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LEAD REAL ESTATE CO., LTD

LEAD REAL ESTATE CO., LTDLREEarnings & Financial Report

Nasdaq · Industrials

Vale Group LLC, doing business as Vulcan Real Estate, is an American private holding company based in Seattle, Washington. The company was founded as Vulcan Northwest in 1986 by Microsoft co-founder Paul Allen and his sister Jody Allen to establish and oversee the family's diverse business activities and philanthropic endeavors. It includes the Paul G. Allen Estate and Trust and advises the Paul G. Allen Family Foundation.

What changed in LEAD REAL ESTATE CO., LTD's 20-F — 2023 vs 2024

Top changes in LEAD REAL ESTATE CO., LTD's 2024 20-F

214 paragraphs added · 217 removed · 172 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

38 edited+11 added−14 removed217 unchanged
Our international operations may also fail due to other risks inherent in foreign operations, including: ● varied, unfamiliar, unclear, and changing legal and regulatory restrictions, including different legal and regulatory standards applicable to real estate development and sales; ● compliance with multiple and potentially conflicting regulations in Asia and North America; ● difficulties in staffing and managing foreign operations; ● longer collection cycles; ● differing intellectual property laws that may not provide sufficient protections for our intellectual property; ● proper compliance with local tax laws, which can be complex and may result in unintended adverse tax consequences; ● localized spread of infection resulting from the COVID-19 pandemic, including any economic downturns and other adverse impacts; ● difficulties in enforcing agreements through foreign legal systems; ● impact of different real estate trends in different regions; ● fluctuations in currency exchange rates that may affect real property demand and may adversely affect the profitability in JPY of real properties provided by us in foreign markets where payment for our real properties is made in the local currency; ● changes in general economic, health, and political conditions in countries where our properties are sold; ● potential labor strike, lockouts, work slowdowns, and work stoppages; and 12 Table of Contents ● different consumer preferences and requirements in specific international markets.
Our international operations may also fail due to other risks inherent in foreign operations, including: ● varied, unfamiliar, unclear, and changing legal and regulatory restrictions, including different legal and regulatory standards applicable to real estate development and sales; ● compliance with multiple and potentially conflicting regulations in Asia and North America; ● difficulties in staffing and managing foreign operations; ● longer collection cycles; ● differing intellectual property laws that may not provide sufficient protections for our intellectual property; ● proper compliance with local tax laws, which can be complex and may result in unintended adverse tax consequences; ● localized spread of infection resulting from the COVID-19 pandemic, including any economic downturns and other adverse impacts; ● difficulties in enforcing agreements through foreign legal systems; ● impact of different real estate trends in different regions; 11 Table of Contents ● fluctuations in currency exchange rates that may affect real property demand and may adversely affect the profitability in JPY of real properties provided by us in foreign markets where payment for our real properties is made in the local currency; ● changes in general economic, health, and political conditions in countries where our properties are sold; ● potential labor strike, lockouts, work slowdowns, and work stoppages; and ● different consumer preferences and requirements in specific international markets.
Our hotel operations are subject to a number of business, financial, and operating risks inherent to the hospitality industry, including: ● competition from hospitality providers in the localities where we operate our hotels; ● relationships with business partners; ● increases in costs due to inflation or other factors that may not be fully offset by increases in revenue in our business, as well as increases in overall prices and the prices of our offerings due to inflation, which could weaken consumer demand for travel and the other products we offer and adversely affect our revenue; ● the ability of third-party Internet and other travel intermediaries who sell our hotel services to guests to attract and retain customers; ● cyclical fluctuations and seasonal volatility in the hospitality industry; ● changes in desirability of geographic regions of our hotels, changes in geographic concentration of our operations and customers, and shortages of desirable locations for development; ● changes in the supply and demand for hotel services, including rooms, food and beverage, and other products and services; ● changes in governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues); and ● political instability, pandemics (such as the COVID-19 pandemic), geopolitical conflict, heightened travel security measures, and other factors that may affect travel.
Our hotel operations are subject to a number of business, financial, and operating risks inherent to the hospitality industry, including: ● competition from hospitality providers in the localities where we operate our hotels; ● relationships with business partners; ● increases in costs due to inflation or other factors that may not be fully offset by increases in revenue in our business, as well as increases in overall prices and the prices of our offerings due to inflation, which could weaken consumer demand for travel and the other products we offer and adversely affect our revenue; ● the ability of third-party Internet and other travel intermediaries who sell our hotel services to guests to attract and retain customers; ● cyclical fluctuations and seasonal volatility in the hospitality industry; ● changes in desirability of geographic regions of our hotels, changes in geographic concentration of our operations and customers, and shortages of desirable locations for development; ● changes in the supply and demand for hotel services, including rooms, food and beverage, and other products and services; ● changes in governmental policies (including in areas such as trade, travel, immigration, healthcare, and related issues); and 7 Table of Contents ● political instability, pandemics (such as the COVID - 19 pandemic), geopolitical conflict, heightened travel security measures, and other factors that may affect travel.
In addition, the depositary may refuse to deliver, transfer, or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason. 19 Table of Contents We may amend the deposit agreement without consent from holders of ADSs and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or cancelling and withdrawing the underlying Ordinary Shares.
In addition, the depositary may refuse to deliver, transfer, or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason. 18 Table of Contents We may amend the deposit agreement without consent from holders of ADSs and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or cancelling and withdrawing the underlying Ordinary Shares.
The deposit agreement governing the ADSs representing our Ordinary Shares provides that, to the fullest extent permitted by applicable law, owners and holders of ADSs irrevocably waive the right to a jury trial for any claim that they may have against us or the depositary arising from or relating to our Ordinary Shares, the ADSs, or the deposit agreement, including any claim under the U.S. federal securities laws. 18 Table of Contents However, ADS owners and holders are not deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.
The deposit agreement governing the ADSs representing our Ordinary Shares provides that, to the fullest extent permitted by applicable law, owners and holders of ADSs irrevocably waive the right to a jury trial for any claim that they may have against us or the depositary arising from or relating to our Ordinary Shares, the ADSs, or the deposit agreement, including any claim under the U.S. federal securities laws. 17 Table of Contents However, ADS owners and holders are not deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder.
This will make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 21 Table of Contents Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and the ADSs.
This will make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. 20 Table of Contents Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and the ADSs.
We may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations. 20 Table of Contents Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.
We may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations. 19 Table of Contents Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.
We may also be required to incur expenses to restore or replace damaged properties in inventory or other facilities we rely on to operate our business. 13 Table of Contents Japan is earthquake-prone and has historically experienced numerous large earthquakes that have resulted in extensive property damage, such as the earthquake on March 11, 2011, or the Great East Japan Earthquake, and the earthquakes that occurred in Kumamoto in April 2016.
We may also be required to incur expenses to restore or replace damaged properties in inventory or other facilities we rely on to operate our business. 12 Table of Contents Japan is earthquake-prone and has historically experienced numerous large earthquakes that have resulted in extensive property damage, such as the earthquake on March 11, 2011, or the Great East Japan Earthquake, and the earthquakes that occurred in Kumamoto in April 2016.
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. 17 Table of Contents As holders of ADSs, you may have fewer rights than holders of our Ordinary Shares and must act through the depositary to exercise those rights.
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. 16 Table of Contents As holders of ADSs, you may have fewer rights than holders of our Ordinary Shares and must act through the depositary to exercise those rights.
Following the completion of our real estate development projects, we may be liable for unforeseen losses, damages, or injuries to third parties at properties we own or sell arising from construction defects. 14 Table of Contents Fluctuation of the value of the Japanese yen against certain foreign currencies may have a material adverse effect on the results of our operations.
Following the completion of our real estate development projects, we may be liable for unforeseen losses, damages, or injuries to third parties at properties we own or sell arising from construction defects. 13 Table of Contents Fluctuation of the value of the Japanese yen against certain foreign currencies may have a material adverse effect on the results of our operations.
If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of the ADSs and the trading volume to decline. 15 Table of Contents The market price of the ADSs may be volatile or may decline regardless of our operating performance.
If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of the ADSs and the trading volume to decline. 14 Table of Contents The market price of the ADSs may be volatile or may decline regardless of our operating performance.
However, it is possible that, for our 2023 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders.
However, it is possible that, for our 2024 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders.
We may be unable to complete our evaluation testing and any required remediation in a timely manner. 16 Table of Contents During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies in our internal control over financial reporting.
We may be unable to complete our evaluation testing and any required remediation in a timely manner. 15 Table of Contents During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies in our internal control over financial reporting.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ABOUT THE PFIC RULES, THE POTENTIAL APPLICABILITY OF THESE RULES TO THE COMPANY CURRENTLY AND IN THE FUTURE, AND THEIR FILING OBLIGATIONS IF THE COMPANY IS A PFIC. ​ 22 Table of Contents
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ABOUT THE PFIC RULES, THE POTENTIAL APPLICABILITY OF THESE RULES TO THE COMPANY CURRENTLY AND IN THE FUTURE, AND THEIR FILING OBLIGATIONS IF THE COMPANY IS A PFIC. 21 Table of Contents
Any of these factors could have a material adverse impact on results of our operations or financial condition. Rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability of our residential leasing business.
Any of these factors could have a material adverse impact on results of our operations or financial condition. 8 Table of Contents Rent control laws and other regulations that limit our ability to increase rental rates may negatively impact our rental income and profitability of our residential leasing business.
Our business could be materially and adversely disrupted by an epidemic or pandemic (such as the COVID-19 pandemic), or similar public threat, or fear of such an event, and the measures that the governmental authorities implement to address it.
Our business could be materially and adversely disrupted by an epidemic or pandemic, or similar public threat, or fear of such an event, and the measures that the governmental authorities implement to address it.
Based on our operations and the composition of our assets, we do not believe we were a PFIC for our 2022 taxable year.
Based on our operations and the composition of our assets, we do not believe we were a PFIC for our 2023 taxable year.
We are subject to various laws and regulations, including those regarding the leasing, purchasing, and selling of real property, and violations of, or changes to, such laws and regulations may adversely affect our business.
We are subject to various laws and regulations, including those regarding the leasing, purchasing, and selling of real property, and violations of, or changes to, such laws and regulations may adversely affect our business. The businesses we engage in are subject to various laws and regulations in Japan.
These labor and raw material shortages can be more severe during periods of strong demand for housing, during periods following natural disasters that have a significant impact on existing residential and commercial structures, or a result of broader economic disruptions, such as the COVID-19 pandemic.
These labor and raw material shortages can be more severe during periods of strong demand for housing, during periods following natural disasters that have a significant impact on existing residential and commercial structures, or a result of broader economic disruptions.
If we cannot satisfy the continued listing requirements and other rules of Nasdaq, the ADSs may be delisted, which could negatively impact the price of the ADSs and your ability to sell them. In order to maintain our listing on Nasdaq, we are required to comply with the continued listing requirements and other rules of Nasdaq.
As a result, the ADSs may be delisted, which could negatively impact the price of the ADSs and your ability to sell them. In order to maintain our listing on Nasdaq, we are required to comply with the continued listing requirements and other rules of Nasdaq.
The businesses we engage in are subject to various laws and regulations in Japan. 10 Table of Contents We are subject to the Building Lots and Buildings Transaction Business Act of Japan (Act No. 176 of 1952, as amended), or the Building Lots and Buildings Transaction Business Act, which regulates the lease, sale, and purchase of buildings and building lots or brokerage of sale and purchase or leasing thereof and which requires a license from the Minister of Land, Infrastructure, Transport, and Tourism of Japan or the governor of a prefecture, as the case may be.
We are subject to the Building Lots and Buildings Transaction Business Act of Japan (Act No. 176 of 1952, as amended), or the Building Lots and Buildings Transaction Business Act, which regulates the lease, sale, and purchase of buildings and building lots or brokerage of sale and purchase or leasing thereof and which requires a license from the Minister of Land, Infrastructure, Transport, and Tourism of Japan or the governor of a prefecture, as the case may be.
Consistent with corporate governance practices in Japan, we do not have a standalone compensation committee or nomination and corporate governance committee of our board. As a result of these exemptions, investors would have less protection than they would have if we were a domestic issuer.
Consistent with corporate governance practices in Japan, we do not have a standalone compensation committee or nomination and corporate governance committee of our board. As a result of these exemptions, investors would have less protection than they would have if we were a domestic issuer. We are currently not in compliance with the continued listing requirements of Nasdaq.
We may be unable to successfully develop and maintain our Glocaly platform, which could adversely impact our business, prospects, and results of operations. In addition to functioning as an interactive media platform, our Glocaly platform has the potential to expand into a multilingual and seamless transaction platform targeting both domestic and foreign buyers for transacting condominiums in Japan.
Failure to properly maintain the platform could adversely impact our business, prospects, and results of operations. In addition to functioning as an interactive media platform, our Glocaly platform has the potential to expand into a multilingual and seamless transaction platform targeting both domestic and foreign buyers for transacting condominiums in Japan.
The number of properties that we can develop or complete during any particular period is limited due to the substantial capital required for land acquisitions and construction, as well as the lengthy development periods required before positive cash flows may be generated. 7 Table of Contents The recognition of our real estate revenue and costs relies upon our estimation of total project sales value and costs.
The number of properties that we can develop or complete during any particular period is limited due to the substantial capital required for land acquisitions and construction, as well as the lengthy development periods required before positive cash flows may be generated.
To date, we have funded our land acquisitions for single-family home development primarily through short-term bank loans, typically with terms ranging from three to six months, and we have funded our land acquisitions for condominium development using cash generated from our operations. As of June 30, 2023, we had approximately JPY5,899,155 thousand (approximately $40,833 thousand) in short-term borrowings outstanding.
To date, we have funded our land acquisitions for single-family home development primarily through short-term bank loans, typically with terms ranging from three to six months, and we have funded our land acquisitions for condominium development using long-term loans from local banks. As of June 30, 2024, we had approximately JPY4,923,796 thousand (approximately $30,605 thousand) in short-term borrowings outstanding.
In the event of an economic downturn, home purchase habits could be adversely affected and we could experience lower than expected net sales, which could force us to delay or slow our growth strategy and have a material adverse effect on our business, financial condition, profitability, and cash flows. 11 Table of Contents In recent years, the economic indicators in Japan have shown mixed signs, and future growth of the Japanese economy is subject to many factors beyond our control.
In the event of an economic downturn, home purchase habits could be adversely affected and we could experience lower than expected net sales, which could force us to delay or slow our growth strategy and have a material adverse effect on our business, financial condition, profitability, and cash flows.
As a result of the geographic concentration of our business, we face a greater risk of a negative impact on our business, financial condition, results of operations, and prospects in the event that any of the areas in which we develop real properties is more severely impacted by any such adverse condition, as compared to other areas or countries.
These risks include: ● changes in economic conditions and unemployment rates; ● changes in laws and regulations; ● a decline in the number of home purchasers; ● changes in competitive environment; and ● natural disasters. 10 Table of Contents As a result of the geographic concentration of our business, we face a greater risk of a negative impact on our business, financial condition, results of operations, and prospects in the event that any of the areas in which we develop real properties is more severely impacted by any such adverse condition, as compared to other areas or countries.
During the fiscal year ended June 30, 2021, we repaid JPY7,626,187 thousand (approximately $56,203 thousand) and renewed JPY8,046,791 thousand (approximately $59,302 thousand) of our short-term borrowings. We expect that we will be able to renew all of the existing bank loans upon their maturity based on our past experience and outstanding credit history.
During the fiscal year ended June 30, 2022, we repaid JPY9,175,148 thousand (approximately $67,618 thousand) and renewed JPY9,506,180 thousand (approximately $70,058 thousand) of our short-term borrowings. We expect that we will be able to renew all of the existing bank loans upon their maturity based on our past experience and outstanding credit history.
However, we do not have insurance coverage against potential losses or damages with respect to our properties before their delivery to customers. Our contractors may not be sufficiently insured themselves or have the financial ability to absorb any losses that arise with respect to our projects or pay our claims.
Our contractors may not be sufficiently insured themselves or have the financial ability to absorb any losses that arise with respect to our projects or pay our claims.
If we are unable to adequately protect our brand, trademarks, and other intellectual property rights, our reputation may be harmed and our business may be adversely affected. We do not have sufficient insurance to cover potential losses and claims. We currently maintain fire insurance and insurance coverage against liability from tortious acts or other personal injuries on our project sites.
If we are unable to adequately protect our brand, trademarks, and other intellectual property rights, our reputation may be harmed and our business may be adversely affected. 9 Table of Contents We do not have sufficient insurance to cover potential losses and claims.
Our business, results of operations, and financial condition would be adversely affected, if a significant number of our tenants seek early termination or fail to meet their obligations in connection with the lease. 9 Table of Contents In addition, tenants may use our apartments for illegal purposes or engage in illegal activities in our apartments, damage or make unauthorized structural changes to our apartments, refuse to leave the apartments upon default or termination of the lease, disturb nearby tenants with noise, trash, odors, or eyesores, sublet our apartments in violation of our lease, or permit unauthorized persons to live in our apartments.
In addition, tenants may use our apartments for illegal purposes or engage in illegal activities in our apartments, damage or make unauthorized structural changes to our apartments, refuse to leave the apartments upon default or termination of the lease, disturb nearby tenants with noise, trash, odors, or eyesores, sublet our apartments in violation of our lease, or permit unauthorized persons to live in our apartments.
An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, along with any associated economic and social instability or distress, have a material adverse impact on our business, prospects, liquidity, financial condition, and results of operations. 6 Table of Contents On March 11, 2020, the World Health Organization declared the outbreak of the COVID-19 virus to be a global pandemic, and in April 2020, the Japanese government issued the Declaration of a State of Emergency, whereby the Japanese government ordered non-essential activities and businesses across Japan to close as a preemptive safeguard against the COVID-19 pandemic.
An epidemic, pandemic, or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, along with any associated economic and social instability or distress, have a material adverse impact on our business, prospects, liquidity, financial condition, and results of operations.
During a period of overall economic weakness, if we are unable to meaningfully decrease these costs as demand for our hotel services decreases, our business operations and financial performance and results may be adversely affected. 8 Table of Contents We are subject to risks inherent in the residential leasing business.
In addition, many of the expenses associated with our business, including personnel costs, interest, rent, property taxes, insurance, and utilities, are relatively fixed. During a period of overall economic weakness, if we are unable to meaningfully decrease these costs as demand for our hotel services decreases, our business operations and financial performance and results may be adversely affected.
During the fiscal year ended June 30, 2023, we repaid JPY11,409,670 thousand (approximately $72,795 thousand) and renewed JPY10,947,410 thousand (approximately $78,976 thousand) of our short-term borrowings. As of June 30, 2022, we had approximately JPY6,361,415 thousand (approximately $46,881 thousand) in short-term borrowings outstanding.
During the fiscal year ended June 30, 2024, we repaid JPY12,700,984 thousand (approximately $78,947 thousand) and renewed JPY12,531,641 thousand (approximately $77,894 thousand of our short-term borrowings. As of June 30, 2023, we had approximately JPY5,093,139 thousand (approximately $35,254 thousand) in short-term borrowings outstanding.
As of June 30, 2023, we had approximately JPY5,899,155 thousand (approximately $40,833 thousand) in short-term borrowings and JPY5,437,668 thousand (approximately $37,639 thousand) in long-term borrowings outstanding.
As of June 30, 2024, we had approximately JPY4,923,796 thousand (approximately $30,605 thousand) in short-term borrowings and JPY6,489,536 thousand (approximately $40,338 thousand) in long-term borrowings outstanding.
During the fiscal year ended June 30, 2022, we repaid JPY7,535,860 thousand (approximately $55,537 thousand) and renewed JPY9,446,200 thousand (approximately $69,616 thousand) of our short-term borrowings. As of June 30, 2021, we had approximately JPY4,451,075 thousand (approximately $32,803 thousand) in short-term borrowings outstanding.
During the fiscal year ended June 30, 2023, we repaid JPY10,293,315 thousand (approximately $71,249 thousand) and renewed JPY10,660,041 thousand (approximately $73,787 thousand) of our short-term borrowings. As of June 30, 2022, we had approximately JPY4,726,413 thousand (approximately $34,832 thousand) in short-term borrowings outstanding.
The current administration of Prime Minster Fumio Kishida and the former administration of Prime Minister Yoshihide Suga and Prime Minister Shinzo Abe have introduced policies to combat deflation and promote economic growth. In addition, the Bank of Japan introduced a plan for quantitative and qualitative monetary easing in April 2013 and announced a negative interest rate policy in January 2016.
In addition, the Bank of Japan introduced a plan for quantitative and qualitative monetary easing in April 2013 and announced a negative interest rate policy in January 2016. However, the long-term impact of these policy initiatives on Japan’s economy remains uncertain.
For the fiscal years ended June 30, 2023, 2022, and 2021, revenue generated from sales of our condominiums was JPY7,270,200 thousand (approximately $50,323 thousand), JPY5,207,600 thousand (approximately $39,508 thousand), and JPY1,583,643 thousand (approximately $1,204 thousand), accounting for approximately 42%, 36%, and 14% of our total revenue, respectively.
For the fiscal years ended June 30, 2024, 2023, and 2022, revenue generated from sales of our condominiums was JPY11,811,213 thousand (approximately $73,416 thousand), JPY7,199,741 thousand (approximately $49,836 thousand), and JPY5,162,292 thousand (approximately $38,045 thousand), accounting for approximately 62%, 41%, and 35% of our total revenue, respectively.
However, our Glocaly platform is still in its nascent stage and has not generated revenue as of the date of this annual report. Therefore, it may experience volatility in performance as we continue to improve and upgrade the platform.
As of the date of this annual report, Glocaly has not generated revenue, though we have seen a growing number of client requests for property referrals through the platform. However, we cannot guarantee that Glocaly ’s performance will remain stable as we continue to improve and upgrade the platform.
Removed
This adversely impacted many business sectors across Japan, including the sectors in which we operate, especially in Tokyo. The COVID-19 pandemic has not materially impacted our business operations and operating results. Core demand for single-family homes and condominiums remains high, which is reflected in our higher revenue growth and operating profits.
Added
For example, pandemics like COVID-19 may impact our business by disrupting supply chains and inflating raw material and labor costs. During the COVID-19 pandemic, we managed these challenges by passing increased costs to customers through higher average sale prices and managing increases in our construction costs through fixed cost subcontractor arrangements, which helped maintain our margins.
Removed
On the supply and construction side, however, our business has faced inflation in the prices of raw materials and labor costs associated with supply chain shortages resulting from the pandemic, which may adversely impact our margins.
Added
Although COVID-19 has not materially impacted our operations during the fiscal years ended June 30, 2024, 2023, and 2022, there remains a risk that future disruptions, whether from another pandemic, economic downturns, or other external factors, could lead to supply chain issues, increased costs, or broader operational challenges.
Removed
As of the date of this annual report, we have passed the rising costs through to our customers in the form of higher average sale prices and also mitigated increases in our construction costs through fixed cost subcontractor arrangements, where the subcontractor bears the cost inflation, thereby preserving our margins.
Added
We cannot guarantee that we will be able to fully mitigate these adverse impacts in the future. 6 Table of Contents We may be unable to complete our property development projects on time, or at all.
Removed
Although we currently expect this trend to continue for future supply side driven inflationary pressures, we cannot guarantee that we will be able to pass all cost increases to our customers and subcontractors or avoid adverse impacts on our margins.
Added
We are subject to risks inherent in the residential leasing business.
Removed
See “—A shortage of building materials or labor, or increases in their costs, could delay home construction or increase its cost, which could materially and adversely affect us.” In addition, the COVID-19 pandemic has resulted in changes to the way we conduct our real estate development and sales, including holding remote meetings with customers and taking certain precautionary measures for customers who visit our offices (such as using alcohol disinfectant).
Added
Our business, results of operations, and financial condition would be adversely affected, if a significant number of our tenants seek early termination or fail to meet their obligations in connection with the lease.
Removed
While we continue to assess the COVID-19 pandemic, at this time we cannot estimate with any degree of certainty the full impact of the COVID-19 pandemic on our financial condition and future results of operations.
Added
We currently maintain fire insurance and insurance coverage against liability from tortious acts or other personal injuries on our project sites. However, we do not have enough insurance coverage against potential losses or damages with respect to our properties before their delivery to customers.
Removed
The ultimate impacts of the COVID-19 pandemic and related mitigation efforts will depend on future developments, including the duration of the COVID-19 pandemic, the acceptance and effectiveness of vaccines, the impact of COVID-19 and related containment and mitigation measures on our customers, contractors, and employees, workforce availability, and the timing and extent to which normal economic and operating conditions resume.
Added
In recent years, the economic indicators in Japan have shown mixed signs, and future growth of the Japanese economy is subject to many factors beyond our control. The former administration of Prime Minster Fumio Kishida, Prime Minister Yoshihide Suga and Prime Minister Shinzo Abe have introduced policies to combat deflation and promote economic growth.
Removed
To the extent that the COVID-19 pandemic adversely impacts our business, results of operations, liquidity, or financial condition, it may also have the effect of increasing many of the other risks described in this “Item 3. Key Information—D. Risk Factors” section. We may be unable to complete our property development projects on time, or at all.
Added
On August 12, 2024, we received a letter from the Listing Qualifications Department of Nasdaq notifying us that we are not in compliance with the minimum market value of publicly held shares (“MVPHS”) requirement as set forth in Nasdaq Listing Rule 5450(b)(1)(C) for continued listing on Nasdaq.
Removed
We recognize our real estate revenue based on the full accrual method and the percentage of completion method depending on the estimated project construction period. Under both methods, revenue and costs are calculated based on an estimation of total project costs and total project revenue, which are revised on a regular basis as the work progresses.
Added
In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we have been provided 180 calendar days, or until February 10, 2025, to regain compliance with Nasdaq Listing Rule 5450(b)(1)(C). To regain compliance, our MVPHS needs to close at $5,000,000 or more for a minimum of 10 consecutive business days at any time during the compliance period.
Removed
Any material deviation between actual and estimated total project sales and costs may result in an increase, a reduction, or an elimination of reported revenue or costs from period to period, which will affect our net income.
Added
In the event that we do not regain compliance by February 10, 2025, Nasdaq will provide written notification to us that the ADSs are subject to delisting. At that time, we may appeal the relevant delisting determination to a hearings panel pursuant to the procedures set forth in the applicable Nasdaq Listing Rules.
Removed
In addition, many of the expenses associated with our business, including personnel costs, interest, rent, property taxes, insurance, and utilities, are relatively fixed.
Added
However, there can be no assurance that, if we do appeal the delisting determination by Nasdaq to the hearings panel, such an appeal would be successful. Alternatively, we may consider applying to transfer our securities to the Nasdaq Capital Market.
Removed
These risks include: ● changes in economic conditions and unemployment rates; ● changes in laws and regulations; ● a decline in the number of home purchasers; ● changes in competitive environment; and ● natural disasters.
Removed
However, the long-term impact of these policy initiatives on Japan’s economy remains uncertain.
Removed
If we are unable to satisfy Nasdaq criteria for maintaining our listing, the ADSs could be subject to delisting.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

77 edited+8 added−9 removed104 unchanged
We currently expect our Glocaly platform to generate revenue by December 2023, from the following aspects: (i) transactional spread (commission) paid by the sellers who utilize our platform; (ii) membership fees paid by sellers who subscribe and list properties on our platform; (iii) advertising fees from selling advertisement space and banners on our platform; and (iv) charges for other value-added services, including transaction services and interactive media services.
We currently expect our Glocaly platform to generate revenue by December 2025, from the following aspects: (i) transactional spread (commission) paid by the sellers who utilize our platform; (ii) membership fees paid by sellers who subscribe and list properties on our platform; (iii) advertising fees from selling advertisement space and banners on our platform; and (iv) charges for other value-added services, including transaction services and interactive media services.
In connection with the IPO, the ADSs began trading on the Nasdaq Global Market under the symbol “LRE” on September 27, 2023. ​ The following chart illustrates our corporate structure as of the date of this annual report. 23 Table of Contents * Indicates less than 1% Notes: all percentages reflect the equity interests held by each of our shareholders.
In connection with the IPO, the ADSs began trading on the Nasdaq Global Market under the symbol “LRE” on September 27, 2023. ​ 22 Table of Contents The following chart illustrates our corporate structure as of the date of this annual report. * Indicates less than 1% Notes: all percentages reflect the equity interests held by each of our shareholders.
Based on our analysis, we have concluded that Sojiya Japan and LRE Cayman are our variable interest entities under Accounting Standards Codification 810-10-05-08A in the fiscal years ended June 30, 2023, 2022, and 2021. See our consolidated financial statements and related notes included elsewhere in this annual report.
Based on our analysis, we have concluded that Sojiya Japan and LRE Cayman are our variable interest entities under Accounting Standards Codification 810-10-05-08A in the fiscal years ended June 30,2024, 2023, and 2022. See our consolidated financial statements and related notes included elsewhere in this annual report.
Lead Real Estate has also been qualified and authorized to transact intrastate business in California since Decmeber 2014. In January 2020, together with Mr. Nagahara, we established Sojiya Japan, as a joint-stock corporation with limited liability in Japan, for the provision of cleaning services for our properties. Lead Real Estate and Mr.
Lead Real Estate has also been qualified and authorized to transact intrastate business in California since December 2014. In January 2020, together with Mr. Nagahara, we established Sojiya Japan, as a joint-stock corporation with limited liability in Japan, for the provision of cleaning services for our properties. Lead Real Estate and Mr.
We outsource our design work to reputable third-party design firms. Our internal project management team, with eight employees as of June 30, 2023, works closely with project managers as well as external designers and architects to ensure that our designs comply with Japanese laws and regulations, and meet our design and other project objectives.
We outsource our design work to reputable third-party design firms. Our internal project management team, with eight employees as of June 30, 2024, works closely with project managers as well as external designers and architects to ensure that our designs comply with Japanese laws and regulations, and meet our design and other project objectives.
In addition, we enter into confidentiality agreements with our employees to protect our intellectual property rights. In addition to our full-time employees, we had two, one, and one independent contractors as of June 30, 2023, 2022, and 2021, respectively. These independent contractors are primarily responsible for planning and development of our projects.
In addition, we enter into confidentiality agreements with our employees to protect our intellectual property rights. In addition to our full-time employees, we had two, two, and one independent contractors as of June 30, 2024, 2023, and 2022, respectively. These independent contractors are primarily responsible for planning and development of our projects.
Specifically, we received the Good Design Award for our Excellence Building Futako-Tamagawa issued by the Japan Institute of Design Promotion in 2020. Easy access to land parcels as a result of our long operating history and strong brand awareness As a real estate developer, we strategically focus on prime locations in Tokyo, Kanagawa prefecture, and Sapporo.
Specifically, we received the Good Design Award for our Excellence Building Futako-Tamagawa issued by the Japan Institute of Design Promotion in 2020. 24 Table of Contents Easy access to land parcels as a result of our long operating history and strong brand awareness As a real estate developer, we strategically focus on prime locations in Tokyo, Kanagawa prefecture, and Sapporo.
On September 29, 2023, we closed our initial public offering (the “IPO”) of 1,143,0900 ADSs at a price to the public of $7.00 per ADS. Each ADS represents one ordinary share of the Company.
On September 29, 2023, we closed our initial public offering (the “IPO”) of 1,143,000 ADSs at a price to the public of $7.00 per ADS. Each ADS represents one ordinary share of the Company.
Our internal project management team monitors the progress and quality of the design firms to ensure that they meet our requirements. Marketing and Sales We maintain an initial bid list of customers who have high intent of purchasing from us. We also identify customers through introduction by real estate agencies.
Our internal project management team monitors the progress and quality of the design firms to ensure that they meet our requirements. 29 Table of Contents Marketing and Sales We maintain an initial bid list of customers who have high intent of purchasing from us. We also identify customers through introduction by real estate agencies.
We have an internal project management team that organizes timelines and coordinates all external parties and activities (including design). 29 Table of Contents Our project planning and design process includes concept and architectural design, construction and engineering design, budgeting, and financial analysis and projections. We believe careful planning is essential to control costs, quality, and timing of our projects.
We have an internal project management team that organizes timelines and coordinates all external parties and activities (including design). Our project planning and design process includes concept and architectural design, construction and engineering design, budgeting, and financial analysis and projections. We believe careful planning is essential to control costs, quality, and timing of our projects.
Our Competitive Strengths We believe the following competitive strengths are essential for our success and differentiate us from our competitors: Developer of luxury residential properties in prime locations across Tokyo, Kanagawa prefecture, and Sapporo We are a real estate developer in Japan. Our revenue increased approximately 387% in the past 10 years.
Our Competitive Strengths We believe the following competitive strengths are essential for our success and differentiate us from our competitors: Developer of luxury residential properties in prime locations across Tokyo, Kanagawa prefecture, and Sapporo We are a real estate developer in Japan. Our revenue increased approximately 327.4% in the past 10 years.
During the fiscal years ended June 30, 2023, 2022, and 2021, we cooperated with 15, 15, and 12 third-party design firms, respectively. In selecting external design firms, we consider, among other things, their reputation for reliability and quality, their track record with us, the design proposed, and the price quoted.
During the fiscal years ended June 30, 2024, 2023, and 2022, we cooperated with 15, 15, and 15 third-party design firms, respectively. In selecting external design firms, we consider, among other things, their reputation for reliability and quality, their track record with us, the design proposed, and the price quoted.
This law also requires real estate traders to employ, or otherwise enlist the services of, a certain number of qualified and registered real estate transaction managers. The Building Lots and Buildings Transaction Business Act imposes various obligations on real estate traders in connection with their business.
This law also requires real estate traders to employ, or otherwise enlist the services of, a certain number of qualified and registered real estate transaction managers. 34 Table of Contents The Building Lots and Buildings Transaction Business Act imposes various obligations on real estate traders in connection with their business.
These real estate agencies are inclined to refer opportunities 25 Table of Contents to us because of our good reputation and capabilities and the business relationships we have built over the years while working with them, many of which have cooperated with us for over 15 years.
These real estate agencies are inclined to refer opportunities to us because of our good reputation and capabilities and the business relationships we have built over the years while working with them, many of which have cooperated with us for over 15 years.
We believe that our existing facilities are sufficient for our near-term needs. Seasonality Our business is not subject to seasonal fluctuations. 34 Table of Contents Japanese Regulations Construction, Repair, and Remodeling of Buildings Our business involving the construction, repair, and remodeling of buildings is generally subject to the Building Standards Act.
We believe that our existing facilities are sufficient for our near-term needs. Seasonality Our business is not subject to seasonal fluctuations. Japanese Regulations Construction, Repair, and Remodeling of Buildings Our business involving the construction, repair, and remodeling of buildings is generally subject to the Building Standards Act.
Even if the building lease is for a fixed term of 35 Table of Contents one year or more, unless the landlord gives notice of its intention not to renew the lease generally six months prior to the expiration of the term, the lease is automatically deemed to be renewed without a fixed term.
Even if the building lease is for a fixed term of one year or more, unless the landlord gives notice of its intention not to renew the lease generally six months prior to the expiration of the term, the lease is automatically deemed to be renewed without a fixed term.
We utilize a homebuilding model designed to minimize risks, in which we typically identify customers for our single-family homes before acquiring the land and commencing construction and build our condominiums in highly-marketable locations, resulting in an aggregate of only five cancelations during the fiscal years ended June 30, 2023, 2022, and 2021.
We utilize a homebuilding model designed to minimize risks, in which we typically identify customers for our single-family homes before acquiring the land and commencing construction and build our condominiums in highly-marketable locations, resulting in an aggregate of only six cancelations during the fiscal years ended June 30, 2024, 2023, and 2022.
We intend to further leverage our relationships with local real estate agencies to facilitate our access to development land parcels and customers. 26 Table of Contents Continue to develop and improve our Glocaly platform Our interactive media platform, Glocaly , has the potential to expand into a multilingual and seamless transaction platform targeting both domestic and foreign buyers for transacting condominiums in Japan.
We intend to further leverage our relationships with local real estate agencies to facilitate our access to development land parcels and customers. Continue to develop and improve our Glocaly platform Our interactive media platform, Glocaly , has the potential to expand into a multilingual and seamless transaction platform targeting both domestic and foreign buyers for transacting condominiums in Japan.
We also provide other services such as property brokerage, property management, and utilities services. Glocaly Platform We launched our interactive media platform, Glocaly , in October 2021, as a listing and marketing platform seeking to facilitate matching of sellers and buyers of condominiums.
We also provide other services such as property brokerage, property management, and utilities services. 31 Table of Contents Glocaly Platform We launched our interactive media platform, Glocaly , in October 2021, as a listing and marketing platform seeking to facilitate matching of sellers and buyers of condominiums.
For our single-family home projects, after both land spots and individual customers are identified through the introduction of real estate agencies, we acquire the land through financing with short-term bank loans (typically with terms ranging from three to six months and interest rates ranging from 1.5% to 3.2%).
For our single-family home projects, after both land spots and individual customers are identified through the introduction of real estate agencies, we acquire the land through financing with short-term bank loans (typically with terms ranging from six to 12 months and interest rates ranging from 1.5% to 4.2%).
We outsource the design work and construction for our luxury residential property projects to third-party design firms and construction companies, while coordinating and closely supervising the projects through our internal 24 Table of Contents teams to maximize quality of the projects.
We outsource the design work and construction for our luxury residential property projects to third-party design firms and construction companies, while coordinating and closely supervising the projects through our internal teams to maximize quality of the projects.
Organizational Structure See “—A. History and Development of the Company.” D. Property, Plants and Equipment See “—B. Business Overview—Facilities” and “—B. Business Overview—Environmental Matters.” Item 4A. UNRESOLVED STAFF COMMENTS Not applicable.
History and Development of the Company.” D. Property, Plants and Equipment See “—B. Business Overview—Facilities” and “—B. Business Overview—Environmental Matters.” Item 4A. UNRESOLVED STAFF COMMENTS Not applicable.
The luxury residential property industry in Tokyo, Kanagawa prefecture, and Sapporo is competitive. We compete primarily with local residential 32 Table of Contents property developers as well as large national and overseas residential property developers that have also started to enter these markets.
The luxury residential property industry in Tokyo, Kanagawa prefecture, and Sapporo is competitive. We compete primarily with local residential property developers as well as large national and overseas residential property developers that have also started to enter these markets.
The following table shows the key operating results for our development and sales of condominiums for the fiscal years ended June 30, 2023, 2022, and 2021, respectively: ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended For the fiscal year ended For the fiscal year ended ​ ​ June 30, 2023 ​ June 30, 2022 ​ June 30, 2021 Number of projects at the beginning of the period 3 2 1 New orders added during the period 9 10 5 Delivered projects (1) during the period 7 9 4 Number of projects at the end of the period 5 3 2 Average sale price for delivered projects during the period (including land) JPY708,759 thousand JPY470,957 thousand JPY395,911 thousand ​ Note: (1) Delivered projects refer to projects for which both the land parcels and building have been delivered.
The following table shows the key operating results for our development and sales of condominiums for the fiscal years ended June 30, 2024, 2023, and 2022, respectively: ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended For the fiscal year ended For the fiscal year ended ​ ​ June 30, 2024 (2) ​ June 30, 2023 ​ June 30, 2022 Number of projects at the beginning of the period 5 3 2 New orders added during the period 24 9 10 Delivered projects (1) during the period 21 7 9 Number of projects at the end of the period 8 5 3 Average sale price for delivered projects during the period (including land) JPY395,636 thousand JPY708,759 thousand JPY470,957 thousand Note: (1) Delivered projects refer to projects for which both the land parcels and building have been delivered.
Since our inception in 2001, we have developed more than 1,000 luxury residential properties in Tokyo, Kanagawa prefecture, and Sapporo, making us one of the few developers that have a proven track record of developing luxury residential properties in these areas. The wide recognition of our brand and Mr.
Since our inception in 2001, we have developed approximately 1,200 luxury residential properties in Tokyo, Kanagawa prefecture, and Sapporo, making us one of the few developers that have a proven track record of developing luxury residential properties in these areas. The wide recognition of our brand and Mr.
The lease agreement automatically renews for successive one-year terms, unless we notify the landlord of our intention to the contrary in writing no later than three months before the expiration of the then current term or the landlord notifies us of its intention to the contrary in writing no later than six months before the expiration of the then current term.
The lease agreement is for a term of three years, and it automatically renews for successive one-year terms, unless we notify the landlord of our intention to the contrary in writing no later than three months before the expiration of the then current term or the landlord notifies us of its intention to the contrary in writing no later than six months before the expiration of the then current term.
In addition, our “Lead Real” brand is widely recognized in Tokyo, Kanagawa prefecture, and Sapporo. We have developed more than 1,000 luxury residential properties since our inception in 2001 and this achievement has helped us attract partners and build trust in our brand. In particular, Mr.
In addition, our “Lead Real” brand is widely recognized in Tokyo, Kanagawa prefecture, and Sapporo. We have developed approximately 1,200 luxury residential properties since our inception in 2001 and this achievement has helped us attract partners and build trust in our brand. In particular, Mr.
As of the date of this annual report, we own an aggregate of 27,815 square feet of buildings and land in Tokyo (other than inventories for our real estate development and sales).
As of the date of this annual report, we own an aggregate of 25,652 square feet of buildings and land in Tokyo (other than inventories for our real estate development and sales).
Eiji Nagahara’s decades of good will and relationships built over his career also help us becomea trusted partner of real estate agencies.
Eiji Nagahara’s decades of good will and relationships built over his career also help us become a trusted partner of real estate agencies.
Our ENT TERRACE Akihabara hotel has a 9.5 points or higher rating on Bookings.com as of the date of this annual report. 31 Table of Contents The table below summarizes information about our hotels as of the date of this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Starting ​ ​ ​ ​ ​ ​ ​ ​ Room Rate Name ​ Location Year Opened Maximum Capacity ​ (Per Night) ENT TERRACE Komagome ​ Toshima Ward, Tokyo ​ August 2019 ​ 11 ​ $ 288 ENT TERRACE Horikiri Shobuen Katsushika Ward, Tokyo March 2020 6 ​ $ 77 ENT TERRACE Shinagawa Higashi-oi Shinagawa Ward, Tokyo October 2020 12 ​ $ 62 per floor ENT TERRACE Omori Sanno Kosher Hotel Ota Ward, Tokyo June 2021 7 ​ $ 329 ENT TERRACE Asakusa Taito Ward, Tokyo October 2022 48 ​ $ 300 per floor ENT TERRACE Akihabara Chiyoda Ward, Tokyo February 2023 40 ​ $ 300 per floor ​ Residential Leasing We lease apartment building units to individual customers both in Japan and in Dallas, Texas.
The table below summarizes information about our hotels as of the date of this annual report. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Starting ​ ​ ​ ​ ​ ​ ​ ​ Room Rate Name ​ Location Year Opened Maximum Capacity ​ (Per Night) ENT TERRACE Komagome ​ Toshima Ward, Tokyo ​ August 2019 ​ 11 ​ $ 288 ENT TERRACE Horikiri Shobuen Katsushika Ward, Tokyo March 2020 6 ​ $ 77 ENT TERRACE Shinagawa Higashi-oi Shinagawa Ward, Tokyo October 2020 12 ​ $ 62 per floor ENT TERRACE Omori Sanno Kosher Hotel Ota Ward, Tokyo June 2021 7 ​ $ 329 ENT TERRACE Asakusa Taito Ward, Tokyo October 2022 48 ​ $ 300 per floor ENT TERRACE Akihabara Chiyoda Ward, Tokyo February 2023 40 ​ $ 300 per floor ​ Residential Leasing We lease apartment building units to individual customers both in Japan and in Dallas, Texas.
Revenue generated from real estate sales accounted for approximately 98.2%, 98.5%, and 98.5% of our total revenue for the same fiscal years, respectively. Revenue derived from other sources accounted for approximately 1.8%, 1.5%, and 1.5% of our total revenue for the same fiscal years, respectively.
Revenue generated from real estate sales accounted for approximately 97.6%, 98.2%, and 98.6% of our total revenue for the same fiscal years, respectively. Revenue derived from other sources accounted for approximately 2.4%, 1.8%, and 1.4% of our total revenue for the same fiscal years, respectively.
We primarily use lumber as raw material for the construction, such that our properties typically have long life span and our constructions involve less energy and less carbon emissions. 33 Table of Contents Employees We had 62, 46, and 37 full-time employees as of June 30, 2023, 2022, and 2021, respectively.
We primarily use lumber as raw material for the construction, such that our properties typically have long life span and our constructions involve less energy and less carbon emissions. Employees We had 70, 62, and 46 full-time employees as of June 30, 2024, 2023, and 2022, respectively.
For the same fiscal years, payments to our single largest construction contractor accounted for 15%, 15%, and 20%, respectively, of our total payments under our construction contracts. For the same fiscal years, payments to our five largest construction contractors accounted for 80%, 75%, and 80%, respectively, of our total payments under our construction contracts.
For the same fiscal years, payments to our five largest construction contractors accounted for 80%, 80%, and 75%, respectively, of our total payments under our construction contracts.
Personal Information The Personal Information Protection Act of Japan (Act No. 57 of 2003, as amended) and related guidelines impose various requirements on businesses, including our group companies, that use databases containing personal information, such as appropriate custody of such information and restrictions on information sharing with third parties.
We comply with these regulations. 36 Table of Contents Personal Information The Personal Information Protection Act of Japan (Act No. 57 of 2003, as amended) and related guidelines impose various requirements on businesses, including our group companies, that use databases containing personal information, such as appropriate custody of such information and restrictions on information sharing with third parties.
Other law imposes on owners and operators certain requirements regarding conditions and activities that may affect human health or the environment. Failure to comply with applicable requirements could complicate our ability to lease an affected property and could subject us to monetary penalties, costs required to achieve compliance, and potential liability to third parties. 37 Table of Contents C.
Other law imposes on owners and operators certain requirements regarding conditions and activities that may affect human health or the environment. Failure to comply with applicable requirements could complicate our ability to lease an affected property and could subject us to monetary penalties, costs required to achieve compliance, and potential liability to third parties. C. Organizational Structure See “—A.
During the fiscal years ended June 30, 2023, 2022, and 2021, 60, 56, and 45 real estate agencies introduced approximately 150, 130, and 100 land parcels and approximately 150, 130, and 100 customers to us, respectively.
During the fiscal years ended June 30, 2024, 2023, and 2022, 60, 60, and 56 real estate agencies introduced approximately 170, 150, and 130 land parcels and approximately 170, 150, and 130 customers to us, respectively.
The following table sets forth the number of our full-time employees categorized by areas of operations as of June 30, 2023: ​ ​ ​ Function Number Management 8 Finance 4 Planning and development 12 Project construction management 8 Sales and marketing 18 Property management 9 Administrative and human resources 3 Total 62 ​ We enter into employment agreements with our full-time employees.
The following table sets forth the number of our full-time employees categorized by areas of operations as of June 30, 2024: ​ ​ ​ Function Number Management 7 Finance 5 Planning and development 18 Project construction management 8 Sales and marketing 18 Property management 9 Administrative and human resources 5 Total 70 ​ We enter into employment agreements with our full-time employees.
We believe that we maintain a good working relationship with our employees and independent contractors, and we have not experienced material labor disputes in the past. None of our employees are represented by labor unions.
We believe that we maintain a good working relationship with our employees and independent contractors, and we have not experienced material labor disputes in the past.
We delivered an aggregate of 196 single-family homes and 20 condominiums in the three fiscal years ended June 30, 2023, and we had 47 single-home projects and five condominium projects ongoing as of June 30, 2023. In addition to the prime locations of the properties we develop, we have been recognized for the quality and design of our products.
We delivered an aggregate of 397 single-family homes and 64 condominiums in the three fiscal years ended June 30, 2024, and we had 25 single-family home projects and nine condominium projects ongoing as of June 30, 2024. In addition to the prime locations of the properties we develop, we have been recognized for the quality and design of our products.
Our Project Development Process We have a systematic and standardized process of project development for our single-family homes and condominiums, which we implement through several well-defined phases as follows: Opportunity Identification and Land Acquisition The first stage of our development process involves the identification of new opportunities.
(2) Including units of condominiums developed and sold by us. 28 Table of Contents Our Project Development Process We have a systematic and standardized process of project development for our single-family homes and condominiums, which we implement through several well-defined phases as follows: Opportunity Identification and Land Acquisition The first stage of our development process involves the identification of new opportunities.
The Labor Contracts Act regulates, among others, the change of terms of employment contracts and working rules, and dismissal and disciplinary action. We comply with these regulations.
The Labor Contracts Act regulates, among others, the change of terms of employment contracts and working rules, and dismissal and disciplinary action.
We also lease offices in Sapporo, Japan, from an independent third party with an area of approximately 766 square feet, with a lease term from April 2021 to March 2024 and a monthly rent of JPY193,770 (approximately $1,428).
We also leased offices in Sapporo, Japan, in April 2018 from an independent third party with an area of approximately 766 square feet and a monthly rent of JPY193,770 (approximately $1,428).
(1) Represents an aggregate of 209,880 Ordinary Shares held by 25 shareholders of Lead Real Estate, each one of which holds less than 5% of our equity interests, as of the date of this annual report. (2) Mr. Nagahara holds 100% of the equity interests in JP Shuhan. (3) Mr. Nagahara holds 100% of the equity interests in LRE Cayman.
(1) Represents an aggregate of 205,334 Ordinary Shares held by 23 shareholders of Lead Real Estate, each one of which holds less than 5% of our equity interests, as of the date of this annual report. (2) Mr. Nagahara holds 50% of the equity interests in Sojiya Japan. (3) Mr. Nagahara holds 100% of the equity interests in LRE Cayman.
The lease agreement automatically renews for successive three-year terms, unless either party notifies the other party of its intention to the contrary in writing no later than six months before the expiration of the then current term. The lease will be automatically renewed in December 2023 as there has been no notification as of the date of this annual report.
The lease agreement automatically renews for successive three-year terms, unless either party notifies the other party of its intention to the contrary in writing no later than six months before the expiration of the then current term. The lease will be automatically renewed in December 2024.
We set the room rates of our hotels based on a number of factors, including local market conditions with reference to room rates set by our competitors, recent occupancy levels, and seasonal occupancy fluctuations.
Our hotels are generally located near train stations and popular tourist attractions. We set the room rates of our hotels based on a number of factors, including local market conditions with reference to room rates set by our competitors, recent occupancy levels, and seasonal occupancy fluctuations.
Further expand our operations overseas We will continue to expand our operations overseas. We have been leasing apartment building units to individual customers in Dallas, Texas since 2020 and Mr. Eiji Nagahara has built personal relationships with landowners and local builders in Texas over the years.
On the international front, we have been leasing apartment building units to individual customers in Dallas, Texas since 2020 and Mr. Eiji Nagahara has built personal relationships with landowners and local builders in Texas over the years.
In addition, we plan to expand to prime real estate locations across the Kanto Region, which encompasses seven prefectures of Japan, including Gunma, Tochigi, Ibaraki, Saitama, Tokyo, Chiba, and Kanagawa, in order to further grow our real estate sales.
In addition, we plan to expand to prime real estate locations across the Kanto Region, which encompasses seven prefectures of Japan, including Gunma, Tochigi, Ibaraki, Saitama, Tokyo, Chiba, and Kanagawa, in order to further grow our real estate sales. 25 Table of Contents Further strengthen and leverage our relationships with local real estate agencies Relationships with local real estate agencies are essential to our business operation.
However, we do not have insurance coverage against potential losses or damages with respect to our properties before their delivery to customers. In addition, our contractors typically do not maintain insurance coverage on our properties under construction.
Insurance We currently maintain fire insurance and insurance coverage against liability from tortious acts or other personal injuries on our project sites. However, we do not have insurance coverage against potential losses or damages with respect to our properties before their delivery to customers. In addition, our contractors typically do not maintain insurance coverage on our properties under construction.
The following tables show the key operating results for our development and sales of single-family homes for the fiscal years ended June 30, 2023, 2022, and 2021, respectively: ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended For the fiscal year ended For the fiscal year ended ​ ​ June 30, 2023 ​ June 30, 2022 ​ June 30, 2021 Number of projects at the beginning of the period 64 79 55 New orders added during the period 49 66 74 Delivered projects (1) during the period 65 81 50 Number of projects at the end of the period 48 64 79 Average sale price for delivered projects during the period (including land) JPY115,937 thousand JPY98,752 thousand JPY99,596 thousand ​ Note: (1) Delivered projects refer to projects for which both the land parcels and building have been delivered.
The entire process of a given single-family home project, from land acquisitions to delivery of the completed project, typically takes approximately 10 months. ​ 27 Table of Contents The following tables show the key operating results for our development and sales of single-family homes for the fiscal years ended June 30, 2024, 2023, and 2022, respectively: ​ ​ ​ ​ ​ ​ ​ ​ For the fiscal year ended For the fiscal year ended For the fiscal year ended ​ ​ June 30, 2024 ​ June 30, 2023 ​ June 30, 2022 Number of projects at the beginning of the period 48 64 79 New orders added during the period 30 49 66 Delivered projects(1) during the period 50 65 81 Number of projects at the end of the period 28 48 64 Average sale price for delivered projects during the period (including land) JPY150,544 thousand JPY115,937 thousand JPY98,752 thousand Note: (1) Delivered projects refer to projects for which both the land parcels and building have been delivered.
During the fiscal years ended June 30, 2023, 2022, and 2021, we operated six, four, and four hotels in Tokyo, respectively. During the fiscal years ended June 30, 2023, 2022, and 2021, we leased apartment units in 15, 17, and 17 apartment buildings to 52, 77, and 118 individual customers, respectively.
During the fiscal years ended June 30, 2024, 2023, and 2022, we operated six, six, and four hotels in Tokyo, respectively. During the fiscal years ended June 30, 2024, 2023, and 2022, we leased apartment units in 16, 19, and 21 apartment buildings to 61, 59, and 77 individual customers, respectively.
We closely supervise and manage the entire project construction process, utilizing our enterprise resource planning systems to monitor and analyze information regarding the process on a real-time basis.
We closely supervise and manage the entire project construction process, utilizing our enterprise resource planning systems to monitor and analyze information regarding the process on a real-time basis. We collect information throughout the development cycle on the entire project and from our contractors to avoid unanticipated delays and cost overruns.
The target customers of our single-family homes are wealthy family buyers who are looking for luxury single-family homes as their primary residence, while the target customers of our condominiums are institutional customers who look to purchase entire condominiums for investment purposes.
Since our inception in 2001, we have delivered approximately 1,200 single-family homes and 27 condominiums. The target customers of our single-family homes are wealthy family buyers who are looking for luxury single-family homes as their primary residence, while the target customers of our condominiums are institutional customers who look to purchase entire condominiums for investment purposes.
We will further strengthen our relationships with local real estate agencies which we have been cooperating with as well as establish relationships with new local real estate agencies in existing and new markets.
We primarily rely on real estate agencies to identify land and development sites for acquisition as well as customers. We will further strengthen our relationships with local real estate agencies which we have been cooperating with as well as establish relationships with new local real estate agencies in existing and new markets.
We lease offices in Yokohama, Japan, from an independent third party with an area of approximately 1,293 square feet, with a lease term from September 2021 to August 2024 and a monthly rent of JPY518,519 (approximately $3,821). We are required to notify the landlord at least six months in advance if we would like to renew the lease.
We lease offices in Yokohama, Japan, from an independent third party with an area of approximately 1,293.5 square feet, with a lease term from September 1, 2021 to August 31, 2024 and a monthly rent of JPY518,519 (approximately $3,821).
During the fiscal years ended June 30, 2023, 2022, and 2021, we leased apartment units in 15, eight, and 17 apartment buildings to 52, 13, and 118 individual customers, respectively. The rent is typically between JPY20,000 (approximately $147) and JPY1,000,000 (approximately $7,369) and the lease terms usually range from 24 to 36 months.
During the fiscal years ended June 30, 2024, 2023, and 2022, we leased apartment units in 16, 15, and 8 apartment buildings to 61, 52, and 13 individual customers, respectively. The rent is typically between JPY50,000 (approximately $311) and JPY500,000 (approximately $3,108) and the lease terms usually range from 24 to 36 months.
The tables below summarize the units of land and building we delivered during the fiscal years ended June 30, 2023, 2022, and 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ Fiscal Year Ended ​ Fiscal Year Ended ​ ​ June 30, 2023 ​ June 30, 2022 ​ June 30, 2021 ​ ​ Land ​ Building ​ Land ​ Building ​ Land ​ Building ​ ​ Deliveries ​ Deliveries ​ Deliveries ​ Deliveries ​ Deliveries ​ Deliveries Type ​ (Units) ​ (Units) ​ (Units) ​ (Units) ​ (Units) ​ (Units) Single-family homes 90 65 94 81 102 50 Condominiums 13 7 12 9 4 4 ​ To diversify our revenue streams and supplement our real estate sales, we have expanded into other businesses related to real estate since 2018.
The tables below summarize the units of land and building we delivered during the fiscal years ended June 30, 2024, 2023, and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ Fiscal Year Ended ​ Fiscal Year Ended ​ ​ June 30, 2024 ​ June 30, 2023 ​ June 30, 2022 ​ ​ Land ​ Building ​ Land ​ Building ​ Land ​ Building ​ ​ Deliveries ​ Deliveries ​ Deliveries ​ Deliveries ​ Deliveries ​ Deliveries Type ​ (Units) ​ (Units) ​ (Units) ​ (Units) ​ (Units) ​ (Units) Single-family homes 71 41 88 39 93 66 Condominiums 33 4 16 1 11 2 ​ To diversify our revenue streams and supplement our real estate sales, we have expanded into other businesses related to real estate since 2018.
Facilities Our principal executive offices are located in Tokyo, Japan, where we lease offices from an independent third party with an area of approximately 4,243 square feet, with a lease term from December 2020 to November 2023 and a monthly rent of JPY2,027,420 (approximately $14,941).
None of our employees are represented by labor unions. 33 Table of Contents Facilities Our principal executive offices are located in Tokyo, Japan, where we lease offices from an independent third party with an area of approximately 4,243 square feet, with a lease term from December 2022 to November 2024 and a monthly rent of JPY2,623,720 (approximately $14,826).
(4) Mr. Nagahara holds 50% of the equity interests in Sojiya Japan. Corporate Information Our headquarters are located at 6F, MFPR Shibuya Nanpeidai Building 16-11, Nampeidai-cho, Shibuya-ku, Tokyo, 150-0036, Japan, and our phone number is +81 03-5784-5127. Our website address is http://www.lead-real.co.jp/en/.
Corporate Information Our headquarters are located at 6F, MFPR Shibuya Nanpeidai Building 16-11, Nampeidai-cho, Shibuya-ku, Tokyo, 150-0036, Japan, and our phone number is +81 03-5784-5127. Our website address is http://www.lead-real.co.jp/en/. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report.
Our experienced team, together with the standardization of our processes and our sophisticated management tools, enables us to consistently launch new projects, as well as successfully undertake a large number of projects at the same time. 27 Table of Contents We manage and actively participate in every aspect of our luxury residential property development, from search and acquisition of the land, to product design, marketing, sales, construction management, purchase of supplies, post-sale services, and financial planning, with the assistance of specialized companies at each development stage.
We manage and actively participate in every aspect of our luxury residential property development, from search and acquisition of the land, to product design, marketing, sales, construction management, purchase of supplies, post-sale services, and financial planning, with the assistance of specialized companies at each development stage.
We develop and sell luxury residential properties, including single-family homes and condominiums, across Tokyo, Kanagawa prefecture , and Sapporo . ● Other Sources . We operate hotels in Tokyo and lease apartment building units to individual customers in Japan and Dallas, Texas.
We develop and sell luxury residential properties, including single-family homes and condominiums, across Tokyo, Kanagawa prefecture , and Sapporo . ● Other Sources .
On April 1, 2020, the Act Partially Amending the Civil Code came into force and the provisions of the liability for defect of warranty were wholly amended such that the concept of “defects” was replaced by the concept of “non-conformity to the contract” with clarification of liabilities arising from such non-conformity. 36 Table of Contents Under the Civil Code, if there is any latent defect or any non-conformity to the contract in the subject matter of a sale or if there is any defect or any non-conformity to the contract in the subject matter of work performed, the seller or the constructor of buildings or building lots is statutorily liable for the defect of warranty or the non-conformity to the contract vis-à-vis the purchaser or the contractee.
On April 1, 2020, the Act Partially Amending the Civil Code came into force and the provisions of the liability for defect of warranty were wholly amended such that the concept of “defects” was replaced by the concept of “non-conformity to the contract” with clarification of liabilities arising from such non-conformity.
As of the date of this annual report, we have registered: ● 19 trademarks in Japan for real estate-related services and other goods and services directly and indirectly related to our business operations; and ● 10 domain names in Japan.
Intellectual Property We rely on a combination of trademarks, service marks, domain name registrations, and contractual restrictions to establish and protect our brand name and logos, marketing designs, and internet domain names. 32 Table of Contents As of the date of this annual report, we have registered: ● 19 trademarks in Japan for real estate-related services and other goods and services directly and indirectly related to our business operations; and ● 10 domain names in Japan.
The entire process of a given condominium project, from land acquisitions to delivery of the completed project, typically takes approximately 12 months. 28 Table of Contents In addition to the construction of new condominiums, our developments of condominiums also include renovation of existing condominiums, which we acquire from third parties, leveraging our design and architect capabilities.
In addition to the construction of new condominiums, our developments of condominiums also include renovation of existing condominiums, which we acquire from third parties, leveraging our design and architect capabilities.
If the court determines that the rent should be decreased, the landlord will be ordered to return any excess rent collected after the lessee’s initial demand and to pay interest on such excess amount, if any, at a rate of 10% per annum.
If the court determines that the rent should be decreased, the landlord will be ordered to return any excess rent collected after the lessee’s initial demand and to pay interest on such excess amount, if any, at a rate of 10% per annum. 35 Table of Contents Special Fixed-term Building Lease The Act on Land and Building Leases provides that the rules regarding renewals of lease agreements do not apply to a type of special fixed-term building lease known as teiki tatemono chintaishaku .
Our goal is to accurately understand the characteristics and needs of our customers and to create more comfortable and secure living environments. We primarily generate revenue from developing and selling single-family homes and condominiums. Since our inception in 2001, we have delivered more than 1,000 single-family homes and 25 condominiums.
In addition, we operate hotels in Tokyo and lease apartment building units to individual customers in Japan and Dallas, Texas. Our goal is to accurately understand the characteristics and needs of our customers and to create more comfortable and secure living environments. 23 Table of Contents We primarily generate revenue from developing and selling single-family homes and condominiums.
After the completion and delivery of the property, we receive the remaining 90% of purchase price of the construction contract. We assist our customers in various title registration procedures relating to their properties.
After the completion and delivery of the property, we receive the remaining 90% of purchase price of the construction contract.
Environmental Regulation Our leasing, development, and reconstruction operations are subject to the Soil Contamination Countermeasures Act.
Further, the landlord and the lessee may exclude the application of the rules regarding adjustment of rent described above. Environmental Regulation Our leasing, development, and reconstruction operations are subject to the Soil Contamination Countermeasures Act.
Quality Control Under our contracts with customers in relation to our single-family homes and condominiums and in accordance with Japanese law, the properties we develop are subject to a 10-year quality warranty. We emphasize quality control to ensure that our buildings and residential units meet our standards and provide high-quality service. We select only experienced design and construction companies.
We emphasize quality control to ensure that our buildings and residential units meet our standards and provide high-quality service. We select only experienced design and construction companies. We provide customers with warranties covering the building structure and certain fittings and facilities of our properties in accordance with the relevant regulations.
We require our contractors to comply with relevant Japanese laws and regulations, as well as our own standards and specifications. Other Sources of Revenue In addition to developing and selling single-family homes and condominiums, we also generate revenue from hotel operations and residential leasing. Hotel Operations We operate hotels under our brand, ENT TERRACE, in Tokyo.
Other Sources of Revenue In addition to developing and selling single-family homes and condominiums, we also generate revenue from hotel operations and residential leasing. Hotel Operations We operate hotels under our brand, ENT TERRACE, in Tokyo. During the fiscal years ended June 30, 2024, 2023, and 2022, we operated six, six, and four hotels, respectively.
Condominiums We develop and sell entire low-rise and mid-rise condominiums to institutional customers, which include blue chip private equity buyers, foreign real estate investment funds, and local strategic bidders.
Condominiums We develop and sell entire low-rise and mid-rise condominiums to institutional customers, which include blue chip private equity buyers, foreign real estate investment funds, and local strategic bidders. Current rental rates for condominiums in Tokyo, Kanagawa prefecture, and Sapporo are on a gradual upward trend, and we expect them to continue rising steadily following the anticipated economic reforms.
In the event of delay or poor work quality, the contractor may be required to pay pre-agreed damages under our construction contracts. Our contractors are also subject to our quality control procedures, including examination of materials and supplies, on-site inspection, and production of progress reports.
To ensure construction quality, our construction contracts contain quality warranties and penalty provisions for poor work quality. In the event of delay or poor work quality, the contractor may be required to pay pre-agreed damages under our construction contracts.
We collect information throughout the development cycle on the entire project and from our contractors to avoid unanticipated delays and cost overruns. 30 Table of Contents Our construction contracts typically provide for fixed payments, subject to adjustments for some types of excess, such as design changes during construction or changes in government-suggested steel prices.
Our construction contracts typically provide for fixed payments, subject to adjustments for some types of excess, such as design changes during construction or changes in government-suggested steel prices. Contractors are typically responsible for procuring the necessary raw materials, as well as providing engineering and construction services.
The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report. Our agent for service of process in the United States is Lead Real Estate Global Co., Ltd., located at 6860 North Dallas Pkwy, Suite 200, Plano, TX 75024.
Our agent for service of process in the United States is Lead Real Estate Global Co., Ltd., located at 6860 North Dallas Pkwy, Suite 200, Plano, TX 75024. The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.
The following tables presents our revenue for the fiscal years ended June 30, 2023, 2022, and 2021. ​ ​ ​ ​ ​ ​ ​ ​ Revenue (Japanese Yen in Thousands) ​ ​ Fiscal Year Ended ​ Fiscal Year Ended ​ Fiscal Year Ended ​ ​ June 30, 2023 ​ June 30, 2022 ​ June 30, 2021 Real Estate Sales 17,125,309 14,108,455 11,090,778 Other 316,939 212,731 164,497 Total 17,442,248 14,321,186 11,255,275 ​ Real Estate Sales Our real estate sales business model is based on our proven track record of identifying and developing prime land and building high-quality residential properties.
We operate hotels in Tokyo and lease apartment building units to individual customers in Japan and Dallas, Texas. 26 Table of Contents The following tables presents our revenue for the fiscal years ended June 30, 2024, 2023, and 2022. ​ ​ ​ ​ ​ ​ ​ ​ Revenue (Japanese Yen in Thousands) ​ ​ Fiscal Year Ended ​ Fiscal Year Ended ​ Fiscal Year Ended ​ ​ June 30, 2024 ​ June 30, 2023 ​ June 30, 2022 Real Estate Sales 18,487,074 17,098,308 14,478,498 Other 463,609 316,940 208,516 Total 18,950,683 17,415,248 14,687,014 ​ Real Estate Sales Our real estate sales business model is based on our proven track record of identifying and developing prime land and building high-quality residential properties.
Current rental rates for condominiums in Tokyo, Kanagawa prefecture, and Sapporo are depressed relative to historical and regional levels, and we expect them to increase gradually following the implementation of anticipated economic reforms. As a consequence, we believe a lack of long-term capital investments and limited focus from international investors have created opportunities for investments in condominiums.
As a consequence, we believe a lack of long-term capital investments and limited focus from international investors have created opportunities for investments in condominiums. The entire process of a given condominium project, from land acquisitions to delivery of the completed project, typically takes approximately 20 months.
Business Overview We are a developer of luxury residential properties, including single-family homes and condominiums, across Tokyo, Kanagawa prefecture, and Sapporo. In addition, we operate hotels in Tokyo and lease apartment building units to individual customers in Japan and Dallas, Texas.
For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” B. Business Overview We are a developer of luxury residential properties, including single-family homes and condominiums, across Tokyo, Kanagawa prefecture, and Sapporo.
Contractors are typically responsible for procuring the necessary raw materials, as well as providing engineering and construction services. During the fiscal years ended June 30, 2023, 2022, and 2021, we outsourced projects to 13, 13, and 11 construction companies, respectively.
During the fiscal years ended June 30, 2024, 2023, and 2022, we outsourced projects to 12, 13, and 13 construction companies, respectively. For the same fiscal years, payments to our single largest construction contractor accounted for 15%, 15%, and 15%, respectively, of our total payments under our construction contracts.
Removed
The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system. For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” B.
Added
For the fiscal years ended June 30, 2024, 2023, and 2022, we had total revenue of JPY18,950,683 thousand (approximately $117,794 thousand), JPY17,415,248 thousand (approximately $128,346 thousand), and JPY14,687,014 thousand (approximately $108,239 thousand), respectively, and profit of JPY626,959 thousand (approximately $3,897 thousand), JPY611,918 thousand (approximately $3,804 thousand), and JPY551,622 thousand (approximately $3,429 thousand), respectively.
Removed
For the fiscal years ended June 30, 2023, 2022, and 2021, we had total revenue of JPY17,442,249 thousand (approximately $120,733 thousand), JPY14,321,186 thousand (approximately $108,650 thousand), and JPY11,255,277 thousand (approximately $85,390 thousand), respectively, and profit of JPY536,484 thousand (approximately $3,713 thousand), JPY493,995 thousand (approximately $3,748 thousand), and JPY276,802 thousand (approximately $2,100 thousand), respectively.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Interest Expenses Interest expenses decreased to JPY16,731 (approximately $116) in the fiscal year ended June 30, 2023 from JPY23,333 thousand (approximately $172 thousand) in the fiscal year ended June 30, 2022, reflecting higher amounts of capitalized interest associated with an increase in the number of our development projects, which offset increases in net borrowings and interest expense.
Interest expenses decreased to JPY16,731 thousand (approximately $116 thousand) in the fiscal year ended June 30, 2023 from JPY23,333 thousand (approximately $172 thousand) in the fiscal year ended June 30, 2022, reflecting higher amounts of capitalized interest associated with an increase in the number of our development projects, which offset increases in net borrowings and interest expense.
Trend Information Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from July 1, 2022 to June 30, 2023 that are reasonably likely to have a material adverse effect on our net revenue, 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.
Trend Information Other than as disclosed below and elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments, or events for the period from July 1, 2023 to June 30, 2024 that are reasonably likely to have a material adverse effect on our net revenue, 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.
Gross margin decreased to 15.8% in the fiscal year ended June 30, 2023, compared to 17% in the fiscal year ended June 30, 2022, primarily driven by the increase in construction costs, such as labor costs and material costs.
Gross margin decreased to 15.8% in the fiscal year ended June 30, 2023, compared to 17.6% in the fiscal year ended June 30, 2022, primarily driven by the increase in construction costs, such as labor costs and material costs.
We attempt to reduce some of these risks and improve our capital efficiency by utilizing one or more of the following methods: selling land lots financed via short-term land loans first to the end buyer in order to recoup costs and improve the liquidity profile of our sales cycle; generally commencing construction of a single-family home only after both land and development contracts are signed simultaneously; beginning building construction only after receiving a substantial down payment from the buyer; and using subcontractors to perform home construction and land development work on a fixed-price basis.
We attempt to reduce some of these risks and improve our capital efficiency by utilizing one or more of the following methods: selling land lots financed via short-term land loans first to the end buyer in order to recoup costs and improve the liquidity profile of our sales cycle; generally commencing construction of a single-family home only after both land and development contracts are signed simultaneously; beginning building construction only after receiving a substantial down payment from the buyer; and using subcontractors to perform home construction and land development work on a fixed-price basis. 44 Table of Contents E.
In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A.
In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. 37 Table of Contents A.
The maturities on these short-term land loans were up to 12 months with a cost of capital ranging from 1.2% to 3.95% annually.
The maturities on these short-term land loans were up to 12 months with a cost of capital ranging from 1.8% to 4.2% annually.
The increase in net cash used in investing activities was primarily attributable to the increase in our investments in tools and equipment. We acquired additional tools and epuipment to support increased construction projects and inventory growth compared to the prior year.
The increase in net cash used in investing activities was primarily attributable to the reason that we acquired additional tools and equipment to support increased construction projects and inventory growth compared to the prior year.
Factors and Trends Affecting Our Results of Operations Our Business Environment and Current Outlook During the fiscal years ended June 30, 2023, 2022, and 2021, we continued to experience strong demand for our real properties despite the COVID-19 pandemic.
Factors and Trends Affecting Our Results of Operations Our Business Environment and Current Outlook During the fiscal years ended June 30, 2024, 2023, and 2022, we continued to experience strong demand for our real properties.
GAAP requires management to make 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 revenue and expenses during the reporting periods.
Critical Accounting Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.
Other revenue increased by 49.0% to JPY316,939 (approximately $2,194) in the fiscal year ended June 30, 2023 from JPY212,731 thousand (approximately $1,568 thousand) in the fiscal year ended June 30, 2022, primarily due to an increase in hotel revenue, 39 Table of Contents attributed to the successful launch of two new hotels, ENT TERRACE Asakusa and ENT TERRACE Akihabara, during the fiscal year ended June 30, 2023.
Other revenue increased by 52.0% to JPY316,940 (approximately $2,194) in the fiscal year ended June 30, 2023 from JPY208,516 thousand (approximately $1,537 thousand) in the fiscal year ended June 30, 2022, primarily due to an increase in hotel revenue, attributed to the successful launch of two new hotels, ENT TERRACE Asakusa and ENT TERRACE Akihabara, during the fiscal year ended June 30, 2023.
We believe many of these factors will continue to support demand in the foreseeable future. In response to the strong demand and in an effort to drive profitability and manage growth, we continued to raise prices for our single-family home and condominium projects.
Additionally, the weak yen and the stable Tokyo real estate market attracted increased interest from foreign investors. We believe many of these factors will continue to support demand in the foreseeable future. In response to the strong demand and in an effort to drive profitability and manage growth, we continued to raise prices for our single-family home and condominium projects.
The overall effective income tax rate was higher in fiscal year 2023 compared to fiscal year 2022, primarily reflecting higher deductions and other adjustments. The overall effective income tax rate was higher in fiscal year 2022 compared to fiscal year 2021, primarily reflecting the impact of deductions and book-tax adjustments.
The overall effective income tax rate was higher in fiscal year 2024 compared to fiscal year 2023, primarily reflecting the impact of deductions and other adjustments. The effective tax rate in FY2023 is slightly lower than in FY2022, primarily reflecting lower deductions and other adjustments.
Our long-term borrowings, excluding the current portion, for the fiscal years ended June 30, 2023, 2022, and 2021 consisted of aggregate principal balances of JPY5,437,668 thousand (approximately $37,639 thousand, JPY2,231,544 thousand (approximately $16,930 thousand) and JPY1,303,948 thousand (approximately $9,893 thousand), respectively, at a cost of capital ranging from 1.3% to 5.5% annually.
Our long-term borrowings, excluding the current portion, for the fiscal years ended June 30, 2024 and 2023, consisted of aggregate principal balances of JPY4,598,151 thousand (approximately $28,581 thousand) and JPY5,437,668 thousand (approximately $37,639 thousand) respectively, at a cost of capital ranging from 1.0% to 5.5% annually.
Credit Facilities As of June 30, 2023, 2022, and 2021, we had total short-term land loans of JPY5,899,156 thousand (approximately $40,833), JPY6,361,415 thousand (approximately $48,262 thousand) and JPY4,451,075 thousand (approximately $33,769 thousand), respectively, with various lenders. These borrowings are collateralized by the land parcels we buy and in turn sell to the ultimate customers.
Credit Facilities As of June 30, 2024 and 2023, we had total short-term land loans of JPY3,787,800 thousand (approximately $23,544 thousand) and JPY4,678,641 thousand (approximately $32,385 thousand) respectively with various lenders. These borrowings are collateralized by the land parcels we buy and in turn sell to the ultimate customers.
As a percentage of revenue, selling, general, and administrative expenses decreased to 10.8% in the fiscal year ended June 30, 2023, from 12.5% in the fiscal year ended June 30, 2022, due to reduced IPO preparation expenses.
As a percentage of revenue, these expenses increased to 10.8% in the fiscal year ended June 30, 2024, from 10.4% in the fiscal year ended June 30, 2023, due to IPO related expenses.
Financing Activities Net cash provided by financing activities was JPY2,744,326 thousand (approximately $18,997 thousand for the fiscal year ended June 30, 2023, compared to JPY2,852,787 thousand (approximately $21,643 thousand) for the fiscal year ended June 30, 2022.
Net cash provided by financing activities was JPY2,554,531 thousand (approximately $17,682 thousand for the fiscal year ended June 30, 2023, compared to JPY2,720,752 thousand (approximately $20,051 thousand) for the fiscal year ended June 30, 2022.
Average sale price increased by 6.4% year-over-year to JPY 23,626 thousand (approximately $174 thousand); ● nine units of condominium building deliveries in the fiscal year ended June 30, 2022, up from four units delivered in the prior fiscal year.
Average sale price decreased by 21.2% year-over-year to JPY353,026 thousand (approximately $2,194 thousand) because the number of units sold with low price increased. ● 4 units of condominium building deliveries in the fiscal year ended June 30, 2024, up from one units delivered in the prior fiscal year.
Profit (Loss) As a result of the foregoing, our net income attributable to ordinary shareholders increased by 1.5% to JPY536,484 (approximately $3,713) in the fiscal year ended June 30, 2023 from JPY528,383 thousand (approximately $3,894 thousand) in the fiscal year ended June 30, 2022, and our net income attributable to ordinary shareholders increased by 109.4% to JPY528,383 thousand (approximately $3,894 thousand) in the fiscal year ended June 30, 2022 from JPY252,358 thousand (approximately $1,860 thousand) in the fiscal year ended June 30, 2021.
Profit (Loss) As a result of the foregoing, our net income attributable to ordinary shareholders increased by 2.5% to JPY626,959 thousand (approximately $3,897 thousand) in the fiscal year ended June 30, 2024 from JPY611,918 thousand (approximately $3,804 thousand) in the fiscal year ended June 30, 2023, and our net income attributable to ordinary shareholders increased by 10.9% to JPY611,918 thousand (approximately $3,804 thousand) in the fiscal year ended June 30, 2023 from JPY551,622 thousand (approximately $3,429 thousand) in the fiscal year ended June 30, 2022.
The decrease in net cash used in operating activities was primarily attributable to the declined inventory purchase compared to the prior year. Net cash used in operating activities was JPY2,930,879 thousand (approximately $22,236 thousand) for the fiscal year ended June 30, 2022, compared to JPY244,655 thousand (approximately $1,856 thousand) for the fiscal year ended June 30, 2021.
The increase in net cash provided by operating activities was primarily attributable to the declined inventory purchase compared to the prior year.. Net cash used in operating activities was JPY919,637 thousand (approximately $6,366 thousand) for the fiscal year ended June 30, 2023, compared to JPY2,598,278 thousand (approximately $19,141 thousand) for the fiscal year ended June 30, 2022.
Operating Margin As a result of the foregoing, operating income increased by 41.0% year-over-year to JPY869,918 (approximately $6,021) in the fiscal year ended June 30, 2023 and operating profit margin increased to 5.0%, and operating income increased by 43% to JPY649,188 thousand (approximately $4,784 thousand) in the fiscal year ended June 30, 2022 from JPY453,647 thousand (approximately $3,343 thousand) in the fiscal year ended June 30, 2021 and operating profit margin increased from 4.5% to 4.0%.
Operating Margin As a result of the foregoing, operating income decreased by 4.3 % year-over-year to JPY898,566 thousand (approximately $5,585 thousand) in the fiscal year ended June 30, 2024 from JPY939,275 thousand (approximately $6,502 thousand ) in the prior fiscal year, and operating profit margin decreased to 5.0%, from 5.3% in the prior fiscal year.
Average sale price increased by 21% year-over-year to JPY 91,128 thousand (approximately $631 thousand); ● 65 units of single-family home building deliveries in the fiscal year ended June 30, 2023, down from 81 units delivered in the prior fiscal year.
Average sale price decreased by 21.1% year-over-year to JPY76,841 thousand (approximately $478 thousands) because mainly the sales were in areas with low sales prices. ● 41 units of single-family home building deliveries in the fiscal year ended June 30, 2024, up from 39 units delivered in the prior fiscal year.
Cost of Revenue and Gross Margin Cost of revenue for real estate sales increased by 22.7% to JPY14,294,254 (approximately $100,327) in the fiscal year ended June 30, 2023, from JPY11,812,347 thousand (approximately $87,054 thousand) in the fiscal year ended June 30, 2022, primarily reflecting increases in construction cost, such as labor costs and material costs.
Cost of revenue for real estate sales increased by 20.3% to JPY14,466,459 thousand (approximately $100,135 thousand) in the fiscal year ended June 30, 2023, from JPY12,023,652 thousand (approximately $88,611 thousand) in the fiscal year ended June 30, 2022, primarily reflecting increases in construction cost, such as labor costs and material costs since general market price in labor and material costs have been increasing. 39 Table of Contents Gross margin slightly decreased to 15.6% in the fiscal year ended June 30, 2024, compared to 15.8% in the fiscal year ended June 30, 2023, primarily driven by the increase in construction costs, such as labor costs and material costs.
Average sale price increased by 19% year-over-year to JPY 384,815 thousand (approximately $2,664 thousand); and ● seven units of condominium building deliveries in the fiscal year ended June 30, 2023, down from nine units delivered in the prior fiscal year. Average sale price increased by 119% year-over-year to JPY 323,944 thousand (approximately $2,242 thousand).
Average sale price increased by 0.3% year-over-year to JPY447,739 thousand (approximately $3,099 thousand); and ● one units of condominium building deliveries in the fiscal year ended June 30, 2023, down from two units delivered in the prior fiscal year. Average sale price decreased by 71.3% year-over-year to JPY35,915 thousand (approximately $249 thousand) because low sales price condominiums were sold.
Average sale price increased by 2% year-over-year to JPY 24,809 thousand (approximately $172 thousand); ● 13 units of land deliveries for condominiums in the fiscal year ended June 30, 2023, up from 12 units delivered in the prior fiscal year.
Average sale price decreased by 11.2% year-over-year to JPY30,320 thousand (approximately $188 thousand) because the single-family homes are in the areas with low market value. 38 Table of Contents ● 33 units of land deliveries for condominiums in the fiscal year ended June 30, 2024, up from 16 units delivered in the prior fiscal year.
Net cash used in investing activities was JPY19,084 thousand (approximately $145 thousand) for the fiscal year ended June 30, 2022, compared to JPY160,433 thousand (approximately $1,217 thousand) for the fiscal year ended June 30, 2021.
Net cash used in investing activities was JPY1,256,039 thousand (approximately $8,694 thousand) for the fiscal year ended June 30, 2023, compared to JPY216,133 thousand (approximately $1,593 thousand) for the fiscal year ended June 30, 2022. The increase in net cash used in investing activities was primarily attributable to the increase in our investments in tools and equipment.
The increase in net cash provided by financing activities was primarily attributable to lower debt repayments in the fiscal year ended June 30, 2022 compared to the prior year.
The decrease in net cash provided by financing activities was primarily attributable to the reduced need in inventory compared to the prior year, resulting in fewer loans required to finance inventory purchase.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were JPY1,886,533 (approximately $13,058) in the fiscal year ended June 30, 2023, compared to JPY1,786,614 thousand (approximately $13,167 thousand) in the fiscal year ended June 30, 2022.
Selling, general, and administrative expenses were JPY1,817,970 thousand (approximately $12,584 thousand) in the fiscal year ended June 30, 2023, compared to JPY1,704,042 thousand (approximately $12,558 thousand) in the fiscal year ended June 30, 2022. The reason of the increase is due to variable cost such as sales commission, which increase as sales increase.
Average sale price increased by 49% year-over-year to JPY 322,996 thousand (approximately $2,380 thousand); ● 81 units of single-family home building deliveries in the fiscal year ended June 30, 2022, up from 50 units delivered in the prior fiscal year.
Average sale price increased by 30.1% year-over-year to JPY34,142 thousand (approximately $236 thousand) because the area where the homes were had high market value. ● 16 units of land deliveries for condominiums in the fiscal year ended June 30, 2023, up from 11 units delivered in the prior fiscal year because the company focused on condominium development rather than single-family home.
The increase in net cash used in operating activities was primarily attributable to a higher amount of cash used for homebuilding inventory, particularly land for condominiums, partially offset by higher net income. 42 Table of Contents Investing Activities Net cash used in investing activities was JPY1,247,540 thousand (approximately $8,636 thousand) for the fiscal year ended June 30, 2023, compared to JPY19,084 thousand (approximately $145 thousand) for the fiscal year ended June 30, 2022.
The decrease in net cash used in operating activities was primarily attributable to the declined inventory purchase compared to the prior year. Investing Activities Net cash used in investing activities was JPY2,243,061 thousand (approximately $13,942 thousand) for the fiscal year ended June 30, 2024, compared to JPY1,256,039 thousand (approximately $8,694 thousand) for the fiscal year ended June 30, 2023.
Other income was JPY186,007 thousand (approximately $1,371 thousand) in the fiscal year ended June 30, 2022 compared to other expenses of JPY9,770 thousand (approximately $72 thousand) in the fiscal year ended June 30, 2021, primarily due to gain on sale of fixed assets.
Other Income, net Other income was JPY73,759 thousand (approximately $458 thousand) in the fiscal year ended June 30, 2024 compared to other income of JPY6,268 thousand (approximately $43 thousand) in the fiscal year ended June 30, 2023, primarily due to the cancellation penalties.
Provision for Income Taxes For the fiscal years ended June 30, 2023, 2022, and 2021, we had a tax provision of JPY322,765 thousand (approximately $2,236 thousand), JPY283,479 thousand (approximately $2,089 thousand), and JPY134,869 thousand (approximately $994 thousand), respectively, which resulted in an overall effective income tax rate of 37.5%, 36.1%, and 32.8%, respectively.
Other income was JPY6,268 thousand (approximately $43 thousand) in the fiscal year ended June 30, 2023 compared to other expenses of JPY25,596 thousand (approximately $189 thousand) in the fiscal year ended June 30, 2022, primarily due to the absence of proceeds from the sale of fixed assets. 40 Table of Contents Provision for Income Taxes For the fiscal years ended June 30, 2024, 2023, and 2022, we had a tax provision of JPY327,869 thousand ($2,037 thousand), JPY317,418 thousand (approximately $2,197 thousand), and JPY286,919 thousand (approximately $2,115 thousand), respectively, which resulted in an overall effective income tax rate of 34.4%, 34.1%, and 34.2%, respectively.
Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. The significant accounting estimates include real estate inventory and cost of sales, impairment of real estate inventory and property and equipment, warranty reserves, loss contingencies, incentive compensation expenses, and deferred income taxes.
Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. The significant accounting estimates include revenue recognition and cost of sales. Revenue recognition and cost of sales Our primary source of revenue is the development and sale of luxury single-family homes and condominiums, including land, in its principal market, Japan.
Average sale price decreased by 17% year-over-year to JPY 147,961 thousand (approximately $1,090 thousand); and ● the above-noted increases to revenue in fiscal year 2022 were offset by 94 units of land deliveries for single-family homes in the fiscal year ended June 30, 2022, down from 102 units delivered in the prior fiscal year.
Revenue from real estate sales increased by 18.1% to JPY17,098,308 thousand (approximately $118,352 thousand) in the fiscal year ended June 30, 2023 from JPY14,478,498 thousand (approximately $106,703 thousand) in the fiscal year ended June 30, 2022, primarily driven by the following factors: ● 88 units of land deliveries for single-family home in the fiscal year ended June 30, 2023, down from 93 units delivered in the prior fiscal year.
Selling, general, and administrative expenses were JPY1,786,614 thousand (approximately $13,167 thousand) in the fiscal year ended June 30, 2022, compared to JPY1,033,402 thousand (approximately $7,616 thousand) in the fiscal year ended June 30, 2021.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses primarily consist of payroll expenses, sales commissions, consulting expenses, and taxes and public dues. Selling, general, and administrative expenses were JPY2,051,040 thousand (approximately $12,749 thousand) in the fiscal year ended June 30, 2024, compared to JPY1,817,970 thousand (approximately $12,584 thousand) for the fiscal year ended June 30, 2023.
As of June 30, 2023, 2022, and 2021, we had JPY786,373 thousand (approximately $5,443 thousand), JPY403,108 thousand (approximately $3,058 thousand), and JPY480,322 thousand (approximately $3,644 thousand) in cash and deposits, respectively.
As of June 30, 2024, we had JPY1,300,684 thousand (approximately $8,085 thousand) in cash and deposits.
We believe our current liquidity is well-positioned to meet our capital expenditure needs in the future. 41 Table of Contents Cash Flows The following table summarizes our cash flows for the fiscal years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended June 30, (¥ in Thousands) ​ 2023 2022 2021 Cash flows from operating activities: ​ ​ ​ Net income ¥ 536,482 ¥ 528,383 ¥ 252,358 Adjustments to reconcile net income to net cash used in operating activities: ​ ​ ​ Depreciation and amortization ​ 76,522 ​ 43,945 ​ 37,326 Loss on disposal of assets ​ — ​ 1,106,677 ​ Deferred income taxes ​ 8,744 ​ (10,939) ​ 6,766 Changes in assets and liabilities: ​ ​ ​ Accounts receivable, net ​ (206,566) ​ 171,985 ​ 244,692 Real estate inventory ​ (1,555,861) ​ (4,306,865) ​ (591,778) Prepaid and other current assets ​ 29,124 ​ 62,130 ​ (100,265) Intangible asset, net ​ (1,477) ​ (54,735) ​ (48,426) Operating lease ​ 21,165 ​ 45,966 ​ (804) Other assets ​ (60,835) ​ (59,201) ​ 303,928 Accounts payable ​ 43,245 ​ 105,567 ​ 180,822 Customer deposits ​ 13,981 ​ 61,928 ​ 58,133 Accrued expenses and other current liabilities ​ (22,507) ​ (625,720) ​ (588,373) Net cash used in operating activities ​ (1,117,983) ​ (2,930,879) ​ (244,655) Cash flows from investing activities: ​ ​ ​ Purchases of property and equipment ​ (1,244,116) ​ (537,294) ​ (170,231) Proceeds from sale of property and equipment ​ — ​ 510,091 ​ — Purchase of investments ​ (4,126) ​ (3,670) ​ (10,700) Proceeds from sale of investments in marketable securities ​ — ​ 11,789 ​ 42,039 Other – net investing ​ 702 ​ — ​ (21,541) Net cash used in investing activities ​ (1,247,540) ​ (19,084) ​ (160,433) Cash flows from financing activities: ​ ​ ​ Proceeds from notes payable ​ 14,688,192 ​ 5,649,300 ​ 8,046,791 Payments on notes payable ​ (11,944,327) ​ (2,811,364) ​ (7,626,187) Proceeds from ordinary share issuance ​ — ​ 14,225 ​ 100,000 Proceeds from sale of treasury shares ​ — ​ 1,079 ​ — Other financing – net ​ 461 ​ (453) ​ 35,000 Net cash provided by financing activities ​ 2,744,326 ​ 2,852,787 ​ 555,604 Effect of exchange rate change on cash and cash equivalents ​ 4,462 ​ 19,962 ​ 271 Net increase in cash and cash equivalents ​ 383,265 ​ (77,214) ​ 150,787 Cash and cash equivalents, beginning of year ​ 403,108 ​ 480,322 ​ 329,535 Cash and cash equivalents, end of year ​ 786,373 ¥ 403,108 ¥ 480,322 ​ Operating Activities Net cash used in operating activities was JPY1,117,982 thousand (approximately $7,739 thousand) for the fiscal year ended June 30, 2023, compared to JPY2,930,879 thousand (approximately $22,236 thousand) for the fiscal year ended June 30, 2022.
We believe our current liquidity is well-positioned to meet our capital expenditure needs in the future. 41 Table of Contents Cash Flows The following table summarizes our cash flows for the fiscal years indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Fiscal Years Ended June 30, ​ ​ 2024 2023 2022 Cash flows from operating activities: ​ ​ ​ Net income ¥ 654,283 ¥ 606,047 ¥ 554,692 Adjustments to reconcile net income to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 102,713 ​ 82,865 ​ 43,359 Loss on disposal of assets ​ 5,852 ​ — ​ — Non-cash finance lease expense ​ ​ 23,847 ​ ​ 20,523 ​ ​ 15,684 Investment revaluation loss ​ ​ 1,965 ​ ​ 96 ​ ​ 658 Deferred income taxes, net ​ 22,879 ​ 8,681 ​ (10,944) Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ (16,246) ​ (3,302) ​ 5,475 Real estate inventory ​ 1,122,406 ​ (1,569,350) ​ (3,011,597) Contract assets ​ ​ 199,522 ​ ​ (178,305) ​ ​ 166,551 Prepaid and other current assets ​ (290,238) ​ 47,429 ​ 71,708 Operating lease, net ​ 2,655 ​ (805) ​ (2,122) Other assets ​ 15,890 ​ 11,963 ​ 4,677 Accounts payable ​ (130,709) ​ 50,699 ​ (607,092) Contract liabilities ​ (130,271) ​ 4,552 ​ 63,716 Accrued expenses and other current liabilities, and other liabilities ​ (12,653) ​ (730) ​ 106,957 Net cash provided by (used in) operating activities ​ 1,571,895 ​ (919,637) ​ (2,598,278) Cash flows from investing activities: ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ (2,221,499) ​ (1,250,451) ​ (203,983) Purchases of intangible assets ​ (6,359) ​ (2,438) ​ (22,674) Purchase of investments securities ​ (15,203) ​ (8,150) ​ (1,460) Proceeds from sale of investments in marketable securities ​ — ​ 5,000 ​ 11,984 Net cash used in investing activities ​ (2,243,061) ​ (1,256,039) ​ (216,133) Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from notes payable ​ 15,014,801 ​ 14,580,822 ​ 5,564,300 Payments on notes payable ​ (14,745,923) ​ (11,944,327) ​ (2,811,365) Payments on IPO costs ​ ​ (229,046) ​ ​ (63,702) ​ ​ (32,060) Proceeds from common stock issuance ​ 1,187,428 ​ — ​ — Proceeds from sale of treasury stocks ​ — ​ — ​ 15,304 Dividend payments ​ (24,998) ​ — ​ — Repayments of principal portion of finance lease liability ​ ​ (25,689) ​ ​ (18,262) ​ ​ (15,427) Net cash provided by financing activities ​ 1,176,573 ​ 2,554,531 ​ 2,720,752 Effect of exchange rate change on cash and cash equivalents ​ 8,904 ​ 4,410 ​ 16,445 Net increase (decrease) in cash and cash equivalents ​ 514,311 ​ 383,265 ​ (77,214) Cash and cash equivalents, beginning of year ​ 786,373 ​ 403,108 ​ 480,322 Cash and cash equivalents, end of year ¥ 1,300,684 ¥ 786,373 ¥ 403,108 Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the year for ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ ¥ 352,355 ​ ¥ 292,581 ​ ¥ 220,081 Income taxes ​ ¥ 316,050 ​ ¥ 396,669 ​ ¥ 212,223 Non-cash investing and financing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets obtained in exchange for operating lease liabilities ​ ¥ 2,613 ​ ¥ 103,771 ​ ¥ 62,683 ​ 42 Table of Contents Operating Activities Net cash provided by operating activities was JPY1,571,895 thousand (approximately $9,771 thousand) for the fiscal year ended June 30, 2024, compared to JPY919,637 thousand (approximately $6,366 thousand) of net cash used during the fiscal year ended June 30, 2023.
Net cash provided by financing activities was JPY2,852,787 thousand (approximately $21,643 thousand) for the fiscal year ended June 30, 2022, compared to JPY555,604 thousand (approximately $4,215 thousand) for the fiscal year ended June 30, 2021.
We acquired additional tools and equipment to support increased construction projects and inventory growth compared to the prior year. Financing Activities Net cash provided by financing activities was JPY1,176,573 thousand (approximately $7,313) for the fiscal year ended June 30, 2024, compared to JPY2,554,531 thousand (approximately $17,682 thousand) for the fiscal year ended June 30, 2023.
Revenue from real estate sales increased by 27.2% to JPY14,108,454 thousand (approximately $103,976 thousand) in the fiscal year ended June 30, 2022 from JPY11,090,778 thousand (approximately $81,736 thousand) in the fiscal year ended June 30, 2021.
Other revenue increased by 46.3% to JPY463,609 thousand (approximately $2,882 thousand) in the fiscal year ended June 30, 2024 from JPY316,940 thousand (approximately $2,194 thousand) in the fiscal year ended June 30, 2023.
Removed
Operating Results Comparison of Results of Operations for the Fiscal Years Ended June 30, 2023, 2022, and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except change % data) Fiscal Years Ended June 30, ​ 2023 ($) 2023 (¥) 2022 (¥) 2021 (¥) Revenue: Real estate sales 118,539 17,125,308 14,108,455 11,090,778 Other revenue 2,194 316,940 212,731 164,497 Total revenue 120,733 17,442,248 14,321,186 11,255,275 Cost of revenue and operating expenses: Cost of sales – real estate 100,327 14,494,256 11,812,347 9,652,072 Cost of sales – other 1,326 191,544 73,037 116,154 Selling, general and administrative expenses 13,058 1,886,530 1,786,614 1,033,402 Total cost of revenue and operating expenses 114,711 16,572,330 13,671,998 10,801,628 Operating income 6,021 869,918 649,188 453,647 Other income / (expense) 42 6,060 186,007 (9,770) Interest expense (116) (16,731) (23,333) (56,650) Total other income (expense) (74) (10,671) 162,674 (66,420) Income before income taxes 5,948 859,247 811,862 387,227 Income taxes 2,234 322,765 283,479 134,869 Net income 3,713 536,482 528,383 252,358 Net loss attributable to the noncontrolling interests 4 523 (370) (27,132) Net income attributable to ordinary shareholders 3,717 537,008 528,753 279,490 Foreign currency translation gain (loss) 37 5,384 19,056 (1,062) Total comprehensive income 3,755 542,389 547,809 278,428 ​ 38 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Supplemental Disclosures Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended (In thousands, except change % data) ​ June 30, 2023 ​ June 30, 2022 ​ June 30, 2022 ​ Gross margin % ​ 15.8 % 17.0 % 13.2 % Operating Profit % ​ 5 % 4.5 % 4.0 % Single-family home land deliveries – Units 90 94 102 ​ Single-family home land deliveries – Average Sale price (¥ in Thousands) 91,128 75,129 77,461 ​ Single-family home building deliveries – Units 65 81 50 ​ Single-family home building deliveries – Average Sale price (¥ in Thousands) 24,809 23,626 22,202 ​ Condominium land deliveries – Units 13 12 4 ​ Condominium land deliveries – Average Sale price (¥ in Thousands) 384,815 322,996 217,321 ​ Condominium building deliveries – Units 7 9 4 ​ Condominium building deliveries – Average Sale price (¥ in Thousands) 323,944 147,961 178,590 ​ ​ Revenue Revenue from real estate sales increased by 21.4% to JPY17,125,309 (approximately $118,539) in the fiscal year ended June 30, 2023 from JPY14,108,454 thousand (approximately $103,976 thousand) in the fiscal year ended June 30, 2022, primarily driven by the following factors: ● 90 units of land deliveries for single-family home in the fiscal year ended June 30, 2023, down from 94 units delivered in the prior fiscal year.
Added
Operating Results Comparison of Results of Operations for the Fiscal Years Ended June 30, 2024, 2023, and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except change % data) Fiscal Years Ended June 30, ​ 2024 ($) 2024 (¥) 2023 (¥) 2022 (¥) Revenue: Real estate sales 114,912 18,487,074 17,098,308 14,478,498 Other revenue 2,882 463,609 316,940 208,516 Total revenue 117,794 18,950,683 17,415,248 14,687,014 Cost of revenue and operating expenses: ​ ​ ​ ​ Cost of sales – real estate 97,720 15,721,271 14,466,459 12,023,652 Cost of sales – other 1,739 279,806 191,544 72,220 Selling, general and administrative expenses 12,749 2,051,040 1,817,970 1,704,042 Total cost of revenue and operating expenses 112,208 18,052,117 16,475,973 13,799,914 Operating income 5,586 898,566 938,275 887,100 Other income / (expense) 458 73,759 6,268 (25,596) Interest expense (114) (18,286) (16,731) (23,333) Total other income (expense) 344 55,473 (10,463) (48,929) Income before income taxes 5,930 954,039 928,812 838,171 Income taxes 2,038 327,869 317,418 286,919 Net income 3,892 626,170 611,918 551,252 Net loss attributable to the noncontrolling interests (5) (789) (524) (370) Net income attributable to ordinary shareholders 3,897 626,959 611,918 551,622 Foreign currency translation gain (loss) 65 10,512 5,241 19,055 Total comprehensive income 3,962 637,471 617,159 570,677 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental Disclosures Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended (In thousands, except change % data) ​ June 30, 2024 ​ June 30, 2023 ​ June 30, 2022 ​ Gross margin % ​ 15.6 % 15.8 % 17.6 % Operating Profit % ​ 4.7 % 5.4 % 6.0 % Single-family home land deliveries – Units 71 88 93 ​ Single-family home land deliveries – Average Sale price (¥ in Thousands) 76,841 97,343 77,891 ​ Single-family home building deliveries – Units 41 39 66 ​ Single-family home building deliveries – Average Sale price (¥ in Thousands) 30,320 34,142 26,252 ​ Condominium land deliveries – Units 33 16 11 ​ Condominium land deliveries – Average Sale price (¥ in Thousands) 353,026 447,739 446,555 ​ Condominium building deliveries – Units 4 1 2 ​ Condominium building deliveries – Average Sale price (¥ in Thousands) 40,335 35,915 125,093 ​ ​ Revenue Revenue from real estate sales increased by 8.1% to JPY18,487,074 thousand (approximately $114,912 thousand) in the fiscal year ended June 30, 2024 from JPY17,098,308 (approximately $118,352 thousand) in the fiscal year ended June 30, 2023, primarily driven by the following factors: ● 71 units of land deliveries for single-family home in the fiscal year ended June 30, 2024, down from 88 units delivered in the prior fiscal year because the company focused on condominium development rather than single-family home.
Removed
Such change was primarily due to the following factors: ● 12 units of land deliveries for condominiums in the fiscal year ended June 30, 2022, up from four units delivered in the prior fiscal year.
Added
Average sale price decreased by 7.2% year-over-year to JPY33,335 thousand (approximately $207 thousand) because the number of units of condominiums with low price increased.
Removed
Average sale price decreased by 3% year-over-year to JPY 75,129 thousand (approximately $554 thousand) primarily due to location of development projects.
Added
Average sale price increased by 25.0% year-over-year to JPY97,343 thousand (approximately $674 thousand).
Removed
Other revenue increased by 29.3% to JPY212,731 thousand (approximately $1,568 thousand) in the fiscal year ended June 30, 2022 from JPY164,497 thousand (approximately $1,212 thousand) in the fiscal year ended June 30, 2021, primarily due to higher miscellaneous sales, including higher property management revenue, real estate brokerage commissions, and higher hotel revenue compared to the prior fiscal year.
Added
Although the number of properties decreased, the unit price increased because properties were sold in higher-priced areas. ● 39 units of single-family home building deliveries in the fiscal year ended June 30, 2023, down from 66 units delivered in the prior fiscal year because the company focused on condominium development rather than single-family home.
Removed
Cost of revenue for real estate sales increased by 22.4% year-over-year to JPY11,812,347 thousand (approximately $87,054 thousand) in the fiscal year ended June 30, 2022, primarily reflecting higher direct costs associated with higher revenue.
Added
This growth was primarily driven by two hotels, which opened during the fiscal year ended June 30, 2023 and were in full operation for the full year throughout the fiscal year ended June 20, 2024.
Removed
Gross margin increased to 17% in the fiscal year ended June 30, 2022, compared to 13.2% in the fiscal year ended June 30, 2021, primarily driven by higher deliveries of condominiums and higher average selling price of land.
Added
Cost of Revenue and Gross Margin Cost of revenue primarily includes the lot purchase costs and demolition costs associated with each lot, construction costs of each home, capitalized interest, building permits and other local municipality related costs, internal and external realtor commissions, and warranty costs (both incurred and estimated to be incurred) Cost of revenue for real estate sales increased by 8.7% to JPY15,721,271 thousand (approximately $97,720 thousand) in the fiscal year ended June 30, 2024, from JPY14,466,459 thousand (approximately $100,135 thousand) in the fiscal year ended June 30, 2023, primarily reflecting increases in construction cost, such as labor costs and material costs since general market price in labor and material costs have been increasing.
Removed
As a percentage of revenue, selling, general, and administrative expenses increased to 12.5% in the fiscal year ended June 30, 2022, from 9.2% in the fiscal year ended June 30, 2021, due to higher indirect costs, including expensed IPO preparation expenses, offset by higher revenue.
Added
Operating income increased by 5.9% year-over-year to JPY939,275 (approximately $6,502) in the fiscal year ended June 30, 2023 from JPY887,100 thousand (approximately $6,537 thousand) in the fiscal year ended June 30, 2022. Operating profit margin decreased from 6.0% in the fiscal year ended June 30, 2022 to 5.4% in the fiscal year ended June 30, 2023.
Removed
Interest expenses decreased to JPY23,333 thousand (approximately $172 thousand) in the fiscal year ended June 30, 2022 from JPY56,650 thousand (approximately $417 thousand) in the fiscal year ended June 30, 2021, reflecting higher amounts of capitalized interest associated with our increased number of development projects, which offset higher net borrowings and interest incurred. 40 Table of Contents Other Income, net Other income was JPY6,062 (approximately $42) in the fiscal year ended June 30, 2023 compared to other expenses of JPY186,007 thousand (approximately $1,371 thousand) in the fiscal year ended June 30, 2022, primarily due to the absence of proceeds from the sale of fixed assets.
Added
Interest Expenses Interest expenses increased to JPY18,286 thousand (approximately $114 thousand) in the fiscal year ended June 30, 2024 from JPY16,731thousand (approximately $116thousand) in the fiscal year ended June 30, 2023, reflecting gradual increase in interest rates.
Removed
The decrease in net cash used in investing activities was primarily attributable to lower purchases of property, plant, and equipment and intangible assets associated with investments in our hotel operation business and the sale of property and equipment in the fiscal year ended June 30, 2022 resulting in proceeds of JPY510,091, as compared to no similar sale in the fiscal year ended June 30, 2021, offset by lower proceeds from sales of investment securities compared to the prior year.
Added
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of June 30, 2024, 2023, and 2022. 43 Table of Contents Contractual Obligations Scheduled contractual obligations required for the five years following June 30, 2024 and thereafter are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of ¥) Payments Due by Period Subsequent to June 30, 2024 ​ ​ 2025 2026 2027 2028 2029 Thereafter Total Short Term Land Borrowings 4,923,796 — — — — — 4,923,796 Long-term debt, including current portion 1,881,858 773,685 1,816,615 130,976 131,349 1,755,053 6,489,536 Interest on long-term debt 121,086 56,148 35,211 32,091 29,961 242,746 517,243 Operating lease obligations 70,941 68,268 24,863 — — — 164,072 Finance lease obligations 23,172 21,246 18,745 10,815 3,243 298 77,519 Total 6,442,903 1,239,348 2,150,434 173,882 164,553 2,001,047 12,172,166 ​ C.
Removed
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements as of June 30, 2023, 2022, and 2021.
Added
Revenue from sales of real estate is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration we expect to receive in exchange for those goods or services.
Removed
Contractual Obligations Scheduled contractual obligations required for the five years following June 30, 2023 and thereafter are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands of ¥) Payments Due by Period Subsequent to June 30, 2023 ​ ​ 2024 2025 2026 2027 2028 Thereafter Total Short Term Land Borrowings 5,285,509 — — — — — 5,285,509 Long-term debt, including current portion 613,647 3,137,152 688,647 100,332 100,674 1,410,863 6,051,315 Interest on long-term debt 126,454 95,704 29,115 24,931 23,409 215,795 515,408 Operating lease obligations 57,853 58,413 21,133 — — — 137,399 Finance lease obligations 19,983 17,842 15,591 12,428 3,846 367 70,057 Total 6,103,446 3,309,111 754,486 137,691 127,929 1,627,025 12,059,688 43 Table of Contents C.
Added
If the land and building are transferred to the customer in a lump-sum transaction, construction is performed on our real estate and revenue is recognized when title and possession are transferred to the customer. If the land is transferred first, building takes place on the customer's property and revenue is recognized over time using milestone method.
Removed
The COVID-19 Pandemic Affecting Our Results of Operations The ongoing COVID-19 pandemic has resulted in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spread of the virus.
Added
With the land title transferred to the buyer upon the closing of the Land Sales Contract, the construction of the building on the land both creates and enhances a customer-controlled asset and leads to the buyer receiving and benefiting from our performance of obligation as the work under the Construction Contract is conducted.
Removed
Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions, and temporarily closing businesses. 44 Table of Contents The COVID-19 pandemic has not materially impacted our business operations and operating results. Core demand for single-family homes and condominiums remains high, which is reflected in our higher revenue growth and operating profits.
Added
Based on the fact, we recognize revenue and cost of sales for the Construction Contract over time using the milestone method.
Removed
On the supply and construction side, however, our business has faced inflation in the prices of raw materials and labor costs associated with supply chain shortages resulting from the pandemic, which may adversely impact our margins.
Added
In applying the milestone method, the percentage of the revenue and cost of sales to be recognized when meeting each milestone is based on the percentage of estimated days required to complete the milestone out of estimated days to complete the total project.
Removed
As of the date of this annual report, we have passed the rising costs through to our customers in the form of higher average sale prices and also mitigated increases in our construction costs through fixed cost subcontractor arrangements, where the subcontractor bears the cost of inflation, thereby preserving our margins.
Added
The estimated days required to complete each milestone and the total project are significant assumptions used in the milestone method that directly and significantly affect the amounts of revenue and cost of sales to be recognized.
Removed
Although we currently expect this trend to continue for future supply side driven inflationary pressures, we cannot guarantee that we will be able to pass all cost increases to our customers and subcontractors or avoid adverse impacts on our margins.
Added
We developed estimated days required to complete each milestone and the total project based on the standardized process for constructions under regulation the government has on the main milestone of the whole construction process as well as the historical experience.
Removed
As of the date of this annual report, the daily life of the Japanese residents is largely back to its normal state, with the Japanese government allowing travel in and out of the country, subject to customary vaccination records and basic health precautionary measures.
Added
We believe that the number of days expected to achieve each milestone closely correlates to the actual construction costs based on the past experience. We closely monitor the accuracy and reasonableness of the estimated days required to complete each milestone and the total project as well as the actual costs incurred for each milestone and adjust them if necessary.
Removed
We believe the worst impacts of the pandemic are behind us and anticipate a gradual recovery or mean reversion toward normal consumer demand in the country. E. Critical Accounting Estimates The preparation of the financial statements in conformity with U.S.
Added
There have been no significant changes in the process or assumptions used during the fiscal years ended June 30, 2024, 2023 and 2022.
Added
Due to the low number of uncompleted projects at each year end, any potential changes in number of estimated days for meeting each milestone or for completing the total project will not result in significant changes in revenue recorded.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Ordinary Shares as of the date of this annual report for: ● each of our named executive officers and directors; 48 Table of Contents ● all our named executive officers and directors 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 Ordinary Shares.
Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Ordinary Shares as of the date of this annual report for: ● each of our named executive officers and directors; ● all our named executive officers and directors 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 Ordinary Shares.
Eiji Nagahara, our president, chief executive officer, and representative director, holds approximately 89.6% of the aggregate voting power of our outstanding Ordinary Shares. As a result, we are a “controlled company” within the meaning of the Nasdaq listing rules.
Eiji Nagahara, our president, chief executive officer, and representative director, holds approximately 89.7% of the aggregate voting power of our outstanding Ordinary Shares. As a result, we are a “controlled company” within the meaning of the Nasdaq listing rules.
Board Diversity Matrix Country of Principal Executive Offices: Japan Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 6 46 Table of Contents Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity ​ ​ ​ ​ ​ ​ Directors 0 ​ 6 ​ 0 ​ 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 ​ B.
Board Diversity Matrix Country of Principal Executive Offices: Japan Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 6 Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity ​ ​ ​ ​ ​ ​ Directors 0 ​ 6 ​ 0 ​ 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 ​ B.
Our articles of incorporation also provide that we may enter into agreements with our accounting auditors ( kaikei kansa-nin ) to limit their respective 47 Table of Contents liabilities to us arising in connection with a failure to execute their duties in good faith and without gross negligence to the amount stipulated in laws and regulations.
Our articles of incorporation also provide that we may enter into agreements with our accounting auditors ( kaikei kansa-nin ) to limit their respective liabilities to us arising in connection with a failure to execute their duties in good faith and without gross negligence to the amount stipulated in laws and regulations.
Risk Factors— Risks Related to Our Ordinary Shares and the Trading Market—Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.” Accordingly, you do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.
Risk Factors— Risks Related to Our Ordinary Shares and the Trading Market—Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you have less protection than you would have if we were a domestic issuer.” Accordingly, you do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. 48 Table of Contents D.
D. Employees See “Item 4. Information on the Company—B. Business Overview—Employees.” E.
Employees See “Item 4. Information on the Company—B. Business Overview—Employees.” E.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company. F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company. 49 Table of Contents F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable.
Percentage of beneficial ownership of each listed person is based on 13,641,900 Ordinary Shares outstanding as of the date of this annual report, excluding 1,986,100 issued treasury shares with no voting rights. Information with respect to beneficial ownership has been furnished by each named executive officer, director, or beneficial owner of 5% or more of our Ordinary Shares.
Ordinary Shares outstanding as of the date of this annual report, excluding 1,986,100 issued treasury shares with no voting rights. Information with respect to beneficial ownership has been furnished by each named executive officer, director, or beneficial owner of 5% or more of our Ordinary Shares.
In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ Beneficially Owned ​ ​ ​ Number Percent Directors and Executive Officers (1) : ​ Eiji Nagahara 12,220,837 89.6 % Daisuke Takahashi 45,455 * ​ Takashi Nihei 18,182 * ​ Hidekazu Hamagishi 4,546 * ​ Akiya Ueki — — ​ Hiroyuki Saito — — ​ Ryoma Iida — — ​ All directors and executive officers as a group (seven individuals): 12,289,020 90.1 % 5% Shareholders: ​ Eiji Nagahara 12,220,837 89.6 % * Represents less than 1% of the number of Ordinary Shares outstanding.
In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ Beneficially Owned ​ ​ ​ Number Percent Directors and Executive Officers(1): ​ Eiji Nagahara 12,234,474 89.7 % Daisuke Takahashi 45,455 * ​ Hidekazu Hamagishi 4,546 * ​ Kenichi Homma 9,091 * ​ Akiya Ueki — — ​ Hiroyuki Saito — — ​ Ryoma Iida — — ​ All directors and executive officers as a group (seven individuals): 12,293,566 90.1 % 5% Shareholders: ​ Eiji Nagahara 12,234,474 89.7 % * Represents less than 1% of the number of Ordinary Shares outstanding.
Engaging in the financial service business, he worked at Ibis Consulting Co., Ltd. from July 2011 to November 2011, First Management Service Co., Ltd. from March 2011 to June 2011, and SME Guarantee Organization Co., Ltd. from April 2010 to March 2011. Mr.
Hamagishi worked at Aisei Drug Co., Ltd., a pharmaceutical company, from December 2011 to March 2012. Engaging in the financial service business, he worked at Ibis Consulting Co., Ltd. from July 2011 to November 2011, First Management Service Co., Ltd. from March 2011 to June 2011, and SME Guarantee Organization Co., Ltd. from April 2010 to March 2011. Mr.
From April 2002 to December 2005, Mr. Hamagishi worked at Nissan Satio Saitama Co., Ltd., an automobile company. Mr. Hamagishi received his Bachelor of Law degree from Daito Bunka University in March 2002. Mr. Akiya Ueki, has served as our director and audit and supervisory committee member since September 2023.
From April 2002 to December 2005, Mr. Hamagishi worked at Nissan Satio Saitama Co., Ltd., an automobile company. Mr. Hamagishi received his Bachelor of Law degree from Daito Bunka University in March 2002. Mr. Kenichi Homma has served as our director since September 2024. Mr.
Beneficial ownership includes voting or investment power with respect to the Ordinary Shares. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them.
Beneficial ownership includes voting or investment power with respect to the Ordinary Shares. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person is based on 13,641,900.
Mr. Takahashi passed all four sections of the Uniform CPA Examination in February 2015. Mr. Takahashi received his bachelor’s degree of Marine Science from Hokkaido University in March 2001. 45 Table of Contents Mr. Takashi Nihei has served as our director since July 2021 and our general manager of development division since February 2006. Prior to joining our Company, Mr.
Mr. Takahashi passed all four sections of the Uniform CPA Examination in February 2015. Mr. Takahashi received his bachelor’s degree of Marine Science from Hokkaido University in March 2001. Mr. Hidekazu Hamagishi has served as our director since July 2021 and as our general manager of accounting department since July 2012. Prior to joining our Company, Mr.
Directors and Senior Management The following sets forth information regarding members of our board of directors and our executive officers as of the date of this annual report. ​ ​ ​ ​ ​ Name Age Position(s) Eiji Nagahara 55 President, Chief Executive Officer, and Representative Director Daisuke Takahashi 47 Chief Financial Officer Takashi Nihei 48 Director and General Manager of Development Division Hidekazu Hamagishi 44 Director and General Manager of Accounting Department Akiya Ueki 67 Director and Audit and Supervisory Committee Member Hiroyuki Saito 56 Independent Director and Audit and Supervisory Committee Member Ryoma Iida 37 Independent Director and Audit and Supervisory Committee Member ​ Mr.
Directors and Senior Management The following sets forth information regarding members of our board of directors and our executive officers as of the date of this annual report. ​ ​ ​ ​ ​ Name Age Position(s) Eiji Nagahara 56 President, Chief Executive Officer, and Representative Director Daisuke Takahashi 48 Chief Financial Officer Hidekazu Hamagishi 45 Director and General Manager of Accounting Department Kenichi Homma 53 Director and General Manager of the Yokohama Supervisory Branch Akiya Ueki 68 Director and Audit and Supervisory Committee Member Hiroyuki Saito 57 Independent Director and Audit and Supervisory Committee Member Ryoma Iida 38 Independent Director and Audit and Supervisory Committee Member ​ 45 Table of Contents Mr.
He passed Japanese bar examination on 2012 and was registered with the Osaka Bar Association on December 2013. Mr. Iida holds a Juris Doctor degree from Osaka University Law School. None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
He passed Japanese bar examination on 2012 and was registered with the Osaka Bar Association on December 2013. Mr. Iida holds a Juris Doctor degree from Osaka University Law School.
The board of directors may appoint from among its members (excluding those who are members of the audit and supervisory committee) a chairperson and a president, or one or more vice-presidents, senior managers, and executive managers of the board.
The board of directors may appoint from among its members (excluding those who are members of the audit and supervisory committee) a chairperson and a president, or one or more vice-presidents, senior managers, and executive managers of the board. 47 Table of Contents Our board of directors consists of five directors, among whom Hiroyuki Saito and Ryoma Iida satisfy the “independence” requirements of the Nasdaq corporate governance rules and the rules and regulations of the SEC.
For the fiscal year ended June 30, 2023, we paid an aggregate of JPY89,980,008 (approximately $682,649) as compensation to our executive officers and directors and we set aside or accrued JPY149,903,338 (approximately $1,137,268) to provide pension, retirement, or other similar benefits to our directors and executive officers. C.
For the fiscal year ended June 30, 2024, we paid an aggregate of JPY92,083,346 (approximately $572,373) as compensation to our executive officers and directors and we set aside or accrued JPY128,895,000 (approximately $801,187) to provide pension, retirement, or other similar benefits to our directors and executive officers.
Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K. 46 Table of Contents Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
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Nihei worked at I-Deal Co., Ltd., a real estate company, from March 2004 to February 2006 and Kyowajyuhan Co., Ltd., a real estate company, from October 2002 to January 2004. From April 1997 to July 2002, Mr. Nihei worked at La-table., Ltd, which mainly engages in the restaurant business. Mr.
Added
Homma joined the Company in October 2020 and has served as the General Manager of the Yokohama Supervisory Branch. In July 2022, Mr. Homma was also appointed as the Executive Officer of the Company. Since joining the Company, Mr.
Removed
Nihei received his diploma in Management Business from Tokyo Shoko Gakuin Technical College in March 1996. Mr. Hidekazu Hamagishi has served as our director since July 2021 and as our general manager of accounting department since July 2012. Prior to joining our Company, Mr. Hamagishi worked at Aisei Drug Co., Ltd., a pharmaceutical company, from December 2011 to March 2012.
Added
Homma has been responsible for the development of the Company’s business mainly in Kanagawa Prefecture, and has continued to lead and promote the business by playing a central role in strategic planning and execution.
Removed
Board Practices Board of Directors Our board of directors has the ultimate responsibility for the administration of our affairs.
Added
His experience prior to joining the Company includes roles at Nikos Life Insurance Co., Tell Corporation, Inc., Yokohama Housing Sales Co., Tokyu Livable Inc., and Bader Home Co. Mr. Akiya Ueki , has served as our director and audit and supervisory committee member since September 2023.
Removed
Our board of directors consists of six directors, among whom Hiroyuki Saito and Ryoma Iida satisfy the “independence” requirements of the Nasdaq corporate governance rules and the rules and regulations of the SEC.
Added
Compensation Recovery Policy We have adopted a compensation recovery policy to provide for the recovery of erroneously-awarded incentive compensation, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, final SEC rules, and applicable listing standards. C. Board Practices Board of Directors Our board of directors has the ultimate responsibility for the administration of our affairs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” 49 Table of Contents B. Related Party Transactions During the fiscal year ended June 30, 2023 and up to the date of this annual report, we have not engaged in any related party transactions. C.
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B. Related Party Transactions During the fiscal year ended June 30, 2024 and up to the date of this annual report, we have not engaged in any related party transactions. C. Interests of Experts and Counsel Not applicable.

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