PCLA 6-K
PicoCELA Inc. (PCLA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2026
Commission File Number: 001-42470
2-34-5 Ningyocho, SANOS Building, Nihonbashi
Chuo-ku, Tokyo 103-0013 Japan
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
| Form 20-F ☒ | Form 40-F ☐ |
Explanatory Note
PicoCELA Inc., a joint stock corporation with limited liability incorporated in Japan, is furnishing its unaudited interim financial statements and notes, together with management’s discussion and analysis of financial condition and results of operations for the six months ended March 31, 2026. The financial statements and notes are attached as Exhibit 99.1 to this report. Management’s supplemental explanation on financial results of operations is attached as Exhibit 99.2 to this report.
Exhibit Index
| Exhibit No. | Description | |
| 99.1 | Unaudited Interim Financial Statements and Notes of PicoCELA Inc. for the Six Months Ended March 31, 2026 | |
| 99.2 | Management’s Supplemental Explanation on Financial Results of Operations | |
| 101. INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PicoCELA Inc. | ||
| Date: September 18, 2026 | By: | /s/ Hiroshi Furukawa |
| Name: | Hiroshi Furukawa | |
| Title: | Chairman, Chief Technology Officer and Representative Director | |
Exhibit 99.1
PICOCELA INC.
FINANCIAL STATEMENTS
| F-1 |
PICOCELA INC.
BALANCE SHEETS
(Japanese yen in thousands, except share data)
| March 31, 2026 | September 30, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ¥ | ¥ | ||||||
| Accounts receivable-trade, net | ||||||||
| Related party receivable | ||||||||
| Inventories | ||||||||
| Advance payments | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Other intangible assets, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Total assets | ¥ | ¥ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | ¥ | ¥ | ||||||
| Contract liabilities – current | ||||||||
| Current portion of borrowings | ||||||||
| Operating lease liabilities – current | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Contract liabilities - non-current | ||||||||
| Borrowings - net of current portion | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Total liabilities | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Common shares, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ¥ | ¥ | ||||||
See accompanying notes to the unaudited financial statements.
| * |
| F-2 |
PICOCELA INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(Japanese yen in thousands, except share and per share data)
| Six Months Ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Revenues: | ||||||||||||
| Revenue from product | ¥ | ¥ | ||||||||||
| Revenue from product – related parties | ||||||||||||
| Revenue from SaaS, maintenance and others | ||||||||||||
| Revenue from SaaS, maintenance and others - related parties | ||||||||||||
| Total revenues | ||||||||||||
| Cost of revenues and operating expenses: | ||||||||||||
| Cost of product revenue | ||||||||||||
| Cost of SaaS, maintenance and others | ||||||||||||
| Selling, general and administrative expenses | ||||||||||||
| Total cost of revenues and operating expenses | ||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ||||||
| Foreign exchange gain (loss) | ( | ) | ( | ) | ||||||||
| Other non-operating income | ||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||
| Net loss before tax | ( | ) | ( | ) | ( | ) | ||||||
| Income tax benefit (expense) | ||||||||||||
| Net loss | ¥ | ( | ) | ¥ | ( | ) | ( | ) | ||||
| Net loss per share attributable to shareholders of the Company | ||||||||||||
| Basic | ¥ | ( | ) | ¥ | ( | ) | ( | ) | ||||
| Diluted | ¥ | ( | ) | ¥ | ( | ) | ( | ) | ||||
| Weighted average stocks outstanding* | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
See accompanying notes to the unaudited financial statements.
| * |
| F-3 |
PICOCELA INC.
STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
(Japanese yen in thousands, except share data)
| Common shares | Class A preferred shares | Class B preferred shares | Class C preferred shares | Additional paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | ¥ | ¥ | ¥ | ¥ | ¥ | ¥ | ( | ) | ¥ | |||||||||||||||||||||||||||||||||||
| Issuance of common shares in consideration for services rendered | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Offsetting of accumulated deficit and additional paid-in capital | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | ¥ | ¥ | ¥ | ¥ | ¥ | ¥ | ( | ) | ¥ | |||||||||||||||||||||||||||||||||||
| Common shares | Class A preferred shares | Class B preferred shares | Class C preferred shares | Additional paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | ¥ | ¥ | ¥ | ¥ | ¥ | ¥ | ( | ) | ¥ | |||||||||||||||||||||||||||||||||||
| Issuance of common shares for cash, net of offering costs | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | ¥ | ¥ | ¥ | ¥ | ¥ | ¥ | ( | ) | ¥ | |||||||||||||||||||||||||||||||||||
| Common shares | Class A preferred shares | Class B preferred shares | Class C preferred shares | Additional paid-in | Accumulated | |||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | ¥ | ¥ | ¥ | ¥ | ¥ | ¥ | ( | ) | ¥ | |||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | ¥ | ¥ | ¥ | ¥ | ¥ | ¥ | ( | ) | ¥ | |||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited financial statements.
| * | The number of shares presented above is adjusted retrospectively to reflect the 1 for 60 sub-division effected on October 24, 2024 and the 30 for 1 reverse share split effected on January 26, 2026. |
| F-4 |
PICOCELA INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
(Japanese yen in thousands)
| Six Months Ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | ¥ | ( | ) | ¥ | ( | ) | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Loss on disposal of assets | ||||||||||||
| Noncash operating lease expense | ||||||||||||
| Share-based compensation expense | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ||||||||||
| Related party receivable | ( | ) | ( | ) | ||||||||
| Inventories | ( | ) | ||||||||||
| Advance payments | ( | ) | ||||||||||
| Prepaid expenses and other current assets | ||||||||||||
| Other assets | ||||||||||||
| Accounts payable | ( | ) | ( | ) | ||||||||
| Contract liabilities | ( | ) | ||||||||||
| Accrued expenses and other liabilities | ( | ) | ||||||||||
| Operating lease liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Purchases of intangible assets | ( | ) | ( | ) | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from borrowing | ||||||||||||
| Payments on borrowing | ( | ) | ( | ) | ( | ) | ||||||
| Repayments of convertible bond | ( | ) | ||||||||||
| Proceeds from issuance of common shares in initial public offering | ||||||||||||
| Proceeds from class C preferred shares issuance | ||||||||||||
| Payments on share offering costs | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by financing activities | ( | ) | ||||||||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | ||||||
| Cash and cash equivalents at beginning of year | ||||||||||||
| Cash and cash equivalents at end of year | ¥ | ¥ | ||||||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid during the year for: | ||||||||||||
| Interest | ¥ | ¥ | ||||||||||
| Income taxes | ||||||||||||
| Non-cash activities: | ||||||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | ||||||||||||
See accompanying notes to the unaudited financial statements.
| F-5 |
PICOCELA INC.
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND BUSINESS
PicoCELA Inc. (“PicoCELA,” the “Company,” “we,” and “our”) is engaged in the manufacturing, installation, and services for enterprise wireless mesh solutions. PicoCELA’s backhaul engine (PBE) is a patented enterprise-grade wireless mesh technology which is used in cable-free connections in a variety of devices and equipment by customers across different industries, such as construction, industrial manufacturing, parks, malls, and various venues located in Japan. As of the date of this report, we solely operate in Japan. The Company has PicoManager, a cloud-based mesh network management service which helps with managing and monitoring the connectivity of wireless mesh Wi-Fi access points. The Company is focused on developing and providing technology that enables high density and cableless connections for mobile communications and information processing.
2. LIQUIDITY AND GOING CONCERN CONSIDERATIONS
The financial statements have been prepared assuming that the Company will continue as a going concern. The Company evaluated whether conditions and events, considered in the aggregate, raise substantial doubt about its ability to continue as a going concern in accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40).
For
the six-month period ended March 31, 2026, the Company incurred a net loss of ¥
To
alleviate the substantial doubt, management has pursued debt and equity financing opportunities. On July 16, 2026, the Company issued
Class A preferred shares to an institutional investor at $ per share for gross proceeds of $
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in Japanese yen, the currency of the country in which the Company is incorporated and operates. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (the “SEC”).
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. Actual results could differ from those estimates, and these differences could have a significant impact on the financial statements. The significant accounting estimates include impairment of inventory and property and equipment, incentive compensation expenses, and income taxes.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”) for all periods presented. Consistent with the criteria of ASC 606, the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The consumption tax that the Company collects concurrently with revenue-producing activities is excluded from revenue.
| F-6 |
The Company recognizes revenue as it satisfies a performance obligation when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes revenue based on the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the obligation, has discretion in establishing pricing and controls the promised goods before transferring those goods or services to customers.
The Company derives its revenue mainly from two sources: (1) product equipment, and (2) software as a service (SaaS), maintenance and others. All of the Company’s contracts with customers do not contain cancellable or refund-type provisions. The following is a description of the accounting policy for the principal revenue streams of the Company:
Product equipment
The Company generally sells the product based on cost plus margin. The Company does not offer discounts, price concessions, or right of return to the customers. Performance obligations are satisfied at a point in time when control of the product is transferred to the customer, which is generally the date on which legal title to the product is transferred to the customer, or the installation is completed. The Company bills customers (i) upon the execution of the contract and (ii) when control of the product is transferred to the customer, and customers generally pay within the same day of each billing.
SaaS, maintenance and others
The Company provides SaaS, maintenance and other services to the customers. The Company does not offer discounts or price concessions. The only performance obligation is to provide related services stated in the SaaS or maintenance agreements the Company entered into. Fees related to the services are billed and collected monthly. The revenue is recognized over the contract term of up to six years since the customers simultaneously receive and consume the benefits provided by the services over the contract period.
Disaggregation of Revenue
Revenue is disaggregated among product equipment and SaaS, maintenance and others.
Product (software or Wi-Fi equipment): Sales of equipment or software product delivered to the customer for revenue include: “PCWL,” our mesh Wi-Fi devices with PBE installed. These products may be customized based on the customers’ needs. Revenue is recognized at a point in time when our performance obligation is complete and control and ownership of the equipment passes to the customer or upon customer acceptance of the product delivery. The contract to deliver software or physical product equipment can be separated from a service agreement that can be provided to the customer. Customers typically purchase the equipment from the Company and can choose to use the Company’s service plan (i.e., maintenance and/or SaaS) or can have a qualified third party to perform the installation, management and maintenance services separately. The equipment and software are separate performance obligations because the equipment and software can be used separately from the SaaS and/or maintenance plans.
Platform service (SaaS), maintenance and others: we provide SaaS services through PicoManager (PM), which is our SaaS platform, and web-based configuration and management, activation and customer service, and asset management. We develop and manage PM ourselves. SaaS platform’s term of use is that our customers use the service over the contract period, and revenue recognition is based on the subscription period. Revenue for maintenance service is recognized when service is rendered, and the fee for such service is invoiced monthly.
The Company’s revenue, disaggregated by revenue stream for the six months ended March 31, 2026, 2025, and 2024 was as follows (in thousands):
| For the Six Months Ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Product equipment | ¥ | ¥ | ¥ | |||||||||
| SaaS, maintenance and others | ||||||||||||
| Total revenues | ¥ | ¥ | ¥ | |||||||||
Operation and Functional Currency
The Company’s reporting and functional currency is the Japanese yen and the Company operates in Japan.
| F-7 |
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that adopt new or revised accounting pronouncements on effective dates for public business entities.
Concentration of Credit Risk and Significant Vendors
Financial
instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and cash equivalents. The
Company maintains all of its bank accounts at high-quality and accredited financial institutions in Japan. Cash balances in bank accounts
in Japan are insured by the Deposit Insurance Corporation of Japan, but may exceed the insured limits of ¥
There
were 3, 3, and 3 suppliers from whom the purchase of products individually represented greater than 10% of the total purchase from the
Company for the six months ended March 31, 2026, 2025, and 2024, respectively. As of March 31, 2026, 2025, and 2024, there were
There
were 4, 3, and 3 customers from whom the revenue individually represented greater than 10% of the total revenues of the Company for the
six months ended March 31, 2026, 2025, and 2024, respectively. As of March 31, 2026, 2025, and 2024, accounts receivable from those customers
accounted for
Segment Reporting
ASC
Topic 280, Segment Reporting, operating segments are defined as components of an enterprise for which separate financial information
is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources
and in assessing performance. The Company’s CODM has been identified as the Chief Operating Officer (“COO”), who primarily
evaluates performance based on the sales results. Segment profitability is measured by net income. The Company only has
Cash and Cash Equivalents
Cash and cash equivalents are defined as cash on hand, demand deposits with financial institutions, and short-term liquid investments with an initial maturity date of three months or less.
| F-8 |
Accounts Receivable
The
Company’s accounts receivable consists primarily of receivables from distributors of our products and direct customers, which were
recorded in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”).
The balance is presented net of an allowance for expected credit losses. The Company monitors the financial condition of its contractors
and records the allowance for expected credit losses on receivables when it believes that contractors are unable to make their required
payments based on relevant information about past events, such as delinquencies and aging trends, current economic conditions, and reasonable
and supportable forecasts of future economic conditions that affect the collectability of the reported amounts. The allowance for expected
credit loss is the Company’s best estimate of the amount of probable credit losses related to existing accounts receivable. Accounts
receivable are written off after considerable collection efforts have been made and the amounts are determined to be uncollectible. As
of October 1, 2024, accounts receivable balance was ¥
Inventories
Inventories consist of finished goods, raw materials, and work in progress (“WIP”). Inventory is stated at cost unless the carrying amount is determined not to be recoverable, in which case the affected inventory is written down to net realizable value. Inventories include the costs of finished goods, raw materials, work in progress, and direct overhead costs incurred related to the manufacturing. Indirect overhead costs are charged to selling, general, and administrative expenses as incurred. Inventories are carried at the lower of accumulated cost or net realizable value. The Company computes inventory costs on an average cost basis and adjusts for excess and obsolete inventories primarily based on future demand and market conditions, including product specific facts and circumstances that considers the Company’s customer base and an assessment of selling price in relation to product cost. Once written down, a new lower cost basis for that inventory is established.
Advance payments
Advancement
payments represent payments made to certain vendors of raw materials in advance of receiving such raw materials. As of March 31, 2026
and September 30, 2025, advance payments were ¥
Property and equipment, net
Property and equipment are measured using the cost model and are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property and equipment are as follows:
| Property and equipment | Useful life/Depreciation period | |
| Machinery and equipment | ||
| Tools, furniture and fixtures |
| F-9 |
Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment and finite-lived intangible assets are reviewed for impairment whenever events and circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. In making these determinations, the Company uses certain assumptions, including, but not limited to: (i) estimated fair value of the assets; and (ii) estimated undiscounted future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of the asset being used in the Company’s operations, and (iii) estimated residual values. Fair value is determined using various valuation techniques including discounted cash flow models, depreciated replacement cost, quoted market values and third-party independent appraisals, as considered necessary. The Company’s assumptions about future conditions that are important to its assessment of potential impairment of its long-lived assets are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available. There were no impairments of property, equipment and intangible assets during the six months ended March 31, 2026, 2025, and 2024.
Other intangible assets, net
Intangible assets with finite lives are initially recorded at cost and amortized on a straight-line basis over the estimated economic useful lives of the respective assets.
The estimated useful lives of other intangible assets are as follows:
| Other intangible assets | Useful life/Depreciation period | |
| Software | ||
| Trademarks |
Leases
Lessee accounting
The Company has leases classified as operating leases for corporate offices in Tokyo and Fukuoka in Japan and in Warsaw in Poland. Assets and liabilities associated with operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the Company’s balance sheets. ROU assets and related lease liabilities associated with operating leases are recognized at the commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
For leases with a term of 12 months or less, the Company makes an accounting policy election by class of underlying assets not to recognize ROU assets and lease liabilities. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term.
Modification to existing lease agreements, including changes to the lease term or payment amounts, are reviewed to determine whether they result in a separate contract. For modifications that do not result in a separate contract, management reviews the lease classification and re-measures the related ROU assets and lease liabilities at the effective date of the modification.
| F-10 |
Lessor accounting
The Company enters into non-cancellable sales-type lease agreements for PCWL equipment with a renewal option. There is no purchase option. At the commencement date of the lease agreements, the Company derecognizes the carrying amount of the underlying assets and recognizes the net investment in the lease measured at the present value, discounted using the rate implicit in the lease, of the lease receivable and unguaranteed residual asset. The current portion of net investment in leases is included in accounts receivable-trade, net and the long-term portion of the net investment in the lease is included in other assets on the balance sheets.
The Company also recognizes selling profit or selling loss at the commencement date and interest income using the effective interest method over the lease term. Revenue from the sales-type leases is included in revenue from SaaS, maintenance and others and the corresponding cost is included in cost of SaaS, maintenance and others on the statements of operations. Interest income from the sales-type leases is included in interest income (expense) on the statements of operations.
The Company elected to exclude the taxes assessed and collected from the lessee from consideration in the contract and from variable payments not included in the consideration in the contract, if applicable.
Deferred offering costs
Deferred offering costs represent the incremental costs incurred for the Company’s issuance of common shares. These costs are deferred and will be deducted from the gross proceeds of the offering. Deferred offering costs primarily include professional fees related to the offering of common shares. As of March 31, 2026 and September 30, 2025, the deferred offering costs were and , respectively.
Warranty Cost
The Company provides a limited warranty for its hardware products, PCWLs, for one year. The Company’s standard warranty requires the Company or its subcontractors to repair or replace defective products during such warranty period at no cost to the customer as far as the damages or defects are not caused by the customer and the claimed defects violate our written product specifications. Warranty costs are charged to cost of revenues as incurred due to immaterial warranty costs.
Contract Liabilities
Contract liabilities are amounts collected from customers with the execution of the sales contract. Contract liabilities represent advances received on contracts in progress and are recognized as revenue as we provide related services. In the event of contract default or termination, the customer deposit is forfeited and recognized as revenue.
The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation.” The cost of services received from employees and non-employees in exchange for awards without performance conditions is recognized in the statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company recognizes compensation cost for awards with performance conditions if and when the Company concludes that it is probable that the performance condition will be achieved. The Company records forfeitures as they occur.
| F-11 |
Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares, composed of incremental common shares issuable upon the exercise of options in all periods, are included in the computation of diluted net income (loss) per share to the extent such shares are dilutive. In a period in which a loss is incurred, only the weighted average number of common shares issued and outstanding is used to compute the diluted net loss per share, as the inclusion of potential common shares would be anti-dilutive.
Cost of Revenues
Cost of revenues includes product costs, processing costs, and software costs of each product.
Selling, general and administrative expenses
Selling,
general and administrative expenses consist primarily of directors’ compensations, salaries and allowances, bonuses, welfare expenses,
recruitment expenses, travel expenses, advertising expenses, rent, taxes and duties, commission fees, depreciation and amortization,
shipping and handling costs, research and development costs and others. Research and development costs incurred were ¥
Selling and Commission Costs
Sales commissions are paid and expensed based on products closed, if any. Other selling costs are expensed in the period incurred.
Advertising Costs
Advertising
costs are expensed as incurred. Advertising costs were ¥
Income Taxes
Income taxes are computed in accordance with the provision of ASC, 740, Income Taxes. Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for all future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, operating loss, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period in which the new legislation is enacted. The Company recognizes the effect of income tax provisions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likelihood of being realized. Changes in recognition and measurement are reflected in the period in which the change in judgement occurs.
The Company recognizes deferred tax assets to the extent that these assets are believed to be more likely than not to be realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more likely than not expected to be realized. In making such a determination, all available positive and negative evidence is considered, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.
Tax benefits for uncertain tax positions are based upon management’s evaluation of the information available at the reporting date. To be recognized in the financial statements, a tax benefit must be at least more likely than not of being sustained based on technical merits. The benefit for positions meeting the recognition threshold is measured as the largest benefit more likely than not of being realized upon settlement with a taxing authority that has full knowledge of all relevant information.
| F-12 |
Recent Accounting Pronouncements
New Accounting Pronouncements Not Yet Effective
The Company has reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact on the Company’s financial statements.
4. SALES-TYPE LEASES AND NET INVESTMENT IN THE LEASE
For
the six months ended March 31, 2026, 2025, and 2024, the Company recorded revenue from the sales-type leases of , , and ¥
For
the six months ended March 31, 2026, 2025, and 2024, the Company recorded interest income of ¥
The component of its aggregate net investment in leases is as follows (in thousands):
| March 31, 2026 | September 30, 2025 | |||||||
| Lease receivable | ¥ | ¥ | ||||||
| Unguaranteed residual asset | ||||||||
| Net investment in the lease | ||||||||
| Current portion | ( | ) | ( | ) | ||||
| Long-term portion | ¥ | ¥ | ||||||
As of March 31, 2026, the annual aggregate maturities of lease payments under sales-type leases during each of the next five fiscal years were as follows (in thousands):
| Year Ending September 30: | Amount | |||
| Remainder of 2026 | ¥ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total undiscounted lease payments | ||||
| Less: lease amount representing interest | ( | ) | ||
| Net investment in the lease | ¥ | |||
| F-13 |
5. INVENTORIES
Inventories consist of finished goods, raw materials, and WIP. WIP includes the cost of the developed product as well as all the direct costs incurred to manufacture the product. The cost of the product is calculated on an average cost basis.
Inventories consisted of the following as of March 31, 2026 and September 30, 2025 (in thousands):
| March 31, 2026 | September 30, 2025 | |||||||
| Raw materials | ¥ | ¥ | ||||||
| WIP | ||||||||
| Finished goods | ||||||||
| Total | ¥ | ¥ | | |||||
6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets as of March 31, 2026 and September 30, 2025 consisted of the following (in thousands):
| March 31, 2026 | September 30, 2025 | |||||||
| Prepaid expenses | ¥ | ¥ | ||||||
| Consumption tax receivable | ||||||||
| Refund of taxes and public dues | ||||||||
| Others | ||||||||
| Total | ¥ | ¥ | ||||||
7. PROPERTY AND EQUIPMENT, NET
In
the six months ended March 31, 2026, 2025, and 2024, the Company disposed of its property and equipment and incurred disposal loss of
, , and ¥
As of March 31, 2026 and September 30, 2025, property and equipment consisted of the following (in thousands):
| Useful Life (years) | March 31, 2026 | September 30, 2025 | ||||||||
| Machinery and equipment | ¥ | ¥ | ||||||||
| Tools, furniture, and fixtures | ||||||||||
| Vehicles | ||||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||||
| Property and equipment, net | ¥ | ¥ | ||||||||
The
Company recorded depreciation expense on property and equipment of ¥
| F-14 |
8. OTHER INTANGIBLE ASSETS, NET
The components of intangible assets as of March 31, 2026 and September 30, 2025 were as follows (in thousands):
| March 31, 2026 | September 30, 2025 | |||||||
| Intangible assets subject to amortization: | ||||||||
| Software | ¥ | ¥ | ||||||
| Trademark | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Net carrying amount | ||||||||
| Intangible assets not subject to amortization: | ||||||||
| Software in progress | ||||||||
| Total intangible assets | ¥ | ¥ | ||||||
The
aggregate amortization expense was ¥
The estimated aggregate amortization expense for other intangible assets for the next five years and thereafter is as follows:
| Thousands of Yen | ||||
| Years ending September 30: | ||||
| Remainder of 2026 | ¥ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | ¥ | |||
9. OTHER ASSETS
Other assets as of March 31, 2026 and September 30, 2025 consisted of the following (in thousands):
| March 31, 2026 | September 30, 2025 | |||||||
| Net investment in the lease | ¥ | ¥ | ||||||
| Guarantee deposits(a) | ||||||||
| Investment in security(b) | ||||||||
| Prepaid expenses (non-current) | ||||||||
| Others | ||||||||
| Total | ¥ | ¥ | ||||||
| (a) |
| (b) |
| F-15 |
10. CONTRACT LIABILITIES
As
of March 31, 2026 and September 30, 2025, the contract liabilities balance was ¥
Significant changes in the contract liabilities balances for the six months ended March 31, 2026, 2025, and 2024 were as follows (in thousands):
| For the Six Months Ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Beginning balance | ¥ | ¥ | ¥ | |||||||||
| Reclassification of the beginning contract liabilities to revenue, as a result of performance obligations satisfied | ( | ) | ( | ) | ( | ) | ||||||
| Cash received in advance and not recognized as revenue | ||||||||||||
| Net change in contract liabilities | ( | ) | ||||||||||
| Ending balance | ¥ | ¥ | ¥ | |||||||||
11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following as of March 31, 2026 and September 30, 2025 (in thousands):
| March 31, 2026 | September 30, 2025 | |||||||
| Other accounts payable | ¥ | ¥ | ||||||
| Accrued expenses | ||||||||
| Accrued vacation | ||||||||
| Accrued consumption Taxes (VAT) | ||||||||
| Deposits received | ||||||||
| Others | ||||||||
| Total | ¥ | ¥ | ||||||
12. BORROWINGS
The Company’s borrowings are from financial institutions in Japan and used for working capital and other general corporate purposes. Debt issuance costs related to these borrowings are immaterial and expensed as incurred.
Borrowings consisted of the following as of March 31, 2026 (in thousands):
Original Amount Borrowed | Loan Duration | Annual Interest Rate | Amount | |||||||||||
| Lender 1 | ¥ | | % | ¥ | ||||||||||
| Lender 2 | | % | ||||||||||||
| Lender 3 | | % | ||||||||||||
| Aggregate outstanding principal balances | ||||||||||||||
| Less: current portion and short-term borrowings | ( | ) | ||||||||||||
| Long-term portion of borrowings | ¥ | |||||||||||||
| F-16 |
Borrowings consisted of the following as of September 30, 2025 (in thousands):
Original Amount Borrowed | Loan Duration | Annual Interest Rate | Amount | |||||||||||
| Lender 1 | ¥ | % | ¥ | |||||||||||
| Lender 2 | % | |||||||||||||
| Lender 3 | | % | ||||||||||||
| Lender 4 | | % | ||||||||||||
| Lender 5 | | % | ||||||||||||
| Aggregate outstanding principal balances | ||||||||||||||
| Less: current portion and short-term borrowings | ( | ) | ||||||||||||
| Long-term portion of borrowings | ¥ | |||||||||||||
The
weighted average interest rate on short-term borrowings outstanding as of March 31, 2026 and September 30, 2025 was
The
Company entered into a line of credit agreement with a financial institution with a credit limit of ¥
The
Company had unpaid guaranty fees to Hiroshi Furukawa, the Company’s then chief executive officer (“CEO”) and representative
director, of and in accrued expenses and other current liabilities as of March 31, 2026 and September 30, 2025, respectively.
The Company recorded guaranty fees to Hiroshi Furukawa of , ¥
As of March 31, 2026, the annual aggregate maturities of borrowing during each of the next five fiscal years were as follows (in thousands):
| Amount | ||||
| Remainder of 2026 | ¥ | |||
| 2027 | ||||
| Total borrowings | ¥ | |||
| F-17 |
13. BONDS
On
October 16, 2023, the Company entered into convertible bond agreements for the aggregate amount of ¥
On
August 30, 2024,
14. COMMITMENTS AND CONTINGENCIES
Contingencies
In the ordinary course of business, the Company often includes standard indemnification provisions in its arrangements with third parties, including vendors, customers, investors, and the Company’s directors and officers. Pursuant to these provisions, the Company may be obligated to indemnify such parties for losses or claims suffered or incurred in connection with its activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. The Company is subject to claims or proceedings from time to time relating to the products and other aspects of its product operations. Management believes that these claims include usual obligations incurred in the normal course of business. In the opinion of management, these matters will not have a material effect on the Company’s financial condition, results of operations or cash flows.
Borrowings
The Company has borrowings that are primarily made under general agreements. Refer to “Note 12. Borrowings” for information about future debt payments.
Legal Matters
From time to time in the normal course of business, the Company may be a party to various legal matters, such as threatened or pending claims or proceedings. There were no such material matters as of March 31, 2026 and September 30, 2025 and for the six months ended March 31, 2026, 2025, and 2024.
Lease Obligations
Operating Leases
The Company entered into non-cancellable operating lease agreements for corporate offices and recognized rent expenses on a straight-line basis over the term of the lease. None of the amounts disclosed below for these leases contain variable payments or residual value guarantees.
Operating
lease costs included in selling, general and administrative expense in the Company’s statements of operations totaled ¥
| F-18 |
The following table (in thousands) presents the operating lease related assets and liabilities recorded on the Company’s balance sheets as of March 31, 2026 and September 30, 2025:
| March 31, 2026 | September 30, 2025 | |||||||
| Right-of-use assets | ¥ | ¥ | ||||||
| Total operating lease assets | ¥ | ¥ | ||||||
| Operating lease liabilities – current | ¥ | ¥ | ||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | ¥ | ¥ | ||||||
The table below shows the future minimum payments under non-cancelable operating leases as of March 31, 2026 (in thousands):
| Years Ending September 30, | Operating Leases | |||
| Remainder of 2026 | ¥ | |||
| 2027 | ||||
| Total | ||||
| Less: lease amount representing interest | ( | ) | ||
| Present value of lease liabilities | ¥ | |||
15. EQUITY
As of March 31, 2026 and September 30, 2025, the Company had and common shares authorized. Each holder of a common share is entitled to one vote for each share held as of the record date and is entitled to receive dividends, when, as and if declared by the shareholders’ meeting or the board of directors of the Company. The number of total common shares outstanding was and as of March 31, 2026 and September 30, 2025, respectively.
PicoCELA is subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below:
Common shares
Under
the Companies Act, issuances of common shares are required to be credited to the common shares account for at least
| F-19 |
Class A preferred shares
In the event of distribution of residual assets upon dissolution of the Company, the Company shall pay to the Class A preferred shareholders as equally as to Class B and C preferred shareholders, prior to common shareholders, an amount equal to the contributed amount. At any time, Class A preferred shares are convertible into the Company’s common shares at a certain conversion price. Class A preferred shares contain terms that change the conversion prices as disclosed below. On July 8, 2024, Class A preferred shares of units were converted into common shares of units at a conversion price of ¥ per share. On July 17, 2024, at the Extraordinary Shareholders Meeting, the Company’s shareholders approved a resolution to amend the articles of incorporation to eliminate Class A preferred shares.
Class B preferred shares
In the event of distribution of residual assets upon dissolution of the Company, the Company shall pay to the Class B preferred shareholders as equally as to Class A and C preferred shareholders, prior to common shareholders, an amount equal to the contributed amount. At any time, Class B preferred shares are convertible into the Company’s common shares at a certain conversion price. Class B preferred shares contain terms that change the conversion prices as disclosed below. On July 8, 2024, Class B preferred shares of units were converted into common shares of units at a conversion price of ¥ per share. On July 17, 2024, at the Extraordinary Shareholders Meeting, the Company’s shareholders approved a resolution to amend the articles of incorporation to eliminate Class B preferred shares.
Class C preferred shares
In the event of distribution of residual assets upon dissolution of the Company, the Company shall pay to the Class C preferred shareholders as equally as to Class A and B preferred shareholders, prior to common shareholders, an amount equal to the contributed amount. At any time, Class C preferred shares are convertible into the Company’s common shares at a certain conversion price. Class C preferred shares contain terms that change the conversion prices as disclosed below. On July 8, 2024, Class C preferred shares of units were converted into common shares of units at a conversion price of ¥ and ¥. On July 17, 2024, at the Extraordinary Shareholders Meeting, the Company’s shareholders approved a resolution to amend the articles of incorporation to eliminate Class C preferred shares.
Terms that change the conversion prices of Class A, B and C preferred shares
Class A, B and C preferred shares contain a feature that requires the conversion price to be adjusted in the following events.
| (a) | In the event of a stock split of common shares | |
| (b) | In the event of a reverse stock split of common shares | |
| (c) | In the event that the Company issues common shares or disposes of common shares held by the Company for an amount lower than the conversion price before adjustment | |
| (d) | In the event that the Company issues or disposes of shares, stock acquisition rights (including those attached to bonds with stock acquisition rights) or other securities, or shares, stock acquisition rights or other securities that may be acquired by the Company in exchange for the delivery of common shares of the Company at a price lower than the amount to be paid for such shares, stock acquisition rights, or other securities | |
| (e) | In the event of the issuance of stock acquisition rights (including Common Shares or shares to be acquired in exchange for delivery of Common Shares or shares that may be requested to be acquired by the Company) that would result in the issue price per share (the amount obtained by dividing the amount paid for the issuance of stock acquisition rights plus the amount of assets to be contributed upon exercise by the number of shares of the Company to be delivered upon exercise; the same shall apply hereinafter) issued upon exercise of the stock acquisition rights (including the case of gratis allotment) being less than the conversion price before adjustment | |
| (f) | In the events of merger, share exchange, share transfer, corporate capital, or reduction in the amount of capital | |
| (g) | In the event that causes or may cause a change in the number of outstanding common shares of the Company (excluding a change caused by the number of common shares of the Company held by the Company) |
| F-20 |
Capital reduction
Under the Companies Act, the Company is allowed to transfer the amounts of common shares, additional paid-in capital, and accumulated deficit among the balances of these equity accounts under certain conditions upon resolution of the shareholders.
Dividends
Under
the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon a resolution
approved at the shareholders’ meeting. The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to
the shareholders, subject to certain limitations and additional requirements. Semi-annual interim dividends may also be paid once a year
upon a resolution approved by the board of directors, if the articles of incorporation of the company stipulate so. The Companies Act
provides certain limitations on the amounts available for dividends or the purchase of treasury stocks.
Increases/decreases and transfer of common shares, reserve, and surplus
The
Companies Act requires that an amount equal to 10% of dividends must be appropriated as legal reserve (a component of retained earnings)
or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends
until the total of the aggregate amount of legal reserve and additional paid-in capital equals 25% of common share. Under the Companies
Act, the total amount of additional paid-in capital and legal reserve may be reduced without limitation. The Companies Act also provides
that common share, legal reserve, additional paid-in capital, other capital surplus and retained earnings may be transferred among the
accounts under certain conditions upon resolution of the shareholders. Upon resolution of shareholders at the extraordinary shareholders’
general meeting held on February 24, 2026, additional paid-in capital was offset against an accumulated deficit in the amount of ¥
Treasury Stocks
The Companies Act also provides for companies to purchase treasury stocks and dispose of such treasury stocks by resolution of the board of directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula.
The Company has historically awarded stock options to various officers, employees and consultants of the Company to purchase common shares of the Company. During the years ended September 30, 2017 to 2019, the Company issued four batches of stock options to acquire the equivalent of total common shares of the Company. . The options became exercisable after the Company successfully completed the IPO on January 17, 2025.
On May 31, 2023, the Company awarded options to purchase an aggregate of and common shares at an exercise price of ¥ and ¥ per common share, respectively, to various officers, directors and employees of the Company. The weighted-average grant-date fair value of the options was ¥. The IPO, one of the performance conditions for the exercise of both options, was successfully completed on January 17, 2025. The option to purchase an aggregate of common shares has another performance condition under which the options will be exercisable upon achieving certain pre-tax income.
| F-21 |
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| (JPY) | (Years) | |||||||||||
| Outstanding as of September 30, 2025 | ||||||||||||
| Granted | - | |||||||||||
| Forfeited/cancelled | - | |||||||||||
| Exercised | - | |||||||||||
| Outstanding as of March 31, 2026 | ||||||||||||
| Vested and exercisable as of March 31, 2026 | ||||||||||||
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| (JPY) | (Years) | |||||||||||
| Outstanding as of September 30, 2024 | ||||||||||||
| Granted | - | |||||||||||
| Forfeited/cancelled | - | |||||||||||
| Exercised | - | |||||||||||
| Outstanding as of March 31, 2025 | ||||||||||||
| Vested and exercisable as of March 31, 2025 | ||||||||||||
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | ||||||||||
| (JPY) | (Years) | |||||||||||
| Outstanding as of September 30, 2023 | ||||||||||||
| Granted | - | |||||||||||
| Forfeited/cancelled | ( | ) | - | |||||||||
| Exercised | - | |||||||||||
| Outstanding as of March 31, 2024 | ||||||||||||
| Vested and exercisable as of March 31, 2024 | - | |||||||||||
For the six months ended March 31, 2026, 2025, and 2024, the Company recognized share-based compensation expense from the stock options of , ¥ million, and , respectively. As of March 31, 2026, the unrecognized stock-based compensation related to the unvested option was ¥ million and is expected to be recognized when a performance condition is considered probable of achievement.
During the six months ended March 31, 2026, in accordance with restricted common share compensation agreements, the Company issued common shares to Hiroshi Furukawa, the Company’s then CEO and representative director, and shares to Hideaki Horikiri, the Company’s then CFO and director in consideration for services rendered. The shares were fully vested on the grant date, and no future services are required for vesting. The agreements prohibit any sale, transfer, loan or pledge of shares for a period of 20 years from the date of grant. However, the prohibition may be canceled by a resolution of the Company’s board of directors.
The
grant-date fair value of the restricted shares was determined based on the quoted market price of the Company’s unrestricted common
shares on the respective grant dates, adjusted for a discount for lack of marketability (“DLOM”) to reflect the transfer
restrictions. The DLOM was estimated using an option-pricing methodology based on the Black-Scholes Model. The significant assumptions
used in estimating the DLOM included the quoted market price of the Company’s common shares, expected volatility, the 20-year restriction
period, and the applicable risk-free interest rate. Based on this valuation, the grant-date fair value was determined to be ¥
During the six months ended March 31, 2026, 2025, and 2024, the Company recorded a net loss. Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has not included the effects of options on diluted net loss per share because to do so would be antidilutive.
| F-22 |
| For the Six Months Ended March 31, | ||||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Numerator: | ||||||||||||
| Net loss attributable to common shareholders | ¥ | ( | ) | ¥ | ( | ) | ¥ | ( | ) | |||
| Denominator: | ||||||||||||
| Weighted average number of common shares outstanding, basic and diluted | ||||||||||||
| Basic and diluted net loss per share | ¥ | ) | ¥ | ) | ¥ | ) | ||||||
| Antidilutive shares excluded from computation of net loss per share | ||||||||||||
18. INCOME TAXES
The
Company’s income tax benefit differs from the expected benefit from applying the national, prefectural, and municipal government
rate of
19. FAIR VALUE DISCLOSURES
ASC Topic 820, Fair Value Measurements (ASC 820), defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date within an entity’s principal market, if any. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity, regardless of whether it is the market in which the entity will ultimately transact for a particular asset or liability or if a different market is potentially more advantageous. Accordingly, this exit price concept may result in a fair value that differs from the transaction price or market price of the asset or liability.
ASC 820 provides a framework for measuring fair value under U.S. GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:
Level 1 – Fair value is based on quoted prices in active markets for identical assets or liabilities.
Level 2 – Fair value is determined using significant observable inputs, generally either quoted prices in active markets for similar assets or liabilities, or quoted prices in markets that are not active.
Level 3 – Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.
The Company utilizes fair value measurements to account for certain items and account balances within the financial statements. Fair value measurements may also be utilized on a non-recurring basis, such as for the impairment of long-lived assets. The fair value of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, current portion of borrowings and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. The Company’s Level 1 assets consist of cash and cash equivalents in the accompanying balance sheets. The carrying value of the Company’s long-term borrowings and bond payable approximates fair value at each balance sheet date because the stated rate of interest of the debts approximates the market interest rate at which the Company can borrow similar debts. As of March 31, 2026 and September 30, 2025, the Company did not have any assets or liabilities measured at fair value classified as Level 2 or Level 3.
| F-23 |
The
Company held investment in non-marketable equity securities of ¥
20. RELATED PARTY TRANSACTIONS
Citibank,
N.A. is a multinational bank, and a holder of more than
EXEO
Group is a multinational radio and telecommunication device distributor and held more than
SHIMIZU
CORPORATION is a multinational construction company and a holder of more than
MCC
Venture Capital Limited Liability Company (“MCC”) held more than
Nikken
Lease Kogyo Co., Ltd. (“Nikken”) is a multinational leasing company and held more than
21. CONSULTING AGREEMENT
On
March 31, 2023, the Company entered into a consulting and services agreement with Spirit Advisors LLC (“Spirit Advisors”).
The Company agreed to compensate Spirit Advisors with engagement fee of U.S.$
| F-24 |
The
Company entered into a financial advisory agreement and a follow-on advisory agreement on February 7, 2025, and March 6, 2025, respectively,
with Qing “Calvin” Zhu (the “Advisor”), an individual advisor, in connection with the Company’s financing.
The Company incurred and paid the Advisor U.S.$
22. SUBSEQUENT EVENTS
The Company and Hideaki Horikiri, the Company’s then CFO and director, currently the Company’s COO and director, entered into those certain two Restricted Common Share Compensation Agreements (collectively, the “Compensation Agreements”), each executed on April 1, 2026 and April 11, 2026, respectively, based on the Companies Act and the resolution regarding the grant of restricted common shares adopted at the meetings of the board of directors of the Company held on March 11, 2026 and March 24, 2026. Pursuant to the Compensation Agreements, the Company issued and common shares of the Company to Mr. Horikiri on April 1, 2026 and April 11, 2026, respectively. The issuance of the common shares was in consideration for Mr. Horikiri’s services rendered and included a prohibition on any sale, transfer, loan or pledge of the shares for a period of 20 years from the respective dates of issuance. However, the prohibition may be canceled by a resolution of the Company’s board of directors.
On April 30, 2026, at an extraordinary general meeting of the shareholders of the Company, the shareholders approved, among other things, the establishment of the Class A preferred shares of the Company.
On
July 14, 2026, the Company entered into a Class A Preferred Share Purchase Agreement (the “Purchase Agreement”) with a certain
institutional investor. Pursuant to the Purchase Agreement, on July 16, 2026, the Company sold and issued Class A preferred
shares of the Company at the price of $ per share, for gross proceeds of $
The Company has evaluated subsequent events after the balance sheet date through September 18, 2026, the date the financial statements were available for issuance. Management has determined that no significant events or transactions have occurred subsequent to the balance sheet date other than the events disclosed above that require both recognition and disclosure in the financial statements.
| F-25 |
Exhibit 99.2
MANAGEMENT’S SUPLEMENTAL EXPLANATION ON FINANCIAL RESULTS OF OPERATIONS
Operating Results
Comparison of the Results for the Six Months Ended March 31, 2026, 2025 and 2024
The following table sets forth statements of operations of PicoCELA Inc., a joint stock corporation with limited liability incorporate in Japan (“we,” “our,” “us,” or the “Company) for the six months ended March 31, 2026, 2025 and 2024:
| (in thousands, except change % data) | Six Months Ended March 31, | Change 2026 vs 2025 | ||||||||||||||||||||||
| 2026 ($) | 2026 (¥) | 2025 (¥) | 2024 (¥) | ¥ | YoY % | |||||||||||||||||||
| Revenue from product equipment | 1,892 | 300,913 | 202,034 | 157,894 | 98,879 | 48.9 | % | |||||||||||||||||
| Revenue from SaaS, Maintenance and others | 418 | 66,477 | 50,547 | 120,587 | 15,930 | 31.5 | % | |||||||||||||||||
| Total revenues | 2,310 | 367,390 | 252,581 | 278,481 | 114,809 | 45.5 | % | |||||||||||||||||
| Cost of revenues | 971 | 154,425 | 107,999 | 129,684 | 46,426 | 43.0 | % | |||||||||||||||||
| Selling, general and administrative expenses | 17,642 | 2,806,510 | 434,629 | 464,804 | 2,371,881 | 545.7 | % | |||||||||||||||||
| Operating loss | (16,303 | ) | (2,593,545 | ) | (290,047 | ) | (316,007 | ) | (2,303,498 | ) | 794.2 | % | ||||||||||||
| Interest income (expense), net | (4 | ) | (632 | ) | (15,532 | ) | (299 | ) | 14,900 | -95.9 | % | |||||||||||||
| Other income (expense), net | 7 | 1,134 | (10,649 | ) | (1,511 | ) | 11,783 | -110.6 | % | |||||||||||||||
| Total other income (expense) | 3 | 502 | (26,181 | ) | (1,810 | ) | 26,683 | -101.9 | % | |||||||||||||||
| Net loss before tax | (16,300 | ) | (2,593,043 | ) | (316,228 | ) | (317,817 | ) | (2,276,815 | ) | 720.0 | % | ||||||||||||
| Income tax benefit (expense) | - | - | - | - | - | 0.0 | % | |||||||||||||||||
| Net loss | (16,300 | ) | (2,593,043 | ) | (316,228 | ) | (317,817 | ) | (2,276,815 | ) | 720.0 | % | ||||||||||||
Impact of Share-Based Compensation
For the six months ended March 31, 2026, we reported a net loss of JPY 2,593 million, compared with net losses of JPY 316 million and JPY 318 million for the six months ended March 31, 2025 and 2024, respectively. Our net loss for the six months ended March 31, 2026 included approximately JPY2.33 billion of share-based compensation expense relating to restricted common shares issued as compensation. This expense was recognized in accordance with the U.S. generally accepted accounting principles (“GAAP”) and significantly increased our reported net loss for the period.
The share-based compensation expense is non-cash in nature. Recognition of the expense did not require the Company to make a corresponding cash payment and, accordingly, the expense is added back in reconciling net loss to cash flows from operating activities.
The magnitude of the share-based compensation expense should therefore be considered separately from the Company’s cash-based operating performance when evaluating the results for the six months ended March 31, 2026.
Non-GAAP Financial Measures
Non-GAAP Net Loss and Non-GAAP Net Loss per Share
We define non-GAAP net loss as GAAP net loss excluding the impact of stock-based compensation expense. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the diluted weighted average common share outstanding. Our management believes non-GAAP net loss and non-GAAP net loss per share are key performance measures and uses such measures to evaluate our operating performance. Accordingly, we believe that the presentation of these adjusted operating results provides useful supplemental information to investors and facilitates the analysis and comparison of our operating results across reporting periods. Our calculation of non-GAAP net loss and non-GAAP net loss per share may differ from similarly titled non-GAAP measures, if any, reported by our peer companies and therefore may not serve as an accurate basis of comparison among companies. Non-GAAP net loss and non-GAAP net loss per share should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
The following table provides a reconciliation of net loss to non-GAAP net loss for the six months ended March 31, 2026, 2025 and 2024:
| (in thousands) | Six Months Ended March 31, | |||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net loss | ¥ | (2,593,043 | ) | ¥ | (316,228 | ) | ¥ | (317,817 | ) | |||
| Stock-based compensation expenses | 2,330,000 | 5,024 | - | |||||||||
| Non-GAAP net loss | ¥ | (263,043 | ) | ¥ | (311,204 | ) | ¥ | (317,817 | ) | |||
| Weighted average number of common shares outstanding used to compute net loss per share, basic and diluted | 2,477,981 | 788,180 | 237,138 | |||||||||
| Net loss per share – basic and diluted | ¥ | (1,046.43 | ) | ¥ | (401.21 | ) | ¥ | (1,340.22 | ) | |||
| Non-GAAP net loss per share - basic and diluted | ¥ | (106.15 | ) | ¥ | (394.84 | ) | ¥ | (1,340.22 | ) | |||
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
Adjusted EBITDA is a key measure used by our management to analyse our financial results, establish budgets and operating goals for our business, evaluate our performance and make strategic decisions. Accordingly, we believe that the presentation of adjusted EBITDA is useful supplemental information to investors and facilitates the analysis and comparison of our operating results across reporting periods. Our calculation of adjusted EBITDA may differ from similarly titled non-GAAP measures, if any, reported by our peer companies and therefore may not serve as an accurate basis of comparison among companies. Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
We define adjusted EBITDA as our net loss excluding: (i) interest expense, net, (ii) income tax expense, (iii) depreciation and amortization, (iv) noncash operating lease expense, (v) other (income) expense, net, and (vi) stock-based compensation expense.
The following table provides a reconciliation of net loss to adjusted EBITDA for the six months ended March 31, 2026, 2025 and 2024:
| (in thousands) | Six Months Ended March 31, | |||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net loss | ¥ | (2,593,043 | ) | ¥ | (316,228 | ) | ¥ | (317,817 | ) | |||
| Interest expense, net | 632 | 15,532 | 299 | |||||||||
| Income tax expense | - | - | - | |||||||||
| Depreciation and amortization | 12,721 | 11,902 | 9,286 | |||||||||
| Noncash operating lease expense | 4,651 | 5,259 | 5,257 | |||||||||
| Other (income) expenses, net | (1,134 | ) | 10,649 | 1,511 | ||||||||
| Stock-based compensation expense | 2,330,000 | 5,024 | - | |||||||||
| Adjusted EBITDA | ¥ | (246,173 | ) | ¥ | (267,862 | ) | ¥ | (301,464 | ) | |||
Shareholders’ Equity
Although the JPY2.33 billion share-based compensation expense significantly increased the Company’s reported net loss for the six months ended at March 31, 2026, it did not result in a corresponding JPY2.33 billion reduction in shareholders’ equity. The recognition of the restricted share compensation resulted in a corresponding increase in common shares and additional paid-in capital, which substantially offset the effect of the compensation expense on total shareholders’ equity.
Total shareholders’ equity as of March 31, 2026 and September 30, 2025 was as follows:
| (in thousands) | March 31, 2026 | September 30, 2025 | ||||||
| Total shareholders’ equity | ¥ | 202,075 | ¥ | 469,948 | ||||
Operating Cash Flow
The Company’s net cash used in operating activities was as follows:
| (in thousands) | Six Months Ended March 31, | |||||||||||
| 2026 | 2025 | 2024 | ||||||||||
| Net cash used in operating activities | ¥ | (134,549 | ) | ¥ | (245,641 | ) | ¥ | (180,766 | ) | |||
The JPY2.33 billion share-based compensation expense recognized during the six months ended March 31, 2026 did not itself result in a cash outflow. In the operating cash flow section of the statement of cash flows, this non-cash expense is added back to net loss in determining net cash provided by or used in operating activities.
Management, therefore, believes that the Company’s operating cash flow, together with its reported GAAP results, provide important additional context for understanding the impact of the share-based compensation expense on the Company’s financial performance.