F-1/A: rYojbaba Co. Ltd. Files for IPO to Fuel Consulting and Health Services Expansion

rYojbaba Co., Ltd., a Japanese company focused on labor consulting and health services, has filed for an initial public offering (IPO) to raise capital for expansion and working capital.

Summary

• rYojbaba Co., Ltd. is pursuing an IPO to offer 1,250,000 common shares, with an expected initial price between $4.00 and $5.00 per share.
• The company intends to list its common shares on the NYSE American or the Nasdaq under the symbol RYOJ.
• The IPO aims to fund working capital, develop an IT platform for labor consulting, hire additional consultants, expand consulting services abroad, and grow osteopathic clinics and beauty salons through M&A and franchising.
• rYojbaba Co., Ltd. operates two primary businesses in Japan: labor consulting and health services (osteopathic clinics and beauty salons).
• For the fiscal year ended December 31, 2023, the company generated revenues of $10,963,365 and net income of $770,571.
• For the six months ended June 30, 2024, the company generated revenues of $5,196,844 and net income of $398,528.
• Following the offering, Ryoji Baba, the CEO, will control approximately 71.3% of the voting power.
• The company will be considered a controlled company and will be exempt from certain corporate governance requirements of the NYSE American or the Nasdaq.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While the company shows growth potential and positive aspects in its business model, there are also risks and challenges, including potential financial difficulties and regulatory hurdles. The decrease in revenue and operating income for the six months ended June 30, 2024, compared to the same period in 2023, is a negative indicator.

Positives

• The company has a profitable labor consulting service with a high customer retention rate.
• The company has strong relationships with CEOs and upper management of client companies.
• The company assists in the formation of labor unions without union dues, reducing the financial burden on members.
• The company has a multifaceted approach to medical treatment in its osteopathic services business.
• The company is applying osteopathic techniques to beauty treatments.

Negatives

• The company is geographically concentrated in the Kyusyu area of Japan.
• The company may face strong competition from other providers in its service areas.
• The company is vulnerable to changes in consumer preferences and economic conditions.
• The company may incur significant taxation from an investigation by the tax authority in Japan.

Risks

• The company may need to raise additional capital in the future, which could dilute current shareholders' ownership interests.
• There is a risk that the company will be a passive foreign investment company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. holders.
• The company's level of indebtedness could materially and adversely affect its business, financial condition, and results of operations.
• The company may face strong competition from other providers in its service areas, which could materially and adversely affect its results of operations.
• The price of the common shares may fluctuate substantially, and investors could lose all or part of their investment.

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 highlights the growing need for labor consulting services in Japan due to complex labor laws and the increasing prevalence of work-related stress. It also notes the competitive landscape of the osteopathic clinic industry and the importance of differentiation to attract customers.

Comparison to Industry Standards

• The document states that the number of osteopathic clinics in Japan exceeded 50,000 in 2023, indicating a competitive market.
• The document mentions that the annual average number of visits to the company's osteopathic clinics is 22.1 times per customer in 2023.
• The document states that the company's osteopathic clinics have a repeat customer rate of over 80% as of November 8, 2024.
• The document states that the company's beauty salons have a repeat customer rate of over 25% as of November 8, 2024.

Related Party Transactions

• During the year ended December 31, 2023, the Company recorded commission expenses of $79,336 from Global HR Technology, of which our CEO/director is a shareholder.
• During the year ended December 31, 2023, the Company paid rent of $5,118 to Runbridge Inc., of which our CEO/director is a shareholder.
• On September 15, 2023, 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 for $1,726,433.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new common shares.
• Employees may benefit from the company's expansion and potential for job growth.
• Customers may benefit from improved services and a wider range of treatment options.
• Suppliers may see increased demand for their products and services.
• Creditors may be affected by the company's level of indebtedness and ability to repay its obligations.

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 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.

Key Dates

Keywords

IPO, labor consulting, osteopathic clinics, health services, RYOJ, Japan, initial public offering, beauty salons, franchising, Network 1 Financial Securities