# EDGAR Filing Document

**Accession Number:** 0002033738
**File Stem:** 0001641172-25-013177
**Filing Date:** 2025-6
**Character Count:** 849059
**Document Hash:** 0f496835fcf66ab3e66a444c28b34e59
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001641172-25-013177.hdr.sgml**: 20250602

**ACCESSION NUMBER**: 0001641172-25-013177

**CONFORMED SUBMISSION TYPE**: F-1/A

**PUBLIC DOCUMENT COUNT**: 15

**FILED AS OF DATE**: 20250602

**DATE AS OF CHANGE**: 20250602

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** GATES GROUP Inc.
- **CENTRAL INDEX KEY:** 0002033738
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE [6500]
- **ORGANIZATION NAME:** 05 Real Estate & Construction
- **EIN:** 000000000
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** F-1/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-283546
- **FILM NUMBER:** 251013031

**BUSINESS ADDRESS:**
- **STREET 1:** 34FSUMITOMO FUDOSAN SHINJUKU GRAND TOWER
- **STREET 2:** 8-17-1 NISISHINJUKU, SHINJUKU-KU
- **CITY:** TOKYO
- **STATE:** M0
- **ZIP:** 160-6134
- **BUSINESS PHONE:** 81-3-5937-0846

**MAIL ADDRESS:**
- **STREET 1:** 34FSUMITOMO FUDOSAN SHINJUKU GRAND TOWER
- **STREET 2:** 8-17-1 NISISHINJUKU, SHINJUKU-KU
- **CITY:** TOKYO
- **STATE:** M0
- **ZIP:** 160-6134

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

**Registration No. 333-283546**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**PRE-EFFECTIVE AMENDMENT NO. 5** 

**TO**

**FORM** **F-1**

**REGISTRATION STATEMENT**

**UNDER THE SECURITIES ACT OF 1933**

**GATES GROUP Inc.**

(Exact name of Registrant as specified in its charter)

**Not Applicable**

(Translation of Registrant's name into English)

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| | | |
|:---|:---|:---|
| **Japan** | **6500** | **Not Applicable** |
| (State or other jurisdiction<br> of incorporation or organization) | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer<br> Identification No.) |

---

**GATES GROUP Inc.**

**34F Sumitomo Fudosan Shinjuku Grand Tower**

**8-17-1 Nishishinjuku, Shinjuku-ku**

**Tokyo, 160-6101 Japan**

**Telephone: +81-3-5937-0846**

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

**Cogency Global Inc.**

**122 East 42nd Street, 18th Floor**

**New York, NY 10168**

**Telephone: (800) 221-0102**

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

***Copies to:***

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| | |
|:---|:---|
| **Laura Anthony, Esq.**<br> **Craig D. Linder, Esq.**<br> **Anthony, Linder & Cacomanolis, PLLC**<br> **1700 Palm Beach Lakes Blvd., Suite 820**<br> **West Palm Beach, Florida 33401**<br> **Telephone: (561) 514-0936** | **__________________** <br> **__________________** <br> **__________________** <br> **__________________** <br> **__________________** <br>|

---

Approximate date of commencement of proposed sale to the public: **As soon as practicable 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 term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant files a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement becomes effective on such date as the Commission, acting pursuant to 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 U.S. Securities and Exchange Commission is effective. This preliminary prospectus does not constitute an offer to sell or a solicitation of an offer to purchase securities in any jurisdiction where offer or sale is not authorized.**

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| | | |
|:---|:---|:---|
| **PRELIMINARY PROSPECTUS** | **SUBJECT TO COMPLETION** | **DATED JUNE 2, 2025** |

---

![](formdrs_001.jpg)

**GATES GROUP Inc.**

**1,000,000** **Common Shares**

We are offering 1,000,000 common shares, no par value. This is our initial public offering. Prior to the offering, there has been no public market for our common shares. We expect the initial public offering price to be between US$5.50 and US$6.50 per share. For purposes of this prospectus, the assumed initial public offering price per share is US$6.00, the midpoint of the anticipated price range.

We have applied to list our common shares on The Nasdaq Capital Market (the "Nasdaq") under the symbol "GTSG." We believe that upon the completion of the offering contemplated by this prospectus, we will meet the standards for listing on the Nasdaq. We cannot guarantee that we will be successful in listing our common shares on the Nasdaq; however, we will not complete this offering unless we are so listed.

Currently, Yuji Sekino, our Chief Executive Officer and a member of our board of directors, beneficially owns 15,930,000 common shares, which represents approximately 62.9% of the voting power of our outstanding common shares, directly and indirectly through RECON MARK, INC. Following this offering, Mr. Sekino will control approximately 60.5% of the voting power of our outstanding common shares if all the common shares are sold (or 60.1% of our outstanding voting power if the underwriters exercise the over-allotment option in full). As a result of his voting power, he will be able to control any action requiring the general approval of our shareholders, including the election of our board of directors, the adoption of amendments to our articles of incorporation and the approval of any merger or sale of substantially all of our assets. If we are approved to list our common shares on the Nasdaq, we will be a "controlled company" as defined in Rule 5615(c)(1) of the Nasdaq listing standards because more than 50% of our voting power will be held by Mr. Sekino after the offering. As a "controlled company," we are exempt by Rule 5615(c)(2) of the Nasdaq listing standards from certain corporate governance requirements. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the Nasdaq. See *"Prospectus Summary—Implications of Being a Controlled Company."*

We are an "emerging growth company" under the federal securities laws and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See "*Prospectus Summary— Implications of Being an Emerging Growth Company and a Foreign Private Issuer*."

**Investing in our common shares involves a high degree of risk. Before purchasing any shares, potential investors should carefully read the discussion of the material risks of investing in our common shares under the heading "*Risk Factors*" beginning on page 15 of this prospectus.**

**Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or recognized the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.**

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| | | |
|:---|:---|:---|
|  | **Per share** | **Total** |
| Public offering price | $[●] | $[●] |
| Underwriting discounts and commissions (1) | $[●] | $[●] |
| Proceeds, before expenses, to us | $[●] | $[●] |

---

(1) See
 "*Underwriting*" beginning on page 108 of this prospectus for additional information regarding the compensation
 payable to the underwriters.

We have granted a 45-day option to the underwriters to purchase up to 150,000 additional common shares solely to cover over-allotments, if any. If the underwriters exercise the option in full, the total underwriting cash discounts and commissions payable by us will be US$517,500, and the total proceeds to us, before expenses, will be US$6,382,500.

Delivery of the common shares is expected to be made on or about [●], 2025.

**_____________________________________**

**The date of this prospectus is , 2025**

**TABLE OF CONTENTS**

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| | |
|:---|:---|
|  | **Page** |
| [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#sj_001) | ii |
| [ABOUT THIS PROSPECTUS](#sj_002) | iii |
| [MARKET AND INDUSTRY DATA](#sj_003) | iii |
| [TRADEMARKS AND COPYRIGHTS](#sj_004) | iii |
| [PROSPECTUS SUMMARY](#sj_005) | 1 |
| [RISK FACTORS](#sj_006) | 15 |
| [USE OF PROCEEDS](#sj_007) | 42 |
| [DIVIDEND POLICY](#sj_008) | 43 |
| [CAPITALIZATION](#sj_009) | 43 |
| [DILUTION](#sj_010) | 45 |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](#sj_011) | 47 |
| [DESCRIPTION OF BUSINESS](#da_001) | 63 |
| [MANAGEMENT](#da_002) | 83 |
| [PRINCIPAL SHAREHOLDERS](#da_003) | 92 |
| [CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS](#da_004) | 93 |
| [DESCRIPTION OF SHARE CAPITAL](#da_005) | 94 |
| [SHARES ELIGIBLE FOR FUTURE SALE](#da_006) | 100 |
| [CERTAIN TAX CONSIDERATIONS](#da_007) | 102 |
| [UNDERWRITING](#da_008) | 108 |
| [EXPENSES RELATED TO THIS OFFERING](#da_009) | 120 |
| [LEGAL MATTERS](#da_010) | 120 |
| [EXPERTS](#da_011) | 120 |
| [DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES](#da_012) | 120 |
| [ENFORCEABILITY OF CIVIL LIABILITIES](#da_013) | 120 |
| [WHERE YOU CAN FIND ADDITIONAL INFORMATION](#da_014) | 121 |
| [INDEX TO FINANCIAL STATEMENTS](#a_007) | F-1 |

---

**You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us. Neither we nor the underwriters have authorized anyone to provide you with information that is different, and neither we nor the underwriters take any responsibility for, and provide any assurance as to the reliability of, any information, other than the information in this prospectus and any free writing prospectus prepared by us. We are offering to sell our common shares, and seeking offers to buy our common shares, only in jurisdictions where such offers and sales are permitted. This prospectus is not an offer to sell, or a solicitation of an offer to buy, our common shares in any jurisdictions where, or under any circumstances under which, the offer, sale, or solicitation is not permitted. The information in this prospectus and in any free writing prospectus prepared by us is accurate only as of the date on its respective cover, regardless of the time of delivery of this prospectus or any free writing prospectus or the time of any sale of our common shares. Our business, results of operations, financial condition, or prospects may have changed since those dates.**

**Before you invest in our common shares, you should read the registration statement (including the exhibits thereto and the documents incorporated by reference therein) of which this prospectus forms a part.**

**For investors outside of the United States**: Neither we nor the underwriters have done anything that would permit this offering, or the possession or distribution of this prospectus, in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and observe any restrictions relating to, this offering and the distribution of this prospectus.

**Notice to prospective investors in Japan**: Our common shares have not been and will not be registered pursuant to Article 4, Paragraph 1 of the Financial Instruments and Exchange Act of Japan. Accordingly, none of our common shares nor any interest therein may be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any "resident" of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations, and ministerial guidelines of Japan in effect at the relevant time.

i

**Cautionary Note 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:

● the size and growth potential of the markets for our products or services, and our ability to serve those markets;

● the rate and degree of market acceptance of our products or services;

● our ability to expand our sales organization to address effectively existing and new markets that we intend to target;

● the impact from future regulatory, judicial, and legislative changes or developments in the U.S. and foreign countries;

● our ability to compete effectively in a competitive industry;

● our ability to obtain funding for our operations;

● our ability to attract collaborators and strategic partnerships;

● our ability to continue to meet the Nasdaq requirements;

● our ability to meet our other financial operating objectives;

● the availability of qualified employees for our business operations;

● general business and economic conditions;

● our ability to meet our financial obligations as they become due;

● positive cash flows and financial viability of our operations and new business opportunities;

● ability to secure intellectual property rights over our proprietary services;

● our ability to be successful in new markets; and

● our ability to avoid infringement of intellectual property rights.

We describe certain material risks, uncertainties, and assumptions that could affect our business, including our financial condition and results of operations, under the heading "*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, potential investors 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.

ii

**ABOUT THIS PROSPECTUS**

As used in this prospectus, unless the context otherwise requires or otherwise states, references to the "GATES," "Company," "we," "us," "our," and similar references refer to GATES GROUP Inc., a Japanese corporation, and its direct and indirect subsidiaries, including, GATES Inc., GATES enterprise Inc., Chuo Kanzai Inc., Future Real Estate Institute Inc., and G.I.F.T. Co., Ltd., each a Japanese corporation, and GATES USA Inc., a Texas corporation.

Our functional currency is the Japanese yen (which we refer to as "¥"). Our reporting currency is the U.S. dollar. The terms "$" or "US$" refer to U.S. dollars, the legal currency of the United States. Consistent with ASC 830, the reporting currency is converted at the following rates:

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| | | | |
|:---|:---|:---|:---|
| (US$1 = ¥) | December 31, 2024 | December 31, 2023 | December 31, 2022 |
| Spot rate | ¥157.37 | ¥140.92 | ¥131.81 |
| Average rate | ¥151.46 | ¥140.50 | ¥131.46 |

---

We make no representation that the Japanese yen or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Japanese yen, as the case may be, at any particular rate or at all.

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (which we refer to as "US GAAP"). Our fiscal year ends on December 31 of each year as does our reporting year. Therefore, any references to 2024 and 2023 are references to the fiscal and reporting years ended December 31, 2024 and December 31, 2023, respectively. Our most recent fiscal year ended on December 31, 2024. See Note 2 in our audited consolidated financial statements as of and for the years ended December 31, 2024, and December 31, 2023, included elsewhere in this prospectus for a discussion of the basis of presentation of financial statements.

We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.

**NON-GAAP FINANCIAL MEASURES**

In addition to U.S. GAAP measures, we also use Adjusted EBITDA and Adjusted EBITDA Margin as described under "*Management's Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures*" in various places in this prospectus. These financial measures are presented as supplemental disclosure and should not be considered in isolation of, as a substitute for, or superior to, the financial information prepared in accordance with U.S. GAAP, and should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus. Adjusted EBITDA and Adjusted EBITDA Margin may differ from similarly titled measures presented by other companies.

Please see "*Selected Consolidated Financial Information and Operating Data*" for a reconciliation of non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with U.S. GAAP.

**MARKET AND INDUSTRY DATA**

This prospectus contains references to market data and industry forecasts and projections, which were obtained or derived from publicly available information, reports of governmental agencies, market research reports, and industry publications and surveys. These sources generally state that the information contained therein has been obtained from sources believed to be reliable. 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 the sections entitled "*Cautionary Note Regarding Forward-Looking Statements*" and "*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.

**TRADEMARKS AND COPYRIGHTS**

The names and marks "GATES", "SELL GATES ONE'S", "ONE ROOM EXIT", "GAISS", "中央管財" (a Japanese name of Chuo Kanzai Inc.), "GATES enterprise", and "G.I.F.T" appearing in this prospectus are the property of the Company and are registered tradenames and trademarks of the Company in Japan. We filed trademark application in Japan for the name of the Company "GATES GROUP", in April 2024, which are currently under examination. This prospectus may also contain trademarks, service marks, and trade names of other companies that are the property of their respective owners. The use or display of trademarks, service marks, trade names or services of third parties in this prospectus does not imply, and should not be construed to imply, any affiliation, endorsement or sponsorship by the Company. For the convenience of readers only, some copyrights, trade names, and trademarks mentioned in this prospectus may appear without their©,® and™ symbols.

iii

**PROSPECTUS SUMMARY**

*This summary highlights certain information about us, this offering, and selected information contained in this prospectus. This summary is not complete and does not contain all of the information that potential investors should consider before deciding whether to invest in our common shares. For a more complete understanding of us and this offering, we encourage you to read and consider the more detailed information in this prospectus, including "Risk Factors" and the financial statements and related notes.* 

 

*Unless otherwise noted, the share and per share information in this prospectus reflect the forward stock splits of the outstanding common shares of the Company at a 1 for 20,000 ratio and a 1 for 2.25 ratio, which were effected on April 30, 2024 and October 31, 2024, respectively.*

**Business Overview**

We are a Japanese real estate company providing a one-stop service that includes in-house procurement, sales, management, and operational support for condominiums and solar power generation facilities. We provide various services related to real estate under the two domains, "GATES AUCTION" and "GATES FUNDING".

Currently we are engaged in the following businesses:

*GATES AUCTION*

● We purchase condominiums and solar power generation facilities from property owners and sell them primarily to real estate sales companies and individual investors;

● We renovate and resell real estate purchased through voluntary sales and auctions to real estate sales companies and individual investors;

● We provide real estate management services such as collection of rent fees, repairs, and restoration of properties to their original condition for condominiums;

● We provide consulting services for the sale of condominiums;

● We provide real estate brokerage services; and

● We provide real estate leasing services.

*GATES FUNDING*

 

● We operate in the financial services sector, offering a real estate crowdfunding platform, where we raise funds from our members to purchase real estate and distribute the proceeds from their management and sale. The members only acquire the right to claim dividends and the right to claim refunds of their investments upon the completion of the real estate project. Such dividends and refunds are based on the net proceeds from rental income and sale of properties. More specifically, the members do not acquire ownership or securities representing ownership in a property or a fractional ownership of a property as the investments of the members are made through an anonymous partnership (as described under "*Description of Business*" on page 63 of this prospectus). This crowdfunding business with anonymous partnership agreements (which are not considered to be securities in Japan) is only being conducted in Japan. Additionally, we provide lending services.

Since our inception, we have compiled and analyzed a growing database of real estate ownership information (approximately 700,000 properties). This has enabled us to develop a proprietary algorithm that assesses the likelihood of a specific owner needing to sell their property, evaluating factors such as the property purchased, the purchase date, other properties owned, and the estimated occupation of the owner. We currently use this algorithm in the business of purchase and sales of real estate. We continuously update and maintain the database to ensure we leverage the most up-to-date and relevant information for our real estate transactions.

***Our Mission "Real Estate Around the World in Your Hand"***

In Japan, the phrase "120-year life period" describes the aging society where people will live to 120 years old due to the progress of medical technologies. In such a society, we believe that people will have to rely solely on pension income for approximately half of their lives after retirement and we believe that individual asset building is necessary to establish a more secure life after retirement. In Japan, while the market for asset building in terms of dollars is growing, we believe only a few companies offer small-lots of real estate overseas for investment, and that market has not yet been established. We aim to provide overseas real estate in small lots through our crowdfunding service, and we believe that this will make it easier for anyone to start asset building through overseas real estate. We also aim to provide opportunities for overseas investors to invest in Japanese real estate more easily by establishing an auction platform in the future.

Our mission is to create a world where everyone can freely and fairly build assets through real estate, under our corporate message of "Real Estate Around the World in Your Hand". We aim to lower the threshold for purchasing real estate and create a transparent and fair market in which everyone can participate. Through our technology and business model, we believe we provide our clients with a viable form of asset building towards retirement.

To realize our mission, we aim to develop a platform that enables real estate investment beyond national borders, although we have not yet developed a real estate auction platform and that our crowdfunding platform has only been in operations in Japan and was recently launched in 2021.

For the years ended December 31, 2024 and 2023, the Company reported revenues of US$144,546,158 and US$108,703,609, respectively, net income of US$237,415 and net loss of US$35,622, respectively, and had net cash used in operating activities of US$422,476 and US$1,992,181, respectively. As stated in the audited consolidated financial statements, as of December 31, 2024 and 2023, the Company had retained earnings of US$1,124,337 and US$905,755, respectively.

**Organizational Structure**

The following diagram reflects our current organizational structure as of the date of this prospectus:

![](formdrs_002.jpg)

GATES GROUP Inc. is a Japanese corporation formed in Japan on May 1, 2018. GATES GROUP Inc. has three wholly owned subsidiaries, GATES Inc., a Japanese corporation, established on August 1, 2011, Gates enterprise Inc., a Japanese corporation, established on January 6, 2020, and GATES USA Inc, a U.S. corporation, established on August 5, 2024.

GATES Inc. has three wholly owned subsidiaries, including Chuo Kanzai Inc., a Japanese corporation, established on May 9, 2006, Future Real Estate Institute Inc., a Japanese corporation, established on December 25, 2019, and G.I.F.T Co., Ltd., a Japanese corporation, established on July 24, 2012.

GATES Inc. engages in sales and brokerage of used condominiums for investment and used solar power generation facilities as well as real estate crowdfunding.

GATES enterprise Inc. engages in the real estate leasing, management and brokerage business.

Chuo Kanzai Inc. engages in sales and brokerage of real estate, primarily for voluntary sales.

Future Real Estate Institute Inc. engages in sales and brokerage of real estate, primarily for voluntary sales.

G.I.F.T Co., Ltd. engages in the financial transaction business and the lending business.

GATES USA Inc engages in procurement and sales of lands and condominiums in the U.S.

**Our Strategy**

We are considering the following strategies aimed at expanding our business and increasing our profitability.

***U.S. Expansion Initiative***

 ****

We plan to expand our business to the U.S. real estate market. Using the funds raised through our crowdfunding platform, we plan to purchase real estate properties in the U.S., and provide investors in Japan with the sales and management services of those properties. For more details, please see *"Planned Business Activities – Planned U.S. Expansion Initiative"*.

 ****

 **

***Developing Real Estate Auction Platform "SELLI"***

 **

Utilizing a portion of the proceeds from this offering, we aim to establish and launch a real estate auction platform named "SELLI," designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide. Real estate transactions often require specialized knowledge due to the complexities involved, including verifying property rights, ownership, condition, and estimating future profitability. These factors, coupled with the involvement of multiple real estate agents, often obscure property prices and inflate costs. SELLI aims to address these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices, eliminating the need for intermediary real estate agents. Our specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience. For more details, see *"Planned Business Activities – Planned Auction Platform".*

***Offering Real Estate Literacy Sessions***

We plan to expand our study sessions on real estate literacy for the employees of public companies in Japan, which began in 2023 and has been held every month. The study sessions are designed to improve literacy in various aspects of real estate, including, but not limited to, investments, rentals, taxes and other areas. We consider these study sessions to be advertising for our business. We seek to offer the study sessions, which are currently offered to one company listed on the stock exchange in Japan, to more than 100 public companies in Japan and the U.S. We plan to accomplish this by approaching and offering our study sessions to the public companies in Japan which are our existing clients or vendors, the U.S. public companies, and institutional investors. The number of participants (employees of the current participating company) has been gradually increasing while we have improved and enriched the contents of the session. We also plan to promote and expand our study sessions by advertising our experience of holding such sessions if the number of participating companies increase. Although we do not currently have any specific plans on how to expand our literacy sessions, we will seek further ways to continue and expand the sessions for the purpose of achieving this goal. We have not earned from, or paid consideration to, the public companies for their employees attending the sessions.

 ****

***Increasing Sales to Individual Investors***

Currently, about 30% of the properties we purchase are sold to individual investors and about 70% are wholesaled to real estate sales companies. We aim to increase the ratio of sales to individual investors. By increasing direct sales to individual investors, we will distribute more properties with reasonable prices directly to the market and more market participants will be aware that those prices are the actual market prices without any intermediate costs which are generally incurred due to the involvement of multiple real estate companies in the process from purchase to delivery. If such awareness spreads among the market, we believe we will acquire a larger market share taking advantages of our ability to directly purchase and deliver the properties. We plan to hire more sales staff to enhance the sale of condominiums which we purchase directly from property owners. Once the development of our auction platform is completed and receives awareness in the market, we also plan to engage those individual investors in it so that they can purchase real estate in the same environment as real estate companies.

***Increasing Solar Power Market Share***

We aim to achieve a substantial share of the market of the pre-owned solar power generation facilities by analyzing the facility owners and using algorithms to create an environment that allows purchasing of such facilities in the same way as condominiums. Considering the growing needs for eco-friendly energy, achieving a larger share in the solar power market is the key factor to our further growth.

**Our Business**

***Current Business Operations***

 ****

Our current business operations are categorized into two domains, "GATES AUCTION" and "GATES FUNDING" as below:

*GATES AUCTION*

● *Purchase and Sales of Real Estate.* We specialize in purchasing condominiums from property owners and selling them primarily to real estate sales companies and individual investors. When selling to real estate companies, we select the buyer who offers the highest price for the properties creating a process similar to an auction. In a typical process of real estate sales in Japan, multiple real estate companies are involved which seek their profits from the process, which lead to higher selling prices to the end customers. The typical real estate sales process in Japan is as follows: (i) first, purchase of a property by a company specializing exclusively in purchasing properties; (ii) second, the property purchased is sold to a real estate wholesale company; (iii) third, the property is wholesaled to a real estate sales company and then the information of the property becomes open to the public through a platform such as Real Estate Information System (REINS); and (iv) fourth, the property is eventually sold to an end customer through a real estate brokerage company. In each stage of (ii) to (iv), these companies take their profits when selling a property and it makes the final price higher when the property is delivered to the end customer. In our business model, we purchase properties directly from property owners and directly sell them to our customers without the involvement of such multiple real estate companies, which we believe results in more reasonable and fair prices to the end customers while still profitable to us. What makes us different is our strong relationships with multiple financial institutions. Real estate companies specializing in purchasing properties generally cannot sell their properties directly to individual buyers as they cannot introduce loans for property purchase to the buyers. Typically, companies specializing in purchasing properties face challenges working with financial institutions because they facilitate sellers in making lump-sum loan repayments. However, through persistent negotiations, we secure loan commitments from these institutions, streamlining the entire process while enabling transactions without involving multiple intermediaries that seek their own profits before a property being sold to an individual buyer. We believe we can effectively compete with our competitors and satisfy customers by selling the condominiums at fair and reasonable prices due to eliminating these intermediaries and hope to create awareness in the market that the prices we offer are the fairest, which we believe will eventually strengthen our ability to maintain existing customers and attract new customers.

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Our property acquisition strategy focuses on carefully selecting newer condominiums located in the central area of Tokyo, and within a 10-minute walk from train stations. From approximately 600,000 unlisted properties and 300 properties for sale each month, we curate a selection that we offer at direct sales prices, eliminating the involvement of multiple real estate companies. Our property acquisition methods include reaching out to property owners via telephone, door-to-door visits, direct mail, landing page response, etc. Once acquired, these properties are either sold directly to individual investors ("One-Room DIRECT") or wholesaled to real estate sales companies. Our basic policy is to settle the purchase and sales in a short period of time, normally within one week, but we hold the ownership in a property when we expect the future increase of the property value. With our extensive network, our strength lies in our ability to purchase properties directly from property owners and directly sell them to our customers without the involvement of multiple real estate companies which we believe results in more reasonable and fair prices to the end customers while still profitable to us due to our direct purchase and sales. We believe we can effectively compete with our competitors and satisfy customers by selling the condominiums at fair and reasonable prices due to eliminating these intermediaries and hope to create awareness in the market that the prices we offer are the most fair, which we believe will eventually strengthen our ability to maintain existing customers and attract new customers. In addition to direct purchase from property owners, we renovate and resell properties acquired through voluntary sales to individual investors and real estate sales companies. Under this service, we consult with home-owners who are having trouble paying their mortgages and other real estate loans, and work closely with financial institutions to maximize the value of these properties and prevent them from being auctioned off due to bankruptcy. Revenue from the sale of condominiums is categorized under the "revenue from sales of real estate properties" revenue stream. Furthermore, we provide consulting services for the sale of condominiums across Japan, including Tokyo, Kansai, Tokai, and Kyushu. Our consulting services encompass a wide range of areas, including appraisal, refinancing, recombination, inheritance, income improvement, management, and the sale of condominiums. Income generated from these consulting services is included in the "revenue from real estate management services" revenue stream.

● *Property Management Service.* We provide real estate management services for condominiums, including rent collection, property repairs, and restoration to original conditions. Income generated from property management services is classified under the "revenue from real estate management services" revenue stream.

● *Purchase and Sale of Solar Power Generation Facilities.* We purchase and sell solar power generation facilities primarily to real estate sales companies and individual investors. We identify potential acquisitions targets through: (1) introduction to companies which sell or maintain the solar power generation facilities; (2) contacting companies disclosed by the Japanese government; and (3) approaching past and existing clients from our condominium business, as the markets for condominiums and solar power generation facilities are closely related in nature and many of our clients in the condominium sector own solar power generation facilities. Revenue from the sale of these solar power generation facilities is recorded under the "revenue from sales of solar power generation facilities" revenue stream.

● *Real Estate Brokerage Services.* We also provide real estate brokerage services. Income from providing such services is included in the "revenue from real estate management services" revenue stream.

● *Real Estate Leasing Services.* We provide leasing services to condominiums and detached houses. Income from providing such services is included in the "revenue from rental services" revenue stream.

*GATES FUNDING*

● *Financial Services.* As a part of our financial services, we offer real estate crowdfunding, where we raise funds from our members via our crowdfunding platform to purchase real estate and distribute the proceeds from the management and sale of these properties. Our crowdfunding platform allows individuals to invest as little as approximately US$63 across a diverse portfolio of real estate investment opportunities offered on the platform. On average, we register 13.3 customers per day. To ensure sustainable, safe, and secure asset management for our clients, we meticulously select and screen all properties featured on the platform. The entire process, from property management to sale, can be entrusted to us as a professional real estate firm. Revenue generated from the sales and lease of real estate properties through crowdfunding projects is recorded under in the "revenue from sales of real estate properties" and the "revenue from rental services". We also provide lending services, and the revenue from these services is included in "other revenue".

***Planned Business Activities***

Our planned business activities include:

● *Planned U.S. Expansion Initiative.* We plan to expand our business to the U.S. real estate market. Using the funds raised through our crowdfunding platform, we plan to acquire real estate properties in the U.S., and provide investors in Japan with the sales and management services of those properties. We are considering the state of Texas as the first location to initiate this plan. We plan to conduct the procurement and sales of real estate properties including lands, detached houses and condominiums through GATES USA Inc, a wholly owned subsidiary of the Company incorporated in the state of Texas in August 2024. We decided to initiate this plan in Texas based on the following factors: (i) the stable and growing residential population and the number of housing units in Texas, (ii) low property prices compared to ones in other major areas in the U.S. such as California and New York, and estimated increase in the property prices in Texas, (iii) the similarity in basic system and flow of real estate transactions between Texas and Japan, and (iv) some of major Japanese real estate companies entered the market of Texas. In addition to analyzing these market data, our CEO directly inspected properties in Texas and strongly felt the potential of Texas. Within the state of Texas, we are considering starting in the north side of Texas, specifically an area from Dallas to Sherman, where we will acquire properties, considering the factors such as regional convenience, demographics, potential economic growth, safety, and average income of residents. In order to research the capital flows in real estate transactions and analyze the risks associated with the acquisition, sales, and management of properties in the U.S., the Company acquired, leased and sold a property in the state of Georgia during the period June 2022 through July 2023. We estimate that the investors in Japan have strong interest in investment in the U.S. real estate properties, according to the survey result conducted during our study session, showing that more than 95% of the participants expressed their interest in investing in the U.S. real estate properties. Furthermore, the aggregate investment amount in the U.S. stock market from Japan exceeded 5 trillion yen, and securitized real estate market in Japan has grown to 59.8 trillion yen in 2023. We also anticipate that interest in the U.S. real estate market will remain in the medium to long term due to expected fluctuations of interest rate and exchange rate. Considering these facts, we believe that the expansion into the U.S. real estate market will significantly contribute to our growth. Although we have not formulated strategies including specific target locations or expansion methods, we are considering further expansion to the East and West Coasts of the U.S. and other regions following the expansion to Texas.

● *Planned Auction Platform.* Utilizing a portion of the proceeds from this offering, we aim to establish and launch a real estate auction platform named "SELLI," designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide. We differentiate our platform from others by offering secure transactions supported by our extensive experience as a real estate company specializing in property purchases. Real estate transactions often require specialized knowledge due to the complexities involved, including verifying property rights, ownership, condition, and estimating future profitability. These factors, coupled with the involvement of multiple real estate agents, often obscure property prices and inflate costs. SELLI aims to address these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices, eliminating the need for intermediary real estate agents. Our specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience. Furthermore, we are considering adding a feature that enables the users to invest in fractional interests in real estate properties on our platform with a little amount of fund like "Robinhood", a popular financial services platform. We set the following phases to develop and expand our prospective auction platform:

○ Phase 1 – We plan to expand our auction platform's investment opportunities into the U.S. real estate market in addition to Japan. The prices of real estate in the U.S. have shown stable increase as compared to the prices of real estate in Japan which have shown drastic fluctuations. To cater to a wider audience, we plan to offer these U.S. investment opportunities through both crowdfunding and auctions. We aim to form a business alliance with a U.S. real estate company to further increase properties on our respective platforms. We also plan to engage U.S. investors on our auction platform and crowdfunding platform where we provide them with investment opportunities to acquire entire or fractional interests in the properties in Japan and the U.S. For the sake of clarity, such investment opportunities to U.S. investors exclude rights to claim dividends and the right to claim refunds upon termination of the project under anonymous partnership agreements.

○ Phase 2 - We plan to expand the auction platform not only to real estate in the U.S., but also real estate in other regions and countries in the world. Although we do not have any specific plans on the target areas to which we will expand at this point, we aim to increase the area where we provide investment opportunities in real estate by considering factors such as economic and market trends in such areas at the time.

○ Phase 3 – We ultimately aim to offer opportunities to acquire world-wide real estate on our auction platform to investors worldwide. We believe that SELLI will realize the true transparency of property prices through the real estate auction where worldwide investors participate.

● *Planned Social Lending Services.* Our subsidiary, G.I.F.T Co., Ltd., plans to offer social lending services. In this model, we will collect funds from investors to extend loans to businesses, with the generated profits from loan interest being distributed back to the investors. As of December 31, 2023, we had handled one project and made a loan to Chuo <u>Kanzai</u> Inc., our subsidiary. The revenue from that transaction is eliminated in our consolidated financial statements for the year ended December 31, 2023 as an intercompany transaction. We have not yet provided the social lending services to any third-party customers and do not have any specific planned projects at this point. However, we are planning to develop these services for general investors and in the process of license application to expand the current permitted business scope.

● *Developments Related to Condominiums.* We plan to develop a call center to accelerate purchase of condominiums by promoting more communications with owners. We plan to hire more staff to enhance the sale of condominiums which we purchase directly to individual investors. We plan to develop a platform which will publicize prices of condominiums to the public (which would otherwise not be public information), cooperating with financial institutions.

● *Developments Related to Solar Power Generation Facilities.* By compiling and analyzing a database of approximately 700,000 real estate owner and property information since our inception, we have developed our proprietary algorithm for condominiums that assesses the likelihood of a specific owner's need to sell property by analyzing factors such as the property purchased, purchase date, other properties owned, and estimated occupation of the owner. We plan to apply this algorithm to our solar power generation facilities to further enhance our capabilities to identify and purchase properties, and provide additional investment opportunities to real estate companies and individual investors.

● *Developments Related to Crowdfunding.* We are planning to develop a new system to enable timely collections of funds from a larger number of users. Currently, our fund collection process involves the following steps:

1. We
 select an investment property, such as an condominium

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. We
 recruit investors for the selected product on our crowdfunding platform, where they can apply
 for the investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. If
 the total investment applications exceed the solicited amount, we conduct a draw to select
 the investors.

4. We
 purchase the investment property.

5. We
 collect the funds from selected investors.

6. We
 distribute the income or capital gains generated from the product.

Currently, we purchase the property before receiving funds from investors because the funds are transferred to our bank account via a third-party funds transfer system, which takes approximately one month to process. By developing a new funds transfer system, we aim to expedite the receipt of funds, thereby improving our cash management.

● *Alliance in Our Real Estate Crowdfunding Business.* We are currently proceeding with a plan for the alliance in our real estate crowdfunding business with a Japanese real estate company. The company operates a real estate crowdfunding platform which has achieved the largest aggregated investment amount in Japan. We expect the increase of approximately 200 thousand in our real estate crowdfunding members if the alliance realizes. We have not yet entered into any agreement for the alliance with them and are currently in the process of reconciling their crowdfunding terms and conditions with ours. After the adjustment is completed, we plan to apply to the Tokyo Metropolitan Government for the terms and conditions. We plan to start offering crowd funding projects as soon as obtaining the approval from the government, which is expected to take several months.

● *Developments Related to Rebuilding Condominiums.* In Japan, aging condominiums cannot be rebuilt due to opposition from some residents, which has become a widespread social concern in the country. To address this, we plan to offer condominium rebuilding consulting services in collaboration with condominium management associations.

**Customers and Suppliers**

Our primary customers in sales and brokerage of condominiums and solar power generation facilities are individual investors and real estate sales companies. Individual investors account for approximately 30% and real estate companies account for approximately 70% of our entire customer base respectively. We are aiming to increase the sales to individual investors. Our main suppliers are individual investors who own condominiums. In real estate crowdfunding, our main customers are individuals ranging from ages 20 to 70.

**Industry Overview**

***Real Estate Industry Generally***

Despite the impacts of the COVID-19 pandemic, the Japanese real estate market continues to remain substantial with an annual transaction value around 4.6 trillion yen (approximately $32.6 billion), according to the Japan Real Estate Institute. However, market needs are beginning to evolve, as energy-saving features become mandatory for mortgage deductions, and interest rates rise alongside increases in the consumer price index in Japan since the start of 2024. Despite these changes, real estate and rent prices continue to climb, which presents challenges for companies specializing in the purchasing and sale of real estate like ours. We believe we can adapt to shifting market needs driven by economic conditions by creating businesses tailored to individual needs. Additionally, we expect that our expertise can help address social issues such as the aging of real estate and the growing number of people struggling to pay their mortgages.

The real estate industry is susceptible to economic trends, policy interest rate trends, land price trends, real estate sales price trends, and real estate taxation. Therefore, deterioration in real estate market conditions, significant increases in interest rates, or other changes in conditions could affect our business performance.

 ***Condominium Industry***

The condominium market in Japan continues to grow as investors recognize these properties as assets with potentially higher yields compared to securities like stocks and bonds, especially given Japan's negative interest rate policy. Global inflation, the weakening of the Japanese Yen, and a shortage of carpenters have driven up the costs of raw materials and labor, contributing to the rise in condominium prices. In the Tokyo metropolitan area, the average prices of pre-owned condominiums sold have been increasing for 60 consecutive months as of May 2025.

***Real Estate Crowdfunding Industry***

The global real estate crowdfunding market is expected to reach US$2,724.7 billion by the end of 2036, growing at a CAGR of 50.1% during the forecast period of 2024-2036. The industry size of the real estate crowdfunding market in 2023 is over US$21.0 billion. The major factors expected to propel the market growth during the forecasted period are the global industrialization driving commercial real estate activities and favorable regulations for real estate crowdfunding in several countries across the world. The Japanese real estate crowdfunding market is growing at a significant pace driven by massive construction activity in the country, contributing more than 5.5% of Japan's GDP in 2021. In Japan, crowdfunding requires the use of internet channels to collect small donations from many people. Generating sales from their products, services, and creative initiatives has become a common strategy for Japanese companies, both startups and established firms, leveraging a healthy market, cooperative local communities, and favorable regulatory conditions. As of December 31, 2023, the Japanese crowdfunding industry had a transaction value of approximately US$170 million. The average amount of funds raised per campaign in 2023 is expected to increase significantly, reaching US$45,000. (Global Real Estate Crowdfunding Market Research, Size, Share and Forecast 2036 (researchnester.com).

 ****

***Solar Power Industry***

The total amount of electricity generated from renewable energy sources, mainly solar power, has been increasing year by year, reaching 8,196 thousand kW at the end of FY2020, equivalent to 53% of the FY2030 target (15,405 thousand kW) of the 6th Basic Energy Plan. The market is expected to reach ¥1,798,600,000 thousand (approximately US$13,300,000 thousand).

***Real Estate Management Industry***

In the building maintenance and management business, the overall building units and the number of condominium units sold in the Tokyo metropolitan area are increasing year by year. Furthermore, apartments and buildings constructed during the high economic growth period are aging, and with demand for reconstruction and commensurate maintenance, management is expected to continue to be in demand in the future.

**Competition**

There are many competitors, from large companies to new entrants in the market of condominiums for investment. In the solar power facilities market, no major companies have entered the market and there are few competitors. Major companies have entered the market a bit, but there are still few competitors in voluntary sales market. There are many competitors, from large companies to new entrants in the real estate auction market and renovation market. In particular, the real estate crowdfunding industry is crowded with competitors, with 280 companies having entered the market as of December 31, 2022, including many leading listed companies such as Owner's Book, Creal, and Rimple.

There are many competitors, from large companies to new entrants in the market of real estate management.

**Our Competitive Strengths**

We believe that there are three major sources of our competitiveness:

First, our ability to purchase properties through the development of our proprietary algorithms. We started as a company specializing in purchasing and brokering condominiums for investment. By compiling and analyzing a database of real estate owner information (approximately 700,000 properties) since our inception, we have developed a proprietary algorithm which provides information on the possibility of a specific owner's need to sell property by analyzing the property the owner purchased, when the owner purchased it, the other properties the owner holds and the estimated occupation of the owner. We currently use this algorithm in the business of purchase and sales of real estate. This proprietary algorithm helps us to effectively approach property owners when we purchase real estate properties.

We also utilize this algorithm to analyze the potential financing commitment that financial institutions will provide for specific real estate properties. We are currently improving the algorithm by giving it training data for further learning. Once the learning process is completed, we will be able to take advantage in negotiation with sellers of properties that financial institutions have been reluctant to evaluate prior to our purchase. In addition, it will enable us to further expand purchases of real estate properties by reducing the time required to contact financial institutions for their evaluation.

Eventually, we aim to apply this algorithm to a customer service by which property owners who purchase from us can easily see the current evaluated sales price of their properties. As there are not services similar to Zillow.com in Japan, a platform which provides various information related to real estate in the U.S. including evaluated price of properties, we believe we can acquire a larger market share in Japan if it is realized.

Second, is our one-stop service which covers the entire process of real estate transaction. In general, Japanese real estate companies specialize in either purchasing or selling and multiple real estate agents intervene between a seller and a buyer in a transaction, each of which incurs intermediate costs. As a result, the final sales price tends to be higher as these agents take their profits in the process to the delivery to a buyer. However, by conducting the entire process from purchase to sale by our own without any agents, we can sell to our customers at a more reasonable and fairer price, which is one of our competitive strengths compared to the other real estate companies.

Third, our advantage lies in our commitment to fair sales prices and our strong partnerships with financial institutions. Typically, companies specializing in purchasing properties face challenges working with financial institutions because they facilitate sellers in making lump-sum loan repayments. However, through persistent negotiations, we secure loan commitments from these institutions, streamlining the entire process while enabling transactions without involving multiple intermediaries that incur additional costs before a property being sold to an individual buyer.

Finally, our strength lies in our design of a variety of real estate crowdfunding products. Future Real Estate Institute Inc., our subsidiary, has products that have not been commercialized in the current real estate crowdfunding market, such as ones purchased through voluntary sales, purchased through auctions, and ones after our renovation, which we believe is our advantage.

**Recent Developments**

 

*Sales*

The following sets forth partial and preliminary financial information and operating data from January 1, 2025 to April 30, 2025. We have provided the partial and preliminary results and operating data described below for the purpose of providing investors with the most current information that our company is able to provide under the time constraints, following the year ended December 31, 2024 for which we have filed audited financial statements, which form a part of this prospectus. The preliminary financial information is not a comprehensive statement of our financial results from January 1, 2025 to April 30, 2025. These preliminary amounts do not include other costs, such as operating expenses or interest expenses. Because our six months ended June 30, 2025 has not ended as of yet, we are still in the process of completing our interim semi-annual financial statements (which will encompass such partial and preliminary financial information and operating data). Therefore, it is possible that normal annual adjustments will be made to such partial and preliminary financial information and operating data.

During the period from January 1, 2025 through April 30, 2025, the Company settled 243 sales transactions of condominiums. The aggregate settlement amount of these condominiums was ¥4,864 million (approximately US$32 million), and the aggregate purchase price of these condominiums and related expenses corresponding to these sales was ¥4,417 million (approximately US$29 million).

During the period from January 1, 2025 through April 30, 2025, the Company settled 9 real estate consulting transactions and the aggregate settlement amount from such transactions was ¥4 million (approximately US$30 thousand). The costs and expenses associated with these settlements was ¥10 thousand (approximately US$72).

During the period from January 1, 2025 through April 30, 2025, the Company received consideration from 1,971 agreements for the property management services and the aggregate consideration amount from such agreements was ¥72 million (approximately US$484 thousand). The costs and expenses associated with these settlements was ¥29 million (approximately US$193 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company settled 21 sales transactions of solar power generation facilities. The aggregate settlement amount of these solar power generation facilities was ¥319 million (approximately US$2,127 thousand), and the aggregate purchase price of these facilities and related expenses corresponding to these sales was ¥260 million (approximately US$1,736 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company generated minimal interest revenue from the financial services.

During the period from January 1, 2025 through April 30, 2025, the Company settled 142 real estate brokerage transactions and the aggregate settlement amount from such transactions was ¥87 million (approximately US$581 thousand). The costs and expenses associated with these settlements was ¥352 thousand (approximately US$2 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company received rent from 305 agreements for the real estate leasing and the aggregate rent from such agreements was ¥25 million (approximately US$166 thousand). The costs and expenses associated with these rent revenues was ¥14 million (approximately US$98 thousand).

*Loans and bonds*

During the period from January 1, 2025 through May 25, 2025, the Company entered into various loans and corporate bonds, in a total principal amount of approximately US$6.3 million, with banks, financial institutions and individual investors for working capital purpose and for the purpose of purchasing real estate properties. The Company paid off certain loans and bonds in an approximate aggregate amount of US$766 thousand ahead of schedule. See "*Management's Discussion and Analysis of Financial Condition and Results of Operations – Loans and Bonds*" in this prospectus for more detailed information about the loans and bonds.

*Waiver of Stock Acquisition Rights*

On January 22, 2025, HeartCore Financial, Inc. ("HeartCore Financial") entered into an Agreement on Waiver of Stock Acquisition Rights with the Company whereby HeartCore Financial waived 760,050 stock acquisition rights of the Company to purchase common shares of the Company equal to 3% of the issued and outstanding common shares on a fully diluted basis as of the day prior to the successful listing on the Nasdaq at an exercise price of ¥1 (US$0.01) per common share.

**Implications of Being an Emerging Growth Company and a Foreign Private Issuer**

We are an "emerging growth company", as defined in Section 2(a) of the Securities Act of 1933, as amended (which we refer to as the "Securities Act"), as modified by the Jumpstart Our Business Startups Act of 2012 (which we refer to as the "JOBS Act"). As such, we are eligible to take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to reporting companies that make filings with the U.S. Securities and Exchange Commission (which we refer to as the "SEC"). For so long as we remain an emerging growth company, we will not be required to, among other things:

● present more than two years of audited financial statements and two years of related selected financial data and management's discussion and analysis of financial condition and results of operations disclosure in our registration statement of which this prospectus forms a part;

● have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (which we refer to as the "Sarbanes-Oxley Act");

● disclose certain executive compensation related items; and

● seek shareholder non-binding advisory votes on certain executive compensation matters and golden parachute arrangements, to the extent applicable to our Company as a foreign private issuer.

The JOBS Act also permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act. This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result, our financial statements may not be comparable to companies that comply with public company effective dates.

We will remain an emerging growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the completion of this offering, (ii) the last day of the fiscal year during which we have total annual gross revenue of at least US$1.235 billion, (iii) the date on which we are deemed to be a "large accelerated filer" under the Securities Exchange Act of 1934, as amended (which we refer to as the "Exchange Act"), which means the market value of our common shares that are held by non-affiliates exceeds US$700.0 million as of the last business day of our most recently completed second fiscal quarter, and (iv) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three- year period.

In addition, we report in accordance with SEC rules and regulations applicable to a "foreign private issuer." As a foreign private issuer, we will take advantage of certain provisions under the rules that allow us to follow the laws of Japan for certain corporate governance matters. Even when we no longer qualify as an emerging growth company, as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

● the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations with respect to a security registered under the Exchange Act;

● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, and current reports on Form 8-K upon the occurrence of specified significant events; and

● Regulation Fair Disclosure (which we refer to as "Regulation FD"), which regulates selective disclosures of material information by issuers.

As a foreign private issuer, we have four months after the end of each fiscal year to file our annual report on Form 20-F with the SEC. In addition, our executive officers, directors, and principal shareholders are exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act.

Foreign private issuers, like emerging growth companies, are exempt from certain more stringent executive compensation disclosure rules. As such, even when we no longer qualify as an emerging growth company, as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will continue to be exempt from the more stringent compensation disclosures required of public companies that are not a foreign private issuer.

We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We are required to determine our status as a foreign private issuer on an annual basis at the end of our second fiscal quarter. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 majority of our executive officers or directors are U.S. citizens or residents;

(ii) more
 than 50% of our assets are located in the United States; or

(iii) our
 business is administered principally in the United States.

In this prospectus, we have taken advantage of certain of the reduced reporting requirements as a result of being an emerging growth company and a foreign private issuer. Accordingly, the information that we provide in this prospectus may be different than the information you may receive from other public companies in which you hold equity interests. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

**Implications of Being a Controlled Company**

The "controlled company" exception to the rules of the Nasdaq provides that a company of which more than 50% of the voting power is held by an individual, group or another company, a "controlled company," need not comply with certain requirements of the corporate governance rules of the Nasdaq. As of the date of this prospectus, Yuji Sekino, the Chief Executive Officer and a director of the Company, owned an aggregate of 15,930,000 common shares, which represents approximately 62.9% of the voting power of our outstanding common shares, directly and indirectly through RECON MARK, INC. Following this offering, Mr. Sekino will control approximately 60.5% of the voting power of our outstanding common shares if all the common shares being offered are sold (or 60.1% of our outstanding voting power if the underwriters' option to purchase additional shares is exercised in full). Accordingly, if we obtain listing on the Nasdaq, we will be a "controlled company" within the meaning of the corporate governance rules of the Nasdaq. Controlled companies are exempt from the corporate governance rules of the Nasdaq requiring that listed companies have (i) a majority of the board of directors consist of "independent" directors under the listing standards of the Nasdaq, (ii) a nominating/corporate governance committee composed entirely of independent directors and a written nominating/corporate governance committee charter meeting the requirements of the Nasdaq, and (iii) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements of the Nasdaq. We currently utilize and presently intend to continue to utilize these exemptions. As a result, we may not have a majority of independent directors, our nomination and corporate governance committee and compensation committee may not consist entirely of independent directors and such committees may not be subject to annual performance evaluations. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the Nasdaq. See "*Management – Corporate Governance Practices.*"

Following this offering, Mr. Sekino will control approximately 60.5% of the voting power of our outstanding common shares if all the common shares are sold (or 60.1% of our outstanding voting power if the underwriters exercise the over-allotment option in full).

**Corporate Information**

GATES GROUP Inc. was founded in Japan in May 2018. Our agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168. Our principal place of business is located at 34F Sumitomo Fudosan Shinjuku Grand Tower, 8-17-1 Nishishinjuku, Shinjuku-ku, Tokyo, Japan, and our telephone number is +81-03-5937-0846. Our website is www.gatestokyo.co.jp. Information on our website or accessible via our website is not reflected in this prospectus and is not part of this prospectus. Any information on our website should not be considered part of this prospectus. The address of our website is included in this prospectus for informational purposes only.

**THE OFFERING**

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| | |
|:---|:---|
| Issuer: | GATES GROUP Inc. |
| Securities offered by us: | 1,000,000 common shares (up to 1,150,000 shares if the underwriters exercise the over-allotment option in full) based on an assumed initial public offering price per share is US$6.00, the midpoint of the anticipated price range. |
| Public offering price: | For purposes of this prospectus, the assumed initial public offering price per common share is US$6.00 (which is the midpoint of the price range set forth on the cover page of this prospectus). The actual offering price per common share will be as determined between the underwriters and us based on market conditions at the time of pricing. Therefore, the assumed public offering price used throughout this prospectus may not be indicative of the final offering price. |
| Over-allotment option: | We have granted to the underwriters an option to purchase up to an additional 150,000 common shares (15% of the number of common shares sold in this offering) exercisable solely to cover over-allotments, if any, at the applicable public offering price less the underwriting discounts and commissions shown on the cover page of this prospectus. The underwriters may exercise this option in full or in part at any time and from time to time until 45 days after the date of this prospectus. |
| Common shares outstanding before this offering: | 25,335,000 common shares<sup>(1)</sup> |
| Common shares expected to be outstanding immediately after this offering: | 26,335,000 common shares (or 26,485,000 common shares if the underwriters exercise in full their option to purchase additional common shares). |
| Use of proceeds: | We expect to receive net proceeds from this offering of approximately US$4,850,000 (or approximately US$5,682,500 if the underwriters exercise in full their option to purchase up to 150,000 if the underwriters exercise the over-allotment option in full) after deducting estimated underwriting discounts and commissions of US$450,000 (7.5% of the gross proceeds of the offering) (or approximately US$517,500 if the representative exercises in full its over-allotment option) and after our offering expenses, estimated at US$700,000 (or approximately US$700,000 if the underwriters exercise the over-allotment option in full). We intend to use the net proceeds from this offering to fund mergers and acquisitions of other businesses, development of the auction platform for condominiums and pre-owned solar power generation facilities, general corporate purposes, such as funds to purchase condominiums, and working capital. See "*Use of Proceeds*." |
| Risk factors: | See "*Risk Factors*" beginning on page 15 of this prospectus for a discussion of some of the factors you should carefully consider before deciding to invest in our common shares. |
| Listing: | We have applied to list our common shares on the Nasdaq under the symbol "GTSG". The approval of our listing on the Nasdaq is a condition of closing this offering. |
| Lock-Ups: | We, all of our directors and executive officers, and holders of our outstanding securities (or securities convertible or exercisable into our common shares) have agreed not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common shares or securities convertible or exercisable into common shares without the prior written consent of the representative for a period of twelve (12) months from the date on which the trading of the common shares on the Nasdaq commences, subject to certain limited exceptions. See "*Underwriting—Lock-Up Agreements*." |
| Dividend policy: | We have not paid annual dividends to shareholders in the past. Following our public offering, the payment of future dividends on our common shares, if any, must be approved by our common shareholders at the annual meeting of the shareholders, will depend on many factors, and the common shareholders may not approve. |

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(1) Unless we indicate otherwise, all information in this prospectus:

● is based on 25,335,000 common shares issued and outstanding as of June 2, 2025; and

● assumes no exercise by the representative of its option to purchase up to an additional 150,000 common shares to cover over-allotments, if any.

**SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA**

The following tables set forth our selected consolidated financial information and operating data as of and for the years ended December 31, 2024 and 2023. You should read the following selected consolidated financial information and operating data in conjunction with, and it is qualified in its entirety by reference to, our audited consolidated financial statements and the related notes thereto and the sections entitled "*Capitalization*" and "*Management's Discussion and Analysis of Financial Condition and Results of Operations*", each of which are included elsewhere in this prospectus.

Our selected consolidated statements of operations and comprehensive loss information and operating data for the years ended December 31, 2024 and 2023, and our related selected consolidated balance sheets information as of December 31, 2024 and 2023, have been derived from our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023, prepared in accordance with U.S. GAAP, which are included elsewhere in this prospectus.

Our historical results for the periods presented below are not necessarily indicative of the results to be expected for any future periods.

**Consolidated statements of operations and comprehensive loss information:**

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| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023** |
| **Revenues, net** | $144546158 | $108703609 |
| **Cost of revenues** | 121007327 | 92883812 |
| **Gross profit** | **23538831** | **15819797** |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative expenses | 22561334 | 15254672 |
| **Total operating expenses** | 22561334 | 15254672 |
| **Income from operations** | **977497** | **565125** |
| **Other income (expenses)** |  |  |
| &nbsp;&nbsp;&nbsp;Other income | 255509 | 112580 |
| &nbsp;&nbsp;&nbsp;Interest expenses | (684056) | (511452) |
| &nbsp;&nbsp;&nbsp;Other expenses | (201453) | (205791) |
| **Total other expenses** | (630000) | (604663) |
| **Income (loss) before income taxes** | 347497 | (39538) |
| &nbsp;&nbsp;&nbsp;Income tax expense (benefit) | 110082 | (3916) |
| **Net income (loss)** | $**237415** | $**(35622)** |
| &nbsp;&nbsp;&nbsp;**Less: net income attributable to noncontrolling interests** | 18833 | 4395 |
| **Net income (loss) attributable to GATES GROUP Inc.** | $**218582** | $**(40017)** |

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**Reconciliation of non-GAAP measures:**

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2024** | **2023** |
| **Net income (loss)** | $237415 | $(35622) |
| Income tax expense (benefit) | 110082 | (3916) |
| **Income (loss) before income taxes** | 347497 | (39538) |
| **Adjustments for:** |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization expense | 333333 | 354085 |
| &nbsp;&nbsp;&nbsp;Other income <sup>(2)</sup> | (255509) | (112580) |
| &nbsp;&nbsp;&nbsp;Interest expense | 684056 | 511452 |
| &nbsp;&nbsp;&nbsp;Other expenses <sup>(2)</sup> | 201453 | 205791 |
| **Adjusted EBITDA<sup>(1)</sup>** | $1310830 | $919210 |
| **Adjusted EBITDA margin <sup>(1)</sup>** | 0.91% | 0.85% |

---

<sup>(1)</sup> We define Adjusted EBITDA as income from operations before income tax expense, depreciation and amortization expense, other income, interest expense, and other expenses. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA for a period by revenues, net for the same period. Management has presented the performance measure Adjusted EBITDA because it monitors performance at a consolidated level and believes that this measure is relevant to an understanding of the Company's financial performance. In addition, we believe this metric provides useful information in understanding our operating performance and trends in our business. Adjusted EBITDA is not a defined performance measure in U.S. GAAP. The Company's definition of Adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities.

<sup>(2)</sup> Other income and other expense were excluded from calculation of EBITDA and EBITDA margin as they represent income and expenses which do not incur frequently in the ordinary course of the Company's business. For all the periods presented, other income primarily consists of interest income from short-term loans and bonds receivable and other one-off income. Other expenses primarily consist of debt issuance cost and administrative expenses for loans for property acquisitions and working capital purposes. The Company plans to use a portion of the proceeds from this offering to finance property acquisition and working capital thereafter and therefore our management expects that these expenses will be minimal as the extent of our reliance on loans and bonds will decrease.

**Consolidated balance sheets information:**

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2023** |
| **Total assets** | $22732412 | $18804912 |
| **Total liabilities** | 21200858 | 17749523 |
| **Total equity** | 1531554 | 1055389 |

---

**SUMMARY OF RISK FACTORS**

Below is a summary of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:

● Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

● It may not be possible for investors to effect service of process within the United States upon most our directors, corporate auditors and executive officers, or to enforce against us or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.

● The illiquidity of real estate properties could significantly impede our ability to resell properties that we purchase.

● We may not make a profit if we sell a property.

● We may be incorrect in our determination of whether a certain property may be sold at a profit, which could cause us to be unable to resell such property without incurring a loss.

● A property that we purchase may turn out to be subject to litigation or liens that we failed to identify prior to our purchase or become subject to litigation or liens after our purchase, which would cause us to suffer a loss.

● A property that we purchase may turn out to have structural or other issues that we failed to identify prior to our purchase or may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.

● We may not be able to attract and retain a sufficient number of purchase/sales personnel needed to maintain and grow our business.

● A material amount of our revenues may be concentrated in one or more large purchasers. If we lose or experience a significant reduction in sales to such key purchasers, our revenues may decrease substantially and our results of operations and financial condition may be harmed.

● Condominiums that we purchase may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.

● If properties are not available at competitive prices, our sales and results of operations could be adversely affected.

● A downturn in the real estate market or changes in industry trends would negatively impact our business.

● Competition for properties may result in fewer opportunities for us to either purchase properties or increase prices for properties, which may impede our growth and materially and adversely affect us.

● The consideration paid for properties that we purchase may exceed fair market value, which may harm our financial condition and operating results.

● Inflation may adversely affect us by increasing costs beyond what we can recover through price increases.

● We may incur significant costs in seeking purchasers for the properties that we purchase.

● We face risks associated with property purchases.

● If the security of our investors' confidential information stored on our crowdfunding platform is breached or otherwise subjected to unauthorized access, their secure information may be stolen.

● Any significant disruption in service on our crowdfunding platform or in our computer or communications systems could reduce our attractiveness and result in a loss of users.

● Increasing competition within our emerging industry could have an impact on our business prospects.

● We may be incorrect in our determination of whether a certain solar power generation facility may be sold at a profit, which could cause us to be unable to resell such solar power generation facility without incurring a loss.

● Solar power generation facilities that we purchase may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.

● If we cannot compete successfully against other resellers of solar power generation facilities, we may not be successful in developing our operations and our business may suffer.

● The success of our planned auction platform will rely on the supply and demand for condominiums and pre-owned solar power generation facilities.

● Even if the common shares are listed on the Nasdaq, there can be no assurance that we will be able to comply with the Nasdaq's continued listing standards.

● The price of our common shares could be subject to rapid and substantial volatility.

● The price of the common shares may fluctuate substantially.

● Management will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.

● As a controlled company, we are not subject to all of the corporate governance rules of the Nasdaq.

● If the voting power of our capital stock continues to be highly concentrated, it may prevent you and other minority shareholders from influencing significant corporate decisions and may result in conflicts of interest.

● We may incur significant taxation from an investigation by the tax authority in Japan.

● We may face restrictions on foreign investment related to Foreign Exchange and Foreign Trade Act in Japan.

**RISK FACTORS**

***An investment in the common shares is highly speculative and involves a high degree of risk. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. You should carefully consider the factors described below, together with all of the other information contained in this prospectus, including the audited financial statements and the related notes included in this prospectus, before deciding whether to invest in the common shares. These risk factors are not presented in the order of importance or probability of occurrence. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected. In that event, the market price of the common shares could decline, and you could lose part or all of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled "Cautionary Statement Regarding Forward-Looking Statements."***

**General Risks Related to our Business**

***Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.***

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds to invest in future growth opportunities. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could seriously harm our business and operating results. If we incur debt, the debt holders would have rights senior to common shareholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common shares. Furthermore, if we issue equity securities, shareholders will experience dilution, and the new equity securities could have rights senior to those of our common shares. Any additional equity or equity-linked financings would be dilutive to our shareholders. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. As a result, our shareholders bear the risk of our future securities offerings reducing the market price of our common shares and diluting their interest.

 ****

***There is a risk that we will be a passive foreign investment company (which we refer to as "PFIC") for the current or any future taxable year, which could result in material adverse U.S. federal income tax consequences if you are a U.S. holder.***

A non-U.S. corporation, such as our Company, is classified as a PFIC for any taxable year in which, after applying relevant look-through rules with respect to the income and assets of its subsidiaries, either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) 50% or more of the value of the corporation's assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) at least 75% of the corporation's gross income is passive income. "Passive income" generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. In determining the value and composition of our assets, the cash we raise in this offering will generally be considered to be held for the production of passive income and thus will be considered a passive asset.

The determination of whether a corporation is a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules that are subject to differing interpretations. In addition, the determination of whether a corporation will be a PFIC for any taxable year can only be made after the close of such taxable year. Our PFIC status will depend, in part, on the amount of cash that we raise in this offering and how quickly we utilize the cash in our business. Furthermore, because we may value our goodwill based on the market price of the common shares in this offering, a decrease in the market price of the common shares may also cause us to be classified as a PFIC for the current or any future taxable year. Based upon the foregoing, it is uncertain whether we will be a PFIC for our current taxable year or any future taxable year. We believe we were not a PFIC in prior taxable year 2024 because less than 75% of our gross income was passive income and less than 50% of the average value of our assets consisted of assets that would produce passive income in 2024.

If we are a PFIC for any taxable year during which a U.S. holder (as defined below) owns common shares, certain adverse U.S. federal income tax consequences could apply to such U.S. holder. See "*Certain Tax Considerations — Certain U.S. Federal Income Tax Considerations for U.S. Holders*" for further information. We have not determined, if we were to be classified as a PFIC for a taxable year, whether we will provide information necessary for a U.S. holder to make a "qualified electing fund" election which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs. Accordingly, U.S. holders should assume that they will not be able to make a qualified electing fund election with respect to the common shares. The PFIC rules are complex, and each U.S. holder should consult its own tax advisor regarding the PFIC rules, the elections which may be available to it, and how the PFIC rules may affect the U.S. federal income tax consequences relating to the ownership and disposition of our common shares.

 ****

***It may not be possible for investors to effect service of process within the United States upon all of our directors, corporate auditors and executive officers, or to enforce against us or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.***

We are a joint stock corporation organized under Japanese law. All of our directors, corporate auditors and executive officers reside in Japan, and significantly all of our assets and the assets of such persons are located outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon these persons or us, or to enforce against them or us judgments obtained in U.S. courts, whether or not predicated upon the civil liability provisions of the federal securities laws of the United States or of the securities laws of any state of the United States. There is doubt as to the enforceability in Japan, either in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely on the federal securities laws of the United States or the securities laws of any state of the United States. A Japanese court may refuse to apply provisions of U.S. securities laws in original actions, or to enforce judgments of U.S. courts that are based on such provisions, if it considers such provisions to be contrary to the public policy of Japan. The United States and Japan do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters, and a Japanese court may deem that there is not sufficient basis for the reciprocity on the enforcement of judgments. Therefore, if you obtain a civil judgment by a U.S. court, you may not be able to enforce it in Japan.

 ****

***Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.***

Our articles of incorporation and the Companies Act of Japan (which we refer to as the "Companies Act") govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors' fiduciary duties and obligations, and shareholders' rights under Japanese law may be different from, or less clearly defined than, those that would apply to a company incorporated in any other jurisdiction. Shareholders' rights under Japanese law may not be as extensive as shareholders' rights under the laws of other countries. For example, under the Companies Act, only holders of 3% or more of our total voting rights or our outstanding shares are entitled to examine our accounting books and records. Furthermore, there is a degree of uncertainty as to what duties the directors of a Japanese joint stock corporation may have in response to an unsolicited takeover bid, and such uncertainty may be more pronounced than that in other jurisdictions.

***Substantially all of our revenues are generated in Japan, but an increase of our international presence could expose us to fluctuations in foreign currency exchange rates, or a change in monetary policy may harm our financial results.***

Our functional currency is Japanese yen and reporting currency is US dollar. Substantially all of our revenues are generated in Japan, but we adopt US dollar as reporting currency. We are exposed to fluctuations in the foreign currency exchange rate. We are subject to the effects of exchange rate fluctuations with respect to any of these currencies which, among other factors, may be influenced by governmental policies and domestic and international economic and political developments. Any significant change in the value of the currencies of the countries in which we do business against the Japanese yen could adversely affect our financial condition and results of operations due to translational and transactional differences in exchange rates.

We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the amount of our revenues that will be generated in other countries, the variability of currency exposures, and the potential volatility of currency exchange rates. We do not take any actions to manage our foreign currency exposure, such as entering into hedging transactions.

***As a "foreign private issuer" we are permitted, and intend, to follow certain home country corporate governance and other practices instead of otherwise applicable SEC and the Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.***

Our status as a foreign private issuer exempts us from compliance with certain SEC laws and regulations and certain regulations of the Nasdaq, including certain governance requirements such as independent director oversight of the nomination of directors and executive compensation. Further, consistent with corporate governance practices in Japan, we do not have a standalone compensation committee or nomination and corporate governance committee under our board. In addition, we are not required under the Exchange Act to file current reports and financial statements with the U.S. Securities and Exchange Commission (which we refer to as the "SEC") as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act and we are generally exempt from filing quarterly reports with the SEC. Also, we are not required to provide the same executive compensation disclosures regarding the annual compensation of our five most highly compensated senior executives on an individual basis as are required of U.S. domestic issuers. As a foreign private issuer, we are permitted to disclose executive compensation on an aggregate basis and need not supply a Compensation Discussion & Analysis, as is required for domestic companies. Furthermore, as a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. These exemptions and accommodations will reduce the frequency and scope of information and protections to which you are entitled as an investor. For a detailed description of our home country corporate governance practices see "*Management - Corporate Governance Practices*" of this prospectus.

 ****

***As an "emerging growth company" under the JOBS Act, we are permitted to rely on exemptions from certain disclosure requirements.***

We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

● have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

● comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the consolidated financial statements (i.e., an auditor discussion and analysis);

● submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency"; and

● disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer's compensation to median employee compensation.

In addition, Section 102 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our consolidated financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.235 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our membership interests that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

Until such time, however, we cannot predict if investors will find our securities less attractive because we may rely on these exemptions. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the price of our securities may be more volatile.

***If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and have an adverse effect on the value of our securities.***

As a public company, we would be required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Further, we will be required to report any changes in internal controls on an annual basis. In addition, we would be required to furnish a report by management on the effectiveness of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We will design, implement, and test the internal controls over financial reporting required to comply with these obligations. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner, or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of its internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the value of our securities could be negatively affected. We also could become subject to investigations by the Commission or other regulatory authorities, which could require additional financial and management resources.

 ****

***As an emerging growth company, our auditor will not be required to attest to the effectiveness of our internal controls.***

Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting while we are an emerging growth company. This means that the effectiveness of our financial operations may differ from our peer companies in that they may be required to obtain independent registered public accounting firm attestations as to the effectiveness of their internal controls over financial reporting and we are not. While our management will be required to attest to internal control over financial reporting and we will be required to detail changes to our internal controls in our annual reports on Form 20-F (commencing with the filing for the year ended 2026), we cannot provide assurance that the independent registered public accounting firm's review process in assessing the effectiveness of our internal controls over financial reporting, if obtained, would not find one or more material weaknesses or significant deficiencies. Further, once we cease to be an emerging growth company (as described below), we will be subject to independent registered public accounting firm attestation regarding the effectiveness of our internal controls over financial reporting. Even if management finds such controls to be effective, our independent registered public accounting firm may decline to attest to the effectiveness of such internal controls and issue a qualified report.

***Upon becoming a public company, we will incur significantly increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.***

Upon becoming a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act has imposed various requirements on public companies including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain directors' and officers' liability insurance, which could make it more difficult for us to attract and retain qualified members of our board of directors. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs.

The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition, we will be required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting the later of our second annual report on Form 20-F or the first annual report on Form 20-F following the date on which we are no longer an emerging growth company. Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. While we currently have an internal audit group, we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the value of our securities could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We expect that we will need to continue to improve our existing, and implement new, operational and financial systems, procedures and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley Act. This, in turn, could have an adverse impact on the value of our securities, and could adversely affect our ability to access the capital markets.

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***We depend on certain officers of the Company, the loss of whom could materially harm our business.***

We rely upon the accumulated knowledge, skills and experience of the officers and personnel of our Company and its affiliates. If Yuji Sekino, our Chief Executive Officer, or any of the other officers or personnel were to leave the Company or become incapacitated, we might suffer in our planning and execution of business strategy and operations, impacting our brand and financial results.

**Risks Related to Our Real Estate Business**

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***The illiquidity of real estate properties could significantly impede our ability to resell properties that we purchase.***

We purchase condominiums from property owners and sell them mainly to real estate sales companies and also to individual investors. We also renovate and resell real estate purchased through voluntary sales and auctions to individual investors and real estate sales companies. Once we identify a property, we negotiate diligently with the owner to purchase that property. As a result of these negotiations, we purchase and then sell the property. Real estate properties may be relatively illiquid. As a result, we may not be able to sell a property or facilitate the sale of a property quickly or on favorable terms in response to changing economic, financial and investment conditions when it otherwise may be prudent to do so. Deteriorating conditions in the Japanese economy and credit markets may make it difficult to sell properties or facilitate the sale of properties at attractive prices. We cannot predict whether we will be able to sell or facilitate the sale of any property for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us or an identified seller. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. We may be required to expend funds to correct defects before a property can be sold, and we cannot provide any assurances that we will have funds available to correct such defects. Our inability to dispose of properties or facilitate the sale of properties at opportune times or on favorable terms could adversely affect our cash flows and results of operations.

***We may not make a profit if we sell a property.***

The prices that we can obtain when we sell a property will depend on many factors that are presently unknown, including, among other things, the economy, demographic trends in the area, tax treatment of real estate investments, and available financing to purchasers. There is a risk that we will not realize any significant profit on any specific property when we sell it.

***We may be incorrect in our determination of whether a certain property may be sold at a profit, which could cause us to be unable to resell such property without incurring a loss.***

We purchase condominiums from property owners and sell them mainly to real estate sales companies and also to individual investors. When identifying a property that we believe may be resold we look for certain factors, for example, age of the property, location of the property including distance from the closest train station, current rent compared to the supposed appropriate rent, financial standing of the condominium management association of the property, facilities such as supermarkets and hospitals around the property, view from the property, design, and how the common use space is managed. We believe that we can purchase the property at a favorable price and then sell it at a profit. However, we may be incorrect in our determination of whether a certain property may be resold at a profit, and if we proceed with purchasing such property, we may be unable to resell it to a purchaser at a higher price than which we paid for it, which would cause us to incur a loss on such property.

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***We may be subject to liability for non-conformance with contracts we enter into in our real estate business.***

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Under the Civil Code and the Real Estate Brokerage Act of Japan, our Company is liable for contractual nonconformity for a minimum period of two years from the date of delivery of a house. In the event that a property sold by our Company is determined to have a serious defect, our Company, as the seller, may be held liable for nonconformance to the contract, even if the direct cause of the defect is due to a cause other than our Company's fault. As a result, our financial position and business performance may be affected due to an increase in repair and other expenses and a decline in creditworthiness.

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***A property that we purchase may turn out to be subject to litigation or liens that we failed to identify prior to our purchase or become subject to litigation or liens after our purchase, which would cause us to suffer a loss.***

A property that we purchase may turn out to be subject to litigation or liens that we failed to identify prior to our purchase or become subject to litigation or liens after our purchase. If this occurs, we would have to expend our own funds in order to remove such liens or contest or settle such litigation, and we may not have such funds available to us at that time. Additionally, we may not be able to sell that property at a price higher than what we paid for it, or at all, which would cause us to suffer a loss.

***A property that we purchase may turn out to have structural or other issues that we failed to identify prior to our purchase or may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.***

A property that we purchase may turn out to have structural or other issues that we failed to identify prior to our purchase. If we do not identify such issues until after we have already purchased the property, we would have to expend our own funds in order to correct such structural issues, and we may not have sufficient funds available at that time. Additionally, we may not be able to resell that property to a purchaser. Accordingly, we may not be able to sell that property at a price higher than what we paid for it, or at all, which would cause us to suffer a loss. Additionally, if a property that we purchase become subject to damage due to factors outside of our controls, such as fires, flooding, weather related damage such as wind damage, or damage due to vandalism, we may not be able to sell such property at a price higher than which we paid for it, or at all, which would cause us to suffer a loss.

***We may not be able to attract and retain a sufficient number of purchase/sales personnel needed to maintain and grow our business.***

We purchase condominiums and solar power generation facilities from facility owners and sell them mainly to real estate sales companies and also to individual investors. We also renovate and resell real estate purchased through voluntary sales and auctions to individual investors and real estate sales companies. The business we conduct is greatly dependent on the number of purchasing/sales personnel that we can attract and retain. In addition, it is imperative to train and secure personnel who have expertise in purchasing operations, and accordingly we plan to retain and train personnel who we believe can support the medium-to long-term growth of the Company and strengthen young and mid-career personnel. However, if we are unable to attract and retain a sufficient number of purchase/sales personnel needed to maintain and grow our business, it would have an adverse effect on our business operations as well as our ability to grow our business.

***If we fail to protect personal information of business partners, customers and others, it would have an adverse effect on our reputation and may impact the value of your investment.***

In the course of our business activities, the Company acquires and holds personal information of business partners, customers, and others, and is subject to regulations under the Act on the Protection of Personal Information and other laws in Japan. The Company has established "Information Security Management Regulations," "Personal Information Protection Regulations," and "Regulations for Handling Specified Personal Information," and has appointed a personal information protection manager to ensure that all employees are familiar with and thoroughly understand the above regulations. In addition, in preparation for the event of a leakage of information, the Company has prepared procedures for handling such a leakage, including a clearly defined reporting route. However, in the event of a leak of personal information held by the Company, the Company's reputation and business performance may be affected by claims for damages or loss of credibility and this could result in a loss of investors, and the value of your investment in us could be adversely affected.

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***We may be incorrect in our determination of whether a certain property may be renovated and sold at a profit, which could cause us to be unable to resell such property without incurring a loss.***

We renovate and resell real estate purchased through voluntary sales and auctions to individual investors and real estate sales companies. When identifying a property that we believe may be renovated and resold we look for certain factors, for example, if a real estate property is located in an upscale residential area, but the property is currently in less than great condition, we believe that we can purchase the property at a favorable price and renovate it and then sell it at a profit. However, we may be incorrect in our determination of whether a certain property may be renovated and resold at a profit, and if we proceed with purchasing such property, we may be unable to resell it to a purchaser at a higher price than which we paid for it, which would cause us to incur a loss on such property.

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***Properties that we purchase to renovate and resell may become damaged during the renovation process which would cause us to incur a loss.***

We renovate and resell real estate purchased through voluntary sales and auctions to individual investors and real estate sales companies. During the renovation process such property may become damaged where through any damages related to the renovations or due to factors outside of our control, such as fires, flooding, weather related damage such as wind damage, or damage due to vandalism. If any such damages were to occur during the renovation process we would not be able to resell such property at a profit or at all, and this would cause us to incur a loss on such property.

***Shortages or price fluctuations in the raw materials and building supplies that we need for our renovations could delay or increase the cost of property renovation and adversely affect our operating results.***

We renovate and resell real estate purchased through voluntary sales and auctions to individual investors and real estate sales companies. The construction and renovation industry has experienced numerous difficulties in procuring raw materials and has been adversely affected by fluctuations in global commodity prices. In particular, shortages and price fluctuations in critical raw materials such as concrete, gypsum board, and lumber could delay the start or completion of one or more of our property renovations and may increase costs. In addition, the delivery of raw materials and the transportation of workers to work sites and the cost of fuel oil used for heavy equipment are highly variable and may be subject to geopolitical events, major storms, other severe weather conditions, and the consequences of significant environmental incidents. Environmental laws and regulations may also negatively impact the availability and prices of raw materials such as lumber and concrete. These increased costs could adversely affect our operating margins and results of operations. In addition, we may not be able to pass on increased renovation costs to purchasers with whom we have already entered into purchase contracts. In addition, such increased costs could adversely affect the economies of the regions in which we operate and reduce demand for our property.

***A material amount of our revenues may be concentrated in one or more large purchasers. If we lose or experience a significant reduction in sales to such key purchasers, our revenues may decrease substantially and our results of operations and financial condition may be harmed.***

A high concentration of our revenue comes from the sale of real estate to certain real estate companies purchasing real estate from us. Accordingly, in each year there may be a small number of real estate companies who purchase from us from whom we generate our revenue. These real estate companies may not be repeat purchasers and in each year it may be a different single purchaser or small number of purchasers from which we generate a large percentage of our revenues. We rely on these purchasers and there is a risk that these purchasers may be unable to make payment under their obligations to us, thereby affecting our revenues.

In 2023, we sold various real properties to GA technologies Co., Ltd., a real estate company, which accounted for 13.4% of our total revenues in 2023. The contracts were separate sales contracts for each of the properties. A part of the purchase price for each property was paid at the time of entering into the sales agreement as a deposit, and the rest of the price was paid in a lump sum at the time of delivery of each property.

In 2024, we sold various real properties to GA technologies Co., Ltd., a real estate company, which accounted for 13.0% of our total revenues in 2024. The contracts were separate sales contracts for each of the properties. A part of the purchase price for each property was paid at the time of entering into the sales agreement as a deposit, and the rest of the price was paid in a lump sum at the time of delivery of each property.

Any payment issues encountered by these large purchasers would likely harm our financial condition and results of operations.

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***We intend to have significant operations in certain geographic areas, which will subject us to an increased risk of loss of revenue or decreases in the market value of properties we purchase or identify in these regions from factors which may affect any of these regions.***

We carefully select and purchase condominiums which are located in the central area of Tokyo. We also provide consulting services not only for the sale of condominiums in Tokyo, but also in Kansai, Tokai, Kyushu area, and other areas throughout Japan.

Some or all of these regions could be affected by:

● severe weather;

● natural disasters;

● climate change;

● shortages in the availability or increased costs in obtaining properties and finding purchasers;

● unemployment;

● changes to the population growth rates and therefore the demand for properties in these regions; and

● changes in the regulatory and fiscal environment.

Due to our business and real properties that we purchased being concentrated in these areas, negative factors affecting one or a number of these geographic regions at the same time could result in decreased market value of properties we purchase, provide consulting services for or identify negatively affecting our results of operations. To the extent that regions in which our business is concentrated are impacted by an adverse event, we could be disproportionately affected compared to companies whose operations are less geographically concentrated.

***Condominiums that we purchase may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.***

We purchase condominiums from property owners and sell them mainly to real estate sales companies and also to individual investors. If such condominiums that we purchase become subject to damage due to factors outside of our controls, such as fires, flooding, weather related damage such as wind damage, or damage due to vandalism, we may not be able to sell such condominiums at a price higher than which we paid for them, or at all, which would cause us to suffer a loss.

***If properties are not available at competitive prices, our sales and results of operations could be adversely affected.***

We purchase condominiums from property owners and sell them mainly to real estate sales companies and also to individual investors. We also renovate and resell real estate purchased through voluntary sales and auctions to individual investors and real estate sales companies. Our long-term profitability depends in large part on the price at which we are able to purchase or identify properties. Increases in the price (or decreases in the availability) of suitable properties could adversely affect our profitability. Moreover, changes in the general availability of desirable properties, competition for available properties, limited availability of financing to acquire such properties, zoning regulations that limit housing density, environmental requirements and other market conditions may hurt our ability to identify and obtain, either for purchase or for renovation and purchase, at prices that will allow us to be profitable. If the supply properties that are appropriate for resale or renovation and resale, become more limited because of these factors, or for any other reason, the cost of such properties could adversely affect our results of operations and financial condition.

***The real estate industry is highly competitive, and we may not be able to compete effectively.***

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The real estate industry requires licenses and qualifications to operate but has low barriers to entry due to the small number of facilities needed to operate the business. Under these circumstances, the Company seeks to differentiate itself from its competitors not only by selling real estate, but also by providing comprehensive lifestyle support tailored to customers' life plans through the purchase of real estate, including the provision of property management and real estate brokerage services. However, despite our efforts, we may not be able to compete effectively which would adversely affect our results of operations and financial condition.

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***Our real estate operations are highly regulated.***

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The real estate sales, brokerage, and management businesses conducted by the Company are regulated by the Real Estate Brokerage Act and other related laws and regulations, and the Company has obtained licenses and approvals from the relevant regulatory authorities for the Real Estate Brokerage License, Condominium Management License, and Rental Housing Management License. To ensure compliance with laws, regulations, and contracts, the Company has established "Risk and Compliance Management Regulations" and conducts in-house training on compliance. At this point in time, there have been no cases of revocation of licenses, permits, or approvals. However, if such licenses, permits, or approvals are revoked or not renewed for some reason in the future, the Company's business activities may be hindered and its business performance may be affected. In addition, the revision or abolition of these laws and regulations, or the emergence of new legal restrictions in the future may also have an impact on our group's business performance.

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***A downturn in the real estate market or changes in industry trends would negatively impact our business.***

The real estate industry is susceptible to economic trends, policy interest rate trends, land price trends, real estate sales price trends, real estate taxation, etc. Therefore, a downturn in the real estate market, a significant increase in interest rates, or other changes in the situation could affect the Company's performance.

***Competition for properties may result in fewer opportunities for us to either purchase properties or increase prices for properties, which may impede our growth and materially and adversely affect us.***

Our growth depends in part on our ability to identify properties that may be resold or renovated and resold, and we may not be successful in identifying such properties or purchasing such properties on favorable terms, if at all. In addition, we can provide no assurances regarding the availability of, or our ability to source and close real estate deals. Failure to identify or purchase properties on favorable terms, or at all, would impede our growth and materially and adversely affect us.

***The consideration paid for properties that we purchase may exceed fair market value, which may harm our financial condition and operating results.***

The consideration that we pay for a property will be based upon numerous factors, and the target property may be purchased in a negotiated transaction rather than through a competitive bidding process. We cannot assure anyone that the purchase price that we pay for a property or its appraised value will be a fair price. As a result, a property we purchase may not be able to be sold at a profit, which may substantially harm our operating results and financial condition.

***Inflation may adversely affect us by increasing costs beyond what we can recover through price increases.***

Inflation can adversely affect us by increasing the costs of property such that we will not be able to afford to purchase properties. In addition, significant inflation is often accompanied by higher interest rates, which have a negative impact on demand for properties that we attempt to purchase and sell.

***We may incur significant costs in seeking purchasers for the properties that we purchase.***

In order to identify potential purchasers for our properties, we will have to use funds to conduct the necessary research, make connections in the industry and market our properties to potential purchasers. The cost of these activities may be significant and in turn may reduce the profit we are able to realize upon the sale of any of our properties.

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***We will compete with numerous other persons and entities for properties that we seek to purchase.***

We will be subject to significant competition when we are attempting to purchase properties. We will compete with many third parties engaged in similar business activities. Many of our competitors may have substantially greater financial and other resources than we have and may have substantially more operating experience than us. They may also enjoy significant competitive advantages that result from, among other things, a lower cost of capital. There is no assurance that we will be able to acquire properties on favorable terms, if at all. These factors could adversely affect our results of operations and financial condition.

***We face risks associated with property purchases.***

We intend to purchase properties and our business activities and their success are subject to the following risks:

● we may be unable to complete any purchases of properties after making a non-refundable deposit and incurring certain other acquisition-related costs;

● we may be unable to obtain financing for acquisitions on commercially reasonable terms or at all;

● acquired properties may fail to sell as expected;

● the actual costs of selling any of our purchased properties may be greater than our estimates; and

● acquired properties may be located in new markets in which we may face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures.

***Environmental contamination on properties that we own or have sold could adversely affect our results of operations.***

In Japan, under the Soil Contamination Countermeasures Act of Japan (Act No. 53 of 2002, as amended), or the Soil Contamination Countermeasures Act, if a local governor finds that the level of soil pollution in a given area of land due to hazardous or toxic substances exceeds the standards prescribed by the Ministry of the Environment of Japan and that area of land is polluted to such an extent that it has caused or may cause harm to human health, the governor must designate the area of land as a polluted area and the governor may order the current owner of such land to remove or remediate hazardous or toxic substances on or under the land in accordance with a plan for removal and remediation, in principle, whether or not the current owner knew of, or was responsible for, the presence of such hazardous or toxic substances. The environmental surveys that we generally conduct in connection with our properties to discover hazardous or toxic substances in the soil, groundwater, and buildings, may be inadequate to fully uncover the types of problems they are intended to identify, which are often difficult or impossible to detect without special expertise and equipment. The presence of hazardous or toxic substances on our properties, or our failure to properly remediate any such contamination, may adversely affect our ability to sell our properties or borrow using the affected properties as collateral. If hazardous or toxic substances are discovered on any of our properties, the affected properties could fall in value and we may be required to incur substantial unforeseen costs to remediate the underlying hazard and discharge the related environmental liabilities. Furthermore, if actual harm to human health results from the presence of hazardous or toxic substances on our properties, we may incur significant damages, regulatory sanctions, or damage to our brand and reputation. The realization of any of such risks related to environmental contamination could have a material adverse effect on our business, financial condition, and results of operations.

***We may incur losses due to defects relating to our properties.***

We may be liable for unforeseen losses, damages, or injuries suffered by third parties at properties that we own or sell as a result of defects in such properties. In Japan, pursuant to the Civil Code of Japan (Act No. 89 of 1896, as amended), or the Civil Code, the owner of a structure or property attached to land is strictly liable to a third party who suffers damages due to defects in such structure or property. Our business, financial condition, or results of operations could be adversely affected as a result of our incurring any such liability. We may also incur significant costs to remedy construction defects in properties that we own or sell under warranty.

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***Our real estate management business is subject to regulatory and legal risks.***

We provide real estate management services such as collection of rent fees, repairs, and restoration of properties to their original condition for condominiums. The real estate management industry in Japan is subject to various regulations and legal requirements. Changes in laws related to property management, tenant rights, taxation, or zoning regulations could significantly impact the Company's operations and profitability. Non-compliance with these regulations could result in fines, legal disputes, or even loss of licenses, affecting the Company's reputation and financial stability.

***Our real estate management business is subject to operational and maintenance risks.***

The Company is responsible for the day-to-day management and maintenance of condominiums, including collecting rent, handling repairs, and ensuring properties are in optimal condition. Operational challenges such as unexpected maintenance issues, tenant disputes, or property damage could increase operating expenses and strain resources. Inadequate maintenance practices or delays in addressing tenant concerns may lead to tenant dissatisfaction, increased turnover rates, and reputational damage for the Company.

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***We will be subject to competition in our real estate management business.***

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The real estate management sector in Japan is highly competitive, with numerous companies offering similar services. Intense competition could lead to pricing pressure, as competitors may undercut prices to attract clients or offer additional incentives. Failure to effectively differentiate the Company's services or maintain competitive pricing structures could result in loss of market share and decreased profitability.

***Our real estate management business relies on relationships with property owners.***

The Company relies heavily on its relationships with property owners, real estate developers or investors. We monthly receive management commission from the property owners who entrust us with property management of their properties, which contributes to our stable income. In addition, we also receive other types of income from these owners, such as considerations for restoration work when tenants move in and out of the property. Such income can be earned only if the owner entrusts property management to us. Since we do not sell our own developed properties at this point, we can acquire contracts and earn more income when an owner switches property management company to us due to transfer of ownership or an existing customer introduces other owners to us. Any deterioration in these relationships, disputes over contractual terms, or the inability to renew management agreements could result in the loss of key clients or revenue streams. Furthermore, reliance on a limited number of property owners may increase the Company's vulnerability to their financial stability and business decisions.

***Our real estate financial services are subject to regulatory and compliance risks.***

We engage in the financial services and lending business. The financial services and lending business in Japan are heavily regulated, with strict requirements imposed by regulatory authorities such as the Financial Services Agency (FSA). The Company must ensure compliance with all applicable laws, regulations, and licensing requirements governing financial services, including anti-money laundering (AML) and know-your-customer (KYC) regulations. Failure to comply with these regulations could result in fines, penalties, reputational damage, and even the suspension or revocation of licenses, adversely impacting the Company's operations and financial performance.

***The lending business is subject to credit and counterparty risks.***

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Engaging in lending activities exposes the Company to credit risks associated with borrowers' defaulting on loans or failing to meet their repayment obligations. Assessing the creditworthiness of borrowers, managing loan portfolios effectively, and implementing robust risk management practices are essential to mitigate these risks. Additionally, reliance on counterparties such as financial institutions or other lenders exposes the Company to counterparty risks, including the risk of default, insolvency, or non-performance by counterparties, which could result in financial losses or disruptions to the Company's operations.

***The lending business is subject to market and economic risks.***

The Company's financial performance is closely linked to the overall economic conditions and real estate market trends in Japan. Economic downturns, fluctuations in property prices, or changes in demand for condominiums could impact the company's revenue, profitability, and loan repayment rates. Moreover, interest rate fluctuations, inflationary pressures, or changes in monetary policies may affect borrowing costs, loan pricing, and the company's ability to generate returns on its lending activities, posing risks to its financial stability and viability.

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***Our real estate consulting services, financial transactions and lending business are subject to operational, transaction and legal risks.***

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Providing consulting services for the sale of condominiums involves various operational and transactional risks, including errors or omissions in property valuations, due diligence, or contract negotiations. Failure to accurately assess market conditions, property risks, or regulatory requirements could lead to financial losses, legal liabilities, and reputational damage for the Company. Moreover, delays or disruptions in transaction processes, financing arrangements, or regulatory approvals may impact revenue recognition and business relationships with clients and partners.

Additionally, engaging in the financial transaction and lending business exposes the Company to various legal and litigation risks, including contractual disputes, loan defaults, foreclosure proceedings, or regulatory investigations. Inadequate documentation, improper loan structuring, or failure to enforce contractual rights could result in legal claims, financial liabilities, and legal expenses for the company. Additionally, changes in laws, regulations, or judicial interpretations may affect the Company's legal rights, obligations, and liabilities, necessitating ongoing legal compliance and risk management efforts.

***Negative publicity would have an adverse effect on the Company's real estate consulting business.***

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The Company's reputation and client relationships are critical to its success in the consulting and financial services industry. Any negative publicity, allegations of misconduct, or breaches of client trust could damage the company's reputation, erode client confidence, and result in client attrition or loss of business opportunities. Maintaining high ethical standards, transparent communication, and effective client relationship management are essential to mitigate reputational risks and foster long-term client loyalty and trust.

***The Company's brokerage business relies on client relationships.***

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The Company's success depends on its ability to establish and maintain strong client relationships, earn client trust, and deliver high-quality brokerage services. Any negative experiences, disputes, or breaches of client trust could damage the Company's reputation, erode client confidence, and result in client attrition or loss of referral business.

***The real estate brokerage industry in Japan is highly competitive.***

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The real estate brokerage industry in Japan is highly competitive, with numerous brokerage firms and agents vying for clients and listings. Intense competition could lead to pricing pressure, as competitors may undercut commission rates or offer additional incentives to attract clients or secure exclusive listings. Failure to differentiate the Company's services, establish a strong brand presence, or maintain competitive pricing structures could result in loss of market share, reduced transaction volumes, and decreased profitability, particularly in a saturated or declining market environment.

***The Company's brokerage business is highly regulated and subject to the risk of litigation.***

The real estate brokerage industry in Japan is subject to various regulations and licensing requirements imposed by regulatory authorities such as the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) and local governments. The Company must ensure compliance with all applicable laws, regulations, and ethical standards governing real estate brokerage activities, including disclosure requirements, consumer protection laws, and anti-discrimination laws. Failure to comply with these regulations could result in fines, penalties, legal liabilities, and reputational damage, adversely impacting the Company's operations and business relationships. Additionally, engaging in real estate brokerage services exposes the Company to various legal and litigation risks, including contractual disputes, misrepresentation claims, negligence claims, or breaches of fiduciary duties. Errors or omissions in property listings, valuation reports, or transaction documents could lead to legal claims, financial liabilities, and legal expenses for the Company. Moreover, disputes with clients, counterparties, or regulatory authorities may result in litigation, arbitration, or regulatory enforcement actions, requiring the company to devote resources to legal defense and resolution efforts, which could disrupt its operations and drain financial resources.

**Risks Related to our Crowdfunding Business**

***Our real estate crowdfunding platform may not operate as we anticipate.***

We engage in real estate crowdfunding, where we collect funds from our members through our crowdfunding platform to purchase real estate and distribute the proceeds from the management and sale of these properties. We expect that our crowdfunding platform will continue to attract members and that we will be able to continue to source investment properties for our platform. If our crowdfunding platform experiences technical challenges resulting in our inability to either attract members or identify and source investment properties, then we may need to implement more manpower-intensive strategies to attract members and source investments, which could lead to an increase in expenses and a corresponding decrease in the value of our common shares.

***If the security of our investors' confidential information stored on our crowdfunding platform is breached or otherwise subjected to unauthorized access, their secure information may be stolen.***

Our crowdfunding platform may store investors' bank information and other personally-identifiable sensitive data. Any accidental or willful security breach or other unauthorized access could cause investors' secure information to be stolen and used for criminal purposes, and investors would be subject to increased risk of fraud or identity theft. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, our crowdfunding platform and any third-party hosting facilities may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, many states have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause our investors to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, could result in a loss of investors, and the value of your investment in us could be adversely affected.

***Any significant disruption in service on our crowdfunding platform or in our computer or communications systems could reduce our attractiveness and result in a loss of users.***

If a catastrophic event resulted in our crowdfunding platform experiencing an outage and physical data loss, our crowdfunding platform's ability to perform its obligations would be materially and adversely affected. The satisfactory performance, reliability, and availability of our technology and our underlying hosting services infrastructure are critical to our operations, level of customer service, reputation and ability to attract new users and retain existing users. Our hosting services infrastructure is provided by a third party hosting provider (the "Hosting Provider"). We also maintain a backup system at a separate location that is owned and operated by a third party. There is no guarantee that access to our crowdfunding platform will be uninterrupted, error-free or secure. Our operations depend on the Hosting Provider's ability to protect its and our systems in its facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. If our arrangement with the Hosting Provider is terminated, or there is a lapse of service or damage to its facilities, our crowdfunding platform could experience interruptions in their service as well as delays and additional expense in arranging new facilities. Any interruptions or delays in our service, whether as a result of an error by the Hosting Provider or other third-party error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our ability to perform any services for corresponding project investments or maintain accurate accounts, and could harm our relationships with our users and our reputation. Additionally, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. Our disaster recovery plan has not been tested under actual disaster conditions, and it may not have sufficient capacity to recover all data and services in the event of an outage at a facility operated by the Hosting Provider. Any of these factors could prevent us from processing or posting payments on the corresponding investments, damage us and our brand and reputation, divert our employees' attention, and cause users to abandon our crowdfunding platform.

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***If we were to enter bankruptcy proceedings, the operation of our crowdfunding platform and the activities with respect to our operations and business would be interrupted.***

If we were to enter bankruptcy proceedings or were to cease operations, we would be required to find other ways to meet obligations regarding our operations and business. Pursuing such alternatives could harm our operations and business by resulting in delays in the disbursement of distributions or the filing of reports or requiring us to pay significant fees to another company that we engage to perform services for us.

***Our crowdfunding platform operates on an online distribution model and is, therefore, subject to internet cyber risk.***

Our online crowdfunding distribution model could be subject to cyber-attacks aiming to breach our security protocols. We take reasonable and commercial precautions to make our systems as secure as possible, including but not limited to daily back-ups, banking grade hosting solutions, divisions between systems to ensure, for example, that our banking backend cannot be reached via our online distribution network, and continuous monitoring of the systems as well as sequential system checks. However, we cannot fully exclude the possibility of cyber-attacks, third party breaches, software bugs or other forms of internet malfeasance. If any of these events occur, our reputation could be negatively impacted and our future revenues could suffer as a result.

***Increasing competition within our emerging industry could have an impact on our business prospects.***

The crowdfunding market is an emerging industry where new competitors are entering the market frequently. These competing companies may have significantly greater financial and other resources than we have and may have been developing their products and services longer than we have been developing ours. Increasing competition may have a negative impact on our profit margins.

**Risks Related to our Solar Power Generational Facilities Resale Business**

***We may not make a profit if we sell a solar power generation facility.***

We purchase solar power generation facilities from facility owners and sell them mainly to real estate sales companies and also to individual investors. The prices that we can obtain when we sell a solar power generation facility will depend on many factors that are presently unknown, including, among other things, the economy, demographic trends in the area, tax treatment of solar generation investments, and available financing to purchasers. There is a risk that we will not realize any significant profit on any specific solar power generation facility when we sell it.

***A solar power generation facility that we purchase may turn out to be subject to litigation or liens that we failed to identify prior to our purchase or become subject to litigation or liens after our purchase, which would cause us to suffer a loss.***

A solar power generation facility that we purchase may turn out to be subject to litigation or liens that we failed to identify prior to our purchase or become subject to litigation or liens after our purchase. If this occurs, we would have to expend our own funds in order to remove such liens or contest or settle such litigation, and we may not have such funds available to us at that time. Additionally, we may not be able to sell that solar power generation facility at a price higher than what we paid for it, or at all, which would cause us to suffer a loss.

***A solar power generation facility that we purchase may turn out to have structural or other issues that we failed to identify prior to our purchase or may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.***

A solar power generation facility that we purchase may turn out to have structural or other issues that we failed to identify prior to our purchase. If we do not identify such issues until after we have already purchased the solar power generation facility, we would have to expend our own funds in order to correct such structural issues, and we may not have sufficient funds available at that time. Additionally, we may not be able to resell that solar power generation facility to a purchaser. Accordingly, we may not be able to sell that solar power generation facility at a price higher than what we paid for it, or at all, which would cause us to suffer a loss. Additionally, if a solar power generation facility that we purchase become subject to damage due to factors outside of our controls, such as fires, flooding, weather related damage such as wind damage, or damage due to vandalism, we may not be able to sell such solar power generation facility at a price higher than which we paid for it, or at all, which would cause us to suffer a loss.

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***We may be incorrect in our determination of whether a certain solar power generation facility may be sold at a profit, which could cause us to be unable to resell such solar power generation facility without incurring a loss.***

We purchase solar power generation facilities from facility owners and sell them mainly to real estate sales companies and also to individual investors. When identifying a solar power generation facility that we believe may be resold we look for certain factors. One of the most important factors is the remaining term of Feed-in Tariff (FIT) contract on the property because future profitability of the facility largely depends on it. Japan's FIT system is stipulated in the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities. Under the FIT system, the government mandates energy companies to purchase renewable-generated electricity at price and contract durations set by the Ministry of Economy, Trade and Industry. We also look for the other factors such as installation year, power generation efficiency and repairment history of the facility, and rights on the land on which the facility is installed. We believe that we can purchase the solar power generation facility at a favorable price and then sell it at a profit. However, we may be incorrect in our determination of whether a certain solar power generation facility may be resold at a profit, and if we proceed with purchasing such solar power generation facility, we may be unable to resell it to a purchaser at a higher price than which we paid for it, which would cause us to incur a loss on such solar power generation facility.

***Solar power generation facilities that we purchase may become subject to damage due to factors outside of our control, which would cause us to suffer a loss.***

We purchase solar power generation facilities from facility owners and sell them mainly to real estate sales companies and also to individual investors. If such solar power generation facilities that we purchase become subject to damage due to factors outside of our controls, such as fires, flooding, weather related damage such as wind damage, or damage due to vandalism, we may not be able to sell such solar power generation facilities at a price higher than which we paid for them, or at all, which would cause us to suffer a loss.

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***A material reduction in the retail price of traditional utility generated electricity or electricity from other sources could harm our business, financial condition, results of operations and prospects.***

The Company's management believes that many customers will decide to purchase solar or renewable electricity, thus maintaining the need for the solar power generation facilities resold by the Company. This is because customers want to pay lower electricity rates than those offered by traditional electricity providers.

The customer's decision to choose solar energy may also be affected by the cost of other renewable energy sources. Decreases in the retail prices of electricity from the traditional utilities or from other renewable energy sources would harm our business as it would decrease the need for the solar power generation facilities resold by the Company. The price of electricity from traditional utilities could decrease as a result of:

● construction of a significant number of new power generation plants, including plants utilizing natural gas, nuclear, coal, renewable energy or other generation technologies;

● relief of transmission constraints that enable local centers to generate energy less expensively;

● reductions in the price of natural gas;

● utility rate adjustment and customer class cost reallocation;

● energy conservation technologies and public initiatives to reduce electricity consumption;

● development of new or lower-cost energy storage technologies that have the ability to reduce a customer's average cost of electricity by shifting load to off-peak times; or

● development of new energy generation technologies that provide less expensive energy.

A reduction in utility electricity prices would make the solar power generation facilities resold by the Company less economically attractive. If the retail price of energy available from traditional utilities were to decrease due to any of these reasons, or other reasons, we would be at a competitive disadvantage and our growth would be limited.

***Existing electric utility industry regulations, and changes to regulations, may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for the solar power generation facilities resold by the Company.***

National and local governments regulations and policies concerning the electric utility industry, and internal policies and regulations promulgated by electric utilities, heavily influence the market for electricity generation products and services. These regulations and policies often relate to electricity pricing and the interconnection of customer-owned electricity generation. In Japan and foreign jurisdictions, governments and utilities continuously modify these regulations and policies. These regulations and policies could deter customers from purchasing renewable energy, including the solar power generation facilities resold by the Company. This could result in a significant reduction in the potential demand for the solar power generation facilities resold by the Company.

In addition, any changes to government or internal utility regulations and policies that favor electric utilities could reduce our competitiveness and cause a significant reduction in demand for the solar power generation facilities resold by the Company.

***Our growth strategy depends on the widespread adoption of solar power technology.***

Although the market for renewable energy is emerging and developing rapidly, the Company's future success is uncertain. If photovoltaic technology proves unsuitable for widespread commercial deployment, or if demand for photovoltaic equipment is not fully deployed, the Company will not be able to generate sufficient revenues from its resales of solar power generation facilities to achieve profitability and maintain positive cash flow in this sector. Factors that could affect the widespread deployment of solar photovoltaic technology include, but are not limited to.

● cost-effectiveness of solar power technologies as compared with conventional and non-solar alternative energy technologies;

● performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;

● fluctuations in economic and market conditions which impact the viability of conventional and non-solar alternative energy sources, such as increases or decreases in the prices of oil and other fossil fuels;

● continued deregulation of the electric power industry and broader energy industry; and

● availability of governmental subsidies and incentives.

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***If we cannot compete successfully against other resellers of solar power generation facilities, we may not be successful in developing our operations and our business may suffer.***

The solar and energy industries are characterized by intense competition and rapid technological advances in Japan. We compete with resellers of solar power generation facilities with business models that are similar to ours. Some of these competitors are integrating vertically in order to ensure supply and to control costs. Many of our competitors also have significant brand name recognition and have extensive knowledge of our target markets. Our inability to compete in the marketplace would adversely affect our business, financial condition and operating results.

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***Developments in alternative technologies or improvements in distributed solar energy generation may materially adversely affect demand for the solar power generation facilities resold by the Company.***

Significant developments in alternative technologies, such as advances in other forms of distributed solar power generation, storage solutions such as batteries, the widespread use or adoption of fuel cells for residential or commercial properties or improvements in other forms of centralized power production may materially and adversely affect the demand for solar power generation facilities resold by the Company in ways management does not currently anticipate. Any failure by us to react to changes in existing technologies, could result in decreased revenue and a loss of market share to competitors.

**Risks Related to our Planned Real Estate and Pre-Owned Solar Power Generation Facilities Auction Platform**

***Our planned auction platform will have to comply with applicable regulations.***

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We aim to establish a real estate auction platform which handles not only condominiums but also pre-owned solar power generation facilities. The auction platform will have to adhere to stringent regulations governing real estate transactions, auctions, and renewable energy projects in Japan. Compliance with laws related to property auctions, real estate brokerage, and renewable energy regulations is essential to avoid legal penalties, fines, and reputational damage. Ensuring compliance with licensing requirements, consumer protection laws, and environmental regulations specific to solar power generation facilities is crucial for maintaining the platform's credibility and trustworthiness among auction participants.

***The success of our planned auction platform will rely on the supply and demand for condominiums and pre-owned solar power generation facilities.***

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The success of the auction platform hinges on the balance of supply and demand for condominiums and pre-owned solar power generation facilities. Understanding and managing the intricacies of supply and demand dynamics are essential for optimizing auction outcomes and maximizing revenue potential.

Several factors contribute to supply and demand dynamics and pose risks to the platform's operations:

● *Property Inventory Fluctuations*: Fluctuations in property inventory, both for condominiums and pre-owned solar power generation facilities, can significantly impact auction participation and bidding activity. Periods of oversupply may lead to decreased demand and lower auction prices, while limited inventory may create bidding wars and drive prices higher. Unpredictable changes in property inventory levels pose risks to auction outcomes and revenue generation for the platform.

● *Market Demand for Renewable Energy*: The demand for pre-owned solar power generation facilities is influenced by various factors, including government incentives, energy policies, and environmental awareness. Changes in government subsidies, shifts in energy policies, or advancements in renewable energy technologies can affect investor interest in solar assets and their willingness to participate in auctions. Anticipating and responding to shifts in market demand for renewable energy assets is crucial for maintaining auction participation and achieving favorable outcomes for solar facility auctions.

● *Condominium Market Trends*: The demand for condominiums is influenced by demographic trends, economic conditions, and lifestyle preferences. Factors such as population growth, urbanization, employment opportunities, and affordability constraints impact demand for residential properties and drive market dynamics. Changes in buyer preferences, shifts in market demographics, or economic downturns can affect the demand for condominiums and the success of condominium auctions. Analyzing market trends and adapting auction strategies accordingly is essential for maximizing buyer interest and achieving optimal auction results.

● *Regional and Seasonal Variations*: Regional variations in property markets and seasonal fluctuations in demand can affect auction participation and bidding activity. Factors such as location attractiveness, infrastructure development, and local economic conditions influence property demand and market dynamics. Additionally, seasonal factors such as weather patterns, holiday seasons, or vacation periods may impact buyer behavior and affect auction outcomes. Understanding regional market dynamics and accounting for seasonal variations in auction planning and marketing strategies are essential for optimizing auction results across different geographical areas and time periods.

● *Competitive Landscape*: The presence of competing similar auction platforms, real estate brokers, and market intermediaries can influence auction participation and pricing dynamics. Intense competition may lead to bidding wars, higher auction prices, or increased marketing efforts to attract buyers and sellers. Conversely, a saturated market or limited differentiation among auction platforms may result in reduced auction activity and lower transaction volumes. Analyzing the competitive landscape, identifying market niches, and offering value propositions are essential for maintaining a competitive edge and sustaining market leadership in the auction industry.

● *Market Sentiment and Investor Confidence*: Market sentiment and investor confidence play a crucial role in driving auction participation and pricing decisions. Positive economic indicators, favorable market conditions, and investor optimism can stimulate demand for properties and increase bidding activity. Conversely, negative economic news, geopolitical tensions, or uncertainty in financial markets may dampen investor confidence and reduce participation in auctions. Monitoring market sentiment, communicating transparently with participants, and fostering trust and credibility are essential for maintaining investor confidence and facilitating successful auction transactions.

***Our planned auction platform will be subject to legal and contractual risks.***

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The prospective auction platform must establish comprehensive legal frameworks, terms of service, and contractual agreements governing auction transactions, property sales, and renewable energy projects. Clear and enforceable contracts help mitigate risks of disputes, misinterpretations, and legal liabilities. Legal risks include potential breaches of contract, misrepresentation claims, disputes over property ownership or condition, and regulatory non-compliance. Ensuring compliance with legal requirements, conducting thorough due diligence, and obtaining legal counsel are essential for protecting the platform's interests and minimizing legal exposure.

***If the security of our user's confidential information stored on the prospective auction platform is breached or otherwise subjected to unauthorized access, their secure information may be stolen.***

The prospective auction platform may store investors' bank information and other personally-identifiable sensitive data. The prospective auction platform will be hosted in data centers that are compliant with payment card industry security standards and the website will use daily security monitoring services. However, any accidental or willful security breach or other unauthorized access could cause investors' secure information to be stolen and used for criminal purposes, and investors would be subject to increased risk of fraud or identity theft. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, the prospective auction platform and its third party hosting facilities may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, many prefectures have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause our prospective users to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, would harm our reputation, could result in a loss of investors, and the value of your investment in us could be adversely affected.

***Any significant disruption in service on the prospective auction platform or in its computer or communications systems could reduce their attractiveness and result in a loss of users.***

If a catastrophic event resulted in the prospective auction platform outage and physical data loss, the prospective auction platform's ability to perform its obligations would be materially and adversely affected. The satisfactory performance, reliability, and availability of our prospective technology and our underlying hosting services infrastructure will be critical to our operations, level of customer service, reputation and ability to attract new users and retain existing users. There is no guarantee that access to the prospective auction platform will be uninterrupted, error-free or secure. Our prospective auction platform operations will depend on our hosting provider's ability to protect its and our systems in its facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. If our arrangement with the hosting provider is terminated, or there is a lapse of service or damage to its facilities, the prospective auction platform could experience interruptions in their service as well as delays and additional expense in arranging new facilities. Any interruptions or delays in our service, whether as a result of an error by the hosting provider or other third party error, our own error, natural disasters or security breaches, whether accidental or willful, could harm our ability to perform any services for corresponding project investments or maintain accurate accounts, and could harm our relationships with our prospective users and our reputation. Additionally, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. Any of these factors could prevent us from processing or posting payments on the corresponding investments, damage us and our brand and reputation, divert our employees' attention, and cause users to abandon the prospective auction platform.

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***Inappropriate business behavior of users via our prospective auction platform could result in reputational or financial damage to our business.***

We aim to establish a real estate auction platform which handles not only condominiums but also pre-owned solar power generation facilities. By providing this auction platform, there is a possibility that inappropriate business behavior exhibited by any of the entrepreneurs who are putting either condominiums or pre-owned solar power generation facilities up for auction through our action platform could result in reputational or financial damages to us. We anticipate enforcing a thorough due diligence process for all users of our prospective platform and we anticipate requiring participating members to sign legally binding terms of use releasing us from any responsibility for impropriety or misdeed. Nevertheless, the prospective users of the auction platform might regard us as being responsible for any inappropriate behavior of the user and this could result in reputation damage to us that could impact our future revenues.

***Our prospective auction platform will operate on an online model and will, therefore, be subject to internet cyber risk.***

Our prospective online auction model could be subject to cyber-attacks aiming to breach our security protocols. We anticipate taking reasonable and commercial precautions to make our online auction system as secure as possible, including but not limited to daily back-ups, banking grade hosting solutions, divisions between systems to ensure, for example, that our banking backend cannot be reached via our online distribution network, and continuous monitoring of the systems as well as sequential system checks. However, we cannot fully exclude the possibility of cyber-attacks, third party breaches, software bugs or other forms of internet malfeasance. If any of these events occur, our reputation could be negatively impacted and our future revenues could suffer as a result.

**Risks Related to Financing**

***We might obtain lines of credit and other borrowings, which increases our risk of loss due to potential foreclosure.***

We may obtain lines of credit and long-term financing that may be secured by our assets. As of April 30, 2025, our outstanding indebtedness was US$17 million. As with any liability, there is a risk that we may be unable to repay our obligations from the cash flow of our assets. Therefore, when borrowing and securing such borrowings with our assets, we risk losing such assets in the event we are unable to repay such obligations or meet such demands.

***We have broad authority to incur debt.***

Our policies do not limit us or our subsidiary entities from incurring debt. We intend to borrow as much as possible. High debt levels would cause us to incur higher interest charges and higher debt service payments and may also be accompanied by restrictive covenants.

***We may require additional capital in the future and may not be able to secure adequate funds on terms acceptable to us.***

The expansion and development of our business may require significant capital, which we may be unable to obtain, to fund our capital expenditures and operating expenses, including working capital needs. We may fail to generate sufficient cash flow from the sales of our commercial and residential properties and land or from other financing sources in order to meet our cash requirements. Further, our capital requirements may vary materially from those currently planned if, for example, our revenues do not reach, or our costs exceed, expected levels or we have to incur unforeseen capital expenditures to maintain our competitive position. If this is the case, we may require additional financing sooner than anticipated or we may have to delay or abandon some or all of our development and expansion plans or otherwise forego market opportunities.

To a large extent, our cash flow generation ability is subject to general economic, financial, competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to enable us to fund our liquidity needs. As a result, we may need to refinance all or a portion of our indebtedness, on or before its maturity, or obtain additional equity or debt financing. We cannot assure you that we will be able to do so on commercially reasonable terms, if at all. Any inability to generate sufficient cash flow, refinance our indebtedness or incur additional indebtedness on commercially reasonable terms could adversely affect our financial condition and could cause us to be unable to service our debt and may delay or prevent the expansion of our business.

**Risks Related to our Corporate Structure**

***Investors will not receive the benefit of the regulations provided to real estate investment trusts or investment companies.***

We are not a real estate investment trust and enjoy a broader range of permissible activities. Under the Investment Company Act of 1940, an "investment company" is defined as an issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities; is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 percent of the value of such issuer's total assets (exclusive of Government securities and cash items) on an unconsolidated basis.

We intend to operate in such manner as not to be classified as an "investment company" within the meaning of the Investment Company Act of 1940 as we intend on only buying and selling real estate. The investment practices and policies of ours are not supervised or regulated by any federal or state authority. As a result, investors will be exposed to certain risks that would not be present if we were subjected to a more restrictive regulatory situation.

***If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted.***

If we are ever deemed to be an investment company under the Investment Company Act of 1940, we may be subject to certain restrictions including:

● restrictions on the nature of our investments; and

● restrictions on the issuance of securities.

In addition, we may have imposed upon us certain burdensome requirements, including:

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● registration as an investment company;

● adoption of a specific form of corporate structure; and

● reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.

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***The exemption from the Investment Company Act of 1940 may restrict our operating flexibility. Failure to maintain this exemption may adversely affect our profitability.***

We do not believe that at any time we will be deemed an "investment company" under the Investment Company Act of 1940 as we do not intend on trading or selling securities. Rather, we intend to only buy and sell real estate. However, if at any time we may be deemed an "investment company," we believe we will be afforded an exemption under Section 3(c)(5)(C) of the Investment Company Act of 1940, as amended (referred to in this Offering as the "1940 Act"). Section 3(c)(5)(C) of the 1940 Act excludes from regulation as an "investment company" any entity that is primarily engaged in the business of purchasing or otherwise acquiring "mortgages and other liens on and interests in real estate". To qualify for this exemption, we must ensure our asset composition meets certain criteria. Generally, 55% of our assets must consist of qualifying mortgages and other liens on and interests in real estate and the remaining 45% must consist of other qualifying real estate-type interests. Maintaining this exemption may adversely impact our ability to acquire or hold investments, to engage in future business activities that we believe could be profitable, or could require us to dispose of investments that we might prefer to retain. If we are required to register as an "investment company" under the 1940 Act, then the additional expenses and operational requirements associated with such registration may materially and adversely impact our financial condition and results of operations in future periods.

**Risks Related to Insurance**

***We may suffer losses that are not covered by insurance.***

Certain weather and environmental events, such as fire, lightning, bursts and explosions, wind, hail, snow, and water damage, can cause damage to real estate. Fire insurance policies can be acquired to prepare for such events. In addition, earthquake insurance can be purchased along with fire insurance. Even in the event of an unprecedented disaster such as the Great East Japan Earthquake, earthquake insurance is a highly public insurance policy operated under the Earthquake Insurance Law, which by law as of December 31, 2023 guarantees insurance payments of up to ¥12 trillion ($91 billion) per earthquake. However, not all perils are covered by insurance, as some are subject to insurance exclusions. For example, earthquake insurance does not pay out if there is no damage to the building itself, but only to gates, fences, or hedges, nor does it pay out for damage caused by war, civil war, or other similar events or riots. Damage caused by land subsidence, uplift, movement, or vibration. will also not be paid.

In the event of a significant loss, insurance coverage may be insufficient to pay the full market value or general reacquisition cost of the underlying property. Factors such as inflation, changes in building codes and ordinances, and environmental considerations may make it impossible to replace the underlying property with insurance proceeds if the underlying property is damaged or destroyed. Under these circumstances, the insurance proceeds received may be insufficient to restore the property.

**Risks Related to this Offering and Ownership of the Common Shares**

***Even if the common shares are listed on the Nasdaq, there can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq.***

Prior to this offering, there has been no public market for our common shares. As a condition to consummating this offering, our common shares offered in this prospectus must be listed on the Nasdaq. Accordingly, in connection with the filing of the registration statement of which this prospectus forms a part, we have applied to list our common shares on the Nasdaq under the symbol "GTSG." Assuming that our common shares are listed, after the consummation of this offering there can be no assurance any broker will be interested in trading our common shares. Therefore, it may be difficult to sell your common shares if you desire or need to sell them. Our underwriters are not obligated to make a market in our common shares, and even if it makes a market, it can discontinue market making at any time without notice. Neither we nor the underwriters can provide any assurance that an active and liquid trading market in our common shares will develop or, if developed, that such market will continue.

Once our common shares are approved for listing on the Nasdaq, there is no guarantee that we will be able to maintain such listing for any period of time by perpetually satisfying the continued listing requirements of the Nasdaq. Our failure to continue to meet these requirements may result in our common shares being delisted from the Nasdaq.

***The price of our common shares could be subject to rapid and substantial volatility.***

There have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings, especially among those 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 common 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 and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of the common shares.

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

Even if the common shares are approved for listing on the Nasdaq, there is no guarantee that we will be able to maintain such listing for any period of time by perpetually satisfying the Nasdaq's continued listing requirements. Our failure to continue to meet these requirements may result in the common shares being delisted from the Nasdaq.

***The price of the common shares may fluctuate substantially.***

The price for the common shares in this offering will be determined by us and representatives of the underwriters, and it may not be indicative of prices that will prevail in the open market following this offering. You may not be able to sell your common shares at or above the offering price or at any other price or at the time that you would like to sell. You should consider an investment in the common shares to be risky, and you should invest in the common shares only if you can withstand a total loss and wide fluctuations in the market value of your investment. Some factors that may cause the market price of the common shares to fluctuate, in addition to the other risks mentioned in this section of the prospectus, are:

● any failure to meet or exceed revenue and financial projections we provide to the public;

● actual or anticipated variations in our quarterly financial condition and operating results or those of other companies in our industry;

● our failure to meet or exceed the estimates and projections of the investment community;

● announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

● additions or departures of our key management personnel;

● issuances by us of debt or equity securities;

● litigation involving our Company, including shareholder litigation; investigations or audits by regulators into the operations of our Company; or proceedings initiated by our competitors, franchisees, or customers;

● changes in the market valuations of similar companies;

● common shares price and volume fluctuations attributable to inconsistent trading volume levels of the common shares;

● significant sales of the common shares by our insiders or our shareholders in the future;

● the trading volume of the common shares in the United States; and

● general economic and market conditions.

These and other market and industry factors may cause the market price and demand for the common shares to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their common shares and may otherwise negatively affect the liquidity of the common shares. Future market fluctuations may also materially adversely affect the market price of the common shares.

In the past, following periods of volatility in the market price of a company's securities, shareholders have often instituted securities class action litigation against that company. Any such class action suit or other securities litigation would divert the attention of our senior management, require us to incur significant expense and, whether or not adversely determined, could materially adversely affect our business, financial condition, results of operations and prospects.

***If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of the common shares and trading volume could decline.***

The trading market for the common shares depends in part on the research and reports that securities or industry analysts publish about us or our business. If few or no securities or industry analysts cover us, the trading price for the common shares would be negatively impacted. If one or more of the analysts who covers us downgrades the common shares, publishes incorrect or unfavorable research about our business, ceases coverage of our Company, or fails to publish reports on us regularly, demand for the common shares could decrease, which could cause the price of the common shares or trading volume to decline.

***Management will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.***

Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of the common shares. Our failure to apply these funds effectively could have a material adverse effect on our business, delay the development of our businesses and cause the price of the common shares to decline.

***As a controlled company, we are not subject to all of the corporate governance rules of the Nasdaq.***

The "controlled company" exception to the rules of the Nasdaq provides that a company of which more than 50% of the voting power is held by an individual, group or another company, a "controlled company," need not comply with certain requirements of the Nasdaq corporate governance rules. As of the date of this prospectus, Yuji Sekino, our Chief Executive Officer and Director, beneficially owned an aggregate of 15,930,000 common shares, which represents approximately 62.9% of the voting power of our outstanding common shares, directly and indirectly through RECON MARK, INC. Following this offering, Mr. Sekino will control approximately 60.5% of the voting power of our outstanding common shares if all the common shares being offered are sold (or 60.1% of our outstanding voting power if the underwriters exercise the over-allotment option in full).

If we obtain a listing on the Nasdaq, we will be a "controlled company" as defined in Rule 5615(c)(1) of the Nasdaq listing standards because more than 50% of our voting power will be held by Mr. Sekino after the offering. As a "controlled company," we are exempt by Rule 5615(c)(1) of the Nasdaq listing standards from the requirements of Rule 5605(b), (d) and (e) of the Nasdaq listing standards that would otherwise require us to have (i) a majority of the Board of Directors consist of "independent" directors under the listing standards of the Nasdaq, (ii) a nominating/corporate governance committee composed entirely of independent directors and a written nominating/corporate governance committee charter meeting the requirements of the Nasdaq, and (iii) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements of the Nasdaq. Consequently, we are exempt from independent director requirements of Rule 5605(b), (d) and (e) of the Nasdaq listing standards, except for the requirements under Rule 5605(b)(2) of the Nasdaq thereof pertaining to executive sessions of independent directors and those under Rule 5605(c)(2)(A) of the Nasdaq pertaining to the Audit Committee. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the Nasdaq. See "*Prospectus Summary—Implications of Being a Controlled Company*."

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***If the voting power of our capital stock continues to be highly concentrated, it may prevent you and other minority shareholders from influencing significant corporate decisions and may result in conflicts of interest.***

Following the completion of this Offering, management will control approximately 60.5% of the voting power of our outstanding common shares if all the common shares being offered are sold (or 60.1% of our outstanding voting power if the underwriters exercise the over-allotment option in full). As a result, management will have majority voting power over all matters requiring shareholder votes, including: the election of directors; mergers, consolidations and acquisitions; the sale of all or substantially all of our assets and other decisions affecting our capital structure; amendments to our certificate of incorporation or our bylaws; and our winding up and dissolution.

This concentration of voting power may delay, deter or prevent acts that would be favored by our other shareholders. The interests of management may not always coincide with our interests or the interests of our other shareholders. This concentration of voting power may also have the effect of delaying, preventing or deterring a change in control of us. Also, management may seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to our other shareholders or adversely affect us or our other shareholders, including investors in this offering. As a result, the market price of our common shares could decline or shareholders might not receive a premium over then-current market price of our common shares upon a change in control. In addition, this concentration of voting power may adversely affect the trading price of our common shares because investors may perceive disadvantages in owning shares in a company with significant shareholders. See "*Executive Compensation*" and "*Description of Share Capital*."

***Our common shares may be subject to the "penny stock" rules in the future. It may be more difficult to resell securities classified as "penny stock."***

Our common shares may be subject to "penny stock" rules (generally defined as non-exchange traded stock with a per-share price below $5.00) in the future. While our common shares will not be considered "penny stock" following this offering since they will be listed on the Nasdaq, if we are unable to maintain that listing and our common shares is no longer listed on the Nasdaq, unless we maintain a per-share price above $5.00, our common shares will become "penny stock." These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as "established customers" or "accredited investors." For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer's account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser's written agreement to the transaction.

Legal remedies available to an investor in "penny stocks" may include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● If a "penny stock" is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● If a "penny stock" is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.

These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common shares and may affect your ability to resell our common shares.

Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments.

For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common shares will not be classified as a "penny stock" in the future.

***If you purchase common shares in this offering, you will experience immediate dilution.***

If you purchase common shares in this offering, you will experience immediate dilution of US$5.89 per common share in the net tangible book value of your common shares after giving effect to this offering at an assumed public offering price of US$6.00 per common share because the price that you pay will be substantially greater than the net tangible book value per common share that you acquire. For a further description of the dilution that you will experience immediately after this offering, see the section of this prospectus titled "*Dilution*."

***If the benefits of any proposed acquisition do not meet the expectations of investors, shareholders or financial analysts, the market price of our common shares may decline.***

If the benefits of any proposed acquisition do not meet the expectations of investors or securities analysts, the market price of our common shares prior to the closing of the proposed acquisition may decline. The market values of our common shares at the time of the proposed acquisition may vary significantly from their prices on the date the acquisition target was identified.

In addition, broad market and industry factors may materially harm the market price of our common shares irrespective of our operating performance. The stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

***The payment of future dividends on our common shares, if any, must be approved by our common shareholders at the annual meeting of the shareholders, or our board of directors only once during a business year, and will depend on many factors on which the common shareholders may determine not to do so.***

The payment of future dividends on our common shares, if any, must be approved by our common shareholders at the annual meeting of the shareholders, or our board of directors only once during a business year, and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our common shareholders may deem relevant, including retaining future earnings, if any, for reinvestment in the development and expansion of our business. Therefore, you may not receive any dividends on your common shares for the foreseeable future, and the success of an investment in the common shares will depend upon any future appreciation in its value. Moreover, any ability to pay may be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us or our subsidiaries. Consequently, investors may need to sell all or part of their holdings of our common shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that the common shares will appreciate in value or even maintain the price at which our shareholders have purchased the common shares.

 ****

***Sales of a substantial number of our common shares in the public markets by our existing shareholders in the future could cause the price of the common shares to fall.***

Of the approximately 25,335,000 common shares issued and outstanding as of June 2, 2025, the resale of 6,480,000 of such common shares held for more than twelve months qualifies for an exemption from registration under Rule 144 of the Securities Act. Sales of a substantial number of our common shares in the public market in the future or the perception that these sales might occur, could depress the market price of the common shares and could impair our ability to raise capital through the sale of additional equity securities from time to time. We are unable to predict the effect that any such sales may have on the prevailing market price of the common shares.

***The future issuance of additional common shares in connection with our stock acquisition rights or other incentives, convertible bonds, acquisitions or otherwise may adversely affect the market of the common shares.***

We currently plan to continue granting stock acquisition rights and other incentives so that we can continue to secure talented personnel in the future. Any common shares issued in connection with the exercise of outstanding stock acquisition rights would dilute your ownership interest.

***The right of holders of common shares to participate in any future rights offerings may be limited, which may cause dilution to their holdings.***

We may, from time to time, distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make any such rights available to the holders of common shares in the United States unless we register such rights and the securities to which such rights relate under the Securities Act or an exemption from the registration requirements is available. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act.

**Risks Related to Tax**

***We may incur significant taxation from an investigation by the tax authority in Japan.***

In Japan, every two to five years, the Japanese tax authority investigates Japanese companies to check the tax filing and determine whether their tax treatment is appropriate. If the tax authority investigates our tax treatment and determines our tax treatment is not appropriate, or if we and the tax authority have different views on tax treatments, we may have to pay a burden taxation.

Future Real Estate Institute Inc., a subsidiary of the Company, underwent a tax investigation by the Japanese tax authorities for its consumption tax returns for the taxable years from 2020 through 2022. The liabilities on the consumption tax exposure were determined to be in the aggregate ¥3.23 million (approximately US$23 thousand) which consists of the additional consumption tax of ¥2.83 million (approximately US$20 thousand) and tax penalties of ¥0.40 million (approximately US$3 thousand), for the taxable year of 2020 based on the outcome of the tax investigation which concluded in October 2023. The additional consumption taxes and tax penalties were paid in December 2023.

If the tax authority determines that our tax treatment is not appropriate in the future tax investigations, we may face additional taxes and related tax penalties. These additional taxes may materially and adversely impact our financial condition and results of operations in future periods.

**Risks Related to Restrictions on Foreign Investment**

***We may face restrictions on foreign investment related to Foreign Exchange and Foreign Trade Act in Japan.***

If we develop a new business or plan a merger or acquisition, we have to consider the impact from restrictions of foreign investment under the Foreign Exchange and Foreign Trade Act, as amended (the "FEFTA"), in Japan. We intend to list our common shares on the Nasdaq. In this case, an investment in our Company may be deemed as an inward direct investment as set forth in the FEFTA. When it is applicable, certain acquisitions of shares in Japan from foreign investors may be subject to prior notification or a post-investment report. Under the FEFTA, when foreign investors acquire our common shares in a transaction that is considered as an inward direct investment or a specified acquisition, they are required to file a notification or report with the Japanese government via the Bank of Japan, subject to limited exemptions. Therefore, if we develop a new business or plan a merger or acquisition in the future, we have to consider the impact from restriction of foreign investment in Japan, and if there is any impact due to the application of this regulation, we may have to forego such new business or plans, which may materially and adversely impact our financial condition and results of operations in future periods.

**Risks Related to the Prospective Expansion to the U.S. Markets**

***In expanding our business to the U.S. and other foreign countries, our operations are regulated by the laws and regulations of those countries or regions.***

Our planned business expansion into the U.S. and other foreign countries will require us to operate in compliance with the civil, commercial, corporate laws, real estate transaction laws, tax laws, and other laws and regulations of the relevant country or region. In developing our business, we intend to investigate such laws and regulations, establish the necessary systems, and operate our business in compliance with such laws and regulations. However, in the event that a violation of such laws or regulations is discovered, we may be subject to penalties such as suspension of business, fines, or revocation of licenses and qualifications by the regulatory authorities in the relevant country or region, which may ultimately have an adverse effect on our business performance and financial position.

***As we expand our business into the United States and other foreign countries, our operating results and financial condition may be affected by economic and political conditions in those countries or regions.***

 ****

When we plan to expand our business into the U.S. and other foreign countries, we intend to do so after conducting sufficient research and analysis of the economic and political conditions in those countries or regions. However, if unforeseen circumstances arise that cannot be predicted by our research and analysis, they may adversely affect our business performance and financial position.

***In expanding our business to the U.S. and other foreign countries, we may not be able to secure the human resources and business alliances necessary to operate our business.***

In the course of our planned business expansion into the U.S. and other foreign countries, we may recruit and hire personnel necessary for our business operations. In addition, we plan to seek business alliances and other arrangements necessary for our business operations. However, we may not be able to secure such personnel or business alliances, which may lead to a total or partial suspension or stagnation of our business operations.

***In expanding our business to the U.S. and other foreign countries, we must adapt to the business customs or culture of the country or region.***

Our planned expansion into the U.S. and other foreign countries will require us to adapt to the business customs or culture of the country or region. We intend to address these barriers through collaboration and cooperation with companies and personnel with local business experience. However, failure to adapt to such business practices and cultures could result in reputational and reputational damage, which could adversely affect our business results and financial condition.

 ****

***In conducting business in the U.S. and other foreign countries, we may encounter natural disasters due to the geography of those countries or regions.***

In the course of our planned business expansion into the U.S. and other foreign countries, there is a possibility that our products and other assets may be damaged by natural disasters in those countries or regions. We plan to take disaster risk into consideration when selecting products and purchasing insurance to protect against natural disaster damage. However, if a disaster occurs unexpectedly or we are unable to obtain insurance under sufficient conditions, the value of our assets may be damaged, and our business performance and financial position may be adversely affected as a result.

**USE OF PROCEEDS**

We estimate that we will receive approximately US$4.85 million in net proceeds from the assumed sale of 1,000,000 common shares offered by us in this offering (or approximately US$5.7 million if the underwriters exercise in full their option to purchase up to 150,000 additional common shares from us), based on an assumed public offering price of US$6.00 per common share (which is the midpoint of the price range set forth on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and offering expenses of approximately US$1.15 million payable by us if the underwriters do not exercise the over-allotment option (or approximately US$1.22 million payable by us if the underwriters exercise the over-allotment option in full).

We intend to use the net proceeds from this offering as follows:

● approximately 60% for funds for mergers and acquisitions of other businesses;

● approximately 10% for development of the auction platform for condominiums and pre-owned solar power generation facilities; and

● approximately 30% for general corporate purposes, such as funds to purchase condominiums, and working capital.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, has no agreements or commitments for particular uses of the net proceeds from this offering, and our management will have discretion in allocating the net proceeds. The amounts and timing of our actual expenditures will depend upon numerous factors, including the progress of our expansion and development efforts, whether or not we enter into strategic transactions, our general operating costs and expenditures, and the changing needs of our businesses.

We are currently considering mergers and acquisitions of a property management company in the U.S., a real estate purchasing company and a building management company in Japan. However, we have not contacted these acquisition targets as of yet.

Each US$1.00 increase (decrease) in the assumed initial public offering price of US$6.00 per share (which is the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering by approximately US$0.93 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions payable by us. We may also increase or decrease the number of shares we are selling in this offering. An increase (decrease) of 100,000 in the number of shares offered by us in this offering, as set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately US$0.56 million, assuming the assumed initial public offering price of US$6.00 per share (which is the midpoint of the price range set forth on the cover page of this prospectus) remains the same, and after deducting the underwriting discounts and commissions payable by us. Any increase or decrease in the estimated proceeds from the offering is not expected to have a material effect on our operations given the discretion we will have in the application and use thereof.

We believe that our funds and the net proceeds from this offering will be sufficient to continue our businesses and operations as currently conducted through 2026; however, changing circumstances may cause us to consume capital significantly faster than we currently anticipate.

To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or debt instruments.

**DIVIDEND POLICY**

We have not paid annual dividends to shareholders in the past. The payment of future dividends on our common shares, if any, must be approved by our common shareholders at the annual meeting of the shareholders and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our common shareholders may deem relevant, including retaining future earnings, if any, for reinvestment in the development and expansion of our business. The agreements into which we may enter in the future, including indebtedness, may impose limitations on our ability to pay dividends or make other distributions on our capital stock. See "*Risk Factors—Risks Related to this Offering and Ownership of the Common Shares—The payment of future dividends on our common shares, if any, must be approved by our common shareholders at the annual meeting of the shareholders, will depend on many factors, and the common shareholders may not approve*."

**CAPITALIZATION**

The following table sets forth our cash and cash equivalents, debt and capitalization as of December 31, 2024:

● on an actual basis; and

● on a pro forma basis to give effect to the above and the assumed issuance of 1,000,000 common shares in this offering at an assumed initial public offering price of US$6.00 per share, after deducting underwriting discounts and commissions of US$450,000 and estimated offering expenses of US$700,000 payable by us, as set forth in this prospectus.

You should read the following table in conjunction with the sections entitled "*Use of Proceeds*", "*Selected Consolidated Financial Information and Operating Data*", "*Management's Discussion and Analysis of Financial Condition and Results of Operations*", and our financial statements and the related notes thereto included elsewhere in this prospectus.

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| | | |
|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Actual** <br> **(Audited)** | **Pro Forma (1)** |
| Cash and cash equivalents | $4855012 | $9705012 |
| &nbsp;&nbsp;&nbsp;Short-term loans and bond payables | 6570517 | 6570517 |
| &nbsp;&nbsp;&nbsp;Bank and other borrowings, current | 3040184 | 3040184 |
| &nbsp;&nbsp;&nbsp;Bank and other borrowings, non-current | 4730616 | 4730616 |
| Total debts | 14341317 | 14341317 |
| Shareholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Common shares, 67,500,000 shares authorized, 25,335,000 shares issued and outstanding, with no stated value, on an actual basis; and 67,500,000 shares authorized, 26,335,000 shares issued and outstanding, with no stated value, on a pro forma basis | 364664 | 5214664 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 41822 | 41822 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 1124337 | 1124337 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (371932) | (371932) |
| Total shareholders' equity | 1158891 | 6008891 |
| Total capitalization | $15500208 | $20350208 |

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(1) The pro forma information above is illustrative only and will be further
adjusted based on the actual public offering price and other terms of this offering determined at pricing. The number of common shares
to be outstanding immediately after this offering is based on the assumed issuance of 1,000,000 common shares in this offering and does
not include up to 150,000 common shares issuable upon the exercise in full by the underwriters of their option to purchase additional
common shares from us based upon an assumed offer and sale of 1,000,000 common shares at an assumed public offering price of US$6.00 per
share (which is the midpoint of the price range set forth on the cover page of this prospectus).

**DILUTION**

Purchasers of common shares in this offering will experience immediate and substantial dilution to the extent of the difference between the initial public offering price per common share paid by the purchasers of the common shares in this offering and the pro forma, as adjusted net tangible book value per common share immediately after, and giving effect to, this offering. Dilution results from the fact that the initial public offering price per common share in this offering is substantially in excess of the net tangible book value per common share attributable to the issued and outstanding common shares held by our existing shareholders.

Our historical net tangible book value per common share is determined by dividing our net tangible book value, which is the book value of our total assets less the book value of our goodwill, intangible assets, deferred initial public offering costs and total liabilities, by the number of outstanding common shares. As of December 31, 2024, the historical net tangible book value of our common shares was US$(2,084,789), or US$(0.08) per common share.

After giving effect to the (i) assumed sale by us of 1,000,000 common shares in this offering at an assumed initial public offering price of US$6.00 per common share (which is the midpoint of the price range set forth on the cover page of this prospectus), and (ii) receipt by us of the net proceeds of this offering, after deduction of the underwriting discounts and commissions and the estimated offering expenses payable by us, our pro forma net tangible book value as of December 31, 2024 have been US$2,765,211 thousand, or US$0.11 per common share. The pro forma net tangible book value per common share immediately after the offering is calculated by dividing the pro forma net tangible book value of US$2,765,211 thousand by 26,335,000 common shares (which is the pro forma common shares outstanding as of December 31, 2024). The difference between the initial public offering price per common share and the pro forma net tangible book value per common share represents an immediate increase in net tangible book value of US$0.19 per common share to our existing shareholders, and an immediate dilution in net tangible book value of US$5.89 per common share to purchasers of common shares in this offering.

The following table illustrates this dilution to purchasers in this offering on a per common share basis (in US dollars):

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| | | |
|:---|:---|:---|
| Assumed initial public offering price per common share |  | $6.00 |
| Net tangible book value per common share before this offering (as of December 31, 2024) | $(0.08) |  |
| Increase in net tangible book value per common share attributable to purchasers in this offering | $0.19 |  |
| Pro forma net tangible book value per common share immediately after this offering |  | $0.11 |
| Dilution in pro forma net tangible book value per common share to purchasers in this offering |  | $5.89 |

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The following table summarizes, as of December 31, 2024, on the pro forma basis described above, the differences between the number of common shares purchased from us, the total consideration paid to us in cash, and the weighted average price per common share that our existing shareholders and the new purchasers in this offering paid. The total consideration below is based on an assumed initial public offering price of US$6.00 per common share (which is the midpoint of the price range set forth on the cover page of this prospectus), before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Common shares** | **Common shares** | **Total Consideration** | **Total Consideration** | **Total Consideration** |
|  | **Number** | **Percent** | **Amount** | **Percent** | **Weighted**<br> **Average**<br> **Price**<br> **Per Share** |
| Existing shareholders | 25335000 | 96.2% | $364664 | 5.7% | $0.014 |
| New investors | 1000000 | 3.8% | $6000000 | 94.3% | $6.000 |
| Total | 26335000 | 100.0% | $6364664 | 100.0% | $0.242 |

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Each US$1.00 increase (decrease) in the assumed initial public offering price of US$6.00 per common share (which is the midpoint of the price range set forth on the cover page of this prospectus) would increase (decrease) the total consideration paid by purchasers in this offering and the weighted average price per share paid by all shareholders by US$1.0 million and US$0.04 per share, respectively, and in the case of an increase, would increase the percentage of total consideration paid by purchasers in this offering by 0.75%, and in the case of a decrease, would decrease the percentage of total consideration paid by purchasers in this offering by 1.10%, assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions payable by us.

Similarly, an increase (decrease) of 100,000 in the number of common shares offered by us in this offering, as set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by purchasers in this offering and the weighted average price per share paid by all shareholders by US$0.6 million and US$0.02 per share, respectively, and in the case of an increase, would increase the percentage of total consideration paid by purchasers in this offering by 0.46%, and in the case of a decrease, would decrease the percentage of total consideration paid by purchasers in this offering by 0.63%, assuming the assumed initial public offering price of US$6.00 per common share (which is the midpoint of the price range set forth on the cover page of this prospectus) remains the same, and after deducting the underwriting discounts and commissions payable by us.

The table and information above assume no exercise by the underwriters of their option to purchase additional common shares in this offering. If the underwriters exercise in full their option to purchase up to 150,000 additional shares from us based upon an assumed offer and sale of 1,000,000 common shares at an offering price of US$6.00 per shares, the pro forma net tangible book value per share immediately after this offering would be US$0.14 per share, and the dilution in pro forma net tangible book value per share to purchasers in this offering would be US$5.86 per share, in each case assuming an assumed initial public offering price of US$6.00 per share (which is the midpoint of the price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

Based upon an assumed offer and sale of 1,000,000 common shares at an offering price of US$6.00 per common share (which is the midpoint of the price range set forth on the cover page of this prospectus), if the underwriters exercise in full their option to purchase up to 150,000 additional common shares from us, the number of common shares held by purchasers in this offering would be increased to 1,150,000 common shares, or 4.3% of the total number of common shares outstanding immediately after this offering, and the percentage of common shares held by our existing shareholders would be reduced to 95.7% of the total number of common shares outstanding immediately after this offering.

The foregoing tables and calculations are based on the number of common shares that will be outstanding immediately following the offering, and exclude up to 150,000 common shares issuable upon the exercise in full by the underwriters of their option to purchase additional common shares from us based upon an assumed public offering price of US$6.00 per share (which is the midpoint of the price range set forth on the cover page of this prospectus).

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF**

**FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*The following discussion and analysis summarize the significant factors affecting our operating results, financial condition, liquidity, and cash flows for the periods presented below. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this prospectus. The forward-looking statements contained herein are based on management's judgment, assumptions made by management and information currently available to it. Actual results could differ materially from those discussed or implied in the forward-looking statements as a result of various factors, including those described below and elsewhere in this prospectus, particularly in the sections entitled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements."*

**<u>Business Overview</u>**

We are a Japanese real estate company providing a one-stop service that includes in-house procurement, sales, management, and operational support for condominiums and solar power generation facilities. We provide various services related to real estate under the two domains, "GATES AUCTION" and "GATES FUNDING".

Currently we are engaged in the following businesses:

*GATES AUCTION*

● We purchase condominiums and solar power generation facilities from property owners and sell them primarily to real estate sales companies and individual investors;

● We renovate and resell real estate purchased through voluntary sales and auctions to real estate sales companies and individual investors;

● We provide real estate management services such as collection of rent fees, repairs, and restoration of properties to their original condition for condominiums;

● We provide consulting services for the sale of condominiums;

● We provide real estate brokerage services; and

● We provide real estate leasing services.

*GATES FUNDING*

 

● We operate in the financial services sector, offering a real estate crowdfunding platform, where we raise funds from our members to purchase real estate and distribute the proceeds from their management and sale. The members only acquire the right to claim dividends and the right to claim refunds of their investments upon the completion of the real estate project. Such dividends and refunds are based on the net proceeds from rental income and sale of properties. More specifically, the members do not acquire ownership or securities representing ownership in a property or a fractional ownership of a property as the investments of the members are made through an anonymous partnership (as described under "*Description of Business*" on page 63 of this prospectus). This crowdfunding business with anonymous partnership agreements (which are not considered to be securities in Japan) is only being conducted in Japan. Additionally, we provide lending services.

Since our inception, we have compiled and analyzed a growing database of real estate ownership information (approximately 700,000 properties). This has enabled us to develop a proprietary algorithm that assesses the likelihood of a specific owner needing to sell their property, evaluating factors such as the property purchased, the purchase date, other properties owned, and the estimated occupation of the owner. We currently use this algorithm in the business of purchase and sales of real estate. We continuously update and maintain the database to ensure we leverage the most up-to-date and relevant information for our real estate transactions.

***Our Mission "Real Estate Around the World in Your Hand"***

In Japan, the phrase "120-year life period" describes the aging society where people will live to 120 years old due to the progress of medical technologies. In such a society, we believe that people will have to rely solely on pension income for approximately half of their lives after retirement and we believe that individual asset building is necessary to establish a more secure life after retirement. In Japan, while the market for asset building in terms of dollars is growing, we believe only a few companies offer small-lots of real estate overseas for investment, and that market has not yet been established. We aim to provide overseas real estate in small lots through our crowdfunding service, and we believe that this will make it easier for anyone to start asset building through overseas real estate. We also aim to provide opportunities for overseas investors to invest in Japanese real estate more easily by establishing an auction platform in the future.

Our mission is to create a world where everyone can freely and fairly build assets through real estate, under our corporate message of "Real Estate Around the World in Your Hand". We aim to lower the threshold for purchasing real estate and create a transparent and fair market in which everyone can participate. Through our technology and business model, we believe we provide our clients with a viable form of asset building towards retirement.

To realize our mission, we aim to develop a platform that enables real estate investment beyond national borders, although we have not yet developed a real estate auction platform and that our crowdfunding platform has only been in operations in Japan and was recently launched in 2021.

For the years ended December 31, 2024 and 2023, the Company reported revenues of US$144,546,158 and US$108,703,609, respectively, net income of US$237,415 and net loss of US$35,622, respectively, and had net cash used in operating activities of US$422,476 and US$1,992,181, respectively. As stated in the audited consolidated financial statements, as of December 31, 2024 and 2023, the Company had retained earnings of US$1,124,337 and US$905,755, respectively.

**Organizational Structure**

The following diagram reflects our current organizational structure as of the date of this prospectus:

![](formdrs_003.jpg)

GATES GROUP Inc. is a Japanese corporation formed in Japan on May 1, 2018. GATES GROUP Inc. has three wholly owned subsidiaries, GATES Inc., a Japanese corporation, established on August 1, 2011, Gates enterprise Inc., a Japanese corporation, established on January 6, 2020, and GATES USA Inc, a U.S. corporation, established on August 5, 2024.

GATES Inc. has three wholly owned subsidiaries, including Chuo Kanzai Inc., a Japanese corporation, established on May 9, 2006, Future Real Estate Institute Inc., a Japanese corporation, established on December 25, 2019, and G.I.F.T Co., Ltd., a Japanese corporation, established on July 24, 2012.

GATES Inc. engages in sales and brokerage of used condominiums for investment and used solar power generation facilities as well as real estate crowdfunding.

GATES enterprise Inc. engages in the real estate leasing, management and brokerage business.

Chuo Kanzai Inc. engages in sales and brokerage of real estate, primarily for voluntary sales.

Future Real Estate Institute Inc. engages in sales and brokerage of real estate, primarily for voluntary sales.

G.I.F.T Co., Ltd. engages in the financial transaction business and the lending business.

GATES USA Inc engages in procurement and sales of lands and condominiums in the U.S.

**Our Strategy**

We are considering the following strategies aimed at expanding our business and increasing our profitability.

***U.S. Expansion Initiative***

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We plan to expand our business to the U.S. real estate market. Using the funds raised through our crowdfunding platform, we plan to purchase real estate properties in the U.S., and provide investors in Japan with the sales and management services of those properties. For more details, please see *"Planned Business Activities – Planned U.S. Expansion Initiative"*.

 **

***Developing Real Estate Auction Platform "SELLI"***

 **

Utilizing a portion of the proceeds from this offering, we aim to establish and launch a real estate auction platform named "SELLI," designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide. Real estate transactions often require specialized knowledge due to the complexities involved, including verifying property rights, ownership, condition, and estimating future profitability. These factors, coupled with the involvement of multiple real estate agents, often obscure property prices and inflate costs. SELLI aims to address these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices, eliminating the need for intermediary real estate agents. Our specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience. For more details, see *"Planned Business Activities – Planned Auction Platform".*

***Offering Real Estate Literacy Sessions***

We plan to expand our study sessions on real estate literacy for the employees of public companies in Japan, which began in 2023 and has been held every month. The study sessions are designed to improve literacy in various aspects of real estate, including, but not limited to, investments, rentals, taxes and other areas. We consider these study sessions to be advertising for our business. We seek to offer the study sessions, which are currently offered to one company listed on the stock exchange in Japan, to more than 100 public companies in Japan and the U.S. We plan to accomplish this by approaching and offering our study sessions to the public companies in Japan which are our existing clients or vendors, the U.S. public companies, and institutional investors. The number of participants (employees of the current participating company) has been gradually increasing while we have improved and enriched the contents of the session. We also plan to promote and expand our study sessions by advertising our experience of holding such sessions if the number of participating companies increase. Although we do not currently have any specific plans on how to expand our literacy sessions, we will seek further ways to continue and expand the sessions for the purpose of achieving this goal. We have not earned from, or paid consideration to, the public companies for their employees attending the sessions.

 ****

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***Increasing Sales to Individual Investors***

Currently, about 30% of the properties we purchase are sold to individual investors and about 70% are wholesaled to real estate sales companies. We aim to increase the ratio of sales to individual investors. By increasing direct sales to individual investors, we will distribute more properties with reasonable prices directly to the market and more market participants will be aware that those prices are the actual market prices without any intermediate costs which are generally incurred due to the involvement of multiple real estate companies in the process from purchase to delivery. If such awareness spreads among the market, we believe we will acquire a larger market share taking advantages of our ability to directly purchase and deliver the properties. We plan to hire more sales staff to enhance the sale of condominiums which we purchase directly from property owners. Once the development of our auction platform is completed and receives awareness in the market, we also plan to engage those individual investors in it so that they can purchase real estate in the same environment as real estate companies.

***Increasing Solar Power Market Share***

We aim to achieve a substantial share of the market of the pre-owned solar power generation facilities by analyzing the facility owners and using algorithms to create an environment that allows purchasing of such facilities in the same way as condominiums. Considering the growing needs for eco-friendly energy, achieving a larger share in the solar power market is the key factor to our further growth.

**Our Business**

***Current Business Operations***

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Our current business operations are categorized into two domains, "GATES AUCTION" and "GATES FUNDING" as below:

*GATES AUCTION*

● *Purchase and Sales of Real Estate.* We specialize in purchasing condominiums from property owners and selling them primarily to real estate sales companies and individual investors. When selling to real estate companies, we select the buyer who offers the highest price for the properties creating a process similar to an auction. In a typical process of real estate sales in Japan, multiple real estate companies are involved which seek their profits from the process, which lead to higher selling prices to the end customers. The typical real estate sales process in Japan is as follows: (i) first, purchase of a property by a company specializing exclusively in purchasing properties; (ii) second, the property purchased is sold to a real estate wholesale company; (iii) third, the property is wholesaled to a real estate sales company and then the information of the property becomes open to the public through a platform such as Real Estate Information System (REINS); and (iv) fourth, the property is eventually sold to an end customer through a real estate brokerage company. In each stage of (ii) to (iv), these companies take their profits when selling a property and it makes the final price higher when the property is delivered to the end customer. In our business model, we purchase properties directly from property owners and directly sell them to our customers without the involvement of such multiple real estate companies, which we believe results in more reasonable and fair prices to the end customers while still profitable to us. What makes us different is our strong relationships with multiple financial institutions. Real estate companies specializing in purchasing properties generally cannot sell their properties directly to individual buyers as they cannot introduce loans for property purchase to the buyers. Typically, companies specializing in purchasing properties face challenges working with financial institutions because they facilitate sellers in making lump-sum loan repayments. However, through persistent negotiations, we secure loan commitments from these institutions, streamlining the entire process while enabling transactions without involving multiple intermediaries that seek their own profits before a property being sold to an individual buyer. We believe we can effectively compete with our competitors and satisfy customers by selling the condominiums at fair and reasonable prices due to eliminating these intermediaries and hope to create awareness in the market that the prices we offer are the fairest, which we believe will eventually strengthen our ability to maintain existing customers and attract new customers.

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Our property acquisition strategy focuses on carefully selecting newer condominiums located in the central area of Tokyo, and within a 10-minute walk from train stations. From approximately 600,000 unlisted properties and 300 properties for sale each month, we curate a selection that we offer at direct sales prices, eliminating the involvement of multiple real estate companies. Our property acquisition methods include reaching out to property owners via telephone, door-to-door visits, direct mail, landing page response, etc. Once acquired, these properties are either sold directly to individual investors ("One-Room DIRECT") or wholesaled to real estate sales companies. Our basic policy is to settle the purchase and sales in a short period of time, normally within one week, but we hold the ownership in a property when we expect the future increase of the property value. With our extensive network, our strength lies in our ability to purchase properties directly from property owners and directly sell them to our customers without the involvement of multiple real estate companies which we believe results in more reasonable and fair prices to the end customers while still profitable to us due to our direct purchase and sales. We believe we can effectively compete with our competitors and satisfy customers by selling the condominiums at fair and reasonable prices due to eliminating these intermediaries and hope to create awareness in the market that the prices we offer are the most fair, which we believe will eventually strengthen our ability to maintain existing customers and attract new customers. In addition to direct purchase from property owners, we renovate and resell properties acquired through voluntary sales to individual investors and real estate sales companies. Under this service, we consult with home-owners who are having trouble paying their mortgages and other real estate loans, and work closely with financial institutions to maximize the value of these properties and prevent them from being auctioned off due to bankruptcy. Revenue from the sale of condominiums is categorized under the "revenue from sales of real estate properties" revenue stream. Furthermore, we provide consulting services for the sale of condominiums across Japan, including Tokyo, Kansai, Tokai, and Kyushu. Our consulting services encompass a wide range of areas, including appraisal, refinancing, recombination, inheritance, income improvement, management, and the sale of condominiums. Income generated from these consulting services is included in the "revenue from real estate management services" revenue stream.

● *Property Management Service.* We provide real estate management services for condominiums, including rent collection, property repairs, and restoration to original conditions. Income generated from property management services is classified under the "revenue from real estate management services" revenue stream.

● *Purchase and Sale of Solar Power Generation Facilities.* We purchase and sell solar power generation facilities primarily to real estate sales companies and individual investors. We identify potential acquisitions targets through: (1) introduction to companies which sell or maintain the solar power generation facilities; (2) contacting companies disclosed by the Japanese government; and (3) approaching past and existing clients from our condominium business, as the markets for condominiums and solar power generation facilities are closely related in nature and many of our clients in the condominium sector own solar power generation facilities. Revenue from the sale of these solar power generation facilities is recorded under the "revenue from sales of solar power generation facilities" revenue stream.

● *Real Estate Brokerage Services.* We also provide real estate brokerage services. Income from providing such services is included in the "revenue from real estate management services" revenue stream.

● *Real Estate Leasing Services.* We provide leasing services to condominiums and detached houses. Income from providing such services is included in the "revenue from rental services" revenue stream.

*GATES FUNDING*

● *Financial Services.* As a part of our financial services, we offer real estate crowdfunding, where we raise funds from our members via our crowdfunding platform to purchase real estate and distribute the proceeds from the management and sale of these properties. Our crowdfunding platform allows individuals to invest as little as approximately US$63 across a diverse portfolio of real estate investment opportunities offered on the platform. On average, we register 13.3 customers per day. To ensure sustainable, safe, and secure asset management for our clients, we meticulously select and screen all properties featured on the platform. The entire process, from property management to sale, can be entrusted to us as a professional real estate firm. Revenue generated from the sales and lease of real estate properties through crowdfunding projects is recorded under in the "revenue from sales of real estate properties" and the "revenue from rental services". We also provide lending services, and the revenue from these services is included in "other revenue".

***Planned Business Activities***

Our planned business activities include:

● *Planned U.S. Expansion Initiative.* We plan to expand our business to the U.S. real estate market. Using the funds raised through our crowdfunding platform, we plan to acquire real estate properties in the U.S., and provide investors in Japan with the sales and management services of those properties. We are considering the state of Texas as the first location to initiate this plan. We plan to conduct the procurement and sales of real estate properties including lands, detached houses and condominiums through GATES USA Inc, a wholly owned subsidiary of the Company incorporated in the state of Texas in August 2024. We decided to initiate this plan in Texas based on the following factors: (i) the stable and growing residential population and the number of housing units in Texas, (ii) low property prices compared to ones in other major areas in the U.S. such as California and New York, and estimated increase in the property prices in Texas, (iii) the similarity in basic system and flow of real estate transactions between Texas and Japan, and (iv) some of major Japanese real estate companies entered the market of Texas. In addition to analyzing these market data, our CEO directly inspected properties in Texas and strongly felt the potential of Texas. Within the state of Texas, we are considering starting in the north side of Texas, specifically an area from Dallas to Sherman, where we will acquire properties, considering the factors such as regional convenience, demographics, potential economic growth, safety, and average income of residents. In order to research the capital flows in real estate transactions and analyze the risks associated with the acquisition, sales, and management of properties in the U.S., the Company acquired, leased and sold a property in the state of Georgia during the period June 2022 through July 2023. We estimate that the investors in Japan have strong interest in investment in the U.S. real estate properties, according to the survey result conducted during our study session, showing that more than 95% of the participants expressed their interest in investing in the U.S. real estate properties. Furthermore, the aggregate investment amount in the U.S. stock market from Japan exceeded 5 trillion yen, and securitized real estate market in Japan has grown to 59.8 trillion yen in 2023. We also anticipate that interest in the U.S. real estate market will remain in the medium to long term due to expected fluctuations of interest rate and exchange rate. Considering these facts, we believe that the expansion into the U.S. real estate market will significantly contribute to our growth. Although we have not formulated strategies including specific target locations or expansion methods, we are considering further expansion to the East and West Coasts of the U.S. and other regions following the expansion to Texas.

● *Planned Auction Platform.* Utilizing a portion of the proceeds from this offering, we aim to establish and launch a real estate auction platform named "SELLI," designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide. We differentiate our platform from others by offering secure transactions supported by our extensive experience as a real estate company specializing in property purchases. Real estate transactions often require specialized knowledge due to the complexities involved, including verifying property rights, ownership, condition, and estimating future profitability. These factors, coupled with the involvement of multiple real estate agents, often obscure property prices and inflate costs. SELLI aims to address these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices, eliminating the need for intermediary real estate agents. Our specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience. Furthermore, we are considering adding a feature that enables the users to invest in fractional interests in real estate properties on our platform with a little amount of fund like "Robinhood", a popular financial services platform. We set the following phases to develop and expand our prospective auction platform:

○ Phase 1 – We plan to expand our auction platform's investment opportunities into the U.S. real estate market in addition to Japan. The prices of real estate in the U.S. have shown stable increase as compared to the prices of real estate in Japan which have shown drastic fluctuations. To cater to a wider audience, we plan to offer these U.S. investment opportunities through both crowdfunding and auctions. We aim to form a business alliance with a U.S. real estate company to further increase properties on our respective platforms. We also plan to engage U.S. investors on our auction platform and crowdfunding platform where we provide them with investment opportunities to acquire entire or fractional interests in the properties in Japan and the U.S. For the sake of clarity, such investment opportunities to U.S. investors exclude rights to claim dividends and the right to claim refunds upon termination of the project under anonymous partnership agreements.

○ Phase 2 - We plan to expand the auction platform not only to real estate in the U.S., but also real estate in other regions and countries in the world. Although we do not have any specific plans on the target areas to which we will expand at this point, we aim to increase the area where we provide investment opportunities in real estate by considering factors such as economic and market trends in such areas at the time.

○ Phase 3 – We ultimately aim to offer opportunities to acquire world-wide real estate on our auction platform to investors worldwide. We believe that SELLI will realize the true transparency of property prices through the real estate auction where worldwide investors participate.

● *Planned Social Lending Services.* Our subsidiary, G.I.F.T Co., Ltd., plans to offer social lending services. In this model, we will collect funds from investors to extend loans to businesses, with the generated profits from loan interest being distributed back to the investors. As of December 31, 2023, we had handled one project and made a loan to Chuo <u>Kanzai</u> Inc., our subsidiary. The revenue from that transaction is eliminated in our consolidated financial statements for the year ended December 31, 2023 as an intercompany transaction. We have not yet provided the social lending services to any third-party customers and do not have any specific planned projects at this point. However, we are planning to develop these services for general investors and in the process of license application to expand the current permitted business scope.

● *Developments Related to Condominiums.* We plan to develop a call center to accelerate purchase of condominiums by promoting more communications with owners. We plan to hire more staff to enhance the sale of condominiums which we purchase directly to individual investors. We plan to develop a platform which will publicize prices of condominiums to the public (which would otherwise not be public information), cooperating with financial institutions.

● *Developments Related to Solar Power Generation Facilities.* By compiling and analyzing a database of approximately 700,000 real estate owner and property information since our inception, we have developed our proprietary algorithm for condominiums that assesses the likelihood of a specific owner's need to sell property by analyzing factors such as the property purchased, purchase date, other properties owned, and estimated occupation of the owner. We plan to apply this algorithm to our solar power generation facilities to further enhance our capabilities to identify and purchase properties, and provide additional investment opportunities to real estate companies and individual investors.

● *Developments Related to Crowdfunding.* We are planning to develop a new system to enable timely collections of funds from a larger number of users. Currently, our fund collection process involves the following steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. We
 select an investment property, such as an condominium

2. We
 recruit investors for the selected product on our crowdfunding platform, where they can apply
 for the investment.

3. If
 the total investment applications exceed the solicited amount, we conduct a draw to select
 the investors.

4. We
purchase the investment property.

5. We
collect the funds from selected investors.

6. We
distribute the income or capital gains generated from the product.

Currently, we purchase the property before receiving funds from investors because the funds are transferred to our bank account via a third-party funds transfer system, which takes approximately one month to process. By developing a new funds transfer system, we aim to expedite the receipt of funds, thereby improving our cash management.

● *Alliance in Our Real Estate Crowdfunding Business.* We are currently proceeding with a plan for the alliance in our real estate crowdfunding business with a Japanese real estate company. The company operates a real estate crowdfunding platform which has achieved the largest aggregated investment amount in Japan. We expect the increase of approximately 200 thousand in our real estate crowdfunding members if the alliance realizes. We have not yet entered into any agreement for the alliance with them and are currently in the process of reconciling their crowdfunding terms and conditions with ours. After the adjustment is completed, we plan to apply to the Tokyo Metropolitan Government for the terms and conditions. We plan to start offering crowd funding projects as soon as obtaining the approval from the government, which is expected to take several months.

● *Developments Related to Rebuilding Condominiums.* In Japan, aging condominiums cannot be rebuilt due to opposition from some residents, which has become a widespread social concern in the country. To address this, we plan to offer condominium rebuilding consulting services in collaboration with condominium management associations.

***Service Agreement***

On October 2, 2023 ("Effective Date"), the Company entered into a Service Agreement (the "Consulting Agreement") with HeartCore Enterprises, Inc. ("HeartCore"). Pursuant to the terms of the Consulting Agreement, HeartCore agreed to provide the Company certain services, including the following (collectively, the "Services"):

&nbsp;&nbsp;&nbsp;&nbsp;i. Suggesting
 to hire human resources;

ii. Suggesting
 to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles;

iii. Suggesting
 to translate accounting documents (i.e., financial statement, general ledger, journal entry);

iv. Suggesting
 to develop growth strategy for the Company after public listing;

v. Suggesting
 to consider the listing structure for the Company;

vi. Assistance
 with introductions to law firms, underwriters and auditing firms for the Company to make their selections, at their
 discretion;

&nbsp;&nbsp;&nbsp;&nbsp;vii. Assisting
 in the preparation of documentation for internal controls required for an initial public offering by the Company;

viii. Translation
 of requested documents into English;

ix. Conversion
 of accounting data from Japanese standards to U.S. GAAP;

x. Provide
 the Company with support services related to the Company's NASDAQ listing;

xi. Attend
 and, if requested by the Company lead meetings with the Company's management and employees;

xii. Suggesting
 the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings;

xiii. Support
 for investor relations activities;

xiv. Preparing
 an investor presentation/deck and executive summary of the Company's business and operations; and

xv. Support
 for investor relations activities.

In providing the Services, HeartCore will not render legal advice or perform accounting services, and will not act as an investment advisor or broker/dealer. Pursuant to the terms of the Consulting Agreement, the parties agreed that HeartCore will not provide the following services, among others: negotiation of the sale of the Company's securities; participation in discussions between the Company and potential investors; assisting in structuring any transactions involving the sale of the Company's securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in the Company.

Pursuant to the terms of the Consulting Agreement, the Company agreed to compensate HeartCore as follows in return for the provision of Services during the Term (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;(a) US$600,000
 to be paid as follows: (i) US$60,000 on the Effective Date; (ii) US$300,000 after 4 months
 from the Effective Date; (iii) US$120,000 after 6 months from the Effective Date; and (iv)
 US$120,000 after 8 months from the Effective Date; and

&nbsp;&nbsp;&nbsp;&nbsp;(b) Issuance
 by the Company to HeartCore of a common share purchase warrant (the "Warrant"),
 deemed fully earned and vested as of the Effective Date, to acquire a number of shares of
 capital stock of the Company, to initially be equal to 3% of the fully diluted share capital
 of the Company as of the Effective Date, subject to adjustment as set forth in the Warrant.

The term of the Consulting Agreement's will continue until the earlier of (i) 3 years from the Effective Date and (ii) 2 years later from the date on which the stock of the Company or any successor or resulting entity in merger or other similar transactions begins to be publicly trade on a security exchange market (the "Term").

On June 7, 2024, the Company entered into an Amendment No. 1 to Services Agreement with HeartCore and HeartCore Financial, Inc. ("HeartCore Financial"), whereby HeartCore transferred all the rights and obligations under the Services Agreement to HeartCore Financial.

**Warrant**

On October 2, 2023, the Company issued a warrant (the "Warrant") to purchase the Company's common shares to HeartCore in exchange for the Services rendered as a consultant in connection with the proposed initial public offering of the Company pursuant to the Consulting Agreement. Pursuant to the terms of the Warrant, HeartCore may, at any time (i) on or after the earlier of the date that either (a) the Company completes its first initial public offering of stock in the U.S. resulting in any class of the Company's stock being listed for trading on any tier of the Nasdaq Stock Market ("Nasdaq"); (b) the Company consummates a merger or other transaction with a special purpose acquisition company ("SPAC") wherein the Company becomes a subsidiary of the SPAC; or (c) the Company undertakes any other Fundamental Transaction, as such term is defined in the warrant, (the "Trigger Date"); and (ii) on or prior to the close of business on the tenth anniversary of the Trigger Date, exercise the Warrant to purchase 16 common shares of the Company, which represents 3% of GATES GROUP Inc.'s issued and outstanding common shares as of the Trigger Date, for an exercise price per share of $0.01, subject to adjustment as provided in the Warrant. The number of shares for which the Warrant will be exercisable will be automatically adjusted on the Trigger Date to be 3% of the fully diluted number and class of shares of capital stock of the Company as of the Trigger Date, following completion of the transactions which caused the Trigger Date to be achieved. The Warrant contains a 9.99% equity blocker.

On June 18, 2024, the Company and HeartCore entered into a Warrant Cancellation Agreement pursuant to which the Warrants originally issued on October 2, 2023 by the Company to HeartCore were immediately effectively cancelled as of the date of the Warrant Cancellation Agreement.

On June 25, 2024, the Company and HeartCore Financial entered into the 2nd stock acquisition rights allotment agreement pursuant to which the Company allotted 337,800 stock acquisition rights (760,050 after Second Stock Split as discussed below) to HeartCore Financial in substitution for the Warrants originally issued to HeartCore on October 2, 2023, the number of stock acquisition rights is subject to adjustment in the event of a stock split. The key terms remained unchanged, except that the stock acquisition right is exercisable during the period from July 1, 2024 to June 30, 2034 at an exercise price of JPY1 under the same conditions specified in the Service Agreement.

**Incorporation of New Entity in the U.S.**

On August 5, 2024, GATES USA Inc, a wholly owned subsidiary of the Company, was incorporated in the state of Texas. GATES USA Inc engages in procurement and sales of lands and condominiums in the U.S.

**Authorized Share Increase**

On October 31, 2024, the Company approved to increase the number of authorized shares from 30,000,000 to 67,500,000.

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**Second Forward Stock Split**

On October 31, 2024, the Company approved a forward stock split of the Company's issued and outstanding common shares, at a ratio of 1-for-2.25 (the "Second Stock Split"). As of December 31, 2023 and immediately prior to the Second Stock Split, there were 11,260,000 common shares issued and outstanding. As a result of the Second Stock Split, the Company has 25,335,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the Second Stock Split.

**Recent Developments**

 

*Sales*

The following sets forth partial and preliminary financial information and operating data from January 1, 2025 to April 30, 2025. We have provided the partial and preliminary results and operating data described below for the purpose of providing investors with the most current information that our company is able to provide under the time constraints, following the year ended December 31, 2024 for which we have filed audited financial statements, which form a part of this prospectus. The preliminary financial information is not a comprehensive statement of our financial results from January 1, 2025 to April 30, 2025. These preliminary amounts do not include other costs, such as operating expenses or interest expenses. Because our six months ended June 30, 2025 has not ended as of yet, we are still in the process of completing our interim semi-annual financial statements (which will encompass such partial and preliminary financial information and operating data). Therefore, it is possible that normal annual adjustments will be made to such partial and preliminary financial information and operating data.

During the period from January 1, 2025 through April 30, 2025, the Company settled 243 sales transactions of condominiums. The aggregate settlement amount of these condominiums was ¥4,864 million (approximately US$32 million), and the aggregate purchase price of these condominiums and related expenses corresponding to these sales was ¥4,417 million (approximately US$29 million).

During the period from January 1, 2025 through April 30, 2025, the Company settled 9 real estate consulting transactions and the aggregate settlement amount from such transactions was ¥4 million (approximately US$30 thousand). The costs and expenses associated with these settlements was ¥10 thousand (approximately US$72).

During the period from January 1, 2025 through April 30, 2025, the Company received consideration from 1,971 agreements for the property management services and the aggregate consideration amount from such agreements was ¥72 million (approximately US$484 thousand). The costs and expenses associated with these settlements was ¥29 million (approximately US$193 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company settled 21 sales transactions of solar power generation facilities. The aggregate settlement amount of these solar power generation facilities was ¥319 million (approximately US$2,127 thousand), and the aggregate purchase price of these facilities and related expenses corresponding to these sales was ¥260 million (approximately US$1,736 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company generated minimal interest revenue from the financial services.

During the period from January 1, 2025 through April 30, 2025, the Company settled 142 real estate brokerage transactions and the aggregate settlement amount from such transactions was ¥87 million (approximately US$581 thousand). The costs and expenses associated with these settlements was ¥352 thousand (approximately US$2 thousand)

During the period from January 1, 2025 through April 30, 2025, the Company received rent from 305 agreements for the real estate leasing and the aggregate rent from such agreements was ¥25 million (approximately US$166 thousand). The costs and expenses associated with these rent revenues was ¥14 million (approximately US$98 thousand).

*Loans and bonds*

During the period from January 1, 2025 through May 25, 2025, the Company entered into various loans and corporate bonds, in a total principal amount of approximately US$6.3 million, with banks, financial institutions and individual investors for working capital purpose and for the purpose of purchasing real estate properties. The Company paid off certain loans and bonds in an approximate aggregate amount of US$766 thousand ahead of schedule. See "*Management's Discussion and Analysis of Financial Condition and Results of Operations – Loans and Bonds*" in this prospectus for more detailed information about the loans and bonds.

 *Waiver of Stock Acquisition Rights*

On January 22, 2025, HeartCore Financial entered into an Agreement on Waiver of Stock Acquisition Rights with the Company whereby HeartCore Financial waived 760,050 stock acquisition rights of the Company to purchase common shares of the Company equal to 3% of the issued and outstanding common shares on a fully diluted basis as of the day prior to the successful listing on the Nasdaq at an exercise price of ¥1 (US$0.01) per common share.

**<u>Results of Operations</u>**

**Comparison of results of operations for the years ended December 31, 2024 and 2023**

The following table summarizes our operating income (loss) as reflected in our audited consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2024 and 2023, and presents information regarding amounts and percentage changes during those periods.

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|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** | **Variance** | **Variance** |
|  | **Amount** | **% of revenue** | **Amount** | **% of revenue** | **Amount** | **%** |
| **Revenues, net** | $144546158 | 100.00% | $108703609 | 100.00% | $35842549 | 32.97% |
| **Cost of revenues** | 121007327 | 83.72% | 92883812 | 85.45% | 28123515 | 30.28% |
| **Gross profit** | **23538831** | **16.28%** | **15819797** | **14.55%** |  **7719034** |  **48.79%** |
| **Operating expenses** | 22561334 | 15.61% | 15254672 | 14.03% | 7306662 | 47.90% |
| **Income from operations** | **977497** | **0.67%** | **565125** | **0.52%** | **412372** | **72.97%** |
| **Other expenses** | (630000) | (0.44)% | (604663) | (0.56)% | (25337) | 4.19% |
| **Income (loss) before income taxes** | **347497** | **0.23%** | **(39538)** | **(0.04)%** | **387035** | **(978.89)%** |
| **Income tax expense (benefit)** | 110082 | 0.07% | (3916) | 0.00% | 113998 | (2911.08)% |
| **Net income (loss)** | 237415 | 0.16% | (35622) | (0.04)% | 273037 | (766.48)% |
| **Less: net income attributable to noncontrolling interests** | 18833 | 0.01% | 4395 | 0.00% | 14438 | 328.51% |
| **Net income (loss) attributable to GATES GROUP Inc.** | $**218582** | **0.15%** | $**(40017)** | **(0.04)%** | **258599** | **(646.22)%** |

---

Our revenues generated from different revenue streams consist of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** | **Variance** | **Variance** |
|  |<br>**Amount** | **% of**<br>**Total<br> Revenue** |<br>**Amount** | **% of**<br>**Total Revenue** |<br>**Amount** |<br>**%** |
| **Revenues, net** |  |  |  |  |  |  |
| Sales of real estate properties | $138184513 | 95.60% | $102750445 | 94.52% | 35434068 | 34.49% |
| Rental services | 510855 | 0.35% | 519499 | 0.48% | (8644) | (1.66% |
| Real estate management services | 2892538 | 2.00% | 3555630 | 3.27% | (663092) | (18.65% |
| Sales of solar power generation facilities | 2744948 | 1.90% | 1731865 | 1.59% | 1013083 | 58.50% |
| Others | 213304 | 0.15% | 146170 | 0.14% | 67134 | 45.93% |
| **Total** | $**144546158** | **100.00**% | **108703609** | 100.00% | **35842549** | **32.97%** |

---

**Revenues, Net**

Our total revenues increased by 32.97% from US$108,703,609 for the year ended December 31, 2023 to US$144,546,158 for the year ended December 31, 2024. The increase was mainly attributable to the increase in (1) the sales of real estate properties of US$35,434,068 due to the increase in the number of properties we sold in the year ended December 31, 2024 as a result of employment of skilled sales personnels and our continuous training of sales staff, and in (2) the sales of solar power generation facilities of US$1,013,083 due to the launch of this new business in August 2023, offset by the negative impact of exchange rate fluctuations between the two periods.

**Cost of Revenues**

Our total cost of revenues increased by 30.28% from US$92,883,812 for the year ended December 31, 2023 to US$121,007,327 for the year ended December 31, 2024. The increase in the cost of revenue was mainly attributable to the increase of purchase of real estate properties and solar power generation facilities along with the revenue growth.

**Gross Profit**

As a result of the above, gross profit increased by 48.79% to US$23,538,831 for the year ended December 31, 2024, from US$15,819,797 for the year ended December 31, 2023.

**Selling, General and Administrative Expenses**

Our general and administrative expenses for the years ended December 31, 2024 and 2023 were as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** | **Variance** | **Variance** |
|  | **Amount** | **% of Total** | **Amount** | **% of Total** | **Amount** | **%** |
| **Selling, general and administrative expenses** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Salaries and welfare expenses | $7171535 | 31.79% | $6167780 | 40.43% | $1003755 | 16.27% |
| &nbsp;&nbsp;&nbsp;Consulting and referral fee | 6728066 | 29.82% | 3859790 | 25.30% | 2868276 | 74.31% |
| &nbsp;&nbsp;&nbsp;Service expenses | 4199679 | 18.61% | 1952492 | 12.80% | 2247187 | 115.09% |
| &nbsp;&nbsp;&nbsp;Business and office expenses | 1310599 | 5.81% | 1137497 | 7.46% | 173102 | 15.22% |
| &nbsp;&nbsp;&nbsp;Lease expenses | 982908 | 4.36% | 951689 | 6.24% | 31219 | 3.28% |
| &nbsp;&nbsp;&nbsp;Taxes and dues | 939289 | 4.16% | 769364 | 5.04% | 169925 | 22.09% |
| &nbsp;&nbsp;&nbsp; Depreciation and amortization expenses | 161591 | 0.72% | 195662 | 1.28% | (34071) | (17.41)% |
| &nbsp;&nbsp;&nbsp; Advertising expenses | 970750 | 4.30% | 177337 | 1.16% | 793413 | 447.40% |
| &nbsp;&nbsp;&nbsp;Others | 96917 | 0.43% | 43061 | 0.29% | 53856 | 125.07% |
| &nbsp;&nbsp;&nbsp;**Total** | $**22561334** | **100.00%** | $**15254672** | **100.00%** | $**7306662** | **47.90%** |

---

Our selling, general and administrative expenses increased by US$7,306,662 from US$15,254,672 for the fiscal year ended December 31, 2023 to US$22,561,334 for the fiscal year ended December 31, 2024, as we spent more efforts to expand business operations. The increase was mostly attributable to the increases of (1) US$2,868,276 in consulting and referral fee related to referral and consulting services for the sale and purchase of real estate properties, (2) US$2,247,187 in service expenses related to accounting, legal, and consulting services for the initial public offering, (3) US$1,003,755 in salaries and welfare expenses related to the recruitment of additional salespeople to expand business, and (4) US$793,413 in advertising expense for the promotion of real estate properties purchase through voluntary sales and solar power generation facilities business, branding and public relation services.

**Other Income (Expenses)**

Our other income (expenses) for the years ended December 31, 2024 and 2023 were as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | **2024** | **2024** | **2023** | **2023** | **Variance** | **Variance** |
|  | **Amount** | **% of<br> Total** | **Amount** | **% of**<br> **Total** | **Amount** | **%** |
| **Other income (expenses)** | $— |  | $— |  | $— |  |
| &nbsp;&nbsp;&nbsp;Other income | 255509 | (40.56)% | 112580 | (18.62)% | 142929 | 126.96% |
| &nbsp;&nbsp;&nbsp;Interest expenses | (684056) | 108.58% | (511452) | 84.58% | (172604) | 33.75% |
| &nbsp;&nbsp;&nbsp;Other expenses | (201453) | 31.98% | (205791) | 34.04% | 4338 | (2.11)% |
| &nbsp;&nbsp;&nbsp;**Other expenses, net** | $**(630000)** | **100.00%** | $**(604663)** | **100.00%** | $**(25337)** | **4.19%** |

---

Other expenses, net increased by US$25,337 from US$604,663 in fiscal year ended December 31, 2023 to US$630,000 in the fiscal year ended December 31, 2024. The increase in other income was attributable to the increase of interest income. The increase in interest expenses was attributable to the addition of loans and other borrowings to finance our increasing property purchases, legal and accounting expenses related to the initial public offering, and working capital needs.

**Income Tax Expense (Benefit)**

Income taxes benefit for the fiscal year ended December 31, 2023 was US$3,916 and income tax expense for the fiscal year ending December 31, 2024 was US$110,082. The increase in income tax expense of US$113,998 was primarily attributable to the increase in net operating income from subsidiaries.

**Net Income (Loss)**

As a result of the above, net loss for the fiscal year ended December 31, 2023 was US$35,622 and net income for the fiscal year ending December 31, 2024 was US$237,415, an increase of US$273,037.

**Net Income Attributable to Noncontrolling Interests**

During the year ended December 31, 2021, we established real estate crowdfunding platform, our non-managing members (noncontrolling equity holders) under real estate joint ventures of anonymous partnership are considered as noncontrolling interests. As a result, for the years ended December 31, 2024 and 2023, $18,833 and $4,395 of net income were attributable to noncontrolling interests, respectively.

**Liquidity and Sources of Funds**

As of December 31, 2024, the Company had US$4,855,012 in cash and cash equivalents compared to US$4,283,778 as of December 31, 2023. In addition, the Company had US$776,566 in accounts receivable as of December 31, 2024 compared to US$674,367 as of December 31, 2023. The Company's accounts receivable includes balances due from customers and services provided and accepted by customers.

As of December 31, 2024, the Company's working capital balance was negative US$2,540,171. In assessing liquidity, management monitors and analyzes the Company's balance of cash and cash equivalents, ability to generate sufficient future earnings, and operating and capital investment commitments. While the Company had negative working capital as of December 31, 2024, the Company believes that it can generate and maintain sufficient future cashflow to meet its working capital needs for the next 12 months from the date of issuance of the audited consolidated financial statements. The management of the Company assessed the following factors to reach the conclusion as such. The Company reached the highest sales record in its history in the fiscal year ended December 31, 2024 by the reorganization of the sales department where Yuji Sekino, the CEO of the Company, and Takahiko Nakajima, the director of the Company, directly instruct and train our sales staff, and estimates that the improvement of sales performance will continue. In addition, the Company aims to scale sales by expanding its sales team and control expenses by maintaining the current number of administrative staffs, with an expectation of improving the cashflow from its operating activities. The Company also plans to issue more corporate bonds if the needs for finance arises.

Over the next few years, the Company intends to consider other sources of financing to meet its cash needs, including raising additional capital through equity issuances. While we face uncertainties regarding the size and timing of our fundraising, we are confident that we will be able to continue to meet our business needs through the use of cash flows generated from operations, bank and other borrowings, and shareholder working capital, as needed.

**Cash Flows for the Years Ended December 31, 2024 and 2023** 

The following table provides a summary of our cash flows for the periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** | **For the Years Ended December 31,** |
|  | | | **Variance** | **Variance** |
|  | **2024** | **2023** | **Amount** | **%** |
| Net cash used in operating activities | $(422476) | $(1992181) | $1569705 | (78.79)% |
| Net cash used in investing activities | (3347030) | (493303) | (2853727) | 578.49% |
| Net cash provided by financing activities | 5033684 | 3606139 | 1427545 | 39.59% |
| Effect of changes in foreign currency exchange rate | (727042) | (323462) | (403580) | 124.77% |
| Net increase in cash, cash equivalents and restricted cash | 537136 | 797193 | (260057) | (32.62)% |
| Cash, cash equivalents and restricted cash as of the beginning of the year | 5758144 | $4960951 | 797193 | 16.07% |
| Cash, cash equivalents and restricted cash as of the end of the year | $6295280 | $5758144 | $537136 | 9.33% |

---

**Operating Activities**

Net cash used in operating activities was US$422,476 for the fiscal year ended December 31, 2024, compared to US$1,992,181 for the fiscal year ended December 31, 2023. The decrease in net cash used by operating activities was primarily attributable to the increase of net income of US$273,037, more real estate properties remained in inventories and higher balance of accounts receivable as of December 31, 2024 compared to December 31, 2023, as a result of increased sales.

**Investing Activities**

Net cash used in investing activities was US$3,347,030 for the fiscal year ended December 31, 2024, compared to US$493,303 for the fiscal year ended December 31, 2023. The increase in net cash used in investing activities was primarily attributable to an increase of US$1,859,014 for G.I.F.T external loans granted to customers in lending business, the increase in cash paid for purchasing property and equipment and investments during the fiscal year ended December 31, 2024.

**Financing Activities**

Net cash provided by financing activities was US$5,033,684 for the fiscal year ended December 31, 2024, compared to US$3,606,139 in the fiscal year ended December 31, 2023. The increase in net cash provided in financing activities was primarily attributable to an increase of US$541,277 funds obtained from bank loans and other borrowings to purchase real estate, IPO-related legal and accounting expenses, and working capital requirement, and an increase of US$567,351 funds obtained from capital contribution from anonymous partnerships during the fiscal year ended December 31, 2024.

**Contractual Obligations**

**Lease Agreements**

The Company has 54 leases classified as operating leases for offices, employee dormitories and sublease purpose. In addition, the Company has entered into 17 leases for certain office equipment which are classified as finance leases.

As of December 31, 2024, the future maturity of lease liabilities is as follows:

---

| | | |
|:---|:---|:---|
| **Year ending December 31,** | **Finance Lease** | **Operating Lease** |
| 2025 | $50556 | $1012862 |
| 2026 | 43039 | 763054 |
| 2027 | 36924 | 12976 |
| 2028 | 31298 | 4709 |
| 2029 | 11214 |  |
| Thereafter | 7900 | - |
| Total undiscounted lease payments | 180931 | 1793601 |
| Less: imputed interest | (8108) | (37415) |
| Present value of lease liabilities | 172823 | 1756186 |
| Less: lease liabilities, current | (47283) | (981395) |
| Lease liabilities, non-current | $125540 | $774791 |

---

**Long-Term Debt**

The Company's long-term debt includes bank and other borrowings.

At December 31, 2024, future minimum borrowing payments are as follows.

---

| | |
|:---|:---|
| **Years Ending December 31,** | **Loan and Bond<br> Payment** |
| 2025 | $3070870 |
| 2026 | 638925 |
| 2027 | 531458 |
| 2028 | 536238 |
| 2029 | 541277 |
| Thereafter | 2483101 |
| Total | $7801869 |

---

**Off-Balance Sheet Arrangements (Off-Balance Sheet Transactions)**

There are no off-balance sheet arrangements as of December 31, 2024.

**Loans and Bonds**

The Company entered into the loan agreement, dated as of October 25, 2022, with Japan Finance Corporation, under which the Company borrowed ¥200,000,000 (approximately US$1,270,890) at the annual interest rate of 0.3% for working capital purpose, on the unsecured basis. The principal and interest are payable monthly and the final repayment date is October 31, 2032. The current remaining balance of the principal is ¥175,950,000 (approximately US$1,118,066) and accrued interest is ¥44,831 (approximately US$285). The copy of the loan agreement is filed as Exhibit 10.4 to the registration statement of which this prospectus forms a part.

The Company entered into the loan agreement, dated as of October 31, 2022, with Tokyo Star Bank, under which the Company borrowed ¥300,000,000 (approximately US$1,906,335). The interest rate is variable and calculated by adding the spread of 2.5% to the base rate quoted from Japan TIBOR. This loan was secured by the guarantees by the parent company, among others. The principal and interest are payable quarterly and the final repayment date is October 31, 2025. The Company fully repaid all portion of the principal and associated interest. The copy of the loan agreement is filed as Exhibit 10.5 to the registration statement of which this prospectus forms a part.

The Company entered into a loan agreement, dated as of April 10, 2023, with SAISON FUNDEX CORPORATION, under which the Company borrowed ¥300,000,000 (approximately US$1,906,335). The interest rate is variable and calculated by adding 2.5% to the long-term prime rate. The principal and interest are payable monthly and the final repayment date is May 6, 2038. This loan is secured by pledged properties (by a hypothecation agreement and share pledge agreement) and guarantees by the parent company, among others. The current remaining balance of the principal is ¥276,539,102 (approximately US$1,757,254) and accrued interest is ¥995,817 (approximately US$6,328). The copies of the loan agreement, hypothecation agreement and share pledge agreement are filed as Exhibits 10.6, 10.7 and 10.8, respectively, to the registration statement of which this prospectus forms a part.

The Company issued unsecured bonds (the 18th GATESgrowth private bonds) for working capital purposes on June 17, 2024 of which the original principal amount is ¥132,000,000 (approximately US$838,788), the annual interest rate is 13.5%, and maturity date is December 17, 2025. The interest is paid semiannually on December 16, 2024, June 16, 2025, and December 17, 2025. The current remaining balance of the principal is ¥132,000,000 (approximately US$838,788) and accrued interest is ¥1,513,485 (approximately US$9,617). The copy of the offering guideline of the bonds is filed as Exhibit 10.9 to the registration statement of which this prospectus forms a part.

The Company issued unsecured bonds (the 21st GATESgrowth private bonds) for working capital purposes on September 1, 2024 of which the original principal amount is ¥130,000,000 (approximately US$826,079), the annual interest rate is 12.0%, and maturity date is March 3, 2025. The interest is paid on the maturity date. The current remaining balance of the principal is ¥130,000,000 (approximately US$826,079) and accrued interest is ¥1,324,932 (approximately US$8,419). The copy of the offering guideline of the bonds is filed as Exhibit 10.10 to the registration statement of which this prospectus forms a part.

The Company issued unsecured bonds (the 22nd GATESgrowth private bonds) for working capital purposes on September 28, 2024 of which the original principal amount is ¥135,000,000 (approximately US$857,851), the annual interest rate is 12.0%, and maturity date is September 27, 2025. The interest is paid semiannually on March 28, 2025 and September 27, 2025. The current remaining balance of the principal is ¥135,000,000 (approximately US$857,851) and accrued interest is ¥1,375,891 (approximately US$8,743). The copy of the offering guideline of the bonds is filed as Exhibit 10.11 to the registration statement of which this prospectus forms a part.

The Company issued unsecured bonds (the 24th GATESgrowth private bonds) for working capital purposes on September 28, 2024 of which the original principal amount is ¥145,000,000 (approximately US$921,395), the annual interest rate is 12.0%, and maturity date is September 27, 2025. The interest is paid quarterly on December 28, 2024, March 28, 2025, June 28, 2025, and September 27, 2025. The current remaining balance of the principal is ¥145,000,000 (approximately US$921,395) and accrued interest is ¥1,477,809 (approximately US$9,391). The copy of the offering guideline of the bonds is filed as Exhibit 10.12 to the registration statement of which this prospectus forms a part.

The Company issued unsecured bonds (the 34th GATESgrowth private bonds) for working capital purposes on December 27, 2024 of which the original principal amount is ¥130,000,000 (approximately US$826,079), the annual interest rate is 15.0%, and maturity date is April 30, 2025. The interest is paid on the maturity date. The current balance of the principal is ¥130,000,000 (approximately US$826,079) and accrued interest is ¥267,124 (approximately US$1,697). The copy of the offering guideline of the bonds is filed as Exhibit 10.13 to the registration statement of which this prospectus forms a part.

**Trend Information**

In addition to the new coronavirus, the recent war in Ukraine and the imposition of broad economic sanctions against Russia could lead to higher energy prices and disruptions in global markets. It is unclear how the continued development and complexity of this situation will affect the Japanese economy and our business in the future. In particular, there is a risk that changes related to the acquisition of new customers and additional purchases by existing customers could adversely affect the Company's results of operations; that deteriorating global economic conditions could have an adverse effect on the Company's industry, business and results of operations; and that many of the other risks listed under "Risk Factors" could have an incremental effect.

Other than as disclosed in the consolidated financial statements, we are not aware of any other trends, uncertainties, demands, commitments or events for the years ended December 31, 2024 and 2023 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.

**<u>Quantitative and Qualitative Disclosure About Market Risk</u>**

We are exposed to market risks in the ordinary course of our business. Information relating to quantitative and qualitative disclosures about these market risks is described below.

***Inflation risk***

Inflationary pressures have recently increased, and may continue to increase, the costs of labor, condominiums for purchase and other inputs for our products. We have experienced, and may continue to experience, higher than expected inflation, including escalating transportation, commodity and other supply chain costs and disruptions. If our costs are subject to significant inflationary pressures, we may not be able to offset such higher costs through price increases, which could adversely affect our business, results of operations or financial condition.

***Liquidity risk***

Liquidity risk is the risk that we will be unable to execute payments on the payment date when performing obligations to repay financial liabilities that come due. We monitor and maintain a level of cash and cash equivalents deemed adequate to finance our operation and to mitigate the effects of fluctuations in cash flow based on cashflow plans we prepare and maintain.

***Market risk***

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily related to fair value of financial instruments as well as interest rates changes.

***Interest Rate Risk***

Our operations are interest rate sensitive. As the borrowing capability is adversely affected by increases in interest rates, a significant increase in interest rates may negatively affect the ability of borrowings to secure adequate financing. Higher interest rates could adversely affect our revenue, gross margin, and net income.

***Credit risk***

We hold cash in bank deposits financial institutions in Japan which are insured by the Deposit Insurance Corporation of Japan subject to certain limitations. We have not experienced any losses on such accounts and believe they are not exposed to any significant credit risk on cash and cash equivalents. Credit risk is also the risk of our incurring financial losses due to the default of contractual obligations by customers. We conduct credit management of customers in Japan based on their financial condition.

**Significant Accounting Policies and** **Critical Accounting Estimates**

We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences, and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates. We believe that critical accounting policies as disclosed in this prospectus reflect the more significant judgements and estimates used in preparation of our consolidated financial statements.

The following descriptions of significant accounting policies and estimates should be read in conjunction with our consolidated financial statements and other disclosures included in this prospectus. When reviewing our consolidated financial statements, you should consider our selection of critical accounting policies, the judgments and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.

**Revenue Recognition**

The Company recognizes revenue under ASC Topic 606, "Revenue from Contracts with Customers" and ASC Topic 842, "Leases".

To determine revenue recognition for contracts with customers, the Company performs the following five steps : (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of consumption tax and applicable local government levies, if any. The consumption tax on sales is calculated at 10% of gross sales.

The Company currently generates its revenue from the following main sources:

*<u>Revenue from sales of real estate properties</u>*

Revenue from the sales of real estate properties, mainly second-handed condominiums, is recognized at the point in time when title to and possession of the property has transferred to the customer or its designated recipient and the Company has no continuing involvement with the property, which is generally upon the delivery of the real estate properties, which generally coincides with the receipt of cash consideration from the customer. Our contracts with customers contain a single performance obligation and we do not provide warranties for sold real estate properties.

*<u>Revenue from rental services</u>*

Rental income is generally recognized on a straight-line basis over the terms of the tenancy agreements. For real estate leases, these contracts are treated as leases for accounting purpose, rather than contracts with customers subject to ASC Topic 606.

*<u>Revenue from real estate management services</u>*

Revenue from real estate management services consists of property management services, brokerage services and real estate consulting services. Property management services mainly include property management services provided to tenants or property owners with revenue recognized during the period when services are rendered. Revenue from brokerage services is earned upon closing of brokerage transaction. Real estate consulting services mainly consist of consulting services provided to customers with revenue recognized when performance obligation is satisfied.

*<u>Revenue from sales of solar power generation facilities</u>*

Revenue from the sales of solar power generation facilities is recognized at the point in time when performance obligation is satisfied, which is after the customers obtain control of the solar power generation facilities. The Company's sales arrangements for solar power generation facilities do not contain any forms of continuing involvement that may affect the revenue recognition of the transactions, nor any variable consideration for energy performance guarantees, minimum electricity end subscription commitments.

 

*<u>Other revenue</u>*

 

Other revenue mainly consists of referral service in connection with solar power generation facilities sale and administrative service in relation to real estate properties sales. Revenue is recognized at the point in time when service is completed. Administrative income and interest income generated from financial transaction and lending business are recognized when earned. Such amounts were minimal for the years ended December 31, 2024 and 2023.

**DESCRIPTION OF BUSINESS**

 

*Unless the context otherwise requires, "GATES," the "Company," "we," "us," and "our," refer to GATES GROUP Inc., a Japanese corporation, and its direct and indirect subsidiaries, including, GATES Inc., GATES enterprise Inc., Chuo Kanzai Inc., Future Real Estate Institute Inc., and G.I.F.T. Co., Ltd., each a Japanese corporation.*

**Business Overview**

We are a Japanese real estate company providing a one-stop service that includes in-house procurement, sales, management, and operational support for condominiums and solar power generation facilities. We provide various services related to real estate under the two domains, "GATES AUCTION" and "GATES FUNDING".

Currently we are engaged in the following businesses:

*GATES AUCTION*

● We purchase condominiums and solar power generation facilities from property owners and sell them primarily to real estate sales companies and individual investors;

● We renovate and resell real estate purchased through voluntary sales and auctions to real estate sales companies and individual investors;

● We provide real estate management services such as collection of rent fees, repairs, and restoration of properties to their original condition for condominiums;

● We provide consulting services for the sale of condominiums;

● We provide real estate brokerage services; and

● We provide real estate leasing services.

 

*GATES FUNDING*

 

● We operate in the financial services sector, offering a real estate crowdfunding platform, where we raise funds from our members to purchase real estate and distribute the proceeds from their management and sale. The members only acquire the right to claim dividends and the right to claim refunds of their investments upon the completion of the real estate project. Such dividends and refunds are based on the net proceeds from rental income and sale of properties. More specifically, the members do not acquire ownership or securities representing ownership in a property or a fractional ownership of a property as the investments of the members are made through an anonymous partnership (as described under "*Description of Business*" on page 63 of this prospectus). This crowdfunding business with anonymous partnership agreements (which are not considered to be securities in Japan) is only being conducted in Japan. Additionally, we provide lending services.

Since our inception, we have compiled and analyzed a growing database of real estate ownership information (approximately 700,000 properties). This has enabled us to develop a proprietary algorithm that assesses the likelihood of a specific owner needing to sell their property, evaluating factors such as the property purchased, the purchase date, other properties owned, and the estimated occupation of the owner. We currently use this algorithm in the business of purchase and sales of real estate. We continuously update and maintain the database to ensure we leverage the most up-to-date and relevant information for our real estate transactions.

 ****

***Our Mission "Real Estate Around the World in Your Hand"***

In Japan, the phrase "120-year life period" describes the aging society where people will live to 120 years old due to the progress of medical technologies. In such a society, we believe that people will have to rely solely on pension income for approximately half of their lives after retirement and we believe that individual asset building is necessary to establish a more secure life after retirement. In Japan, while the market for asset building in terms of dollars is growing, we believe only a few companies offer small-lots of real estate overseas for investment, and that market has not yet been established. We aim to provide overseas real estate in small lots through our crowdfunding service, and we believe that this will make it easier for anyone to start asset building through overseas real estate. We also aim to provide opportunities for overseas investors to invest in Japanese real estate more easily by establishing an auction platform in the future.

Our mission is to create a world where everyone can freely and fairly build assets through real estate, under our corporate message of "Real Estate Around the World in Your Hand". We aim to lower the threshold for purchasing real estate and create a transparent and fair market in which everyone can participate. Through our technology and business model, we believe we provide our clients with a viable form of asset building towards retirement.

To realize our mission, we aim to develop a platform that enables real estate investment beyond national borders, although we have not yet developed a real estate auction platform and that our crowdfunding platform has only been in operations in Japan and was recently launched in 2021.

For the years ended December 31, 2024 and 2023, the Company reported revenues of US$144,546,158 and US$108,703,609, respectively, net income of US$237,415 and net loss of US$35,622, respectively, and had net cash used in operating activities of US$422,476 and US$1,992,181, respectively. As stated in the audited consolidated financial statements, as of December 31, 2024 and 2023, the Company had retained earnings of US$1,124,337 and US$905,755, respectively.

**Organizational Structure**

The following diagram reflects our current organizational structure as of the date of this prospectus:

![](formdrs_004.jpg)

GATES GROUP Inc. is a Japanese corporation formed in Japan on May 1, 2018. GATES GROUP Inc. has three wholly owned subsidiaries, GATES Inc., a Japanese corporation, established on August 1, 2011, Gates enterprise Inc., a Japanese corporation, established on January 6, 2020, and GATES USA Inc, a U.S. corporation, established on August 5, 2024.

GATES Inc. has three wholly owned subsidiaries, including Chuo Kanzai Inc., a Japanese corporation, established on May 9, 2006, Future Real Estate Institute Inc., a Japanese corporation, established on December 25, 2019, and G.I.F.T Co., Ltd., a Japanese corporation, established on July 24, 2012.

GATES Inc. engages in sales and brokerage of used condominiums for investment and used solar power generation facilities as well as real estate crowdfunding.

GATES enterprise Inc. engages in the real estate leasing, management and brokerage business.

Chuo Kanzai Inc. engages in sales and brokerage of real estate, primarily for voluntary sales.

Future Real Estate Institute Inc. engages in sales and brokerage of real estate, primarily for voluntary sales.

G.I.F.T Co., Ltd. engages in the financial transaction business and the lending business.

GATES USA Inc engages in procurement and sales of lands and condominiums in the U.S.

**Our Strategy**

We are considering the following strategies aimed at expanding our business and increasing our profitability.

***U.S. Expansion Initiative***

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We plan to expand our business to the U.S. real estate market. Using the funds raised through our crowdfunding platform, we plan to purchase real estate properties in the U.S., and provide investors in Japan with the sales and management services of those properties. For more details, please see *"Planned Business Activities – Planned U.S. Expansion Initiative"*.

 **

***Developing Real Estate Auction Platform "SELLI"***

 **

Utilizing a portion of the proceeds from this offering, we aim to establish and launch a real estate auction platform named "SELLI," designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide. Real estate transactions often require specialized knowledge due to the complexities involved, including verifying property rights, ownership, condition, and estimating future profitability. These factors, coupled with the involvement of multiple real estate agents, often obscure property prices and inflate costs. SELLI aims to address these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices, eliminating the need for intermediary real estate agents. Our specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience. For more details, see *"Planned Business Activities – Planned Auction Platform".*

***Offering Real Estate Literacy Sessions***

We plan to expand our study sessions on real estate literacy for the employees of public companies in Japan, which began in 2023 and has been held every month. The study sessions are designed to improve literacy in various aspects of real estate, including, but not limited to, investments, rentals, taxes and other areas. We consider these study sessions to be advertising for our business. We seek to offer the study sessions, which are currently offered to one company listed on the stock exchange in Japan, to more than 100 public companies in Japan and the U.S. We plan to accomplish this by approaching and offering our study sessions to the public companies in Japan which are our existing clients or vendors, the U.S. public companies, and institutional investors. The number of participants (employees of the current participating company) has been gradually increasing while we have improved and enriched the contents of the session. We also plan to promote and expand our study sessions by advertising our experience of holding such sessions if the number of participating companies increase. Although we do not currently have any specific plans on how to expand our literacy sessions, we will seek further ways to continue and expand the sessions for the purpose of achieving this goal. We have not earned from, or paid consideration to, the public companies for their employees attending the sessions.

 ****

***Increasing Sales to Individual Investors***

Currently, about 30% of the properties we purchase are sold to individual investors and about 70% are wholesaled to real estate sales companies. We aim to increase the ratio of sales to individual investors. By increasing direct sales to individual investors, we will distribute more properties with reasonable prices directly to the market and more market participants will be aware that those prices are the actual market prices without any intermediate costs which are generally incurred due to the involvement of multiple real estate companies in the process from purchase to delivery. If such awareness spreads among the market, we believe we will acquire a larger market share taking advantages of our ability to directly purchase and deliver the properties. We plan to hire more sales staff to enhance the sale of condominiums which we purchase directly from property owners. Once the development of our auction platform is completed and receives awareness in the market, we also plan to engage those individual investors in it so that they can purchase real estate in the same environment as real estate companies.

 ****

***Increasing Solar Power Market Share***

We aim to achieve a substantial share of the market of the pre-owned solar power generation facilities by analyzing the facility owners and using algorithms to create an environment that allows purchasing of such facilities in the same way as condominiums. Considering the growing needs for eco-friendly energy, achieving a larger share in the solar power market is the key factor to our further growth.

**Our Business**

***Current Business Operations***

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Our current business operations are categorized into two domains, "GATES AUCTION" and "GATES FUNDING".

In "GATES AUCTION" domain, we provide services as below:

 

*Purchase and Sales of Real Estate*

 

We specialize in purchasing condominiums from property owners and selling them primarily to real estate sales companies and individual investors. When selling to real estate companies, we select the buyer who offers the highest price for the properties creating a process similar to an auction. In a typical process of real estate sales in Japan, multiple real estate companies are involved which seek their profits from the process, which lead to higher selling prices to the end customers. The typical real estate sales process in Japan is as follows: (i) first, purchase of a property by a company specializing exclusively in purchasing properties; (ii) second, the property purchased is sold to a real estate wholesale company; (iii) third, the property is wholesaled to a real estate sales company and then the information of the property becomes open to the public through a platform such as Real Estate Information System (REINS); and (iv) fourth, the property is eventually sold to an end customer through a real estate brokerage company. In each stage of (ii) to (iv), these companies take their profits when selling a property and it makes the final price higher when the property is delivered to the end customer. In our business model, we purchase properties directly from property owners and directly sell them to our customers without the involvement of such multiple real estate companies, which we believe results in more reasonable and fair prices to the end customers while still profitable to us. What makes us different is our strong relationships with multiple financial institutions. Real estate companies specializing in purchasing properties generally cannot sell their properties directly to individual buyers as they cannot introduce loans for property purchase to the buyers. Typically, companies specializing in purchasing properties face challenges working with financial institutions because they facilitate sellers in making lump-sum loan repayments. However, through persistent negotiations, we secure loan commitments from these institutions, streamlining the entire process while enabling transactions without involving multiple intermediaries that seek their own profits before a property being sold to an individual buyer. We believe we can effectively compete with our competitors and satisfy customers by selling the condominiums at fair and reasonable prices due to eliminating these intermediaries and hope to create awareness in the market that the prices we offer are the fairest, which we believe will eventually strengthen our ability to maintain existing customers and attract new customers.

![](formf-1_011.jpg)

![](formf-1_012.jpg)

Our property acquisition strategy focuses on carefully selecting newer condominiums located in the central area of Tokyo, and within a 10-minute walk from train stations. From approximately 600,000 unlisted properties and 300 properties for sale each month, we curate a selection that we offer at direct sales prices, eliminating the involvement of multiple real estate companies. Our property acquisition methods include reaching out to property owners via telephone, door-to-door visits, direct mail, landing page response, etc. Once acquired, these properties are either sold directly to individual investors ("One-Room DIRECT") or wholesaled to real estate sales companies. Our basic policy is to settle the purchase and sales in a short period of time, normally within one week, but we hold the ownership in a property when we expect the future increase of the property value. Currently, we hold eight properties for long-term increase in value, all of which are rented out. We currently intend to continue to hold all such properties. We earn revenues on these activities by selling the condominiums at a price higher than what we paid for them. We began purchasing and selling condominiums in 2016.

In addition to direct purchase from property owners, we renovate and resell properties acquired through voluntary sales to individual investors and real estate sales companies. Under this service, we consult with home-owners who are having trouble paying their mortgages and other real estate loans, and work closely with financial institutions to maximize the value of these properties and prevent them from being auctioned off due to bankruptcy. We identify potential acquisitions targets through: (1) introduction to the National Voluntary Sale Association, a general incorporation association which supports people in trouble with repayment of residence loans by consulting on voluntary loan; (2) monitoring the information on real estate auctions; and (3) introduction to the previous vendor. We earn revenues on these activities by selling the renovated properties at prices which are higher than the combination of the price we paid for the property and the amount of funds we expended to renovate the property. No renovations have been made to the properties included in inventory as of December 31, 2024, and there are no specific plans for additional renovations at this time. We began purchasing and renovating properties for resale in 2022.

Our investment strategies and policies for property purchase include ones regarding mortgages placed on and assets that will be invested in any specific property. Our basic policy is to purchase properties without borrowings by shortening the period between purchase and sale. We usually settle purchase and sale in a short period (flip) and therefore finance for property acquisition is not necessary in this case. However, in case we have a chance to acquire a property to be held long-term in a good deal, in order to acquire it before our competitors acquire it, we utilize finance from financial institutions for the acquisition as it takes longer than usual until the settlement of the property sale. In addition, when acquiring a property for renovation, we purchase it with financing from a financial institution or funds raised from investors through crowdfunding. Our Chief Financial Officer determines the amount of assets to be invested in a particular property based on the Company's business and financial plan. Since most of our transactions are based on properties available for immediate resale, we usually obtain, prior to our property purchase, an evaluation of an amount that a financial institution will finance to a buyer purchasing from us, and we purchase the property at a price less than that amount. This allows us to wholesale to real estate sales companies. The Board of Directors may change these purchasing policies solely by its resolution to quickly respond to the daily changes in the real estate markets. In addition, as real estate transactions often require specialized knowledge due to the complexities involved, we believe that it is reasonable to make these significant decisions by the Board of Directors which consists of the specialists in this field.

Revenue from the sale of condominiums is categorized under the "revenue from sales of real estate properties" revenue stream, and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these activities of US$138,184,513 and US$102,750,445, respectively.

As of December 31, 2024, the Company has following condominiums for sale:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **#** | **Project name** | **Location** | **Book Value as<br> of December<br> 31, 2024($)** | **Nature of mortgages<br> or other liens or <br> encumbrances <br> against properties** | **Amount of all <br> material <br> mortgages($)** |
| 1 | Court Village Makishi 301 | Naha-shi, Okinawa | 190245 | N/A |  |
| 2 | Excel Villa Izuakasawa 213 | Ito-shi, Shizuoka | 37783 | N/A |  |
| 3 | Maison de Raisin 303 | Kawaguchi-shi, Saitama | 30509 | N/A |  |
| 4 | La Residence de Panthele 1006 | Fukuoka-shi, Fukuoka | 13530 | N/A |  |
| 5 | Maison de Suim 215 | Morioka-shi, Iwate | 20718 | N/A |  |
| 6 | Maison de Eleve 207 | Sendai-shi, Miyagi | 16889 | N/A |  |
| 7 | Maison de Germe 106 | Sendai-shi, Miyagi | 21097 | N/A |  |
| 8 | Maison de Felles 210 | Sendai-shi, Miyagi | 17947 | N/A |  |
| 9 | Maison de Arnica 103 | Kobe-shi, Hyogo | 24297 | N/A |  |
| 10 | La Parfait de Kunimi 207 | Sendai-shi, Miyagi | 18134 | N/A |  |
| 11 | La Parfait de Kunimi 205 | Sendai-shi, Miyagi | 18126 | N/A |  |
| 12 | La Parfait de Kunimi 203 | Sendai-shi, Miyagi | 18126 | N/A |  |
| 13 | La Residence de Eleire 605 | Kobe-shi, Hyogo | 31546 | N/A |  |
| 14 | CLIO Negishi Nibankan 202 | Yokohama-shi, Kanagawa | 32163 | N/A |  |
| 15 | Tamachi Century Mansion 208 | Minato-ku, Tokyo | 101441 | N/A |  |
| 16 | Espoir Hakozaki 604 | Fukuoka-shi, Fukuoka | 15149 | N/A |  |
| 17 | Status Mansion Terukuni 104 | Fukuoka-shi, Fukuoka | 15066 | N/A |  |
| 18 | 5-chome Ayukawa-cho, Hitachi-shi, Ibaraki | Hitachi-shi, Ibaraki | 34065 | N/A |  |
| 19 | Saint Palace Minamiohi 702 | Shinagawa-ku, Tokyo | 122436 | Mortgage | 95317 |
| 20 | Apre City Ryogoku 805 | Sumida-ku, Tokyo | 132358 | Mortgage | 104848 |
| 21 | 3-chome Kakubancho, Yonago-shi, Tottori | Yonago-shi, Tottori | 41163 | N/A |  |
| 22 | Le-lion Sangenjaya III 402 | Setagaya-ku, Tokyo | 141838 | N/A |  |
| 23 | Anesaki, Ichihara-shi, Chiba | Ichihara-shi, Chiba | 40174 | N/A |  |
| 24 | Shinsakai-cho, Ishinomaki-shi, Miyagi | Ishinomaki-shi, Miyagi | 24146 | N/A |  |
| 25 | Suncradle Tachikawa Nishiki-cho 3066 | Tachikawa-shi, Tokyo | 230088 | Mortgage | 203978 |
| 26 | Kugenuma Matsugaoka | Fujisawa-shi, Kanagawa | 242504 | Mortgage | 238292 |
| 27 | ARUZA Kita-Yono North Spear | Saitama-shi, Saitama | 231218 | Mortgage | 236386 |

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As of December 31, 2024, the Company has following real properties which are materially important:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **#** | **Project name** | **Location** | **Book Value as<br> of the prospectus date($)** | **Nature of mortgages<br> or other liens or <br> encumbrances <br> against properties** | **Amount of all <br> material <br> mortgages($)** |
| 1 | Tamachi Century Mansion 208 | Minato-ku, Tokyo | 101441 | N/A |  |
| 2 | 5-chome Ayukawa-cho, Hitachi-shi, Ibaraki | Hitachi-shi, Ibaraki | 34065 | N/A |  |
| 3 | 3-chome Kakubancho, Yonago-shi, Tottori | Yonago-shi, Tottori | 41163 | N/A |  |
| 4 | Anesaki, Ichihara-shi, Chiba | Ichihara-shi, Chiba | 40174 | N/A |  |
| 5 | Shinsakai-cho, Ishimaki-shi, Miyagi | Ishimaki-shi, Miyagi | 24146 | N/A |  |
| 6 | APRE CITY RYOGOKU 805 | Sumida-ku, Tokyo | 132358 | Mortgage | 104848 |
| 7 | SAINT PALACE MINAMIOHI 702 | Shinagawa-ku, Tokyo | 122436 | Mortgage | 95317 |
| 8 | Maison de Arnica 103 | Kobe-shi, Hyogo | 24297 | N/A |  |
| 9 | Maison de Eleve 207 | Sendai-shi, Miyagi | 16889 | N/A |  |
| 10 | Maison de Germe 106 | Sendai-shi, Miyagi | 21097 | N/A |  |
| 11 | Maison de Suim 215 | Morioka-shi, Iwate | 20718 | N/A |  |
| 12 | Maison de Felles 210 | Sendai-shi, Miyagi | 17947 | N/A |  |
| 13 | La Residance de Eleire 605 | Kobe-shi, Hyogo | 31546 | N/A |  |
| 14 | La Residance de Panthele 1006 | Fukuoka-shi, Fukuoka | 13530 | N/A |  |
| 15 | ESPOIR Hakozaki 604 | Fukuoka-shi, Fukuoka | 15149 | N/A |  |
| 16 | Status Mansion Terukuni 104 | Fukuoka-shi, Fukuoka | 15066 | N/A |  |
| 17 | La Parfait de Kunimi 203 | Sendai-shi, Miyagi | 18126 | N/A |  |
| 18 | La Parfait de Kunimi 205 | Sendai-shi, Miyagi | 18126 | N/A |  |
| 19 | La Parfait de Kunimi 207 | Sendai-shi, Miyagi | 18134 | N/A |  |
| 20 | CLIO Negishi Nibankan 202 | Yokohama-shi, Kanagawa | 32163 | N/A |  |
| 21 | Maison de raisin 303 | Kawaguchi-shi, Saitama | 30509 | N/A |  |
| 22 | Le-lion Sangenjaya III 402 | Setagaya-ku, Tokyo | 141838 | N/A |  |
| 23 | SUNCRADLE TACHIKAWA NISHIKI-CHO 306 \* | Tachikawa-shi, Tokyo | 230088 | Mortgage | 203978 |
| 24 | Kugenuma Matsugaoka \* | Fujisawa-shi, Kanagawa | 242504 | Mortgage | 238292 |
| 25 | COURT VILLAGE Makishi 301 \* | Naha-shi, Okinawa | 190245 | N/A |  |
| 26 | EXCEL VILLA Izuakasawa 213 \* | Ito-shi, Shizuoka | 37783 | N/A |  |
| 27 | Urusa Kitayono North pair \* | Saitama-shi, Saitama | 231218 | Mortgage | 236,386 \*\*\* |
| 28 | MIJAS Higashiohi 103 \*\* | Shinagawa-ku, Tokyo | 106979 | N/A |  |
| 29 | MIJAS Higashiohi 105 \*\* | Shinagawa-ku, Tokyo | 117746 | N/A |  |
| 30 | MIJAS Higashiohi 107 \*\* | Shinagawa-ku, Tokyo | 117747 | N/A |  |
| 31 | MIJAS Higashiohi 109 \*\* | Shinagawa-ku, Tokyo | 85144 | \*\*\*\* |  |
| 32 | MIJAS Higashiohi 205 \*\* | Shinagawa-ku, Tokyo | 181844 | \*\*\*\* |  |
| 33 | INTELLINX MINAMISHINMACHI 201 \*\* | Osaka-shi, Osaka | 87881 | Mortgage | 63401 |
| 34 | CRESCENT MOTOHASUNUMA 306 \*\* | Itabashi-ku, Tokyo | 84991 | Mortgage | 62158 |
| 35 | MIJAS Higashiohi 206 \*\* | Shinagawa-ku, Tokyo | 196237 | N/A |  |
| 36 | Stokemaiju 603 \*\* | Shibuya-ku, Tokyo | 147261 | Mortgage | 74590 |

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\* Properties after renovation for resale

\*\*Properties held for long-term increase in value which are recorded in property and equipment

\*\*\* The mortgage loan exceeds the book value of the property as it includes financing for 100% of the book value and consumption tax incurred at purchase.

\*\*\*\* Properties pledged for a bank loan dated as of April 10, 2023, borrowed for working capital purpose, as detailed in Exhibit 10.6 to the registration statement of which this prospectus forms a part. This loan is secured by pledged properties (Exhibit 10.7), pledged shares (Exhibit 10.8) of two subsidiaries (Chuo Kanzai Inc. and Future Real Estate Institute Inc.), guarantees by the parent company, among others.

Utilizing our ability to purchase properties directly from property owners and directly deliver them to our customers, we also provide consulting services for the sale of condominiums across Japan, including Tokyo, Kansai, Tokai, and Kyushu. Our consulting services encompass a wide range of areas, including appraisal, refinancing, recombination, inheritance, income improvement, and management, and the sale of condominiums.

We earn revenues on these activities by charging the following fees for these consulting services: advisory and planning fees for the use, valuation, profitability calculation, purchase, disposition of real estate properties, and related services. Since the inception of the consulting services in 2011, the Company has provided these services related to approximately 6,000 properties to date. Income generated from these consulting services is included in the "revenue from real estate management services" revenue stream, and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these activities of US$756,791 and US$1,438,205, respectively.

*Property Management Service*

 

We provide real estate management services for condominiums, including rent collection, property repairs, and restoration to original conditions. We earn revenues on these activities by charging the following fees for these services: condominium management fees, administrative fees for the renewal of, and new lease agreement, construction fees for restoration, repairment and lock exchange, fees for 24-hours customer support, insurance service fees for condominium and facility.

To date the Company has provided these services to approximately 1,000 clients. Income generated from property management services is classified under the "revenue from real estate management services" revenue stream, and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these activities of US$1,333,387 and US$1,200,904, respectively. We began providing property management services in 2016.

 

 

*Purchase and Sale of Solar Power Generation Facilities*

We purchase and sell solar power generation facilities primarily to real estate sales companies, and individual investors. We identify potential acquisitions targets through: (1) introduction to companies which sell or maintain the solar power generation facilities; (2) contacting companies disclosed by the Japanese government; and (3) approaching past and existing clients from our condominium business, as the markets for condominiums and solar power generation facilities are closely related in nature and many of our clients in the condominium sector own the solar power generation facilities. We earn revenues on these activities by selling the power generation facilities at higher prices than we paid for them and also by selling the electricity generated by the facilities while we hold them. Revenue from the sale of these solar power generation facilities is recorded under the "revenue from sales of solar power generation facilities" revenue stream, and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these activities of US$2,744,948 and 1,731,865, respectively.

We began purchasing and selling solar power generation facilities in 2023.

As of December 31, 2024, the Company has following solar power generation facilities for sale:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **#** | **Project name** | **Location** | **Book Value as<br> of December<br> 31, 2024($)** | **Nature of mortgages<br> or other liens or <br> encumbrances <br> against properties** | **Amount of all <br> material <br> mortgages($)** |
| 1 | Omaezaki, Omaezaki-shi, Shizuoka | Omaezaki-shi, Shizuoka | 91375 | N/A |  |
| 2 | Uji, Uji-cho, Takahashi-shi, Okayama | Takahashi-shi, Okayama | 57831 | N/A |  |
| 3 | 701-4 Kurimachi, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 49391 | N/A |  |
| 4 | 185 Shimoazahara, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 120751 | N/A |  |
| 5 | 95-10 Tenwa, Ako-shi, Hyogo | Ako-shi, Hyogo | 94810 | N/A |  |
| 6 | 95-3 Tenwa, Ako-shi, Hyogo | Ako-shi, Hyogo | 67588 | N/A |  |
| 7 | 15-1 Kurimachi, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 100569 | N/A |  |
| 8 | 597-1, 597-2 Kurimachi, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 94339 | N/A |  |
| 9 | 814 Minagi, Haga-cho, Shiso-shi, Hyogo | Shiso-shi, Hyogo | 47370 | N/A |  |
| 10 | 181 Shimoazahara, Shingucho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 113248 | N/A |  |

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As of December 31, 2024, the Company has following solar power generation facilities which are materially important:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **#** | **Project name** | **Location** | **Book Value as<br> of the prospectus date($)** | **Nature of mortgages<br> or other liens or <br> encumbrances <br> against properties** | **Amount of all <br> material <br> mortgages($)** |
| 1 | Omaezaki, Omaezaki-shi, Shizuoka | Omaezaki-shi, Shizuoka | 91375 | N/A |  |
| 2 | Uji, Uji-cho, Takahashi-shi, Okayama | Takahashi-shi, Okayama | 57831 | N/A |  |
| 3 | 701-4 Kurimachi, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 49391 | N/A |  |
| 4 | 185 Shimoazahara, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 120751 | N/A |  |
| 5 | 95-10 Tenwa, Ako-shi, Hyogo | Ako-shi, Hyogo | 94810 | N/A |  |
| 6 | 95-3 Tenwa, Ako-shi, Hyogo | Ako-shi, Hyogo | 67588 | N/A |  |
| 7 | 515-1 Kurimachi, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 100569 | N/A |  |
| 8 | 597-1, 597-2 Kurimachi, Shingu-cho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 94339 | N/A |  |
| 9 | 814 Minagi, Haga-cho, Shiso-shi, Hyogo | Shiso-shi, Hyogo | 47370 | N/A |  |
| 10 | 181 Shimoazahara, Shingucho, Tatsuno-shi, Hyogo | Tatsuno-shi, Hyogo | 113248 | N/A |  |

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*Real Estate Brokerage Services*

We also provide real estate brokerage services. To date we have provided real estate brokerage services to approximately 300 clients. We earn revenues on these activities by charging brokerage fees in the form of consulting fees for connecting owners who want to sell their properties with the other real estate companies and for providing purchases with sales materials. Income from providing such services is included in the "revenue from real estate management services" revenue stream, and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these activities of US$802,360 and US$916,521, respectively. We began providing real estate brokerage services in 2011.

*Real Estate Leasing*

 

We provide leasing services to condominiums and detached houses. We earn revenues on these activities by charging rent for the use of leased properties. We acquire properties held for lease based on a resolution of the Board of Directors. Income from providing such services is included in the "revenue from rental services" revenue stream, and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these activities of US$510,855 and US$519,499, respectively. We began providing real estate leasing services in 2018.

In "GATES FUNDING" domain, we provide services as below:

*Financial Services* 

As a part of our financial services, we offer real estate crowdfunding, where we raise funds from our members via our crowdfunding platform to purchase real estate properties and distribute the proceeds from the management and sale of these properties. We earn revenues on these activities by selling the condominium at a higher price than the price at which we purchase it and also by rent collected from residents in the condominium. We established and launched our real estate crowdfunding platform in 2021.

We provide crowdfunding services directly to the members of our platform. When an investor makes an investment, an anonymous partnership is formed, and the investor acquires the right to claim dividends and the right to claim refunds upon termination of the project under the anonymous partnership agreement. Anonymous partnership (*tokumei kumiai*), which is a structure similar to a limited partnership, is a Japanese bilateral contract governed by the Commercial Code of Japan and are not considered to be securities in Japan. Anonymous partnership agreement may be formed between an anonymous partner (non-managing member) and a proprietor (the partnership operator). Under the agreement, the anonymous partner contributes cash or other assets to the project of the proprietor. The amounts contributed become the property of the proprietor and are not jointly held by the parties. The anonymous partner is generally not liable for third-party claims made on the proprietor and is entitled to share of profit arising from the project. Therefore, an investor only acquires the right to claim dividends and the right to claim refunds upon termination of the project under the anonymous partnership agreement. Such dividends and refunds are based on the net proceeds from rental income and sale of properties. The investor does not acquire ownership or securities representing ownership in a property or a fractional ownership of a property under an anonymous partnership agreement. This crowdfunding business with these anonymous partnership agreements is only being conducted in Japan.

Our real estate crowdfunding platform allows individuals to invest as little as approximately US$62 across a diverse portfolio of real estate investment opportunities offered on the platform. On average, we register 0.3 customers per day. To ensure sustainable, safe, and secure asset management for our clients, we meticulously select and screen all properties featured on the platform. The entire process, from property management to sale, can be entrusted to us as a professional real estate firm. Revenue generated from the sales and lease of real estate properties through crowdfunding projects is recorded under the "revenue from sales of real estate properties" and the "revenue from rental services".

We also provide lending services to companies in need of finance. Income from providing such services is included in "other revenue", and during the years ended December 31, 2024 and 2023, the Company has generated revenues from these lending activities of US$7,070 and US$7,987, respectively.

 

***Planned Business Activities***

We are developing or plan to develop the following services, products, platform or facilities to enhance and expand our business.

*Planned U.S, Expansion Initiative.*

We plan to expand our business to the U.S. real estate market. Using the funds raised through our crowdfunding platform, we plan to acquire real estate properties in the U.S., and provide investors in Japan with the sales and management services of those properties. We are considering the state of Texas as the first location to initiate this plan. We plan to conduct the procurement and sales of real estate properties including lands, detached houses and condominiums through GATES USA Inc, a wholly owned subsidiary of the Company incorporated in the state of Texas in August 2024. We decided to initiate this plan in Texas based on the following factors: (i) the stable and growing residential population and the number of housing units in Texas, (ii) low property prices compared to ones in other major areas in the U.S. such as California and New York, and estimated increase in the property prices in Texas, (iii) the similarity in basic system and flow of real estate transactions between Texas and Japan, and (iv) some of major Japanese real estate companies entered the market of Texas. In addition to analyzing these market data, our CEO directly inspected properties in Texas and strongly felt the potential of Texas. Within the state of Texas, we are considering starting in the north side of Texas, specifically an area from Dallas to Sherman, areas where we will acquire properties, considering the factors such as regional convenience, demographics, potential economic growth, safety, and average income of residents. In order to research the capital flows in real estate transactions and analyze the risks associated with the acquisition, sales, and management of properties in the U.S., the Company acquired, leased and sold a property in the state of Georgia during the period June 2022 through July 2023. We estimate that the investors in Japan have strong interest in investment in the U.S. real estate properties, according to the survey result conducted during our study session, showing that more than 95% of the participants expressed their interest in investing in the U.S. real estate properties. Furthermore, the aggregate investment amount in the U.S. stock market from Japan exceeded 5 trillion yen, and securitized real estate market in Japan has grown to 59.8 trillion yen in 2023. We also anticipate that interest in the U.S. real estate market will remain in the medium to long term due to expected fluctuations of interest rate and exchange rate. Considering these facts, we believe that the expansion into the U.S. real estate market will significantly contribute to our growth. Although we have not formulated strategies including specific target locations or expansion methods, we are considering further expansion to the East and West Coasts of the U.S. and other regions following the expansion to Texas.

 

*Planned Auction Platform*

 

Utilizing a portion of the proceeds from this offering, we aim to establish and launch a real estate auction platform named "SELLI," designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide. We differentiate our platform from others by offering secure transactions supported by our extensive experience as a real estate company specializing in property purchases. Real estate transactions often require specialized knowledge due to the complexities involved, including verifying property rights, ownership, condition, and estimating future profitability. These factors, coupled with the involvement of multiple real estate agents, often obscure property prices and inflate costs. SELLI aims to address these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices, eliminating the need for intermediary real estate agents. Our specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience. Furthermore, we are considering adding a feature that enables the users to invest in fractional interests in real estate properties on our platform with a little amount of fund like "Robinhood", a popular financial services platform. We set the following phases to develop and expand our prospective auction platform:

○ Phase 1 - We plan to expand our auction platform's investment opportunities into the U.S. real estate market in addition to Japan. The prices of real estate in the U.S. have shown stable increase as compared to the prices of real estate in Japan which have shown drastic fluctuations. To cater to a wider audience, we plan to offer these U.S. investment opportunities through both crowdfunding and auctions. We aim to form a business alliance with a U.S. real estate company to further increase properties on our respective platforms. We also plan to engage the U.S. investors on our auction platform and crowdfunding platform where we provide them with the investment opportunities to acquire entire or fractional interests in the properties in Japan and the U.S. For the sake of clarity, such investment opportunities to U.S. investors exclude rights to claim dividends and the right to claim refunds upon termination of the project under anonymous partnership agreements.

○ Phase 2 - We plan to expand the auction platform not only to real estate in the U.S., but also real estate in other regions and countries in the world. Although we do not have any specific plans on the target areas to which we will expand at this point, we aim to increase the area where we provide investment opportunities in real estate by considering factors such as economic and market trends in such areas at the time.

○ Phase 3 – We ultimately aim offer opportunities to acquire world-wide real estate on our auction platform to investors worldwide. We believe that SELLI will realize the true transparency of property prices through the real estate auction where worldwide investors participate.

Planned Social Lending Services.

 

Our subsidiary, G.I.F.T Co., Ltd., plans to offer social lending services. In this model, we will collect funds from investors to extend loans to businesses, with the generated profits from loan interest being distributed back to the investors. As of December 31, 2024, we had handled one project and made a loan to Chuo Kanzai Inc., our subsidiary. The revenue from that transaction is eliminated in our consolidated financial statements for the year ended December 31, 2024 as an intercompany transaction. We have not yet provided the social lending services to any third-party customers and do not have any specific planned projects at this point. However, we are planning to develop these services for general investors and in the process of license application to expand the current permitted business scope.

*Developments Related to Condominiums*

 

We plan to develop a call center to accelerate purchase of condominiums by promoting more communications with owners. We plan to hire more staff to enhance the sale of condominiums which we purchase directly to individual investors. We plan to develop a platform which will publicize prices of condominiums to the public (which would otherwise not be public information), cooperating with financial institutions.

*Developments Related to Solar Power Generation Facilities*

 

By compiling and analyzing a database of approximately 700,000 real estate owner and property information since our inception, we have developed our proprietary algorithm for condominiums that assesses the likelihood of a specific owner's need to sell property by analyzing factors such as the property purchased, purchase date, other properties owned, and estimated occupation of the owner. We currently use this algorithm in the business of purchase and sales of real estate. We plan to apply this algorithm to our solar power generation facilities to further enhance our capabilities to identify and purchase properties, and provide additional investment opportunities to real estate companies and individual investors.

 

 

*Developments Related to Crowdfunding*

 

We are planning to develop a new system to enable timely collections of funds from a larger number of users. Currently, our fund collection process involves the following steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. We recruit investors for the selected product on our crowdfunding platform, where they can apply for the investment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. If the total investment applications exceed the solicited amount, we conduct a draw to select the investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. We purchase the investment property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. We collect the funds from selected investors

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. We distribute the income or capital gains generated from the product.

Currently, we purchase the property before receiving funds from investors because the funds are transferred to our bank account via a third-party funds transfer system, which takes approximately one month to process. By developing a new funds transfer system, we aim to expedite the receipt of funds, thereby improving our cash management.

*Alliance in Our Real Estate Crowdfunding Business*

We are currently proceeding with a plan for the alliance in our real estate crowdfunding business with a Japanese real estate company. The company operates a real estate crowdfunding platform which has achieved the largest aggregated investment amount in Japan. We expect the increase of approximately 200 thousand in our real estate crowdfunding members if the alliance realizes. We have not yet entered into any agreement for the alliance with them and are currently in the process of reconciling their crowdfunding terms and conditions with ours. After the adjustment is completed, we plan to apply to the Tokyo Metropolitan Government for the terms and conditions. We plan to start offering crowd funding projects as soon as obtaining the approval from the government, which is expected to take several months.

*Developments Related to Rebuilding Condominiums*

In Japan, aging condominiums cannot be rebuilt due to opposition from some residents, which has become a widespread social concern in the country. To address this, we plan to offer condominium rebuilding consulting services in collaboration with condominium management associations.

**Customers and Suppliers**

Our primary customers in sales and brokerage of condominiums and solar power generation facilities are individual investors and real estate sales companies. Individual investors account for approximately 30% and real estate companies account for approximately 70% of our entire customer base respectively. We are aiming to increase the sales to individual investors. Our main suppliers are individual investors who own condominiums. In real estate crowdfunding, our main customers are individuals ranging from ages 20 to 70.

**<br> Industry Overview**

***Real Estate Industry Generally***

Despite the impacts of the COVID-19 pandemic, the Japanese real estate market continues to remain substantial with an annual transaction value around 4.6 trillion yen (approximately $32.6 billion), according to the Japan Real Estate Institute. However, market needs are beginning to evolve, as energy-saving features become mandatory for mortgage deductions, and interest rates rise alongside increases in the consumer price index in Japan since the start of 2024. Despite these changes, real estate and rent prices continue to climb, which presents challenges for companies specializing in the purchasing and sale of real estate like ours. We believe we can adapt to shifting market needs driven by economic conditions by creating businesses tailored to individual needs. Additionally, we expect that our expertise can help address social issues such as the aging of real estate and the growing number of people struggling to pay their mortgages.

The real estate industry is susceptible to economic trends, policy interest rate trends, land price trends, real estate sales price trends, and real estate taxation. Therefore, deterioration in real estate market conditions, significant increases in interest rates, or other changes in conditions could affect our business performance.

 ****

 ***Condominium Industry***

The condominium market in Japan continues to grow as investors recognize these properties as assets with potentially higher yields compared to securities like stocks and bonds, especially given Japan's negative interest rate policy. Global inflation, the weakening of the Japanese Yen, and a shortage of carpenters have driven up the costs of raw materials and labor, contributing to the rise in condominium prices. In the Tokyo metropolitan area, the average prices of pre-owned condominiums sold have been increasing for 60 consecutive months as of May 2025.

***Real Estate Crowdfunding Industry***

The global real estate crowdfunding market is expected to reach US$2,724.7 billion by the end of 2036, growing at a CAGR of 50.1% during the forecast period of 2024-2036. The industry size of the real estate crowdfunding market in 2023 is over US$21.0 billion. The major factors expected to propel the market growth during the forecasted period are the global industrialization driving commercial real estate activities and favorable regulations for real estate crowdfunding in several countries across the world. The Japanese real estate crowdfunding market is growing at a significant pace driven by massive construction activity in the country, contributing more than 5.5% of Japan's GDP in 2021. In Japan, crowdfunding requires the use of internet channels to collect small donations from many people. Generating sales from their products, services, and creative initiatives has become a common strategy for Japanese companies, both startups and established firms, leveraging a healthy market, cooperative local communities, and favorable regulatory conditions. As of December 31, 2023, the Japanese crowdfunding industry had a transaction value of approximately US$170 million. The average amount of funds raised per campaign in 2023 is expected to increase significantly, reaching US$45,000. (Global Real Estate Crowdfunding Market Research, Size, Share and Forecast 2036 (researchnester.com).

***Solar Power Industry***

The total amount of electricity generated from renewable energy sources, mainly solar power, has been increasing year by year, reaching 8,196 thousand kW at the end of FY2020, equivalent to 53% of the FY2030 target (15,405 thousand kW) of the 6th Basic Energy Plan. The market is expected to reach ¥1,798,600,000 thousand (approximately US$13,300,000 thousand).

***Real Estate Management Industry***

In the building maintenance and management business, the overall building units and the number of condominium units sold in the Tokyo metropolitan area are increasing year by year. Furthermore, apartments and buildings constructed during the high economic growth period are aging, and with demand for reconstruction and commensurate maintenance, management is expected to continue to be in demand in the future.

**Sales and Marketing**

 ****

*Purchase and Sales of Real Estate*

 

We market the services of real estate purchase and sales by holding seminars for investors. As to the renovation and resale, we use platforms such as "REINS", which is a third-party information platform for real estate and approach to potential purchasers through introduction from the other real estate companies. We also maintain relationships with approximately 100 real estate companies so that we can quickly find the best purchaser that can deal with our clients' demands among them as to the sales consultation services.

*Property Management Service*

To market our property management services, we offer a policy of zero monthly rental management fees for condominiums. This is a business model in which personnel and other expenses are covered by revenues from replacing tenants, and we aim to receive management contracts from owners of condominiums that they do not purchase from us, promote new sales, and absorb purchasing and sales needs from owners of managed properties. We continue to update and profile our database so that our analytical algorithms for property owner information, which is one of our strengths, can keep up with changes in market conditions.

 

*Purchase and Sale of Solar Power Generation Facilities*

We market our solar power generation facilities by approaching past and existing clients who are investors.

 

*Financial Services*

We market our real estate crowdfunding by advertising on the PR platforms such as PR TIMES.

*Real Estate Brokerage Services*

We market our real estate brokerage services by maintaining relationships with approximately 100 real estate companies so that we can quickly find the best purchaser that can deal with our clients' demands among them.

*Planned Auction Platform*

We plan to market our upcoming auction platform through our study session for real estate literacy. We will introduce a membership system for the auction platform and offer the memberships to the participants.

**Competition**

There are many competitors, from large companies to new entrants in the market of condominiums for investment. In the solar power facilities market, no major companies have entered the market and there are few competitors. Major companies have entered the market a bit, but there are still few competitors in voluntary sales market. There are many competitors, from large companies to new entrants in the real estate auction market and renovation market. In particular, the real estate crowdfunding industry is crowded with competitors, with 280 companies having entered the market as of December 31, 2022, including many leading listed companies such as Owner's Book, Creal, and Rimple.

There are many competitors, from large companies to new entrants in the market of real estate management.

**Our Competitive Strengths**

We believe that there are three major sources of our competitiveness:

First, our ability to purchase properties through the development of our proprietary algorithms. We started as a company specializing in purchasing and brokering condominiums for investment. By compiling and analyzing a database of real estate owner information (approximately 700,000 properties) since our inception, we have developed a proprietary algorithm which provides information on the possibility of a specific owner's need to sell property by analyzing the property the owner purchased, when the owner purchased it, the other properties the owner holds and the estimated occupation of the owner. We currently use this algorithm in the business of purchase and sales of real estate. This proprietary algorithm helps us to effectively approach property owners when we purchase real estate properties.

We also utilize this algorithm to analyze the potential financing commitment that financial institutions will provide for specific real estate properties. We are currently improving the algorithm by giving it training data for further learning. Once the learning process is completed, we will be able to take advantage in negotiation with sellers of properties that financial institutions have been reluctant to evaluate prior to our purchase. In addition, it will enable us to further expand purchases of real estate properties by reducing the time required to contact financial institutions for their evaluation.

Eventually, we aim to apply this algorithm to a customer service by which property owners who purchase from us can easily see the current evaluated sales price of their properties. As there are not services similar to Zillow.com in Japan, a platform which provides various information related to real estate in the U.S. including evaluated price of properties, we believe we can acquire a larger market share in Japan if it is realized.

Second, is our one-stop service which covers the entire process of real estate transaction. In general, Japanese real estate companies specialize in either purchasing or selling and multiple real estate agents intervene between a seller and a buyer in a transaction, each of which incurs intermediate costs. As a result, the final sales price tends to be higher as these agents take their profits in the process to the delivery to a buyer. However, by conducting the entire process from purchase to sale by our own without any agents, we can sell to our customers at a more reasonable and fairer price, which is one of our competitive strengths compared to the other real estate companies.

Third, our advantage lies in our commitment to fair sales prices and our strong partnerships with financial institutions. Typically, companies specializing in purchasing properties face challenges working with financial institutions because they facilitate sellers in making lump-sum loan repayments. However, through persistent negotiations, we secure loan commitments from these institutions, streamlining the entire process while enabling transactions without involving multiple intermediaries that incur additional costs before a property being sold to an individual buyer.

Finally, our strength lies in our design of a variety of real estate crowdfunding products. Future Real Estate Institute Inc., our subsidiary, has products that have not been commercialized in the current real estate crowdfunding market, such as ones purchased through voluntary sales, purchased through auctions, and ones after our renovation, which we believe is our advantage.

**Intellectual Property**

***Trademarks***

The names and marks "GATES", "SELL GATES ONE'S", "ONE ROOM EXIT", "GAISS", "中央管財" (a Japanese name of Chuo Kanzai Inc.), "GATES enterprise", "G.I.F.T", and "GATES GROUP" appearing in this prospectus are the property of the Company and are registered tradenames and trademarks of the Company in Japan.

The following tables summarize our held and applied for trademarks together with their duration.

---

| | | |
|:---|:---|:---|
| **Trademarks Held** | **Date of Issuance** | **Duration** |
| GATES | November 10, 2021 | 10 years |
| SELL GATES ONE'S | February 18, 2020 | 10 years |
| ONE ROOM EXIT | February 18, 2020 | 10 years |
| GAISS | July 31, 2024 | 10 years |
| 中央管財 | October 21, 2024 | 10 years |
| GATES enterprise | November 19, 2024 | 10 years |
| G.I.F.T | November 15, 2024 | 10 years |
| GATES GROUP | December 20, 2024 | 10 Years |

---

Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the®,™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend any use or display by us of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

***Patents***

The patent for the real estate scoring algorithm system was granted in Japan and registered on May 18, 2022, and has a duration of 20 years. The sole rights holder of the patent is GATES Inc. The scope of the patent includes data processing device which consists of a device evaluating multiple attributes of a condominium, a device judging the value of a condominium by scoring and ranking it based on the evaluation of these attributes, a device judging the materiality that each evaluation of the attribute has to the judged value of the condominium, and a device outputting the value and the materiality. These attributes are classified into 5 categories which consist of railroad information indicating which railroad line the condominium is located along, location information indicating where the condominium is located, building information indicating the characteristics of the condominium, management information indicating the status of property management, and price information of the condominium. The device evaluates these attributes based on the model obtained by learning the training data derived from the evaluation of a condominium performed by real estate specialists.

**Service Agreement**

On October 2, 2023 ("Effective Date"), the Company entered into a Service Agreement (the "Consulting Agreement") with HeartCore Enterprises, Inc. ("HeartCore"). Pursuant to the terms of the Consulting Agreement, HeartCore agreed to provide the Company certain services, including the following (collectively, the "Services"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Suggesting
 to hire human resources;

ii. Suggesting
 to convert financial statements from Japanese tax law basis to Japanese generally accepted accounting principles;

iii. Suggesting
 to translate accounting documents (i.e., financial statement, general ledger, journal entry);

iv. Suggesting
 to develop growth strategy for the Company after public listing;

v. Suggesting
 to consider the listing structure for the Company;

vi. Assistance
 with introductions to law firms, underwriters and auditing firm for the Company to make their selections, at their discretion;

vii. Assisting
 in the preparation of documentation for internal controls required for an initial public offering by the Company;

viii. Translation
 of requested documents into English;

ix. Conversion
 of accounting data from Japanese standards to U.S. GAAP;

x. Provide
 the Company with support services related to the Company's NASDAQ listing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xi. Attend
 and, if requested by the Company lead meetings with the Company's management and employees;

xii. Suggesting
 the preparation of Form S-1 or Form F-1, Form S-4 or Form F-4 filings;

xiii. Support
 for investor relations activities;

xiv. Preparing
 an investor presentation/deck and executive summary of the Company's business and operations; and

xv. Support
 for investor relations activities.

In providing the Services, HeartCore will not render legal advice or perform accounting services, and will not act as an investment advisor or broker/dealer. Pursuant to the terms of the Consulting Agreement, the parties agreed that HeartCore will not provide the following services, among others: negotiation of the sale of the Company's securities; participation in discussions between the Company and potential investors; assisting in structuring any transactions involving the sale of the Company's securities; pre-screening of potential investors; due diligence activities; nor providing advice relating to valuation of or financial advisability of any investments in the Company.

Pursuant to the terms of the Consulting Agreement, the Company agreed to compensate HeartCore as follows in return for the provision of Services during the Term (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;(a) US$600,000
 to be paid as follows: (i) US$60,000 on the Effective Date; (ii) US$300,000 after 4 months
 from the Effective Date; (iii) US$120,000 after 6 months from the Effective Date; and (iv)
 US$120,000 after 8 months from the Effective Date; and

&nbsp;&nbsp;&nbsp;&nbsp;(b) Issuance
 by the Company to HeartCore of a common share purchase warrant (the "Warrant"),
 deemed fully earned and vested as of the Effective Date, to acquire a number of shares of
 capital stock of the Company, to initially be equal to 3% of the fully diluted share capital
 of the Company as of the Effective Date, subject to adjustment as set forth in the Warrant.

The term of the Consulting Agreement's will continue until the earlier of (i) 3 years from the Effective Date and (ii) 2 years later from the date on which the stock of the Company or any successor or resulting entity in merger or other similar transactions begins to be publicly trade on a security exchange market (the "Term").

**Warrant**

On October 2, 2023, the Company issued a warrant (the "Warrant") to purchase the Company's common shares to HeartCore in exchange for the Services rendered as a consultant in connection with the proposed initial public offering of the Company pursuant to the Consulting Agreement. Pursuant to the terms of the Warrant, HeartCore may, at any time (i) on or after the earlier of the date that either (a) the Company completes its first initial public offering of stock in the U.S. resulting in any class of the Company's stock being listed for trading on any tier of the Nasdaq Stock Market ("Nasdaq"); (b) the Company consummates a merger or other transaction with a special purpose acquisition company ("SPAC") wherein the Company becomes a subsidiary of the SPAC; or (c) the Company undertakes any other Fundamental Transaction, as such term is defined in the warrant, (the "Trigger Date"); and (ii) on or prior to the close of business on the tenth anniversary of the Trigger Date, exercise the Warrant to purchase 16 common shares of the Company, which represents 3% of GATES GROUP Inc.'s issued and outstanding common shares as of the Trigger Date, for an exercise price per share of $0.01, subject to adjustment as provided in the Warrant. The number of shares for which the Warrant will be exercisable will be automatically adjusted on the Trigger Date to be 3% of the fully diluted number and class of shares of capital stock of the Company as of the Trigger Date, following completion of the transactions which caused the Trigger Date to be achieved. The Warrant contains a 9.99% equity blocker.

**First Forward Stock Split**

Effective April 30, 2024, the Company approved a forward stock split of the Company's issued and outstanding shares of common share, at a ratio of 1-for-20,000 (the "First Stock Split"). Immediately prior to the First Stock Split, there were 563 shares of common share issued and outstanding. As a result of the First Stock Split, the Company had 11,260,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the First Stock Split.

 **Incorporation of New Entity in the U.S.**

On August 5, 2024, GATES USA Inc, a wholly owned subsidiary of the Company, was incorporated in the state of Texas. GATES USA Inc engages in procurement and sales of lands and condominiums in the U.S.

 **Authorized Share Increase**

On October 31, 2024, the Company approved to increase the number of authorized shares from 30,000,000 to 67,500,000.

  ****

 **Second Forward Stock Split**

On October 31, 2024, the Company approved a forward stock split of the Company's issued and outstanding common shares, at a ratio of 1-for-2.25 (the "Second Stock Split"). As of December 31, 2023 and immediately prior to the Second Stock Split, there were 11,260,000 common shares issued and outstanding. As a result of the Second Stock Split, the Company has 25,335,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the Second Stock Split.

**Recent Developments**

 

*Sales*

The following sets forth partial and preliminary financial information and operating data from January 1, 2025 to April 30, 2025. We have provided the partial and preliminary results and operating data described below for the purpose of providing investors with the most current information that our company is able to provide under the time constraints, following the year ended December 31, 2024 for which we have filed audited financial statements, which form a part of this prospectus. The preliminary financial information is not a comprehensive statement of our financial results from January 1, 2025 to April 30, 2025. These preliminary amounts do not include other costs, such as operating expenses or interest expenses. Because our six months ended June 30, 2025 has not ended as of yet, we are still in the process of completing our interim semi-annual financial statements (which will encompass such partial and preliminary financial information and operating data). Therefore, it is possible that normal annual adjustments will be made to such partial and preliminary financial information and operating data.

During the period from January 1, 2025 through April 30, 2025, the Company settled 243 sales transactions of condominiums. The aggregate settlement amount of these condominiums was ¥4,864 million (approximately US$32 million), and the aggregate purchase price of these condominiums and related expenses corresponding to these sales was ¥4,417 million (approximately US$29 million).

During the period from January 1, 2025 through April 30, 2025, the Company settled 9 real estate consulting transactions and the aggregate settlement amount from such transactions was ¥4 million (approximately US$30 thousand). The costs and expenses associated with these settlements was ¥10 thousand (approximately US$72).

During the period from January 1, 2025 through April 30, 2025, the Company received consideration from 1,971 agreements for the property management services and the aggregate consideration amount from such agreements was ¥72 million (approximately US$484 thousand). The costs and expenses associated with these settlements was ¥29 million (approximately US$193 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company settled 21 sales transactions of solar power generation facilities. The aggregate settlement amount of these solar power generation facilities was ¥319 million (approximately US$2,127 thousand), and the aggregate purchase price of these facilities and related expenses corresponding to these sales was ¥260 million (approximately US$1,736 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company generated minimal interest revenue from the financial services.

During the period from January 1, 2025 through April 30, 2025, the Company settled 142 real estate brokerage transactions and the aggregate settlement amount from such transactions was ¥87 million (approximately US$581 thousand). The costs and expenses associated with these settlements was ¥352 thousand (approximately US$2 thousand).

During the period from January 1, 2025 through April 30, 2025, the Company received rent from 305 agreements for the real estate leasing and the aggregate rent from such agreements was ¥25 million (approximately US$166 thousand). The costs and expenses associated with these rent revenues was ¥14 million (approximately US$98 thousand).

*Loans and bonds*

During the period from January 1, 2025 through May 25, 2025, the Company entered into various loans and corporate bonds, in a total principal amount of approximately US$6.3 million, with banks, financial institutions and individual investors for working capital purpose and for the purpose of purchasing real estate properties. The Company paid off certain loans and bonds in an approximate aggregate amount of US$766 thousand ahead of schedule. See "*Management's Discussion and Analysis of Financial Condition and Results of Operations – Loans and Bonds*" in this prospectus for more detailed information about the loans and bonds.

 *Waiver of Stock Acquisition Rights*

On January 22, 2025, HeartCore Financial, Inc. ("HeartCore Financial") entered into an Agreement on Waiver of Stock Acquisition Rights with the Company whereby HeartCore Financial waived 760,050 stock acquisition rights of the Company to purchase common shares of the Company equal to 3% of the issued and outstanding common shares on a fully diluted basis as of the day prior to the successful listing on the Nasdaq at an exercise price of ¥1 (US$0.01) per common share.

**Employees**

As of June 2, 2025, the Company and its subsidiaries had in aggregate 138 full-time employees and 8 part-time employees as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Function** | **Full-Time**<br> **Employees** | **Full-Time**<br> **Employees** | **Part-Time**<br> **Employees** | **Part-Time**<br> **Employees** |
| Sales and Marketing |  | 119 |  | 8 |
| Management (Finance, HR, General Admin) |  | 19 |  | 0 |

---

None of our employees are represented by a union. We consider our relations with our employees to be good.

**Facilities**

The Company's head office is located at 34F Sumitomo Fudosan Shinjuku Grand Tower, 8-17-1 Nishishinjuku, Shinjuku-ku, Tokyo, Japan. The Company subleases this office space which is approximately 748.13 square meters as well as an additional 375.06 square meters of office space from a shareholder of the Company. The current term of this sublease will expire on December 31, 2026. The terms of the office sublease provide for an aggregate base rent of US$74,744 and an aggregate sales tax contribution of US$7,474 per month.

The Company also leases office space located at 23F Osaka Ekimae 4th Bldg., 1-11-4 Umeda, Kita-ku, Osaka-shi, Osaka, Japan. The Company leases this office space which is approximately 110.79 square meters from a third party. The current term of this lease will expire on July 31, 2025. The terms of the office lease provide for a base rent of US$3,725 and a sales tax contribution of US$373 per month.

The Company also leases office space located at 12F Osaka Ekimae 2nd Bldg., 1-2-2-1200 Umeda, Kita-ku, Osaka-shi, Osaka, Japan. The Company leases this office space which is approximately 74.98 square meters from a third party. The current term of this lease will expire on January 4, 2026. The terms of the office lease provide for a base rent of US$1,609 and a sales tax contribution of US$161 per month.

The Company also leases office space located at 6F Ohtaka Bldg., 1-16-14 Shinjuku, Shinjuku-ku, Tokyo, Japan. The Company leases this office space which is approximately 44.30 square meters from a third party. The current term of this lease will expire on May 25, 2027. The terms of the office lease provide for a base rent of US$1,189 and a sales tax contribution of US$119 per month.

We believe that our facilities are suitable to meet our current needs.

**Government Regulation**

***Regulations Relating to Real Estate Sales and Brokerage***

Our Company's business related to the sale and brokerage of real estate falls under the application of the "Real Estate Brokerage Act." According to the Real Estate Brokerage Act, anyone wishing to engage in real estate transactions (referred to as "Real Estate Transactions") must first obtain a license from the Minister of Land, Infrastructure, Transport and Tourism (referred to as the "MLIT") or the governor of the applicable prefecture. The MLIT or the governor of the applicable prefecture may issue instructions or revoke the license or order the suspension of business for up to one year if a real estate transaction agent engages in transactions that violate the Real Estate Brokerage Act or other significantly inappropriate acts. The Real Estate Brokerage Act also obligates real estate transaction agents to employ a certain number of qualified and registered real estate transaction managers or engage them in their business by other means.

The Real Estate Brokerage Act imposes various obligations on real estate transaction agents. For example, they must provide written documents containing important information about the property (referred to as "Disclosure Statement") to prospective buyers, lessees, and certain stakeholders before concluding a real estate contract, and provide a sufficient explanation. Additionally, the Real Estate Brokerage Act imposes restrictions on the amount of earnest money that can be collected from buyers and the damages payable to real estate transaction agents. It also imposes limitations on advertising related to real estate transaction agents' activities.

In May 2022, amendments to the Real Estate Brokerage Act and related regulations were enacted. These amendments allow for the electronic delivery of documents that were previously required to be provided in writing, such as Disclosure Statements, conditional upon the consent of property buyers, lessees, and/or certain stakeholders. As a result of these amendments, virtually all real estate transactions can now be completed online.

***Regulations Relating to Rental Housing Management***

The rental housing management business conducted by the Company falls under the application of the "Act on Rental Housing Management Business." Those engaged in rental housing management with 200 or more units under management are required to be registered by the MLIT.

Pursuant to the Act on Rental Housing Management Business, at each business site, it is mandatory to appoint a business manager with knowledge and experience in rental housing management, provide written explanations regarding the specific details and implementation methods of management tasks before entering into a management contract, segregate rental incomes and other managed funds from personal assets, and regularly report on the status of operations to the counterparty of the management contract. Pursuant to the Act on Rental Housing Management Business, subleasing agents are obligated to provide written explanations regarding important matters (such as rent and contract duration) before entering into a specific lease agreement (master lease agreement) in order to prevent the intentional withholding or misrepresentation of facts by employees influencing the counterparty's judgment, as well as to prohibit exaggerated advertising. Violators may face measures such as suspension of business operations or fines.

In case of violations of the Act on Rental Housing Management Business, the MLIT may revoke the registration of the rental housing management operator and order the suspension of all or part of their business for a period of up to one year. The amendment to the Act on Rental Housing Management Business, enacted in May 2022 allows for the electronic delivery of documents such as the disclosure statements and contracts, conditional upon the prior consent of the contracting party.

***Regulations Relating to Condominium Management***

Condominium management companies are subject to the "Act on Advancement of Proper Condominium Management," which requires them to appoint a qualified management officer with a national license for each office, depending on the number of contracts entrusted by the condominium associations. Furthermore, before entering into a management contract with a condominium management association, the aforementioned qualified individuals must explain important matters, provide written documents at the time of contract formation, and fulfill obligations such as monthly financial reports to the entrusted association and reporting on the state of condominium management after the end of the fiscal year. Additionally, pursuant to the Act on Advancement of Proper Condominium Management, condominium management companies must manage repair reserve funds and other assets entrusted by the association separately from their own assets and those of other associations. They also have certain obligations such as displaying signs, maintaining books, and prohibiting subcontracting of routine tasks. In the event of violations of the Act on Advancement of Proper Condominium Management, the MLIT may order the suspension of all or part of their operations for up to one year.

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***Regulations Relating to Real Estate Leasing***

In Japan, the leasing of buildings is primarily governed by the Civil Code and the Act on Land and Building Leases. Regarding leasing transactions of buildings, the Act on Land and Building Leases takes precedence over the Civil Code, mainly from the perspective of tenant protection. Unless otherwise provided in the Act on Land and Building Leases, its provisions are mandatorily applied to building leases, even if they are more disadvantageous to the tenant than the provisions of the Civil Code, irrespective of the conditions of the relevant lease contract.

Building lease agreements may have fixed terms or be indefinite. However, under the Act on Land and Building Leases, building lease agreements for less than one year are considered indefinite. Even in cases where a building lease agreement has a term of one year or more, unless the landlord provides notice of non-renewal approximately six months before the expiration of the term, the lease agreement is automatically deemed to be renewed indefinitely. Under the Act on Land and Building Leases, it is stipulated that landlords can terminate building leases by giving six months' notice. However, in the case of building leases with a term of one year or more, it is generally not possible to terminate the lease before the expiration of the term unless otherwise specified in the lease agreement.

Under the Act on Land and Building Leases, the lessor cannot indicate their intention not to renew or terminate the lease unless there are legitimate reasons based on various factors such as the necessity of building usage for both the lessor and the lessee, the history of the building lease, the current usage status of the building, its condition, and the amount the lessor will pay the lessee as compensation for surrendering the building.

Under the Act on Land and Building Leases, if the rent becomes unreasonable, one party to the building lease contract may request an increase or decrease in the rent, regardless of the terms of the lease agreement, due to (i) changes in taxes or other public charges imposed on the leased building or land, (ii) fluctuations in the price of the building or land or other economic conditions, or (iii) comparison with the rent of neighboring similar buildings. However, this provision of the Act on Land and Building Leases does not allow the lessor to demand an increase in rent if the lease agreement specifies that the rent will not be increased for a certain period.

If the parties fail to reach an agreement regarding the increase or decrease in rent, either party can seek a court order. In this case, the court considers various factors, including those mentioned from (i) to (iii), to determine whether to adjust the rent and to what extent. If the court decides to decrease the rent, the lessor is ordered to refund any excess rent collected after the lessee's initial request and pay interest at an annual rate of 10% on any excess amount.

Under the Land Lease and House Lease Law, for a type of special fixed-term building lease called a fixed-term building lease, the provisions regarding the renewal of lease agreements do not apply. Furthermore, the lessor and lessee may exclude the application of the provisions regarding the adjustment of rent mentioned above.

***Regulations Relating to Defects Liability and Contractual Non-Conformity Liability***

Regarding real estate sales operations, under the Civil Code and certain other laws, there is a possibility of assuming defects liability for sales contracts or construction defects concluded before March 31, 2020, and contractual non-conformity for sales contracts or construction after April 1, 2020. With the enactment of the "Act for Partial Revision of the Civil Code" on April 1, 2020, the provisions regarding defects liability were entirely revised. The concept of "defects" was replaced with "contractual non-conformity," clarifying the responsibilities arising from such non-conformities.

In the Civil Code, if there are potential defects or contractual non-conformities in the object of sale or construction, the seller or constructor of a building or land bears legal responsibility to the buyer or contractor for guaranteeing defects or contractual non-conformities. These legal responsibilities typically extend for one year from the date when (i) the buyer became aware of potential defects or contractual non-conformities regarding type or quality, (ii) the delivery of the object with defects in construction, or (iii) the contractor recognized contractual non-conformities regarding type or quality. In the case of contractual non-conformities, after the recent amendments to the Civil Code, pursuing these legal responsibilities can involve cancellation of the sale, deduction of the sale price, realization of conformity, and claims for damages (including resale profits). The Real Estate Brokerage Act generally prohibits real estate transaction agents, who are sellers of buildings or land, from unfairly altering these legal responsibilities to the detriment of the buyer.

The "Housing Quality Assurance Act." imposes stricter responsibilities on sellers of newly constructed homes (including newly built condominiums) and construction companies. Under certain conditions, sellers and construction companies of newly built homes bear legal responsibility for defects in the main parts of the home for ten years from its delivery, and any contracts that seek to alter these responsibilities to the detriment of buyers or contractors are deemed invalid.

***Regulations Relating to Real Estate Crowdfunding***

The Act on Specified Joint Real Estate Ventures was enacted in 1995 to protect investors in "real estate specified joint enterprises" and promote their development. A real estate specified joint enterprise involves a business entity raising funds from multiple investors through anonymous or discretionary partnership agreements to acquire, lease, and manage income-generating real estate, distributing profits from acquisitions to investors.

While our real estate crowdfunding business operates under a license issued by the Governor of Tokyo based on the Act on Specified Joint Real Estate Ventures, the crowdfunding market is still in its early stages. There is a possibility of amendments to the Act on Specified Joint Real Estate Ventures in the future. If such amendments occur, we will promptly adapt to them. However, if regulatory tightening due to legal revisions significantly impacts our business operations, financial condition, and performance, there may be implications for our business activities, financial status, and operating results.

Currently, under the Act on Specified Joint Real Estate Ventures, it is required that each relevant business meets certain capital requirements and possesses the financial foundation necessary for conducting real estate specified joint enterprises, as well as the human resources required to properly carry out the business.

Real estate specified joint enterprise agreements must meet certain criteria, and it is required to have qualified business managers, such as Certified Real Estate Consulting Masters, Certified Building Administrator, and ARES Certified Master, at each office. Additionally, to ensure that investors can obtain sufficient information when conducting pre-contract explanations and contract negotiations online, it is necessary to establish a system for electronic transaction operations. Compliance with these basic requirements as a real estate specified joint enterprise operator is required. Furthermore, any changes in business processes or documents used require approval from the Tokyo Metropolitan Government upon each alteration. Violation of this act may result in the revocation of the operator's license and, in serious cases, suspension of operations.

***Regulations Relating to the Solar Power Business***

Our Company engages in purchasing solar power generation facilities from individuals who wish to sell existing operational facilities and selling them to customers who wish to purchase such facilities. Conducting due diligence on the investment is crucial for both purchases and sales. The main laws applicable to this business include the Real Estate Brokerage Act, necessary for dealing with land where solar panels are installed, and the Secondhand Goods Business Act, necessary for dealing with solar panels. The restrictions under the Real Estate Brokerage Act are as mentioned above.

Under the Secondhand Goods Business Act, there are obligations such as verifying the identity of transaction partners to prevent crime, reporting obligations in cases of suspected criminal goods, and recording obligations for transaction partners and items brought in for potential future criminal investigations. Violation of the Secondhand Goods Business Act may result in imprisonment of up to three years or a fine of up to one million yen, as well as administrative penalties such as license revocation.

***Regulations Relating to the Money Lending Business:***

The Money Lending Business Act mandates the assessment of repayment capacity and imposes restrictions such as prohibiting loans exceeding one-third of the borrower's annual income, known as the total loan amount regulation. Additionally, if the loan amount exceeds 500,000-yen, submission of proof of annual income is required. These measures aim to prevent excessive lending by money lenders and protect borrowers from falling into multiple debts.

Furthermore, there are limits on interest rates based on the amount borrowed. There are two legal maximum interest rates: the maximum interest rate under the Interest Rate Restriction Act and the maximum interest rate under the Investment Law. However, to alleviate the burden of interest, lending above the maximum interest rate set by the Interest Rate Restriction Act is legally invalid in civil matters and can result in administrative penalties. Additionally, lending above the maximum interest rate set by the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates is subject to criminal penalties.

Additionally, there are regulations regarding debt collection methods and measures to prevent excessive collection practices, such as requiring lenders to take out life insurance policies with the borrower as the insured to mitigate risks, as well as prohibitions on lenders holding the borrower's savings account passbook or cash card. To ensure proper operation of lending businesses, it is mandatory for individuals to pass qualification exams on the necessary knowledge related to lending for each business location and be registered. Moreover, there are provisions for the aggregation of credit information (credit reports) regarding individuals' borrowing activities from lending institutions and others, which is then provided to credit reporting agencies for registration and dissemination to lending institutions and others.

If found in violation of these regulations, individuals may face penalties such as imprisonment for up to one or two years, or fines of up to 3 million yen, depending on the specific prohibition. Additionally, administrative measures such as cancellation of registration or suspension of business may be imposed on lending businesses. Furthermore, conducting lending business without proper registration may result in imprisonment for up to 10 years or fines of up to 30 million yen.

***Regulations Relating to Financial Instruments Dealers***

Rules and prohibitions regarding sales and solicitation include regulations on advertising, the obligation to provide written documents before and at the time of contract conclusion, prohibition of unfair solicitation practices, principles of suitability, and prohibition of loss compensation. In the event of a violation of the Financial Instruments and Exchange Act, administrative penalties such as improvement orders, business suspension orders, or registration cancellations may be imposed by the Financial Services Agency. Individuals conducting financial instruments business without registration may face imprisonment of up to five years, a fine of up to 5 million yen, or both.

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***Regulations Relating to Business Operations in General***

In Japan, there are various labor-related laws such as the Labor Standards Act, the Industrial Safety and Health Act, and the Labor Contract Act. The Labor Standards Act sets the minimum standards for working conditions such as working hours, rest periods, and the number of holidays. The Industrial Safety and Health Act mandates measures to ensure the safety of employees and protect the health of workers in the workplace. The Labor Contract Act regulates employment contracts, changes to work rules, dismissals, and disciplinary actions. Our Company complies with these regulations.

The "Act on the Protection of Personal Information" and related guidelines impose various requirements on businesses, including our group companies, that use databases containing personal information, such as appropriate storage of personal information and restrictions on sharing information with third parties. If the Personal Information Protection Commission or other relevant authorities order measures necessary to comply with the law and we fail to comply, our group may face criminal or administrative penalties. Recent amendments have expanded the scope of the Act on the Protection of Personal Information to include anonymized data, pseudonymized data, and personal identification information.

**Legal Proceedings**

From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

We acquired Chuo Kanzai Inc. and Future Real Estate Institute Inc. through a merger in 2022. As of March 2024, a lawsuit was filed against Chuo Kanzai Inc. in Tokyo District court by the former owner regarding payment of severance benefits totaling 187 million yen and Chuo Kanzai Inc. has filed a countersuit against the former owner for breach of representations and warranties. The current status of this case is still ongoing and we are waiting for the judgement.

**MANAGEMENT**

**Our Executive Officers, Directors, and Corporate Auditors**

The following table sets forth the names, ages and positions of our executive officers and members of our board of directors and of our board of corporate auditors as of the date of this prospectus. The business address of all of persons identified below is 34F Sumitomo Fudosan Shinjuku Grand Tower, 8-17-1 Nishishinjuku, Shinjuku-ku, Tokyo, Japan.

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Positions Held** |
| **Officers and Directors** |  |  |
| Yuji Sekino | 39 | Chief Executive Officer (CEO) and Director |
| Takeshi Seto | 44 | Chief Financial Officer (CFO) and Director |
| Takahiko Nakajima | 39 | Director |
| Takashi Nishibori | 65 | Independent Director |
| Hironori Matsumiya | 49 | Independent Director |
| Masayoshi Takatsu | 47 | Corporate Auditor\* |
| Yoshihito Arita | 39 | Corporate Auditor\* |
| Masumi Kawaguchi | 37 | Corporate Auditor\* |

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\* Members of our statutory Board of Corporate Auditors are not members of our Board of Directors.

**Biographical Information**

The following is a summary of certain biographical information concerning our executive officers, directors, and corporate auditors.

**Executive Officers**

***Yuji Sekino***

Mr. Sekino has served as the Company's Chief Executive Officer and Director since May 2018. He founded the Company's wholly owned subsidiary GATES Inc. (formerly named Sellgate Japan Co., Ltd.) in August 2011, and founded the Company (formerly named Sellgate Holdings Co., Ltd.) in May 2018. Mr. Sekino also founded the Company's wholly owned subsidiary GATES Enterprise Inc. in January 2020. Since establishment, Mr. Sekino has been overseeing the overall management of the Company and its subsidiaries as CEO and director. Mr. Sekino graduated from Hinode Private High School in March 2004. Mr. Sekino does not and has not previously served as a director of any reporting company.

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***Takeshi Seto***

Mr. Seto has served as the Company's Chief Financial Officer since April 2023 and as a Director since July 2023. He worked at the accounting firm Heartful Accounting Firm from 2005 to 2011, Seto Accounting Office from 2011 to 2014, and Harigaya Accounting Office from 2015 to 2022. He was an accounting and tax advisor of GATES GROUP Inc. from January 2023 to March 2023. Mr. Seto has been providing comprehensive support in accounting, taxation, and general management since the establishment of the Company. Mr. Seto graduated from Setagaya Gakuen High School in March 1999. Mr. Seto does not and has not previously served as a director of any reporting company.

**Directors**

***Takahiko Nakajima***

Mr. Nakajima has served as a director of the Company since December 2019. Mr. Nakajima joined UK International Co., Ltd. in November of 2001. In December 2012, he joined the Company's wholly owned subsidiary GATES Inc. (formerly named Sellgate Japan Co., Ltd.), where he served as the head of the department responsible for contract management and systems. Mr. Nakajima has served as a director of GATES Inc. and GATES enterprise Inc., each a wholly owned subsidiary of the Company, since January 2020. He has also served as a director of Chuo Kanzai Inc., a wholly owned subsidiary of GATES Inc since October 2022. Mr. Nakajima does not and has not previously served as a director of any reporting company.

**Independent Directors**

***Takashi Nishibori***

Mr. Nishibori has served as an independent director of the Company since March 2022. Mr. Nishibori served as an independent director of ANAP Co., Ltd. from November 2007 to October 2024. He has served as a director of JBI Inc., previously known as TNBI Inc. since June 2016. He has also served as an independent director of TSUKADA GLOBAL HOLDINGS Inc., HEYAGOTO Co., LTD., and Zeus Enterprise Co., Ltd. since March 2006, September 2023, and October 2023, respectively. Since November 2018, Mr. Nishibori has served as a corporate auditor of Yoshimura Package Partners Co., Ltd. Mr. Nishibori graduated from the Faculty of Commerce of Osaka City University in March 1983. Mr. Nishibori does not and has not previously served as a director of any reporting company.

***Hironori Matsumiya***

Mr. Matsumiya has served as an independent director of the Company since March 2022, and has served as an independent director of the Company's wholly owned subsidiaries, GATES Inc. and GATES Enterprise Inc. since October 2022. In 2006, he completed training at the Supreme Court of Japan's Legal Training and Research Institute. He was certified as a lawyer in Japan and joined Orrick, Herrington & Sutcliffe, LLP in 2006, where he worked until February 2009. From March 2009 to September 2014, he worked at MURATA & WAKATSUKI LAW OFFICES. From October 2014 to December 2017, he worked at Island Shinjuku Law Office. He served as a corporate auditor of JIMOS Co., Ltd. from June 2017 to June 2019. Since 2018, he has served as a partner at One Asia Lawyers. From June 2020 to June 2024, he served as a corporate auditor at Kantokasei Kogyo Co., Ltd., a manufacturer of plated products. Mr. Matsumiya graduated from the Faculty of Law of Keio University's in March 2000. Mr. Matsumiya does not and has not previously served as a director of any reporting company.

**Corporate Auditors**

***Masayoshi Takatsu***

Mr. Takatsu has served as a corporate auditor of the Company since November 2019. Since March 2018 to July 2024, he served as an independent director at Senkaku Co., Ltd., which operates a coin laundry business. From June 2023 to the present, he has also been an independent director at Sokaen Ace Co., Ltd., a company listed on the Tokyo Stock Exchange. Since December 2023, he has been serving as a corporate auditor at Robot Consulting Co., Ltd., which is engaged in software development and related activities.

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***Yoshihito Arita***

Mr. Arita has served as a corporate auditor of the Company since July 2023, and he has served as a corporate auditor of the Company's wholly owned subsidiaries, GATES Inc. and GATES Enterprise Inc. since July 2023. He has served as a director of H&I Inc. and Tokyo Growth Inc. since June 2022 and August 2022, respectively. Mr. Arita has also served as an independent director of Teal Bank Corp., HSJ Corporation, AMATUHI Inc., and Jiyujutaku Inc. since December 2020, March 2023, April 2024, and March 2024, respectively.

***Masumi Kawaguchi***

Ms. Kawaguchi has served as a corporate auditor of the Company since April 1, 2025.After working at Ernst Young, Ms. Kawaguchi obtained Japanese certified public accountant and worked at KPMG AZSA LLC from February 2018 to September 2023. From November 2023 to May 2024, she worked at UNIVIS GROUP, and from May 2024 to March 2025, she worked at Resolute Partners Inc. Ms. Kawaguchi graduated from Waseda University in March 2011. Ms. Kawaguchi does not and has not previously served as a director of any reporting company.

**Family Relationships**

There are no family relationships among any of our directors, executive officers or corporate auditors.

**Corporate Governance Practices**

We are a "foreign private issuer" as defined under the federal securities laws of the United States and the Nasdaq listing standards. Under the federal securities laws of the United States, foreign private issuers are subject to different disclosure requirements than U.S.-domiciled public companies. We intend to take all actions necessary for us to maintain our status as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act, the Exchange Act and other applicable rules adopted by the SEC and the Nasdaq listing standards. Under the SEC rules and the Nasdaq listing standards, a foreign private issuer is subject to less stringent corporate governance requirements. Subject to certain exceptions, the SEC and the Nasdaq permit a foreign private issuer to follow its home country practice in lieu of their respective rules and listing standards. In general, our articles of incorporation and the Companies Act govern our corporate affairs.

As a foreign private issuer, we will follow Japanese law and corporate practice in lieu of the corporate governance provisions set out under Nasdaq Rule 5600, the requirement in Nasdaq Rule 5250(b)(3) to disclose third party director and nominee compensation, and the requirement in Nasdaq Rule 5250(d) to distribute annual and interim reports. Of particular note, the following rules under Nasdaq Rule 5600 are exempt from Japanese law requirements:

● Nasdaq Rule 5605(b)(1) requires that at least a majority of a listed company's board of directors be independent directors. Under our current corporate structure, the Companies Act does not require independent directors.

● Nasdaq Rule 5605(c)(2)(A) requires a listed company to have an audit committee composed entirely of not less than three directors, each of whom must be independent. Under Japanese law, a company may have a statutory auditor or a board of auditors. We have a three-member Board of Corporate Auditors, each member of which will meet the requirements of Rule 10A-3 under the Exchange Act. See "*Management* — *Board of Corporate Auditors*" below for additional information.

● Nasdaq Rule 5605(d) requires, among other things, that a listed company's compensation committee be comprised of at least two members, each of whom is an independent director as defined under such rule. Our board of directors will collectively participate in the discussions and determination of compensation for our executive and directors (subject to the maximum aggregate compensation amount resolved by our shareholders meetings), and other compensation related matters. Likewise, our corporate auditors discuss and determine compensation of each corporate auditor (subject to the maximum aggregate compensation amount resolved by our shareholders meetings) without involvement of our board of directors.

● Nasdaq Rule 5605(e) requires that a listed company's nomination and corporate governance committee be comprised solely of independent directors. Our board of directors will not have a standalone nomination and corporate governance committee. Our board of directors will collectively participate in the nomination process of potential directors and corporate auditors (in the cases of corporate auditors, consent of board of corporate auditors is required) and oversee our corporate governance practices.

● Nasdaq Rule 5620(c) provides a one-third quorum requirement applicable to shareholder meetings. In accordance with Japanese law and generally accepted business practices, our articles of incorporation provide that there is no quorum requirement for a general resolution of our shareholders. However, under the Companies Act and our articles of incorporation a quorum of not less than one-third or more of the total number of voting rights is required in connection with the election of directors, corporate auditors and certain other matters.

The Company intends to avail itself of these exemptions. More specifically, the Company will not have a compensation committee or a nominating and corporate governance committee. Therefore, for as long as the Company remains a "foreign private issuer," the Company will not have the same protections afforded to shareholders of companies that are subject to all of these corporate governance requirements. If at any time the Company ceases to be a "foreign private issuer" under the rules of the Nasdaq, the Company intends to avail itself of the "controlled company" exception to the rules of the Nasdaq.

The "controlled company" exception to the rules of the Nasdaq provides that a company of which more than 50% of the voting power is held by an individual, group or another company, a "controlled company," need not comply with certain requirements of the corporate governance rules of the Nasdaq. Following this offering, Yuji Sekino will control approximately 60.5% of the voting power of our outstanding shares if all the common shares being offered are sold (or 60.1% of our outstanding voting power if the underwriters exercise the over-allotment option in full). Accordingly, we expect to be a "controlled company" within the meaning of the corporate governance standards of the Nasdaq.

As a "controlled company" (which is a company of which more than 50% of the voting power is held by an individual, group or another company), we may elect not to comply with certain corporate governance standards, including the requirements: (1) that a majority of our board of directors consist of independent directors; (2) that our board of directors have a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and (3) that our board of directors have a nominating and corporate governance committee that is comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities. For so long as we qualify as a controlled company, we may take advantage of these exemptions. Accordingly, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of these corporate governance requirements.

In the event that we cease to be a "foreign private issuer" under the rules of the Nasdaq and cease to be a "controlled company" and our common shares continue to be listed on the Nasdaq, the Company's Board of Directors will take all action necessary to comply with the corporate governance rules of the Nasdaq, including, but not limited to, establishing certain committees composed entirely of independent directors, subject to a permitted "phase-in" period.

**Board of Directors**

Our board of directors has the ultimate responsibility for the administration of our affairs. Our board of directors meets no less than once every three months. Under the Companies Act and our articles of incorporation, our Company shall have three or more directors on our board of directors. Our board of directors is currently comprised of three directors. Directors are typically nominated at the board level and are elected at general meetings of the shareholders. The term of office of any director expires at the close of the ordinary general meeting of shareholders held with respect to the last fiscal year ended within one years after such director's election to office. Our directors may, however, serve any number of consecutive terms.

Our board of directors appoints from among its members one or more representative directors, who serve as head administrator(s) over our Company's affairs and represent our Company in accordance with the resolutions of our board of directors. Our board of directors may appoint from among its members a chairperson, a president or one or more deputy presidents, senior managing directors, or managing directors.

Under our Company's current corporate structure, the Companies Act does not require our board of directors to have any independent directors. Our board of directors is currently comprised of five directors, three of whom (Yuji Sekino, Takeshi Seto and Takahiko Nakajima) are considered non-independent and two of whom (Takashi Nishibori and Hironori Matsumiya) are considered independent.

**Board of Corporate Auditors**

As permitted under the Companies Act, we have elected to structure our corporate governance system as a company with a separate board of corporate auditors instead of an audit committee of our board of directors. Our articles of incorporation provide for no more than three corporate auditors. Corporate auditors are typically nominated at the board level and are elected at general meetings of shareholders by a majority of shareholders entitled to vote, where a quorum is established by shareholders holding one-third or more of the voting rights of those who are entitled to vote are present at the shareholders' meeting. The normal term of office of any corporate auditor expires at the close of the annual general meeting of shareholders held with respect to the last fiscal year ended within four years after such corporate auditor's election to office. Our corporate auditors may, however, serve any number of consecutive terms. Corporate auditors may be removed by a special resolution of a general meeting of shareholders.

Our corporate auditors are not required to be certified public accountants. Our corporate auditors may not concurrently serve as directors, employees or accounting advisors (*kaikei sanyo*) of our Company or any of our subsidiaries or serve as corporate officers of our subsidiaries. Under the Companies Act, at least one-half of the corporate auditors of a company must be persons who satisfy the requirements for an outside corporate auditor under the Companies Act, and at least one of the corporate auditors must be a full-time corporate auditor.

The function of our board of corporate auditors and each corporate auditor is similar to that of independent directors, including those who are members of the audit committee of a U.S. public company. Each corporate auditor has a statutory duty to supervise the administration by the directors of our affairs, to examine our financial statements and business reports to be submitted by a representative director at the general meetings of shareholders, and to prepare an audit report. Our corporate auditors are obligated to participate in meetings of our board of directors and, if necessary, to express their opinion at such meetings, but are not entitled to vote. Our corporate auditors must inspect the proposals, documents, and any other materials to be submitted by our board of directors to the shareholders at the shareholders' meeting. If a corporate auditor finds a violation of statutory regulations or our articles of incorporation, or another significant improper matter, such auditor must report those findings to the shareholders at the shareholders' meeting.

Furthermore, if a corporate auditor believes that a director has engaged in, or is likely to engage in, misconduct or acts that are significantly improper, or that there has been a violation of statutory regulations or our articles of incorporation, the corporate auditor: (i) must report that fact to our board of directors; (ii) can demand that a director convene a meeting of our board of directors; and (iii) if no such meeting is convened in response to the demand, can convene the meeting under the corporate auditor's own authority. If a director engages in, or is likely to engage in, an activity outside the scope of the objectives of our Company or otherwise in violation of laws or regulations or our articles of incorporation, and such act is likely to cause significant damage to our Company, then a corporate auditor can demand that the director cease such activity.

Our board of corporate auditors has a statutory duty to prepare an audit report based on the audit reports issued by the individual corporate auditors and, in the case of audit reports related to financial statements, the independent auditors of our Company each year, and submit such audit reports to a relevant director. A corporate auditor may note an opinion in an audit report issued by our board of corporate auditors, if the opinion expressed in such corporate auditor's individual audit report is different from the opinion expressed in the audit report issued by our board of corporate auditors. Our board of corporate auditors is empowered to establish the audit principles, the method of examination by our corporate auditors of our affairs and financial position, and any other matters relating to the performance of our corporate auditors' duties.

Additionally, our corporate auditors must represent our Company in: (i) any litigation between our Company and a director; (ii) dealing with shareholders' demands seeking a director's liability to our Company; and (iii) dealing with notices of litigation and settlement in a derivative suit seeking a director's liability to our Company. A corporate auditor can file court actions relating to our Company within the authority of our corporate auditors, such as an action to nullify the incorporation of our Company, the issuance of shares, or a merger, or to cancel a resolution at a shareholders' meeting.

**Differences in Corporate Governance from the Nasdaq Listing Rules**

Companies listed on the Nasdaq must comply with certain standards regarding corporate governance under Rule 5605 of the Nasdaq Listing Rules. However, listed companies that are foreign private issuers, such as we will be, are permitted to follow home country practice in lieu of certain provisions of Rule 5605 of the Nasdaq Listing Rules.

The following table shows the significant differences between the corporate governance practices followed by U.S. listed companies under Rule 5605 of the Nasdaq Listing Rules and those followed by GATES.

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| | |
|:---|:---|
| **Corporate Governance Practices**<br> **Followed by Nasdaq-listed U.S. Companies** | **Corporate Governance Practices**<br> **Followed by GATES** |
| 1. A Nasdaq-listed U.S. company must have a majority of directors meeting the independence requirements under Rule 5605(a)(2) of the Nasdaq Listing Rules. | For Japanese companies, including GATES, which employ a corporate governance system based on a board of corporate auditors (the board of corporate auditor system), the Companies Act of Japan (the Companies Act) has no independence requirement with respect to directors. The task of overseeing management and independent auditors is assigned to the members of the board of corporate auditors, who are separate from GATES' management.<br>All members of the board of corporate auditors must meet certain independence requirements under the Companies Act.<br>For Japanese companies with a board of corporate auditors, including GATES, at least half of the members of such board must be "outside" corporate auditors. Such "outside" corporate auditors of the board of corporate auditors must meet additional independence requirements under the Companies Act. An "outside" corporate auditor of the board of corporate auditors means a member of the board of corporate auditors who, among other things, (i) has not been a director or employee, including a manager, of GATES or any of its subsidiaries within 10 years prior to assuming the position of a member of the board of corporate auditors, (ii) (in case of a person who has formerly served as a member of the board of corporate auditors of GATES or any of its subsidiaries within 10 years prior to assuming the position of a member of the board of corporate auditors) has not been a director or employee, including a manager, of GATES or any of its subsidiaries within 10 years prior to assuming such former position of a member of the board of corporate auditors and (iii) is not currently spouse or relative within two degrees of a director or important employee, including a manager, of GATES.<br>As of June 2, 2025, GATES had three members of the board of corporate auditors, two of them were "outside" members of the board of corporate auditors. |

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| | |
|:---|:---|
| **Corporate Governance Practices**<br> **Followed by Nasdaq-listed** <br> **U.S. Companies** | **Corporate Governance Practices**<br> **Followed by GATES** |
| 2. A Nasdaq-listed U.S. company must have an audit committee composed entirely of independent directors, and the audit committee must have at least three members. | GATES employs the board of corporate auditor system as described above. Under this system, the board of corporate auditors is a legally separate and independent body from the board of directors. The main function of the board of corporate auditors is similar to that of independent directors, including those who are members of the audit committee of a U.S. company: to monitor the performance of the directors, and review and express opinions on the method of auditing by GATES' independent auditors and on such independent auditors' audit reports, for the protection of GATES' shareholders.<br>As of June 2, 2025, GATES had three members of the board of corporate auditors. Each member of the board of corporate auditors serves a four-year term of office. In contrast, the term of office of each director of GATES is one year.<br>With respect to the requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934 relating to listed company audit committees, GATES relies on an exemption under that rule which is available to foreign private issuers with board of corporate auditors meeting certain requirements. |
| 3. A Nasdaq-listed U.S. company must have a nominating/corporate governance committee composed of entirely independent directors and the compensation committee must have at least two members. | GATES' directors are elected at a general meeting of shareholders. Its board of directors does not have the power to fill vacancies thereon. The members of the board of corporate auditors are also elected at a general meeting of shareholders of GATES. A proposal by GATES' board of directors to elect a member to the board of corporate auditors must be approved by a resolution of its board of corporate auditors. The board of corporate auditors is empowered to adopt a resolution requesting that GATES' directors submit a proposal for election of a member of the board of corporate auditors to a general meeting of shareholders. The members of the board of corporate auditors have the right to state their opinions concerning election of a member of the board of corporate auditors at the general meeting of shareholders. |

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| | |
|:---|:---|
| **Corporate Governance Practices**<br> **Followed by Nasdaq-listed** <br> **U.S. Companies** | **Corporate Governance Practices**<br> **Followed by GATES** |
| 4. A Nasdaq-listed U.S. company must have a compensation committee composed entirely of independent directors and the compensation committee must have at least three members. Compensation committee members must satisfy the additional independence requirements under 5605(d)(2)(A) of the Nasdaq Listing Rules. | The total amount of compensation for GATES' directors and the total amount of compensation for the members of GATES' board of corporate auditors are proposed to, and voted upon by, a general meeting of shareholders. Once the proposal for each of such total amount of compensation is approved at the general meeting of shareholders, each of the board of directors and board of corporate auditors allocates the respective total amount among its respective members. |
| A compensation committee must also have authority to retain or obtain the advice compensation and other advisers, subject to prescribed independence criteria that the committee must consider prior to engaging any such adviser. | There are no procedural or disclosure requirements with respect to the use of compensation to consultants, independent legal counsel or other advisors. |

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**Risk Management**

One of the key functions of our board of directors is informed oversight of our risk management process. Our board of directors has a standing risk management committee. In particular, our risk management committee is responsible for monitoring and assessing strategic risk exposure, including risks associated with cybersecurity, data protection, legal and regulatory matters, and our board of corporate auditors, cooperating with our internal audit group, is responsible for overseeing and evaluating our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. Our board of corporate auditors also reviews legal, regulatory and compliance matters that could have a significant impact on our financial statements. While each standing committee of our board of directors will be responsible for evaluating certain risks and overseeing the management of such risks, our entire board of directors will be regularly informed through committee reports about such risks.

**Code of Business Conduct**

Following the consummation of this offering, our board of directors will adopt a written code of business conduct that applies to our directors, corporate auditors, officers, and employees (including our principal executive officer, principal financial officer, principal accounting officer or controller, and other persons performing similar functions), and our agents.

**Limitation of Liability of Directors and Corporate Auditors**

In accordance with our articles of incorporation, and pursuant to the provisions of Article 427 of the Companies Act, we are authorized to enter into agreements with corporate auditors, to limit his or her liability to our Company for any losses or damages arising from the conduct specified under Article 423 of the Companies Act; provided, that, the amount of such limited liability is the amount stipulated in applicable laws and regulations, whichever is higher. We have not, however, executed any such limitation of liability agreements with our corporate auditors.

Our articles of incorporation include limitation of liability provisions for independent directors and corporate auditors, pursuant to which our board of directors can authorize our Company to exempt the independent directors and corporate auditors from liabilities arising in connection with any failure to execute their respective duties in good faith or due to simple negligence (excluding gross negligence and willful misconduct), within the limits stipulated by applicable laws and regulations, including Article 426, Paragraph 1 of the Companies Act.

**Compensation of our Executive Officers, Directors and Corporate Auditors**

Remuneration to our executive officers, directors and corporate auditors is comprised of base compensation. In the fiscal year ended December 31, 2024, we paid an aggregate of approximately ¥115.7 million (US$760 thousand) to our executive officers and directors, namely Yuji Sekino, Takeshi Seto, Takahiko Nakajima, Takashi Nishibori, and Hironori Matsumiya, and ¥11.6 million (US$76 thousand) to our corporate auditors, namely Masayoshi Takatsu, Yoshihito Arita, and Hiroyuki Takamido. In the fiscal year ended December 31, 2023, we paid an aggregate of approximately ¥74.5 million (US$530 thousand) to our executive officers and directors, namely Yuji Sekino, Takeshi Seto, Takahiko Nakajima, Hiroyuki Takamido, Takashi Nishibori, and Hironori Matsumiya, and ¥6.6 million (US$47 thousand) to our corporate auditors, namely Masayoshi Takatsu, Yoshihito Arita, and Naoki Shiraishi. The Company did not grant any stock options or warrants to employees and did not provide discretionary bonuses during the fiscal years ended December 31, 2024 and 2023. We have not set aside pension, retirement, or other benefits for our executive officers.

In accordance with the Companies Act and our articles of incorporation, the amount of compensation for our directors and corporate auditors is decided by first setting the maximum amount of total compensation for all of our directors and corporate auditors through a resolution adopted by our shareholders at a shareholders meeting. The representative director authorized by our board of directors and our board of directors then decide on the amount of compensation for each director based on certain criteria established by our Company, and the amount of compensation for each corporate auditor is decided through discussions among the corporate auditors.

The amount of compensation for executive officers, excluding directors, is determined by the Board of Directors.

The following table summarizes the total amount of remuneration paid to our directors and corporate auditors in fiscal year 2024, including by the type of remuneration and the number of persons in each category.

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| | | | |
|:---|:---|:---|:---|
| **(except stock options and number of persons in<br> category)**<br> **Category of directors and corporate auditors** | **Total amount of**<br> **remuneration** | **Base<br> compensation** | **Number of persons**<br> **in category** |
| Directors (1) | $760261 | $760261 | 5 |
| Full-time outside corporate auditor (2) | $52235 | $52235 | 1 |
| Outside corporate auditors (3) | $23653 | $23653 | 2 |

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(1) Consist
 of Yuji Sekino, Takeshi Seto, Takahiko Nakajima, Takashi Nishibori and
 Hironori Matsumiya.

(2) Consists
 of Hiroyuki Takamido. Hiroyuki Takamido served as a director before his appointment to the
 board of corporate auditors on May 1, 2024.

(3) Consists
 of Masayoshi Takatsu and Yoshihito Arita.

**Stock Acquisition Right**

On January 22, 2025, HeartCore Financial, Inc. ("HeartCore Financial") entered into an Agreement on Waiver of Stock Acquisition Rights with the Company whereby HeartCore Financial waived 760,050 stock acquisition rights of the Company to purchase common shares of the Company equal to 3% of the issued and outstanding common shares on a fully diluted basis as of the day prior to the successful listing on the Nasdaq at an exercise price of ¥1 (US$0.01) per common share. As of June 2, 2025, no other stock acquisition rights are outstanding.

**PRINCIPAL SHAREHOLDERS**

The following table and accompanying footnotes set forth certain information with respect to the beneficial ownership of our common shares, immediately prior to and immediately after the completion of this offering, by:

● each of our named executive officers, directors, and corporate auditors;

● all of our named executive officers, directors, and corporate auditors as a group; and

● each person or entity (or group of affiliated persons or entities) known by us to be the beneficial owner of 5% or more of our common shares.

To our knowledge, each shareholder named in the table has sole voting and investment power with respect to all of our common shares shown as "beneficially owned" (as determined by the rules of the SEC) by such shareholder, except as otherwise set forth in the footnotes to the table. The SEC has defined "beneficial" ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power.

The percentages reflect beneficial ownership (as determined in accordance with Rule 13d-3 under the Exchange Act) immediately prior to, and immediately after, the completion of this offering. Shares immediately prior to the completion of this offering are based on 25,335,000 common shares outstanding. Shares immediately following the completion of this offering are based on the shares immediately prior to the completion of this offering and an assumed offering of 1,000,000 common shares at an offering price of US$6.00 per common share, assuming no exercise by the underwriters of their option to purchase additional common shares from us in this offering.

Except as noted in the footnotes to the table below, the address for all of the shareholders in the table below is c/o GATES GROUP Inc., 34F Sumitomo Fudosan Shinjuku Grand Tower, 8-17-1 Nishishinjuku, Shinjuku-ku, Tokyo, 160-6101 Japan.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Common Shares**<br> **Beneficially Owned**<br> **Immediately Prior to this**<br> **Offering(2)** | **Common Shares**<br> **Beneficially Owned**<br> **Immediately Prior to this**<br> **Offering(2)** | **Common Shares**<br> **Beneficially Owned**<br> **Immediately After this**<br> **Offering(2)** | **Common Shares**<br> **Beneficially Owned**<br> **Immediately After this**<br> **Offering(2)** |
| <br>**Name of Beneficial Owner** | **Shares** | **Percentage** | **Shares** | **Percentage** |
| **Named Executive Officers, Directors, and Corporate Auditors:** |  |  |  |  |
| Yuji Sekino (1) | 15930000 | 62.9% | 15930000 | 60.5% |
| Takeshi Seto | 225000 | \*% | 225000 | \*% |
| Takahiko Nakajima | 360000 | 1.4% | 360000 | 1.4% |
| Takashi Nishibori |  | \*% | - | \*% |
| Hironori Matsumiya |  | \*% | - | \*% |
| Masayoshi Takatsu |  | \*% | - | \*% |
| Yoshihito Arita |  | \*% | - | \*% |
| Hiroyuki Takamido |  | \*% | - | \*% |
| All named executive officers, directors, and corporate auditors as a group 8 persons | 16515000 | 65.2% | 16515000 | 62.7% |
| **5% or more Shareholders:** |  |  |  |  |
| RECON MARK, INC. (1) | 13095000 | 51.7% | 13095000 | 49.7% |

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\* Represents less than 1% of the number of common shares outstanding.

(1) Represents: (i) 2,835,000 common shares directly beneficially owned by Yuji Sekino; and (ii) 13,095,000 common shares held by RECON MARK, INC., which is 100% owned by Yuji Sekino, our Chief Executive Officer. As Yuji Sekino has sole voting and dispositive power over these common shares, thus is deemed to be the beneficial owner of these common shares.

(2) Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. A person is deemed to be the beneficial owner of any common shares if that person has or shares voting power or investment power with respect to those shares or has the right to acquire beneficial ownership at any time within 60 days.

**CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS**

**Transactions with Related Parties**

The related parties had material transactions for the years ended December 31, 2024, 2023 and 2022 consist of the following:

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| | |
|:---|:---|
| **Name of Related Party** | **Nature of Relationship at December 31, 2023** |
| Yuji Sekino | CEO of the Company |
| RECON MARK, INC. | A company controlled by CEO of the Company |

---

The Company borrowed nil, US$714,143 and US$358,869, from RECON MARK, INC. during the years ended December 31, 2024, 2023, and 2022, respectively, and repaid the amount in full during the years ended December 31, 2023 and 2022. The loans bore an interest rate of 2% with terms of 7 months and 2.5 months for the years ended 2023 and 2022, respectively.

The Company consumed entertainment, consulting, legal and recruitment service from certain related party service providers and incurred selling, general and administrative expenses of nil, US$65,101 and US$15,975 for the years ended December 31, 2024, 2023 and 2022, respectively. Payables due to such related party service providers amounted to nil, US$1,561 and nil as of December 31, 2024, 2023 and 2022 respectively.

During the year ended December 31, 2024, one operating lease was guaranteed by the CEO of the Company, one operating lease was guaranteed by the CEO of Chuo Kanzai, respectively. During the year ended December 31, 2023, one operating lease was guaranteed by the CEO of the Company, two operating leases were guaranteed by the former CEO of Chuo Kanzai and one operating lease was guaranteed by the CEO of Chuo Kanzai, respectively. During the year ended December 31, 2022, one operating lease was guaranteed by the CEO of the Company and two operating leases were guaranteed by the former CEO of Chuo Kanzai.

The guaranty information for the Company's outstanding short-term loans and bonds payable, bank and other borrowings as of December 31, 2024, 2023 and 2022, consist of the following:

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| | | | |
|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2023** | **December 31, 2022** |
| **Short-term loans and bonds payable** |  |  |  |
| &nbsp;&nbsp;&nbsp;Guaranteed by the CEO of the Company |  |  | 304074 |
| **Bank and other borrowings** |  |  |  |
| &nbsp;&nbsp;&nbsp;Guaranteed by CEO of the Company | 1264396 | 1775859 | 2257545 |
| &nbsp;&nbsp;&nbsp;Guaranteed by former CEO of Chuo Kanzai | 325221 | 448850 | 165481 |
| &nbsp;&nbsp;&nbsp; Guaranteed by the CEO and parent company and/or subsidiary within the Company's organizational structure |  |  | 2276003 |

---

For the period from January 1, 2025 to the prospectus date, we did not have any material transactions with related parties.

**Compensation to Directors, Corporate Auditors, and Officers**

Yuji Sekino is Chief Executive Officer and a director of our Company. Yuji Sekino receives US$39,045 per month from our Company as compensation for services rendered.

Takeshi Seto is Chief Financial Officer and a director of our Company. Takeshi Seto receives US$9,582 per month from our Company as compensation for services rendered.

Takahiko Nakajima is a director of our Company. Takahiko Nakajima receives US$10,129 per month from our Company as compensation for services rendered.

Takashi Nishibori is an independent director of our Company. Takashi Nishibori receives US$2,628 per month from our Company as a consulting fee.

Hironori Matsumiya is an independent director of our Company. Hironori Matsumiya receives US$1,971 per month from our Company as a consulting fee.

Masayoshi Takatsu is a corporate auditor of our Company. Masayoshi Takatsu receives US$657 per month from our Company as a consulting fee.

Yoshihito Arita is a corporate auditor of our Company. Yoshihito Arita receives US$1,314 per month from our Company as a consulting fee.

Masumi Kawaguchi is a corporate auditor of our Company. Masumi Kawaguchi receives US$4,448 per month from our Company as a consulting fee.

**DESCRIPTION OF SHARE CAPITAL**

*The following is a summary of the material terms of our capital stock and our articles of incorporation, including a summary of the relevant provisions of applicable share handling regulations, of the Companies Act and the Act on Book-Entry Transfer of Company Bonds, Shares, etc. of Japan (Shasai Kabushiki tou no Furikae ni kansuru Houritsu) (Act No. 75 of 2001, as amended) (including regulations promulgated thereunder, the "Book-Entry Act") relating to joint-stock corporations (kabushiki kaisha), and of certain related laws and legislation, each as currently in effect. Because it is a summary, this discussion should be read together with our articles of incorporation and the applicable share handling regulations.*

We are a joint-stock corporation founded in Japan under the Companies Act. The rights of our shareholders are represented by our common shares as described below, and our shareholders' liability is limited to the amount of their respective holdings in such shares.

**Description of Our Share Capital**

As of June 2, 2025, our authorized capital stock consisted of 67,500,000 common shares, and there were 25,335,000 common shares outstanding. As of June 2, 2025, there were 17 record holders of our common shares.

Based upon the assumed offer and sale of 1,000,000 common shares in this offering at an initial public offering price of US$6.00 per share (which is the midpoint of the range set forth on the cover page of this prospectus), following this offering, there will be 26,335,000 common shares outstanding.

All currently outstanding common shares are fully-paid and non-assessable.

**Changes in Capital**

Under our articles of incorporation, any changes in capital, such as a share issuance, stock split, consolidation of shares, or issuance of share options, among others, require a majority vote of our common shareholders, as described under "—*Voting Rights and Shareholder Meetings*" below.

***First Forward Stock Split***

Effective April 30, 2024, the Company approved a forward stock split of the Company's issued and outstanding shares of common share, at a ratio of 1-for-20,000 (the "First Stock Split"). Immediately prior to the First Stock Split, there were 563 shares of common share issued and outstanding. As a result of the First Stock Split, the Company had 11,260,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the First Stock Split.

 ****

***Authorized Share Increase***

On October 31, 2024, the Company approved to increase the number of authorized shares from 30,000,000 to 67,500,000.

 ****

***Second Forward Stock Split***

On October 31, 2024, the Company approved a forward stock split of the Company's issued and outstanding common shares, at a ratio of 1-for-2.25 (the "Second Stock Split"). As of December 31, 2023 and immediately prior to the Second Stock Split, there were 11,260,000 common shares issued and outstanding. As a result of the Second Stock Split, the Company has 25,335,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the Second Stock Split.

**Voting Rights and Shareholder Meetings**

Our articles of incorporation provide that each annual meeting of our shareholders must be held in March of each year. In addition, shareholders meetings to consider and vote on extraordinary matters may be held as necessary, provided that we satisfy all of the procedural requirements under both our articles of incorporation and the Companies Act.

Our common shares allocate one vote per share at shareholders' meetings. Our articles of incorporation provide for a simple majority approval on most matters submitted for shareholder vote, unless otherwise required by laws or regulations. As required by law, and as referenced in our articles of incorporation, a two-thirds majority approval is required for any votes on matters specified in Article 309, Paragraph (2) of the Companies Act, which cover, in relevant part, treasury stock purchases, purchases of an entire class of shares, and stock consolidations. Any amendment to our articles of incorporation must be approved by our shareholders at a shareholders' meeting.

**Pre-Emptive Rights**

Holders of common shares have no pre-emptive rights under our articles of incorporation.

**Dividend Rights**

We may issue dividends upon a resolution of our common shareholders. We have not paid dividends to shareholders in the past. The payment of future dividends on our common shares, if any, must be approved by our common shareholders at the annual meeting of the shareholders and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our common shareholders may deem relevant, including retaining future earnings, if any, for reinvestment in the development and expansion of our business.

**Liquidation Rights**

In accordance with the Companies Act and the Articles of Incorporation, liquidations must be approved by common shareholders holding at least a two-thirds majority of the shares present at a meeting where a quorum of one-third of the issued and outstanding shares with voting rights is present.

**Transfer Agent**

Under Article 11 of our articles of incorporation, we are required to have a shareholder registry administrator. The shareholder registry administrator and the shareholder registry administrator's location for handling share-related affairs must be determined pursuant to a resolution of our board of directors. All affairs related to our shareholder and share option registries are delegated to the shareholder registry administrator and are not to be handled by our Company. The current shareholder registry administrator for our Company is Computershare Trust Company, N.A.

**Limitations on Liability**

Our articles of incorporation permit us to exempt, by resolution of our board of directors, corporate auditors from liabilities arising in connection with their failure to execute their duties in good faith (but without gross negligence), to the fullest extent permitted by the Companies Act. In addition, our articles of incorporation permit us to exempt, by resolution of our board of directors, directors from liabilities arising in connection with any failure to execute their duties in good faith or due to simple negligence (excluding gross negligence and willful misconduct), to the fullest extent permitted by the Companies Act. Should our board of directors, exempt a corporate auditor or director from any such liabilities, our rights and those of our shareholders to file shareholders' derivative suits on behalf of our Company to recover monetary damages from such director or corporate auditor for breach of their duties under the Companies Act will be eliminated or reduced. However, exculpation does not apply to any director or corporate auditor if they have breached their duties under the Companies Act intentionally (*koi*) or by gross negligence (*ju-kashitsu*). Furthermore, we may enter into agreements for the limitation of liabilities with our independent directors and corporate auditors. If we do so, we expect that these agreements will eliminate or reduce our rights and those of our shareholders as described above.

**Articles of Incorporation**

***Objective of our Company under our Articles of Incorporation***

We have broad authority under Article 2 of our articles of incorporation to conduct our lines of business.

***Provisions Regarding Our Directors***

With respect to the election of directors of our Company, each director must be voted in by a majority of our common shareholders entitled to vote at a common shareholders' meeting where shareholders holding one-third or more of the voting rights entitled to vote are present. Additionally, any resolution regarding the election of a director cannot be adopted by cumulative voting.

***Rights of Shareholders of our Common Shares***

Under the Companies Act and our articles of incorporation, holders of our common shares have, among others, the following rights:

● the right to receive dividends when the payment of dividends has been approved at a shareholders' meeting, with this right lapsing three years after the due date for payment according to a provision in our articles of incorporation;

● the right to vote at a shareholders' meeting (cumulative voting for the election of directors is not allowed under our articles of incorporation);

● the right to receive surplus in the event of a liquidation; and

● the right to require us to purchase shares subject to certain requirements under the Companies Act when a shareholder opposes certain resolutions, including (i) the transfer of all or material part of our business, (ii) an amendment to our articles of incorporation to establish a restriction on share transfer, (iii) a share exchange or share transfer to establish a holding company, (iv) a company split, or (v) a merger, all of which must, as a general rule, be approved by a special resolution adopted at a shareholders' meeting.

Under the Companies Act, a company is permitted to make a distribution of surplus to the extent that the aggregate book value of the assets to be distributed to shareholders does not exceed the distributable amount provided for under the Companies Act and the applicable ordinance of the Ministry of Justice as of the effective date of such distribution of surplus. The amount of surplus at any given time shall be the amount of the Company's assets and the book value of the Company's treasury stock after subtracting and adding the amounts of the items provided for under the Companies Act and the applicable ordinance of the Ministry of Justice.

A shareholder is generally entitled to one vote per share at a shareholders' meeting. In general, under the Companies Act and our articles of incorporation, a shareholders' meeting may adopt an ordinary resolution by a majority of the voting rights presented at the meeting. The Companies Act and our articles of incorporation require a quorum of not less than one-third of the total number of voting rights in connection with the election of directors and statutory auditors. Under the Companies Act, to avoid exercising improper control in a form of mutual shareholding, an institutional shareholder, 25% or more voting rights of which are directly or indirectly held by us, does not have voting rights at our shareholders' meeting. We have no voting rights with respect to our own common shares that we hold. Shareholders may exercise their voting rights through proxies, provided that a shareholder may appoint only one other shareholder who has voting rights as its proxy.

With respect to a special resolution, while the Companies Act generally requires a quorum of the majority of the total number of voting rights and approval of two-thirds of the voting rights presented at the meeting in connection with any material corporate actions, it allows a company to reduce the quorum for such special resolutions pursuant to its articles of incorporation to one-third (or greater than one-third) of the total number of voting rights. We adopted a quorum of not less than one-third of the total number of voting rights in our articles of incorporation for special resolutions for material corporate actions, such as:

● a reduction of the stated capital (except when a company reduces the stated capital within a certain amount as provided for under the Companies Act);

● an amendment to our articles of incorporation;

● establishment of a 100% parent-subsidiary relationship through a share exchange or share transfer requiring shareholders' approval;

● a dissolution, merger, or consolidation requiring shareholders' approval;

● a company split requiring shareholders' approval;

● a transfer of all or an important part of our business;

● a takeover of the entire business of any other corporation requiring shareholders' approval;

● issuance of new shares at a substantially favorable price, or issuance of stock acquisition rights or bonds with stock acquisition rights with substantially favorable conditions, to persons other than our shareholders; and

● other material corporate actions provided in the Companies Act.

The Companies Act provides additional specific rights for shareholders owning a substantial number of voting rights.

A shareholder holding 90% or more of the total number of voting rights of all shareholders has the right to demand that all other shareholders sell their shares to such shareholder who holds 90% or more of the voting rights.

Shareholders holding 10% or more of the total number of voting rights of all shareholders, or 10% or more of the total number of our outstanding shares, have the right to apply to a court of competent jurisdiction for our dissolution.

Shareholders who have held 3% or more of the total number of voting rights of all shareholders for six months or more have the right to demand the convening of a shareholders' meeting.

Shareholders who have held 3% or more of the total number of voting rights of all shareholders, or 3% or more of the total number of our outstanding shares, for six months or more have certain rights under the Companies Act, which include the right to:

● apply to a competent court for removal of a director or a corporate auditor where a fraudulent act or a significant event violating laws and regulations or the Company's Articles of Incorporation exists with respect to performance of duties of such director or corporate auditor, and removal by shareholders at a meeting has been denied; and

● apply to a competent court for removal of a liquidator.

Shareholders holding 3% or more of the total number of voting rights of all shareholders have the right to object to the exculpation of a director or a corporate auditor from certain liabilities.

Shareholders holding 3% or more of the total number of voting rights of all shareholders, or 3% or more of the total number of our outstanding shares, have certain rights under the Companies Act, which include the right to:

● examine our accounting books and documents and make copies of them; and

● apply to a competent court for the appointment of an inspector to inspect our operation and/or financial condition where an event casting doubt on a fraudulent act or a significant fact violating laws and regulations or the Company's Articles Incorporation exists with respect to operation of the Company.

Shareholders who have held 1% or more of the total number of voting rights of all shareholders for six months or more have the right to apply to a competent court for the appointment of an inspector to review the correctness of the convocation and voting procedures of a shareholders' meeting.

Shareholders who have held 1% or more of the total number of voting rights of all shareholders, or 300 or more voting rights, for six months or more have the right to demand that certain matters be added to the agenda items at a shareholders' meeting.

Shareholders who have held any number of shares for six months or more have the right to demand that we take certain actions under the Companies Act, which include the rights to demand:

● the institution of an action to enforce the liabilities of our directors or corporate auditors;

● the institution of an action to disgorge from a recipient the benefit of a proprietary nature given in relation to the exercise of the right of a shareholder; and

● on our behalf, that a director ceases an illegal or ultra vires action.

There are no provisions under the Companies Act or our articles of incorporation which forces shareholders to make additional contributions when requested by us.

Under the Companies Act, in order to change the rights of shareholders which are stipulated and defined in our articles of incorporation, we must amend our articles of incorporation. Amendments must, as a general rule, be approved by a special resolution of our shareholders.

Annual meetings and special meetings of shareholders are convened by our Chief Executive Officer based on a resolution of our board of directors. Under our articles of incorporation, shareholders of record as of December 31 of each year have the right to attend our annual shareholders' meeting. We may, by prescribing a record date, determine the shareholders who are stated or recorded in the shareholder registry on the record date as the shareholders entitled to attend and take action at a special shareholders' meeting, and in this case, we are required to make a public notice of the record date at least two weeks prior to the record date. A convocation notice will be sent to these shareholders at least two weeks prior to the date of the shareholders' meeting.

***Our Acquisition of our Common Shares***

Under applicable laws of Japan, we may acquire our common shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) from
 a specific shareholder (other than any of our subsidiaries), pursuant to a special resolution of a shareholders' meeting; or

(ii) from
 any of our subsidiaries, pursuant to a resolution of our board of directors.

In the case of any acquisition made by way of (i) above, any other shareholder may request within a certain period of time provided under the applicable ordinance of the Ministry of Justice before a shareholders' meeting that we also purchase the shares held by the requesting shareholder, unless the purchase price or any other consideration to be delivered in exchange for the acquisition of common shares does not exceed the market price of our common shares calculated by the method prescribed in the applicable ordinance of the Ministry of Justice.

In general, an acquisition by us of our common shares must satisfy certain requirements, including that the total amount of the acquisition price may not exceed the distributable amount.

We may hold the common shares which we acquired pursuant to (i) and (ii) above, or we may cancel such shares by a resolution of our board of directors. We may also dispose of such shares pursuant to a resolution of our board of directors, subject to other requirements applicable to the issuance of shares under the Companies Act.

***Restrictions on Holders of our Common Shares***

There are no restrictions with respect to non-residents of Japan or foreign shareholders holding our common shares or on the exercise of voting rights. However, pursuant to a provision of our share handling regulations, a shareholder who does not have an address or residence in Japan is required to file with our transfer agent its temporary address to receive notices in Japan or that of a standing proxy having any address or residence in Japan.

There are no provisions in our articles of incorporation that would have the effect of delaying, deferring, or preventing a change in control that would operate only with respect to a merger, acquisition or corporate restructuring involving us.

There are no provisions in our articles of incorporation or other subordinated rules regarding an ownership threshold, above which shareholder ownership must be disclosed.

There are no provisions in our articles of incorporation governing changes in our Company's capital that are more stringent than is required by law.

**Historical Common Equity Transactions**

Since May 1, 2018, the Company engaged in the following unregistered stock issuances:

Effective April 30, 2024, the Company approved a forward stock split of the Company's issued and outstanding shares of common share, at a ratio of 1-for-20,000 (the "First Stock Split"). Immediately prior to the First Stock Split, there were 563 shares of common share issued and outstanding. As a result of the First Stock Split, the Company had 11,260,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the First Stock Split.

On June 25 2024, the Company allotted 337,800 stock acquisition rights to HeartCore Financial, Inc. ("HeartCore Financial") in exchange for services rendered as a consultant in connection with the proposed initial public offering of the Company under grants authorized by our shareholders and directors in substitution for the Warrant executed as of October 2, 2023, between the Company and HeartCore Enterprises, Inc., the number of stock acquisition rights is subject to adjustment in the event of a stock split. The number of the stock acquisition rights was adjusted to 760,050 after the Second Forward Stock Split effective on October 31, 2024 as stated below. The stock acquisition right is exercisable from July 1, 2024 to June 30, 2034 upon the condition that the IPO has been completed. The stock acquisition right has an exercise price of ¥1(US$0.01) per common share.

On October 31, 2024, the Company approved a forward stock split of the Company's issued and outstanding common shares, at a ratio of 1-for-2.25 (the "Second Stock Split"). As of December 31, 2023 and immediately prior to the Second Stock Split, there were 11,260,000 common shares issued and outstanding. As a result of the Second Stock Split, the Company has 25,335,000 common shares issued and outstanding. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the Second Stock Split.

On January 22, 2025, HeartCore Financial, Inc. ("HeartCore Financial") entered into an Agreement on Waiver of Stock Acquisition Rights with GATES GROUP Inc. whereby HeartCore Financial waived 760,050 stock acquisition rights of GATES GROUP Inc. to purchase common shares of GATES GROUP Inc. equal to 3% of the issued and outstanding common shares on a fully diluted basis as of the day prior to the successful listing on the Nasdaq at an exercise price of ¥1 (US$0.01) per common share.

We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.

**SHARES ELIGIBLE FOR FUTURE SALE**

Before this offering, there has not been a public market for our common shares. Future sales of substantial amounts of our common shares, including shares issued upon the conversion of any convertible notes, the exercise of outstanding options and warrants, in the public market after this offering, or the possibility of these sales occurring, could cause the prevailing market price for our common shares to fall or impair our ability to raise equity capital in the future.

Immediately following the closing of this offering, we will have 26,335,000 common shares issued and outstanding. In the event the representative exercises in full the over-allotment option to purchase additional common shares, we will have 26,485,000 common shares issued and outstanding. The common shares sold in this offering will be freely tradable without restriction or further registration or qualification under the Securities Act.

Of the approximately 25,335,000 common shares issued and outstanding as of June 2, 2025, the resale of 6,480,000 of such common shares held for more than twelve months qualifies for an exemption from registration under Rule 144 of the Securities Act. The remaining 18,855,000 previously issued common shares that were not offered and sold in this offering, as well as shares issuable upon the exercise of warrants and subject to employee stock options, are or will be upon issuance, "restricted securities," as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if such public resale is registered under the Securities Act or if the resale qualifies for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which are summarized below.

**Rule 144**

In general, a person who has beneficially owned restricted common shares of our Company for at least twelve months, or at least six months in the event we have been a reporting company under the Exchange Act for at least ninety (90) days before the sale, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the ninety (90) days preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the following:

● 1% of the number of our common shares then outstanding; which will equal approximately 263,350 common shares immediately after this offering (assuming no exercise by the underwriters of their option to purchase additional common shares from us); or

● 1% of the average weekly trading volume of our common shares on the Nasdaq, during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to the sale;

provided that, in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.

Affiliate resales under Rule 144 are also subject to the availability of current public information about us. In addition, if the number of shares being sold under Rule 144 by an affiliate during any three-month period exceeds 5,000 shares or has an aggregate sale price in excess of US$50,000, the seller must file a notice on Form 144 with the SEC and the Nasdaq, concurrently with either the placing of a sale order with the broker or the execution directly with a market maker.

Under Rule 144, a person who is not an affiliate of ours at the time of sale, and has not been an affiliate at any time during the 90 days preceding a sale, and who has beneficially owned our common shares for at least six months but less than a year, is entitled to sell such shares subject only to the availability of current public information about us. If such person has held our shares for at least one year, such person can resell without regard to any Rule 144 restrictions, including the 90-day public company requirement and the current public information requirement. Non-affiliate resales are not subject to the manner of sale, volume limitation or notice filing provisions of Rule 144.

**Rule 701**

In general, Rule 701 allows a shareholder who purchased our common shares pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of ours during the immediately preceding 90 days to sell those shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. All holders of Rule 701 shares, however, are required to wait until ninety (90) days after the date of this prospectus before selling shares pursuant to Rule 701.

**Lock-Up Agreements**

We, all of our directors and officers and holders of 10% or more of our outstanding securities (or securities convertible into our common shares) have agreed with the representative, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our common shares or securities convertible into or exercisable or exchangeable for our common shares for a period of six months from the date on which the trading of the common shares on the Nasdaq commences. See the "*Underwriting*" section below for more information.

**Form S-8 Registration Statements**

Following the completion of this offering, we may file one or more registration statements on Form S-8 under the Securities Act to register the common shares issued or reserved for issuance under any future plan. The registration statement on Form S-8 will become effective automatically upon filing. Common shares issued upon exercise of a stock option and registered under the Form S-8 registration statement will, subject to vesting and lock-up provisions, and Rule 144 volume limitations applicable to our affiliates, be available for sale in the open market immediately unless they are subject to the lock-up restrictions described under "*Underwriting—No Sales of Similar Securities*", in which case, after the expiration of such lock-up.

**THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL MATTERS RELATING TO SHARE TRANSFER RESTRICTIONS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN LEGAL ADVISOR REGARDING THE PARTICULAR SECURITIES LAWS AND TRANSFER RESTRICTION CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR COMMON SHARES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.**

**CERTAIN TAX CONSIDERATIONS**

*The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our common shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any local, state, foreign, including Japan, or other taxing jurisdiction.*

**Taxation in Japan**

Generally, a non-resident of Japan or non-Japanese entity (which we refer to as a "Non-Resident Holder") is subject to Japanese withholding tax on dividends paid by Japanese corporations. Stock splits are not subject to Japanese income tax. A conversion of retained earnings or legal reserve (but not additional paid-in capital, in general) into stated capital (whether made in connection with a stock split or otherwise) is not treated as a deemed dividend payment to shareholders for Japanese tax purposes. Thus, such a conversion does not trigger Japanese withholding taxation (Article 2(16) of the Japanese Corporation Tax Law and Article 8(1)(xiii) of the Japanese Corporation Tax Law Enforcement Order).

Pursuant to the Convention Between the Government of the United States of America and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (which we refer to as the "Treaty"), dividend payments made by a Japanese corporation to a U.S. resident or entity, unless the recipient of the dividend has a "permanent establishment" in Japan, and the common shares with respect to which such dividends are paid are effectively connected with such "permanent establishment", are generally subject to a withholding tax at rate of: (i) 10% for portfolio investors who are qualified U.S. residents eligible for benefits of the Treaty; and (ii) 0% (*i.e.*, no withholding) for pension funds which are qualified U.S. residents eligible for benefits of the Treaty, provided that the dividends are not derived from the carrying on of a business, directly or indirectly, by such pension funds. Japan is a party to a number of income tax treaties, conventions and agreements, (which we refer to collectively as the "Tax Treaties"), whereby the maximum withholding tax rate for dividend payments is set at, in most cases, 15% for portfolio investors who are Non-Resident Holders. Specific countries with which such Tax Treaties have been entered into include Canada, Denmark, Finland, Germany, Ireland, Italy, Luxembourg, New Zealand, Norway, and Republic of Singapore. Japan's income tax treaties with Australia, Belgium, France, The Netherlands, Sweden, Switzerland and the United Kingdom have been amended to generally reduce the maximum withholding tax rate to 10%.

On the other hand, unless one of the applicable Tax Treaties reducing the maximum rate of withholding tax applies, the standard tax rate applicable to dividends paid with respect to listed shares, such as those paid by our Company on shares, to Non-Resident Holders is 15% under the Japanese Income Tax Law, except for dividends paid to any individual shareholder who holds 3% or more of the issued shares, in which case the applicable rate is 20% (Article 182(2) of the Japanese Income Tax Law and Article 9-3(1)(i) of the Japanese Special Tax Measures Law, including its relevant temporary provision for these withholding rates). On December 2, 2011, the "Special measures act to secure the financial resources required to implement policy on restoration of the East Japan Earthquake" (Act No. 117 of 2011) was promulgated and special surtax measures on income tax and withholding tax were introduced thereafter to fund the restoration effort for the earthquake. Income tax and withholding taxpayers need to pay a surtax, calculated by multiplying the standard tax rate by 2.1% for 25 years starting from January 1, 2013 (which we refer to as "Surtax"). As a result, the withholding tax rate applicable to dividends paid with respect to listed shares to Non-Resident Holders increased to 15.315% (which we refer to as "Withholding Tax Rate") which is applicable for the period from January 1, 2014 until December 31, 2037.

Taking this Withholding Tax Rate into account, the treaty rates such as the 15% rate (or 10% for eligible U.S. residents subject to the Treaty and/or eligible residents subject to other similarly renewed treaties mentioned above) apply, in general, except for dividends paid to any individual holder who holds 3% or more of the total issued shares, in which case the applicable rate is 20.42% (standard tax rate of 20% imposed by Surtax). The treaty rate normally overrides the domestic rate, but due to the so-called "preservation doctrine" under Article 1(2) of the Treaty, and/or due to Article 3-2 of the Special Measures Law for the Income Tax Law, Corporation Tax Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the tax rate under the domestic tax law is lower than that promulgated under the applicable income tax treaty, then the domestic tax rate is still applicable. Currently, the tax rate under the applicable tax treaty is lower than that under the domestic tax law and thus the treaty override treatment applies. As such, the tax rate under the Treaty applies for most holders of shares who are U.S. residents or entities. In the case where the treaty rate is applicable, no Surtax is imposed, but in order to enjoy the lower treaty rate, the taxpayer must file a treaty application in advance with the Japanese National Tax Agency through our Company. Gains derived from the sale outside Japan of a Japanese corporation's shares by Non-Resident Holders, or from the sale of a Japanese corporation's shares within Japan by a non-resident of Japan as an occasional transaction or by a non-Japanese entity not having a permanent establishment in Japan, are generally not subject to Japanese income or corporation taxes, provided that the seller is an investor who is a qualified U.S. resident eligible for benefit of the Treaty. Japanese inheritance and gift taxes at progressive rates may apply to an individual who has acquired a Japanese corporation's shares as a distributee, legatee or donee.

**Certain U.S. Federal Income Tax Considerations for U.S. Holders**

The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our common shares by a U.S. holder (as defined below) that acquires our common shares in this offering. This summary is for general information purposes only and does not purport to be a complete discussion of all potential tax considerations that may be relevant to a particular person's decision to acquire common shares.

This summary is based on the U.S. Internal Revenue Code of 1986, as amended (the "Code"), the regulations promulgated under the Code (the "U.S. Treasury Regulations"), the income tax treaty between Japan and the United States (the "Treaty"), published rulings of the U.S. Internal Revenue Service (the "IRS"), published administrative positions of the IRS, and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date hereof. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary. We have not requested a ruling from the IRS with respect to any of the U.S. federal income tax considerations described below and, as a result, the IRS could disagree with portions of this discussion.

For purposes of this discussion, a "U.S. holder" is a beneficial owner of the common shares or that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

● an estate the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or

● a trust (i) the administration of which is subject to the primary supervision of a court within the United States and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust, or (ii) that has validly elected to be treated as a U.S. person under the Code.

If an entity or arrangement that is classified as a partnership for U.S. federal income tax purposes holds the common shares, the U.S. federal income tax consequences to such partnership and its partners of the ownership and disposition of the common shares generally will depend in part on the activities of the partnership and the status of such partners. This summary does not address the tax consequences to any such partner or partnership. Partners of entities or arrangements that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the ownership and disposition of the common shares.

This discussion applies only to a U.S. holder that holds common shares as "capital assets" under the Code (generally, property held for investment). Unless otherwise provided, this summary does not discuss reporting requirements. In addition, this discussion does not address any tax consequences other than U.S. federal income tax consequences, such as U.S. state and local tax consequences, U.S. estate and gift tax consequences, and non-U.S. tax consequences, and does not describe all of the U.S. federal income tax consequences that may be relevant in light of a U.S. holder's particular circumstances, including alternative minimum tax consequences, the Medicare tax on certain net investment income, and tax consequences to holders that are subject to special provisions under the Code, including, but not limited to, holders that:

● are tax exempt organizations, qualified retirement plans, individual retirement accounts, or other tax deferred accounts;

● are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies;

● are brokers or dealers in securities or currencies or holders that are traders in securities that elect to apply a mark-to-market accounting method;

● have a "functional currency" for U.S. federal income tax purposes that is not the U.S. dollar;

● own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;

● acquire common shares in connection with the exercise of employee stock options or otherwise as compensation for services;

● are partnerships or other pass-through entities for U.S. federal income tax purposes (or investors in such partnerships and entities);

● are required to accelerate the recognition of any item of gross income with respect to the common shares as a result of such income being recognized on an applicable financial statement;

● own or will own (directly, indirectly, or constructively) 10% or more of our total combined voting power or value;

● hold the common shares in connection with trade or business conducted outside of the United States or in connection with a permanent establishment or other fixed place of business outside of the United States; or

● are former U.S. citizens or former long-term residents of the United States.

Each U.S. holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state, local, non-U.S. and other tax considerations of the ownership and disposition of our common shares.

***Passive Foreign Investment Company Considerations***

A non-U.S. corporation, such as our Company, is classified as a passive foreign investment company ("PFIC") for any taxable year in which, after applying relevant look-through rules with respect to the income and assets of its subsidiaries, either: (i) 50% or more of the value of the corporation's assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets; or (ii) at least 75% of the corporation's gross income is passive income. "Passive income" generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. In determining the value and composition of our assets, the cash we raise in this offering will generally be considered to be held for the production of passive income and thus will be considered a passive asset.

The determination of whether a corporation is a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules that are subject to differing interpretations. In addition, the determination of whether a corporation will be a PFIC for any taxable year can only be made after the close of such taxable year. Our PFIC status will depend, in part, on the amount of cash that we raise in this offering and how quickly we utilize the cash in our business. Furthermore, because we may value our goodwill based on the expected market price of the common shares in this offering, a decrease in the market price of our common shares may also cause us to be classified as a PFIC for the current or any future taxable year. Based upon the foregoing, it is uncertain whether we will be a PFIC for our current taxable year or any future taxable year.

We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change. If we are a PFIC for any year during which you hold the common shares, we will generally continue to be treated as a PFIC for all succeeding years during which you hold such common shares. However, if we cease to be a PFIC, provided that you have not made a mark-to-market election, as described below, you may avoid some of the adverse effects of the PFIC regime by making a deemed sale election with respect to the common shares. We believe we were not a PFIC in prior taxable year 2023 because less than 75% of our gross income was passive income and less than 50% of the average value of our assets consisted of assets that would produce passive income in 2023.

The discussion below under "—*Distributions on the Common Shares*" and "—*Sale or Other Disposition of the Common Shares*" is written on the basis that we will not be classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that generally would apply if we are treated as a PFIC are discussed below under "—*Passive Foreign Investment Company Rules*."

 ****

***Distributions on the Common Shares***

The gross amount of any distributions paid on our common shares will generally be included in the gross income of a U.S. holder as dividend income on the date actually or constructively received by the U.S. holder, in the case of common shares, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (computed on the basis of U.S. federal income tax principles). Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, we expect that distributions will generally be reported to U.S. holders as dividends. Dividends received on our common shares generally will not be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S. corporations.

Individuals and other non-corporate U.S. holders will be subject to tax on any such dividends at the lower capital gains tax rate applicable to "qualified dividend income," provided that certain conditions are satisfied, including that (i) the common shares on which the dividends are paid are readily tradable on an established securities market in the United States or we are eligible for the benefits of the Treaty, (ii) we are not a PFIC nor treated as such with respect to a U.S. holder (as discussed below) for either our taxable year in which the dividend was paid or for the preceding taxable year, and (iii) certain holding period requirements are met. For this purpose, common shares listed on the Nasdaq will generally be considered to be readily tradable on an established securities market in the United States. You should consult your tax advisor regarding the availability of the lower rate for dividends paid with respect to our common shares.

For U.S. foreign tax credit purposes, dividends paid on our common shares generally will be treated as foreign source income and generally will constitute passive category income. The amount of a dividend will include any amounts withheld by us in respect of Japanese income taxes. Subject to applicable limitations, some of which vary depending upon the U.S. holder's particular circumstances, Japanese income taxes withheld from dividends on the common shares, at a rate not exceeding any reduced rate pursuant to the Treaty, will be creditable against the U.S. holder's U.S. federal income tax liability. In lieu of claiming a foreign tax credit, U.S. holders may, at their election, deduct foreign taxes, including any Japanese income taxes, in computing their taxable income, subject to generally applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year. The rules governing foreign tax credits are complex and U.S. holders should consult their tax advisers regarding the creditability or deductibility of foreign taxes in their particular circumstances.

The amount of any dividend paid in Japanese yen will equal the U.S. dollar value of the Japanese yen received, calculated by reference to the exchange rate in effect on the date the dividend is received by you, in the case of common shares, regardless of whether the Japanese yen are converted into U.S. dollars. If the Japanese yen received as a dividend are converted into U.S. dollars on the date of receipt, a U.S. holder generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the Japanese yen received as a dividend are not converted into U.S. dollars on the date of receipt, a U.S. holder will have a basis in the Japanese yen equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Japanese yen will be treated as U.S. source ordinary income or loss.

***Sale or Other Disposition of the Common Shares***

A U.S. holder will recognize gain or loss on the sale or other disposition of a common share equal to the difference between the amount realized for the common share and the holder's tax basis in the common share. Such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if the U.S. holder's holding period for such common share was more than one year as of the date of the sale or other disposition. Long-term capital gain recognized by a non-corporate U.S. holder is subject to U.S. federal income tax at rates lower than the rates applicable to ordinary income and short-term capital gains, while short-term capital gains are subject to U.S. federal income tax at the rates applicable to ordinary income. The deductibility of capital losses is subject to various limitations. Any gain or loss recognized will generally be U.S. source gain or loss for foreign tax credit purposes. Consequently, a U.S. holder may not be able to use the foreign tax credit arising from any Japanese tax imposed on the disposition of the common share unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from non-U.S. sources.

***Passive Foreign Investment Company Rules***

If we are a PFIC for any taxable year during which you hold our common shares, you will be subject to special tax rules with respect to any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge) of the common shares, unless you make a mark-to-market election as discussed below. Distributions you receive from us in a taxable year that are greater than 125% of the average annual distributions you received from us during the shorter of the three preceding taxable years or your holding period for the common shares will be treated as an excess distribution. Under these special tax rules:

● the excess distribution or gain will be allocated ratably over your holding period for the common shares,

● the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income, and

● the amount allocated to each of the other taxable years will be subject to tax at the highest rate of tax in effect for you for such year and will be increased by an additional tax calculated as an interest charge on the resulting tax deemed deferred with respect to each such other taxable year at the rates generally applicable to underpayments of tax payable in those years.

If we are a PFIC for any taxable year during which a U.S. holder holds our common shares and any of our subsidiaries or other corporate entities in which we own equity interests is also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

As an alternative to the foregoing rules, a U.S. holder may make a mark-to-market election with respect to our common shares, provided such common shares are treated as "marketable stock." The common shares generally will be treated as marketable stock if the common shares are regularly traded on a "qualified exchange or other market," as defined in applicable U.S. Treasury Regulations. Our common shares will be marketable stock as long as they remain listed on the Nasdaq, which is a qualified exchange for this purpose, and are regularly traded. We anticipate that our common shares should qualify as being regularly traded but no assurances can be given in this regard.

If a U.S. holder makes a valid mark-to-market election with respect to the common shares, the holder generally will (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of common shares held at the end of the taxable year over the adjusted tax basis of such common shares and (ii) deduct as an ordinary loss in each such taxable year the excess, if any, of the adjusted tax basis of the common shares over the fair market value of such common shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. holder's adjusted tax basis in the common shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. holder makes a mark-to-market election in respect of our common shares and we cease to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If a U.S. holder makes a mark-to-market election, any gain such U.S. holder recognizes upon the sale or other disposition of our common shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.

Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. holder may continue to be subject to the general PFIC rules described above with respect to such U.S. holder's indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

We have not determined whether, if we were to be classified as a PFIC for a taxable year, we will provide information necessary for a U.S. holder to make a "qualified electing fund" election which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above. Accordingly, U.S. holders should assume that they will not be able to make a qualified electing fund election with respect to the common shares.

If a U.S. holder owns common shares during any year in which we are a PFIC, the holder generally must file an annual report containing such information as the U.S. Treasury may require on IRS Form 8621 (or any successor form). A failure to file this report generally will suspend the statute of limitations with respect to any tax return, event, or period to which such report relates (potentially including with respect to items that do not relate to a U.S. holder's investment in common shares).

The PFIC rules are complex, and each U.S. holder should consult its own tax advisor regarding the PFIC rules, the elections which may be available to it, and how the PFIC rules may affect the U.S. federal income tax consequences relating to the ownership and disposition of common shares.

***Information Reporting and Backup Withholding***

Payments of dividends or sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries may be subject to information reporting and backup withholding, unless (i) the U.S. holder is a corporation or other exempt recipient, or (ii) in the case of backup withholding, the U.S. holder provides a correct U.S. taxpayer identification number and certifies that it is not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding rules will be allowed as a credit against a U.S. holder's U.S. federal income tax liability, if any, or will be refunded, if such U.S. holder furnishes required information to the IRS in a timely manner. Each U.S. holder should consult its own tax advisor regarding the information reporting and backup withholding rules in their particular circumstances and the availability of and procedures for obtaining an exemption from backup withholding.

***Reporting Obligations for Certain Owners of Foreign Financial Assets***

Certain U.S. holders may be required to file information returns with respect to their investment in common shares. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. holders that hold certain specified foreign financial assets in excess of certain thresholds. The definition of "specified foreign financial assets" includes not only financial accounts maintained in non-U.S. financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person, and any interest in a non-U.S. entity. U.S. holders may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions.

The discussion of reporting obligations set forth above is not intended to constitute an exhaustive description of all reporting obligations that may apply to a U.S. holder. A failure to satisfy certain reporting obligations may result in an extension of the period during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting obligation. Penalties for failure to comply with these reporting obligations are substantial. U.S. holders should consult with their own tax advisors regarding their reporting obligations under these rules, including the requirement to file an IRS Form 8938.

**U.S. Holders should consult their tax advisors regarding any reporting obligations that may arise with respect to the acquisition, ownership or disposition of our common shares. Failure to company with applicable reporting requirements could result in substantial penalties.**

**The foregoing discussion of certain U.S. federal income tax considerations is for general information only and is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership and disposition of our common shares. U.S. Holders should consult their own tax advisors concerning the tax consequences applicable to their particular situations.**

**UNDERWRITING** 

______________________ is acting as the representative of the underwriters and book-running managers of this offering. Under the terms of an underwriting agreement dated [●], each of the underwriters named below has severally agreed to purchase from us the respective number of common shares shown opposite its name below:

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| | |
|:---|:---|
| **Underwriters** | **Number of<br> Common Shares** |
| ______________________ |  |
| **Total:** |  |

---

The underwriting agreement provides that the underwriters' obligation to purchase common shares depends on the satisfaction of the conditions contained in the underwriting agreement including:

● the obligation to purchase all of the common shares offered hereby (other than those common shares covered by their option to purchase additional common shares as described below), if any of the common shares are purchased;

● the representations and warranties made by us to the underwriters are true;

● there is no material change in our business or the financial markets; and

● we deliver customary closing documents to the underwriters.

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***Commissions and Expenses***

The underwriting discount is equal to the public offering price per share, less the amount paid by the underwriters to us per share. The underwriting discount was determined through an arms' length negotiation between us and the underwriters. We have agreed to sell the common shares to the underwriters at the offering price of $[●] per common share, which represents the public offering price of the common shares set forth on the cover page of this prospectus less an 7.5% underwriting discount. The underwriters may allow and certain dealers may reallow a discount from the concession not in excess of $[●] per share to certain brokers and dealers. After this offering, the public offering price, concession, and reallowance to dealers may be changed by the Representative. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The common shares are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.

The following table shows the public offering price, underwriting discount, and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters of the over-allotment option.

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| | | | |
|:---|:---|:---|:---|
|  | **Per Share** | **Total<br> Without<br> Over-Allotment<br> Option** | **Total <br> With Full<br> Over-Allotment<br> Option** |
| Public offering price | $[●] | $[●] | $[●] |
| Underwriting discounts(1) | $[●] | $[●] | $[●] |
| Proceeds, before expenses, to us | $[●] | $[●] | $[●] |

---

(1) Represents an underwriting discount equal to 7.5% per common share.

We will advance $25,000 to the Representative upon the filing of a registration statement. We have agreed to pay all expenses relating to the Offering, including, without limitation, all filing fees and communication expenses relating to the registration of the common shares to be sold in the Offering (including the Over-allotment common shares) with the Commission and the filing of the offering materials with FINRA; all fees and expenses relating to the listing of such common shares on such stock exchange as the Company and the Representative together determine; all reasonable fees, expenses and disbursements relating to background checks of the Company's officers and directors; all fees, expenses and disbursements relating to the registration or qualification of such common shares under the "blue sky" securities laws of such states and other jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees, and the fees and disbursements of the Representative's counsel for such counsel's participation in the "blue sky" and stock exchange listing process); the costs of all mailing and printing of the underwriting documents (including the Underwriting Agreement, any Blue Sky Surveys and, if appropriate, any Agreement Among Underwriters, Selected Dealers' Agreement, Underwriters' Questionnaire and Power of Attorney), Registration Statements, Prospectuses and all amendments, supplements, and exhibits thereto and as many preliminary and final Prospectuses as the Representative may reasonably deem necessary; the costs and expenses of the public relations firm; the costs of preparing, printing and delivering certificates representing such common shares; fees and expenses of the transfer agent for such common shares; stock transfer taxes, if any, payable upon the transfer of securities from the Company to the Representative; the fees and expenses of the Company's accountants and the fees and expenses of the Company's legal counsel and other agents and representatives. Upon the Representative's request, the Company shall provide funds to pay all such fees, expenses, and disbursements in advance. For the sake of clarity, it is understood and agreed that (i) the Company shall be responsible for the Representative's legal fees, costs and expenses in connection with the Offering irrespective of whether the Offering is consummated, and (ii) the maximum amount of legal fees, costs and expenses incurred by the Representative that the Company shall be responsible for shall not exceed $150,000 in the event of a Closing of the Offering, and shall not exceed $75,000 in the event that there is not a Closing of the Offering. Any expense deposit or advance will be returned to us to the extent the Representative's out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A).

In addition, we agreed, during the engagement period of the Representative or until the consummation of this offering, whichever is earlier, not to negotiate with any other broker-dealer relating to a possible private and/or public offering of the securities without the written consent of the Representative, provided that the Representative is reasonably proceeding in good faith with preparation for this offering. Until the underwriting agreement is signed, we may terminate the Representative's participation in this offering only for cause. If terminated, we agree to reimburse the Representative for the full amount of its accountable expenses incurred to such date, up to a maximum of $10,000 (exclusive of legal fees and disbursements incurred), including but not limited to travel, lodging and other "road show" expenses, mailing, printing and reproduction expenses, and any expenses incurred by the Representative in conducting its due diligence), and also to reimburse the Representative for all fees and disbursements incurred by the Representative's counsel, less any advance and amounts previously paid to the Representative in reimbursement for such expenses; provided, however, that such fees shall be subject to FINRA Rule 5110(f)(2)(C) and shall not apply if and to the extent the Representative has advised us of the Representative's inability or unwillingness to proceed with this offering.

Previously, we paid an advance of $25,000 (the "Advance") to Loop Capital Markets LLC ("Loop"), the previous representative of the underwriters, whose engagement expired on December 31, 2024, for their anticipated out-of-pocket expenses; any advance will be returned to us to the extent Loop's out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A). The Advance has been fully applied to Loop's out-of-pocket expenses with $0 remaining.

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***Option to Purchase Additional Common Shares***

We have granted the underwriters an option exercisable for 45 days after the date of this prospectus to purchase, from time to time, in whole or in part, up to an aggregate of [●] common shares from us at the public offering price less underwriting discounts and commissions. To the extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these additional common shares based on the underwriter's percentage underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting Section.

**Lock-Up Agreements** 

We, all of our directors, executive officers, and existing shareholders have agreed with the underwriters or our company that, for a period of no less than 6 months after the date of this prospectus subject to certain limited exceptions as described below, they will not directly or indirectly, without the prior written consent of each of the underwriters, (i) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any common shares (including, without limitation, common shares that may be deemed to be beneficially owned by us in accordance with the rules and regulations of the SEC and common shares that may be issued upon exercise of any options or warrants) or securities convertible into or exercisable or exchangeable for common shares (other than the stock and shares issued pursuant to employee benefit plans, qualified stock option plans, or other employee compensation plans existing on the date of this prospectus or pursuant to currently outstanding options, warrants or rights not issued under one of those plans), or sell or grant options, rights or warrants with respect to any common shares or securities convertible into or exchangeable for common shares (other than the grant of options pursuant to option plans existing on the date of this prospectus), (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of common shares, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of common shares or other securities, in cash or otherwise, (iii) make any demand for or exercise any right or file or cause to be filed a registration statement, including any amendments thereto, with respect to the registration of any common shares or securities convertible, exercisable or exchangeable into common shares or any of our other securities (other than any registration statement on Form S-8), or (iv) publicly disclose the intention to do any of the foregoing. These restrictions are subject to certain exceptions.

The underwriters, in their sole discretion, may release the ordinary shares and other securities subject to the lock-up agreements described above in whole or in part at any time. When determining whether or not to release ordinary shares and other securities from lock-up agreements, the underwriters will consider, among other factors, the holder's reasons for requesting the release, the number of common shares and other securities for which the release is being requested and market conditions at the time. At least three business days before the effectiveness of any release or waiver of any of the restrictions described above with respect to an officer or director of our company, the underwriters will notify us of the impending release or waiver and we have agreed to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver, except where the release or waiver is effected solely to permit a transfer of ordinary shares that is not for consideration and where the transferee has agreed in writing to be bound by the same terms as the lock-up agreements described above to the extent and for the duration that such terms remain in effect at the time of transfer.

**Offering Price Determination** 

Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price will be negotiated between the representatives and us. In determining the initial public offering price of our ordinary shares, the representatives considered:

● the history and prospects for the industry in which we compete;

● our financial information;

● the ability of our management and our business potential and earning prospects;

● the prevailing securities markets at the time of this offering; and

● the recent market prices of, and the demand for, publicly traded shares of generally comparable companies.

**Indemnification** 

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make for these liabilities.

**Stabilization, Short Positions and Penalty Bids** 

● Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

● A short position involves a sale by the underwriters of common shares in excess of the number of common shares the underwriters are obligated to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short position or a naked short position. In a covered short position, the number of common shares involved in the sales made by the underwriters in excess of the number of common shares they are obligated to purchase is not greater than the number of common shares that they may purchase by exercising their option to purchase additional common shares. In a naked short position, the number of common shares involved is greater than the number of common shares in their option to purchase additional common shares. The underwriters may close out any short position by either exercising their option to purchase additional common shares and/or purchasing common shares in the open market. In determining the source of common shares to close out the short position, the underwriters will consider, among other things, the price of common shares available for purchase in the open market as compared to the price at which they may purchase common shares through their option to purchase additional common shares. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in the offering.

● Syndicate covering transactions involve purchases of the common shares in the open market after the distribution has been completed in order to cover syndicate short positions.

● Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common share originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common share or preventing or retarding a decline in the market price of the common share. As a result, the price of the common share may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the Nasdaq or otherwise and, if commenced, may be discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common share. In addition, neither we nor any of the underwriters make any representation that the representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

**Electronic Distribution** 

A prospectus in electronic format may be made available on the internet sites or through other online services maintained by one or more of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of common shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

Other than the prospectus in electronic format, the information on any underwriter's or selling group member's website and any information contained in any other website maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

**Listing on the Nasdaq** 

We have applied for approval for listing the common shares on the Nasdaq under the symbol "GTSG." In order to meet the requirements for listing on that exchange, the underwriters have undertaken to sell a minimum number of common shares to a minimum number of beneficial owners as required by that exchange.

**Stamp Taxes** 

If you purchase common shares offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

**Relationships** 

The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for the issuer and its affiliates, for which they received or may in the future receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer or its affiliates. The underwriters and certain of their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

**Selling Restrictions** 

This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction (i) in which such an offer or solicitation is not authorized, (ii) in which any person making such offer or solicitation is not qualified to do so or (iii) in which any such offer or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the common shares or possession or distribution of this prospectus or any other offering or publicity material relating to the common shares in any country or jurisdiction (other than the United States) where any such action for that purpose is required. Accordingly, each underwriter has undertaken that it will not, directly or indirectly, offer or sell any common shares or have in its possession, distribute or publish any prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of common shares by it will be made on the same terms.

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***Australia***

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission ("ASIC"), in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001 (the "Corporations Act"), and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act. Any offer in Australia of the common shares may only be made to persons (the "Exempt Investors") who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the common shares without disclosure to investors under Chapter 6D of the Corporations Act. The common shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring common shares must observe such Australian on-sale restrictions. This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any common shares recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

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***Bermuda***

The common shares may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 2003 of Bermuda which regulates the sale of securities in Bermuda. Additionally, non- Bermudian persons (including companies) may not carry on or engage in any trade or business in Bermuda unless such persons are permitted to do so under applicable Bermuda legislation.

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***British Virgin Islands***

The common shares are not being, and may not be offered to the public or to any person in the British Virgin Islands for purchase or subscription by us or on our behalf. The common shares may be offered to companies incorporated under the BVI Business Companies Act, 2004 (British Virgin Islands) (each a BVI Company), but only where the offer will be made to, and received by, the relevant BVI Company entirely outside of the British Virgin Islands.

This prospectus has not been, and will not be, registered with the Financial Services Commission of the British Virgin Islands. No registered prospectus has been or will be prepared in respect of the common shares for the purposes of the Securities and Investment Business Act, 2010, or SIBA or the Public Issuers Code of the British Virgin Islands.

The common shares may be offered to persons located in the British Virgin Islands who are "qualified investors" for the purposes of SIBA. Qualified investors include (i) certain entities which are regulated by the Financial Services Commission in the British Virgin Islands, including banks, insurance companies, licensees under SIBA and public, professional and private mutual funds; (ii) a company, any securities of which are listed on a recognized exchange; and (iii) persons defined as "professional investors" under SIBA, which is any person (a) whose ordinary business involves, whether for that person's own account or the account of others, the acquisition or disposal of property of the same kind as the property, or a substantial part of our property; or (b) who has signed a declaration that he, whether individually or jointly with his spouse, has a net worth in excess of US$1,000,000 and that he consents to being treated as a professional investor.

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***Canada***

 

*Resale Restrictions* 

The distribution of common shares in Canada is being made only in the provinces of Ontario, Quebec, Alberta and British Columbia on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of these securities are made. Any resale of the common shares in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common shares.

 

*Representations of Canadian Purchasers* 

● By purchasing common shares in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:

● the purchaser is entitled under applicable provincial securities laws to purchase the common shares without the benefit of a prospectus qualified under those securities laws as it is an "accredited investor" as defined under National Instrument 45-106—Prospectus Exemptions;

● the purchaser is a "permitted client" as defined in National Instrument 31-103—Registration Requirements, Exemptions and Ongoing Registrant Obligations;

● where required by law, the purchaser is purchasing as principal and not as agent; and

● the purchaser has reviewed the text above under Resale Restrictions.

 

*Conflicts of Interest* 

Canadian purchasers are hereby notified that the underwriters are relying on the exemption set out in section 3A.3 or 3A.4, if applicable, of National Instrument 33-105—Underwriting Conflicts from having to provide certain conflict of interest disclosure in this document.

 

*Statutory Rights of Action* 

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if the offering memorandum (including any amendment thereto) such as this document contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser of these securities in Canada should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

 

*Enforcement of Legal Rights* 

All of our directors and officers as well as the experts named herein may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

 

*Taxation and Eligibility for Investment* 

Canadian purchasers of common shares should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common shares in their particular circumstances and about the eligibility of the common shares for investment by the purchaser under relevant Canadian legislation.

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***Cayman Islands***

This prospectus does not constitute an invitation or offer to the public in the Cayman Islands of the common shares whether by way of sale or subscription. The underwriters have not offered or sold, and will not offer or sell, directly or indirectly, any common shares in the Cayman Islands.

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***Dubai International Financial Center***

This document relates to an exempt offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with exempt offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The common shares which are the subject of the offering contemplated by this document may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the common shares offered should conduct their own due diligence on the common shares. If you do not understand the contents of this document you should consult an authorized financial advisor.

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***European Economic Area***

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter represents and agrees that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State, it has not made and will not make an offer of common shares which are the subject of the offering contemplated by this prospectus to the public in that Relevant Member State other than:

● to any legal entity which is a qualified investor as defined in the Prospectus Directive;

● to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

● in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of common shares shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer to the public" in relation to any common shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the common shares to be offered so as to enable an investor to decide to purchase or subscribe the common shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

***United Kingdom***

Each of the underwriters severally represents warrants and agrees as follows:

● it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (FSMA) received by it in connection with the issue or sale of the common shares in circumstances in which Section 21 of the FSMA does not apply to us; and

● it has complied with, and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the common shares in, from or otherwise involving the United Kingdom.

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***France***

Neither this prospectus nor any other offering material relating to the common shares described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The common shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the common shares has been or will be:

● to any legal entity which is a qualified investor as defined in the Prospectus Directive;

● to fewer than 100 or, if the relevant member state has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by us for any such offer;

● in any other circumstances falling within Article 3(2) of the Prospectus Directive;

● released, issued, distributed or caused to be released, issued or distributed to the public in France; or

● used in connection with any offer for subscription or sale of the common shares to the public in France.

Such offers, sales and distributions will be made in France only:

● to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d'investisseurs), in each case investing for their own account, all as defined in, and in accordance with articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier;

● to investment services providers authorized to engage in portfolio management on behalf of third parties; or

● in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l'épargne).

The common shares may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier.

 ****

***Germany***

This prospectus does not constitute a Prospectus Directive-compliant prospectus in accordance with the German Securities Prospectus Act (Wertpapierprospektgesetz) and does therefore not allow any public offering in the Federal Republic of Germany ("Germany") or any other Relevant Member State pursuant to § 17 and § 18 of the German Securities Prospectus Act. No action has been or will be taken in Germany that would permit a public offering of the common shares, or distribution of a prospectus or any other offering material relating to the common shares. In particular, no securities prospectus (Wertpapierprospekt) within the meaning of the German Securities Prospectus Act or any other applicable laws of Germany, has been or will be published within Germany, nor has this prospectus been filed with or approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) for publication within Germany.

Each underwriter will represent, agree and undertake, (i) that it has not offered, sold or delivered and will not offer, sell or deliver the common shares within Germany other than in accordance with the German Securities Prospectus Act (Wertpapierprospektgesetz) and any other applicable laws in Germany governing the issue, sale and offering of common shares, and (ii) that it will distribute in Germany any offering material relating to the common shares only under circumstances that will result in compliance with the applicable rules and regulations of Germany.

This prospectus is strictly for use of the person who has received it. It may not be forwarded to other persons or published in Germany.

 ****

***Hong Kong***

The common shares may not be offered or sold in Hong Kong by means of any document other than (i) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance, or (ii) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the common shares may be issued or may be in the possession of any person for the purpose of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to common shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

 ****

***Israel***

This prospectus does not constitute a prospectus under the Israeli Securities Law, 5728-1968, and has not been filed with or approved by the Israel Securities Authority. In Israel, this prospectus is being distributed only to, and is directed only at, investors listed in the first addendum, or the Addendum, to the Israeli Securities Law, consisting primarily of joint investment in trust funds, provident funds, insurance companies, banks, portfolio managers, investment advisors, members of the Tel Aviv Stock Exchange, underwriters purchasing for their own account, venture capital funds, entities with equity in excess of NIS 50 million and qualified individuals, each as defined in the Addendum (as it may be amended from time to time), collectively referred to as qualified investors. Qualified investors may be required to submit written confirmation that they meet the criteria for one of the categories of investors set forth in the prospectus.

 ****

 ****

***Italy***

The offering of common shares has not been registered with the Commissione Nazionale per le Società e la Borsa ("CONSOB") pursuant to Italian securities legislation and, accordingly, no common shares may be offered, sold or delivered, nor copies of this prospectus or any other documents relating to the common shares may not be distributed in Italy except:

● to "qualified investors", as referred to in Article 100 of Legislative Decree No. 58 of 24 February 1998, as amended (the "Decree No. 58") and defined in Article 26, paragraph 1, letter d) of CONSOB Regulation No. 16190 of 29 October 2007, as amended ("Regulation No. 16190") pursuant to Article 34-ter, paragraph 1, letter b) of CONSOB Regulation No. 11971 of 14 May 1999, as amended ("Regulation No. 11971"); or

● in any other circumstances where an express exemption from compliance with the offer restrictions applies, as provided under Decree No. 58 or Regulation No. 11971.

Any offer, sale or delivery of the common shares or distribution of copies of this prospectus or any other documents relating to the common shares in the Republic of Italy must be:

● made by investment firms, banks or financial intermediaries permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of 1 September 1993, as amended (the "Banking Law"), Decree No. 58 and Regulation No. 16190 and any other applicable laws and regulations;

● in compliance with Article 129 of the Banking Law, and the implementing guidelines of the Bank of Italy, as amended; and

● in compliance with any other applicable notification requirement or limitation which may be imposed, from time to time, by CONSOB or the Bank of Italy or other competent authority.

Please note that, in accordance with Article 100-bis of Decree No. 58, where no exemption from the rules on public offerings applies, the subsequent distribution of the common shares on the secondary market in Italy must be made in compliance with the public offer and the prospectus requirement rules provided under Decree No. 58 and Regulation No. 11971.

Furthermore, common shares which are initially offered and placed in Italy or abroad to qualified investors only but in the following year are regularly ("sistematicamente") distributed on the secondary market in Italy to non- qualified investors become subject to the public offer and the prospectus requirement rules provided under Decree No. 58 and Regulation No. 11971. Failure to comply with such rules may result in the sale of the common shares being declared null and void and in the liability of the intermediary transferring the common shares for any damages suffered by such non-qualified investors.

 ****

***Japan***

The common shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, "Japanese Person" shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

 ****

 ****

***Kuwait***

Unless all necessary approvals from the Kuwait Ministry of Commerce and Industry required by Law No. 31/1990 "Regulating the Negotiation of Securities and Establishment of Investment Funds," its Executive Regulations and the various Ministerial Orders issued pursuant thereto or in connection therewith, have been given in relation to the marketing and sale of the common shares, these may not be marketed, offered for sale, nor sold in the State of Kuwait. Neither this prospectus (including any related document), nor any of the information contained therein is intended to lead to the conclusion of any contract of whatsoever nature within Kuwait.

 ****

***China***

This prospectus has not been and will not be circulated or distributed in China, and the common shares may not be offered or sold, and will not be offered or sold, directly or indirectly, to any PRC resident or to persons for re-offering or resale, directly or indirectly, to any PRC resident except pursuant to applicable PRC laws and regulations.

***Qatar***

The common shares have not been and will not be offered, sold or delivered at any time, directly or indirectly, in the State of Qatar ("Qatar") in a manner that would constitute a public offering. This prospectus has not been reviewed or approved by or registered with the Qatar Central Bank, the Qatar Exchange or the Qatar Financial Markets Authority. This prospectus is strictly private and confidential, and may not be reproduced or used for any other purpose, nor provided to any person other than the recipient thereof.

 ****

***Saudi Arabia***

This prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority. The Capital Market Authority does not make any representation as to the accuracy or completeness of this prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

 ****

***Switzerland***

This document is not intended to constitute an offer or solicitation to purchase or invest in the common shares described herein. The common shares may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the common shares constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange or any other regulated trading facility in Switzerland, and neither this document nor any other offering or marketing material relating to the common shares may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to the offering, nor our company nor the common shares have been or will be filed with or approved by any Swiss regulatory authority. The common shares are not subject to the supervision by any Swiss regulatory authority, e.g., the Swiss Financial Markets Supervisory Authority FINMA (FINMA), and investors in the common shares will not benefit from protection or supervision by such authority.

 ****

***Taiwan***

The common shares have not been and will not be registered or filed with, or approved by, the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations that require a registration, filing or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer or sell the common shares in Taiwan.

 ****

 ****

***United Arab Emirates (Excluding the Dubai International Financial Center)***

The common shares have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates ("U.A.E.") other than in compliance with the laws of the U.A.E. Prospective investors in the Dubai International Financial Centre should have regard to the specific selling restrictions on prospective investors in the Dubai International Financial Centre set out below.

The information contained in this prospectus does not constitute a public offer of common shares in the U.A.E. in accordance with the Commercial Companies Law (Federal Law No. 8 of 1984 of the U.A.E., as amended) or otherwise and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or the Dubai Financial Services Authority, or DFSA. If you do not understand the contents of this prospectus, you should consult an authorized financial advisor. This prospectus is provided for the benefit of the recipient only, and should not be delivered to, or relied on by, any other person.

 ****

***Singapore***

This prospectus has not been and will not be registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the common shares may not be circulated or distributed, nor may the common shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time (the "SFA")) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the common shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a
 corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments
 and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a
 trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust
 is an individual who is an accredited investor,

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the common shares pursuant to an offer made under Section 275 of the SFA except:

(1) to
 an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section
 276(4)(i)(B) of the SFA;

(2) where
 no consideration is or will be given for the transfer;

(3) where
 the transfer is by operation of law;

(4) as
 specified in Section 276(7) of the SFA; or

(5) as
 specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts)
 Regulations 2018.

**EXPENSES RELATED TO THE OFFERING**

The following table sets forth the costs and expenses, other than the underwriting discounts and commissions and expenses, payable in connection with this offering. All amounts shown are estimates and subject to future contingencies, except the U.S. Securities and Exchange Commission registration fee, the Financial Industry Regulatory Authority filing fee, and the entry fee of the Nasdaq.

---

| | |
|:---|:---|
| **Description** | **Amount** |
| U.S. Securities and Exchange Commission registration fee | $1145 |
| Financial Industry Regulatory Authority filing fee | 1621 |
| The Nasdaq entry fee | 75000 |
| Accounting fees and expenses | 200000 |
| Legal fees and expenses | 250000 |
| Printing expenses | 10000 |
| Accountable expenses | 150000 |
| Miscellaneous | 12234 |
| **Total** | $700000 |

---

**LEGAL MATTERS**

The validity of the common shares offered in this offering and certain legal matters as to Japanese law will be passed upon for us by One Asia Lawyers, Tokyo, Japan.

Certain legal matters in connection with this offering with respect to United States federal securities law will be passed upon for us by Anthony, Linder & Cacomanolis, PLLC, West Palm Beach, Florida. Bevilacqua PLLC, Washington, D.C., is acting as U.S. counsel to the underwriters with respect to this offering.

**EXPERTS**

Our consolidated financial statements as of December 31, 2024 and 2023 and for the years then ended included in this prospectus have been audited by MaloneBailey, LLP, an independent registered public accounting firm, as indicated in their report with respect thereto, and have been so included in reliance upon the report of such firm given on their authority as experts in accounting and auditing.

**DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES**

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

**ENFORCEABILITY OF CIVIL LIABILITIES**

We are a joint stock corporation organized under Japanese law. Most of our directors, corporate auditors and executive officers reside in Japan, and significantly all of our assets and the assets of such persons are located outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon these persons or us, or to enforce against them or us judgments obtained in U.S. courts, whether or not predicated upon the civil liability provisions of the federal securities laws of the United States or of the securities laws of any state of the United States. Our Japanese counsel, One Asia Lawyers, has advised us that there is doubt as to the enforceability in Japan, either in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely on the federal securities laws of the United States or the securities laws of any state of the United States. A Japanese court may refuse to apply provisions of U.S. securities laws in original actions, or to enforce judgments of U.S. courts that are based on such provisions, if it considers such provisions to be contrary to the public policy of Japan.

We have appointed Cogency Global Inc. as our agent for service of process relating to any suit, action, or proceeding originating in the state and federal courts of the United States relating to this registration statement that are brought against us under the state and federal laws of the United States. Cogency Global Inc.'s services are limited to only receiving service of process on our behalf and not the enforcement of judgments.

One Asia Lawyers has further advised that the United States and Japan do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters, and a Japanese court may deem that there is not sufficient basis for the reciprocity on the enforcement of judgments. Therefore, if you obtain a civil judgment by a U.S. court, you may not be able to enforce it in Japan.

In addition, One Asia Lawyers have 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:

● the jurisdiction of the foreign court shall be recognized under laws, regulations, treaties, or conventions;

● the defeated defendant has been served (excluding service by publication or other similar service) with the summons or order for the commencement of litigation, or that he/she did not receive such summons or order, but did respond to the summons or order;

● the content of the judgment and the litigation proceedings are not contrary to public policy or good morals in Japan; and

● there exists a guarantee of reciprocity as to the recognition by a court of the relevant foreign jurisdiction of a final judgment of a Japanese court.

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.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a registration statement on Form F-1 under the Securities Act relating to the common shares being offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. Some items included in the registration statement have been omitted from this prospectus in accordance with the rules and regulations of the SEC. For further information about our Company and our common shares being offered by this prospectus, we refer you to the registration statement, including all amendments, supplements, exhibits, and schedules thereto. Statements contained in this prospectus regarding the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see a copy of such contract or document that has been filed. Each statement in this prospectus relating to a contract or document that is filed as an exhibit to the registration statement is qualified in all respects by reference to the full text of such contract or document filed as an exhibit to the registration statement.

You may access and read the registration statement and this prospectus, including the related exhibits and schedules, and any document we file with the SEC at the SEC's Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC are available to the public without charge through the SEC's website at http://www.sec.gov.

Upon completion of this offering, we will be subject to the information reporting requirements of the Exchange Act that are applicable to "foreign private issuers", and under those requirements will file reports with the SEC. Those other reports or other information may be inspected without charge at the locations described above. As a "foreign private issuer", we will be exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors, corporate auditors, and principal shareholders will be exempt from the reporting and "short-swing" profit recovery provisions contained in Section 16 of the Exchange Act with respect to their purchases and sales of securities. In addition, as a "foreign private issuer", we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. Furthermore, we will not be required under the Exchange Act to file annual or other reports and financial statements with the SEC as frequently or as promptly as U.S. companies that have securities registered under the Exchange Act. As such, we will file with the SEC, within 120 days after the end of each fiscal year, or such other applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm. We also intend to furnish to the SEC under cover of Form 6-K certain other material information.

Our corporate website is www.gatestokyo.co.jp. After the consummation of this offering, you may go to our website to access our periodic reports and other information that we file with the SEC as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not incorporated by reference into, and is not a part of, this prospectus. We have included our website address in this prospectus solely for informational purposes.

**GATES GROUP INC.**

**INDEX TO FINANCIAL STATEMENTS**

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| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm](#a_001) | F-2 |
| [Consolidated Balance Sheets as of December 31, 2024 and 2023](#a_002) | F-3 |
| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2024 and 2023](#a_003) | F-4 |
| [Consolidated Statements of Changes in Equity for the Years Ended December 31, 2024 and 2023](#a_004) | F-5 |
| [Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023](#a_005) | F-6 |
| [Notes to Consolidated Financial Statements](#a_006) | F-7 |

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and Board of Directors of

GATES GROUP Inc.

 ***Opinion on the Financial Statements***

We have audited the accompanying consolidated balance sheets of GATES GROUP Inc. and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 ***Basis for Opinion***

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 */s/ MaloneBailey, LLP*

www.malonebailey.com

We have served as the Company's auditor since 2024.

Tokyo, Japan

June 2, 2025

**GATES GROUP INC.**

**CONSOLIDATED BALANCE SHEETS**

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| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2024** | **2023** |
| **ASSETS** |  |  |
| **Current assets** |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $4855012 | $4283778 |
| &nbsp;&nbsp;&nbsp; Restricted cash | 1440268 | 1474366 |
| &nbsp;&nbsp;&nbsp; Term deposits | 1334 | 6387 |
| &nbsp;&nbsp;&nbsp; Short-term investments | 578915 |  |
| &nbsp;&nbsp;&nbsp; Financing receivables, current | 1588613 | 461255 |
| &nbsp;&nbsp;&nbsp; Accounts receivable | 776566 | 674367 |
| &nbsp;&nbsp;&nbsp; Inventories | 2700028 | 1879619 |
| &nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 741192 | 883351 |
| **Total current assets** | **12681928** | **9663123** |
| **Non-current assets** |  |  |
| &nbsp;&nbsp;&nbsp; Long-term investments | 71299 | 76043 |
| &nbsp;&nbsp;&nbsp; Financing receivables, non-current | 730762 |  |
| &nbsp;&nbsp;&nbsp; Property and equipment, net | 2180727 | 1663124 |
| &nbsp;&nbsp;&nbsp; Intangible assets, net | 1026905 | 1276631 |
| &nbsp;&nbsp;&nbsp; Goodwill | 2589438 | 2891711 |
| &nbsp;&nbsp;&nbsp; Operating lease right-of-use assets | 1905567 | 2460893 |
| &nbsp;&nbsp;&nbsp; Finance lease right-of-use assets | 169514 | 135847 |
| &nbsp;&nbsp;&nbsp; Other assets | 1376272 | 637540 |
| **Total non-current assets** | **10050484** | **9141789** |
| **TOTAL ASSETS** | $**22732412** | $**18804912** |
| **LIABILITIES AND EQUITY** |  |  |
| **Current liabilities** |  |  |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | $3880453 | $3357111 |
| &nbsp;&nbsp;&nbsp; Short-term loans and bonds payable | 6570517 | 3597710 |
| &nbsp;&nbsp;&nbsp; Bank and other borrowings, current | 3040184 | 868912 |
| &nbsp;&nbsp;&nbsp; Deferred revenue | 199060 | 350515 |
| &nbsp;&nbsp;&nbsp; Income tax payables | 65778 | 98735 |
| &nbsp;&nbsp;&nbsp; Operating lease liabilities, current | 981395 | 1230390 |
| &nbsp;&nbsp;&nbsp; Finance lease liabilities, current | 47283 | 47823 |
| &nbsp;&nbsp;&nbsp; Other current liabilities | 437429 | 148934 |
| **Total current liabilities** | **15222099** | **9700130** |
| **Non-current liabilities** |  |  |
| &nbsp;&nbsp;&nbsp; Bank and other borrowings, non-current | 4730616 | 6402164 |
| &nbsp;&nbsp;&nbsp; Operating lease liabilities, non-current | 774791 | 1063898 |
| &nbsp;&nbsp;&nbsp; Finance lease liabilities, non-current | 125540 | 90742 |
| &nbsp;&nbsp;&nbsp; Other liabilities | 347812 | 492589 |
| **Total non-current liabilities** | **5978759** | **8049393** |
| **TOTAL LIABILITIES** | **21200858** | **17749523** |
| **EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp; Common shares (67,500,000 shares authorized, 25,335,000 shares issued and outstanding as of December 31, 2024 and 2023, with no stated value)\* | 364664 | 364664 |
| &nbsp;&nbsp;&nbsp; Additional paid-in capital | 41822 | 41822 |
| &nbsp;&nbsp;&nbsp; Retained earnings | 1124337 | 905755 |
| &nbsp;&nbsp;&nbsp; Accumulated other comprehensive loss | (371932) | (256852) |
| **Total GATES GROUP Inc.'s equity** | **1158891** | **1055389** |
| &nbsp;&nbsp;&nbsp; Noncontrolling interests | 372663 | - |
| **TOTAL EQUITY** | **1531554** | **1055389** |
| **TOTAL LIABILITIES AND EQUITY** | $**22732412** | $**18804912** |

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\*Given effect of the Stock Split, see Note 11.

The accompanying notes are an integral part of these consolidated financial statements.

**GATES GROUP INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**

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| | | |
|:---|:---|:---|
|  | **For the Years Ended** <br> **December 31,**  | **For the Years Ended** <br> **December 31,**  |
|  | **2024** | **2023** |
| **Revenues, net** | $144546158 | $108703609 |
| **Cost of revenues** | (121007327) | (92883812) |
| **Gross profit** | 23538831 | 15819797 |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;&nbsp; Selling, general and administrative expenses | (22561334) | (15254672) |
| **Total operating expenses** | (22561334) | (15254672) |
| **Income from operations** | **977497** | **565125** |
| **Other income (expenses)** |  |  |
| &nbsp;&nbsp;&nbsp; Other income | 255509 | 112580 |
| &nbsp;&nbsp;&nbsp; Interest expenses | (684056) | (511452) |
| &nbsp;&nbsp;&nbsp; Other expenses | (201453) | (205791) |
| **Total other expenses** | (630000) | (604663) |
| **Income (loss) before income taxes** | 347497 | (39538) |
| &nbsp;&nbsp;&nbsp; Income tax expense (benefit) | 110082 | (3916) |
| **Net income (loss)** | **237415** | **(35622)** |
| Less: net income attributable to noncontrolling interests | 18833 | 4395 |
| **Net income (loss) attributable to GATES GROUP Inc.** | $**218582** | $**(40017)** |
| **Comprehensive income (loss)** |  |  |
| Net income (loss) | $237415 | $(35622) |
| Other comprehensive loss |  |  |
| &nbsp;&nbsp;&nbsp; Foreign currency translation adjustment | (138257) | (81144) |
| **Total comprehensive income (loss)** | **99158** | **(116766)** |
| Less: comprehensive loss attributable to noncontrolling interests | (4344) | (1168) |
| **Comprehensive income (loss) attributable to GATES GROUP Inc.** | $**103502** | $**(115598)** |
| **Net income (loss) per share attributable to GATES GROUP Inc.** |  |  |
| &nbsp;&nbsp;&nbsp; **- Basic\*** | $**0.01** | $**(0.00)** |
| &nbsp;&nbsp;&nbsp; **- Diluted\*** | $**0.01** | $**(0.00)** |
| **Weighted average common shares outstanding** |  |  |
| &nbsp;&nbsp;&nbsp; **- Basic\*** | **25335000** | **25335000** |
| &nbsp;&nbsp;&nbsp; **- Diluted\*** | **25335000** | **25335000** |

---

\*Given effect of the Stock Split, see Note 11.

The accompanying notes are an integral part of these consolidated financial statements.

**GATES GROUP INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**

**FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Number of Shares\*** | **Common Shares** | **Additional Paid-in Capital** | **Retained Earnings** | **Accumulated Other Comprehensive Loss** | **Noncontrolling Interests** | **Total Equity** |
| **Balance as of January 1, 2023** | **25335000** | $**364664** | $**41822** | $**945772** | $**(181271)** | $**99450** | $**1270437** |
| Net income (loss) |  |  |  | (40017) |  | 4395 | (35622) |
| Capital contribution from anonymous partnerships |  |  |  |  |  | 150851 | 150851 |
| Distribution to anonymous partnerships |  |  |  |  |  | (4982) | (4982) |
| Capital return to anonymous partnerships |  |  |  |  |  | (244151) | (244151) |
| Foreign currency translation adjustment | - | - | - | - | (75581) | (5563) | (81144) |
| **Balance as of December 31, 2023** | **25335000** | $**364664** | $**41822** | $**905755** | $**(256852)** | $**-** | $**1055389** |
| Net income |  |  |  | 218582 |  | 18833 | 237415 |
| Capital contribution from anonymous partnerships |  |  |  |  |  | 718202 | 718202 |
| Distribution to anonymous partnerships |  |  |  |  |  | (13893) | (13893) |
| Capital return to anonymous partnerships |  |  |  |  |  | (240618) | (240618) |
| Capital return and distribution payable to anonymous partnerships |  |  |  |  |  | (86684) | (86684) |
| Foreign currency translation adjustment | - | - | - | - | (115080) | (23177) | (138257) |
| **Balance as of December 31, 2024** | **25335000** | $**364664** | $**41822** | $**1124337** | $**(371932)** | $**372663** | $**1531554** |

---

\*Given effect of the Stock Split, see Note 11.

The accompanying notes are an integral part of these consolidated financial statements.

**GATES GROUP INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** <br> **December 31,**  | **For the Years Ended** <br> **December 31,**  |
|  | **2024** | **2023** |
| **CASH FLOWS FROM OPERATING ACTIVITIES** |  |  |
| Net income (loss) | $237415 | $(35622) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities |  |  |
| &nbsp;&nbsp;&nbsp; Depreciation and amortization expense | 333333 | 354085 |
| &nbsp;&nbsp;&nbsp; Non-cash lease expense | 1230267 | 1310804 |
| &nbsp;&nbsp;&nbsp; Loss on modification of operating lease contracts | 2649 | 111 |
| &nbsp;&nbsp;&nbsp; Gain on termination of finance lease contracts | (235) |  |
| &nbsp;&nbsp;&nbsp; Amortization of debt issuance costs | 126288 | 53050 |
| &nbsp;&nbsp;&nbsp; Fair value change of investments | (3329) | (3397) |
| &nbsp;&nbsp;&nbsp; Asset retirement obligations accretion expense | 4186 | 4176 |
| &nbsp;&nbsp;&nbsp; Gain on settlement of asset retirement obligations | (2047) | (2019) |
| &nbsp;&nbsp;&nbsp; Loss (gain) on disposal of property and equipment | 5462 | (115146) |
| &nbsp;&nbsp;&nbsp; Deferred income tax | (41974) | (197570) |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp; Term deposits | (9) |  |
| &nbsp;&nbsp;&nbsp; Accounts receivable | (179435) | (620544) |
| &nbsp;&nbsp;&nbsp; Inventories | (1056600) | (1496100) |
| &nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets | 53154 | (394204) |
| &nbsp;&nbsp;&nbsp; Other assets | (881865) | (45272) |
| &nbsp;&nbsp;&nbsp; Accounts payable and accrued expenses | 909000 | 591976 |
| &nbsp;&nbsp;&nbsp; Deferred revenue | (119299) | 84152 |
| &nbsp;&nbsp;&nbsp; Income tax payables | (23520) | (88663) |
| &nbsp;&nbsp;&nbsp; Operating lease liabilities | (1233115) | (1351297) |
| &nbsp;&nbsp;&nbsp; Other current liabilities | 229254 | (23383) |
| &nbsp;&nbsp;&nbsp; Other liabilities | (12056) | (17318) |
| **NET CASH USED IN OPERATING ACTIVITIES** | **(422476)** | **(1992181)** |
| **CASH FLOWS FROM INVESTING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp; Purchase of term deposits | (68007) | (3843) |
| &nbsp;&nbsp;&nbsp; Proceeds from maturity of term deposits | 72572 | 2562 |
| &nbsp;&nbsp;&nbsp; Purchase of property and equipment | (865752) | (361692) |
| &nbsp;&nbsp;&nbsp; Proceeds from disposal of property and equipment |  | 298289 |
| &nbsp;&nbsp;&nbsp; Financing receivables originated | (2321647) | (462633) |
| &nbsp;&nbsp;&nbsp; Collection of principals on financing receivables | 432009 | 2420 |
| &nbsp;&nbsp;&nbsp; Loans provided to an employee | (1969) |  |
| &nbsp;&nbsp;&nbsp; Purchase of investments | (606198) | (99062) |
| &nbsp;&nbsp;&nbsp; Proceeds from sales of investments | 11962 | 130656 |
| **NET CASH USED IN INVESTING ACTIVITIES** | **(3347030)** | **(493303)** |
| **CASH FLOWS FROM FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp; Proceeds from bank loans and other borrowings | 12741980 | 12200703 |
| &nbsp;&nbsp;&nbsp; Repayments of bank loans and other borrowings | (7878851) | (8354192) |
| &nbsp;&nbsp;&nbsp; Payments for bond issuance costs | (223525) | (95089) |
| &nbsp;&nbsp;&nbsp; Repayments of finance lease liabilities | (69611) | (47001) |
| &nbsp;&nbsp;&nbsp; Capital contribution from anonymous partnerships | 718202 | 150851 |
| &nbsp;&nbsp;&nbsp; Distribution to anonymous partnerships | (13893) | (4982) |
| &nbsp;&nbsp;&nbsp; Capital return to anonymous partnerships | (240618) | (244151) |
| **NET CASH PROVIDED BY FINANCING ACTIVITIES** | **5033684** | **3606139** |
| Effect of changes in foreign currency exchange rate | (727042) | (323462) |
| NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 537136 | 797193 |
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AS OF THE BEGINNING OF THE YEAR | 5758144 | 4960951 |
| **CASH, CASH EQUIVALENTS AND RESTRICTED CASH AS OF THE END OF THE YEAR** | $**6295280** | $**5758144** |
| **SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION** |  |  |
| &nbsp;&nbsp;&nbsp; Cash paid for interest expense | $680719 | $511452 |
| &nbsp;&nbsp;&nbsp; Cash paid for income taxes | $178542 | $250664 |
| **NON-CASH INVESTING AND FINANCING ACTIVITIES** |  |  |
| &nbsp;&nbsp;&nbsp; Payroll withheld as repayment of loan receivable from an employee | $594 | $- |
| &nbsp;&nbsp;&nbsp; Capital return and distribution payable to anonymous partnerships | $86684 | $- |
| &nbsp;&nbsp;&nbsp; Addition of asset retirement obligations | $- | $124744 |
| &nbsp;&nbsp;&nbsp; Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $26069 | $2631305 |
| &nbsp;&nbsp;&nbsp; Remeasurement of operating lease liabilities and right-of-use assets due to lease modification | $1037503 | $1352 |
| &nbsp;&nbsp;&nbsp; Finance lease right-of-use assets obtained in exchange for finance lease liabilities | $126691 | $106084 |
| **Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets** |  |  |
| &nbsp;&nbsp;&nbsp; Cash and cash equivalents | $4855012 | $4283778 |
| &nbsp;&nbsp;&nbsp; Restricted cash | 1440268 | 1474366 |
| **Total cash, cash equivalents and restricted cash** | $**6295280** | $**5758144** |

---

The accompanying notes are an integral part of these consolidated financial statements.

**GATES GROUP INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS**

GATES GROUP Inc. ("GATES GROUP"), a holding company, was incorporated in Japan on May 1, 2018. GATES GROUP, through its consolidated subsidiaries, is principally engaged in the business of real estate sales, rental, management, brokerage, solar power generation facilities sales and crowdfunding, etc.

GATES GROUP and its consolidated subsidiaries are collectively referred to herein as the "Company", "we" and "us", unless specific reference is made to an entity.

*<u>Corporate Structure</u>*

 

As of December 31, 2024, the Company's major subsidiaries are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Place of Incorporation** | **Date of Incorporation or Acquisition** | **Percentage of Ownership** | **Principal Activities** |
| GATES Inc. | Japan | August 1, 2011 | 100% | Sales and brokerage of real estate properties, sales of solar power generation facilities and real estate crowdfunding |
| GATES enterprise Inc. | Japan | January 6, 2020 | 100% | Management, rental and brokerage of real estate properties |
| G.I.F.T Co., Ltd. ("G.I.F.T") | Japan | April 15, 2022 | 100% | Financial transaction and lending service |
| Chuo Kanzai Inc. ("Chuo Kanzai") | Japan | October 31, 2022 | 100% | Sales and brokerage of real estate properties |
| Future Real Estate Institute Inc. ("Future Real Estate") | Japan | October 31, 2022 | 100% | Sales and brokerage of real estate properties |
| GATES USA Inc. | United States | August 5, 2024 | 100% | Sales of real estate properties |

---

**NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(a) Basis of Presentation**

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(b) Principles of Consolidation**

On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. Our evaluation considers all of our variable interests, including equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity or structure.

In August 2021, the Company launched its first real estate crowdfunding project which allows investors to invest through joint venture arrangements. The Company's crowdfunding joint ventures consist of anonymous partnerships, which is a structure similar to a limited partnership. For the arrangement structured as a limited partnership, our evaluation of whether the equity holders (equity partners other than the managing member of a joint venture) lack the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members (the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:

● Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating decisions made in the ordinary course of business that most significantly influence the entity's economic performance.

● Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause.

If we conclude that any of the three characteristics of a variable interest entity ("VIE") (i.e., insufficiency of equity, existence of non-substantive voting rights, or lack of a controlling financial interest) are met, including that the equity holders lack the characteristics of a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the entity or structure is a VIE and evaluate it for consolidation under the variable interest model.

*<u>Variable interest model</u>*

If an entity or structure is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits - that is, (i) we have the power to direct the activities of a VIE that most significantly influence the VIE's economic performance (power), and (ii) we have the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We consolidate VIEs whenever we determine that we are the primary beneficiary. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the equity method of accounting.

*<u>Voting model</u>*

If a legal entity fails to meet any of the three characteristics of a VIE, we then evaluate such entity under the voting model. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares and that other equity holders do not have substantive participating rights.

We consolidate anonymous partnerships which are determined to be VIEs. The assets and liabilities of the VIEs that are included in the accompanying consolidated financial statements as of December 31, 2024 and 2023 are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Total assets | 719070 |  |
| Total liabilities | 204275 |  |

---

The consolidated financial statements include the accounts of the Company and all of its subsidiaries. VIEs, for which the Company and its subsidiaries are the primary beneficiaries, are also included in the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(c) Foreign Currency**

The Company maintains its books and record in its local currency, the Japanese YEN ("JPY"), which is a functional currency as being the primary currency of the economic environment in which its operation is conducted. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in other income (expenses) in the consolidated statements of operations and comprehensive income (loss).

The reporting currency of the Company is the United States Dollars ("US$" or "$"), and the accompanying consolidated financial statements have been expressed in US$. In accordance with Accounting Standards Codification ("ASC") Topic 830-30, "Translations of Financial Statements", assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the reporting period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the statements of changes in shareholders' equity.

Translation of amounts from local currency of the Company into US$1 has been made at the following exchange rates:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2024** | **December 31, <br> 2023** |
| Current JPY: US$1 exchange rate | 157.37 | 140.92 |
| Average JPY: US$1 exchange rate | 151.46 | 140.50 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(d) Noncontrolling Interests**

Noncontrolling interests in the consolidated balance sheets represent the portion of the equity in the subsidiary and VIEs not attributable, directly or indirectly, to the Company. The portion of the income or loss applicable to the noncontrolling interests in subsidiaries and VIEs is also separately reflected in the consolidated statements of operations and comprehensive income (loss).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(e) Use of Estimates**

In preparing the consolidated financial statements in conformity with U.S. GAAP, the management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the consolidated financial statements. Estimates required to be made by management include, but are not limited to, the net realizable value of solar power generation facilities inventories, impairment of real estate properties inventories, provision for credit losses, purchase price allocation of acquired real estates, useful lives of property and equipment and intangible assets, impairment of long-lived assets, valuation allowance of deferred tax assets, uncertain income tax positions and implicit interest rate of operating and finance leases. Actual results could differ from those estimates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(f) Business Combinations**

Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and noncontrolling interests, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred.

Consideration transferred in a business combination is measured at the fair value as of the date of acquisition. Where the consideration in an acquisition includes contingent consideration, and the payment of which depends on the achievement of certain specified conditions post-acquisition, the contingent consideration is recognized and measured at its fair value at the acquisition date and is recorded as a liability. It is subsequently carried at fair value with changes in fair value reflected in earnings.

In a business combination achieved in stages, the Company remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the remeasurement gain or loss, if any, is recognized in the consolidated statements of operations and comprehensive income (loss).

Fair value is determined based upon the guidance of the ASC Topic 820, "Fair Value Measurements and Disclosures", and generally are determined using Level 2 inputs and Level 3 inputs. The determination of fair value involves the use of significant judgments and estimates. The Company utilizes the assistance of third-party valuation appraisers to determine the fair value as of the date of acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(g) Cash and Cash Equivalents**

Cash and cash equivalents include cash on hand and deposits in banks and other financial institutions that are unrestricted as to withdrawal or use, and which have original maturities of three months or less. The Company maintains substantially all of its bank accounts in Japan. Cash balances in bank accounts in Japan are insured by the Deposit Insurance Corporation of Japan subject to certain limitations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(h) Restricted Cash**

Restricted cash represents cash pledged to financial institutions as collateral for the Company's bank loans, and cash deposits in banks that are restricted as to withdrawal or usage according to certain agreements with customers or with investors of crowdfunding projects. The restricted cash is not available for withdrawal or the Company's general use until after the corresponding bank loans are repaid, or the performance obligation is satisfied. Restricted cash is classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective agreements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(i) Term Deposits**

Term deposits consist of deposits placed with financial institutions with original maturities of greater than three months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(j) Accounts Receivable**

Accounts receivable represents the Company's right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). The Company's accounts receivable balances are unsecured, bear no interest and are due within one year from the date of the sale.

The Company adopted Accounting Standards Updates ("ASU") No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments on January 1, 2021.

The allowance for credit losses reflects the Company's current estimate of credit losses expected to be incurred over the life of the receivables. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company also monitors other risk factors and forward-looking information, such as geographical specific risks and economic factors that may affect a customer's ability to pay in establishing and adjusting its allowance for credit losses. Accounts receivable balances are written off after all collection efforts have ceased. No allowance for credit losses for accounts receivable was recorded as of December 31, 2024 and 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(k) Financing Receivables**

In October 2023, the Company started its financial transaction and lending business by providing loans to entities or individuals with financial needs related to the operation or purchase of real estate. Financing receivables generated from these lending activities are classified as current or non-current based on their contractual maturity dates.

 *<u>Measurement of financing receivables</u>*

Financing receivables are measured at amortized cost and reported on the consolidated balance sheets at the outstanding principal, adjusted for any write-offs and the allowance for credit losses.

 *<u>Allowance for credit losses</u>*

 

The Company assesses the allowance for credit losses, primarily based on past collection experience, as well as consideration of current and future economic conditions and changes in the Company's customer collection trends. The provision for credit losses represents an estimate of the losses expected to be incurred from the Company's financing receivable portfolio. The allowance for credit losses and corresponding receivables are written off when they are determined to be uncollectible. No allowance for credit losses for financing receivables was recorded as of December 31, 2024 and 2023.

 *<u>Accrued interest receivable</u>*

Accrued interest income on financing receivables is calculated based on the effective interest rate of the loan and recorded as interest income as earned. The outstanding principal balance of loans which has not been collected prior to the contractual maturity date is considered past due. When a financing receivable reaches one day past due, it is placed on non-accrual status, and the Company stops accruing interest on such receivables as of that date. The accrued but unpaid interest as of that date is not reversed. Cash receipt of non-accrual financing receivables would be first applied to any unpaid principal, late payment fees, if any, before recognizing interest income. The Company does not resume accrual of interest on a financing receivable after it has been placed on non-accrual status. No financing receivable was placed on non-accrual status for the years ended December 31, 2024 and 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(l) Inventories**

Our inventories mainly consist of real estate properties inventories and solar power generation facilities inventories.

Real estate properties inventories include real estate properties held for sale and real estate properties under renovation, the vast majority of which are expected to be completed and sold within one year of the balance sheet date. Real estate properties are recorded at the lower of cost or fair value less cost to sell. If an asset's fair value less cost to sell, based on discounted future cash flows, management estimates or market comparisons, is less than its carrying amount, an allowance is recorded against the asset. Real estate properties under renovation are carried at cost less impairment, as applicable. The amount of the impairment loss, if any, is calculated as the excess of the asset's carrying value over its fair value, which is determined using a discounted cash flow analysis, management estimates or market comparisons.

The cost basis of the real estate properties inventories includes all direct acquisition costs including but not limited to the property purchase price, renovation costs, certain amenities, capitalized interest, capitalized real estate taxes and other costs. Interests and real estate taxes are not capitalized unless active renovation is underway. When acquiring real estate with existing buildings, we allocate the purchase price between land, building and intangibles related to in-place leases, if any, based on their relative fair values.

The classification of cash flows associated with the purchase and sale of real estate properties is based on the activity that is likely to be the predominant source or use of cash flows for the properties. Accordingly, the Company presents payment made to acquire the real estate properties that are expected to be leased to customers and the related cash flows from rental revenue as investing activities in the consolidated statements of cash flows. The cash proceeds received from the sale of such real estate properties, if any, are included in investing activities. Payments made to acquire the real estate properties that are expected to be sold to customers and the related cash proceeds from the sale of such properties are presented as operating activities in the consolidated statements of cash flows.

Solar power generation facilities inventories represent solar power generation facilities held for sale, which are stated at the lower of cost and net realizable value. If an asset's fair value less cost to sell, based on discounted future cash flows, management estimates or market comparisons, is less than its carrying amount, an allowance is recorded against the asset. The cost basis of solar power generation facilities inventories primarily includes acquisition costs. The amount of the impairment loss, if any, is calculated as the excess of the asset's carrying value over its fair value, which is determined using a discounted cash flow analysis, management estimates or market comparisons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(m) Investments**

*<u>Investments in equity securities with readily determinable fair values</u>*

We hold investments in equity securities of publicly listed companies, for which we do not have significant influence. Investments in equity securities with readily determinable fair values are measured at fair value and any changes in fair value are recognized in other income (expenses).

*<u>Investments in funds that report net asset value ("NAV") per share</u>*

We hold investments in Japanese pooled funds. These funds are generally readily redeemable at their net asset values. The fair value of investment funds is measured at their net asset values per share (or its equivalent) as a practical expedient.

*<u>Investments in privately held companies and organizations that do not report NAV per share</u>*

Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative, under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses).

 *<u>Investments in held-to-maturity debt securities</u>*

Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, net of any allowance for credit losses. Interests arising from held-to-maturity securities are recognized in other income (expense). Investment in held-to-maturity debt securities is classified as either current if the remaining contractual maturities are within one year, or as non-current if the remaining contractual maturities are over one year.

As of December 31, 2024 and 2023, investments consisted of the following:

 *<u>Equity securities</u>*

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| **Long-term investments – equity securities** |  |  |
| Investments in public entities with readily determinable fair value | 3062 | 2993 |
| Investments in funds that report NAV per share | 67277 | 71978 |
| Investments in private entities or organizations that do not report NAV per share: |  |  |
| &nbsp;&nbsp;&nbsp; Entities or organizations without observable price changes | 960 | 1072 |
| **Total long-term investments – equity securities** | **71299** | **76043** |

---

Realized and unrealized gain or loss on long-term investments, which were included in other income (expenses), were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** <br> **December 31,**  | **For the Years Ended** <br> **December 31,**  |
|  | **2024** | **2023** |
| Realized gain (loss) | 1173 | (945) |
| Unrealized gain (loss) | 2156 | 4342 |
| **Total** | **3329** | **3397** |

---

*Debt securities*

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| **Short-term investments – debt securities** |  |  |
| Held-to-maturity debt securities: |  |  |
| &nbsp;&nbsp;&nbsp; Private placement bonds issued by corporations | 578915 |  |
| **Total short-term investments – debt securities** | **578915** |  |

---

There were no realized or unrealized gain or loss, or allowance for credit losses on held-to-maturity debt securities for the years ended December 31, 2024 and 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(n) Property and Equipment, Net**

Property and equipment, including real estate properties held for lease, are measured using the cost model and stated at cost less accumulated depreciation. Acquisition cost includes mainly the costs directly attributable to the acquisition and the initial estimated dismantlement, removal, and restoration costs associated with the assets. Depreciation is calculated using the straight-line and declining methods over the estimated useful lives, as more details follow. Depreciation is included in cost of revenues and selling, general and administrative expenses and is allocated based on estimated usage for each class of asset.

---

| | | |
|:---|:---|:---|
|  | Depreciation Method | Useful Life |
| Buildings, including buildings held for lease | Straight-line method | 10 – 27.5 years |
| Facilities attached to buildings | Straight-line or declining balance method | 3 – 15 years |
| Tool, furniture, and fixtures | Declining balance method | 4 – 15 years |
| Office equipment | Straight-line method | 3 years |
| Land | Not depreciated |  |
| Software\* | Straight-line method | 5 years |
| Software under development\*\* | Not depreciated |  |

---

\* Represents software that is non-detachable to the hardware.

\*\* Represents software developed or obtained for internal use. The Company capitalizes direct external costs associated with developing or obtaining internal-use software, including but not limited to professional fees for consultants who are directly associated with the development. Costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities are expensed as incurred and are recorded in selling, general and administrative expenses. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time amortization commences.

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon. The classification of cash flows associated with the purchase and sale of real estate properties is based on the activity that is likely to be the predominant source or use of cash flows for the properties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(o) Intangible Assets, Net**

Intangible assets with an indefinite life are not amortized and are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired.

Intangible assets with finite lives are initially recorded at cost and amortized on a straight-line basis over the estimated economic useful lives of the respective assets. Acquired intangible assets from business combinations are recognized and measured at fair value at the time of acquisition. Those assets represent assets with finite lives and are further amortized on a straight-line basis over the estimated economic useful lives of the respective assets.

The estimated useful lives of intangible assets are as follows:

Licenses 11 years and 1 month <br> Customer assets 11 years

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(p) Leases**

The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

We classify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct financing lease (as a lessor):

&nbsp;&nbsp;&nbsp;&nbsp;(i) ownership
 is transferred from lessor to lessee by the end of the lease term;

(ii) an
 option to purchase is reasonably certain to be exercised;

(iii) the
 lease term is for the major part of the underlying asset's remaining economic life;

(iv) the
 present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or

(v) the
 underlying asset is specialized and is expected to have no alternative use at the end of the lease term.

If we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet any of the criteria, we account for the lease as an operating lease.

*<u>Lessee accounting</u>*

The Company recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Company's right to use an underlying asset for the lease term. Lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Company.

As the rates implicit on the Company's leases for which it is the lessee are not readily determinable, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining the incremental borrowing rate, the Company assesses multiple variables such as lease term, collateral, economic conditions, and its creditworthiness.

From time to time, we may enter into sublease agreements with third parties. Our subleases generally do not relieve us of our primary obligations under the corresponding head lease. As a result, we account for the head lease based on the original assessment at lease inception. We determine if the sublease arrangement is either a sales-type, direct financing, or operating lease at inception of the sublease. If the total remaining lease cost on the head lease for the term of the sublease is greater than the anticipated sublease income, the right-of-use asset is assessed for impairment. Our subleases are generally operating leases and we recognize sublease income on a straight-line basis over the sublease term.

*<u>Lessor accounting – operating leases</u>*

We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires us to account for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single component if two criteria are met:

&nbsp;&nbsp;&nbsp;&nbsp;(i) the
 timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and

(ii) the
 lease component would be classified as an operating lease if it were accounted for separately.

Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases. Nonlease components consist primarily of common area expenses.

If the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under the lease accounting standard and classify these revenues as rental income.

We commence recognition of rental income related to the operating leases at the date the property is ready for its intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently but recognized as revenue in future periods are classified in deferred revenue in our consolidated balance sheets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(q) Impairment of Long-Lived Assets Other Than Goodwill**

Long-lived assets with finite lives, primarily property and equipment, including real estate properties held for lease, operating lease right-of-use assets, finance lease right-of-use assets and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset's carrying value, then the asset is deemed to be impaired and written down to its fair value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(r) Goodwill**

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In accordance with ASC Topic 350, "Intangibles – Goodwill and Others", goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test. Fair value is generally determined using a discounted cash flow analysis.

The changes in the carrying amount of goodwill were as follows:

---

| | |
|:---|:---|
| Balance at January 1, 2023 | $3091571 |
| Translation adjustment | (199860) |
| Balance at December 31, 2023 | 2891711 |
| Translation adjustment | (302273) |
| Balance at December 31, 2024 | $**2589438** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(s) Asset Retirement Obligations**

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, renovation, and/or normal use of the long-lived assets, included in other liabilities in the consolidated balance sheets. The Company's asset retirement obligations are primarily related to leasehold improvement of its office leases, that, at the end of the leases, are required to be returned to the landlords in their original condition. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the leasehold improvements and are depreciated over the shorter of the estimated useful life of the asset or the term of the lease subsequent to the initial measurement. Due to the time over which these obligations could be settled and judgement used to determine the liability, the ultimate obligation may differ from the estimate. Upon settlement, any difference between the actual cost and the estimate is recognized as a gain or loss in that period.

The following table represents changes to the Company's asset retirement obligations liability for the periods presented:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** <br> **December 31,**  | **For the Years Ended** <br> **December 31,**  |
|  | **2024** | **2023** |
| **Liability at beginning of year** | $268869 | $189994 |
| &nbsp;&nbsp;&nbsp; Liabilities incurred |  | 124744 |
| &nbsp;&nbsp;&nbsp; Accretion expense | 4186 | 4176 |
| &nbsp;&nbsp;&nbsp; Liabilities settled | (2047) | (37490) |
| &nbsp;&nbsp;&nbsp; Translation adjustment | (28185) | (12555) |
| **Liability at end of year** | $**242823** | $**268869** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(t) Revenue Recognition**

The Company recognizes revenue from sales of real estate properties, sales of solar power generation facilities, providing of real estate management services and other services under ASC Topic 606, "Revenue from Contracts with Customers".

To determine revenue recognition for contracts with customers, the Company performs the following five steps : (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of consumption tax and applicable local government levies, if any. The consumption tax on sales is calculated at 10% of gross sales. The Company has elected to adopt the practical expedient for incremental costs to obtain a contract with a customer, i.e. sales commissions, with amortization periods of one year or less to be recorded in selling, general and administrative expenses when incurred.

The Company recognizes revenue from rental services under ASC Topic 842, "Leases".

The Company currently generates its revenue from the following main sources:

*<u>Revenue from sales of real estate properties</u>*

Revenue from the sales of real estate properties, mainly second-handed condominiums, is recognized at the point in time when title to and possession of the property has transferred to the customer or its designated recipient and the Company has no continuing involvement with the property, which is generally upon the delivery of the real estate properties, which generally coincides with the receipt of cash consideration from the customer. Our contracts with customers contain a single performance obligation and we do not provide warranties for sold real estate properties.

*<u>Revenue from rental services</u>*

Rental income is generally recognized on a straight-line basis over the terms of the tenancy agreements. For real estate leases, these contracts are treated as leases for accounting purpose, rather than contracts with customers subject to ASC Topic 606. Also see Note 2(p).

*<u>Revenue from real estate management services</u>*

Revenue from real estate management services consists of property management services, brokerage services and real estate consulting services. Property management services mainly include property management services provided to tenants or property owners with revenue recognized during the period when services are rendered. Revenue from brokerage services is earned upon closing of brokerage transaction. Real estate consulting services mainly consist of consulting services provided to customers with revenue recognized when performance obligation is satisfied.

*<u>Revenue from sales of solar power generation facilities</u>*

Revenue from the sales of solar power generation facilities is recognized at the point in time when performance obligation is satisfied, which is after the customers obtain control of the solar power generation facilities. The Company's sales arrangements for solar power generation facilities do not contain any forms of continuing involvement that may affect the revenue recognition of the transactions, nor any variable consideration for energy performance guarantees, minimum electricity end subscription commitments.

 

*<u>Other revenue</u>*

 

Other revenue mainly consists of referral service in connection with solar power generation facilities sale and administrative service in relation to real estate properties sales. Revenue is recognized at the point in time when service is completed. Administrative income and interest income generated from financial transaction and lending business are recognized when earned. Such amounts were minimal for the years ended December 31, 2024 and 2023.

*Disaggregation of Revenue*

 

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** <br> **December 31,**  | **For the Years Ended** <br> **December 31,**  |
|  | **2024** | **2023** |
| Revenue from sales of real estate properties | $138184513 | $102750445 |
| Revenue from rental services | 510855 | 519499 |
| Revenue from real estate management services |  |  |
| &nbsp;&nbsp;&nbsp; Property management services | 1333387 | 1200904 |
| &nbsp;&nbsp;&nbsp; Brokerage services | 802360 | 916521 |
| &nbsp;&nbsp;&nbsp; Real estate consulting services | 756791 | 1438205 |
| Revenue from sales of solar power generation facilities | 2744948 | 1731865 |
| Other revenue | 213304 | 146170 |
| **Total** | $**144546158** | $**108703609** |

---

Changes in the Company's deferred revenue for the years ended December 31, 2024 and 2023 were presented in the following table:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Deferred revenue at beginning of year | $350515 | $285041 |
| Net cash received in advance during the year | 3386999 | 3848860 |
| Revenue recognized (consumption tax included) from opening balance of deferred revenue | (326134) | (249650) |
| Revenue recognized (consumption tax included) from deferred revenue arising during current year | (3180165) | (3515057) |
| Translation adjustment | (32155) | (18679) |
| Deferred revenue at end of year | $**199060** | $**350515** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(u) Cost of Revenues**

Cost of revenues primarily include the real estate properties and solar power generation facilities purchase price, acquisition costs, direct costs to renovate, repair and upgrade the real estate properties, solar power generation facilities development costs, sublease costs, depreciation, direct material costs, electricity transportation costs, and salaries and related expenses for personnel directly involved in delivery of services and products to customers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(v) Advertising Expenses**

The Company expenses advertising costs as incurred. Total advertising expenses were $970,750 and $177,337 for the years ended December 31, 2024 and 2023, respectively, and have been included as part of selling, general and administrative expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(w) Concentration of Credit Risk**

Financial instruments that potentially subject the Company to credit risk consist primarily of accounts and financing receivables. The Company does not require collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. See Note 5 for more information related to financing receivables.

*<u>Customers</u>*

For the years ended December 31, 2024 and 2023, customers accounting for 10% or more of the Company's total revenues were as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** <br> **December 31,**  | **For the Years Ended** <br> **December 31,**  |
|  | **2024** | **2023** |
| Customer A | 13% | 13% |

---

As of December 31, 2024 and 2023, customers accounting for 10% or more of the Company's total outstanding accounts receivable were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Customer B | 82% | 92% |

---

*<u>Suppliers</u>*

For the years ended December 31, 2024 and 2023, no suppliers accounted for 10% or more of the Company's total purchases.

As of December 31, 2024 and 2023, suppliers accounting for 10% or more of the Company's total outstanding accounts payable were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Supplier A | \* | 26% |

---

\*Less than 10%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(x) Segment Reporting**

ASC Topic 280, "Segment Reporting", requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's chief operating decision maker ("CODM") organizes segments within the company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Management determined the Company's operations constitute a single reportable segment in accordance with ASC Topic 280.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(y) Comprehensive Income or Loss**

ASC Topic 220, "Comprehensive Income", establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(z) Net Income (Loss) Per Share**

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted net income (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common shares were exercised or equity awards vest resulting in the issuance of common shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(aa) Stock Based Compensation**

The Company accounts for stock based compensation awards in accordance with ASC Topic 718, "Compensation – Stock Compensation". The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated statements of operations and comprehensive income (loss) based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(bb) Related Parties and Transactions**

The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC Topic 850, "Related Party Disclosures" and other relevant ASC standards.

Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(cc) Income Taxes**

Income taxes are accounted for using an asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes". Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets also include the prior years' net operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

The Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

Under the provisions of ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in other expenses in the statements of operations and comprehensive income (loss).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(dd) Fair Value Measurements**

The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset's or a liability's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:

● Level 1: quoted prices in active markets for identical assets or liabilities;

● Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or

● Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

As of December 31, 2024 and 2023, the carrying values of current assets and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.

Assets measured at fair value on a recurring basis as of December 31, 2024 are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Fair Value Measurements as of December 31, 2024** | **Fair Value Measurements as of December 31, 2024** | **Fair Value Measurements as of December 31, 2024** | **Fair Value Measurements as of December 31, 2024** | **Fair Value Measurements as of December 31, 2024** |
|  | **Quoted Prices in Active Markets for Identical Assets (Level 1)** | **Significant Other** <br> **Observable** <br> **Inputs** <br> **(Level 2)**  | **Unobservable** <br> **Inputs** <br> **(Level 3)**  | **Fair Value at December 31, 2024** |
| **Long-term investments:** |  |  |  |  |
| Marketable securities | 3062 |  |  | 3062 |

---

Assets measured at fair value on a recurring basis as of December 31, 2023 are summarized below.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Fair Value Measurements as of December 31, 2023** | **Fair Value Measurements as of December 31, 2023** | **Fair Value Measurements as of December 31, 2023** | **Fair Value Measurements as of December 31, 2023** | **Fair Value Measurements as of December 31, 2023** |
|  | **Quoted Prices in Active Markets for Identical Assets (Level 1)** | **Significant Other** <br> **Observable** <br> **Inputs** <br> **(Level 2)**  | **Unobservable** <br> **Inputs** <br> **(Level 3)**  | **Fair Value at December 31, 2023** |
| &nbsp;&nbsp; **Long-term investments:** |  |  |  |  |
| &nbsp;&nbsp; Marketable securities | 2993 |  |  | 2993 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(ee) Commitments and Contingencies**

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

The Company is involved in legal proceedings and claims in the ordinary course of business. In the opinion of management, none of such proceedings and claims will have a significant impact on the Company's consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(ff) Employee Benefits**

The Company sponsors defined contribution plan for its employees. Under the plan, the Company as a sponsor pays fixed contributions into an independently administrative fund and the employees also pay fixed contributions into the fund. Defined contribution retirement benefit expenses are recognized as expenses in the period when an employee renders related service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(gg) Government Assistance**

Government assistance, in the form of monetary grants, is not recognized until there is reasonable assurance that the Company will comply with the conditions of the grant and the Company will receive the grant.

Grants related to income are recognized as a reduction in related expense or recognized as other income in the period that the recognition criteria are met.

During the years ended December 31, 2024 and 2023, the Company received the government grants, mainly related to the encouragement of utilizing information technology, in an aggregate of $6,543 and nil, which have been included as part of other income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(hh) Recent Accounting Pronouncements**

*<u>New Accounting Pronouncements Recently Adopted</u>*

In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU No. 2023-07 is effective for public companies for annual reporting periods beginning after December 15, 2023, on a retrospective basis. The Company adopted ASU No. 2023-07 during the year ended December 31, 2024. See Note 14 for further details.

 

 

*<u>New Accounting Pronouncements Not Yet Effective</u>*

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvement to Income Tax Disclosures", to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The new guidance is effective for public business entities for annual reporting periods beginning after December 15, 2024, on a prospective basis. For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", requiring public companies to disclose additional information about specific expense categories in the notes to the consolidated financial statements on an annual and interim basis. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

**NOTE 3 — INVENTORIES**

Inventories consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| **Real estate inventories** |  |  |
| &nbsp;&nbsp;&nbsp; Real estate properties held for sale | 1631538 | 1514994 |
| &nbsp;&nbsp;&nbsp; Real estate properties under renovation | 231218 | - |
| **Subtotal** | 1862756 | 1514994 |
| **Solar power generation inventories** |  |  |
| &nbsp;&nbsp;&nbsp; Solar power generation facilities held for sale | 837272 | 364625 |
| **Subtotal** | 837272 | 364625 |
| **Total** | **2700028** | **1879619** |

---

Certain inventories were pledged to secure the Company's loans, see Note 10.

**NOTE 4 — PREPAID EXPENSES, OTHER CURRENT ASSETS AND OTHER ASSETS**

Prepaid expenses and other current assets consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| &nbsp;&nbsp;&nbsp; Advances to suppliers | 609989 | 592734 |
| &nbsp;&nbsp;&nbsp; Others | 131203 | 290617 |
| **Total** | **741192** | **883351** |

---

Loan receivables of $461,255 in connection with the Company's financial transaction and lending business were previously included in "Prepaid expenses and other current assets" on the consolidated balance sheet as of December 31, 2023. This amount has been recast to conform to the current year presentation, which is presented as "Financing receivables" on the consolidated balance sheets. See Note 5.

Other assets consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| &nbsp;&nbsp;&nbsp; Life insurance policies | 207120 | 99379 |
| &nbsp;&nbsp;&nbsp; Rental deposits | 707497 | 44534 |
| &nbsp;&nbsp;&nbsp; Deferred income tax assets | 294341 | 373483 |
| &nbsp;&nbsp;&nbsp; Others | 167314 | 120144 |
| **Total** | **1376272** | **637540** |

---

**NOTE 5** **— FINANCING RECEIVABLES**

Financing receivables consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Financing receivables – corporate customers | 2319375 | 461255 |
| Less: allowance for credit losses | - | - |
| Financing receivables, net | 2319375 | 461255 |
| Less: current portion | 1588613 | 461255 |
| Financing receivables, non-current | 730762 | - |

---

For the years ended December 31, 2024 and 2023, the Company generated interest income of $7,070 and $7,275, respectively, in connection with its financial transaction and lending business. In April 2025, the Company collected $997,649 of short-term financing receivables ahead of schedule.

The credit risk profile of financing receivables, based on internal risk ratings as of December 31, 2024, presented on an amortized cost basis by year of origination was as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
| <br>Fiscal Year | **Low** | **Moderate** | **High** |
| &nbsp;&nbsp;&nbsp; 2024 | 2319375 |  |  |
| &nbsp;&nbsp;&nbsp; 2023 |  |  |  |
| &nbsp;&nbsp;&nbsp; 2022 |  |  |  |
| &nbsp;&nbsp;&nbsp; 2021 |  |  |  |
| &nbsp;&nbsp;&nbsp; 2020 and prior | **-** |  |  |
| **Total** | **2319375** |  |  |

---

The credit risk profile of financing receivables, based on internal risk ratings as of December 31, 2023, presented on amortized cost basis by year of origination was as follows:

---

| | | | |
|:---|:---|:---|:---|
| | **As of December 31, 2023** | **As of December 31, 2023** | **As of December 31, 2023** |
| <br>Fiscal Year | **Low** | **Moderate** | **High** |
| &nbsp;&nbsp;&nbsp; 2023 | 461255 |  |  |
| &nbsp;&nbsp;&nbsp; 2022 |  |  |  |
| &nbsp;&nbsp;&nbsp; 2021 |  |  |  |
| &nbsp;&nbsp;&nbsp; 2020 |  |  |  |
| &nbsp;&nbsp;&nbsp; 2019 and prior | **-** |  |  |
| **Total** | **461255** |  |  |

---

As of December 31, 2024 and 2023, customers accounting for 10% or more of the Company's total outstanding financing receivables were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Customer A | \* | 100% |
| Customer B | 100% | \* |

---

\* Less than 10%

**NOTE 6 — PROPERTY AND EQUIPMENT, NET**

Property and equipment, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Buildings, including buildings held for lease | 571075 | 279965 |
| Facilities attached to buildings | 624602 | 687242 |
| Tools, furniture and fixture | 231104 | 242781 |
| Office equipment | 3890 | 3366 |
| Land | 903777 | 635999 |
| Software | 148132 | 129298 |
| Software under development | 239378 | 146331 |
| Subtotal | 2721958 | 2124982 |
| Less: accumulated depreciation | (541231) | (461858) |
| **Property and equipment, net** | **2180727** | **1663124** |

---

Certain buildings were pledged to secure the Company's loans, see Note 10.

Depreciation expense was $141,760 and $176,238 for the years ended December 31, 2024 and 2023, respectively.

**NOTE 7 – INTANGIBLE ASSETS, NET**

Intangible assets, net consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| **Cost** |  |  |
| Customer assets | 909602 | 1015782 |
| Licenses | 372250 | 415704 |
| **Subtotal** | **1281852** | **1431486** |
| **Less: accumulated amortization** |  |  |
| Customer assets | (165383) | (92344) |
| Licenses | (89564) | (62511) |
| **Subtotal** | **(254947)** | **(154855)** |
| **Intangible assets, net** | **1026905** | **1276631** |

---

Amortization expense was $120,818 and $130,239 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the future estimated amortization costs for intangible assets are as follows:

---

| | |
|:---|:---|
| <br> **Year Ended December 31,** | **Estimated**<br> **Amortization** |
| 2025 | 116278 |
| 2026 | 116278 |
| 2027 | 116278 |
| 2028 | 116278 |
| 2029 | 116278 |
| Thereafter | 445515 |
| **Total** | **1026905** |

---

**NOTE 8 — LEASES – AS A LESSEE**

The Company has entered into operating leases mainly for offices, employee dormitories and sublease purpose, with terms ranging from 2 to 12 years, and finance leases for certain office equipment, with terms ranging from 2 to 7 years. The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right-of-use assets and lease liabilities was included in the consolidated financials.

During the year ended December 31, 2024, one operating lease was guaranteed by the Chief Executive Officer ("CEO") of the Company and one operating lease was guaranteed by the CEO of Chuo Kanzai, respectively.

During the year ended December 31, 2023, one operating lease was guaranteed by the CEO of the Company, two operating leases were guaranteed by the former CEO of Chuo Kanzai and one operating lease was guaranteed by the CEO of Chuo Kanzai, respectively.

Operating lease expenses for lease payments are recognized on a straight-line basis over the lease term. Finance lease costs include amortization, which is recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with initial term of twelve months or less are not recorded on the consolidated balance sheets.

The components of lease costs are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2024** | **2023** |
| Finance lease costs |  |  |
| &nbsp;&nbsp;&nbsp; Amortization of finance lease right-of-use assets | 70755 | 47608 |
| &nbsp;&nbsp;&nbsp; Interest on finance lease liabilities | 4257 | 2160 |
| Total finance lease costs | 75012 | 49768 |
| Operating lease costs | 1292523 | 1348675 |
| Short-term lease costs | - | 3653 |
| **Total lease costs** | **1367535** | **1402096** |

---

The following table presents supplemental information related to the Company's leases:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2024** | **2023** |
| Cash paid for amounts included in the measurement of lease liabilities: |  |  |
| &nbsp;&nbsp;&nbsp; Operating cash flows from finance leases | 4257 | 2160 |
| &nbsp;&nbsp;&nbsp; Operating cash flows from operating leases | 1284006 | 1395353 |
| &nbsp;&nbsp;&nbsp; Financing cash flows from finance leases | 69611 | 47001 |
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 26069 | 2631305 |
| Finance lease right-of-use assets obtained in exchange for finance lease liabilities | 126691 | 106084 |
| Remeasurement of operating lease liabilities and right-of-use assets due to lease modification | 1037503 | 1352 |
| Weighted average discount rate (per annum) |  |  |
| &nbsp;&nbsp;&nbsp; Finance leases | 2.20% | 2.20% |
| &nbsp;&nbsp;&nbsp; Operating leases | 2.20% | 2.20% |
| Weighted average remaining lease term (years) |  |  |
| &nbsp;&nbsp;&nbsp; Finance leases | 4.17 | 2.65 |
| &nbsp;&nbsp;&nbsp; Operating leases | 1.91 | 1.99 |

---

As of December 31, 2024, the future maturity of lease liabilities is as follows:

---

| | | |
|:---|:---|:---|
| **Years Ended December 31,** | **Finance Lease** | **Operating Lease** |
| 2025 | 50556 | 1012862 |
| 2026 | 43039 | 763054 |
| 2027 | 36924 | 12976 |
| 2028 | 31298 | 4709 |
| 2029 | 11214 |  |
| Thereafter | 7900 | - |
| Total undiscounted lease payments | 180931 | 1793601 |
| Less: imputed interest | (8108) | (37415) |
| Present value of lease liabilities | 172823 | 1756186 |
| Less: lease liabilities, current | (47283) | (981395) |
| **Lease liabilities, non-current** | **125540** | **774791** |

---

**NOTE 9 – ACCOUNTS PAYABLE, ACCRUED EXPENSES, OTHER CURRENT LIABILITIES AND OTHER LIABILITIES**

Accounts payable, accrued expenses, other current liabilities and other liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| **Accounts payable and accrued expenses:** |  |  |
| &nbsp;&nbsp;&nbsp; Vendor payables | 1190488 | 1045540 |
| &nbsp;&nbsp;&nbsp; Withholding taxes and social insurance premiums for employees | 335020 | 174592 |
| &nbsp;&nbsp;&nbsp; Accrued wage payables | 938097 | 739506 |
| &nbsp;&nbsp;&nbsp; Rent and miscellaneous payments received from tenants to be remitted to property owners and service providers | 915376 | 891067 |
| &nbsp;&nbsp;&nbsp; Deposits received from tenants to be remitted to property owners | 318069 | 352100 |
| &nbsp;&nbsp;&nbsp; Interest payables | 183403 | 154306 |
| **Total accounts payable and accrued expenses** | **3880453** | **3357111** |
| **Other current liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp; Accrued consumption tax | 346553 | 145177 |
| &nbsp;&nbsp;&nbsp; Payable to investors of anonymous partnerships | 86685 |  |
| &nbsp;&nbsp;&nbsp; Others | 4191 | 3757 |
| **Total other current liabilities** | **437429** | **148934** |
| **Other liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp; Deferred income tax liabilities | 104989 | 210763 |
| &nbsp;&nbsp;&nbsp; Asset retirement obligations | 242823 | 268869 |
| &nbsp;&nbsp;&nbsp; Others | - | 12957 |
| **Total other liabilities** | **347812** | **492589** |

---

**NOTE 10 — SHORT-TERM LOANS AND BONDS PAYABLE, BANK AND OTHER BORROWINGS**

The Company's short-term loans and bonds payable, and bank and other borrowings consist of the following:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Indebtedness** | **Weighted Average Interest Rate<sup>\*</sup>** | **Weighted Average Years to Maturity<sup>\*</sup>** | **Balance as of** <br> **December 31, 2024**  | **Balance as of** <br> **December 31, 2023**  |
| **Short-term loans and bonds payable** |  |  |  |  |
| **Secured loans** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fixed rate loans | 2.54% | 0.63 | 404143 | 538007 |
| &nbsp;&nbsp;&nbsp; Variable rate loans | 1.34% | 0.71 | 474678 | 590216 |
| Subtotal | 1.89% | 0.67 | 878821 | 1128223 |
| **Unsecured bonds payable** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fixed rate bonds | 13.07% | 0.48 | 5691696 | 2469487 |
| Subtotal | 13.07% | 0.48 | 5691696 | 2469487 |
| **Total short-term loans and bonds payable** | **9.84%** | **0.50** | **6570517** | **3597710** |
| **Bank and other borrowings** |  |  |  |  |
| **Secured loans** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fixed rate loans | 1.57% | 5.97 | 1495990 | 1992308 |
| &nbsp;&nbsp;&nbsp; Variable rate loans | 3.78% | 12.21 | 2368820 | 2838085 |
| Subtotal | 2.93% | 9.80 | 3864810 | 4830393 |
| **Unsecured loans** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fixed rate loans | 0.53% | 8.32 | 1408038 | 1761531 |
| &nbsp;&nbsp;&nbsp; Variable rate loans | 2.30% | 2.00 | 127038 | - |
| Subtotal | 0.68% | 7.79 | 1535076 | 1761531 |
| **Secured bonds payable** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fixed rate bonds | 0.23% | 1.73 | 75104 | 125716 |
| Subtotal | 0.23% | 1.73 | 75104 | 125716 |
| **Unsecured bonds payable** |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fixed rate bonds | 13.16% | 0.70 | 2295810 | 553436 |
| Subtotal | 13.16% | 0.70 | 2295810 | 553436 |
| **Total bank and other borrowings** | **5.48%** | **7.70** | **7770800** | **7271076** |
| Less: current portion |  |  | (3040184) | (868912) |
| **Non-current portion** |  |  | **4730616** | **6402164** |

---

\* Pertained to information for loans outstanding as of December 31, 2024.

The Company borrowed loans from various financial institutions and issued bonds for the purpose of purchasing real estate properties, and for working capital purpose.

Interest expense for short-term loans and bonds payable, bank and other borrowings was $684,056 and $511,452 for the years ended December 31, 2024 and 2023, respectively.

The pledge information for the Company's outstanding short-term loans and bonds payable, bank and other borrowings as of December 31, 2024 and 2023, consists of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br> **2024**  | **December 31,** <br> **2023**  |
| **Short-term loans and bonds payable** |  |  |
| &nbsp;&nbsp;&nbsp; Pledged by real estate inventories and buildings held for lease | 878821 | 1086952 |
| **Bank and other borrowings** |  |  |
| &nbsp;&nbsp;&nbsp; Pledged by real estate inventories and buildings held for lease | 200217 | 141295 |
| &nbsp;&nbsp;&nbsp; Pledged by restricted cash (a) | 317723 | 354811 |
| &nbsp;&nbsp;&nbsp; Pledged by buildings held for lease and equity shares of a subsidiary within the Company's organization structure | 1757254 | 2068306 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(a) As of December 31, 2024 and 2023, these loans were secured
 by restricted cash of $317,723 and $354,811, respectively.

The guaranty information for the Company's outstanding short-term loans and bonds payable, bank and other borrowings as of December 31, 2024 and 2023, consists of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2024** | **December 31, <br> 2023** |
| **Short-term loans and bonds payable** |  |  |
| &nbsp;&nbsp;&nbsp; Guaranteed by parent company and/or subsidiary within the Company's organizational structure |  | 283253 |
| &nbsp;&nbsp;&nbsp; **Bank and other borrowings** |  |  |
| &nbsp;&nbsp;&nbsp; Guaranteed by CEO of the Company | 1264396 | 1775859 |
| &nbsp;&nbsp;&nbsp; Guaranteed by former CEO of Chuo Kanzai | 325221 | 448850 |
| &nbsp;&nbsp;&nbsp; Guaranteed by parent company and/or subsidiary within the Company's organizational structure | 1757254 | 2464389 |
| &nbsp;&nbsp;&nbsp; Co-guaranteed by the respective bank and Tokyo Credit Guarantee Association | 75776 | 125716 |

---

During the years ended December 31, 2024 and 2023, the Company entered into amended loan agreements which had prepayment options with financial institutions for certain loans. The amended terms mainly included changes of maturity dates and installment amount. The Company analyzed the amendments under ASC Topic 470 and concluded that these amendments were not considered substantially different and were accounted for as debt modifications.

As of December 31, 2024, future minimum payments for bank and other borrowings are as follows:

---

| | |
|:---|:---|
| <br> **Years Ended December 31,** | **Principal**<br> **Repayment** |
| 2025 | 3070870 |
| 2026 | 638925 |
| 2027 | 531458 |
| 2028 | 536238 |
| 2029 | 541277 |
| Thereafter | 2483101 |
| **Total** | **7801869** |

---

**NOTE 11 – EQUITY**

*<u>Common shares</u>*

No common share was issued during the years ended December 31, 2024 and 2023. All of the issued shares as of December 31, 2024 and 2023 have been paid in full.

 

Under the Companies Act of Japan (the "Companies Act"), issuances of common shares, including conversions of bonds and notes, are required to be credited to the common shares account for at least 50% of the proceeds and to the legal capital surplus account ("legal capital surplus"), which is included in additional paid-in capital, for the remaining amounts.

The Companies Act permits that common shares, additional paid-in capital and retained earnings can be transferred among these accounts under certain conditions upon the approval at the general meeting of shareholders. The Companies Act limits the increase of additional paid-in capital in case disposition of treasury stock and issuance of common shares are performed at the same time.

 

*<u>Stock split</u>*

Effective April 30, 2024, the Company approved a stock split of the Company's issued and outstanding shares of common share, at a ratio of 1-for-20,000 (the "Stock Split I"). Immediately prior to the Stock Split I, there were 563 shares of common share issued and outstanding. As a result of the Stock Split I, the Company has 11,260,000 shares of common share issued and outstanding.

On October 31, 2024, the Company effected a stock split of the Company's issued and outstanding shares of common share, at a ratio of 1-for-2.25 (the "Stock Split II"). Immediately prior to the Stock Split II, there were 11,260,000 shares of common share issued and outstanding. As a result of the Stock Split II, the Company has 25,335,000 shares of common share issued and outstanding. The Company's authorized shares of common share were also increased to 67,500,000. All share and per share data included within the consolidated financial statements and related footnotes have been adjusted to account for the effects of the Stock Split I and II.

*<u>Legal reserve set aside as appropriation of retained earnings and legal capital surplus</u>*

Retained earnings consist of legal reserves and accumulated earnings. The Companies Act provides that an amount at least equal to 10% of the aggregate amount of cash dividends and certain appropriations of retained earnings associated with cash outlays applicable to each period shall be appropriated and set aside as a legal reserve until the aggregate amount of legal reserve set aside as an appropriation of retained earnings and the legal capital surplus equals 25% of stated capital as defined in the Companies Act. Legal reserves may be used to eliminate or reduce a deficit or be transferred to other retained earnings upon approval of the General Meeting of Shareholders.

*<u>Stock-based compensation</u>*

 

On October 2, 2023 (the "Effective Date"), the Company entered into a services agreement (the "Service Agreement") with HeartCore Enterprises, Inc. ("HeartCore"). Pursuant to the terms of the Service Agreement, HeartCore agreed to provide the Company certain professional services in connection with the Company's initial public offering (the "IPO"). On the same day, the Company entered into a Common Stock Purchase Warrant Agreement (the "Warrant Agreement") with HeartCore. The Company agreed to compensate HeartCore with cash consideration of $600,000 and the Company's warrant (the "Warrants") to acquire 3% of the fully diluted share capital of the Company's common shares as of the Trigger Date (defined below), subject to adjustment as set forth in the Warrant Agreement. The Warrants vested as of the Effective Date, however, HeartCore can only exercise the Warrants in 10 years upon the Company's successful listing on the Nasdaq Stock Market, NYSE or NYSE American, completion of a merger or other transaction with a SPAC, or the occurrence of other fundamental events defined in the Warrant Agreement (the "Trigger Date"), for an exercise price per share of $0.01, subject to adjustment as provided in the Warrant Agreement.

On June 7, 2024, the Company entered into an Amendment No. 1 to Services Agreement with HeartCore and HeartCore Financial, Inc. ("HeartCore Financial"), whereby HeartCore transferred all the rights and obligations under the Services Agreement to HeartCore Financial.

On June 18, 2024, the Company and HeartCore entered into a Warrant Cancellation Agreement pursuant to which the Warrants originally issued on October 2, 2023 by the Company to HeartCore were immediately effectively cancelled as of the date of the Warrant Cancellation Agreement.

On June 25, 2024, the Company and HeartCore Financial entered into the 2nd stock acquisition rights allotment agreement pursuant to which the Company allotted 337,800 stock acquisition rights (760,050 after Stock Split II as discussed above) to HeartCore Financial in substitution for the Warrants originally issued to HeartCore on October 2, 2023, the number of stock acquisition rights is subject to adjustment in the event of a stock split. The key terms remained unchanged, except that the stock acquisition right is exercisable during the period from July 1, 2024 to June 30, 2034 at an exercise price of JPY1 under the same conditions specified in the Service Agreement.

The Company did not recognize any stock-based compensation expense for the years ended December 31, 2024 and 2023 as the performance condition of exercisability upon a successful IPO is not considered probable until it occurs.

The stock acquisition rights were subsequently waived by HeartCore Financial in January 2025. See Note 15.

**NOTE 12 - INCOME TAXES**

The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. During the years ended December 31, 2024 and 2023, substantially all taxable income of the Company is generated in Japan. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory rate of approximately 33.58% for the years ended December 31, 2024 and 2023.

For the years ended December 31, 2024 and 2023, the Company's income tax expenses are as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2024** | **2023** |
| Current | 155427 | 193654 |
| Deferred | (45345) | (197570) |
| **Total** | 110082 | (3916) |

---

A reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of operations and comprehensive income (loss) to the Japanese statutory tax rate for the years ended December 31, 2024 and 2023 is as follows:

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended** | **For the Years Ended** |
|  | **December 31,** | **December 31,** |
|  | **2024** | **2023** |
| Japanese statutory tax rate | 33.58% | 33.58% |
| Effect of different statutory tax rate in Japan | 0.48% | (3.61%) |
| Effect of entertainment expenses not deductible | 11.40% | (58.53%) |
| Effect of non-taxable items | (4.47%) |  |
| Effect of tax payments and dues | (3.82%) | 40.52% |
| Effect of special deduction | (6.06%) |  |
| Other adjustments | 0.57% | (2.06 %) |
| **Effective tax rate** | 31.68% | 9.90% |

---

The tax effects of temporary differences that give rise to the deferred income tax assets and liabilities at December 31, 2024 and 2023 are presented below:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| **Deferred income tax assets** |  |  |
| Revenue and expense adjustments | 74330 | 87989 |
| Lease liabilities | 628491 | 813561 |
| Asset retirement obligations | 83918 | 92897 |
| Net operating loss carryforwards | 405990 | 424316 |
| Others | 41334 | 41401 |
| **Total deferred income tax assets** | **1234063** | **1460164** |
| **Deferred income tax liabilities** |  |  |
| Revenue and expense adjustments |  | (129) |
| Fair value change on investment securities | (1207) | (110) |
| Change in cash surrender value of life insurance policies | (31885) |  |
| Right-of-use assets | (655294) | (844444) |
| Asset retirement costs | (11491) | (24068) |
| Intangible assets acquired through business combinations | (344834) | (428692) |
| **Total deferred income tax liabilities** | **(1044711)** | **(1297443)** |
| **Deferred income tax assets, net (included in other assets)** | **294341** | **373484** |
| **Deferred income tax liabilities, net (included in other liabilities)** | **(104989)** | **(210763)** |

---

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Company regularly assesses the ability to realize its deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results of recent operations, projected future taxable income, and tax planning strategies.

The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as the Company's projections for growth. The adjustments of a valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which the valuation allowance is adjusted. Based upon the level of historical taxable profit and projections for future taxable profit over the periods for which the deferred tax assets are deductible, management believes it is probable that the Company will utilize the benefits of these deferred tax assets as of December 31, 2024 and 2023. Uncertainty of estimates of future taxable profit could increase due to changes in the economic environment surrounding the Company, effects by market conditions, effects of currency fluctuations or other factors.

*<u>Uncertain tax positions</u>*

The Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2024 and 2023, the management considered the Company did not have any significant unrecognized uncertain tax positions. The Company did not incur any interest or penalties tax for the years ended December 31, 2024 and 2023. The Company does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months from December 31, 2024. Open tax years in Japan are five years. The Company's Japan income tax return filed for the tax years ending from December 31, 2020 through December 31, 2024 are subject to examination by the relevant taxing authorities. The Company's tax attributes from prior periods remain subject to adjustment.

**NOTE 13 – RELATED PARTY TRANSACTIONS**

The related parties had material transactions for the years ended December 31, 2024 and 2023 consist of the following:

---

| | |
|:---|:---|
| **Name of Related Party** | **Nature of Relationship at December 31, 2024** |
| Yuji Sekino | CEO of the Company |
| RECON MARK, INC. | A company controlled by CEO of the Company |

---

The Company borrowed nil and $714,143 from RECON MARK, INC. during the years ended December 31, 2024 and 2023, respectively, and repaid the amount in full during the same respective years. The loan bore an interest rate of 2% with terms less than one year.

The Company received certain entertainment, consulting, legal and recruitment service from related party service providers and incurred selling, general and administrative expenses of nil and $65,101 for the years ended December 31, 2024 and 2023, respectively. Payables due to such related party service providers amounted to nil and $1,561 as of December 31, 2024 and 2023, respectively.

Also see Note 8 and 10 for more transactions with related parties.

**NOTE 14 – SEGMENT AND GEOGRAPHIC INFORMATION**

 

*<u>Segment information</u>*

The following table summarizes selected financial information with respect to the Company's single operating segment and reportable segment for the years ended December 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Revenues | 144546158 | 108703609 |
| Less: |  |  |
| Cost of revenues | 121007327 | 92883812 |
| Salaries and welfare expenses | 7171535 | 6167780 |
| Consulting and referral fee | 6728066 | 3859790 |
| Service expenses | 4199679 | 1952492 |
| Business and office expenses | 1310599 | 1137497 |
| Lease expenses | 982908 | 951689 |
| Taxes and dues | 939289 | 769364 |
| Advertising expenses | 970750 | 177337 |
| Depreciation and amortization expenses | 161591 | 195662 |
| Other items | 96917 | 43061 |
| Total cost of revenues and expenses | **143568661** | **108138484** |
| Income from operations | 977497 | 565125 |
| Total other expenses | 630000 | 604663 |
| Income (loss) before income tax expenses | **347497** | **(39538)** |
| Income tax expense (benefit) | 110082 | (3916) |
| Net income (loss) | **237415** | **(35622)** |

---

*<u>Geographic information</u>*

The following table summarizes the breakdown of revenues by geography for the years ended December 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Japan | 144542158 | 108703609 |
| United States | 4000 | - |
| Total revenues | **144546158** | **108703609** |

---

The following table summarizes the breakdown of long-lived assets by geography as of December 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br> **2024** | **December 31,**<br> **2023** |
| Japan | 4982104 | 5536495 |
| United States | 300609 | - |
| Total long-lived assets | **5282713** | **5536495** |

---

**NOTE 15 – SUBSEQUENT EVENTS**

The Company evaluated subsequent events through June 2, 2025, which is the date the consolidated financial statements are issued, and concluded that no subsequent events have occurred that would require recognition or disclosure in the consolidated financial statements other than as disclosed below.

During the subsequent period, the Company entered into various loans with banks and financial institutions and issued corporate bonds for working capital purpose and for the purpose of purchasing real estate properties. The Company paid off certain loans and bonds in an approximate aggregate amount of $0.8 million ahead of schedule as the pledged real estate properties were sold to customers.

On January 22, 2025, the Company and HeartCore Financial entered into an agreement pursuant to which HeartCore Financial irrevocably waived the stock acquisition rights previously granted by the Company.

**1,000,000** **Common Shares**

![A green square with black background Description automatically generated](formdrs_001.jpg)

**GATES GROUP Inc.**

**PROSPECTUS**

**________________________**

**, 2025**

**Through and including , 2025 (the 25<sup>th</sup> day after the date of this offering), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.**

**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**Item 6. Indemnification of Directors and Officers.**

Article 330 of the Companies Act of Japan (which we refer to as the "Companies Act") makes the provisions of Part III, Chapter 2, Section 10 of the Civil Code of Japan applicable to the relationship between us and our directors and corporate auditors. Section 10 of the Civil Code, among other things, provides in effect that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Any
 director or corporate auditor of a company may demand advance payment of expenses considered necessary for the management of the
 affairs of such company entrusted to the director or corporate auditor;

2. If
 a director or a corporate auditor of a company has defrayed any expenses considered necessary for the management of the affairs of
 such company entrusted to the director or corporate auditor, the director or corporate auditor may demand reimbursement therefor
 and interest thereon after the date of payment from such company;

3. If
 a director or a corporate auditor has assumed an obligation necessary for the management of the affairs of such company, the director
 or corporate auditor may require such company to perform it in the director or corporate auditor's place or, if it is not due,
 to furnish adequate security; and

4. If
 a director or a corporate auditor, without any fault on the director or corporate auditor's part, sustains damage through the
 management of the affairs of such company, the director or corporate auditor may demand compensation therefor from such company.

Pursuant to Articles 30 and 39 of the Articles of Incorporation of the Company and pursuant to Article 427 of the Companies Act, the Company may enter into agreements with non-executive directors and corporate auditors to limit their liability to the Company with respect to loss or damage caused by their acts stipulated in Article 423 of the Companies Act, respectively. However, the amount of such limited liability shall be the minimum liability limit stipulated by laws and regulations. Takashi Nishibori and Hironori Matsumiya are "non-executive director" under the Companies Act. Yuji Sekino (Chief Executive Officer of GATES GROUP Inc.), Takeshi Seto (Chief Financial Officer of GATES GROUP Inc.), Takahiko Nakajima are "executive" directors under the Companies Act.

In addition, our articles of incorporation include limitation of liability provisions, pursuant to which we can exempt, by resolution of our board of directors, our independent directors and corporate auditors from liabilities arising in connection with any failure to execute their respective duties in good faith or due to simple negligence (excluding gross negligence and willful misconduct), within the limits stipulated by applicable laws and regulations including Article 426, Paragraph 1 of the Companies Act.

We maintain, at our expense, a directors' and officers' liability insurance policy for each of our directors and corporate auditors. The policy insures each of our directors and corporate auditors against certain liabilities that they may incur in their capacity as a director or corporate auditor.

**Item 7. Recent Sales of Unregistered Securities.**

**Historical Common Equity Transactions**

Since May 1, 2018, the Company engaged in the following unregistered stock issuances:

● Effective April 30, 2024, the Company approved a forward
 stock split of the Company's issued and outstanding shares of common share, at a ratio of 1-for-20,000 (the "First Stock
 Split"). Immediately prior to the First Stock Split, there were 563 shares of common share issued and outstanding. As a result
 of the First Stock Split, the Company had 11,260,000 common shares issued and outstanding. All share and per share data included
 within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the First Stock
 Split.

● On June 25, 2024, the Company allotted 337,800 stock acquisition
 rights to HeartCore Financial, Inc. ("HeartCore Financial") in exchange for services rendered as a consultant
 in connection with the proposed initial public offering of the Company under grants authorized by our shareholders and directors
 in substitution for the Warrant executed as of October 2, 2023 between the Company and HeartCore Enterprises, Inc., the number
 of stock acquisition rights is subject to adjustment in the event of a stock split. The number of the stock acquisition rights was
 adjusted to 760,050 after the Second Forward Stock Split effective on October 31, 2024 as stated below. The stock acquisition right
 is exercisable from July 1, 2024 to June 30, 2034 upon the condition that the IPO has been completed. The stock acquisition right
 has an exercise price of ¥1(US$0.01) per common share.

● On October 31, 2024, the Company approved a forward
 stock split of the Company's issued and outstanding common shares, at a ratio of 1-for-2.25 (the "Second Stock Split").
 As of December 31, 2023 and immediately prior to the Second Stock Split, there were 11,260,000 common shares issued and outstanding.
 As a result of the Second Stock Split, the Company has 25,335,000 common shares issued and outstanding. All share and per share data
 included within the consolidated financial statements and related footnotes have been adjusted to account for the effect of the Second
 Stock Split.

● On
 January 22, 2025, HeartCore Financial entered into an Agreement on Waiver of Stock Acquisition Rights with the Company whereby HeartCore
 Financial waived 760,050 stock acquisition rights of the Company to purchase common shares of the Company equal to 3% of the issued
 and outstanding common shares on a fully diluted basis as of the day prior to the successful listing on the Nasdaq at an exercise
 price of ¥1 (US$0.01) per common share.

We believe that each of the following issuances was exempt from registration under the Securities Act pursuant to Regulation S under the Securities Act regarding sales by an issuer in offshore transactions. No underwriters were involved in these issuances of securities.

**Item 8. Exhibits and Financial Statement Schedules**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The following documents are filed as part of this registration statement:

---

| | |
|:---|:---|
| **Exhibit Number** | **Description** |
| 1.1\* | [Form of Underwriting Agreement](ex1-1.htm) |
| 3.1\*\* | [Articles of Incorporation of GATES GROUP Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224050644/ex3-1.htm) |
| 5.1\* | [Opinion of One Asia Lawyers regarding the validity of common shares being registered](ex5-1.htm) |
| 10.1\*\* | [Service Agreement, dated as of October 2, 2023, between GATES GROUP Inc. and HeartCore Enterprises, Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-1.htm) |
| 10.2\*\* | [1<sup>st</sup> Amendment to Service Agreement, dated as of June 7, 2024, among GATES GROUP Inc., HeartCore Enterprises, Inc., and HeartCore Financial, Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-2.htm) |
| 10.3\*\* | [2<sup>nd</sup> Stock Acquisition Rights Allotment Agreement, dated June 25, 2024, between GATES GROUP Inc. and HeartCore Financial, Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-3.htm) |
| 10.4\*\* | [Loan Agreement Certificate, dated October 25, 2022, between Japan Finance Corporation and GATES GROUP Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-4.htm) |
| 10.5\*\* | [Banking Transaction Agreement, dated October 31, 2022, between Tokyo Star Bank and GATES GROUP Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-5.htm) |
| 10.6\*\* | [Loan Agreement (and Joint Guarantee Agreement), dated April 10, 2023, between SAISON FUNDEX CORPORATION and GATES Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex10-6.htm) |
| 10.7\*\* | [Hypothecation Agreement, dated April 10, 2023, between SAISON FUNDEX CORPORATION and GATES Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex10-7.htm) |
| 10.8\*\* | [Share Pledge Agreement dated April 10, 2023, between SAISON FUNDEX CORPORATION and GATES Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex10-8.htm) |
| 10.9\*\* | [The 18<sup>th</sup> Unsecured Bonds Offering Guidelines of GATES Inc. dated June 17, 2024.](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex10-9.htm) |
| 10.10\*\* | [The 21<sup>st</sup> Unsecured Bonds Offering Guidelines of GATES Inc. dated September 1, 2024](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex10-10.htm) |
| 10.11\*\* | [The 22<sup>nd</sup> Unsecured Bonds Offering Guidelines of GATES Inc. dated September 28, 2024](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-6.htm) |
| 10.12\*\* | [The 24<sup>th</sup> Unsecured Bonds Offering Guidelines of GATES Inc. dated September 28, 2024](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex10-7.htm) |
| 10.13\*\* | [The 34<sup>th</sup> Unsecured Bonds Offering Guidelines of GATES Inc. dated December 27, 2024](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex10-13.htm) |
| 10.14\* | [Agreement on Waiver of Stock Acquisition Rights, dated January 22, 2025, between GATES GROUP Inc. and HeartCore Financial, Inc.](ex10-14.htm) |
| 21.1\*\* | [List of Subsidiaries of the GATES GROUP Inc.](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/ex21-1.htm) |
| 23.1\* | [Consent of MaloneBailey, LLP](ex23-1.htm) |
| 23.2\* | [Consent of One Asia Lawyers (included in Exhibit 5.1)](ex5-1.htm) |
| 24.1\*\* | [Power of Attorney (included on the signature page of this registration statement)](https://www.sec.gov/Archives/edgar/data/2033738/000149315224048276/formf-1.htm#aaa_001) |
| 107\*\* | [Filing Fee Table](https://www.sec.gov/Archives/edgar/data/2033738/000149315225002564/ex107.htm) |

---

\* Filed herewith. <br> \*\* Previously filed. <br> † Includes management contracts and compensation plans and arrangements

**Item 9. Undertakings.**

&nbsp;&nbsp;&nbsp;&nbsp;(a) The
 undersigned registrant (which we refer to as the "Registrant") hereby undertakes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To
 file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To
 include any prospectus required by section 10(a)(3) of the Securities Act;

(ii) To
 reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
 post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
 forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if
 the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
 of the estimated maximum offering range may be reflected in the form of prospectus filed with the U.S. Securities and Exchange Commission
 pursuant to Rule 424(b) under the Securities Act if, in the aggregate, the changes in volume and price represent no more than 20%
 change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective
 registration statement; and

(iii) To
 include any material information with respect to the plan of distribution not previously disclosed in the registration statement
 or any material change to such information in the registration statement.

---

| | |
|:---|:---|
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the Registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. |
| (5) | That, for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of the securities: |
|  | The Registrant undertakes that in a primary offering of securities of the Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Any
 preliminary prospectus or prospectus of the Registrant relating to the offering required to be filed pursuant to Rule 424 under the
 Securities Act;

(ii) Any
 free writing prospectus relating to the offering prepared by or on behalf of the Registrant or used or referred to by the Registrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The
 portion of any other free writing prospectus relating to the offering containing material information about the Registrant or its
 securities provided by or on behalf of the Registrant; and

(iv) Any
 other communication that is an offer in the offering made by the Registrant to the purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;(b) Insofar
 as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons
 of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
 U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is,
 therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant
 of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action,
 suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
 the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
 of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and
 will be governed by the final adjudication of such issue.

(c) The
 Registrant hereby undertakes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) That,
 for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as
 part of this registration statement in reliance upon Rule 430A under the Securities Act and contained in a form of prospectus filed
 by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration
 statement as of the time it was declared effective.

(2) That,
 for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus
 shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
 at that time shall be deemed to be the initial bona fide offering thereof.

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Tokyo, Japan on this 2<sup>nd</sup> day of June 2025.

---

| | |
|:---|:---|
| **GATES GROUP Inc.** | **GATES GROUP Inc.** |
| By: | */s/ Yuji Sekino* |
|  | Yuji Sekino |
|  | Chief Executive Officer |

---

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| */s/ Yuji Sekino* | Chief Executive Officer and Director | June 2, 2025 |
| Yuji Sekino | (Principal Executive Officer) |  |
| *\** | Chief Financial Officer and Director | June 2, 2025 |
| Takeshi Seto | (Principal Financial and Accounting Officer) |  |
| *\** | Director | June 2, 2025 |
| Takahiko Nakajima |  |  |
| *\** | Independent Director | June 2, 2025 |
| Takashi Nishibori |  |  |
| *\** | Independent Director | June 2, 2025 |
| Hironori Matsumiya |  |  |

---

---

| | |
|:---|:---|
| By: | */s/ Yuji Sekino* |
|  | Yuji Sekino |
|  | Attorney-in-fact\* |

---

**SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES**

Pursuant to the Securities Act of 1933 as amended, the undersigned, the duly authorized representative in the United States of America of GATES GROUP Inc., has signed this registration statement on June 2, 2025.

**COGENCY GLOBAL INC.**

---

| | |
|:---|:---|
| By: | */s/ Colleen A. De Vries* |
| Name: | Colleen A. De Vries |
| Title: | Sr. Vice President on behalf of Cogency Global Inc. |

---

## Exhibit 1.1

**Exhibit 1.1**

**UNDERWRITING AGREEMENT**

[\*], 2025

 **_______________________**

_______________________

_______________________

*As Representative of the several Underwriters named on Schedule 1 attached hereto*

Ladies and Gentlemen:

The undersigned, Gates Group Inc., a joint stock corporation organized under the laws of Japan (the "**Company**"), hereby confirms its agreement (this "**Agreement**") with ________________ (hereinafter referred to as "you" (including its correlatives) or the "**Representative**") and with the other underwriters named on <u>Schedule 1</u> hereto for which the Representative is acting as representative to the several underwriters (the Representative and such other underwriters being collectively called the "**Underwriters**" or, individually, an "**Underwriter**") as follows:

1. <u>Purchase and Sale of Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 *<u>Firm Shares</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1.1 <u>Nature and Purchase of Firm Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell in the aggregate [\*] common shares of the Company, no par value (the "**Common Shares**"), and each Underwriter agrees to purchase, severally and not jointly, at the Closing, an aggregate of [\*] Common Shares (the "**Firm Shares**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Firm Shares are to be offered together to the public at the offering price per one Firm Share as set forth on Schedule 2-A hereto (the "**Purchase Price**"). The Underwriters, severally and not jointly, agree to purchase from the Company the number of Firm Shares set forth opposite their respective names on Schedule 1 attached hereto and made a part hereof at the purchase price for one Firm Share of $[\*] (or 92.5% of the Purchase Price).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1.2 <u>Firm Shares Payment and Delivery</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Delivery and payment for the Firm Shares shall be made at 10:00 a.m., Eastern time, on the second (2<sup>nd</sup>) Business Day following the effective date (the "**Effective Date**") of the Registration Statement (as defined in Section 2.1.1 below) (or the third (3<sup>rd</sup>) Business Day following the Effective Date if the Registration Statement is declared effective after 4:01 p.m., Eastern time) or at such earlier time as shall be agreed upon by the Representative and the Company, at the offices of ___________ ("**Representative's Counsel**"), or at such other place (or remotely by facsimile or other electronic transmission) as shall be agreed upon by the Representative and the Company. The hour and date of delivery and payment for the Firm Shares is called the "**Closing Date**."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Payment for the Firm Shares shall be made on the Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery of the certificates (in form and substance satisfactory to the Underwriters) representing the Firm Shares (or through the facilities of the Depository Trust Company ("**DTC**")) for the account of the Underwriters. The Firm Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares except upon tender of payment by the Representative for all of the Firm Shares. The term "**Business Day**" means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York, New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 *<u>Over-allotment Option</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.1 <u>Option Shares</u>. For the purposes of covering any over-allotments in connection with the distribution and sale of the Firm Shares, the Company hereby grants to the Underwriters an option (the "**Over-allotment Option**") to purchase, in the aggregate, up to [\*] additional Common Shares (constituting 15% of the shares Firm Shares sold in this Offering) (the "**Option Shares**", and along with the Firm Shares, the "**Shares**"), from the Company. The purchase price to be paid per Option Share shall be equal to the price per Option Share set forth in Schedule 2-A. The Shares shall be issued directly by the Company and shall have the rights and privileges described in the Registration Statement, the Pricing Disclosure Package and the Prospectus referred to below. The offering and sale of the Shares is herein referred to as the "**Offering**."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.2 <u>Exercise of Option</u>. The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by the Representative as to all (at any time) or any part (from time to time) of the Option Shares within forty-five (45) days after the Effective Date. The Underwriters shall not be under any obligation to purchase any of the Option Shares prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of written notice to the Company from the Representative, setting forth the number of the Option Shares to be purchased and the date and time for delivery of and payment for the Option Shares (the "**Option Closing Date**"), which shall not be later than five (5) full Business Days after the date of the notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of Representative's Counsel or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Shares does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option with respect to all or any portion of the Option Shares subject to the terms and conditions set forth herein, (i) the Company shall become obligated to sell to the Underwriters the number of the Option Shares specified in such notice and (ii) each of the Underwriters, acting severally and not jointly, shall purchase that portion of the total number of the Option Shares then being purchased as set forth in Schedule 1 opposite the name of such Underwriter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2.3 <u>Payment and Delivery</u>. Payment for the Option Shares shall be made on the Option Closing Date by wire transfer in Federal (same day) funds, payable to the order of the Company upon delivery to you of certificates (in form and substance satisfactory to the Underwriters) representing the Option Shares (or through the facilities of DTC or via DWAC transfer) for the account of the Underwriters. The Option Shares shall be registered in such name or names and in such authorized denominations as the Representative may request in writing prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Shares except upon tender of payment by the Representative for applicable Option Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 *<u>[RESERVED]</u>*

2. <u>Representations and Warranties of the Company</u>. The Company represents and warrants to the Underwriters as of the Applicable Time (as defined below), as of the Closing Date and as of the Option Closing Date, if any, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 *<u>Filing of Registration Statement</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.1 <u>Pursuant to the Securities Act</u>. The Company has filed with the U.S. Securities and Exchange Commission (the "**Commission**") a registration statement, and an amendment or amendments thereto, on Form F-1 (File No. _______), including any related prospectus or prospectuses, for the registration of the Shares and the Representative's Securities under the Securities Act of 1933, as amended (the "**Securities Act**"), which registration statement and amendment or amendments have been prepared by the Company in all material respects in conformity with the requirements of the Securities Act and the rules and regulations of the Commission under the Securities Act (the "**Securities Act Regulations**") and will contain all material statements that are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations. Except as the context may otherwise require, such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including the Preliminary Prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part thereof and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A of the Securities Act Regulations (the "**Rule 430A Information**")), is referred to herein as the "**Registration Statement**." If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing, the term "**Registration Statement**" shall include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the Commission on the date hereof.

Each prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a "**Preliminary Prospectus**." The Preliminary Prospectus, subject to completion, dated [\*], 2024, that was included in the Registration Statement immediately prior to the Applicable Time is hereinafter called the "**Pricing Prospectus**." The final prospectus in the form first furnished to the Underwriters for use in the Offering is hereinafter called the "**Prospectus**." Any reference to the "**most recent Preliminary Prospectus**" shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.

"**Applicable Time**" means 4:00 p.m., Eastern time, on the date of this Agreement.

"**Issuer Free Writing Prospectus**" means any "issuer free writing prospectus," as defined in Rule 433 of the Securities Act Regulations ("**Rule 433**"), including without limitation any "free writing prospectus" (as defined in Rule 405 of the Securities Act Regulations) relating to the Shares that is (i) required to be filed with the Commission by the Company, (ii) a "road show that is a written communication" within the meaning of Rule 433(d)(8)(i), whether or not required to be filed with the Commission, or (iii) exempt from filing with the Commission pursuant to Rule 433(d)(5)(i) because it contains a description of the Shares or of the Offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company's records pursuant to Rule 433(g).

"**Issuer General Use Free Writing Prospectus**" means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors (other than a "bona fide electronic road show," as defined in Rule 433 (the "**Bona Fide Electronic Road Show**")), as evidenced by its being specified in Schedule 2-B hereto.

"**Issuer Limited Use Free Writing Prospectus**" means any Issuer Free Writing Prospectus that is not an Issuer General Use Free Writing Prospectus.

"**Pricing Disclosure Package**" means any Issuer General Use Free Writing Prospectus issued at or prior to the Applicable Time, the Pricing Prospectus and the information included on Schedule 2-A hereto, all considered together.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1.2 <u>Pursuant to the Exchange Act</u>. The Company has filed with the Commission a Form 8-A (File Number 001-[\*]) providing for the registration pursuant to Section 12(b) under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**"), of the Common Shares. The registration of the Common Shares under the Exchange Act has become effective on or prior to the date hereof. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 *<u>Share Exchange Listing</u>*. The Shares have been approved for listing on the NYSE American, LLC or the Nasdaq Capital Market (the "**Exchange**"), and the Company has taken no action designed to, or likely to have the effect of, delisting of the Shares from the Exchange, nor has the Company received any written notification that the Exchange is contemplating terminating such listing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 *<u>No Stop Orders, etc</u>*. Neither the Commission nor, to the Company's knowledge, any state regulatory authority has issued any written order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company's knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission for additional information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 *<u>Disclosures in Registration Statement</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.1 <u>Compliance with Securities Act and 10b-5 Representation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus, including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Neither the Registration Statement nor any amendment thereto, at its effective time, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Pricing Disclosure Package, as of the Applicable Time, at the Closing Date or at any Option Closing Date (if any), did not, does not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Limited Use Free Writing Prospectus hereto does not conflict with the information contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, and each such Issuer Limited Use Free Writing Prospectus, as supplemented by and taken together with the Pricing Prospectus as of the Applicable Time, did not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements made in reliance upon and in conformity with written information furnished to the Company in writing with respect to the Underwriters by the Representative expressly for use in the Registration Statement, the Pricing Prospectus or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of any Underwriter consists solely of the disclosure contained in the "Underwriting" subsections "Commissions and Expenses," Price Stabilization, Short Positions and Penalty Bids," and "Relationships" of the Prospectus (the "**Underwriters' Information**"). The disclosures in the Registration Statement and Prospectus concerning the effects of U.S. laws and Japan national and local regulations on the Company's business as currently contemplated are correct in all material respects and do not omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), at the Closing Date or at any Option Closing Date, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to the Underwriters' Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.2 <u>Disclosure of Agreements</u>. The agreements and documents described in the Registration Statement, the Pricing Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus, or (ii) is material to the Company's business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company's knowledge, the other parties thereto, in accordance with its terms, except (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. None of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company's knowledge, any other party is in default thereunder and, to the Company's knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a default thereunder, except for any default or event which would not reasonably be expected to result in a Material Adverse Change (as defined below). To the Company's knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses (each, a "**Governmental Entity**"), including, without limitation, those relating to environmental laws and regulations, except for any violation which would not reasonably be expected to result in a Material Adverse Change (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.3 <u>Prior Securities Transactions</u>. During the past three (3) years from the date of this Agreement, no securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration Statement, the Pricing Disclosure Package and any Preliminary Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4.4 <u>Regulations</u>. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus concerning the effects of federal, state, local and all foreign regulation on the Offering and the Company's business as currently contemplated are correct in all material respects and no other such regulations are required to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which are not so disclosed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 *<u>Changes after Dates in Registration Statement</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5.1 <u>No Material Adverse Change</u>. Since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of operations of the Company or its Subsidiaries taken as a whole, nor any change or development that, singularly or in the aggregate, would involve a material adverse change in or affecting the condition (financial or otherwise), results of operations, business, or assets of the Company or its Subsidiaries taken as a whole (a "**Material Adverse Change**"); (ii) there have been no material transactions entered into by the Company or its Subsidiaries, other than as contemplated pursuant to this Agreement; and (iii) no officer or director of the Company has resigned from any position with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5.2 <u>Recent Securities Transactions, etc</u>. Subsequent to the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 *<u>Independent Accountants</u>*. To the knowledge of the Company, MaloneBailey, LLP ("**Auditor**"), whose report is filed with the Commission as part of the Registration Statement, the Pricing Disclosure Package and the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. The Auditor has not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 *<u>Financial Statements, etc</u>*. The financial statements, including the notes thereto and supporting schedules, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, fairly present in all material respects the financial position and the results of operations of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("**GAAP**"), consistently applied throughout the periods involved (provided that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all footnotes required by GAAP); and any supporting schedules included in the Registration Statement present fairly in all material respects the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related notes, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been properly compiled and prepared in accordance with the applicable requirements of the Securities Act and the Securities Act Regulations and present fairly in all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding "non-GAAP financial measures" (as such term is defined by the rules and regulations of the Commission), if any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future effect on the Company's financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (a) neither the Company nor any of its subsidiaries listed in Exhibit 21.1 to the Registration Statement (each, a "**Subsidiary**" and, collectively, the "**Subsidiaries**"), has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid any dividends or made any distribution of any kind with respect to its Common Shares or preferred stock (c) there has not been any change in the capital of the Company or any of its Subsidiaries, or, other than in the course of business, any grants under any stock compensation plan, and (d) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Change. The Company represents that it has no direct or indirect subsidiaries other than those listed in Exhibit 21.1 to the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 *<u>Authorized Capital; Options, etc</u>*. The Company had, at the date or dates indicated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have on the Closing Date the adjusted capitalization set forth therein. Except as set forth in, or contemplated by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable Time and on the Closing Date and any Option Closing Date, there will be no options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued Common Shares or any security convertible or exercisable into Common Shares, or any contracts or commitments to issue or sell Common Shares or any such options, warrants, rights or convertible securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 *<u>Valid Issuance of Securities, etc</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9.1 <u>Outstanding Securities</u>. All issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The Common Shares, preferred stock, and any other securities outstanding or to be outstanding upon consummation of the Offering conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The offers and sales of the outstanding Common Shares were at all relevant times either registered under the Securities Act and the applicable state securities or "blue sky" laws or, based in part on the representations and warranties of the purchasers of such shares, exempt from such registration requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9.2 <u>Securities Sold Pursuant to this Agreement</u>. The Shares have been duly authorized for issuance and sale and, when issued and paid for, will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders; the Shares are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Shares has been duly and validly taken. The Shares conform in all material respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 *<u>Registration Rights of Third Parties</u>*. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities of the Company under the Securities Act or to include any such securities in a registration statement to be filed by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 *<u>Validity and Binding Effect of Agreement</u>*. This Agreement has been duly and validly authorized by the Company, and, when executed and delivered, will constitute, the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 *<u>No Conflicts, etc</u>*. The execution, delivery and performance by the Company of each of this Agreement and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any violation of the provisions of the Company's Articles of Incorporation (as the same may be amended or restated from time to time, together with the Companies Act of Japan, the "**Charter**") or the by-laws of the Company; or (iii) violate any existing applicable law, rule, regulation, judgment, order or decree of any Governmental Entity as of the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 *<u>No Defaults; Violations</u>*. No material default exists in the due performance and observance of any term, covenant or condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which the Company may be bound or to which any of the properties or assets of the Company is subject. The Company is not (i) in violation of any term or provision of its Charter or by-laws, or (ii) in violation of any franchise, license, permit, applicable law, rule, regulation, judgment or decree of any Governmental Entity, except in the cases of clause (ii) for such violations which would not reasonably be expected to cause a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14 *<u>Corporate Power; Licenses; Consents</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14.1 <u>Conduct of Business</u>. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business purpose as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except for the absence of which would not reasonably be expected to have a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14.2 <u>Transactions Contemplated Herein</u>. The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent, authorization or order of, and no filing with, any court, government agency, the Exchange or other body is required for the valid issuance, sale and delivery of the Shares and the consummation of the transactions and agreements contemplated by this Agreement and as contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, except with respect to applicable Securities Act Regulations, state securities laws and the rules and regulations of the Financial Industry Regulatory Authority, Inc. ("**FINRA**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15 *D&O Questionnaires*. To the Company's knowledge, all information contained in the questionnaires (the "**Questionnaires**") completed by each of the Company's directors and officers immediately prior to the Offering (the "**Insiders**") as supplemented by all information concerning the Company's directors, officers and principal shareholders as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, as well as in the Lock-Up Agreement (as defined in Section 2.24 below), provided to the Underwriters, is true and correct in all material respects and the Company has not become aware of any information which would cause the information disclosed in the Questionnaires to become materially inaccurate and incorrect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16 *<u>Litigation; Governmental Proceedings</u>*. There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the Company's knowledge, threatened against, or involving the Company or, to the Company's knowledge, any executive officer or director which has not been disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17 *<u>Good Standing</u>*. The Company has been duly organized and is validly existing as a joint stock corporation organized under the laws of Japan and is in good standing under the laws of Japan as of the date hereof, and is duly qualified to do business and is in good standing in each other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify, singularly or in the aggregate, would not have or reasonably be expected to result in a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18 *<u>Insurance</u>*. The Company carries or is entitled to the benefits of insurance, (including, without limitation, as to directors and officers insurance coverage), with, to the Company's knowledge, reputable insurers, in the amount of directors and officers insurance coverage at least equal to $5,000,000 and the Company has included each Underwriter as an additional insured party to the directors and officers insurance coverage and all such insurance is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19 *<u>Transactions Affecting Disclosure to FINRA</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.1 <u>Finder's Fees</u>. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder's, consulting or origination fee by the Company or any Insider with respect to the sale of the Shares hereunder or any other arrangements, agreements or understandings of the Company or, to the Company's knowledge, any of its shareholders that may affect the Underwriters' compensation, as determined by FINRA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.2 <u>Payments within Six (6) Months</u>. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any person, as a finder's fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member participating in the offering as defined in FINRA Rule 5110(j)(15) ("**Participating Member**"); or (iii) any person or entity that has any direct or indirect affiliation or association with any Participating Member, within the six (6) months immediately prior to the original filing of the Registration Statement, other than the payment to the Underwriters as provided hereunder in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.3 <u>Use of Proceeds</u>. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.4 <u>FINRA Affiliation</u>. To the Company's knowledge, and except as may otherwise be disclosed in FINRA questionnaires provided to the Representative's Counsel, there is no (i) officer or director of the Company, (ii) beneficial owner of 5% or more of any class of the Company's securities or (iii) beneficial owner of the Company's unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the Registration Statement that is an affiliate or associated person of a Participating Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19.5 <u>Information</u>. All information provided by the Company and, to the Company's knowledge, all information provided by its officers and directors, in its and their respective FINRA questionnaire to Representative's Counsel specifically for use by Representative's Counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all material respects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.20 *<u>Foreign Corrupt Practices Act</u>*. None of the Company and its Subsidiaries or, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that (i) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might have had a Material Adverse Change or (iii) if not continued in the future, might adversely affect the assets, business, operations or prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.21 *<u>Compliance with OFAC</u>*. None of the Company and its Subsidiaries or, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company and its Subsidiaries or any other person acting on behalf of the Company and its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury ("**OFAC**"), and the Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.22 *<u>Money Laundering Laws</u>*. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the "**Money Laundering Laws**"); and no action, suit or proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.23 *<u>Officers' Certificate</u>*. Any certificate signed by any duly authorized officer of the Company and delivered to you or to Representative's Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.24 *<u>Lock-Up Agreements</u>*. Schedule 3 hereto contains a complete and accurate list of the Company's officers, directors and each owner of ten percent (10.0%) or more of the Company's outstanding Common Shares (or securities convertible or exercisable into Common Shares) (collectively, the "**Lock-Up Parties**"). The Company has caused each of the Lock-Up Parties to deliver to the Representative an executed Lock-Up Agreement, in a form substantially similar to that attached hereto as Exhibit A (the "**Lock-Up Agreement**"), prior to the execution of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.25 *<u>Subsidiaries</u>*. All Subsidiaries of the Company are duly organized and in good standing under the laws of the place of organization or incorporation, and each Subsidiary is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify would not have a Material Adverse Change. The Company's ownership and control of each Subsidiary is as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The Company owns, directly or indirectly, all of its capital stock or other equity interests of each Subsidiary free and clear of any liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive or similar rights to subscribe for or purchase securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.26 *<u>Related Party Transactions</u>*. There are no business relationships or related party transactions involving the Company or any other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus that have not been described as required by the Securities Act Regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.27 *<u>Board of Directors</u>*. The Board of Directors of the Company is comprised of the persons set forth under the heading of the Pricing Prospectus and the Prospectus captioned "Management." The qualifications of the persons serving as board members and the overall composition of the board comply with the Exchange Act, the Exchange Act Regulations, the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the "**Sarbanes-Oxley Act**") applicable to the Company and the listing rules of the Exchange. All members of the Company's board of corporate auditors meet applicable independence requirements under the Companies Act of Japan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28 *<u>Sarbanes-Oxley Compliance</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28.1 <u>Disclosure Controls</u>. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company has developed and currently maintains disclosure controls and procedures that will comply with Rule 13a-15 or 15d-15 under the Exchange Act Regulations, and such controls and procedures are effective to ensure that all material information concerning the Company will be made known on a timely basis to the individuals responsible for the preparation of the Company's Exchange Act filings and other public disclosure documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.28.2 <u>Compliance</u>. The Company is, or at the Applicable Time and on the Closing Date will be, in material compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and has taken reasonable steps to ensure the Company's future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the material provisions of the Sarbanes-Oxley Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.29 *<u>Accounting Controls</u>*. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, the Company maintains systems of "internal control over financial reporting" (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, its respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is not aware of any material weaknesses in its internal control over financial reporting, and, if applicable, with respect to such remedial actions disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company represents that it has taken all remedial actions set forth in such disclosure. The Company's Auditor and the board of corporate auditors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are known to the Company's management and that have adversely affected or are reasonably likely to adversely affect the Company' ability to record, process, summarize and report financial information; and (ii) any fraud known to the Company's management, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.30 *<u>No Investment Company Status</u>*. The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, required to register as an "investment company," as defined in the Investment Company Act of 1940, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.31 *<u>No Labor Disputes</u>*. No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is imminent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.32 *<u>Intellectual Property Rights</u>*. The Company and each of its Subsidiaries owns or possesses or has valid rights to use all patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and similar rights ("**Intellectual Property Rights**") necessary for the conduct of the business of the Company and its Subsidiaries as currently carried on and as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus. To the knowledge of the Company, no action or use by the Company or any of its Subsidiaries necessary for the conduct of its business as currently carried on and as described in the Registration Statement and the Prospectus will involve or give rise to any infringement of, or license or similar fees for, any Intellectual Property Rights of others. Neither the Company nor any of its Subsidiaries has received any written notice alleging any such infringement, fee or conflict with asserted Intellectual Property Rights of others. Except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change (A) to the knowledge of the Company, there is no infringement, misappropriation or violation by third parties of any of the Intellectual Property Rights owned by the Company; (B) there is no pending or, to the knowledge of the Company, threatened action, suit, proceeding or claim by others challenging the rights of the Company in or to any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim, that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; (C) the Intellectual Property Rights owned by the Company and, to the knowledge of the Company, the Intellectual Property Rights licensed to the Company have not been adjudged by a court of competent jurisdiction invalid or unenforceable, in whole or in part, and there is no pending or, to the Company's knowledge, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; (D) there is no pending or, to the Company's knowledge, threatened action, suit, proceeding or claim by others that the Company infringes, misappropriates or otherwise violates any Intellectual Property Rights or other proprietary rights of others, the Company has not received any written notice of such claim and the Company is unaware of any other facts which would form a reasonable basis for any such claim that would, individually or in the aggregate, together with any other claims in this Section 2.32, reasonably be expected to result in a Material Adverse Change; and (E) to the Company's knowledge, no employee of the Company is in or has ever been in violation in any material respect of any term of any employment contract, patent disclosure agreement, invention assignment agreement, non-competition agreement, non-solicitation agreement, nondisclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee's employment with the Company, or actions undertaken by the employee while employed with the Company and could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company's knowledge, all material technical information developed by and belonging to the Company which has not been patented has been kept confidential. The Company is not a party to or bound by any options, licenses or agreements with respect to the Intellectual Property Rights of any other person or entity that are required to be set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus and are not described therein. The Registration Statement, the Pricing Disclosure Package and the Prospectus contain in all material respects the same description of the matters set forth in the preceding sentence. None of the technology employed by the Company has been obtained or is being used by the Company in violation of any contractual obligation binding on the Company or, to the Company's knowledge, any of its officers, directors or employees, or otherwise in violation of the rights of any persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.33 *<u>Taxes</u>*. Each of the Company and its Subsidiaries has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof, except in any case in which the failure so to file would not reasonably be expected to cause a Material Adverse Change. Each of the Company and its Subsidiaries has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company or such respective Subsidiary, except for any such taxes that are currently being contested in good faith or as would not reasonably be expected to cause a Material Adverse Change. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. Except as disclosed in writing to the Underwriters, (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company or its Subsidiaries, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company or its Subsidiaries. The term "taxes" means all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term "returns" means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.34 *<u>ERISA Compliance</u>*. The Company is not subject to the Employee Retirement Income Security Act of 1974, as amended, or the regulations and published interpretations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.35 *<u>Compliance with Laws</u>*. Except as otherwise disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus and as could not, individually or in the aggregate, be expected to result in a Material Adverse Change, each of the Company and each Subsidiary, the Company: (A) is and at all times has been in compliance with all statutes, rules, or regulations applicable to the services provided by the Company ("**Applicable Laws**"), except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received any warning letter, untitled letter or other correspondence or notice from any other governmental authority alleging or asserting noncompliance with any Applicable Laws or any licenses, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Laws ("**Authorizations**"); (C) possesses all material Authorizations and such material Authorizations are valid and in full force and effect and are not in material violation of any term of any such Authorizations; (D) has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any governmental authority or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such governmental authority or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding that if brought would result in a Material Adverse Change; (E) has not received written notice that any Governmental Authority has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations and has no knowledge that any such Governmental Authority is considering such action; (F) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission); and (G) has not, either voluntarily or involuntarily, initiated, conducted, or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning, or other notice or action relating to the alleged lack of safety of any product or any alleged product defect or violation and, to the Company's knowledge, no third party has initiated, conducted or intends to initiate any such notice or action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.36 *<u>Ineligible Issuer</u>*. At the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Shares and at the date hereof, the Company was not and is not an "ineligible issuer," as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.37 *<u>Real Property</u>*. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company and its Subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real or personal property which are material to the business of the Company and its Subsidiaries taken as a whole, in each case free and clear of all liens, encumbrances, security interests, claims and defects that do not, singly or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or its Subsidiaries; and all of the leases and subleases material to the business of the Company and its Subsidiaries, considered as one enterprise, and under which the Company or any of its Subsidiaries holds properties described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, are in full force and effect, and neither the Company nor any Subsidiary has received any written notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any Subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such Subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease, which would result in a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.38 *<u>Contracts Affecting Capital</u>*. There are no transactions, arrangements or other relationships between and/or among the Company, any of its affiliates (as such term is defined in Rule 405 of the Securities Act Regulations) and any unconsolidated entity, including, but not limited to, any structured finance, special purpose or limited purpose entity that could reasonably be expected to materially affect the Company's or its Subsidiaries' liquidity or the availability of or requirements for their capital resources required to be described or incorporated by reference in the Registration Statement, the Pricing Disclosure Package and the Prospectus which have not been described or incorporated by reference as required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.39 *<u>Loans to Directors or Officers</u>*. There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company or its Subsidiaries to or for the benefit of any of the officers or directors of the Company, its Subsidiaries or any of their respective family members, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.40 *<u>Industry Data; Forward-looking statements</u>*. The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the Company's good faith estimates that are made on the basis of data derived from such sources. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.41 *<u>Intentionally omitted</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.42 *<u>Intentionally omitted</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.43 *<u>Electronic Road Show</u>*. The Company has made available a Bona Fide Electronic Road Show in compliance with Rule 433(d)(8)(ii) of the Securities Act Regulations such that no filing of any "road show" (as defined in Rule 433(h) of the Securities Act Regulations) is required in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.44 *<u>Margin Securities</u>*. The Company owns no "margin securities" as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the "**Federal Reserve Board**"), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Shares to be considered a "purpose credit" within the meanings of Regulation T, U or X of the Federal Reserve Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.45 *<u>Dividends and Distributions</u>*. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus, no Subsidiary of the Company is currently prohibited or restricted, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such Subsidiary's capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary's property or assets to the Company or any other Subsidiary of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.46 *<u>Lending Relationships</u>*. Except as disclosed in the Pricing Disclosure Package, Registration Statement and the Prospectus, the Company (i) does not have any material lending or other relationship with any bank or lending affiliate of the Underwriters and (ii) does not intend to use any of the proceeds from the sale of the Securities hereunder to repay any outstanding debt owed to any affiliate of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.47 *<u>Transactions With Affiliates and Employees</u>*. Except as set forth in the Registration Statement, any Preliminary Prospectus and the Prospectus, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.48 *<u>Solvency</u>*. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Shares hereunder, the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, are sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). Except as set forth in the Registration Statement and the Prospectus, the Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The Registration Statement and the Prospectus sets forth as of [\*] , 2024 all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, "Indebtedness" means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company's consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Except as set forth in the Registration Statement and the Prospectus, neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.49 *<u>Tax Status</u>*. Except for matters that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change, the Company and each Subsidiary (i) has made or filed all income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due in the ordinary course by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.50 *<u>Emerging Growth Company</u>*. From the time of the initial confidential submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly or through any person authorized to act on its behalf in any Testing-the-Waters Communications) through the date hereof, the Company has been and is an "emerging growth company," as defined in Section 2(a) of the Securities Act (an "**Emerging Growth Company**"). "Testing-the-Waters Communication" means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act.

3. <u>Covenants of the Company</u>. The Company covenants and agrees as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 *<u>Amendments to Registration Statement</u>*. The Company shall deliver to the Representative, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the Effective Date and not file any such amendment or supplement to which the Representative shall reasonably object in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 *<u>Federal Securities Laws</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.1 <u>Compliance</u>. The Company, subject to Section 3.2.2, shall comply with the requirements of Rule 430A of the Securities Act Regulations, and will notify the Representative promptly, and confirm the notice in writing, (i) when any post-effective amendment to the Registration Statement shall become effective or any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission; (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the Offering of the Shares. The Company shall effect all filings required under Rule 424(b) of the Securities Act Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company shall use its reasonable best efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.2 <u>Continued Compliance</u>. The Company shall comply with the Securities Act, the Securities Act Regulations, the Exchange Act and the Exchange Act Regulations so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations ("**Rule 172**"), would be) required by the Securities Act to be delivered in connection with sales of the Shares, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to (i) amend the Registration Statement in order that the Registration Statement will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (ii) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (iii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly (A) give the Representative notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representative with copies of any such amendment or supplement and (C) file with the Commission any such amendment or supplement; provided that the Company shall not file or use any such amendment or supplement to which the Representative or Representative's Counsel shall reasonably object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has given the Representative notice of any filings made pursuant to the Exchange Act or the Exchange Act Regulations within 48 hours prior to the Applicable Time. The Company shall give the Representative notice of its intention to make any such filing from the Applicable Time until the later of the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in Section 1.2 hereof and will furnish the Representative with copies of the related document(s) a reasonable amount of time prior to such proposed filing, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall reasonably object.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.3 <u>Exchange Act Registration</u>. Until three (3) years after the date of this Agreement, the Company shall use its commercially reasonable efforts to maintain the registration of the Common Shares under the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.4 <u>Free Writing Prospectuses</u>. The Company agrees that, unless it obtains the prior consent of the Representative, it shall not make any offer relating to the Shares that would constitute an Issuer Free Writing Prospectus or that would otherwise constitute a "free writing prospectus," or a portion thereof, required to be filed by the Company with the Commission or retained by the Company under Rule 433; provided that the Representative shall be deemed to have consented to each Issuer General Use Free Writing Prospectus set forth in Schedule 2-B. The Company represents that it has treated or agrees that it will treat each such free writing prospectus consented to, or deemed consented to, by the Underwriters as an "issuer free writing prospectus," as defined in Rule 433, and that it has complied and will comply with the applicable requirements of Rule 433 with respect thereto, including timely filing with the Commission where required, legending and record keeping. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company will promptly notify the Underwriters and will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2.5 <u>Testing-the-Waters Communications</u>. If at any time following the distribution of any Written Testing-the-Waters Communication there occurred or occurs an event or development as a result of which such Written Testing-the-Waters Communication included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at that subsequent time, not misleading, the Company shall promptly notify the Representative and shall promptly amend or supplement, at its own expense, such Written Testing-the-Waters Communication to eliminate or correct such untrue statement or omission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 *<u>Delivery to the Underwriters of Registration Statements</u>*. The Company has delivered or made available or shall deliver or make available to the Representative and Representative's Counsel, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and upon request will also deliver to the Underwriters, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 *<u>Delivery to the Underwriters of Prospectuses</u>*. The Company has delivered or made available or will deliver or make available to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 *<u>[RESERVED]</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 *<u>Review of Financial Statements</u>*. For a period of three (3) years after the date of this Agreement, the Company, at its expense, shall cause its regularly engaged independent registered public accounting firm to review (but not audit) the Company's financial statements for each of the three fiscal quarters immediately preceding the announcement of any quarterly financial information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 *<u>Listing</u>*. The Company shall use its commercially reasonable efforts to maintain the listing of the Shares on the Exchange for at least three (3) years from the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8 *<u>Intentionally omitted</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9 *<u>Reports to the Representative</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9.1 <u>Periodic Reports, etc</u>. For a period of three (3) years after the date of this Agreement, the Company shall furnish or make available to the Representative copies of such financial statements and other periodic and special reports as the Company from time to time furnishes generally to holders of any class of its securities and also furnish or make available to the Representative: (i) a copy of each periodic report the Company shall be required to file with the Commission under the Exchange Act and the Exchange Act Regulations; (ii) a copy of every press release and every news item and article with respect to the Company or its affairs which was released by the Company; (iii) a copy of each Form 8-K prepared and filed by the Company; (iv) a copy of each registration statement filed by the Company under the Securities Act; and (v) such additional documents and information with respect to the Company and the affairs of any future subsidiaries of the Company as the Representative may from time to time reasonably request; provided the Representative shall sign, if requested by the Company, a Regulation FD compliant confidentiality agreement which is reasonably acceptable to the Representative and Representative's Counsel in connection with the Representative's receipt of such information. Documents filed with the Commission pursuant to its EDGAR system shall be deemed to have been delivered to the Representative pursuant to this Section 3.9.1.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9.2 <u>Transfer Agent; Transfer Sheets</u>. For a period of three (3) years after the date of this Agreement, the Company shall retain a transfer agent and registrar acceptable to the Representative (the "**Transfer Agent**") and shall furnish to the Representative at the Company's sole cost and expense such transfer sheets of the Company's securities as the Representative may reasonably request, including the daily and monthly consolidated transfer sheets of the Transfer Agent and DTC. [\*] is acceptable to the Representative to act as Transfer Agent for the Common Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9.3 <u>Trading Reports</u>. For a period of six (6) months after the date hereof, during such time as the Common Shares are listed on the Exchange, the Company shall provide to the Representative, at the Company's expense, such reports published by the Exchange relating to price trading of the Common Shares, as the Representative shall reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10 *<u>Payment of Expenses</u>*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10.1 <u>General Expenses Related to the Offering</u>. The Company hereby agrees to pay on each of the Closing Date and the Option Closing Date, if any, to the extent not paid at the Closing Date, all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and communication expenses relating to the registration of the Shares to be sold in the Offering (including the Over-allotment Option) with the Commission; (b) all Public Filing System filing fees associated with the review of the Offering by FINRA; (c) all fees and expenses relating to the listing of the Shares on the Exchange as the Company and the Representative together determine; (d) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Shares under the securities laws of such foreign jurisdictions as the Representative may reasonably designate (including, without limitation, all filing and registration fees, and the fees and disbursements of the Representative's Counsel for such counsel's participation in the "blue sky" and stock exchange listing process); (e) the costs of all mailing and printing of the underwriting documents (including the Agreement, any Blue Sky Surveys and, if appropriate, any Agreement Among Underwriters, Selected Dealers' Agreement, Underwriters' Questionnaire and Power of Attorney), Registration Statement, the Pricing Disclosure Package and the Prospectus and all amendments, supplements, and exhibits thereto and as many preliminary and final Prospectuses as the Representative may reasonably deem necessary; (f) the costs and expenses of the public relations firm; (g) the costs of preparing, printing and delivering certificates representing the Shares; (h) fees and expenses of the transfer agent for the Shares; (h) stock transfer taxes, if any, payable upon the transfer of securities from the Company to the Representative; (j) the fees and expenses of the Company's accountants and the fees and expenses of the Company's legal counsel and other agents and representatives; and (k) all reasonable, out-of-pocket expenses as incurred in connection with this engagement, including but not limited to travel and communication expenses, printing expenses, roadshow expenses, due diligence expenses, background checks, courier charges and the reasonable fees and disbursements for Representative's legal counsel, and also the reasonable fees and disbursements of any other consultants or third party services engaged by the Representative with all of the Underwriters' actual out-of-pocket expenses under sub-section 3.10.1(k) not to exceed $150,000 without the Company's prior written consent, in the event of a Closing of the Offering, and shall not exceed $75,000 in the event that there is not a Closing of the Offering. The Representative may deduct from the net proceeds of the Offering payable to the Company on the Closing Date, or the Option Closing Date, if any, the expenses set forth herein to be paid by the Company to the Underwriters; provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Underwriters pursuant to Section 7.3 hereof. In connection with the initial filing of the Registration Statement, the Representative received an advance of $25,000. Any expense deposit or advance will be returned to us to the extent the Representative's out-of-pocket accountable expenses are not actually incurred in accordance with FINRA Rule 5110(g)(4)(A).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.10.2 <u>[RESERVED]</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.11 *<u>Application of Net Proceeds</u>*. The Company shall apply the net proceeds from the Offering received by it in a manner consistent with the application thereof described under the caption "Use of Proceeds" in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.12 *<u>Delivery of Earnings Statements to Security Holders</u>*. The Company shall make generally available to its security holders as soon as practicable, but not later than the first day of the fifteenth (15<sup>th</sup>) full calendar month following the date of this Agreement, an earnings statement (which need not be certified by independent registered public accounting firm unless required by the Securities Act or the Securities Act Regulations, but which shall satisfy the provisions of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of at least twelve (12) consecutive months beginning after the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.13 *<u>Stabilization</u>*. Neither the Company nor, to its knowledge, any of its employees, directors or shareholders has taken or shall take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.14 *<u>Internal Controls</u>*. Except to the extent disclosed in the Registration Statement, Pricing Disclosure Package and Prospectus, the Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary in order to permit preparation of financial statements in accordance with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.15 *<u>Accountants</u>*. As of the date of this Agreement, the Company has retained an independent registered public accounting firm reasonably acceptable to the Representative, and the Company shall continue to retain a nationally recognized independent registered public accounting firm for a period of at least three (3) years after the date of this Agreement. The Representative acknowledges that the Auditor is acceptable to the Representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.16 *<u>FINRA</u>*. For a period of ninety (90) days from the later of the Closing Date or the Option Closing Date, the Company shall advise the Representative (who shall make an appropriate filing with FINRA) if it is or becomes aware that (i) any officer or director of the Company, (ii) any beneficial owner of 10% or more of any class of the Company's securities or (iii) any beneficial owner of the Company's unregistered equity securities which were acquired during the 180 days immediately preceding the filing of the original Registration Statement is or becomes an affiliate or associated person of a Participating Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.17 *<u>No Fiduciary Duties</u>*. The Company acknowledges and agrees that the Underwriters' responsibility to the Company is solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.18 *<u>Company Lock-Up</u>*. The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representative, it will not, for a period of six (6) months from the date on which the trading of the Securities on the Exchange commences (the "**Lock-Up Period**"), (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant or modify the terms of any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company or modify the terms of any existing securities, in each case, whether in conjunction with another broker-dealer or on the Company's own volition; (ii) file or cause to be filed any registration statement with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company (other than pursuant to a registration statement on Form S-8 for employee benefit plans); or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of shares of capital stock of the Company or such other securities, in cash or otherwise. The restrictions contained in this section shall not apply to (i) the Shares to be sold hereunder; and (ii) the issuance by the Company of Common Shares upon the exercise of an outstanding option or warrant or the conversion of a security outstanding on the date hereof or disclosed in the Registration Statement and the Pricing Disclosure Package.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.19 *<u>Release of D&O Lock-up Period</u>*. If the Representative, in its sole discretion, agrees to release or waive the restrictions set forth in the Lock-Up Agreements described in Section 2.24 hereof for an officer or director of the Company and provides the Company with notice of the impending release or waiver at least three (3) Business Days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit B hereto through a major news service at least two (2) Business Days before the effective date of the release or waiver.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.20 *<u>Blue Sky Qualifications</u>*. The Company shall use its best efforts, in cooperation with the Underwriters, if necessary, to qualify the Shares for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as the Representative may designate and to maintain such qualifications in effect so long as required to complete the distribution of the Shares; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.21 *<u>Reporting Requirements</u>*. The Company, during the period when a prospectus relating to the Shares is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, will file all documents required to be filed with the Commission pursuant to the Exchange Act within the time periods required by the Exchange Act and Exchange Act Regulations. Additionally, the Company shall report the use of proceeds from the issuance of the Shares as may be required under Rule 463 under the Securities Act Regulations.

4. <u>Conditions of Underwriters' Obligations</u>. The obligations of the Underwriters to purchase and pay for the Shares, as provided herein, shall be subject to (i) the continuing accuracy of the representations and warranties of the Company as of the date hereof and as of each of the Closing Date and the Option Closing Date, if any; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 *<u>Regulatory Matters</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.1 <u>Effectiveness of Registration Statement; Rule 430A Information</u>. The Registration Statement has become effective not later than 5:00 p.m., Eastern time, on the date of this Agreement or such later date and time as shall be consented to in writing by you, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company's knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. The Prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.2 <u>FINRA Clearance</u>. On or before the date of this Agreement, the Representative shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.3 <u>Exchange Share Market Clearance</u>. On the Closing Date, the Firm Shares shall have been approved for listing on the Exchange, subject only to official notice of issuance. On the first Option Closing Date (if any), the Option Shares shall have been approved for listing on the Exchange, subject only to official notice of issuance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 *<u>Company Counsel Matters</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.1 <u>Closing Date Opinion of Counsel for the Company</u>. On the Closing Date, the Representative shall have received the favorable opinion and negative assurances statement of Anthony, Linder & Cacomanolis, PLLC, counsel for the Company, dated the Closing Date, in customary form and substance reasonably satisfactory to Representative's Counsel addressed to the Representative and stating that such opinions may be relied upon by Representative's Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.2 <u>Closing Date Opinion of Japan Counsel for the Company</u>. On the Closing Date, the Representative shall have received the favorable opinion and negative assurances statement of One Asia Lawyers, Japan counsel for the Company, dated the Closing Date, in customary form and substance reasonably satisfactory to Representative's Counsel addressed to the Representative and stating that such opinions may be relied upon by Representative's Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.3 <u>Option Closing Date Opinion of Counsel for the Company</u>. On the Option Closing Date, if any, the Representative shall have received the favorable opinion and negative assurances statement of Anthony, Linder & Cacomanolis, PLLC, counsel for the Company, dated the Option Closing Date, addressed to the Representative and in customary form and substance reasonably satisfactory to the Representative, confirming as of the Option Closing Date, the statements made by such counsel in their opinions delivered on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.4 <u>Option Closing Date Opinion of Japan Counsel for the Company</u>. On the Option Closing Date, if any, the Representative shall have received the favorable opinion and negative assurances statement of One Asia Lawyers, Japan counsel for the Company, dated the Option Closing Date, addressed to the Representative and in customary form and substance reasonably satisfactory to the Representative, confirming as of the Option Closing Date, the statements made by such counsel in their opinions delivered on the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2.5 <u>Reliance</u>. In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representative) of other counsel reasonably acceptable to the Representative, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements or certificates shall be delivered to Representative's Counsel if requested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 *<u>Comfort Letters</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.1 <u>Cold Comfort Letter</u>. At the time this Agreement is executed you shall have received a cold comfort letter containing statements and information of the type customarily included in accountants' comfort letters with respect to the financial statements and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the Representative and in form and substance satisfactory in all respects to you and to the Auditor, dated as of the date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.2 <u>Bring-down Comfort Letter</u>. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that the Auditor reaffirms the statements made in the letter furnished pursuant to Section 4.3.1, except that the specified date referred to shall be a date not more than three (3) Business Days prior to the Closing Date or the Option Closing Date, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 *<u>Officers' Certificates</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.1 <u>Officers' Certificate</u>. The Company shall have furnished to the Representative a certificate, dated the Closing Date and any Option Closing Date (if such date is other than the Closing Date), of its Chief Executive Officer, its President and its Chief Financial Officer stating that (i) such officers have carefully examined the Registration Statement, the Pricing Disclosure Package, any Issuer Free Writing Prospectus and the Prospectus and, in their opinion, the Registration Statement and each amendment thereto, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date) did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), any Issuer Free Writing Prospectus as of its date and as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus, (iii) to the best of their knowledge after reasonable investigation, as of the Closing Date (or any Option Closing Date if such date is other than the Closing Date), the representations and warranties of the Company in this Agreement are true and correct in all material respects (except for those representations and warranties qualified as to materiality, which shall be true and correct in all respects and except for those representations and warranties which refer to facts existing at a specific date, which shall be true and correct as of such date) and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date (or any Option Closing Date if such date is other than the Closing Date), and (iv) there has not been, subsequent to the date of the most recent audited financial statements included or incorporated by reference in the Pricing Disclosure Package, a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.2 <u>Secretary's Certificate</u>. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date or the Option Date, as the case may be, respectively, certifying: (i) that each of the Charter and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company's Board of Directors (and any pricing committee thereof) relating to the Offering are in full force and effect and have not been modified; (iii) as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission; and (iv) as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5 *<u>No Material Changes</u>*. Prior to and on each of the Closing Date and each Option Closing Date, if any: (i) there shall have been no Material Adverse Change in the condition or prospects or the business activities, financial or otherwise, of the Company from the latest dates as of which such condition is set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Insider before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding may reasonably be expected to cause a Material Adverse Change, except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 *<u>Delivery of Agreements</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6.1 <u>Lock-Up Agreements</u>. On or before the date of this Agreement, the Company shall have delivered to the Representative executed copies of the Lock-Up Agreements from each of the persons listed in Schedule 3 hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7 *<u>Additional Documents</u>*. At the Closing Date and at each Option Closing Date (if any) Representative's Counsel shall have been furnished with such documents and opinions as they may require for the purpose of enabling Representative's Counsel to deliver an opinion to the Underwriters, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Shares as herein contemplated shall be satisfactory in form and substance to the Representative and Representative's Counsel.

5. <u>Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 *<u>Indemnification of the Underwriters</u>*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.1 <u>General</u>. Subject to the conditions set forth below, the Company agrees to indemnify, defend and hold harmless each Underwriter, its affiliates and each of its and their respective directors, officers, members, employees, representatives, partners, shareholders, affiliates, counsel, and agents and each person, if any, who controls any such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively the "**Underwriter Indemnified Parties**," and each an "**Underwriter Indemnified Party**"), from and against any and all loss, liability, claim, damage and expense whatsoever (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) to which they or any of them may become subject under the Securities Act, the Exchange Act or any other statute or at common law or otherwise or under the laws of foreign countries (a "**Claim**"), arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in (A) the Registration Statement, the Pricing Disclosure Package, any Preliminary Prospectus, the Prospectus, or in any Issuer Free Writing Prospectus or in any Written Testing-the-Waters Communication (as from time to time each may be amended and supplemented); (B) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any "road show" or investor presentations made to investors by the Company (whether in person or electronically); or (C) any application or other document or written communication (in this Section 5, collectively called "application") executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Shares under the securities laws thereof or filed with the Commission, any state securities commission or agency, the Exchange or any other national securities exchange; unless, with respect to each subsection (A) through (C), such statement or omission was made in reliance upon, and in conformity with, the Underwriters' Information. With respect to any untrue statement or omission or alleged untrue statement or omission made in the Registration Statement, Pricing Disclosure Package or Prospectus, the indemnity agreement contained in this Section 5.1.1 shall not inure to the benefit of any Underwriter Indemnified Party to the extent that any loss, liability, claim, damage or expense of such Underwriter Indemnified Party results from the fact that a copy of the Prospectus was not given or sent to the person asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale of the Shares to such person as required by the Securities Act and the Securities Act Regulations, and if the untrue statement or omission has been corrected in the Prospectus, unless such failure to deliver the Prospectus was a result of non-compliance by the Company with its obligations under Section 3.3 hereof. The Company also agrees that it will reimburse each Underwriter Indemnified Party for all reasonable fees and expenses (including but not limited to any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out of any action between any of the Underwriter Indemnified Parties and the Company or between any of the Underwriter Indemnified Parties and any third party, or otherwise) (collectively, the "**Expenses**"), and further agrees wherever and whenever possible to advance payment of Expenses as they are incurred by an Underwriter Indemnified Party in investigating, preparing, pursuing or defending any Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.2 <u>Procedure</u>. If any action is brought against an Underwriter Indemnified Party in respect of which indemnity may be sought against the Company pursuant to Section 5.1.1, such Underwriter Indemnified Party shall promptly notify the Company in writing of the institution of such action and the Company shall assume the defense of such action, including the employment and fees of counsel (subject to the approval of such Underwriter Indemnified Party (which approval shall not be unreasonably withheld)) and payment of actual expenses if an Underwriter Indemnified Party requests that the Company do so. Such Underwriter Indemnified Party shall have the right to employ its or their own counsel in any such case, and the fees and expenses of such counsel shall be at the expense of the Company and shall be advanced by the Company; provided, however, that the Company shall not be obligated to bear the reasonable fees and expenses of more than one firm of attorneys selected by the Underwriter Indemnified Party (in addition to local counsel). Notwithstanding anything to the contrary contained herein, and provided that the Company has timely honored its obligations under Section 5, the Underwriter Indemnified Party shall not enter into any settlement without the prior written consent (which shall not be unreasonably withheld) of the terms of any settlement by the Company. The Company shall not be liable for any settlement of any action effected without its prior written consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Underwriters (which consent shall not be unreasonably withheld), settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which advancement, reimbursement, indemnification or contribution may be sought hereunder (whether or not such Underwriter Indemnified Party is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of each Underwriter Indemnified Party, acceptable to such Underwriter Indemnified Party, from all liabilities, expenses and claims arising out of such action for which indemnification or contribution may be sought and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Underwriter Indemnified Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 *<u>Indemnification of the Company</u>*. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, its officers who signed the Registration Statement and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all loss, liability, claim, damage and expense described in the foregoing indemnity from the Company to the several Underwriters, as incurred, but only with respect to such losses, liabilities, claims, damages and expenses (or actions in respect thereof) which arise out of or are based upon untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or in any application, in reliance upon, and in conformity with, the Underwriters' Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or any application, and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters by the provisions of Section 5.1.2. The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Shares or in connection with the Registration Statement, the Pricing Disclosure Package, the Prospectus, or any Issuer Free Writing Prospectus or any Written Testing-the-Waters Communication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 *<u>Contribution</u>*. If the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 5.1 or 5.2 in respect of any liabilities and Expenses referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such liabilities and Expenses, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and each of the Underwriters, on the other hand, from the Offering, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other hand, in connection with the matters as to which such liabilities or Expenses relate, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other, with respect to such Offering shall be deemed to be in the same proportion as the total net proceeds actually received by the Company from the Offering of the Shares purchased under this Agreement (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions actually received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company, on the one hand, and the Underwriters, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished to the Company through the Representative by or on behalf of any Underwriter for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters' Information. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from a party who was not guilty of such fraudulent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4 *<u>Limitation</u>*. The Company also agrees that no Underwriter Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company for or in connection with advice or services rendered or to be rendered by any Underwriter Indemnified Party pursuant to this Agreement, the transactions contemplated thereby or any Underwriter Indemnified Party's actions or inactions in connection with any such advice, services or transactions, except to the extent that a court of competent jurisdiction has made a finding that liabilities (and related Expenses) of the Company have resulted from such Underwriter Indemnified Party's fraud, bad faith, gross negligence or willful misconduct in connection with any such advice, actions, inactions or services or such Underwriter Indemnified Party's breach of this Agreement or any obligations of confidentiality owed to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5 *<u>Survival & Third-Party Beneficiaries</u>*. The advancement, reimbursement, indemnity and contribution obligations set forth in this Section 5 shall remain in full force and effect regardless of any termination of, or the completion of any Underwriter Indemnified Party's services under or in connection with, this Agreement. Each Underwriter Indemnified Party's is an intended third-party beneficiary of this Section 5, and has the right to enforce the provisions of Section 5 as if he/she/it was a party to this Agreement.

6. <u>Effective Date of this Agreement and Termination Thereof</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 *<u>Effective Date</u>*. This Agreement shall become effective when both the Company and the Representative have executed the same and delivered counterparts of such signatures to the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 *<u>Termination</u>*. The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted, or in your opinion will in the immediate future materially disrupt, general securities markets in the United States; or (ii) if trading on the New York Stock Exchange or the Nasdaq Stock Market LLC shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other government authority having jurisdiction; or (iii) if the United States shall have become involved in a new war or an increase in major hostilities; or (iv) if a banking moratorium has been declared by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in your opinion, make it inadvisable to proceed with the delivery of the Firm Shares or Option Shares; or (vii) if the Company is in material breach of any of its representations, warranties or covenants hereunder; or (viii) if the Representative shall have become aware after the date hereof of such a Material Adverse Change, or such adverse material change in general market conditions as in the Representative's judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Shares or to enforce contracts made by the Underwriters for the sale of the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 *<u>Expenses</u>*. Notwithstanding anything to the contrary in this Agreement, in the event that this Agreement shall not be carried out for any reason whatsoever, within the time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Underwriters their actual and accountable out-of-pocket expenses related to the transactions contemplated herein then due and payable up to the amounts set forth in Section 3.10.1 and upon demand the Company shall pay such amount thereof to the Representative on behalf of the Underwriters; provided, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement. Notwithstanding the foregoing, any advance received by the Representative will be reimbursed to the Company to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 *<u>Indemnification</u>*. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall remain in full force and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 *<u>Representations, Warranties, Agreements to Survive</u>*. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its Affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company or (ii) delivery of and payment for the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 *<u>Tail Period</u>*. Subject to FINRA Rule 5110(g)(5)(B), the Representative shall be entitled to compensation commensurate with those set forth under Section 2(f), Section 2(g), Section 2(h) and Section 4, during the twelve (12) months period following the termination of that certain engagement agreement by and between the Company and the Representative, dated as of May 31, 2024, as amended (the "**Engagement Agreement**"), if the Company completes any public or private offering or other financing or capital-raising transaction of any kind (the "**Tail Financing**") with a party directly introduced to the Company by the Representative in writing during the Engagement Period (as defined below). The Representative will provide a list of investors at the conclusion of the Engagement Period that were introduced to the Company during the Engagement Period and only these investors will be eligible for the compensation specified in this section. In compliance with FINRA Rule 5110(g)(5)(B), the right granted to the Representative under this Section 6.6 shall be terminated upon termination by the Company of this Agreement for cause and the Company shall not be responsible for paying for the fee set forth in this Section 6.6 unless a Tail Financing is consummated within the term of this Agreement. "**Engagement Period**" shall mean the period beginning on May 31, 2024, and ending on the earliest of (i) May 31, 2025, or (ii) the date that the Company terminates the Engagement Agreement pursuant to the terms therein.

7. <u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 *<u>Notices</u>*. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be mailed (registered or certified mail, return receipt requested), personally delivered or sent by facsimile transmission and confirmed or electronic mail and shall be deemed given when so delivered or faxed and confirmed or sent via electronic mail, or if mailed, two (2) days after such mailing.

If to the Representative:

 **____________________**

___________________

___________________

Attn: **______________**

Fax No: ___________

Email: [\*]

*With a copy (which shall not constitute notice) to:*

 **________________**

___________________

___________________

Attention: **__________**

Fax No: ____________

Email: _____________

If to the Company:

**Gates Group Inc.**

34F Sumitomo Fudosan Shinjuku Grand Tower

8-17-1 Nishishinjuku, Shinjuku-ku

Tokyo, 160-6101 Japan

Attention: **Yuji Sekino**

Fax No: [\*]

Email: [\*]

With a copy (which shall not constitute notice) to:

**Anthony, Linder & Cacomanolis, PLLC**

1700 Palm Beach Lakes Blvd., Suite 820

West Palm Beach, Florida 33401

Attention: **Laura Anthony, Esq.**

Attention: **Craig D. Linder, Esq.**

Fax No: (561) 514-0832

Email: [\*]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 *<u>Headings</u>*. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 *<u>Amendment</u>*. This Agreement may only be amended by a written instrument executed by each of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 *<u>Entire Agreement</u>*. This Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this Agreement) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. Notwithstanding anything to the contrary set forth herein, it is understood and agreed by the parties hereto that all other terms and conditions of the Engagement Letter, as such Engagement Letter may be amended from time to time, shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.5 *<u>Binding Effect</u>*. This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the Underwriters, the Company and the controlling persons, directors and officers referred to in Section 5 hereof, and their respective successors, legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. The term "successors and assigns" shall not include a purchaser, in its capacity as such, of securities from any of the Underwriters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.6 *<u>Governing Law; Consent to Jurisdiction; Trial by Jury</u>*. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 7.1 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys' fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its shareholders and affiliates) and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.7 *<u>Execution in Counterparts</u>*. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by facsimile or email/pdf transmission shall constitute valid and sufficient delivery thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.8 *<u>Waiver, etc</u>*. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

*[Signature Page Follows]*

 

If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between us.

---

| | |
|:---|:---|
| Very truly yours, | Very truly yours, |
| **Gates Group Inc.** | **Gates Group Inc.** |
| By: |  |
| Name: | Yuji Sekino |
| Title: | Chief Executive Officer |

---

Confirmed as of the date first written above mentioned, on behalf of itself and as Representative of the several Underwriters named on Schedule 1 hereto:

---

| | |
|:---|:---|
| ___________________________ | ___________________________ |
| By: |  |
| Name: | _______________________ |
| Title: | _______________________ |

---

**<u>SCHEDULE 1</u>**

---

| | | |
|:---|:---|:---|
| ***Underwriter*** | **Total <br> Number <br> of <br> Firm <br> Shares <br> to be <br> Purchased** | **Number of<br> Additional<br> Option Shares<br> to be<br> Purchased if the<br> Over-<br> Allotment<br> Option is<br> Fully Exercised** |
| **_________________________** | [\*] | [\*] |
| **TOTAL** | [\*] | [\*] |

---

**<u>SCHEDULE 2-A</u>**

**Pricing Information**

Number of Firm Shares: [\*]

Number of Option Shares: [\*]

Public Offering Price per Firm Share: $[\*]

Public Offering Price per Option Share: $[\*]

Underwriting Discount per Firm Share: $[\*]

Underwriting Discount per Option Share: $[\*]

**<u>SCHEDULE 2-B</u>**

**Issuer General Use Free Writing Prospectuses**

**<u>SCHEDULE 2-C</u>**

**Written Testing-the-Waters Communications**

**<u>SCHEDULE 3</u>**

**List of Lock-Up Parties**

**Directors and Officers**

Yuji Sekino

Takeshi Seto

Takahiko Nakajima

Takashi Nishibori

Hironori Matsumiya

Masayoshi Takatsu

Yoshihito Arita

Hiroyuki Takamido

**Shareholders**

Recon Mark, Inc.

[\*]

**<u>EXHIBIT A</u>**

**Form of Lock-Up Agreement**

**Form of**

**Lock-Up Agreement**

[\*], 2025

_______________________

_______________________

 **_______________________**

**Re: <u>Proposed Public Offering by Gates Group Inc.</u>**

Ladies and Gentlemen:

The undersigned, a holder of securities of Gates Group Inc., a company organized in Japan (the "<u>Company</u>"), understands that ________________ (the "<u>Representative</u>") will act as the representative of the underwriters in carrying out an offering (the "<u>Offering</u>") of the Company's common shares, no par value (the "<u>Securities</u>"). In recognition of the benefit that the Offering will confer upon the undersigned, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with the Representative that, without the prior written consent of the Representative, during a period of six (6) months from the date on which the trading of the Securities commences on the NYSE American or on The Nasdaq Capital Market (the "<u>Lock-Up Period</u>"), the undersigned will not, without the prior written consent of the Representative, directly or indirectly (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any securities of the Company (collectively, the "<u>Lock-Up Securities</u>"), whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or file, or cause to be filed, any registration statement under the Securities Act of 1933, as amended, with respect to any of the foregoing or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities, whether any such swap or transaction described in clause (i) or (ii) above is to be settled by delivery of the Lock-Up Securities or such other securities, in cash or otherwise.

The Representative may in its sole discretion and at any time without notice release some or all of the shares subject to lock-up agreements prior to the expiration of the Lock-Up Period. When determining whether or not to release shares from the lock-up agreements, the Representative will consider, among other factors, the security holder's reasons for requesting the release, the number of shares for which the release is being requested and market conditions at the time.

Notwithstanding the foregoing, and subject to the conditions below, the undersigned may transfer the Lock-Up Securities without the prior written consent of the Representative as follows, provided that (1) the Representative receives a signed lock-up agreement for the balance of the Lock-Up Period from each donee, trustee or transferee, as the case may be, (2) any such transfer shall not involve a disposition for value, (3) such transfers are not required to be reported in any public report or filing with the Securities and Exchange Commission, or otherwise and (4) the undersigned does not otherwise voluntarily effect any public filing or report regarding such transfers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) as a bona fide gift or gifts (including but not limited to charitable gifts); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to any member of the immediate family of the undersigned or to a trust or other entity for the direct or indirect benefit of, or wholly-owned by, the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, "<u>immediate family</u>" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if the undersigned is a corporation, partnership, limited liability company, trust or other business entity (1) transfers to another corporation, partnership, limited liability company, trust or other business entity that is a direct or indirect affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933, as amended) of the undersigned or (2) distributions of common shares or any security convertible into or exercisable for common shares to limited partners, limited liability company members or stockholders of the undersigned; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) if the undersigned is a trust, transfers to the beneficiary of such trust; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) by will, other testamentary document or intestate succession; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement.

Furthermore, no provision in this letter shall be deemed to restrict or prohibit (1) transactions relating to Securities purchased in the Offering or acquired in open market transactions after the completion of Offering; and (2) the exercise or exchange by the undersigned of any option or warrant to acquire any common shares or options to purchase common shares, in each case for cash or on a "cashless" or "net exercise" basis, pursuant to any share option, share bonus or other share plan or arrangement; provided, however, that the underlying common shares shall continue to be subject to the restrictions on transfer set forth in this letter.

The undersigned further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this lock-up agreement during the Lock-Up Period, it will give written notice thereof to the Representative and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period has expired.

The undersigned understands that, if the Offering shall terminate or be terminated prior to payment for and delivery of the Securities, the undersigned shall be released from all obligations set forth herein.

The undersigned also agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of the Lock-Up Securities except in compliance with the foregoing restrictions.

The undersigned, whether or not participating in the Offering, understands that the Representative is proceeding with the Offering in reliance upon this lock-up agreement.

This lock-up agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.

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| |
|:---|
| Very truly yours, |
| (Print Name) |
| (Signature) |

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**<u>EXHIBIT B</u>**

**Form of Press Release**

## Exhibit 5.1

**Exhibit 5.1**

June 2, 2025

GATES GROUP Inc.

34F Sumitomo Fudosan Shinjuku Grand Tower

8-17-1 Nishishinjuku, Shinjuku-ku

Tokyo, 160-6101 Japan

Re: GATES GROUP Inc.

Ladies and Gentlemen:

We act as Japanese special counsel for GATES GROUP Inc., a corporation incorporated under the laws of Japan (the "**Company**"), in connection with the underwritten initial public offering and sale by the Company of certain new common shares of the Company (the "**New Shares**," and the common shares of the Company in general, the "**Shares**") of up to 1,150,000 Shares (including 150,000 Shares subject to the underwriters' over-allotment option), as described in the Company's Registration Statement on Form F-1 (File No. 333-283546) (including all exhibits thereto and as amended from time to time, the "**Registration Statement**"), as filed by the Company with the Securities and Exchange Commission in accordance with the Securities Act of 1933, as amended (the "**Securities Act**") . The Shares are to be sold by the Company pursuant to an underwriting agreement (the "**Underwriting Agreement**") by and between the Company and underwriter (the "**Underwriter**") named therein, the form of which is filed as Exhibit 1.1 to the Registration Statement.

For the purposes of this opinion letter, we have examined originals and/or photostatic copies of such documents as we have deemed relevant. In conducting our examination, we have assumed, without independent verification, the legitimacy of all signatures, the legal capacity of each party thereto, the authenticity of all the documents submitted to us as originals, and the conformity to the originals of all the documents submitted to us. In addition, in rendering this opinion letter, we have assumed that the New Shares will be offered in the manner and on the terms and conditions described or referred to in the Registration Statement.

This opinion letter is limited solely to the matters expressly set forth herein. Our opinions expressed herein are limited only to the laws of Japan, and to be governed by and construed in accordance with the laws of Japan and is limited to and is given on the basis of the current law and practice in Japan. We do not purport to express or imply any opinion with respect to the applicability or effect of the laws of any other jurisdiction. We express no opinion concerning, and assume no responsibility as to, laws or judicial decisions related to any United States federal laws, rules or regulations, including but not limited to any United States federal securities laws, rules or regulations, or any United States state securities or "blue sky" laws, rules or regulations.

Based upon and subject to the foregoing, and having regard to legal considerations and other information we have deemed relevant, we are of the view that the New Shares have been duly and validly authorized, and that when the New Shares are issued and delivered in exchange for payment in full to the Company of all considerations required therefor, in the manner and on the terms and conditions described in the Registration Statement and in accordance with the proceedings described therein, all the New Shares will be duly and validly issued, fully paid and non-assessable.

We hereby consent to the reference to our firm's name under the caption "Legal Matters" in the Prospectus included in the Registration Statement and the use of this opinion letter as an exhibit to the Registration Statement. Despite such consent, we do not admit that we come within the category of persons where consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission.

Very truly yours,

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| |
|:---|
| */s/ Hiroki Yamada* |
| Hiroki Yamada |
| An Attorney of One Asia Lawyers |

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## Exhibit 10.14

**Exhibit 10.14**

**Agreement on Waiver of Stock Acquisition Rights**

HeartCore Financial, Inc. (hereinafter referred to as the "Rights Holder") and GATES GROUP Inc. (hereinafter referred to as the "Issuing Company") hereby enter into this agreement (hereinafter referred to as the "Agreement") regarding the stock acquisition rights of the Issuing Company (hereinafter referred to as the "Stock Acquisition Rights") held by the Rights Holder, as set forth below.

<u>Name of the stock acquisition rights to be waived</u> <u>Number of stock acquisition rights to be waived</u> <br> Second Stock Acquisition Rights 337,800

Article 1 (Waiver of Stock Acquisition Rights)

The Rights Holder shall waive all of the Stock Acquisition Rights it holds as of today and agrees that the declaration of such waiver is irrevocable.

Article 2 (Costs Related to the Waiver)

The Rights Holder and the Issuing Company agree that any and all costs arising from or related to the Rights Holder's waiver of the Stock Acquisition Rights (including registration costs) shall be borne entirely by the Issuing Company.

Article 3 (Governing Law and Agreed Jurisdiction)

The Agreement shall be governed by and interpreted in accordance with the laws of Japan. Furthermore, any disputes arising between the parties in connection with the Agreement shall be subject to the exclusive jurisdiction of the Tokyo District Court as the court of first instance.

Article 4 (Consultation)

Any matters not stipulated in the Agreement or any ambiguities regarding its content shall be resolved through sincere consultation between the parties.

As evidence of the execution of the Agreement, two copies of this document shall be prepared, and after being signed and sealed, each party shall retain one original copy.

January 22, 2025

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| | |
|:---|:---|
| (Right Holder) | */s/ Sumitaka Yamamoto* |
| 19303 Chablis Ct, Saratoga, CA 95070 |  |
| HeartCore Financial, Inc. |  |
| Director Sumitaka Yamamoto |  |
| (Issuing Company) | /*s/ Yuji Sekino* |
| 8-17-1 Nishi-Shinjuku, Shinjuku-ku |  |
| 34F Sumitomo Fudosan Shinjuku Grand Tower |  |
| GATES GROUP Inc. |  |
| Yuji Sekino, Representative Director |  |

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## Exhibit 23.1

**Exhibit 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We consent to the inclusion in this Pre-Effective Amendment No. 5 to Registration Statement (File No. 333-283546) on Form F-1 of our report dated June 2, 2025 with respect to the audited consolidated financial statements of GATES GROUP Inc. for the years ended December 31, 2024 and 2023.

We also consent to the references to us under the heading "Experts" in such Registration Statement.

---

| |
|:---|
| */s/ MaloneBailey, LLP* |
| www.malonebailey.com |
| Tokyo, Japan |
| June 2, 2025 |

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