As filed with the U.S. Securities and Exchange Commission on May 2, 2025.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Center Holdings Inc.

(Exact name of registrant as specified in its charter)

Realize Sakaisuji-Honmachi Building Room 507

1-5-31 Kyutaromachi, Chuo-ku,

Osaka City, Osaka, 541-0056

Japan

+81-06-6263-6808

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

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

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

With copies 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.

EXPLANATORY NOTE

This registration statement on Form F-1 (File No. 333-) contains disclosure that will be circulated as two separate final prospectuses, as set forth below.

The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points:

The Company has included in this registration statement a set of alternate pages after the back-cover page of the Public Offering Prospectus (the “Alternate Pages”) to reflect the foregoing differences in the Resale Prospectus as compared to the Public Offering Prospectus. The Public Offering Prospectus will exclude the Alternate Pages and will be used for the public offering by the Registrant. The Resale Prospectus will be substantively identical to the Public Offering Prospectus except for the addition or substitution of the Alternate Pages and will be used for the resale offering by the Selling Shareholders.

The Selling Shareholders have represented to the Company that they will consider selling some or all of their respective Selling Shareholder Shares registered pursuant to this registration statement immediately after the pricing of the public offering, as requested by the underwriters for the public offering in order to create an orderly, liquid market for our Ordinary Shares. As a result, the sales of our Ordinary Shares registered in this registration statement will result in two offerings by the Registrant taking place concurrently or sequentially, which could affect the price and liquidity of, and demand for, our Ordinary Shares. This risk and other risks are included in “Risk Factors” in each of the Public Offering Prospectus and the Resale Prospectus.

The information in this preliminary prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary 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 MAY 2, 2025

Center Holdings Inc.

3,750,000 Ordinary Shares

This is a firm commitment initial public offering (the “Offering”) of our ordinary shares (“Ordinary Shares” or individually, an “Ordinary Share”). We are offering 3,750,000 Ordinary Shares. We expect the initial public offering price of our Ordinary Shares to be in the range of $4.00 to $6.00 per Ordinary Share. Prior to this Offering, there has been no public market for our Ordinary Shares. The Representative (as defined below) may also purchase up to fifteen percent (15%) of the Ordinary Shares sold in the Offering within 45 days to cover over-allotments, if any. We are also registering up to 3,970,014 Ordinary Shares (the “Selling Shareholder Shares”) for resale by the selling shareholders named in a separate Resale Prospectus (each, a “Selling Shareholder”), pursuant to the Resale Prospectus. This prospectus will not be used for the offering of Selling Shareholder Shares, and the Resale Prospectus will not be used for this initial public offering.

The sale of the Selling Shareholder Shares in the resale offering is conditioned upon the successful completion of the sale of our Ordinary Shares by the Company in the underwritten primary offering. The sales price to the public of the Selling Shareholder Shares will initially be fixed at the initial public offering price of our Ordinary Shares offered in this prospectus. Following listing of our Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”), the per Ordinary Share offering price of the Selling Shareholder Shares to be sold by the Selling Shareholders may be sold at prevailing market prices, prices related to prevailing market prices, or privately negotiated prices. We will not receive any of the proceeds from the sale of the Ordinary Shares by the Selling Shareholders named in the Resale Prospectus.

We have applied to list our Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “CTMB”. It is a condition to the closing of this Offering that our Ordinary Shares are approved for listing on Nasdaq. At this time, Nasdaq has not yet approved our application to list our Ordinary Shares and there is no guarantee or assurance that our Ordinary Shares will be approved for listing on Nasdaq.

Neither the United States Securities and Exchange 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. Investing in our Ordinary Shares 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 our Ordinary Shares.

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 28 of this prospectus for more information.

Following the completion of this Offering, our issued and outstanding share capital will consist of the Ordinary Shares. Mr. Tatsuya Nakagoshi, our founder and director, will hold approximately 71.63% of the aggregate voting power of our issued and outstanding Ordinary Shares, assuming no exercise of the Representative’s over-allotment option, or approximately 70.25%, assuming full exercise of the Representative’s over-allotment option, based on an assumed initial public offering price of $4.00 per Ordinary Share. As such, we will be deemed to be a “controlled company” under Nasdaq Listing Rule 5615(c). However, even if we are deemed to be a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Listing Rules. Nevertheless, as a foreign private issuer, we intend to follow home country practice. Further, for as long as Mr. Nakagoshi beneficially owns a majority of the voting power of our outstanding Ordinary Shares, he will generally be able to control the outcome of matters submitted to our shareholders for approval, including the election of directors, without the approval of our other shareholders. See “Risk Factors—Risks Relating to this Offering and the Trading Market—As a foreign private issuer, we intend to follow home country practice even though we will be considered a “controlled company” under Nasdaq corporate governance rules, which could adversely affect our public shareholders,” and see also “Management—Controlled Company.”

This Offering is being conducted on a firm commitment basis. The lead underwriter is obligated to take and pay for all of the Ordinary Shares if any such Ordinary Shares are taken. We have granted to the Representative an option, exercisable within 45 days from the date of this prospectus, to purchase up to an additional 15.0% of the total number of our Ordinary Shares to be offered hereby (excluding shares subject to this option), solely for the purpose of covering over-allotments, at the public offering price less the underwriting discounts. If the lead underwriter exercises the option in full, and assuming an offering price of $4.00 per Ordinary Share, which is the low end of the price range set forth on the cover page of this prospectus, the total gross proceeds to us, before underwriting discounts, commissions and expenses, will be approximately $___ million.

The underwriters expect to deliver the Ordinary Shares against payment in U.S. dollars in New York, New York on or about [           ], 2025 through the book-entry facilities of The Depository Trust Company.

Prospectus dated [    ], 2025

TABLE OF CONTENTS

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the Ordinary Shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Neither we nor any of the underwriters has done anything that would permit this offering or possession or distribution of this prospectus or any filed free writing prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus or any free writing prospectus must inform themselves about, and observe any restrictions relating to, the Offering and the distribution of this prospectus or any free writing prospectus outside of the United States. This Offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of our Ordinary Shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.

Until                          , 2025 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade the Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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 Ordinary Shares 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 and reporting currency are 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. Convenience translations included in this prospectus are based on the exchange rate of JPY to U.S. dollars of ¥150.41=$1.00. 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:

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the Representative of its over-allotment option.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our Ordinary Shares, discussed under “Risk Factors,” before deciding whether to invest in our Ordinary Shares.

Overview

We conduct all of our operations through our subsidiary in Japan, Center Mobile Japan and its subsidiary, Pay Storage. Center Mobile Japan is a mobile connectivity and wireless communications services provider in Japan, offering a “full range” of 4G LTE voice, texting, and data services covering all areas throughout Japan. Our customers are attracted to our services because of our competitive prices, flexible monthly plans, the high quality and stability of our services, and our innovative business model that allows our customers to lower their monthly fees. We offer such services on a monthly basis for specified quantities of minutes or amounts of data selected in advance. In addition, we are, as of the date of this prospectus, one of the few mobile connectivity and wireless communications services providers in Japan operating an innovative business model that allows our customers to lower their monthly fees for our services by watching advertisements or playing games through our proprietary app, “PLAIO.” Through our business model that incentivizes our customers to watch advertisements through PLAIO, we are able to receive advertising fees from advertisers and use them to reward those customers who watched advertisements in the form of “points,” which may be used by them to lower their monthly fees for our mobile connectivity and wireless communications services.

As a mobile virtual network operator (“MVNO”), we provide mobile connectivity and wireless communications services in Japan by using the infrastructure and communication system of NTT Docomo, Inc. (“NTT Docomo”), one of the largest Japanese mobile network operators (“MNO”) in terms of subscription market share. To provide mobile connectivity and wireless communications services to our customers, we purchase wholesale mobile connectivity and wireless communications services and applicable SIM cards from FreeBit Co., Ltd. (“FreeBit”), a Japanese mobile virtual network enabler (“MVNE”) that also purchases wholesale the wireless network infrastructure from NTT Docomo, and distribute the SIM cards to OEM partners, retailers who distribute the SIM cards under their own brands (“OEM Partners”), or to customers through our online store, directly-operated stores, franchise stores, and distributors under our name (the “SIM Card Business”).

Because we do not own or operate a physical network or relevant appliances and equipment, we are free from related capital expenditures and, therefore, are able to focus our resources on providing competitive prices for our services against MNOs. Furthermore, in addition to the monthly fees from our customers, we are also able to generate advertising revenue through “PLAIO,” our proprietary app. While it is common for other mobile connectivity and wireless communications services providers that operate diversified businesses to generate additional revenue by selling other services to existing customers for the mobile connectivity and wireless communications services, our innovative business model allows us to generate additional advertising revenue without the sales of other services, enabling two revenue streams from a single service. This unique dual revenue structure with lower overhead provides us with additional funds to provide high-quality and stable services by leasing sufficient bandwidth for mobile connectivity and wireless communications services from FreeBit yet at competitive prices to our customers.

As of November 30, 2024, we had entered into approximately 28,212 service agreements in connection with our mobile connectivity and wireless communications services and our revenue generated from the SIM Card Business was approximately JPY555,309 thousand ($3,692 thousand), JPY1,060,404 thousand ($7,050 thousand) and JPY1,312,065 thousand ($8,723 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 53.4%, 67.1% and 74.5% of our total revenue for those periods, respectively.

We also operate an internet service business to provide communications services other than those we provide under the SIM Card Business (the “Internet Business”). Under the Internet Business, we offer three types of communications services: the mobile router connectivity service, the home wireless communications service, and the home internet service. For the mobile router connectivity service and the home wireless communications service, we, as an MVNO, purchase wholesale SIM cards and mobile connectivity and wireless communications services and applicable mobile routers from an MVNE and sell our wireless communications services to the customers through our retail channels; for the home internet service, we purchase internet access services and applicable home routers wholesale from an internet access service provider that purchases the optical fiber system and internet access services wholesale from telecom companies and sell our internet access services to customers through our retail channels.

As of November 30, 2024, we had entered into approximately 1,595 service agreements under the Internet Business, and our revenue generated from the Internet Business was approximately JPY47,230 thousand ($314 thousand), JPY44,485 thousand ($296 thousand) and JPY73,093 thousand ($486 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 4.5%, 2.8% and 4.6% of our total revenue for those periods, respectively.

In addition to the SIM Card Business and the Internet Business, we currently also operate an outsourcing business (the “Outsourcing Business”). Under the Outsourcing Business, we work as a staffing agency, and our goal and policy are to provide a more stable working environment and conditions for job seekers. Unlike most of the staffing agencies in Japan that only hire job seekers and dispatch them to their corporate clients without providing much training, leaving the training to such corporate clients, we hire job seekers as our full-time employees and provide basic training to help them fit into the workplaces and positions that we consider the best match for them based on their willingness, interests, personalities, experiences, requirements, and our corporate clients’ needs before dispatching them to our corporate clients We also focus on the welfare of our employees and, we believe, offer more competitive employment conditions compared to those of other staffing agencies in Japan. By doing so, we may provide a more stable working environment and conditions for job seekers, which benefits us in recruiting more talented and competent personnel to appeal to more corporate clients. For each dispatch, our corporate clients pay us a monthly dispatch fee, and we then pay our employees who are dispatched monthly salaries, transportation allowance, and incentive bonuses out of the dispatch fees. When our full-time employees are not dispatched to our corporate clients, they generally work at our office and assist in matters such as managing dispatched employees and acquiring new corporate clients.

In addition, for job seekers who do not intend to take the dispatch path, we provide the service of acting as an intermediary, introducing them to appropriate hirers based on job seekers’ willingness, interests, personalities, experiences, requirements, and the hirers’ needs. In particular, in some special cases of blue-collar job seekers, if they face financial difficulties before getting hired, we support them with a certain amount of living expenses for a certain period of time. By doing so, we expect to make our service appealing to more job seekers, enabling us to secure the source of job seekers. After the job seekers are hired, we charge the hirers referral fees no greater than 30% of the workers’ estimated annual compensation package.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, our revenue generated from the Outsourcing Business was approximately JPY399,827 thousand (2,658 thousand), JPY264,865 thousand ($1,761 thousand) and JPY73,408 thousand ($488 thousand), respectively, which accounted for 38.4%, 16.8% and 4.2% of our total revenue for those periods, respectively.

In addition to our SIM Card Business, Internet Business, and Outsourcing Business, we currently also operate a travel business (the “Travel Business”). Through cooperating with our travel business partners, we operate a portal site that allows customers to purchase travel plans such as hotel plus airplane ticket set plans and hotel plus Shinkansen (i.e., the Japanese bullet trains) ticket travel plans. In most cases, our prices are lower than wholesale prices. While our prices may sometimes be slightly higher than the wholesale price, they are still lower than the official prices set by the hotels, airlines, and the Shinkansen company. We charge a monthly subscription fee of 2,530 Japanese yen (approximately $17). As of November 30, 2024, we had approximately 4,769 subscribers, and our revenue generated from the Travel Business was approximately JPY58,596 thousand ($390 thousand), JPY142,257 thousand ($946 thousand) and JPY229,812 thousand ($1,528 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 6.0%, 9.0% and 13.0% of our total revenue for those periods, respectively.

We operate our SIM Card Business, Internet Business, and Travel Business through Center Mobile Japan and operate our Outsourcing Business through Pay Storage, the wholly owned subsidiary of Center Mobile Japan. Both Center Mobile Japan and Pay Storage are based in Japan. Since investors will invest in Center Mobile Cayman, a holding company without substantial operations, our cash flows and our ability to meet our obligations depend on the cash flows of Center Mobile Japan and Pay Storage and the payment of funds by Center Mobile Japan and Pay Storage to us in the form of dividends, distributions or otherwise.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, our total revenue was JPY1,039,866 thousand (approximately $6,914 thousand), JPY1,583,214 thousand (approximately $10,526 thousand) and JPY1,760,423, thousand (approximately $11,704 thousand), respectively, and our net income was JPY29,081 thousand (approximately $193 thousand), JPY40,278 thousand (approximately $268 thousand) and JPY291,724 thousand (approximately $1,940 thousand), respectively.

Presently, we intend to expand into the fields of a water dispenser business and to develop our original smartphones. The water dispenser business plans to develop a model with a hot water mode for health-conscious users, a baby formula mode for preparing infant formula, advanced sterilization functions, and IoT (i.e., Internet of Things) technology. In connection with the development of our original smartphones, to date, we have completed market research and prepared to form partnerships with companies that will support development, as well as manufacturers who will handle production. Next steps involve finalizing the product design, moving into mass production, and developing an upgraded version of the water dispenser with additional features, along with obtaining relevant patents.

Competitive Strengths

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

Growth Strategies

We intend to grow our business using the following key strategies:

Our Challenges

We face risks and uncertainties in realizing our business objectives and executing our strategies, including but not limited to the following significant challenges:

Corporate Information

Our headquarters are located at Realize Sakaisuji-Honmachi Building Room 507, 1-5-31 Kyutaromachi, Chuo-ku, Osaka City, Osaka, 541-0056, Japan and our phone number is +81-06-6263-6808. Our registered office in the Cayman Islands is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our website address is https://centermobile.co.jp. The information contained in, or accessible from, our website or any other website does not constitute a part of this prospectus or the registration statement of which it forms a part. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168. 

Corporate Structure 

Center Mobile was incorporated as a joint-stock corporation (kabushiki kaisha) with limited liability under Japanese law on June 2, 2020, in Osaka, Japan. The following chart illustrates our corporate structure as of the date of this prospectus and upon completion of this Offering and does not include an aggregate of 3,970,014 Selling Shareholder Shares.

Following the completion of this Offering, Mr. Tatsuya Nakagoshi, our founder and director, will hold approximately 71.63% of the aggregate voting power of our issued and outstanding Ordinary Shares, assuming no exercise of the Representative’s over-allotment option, or approximately 70.25%, assuming full exercise of the Representative’s over-allotment option, based on an assumed initial public offering price of $4.00 per Ordinary Share, representing the low end of the price range set forth on the cover page of this prospectus. As such, we will be deemed to be a “controlled company” under Nasdaq Listing Rule 5615(c). However, even if we are deemed to be a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Listing Rules. Nevertheless, as a foreign private issuer, we intend to follow home country practice. Further, for as long as Mr. Nakagoshi beneficially owns a majority of the voting power of our outstanding Ordinary Shares, he will generally be able to control the outcome of matters submitted to our shareholders for approval, including the election of directors, without the approval of our other shareholders. See “Risk Factors—Risks Relating to this Offering and the Trading Market—As a foreign private issuer, we intend to follow home country practice even though we will be considered a “controlled company” under Nasdaq corporate governance rules, which could adversely affect our public shareholders,” and see also “Management—Controlled Company.”

Implications of Being an “Emerging Growth Company”

As a company with less than $1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An “emerging growth company” may take advantage of reduced reporting requirements that are otherwise applicable to larger public companies. In particular, as an emerging growth company, we:

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an “emerging growth company” at the end of the fiscal year in which the fifth anniversary of our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended (the “Securities Act”) occurred, if we have more than $1.235 billion in annual revenue, have a public float of $700 million or more, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period.

Foreign Private Issuer Status

We are a foreign private issuer within the meaning of the rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

As a foreign private issuer, Nasdaq corporate governance rules allow us to follow corporate governance practice in our home country, Cayman Islands, with respect to appointments to our board of directors and committees. We intend to follow home country practice, as permitted by Nasdaq. See “Risk Factors—Risks Relating to this Offering and the Trading Market—Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer” beginning on page 26 of this prospectus. Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Controlled Company

Upon completion of this Offering, Mr. Tatsuya Nakagoshi, our founder and director, will hold approximately 71.63% of the aggregate voting power of our issued and outstanding Ordinary Shares, assuming no exercise of the Representative’s over-allotment option, or approximately 70.25%, assuming full exercise of the Representative’s over-allotment option, in each case, based on an assumed initial public offering price of $4.00 per Ordinary Share, representing the low end of the price range set forth on the cover page of this prospectus.

As a result, we will be deemed to be a “controlled company” for the purpose of the Nasdaq listing rules. As a controlled company, we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements, including:

Consequently, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

As a foreign private issuer, however, Nasdaq corporate governance rules allow us to follow corporate governance practice in our home country, Cayman Islands, with respect to appointments to our board of directors and committees. We intend to follow home country practice, as permitted by Nasdaq, rather than rely on the “controlled company” exception to the corporate governance rules. See “Risk Factors—Risks Relating to this Offering and the Trading Market—Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.” Further, for as long as Mr. Nakagoshi beneficially owns a majority of the voting power of our outstanding Ordinary Shares, he will generally be able to control the outcome of matters submitted to our shareholders for approval, including the election of directors, without the approval of our other shareholders. Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Summary of Risk Factors

Investing in our Ordinary Shares involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in our Ordinary Shares. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk Factors.”

Risks Relating to Our Business

The following summarizes some of the more important risks and uncertainties related to an investment in the securities offered hereby. It is not a summary of all of the risks we face. For a more detailed discussion of risks related to our securities, please see the section captioned “Risk Factors” beginning on page 10 of the prospectus.

Risks and uncertainties related to our business include, but are not limited to, the following:

Risks Relating to this Offering and the Trading Market

In addition to the risks described above, we are subject to general risks and uncertainties related to this Offering and the trading market of our Ordinary Shares, including, but are not limited to, the following:

THE OFFERING

RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, 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 consolidated 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 our Ordinary Shares 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 our Ordinary Shares if you can bear the risk of loss of your entire investment.

Risks Relating to Our Business

Our dependence on MVNEs, their MNOs, and other third-party service providers could prevent us from continuously providing our services to our customers, which could result in decreased sales and revenue and loss of market share.

For our SIM Card Business, we purchase wholesale mobile connectivity and wireless communications services and applicable SIM cards from FreeBit, a Japanese MVNE that also purchases wholesale the wireless network infrastructure from NTT Docomo. While our service agreement has been automatically renewed every year since 2022, we have not entered into a long-term service agreement with FreeBit. See “Business—SIM Card Business.” Moreover, for our Internet Business, we purchase wholesale SIM cards and mobile connectivity and wireless communications services and applicable mobile routers from Network Consulting Co., Ltd, a Japanese MVNE that purchases wholesale SIM cards and mobile connectivity and wireless communications services (“Network Consulting”), and purchase applicable mobile routers wholesale from UQ Communications Inc., a Japanese MNO. In addition, we purchase internet access services and applicable home routers wholesale from NEXT BB Co., Ltd (“NEXT BB”), a Japanese internet access service provider that purchases the optical fiber system and internet access services wholesale from NTT East Corporation and NTT West Corporations. See “Business—Internet Business.” Our service agreements with Network Consulting and NEXT BB have an automatic renewal term, allowing us to continue the contractual relationship under the same terms, unless either party notifies the other of its intention to the contrary in writing no later than one month before the expiration of the then current term. However, there is no assurance that FreeBit will continue to purchase wholesale the wireless network infrastructure from NTT Docomo and renew our service agreement with us. It is also possible that Network Consulting or NEXT BB may terminate our service agreement for our Internet Business. If the above MVNEs and other third-party service providers determine to terminate our service agreements or replacing existing terms with unfavorable ones, we may have no means of replacing these services on a timely basis or at all, which may adversely affect our business, financial condition, and our results of operations.

In addition, we rely greatly on network services provided by our MVNEs, their MNOs, and other third-party services providers, which may subject to interruptions, errors, or delays with respect to their backbone network or service facilities caused by human errors, interruptions, errors, or delays with service facilities, or natural factors, including damage from fire, earthquakes, or other natural disasters, power loss, sabotage, computer hackers, cyber-attack, human error, computer viruses, and other similar events. If our MVNEs, their MNOs, and other third-party services providers experience any of these incidents and will not be able to repair or regain stable network services in a timely manner or at all, our network capacity provided by such MVNEs, their MNOs, and/or other third-party service providers will suffer. As a result, the credibility of our network and customer satisfaction could decrease significantly, which could have a material adverse effect on our business and results of operations.

Our ability to provide travel plans at competitive prices is crucial to the success of our Travel Business. If we are unable to continue to provide attractive travel plans, the number of subscribers of our travel services may decline, which could cause a decrease in our Travel Business revenue and materially and adversely affect our business, financial condition, and results of operations.

We believe that the success of our Travel Business is dependent on our ability to provide subscribers with access to travel plans offered by partners at competitive prices. By cooperating with our travel business partners, we provide services that allow subscribers to purchase travel plans from our partners, at prices that are lower than the wholesale price in most cases. While our prices may sometimes be slightly higher than the wholesale price, they are still lower than the official prices set by the hotels, airlines, and the Shinkansen (Japanese bullet trains) company. If we are unable to keep travel plans offered by our partners via our portal site attractive, for example, due to interruption of business relationships with our travel business partners or more attractive travel plans provided by competitors, our existing subscribers may terminate the subscriptions and we may not be able to attract new subscribers. As a result, our Travel Business revenue will decrease, which could materially and adversely affect our business, financial condition, results of operations, and the trading price of our Ordinary Shares after the Offering.

We rely greatly on FourM for showing advertisements to our customers through our PLAIO application and collecting advertising revenue under contractual terms. Unexpected termination of our contractual relationship with FourM would materially and adversely affect our business, financial condition, and results of operations.

We collect a significant amount of advertising revenue from the advertisers through FourM, who attracts and negotiates with the advertisers and manages the advertisements of those paying the highest advertising fees being displayed in our PLAIO application. During the fiscal years ended May 31, 2024 and 2023, advertising revenue collected from FourM was JPY73,132 thousand ($486 thousand) and JPY44,986 thousand ($299 thousand), respectively, which accounted for 92.3% and 53.8% of our total advertising revenue, respectively. Although our outsourcing agreement with FourM has an automatic renewal term, allowing us to continue the contractual relationship under the same terms, unless either party notifies the other of its intention to the contrary in writing no later than one month before the expiration of then current term, the term of our outsourcing agreement lasts only three months and could only be renewed for successive three-month terms. If FourM terminates our application license agreement, we may not be able to replace FourM with a third party in a timely manner or manage the advertisements on our own as effectively as FourM does, resulting in a significant decrease in our advertising revenue and inability to offer our customers with lower fees under our innovative business model, which could materially and adversely impact our business, financial condition, and results of operations.

We have a limited operating history and face significant challenges and will incur substantial expenses as we build our capabilities and it may be difficult for potential investors to evaluate our business.

We have only been in existence since 2020 and have a limited operating history. We are subject to the risks inherent in a growing company, including, among other things, risks that we may not be able to hire sufficient qualified personnel and establish operating controls and procedures. We rely on a limited number of trained internal personnel, as the Company has only 69 full-time employees. As we build our own capabilities, we expect to encounter risks and uncertainties frequently experienced by growing companies in new and rapidly evolving fields, including the risks and uncertainties described herein. If we are unable to build our own capabilities, our operating and financial results could differ materially from our expectations, and our business could suffer. Our limited operating history makes it difficult for potential investors to evaluate our business or prospective operations. Investors should evaluate an investment in us in light of the uncertainties encountered by such companies in a competitive environment. Our business is dependent upon the implementation of our business plan, as well as the ability and operation of our retail channels, such as OEM Partners and franchise stores. There can be no assurance that our efforts will be successful or that we will be able to continuously attain profitability.

We operate in highly competitive industries across our SIM Card Business, Internet Business, and Outsourcing Business and Travel Business, and we may not be able to compete effectively, especially against competitors with greater financial, technical, personnel, marketing, and other resources.

We operate in highly competitive industries across our SIM Card Business, Internet Business, and Outsourcing Business and Travel Business, including significant competition in the MVNO industry in Japan. The major competitors of our SIM Card Business are major MVNOs, some of which are highly integrated service providers that are directly operated by MNOs or MVNEs. These major competitors may have greater brand recognition, larger customer bases, and a larger pool of technology human resources, including application development engineers, than we do. They may also have better financial resources to fund advertising, purchase wholesale more bandwidth of the mobile connectivity and wireless communications services to improve network speed, invest more heavily in research and development, and reduce prices to retain existing customers and attract new customers. We will compete with these competitors on brand name, quality of services, level of expertise, advertising, product and service innovation, and differentiation of product and services. Moreover, new entrants from other industries into the MVNO industry with new and enhanced technologies may increase the competition and weaken our competitive position and profitability. 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.

Our business depends on a strong brand recognition, and if we fail to respond to customer requirements or are not able to maintain and enhance our brand, our business and results of operations may be harmed.

We believe that the recognition of our brand contributes significantly to the success of our business. We also believe that maintaining and enhancing our brand is critical to expanding our customer’s base. As our market becomes increasingly competitive, maintaining and enhancing our brand will depend largely on our ability to fund the advertising and promote our services and brand through social media platforms, which may be increasingly difficult and expensive. We also intend to engage with our existing and potential customers to receive real time feedback on our services. However, we cannot guarantee that the expected results will be achieved. If we are unable to maintain and enhance a strong brand recognition, or fail to respond to customer requirements, we may lose our competitive edge and may not be able to increase our customer base. As a result, our brand, business, and results of operations and the trading price of our Ordinary Shares after the Offering may be materially and adversely affected.

Our business is dependent on our ability to expand our services across our SIM Card Business, Internet Business, and Outsourcing Business and Travel Business, and we may not be able to compete effectively, especially against competitors with greater name recognition, greater operating revenues, larger customer bases, longer customer relationships and greater marketing resources than we have, while maintaining the quality of the services provided and keeping a positive customer experience.

Our business as a mobile connectivity and wireless communications services provider depends on our ability to maintain and expand our telecommunications service network while maintaining the quality of the services provided and a positive customer experience. We believe that our growth will require, among other aspects, increasing marketing activities and network capacity, continuous attention to service quality, and a positive customer experience. These requirements will place significant demand on our managerial, operational, and financial resources. Failure to manage successfully and effectively our growth could reduce the quality of our services and result in an inadequate customer experience that may have adverse effects on our business, financial condition, and results of operations.

If we are unable to keep our strengths, such as keeping SIM card service prices competitive and attractive, and providing high-quality internet services, our profitability will suffer.

We believe our success depends in substantial part on our ability to:

If we are unable to maintain any of the above strengths, we may not be able to keep existing customers and attract new customers or maintain our brand recognition and competitive edge. As a result, our profitability will suffer and our business, financial condition, and results of operations and the trading price of our Ordinary Shares after the Offering could be materially and adversely affected.

The loss of key personnel could have a material adverse effect on our business, as our success is substantially dependent on the continued service of our senior management and technical staff.

Our success is substantially dependent on the continued service of our senior management, technical staffs, and other key personnel, who have extensive market knowledge and long-standing industry relationship in the MVNO industry, substantial technical skills in mobile phone customer management system, and significant experience in expanding new business and marketing, including Mr. Tatsuya Nakagoshi, our founder and director, Mr. Yu Asano, our Chief Executive Officer and representative director, Mr. Yusuke Kanazawa and Mr. Shintaro Yamaguchi, our directors, Mr. Kazuo Iseji, our Chief Financial Officer and director, Mr. Yuuki Hayakawa, our director who is in charge of new business, and Mr. Yoshiaki Izutsu, our director and chief technology officer who is also our engineer and designer since our inception. If one or more of our key personnel are unable to continue in their present positions, we may not be able to replace them easily, or at all. The loss of such key personnel could make it more difficult to successfully operate our business and achieve our business goals, and result in loss of key information, expertise, or know-how. As a result, our business may be disrupted, and our financial condition, results of operations and the trading price of our Ordinary Shares after the Offering may be materially and adversely affected.

If we fail to maintain and increase our retail channels, our business, financial condition, and results of operations could be materially and adversely affected.

Our retail channels are critical to our business as we acquire significant numbers of customers and enhance brand recognition through these retail channels. As of the date of this prospectus, we had two directly-operated stores, which were all located in Osaka, Japan, 15 distributors, 36 franchise stores (operated by 35 owners) throughout Japan, and five OEM Partners. If any of these sales channels ceases operations or suffers business interruptions, we may lose customers and our corporate image and credibility may suffer, which could have a material and adverse effect on our business and results of operations.

Moreover, we intend to expand our retail channels by increasing the number of franchise stores and OEM Partners. The number and timing of new franchise stores and OEM Partners may be impacted by a number of factors, including:

In addition, we have been operating an online store on our website since June 2021, where customers can choose the monthly plans and order SIM cards to be shipped to their addresses within Japan. Unavailability or delays in engaging in new franchise stores or OEM Partners, failure to effectively operate our online store, or delays or costs resulting from a decrease in commercial development due to capital constraints, difficulties in staffing, or a lack of customer acceptance may negatively impact our new retail channels growth, which could have a material and adverse effect on our business and results of operations.

Our earnings depend substantially on the success of our franchise stores and OEM Partners, and we may be harmed by actions taken by our franchise stores or OEM Partners, or employees of our franchise stores and OEM Partners, which are outside of our control.

A significant portion of our SIM Card Business and Internet Business revenue is generated by monthly usage payments paid by our customers obtained through our franchise stores and OEM Partners. During the fiscal years ended May 31, 2024 and 2023, revenue from customers acquired through our franchise stores accounted for 1.8% and 1% of our total revenue, respectively, and revenue from our OEM Partners accounted for 69.6% and 56.5% of our total revenue, respectively.  Any business interruptions or reduction of revenue of our franchisees or OEM Partners could have an adverse effect on our business. Our franchise stores and OEM service agreements generally have a term of one year and automatically renew for successive one-year terms, unless either party notifies the other of its intention to the contrary in writing no later than three months before the expiration of the current term. If our franchise stores or OEM Partners terminate their agreements with us or request more favorable terms than the ones we currently have to renew such agreement, our retail channels will decrease and our ability to acquire customers will suffer. As a result, our business and results of operations will be materially and adversely affected.

In addition, although we license certain trademarks and trade names, such as センターモバイル (which translates to “center mobile”), and grant permission to use our store management know-how and provide management guidance to franchise stores, franchise stores are independent operators, and their employees are not our employees. Franchise stores may not operate their stores in a manner consistent with our standards and requirements or they or their employees may take actions that adversely affect the value of our brand. While we try to ensure that franchise stores maintain the quality of our brand and comply with their franchise agreements, franchise stores may take actions that adversely affect the value of our intellectual property or reputation or that are inconsistent with their contractual obligations. Although our franchise agreements permit us to terminate the agreement under certain circumstances, including violation of the agreement by a franchise store or deterioration of financial conditions of a franchise store, there can be no assurance that such remedy will be available or sufficient to prevent or undo harm to our brand.

Our directly-operated stores, franchise stores, distributors, and OEM Partners are all located in Japan; therefore our current business and future growth could be materially and adversely affected if we experience a decline in customers in Japan.

Our directly-operated stores, franchise stores, distributors, and OEM Partners are all located in Japan. We expect to continue to derive a substantial portion of our revenue from Japan in the foreseeable future. Our current business and future growth could be materially and adversely affected if we experience a decline in consumer sales or customer engagement in Japan.

Due to the importance of the Japanese market to our business, we are also subject to macroeconomic risks specific to Japan. See “—General economic, political, and market conditions may have an adverse impact on our operating performance, results of operations, and cash flow” below.

Privacy concerns and privacy laws and regulations may reduce the effectiveness of our products and services and could adversely affect our business.

To provide SIM Card Business services, we are currently acquiring personal data from SIM Card Business users, such as users’ names, addresses, birth dates, email addresses, selected SIM card plan and amount of data, and, in case of corporate customers, the corporations to which the users belong. Additionally, to develop our big data technologies, which will enhance the quality of targeted advertising for our SIM Card Business, we plan to collect and use certain personal data obtained from SIM Card Business, water dispenser business, and original device business.  See “Business—Growth Strategies—Continue to grow our SIM Card Business” and “Business—Intellectual Property—Our Big Data Technologies.” We have not collected any personal data through the water dispenser business and original device business yet. See “Business—Personal Data.”

Japanese government bodies and agencies have adopted laws and regulations regarding the collection, use, storage and transfer of personal information obtained from consumers and individuals. Specifically, Personal Information Protection Act of Japan imposes various requirements on businesses, including us, that use databases containing personal information.  See “Regulations.” The costs of compliance with, and other burdens imposed by, such laws and regulations may limit the utilization of personal data collected from our users and customers or lead to significant fines, penalties or liabilities for any noncompliance with such privacy laws. Furthermore, privacy concerns may cause our users to resist providing personal data necessary for targeted advertising as well as the further development of our big data technologies. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our products and services in certain industries.

All of our legislative and regulatory initiatives may, directly or indirectly, adversely affect our ability to process, handle, store, use, and transmit demographic and personal data obtained from our users and customers, which could affect effective targeted advertising, inhibit the development of our big data technologies, or reduce demand for our products and services. In addition to government activity, privacy advocacy groups and the technology and other industries are considering various new, additional or different self-regulatory standards that may place additional burdens on us. If the processing of personal data were to be curtailed in this manner, our products and services would be less effective, which may reduce demand for our products and services and adversely affect our business, results of operations, and the trading price of our Ordinary Shares.

If we fail to keep, manage, or properly use customers’ personal data, we could be subject to lawsuits, incur expenses associated with our server management system, or suffer damage to our reputation.

We receive, collect, and manage sensitive data obtained from our customers, including personal data, such as name, date of birth, and residential address, and internet access login information. To protect the confidentiality of such obtained information, we exercise much care through our server management system and take steps to ensure the security of our network, in accordance with the Personal Information Protection Act. However, our network may suffer internet interruption caused by human error, problems with facilities or systems, cyber-attacks, hacking, or other unauthorized access by third parties. There can be no assurance that we will effectively prevent such threats or successfully mitigate the negative effects.

Moreover, despite internal controls, misconduct by our employees could result in the improper use or disclosure of sensitive data and personal information. If any person, including any of our employees, gains unauthorized access or penetrates our network security or otherwise mismanages sensitive data, we could be subject to significant liability or lawsuits for damages, incur expenses associated with repairing or upgrading our server management system, and suffer damage to our reputation that could result in severe decline in the number of new customers as well as increase service cancellations. Although we require our franchise stores and OEM Partners to protect customers’ personal information, our corporate image or credibility could be negatively impacted if they fail to properly protect such information or fail to comply with related laws or regulations.

If we or any franchise stores fails to attract, train, or retain qualified management and sales personnel in physical stores, our business and future growth may be materially and adversely affected.

Our physical stores’ reputation and successful operation are dependent on the quality of service performed by the management and sales personnel. To provide a positive customer experience and keep the physical stores’ performance consistent with our culture and standards, we offer direct training to sales personnel for our directly-operated stores and provide sales guidance and manuals to franchise stores. We also intend to expand our Outsourcing Business by recruiting and dispatching them to sales companies to develop sales skills, which could be used for our SIM Cards Business and our future water dispenser business and the original smartphones business. If we fail to attract, train, or retain qualified management and sales personnel, our physical stores’ performance will be negatively impacted, resulting in loss of customers and decline in revenue, which could have a material and adverse effect on our business, financial condition, results of operations and the trading price of our Ordinary Shares after the Offering.

Our investment in the water dispenser business and the original smartphones business may not produce the returns we expect and may adversely affect our results of operations.

We have been significantly investing in the water dispenser business and the original smartphones business since January 2024 to diversify our revenue and collect data for future advertising business. For the fiscal year ended May 31, 2024, capital expenditures, including research and development, were JPY2,500 thousand ($16 thousand). We are expecting to increase our revenue by selling water dispensers and original smartphones. We also expect to use water dispensers and original smartphones to collect data regarding customers’ personal interests and lifestyle habits by using our big data technologies that we, cooperating with an external team, are currently researching and developing, and use such data for future advertising distribution. See “Business—Intellectual Property—Our Big Data Technologies.” Part of the proceeds in this Offering will be used to expand both the water dispenser business and development, manufacture, and sales of our original smartphones. However, there is no assurance that our original smartphones or water dispensers will generate sufficient or any customer interest. Customers may not find our original smartphones attractive for reasons such as high cost compared to other devices in the market, low brand recognition, and lack of design preference, and our water dispensers may not be able to function properly or effectively in collecting lifestyle data as we expect. If we fail in our business strategy or fail to collect useful data, we may not be able to achieve the return we expect and we may fail to cover our development, manufacturing, and marketing costs and expenses associated with these new businesses. As a result, our results of operations and the trading price of our Ordinary Shares after the Offering may be materially and adversely affected.

We may not be able to successfully implement our business and operating strategies.

Our long-term success is greatly dependent on our ability to build and maintain a large customer base, attract new advertising sponsors, diversify revenue sources, and enhance brand recognition. To achieve these goals, our business and operating strategies include:

The rapidly changing technology, Internet, travel and staffing industries means we will be required to innovate to remain competitive. However, we may not be able to implement these strategies successfully or realize the anticipated results fully or at all, and the implementation may be costlier or more challenging than we initially expected. In addition, our ability to successfully implement these strategies could be adversely affected by a number of factors beyond our control, including operating difficulties, increased ongoing operating costs, general economic conditions, increased competition, technological changes, and increased dependence on third-party suppliers and service providers. Presently, we intend to expand into the fields of a water dispenser business and to develop our original smartphones. Further, because there is no certainty that our growth strategy for the water dispenser business and the original smartphones business will be as successful as we anticipate, we may incur expenses or suffer losses of revenue for a significant period of time, which could have a material adverse effect on our business, financial condition, results of operations, and the trading price of our Ordinary Shares after the Offering.

If we fail to keep up with the rapid development changes in our industry, our services may become obsolete, and we may lose customers.

Our markets are characterized by rapid development changes, including frequent new product and service introductions, continually changing customer requirements, and evolving industry standards. If we fail to obtain access to new or important technologies or fail to develop and introduce new services that are compatible with changing industry technologies and customer requirements, our services may become obsolete, and we may lose customers, which could have a material and adverse effect on our business, results of operations and the trading price of our Ordinary Shares after the Offering.

We require a significant amount of cash to fund our 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 need to raise funds for our water dispenser business and original smartphones business so as to remain competitive.

Our ability to obtain external financing is subject to a number of uncertainties, including:

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

Regulatory matters and new legislation could negatively impact our ability to conduct our business.

As an MVNO in Japan, we are subject to a wide range of telecommunications, internet, and data protection laws and regulations as well as supervision by the Minister of Internal Affairs and Communication (“MIC”). Violation of such laws and regulations may result in investigations, business improvement orders, and corrective orders by the MIC, as well as criminal penalties such as fines and imprisonment. In addition, as we provide our services to consumers, we are also subject to consumer protection laws and regulations, including the Act against Unjustifiable Premiums and Misleading Representations, and supervision by the Japan Consumer Affairs Agency. In the event of a violation, the Japan Consumer Affairs Agency may issue an order to take measures and impose an administrative fine. These violations and consequences could harm our reputation and adversely affect our business, financial condition, and results of operations. We also hold a secondhand goods dealer license for resale of used smartphones, and a worker dispatching business license and a paid employment placement business license for our Outsourcing Business. Although we strive to ensure that our operations comply with applicable laws and regulations, there is no assurance that we will not violate any laws or regulations in the foreseeable future. Violations of relevant laws and regulations could result in the revocation of our licenses or suspension of our business, which could harm our reputation and adversely affect our business, financial condition, and results of operations. Enforcement of, or changes in, other laws and regulations of general applicability to Japanese companies could also have an adverse impact on our financial condition, results of operations and the trading price of our Ordinary Shares after the Offering.

Existing and future governmental regulations may substantially affect the way in which we conduct our business. These regulations may increase the cost of doing business or may restrict the way in which we offer products and services. We cannot predict how future regulatory changes may affect our business. Any changes in laws or regulations, such as those described above, or in the policies of regulatory authorities affecting our business activities could adversely affect our financial condition or results of operations. For more information, see “Regulations.”

We face various cyber-security risks which, if not adequately addressed, could have an adverse effect on our business.

We face various cyber-security risks that could result in business losses, including contamination (whether intentional or accidental) of our networks and systems by third parties with whom we exchange data, equipment failures, unauthorized access to and loss of confidential customer, employee, and/or proprietary data by persons inside or outside our Company. We are also exposed to cyber-attacks causing systems degradation or service unavailability by malicious third parties, and infiltration of malware (such as computer viruses) into our systems.

The inability to operate our networks and systems as a result of cyber-attacks, even for a limited period of time, may result in significant expenses to us and/or a loss of market share to other MVNOs. The costs associated with a major cyber-attack could include expensive incentives offered to existing customers and business partners to retain their business, increased expenditures on cyber-security measures and the use of alternate resources, lost revenue from business interruption, and litigation. If we are unable to adequately address these cyber-security risks, our operating network and information systems could be compromised, which would have an adverse effect on our business, financial condition, reputation, and results of operations.

We rely on our relationships with certain business partners to develop and manufacture water dispensers and original smartphones. If these relationships were to be impaired, or if one of our business partners were unable to supply sufficient products to keep pace with our growth plans, we may not be able to continue to meet our current requirements and new business expansion in a timely manner, which could have a material adverse effect on business.

To develop the water dispenser business and the original smartphones business, we have engaged certain business partners to develop and manufacture water dispensers and our own original smartphones. If we fail to maintain a strong relationship with our existing business partners or fail to continue acquiring and strengthening relationships with new business partners, or any of them decide to end its relationship with us, we may not be able to replace them in a timely manner or at all. As a result, our ability to develop the water dispenser business and the original smartphones business may be limited and negatively impacted, which could have a material and adverse effect on our competitive position and business expansion.

Our businesses depend on using and protecting our intellectual property rights and on not infringing the intellectual property rights of others.

We rely on our intellectual property, such as our PLAIO applications, copyrights, trademarks, trade secrets, and management know-how to conduct our business, and authorize third parties to use such intellectual property through application license agreements, OEM service agreements, and franchise agreements.

Legal challenges to our intellectual property rights and claims of intellectual property infringement by third parties could require us to enters into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability, or be enjoined preliminarily or permanently from further use of the intellectual property in question. If any of these events occur, we may need to change our business practices, which may limit our ability to compete effectively and could have an adverse effect on its results of operations. In the event that we believe any such challenges or claims are without merit, they can nonetheless be time-consuming and costly to defend and divert management’s attention and resources away from our businesses.

The success of our SIM Card Business expansion and our innovative business model development relies on our ongoing and future patent applications of big data technologies, which, if unsuccessful or delayed, could materially and adversely affect our business, financial condition, and results of operations.

We intend to continue to grow our SIM Card Business and further develop our innovative business model by using our ongoing patent applications related to big data technologies. See “Business—Growth Strategies.” We may also need to apply for new patents in the foreseeable future to meet our business expansion and development requirements. However, we cannot predict whether such pending patents will be granted by the Japan Patent Office and when we will apply for new patents. If we fail to obtain any of these patents or are unable to apply for new patents, we may need to change our business strategy, invest in new technologies, or secure a license from a third party for similar technologies, which may incur expenses and could have an adverse effect on our business, financial condition, results of operations and the trading price of our Ordinary Shares after the Offering.

We are subject to credit risk with respect to our customers.

Our operations depend to a significant extent on the ability of our customers to pay for our services. Customers shall pay communication service usage fees for a certain month in the next month, i.e., pay the fee for May in June. If we are unable to undertake measures to limit payment defaults by our customers, we will remain subject to outstanding uncollectible amounts, which could have an adverse effect on our results of operations and the trading price of our Ordinary Shares after the Offering.

If we are unable to conduct our marketing activities cost-effectively, our results of operations and financial condition could 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 increase sales of our products. Our marketing and promotional activities may not be well received by customers and may not result in the increased levels of product sales that we anticipate. We incurred JPY47,696 thousand ($317 thousand) and JPY8,205 thousand ($55 thousand) in promotion and advertising expenses during the fiscal years ended May 31, 2024 and 2023, respectively.

Marketing approaches and tools in the telecommunication markets in Japan are evolving. This further requires us to enhance our marketing approaches and 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.

If we fail to effectively implement our hiring policies in our Outsourcing Business, we may not be able to attract more job seekers and keep a stable pool of competent and well-trained workers, which could materially and adversely affect our business, financial condition, and results of operations.

We believe that our policy of providing a more stable working environment and conditions for job seekers is curial to the success of our Outsourcing Business. Under this policy, we provide job seekers with adequate training and dispatch them to workplaces that we consider the best match based on both their willingness and our corporate clients’ needs. See “Business—Outsourcing Business.” Moreover, as we hire job seekers as our full-time employees, we continue to provide stable income and benefits to job seekers during the gap of dispatches, offer a basic training and comprehensive career path to our job seekers, and arrange regular counseling with respect to different types of positions or jobs. If we fail to effectively implement our hiring policies, for example, if our training does not help job seekers fit into the workplaces, we may not able to meet our corporate clients’ needs, or if our client terminates the worker dispatch agreement with respect to a specific job seeker and we are unable to dispatch such job seeker to a new position for a long period of time from previous dispatch, we will continue to incur labor costs by paying such job seekers the income and benefits without receiving any dispatch fees. Moreover, if our job seekers are unsatisfied with our training or counseling services and choose to resign from us, we may not be able to keep a stable pool of competent and well-trained workers and attract more job seekers. As a result, our business, financial condition, results of operations and the trading price of our Ordinary Shares after the Offering may be materially and adversely affected.

The success of our Outsourcing Business depends on our ability to maintain our professional reputation.

We depend on our overall professional reputation to maintain existing clients and secure new engagements. Our Outsourcing Business also depends on the individual reputations of our employees. We obtain many of our new engagements from referrals by existing clients. If our existing clients are dissatisfied with our employees’ performance, we may not be able to secure new engagement from these existing clients or receive any referrals from them. Moreover, if any factor, including a poor work ethic of our dispatched employees, hurts our reputation, we may experience difficulties in competing successfully for new engagements. Failure to maintain our professional reputation could adversely affect our overall business and results of operations.

A significant portion of our Outsourcing Business revenue is generated by dispatch fees paid by PayPay Corporation a Japanese mobile payment app operating company. If our relationship with it is impaired and we are unable to engage new corporate customers to replace it, our business, financial condition, and results of operations would be materially and adversely affected.

Our Outsourcing Business revenue depends substantially on dispatch fees paid by PayPay Corporation (“PayPay”), a Japanese mobile payment app operating company. While we did not generate revenue from PayPay during the fiscal year ended May 31, 2023, during the fiscal year ended May 31, 2024, we received aggregated dispatch fees of JPY66,546 thousand ($442 thousand) from PayPay, which accounted for 25.1% of our total Outsourcing Business revenue, respectively. We entered into a basic worker dispatch agreement with PayPay on June 6, 2023, which has a term of one year and automatically renews for successive one-year terms, unless either party notifies the other of its intention to the contrary in writing no later than one month before the expiration of the current term. See “Business—Our Business—Outsourcing Business—Corporate Clients.” However, if PayPay terminates its agreement with us or replace existing terms with unfavorable ones, we may have no means of replacing it with other corporate customers on a timely basis or at all, which may adversely affect our business, financial condition, results of operations and the trading price of our Ordinary Shares after the Offering.

We have no commercial insurance coverage.

Other than the government-mandated social and health insurance, worker’s accident compensation insurance, and comprehensive tenant insurance, we do not maintain any other insurance covering our directors’ and officers’ liability, property, equipment, or employees. Any business disruption or litigation against us or our executive directors may result in increased costs and the diversion of our resources, which may adversely affect our business, financial condition, and results of operations.

Public health epidemics or outbreaks, such as the COVID-19 pandemic, and natural disasters, such as a tsunami, could adversely impact our business.

An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, along with any associated economic and social instability or distress, have a material adverse impact on our business, prospects, liquidity, financial condition, and results of operations.

During the fiscal years ended May 31, 2024 and 2023 and since May 31, 2024, the COVID-19 pandemic has not had a material adverse effect on our business, financial condition and results of operations. However, if an epidemic or other outbreak of disease occurs, we may need to shut down our directly-operated stores, franchisee stores, or OEM Partners, limit the number of customers entering these stores, and take certain precautionary measures for employees or customers. A future epidemic or other outbreak may also disrupt recruitment for employees and professionals, decrease the demand for our outsourcing service, and the usage of our travel service due to travel restrictions.

Moreover, Japan, where we operate, is a country prone to natural disasters, such as volcanic eruptions and tsunamis. As a mobile network service provider, our operations are susceptible to natural disasters and adverse weather conditions. We may experience earthquakes, floods, typhoons, power outages, or similar events beyond our control that could materially and adversely affect our operations, such as temporary suspension of business of our directly-operated stores, franchisee stores or OEM Partners.

Our compliance and risk management programs might not be effective and may result in outcomes that could adversely affect our reputation, financial condition, and results of operations.

Our ability to comply with applicable laws and rules is largely dependent on our establishment and maintenance of compliance, review, and reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. There is no assurance that our compliance policies and procedures will always be effective or that we will always be successful in monitoring or evaluating our risks. In the case of alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, which could be significant. Any of these outcomes may adversely affect our reputation, financial condition, and results of operations.

General economic, political, and market conditions may have an adverse impact on our operating performance, results of operations and cash flow.

Our business is influenced by a range of factors that are beyond our control, including general economic and business conditions and legal, regulatory, and political developments. Challenging economic conditions worldwide have contributed, from time-to-time, and may continue to contribute, to slowdowns in the information technology industry at large. Weaknesses in the economy could have a negative effect on our business, operations, and financial condition, including decreases in revenue and operating cash flow, and inability to attract future equity and debt financing on commercially reasonable terms.

In addition, we are currently operating in a period of economic uncertainty and capital markets disruption, significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine and the tension between Israel and its neighbors. The military conflicts in Ukraine and the Middle East have led to sanctions and other penalties being levied by the United States, the European Union, and other countries, including Japan, against various entities and countries. There is also the potential for additional sanctions and penalties. If there are any counter-sanctions against Japan that significantly impacts Japan’s economy, our business, financial condition, and results of operations may be materially and adversely impacted. While our business has not been materially impacted by these geopolitical tensions as of the date of this prospectus, the extent to which our operations or those of our business partners will be affected in the future, or the ways in which the conflicts may impact our business, including sanctions and penalties, is unpredictable. The extent and duration of the military actions, sanctions, and resulting market disruptions could be substantial. Any such disruptions may also amplify the impact of other risks described in this prospectus.

We are subject to litigation or administrative proceedings, which, if adversely determined, could cause us to incur substantial losses.

From time to time during the normal course of our business, we are subject to various litigation claims and legal disputes. We do not have any insurance for legal action against us. As a result, we might be required to incur significant legal fees, which may have a material adverse effect on our financial position. In addition, because we cannot accurately predict the outcome of any action, it is possible that, as a result of current and/or future litigation, we will be subject to adverse judgments or settlements that could significantly reduce our earnings or result in losses.

Moreover, we may also be subject to administrative proceedings. On March 29, 2023, we received administrative sanctions from the Japan Consumer Affairs Agency for violating regulations on multilevel marketing transactions under the Specified Commercial Transactions Act, as we had provided services to certain business partners who improperly engaged in multilevel marketing transactions. Mr. Tatsuya Nakagoshi, our founder and former representative director and former Chief Executive Officer, and Mr. Kazuo Iseji, our director and Chief Financial Officer, have also received administrative sanctions from the Japan Consumer Affair Agency for cooperating with these business partners. The administrative sanctions prohibited us, Mr. Tatsuya Nakagoshi, and Mr. Kazuo Iseji from being involved in any solicitation, acceptance of an offer to contract, or entering into any contract in connection with multilevel marketing transactions from March 30, 2023 to December 29, 2023. Although marketing activities were not impacted by the administrative sanctions as we ceased such involvement before receiving the sanctions, such administrative proceedings have had a negative impact on our reputation. To prevent the recurrence of similar incidents, we have adopted policies on not conducting multilevel marketing transactions and not providing services to our business partners engaging in multilevel marketing transactions and taking thorough measures to prevent a recurrence. However, there is no guarantee that our policies or measures will be adequate and if we receive similar or other administrative sanctions in the future, our reputation and corporate image will be significantly damaged, which would result in loss of customers and a material adverse impact on our business, results of operations and the trading price of our Ordinary Shares after the Offering.

We intend to explore acquisitions, other investments, and strategic alliances. We may not be successful in identifying opportunities or in integrating the acquired businesses. Any such transaction may not produce the results we anticipate, which could adversely affect our business.

We intend to explore and pursue acquisitions, strategic partnerships, joint ventures, and other alliances to strengthen our business and grow our Company in the future. The market for acquisitions and strategic opportunities is highly competitive. In addition, these transactions entail numerous operational and financial risks, including but not limited to difficulties in valuing acquired businesses, combining personnel and firm cultures, integrating acquired products, services and operations, achieving anticipated synergies that were inherent in our valuation assumptions, exposure to unknown material liabilities, the potential loss of key vendors, clients, or employees of acquired companies, incurrence of substantial debt or dilutive issuance of equity securities to pay for acquisitions, higher-than expected acquisition or integration costs, write-downs of assets or impairment charges, increased amortization expenses, and decreased earnings, revenue, or cash flow from dispositions.

Risks Relating to this Offering and the Trading Market

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

We have applied to list our Ordinary Shares on Nasdaq. Prior to this Offering, there has not been a public market for our Ordinary Shares, and we cannot assure you that an active public market for our Ordinary Shares will develop or be sustained after this Offering. If an active public market for our Ordinary Shares does not develop following the completion of this Offering, the market price and liquidity of our Ordinary Shares may be materially and adversely affected. The initial public offering price of our Ordinary Shares 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 our Ordinary Shares 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 purchased.

We expect the initial public offering price of our Ordinary Shares to be substantially higher than the pro forma as-adjusted net tangible book value per Ordinary Share. Consequently, when you purchase our Ordinary Shares in the Offering, upon completion of the Offering, you will incur an immediate dilution of $3.44 per Ordinary Share, based on the assumed initial public offering price of $4.00 per Ordinary Share, representing the low end of the price range set forth on the cover page of this prospectus, and assuming no exercise of the Representative’s over-allotment option. See “Dilution” beginning on page 33 of this prospectus. In addition, you may experience further dilution to the extent that additional Ordinary Shares are issued upon the exercise of outstanding options we may grant from time to time.

Future issuances of our Ordinary Shares or securities convertible into, or exercisable or exchangeable for, our Ordinary Shares could cause the market price of our Ordinary Shares to decline and would result in the dilution of your holdings.

Future issuances of our Ordinary Shares or securities convertible into, or exercisable or exchangeable for, our Ordinary Shares could cause the market price of our Ordinary Shares to decline. We cannot predict the effect, if any, of future issuances of our securities on the price of our Ordinary Shares. In all events, future issuances of our Ordinary Shares would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur could adversely affect the market price of our Ordinary Shares.

The sale or availability for sale of substantial amounts of our Ordinary Shares could adversely affect their market price.

Sales of substantial amounts of our Ordinary Shares 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 our Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. Resales of our Ordinary Shares in the public market during this offering by the Selling Shareholders in this offering may cause the market price of our Ordinary Shares to decline. The Ordinary Shares sold in this Offering to “non-affiliates” 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, 24,720,473 of our Ordinary Shares are outstanding. Excluding the Selling Shareholder Shares, there will be 3,750,000 Ordinary Shares publicly trading immediately following the consummation of this Offering, assuming no exercise of the Representative’s over-allotment option, or 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, and based on the assumed initial public offering price of $4.00, representing the low end of the price range set forth on the cover page of this prospectus. In connection with this Offering, our officers, directors, and holder(s) of 5.0% of the outstanding shares of Ordinary Shares as of the effective date of the registration statement of which this prospectus forms a part have agreed not to offer, issue, sell, contract to sell, encumber, grant any option for the sale of or otherwise dispose of any of our securities for a period of 180 days from the date of this prospectus. However, the Representative may release these securities from these restrictions at any time, subject to applicable regulations of the 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 our Ordinary Shares. See “Underwriting” and “Ordinary Shares 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 our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline.

Any trading market for our Ordinary Shares 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 our Ordinary Shares 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 our Ordinary Shares and the trading volume to decline.

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

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

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, shareholders 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 our Ordinary Shares 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 second annual report following the completion of this Offering. 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 our independent registered public accounting firm 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 our Ordinary Shares. 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 substantially 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 Nasdaq, 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. As a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements.

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 our public float equals or exceeds $700 million as of the prior August 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 Ordinary Shares less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our stock price may decline and/or become more volatile.

In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

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 have limited experience operating as a public company.

We have limited experience conducting our operations as a public company. We may encounter operational, administrative, and strategic difficulties as we adjust to operating as a public company. This may cause us to react more slowly than our competitors to industry changes and may divert our management’s attention from running our business or otherwise harm our operations. In addition, since we are becoming a public company, our management team will need to develop the expertise necessary to comply with the numerous regulatory and other requirements applicable to public companies, including requirements relating to corporate governance, listing standards and securities and investor relationships issues. As a public company, our management will have to evaluate our internal controls system with new thresholds of materiality, and to implement necessary changes to our internal controls system. We cannot guarantee that we will be able to do so in a timely and effective manner.

As a foreign private issuer, we intend to follow home country practice even though we will be considered a “controlled company” under Nasdaq corporate governance rules, which could adversely affect our public shareholders.

Following this Offering, Mr. Tatsuya Nakagoshi, our founder and director, will continue to hold more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq corporate governance rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and may elect not to comply with certain Nasdaq corporate governance standards, including the requirements that:

As a foreign private issuer, however, Nasdaq corporate governance rules allow us to follow corporate governance practice in our home country, Cayman Islands, with respect to appointments to our board of directors and committees. We intend to follow home country practice, as permitted by Nasdaq rather than rely on the “controlled company” exception to the corporate governance rules. See also “—Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer,” below. Further, for as long as Mr. Nakagoshi beneficially owns a majority of the voting power of our outstanding Ordinary Shares, he will generally be able to control the outcome of matters submitted to our shareholders for approval, including the election of directors, without the approval of our other shareholders. Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

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 our Ordinary Shares.

Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and high 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, our Ordinary Shares may be subject to immediate and substantial price volatility, low volumes of trading, 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 our Ordinary Shares.

In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence the price of our Ordinary Shares. This low volume of trading could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares 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 our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional 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 our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.

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 our Ordinary Shares.

We anticipate using the net proceeds from this Offering for the development and expansion of the water dispenser business, development and expansion of the original smartphone business and expansion of our existing business, including products and services in our SIM Card Business. See “Use of Proceeds.” 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 our Ordinary Shares. 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.

You may have difficulty enforcing judgments against us.

We are incorporated under the laws of the Cayman Islands as an exempted company limited by shares. Currently, all of our operations are conducted in Japan, and all or a substantial portion of our assets are and will be located outside of the United States and located in Japan. In addition, all of our officers and directors are nationals and residents of a country other than the United States, and almost all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe we have violated your rights, either under United States federal or state securities laws or otherwise, or if you have a claim against us. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Japan may not allow you to enforce a judgment against our assets or the assets of our directors and officers. See “Enforceability of Civil Liabilities.”

The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

Our corporate affairs are governed by our memorandum and articles of association, by the Cayman Companies Act and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders, and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors, or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. These rights, however, may be provided in a company’s articles of association. Our post-offering amended and restated articles of association will allow our shareholders holding shares which carry in aggregate not less than one-tenth of all votes attaching to all of our issued and outstanding shares, to requisition an extraordinary general meeting of our shareholders, in which case our board of directors is obliged to call such meeting. Advance notice of at least ten calendar days is required for the convening of any general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least two shareholders entitled to vote and present in person or by proxy or (in the case of a shareholder being a corporation) by its duly authorized representative representing not less than one-third in nominal value of the total issued voting shares in the Company throughout the meeting.

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 Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require 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, the Cayman Islands, 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, Nasdaq listing rules require U.S. domestic issuers to have an audit committee, a compensation committee and a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. We intend to follow home-country practice, as permitted by Nasdaq. See “Management — Corporate Governance Practices.” Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

We have elected to rely on a phase-in provision of Nasdaq listing rules, and, as a result, we will not immediately be subject to certain corporate governance requirements otherwise required by Nasdaq.

We have applied to list our Ordinary Shares on Nasdaq upon consummation of this Offering. We will rely on the phase-in provision of Nasdaq listing rules with respect to the independence of our audit committee. The phase-in provision permits us to have an audit committee that has one member that is independent by the date that our Ordinary Shares first trade on Nasdaq, and a majority of and all members that are independent within 90 days and one year, respectively, of the SEC’s declaration of effectiveness of the registration statement of which this prospectus forms a part.

As we will establish an audit committee consisting of three directors, including [  ], [  ], and Aya Hoshiko, upon the SEC’s declaration of effectiveness of the registration statement of which this prospectus forms a part and that we have determined that only Aya Hoshiko will satisfy the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act, [  ] and [  ] will be replaced with independent directors within 90 days and one year, respectively, of the SEC’s declaration of effectiveness of the registration statement of which this prospectus forms a part so that after one year of the effective date, the audit committee will consist solely of independent directors.

During the phase-in period, our shareholders will not have the same protections afforded to shareholders of companies that comply with Nasdaq’s independence requirements without reliance on the phase-in period.

If we cannot satisfy, or continue to satisfy, the listing requirements and other rules of Nasdaq, our Ordinary Shares may not be listed or may be delisted, which could negatively impact the price of our Ordinary Shares and your ability to sell them.

We have applied to list our Ordinary Shares on Nasdaq 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 our Ordinary Shares are listed on Nasdaq, we cannot assure you that our Ordinary Shares will continue to be listed on Nasdaq. We will not proceed with this Offering if our Ordinary Shares are not approved for listing on Nasdaq.

In addition, to maintain our listing on Nasdaq following this Offering, we will be required to comply with certain rules of Nasdaq, including those regarding minimum shareholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of Nasdaq, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy Nasdaq criteria for maintaining our listing, our Ordinary Shares could be subject to delisting.

If our Ordinary Shares are delisted from Nasdaq, we could face significant consequences, including:

We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this will make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This will make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company and, which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

If we are classified as a passive foreign investment company, United States taxpayers who own our Ordinary Shares may have adverse United States federal income tax consequences.

A non-U.S. corporation, we will be classified as a passive foreign investment company (“PFIC”) for any taxable year if, for such year, either:

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Depending on the amount of cash we raise in this Offering, together with any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether we are or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain IRS guidance relating to the classification of assets as producing active or passive income. Such regulations and guidance are potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, we may be a PFIC in one or more taxable years.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were or are determined to be a PFIC, see “Material Income Tax Considerations — United States Federal Income Taxation — PFIC Consequences.”

U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ABOUT THE PFIC RULES, THE POTENTIAL APPLICABILITY OF THESE RULES TO THE COMPANY CURRENTLY AND IN THE FUTURE, AND THEIR FILING OBLIGATIONS IF THE COMPANY IS A PFIC.

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:

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 forms 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 incorporated under the laws of the Cayman Islands as an exempted company limited by shares. We are incorporated under the laws of the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions, and the availability of professional and support services. The Cayman Islands, however, has a less developed body of securities laws as compared to the United States and provides significantly less protection for investors than the United States. Additionally, Cayman Islands companies may not have standing to sue in the Federal courts of the United States.

Substantially all of our assets are located in Japan. In addition, all of our directors and officers are nationals or residents of Japan and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States 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.

Conyers Dill & Pearman (“Conyers”), our special counsel with respect to the laws of the Cayman Islands, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in the Cayman Islands against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

We have been advised by Conyers that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments with the United States), the courts of the Cayman Islands would recognize as a valid judgment, a final and conclusive judgment in personam obtained in the federal or state courts of the United States against the Company under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands.

In addition, TMI Associates, our counsel with respect to the laws of Japan, has advised us that there is uncertainty as to the enforceability in Japan, either in original actions brought in Japan or in actions to enforce judgments of U.S. courts, of civil liability predicated upon the federal securities laws of the United States or the securities laws of any state in the United States.

A Japanese court may decline to apply U.S. securities laws in an original action if it determines that such laws are contrary to the public policy of Japan.

Japanese courts will refuse to enforce judgments of foreign courts if the judgments do not meet any of the following requirements:

With respect to the guarantee of reciprocity, there are no treaties between the U.S. and Japan that would generally permit any judgments of U.S. courts to be enforced in Japan. Thus, a Japanese court will determine on a case-by-case basis whether there is a guarantee of reciprocity is in place between the U.S. court in question and Japanese courts.

Therefore, if you obtain a civil judgment by a U.S. court, you may not be able to enforce it in Japan.

USE OF PROCEEDS

Based upon the assumed initial public offering price of $4.00 per Ordinary Share, representing the low end of the price range set forth on the cover page of this prospectus, 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 $12,756 thousand (JPY1,918,684 thousand), assuming the Representative does not exercise its over-allotment option, and $14,849 thousand (JPY2,233,417 thousand), 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:

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this Offering. Currently, we do not plan to use the net proceeds from this offering to directly or indirectly acquire assets other than in the ordinary course of business. 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 our Ordinary Shares” on page 25 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.

We will not receive any proceeds from the sale of the Selling Shareholder Shares under the separate Resale Prospectus.

DIVIDEND POLICY

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. The payment of future dividends will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions, our investor relation policies, and other factors that our shareholders or our board of directors may deem relevant. Consequently, we cannot give any assurance that any dividends will be declared and paid in the future.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our subsidiary, Center Mobile Japan. Under the Japanese Companies Act (Act No. 86 of 2005, as amended), dividends must be paid from retained earnings and no dividend shall be paid out if the payment would cause the company to be insolvent (more precisely, if the amount of net assets after dividends falls below a certain amount as stipulated by the Companies Act). As a result, in the event that Center Mobile Japan incurs debt on its own behalf in the future, its ability to pay dividends or other distributions to us may be limited. Cash dividends on our Ordinary Shares, if any, will be paid in JPY.

CAPITALIZATION

The following table sets forth our capitalization as of November 30, 2024:

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.

DILUTION

If you invest in our Ordinary Shares, your interest will be diluted for each Ordinary Share you purchase to the extent of the difference between the initial public offering price per Ordinary Share and our net tangible book value per Ordinary Share after this Offering. Dilution results from the fact that the initial public offering price per Ordinary Share 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 November 30, 2024 was $3,081 thousand (JPY463,412 thousand), or $0.13 (JPY19) per Ordinary Share. Net tangible book value represents the amount of our total tangible assets, less the amount of our total liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as-adjusted for the Offering) from the public offering price per share and after deducting the estimated underwriting discounts and the other estimated offering fees and expenses payable by us.

After giving effect to the sale of 3,750,000 Ordinary Shares in this Offering based on the assumed initial public offering price of $4.00 per Ordinary Share, representing the low end of the price range set forth on the cover page of this prospectus, and after deducting 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 November 30, 2024, would have been $15,845 thousand (JPY2,383,179 thousand), or $0.56 (JPY84) per Ordinary Share. This represents an immediate increase in net tangible book value of $0.43 (JPY65) per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of $3.44 (JPY5174) per Ordinary Share to investors purchasing Ordinary Shares 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 $4.00 per Ordinary Share would increase (decrease) our as-adjusted net tangible book value after giving effect to this Offering by $3,488 thousand (JPY524,555 thousand), the as-adjusted net tangible book value per Ordinary Share after giving effect to this Offering by $0.12 (JPY18) per Ordinary Share, and decrease (increase) the dilution in as-adjusted net tangible book value per Ordinary Share to new investors in this Offering by $0.88 (JPY132) per Ordinary Share, assuming no change to the number of Ordinary Shares offered by us as set forth on the front cover of this prospectus, and after deducting the underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us.

An increase (decrease) of 1,000,000 Ordinary Shares in the number of Ordinary Shares offered by us would increase (decrease) our as-adjusted net tangible book value after giving effect to this Offering by $3,720 thousand (JPY559,525 thousand), increase (decrease) the as-adjusted net tangible book value per Ordinary Share after giving effect to this Offering by $0.10 (JPY15) per Ordinary Share, and decrease (increase) the dilution in as-adjusted net tangible book value per Ordinary Share to new investors in this Offering by $0.12 (JPY18) per Ordinary Share, based on the initial public offering price of $4.00 (JPY602) per Ordinary Share, and after deducting the underwriting discounts, non-accountable expense allowance, and estimated offering expenses payable by us.

The following tables illustrate such dilution:

The following tables summarize, on an as-adjusted basis as of November 30, 2024, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per Ordinary Share before deducting the estimated underwriting discounts, non-accountable expense allowance, and the estimated offering expenses payable by us.

The as-adjusted information as discussed above is illustrative only. Our net tangible book value following the completion of this Offering is subject to adjustment based on the actual initial public offering price of the Ordinary Share and other terms of this Offering determined at the pricing.

CORPORATE HISTORY AND STRUCTURE

Corporate History

Center Mobile was incorporated as a joint-stock corporation (kabushiki kaisha) with limited liability under Japanese law on June 2, 2020, in Osaka, Japan.

On June 10, 2022, we executed a loan agreement with Mr. Shota Matsuyama, the founder of Pay Storage. Pursuant to the terms of the agreement, we extended a loan to him in the principal amount of JPY20 million, with a fixed annual interest rate of 0.90%. The loan is set to mature at the end of June 2025. The proceeds of the loan were utilized as capital for the establishment of Pay Storage. Mr. Shota Matsuyama served as Pay Storage’s representative director and Chief Executive Officer from June 2022 to November 2023.

On June 30, 2024, we entered into a share transfer agreement with Mr. Shota Matsuyama, the then sole shareholder of Pay Storage, pursuant to which Mr. Matsuyama agreed to transfer 400 shares of Pay Storage to us for the transfer price of JPY20 million. The share transfer date was on June 30, 2024 (the “Closing Date”). On the Closing Date, the transfer price was offset against the equivalent portion of the outstanding loan amount for which we hold claims against Mr. Matsuyama.

In connection with this offering, we have undertaken a reorganization of our corporate structure (the “Reorganization”) in the following steps:

Our Corporate Structure

The following chart illustrates our corporate structure as of the date of this prospectus and upon completion of this Offering and does not include an aggregate of 3,970,014 Selling Shareholder Shares.

Following the completion of this Offering, Mr. Tatsuya Nakagoshi, our founder and director, will hold approximately 71.63% of the aggregate voting power of our issued and outstanding Ordinary Shares, assuming no exercise of the Representative’s over-allotment option, or approximately 70.25%, assuming full exercise of the Representative’s over-allotment option, based on an assumed initial public offering price of $4.00 per Ordinary Share, representing the low end of the price range set forth on the cover page of this prospectus. As such, we will be deemed to be a “controlled company” under Nasdaq Listing Rule 5615(c). However, even if we are deemed to be a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Listing Rules. Nevertheless, as a foreign private issuer, we intend to follow home country practice. Further, for as long as Mr. Nakagoshi beneficially owns a majority of the voting power of our outstanding Ordinary Shares, he will generally be able to control the outcome of matters submitted to our shareholders for approval, including the election of directors, without the approval of our other shareholders. See “Risk Factors—Risks Relating to this Offering and the Trading Market—As a foreign private issuer, we intend to follow home country practice even though we will be considered a “controlled company” under Nasdaq corporate governance rules, which could adversely affect our public shareholders” and see “Management—Controlled Company.”

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

We conduct all of our operations through our subsidiary in Japan, Center Mobile Japan. Center Mobile Japan is a mobile connectivity and wireless communications services provider in Japan, offering a full range of 4G LTE voice, texting, and data services covering all areas throughout Japan. Our customers are attracted to our services because of our competitive prices, flexible monthly plans, the high quality and stability of our services, and our innovative business model that allows our customers to lower their monthly fees. We offer such services on a monthly basis for specified quantities of minutes or amounts of data selected in advance. In addition, we are, as of the date of this prospectus, one of the few mobile connectivity and wireless communications services providers in Japan operating an innovative business model that allows our customers to lower their monthly fees for our services by watching advertisements or playing games through our proprietary app, “PLAIO.” Through this business model that incentivizes our customers to watch advertisements through PLAIO, we are able to receive advertising fees from advertisers and use them to reward those customers who watched advertisements in the form of “points,” which may be used by them to lower their monthly fees for our mobile connectivity and wireless communications services.

As an MVNO, we provide mobile connectivity and wireless communications services in Japan by using the infrastructure and communication system of NTT Docomo, one of the largest Japanese MNOs in terms of subscription market share. To provide mobile connectivity and wireless communications services to our customers, we purchase wholesale mobile connectivity and wireless communications services and applicable SIM cards from FreeBit, a Japanese MVNE that also purchases wholesale the wireless network infrastructure from NTT Docomo, and distribute the SIM cards to OEM Partners, retailers who distribute the SIM cards under their own brands, or to customers through our online store, directly-operated stores, franchise stores, and distributors under our name (the SIM Card Business).

Because we do not own or operate a physical network or relevant appliances and equipment, we are free from related capital expenditures and, therefore, are able to focus our resources on providing competitive prices for our services against MNOs. Furthermore, in addition to the monthly fees from our customers, we are also able to generate advertising revenue through operating our innovative business model. While it is common for other mobile connectivity and wireless communications services providers that operate diversified businesses to generate additional revenue by selling other services to existing customers for the mobile connectivity and wireless communications services, our innovative business model allows us to generate additional advertising revenue without the sales of other services, enabling two revenue streams from a single service. This unique dual revenue structure provides us with additional funds to provide high-quality and stable services by leasing sufficient bandwidth for mobile connectivity and wireless communications services from FreeBit yet at competitive prices to our customers.

As of November 30, 2024, we had entered into approximately 28,212 service agreements for our mobile connectivity and wireless communications services and our revenue generated from the SIM Card Business was approximately JPY555,309 thousand ($3,692 thousand), JPY1,060,404 thousand ($7,050 thousand) and JPY1,312,065 thousand ($8,723 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 53.4%, 67.1% and 74.5% of our total revenue for those periods, respectively.

We also operate an Internet Business. Under the Internet Business, we offer three types of communications services: the mobile router connectivity service, the home wireless communications service, and the home internet service. For the mobile router connectivity service and the home wireless communications service, we, as an MVNO, purchase wholesale SIM cards and mobile connectivity and wireless communications services and applicable mobile routers from an MVNE and sell our wireless communications services to the customers through our retail channels; for the home internet service, we purchase internet access services and applicable home routers wholesale from an internet access service provider that purchases the optical fiber system and internet access services wholesale from telecom companies and sell our internet access services to customers through our retail channels.

As of November 30, 2024, we had entered into approximately 1,595 service agreements under the Internet Business, and our revenue generated from the Internet Business was approximately JPY47,230 thousand ($314 thousand), JPY44,485 thousand ($296 thousand) and JPY73,093 thousand ($486 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 4.5%, 2.8% and 4.6% of our total revenue for those periods, respectively.

In addition to the SIM Card Business and the Internet Business, we currently also operate the Outsourcing Business. Under the Outsourcing Business, we work as a staffing agency, and our goal and policy are to provide a more stable working environment and conditions for job seekers. Unlike most of the staffing agencies in Japan that only hire job seekers and dispatch them to their corporate clients without providing much training, leaving the training to such corporate clients, we hire job seekers as our full-time employees and provide basic training to help them fit into the workplaces and positions that we consider the best match for them based on their willingness, interests, personalities, experiences, requirements, and our corporate clients’ needs before dispatching them to our corporate clients. We also focus on the welfare of our employees and, we believe, offer more competitive employment conditions compared to those of other staffing agencies in Japan. By doing so, we may provide a more stable working environment and conditions for job seekers, which benefits us in recruiting more talented and competent personnel to appeal to more corporate clients. For each dispatch, our corporate clients pay us a monthly dispatch fee, and we then pay our employees who are dispatched monthly salaries, transportation allowance, and incentive bonuses out of the dispatch fees. When our full-time employees are not dispatched to our corporate clients, they generally work at our office and assist in matters such as managing dispatched employees and acquiring new corporate clients.

In addition, for job seekers who do not intend to take the dispatch path, we provide the service of acting as an intermediary, introducing them to appropriate hirers based on job seekers’ willingness, interests, personalities, experiences, requirements, and the hirers’ needs. In particular, in some special cases of blue-collar job seekers, if they face financial difficulties before getting hired, we support them with a certain amount of living expenses for a certain period of time. By doing so, we expect to make our service appealing to more job seekers, enabling us to secure the source of job seekers. After the job seekers are hired, we charge the hirers referral fees no greater than 30% of the workers’ estimated annual compensation package.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, our revenue generated from the Outsourcing Business was approximately JPY399,827 thousand (2,658 thousand), JPY264,865 thousand ($1,761 thousand) and JPY73,408 thousand ($488 thousand), respectively, which accounted for 38.4%, 16.8% and 4.2% of our total revenue for those periods, respectively.

In addition to our SIM Card Business, Internet Business, and Outsourcing Business, we currently also operate Travel Business. Through cooperating with our travel business partners, we operate a portal site that allows customers to purchase travel plans such as hotel plus airplane ticket set plans and hotel plus Shinkansen (Japanese bullet trains) ticket travel plans. In most cases, our prices are lower than wholesale prices. While our prices may sometimes be slightly higher than the wholesale price, they are still lower than the official prices set by the hotels, airlines, and the Shinkansen company. We charge a monthly subscription fee of 2,530 Japanese yen (approximately $17). As of November 30, 2024, we had approximately 4,769 subscribers, and our revenue generated from the Travel Business was approximately JPY58,596 thousand (390 thousand), JPY142,257 thousand ($946 thousand) and JPY229,812 thousand ($1,528 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 6.0%, 9.0% and 13.0% of our total revenue for those periods, respectively.

We operate our SIM Card Business, Internet Business, and Travel Business through Center Mobile Japan and operate our Outsourcing Business through Pay Storage, the wholly owned subsidiary of Center Mobile Japan. Both Center Mobile Japan and Pay Storage are based in Japan. Since investors will invest in Center Mobile Cayman, a holding company without substantial operations, our cash flows and our ability to meet our obligations depend on the cash flows of Center Mobile Japan and Pay Storage and the payment of funds by Center Mobile Japan and Pay Storage to us in the form of dividends, distributions or otherwise.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, our total revenue was JPY1,039,866 thousand (approximately $6,914 thousand), JPY1,583,214 thousand (approximately $10,526 thousand) and JPY1,760,423, thousand (approximately $11,704 thousand), respectively, and our net income was JPY29,081 thousand (approximately $193 thousand), JPY40,278 thousand (approximately $268 thousand) and JPY291,724 thousand (approximately $1,940 thousand), respectively.

Factors Impacting Our Operating Results

Our financial condition and results of operations 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.

Relationship with MVNEs and other third-party service providers

For our SIM Card Business, we purchase wholesale mobile connectivity and wireless communications services and applicable SIM cards from FreeBit, a Japanese MVNE that also purchases wholesale the wireless network infrastructure from NTT Docomo. While our service agreement has been automatically renewed every year since 2022, we have not entered into a long-term service agreement with FreeBit. See “Business—SIM Card Business.” Moreover, for our Internet Business, we purchase wholesale SIM cards and mobile connectivity and wireless communications services and applicable mobile routers from Network Consulting, and purchase applicable mobile routers wholesale from UQ Communications Inc., a Japanese MNO. In addition, we purchase internet access services and applicable home routers wholesale from NEXT BB. See “Business—Internet Business.” Our service agreements with Network Consulting and NEXT BB have an automatic renewal term, allowing us to continue the contractual relationship under the same terms, unless either party notifies the other of its intention to the contrary in writing no later than one month before the expiration of the then current term. However, there is no assurance that FreeBit will continue to purchase wholesale the wireless network infrastructure from NTT Docomo and renew our service agreement with us. It is also possible that Network Consulting or NEXT BB may terminate our service agreement for our Internet Business. If the above MVNEs and other third-party service providers determine to terminate our service agreements or replacing existing terms with unfavorable ones, we may have no means of replacing these services on a timely basis or at all, which may adversely affect our business, financial condition, and our results of operations.

In addition, we rely greatly on network services provided by our MVNEs, their MNOs, and other third-party services providers, which may subject to interruptions, errors, or delays with respect to their backbone network or service facilities caused by human errors, interruptions, errors, or delays with service facilities, or natural factors, including damage from fire, earthquakes, or other natural disasters, power loss, sabotage, computer hackers, cyber-attack, human error, computer viruses, and other similar events. If our MVNEs, their MNOs, and other third-party services providers experience any of these incidents and will not be able to repair or regain stable network services in a timely manner or at all, our network capacity provided by such MVNEs, their MNOs, and/or other third-party service providers will suffer. As a result, the credibility of our network and customer satisfaction could decrease significantly, which could have a material adverse effect on our business and results of operations.

Ability to maintain and enhance our brand

We believe that recognition of our brand contributes significantly to the success of our business. We also believe that maintaining and enhancing our brand is critical to expanding our customer’s base. As our market becomes increasingly competitive, maintaining and enhancing our brand will depend largely on our ability to fund the advertising and promote our services and brand through social media platforms, which may be increasingly difficult and expensive. We also intend to engage with our existing and potential customers to receive real time feedback on our services. However, we cannot guarantee that the expected results will be achieved. If we are unable to maintain and enhance a strong brand recognition, or fail to respond to customer requirements, we may lose our competitive edge and may not be able to increase our customer base. As a result, our brand, business, and results of operations may be materially and adversely affected.

Ability to expand our services

Our business as a mobile connectivity and wireless communications services provider depends on our ability to maintain and expand our telecommunications service network while maintaining the quality of the services provided and a positive customer experience. We believe that our growth will require, among other aspects, increasing marketing activities and network capacity, continuous attention to service quality, and a positive customer experience. These requirements will place significant demand on our managerial, operational, and financial resources. Failure to manage successfully and effectively our growth could reduce the quality of our services and result in an inadequate customer experience that may have adverse effects on our business, financial condition, and results of operations.

Performance of our franchise stores and OEM Partners

A significant portion of our SIM Card Business and Internet Business revenue is generated by monthly usage payments paid by our customers obtained through our franchise stores and OEM Partners. During the fiscal years ended May 31, 2024 and 2023, revenue from customers acquired through our franchise stores accounted for 1.8% and 1% of our total revenue, respectively, and revenue from our OEM Partners accounted for 69.6% and 56.5% of our total revenue, respectively.  Any business interruptions or reduction of revenue of our franchisees or OEM Partners could have an adverse effect on our business. Our franchise stores and OEM service agreements generally have a term of one year and automatically renew for successive one-year terms, unless either party notifies the other of its intention to the contrary in writing no later than three months before the expiration of the current term. If our franchise stores or OEM Partners terminate their agreements with us or request more favorable terms than the ones we currently have to renew such agreement, our retail channels will decrease and our ability to acquire customers will suffer. As a result, our business and results of operations will be materially and adversely affected.

In addition, although we license certain trademarks and trade names, such as センターモバイル (which translates to “center mobile”), and grant permission to use our store management know-how and provide management guidance to franchise stores, franchise stores are independent operators, and their employees are not our employees. Franchise stores may not operate their stores in a manner consistent with our standards and requirements or they or their employees may take actions that adversely affect the value of our brand. While we try to ensure that franchise stores maintain the quality of our brand and comply with their franchise agreements, franchise stores may take actions that adversely affect the value of our intellectual property or reputation or that are inconsistent with their contractual obligations. Although our franchise agreements permit us to terminate the agreement under certain circumstances, including violation of the agreement by a franchise store or deterioration of financial conditions of a franchise store, there can be no assurance that such remedy will be available or sufficient to prevent or undo harm to our brand.

Ability to provide travel plans at competitive prices

We believe that the success of our Travel Business is dependent on our ability to provide subscribers with access to travel plans offered by partners at competitive prices. By cooperating with our travel business partners, we provide services that allow subscribers to purchase travel plans from our partners, at prices that are lower than the wholesale price in most cases. While our prices may sometimes be slightly higher than the wholesale price, they are still lower than the official prices set by the hotels, airlines, and the Shinkansen (Japanese bullet trains) company. If we are unable to keep travel plans offered by our partners via our portal site  attractive, for example, due to interruption of business relationships with our travel business partners or more attractive travel plans provided by competitors, our existing subscribers may terminate the subscriptions and we may not be able to attract new subscribers. As a result, our Travel Business revenue will decrease, which could materially and adversely affect our business, financial condition, and results of operations.

Competitive market

We face significant competition in the MVNO industry in Japan. The major competitors of our SIM Card Business are major MVNOs, some of which are highly integrated service providers that are directly operated by MNOs or MVNEs. These major competitors may have greater brand recognition, larger customer bases, and a larger pool of technology human resources, including application development engineers, than we do. They may also have better financial resources to fund advertising, purchase wholesale more bandwidth of the mobile connectivity and wireless communications services to improve network speed, invest more heavily in research and development, and reduce prices to retain existing customers and attract new customers. We will compete with these competitors on brand name, quality of services, level of expertise, advertising, product and service innovation, and differentiation of product and services. Moreover, new entrants from other industries into the MVNO industry with new and enhanced technologies may increase the competition and weaken our competitive position and profitability. 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.

Future Outlook of Market Trend

According to a report titled “Trends in the communications market” released by the MIC on April 24, 2024, as of the end of December 2023, there were 1,890 MVNOs, and the market share of MVNOs in the number of mobile communication contracts in cellular phone, Phala Network, and Broadband Wireless Access was 15.2%, which increased by 1.4% from 13.8% as of December 2022.

Although the consumer price index for telecommunications charges (cell phone) has declined significantly compared to the time when the revised Telecommunications Business Act went into effect in October 2019, the consumer price index for telecommunications charges (cell phone) has been on an upward trend in recent years, increasing by 13.0% since 2021.

According to the results of the survey conducted by the MIC from March 1, 2024 to March 3, 2024, a total of 3.3% of all respondents have switched from MVNOs to MNOs, while a total of 4.5% of all respondents have switched from MNOs to MVNOs. According to the report by the MIC, the number of MVNO contracts is increasing.

Key Financial Performance Indicators

Revenue

Our revenue is primarily derived from mobile network services, advertising, outsourcing business, and travel business.

Cost of revenue

Our cost of revenue is primarily comprised of the costs to purchase wholesale mobile connectivity and wireless communications services and applicable SIM cards and personnel costs related to outsourcing business.

Gross profit and gross profit margin

Gross profit is the difference between our revenue and cost of revenue. Gross profit margin is calculated by dividing gross profit by revenue.

Selling, general, and administrative expenses (“SG&A expenses”)

SG&A expenses are primarily comprised of personnel costs for general corporate functions and sales and marketing staff, commission expenses, advertising expenses, and outsourcing expenses.

Operating income

Operating income is the difference between our revenue and cost of revenue and SG&A expenses.

Other income (expenses)

Other income (expenses) is primarily comprised of interest income (expenses) and other income (expenses), which reflect the non-recurring, non-operating gains and losses we have from time to time.

Key Performance Indicators (KPIs)

The following metrics are the KPIs that we use to measure the performance of our business and future business opportunities and to develop strategic plans. We believe these KPIs provide useful information to help investors understand and evaluate our results of operations in the same manner as our management team. Certain judgement and estimates are inherent in our processes for calculating these KPIs.

These KPIs are presented for supplemental information purposes only. They should not be considered as a substitute for financial information presented in accordance with U.S. GAAP and may differ from similarly titled metrics or measures presented by other companies. The following table sets forth a summary of the KPIs:

Number of users

Every month, we track the number of users. We define users as our customers who use our SIM cards. The number of users in the table above reflects the number of customers using our SIM cards as of November 30, 2024 and 2023 and March 31, 2024 and 2023. We consider the number of users as a KPI as it indicates the revenue base for our business. This is a leading indicator for our mobile network service and advertising business.

Number of subscribers

Every month, we track the number of subscribers. We define subscribers as our customers who subscribe our travel services. The number of subscribers in the table above reflect the number of customers subscribing our travel plan by paying the monthly fee as of November 30, 2024 and 2023 and March 31, 2024 and 2023. We consider the number of subscribers as a KPI as it indicates the revenue base for our business. This is a leading indicator for travel business.

Churn rate and retention rate

Every month, we track churn rate and retention rate. We calculate churn rate by dividing the total number of users canceled during the fiscal year by the total number of users we have at the beginning of the fiscal year. Retention rate can be calculated by subtracting the churn rate for the fiscal year from 100%. We consider churn rate and retention rate as KPIs because they indicate the ratio of our users who continue using our services and provide the forecasts of our revenue.

Results of Operations

Comparison of Results of Operations for the Six Months ended November 30, 2024 and 2023

The following table sets forth our statements of operations for the six months ended November 30, 2024 and 2023:

(in thousands, except change % data)

Revenue

Revenue for the six months ended November 30, 2024 increased by JPY275,584 thousand ($1,833 thousand), or 36.1%, compared to the six months ended November 30, 2023. The increase was primarily driven by following factors:

Cost of Revenue

Cost of revenue for the six months ended November 30, 2024 increased by JPY62,522 thousand ($416 thousand), or 14.4%, compared to the six months ended November 30, 2023. The increase was primarily driven by the following factors:

Gross Profit/(Loss)

As a result of the foregoing, the gross profit was JPY541,685 thousand ($3,601 thousand) during the six months ended November 30, 2024, compared to JPY328,623 thousand ($2,185 thousand) during the six months ended November 30, 2023.

SG&A Expenses

SG&A expenses for the six months ended November 30, 2024 increased by JPY510,636 thousand ($3,395 thousand), or 90.6%, compared to the six months ended November 30, 2023. The increase was primarily driven by the following factors:

Other Income (Expenses), net

Other income (expenses) for the six months ended November 30, 2024 increased by JPY3,895 thousand ($26 thousand), or 548.6%, compared to the six months ended November 30, 2023, primarily due to the foreign exchange gain recognized in the six months ended November 30, 2024.

Net Income

As a result of the foregoing, the net income was JPY29,081 thousand ($193 thousand) during the six months ended November 30, 2024, compared to JPY33,595 thousand ($224 thousand) during the six months ended November 30, 2023.

Comparison of Results of Operations for the Fiscal Years Ended May 31, 2024 and 2023

The following table sets forth our statements of operations for the fiscal years ended May 31, 2024 and 2023:

Revenue

Revenue decreased by JPY177,209 thousand ($1,178 thousand), or 10.1% year-over-year, to JPY1,583,214 thousand ($10,526 thousand). The decrease was primarily driven by following factors:

Cost of Revenue

Cost of revenue increased by JPY140,388 thousand ($933 thousand), or 18.1% year-over-year, to JPY917,763 thousand ($6,101 thousand). The increase was primarily driven by the following factors:

Gross Profit/(Loss)

As a result of the foregoing, the gross profit was JPY665,451 thousand ($4,425 thousand) during the fiscal year ended May 31, 2024, compared to JPY983,048 thousand ($6,536 thousand) during the fiscal year ended May 31, 2023.

SG&A Expenses

SG&A expenses increased by JPY35,190 thousand ($224 thousand), or 6.3% year-over-year, to JPY596,247 thousand ($3,793 thousand) primarily due to:

The increase was partially offset by a decrease in incentives paid to franchise stores and distributors due to the decrease in sales from mobile network service.

Other Income (Expenses), net

Other expenses increased by JPY220 thousand ($2 thousand), or 26.5% year-over-year, to JPY1,050 thousand ($7 thousand), primarily due an increase in interests on bonds.

Net Income

As a result of the foregoing, the net income was JPY40,278 thousand ($256 thousand) during the fiscal year ended May 31, 2024, compared to JPY291,724 thousand ($1,857 thousand) during the fiscal year ended May 31, 2023.

Cash Flows/Liquidity

Cash Flows for the Six Months Ended November 30, 2024 and 2023

As of November 30, 2024 and May 31, 2024, we had cash of JPY309,688 ($2,059 thousand) and JPY365,017 ($2,427 thousand), respectively. Liquidity is a measure of our ability to meet potential cash requirements. We generally fund our operations with cash flows from operations, and, when needed, borrowing from financial institutions. We expect that our cash and cash equivalents will be sufficient to fund our operating expenses and cash obligations for at least the next 12 months, although our ability to continue as a going concern depends upon our ability to attract and retain revenue generating customers, acquire new customers, and secure additional financing.

(in thousands)

Operating Activities

Net cash generated from operating activities increased from cash outflow of JPY62,103 ($413 thousand) during the six months ended November 30, 2023 to cash inflow of JPY13,390 ($89 thousand) during the six months ended November 30, 2024. The increase was primarily due to the increase in income tax payable and accrued consumption taxes at November 30, 2024.

Investing Activities

Net cash provided by investing activities increased from cash outflow of JPY21,859 thousand ($145 thousand) during the six months ended November 30, 2023 to cash inflow of JPY39,651 thousand ($264 thousand) during the six months ended November 30, 2024. The increase was primarily due to the payment received on a short-term loan receivable from a related party.

Financing Activities

Net cash used in financing activity increased from JPY14,562 thousand ($97 thousand) during the six months ended November 30, 2023 to JPY108,370 thousand ($720 thousand) during the six months ended November 30, 2024, mainly due to the payment of IPO related expenses.

Cash Flows for the Fiscal Years Ended May 31, 2024 and 2023

As of May 31, 2024 and 2023, we had cash of JPY365,017 ($2,427 thousand) and JPY517,101 ($3,438 thousand), respectively. Liquidity is a measure of our ability to meet potential cash requirements. We generally fund our operations with cash flows from operations, and, when needed, borrowing from financial institutions. We expect that our cash and cash equivalents will be sufficient to fund our operating expenses and cash obligations for at least the next 12 months, although our ability to continue as a going concern depends upon our ability to attract and retain revenue generating customers, acquire new customers, and secure additional financing.

(in thousands)

Operating Activities

Net cash generated from operating activities decreased from cash inflow of JPY362,322 ($2,409 thousand) during the fiscal year ended May 31, 2023 to cash outflow of JPY75,691 ($503 thousand) during the fiscal year ended May 31, 2024. The decrease was primarily due to the decrease in net income in the fiscal year ended May 31, 2024.

Investing Activities

Net cash used in investing activities decreased from JPY125,864 thousand ($837 thousand) during the fiscal year ended May 31, 2023 to JPY7,812 thousand ($52 thousand) during the fiscal year ended May 31, 2024. The decrease was primarily due to the less amount spent on the acquisition of property and equipment and investments.

Financing Activities

Net cash provided by financing activity decreased from cash inflow of JPY77,767 thousand ($517 thousand) during the fiscal year ended May 31, 2023 to cash outflow of JPY68,581 thousand ($456 thousand) during the fiscal year ended May 31, 2024, mainly due the issuance of bonds in the fiscal year ended May 31, 2023.

Contractual Obligations and Commitments

As of November 30, 2024, we had total of JPY108,361 thousand ($720 thousand) contractual obligations for future payments.

As of May 31, 2024, we had total of JPY139,530 thousand ($928 thousand) contractual obligations for future payments.

Off-Balance Sheet Arrangements

As of November 30, 2024 and May 31, 2024, we did not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Capital Expenditures

Our capital expenditures primarily consist of acquisition of property and equipment.

During the six months ended November 30, 2024 and 2023, we spent JPY14,895 thousand ($99 thousand) and JPY1,679 thousand ($11 thousand), respectively, on acquisitions of property and equipment.

During the fiscal years ended May 31, 2024 and 2023, we spent JPY4,488 thousand ($29 thousand) and JPY95,975 thousand ($611 thousand), respectively, on acquisitions of property and equipment and nil and JPY33,863 thousand ($215 thousand), respectively, on acquisition of investments.

Quantitative and Qualitative Disclosure About Market Risk

Foreign Currency Risk

We transact our operating activities in Japan, and our cash generated from revenue is denominated in Japanese yen. Our expenses are generally denominated in Japanese yen. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities, and net investments in foreign operations, if we acquire any. We acknowledge the recent volatility of the U.S dollar but believe we are relatively insulated from foreign exchange risk, as most of our economical transactions are conducted within Japan and using Japanese yen.

Inflation Risk

Inflationary factors, such as increases in our operating expenses, may adversely affect our results of operations. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, an increase in the rate of inflation in the future may have an adverse effect on our levels of operating expenses as a percentage of revenue if we are unable to increase our prices to keep pace with these increased expenses.

Interest Rate Risk

As of May 31, 2024, we had cash and cash equivalents that consist of bank deposit. We did not have investment or other interest-earning instruments that carry a high degree of interest rate risk. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our historical consolidated financial statements.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these consolidated 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 consolidated 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 2 to the consolidated 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 consolidated financial statements.

Use of Estimates

Significant accounting estimates reflected in our consolidated financial statements include inventories, long-lived assets, leases, asset retirement obligations, and deferred tax liabilities. 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 consolidated financial statements.

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

Revenue Recognition

The Company accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps:

For an arrangement to qualify as a contract, it must be probable that the Company will collect the consideration to which it is entitled for the goods or services to be transferred. Once the contract is determined to be within the scope of ASC 606, the Company assesses the promised goods or services in each contract and determines whether those are performance obligations and the related transaction price. The Company then recognizes the sale of goods based on the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.

The Company recognizes revenue from mobile network service, sales of advertisement, outsourcing service, and travel business sales.

Mobile network service segment

Revenue from mobile network service

The Company provides flexible monthly mobile network plans to users for a full range of 4G LTE voice, texting, and data services covering all areas throughout Japan. Users can select plans with specified transferrable amounts of voice and data services or plans with only specified transferrable amounts of data and enter into the contracts with the Company. Revenue from mobile network service is recognized over time during the period the network services are provided to users, corresponding to the point at which the promised service is transferred to users and the performance obligation is satisfied. The Company has determined that the Company is the principal in this arrangement since another party is not involved in providing services to users. Cost of revenues primarily consists of fees for mobile network services from MVNEs.

Through the proprietary app, “PLAIO,” the Company receives advertising fees from advertisers and uses them to reward customers who watched advertisements to lower their monthly fees for mobile network services. By watching a video advertisement with a length ranging from 30 seconds to around 60 seconds through PLAIO, customers can receive five points, with each point being used as 0.1 Japanese yen by the customers to deduct their monthly fees for the mobile network services. The Company defers revenue equivalent to the estimated service price of points earned by end users, which can be applied to reduce their monthly fees for the mobile network services as each point is earned. A corresponding liability is recorded as deferred revenue when each point is earned. This deferral is based on the estimated value of the mobile network services for which the reward is expected to be redeemed, net of estimated unredeemed points. Points generally expire when the mobile network service contracts are terminated. When a customer redeems an earned reward, we recognize revenue for the redeemed product and reduce the related deferred revenue.

Advertising segment

Revenue from sales of advertisement

The Company receives the advertising fees from advertisers based on the cost-per-action, such as the numbers of watching advertisements through PLAIO app, and uses them to reward users who watch advertisements through the Company’s mobile network. Revenue from sales of advertisement is recognized at a point in time when the Company completes providing advertisements to users through the Company’s mobile network, corresponding to the point at which the promised service is transferred to users and the performance obligation is satisfied. The Company has determined that the Company is the principal in this arrangement since another party is not involved in providing services to users. The Company recorded only intersegment cost of revenues.

Outsourcing service segment

Revenue from outsourcing service

The Company hires job seekers as our full-time employees and dispatches them to corporate customers as a staffing agency. Revenue from outsourcing services as a staffing agency is recognized over time during the period the human resources are provided to the corporate customers, corresponding to the point at which the promised service is transferred to the customers and the performance obligation is satisfied. In addition, the Company also serves as an intermediary who introduces job seekers to appropriate hirers based on job seekers’ willingness, interests, personalities, experiences, requirements, and the hirers’ needs. Revenue from outsourcing service as an intermediary is recognized at a point in time when a customer hires a job seeker introduced by the Company and after the period stipulated in the contract has elapsed, which is also the time when the promised service is transferred to customers and the performance obligation is satisfied. The Company has determined that the Company is the principal in this arrangement since another party is not involved in providing services to customers. Cost of revenues primarily consists of salaries and outsourcing expenses.

The Company also supports job seekers by providing them with a certain amount of living expenses to enable job seekers to focus on job searching. The nature of the support is short-term loans with no interests and the job seekers will repay the loans after they have been employed. Therefore, the Company records these advances as other receivables and reconciles other receivables when the jobseekers repay the Company. During the series of this transactions, the Company noted that there were no accounting issues related to revenue recognition.

Travel business segment

Revenue from travel business sales

The Company operates a travel business. Through cooperating with the Company’s travel business partners, the Company operates a portal site that allows customers to purchase travel plans such as hotel plus airplane ticket set plans or hotel plus Shinkansen (Japanese bullet trains) ticket travel plans offered by the Company’s partners. The Company charges its customers a monthly subscription fee. Revenue from travel business sales is recognized over time during the period the Company provides subscription services to subscribers that allow them to purchase travel plans through the Company’s portal, which is the time when the promised service is transferred to subscribers and the performance obligation is satisfied. The Company determined that the Company is the principal in this arrangement since another party is not involved in providing services to subscribers. Cost of revenues primarily consists of fees for the Company’s travel business partners.

Inventories

Inventories consist of merchandise, including smartphone-related products and cosmetic products. Estimates of the lower of cost and net realizable value of inventory are determined by comparing the actual cost of the inventory to the estimated selling prices in the ordinary course of business based on current market and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory.

Property and Equipment

Property and equipment are stated at cost.

Maintenance and repairs are charged to expenses as incurred. Improvements of a major nature are capitalized. Construction in progress is not depreciated until ready for service at the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts, and any gains or losses are reflected in income.

The long-lived assets of the Company are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment” (“ASC No. 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment is recognized by measuring the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were recorded during the fiscal years ended May 31, 2024 and 2023.

BUSINESS

Overview

We conduct all of our operations through our subsidiary in Japan, Center Mobile Japan. Center Mobile Japan is a mobile connectivity and wireless communications services provider in Japan, offering a full range of 4G LTE voice, texting, and data services covering all areas throughout Japan. Our customers are attracted to our services because of our competitive prices, flexible monthly plans, the high quality and stability of our services, and our innovative business model that allows our customers to lower their monthly fees. We offer such services on a monthly basis for specified quantities of minutes or amounts of data selected in advance. In addition, we are, as of the date of this prospectus, one of the few mobile connectivity and wireless communications services providers in Japan operating an innovative business model that allows our customers to lower their monthly fees for our services by watching advertisements or playing games through our proprietary app, “PLAIO.” Through this business model that incentivizes our customers to watch advertisements through PLAIO, we are able to receive advertising fees from advertisers and use them to reward those customers who watched advertisements in the form of “points,” which may be used by them to lower their monthly fees for our mobile connectivity and wireless communications services.

As an MVNO, we provide mobile connectivity and wireless communications services in Japan by using the infrastructure and communication system of NTT Docomo, one of the largest Japanese MNOs in terms of subscription market share. To provide mobile connectivity and wireless communications services to our customers, we purchase wholesale mobile connectivity and wireless communications services and applicable SIM cards from FreeBit, a Japanese MVNE that also purchases wholesale the wireless network infrastructure from NTT Docomo, and distribute the SIM cards to OEM Partners, retailers who distribute the SIM cards under their own brands, or to customers through our online store, directly-operated stores, franchise stores, and distributors under our name (the SIM Card Business).

Because we do not own or operate a physical network or relevant appliances and equipment, we are free from related capital expenditures and, therefore, are able to focus our resources on providing competitive prices for our services against MNOs. Furthermore, in addition to the monthly fees from our customers, we are also able to generate advertising revenue through operating our innovative business model. While it is common for other mobile connectivity and wireless communications services providers that operate diversified businesses to generate additional revenue by selling other services to existing customers for the mobile connectivity and wireless communications services, our innovative business model allows us to generate additional advertising revenue without the sales of other services, enabling two revenue streams from a single service. This unique dual revenue structure provides us with additional funds to provide high-quality and stable services by leasing sufficient bandwidth for mobile connectivity and wireless communications services from FreeBit yet at competitive prices to our customers.

As of November 30, 2024, we had entered into approximately 28,212 service agreements for our mobile connectivity and wireless communications services and our revenue generated from the SIM Card Business was approximately JPY555,309 thousand ($3,692 thousand), JPY1,060,404 thousand ($7,050 thousand) and JPY1,312,065 thousand ($8,723 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 53.4%, 67.1% and 74.5% of our total revenue for those periods, respectively.

We also operate the Internet Business. Under the Internet Business, we offer three types of communications services: the mobile router connectivity service, the home wireless communications service, and the home internet service. For the mobile router connectivity service and the home wireless communications service, we, as an MVNO, purchase wholesale SIM cards and mobile connectivity and wireless communications services and purchase applicable mobile routers wholesale from an MVNE and sell our wireless communications services to the customers through our retail channels; for the home internet service, we purchase internet access services and applicable home routers wholesale from an internet access service provider that purchases the optical fiber system and internet access services wholesale from telecom companies and sell our internet access services to customers through our retail channels.

As of November 30, 2024, we had entered into approximately 1,595 service agreements under the Internet Business, and our revenue generated from the Internet Business was approximately JPY47,230 thousand ($314 thousand), JPY44,485 thousand ($296 thousand) and JPY73,093 thousand ($486 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 4.5%, 2.8% and 4.6% of our total revenue for those periods, respectively.

In addition to the SIM Card Business and the Internet Business, we currently also operate the Outsourcing Business. Under the Outsourcing Business, we work as a staffing agency, and our goal and policy are to provide a more stable working environment and conditions for job seekers. Unlike most of the staffing agencies in Japan that only hire job seekers and dispatch them to their corporate clients without providing much training, leaving the training to such corporate clients, we hire job seekers as our full-time employees and provide basic training to help them fit into the workplaces and positions that we consider the best match for them based on their willingness, interests, personalities, experiences, requirements, and our corporate clients’ needs before dispatching them to our corporate clients. We also focus on the welfare of our employees and, we believe, offer more competitive employment conditions compared to those of other staffing agencies in Japan. By doing so, we may provide a more stable working environment and conditions for job seekers, which benefits us in recruiting more talented and competent personnel to appeal to more corporate clients. For each dispatch, our corporate clients pay us a monthly dispatch fee, and we then pay our employees who are dispatched monthly salaries, transportation allowance, and incentive bonuses out of the dispatch fees. When our full-time employees are not dispatched to our corporate clients, they generally work at our office and assist in matters such as managing dispatched employees and acquiring new corporate clients.

In addition, for job seekers who do not intend to take the dispatch path, we provide the service of acting as an intermediary, introducing them to appropriate hirers based on job seekers’ willingness, interests, personalities, experiences, requirements, and the hirers’ needs. In particular, in some special cases of blue-collar job seekers, if they face financial difficulties before getting hired, we support them with a certain amount of living expenses for a certain period of time. By doing so, we expect to make our service appealing to more job seekers, enabling us to secure the source of job seekers. After the job seekers are hired, we charge the hirers referral fees no greater than 30% of the workers’ estimated annual compensation package.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, our revenue generated from the Outsourcing Business was approximately JPY399,827 thousand (2,658 thousand), JPY264,865 thousand ($1,761 thousand) and JP73,408 thousand ($488 thousand), respectively, which accounted for 38.4%, 16.8% and 4.2% of our total revenue for those periods, respectively.

In addition to our SIM Card Business, Internet Business, and Outsourcing Business, we currently also operate Travel Business. Through cooperating with our travel business partners, we operate a portal site that allows customers to purchase travel plans such as hotel plus airplane ticket set plans and hotel plus Shinkansen (Japanese bullet trains) ticket travel plans. In most cases, our prices are lower than wholesale prices. While our prices may sometimes be slightly higher than the wholesale price, they are still lower than the official prices set by the hotels, airlines, and the Shinkansen company. We charge a monthly subscription fee of 2,530 Japanese yen (approximately $17). As of November 30, 2024, we had approximately 4,769 subscribers, and our revenue generated from the Travel Business was approximately JPY58,596 thousand ($390 thousand), JPY142,257 thousand ($946 thousand) and JPY229,812 thousand ($1,528 thousand), respectively, during the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, which accounted for 6.0%, 9.0% and 13.0% of our total revenue for those periods, respectively.

We operate our SIM Card Business, Internet Business, and Travel Business through Center Mobile Japan and operate our Outsourcing Business through Pay Storage, the wholly owned subsidiary of Center Mobile Japan. Both Center Mobile Japan and Pay Storage are based in Japan. Since investors will invest in Center Mobile Cayman, a holding company without substantial operations, our cash flows and our ability to meet our obligations depend on the cash flows of Center Mobile Japan and Pay Storage and the payment of funds by Center Mobile Japan and Pay Storage to us in the form of dividends, distributions or otherwise.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, our total revenue was JPY1,039,866 thousand (approximately $6,914 thousand), JPY1,583,214 thousand (approximately $10,526 thousand) and JPY1,760,423, thousand (approximately $11,704 thousand), respectively, and our net income was JPY29,081 thousand (approximately $193 thousand), JPY40,278 thousand (approximately $268 thousand) and JPY291,724 thousand (approximately $1,940 thousand), respectively.

Competitive Strengths

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

Competitive price and an innovative business model

As an MVNO that uses the infrastructure and communication system of an MNO and purchases wholesale mobile connectivity and wireless communications services from an MVNE, we can obtain bulk access to mobile connectivity and wireless communications services at wholesale rates. Since we do not own or operate a physical network or relevant appliances and equipment, we are free from related capital expenditures. Therefore, we are able to provide competitive prices for our services against MNOs.

In addition, through operating an innovative business model that incentivizes our customers to watch advertisements through our proprietary app, “PLAIO,” we are able to receive advertising fees from advertisers and use them to reward those customers who watched advertisements to lower their monthly fees for our mobile connectivity and wireless communications services. By watching a video advertisement with a length ranging from 30 seconds to around 60 seconds through PLAIO, customers can receive five points, with each point being used as 0.1 Japanese yen by the customers to deduct their monthly fees for our mobile connectivity and wireless communications services.

During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, more than 20% of our customers at least partly deducted their monthly fees for our mobile connectivity and wireless communications services through our innovative business model. See “—Innovative business model.” As we strive to grow our business, we expect to further develop our innovative business model and increase advertising revenue. With such grown advertising revenue, we intend to provide more incentives to our customers, such as awarding more points for each video advertisement watched, to the extent that most of our customers can large-partially or even fully deduct their monthly fees.

High quality and stability of our mobile connectivity and wireless communications services

Pursuant to our service agreement with FreeBit, we are able to determine the bandwidth of the mobile connectivity and wireless communications services we purchase wholesale from FreeBit on a monthly basis. As the bandwidth determines how much data can be transferred at one time, the more bandwidth we can access from FreeBit, the more data our customers can send and receive at one time. As such, by monitoring the numbers of our customers and the aggregate data amounts they transfer and measuring the transfer speeds during the peak periods in specific areas on a daily basis, we may decide the bandwidth of the mobile connectivity and wireless communications services we need to purchase wholesale from FreeBit or to increase the bandwidth when necessary to ensure the high quality and stability of our services.

Thanks to the innovative business model we operate, in addition to the monthly fees we receive from our customers, we are also able to generate advertising revenue. While it is common for other mobile connectivity and wireless communications services providers that operate diversified businesses to generate additional revenue by selling other services to existing customers for the mobile connectivity and wireless communications services, our innovative business model allows us to generate additional advertising revenue without the sales of other services, enabling two revenue streams from a single service. This unique dual revenue structure provides us with additional funds to purchase wholesale sufficient bandwidth for mobile connectivity and wireless communications services from FreeBit, ensuring the high quality and stability of our services.

Experienced management team with strong technical and operational expertise

Our management team is comprised of highly skilled and dedicated professionals who have extensive multidisciplinary experience related to our businesses.

Our representative director and Chief Executive Officer, Mr. Yu Asano, has more than 10 years of experience in sales and has experience working as a manager at a company that provides temporary staffing services for two years.

Our founder and director, Mr. Tatsuya Nakagoshi, served as a representative director at a consulting company in Japan for eight years and a representative director at a design and system development and maintenance company.

Our director, Mr. Yuki Hayakawa, worked as a planner for five years at a trading house that resells apparels and interior goods online and via mail orders, where he was responsible for planning and execution of e-mail marketing and advertising distribution and deepened his knowledge in digital marketing, particularly e-mail marketing, and advertising. From April 2015 to March 2017, Mr. Hayakawa worked at a company providing smartphone and phoneline solutions for corporate customers, where he was responsible for corporate client sales. Mr. Hayakawa also has experience in online sales of original equipment manufacturer’s products during his two years working as a partner at a retailer. While serving as our director, Mr. Hayakawa also currently works as a partner at a company that focuses on advertising agency management business.

Our director and Chief Technology Officer, Mr. Yoshiaki Izutsu, has more than 10 years of experience in system engineering and web design.

Our director, Mr. Yusuke Kanazawa, has more than 10 years of experience in e-commerce. From December 2015 to March 2019, Mr. Kanazawa also served as a representative director at a real estate company, where he developed his expertise in marketing, including product planning, landing page creation and improvement, advertisement placement, and optimization of advertisement effectiveness. While serving as our director, Mr. Kanazawa also works as a sole proprietor, operating his e-commerce website and providing consulting services relating to e-commerce website management.

Before joining us, our director and Chief Financial Officer, Mr. Kazuo Iseji, worked as a sole proprietor managing a restaurant in Osaka from April 2014 to May 2021, where he, in addition to general business operations, was also responsible for financial planning and management and accounting. In November 2011, Mr. Iseji passed Level 1 of the Official Business Skills Test in Bookkeeping, a test held by Chamber of Commerce and Industry of Japan, the knowledge of which is equivalent to college degree knowledge in commercial bookkeeping and accounting for large companies.

We have developed nationwide retail channels and flexible expansion model

As of the date of this prospectus, we have established nationwide retail channels in Japan, consisting of two directly-operated stores, 36 franchise stores (operated by 35 owners), 15 distributors, and five OEM Partners. With our existing retail channel, we are able to distribute our SIM cards and provide customer services to our customers throughout the country. During the six months ended November 30, 2024 and the fiscal years ended May 31, 2024 and 2023, we entered into 28,212, 30,031 and 32,845 service agreements for our mobile connectivity and wireless communications services, respectively.

To further expand our retail channel, we provide appealing incentives to attract retailers who want to join our SIM Card Business. They enjoy the great flexibility to join as franchise stores, distributors, or OEM Partners based on their own conditions and needs. See “—Retail Channels.”

Growth Strategies

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

Continue to grow our SIM Card Business

As smartphones have become one of the most used electronic devices in modern daily life, more and more consumers tend to use specific smartphone apps to obtain the information they need rather than using search engines or web browsers as they did in the past. For example, more consumers are using Amazon’s or Walmart’s app to shop instead of using their websites in web browsers. Therefore, we believe it is one of the most efficient and effective ways to understand and obtain big data regarding the consumers’ life habits and what they are interested in by not only acquiring the web browsing history of the consumers but also collecting data like “when, how, and to what extent they are using their smartphones and when, how, and what smartphone apps they are using” because these will not be reflected in the consumers’ web browsing history if they only use smartphone apps. In view of this, to further develop the business model in which we use a portion of our advertising revenue to benefit our customers with lower fees for our mobile connectivity and wireless communications services, we are currently cooperating with an external team to conduct research and we entered into a consulting agreement with a Japanese technology company that specializes in the development of big data technologies in September 2024 to give advice and guidance on the development of our big data technologies that allow us to collect and analyze, under our customers’ prior consent, big data and information regarding our customers’ lifestyle habits and interests. See “—Intellectual Property—Our Big Data Technologies.”

We plan to apply our big data technologies when we grow our customer base to the extent that we have at least 100,000 customers. With the implementation of our big data technologies under development in the future, we expect to be able to collect and analyze, under our customers’ prior consent, big data and information regarding the lifestyle habits and interests of our customers (including those who use our SIM cards or our original smartphones (as described below)) not only from their web browsing history but also from the smartphone apps they use to maximize the effectiveness and efficiency of advertising by conducting highly accurate targeted advertising. We expect such targeted advertising to include, for example, displaying travel agencies’ advertisements to offer special deals on travel plans for users who open travel apps frequently, delivering advertisements of newly released games to users who play game apps three times or more a week, and casting advertisements of appropriate products at the proper timing to the users according to their lifestyle habits and interests. We also plan to employ data we obtain from our water dispenser and original smartphones in developing our big data technologies. See “—Expand into the fields of water dispenser business and develop our original smartphones.” As of the date of this prospectus, we have obtained two patents in Japan and are proceeding with the patent application in all Patent Cooperation Treaty contracting states in connection with our big data technologies that enable us to obtain big data from SIM communication logs and are preparing to submit certain patent applications in Japan and all Patent Cooperation Treaty contracting states for certain methods to apply big data to conduct effective and efficient advertising.

In addition, we plan to deliver advertisements in the format of push notifications on smartphones. In this case, our customers will be able to “watch” the advertisements by simply tapping the push notification, making it easier for them to earn points and for us to generate advertising revenue. As smartphones have become one of the most used electronic devices in modern daily life and we expect people to spend more time on them in the future, we believe being able to deliver advertisements directly through smartphones and, with the implementation of our big data technologies, at the most appropriate timing and with most appealing contents to our customers will substantially increase the click-through rate of the advertisements we deliver and maximize the effectiveness and efficiency of advertising, consequently attracting more advertisers and long-term advertising sponsors join our innovative business model as we believe it will be a useful platform for them to deliver their advertisements effectively and efficiently, and lead to more advertising revenue generated. With such grown advertising revenue, we intend to provide more incentives to our customers, such as awarding more points for each video advertisement watched, to the extent that more customers can fully deduct their monthly fees to attract more customers and broaden our customer base. Consequently, as we broaden our customer base, we will be able to attract more advertisers and long-term advertising sponsors, establishing a profitable cycle for our business. Ultimately, our goal is to mainly rely on the advertising revenue from advertisers and long-term advertising sponsors to provide our mobile connectivity and wireless communications services for free to our customers, with advertisements delivered and watched on a regular basis, just like YouTube and Facebook, making “using our mobile connectivity and wireless communications services is free” become a new common sense among the consumers in Japan.

In addition, we plan to focus more on the online store on our website that we opened in June 2021, where customers can choose monthly plans to subscribe to our mobile connectivity and wireless communications services anywhere and order SIM cards to be shipped to their addresses within Japan. By doing so, we could further expand our sales and provide our services to the customers who reside in areas where we have not yet operated physical stores.

In addition, the reason we currently provide our mobile connectivity and wireless communications services as an MVNO is the low demand for bandwidth from our limited customer base. Therefore, as we grow our customer base, the demand for bandwidth from our customer base may increase to a level that is economically and strategically proper for us to directly purchase wholesale the wireless network infrastructure from NTT Docomo or other major MNOs in Japan, such as KDDI Corporation (AU) and SoftBank Corp., as an MVNE.

Increase our visibility and brand awareness by advertising

We intend to increase our visibility and brand awareness by advertising, promoting our services and brand through social media platforms, and engaging with our existing and potential customers to receive real-time feedback on our services. We also anticipate that listing on Nasdaq would increase our visibility and brand awareness and thus benefit the growth of our customer base.

Expand into the fields of water dispenser business and develop our original smartphones

Besides continuing to grow our SIM Card Business, we also intend to expand into the fields of water dispenser business and develop our original smartphones. As of the date of this prospectus, we are cooperating with certain manufacturers to develop our own original smartphones and water dispensers equipped with Internet of Things functions (“IoT functions”).

We are currently developing our original smartphones that, under our customers’ prior consent, will allow us to collect big data and information regarding the users’ lifestyle habits and interests, regardless of whether the smartphones are using our SIM card. In addition, under our customers’ prior consent, our original smartphones will allow us to display advertisements to our customers at the time we schedule while they are using them. As these advertisements will be skippable, they will not interfere with the normal operations of smartphones. In this case, like watching commercials on television, our customers will be able to earn points by watching these advertisements while using our original smartphones without making efforts to use our proprietary app, “PLAIO.”

In order to obtain smartphone user data, we plan to develop software which collects user logs when our original smartphones are operated. As of the date of this prospectus, we have confirmed with a third-party smartphone application developer on the types of communication logs we can obtain from smartphone usage and have received the samples of these logs. We are currently in the conceptualization stage, evaluating what can be inferred and analyzed by using these sample logs. We plan to complete the development of the software necessary for acquiring and transferring logs for the further development of our big data technologies in May or June of 2025.

For the water dispenser business, we are currently planning to develop our original water dispensers equipped with IoT functions. With IoT functions, our water dispensers, under the users’ prior consent, are capable of recording and collecting data on users’ lifestyle habits, such as their health habits and usual time periods at home. Through the sales of our original IoT water dispensers, we will be able to reach target customers different from those in the SIM Card Business and collect big data that we were unable to obtain before. For example, it will be possible for us to know users’ usual time periods at home, leading to further understanding of their lifestyles. In addition, as big data regarding users’ usual time periods at home are valuable data for companies such as home security companies and delivery companies, we will be able to leverage these big data to develop business collaboration relationships with them, bring us more business opportunities as well as providing a more convenient lifestyle for our users. Furthermore, as our original IoT water dispensers are equipped with powdered milk mode to make formula milk for infants, sterilized water mode, and hot water mode, we could reach and further understand the lifestyles of young couples with infants in their houses and people who may care more about their health. Since our original IoT water dispensers are also equipped with a function for users to create personal accounts to record their water consumption, if each user creates a personal account, we would be able to learn the number of people in each household.

In order to obtain consumer data from IoT water dispensers, we plan to develop software which collects user logs when the dispensers are operated. As of the date of this prospectus, we are in the process of determining the types of data and logs to be collected through the water dispenser, the methods for acquisition, and the technical specifications required for such data collection. Additionally, we have consulted with a third-party water dispenser manufacturer to confirm the types of logs that can be obtained and the technology necessary to facilitate their collection.

In addition, by reaching these new target customers, we will be able to expand the promotion of our mobile connectivity and wireless communications services to different customer groups, expecting to further broaden our customer base. On the other hand, we may also promote our original IoT water dispensers to customers coming for our mobile connectivity and wireless communications services through our retail channels. As such, we expect this strategy will benefit both our water dispenser business and our SIM Card Business.

We plan to start reselling our water dispensers in the spring or summer of 2025 and our original smartphone by the end of 2025 or the beginning of 2026. We intend to incorporate additional data collected from the users of our original smartphones and IoT water dispensers to develop big data technologies that we, cooperating with an external team and a Japanese technology company that specializes in the development of big data technologies, are currently researching and developing to conduct a further accurate analysis that would enable us to display appropriate and personalized advertisements to our customers more efficiently. See “—Intellectual Property—Our Big Data Technologies.” By implementing this strategy, we expect to advertise more efficiently and effectively to attract more advertisers and long-term advertising sponsors and eventually increase our advertising revenue. Furthermore, with such increased advertising revenue, we intend to provide more incentives, such as awarding more points for each video advertisement watched, to attract more customers and broaden our customer base. Consequently, we will be able to attract more advertisers and long-term advertising sponsors, establishing a profitable cycle for our business.

Our Business

SIM Card Business