Full Press Release Details
MEDICAL GROUP HOLDINGS INCORPORATED
TO FINANCIAL STATEMENTS
| Page | ||
| Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited) | F-2 | |
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023 (Unaudited) | F-4 | |
| Consolidated Statements of Changes in Stockholder's Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited) | F-5 | |
| Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited) | F-6 | |
| Notes to Unaudited Consolidated Financial Statements | F-8 |
MEDICAL GROUP HOLDINGS INCORPORATED
UNAUDITED CONSOLIDATED BALANCE SHEETS
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 103,702,770 | $ | 103,022,932 | ||||
| Accounts receivable | 2,315,948 | 1,437,077 | ||||||
| Accounts receivable - related parties | 23,857,674 | 33,676,672 | ||||||
| Inventories | 1,947,005 | 3,090,923 | ||||||
| Finance lease receivables, current - related parties | 6,598,828 | 6,143,564 | ||||||
| Customer loans receivable, current | 14,525,297 | 8,484,753 | ||||||
| Other receivables - related party | 5,245,990 | - | ||||||
| Prepaid expenses and other current assets | 11,526,931 | 10,050,005 | ||||||
| Total current assets | 169,720,443 | 165,905,926 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 11,879,132 | 13,582,017 | ||||||
| Intangible assets, net | 14,828,253 | 19,739,276 | ||||||
| Long-term investments | 4,635,304 | 849,434 | ||||||
| Goodwill, net | 3,148,091 | 3,590,791 | ||||||
| Finance lease receivables, non-current - related parties | 3,450,699 | 3,420,489 | ||||||
| Operating lease right-of-use assets | 4,614,597 | 5,919,937 | ||||||
| Deferred tax assets | 868,604 | - | ||||||
| Customer loans receivable, non-current | 6,664,910 | 6,444,025 | ||||||
| Long-term prepayments | 3,633,491 | 4,099,763 | ||||||
| Long-term investments in MCs - related parties | 17,369,040 | 19,811,555 | ||||||
| Other assets | 14,433,783 | 15,442,058 | ||||||
| Total non-current assets | 85,525,904 | 92,899,345 | ||||||
| Total assets | $ | 255,246,347 | $ | 258,805,271 | ||||
| LIABILITIES AND STOCKHOLDER'S EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 14,602,870 | $ | 26,531,944 | ||||
| Current portion of long-term loans | 112,042 | 156,217 | ||||||
| Notes payable, current - related parties | 9,672,886 | 3,369,203 | ||||||
| Advances from customers | 1,103,522 | 2,074,457 | ||||||
| Advances from customers - related parties | 15,803,809 | 23,058,175 | ||||||
| Income tax payable | 12,773,567 | 8,782,930 | ||||||
| Operating lease liabilities, current | 3,449,126 | 3,885,812 | ||||||
| Accrued liabilities and other current liabilities | 14,022,067 | 21,009,009 | ||||||
| Due to related party | 3,469,183 | 3,583,523 | ||||||
| Total current liabilities | 75,009,072 | 92,451,270 |
MEDICAL GROUP HOLDINGS INCORPORATED
UNAUDITED CONSOLIDATED BALANCE SHEETS - (Continued)
| June 30, 2024 | December 31, 2023 | |||||||
| Non-current liabilities: | ||||||||
| Long-term loans | 646,878 | 1,062,722 | ||||||
| Notes payable, non-current - related parties | 14,147,360 | 11,948,219 | ||||||
| Deferred tax liabilities | 2,316,808 | 6,013,565 | ||||||
| Operating lease liabilities, non-current | 1,454,794 | 2,444,316 | ||||||
| Other liabilities | 1,015,841 | 1,074,930 | ||||||
| Total non-current liabilities | 19,581,681 | 22,543,752 | ||||||
| Total liabilities | 94,590,753 | 114,995,022 | ||||||
| Stockholder's equity: | ||||||||
| Preferred stock ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of June 30, 2024 and December 31, 2023) | - | - | ||||||
| Common stock ($0.0001 par value, 200,000,000 shares authorized, 7,949,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023) | 795 | 795 | ||||||
| Additional paid-in capital | 36,887,905 | 36,887,905 | ||||||
| Retained earnings | 180,090,892 | 142,848,732 | ||||||
| Accumulated other comprehensive loss | (56,683,275 | ) | (37,578,255 | ) | ||||
| Total SBC Medical Group Holdings Incorporated's stockholder's equity | 160,296,317 | 142,159,177 | ||||||
| Non-controlling interests | 359,277 | 1,651,072 | ||||||
| Total stockholder's equity | 160,655,594 | 143,810,249 | ||||||
| Total liabilities and stockholder's equity | $ | 255,246,347 | $ | 258,805,271 |
accompanying notes are an integral part of these unaudited consolidated financial statements.
MEDICAL GROUP HOLDINGS INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues, net - related parties | $ | 51,039,038 | $ | 39,238,104 | $ | 101,509,245 | $ | 80,216,944 | ||||||||
| Revenues, net | 2,063,042 | 1,763,322 | 6,400,877 | 3,697,100 | ||||||||||||
| Total revenues, net | 53,102,080 | 41,001,426 | 107,910,122 | 83,914,044 | ||||||||||||
| Cost of revenues | 13,682,405 | 9,078,576 | 28,971,072 | 23,475,757 | ||||||||||||
| Gross profit | 39,419,675 | 31,922,850 | 78,939,050 | 60,438,287 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 12,129,115 | 16,192,346 | 27,187,605 | 33,438,520 | ||||||||||||
| Misappropriation loss | - | 160,198 | - | 352,250 | ||||||||||||
| Total operating expenses | 12,129,115 | 16,352,544 | 27,187,605 | 33,790,770 | ||||||||||||
| Income from operations | 27,290,560 | 15,570,306 | 51,751,445 | 26,647,517 | ||||||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income | 11,644 | 10,610 | 29,333 | 76,111 | ||||||||||||
| Interest expense | (7,424 | ) | (25,508 | ) | (10,432 | ) | (33,402 | ) | ||||||||
| Other income | 306,291 | 1,272,763 | 655,972 | 2,736,854 | ||||||||||||
| Other expenses | (514,636 | ) | (158,600 | ) | (1,951,292 | ) | (482,925 | ) | ||||||||
| Gain on disposal of subsidiary | - | - | 3,813,609 | - | ||||||||||||
| Total other income (expenses) | (204,125 | ) | 1,099,265 | 2,537,190 | 2,296,638 | |||||||||||
| Income before income taxes | 27,086,435 | 16,669,571 | 54,288,635 | 28,944,155 | ||||||||||||
| Income tax expense | 8,529,110 | 6,814,289 | 16,981,094 | 12,670,982 | ||||||||||||
| Net income | 18,557,325 | 9,855,282 | 37,307,541 | 16,273,173 | ||||||||||||
| Less: net income (loss) attributable to non-controlling interests | 72,917 | (813,640 | ) | 65,381 | (398,189 | ) | ||||||||||
| Net income attributable to SBC Medical Group Holdings Incorporated | $ | 18,484,408 | $ | 10,668,922 | $ | 37,242,160 | $ | 16,671,362 | ||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustment | $ | (9,046,549 | ) | $ | (7,878,633 | ) | $ | (19,240,401 | ) | $ | (18,850,973 | ) | ||||
| Unrealized gain on available-for-sale debt security, net of tax effect of nil and $86,150 for the three months ended June 30, 2024 and 2023, respectively; nil and $101,725 for the six months ended June 30, 2024 and 2023, respectively | - | 166,561 | - | 196,623 | ||||||||||||
| Total comprehensive income (loss) | 9,510,776 | 2,143,210 | 18,067,140 | (2,381,177 | ) | |||||||||||
| Less: comprehensive income (loss) attributable to non-controlling interests | 22,000 | (1,130,375 | ) | (70,000 | ) | (741,527 | ) | |||||||||
| Comprehensive income (loss) attributable to SBC Medical Group Holdings Incorporated | $ | 9,488,776 | $ | 3,273,585 | $ | 18,137,140 | $ | (1,639,650 | ) | |||||||
| Net income per share attributable to SBC Medical Group Holdings Incorporated* | ||||||||||||||||
| Basic and diluted | $ | 2.33 | $ | 1.34 | $ | 4.69 | $ | 2.10 | ||||||||
| Weighted average shares outstanding* | ||||||||||||||||
| Basic and diluted | 7,949,000 | 7,949,000 | 7,949,000 | 7,949,000 |
accompanying notes are an integral part of these unaudited consolidated financial statements.
MEDICAL GROUP HOLDINGS INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
| Common Stock | Accumulated | Total SBC Medical Group Holdings | ||||||||||||||||||||||||||||||
| Number | Amount | Additional Paid-in Capital | Retained Earnings | Other Comprehensive Loss | Incorporated's Stockholder's Equity | Non- controlling Interests | Total Stockholder's Equity | |||||||||||||||||||||||||
| Balance as of December 31, 2023 | 7,949,000 | $ | 795 | $ | 36,887,905 | $ | 142,848,732 | $ | (37,578,255 | ) | $ | 142,159,177 | $ | 1,651,072 | $ | 143,810,249 | ||||||||||||||||
| Disposal of subsidiary | - | - | - | - | - | - | (1,221,795 | ) | (1,221,795 | ) | ||||||||||||||||||||||
| Net income (loss) | - | - | - | 18,757,752 | - | 18,757,752 | (7,536 | ) | 18,750,216 | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (10,109,388 | ) | (10,109,388 | ) | (84,464 | ) | (10,193,852 | ) | ||||||||||||||||||||
| Balance as of March 31, 2024 | 7,949,000 | 795 | 36,887,905 | 161,606,484 | (47,687,643 | ) | 150,807,541 | 337,277 | 151,144,818 | |||||||||||||||||||||||
| Net income | - | - | - | 18,484,408 | - | 18,484,408 | 72,917 | 18,557,325 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (8,995,632 | ) | (8,995,632 | ) | (50,917 | ) | (9,046,549 | ) | ||||||||||||||||||||
| Balance as of June 30, 2024 | 7,949,000 | $ | 795 | $ | 36,887,905 | $ | 180,090,892 | $ | (56,683,275 | ) | $ | 160,296,317 | $ | 359,277 | $ | 160,655,594 |
| Common Stock* | Accumulated | Total SBC Medical Group Holdings | ||||||||||||||||||||||||||||||
| Number | Amount | Additional Paid-in Capital* | Retained Earnings | Other Comprehensive Loss | Incorporated's Stockholder's Equity | Non- controlling Interests | Total Stockholder's Equity | |||||||||||||||||||||||||
| Balance as of December 31, 2022 | 1 | $ | - | $ | 26,624,694 | $ | 103,478,696 | $ | (24,853,275 | ) | $ | 105,250,115 | $ | 2,599,968 | $ | 107,850,083 | ||||||||||||||||
| Issuance of common stock | 1,000 | - | 10 | - | - | 10 | - | 10 | ||||||||||||||||||||||||
| Net income | - | - | - | 6,002,440 | - | 6,002,440 | 415,451 | 6,417,891 | ||||||||||||||||||||||||
| Unrealized gain on available-for-sale debt security, net of tax effect of $15,575 | - | - | - | - | 30,062 | 30,062 | - | 30,062 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (10,945,737 | ) | (10,945,737 | ) | (26,603 | ) | (10,972,340 | ) | ||||||||||||||||||||
| Balance as of March 31, 2023 | 1,001 | - | 26,624,704 | 109,481,136 | (35,768,950 | ) | 100,336,890 | 2,988,816 | 103,325,706 | |||||||||||||||||||||||
| Net income (loss) | - | - | - | 10,668,922 | - | 10,668,922 | (813,640 | ) | 9,855,282 | |||||||||||||||||||||||
| Unrealized gain on available-for-sale debt security, net of tax effect of $86,150 | - | - | - | - | 166,561 | 166,561 | - | 166,561 | ||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (7,561,898 | ) | (7,561,898 | ) | (316,735 | ) | (7,878,633 | ) | ||||||||||||||||||||
| Balance as of June 30, 2023 | 1,001 | $ | - | $ | 26,624,704 | $ | 120,150,058 | $ | (43,164,287 | ) | $ | 103,610,475 | $ | 1,858,441 | $ | 105,468,916 |
accompanying notes are an integral part of these unaudited consolidated financial statements.
MEDICAL GROUP HOLDINGS INCORPORATED
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 37,307,541 | $ | 16,273,173 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization expense | 1,849,422 | 6,400,831 | ||||||
| Non-cash lease expense | 1,923,890 | 2,132,980 | ||||||
| Allowance for credit losses | 62,804 | 146,452 | ||||||
| Impairment loss on property and equipment | - | 194,336 | ||||||
| Fair value change of long-term investments | 1,045,557 | - | ||||||
| Gain on disposal of subsidiary | (3,813,609 | ) | - | |||||
| Gain on disposal of property and equipment | (902 | ) | (249,532 | ) | ||||
| Deferred income taxes | (3,322,728 | ) | (1,514,836 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,423,412 | ) | (1,392,104 | ) | ||||
| Accounts receivable - related parties | 5,843,499 | (18,400,405 | ) | |||||
| Inventories | 561,921 | (4,347,104 | ) | |||||
| Finance lease receivables - related parties | (1,759,556 | ) | 16,427,854 | |||||
| Customer loans receivable | 7,521,267 | - | ||||||
| Prepaid expenses and other current assets | (1,488,347 | ) | 9,999,175 | |||||
| Long-term prepayments | (41,412 | ) | - | |||||
| Other assets | (1,007,431 | ) | (1,099,364 | ) | ||||
| Accounts payable | (8,960,556 | ) | 7,497,459 | |||||
| Notes payable - related parties | (5,101,368 | ) | - | |||||
| Advances from customers | (755,977 | ) | (716,491 | ) | ||||
| Advances from customers - related parties | (4,663,233 | ) | (8,130,208 | ) | ||||
| Income tax payable | 5,462,133 | 1,342,119 | ||||||
| Operating lease liabilities | (1,998,196 | ) | (2,004,281 | ) | ||||
| Accrued liabilities and other current liabilities | (4,444,172 | ) | (985,999 | ) | ||||
| Accrued retirement compensation expense - related party | - | (22,082,643 | ) | |||||
| Other liabilities | 77,625 | 79,987 | ||||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 22,874,760 | (428,601 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of property and equipment | (1,565,333 | ) | (1,085,391 | ) | ||||
| Purchase of intangible assets | - | (1,683,030 | ) | |||||
| Purchase of convertible note | (1,700,000 | ) | (1,000,000 | ) | ||||
| Prepayments for property and equipment | - | (287,174 | ) | |||||
| Advances to related parties | (617,804 | ) | (682,260 | ) | ||||
| Payments made on behalf of a related party | (5,245,990 | ) | - | |||||
| Purchase of short-term investments | - | (49,724 | ) | |||||
| Cash received for acquisition of subsidiary, net of cash received | - | 722,551 | ||||||
| Long-term loans to others | (62,489 | ) | (381,588 | ) | ||||
| Repayments from related parties | 555,000 | 535,808 | ||||||
| Repayments from others | 44,748 | - | ||||||
| Disposal of subsidiary, net of cash disposed of | (815,819 | ) | - | |||||
| Proceeds from disposal of property and equipment | 1,971 | 147,924 | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (9,405,716 | ) | (3,762,884 | ) |
MEDICAL GROUP HOLDINGS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
| For the Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Borrowings from related parties | - | 11,777,729 | ||||||
| Proceeds from issuance of common stock | - | 10 | ||||||
| Repayments of long-term loans | (59,217 | ) | (4,509,916 | ) | ||||
| Repayments to related parties | (50,124 | ) | (7,608,925 | ) | ||||
| NET CASH USED IN FINANCING ACTIVITIES | (109,341 | ) | (341,102 | ) | ||||
| Effect of changes in foreign currency exchange rate | (12,679,865 | ) | (11,436,739 | ) | ||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 679,838 | (15,969,326 | ) | |||||
| CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF THE PERIOD | 103,022,932 | 51,737,994 | ||||||
| CASH AND CASH EQUIVALENTS AS OF THE END OF THE PERIOD | $ | 103,702,770 | $ | 35,768,668 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest expense | $ | 10,432 | $ | 33,402 | ||||
| Cash paid for income taxes | $ | 16,191,178 | $ | 12,608,072 | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Property and equipment transferred from long-term prepayments | $ | - | $ | 7,329,186 | ||||
| An intangible asset transferred from long-term prepayments | $ | - | $ | 17,666,115 | ||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | - | $ | 1,029,518 | ||||
| Remeasurement of operating lease liabilities and right-of-use assets due to lease modifications | $ | 1,376,034 | $ | 2,062,879 | ||||
| Issuance of promissory notes to related parties in connection with loan services provided | $ | 16,085,387 | $ | 31,496 | ||||
| Non-cash purchase consideration for an asset acquisition | $ | - | $ | 705,528 |
accompanying notes are an integral part of these unaudited consolidated financial statements.
MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Medical Group Holdings Incorporated ("SBC USA"), a holding company, was incorporated under the laws of the state of Delaware
on January 20, 2023. SBC USA, through its consolidated subsidiaries and variable interest entity ("VIE"), is principally
engaged in medical industry to provide comprehensive management services to the medical corporations and their clinics, including but
not limited to licensure of the use of trademark and brand name of "Shonan Beauty Clinic", sales of medical equipment, medical
consumables procurement services, and management of customer's loyalty program, etc.
USA and its consolidated subsidiaries and VIE are collectively referred to herein as the "Company", "we" and
"us", unless specific reference is made to an entity.
June 2020 and April 2022, SBC Inc., a company incorporated in Japan in June 2007, and Advice Innovation Co., Ltd., a company
incorporated in Japan in December 2018, were merged with and into SBC Medical Group Co., Ltd. ("SBC Japan"), a company
incorporated in Japan in September 2017 and previously known as Aikawa Medical Management Co., Ltd., respectively, with SBC Japan
being the surviving entity in such mergers.
April 2023, SBC Japan acquired 100% equity interest of L'Ange Cosmetique Co., Ltd. ("L'Ange Sub"), a company
incorporated in Japan in June 2003, and Shobikai Co., Ltd. ("Shobikai Sub"), a company incorporated in Japan in June 2014,
through share exchange. As a result, L'Ange Sub and Shobikai Sub become wholly owned subsidiaries of SBC Japan.
August 2023, SBC Japan and L'Ange Sub disposed of their entire equity interest in Ai Inc. and Lange Inc., both incorporated
in the Federated States of Micronesia in January 2022, respectively, for cash. As a result, Ai Inc. and Lange Inc. cease to be subsidiaries
of the Company, with the related investment in capital being treated as a deemed distribution and the disposal proceeds treated as a
deemed contribution.
September 2023, SBC USA acquired 100% equity interest of SBC Japan through share exchange with one share of its common stock. As
a result, SBC Japan becomes a wholly owned subsidiary of SBC USA.
The above reorganization has been accounted for
as a recapitalization among entities under common control since the same controlling shareholder controlled these entities before and
after the reorganization. The consolidation of the Company has been accounted for at historical cost and prepared on the basis as if the
transactions had become effective as of the beginning of the earliest period presented in the accompanying consolidated financial statements.
As of June 30, 2024, the Company's major
subsidiaries and VIE are as follows:
| Name | Place of Incorporation | Date of Incorporation or Acquisition | Percentage of Ownership | Principal Activities | |||||
| SBC Medical Group Co., Ltd. | Japan | September 29, 2017 | 100% | Franchising, procurement and management services for the medical corporations | |||||
| L'Ange Cosmetique Co., Ltd. | Japan | June 18, 2003 | 100% | Management and rental services for the medical corporations | |||||
| Shobikai Co., Ltd. | Japan | June 4, 2014 | 100% | Procurement, management and rental services for the medical corporations |
GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION
| Name | Place of Incorporation | Date of Incorporation or Acquisition | Percentage of Ownership | Principal Activities | |||||
| Liesta Co., Ltd. | Japan | December 15, 2020 | 100% | Real estate brokerage services | |||||
| Skynet Academy Co., Ltd. | Japan | April 1, 2022 | 78% | Pilot training services | |||||
| SBC Sealane Co., Ltd. | Japan | June 7, 2022 | 100% | Construction services | |||||
| SBC Marketing Co., Ltd. | Japan | June 30, 2022 | 100% | Internet marketing services | |||||
| Medical Payment Co., Ltd. | Japan | June 30, 2022 | 75% | Loan services | |||||
| SBC Medical Consulting Co., Ltd. | Japan | August 2, 2022 | 100% | Human resource services | |||||
| Shoubikai Medical Vietnam Co., Ltd. | Vietnam | August 29, 2013 | 100% | Cosmetic clinic | |||||
| SBC Healthcare Inc. | United States | December 16, 2019 | 100% | Management services for cosmetic clinic in the United States | |||||
| SBC Irvine, LLC* | United States | December 27, 2018 | 100% | Management services for cosmetic clinic in the United States | |||||
| Kijimadairakanko Inc. | Japan | April 3, 2023 | 100% | Ski resorts and tourism services | |||||
| Aikawa Medical Management, Inc. | United States | May 10, 2017 | VIE | Management services for cosmetic clinic in the United States |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Presentation and Principles of Consolidation
The accompanying unaudited 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 Securities and Exchange Commission ("SEC"). The unaudited 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 a 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 consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and related notes for the year ended December 31, 2023.
The unaudited consolidated financial statements
include the financial statements of the Company, its subsidiaries, and consolidated VIE for which the Company is the primary beneficiary.
The results of the subsidiaries are consolidated from the date on which the Company obtained control and continues to be consolidated
until the date that such control ceases. All significant transactions and balances among the Company's subsidiaries, including the
VIE, have been eliminated upon consolidation.
Variable Interest Entities
In accordance with the guidance for the consolidation
of VIE, the Company identifies its variable interests and analyzes to determine if the entity in which the Company has a variable interest
is a VIE. Determination if a variable interest is a VIE includes both quantitative and qualitative consideration. For those entities
determined to be VIEs within the scope of the VIE model, a further quantitative and qualitative analysis is performed to determine if
the Company is deemed the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE
that most significantly impact the entity's economic performance and who has an obligation to absorb losses of the entity or a right
to receive benefits from the entity that could potentially be significant.
SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (cont.)
The Company would consolidate those entities in which it is determined
to be the primary beneficiary. The Company based its qualitative analysis on its review of the design of the entity, its organizational
structure including decision-making ability and the relevant development, operating management and financial agreements.
The Company evaluates its relationship with its
VIE on an ongoing basis to determine whether it continues to be the primary beneficiary of its consolidated VIE, or whether it has become
the primary beneficiary of the VIE it does not consolidate.
If a legal entity fails to meet any of the three
characteristics of a VIE, we then evaluate such entity under the voting model. Under the voting model, we consolidate the entity if we
determine that we, directly or indirectly, have greater than 50% of the voting rights and that other equity holders do not have substantive
participating rights.
Assessment of Medical Corporations in Japan