Pixie Dust Technologies Readies $19 Million U.S. IPO (Pending:PXDT)

A Fast Take On Pixie Mud Applied sciences, Inc.

Pixie Mud Applied sciences, Inc. (PXDT) has filed to boost $19 million in an IPO of its American Depositary Shares representing underlying frequent shares, in line with an F-1 registration assertion.

The agency produces private care gadgets and spatial sensing and management techniques.

Given administration’s extreme valuation expectations for a tiny firm with declining income and excessive and growing working losses, my outlook on the IPO is to Promote.

Pixie Mud Overview

Tokyo, Japan-based Pixie Mud Applied sciences, Inc. was based to develop ultrasonic private stimulation gadgets for shoppers and unrelated sensing and management techniques and supplies for industrial use.

Administration is headed by co-founder and CEO Dr. Yoichi Ochiai, who has been with the agency since its inception in 2017 and has been an assistant professor of library, data and media research on the College of Tsukuba since 2015.

The corporate’s main choices embody the next:

• SonoRepro – shopper scalp care

• VUEVO – shopper voice arrival detection for deaf folks

• kikippa – shopper acoustic stimulation speaker machine

• iwasemi – sound absorbing materials – industrial.

As of October 31, 2023, Pixie Mud has booked honest market worth funding of $49.2 million in fairness and debt. From traders together with Incubate Fund, INCJ, Ltd., Abies Ventures Fund and people.

Pixie Mud – Buyer Acquisition

The agency is concentrated on promoting its merchandise primarily in Japan and will promote third-party merchandise alongside its merchandise to offer full options to prospects.

The agency is pursuing a spread of income fashions for its core wave management know-how, as detailed beneath:

Promoting, G&A bills as a proportion of complete income have risen sharply as revenues have decreased, because the figures beneath point out:

Click on to enlarge

(Supply – SEC.)

The Promoting, G&A effectivity a number of, outlined as what number of {dollars} of further new income are generated by every greenback of Promoting, G&A expense, fell to adverse (0.1x) in the newest reporting interval, as proven within the desk beneath:

Click on to enlarge

(Supply – SEC.)

Pixie Mud’s Market & Competitors

In accordance with a 2022 market analysis report by Emergen Analysis, the worldwide marketplace for therapeutic ultrasound remedy was an estimated $1.93 billion in 2021 and is forecasted to achieve $4.0 billion by 2030

This represents a forecast CAGR (Compound Annual Progress Fee) of 8.5% from 2022 to 2030.

The primary drivers for this anticipated progress are a rise within the variety of ultrasound procedures and an increase within the prevalence of varied persistent circumstances.

Additionally, the chart beneath summarizes the anticipated market progress and associated dynamics:

Main aggressive or different business members embody the next:

• Denkibari Brush (GM Company)

• Physician Scalp (Will A Co., Ltd.)

• Tillet (WATAKYU CREAT CO., LTD.)

• LH Scalp EX (ARTNATURE INC.)

• Scalp Raise (YA-MAN, Ltd.).

The corporate additionally seeks to function in industrial/industrial markets with its sensing and management system applied sciences.

Pixie Mud Applied sciences, Inc. Monetary Efficiency

The corporate’s latest monetary outcomes could be summarized as follows:

• Declining prime line income

• Diminished gross revenue and uneven gross margin

• Rising working losses

• Rising money utilized in operations.

Under are related monetary outcomes derived from the agency’s registration assertion:

Click on to enlarge

(Supply – SEC.)

As of October 31, 2023, Pixie Mud had $2.0 million in money and $16.4 million in complete liabilities.

Free money movement throughout the twelve months ending October 31, 2023, was adverse ($8.5 million).

Pixie Mud Applied sciences, Inc. IPO Particulars

Pixie Mud intends to boost $19 million in gross proceeds from an IPO of its American Depositary Shares representing underlying frequent shares, providing 2 million shares at a proposed midpoint worth of $9.50.

No present shareholders have indicated an curiosity in buying shares on the IPO worth.

Assuming a profitable IPO, the corporate’s enterprise worth at IPO would approximate $112.2 million, excluding the consequences of underwriter over-allotment choices.

The float to excellent shares ratio (excluding underwriter over-allotments) shall be roughly 13.3%. A determine below 10% is usually thought-about a “low float” inventory, which could be topic to vital worth volatility.

As a international non-public issuer, the corporate can select to make the most of diminished, delayed or exempted monetary and senior officer disclosure necessities versus those who home U.S. companies are required to observe.

The agency is an “rising progress firm” as outlined by the 2012 JOBS Act and will elect to make the most of diminished public firm reporting necessities; potential shareholders would obtain much less data for the IPO and sooner or later as a publicly-held firm inside the necessities of the Act.

Administration says it is going to use the web proceeds from the IPO as follows:

roughly 8% for manufacturing of our present product strains;

roughly 16% for continued commercialization (together with advertising and marketing and gross sales assist) of our present product strains;

roughly 18% for analysis and growth. Specifically, we plan to start growth of prototypes of latest proprietary soundproofing metamaterials and a mass manufacturing prototype mannequin for VUEVO glasses; and

roughly 57% for working capital and common company functions, which can embody future strategic investments and acquisitions complementary to our enterprise, though now we have not recognized any particular funding or acquisition goal presently.

(Supply – SEC.)

Administration’s presentation of the corporate roadshow is just not accessible.

Concerning excellent authorized proceedings, administration stated the agency is just not at present a celebration to any materials authorized or administrative proceedings.

The only listed bookrunner of the IPO is Boustead Securities.

Valuation Metrics For Pixie Mud

Under is a desk of related capitalization and valuation figures for the corporate:

Click on to enlarge

(Supply – SEC.)

Commentary About Pixie Mud’s IPO

Pixie Mud Applied sciences is in search of U.S. public capital market funding to fund its continued R&D efforts and assist its product commercialization actions.

The agency’s financials have produced dropping prime line income, lowered gross revenue and uneven gross margin, greater working losses and growing money utilized in operations.

Free money movement for the twelve months ending October 31, 2023, was adverse ($8.5 million).

Promoting, G&A bills as a proportion of complete income have risen sharply as income has decreased; its Promoting, G&A effectivity a number of fell to adverse (0.1x) as revenues dropped.

The agency at present plans to pay no dividends, and plans to retain any future earnings for reinvestment again into the agency’s progress and dealing capital necessities.

PXDT’s latest capital spending historical past signifies it has spent calmly on capital expenditures even because it has generated adverse working money movement.

The market alternative for therapeutic ultrasound remedy within reason strong and anticipated to develop at a average price of progress within the coming years.

Boustead Securities is the only underwriter, and the ten IPOs led by the agency over the past 12-month interval have generated a mean return of adverse (58.8%) since their IPO. It is a bottom-tier efficiency for all main underwriters throughout the interval.

Dangers to the corporate’s outlook as a public firm embody its deal with Japan, the dearth of shopper consciousness of its therapies, its small dimension and skinny capitalization.

As for valuation expectations, administration is asking traders to pay an Enterprise Worth/Income a number of of roughly 27.7x.

Given administration’s extreme valuation expectations for a tiny firm with declining income and excessive and growing working losses, my outlook on the Pixie Mud Applied sciences, Inc. IPO is to Promote.

Anticipated IPO Pricing Date: To be introduced.