F-1/A: RyoJbaba Co., Ltd. Files Amendment for Initial Public Offering

RyoJbaba Co., Ltd. has filed a pre-effective amendment to its Form F-1 registration statement for its initial public offering of 1,250,000 common shares.

Summary

• RyoJbaba Co., Ltd., a Japanese company, is planning an initial public offering of 1,250,000 common shares with an expected price range of $4.00 to $5.00 per share.
• The company operates two primary businesses: consulting services for labor unions and companies, and health services through 27 osteopathic clinics and two beauty salons.
• For the fiscal year ended December 31, 2023, RyoJbaba generated revenues of $10,963,365, with 87% from health services and 13% from consulting, and reported a net income of $770,571.
• The company intends to list its common shares on the NYSE American or the Nasdaq under the symbol RYOJ.
• The company is seeking to register warrants to purchase 87,500 common shares for the underwriters, with an exercise price of $4.00 per share.
• The company is an emerging growth company and a foreign private issuer, which allows for reduced reporting requirements.
• The company will be a controlled company after the offering, as Ryoji Baba, the CEO, will hold over 50% of the voting power.
• The company plans to use the net proceeds from the offering for working capital, IT platform development, hiring additional consultants, and expansion of its businesses.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for the company, highlighting its growth, profitability, and strategic plans. However, it also acknowledges several risks and challenges, which tempers the overall sentiment.

Positives

• The company has a high customer retention rate in its labor consulting services.
• The company has strong relationships with top executives of its clients.
• The company has experience in identifying the causes of potential problems among laborers.
• The company assists in the formation of labor unions without union dues, reducing the financial burden on members.
• The company provides impartial services that are beneficial for both employers and employees.
• The company has a repeat customer rate of over 80% in its osteopathic clinics.
• The company has a multifaceted approach to medical treatment, applying osteopathic techniques to beauty treatments.

Negatives

• The company is a controlled company, which means it is exempt from certain corporate governance requirements.
• The company is an emerging growth company and a foreign private issuer, which allows for reduced reporting requirements.
• The company's success depends substantially on the value of its brands.
• The company is vulnerable to changes in consumer preferences and economic conditions.
• The company may not be able to compete successfully with other osteopathic clinic businesses.
• The company is exposed to the risk of natural disasters, unusual weather conditions, pandemic outbreaks, political events, war, and terrorism.

Risks

• The company may need to raise additional capital in the future, which could dilute current shareholders ownership.
• The company may be classified as a passive foreign investment company (PFIC), which could result in adverse tax consequences for U.S. holders.
• It may not be possible to enforce judgments obtained in U.S. courts against the company or its directors and officers in Japan.
• The company is exposed to fluctuations in foreign currency exchange rates.
• The company's success depends on its ability to retain its senior management team and hire talented people.
• The company's financial results could suffer if it is unable to achieve or maintain adequate utilization and suitable billing rates for its labor consultants.
• The company's system-wide osteopathic clinic and beauty salon base is geographically concentrated in the Kyusyu area of Japan.
• The company may suffer losses from liability or other claims if its clinic services cause harm to customers.
• The company's level of indebtedness could materially and adversely affect its business, financial condition and results of operations.

Future Outlook

The company intends to use the net proceeds from the offering to fund working capital and general corporate purposes, which may include implementation and development of an information technology (IT) platform for its labor consulting services, hiring of additional consultants and an expansion abroad of consulting business as well as an expansion of its osteopathic clinics and osteopathic beauty salons through mergers and acquisitions and franchising.

Management Comments

• We believe that work-induced stress is a serious and growing problem as profits over people dominate all sectors of contemporary business culture.
• We believe that work-related stress not only affects the health and well-being of individual employees, but also reduces employee productivity.
• We believe that the significant difference between our Company and our competitors is our ability to provide impartial services that are not tailored specifically to the employer or the employee.

Industry Context

The document highlights the growing need for labor consulting services in Japan due to complex labor laws and the rise of 'black corporations'. It also notes the increasing number of osteopathic clinics in Japan and the importance of differentiation in this market.

Comparison to Industry Standards

• The document mentions that the judo therapy, acupuncture, moxibustion and massage market in Japan is estimated to increase by 5.3% year-over-year to 968 billion yen in 2021.
• The number of osteopathic clinics in Japan exceeded 50,000 in 2023, almost doubling in 20 years.
• The company's osteopathic clinics have a repeat customer rate of over 80%, which is higher than the industry average.
• The company's beauty salons have a repeat customer rate of over 25%, which is lower than the osteopathic clinics but still significant.
• The company's annual average number of visits per customer in osteopathic clinics is 22.1 times, which is higher than the industry average.
• The company's beauty salons have a period average number of visits of 5.5 times per customer.

Related Party Transactions

• The company recorded commission expenses of $79,336 from Global HR Technology, of which our CEO/director is a shareholder.
• The company paid rent of $5,118 to Runbridge Inc., of which our CEO/director is a shareholder.

Stakeholder Impact

• Shareholders will have the opportunity to invest in a growing company with a unique business model.
• Employees may benefit from the company's expansion and growth.
• Customers will have access to the company's consulting and health services.
• Suppliers may benefit from increased business with the company.
• Creditors may be impacted by the company's level of indebtedness.

Next Steps

• The company intends to list its common shares on the NYSE American or the Nasdaq.
• The company plans to use the net proceeds from the offering for working capital, IT platform development, hiring additional consultants, and expansion of its businesses.
• The company intends to develop a franchise business as to osteopathic clinics and beauty salons in the future.

Key Dates

Keywords

Initial Public Offering, Osteopathic Clinics, Labor Consulting, Health Services, Japanese Company, Emerging Growth Company, Foreign Private Issuer, NYSE American, Nasdaq, Warrants