SecProbe.io

CORRESP
1
filename1.htm

ANTHONY
L.G., PLLC

    laura
    aNTHONy, esq

    JOHN CACOMANOLIS, ESQ*

    CHAD
    FRIEND, ESQ, LLM

    SVETLANA ROVENSKAYA, ESQ**

    WWW.ANTHONYPLLC.COM

    WWW.SECURITIESLAWBLOG.COM

    WWW.LAWCAST.COM

    OF COUNSEL:

    Jessica
    Haggard, esq. ***

    MICHAEL R. GEROE, ESQ, CIPP/US****

    CRAIG
    D. LINDER, ESQ*****

    PETER
    P. LINDLEY, ESQ, CPA, MBA

    john
    lowy, esq.******

    STUART
    REED, ESQ

    LAZARUS
    ROTHSTEIN, ESQ.

    Harris Tulchin, Esq. *******

    DIRECT E-MAIL:

    LANTHONY@ANTHONYPLLC.COM

*licensed in FL and NY

**licensed in NY and NJ

***licensed in Missouri

****licensed in CA, DC, MO and NY

*****licensed in CA, FL and NY

******licensed in NY and NJ

*******licensed in CA and HI (inactive in HI)

February 23, 2023

VIA ELECTRONIC EDGAR FILING

Office of Real Estate and Construction

Division of Corporation Finance

Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

    Re:
    SYLA Technologies Co., Ltd.

    Amendment No. 4 to Registration Statement on Form F-1

    Filed January 31, 2023

    File No. 333-268420

Dear Sir or Madam:

We have electronically filed herewith on behalf of
SYLA Technologies Co., Ltd. (the “Company”) Pre-Effective Amendment No. 5 to the above-referenced Registration Statement
on Form F-1 (“Amendment No. 5 to Form F-1”). Amendment No. 5 to Form F-1 is marked to show changes made from the previous
filing made on January 31, 2023 (the “Prior Filing”). We have included a narrative response herein keyed to the comments
of the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “SEC”)
set forth in the Staff’s comment letter to Hiroyuki Sugimoto, Chief Executive Officer of the Company, dated February 16, 2023. We
trust you shall deem the contents of this letter responsive to your comment letter.

Amendment No. 4 to Registration Statement on Form
F-1

Business Overview, page 1

    1.
    Comment: We note your response to comment 1 stating that the lease has an initial one-year term. Please tell us if the mining business may revert to you at the end of the initial lease term, if Getworks does not renew its lease with you.

    Response: The mining business will not revert to the Company at the end of the initial lease term, if Getworks does not renew its lease with the Company. Neither the Business Transfer Agreement, dated January 20, 2023, between the Company, as seller, and Getworks, as purchaser, nor the Lease Agreement, dated January 23, 2023, between the Company, as landlord, and Getworks, as tenant, provides for the reversion of the mining business to the Company under any circumstance. There are no other agreements between the Company and Getworks other than the Business Transfer Agreement and the Lease Agreement. If Getworks does not renew its lease with the Company, Getworks is required to move its mining machine business out of the building and vacate the premises. The Company also covenants, on behalf of itself and its current and future subsidiaries and affiliates, not to engage in the mining machine business now or in the future in Exhibit A attached hereto.

Index to Financial Statements, page F-1

    2.
    Comment: We note your response to comment 2. Please provide us with your income test calculations and your analysis regarding the presentation of discontinued operations using results for the period ended June 30, 2022, which is consistent with financial statement period of your latest financial statements included in your filing. Further, if providing the analyses in United States Dollars, provide us with the foreign currency translation rates used; alternatively, provide us with your analyses by using Japanese Yen.

    Response: In accordance
    with Rule 1-02(w)(1)(iii) of Regulation S-X, the significant subsidiary test is met when 1) the absolute value of the registrant’s
    and its other subsidiaries’ equity in the tested subsidiary’s consolidated income or loss from continuing operations
    before income taxes (after intercompany eliminations) attributable to the controlling interest exceeds 10 percent of the absolute
    value of such income or loss of the registrant and its subsidiaries consolidated for the most recently completed fiscal year; and
    2) the registrant’s and its other subsidiaries’ proportionate share of the tested subsidiary’s consolidated total
    revenue from continuing operations (after intercompany eliminations) exceeds 10 percent of such total revenue of the registrant and
    its subsidiaries consolidated for the most recent completed fiscal year.

    In our response to prior comment
    No. 2 in the response letter dated February 10, 2023, the Company has provided the computation of income test for the year
    ended December 31, 2022, which is the most recent completed fiscal year, as required by Rule 1-02(w)(1)(iii). The Company has provided
    income test calculations for the six months ended June 30, 2022 as requested by the Staff as below:

    For the six months ended

 June 30, 2022

    (in thousands of JPY)

    1) Income test – income component

    The Company’s equity in mining machine business’s income before income tax

    JPY260,421

    Consolidated income before income taxes

    JPY286,088

    Significance percentage

    91.03%

    2) Income test – revenue component

    The Company’s share in mining machine business’s revenue

    JPY757,810

    Consolidated revenue

    JPY8,869,667

    Significance percentage

    8.54%

    The Company acknowledged that the test under 1) exceeded
    10%, however, the test under 2) was less than 10%. Rule 1-02(w)(1)(iii) of Regulation S-X has both income component and revenue component,
    and the tested subsidiary will meet the significant test only if both the income and revenue component are met. As the significance percentage
    of revenue component was lower than 10%, the Company concluded the income test under significant subsidiary test would not be met if using
    results for the period ended June 30, 2022.

    The Company evaluated discontinued operation presentation
    for mining machine business in the interim financial statements for the six months ended June 30, 2022. In accordance with ASC 205-20-45-3,
    in the period in which a discontinued operation either has been disposed of or is classified as held for sale, the statement in which
    net income of a business entity is reported for current and prior periods shall report the results of operations and discontinued operations.
    As indicated in our responses to prior comment No. 1 in the response letters dated January 12, 2023 and January 30, 2023, on December
    30, 2022, the Board of Directors of the Company approved to withdraw from the mining machine business. On January 11, 2023, the Company
    entered into a letter of intent with Getworks Co., Ltd. On January 23, 2023, the Company officially closed the transaction with Getworks
    Co., Ltd. The Company committed to a plan to dispose of its mining machine business subsequent to November 16, 2022, the date when the
    Company issued its financial statements for the six months ended June 30, 2022, which is included in the Form F-1. As a result, the Company
    concluded that the held for sale criteria for mining machine business are not met as of June 30, 2022 and it is not required to present
    mining machine business as discontinued operations in the interim financial statements for the six months ended June 30, 2022. Please
    also see discussion regarding whether the disposition of mining machine business constitutes a strategic shift that has a major effect
    on operations and financial results in response to comment No. 3.

    The Company acknowledged that for the six months ended
    June 30, 2022, the income before income tax contributed from mining machine business as a percentage of consolidated income before income
    tax was significant.

    In the
    year ended December 31, 2022, the sales of newly built properties were concentrated in the second half of the year, as we included
    in our budget plan for the real estate business, which resulted in a large proportion of the annual income before income taxes being
    recorded in the second half of the year. As a result, the mining machine business accounted for a higher percentage of the overall
    income before income tax for the six months ended June 30, 2022.

As the Company
provided in the prior comment No. 2 of the response letter dated February 10, 2023, the revenue and the income before income tax
for the full year are JPY23,335,826 thousand and JPY1,112,823 thousand, respectively. In the second half of the year, the real estate
business continued to perform as budgeted, while the mining business posted a loss due to deteriorating market conditions. As a result,
the ratio of net income to net sales in the mining business for the full year declined to 18.4%.

    In the interest of transparency, the Company included additional disclosures in the subsequent events footnote to
    the unaudited financial statements for the six months ended June 30, 2022 to the Amendment No. 5 to Form F-1 to disclose the impact of
    the disposition of mining business to the financial statements. The Company respectfully advises the Staff that the numbers used for calculation
    of income test above do not include the portion attributable to the non-controlling interest, where the numbers disclosed in the subsequent
    events include the portion attributable to the non-controlling interest, which is in line with the presentation of income statement.

    3.
    Comment: Notwithstanding our comment above, we note that the mining business contributed 18.4% of net income for the year ended December 31, 2022. Given the significance of the mining business’s contribution, please explain in detail, how you were able to conclude that the sale of the mining business did not have a major effect on your operations and financial results. Please refer to ASC 205-20-55-90 to 92.

    Response: We referred to Example 3 in ASC 205-20-55-90 to 92. In Example 3, the entity operates retail stores in 2 different formats – mall and supercenter stores in 5 major geographical regions and decides to shift its strategy of selling products in malls and focus solely on its supercenter stores due to declining net income at 200 stores located in malls across all 5 major geographic regions. Because the 200 stores located in malls are a major part of the entity’s operations and financial results as historically net income from the 200 stores in mall has been in a range of 30 to 40 percent of the entity’s total net income, the disposal represents a strategic shift that is reported in discontinued operations.

                                    In Example 3, we understand
                                    that the case is considered a strategic shift because the company has decided to dispose of one of
                                    the two sales channels with the company's sales strategy, which is both quantitatively (in terms
                                    of net income) significant and a change in sales strategy. Based on the following analysis based
                                    on Example 3, we conclude that the Company's mining machine business does not qualify as a strategic
                                    shift because it is neither quantitatively material nor integrated into our strategy.

    With respect to whether the disposal had a
    major effect on the Company’s operations and financial result, the Company acknowledged that one may argue the net income (18.4%)
    related to mining machine business represented a significant portion of the Company’s consolidated net income for the year
    ended December 31, 2022, however, the management indicators that we consider important for our real estate business include total
    assets and net sales, and since total assets and net sales in the mining business account for only 0.3% and 4.3% of our total assets
    and net sales, respectively, we consider the mining business to be quantitatively insignificant.

The Company is in real estate business
since its establishment in 2009. As disclosed in business overview section in the Form F-1 and Amendments, the Company’s primary
mission or strategy is to support and enrich people’s lives in the era of 100-year life expectancy by democratizing global real
estate investment using technology and smart asset management. The Company generated 100%, 100% and 89% of revenue from real estate and
related services (including real estate sales, land sales, rental income and real estate management service, as disclosed in the disaggregation
of revenues footnote to the financial statements) for the year ended December 31, 2020, the year ended December 2021 and six months ended
June 30, 2022, respectively. Revenues generated from real estate and related service increased by 26.8%, from JPY13,140,176 thousand
for the year ended December 31, 2020 to JPY16,665,382 thousand for the year ended December 31, 2021; and increased by 21.1% from JPY6,500,616
thousand for the six months ended June 30, 2021 to JPY7,870,560 thousand for the six months ended June 30, 2022. All these
figures indicated that real estate and related business is the Company’s core business, which has been generating stable revenue
and demonstrating strong growth in recent years.

    In January 2022, the Company started
    to sell mining machines on a trial basis. Since the sale of mining machines is highly influenced by the crypto currency market and
    regulation, the Company only conducted such business tentatively and has not yet integrated this new business into the Company’s
    business plan and overall strategy.

    The mining machine business performed well for the
    six months ended June 30, 2022 and led to a high net profit margin due to market conditions, but the management of the Company viewed
    the well performance of the mining machine business as an accidental and temporary situation, and deemed the mining machine business as
    a non-sustainable business and thus did not included such business in the Company’s business plan and overall strategy.

    The management of the Company continued the discussion
    on whether to continue the mining machine business based on its risk assessment and in December 2022, the Board of Directors decided to
    withdraw from the high-risk mining machine business. The withdrawal from the mining machine business does not impact our real estate business.
    The Company also considered the effect of the withdrawal on both its historical operations and expected future operations and concluded
    that they are immaterial to the operations.

    We were not internally changing our operating
    or organizational structure for the Company as a result of the disposition. By executing the disposition, we did not exit a major
    geographic region, a major line of business, a major equity method investment, or other major parts of an entity.

    Based on the discussion above, the
disposal of mining machine business does not represent a change in the Company strategy.

    Per the interpretative examples in the KPMG Handbook:
    Discontinued operations and held-for-sale disposal groups, Example 5.2.10 and Question 5.2.10 (refer to Exhibit B), it is not appropriate
    to conclude a major disposal which had major effect on operations and financial results always be a strategic shift as a disposal’s
    effect on operations and financial results is assessed separately from the “strategic shift” concept. In Example 5.2.10, the
    shutdown of bottling facility will have a major effect on ABC Corp.’s operations and financial results, however, as ABC Corp. also
    determines that the shutdown d