Tokyo Lifestyle Co., Ltd 6-K, filed Dec 19, 2025
Tokyo Lifestyle Co., Ltd. (TKLF)
About this 6-K
Tokyo Lifestyle Co., Ltd filed this 6-K on December 19, 2025.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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:
Harumi Building, 2-5-9 Kotobashi,
Sumida-ku, Tokyo, 130-0022
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 ☐
EXPLANATORY NOTE
Tokyo Lifestyle Co., Ltd., formerly known as Yoshitsu Co., Ltd (the “Company”) is furnishing this report on Form 6-K to provide the six-month interim financial statements for the period ended September 30, 2025 and incorporate such financial statements into the Company’s registration statement referenced below.
The information contained in this Report of Foreign Private Issuer on Form 6-K is hereby incorporated by reference into the registration statement on Form F-3 of the Company (File No. 333-281714), and the registration statement on Form F-3 of the Company (File No. 333-274076), as amended, and into the base prospectus and the prospectus supplement outstanding under each of the foregoing registration statements, to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
1
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Unaudited Consolidated Financial Statements for the Six Months Ended September 30, 2025 and 2024 | |
| 99.2 | Press Release Titled “Tokyo Lifestyle Co., Ltd. Reports First Six Months of Fiscal Year 2026 Financial Results” | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
2
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.
| Tokyo Lifestyle Co., Ltd. | ||
| Date: December [18], 2025 | By: | /s/ Mei Kanayama |
| Name: | Mei Kanayama | |
| Title: |
Representative Director and Director (Principal Executive Officer) | |
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Exhibit 99.1
TOKYO LIFESTYLE CO., LTD.
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
F-1
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable - related parties, net | ||||||||
| Merchandise inventories, net | ||||||||
| Due from related parties | ||||||||
| Advance to suppliers - a related party | ||||||||
| Compensation receivable for consumption tax, current, net | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Life insurance policy, cash surrender value | ||||||||
| Compensation receivable for consumption tax, non-current, net | ||||||||
| Long-term prepaid expenses and other non-current assets, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term borrowings | $ | $ | ||||||
| Current portion of long-term borrowings | ||||||||
| Accounts payable | ||||||||
| Accounts payable - a related party | ||||||||
| Due to related parties | ||||||||
| Deferred revenue | ||||||||
| Taxes payable | ||||||||
| Operating lease liabilities, current | ||||||||
| Finance lease liabilities, current | ||||||||
| Warrants liabilities | ||||||||
| Dividends payable | ||||||||
| Other payables and other current liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Finance lease liabilities, non-current | ||||||||
| Long-term borrowings | ||||||||
| Other non-current liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary shares, par value, | ||||||||
| Capital reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| Non-controlling interest | ||||||||
| TOTAL EQUITY | ||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERTAIONS AND COMPREHENSIVE INCOME (LOSS)
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| REVENUE | ||||||||
| Revenue - third parties | $ | $ | ||||||
| Revenue - related parties | ||||||||
| Total revenue | ||||||||
| COSTS AND OPERATING EXPENSES | ||||||||
| Merchandise costs | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total costs and operating expenses | ||||||||
| INCOME FROM OPERATIONS | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Additional and delinquent tax due to consumption tax correction | ( | ) | ||||||
| Gain from disposal of a subsidiary | ||||||||
| Cash surrender value loss | ( | ) | ||||||
| Other income, net | ||||||||
| Loss from foreign currency exchange | ( | ) | ( | ) | ||||
| Change in fair value of warrants liabilities | ( | ) | ( | ) | ||||
| Total other expenses, net | ( | ) | ( | ) | ||||
| INCOME BEFORE INCOME TAX PROVISION (BENEFIT) | ||||||||
| PROVISION (BENEFIT) FOR INCOME TAXES | ( | ) | ||||||
| NET INCOME (LOSS) | ( | ) | ||||||
| Less: net loss attributable to non-controlling interest | ( | ) | ||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO TOKYO LIFESTYLE CO., LTD. | $ | ( | ) | $ | ||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Net income (loss) | ( | ) | ||||||
| Foreign currency translation gain | ||||||||
| Total comprehensive income (loss) | ( | ) | ||||||
| Less: Comprehensive loss attributable to non-controlling interest | ( | ) | ||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | ( | ) | $ | ||||
| Earnings (loss) per ordinary share | ||||||||
| - basic | $ | ( | ) | $ | ||||
| - diluted | $ | ( | ) | $ | ||||
| Weighted average shares | ||||||||
| - basic | ||||||||
| - diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-3
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
| Ordinary Shares | Capital | Retained | Accumulated Other Comprehensive | Total Shareholders’ | Non- controlling | Total | ||||||||||||||||||||||||||
| Shares | Amount | Reserve | Earnings | Loss | Equity | Interest | Equity | |||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | - | $ | ||||||||||||||||||||||
| Transfer of capital to capital reserve | - | ( | ) | |||||||||||||||||||||||||||||
| Net income for the period | - | |||||||||||||||||||||||||||||||
| Foreign currency translation gain | - | |||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||
| Capital contribution from non-controlling shareholders | - | |||||||||||||||||||||||||||||||
| Dividend declared for the period | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation gain (loss) | - | ( | ) | |||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss (gain) from disposal of property and equipment | ( | ) | ||||||
| Gain from unrealized foreign currency translation | ( | ) | ( | ) | ||||
| Provision for (reversal of) credit losses | ( | ) | ||||||
| Addition (reversal) of merchandise inventories written down | ( | ) | ||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Deferred tax benefit | ( | ) | ( | ) | ||||
| Change in fair value of warrants liabilities | ||||||||
| Loss on cash surrender value | ||||||||
| Accrued interest expense | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts receivable - related parties | ( | ) | ||||||
| Advance to suppliers - related party | ( | ) | ||||||
| Merchandise inventories | ( | ) | ( | ) | ||||
| Compensation receivable for consumption tax | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Long term prepaid expenses and other non-current assets | ||||||||
| Accounts payable | ||||||||
| Accounts payable - related parties | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||
| Other payables and other current liabilities | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other non-current liabilities | ( | ) | ( | ) | ||||
| Net used in provided by operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Investment in life insurance policy | ( | ) | ||||||
| Collection of amount due from (advances made to) related parties | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Capital contribution from non-controlling shareholders | ||||||||
| Proceeds from short-term borrowings | ||||||||
| Repayments of short-term borrowings | ( | ) | ||||||
| Proceeds from long-term borrowings | ||||||||
| Repayments of long-term borrowings | ( | ) | ( | ) | ||||
| Advances received from (payments made to) related parties | ( | ) | ||||||
| Repayment of obligations under finance leases | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate fluctuation on cash | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Supplemental non-cash operating activities | ||||||||
| Right of use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| Reduction of right-of-use assets and operating lease obligations due to early termination of lease agreement | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
TOKYO LIFESTYLE CO., LTD. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION
Tokyo Lifestyle Co., Ltd. (the “Company”),
formerly known as Yoshitsu Co., Ltd, is a stock company incorporated in Japan pursuant to the laws of Japan on
Prior to July 1, 2023, the Company owned
On July 27, 2022, the Company acquired a
On October 26, 2022, TLS acquired
On September 6, 2023, TLS incorporated a wholly-owned subsidiary, RAKKISTAR HOLDING INC., in the Province of Ontario, Canada, which principally engages in the import and retail of Japanese beauty and cosmetic products in Canada.
On October 17, 2023, TLS incorporated a wholly-owned subsidiary, Tokyo Lifestyle Holding Inc. (“TLS Holding”), in the State of Delaware, which is currently not engaging in any active business operations. TLS Holding incorporated four wholly-owned subsidiaries, REIWATAKIYA LV LLC, a limited liability company on August 3, 2023, in the State of Nevada, which principally engages in the import and retail of Japanese beauty and cosmetic products in Nevada; REIWATAKIYA BOS LLC, a limited liability company on October 26, 2023, in the Commonwealth of Massachusetts, which principally engages in the import and retail of Japanese beauty and cosmetic products in Massachusetts; REIWATAKIYA NYC LLC, a limited liability company on November 8, 2023, in the State of New York, which principally engages in the import and retail of Japanese beauty and cosmetic products in New York; and REIWATAKIYA LV II LLC, a limited liability company on May 13, 2024, in the State of Nevada, which principally engages in the import and retail of Japanese beauty and cosmetic products in Nevada.
On May 15, 2025, TLS and two third parties,
incorporated TOKYO LIFESTYLE PTY LTD, a proprietary limited company in Sydney, Australia, which principally engages in the import and
retail of Japanese beauty and cosmetic products in Australia. TLS owns
On June 3, 2025, TLS incorporated Shenzhen Qianxusenhuo Network Technology Co., Ltd., a company incorporated in the PRC, which principally engages in e-commerce technical, marketing and consulting services, as well as import and retail of Japanese beauty and cosmetic products in the PRC.
On July 27, 2025, TLS acquired
F-6
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION (continued)
The Company and its subsidiaries are a retailer
and wholesaler of Japanese beauty and health products, as well as luxury and electronic products, sundry products, collectible cards and
trendy toys, and other products and services. The Company offers approximately
Acquisitions Under Common Control
On July 20, 2022, the Company entered into a definitive
agreement (the “Agreement”) with All Seas Global Limited to acquire
On October 26, 2022, the board of directors of
TLS approved the acquisition of Reiwatakiya from All Seas Global Limited, who held a
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities Exchange Commission (the “SEC”). The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany balances and transactions are eliminated upon consolidation. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the afore-mentioned SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal years ended March 31, 2025 and 2024. Operating results for the six-month period ended September 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2026.
F-7
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of estimates
In preparing the unaudited condensed consolidated financial statements in conformity with U.S. GAAP, management makes 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 and the reported amounts of revenue and expenses during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, assessment of expected credit losses for accounts receivable, compensation receivable for consumption tax, current and non-current prepaid expenses and other assets, valuation of inventories, useful lives of property and equipment and the recoverability of long-lived assets, provision necessary for contingent liabilities, inputs used in the calculation of the asset retirement obligation, and implicit interest rate of operating leases and financing leases. Actual results could differ from those estimates.
Cash
Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains bank accounts in Japan, Hong Kong, mainland China, Malaysia, the United States, Canada and Australia. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. As of September 30, 2025 and March 31, 2025, the Company did not have any cash equivalents.
Receivables and credit losses
The Company follows Accounting Standards Update (“ASU”) 2016-13 “Financial Instruments – Credit Losses (“Topic 326”), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss impairment methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The expected credit loss impairment model requires the entity to recognize its estimate of expected credit losses for affected financial assets using an allowance for credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
The Company’s account receivables, compensation receivable for consumption tax and other receivable included in current and non-current prepaid expenses and other assets are within the scope of Topic 326. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon assessment of various factors, including historical experience, the age of the receivables, credit-worthiness of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
Expected credit losses are included in selling,
general, and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss).
After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Account receivables, compensation
receivable for consumption tax, and other receivable is recognized and carried at original amount less an allowance for credit losses,
as necessary. As of September 30, 2025 and March 31, 2025, allowance for credit losses for accounts receivable amounted to $
F-8
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leases
The Company accounts for lease in accordance with ASC No.842, Lease (“Topic 842”). The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty.
The Company leases retail store facilities and distribution centers, which are classified as operating leases and leases certain software and equipment and furniture as finance lease in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for all leases on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Operating leases are included in operating lease right-of-use assets, operating lease liabilities, current, and operating lease liabilities, non-current, and finance leases are included in property and equipment, finance lease liabilities, current, and finance lease liabilities, non-current in the consolidated balance sheet.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The operating lease right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All operating lease right-of-use assets are reviewed for impairment annually. There was impairment for operating lease right-of-use lease assets during the six months ended September 30, 2025 and 2024.
The Company has elected the short-term lease exception, and therefore operating lease right-of-use assets and liabilities do not include leases with a lease term of twelve months or less.
Equity investment
An investment in which the Company has the ability
to exercise significant influence, but does not have a controlling interest, is accounted for using the equity method. Significant influence
is generally considered to exist when the Company has an ownership interest in the voting stock between
Common control transactions
In business combinations under common control, the assets and liabilities acquired are measured at the historical amounts of the acquirees in the unaudited condensed consolidated financial statements of acquirer on the acquisition date. The difference between the carrying amounts of the net assets acquired and the consideration paid is adjusted to the equity account of the acquirer. The operating results for all periods presented are retrospectively restated as if the current structure and operations resulting from the acquisition had been in existence since the beginning of the earliest year presented, with financial data of previously separate entities consolidated. The subsequent adjustment of contingent consideration after the acquisition date is also accounted for as an equity transaction.
F-9
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Compensation receivable for consumption tax
Compensation receivable for consumption tax pertains
to damages the Company claimed from certain suppliers as well as customers. Compensation receivable for consumption tax is recognized
and carried at original amount in the agreements less an allowance for credit losses. As of September 30, 2025 and March 31, 2025, allowance
for credit losses for compensation receivable for consumption tax amounted to $
Merchandise inventories
Merchandise inventories are stated at the lower
of cost or net realizable value, on a weighted average basis. Costs include mainly the cost of merchandise inventories. Net realizable
value is the estimated selling price in the normal course of business less any costs to sell products. Write-down is recorded when future
estimated net realizable value is less than cost, which is recorded in merchandise costs in the unaudited condensed consolidated statements
of operations and comprehensive income (loss). The Company periodically evaluates merchandise inventories for their net realizable value
adjustments, and reduces the carrying value of those merchandise inventories that are obsolete or in excess of the forecasted usage to
their estimated net realizable value based on various factors including aging and expiration dates, as applicable, taking into consideration
historical and expected future product sales. As of September 30, 2025 and March 31, 2025, merchandise inventories write-down was $
Property and equipment
Property and equipment are stated at cost less
accumulated depreciation and amortization. Except for assets that are not subject to depreciation, such as land and construction in progress,
depreciation and amortization of property and equipment are mainly provided using the straight-line method or declining balance method,
which allocates an asset’s cost over the periods during which the Company benefits from the use of the asset.
| Useful life | ||
| Property and buildings | ||
| Land | ||
| Leasehold improvements | ||
| Equipment and furniture | ||
| Automobiles | ||
| Software |
Land has infinite useful life and is not subjected to amortization. Management reviews for impairment accordance with the accounting policy stated under impairment of long-lived assets.
Expenditures for maintenance and repair, which do not materially extend the useful lives of the assets, are charged to expenses as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in other income or expenses.
F-10
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Asset retirement obligations
The Company records the fair value of an asset
retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived
assets that result from the acquisition, construction, development, and/or normal use of the long-lived assets. The Company’s asset
retirement obligations are primarily related to leasehold improvement of its retail stores leases, that, at the end of the leases, are
required to be returned to the landlords in their original condition. As of September 30, 2025 and March 31, 2025, the balance of asset
retirement obligations included in other non-current liabilities was $
Impairment of long-lived assets
The Company evaluates its long-lived assets, including property and equipment, operating lease right-of-use assets and long-term prepaid expenses and non-current assets for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Company evaluates the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. The adjusted carrying amount of the assets become new cost basis and are depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Given no events or changes in circumstances indicating the carrying amount of long-lived assets may not be recovered through the related future net cash flows, the Company did not recognize any impairment loss on long-lived assets for the six months ended September 30, 2025 and 2024, respectively.
Revenue recognition
The Company accounts for revenue in accordance with ASC 606. ASC 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
F-11
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Under ASC 606, revenue is recognized when control of promised goods is transferred or service is rendered to the Company’s customers in an amount of consideration to which an entity expects to be entitled to in exchange for those goods or services, and it is probable that the Company will collect the consideration. Control is the ability to direct the use of, and obtain substantially all of the remaining benefits from, the specified goods and services.
The Company currently generates its revenue through retail and wholesale of Japanese beauty and health products, luxury and electronic products, collectible cards and trendy toys, as well as sundry and other products and services, through a multi-channel distribution network. Currently, the Company sells its products and renders its services through: (i) directly-operated physical stores, (ii) online stores and services, and (iii) franchise stores and wholesale customers. For domestic sales in Japan, Hong Kong, the United States, and Canada, revenue is recognized at the point of sales or delivery of the related products and control is transferred. For international sales, the Company sells goods under Free on Board shipping point term, and revenue is recognized when products are loaded on the ships and control is deemed as transferred. The Company’s service revenue primarily consists advertising services of KOLs for its customers. The Company produces short videos with online celebrities to promote the brands of its customers on social media platforms, such as TikTok and Kuaishou. Since December 2023, the Company has only provided supporting services to the online celebrities. Revenue from these services is recognized at a point in time when the service is rendered by the Company. Revenue amount represents the invoiced value, net of consumption tax.
For online stores, the Company generally offers an eight-day product return policy for products sold in the Company’s online store in Japan, as long as the products are undamaged, in their original condition, and can be resold. For products sold in the Company’s physical stores, the Company offers a seven-day product return policy for products sold in the Company’s physical stores in Japan and Hong Kong; a fifteen-day and thirty-day product return policy for products sold in the Company’s physical stores in the United States and Canada, as long as the products are undamaged, in their original condition, and can be resold. Historically, customer returns were immaterial. Therefore, the Company did not provide any sales return allowances for the six months ended September 30, 2025 and 2024.
The Company enters into franchise agreements with
franchisees in Japan under which the franchisee is granted a revocable license and non-exclusive right to use the Company’s trademarks
and stores. The Company requires an entire non-refundable initial franchise fee of ¥
F-12
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company is the principal for its transactions and recognizes revenue on a gross basis. The Company is the principal when it has control of the merchandise before it is transferred to customers, which generally is established when the Company is primarily responsible for merchandising decisions, maintains the relationship with customers, including assurance of member service and satisfaction, and has pricing discretion.
In directly-operated physical stores, customers
can enroll in the Company’s rewards program, which is primarily a spending-based rewards program, and get a rewards card. Members
of the rewards program usually earn three membership points for each ¥
Contract balances and remaining performance obligations
Contract balances typically arise when a difference
in timing between the transfer of control to the customer and receipt of consideration occurs. The Company did have contract assets
as of September 30, 2025 and March 31, 2025. The Company’s contract liabilities, which are reflected in its unaudited condensed
consolidated balance sheets as deferred revenue of $
Disaggregation of revenue
The Company disaggregates its revenue by geographic areas, product categories, and distribution channels, which the Company believes best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenue for the six months ended September 30, 2025 and 2024 is as following:
F-13
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue by geographic areas
The summary of the Company’s total revenue by geographic areas for the six months ended September 30, 2025 and 2024 was as follows
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Japan domestic market | $ | $ | ||||||
| Hong Kong market | ||||||||
| The United States market | ||||||||
| Other overseas markets | ||||||||
| Total revenue | $ | $ | ||||||
Revenue by product categories
The summary of the Company’s total revenue by product categories for the six months ended September 30, 2025 and 2024 was as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Beauty products | $ | $ | ||||||
| Health products | ||||||||
| Sundry products | ||||||||
| Luxury products | ||||||||
| Electronic products | ||||||||
| Collectible cards and trendy toys | ||||||||
| Other products and services (1) | ||||||||
| Total revenue | $ | $ | ||||||
| (1) |
Revenue by distribution channels
The summary of the Company’s total revenue by distribution channels for the six months ended September 30, 2025 and 2024 was as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Directly-operated physical stores | $ | $ | ||||||
| Online stores and services | ||||||||
| Franchise stores and wholesale customers | ||||||||
| Total revenue | $ | $ | ||||||
F-14
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair value of financial instruments
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. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, due from related parties, current portion of compensation receivable for consumption tax, prepaid expenses and other current assets, short-term borrowings, current portion of long-term borrowings, accounts payable, due to related parties, deferred revenue, taxes payable, and other payables and other current liabilities, approximate the fair value of the respective assets and liabilities as of September 30, 2025 and March 31, 2025 based upon the short-term nature of the assets and liabilities. Cash surrender value of life insurance policies are classified as Level 2. The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.
Foreign currency translation
The Company maintains its books and records in its local currency, Japanese yen (“YEN” or “¥”), which is a functional currency as being the primary currency of the economic environment in which its operation is conducted. The Company’s subsidiaries in Hong Kong, the PRC, Malaysia, the United States, Canada, Australia and Vietnam use their respective currencies Hong Kong Dollar (“HK$”), Chinese Yuan (“RMB”), Malaysia Ringgit (“MYR”), United States Dollars (“USD”), Canadian dollar (“CAD”), Australian dollar (“AUD”) and Vietnamese Dong (“VND”). Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations and comprehensive income (loss).
The reporting currency of the Company is the United States Dollars (“US$” or “$”) and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statement,” assets and liabilities of the Company are translated into US$, using the exchange rate on the balance sheet date. Revenue and expenses are translated at the average rates prevailing during the period. Shareholders’ equity is translated at the historical exchange rate at the time of transaction. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.
F-15
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements in this report:
| For the Six Months Ended September 30, 2025 | For the Six Months Ended September 30, 2024 | March 31, 2025 | ||||||||||||||||||||||
| Year-end spot rate | Average rate | Year-end spot rate | Average rate | Year-end spot rate | Average rate | |||||||||||||||||||
| US$ against YEN | ¥1=US$ | ¥1=US$ | ¥1=US$ | ¥1=US$ | ¥1=US$ | ¥1=US$ | ||||||||||||||||||
| US$ against HK$ | HK$1=US$ | HK$1=US$ | HK$1=US$ | HK$1=US$ | HK$1=US$ | HK$1=US$ | ||||||||||||||||||
| US$ against RMB | RMB1=US$ | RMB1=US$ | RMB1=US$ | RMB1=US$ | RMB1=US$ | RMB1=US$ | ||||||||||||||||||
| US$ against MYR | MYR1=US$ | MYR1=US$ | MYR1=US$ | MYR1=US$ | MYR1=US$ | MYR1=US$ | ||||||||||||||||||
| US$ against CAD | CAD1=US$ | CAD1=US$ | CAD1=US$ | CAD1=US$ | CAD1=US$ | CAD1=US$ | ||||||||||||||||||
| US$ against AUD | AUD1=US$ | AUD 1=US$ | ||||||||||||||||||||||
| US$ against VND | VND1=US$ | VND1=US$ | ||||||||||||||||||||||
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. Deferred tax assets 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 including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit
only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized
is the largest amount of tax benefit that is greater than
The Company’s operating entities in Japan are subject to the income tax laws of Japan. As of September 30, 2025, the tax years ended March 31, 2023 through March 31, 2025 for the Company’s operating entities in Japan remain open for statutory examination by the Japanese tax authorities.
The Company’s subsidiary in Hong Kong is subject to profit taxes in Hong Kong. As of September 30, 2025, the tax years ended since the year of incorporation through March 31, 2025 for the Company’s subsidiary in Hong Kong remain open for statutory examination by the Hong Kong taxing jurisdictions.
The Company’s subsidiary in mainland China is subject to the income tax laws of the PRC. As of September 30, 2025, the tax years ended since the year of incorporation through December 31, 2024 for the Company’s PRC subsidiary remain open for statutory examination by PRC tax authorities.
F-16
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company’s subsidiary in Malaysia is subject to the income tax laws of Malaysia. As of September 30, 2025, all of the tax returns of the Company’s Malaysian subsidiary remain open for statutory examination by relevant tax authorities.
The Company’s subsidiaries in the United States are subject to the tax law of the United States. As of September 30, 2025, the tax years ended since the year of incorporation through December 31, 2024 for the Company’s subsidiaries in the United States remain open for statutory examination by United States tax authorities.
The Company’s subsidiary in Canada is subject to the tax law of Canada. As of September 30, 2025, the tax years ended since the year of incorporation through March 31, 2025 for the Company’s subsidiary in Canada remain open for statutory examination by Canadian tax authorities.
Consumption tax
The Company has been subject to the applicable
consumption tax rate of
Earnings (loss) per share
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no dilutive shares for the six months ended September 30, 2025 and 2024.
Shipping and handling cost
All shipping and handling costs are expensed as
incurred and included in selling, general, and administrative expenses in the unaudited condensed consolidated statements of operations
and comprehensive income (loss). Total shipping and handling expenses were $
F-17
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Advertising expenses
Advertising costs are expensed as incurred and
included in selling, general, and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive
income (loss). Advertising expenses amounted to $
Comprehensive income (loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income. The foreign currency translation gain or loss resulting from the translation of the financial statements expressed in YEN, HK$, RMB, MYR, CAD, AUD and VND to US$ is reported in other comprehensive income in the unaudited condensed consolidated statements of operations and comprehensive income (loss).
Related parties and transactions
The Company identifies related parties, and accounts for and discloses related party transactions in accordance with ASC 850, “Related Party Disclosures,” and other relevant ASC standards.
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence. Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions.
Segment reporting
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The Company adopted this ASU commencing April 1, 2024 retrospectively to all periods presented in the consolidated financial statement and the adoption of the ASU does not have a material effect on its unaudited condensed consolidated financial statements.
The Company uses the management approach in determining
its operating segments. The management approach considers the internal reporting used by the Company’s CODM. The Company’s
CODM has been identified as the Chief Executive Officer (“CEO”) who reviews the financial information of separate operating
segments when making decisions about allocating resources and assessing performance of the Company. Management has determined that the
Company has
F-18
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Risks and uncertainties
Political and economic risk
The directly-operated physical stores of the Company are located in Japan, Hong Kong, the United States, Canada and Australia, and the online stores and franchise stores and wholesale partners of the Company are mainly located in Japan, Hong Kong, mainland China, and the United States. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Japan, Hong Kong, mainland China, the United States, Canada and Australia, as well as by the general state of their economy. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in above-mentioned territories. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
Credit risk
As of September 30, 2025 and March 31, 2025, $
As of September 30, 2025 and March 31, 2025, $
As of September 30, 2025 and March 31, 2025, $
As of September 30, 2025 and March 31, 2025,
$ and $
As of September 30, 2025 and March 31, 2025, $
F-19
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
As of September 30, 2025 and March 31, 2025, $
As of September 30, 2025 and March 31, 2025,
$
Accounts receivable are typically unsecured and derived from revenue earned from customers, compensation receivables are typically unsecured and derived from damages the Company claimed from certain suppliers as well as customers, thereby exposed to credit risks. The risk is mitigated by the Company’s assessment of its customers and suppliers’ creditworthiness and its ongoing monitoring of outstanding balances.
Concentrations
For the six months ended September 30, 2025 and 2024, the majority of the Company’s assets were located in Japan and Hong Kong.
The Company’s revenue was generated by the
Company and its subsidiaries, which are located in Japan, Hong Kong, mainland China, the United States, and Canada. Revenue generated
from companies in Japan accounted for
For the six months ended September 30, 2025, two
customers accounted for
As of September 30, 2025, three wholesale customers
accounted for
For the six months ended September 30, 2025, three
suppliers accounted for approximately
F-20
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, that requires disclosure of the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense line item on the income statement. The standard also requires a qualitative description of other amounts included in each relevant expense line item on the income statement that are not separately disclosed. In addition, entities are required to disclose the nature and amount of selling expenses. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company plans to adopt this guidance effective April 1, 2027 and the Company is evaluating the impact of the adoption of this guidance on its disclosures.
In July 2025, the FASB issued ASU No. 2025 05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” This ASU provides a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606. The standard is effective for annual periods beginning after December 15, 2025. Early adoption of ASU 2025-05 is permitted and should be applied prospectively. The Company plans to adopt this guidance effective April 1, 2026 and the Company is evaluating the impact of the adoption of this guidance on its disclosures.
Except for the above-mentioned pronouncement, there are no new recently issued accounting standards that will have material impact on the Company’s unaudited condensed consolidated financial position, statements of operations, and cash flows.
NOTE 3 – ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| September
30, 2025 | March 31, 2025 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
The Company’s accounts receivable primarily include balance due from customers when the Company’s products have been sold and delivered to customers, which has not been collected as of the balance sheet dates.
Movement of allowance for credit losses was as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Additional (reduction) | ( | ) | ||||||
| Foreign currency translation adjustments | ||||||||
| Ending balance | $ | $ | ||||||
F-21
NOTE 4 – MERCHANDISE INVENTORIES, NET
Merchandise inventories, net consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Beauty products | $ | $ | ||||||
| Health products | ||||||||
| Luxury products | ||||||||
| Other products | ||||||||
| Merchandise inventories, net | $ | $ | ||||||
As of September 30, 2025 and March 31, 2025, merchandise
inventories write-down was $
NOTE 5 – COMPENSATION RECEIVABLE FOR CONSUMPTION TAX, NET
Compensation receivable for consumption tax, net consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Compensation receivable for consumption tax | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Subtotal | ||||||||
| Less: compensation receivable for consumption tax, current, net | ( | ) | ( | ) | ||||
| Compensation receivable for consumption tax, non-current, net | $ | $ | ||||||
The Tokyo Regional Taxation Bureau had conducted
a tax examination into the Company’s consumption tax filing for the period from July 2018 to December 2021. As a result of the examination,
the Company was required to return consumption tax refund for export transactions that were determined not to meet the tax exemption requirements
due to failure in submission of relevant export documents (see Note 12) by certain of the Company’s suppliers and customers. In
June 2023, the Company entered into agreements with relevant suppliers and customers to claim compensation for damages from the additional
consumption tax payment. These suppliers and customers agreed to compensate the Company and the compensation receivable for consumption
tax will be paid over two years from the date of the agreements. However, due to the tax review the Company filed with the National Tax
Tribunal on February 22, 2024 as mentioned in Note 6(3), the Company agreed to temporarily suspend the repayment, and these suppliers
and customers will resume the payment after the final assessment is determined by the Tokyo Regional Taxation Bureau. As of September
30, 2025, the net total of compensation receivable for consumption tax was approximately $
F-22
NOTE 6 – PREPAID EXPENSES AND OTHER ASSETS, NET
Prepaid expenses and other assets, net consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Deposits (1) | $ | $ | ||||||
| Consumption tax receivable (2) | ||||||||
| Income tax receivable (3) | ||||||||
| Other receivables (4) | ||||||||
| Advance to suppliers (5) | ||||||||
| Prepaid expenses and others | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Subtotal | ||||||||
| Less: prepaid expenses and other current assets, net | ( | ) | ( | ) | ||||
| Long-term prepaid expenses and other non-current assets, net | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
F-23
NOTE 7 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Property and buildings | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Land | ||||||||
| Equipment and furniture | ||||||||
| Automobiles | ||||||||
| Software | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Less: impairment on property and equipment. | ( | ) | ||||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expenses were $
As of September 30, 2025 and March 31, 2025, the
Company pledged a piece of land of
NOTE 8 – LEASES
The Company leases retail store facilities and distribution centers under non-cancellable operating leases, with terms ranging from one to 15 years, as well as finance leases for software, equipment, and furniture with a term of five years. The Company considers those renewal or termination options 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.
Operating lease expenses for lease payment are recognized on a straight-line basis over the lease term. Finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
Operating Leases
The table below presents the operating lease related assets and liabilities recorded on the consolidated balance sheets as of September 30, 2025 and March 31, 2025:
| September 30, 2025 | March 31, 2025 | |||||||
| Operating lease right-of-use lease assets | $ | $ | ||||||
| Operating lease liabilities – current | $ | $ | ||||||
| Operating lease liabilities – non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
F-24
NOTE 8 – LEASES (continued)
Other supplemental information for all of operating leases as of September 30, 2025 and March 31, 2025 was as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Remaining lease term and discount rate: | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate (1) | % | % | ||||||
| (1) | |
During the six months ended September 30, 2025
and 2024, the Company incurred total operating lease expenses of $
Finance Leases
The components of finance lease expenses were as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Finance leases cost: | ||||||||
| Amortization of right-of-use assets | $ | $ | ||||||
| Interest on lease liabilities | ||||||||
| Total finance leases cost | $ | $ | ||||||
Supplemental cash flow information related to finance leases was as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from finance leases | $ | $ | ||||||
F-25
NOTE 8 – LEASES (continued)
Supplemental balance sheet information related to leases as of September 30, 2025 and March 31, 2025 was as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Finance leases cost: | ||||||||
| Software | $ | $ | ||||||
| Equipment and furniture | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
The weighted average remaining lease terms and discount rates for all of finance leases as of September 30, 2025 and March 31, 2025 were as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Remaining lease term and discount rate: | ||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate | % | % | ||||||
The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2025:
| Operating Leases | Finance Leases | |||||||
| Remainder of 2026 | $ | $ | ||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | $ | $ | ||||||
F-26
NOTE 9 – INVESTMENTS
On October 17, 2024, the Company, through its
subsidiary TLS, entered into a cooperation agreement with a third-party company, and both parties agreed to invest ¥
Summarized financial information of unconsolidated entity is as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Current assets | $ | $ | ||||||
| Noncurrent assets | $ | $ | ||||||
| Current liabilities | $ | $ | ||||||
| Noncurrent liabilities | $ | $ | ||||||
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net sales | $ | $ | ||||||
| Gross profit | $ | $ | ||||||
| Loss from operations | $ | ( | ) | $ | ||||
| Net loss | $ | ( | ) | $ | ||||
NOTE 10 – BORROWINGS
Short-term borrowings consisted of the following:
| Maturity | Interest Rate | September 30, 2025 | March 31, 2025 | |||||||||
| Syndicated Loans (1) | $ | $ | ||||||||||
| Resona Bank (2) | ||||||||||||
| Best Life Technology (3) | ||||||||||||
| Loans from HSBC (4) | ||||||||||||
| Total short-term borrowings | $ | $ | ||||||||||
F-27
NOTE 10 – BORROWINGS (continued)
The terms of the various loan agreements related to short-term borrowings contain certain restrictive covenants which, among other things, require the Company to maintain specified ratios of debt to tangible net assets and debt service coverage, and positive net income. The terms also prohibit the Company from entering into transactions that may have a significant adverse impact on the Company’s ability to fulfil its loan obligations, including but not limited to, reorganization of the Company or its subsidiaries, transferring part or all of the Company’s business or assets to third parties, or receiving part or all of business or assets from other third-party companies. Although the Company incurred a net loss in the six months ended September 30, 2025, the Company did not receive any notices from banks, such as notices of terminating its ability to borrow under the relevant agreements and notices of accelerating its obligations to repay outstanding borrowings.
| ^ | TIBOR is an acronym for the Tokyo Interbank Offered Rate, which is the daily reference rate derived from the interest rate that banks charge to lend funds to other banks in the Japanese interbank market. |
| # | HIBOR is an acronym for the Hong Kong Interbank Offered Rate, which is the daily reference rate derived from the interest rate that banks charge to lend funds to other banks in the Hong Kong interbank market. |
| (1) |
| (2) |
| (3) |
| (4) |
F-28
NOTE 10 – BORROWINGS (continued)
Long-term borrowings consisted of the following:
| Maturity | Interest Rate | September 30, 2025 | March 31, 2025 | |||||||||
| Japan Finance Corporation (1) | $ | $ | ||||||||||
| BOT Lease Co., Ltd. (2) | ||||||||||||
| MUFG Bank (3) | ||||||||||||
| The Hong Kong and Shanghai Banking Corporation Limited (4) | ||||||||||||
| DFL-Shutoken Leasing (Hong Kong) Company Limited | ||||||||||||
| Kyrin Starway Limited (5) | ||||||||||||
| Total long-term borrowings | $ | $ | ||||||||||
| Current portion of long-term borrowings | $ | $ | ||||||||||
| Non-current portion of long-term borrowings | $ | $ | ||||||||||
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
The future maturities of long-term borrowings as of September 30, 2025 were as follows:
| 12 months ending September 30 | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total long-term borrowings | $ | |||
For the above-mentioned short-term and long-term
loans, the Company recorded interest expenses of $
F-29
NOTE 11 – RELATED PARTY TRANSACTIONS
The Company’s relationships with related parties who had transactions with the Company are summarized as follows:
| Name of Related Party | Relationship to the Company | |
| Mr. Mei Kanayama | ||
| DinnerBank Co., Ltd. (“DinnerBank”) | ||
| Tokushin G.K. | ||
| Crossing Cards | ||
| Takuetsu Kokusai Co., Ltd. |
| a. | Accounts receivable, net – related parties |
Accounts receivable, net – related parties consisted of the following:
| Name | September 30, 2025 | March 31, 2025 | ||||||
| DinnerBank | $ | $ | ||||||
| Takuetsu Kokusai Co., Ltd. | ||||||||
| Subtotal | ||||||||
| Less: allowance for credit losses | ||||||||
| Total accounts receivable, net –related parties | $ | $ | ||||||
| b. | Due from related parties |
Due from related parties consisted of the following:
| Name | September 30, 2025 | March 31, 2025 | ||||||
| Takuetsu Kokusai Co., Ltd. | $ | $ | ||||||
| DinnerBank | ||||||||
| Total due from related parties | $ | $ | ||||||
| c. | Advance to suppliers – a related party |
Advance to suppliers – a related party consisted of the following:
| Name | September 30, 2025 | March 31, 2025 | ||||||
| Crossing Cards | $ | $ | ||||||
| Total advance to suppliers – a related party | $ | $ | ||||||
F-30
NOTE 11 – RELATED PARTY TRANSACTIONS (continued)
| d. | Accounts payable – a related party |
Accounts payable – a related party consisted of the following:
| Name | September 30, 2025 | March 31, 2025 | ||||||
| DinnerBank | $ | $ | ||||||
| Total accounts payable – a related party | $ | $ | ||||||
| e. | Due to related parties |
Due to related parties consisted of the following:
| Name | September 30, 2025 | March 31, 2025 | ||||||
| Mr. Mei Kanayama | $ | $ | ||||||
| DinnerBank | ||||||||
| Tokushin G.K. | ||||||||
| Total due to related parties | $ | $ | ||||||
| f. |
| For the Six Months Ended September 30, | ||||||||
| Name | 2025 | 2024 | ||||||
| DinnerBank | $ | $ | ||||||
| Takuetsu Kokusai Co., Ltd. | ||||||||
| Total revenue from related parties | $ | $ | ||||||
| g. |
| For the Six Months Ended September 30, | ||||||||
| Name | 2025 | 2024 | ||||||
| DinnerBank | $ | $ | ||||||
| Crossing Cards | ||||||||
| Takuetsu Kokusai Co., Ltd. | ||||||||
| Total purchase from related parties | $ | $ | ||||||
| h. | Other related party transactions |
Mr. Kanayama provided guarantees in connection with certain loans the Company borrowed (see Note 10).
F-31
NOTE 12 – TAXES
| (a) | Corporate Income Taxes |
The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.
Japan
The Company and its subsidiary in Japan are mainly
subject to Japanese national and local income taxes, inhabitant tax, and enterprise tax, which, in the aggregate, represent a statutory
income tax rate of approximately
Hong Kong
TLS is incorporated in Hong Kong and is subject
to profit taxes in Hong Kong at a rate of
PRC
The Company’s subsidiary in the PRC is subject
to the PRC Enterprise Income Tax. Under the Enterprise Income Tax Law of PRC, domestic enterprises and Foreign Investment Enterprises
are subject to a unified
Malaysia
Reiwatakiya is incorporated in Malaysia, and is
governed by the income tax laws of Malaysia. The income tax provision in respect of operations in Malaysia is calculated at the applicable
tax rates on the taxable income for the periods based on existing legislation, interpretations, and practices. Under the Income Tax Act
of Malaysia, enterprises incorporated in Malaysia are usually subject to a unified
The United States
The
Company’s subsidiaries in the United States are subject to the United States federal corporate income tax rate of
Canada
The Company’s subsidiary in Canada is subject
to the Canadian federal corporate income tax rate of
Australia
The Company’s subsidiary in Australia is
subject to an Australian statutory federal income tax rate at
F-32
NOTE 12 – TAXES (continued)
The income (loss) before tax were as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Japan | $ | ( | ) | $ | ( | ) | ||
| Hong Kong | ||||||||
| PRC | ( | ) | ||||||
| Malaysia | ( | ) | ||||||
| The United States | ||||||||
| Canada | ( | ) | ( | ) | ||||
| Australia | ( | ) | ||||||
| Vietnam | ||||||||
| Income before tax | $ | $ | ||||||
The components of the income tax provision (benefit) were as follows:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Current tax provision | ||||||||
| Japan | $ | $ | ||||||
| Hong Kong | ||||||||
| PRC | ||||||||
| Malaysia | ||||||||
| The United States | ||||||||
| Canada | ||||||||
| Australia | ||||||||
| Vietnam | ||||||||
| Deferred tax benefit | ||||||||
| Japan | $ | ( | ) | $ | ( | ) | ||
| Hong Kong | ( | ) | ( | ) | ||||
| PRC | ||||||||
| Malaysia | ( | ) | ( | ) | ||||
| The United States | ||||||||
| Canada | ||||||||
| Australia | ||||||||
| Vietnam | ||||||||
| ( | ) | ( | ) | |||||
| Income tax provision (benefit) | $ | $ | ( | ) | ||||
F-33
NOTE 12 – TAXES (continued)
The following table reconciles the Japan statutory rate to the Company’s effective tax rates for the six months ended September 30, 2025 and 2024, respectively:
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Japanese statutory income tax rate | % | % | ||||||
| Non-deductible expenses | % | % | ||||||
| Non-taxable income | ( | )% | ||||||
| Tax rate difference in non-Japan subsidiaries and different prefectures in Japan | ( | )% | % | |||||
| Effect of change in Japanese statutory income tax rate | ( | )% | ||||||
| Change in valuation allowance | % | ( | )% | |||||
| Effects of consumption tax examination (1) | % | ( | )% | |||||
| Prior year income tax true-up | % | |||||||
| Effective tax rate | % | ( | )% | |||||
| (1) |
The Company’s deferred tax liabilities, net comprised of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Deferred tax assets: | ||||||||
| Allowance for credit losses | $ | $ | ||||||
| Accrued member rewards | ||||||||
| Accrued employee bonus | ||||||||
| Accrued asset retirement obligation | ||||||||
| Accrued employee retirement pension | ||||||||
| Change in fair value of warrant liabilities | ||||||||
| Net operating loss carry-forwards | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Total deferred tax assets, net | ||||||||
| Deferred tax liabilities: | ||||||||
| Compensation receivable for consumption tax | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Deferred tax liabilities, net | $ | ( | ) | $ | ( | ) | ||
The Company’s movement of the valuation allowance were as follows:
| September 30, 2025 | March 31, 2025 | |||||||
| Beginning balance | $ | $ | ||||||
| Addition (reduction) | ( | ) | ||||||
| Foreign currency translation adjustments | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
F-34
NOTE 12 – TAXES (continued)
As of September 30, 2025 and March 31, 2025, the
Company had a net operating loss carried forward of $
As of September 30, 2025 and March 31, 2025, the
Company had a net operating loss carried forward of $
As of September 30, 2025 and March 31, 2025, the
Company had a net operating loss carried forward of $
As of September 30, 2025 and March 31, 2025, the
Company had a net operating loss carried forward of $
As of September 30, 2025 and March 31, 2025, the
Company had a net operating loss carried forward of $
| (b) | Consumption tax |
In Japan, consumption tax collected and remitted
to tax authorities is excluded from revenue, cost of sales, and expenses in the unaudited condensed consolidated statements of operations
and comprehensive income (loss). The Company has been subject to the applicable consumption tax rate of
Since January 2022, the Tokyo Regional Taxation
Bureau had conducted a tax examination into the Company’s consumption tax filing for the period from July 2018 to December 2021,
and the examination was completed in May 2023. As a result of the examination, the Company was required to return consumption tax refund
for export transactions that were determined not to meet the tax exemption requirements due to incomplete submission of relevant export
documents as well as to pay the additional tax for understatement and delinquent tax computed by the Company’s tax consultant. The
Company made payments of the consumption tax payable by a monthly installment of and the amount payable was also offset by the consumption
tax receivable from the tax authorities for excess input consumption tax. As disclosed in Note 6 (3), the Company filed a request for
review with the National Tax Tribunal on February 22, 2024, challenging the legality of the reassessment decision and the imposition of
additional tax penalties issued by the Tokyo Regional Taxation Bureau. On February 13, 2025, the Company received a ruling from the National
Tax Tribunal, dated February 12, 2025, which upheld the Company’s request and annulled the disposition. The Company adjusted its
additional consumption tax amount and resulted in a consumption tax receivable of $
| (c) | Taxes payable |
Taxes payable consisted of the following:
| September 30, 2025 | March 31, 2025 | |||||||
| Income tax payable | $ | $ | ||||||
| Consumption tax payable and others | ||||||||
| Total taxes payable | $ | $ | ||||||
F-35
NOTE 13 – WARRANTS LIABILITIES
Representative’s warrants liability
In connection with the Company’s IPO, the
Company agreed to issue warrants to the representative of the underwriters, for a nominal consideration of $
Because the strike price of the Representative’s Warrants is denominated in United States Dollars, a currency other than the Company’s functional currency, Japanese yen, the Representative’s Warrants were not considered indexed to the Company’s own stock. As such, the Representative’s Warrants were classified as a derivative liability under ASC 815-10, and recorded initially and subsequently at fair value with all future changes in the fair value recognized currently in earnings until such time as the warrants are exercised or expired. As of September 30, 2025, these Representative’s Warrants were issued and outstanding but of the warrants had been exercised. For the six months ended September 30, 2025 and 2024, these Representative’s Warrants were antidilutive and accordingly were not included in the diluted EPS calculation based on treasury stock method.
On January 13, 2022, the Company recorded a fair
value of $
These warrants do not trade in an active securities market, and as such, the Company estimates their fair value using the Black-Scholes Option Pricing Model (the “Black-Scholes Model”) as of September 30, 2025 and March 31, 2025 using the following assumptions:
| September 30, 2025 | March 31, 2025 | |||||||
| Representative’s Warrants liability | ||||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
F-36
NOTE 13 – WARRANTS LIABILITY (continued)
Investors’ warrants liability
On January 26, 2024, the Company entered into
a securities purchase agreement with certain institutional investors, pursuant to which the Company sold
Because the strike price of the Investors’
Warrants is denominated in United States Dollars, a currency other than the Company’s functional currency, Japanese yen, the Investors’
Warrants were not considered indexed to the Company’s own stock. As such, the Investors’ Warrants were classified as a derivative
liability under ASC 815-10, and recorded initially and subsequently at fair value with all future changes in the fair value recognized
currently in earnings until such time as the warrants are exercised or expired. As of September 30, 2025, a total of ADS purchase
warrants were exercised by the investors, and net proceeds of $
On January 26, 2024, the Company recorded a fair
value of $
These warrants do not trade in an active securities market, and as such, the Company estimates its fair value using the Black-Scholes Model as of September 30, 2025 and March 31, 2025 using the following assumptions:
| September 30, 2025 | March 31, 2025 | |||||||
| Investors’ Warrants liability | ||||||||
| Stock price | $ | $ | ||||||
| Exercise price | $ | $ | ||||||
| Expected term (years) | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
F-37
NOTE 14 – SHAREHOLDERS’ EQUITY
Ordinary shares
On January 26, 2024, the Company entered into
a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to sell
Initial public offering
On January 13, 2022, the Company closed its IPO
of
Reverse Split of ADSs
Capital reduction
On June 27, 2024, the shareholders of the Company
approved a capital reduction at the annual general meeting, and the amount of capital reduced by ¥
On March 14, 2025, the shareholders of the Company
approved another capital reduction at the extraordinary general meeting, and the amount of capital reduced further by ¥
Restricted net assets
The Company is restricted in its ability to transfer
a portion of its net assets, equivalent to its share capital to its shareholders in the form of loans, advances, or cash dividends. The
payment of dividends by the Company organized in Japan is subject to limitations, procedures, and formalities. Regulations in Japan currently
permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in Japan.
As of September 30, 2025 and March 31, 2025, the total restricted net assets of the Company amounted to $
Cash Dividends
On September 25, 2025, the board of directors
of the Company, approved an interim dividend of JPY
F-38
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. As of September 30, 2025 and March 31, 2025, there were no legal claims and litigation against the Company.
NOTE 16 – SEGMENT REPORTING
Segments
The Company is engaged in the operation of retail
and wholesale of Japanese beauty and health products, as well as sundry products and other products and services. The Company’s
operations are conducted in
Directly-operated physical stores segment includes physical stores in Japan, Hong Kong, the United States, Canada and Australia. Online stores and services segment includes sales through the Company’s websites and various e-commerce marketplaces in Japan, as well as services from advertising business through KOLs and supporting services to online celebrities. Franchise stores and wholesale customers segments include franchise stores in Japan, Hong Kong, the United States Canada, Thailand, and the United Kingdom, and wholesale customers in Japan and other countries including Hong Kong, mainland China, the United States, and Canada.
The Company measures the results of its segments
using, among other measures, each segment’s revenue, merchandise costs, interest expenses, net, income tax benefit, net income,
depreciation and amortization, capital expenditures, total assets as well as total liabilities, which includes certain corporate overhead
allocations.
The following table presents the segment information for the six months ended September 30, 2025 and 2024, respectively:
| For the Six Months Ended September 30, 2025 | ||||||||||||||||
| Directly- Operated Physical Stores | Online Stores and Services | Franchise Stores and Wholesale Customers | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Merchandise costs | $ | $ | $ | $ | ||||||||||||
| Interest expenses, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Income tax provision | $ | $ | $ | $ | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
F-39
NOTE 16 – SEGMENT REPORTING (continued)
| For the Six Months Ended September 30, 2024 | ||||||||||||||||
| Directly- Operated Physical Stores | Online Stores and Services | Franchise Stores and Wholesale Customers | Total | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Merchandise costs | $ | $ | $ | $ | ||||||||||||
| Interest expenses, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Income tax benefit | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | - | $ | - | $ | ||||||||||
| September 30, 2025 | March 31, 2025 | |||||||
| Total assets: | ||||||||
| Directly-Operated Physical Stores | $ | $ | ||||||
| Online Stores and Services | ||||||||
| Franchise Stores and Wholesale Customers | ||||||||
| Total assets | $ | $ | ||||||
| Total liabilities: | ||||||||
| Directly-Operated Physical Stores | $ | $ | ||||||
| Online Stores and Services | ||||||||
| Franchise Stores and Wholesale Customers | ||||||||
| Total liabilities | $ | $ | ||||||
The following table presents the geographic information where the Company’s long-live assets were located:
| September 30, 2025 | March 31, 2025 | |||||||
| Japan | $ | $ | ||||||
| Hong Kong | ||||||||
| The United States | ||||||||
| Other overseas countries | ||||||||
| Total long-live assets | $ | $ | ||||||
Disaggregated Revenue
The Company disaggregates its revenue by geographic areas, product categories, and distribution channels, which the Company believes best depicts how the nature, amount, timing, and uncertainty of the revenue and cash flows are affected by economic factors. See Note 2 for the Company’s disaggregation of revenue for the six months ended September 30, 2025 and 2024.
NOTE 17 – SUBSEQUENT EVENTS
These unaudited condensed consolidated financial statements were approved by management and available for issuance on December 19, 2025, and the Company has evaluated subsequent events through this date. The Company did not identify any subsequent events except those disclosed above that would have required adjustment or disclosure in the financial statements.
F-40
Exhibit 99.2
Tokyo Lifestyle Co., Ltd. Reports First Six Months of Fiscal Year 2026 Financial Results
Revenue Increased by 94.3% YoY; Gross Profit Increased by 29.8% YoY
TOKYO, December 19, 2025 /PRNewswire/ -- Tokyo Lifestyle Co., Ltd. (“Tokyo Lifestyle” or the “Company”) (Nasdaq: TKLF), a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, collectible cards, trendy toys as well as other products in Hong Kong, Japan, North America, Thailand, Vietnam, the United Kingdom and Australia, today announced its unaudited financial results for the first six months of the fiscal year 2026 ended September 30, 2025.
Mr. Mei Kanayama, Principal Executive Officer of Tokyo Lifestyle, commented: “The first half of fiscal year 2026 delivered broad-based, double-digit growth across our core business lines, with revenue from (i) franchise stores and wholesale customers and (ii) directly operated physical stores increasing by 102.5% and 47.1%, respectively. This growth was driven by our continuous efforts to expand our product offerings, acquire new retail and wholesale customers, and grow our global network of directly operated stores.
“During the period, we continued to enrich our product portfolio with a clear strategic focus on core categories such as beauty, luxury, and electronic products. Supported by our deliberate global expansion strategy and disciplined execution, sales to wholesale and retail customers in key regions accelerated, reflected in a 59.4% increase in total stock keeping units (“SKUs”), as well as revenue growth from additional physical stores and expanded operations in Hong Kong, the United States, and Canada.
“As commercial and retail environments continued to recover across our core markets, we amplified this momentum through targeted promotional initiatives and proactive pricing strategies built upon our mature membership system. Onsite promotions, including mall events, gifts with purchase above certain thresholds, and foot-traffic-driven activities, effectively boosted sales in our physical stores, particularly in the beauty product category.
“These combined efforts led to a 94.3% year-over-year increase in total revenue and a 29.8% increase in gross profit. We also sustained a stable and healthy overall gross margin of 8.3% across our business lines, underscoring our ability to balance scale with profitability.
“Despite the impact of prior-period tax adjustments and foreign exchange fluctuations, we remain optimistic and confident in our strategy and execution capabilities. To optimize resource allocation, we are placing greater emphasis on preparations for future expansion and making necessary investments in site evaluation, talent and customer retention and acquisition. At the same time, we are adopting more flexible collaboration models to strengthen our multi-channel sales network to stay aligned with evolving consumer behavior and industry trends.
“While steadily expanding our global physical store network, we are also actively exploring and piloting new technologies and partnership models to accelerate our online sales capabilities, which we believe will be an integral driver of our future growth. Looking ahead, we remain confident in our strategic direction and growth trajectory and expect to deliver sustained, profitable growth and long-term value for our shareholders.”
Mr. Youichiro Haga, Principal Accounting and Financial Officer of Tokyo Lifestyle, commented: “We are pleased that the Company maintained robust and healthy growth during the first half of fiscal year 2026, supported by solid financial performance metrics. Alongside revenue growth that nearly doubled, our accounts receivable increased by 42.4% while the receivables turnover ratio declined only moderately, reflecting the effectiveness of our disciplined controls and balanced growth strategy. The period’s net loss, primarily attributable to tax and foreign exchange impacts, does not reflect our operational performance. In fact, operating profit grew, highlighting ongoing enhancements in our core business fundamentals. We believe that stronger revenue and gross margin performance will lay a solid foundation for a sustained recovery in overall profitability.
“At the same time, merchandise inventories decreased by 27.6% despite the 59.4% increase in total SKUs offered, raising our inventory turnover ratio from 13 to 35. This demonstrates a healthy and orderly growth trajectory, too.
“We also optimized our liability structure by adjusting the mix of short- and long-term borrowings. The addition of new long-term borrowing not only reduced our financing costs and strengthened cash flow stability, but also signaled increased confidence from lenders and investors in our track record and long-term growth prospects.
“Looking ahead, we will continue to enhance our financial strength through disciplined cost management to support our global expansion strategy and deliver increasing long-term value for our shareholders.”
First Six Months of Fiscal Year 2026 Financial Highlights
| ● | Revenue was $190.4 million for the six months ended September 30, 2025, increased by 94.3% from $98.0 million for the same period of last year. |
| ● | Gross profit was $15.8 million for the six months ended September 30, 2025, increased by 29.8% from $12.1 million for the same period of last year. |
| ● | Income from operations was $3.6 million for six months ended September 30, 2025, increased by 13.0% from $3.2 million for the same period of last year. |
| ● | Income before provision (benefit) for income tax was $0.7 million for the six months ended September 30, 2025, compared to $0.8 million for the same period of last year. |
| ● | Net loss was $0.9 million for the six months ended September 30, 2025, compared to net income of $1.3 million for the same period of last year. |
| ● | Basic and diluted loss per share was $0.02 for the six months ended September 30, 2025, compared to basic and diluted earnings per share $0.03 for the same period of last year. |
2
First Six Months of Fiscal Year 2026 Financial Results
Revenue
Total revenue was $190.4 million for the six months ended September 30, 2025, increased by 94.3% from $98.0 million for the same period of last year.
| For the Six Months Ended September 30, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| ($ millions) | Revenue | Cost of Revenue | Gross Margin | Revenue | Cost of Revenue | Gross Margin | ||||||||||||||||||
| Franchise stores and wholesale customers | 176.1 | 164.0 | 6.9 | % | 86.9 | 78.0 | 10.3 | % | ||||||||||||||||
| Directly-operated physical stores | 10.2 | 7.7 | 24.9 | % | 6.9 | 4.9 | 29.4 | % | ||||||||||||||||
| Online stores and services | 4.1 | 3.0 | 27.5 | % | 4.1 | 3.0 | 27.5 | % | ||||||||||||||||
| Total | 190.4 | 174.7 | 8.3 | % | 98.0 | 85.9 | 12.4 | % | ||||||||||||||||
Revenue from franchise stores and wholesale customers increased by 102.5%, to $176.1 million for the six months ended September 30, 2025, from $86.9 million for the same period of last year. The increase was mainly due to the Company’s continuous effort in extending its products offering as its total SKUs increased from approximately 165,200 SKUs during the six months ended September 30, 2024, to approximately 263,400 SKUs during the six months ended September 30, 2025. Especially, revenue from beauty products, luxury products and electronic products increased significantly during the six months ended September 30, 2025 as compared to the same period last year. In addition, the increase was also due to revenue from new wholesale customers because the Company continued to develop its customer base by entering into business relationships with new wholesale customers during the six months ended September 30, 2025.
Revenue from directly-operated physical stores increased by 47.1%, to $10.2 million for the six months ended September 30, 2025, from $6.9 million for the same period of last year. The increase was primarily due to the increase revenue generated by the Company’s directly-operated physical stores in Hong Kong due to the increased customer visits, which resulted from 1) rebounded number of tourists from mainland China and overseas countries; 2) greater effort spent by its sales team to carry out face-to-face promotion of its products; 3) optimized promotion and price discounts strategies, together with increased SKUs which attracted more customers; and 4) addition of one new physical store. The increase was also attributable to revenue generated from directly-operated physical stores in the United States and Canada due to its continuous business expansion in those countries. The Company currently operates five directly-operated physical stores in the United States and two directly-operated physical stores in Canada during the six months ended September 30, 2025, as compared to four directly-operated physical stores in the United States and one directly-operated physical store in Canada during the six months ended September 30, 2024.
Revenue from online stores and services remained relatively stable, and was $4.1 million for the six months ended September 30, 2025 and 2024.
3
Cost of Revenue
Cost of revenue increased by 103.4%, to $174.7 million for the six months ended September 30, 2025, from $85.9 million for the same period of last year.
Gross Profit and Gross Margin
Gross profit increased by 29.8%, to $15.8 million for the six months ended September 30, 2025, from $12.1 million for the same period of last year.
Gross margin decreased to 8.3% for the six months ended September 30, 2025, from 12.4% for the same period of last year. The decrease was primarily due to promotional activities at directly-operated stores, as well as a higher proportion of lower-margin luxury and electronic product sales at franchise stores and wholesale customers.
Operating Expenses
Operating expenses increased by 35.8%, to $12.1 million for the six months ended September 30, 2025, from $8.9 million for the same period of last year. The increase was primarily driven by higher shipping expenses in line with the significant growth in sales from franchise stores and wholesale customers; increased travel expenses related to site inspections for new physical stores; higher payroll, employee benefits, and bonus expenses for talent incentivization; as well as rental and other expenses associated with business expansion.
Additional and Delinquent Tax due to Consumption Tax Correction
During the six months ended September 30, 2025, the Company recorded approximately $1.8 million in additional consumption tax in accordance with the latest assessment issued by the Tokyo Regional Taxation Bureau. The amount has been fully reflected in the Company’s financial statements for the period.
Loss from Foreign Currency Exchange
Loss from foreign currency exchange decreased to approximately $0.1 million for the six months ended September 30, 2025, compared with $0.8 million for the same period last year.
Change in Fair Value of Warrants Liabilities
Change in fair value of the warrants liabilities was $(508,128) for the six months ended September 30, 2025, compared to $(1,121,968) for the same period last year.
Provision (Benefit) for Income Taxes
Provision for income taxes was $1.6 million for the six months ended September 30, 2025, compared to an income tax benefit of $0.6 million for the same period of last year. The increase was mainly due to higher current income tax expenses resulting from increased taxable income generated by the Company’s Hong Kong subsidiary.
Net Income (Loss)
As a result of the foregoing, net loss was $0.9 million for the six months ended September 30, 2025, compared to net income of $1.3 million for the same period of last year.
Basic and Diluted Earnings (Loss) per Share
Basic and diluted loss per share was $0.02 for the six months ended September 30, 2025, compared to basic and diluted earnings per share of $0.03 for the same period of last year.
4
Financial Condition
As of September 30, 2025, the Company had cash of $2.2 million as compared to $4.8 million as of March 31, 2025. As of September 30, 2025, the Company also had approximately $148.6 million of account receivable balance due from third parties. Approximately 26.4% of the September 30, 2025 balance has been subsequently collected, and the majority of the remaining balance is expected to be collected by June 30, 2026. The collection of such receivables made cash available for use in the Company’s operations as working capital, if necessary.
Net cash used in operating activities was $8.1 million for the six months ended September 30, 2025, mainly derived from the net loss of $0.9 million for the period, and net changes in the Company’s operating assets and liabilities, which mainly included the increased accounts receivable of $40.5 million resulted from the increased revenue during the period, partially offset by increased accounts payable of $33.3 million which was due to increased purchases to fulfill the Company’s customer orders.
Net cash used in investing activities was $0.7 million for the six months ended September 30, 2025, mainly due to investment in life insurance policy of $0.6 million.
Net cash provided by financing activities was $6.0 million for the six months ended September 30, 2025, which primarily consisted of proceeds from short-term borrowings of $8.2 million, proceeds from long-term borrowings of $4.8 million, and advances received from related parties of $1.5 million, partially offset by repayments of short-term borrowings of $8.2 million.
About Tokyo Lifestyle Co., Ltd.
Headquartered in Tokyo, Japan, Tokyo Lifestyle Co., Ltd. (formerly known as Yoshitsu Co., Ltd) is a retailer and wholesaler of Japanese beauty and health products, sundry products, luxury products, electronic products, collectible cards, trendy toys, and other products in Hong Kong, Japan, North America, Thailand, Vietnam, the United Kingdom and Australia. The Company offers various beauty products (including cosmetics, skincare, fragrance, and body care products), health products (including over-the-counter drugs, nutritional supplements, and medical supplies and devices), sundry products (including home goods), collectible cards and trendy toys (including Pokémon cards, BE@RBRICK and other trendy products) and other products (including food and alcoholic beverages). The Company currently sells its products through directly-operated physical stores, through online stores, and to franchise stores and wholesale customers. For more information, please visit the Company’s website at https://www.ystbek.co.jp/irlibrary/.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. In addition, there is uncertainty about the demand for the Company’s products, global supply chains, and economic activity in general. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and in its other filings with the U.S. Securities and Exchange Commission.
For more information, please contact:
Tokyo Lifestyle Co., Ltd.
Investor Relations Department
Email: ir@ystbek.co.jp
Ascent Investor Relations LLC
Tina Xiao
President
Phone: +1-646-932-7242
Email: investors@ascent-ir.com
5
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | March 31, | |||||||
| 2025 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 2,177,691 | $ | 4,819,639 | ||||
| Accounts receivable, net | 148,571,553 | 107,305,580 | ||||||
| Accounts receivable - related parties, net | - | 117 | ||||||
| Merchandise inventories, net | 5,340,678 | 4,370,803 | ||||||
| Due from related parties | 1,553 | 1,208 | ||||||
| Advance to suppliers - a related party | 29,384 | - | ||||||
| Compensation receivable for consumption tax, current, net | 7,289,882 | 7,178,775 | ||||||
| Prepaid expenses and other current assets, net | 12,020,659 | 13,542,183 | ||||||
| TOTAL CURRENT ASSETS | 175,431,400 | 137,218,305 | ||||||
| Property and equipment, net | 10,392,844 | 10,763,020 | ||||||
| Operating lease right-of-use assets | 7,222,465 | 6,031,284 | ||||||
| Life insurance policy, cash surrender value | 516,104 | - | ||||||
| Compensation receivable for consumption tax, non-current, net | 2,071,410 | 2,039,840 | ||||||
| Long-term prepaid expenses and other non-current assets, net | 1,642,982 | 1,777,736 | ||||||
| TOTAL ASSETS | $ | 197,277,205 | $ | 157,830,185 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Short-term borrowings | $ | 58,582,850 | $ | 57,903,207 | ||||
| Current portion of long-term borrowings | 5,569,153 | 706,531 | ||||||
| Accounts payable | 58,460,599 | 25,057,104 | ||||||
| Accounts payable - a related party | 100,628 | 2,678,588 | ||||||
| Due to related parties | 1,530,307 | 27,678 | ||||||
| Deferred revenue | 7,551,974 | 8,027,153 | ||||||
| Taxes payable | 1,462,736 | 349,671 | ||||||
| Operating lease liabilities, current | 2,244,561 | 2,068,399 | ||||||
| Finance lease liabilities, current | 119,701 | 138,180 | ||||||
| Warrants liabilities | 3,042,829 | 2,502,718 | ||||||
| Dividends payable | 540,637 | - | ||||||
| Other payables and other current liabilities | 1,950,588 | 1,998,713 | ||||||
| TOTAL CURRENT LIABILITIES | 141,156,563 | 101,457,942 | ||||||
| Operating lease liabilities, non-current | 5,050,752 | 4,003,366 | ||||||
| Finance lease liabilities, non-current | 62,769 | 119,068 | ||||||
| Long-term borrowings | 6,476,142 | 6,501,772 | ||||||
| Other non-current liabilities | 1,353,557 | 1,470,135 | ||||||
| Deferred tax liabilities, net | 904,213 | 1,263,872 | ||||||
| TOTAL LIABILITIES | $ | 155,003,996 | $ | 114,816,155 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary shares, no par value,100,000,000 shares authorized; 42,327,806 shares and 42,220,206 shares issued and outstanding as of September 30, 2025 and March 31, 2025, respectively | 81,150 | 81,150 | ||||||
| Capital reserve | 26,946,116 | 26,946,116 | ||||||
| Retained earnings | 26,301,112 | 27,695,268 | ||||||
| Accumulated other comprehensive loss | (11,062,727 | ) | (11,708,504 | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | 42,265,651 | 43,014,030 | ||||||
| Non-controlling interest | 7,558 | - | ||||||
| TOTAL EQUITY | 42,273,209 | 43,014,030 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 197,277,205 | $ | 157,830,185 | ||||
6
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERTAIONS AND COMPREHENSIVE INCOME (LOSS)
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| REVENUE | ||||||||
| Revenue - third parties | $ | 190,418,636 | $ | 91,136,514 | ||||
| Revenue - related parties | 2,749 | 6,866,951 | ||||||
| Total revenue | 190,421,385 | 98,003,465 | ||||||
| COSTS AND OPERATING EXPENSES | ||||||||
| Merchandise costs | 174,661,012 | 85,858,021 | ||||||
| Selling, general and administrative expenses | 12,121,307 | 8,924,982 | ||||||
| Total costs and operating expenses | 186,782,319 | 94,783,003 | ||||||
| INCOME FROM OPERATIONS | 3,639,066 | 3,220,462 | ||||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense, net | (833,756 | ) | (823,836 | ) | ||||
| Additional and delinquent tax due to consumption tax correction | (1,815,619 | ) | - | |||||
| Gain from disposal of a subsidiary | 44,762 | - | ||||||
| Cash surrender value loss | (91,243 | ) | - | |||||
| Other income, net | 297,757 | 319,624 | ||||||
| Loss from foreign currency exchange | (67,155 | ) | (810,623 | ) | ||||
| Change in fair value of warrants liabilities | (508,128 | ) | (1,121,968 | ) | ||||
| Total other expenses, net | (2,973,382 | ) | (2,436,803 | ) | ||||
| INCOME BEFORE INCOME TAX PROVISION (BENEFIT) | 665,684 | 783,659 | ||||||
| PROVISION (BENEFIT) FOR INCOME TAXES | 1,566,339 | (552,570 | ) | |||||
| NET INCOME (LOSS) | (900,655 | ) | 1,336,229 | |||||
| Less: net loss attributable to non-controlling interest | (40,612 | ) | - | |||||
| NET INCOME (LOSS) ATTRIBUTABLE TO TOKYO LIFESTYLE CO., LTD. | $ | (860,043 | ) | $ | 1,336,229 | |||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Net income (loss) | (900,655 | ) | 1,336,229 | |||||
| Foreign currency translation gain | 645,777 | 1,876,274 | ||||||
| Total comprehensive income (loss) | (254,878 | ) | 3,212,503 | |||||
| Less: Comprehensive loss attributable to non-controlling interest | (40,751 | ) | - | |||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | (295,629 | ) | $ | 3,212,503 | |||
| Earnings (loss) per ordinary share | ||||||||
| - basic | $ | (0.02 | ) | $ | 0.03 | |||
| - diluted | $ | (0.02 | ) | $ | 0.03 | |||
| Weighted average shares | ||||||||
| - basic | 42,327,806 | 42,220,206 | ||||||
| - diluted | 42,327,806 | 42,220,206 | ||||||
7
TOKYO LIFESTYLE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Income (loss) | $ | (900,655 | ) | $ | 1,336,229 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 593,622 | 409,461 | ||||||
| Loss (gain) from disposal of property and equipment | 72,518 | (202,165 | ) | |||||
| Gain from unrealized foreign currency translation | (22,615 | ) | (358,309 | ) | ||||
| Provision for (reversal of) credit losses | 446,841 | (26,932 | ) | |||||
| Addition (reversal) of merchandise inventories written down | (112,498 | ) | 14,709 | |||||
| Amortization of operating lease right-of-use assets | 1,383,934 | 911,218 | ||||||
| Deferred tax benefit | (384,677 | ) | (905,570 | ) | ||||
| Change in fair value of warrants liabilities | 508,128 | 1,121,968 | ||||||
| Loss on cash surrender value | 91,243 | - | ||||||
| Accrued interest expense | (32,455 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (40,463,477 | ) | 5,844,436 | |||||
| Accounts receivable - related parties | 120 | (2,907,787 | ) | |||||
| Advance to suppliers - related party | (29,780 | ) | - | |||||
| Merchandise inventories | (847,487 | ) | (2,768,207 | ) | ||||
| Compensation receivable for consumption tax | - | 695,565 | ||||||
| Prepaid expenses and other current assets | 1,644,386 | (9,394,219 | ) | |||||
| Long term prepaid expenses and other non-current assets | 164,670 | 203,598 | ||||||
| Accounts payable | 33,334,520 | 3,416,712 | ||||||
| Accounts payable - related parties | (2,567,303 | ) | (8,116 | ) | ||||
| Deferred revenue | (636,566 | ) | 6,937,534 | |||||
| Taxes payable | 1,113,480 | (4,611,614 | ) | |||||
| Other payables and other current liabilities | (47,034 | ) | (552,070 | ) | ||||
| Operating lease liabilities | (1,350,756 | ) | (944,078 | ) | ||||
| Other non-current liabilities | (29,250 | ) | (197,185 | ) | ||||
| Net used in provided by operating activities | (8,071,091 | ) | (1,984,822 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (127,964 | ) | (678,267 | ) | ||||
| Proceeds from disposal of property and equipment | - | 28,868 | ||||||
| Investment in life insurance policy | (605,299 | ) | - | |||||
| Collection of amount due from (advances made to) related parties | (331 | ) | 9,256 | |||||
| Net cash used in investing activities | (733,594 | ) | (640,143 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Capital contribution from non-controlling shareholders | 48,309 | - | ||||||
| Proceeds from short-term borrowings | 8,198,954 | 2,752,445 | ||||||
| Repayments of short-term borrowings | (8,173,699 | ) | - | |||||
| Proceeds from long-term borrowings | 4,819,577 | - | ||||||
| Repayments of long-term borrowings | (297,564 | ) | (129,984 | ) | ||||
| Advances received from (payments made to) related parties | 1,496,726 | (26,132 | ) | |||||
| Repayment of obligations under finance leases | (79,353 | ) | (110,734 | ) | ||||
| Net cash provided by financing activities | 6,012,950 | 2,485,595 | ||||||
| Effect of exchange rate fluctuation on cash | 149,787 | 740,954 | ||||||
| Net increase (decrease) in cash | (2,641,948 | ) | 601,584 | |||||
| Cash at beginning of period | 4,819,639 | 2,475,538 | ||||||
| Cash at end of period | $ | 2,177,691 | $ | 3,077,122 | ||||
| Supplemental cash flow information | ||||||||
| Cash paid for income taxes | $ | 65,427 | $ | 2,100,807 | ||||
| Cash paid for interest | $ | 833,326 | $ | 494,581 | ||||
| Supplemental non-cash operating activities | ||||||||
| Right of use assets obtained in exchange for operating lease liabilities | $ | 5,527,096 | $ | 1,561,296 | ||||
| Reduction of right-of-use assets and operating lease obligations due to early termination of lease agreement | $ | 240,651 | $ | - | ||||
8