United States securities and exchange commission logo
May 4, 2022
Eiji Nagahara
President and Chief Executive Officer
LEAD REAL ESTATE CO., LTD.
6F, MFPR Shibuya Nanpeidai Building 16-11
Nampeidai-cho, Shibuya-ku
Tokyo, 150-0036, Japan
Re: LEAD REAL ESTATE
CO., LTD.
Draft Registration
Statement on Form F-1
Submitted April 8,
2022
CIK No. 0001888980
Dear Mr. Nagahara:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
DRS filed on April 8, 2022
Enforceability of Civil Liabilites, page 32
1. Please revise your
disclosure to include all of the information required by Item 101(g) of
Regulation S-K,
including, for example, discussing whether any treaties or reciprocity
may exist with the
United States, and whether any processes exist where investors may
bring original actions
or judgments may be enforced.
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Revenue, page 44
2. We note your disclosure
on page 44 regarding your revenue from 102 units of land
Eiji Nagahara
FirstName LastNameEiji Nagahara
LEAD REAL ESTATE CO., LTD.
Comapany
May 4, 2022NameLEAD REAL ESTATE CO., LTD.
May 4,
Page 2 2022 Page 2
FirstName LastName
deliveries for single-family homes and 50 units of single-family home
building deliveries
in the fiscal year ended June 30, 2021. We also note your disclosure
on page F-9
regarding your revenue from Land and non-development revenue, which
appears to be the
majority of your revenue. We note your disclosure that Development
sales include the
revenue recognized for the delivery of single-family home or
condominium buildings. It
is unclear why your revenue from the sale of land appears to be
substantially greater than
your Development sales revenue. Please explain clearly these different
sources of revenue
and how they reflect your business as a developer of luxury
residential properties,
including single-family homes and condominiums. Also, reconcile your
disclosure on
page 44 with your disclosure on page 2 which states you delivered 102
single-family
home projects to 102 customers in fiscal 2021.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 45
3. Please provide a more robust analysis of material changes in your cash
flows from
operating (including changes in working capital components and
material changes to
reconciling items), investing, and financing activities between the
periods presented. In
doing so, please explain the underlying reasons for and implications
of material changes
between periods to provide investors with an understanding of trends
and variability in
cash flows. Refer to Item 303 of Regulation S-K.
4. Please revise to state whether, as of the most recent balance sheet
date, your existing cash
will be sufficient to meet capital expenditure needs for the next 12
months. In addition,
please ensure your disclosures highlight your ability to generate and
obtain adequate
amounts of cash to meet your requirements and your plans for cash in
the short-term based
upon your currently available resources including whether you are
relying on external
financing including the proceeds from this offering to meet your
needs. Please describe
any potential constraints that may not allow you to obtain such
financing. We refer you to
FRC 501.03(a) and Section IV of SEC Release 33-8350.
Business, page 51
5. Given your proposed use of proceeds, please provide an expanded
description
of your plan to acquire land in Dallas, Texas, and describe your
strong connections with
local builders.
6. We note that you have included a number of photographs of properties
throughout the
Business section identified as "example" properties. Please revise to
clarify whether these
are properties that you have actually developed and sold.
Real Estate Development and Sales, page 54
7. We note your disclosure that you manage and actively participate in
every aspect of your
luxury residential property development... with the assistance of
specialized firms at each
development stage. Please describe your relationships with these
specialized firms
Eiji Nagahara
FirstName LastNameEiji Nagahara
LEAD REAL ESTATE CO., LTD.
Comapany
May 4, 2022NameLEAD REAL ESTATE CO., LTD.
May 4,
Page 3 2022 Page 3
FirstName LastName
including what roles they perform including, for example, if you have
relationships with
financing companies and the terms of any such arrangements.
Our Project Development Process, page 57
8. We note your disclosure that you maintain long-term relationships with
certain real estate
agencies. Describe the nature, extent and duration of these
relationships and why the
agencies would proactively choose to source to you rather than
maximizing the price for
the properties. Also clarify whether you have any agreements with
these agencies that
would require them to continue to source properties to you on an
advantageous basis or at
all.
Glocaly Platform, page 60
9. We note references throughout your filing to your AI-enabled
interactive media platform.
Please explain clearly what you mean by AI-enabled technology in the
context of your
Glocaly platform.
Direct Registration System, page 90
10. We note your disclosure under this heading and have the following
comment:
Please make clear the difference between registered holding
of uncertificated ADSs
and holding of security entitlements;
Include any material risk factors related to the Direct
Registration System and Profile,
as necessary; and
We note that the depositary will initially hold the ordinary
shares underlying the
ADSs. Therefore, please include discussion of any ability to seek
rectification of any
errors in the systems and processes you discuss, as necessary.
Financial Statements, page F-1
11. Please provide your updated financial statements in your next
amendment, or tell us how
you determined that you comply with the updating requirements of Item
8 of Form 20-F.
Consolidated Balance Sheets, page F-3
12. Please revise to separately present accounts receivable and contract
assets separately on
the face of the balance sheet for the periods presented. See ASC
606-10-45-1.
1. Nature of Operations and Significant Accounting Policies
Revenue Recognition, page F-8
13. Reference is made to your revenue recognition policy disclosed within
your footnotes on
page F-8. Please tell us and expand your disclosures to address the
following:
Eiji Nagahara
LEAD REAL ESTATE CO., LTD.
May 4, 2022
Page 4
Please clarify whether you are recognizing revenue related to your
construction
contracts at a point in time or over time. In that regard, please
clarify whether a
transfer of a completed building to a buyer on the closing date is
related to work as
part of the construction contracts you enter into or whether the
sale of the completed
building relates to sales of existing fully constructed buildings
for which the
Company did not develop;
To the extent a completed building is not related to your
construction contracts,
please clarify whether a sale of a completed building is part of
your Non-
Development revenue shown in your Disaggregation of Revenue
disclosure on page
F-9 and that revenue from your construction contracts for which the
Company
actually performs is reflected in your Development Sales line item
in that disclosure;
Please clarify what constitutes the sales of the existing
structures as disclosed on page
F-9 for which the Company did not develop. In that regard, please
clarify whether
those existing structures include sales of already completed
buildings and single
family homes that the Company did not develop; and
Please clarify whether you are recognizing revenue over time using
an output method
or an input method. In that regard we note that revenue recognized
based on
milestones is considered an output method where as costs incurred
relative to total
estimated costs to be incurred is considered an input measure.
5. Commitments and Contingencies, page F-17
14. Please revise your disclosure to include each of the disclosure
requirements in ASC 842-
20-50-4, as applicable, or tell us how you have complied with the
guidance.
7. Debt, page F-18
15. Please clarify whether the 4,353,512 JPY short-term borrowings related to
your land loans
collateralized on specific lots disclosed on page F-18 are the same loans
that are
considered part of the 4,451,075 JPY current portion of your aggregate
5,755,023
JPY long term borrowings. Additionally, please reconcile such amounts to
the Long Term
Debt, including current portion line item included in your Contractual
Obligations table on
page 47 which shows such total amount at 1,401,511 JPY.
You may contact Ameen Hamady at 202-551-3891 or Wilson Lee at
202-551-3468 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Ruairi Regan at 202-551-3269 or Pam Long at 202-551-3765 with any other
questions.
Sincerely,
FirstName LastNameEiji Nagahara
Comapany NameLEAD REAL ESTATE CO., LTD. Division of
Corporation Finance
Office of Real
Estate & Construction
May 4, 2022 Page 4
cc:
FirstName Ying Li, Esq.
LastName