PXDT Pixie Dust Technologies Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of January, 2024

Commission File Number 001-41749

PIXIE DUST TECHNOLOGIES, INC.

(Translation of registrant’s name into English)

Pixie Dust Technologies, Inc.

2-2-1 Yaesu, Chuo-ku
Tokyo, 104-0028, Japan

(Address of Principal Executive Offices)

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 

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Financial Condition and Results of Operations

On January 31, 2024, Pixie Dust Technologies, Inc. (the “Company”) released its interim financial results, including the unaudited condensed financial statements of the Company, for the six months ended October 31, 2023.

This report on Form 6-K is hereby incorporated by reference into the Registration Statement on Form S-8 (File No. 333-275675) of the Company, and in each instance the related prospectuses, as such registration statement and prospectuses may be amended or supplemented from time to time, and to be a part thereof from the date on which this report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

EXHIBIT INDEX

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

2

Exhibit 99.1

PIXIE DUST TECHNOLOGIES, INC.

ANNOUNCES INTERIM FINANCIAL RESULTS

FOR THE SIX MONTHS ENDED OCTOBER 31, 2023

New York, New York and Tokyo, Japan, January 31, 2024 – Pixie Dust Technologies, Inc. (Nasdaq: PXDT) (the “Company”), a Japanese technology company focused on commercializing innovative products and materials utilizing proprietary wave technology, today announced its interim financial results for the six months ended October 31, 2023. Provided below is a discussion and analysis of the Company’s financial condition and results of operations, along with the related unaudited condensed interim financial statements of the Company for the six months ended October 31, 2023.

About Pixie Dust Technologies, Inc.

Pixie Dust Technologies, Inc. is a Japanese technology company focused on commercializing innovative products and materials utilizing proprietary wave technology. The Company is currently focusing on two areas of product development: (1) “Personal Care & Diversity”, where wave control technology is applied to mechanobiology and intervention/assistance in vision, hearing, and touch, and (2) “Workspace & Digital Transformation,” where metamaterials (technology that creates properties through structure rather than material) and solutions to commercial design problems, such as in offices or construction sites, are applied.

Pixie Dust Technologies Investor Relations Contact:

Email: PXDT_IR@pixiedusttech.com

Gateway Group, Inc.

John Yi and Luke Johnson

Email: pixie@gateway-grp.com

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this interim report for the six months ended October 31, 2023 (this “interim report”), including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning our possible or assumed future results of operations, financial condition, business strategies and plans, market opportunity, competitive position, industry environment, and potential growth opportunities. In some cases, you can identify forward-looking statements by terms such as “may”, “will”, “should”, “believe”, “expect”, “could”, “intend”, “plan”, “anticipate”, “estimate”, “continue”, “predict”, “project”, “potential”, “target”, “goal” or other words that convey the uncertainty of future events or outcomes. You can also identify forward-looking statements by discussions of strategy, plans or intentions. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, because forward-looking statements relate to matters that have not yet occurred, they are inherently subject to significant business, competitive, economic, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including, among others, those discussed in this interim report and in our annual report on Form 20-F (File No. 001-41749) for the year ended April 30, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) under the headings “Risk Factors”, “Operating and Financial Review and Prospects”, and “Business Overview” may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements in this interim report. Some of the factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements in this interim report include:

Given the foregoing risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements in this interim report. The forward-looking statements contained in this interim report are not guarantees of future performance and our actual results of operations and financial condition may differ materially from such forward-looking statements. In addition, even if our results of operations and financial condition are consistent with the forward-looking statements in this interim report, they may not be predictive of results or developments in future periods.

Any forward-looking statement that we make in this interim report speaks only as of the date of this interim report. Except as required by law, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements in this interim report, whether as a result of new information, future events or otherwise, after the date of this interim report.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed interim financial statements for the six months ended October 31, 2023 and related notes thereto, included elsewhere in this interim report, as well as our audited financial statements and related notes for the year ended April 30, 2023, which are included in our annual report on Form 20-F filed with the SEC on November 16, 2023. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our current plans, expectations, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this interim report, particularly in the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

As used this interim report, the terms “the Company”, “Pixie”, “we”, “our” or “us” refer solely to Pixie Dust Technologies, Inc., a joint stock corporation with limited liability organized under the laws of Japan. We refer to our common shares as “common shares” or “common stock,” unless the context otherwise requires. Our functional currency and reporting currency is the Japanese yen (which we refer to as “JPY” or “¥”). The terms “dollar,” “USD,” “US$” or “$” refer to U.S. dollars, the legal currency of the United States. Convenience translations included in this interim report of Japanese yen into U.S. dollars have been made at the exchange rate of ¥151.46=US$1.00, which was the foreign exchange rate on October 31, 2023 as reported by the Board of Governors of the Federal Reserve System (which we refer to as the “U.S. Federal Reserve”) in weekly release on November 6 , 2023. Historical and current exchange rate information may be found at www.federalreserve.gov/releases/h10/.

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Our fiscal year ends on April 30 of each year as does our reporting year. Our most recent fiscal year ended on April 30, 2023. See Note 2 to our unaudited condensed interim financial statements for the six months ended October 31, 2023 and related notes thereto included elsewhere in this interim report for a discussion of the basis of presentation, functional currency and convenience translation of condensed interim financial statements.

Business Overview

We aim to create and commercialize innovative consumer personal care products and spatial materials through the utilization of mechanobiology and metamaterials in combination with our core proprietary wave technology that employs sound and light waves. Mechanobiology is an emerging field of research that studies how biological systems respond to mechanical stimuli. Mechanobiological research findings have the potential to be used to develop new health care and personal care options. Metamaterials are artificially engineered materials that have properties not found in nature. These properties are achieved by carefully designing the structure of the metamaterial at the sub-wavelength scale. Metamaterials can be used to manipulate electromagnetic waves, such as light and radio waves, in novel ways, such as negative refraction to light. Our wave control technologies consist of a system of methodologies to manipulate the common behaviors of sound and light in abstract layers as desired, and to utilize the unique attributes of sound and light for innovative personal care and industrial products.

We generate revenue from the services and sales of products using our core wave control technology, and we operate in one segment. While wave control technology has the potential for a variety of applications, we currently focus our development efforts in two principal fields: Personal Care & Diversity and Workspace & Digital Transformation. We focus our research and development on commercializing technologies that we believe will, among other things, provide personal care benefits and that will improve physical limitations through sensory and metamaterial technologies.

In 2014, Dr. Yoichi Ochiai, our Chief Executive Officer and Dr. Takayuki Hoshi, our Chief Research Officer, developed “Pixie Dust,” a three-dimensional acoustic levitation technology, which enables the movement of objects in three dimensions by using ultrasonic control. Previously, ultrasonic waves had only been used to levitate objects and make them move in two dimensions. Since then, we have continued to work on overcoming the challenges in manipulating waves by improving the efficiency and performance of the computer processing required to control waves and making the circuit boards more sophisticated, as well as on applying our wave control technology to product developments and innovation.

Our Company was founded in 2017 by Dr. Ochiai, Dr. Hoshi, and Mr. Taiichiro Murakami, our Chief Operating Officer, to explore better ways to integrate academic and industry resources to develop and commercialize applications of our wave control technology. Since our Company’s inception, we have actively pursued industry-academia collaborations to generate new technologies that can be applied to real-world uses. In doing so, we have prioritized developing products that we believe have potential for wide applicability in the marketplace. We have also sought to accelerate the commercialization of the new products by collaborating with established companies in the relevant industries. Our research efforts aim to develop both advanced technologies and new products and services that can meet real-life needs and help to address social issues facing the global society, such as issues arising from an aging population, as well as to generate added value for our stakeholders.

In the Personal Care & Diversity field, we are working to develop technologies to enhance personal care and quality of life. We have launched three personal care products in Japan, our principal market: SonoRepro, an ultrasonic non-contact vibrotactile stimulation scalp care device in November 2022; VUEVO, a series of directional voice arrival detection devices for individuals who are deaf/hard of hearing (“DHH”) in March 2023; and kikippa, an acoustic stimulation device functioning as a speaker in April 2023. Our products have been developed, and are marketed and sold, as personal care products. They are not marketed, nor intended to be used, as medical devices. In Japan, medical devices require compliance with the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (“PMDA”) and are regulated by the Pharmaceuticals and Medical Devices Agency (“PMD Agency”) and the Ministry of Health, Labor and Welfare, which require registration, approval and compliance with marketing requirements, among other things. If any of our products were to be characterized as a medical device by the Japanese regulators, we may be required to seek regulatory approval and could face penalties for not obtaining such approval. As we continue our product research and development, we may create new products or an extension of an existing product that may qualify as a medical device in Japan or other jurisdictions. In such event, we would seek the requisite regulatory approval in Japan and any other applicable jurisdictions for such products in the future.

In the Workspace & Digital Transformation field, we are working to develop technologies for sensing and controlling space. We launched iwasemi, a sound-absorbing metamaterial in Japan in July 2022, and conducted a “soft” launch of selected versions of our iwasemi product to key professionals in the United States, such as architectural and interior design firms, in March 2023. Additionally, we are continuing our development of KOTOWARI, a technology providing spatial analysis data; however, we currently do not have any specific timeline for commercializing these products.

In the next few years, we plan to focus our efforts on marketing and expanding the features of SonoRepro, kikippa, VUEVO, and iwasemi, particularly in our principal market of Japan. As part of our sales strategy, we may offer third-party products that complement our own products. For instance, we obtained a license to sell a medication for treatment of hair loss, which we co-market with our personal scalp care device, SonoRepro. We intend to continue to explore such opportunities to provide comprehensive solutions to our customers.

Historically, we have generated revenues primarily from commissioned research and development (“R&D”) and solution services we have provided for other companies under our collaboration agreements. However, as we expand our marketing and sales efforts for our products, we expect revenue from product sales to contribute an increasing proportion of our revenues over time. During the six months ended October 31, 2023, we continued to expand our marketing and sales efforts for our products, which resulted in product revenue accounting for approximately 75% of our total revenue for the same period. For the six months ended October 31, 2022 and 2023, we generated revenues of ¥158,639 thousand and ¥299,139 thousand ($1,975 thousand), respectively, and incurred net losses of ¥885,000 thousand and ¥1,150,027 thousand ($7,593 thousand), respectively.

Key Financial Definitions

Revenue. Our major sources of revenue include commissioned research and development, solution services, guest speaker services, membership services, and product sales.

Our commissioned research and development revenue has historically comprised the bulk of our revenue. As part of our commissioned research and development activities, we submit to our customers certain deliverables, such as reports, prototypes, and digital source code, which are generated during research and demonstration experiments or the verification and demonstration of the relevant digital technology to the customers. As part of our solution services, we sell or lend dedicated devices and provide system usage service principally through our hackke service and VUEVO service. As part of our guest speaker services, members of our management team speak for several media or external events such as academic or industry conferences managed by third parties. As part of our membership services, we operate a membership forum called “Pixie Nest,” which hosts meetings and distributes information to facilitate solving social issues based on knowledge gained by Pixie through industry-academia collaboration, and for such service, our members pay a fee.

During the six months ended October 31, 2023, we generated revenue primarily from product sales, in addition to revenue from commissioned research and development and revenue from our various types of services. Our product sales for the six months ended October 31, 2023 were primarily comprised of SonoRepro, iwasemi and kikippa. Revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the expected consideration in exchange for such goods or services. We recognize revenue from the sales of SonoRepro and iwasemi to customers principally at the point of delivery of the product to the customer. The kikippa products are first sold to an intermediary which is identified as our customer. We recognize revenue from the sales of kikippa at the time of delivery of the product to the intermediary, which is upon transferring control of the goods to the intermediary as evidenced by the intermediary’s ability to direct the use of and obtain substantially all of the remaining benefits from the performance obligation. We are the principal for the transactions with the intermediary and recognize revenue on a gross basis. Additionally, there is no right of return for delivered products to the intermediary and payment to us is not contingent on sales to an end user. The intermediary then resells kikippa to an end user. When we generate revenue from e-commerce, it is recognized either at the time of shipment or at the time of delivery of the product to the end customer, depending on the terms of the contracts. We also entered into certain product rental arrangements and earned product rental revenue. Rental revenue was not material during the six months ended October 31, 2023.

Going forward, while the revenue from commissioned research and development will remain as a source of revenue for us, we expect to generate more revenue from commercializing and expanding sales of our own products and other services.

Cost of services. Cost of services consists primarily of outsourcing costs, depreciation and amortization, supply expenses, personnel costs and related costs that are attributable to providing our services.

Cost of products. Cost of products consists primarily of material costs, outsourcing costs, depreciation and amortization, supply expenses, personnel costs and related costs that are attributable to production.

Research and development costs. Research and development costs consist of personnel costs, laboratory supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities on our behalf.

Selling, general and administrative expenses. Our selling, general and administrative expenses (“SG&A”) are primarily composed of advertising and marketing promotion expenses, and personnel costs for sales and marketing staff and general corporate functions.

Interest expense. Interest expense consists primarily of interest expense arising from borrowings from banks.

Other income, net. From time to time we have non-recurring, non-operating gains and losses which are reflected through other income (expense). These typically include income from interest and subsidies among other sources and foreign exchange gains (losses).

Factors Impacting our Operating Results

The following trends and uncertainties either affected our financial performance historically or are likely to impact our results of operations in the future:

As we have a limited history of commercializing our products, it may be difficult to predict our future performance based on our current operation results. The commercial success of our products and product candidates is dependent on a number of factors including market acceptance of our products and solutions, our manufacturing and marketing capabilities and our competitive and regulatory environments, among others, many of which may be out of our control. We plan to leverage our resources including our collaboration relationships with strategic partners in our efforts to commercialize our products and have seen some encouraging market reaction to SonoRepro and iwasemi so far. Our ability to achieve profitability by focusing on commercializing our products will depend on our ability to create and increase market demand for our products and manage our growth and the related costs effectively.

We anticipate that our general and administrative expenses will increase in the future as a result of increased costs associated with being a public company. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys and accountants, among other expenses, and, in the case of public company-related expenses, services associated with strengthening our internal control over financial reporting, maintaining compliance with Nasdaq listing and SEC reporting requirements, director and officer liability insurance costs and investor and public relations costs, among other expenses.

Operating Results

Comparison of the Results for the Six Months Ended October 31, 2022 and 2023

Revenue. Our revenue increased by 88.6% from ¥158,639 thousand for the six months ended October 31, 2022 to ¥299,139 thousand ($1,975 thousand) for the six months ended October 31, 2023, primarily due to increases in product sales revenue of ¥188,936 thousand, partially offset by decreases in revenue from commissioned research and development of ¥41,281 thousand and revenue from membership service of ¥4,097 thousand. The increase in product sales was primarily attributable to the launches and sales of the following products: SonoRepro (launched in November 2022), kikippa (launched in April 2023), and to a lesser degree, iwasemi (launched in July 2022). The decline in revenue from commissioned research and development was primarily due to a decrease in the number of projects related to kikippa and VUEVO as the research and development phase for these products wound down during the six months ended October 31, 2023, and we started to focus on the commercialization.

Cost of Services. Our cost of services decreased by 27.7% from ¥23,121 thousand for the six months ended October 31, 2022 to ¥16,710 thousand ($111 thousand) for the six months ended October 31, 2023, primarily due to a decrease in revenue from commissioned research and development. The lower rate of decrease in cost of services as compared to the rate of decrease in service revenue is mainly attributable to a decrease of service projects that have improved gross margin due to changes in the portfolio of project components, as we have the ability to leverage existing research results for commissioned research and development depending on the type of service projects.

Cost of Products. Our cost of products increased by 427.3% from ¥24,053 thousand for the six months year ended October 31, 2022 to ¥126,820 thousand ($837 thousand) for the six months ended October 31, 2023, primarily due to the commencement of full-scale manufacturing and expanded sales of new products launched since October 31, 2022, partially offset by the reduction of the per unit cost of product due to the benefits of mass production.

Research and Development Expenses. Our research and development decreased by 17.6% from ¥339,283 thousand in the six months year ended October 31, 2022 to ¥279,436 thousand ($1,845 thousand) for the six months ended October 31, 2023, primarily due to a shift in focus from the research and development of kikippa and VUEVO to product commercialization.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased by 63.3% from ¥643,892 thousand for the six months ended October 31, 2022 to ¥1,051,796 thousand ($6,944 thousand) for the six months ended October 31, 2023, primarily due to increases in advertising and marketing expenses of ¥139,937 thousand for our new products, personnel expenses of ¥99,443 thousand due to an increase in the number of employees, rent expense of ¥30,159 thousand in connection with our new headquarters and depreciation expenses of ¥32,141 thousand. The remaining increase is primarily attributable to the outsourcing costs relating to marketing consulting and IT services.

Interest Expense. Our interest expense increased by 17.8% from ¥13,423 thousand for the six months ended October 31, 2022 to ¥15,811 thousand ($104 thousand) for the six months ended October 31, 2023, primarily due to an increase in outstanding borrowings.

Other Income, net. Our other income increased significantly from ¥133 thousand for the six months ended October 31, 2022 to ¥41,407 thousand ($273 thousand) for the six months ended October 31, 2023, primarily due to the increase of foreign exchange gains as a result of the receipt of the net proceeds from the initial public offering of our common shares in U.S. dollars during the six months ended October 31, 2023.

Liquidity and Capital Resources

Sources of Capital Resources

Our principal sources of liquidity were cash and cash equivalents totaling ¥2,135,513 thousand as of April 30, 2023 and ¥2,420,667 thousand ($15,982 thousand) as of October 31, 2023, which were held and used for working capital purposes. Our cash and cash equivalents are comprised of cash on hand, demand deposits and time deposits maintained at various financial institutions.

We have funded our operations primarily through equity and debt financings and revenue from product sales and our commissioned research and development pursuant to contractual arrangements with third parties. In June and September 2022, we received ¥2,178,760 thousand ($16,021 thousand) in gross proceeds from our sale of 1,153,800 shares of Series C convertible preferred stock. In August 2023, we completed an initial public offering (“IPO”) of our common shares, pursuant to which we issued and sold 1,666,667 common shares represented by American Depositary Shares (“ADSs”) at a public offering price of $9.00 per ADS, for aggregate net proceeds of approximately $11.2 million. Each ADS represents one common share. We received approximately ¥1,471,085 thousand ($9,713 thousand) in net proceeds after deducting offering costs. Additionally, we have outstanding loans from two Japanese financial institutions: (i) The Shoko Chukin Bank, Ltd. and (ii) Resona Bank Limited. See “—Credit Facilities” below for more information on these loans.

Our commissioned research and development pursuant to contractual arrangements with third parties and our collaboration arrangements aimed at developing, testing and validating our products and product candidates with collaboration partners was historically a substantial source of revenue for our business. While commissioned research and development services will remain as a source of revenue for us, we expect to gain more revenue from commercializing and expanding sales of our own products. During the six months ended October 31, 2023, product sales and service revenue were the main sources of our total revenue, with our product sales accounting for approximately 75 % of our total revenue for the six months ended October 31, 2023. As such, cash inflows from operations and total revenue can be negatively impacted by potential decreases in demands for our products and services which could result from adverse economic conditions or changes in consumer preferences.

Uses of Capital Resources

We have incurred significant operating losses and negative cash flows since our inception. We incurred net losses of ¥1,150,027 thousand ($7,593 thousand) and negative cash flows from operations of ¥1,385,065 thousand ($9,145 thousand) for the six months ended October 31, 2023. As of October 31, 2023, we had an accumulated deficit of ¥5,532,279 thousand ($36,526 thousand). Our primary use of capital resources has been to conduct research and development activities, expand our marketing and sales efforts for our products, organize and staff our Company, develop our business plan, secure related intellectual property rights and raise capital.

Operating Capital Requirements

Our ability to achieve profitability depends on the successful development and commercialization of our technology and our products. We expect to incur significant costs for at least the next several years to develop, manufacture and distribute our products, and we expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development and seek marketing approval for our Personal Care & Diversity products and related products as needed. As a result, we will require significant capital to support our ongoing operations and to drive our business strategy before we can generate significant revenues.

Going Concern and Management Plans

We do not expect that our cash and cash equivalents as of October 31, 2023 will enable us to fund our operating expenses, debt obligations and capital expenditures for the next 12 months following the date of issuance of the unaudited condensed interim financial statements for the six months ended October 31, 2023 included in this interim report. Therefore, it is likely we will require additional capital over the next 12 months. Furthermore, the outstanding principal borrowings of ¥1,000,000 thousand ($6,602 thousand) will mature on February 29, 2024. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. Management plans to alleviate the conditions that raise substantial doubt to our ability to continue as a going concern by raising additional capital through the issuance of common shares, including a follow-on public offering, other equity or debt financings or refinancing of existing debt obligations. Additionally, management plans to manage liquidity through the timing and extent of spending related to research and development, advertising and other discretionary operating expenses. However, there can be no assurances that we will be successful in securing any equity or debt financing on terms favorable to us, or at all, and it is not possible to predict whether any financing efforts will be successful or if we will obtain the necessary financing. Our unaudited condensed interim financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. Such condensed interim financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

For more information, see “Liquidity and Going Concern” in Note 2: Summary of Significant Accounting Policies to our unaudited condensed interim financial statements for the six months ended October 31, 2023 included elsewhere in this interim report.

Until we are able to generate significant revenues from the sale of our products, we expect to finance our operations through equity or debt financing or other sources, including revenue from third-party collaborations, strategic partnerships, marketing, distribution and licensing agreements. We do not expect to generate cash flow from operating activities sufficient to fund our operating expenses and capital expenditure requirements for the next two to three years.

Our future funding requirements will depend on many factors, including:

Additionally, a change in any of the above or other factors with respect to the development and commercialization of any of our products could significantly change the costs and timing associated with the development and commercialization of that product. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. If we are unable to raise the capital we need when we need it or enter into such agreements, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our products.

We expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.

Cash Flows

Comparison of the six months ended October 31, 2022 and 2023

Net Cash used in Operating Activities

During the six months ended October 31, 2022 and 2023, our net cash used in operating activities was ¥861,666 thousand and ¥1,385,065 thousand ($9,145 thousand), respectively, primarily resulting from our net loss of ¥885,000 thousand and ¥1,150,027 thousand ($7,593 thousand) for the six months ended October 31, 2022 and 2023, respectively, in each case further adjusted for non-cash charges. Non-cash charges were primarily comprised of depreciation and amortization of ¥38,896 thousand and ¥101,331 thousand ($669 thousand) for the six months ended October 31, 2022 and 2023, respectively, and stock-based compensation of ¥32,768 thousand and ¥3,355 thousand ($22 thousand) for the six months ended October 31, 2022 and 2023, respectively. Foreign exchange losses of ¥4,043 thousand and foreign exchange gains of ¥35,940 thousand ($237 thousand) were also included for the six months ended October 31, 2022 and 2023, respectively. The increase in depreciation and amortization was primarily due to change in estimate for the original lease term in connection with our move to the new headquarters. The increase in cash used in operating activities was primarily due to activities related to our business expansion and our increased marketing and sales activities.

Net Cash used in Investing Activities

During the six months ended October 31, 2022 and 2023, our net cash used in investing activities was ¥49,321 thousand and ¥68,760 thousand ($454 thousand), respectively. The increase in net cash used in investing activities was primarily due to the advance payment for lease improvement of our new headquarters during the six months ended October 31, 2023 and an increase in acquisitions of property and equipment including molds for iwasemi and kikippa.

Net Cash provided by Financing Activities

During the six months ended October 31, 2022 and 2023, our net cash provided by financing activities was ¥2,389,980 thousand and ¥1,698,030 thousand ($11,211 thousand), respectively, primarily due to net proceeds from the issuance of Series C convertible preferred stock in June and September 2022 and net proceeds from our completed initial public offering in August 2023.

Credit Facilities

As of October 31, 2023, we have outstanding loans (the “Bank Loans”) from two Japanese financial institutions: (i) The Shoko Chukin Bank, Ltd. and (ii) Resona Bank Limited which totaled ¥1,027,779 thousand ($6,785 thousand). The main purpose of obtaining the Bank Loans has been to fund our operations.

On March 22, 2019, we entered into a loan agreement with The Shoko Chukin Bank, Ltd. The agreement provides for four loans to be advanced to us in March 2019, July 2020, July 2021 and July 2022, respectively, each in the amount of ¥250,000 thousand, provided that we meet certain financial performance targets. The loans under this facility carry an interest rate of 3% per annum and will mature in a lump sum on February 29, 2024. The outstanding principal balance as of October 31, 2023 was ¥1,000,000 thousand ($6,602 thousand). We plan to seek new debt financing or refinancing of existing debt obligations.

On November 30, 2020, we entered into a loan agreement with Resona Bank Limited for a principal amount of ¥40,000 thousand. The loan agreement was amended on the same date. Pursuant to the loan agreement, as amended, the loan carries an interest of 1.475% per annum; however, the loan is exempt from interest payment for the period from November 30, 2020 to November 29, 2023. In addition, we shall make a monthly repayment of ¥1,111 thousand and the last payment shall be made on November 30, 2025. This loan is guaranteed by Tokyo Credit Guarantee Corporation, an unaffiliated guarantee service provider. The outstanding principal balance as of October 31, 2023 was ¥27,779 thousand ($183 thousand).

Cash Commitments from Contractual Obligations

The following table summarizes our contractual obligations as of October 31, 2023 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

We have entered into contracts in the normal course of business with third parties. These contracts do not contain any minimum purchase commitments and are cancelable by us upon prior notice and, as a result, are not included in the table of contractual obligations and commitments above. Payments due upon cancellation consist only of payments for services provided and expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation.

Off-Balance Sheet Arrangements

As of October 31, 2023, we were not party to any material off-balance sheet financial arrangements that are reasonably likely to have a current or future effect on our financial condition or operating results. We do not have any relationship with unconsolidated entities or financial partnerships for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes.

Research and Development, Patents and Licenses 

Our goal is to continue to develop and commercialize innovative and practical products by applying our control wave technology. We continue to develop and leverage our collaborative relationships with academia and the industry in R&D and marketing our products. We have benefited from our collaborations with academic institutions and industry collaborators and commissioned research and development were historically a substantial source of our revenue. We discuss with our collaboration partners what areas to perform research and development. Through trials and tests, we and our collaboration partners have found some results which we believe can be commercialized. We have developed and released our products such as SonoRepro, kikippa, VUEVO and iwasemi under these collaborations. We have made a substantial investment in research and development including incurring personnel-related expenses and facility costs. We plan to continue investing in research and development to bring innovative products and solutions to the market.

Trend Information 

Other than as disclosed in this interim report, we are not aware of any trends, uncertainties, demands, commitments or events for the current interim period that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

Critical Accounting Policies and Estimates

Our condensed interim financial statements are prepared in accordance with U.S. GAAP, which requires us to make a number of estimates and assumptions that affect the reported amounts and disclosures in the condensed interim financial statements. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed interim financial statements, and the reported amounts of revenues and expenses during the reporting period. We base our accounting estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. However, actual results may differ from those estimates.

Except for the Recently Adopted Accounting Pronouncements, which is further described below, there have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 20-F for the year ended April 30, 2023, which was filed with the SEC on November 16, 2023. For a description of our significant accounting policies and recently issued accounting pronouncements, see Note 2: Summary of Significant Accounting Policies to our unaudited condensed interim financial statements for the six months ended October 31, 2023 included elsewhere in this interim report.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope improvements and provide additional disclosure guidance. We adopted this ASU on May 1, 2023 and have applied the guidance prospectively. Our expected loss allowance methodology is developed using an aging method and historical loss rates, as well as current economic conditions and expectations of future economic conditions considering economic variables such as gross domestic product and interest rates. We have determined that ASU 2016-13 had no material impact on our unaudited condensed interim financial statements and related disclosures.

Pixie Dust Technologies, Inc.

Condensed Balance Sheets (Unaudited)

The accompanying notes are an integral part of these unaudited condensed interim financial statements.

Pixie Dust Technologies, Inc.

Condensed Statements of Operations (Unaudited)

The accompanying notes are an integral part of these unaudited condensed interim financial statements.

Pixie Dust Technologies, Inc.

Condensed Statements of Stockholders’ Equity (Unaudited)

The accompanying notes are an integral part of these unaudited condensed interim financial statements.

Pixie Dust Technologies, Inc.

Condensed Statements of Cash Flows (Unaudited)

The accompanying notes are an integral part of these unaudited condensed interim financial statements.

Pixie Dust Technologies, Inc.

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited)

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