LGPS 6-K
Logprostyle Inc. (LGPS)
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 December 2025
Commission File Number: 001-42473
LOGPROSTYLE INC.
3-6-23 Kitaaoyama
Minato-ku, Tokyo 107-0061, Japan
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
On December 22, 2025, the Board of Directors of Logprostyle Inc. (the “Company”) announced its financial and operational results for the half year ended September 30, 2025.
A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in any website is not a part of this report on Form 6-K.
A copy of the unaudited financial statements as at and for the six months ended September 30, 2025 and Management’s Discussion and Analysis of Financial Condition and Results of Operations as at and for the six months ended September 30, 2025 are attached hereto as Exhibits 99.2 and 99.3.
EXHIBIT INDEX
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| LOGPROSTYLE INC. | ||
| Date: December 22, 2025 | By: | /s/ Yasuyuki Nozawa |
| Yasuyuki Nozawa | ||
| Chief Executive Officer, President, and Representative | ||
Exhibit 99.1
 |
LogProstyle Inc. Aoyama Building 13th Floor, 1-2-3 Kita-Aoyama, Minato-ku, Tokyo, 107-0061, Japan https://www.logprostyle.co.jp/ |
LogProstyle Reports First Half Fiscal Year 2026 Results
December 22, 2025
LogProstyle Inc. (NYSE American: LGPS) (the “Company” or “LogProstyle”), a leading real estate renovation and resale, development, hotel and restaurant management company, today announced its first half fiscal year 2026 financial results for the period ended September 30, 2025. References in this earnings release to “JPY” or “¥” refer to Japanese yen and “US$” refers to United States dollars. Convenience translations included in this earnings release of Japanese yen into United States dollars have been made at the exchange rate of ¥147.97 = US$1.00, which was the foreign exchange rate on September 30, 2025.
First Half Fiscal Year 2026 Summary
(First half fiscal year 2026 results for the six-month period ended September 30, 2025, compared to the comparable six-month period of 2024)
| ● | Total revenue of JPY10,324 million (US$69.8 million) compared to JPY10,518 million. | |
| ● | Gross profit increased 25% to JPY2,196 million (US$14.8 million), margin expansion of over 460 basis points to 21.3% from 16.6%. | |
| ● | Operating income reached JPY884 million (US$6 million), up 31% from JPY673 million. Operating margin increased by 217 basis points to 8.6% from 6.4%. | |
| ● | Net income increased 34% to JPY494 million (US$3.3 million) from JPY369 million. Basic earnings per share grew by JPY3.85 to JPY20.90 (US$0.14), and diluted earnings per share grew by JPY 3.63 to JPY 20.68 (US$0.14). | |
| ● | Equity ratio expanded by 136 basis points to 17.0%. |
| Results Summary for the First Half Fiscal Year 2026 | ||||||||||||||||
| (US$ and ¥ in millions except per share data) | 1H FY2026 ($USD) | 1H FY2026 (¥JPY) | 1H FY2025 (¥JPY) | YoY Change | ||||||||||||
| Revenue | US$ | 69.8 | ¥ | 10,324 | ¥ | 10,518 | (2 | )% | ||||||||
| Gross Profit | US$ | 14.8 | ¥ | 2,196 | ¥ | 1,750 | 25 | % | ||||||||
| Gross Margin | 21.3 | % | 21.3 | % | 16.6 | % | 463 bps | |||||||||
| Operating Income | US$ | 6.0 | ¥ | 884 | ¥ | 673 | 31 | % | ||||||||
| Operating Margin | 8.6 | % | 8.6 | % | 6.4 | % | 217 bps | |||||||||
| Net Income | US$ | 3.3 | ¥ | 494 | ¥ | 369 | 34 | % | ||||||||
| Basic EPS | US$ | 0.14 | ¥ | 20.90 | ¥ | 17.05 | ¥ | 3.85 | ||||||||
| Diluted EPS | US$ | 0.14 | ¥ | 20.68 | ¥ | 17.05 | ¥ | 3.63 | ||||||||
| 2 |
Yasuyuki Nozawa, Representative Director, President and CEO of LogProstyle said, “Our performance in the first half of fiscal year 2026 demonstrates the resilience of our business model and the continued progress across our core real estate and hospitality business lines. Despite modest revenue declines, we delivered material margin expansion and profit generation, largely attributed to disciplined cost management and proven track record navigating the Japanese real estate market. We are pleased with the performance of our hospitality business, with robust inbound tourism driving improved occupancy and higher average daily rates. As we look ahead to the back-half of the year, we remain focused on strengthening our balance sheet, accelerating our development pipelines, and enhancing operational efficiency. Our strategic priorities remain centered on long-term sustainable growth and value creation for our shareholders.”
Financial highlights:
Revenue for the first six months of fiscal year 2026 in the period ended September 30, 2025, reached JPY10,324 million (US$69.8 million), declined slightly by 2% compared to JPY10,518 million in the year ago period. Real estate generated JPY9,498 million (US$64.2 million) in revenue, roughly stable versus JPY9,627 million in the year ago period. The moderate decline in real estate revenue was driven primarily by a reduction in the number of units sold, partially offset by an increase in sales of new real estate development projects. Hotel revenue of JPY642 million (US$4.3 million), increased by 10.7% compared to JPY580 million in the comparable year-ago period. Revenue growth was driven by an increase in occupancy rates from 68.2% to 70.8% in the six months ended September 30, 2025, and the higher average daily rates which increased from JPY19.6 thousand (US$130) to JPY21.3 thousand (US$140).
Gross profit increased by 25% to JPY2,196 million (US$14.8 million), up from JPY1,750 million, with gross margin expanding by 463 basis points to 21.3% from 16.6% in the prior year period. The gross margin expansion was supported by diligent cost controls and pricing power, partially offset by lower revenue.
Operating expenses increased by 22% to JPY1,311 million (US$8.9 million) from JPY1,077 million in the prior-year period. The increase in operating expenses was driven by costs associated with being a public company, and higher payroll costs. Operating income reached JPY884 million (US$6 million), an increase of 31% compared with JPY673 million in the comparable year-ago period. Operating margin expanded by 217 basis points to 8.6%, up from 6.4%, supported by stable revenue and rigorous expense management.
Net income for the first six months of fiscal year 2026 reached JPY494 million (US$3.3 million), up 34% compared with the JPY369 million in the year-ago period. Basic earnings per share increased by ¥3.85 to ¥20.90 (US$0.14) from ¥17.05, and diluted earnings per share increased by ¥3.63 to ¥20.68 (US$0.14) from ¥17.05.
EBITDA reached JPY927 million (US$6.3 million), up 28% from JPY723 in the year ago period of fiscal 2025. EBITDA margin expanded by 210 basis points to 9.0% from 6.9% in the year ago period.
Cash and cash equivalents of JPY1,161 million (US$7.8 million) at September 30, 2025, compared with JPY2,121 million at March 31, 2025.
| 3 |
Operational highlights:
| ● | In October, LogProstyle announced a land acquisition for the development of its second hotel in the Asakusa district of Tokyo. Expected to open in October of 2028, LogProstyle’s footprint expands to five strategically located hotels in the leading tourism markets of Japan. Situated on over 280 square meters of land in one of Tokyo’s most atmospheric and historically rich neighborhoods, this latest hotel property is located within 300 meters from PROSTYLE RYOKAN Asakusa Tokyo, enabling operational synergies between the two hotels. | |
| ● | Effective August 2025, LogProstyle engaged with Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“Mitsubishi UFJ Morgan Stanley Securities”) to serve as an intermediary for the buying and selling of its shares. In line with the strategy of driving sustainable growth and long-term value creation for shareholders, the engagement marks an important milestone in enhancing liquidity and distribution, while expanding access to global institutional and individual investors. |
| 4 |
LogProstyle Inc.
CONSOLIDATED BALANCE SHEETS
(Yen in thousands, except share data)
September 30,2025 | March 31,2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ¥ | 1,161,203 | ¥ | 2,120,515 | ||||
| Trade notes and accounts receivable, net | 97,590 | 138,373 | ||||||
| Inventories, net | 15,036,477 | 13,612,387 | ||||||
| Consumption tax receivable | 137,380 | 5,749 | ||||||
| Short-term investments | 156,214 | 182,030 | ||||||
| Other current assets | 536,948 | 353,579 | ||||||
| Total current assets | 17,125,812 | 16,412,633 | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | 424,770 | 357,527 | ||||||
| Operating lease right-of-use assets | 4,246,457 | 4,481,941 | ||||||
| Software | 25,349 | 27,792 | ||||||
| Leasehold and guarantee deposits | 395,137 | 465,968 | ||||||
| Deferred tax assets | 435,123 | 458,767 | ||||||
| Other non-current assets | 776,860 | 363,608 | ||||||
| Allowance for credit losses | (75,044 | ) | (84,048 | ) | ||||
| Total non-current assets | 6,228,652 | 6,071,555 | ||||||
| Total assets | ¥ | 23,354,464 | ¥ | 22,484,188 | ||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable | ¥ | 303,760 | ¥ | 597,708 | ||||
| Accrued expenses | 148,554 | 112,661 | ||||||
| Short-term loans | 1,861,566 | 1,885,259 | ||||||
| Current portion of bonds | 6,323 | 28,620 | ||||||
| Current portion of long-term loans | 4,001,512 | 4,025,343 | ||||||
| Operating lease liabilities, current | 475,229 | 463,129 | ||||||
| Finance lease liabilities, current | 8,019 | 8,400 | ||||||
| Contract liabilities | 91,659 | 252,260 | ||||||
| Income taxes payable | 256,081 | 248,885 | ||||||
| Other current liabilities | 176,528 | 254,956 | ||||||
| Total current liabilities | 7,329,231 | 7,877,221 | ||||||
| Non-current liabilities | ||||||||
| Bond | 38,720 | - | ||||||
| Long-term loans | 8,010,676 | 6,858,607 | ||||||
| Operating lease liabilities, non-current | 3,863,265 | 4,090,933 | ||||||
| Finance lease liabilities, non-current | 15,228 | 19,062 | ||||||
| Other non-current liabilities | 126,351 | 121,146 | ||||||
| Total non-current liabilities | 12,054,240 | 11,089,748 | ||||||
| Total liabilities | ¥ | 19,383,471 | ¥ | 18,966,969 | ||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common shares: 81,498,000 shares authorized, 23,652,110 shares issued and 23,628,452 shares outstanding as of September 30, 2025 and March 31, 2025 with no stated value. | ¥ | 924,817 | ¥ | 924,817 | ||||
| Capital surplus | 1,445,333 | 1,445,333 | ||||||
| Additional paid in capital | (197,466 | ) | (238,115 | ) | ||||
| Retained earnings | 1,813,103 | 1,397,387 | ||||||
| Treasury shares | (2,539 | ) | (2,539 | ) | ||||
| Accumulated other comprehensive loss | (12,255 | ) | (9,664 | ) | ||||
| Total shareholders’ equity | 3,970,993 | 3,517,219 | ||||||
| Total liabilities and equity | ¥ | 23,354,464 | ¥ | 22,484,188 |
| 5 |
LogProstyle Inc.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Yen in thousands, except share and per share data)
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue: | ¥ | 10,324,388 | ¥ | 10,518,468 | ||||
| Cost of revenue | (8,128,849 | ) | (8,768,666 | ) | ||||
| Gross profit | 2,195,539 | 1,749,802 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | (1,311,386 | ) | (1,077,092 | ) | ||||
| Total operating expenses | (1,311,386 | ) | (1,077,092 | ) | ||||
| Operating income | 884,153 | 672,710 | ||||||
| Other income (expenses): | ||||||||
| Interest expenses | (126,237 | ) | (109,535 | ) | ||||
| Other income, net | 5,301 | 5,871 | ||||||
| Total other expenses | (120,936 | ) | (103,664 | ) | ||||
| Income before income taxes | 763,217 | 569,046 | ||||||
| Income tax expenses | (268,798 | ) | (199,891 | ) | ||||
| Net income | 494,419 | 369,155 | ||||||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translation adjustment | (2,591 | ) | (9,114 | ) | ||||
| Total comprehensive income | ¥ | 491,828 | ¥ | 360,041 | ||||
| Earnings per share: | ||||||||
| Basic | ¥ | 20.90 | ¥ | 17.05 | ||||
| Diluted | 20.68 | 17.05 | ||||||
| Weighted average number of shares of common stock outstanding | ||||||||
| Basic | 23,652,110 | 21,652,110 | ||||||
| Diluted | 23,906,208 | 21,652,110 | ||||||
| 6 |
LogProstyle Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Yen in thousands)
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | ¥ | 494,419 | ¥ | 369,155 | ||||
| Depreciation and amortization | 42,794 | 50,249 | ||||||
| Amortization of debt issuance costs | 32,222 | 34,665 | ||||||
| Stock-based compensation expenses | 40,649 | - | ||||||
| Deferred income taxes | 23,644 | 95,736 | ||||||
| Provision of allowance for credit losses | (9,004 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in trade notes and accounts receivable, net | 40,783 | 51,518 | ||||||
| (Increase) decrease in inventories, net | (1,424,090 | ) | 1,339,815 | |||||
| (Increase) decrease in consumption taxes receivable | (131,631 | ) | 22,899 | |||||
| (Increase) decrease in prepaid expenses | (195,177 | ) | 12,795 | |||||
| (Increase) in advances to vendors | (9,313 | ) | (42,793 | ) | ||||
| Decrease (increase) in leasehold and guarantee deposits | 70,831 | (7,875 | ) | |||||
| (Increase) decrease in long-term prepaid expenses | (406,129 | ) | 125 | |||||
| Increase in accounts payables | 38,018 | 943 | ||||||
| Increase (decrease) in accrued expenses | 35,893 | (100,303 | ) | |||||
| Increase in income taxes payable | 7,196 | 42,200 | ||||||
| (Decrease) in contract liabilities | (160,601 | ) | (59,719 | ) | ||||
| Increase in deposits received | 28,773 | 12,060 | ||||||
| Other, net | (59,989 | ) | 71,689 | |||||
| Net cash flows (used in) provided by operating activities | (1,540,712 | ) | 1,893,159 | |||||
| Cash flows from investing activities: | ||||||||
| Purchase of short-term investments | (30,064 | ) | (118,000 | ) | ||||
| Proceeds from sales of short-term investments | 55,880 | 73,800 | ||||||
| Purchases of property, plant and equipment, net | (104,682 | ) | (32,745 | ) | ||||
| Purchases of software | (2,584 | ) | (15,963 | ) | ||||
| Purchases of long-term investments | - | (270,000 | ) | |||||
| Purchases of investments in capital | (3,270 | ) | (1,220 | ) | ||||
| Other, net | - | (77 | ) | |||||
| Net cash flows used in investing activities | (84,720 | ) | (364,205 | ) | ||||
| Cash flows from financing activities: | ||||||||
| (Decrease) increase in short-term borrowings, net | (20,681 | ) | 127,254 | |||||
| Borrowings from long-term loans | 7,180,708 | 4,633,208 | ||||||
| Repayments for long-term loans | (6,030,730 | ) | (6,728,724 | ) | ||||
| Proceeds from issuance of bonds | 50,000 | - | ||||||
| Redemption of bonds | (28,620 | ) | (24,640 | ) | ||||
| Payments for finance leases | (4,216 | ) | (4,148 | ) | ||||
| Payment for debt issuance costs | (68,504 | ) | (15,304 | ) | ||||
| Payments for dividends | (78,703 | ) | ||||||
| Payments of listing expenses | (331,966 | ) | (100,180 | ) | ||||
| Net cash flows provided by (used in) financing activities | 667,288 | (2,112,534 | ) | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,168 | ) | 2,830 | |||||
| Net (decrease) in cash and cash equivalents | (959,312 | ) | (580,750 | ) | ||||
| Cash and cash equivalents at the beginning of period | 2,120,515 | 1,218,241 | ||||||
| Cash and cash equivalents at the end of period | ¥ | 1,161,203 | ¥ | 637,491 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | ¥ | 279,310 | ¥ | 255,293 | ||||
| Cash paid for taxes | ¥ | 260,665 | ¥ | 67,666 | ||||
| Cash refund for taxes | 884 | 3,348 | ||||||
| 7 |
LogProstyle Inc.
REVENUE BY BUSINESS SEGMENT
(US$ and ¥ thousands)
| Six Months Ended September 30, | ||||||||||||||||
| 2025($) | 2025(¥) | 2024(¥) | YoY % | |||||||||||||
| Real Estate | $ | 64,190 | ¥ | 9,498,243 | ¥ | 9,627,373 | (1.3 | )% | ||||||||
| Hotel | 4,340 | 642,236 | 579,914 | 10.7 | % | |||||||||||
| Other | 1,243 | 183,909 | 311,181 | (40.9 | )% | |||||||||||
| Total Revenue | $ | 69,773 | ¥ | 10,324,388 | ¥ | 10,518,468 | (1.8 | )% | ||||||||
LogProstyle Inc.
Reconciliation of Operating Income to EBITDA
(US$ and ¥ in million)
| Six Months Ended September 30, | ||||||||||||
| 2025($) | 2025(¥) | 2024(¥) | ||||||||||
| Operating income | $ | 6 | ¥ | 884 | ¥ | 673 | ||||||
| Depreciation and amortization | 0.3 | 43 | 50 | |||||||||
| EBITDA | $ | 6.2 | ¥ | 927 | ¥ | 723 | ||||||
EBITDA is a non-GAAP financial measure. Management believes that EBITDA provides useful information for investors to evaluate the Company’s operating performance and cash-generating ability. It is also used by management for internal purposes, including performance evaluation and budgeting. EBITDA is not a measure defined under US-GAAP or IFRS and may not be comparable to similar metrics disclosed by other companies.
Forward-Looking Statements Disclaimer:
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding the Company’s future financial performance, operating results, business strategy, capital resources, liquidity, development pipeline, operational efficiency, and long-term growth objectives. These statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to, changes in economic conditions, real estate and hospitality market conditions, interest rate fluctuations, construction and development risks, cost inflation, regulatory changes, foreign exchange fluctuations, and other risks related to the Company’s business operations, and other factors described in the Company’s filings with the U.S. Securities and Exchange Commission, including the risks detailed in the Company’s annual report on Form 20-F filed with the SEC on July 7, 2025. Forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this press release, except as required by applicable law. Any references to our website have been provided as a convenience, and the information contained on such website is not incorporated by reference into this press release.
About LogProstyle Inc.
LogProstyle Inc. is involved in a wide range of businesses, including real estate development, hotel management, and restaurant management. With the slogan “redefine life style,” the Company is working on various projects with the aim of illustrating an innovative and sustainable lifestyle. LogProstyle is the first unlisted Japanese company to list its Japanese common shares directly on a major United States stock exchange rather than through American Depositary Receipts (ADRs).
Contacts
LogProstyle Inc., Investor Relations, [email protected]
Hayden IR, Investor Relations, [email protected]
Exhibit 99.2
LogProstyle Inc.
CONSOLIDATED BALANCE SHEETS
(Yen in thousands)
September 30, 2025 | March 31, 2025 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | ¥ | 1,161,203 | ¥ | 2,120,515 | ||||
| Trade notes and accounts receivable, net | 97,590 | 138,373 | ||||||
| Inventories, net | 15,036,477 | 13,612,387 | ||||||
| Consumption tax receivable | 137,380 | 5,749 | ||||||
| Short-term investments | 156,214 | 182,030 | ||||||
| Other current assets | 536,948 | 353,579 | ||||||
| Total current assets | 17,125,812 | 16,412,633 | ||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | 424,770 | 357,527 | ||||||
| Operating lease right-of-use assets | 4,246,457 | 4,481,941 | ||||||
| Software | 25,349 | 27,792 | ||||||
| Leasehold and guarantee deposits | 395,137 | 465,968 | ||||||
| Deferred tax assets | 435,123 | 458,767 | ||||||
| Other non-current assets | 776,860 | 363,608 | ||||||
| Allowance for credit losses | (75,044 | ) | (84,048 | ) | ||||
| Total non-current assets | 6,228,652 | 6,071,555 | ||||||
| Total assets | ¥ | 23,354,464 | ¥ | 22,484,188 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-3 |
LogProstyle Inc.
CONSOLIDATED BALANCE SHEETS
(Yen in thousands, except share data)
September 30, 2025 | March 31, 2025 | |||||||
| (unaudited) | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable | ¥ | 303,760 | ¥ | 597,708 | ||||
| Accrued expenses | 148,554 | 112,661 | ||||||
| Short-term loans | 1,861,566 | 1,885,259 | ||||||
| Current portion of bonds | 6,323 | 28,620 | ||||||
| Current portion of long-term loans | 4,001,512 | 4,025,343 | ||||||
| Operating lease liabilities, current | 475,229 | 463,129 | ||||||
| Finance lease liabilities, current | 8,019 | 8,400 | ||||||
| Contract liabilities | 91,659 | 252,260 | ||||||
| Income taxes payable | 256,081 | 248,885 | ||||||
| Other current liabilities | 176,528 | 254,956 | ||||||
| Total current liabilities | 7,329,231 | 7,877,221 | ||||||
| Non-current liabilities | ||||||||
| Bond | 38,720 | - | ||||||
| Long-term loans | 8,010,676 | 6,858,607 | ||||||
| Operating lease liabilities, non-current | 3,863,265 | 4,090,933 | ||||||
| Finance lease liabilities, non-current | 15,228 | 19,062 | ||||||
| Other non-current liabilities | 126,351 | 121,146 | ||||||
| Total non-current liabilities | 12,054,240 | 11,089,748 | ||||||
| Total liabilities | ¥ | 19,383,471 | ¥ | 18,966,969 | ||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Common shares: 81,498,000 shares authorized, 23,652,110 shares issued and 23,628,452 shares outstanding as of September 30, 2025 and March 31, 2025 with no stated value. | ¥ | 924,817 | ¥ | 924,817 | ||||
| Capital surplus | 1,445,333 | 1,445,333 | ||||||
| Additional paid in capital | (197,466 | ) | (238,115 | ) | ||||
| Retained earnings | 1,813,103 | 1,397,387 | ||||||
| Treasury shares | (2,539 | ) | (2,539 | ) | ||||
| Accumulated other comprehensive loss | (12,255 | ) | (9,664 | ) | ||||
| Total shareholders’ equity | 3,970,993 | 3,517,219 | ||||||
| Total liabilities and equity | ¥ | 23,354,464 | ¥ | 22,484,188 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-4 |
LogProstyle Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Yen in thousands, except share and per share data)
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue: | ¥ | 10,324,388 | ¥ | 10,518,468 | ||||
| Cost of revenue | (8,128,849 | ) | (8,768,666 | ) | ||||
| Gross profit | 2,195,539 | 1,749,802 | ||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | (1,311,386 | ) | (1,077,092 | ) | ||||
| Total operating expenses | (1,311,386 | ) | (1,077,092 | ) | ||||
| Operating income | 884,153 | 672,710 | ||||||
| Other income (expenses): | ||||||||
| Interest expenses | (126,237 | ) | (109,535 | ) | ||||
| Other income, net | 5,301 | 5,871 | ||||||
| Total other expenses | (120,936 | ) | (103,664 | ) | ||||
| Income before income taxes | 763,217 | 569,046 | ||||||
| Income tax expenses | (268,798 | ) | (199,891 | ) | ||||
| Net income | 494,419 | 369,155 | ||||||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translation adjustment | (2,591 | ) | (9,114 | ) | ||||
| Total comprehensive income | ¥ | 491,828 | ¥ | 360,041 | ||||
| Earnings per share: | ||||||||
| Basic | ¥ | 20.90 | ¥ | 17.05 | ||||
| Diluted | 20.68 | 17.05 | ||||||
| Weighted average number of shares of common stock outstanding | ||||||||
| Basic | 23,652,110 | 21,652,110 | ||||||
| Diluted | 23,906,208 | 21,652,110 | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-5 |
LogProstyle Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Yen in thousands, except share data)
| Common Shares | Capital | Additional paid in | Retained | Treasury shares | ||||||||||||||||||||||||||||||||
| Shares | Amount | Surplus | capital | Earnings | Shares | Amount | AOCI | Total | ||||||||||||||||||||||||||||
Balance at March 31, 2024 | 21,652,110 | ¥ | 235,001 | ¥ | 755,517 | ¥ | 148,392 | ¥ | 643,766 | 23,658 | ¥ | (2,539 | ) | ¥ | (17,320 | ) | ¥ | 1,762,817 | ||||||||||||||||||
| Net income | - | - | - | - | 369,155 | - | - | - | 369,155 | |||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | (9,114 | ) | (9,114 | ) | |||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| Payments for dividends | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Balance at September 30, 2024 | 21,652,110 | ¥ | 235,001 | ¥ | 755,517 | ¥ | 148,392 | ¥ | 1,012,921 | 23,658 | ¥ | (2,539 | ) | ¥ | (26,434 | ) | ¥ | 2,122,858 | ||||||||||||||||||
| Common Shares | Capital | Additional paid in | Retained | Treasury shares | ||||||||||||||||||||||||||||||||
| Shares | Amount | Surplus | capital | Earnings | Shares | Amount | AOCI | Total | ||||||||||||||||||||||||||||
Balance at March 31, 2025 | 23,652,110 | ¥ | 924,817 | ¥ | 1,445,333 | ¥ | (238,115 | ) | ¥ | 1,397,387 | 23,658 | ¥ | (2,539 | ) | ¥ | (9,664 | ) | ¥ | 3,517,219 | |||||||||||||||||
| Net income | - | - | - | - | 494,419 | - | - | - | 494,419 | |||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | - | - | - | (2,591 | ) | (2,591 | ) | |||||||||||||||||||||||||
| Stock-based compensation | - | - | - | 40,649 | - | - | - | - | 40,649 | |||||||||||||||||||||||||||
| Payments for dividends | - | - | - | - | (78,703 | ) | - | - | - | (78,703 | ) | |||||||||||||||||||||||||
Balance at September 30, 2025 | 23,652,110 | ¥ | 924,817 | ¥ | 1,445,333 | ¥ | (197,466 | ) | ¥ | 1,813,103 | 23,658 | ¥ | (2,539 | ) | ¥ | (12,255 | ) | ¥ | 3,970,993 | |||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-6 |
LogProstyle Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Yen in thousands)
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | ¥ | 494,419 | ¥ | 369,155 | ||||
| Depreciation and amortization | 42,794 | 50,249 | ||||||
| Amortization of debt issuance costs | 32,222 | 34,665 | ||||||
| Stock-based compensation expenses | 40,649 | - | ||||||
| Deferred income taxes | 23,644 | 95,736 | ||||||
| Provision of allowance for credit losses | (9,004 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in trade notes and accounts receivable, net | 40,783 | 51,518 | ||||||
| (Increase) decrease in inventories, net | (1,424,090 | ) | 1,339,815 | |||||
| (Increase) decrease in consumption taxes receivable | (131,631 | ) | 22,899 | |||||
| (Increase) decrease in prepaid expenses | (195,177 | ) | 12,795 | |||||
| (Increase) in advances to vendors | (9,313 | ) | (42,793 | ) | ||||
| Decrease (increase) in leasehold and guarantee deposits | 70,831 | (7,875 | ) | |||||
| (Increase) decrease in long-term prepaid expenses | (406,129 | ) | 125 | |||||
| Increase in accounts payables | 38,018 | 943 | ||||||
| Increase (decrease) in accrued expenses | 35,893 | (100,303 | ) | |||||
| Increase in income taxes payable | 7,196 | 42,200 | ||||||
| (Decrease) in contract liabilities | (160,601 | ) | (59,719 | ) | ||||
| Increase in deposits received | 28,773 | 12,060 | ||||||
| Other, net | (59,989 | ) | 71,689 | |||||
| Net cash flows (used in) provided by operating activities | (1,540,712 | ) | 1,893,159 | |||||
| Cash flows from investing activities: | ||||||||
| Purchase of short-term investments | (30,064 | ) | (118,000 | ) | ||||
| Proceeds from sales of short-term investments | 55,880 | 73,800 | ||||||
| Purchases of property, plant and equipment, net | (104,682 | ) | (32,745 | ) | ||||
| Purchases of software | (2,584 | ) | (15,963 | ) | ||||
| Purchases of long-term investments | - | (270,000 | ) | |||||
| Purchases of investments in capital | (3,270 | ) | (1,220 | ) | ||||
| Other, net | - | (77 | ) | |||||
| Net cash flows used in investing activities | (84,720 | ) | (364,205 | ) | ||||
| Cash flows from financing activities: | ||||||||
| (Decrease) increase in short-term borrowings, net | (20,681 | ) | 127,254 | |||||
| Borrowings from long-term loans | 7,180,708 | 4,633,208 | ||||||
| Repayments for long-term loans | (6,030,730 | ) | (6,728,724 | ) | ||||
| Proceeds from issuance of bonds | 50,000 | - | ||||||
| Redemption of bonds | (28,620 | ) | (24,640 | ) | ||||
| Payments for finance leases | (4,216 | ) | (4,148 | ) | ||||
| Payment for debt issuance costs | (68,504 | ) | (15,304 | ) | ||||
| Payments for dividends | (78,703 | ) | ||||||
| Payments of listing expenses | (331,966 | ) | (100,180 | ) | ||||
| Net cash flows provided by (used in) financing activities | 667,288 | (2,112,534 | ) | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,168 | ) | 2,830 | |||||
| Net (decrease) in cash and cash equivalents | (959,312 | ) | (580,750 | ) | ||||
| Cash and cash equivalents at the beginning of period | 2,120,515 | 1,218,241 | ||||||
| Cash and cash equivalents at the end of period | ¥ | 1,161,203 | ¥ | 637,491 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | ¥ | 279,310 | ¥ | 255,293 | ||||
| Cash paid for taxes | ¥ | 260,665 | ¥ | 67,666 | ||||
| Cash refund for taxes | 884 | 3,348 | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| F-7 |
LogProstyle Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS
Description of Business
LogProstyle Inc. (“the Company”) and its subsidiaries (collectively, the “Group”) operate in Japan through our subsidiaries as a real estate developer and real estate management company. Our subsidiaries primarily offer three types of services: (i) provision of real estate-related services, such as design and renovation, and real estate development, (ii) hotel management and accommodation, and (iii) additional services such as the sale of housing equipment and materials, restaurant operation, and information technology consulting.
On April 5, 2025, LogProstyle signed a Memorandum of Association (MoA) with the Dubai Department of Economy and Tourism (DET) and established a new entity, “LogProstyle Inc For Hotel Management CO. L.L.C S.O.C” (LogProstyle Dubai).
The consolidated financial statements of the Group include the Company and the entities below:
| Date of Incorporation or Acquisition | Place of Incorporation | Percentage of Direct or Indirect Economic Ownership | ||||||
| Subsidiaries | ||||||||
| Prostyle Inc. | February 2017 | Japan | 100.0 | % | ||||
| LogSuite Inc. | August 2006 | Japan | 100.0 | % | ||||
| LogAsset Inc. | February 2023 | Japan | 100.0 | % | ||||
| LogArchitects Inc. | September 2015 | Japan | 100.0 | % | ||||
| Chino Building Management Inc. | February 2015 | Japan | 100.0 | % | ||||
| ProstyleRyokan Inc. | May 2017 | Japan | 100.0 | % | ||||
| Okinawa Igeto Inc. | January 2018 | Japan | 100.0 | % | ||||
| Kotakino Inc. | September 2013 | Japan | 100.0 | % | ||||
| LogKnot Vietnam Co., Ltd. | August 2021 | Vietnam | 100.0 | % | ||||
| Propolife Vietnam Co., Ltd. | October 2015 | Vietnam | 100.0 | % | ||||
| Yantai Propolife Wood Industry Co., Ltd. | November 2016 | China | 100.0 | % | ||||
| LogProstyle US Inc. | December 2024 | US | 100.0 | % | ||||
| LogProstyle Inc For Hotel Management CO. L.L.C S.O.C | April 2025 | UAE | 100.0 | % | ||||
On August 30, 2024, the Company purchased a 40.8% interest for an investment in a condominiums in Miyanomori, Hokkaido for ¥270,000 thousand. The investment, which is classified as a long-term investments. The purchase was accounted for as an equity-method investment under ASC 323, Investments – Equity Method and Joint Ventures, and continues to be accounted for under the equity method of accounting.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles of the United States.
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
There are 5 subsidiaries as of September 30, 2025 and 4 subsidiaries as of March 31, 2025, respectively, which have different fiscal year-ends from that of the Company. These subsidiaries were consolidated based on the respective year end. Adjustments were made for the effects of significant intragroup transactions caused by different fiscal year-ends and the remaining impacts would not be material.
The unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended March 31, 2025.
Reclassification
Certain amounts in the prior period have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Significant estimates and assumptions are reflected in valuation and disclosure of accounts including: impairment of long-lived assets, valuation of stock-based compensation, recoverability of deferred taxes and allowance for credit losses. Actual results could differ from these good faith estimates and judgments.
| F-8 |
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and deposits in banks that are unrestricted as to withdrawal or use. All highly liquid investments acquired with original maturities of three months or less are considered to be cash equivalents.
Short-Term Investments
Short-term investments represent cash pledged to financial institutions as collateral for the Company’s bank loans, and term deposits placed with financial institutions with original maturities of greater than three months. Short-term investments are not available for withdrawal or the Company’s general use until after the corresponding bank loans are repaid, or the term deposits mature. Short-term investments are classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective agreements.
Trade Notes and Accounts Receivable
Accounts receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due). The Group’s accounts receivable balances are unsecured, bear no interest and are due upon normally within a year from the date of the sale.
Allowance for Credit Losses
In accordance with Accounting Standards Codification (“ASC”) Topic 326, “Financial Instruments - Credit Losses”, the Company estimates and records an expected lifetime credit loss on trade notes and accounts receivable and leasehold and guarantee deposits by utilizing historical write-off rates as a starting point for determining expected credit losses and has considered all available relevant information, including details about past events, current conditions, and reasonable and supportable forecasts, as well as their impact on the expected credit losses. The allowance for expected credit losses is adjusted for current conditions and reasonable and supportable forecasts.
Inventories
Inventories consist of real estate inventories, raw entitled land, construction in process, including capitalized interest and housing equipment and material. Estimates of the lower of cost and net realizable value of inventory are determined by comparing the actual cost of the inventory to the estimated selling prices in the ordinary course of business based on current market and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory.
The cost basis of the real estate inventories includes all direct acquisition costs including but not limited to the property purchase price, acquisition costs, construction costs, development costs, capitalized interest, capitalized real estate taxes and other costs. Interests and real estate taxes are not capitalized unless active development or construction is underway. When acquiring real estate with existing buildings, we allocate the purchase price between land and building based on their relative fair values.
Property, Plant and Equipment
Property, Plant and Equipment are stated at cost less accumulated depreciation.
| Useful life | Depreciation method | |||
| Buildings | 6-39 years | Straight-line method | ||
| Leasehold improvements | 4-18 years | Straight-line method | ||
| Vehicles | 2 years | Straight-line method | ||
| Tool, furniture and fixtures | 3-15 years | Straight-line method | ||
| Land | Indefinite | - |
Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. Construction in progress is not depreciated until ready for service. At the time of retirement or other disposition of property, plant and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.
| F-9 |
The long-lived assets of the Group are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment” (“ASC No. 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were recorded during the six months ended September 30, 2025 and 2024.
Fair Value
The Company performs fair value measurements in accordance with ASC Topic 820, “Fair Value Measurement”. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:
| ● | Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; |
| ● | Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and |
| ● | Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
Revenue Recognition
The Group accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that the Group recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps:
| (1) | identify the contracts with a customer, | |
| (2) | identify the performance obligations in the contract, | |
| (3) | determine the transaction price, | |
| (4) | allocate the transaction price to the performance obligations in the contract and | |
| (5) | recognize revenue when (or as) the entity satisfies a performance obligation. |
In order for an arrangement to be considered a contract, it must be probable that the Group will collect the consideration to which it is entitled for goods or services to be transferred. Once the contract is determined to be within the scope of ASC 606, the Group assesses the goods or services promised with each contract, determines whether those are performance obligations and the related transaction price. The Group then recognizes the sale of goods based on the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied.
The Company recognizes revenue from rental services under ASC Topic 842, “Leases”.
The Group recognizes revenue from sales of real estate properties, provision of hotel accommodation services, and sales of housing equipment and material sales.
Revenue from sales of real estate properties
Revenues from the sales of real estate properties are recognized at the point in time when title to and possession of the property has transferred to the customer and the Group has no continuing involvement with the property, which is generally upon the delivery of the real estate properties, which generally coincides with the receipt of cash consideration from the customer. Our contracts with customers contain a single performance obligation.
Revenue from hotel accommodation services
Revenues from hotel accommodation services are recognized during the period when services are rendered.
| F-10 |
Housing equipment and material sales
Housing equipment and material sales are recognized at the point in time when the goods are delivered to the customer.
The Group’s revenues are presented net of consumption tax collected on behalf of governments.
Leases
The Group determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.
We classify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct financing lease (as a lessor):
(i) ownership is transferred from lessor to lessee by the end of the lease term;
(ii) an option to purchase is reasonably certain to be exercised;
(iii) the lease term is for the major part of the underlying asset’s remaining economic life;
(iv) the present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or
(v) the underlying asset is specialized and is expected to have no alternative use at the end of the lease term.
If we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet any of the criteria, we account for the lease as an operating lease.
Lessee accounting
The Group recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as the Group has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Group’s right to use an underlying asset for the lease term. Lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Group.
As the rates implicit on the Group’s leases for which it is the lessee are not readily determinable, the Group uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining the incremental borrowing rate, the Group assesses multiple variables such as lease term, collateral, economic conditions, and its creditworthiness.
Lessor accounting
The Group accounts for the revenue from its lease contracts by utilizing the single component accounting policy. This policy requires the Group to account for, by class of underlying asset, the lease component and non-lease component(s) associated with each lease as a single component if two criteria are met:
(i) the timing and pattern of transfer of the lease component and the non-lease component(s) are the same; and
(ii) the lease component would be classified as an operating lease if it were accounted for separately.
Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under the Group’s leases. Non-lease components consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for repairs, maintenance, and common area expenses.
| F-11 |
If the lease component is the predominant component, the Group accounts for all revenue under such lease as a single component in accordance with the lease accounting standard. Conversely, if the non-lease component is the predominant component, all revenue under such lease is accounted for in accordance with the revenue recognition accounting standard. The Group’s operating leases qualify for the single component accounting, and the lease component in each of its leases is predominant. Therefore, the Group accounts for all revenue from its operating leases under the lease accounting standard and classify the revenue as lease income.
The Group commences recognition of lease income related to the operating leases at the date the property is ready for its intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from leases related to fixed rental payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently but recognized as revenue in future periods are classified in deferred revenue in its consolidated balance sheets.
Advertising Expenses
The Group expenses advertising costs as they incurred. Total advertising expenses were ¥48,023 thousand and ¥36,619 thousand for the six months ended September 30, 2025 and 2024, respectively, and have been included as part of selling, general and administrative expenses.
Concentration of Credit Risk and Significant Vendors
Financial instruments that potentially subject the Group to credit risk consist primarily of trade notes and accounts receivable, net. The Group does not require collateral or other security to support these receivables. The Group conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.
Customers
For the six months ended September 30, 2025 and 2024, customers accounting for 10% or more of the Group’s total revenues were as follows:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Customer A | 13 | % | * | % | ||||
| Customer B | * | 18 | ||||||
| * | Less than 10% |
As of September 30, 2025 and March 31, 2025, customers accounting for 10% or more of the Group’s total current outstanding trade notes and accounts receivable, net were as follows:
September 30, 2025 | March 31, 2025 | |||||||
| Customer C | 14 | % | * | % | ||||
| Customer D | 12 | * | ||||||
| Customer E | 12 | 11 | ||||||
| * | Less than 10% |
Suppliers
For the six months ended September 30, 2025 and 2024, no suppliers accounted for 10% or more of the Company’s total purchases.
| F-12 |
As of September 30, 2025 and March 31, 2025, suppliers accounted for 10% or more of the Group’s total current outstanding accounts payable were as follows:
September 30, 2025 | March 31, 2025 | |||||||
| Supplier A | 15 | % | * | % | ||||
| Supplier B | 14 | * | ||||||
| Supplier C | 11 | * | ||||||
| Supplier D | * | 45 | ||||||
| Supplier E | * | 10 | ||||||
| * | Less than 10% |
Income Taxes
Under FASB ASC 740, “Income Taxes”, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Group recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Interest and penalties accrued related to unrecognized tax benefits are included in income taxes in the consolidated statements of income and comprehensive income.
Foreign Currency Translation and Re-measurement
The functional currency of the Company and the Japanese subsidiaries are the Japanese Yen (“JPY”). The functional currency of the Company’s subsidiaries, Propolife Vietnam Co., Ltd. and LogKnot Vietnam Co., Ltd. are the Vietnamese dong. The functional currency of the Company’s subsidiaries, Yantai Propolife Wood Industry Co., Ltd. is the Chinese yuan. The functional currency of the Company’s subsidiaries, LogProstyle US Inc. and LogProstyle Inc For Hotel Management CO. L.L.C S.O.C are the U.S. dollars. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements of income and comprehensive income.
The reporting currency of the Group is the JPY, and the accompanying consolidated financial statements have been expressed in JPY. In accordance with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Group whose functional currency is not JPY are translated into JPY, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive income (loss) within the consolidated statements of shareholders’ equity.
Segments
ASC 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
The Group has three reportable segments: Real estate segment, Hotel segment and other segment, which are based on the Group’s organizational structure and characteristics of products and services. Operating segments are defined as the components of the Group for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s CODMs primarily evaluate performance based on financial results. The accounting policies used for these reportable segments are consistent with the accounting policies used in the Group’s consolidated financial statements.
| F-13 |
Comprehensive Income or Loss
ASC Topic 220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources.
Net Income Per Share
Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted net income per share reflects the potential dilution that could occur if stock options and other commitments to issue common shares were exercised or equity awards vest resulting in the issuance of common shares that could share in the net income of the Group.
Stock-based Compensation
The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation”. The cost of services received from directors of the Company (excluding independent directors), executive officers, and directors of subsidiaries in exchange for awards of equity instruments is recognized in the consolidated statements of income and comprehensive income based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period.
The Company measures a liability award under a stock-based compensation payment arrangement based on the award’s fair value remeasured at each reporting date until the date of settlement. Compensation cost for each period until settlement is based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered at the reporting date) in the fair value of the instrument for each reporting period.
Related Parties and Transactions
The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related Party Disclosures” and other relevant ASC standards.
Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis. For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public companies to disclose additional information about specific expense categories in the notes to the consolidated financial statements on an annual and interim basis. ASU No. 2024-03 is effective for public companies for annual reporting periods beginning after December 15, 2026, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurements of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05). The amendments in this update provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Under ASU 2025-05, an entity is required to disclose whether it has elected to use the practical expedient. An entity that makes the accounting policy election is required to disclose the date through which subsequent cash collections are evaluated. ASU 2025-05 is effective for the Company beginning in the fiscal year ending December 31, 2026. The Company is currently evaluating the impacts of the adoption of ASU 2025-05 on the consolidated financial statements.
| F-14 |
NOTE 3 – CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of September 30, 2025 and March 31, 2025 consist of the following:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Cash and deposits | ¥ | 1,114,431 | ¥ | 2,076,564 | ||||
| Cash equivalents | 46,772 | 43,951 | ||||||
| Total | ¥ | 1,161,203 | ¥ | 2,120,515 | ||||
NOTE 4 - TRADE NOTES AND ACCOUNTS RECEIVABLE, NET
Trade notes and accounts receivable, net are summarized as follows:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Trade notes | ¥ | 5,651 | ¥ | 3,298 | ||||
| Accounts receivable | 92,135 | 135,386 | ||||||
| Less: allowance for credit losses | (196 | ) | (311 | ) | ||||
| Trade notes and accounts receivable, net | ¥ | 97,590 | ¥ | 138,373 | ||||
NOTE 5- INVENTORIES, NET
The following table summarizes the components of the Group’s inventories as of the dates presented:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Real estate inventories, net | ||||||||
| Real estate properties held for sale | ¥ | 6,448,442 | ¥ | 6,187,759 | ||||
| Real estate properties in progress | 8,312,450 | 7,222,597 | ||||||
| Subtotal | 14,760,892 | 13,410,356 | ||||||
| Housing equipment and material, net | 153,219 | 140,178 | ||||||
| Others | 122,366 | 61,853 | ||||||
| Inventories, net | ¥ | 15,036,477 | ¥ | 13,612,387 | ||||
As of September 30, 2025 and March 31, 2025, capitalized interest was ¥141,747 thousand and ¥149,105 thousand, respectively.
NOTE 6 – OTHER CURRENT ASSETS
The following table summarizes the components of the Group’s other current assets as of the dates presented:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Prepaid expenses | ¥ | 310,477 | ¥ | 115,300 | ||||
| Advances to vendors | 183,429 | 174,116 | ||||||
| Others | 43,042 | 64,163 | ||||||
| Total | ¥ | 536,948 | ¥ | 353,579 | ||||
| F-15 |
NOTE 7– PROPERTY, PLANT AND EQUIPMENT
The following table summarizes the components of the Group’s property and equipment as of the dates presented:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Buildings | ¥ | 95,006 | ¥ | 98,383 | ||||
| Leasehold improvements | 312,876 | 226,697 | ||||||
| Vehicles | 1,691 | 1,691 | ||||||
| Tools, Furniture, and Fixtures | 233,643 | 234,159 | ||||||
| Land | 70,894 | 70,894 | ||||||
| Right-of-use assets- Finance lease | 64,879 | 64,879 | ||||||
| 778,989 | 696,703 | |||||||
| Accumulated depreciation | (312,239 | ) | (301,452 | ) | ||||
| Accumulated depreciation- Finance lease | (41,980 | ) | (37,724 | ) | ||||
| Total | ¥ | 424,770 | ¥ | 357,527 | ||||
Depreciation expense for the six months ended September 30, 2025 and 2024 was ¥31,405 thousand and ¥47,074 thousand, respectively, of which ¥11,561 thousand and ¥27,189 thousand are recorded under selling, general and administrative expenses, respectively.
NOTE 8– OTHER NON-CURRENT ASSETS
The following table summarizes the components of the Group’s other assets as of the dates presented:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Long-term prepaid expenses | ¥ | 415,227 | ¥ | 9,098 | ||||
| Long-term investments (*) | 270,000 | 270,000 | ||||||
| Investment securities | 39,084 | 39,084 | ||||||
| Investments in capital | 29,670 | 26,400 | ||||||
| Insurance funds | 20,228 | 16,850 | ||||||
| Others | 2,651 | 2,176 | ||||||
| Total | ¥ | 776,860 | ¥ | 363,608 | ||||
| * | The Company sold condominiums in Miyanomori, Hokkaido in April 2024 to a third party, and purchased a 40.8% interest of equity method in the specified joint real estate venture that owns these condominiums for ¥270,000 thousand in August 2024. The investment, which is classified as long-term investments in the above table. The purchase was accounted for as an equity-method investment under ASC 323, Investments – Equity Method and Joint Ventures, and continues to be accounted for under the equity method of accounting. |
NOTE 9 – BONDS
The Group issued corporate bonds through various banks, which consist of the following:
| Thousands of Yen | Thousands of Yen | |||||||||||||||||||
| Principal Amount | Issuance Date | Maturity Date | Annual Interest Rate | Balance as
of | Balance as of 31, | |||||||||||||||
| Lender 1 | ¥ | 100,000 | 9/26/2022 | 9/26/2025 | 0.56 | % | ¥ | - | ¥ | 20,000 | ||||||||||
| Lender 2 | 100,000 | 9/25/2020 | 9/25/2025 | 0.83 | % | - | 10,000 | |||||||||||||
| Lender 3 | 50,000 | 8/25/2025 | 8/25/2032 | 0.75 | % | 50,000 | - | |||||||||||||
| Aggregate outstanding principal balances | 50,000 | 30,000 | ||||||||||||||||||
| Less: unamortized bond issuance costs | (4,957 | ) | (1,380 | ) | ||||||||||||||||
| Less: current portion | (6,323 | ) | (28,620 | ) | ||||||||||||||||
| Non-current portion | ¥ | 38,720 | ¥ | - | ||||||||||||||||
Interest expenses for corporate bonds were ¥1,409 thousand and ¥1,442 thousand for the six months ended September 30, 2025 and 2024, respectively.
| F-16 |
NOTE 10 — BANK AND OTHER BORROWINGS
The Group’s outstanding indebtedness borrowed from banks and other financial institutions, consist of the following:
| Thousands of Yen | ||||||||||||||||
| Indebtedness | Weighted average interest rate* | Weighted average years to maturity* | Balance as of September 30, 2025 | Balance as of March 31, 2025 | ||||||||||||
| Short-term loans | ||||||||||||||||
| Secured loans | ||||||||||||||||
| Fixed rate loans | 2.64 | % | 0.46 | ¥ | 710,220 | ¥ | 1,842,700 | |||||||||
| Variable rate loans (*1) | 2.51 | % | 0.70 | 1,097,800 | - | |||||||||||
| Unsecured loans | ||||||||||||||||
| Fixed rate loans | 2.81 | % | 0.17 | 53,666 | 50,000 | |||||||||||
| Variable rate loans (*1) | 1.98 | % | 0.17 | 10,332 | - | |||||||||||
| Aggregate outstanding principal balances | 2.57 | % | 0.59 | ¥ | 1,872,018 | ¥ | 1,892,700 | |||||||||
| Less: unamortized debt issuance costs | ¥ | (10,452 | ) | ¥ | (7,441 | ) | ||||||||||
| Short-term loans | ¥ | 1,861,566 | ¥ | 1,885,259 | ||||||||||||
| Long-term loans | ||||||||||||||||
| Secured loans | ||||||||||||||||
| Fixed rate loans | 2.93 | % | 2.13 | 4,523,764 | 9,718,249 | |||||||||||
| Variable rate loans (*2) | 2.62 | % | 2.46 | 6,649,563 | 280,000 | |||||||||||
| Unsecured loans | ||||||||||||||||
| Fixed rate loans | 1.48 | % | 5.36 | 730,524 | 960,379 | |||||||||||
| Variable rate loans (*2) | 1.80 | % | 3.23 | 204,755 | - | |||||||||||
| Aggregate outstanding principal balances | 2.65 | % | 2.52 | ¥ | 12,108,606 | ¥ | 10,958,628 | |||||||||
| Less: unamortized debt issuance costs | ¥ | (96,418 | ) | ¥ | (74,678 | ) | ||||||||||
| Less: current portion | (4,001,512 | ) | (4,025,343 | ) | ||||||||||||
| Non-current portion | ¥ | 8,010,676 | ¥ | 6,858,607 | ||||||||||||
| * | Pertained to information for loans outstanding as of September 30, 2025. |
| *1 | Annual interest rate was short-term prime rate in Japan +1.88%. |
| *2 | Annual interest rate was long-term prime rate in Japan + 2.30%. |
The Group borrowed loans from various financial institutions for the purpose of purchasing real estate properties and for working capital purpose.
Interest expenses for short-term and long-term loans were ¥119,754 thousand and ¥103,322 thousand for the six months ended September 30, 2025 and 2024, respectively.
Included in real estate inventory was capitalized interest of ¥91,310 thousand and ¥113,723 thousand for the six months ended September 30, 2025, and 2024, respectively.
As of September 30, 2025 and March 31, 2025, term deposits, inventories and property, plant and equipment, net pledged as security under secured loans are as follows:
| Thousands of Yen | ||||||||
September 30, 2025 | March 31, 2025 | |||||||
| Term deposits | ¥ | 5,000 | ¥ | 5,000 | ||||
| Inventories | 10,217,712 | 13,137,928 | ||||||
| Property, plant and equipment, net | 84,603 | 84,386 | ||||||
| Total | ¥ | 10,307,315 | ¥ | 13,227,314 | ||||
Compensating balances that do not legally restrict the use of cash were ¥299,670 thousand and ¥ 296,400 thousand as of September 30, 2025 and March 31, 2025.
| F-17 |
As of September 30, 2025, future minimum payments for long-term loans are as follows:
| Thousands of Yen | ||||
| Fiscal Years Ending March 31, | Principal Repayment | |||
| Remaining of 2026 | ¥ | 683,391 | ||
| 2027 | 7,664,508 | |||
| 2028 | 2,850,161 | |||
| 2029 | 169,482 | |||
| 2030 | 168,341 | |||
| Thereafter | 572,723 | |||
| Total | ¥ | 12,108,606 | ||
There are no significant debt covenants related to short-term and long-term loans.
NOTE 11 – FAIR VALUE MEASUREMENTS
As of September 30, 2025 and March 31, 2025, the carrying values of current assets and current liabilities approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.
| Fair Value Measurements as of September 30, 2025 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Fair Value at September 30, 2025 | |||||||||||||
| Liability | ||||||||||||||||
| Bond, including current portion of bonds | - | ¥ | 49,582 | - | ¥ | 49,582 | ||||||||||
| Long-term debt, including current portion of long-term debt | - | 12,037,934 | - | 12,037,934 | ||||||||||||
| Total | - | ¥ | 12,087,516 | - | ¥ | 12,087,516 | ||||||||||
| Fair Value Measurements as of March 31, 2025 | ||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Fair Value at March 31, 2025 | |||||||||||||
| Liability | ||||||||||||||||
| Bond, including current portion of bonds | - | ¥ | 28,620 | - | ¥ | 28,620 | ||||||||||
| Long-term debt, including current portion of long-term debt | - | 12,736,598 | - | 12,736,598 | ||||||||||||
| Total | ¥ | 12,765,218 | ¥ | 12,765,218 | ||||||||||||
Long-term debt
The Group’s long-term debt instruments are classified as Level 2 instruments and valued based on the present value of future cash flows associated with each instrument discounted using current market borrowing rates for similar debt instruments of comparable maturity. The levels are more fully described in Note 2.
| F-18 |
NOTE 12 – DISAGGREGATION OF REVENUES
Revenues generated from different revenue streams consisted of the following:
| Thousands of Yen | ||||||||
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue from sales of real estate properties | ¥ | 9,161,318 | ¥ | 9,391,904 | ||||
| Revenue from hotel accommodation services | 642,499 | 662,909 | ||||||
| Housing equipment and material sales | 257,324 | 151,463 | ||||||
| Revenue from rental services | 16,096 | 19,437 | ||||||
| Others | 247,151 | 292,755 | ||||||
| Total | ¥ | 10,324,388 | ¥ | 10,518,468 | ||||
The following table summarizes the changes in contract liabilities as of the dates presented:
| Thousands of Yen | ||||||||
| September 30, 2025 | March 31, 2025 | |||||||
| Balances at the beginning of the period | ¥ | 252,260 | ¥ | 352,651 | ||||
| Billings and not recognized as revenue yet during the period | 91,659 | 252,260 | ||||||
| Revenue recognized from opening balance of contract liabilities | (252,260 | ) | (352,651 | ) | ||||
| Balances at the end of the period | ¥ | 91,659 | ¥ | 252,260 | ||||
100% of total contract liabilities as of March 31, 2025 was realized for the six months ended September 30, 2025. As of September 30, 2025, the Group expects 100% of total contract liabilities to be realized in less than a year. Changes in contract liabilities are primarily due to the timing of revenue recognition, billings, and cash collections.
NOTE 13 - LEASES
Lessee
The Group has entered into operating leases for hotels and offices with terms ranging from one to twenty years, and finance leases for certain office equipment and vehicles, with terms ranging from one to seven years. The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right-of-use assets and lease liabilities was included in the consolidated financials.
Operating lease expenses for lease payments are recognized on a straight-line basis over the lease term.
The following table presents supplemental information related to the Group’s leases:
| Thousands of Yen | ||||||||
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Finance lease costs | ||||||||
| Amortization of right-of-use assets | ¥ | 4,255 | ¥ | 4,207 | ||||
| Interest on lease liabilities | 213 | 218 | ||||||
| Total finance lease costs | 4,468 | 4,425 | ||||||
| Operating lease costs | 286,272 | 323,750 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | 266,329 | 334,283 | ||||||
| Financing cash flows from finance leases | 4,428 | 4,366 | ||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | - | - | ||||||
| Finance lease right-of-use assets obtained in exchange for finance lease liabilities | ¥ | - | ¥ | 18,360 | ||||
| Remeasurement of operating lease liabilities and right-of-use assets due to lease modification | - | (268,067 | ) | |||||
| Weighted average remaining lease term (years) | ||||||||
| Operating leases | 10.7 | 10.8 | ||||||
| Finance leases | 3.2 | 4.0 | ||||||
| Weighted-average discount rate (per annum) | ||||||||
| Operating leases | 2.29 | % | 2.21 | % | ||||
| Finance leases | 1.66 | % | 1.66 | % | ||||
| F-19 |
As of September 30, 2025, the future maturity of lease liabilities is as follows:
| Thousands of Yen | ||||||||
| Fiscal Years Ending March 31, | Finance Lease | Operating Lease | ||||||
| Remaining of 2026 | ¥ | 4,045 | ¥ | 291,044 | ||||
| 2027 | 7,996 | 552,245 | ||||||
| 2028 | 6,513 | 547,100 | ||||||
| 2029 | 4,431 | 535,159 | ||||||
| 2030 | 907 | 419,559 | ||||||
| Thereafter | - | 2,546,563 | ||||||
| Total lease payments | ¥ | 23,892 | ¥ | 4,891,670 | ||||
| Less: imputed interest | (645 | ) | (553,176 | ) | ||||
| Total lease liabilities | 23,247 | 4,338,494 | ||||||
| Less: current portion | (8,019 | ) | (475,229 | ) | ||||
| Non-current lease liabilities | ¥ | 15,228 | ¥ | 3,863,265 | ||||
Lessor
Lease income related to operating leases included income from leases on the consolidated statements of income and comprehensive income. The amounts of lease income recognized on the consolidated statements of income and comprehensive income were as follows:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Fixed income from operating leases | ¥ | 16,096 | ¥ | 19,437 | ||||
NOTE 14 – STOCK-BASED COMPENSATION
Shareholders approved the establishment of a performance share plan (the “Plan”) with post-vetting delivery and related remuneration for directors (excluding independent directors), executive officers, and directors of subsidiaries. The total amount of monetary claims and cash to be granted under the Plan to the eligible directors for each performance evaluation period shall not exceed ¥200,000 thousands (excluding salaries for directors who also serve as employees), and the total number of Company shares to be delivered shall not exceed 500,000 shares per performance evaluation period. The achievement rate of performance targets is based on performance indicators (financial and/or non-financial) reflective of the Group’s profitability and management policies, as determined by resolution of the Company’s board of directors in advance. The approval of the Plan is indicative of the Company’s priority of aligning management incentives with shareholders.
The fair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant date. The issuances of the awards granted under the Plan are accounted for as a combination award in accordance with the accounting provisions under ASC 718, “Compensation - Stock Compensation”.
The grant-date fair value of the awards granted under the Plan was ¥144,825 thousands. Expense for performance-based stock units is recognized when it is probable that the performance goal will be achieved.
The Company recognized the following amounts in total non-employee stock-based compensation costs in relation to the Plan for the six months ended September 30, 2025 and 2024:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Equity-classified stock-based compensation expense | ¥ | 40,649 | ¥ | - | ||||
| Liability-classified stock-based compensation expense | 31,764 | - | ||||||
| Stock-based compensation expense | ¥ | 72,413 | ¥ | - | ||||
As of September 30, 2025, there was ¥40,649 thousands of total unrecognized compensation cost related to the Company’s equity-classified awards. This cost is expected to be recognized over a weighted-average period of 0.5 years.
As of September 30, 2025, there was ¥31,764 thousands of total unrecognized compensation cost related to the Company’s liability-classified awards. This cost is expected to be recognized over a weighted-average period of 0.5 years.
The following table summarizes the award activity under the Plan for the six months ended September 30, 2025:
| Number of PSUs | Weighted Average Grant Date Fair Value Per Share | |||||||
| Unvested as of March 31, 2025 | - | ¥ | - | |||||
| Granted | 500,000 | 162.59 | ||||||
| Vested | - | - | ||||||
| Forfeited | - | - | ||||||
| Unvested as of September 30, 2025 | 500,000 | ¥ | 162.59 | |||||
NOTE 15- SHAREHOLDERS’ EQUITY
Share capital shares
The changes in the number of issued shares of share capital during the six months ended September 30, 2025 and 2024 were as follows:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Balance at the beginning of period | 23,652,110 | 21,652,110 | ||||||
| Issuance of capital shares | - | - | ||||||
| Balance at the end of period | 23,652,110 | 21,652,110 | ||||||
All of the issued shares as of September 30, 2025 and March 31, 2025 have been paid in full.
| F-20 |
Under the Companies Act of Japan (the “Companies Act”), issuances of capital shares, including conversions of bonds and notes, are required to be credited to the share capital account for at least 50% of the proceeds and to the legal capital surplus account (“Capital surplus”) for the remaining amounts.
The Companies Act permits that share capital, capital surplus and retained earnings can be transferred among these accounts under certain conditions upon the approval of a General Meeting of Shareholders. The Companies Act limits the increase of paid in capital in case disposition of treasury shares and issuance of common stock are performed at the same time.
Legal reserve set aside as appropriation of retained earnings and legal capital surplus
Retained earnings consist of legal reserves and accumulated earnings. The Companies Act provides that an amount at least equal to 10% of the aggregate amount of cash dividends and certain appropriations of retained earnings associated with cash outlays applicable to each period shall be appropriated and set aside as a legal reserve until the aggregate amount of legal reserve set aside as an appropriation of retained earnings and the legal capital surplus equals 25% of stated capital as defined in the Companies Act. Legal reserves may be used to eliminate or reduce a deficit or be transferred to other retained earnings upon approval of the General Meeting of Shareholders.
Treasury shares
The changes in the number of treasury shares during the six months ended September 30, 2025 and 2024 were as follows:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Balance at the beginning of period | 23,658 | 23,658 | ||||||
| Sales of treasury shares | - | - | ||||||
| Balance at the end of period | 23,658 | 23,658 | ||||||
NOTE 16 - OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) during the six months ended September 30, 2025 and 2024 consists of the following:
| Thousands of Yen | ||||||||
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Foreign currency translation adjustment: | ||||||||
| Income (losses) during the period | ¥ | (2,591 | ) | ¥ | (9,114 | ) | ||
| Income (losses) before tax effect | (2,591 | ) | (9,114 | ) | ||||
| Income (losses) after tax effect | ¥ | (2,591 | ) | ¥ | (9,114 | ) | ||
| Total | ||||||||
| Income (losses) during the period | ¥ | (2,591 | ) | ¥ | (9,114 | ) | ||
| Income (losses) before tax effect | (2,591 | ) | (9,114 | ) | ||||
| Income (losses) after tax effect | ¥ | (2,591 | ) | ¥ | (9,114 | ) | ||
NOTE 17 - INCOME TAX
Japan
The Company and the Japanese subsidiaries conduct its major businesses in and are subject to tax in this jurisdiction. As a result of its business activities, the Company and the Japanese subsidiaries apply the Japanese Group Relief System and file tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company and the Japanese subsidiaries are imposed by the national, prefectural, and municipal governments.
| F-21 |
As of September 30, 2025, tax years ended March 31, 2019 to 2025 remain open for the local tax authority audit. The Company has received no notice of audit from the local tax authority for any of the open tax years.
China
Yantai Propolife Wood Industry Co., Ltd. was incorporated under the laws of China. The income tax rate is 25%. As of September 30, 2025, at least over six tax years until the year ended December 31, 2024 remain open for the local tax authority audit. The Company has received no notice of audit from the local tax authority for any of the open tax years.
Vietnam
LogKnot Vietnam Co., Ltd. and Propolife Vietnam Co., Ltd. were incorporated under the laws of Vietnam. The income tax rate is 20%. As of September 30, 2025, at least over six tax years until the year ended December 31, 2024 remain open for the local tax authority audit. The Company has received no notice of audit from the local tax authority for any of the open tax years.
For the six months ended September 30, 2025 and 2024, the Group’s income tax expenses are as follows:
| Thousands of Yen | ||||||||
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Current | ¥ | 245,154 | ¥ | 104,155 | ||||
| Deferred | 23,644 | 95,736 | ||||||
| Total | ¥ | 268,798 | ¥ | 199,891 | ||||
A reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of income and comprehensive income to the Japanese statutory tax rate for the six months ended September 30, 2025 and 2024 is as follows:
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Japanese statutory tax rate | 34.59 | % | 34.59 | % | ||||
| Entertainment expenses not deductible | 0.56 | 2.54 | ||||||
| Change in valuation allowance | (0.29 | ) | (2.28 | ) | ||||
| Other adjustments | 0.25 | 0.49 | ||||||
| Effective tax rate | 35.11 | % | 35.34 | % | ||||
On March 31, 2025, amendments to Japanese tax regulations were enacted into law. As a result, the Japanese statutory tax rate was increased from 34.59 % to 35.43 % from the fiscal year beginning April 1, 2026.
The tax effects of temporary differences that give rise to the deferred income tax assets and liabilities at September 30, 2025 and March 31, 2025 are presented below:
| Thousands of Yen | ||||||||
| September 30, 2025 | March 31, 2025 | |||||||
| Deferred income tax assets | ||||||||
| Operating lease liabilities | ¥ | 1,496,915 | ¥ | 1,581,389 | ||||
| Net operating losses carried forward | 213,255 | 202,547 | ||||||
| Inventories | 88,971 | 88,739 | ||||||
| Stock-based compensation | 43,939 | - | ||||||
| Other current liabilities | 31,855 | 33,763 | ||||||
| Loss on valuation of shares of subsidiaries | 31,178 | 32,390 | ||||||
| Enterprise taxes payables | 29,703 | 30,858 | ||||||
| Other non-current liabilities | 28,642 | 30,491 | ||||||
| Allowance for credit losses | 26,382 | 27,407 | ||||||
| Property, plant and equipment | 15,668 | 16,277 | ||||||
| Finance lease liabilities | 9,366 | 9,730 | ||||||
| Deferred listing expenses | - | 84,835 | ||||||
| Others | 70,676 | 65,083 | ||||||
| Subtotal | 2,086,547 | 2,203,509 | ||||||
| Less: valuation allowance | (127,095 | ) | (137,041 | ) | ||||
| Total deferred income tax assets | ¥ | 1,959,452 | ¥ | 2,066,468 | ||||
| Deferred income tax liabilities | ||||||||
| Operating lease right-of-use assets | ¥ | (1,461,234 | ) | ¥ | (1,523,570 | ) | ||
| Capitalized interest | (40,969 | ) | (51,574 | ) | ||||
| Others | (22,126 | ) | (32,557 | ) | ||||
| Total deferred income tax liabilities | ¥ | (1,524,329 | ) | ¥ | (1,607,701 | ) | ||
| Deferred income tax assets, net | ¥ | 435,123 | ¥ | 458,767 | ||||
| F-22 |
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Group regularly assesses the ability to realize its deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. The Group weighs all available positive and negative evidence, including its earnings history and results of recent operations, projected future taxable income, and tax planning strategies.
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as the Group’s projections for growth. The adjustments of a valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which the valuation allowance is adjusted. Based upon the level of historical taxable profit and projections for future taxable profit over the periods for which the deferred tax assets are deductible, management believes it is more likely than not that the Group will utilize the benefits of these deferred tax assets, net of the valuation allowance, as of September 30, 2025 and March 31, 2025. Uncertainty of estimates of future taxable profit could increase due to changes in the economic environment surrounding the Group, effects by market conditions, effects of currency fluctuations or other factors.
The net changes in the total valuation allowance were a decrease of ¥9,946 thousands and a decrease of ¥7,293 thousands for the six months ended September 30, 2025 and 2024, respectively.
As of September 30, 2025, the Group had net operating losses which can be carried forward for income tax purposes of ¥561,277 thousand to reduce future taxable income. Periods available to reduce future taxable income vary in each tax jurisdiction and generally range from four to ten years as follows:
| Thousands of Yen | ||||
| After four years through five years | ¥ | 80,779 | ||
| After five years through six years | 180,655 | |||
| After six years through seven years | 123,398 | |||
| After seven years through eight years | 84,451 | |||
| After eight years through nine years | 15,616 | |||
| After nine years through ten years | 76,378 | |||
| Total | ¥ | 561,277 | ||
Uncertain tax positions
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions.
As of September 30, 2025 and March 31, 2025, the management considered that the Group did not have any significant unrecognized uncertain tax positions. The Group did not incur any interest or penalties tax for the six months ended September 30, 2025 and 2024. The Group does not anticipate any significant increases or decreases in unrecognized tax benefits in the next twelve months from September 30, 2025.
| F-23 |
NOTE 18 – COMMITMENT AND CONTINGENCY
Contingencies
The Group is involved in legal proceedings and claims in the ordinary course of business. In the opinion of management, none of such proceedings and claims will have a significant impact on the Group’s consolidated financial statements.
NOTE 19 – SEGMENT INFORMATION
The Group has three reportable segments.
| i. | Real estate: Provision of real estate-related services, such as design and renovation, and real estate development in Japan | |
| ii. | Hotel: Hotel management and accommodation in Japan and Vietnam | |
| iii. | Other: Additional services such as the sale of housing equipment and materials, restaurant operation, and information technology consulting in Japan |
The following table shows information by reportable segment for the six months ended September 30, 2025 and 2024:
| Thousands of Yen | ||||||||||||||||||||
| Real estate | Hotel | Others | Reconciling Items | Consolidated | ||||||||||||||||
| For the Six Months Ended September 30, 2025 | ||||||||||||||||||||
| Net sales: | ||||||||||||||||||||
| External customers | ¥ | 9,498,243 | ¥ | 642,236 | ¥ | 183,909 | - | ¥ | 10,324,388 | |||||||||||
| Intersegment | 6,983 | 147 | 119,500 | ¥ | (126,630 | ) | - | |||||||||||||
| Total | 9,505,226 | 642,383 | 303,409 | (126,630 | ) | 10,324,388 | ||||||||||||||
| Cost of revenues | (7,381,066 | ) | (611,023 | ) | (249,232 | ) | 112,472 | (8,128,849 | ) | |||||||||||
| Operating expenses | (660,389 | ) | (43,124 | ) | (62,422 | ) | (545,451 | ) | (1,311,386 | ) | ||||||||||
| Operating income (loss) | 1,463,771 | (11,764 | ) | (8,245 | ) | (559,609 | ) | 884,153 | ||||||||||||
| Other income (expenses) | (117,024 | ) | 300 | (3,276 | ) | (936 | ) | (120,936 | ) | |||||||||||
| Income (loss) before income taxes | 1,346,747 | (11,464 | ) | (11,521 | ) | (560,545 | ) | 763,217 | ||||||||||||
| Thousands of Yen | ||||||||||||||||||||
| Real estate | Hotel | Others | Reconciling Items | Consolidated | ||||||||||||||||
| For the Six Months Ended September 30, 2024 | ||||||||||||||||||||
| Net sales: | ||||||||||||||||||||
| External customers | ¥ | 9,627,373 | ¥ | 579,914 | ¥ | 311,181 | - | ¥ | 10,518,468 | |||||||||||
| Intersegment | 3,220 | 13,100 | 78,056 | ¥ | (94,376 | ) | - | |||||||||||||
| Total | 9,630,593 | 593,014 | 389,237 | (94,376 | ) | 10,518,468 | ||||||||||||||
| Cost of revenues | (7,980,969 | ) | (549,384 | ) | (318,128 | ) | 79,815 | (8,768,666 | ) | |||||||||||
| Operating expenses | (599,311 | ) | (28,849 | ) | (97,936 | ) | (350,996 | ) | (1,077,092 | ) | ||||||||||
| Operating income (loss) | 1,050,313 | 14,781 | (26,827 | ) | (365,557 | ) | 672,710 | |||||||||||||
| Other income (expenses) | (91,142 | ) | (187 | ) | (1,013 | ) | (11,322 | ) | (103,664 | ) | ||||||||||
| Income (loss) before income taxes | 959,171 | 14,594 | (27,840 | ) | (376,879 | ) | 569,046 | |||||||||||||
| F-24 |
Reconciling items include elimination of intersegment transactions and corporate expenses. Corporate expenses, included in reconciling items for the six months ended September 30, 2025 and 2024, amounted to ¥545,451 thousand and ¥350,996 thousand, respectively, which consist of certain directors compensation. Segment assets are based on those directly associated with each segment.
NOTE 20 - NET INCOME PER SHARE
The computation of basic and diluted net income per share for the six months ended September 30, 2025 and 2024 is as follows:
Thousands of Yen except share and per share data | ||||||||
For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net income | ¥ | 494,419 | ¥ | 369,155 | ||||
| Denominator: | ||||||||
| Weighted average number of common shares outstanding used in calculating basic/diluted net income per share | ||||||||
| Weighted average number of common shares outstanding used in calculating basic net income per share | 23,652,110 | 21,652,110 | ||||||
| Dilutive effect of Stock-based compensation | 5,495 | - | ||||||
| Weighted average number of common shares outstanding used in calculating diluted net income per share | 23,906,208 | 21,652,110 | ||||||
| Net income per share | ||||||||
| Net income (loss) per share – basic | 20.90 | 17.05 | ||||||
| Net income (loss) per share – diluted | 20.68 | 17.05 | ||||||
There were no dilutive securities excluded from the computation of diluted net income (loss) per share for the six months ended September 30, 2025 and 2024.
NOTE 21 - SUBSEQUENT EVENTS
Management evaluated all additional events subsequent to the balance sheet date through December 22, 2025, the date the financial statements were available to be issued, and determined that there are no material subsequent events that require disclosure.
Exhibit 99.3
Key Financial Performance Indicators
Revenue
Our revenue is primarily derived from real estate business including condominium renovation, and real estate development, and hotel management and accommodation business.
Occupancy rate
The occupancy rate is calculated by dividing the number of rooms utilized by the total number of rooms available. The Company utilizes revenue per available room as a key performance indicator.
Average daily rate
The average daily rate is calculated by dividing the total sales by the number of rooms utilized. We set the hotel room rates based on a number of factors, including local market conditions with reference to room rates set by competitors, recent occupancy rates, and seasonal occupancy fluctuations.
Cost of revenue
Our cost of revenue is primarily comprised of the costs to purchase units, construction costs, and capitalized interests.
Gross profit and gross profit margin
Gross profit is the difference between our revenue and cost of sales. Gross profit margin is the profit expressed as a percentage of revenue.
Selling, general and administrative expenses
Selling, general and administrative expenses are primarily comprised of personnel costs for general corporate functions and sales and marketing staff, brokerage fees, advertising expenses, taxes and dues, and outsourcing fees.
Operating profit and operating profit margin
Operating profit is the difference between our revenue and cost of revenue and selling, general and administrative expenses. Operating profit margin is the profit margin as a percentage of revenues.
Other income (expenses)
Other income (expense) is comprised of interest expenses and other income (expenses), in which, from time to time, we have non-recurring, non-operating gains and losses that are reflected through other income (expense).
A. Operating Results
Results of Operations
Comparison of Results of Operations for the Six Months Ended September 30, 2025 and 2024
The following table sets forth our statements of operations for the six months ended September 30, 2025 and 2024:
| (in thousands, except change % data) | Six Months Ended September 30, | Change (2025 vs 2024) | ||||||||||||||||||
| 2025($) | 2025(¥) | 2024(¥) | ¥ | YoY % | ||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Real estate | 64,190 | 9,498,243 | 9,627,373 | (129,130 | ) | -1.3 | % | |||||||||||||
| Hotel | 4,340 | 642,236 | 579,914 | 62,322 | 10.7 | % | ||||||||||||||
| Others | 1,243 | 183,909 | 311,181 | (127,272 | ) | -40.9 | % | |||||||||||||
| Total revenue | 69,773 | 10,324,388 | 10,518,468 | (194,080 | ) | -1.8 | % | |||||||||||||
| Cost of revenues | (54,936 | ) | (8,128,849 | ) | (8,768,666 | ) | 639,817 | -7.3 | % | |||||||||||
| Gross profit | 14,837 | 2,195,539 | 1,749,802 | 445,737 | 25.5 | % | ||||||||||||||
| Selling, general and administrative expenses | (8,863 | ) | (1,311,386 | ) | (1,077,092 | ) | (234,294 | ) | 21.8 | % | ||||||||||
| Operating income | 5,974 | 884,153 | 672,710 | 211,443 | 31.4 | % | ||||||||||||||
| Interest expenses | (853 | ) | (126,237 | ) | (109,535 | ) | (16,702 | ) | 15.2 | % | ||||||||||
| Other income, net | 36 | 5,301 | 5,871 | (570 | ) | -9.7 | % | |||||||||||||
| Net income before tax | 5,157 | 763,217 | 569,046 | 194,171 | 34.1 | % | ||||||||||||||
| Income tax expense | (1,817 | ) | (268,798 | ) | (199,891 | ) | (68,907 | ) | 34.5 | % | ||||||||||
| Net income | 3,340 | 494,419 | 369,155 | 125,264 | 33.9 | % | ||||||||||||||
| Occupancy rate | 70.8 | % | 68.2 | % | 2.6 | % | 3.9 | % | ||||||||||||
| Average daily rate | 21,377 | 19,573 | 1,804 | 9.2 | % | |||||||||||||||
Revenues
Revenues decreased by JPY120,130 thousand or 1.3% year-over-year to JPY10,324,388 thousand ($69,773 thousand) in the six months ended September 30, 2025 from JPY10,518,468 thousand in the six months ended September 30, 2024. The decrease was primarily driven by the following factors:
| ● | Revenue from real estate decreased by JPY129,130 thousand, mainly due to the decrease in the number of units sold. 22 units were sold in the renovated condominium in the six months ended September 30, 2025, compared 30 units sold in the six months ended September 30, 2024. The decrease in sales of renovated condominium was partially offset by an increase in sales of real estate development primarily due to the sales of new projects completed in the six months ended September 30, 2025. |
| ● | Revenue from hotel accommodation services increased by JPY62,322 thousand, mainly due to the higher occupancy rates which increased from 68.2% in the six months ended September 30, 2024 to 70.8% in the six months ended September 30, 2025, and the higher average daily rates which increased from JPY19 thousand (approximately $130) in the six months ended September 30, 2024 to JPY21 thousand (approximately $140) in the six months ended September 30, 2025. |
Cost of Revenues
Cost of revenues decreased by JPY639,817 thousand or 7.3% year-over-year to JPY8,128,849 thousand ($54,936 thousand), which reflects the lower direct costs associated with the lower revenue during the six months ended September 30, 2025.
Gross Profit and Gross Profit Margin
Gross profit was JPY2,195,539 thousand ($14,837 thousand) during the six months ended September 30, 2025, compared to JPY1,749,802 thousand during the six months ended September 30, 2024. Gross profit margin was 21.3% during the six months ended September 30, 2025, compared to 16.6% during the six months ended September 30, 2024.
Selling, General and Administrative Expenses (“SG&A expenses”)
SG&A expenses increased by JPY234,294 thousand or 21.8% year-over-year to JPY1,311,386 thousand ($8,863 thousand), primarily due to:
| ● | The increase in outsourcing fee an increase company related expense due to being a public entity which was not the case during the same period last year. |
| ● | The increase in stock-based compensation expenses as we granted a new performance-based equity program using Performance Share Units during the six months ended September 30, 2025. |
| ● | The increase in directors’ remuneration due to the appointment of new directors and an increase in the average number of directors during the six months ended September 30, 2025, compared to the average number during the six months ended September 30, 2024. |
Interest expenses
Interest expenses increased by JPY16,702 thousand or 15.2% year-over-year from JPY109,535 thousand to JPY126,237 thousand ($853 thousand), resulted from the higher average loan balance during the six months ended September 30, 2025.
Other Income, net
Other income was JPY5,301 thousand ($36 thousand) during the six months ended September 30, 2025 compared to JPY5,871 thousand during the six months ended September 30, 2024 and remained relatively at the same level.
Net Income
As a result of the foregoing, the net income was JPY494,419 thousand ($3,340 thousand) during the six months ended September 30, 2025, compared to JPY369,155 thousand during the six months ended September 30, 2024.
B. Liquidity and Capital Resources
Cash Flows/Liquidity
Cash flows for the six months ended September 30, 2025 and 2024
As of September 30, 2025 and March 31, 2025, we had cash of JPY1,161,203 thousand ($7,848 thousand) and JPY2,120,515 thousand, respectively. Liquidity is a measure of our ability to meet potential cash requirements. We generally funded our operations with cash flow from operations and, when needed, borrowing from financial institutions. We expect that our working capital will be sufficient to fund our operating expenses and cash obligations for at least the next 12 months, although our ability to continue as a going concern depends upon our ability to attract and retain revenue generating customers, acquire new customer contracts, and secure additional financing. In the long-term, or beyond the next 12 months, we plan to finance our operations primarily through cash from operating activities, borrowing from financial institutions, private placement of capital stock, and/or other available equity financings, depending upon market conditions, among other considerations. We have no other material unused source of liquidity.
| (in thousands) | Six Months Ended September 30, 2025 | Six Months Ended September 30, 2024 | ||||||||||
| (US$) | (JPY) | (JPY) | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | 3,341 | 494,419 | 369,155 | |||||||||
| Depreciation and amortization | 289 | 42,794 | 50,249 | |||||||||
| Amortization of debt issuance costs | 218 | 32,222 | 34,665 | |||||||||
| Stock-based compensation expenses | 275 | 40,649 | - | |||||||||
| Deferred income taxes | 160 | 23,644 | 95,736 | |||||||||
| Provision of allowance for credit losses | (61 | ) | (9,004 | ) | - | |||||||
| Changes in operating assets and liabilities: | - | |||||||||||
| Decrease in trade notes and accounts receivable, net | 276 | 40,783 | 51,518 | |||||||||
| (Increase) decrease in inventories, net | (9,624 | ) | (1,424,090 | ) | 1,339,815 | |||||||
| (Increase) decrease in consumption taxes receivable | (890 | ) | (131,631 | ) | 22,899 | |||||||
| (Increase) decrease in prepaid expenses | (1,319 | ) | (195,177 | ) | 12,795 | |||||||
| (Increase) in advances to vendors | (63 | ) | (9,313 | ) | (42,793 | ) | ||||||
| Decrease (increase) in leasehold and guarantee deposits | 479 | 70,831 | (7,875 | ) | ||||||||
| (Increase) decrease in long-term prepaid expenses | (2,745 | ) | (406,129 | ) | 125 | |||||||
| Increase in accounts payables | 257 | 38,018 | 943 | |||||||||
| Increase (decrease) in accrued expenses | 243 | 35,893 | (100,303 | ) | ||||||||
| Increase in income taxes payable | 49 | 7,196 | 42,200 | |||||||||
| (Decrease) in contract liabilities | (1,085 | ) | (160,601 | ) | (59,719 | ) | ||||||
| Increase in deposits received | 194 | 28,773 | 12,060 | |||||||||
| Other, net | (405 | ) | (59,989 | ) | 71,689 | |||||||
| Net cash flows (used in) provided by operating activities | (10,411 | ) | (1,540,712 | ) | 1,893,159 | |||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of short-term investments | (203 | ) | (30,064 | ) | (118,000 | ) | ||||||
| Proceeds from sales of short-term investments | 378 | 55,880 | 73,800 | |||||||||
| Purchases of property, plant and equipment, net | (707 | ) | (104,682 | ) | (32,745 | ) | ||||||
| Purchases of software | (17 | ) | (2,584 | ) | (15,963 | ) | ||||||
| Purchases of long-term investments | - | - | (270,000 | ) | ||||||||
| Purchases of investments in capital | (22 | ) | (3,270 | ) | (1,220 | ) | ||||||
| Other, net | - | - | (77 | ) | ||||||||
| Net cash flows used in investing activities | (571 | ) | (84,720 | ) | (364,205 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| (Decrease) increase in short-term borrowings, net | (140 | ) | (20,681 | ) | 127,254 | |||||||
| Borrowings from long-term loans | 48,528 | 7,180,708 | 4,633,208 | |||||||||
| Repayments for long-term loans | (40,756 | ) | (6,030,730 | ) | (6,728,724 | ) | ||||||
| Proceeds from issuance of bonds | 338 | 50,000 | - | |||||||||
| Redemption of bonds | (193 | ) | (28,620 | ) | (24,640 | ) | ||||||
| Payments for finance leases | (28 | ) | (4,216 | ) | (4,148 | ) | ||||||
| Payment for debt issuance costs | (463 | ) | (68,504 | ) | (15,304 | ) | ||||||
| Payments for dividends | (532 | ) | (78,703 | ) | ||||||||
| Payments of listing expenses | (2,243 | ) | (331,966 | ) | (100,180 | ) | ||||||
| Net cash flows provided by (used in) financing activities | 4,511 | 667,288 | (2,112,534 | ) | ||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (8 | ) | (1,168 | ) | 2,830 | |||||||
| Net (decrease) in cash and cash equivalents | (6,479 | ) | (959,312 | ) | (580,750 | ) | ||||||
| Cash and cash equivalents at the beginning of period | 14,331 | 2,120,515 | 1,218,241 | |||||||||
| Cash and cash equivalents at the end of period | 7,848 | 1,161,203 | 637,491 | |||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||
| Cash paid for interest | 1,888 | 279,310 | 255,293 | |||||||||
| Cash paid for taxes | 1,762 | 260,665 | 67,666 | |||||||||
| Cash refund for taxes | 6 | 884 | 3,348 | |||||||||
Operating Activities
Net cash used in operating activities decreased from the cash inflow of JPY1,893,159 thousand during the six months ended September 30, 2024 to the cash outflow of JPY1,540,712 thousand ($10,411 thousand) during the six months ended September 30, 2025. The decrease was primarily due to the increase in inventories and long-term prepaid expenses in the six months ended September 30, 2025.
Investing Activities
Net cash used in investing activities decreased from the cash outflow of JPY364,205 thousand during the six months ended September 2024 to the cash outflow of JPY84,720 thousand ($571 thousand) during the six months ended September 30, 2025. The decrease was primarily due to the long-term investment we acquired in the six months ended September 30, 2024 which was a non-recurring activity and did not happen in the six months ended September 30, 2025.
Financing Activities
Net cash provided by financing activity increased from the cash outflow of JPY2,112,534 thousand during the six months ended September 30, 2024 to the cash outflow of JPY667,288 thousand ($4,511 thousand) during the six months ended September 30, 2025, mainly due to the increase in borrowing from long-term loans.