SBC Medical Group Holdings Inc
For the period ended Jun 30, 2025. Filed Aug 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 13, 2025
SBC$5.04+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001641172-25-010567
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0001641172-25-023322
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 123 current paragraphs.
48 unchanged; 25 reworded; 42 added; 20 removed; 1 previous and 8 current paragraphs rearranged.
Tables are not compared: 8 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (42)
Current report
“Members (orshain) of general meeting of members (orshain)” means one of the organs of a Japanese Medical Corporation, and element of general meeting of members (as explained below) of the Medical Corporation. Each member (orshain) of general meeting of members (orshain) has one voting right.
Current report
** “General meeting of members (orshain)” means one of the organs of a Japanese Medical Corporation, and the highest decision-making body of the Medical Corporation, of which the main duties include the election and dismissal of directors (orriji) and corporate auditors (orkanji) of the Medical Corporation, and the approval of financial statements and statutory business reports of the Medical Corporation.
Current report
*** “Equity interest (ormochibun)” means the right to receive distribution of the residual assets of a Japanese Medical Corporation in proportion to the amount of contribution (Article 10.3.3.2 brackets of the Supplementary Provision of the Japanese Medical Care Act.). However, the procedures for an equity interest (ormochibun) holder to exercise and realize the right to receive distribution of the residual assets of the Medical Corporation is more complicated than that of a stock corporation due to the restrictions under the Medical Care Act.
Current report
Franchising revenue for the three months ended June 30, 2025, decreased to $10,007,581 by $4,618,675, or 31.58%, from $14,626,256 for the same period in 2024. This decrease was mainly due to the revision of the fee structure for determining service fees for each clinic of MCs based on the size, scale and performance of each clinic effective as of April 1, 2025, partially offset by the appreciation of JPY.
Current report
The procurement revenue for the three months ended June 30, 2025 increased to $15,756,519 by $2,219,911, or 16.40%, from $13,536,608 for the same period in 2024. This increase was mainly due to the orders from MCs for the new types of medical materials, as well as the appreciation of JPY.
Current report
The operating expenses increased to $15,456,385 for the three months ended June 30, 2025 by $3,327,270, or 27.43%, from $12,129,115 for the same period in 2024. The increase was mainly due to the increase in office, utility and other expenses, and consulting and professional service fees, partially offset by the decrease in salaries and welfare.
Current report
Office, utility and other expenses increased by $2,067,034, or 28,315.53%, to $2,074,334 for the three months ended June 30, 2025 from $7,300 for the same period in 2024, mainly due to the large-scale replacement of office supplies during the quarter.
Current report
Salaries and welfare decreased by $1,106,930, or 14.06%, to $6,765,517 for the three months ended June 30, 2025 from $7,872,447 for the same period in 2024, mainly due to the disposal a subsidiary, Kijimadairakanko Inc. in December 2024 and the decrease for the compensation to the director and CEO of the Company.
Current report
In particular, the other income was $33,771 for the three months ended June 30, 2025, as compared to $306,291 for the three months ended June 30, 2024, mainly due to the decrease in the foreign exchange gain. The other expense was $1,132,465 for the three months ended June 30, 2025, as compared to $514,636 for the three months ended June 30, 2024, mainly due to the increase in the foreign exchange losses arising from intercompany loan balances between the Company and its subsidiary. Change in fair value of cryptocurrencies was $111,632 for the three months ended June 30, 2025, as compared to nil for the three months ended June 30, 2024, due to the Company purchased cryptocurrencies in the three months ended June 30, 2025 resulting in the fair value change of the cryptocurrencies during the current period.
Current report
Net loss attributable to non-controlling interests was $18,388 for the three months ended June 30, 2025, as compared to net income attributable to non-controlling interests of $72,917 for the three months ended June 30, 2024.
Current report
Revenues, Net
Current report
Revenues, net, decreased by 15.96% from $107,910,122 for the six months ended June 30, 2024 to $90,687,548 for the six months ended June 30, 2025.
Current report
Franchising revenue for the six months ended June 30, 2025 decreased to $25,726,863 by $4,009,661, or 13.48%, from $29,736,524 for the same period in 2024. This decrease was mainly due to the revision of the fee structure for determining service fees for each clinic of MCs based on the size, scale and performance of each clinic effective as of April 1, 2025, partially offset by the appreciation of JPY.
Current report
The procurement revenue for the six months ended June 30, 2025 increased to $30,089,302 by $3,356,710, or 12.56%, from $26,732,592 for the same period in 2024. This increase was mainly due to the orders from MCs for the new types of medical materials, as well as the appreciation of JPY.
Current report
The management services revenue for the six months ended June 30, 2025 decreased to $13,866,681 by $18,493,586, or 57.15%, from $32,360,267 for the same period in 2024. This decrease was mainly due to (i) the discontinuation of clinic operation staff supporting services that had been provided by Shobikai Sub to MCs since the third quarter of 2024, because the Company completed the merger of Shobikai Sub with and into Lange Sub and the related business license that was held by Shobikai Sub became invalid upon the completion of the merger in January 2025, (ii) the decrease in the revenue in connection with customer rewards program offered to customers of the franchisee clinics and (iii) the revision of the fee structure for determining service fees for each clinic of MCs based on the size, scale and performance of each clinic effective as of April 1, 2025, partially offset by the appreciation of JPY.
Current report
The rental services revenue for the six months ended June 30, 2025 increased to $12,491,690 by $5,420,576, or 76.66%, from $7,071,114 for the same period in 2024. This increase was mainly due to opening of new clinics resulting in the increased demand for medical equipment fromnew clinics and replacing laser hair removal equipment from existing clinics as well as the appreciation of JPY.
Current report
Others
Current report
Cost of Revenues
Current report
Gross Profit
Current report
Gross profit for the six months ended June 30, 2025 was $67,743,661 compared to $78,939,050 for the same period in 2024. The decrease in gross profit by $11,195,389 or 14.18% was mainly due to the decrease in franchising revenue and management services revenue with relatively high gross margin as a result of the factors described above.
Current report
Operating Expenses
Current report
Operating expenses for the six months ended June 30, 2025 and 2024 were as follows:
Current report
The operating expenses increased to $28,987,395 for the six months ended June 30, 2025 by $1,799,790, or 6.62%, from $27,187,605 for the same period in 2024. The increase was mainly due to the increase in office, utility and other expenses, and consulting and professional service fees, partially offset by the decrease in salaries and welfare.
Current report
Office, utility and other expenses increased by $892,548, or 33.07%, to $3,591,521 for the six months ended June 30, 2025 from $2,698,973 for the same period in 2024, mainly due to the large-scale replacement of office supplies during the quarter.
Current report
Salaries and welfare decreased by $1,179,029, or 8.20%, to $13,207,259 for the six months ended June 30, 2025 from $14,386,288 for the same period in 2024, mainly due to the disposal a subsidiary, Kijimadairakanko Inc. in December 2024 and the decrease for the compensation to the director and CEO of the Company.
Current report
Other Income (Expenses)
Current report
Other income (expenses) for the six months ended June 30, 2025 and 2024, were as follows:
Current report
Other income (expenses), net was $6,235,502 for the six months ended June 30, 2025 compared to $2,537,190 for the same period in 2024. The increase in other income (expense) by $3,698,312 or 145.76% was mainly due to a gain on redemption of life insurance policies of $8,746,138 in 2025, and the absence in 2025 of a gain on disposal of subsidiary of $3,813,609 recognized in 2024. In addition, the other income was $185,099 for the six months ended June 30, 2025, as compared to $655,972 for the six months ended June 30, 2024, mainly due to the decrease in the foreign exchange gains. The other expense was $2,829,724 for the six months ended June 30, 2025, as compared to $1,951,292 for the six months ended June 30, 2024, mainly due to the increase in the foreign exchange losses arising from intercompany loan balances between the Company and its subsidiary. Change in fair value of cryptocurrencies was $111,632 for the six months ended June 30, 2025, as compared to nil for the six months ended June 30, 2024, due to the Company purchased cryptocurrencies in the six months ended June 30, 2025, which resulted in the fair value change of the cryptocurrencies during the current period.
Current report
Income Tax Expense
Current report
Income tax expense for the six months ended June 30, 2025 was $21,059,966 compared to $16,981,094 for the same period in 2024. The increase in income tax expense by $4,078,872 or 24.02% was mainly due to the increase of deferred tax expenses recognized and the appreciation of JPY.
Current report
The effective tax rate was 46.81% and 31.28% for the six months ended June 30, 2025 and 2024, respectively. The increase of 15.53 percentage points was mainly due to the deemed contribution in connection with the price modification on disposal of an aircraft to General Incorporated Association SBC, an entity controlled by the CEO of the Company, who is also the controlling shareholder of the Company, which was treated as a taxable gain under the Japanese tax law for the six months ended June 30, 2025.
Current report
Net Income
Current report
As a result of the foregoing, we reported a net income of $23,931,802 for the six months ended June 30, 2025, representing a decrease of $13,375,739 or 35.85% from $37,307,541 for the six months ended June 30, 2024.
Current report
Net Income (Loss) Attributable to Non-controlling Interests
Current report
Net loss attributable to non-controlling interests was $28,884 for the six months ended June 30, 2025, as compared to net income attributable to non-controlling interests of $65,381 for the six months ended June 30, 2024.
Current report
Cash Flows for the six months ended June 30, 2025 and 2024
Current report
During the six months ended June 30, 2025, net cash provided by investing activities of $15,397,998 was mainly the result of proceeds from redemption of life insurance policies of $17.7 million, offset by the payments made on behalf of related parties of $1.8 million.
Current report
During the six months ended June 30, 2025, net cash provided by financing activities of $6,901,719 was mainly due to the deemed contribution in connection with the price modification on disposal of property and equipment of $9.7 million, offset by repurchase of common stock of $2.4 million.
Current report
RecentDevelopments
Current report
One Big Beautiful Bill Act
Showing the first 40 of 42 passages. Open the source sections for the rest.
Removed paragraphs (20)
Previous report
Franchising Revenue
Previous report
Franchising revenue for the three months ended March 31, 2025 increased to $15,719,282 by $609,014, or 4.03%, from $15,110,268 for the same period in 2024. This increase was mainly due to the business expansion of the MCs, partially offset by the depreciation of JPY.
Previous report
Procurement Revenue
Previous report
The procurement revenue for the three months ended March 31, 2025 increased to $14,332,783 by $1,136,799, or 8.61%, from $13,195,984 for the same period in 2024. This increase was mainly due to the increased demand on medical materials due to the business expansion of MCs, partially offset by the depreciation of JPY.
Previous report
Management Services Revenue
Previous report
Rental Services Revenue
Previous report
The operating expenses decreased to $13,531,010 for the three months ended March 31, 2025 by $1,527,480, or 10.14%, from $15,058,490 for the same period in 2024. The decrease was mainly due to the decrease in recruiting expense, depreciation and amortization expense, and office, utility and other expenses partially offset by the increase in consulting and professional service fee.
Previous report
Recruiting expense decreased by $512,678, or 67.72%, to $244,377 for the three months ended March 31, 2025 from $757,055 for the same period in 2024, mainly due to the one-time recruiting advertisement expenses incurred in the same period of the prior year.
Previous report
Office, utility and other expenses decreased by $1,174,486, or 43.63%, to $1,517,187 for the three months ended March 31, 2025 from $2,691,673 for the same period in 2024, mainly due to the insourcing of debt collection activities for customer loans receivable since January 2025 and the disposal of two subsidiaries in December 2024.
Previous report
In particular, a gain on the redemption of life insurance policies was recorded due to the maturity of four corporate-owned life insurance policies. A gain on disposal of subsidiary in the prior year was recorded due to the disposal of Cell Pro Japan Co., Ltd. (“Cellpro”), a former subsidiary of the Company, on January 1, 2024.
Previous report
Net loss attributable to non-controlling interests was $10,496 for the three months ended March 31, 2025, as compared to $7,536 for the three months ended March 31, 2024.
Previous report
Recent Developments
Previous report
Subsidiary Merger
Previous report
In January 2025, the Company effected a merger in which SBC Medical Group Co., Ltd. (“SBC Japan”) and Shobikai Co., Ltd. (“Shobikai Sub”) merged with and into L’Ange Cosmetique Co., Ltd. (“L’Ange Sub”). As a result, the separate corporate existence of SBC Japan and Shobikai Sub ceased, with L’Ange Sub continuing as the surviving company. Following the merger, L’Ange Sub changed its name to SBC Medical Group Co., Ltd., which is herein referred to as“SBC Medical Sub,” or “SBC Japan.”
Previous report
Changes to Service Fee Structure
Previous report
Effective as of April 1, 2025, the Company revised the fee structure to pursue a long-term growth strategy aimed at expanding and stabilizing the business foundation by creating an environment that can better facilitate the establishment of new clinics by MCs. This updated fee structure introduces a more tailored, performance-based approach to determining service fees for each clinic, based on several key criteria:
Previous report
These factors collectively determine each clinic’s tier classification (e.g., as a small, medium, or large clinic), as defined in the updated service agreement’s appendix. Under this system, each clinic is assigned to an appropriate tier based on its profile, and a corresponding fixed monthly fee is applied according to the schedule set forth in the contract. Notably, clinics offering cosmetic medical services are categorized using a more granular tier system reflecting their scale, with tiers ranging from newly opened clinics in their first year up to “super-large” clinics. In contrast, clinics focusing on other types of medical services (such as dermatology, AGA hair restoration, fertility treatments, or dental and orthopedic care) are classified into the standard small, medium, or large clinic tiers. This tiered approach ensures that service fees are aligned with each clinic’s size and performance, supporting newer and smaller clinics as they grow while accommodating the higher capacities of larger established clinics.
Previous report
If the revised fee structure had been applied starting in April 2024, it is estimated that total revenues for fiscal year 2024 would have decreased by approximately 10%. However, the Company expects the impact on total revenues and income from operations for fiscal year 2025 to be offset by the absence of one-time losses that were recorded in fiscal year 2024, mainly included impairment loss on intangible asset and stock-based compensation. Nevertheless, the ultimate financial impact remains uncertain and will depend on a number of factors, many of which are beyond the Company’s control.
Previous report
On May 12, 2025, the Company’s board of directors approved a share repurchase program with an aggregate purchase limit of up to USD 5 million. The repurchase period will begin on May 20, 2025 and continue through May 20, 2026, unless extended or terminated earlier depending on the progress. The program will be funded by surplus cash and future free cash flow.
Previous report
The Company believes its current share price undervalues its business performance, the growth potential of the aesthetic-medical market, and its position as an industry leader. The repurchase program is intended to return capital to shareholders and signal confidence in the Company’s valuation. It also aims to reduce shares outstanding and enhance capital efficiency.
Reworded paragraphs (25)
Previous wording
Our wholly owned subsidiary, SBC Medical Group Co., Ltd., a Japan corporation (“SBC Medical Sub”, or “SBC Japan”) is designated as a “medical service corporation” in Japan. In Japan, a medical service corporation is a legal entity that provides management service to “medical corporations”. The management services are conducted through franchisor-franchisee contracts and/or service contracts between SBC Medical Sub and the medical corporations that own all 251 of the treatment centers in Japanas of March 31, 2025. These clinics provide include but are not limited to breast augmentation, liposuction, rejuvenation treatments (including treatment of wrinkles, acne, scars, cellulite, excess fat, discoloration, and signs of aging), laser skin toning and spot removal, eyes double fold surgery, rhinoplasty, treatment of osmidrosis and hyperhidrosis, hair transplants, gynecological formation treatments, laser hair removal, face line surgeries, cosmetical dental procedures, tattoo removal, lasik eye surgery, lateral canthoplasty, brow lift procedures, androgenetic alopecia treatment, and cheek sagging prevention methods.
Current wording
Our wholly owned subsidiary, SBC Medical Group Co., Ltd., a Japan corporation (“SBC Medical Sub”, or “SBC Japan”) is designated as a “medical service corporation” in Japan. In Japan, a medical service corporation is a legal entity that provides management service to “medical corporations”. The management services are conducted through franchisor-franchisee contracts and/or service contracts between SBC Medical Sub and the medical corporations that own all 252 of the treatment centers in Japan as of June 30, 2025. These clinics provide include but are not limited to breast augmentation, liposuction, rejuvenation treatments (including treatment of wrinkles, acne, scars, cellulite, excess fat, discoloration, and signs of aging), laser skin toning and spot removal, eyes double fold surgery, rhinoplasty, treatment of osmidrosis and hyperhidrosis, hair transplants, gynecological formation treatments, laser hair removal, face line surgeries, cosmetical dental procedures, tattoo removal, lasik eye surgery, lateral canthoplasty, brow lift procedures, androgenetic alopecia treatment, and cheek sagging prevention methods. In addition, similar management services are provided to five independently operated clinics.
Previous wording
The Company’s subsidiaries have entered into franchisor-franchisee contracts and service contracts with six medical corporations, consisting of Medical Corporation Shobikai, Medical Corporation Kowakai, Medical Corporation Nasukai, Medical Corporation Aikeikai, Medical Corporation Jukeikai and Medical Corporation Ritz Cosmetic Surgery. In addition, the Company has entered into service contracts since September 2023 with two additional medical corporations, Medical Corporation Association Furinkai and Medical Corporation Association Junikai (collectively with the six franchisee medical corporations, the “Medical Corporations” or “MCs”). All of the Medical Corporations are deemed to be related parties of the Company since relatives of the CEO of the Company are the members (orshain) of general meetings of members of the Medical Corporations. The CEO of the Company was previously a member of the six franchisee Medical Corporations until he ceased being a member in July 2023. The Company, through SBC Medical Sub, owns equity “deposit” interests (ormochibun) of the Medical Corporations (except Medical Corporation Association Furinkai and Medical Corporation Association Junikai). Although the Company, through SBC Medical Sub, has an equity “deposit” interest to the rights to receive a distribution of residual assets in proportion to the amount of contribution in certain circumstances as provided in the articles of incorporation of each of the Medical Corporations (except Medical Corporation Association Furinkai and Medical Corporation Association Junikai), the Company or SBC Medical Sub does not have voting control over the corporate actions at general meetings of members (orshain) of the Medical Corporations per the requirements of the Japanese Medical Care Act.
Current wording
The Company’s subsidiaries have entered into franchisor-franchisee contracts and service contracts with six medical corporations, consisting of Medical Corporation Shobikai, Medical Corporation Kowakai, Medical Corporation Nasukai, Medical Corporation Aikeikai, Medical Corporation Jukeikai and Medical Corporation Ritz Cosmetic Surgery. In addition, the Company has entered into service contracts since September 2023 with two additional medical corporations, Medical Corporation Association Furinkai and Medical Corporation Association Junikai (collectively with the six franchisee medical corporations, the “Medical Corporations” or “MCs”). All of the Medical Corporations are deemed to be related parties of the Company since relatives of the CEO of the Company are the members* of general meetings of members** of the Medical Corporations. The CEO of the Company was previously a member* of the six franchisee Medical Corporations until he ceased being a member* in July 2023. The Company, through SBC Medical Sub, owns equity interests*** of the Medical Corporations (except Medical Corporation Association Furinkai and Medical Corporation Association Junikai). Although the Company, through SBC Medical Sub, has an equity interest*** to the rights to receive a distribution of residual assets in proportion to the amount of contribution in certain circumstances as provided in the Japanese Medical Care Act and in the articles of incorporation (except Medical Corporation Association Furinkai and Medical Corporation Association Junikai), the Company or SBC Medical Sub does not have voting control over the corporate actions at general meetings of members** of the Medical Corporations per the requirements of the Japanese Medical Care Act.
Previous wording
For the three months ended March 31, 2025 and 2024, we generated revenues of $47,328,701 and $54,808,042, respectively, we reported net income attributable to SBC Medical Group Holdings Incorporated of $21,502,446 and $18,757,752, respectively, and cash flows provided by operating activities of $1,928,621 and $3,682,175, respectively. As of March 31, 2025, we had retained earnings of $210,965,453.
Current wording
For the three months ended June 30, 2025 and 2024, we generated revenues of $43,358,847 and $53,102,080, respectively, we reported net income attributable to SBC Medical Group Holdings Incorporated of $2,458,240 and $18,484,408, respectively. For the six months ended June 30, 2025 and 2024, we generated revenues of $90,687,548 and $107,910,122, respectively, we reported net income attributable to SBC Medical Group Holdings Incorporated of $23,960,686 and $37,242,160, respectively, and cash flows provided by (used in) operating activities of $(6,411,168) and $22,874,760, respectively. As of June 30, 2025, we had retained earnings of $213,423,693.
Previous wording
Our primary mission is to provide quality comprehensive management services to the Medical Corporations and expand our “Shonan Beauty Clinic” brand. We plan to achieve the mission by maintaining and strengthening our market position and brand in the cosmetic medical treatment management market in Japan, Vietnam, Singapore and the United States, and by growing our presence globally.
Current wording
Our primary mission is to provide quality comprehensive management services to the Medical Corporations and expand our “Shonan Beauty Clinic” brand. We plan to achieve the mission by maintaining and strengthening our market position and brand in the cosmetic medical treatment management market in Japan, Vietnam and Singapore, and by growing our presence globally.
Previous wording
Revenues, net, decreased by 13.65% from $54,808,042 for the three months ended March 31, 2024 to $47,328,701 for the three months ended March 31, 2025.
Current wording
Revenues, net, decreased by 18.35% from $53,102,080 for the three months ended June 30, 2024 to $43,358,847 for the three months ended June 30, 2025.
Previous wording
Japanese Yen (“JPY”) against the U.S. dollar slightly depreciated during the three months ended March 31, 2025, compared to the three months March 31, 2024. The spot rate against the dollar was 149.4840 yen on Marh 31, 2025 compared to 151.3380 yen on March 31, 2024 and the average rate against the dollar was 152.5417 yen for the three months ended March 31, 2025 compared to 148.4462 yen for the same period in 2024. For the three months ended March 31, 2025 and 2024, we generated net revenues of $47,328,701 (JPY7,220 million) and $54,808,042 (JPY8,136 million), respectively, we reported net income of $21,491,950 (JPY3,252 million) and $18,750,216 (JPY2,783 million), respectively. Overall, the unfavorable impacts of the period-to-period foreign exchange rate changes on net revenues and net income were $1,305,757 and $412,787, respectively, for the three months ended March 31, 2025.
Current wording
Japanese Yen (“JPY”) against the U.S. dollar appreciated during the three months ended June 30, 2025, compared to the three months June 30, 2024. The spot rate against the dollar was 144.1650 yen on June 30, 2025 compared to 160.8680 yen on June 30, 2024 and the average rate against the dollar was 144.0297 yen for the three months ended June 30, 2025 compared to 156.0476 yen for the same period in 2024. For the three months ended June 30, 2025 and 2024, we generated net revenues of $43,358,847 (JPY6,245 million) and $53,102,080 (JPY8,286 million), respectively, we reported net income of $2,439,852 (JPY310 million) and $18,557,325 (JPY2,894 million), respectively. Overall, the favorable impacts of the period-to-period foreign exchange rate changes on net revenues and net income were $1,058,367 and $59,556, respectively, for the three months ended June 30, 2025.
Previous wording
The main reasons for the variance of $7,479,341 in revenues, net per revenue stream are as follows:
Current wording
The main reasons for the variance of $9,743,233 in revenues, net per revenue stream are as follows:
Previous wording
The management services revenue for the three months ended March 31, 2025 decreased to $8,728,103 by $6,926,567, or 44.25%, from $15,654,670 for the same period in 2024. This decrease was mainly due to (i) the discontinuation of clinic operation staff supporting services that had been provided by Shobikai Sub to MCs since the third quarter of 2024, because the Company completed the merger of Shobikai Sub with and into Lange Sub and the related business license, held by Shobikai Sub, became invalid upon the merger in January 2025 and (ii) the depreciation of JPY, partially offset by (i) the business expansion of MCs and (ii) the increase in the number of the clinics of MCs.
Current wording
The management services revenue for the three months ended June 30, 2025 decreased to $5,138,578 by $11,567,019, or 69.24%, from $16,705,597 for the same period in 2024. This decrease was mainly due to (i) the discontinuation of clinic operation staff supporting services that had been provided by Shobikai Sub to MCs since the third quarter of 2024, because the Company completed the merger of Shobikai Sub with and into Lange Sub and the related business license, held by Shobikai Sub, became invalid upon the merger in January 2025, (ii) the decrease in the revenue in connection with customer rewards program offered to customers of the franchisee clinics and (iii) the revision of the fee structure for determining service fees for each clinic of MCs based on the size, scale and performance of each clinic effective as of April 1, 2025, partially offset by the appreciation of JPY.
Previous wording
The rental services revenue for the three months ended March 31, 2025 increased to $5,640,514 by $2,022,573, or 55.90%, from $3,617,941 for the same period in 2024. This increase was mainly due to the increased demand for medical equipment from MCs due to the business expansion of MCs, partially offset by the depreciation of JPY.
Current wording
The rental services revenue for the three months ended June 30, 2025 increased to $6,851,176 by $3,398,003, or 98.40%, from $3,453,173 for the same period in 2024. This increase was mainly due to the opening of new clinics resulting in the increased demand for medical equipment from new clinics andreplacing laser hair removal equipment from existing clinics as well as the appreciation of JPY.
Previous wording
Depreciation and amortization expense decreased by $507,299, or 52.37%, to $461,405 for the three months ended March 31, 2025 from $968,704 for the same period in 2024, mainly due to the disposal of two subsidiaries, Kijimadairakanko Inc. and Skynet Academy Co., Ltd., in December 2024.
Current wording
The other revenues for the three months ended June 30, 2025 increased to $5,604,993 by $824,547, or 17.25%, from $4,780,446 for the same period in 2024. This increase was mainly due to revenues from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, which were acquired in November 2024, offset by the disposal of its subsidiaries, Kijimadairakanko Inc. and Skynet Academy Co., Ltd. in December 2024.
Previous wording
Gross profit for the three months ended March 31, 2025 was $37,733,084 compared to $39,519,375 for the same period in 2024. The decrease in gross profit by $1,786,291 or 4.52% was mainly due to the decrease in management services revenue and other revenues with relatively high gross margin as a result of the factors described above.
Current wording
Gross profit for the three months ended June 30, 2025 was $30,010,577 compared to $39,419,675 for the same period in 2024. The decrease in gross profit by $9,409,098 or 23.87% was mainly due to the decrease in franchising revenue and management services revenue with relatively high gross margin as a result of the factors described above.
Previous wording
Consulting and professional service fees increased by $667,321, or 25.37%, to $3,298,082 for the three months ended March 31, 2025 from $2,630,761 for the same period in 2024, mainly due to the increase in legal, tax, and market research expenses associated with the Company’s listing.
Current wording
Consulting and professional service fees increased by $1,299,921, or 50.42%, to $3,878,036 for the three months ended June 30, 2025 from $2,578,115 for the same period in 2024, mainly due to the increase in legal, tax, and market research expenses associated with the Company’s listing.
Previous wording
Income tax expense for the three months ended March 31, 2025 was $9,959,457 compared to $8,451,984 for the same period in 2024. The increase in income tax expense by $1,507,473 or 17.84% was mainly due to the higher income before tax.
Current wording
Income tax expense for the three months ended June 30, 2025 was $11,100,509 compared to $8,529,110 for the same period in 2024. The increase in income tax expense by $2,571,399 or 30.15% was mainly due to the increase of deferred tax expenses recognized and the appreciation of JPY.
Previous wording
The effective tax rate was 31.67% and 31.07% for the three months ended March 31, 2025 and 2024, respectively.
Current wording
The effective tax rate was 81.98% and 31.49% for the three months ended June 30, 2025 and 2024, respectively. The increase of 50.49 percentage points was mainly due to the deemed contribution in connection with the price modification on disposal of an aircraft to General Incorporated Association SBC, an entity controlled by the CEO of the Company, who is also the controlling shareholder of the Company, which was treated as a taxable gain under the Japanese tax law for the three months ended June 30, 2025.
Previous wording
As a result of the foregoing, we reported a net income of $21,491,950 for the three months ended March 31, 2025, representing an increase of $2,741,734 or 14.62% from $18,750,216 for the three months ended March 31, 2024.
Current wording
As a result of the foregoing, we reported a net income of $2,439,852 for the three months ended June 30, 2025, representing a decrease of $16,117,473 or 86.85% from $18,557,325 for the three months ended June 30, 2024.
Previous wording
The other revenues for the three months ended March 31, 2025 decreased to $2,908,019 by $4,321,160, or 59.77%, from $7,229,179 for the same period in 2024. This decrease was mainly due to the disposal of its subsidiaries, Kijimadairakanko Inc. and Skynet Academy Co., Ltd., in December 2024, offset by revenues from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, which were acquired in November 2024.
Current wording
The other revenues for the six months ended June 30, 2025 decreased to $8,513,012 by $3,496,613, or 29.12%, from $12,009,625 for the same period in 2024. This decrease was mainly due to the disposal of its subsidiaries, Kijimadairakanko Inc. and Skynet Academy Co., Ltd., in December 2024, offset by revenues from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, which were acquired in November 2024.
Previous wording
Cost of revenues for the three months ended March 31, 2025 was $9,595,617 compared to $15,288,667 for the same period in 2024. The decrease was mainly due to the Company’s effort of the cost reduction, as well as the discontinuation of clinic operation supporting services provided by Shobikai Sub to MCs since the third quarter of 2024, and the Company then terminated the employment of the related staff. As a result, labor cost significantly decreased.
Current wording
Cost of revenues for the six months ended June 30, 2025 was $22,943,887 compared to $28,971,072 for the same period in 2024. The decrease was mainly due to the Company’s effort of the cost reduction, as well as the discontinuation of clinic operation supporting services provided by Shobikai Sub to MCs since the third quarter of 2024, and the Company then terminated the employment of the related staff. As a result, cost of revenues decreased overall, despite a partial offset from higher purchase costs resulting from replacing laser hair removal equipment from MCs.
Previous wording
As of March 31, 2025, the Company had $132,055,823 in cash and cash equivalents compared to $125,044,092 as of December 31, 2024. In addition, the Company had $32,191,368 in accounts receivable as of March 31, 2025 compared to $30,260,113 as of December 31, 2024. The Company’s accounts receivable includes balances due from customers for the services and goods provided by the Company and accepted by customers.
Current wording
As of June 30, 2025, the Company had $152,740,882 in cash and cash equivalents compared to $125,044,092 as of December 31, 2024. In addition, the Company had $51,271,211 in accounts receivable as of June 30, 2025 compared to $30,260,113 as of December 31, 2024. The Company’s accounts receivable includes balances due from customers for the services and goods provided by the Company and accepted by customers.
Previous wording
As of March 31, 2025, the Company’s working capital balance was $166,630,721. In assessing liquidity, management monitors and analyzes the Company’s cash and cash equivalents, ability to generate sufficient future earnings, and operating and capital investment commitments. The Company believes that its current cash and cash equivalents from operations and borrowings from banks will be sufficient to meet its working capital needs for the next 12 months from the date of issuance of the unaudited financial statements included in this Quarterly Report.
Current wording
As of June 30, 2025, the Company’s working capital balance was $180,660,427. In assessing liquidity, management monitors and analyzes the Company’s cash and cash equivalents, ability to generate sufficient future earnings, and operating and capital investment commitments. The Company believes that its current cash and cash equivalents from operations and borrowings from banks will be sufficient to meet its working capital needs for the next 12 months from the date of issuance of the unaudited financial statements included in this Quarterly Report.
Previous wording
Net cash provided by operating activities was $1,928,621 for the three months ended March 31, 2025, mainly derived from net income of $21,491,950 for the period, reconciled by a gain on redemption of life insurance policies of $8,746,138 and deferred income tax expense of $7,016,227, and net changes in operating assets and liabilities, which mainly included an increase in finance lease receivables – related parties of $2,779,253, a decrease in customer loans receivable of $4,501,760, an increase in prepaid expenses and other current assets of $3,150,243, an increase in accounts payable of $3,235,017, a decrease in advances from customers – related parties of $2,114,829, and a decrease in income tax payable of $17,635,239.
Current wording
Net cash used in operating activities was $6,411,168 for the six months ended June 30, 2025, mainly derived from net income of $23,931,802 for the period, reconciled by a gain on redemption of life insurance policies of $8,746,138 and deferred income tax expense of $7,452,983, and net changes in operating assets and liabilities, which mainly included an increase in accounts receivable - related parties of $17,039,113, an increase in finance lease receivables – related parties of $6,482,967, a decrease in customer loans receivable of $8,081,703, an increase accounts payable to related parties - current of $2,455,865, a decrease in notes and other payables - related parties of $5,031,570, a decrease in advances from customers – related parties of $2,363,891, a decrease in income tax payable of $6,030,526, and a decrease in accrued liabilities and other current liabilities of $2,508,035.
Previous wording
Net cash provided by operating activities was $3,682,175 for the three months ended March 31, 2024, mainly derived from net income of $18,750,216 for the period, reconciled by a gain on disposal of subsidiary of $3,813,609, and net changes in operating assets and liabilities, which mainly included a decrease in accounts receivable – related parties of $4,775,935, a decrease in accounts payable of $8,937,435, and a decrease in income tax payable of $6,552,783.
Current wording
Net cash provided by operating activities was $22,874,760 for the six months ended June 30, 2024, mainly derived from net income of $37,307,541 for the period, reconciled by a gain on disposal of subsidiary of $3,813,609, deferred income taxes of $3,322,728, and net changes in operating assets and liabilities, which mainly included a decrease in accounts receivable – related parties of $5,843,499, a decrease in customer loans receivable of $7,521,267, a decrease in accounts payable of $8,960,556, a decrease in notes and other payables – related parties of $5,101,368, a decrease in advance from customers – related parties of $4,663,233, a decrease in accrued liabilities and other current liabilities of $4,444,172 and an increase in income tax payable of $5,462,133.
Previous wording
During the three months ended March 31, 2025, net cash used in investing activities of $978,807 was mainly the result of purchase of long-term investments of $0.6 million, and prepayments for property and equipment of $0.5 million, offset by proceeds from disposal of property and equipment of $0.3 million. During the three months ended March 31, 2024, net cash used in investing activities of $3,394,122 was mainly the result of purchase of convertible note of $1.7 million, disposal of subsidiary, net of cash disposed of $0.8 million, and purchase of property and equipment of $0.7 million.
Current wording
During the six months ended June 30, 2024, net cash used in investing activities of $9,405,716 was mainly the result of payments made on behalf of a related parties of $5.2 million, purchase of convertible note of $1.7 million, purchase of property and equipment of $1.6 million, and disposal of subsidiary, net of cash disposed of $0.8 million.
Previous wording
During the three months ended March 31, 2025, net cash used in financing activities of $280,380 was mainly due to the repayments of finance lease liabilities of $0.2 million. During the three months ended March 31, 2024, net cash used in financing activities of $40,227 was mainly due to the repayments of long-term loans of $0.03 million.
Current wording
During the six months ended June 30, 2024, net cash used in financing activities of $109,341 was mainly due to the repayments of long-term loans of $0.06 million.
Previous wording
Webelieve that there have been no material changes to our critical accounting policies and estimates from those disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 28, 2025.
Current wording
We believe that there have been no material changes to our critical accounting policies and estimates from those disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 28, 2025.
Previous wording
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
Current wording
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Further information regarding our business is provided in “Description of Business” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 28, 2025.
Current report — wording carried from elsewhere
Cost of revenues for the three months ended June 30, 2025 was $13,348,270 compared to $13,682,405 for the same period in 2024. The decrease was mainly due to the Company’s effort of the cost reduction, as well as the discontinuation of clinic operation supporting services provided by Shobikai Sub to MCs since the third quarter of 2024, and the Company then terminated the employment of the related staff. The decrease was partially offset by higher purchase costs resulting from replacing laser hair removal equipment from MCs.
Current report — wording carried from elsewhere
Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
The following table summarizes our operating income as reflected in our unaudited consolidated statements of operations and comprehensive income for the six months ended June 30, 2025 and 2024, and presents information regarding amounts and percentage changes during those periods.
Current report — wording carried from elsewhere
Revenues, net generated from different revenue streams consist of the following:
Current report — wording carried from elsewhere
Japanese Yen (“JPY”) against the U.S. dollar appreciated during the six months ended June 30, 2025, compared to the six months June 30, 2024. The spot rate against the dollar was 144.1650 yen on June 30, 2025 compared to 160.8680 yen on June 30, 2024 and the average rate against the dollar was 148.4720 yen for the six months ended June 30, 2025 compared to 152.1868 yen for the same period in 2024. For the six months ended June 30, 2025 and 2024, we generated net revenues of $90,687,548 (JPY13,465 million) and $107,910,122 (JPY16,422 million), respectively, we reported net income of $23,931,802 (JPY3,562 million) and $37,307,541 (JPY5,678 million), respectively. Overall, the favorable impacts of the period-to-period foreign exchange rate changes on net revenues and net income were $2,213,636 and $526,004, respectively, for the six months ended June 30, 2025.
Current report — wording carried from elsewhere
The main reasons for the variance of $17,222,574 in revenues, net per revenue stream are as follows:
Current report — wording carried from elsewhere
Consulting and professional service fees increased by $1,967,242, or 37.77%, to $7,176,118 for the six months ended June 30, 2025 from $5,208,876 for the same period in 2024, mainly due to the increase in legal, tax, and market research expenses associated with the Company’s listing.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Cash Flows for the three months ended March 31, 2025 and 2024