| RELATED PARTY TRANSACTIONS |
NOTE 17 — RELATED PARTY TRANSACTIONS The related parties that had material transactions for the six months ended June 30, 2026 and 2025 consist of the following:
|
|
|
Name of Related Parties |
|
Nature of Relationship as of June 30, 2026 |
Yoshiyuki Aikawa |
|
Controlling shareholder, director and CEO of the Company |
Yoshiko Aikawa |
|
Mother of the Company’s CEO and serving as a director of SBC Japan, a principal operating subsidiary of the Company |
Medical Corporation Shobikai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Kowakai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Nasukai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Aikeikai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Jukeikai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Ritz Cosmetic Surgery |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Association Furinkai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Association Junikai |
|
The relatives of CEO of the Company being the Members of the MC |
Medical Corporation Misakikai |
|
The relatives of CEO of the Company being the Members of the MC |
General Incorporated Association Miotokai |
|
The relatives of CEO of the Company being the Members of the Medical Association |
SBC Co., Ltd., previously known as Harvier, Inc. |
|
Controlled by the CEO of the Company |
Skynet Academy Co., Ltd. |
|
Subsidiary of SBC Co., Ltd., previously known as Harvier, Inc. a company controlled by the CEO of the Company |
Japan Medical & Beauty Inc. |
|
Controlled by the CEO of the Company |
AI Med Inc. |
|
The CEO of the Company is a principal shareholder of AI Med Inc., and the Company’s Chief Strategy Officer serves as its representative director |
Co-medical Co., Ltd. |
|
The CEO of the Company is a principal shareholder of Co-medical Co., Ltd. |
SBC Inc. |
|
Controlled by the CEO of the Company |
SBC Shonan Osteopathic Clinic Inc. |
|
The CEO of the Company is a principal shareholder of SBC Shonan Osteopathic Clinic Inc. |
General Incorporated Association SBC |
|
The CEO of the Company being the Member of General Incorporated Association SBC |
Public Interest Foundation SBC Medical Promotion Foundation |
|
The relative of CEO of the Company being a Member of Public Interest Foundation SBC Medical Promotion Foundation |
SBC Tokyo Medical University |
|
The CEO of the Company is the chairman of SBC Tokyo Medical University |
SBC Irvine MC |
|
Significantly influenced by the Company |
MEDIROM Healthcare Technologies Inc. (“MEDIROM”) |
|
Fumitoshi Fujiwara, an independent director and Chairman of the Audit Committee of the Company, serves as a Director and Chief Financial Officer of MEDIROM, a company listed on Nasdaq. |
SBC Kijimadaira Resort Inc. |
|
Previously a subsidiary of SBC Inc., a company controlled by the CEO of the Company; Merged with and into SBC Inc. on July 1, 2025, and corporate existence ceased. |
NOTE 17 — RELATED PARTY TRANSACTIONS (cont.) During the three and six months ended June 30, 2026 and 2025, the transactions with related parties are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30, |
|
|
For the Six Months
Ended June 30, |
|
Revenues, net |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Medical Corporation Shobikai |
|
$ |
12,197,450 |
|
|
$ |
10,962,737 |
|
|
$ |
22,657,872 |
|
|
$ |
22,515,192 |
|
Medical Corporation Kowakai |
|
|
9,380,067 |
|
|
|
8,909,329 |
|
|
|
17,352,078 |
|
|
|
20,022,253 |
|
Medical Corporation Nasukai |
|
|
10,170,478 |
|
|
|
10,244,692 |
|
|
|
19,073,848 |
|
|
|
22,535,537 |
|
Medical Corporation Aikeikai |
|
|
3,416,683 |
|
|
|
3,646,228 |
|
|
|
6,516,096 |
|
|
|
7,288,931 |
|
Medical Corporation Jukeikai |
|
|
1,366,434 |
|
|
|
890,237 |
|
|
|
3,894,728 |
|
|
|
2,064,207 |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
1,114,270 |
|
|
|
1,044,588 |
|
|
|
1,887,820 |
|
|
|
2,558,211 |
|
Japan Medical & Beauty Inc. |
|
|
45,503 |
|
|
|
10,373 |
|
|
|
55,063 |
|
|
|
20,206 |
|
SBC Co., Ltd., previously known as Harvier, Inc. |
|
|
5,646 |
|
|
|
5,186 |
|
|
|
11,382 |
|
|
|
10,103 |
|
SBC Inc. |
|
|
6,388 |
|
|
|
206 |
|
|
|
6,655 |
|
|
|
314 |
|
Public Interest Foundation SBC Medical Promotion Foundation |
|
|
10 |
|
|
|
30 |
|
|
|
23 |
|
|
|
41 |
|
SBC Tokyo Medical University |
|
|
26,919 |
|
|
|
2,155 |
|
|
|
75,172 |
|
|
|
16,317 |
|
Yoshiyuki Aikawa |
|
|
— |
|
|
|
800 |
|
|
|
— |
|
|
|
29,987 |
|
AI Med Inc. |
|
|
— |
|
|
|
98 |
|
|
|
107 |
|
|
|
190 |
|
SBC Irvine MC |
|
|
— |
|
|
|
37,753 |
|
|
|
— |
|
|
|
239,538 |
|
Medical Corporation Association Furinkai |
|
|
3,070,393 |
|
|
|
2,304,254 |
|
|
|
5,728,400 |
|
|
|
4,938,946 |
|
Medical Corporation Association Junikai |
|
|
2,702,091 |
|
|
|
879,282 |
|
|
|
3,995,803 |
|
|
|
1,948,521 |
|
Skynet Academy Co., Ltd. |
|
|
6,274 |
|
|
|
6,915 |
|
|
|
12,647 |
|
|
|
13,471 |
|
SBC Kijimadaira Resort Inc. |
|
|
— |
|
|
|
35 |
|
|
|
— |
|
|
|
78 |
|
Medical Corporation Misakikai |
|
|
208,720 |
|
|
|
— |
|
|
|
390,353 |
|
|
|
— |
|
General Incorporated Association Miotokai |
|
|
14,868 |
|
|
|
— |
|
|
|
29,207 |
|
|
|
— |
|
Total |
|
$ |
43,732,194 |
|
|
$ |
38,944,898 |
|
|
$ |
81,687,254 |
|
|
$ |
84,202,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30, |
|
|
For the Six Months
Ended June 30, |
|
Cost of revenues |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Medical Corporation Nasukai |
|
$ |
— |
|
|
$ |
65,959 |
|
|
$ |
— |
|
|
$ |
65,959 |
|
Medical Corporation Aikeikai |
|
|
— |
|
|
|
3,742 |
|
|
|
— |
|
|
|
3,742 |
|
Japan Medical & Beauty Inc. |
|
|
138,593 |
|
|
|
4,502,380 |
|
|
|
262,982 |
|
|
|
7,801,736 |
|
SBC Tokyo Medical University |
|
|
— |
|
|
|
94,295 |
|
|
|
— |
|
|
|
183,689 |
|
SBC Inc. |
|
|
— |
|
|
|
3,226 |
|
|
|
— |
|
|
|
71,404 |
|
Total |
|
$ |
138,593 |
|
|
$ |
4,669,602 |
|
|
$ |
262,982 |
|
|
$ |
8,126,530 |
|
NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended June 30, |
|
|
For the Six Months
Ended June 30, |
|
Selling, general and administrative expenses |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Medical Corporation Shobikai |
|
$ |
93,286 |
|
|
$ |
354,930 |
|
|
$ |
217,222 |
|
|
$ |
354,930 |
|
Medical Corporation Kowakai |
|
|
19,792 |
|
|
|
3,697 |
|
|
|
26,947 |
|
|
|
3,697 |
|
Medical Corporation Nasukai |
|
|
3,283 |
|
|
|
15,178 |
|
|
|
5,119 |
|
|
|
15,178 |
|
Medical Corporation Aikeikai |
|
|
14,128 |
|
|
|
28,218 |
|
|
|
38,039 |
|
|
|
28,218 |
|
Medical Corporation Jukeikai |
|
|
— |
|
|
|
791 |
|
|
|
863 |
|
|
|
791 |
|
Medical Corporation Association Junikai |
|
|
— |
|
|
|
337 |
|
|
|
— |
|
|
|
337 |
|
Medical Corporation Association Furinkai |
|
|
— |
|
|
|
429 |
|
|
|
— |
|
|
|
429 |
|
SBC Inc. |
|
|
6,179 |
|
|
|
7 |
|
|
|
7,102 |
|
|
|
7 |
|
Japan Medical & Beauty Inc. |
|
|
2,962 |
|
|
|
— |
|
|
|
6,639 |
|
|
|
— |
|
SBC Tokyo Medical University |
|
|
85,548 |
|
|
|
— |
|
|
|
172,454 |
|
|
|
— |
|
General Incorporated Association SBC |
|
|
17,538 |
|
|
|
12,180 |
|
|
|
20,388 |
|
|
|
12,180 |
|
Co-medical Co., Ltd. |
|
|
5,657 |
|
|
|
— |
|
|
|
7,125 |
|
|
|
— |
|
Medical Corporation Misakikai |
|
|
93,137 |
|
|
|
— |
|
|
|
179,787 |
|
|
|
— |
|
Yoshiko Aikawa |
|
|
— |
|
|
|
— |
|
|
|
3,218 |
|
|
|
— |
|
Total |
|
$ |
341,510 |
|
|
$ |
415,767 |
|
|
$ |
684,903 |
|
|
$ |
415,767 |
|
As of June 30, 2026 and December 31, 2025, the balances with related parties are as follows:
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Medical Corporation Shobikai |
|
$ |
10,334,652 |
|
|
$ |
6,618,853 |
|
Medical Corporation Nasukai |
|
|
11,228,286 |
|
|
|
7,268,301 |
|
Medical Corporation Kowakai |
|
|
11,279,357 |
|
|
|
6,930,382 |
|
Medical Corporation Aikeikai |
|
|
3,353,695 |
|
|
|
2,938,667 |
|
Medical Corporation Jukeikai |
|
|
1,130,638 |
|
|
|
920,649 |
|
Medical Corporation Association Furinkai |
|
|
684,630 |
|
|
|
1,065,239 |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
1,165,338 |
|
|
|
978,614 |
|
Medical Corporation Association Junikai |
|
|
1,480,539 |
|
|
|
700,794 |
|
SBC Tokyo Medical University |
|
|
6,141 |
|
|
|
5,614 |
|
AI Med Inc. |
|
|
— |
|
|
|
33 |
|
SBC Inc. |
|
|
2,837 |
|
|
|
382 |
|
Public Interest Foundation SBC Medical Promotion Foundation |
|
|
26 |
|
|
|
30 |
|
General Incorporated Association SBC |
|
|
— |
|
|
|
5,171 |
|
Medical Corporation Misakikai |
|
|
77,442 |
|
|
|
73,734 |
|
General Incorporated Association Miotokai |
|
|
5,105 |
|
|
|
5,267 |
|
Total |
|
$ |
40,748,686 |
|
|
$ |
27,511,730 |
|
|
|
|
|
|
|
|
|
|
Short-term investments |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
MEDIROM Healthcare Technologies Inc. |
|
$ |
307,922 |
|
|
$ |
319,193 |
|
Total |
|
$ |
307,922 |
|
|
$ |
319,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, |
|
|
For the three Months Ended June 30, |
|
Interest Income |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
MEDIROM Healthcare Technologies Inc. |
|
$ |
3,465 |
|
|
$ |
— |
|
|
$ |
3,465 |
|
|
$ |
— |
|
Total |
|
$ |
3,465 |
|
|
$ |
— |
|
|
$ |
3,465 |
|
|
$ |
— |
|
In December 2025, the Company purchased unsecured convertible bonds issued by MEDIROM with a principal amount of JPY50,000,000, which are recorded as short-term investments - related parties. In June 2026, MEDIROM exercised its option to extend the maturity date of these bonds from June 30, 2026 to December 25, 2026, in accordance with the original terms. Consequently, the period for exercising the conversion rights was also extended to December 7, 2026. NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)
|
|
|
|
|
|
|
|
|
Finance lease receivables |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Medical Corporation Shobikai |
|
$ |
4,859,860 |
|
|
$ |
4,830,319 |
|
Medical Corporation Kowakai |
|
|
4,566,734 |
|
|
|
5,586,393 |
|
Medical Corporation Nasukai |
|
|
6,487,466 |
|
|
|
6,633,510 |
|
Medical Corporation Aikeikai |
|
|
1,766,974 |
|
|
|
2,206,227 |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
1,369,095 |
|
|
|
1,885,804 |
|
Medical Corporation Jukeikai |
|
|
2,013,596 |
|
|
|
953,857 |
|
Medical Corporation Association Furinkai |
|
|
1,549,640 |
|
|
|
1,432,106 |
|
Medical Corporation Association Junikai |
|
|
2,777,294 |
|
|
|
3,033,529 |
|
SBC Shonan Osteopathic Clinic Inc. |
|
|
8,899 |
|
|
|
17,123 |
|
Total |
|
|
25,399,558 |
|
|
|
26,578,868 |
|
Less: current portion |
|
|
(13,725,781 |
) |
|
|
(12,832,355 |
) |
Non-current portion |
|
$ |
11,673,777 |
|
|
$ |
13,746,513 |
|
|
|
|
|
|
|
|
|
|
Other receivables |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Medical Corporation Shobikai |
|
$ |
499,790 |
|
|
$ |
— |
|
Medical Corporation Kowakai |
|
|
386,284 |
|
|
|
— |
|
Medical Corporation Nasukai |
|
|
364,984 |
|
|
|
— |
|
Medical Corporation Aikeikai |
|
|
163,488 |
|
|
|
— |
|
Medical Corporation Jukeikai |
|
|
71,079 |
|
|
|
— |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
74,896 |
|
|
|
— |
|
Total |
|
$ |
1,560,521 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Due from related party, net |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
SBC Irvine MC |
|
$ |
— |
|
|
$ |
2,762,999 |
|
Less: allowance for credit loss |
|
|
— |
|
|
|
(2,762,999 |
) |
Total |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Long-term investments in MCs |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Medical Corporation Shobikai |
|
$ |
6,158 |
|
|
$ |
6,384 |
|
Medical Corporation Kowakai |
|
|
6,158 |
|
|
|
6,384 |
|
Medical Corporation Nasukai |
|
|
6,158 |
|
|
|
6,384 |
|
Medical Corporation Aikeikai |
|
|
6,158 |
|
|
|
6,384 |
|
Medical Corporation Jukeikai |
|
|
6,623,756 |
|
|
|
6,866,219 |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
10,559,026 |
|
|
|
10,945,538 |
|
Total |
|
$ |
17,207,414 |
|
|
$ |
17,837,293 |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Japan Medical & Beauty Inc. |
|
$ |
339,021 |
|
|
$ |
48,839 |
|
Medical Corporation Shobikai |
|
|
148,487 |
|
|
|
230,354 |
|
Medical Corporation Kowakai |
|
|
69,138 |
|
|
|
101,565 |
|
Medical Corporation Nasukai |
|
|
89,285 |
|
|
|
127,750 |
|
Medical Corporation Aikeikai |
|
|
41,826 |
|
|
|
57,068 |
|
Medical Corporation Jukeikai |
|
|
12,663 |
|
|
|
8,718 |
|
Medical Corporation Association Furinkai |
|
|
10,748 |
|
|
|
11,674 |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
5,486 |
|
|
|
10,462 |
|
General Incorporated Association SBC |
|
|
70,272 |
|
|
|
536 |
|
SBC Tokyo Medical University |
|
|
30,792 |
|
|
|
31,919 |
|
SBC Shonan Osteopathic Clinic Inc. |
|
|
526 |
|
|
|
958 |
|
Medical Corporation Misakikai |
|
|
32,762 |
|
|
|
21,620 |
|
Yoshiyuki Aikawa |
|
|
80,804 |
|
|
|
— |
|
Total |
|
$ |
931,810 |
|
|
$ |
651,463 |
|
NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)
|
|
|
|
|
|
|
|
|
Advances from customers |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Medical Corporation Shobikai |
|
$ |
1,089,290 |
|
|
$ |
1,712,820 |
|
Medical Corporation Kowakai |
|
|
748,119 |
|
|
|
1,145,776 |
|
Medical Corporation Nasukai |
|
|
715,815 |
|
|
|
1,098,435 |
|
Medical Corporation Aikeikai |
|
|
282,926 |
|
|
|
430,305 |
|
Medical Corporation Jukeikai |
|
|
399,176 |
|
|
|
100,808 |
|
Medical Corporation Ritz Cosmetic Surgery |
|
|
261,900 |
|
|
|
64,569 |
|
Medical Corporation Association Furinkai |
|
|
253,177 |
|
|
|
370,797 |
|
Medical Corporation Association Junikai |
|
|
243,447 |
|
|
|
433,711 |
|
Total |
|
$ |
3,993,850 |
|
|
$ |
5,357,221 |
|
|
|
|
|
|
|
|
|
|
Due to related party |
|
June 30,
2026 |
|
|
December 31,
2025 |
|
Yoshiyuki Aikawa |
|
$ |
— |
|
|
$ |
2,692,673 |
|
Total |
|
$ |
— |
|
|
$ |
2,692,673 |
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended June 30, |
|
Allowance for credit loss movement |
|
2026 |
|
|
2025 |
|
Beginning balance |
|
$ |
2,762,999 |
|
|
$ |
2,836,013 |
|
Provision for credit loss |
|
|
— |
|
|
|
— |
|
Reversal of credit loss |
|
|
— |
|
|
|
(70,000 |
) |
Write-off |
|
|
(2,762,999 |
) |
|
|
— |
|
Ending balance |
|
$ |
— |
|
|
$ |
2,766,013 |
|
The balances of due to and due from related parties represent outstanding loans from and to related parties, respectively, as of June 30, 2026 and December 31, 2025. These loans are unsecured, interest-free and due on demand. The Company paid officer compensation of approximately JPY20 million per month to Yoshiko Aikawa, the mother of the Company’s CEO, which was recorded in selling, general and administrative expenses. Such compensation amounted to $376,414 and $414,898 for the three months ended June 30, 2026 and 2025, respectively, and $758,799 and $808,233 for the six months ended June 30, 2026 and 2025, respectively. Ms. Aikawa served as the Representative Director of the Company’s principal operating subsidiary, SBC Medical Group Co., Ltd. (SBC Japan), until March 25, 2026. On that date, she resigned from her position as Representative Director and continues to serve as a director of the subsidiary. Also see Note 2(a), 3, 9, 12, 13, 16 and 19 for more transactions with related parties.
|