As filed with the U.S. Securities and Exchange Commission on April 19, 2024.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________

POST-EFFECTIVE AMENDMENT NO. 2
TO

Form F-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

______________

HW ELECTRO Kabushiki Kaisha
(Exact name of registrant as specified in its charter)

HW Electro Co., Ltd.
(Translation of Registrant’s name into English)

______________

301, Aomi 2-chome 7-4 the
SOHO, Koto-ku, Tokyo
135-0064 Japan
(+81) 3-6457-1469
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

_______________________

Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
800-221-0102

(Name, address, including zip code, and telephone number, including area code, of agent for service)

_______________________

With a Copy to:

_______________________

Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED APRIL 19, 2024

HW Electro Co., Ltd.

3,750,000 American Depositary Shares

Representing 3,750,000 Ordinary Shares

This is a firm commitment initial public offering of the American depositary shares (the “ADSs”) representing our ordinary shares (“Ordinary Shares”). We are offering 3,750,000 ADSs, based on an assumed initial public offering price of $3.00 per ADS, and each ADS represents one Ordinary Share. Prior to this offering, there has been no public market for the ADSs or our Ordinary Shares.

We have applied to list the ADSs on the NYSE American LLC (“NYSE American”) under the symbol “HWEC”. It is a condition to the closing of this offering that the ADSs are approved for listing on NYSE American. At this time, NYSE American has not yet approved our application to list the ADSs and there is no guarantee or assurance that the ADSs will be approved for listing on NYSE American.

Investing in the ADSs involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 10 to read about factors you should consider before buying the ADSs.

We are an “emerging growth company” as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 3 of this prospectus for more information.

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(1)    Represents underwriting discounts equal to 7.0% per ADS.

(2)     In addition to the underwriting discounts listed above, we have agreed to: (i) reimburse the underwriters for certain expenses; (ii) provide a non-accountable expense allowance equal to 1.0% of the gross proceeds of this offering payable to the Representative; and (iii) issue, upon closing of this offering, warrants to the Representative, exercisable during the five year period after the date of commencement of sales of ADSs in this offering, entitling the Representative to purchase 5.0% of the total number of ADSs sold in this offering (including any ADSs sold as a result of the exercise of the Representative’s over-allotment option) at a per ADS price equal to 120% of the initial public offering price (the “Representative’s Warrants”). The registration statement of which this prospectus is a part also covers the Representative’s Warrants, the ADSs issuable upon the exercise thereof and the underlying Ordinary Shares. See “Underwriting” for additional information regarding total underwriter compensation.

The underwriters expect to deliver the ADSs against payment in U.S. dollars in New York, New York on or about             , 2024.

Neither the U.S. Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Co-Managers

Prospectus dated             , 2024

TABLE OF CONTENTS

About this Prospectus

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the ADSs offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. The information contained in this prospectus is current only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

Our functional currency is the Japanese yen (“JPY” or “¥”), the legal currency of Japan. The terms “dollar” or “$” refer to U.S. dollars, the legal currency of the United States. Our financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our financial statements in U.S. dollars. These dollar references are based on the exchange rate of JPY to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars, which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars).

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

•        “ADRs” are to the American Depositary Receipts that may evidence the ADSs;

•        “ADSs” are to the American Depositary Shares, each of which represents one Ordinary Share;

•        “Anest Iwata” are to Anest Iwata Corporation, a limited liability company organized under the laws of Japan;

•        “Autobacs Seven” are to Autobacs Seven Co., Ltd., a limited liability company organized under the laws of Japan;

•        “Bosai System” are to BOSAI SYSTEM Co., Ltd., a limited liability company organized under the laws of Japan;

•        “Cenntro” are to Cenntro Electric Group Limited, a limited liability company incorporated under the laws of Australia, Cenntro Automotive Corporation, Cenntro Electric Group Limited’s wholly owned subsidiary incorporated under the laws of the state of Delaware, and/or Cenntro Electric Group Limited’s other subsidiaries;

•        “ENEOS WING” are to ENEOS WING Corporation, a Japanese company that runs a chain of gas stations, sells petroleum products, and operates automobile maintenance, cleaning, repair, inspection, and new car leasing businesses at its 319 outlets throughout Japan;

•        “FINRA” are to the Financial Industry Regulatory Authority;

•        “HWE,” “HW ELECTRO,” “we,” “us,” “our,” “our Company,” or the “Company” are to HW Electro Co., Ltd., a joint-stock corporation with limited liability organized under Japanese law;

•        “Level 4 autonomous driving technology” are to an autonomous driving technology that is considered to be fully autonomous driving, since the vehicle can handle the majority of driving situations independently and is developed to the point that a vehicle can handle highly complex urban driving situations, such as the sudden appearance of construction sites, without any driver intervention, which means a vehicle can be driven by an autonomous driving system from a specific area in a city center to a driver’s intended destination;

•        “Ordinary Shares” are to the ordinary shares of HWE;

•        “SEC” are to the U.S. Securities and Exchange Commission; and

•        “TONOX” are to TONOX Co., Ltd., a limited liability company organized under the laws of Japan.

RISK FACTORS

An investment in the ADSs involves a high degree of risk. Before deciding whether to invest in the ADSs, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of the ADSs to decline, resulting in a loss of all or part of your investment. The risks described below and discussed in other parts of this prospectus are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in the ADSs if you can bear the risk of loss of your entire investment.

Risks Related to Our Business and Industry

We have incurred significant losses during the fiscal years ended September 30, 2023 and 2022, which raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on being able to generate positive operating cash flows and raise additional capital significant enough to result in operating profitability.

We have a significant working capital deficiency, have incurred significant losses, and need to raise additional funds to meet our obligations and sustain our operations during the fiscal years ended September 30, 2023 and 2022. For the fiscal years ended September 30, 2023 and 2022, our net loss was $14,278,256 and $4,700,613, respectively. As of September 30, 2023 and 2022, our working capital deficit was $792,030 and $1,351,178, respectively. In addition, we had net cash outflows of $11,676,441 and $2,191,507, respectively, from operating activities for the fiscal years ended September 30, 2023 and 2022. Given the preceding conditions, our auditor, WWC, P.C., has raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends upon our ability to market and sell our products to generate positive operating cash flows.

During the fiscal year ended September 30, 2023, the Company issued 7,757,030 Ordinary Shares in private transactions for aggregate gross proceeds of approximately $9.8 million.

While our management’s plan is to continue improving operations to generate positive operating cash flows and raise additional capital through private or public offerings, there is no assurance that we will be successful in generating positive operating cash flows and raising additional capital through private or public offerings that are significant enough to result in operating profitability in the future.

If we are unable to generate and raise sufficient positive operating cash flows and additional capital to result in operating profitability in the future, there may remain substantial doubt about our ability to continue as a going concern, and investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms or at all.

Further, if we are unable to continue as a going concern, we may have to discontinue operations and liquidate our assets and may be compelled to receive less than the value at which those assets are carried on our audited financial statements, which would cause the ADS holders to lose all or a part of their investment.

Our limited operating history makes it difficult to evaluate our results of operations and prospects.

We have only been in existence since 2019 and have a limited operating history with respect to each of our principal products. We commenced selling our electric light commercial vehicles in April 2022, and during the fiscal years ended September 30, 2023 and 2022, we only sold and delivered 52 and 16 vehicles to customers, respectively.

Our future success will require us to further expand our customer base and scale up the sales of our electric light commercial vehicles. Our business model and ability to attract more customers are unproven. To address the risks, we must, among other things, continue to (i) expand our sales and distribution channel, (ii) maintain and further develop business relationships with our existing and potential customers, and (iii) improve public relations and brand awareness and enhance customer loyalty. We cannot assure you that we will be successful in addressing such risks.

Although we have experienced revenue growth, we cannot assure you that our revenue will increase at previous rates or at all, or that we will be able to operate profitably in future periods. Our limited operating history makes the prediction of future results of operations difficult, and therefore, past revenue growth experienced by us should not be taken as indicative of the rate of revenue growth, if any, that can be expected in the future. We believe that period to period comparisons of our operating results are not meaningful and that the results for any period should not be relied upon as an indication of future performance. You should consider our business and prospects in light of the risks, uncertainties, expenses, and challenges that we will face as an early-stage company seeking to sell new products in a volatile and challenging market.

We are significantly dependent upon one manufacturer, and our operations could be disrupted if our relationships with such manufacturer are compromised.

We currently rely on our sole cooperating manufacturer, Cenntro, to manufacture all of our electric light commercial vehicles. Our reliance on Cenntro makes us vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs. While we have entered into a long-term manufacturing contract, the Exclusive Basic Transaction Agreement, with Cenntro, we may not be successful in entering into individual contracts or negotiating individual contracts on favorable terms pertaining to the volume of the vehicles to manufacture, the delivery date and location, the amount of consideration, and other necessary matters every time we place orders in the future. If we are compelled to enter into written individual contracts on less favorable terms than we currently have with Cenntro, we could be subject to binding purchase obligations that may be harmful to our business. Any change in our relationships with Cenntro could adversely affect our business, financial condition and the results of operations.

The manufacturing factories of Cenntro are located in China. Our use of an international manufacturer may increase supply risk, including the risk of supply interruptions, reductions in manufacturing quality or controls, changes in export/import regulations, and trade friction between countries.

We may be negatively impacted by the deterioration in the financial conditions of Cenntro. If Cenntro becomes unable or unwilling to manufacture our electric light commercial vehicles in sufficient volumes, at high-quality levels, on a timely basis, and pursuant to the Exclusive Basic Transaction Agreement and existing written individual contracts, due to financial conditions or otherwise, we would have to identify, qualify, and select acceptable alternative cooperating manufacturers. An alternative cooperating manufacturer may not be available to us when needed or may not be in a position to satisfy our quality or production requirements on commercially reasonable terms, or be able to fulfill comparable pricing and timing requirements. Any significant interruption or delays in manufacturing would require us to reduce or delay our supply of products to our customers or increase our shipping costs to make up for delays in manufacturing, if possible, which in turn could reduce our revenue, cause us to incur delay-related liquidated damages or other liabilities to our customers, harm our relationships with our customers, damage our reputation, or cause us to forego potential revenue opportunities. While we may have certain contractual remedies against Cenntro, if Cenntro becomes unable or unwilling to continue to manufacture our electric light commercial vehicles, such remedies may not be sufficient in scope, we may not be able to effectively enforce such remedies, and we may incur significant costs in enforcing such remedies. See “Business — Manufacturing.”

We may experience cost increases or disruptions in the supply of our electric light commercial vehicles.

Our ability to sell our electric light commercial vehicles is dependent on Cenntro’s, our cooperating manufacturer, continued ability to procure raw materials. Cenntro incurs significant costs related to procuring raw materials required to manufacture and assemble our electric light commercial vehicles. It uses various raw materials in our electric light commercial vehicles, including aluminum, steel, carbon fiber, semiconductors, motors and non-ferrous metals such as copper, lithium, nickel as well as cobalt. The prices for these raw materials fluctuate depending on factors beyond our or Cenntro’s control, including market conditions, global demand, supply interruptions, material shortages of these materials, and fluctuation of the exchange rate. Fluctuations in the cost of these materials could materially affect our business and operating results, as it may reflect on the purchase costs of our electric light commercial vehicles we pay Cenntro.

Our business also depends on Cenntro’s continued procurements of battery cells for our electric light commercial vehicles. We, together with Cenntro, are exposed to multiple risks relating to the availability and pricing of quality lithium-ion battery cells. These risks include:

•        the inability or unwillingness of current battery cell manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric or plug-in hybrid vehicle industry as demand for such cells increases;

•        disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and

•        an increase in the cost of raw materials, such as lithium, nickel, and cobalt, used in lithium-ion cells.

Furthermore, currency fluctuations, tariffs, or shortages in petroleum and other economic or political conditions may result in significant increases in freight charges and raw material costs. Substantial increases in the prices for the raw materials or components may eventually increase our purchase costs and could reduce our margins. In addition, growth in the popularity of electric vehicles without a significant expansion in battery cell production capacity could result in shortages which would result in increased purchase costs to us or disruptions in the supply of our electric light commercial vehicles.

A significant portion of our total revenue was derived from a few major customers. A high concentration of our revenue from a few major customers means that loss of business from any of them may have a significant negative impact on our business and financial performance.

For the fiscal year ended September 30, 2023, the most major customer accounted for 42% of our total revenues, and the second major customer accounted for 29% of our total revenues. For the fiscal year ended September 30, 2022, the most major customer accounted for 32% of our total revenues, and the second major customer accounted for 12% of our total revenues. These major customers may not purchase our electric light commercial vehicles in the future, because a customer (i) may not need additional electric light commercial vehicles; (ii) may not have the budget for purchasing electric light commercial vehicles; (iii) may require more electric light commercial vehicles but choose to purchase them from our competitors instead of us; or (iv) any other reasons. A high concentration of revenue from a few major customers means that loss of business from any of them may have a significant negative impact on our business and financial performance.

We do not directly control certain costs related to our business, which could put us at a disadvantage relative to companies who have a vertically integrated business model.

We do not have control over the costs our cooperating manufacturer, Cenntro, charges for the manufacture of our electric light commercial vehicles, as the purchase price of our electric light commercial vehicles may vary each time we enter into individual agreements with Cenntro for particular orders. This may lead us to charge higher prices for our electric light commercial vehicles than our competitors with a vertically integrated business model, causing us to be unable to maintain or increase market share.

We contract a cooperating manufacturer in China to produce all of our electric light commercial vehicles, which exposes us to various risks relating to long-distance transportation of them.

We place manufacturing orders with our cooperating manufacturer, Cenntro, to produce our electric light commercial vehicles at their manufacturing factories in Hangzhou, China. We transport all of our electric light commercial vehicles from the Port of Shanghai, China to Japan for sale. The geographical separation of Cenntro’s factories and our customers necessitates constant long-distance transportation of all of our electric light commercial vehicles between China and Japan. The distance between Hangzhou, China and Tokyo, Japan, is approximately 1,189 miles, and we transport our electric light commercial vehicles by sea freight. The constant long-distance transportation of all of our electric light commercial vehicles may expose us to various risks, including (i) an increase in transportation costs, (ii) loss of our electric light commercial vehicles as a result of any accidents that may occur in the transportation process, (iii) delays in the transportation of our electric light commercial vehicles as a result of any severe weather conditions, natural disasters, or other conditions adversely affecting sea traffic between China and Japan, and (iv) disruptions to our sales of electric light commercial vehicles as a result of delays in the transportation of our electric light commercial vehicles. Any of these risks could have a material adverse effect on our business and the results of operations.

If we lose the right to exclusively sell the electric light commercial vehicles manufactured by Cenntro in Japan, we could face further competition and adversely affect our business and the results of operations.

Pursuant to the Exclusive Basic Transaction Agreement, Cenntro has conferred upon us the distribution right to exclusively sell in Japan the electric light commercial vehicles it manufactures. However, pursuant to the Exclusive Basic Transaction Agreement, Cenntro may decline to grant us this right for the following calendar year if we fail to sell more than 500 electric light commercial vehicles in a calendar year or an additional 100 electric light commercial vehicles compared to the previous calendar year. While Cenntro has nevertheless granted us the distribution right to exclusively sell the electric light commercial vehicles it manufactures in Japan for calendar years 2021, 2022, 2023 and 2024, notwithstanding our inability to fulfill the requirements stipulated in the Exclusive Basic Transaction Agreement during calendar years 2021, 2022 and 2023, if we fail to sell at least 152 of our electric light commercial vehicles in the calendar year 2024, as we only sold 52 in the calendar year 2023, or fail to satisfy the preceding requirements in any subsequent calendar year, we may lose the right to exclusively sell the electric light commercial vehicles manufactured by Cenntro in Japan and potentially face further competition from other companies selling similar electric light commercial vehicles manufactured by Cenntro. As a consequence, our business and the results of operations may be adversely affected.

Notwithstanding our continuing efforts to diversify our revenue sources, we derive and expect to continue to derive a significant portion of our revenue from the sales of our electric light commercial vehicles. As a result, the loss of, or a significant reduction in demand for our electric light commercial vehicles, would significantly reduce our revenue and harm our results of operations.

We expect that our results of operations will, for at least the next five years, continue to depend on the sales of our electric light commercial vehicles.

Since we commenced selling our electric light commercial vehicles in April 2022, the revenue generated from the sales of our electric light commercial vehicles has been the main source of our total revenue. In the fiscal years ended September 30, 2023 and 2022, the sales of our electric light commercial vehicles contributed approximately 94.8% and 96.7% of the total revenue for those periods, respectively, whereas the sales of car parts and the service fees we charged only collectively accounted for the remaining 5.2% and 3.3%, respectively.

While we strive to diversify our revenue sources by commencing a new service — HW ELECTRO Platform Service, we cannot assure you that the new service will generate significant revenue for us to the extent we anticipate. As a result, if the revenue generated from our new service does not grow as we expect, the loss of, or a significant reduction in, demand for our electric light commercial vehicles would significantly reduce our revenue and harm our results of operations.

Defects or performance problems in our electric light commercial vehicles could result in loss of customers, reputational damage, and decreased revenue, and we may face warranty, indemnity, and product liability claims arising from defective products.

Although our electric light commercial vehicles meet our stringent quality requirements, they may contain undetected errors or defects, especially when first introduced or when new versions are released. Errors, defects, or poor performance can arise due to design flaws, defects in raw materials, or components or manufacturing difficulties, which can affect both the quality and the yield of the product. Any actual or perceived errors, defects, or poor performance in our products could result in the replacement or recall of our products or components thereof, shipment delays, rejection of our products, damage to our reputation, lost revenue, diversion of our personnel from our product development efforts, and increases in customer service and support costs, all of which could have a material adverse effect on our business, financial condition, and results of operations. In addition, once we determine or are required to recall our products, we are subject to the obligation to inform the Japanese Ministry of Land, Infrastructure, Transport and Tourism, a Japanese governmental department (“MLIT”), and report the status of the recall. MLIT will then conduct a series of investigations regarding the recall, including collecting information about the errors, defects, or poor performance in our products, analyzing the reasons for the recall, and verifying the validity of the recall.

Furthermore, defective components may give rise to warranty, indemnity, or product liability claims against us that exceed any revenue or profit we receive from the affected products. Our limited warranties cover defects in materials and workmanship of our products under normal use and service conditions, and, therefore, we bear the risk of warranty claims long after we have sold products and recognized revenue. While we do have accrued reserves for warranty claims, our estimated warranty costs for previously sold products may change to the extent future products are not compatible with

earlier versions of products under warranty. Our warranty accruals are based on our assumptions that mainly are derived from the data and analysis provided by TONOX, because we do not have a long history to inform such assumptions of our own. As a result, these assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial unanticipated expenses to repair or replace defective products in the future or to compensate customers for defective products. Our failure to accurately predict future claims could result in unexpected volatility in, and have a material adverse effect on, our financial condition.

If one of our products were to cause injury to someone or cause property damage, then we could be exposed to product liability claims and lawsuits, which could result in significant costs and liabilities if damages are awarded against us. Further, any product liability claim we face could be expensive to defend and could divert management’s attention. The successful assertion of a product liability claim against us could result in potentially significant monetary damages, penalties, or fines, subject us to adverse publicity, damage our reputation and competitive position, and adversely affect sales of our products. In addition, product liability claims, injuries, defects, or other problems experienced by other companies in the electric vehicles industry could lead to unfavorable market conditions for the industry as a whole.

Although as of the date of this prospectus, no material warranty, indemnity, or product liability claims against us have been filed, and no request for recall of our electric light commercial vehicles or components has been made, there is no assurance that material claims or requests will not be made or filed in the future.

While we may have certain contractual remedies against, and recourse to, Cenntro if our electric light commercial vehicles contain errors or defects and may seek compensation from Cenntro to redress damages and losses resulting from warranty, indemnity, or product liability claims made against us, such remedies, recourse or compensation may not be sufficient in scope, may not be effectively or timely enforced, and significant costs may be incurred in enforcing them. See “Business — Manufacturing.”

Failure to keep up with the changing preferences in our market would result in our losing market share, thus seriously harm our business, financial condition, and results of operations.

Our business and operating results may be harmed if we fail to expand our products to achieve widespread market acceptance or generate significant revenue and gross profits to offset our operating and other costs. We may not successfully identify, develop, and market new products in a timely manner. If we introduce new products, they may not attain broad market acceptance or contribute meaningfully to our revenue or profitability. Competitive or technological developments may require us to make substantial, unanticipated capital expenditures in new products and technologies or in new strategic partnerships, and we may not have sufficient resources to make these expenditures. Because the market for our products is subject to rapid changes, we may need to expand and/or evolve our products quickly. Delays and cost overruns could affect our ability to respond to technological changes, evolving industry standards, competitive developments, or customer requirements and harm our business and operating results. The development and implementation of such advanced technologies is inherently complex, and we will need to coordinate with our manufacturer in order to integrate such technology into our electric vehicles and ensure it interoperates with other complex technology as designed and as expected. We may fail to detect defects and errors that are subsequently revealed, and our control over the performance of other parties’ services and systems may be limited. Any defects or errors in, or which are attributed to, our technology, could result in, among other things:

•        delayed production and delivery of our vehicles;

•        delayed market acceptance of our vehicles;

•        loss of customers or the inability to attract new customers;

•        diversion of engineering or other resources for remedying the defect or error;

•        damage to our brand or reputation;

•        increased service and warranty costs;

•        legal action by customers or third parties, including product liability claims; and

•        penalties imposed by regulatory authorities.

In addition, we rely on Cenntro to develop a number of technologies for use in our vehicles. There can be no assurances that Cenntro will be able to meet the technological requirements, production timing and volume requirements to support our business plan. In addition, such technology may not satisfy the cost, performance useful life and warranty characteristics we anticipate in our business plan, which could materially and adversely affect our business, prospects and results of operations.

Our future growth is dependent upon customers’ willingness to adopt electric vehicles.

Our growth is highly dependent upon the adoption by consumers of, and we are subject to an elevated risk of any reduced demand for, alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition, and operating results will be harmed. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, and changing consumer demands and behaviors.

Other factors that may influence the adoption of alternative fuel vehicles, and specifically electric vehicles, include:

•        perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performance, and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles;

•        perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including vehicle electronics and regenerative braking systems;

•        the limited range over which electric vehicles may be driven on a single battery charge;

•        the decline of an electric vehicle’s range resulting from deterioration over time in the battery’s ability to hold a charge;

•        concerns about electric grid capacity and reliability, which could derail our past and present efforts to promote electric vehicles as a practical alternative solution to vehicles that require gasoline;

•        the availability of alternative fuel vehicles, including plug-in hybrid electric vehicles;

•        improvements in the fuel economy of the internal combustion engine;

•        increases in the cost of electricity;

•        the availability of service for electric vehicles;

•        the environmental consciousness of consumers;

•        volatility in the cost of oil and gasoline;

•        consumers’ perceptions of the dependency of Japan on oil from unstable or hostile countries;

•        government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

•        standardization of electric vehicle charging systems and consumers’ perceptions about convenience and cost to charge an electric vehicle;

•        the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles;

•        perceptions about and the actual cost of alternative fuel;

•        unbalanced electricity supply and demand in summer and winter in Japan and the possibility of Japanese government ordering to restrict the use of electricity in these peak seasons; and

•        macroeconomic factors.

The influence of any of the factors described above may cause current or potential customers not to purchase our electric light commercial vehicles, which would materially adversely affect our business, operating results, financial condition and prospects.

The range of our electric light commercial vehicles on a single charge declines over time, which may negatively influence potential customers’ decisions whether to purchase them.

The range of our electric light commercial vehicles on a single charge declines over time, principally as a function of usage, time, and charging patterns, as well as other factors. For example, a customer’s use of their ELEMO-K or ELEMO, as well as the frequency with which they charge the battery of their ELEMO-K or ELEMO, can result in additional deterioration of the battery’s ability to hold a charge. While we currently provide our customers with a battery capacity warranty to cover the battery capacity deterioration to alleviate the customers’ concerns about batteries in general, such a warranty may be insufficient to cover every issue regarding battery capacity deterioration and may negatively influence potential customers’ decisions whether to purchase our vehicles, which may harm our ability to market and sell our vehicles, which would materially adversely affect our business, operating results, financial condition and prospects.

If we are unable to conduct our marketing activities cost-effectively, our results of operations and financial condition may be materially and adversely affected.

We have incurred expenses on a variety of marketing and brand promotion efforts designed to enhance our brand recognition and reputation. Our marketing and promotional activities may not be well received by customers and may not result in the increased levels of customer base and sales of our electric light commercial vehicles that we anticipate. We incurred JPY169.3 million, or approximately $1.2 million, and JPY11.7 million, or approximately $0.1 million, in promotion and advertising expenses during the fiscal years ended September 30, 2023 and 2022, respectively. Marketing approaches and tools in the light commercial truck market in Japan are evolving. This further requires us to enhance our marketing approaches and to experiment with new marketing methods to keep pace with industry developments and customer preferences, which may not be as cost-effective as our marketing activities in the past and may lead to significantly higher marketing expenses in the future. We cannot assure you that we can produce, or benefit from, unique and effective marketing campaigns in the future. Failure to refine our existing marketing approaches or to introduce new effective marketing approaches in a cost-effective manner could reduce our market share, cause our net revenue to decline, and negatively impact our profitability.

Developments in alternative technologies or improvements in the internal combustion engine may materially and adversely affect the demand for our electric light commercial vehicles.

Significant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells, hydrogen fuel or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, fuel that is abundant and relatively inexpensive in Japan, such as compressed natural gas, may emerge as consumers’ preferred alternative to petroleum-based propulsion. Any failure by us to keep up with new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced electric light commercial vehicles, which could result in the loss of competitiveness of our electric light commercial vehicles, decreased revenue, and a loss of market share to competitors.

We significantly depend on the operations and supply chain we have built with our business partners, and any failure or significant disruptions of the operations and supply chain could materially adversely affect our business, financial condition, and results of operations.

Our business is highly dependent on the operations and supply chain we have built with our business partners. As of the date of this prospectus, besides our cooperating manufacturer, Cenntro, we also rely on (i) Anest Iwata and TONOX to modify our electric light commercial vehicles to comply with the regulations and standards for the Japanese market, install the accessories, and undertake the inspection, (ii) ENEOS WING to promote the sales of and distribute our electric light commercial vehicles via their sales and distribution channels in Japan, and (iii) Japan Autobody Repair Work Association to provide maintenance, repair, and other after-sale services to our customers in its maintenance facilities. Our reliance on these business partners makes us vulnerable to possible sales constraints and reduced control over delivery schedules and the quality of our electric light commercial vehicles and sale and after-sale services. While we have entered into agreements with our business partners, we may not be successful in extending

or renewing these agreements on favorable terms when they expire in the future. If we fail to extend or renew the agreements or extend or renew them on less favorable terms than we currently have, our business operation may be interrupted, or we could be subject to binding obligations that may be harmful to our business. Any change in our relationships with any of our business partners could adversely affect our financial condition and results of operations.

We may be negatively impacted by the deterioration in the financial conditions of any of our business partners. If any of our business partners were unable or unwilling to perform their services at high-quality levels, on a timely basis, and pursuant to our agreements, due to financial conditions or otherwise, we would have to identify, qualify, and select acceptable alternative performers. An alternative performer may not be available to us when needed or may not be in a position to satisfy our requirements on commercially reasonable terms, and may be incapable of addressing considerations with respect to quality and timing. Any significant interruption of our operations and supply chain would require us to reduce or delay our supply of products/services to our customers or increase our costs to look for alternative performers to make up for delays, if possible, which in turn could reduce our revenue, cause us to incur delay-related liquidated damages or other liabilities to our customers, harm our relationships with our customers, damage our reputation, or cause us to forego potential revenue opportunities. While we may have certain contractual remedies against our business partners, if our business partners become unable or unwilling to continue to perform their services at high-quality levels, on a timely basis, and pursuant to our agreements, such remedies may not be sufficient in scope, we may not be able to effectively enforce such remedies, and we may incur significant costs in enforcing such remedies.

Marketplace confidence in our long-term business prospects is important for building and maintaining our business.

If we are unable to establish and maintain confidence about our business prospects among consumers and within our industry, then our financial condition, operating results, and business prospects may suffer materially. Our electric light commercial vehicles are highly technical products that require maintenance and support. If we were to cease or cut back operations, even years from now, buyers of our electric light commercial vehicles from years earlier might have much more difficulty in maintaining their electric light commercial vehicles and obtaining satisfactory support. As a result, consumers may be less likely to purchase our electric light commercial vehicles now if they are not convinced that our business will succeed or that our operations will continue for many years. Similarly, our business partners and other third parties will be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed.

Accordingly, in order to build and maintain our business, we must maintain confidence among customers, business partners, and other parties in our liquidity and long-term business prospects. In contrast to some more established auto makers, we believe that, in our case, the task of maintaining such confidence may be particularly complicated by factors such as the following:

•        our limited operating history;

•        our limited revenue and lack of profitability to date;

•        unfamiliarity with or uncertainty about our electric light commercial vehicles;

•        uncertainty about the long-term marketplace acceptance of alternative fuel light commercial trucks generally, or electric light commercial vehicles specifically;

•        the prospect that we will need ongoing infusions of external capital to fund our planned operations;

•        the size of our expansion plans in comparison to our existing capital base and scope and history of operations; and

•        the prospect or actual emergence of direct, sustained competitive pressure from more established auto makers, which may be more likely if our initial efforts are perceived to be commercially successful.

Many of these factors are largely outside our control, and any negative perceptions about our long-term business prospects, even if exaggerated or unfounded, would likely harm our business and make it more difficult to raise additional funds when needed.

Our future success depends on our ability to retain our chief executive officer and other key executives and to attract and retain qualified personnel.

We are highly dependent on our executive officers, as well as the other principal members of our management team. We also depend on our ability to retain and motivate key employees and attract qualified new employees. We may be unable to replace key members of our management team and key employees if we lose their services. Integrating new employees into our team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition, and results of operations.

While we maintain “key person” insurance for our directors and executive officers, the loss of the services of any of these persons could impede the achievement of our growth, development, and commercialization objectives. The unexpected loss of the services of one or more of our directors or executive officers and/or advisors, including due to disease (such as COVID-19), disability, or death, could have a detrimental effect on us.

In addition, we currently rely on consultants and advisors to assist us in formulating our development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us.

If we are unable to provide a high-quality customer experience, our business, reputation, financial condition, and results of operations may be materially and adversely affected.

The success of our business largely depends on our ability to provide a high-quality customer experience, which in turn depends on a variety of factors. These factors include our ability to offer good quality electric light commercial vehicles at competitive prices and maintain reliable relationships with our customers, and the ability of our business partner, Japan Autobody Repair Work Association, to continue to provide high-quality, timely, and satisfying sale and after-sales services. If our customers are not satisfied with our service experience, or the quality and the prices of our electric light commercial vehicles are severely interrupted or otherwise fail to meet our customers’ expectations, our reputation and customer loyalty could be adversely affected.

As a result, if we are unable to continue to provide or maintain a high-quality customer experience, we may not be able to retain existing customers or attract new customers, which could have a material adverse effect on our business, reputation, financial condition, and results of operations.

Our business depends on the continued success of our brands, and if we fail to maintain and enhance the recognition of our brands, we may face difficulty increasing our network of business partners and customers, and our reputation and operating results may be harmed.

We believe that market awareness of our brands, including “HWE,” “HW ELECTRO” and “ELEMO,” have contributed significantly to the success of our business. Maintaining and enhancing our brands is critical to our efforts to increase our network of business partners and customers.

Our ability to attract business partners and customers depends not only on investment in our brands, our marketing efforts, and the success of our products and services, but also on the perceived value of our products and services versus competing alternatives among our customer base. In addition, a failure by our customers to distinguish between our brands and the different products and services provided by our competitors may result in a reduction in revenue, profit, and margins. If our marketing initiatives are not successful or become less effective, or if we are unable to further enhance our brand recognition, or if we incur excessive marketing and promotion expenses, we may not be able to attract new customers successfully or efficiently, and our business and results of operations may be materially and adversely affected.

In addition, negative publicity about our business, products, services, shareholders, affiliates, directors, officers, and other employees, and the industry in which we operate, can harm the recognition of our brands or reputation. Negative publicity, regardless of merits, concerning the foregoing, could be related to a wide variety of matters, including, but not limited to:

•        alleged misconduct or other improper activities committed by our directors, officers, other employees, and business partners, including misrepresentation made by our employees to potential business partners and customers during sales and marketing activities, and other fraudulent activities to artificially inflate the popularity of our products and services offerings;

•        false or malicious allegations or rumors about us or our directors, shareholders, affiliates, officers, other employees and business partners;

•        complaints by customers, or business partners about our products, services and sales, and marketing activities;

•        security breaches of confidential business partners, customer, or employee information;

•        employment-related claims relating to alleged employment discrimination, wage, and hour violations; and

•        governmental and regulatory investigations or penalties resulting from our failure to comply with applicable laws and regulations.

In addition to traditional media, there has been increasing use of social media platforms and similar devices in Japan, including instant messaging applications, social media websites, and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. The availability of information on instant messaging applications and social media platforms is virtually immediate, as is its impact, without affording us an opportunity for redress or correction. The opportunity for dissemination of information, including inaccurate information, is readily available. Information concerning our Company, shareholders, affiliates, directors, officers, other employees, and business partners, may be posted on such platforms at any time. The risks associated with any such negative publicity or incorrect information cannot be completely eliminated by our strategies to maintain our brand integrity and may materially harm the recognition of our brand, our reputation, business, financial condition, and results of operations.

We could be adversely affected by a failure to protect our intellectual property or the intellectual property of our business partners.

We have significant intellectual property rights, in particular with respect to our brands, such as “HWE,” “HW ELETRO,” and “ELEMO.” See also “— Our business depends on the continued success of our brands, and if we fail to maintain and enhance the recognition of our brands, we may face difficulty increasing our network of business partners and customers, and our reputation and operating results may be harmed.”

We regard our intellectual property as critical to our success, and we depend, to a large extent, on our ability to develop and maintain our intellectual property rights. To do so, we rely upon a combination of trade secrets, confidential policies, nondisclosure, and other contractual arrangements and copyrights, software copyrights, trademarks, and other intellectual property laws. We also make use of the intellectual property rights from business partners to monetize the services we provide. Despite our efforts to protect our or our business partners’ intellectual property rights, the steps we take in this regard might not be adequate to prevent, or deter, infringement or other misappropriation of our or our business partners’ intellectual property by competitors, former employees, or other third parties.

Monitoring and preventing any unauthorized use of our or our business partners’ intellectual property is difficult and costly, and any of our or our business partners’ intellectual property rights could be challenged, invalidated, circumvented, or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. Litigation or proceedings before governmental authorities, or administrative and judicial bodies may be necessary to enforce our intellectual property rights and to determine the validity and scope of our rights. Our efforts to protect our intellectual property in such litigation and proceedings may be ineffective and could result in substantial costs and diversion of resources and management time, each of which could substantially harm our operating results. Any failure in protecting or enforcing our or our business partners’ intellectual property rights could have a material adverse effect on our business, results of operations, financial condition, or prospects.

We may be subject to intellectual property claims that create uncertainty about ownership or use of intellectual property essential to our business and divert our managerial and other resources.

Our success depends, in part, on our ability to operate without infringing the intellectual property rights of others. Third parties may, in the future, claim our or our business partners’ current or future copyrights, patents, trademarks, technologies, business methods, or processes infringe on their intellectual property rights or challenge the validity of our or our business partners’ intellectual property rights. We may be subject to intellectual property infringement claims that would be costly to defend and could limit our ability to use certain critical copyrights, trademarks, or business methods.

The defense and prosecution, if necessary, of intellectual property suits, interference proceedings, and related legal and administrative proceedings can become very costly and may divert our management personnel from their normal responsibilities. We may not prevail in any of these suits or proceedings. An adverse determination of any litigation or defense proceedings could require us to pay substantial compensatory and punitive damages, could restrain us from using critical copyrights, patents, trademarks, business methods, or processes, and could result in us losing or not gaining valuable intellectual property rights.

Furthermore, due to the voluminous amount of discovery frequently conducted in connection with intellectual property litigation, some of our confidential information could be disclosed to competitors during this type of litigation. In addition, public announcements of the results of hearings, motions, or other interim proceedings or developments in the litigation could be perceived negatively by investors and thus have an adverse effect on the trading price of the ADSs.

We require a significant amount of cash to fund our operations and business expansion; if we cannot obtain additional capital on terms satisfactory to us when we need it, our growth prospects and future profitability may be materially and adversely affected.

We require a significant amount of cash to fund our operations, including payments to the cooperating manufacturer for our products. We will also need to raise funds for the expansion of our sales and distribution channels and other investing activities so as to remain competitive.

During the fiscal year ended September 30, 2023, the Company issued 7,757,030 Ordinary Shares in private transactions for aggregate gross proceeds of approximately $9.8 million. Future expansion, market changes, or other developments may cause us to require additional funds. Our ability to obtain external financing is subject to a number of uncertainties, including:

•        our future financial condition, results of operations, and cash flows;

•        the state of global credit markets;

•        general market conditions for financing activities by companies in our industry; and

•        economic, political, and other conditions in Japan and elsewhere.

If we are unable to obtain funding in a timely manner or on commercially acceptable terms, or at all, our growth prospects and future profitability may be materially and adversely affected.

To sustain our ability to support our operating activities, we may have to consider supplementing our available sources of funds through the following sources:

•        cash generated from operations;

•        other available sources of financing from Japanese banks and other financial institutions; and

•        financial support from the Company’s related parties and shareholders.

However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. All of these factors may raise substantial doubt about the ability of the Company to continue as a going concern. The audited financial statements for the fiscal years ended September 30, 2023 and 2022 have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to continue as a going concern. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

Our independent registered public accounting firm included an explanatory paragraph in its audit report on our financial statements as of and for the fiscal years ended September 30, 2023 and 2022, stating that we did not have a sufficient cash balance as of September 30, 2023 and 2022, which raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to raise additional capital. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all. Further, if we cannot continue as a going concern, we may be forced to discontinue operations and liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements, which would cause holders of our ordinary shares and our shareholders to lose all or a part of their investment.

Our current insurance policies may not provide adequate levels of coverage against all claims and we may incur losses that are not covered by our insurance.

We believe we maintain insurance coverage that is customary for businesses of our size and type. However, we may be unable to insure against certain types of losses or claims, or the cost of such insurance may be prohibitive. Uninsured losses or claims, if they occur, could have a material adverse effect on our reputation, business, results of operations, financial condition, or prospects.

Our operations are subject to natural disasters, adverse weather conditions, operating hazards, and labor disputes.

We may experience earthquakes, floods, typhoon, power outages, labor disputes, or similar events beyond our control that would affect our operations. Our cooperating manufacturer’s manufacturing processes involve the use of hazardous equipment, such as furnaces, and it also use, store, and generate volatile and otherwise dangerous chemicals and wastes during its manufacturing processes, which are potentially destructive and dangerous if not properly handled or in the event of uncontrollable or catastrophic circumstances, including operating hazards, fires and explosions, natural disasters, adverse weather conditions, and major equipment failures, for which we cannot obtain insurance at a reasonable cost or at all.

In addition, since our cooperating manufacturer manufactures our electric light commercial vehicles in its factories in Hangzhou, China, the occurrence of any natural disaster, unanticipated catastrophic event, or unexpected accident in this location could result in production curtailments, shutdowns, or periods of reduced production, which could significantly disrupt our business operations, cause us to incur additional costs, and affect our ability to deliver our products to our customers as scheduled, which could adversely affect our business, financial condition, and results of operations.

Our results could be harmed if compliance with new environmental regulations becomes too burdensome.

The manufacturing processes of our cooperating manufacturer may result in the creation of hazardous and/or toxic wastes, including various gases, epoxies, inks, solvents, and other organic wastes. Our cooperating manufacturer is subject to Chinese governmental regulations related to the use, storage, and disposal of such hazardous wastes. The amounts of their hazardous waste may increase in the future as the manufacturing operations increase, and therefore, their cost of compliance is likely to increase. Although we believe it is operating in compliance with applicable environmental laws, there is no assurance that it will be in compliance consistently as such laws and regulations, or their interpretation and implementation, change. Failure to comply with environmental regulations could result in fines, suspension, or halting production or closure of manufacturing operations, eventually harming our business. Additionally, our cooperating manufacturer may incur substantial costs to comply with future regulations, which may also adversely impact our results of operations.

In addition, we are required by certain Japanese governmental regulations to retrieve and recycle specified materials and components such as airbags. Retrieving and recycling such specified materials may be costly, and we may thus incur substantial costs to comply with these regulations, which may also adversely impact our results of operations.

We may not be able to manage our expansion of operations effectively.

In anticipation of the growth in demand for our electric light commercial vehicles, we plan to expand our business operations significantly. Our ability to meet existing commitments to our customers depends on the successful and timely implementation of our expansion plan. If we are unable to fulfill our commitments to customers or customer orders on a timely basis or at all, we may lose our customers and our reputation may be damaged.

The success of our business expansion and operational growth depends on the improvement of our operational and financial systems, enhancement of our internal procedures and controls, and development of the business alliance with existing and potential business partners. If we fail to improve our operational and financial systems, enhance our internal procedures and controls and risk monitoring and management system, and develop the business alliance with existing and potential business partners, we may not be able to take advantage of growth opportunities or identify unfavorable business trends, administrative oversights, or other risks that could materially and adversely affect our business, prospects, financial condition, and results of operations. Furthermore, our management will be required to maintain and expand our relationships with our customers, business partners, and other third parties. We cannot assure you that our current and planned operations, personnel, systems, internal procedures, and controls will be adequate to support our future growth. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies, or respond to competitive pressures.

A resurgence of COVID-19 may adversely impact our business, results of operations, and cash flows.

From 2019 to 2022, the COVID-19 pandemic resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus. The possibility of future resurgences of the COVID-19 pandemic or similar events may prompt governments across the world to implement similar actions. Such governmental actions, together with the development of the COVID-19 pandemic, could materially disrupt our business and operations, slow down the overall economy, curtail consumer spending, and make it difficult to adequately staff our operations.

Although we are fully dependent on our cooperating manufacturer, Cenntro, to manufacture our products in its factory in China, our operating results were not materially affected by the COVID-19 pandemic and the implementation of significant governmental measures in China during the fiscal years ended September 30, 2021 and 2022, since our business was still at the early preparatory stage during such periods. Since September 30, 2022, and as of the date of this prospectus, our operations have not been affected by the COVID-19 pandemic. As our business has currently entered into the rapid growth stage, our business and results of operation may be significantly adversely impacted if a resurgence of the COVID-19 pandemic occurs in China and the Chinese government decides to implement significant governmental measures similar to the zero-COVID policy it applied from 2020 to early December 2022, which might lead to lockdown or operating restrictions of Cenntro’s manufacturing factory in China and thus the disruption of our supply chain.

Although the spread of COVID-19 appears to be under control currently, the extent to which the COVID-19 pandemic may impact our future financial results will depend on future developments, such as the implementation of governmental measures, new information on the effectiveness of the mitigation strategies, the duration, spread, severity, and resurgence of COVID-19 and any COVID-19 variants, the related travel advisories and restrictions, the overall impact of the COVID-19 pandemic on the global economy and capital markets, and the efficacy of COVID-19 vaccines, which may also take an extended time to be widely and adequately distributed, all of which remain highly uncertain and unpredictable. Given this uncertainty, we are currently unable to quantify the expected impact of the COVID-19 pandemic on our future operations, financial condition, liquidity, and results of operations if the current situation continues.

Our business, financial condition, and results of operations could be materially adversely affected if the exchange rate between U.S. dollars and JPY changes.

Our products sold and services provided to our customers are denominated in JPY, while the currency we pay to our cooperating manufacturer is the U.S. dollar. The value of JPY has been subject to significant fluctuations with respect to the U.S. dollar in the past and may be subject to significant fluctuations in the future. As a result, we face

exposure to foreign currency exchange rate fluctuations. The value of JPY against U.S. dollars may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the Japanese government. We may not be able to implement the pricing policy that raises the prices of our products or services generally in line with local inflation, thereby helping to mitigate the effects of devaluations of JPY in the future, or future exchange rate fluctuations may have a material adverse effect on its ability to pay or purchase. If the exchange rate between JPY and U.S. dollars fluctuates in an unanticipated manner, our business, financial condition, and results of operations could be materially adversely affected.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition, and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to continuing market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

The military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union and other countries, including Japan, against Russia. Additional potential sanctions and penalties have also been proposed or threatened. In addition, if China actively involves itself in or extends support to Russia, there is a potential risk of sanctions and penalties being imposed on China as well by the United States, European Union, and other countries against Russia, including Japan. Because all of our products are produced by our cooperating manufacturer, Cenntro, in its factory in China and are sold in Japan, if Japan imposes sanctions and penalties on China, we may be limited or prohibited from importing our products into Japan, leading to a significant disruption of our supply chain and operation and massive adverse impact on business, results of operations, and financial condition. Although our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine to date, it is impossible to predict the extent to which our operations, or those of our cooperating manufacturer and other business partners, will be impacted in the short and long term, or the ways in which the conflict may impact our business, including sanctions and penalties being levied by Japan against China. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this prospectus.

We operate in a competitive market and our failure to compete effectively could adversely affect our results of operations.

The Japanese electric light commercial vehicles market is oligopolistic, as only three companies sell electric light commercial vehicles in Japan — Mitsubishi Motors Corporation, ASF Co. Ltd. and us. We believe that competing with Mitsubishi Motors Corporation and ASF Co. Ltd. has caused us limited adverse impact as of the date of this prospectus. See “Business — Competition.” However, our current or future competitors may have longer operating histories, greater brand recognition, better supplier relationships, larger customer bases, more cost-effective fulfillment capabilities, or greater financial, technical, or marketing resources than we do. Competitors may leverage their brand recognition, experience, and resources to compete with us in a variety of ways, including investing more heavily in research and development and making acquisitions for the expansion of their products. Some of our competitors may be able to secure more favorable terms from suppliers, devote greater resources to marketing and promotional campaigns, and adopt more aggressive pricing or inventory policies than us. In addition, new and enhanced technologies may increase the competition in the Japanese electric light commercial vehicles market. Increased competition may reduce our profitability, market share, customer base, and brand recognition. There can be no assurance that we will be able to compete successfully against current or future competitors, and such competitive pressures could have a material adverse effect on our business, financial condition, and results of operations.

Cybersecurity incidents may materially and adversely affect our business.

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in recent years. Our HW ELECTRO Platform Services, which was launched in September 2023, enables us to collect and analyze big data, such as driving data, routing data, and vehicle conditions, to evaluate the performance of each driver

for the customer’s reference. See “Business — Growth Strategies — Diversify Revenue Sources.” This could subject us to cybersecurity risks. To reduce security concerns, we will rely on commercially available systems, software, tools, and monitoring to provide security for processing, transmission, and storage of confidential information.

Despite the security measures and ongoing vigilance, we will have in place to protect sensitive information, our systems and those of our third-party service providers may be vulnerable to security breaches, hacker attacks, vandalism, computer viruses, loss or misplacement of data, human error, or other malfunctions and attacks. Such breaches may compromise our network and information stored therein may be accessed, disclosed, lost, or stolen. Advances in computer and software capabilities and encryption technology, new tools, and other developments may increase the risk of a breach or compromise. Technological interruptions would also disrupt our operations, including our ability to timely deliver and track product or service orders, project inventory requirements, manage our supply chain and otherwise adequately service our customers or disrupt our customers’ ability to use our products or services. In the event we experience significant disruptions, we may be unable to repair our systems in an efficient and timely manner and such events may disrupt or reduce the efficiency of our entire operation for a prolonged period. The occurrence of these incidents could result in diminished internal and external reporting capabilities, impaired ability to process transactions, harm to our control environment, diminished employee productivity, and unanticipated increases in costs, including substantial legal costs in connection with the defending of any lawsuits that may arise from such incidents.

We are increasingly dependent on complex information technology to manage our infrastructure. Our information systems require an ongoing commitment of significant resources to maintain, protect and enhance our existing systems. Failure to maintain or protect our information systems and data integrity effectively could negatively affect our business, financial condition and results of operations.

Our substantial indebtedness could materially and adversely affect our business, financial condition, results of operations, and cash flows.

As of September 30, 2023, we had $3,921,976 in loans payable to financial institutions, bank loans, operating and finance leases obligations and amounts due to a shareholder.

The amount of our debt could have significant consequences on our operations, including:

•        reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions, and other general corporate purposes as a result of our debt service obligations;

•        limiting our ability to obtain additional financing;

•        limiting our flexibility in planning for, or reacting to, changes in our business, the industry in which we operate, and the general economy;

•        increasing the cost of any additional financing; and

•        limiting the ability of our subsidiaries to pay dividends to us for working capital or return on our investment.

Any of these factors and other consequences that may result from our substantial indebtedness could have a material adverse effect on our business, financial condition, results of operations, and cash flows impacting our ability to meet our payment obligations under our debts. Our ability to meet our payment obligations under our outstanding indebtedness depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control.

We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.

We have entered into a number of transactions with related parties, including our directors and an executive officer. See “Related Party Transactions” on page 96. We may in the future enter into additional transactions with entities in which members of our board of directors and other related parties hold ownership interests. Transactions with the entities in which related parties hold ownership interests present potential for conflicts of interest, as the interests of these entities and their shareholders may not align with the interests of the Company and our unaffiliated

shareholders with respect to the negotiation of, and certain other matters related to, our purchases from and other transactions with such entities. Conflicts of interest may also arise in connection with the exercise of contractual remedies under these transactions, such as default.

Nevertheless, we may have achieved more favorable terms if such transactions had not been entered into with related parties. These transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations or may result in government enforcement actions other litigation.

The regulatory regimes governing electric vehicles are uncertain, and new regulations or policies may materially adversely affect the development of electric vehicles.

We operate in the electric vehicle industry, which is subject to certain laws and regulations in Japan. See “Regulations.” Our industry is relatively new and evolving, and relevant laws and regulations in Japan involve significant uncertainties. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violation of applicable laws and regulations. New or changing laws and regulations or interpretations of existing laws and regulations may materially and adversely impact the development and growth of our industry, which could adversely affect our business.

We rely heavily on our sole manufacturer, Cenntro, to manufacture our products in its factories in China. This subjects us to economic, operational, regulatory and legal risks specific to China.

We currently rely on our cooperating manufacturer, Cenntro, to manufacture all of our electric light commercial vehicles in its factories in China. See “Business — Manufacturing.” We expect to continue relying solely on Cenntro in the next five years. This increases our sensitivity to the economic, operational and legal risks specific to China. For example, China’s economy differs from the economies of most developed countries in many aspects, including, but not limited to, the degree of government involvement, level of corruption, control of capital investment, reinvestment control of foreign exchange, control of intellectual property, allocation of resources, growth rate and development level. Although the Chinese government has implemented measures since the late 1970s emphasizing the utilization of market forces for economic reform, including the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, which are generally viewed as a positive development for foreign business investment, a substantial portion of productive assets in China is still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over economic growth in China through allocating resources, controlling payments of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

It is unclear whether and how our current or future business, prospects, financial condition or results of operations may be affected by changes in China’s economic, political and social conditions and in its laws, regulations and policies. In addition, many of the economic reforms carried out by the Chinese government are unprecedented or experimental and are expected to be refined and improved over time. This refining and improving process may not necessarily have a positive effect on our operations and business development.

Additionally, the legal system in China is not fully developed and there are inherent uncertainties that may affect the protection afforded to Cenntro for its business and activities in China that are governed by the Chinese laws and regulations, which might impact our operations and business development. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since administrative and court authorities in China have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection for us than in more developed legal systems. These uncertainties may impede our ability to enforce contracts and could materially and adversely affect our business, financial condition and results of operations.

We rely on third-party platforms to operate our first own original designed product, PUZZLE, any interruption of these platforms may cause adverse effect on our business.

In the first half of 2025, we plan to launch a new model of electric light commercial vehicle — PUZZLE, a commercial van to be made for the Japanese market. PUZZLE will be our first own original designed product. To make PUZZLE a user-friendly vehicle to operate, we have designed PUZZLE to be compatible with some supportive

software such as Apple CarPlay and Android Auto, as well as our own developed supporting system — the HW ELECTRO Platform Service. See “Business—Growth Strategies—Develop our own original designed products.” Our business would be harmed if:

•        third-party supportive software developers discontinue or limit our access to their platforms;

•        governments or private parties, such as internet providers, impose bandwidth restrictions or increase charges or restrict or prohibit access to those platforms;

•        Apple CarPlay and Android Auto start to charge fees;

•        the platforms modify their algorithms, communication channels available to developers, respective terms of service or other policies;

•        the platforms decline in popularity;

•        the platforms adopt changes or updates to their technology that impede integration with other software systems or otherwise require us to modify our technology or update our system in order to ensure our customers can continue to operate PUZZLE with ease;

•        the platforms block or limit access to Japanese customers; and

•        we are unable to comply with the platform providers’ terms of service.

In addition, if we do not adhere to the terms and conditions of its platform providers, the platform providers may take actions to limit the operations of, suspend or remove our operations from the platform, and/or we may be exposed to liability or litigation.

If any events described above or similar to those described above were to occur on a short-term or long-term basis, they could have a material adverse effect on our brands and reputation, as well as our business, financial condition and results of operations.

Risks Relating to this Offering and the Trading Market

An active trading market for our Ordinary Shares or the ADSs may not develop.

We have applied to list the ADSs on NYSE American. We have no current intention to seek a listing for our Ordinary Shares on any stock exchange. Prior to this offering, there has not been a public market for the ADSs or our Ordinary Shares, and we cannot assure you that an active public market for the ADSs will develop or be sustained after this offering. If an active public market for the ADSs does not develop following the completion of this offering, the market price and liquidity of the ADSs may be materially and adversely affected. The initial public offering price of the ADSs will be determined through negotiation between us and the underwriters, and this price does not necessarily reflect the price at which investors in the market will be willing to buy and sell the ADSs following the completion of this offering. Investors in this offering may experience a significant decrease in the market value of their investments, regardless of our operating performance or prospects.

You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares underlying the ADSs purchased.

The initial public offering price of the ADSs is substantially higher than the as adjusted net tangible book value per Ordinary Share underling the ADS. Consequently, when you purchase the ADSs in the offering, upon completion of the offering you will incur immediate dilution of $2.75 per Ordinary Share underlying the ADS, based on the assumed initial public offering price of $3.00 per ADS, and assuming no exercise of the Representative’s over-allotment option. See “Dilution” beginning on page 42 of this prospectus. In addition, you may experience further dilution to the extent that additional Ordinary Shares or ADSs are issued upon exercise of outstanding options we may grant from time to time.

Future issuances of the ADSs or Ordinary Shares or securities convertible into, or exercisable or exchangeable for, our Ordinary Shares, or the expiration of lock-up agreements that restrict the issuance of new ADSs or Ordinary Shares or the trading of outstanding ADSs or Ordinary Shares, could cause the market price of the ADSs to decline and would result in the dilution of your holdings.

Future issuances of the ADSs or our Ordinary Shares or securities convertible into, or exercisable or exchangeable for, our Ordinary Shares, or the expiration of lock-up agreements that restrict the issuance of new ADSs or Ordinary Shares or the trading of outstanding ADSs or Ordinary Shares, could cause the market price of the ADSs to decline. We cannot predict the effect, if any, of future issuances of our securities, or the future expirations of lock-up agreements, on the price of the ADSs. In all events, future issuances of the ADSs or our Ordinary Shares would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of the ADSs. In connection with this offering, we will enter into a lock-up agreement that prevents us, subject to certain exceptions, from offering additional shares of capital stock for up to six months from the date of this prospectus, as further described in the section titled “Underwriting.” In addition to any adverse effects that may arise upon the expiration of these lock-up agreements, the lock-up provisions in these agreements may be waived, at any time and without notice. If the restrictions under the lock-up agreements are waived, the ADSs or our Ordinary Shares may become available for resale, subject to applicable law, including without notice, which could reduce the market price for the ADSs.

After the completion of this offering, share ownership will remain concentrated in the hands of our management, who will continue to be able to exercise a direct or indirect controlling influence on us.

We anticipate that our directors and executive officers will together beneficially own approximately 41.8% of our Ordinary Shares issued and outstanding after the completion of this offering, assuming the Representative does not exercise its over-allotment option, or 41.3% assuming the Representative exercises its over-allotment option in full, in each case, excluding shares issuable upon exercise of unexercised options or the Representative’s Warrants. As a result, these shareholders, acting together, will have significant influence over all matters that require approval by our shareholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other shareholders, including those who purchase ADSs in this offering, oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our Company that other shareholders may view as beneficial.

The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price.

Sales of substantial amounts of the ADSs in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of the ADSs and could materially impair our ability to raise capital through equity offerings in the future. The ADSs sold in this offering will be freely tradable without restriction or further registration under the Securities Act, and Ordinary Shares held by our existing shareholders may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. As of the date of this prospectus, 38,074,888 of our Ordinary Shares are outstanding. There will be 3,750,000 ADSs (representing 3,750,000 Ordinary Shares) issued and outstanding immediately following the consummation of this offering, assuming no exercise of the Representative’s over-allotment option, or 4,312,500 ADSs (representing 4,312,500 Ordinary Shares), if the Representative exercises its over-allotment option in full, in each case, excluding shares issuable upon exercise of unexercised options or the Representative’s Warrants, and based on the assumed initial public offering price of $3.00. In connection with this offering, our directors and executive officers have agreed not to sell any Ordinary Shares, ADSs, or similar securities for six months after the date of this prospectus without the prior written consent of the Representative, subject to certain exceptions. However, the Representative may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”). We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. See “Underwriting” and “Ordinary Shares and ADSs Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.

If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding the ADSs, the price of the ADSs and trading volume could decline.

Any trading market for the ADSs may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of the ADSs would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of the ADSs and the trading volume to decline.

The market price of the ADSs may be volatile or may decline regardless of our operating performance, and you may not be able to resell your ADSs at or above the initial public offering price.

The initial public offering price for the ADSs will be determined through negotiations between the underwriters and us and may vary from the market price of the ADSs following this offering. If you purchase the ADSs in this offering, you may not be able to resell those ADSs at or above the initial public offering price. We cannot assure you that the initial public offering price of the ADSs, or the market price following this offering, will equal or exceed prices in privately negotiated transactions of our Ordinary Shares that have occurred from time to time prior to this offering. The market price of the ADSs may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

•        actual or anticipated fluctuations in our revenue and other operating results;

•        the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

•        actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

•        announcements by us or our competitors of significant products, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

•        price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

•        the trading volume of the ADSs on NYSE American;

•        sales of the ADSs or Ordinary Shares by us, our executive officers and directors, or our shareholders or the anticipation that such sales may occur in the future;

•        rumors and market speculation involving us or other companies in our industry;

•        developments or disputes concerning our intellectual property or other proprietary rights;

•        announced or completed acquisitions of businesses or technologies by us or our competitors;

•        new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

•        changes in tax laws and regulations as well as accounting standards, policies, guidelines, interpretations or principles;

•        any significant change in our management;

•        lawsuits threatened or filed against us; and

•        other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

If we fail to implement and maintain an effective system of internal control, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.

Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending September 30, 2024. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could, in turn, limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations, and civil or criminal sanctions. We may also be required to restate our financial statements for prior periods.

We will incur substantial increased costs as a result of being a public company.

Upon consummation of this offering, as a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and NYSE American, impose various requirements on the corporate governance practices of public companies.

Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of the ADSs that is held by non-affiliates equals or exceeds $700 million as of the prior March 31, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

After we are no longer an “emerging growth company,” or until five years following the completion of this offering, whichever is earlier, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we will be required to increase the number of independent directors and adopt

policies regarding internal controls and disclosure controls and procedures. In addition, investors may find our ADSs less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our ADSs less attractive as a result, there may be a less active trading market for our ADSs and our stock price may decline and/or become more volatile.

We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition, or prospects, making it difficult for prospective investors to assess the rapidly changing value of the ADSs.

Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with a number of recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume, and less liquidity than large-capitalization companies. In particular, the ADSs may be subject to rapid and substantial price volatility, low volumes of trades, and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition, or prospects, making it difficult for prospective investors to assess the rapidly changing value of the ADSs.

In addition, if the trading volumes of the ADSs are low, persons buying or selling in relatively small quantities may easily influence prices of the ADSs. This low volume of trades could also cause the price of the ADSs to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of the ADSs may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of the ADSs. As a result of this volatility, investors may experience losses on their investment in the ADSs. A decline in the market price of the ADSs also could adversely affect our ability to issue additional ADSs or Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in the ADSs will develop or be sustained. If an active market does not develop, holders of the ADSs may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the operation, development, and growth of our business and, as a result, we do not expect to declare or pay any dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income. Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs. There is no guarantee that the ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs.

Our management has broad discretion to determine how to use the net proceeds raised in this offering and may use them in ways that may not enhance our results of operations or the price of the ADSs.

We anticipate that we will use the net proceeds from this offering for (i) the purchase of electric vehicles and other general corporate purposes, (ii) marketing, (iii) further research and development to update and upgrade the HW ELECTRO Platform Service, and (iv) research and development of “PUZZLE,” our original designed vehicle to be made for the Japanese market. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of the ADSs. The failure of our management to apply these funds effectively could harm our business and financial condition. We may invest the net proceeds from this offering in a manner that does not produce income, or that loses value.

If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have, including outcomes that could be less favorable to the plaintiff(s) in any such action. Nevertheless, if this jury trial waiver is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation, or provision of the deposit agreement or the ADSs serves as a waiver by any holder or beneficial owner of ADSs (including purchasers of the ADSs in the secondary market) or by us or the depositary of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

Holders of ADSs may not receive distributions on our Ordinary Shares or any value for them if it is illegal or impractical to make them available to such holders.

The depositary of the ADSs will agree to pay holders of ADSs the cash dividends or other distributions it or the custodian for the ADSs receives on the Ordinary Shares or other deposited securities after deducting its fees and expenses. Holders of ADSs will receive these distributions in proportion to the number of our Ordinary Shares that such ADSs represent. However, the depositary will not be responsible for making such payments or distributions if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act, but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit distributions on our Ordinary Shares to holders of ADSs. This means that holders of ADSs may not receive the distributions we make on our Ordinary Shares if it is illegal or impractical to make them available to such holders. These restrictions may materially reduce the value of the ADSs.

Holders of ADSs may be subject to limitations on transfer of their ADSs.

ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer, or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We may amend the deposit agreement without consent from holders of ADSs and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or withdrawing the underlying Ordinary Shares.

We may agree with the depositary to amend the deposit agreement without consent from holders of ADSs. If an amendment increases fees to be charged to ADS holders or prejudices a material right of ADS holders, it will not become effective until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, ADS holders are considered, by continuing to hold their ADSs, to have agreed to the amendment and to be bound by the amended deposit agreement. If holders of ADSs do not agree with an amendment to the deposit agreement, their choices will be limited to selling the ADSs or withdrawing the underlying Ordinary Shares. No assurance can be given that a sale of ADSs could be made at a price satisfactory to the holder in such circumstances.

We are incorporated in Japan, and it may be more difficult to enforce judgments obtained in courts outside Japan.

We are incorporated in Japan as a joint-stock corporation with limited liability. All of our directors are non-U.S. residents, and a substantial portion of our assets and the personal assets of our directors and executive officers are located outside the United States. As a result, when compared to a U.S. company, it may be more difficult for investors to effect service of process in the United States upon us or to enforce against us, our directors or executive officers, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal or state securities

laws of the U.S. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the United States. See “Enforceability of Civil Liabilities.”

Dividend payments and the amount you may realize upon a sale of our Ordinary Shares or the ADSs that you hold will be affected by fluctuations in the exchange rate between the U.S. dollar and JPY.

Cash dividends, if any, in respect of our Ordinary Shares represented by the ADSs will be paid to the depositary in JPY and then converted by the depositary into U.S. dollars, subject to certain conditions and terms of the deposit agreement. Accordingly, fluctuations in the exchange rate between JPY and the U.S. dollar will affect, among other things, the amounts a holder of ADSs will receive from the depositary in respect of dividends, the U.S. dollar value of the proceeds that a holder of ADSs would receive upon sale in Japan of our Ordinary Shares obtained upon surrender of ADSs and the secondary market price of ADSs. Such fluctuations will also affect the U.S. dollar value of dividends and sales proceeds received by holders of our Ordinary Shares.

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting, and other expenses that we would not incur as a foreign private issuer.

We expect to qualify as a foreign private issuer upon the completion of this offering. As a foreign private issuer, we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our executive officers, directors, and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we will not be required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer immediately following the completion of this offering, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and intend to take advantage of exemptions from certain NYSE American listing standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

The NYSE American LLC Company Guide requires listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, Japan, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. In addition, the NYSE American LLC Company Guide requires U.S. domestic issuers to have an audit committee and a compensation committee and a nominating committee composed entirely of independent directors, and an audit committee with a minimum of three members. While we, as a foreign private issuer, are not subject to these requirements, we still choose to have a majority of our board consist of independent directors, have a compensation committee, a nominating committee composed entirely of independent directors, and an audit committee with a minimum of three members who are independent directors. Nevertheless, investors may still have less protection than they would have if we were a domestic issuer. The NYSE American LLC Company Guide may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans and certain ordinary share issuances. We intend to comply with the requirements of the NYSE American LLC Company Guide in determining whether shareholder approval is required on such matters.

If we cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of NYSE American, the ADSs may not be listed or may be delisted, which could negatively impact the price of the ADSs and your ability to sell them.

We have applied to list the ADSs on NYSE American upon consummation of this offering. We cannot assure you that we will be able to meet those initial listing requirements at that time. Even if the ADSs are listed on NYSE American, we cannot assure you that the ADSs will continue to be listed on NYSE American. We will not proceed with this offering if the ADSs are not approved for listing on NYSE American.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results, and financial needs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

•        assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;

•        our ability to execute our growth strategies, including our ability to meet our goals;

•        current and future economic and political conditions;

•        our capital requirements and our ability to raise any additional financing which we may require;

•        our ability to attract customers and further enhance our brand recognition;

•        our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business;

•        the COVID-19 pandemic; and

•        other assumptions described in this prospectus underlying or relating to any forward-looking statements.

We describe certain material risks, uncertainties, and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Industry Data and Forecasts

This prospectus contains references to market data and industry forecasts and projections, which were obtained or derived from publicly available information, reports of governmental agencies, market research reports, and industry publications and surveys. These sources generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe such information to be accurate, we have not independently verified the data from these sources. However, we acknowledge our responsibility for all disclosures in this prospectus. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and additional uncertainties and risks regarding the other forward-looking statements in this prospectus due to a variety of factors, including those described in this section, the section entitled “Risk Factors,” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the forecasts and estimates.

ENFORCEABILITY OF CIVIL LIABILITIES

We are a joint-stock corporation with limited liability organized under Japanese law. All of our executive officers and directors reside in Japan and significantly all of our assets and the assets of such persons are located outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States or elsewhere outside Japan upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

USE OF PROCEEDS

Based upon the assumed initial public offering price of $3.00 per ADS, we will receive net proceeds from this offering, after deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us, of approximately $8,422,212, assuming the Representative does not exercise its over-allotment option, and $9,945,181, if the Representative exercises its over-allotment option in full.

We plan to use the net proceeds we receive from this offering for the following purposes:

•        approximately 50% for the purchase of electric vehicles and other general corporate purposes;

•        approximately 30% for research and development of “PUZZLE”;

•        approximately 10% for marketing; and

•        approximately 10% for further research and development to update and upgrade the HW ELECTRO Platform Service.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have flexibility and discretion to apply the net proceeds of this offering. See “Risk Factors — Risks Relating to this Offering and the Trading Market — Our management has broad discretion to determine how to use the net proceeds raised in this offering and may use them in ways that may not enhance our results of operations or the price of the ADSs” beginning on page 30 of this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

DIVIDEND POLICY

Since our inception, we have not declared or paid cash dividends on our Ordinary Shares. Any decision to pay dividends in the future will be subject to a number of factors, including our financial condition, results of operations, the amount of our retained earnings, capital demands, general business conditions, and other factors our board of directors may deem relevant. We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the operation, development, and growth of our business, and, as a result, we do not expect to pay any dividends in the foreseeable future. Consequently, we cannot give any assurance that any dividends may be declared and paid in the future.

If declared, holders of our outstanding shares on a dividend record date will be entitled to the full dividend declared without regard to the date of issuance of the shares or any subsequent transfer of the shares. Payment of declared annual dividends in respect of a particular year, if any, will be made in the following year after approval by our shareholders at the annual general meeting of shareholders, subject to certain provisions of our articles of incorporation and the Companies Act. See “Description of Share Capital — Restriction on Distribution of Surplus” beginning on page 101 of this prospectus.

Subject to the terms of the deposit agreement for the ADSs, you will be entitled to receive dividends on our Ordinary Shares represented by ADSs to the same extent as the holders of our Ordinary Shares, less the fees and expenses payable under the deposit agreement in respect of, and any Japanese tax applicable to, such dividends. See “Material Income Tax Consideration — Japanese Taxation” and “Description of American Depositary Shares.” The depositary will generally convert JPY it receives into U.S. dollars and distribute the U.S. dollar amounts to holders of ADSs. Cash dividends on our Ordinary Shares, if any, will be paid in JPY.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2023:

•        on an actual basis; and

•        on an as adjusted basis to reflect the issuance and sale of Ordinary Shares in the form of ADSs by us in this offering based on the assumed initial public offering price of $3.00 per ADS, after deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us, and assuming no exercise of the Representative’s over-allotment option.

You should read this capitalization table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the related notes appearing elsewhere in this prospectus.

____________

(1)      The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. We estimate that such net proceeds will be approximately $8,422,212, assuming the Representative does not exercise its over-allotment option, and $9,945,181, if the Representative exercises its over-allotment option in full.

(2)      On July 20, 2023, the Company’s board of directors approved a share split of the Company’s outstanding Ordinary Shares and Series A convertible preferred shares at a ratio of 1:2, which was based on a record date of August 31, 2023 and became effective on September 1, 2023, resulting in 38,074,888 Ordinary Shares being issued and outstanding and 2,857,142 Series A convertible preferred shares being issued after the share split. These shares are presented on a retroactive basis to reflect the share split.

A $1.00 increase (decrease) in the assumed initial public offering price of $3.00 per ADS, would increase (decrease) each of total shareholders’ equity and total capitalization by $3,384,375, if the over-allotment option is not exercised, or $5,415,000 if the over-allotment option is exercised in full, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts, non-accountable expense allowance and estimated expenses payable by us. An increase (decrease) of 1,000,000 ADSs in the number of ADSs offered by us would increase (decrease) each of total shareholders’ equity and total capitalization by $2,707,500, if the over-allotment option is not exercised, or $4,230,468 if the over-allotment option is exercised in full, based on the assumed initial public offering price of $3.00 per ADS, and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated expenses payable by us.

DILUTION

If you invest in the ADSs, your interest will be diluted for each ADS you purchase to the extent of the difference between the initial public offering price per ADS and our net tangible book value per Ordinary Share underlying the ADS after this offering. Dilution results from the fact that the initial public offering price per ADS is substantially in excess of the net tangible book value per Ordinary Share attributable to the existing shareholders for our presently outstanding Ordinary Shares.

Our net tangible book value as of September 30, 2023 was $1,917,297, or $0.05 per Ordinary Share and $0.05 per ADS. Net tangible book value represents the amount of our total tangible assets, less the amount of our total liabilities. Dilution is determined by subtracting net tangible book value per Ordinary Share, after giving effect to the additional proceeds we will receive from this offering, based on the assumed initial public offering price of $3.00 per ADS, and after deducting underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us.

After giving effect to our sale of 3,750,000 ADSs offered in this offering based on the assumed initial public offering price of $3.00 per ADS after deduction of the estimated underwriting discounts, the non-accountable expense allowance and the estimated offering expenses payable by us, and assuming no exercise of the over-allotment option, our as adjusted net tangible book value as of September 30, 2023, would have been $10,339,509, or $0.25 per Ordinary Share and $0.25 per ADS. This represents an immediate increase in net tangible book value of $0.20 per Ordinary Share and $0.20 per ADS to the existing shareholders, and an immediate dilution in net tangible book value of $2.75 per Ordinary Share and $2.75 per ADS to investors purchasing ADSs in this offering. The as-adjusted information discussed above is illustrative only.

A $1.00 increase (decrease) in the assumed initial public offering price of $3.00 per ADS would increase (decrease) our as adjusted net tangible book value after giving effect to this offering by $3,384,375, the as adjusted net tangible book value per Ordinary Share and per ADS after giving effect to this offering by $0.08 per Ordinary Share and $0.08 per ADS, and decrease (increase) the dilution in as adjusted net tangible book value per Ordinary Share and per ADS to new investors in this offering by $2.67 per Ordinary Share and $2.67 per ADS, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

An increase (decrease) of 1,000,000 ADSs in the number of ADSs offered by us would increase (decrease) our as adjusted net tangible book value after giving effect to this offering by $2,707,500, increase (decrease) the as adjusted net tangible book value per Ordinary Share and per ADS after giving effect to this offering by $0.06 per Ordinary Share and $0.06 per ADS, and decrease (increase) the dilution in as adjusted net tangible book value per Ordinary Share and per ADS to new investors in this offering by $2.70 per Ordinary Share and $2.70 per ADS, based on the initial public offering price of $3.00 per ADS, and after deducting underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us.

The following tables illustrate such dilution:

CORPORATE HISTORY AND STRUCTURE

Corporate History

HW ELECTRO, was incorporated in Koto-ku, Tokyo, Japan on May 24, 2019 as a joint-stock corporation (kabushiki kaisha) with limited liability.

Our Corporate Structure

The following chart illustrates our corporate structure as of the date of this prospectus and upon completion of this offering based on 38,074,888 of our Ordinary Shares outstanding as of the date of this prospectus and 3,750,000 ADSs to be sold in this offering, assuming no exercise of the Representative’s over-allotment option:

____________

(1)      Represents 15,954,342 Ordinary Shares held by 66 shareholders of our Company, each of which holds less than 5% of our Ordinary Shares, as of the date of this prospectus.

(2)      The percentage is based upon 38,074,888 Ordinary Shares issued and outstanding as of the date of this prospectus and excludes any Ordinary Shares issuable upon exercise of outstanding options.

For details of our principal shareholders’ ownership, please refer to the beneficial ownership table in “Principal Shareholders.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this prospectus. This discussion and analysis and other parts of this prospectus contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this prospectus. You should carefully read the “Risk Factors” section of this prospectus to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview of Our Business

HW Electro Co., Ltd incorporated on May 24, 2019 under the Companies Act of Japan. The Company is based in Japan and is principally engaged in the business of importing and selling high-performance fully electric light commercial vehicles. The electric light commercial vehicles we sell belong to the category of “light commercial vehicles,” which are commercial carrier vehicles with a gross vehicle weight of no more than 3,500 kilograms and are targeted at corporate customers.

We sell our products to commercial markets through direct sales as well as through a network of affiliated car dealers. In addition, we have completed the initial development of the HW ELECTRO Platform Service and launched it to all of our customers in September 2023. The HW ELECTRO Platform Service is an optional supporting system that assists customers in managing the electric light commercial vehicles and their drivers, to corporate customers who have purchased our electric light commercial vehicles.

To target commercial markets, we commenced selling our first imported vehicle, the model ELEMO, in April 2022. In July 2022, we started selling a new model ELEMO-K.

We are continuing to import and sell high-performance electric light commercial vehicles. Since June 2023, we have commenced the sales of a new model called “ELEMO-L,” which is van type model. While we have our primarily targeted corporate customers, we believe that the ELEMO-L can be used as recreational camping vehicles, which we expect may enable us to increase consumer market penetration. After the ELEMO-L, we plan to sell another new model of electric vehicle called “PUZZLE” in the first half of 2025, the design of which remains in progress as of the date of this prospectus. The foregoing reflects management’s experience and knowledge of the Japanese automotive industry, as well as feedback from existing and potential customers.

Key Factors Affecting the Results of Our Company’s Operations

Our financial condition and results of operation have been and will continue to be affected by a number of factors, many of which may be beyond our control, including those factors set out in the section headed ‘‘Risk Factors’’ in this prospectus and those set out below:

•        Ability to Manage a Resilient Supply Chain.

As of the date of this prospectus, we purchase electric light commercial vehicles from Cenntro, as our sole supplier of electric light commercial vehicles, pursuant to the Exclusive Basic Transaction Agreement, which entitles us to distribute electric light commercial vehicles manufactured by Cenntro exclusively in the Japanese market. Our ability to sell such vehicles is dependent on Cenntro’s continued supply of input materials, including metals, battery cells, and semiconductors. Fluctuations in the cost of materials, which includes fluctuation of the exchange rate, supply interruptions, or material shortages could materially impact our business. We may experience fluctuations in the purchase cost of electric light commercial vehicles or disruptions in the supply of electric light commercial vehicles as a consequence of any of the foregoing that could impact our financial performance.

•        Ability to Attract Customers through Distribution Partners.

Our growth will depend in large part on our ability to attract commercial customers by understanding deeply commercial customers’ needs. We are in the early stages of growth in our existing markets, and we expect to collaborate with a couple of large distributors who have sales networks nationwide in Japan. We anticipate that the expansion of sales channels will lead to additional orders and deliveries, and, as a result, increase our customer base. To achieve this, we will need to continue to motivate the distribution partners to dedicate themselves to sales of our products. We plan to provide “dealer programs” to each of the distribution partners, pursuant to which we will distribute commissions to them at certain rates. Generally, we will distribute a commission of 1% of the sold price to the distribution partner who achieves the mutually agreed upon target sales volume, a commission of 2% if one achieves 110% of the target sales volume, and a commission of 3% if one achieves more than 120% of the target sales volume. However, an inability to attract new customers through distribution partners would substantially impact our ability to grow revenue or improve our financial results.

•        Ability to Scale our Ecosystem.

We plan to scale up our ecosystem, which we expect to include the expansion of our distribution partner network, operational infrastructure, development of own original designed electric vehicles, including PUZZLE, an electric vehicle to be made for the Japanese market, and the further development of the HW ELECTRO Platform Service. The above initiatives, especially development of own original designed electric vehicles, are currently in the research and development stage, and, in particular, there is no guarantee that PUZZLE will be manufactured and brought to market. It is also uncertain whether the commercialization of the HW ELECTRO Platform Service with scalability will be successful, and we may have difficulty attracting and retaining customers in the future. We believe our long-term ability to achieve our financial targets will depend on our ability to cost effectively scale these elements.

•        Ability to Attract and Retain Talent, and Scale Our Team.

Our business has been growing rapidly, which requires more talents to join us. Any failure to retain and recruit personnel is critical to our growth, and to effectively pursue our objectives. If we are unable to retain or hire key personnel, our business and competitive position may be harmed, resulting in an adverse impact to our business, prospects, financial condition, results of operations, and cash flows.

•        Our business, financial condition, and results of operations could be materially adversely affected if the exchange rate between U.S. dollars and JPY changes.

Our products sold and services provided to our customers are denominated in JPY, while the currency we pay to our cooperating manufacturer is the U.S. dollar. The value of JPY has been subject to significant fluctuations with respect to the U.S. dollar in the past and may be subject to significant fluctuations in the future. As a result, we face exposure to foreign currency exchange rate fluctuations. The value of JPY against U.S. dollars may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the Japanese government. We may not be able to implement the pricing policy that raises the prices of our products or services generally in line with local inflation, thereby helping to mitigate the effects of devaluations of JPY in the future, or future exchange rate fluctuations may have a material adverse effect on its ability to pay or purchase. If the exchange rate between JPY and U.S. dollars fluctuates in an unanticipated manner, our business, financial condition, and results of operations could be materially adversely affected.

•        We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition, and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact

of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to continuing market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.

The military conflict in Ukraine has led to sanctions and other penalties being levied by the United States, European Union and other countries, including Japan, against Russia. Additional potential sanctions and penalties have also been proposed or threatened. In addition, if China actively involves itself in or extends support to Russia, there is a potential risk of sanctions and penalties being imposed on China as well by the United States, European Union, and other countries against Russia, including Japan. Because all of our products are produced by our cooperating manufacturer, Cenntro, in its factory in China and are sold in Japan, if Japan imposes sanctions and penalties on China, we may be limited or prohibited from importing our products into Japan, leading to a significant disruption of our supply chain and operation and massive adverse impact on business, results of operations, and financial condition. Although our business has not been materially impacted by the ongoing military conflict between Russia and Ukraine to date, it is impossible to predict the extent to which our operations, or those of our cooperating manufacturer and other business partners, will be impacted in the short and long term, or the ways in which the conflict may impact our business, including sanctions and penalties being levied by Japan against China. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this prospectus.

•        Going concern

The Company’s ability to continue as a going concern depends upon its ability to market and sell its products to generate positive operating cash flows. For the fiscal years ended September 30, 2023 and 2022, the Company reported net loss of $14,278,256 and $4,700,613, respectively. As of September 30, 2023 and 2022, the Company’s working capital deficit was $792,030 and $1,351,178, respectively. In addition, the Company had net cash outflows of $11,676,441 and $2,191,507 from operating activities for the fiscal years ended September 30, 2023 and 2022, respectively. These conditions give rise to substantial doubt as to whether the Company will be able to continue as a going concern.

To sustain its ability to support the Company’s operating activities, the Company may have to consider supplementing its available sources of funds through the following sources:

•        cash generated from operations;

•        other available sources of financing from Japan banks and other financial institutions; and

•        financial support from the Company’s related party and shareholders.

During the fiscal year ended September 30, 2023, the Company issued 7,757,030 Ordinary Shares in private transactions for aggregate gross proceeds of approximately $9.8 million. However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. All of these factors may raise substantial doubt about the ability of the Company to continue as a going concern. The audited financial statements for the fiscal years ended September 30, 2023 and 2022 have been prepared on a going concern basis and do not include any adjustments to reflect the possible future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to continue as a going concern.

Results of Operations

Our primary source of revenue is from the sale of our electric light commercial vehicles. For the fiscal years ended September 30, 2023 and 2022, we have recorded revenue of $1,435,740 and $442,789, respectively, primarily driven by the first launch and deliveries of our first imported electric light commercial vehicle, the ELEMO.

The following table shows our Statement of Operations data for the fiscal years ended September 30, 2023 and 2022. For further information regarding the results of our operations, see our financial statements appearing elsewhere in this prospectus.

Description and Analysis of Principal Components of Our Results of Operations

We expect to incur significant operating costs and expenses that will impact our future profitability, including research and development expenses as we develop our own original designed electric light commercial vehicles and the HW ELECTRO Platform Service, as well as selling and distribution expenses, as we market our electric light commercial vehicles and services as we scale our operations. Moreover, we may incur significant costs in connection with our services as we scale our business, including servicing and warranty costs. Our ability to become profitable in the future will not only depend on our ability to successfully market and sell our electric light commercial vehicles and services, but also to appropriately control costs and realize economies of scale.

The following discussion is based on our historical results of operations and may not be indicative of our future operating performance.

Revenue

During the fiscal years ended September 30, 2023 and 2022, our revenue was derived from sale of our electric light commercial vehicles as we commenced the business in April 2022. The following table sets out the revenue generated from each of our business sectors during the fiscal years ended September 30, 2023 and 2022:

Cost of revenue

During the fiscal years ended September 30, 2023 and 2022, our cost of revenue mainly consisted of direct cost of electric light commercial vehicles, indirect materials costs, subcontracting costs, operation overhead, warranty cost, inventory write-off and impairment loss in inventory valuation allowance. For the fiscal years ended September 30, 2023 and 2022, our cost of revenue amounted to approximately $1.9 million and $0.3 million, respectively.

For the fiscal year ended September 30, 2023, our cost of sale of electric light commercial vehicles and accessories increased by $1.6 million was in line with the increase in sales of electric light commercial vehicles, inventory write-off of $0.2 million and impairment loss recognized for inventory valuation allowance of $0.4 million and warranty provision of $0.07 million.

Gross (loss)/profit and gross (loss)/profit margin

The table below sets forth our Company’s gross (loss)/profit and gross (loss)/profit margin by business sector during the fiscal years ended September 30, 2023 and 2022:

For the fiscal years ended September 30, 2023 and 2022, our total gross (loss)/profit was $(0.5 million) and $0.1 million, respectively, and our gross profit margin was (32.6)% and 31.4%, respectively. Our total gross profit decrease of $(0.6 million) during the fiscal year ended September 30, 2023 was caused by the increase in inventory write-off of $0.2 million, impairment loss recognized for inventory valuation allowance of $0.4 million and warranty provision of $0.07 million.

Selling, general and administrative expenses

Our selling, general and administrative expenses primarily consist of (i) staff cost; (ii) agent service fee; (iii) transportation expenses; (iv) sundry taxes expense; (v) commission fee; (vi) professional fee expense; (vii) operating lease expense; and (viii) other miscellaneous expenses. The following table sets forth the breakdown of our general and administrative expenses for the fiscal years ended September 30, 2023 and 2022:

Our selling, general and administrative expenses amounted to approximately $6.5 million and $2.4 million for the fiscal years ended September 30, 2023 and 2022, respectively. Selling, general and administration expenses form part of the fixed running costs of the Company. In 2022, the Company launched its strategies to expand its business, which resulted in increased selling, general and administrative expenses to support the operating activities.

Agent service fee expense was mainly represented by compensation for business partners, including planning, marketing, alliances, translation work, general affairs, etc. The increase in agent service fee expense by $1.2 million is mainly attributed to the agency appointed for the introduction of the new model during the fiscal year ended September 30, 2023.

Staff costs were mainly represented by the salaries and allowances to our employees, primarily for our sales service, corporate, executive, finance and other administrative functions.

Professional fee expense was mainly represented by the financial advisory, legal and other services rendered by the professionals outside the Company. The increase in the professional fee expense by $0.8 million is mainly to engage with the professional parties in order to plan and operate the launching of the commercial strategies to expand our business, research and development activities and launch of new products.

Transportation expenses were mainly represented by the expenditure for business travel incurred.

Sundry taxes were mainly represented by the various country tax jurisdictions, including consumption tax imposed on imported goods to the Company during the year.

Commission fee expense mainly consists of fees paid to external service and bank charges etc.

Operating lease expenses consist of fees for the leasing of offices, a showroom for demonstrating our electric light commercial vehicles and the facility for the Kimitsu laboratory.

Depreciation expense is charged on our property, plant and equipment, which included (i) buildings; (ii) right-of-use assets; (iii) machinery and equipment; and (iv) vehicles. The increase in depreciation is mainly due to the amortization of newly acquired buildings and vehicles.

Miscellaneous expenses were mainly office maintenance, conference fees and office low value supplies.

Advertising expenses occur as we market our electric light commercial vehicles and services and the increase is mainly attributed to the participation of the exhibition and publication activities for the introduction of the new model during the fiscal year ended September 30, 2023.

Research and development expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including licensing fees, cost of salaries, payroll taxes and other employee benefits, and costs of subcontractors hired for and materials used for research and development activities, including testing, modifying, and prototyping our electric light commercial vehicles products and software platform service for the Japanese market. All costs associated with research and development are expensed as incurred.

Research and development expenses for the fiscal years ended September 30, 2023 and 2022 were approximately $1.1 million and $0.1 million, respectively, representing an increase by approximately $1 million for the fiscal year ended September 30, 2023. The increase in research and development expenses was due to significant software development, prototyping, and testing expenses related to the electric light commercial vehicles. As the software under development was an integral part of the electric light commercial vehicles, the software could not be marketed separately from the ultimate product or process sold to customers.

The software is not marketable as a stand-alone product, and the software development costs shall be expensed when incurred until either technological feasibility has been established for the software or all research and development activities for other components of the product or process have been completed. Hence, the Company incurred its research and development costs during the fiscal years ended September 30, 2023 and 2022, which is in compliance with ASC 730-10-25.

Share-based compensation expense

On June 9, 2021, the Company awarded options to purchase an aggregate of 3,750,000 Ordinary Shares at an exercise price of JPY40 per share (reflecting a 1:2 share split of our Ordinary Shares, effective on September 1, 2023) to various officers, directors, employees and consultants of the Company to measure the cost of their services received.

The Company uses the fair value method of accounting for our stock options granted to various officers, directors, employees and consultants to measure the cost of their services received in exchange for the share-based awards. The fair value of stock option awards with only service and/or performance conditions is estimated on the grant or offering date using the Black-Scholes option-pricing model with the assistance of a third-party valuation appraiser. The Black-Scholes option-pricing model requires inputs such as the risk-free interest rate, expected term and expected volatility. These inputs are subjective and generally require significant judgment. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally two years for stock options. Share-based compensation expense is recognized on a straight-line basis, net of actual forfeitures in the period. Share-based compensation expense is recorded in the statements of operations.

The stock options vested on June 10, 2023 with the expiration date on June 9, 2036. No formal notice of stock option distribution was made to grantees as of September 30, 2023. The Company decided to recognize all the stock option expenses upon issuance and re-evaluate the fair value of the stock option at closing dates, as if all the stock options are exercisable.

For the fiscal years ended September 30, 2023 and 2022, the Company recognized share-based compensation expenses related to the options of $5.1 million and $2.8 million, respectively.

Interest expenses

Our interest expenses arose from accounts payable for trade, lease liabilities, bank loans, loans payable and amount due to a shareholder. For the fiscal years ended September 30, 2023 and 2022, our interest expenses increased by approximately $0.05 million, mainly due to new bank loans increase during the fiscal year ended September 30, 2023.

Other expenses

Other expenses consist primarily of foreign exchange losses related to our foreign currency-denominated monetary assets and liabilities. We expect our foreign exchange gains and losses will vary depending upon movements in the underlying exchange rates.

Other expenses increased by approximately $0.06 million in the fiscal year ended September 30, 2023 as compared to the fiscal year ended September 30, 2022. The change is primarily due to fluctuations in foreign currency exchange rates resulted in increase in foreign exchange loss during the fiscal year ended September 30, 2023.

Total provision for (benefit from) income tax

During the fiscal years ended September 30, 2023 and 2022, our total provision for (benefit from) income tax consisted of current tax expense and deferred tax credit. The following table sets forth the breakdown of our income tax credit for the fiscal years ended September 30, 2023 and 2022:

Our Company’s operations are based in Japan and we are subject to income tax on an entity basis on the estimated chargeable income arising in Japan at the rate of 30.68%.

For the fiscal years ended September 30, 2022, our income tax credit, net was approximately $0.7 million. This is mainly attributed from the recognition of the deferred tax assets arising from the carried over tax losses. For the fiscal years ended September 30, 2023, our income tax expense was approximately $0.9 million. The deferred tax expense by $0.9 million for the fiscal year ended September 30, 2023 is due to the valuation allowance of $3.0 million recognized after offsetting with the deferred tax credit of $2.1 million over the recognition of deferred tax assets arising from the current year’s tax losses carried forward.

Our Company had no tax obligation arising from other jurisdictions during the fiscal years ended September 30, 2023 and 2022. During the fiscal years ended September 30, 2023 and 2022, we had no material dispute or unresolved tax issues with the relevant tax authorities.

Net loss for the Year

As a result of the foregoing, our net loss for the year amounted to approximately $14.3 million and $4.7 million for the fiscal years ended September 30, 2023 and 2022, respectively.

Results for the Fiscal Years Ended September 30, 2022 and 2021

The following table shows our Statements of Operations data for the fiscal years ended September 30, 2022 and 2021. For further information regarding the results of our operations, see our financial statements appearing elsewhere in this prospectus.

Description and Analysis of Principal Components of Our Results of Operations

We expect to incur significant operating costs and expenses that will impact our future profitability, including research and development expenses as we develop our own original designed electric light commercial vehicles and the HW ELECTRO Platform Service, as well as selling and distribution expenses, as we market our electric light

commercial vehicles and services as we scale our operations. Moreover, we may incur significant costs in connection with our services as we scale our business, including servicing and warranty costs. Our ability to become profitable in the future will not only depend on our ability to successfully market and sell our electric light commercial vehicles and services, but also to appropriately control costs and realize economies of scale.

The following discussion is based on our historical results of operations and may not be indicative of our future operating performance.

Revenue

During the fiscal year ended September 30, 2022, our revenue was derived from sale of our electric light commercial vehicles as we commenced the business in April 2022. The following table sets out the revenue generated from each of our business sectors during the fiscal years ended September 30, 2022 and 2021:

Cost of revenue

During the fiscal years ended September 30, 2022 and 2021, our cost of revenue mainly consisted of direct cost of electric light commercial vehicles, indirect materials costs, subcontracting costs, operation overhead and warranty cost. For the fiscal years ended September 30, 2022 and 2021, our cost of revenue amounted to approximately $0.3 million and $nil, respectively.

Gross profit and gross profit margin

The table below sets forth our Company’s gross profit and gross profit margin by business sector during the fiscal years ended September 30, 2022 and 2021:

Our total gross profit was $0.1 million and our gross profit margin was 31% for the fiscal year ended September 30, 2022. Our total gross profit increased during the year was contributed by the commencement of selling our electric light commercial vehicles in the fiscal year ended September 30, 2022.

Selling, general and administrative expenses

Our selling, general and administrative expenses primarily consist of (i) staff cost; (ii) agent service fee; (iii) transportation expenses; (iv) sundry taxes expense; (v) commission fee; (vi) professional fee expense; (vii) operating lease expense; and (viii) other miscellaneous expenses. The following table sets forth the breakdown of our general and administrative expenses for the fiscal years ended September 30, 2022 and 2021:

Our selling, general and administrative expenses amounted to approximately $2.4 million and $1.1 million for the fiscal years ended September 30, 2022 and 2021, respectively. Selling, general and administration expenses form part of the fixed running costs of the Company. In 2022, the Company launched its strategies to expand its business, which resulted in increased selling, general and administrative expenses to support the operating activities.

Agent service fee expense was mainly represented by compensation for business partners, including planning, marketing, alliances, translation work, general affairs, etc.

Staff costs were mainly represented by the salaries and allowances to our employees, primarily for our sales service, corporate, executive, finance and other administrative functions.

Professional fee expense was mainly represented by the financial, legal advisory service and other services rendered by the professionals outside the Company.

Transportation expenses were mainly represented by the expenditure for business travel incurred.

Sundry taxes were mainly represented by the various country tax jurisdictions, including consumption tax imposed on imported goods to the Company during the year.

Commission fee expense mainly consists of fees paid to external service and bank charges etc.

Operating lease expenses consist of fees for the leasing of offices, a showroom for demonstrating our electric light commercial vehicles and the facility for the Kimitsu laboratory.

Depreciation expense is charged on our property, plant and equipment, which included (i) buildings; (ii) right-of-use assets; (iii) machinery and equipment; and (iv) electric light commercial vehicles. The increase in depreciation is mainly due to the amortization of newly acquired buildings.

Miscellaneous expenses were mainly office maintenance, conference fee and office low value supplies.

Advertising expenses occur as we market our electric light commercial vehicles and services.

Research and development expenses

Research and development expenses include costs directly attributable to the conduct of research and development programs, including licensing fees, cost of salaries, payroll taxes and other employee benefits, and costs of subcontractors hired for and materials used for research and development activities, including testing, modifying, prototyping our electric light commercial vehicles products and platform service for the Japanese market. All costs associated with research and development are expensed as incurred.

Research and development expenses for the fiscal year ended September 30, 2022 were approximately $0.1 million, representing a decrease from approximately $0.6 million for the fiscal year ended September 30, 2021. The decrease in research and development expenses was due to significant software development, prototyping, and testing expenses related to the electric light commercial vehicles completed in the first half of the fiscal year ended September 30, 2022 following the launch of our first electric light commercial vehicle, ELEMO, in April 2022. As the software under development was an integral part of the electric light commercial vehicles, the software could not be marketed separately from the ultimate product or process sold to customers.

The software is not marketable as a stand-alone product, and the software development costs shall be expensed when incurred until either technological feasibility has been established for the software or all research and development activities for other components of the product or process have been completed. Hence, the Company incurred its research and development costs during the fiscal years ended September 30, 2022 and 2021, which is in compliance with ASC 730-10-25.

Share-based compensation expense

On June 9, 2021, the Company awarded options to purchase an aggregate of 3,750,000 Ordinary Shares at an exercise price of JPY40 per share (reflecting a 1:2 share split of our Ordinary Shares, effective on September 1, 2023) to various officers, directors, employees and consultants of the Company to measure the cost of their services received.

The Company uses the fair value method of accounting for our stock options granted to various officers, directors, employees and consultants to measure the cost of their services received in exchange for the share-based awards. The fair value of stock option awards with only service and/or performance conditions is estimated on the grant or offering date using the Black-Scholes option-pricing model with the assistance of a third-party valuation appraiser. The Black-Scholes option-pricing model requires inputs such as the risk-free interest rate, expected term and expected volatility. These inputs are subjective and generally require significant judgment. The resulting cost is recognized over the period during which an employee is required to provide service in exchange for the awards, usually the vesting period, which is generally two years for stock options. Share-based compensation expense is recognized on a straight-line basis, net of actual forfeitures in the period. Share-based compensation expense is recorded in the statements of operations.

The stock options vested on June 10, 2023 with the expiration date on June 9, 2036. No formal notice of stock option distribution was made to grantees as of September 30, 2023. The Company decided to recognize all the stock option expenses upon issuance and re-evaluate the fair value of the stock option at closing dates, as if all the stock options are exercisable.

For the fiscal years ended September 30, 2022 and 2021, the Company recognized share-based compensation expenses related to the options of $2,766,817 and $145, respectively.

Interest expenses

Our interest expenses arose from accounts payable for trade, lease liabilities and bank loans. For the fiscal years ended September 30, 2022 and 2021, our interest expenses increased by approximately $56,279, mainly due to new lease liabilities and new trade payables increase during the fiscal year ended September 30, 2022.

Other expenses

Other expenses consist primarily of foreign exchange losses related to our foreign currency-denominated monetary assets and liabilities. We expect our foreign exchange gains and losses will vary depending upon movements in the underlying exchange rates.

Other expenses decreased by approximately $0.1 million in the fiscal year ended September 30, 2022 as compared to the fiscal year ended September 30, 2021. The change is primarily due to fluctuations in foreign currency exchange rates.

Total provision for income tax

During the fiscal years ended September 30, 2022 and 2021, our total provision for income tax consisted of current tax expense and deferred tax credit for the fiscal year. The following table sets forth the breakdown of our income tax credit for the fiscal years ended September 30, 2022 and 2021:

Our Company’s operations are based in Japan and we are subject to income tax on an entity basis on the estimated chargeable income arising in Japan at the rate of 30.68%.

For the fiscal years ended September 30, 2022 and 2021, our income tax credit net was approximately $0.7 million and $0.3 million. This is mainly attributed from the recognition of the deferred tax assets arising from the carried over tax losses.

Our Company had no tax obligation arising from other jurisdictions during the fiscal years ended September 30, 2021 and 2022. During the fiscal years ended September 30, 2021 and 2022, we had no material dispute or unresolved tax issues with the relevant tax authorities.

Net loss for the Year

As a result of the foregoing, our net loss for the fiscal year amounted to approximately $4.7 million and $1.4 million for the fiscal years ended September 30, 2022 and 2021, respectively.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Liquidity and Capital Resources

Our liquidity and working capital requirements are primarily related to our operating expenses. Historically, we have met our working capital and other liquidity requirements primarily through a combination of cash generated from equity and debt financings to the Company. Going forward, we expect to fund our working capital and other liquidity requirements from various sources, including but not limited to cash generated from our operations, loans from banking facilities, the net proceeds from this offering and other equity and debt financings as and when appropriate.

The Company’s ability to continue as a going concern depends upon its ability to market and sell its products to generate positive operating cash flows. For the fiscal year ended September 30, 2023, the Company reported net loss of $14,278,256. As of September 30, 2023 and 2022, the Company’s working capital deficit was $792,030 and $1,351,178, respectively. In addition, the Company had net cash outflows of $11,676,441 from operating activities for the fiscal year ended September 30, 2023. These conditions give rise to substantial doubt as to whether the Company will be able to continue as a going concern. In view of this, the Company has raised funds through the issuance of new Ordinary Shares during the year ended September 30, 2023.

As circumstances warrant and to sustain its ability to support the Company’s operating activities, the Company may consider supplementing its available sources of funds through the following sources:

•        cash generated from operations;

•        other available sources of financing from Japanese banks and other financial institutions; and

•        financial support from the Company’s related party and shareholders.

Management had raised additional funds by performing a series of issuances of Ordinary Shares during the year ended September 30, 2023, resulting in 7,757,030 Ordinary Shares issued and approximately $9.8 million in proceeds received. However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. All of these factors may raise substantial doubt about the ability of the Company to continue as a going concern. The audited financial statements for the fiscal years ended September 30, 2023 and 2022 have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to continue as a going concern. The perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

Our independent registered public accounting firm included an explanatory paragraph in its audit report on our financial statements as of and for the fiscal year ended September 30, 2023, stating that we did not have a sufficient cash balance as of September 30, 2023, which raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our ability to raise additional capital. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all. Further, if we cannot continue as a going concern, we may be forced to discontinue operations and liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements, which would cause holders of our ordinary shares and our shareholders to lose all or a part of their investment.

Material Cash Requirements

Our cash requirements consist primarily of day-to-day operating expenses, research and development expenses, capital expenditures and contractual obligations with respect to facility leases and other operating leases. We lease our headquarters, parking spaces, employee dormitories, and showrooms. We expect to make future payments on existing leases from cash generated from operations. We have limited credit available from our major vendors and are required to prepay the majority of our inventory purchases, which further constrains our cash liquidity.

We had the following contractual obligations and lease commitments as of September 30, 2023:

Between December 8, 2023 and April 15, 2024, the Company borrowed a series of short-term loans in the aggregate amount of $1,847,020 from our Chief Executive Officer, Mr. Weicheng Hsiao. The loans are unsecured, interest-free and due for repayment by January 31, 2024, February 29, 2024, April 30, 2024 and May 31, 2024. The Company subsequently repaid an aggregate amount of $645,788 to our Chief Executive Officer, Mr. Weicheng Hsiao. As of April 19, 2024, the remaining loan principal amount outstanding is $1,201,232.

On December 19, 2023, the Company borrowed a short-term loan in an amount of $669,210 from a third party, Mr. Koichi Inutsuka. The loan was unsecured, interest bearing of 7% per annum and due for repayment by January 22, 2024. The loan has been fully repaid by the Company to Mr. Koichi Inutsuka as of April 19, 2024.

On January 10, 2024, the Company complied with the terms of an agreement with a customer that provided for a full or partial refund should the customer be unsatisfied with the Company’s product by accepting the return of the product in exchange for a full refund to the customer.

On March 28, 2024, the Company borrowed short-term unsecured loans in an aggregate amount of $401,526 from a third party, Car Conveni Club Co., Ltd. The loan is unsecured, interest bearing of 9.6% per annum and due for repayment by May 31, 2024.

On March 28, 2024, the Company borrowed short-term secured loans in an aggregate amount of $133,842 from a third party, Car Conveni Club Co., Ltd. The loan is secured, interest bearing of 9.6% per annum and due for repayment by April 10, 2024. Mr. Weicheng Hsiao pledged 80,000 of the Ordinary Shares he owns as collateral for the loan repayment. On April 10, 2024, the Company defaulted on the short-term secured loans. Mr. Weicheng Hsiao intends to transfer the 80,000 Ordinary Shares pledged to Car Conveni Club Co., Ltd to settle the outstanding balance by the end of April 2024.

On April 9, 2024, the Company borrowed short-term unsecured loans in an aggregate amount of $66,921 from a third party, S’chatz Japan Corporation. The loans are unsecured, interest-free and due for repayment by April 25, 2024.

Working Capital

The following table sets forth our assets, liabilities and shareholders’ equity as of September 30, 2023 and 2022 in USD:

As of September 30, 2023 and 2022, we had negative working capital of approximately $0.8 million and $1.4 million, respectively, total assets of approximately $8.2 million and $5.1 million, respectively, total liabilities of approximately $6.3 million and $3.3 million, respectively, and shareholders’ equity of approximately $1.9 million and $1.8 million, respectively.

To sustain our ability to support our operating activities, we may have to consider supplementing our available sources of funds through the following sources:

•        cash generated from operations;

•        other available sources of financing from Japanese banks and other financial institutions;

•        financial support from the Company’s related parties and shareholders; and

•        issuance of securities in this offering.

However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. All of these factors may raise substantial doubt about the ability of the Company to continue as a going concern. The audited financial statements for the years ended September 30, 2023 and 2022 have been prepared on a going concern basis and do not include any adjustments to reflect the possible future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to continue as a going concern.

Cash flows

The following table summarizes our cash flows for the fiscal years ended September 30, 2023 and 2022:

The following table summarizes our cash flows for the fiscal years ended September 30, 2022 and 2021:

Cash Flow from Operating Activities

For the fiscal year ended September 30, 2023, our net cash used in operating activities increased by $9.5 million as compared to the fiscal year ended September 30, 2022, primarily due to a $9.6 million increase in net loss that was mainly attributable to the Company commencing its business which resulted in increase in cash outflow for expenditures for research and development activities and operating activities and sale of our electric commercial vehicles as discussed in “Results of Operations” above. The increase in net loss is partially offset by higher non-cash adjustments of approximately $4.1 million for share-based compensation expense, deferred tax expense, loss on disposal of property, plant and equipment, provision for warranty liabilities and depreciation. The cash outflow was further increased due to the cash outflow in working capital by $4.0 million, mainly led by short-term loans of $3.0 million from the Company to the Chief Executive Officer, Mr. Weicheng Hsiao, payment of deferred financing costs for the initial public offering expense of $0.3 million and an increase in prepayments to third parties for downpayments to suppliers, prepaid outsourcing agency services, advertisement agency and exhibition, office and store rental and car leasing fee and prototype and system design and development fee totaling of $0.7 million. The abovementioned short-term loans of $3.0 million from the Company to the Chief Executive Officer, Mr. Weicheng Hsiao, have been fully repaid by Mr. Weicheng Hsiao to the Company as of November 2, 2023.

For the fiscal year ended September 30, 2022, our net cash used in operating activities increased by $0.3 million as compared to the fiscal year ended September 30, 2021, primarily due to a $3.3 million increase in net loss that was mainly attributable to the Company commencing its business which resulted in increase in cash outflow for expenditures for research and development activities and operating activities and sale of our electric commercial vehicles as discussed in “Results of Operations” above. The increase in net loss is partially offset by higher non-cash adjustments for share-based compensation expense, loss on disposal of property, plant and equipment, and depreciation. The cash outflow was further reduced by the increases in working capital by $0.4 million, led by increases in accounts payable of $1.0 million, primarily due to an increase in purchases from the suppliers and a decrease in prepayments of $1.0 million, but the increase in working capital was partially offset by an increase in inventories of $1.2 million, primarily due to increase in the purchase of materials and increase in work-in-progress of our electric light commercial vehicles as a result of the commencement of business and anticipation of the increase in demand for our electric light commercial vehicles and decrease in the amount due to related party of $0.3 million due to lesser advances.

Cash Flow from Investing Activities

Our cash flows used in investing activities primarily consisted of purchase of building, machinery and equipment, and vehicles.

For the fiscal year ended September 30, 2023, our net cash used in investing activities was approximately $0.6 million, primarily attributable to the purchase of property, plant and equipment.

For the fiscal year ended September 30, 2022, our net cash used in investing activities was approximately $2.4 million, primarily attributable to the purchase of property, plant and equipment.

Cash Flow from Financing Activities

Our cash flows from financing activities primarily consists of proceeds from issuance of shares and share capital offset against the repayment of borrowings and lease liabilities.

For the fiscal year ended September 30, 2023, our Company recorded net cash generated from financing activities of approximately $12.8 million, which was mainly attributable to the (i) proceeds from a bank loan of approximately $3.6 million, (ii) proceeds from issuance of Ordinary Shares in the aggregate amount of approximately $9.8 million, which is partly offset by the repayment of loans payable — third party of approximately $0.8 million.

For the fiscal year ended September 30, 2022, our Company recorded net cash generated from financing activities of approximately $4.5 million, which was mainly attributable to the (i) proceeds from loans payable — third party of approximately $1.3 million, (ii) proceeds from issuance of Ordinary Shares and Series A convertible preferred shares in aggregate amount of approximately $2.0 million and (iii) shares to be issued of approximately $0.9 million.

For the fiscal year ended September 30, 2021, our Company recorded net cash generated from financing activities of approximately $2.1 million, which was mainly attributable to the proceeds from loans payable — third party of approximately $1.0 million and proceeds from issuance of Ordinary Shares of approximately $1.1 million.

Accounts receivable, net

Our accounts receivable, net, decreased from $45,064 to $258 as of September 30, 2022 and 2023, respectively. The decrease was primarily attributable to the faster collection from customers.

The following table sets forth the aging analysis of our accounts receivable, net, based on the invoice date as of the dates mentioned below:

We have a policy for determining the allowance for expected credit loss based on the evaluation of collectability and aging analysis of accounts receivable, net, and on management’s judgment, including the change in credit quality, the past collection history of each customer and the current market condition.

The Company generally conducts its business with creditworthy third parties. The Company determines, on a continuing basis, the probable losses and an allowance for expected credit loss, based on several factors, including internal risk ratings, customer credit quality, payment history, historical bad debt/write-off experience and forecasted economic and market conditions. Accounts receivable, net, are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. In addition, receivable balances, net, are monitored on an ongoing basis and exposure to bad debts is not significant.

During the fiscal years ended September 30, 2023 and 2022, the Company made nil allowance for doubtful accounts for accounts receivable.

The following table sets forth our average accounts receivable turnover days for the fiscal years ended September 30, 2023 and 2022:

____________

(1)      Average accounts receivable turnover days is calculated as the ending of accounts receivable balance for the respective year divided by revenue for the respective year and multiplied by the number of days in the respective year.

Our average accounts receivable turnover days were approximately 0.07 days and 37 days for the fiscal years ended September 30, 2023 and 2022, respectively. The credit term offered to our major customers is 30 days. The decrease in average accounts receivable turnover days for the fiscal year ended September 30, 2023 is primarily due to measures implemented to strengthen our credit control and follow up on collections regularly.

Accounts receivable, net, were closely monitored and reviewed on a regular basis to identify any potential non-payment or delay in payment. We conducted an individual review on each of the customers to determine the impairment based on several factors including historical payment pattern and market available data such as available press information about the customer and past due status.

Inventories, net

Our inventories, net primarily consist of raw materials, works-in-progress and finished goods as of September 30, 2023 and 2022.

Inventories are stated at the lower cost or net realizable value. Cost is computed using standard cost for vehicles, which approximates actual cost on a specific identification method basis. We also review our inventories to determine whether the carrying value exceeds the net amount realizable upon the ultimate sale of the inventories. This requires us to determine the estimated selling price of our vehicles less the estimated cost to convert the inventories on-hand into a finished product. During the fiscal years ended September 30, 2023 and 2022, the Company recognized the impairment loss in inventories of $0.3 million and nil, respectively, due to the write-down of inventory to its net realizable value. The impairment loss is included in cost of sales.

The increase in inventories, net of approximately $0.2 million as of September 30, 2023 as compared with September 30, 2022 was primarily the result of an increase in work-in-progress and finished goods of our electric light commercial vehicles in anticipation of an increase in orders for 2024.

Prepayments

Prepayments mainly represent advance payment to the supplier for the purchase of electric vehicles and prepaid expenses for the agency fees and advertisement placement fee, rental of showroom, offices and dormitory. The following table sets forth the breakdown of the prepayment as of the dates indicated:

Our total prepayments increased from approximately $0.1 million as of September 30, 2022 to $0.7 million as of September 30, 2023, primarily attributable to advance payments to suppliers for the purchase of electric vehicles and prepaid expenses for accounting agency fees, office and store rental and car leasing, advertisement agency fee and exhibition, prototype and system design and development.

Prepayment — third party consisted of the following:

Amount due from a related party

The Chief Executive Officer, Mr. Weicheng Hsiao, borrowed a series of short-term loans from the Company. The terms were negotiated based on mutual agreement and were non-trade, unsecured, bore interest at 3.5% per annum, and were repayable by November 30, 2023. Such loans have been fully repaid by Mr. Weicheng Hsiao to the Company as of November 2, 2023.

Long-term deposits

The Company leases its headquarters, parking spaces, employee dormitories, and showrooms in Tokyo, Kanagawa, and Chiba.

Our long-term deposits decreased from $0.08 million as of September 30, 2022 to $0.03 million as of September 30, 2023, primarily attributable to non-renewal of short-term leases for certain showrooms in Tokyo.

Cost method investment

The Company holds an investment of 10% interest of equity security in a privately held company operating in the transportation business in the logistics industry and in which the Company does not have a controlling interest or significant influence. The investment is recorded at a cost of $3,346 and $3,455 as of September 30, 2023 and 2022, respectively. The impairment of the investment is nil and nil as of September 30, 2023 and 2022.

Accounts payables, accruals, and other current liabilities

Accounts payable

The general credit terms from our major suppliers are 30 to 90 days. Our accounts payable decreased from approximately $1.0 million as of September 30, 2022 to approximately $0.7 million as of September 30, 2023, which was primarily due to lower purchases towards the end of the fiscal year ended September 30, 2023.

The following table sets forth the ageing analysis of our accounts payable based on the invoice date as of the dates mentioned below:

Our average accounts payable turnover days remained relatively within credit term and amounted to approximately 90 days as of September 30, 2023 and 2022.

We did not have any material default in payment of accounts payable during the fiscal years ended September 30, 2023 and 2022.

Accruals and other current liabilities

While we may have certain contractual remedies against and recourse to Cenntro if our electric light commercial vehicles contain errors or defects and seek compensation from Cenntro for our damage and loss resulting from warranty, indemnity, or product liability claims against us, such remedies, recourse or compensation may not be sufficient in scope, may not be effectively enforced, and significant costs may incur in enforcing them. See “Business — Manufacturing.”

Deferred tax assets, net

As of September 30, 2023 and 2022, the Company had net operating loss carryforwards of approximately $9.0 million and $2.9 million, respectively. As of September 30, 2023 and 2022, deferred tax assets, net from the net operating loss carryforwards amounted to $nil and $0.8 million, respectively.

As of September 30, 2023, the Company has recognized a valuation allowance of approximately $3.0 million as it has assessed that it is not probable that the taxable profit will be available against which the unused tax losses or unused tax credits can be utilized, and, therefore, the deferred tax assets will not be realized in the foreseeable future.

Equity

The Company has performed a series of issuance of Ordinary Shares resulting in 38,074,888 shares of ordinary Shares issued and outstanding as of September 30, 2023. The Company only has one single class of Ordinary Shares that is accounted for as permanent equity.

On July 20, 2023, the Company’s board of directors approved a share split of the Company’s outstanding Ordinary Shares and Series A convertible preferred shares at a ratio of 1:2, which was based on a record date of August 31, 2023 and became effective on September 1, 2023, resulting in 38,074,888 Ordinary Shares being issued and outstanding and 2,857,142 Series A convertible preferred shares being issued after the share split. The Company believes it is appropriate to reflect the above transactions on a retroactive basis similar to a share split or dividend pursuant to ASC 260. All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the 1:2 share split.

Pursuant to the Company’s articles of incorporation, on August 31, 2023, Autobacs Seven requested the Company to convert its 2,857,142 Series A convertible preferred shares on August 31, 2023. On August 31, 2023, the Company issued 2,857,142 Ordinary Shares to Autobacs Seven, and in exchange, the Company acquired the 2,857,142 Series A convertible preferred shares, which were canceled by the Company on October 20, 2023.

Commitments

Capital commitments

As of September 30, 2023 and 2022, we did not have any capital commitments.

Contingencies

In the ordinary course of business, the Company may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Company records contingent liabilities resulting from such claims, when a loss is assessed to be probable, and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation as of September 30, 2023 and up through the date of this prospectus.

Capital Expenditures

Historical capital expenditures

Our capital expenditures during the fiscal years ended September 30, 2023 and 2022 mainly related to office and showroom expansion due to business scale expansion and replacement of obsolete equipment. For the fiscal years ended September 30, 2023 and 2022, our capital expenditures in relation to property, plant and equipment were approximately $0.6 million and $2.5 million, respectively. We principally funded our capital expenditures through cash flows from the issuance of shares during the fiscal years ended September 30, 2023 and 2022.

Critical Accounting Policies and Estimates

Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. While our significant accounting policies are more fully described in Note 3 to the financial statements included elsewhere in this prospectus, we believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

We are an “emerging growth company” as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or revised accounting standards and acknowledge such election is irrevocable pursuant to Section 107 of the JOBS Act. As a result of our election, our financial statements may not be comparable to those of companies that comply with public company effective dates.

Use of Estimates and Assumptions

Significant accounting estimates reflected in our financial statements include useful lives for property, plant and equipment, assumptions used in assessing right of use assets, allowance for expected credit loss accounts and revenue recognition, inventories valuation, impairment of long-lived assets, property, plant and equipment, provision of warranty liabilities, valuation allowance for deferred tax assets and uncertain tax position. Economic conditions may increase the inherent uncertainty in the estimates and assumptions indicated above. Actual results may differ from previously estimated amounts, and such differences may be material to our financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected prospectively in the period they occur. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from these estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this prospectus reflect the more significant judgments and estimates used in preparation of our financial statements.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our financial statements:

Revenue Recognition

We recognized our revenue under Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC606). We recognize revenue to depict the transfer of our electric light commercial vehicles (that is, an asset) to customers in an amount that reflects the consideration to which we expect to receive in exchange for those electric light commercial vehicles. An asset is transferred when the customer obtains control of that asset. It also requires us to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of the electric light commercial vehicle transfers to a customer.

To achieve that core principle, we apply the five steps defined under Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

We account for a contract with a customer when the contract is committed in writing, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration to collect is substantially probable. The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the delivery of goods, has discretion in establishing pricing, and controls the promised good before transferring those goods to customers.

In accordance with ASC 340-40, which requires the capitalization of all incremental costs from obtaining and fulfilling a contract with a customer if such costs are expected to be recovered with the period of more than one year, we capitalize certain contract acquisition costs consisting primarily of consulting fees, and expect such consulting fees as a result of obtaining customer contracts to be recoverable. For contracts with the realization period of less than one year, the guidance provides a practical expedient that permits an entity to immediately expense contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less.

We currently generate revenue from the following main sources:

(a)     Revenue from goods sold

We recognize revenue for our electric light commercial vehicles sold upon delivery to the customer, which is when we have satisfied a performance obligation by transferring control of a vehicle to the customer. The amount of revenue recognized is the amount of the transaction price allocated to the satisfied performance obligation, which is the amount of the consideration in the contract to which our Company expects to be entitled in exchange for transferring the promised goods or services. Payments are typically received at the point control transfers or in accordance with payment terms customary to the business.

The transaction price is allocated to each performance obligation (the “PO”) in the contract on the basis of the relative stand-alone selling prices of the promised goods. The individual standalone selling price of a good that has not previously been sold on a stand-alone basis, or has a highly variable selling price, is determined based on the residual portion of the transaction price after allocating the transaction price to goods with observable stand-alone selling price. A discount or variable consideration is allocated to one or more, but not all, of the performance obligations if it relates specifically to those performance obligations.

Transaction price is the amount of consideration in the contract to which the Company expects to be entitled in exchange for transferring the promised goods. The transaction price may be fixed or variable and is adjusted for time value of money if the contract includes a significant financing component. Consideration payable to a customer is deducted from the transaction price if the Company does not receive a separate identifiable benefit from the customer. When consideration is variable, if applicable, the estimated amount is included in the transaction price to the extent that it is highly probable that a significant reversal of the cumulative revenue will not occur when the uncertainty associated with the variable consideration is resolved.

Revenue may be recognized at a point in time or over time following the timing of satisfaction of the PO. If a PO is satisfied over time, revenue is recognized based on the percentage of completion reflecting the progress towards complete satisfaction of that PO. Typically, POs for products where the process is described as below, the PO is satisfied at point in time.

For the sales of our electric light commercial vehicles, the Company typically receives purchase orders from its customers which will set forth the terms and conditions including the transaction price, products to be delivered, terms of delivery, and terms of payment. The terms serve as the basis of the performance obligations that the Company must fulfill in order to recognize revenue. The key performance obligation is the delivery of the electric light commercial vehicles to the customer at their location at which point title to that asset passes to the customer.

The Company has entered into agreements with certain customers that allow full or partial refunds if we are unable to ultimately meet requirements regarding quality set forth in the agreement. For these agreements, our management estimates an expected liability for potential refunds. Our management develops this estimate based on actual historical refund data and the probability of product defects. Refund liabilities are settled in cash with customers. The actual amount of customer returns, which is inherently uncertain, may differ from the Company’s estimates. If the Company determines that actual or expected returns or allowances are significantly higher or lower than the reserves it established, it will record a reduction or increase, as appropriate, to net sales in the period in which it makes such a determination. Provisions for customer-specific discounts are based on contractual obligations with certain customers. The Company records, on a gross basis, a refund liability and an asset, which represents the right to receive goods (inventory) back from the customer for recovery, in the balance sheets. The refund liability is remeasured at the balance sheet date to reflect changes in the estimate of returns, with a corresponding adjustment to revenue. The asset is initially measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value.

Property, plant and equipment, net

Property, plant and equipment, net, is tested for impairment whenever there is any objective evidence or indication that these assets may be impaired.

The recoverable amounts of property, plant and equipment, net, have been determined based on higher of the fair value less costs to sell or value-in use calculations. If the carrying amounts exceed the recoverable amounts, an impairment is recognized to profit or loss for the differences.

Property, plant and equipment, net, are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis or declining balance method over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use. Estimated useful lives are as follows:

SCHEDULE OF ESTIMATED USEFUL LIVES

Expenditure for repair and maintenance costs, which do not materially extend the useful lives of the assets, are charged to expenses as incurred, whereas the expenditure for major renewals and betterment that substantially extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the statements of operations and comprehensive loss. The cost of construction-in-progress includes the cost directly attributable to the construction of showroom. Construction in progress is not depreciated.

Cost method investment

The Company accounts for investment with less than 20% of the voting shares and does not have the ability to exercise significant influence over operating and financial policies of the investee using the cost method. The Company records cost method investment at the historical cost in its financial statements and subsequently records any dividends received from the net accumulated earrings of the investee as income. Dividends received in excess of earnings are considered a return of investment and are recorded as reduction in the cost of the investment.

Cost method investment are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investment is less than its carrying value. An impairment is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary.

These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investment; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. No event had occurred and indicated that other-than-temporary impairment existed and therefore the Company did not record any impairment charges for its investment for the fiscal years ended September 30, 2023 and 2022.

Impairment of long-lived assets

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairment of long-lived assets was recognized for the fiscal years ended September 30, 2023 and 2022, respectively.

Once an impairment is determined, the actual impairment recognized is the difference between the carrying amount and the fair value as estimated using one of the following approaches: income, cost and/or market. Assets which are to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

The carrying amount of a long-lived asset or asset group is considered impaired when the anticipated undiscounted cash flows from such asset or asset group are less than its carrying amount. In that event, a loss is recorded in “Impairment of long-lived assets” on our Statements of Operations and Comprehensive Income (Loss) based on the amount by which the carrying amount exceeds the fair value of the long-lived asset or asset group. Fair value, using the income approach, is determined primarily using a discounted cash flow model that uses the estimated cash flows associated with the asset or asset group under review, discounted at a rate commensurate with the risk involved. Fair value, utilizing the cost approach, is determined based on the replacement cost of the asset reduced for, among other things, depreciation and obsolescence. Fair value, utilizing the market approach, benchmarks the fair value against the carrying amount.

Inventories, net

Inventories are stated at the lower of cost or net realizable value. Cost is computed using specific identification method, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. We record inventories write-downs for excess or obsolete inventories based upon assumptions about current and future demand forecasts. If our inventories on-hand is in excess of our future demand forecast, the excess amounts are written-off.

We also review our inventories to determine whether their carrying value exceeds the net amount realizable upon the ultimate sale of the inventories. This requires us to determine the estimated selling price of our vehicles less the estimated cost to convert the inventories on-hand into a finished product. Once inventories are written-down, a new, lower cost basis for that inventories are established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Should our estimates of future selling prices or production costs change, additional and potentially material write-downs may be required. A small change in our estimates may result in a material charge to our reported financial results.

Product warranties

The estimated costs related to product warranties are accrued at the time products are sold and are charged to cost of revenue in the financial statement. These estimates are established using historical information on the nature, frequency and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. Revisions are made when necessary and are based on changes in these factors.

The warranty liabilities during the fiscal years ended September 30, 2023 and 2022 mainly represented the provision for warranty liabilities for electric light commercial vehicle products sold, which usually covers a 36-month period from the date on which the electric light commercial vehicle products are delivered and accepted by the customers.

Income taxes

We are subject to enterprise income tax on our taxable income as determined under Japan tax laws. Significant judgment is required in determining our provision for income taxes and our deferred tax assets, net. We make these estimates and judgments about our future taxable income that are based on assumptions that are consistent with our future plans. Tax laws, regulations and administrative practices may be subject to change due to economic or political conditions including fundamental changes to the tax laws applicable to corporate multinationals. As of September 30, 2023 and 2022, the Company had net operating loss carryforwards of $8.9 million and $2.9 million, respectively. As of September 30, 2023 and 2022, deferred tax assets, net from the net operating loss carryforwards amounted to $nil and $0.8 million, respectively. Should the actual amounts differ from our estimates, the amount of our deferred tax asset, non-current, net, could be materially impacted.

The Company accounts for income taxes under ASC 740. Deferred tax assets are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets, non-current, net, are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets, non-current, net, of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets, non-current, net, to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures.

The Company did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its statements of operations and comprehensive loss for the fiscal years ended September 30, 2023 and 2022, respectively. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months.

Valuation of Deferred Tax Assets

As of September 30, 2023, the Company has recognized a valuation allowance of approximately $3.0 million to reduce the Company’s deferred tax assets as it has assessed that it is considered more likely than not that the deferred tax assets to be realized. In assessing the need for the valuation allowance, management considers, among other things, projections of future taxable income and ongoing prudent and feasible tax planning strategies. If the Company determines that sufficient negative evidence exists, then it will consider recording a valuation allowance against a portion or all of the deferred tax assets in that jurisdiction. If, after recording a valuation allowance, the Company’s projections of future taxable income and other positive evidence considered in evaluating the need for a valuation allowance prove, with the benefit of hindsight, to be inaccurate, it could prove to be more difficult to support the realization of its deferred tax assets. As a result, an additional valuation allowance could be required, which would have an adverse impact on its effective income tax rate and results. Conversely, if, after recording a valuation allowance, the Company determines that sufficient positive evidence exists in the jurisdiction in which the valuation allowance was recorded, it may reverse a portion or all of the valuation allowance in that jurisdiction. In such situations, the adjustment made to the deferred tax asset would have a favorable impact on its effective income tax rate and results in the period such determination was made.

Share-Based Compensation

We use the fair value method of accounting for our stock options granted to various officers, directors, employees, and consultants to measure the cost of their services received in exchange for the share-based awards. The fair value of stock option awards with only service and/or performance conditions is estimated on the grant or offering date using

BUSINESS

Overview

We are the first company in Japan to obtain a license plate number for imported electric light commercial vehicles and the second company and also one of the three companies that sell electric light commercial vehicles in Japan as of the date of this prospectus. The electric light commercial vehicles we sell belong to the category of “light commercial vehicles,” which are commercial carrier vehicles with a gross vehicle weight of no more than 3,500 kilograms.

We commenced selling and delivering two models of electric light commercial vehicles, ELEMO and ELEMO-K, in Japan in April 2022 and July 2022, respectively, and have been working with Cenntro, our cooperating manufacturer, to produce them under our brand, ELEMO, in its factory in Hangzhou, China. ELEMO is the first electric vehicle we sell and is the second electric light commercial vehicle that has ever been sold in Japan since the commencement of sales of MINICAB-MiEV in December 2011, which was the first electric light commercial vehicle produced by Mitsubishi Motors Corporation. Since June 2023, we have commenced the sales of a new model called “ELEMO-L,” a van-type electric vehicle that could be used for commercial and recreational camping purposes, which we expect may enable us to increase consumer market penetration.

Under the Exclusive Basic Transaction Agreement, Cenntro manufactures ELEMO, ELEMO-K, ELEMO-L, and other electric vehicles under the specifications designated by us in their manufacturing factories in China and delivers the electric vehicles to the ports in China designated in the individual agreement for a particular order. We arrange for the shipment from these ports to the Port of Yokohama or other designated ports in Japan. Upon arrival, we transport the vehicles to our research lab located in Chiba, Japan, for inspection, and then send them to our business partners’ facilities, Anest Iwata’s factory in Fukushima, Japan, and TONOX’s factories in Kanagawa, Japan. The specialists of Anest Iwata and TONOX modify the vehicles to comply with the regulations and standards for the Japanese market, install the accessories, and undertake the inspection in accordance with our instructions. After the inspection and modifications, we deliver the electric vehicles to the governmental vehicle inspection office, the National Agency for Automotive and Land Transportation Technology, for individual imported vehicle inspection, and the local land transportation office for registration. Upon completion of the individual import vehicle inspection and registration, we conduct the final inspection in our research laboratory located in Chiba, Japan, and deliver the electric light commercial vehicles to the customers.

Since the inception of our operation, we have been leveraging the customizability and adjustability of our electric light commercial vehicles to attract corporations in different industries and local governments that have varying needs from their departments in Japan. During the fiscal years ended September 30, 2023 and 2022, we sold and delivered 52 and 16 electric light commercial vehicles to 14 and 11 customers, respectively.

During the fiscal year ended September 30, 2022, our primary focus was on building our customer base through direct sales efforts using our limited sales force. Starting in October 2022, we began recruiting additional salespersons to expand our sales scale and strengthen our presence. This initiative was in addition to our collaboration with ENEOS WING commencing in early 2023, to promote the sales and distribution of our electric light commercial vehicles through its established sales and distribution network nationwide. By implementing the preceding measures, we have accomplished significant growth in sales and received 262 orders for our electric light commercial vehicles as of September 30, 2023. We expect to deliver an aggregate of 733 electric light commercial vehicles during the fiscal year ending September 30, 2024. We also entered into a membership agreement with Japan Autobody Repair Work Association on May 16, 2022, pursuant to which Japan Autobody Repair Work Association provides maintenance, repair, and other after-sale services to our customers on our behalf at the approximately 1,600 maintenance facilities it operates.

During the fiscal years ended September 30, 2023 and 2022, the revenue generated from the sales of our electric light commercial vehicles was JPY199,467,344 and JPY55,215,779, respectively, or approximately $1,435,740 and $442,789, respectively, which accounted for 100.0% and 100.0% of our total revenue for those periods, respectively. Our net loss for the fiscal years ended September 30, 2023 and 2022, amounted to JPY1,983,677,884 and JPY586,166,296, respectively, or approximately $14,278,256 and $4,700,613, respectively.

Competitive Strengths

We believe the following competitive strengths are essential for our success and differentiate us from our competitors:

An early mover in the Japanese electric light commercial truck market

As of the date of this prospectus, we are the second company and also one of the three companies that sell electric light commercial vehicles in the Japanese market. When we commenced selling our electric light commercial vehicles — ELEMO 200 and ELEMO-K in April 2022 and July 2022, they were the only two electric light commercial vehicles available in the Japanese market since the production of MINICAB-MiEV, the first electric light commercial vehicles manufactured by Mitsubishi Motors Corporation, which was temporarily discontinued in March 2021. Mitsubishi Motors Corporation has since resumed the production of MINICAB-MiEV, due to the industry’s decarbonization trend. However, this has had a limited adverse impact on us as of the date of this prospectus. We believe the Japanese electric light commercial truck market is still growing.

The customizability and adjustability of our products

Our two types of ELEMO-K, Pick Up and Box, and three types of ELEMO, Pick Up, Flatbed, and Box, can satisfy the various needs of customers from different industries with proper adaptation and modification. Particularly, our electric light commercial vehicles are suitable to serve corporations in industries such as logistics and home delivery, food and beverage retail, agriculture, fishing, and forestry, civil engineering and construction, and governmental departments, such as fire departments, medical departments, and environmental hygiene departments after proper adaptation and modification.

We anticipate that the customizability and adjustability of our electric light commercial vehicles will enable us to further develop our customer base and broaden the source of existing and potential customers from various industries.

Strong and Experienced Management

Our management team comprises highly-skilled and dedicated professionals who have extensive multidisciplinary experience in the automobile industry. Our founder and Chief Executive Officer, Mr. Weicheng Hsiao, founded a racing team to compete in the D1 Grand Prix series and modified and adapted the racing cars within the regulations before he founded our Company, and he also runs Goodride Japan INC., a wholesale tire company. Our Chief Marketing Officer, Mr. Takashi Watanabe, worked for Nissan Motor Co., Ltd. for more than 30 years, including serving various key management positions overseas, such as the head of INFINITI China, Nissan Motor Co., Ltd.’s subsidiary in China, and the general manager of sales and marketing department for overseas markets, for more than ten years, served as the key account executive at Continental Automotive Japan Co., Ltd., a mega automotive parts supplier, and served as the deputy chief executive officer at GLM Co., Ltd., the first Japanese EV company exclusive in development and sales. Our Chief Financial Officer, Hiroto Nagura, has five years of experience in financing management in the Japanese logistics and automobile industry.

Growth Strategies

We intend to develop our business by implementing the following strategies:

Continue to grow our sales and expand our sales and distribution channel

During the fiscal year ended September 30, 2022, our primary focus was on building our customer base through direct sales efforts using our limited sales force. Starting in October 2022, we began recruiting additional salespersons to expand our sales scale and strengthen our presence. This initiative was in addition to our collaboration with ENEOS WING commencing in early 2023, to promote the sales and distribution of our electric light commercial vehicles through its established sales and distribution network nationwide. By implementing the preceding measures, we have accomplished significant growth in sales and received 262 orders for our electric light commercial vehicles as of September 30, 2023.

We have devoted more resources to expanding our sales and distribution channel, in anticipation of the growth we believe will occur over the next 10 years in the Japanese electric light commercial truck market. We intend to develop the strategic alliances we have been discussing with Bosai System since July 2022 and Autobacs Seven since October 2021 to promote the sales and distribution of our electric light commercial vehicles via their sales channels in

Japan. In particular, Autobacs Seven, a retailer of automotive parts and accessories primarily based in Japan, currently operates 585 retail shops and franchise stores throughout the country. With the existing sales and distribution channel, we expect to sell and deliver 733 and 2,301 of our electric light commercial vehicles for the fiscal years ending September 30, 2024 and 2025, respectively.

By expanding our sales and distribution channel in Japan, particularly in areas that have not yet been explored, we believe it will contribute to the growth of our sales and customer base and broad market penetration and increase our brand’s recognition in Japan.

Develop our own original designed products

As all of our currently available electric light commercial vehicles are designed and manufactured by Cenntro, our only cooperating manufacturer at the current stage, we intend to develop our own original designed products based on our insight on the industry trends to enhance the customizability and adjustability of our electric light commercial vehicles to satisfy the various demands from the growing market in Japan and attract potential customers from different industries.

In addition, developing our own original designed products allows us to reduce our dependence on Cenntro and diversify our supply base by cooperating with other suitable manufacturers, which will mitigate our operational risk and benefit our business in the long term.

In the first half of 2025, we plan to launch our first originally designed electric light commercial vehicle — PUZZLE, a commercial van to be made for the Japanese market. Puzzle’s unique design, which maximizes shared parts and even body panels, will allow it to offer more usable space than a typical commercial van. To make PUZZLE a user-friendly vehicle to operate, we have designed PUZZLE to be compatible with some supportive software, such as Apple CarPlay and Android Auto, as well as our own developed proprietary supporting system — the HW ELECTRO Platform Service (described below). In addition, PUZZLE will also be equipped with additional functions and features with which our currently available electric light commercial vehicles are not equipped. For example, PUZZLE will be able to provide internet connection over Wi-Fi and electricity through its wall outlets and USB ports, enabling it to serve as a Wi-Fi hotspot and a mobile power bank, which may prove especially useful in emergency situations, since Japan experiences frequent natural disasters every year. Furthermore, a solar panel installed on the top of PUZZLE will be able to power the built-in SOS system, allowing drivers or passengers to reach out for rescue services even if PUZZLE’s battery is depleted.

Maintain and further develop business relationships with our existing and potential customers

Though the Japanese electric light commercial truck market is growing, it is still in its infancy and remains undeveloped. Besides, rather than having sufficient information and thus having determined to purchase electric light commercial vehicles, most of the potential customers we are aware of have limited acquaintance and experience regarding electric light commercial vehicles and are still hesitating about replacing traditional gasoline-powered light commercial trucks with electric ones at the current stage.

Under these circumstances, we believe the potential customers would value the users’ experience and count on referrals from existing customers when deciding whether to switch to electric light commercial vehicles and from whom they should purchase. Therefore, in addition to promoting our electric light commercial vehicles via our sales and distribution channels, it is also essential to maintain and further develop business relationships with our existing customers and ensure their satisfaction with our electric light commercial vehicles in order to develop new customers.

As such, we plan to maintain and further develop business relationships with our existing customers by investing more resources to ensure the good quality of our electric light commercial vehicles by outsourcing the inspections and modifications of our products to large-scale professional companies, and provide the after-sale services, such as maintenance and repair, at more locations by cooperating with more facilities. See “Business — Manufacturing” and “Business — Customers, Sales, and Marketing” We also anticipate the increase in our visibility and brand recognition after our proposed listing on NYSE American may benefit us in attracting more potential customers to order our electric light commercial vehicles.

Improve Public Relations and Brand Awareness and Enhance Customer Loyalty

We intend to improve our public relations and brand awareness by opening new showrooms in Nagoya, Osaka, and Okinawa, participating in various series of exhibitions and events in Japan, collaborating with more dealers and distributors, promoting our electric light commercial vehicles and brands through social media platforms, and engaging with our existing and potential customers to receive real-time feedback on our products and services.

We are also dedicated to improving customer experience and enhancing customer loyalty. By choosing and cooperating with competent and reliable business alliances, we strive to provide high-quality sales and after-sales services in order to showcase our high product quality, which we believe will foster trust and loyalty among our new and existing customers.

Diversify Revenue Sources

The sales of our electric light commercial vehicles have been our main business since our inception. As we intend to continue to pursue revenue growth, we have dedicated ourselves to increasing the diversity of our revenue sources by developing and innovating new technologies and services. For the past two years, we have invested in management and financial resources and in research and development and have been working closely with cooperating vendors to develop a new service, the HW ELECTRO Platform Service.

The HW ELECTRO Platform Service is an optional supporting system that assists customers in managing the electric light commercial vehicles and their drivers, which could be purchased when placing orders for our electric light commercial vehicles. The HW ELECTRO Platform Service is composed of a backend-connected platform, which we will operate, via a drivers’ app, and may be used by customers or drivers they hire, and a device. Through the backend-connected platform, we are capable of collecting and analyzing big data, such as driving data, routing data, and vehicle conditions, to evaluate the performance of each driver for the customer’s reference. These data and conditions can also be viewed on the driver’s app, assisting the driver or the customer in managing and organizing the travel route, estimated driving time, remaining load capacity, and maintenance information. In addition, in the next phase of development, we plan to provide a service that will enable temperature control of the cargo box. Drivers and customers will be able to turn the vehicle on and off as well as adjust the temperature inside the vehicle and cargo box through the driver’s app, which we believe will be an important and convenient service, especially for customers in the logistics and delivery industry and the food and beverage retail industry.

We have completed the initial development of the HW ELECTRO Platform Service and launched it to all our customers in September 2023. We also intend to continue developing and upgrading the HW ELECTRO Platform Service so as to incorporate more functions into it.

We expect the launch of the HW ELECTRO Platform Service and its constant upgrade to diversify the sources of our total revenue to the extent that revenue generated from the sales of our electric light commercial vehicles comprises no greater than 92.6% and the revenue generated from HW ELECTRO Platform Service at least contributes 7.4% of our total revenue for the fiscal year ended September 30, 2027.

Implement Level 4 autonomous driving technology and the operating system on our electric light commercial vehicles

We believe that autonomous driving has the potential to improve safety in vehicular mobility, by reducing the risk of accidents. Autonomous driving may also improve vehicle utilization by allowing cars to operate throughout the day, since they would not be subject to drivers’ stamina limitations, increasing supply and reducing the cost of transportation.

As of the date of this prospectus, we expect to enter into a consignment contract with a technology development company that specializes in autonomous driving technology to research and develop Level 4 autonomous driving technology and its compatibility with our electric light commercial vehicles.

While the development of Level 4 autonomous driving technology and its implementation on our products remains subject to uncertainties and a series of internal and external complex tests, examinations, and evaluations, we plan to implement Level 4 autonomous driving technology and the operating system on our electric light commercial vehicles by connecting it to the HW ELECTRO Platform Service and expect to launch them in the Japanese market during the 2030s.

Our Products

We commenced selling two models of electric light commercial vehicles, ELEMO and ELEMO-K, in Japan in April 2022 and July 2022, respectively, and have been working with Cenntro, our cooperating manufacturer, to produce them under our brand, “ELEMO.” During the fiscal years ended September 30, 2023 and 2022, we sold and delivered a total of 52 and 16 electric light commercial vehicles, including three and ten ELEMO, 47 and six ELEMO-K, and two and 0 ELEMO-L, respectively. Since June 2023, we have commenced the sales of a new model called “ELEMO-L,” a van-type electric vehicle that could be used for commercial and recreational camping purposes, which we expect may enable us to increase consumer market penetration.