| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation and Principles of Consolidation The
financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting
Principles of the United States (“U.S. GAAP”). The
accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation. There
were 3 subsidiaries as of September 30, 2024 and March 31, 2024, respectively, which have different fiscal year-ends from that of the
Company. These subsidiaries were consolidated based on their respective year end. Adjustments were made for the effects of significant
intragroup transactions caused by different fiscal year-ends and the remaining impacts would not be material. The
unaudited interim consolidated financial statements do not include all of the information and disclosure required by the U.S. GAAP for
complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management,
all adjustments consisting of normal recurring nature considered necessary for a fair presentation of the financial position and the
results of operations and cash flows for the interim periods have been included. The unaudited interim consolidated financial statements
should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended March 31,
2024. Use
of Estimates The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for
certain expenses during the reporting period. Significant estimates and assumptions are reflected in valuation and disclosure of accounts
including: impairment of long-lived assets and recoverability of deferred taxes. Actual results could differ from these good faith estimates
and judgments. Cash
and Cash Equivalents Cash
and cash equivalents include cash on hand and deposits in banks that are unrestricted as to withdrawal or use. All highly liquid investments
acquired with original maturities of three months or less are considered to be cash equivalents. Short-Term
Investments Short-term
investments represent cash pledged to financial institutions as collateral for the Company’s bank loans, and term deposits placed
with financial institutions with original maturities of greater than three months. Short-term investments are not available for withdrawal
or the Company’s general use until after the corresponding bank loans are repaid, or the term deposits mature. Short-term investments
are classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective
agreements. Trade
Notes and Accounts Receivable Accounts
receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due). The Group’s accounts receivable balances are unsecured, bear no interest
and are due upon normally within a year from the date of the sale. Allowance for credit losses for accounts receivable is maintained
for all customers based on Accounting Standards Codification (ASC) 326 “Financial Instruments—Credit Losses,” based
on historical experiences of credit losses and reasonable and supportable forecasts. An additional reserve for individual accounts is
recorded when the Group becomes aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy
filings. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. When
all collection options are exhausted including legal recourse, the accounts or portions thereof are deemed to be uncollectable and charged
against the allowance. Inventories Inventories
consist of real estate inventories, raw entitled land, construction in process, including capitalized interest and housing equipment
and material. Estimates of the lower of cost and net realizable value of inventory are determined
by comparing the actual cost of the inventory to the estimated selling prices in the ordinary course of business based on current market
and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory. The
cost basis of the real estate inventories includes all direct acquisition costs including but not limited to the property purchase price,
acquisition costs, construction costs, development costs, capitalized interest, capitalized real estate taxes and other costs. Interests
and real estate taxes are not capitalized unless active development or construction is underway. When acquiring real estate with existing
buildings, we allocate the purchase price between land and building based on their relative fair values. Property,
Plant and Equipment Property,
Plant and Equipment are stated at cost less accumulated depreciation. SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
ARE STATED AT COST LESS ACCUMULATED DEPRECIATION
Useful
life Depreciation
method
Buildings 8 47 Straight-line
method
Leasehold
improvements 6 27 Straight-line
method
Vehicles 2 Straight-line
method
Tool,
furniture and fixtures 3 15
Straight-line
method
Land Indefinite
- Maintenance
and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. Construction in progress is not depreciated
until ready for service. At the time of retirement or other disposition of property, plant and equipment, the cost and accumulated depreciation
are removed from the accounts and any gains or losses are reflected in income. The
long-lived assets of the Group are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment”
(“ASC No. 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted
cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were recorded during
the six months ended September 30, 2024 and 2023. Fair
Value The
Company performs fair value measurements in accordance with ASC Topic 820, “ Fair Value Measurement.
● Level
1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;
● Level
2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace
for identical or similar assets and liabilities; and
● Level
3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. Revenue
Recognition The
Group accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core
principle of ASC 606 is that the Group recognizes revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The ASC 606 revenue
recognition model consists of the following five steps:
(1) identify
the contracts with a customer,
(2) identify
the performance obligations in the contract,
(3) determine
the transaction price,
(4) allocate
the transaction price to the performance obligations in the contract and
(5) recognize
revenue when (or as) the entity satisfies a performance obligation. In
order for an arrangement to be considered a contract, it must be probable that the Group will collect the consideration to which it is
entitled for goods or services to be transferred. Once the contract is determined to be within the scope of ASC 606, the Group assesses
the goods or services promised with each contract, determines whether those are performance obligations and the related transaction price.
The Group then recognizes the sale of goods based on the transaction price that is allocated to the respective performance obligation
when the performance obligation is satisfied. The
Company recognizes revenue from rental services under ASC Topic 842, “Leases.” The
Group recognizes revenue from sales of real estate properties, provision of hotel accommodation services, and sales of housing equipment
and material sales. Revenue
from sales of real estate properties Revenue
from the sales of real estate properties is recognized at the point in time when title to and possession
of the property has transferred to the customer and the Group has no continuing involvement with the property, which is generally upon
the delivery of the real estate properties, which generally coincides with the receipt of cash consideration from the customer. Our contracts
with customers contain a single performance obligation. Revenue
from hotel accommodation services Revenue
from hotel accommodation services is recognized during the period when services are rendered. Housing
equipment and material sales Housing
equipment and material sales are recognized at the point in time when the goods are delivered to the customer. The
Group’s revenue is presented net of consumption tax collected on behalf of governments. Leases The
Group determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains
a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for
consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic
benefits from the use of the asset and the right to direct the use of the asset. We
classify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases
if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct
financing lease (as a lessor): (i)
ownership is transferred from lessor to lessee by the end of the lease term; (ii)
an option to purchase is reasonably certain to be exercised; (iii)
the lease term is for the major part of the underlying asset’s remaining economic life; (iv)
the present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or (v)
the underlying asset is specialized and is expected to have no alternative use at the end of the lease term. If
we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet
any of the criteria, we account for the lease as an operating lease. Lessee
accounting The
Group recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as the
Group has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Group’s right to use an
underlying asset for the lease term. Lease liabilities represent the Group’s obligation to make lease payments arising from the
lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities
are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement
of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received;
and (iii) initial direct costs incurred by the Group. As
the rates implicit on the Group’s leases for which it is the lessee are not readily determinable, the Group uses its incremental
borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining
the incremental borrowing rate, the Group assesses multiple variables such as lease term, collateral, economic conditions, and its creditworthiness. Lessor
accounting The
Group accounts for the revenue from its lease contracts by utilizing the single component accounting policy. This policy requires the
Group to account for, by class of underlying asset, the lease component and non-lease component(s) associated with each lease as a single
component if two criteria are met: (i)
the timing and pattern of transfer of the lease component and the non-lease component(s) are the same; and (ii)
the lease component would be classified as an operating lease if it were accounted for separately. Lease
components consist primarily of fixed rental payments, which represent scheduled rental amounts due under the Group’s leases. Non-lease
components consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for
repairs, maintenance, and common area expenses. If
the lease component is the predominant component, the Group accounts for all revenue under such lease as a single component in accordance
with the lease accounting standard. Conversely, if the non-lease component is the predominant component, all revenue under such lease
is accounted for in accordance with the revenue recognition accounting standard. The Group’s operating leases qualify for the single
component accounting, and the lease component in each of its leases is predominant. Therefore, the Group accounts for all revenue from
its operating leases under the lease accounting standard and classify the revenue as lease income. The
Group commences recognition of lease income related to the operating leases at the date the property is ready for its intended use by
the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from leases related to fixed rental
payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently
but recognized as revenue in future periods are classified in deferred revenue in its consolidated balance sheets. Advertising
Expenses The
Group expenses advertising costs as they incurred. Total advertising expenses were ¥ 36,619 47,321 Concentration
of Credit Risk and Significant Vendors Financial
instruments that potentially subject the Group to credit risk consist primarily of trade notes and accounts receivable, net. The Group
does not require collateral or other security to support these receivables. The Group conducts periodic reviews of the financial condition
and payment practices of its customers to minimize collection risk on accounts receivable. Customers For
the six months ended September 30, 2024 and 2023, customers accounting for 10% or more of the Group’s total revenue was as follows: SCHEDULES
OF CONCENTRATION OF RISK BY RISK FACTOR
For
the Six Months Ended September
30,
2024 2023
Customer A 13 % - *%
* Less
than 10% As
of September 30, 2024 and March 31, 2024, customers accounting for 10% or more of the Group’s total current outstanding trade notes
and accounts receivable were as follows:
September 30, March 31,
Customer B 10 % - *%
Customer C - *% 27 %
Customer D - *% 12 %
* Less
than 10% Suppliers For
the six months ended September 30, 2024 and 2023, suppliers accounted for 10% or more of the Group’s total purchases.
For
the Six Months Ended September
30,
2024 2023
Supplier A - *% 20 %
Supplier B - *% 17 %
* Less
than 10% As
of September 30, 2024 and March 31, 2024, suppliers accounted for 10% or more of the Group’s total current outstanding accounts
payable – trade were as follows:
September 30, March 31,
Supplier C - *% 14 %
Supplier D 30 % - *% Income
Taxes Under
FASB ASC 740, “ Income Taxes, The
Group recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that
the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the more-likely-than-not
recognition threshold are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.
Interest and penalties accrued related to unrecognized tax benefits are included in income taxes in the consolidated statements of operations
and comprehensive income. Foreign
Currency Translation and Re-measurement The
functional currency of the Company and the Japanese subsidiaries are the Japanese Yen (“JPY”). The functional currency of
the Company’s subsidiaries, Propolife Vietnam Co., Ltd. and LogKnot Vietnam Co., Ltd. are the Vietnamese dong. The functional currency
of the Company’s subsidiaries, Yantai Propolife Wood Industry Co., Ltd. is the Chinese yuan. Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements
of income and comprehensive income. The
reporting currency of the Group is the JPY, and the accompanying consolidated financial statements have been expressed in JPY. In accordance
with ASC Topic 830-30, “Translation of Financial Statements,” assets and liabilities of the Group whose functional currency
is not JPY are translated into JPY, using the exchange rate on the balance sheet date. Revenue and expenses are translated at average
rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate
component of accumulated other comprehensive income (loss) within the consolidated statements of shareholders’ equity. Segments ASC
280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making
operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management disaggregates a company. The
Group has three reportable segments: Real estate segment, Hotel segment and other segment, which are based on the Group’s organizational
structure and characteristics of products and services. Operating segments are defined as the components of the Group for which separate
financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources
and in assessing performance. The Company’s chief operating decision maker primarily evaluates performance based on financial results.
The accounting policies used for these reportable segments are consistent with the accounting policies used in the Group’s consolidated
financial statements. Comprehensive
Income or Loss ASC
Topic 220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income or loss, its components
and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Net
Income Per Share Basic
net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting
period. Diluted net income per share reflects the potential dilution that could occur if stock options and other commitments to issue
common shares were exercised or equity awards vest resulting in the issuance of common shares that could share in the net income of the
Group. Related
Parties and Transactions The
Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related
Party Disclosures” and other relevant ASC standards. Parties,
which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company
or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be
related if they are subject to common control or common significant influence. Transactions
involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive,
free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related
party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations
can be substantiated. Recently
Issued Accounting Pronouncements In
November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements
to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through
enhanced disclosures about significant segment expenses. ASU No. 2023-09 is effective for public companies for annual reporting periods
beginning after December 15, 2023, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact
of this ASU on its consolidated financial statements and related disclosures. In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency
and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU
No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis.
For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early
adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related
disclosures. | NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation and Principles of Consolidation The
financial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting
Principles of the United States. The
accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation. There
are 3 subsidiaries as of March 31, 2024 and 2023, respectively, which have different fiscal year-ends from that of the Company. These
subsidiaries were consolidated based on the respective year end. Adjustments were made for the effects of significant intragroup transactions
caused by different fiscal year-ends and the remaining impacts would not be material. Use
of Estimates The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for
certain expenses during the reporting period. Significant estimates and assumptions are reflected in valuation and disclosure of accounts
including: impairment of long-lived assets and recoverability of deferred taxes. Actual results could differ from these good faith estimates
and judgments. Cash
and Cash Equivalents Cash
and cash equivalents include cash on hand and deposits in banks that are unrestricted as to withdrawal or use. All highly liquid investments
acquired with original maturities of three months or less are considered to be cash equivalents. Short-Term
Investments Short-term
investments represent cash pledged to financial institutions as collateral for the Company’s bank loans, and term deposits placed
with financial institutions with original maturities of greater than three months. Short-term investments are not available for withdrawal
or the Company’s general use until after the corresponding bank loans are repaid, or the term deposits mature. Short-term investments
are classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective
agreements. Trade
Notes and Accounts Receivable Accounts
receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due). The Group’s accounts receivable balances are unsecured, bear no interest
and are due upon normally within a year from the date of the sale. Allowance for credit losses for accounts receivable is maintained
for all customers based on Accounting Standards Codification (ASC) 326 “Financial Instruments—Credit Losses”, based
on historical experiences of credit losses and reasonable and supportable forecasts. An additional reserve for individual accounts is
recorded when the Group becomes aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy
filings. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. When
all collection options are exhausted including legal recourse, the accounts or portions thereof are deemed to be uncollectable and charged
against the allowance. Inventories Inventories
consist of real estate inventories, raw entitled land, construction in process, including capitalized interest and housing equipment
and material. Estimates of the lower of cost and net realizable value of inventory are determined
by comparing the actual cost of the inventory to the estimated selling prices in the ordinary course of business based on current market
and economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory. The
cost basis of the real estate inventories includes all direct acquisition costs including but not limited to the property purchase price,
acquisition costs, construction costs, development costs, capitalized interest, capitalized real estate taxes and other costs. Interests
and real estate taxes are not capitalized unless active development or construction is underway. When acquiring real estate with existing
buildings, we allocate the purchase price between land and building based on their relative fair values. Property,
Plant and Equipment Property,
Plant and Equipment are stated at cost less accumulated depreciation. SCHEDULE
OF PROPERTY, PLANT AND EQUIPMENT ARE STATED AT COST LESS ACCUMULATED DEPRECIATION
Useful
life Depreciation
method
Buildings 6 47
years Straight-line
method
Leasehold
improvements 6 18
years Straight-line
method
Vehicles 2
years Straight-line
method
Tool,
furniture and fixtures 3 15
years Straight-line
method
Land Indefinite
- Maintenance
and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. Construction in progress is not depreciated
until ready for service. At the time of retirement or other disposition of property, plant and equipment, the cost and accumulated depreciation
are removed from the accounts and any gains or losses are reflected in income. The
long-lived assets of the Group are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment”
(“ASC No. 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted
cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were recorded during
the years ended March 31, 2024 and 2023. Fair
Value The
Company performs fair value measurements in accordance with ASC Topic 820, “ Fair Value Measurement
● Level
1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;
● Level
2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace
for identical or similar assets and liabilities; and
● Level
3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. Revenue
Recognition The
Group accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core
principle of ASC 606 is that the Group recognizes revenue to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services. The ASC 606 revenue
recognition model consists of the following five steps:
(1) identify
the contracts with a customer,
(2) identify
the performance obligations in the contract,
(3) determine
the transaction price,
(4) allocate
the transaction price to the performance obligations in the contract and
(5) recognize
revenue when (or as) the entity satisfies a performance obligation. In
order for an arrangement to be considered a contract, it must be probable that the Group will collect the consideration to which it is
entitled for goods or services to be transferred. Once the contract is determined to be within the scope of ASC 606, the Group assesses
the goods or services promised with each contract, determines whether those are performance obligations and the related transaction price.
The Group then recognizes the sale of goods based on the transaction price that is allocated to the respective performance obligation
when the performance obligation is satisfied. The
Company recognizes revenue from rental services under ASC Topic 842, “Leases”. The
Group recognizes revenue from sales of real estate properties, provision of hotel accommodation services, and sales of housing equipment
and material sales. Revenue
from sales of real estate properties Revenue
from the sales of real estate properties is title to and possession of the property has transferred to
the customer and the Group has no continuing involvement with the property, which is generally upon the delivery of the real estate properties,
which generally coincides with the receipt of cash consideration from the customer. Our contracts with customers contain a single performance
obligation. Revenue
from hotel accommodation services Revenue
from hotel accommodation services is Housing
equipment and material sales Housing
equipment and material sales are recognized at the point in time when the goods are delivered to the customer. The
Group’s revenue is Leases The
Group determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains
a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for
consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic
benefits from the use of the asset and the right to direct the use of the asset. We
classify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases
if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct
financing lease (as a lessor): (i)
ownership is transferred from lessor to lessee by the end of the lease term; (ii)
an option to purchase is reasonably certain to be exercised; (iii)
the lease term is for the major part of the underlying asset’s remaining economic life; (iv)
the present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or (v)
the underlying asset is specialized and is expected to have no alternative use at the end of the lease term. If
we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet
any of the criteria, we account for the lease as an operating lease. Lessee
accounting The
Group recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as the
Group has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Group’s right to use an
underlying asset for the lease term. Lease liabilities represent the Group’s obligation to make lease payments arising from the
lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities
are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement
of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received;
and (iii) initial direct costs incurred by the Group. As
the rates implicit on the Group’s leases for which it is the lessee are not readily determinable, the Group uses its incremental
borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining
the incremental borrowing rate, the Group assesses multiple variables such as lease term, collateral, economic conditions, and its creditworthiness. Lessor
accounting The
Group accounts for the revenue from its lease contracts by utilizing the single component accounting policy. This policy requires the
Group to account for, by class of underlying asset, the lease component and non-lease component(s) associated with each lease as a single
component if two criteria are met: (i)
the timing and pattern of transfer of the lease component and the non-lease component(s) are the same; and (ii)
the lease component would be classified as an operating lease if it were accounted for separately. Lease
components consist primarily of fixed rental payments, which represent scheduled rental amounts due under the Group’s leases. Non-lease
components consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for
repairs, maintenance, and common area expenses. If
the lease component is the predominant component, the Group accounts for all revenue under such lease as a single component in accordance
with the lease accounting standard. Conversely, if the non-lease component is the predominant component, all revenue under such lease
is accounted for in accordance with the revenue recognition accounting standard. The Group’s operating leases qualify for the single
component accounting, and the lease component in each of its leases is predominant. Therefore, the Group accounts for all revenue from
its operating leases under the lease accounting standard and classify the revenue as lease income. The
Group commences recognition of lease income related to the operating leases at the date the property is ready for its intended use by
the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from leases related to fixed rental
payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently
but recognized as revenue in future periods are classified in deferred revenue in its consolidated balance sheets. Advertising
Expenses The
Group expenses advertising costs as they incurred. Total advertising expenses were ¥ 108,289 126,528 Concentration
of Credit Risk and Significant Vendors Financial
instruments that potentially subject the Group to credit risk consist primarily of trade notes and accounts receivable, net. The Group
does not require collateral or other security to support these receivables. The Group conducts periodic reviews of the financial condition
and payment practices of its customers to minimize collection risk on accounts receivable. Customers For
the years ended March 31, 2024 and 2023, customers accounting for 10% or more of the Group’s total revenue SCHEDULES
OF CONCENTRATION OF RISK BY RISK FACTOR
For
the Years Ended March 31,
2024 2023
Customer A - * 13 %
* Less than 10% As
of March 31, 2024 and 2023, customers accounting for 10% or more of the Group’s total current outstanding trade notes and accounts
receivable were as follows:
March
31, 2024 March
31, 2023
Customer B 27 % 22 %
Customer C 12 % -
* Less than 10% Suppliers For
the years ended March 31, 2024 and 2023, suppliers accounted for 10% or more of the Group’s total purchases.
For
the Years Ended March 31,
2024 2023
Supplier A - 25 %
* Less than 10% As
of March 31, 2024 and 2023, suppliers accounted for 10% or more of the Group’s total current outstanding accounts payable –
trade were as follows:
March
31, 2024 March
31, 2023
Supplier B 14 % - Income
Taxes Under
FASB ASC 740, “ Income Taxes The
Group recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that
the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the more-likely-than-not
recognition threshold are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.
Interest and penalties accrued related to unrecognized tax benefits are included in income taxes in the consolidated statements of operations
and comprehensive income. Foreign
Currency Translation and Re-measurement The
functional currency of the Company and the Japanese subsidiaries are the Japanese Yen (“JPY”). The functional currency of
the Company’s subsidiaries, Propolife Vietnam Co., Ltd. and LogKnot Vietnam Co., Ltd. are the Vietnamese dong. The functional currency
of the Company’s subsidiaries, Yantai Propolife Wood Industry Co., Ltd. is the Chinese yuan. Transactions denominated in currencies
other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements
of income and comprehensive income. The
reporting currency of the Group is the JPY, and the accompanying consolidated financial statements have been expressed in JPY. In accordance
with ASC Topic 830-30, “Translation of Financial Statements”, assets and liabilities of the Group whose functional currency
is not JPY are translated into JPY, using the exchange rate on the balance sheet date. Revenue Segments ASC
280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making
operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management disaggregates a company. The
Group has three reportable segments: Real estate segment, Hotel segment and other segment, which are based on the Group’s organizational
structure and characteristics of products and services. Operating segments are defined as the components of the Group for which separate
financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources
and in assessing performance. The Company’s CODMs primarily evaluate performance based on financial results. The accounting policies
used for these reportable segments are consistent with the accounting policies used in the Group’s consolidated financial statements. Comprehensive
Income or Loss ASC
Topic 220, “Comprehensive Income,” establishes standards for reporting and display of comprehensive income or loss, its components
and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Net
Income Per Share Basic
net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting
period. Diluted net income per share reflects the potential dilution that could occur if stock options and other commitments to issue
common shares were exercised or equity awards vest resulting in the issuance of common shares that could share in the net income of the
Group. Related
Parties and Transactions The
Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, “Related
Party Disclosures” and other relevant ASC standards. Parties,
which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company
or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be
related if they are subject to common control or common significant influence. Transactions
involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive,
free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related
party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations
can be substantiated. Recently
Issued Accounting Pronouncements In
November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements
to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through
enhanced disclosures about significant segment expenses. ASU No. 2023-09 is effective for public companies for annual reporting periods
beginning after December 15, 2023, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact
of this ASU on its consolidated financial statements and related disclosures. In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency
and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU
No. 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective basis.
For all other entities, it is effective for annual reporting periods beginning after December 15, 2025, on a prospective basis. Early
adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related
disclosures. |
