F-1: rYojbaba Co. Ltd. Files for IPO to Enhance Labor Consulting and Osteopathic Services

rYojbaba Co., Ltd., a Japanese company focused on labor consulting and health services, has filed for an IPO to fund its expansion and IT platform development.

Summary

• rYojbaba Co., Ltd. is pursuing an initial public offering to raise capital for working capital and general corporate purposes.
• The company plans to offer 1,250,000 common shares, with an expected initial public offering price between $4.00 and $5.00 per share.
• The net proceeds are intended to be used for developing an IT platform for labor consulting, hiring additional consultants, expanding consulting business abroad, and expanding osteopathic clinics and beauty salons through mergers, acquisitions, and franchising.
• The company generated revenues of $10,963,365 in 2023, with 87% from health services and 13% from consulting services.
• Net income for 2023 was $770,571, a significant increase from a net loss of $452,546 in 2022.
• The company intends to apply to list its common shares on the NYSE American or the Nasdaq under the symbol RYOJ.
• Ryoji Baba, the CEO, will retain significant voting control post-IPO, potentially classifying the company as a controlled company.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook due to the company's improved financial performance and strategic growth plans, but also acknowledges several risks and challenges.

Positives

• The company experienced a significant turnaround from a net loss in 2022 to a net income in 2023.
• The IPO will provide capital for strategic growth initiatives, including IT development and international expansion.
• The company has a clear plan for utilizing the IPO proceeds to enhance its business operations.
• The company's CEO has significant experience in the labor consulting industry.
• The company has a high repeat customer rate for its osteopathic clinics.

Negatives

• The company will be considered a controlled company after the IPO, which may reduce corporate governance protections for minority shareholders.
• The company is dependent on its senior management team.
• The company faces strong competition in both the labor consulting and osteopathic services industries.
• The company's success depends substantially on the value of its brands.

Risks

• The company may need to raise additional capital in the future, which could dilute current shareholders' ownership interests.
• The company is exposed to the risk of natural disasters, unusual weather conditions, pandemic outbreaks such as COVID-19, political events, war, and terrorism that could disrupt business.
• The company's level of indebtedness could materially and adversely affect its business, financial condition and results of operations.
• The price of the common shares may fluctuate substantially.
• The company may incur significant taxation from an investigation by the tax authority in Japan.

Future Outlook

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

Management Comments

• Our primary mission is to improve and restore physical and mental health diminished by work related stress through our consulting and health services.
• We believe that work-induced stress is a serious and growing problem as profits over people dominate all sectors of contemporary business culture.

Industry Context

The document notes the importance of labor rights and the challenges faced by labor unions in Japan, as well as the growth and competition in the osteopathic medicine market.

Comparison to Industry Standards

• The document mentions that the number of osteopathic clinics in Japan exceeded 50,000 in 2023, indicating a competitive landscape.
• The document notes that the judo therapy, acupuncture, moxibustion and massage market is estimated to increase by 5.3% year-over-year to 968 billion yen in 2021.
• The document notes that the number of training schools for judo therapists increased from 25 in 2000 to 109 in 2015, which increased the number of fields in which nationally certified therapists could work.
• The document notes that Fukuoka Prefecture ranked second in the number of new openings of osteopathic clinics in Japan from 2020 to 2022.
• The document notes that the total number of patients treated at Sakai Seikotsuin per month, per clinic, as of December 2023 was 328 compared to national average monthly count was 227 (LIGUA Inc., 19 Sept 2023).
• The document notes that the total number of reservations for osteopathic beauty salon per month, per salon, is 424.1 compared to the national average monthly customer count per facility was 333 customers (Japan Ministry of Health, Labour and Welfare, 19 Sept 2023).

Related Party Transactions

• The company acquired contracts with 10 customers for HR consulting services from Global HR Technology Co., Ltd. (GHRT), of which our CEO/director was a minority shareholder at the time of the acquisition.
• The company recorded commission expenses from Global HR Technology, of which our CEO/director is a shareholder.
• The company paid rent to Runbridge Inc., of which our CEO/director is a shareholder.
• Junichi Watanabe, our CEO of Sakai Seikotsuin Nishi Co., Ltd., and Masataka Sakai, our Director of Sakai Seikotsuin Nishi Co., Ltd., are the guarantors with respect to such 20 outstanding loans.

Stakeholder Impact

• Shareholders will be impacted by the potential dilution from the issuance of new shares.
• Employees may benefit from the company's plans to hire additional consultants and expand its business operations.
• Customers may benefit from the company's plans to develop an IT platform and improve its service offerings.

Next Steps

• The company intends to apply to list its common shares on the NYSE American or the Nasdaq under the symbol RYOJ.
• The company will need to secure approval from the NYSE American or the Nasdaq for its listing application.
• The company will need to execute the underwriting agreement with Boustead Securities, LLC.

Key Dates

Keywords

labor consulting, osteopathic services, IPO, initial public offering, health services, franchising, acquisitions, IT platform, Japan, RYOJ