SEC Form F-1 filed by BloomZ Inc.

As filed with the U.S. Securities and Exchange Commission on September 26, 2024.

Registration No. 377-07446

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

FORM F-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

BloomZ Inc.
(Exact name of registrant as specified in its charter)

Toyo Recording 1F, 4-5-19 Akasaka
Minato-ku, Tokyo 107-0052
Japan
+81 050-3138-4984
(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
Telephone: (800) 221-0102

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

Ying Li, Esq.
Lisa Forcht, Esq. 

Hunter Taubman Fischer & Li LLC 

950 Third Avenue, 19^th Floor 

New York, NY 10022

212-530-2206

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, please 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, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

8,244,800 Ordinary Shares

This prospectus relates to the offer and resale by the selling shareholders identified in this prospectus (each, a “Selling Shareholder” and, collectively, the “Selling Shareholders”) of an aggregate of 8,244,800 ordinary shares of BloomZ Inc. (the “Company,” “we,” “us” or “our”), par value $0.00000002 (the “Resale Shares”). 

The Resale Shares will be resold from time to time by the Selling Shareholders listed in the section titled “Selling Shareholders” beginning on page 32.

The Selling Shareholders, or their respective transferees, pledgees, donees or other successors-in-interest, may sell the Resale Shares through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The Selling Shareholders may sell any, all or none of the securities offered by this prospectus, and we do not know when or in what amount the Selling Shareholders may sell their Resale Shares hereunder following the effective date of this registration statement. We provide more information about how a Selling Shareholders may sell their Resale Shares in the section titled “Plan of Distribution” on page 93.

We are registering the Resale Shares on behalf of the Selling Shareholders, to be offered and sold by them from time to time. We will not receive any proceeds from the sale of the Resale Shares by the Selling Shareholders in the offering described in this prospectus. We have agreed to bear all of the expenses incurred in connection with the registration of the Resale Shares. The Selling Shareholders will pay or assume the obligation to pay any discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses, if any, incurred for the sale of the Resale Shares.

Our ordinary shares, par value $0.00000002 per share (the “Ordinary Shares”), are currently listed on the Nasdaq Capital Market under the symbol “BLMZ.”

We are an “emerging growth company” as defined under applicable U.S. securities laws and are eligible for reduced public company reporting requirements. Please read the disclosures beginning on page 7 of this prospectus for more information.

Investing in our Ordinary Shares, including the Resale 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 the Resale Shares.

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

The date of this prospectus is             , 2024

TABLE OF CONTENTS

About this Prospectus

This prospectus describes the general manner in which the Selling Shareholders may offer from time to time 8,244,800 Ordinary Shares that comprise the Resale Shares. You should rely only on the information contained in this prospectus and the related exhibits, any prospectus supplement or amendment thereto and the documents incorporated by reference, or to which we have referred you, before making your investment decision. Neither we nor the Selling Shareholders have authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus, any prospectus supplement or amendments thereto do not constitute an offer to sell, or a solicitation of an offer to purchase, the Resale Shares offered by this prospectus, any prospectus supplement or amendments thereto in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer or solicitation of an offer in such jurisdiction. You should not assume that the information contained in this prospectus, any prospectus supplement or amendments thereto, as well as information we have previously filed with the U.S. Securities and Exchange Commission (the “SEC”), is accurate as of any date other than the date on the front cover of the applicable document. For the avoidance of doubt, no offer or invitation to subscribe for Ordinary Shares is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

If necessary, the specific manner in which the Resale Shares may be offered and sold will be described in a supplement to this prospectus, which supplement may also add, update or change any of the information contained in this prospectus. To the extent there is a conflict between the information contained in this prospectus and any prospectus supplement, you should rely on the information in such prospectus supplement, provided that if any statement in one of these documents is inconsistent with a statement in another document having a later date—for example, a document incorporated by reference in this prospectus or any prospectus supplement—the statement in the document having the later date modifies or supersedes the earlier statement.

Neither the delivery of this prospectus nor any distribution of Resale Shares pursuant to this prospectus shall, under any circumstances, create any implication that there has been no change in the information set forth or incorporated by reference into this prospectus or in our affairs since the date of this prospectus. Our business, financial condition, results of operations and prospects may have changed since such 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 of Japanese yen into U.S. dollars have been made at the exchange rates of ¥151.22=$1.00, which was the foreign exchange rate on March 29, 2024, as reported by the Board of Governors of the Federal Reserve System (the “U.S. Federal Reserve”) in its weekly release on April 1, 2024. Historical and current exchange rate information may be found at https://www.federalreserve.gov/releases/h10/.

Conventions that Apply to this Prospectus

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

On December 11, 2023, the Company’s shareholders approved a sub-division of the Company’s authorized and issued Ordinary Shares at a ratio of 1:5,000, which became effective on December 11, 2023. As a result of the sub-division, the authorized share capital of the Company became US$50,000 divided into 2,500,000,000,000 shares of a par value of US$0.00000002 each, of which 11,185,000 Ordinary Shares were issued and outstanding after the sub-division. Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented to give effect to the 1-for-5,000 sub-division of our Ordinary Shares.

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 Related to Our Business and Industry

We have had significant accumulated deficits as of March 31, 2024, September 30, 2023 and 2022, which raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends on our being able to attract and retain revenue generating customers, acquire new customer contracts, and secure additional financing.

We had operating losses of ¥18,416 thousand, ¥15,796 thousand and a profit of ¥241 thousand for the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, respectively. Such operating losses resulted in accumulated deficits of ¥34,905 thousand, ¥16,489 thousand and ¥693 thousand as of March 31, 2024, September 30, 2023 and 2022, respectively. Given the preceding conditions, our auditor, TAAD LLP, has raised substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern depends upon our ability to attract and retain revenue generating customers, acquire new customer contracts, and secure additional financing.

While our management’s plan is to acquire new revenue generating customer contracts and obtain additional financing through the issuance of the Company’s Ordinary Shares, other equity or debt financings, or other means, there is no assurance that we will be successful.

If we are unable to acquire new revenue generating customer contracts and obtain additional financing in the future, there may remain substantial doubt about our ability to continue as a going concern, and, investors or other financing sources may be unwilling to provide funding to us on commercially reasonable terms or at all.

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

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

The audio production and VTuber management industries in Japan are both highly competitive and fragmented. As a relatively new and small-scale company in both industries, we face competition directly from the large-scale companies with more resources and those with a more extended operating history and more connections to these industries. In addition, we indirectly face competition from other large video streaming platforms, social media platforms, and other platforms offering movies, concerts, sports games, and other recreational activities in terms of our VTuber management business. See “Business — Competition.” Our current or future competitors may have longer operating histories, greater brand recognition, or greater financial, technical, or marketing resources than we do. Competitors may leverage their brand recognition, experience, and resources to compete with us in a variety of ways, including investing more heavily in developing diverse types and innovative content in their audio production business and VTuber live streaming projects. In addition, new and enhanced technologies may increase the competition in the audio production and VTuber live streaming markets. Increased competition may reduce our profitability, market share, customer base, and brand recognition. There can be no assurance that we will be able to compete successfully against current or future competitors, and such competitive pressures could have a material adverse effect on our business, financial condition, and results of operations.

If we are unable to retain the existing clients for our audio production and voice actor workshop businesses, our results of operations will be materially and adversely affected.

The fees paid by the production committee for our comprehensive audio production services and the profit distributed based on our investment ratio after the animations/video games sold are the primary source of income of our audio production business. In the event our existing clients no longer place orders for our audio production services or invite us to invest and be involved in animation/video game production projects, and we do not acquire sufficient replacement orders to compensate, the revenue from our audio production business may be impacted, and our results of operations may be materially and adversely affected.

Membership fees we collect from the registered members under our workshop business provide the primary source of income of our voice actor workshop business. Since we do not enter into any long-term contracts with our registered members, we may not be able to predict whether the registered members will continue to participate in our workshops accurately, and the participating rates may decline or fluctuate due to factors such as the level of satisfaction with our services and our fees and charges, as well as factors beyond our control, such as the outbreak of a pandemic, Japan’s overall economic situation, and the rising competition from our competitors. If our existing members decide to no longer participate in our voice actor workshops and we do not acquire replacement members in comparable numbers or otherwise grow our member base, the revenue from our voice actor workshop business may be impacted, and our results of operations may be materially and adversely affected.

If we fail to retain our existing fans or further grow our fan base, the operation, profitability, and prospects of our VTuber management business may be materially and adversely affected.

The size of the fan base and the level of fan engagement are critical to the success of our VTuber management business. Since a large portion of the revenue generated from the VTuber management business was from the profits distributed by the online platforms, which directly hinge upon the number of the viewers of our affiliated VTubers’ live streaming videos and how many services, such as Super Chats/Stickers/Thanks, our fans purchase, the amount of the revenue generated by our VTuber management business significantly depends on our ability to maintain and increase the size of our fan base and fan engagement level. If our fan base becomes smaller or our fans become less active, it is probable that our fans would spend less on services like Super Chats/Stickers/Thanks or access the platforms less, in general. As a result, our financial condition would suffer from the consequential decline in revenue, and our business and operating results will be materially and adversely impacted.

As of March 31, 2024, we had approximately 470,000 subscribers on our affiliated VTubers’ YouTube channels.

Our revenue generated from the VTuber management business is highly dependent on the level of fan engagement. For example, during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, 24.6%, 29.0% and 54.0%, respectively, of the revenue generated from the VTuber management business came from YouTube, and among the revenue sources we generated from YouTube during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, 52.2%, 68.3% and 81.5% was from Super Chats/Stickers/Thanks, respectively. This indicates our high level of fan engagement as it reflects the high level of activeness and willingness of our fans to purchase services like Super Chats/Stickers/Thanks to interact and engage with our affiliated VTubers during their live streaming sessions.

Maintaining and improving the current size of our fan base and the level of our fan engagement is critical to our continued success. To maintain and improve this already large size of our fan base and high level of fan engagement, however, we would have to ensure that we adequately and timely respond to changes in fan preferences, cultivate, attract, and retain enough popular VTubers, and offer new features and content that may attract new fans. There is no guarantee that we can meet all of these goals. A number of factors could negatively affect our fan retention, growth, and engagement, including if:

We may fail to cultivate, attract, and retain talented and competent voice actors and VTubers, which may materially and negatively affect our audio production and VTuber management businesses and operations.

As of the date of this prospectus, we have 59 collaborating voice actors and 16 affiliated VTubers, which increased by approximately 145.8% and 128.6% from the numbers as of September 30, 2021, respectively. Our collaborating voice actors play a key role in the audio production, since their voice acting provides the personality of their casting characters. Affiliated VTubers are the core of the live streaming ecosystem, as they are the primary source of captivating content to attract a dynamic and highly interactive community of fans. The charisma of our collaborating voice actors and affiliated VTubers, together with their voice acting skills, are primary contributors to secure the retention of our clients and fans. While we enter into one-year exclusive management agreements with our collaborating voice actors and affiliated VTubers that prohibit them from voice acting or live streaming for third parties’ projects without our prior consent, they may choose not to renew the agreements when the term ends. Moreover, the exclusive management agreements do not prohibit departing voice actors and VTubers from immediately working with our competitors. The departure of high-quality voice actors and VTubers may cause a quick corresponding decline in our client and fan base. To retain high-quality voice actors and VTubers, we may have to expend more resources to provide incentives, such as compensation schemes and comprehensive training and support to help them improve their incentives and build publicity and brand awareness. Although we strive to improve and stabilize our operations in these respects, there is no assurance that our collaborating voice actors and affiliated VTubers will not leave, despite our best efforts to retain them.

Contractual disputes with our collaborating voice actors and affiliated VTubers may harm our reputation and subject us to contractual liabilities, and may be costly or time-consuming to resolve.

We have entered into a one-year exclusive management agreement with every collaborating voice actor and affiliated VTuber. The fixed terms of the exclusive management agreement are generally non-negotiable, and such agreements will be automatically renewed if no party terminates one month prior to the end of the term. From time to time, there may be contractual disputes between us and our collaborating voice actors or affiliated VTubers. Any such disputes may be costly and time-consuming to resolve and detrimental to the quality of our audio production or the content produced by our affiliated VTubers, causing our existing clients to end the business relationship, decrease our fan base and the level of engagement, or could otherwise adversely affect our business, financial condition, and results of operations.

If we are no longer able to benefit from CyberStep’s support, our business may be adversely affected.

CyberStep, one of our principal shareholders and one of the Selling Shareholders, is a large video game-producing company. Our business has benefited from CyberStep’s permission to access its resources and assets, including granting us the use of the studios it leases to host physical voice actor workshops and providing access to its existing sales channels to sell and deliver merchandise featuring our collaborating voice actors and affiliated VTubers. In addition, we also have benefited from other types of CyberStep’s support, including designing and producing novel video games suitable for our collaborating voice actors and affiliated VTubers, to provide work opportunities for our audio production services, and assisting us by engaging with, and securing opportunities to work for, its subsidiaries or strategic alliance counterpart in relevant industries.

However, since we do not enter into agreements with CyberStep for the foregoing support and have been dependent on oral arrangements and non-obligatory support from the management of CyberStep, CyberStep may, at its own discretion, cease granting such permission or providing such support.

We cannot assure you that we will continue to benefit from our cooperation with CyberStep and its subsidiaries in the future. To the extent we cannot maintain our cooperative relationships with CyberStep on terms favorable to us or at all, we may need to expend resources to locate other business alliances to provide similar resources, services and assets, and we may lose work opportunities, which would have a material and adverse effect on our business, prospects and results of operations.

Our limited operating history in rapidly evolving industries makes it difficult to accurately forecast our future operating results and evaluate our business prospects.

We only have a limited operating history, as we launched our audio production and voice actor workshop business in October 2017 and our VTuber management business in December 2021. Members of our management team have been working together for a short period of time and our operations are still in an early stage. They may still be in the process of exploring approaches to running our Company and reaching a consensus among themselves, which may affect the efficiency and results of our operation. Due to our limited operating history, our historical growth rate may not be indicative of our future performance. Our future performance may be more susceptible to certain risks than a company with a longer operating history in a different industry. Many factors could adversely affect our business and prospects and future performance, including:

We may not be successful in addressing the risks and uncertainties listed above, among others, which may materially and adversely affect our business, results of operations, financial condition, and future prospects.

Our financial condition, results of operations, and cash flows have been adversely affected by the COVID-19 pandemic.

The COVID-19 pandemic has spread throughout the world and resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus during calendar years 2020, 2021, and 2022. Companies also took precautions, such as requiring employees to work remotely, imposing travel restrictions, and temporarily closing their businesses.

While our business was not materially affected by the COVID-19 pandemic during the six months ended March 31, 2024 and the fiscal year ended September 30, 2023, it was substantially and adversely affected during the fiscal years ended September 30, 2022 and 2021. The global outbreak of COVID-19 adversely impacted Japan between the beginning of 2020 and the first half of 2023. During such period, the Japanese government issued several Declarations of Emergency, requesting the closing of non-essential activities and businesses across the country as a preemptive safeguard against the spread of COVID-19. This situation adversely impacted businesses across the country, particularly in the education and entertainment fields in which we operate.

Audio Production

During the fiscal years ended September 30, 2022 and 2021, many of the orders for audio production services we had received were postponed, due to the cessation of the entirety of animation production projects in compliance with the government COVID-19 policies. In addition, the progress of a few audio productions was delayed, as some of our collaborating voice actors were infected with COVID-19. Our audio production business was not materially affected by the COVID-19 pandemic during the six months ended March 31, 2024 and the fiscal year ended September 30, 2023, because fewer orders for audio production services were postponed, as fewer animation production projects were deferred or canceled compared to the fiscal years ended September 30, 2022 and 2021. However, the revenue generated from the audio production business during the fiscal year ended September 30, 2023 nevertheless decreased by 46.9% compared to the fiscal year ended September 30, 2022, due to a reason unrelated to the COVID-19 pandemic. The decrease was mainly because we were devoting ourselves to several large projects that are expected to take a few years to complete during the fiscal year ended September 30, 2023, and thus, fewer revenue-generating projects were completed during such period compared to the fiscal year ended September 30, 2022. The revenue generated from the audio production business during the six months ended March 31, 2024 increased compared to the same period in the prior year.

VTuber Management

COVID-19 significantly affected the streaming schedule due to infections afflicting our affiliated VTubers during fiscal year 2022. In addition, offline events featuring our affiliated VTubers we planned to hold and expected to significantly contribute to the revenue were canceled in fiscal year 2022, either in compliance with the government’s COVID-19 policies or due to the infection of our affiliated VTubers. Since fewer of our affiliated VTubers were infected with COVID-19 and most of our infected affiliated VTubers had recovered from COVID-19, the streaming schedule during the six months ended March 31, 2024 and the fiscal year 2023 was not as significantly affected as it was during the fiscal year 2022. Consequently, during the six months ended March 31, 2024 and the fiscal year ended September 30, 2023, the number of VTubers available for live streaming increased, which led to higher advertisement revenue, and thus, the revenue generated from the VTuber management business significantly increased.

Voice Actor Workshops

Our physical voice actor workshops were frequently canceled, in compliance with the government policies during the fiscal years ended September 30, 2022 and 2021, due to the COVID-19 pandemic. While our voice actor workshop business was not materially affected by the COVID-19 pandemic during the six months ended March 31, 2024 and the fiscal year ended September 30, 2023, as no physical voice actor workshops were canceled during these periods, the revenue generated from the voice actor workshop business decreased compared to the same period in the prior year. The decrease is primarily because the Company focused on the operation of the VTuber management business rather than the recruitment of members for the voice actor workshops during the six months ended March 31, 2024 and the fiscal year ended September 30, 2023.

For additional information, see section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations — COVID-19 Affecting Our Results of Operations” in this prospectus.

Our business has not been materially affected by the COVID-19 pandemic since October 1, 2022. We continue to assess the COVID-19 pandemic, however, at this time, we cannot estimate the full impact of the COVID-19 pandemic on our financial condition and future results of operations. The ultimate impacts of the COVID-19 pandemic and related mitigation efforts will depend on future developments, including the duration of the COVID-19 pandemic, the acceptance and effectiveness of vaccines, the impact of COVID-19 and related containment and mitigation measures on our clients, members, collaborating voice actors, affiliated VTubers, and employees, workforce availability, and the timing and extent to which normal economic and operating conditions resume. To the extent that the COVID-19 pandemic adversely impacts our business, results of operations, liquidity, or financial condition, it may also have the effect of increasing many of the other risks described in this “Risk Factors” section.

Our businesses are all operated in Japan, and our current business and future growth could be materially and adversely affected if we experience a decline in clients in Japan.

Since our audio production business, VTuber management business, and voice actor business are all operated in Japan, our current business and future growth could be materially and adversely affected if we experience a decline in clients and fan 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 “— A downturn in the economy of the markets in which our audio production services, VTuber live streaming services, and voice acting educational services are provided may affect clients’ and fans’ willingness to spend on extracurricular education and entertainment services, which could directly or indirectly delay our growth strategy and have a material adverse effect on our business, financial condition, profitability, and cash flows” in this section.

A downturn in the economy of the markets in which our audio production services, VTuber live streaming services, and voice acting educational services are provided may affect clients’ and fans’ willingness to spend on extracurricular education and entertainment services, which could delay our growth strategy and directly or indirectly have a material adverse effect on our business, financial condition, profitability, and cash flows.

A downturn in the economy of the markets in which our audio production services, VTuber live streaming services, and voice acting educational services are provided could adversely impact clients’ and fans’ willingness to spend on extracurricular education and entertainment services. Factors that could affect such willingness include general business conditions, employment levels, interest rates and tax rates, the availability of consumer credit, and consumer confidence in future economic conditions. In the event of an economic downturn, consumer spending habits could be adversely affected and we could experience lower than expected net profits, which could force us to delay or slow our growth strategy and directly or indirectly have a material adverse effect on our business, financial condition, profitability, and cash flows.

In recent years, the economic indicators in Japan have also shown mixed signs, and future growth of the Japanese economy is subject to many factors beyond our control. The current administration of Prime Minster Fumio Kishida and the former administration of Prime Minister Yoshihide Suga and Prime Minister Shinzo Abe have introduced policies to combat deflation and promote economic growth. In addition, the Bank of Japan introduced a plan for quantitative and qualitative monetary easing in April 2013 and announced a negative interest rate policy in January 2016. In April 2020, the Bank of Japan decided to further intensify monetary easing in response to the economic downturn caused by the COVID-19 pandemic. However, the long-term impact of these policy initiatives on Japan’s economy remains uncertain. In addition, the occurrence of pandemics, such as the COVID-19 pandemic, the occurrence of large-scale natural disasters, such as earthquakes and typhoons, as well as an increase in the consumption tax rate, which took place in April 2014, with a further increase in October 2019, may also adversely impact the Japanese economy, potentially impacting spending on extracurricular education and entertainment services. Any future deterioration of the Japanese or global economy may result in a decline in consumption that would have a negative impact on demand for our services and the prices we are able to charge for them.

Our management has a limited history managing rapid expansion. If we cannot effectively and efficiently manage our growth strategy, our results of operations or profitability could be materially and adversely affected.

We have been growing rapidly in recent years (other than the fiscal year ended September 30, 2021, in which our results of operations were negatively affected by the COVID-19 pandemic), and we intend to continue to expand our business by undertaking audio production for more animation and video game projects, planning and producing our own animation and TV programs, securing more talented and competent voice actors and VTubers, improving and increasing the content of our affiliated VTubers’ live streaming performances, holding offline events featuring our collaborating voice actors and affiliated VTubers, and broadening the scale of our voice actor workshops. Since this rapid expansion is a new strategy for us and our management has a limited history managing such an expansion, we may not be able to adapt quickly to such major business changes, compete successfully in new markets, build our brand in new areas, or generate sufficient net income from our newly expanded business. As a result, it is difficult for us to predict our results of operations with respect to our newly expanded business and you should not rely on our historical results of operations as an indication of our future financial performance.

This growth strategy has placed, and will continue to place, substantial demands on our managerial, operational, technological, and other resources. Our growth strategy will also place significant demands on us to maintain the quality of our services to ensure that our brand does not suffer as a result of any deviations, whether actual or perceived, in the quality of our services. To accommodate our growth, we anticipate that we will need to implement a variety of new and upgraded operational and financial systems, procedures, and controls, including the improvement of our accounting and other internal management systems. We will also need to continue to expand, train, manage, and motivate our workforce and manage our relationships with members, clients, and collaborating service providers. All of these endeavors involve risks, and will require substantial management effort and significant additional expenditures. We cannot assure you that we will be able to effectively manage our growth or execute our strategies effectively, and any failure to do so may have a material adverse effect on our results of operations and profitability.

Any negative publicity about us, our business, shareholders, affiliates, directors, officers, and other employees may materially and adversely affect our reputation and business.

We may, from time to time, receive negative publicity about us, our management, or our business. Any such negative publicity may be the result of malicious harassment or unfair competition acts by third parties. We may also be subject to government or regulatory investigations as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to defend ourselves against such third-party conduct, and we may not be able to conclusively refute any such allegations within a reasonable period of time, or at all. Our reputation may be materially and adversely affected as a result of any negative publicity, which in turn may cause us to lose market share, clients, fans, and business partnerships and could, consequently, have a material adverse effect on our business, reputation, financial condition, and results of operations.

Negative publicity, regardless of merit, could be related to a wide variety of matters, including, but not limited to:

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

The success of our business largely depends on our ability to provide a high-quality customer experience for our audio production services, VTuber live streaming services, and voice acting educational services, which in turn depends on a variety of factors. These factors include our ability to (i) continue to offer high-quality audio production services, VTuber live streaming services, and voice acting educational services at competitive prices, (ii) maintain reliable relationships with our clients, members, and collaborating voice actors and affiliated VTubers and retain the permission to use the physical studios leased by CyberStep and keep them clean and safe for the voice actor workshops, and (iii) provide timely and satisfying customer service. If our customers are not satisfied with our service experience, or the prices at which we offer the audio production services and voice acting educational services are severely interrupted or otherwise fail to meet our customers’ expectations, our reputation and customer loyalty could be adversely affected. As a result, if we are unable to continue to provide, or maintain, a high-quality customer service, we may not be able to retain existing customers or attract new customers, which could have a material adverse effect on our business, reputation, financial condition, and results of operations.

Our business depends on the continued success of our brand, and if we fail to maintain and enhance the recognition of our brand, we may face difficulty increasing our network of clients, fans, members, and collaborating voice actors and affiliated VTubers, and our reputation and operating results may be harmed.

We believe that market awareness of our brand, “BloomZ,” has contributed significantly to the success of our business. Maintaining and enhancing our brand is critical to our efforts to increase our network of clients, fans, members, and collaborating voice actors and affiliated VTubers.

Our ability to attract new clients, fans, members, and collaborating voice actors and affiliated VTubers depends on investment in our brand, our marketing efforts, and the success of our services, and on the perceived value of our services as may be compared to competing alternatives available to our client, fan, and member bases.

In order to increase the market awareness of our brand, we have been striving to cultivate, attract, and retain talented and competent voice actors and VTubers so as to improve our capacity for participating in more animation/video game production projects and producing more live streaming videos and hosting online live streaming events. As of the date of this prospectus, the number of our collaborating voice actors has increased to 59 from seven in 2017, and the number of affiliated VTubers has increased to 16 since the commencement of our VTuber management business in December 2021. In addition, the aggregate number of views of our VTubers’ YouTube channels affiliated with Hoshimeguri Gakuen, increased significantly from 2,346,418 in the fiscal year 2022 to 9,476,466 in the fiscal year 2023.

In addition, a failure by our clients, fans, and members to distinguish between our brand and the different services provided by our competitors may result in a reduction in revenue, profit, and margins, should the services of our competitors be selected rather than ours. If our marketing initiatives are not successful or become less effective, if we are unable to further enhance our brand recognition, or if we incur excessive marketing and promotion expenses, we may not be able to attract new clients, fans, members, and collaborating voice actors and affiliated VTubers successfully or efficiently, and our business and results of operations may be materially and adversely affected.

In addition, negative publicity about our business, shareholders, affiliates, directors, officers, and other employees can harm the recognition of our brand. Please see “— Any negative publicity about us, our business, shareholders, affiliates, directors, officers, and other employees may materially and adversely affect our reputation and business.”

In addition to traditional media, there has been an increasing use of social media platforms and similar devices in Japan, including instant messaging applications, social media websites, and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. The availability of information on instant messaging applications and social media platforms is virtually immediate, as is its impact, which affords us little or no opportunity for redress or correction. The opportunity for dissemination of information, including inaccurate information, is readily available. Information concerning our Company, shareholders, affiliates, directors, officers, and other employees, may be posted on such platforms at any time. The risks associated with any such negative publicity or incorrect information cannot be completely eliminated by our strategies to maintain our brand integrity and may materially harm the recognition of our brand, our reputation, business, financial condition, and results of operations.

Unauthorized use of our intellectual property by third parties and expenses incurred in protecting our intellectual property rights may adversely affect our business, reputation, and competitive edge.

We regard our company logo, domain names, copyrights, and other similar intellectual property, especially with respect to our collaborating voice actors and affiliated VTubers’ virtual characters, and use of rights of publicity (being the licensable right to control the commercial use and make use of the commercial value of individual’s names, signatures, images, portraits, and likenesses) of our collaborating voice actors, pursuant to the exclusive management agreements, as important to our success, and we rely on a combination of intellectual property laws and contractual arrangements, including confidentiality and non-disclosure agreements to protect our rights. For details, please see “Business — Intellectual Property.”

Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented, or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. It may be difficult to maintain and enforce intellectual property rights. Statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights in all jurisdictions.

Policing unauthorized use of our proprietary technology and other intellectual property is difficult and expensive, and litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources and could disrupt our business, as well as materially adversely affect our financial condition and results of operations. Further, despite the potentially substantial costs, we cannot assure you that we will prevail in any such litigation.

Third parties may claim that we infringe on their proprietary intellectual property rights, which could cause us to incur significant legal expenses and prevent us from promoting our services.

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

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

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

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

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

Data security breaches and attempts thereof could negatively affect our reputation, credibility, and business.

Our operation of businesses collects and stores personal information relating to our customers (registered members), including their personally identifiable information. Customers are increasingly concerned with the security of personal information transmitted over the Internet (or through other mechanisms), consumer identity theft, and user privacy. Any perceived, attempted, or actual unauthorized disclosure of personally identifiable information regarding our members, collaborating voice actors, and affiliated VTubers could harm our reputation and credibility, reduce the revenue of our businesses, impair and reduce our ability to attract and retain members, collaborating voice actors, and affiliated VTubers, and could result in litigation against us or the imposition of significant fines or penalties. We cannot assure you that any of our third-party service providers with access to such personally identifiable information will maintain policies and practices regarding data privacy and security in compliance with all applicable laws, or that they will not experience data security breaches or attempts thereof which could have a corresponding adverse effect on our business.

Recently, data security breaches suffered by well-known companies and institutions have attracted a substantial amount of media attention, prompting new foreign, national, provincial or state, and local laws and legislative proposals addressing data privacy and security, as well as increased data protection obligations imposed on merchants by credit card issuers. As a result, we may become subject to more extensive requirements to protect the customer information that we process in connection with the purchase of our services, resulting in increased compliance costs.

Our ability to operate our VTuber management business depends on the development and maintenance of live streaming platforms and the Internet infrastructure operated by third parties.

Since we operate our VTuber management business on live streaming platforms operated by third parties, such as YouTube, FANBOX, and BOOTH, if our contractual relationship with these third parties is terminated due to our violation of their terms of service, we may no longer be able operate our VTuber management business on their live streaming platforms. In such event, the value of these live streaming platforms with video distribution media would decline due to a decrease in the number of users and our VTuber management business would be adversely affected.

In addition, the Internet’s infrastructure is comprised of many different networks and services that are highly fragmented and distributed by design. This infrastructure is run by a series of independent third-party organizations that work together to provide the infrastructure and supporting services of the Internet under the governance of the Internet Corporation for Assigned Numbers and Names (“ICANN”) and the Internet Assigned Numbers Authority, now under the stewardship of ICANN. The Internet has experienced various outages and other delays due to damage to portions of its infrastructure, denial-of-service attacks, or related cyber incidents, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet usage or result in fragmentation of the Internet, resulting in multiple separate Internets. These scenarios are not under our control and could reduce the availability of the Internet to our affiliated VTubers for delivery of their live streaming services. Any interruptions in our VTuber live streaming services or the ability of our fans to access our VTuber live streaming services could result in a loss of potential or existing fans and harm our VTuber management business.

We may need additional capital in the future to pursue our business objectives.

We may need to raise additional capital to respond to business challenges or opportunities, accelerate our growth, develop new business offerings, or enhance our technological capacities. Due to the unpredictable nature of the capital markets and our industries, we cannot assure you that we will be able to raise additional capital on terms favorable to us, or at all, if and

when required, especially if we experience disappointing results of operations. If adequate capital is not available to us as required, our ability to fund operations, take advantage of unanticipated opportunities, develop or enhance our infrastructure, or respond to competitive pressures could be significantly limited. If we do raise additional funds through the issuance of equity or convertible debt securities, the ownership interests of holders of our Ordinary Shares could be significantly diluted. These newly issued securities may have rights, preferences, or privileges senior to those of existing holders or our securities.

If we fail to attract, recruit, or retain our key personnel, including our executive officers, senior management, and key employees, our ongoing operations and growth could be affected.

Our success also depends, to a large extent, on the efforts of our key personnel, including our chief executive officer, Ms. Kazusa Aranami, director, Mr. Yuhi Mimura, and other key employees who have valuable experience, knowledge, and connection in the animation production industry and the audio production industry. There is no assurance that these key personnel will not voluntarily terminate their employment with us. We do not carry, and do not intend to procure, key person insurance on any of our senior management team. The loss of any of our key personnel could be detrimental to our ongoing operations. Our success will also depend on our ability to attract and retain qualified personnel to manage our existing operations as well as our future growth. We may not be able to successfully attract, recruit, or retain key personnel, and this could adversely impact our growth. Moreover, we rely on our sales and marketing team to source new clients for our business growth. We have four sales and marketing personnel in total, as of the date of this prospectus, who are responsible for pitching and soliciting upstream animation/video game-producing companies to purchase our audio production services. If we are unable to attract, retain, and motivate our sales and marketing personnel, our business may be adversely affected.

We may from time to time be subject to claims, controversies, lawsuits, and legal proceedings, which could adversely affect our business, prospects, results of operations, and financial condition.

We may from time to time become subject to or involved in various claims, controversies, lawsuits, and legal proceedings. However, claims and threats of lawsuits are subject to inherent uncertainties, and we are uncertain whether any of these claims would develop into a lawsuit. Lawsuits, or any type of legal proceeding, may cause us to incur defense costs, utilize a significant portion of our resources, and divert management’s attention from our day-to-day operations, any of which could harm our business. Any settlements or judgments against us could have a material adverse impact on our financial condition, results of operations, and cash flows. In addition, negative publicity regarding claims or judgments made against us may damage our reputation and may result in a material adverse impact on us.

Risks Relating to this Offering and the Trading Market

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 shares at or above the initial public offering price.

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, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

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

If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, 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.

In preparing our consolidated financial statements as of and for the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board, and other control deficiencies. The material weaknesses identified included (i) certain audit adjustments proposed by the auditor and recorded by the Company into the financial statements; and (ii) a lack of independent directors and an audit committee. Following the identification of the material weaknesses and control deficiencies, we plan to continue to take remedial measures including (i) implementing regular and continuous accounting principles generally accepted in the United States of America (“U.S. GAAP”) accounting and financial reporting training programs for our accounting and financial reporting personnel; (ii) engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (iii) appointing independent directors, establishing an audit committee, and strengthening corporate governance. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. If we fail to implement and maintain an effective system of internal control to remediate any material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud. If we fail to achieve and maintain an effective internal control environment on an ongoing basis, 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 an 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. As a result, our business, financial condition, results of operations and prospects, and the trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

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

As a public company, we incur substantially increased costs as compared to when we were a private company.

We incur significant legal, accounting, and other expenses as a public company 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. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Ordinary Shares that is held by non-affiliates exceeds $700 million as of the prior September 30, 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 our initial public 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 have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures.

As we have only recently become a public company, we are continuing to evaluate and monitor developments with respect to these rules and regulations, and, as of the date of this prospectus, we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

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. The sales or subsequent resales of the Resale Shares in the public market by the Selling Shareholders may cause the market price of our Ordinary Shares to decline. All of the Resale Shares will be freely tradable without restriction or further registration under the Securities Act, and certain 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, an aggregate of 13,429,800 Ordinary Shares are issued and outstanding. Sales of these Ordinary Shares into the market could cause the market price of our Ordinary Shares to decline.

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

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

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.

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 are qualified as a foreign private issuer. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not 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 are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently are qualified as a foreign private issuer, 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 are exempt 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, and such independent directors have regularly scheduled meetings at which only they are present. As a foreign private issuer, however, we are permitted to, and we have chosen to follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, the Cayman Islands, does not impose a requirement that our board of directors consist of a majority of independent directors or that such independent directors meet regularly without other members present. 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 a compensation committee composed entirely of independent directors and that director nominees be selected or recommended for selection by either a majority of the independent directors or a nominating and corporate governance committee comprised solely of independent directors. We, as a foreign private issuer, are not subject to these requirements and have chosen to follow home country practice instead. Our home country practice does not impose specific requirements on the establishment of a compensation committee or nominating committee or nominating process. Therefore, we do not have a compensation committee or a nominating and corporate governance committee, nor are our director nominees selected or recommended for selection by a majority of the independent directors. Nasdaq listing rules also require listed companies to obtain shareholder approval prior to issuing or selling securities (or securities convertible into or exercisable for common stock) that equal 20% or more of the companies’ outstanding common stock or voting power prior to such issuance or sale. We, as a foreign private issuer, are permitted to and have chosen to follow home country practice in lieu of this requirement, which allows us to issue and sell securities that equal 20% or more of our outstanding Ordinary Shares or voting power without obtaining shareholder approval.

Therefore, for as long as we remain a “foreign private issuer,” we will not have the same protections afforded to our shareholders that are subject to all of the above corporate governance requirements, and you will have less protection than you would have if we were a domestic issuer.

If we cannot continue to satisfy the listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

We have listed our Ordinary Shares on the Nasdaq Capital Market under the symbol “BLMZ.”

In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of the Nasdaq Capital Market, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

On September 12, 2024, we received a written notification (the “Notification Letter”) from Nasdaq advising us that, based on the market value of our Ordinary Shares from July 29, 2024 to September 11, 2024, we did not meet the minimum market value of listed securities requirement stipulated in Nasdaq Listing Rule 5550(b)(2) (the “Minimum Market Value of Listed Securities Requirement”). Nasdaq Listing Rule 5550(b)(2) requires listed companies to maintain a minimum market value of listed securities of $35 million, and Nasdaq Listing Rule 5810(c)(3)(C) provides that a failure to meet the Minimum Market Value of Listed Securities Requirement exists if the deficiency continues for a period of 30 consecutive business days.

The Notification Letter does not impact our listing on the Nasdaq. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have been provided 180 calendar days, or until March 11, 2025 (the “Compliance Period”), to regain compliance with Nasdaq Listing Rule 5550(b)(2), which will be satisfied if, at any time during the Compliance Period, the market value of our Ordinary Shares closes at $35 million or more for a minimum of ten consecutive business days. During the Compliance Period, we expect that our Ordinary Shares will continue to be listed and traded on the Nasdaq. We intend to monitor the market value of our Ordinary Shares between now and March 11, 2025, and our management is looking into various options available to regain compliance and maintain our continued listing. In the event we do not regain compliance by March 11, 2025, we will be subject to delisting, yet we may appeal the delisting determination to the Nasdaq’s hearings panel.

If the Nasdaq Capital Market subsequently delists our securities from trading, we could face significant consequences, including:

Anti-takeover provisions in our articles of association may discourage, delay, or prevent a change in control.

Some provisions of our articles of association may discourage, delay or prevent a change in control of our Company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue shares with preferred, deferred, or other special rights or restrictions without any further vote or action by our shareholders.

Our board of directors may decline to register transfers of Ordinary Shares in certain circumstances.

Our board of directors may, in its sole discretion, decline to register any transfer of any Ordinary Share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any Ordinary Share unless (i) the instrument of transfer is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares transferred are free of any lien in favor of us; or (vi) a fee of such maximum sum as the Nasdaq Capital Market may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on 14 days’ notice being given by advertisement in one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.

This, however, is unlikely to affect market transactions of the Ordinary Shares purchased by investors in a public offering. The legal title to such Ordinary Shares and the registration details of those Ordinary Shares in the Company’s register of members remain with the Depository Trust Company. All market transactions with respect to those Ordinary Shares are carried out without the need for any kind of registration by the directors, as the market transactions will all be conducted through the Depository Trust Company systems.

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 which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. 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 share price may be more volatile. See “Implications of Our Being an ‘Emerging Growth Company.’”

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 in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. 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 articles of association 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 five 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, present in person or by proxy, holding shares which carry in aggregate in excess of 50% of all votes attaching to all of our shares in issue and entitled to vote at such meeting.

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 such as ourselves will be classified as a passive foreign investment company, which is known as a 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 2023 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.

For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

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 Consideration — United States Federal Income Taxation — PFIC.”

Our shareholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.

If we are forced to enter into an insolvency liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our Company to claims, by paying public shareholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable for a fine of 15,000 Cayman Islands Dollars and to imprisonment for five years in the Cayman Islands.

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 product and development programs. 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. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

Industry Data and Forecasts

This prospectus contains 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 counsel with respect to the laws of the Cayman Islands, and COACH Legal Professional Corporation (“COACH”), our counsel with respect to Japanese law, have advised us that there is uncertainty as to whether the courts of the Cayman Islands or Japan 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 or Japan 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 may 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 may 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. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from United States courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

In addition, COACH has advised the Company that it is uncertain whether the Japanese courts will (i) recognize or enforce judgments of United States courts obtained against the Company or any of its directors or officers under the civil liability provisions of the securities laws of the United States or any state of the United States or (ii) accept the original action brought in Japan against the Company or any of its directors or officers under the securities laws of the United States. Japan’s Civil Execution Act (Act No. 4 of 1979, as amended) and Code of Civil Procedure (Act No. 109 of 1996, as amended) require Japanese courts to deny requests for the enforcement of judgments of foreign courts where foreign judgments does not meet the requirements set forth in the Civil Execution Act and the Code of Civil Procedure, including the following:

Reciprocity is defined as the recognition in a foreign country of the validity of a judgment of a Japanese court of the same kind as that of a foreign court in that country under conditions not different in material respects from those in Japan, just as Japan recognizes the judgment of a foreign court, and the Japanese courts will determine the existence of reciprocity on a case-by-case basis for each judgment rendered by a foreign court

For example, Japanese courts recognize reciprocity for judgments of courts in the states of Hawaii, New York, California, and Nevada (mainly for monetary claims), but there is no guarantee that reciprocity will be recognized for judgments in other states or for different types of U.S. judgments. Therefore, U.S. court judgments for civil liability premised on U.S. federal and state securities laws may not be enforceable in Japan.

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of the Resale Shares. The Selling Shareholders will receive all of the net proceeds from the sales of the Resale Shares under this prospectus. The Company has agreed to bear the expenses relating to the registration of the Resale Shares for the Selling Shareholders.

DIVIDEND POLICY

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

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 due in the ordinary course of business.

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, BloomZ 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 BloomZ 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, if any, on our Ordinary Shares will be paid in U.S. dollars.

SELLING SHAREHOLDERS

The following table sets forth the names of the Selling Shareholders, the number of the Ordinary Shares that the Selling Shareholders beneficially owned prior to the offering, and the maximum number of the Resale Shares that may be offered for resale for the account of the Selling Shareholders under this prospectus. The table also provides information regarding the number and percentage of the Ordinary Shares beneficially owned by the Selling Shareholders after the offering of the shares as adjusted to reflect the assumed sale of all of the Resale Shares offered under this prospectus.

None of the Selling Shareholders is a broker-dealer or an affiliate of a broker-dealer. For the Resale Shares to be offered by the Selling Shareholders, and they do not have any agreement or understanding to distribute any of the Resale Shares being registered. Each Selling Shareholder may offer for sale from time to time any or all of the Resale Shares. The table below assumes that the Selling Shareholders will sell all of the Resale Shares offered for sale by this prospectus.

Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this prospectus are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.

The Company may require the Selling Shareholders to suspend the sales of the Resale Shares offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of statements in these documents in order to make statements in those documents not misleading.

CORPORATE HISTORY AND STRUCTURE

Our Corporate History

BloomZ Japan was established on October 17, 2017, as a limited liability company organized under the laws of Japan.

On December 1, 2020, CyberStep (TSE: 3810), a Japanese public company, acquired 100% of the equity interests in BloomZ Japan from its original shareholders. BloomZ Japan became CyberStep’s wholly owned subsidiary.

In connection with the IPO, we undertook a reorganization of our corporate structure (the “Reorganization”) in the following steps:

On July 25, 2024, we completed the IPO of 1,250,000 Ordinary Shares at a public offering price of $4.30 per share. The gross proceeds raised from the IPO were approximately $5.38 million prior to deducting underwriting discounts and other offering expenses payable by us.

On August 26, 2024, we issued 497,400 Ordinary Shares to HeartCore Enterprises, Inc., a Delaware corporation, and 497,400 Ordinary Shares to Spirit Advisors, LLC, a Delaware limited liability company, in consideration of the services they provided to the Company in connection with our IPO.

Recent Development

Consulting Agreement

On January 11, 2023 (the “Effective Date”), the Company entered into a Consulting and Services Agreement, as amended on September 14, 2023 (the “Consulting Agreement”), with HeartCore Enterprises, Inc., a Selling Shareholder (“HeartCore”). Pursuant to the terms of the Consulting Agreement, HeartCore agreed to provide the Company certain services, including the following (collectively, the “Services”):

Pursuant to the terms of the Consulting Agreement, the Company agreed to compensate HeartCore US$500,000, to be paid as follows, in return for the provision of the Services during the eight-month term (the “Term”):

For any services performed by HeartCore beyond the Term, the Company agreed to compensate HeartCore for such services at the rate of US$150 per hour, based on the hours spent by personnel of HeartCore.

The Term of the Consulting Agreement expired.

Our Corporate Structure

The following diagram illustrates our corporate structure as of the date of this prospectus.

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

Overview

We conduct all of our operations through our subsidiary in Japan, BloomZ Japan. BloomZ Japan is an audio producing and voice actor managing company, which aims to promote voice acting to the world stage, as an essential component of animation and an aspect of Japanese culture. Since our inception in 2017, we have been devoting ourselves to providing audio production services as well as voice acting educational services to Japanese youth who wish to become professional voice actors.

COVID-19 Affecting Our Results of Operations

While our business was not materially affected by the COVID-19 pandemic during the six months ended March 31, 2024 and 2023 and during the fiscal year ended September 30, 2023, it was substantially and adversely affected during the fiscal years ended September 30, 2022 and 2021. The COVID-19 pandemic adversely impacted Japan between the beginning of 2020 and the first half of 2023. During such period, the Japanese government issued several Declarations of Emergency, requesting the closing of non-essential activities and businesses across the country as a preemptive safeguard against the spread of COVID-19. This situation adversely impacted businesses across the country, particularly in the education and entertainment fields in which we operate.

Audio Production

During the fiscal years ended September 30, 2022 and 2021, many of the orders for audio production services we had received were postponed, due to the cessation of the entirety of animation production projects in compliance with the government COVID-19 policies. In addition, the progress of a few audio productions was delayed, as some of our collaborating voice actors were infected with COVID-19. Our audio production business was not materially affected by the COVID-19 pandemic during the six months ended March 31, 2024 and 2023 and during the fiscal year ended September 30, 2023, because fewer orders for audio production services were postponed, as fewer animation production projects were deferred or canceled compared to the fiscal years ended September 30, 2022 and 2021. However, the revenue generated from the audio production business during the fiscal year ended September 30, 2023 nevertheless decreased by 46.9% compared to the fiscal year ended September 30, 2022, due to a reason unrelated to the COVID-19 pandemic. The decrease was mainly because we were devoting ourselves to several large projects that are expected to take a few years to complete during the fiscal year ended September 30, 2023, and thus, fewer revenue-generating projects were completed during such period compared to the fiscal year ended September 30, 2022. The revenue generated from the audio production business during the six months ended March 31, 2024 increased compared to the same period in the prior year.

VTuber Management

COVID-19 significantly affected the streaming schedule due to infections afflicting our affiliated VTubers during fiscal year 2022. In addition, offline events featuring our affiliated VTubers we planned to hold and expected to significantly contribute to the revenue were canceled in fiscal year 2022, either in compliance with the government’s COVID-19 policies or due to the infection of our affiliated VTubers. Since fewer of our affiliated VTubers were infected with COVID-19 and most of our infected affiliated VTubers had recovered from COVID-19, the streaming schedule during the six months ended March 31, 2024 and 2023 and during the fiscal year 2023 was not as significantly affected as it was during the fiscal year 2022. Consequently, during the six months ended March 31, 2024 and 2023 and during the fiscal year ended September 30, 2023, the number of VTubers available for live streaming increased, which led to higher advertisement revenue, and thus, the revenue generated from the VTuber management business significantly increased.

Voice Actor Workshops

Our physical voice actor workshops were frequently canceled, in compliance with the government policies during the fiscal years ended September 30, 2022 and 2021, due to the COVID-19 pandemic. While our voice actor workshop business was not materially affected by the COVID-19 pandemic during the six months ended March 31, 2024 and during the fiscal year ended September 30, 2023, as no physical voice actor workshops were canceled during these periods, the revenue generated from the voice actor workshop business decreased compared to the same period in the prior year. The decrease is primarily because the Company focused on the operation of the VTuber management business rather than the recruitment of members for the voice actor workshops during the six months ended March 31, 2024 and during the fiscal year ended September 30, 2023.

The extent of any future impact of the COVID-19 pandemic on our business is still highly uncertain and cannot be predicted as of the date of this prospectus. Any potential impact to our operating results will depend, to a large extent, on future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemic and the actions taken by government authorities to contain the spread of the COVID-19 pandemic, almost all of which are beyond our control.

See “Risk Factors — Risks Related to Our Business and Industry — Our financial condition, results of operations, and cash flows have been adversely affected by the COVID-19 pandemic.”

Key Operating Metrics

In assessing the performance of our businesses, we review and focus on our key financial performance indicators — revenue, gross profit and gross margin, and operating income and operating margin.

Revenue

Revenue includes the proceeds from the audio production business, the VTuber management business, and the voice actor workshop business, whereas the cost of goods sold primarily includes the labor outsourcing costs incurred in delivering revenue.

Operating Profit and Operating Margin

Operating profit is the difference between our revenue and cost of revenue, selling, general, and administrative (“SG&A”) expenses, and depreciation and amortization. Operating margin is the operating profit expressed as a percentage of revenue.

Results of Operations

Comparison of Results of Operations for the Six Months Ended March 31, 2024 and 2023

The following table sets forth our statements of operations for the six months ended March 31, 2024 and 2023:

Revenue

Revenue increased by ¥60,248 thousand ($399 thousand) or 97.0% to ¥122,377 thousand ($809 thousand), primarily due to the following factors:

Cost of Revenue

Total cost of revenue increased by ¥34,728 thousand ($229 thousand), or 73.7%, to ¥81,850 thousand ($541 thousand), reflecting the change in the direct costs associated with the fluctuation in revenue.

SG&A Expenses and Depreciation and Amortization Expenses and Operating Margin

Total selling, general, and administrative, or SG&A, expenses increased by ¥32,612 thousand ($216 thousand), or 165.9%, to ¥52,274 thousand ($346 thousand), primarily due to the following factors:

Depreciation and amortization expenses increased by ¥2,753 thousand ($18 thousand), or 70.9%, to ¥6,635 thousand ($44 thousand), primarily due to the additional joint investments the Company acquired during the six months ended March 31, 2024.

Operating loss increased by ¥9,845 thousand ($64 thousand), or 115.3%, to an operating loss of ¥18,382 thousand ($122 thousand) during the six months ended March 31, 2024 from an operating loss of ¥8,537 thousand ($58 thousand) during the six months ended March 31, 2023. Operating margin decreased from a loss of 13.7% to a loss of 15.0%.

Interest Expenses, Net

Net interest expenses decreased by ¥591 thousand ($4 thousand), or 86.5%, to ¥92 thousand ($1 thousand), mainly because the ¥200,000 thousand loan that the Company borrowed from CyberStep in January 2023 was repaid in June 2023.

Other Income/Expenses, net

Other income was ¥58 thousand ($0.4 thousand), primarily consists of income received from the short-term loan receivable and consumption taxes paid.

Net Loss

As a result, net loss was ¥18,416 thousand ($123 thousand) during the six months ended March 31, 2024 compared to a net loss of ¥9,140 thousand ($62 thousand) during the six months ended March 31, 2023.

Cash Flows/Liquidity

As of March 31, 2024 and 2023, we had cash of ¥29,070 thousand ($192 thousand) and ¥59,955 thousand ($396 thousand), respectively. Liquidity is a measure of our ability to meet potential cash requirements. We generally funded our operations with cash flow from operations and, when needed, with borrowings from Japanese financial institutions or capital injections from our principal shareholders. Our principal uses for liquidity have been to fund media rights bids for animation projects in our audio production business and for daily operations and working capital. We expect that our cash and cash equivalents will be sufficient to fund our operating expenses and cash obligations for the next 12 months; however, our ability to continue as a going concern depends upon our ability to attract and retain revenue generating customers, acquire new customer contracts, and secure additional financing.

Operating Activities

Net cash generated by operating activities increased from ¥8,736 thousand ($58 thousand) during the six months ended March 31, 2023 to ¥63,036 thousand ($413 thousand) during the six months ended March 31, 2024, primarily due to the increase in deferred revenue.

Investing Activities

Net cash used in investing activities increased from ¥35,640 thousand ($236 thousand) during the six months ended March 31, 2023 to ¥79,950 thousand ($529 thousand) during the six months ended March 31, 2024, mainly due to higher spending related to the acquisition of joint investments during the six months ended March 31, 2024.

Financing Activities

Net cash provided by financing activities decreased from a cash inflow of ¥186,289 thousand ($1,232 thousand) during the six months ended March 31, 2023 to a cash outflow of ¥13,971 ($92 thousand) during the six months ended March 31, 2024, primarily due to the reduction in the amount of loan proceeds the Company received from a related party during the six months ended March 31, 2024.

Debt

The Company’s borrowings as of March 31, 2024 and September 30, 2023, including short-term and long-term positions, consisted of the following:

Contractual Obligations and Commitments

Comparison of Results of Operations for the Fiscal Years Ended September 30, 2023 and 2022

The following table sets forth our statements of operations for the fiscal years ended September 30, 2023 and 2022:

Revenue

Revenue decreased by 11.8% year-over-year to ¥128,313 thousand ($858 thousand) primarily due to the following factors:

Cost of Revenue

Total cost of revenue decreased by 22.6% year-over-year to ¥83,308 thousand ($558 thousand), reflecting the change in the direct costs associated with the fluctuation in revenue.

SG&A Expenses and Depreciation and Amortization Expenses and Operating Margin

Total selling, general, and administrative, or SG&A, expenses increased by 85.6% year-over-year to ¥51,626 thousand ($345 thousand), primarily due to the following factors:

Depreciation and amortization expenses increased by 161.9% year-over-year to ¥8,264 thousand ($55 thousand), primarily due to the additional joint investments the Company acquired during the fiscal year ended September 30, 2023.

Operating income decreased by 318.2% to an operating loss of ¥14,885 thousand ($100 thousand) during the fiscal year ended September 30, 2023 from an operating income of ¥6,821 thousand ($47 thousand) during the fiscal year ended September 30, 2022. Operating margin decreased from a profit of 4.7% to a loss of 11.6%.

Interest Expenses, Net

Net interest expenses increased by 2,109.0% year-over-year to ¥1,723 thousand ($12 thousand), mainly due to the ¥200,000 thousand loan that the Company borrowed from CyberStep in January 2023. The loan was repaid in June 2023.

Other Income/Expenses, net

Other income was ¥812 thousand ($5 thousand), reflecting interest income from short-term loan receivable.

Income Tax Expense

Income tax expense decreased by 100.0% year-over-year to ¥0 ($0) due to the pre-tax loss the Company had during the fiscal year ended September 30, 2023.

Net Loss

As a result, net loss was ¥15,796 thousand ($107 thousand) during the fiscal year ended September 30, 2023 compared to a net income of ¥241 thousand ($2 thousand) during the fiscal year ended September 30, 2022.

Cash Flows/Liquidity

As of September 30, 2023 and 2022, we had cash of ¥59,955 thousand ($401 thousand) and ¥65,480 thousand ($438 thousand), respectively. Liquidity is a measure of our ability to meet potential cash requirements. We generally funded our operations with cash flow from operations and, when needed, with borrowings from Japanese financial institutions or capital injections from our principal shareholders. Our principal uses for liquidity have been to fund media rights bids for animation projects in our audio production business and for daily operations and working capital. We expect that our cash and cash equivalents will be sufficient to fund our operating expenses and cash obligations for the next 12 months; however our ability to continue as a going concern depends upon our ability to attract and retain revenue generating customers, acquire new customer contracts, and secure additional financing.

Operating Activities

Net cash generated by operating activities decreased from ¥52,819 thousand ($398 thousand) generated by operating activities during the fiscal year ended September 30, 2022 to the net cash use of ¥41,825 thousand ($280 thousand) during the fiscal year ended September 30, 2023, primarily due to the following factors:

Investing Activities

Net cash used in investing activities increased from ¥6,434 thousand ($48 thousand) used in investing activities during the fiscal year ended September 30, 2022 to ¥20,147 thousand ($135 thousand) during the fiscal year ended September 30, 2023, primarily due to higher spending related to the acquisition of joint investments totaling ¥19,828 thousand ($133 thousand) during the fiscal year ended September 30, 2023 compared to ¥6,068 thousand ($41 thousand) during the fiscal year ended September 30, 2022.

Financing Activities

Net cash provided by financing activities increased from ¥2,240 thousand ($17 thousand) used in financing activities during the fiscal year ended September 30, 2022 to ¥56,447 ($378 thousand) provided by financing activities during the fiscal year ended September 30, 2023, primarily due to the proceeds the Company received from issuance of shares during the fiscal year ended September 30, 2023 while the Company did not issue new shares during the fiscal year ended September 30, 2022. The increase was partially offset by the payments of deferred offering costs made during the fiscal year ended September 30, 2023.

Debt

The Company’s borrowings as of September 30, 2023 and 2022, including short-term and long-term positions, consisted of the following:

Contractual Obligations and Commitments

Critical Accounting Polices and use of Estimates

Basis of Presentation

The accompanying financial statements appearing elsewhere in this prospectus are presented in Japanese yen, the currency of the country in which the Company is incorporated and primarily operates. The accompanying financial statements are prepared in accordance with U.S. GAAP.

Going Concern

The Company had a loss of ¥18,416 thousand, ¥15,796 thousand and a profit of ¥241 thousand for the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, respectively. The operating income and loss resulted in an accumulated deficit of ¥34,905 thousand, ¥16,489 thousand and ¥693 thousand as of March 31, 2024, September 30, 2023 and 2022, respectively.

The Company’s financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to attract and retain revenue generating customers, acquire new customer contracts, and secure additional financing.

The Company may consider obtaining additional financing in the future through the issuance of the Company’s Ordinary Shares, other equity or debt financings, or other means. The Company, however, is dependent upon its ability to obtain new revenue generating customer contracts, secure equity and/or debt financing and there are no assurances that the Company will be successful. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts, or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the reporting date, and the reported amounts of revenue and expense during the reporting period. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future and include, but are not limited to, useful lives of property and equipment, deferred costs, and valuation allowance against net deferred tax assets. Actual results could differ from those estimates.

Revenue Recognition

The Company applies ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) for all periods presented in the financial statements. To determine the appropriate amount of revenue to be recognized in accordance with ASC 606, the Company follows a five-step model as follows:

1 — Identification of the contract with a customer

2 — Identification of the performance obligation in the contract

3 — Determination of the transaction price

4 — Allocation of the transaction price to the performance obligation in the contract

5 — Recognition of revenue when, or as, a performance obligation is satisfied

The Company’s revenue is primarily derived from audio production and provision of talent management business, internet business, and workshop business. The Company assesses the contract term as the period in which the parties to the contract have enforceable rights and obligations. Customer contracts are generally standardized and non-cancellable for the duration of the stated contract term. Consumption taxes collected and remitted to tax authorities are excluded from revenue.

The Company may use third-party vendors to provide certain goods or services to its customers. The Company evaluates those relationships to determine whether revenue should be reported gross or net. The Company recognizes revenue on a gross basis where it acts as principal and controls the goods and services used to fulfill the performance obligations to the customer and on a net basis where it acts as an agent.

Regarding revenue derived from audio production and talent management business, the Company did not act as an agent during the fiscal years ended September 30, 2023 and 2022. During the fiscal year ended September 30, 2023, the Company started sales of novel games as part of their Internet business. The Company evaluated the relationships with retailers and recognized revenue on a gross basis when the Company acted as principal and recognized in net when the Company acted as an agent.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities — current, and operating lease liabilities — noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expenses for lease payments are recognized on a straight-line basis over the lease term.

Leases with a lease term of 12 months or less at inception are not recorded on our balance sheet and are expensed on a straight-line basis over the lease term in our statement of operations.

Quantitative and Qualitative Disclosure about Market Risk

Currency Risk

We transact our operating activities in Japanese yen. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities, and net investments in foreign operations. We acknowledge the recent deterioration and volatility of the Japanese yen relative to U.S. dollars, but believe we are relatively insulated from foreign exchange risk, as primarily all of our economical transactions are conducted within Japan and using Japanese yen.

Market Risk

We derive revenue primarily from animation content and other visual and entertainment mediums which feature animation or digital content. We believe the end-market demands for such content will continue to increase in the foreseeable future and believe that products such as merchandises and film adaptations that serve this demand will continue to be in demand.

BUSINESS

Overview

We conduct all of our operations through our subsidiary in Japan, BloomZ Japan. BloomZ Japan is an audio producing and voice actor managing company, which aims to promote voice acting to the world stage, as an essential component of animation and an aspect of Japanese culture. Since our inception in 2017, we have been devoting ourselves to providing audio production services as well as voice acting educational services to Japanese youth who wish to become professional voice actors.

We are currently engaged in three lines of businesses: (i) the audio production business; (ii) the VTuber management business; and (iii) the voice actor workshop business.

Audio Production Business

Since our inception in 2017, we have provided comprehensive audio production services for animations and video games. The procedure of comprehensive audio production begins once the animation/video game-producing company initially completes the visual works of the animation/video game and generally consists of dubbing, BGM producing, and mixing.

We have developed certain cooperating models with animation/video game-producing companies, under which we receive the audio production fees from the production committee/video game-producing companies for our comprehensive audio production services. In particular, we can choose to invest in the whole animation-producing project under the cooperating model for animation production and would be entitled to share the profit based on our investment ratio after the animations are sold.

The fees paid by the production committee/video game-producing companies for our comprehensive audio production services are the primary income of our audio production business, and they amounted to approximately JPY54,650 thousand, JPY63,835 thousand and JPY120,121 thousand during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, which accounted for approximately 44.7%, 49.8% and 83.2% of our total revenue for those periods, respectively.

VTuber Management Business

We commenced our VTuber management business in December 2021. A “VTuber” is a virtual character (animated character) we create by utilizing motion-capture technology for our streamers to provide their voice to stream real-time videos featuring human facial expressions and gestures, which can also communicate and interact with audiences through the chat function by embedding in live-streaming platforms.

“Hoshimeguri Gakuen” is a VTuber group consisting of 16 of the affiliated VTubers, as of the date of this prospectus, we have managed and operated since its debut in December 2021. Our affiliated VTubers mainly focus on real-time live streaming on online platforms such as YouTube, FANBOX and BOOTH, such as chatting, singing, and game live streaming. Besides interactive real-time live streaming, we also sell goods and digital merchandise featuring the virtual characters of our affiliated VTubers on FANBOX and BOOTH. In addition, our affiliated VTubers participate and perform in online live streaming events held by other companies, such as VirtualThruLens.

Most of the revenue of the VTuber management business was from the profits distributed by the online platforms and the performing fees distributed by the host companies of live streaming events. For the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, the revenue generated from the VTuber management business was JPY59,083 thousand, JPY57,442 thousand and JPY18,630 thousand, which accounted for approximately 48.3%, 44.8% and 12.8% of our total revenue for those periods, respectively. Among the sources of revenue generated from the VTuber management business during the six months ended March 31, 2024, 24.6%, 51.0%, 1.4%, and 23.0% came from YouTube, BOOTH, FANBOX, and others, respectively. During the fiscal year ended September 30, 2023, 29.0%, 42.5%, 2.1%, and 26.3% came from YouTube, BOOTH, FANBOX, and others, respectively. During the fiscal year ended September 30, 2022, 54.0%, 26.4%, 6.6%, and 13% came from YouTube, BOOTH, FANBOX, and others, respectively.

Voice Actor Workshop Business

We have provided professional and practical voice acting educational services through our voice actor workshops since our inception in 2017. In cooperation with active professional voice actors, we regularly host physical voice actor workshops four times a month in the studios leased by CyberStep in Tokyo, Japan, which CyberStep permits such use at no charge.

To cultivate young voice actors and their abilities to work as a professional, we provide our members basic vocalization-related lessons and combine actual animation and video game scripts into the training sections to equip them with practical skills and mannerisms in dubbing and audio production. As of March 31, 2024, we had 70 registered members who had participated in our workshops.

We generally charge every registered member a membership fee of JPY22 thousand monthly for four lessons in one month. Membership fees from the registered members provide the primary income of our voice actor workshop business, and they amounted to approximately JPY2,040 thousand, JPY5,054 thousand and JPY5,805 thousand during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, which accounted for approximately 1.7%, 3.9% and 4.0% of our total revenue for those periods, respectively.

Our Competitive Strengths

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

Visionary and Experienced Management Team with Strong Technical and Operational Expertise

Our senior management team has extensive experience in the audio production industry, extending to both the animation and video game production industry. Ms. Kazusa Aranami, our founder and chief executive officer, is known for her achievement as a voice actress. As an entrepreneur with a strong voice acting background and over 10 years of experience in the audio production industry, Ms. Aranami has led us to establish an optimized and robust standard of procedure to ensure the high quality and efficiency of our audio production services and secured the main sources of the orders for our audio production services with her insight into the industry trends and her deep connections within the industry. Having worked in the animation production industry for more than 10 years, Mr. Yuhi Mimura, our director, had been involved in all stages of animation production in his career. With his profound experience in the animation production industry, Mr. Mimura is capable of casting any genre of audio work, which allows us to adjust our operation with respect to audio production flexibly within the client’s budget. Under the leadership of our senior management members, we have identified trends in the audio production industry and seized opportunities for growth and innovation.

Innovative Vision and Operating Philosophy

Our goal and operating philosophy are to promote voice acting to the world, as an aspect of Japanese culture that is similar to animation, which is an essential component of animation and an aspect of Japanese culture. Based on this goal and operating philosophy, we are actively challenging new fields unparalleled in the closed voice acting industry — VTubers, a spin-off and an innovative application of voice acting — leading to achievements, for example, we have managed and operated a VTuber group, “Hoshimeguri Gakuen,” which, together with our affiliated VTubers’ individual YouTube channels, had approximately 470,000 subscribers on its YouTube channel as of March 31, 2024. Since VTubers are operating under virtual characters, streamers can be engaged in streaming with fewer real world constraints regarding geographic distance, gender, age, nationality, etc., as opposed to the constraints physical individuals would encounter. In addition, since we own the intellectual property rights of the VTubers’ virtual characters, we may efficiently conduct business by leveraging the intellectual property rights in designing and selling physical and virtual merchandise featuring the VTubers’ virtual characters.

Close Connections with a Large Variety of Talented Voice Actors and VTubers

As Ms. Kazusa Aranami, our chief executive officer, a well-known voice actress and VTuber with profound experience and achievement, has been leading the operations of our audio production business and VTuber management business since our inception, we have developed close connections with a large variety of talented voice actors and VTubers. As of the date of this prospectus, we have 59 collaborating voice actors and 16 affiliated VTubers. We believe close connections with a large variety of talented and experienced voice actors and VTubers would enable us to provide more efficient, flexible, and diverse as well as high-quality services to our existing clients and attract potential clients.

Strong Support from a Large Video Game-Producing Company

One of our principal shareholders, CyberStep, is a large video game-producing company. Since video game production is one of the upstream industries of our audio production business and VTuber management business, CyberStep is competent in quickly and efficiently designing and producing novel video games suitable for our collaborating voice actors and affiliated VTubers with specific teams. While we do not enter into agreements with CyberStep on a regular basis, from time to time, when CyberStep takes into account our collaborating voice actors’ or affiliated VTubers’ vocal characteristics, skills and experiences when designing characters in the video games, including the characters’ personalities, backgrounds and genders, it enters into service agreements with us for our audio production services that feature our collaborating voice actors or affiliated VTubers. For example, the video game “Onigiri,” which Cyberstep launched in 2013, features one voice actor from our Company, and the video game “CosmicBreak Universal,” which CyberStep launched in 2020, features two voice actors from our Company. This has also been a significant attraction point of our voice actor workshops.

In addition, as a large video game-producing company that has invested in and cooperated with various companies and developed strategic alliances from different industries, including retail sales, logistics, and event planning, CyberStep has granted us access to its resources and assets, such as using the studios it leases to host physical voice actor workshops and its existing sales channels to sell and deliver the merchandise featuring our collaborating voice actors and affiliated VTubers. In addition, CyberStep has been assisting us in engaging with and securing opportunities to work with its subsidiaries or strategic alliances. For instance, since CyberStep invested in TechnoBlood eSports Inc., a Japanese e-sports company (“TechnoBlood”), in December 2022, TechnoBlood and BloomZ Japan jointly worked on an e-sports program broadcasted in June 2023 on TOKYO MX, a TV channel that is available to be watched by approximately 15 million households and 37.35 million people in the Kanto area of Japan, in which BloomZ Japan was responsible for hosting for the events and casting performers.

However, since we do not enter into an agreement with CyberStep specifically granting us access to its resources and assets, assisting us in generating work opportunities or providing us with any support, we have been dependent on oral permission and non-obligatory assistance and support from the management of CyberStep, which CyberStep may cease providing at its own discretion in the future. Please see “Risk Factors — Risks Related to Risks Related to Our Business and Industry — If we are no longer able to benefit from CyberStep’s support, our business may be adversely affected.”

Our Growth Strategy

Continue to focus on maintaining and improving the quality and quantity of our audio production services

The audio production business is our core business and is the key to our continued growth and building our reputation and brand awareness. Therefore, we intend to continue to focus on maintaining and improving the quality of our audio production service. Our initiatives include further optimizing the standard of procedure for our audio production and enhancing the training of and quality control over the collaborating voice actors. We also intend to increase the quantity of our audio production services by investing in and undertaking audio production for more animation and video game productions and acquiring the intellectual property rights to audio production, voice actor casting, and digital content production.

Maintain and further develop business relationships with our existing and potential clients in the animation and video game industries

Due to the abundant business connections with the animation and video game industries, our CEO, Ms. Aranami, and our director, Mr. Mimura, have established during their long and successful careers in the field, we have developed deep cooperating relationships with many upstream entities of the animation and video game industry. Our senior management team has built solid connections with Nihon Falcom Corporation, CyberStep, ZERO-G Inc., and other well-known animation or video game-producing companies in Japan. We plan to further develop business relationships with potential clients by investing in and undertaking audio production for more animation and video game productions so as to cooperate with new clients and build our reputation and brand awareness. We also anticipate the increase in our visibility and brand recognition as a consequence of our recent listing on Nasdaq may benefit us in attracting more potential clients to place orders for our audio production service.

Continue to invest in securing talented and competent voice actors and VTubers

A large variety of talented and competent voice actors and VTubers are the root of our audio production business and VTuber management business. Therefore, we intend to continue to invest in securing talented and competent voice actors and VTubers by enhancing the training of our collaborating voice actors and affiliated VTubers, headhunting for experienced voice actors and VTubers who have already accomplished certain achievement, and holding more and larger scale auditions to discover talented newcomers.

In addition to targeting individual experienced voice actors and VTubers, we also intend to acquire currently existing VTuber groups from their operating and managing companies in Japan.

Through the preceding approaches, we aim to have VTuber groups consisting of more than 100 affiliated VTubers by 2025.

Expand into the fields of planning and producing our own animation and TV programs

It has long been our desire and goal to plan and produce our own original animated films. Having our own animation production projects will set a milestone for our growth and development, which we believe will enable us to vertically integrate our resources and enable us to form a more efficient corporate structure.

While we will continue to invest in other companies’ animation production projects, we also intend to move forward to expand into the fields of planning and producing our own animation and TV programs. Since the beginning of the fiscal year 2023, we have received a few orders, including an order to produce a 12 episodes of three-minute animation broadcasted from January 2024 to March 2024 with a total producing budget of JPY32 million, and have developed an administrating structure capable of planning and producing our own animation production, under which our CEO, Ms. Aranami, leverages her keen insight on the industry trends and her deep connections within the animation industry to conduct sales activities and our director, Ms. Mimura, who is proficient in animation production management, has established a system to manage the progress of the animation production with his profound experience in animation production and know-how.

Investment in animation production committees to acquire rights outside of comprehensive audio production

In the Japanese animation production industry, “animation production committees” are usually established as an external joint venture or partnership by several companies, including animation-producing companies, audio production companies, and other investors, to produce animation. To establish an animation production committee, the companies enter into a joint venture or partnership agreement specifying the distribution and fees for work, the date of the first broadcast, the total project cost, the ownership of intellectual property rights, the method of profit allocation, the amount of investment by each company, and their respective roles. Generally, only the companies investing in the animation production committee may obtain the right to provide their services for the project. Therefore, we usually invest in an animation production committee to acquire the right and work opportunity to provide our audio production services for the project. In addition, once the animation is sold, the animation production committee would allocate the profit to the investors pursuant to the joint venture or partnership agreement or, if not stipulated, on the basis of the investment ratio of each party.

As of the date of this prospectus, in addition to acquiring the rights to the comprehensive audio production through our investment in animation production committees, we have also acquired the rights to the comprehensive animation production, the overseas copyrights and the rights for goods merchandising.

As we believe that overseas copyrights are one of the highest sales and revenue-generating rights obtainable in the animation production business, we expect that, in addition to the rights to the comprehensive audio production, acquiring such copyrights would enhance our total revenues and consequently contribute to the growth of our business. As of the date of this prospectus, we have acquired the rights to adapt seven popular Japanese manga into animation and plan to use them as leverage to form animation production committees, subject to the condition that we will exclusively own the overseas copyrights of the seven animations produced. Among the seven animations, one has been broadcast from January 2024 to March 2024, two are scheduled for broadcast in the second half of the calendar year 2024, and the others are scheduled in the calendar year 2025, and we expect to start generating revenues from their overseas copyrights thereafter.

Our Business

Our business contains three core parts: the audio production business, the VTuber management business, and the voice actor and VTuber workshop business.

Audio Production

The audio production business has been our main business since our inception in 2017.

High-quality audio production takes an animation/video game to a different level. For video game production, we have developed a cooperating model with the video game-producing companies.

The cooperating model for video game production is illustrated as follows:

Under this cooperating model, we are responsible for comprehensive audio production for the video game, including auditioning and determining which of our collaborating voice actors to dub for the characters in the video game, while in some cases, video game-producing companies may designate specific voice actors that are not affiliated with us to dub, and organizing and arranging schedules for the voice actors to record. Generally, video game-producing companies pay a lump sum audio production fee directly to us, and we will then distribute the casting/performance fee to our collaborating voice actors pursuant to our exclusive management agreements with them or to the voice actors’ agencies for the unaffiliated voice actors.

As for the animation production, since we are responsible for providing one of the most significant and indispensable parts of animation production, we have been leveraging our audio production services to develop a cooperating model with animation-producing companies, in which we are an investor (among other investors) of the whole animation/video game production, as well as an outsourced contractor engaged by the production committee (in which we are an investor).

The cooperating model for animation production is illustrated as follows:

Under this cooperating model, we invest in and establish a production committee with the animation-producing company and other investors. Through the production committee, we are in charge of the comprehensive audio production once the animation-producing company is initially finished with the visual works of the animation. An animation usually contains 12 episodes, with one episode being recorded, edited, and produced each week. The production committee generally pays us the audio production fee weekly for each episode, although on some occasions, the audio production fee is paid after the production of the whole animation is completed. After receiving the audio production fee from the production committee, we will distribute the casting/performance fee to our collaborating voice actors pursuant to our exclusive management agreements with them or to the voice actors’ agencies for the unaffiliated voice actors. As of the date of this prospectus, in addition to acquiring the rights to comprehensive audio production through our investment in animation production committees, we have also acquired the rights to the comprehensive animation production, the overseas copyrights and the rights for goods merchandising. As we believe that overseas copyrights are one of the highest sales and revenue-generating rights obtainable in the animation production business, we expect that, in addition to the rights to the comprehensive audio production, acquiring such copyrights would enhance our total revenues and, consequently, contribute to the growth of our business. As of the date of this prospectus, we have acquired the rights to adapt seven popular Japanese manga into animations and plan to use them as leverage to form animation production committees, subject to the condition that we will exclusively own the overseas copyrights of the seven animations. Among the seven animations, one has been broadcast from January 2024 to March 2024, two are scheduled for broadcast in the second half of the calendar year 2024, and the others are scheduled in the calendar year 2025, and we expect to start generating revenues from their overseas copyrights thereafter.

The comprehensive audio production consists of dubbing, BGM producing, and mixing.

Dubbing

After reviewing the visual works of the animation/video game, we will select from our collaborating voice actors we deem the best fit, or sometimes we select unaffiliated voice actors designated by the production committee, to dub for specific characters in the animation/video game, based on their vocal characteristics, ability, experience, pay rate, and popularity among audiences, among other factors. Once the voice actors are determined, we contact the voice actors or the agents of the unaffiliated voice actors to arrange the schedules for dubbing in the recording studio provided by the production committee/video game-producing company.

BGM Producing

We often outsource to music companies that specialize in BGM production to provide the BGM for the animation/video games under production. Such companies, along with their composers and lyricists, work with the audio director of the animation/video game hired by the animation/video game-producing company to create and edit the audio effects and BGM in their own recording studio.

Mixing

In general, dubbing and BGM producing are parallel and progress simultaneously. After the dubbing and BGM production are both completed, the mixer we contract with mix the dubbed soundtrack and the BGM with the visual works of the animation/video game.

We have contributed to the production of one, zero, one and three animations, and zero, one, one and one video game in the six months ended March 31, 2024 and the fiscal years ended September 30, 2023, 2022 and 2021, respectively, under this cooperating model. The following table summarizes the information of the animations/video games we completed in the six months ended March 31, 2024 and the fiscal years ended September 30, 2023, 2022 and 2021:

Once an animation is sold, the production committee allocates the profit to us, the animation-producing company, and other investors on the basis of the investment ratio of each party. For the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, we were distributed JPY6,604 thousand, JPY1,982 thousand and JPY847 thousand, respectively.

Collaborating Voice Actors

While we enter into exclusive management agreements stipulating similar terms with each of our collaborating voice actors, we generally classify them into three levels: “Affiliated,” “Semi-Affiliated,” and “Entrusted.” Affiliated and Semi-Affiliated voice actors are those who have reached a certain level of achievement in the industry and made contributions to us, while newcomers who have just joined us are classified as Entrusted voice actors.

Generally, Affiliated voice actors have had longer careers and have higher rates of compensation than Semi-Affiliated voice actors. As of March 31, 2024, September 30, 2023 and 2022, we had 11, nine and nine Affiliated voice actors, seven, 10 and 10 Semi-Affiliated voice actors and 30, 33 and 24 Entrusted voice actors, respectively.

The material terms stipulated in our exclusive management agreements are as follows:

Scope of the Exclusive Management Agreement

The following entertainment activities performed and conducted by our collaborating voice actor as a voice actor are subject to the exclusive management agreement, which the voice actor’s exclusive rights belong to us worldwide:

Obligations and Rights

We are the manager of our collaborating voice actor for worldwide entertainment activities, and the collaborating voice actors are our exclusive voice actors and perform pursuant to our instructions.

Intellectual Property Rights

All intellectual property rights, including, but not limited to, copyrights, trademarks, design rights, and ownership rights arising from the collaborating voice actor’s entertainment activities during the effective term of the exclusive management agreements, belong exclusively to us worldwide, including Japan. We may use and dispose of them at our own discretion.

Right to Receive Performance Fees

We have the right to receive the performance fee of the collaborating voice actor’s entertainment activities from third parties on his/her behalf. We are entitled to 20% of the performance fee as compensation for our management services.

Term

During the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, the exclusive management agreements entered were generally for a period of one year. The exclusive management agreement is automatically extended for one year if neither we nor the collaborating voice actor delivers notice of termination at least one month prior to the expiration date of the exclusive management agreement.

Termination

We may immediately terminate the exclusive management agreement if the collaborating voice actor:

Both we and the collaborating voice actor may immediately terminate the exclusive management agreement if either of us violates the representations and warranties that either party is not or will not be affiliated with any organized crime group or any other antisocial force.

Clients and Marketing

While our clients are mainly animation and video game-producing companies in Japan, we sometimes receive orders from foreign movie companies for Japanese dubbing services. We recruit new clients via existing client referrals, personal networking, online advertisements, promotions, and digital marketing. Since we are relatively new to the audio production industry, our marketing strategy has been, as of the date of this prospectus, to work on as many projects as we can within our capacity, regardless of the scale of the projects, as we strive to build our reputation and brand awareness. For the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, we had 33, 59 and 56 clients, respectively.

During the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, approximately 40%, 90% and 90% of the orders we received came from our existing clients, respectively. We believe that such high reorder rate demonstrates the quality and client satisfaction of the comprehensive audio production services we provide.

Set out below is a breakdown of the revenue generated from our audio production business contributed by our top five clients during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022:

For the Six Months Ended March 31, 2024

For the Fiscal Year Ended September 30, 2023

For the Fiscal Year Ended September 30, 2022

Material terms of our service agreements with the top five clients are as follows:

Scope of Services

We generally enter into written service agreements with clients that set out the scope of services as follows:

Individual Contract

We generally enter into a written individual contract for a specific project; either an animation or a video game, with clients to stipulate the contents and details of the service, the delivery date, the amount of consideration, the payment schedule, and other necessary matters.

Term

During the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, the service agreements entered were generally for a period of one year. The service agreements are generally automatically extended for one year if neither we nor the client make a written request to change or terminate the agreement at least one month prior to the expiration date of the agreement.

Termination

The service agreements generally grant both us and the clients the right to terminate the service agreement or individual contracts by providing the other party one-month prior written notice.

If an individual contract terminates in the middle of the term, due to termination or other reasons, the clients are required to pay us the consideration in proportion to the ratio of the performance of our services.

VTuber Management

We commenced our VTuber management business in December 2021. The term “VTuber” is an abbreviation of virtual YouTuber, which is a virtual (animated) character, in lieu of a physical individual, we create by utilizing motion-capture technology for our streamers to provide their voices, in order to stream real-time videos featuring human facial expressions and gestures, which can also communicate and interact with audiences through the chat function by embedding in live-streaming platforms.

“Hoshimeguri Gakuen” is a VTuber group we have managed and operated since its debut in December 2021. As of the date of this prospectus, we have 16 affiliated VTubers in the group. Focusing on real-time live streaming, our affiliated VTubers mainly broadcast chatting, singing, and game live streaming on YouTube, FANBOX, and BOOTH. Besides interactive real-time live streaming, we also strive to build and grow our fan bases through sales of goods and digital merchandise featuring the virtual characters of our affiliated VTubers on FANBOX, and BOOTH. As of March 31, 2024, Hoshimeguri Gakuen, together with our affiliated VTubers’ individual YouTube channels, had approximately 470,000 subscribers on its YouTube channel. In addition, our affiliated VTubers participate and perform in online live streaming events held by other companies, such as VirtualThruLens.

Our revenue generated from YouTube mainly contains three parts: Google AdSense revenue, membership, and Super Chats/Stickers/Thanks. Google AdSense revenue is the revenue that we can receive from Google LLC by having ads displayed on our affiliated VTubers’ live streaming videos on YouTube, by which we receive a rate ranging from JPY200 to JPY600 per 1,000 viewers based on ad impressions recognized by Google. YouTube Membership is a service provided by YouTube that allows a subscriber to register as a member of our YouTube Channel and gain membership privileges, such as access to exclusive videos and other exclusive items to the channel, by paying a monthly fee. Super Chats and Super Stickers are services provided by YouTube that allow audiences to interact with our affiliated VTubers during their real-time live streaming. Audiences can purchase Super Chats to highlight their message and thus increase the chance of getting our affiliated VTuber’s attention within the live chat box. Audiences can also purchase Super Stickers to see a digital or animated image that pops up in the live chat feed. Audiences may also directly tip our affiliated VTubers via Super Thanks, which is a service provided by YouTube, formerly known as Viewer applause, to show extra gratitude for our affiliated VTubers’ live streaming videos. Among the revenue sources generated from YouTube during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, 4.8%, 7.8% and 3.0% was from Google AdSense revenue, 42.9%, 23.9% and 15.6% was from memberships, and 52.2%, 68.3% and 81.5% was from Super Chats/Stickers/Thanks, respectively. 

Our revenue generated from BOOTH and FANBOX mainly consists of the sales of the merchandise featuring our affiliated VTubers’ virtual characters. Among all the merchandise we sold, including acrylic figures, illustrations, and stickers during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, the recorded voice data of our affiliated VTubers’ virtual characters were the most popular genre.

Our revenue generated from online live streaming events, such as VirtualThruLens, mainly consists of the performing fees of our affiliated VTubers distributed by the host companies of the events. For the fiscal year ended September 30, 2023, we received JPY1,469 thousand from the host company of VirtualThruLens, Avex Entertainment Inc.

For the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, the revenue generated from the VTuber management business was JPY59,083 thousand, JPY57,442 thousand and JPY18,630 thousand, which accounted for approximately 48.3%, 44.8% and 12.8% of our total revenue for those periods, respectively. Among the sources of revenue generated from the VTuber management business during the six months ended March 31, 2024, 24.6%, 51.0%, 1.4%, and 23.0% came from YouTube, BOOTH, FANBOX, and others, respectively. During the fiscal year ended September 30, 2023, 29.0%, 42.5%, 2.1%, and 26.3% came from YouTube, BOOTH, FANBOX, and others, respectively. During the fiscal year ended September 30, 2022, 54.0%, 26.4%, 6.6%, and 13.0% came from YouTube, BOOTH, FANBOX, and others, respectively.

Affiliated VTubers

As of the date of this prospectus, we have entered into exclusive management agreements with 16 affiliated VTubers. Pursuant to the exclusive management agreements, we provide comprehensive support to our affiliated VTubers, such as assisting in their streaming on YouTube and other individual activities, helping them create video programs as a member of Hoshimeguri Gakuen, and providing equipment intended for streaming and streaming studios leased by CyberStep available to them. In return, most of the revenue generated by our affiliated VTubers from third parties is allocated to the affiliated VTuber and us on a 50% to 50% basis.

The material terms stipulated in our exclusive management agreements are as follows:

Scope of the Exclusive Management Agreement

The following VTuber activities performed and conducted by our affiliated VTuber as a VTuber are subject to the exclusive management agreement, which the VTuber’s exclusive rights belong to us worldwide:

Obligations and Rights

We are the manager of our affiliated VTubers for VTuber activities, and the affiliated VTubers are our exclusive VTubers and perform pursuant to our instructions.

Intellectual Property Rights

All the accounts and the auxiliary rights of the social media, streaming platforms, and others necessary for us to perform the management services exclusively belong to us without any limitation as to region, period, or scope.

All intellectual property rights, including, but not limited to, copyrights, trademarks, design rights, and ownership rights arising from the affiliated VTuber’s VTuber activities, exclusively belong to us without any limitation as to region, term, or scope. We may use and dispose of them at our own discretion, provided that we obtain consent from the affiliated VTuber before using the intellectual property rights for any purpose other than VTuber activities and related advertising, promoting, and merchandise producing.

Right to Receive Performance Fees

We have the right to receive the revenue generated from the affiliated VTuber’s VTuber activities from third parties on his/her behalf. We are entitled to 50% of the revenue generated from YouTube and the sales of virtual merchandise that involves the affiliated VTuber’s performance, such as recorded voices data; 90% of the revenue generated from the sales of physical merchandise, such as acrylic figures and stickers, and virtual merchandise that does not involve the affiliated VTuber’s performance, such as illustrations, as compensation for our management services.

Term

During the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, the exclusive management agreements entered were generally for a period of one year. The exclusive management agreement is automatically extended for one year if neither we nor the affiliated VTuber delivers notice of termination at least three months prior to the expiration date of the exclusive management agreement.

Termination

Both we and the collaborating voice actor may immediately terminate the exclusive management agreement if either of us violates the representations and warranties that either party is not or will not be affiliated with any organized crime group or any other antisocial force.

One of our most famous affiliated VTuber’s virtual characters — Kuramochi Kyoko

One of our most famous affiliated VTuber’s virtual characters — Mochimochi Sakura

Our Suppliers

Before the debut of a new VTuber, we generally design the VTuber’s character settings, including its appearance and characteristics that we consider appropriate after discussing with the VTuber. We then engage with animation developers with respect to the production and output of our designed 2D or 3D virtual characters consistent with our character settings.

We do not enter into long-term production contracts with specific animation developers. Instead, we place fixed-term orders with the animation developers for the production of virtual characters. Without being bound by long-term producing contracts, we have greater flexibility to choose from several animation developers to satisfy the specifications of our demands on the basis of the factors that benefit us the most at the time we place the order, including the quality and the price of their service, the quality and efficiency of the services they provide, and the payment terms they accept.

Marketing

Targeting building and growing our fan bases, we focus on improving the content of our affiliated VTubers’ live streaming videos. We provide various types of support to our affiliated VTubers to improve the content of their live streaming videos, such as providing training in line with the guidelines to ensure the soundness of content, updating them with information about the latest popular trends, assisting them in deciding the songs to sing and the games be live-streamed, and providing suggestions for their direction in organizing and planning their live streaming videos.

We expect to further develop and maintain strong relationships between our affiliated VTubers and their fans by supporting them in increasing their public recognition, building their reputation and awareness, and gaining more fans. To this end, we are continuously planning events, activities, and TV shows that our affiliated VTubers will present, which we believe may further foster the ties between our affiliated VTubers and their fans.

Voice Actor Workshops

We have provided professional and practical training in voice acting through our voice actor workshops since our inception in 2017. In cooperation with active professional voice actors, we regularly host physical voice actor workshops four times a month in the studios leased by CyberStep in Tokyo, which CyberStep permits such use at no charge. We have determined that it is more advantageous to operate physical voice actor workshops rather than online-workshop, because it allows us to exercise greater control over the quality of our training services and overall training environment.

To cultivate young voice actors and their abilities to work as professionals, we provide our members basic vocalization-related lessons and combine actual animation and video game scripts into the training sections to equip them with practical skills and mannerisms in dubbing and audio production, which enables us to differentiate our lessons from similar services in Japan provided by competitors.

Since our inception, we have built a large base of members, which has been essential for our rapid growth. As of March 31, 2024, we had 70 registered members who had participated in our workshops since the inception of our voice actor workshop business.

We generally charge every registered member a membership fee of JPY22 thousand monthly for four lessons in one month. Membership fees from the registered members provide the primary income of our voice actor workshop business, and they amounted to approximately JPY2,040 thousand, JPY5,054 thousand and JPY5,805 thousand during the six months ended March 31, 2024 and the fiscal years ended September 30, 2023 and 2022, which accounted for approximately 1.7%, 3.9% and 4.0% of our total revenue for those periods, respectively.

Our Lessons

All of our lessons are directly instructed and lectured by our cooperating active professional voice actors who have extensive experience in dubbing for animations, foreign movies, or video games, such as Azusa Enoki, a renowned Japanese voice actress, actress, and singer who dubbed for Nagisa Saito in “Squid Girl,” Uta Yumeno in “Onegai My Melody” series, Angelene in “A Certain Magical Index II,” and Mion Takamine in “Pretty Rhythm.”

Instructors are responsible for instructing and teaching a large variety of skills within the scope of voice acting, including basic vocalization, pronunciation and intonation, practical techniques while reading out actual animation and video game scripts, nuances between acting on stage and as a voice actor, useful mannerisms for recording situations, and various domestic and international methods for opening up the emotions in a play. During our lessons, members may also experience voice acting in actual recording studios leased by CyberStep.

Our Members

We do not adopt strict conditions for applications to our voice actor workshop and generally accept every applicant, regardless of whether they want to become professional voice actors or are purely interested in voice acting.

Members who perform well and show their talent in the workshop are allowed to participate in the newcomer auditions we hold at the end of each fiscal year, in which we evaluate participants’ characteristics, interest in voice acting, expression ability, and potential performing competency from a comprehensive perspective. Once the participants pass the newcomer audition, they are given the opportunity to enter into exclusive management agreements with us and commence operation as our collaborating voice actors or affiliated VTubers, or both.

In our efforts to appeal to more applicants to join our voice actor workshop, we emphasize improving our lessons in a way that incorporates diverse and practical content. In addition, we have implemented a policy that offers outstanding members the opportunity to present in small audio production projects we operate for casting and dubbing, which has been recognized by our members as one of the most appealing factors to join our voice actor workshop.

Competition

The audio production and VTuber management industries in Japan are both highly competitive and fragmented, with many new companies joining the competition in recent years and a few leading companies, such as Magic Capsule Co., Ltd. and Techno Sound Co., Ltd., in terms of audio production, and COVER Corp. (TSE: 5253; OTCMKTS: COVCF) and ANYCOLOR Inc (TSE: 5032), in terms of VTuber management. As a relatively new and small-scale company in both industries, we face competition directly from the large-scale companies with more resources and those with a more extended operating histories and more connections to the industries they work within. In addition, we indirectly compete with other large video streaming platforms, social media platforms, and other platforms offering online entertainment with respect to our VTuber management business.

We believe that our ability to compete effectively depends upon many factors, including the high quality of our audio production services, the diverse and innovative content of our real-time live streaming, our close connections with a large variety of talented voice actors and VTubers, our capability to adjust flexibly to satisfy clients’ needs and demands, and the strength of our brand. In addition to the factors listed above, we believe that we are well-positioned to effectively compete in the audio production and VTuber management industries based on the fact that we are able to integrate our resources in our audio production business and VTuber management business and leverage the strengths of both industries and maximize synergies to support both. Some competitors, however, may have longer operating histories, greater brand recognition, or greater financial, technical, or marketing resources than we do. For a discussion of risks relating to competition. See “Risk Factors — Risks Related to Our Business and Industry — We operate in highly competitive markets and our failure to compete effectively could adversely affect our results of operations.”

Employees

We had eight, six, four, and three full-time employees as of March 31, 2024 and September 30, 2023, 2022, and 2021, respectively. The following table sets forth the number of our full-time employees categorized by areas of operations as of March 31, 2024:

We enter into employment agreements with our full-time employees. The employment agreements have an indefinite term and may be terminated by the employee with a 30-day advance notice. Dismissal of the employee by us is required to meet the following requirements: (i) the dismissal is objectively reasonable and socially acceptable; (ii) the dismissal is based on the grounds set forth in the labor regulations; (iii) the dismissal does not fall under any of the prohibited grounds stipulated by law; and (iv) a 30-day advance notice is given, or a dismissal allowance is paid in lieu of such notice. In addition, we enter into confidentiality agreements with our key employees upon employment with our Company.

In addition to our full-time employees, we had eight, two, four, and three outsourced employees as of March 31, 2024 and September 30, 2023, 2022, and 2021, respectively. Besides assisting our full-time employees, these outsourced employees are also responsible for general administration, finance and accounting, project management, legal affairs, and the operations of VTuber management and voice actor workshops.

We believe that we maintain a good working relationship with our full-time and outsourced employees, and we have not experienced material labor disputes in the past. None of our employees are represented by a labor union.

Insurance

Other than the government-mandated social and health insurance and worker’s accident compensation insurance, we do not maintain any other insurance covering our directors’ and officers’ liability, properties, equipment, or employees. We neither carry any business interruption insurance, accident insurance covering our members in respect of personal injuries or damages arising from accidents that occur during the voice actor workshops, nor any other third-party liability insurance to cover claims in respect of personal injuries or any damages arising from accidents on our properties or in relation to our operations. We believe that our insurance coverage is in line with industry practice.

Property and Equipment

We lease our headquarters location in Akasaka, Tokyo, and a work office located in Ichigaya, Tokyo. A summary of our leased properties as of the date of this prospectus is shown below:

We lease these premises from independent third parties under operating lease agreements. The lease agreement of our office located in Ichigaya is renewable from one year to six months before the lease expires.

We believe that our existing facilities are sufficient for our near-term needs.

Intellectual Property

We regard our company logo, domain names, copyrights, and other similar intellectual property, especially with respect to our collaborating voice actors and affiliated VTubers’ virtual characters, and use of rights of publicity of our collaborating voice actors as critical to our success. “Rights of publicity” are the licensable rights to control the commercial use and make use of the commercial value of individual’s names and portraits, etc. that are recognized through judicial precedents of the Japanese courts, which refers to the Japanese Constitution and the Japanese Civil Code. We rely on a combination of laws in Japan such as Civil Code, Copyright Law and trademark Act, judicial precedents of the Japanese courts, and confidentiality agreements with employees to protect our intellectual property rights. We also regularly monitor any infringement or misappropriation of our intellectual property rights.

Pursuant to the exclusive management agreements with our collaborating voice actors and affiliated VTubers, we own all intellectual property rights, including, but not limited to, copyrights, trademarks, design rights, and rights arising from the collaborating voice actor’s entertainment activities/affiliated VTubers’ VTuber activities, and use of rights of publicity of our collaborating voice actors.

As of the date of this prospectus, we have use of rights of publicity of our collaborating voice actors in the following animations/video games/foreign dramas:

As of the date of this prospectus, we have copyrights and other intellectual property rights, and the ownership of the social media accounts of the following affiliated VTubers’ virtual characters:

No.		Name		Original Name		Publication Date		Expiration Date		Image
1		Kyoko Kuwamochi		倉持京子		September 11, 2020		September 10, 2090
2		Oguri Mel		オグリ・メル		September 12, 2020		September 11, 2090
3		Mikado		帝		October 2, 2020		October 1, 2090
4		Kamino Hikari		神乃ひかり		November 21, 2020		November 20, 2090
5		Mochimochi Sakura		餅々さくら		February 28, 2021		February 27, 2091
6		Iori Nemea		伊織ねめあ		May 1, 2021		April 30, 2091

No.		Name		Original Name		Publication Date		Expiration Date		Image
7		Makura Rui		魔昏るい		May 15, 2022		May 14, 2092
8		Teru Umashika		馬鹿蝶		May 26, 2022		May 25, 2092
9		Aoi Heru		碧衣ヘルオグリ・メル		May 27, 2022		May 26, 2092
10		Kachiki Shakuna		勝気シャクナ		June 29, 2022		June 28, 2092
11		Michisaki Mirine		満咲ミリネ		October 22, 2022		October 21, 2092

No.		Name		Original Name		Publication Date		Expiration Date		Image
12		Hakuchoge Mahoro		六月雪まほろ		October 23, 2022		October 22, 2092
13		Kaneko Kirari		金猫きらり		October 24, 2022		October 23, 2092
14		Kirikuma Yuni		切熊ゆに		December 18, 2022		December 17, 2092
15		Somei Kairi		爽明カイリ		August 13, 2023		August 12, 2093
16		Domeki Eru		百目鬼える		August 14, 2023		August 13, 2093

In addition, as of the date of this prospectus, we have registered one domain name and 79 social media accounts in Japan relating to our business.

Seasonality

In the audio production business, although the broadcast schedule of the video game productions is affected by the seasons, Japanese animation productions, in which we are mainly involved in the audio production component, are produced throughout the year. In addition, the activities of the animation production committee, which is made up of the animation-producing company and other investors, including our Company, do not fluctuate with the seasons, and profits and distributions from the activities of the companies that own the copyrights may be generated at any time of the year.

In the VTuber management business, although the choice of content to be viewed is largely determined by the interests and preferences of individual users, the number of times video content is viewed can be expected to increase during the summer, year-end and New Year holidays, when audiences have more leisure time than in any other time of the year. In addition, events are held during each of these seasons, which have an impact on sales.

The voice actor workshop business is highly specialized and aims to improve skills over a long period of time. Therefore, there is no seasonality in the number of participants throughout the year. However, marketing efforts to attract customers tend to be more effective in April, when Japan’s new fiscal year begins.

Legal Proceedings

From time to time, we may become a party to various legal or administrative proceedings arising in the ordinary course of our business, including actions with respect to intellectual property infringement, violation of third-party licenses or other rights, breaches of contract, and labor and employment claims. As of the date of this prospectus, we are not a party to, and we are not aware of any threat of, any legal or administrative proceedings that, in the opinion of our management, is likely to have any material and adverse effect on our business, financial condition, cash flow, or results of operations.

REGULATIONS

The main Japanese laws that regulate the services provided by the Company include the Act against Unjustifiable Premiums and Misleading Representations, the Act on Specified Commercial Transactions, the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors, the Copyright Act, labor-related laws, and the Act on the Protection of Personal Information.

Act against Unjustifiable Premiums and Misleading Representations

Our business involving the sale of digital contents for consumers is subject to the Act against Unjustifiable Premiums and Misleading Representations (Act No. 134 of May 15, 1962, as amended). Under this law, we are prohibited from making representations to the general consumers that the contents of the products are significantly better than they actually are, and representations to the general consumers that the contents of our products are significantly better than those pertaining to our competitors if not true.

In addition, this law establishes regulations regarding the provision of premiums by business operators, such as a limit on the maximum amount of premiums to prevent the provision of excessive premiums.

Business operators that violate this law may be ordered by the supervisory authority to take certain actions or receive administrative guidance.

In addition, if a business operator commits an act of misrepresentation, it may be ordered to pay a surcharge.

Act on Specified Commercial Transactions

Our business involving the internet sale of digital contents for consumers is subject to the Act on Specified Commercial Transactions (Act No. 57 of June 4, 1976, as amended). Under this law, Internet sellers are obligated to indicate in their advertisements the consideration for services provided via the Internet, the time and method of payment of the consideration, etc., and are prohibited from attempting to induce customers to apply for sales contracts and service contracts related to mail order sales against their will.

Under the June 2022 amendment, Internet sellers are obliged to indicate on the final confirmation screen of the Internet ordering system the consideration for the services, the time and method of payment of the consideration, and other matters so that the customer can easily confirm the final confirmation at the stage immediately before the order is confirmed.

Business operators violating the regulations of this law may be subject to administrative penalties, such as orders to improve operations, orders to suspend operations, or orders to prohibit the operations of officers, and may also be subject to penalties.

Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors

Our business involving outsourcing content production may be subject to the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors (Act No. 120 of June 1, 1956, as amended). Under this law, we may be obligated to deliver order forms to subcontractors and set deadlines for payment of subcontract proceeds. In addition, after we have subcontracted work to a subcontractor, we may be prohibited from having the subcontractor pick up items related to the work, etc., unless the subcontractor is responsible for the subcontractor’s actions.

Business operators violating the regulations of this law may be subject to recommendations, publication, etc., by the regulatory authorities, and may also be subject to penalties.

Intellectual Property Laws and Regulations

Japan has a number of laws and regulations concerning intellectual property rights, including the Patent Act (Act No. 121 of 1959, as amended), the Utility Model Act (Act No. 123 of 1959, as amended), the Design Act (Act No. 125 of 1959, as amended), and the Copyright Act (Act No. 48 of 1970, as amended).

The Patent Act protects rights to inventions, the Utility Model Act protects rights to inventions such as the shape of an article, the Design Act protects rights to the design of an article, and the Copyright Act protects rights pertaining to spiritual and creative activities, such as literature, art, music, and programs, as well as the rights of performers.

Our business may be subject to various restrictions on the use of various rights under these laws and regulations.

In particular, since we sell our content, the appropriateness of copyrights may become an issue, and where we infringe on the copyrights of third parties, we may be subject to claims for injunction or damages.

Labor Laws

Japan has a variety of labor-related laws, including the Labor Standards Act (Act No. 49 of April 7, 1947, as amended), the Industrial Safety and Health Act (Act No. 57 of June 8, 1972, as amended), and the Labor Contracts Act (Act No. 128 of December 5, 2007, as amended). The Labor Standards Act stipulates minimum standards for working hours, holidays, overtime pay, and other working conditions. The Industrial Safety and Health Act requires, among other things, the implementation of measures to ensure employee safety and protect workers’ health in the workplace. The Labor Contracts Act establishes regulations regarding employment contracts, changes to work rules, dismissals, and disciplinary actions.

In particular, in Japan, the Labor Contract Law restricts the dismissal of employees, and it is necessary to properly manage and supervise employees.

In addition, the “Act on Comprehensive Promotion of Labor Measures and Stabilization of Employment and Improvement of Working Lives of Workers” (abbreviated as “Act on Comprehensive Promotion of Labor Measures”) was enacted on June 1, 2020, imposing on businesses the obligation to ensure a safe work environment.

Personal Information Protection Act

The Personal Information Protection Act of Japan (Act No. 57 of 2003, as amended) and related guidelines impose various regulations on businesses that use personal information and its databases, regarding the appropriate acquisition of such information, secure management, prohibition of use for other purposes, restrictions on information sharing with third parties, and appropriate subsequent measures in the event of information leakage.

The April 2022 amendment imposes a clear-cut obligation on businesses to prohibit the inappropriate use of personal information. The rules regarding the protection of personal information are changed, such that even non-personal information, such as website browsing history and personal location information associated with an individual, is subject to the Personal Information Protection Law in certain cases where consideration of personal privacy is required.

Business operators violating the regulations of this law may be subject to recommendations, etc., by the regulatory authorities and may also be subject to penalties.

Conclusion

We operate our services in compliance with these regulations.

Although we will continue to strengthen our legal compliance system and conduct internal training, the enactment or revision of new laws and regulations, and where the services operated by us become subject to new laws and regulations, it may affect our business, performance, and financial position.

MANAGEMENT

Set forth below is information concerning our directors and executive officers.

The following individuals are our executive management and members of the board of directors.

The following is a brief biography of each of our executive officers and directors:

Ms. Kazusa Aranami is our founder and has served as our director, chief executive officer, and chairperson since our inception in April 2023 and as BloomZ Japan’s representative director and chief executive officer since its inception in October 2017. Prior to founding BloomZ Japan and our Company, Ms. Aranami worked as a voice actress and actress at four different voice actor management companies — JTB Entertainment, Kitty Production, Apt Pro Inc, and Quatrestella Co., Ltd., between April 2008 and December 2011, May 2013 and March 2015, April 2015 and July 2015, and August 2015 and September 2017, respectively. Ms. Aranami also worked as a freelance voice actress and actress between January 2012 and April 2013. Ms. Aranami received her vocational degree in Voice Acting from Yoyogi Animation Academy in 2007.

Mr. Yuhi Mimura has served as our director since our inception in April 2023 and as BloomZ Japan’s director since its inception in October 2017. Prior to joining BloomZ Japan and our Company, Mr. Mimura worked as a staff member responsible for animation production progress at Asahi Production Inc., an animation-producing company, from December 2007 to October 2011, a manager at I Link Co., Ltd., a voice actor management company, from November 2011 to February 2014, a manager at Aksent. Co. Ltd., a voice actor management company, from March 2014 to September 2015, and a manager and a staff member responsible for audio production progress at Quatrestella Co., Ltd., a voice actor management company, from October 2015 to September 2017. Mr. Mimura received his vocational degree in Color Studies from Yoyogi Animation Academy in 2007.

Mr. Minoru Muranaga has served as our chief financial officer since August 2024 and as BloomZ Japan’s accounting manager since July 2023. Prior to joining the Company and BloomZ Japan, Mr. Muranaga worked as a manager at FORUM8 Co., Ltd., a Japanese software developer and supplier, between June 2018 and November 2022. Mr. Muranaga received his bachelor’s degree in Social Science from Waseda University in 1992 and has a certificate as a Japanese Certified Public Accountant.

Mr. Akira Sugimoto has served as our independent director since July 2024. Mr. Sugimoto is the founder and representative director of ActKnowledge Co., Ltd., a Japanese company that provides management consulting services. Prior to founding ActKnowledge Co., Ltd. in April 2023, Mr. Sugimoto worked for Mitsubishi UFJ Financial Group, Inc. (NYSE: MUFG), a Japanese bank holding and financial services company, for more than 20 years, including working as an inspector in different departments and subsidiaries and a chief consultant at Mitsubishi UFJ Research & Consulting Co., Ltd., Mitsubishi UFJ Financial Group, Inc.’s second tier subsidiary, and served as a director at Plan and D Co., Ltd., a Japanese consulting company, between January 2014 and March 2023. Mr. Sugimoto received his bachelor’s degree in Law from the University of Tokyo in 1989.

Pursuant to our articles of association, unless otherwise determined by our Company in a general meeting, we are required to have a minimum of two directors and the exact number of directors will be determined from time to time by our board of directors.

Under our articles of association, a director may be appointed by ordinary resolution or by the directors. An appointment of a director may be on terms that the director will automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between our Company and the director, if any, but no such term will be implied in the absence of express provision. It is expected that, whether by ordinary resolution or by the directors, each director will be appointed on the terms that the director will hold office until the appointment of the director’s successor or the director’s re-appointment at the next annual general meeting, unless the director has sooner vacated office.

For additional information, see “Description of Share Capital — Directors.”

Family Relationships

None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.

Board of Directors

Our board of directors currently consists of three directors, including one independent director. A director may vote with respect to any contract, proposed contract, or arrangement in which he is materially interested, provided that (a) such director, if his/her interest in such contract or arrangement is material, has declared the nature of his/her interest at the earliest meeting of the board at which it is practicable for him/her to do so, either specifically or by way of a general notice and (b) if such contract or arrangement is a transaction with a related party, such transaction has been approved by the audit committee. Nasdaq corporate governance rules require that a majority of an issuer’s board of directors must consist of independent directors. However, as a Cayman Islands company listed on the Nasdaq, we are a foreign private issuer and are permitted to follow the home country practice with respect to certain corporate governance matters. Cayman Islands law does not require a majority of a publicly traded company’s board of directors to be comprised of independent directors. We rely on this home country practice exception and do not have a majority of independent directors serving on our board of directors.

Our board of directors may exercise all the powers of our Company to borrow money, mortgage its undertaking, property, and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of our Company or of any third party. None of our directors has a service contract with us that provides for benefits upon termination of service.

Duties of Directors

Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Cayman Companies Act imposes a number of statutory duties on a director. Under Cayman Islands law, the fiduciary duties owed by a director to our Company include (a) a duty to act in good faith in what the director considers are in the best interests of the company, (b) a duty to exercise their powers in the company’s interests and only for the purposes for which they were given, (c) a duty to avoid improperly fettering the exercise of the director’s future discretion, (d) a duty to avoid any conflict of interest (whether actual or potential) between the director’s duty to the company and the director’s personal interests or a duty owed to a third party, and (e) a duty to exercise independent judgment. The common law duties owed by a director are those to exercise appropriate skill and care. The relevant threshold measure for such standard is that of a reasonable diligent person having both the general knowledge, skill, and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company, and the general knowledge, skill, and experience that that director has. In fulfilling their duty to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and our shareholder resolutions. We have the right to seek damages where certain duties owed by any of our directors are breached.

The functions and powers of our board of directors include, among others:

Terms of Directors and Executive Officers

Under our articles of association, a director may be appointed by ordinary resolution or by the directors. An appointment of a director may be on terms that the director will automatically retire from office (unless he has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between our Company and the director, if any, but no such term will be implied in the absence of express provision. It is expected that, whether by ordinary resolution or by the directors, each director will be appointed on the terms that the director will hold office until the appointment of the director’s successor or the director’s re-appointment at the next annual general meeting, unless the director has sooner vacated office.

All of our executive officers are appointed by and serve at the discretion of our board of directors.

Qualification

Under our articles of association, a director is not required to hold any shares in our Company by way of qualification. A director who is not a shareholder of our Company is nevertheless entitled to attend and speak at general meetings.

Employment Agreements and Indemnification Agreements

We have entered into employment agreements with each of our executive officers. Pursuant to employment agreements, the form of which is filed as Exhibit 10.1 to the registration statement of which this prospectus is a part, we agree to employ each of our executive officers for a specified time period, which may be renewed upon both parties’ agreement 30 days before the end of the current employment term. We may terminate the employment for cause, at any time, without notice or remuneration, for certain acts of the executive officer, including the commitments of any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offense, willful disobedience of a lawful and reasonable order, fraud or dishonesty, receipt of bribery, or severe neglect of his or her duties. An executive officer may terminate his or her employment at any time with a one-month prior written notice. Each executive officer agrees to hold, both during and after the employment agreement expires, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our Company.

Compensation of Directors and Executive Officers

For the fiscal year ended September 30, 2023, we paid an aggregate of JPY15,577 thousand ($104 thousand) as compensation to our executive officers and directors. None of our non-employee directors have any service contracts with us that provide for benefits upon termination of employment. We have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers.

Committees of the Board of Directors

Audit Committee

We have established an audit committee, which consists of three directors, including Kazusa Aranami, Yuhi Mimura, and Akira Sugimoto. We have determined that only Akira Sugimoto satisfies the “independence” requirements of Section 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Exchange Act. Therefore, Kazusa Aranami and Yuhi Mimura will be replaced with independent directors within 90 days and one year, respectively, of listing on the Nasdaq Capital Market, so that after one year of the listing, the audit committee will consist solely of independent directors. We have also determined that Akira Sugimoto qualifies as an audit committee financial expert under the SEC rules and as a financially sophisticated audit committee member under the Nasdaq listing rules. Akira Sugimoto is the chair of the audit committee. Our audit committee has adopted a written charter (the “Charter”), which requires that each member of the Audit Committee are independent in accordance with the requirements of Rule 10A-3 of the Exchange Act and the rules of the NASDAQ Stock Market or any other securities exchange on which any of our securities are listed, and that no member of the Audit Committee can have participated in the preparation of the Company’s or any of its subsidiaries’ financial statements at any time during the past three years. The Charter requires that each member of the Committee must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement, at least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that leads to financial sophistication, and at least one member of the Audit Committee must be an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The Charter provides that the purpose of the Audit Committee is to oversee the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements, and that the primary role of the Audit Committee is to oversee the financial reporting and disclosure process.

The Charter provides that the Audit Committee has the following authority and responsibilities, among others:

Compensation Committee

Because we are a “foreign private issuer” within the meaning of the corporate governance standards of Nasdaq, we are not required to, and do not currently expect to, have a compensation committee. If and when we are no longer a “foreign private issuer,” we will be required to establish a compensation committee. We anticipate that such a compensation committee would consist of three directors who will be “independent” under the rules of the SEC, subject to the permitted “phase-in” period pursuant to the rules of Nasdaq. Upon formation of a compensation committee, we would expect to adopt a compensation committee charter defining the committee’s primary duties in a manner consistent with the rules of the SEC and Nasdaq standards.

This compensation committee would:

Upon formation of a compensation committee, we would expect to adopt a compensation committee charter defining the committee’s primary duties in a manner consistent with the rules of the SEC and Nasdaq standards.

Nominating and Corporate Governance Committee

Because we are a “foreign private issuer” within the meaning of the corporate governance standards of Nasdaq, we are not required to, and do not currently expect to, have a nominating and corporate governance committee. If and when we are no longer a “foreign private issuer,” we will be required to establish a nominating and corporate governance committee. We anticipate that such a nominating and corporate governance committee would consist of three directors who will be “independent” under the rules of the SEC, subject to the permitted “phase-in” period pursuant to the rules of Nasdaq. Upon formation of a nominating and corporate governance committee, we would expect to adopt a nominating and corporate governance committee charter defining the committee’s primary duties in a manner consistent with the rules of the SEC and Nasdaq standards.

A shareholder may nominate one or more persons for election as a director at an annual meeting of shareholders if the shareholder complies with the notice and information provisions contained in our bylaws. Such notice must be in writing to our Company not less than 90 days and not more than 120 days prior to the anniversary date of the preceding year’s annual meeting of shareholders or as otherwise required by requirements of the Exchange Act. In addition, shareholders furnishing such notice must be a holder of record on both (i) the date of delivering such notice and (ii) the record date for the determination of shareholders entitled to vote at such meeting.

Code of Business Conduct and Ethics

Because we are a “foreign private issuer” within the meaning of the corporate governance standards of Nasdaq, we are not required, and do not currently expect, to adopt one or more codes of conduct applicable to all directors, officers, and employees. If and when we are no longer a “foreign private issuer,” we will be required to adopt one or more codes of conduct applicable to all directors, officers, and employees, and that such codes are publicly available. We anticipate that such a code would apply to our directors, officers, employees (including our principal executive officer, principal financial officer, and other persons performing similar functions), and our agents and would be publicly available on our website.