Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2021 shares | |
Document and Entity Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Period End Date | Dec. 31, 2021 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-39809 |
Entity Registrant Name | Medirom Healthcare Technologies Inc. |
Entity Incorporation, State or Country Code | M0 |
Entity Address, Address Line One | 2-3-1 Daiba |
Entity Address, City or Town | Minato-ku |
Entity Address, Postal Zip Code | 135-0091 |
Entity Address, Country | JP |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
ICFR Auditor Attestation Flag | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 4,882,500 |
Auditor Name | BAKER TILLY US, LLP |
Auditor Firm ID | 23 |
Auditor Location | Irvine, California |
Entity Central Index Key | 0001819704 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
American Depositary Shares | |
Document and Entity Information | |
Title of 12(b) Security | American Depositary Shares, each representing one common share |
Trading Symbol | MRM |
Security Exchange Name | NASDAQ |
Common Shares, no par value | |
Document and Entity Information | |
Title of 12(b) Security | Common Shares, no par value* |
No Trading Symbol Flag | true |
Security Exchange Name | NASDAQ |
Business Contact | |
Document and Entity Information | |
Entity Address, Address Line One | 2-3-1 Daiba |
Entity Address, City or Town | Minato-ku |
Entity Address, Postal Zip Code | 135-0091 |
Entity Address, Country | JP |
Contact Personnel Name | Fumitoshi Fujiwara |
Contact Personnel Email Address | ir@medirom.co.jp |
City Area Code | (0)3 |
Local Phone Number | 6721-7364 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | ¥ 370,617 | ¥ 1,439,733 |
Time deposits | 26,526 | 32,524 |
Accounts receivable-trade, net | 312,302 | 148,540 |
Accounts receivable-other, net | 542,988 | 411,278 |
Inventories | 18,703 | 7,956 |
Prepaid expenses and other current assets | 111,166 | 47,193 |
Total current assets | 1,382,302 | 2,087,224 |
Property and equipment, net | 424,996 | 235,930 |
Goodwill | 600,329 | 150,720 |
Other intangible assets, net | 391,038 | 97,615 |
Investments | 53,020 | 500 |
Long-term accounts receivable-other, net | 101,898 | 116,942 |
Right-of-use asset - operating lease, net | 1,824,095 | 1,578,828 |
Lease and guarantee deposits | 868,159 | 710,636 |
Deferred tax assets, net | 655,591 | |
Other assets | 107,224 | 79,480 |
Total assets | 5,753,061 | 5,713,466 |
Current liabilities: | ||
Accounts payable | 230,899 | 67,016 |
Accrued expenses | 865,865 | 889,112 |
Current portion of borrowings | 162,252 | 242,281 |
Accrued income taxes | 40,721 | 43,198 |
Current portion of contract liability | 104,182 | 172,063 |
Advances received | 618,514 | 461,665 |
Current portion of lease liability | 755,219 | 658,320 |
Mandatorily redeemable noncontrolling interests | 148,000 | |
Other current liabilities | 270,821 | 118,933 |
Total current liabilities | 3,196,473 | 2,652,588 |
Borrowings - net of current portion | 746,588 | 668,380 |
Deposit received | 328,962 | 375,463 |
Contract liability - net of current portion | 239,067 | 333,978 |
Lease liability - net of current portion | 1,128,737 | 992,892 |
Asset retirement obligation | 296,401 | 191,192 |
Other liabilities | 25,176 | 7,716 |
Total liabilities | 5,961,404 | 5,222,209 |
COMMITMENTS AND CONTINGENCIES (NOTE 18) | ||
SHAREHOLDERS' (DEFICIT) EQUITY: | ||
Treasury stock, at cost- 92,500 common shares at December 31, 2021 and 2020 | (3,000) | (3,000) |
Additional paid-in capital | 1,265,456 | 1,018,146 |
Accumulated deficit | (2,694,033) | (1,703,302) |
Total shareholders' (deficit) equity | (208,343) | 491,257 |
Total liabilities and shareholders' (deficit) equity | 5,753,061 | 5,713,466 |
Common stock | ||
SHAREHOLDERS' (DEFICIT) EQUITY: | ||
Common stock | 1,223,134 | 1,179,313 |
Class A Common | ||
SHAREHOLDERS' (DEFICIT) EQUITY: | ||
Common stock | ¥ 100 | ¥ 100 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - ¥ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Treasury stock shares | 92,500 | 92,500 |
Common stock | ||
Common stock, no par value | ¥ 0 | ¥ 0 |
Common stock, shares authorized | 19,899,999 | 9,999,999 |
Common stock, shares issued | 4,975,000 | 4,915,000 |
Common stock, shares outstanding | 4,882,500 | 4,822,500 |
Class A Common | ||
Common stock, no par value | ¥ 0 | ¥ 0 |
Common stock, shares authorized | 1 | 1 |
Common stock, shares issued | 1 | 1 |
Common stock, shares outstanding | 1 | 1 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATION - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | |||
Revenues | ¥ 5,409,825 | ¥ 3,341,617 | ¥ 3,908,264 |
Cost of revenues and operating expenses: | |||
Selling, general and administrative expenses | 1,822,787 | 1,068,537 | 871,862 |
Impairment loss on long-lived assets | 63,211 | 106,501 | 44,546 |
Total cost of revenues and operating expenses | 5,880,412 | 4,087,705 | 3,873,914 |
Operating (loss) income | (470,587) | (746,088) | 34,350 |
Other income (expense): | |||
Dividend income | 2 | 2 | 2 |
Interest income | 839 | 1,332 | 1,336 |
Interest expense | (11,950) | (13,234) | (13,591) |
Gain from bargain purchase | 6,487 | ||
Subsidies | 27,846 | 111,581 | |
Foreign exchange income | 14,992 | ||
Other, net | 24,377 | 19,718 | 4,153 |
Total other income (expense) | 56,106 | 119,399 | (1,613) |
(Loss) income before income tax expense (benefit) and equity in earnings of investment | (414,481) | (626,689) | 32,737 |
Income tax expense (benefit) | 576,250 | (87,519) | 15,961 |
Equity in earnings of investment | 559 | ||
Net (loss) income | (990,731) | (539,170) | 17,335 |
Net (loss) income attributable to shareholders of the Company | ¥ (990,731) | ¥ (539,170) | ¥ 17,335 |
Net (loss) earnings per share attributable to shareholders of the Company | |||
Basic | ¥ (203.13) | ¥ (133.97) | ¥ 4.63 |
Diluted | ¥ (203.13) | ¥ (133.97) | ¥ 4.06 |
Weighted average shares outstanding | |||
Basic | 4,877,404 | 4,024,692 | 3,747,296 |
Diluted | 4,877,404 | 4,024,692 | 4,272,302 |
Directly-operated salons | |||
Revenues: | |||
Revenues | ¥ 4,006,834 | ¥ 2,026,806 | ¥ 2,031,155 |
Cost of revenues and operating expenses: | |||
Cost of revenue | 3,281,781 | 2,149,843 | 1,912,893 |
Franchise fees | |||
Revenues: | |||
Revenues | 1,359,026 | 1,289,141 | 1,833,501 |
Cost of revenues and operating expenses: | |||
Cost of revenue | 691,286 | 745,102 | 1,019,956 |
Other revenues | |||
Revenues: | |||
Revenues | 43,965 | 25,670 | 43,608 |
Cost of revenues and operating expenses: | |||
Cost of revenue | ¥ 21,347 | ¥ 17,722 | ¥ 24,657 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||
Net (loss) income | ¥ (990,731) | ¥ (539,170) | ¥ 17,335 |
Foreign currency translation adjustments, net of tax | 278 | ||
Comprehensive (loss) income | ¥ (990,731) | ¥ (539,170) | ¥ 17,613 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY - JPY (¥) ¥ in Thousands | Common stock Class A Common | Common stock | Treasury stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit Cumulative adjustment | Accumulated deficit | Cumulative adjustment | Total |
Balance, beginning of period at Dec. 31, 2018 | ¥ 100 | ¥ 245,000 | ¥ (3,000) | ¥ 363,267 | ¥ (278) | ¥ (722,644) | ¥ (117,555) | ||
Balance, beginning of period (in shares) at Dec. 31, 2018 | 1 | 3,765,000 | 92,500 | ||||||
Increase (Decrease) in Stockholders' Equity: | |||||||||
Issuance of common stock | ¥ 350,000 | 350,000 | 700,000 | ||||||
Issuance of common stock (in shares) | 350,000 | ||||||||
Net (loss) income attributable to shareholders of the Company | 17,335 | 17,335 | |||||||
Foreign currency translation adjustments | ¥ 278 | 278 | |||||||
Balance, end of period at Dec. 31, 2019 | ¥ 100 | ¥ 595,000 | ¥ (3,000) | 713,267 | ¥ (458,823) | (705,309) | 600,058 | ||
Balance, end of period (in shares) at Dec. 31, 2019 | 1 | 4,115,000 | 92,500 | ||||||
Increase (Decrease) in Stockholders' Equity: | |||||||||
Issuance of common stock | ¥ 584,313 | 304,879 | 889,192 | ||||||
Issuance of common stock (in shares) | 800,000 | ||||||||
Net (loss) income attributable to shareholders of the Company | (539,170) | (539,170) | |||||||
Balance, end of period at Dec. 31, 2020 | ¥ 100 | ¥ 1,179,313 | ¥ (3,000) | 1,018,146 | ¥ (458,823) | (1,703,302) | ¥ (458,823) | 491,257 | |
Balance, end of period (in shares) at Dec. 31, 2020 | 1 | 4,915,000 | 92,500 | ||||||
Increase (Decrease) in Stockholders' Equity: | |||||||||
Issuance of common stock | ¥ 43,821 | 43,821 | 87,642 | ||||||
Issuance of common stock (in shares) | 60,000 | ||||||||
Net (loss) income attributable to shareholders of the Company | (990,731) | (990,731) | |||||||
Stock-based compensation | 196,853 | 196,853 | |||||||
Vesting of option purchase consideration (Note 10) | 6,636 | 6,636 | |||||||
Balance, end of period at Dec. 31, 2021 | ¥ 100 | ¥ 1,223,134 | ¥ (3,000) | ¥ 1,265,456 | ¥ (2,694,033) | ¥ (208,343) | |||
Balance, end of period (in shares) at Dec. 31, 2021 | 1 | 4,975,000 | 92,500 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net (loss) income | ¥ (990,731) | ¥ (539,170) | ¥ 17,335 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||
Depreciation and amortization | 126,243 | 62,290 | 46,174 |
Losses on sales of directly-owned salons to franchisees | 2,692 | 9,600 | |
Gain from sales of directly-owned salons | (541,472) | ||
Bad debt | 28,808 | (11,376) | 271 |
Stock-based compensation | 196,853 | ||
Impairment loss on investments | 10,544 | 0 | |
Losses on disposal of property and equipment, net, other intangible assets, net and goodwill | 3,614 | 33,841 | 4,631 |
Impairment loss on long-lived assets | 63,211 | 106,501 | 44,546 |
Gain from bargain purchases | (6,487) | ||
Deferred income tax expense (benefit) | 551,483 | (107,264) | 5,739 |
Other non-cash (gains) losses - net | 819 | 1,903 | (895) |
Changes in operating assets and liabilities: | |||
Accounts receivable-trade, net | (37,024) | 189,143 | (66,877) |
Accounts receivable-other, net | (87,148) | (48,031) | (36,190) |
Inventories | (2,441) | (2,445) | 892 |
Prepaid expenses and other current assets | (74,799) | (8,167) | (39,698) |
Lease and guarantee deposits | (70,662) | 58,468 | (14,163) |
Accounts payable | 58,437 | (55,574) | (18,729) |
Accrued expenses | 195,541 | 206,706 | 116,856 |
Accrued income taxes | (2,897) | 25,364 | 4,200 |
Contract liability | (162,793) | (160,595) | |
Advances received | 96,198 | (15,322) | (39,177) |
Other current liabilities | 130,110 | (3,389) | 10,226 |
Deposit received | (46,501) | (98,925) | (20,871) |
Other assets and other liabilities - net | 5,228 | (10,922) | (9,513) |
Net cash (used in) provided by operating activities | (557,231) | (366,420) | 7,870 |
Cash flows from investing activities: | |||
Purchases of time deposits | (26,402) | (26,703) | (37,900) |
Proceeds from maturities of time deposits | 6,000 | 10,000 | 6,000 |
Proceeds from sale of investments | 53,000 | ||
Acquisition of investments | (52,520) | (13,544) | |
Acquisition of property and equipment | (95,651) | (73,556) | (7,406) |
Proceeds from sale of property and equipment | 3,227 | 5,000 | |
Cost additions to internal use software | (18,127) | (30,569) | (12,068) |
Proceeds from sale of salons | 430,000 | ||
Acquisition of businesses - net of cash acquired | (375,757) | (99,195) | (3,201) |
Proceeds from due from shareholder | 8,267 | 8,412 | |
Payment received on short-term loans receivable | 450 | 900 | 450 |
Payment received on long-term accounts receivable-other, net | 9,488 | 15,030 | 16,326 |
Proceeds from insurance cancellations | 38,583 | ||
Net cash used in investing activities | (83,936) | (139,599) | (37,931) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock in initial public offering - net of underwriting discounts and commissions | 1,168,627 | ||
Proceeds from issuance of common stock | 700,000 | ||
Proceeds from issuance of common stock for exercise of over-allotment, net of issuance costs | 87,642 | ||
Net repayment of short-term borrowings | (180,000) | ||
Proceeds from long-term borrowings | 775,000 | ||
Repayment of long-term borrowings | (251,084) | (206,440) | (234,411) |
Payment of installment payables related to business acquisitions | (2,888) | (33,949) | (82,812) |
Payment of deferred offering costs | (261,619) | (97,857) | (43,283) |
Repayment of corporate bonds | (7,500) | ||
Proceeds from issuance of stock options | 6,750 | ||
Net cash (used in) provided by financing activities | (427,949) | 1,432,131 | 331,994 |
Net (decrease) increase in cash and cash equivalents | (1,069,116) | 926,112 | 301,933 |
Cash and cash equivalents at beginning of year | 1,439,733 | 513,621 | 211,688 |
Cash and cash equivalents at end of year | 370,617 | 1,439,733 | 513,621 |
Cash paid during the year for: | |||
Interest | 10,865 | 10,219 | 11,872 |
Income taxes | 45,505 | 7,005 | 24,344 |
Non-cash investing and financing activities: | |||
Right-of-use assets obtained in exchange for lease liabilities | 917,135 | 604,703 | 749,008 |
Purchases of property and equipment included in accrued expenses | 23,488 | 29,244 | |
Purchases of intangible assets included in accrued expenses | 14,236 | 1,535 | 3,321 |
Payables related to acquisition of businesses included in accrued expenses | 1,667 | 48,901 | |
Sales of salons included in accounts receivable | 129,000 | ||
Payable related to acquisition of noncontrolling interests included in mandatorily redeemable noncontrolling interests | ¥ 148,000 | ||
Deferred offering costs included in accrued expenses | ¥ 261,619 | ¥ 14,226 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | 1. Basis of Presentation and Summary of Significant Accounting Policies Description of Business MEDIROM Healthcare Technologies Inc. ("Parent") and its six subsidiaries (collectively, the "Company") are one of the leading holistic health services providers in Japan. The Company is a franchisor and operator of healthcare salons across Japan and is a preferred platform partner for large consumer brands, healthcare service providers, and government entities to affect positive health outcomes. The Company primarily engages in three lines of business: Relaxation Salon Segment (retail), Luxury Beauty (retail) and Digital Preventative Healthcare Segment (healthtech). Refer to description below and Note 11 for segment information. Parent was originally incorporated in Japan on July 13, 2000 under the name "Kabushiki Kaisha Young Leaves." In January 2017, Parent changed Parent’s name to "MEDIROM Inc." In March 2020, Parent changed Parent’s name to "MEDIROM Healthcare Technologies Inc." Relaxation Salon Segment (See Note 11 for segment information) The Relaxation Salon Segment is the core of our business, whereby we own, develop, operate, or franchise and support relaxation salons. The salon locations cover major cities throughout Japan, with strong market presence in the Tokyo metropolitan area. The Segment includes several Relaxation Salon brands including Re.Ra.Ku ® Number of Relaxation Salons 2021 2020 2019 Directly-operated 188 150 107 Franchised 124 140 176 Total 312 290 283 See Note 2, "Business Combination" for the number of salons acquired during each year. The results of operations of directly-operated salons converted to franchised salons in sale transactions with franchisees were not material either individually or in the aggregate to the consolidated financial statements. Digital Preventative Healthcare Segment (See Note 11 for segment information) The Digital Preventative Healthcare Segment mainly consists of the following operations: government-sponsored Specific Health Guidance program, utilizing our internally-developed on-demand health monitoring smartphone application, or Lav ® ® Luxury Beauty Segment (See Note 2 for business combination and Note 11 for segment information) In October 2021, the Company acquired 60% of the ownership interest in ZACC Kabushiki Kaisha (“ZACC”), a high-end hair salon company, and acquired the remaining outstanding common stock in January 2022. ZACC owns and operates 3 luxury hair salon brands (ZACC vie, ZACC raffine, and ZACC ginza), all of which have been recognized by customers for over 30 years for their high level of techniques and hospitality. Basis of Presentation The accompanying consolidated financial statements are presented in Japanese yen, the currency of the country in which the Company is incorporated and principally operates. The accompanying consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America ("U.S. GAAP"). Recent Developments and Liquidity In the years ended December 31, 2020 and 2021, the Company experienced negative cash flows from operations and also used a significant amount of cash for acquisitions and investments. In addition, it has had losses from operations since 2020, and has had a working capital deficit and an accumulated deficit for the past three years. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern for one year after the Company’s consolidated financial statements are issued. Management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations due. During 2021, the Japanese government issued multiple Declarations of Emergency for COVID-19, which impacted Tokyo and other prefectures where our salons are located. This affected the operation of our salons located in shopping malls and spa facilities. Under Declarations of Emergency, up to 28 salons had shortened operation and 36 salons temporarily closed their operation. As a result, our sales and profitability have not fully recovered. We have managed our operations by relocating therapists from closed or shortened salons to those lacking enough therapists, or issuing furlough to those who cannot be relocated to other open salons and applying for governmental subsidies. As of the date of this report, all Declarations of Emergency were lifted nationwide. However, the duration and extent of COVID-19’s impact is not reasonably possible to estimate due to the uncertainty about the spread of the virus. This could lead to lower sales, further relaxation salon closures, delays in development of the Company’s business, which could continue to materially affect our financial condition and results of operations. In addition, pursuant to the Settlement Act, issuers of prepaid cards are required to maintain net assets of more than JPY 100 million. As of December 31, 2021, the Company’s net assets have fallen below JPY100 million under Japanese GAAP (“JGAAP”) on a standalone basis. The Company is currently in consultation with the regulatory authority. S ee “Item 4. ” for more detail. The Company expects that its cash and cash equivalents as of December 31, 2021 of ¥ We may also consider obtaining additional financing through the issuance of our common stock, including a public offering of our ADSs, or through other equity or debt financings, and we may also look into refinancing our existing debt obligations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful. In addition, management is actively pursuing restoring profitability of our relaxation salon business and started shipping units of Mother Bracelet ® Consolidation and Variable Interest Entities The consolidated financial statements for the year ended December 31, 2020 include the accounts of Parent and the following wholly owned subsidiaries: JOYHANDS WELLNESS Inc., Bell Epoc Wellness Inc., Decollte Wellness Corporation, and Medirom Human Resources Inc. Effective July 1, 2021, Bell Epoc Wellness Inc., a subsidiary of the Company, was merged with Decollte Wellness Corporation, another subsidiary of the Company pursuant to an absorption-type company split agreement, with Bell Epoc Wellness Inc. being the successor entity. The purpose of this reorganization is to achieve more efficiency in training therapists and operating the relaxation salons, and to integrate the brands. As these subsidiaries were under common control, there was no impact to the consolidated financial statements. Bell Epoc Wellness Inc. changed its name to Wing Inc. effective November 1, 2021. The consolidated financial statements for the year ended December 31, 2021 include the accounts of Parent and the following subsidiaries: JOYHANDS WELLNESS Inc., Wing Inc., Bell & Joy Power Partners, Inc., SAWAN Co., Ltd., ZACC Kabushiki Kaisha (“ZACC”), and Medirom Human Resources Inc. All intercompany transactions have been eliminated in consolidation. Investments in companies over which the Company has significant influence but not control are accounted for by the equity method. The Company evaluates its investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If the Company concludes that an investee is a VIE, the Company evaluates its power to direct the activities of the investee, its obligation to absorb the expected losses of the investee and its right to receive the expected residual returns of the investee to determine whether the Company is the primary beneficiary of the investee. If the Company is the primary beneficiary of a VIE, the Company consolidates such entity and reflects the noncontrolling interest of other beneficiaries of that entity. There is no VIE where the Company is the primary beneficiary as of December 31, 2021 and 2020. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, the allowance for doubtful accounts, fair value of intangible assets acquired through business combination, impairment of long-lived assets and goodwill, asset retirement obligations, valuation of stock-based compensation, going concern and valuation of deferred tax assets. Management bases these estimates on assumptions that it believes to be reasonable under the circumstance, including considerations for the impact from the outbreak of the COVID-19 pandemic on the Company's business. Actual results may differ from these estimates in future periods when the COVID-19 pandemic continues to evolve and additional information becomes available. Foreign Currency Translation The assets and liabilities of an equity method investee are translated into Japanese yen at the respective year-end exchange rates. All income and expense accounts are translated at weighted average rates. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' (deficit) equity. Exchange gains and losses resulting from foreign currency transactions and the conversion of monetary assets and liabilities denominated in foreign currencies are included in foreign exchange income in the consolidated statements of operation. Mandatorily Redeemable Noncontrolling Interests Mandatorily redeemable noncontrolling interests represent equity interests in ZACC owned by outside parties. Noncontrolling interests are considered mandatorily redeemable when they are subject to an unconditional obligation to be redeemed by the Company on a specified date and are presented as a liability. As of December 31, 2021, the noncontrolling interest related to ZACC was classified as a current liability based on the terms of the purchase agreement. Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand or other highly liquid investments placed with banks or other financial institutions which are unrestricted as to withdrawal or use and have original maturities of less than three months. There are no cash equivalents balances for the periods presented. Time Deposits Time deposits presented in the consolidated balance sheets are short-term investments, whose maturity dates are longer than three months but less than one year. Time deposits with maturity dates of longer than one year are included in other assets in the consolidated balance sheets. Accounts Receivable—Trade, Net The accounts receivable-trade on the Company's consolidated balance sheets primarily includes accounts receivables from franchisees. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses incurred related to existing accounts and receivables. As of December 31, 2021 and 2020, the allowance for doubtful accounts related to accounts receivable-trade was ¥6,689 thousand and ¥4,426 thousand, respectively. Accounts Receivable—Other, Net and Long-Term Accounts Receivable—Other, Net The accounts receivable—other on the Company's consolidated balance sheets primarily includes accounts receivable from commercial facility landlords and credit card companies related directly-operated salon's revenue and franchisee's revenue collected by these entities on behalf of the Company. As of December 31, 2021 and 2020, accounts receivable from commercial facilities and credit card companies of ¥457,642 thousand and ¥302,227 thousand, respectively, are included in the accounts receivable—other, net on the consolidated balance sheets. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts). The Company monitors the financial condition of its debtor and records provisions for estimated losses on receivables when it believes debtors are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses incurred related to existing accounts and receivables. As of December 31, 2021, the allowance for doubtful accounts related to accounts receivable-other was ¥23,337 thousand. There was no allowance for doubtful accounts related to accounts receivable-other as of December 31, 2020. Long-term accounts receivable—other mainly consists of a non-interest bearing receivable due from an unrelated business entity, with a maturity of July 31, 2038, monthly repayment amounts of ¥1,200 thousand until January 2021, ¥ Concentrations Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash. The Company primarily places its cash with high-credit quality financial institutions. The Company's cash deposits, of up to ¥10,000 thousand are insured by the Japanese government. From time to time, the Company has deposits in excess of the insured amounts. Inventories Inventories consist principally of merchandise. A portion of inventories are also used for salon services. Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method for merchandise. Investments The Company uses the equity method to account for equity investments over which it has significant influence but does not own a majority equity interest or otherwise control, generally accompanying a shareholding of between 20% and 50% of the voting rights. The share of earnings or losses of the investee are included in equity in earnings of investment in the consolidated statements of operation. Equity method adjustments include the company’s proportionate share of investee income or loss and other adjustments required by the equity method. The Company evaluates its equity method investments for impairment whenever an event or change in circumstances occurs that may have a significant adverse impact on the fair value of the investment. If a loss in value has occurred and is deemed to be other than temporary, an impairment loss is recorded. Several factors are reviewed to determine whether a loss has occurred that is other than temporary, including absence of an ability to recover the carrying amount of the investment, the length and extent of the fair value decline, and the financial condition and future prospects of the investee. Investments in equity securities, in which the Company does not have significant influence, and for which there is not a readily determinable fair value, are recorded at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments in the same issuer. When the Company evaluates whether these non-marketable equity securities are impaired or not, the Company evaluates first whether an event or change in circumstances has occurred in the period that may have significant adverse effect on the fair value of the securities (an impairment indicator). The Company uses such impairment indicators as follows: (1) A significant deterioration in the earnings performance or business prospects of the investee. (2) A significant adverse change in the regulatory, economic, or technological environment of the investee. (3) A significant adverse change in the general market condition of either the geographic area or the industry in which the investee operates. (4) A recent example of the new issuance of a security, in which the issue price is less than our cost. The Company estimates the fair value of the non-marketable equity securities when an impairment indicator is present. The fair value is determined as a result of considering various unobservable inputs which are available to the Company, including expectation of future income of the investees, net asset value of the investees, and material unrealized losses to be considered in assets and liabilities held by the investees. The Company recognizes impairment of non-marketable equity securities when the fair value is below the carrying amount and the decline in fair value is considered to be other-than-temporary. Leases The Company considers whether a contract is a lease or if it contains a lease element when a contract is executed. If a contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration, such contract is determined to contain a lease element. When the contract contains a lease element, a lease is either classified as operating lease or finance lease when the Company is a lessee, and a sales-type lease or direct financing lease when the Company is a lessor. The Company, as a lessee, applies the right-of-use model to account for lease transactions. Under the right-of-use model, right-of-use asset and lease liability are recognized at commencement date. The Company measures its lease liability at present value of future lease payments over the remaining term. The Company uses its incremental borrowing rate for the discount rate to calculate the present value of the payments since it is difficult and not practical to determine the interest rate implicit in the lease. The Company's incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Right-of-use asset lease liability For operating leases, the Company recognizes the minimum lease payments where it is the lessee and the minimum lease income where it is the lessor on a straight-line basis over the lease term, and reflects them as rental expenses and rental revenues, respectively, in the consolidated statements of operation. The Company elected to separate lease and non-lease components and not to recognize leases with an initial term of 12 months or less. Operating rental expense includes amortization of right-of-use assets and interests on lease liability. Variable lease expenses are primarily linked to sales and are excluded from the measurement of lease liability. Rental expenses are recorded in the consolidated statements of operation based on the nature of the underlying lease. Rental expense related to leases for directly-operated salons and for leased properties that are subsequently subleased to franchisees are recorded to cost of revenue from directly-operated salons and cost of franchise revenue, respectively, and rental expense related to leases for corporate offices is recorded to selling, general and administrative expenses. Rental income for operating leases on properties subleased to franchisees is recorded to franchise revenue. Terms and conditions of the sublease agreements are arranged to pass through lease obligations under head leases to the franchisees. Sublease income is presented on a gross basis on the accompanying consolidated statements of operation, as the Company remains the primary obligor. For newly executed contracts, renewal and revision related to leases, estimates and certain assumptions are used to determine asset value, useful lives, discount rate, lease term, etc. and these have effects on (1) classification of lease, (2) measurement of rental payments and (3) measurement of lease asset. These results may differ if varying estimates and assumptions are used. Property and Equipment, Net Property and equipment are recorded at cost, less accumulated depreciation. Depreciation of property and equipment is computed principally using the straight-line method based on the estimated useful life of the assets. The useful lives for depreciation by major asset classes are as follows: Leasehold improvements Lesser of 15 years or the remaining lease term Vehicles 2-6 years Tools, furniture and fixtures 2-13 years Other Intangible Assets, Net Other intangible assets with finite useful lives consist primarily of capitalized software, reacquired franchise rights, definite-lived trademarks, and customer relationships. The Company capitalizes both eligible internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized until the software is substantially complete and ready for its intended use. Costs related to data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. Capitalized software is amortized over the estimated useful life (3-5 years) using the straight-line method. The Company amortizes the fair value of reacquired franchise rights over the remaining contractual terms of the reacquired franchise rights at the time of the acquisition, which generally range from 1-5 years. The Company amortizes the fair value of trademarks over the estimated useful life (10 years). The Company amortizes the fair value of customer relationships over the estimated useful life ( 3 Impairment of Long-lived Assets, Excluding Goodwill The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities. Long-lived assets include property and equipment, right-of-use lease assets, internal use software, and definite-lived intangible assets. The Company reviews the carrying value of long-lived assets for impairment whenever events or circumstances occur that indicate that the carrying value of the assets may not be recoverable. The assets are considered to be impaired when the estimated undiscounted cash flows expected to result from the use of the assets and their eventual disposition are less than their carrying values. The impairment loss is measured as the amount by which the carrying value of the asset or asset group exceeds its fair value. In determining the fair value, the Company uses present value techniques, if appropriate, based on the estimated future cash flows expected to result from the use of the assets and their eventual dispositions. During 2021, long-lived assets impairment charges related to continuing operations of ¥3,165 thousand, ¥ ¥9,825 thousand and ¥34,721 thousand were recorded on property and equipment and right-of-use asset—operating leases, respectively. Long-lived assets impairments are recorded in impairment loss on long-lived assets in the consolidated statements of operation. Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not we have acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. If an acquisition is determined to be a business combination, the assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. If an acquisition is determined to be an asset acquisition, the cost of the asset acquisition, including transaction costs, are allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. If the cost of the asset acquisition is less than the fair value of the net assets acquired, no gain is recognized in earnings. The excess fair value of the acquired net assets acquired over the consideration transferred is allocated on a relative fair value basis to the identifiable net assets (excluding non-qualifying assets). Determining estimated fair value requires a significant amount of judgment and estimates. If assumptions change or errors are determined in our calculations, the fair value could materially change resulting in a change in goodwill or identifiable net assets acquired. Goodwill Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in business combinations. The Company generally records goodwill in connection with the acquisition of relaxation salons from franchisees. Upon the sale of relaxation salons to franchisees, goodwill is decremented. In addition, the Company records goodwill when the Company acquires other entities. Goodwill and intangible assets that are deemed to have indefinite useful lives are subject to impairment testing. Impairment testing is performed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill impairment assessments are performed at the reporting unit level, which is the same as the Company's operating segments. The Company utilizes a qualitative assessment for determining whether step one of the goodwill impairment analysis is necessary. If a step one test is considered necessary based on the qualitative factors, the Company compares the estimated fair value of a reporting unit to its carrying value. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit. The Company calculates estimated fair values of the reporting units based on discounted future cash flows utilizing estimates in annual revenue, service and product margins, fixed expense rates, allocated corporate overhead, directly-operated and franchise salon counts, and long-term growth rates for determining terminal value. If the carrying amount of a reporting unit exceeds its fair value, a loss will be recorded for the excess of the carrying value of the reporting unit over the fair value of the reporting unit. The Company did not recognize impairment losses for any goodwill during the years ended December 31, 2021, 2020 and 2019. Asset Retirement Obligations The Company records asset retirement obligations when the obligation is incurred. The obligation is measured at fair value and included in other current liabilities and asset retirement obligations. When the liability is initially recorded, the Company capitalizes the related cost by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value, and the capitalized cost is depreciated over the asset's useful life. Revenue Recognition Revenues are recognized when control of the promised goods or services are transferred to the customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company determines revenue recognition through the following steps: Step 1: identification of the contract with a customer; Step 2: identification of the performance obligations in the contract; Step 3: determination of the transaction price; Step 4: allocation of the transaction price to the performance obligations in the contract; Step 5: recognition of revenue when, or as, the Company satisfies a performance obligation. Revenue from Directly-Operated Salons Revenues from directly-operated salons (including sales in the Luxury Beauty segment) are recognized when services are provided at the salons. The promised services for directly operated studios are the services ordered by the end customer from the service menu. The services are provided in one appointment. Therefore, there is only one performance obligation. As the customer simultaneously receives and consumes the benefits of the relaxation services, the revenue is recognized over time using the delivery output method. Revenue from prepaid cards is recognized when the services are transferred. When value is added to a prepaid card, the Company records a contract liability for its performance obligation to stand ready to transfer services in the future (or transfer funds to franchisee who provides service). When the services or funds are transferred, it derecognizes the contract liability and correspondingly recognizes revenue net of any funds transferred to franchisees. The Company expects to be entitled to a certain amount of breakage and recognizes revenue from breakage proportionately to the redemptions exercised by the customer. The Company also sells salons that were previously owned to third-party investors. Such investors are required to enter into Service Agreements with the Company to allow it to manage the operations of the salons and the Company will charge a fee for the management services to be provided. As this is a recurring source of income for the Company as part of the larger strategy for the relaxation salons segment, the sale of salons is considered part of the Company’s ongoing major or central operations and thus ordinary activities for the Company. Therefore, the Company applies ASC 606 to these contracts. Revenue from the sale of directly-owned salons is comprised of the (i) transfer of the salon assets and business rights and (ii) outsourced salon operation services. The revenue for the transfer of salon assets and business rights is recognized at a point in time when the agreement is signed, and control is transferred to the customer. The consideration for the transfer of the salon is generally collected upfront. There is no significant financing component. The proceeds from the transfer of the salon are presented as cash flows from investing activities on the consolidated statements of cash flow to be consistent with how the cash outflows and inflows are classified related to the salon’s purchase and sale. Revenue from the Service Agreement are recognized over the term of the agreement as services are provided. The customer benefits from the integrated service over the contract term and each time increment is substantially the same. Therefore, the outsourced salon operations are considered a “series” of distinct services and are treated as a single performance obligation. The term of the Service Agreement is typically five years. Under the Service Agreement, the Company is reimbursed for the costs of operating the salon and will recognize revenue from the reimbursement of costs using the as-invoiced practical expedient. Furthermore, the Company will receive a certain portion of the excess profit, which is considered variable consideration. This success fee will be constrained until there is greater than 70% probability that there will be no future reversal of revenue. Franchise Revenue Franchise revenue is comprised of (i) franchise fees, (ii) royalty income, (iii) staffing service revenue, (iv) sublease revenue, and (v) other franchise revenues. The Company and the franchisee enter into a franchise agreement which sets forth the standard terms and conditions of operating the franchised salon, as well as the fees and royalties over the term of the agreement. In most cases, an outsourcing agreement, is also entered into in conjunction with the franchise agreement that specifies the terms of the sublease arrangement with the franchisee. Upon the franchisee's request, the Company's therapists are dispatched to franchise locations and franchisees must pay dispatch fees in accordance with the di |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination | |
Business Combination | 2. Business Combination Acquisition of ZACC On August 31, 2021, the Company entered into a share transfer agreement with all the existing shareholders of ZACC, a Japanese hair salon operator of “ZACC” brand, pursuant to which it will acquire 100% of the outstanding shares of ZACC for cash consideration of ¥370,000 thousand. The total consideration net of the settlement of a pre-existing borrowing was ¥270,000 thousand. ZACC owns and operates 3 luxury hair salon brands (ZACC vie, ZACC raffine, and ZACC ginza), all of which have been recognized by customers for over 30 years for their high level of techniques and hospitality. The purchase price was paid by cash on hand, and an initial payment of ¥69,014 thousand was made on August 31, 2021. The acquisition date was October 1, 2021, when the Company acquired a controlling interest (60% of the common shares) for ¥152,986 thousand and was required to consolidate ZACC. The remaining shares of ZACC were transferred to the Company on January 1, 2022 for ¥148,000 thousand. The acquisition was accounted for by the acquisition method. The consideration paid by the Company approximated the Company’s total fair value. Therefore, the price per share paid by the Company equals the mandatorily redeemable noncontrolling interest per share fair value. The allocation of the purchase price was based on the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. The estimated fair values of the assets acquired and liabilities assumed at the acquisition date were as follows: Thousands of Yen Fair value of assets/liabilities Cash ¥ 81,802 Accounts receivable-other 49,573 Inventories 5,408 Prepaid expenses and other current assets 2,234 Property and equipment 39,232 Other intangible assets 240,000 Right-of-use asset-operating lease 202,196 Other assets 68,497 Total assets acquired 688,942 Accounts payable (6,041) Accrued expenses and other current liabilities (42,168) Mandatorily redeemable noncontrolling interests in ZACC (148,000) Lease liability (201,076) Borrowings (249,263) Asset retirement obligation (14,147) Deferred tax liability (73,488) Total liabilities assumed (734,183) Net liabilities assumed (45,241) Fair value of the consideration transferred 122,000 Goodwill ¥ 167,241 The intangibles of ¥240,000 thousand is comprised of customer relationships of ¥150,000 thousand and ¥90,000 thousand of tradename. The goodwill recorded primarily relates to the growth potential from expanding ZACC’s presence in Japan by implementing a franchising model with the help of the Company’s expertise in this area and the acquired assembled workforce. Almost all of the goodwill is expected to be nondeductible for income tax purposes. There were no acquisition-related costs incurred. The amount of revenue and earnings from the acquisition included in the Company’s results of operations for the year ended December 31, 2021 was ¥169,320 thousand and ¥174 thousand, respectively. Pro forma revenue and earnings amounts on a combined basis have not been presented as it is impracticable due to the lack of availability of historical financial statements that comply with U.S. GAAP. Acquisition of SAWAN On May 6, 2021, the Company acquired control of SAWAN CO. LTD. (“SAWAN”) by purchasing all outstanding shares for cash consideration of ¥140,697 thousand. As a result, “Ruam Ruam,” which is a luxury relaxation salon brand held by SAWAN, has become part of the Company’s directly-operated salons. The acquisition was accounted for by the acquisition method. Acquisition-related costs of ¥12,000 thousand were recognized as expenses when incurred, which is included in selling, general and administrative expenses in the consolidated statements of operation. The allocation of the purchase price was based on the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. The estimated fair values of the assets acquired and liabilities assumed at the acquisition date were as follows: Thousands of Yen Fair value of assets/liabilities Cash ¥ 7,824 Accounts receivable-other 18,228 Inventories 3,391 Prepaid expenses and other current assets 16,643 Property and equipment 70,497 Other intangible assets 100,000 Right-of-use asset-operating lease 168,242 Other long-term assets 57,259 Total assets acquired 442,084 Accounts payable (99,405) Accrued expenses (16,271) Advances received (60,651) Lease liability (165,560) Asset retirement obligation (25,060) Deferred tax liabilities (30,620) Other liabilities (14,701) Total liabilities assumed (412,268) Net assets acquired 29,816 Fair value of the consideration transferred 140,697 Goodwill ¥ 110,881 The intangibles of ¥100,000 thousand is comprised of customer relationships of ¥30,000 thousand and ¥70,000 thousand of tradename intangibles. The goodwill recorded primarily relates to the sales growth potential of the relaxation salons held by SAWAN and acquired assembled workforce. Almost all of the goodwill is expected to be nondeductible for income tax purposes. The amount of revenue and earnings from the acquisition included in the Company’s results of operations for the year ended December 31, 2021 was ¥307,141 thousand and ¥(28,988) thousand, respectively. Pro forma revenue and earnings amounts on a combined basis have not been presented as it is impracticable due to the lack of availability of historical financial statements that comply with U.S. GAAP. Acquisition of relaxation salons During 2021, 2020 and 2019, the Company acquired 18 relaxation salons, 16 relaxation salons and 17 relaxation salons, respectively, for cash consideration of ¥202,686 thousand, ¥86,916 thousand and ¥23,813 thousand, respectively. The cash consideration paid in these transactions is included within acquisition of businesses - net of cash acquired in the investing activities, payment of installment payables related to business acquisitions in the financing activities and payables related to acquisition of businesses included in accrued expenses in the non-cash investing and financing activities sections of the consolidated statements of cash flows. Acquisition-related costs were recognized as expenses when incurred, which were immaterial in amount. The results of operations, and assets and liabilities, of these relaxation salons were included in the consolidated financial statements from the date of acquisition. The purchase price allocation was based on the estimated fair values of the assets acquired and liabilities assumed, as of the acquisition date. The estimated fair values of the assets acquired and liabilities assumed at the acquisition date were as follows: Thousands of Yen Fair value of assets/liabilities 2021 2020 2019 Property and equipment ¥ 36,299 ¥ 51,005 ¥ 27,567 Other intangible assets 15,000 12,690 6,519 Total assets acquired 51,299 63,695 34,086 Asset retirement obligation (33,876) (49,217) (25,942) Total liabilities assumed (33,876) (49,217) (25,942) Net assets acquired 17,423 14,478 8,144 Fair value of the consideration transferred 202,686 86,916 23,813 Goodwill 185,263 72,438 22,156 Gain from bargain purchases ¥ ― ¥ ― ¥ 6,487 The goodwill recorded primarily relates to the sales growth potential of the relaxation salon locations acquired and is expected to be deductible for income tax purposes. In 2021, 2020 and 2019, the fair value of the reacquired franchise rights was estimated using the excess earnings method and relief from royalty method with Level 3 unobservable inputs. In order to develop these Level 3 fair value measurements, the Company used 1.2% - 6.0% royalty rate and 11.3% - 25.0% discount rate as significant unobservable inputs. The amount of reacquired franchise rights was ¥15,000 thousand, ¥12,690 thousand and ¥6,519 in 2021, 2020 and 2019, respectively. Reacquired franchise rights are subject to amortization and are amortized over an estimated useful life of approximately one For some relaxation salons acquired, the Company recognized the excess of the fair value of the net assets assumed over the fair value of the consideration transferred as a gain from bargain purchases of nil, nil and ¥6,487 thousand in 2021, 2020 and 2019 respectively, which is separately presented in the consolidated statements of operation. The amount of revenue from the acquired relaxation salons included in the Company's results of operations for the years ended December 31, 2021, 2020 and 2019 was ¥208,660 thousand, ¥375,148 thousand and ¥799,788 thousand, respectively. The amount of earnings (loss) from the acquired relaxation salons included in the Company's results of operations for the years ended December 31, 2021, 2020 and 2019 was ¥(13,788) thousand, ¥(26,595) thousand and ¥107,145 thousand, respectively. Disclosure of pro forma information is omitted as the information is not easily available. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment, Net | |
Property and Equipment, Net | 3. Property and Equipment, Net As of December 31, 2021 and 2020, property and equipment, net consist of the following: Thousands of Yen 2021 2020 Leasehold improvements ¥ 472,872 ¥ 272,756 Vehicles 23,219 9,548 Tools, furniture and fixtures 87,034 37,480 Total 583,125 319,784 Accumulated depreciation and amortization (158,129) (83,854) ¥ 424,996 ¥ 235,930 Depreciation and amortization expense was ¥80,463 thousand, ¥41,691 thousand and ¥29,557 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. For the years ended December 31, 2021, 2020 and 2019 the Company recognized impairment loss of ¥3,165 thousand, ¥36,512 thousand and ¥9,825 thousand for the Relaxation Salon segment on leasehold improvements used in certain relaxation salons, respectively. The Company conducted strategic reviews of its future profitability forecast. Following these reviews, the Company reduced the corresponding estimated future cash flows of these assets and the estimated ability to recover the carrying amount of the long-lived assets within the period applicable to the impairment determination, resulting in the impairment charges. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Other Intangible Assets, Net | |
Goodwill and Other Intangible Assets, Net | 4. Goodwill and Other Intangible Assets, Net The components of intangible assets as of December 31, 2021 and 2020 are as follows: Thousands of Yen 2021 2020 Intangible assets subject to amortization: Software for internal use ¥ 113,345 ¥ 84,152 Reacquired franchise rights 19,343 17,973 Customer relationship 180,000 ― Trademark 160,000 ― Other 750 750 Total 473,438 102,875 Accumulated amortization (82,769) (44,330) Net carrying amount 390,669 58,545 Intangible assets not subject to amortization: Trademark ― 38,922 Goodwill 600,329 150,720 Telephone rights 369 148 Total 600,698 189,790 Total intangible assets ¥ 991,367 ¥ 248,335 The aggregate amortization expense was ¥45,780 thousand, ¥20,599 thousand and ¥16,617 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, the weighted average amortization period for internal-use software, reacquired franchise rights, customer relationships and trademarks was 4 years, 1 year, 6 years and 10 years, respectively. The indefinite-lived trademark intangible relates to the relaxation salon segment and was considered abandoned due to the internal reorganization in 2021. The Company recorded an impairment charge for the full carrying value of ¥38,922 thousand in the year ended December 31, 2021. In addition, the Company recorded an impairment loss of ¥145 thousand on reacquired rights of certain relaxation salons in the relaxation segment for the year ended December 31, 2021. The Company conducted strategic reviews of its future profitability forecast. Following these reviews, the Company reduced the corresponding estimated future cash flows of these assets and the estimated ability to recover the carrying amount of the reacquired rights within the period applicable to the impairment determination, resulting in the impairment charges. The estimated aggregate amortization expense for other intangible assets for the next five years and thereafter is as follows: Thousands of Yen Year ending December 31: 2022 ¥ 76,336 2023 65,756 2024 55,641 2025 41,919 2026 39,570 Thereafter 111,447 Total ¥ 390,669 The following table shows changes in carrying amount of goodwill for the years ended December 31, 2021, 2020 and 2019: Thousands of Yen Balance at December 31, 2019 ¥ 78,282 Acquisitions of relaxation salons*¹ 72,438 Balance at December 31, 2020 150,720 Acquisitions of relaxation salons*¹ 185,263 Acquisition of SAWAN’s shares*³ 110,881 Acquisition of ZACC’s shares*² 167,241 Sale of directly-owned salons, and closure of directly-owned salons (13,776) Balance at December 31, 2021 ¥ 600,329 *1 Acquisitions for the years ended December 31, 2021 and 2020 relate to relaxation salon acquisitions in the relaxation salon segment. Refer to Note 2. *2 Acquisition for the year ended December 31, 2021 relates to ZACC’s shares acquisition in the luxury beauty segment. Refer to Note 2. *3 Acquisition for the year ended December 31, 2021 relates to SAWAN’s shares acquisitions in the relaxation salon segment. Refer to Note 2. No impairment losses on goodwill were recognized for the years ended December 31, 2021, 2020 and 2019. The Company performed a step 1 quantitative assessment for its annual goodwill impairment test on December 31, 2021. Based on the results of the step 1 test, the fair value of the reporting unit exceeded the carrying value and no impairment was recorded. The Company performed a qualitative assessment for its annual goodwill impairment test on December 31, 2020 and December 31, 2019. Based on the results of the qualitative assessment, a step one test was not considered necessary. The fair value of all reporting units was determined using an income approach based upon estimates of future discounted cash flows. Significant judgments and unobservable inputs categorized as Level III in the fair value hierarchy are inherent in the impairment tests performed and include assumptions about the amount and timing of expected future cash flows, growth rates, and the determination of appropriate discount rates. The Company believes that the assumptions used in its annual impairment test are reasonable, but variations in any of the assumptions may result in different calculations of fair values and impairment charges. The impacts of any adverse business and market conditions which impact the overall performance of the Company's reporting units will continue to be monitored. If the Company's reporting units do not achieve the financial performance that the Company expects, it is possible that goodwill impairment charges may result. There can therefore be no assurance that future events will not result in an impairment of goodwill. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2021 | |
Investments | |
Investments | 5. Investments Equity Method Investments In December 2019, the Company sold all of its investment in Re.Ra.Ku (Hong Kong) Health Science and Technology Co., Limited, for ¥ 50,000 thousand, for a gain of ¥ 559 thousand. As of December 31, 2021, 2020 and 2019, the Company had zero ownership interest in equity method investments. Investments at Cost The carrying amount of non-marketable securities are recorded at cost as fair value is not readily determinable. The amount is ¥53,020 thousand and ¥500 thousand as of December 31, 2021 and 2020, respectively. The Company did not recognize any impairment for the year ended December 31, 2021. For the year ended December 31, 2020, impairment charges of ¥5,544 thousand and ¥5,000 thousand were recorded on the Matrix Industries, Inc. and other non-marketable securities, respectively. The Company did not recognize any impairment for the year ended December 31, 2019. The breakdown of non-marketable securities as of December 31, 2021, 2020 and 2019 are as follows: Carrying amount Thousands of Yen Ownership 2021 2020 2021 2020 Matrix Industries, Inc. ¥ 52,520 ¥ ― 0.09% 0.09% Other 500 500 ― ― Total ¥ 53,020 ¥ 500 In February 3, 2021 the Company acquired a convertible note from Matrix Industries, Inc. for ¥52,520 thousand. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2021 | |
Borrowings | |
Borrowings | 6. Borrowings The Company has borrowings with financial institutions. Some borrowings are secured. As of December 31, 2021, time deposits with an aggregating book value of ¥81,526 thousand are pledged as collateral (the amounts of ¥20,026 thousand and ¥61,500 thousand are included in time deposits and other assets, respectively, in the consolidated balance sheets). Some borrowings are guaranteed by Credit Guarantee Association, a Japanese governmental affiliate agency which supplements private companies with credit. The borrowings accrue interest using fixed interest rates of 0.21% – 3.98%, per annum as of December 31, 2021 and 2020. Debt issuance costs related to these borrowings are immaterial. The carrying value of the Company’s borrowings as of December 31, 2021 and 2020 are as follow: Thousands of Yen 2021 2020 Borrowings (Due through 2035 with weighted average interest rates of 0.66% as of December 31, 2021, due through 2035 with weighted average interest rates of ¥ 908,840 ¥ 910,661 Current portion of borrowings (162,252) (242,281) Total borrowings ¥ 746,588 ¥ 668,380 As of December 31, 2021, the carrying value is comprised of the principal amount of ¥913,486 thousand less a fair value valuation discount of ¥4,646 thousand. As of December 31, 2020, the carrying value is the same as the principal amount of the borrowings of ¥910,661 thousand. The following is a summary of maturities of borrowings subsequent to December 31, 2021: Thousands of Yen Year ending December 31: 2022 ¥ 162,252 2023 99,252 2024 96,918 2025 88,438 2026 94,460 2027 and thereafter 367,520 Total ¥ 908,840 Parent has long-term borrowings. These borrowings are primarily made under general agreements, which are to provide security and guarantees for present and future indebtedness or to secure a guarantor upon request of the bank, and that the banks shall have the right to offset cash deposits against any debts and obligations that have become due or, in the case of default, against all obligations to the banks. Kouji Eguchi, the representative director and the shareholder of Parent (holds 38.61% of common stock and all Class A |
Asset Retirement Obligation
Asset Retirement Obligation | 12 Months Ended |
Dec. 31, 2021 | |
Asset Retirement Obligation. | |
Asset Retirement Obligation | 7. Asset Retirement Obligation Asset retirement obligation primarily consists of estimated costs arising from a contractual obligation to a landlord to remove leasehold improvements from leased properties at the end of the lease contracts for its headquarters and directly-operated salons. Reconciliation of the beginning and ending amount of asset retirement obligation for the years ended December 31, 2021 and 2020 is as follows: Thousands of Yen 2021 2020 Beginning balance ¥ 191,192 ¥ 127,411 Liabilities incurred 114,946 80,056 Liabilities settled (9,316) (16,870) Accretion expense 2,172 595 Ending balance ¥ 298,994 ¥ 191,192 As of December 31, 2021, the amounts of ¥2,593 thousand and ¥296,401 thousand asset retirement obligation are included in other current liabilities and asset retirement obligation, respectively, in the consolidated balance sheets. As of December 31, 2020, the amounts of ¥191,192 thousand asset retirement obligation are included in asset retirement obligation, in the consolidated balance sheets. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Leases | 8. Leases The Company mainly leases commercial space for its relaxation salon from external third parties, which are either operated by the Company or a franchisee and also enters into contracts with franchisees subleasing partial spaces of leased properties under the terms and conditions that are substantially the same as the head lease contracts. As of December 31, 2021, 2020 and 2019, the Company had 235, 213 and 220 leased salons, respectively, of which 115, 130 and 165 salons, respectively were subleased. Operating Leases Lessee There are no lease transactions classified as finance leases for the years ended December 31, 2021, 2020 and 2019. The table below summarizes the components of operating lease costs related to operating leases for the year ended December 31, 2021, 2020 and 2019: Thousands of Yen 2021 2020 2019 Fixed lease cost (a) ¥ 801,292 ¥ 748,230 ¥ 851,555 Variable lease cost (b) 33,167 24,484 30,901 Short-term cost 38,876 11,669 10,979 Total ¥ 873,335 ¥ 784,383 ¥ 893,435 (a) This includes the amount of ¥420,138 thousand, ¥478,225 thousand and ¥580,074 thousand recoverable from sublessees for the years ended December 31, 2021, 2020 and 2019, respectively. (b) This includes the amount of ¥17,838 thousand, ¥14,146 thousand and ¥27,606 thousand recoverable from sublessees for the years ended December 31, 2021, 2020 and 2019, respectively. There are no sale-and leaseback transactions conducted in the years ended December 31, 2021, 2020 and 2019. Supplementary information on cash flow and other information for leasing activities for the year ended December 31, 2021, 2020 and 2019 are as follows: Thousands of Yen 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows ¥ 881,822 ¥ 797,623 ¥ 375,270 Right-of-use assets obtained in exchange for lease liabilities 917,135 604,703 749,008 Weighted average remaining lease term (in years) 3.2 2.8 3.3 Weighted average discount rate 1.64% 1.45% 1.45% Maturity analysis of future minimum lease payments under non-cancellable leases subsequent to December 31, 2021 are as follows: Thousands of Yen Year ending December 31: 2022 ¥ 773,383 2023 490,042 2024 278,068 2025 181,245 2026 112,678 2027 and thereafter 113,935 Total 1,949,351 Less: Interest component (65,395) Present value of minimum lease payments ¥ 1,883,956 The amount of ¥755,219 thousand and ¥1,128,737 thousand of the discounted present value of minimum lease payment are included in current portion of lease liability and lease liability — net of current portion, respectively, in the consolidated balance sheets. Subleases The Company leases space from commercial facility landlords which in turn it subleases to certain franchisees of its relaxation salons. Sublease revenues are as follows for the years ended December 31, 2021, 2020 and 2019, and included in franchise revenues: Thousands of Yen 2021 2020 2019 Fixed sublease income ¥ 420,138 ¥ 478,225 ¥ 580,074 Variable sublease income 17,838 14,146 27,606 Total ¥ 437,976 ¥ 492,371 ¥ 607,680 Expected future minimum lease collections to be received under non-cancellable subleases subsequent to December 31, 2021 are as follows: Thousands of Yen Year ending December 31: 2022 ¥ 328,989 2023 225,351 2024 92,165 2025 45,374 2026 23,279 2027 and thereafter 18,267 Total ¥ 733,425 There are no lease transactions classified as sale-type leases and direct financing leases for the years ended December 31, 2021, 2020 and 2019. |
Shareholders' (Deficit) Equity
Shareholders' (Deficit) Equity | 12 Months Ended |
Dec. 31, 2021 | |
Shareholders' (Deficit) Equity | |
Shareholders' (Deficit) Equity | 9. Shareholders' (Deficit) Equity Common stock and Class A common stock Parent's capital consists of common stock and Class A common stock. On March 29, 2021, the Company held its 21st Ordinary General Meeting of Shareholders, whereby the proposal to amend the Articles of Incorporation to increase the total number of authorized shares was approved. The total number of authorized shares increased to 19,900,000 shares, and the total number of authorized class shares increased to 19,899,999 common shares and one (1) Class A common share. The same rights are granted to common stock and Class A common stock on the right to claim a dividend and to claim a liquidation distribution. Class A common stock is entitled to no voting rights at ordinary shareholders’ meetings. However, when Parent makes decisions on the following matters stipulated in laws or regulations or the articles of incorporation that need to be approved by the resolution of the Board of Directors, in addition, Parent needs approval at the Class General Meetings of respective shareholders, which is constituted by the shareholders of Class A common stock. 1. Subject to a demand for sale of treasury stock from inheritors; 2. Reverse stock split, stock split, issuance of stock and issuance of stock acquisition right; 3. Dismissal of Parent's corporate auditor; 4. Decrease of common stock; 5. Dividend paid in property other than money; 6. Change in the articles of incorporation, business transfer, dissolution and liquidation of Parent; and 7. Organizational change, merger, stock exchange and stock transfer; All issued Class A common stock are held by Parent's representative director, Kouji Eguchi. The holders of Class A common share can claim anytime to acquire Class A common share at market price. Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are summarized below: Common stock Under the Companies Act, issuances of common stock are required to be credited to the common stock account for at least 50% of the proceeds and to the additional paid-in capital account for the remaining amounts. Dividends Under the Companies Act, companies can pay dividends at any time during the year in addition to the year-end dividend upon resolution at the shareholders’ meeting. The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to shareholders’ subject to certain limitations and additional requirements. Semiannual dividends may also be paid upon resolution by the Board of Directors. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million. Increases / decreases and transfer of common stock, reserve and surplus The Companies Act requires that an amount equal to 10% of dividends must be appropriated as legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the total of the aggregate amount of legal reserve and additional paid-in capital equals 25% of common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, and other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of the shareholders. Treasury Stock The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-based Compensation | |
Stock-based Compensation | 10. Stock-based Compensation The fair value of stock options as part of employee incentive plans is estimated at the date of grant of the purchase rights using the Black-Sholes option-pricing model. The model requires the input of highly subjective assumptions such as the expected stock price volatility and the expected term. According to the resolutions at the general meetings of shareholders held in December 2015, as Fourth Series of Stock Subscription Rights, stock options to purchase 1,539,500 shares of common stock were granted to the Company's director and the Company's corporate auditor on December 21, 2015. The exercise term of stock options is 8 years commencing from December 22, 2017 and they must hold positions in the Company at the time of exercise to exercise their rights. The stock option's fair value as of grant date was ¥2.45 per share. The exercise price of the stock option is ¥400 per share. According to the resolutions at the general meetings of shareholders held in December 2015, as Fifth Series of Stock Subscription Rights, stock options to purchase 285,500 shares of common stock were granted to the Company's employees on December 21, 2015. The exercise term of stock options is 8 years commencing from December 22, 2017 and they must be employed by the Company at the time of exercise to exercise their rights. The stock option's fair value as of grant date was ¥2.96 per share. The exercise price of the stock option is ¥400 per share. According to the resolutions at the general meetings of shareholders held in December 2016, as Sixth Series of Stock Subscription Rights, stock options to purchase 230,000 shares of common stock were granted to the Company's corporate auditor on December 21, 2016. The exercise term of stock options is 8 years commencing from December 22, 2018 and they must hold positions in the Company at the time of exercise to exercise their rights. The stock option's fair value as of grant date was ¥0.67 per share. The exercise price of the stock option is ¥2,000 per share. According to the resolutions at the general meetings of shareholders held in December 2016, as Seventh Series of Stock Subscription Rights, stock options to purchase 174,000 shares of common stock were granted to the Company's director and the Company's employees on December 21, 2016. The exercise term of stock options is 8 years commencing from December 22, 2018 and they must be employed by the Company at the time of exercise to exercise their rights. The stock option's fair value as of grant date was ¥0.82 per share. The exercise price of the stock option is ¥2,000 per share. According to the resolutions at the extraordinary general meetings of shareholders held in August 2020, as Eighth Series of Stock Subscription Rights, stock options to purchase 150,000 shares of common stock were granted to the Company’s director on October 2, 2020. The amount to be paid in for the stock option was ¥ 1.00 per share. The exercise term of stock options is 5 years commencing from October 1, 2021 and they must be employed by the Company at the time of exercise to exercise their rights. The stock option’s fair value as of grant date was ¥ 104.64 per share. The exercise price of the stock option is ¥ 2,000 per share. According to the resolutions at the extraordinary general meetings of shareholders held in August 2020, as Ninth Series of Stock Subscription Rights, stock options to purchase 300,000 shares of common stock were granted to the Company’s director, the Company’s corporate auditor, the Company’s employees and outside service providers on October 2, 2020. The amount to be paid in for the stock option was ¥ 22.00 per share. The exercise term of stock options is 3 years commencing from October 1, 2021 and they must be employed by the Company at the time of exercise to exercise their rights (however, this shall not apply to outside service providers). In addition, the exercise can take place only when the Company achieves an annual consolidated revenue target of ¥ 3,908,264 thousand under U.S. GAAP in any of our 2020, 2021 or 2022 fiscal years. The stock option’s fair value as of grant date was ¥ 637.02 per share. The exercise price of the stock option is ¥ 128 per share. The Company did not grant any stock options during 2021 and 2019. Cash received from stock options granted during 2020 was The fair value of the Company’s stock option was estimated on the date of grant using the Black-Sholes option-pricing model that incorporates the assumptions presented below: Year ended 2021 2020 Expected term of option (in years) ― 2 –3 Expected volatility ― % 58.21 – 65.93 % Expected dividend yield ― % ― % Risk-free interest rate ― % 0.17 – 0.19 % Expected term of option The expected term of option represents the period of time that the stock options granted are expected to be outstanding. The expected term of option was estimated utilizing the simplified method because the Company did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The simplified method primarily is calculated as the midpoint between the requisite service period and the contractual term of option. Expected volatility Since the Company does not have a trading history of its common stock, the expected volatility is based on average volatility of comparable publicly traded companies within the Company’s industry. Therefore, the Company used the average of their historical volatilities over the respective expected option terms as an estimate of the expected volatility of its own share price. Expected dividend yield The expected dividend yield is assumed to be zero as the Company has no current plans to pay any dividends in the foreseeable future. Risk-free interest rate The risk-free interest rate is based on market yield curve of the U.S. Treasury securities for the respective expected terms of options. A summary of the activity of the Company's employee stock option plans as of and for the years ended December 31, 2021, 2020 and 2019 is presented below: Yen Years Thousands of Yen Number of shares Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value Outstanding at December 31, 2018 549,500 ¥ 1,552 7.6 ¥ ― Forfeited/Expired (30,000) 800 Outstanding at December 31, 2019 519,500 1,595 6.7 ― Exercisable at December 31, 2019 519,500 1,595 6.7 ― Granted 450,000 752 ― Forfeited/Expired (290,000) 1,903 Outstanding at December 31, 2020 679,500 905 4.3 531,518 Exercisable at December 31, 2020 229,500 1,205 5.4 123,891 Forfeited/Expired (79,700) 1,266 Outstanding at December 31, 2021 599,800 857 3.5 192,570 Exercisable at December 31, 2021 599,800 ¥ 857 3.5 ¥ 192,570 For the year ended December 31, 2021, there was ¥ 15,545 thousand of compensation cost recognized for the 8th stock options. As of December 31, 2021, the performance condition for the 9th series stock option was deemed probable and the full compensation cost of ¥ 181,308 thousand for the non-forfeited options was recorded in the year ended December 31, 2021. As of December 31, 2021, there was no unrecognized compensation cost. For the year ended December 31, 2020, there was no material compensation cost recognized for the 8th stock options. As of December 31, 2020, the performance condition for the 9th series of stock option was not deemed probable due to the impacts of COVID-19 and no compensation cost was recorded. For the year ended December 31, 2019, there were no compensation cost recognized for these stock options. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2021 | |
Segment Information | |
Segment Information | 11. Segment Information The Company operates its business in three segments: Relaxation Salon, Digital Preventative Healthcare, and Luxury Beauty, which are based on the organizational structure and information reviewed by the Company's Chief Operating Decision Maker, who is the Chief Executive Officer, to evaluate its operating results and allocation of resources. The accounting policies of the segments are substantially the same as those described in the significant accounting policies in Note 1. Information about operating results and assets for each segment as of and for the years ended December 31, 2021, 2020 and 2019 is as follows: Thousands of Yen Digital Corporate Relaxation Preventative Luxury and Salon Healthcare Beauty elimination Consolidated Year ended December 31, 2021 Revenues ¥ 5,196,540 ¥ 43,965 ¥ 169,320 ¥ ― ¥ 5,409,825 Operating income (loss) 699,105 (144,857) (6,538) (1,018,297) (470,587) Depreciation and amortization 80,917 11,113 10,736 23,477 126,243 Total assets 4,002,005 161,945 701,172 887,939 5,753,061 Year ended December 31, 2020 Revenues ¥ 3,315,947 ¥ 25,670 ¥ ― ¥ ― ¥ 3,341,617 Operating loss (140,866) (66,100) ― (539,122) (746,088) Depreciation and amortization 32,261 8,007 ― 22,022 62,290 Total assets 3,096,094 34,247 ― 2,583,125 5,713,466 Year ended December 31, 2019 Revenues ¥ 3,864,656 ¥ 43,608 ¥ ― ¥ ― ¥ 3,908,264 Operating income (loss) 279,439 (43,056) ― (202,033) 34,350 Depreciation and amortization 34,025 4,764 ― 7,385 46,174 Total assets 3,346,739 29,565 ― 1,381,161 4,757,465 Expenses not directly associated with specific segments are allocated based on the most reasonable measures applicable. Corporate expenses include certain corporate general and administrative expenses and back-office expenses. Assets attributed to each segment are accounts receivable-trade, net, accounts receivable-other, net, inventories, prepaid expenses, right-of-use asset - operating lease, property and equipment, goodwill, intangible assets, investments, and lease and guarantee deposits. Corporate assets primarily consist of cash and cash equivalents, time deposits, long-term accounts receivable-other, net, deferred tax assets, and property and equipment. Substantially all revenues are from customers operating in Japan. Geographic information is omitted due to immateriality of revenue and operating income attributable to international operations for the years ended December 31, 2021, 2020 and 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | 12. Income Taxes The following table shows a summary of income taxes for the years ended December 31, 2021, 2020 and 2019: Thousands of Yen Thousands of Yen Thousands of Yen 2021 2020 2019 Total Total Total (Loss) income before income taxes ¥ (414,481) ¥ (626,689) ¥ 32,737 Income taxes Current 24,767 19,745 10,222 Deferred 551,483 (107,264) 5,739 Total ¥ 576,250 ¥ (87,519) ¥ 15,961 Parent and its subsidiaries are subject to a number of taxes based on income, in the aggregate resulted in an effective statutory rate of approximately 30.6% for the years ended December 31, 2021, 2020 and 2019. A reconciliation of the differences between the effective income tax rates reflected in the accompanying consolidated statements of operation and Japanese statutory tax rates for the years ended December 31, 2021, 2020 and 2019 is as follows: 2021 2020 2019 Statutory tax rate 30.6 % 30.6 % 30.6 % Increases (reductions) in taxes due to: Change in valuation allowance (155.9) (13.2) (10.2) Nondeductible expenses (1.1) (0.3) 3.2 Inhabitant tax-per capita* (3.9) (3.2) 24.5 Stock-based compensation (14.5) ― ― Use of operating loss carryforwards 3.9 ― ― Other-net 1.9 0.1 0.7 Effective income tax rate (139.0) % 14.0 % 48.8 % * Inhabitants tax is imposed on resident corporations in Japan. It consists of the corporation tax calculated as a percentage of national corporation tax and the per capita levy determined based on capital and the number of employees. For the year ended December 31, 2021, the impact of inhabitant tax per capita on the effective tax rate decreased due to fluctuation of (loss) income before income taxes. The tax effects of the major items of temporary differences giving rise to the deferred tax assets and liabilities as of December 31, 2021, 2020 and 2019 are as follows: Thousands of Yen 2021 2020 2019 Deferred tax assets: Accounts receivable-trade ¥ 13,485 ¥ 13,485 ¥ 13,485 Provision for bad debt 50,551 41,700 50,271 Goodwill ― ― 1,135 Other prepaid expenses - currently not deductible ― ― 54,235 Contract liability ― 154,950 ― Asset retirement obligation 91,552 58,543 39,013 Operating lease liability 576,867 505,601 563,660 Operating loss carryforwards 716,518 484,040 95,490 Other 69,603 60,392 51,485 Gross deferred tax assets 1,518,576 1,318,711 868,774 Valuation allowance (771,441) (125,376) (42,395) Total deferred tax assets 747,135 1,193,335 826,379 Deferred tax liabilities: Property and equipment (65,590) (32,433) (18,141) Goodwill (15,018) (4,073) ― Intangible assets (101,025) (15,285) (6,485) Right-of-use asset - operating lease (558,538) (483,437) (560,336) Deferred offering costs ― ― (17,609) Advances received ― (1,311) (1,303) Other (6,964) (1,205) ― Total deferred tax liabilities (747,135) (537,744) (603,874) Net deferred tax assets ¥ ― ¥ 655,591 ¥ 222,505 Valuation allowance for deferred tax assets have increased by ¥646,065 thousand, increased by ¥82,981 thousand and decreased by ¥3,355 thousand for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021, the Company has provided a full valuation allowance against all of its deferred tax assets. The Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessments, more weight was given to evidence that could be objectively verified. Under this approach the recent cumulative losses are a significant piece of significant negative evidence and was given more weight than projected future income. Based on the Company’s review of this evidence, management believes that a full valuation allowance against all of the Company’s deferred tax assets as of December 31, 2021 is appropriate. At December 31, 2021, the Company had operating loss carryforwards of ¥2,340,033 thousand, which are available to offset future taxable income. These carryforwards are scheduled to expire as follows: Operating loss carryforwards (Thousands of Yen) Years ending December 31: Between 2022 and 2025 ¥ 133,695 Between 2026 and 2029 160,948 2030 and thereafter 2,045,390 Total ¥ 2,340,033 The Company does not recognize any deferred tax liabilities for undistributed earnings of domestic subsidiaries since dividends from these subsidiaries are not subject to taxation under Japanese tax law. At December 31, 2021, 2020 and 2019, current unrecognized tax benefit is not material in amount. Even in the next twelve months after the end of 2021, it is unlikely that the total amount would change dramatically. The penalties and interest expenses related to income taxes are recognized in the consolidated statements of operation as of December 31, 2021, 2020 and 2019, however, the amounts are immaterial. Parent and its subsidiaries are subject to taxation in Japan and in the local Japanese governments where the Company’s salons or offices are located. As of December 31, 2021, the fiscal year ending December 31, 2016 and subsequent years remain open to examination by the tax authority (National Tax Agency and Tokyo Metropolitan Government). |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Revenue Recognition | 13. Revenue Recognition Disaggregation of revenue For the year ended December 31, 2021and 2020, revenues are disaggregated by revenue stream and reconciled to reportable segment revenues as follows. Thousands of Yen Digital Preventative Luxury Revenue Stream* Relaxation Salon Healthcare Beauty Consolidated Year ended December 31, 2021 Revenue from directly-operated salons ¥ 3,278,514 ¥ ― ¥ 169,320 ¥ 3,447,834 Revenue from the sale of directly-owned salons 559,000 ― ― 559,000 Franchise fees 199,889 ― ― 199,889 Royalty income 209,848 ― ― 209,848 Staffing service revenue 263,962 ― ― 263,962 Sublease revenue 437,976 ― ― 437,976 Other franchise revenues 247,351 ― ― 247,351 Other revenues ― 43,965 ― 43,965 Total revenues ¥ 5,196,540 ¥ 43,965 ¥ 169,320 ¥ 5,409,825 Thousands of Yen Digital Preventative Luxury Revenue Stream* Relaxation Salon Healthcare Beauty Consolidated Year ended December 31, 2020 Revenue from directly-operated salons ¥ 2,026,806 ¥ ― ¥ ¥ 2,026,806 Franchise fees 175,445 ― ― 175,445 Royalty income 179,745 ― ― 179,745 Staffing service revenue 254,282 ― ― 254,282 Sublease revenue 492,371 ― ― 492,371 Other franchise revenues 187,298 ― ― 187,298 Other revenues ― 25,670 ― 25,670 Total revenues ¥ 3,315,947 ¥ 25,670 ¥ ― ¥ 3,341,617 * All revenue streams are recognized over time, with the exception of hiring support within other franchise revenues and revenue from the sale of directly-owned salons, which are recognized at a point in time. Revenue related to hiring support was not material in the periods presented. Contract balance Information about receivables and contract liabilities from contracts with customers is as follows: Thousands of Yen As of As of December 31, December 31, 2021 2020 Balance sheet classification Receivables ¥ 312,302 ¥ 148,540 Accounts receivable-trade, net Contract liabilities: Current 104,182 172,063 Current portion of contract liability Long-term 239,067 333,978 Contract liability - net of current portion Total ¥ 343,249 ¥ 506,041 Prepaid card liability ¥ 509,355 ¥ 403,229 Advances received Receivables relate primarily to payments due for royalty income, staffing service revenue and sublease revenue. With respect to the payment term, payment for these revenues is generally collected monthly. As such, no significant finance component has been identified. The receivables balance is presented net of an allowance for expected losses (i.e., doubtful accounts), and are primarily related to receivables from the Company’s franchisees. Refer to “Accounts Receivables – Trade, Net” on Note 1 for details on the components of the receivables balance and the allowance. Contract liabilities primarily represents the Company’s remaining performance obligations under its franchise agreement at the end of the year, for which consideration has been received and revenue had not been recognized, and is generally recognized as revenues ratably over the remaining customer life that the expected services are expected services are expected to be provided. Prepaid card liabilities mainly relate to the unused balance of ReRaKu and SAWAN cards that can be redeemed at company-operated salons for services. Revenue for prepaid cards is recognized and the corresponding liability is reduced as the services are provided. As of December 31, 2021, contract assets under contracts with customers were immaterial and they are included in prepaid expenses and other current assets and other assets in the consolidated balance sheets. Changes in the Company’s contract liabilities for the year ended December 31, 2021 are as follows: Thousands of Yen Contract liabilities Balance at December 31, 2020 ¥ 506,041 Revenues recognized during 2021 which were included in the contract liabilities balance at December 31, 2020 (201,074) Remaining amounts at December 31, 2021 which were newly recognized as contract liabilities during 2021 38,282 Balance at December 31, 2021 ¥ 343,249 For the year ended December 31, 2021, there were no revenues recognized under performance obligations which were satisfied for past fiscal years by change of transaction price, etc. Changes in receivables and contract liabilities are primarily due to the timing of revenue recognition, billings and cash collections. Transaction price allocated to remaining performance obligations Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2021 is as follows: Thousands of Yen Year ending December 31: 2022 ¥ 104,182 2023 100,357 2024 86,118 2025 42,201 2026 8,734 2027 and thereafter 1,657 Total ¥ 343,249 |
Other Comprehensive Income (Los
Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2021 | |
Other Comprehensive Income (Loss) | |
Other Comprehensive Income (Loss) | 14. Other Comprehensive Income (Loss) Tax effects allocated to each component of other comprehensive income (loss) and reclassification adjustments for the year ended December 31, 2019 are as follows: Thousands of Yen Before Tax Tax Net of Tax Amount Expense Amount Year ended December 31, 2019 Foreign currency translation adjustments Reclassification adjustments for gains and losses realized in net income ¥ 400 ¥ (122) ¥ 278 Other comprehensive income (loss) ¥ 400 ¥ (122) ¥ 278 There were no such amounts recognized for the year ended December 31, 2021 and 2020. Changes in accumulated other comprehensive income (loss) for the year ended December 31, 2019 are as follows Thousands of Yen Foreign currency translation adjustments Balance at December 31, 2018 ¥ (278) Amounts reclassified from accumulated other comprehensive income (loss) 278 Net change during the year 278 Balance at December 31, 2019 ¥ ― There was no accumulated other comprehensive income (loss) as of December 31, 2021 and 2020 and no changes for the year ended December 31, 2021 and 2020. Reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2021, 2020 and 2019 are as follows: Affected line items Thousands of Yen in consolidated 2021 2020 2019 statements of (loss) income Foreign currency translation adjustments ¥ ― ¥ ― ¥ 400 Other – net ― ― (122) Income tax expense ― ― 278 Net income Total amount reclassified, net of tax ¥ ― ¥ ― ¥ 278 |
(Loss) Earnings Per Share
(Loss) Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
(Loss) Earnings Per Share | |
(Loss) Earnings Per Share | 15. (Loss) Earnings Per Share (Loss) earnings per common share is allocated based on each right of common stock and Class A common stock, on the assumption that (loss) income from current year has been distributed. Common stock and Class A common stock have equal rights with respect to surplus dividend and residual assets distribution as net (loss) income attributable to shareholders of the Company is allocated proportionally. Reconciliations of net (loss) income and weighted average number of common shares outstanding used for the computation of basic (loss) earnings per common share for the years ended December 31, 2021, 2020 and 2019 are as follows: 2021 2020 2019 Common Class A Common Class A Common Class A (Thousands of Yen) (Thousands of Yen) (Thousands of Yen) Income (Numerator) Net (loss) income attributable to shareholders of the Company ¥ (990,731) ― ¥ (539,170) ― ¥ 17,335 ― Shares (Denominator) (Number of shares) (Number of shares) (Number of shares) Weighted average common shares outstanding 4,877,404 1 4,024,692 1 3,747,295 1 Effect of dilutive instruments: Stock options ― ― ― ― 525,007 ― Weighted average common shares for diluted computation 4,877,404 1 4,024,692 1 4,272,302 1 (Loss) earnings per common share attributable to shareholders of the Company (Yen) (Yen) (Yen) Basic ¥ (203.13) ¥ (203.13) ¥ (133.97) ¥ (133.97) ¥ 4.63 ¥ 4.63 Diluted ¥ (203.13) ¥ (203.13) ¥ (133.97) ¥ (133.97) ¥ 4.06 ¥ 4.06 For periods in which the Company reports net loss, diluted net loss per common share attributable to common shareholders is the same as basic net loss per common share attributable to common shareholders. Options to purchase 599,800 shares and 799,500 shares have been excluded from the diluted net loss per common share attributable to common shareholders calculation for the year ended December 31, 2021 and 2020, respectively because the effect of inclusion would have been anti-dilutive. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 16. Fair Value of Financial Instruments Fair value of financial instruments The estimated fair values of the Company's financial instruments at December 31, 2021 and 2020 are set forth below: The following summary excludes cash and cash equivalents, time deposits, accounts receivable-trade, accounts receivable-other, investments, long-term accounts receivable-other, lease and guarantee deposits, current portion of borrowings, accounts payable-trade, accrued expenses, mandatorily redeemable noncontrolling interests, deposit received and operating lease liability for which fair values approximate their carrying amounts. The summary also excludes investments which are disclosed in Note 5. Thousands of Yen 2021 2020 Carrying amount Estimated fair value Carrying amount Estimated fair value Borrowings - net of current portion ¥ (746,588) ¥ (759,185) ¥ (668,380) ¥ (644,499) The following methods and assumptions are used to estimate the fair value in the above table. Borrowings The Company's borrowings instruments are classified as Level 2 instruments and valued based on the present value of future cash flows associated with each instrument discounted using current market borrowing rates for similar borrowings instruments of comparable maturity. The classification of levels is fully described in Note 17. Assumptions used in fair value estimates Fair value estimates are made at a specific point in time, based on relevant market information available and details of the financial instruments. These estimates are practically conducted by the Company which involve uncertainties and matters of significant judgment; therefore, these cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 17. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy that prioritizes the inputs used to measure fair value is as follows: Level 1 Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable, which reflect the reporting entity's own assumptions about the assumptions that market participants would use in establishing a price. The only asset or liability to be measured at fair value on a “recurring” basis during 2021 related to the mandatorily redeemable noncontrolling interest as part of the ZACC acquisition in October 2021, which is considered a level 3 input. As of December 31, 2021, the carrying value approximated the fair value due to the short timeframe before redemption and there were no other adjustments during the year. The Company subsequently purchased the shares related to the noncontrolling interest in January 2022. There were no assets or liabilities to be measured at fair value on "recurring" basis during 2020 and 2019. Long-lived assets and liabilities that have been measured at fair value on "nonrecurring" basis include leasehold improvements, right-of-use assets — operating lease, trademark, and reacquired franchise rights. Assets and liabilities measured at fair value on "nonrecurring" basis as of December 31, 2021, 2020 and 2019 are as follows: Thousands of Yen Impairment Level 1 Level 2 Level 3 loss Year ended December 31, 2021 Assets Leasehold improvements ¥ ― ¥ ― ¥ 359,376 ¥ 3,165 Right-of-use asset - operating lease ― ― 1,824,095 20,979 Trademark ― ― 153,458 38,922 Reacquired franchise rights ― ― 8,639 145 Total ¥ ― ¥ ― ¥ 2,345,568 ¥ 63,211 Year ended December 31, 2020 Assets Leasehold improvements ¥ ― ¥ ― ¥ 213,314 ¥ 36,512 Right-of-use asset - operating lease ― ― 1,578,828 69,989 Total ¥ ― ¥ ― ¥ 1,792,142 ¥ 106,501 Year ended December 31, 2019 Assets Leasehold improvements ¥ ― ¥ ― ¥ 161,330 ¥ 9,825 Right-of-use asset - operating lease ― ― 1,829,968 34,721 Total ¥ ― ¥ ― ¥ 1,991,298 ¥ 44,546 Impairment of long-lived assets Significant judgments and unobservable inputs categorized as Level 3 in the fair value hierarchy are inherent in the impairment tests performed and include assumptions about the amount and timing of expected future cash flows, growth rates, and the determination of appropriate discount rates. The Company believes that the assumptions used in its annual and any interim date impairment tests are reasonable, but variations in any of the assumptions may result in different calculations of fair values and impairment charges. The Company's primary business is the operations of Relaxation Salons. It regularly conducts reviews of past performances and future profitability forecast for individual Salons. Based on the evaluation, if the Company determines that the Salon assets are impaired and not fully recoverable, it reduces the carrying amounts of the Salon's long-lived assets to the estimated fair value. Fair value is determined based on income approach using Level 3 inputs under ASC 820 Fair Value Measurement For the year ended December 31, 2021, the Company recognized impairment loss of ¥24,289 thousand on leasehold improvements, right-of-use asset — operating lease and reacquired franchise rights directly related to certain relaxation salons. The Company conducted strategic reviews of its future profitability forecast for the salons. Following these reviews, the Company reduced the corresponding estimated future cash flows of these assets and the estimated ability to recover the carrying amount of the long-lived assets within the period applicable to the impairment determination, resulting in the impairment charges. For the year ended December 31, 2020, the Company recognized impairment loss of ¥106,501 thousand on leasehold improvements and right-of-use assets — operating lease directly related to certain relaxation salons. The Company conducted strategic reviews of its future profitability forecast for the salons. Following these reviews, the Company reduced the corresponding estimated future cash flows of these assets and the estimated ability to recover the carrying amount of the long-lived assets within the period applicable to the impairment determination, resulting in the impairment charges. For the year ended December 31, 2019, the Company recognized impairment loss of ¥44,546 thousand on leasehold improvements and right-of-use assets — operating lease directly related to certain relaxation salons. The Company conducted strategic reviews of its future profitability forecast for the salons. Following these reviews, the Company reduced the corresponding estimated future cash flows of these assets and the estimated ability to recover the carrying amount of the long-lived assets within the period applicable to the impairment determination, resulting in the impairment charges. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 18. Commitments and Contingencies Operating leases The Company mainly in addition to its headquarters facility, leases salon spaces from external third parties, which are either directly-operated salons or franchised salons. Refer to Note 8 "Leases" and Note 7 "Asset Retirement Obligation" for details on the components of operating lease costs and future minimum lease payments under non-cancellable leases and asset retirement obligation, respectively. Borrowings The Company has borrowings that are primarily made under general agreements. Refer to Note 6 Borrowings for future debt payments. Litigation The Company is involved in various claims and legal actions arising in the ordinary course of business. The Company has recorded provisions for liabilities when it is probable that liabilities have been incurred and the amount of loss can be reasonably estimated. The Company reviews these provisions at least on a yearly basis and adjusts these provisions to reflect the impact of the negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Based on its experience, although litigation is inherently unpredictable, the Company believes that any damage amounts claimed in outstanding matters are not a meaningful indicator of the Company's potential liability. In the opinion of management, any reasonably possible range of losses from outstanding matters would not have a material adverse effect on the Company's consolidated financial position, results of operations, or cash flows. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | 19. Related Party Transactions Transactions with the Company's representative director The interest received on the short-term loans from Kouji Eguchi, the representative director and the shareholder of Parent (holds 48.05% of common stock and all Class Transactions with the Company’s director Akira Nojima, Parent’s independent director, is the sole owner of Kabushiki Kaisha No Track. As of December 31, 2021 and 2020, the outstanding accrued expenses to Kabushiki Kaisha No Track are ¥ Tomoya Ogawa, Parent's independent director and the shareholder of the Company (holds 0.58%, 0.59% and 0.71% of common stock as of December 31, 2021, 2020 and 2019 respectively), is the sole owner of Kabushiki Kaisha LTW. As of December 31, 2021 and 2020, the outstanding accrued expenses to Kabushiki Kaisha LTW are ¥330 thousand and ¥110 thousand (included in accrued expenses). The Company paid consulting fees of ¥3,000 thousand, ¥1,200 thousand and ¥1,200 thousand (included in selling, general and administrative expenses) to Kabushiki Kaisha LTW, in the years ended December 31, 2021, 2020 and 2019, respectively. Kazuyoshi Takahashi, the representative director of ZACC and the shareholder of ZACC is the guarantor with respect to some of the Company’s borrowings. See Note 6, “Borrowings” for more detail. Mr. Takahashi also underwrote the Company’s corporate bond of JPY50,000 thousand issued on May 10, 2022. The maturity date was August 15, 2022 at an annual interest rate of 5% without any collateral. On August 15, 2022, he underwrote the Company’s second corporate bond of JPY40,000 thousand to be matured on December 31, 2022, with all the other conditions substantially the same as the first bond. Transactions with the Company's corporate auditor Osamu Sato, Parent's corporate auditor and the shareholder of Parent (holds 0.36%, 0.36% and 0.44% of common stock as of December 31, 2021, 2020 and 2019 respectively), is the president and representative director of Ebis 20 Co., Ltd. As of December 31, 2021 and 2020, the outstanding accrued expenses to Ebis 20 Co., Ltd are ¥ |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | 20. Subsequent Events Acquisition of Remaining ZACC shares The remaining shares of ZACC were transferred to the Company on January 1, 2022 for ¥148,000 thousand. Refer to Note 2 for more detail. Receipt of Nasdaq Notification Regarding Minimum Market Value Deficiency On January 18, 2022, the Company received a written notification (the “Notification Letter”) from The Nasdaq Stock Market LLC (“Nasdaq”), notifying the Company that it is not in compliance with the minimum market value requirement set forth in Nasdaq Listing Rules for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(b)(2) requires companies to maintain a minimum market value of US$35 million and Nasdaq Listing Rule 5810(c)(3)(C) provides that a failure to meet the minimum market value requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the market value of the Company from November 23, 2021 to January 14, 2022, the Company no longer meets the minimum market value requirement. The Notification Letter did not impact the Company’s listing on The Nasdaq Capital Market at that time. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company has been provided 180 calendar days, or until July 18, 2022, to regain compliance with Nasdaq Listing Rule 5550(b)(2). To regain compliance, the Company’s market value must exceed US$35 million for a minimum of 10 consecutive business days. The Company’s business operations were not affected by the receipt of the Notice. On April 19, 2022, Nasdaq issued a notice to the Company which announces that Nasdaq has determined that for 10 consecutive business days, from April 10, 2022 to April 19, 2022, the Company’s market value of listed securities has been US$35,000,000 or greater. Accordingly, the Company has regained compliance with the Rule and the matter was now closed. On June 29, 2022, the Company received a second Notification Letter from Nasdaq, notifying the Company that it is not in compliance with the minimum market value requirement set forth in Nasdaq Listing Rules for continued listing on The Nasdaq Capital Market. Based on the market value of the Company from May 9, 2022 to June 28, 2022, the Company no longer meets the minimum market value requirement. The Notification Letter did not impact the Company’s listing on The Nasdaq Capital Market at that time. In accordance with Nasdaq Listing Rule 5810(c)(3)(C), the Company has been provided 180 calendar days, or until December 27, 2022, to regain compliance with Nasdaq Listing Rule 5550(b)(2). To regain compliance, the Company’s market value must exceed US$35 million for a minimum of 10 consecutive business days. The Company’s business operations were not affected by the receipt of the Notice. Potential deficiency in the net asset required for Issuer of Prepaid Cards “Re.Ra.Ku Cards” One of the requirements for Issuers of prepaid cards under the Settlement Act is to maintain the net asset of the issuer being more than JPY 100 million ( . As of December 31, 2021, the Company’s net assets have fallen below JPY 100 million under JGAAP on a standalone basis. The Company has recently reported the issue to the Kanto Local Financial Bureau and is currently in consultation with the regulatory authority to potentially receive any administrative guidance. See “Item 4. Regulations Governing Prepaid Cards” for more detail. Issuance of a corporate bond On May 10, 2022, the Company issued a corporate bond to help with short-term capital needs and received proceeds of ¥ 50,000 thousand based on the face value of the bond. The maturity date of the corporate bond is August 15, 2022. The corporate bond was redeemed in a lump sum on August 15, 2022, the maturity date. On August 31, 2022, the Company issued a corporate bond to help with short-term capital needs and received proceeds of ¥ 40,000 thousand based on the face value of the bond. The maturity date of the corporate bond is December 31, 2022. Mr. Takahashi, the representative director of ZACC, underwrote both of the Company’s corporate bonds. See Note 19, “Related Party Transactions” for more detail. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Basis of Presentation and Summary of Significant Accounting Policies | |
Description of Business | Description of Business MEDIROM Healthcare Technologies Inc. ("Parent") and its six subsidiaries (collectively, the "Company") are one of the leading holistic health services providers in Japan. The Company is a franchisor and operator of healthcare salons across Japan and is a preferred platform partner for large consumer brands, healthcare service providers, and government entities to affect positive health outcomes. The Company primarily engages in three lines of business: Relaxation Salon Segment (retail), Luxury Beauty (retail) and Digital Preventative Healthcare Segment (healthtech). Refer to description below and Note 11 for segment information. Parent was originally incorporated in Japan on July 13, 2000 under the name "Kabushiki Kaisha Young Leaves." In January 2017, Parent changed Parent’s name to "MEDIROM Inc." In March 2020, Parent changed Parent’s name to "MEDIROM Healthcare Technologies Inc." Relaxation Salon Segment (See Note 11 for segment information) The Relaxation Salon Segment is the core of our business, whereby we own, develop, operate, or franchise and support relaxation salons. The salon locations cover major cities throughout Japan, with strong market presence in the Tokyo metropolitan area. The Segment includes several Relaxation Salon brands including Re.Ra.Ku ® Number of Relaxation Salons 2021 2020 2019 Directly-operated 188 150 107 Franchised 124 140 176 Total 312 290 283 See Note 2, "Business Combination" for the number of salons acquired during each year. The results of operations of directly-operated salons converted to franchised salons in sale transactions with franchisees were not material either individually or in the aggregate to the consolidated financial statements. Digital Preventative Healthcare Segment (See Note 11 for segment information) The Digital Preventative Healthcare Segment mainly consists of the following operations: government-sponsored Specific Health Guidance program, utilizing our internally-developed on-demand health monitoring smartphone application, or Lav ® ® Luxury Beauty Segment (See Note 2 for business combination and Note 11 for segment information) In October 2021, the Company acquired 60% of the ownership interest in ZACC Kabushiki Kaisha (“ZACC”), a high-end hair salon company, and acquired the remaining outstanding common stock in January 2022. ZACC owns and operates 3 luxury hair salon brands (ZACC vie, ZACC raffine, and ZACC ginza), all of which have been recognized by customers for over 30 years for their high level of techniques and hospitality. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements are presented in Japanese yen, the currency of the country in which the Company is incorporated and principally operates. The accompanying consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America ("U.S. GAAP"). |
Recent Developments and Liquidity | Recent Developments and Liquidity In the years ended December 31, 2020 and 2021, the Company experienced negative cash flows from operations and also used a significant amount of cash for acquisitions and investments. In addition, it has had losses from operations since 2020, and has had a working capital deficit and an accumulated deficit for the past three years. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern for one year after the Company’s consolidated financial statements are issued. Management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations due. During 2021, the Japanese government issued multiple Declarations of Emergency for COVID-19, which impacted Tokyo and other prefectures where our salons are located. This affected the operation of our salons located in shopping malls and spa facilities. Under Declarations of Emergency, up to 28 salons had shortened operation and 36 salons temporarily closed their operation. As a result, our sales and profitability have not fully recovered. We have managed our operations by relocating therapists from closed or shortened salons to those lacking enough therapists, or issuing furlough to those who cannot be relocated to other open salons and applying for governmental subsidies. As of the date of this report, all Declarations of Emergency were lifted nationwide. However, the duration and extent of COVID-19’s impact is not reasonably possible to estimate due to the uncertainty about the spread of the virus. This could lead to lower sales, further relaxation salon closures, delays in development of the Company’s business, which could continue to materially affect our financial condition and results of operations. In addition, pursuant to the Settlement Act, issuers of prepaid cards are required to maintain net assets of more than JPY 100 million. As of December 31, 2021, the Company’s net assets have fallen below JPY100 million under Japanese GAAP (“JGAAP”) on a standalone basis. The Company is currently in consultation with the regulatory authority. S ee “Item 4. ” for more detail. The Company expects that its cash and cash equivalents as of December 31, 2021 of ¥ We may also consider obtaining additional financing through the issuance of our common stock, including a public offering of our ADSs, or through other equity or debt financings, and we may also look into refinancing our existing debt obligations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful. In addition, management is actively pursuing restoring profitability of our relaxation salon business and started shipping units of Mother Bracelet ® |
Consolidation and Variable Interest Entities | Consolidation and Variable Interest Entities The consolidated financial statements for the year ended December 31, 2020 include the accounts of Parent and the following wholly owned subsidiaries: JOYHANDS WELLNESS Inc., Bell Epoc Wellness Inc., Decollte Wellness Corporation, and Medirom Human Resources Inc. Effective July 1, 2021, Bell Epoc Wellness Inc., a subsidiary of the Company, was merged with Decollte Wellness Corporation, another subsidiary of the Company pursuant to an absorption-type company split agreement, with Bell Epoc Wellness Inc. being the successor entity. The purpose of this reorganization is to achieve more efficiency in training therapists and operating the relaxation salons, and to integrate the brands. As these subsidiaries were under common control, there was no impact to the consolidated financial statements. Bell Epoc Wellness Inc. changed its name to Wing Inc. effective November 1, 2021. The consolidated financial statements for the year ended December 31, 2021 include the accounts of Parent and the following subsidiaries: JOYHANDS WELLNESS Inc., Wing Inc., Bell & Joy Power Partners, Inc., SAWAN Co., Ltd., ZACC Kabushiki Kaisha (“ZACC”), and Medirom Human Resources Inc. All intercompany transactions have been eliminated in consolidation. Investments in companies over which the Company has significant influence but not control are accounted for by the equity method. The Company evaluates its investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If the Company concludes that an investee is a VIE, the Company evaluates its power to direct the activities of the investee, its obligation to absorb the expected losses of the investee and its right to receive the expected residual returns of the investee to determine whether the Company is the primary beneficiary of the investee. If the Company is the primary beneficiary of a VIE, the Company consolidates such entity and reflects the noncontrolling interest of other beneficiaries of that entity. There is no VIE where the Company is the primary beneficiary as of December 31, 2021 and 2020. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, the allowance for doubtful accounts, fair value of intangible assets acquired through business combination, impairment of long-lived assets and goodwill, asset retirement obligations, valuation of stock-based compensation, going concern and valuation of deferred tax assets. Management bases these estimates on assumptions that it believes to be reasonable under the circumstance, including considerations for the impact from the outbreak of the COVID-19 pandemic on the Company's business. Actual results may differ from these estimates in future periods when the COVID-19 pandemic continues to evolve and additional information becomes available. |
Foreign Currency Translation | Foreign Currency Translation The assets and liabilities of an equity method investee are translated into Japanese yen at the respective year-end exchange rates. All income and expense accounts are translated at weighted average rates. Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' (deficit) equity. Exchange gains and losses resulting from foreign currency transactions and the conversion of monetary assets and liabilities denominated in foreign currencies are included in foreign exchange income in the consolidated statements of operation. |
Mandatorily Redeemable Noncontrolling Interests | Mandatorily Redeemable Noncontrolling Interests Mandatorily redeemable noncontrolling interests represent equity interests in ZACC owned by outside parties. Noncontrolling interests are considered mandatorily redeemable when they are subject to an unconditional obligation to be redeemed by the Company on a specified date and are presented as a liability. As of December 31, 2021, the noncontrolling interest related to ZACC was classified as a current liability based on the terms of the purchase agreement. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand or other highly liquid investments placed with banks or other financial institutions which are unrestricted as to withdrawal or use and have original maturities of less than three months. There are no cash equivalents balances for the periods presented. |
Time Deposits | Time Deposits Time deposits presented in the consolidated balance sheets are short-term investments, whose maturity dates are longer than three months but less than one year. Time deposits with maturity dates of longer than one year are included in other assets in the consolidated balance sheets. |
Accounts Receivable-Trade, Net | Accounts Receivable—Trade, Net The accounts receivable-trade on the Company's consolidated balance sheets primarily includes accounts receivables from franchisees. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts), primarily related to receivables from the Company's franchisees. The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses incurred related to existing accounts and receivables. As of December 31, 2021 and 2020, the allowance for doubtful accounts related to accounts receivable-trade was ¥6,689 thousand and ¥4,426 thousand, respectively. |
Accounts Receivable-Other, Net and Long-Term Accounts Receivable-Other, Net | Accounts Receivable—Other, Net and Long-Term Accounts Receivable—Other, Net The accounts receivable—other on the Company's consolidated balance sheets primarily includes accounts receivable from commercial facility landlords and credit card companies related directly-operated salon's revenue and franchisee's revenue collected by these entities on behalf of the Company. As of December 31, 2021 and 2020, accounts receivable from commercial facilities and credit card companies of ¥457,642 thousand and ¥302,227 thousand, respectively, are included in the accounts receivable—other, net on the consolidated balance sheets. The balance is presented net of an allowance for expected losses (i.e., doubtful accounts). The Company monitors the financial condition of its debtor and records provisions for estimated losses on receivables when it believes debtors are unable to make their required payments based on factors such as delinquencies and aging trends. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses incurred related to existing accounts and receivables. As of December 31, 2021, the allowance for doubtful accounts related to accounts receivable-other was ¥23,337 thousand. There was no allowance for doubtful accounts related to accounts receivable-other as of December 31, 2020. Long-term accounts receivable—other mainly consists of a non-interest bearing receivable due from an unrelated business entity, with a maturity of July 31, 2038, monthly repayment amounts of ¥1,200 thousand until January 2021, ¥ |
Concentrations | Concentrations Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash. The Company primarily places its cash with high-credit quality financial institutions. The Company's cash deposits, of up to ¥10,000 thousand are insured by the Japanese government. From time to time, the Company has deposits in excess of the insured amounts. |
Inventories | Inventories Inventories consist principally of merchandise. A portion of inventories are also used for salon services. Inventories are stated at the lower of cost or net realizable value, cost being determined by the first-in, first-out method for merchandise. |
Investments | Investments The Company uses the equity method to account for equity investments over which it has significant influence but does not own a majority equity interest or otherwise control, generally accompanying a shareholding of between 20% and 50% of the voting rights. The share of earnings or losses of the investee are included in equity in earnings of investment in the consolidated statements of operation. Equity method adjustments include the company’s proportionate share of investee income or loss and other adjustments required by the equity method. The Company evaluates its equity method investments for impairment whenever an event or change in circumstances occurs that may have a significant adverse impact on the fair value of the investment. If a loss in value has occurred and is deemed to be other than temporary, an impairment loss is recorded. Several factors are reviewed to determine whether a loss has occurred that is other than temporary, including absence of an ability to recover the carrying amount of the investment, the length and extent of the fair value decline, and the financial condition and future prospects of the investee. Investments in equity securities, in which the Company does not have significant influence, and for which there is not a readily determinable fair value, are recorded at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments in the same issuer. When the Company evaluates whether these non-marketable equity securities are impaired or not, the Company evaluates first whether an event or change in circumstances has occurred in the period that may have significant adverse effect on the fair value of the securities (an impairment indicator). The Company uses such impairment indicators as follows: (1) A significant deterioration in the earnings performance or business prospects of the investee. (2) A significant adverse change in the regulatory, economic, or technological environment of the investee. (3) A significant adverse change in the general market condition of either the geographic area or the industry in which the investee operates. (4) A recent example of the new issuance of a security, in which the issue price is less than our cost. The Company estimates the fair value of the non-marketable equity securities when an impairment indicator is present. The fair value is determined as a result of considering various unobservable inputs which are available to the Company, including expectation of future income of the investees, net asset value of the investees, and material unrealized losses to be considered in assets and liabilities held by the investees. The Company recognizes impairment of non-marketable equity securities when the fair value is below the carrying amount and the decline in fair value is considered to be other-than-temporary. |
Leases | Leases The Company considers whether a contract is a lease or if it contains a lease element when a contract is executed. If a contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration, such contract is determined to contain a lease element. When the contract contains a lease element, a lease is either classified as operating lease or finance lease when the Company is a lessee, and a sales-type lease or direct financing lease when the Company is a lessor. The Company, as a lessee, applies the right-of-use model to account for lease transactions. Under the right-of-use model, right-of-use asset and lease liability are recognized at commencement date. The Company measures its lease liability at present value of future lease payments over the remaining term. The Company uses its incremental borrowing rate for the discount rate to calculate the present value of the payments since it is difficult and not practical to determine the interest rate implicit in the lease. The Company's incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Right-of-use asset lease liability For operating leases, the Company recognizes the minimum lease payments where it is the lessee and the minimum lease income where it is the lessor on a straight-line basis over the lease term, and reflects them as rental expenses and rental revenues, respectively, in the consolidated statements of operation. The Company elected to separate lease and non-lease components and not to recognize leases with an initial term of 12 months or less. Operating rental expense includes amortization of right-of-use assets and interests on lease liability. Variable lease expenses are primarily linked to sales and are excluded from the measurement of lease liability. Rental expenses are recorded in the consolidated statements of operation based on the nature of the underlying lease. Rental expense related to leases for directly-operated salons and for leased properties that are subsequently subleased to franchisees are recorded to cost of revenue from directly-operated salons and cost of franchise revenue, respectively, and rental expense related to leases for corporate offices is recorded to selling, general and administrative expenses. Rental income for operating leases on properties subleased to franchisees is recorded to franchise revenue. Terms and conditions of the sublease agreements are arranged to pass through lease obligations under head leases to the franchisees. Sublease income is presented on a gross basis on the accompanying consolidated statements of operation, as the Company remains the primary obligor. For newly executed contracts, renewal and revision related to leases, estimates and certain assumptions are used to determine asset value, useful lives, discount rate, lease term, etc. and these have effects on (1) classification of lease, (2) measurement of rental payments and (3) measurement of lease asset. These results may differ if varying estimates and assumptions are used. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are recorded at cost, less accumulated depreciation. Depreciation of property and equipment is computed principally using the straight-line method based on the estimated useful life of the assets. The useful lives for depreciation by major asset classes are as follows: Leasehold improvements Lesser of 15 years or the remaining lease term Vehicles 2-6 years Tools, furniture and fixtures 2-13 years |
Other Intangible Assets, Net | Other Intangible Assets, Net Other intangible assets with finite useful lives consist primarily of capitalized software, reacquired franchise rights, definite-lived trademarks, and customer relationships. The Company capitalizes both eligible internal and external costs of developing or obtaining computer software for internal use. Costs incurred to develop internal-use software during the application development stage are capitalized until the software is substantially complete and ready for its intended use. Costs related to data conversion, training and maintenance costs associated with internal-use software are expensed as incurred. Capitalized software is amortized over the estimated useful life (3-5 years) using the straight-line method. The Company amortizes the fair value of reacquired franchise rights over the remaining contractual terms of the reacquired franchise rights at the time of the acquisition, which generally range from 1-5 years. The Company amortizes the fair value of trademarks over the estimated useful life (10 years). The Company amortizes the fair value of customer relationships over the estimated useful life ( 3 |
Impairment of Long-lived Assets, Excluding Goodwill | Impairment of Long-lived Assets, Excluding Goodwill The Company assesses impairment of long-lived assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities. Long-lived assets include property and equipment, right-of-use lease assets, internal use software, and definite-lived intangible assets. The Company reviews the carrying value of long-lived assets for impairment whenever events or circumstances occur that indicate that the carrying value of the assets may not be recoverable. The assets are considered to be impaired when the estimated undiscounted cash flows expected to result from the use of the assets and their eventual disposition are less than their carrying values. The impairment loss is measured as the amount by which the carrying value of the asset or asset group exceeds its fair value. In determining the fair value, the Company uses present value techniques, if appropriate, based on the estimated future cash flows expected to result from the use of the assets and their eventual dispositions. During 2021, long-lived assets impairment charges related to continuing operations of ¥3,165 thousand, ¥ ¥9,825 thousand and ¥34,721 thousand were recorded on property and equipment and right-of-use asset—operating leases, respectively. Long-lived assets impairments are recorded in impairment loss on long-lived assets in the consolidated statements of operation. |
Acquisitions | Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not we have acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. If an acquisition is determined to be a business combination, the assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. If an acquisition is determined to be an asset acquisition, the cost of the asset acquisition, including transaction costs, are allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. If the cost of the asset acquisition is less than the fair value of the net assets acquired, no gain is recognized in earnings. The excess fair value of the acquired net assets acquired over the consideration transferred is allocated on a relative fair value basis to the identifiable net assets (excluding non-qualifying assets). Determining estimated fair value requires a significant amount of judgment and estimates. If assumptions change or errors are determined in our calculations, the fair value could materially change resulting in a change in goodwill or identifiable net assets acquired. |
Goodwill | Goodwill Goodwill represents the excess of cost over fair value of identifiable net assets acquired and assumed in business combinations. The Company generally records goodwill in connection with the acquisition of relaxation salons from franchisees. Upon the sale of relaxation salons to franchisees, goodwill is decremented. In addition, the Company records goodwill when the Company acquires other entities. Goodwill and intangible assets that are deemed to have indefinite useful lives are subject to impairment testing. Impairment testing is performed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill impairment assessments are performed at the reporting unit level, which is the same as the Company's operating segments. The Company utilizes a qualitative assessment for determining whether step one of the goodwill impairment analysis is necessary. If a step one test is considered necessary based on the qualitative factors, the Company compares the estimated fair value of a reporting unit to its carrying value. The carrying value of each reporting unit is based on the assets and liabilities associated with the operations of the reporting unit. The Company calculates estimated fair values of the reporting units based on discounted future cash flows utilizing estimates in annual revenue, service and product margins, fixed expense rates, allocated corporate overhead, directly-operated and franchise salon counts, and long-term growth rates for determining terminal value. If the carrying amount of a reporting unit exceeds its fair value, a loss will be recorded for the excess of the carrying value of the reporting unit over the fair value of the reporting unit. The Company did not recognize impairment losses for any goodwill during the years ended December 31, 2021, 2020 and 2019. |
Asset Retirement Obligations | Asset Retirement Obligations The Company records asset retirement obligations when the obligation is incurred. The obligation is measured at fair value and included in other current liabilities and asset retirement obligations. When the liability is initially recorded, the Company capitalizes the related cost by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value, and the capitalized cost is depreciated over the asset's useful life. |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised goods or services are transferred to the customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company determines revenue recognition through the following steps: Step 1: identification of the contract with a customer; Step 2: identification of the performance obligations in the contract; Step 3: determination of the transaction price; Step 4: allocation of the transaction price to the performance obligations in the contract; Step 5: recognition of revenue when, or as, the Company satisfies a performance obligation. Revenue from Directly-Operated Salons Revenues from directly-operated salons (including sales in the Luxury Beauty segment) are recognized when services are provided at the salons. The promised services for directly operated studios are the services ordered by the end customer from the service menu. The services are provided in one appointment. Therefore, there is only one performance obligation. As the customer simultaneously receives and consumes the benefits of the relaxation services, the revenue is recognized over time using the delivery output method. Revenue from prepaid cards is recognized when the services are transferred. When value is added to a prepaid card, the Company records a contract liability for its performance obligation to stand ready to transfer services in the future (or transfer funds to franchisee who provides service). When the services or funds are transferred, it derecognizes the contract liability and correspondingly recognizes revenue net of any funds transferred to franchisees. The Company expects to be entitled to a certain amount of breakage and recognizes revenue from breakage proportionately to the redemptions exercised by the customer. The Company also sells salons that were previously owned to third-party investors. Such investors are required to enter into Service Agreements with the Company to allow it to manage the operations of the salons and the Company will charge a fee for the management services to be provided. As this is a recurring source of income for the Company as part of the larger strategy for the relaxation salons segment, the sale of salons is considered part of the Company’s ongoing major or central operations and thus ordinary activities for the Company. Therefore, the Company applies ASC 606 to these contracts. Revenue from the sale of directly-owned salons is comprised of the (i) transfer of the salon assets and business rights and (ii) outsourced salon operation services. The revenue for the transfer of salon assets and business rights is recognized at a point in time when the agreement is signed, and control is transferred to the customer. The consideration for the transfer of the salon is generally collected upfront. There is no significant financing component. The proceeds from the transfer of the salon are presented as cash flows from investing activities on the consolidated statements of cash flow to be consistent with how the cash outflows and inflows are classified related to the salon’s purchase and sale. Revenue from the Service Agreement are recognized over the term of the agreement as services are provided. The customer benefits from the integrated service over the contract term and each time increment is substantially the same. Therefore, the outsourced salon operations are considered a “series” of distinct services and are treated as a single performance obligation. The term of the Service Agreement is typically five years. Under the Service Agreement, the Company is reimbursed for the costs of operating the salon and will recognize revenue from the reimbursement of costs using the as-invoiced practical expedient. Furthermore, the Company will receive a certain portion of the excess profit, which is considered variable consideration. This success fee will be constrained until there is greater than 70% probability that there will be no future reversal of revenue. Franchise Revenue Franchise revenue is comprised of (i) franchise fees, (ii) royalty income, (iii) staffing service revenue, (iv) sublease revenue, and (v) other franchise revenues. The Company and the franchisee enter into a franchise agreement which sets forth the standard terms and conditions of operating the franchised salon, as well as the fees and royalties over the term of the agreement. In most cases, an outsourcing agreement, is also entered into in conjunction with the franchise agreement that specifies the terms of the sublease arrangement with the franchisee. Upon the franchisee's request, the Company's therapists are dispatched to franchise locations and franchisees must pay dispatch fees in accordance with the dispatched employees' position. (i) Franchise fees The Company receives the entire non-refundable initial franchise fees from the franchisee based on franchise agreement. The franchise agreement typically has an initial term of five years. The services for operating the franchised salon provided by the Company under franchise contract are not separately identifiable within the contract and are interrelated with the franchise right granted in the franchise agreement. As such the services are considered to represent a single performance obligation. The franchise agreement could be renewed prior to expiration by mutual consent and renewal franchise fees are paid by franchisee upon renewal of agreement. Initial franchise fees and expected renewal franchise fees are recognized as revenue ratably using the time-based input method over the expected average contract life (7-10 years), instead of the contract term, as there is a material right related to renewals. (ii) Royalty income The Company collects royalties, an amount calculated by multiplying a certain percentage to gross sales, on a monthly basis. The royalties are subject to the sales- and usage-based royalties constraint and are recognized as revenues based on the monthly royalty earned where such amount is determined on the basis of gross sales made from each salon. (iii) Staffing service revenue The Company also generates revenue from providing its therapists to franchisees, which are recognized as revenues based on the total number of working hours of the agency worker during the dispatched period. The Company has elected the 'as-invoiced' practical expedient for its staffing services where the fixed rate per hour is invoiced to the customer. (iv) Sublease revenue The Company leases the premises in which the majority of its franchisees operate, where the Company retains the head lease primary obligation, and has entered into corresponding sublease arrangements with franchisees. Revenues from sublease transactions with franchisees are recognized on a straight-line basis over the respective operating lease terms, or at the time of the underlying sales for variable lease payments, in accordance with Accounting Standards Codification ("ASC") 842 Leases ("ASC 842"). (v) Other franchise revenues Other franchise revenues include other services provided to franchisees separately from the franchise agreements and include advertising, training, studio construction and hiring support. These services are primarily recognized as revenues when services are provided. The Company has elected the 'as-invoiced' practical expedient for its studio construction services where the consideration is invoiced to the customer. Other Revenues Other revenues are primarily from the Digital Preventive Healthcare segment, which include revenues from serving implementation of health and wellness programs (Specific Health Guidance Program), and are recognized when services are provided. Health monitoring wearable device service (MOTHER Bracelet ® See Note 13 for further disclosures required under ASC 606 and Recently Adopted Accounting Pronouncements below for impacts of the ASC606 adoption. Revenue is recognized net of consumption tax collected from customers and subsequently remitted to governmental authorities. |
Advertising Expenses | Advertising Expenses Advertising costs are expensed as incurred and are recorded in selling, general and administration expenses in the consolidated statements of operation. Advertising expenses for the years ended December 31, 2021, 2020 and 2019 were ¥130,959 thousand, ¥92,460 thousand and ¥77,911 thousand, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of employee services received in exchange for an award of equity instruments at the fair value of the award on the grant date and recognizes the cost over the requisite service period which the employee is required to provide services in exchange for the award. Compensation expenses are recognized on a straight-line basis over the requisite service period of the awards which are expected to be vested. The Company accounts for forfeitures as they occur. The Company uses option pricing methods that require the input of subjective assumptions, including the expected term, expected volatility, dividend yield and risk-free interest rate. The Company estimates the likelihood and the rate of achievement for performance sensitive stock-based awards at the end of each reporting period. Changes in the estimated rate of achievement can have a significant effect on the recorded stock-based compensation expense as the effect of a change in the estimated achievement level is recognized in the period the change occurs. |
Income Taxes | Income Taxes Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes and tax loss carryforwards. These deferred taxes are measured using the currently enacted tax rates in effect for the year in which the temporary differences or tax loss carryforwards and tax credits are expected to reverse. Valuation allowances are provided against deferred tax assets when it is more likely than not that a tax benefit will not be realized. The Company considers all available evidence (both positive and negative) when determining whether a valuation allowance is required, with emphasis on its past operating results, the existence of cumulative losses in the most recent years and its forecast of near-term taxable income. The Company recognizes the financial statement effect of uncertain 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. Accrued interest and penalties related to the unrecognized tax benefits are included in income tax expense (benefit) in the consolidated statements of operation. The Company recognizes penalties related to income taxes within the selling, general and administrative expenses line in the consolidated statements of operations. Interest related to income taxes will be recognized in interest expense in the consolidated statements of operations. |
(Loss) Earnings Per Share | (Loss) Earnings Per Share Basic and diluted (loss) earnings per common share are presented in conformity with the two-class method required for participating securities. Basic net (loss) income attributable to the Company per common share is computed by dividing net (loss) income attributable to the Company by the weighted-average number of shares of common stock outstanding during the year. Diluted net income attributable to the Company per common share reflects the potential dilutive effect of stock options. (See Note 15) |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements Revenue from Contracts with Customers In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers Revenue from Contracts with Customers (ASC 606) and Leases (ASC 842) -Effective Dates for Certain Entities The Company adopted ASU 606 as of January 1, 2020 using the modified retrospective method of adoption for contracts that were not completed as of the adoption and recognized a cumulative-effect adjustment to accumulated deficit of ¥(458,823) thousand. Revenues are recognized when control of the promised goods or services are transferred to the customers, in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. As a result, the Company has changed its accounting policy for revenue recognition of franchise fees as detailed below. The adoption of this new guidance did not have a material impact for revenue recognition other than franchise fees. The comparative periods have not been adjusted and continue to be reported under the previous revenue recognition guidance. The details of the significant changes are discussed below. Franchise fee s The adoption of the new revenue recognition guidance changed the timing of recognition of initial franchise fees and renewal franchise fees. Prior to the adoption of ASC 606, the Company recognized revenue under FASB Topic 605 Revenue Recognition (“ASC 605”). Under ASC 605, initial franchise fees are recognized as revenue when the franchised relaxation salon is opened as all material services and conditions related to the initial franchise fee have been substantially performed by the opening date. In addition, under ASC 605, renewal franchise fees are recognized as revenues at the beginning of the renewal term. Under the new revenue recognition guidance, the services for operating the franchised salon provided by the Company under franchise contract are not separately identifiable within the contract, and are interrelated with the franchise right granted in the franchise agreement. As such the services are considered to represent a single performance obligation. Therefore initial franchise fees and expected renewal franchise fees are recognized as revenue ratably over the expected average contract life ( 7 Income Taxes In December 2019, the FASB issued ASU 2019-12 Income Taxes - Simplifying the Accounting for Income Taxes (Topic 740) Acquired Contract Assets and Contract Liabilities In October 2021, the FASB issued ASU 2021-08 Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities Recently Issued Accounting Pronouncements Not Yet Adopted Credit Losses In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842). Investments In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321) Clarifying the Interactions between Topics 321, 323 and 815 Reference Rate Reform On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope Reference Rate Reform |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Significant Accounting Policies | |
Schedule of useful lives for depreciation by major asset classes | Leasehold improvements Lesser of 15 years or the remaining lease term Vehicles 2-6 years Tools, furniture and fixtures 2-13 years |
Relaxation Salon Segment | |
Significant Accounting Policies | |
Schedule of total number of salons by operation type | Number of Relaxation Salons 2021 2020 2019 Directly-operated 188 150 107 Franchised 124 140 176 Total 312 290 283 |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ZACC | |
Business Combination | |
Schedule of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date | Thousands of Yen Fair value of assets/liabilities Cash ¥ 81,802 Accounts receivable-other 49,573 Inventories 5,408 Prepaid expenses and other current assets 2,234 Property and equipment 39,232 Other intangible assets 240,000 Right-of-use asset-operating lease 202,196 Other assets 68,497 Total assets acquired 688,942 Accounts payable (6,041) Accrued expenses and other current liabilities (42,168) Mandatorily redeemable noncontrolling interests in ZACC (148,000) Lease liability (201,076) Borrowings (249,263) Asset retirement obligation (14,147) Deferred tax liability (73,488) Total liabilities assumed (734,183) Net liabilities assumed (45,241) Fair value of the consideration transferred 122,000 Goodwill ¥ 167,241 |
SAWAN CO. LTD. ("SAWAN") | |
Business Combination | |
Schedule of the estimated fair values of the assets acquired and liabilities assumed at the acquisition date | Thousands of Yen Fair value of assets/liabilities Cash ¥ 7,824 Accounts receivable-other 18,228 Inventories 3,391 Prepaid expenses and other current assets 16,643 Property and equipment 70,497 Other intangible assets 100,000 Right-of-use asset-operating lease 168,242 Other long-term assets 57,259 Total assets acquired 442,084 Accounts payable (99,405) Accrued expenses (16,271) Advances received (60,651) Lease liability (165,560) Asset retirement obligation (25,060) Deferred tax liabilities (30,620) Other liabilities (14,701) Total liabilities assumed (412,268) Net assets acquired 29,816 Fair value of the consideration transferred 140,697 Goodwill ¥ 110,881 |
Relaxation Salons | |
Business Combination | |
Schedule of estimated fair values of the assets acquired and liabilities assumed | Thousands of Yen Fair value of assets/liabilities 2021 2020 2019 Property and equipment ¥ 36,299 ¥ 51,005 ¥ 27,567 Other intangible assets 15,000 12,690 6,519 Total assets acquired 51,299 63,695 34,086 Asset retirement obligation (33,876) (49,217) (25,942) Total liabilities assumed (33,876) (49,217) (25,942) Net assets acquired 17,423 14,478 8,144 Fair value of the consideration transferred 202,686 86,916 23,813 Goodwill 185,263 72,438 22,156 Gain from bargain purchases ¥ ― ¥ ― ¥ 6,487 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property and Equipment, Net | |
Schedule of property and equipment | Thousands of Yen 2021 2020 Leasehold improvements ¥ 472,872 ¥ 272,756 Vehicles 23,219 9,548 Tools, furniture and fixtures 87,034 37,480 Total 583,125 319,784 Accumulated depreciation and amortization (158,129) (83,854) ¥ 424,996 ¥ 235,930 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Other Intangible Assets, Net | |
Schedule of components of intangible assets | Thousands of Yen 2021 2020 Intangible assets subject to amortization: Software for internal use ¥ 113,345 ¥ 84,152 Reacquired franchise rights 19,343 17,973 Customer relationship 180,000 ― Trademark 160,000 ― Other 750 750 Total 473,438 102,875 Accumulated amortization (82,769) (44,330) Net carrying amount 390,669 58,545 Intangible assets not subject to amortization: Trademark ― 38,922 Goodwill 600,329 150,720 Telephone rights 369 148 Total 600,698 189,790 Total intangible assets ¥ 991,367 ¥ 248,335 |
Schedule of estimated aggregate amortization expense for intangible assets | Thousands of Yen Year ending December 31: 2022 ¥ 76,336 2023 65,756 2024 55,641 2025 41,919 2026 39,570 Thereafter 111,447 Total ¥ 390,669 |
Schedule of changes in carrying amount of goodwill | Thousands of Yen Balance at December 31, 2019 ¥ 78,282 Acquisitions of relaxation salons*¹ 72,438 Balance at December 31, 2020 150,720 Acquisitions of relaxation salons*¹ 185,263 Acquisition of SAWAN’s shares*³ 110,881 Acquisition of ZACC’s shares*² 167,241 Sale of directly-owned salons, and closure of directly-owned salons (13,776) Balance at December 31, 2021 ¥ 600,329 *1 Acquisitions for the years ended December 31, 2021 and 2020 relate to relaxation salon acquisitions in the relaxation salon segment. Refer to Note 2. *2 Acquisition for the year ended December 31, 2021 relates to ZACC’s shares acquisition in the luxury beauty segment. Refer to Note 2. *3 Acquisition for the year ended December 31, 2021 relates to SAWAN’s shares acquisitions in the relaxation salon segment. Refer to Note 2. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Investments | |
Schedule of non-marketable securities | Carrying amount Thousands of Yen Ownership 2021 2020 2021 2020 Matrix Industries, Inc. ¥ 52,520 ¥ ― 0.09% 0.09% Other 500 500 ― ― Total ¥ 53,020 ¥ 500 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Borrowings | |
Schedule of borrowings | Thousands of Yen 2021 2020 Borrowings (Due through 2035 with weighted average interest rates of 0.66% as of December 31, 2021, due through 2035 with weighted average interest rates of ¥ 908,840 ¥ 910,661 Current portion of borrowings (162,252) (242,281) Total borrowings ¥ 746,588 ¥ 668,380 |
Schedule of maturities of borrowings | Thousands of Yen Year ending December 31: 2022 ¥ 162,252 2023 99,252 2024 96,918 2025 88,438 2026 94,460 2027 and thereafter 367,520 Total ¥ 908,840 |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Asset Retirement Obligation. | |
Schedule of reconciliation of the beginning and ending amount of asset retirement obligation | Thousands of Yen 2021 2020 Beginning balance ¥ 191,192 ¥ 127,411 Liabilities incurred 114,946 80,056 Liabilities settled (9,316) (16,870) Accretion expense 2,172 595 Ending balance ¥ 298,994 ¥ 191,192 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Schedule of components of operating lease costs related to operating leases | Thousands of Yen 2021 2020 2019 Fixed lease cost (a) ¥ 801,292 ¥ 748,230 ¥ 851,555 Variable lease cost (b) 33,167 24,484 30,901 Short-term cost 38,876 11,669 10,979 Total ¥ 873,335 ¥ 784,383 ¥ 893,435 (a) This includes the amount of ¥420,138 thousand, ¥478,225 thousand and ¥580,074 thousand recoverable from sublessees for the years ended December 31, 2021, 2020 and 2019, respectively. (b) This includes the amount of ¥17,838 thousand, ¥14,146 thousand and ¥27,606 thousand recoverable from sublessees for the years ended December 31, 2021, 2020 and 2019, respectively. |
Schedule of supplementary information on cash flow and other information for leasing activities | Thousands of Yen 2021 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows ¥ 881,822 ¥ 797,623 ¥ 375,270 Right-of-use assets obtained in exchange for lease liabilities 917,135 604,703 749,008 Weighted average remaining lease term (in years) 3.2 2.8 3.3 Weighted average discount rate 1.64% 1.45% 1.45% |
Schedule of maturity analysis of future minimum lease payments under non-cancellable leases | Thousands of Yen Year ending December 31: 2022 ¥ 773,383 2023 490,042 2024 278,068 2025 181,245 2026 112,678 2027 and thereafter 113,935 Total 1,949,351 Less: Interest component (65,395) Present value of minimum lease payments ¥ 1,883,956 |
Schedule of subleases | Thousands of Yen 2021 2020 2019 Fixed sublease income ¥ 420,138 ¥ 478,225 ¥ 580,074 Variable sublease income 17,838 14,146 27,606 Total ¥ 437,976 ¥ 492,371 ¥ 607,680 Thousands of Yen Year ending December 31: 2022 ¥ 328,989 2023 225,351 2024 92,165 2025 45,374 2026 23,279 2027 and thereafter 18,267 Total ¥ 733,425 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Stock-based Compensation | |
Schedule of stock option assumptions | Year ended 2021 2020 Expected term of option (in years) ― 2 –3 Expected volatility ― % 58.21 – 65.93 % Expected dividend yield ― % ― % Risk-free interest rate ― % 0.17 – 0.19 % |
Activity in stock option plans | Yen Years Thousands of Yen Number of shares Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value Outstanding at December 31, 2018 549,500 ¥ 1,552 7.6 ¥ ― Forfeited/Expired (30,000) 800 Outstanding at December 31, 2019 519,500 1,595 6.7 ― Exercisable at December 31, 2019 519,500 1,595 6.7 ― Granted 450,000 752 ― Forfeited/Expired (290,000) 1,903 Outstanding at December 31, 2020 679,500 905 4.3 531,518 Exercisable at December 31, 2020 229,500 1,205 5.4 123,891 Forfeited/Expired (79,700) 1,266 Outstanding at December 31, 2021 599,800 857 3.5 192,570 Exercisable at December 31, 2021 599,800 ¥ 857 3.5 ¥ 192,570 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Segment Information | |
Information about operating results and assets for each segment | Thousands of Yen Digital Corporate Relaxation Preventative Luxury and Salon Healthcare Beauty elimination Consolidated Year ended December 31, 2021 Revenues ¥ 5,196,540 ¥ 43,965 ¥ 169,320 ¥ ― ¥ 5,409,825 Operating income (loss) 699,105 (144,857) (6,538) (1,018,297) (470,587) Depreciation and amortization 80,917 11,113 10,736 23,477 126,243 Total assets 4,002,005 161,945 701,172 887,939 5,753,061 Year ended December 31, 2020 Revenues ¥ 3,315,947 ¥ 25,670 ¥ ― ¥ ― ¥ 3,341,617 Operating loss (140,866) (66,100) ― (539,122) (746,088) Depreciation and amortization 32,261 8,007 ― 22,022 62,290 Total assets 3,096,094 34,247 ― 2,583,125 5,713,466 Year ended December 31, 2019 Revenues ¥ 3,864,656 ¥ 43,608 ¥ ― ¥ ― ¥ 3,908,264 Operating income (loss) 279,439 (43,056) ― (202,033) 34,350 Depreciation and amortization 34,025 4,764 ― 7,385 46,174 Total assets 3,346,739 29,565 ― 1,381,161 4,757,465 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Summary of income taxes | Thousands of Yen Thousands of Yen Thousands of Yen 2021 2020 2019 Total Total Total (Loss) income before income taxes ¥ (414,481) ¥ (626,689) ¥ 32,737 Income taxes Current 24,767 19,745 10,222 Deferred 551,483 (107,264) 5,739 Total ¥ 576,250 ¥ (87,519) ¥ 15,961 |
Reconciliation of the differences between the effective income tax rates | 2021 2020 2019 Statutory tax rate 30.6 % 30.6 % 30.6 % Increases (reductions) in taxes due to: Change in valuation allowance (155.9) (13.2) (10.2) Nondeductible expenses (1.1) (0.3) 3.2 Inhabitant tax-per capita* (3.9) (3.2) 24.5 Stock-based compensation (14.5) ― ― Use of operating loss carryforwards 3.9 ― ― Other-net 1.9 0.1 0.7 Effective income tax rate (139.0) % 14.0 % 48.8 % * Inhabitants tax is imposed on resident corporations in Japan. It consists of the corporation tax calculated as a percentage of national corporation tax and the per capita levy determined based on capital and the number of employees. For the year ended December 31, 2021, the impact of inhabitant tax per capita on the effective tax rate decreased due to fluctuation of (loss) income before income taxes. |
Temporary differences giving rise to the deferred tax assets and liabilities | Thousands of Yen 2021 2020 2019 Deferred tax assets: Accounts receivable-trade ¥ 13,485 ¥ 13,485 ¥ 13,485 Provision for bad debt 50,551 41,700 50,271 Goodwill ― ― 1,135 Other prepaid expenses - currently not deductible ― ― 54,235 Contract liability ― 154,950 ― Asset retirement obligation 91,552 58,543 39,013 Operating lease liability 576,867 505,601 563,660 Operating loss carryforwards 716,518 484,040 95,490 Other 69,603 60,392 51,485 Gross deferred tax assets 1,518,576 1,318,711 868,774 Valuation allowance (771,441) (125,376) (42,395) Total deferred tax assets 747,135 1,193,335 826,379 Deferred tax liabilities: Property and equipment (65,590) (32,433) (18,141) Goodwill (15,018) (4,073) ― Intangible assets (101,025) (15,285) (6,485) Right-of-use asset - operating lease (558,538) (483,437) (560,336) Deferred offering costs ― ― (17,609) Advances received ― (1,311) (1,303) Other (6,964) (1,205) ― Total deferred tax liabilities (747,135) (537,744) (603,874) Net deferred tax assets ¥ ― ¥ 655,591 ¥ 222,505 |
Operating loss carryforwards | Operating loss carryforwards (Thousands of Yen) Years ending December 31: Between 2022 and 2025 ¥ 133,695 Between 2026 and 2029 160,948 2030 and thereafter 2,045,390 Total ¥ 2,340,033 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Schedule of disaggregation of revenue | For the year ended December 31, 2021and 2020, revenues are disaggregated by revenue stream and reconciled to reportable segment revenues as follows. Thousands of Yen Digital Preventative Luxury Revenue Stream* Relaxation Salon Healthcare Beauty Consolidated Year ended December 31, 2021 Revenue from directly-operated salons ¥ 3,278,514 ¥ ― ¥ 169,320 ¥ 3,447,834 Revenue from the sale of directly-owned salons 559,000 ― ― 559,000 Franchise fees 199,889 ― ― 199,889 Royalty income 209,848 ― ― 209,848 Staffing service revenue 263,962 ― ― 263,962 Sublease revenue 437,976 ― ― 437,976 Other franchise revenues 247,351 ― ― 247,351 Other revenues ― 43,965 ― 43,965 Total revenues ¥ 5,196,540 ¥ 43,965 ¥ 169,320 ¥ 5,409,825 Thousands of Yen Digital Preventative Luxury Revenue Stream* Relaxation Salon Healthcare Beauty Consolidated Year ended December 31, 2020 Revenue from directly-operated salons ¥ 2,026,806 ¥ ― ¥ ¥ 2,026,806 Franchise fees 175,445 ― ― 175,445 Royalty income 179,745 ― ― 179,745 Staffing service revenue 254,282 ― ― 254,282 Sublease revenue 492,371 ― ― 492,371 Other franchise revenues 187,298 ― ― 187,298 Other revenues ― 25,670 ― 25,670 Total revenues ¥ 3,315,947 ¥ 25,670 ¥ ― ¥ 3,341,617 * All revenue streams are recognized over time, with the exception of hiring support within other franchise revenues and revenue from the sale of directly-owned salons, which are recognized at a point in time. Revenue related to hiring support was not material in the periods presented. |
Schedule of contract balance | Information about receivables and contract liabilities from contracts with customers is as follows: Thousands of Yen As of As of December 31, December 31, 2021 2020 Balance sheet classification Receivables ¥ 312,302 ¥ 148,540 Accounts receivable-trade, net Contract liabilities: Current 104,182 172,063 Current portion of contract liability Long-term 239,067 333,978 Contract liability - net of current portion Total ¥ 343,249 ¥ 506,041 Prepaid card liability ¥ 509,355 ¥ 403,229 Advances received |
Schedule of changes in contract liability | Changes in the Company’s contract liabilities for the year ended December 31, 2021 are as follows: Thousands of Yen Contract liabilities Balance at December 31, 2020 ¥ 506,041 Revenues recognized during 2021 which were included in the contract liabilities balance at December 31, 2020 (201,074) Remaining amounts at December 31, 2021 which were newly recognized as contract liabilities during 2021 38,282 Balance at December 31, 2021 ¥ 343,249 |
Schedule of estimated revenue | Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied as of December 31, 2021 is as follows: Thousands of Yen Year ending December 31: 2022 ¥ 104,182 2023 100,357 2024 86,118 2025 42,201 2026 8,734 2027 and thereafter 1,657 Total ¥ 343,249 |
Other Comprehensive Income (L_2
Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Comprehensive Income (Loss) | |
Components of other comprehensive income (loss) | Thousands of Yen Before Tax Tax Net of Tax Amount Expense Amount Year ended December 31, 2019 Foreign currency translation adjustments Reclassification adjustments for gains and losses realized in net income ¥ 400 ¥ (122) ¥ 278 Other comprehensive income (loss) ¥ 400 ¥ (122) ¥ 278 |
Changes in accumulated other comprehensive income (loss) | Thousands of Yen Foreign currency translation adjustments Balance at December 31, 2018 ¥ (278) Amounts reclassified from accumulated other comprehensive income (loss) 278 Net change during the year 278 Balance at December 31, 2019 ¥ ― |
Reclassifications out of accumulated other comprehensive income(loss) | Affected line items Thousands of Yen in consolidated 2021 2020 2019 statements of (loss) income Foreign currency translation adjustments ¥ ― ¥ ― ¥ 400 Other – net ― ― (122) Income tax expense ― ― 278 Net income Total amount reclassified, net of tax ¥ ― ¥ ― ¥ 278 |
(Loss) Earnings Per Share (Tabl
(Loss) Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
(Loss) Earnings Per Share | |
Reconciliations of net (loss) income and weighted average number of common shares outstanding used for the computation of basic (loss) earnings per common share | 2021 2020 2019 Common Class A Common Class A Common Class A (Thousands of Yen) (Thousands of Yen) (Thousands of Yen) Income (Numerator) Net (loss) income attributable to shareholders of the Company ¥ (990,731) ― ¥ (539,170) ― ¥ 17,335 ― Shares (Denominator) (Number of shares) (Number of shares) (Number of shares) Weighted average common shares outstanding 4,877,404 1 4,024,692 1 3,747,295 1 Effect of dilutive instruments: Stock options ― ― ― ― 525,007 ― Weighted average common shares for diluted computation 4,877,404 1 4,024,692 1 4,272,302 1 (Loss) earnings per common share attributable to shareholders of the Company (Yen) (Yen) (Yen) Basic ¥ (203.13) ¥ (203.13) ¥ (133.97) ¥ (133.97) ¥ 4.63 ¥ 4.63 Diluted ¥ (203.13) ¥ (203.13) ¥ (133.97) ¥ (133.97) ¥ 4.06 ¥ 4.06 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value of Financial Instruments | |
Estimated fair value of debt | Thousands of Yen 2021 2020 Carrying amount Estimated fair value Carrying amount Estimated fair value Borrowings - net of current portion ¥ (746,588) ¥ (759,185) ¥ (668,380) ¥ (644,499) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Assets and liabilities measured on a nonrecurring basis | Thousands of Yen Impairment Level 1 Level 2 Level 3 loss Year ended December 31, 2021 Assets Leasehold improvements ¥ ― ¥ ― ¥ 359,376 ¥ 3,165 Right-of-use asset - operating lease ― ― 1,824,095 20,979 Trademark ― ― 153,458 38,922 Reacquired franchise rights ― ― 8,639 145 Total ¥ ― ¥ ― ¥ 2,345,568 ¥ 63,211 Year ended December 31, 2020 Assets Leasehold improvements ¥ ― ¥ ― ¥ 213,314 ¥ 36,512 Right-of-use asset - operating lease ― ― 1,578,828 69,989 Total ¥ ― ¥ ― ¥ 1,792,142 ¥ 106,501 Year ended December 31, 2019 Assets Leasehold improvements ¥ ― ¥ ― ¥ 161,330 ¥ 9,825 Right-of-use asset - operating lease ― ― 1,829,968 34,721 Total ¥ ― ¥ ― ¥ 1,991,298 ¥ 44,546 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details) | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2021 item | Oct. 31, 2021 item | Dec. 31, 2021 item subsidiary segment | Dec. 31, 2020 item | Dec. 31, 2019 item | |
Product Information | |||||
Number of subsidiaries | subsidiary | 6 | ||||
Number of lines of business | segment | 3 | ||||
Number of salons | 312 | 290 | 283 | ||
Number of VIE where the Company is the primary beneficiary | 0 | 0 | |||
Number of salons operated | 12 | ||||
ZACC | |||||
Product Information | |||||
Percentage of ownership interest | 100% | 60% | |||
Number of salons operated | 3 | 3 | |||
Period of customers recognized by high level of techniques and hospitality | 30 years | 30 years | |||
Directly-operated salons | |||||
Product Information | |||||
Number of salons | 188 | 150 | 107 | ||
Franchise fees | |||||
Product Information | |||||
Number of salons | 124 | 140 | 176 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Recent Developments and liquidity (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 JPY (¥) item | Dec. 31, 2022 JPY (¥) | Dec. 31, 2020 JPY (¥) | |
Unusual or Infrequent Item, or Both | |||
Number of fully closed salons | item | 36 | ||
Cash and cash equivalents | ¥ | ¥ 370,617 | ¥ 1,439,733 | |
Percentage of directly-owned salons | 53.30% | ||
Number of salons operated | item | 12 | ||
Gross proceeds from sale of salons | ¥ | ¥ 559,000 | ||
Minimum | Subsequent Event | Act on Settlement of Funds | |||
Unusual or Infrequent Item, or Both | |||
Net assets | ¥ | ¥ 100,000 | ||
Maximum | |||
Unusual or Infrequent Item, or Both | |||
Number of salons with shortened operations | item | 28 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Cash and Cash Equivalents and Concentrations (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Cash equivalents | ¥ 0 | ¥ 0 | ¥ 0 |
Maximum cash deposits insured by the government | ¥ 10,000 |
Basis of Presentation and Sum_7
Basis of Presentation and Summary of Significant Accounting Policies - Accounts Receivable (Details) - JPY (¥) ¥ in Thousands | 1 Months Ended | ||||
Jan. 31, 2022 | Feb. 28, 2021 | Jan. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Allowance for doubtful accounts related to accounts receivable-trade | ¥ 6,689 | ¥ 4,426 | |||
Allowance for doubtful accounts related to accounts receivable-other | 23,337 | 0 | |||
Accounts receivable-other, net | 542,988 | 411,278 | |||
Short-term accounts receivable-other | 542,988 | 411,278 | |||
Long-term accounts receivable-other | 101,898 | 116,942 | |||
Allowance for doubtful accounts on long-term accounts receivable | 135,066 | 131,759 | |||
Receivable from commercial facilities and credit card companies | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Accounts receivable-other, net | 457,642 | 302,227 | |||
Short-term accounts receivable-other | 457,642 | 302,227 | |||
Loan receivable due from an unrelated business entity | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Accounts receivable-other, net | 14,400 | 11,520 | |||
Monthly repayment of loan receivable due from an unrelated business entity | ¥ 1,200 | ¥ 720 | ¥ 1,200 | ||
Principal balance due | 223,945 | 235,945 | |||
Short-term accounts receivable-other | 14,400 | 11,520 | |||
Long-term accounts receivable-other | ¥ 13,019 | ¥ 12,756 |
Basis of Presentation and Sum_8
Basis of Presentation and Summary of Significant Accounting Policies - Leases (Details) | Dec. 31, 2021 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Lease terms, operating lease | 3 years |
Lease terms, finance lease | 3 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease terms, operating lease | 10 years |
Lease terms, finance lease | 10 years |
Basis of Presentation and Sum_9
Basis of Presentation and Summary of Significant Accounting Policies - Property and Equipment, Net (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life | 15 years |
Vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 2 years |
Vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 6 years |
Tools, furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 2 years |
Tools, furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 13 years |
Basis of Presentation and Su_10
Basis of Presentation and Summary of Significant Accounting Policies - Other Intangible Assets, Net (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2021 JPY (¥) | |
Trademark | |
Finite-Lived Intangible Assets [Line Items] | |
Impairments | ¥ 38,922 |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 7 years |
Minimum | Capitalized software | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Minimum | Reacquired franchise rights | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 1 year |
Minimum | Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 3 years |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Maximum | Trademark | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 10 years |
Maximum | Capitalized software | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Maximum | Reacquired franchise rights | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 5 years |
Maximum | Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life | 7 years |
Basis of Presentation and Su_11
Basis of Presentation and Summary of Significant Accounting Policies - Impairment of Long-lived Assets, Goodwill and Deferred Offering Costs (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment | |||
Impairment of Long-Lived Assets Held-for-use | ¥ 63,211 | ¥ 106,501 | ¥ 44,546 |
Impairment charges on right-of-use asset-operating leases | 20,979 | 69,989 | 34,721 |
Impairment losses for goodwill | 0 | 0 | 0 |
Other Intangible Assets [Member] | |||
Property, Plant and Equipment | |||
Impairment of Long-Lived Assets Held-for-use | 39,067 | ||
Leasehold improvements | |||
Property, Plant and Equipment | |||
Impairment of Long-Lived Assets Held-for-use | 3,165 | 36,512 | 9,825 |
Property and equipment | |||
Property, Plant and Equipment | |||
Impairment of Long-Lived Assets Held-for-use | ¥ 3,165 | ¥ 36,512 | ¥ 9,825 |
Basis of Presentation and Su_12
Basis of Presentation and Summary of Significant Accounting Policies - Revenue Recognition (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Typical initial term of franchise agreement | 5 years | ||
Revenues | ¥ 5,409,825 | ¥ 3,341,617 | ¥ 3,908,264 |
Franchise fees | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 1,359,026 | ¥ 1,289,141 | ¥ 1,833,501 |
Health monitoring wearable device service | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | ¥ 0 | ||
Minimum | Franchise fees | |||
Disaggregation of Revenue [Line Items] | |||
Expected average contract life | 7 years | ||
Maximum | Franchise fees | |||
Disaggregation of Revenue [Line Items] | |||
Expected average contract life | 10 years |
Basis of Presentation and Su_13
Basis of Presentation and Summary of Significant Accounting Policies - Advertising Expense (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Basis of Presentation and Summary of Significant Accounting Policies | |||
Advertising Expense | ¥ 130,959 | ¥ 92,460 | ¥ 77,911 |
Basis of Presentation and Su_14
Basis of Presentation and Summary of Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Standards Update | ||||
Cumulative effect of adoption of ASC 606 | ¥ (208,343) | ¥ 491,257 | ¥ 600,058 | ¥ (117,555) |
Accumulated deficit | ||||
Accounting Standards Update | ||||
Cumulative effect of adoption of ASC 606 | ¥ (2,694,033) | (1,703,302) | (705,309) | ¥ (722,644) |
Cumulative adjustment | ||||
Accounting Standards Update | ||||
Cumulative effect of adoption of ASC 606 | (458,823) | |||
Cumulative adjustment | Accumulated deficit | ||||
Accounting Standards Update | ||||
Cumulative effect of adoption of ASC 606 | ¥ (458,823) | ¥ (458,823) |
Basis of Presentation and Su_15
Basis of Presentation and Summary of Significant Accounting Policies - Franchise Fees Contract Life (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Minimum | |
Intangible asset average life | |
Contract life (in years) | 7 years |
Maximum | |
Intangible asset average life | |
Contract life (in years) | 10 years |
Business Combination - Acquisit
Business Combination - Acquisition of ZACC, SAWAN, Relaxation Salons (Details) ¥ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Jan. 01, 2022 JPY (¥) | Oct. 01, 2021 JPY (¥) | Aug. 31, 2021 JPY (¥) item | May 06, 2021 JPY (¥) | Oct. 31, 2021 item | Dec. 31, 2021 JPY (¥) item | Dec. 31, 2020 JPY (¥) item | Dec. 31, 2019 JPY (¥) item | |
Business Combination | ||||||||
Number of salons operated | item | 12 | |||||||
Assets Acquired and Liabilities Assumed | ||||||||
Accounts receivable-other | ¥ 542,988 | ¥ 411,278 | ||||||
Inventories | 18,703 | 7,956 | ||||||
Prepaid expenses and other current assets | 111,166 | 47,193 | ||||||
Property and equipment | 424,996 | 235,930 | ||||||
Other intangible assets | 391,038 | 97,615 | ||||||
Right-of-use asset - operating lease | 1,824,095 | 1,578,828 | ||||||
Other assets | 107,224 | 79,480 | ||||||
Total assets | 5,753,061 | 5,713,466 | ¥ 4,757,465 | |||||
Accounts payable | (230,899) | (67,016) | ||||||
Mandatorily redeemable noncontrolling interests | (148,000) | |||||||
Advances received | (618,514) | (461,665) | ||||||
Lease liability | (755,219) | (658,320) | ||||||
Borrowings | (746,588) | (668,380) | ||||||
Asset retirement obligation | (296,401) | (191,192) | (127,411) | |||||
Other liabilities | (25,176) | (7,716) | ||||||
Total liabilities assumed | (5,961,404) | (5,222,209) | ||||||
Gain from bargain purchase | 6,487 | |||||||
ZACC | ||||||||
Business Combination | ||||||||
Percentage of ownership interest | 100% | 60% | ||||||
Cash consideration | ¥ 148,000 | ¥ 152,986 | ¥ 370,000 | |||||
Fair value of the consideration transferred | 270,000 | |||||||
Initial payment to acquire businesses | ¥ 69,014 | |||||||
Initial percentage of voting equity interests acquired | 60% | |||||||
Number of salons operated | item | 3 | 3 | ||||||
Period of customers recognized by high level of techniques and hospitality | 30 years | 30 years | ||||||
Acquisition related costs | ¥ 0 | |||||||
Assets Acquired and Liabilities Assumed | ||||||||
Cash | 81,802 | |||||||
Accounts receivable-other | 49,573 | |||||||
Inventories | 5,408 | |||||||
Prepaid expenses and other current assets | 2,234 | |||||||
Property and equipment | 39,232 | |||||||
Other intangible assets | 240,000 | 240,000 | ||||||
Right-of-use asset - operating lease | 202,196 | |||||||
Other assets | 68,497 | |||||||
Total assets | 688,942 | |||||||
Accounts payable | (6,041) | |||||||
Accrued expenses and other current liabilities | (42,168) | |||||||
Mandatorily redeemable noncontrolling interests | (148,000) | |||||||
Lease liability | (201,076) | |||||||
Borrowings | (249,263) | |||||||
Asset retirement obligation | (14,147) | |||||||
Deferred tax liabilities | (73,488) | |||||||
Total liabilities assumed | (734,183) | |||||||
Net assets acquired | (45,241) | |||||||
Fair value of the consideration transferred | 122,000 | |||||||
Asset Acquisition,Goodwill | ¥ 167,241 | |||||||
SAWAN CO. LTD. ("SAWAN") | ||||||||
Business Combination | ||||||||
Cash consideration | ¥ 140,697 | |||||||
Acquisition related costs | 12,000 | |||||||
Assets Acquired and Liabilities Assumed | ||||||||
Cash | 7,824 | |||||||
Accounts receivable-other | 18,228 | |||||||
Inventories | 3,391 | |||||||
Prepaid expenses and other current assets | 16,643 | |||||||
Property and equipment | 70,497 | |||||||
Other intangible assets | 100,000 | |||||||
Right-of-use asset - operating lease | 168,242 | |||||||
Other assets | 57,259 | |||||||
Total assets | 442,084 | |||||||
Accounts payable | (99,405) | |||||||
Accrued expenses and other current liabilities | (16,271) | |||||||
Advances received | (60,651) | |||||||
Lease liability | (165,560) | |||||||
Asset retirement obligation | (25,060) | |||||||
Deferred tax liabilities | (30,620) | |||||||
Other liabilities | (14,701) | |||||||
Total liabilities assumed | (412,268) | |||||||
Net assets acquired | 29,816 | |||||||
Fair value of the consideration transferred | 140,697 | |||||||
Asset Acquisition,Goodwill | ¥ 110,881 | |||||||
Relaxation Salons | ||||||||
Business Combination | ||||||||
Cash consideration | ¥ 202,686 | ¥ 86,916 | ¥ 23,813 | |||||
Number of salons acquired | item | 18 | 16 | 17 | |||||
Assets Acquired and Liabilities Assumed | ||||||||
Property and equipment | ¥ 36,299 | ¥ 51,005 | ¥ 27,567 | |||||
Other intangible assets | 15,000 | 12,690 | 6,519 | |||||
Total assets | 51,299 | 63,695 | 34,086 | |||||
Asset retirement obligation | (33,876) | (49,217) | (25,942) | |||||
Total liabilities assumed | (33,876) | (49,217) | (25,942) | |||||
Net assets acquired | 17,423 | 14,478 | 8,144 | |||||
Fair value of the consideration transferred | 202,686 | 86,916 | 23,813 | |||||
Asset Acquisition,Goodwill | 185,263 | 72,438 | 22,156 | |||||
Gain from bargain purchase | ¥ 0 | ¥ 0 | ¥ 6,487 |
Business Combination - Addition
Business Combination - Additional Information (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Aug. 31, 2021 | May 06, 2021 | |
Business Combination | |||||
Gain from bargain purchase | ¥ 6,487 | ||||
Other intangible assets | ¥ 391,038 | ¥ 97,615 | |||
Revenues | 5,409,825 | 3,341,617 | 3,908,264 | ||
Net loss | (990,731) | (539,170) | 17,335 | ||
Amount of intangibles acquired | ¥ 473,438 | 102,875 | |||
Minimum | |||||
Business Combination | |||||
Useful life | 7 years | ||||
Maximum | |||||
Business Combination | |||||
Useful life | 10 years | ||||
Trademark | |||||
Business Combination | |||||
Amount of intangibles acquired | ¥ 160,000 | ||||
Trademark | Maximum | |||||
Business Combination | |||||
Useful life | 10 years | ||||
Reacquired franchise rights | |||||
Business Combination | |||||
Amount of intangibles acquired | ¥ 19,343 | 17,973 | |||
Reacquired franchise rights | Minimum | |||||
Business Combination | |||||
Useful life | 1 year | ||||
Reacquired franchise rights | Maximum | |||||
Business Combination | |||||
Useful life | 5 years | ||||
Customer relationships | Minimum | |||||
Business Combination | |||||
Useful life | 3 years | ||||
Customer relationships | Maximum | |||||
Business Combination | |||||
Useful life | 7 years | ||||
ZACC | |||||
Business Combination | |||||
Other intangible assets | ¥ 240,000 | ¥ 240,000 | |||
Revenues | 169,320 | ||||
Net loss | 174 | ||||
ZACC | Trademark | |||||
Business Combination | |||||
Other intangible assets | 90,000 | ||||
ZACC | Customer relationships | |||||
Business Combination | |||||
Other intangible assets | 150,000 | ||||
SAWAN CO. LTD. ("SAWAN") | |||||
Business Combination | |||||
Other intangible assets | ¥ 100,000 | ||||
Revenues | 307,141 | ||||
Net loss | (28,988) | ||||
SAWAN CO. LTD. ("SAWAN") | Trademark | |||||
Business Combination | |||||
Other intangible assets | 70,000 | ||||
SAWAN CO. LTD. ("SAWAN") | Customer relationships | |||||
Business Combination | |||||
Other intangible assets | ¥ 30,000 | ||||
Relaxation Salons | |||||
Business Combination | |||||
Gain from bargain purchase | 0 | 0 | 6,487 | ||
Other intangible assets | 15,000 | 12,690 | 6,519 | ||
Revenues | 208,660 | 375,148 | 799,788 | ||
Net loss | ¥ (13,788) | (26,595) | 107,145 | ||
Relaxation Salons | Minimum | |||||
Business Combination | |||||
Royalty rate of fair value measurements for unobservable inputs (as a percent) | 1.20% | ||||
Discount rate of fair value measurements for unobservable inputs (as a percent) | 11.30% | ||||
Relaxation Salons | Maximum | |||||
Business Combination | |||||
Royalty rate of fair value measurements for unobservable inputs (as a percent) | 6% | ||||
Discount rate of fair value measurements for unobservable inputs (as a percent) | 25% | ||||
Relaxation Salons | Reacquired franchise rights | |||||
Business Combination | |||||
Amount of franchise rights reacquired | ¥ 15,000 | ¥ 12,690 | ¥ 6,519 | ||
Relaxation Salons | Reacquired franchise rights | Minimum | |||||
Business Combination | |||||
Useful life of reacquired franchise rights | 1 year | ||||
Relaxation Salons | Reacquired franchise rights | Maximum | |||||
Business Combination | |||||
Useful life of reacquired franchise rights | 3 years |
Property and Equipment, Net - P
Property and Equipment, Net - Property and Equipment (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Cost | ¥ 583,125 | ¥ 319,784 | |
Accumulated depreciation and amortization | (158,129) | (83,854) | |
Net carrying amounts | 424,996 | 235,930 | |
Depreciation and amortization expense | 80,463 | 41,691 | ¥ 29,557 |
Impairment loss | 63,211 | 106,501 | 44,546 |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 472,872 | 272,756 | |
Impairment loss | 3,165 | 36,512 | ¥ 9,825 |
Vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Cost | 23,219 | 9,548 | |
Tools, furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Cost | ¥ 87,034 | ¥ 37,480 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, Net - Components of intangible assets (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets subject to amortization | ¥ 473,438 | ¥ 102,875 | |
Accumulated amortization | (82,769) | (44,330) | |
Net carrying amount, Intangible assets subject to amortization | 390,669 | 58,545 | |
Goodwill | 600,329 | 150,720 | ¥ 78,282 |
Indefinite-lived Intangible Assets and Goodwill | 600,698 | 189,790 | |
Total intangible assets | 991,367 | 248,335 | |
Amortization expense | 45,780 | 20,599 | ¥ 16,617 |
Trademark | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets subject to amortization | 160,000 | ||
Intangible assets not subject to amortization | 38,922 | ||
Impairments | ¥ 38,922 | ||
Trademark | Weighted average | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Useful life | 10 years | ||
Customer relationship | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets subject to amortization | ¥ 180,000 | ||
Customer relationship | Weighted average | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Useful life | 6 years | ||
Telephone rights | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets not subject to amortization | ¥ 369 | 148 | |
Capitalized software | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets subject to amortization | ¥ 113,345 | 84,152 | |
Capitalized software | Weighted average | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Useful life | 4 years | ||
Reacquired franchise rights | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets subject to amortization | ¥ 19,343 | 17,973 | |
Impairment of other intangible assets | ¥ 145 | ||
Reacquired franchise rights | Weighted average | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Useful life | 1 year | ||
Other. | |||
Finite Lived and Indefinite Lived Intangible Assets by Major Class [Line Items] | |||
Intangible assets subject to amortization | ¥ 750 | ¥ 750 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, Net - Estimated aggregate amortization expense (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2022 | ¥ 76,336 | |
2023 | 65,756 | |
2024 | 55,641 | |
2025 | 41,919 | |
2026 | 39,570 | |
Thereafter | 111,447 | |
Net carrying amount, Intangible assets subject to amortization | ¥ 390,669 | ¥ 58,545 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, Net - Changes in carrying amount of goodwill (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill Roll Forward | |||
Goodwill beginning balance | ¥ 150,720 | ¥ 78,282 | |
Sales of directly-operated salons, and closure of directly-operated salons | (13,776) | ||
Goodwill impairment losses | 0 | 0 | ¥ 0 |
Goodwill ending balance | 600,329 | 150,720 | ¥ 78,282 |
ZACC | |||
Goodwill Roll Forward | |||
Acquisitions | 167,241 | ||
SAWAN CO. LTD. ("SAWAN") | |||
Goodwill Roll Forward | |||
Acquisitions | 110,881 | ||
Relaxation Salons | |||
Goodwill Roll Forward | |||
Acquisitions | ¥ 185,263 | ¥ 72,438 |
Investments - Equity Method Inv
Investments - Equity Method Investments (Details) - Re.Ra.Ku (Hong Kong) Health Science - JPY (¥) ¥ in Thousands | 1 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 0% | 0% | 0% |
Gain from sale of investment | ¥ 559 | ||
Proceeds from sale of equity investments | ¥ 50,000 |
Investments - Investment at Cos
Investments - Investment at Cost (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | |||
Feb. 03, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Carrying amount | ¥ 53,020 | ¥ 500 | ||
Impairment loss on investments | 10,544 | ¥ 0 | ||
Proceeds from Sale of Long-term Investments | ¥ 53,000 | |||
Payments to acquire additional shares | 52,520 | ¥ 13,544 | ||
Matrix Industries, Inc. | ||||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Carrying amount | ¥ 52,520 | |||
Ownership percentage | 0.09% | 0.09% | ||
Impairment loss on investments | ¥ 5,544 | |||
Payments to acquire additional shares | ¥ 52,520 | |||
Other | ||||
Equity Securities without Readily Determinable Fair Value [Line Items] | ||||
Carrying amount | ¥ 500 | 500 | ||
Impairment loss on investments | ¥ 5,000 |
Borrowings (Details)
Borrowings (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Debt Instrument | ||
Time deposits pledged as collateral | ¥ 81,526 | |
Borrowings (Due through 2035 with weighted average interest rates of 0.66% as of December 31, 2021, due through 2035 with weighted average interest rates of 1.33% as of December 31, 2020) | 908,840 | ¥ 910,661 |
Current portion of borrowings | (162,252) | (242,281) |
Total borrowings | ¥ 746,588 | ¥ 668,380 |
Weighted average interest rates | 0.66% | 1.33% |
Time Deposits | ||
Debt Instrument | ||
Time deposits pledged as collateral | ¥ 20,026 | |
Other Assets | ||
Debt Instrument | ||
Time deposits pledged as collateral | ¥ 61,500 | |
Japanese financial institutions unsecured bank loans | Minimum | ||
Debt Instrument | ||
Fixed interest rates | 0.21% | 0.21% |
Japanese financial institutions unsecured bank loans | Maximum | ||
Debt Instrument | ||
Fixed interest rates | 3.98% | 3.98% |
Borrowings - Maturities of borr
Borrowings - Maturities of borrowings (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2022 | ¥ 162,252 | |
2023 | 99,252 | |
2024 | 96,918 | |
2025 | 88,438 | |
2026 | 94,460 | |
2027 and thereafter | 367,520 | |
Total | ¥ 908,840 | ¥ 910,661 |
Borrowings - Additional informa
Borrowings - Additional information (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 JPY (¥) item loan | Dec. 31, 2020 JPY (¥) | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||
Long-term debt | ¥ 908,840 | ¥ 910,661 | |
Debt instrument principal amount | 913,486 | ||
Valuation discount | ¥ 4,646 | ||
Number of loan agreements containing financial covenants | loan | 0 | ||
Kouji Eguchi | |||
Debt Instrument [Line Items] | |||
Number of loans guaranteed | loan | 12 | ||
Long-term debt | ¥ 314,700 | ||
Kouji Eguchi | Class A Common | |||
Debt Instrument [Line Items] | |||
Ownership percentage | 100% | 48.05% | |
Kazuyoshi Takahashi | |||
Debt Instrument [Line Items] | |||
Number of loans guaranteed | loan | 4 | ||
Long-term debt | ¥ 99,706 | ||
Number of banks | item | 2 | ||
Common stock | Kouji Eguchi | |||
Debt Instrument [Line Items] | |||
Ownership percentage | 38.61% | ||
Common stock | Kazuyoshi Takahashi | |||
Debt Instrument [Line Items] | |||
Ownership percentage | 26% |
Asset Retirement Obligation (De
Asset Retirement Obligation (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Asset Retirement Obligation Disclosure [Line Items] | ||
Beginning balance | ¥ 191,192 | ¥ 127,411 |
Liabilities incurred | 114,946 | 80,056 |
Liabilities settled | (9,316) | (16,870) |
Accretion expense | 2,172 | 595 |
Ending balance | 296,401 | 191,192 |
Ending balance | 298,994 | |
Other Current Liabilities | ||
Asset Retirement Obligation Disclosure [Line Items] | ||
Asset retirement obligation, current | 2,593 | |
Asset Retirement Obligation | ||
Asset Retirement Obligation Disclosure [Line Items] | ||
Beginning balance | 191,192 | |
Ending balance | ¥ 296,401 | ¥ 191,192 |
Leases - Operating leases (Deta
Leases - Operating leases (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 JPY (¥) building | Dec. 31, 2020 JPY (¥) building | Dec. 31, 2019 JPY (¥) building | |
Leases | |||
Number of leased salons | building | 235 | 213 | 220 |
Number of leased salons subleased | building | 115 | 130 | 165 |
Operating lease costs: | |||
Fixed lease cost | ¥ 801,292 | ¥ 748,230 | ¥ 851,555 |
Variable lease cost | 33,167 | 24,484 | 30,901 |
Short-term cost | 38,876 | 11,669 | 10,979 |
Total | 873,335 | 784,383 | 893,435 |
Sublease income, fixed lease | 420,138 | 478,225 | 580,074 |
Sublease income, variable lease | ¥ 17,838 | ¥ 14,146 | ¥ 27,606 |
Leases - Supplementary informat
Leases - Supplementary information on cash flow (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows | ¥ 881,822 | ¥ 797,623 | ¥ 375,270 |
Right-of-use assets obtained in exchange for lease liabilities | ¥ 917,135 | ¥ 604,703 | ¥ 749,008 |
Weighted average remaining lease term (in years) | 3 years 2 months 12 days | 2 years 9 months 18 days | 3 years 3 months 18 days |
Weighted average discount rate | 1.64% | 1.45% | 1.45% |
Year ending December 31: | |||
2022 | ¥ 773,383 | ||
2023 | 490,042 | ||
2024 | 278,068 | ||
2025 | 181,245 | ||
2026 | 112,678 | ||
2027 and thereafter | 113,935 | ||
Total | 1,949,351 | ||
Less: Interest component | (65,395) | ||
Present value of minimum lease payments | 1,883,956 | ||
Current portion of lease liability | 755,219 | ¥ 658,320 | |
Lease liability - net of current portion | ¥ 1,128,737 | ¥ 992,892 |
Leases - Subleases (Details)
Leases - Subleases (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | |||
Fixed sublease income | ¥ 420,138 | ¥ 478,225 | ¥ 580,074 |
Variable sublease income | 17,838 | 14,146 | 27,606 |
Total | 437,976 | ¥ 492,371 | ¥ 607,680 |
Year ending December 31: | |||
2022 | 328,989 | ||
2023 | 225,351 | ||
2024 | 92,165 | ||
2025 | 45,374 | ||
2026 | 23,279 | ||
2027 and thereafter | 18,267 | ||
Total | ¥ 733,425 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - JPY (¥) ¥ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 29, 2021 | Dec. 31, 2020 | |
Minimum required net assets after distribution of dividends | ¥ 3 | ||
Required appropriation to legal reserve, percentage | 10% | ||
Percentage of common stock, percentage which precludes appropriation | 25% | ||
Class A Common | |||
Common stock, shares authorized | 1 | 1 | 1 |
Common stock | |||
Common stock, shares authorized | 19,899,999 | 19,899,999 | 9,999,999 |
Portion of proceeds credited to capital stock, minimum under Companies Act | 50% | ||
Common stock | Class A Common | |||
Recently approved maximum number of common shares | 19,900,000 |
Stock-based Compensation (Detai
Stock-based Compensation (Details) | 12 Months Ended | ||||
Oct. 02, 2020 JPY (¥) ¥ / shares shares | Dec. 21, 2016 ¥ / shares shares | Dec. 21, 2015 ¥ / shares shares | Dec. 31, 2021 JPY (¥) | Dec. 31, 2020 JPY (¥) ¥ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 450,000 | ||||
Exercise price, per share | ¥ 752 | ||||
Expected volatility rate minimum | 58.21% | ||||
Expected volatility rate maximum | 65.93% | ||||
Expected dividend yield | 0% | 0% | |||
Risk-free interest rate minimum | 0.17% | ||||
Risk-free interest rate maximum | 0.19% | ||||
Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected term of option (in years) | 2 years | ||||
Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected term of option (in years) | 3 years | ||||
Other Current Liabilities | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Liability on stock options granted | ¥ | ¥ 6,750,000 | ||||
Stock option | Director and corporate auditor | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 300,000 | 1,539,500 | |||
Exercise term | 3 years | 8 years | |||
Fair value at grant date, per share | ¥ 22 | ¥ 2.45 | |||
Exercise price, per share | ¥ 400 | ||||
Stock option | Director and employees | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 174,000 | ||||
Exercise term | 8 years | ||||
Fair value at grant date, per share | ¥ 0.82 | ||||
Exercise price, per share | ¥ 2,000 | ||||
Stock option | Corporate auditor | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 230,000 | ||||
Exercise term | 8 years | ||||
Fair value at grant date, per share | ¥ 0.67 | ||||
Exercise price, per share | ¥ 2,000 | ||||
Stock option | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 150,000 | ||||
Exercise term | 5 years | ||||
Fair value at grant date, per share | ¥ 104.64 | ||||
Paid in for the stock option | ¥ | 1 | ||||
Exercise price, per share | ¥ 2,000 | ||||
Stock option | Employees | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares granted | shares | 285,500 | ||||
Exercise term | 8 years | ||||
Fair value at grant date, per share | 637.02 | ¥ 2.96 | |||
Exercise price, per share | ¥ 128 | ¥ 400 | |||
Annual consolidated revenue target to achieve to exercise options | ¥ | ¥ 3,908,264,000 |
Stock-based Compensation - Acti
Stock-based Compensation - Activity (Details) - JPY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Number of shares outstanding, beginning of period | 679,500 | 519,500 | 549,500 | |
Number of shares granted | 450,000 | |||
Number of shares forfeited/expired | (79,700) | (290,000) | (30,000) | |
Number of shares outstanding, end of period | 599,800 | 679,500 | 519,500 | 549,500 |
Number of shares exercisable | 599,800 | 229,500 | 519,500 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Weighted average exercise price, beginning of period | ¥ 905 | ¥ 1,595 | ¥ 1,552 | |
Weighted average exercise price, granted | 752 | |||
Weighted average exercise price, forfeited/expired | 1,266 | 1,903 | 800 | |
Weighted average exercise price, outstanding, end of period | 857 | 905 | 1,595 | ¥ 1,552 |
Weighted average exercise price exercisable | ¥ 857 | ¥ 1,205 | ¥ 1,595 | |
Weighted average remaining contractual term, outstanding | 3 years 6 months | 4 years 3 months 18 days | 6 years 8 months 12 days | 7 years 7 months 6 days |
Weighted average remaining contractual term, exercisable | 3 years 6 months | 5 years 4 months 24 days | 6 years 8 months 12 days | |
Aggregated intrinsic value, outstanding, beginning of period | ¥ 531,518 | |||
Aggregated intrinsic value, outstanding, end of period of period | 192,570 | ¥ 531,518 | ||
Aggregated intrinsic value, exercisable | 192,570 | 123,891 | ||
Stock option | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Compensation cost recognized | ¥ 0 | |||
Employee Stock Options Ninth Series | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Compensation cost recognized | 181,308 | |||
Unrecognized compensation cost | 0 | 0 | ||
Employee Stock Options Eighth Series | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Compensation cost recognized | ¥ 15,545 | ¥ 0 |
Segment Information (Details)
Segment Information (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 JPY (¥) segment | Dec. 31, 2020 JPY (¥) | Dec. 31, 2019 JPY (¥) | |
Segment Reporting Information | |||
Number of operating segments | segment | 3 | ||
Revenues | ¥ 5,409,825 | ¥ 3,341,617 | ¥ 3,908,264 |
Operating income (loss) | (470,587) | (746,088) | 34,350 |
Depreciation and amortization | 126,243 | 62,290 | 46,174 |
Total assets | 5,753,061 | 5,713,466 | 4,757,465 |
Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 5,196,540 | 3,315,947 | 3,864,656 |
Operating income (loss) | 699,105 | (140,866) | 279,439 |
Depreciation and amortization | 80,917 | 32,261 | 34,025 |
Total assets | 4,002,005 | 3,096,094 | 3,346,739 |
Digital Preventative Healthcare | |||
Segment Reporting Information | |||
Revenues | 43,965 | 25,670 | 43,608 |
Operating income (loss) | (144,857) | (66,100) | (43,056) |
Depreciation and amortization | 11,113 | 8,007 | 4,764 |
Total assets | 161,945 | 34,247 | 29,565 |
Luxury Beauty | |||
Segment Reporting Information | |||
Revenues | 169,320 | ||
Operating income (loss) | (6,538) | ||
Depreciation and amortization | 10,736 | ||
Total assets | 701,172 | ||
Operating segments | |||
Segment Reporting Information | |||
Revenues | 5,409,825 | 3,341,617 | |
Corporate and eliminations | |||
Segment Reporting Information | |||
Operating income (loss) | (1,018,297) | (539,122) | (202,033) |
Depreciation and amortization | 23,477 | 22,022 | 7,385 |
Total assets | 887,939 | 2,583,125 | 1,381,161 |
Directly-operated salons | |||
Segment Reporting Information | |||
Revenues | 4,006,834 | 2,026,806 | 2,031,155 |
Directly-operated salons | Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 3,278,514 | 2,026,806 | |
Directly-operated salons | Luxury Beauty | |||
Segment Reporting Information | |||
Revenues | 169,320 | ||
Directly-operated salons | Operating segments | |||
Segment Reporting Information | |||
Revenues | 3,447,834 | 2,026,806 | |
Franchise fees | |||
Segment Reporting Information | |||
Revenues | 1,359,026 | 1,289,141 | 1,833,501 |
Franchise fees | Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 199,889 | 175,445 | |
Franchise fees | Operating segments | |||
Segment Reporting Information | |||
Revenues | 199,889 | 175,445 | |
Royalty income | Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 209,848 | 179,745 | |
Royalty income | Operating segments | |||
Segment Reporting Information | |||
Revenues | 209,848 | 179,745 | |
Staffing service revenue | Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 263,962 | 254,282 | |
Staffing service revenue | Operating segments | |||
Segment Reporting Information | |||
Revenues | 263,962 | 254,282 | |
Sublease revenue | Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 437,976 | 492,371 | |
Sublease revenue | Operating segments | |||
Segment Reporting Information | |||
Revenues | 437,976 | 492,371 | |
Other franchise revenues | Relaxation Salon Segment | |||
Segment Reporting Information | |||
Revenues | 247,351 | 187,298 | |
Other franchise revenues | Operating segments | |||
Segment Reporting Information | |||
Revenues | 247,351 | 187,298 | |
Other revenues | |||
Segment Reporting Information | |||
Revenues | 43,965 | 25,670 | ¥ 43,608 |
Other revenues | Digital Preventative Healthcare | |||
Segment Reporting Information | |||
Revenues | 43,965 | 25,670 | |
Other revenues | Operating segments | |||
Segment Reporting Information | |||
Revenues | ¥ 43,965 | ¥ 25,670 |
Income Taxes (Details)
Income Taxes (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | |||
(Loss) income before income taxes | ¥ (414,481) | ¥ (626,689) | ¥ 32,737 |
Income taxes | |||
Current | 24,767 | 19,745 | 10,222 |
Deferred | 551,483 | (107,264) | 5,739 |
Total | ¥ 576,250 | ¥ (87,519) | ¥ 15,961 |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Statutory tax rate | 30.60% | 30.60% | 30.60% |
Change in valuation allowance | (155.90%) | (13.20%) | (10.20%) |
Nondeductible expenses | (1.10%) | (0.30%) | 3.20% |
Inhabitant tax-per capita* | (3.90%) | (3.20%) | 24.50% |
Stock-based compensation | (14.50%) | ||
Use of operating loss carryforwards | 3.90% | ||
Other-net | 1.90% | 0.10% | 0.70% |
Effective income tax rate | (139.00%) | 14% | 48.80% |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets and liabilities (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred tax assets: | |||
Accounts receivable-trade | ¥ 13,485 | ¥ 13,485 | ¥ 13,485 |
Provision for bad debt | 50,551 | 41,700 | 50,271 |
Goodwill | 1,135 | ||
Other prepaid expenses-currently not deductible | 54,235 | ||
Contract liability | 154,950 | ||
Asset retirement obligation | 91,552 | 58,543 | 39,013 |
Operating lease liability | 576,867 | 505,601 | 563,660 |
Operating loss carryforwards | 716,518 | 484,040 | 95,490 |
Other | 69,603 | 60,392 | 51,485 |
Gross deferred tax assets | 1,518,576 | 1,318,711 | 868,774 |
Valuation allowance | (771,441) | (125,376) | (42,395) |
Total deferred tax assets | 747,135 | 1,193,335 | 826,379 |
Deferred tax liabilities: | |||
Property and equipment | (65,590) | (32,433) | (18,141) |
Goodwill | (15,018) | (4,073) | |
Intangible assets | (101,025) | (15,285) | (6,485) |
Right-of-use asset-operating lease | (558,538) | (483,437) | (560,336) |
Deferred offering costs | (17,609) | ||
Advances received | (1,311) | (1,303) | |
Other | (6,964) | (1,205) | |
Total deferred tax liabilities | (747,135) | (537,744) | (603,874) |
Net deferred tax assets | 655,591 | 222,505 | |
Increase (decrease) in valuation allowance | ¥ 646,065 | ¥ 82,981 | ¥ (3,355) |
Income Taxes - Operating loss c
Income Taxes - Operating loss carryforwards (Details) ¥ in Thousands | Dec. 31, 2021 JPY (¥) |
Income Taxes | |
Operating loss carryforwards expiring between 2022 and 2025 | ¥ 133,695 |
Operating loss carryforwards expiring between 2026 and 2029 | 160,948 |
Operating loss carryforwards expiring 2030 and thereafter | 2,045,390 |
Total | ¥ 2,340,033 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of revenue (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue | |||
Revenues | ¥ 5,409,825 | ¥ 3,341,617 | ¥ 3,908,264 |
Directly-operated salons | |||
Disaggregation of Revenue | |||
Revenues | 4,006,834 | 2,026,806 | 2,031,155 |
Franchise fees | |||
Disaggregation of Revenue | |||
Revenues | 1,359,026 | 1,289,141 | 1,833,501 |
Other revenues | |||
Disaggregation of Revenue | |||
Revenues | 43,965 | 25,670 | 43,608 |
Relaxation Salon Segment | |||
Disaggregation of Revenue | |||
Revenues | 5,196,540 | 3,315,947 | 3,864,656 |
Relaxation Salon Segment | Directly-operated salons | |||
Disaggregation of Revenue | |||
Revenues | 3,278,514 | 2,026,806 | |
Relaxation Salon Segment | Directly-operated salons sold | |||
Disaggregation of Revenue | |||
Revenues | 559,000 | ||
Relaxation Salon Segment | Franchise fees | |||
Disaggregation of Revenue | |||
Revenues | 199,889 | 175,445 | |
Relaxation Salon Segment | Royalty income | |||
Disaggregation of Revenue | |||
Revenues | 209,848 | 179,745 | |
Relaxation Salon Segment | Staffing service revenue | |||
Disaggregation of Revenue | |||
Revenues | 263,962 | 254,282 | |
Relaxation Salon Segment | Sublease revenue | |||
Disaggregation of Revenue | |||
Revenues | 437,976 | 492,371 | |
Relaxation Salon Segment | Other franchise revenues | |||
Disaggregation of Revenue | |||
Revenues | 247,351 | 187,298 | |
Digital Preventative Healthcare | |||
Disaggregation of Revenue | |||
Revenues | 43,965 | 25,670 | ¥ 43,608 |
Digital Preventative Healthcare | Other revenues | |||
Disaggregation of Revenue | |||
Revenues | 43,965 | 25,670 | |
Luxury Beauty | |||
Disaggregation of Revenue | |||
Revenues | 169,320 | ||
Luxury Beauty | Directly-operated salons | |||
Disaggregation of Revenue | |||
Revenues | 169,320 | ||
Operating segments | |||
Disaggregation of Revenue | |||
Revenues | 5,409,825 | 3,341,617 | |
Operating segments | Directly-operated salons | |||
Disaggregation of Revenue | |||
Revenues | 3,447,834 | 2,026,806 | |
Operating segments | Directly-operated salons sold | |||
Disaggregation of Revenue | |||
Revenues | 559,000 | ||
Operating segments | Franchise fees | |||
Disaggregation of Revenue | |||
Revenues | 199,889 | 175,445 | |
Operating segments | Royalty income | |||
Disaggregation of Revenue | |||
Revenues | 209,848 | 179,745 | |
Operating segments | Staffing service revenue | |||
Disaggregation of Revenue | |||
Revenues | 263,962 | 254,282 | |
Operating segments | Sublease revenue | |||
Disaggregation of Revenue | |||
Revenues | 437,976 | 492,371 | |
Operating segments | Other franchise revenues | |||
Disaggregation of Revenue | |||
Revenues | 247,351 | 187,298 | |
Operating segments | Other revenues | |||
Disaggregation of Revenue | |||
Revenues | ¥ 43,965 | ¥ 25,670 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balance (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue Recognition | ||
Accounts receivable-trade, net | ¥ 312,302 | ¥ 148,540 |
Contract liabilities: | ||
Current portion of contract liability | 104,182 | 172,063 |
Contract liability - net of current portion | 239,067 | 333,978 |
Contract with Customer, Liability, Total | 343,249 | 506,041 |
Prepaid card liability | ¥ 509,355 | ¥ 403,229 |
Revenue Recognition - Changes i
Revenue Recognition - Changes in Company's Contract Liabilities (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2021 JPY (¥) | |
Revenue Recognition | |
Beginning Balance | ¥ 506,041 |
Revenues recognized which were included in the contract liabilities balance | (201,074) |
Remaining amounts which were newly recognized as contract liabilities | 38,282 |
Ending Balance | ¥ 343,249 |
Revenue Recognition - Estimated
Revenue Recognition - Estimated revenue (Details) ¥ in Thousands | Dec. 31, 2021 JPY (¥) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
2022 | ¥ 104,182 |
2023 | 100,357 |
2024 | 86,118 |
2025 | 42,201 |
2026 | 8,734 |
2027 and thereafter | 1,657 |
Total remaining revenue performance obligation | ¥ 343,249 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 1 year |
Other Comprehensive Income (L_3
Other Comprehensive Income (Loss) (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Other comprehensive income (loss), after tax | ¥ 0 | ¥ 0 | |
Foreign currency translation adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Reclassification adjustments for gains and losses realized in net income, before tax | ¥ 400 | ||
Reclassification adjustments for gains and losses realized in net income, tax | (122) | ||
Reclassification adjustments for gains and losses realized in net income, after tax | 278 | ||
Other comprehensive income (loss), before tax | 400 | ||
Other comprehensive income (loss), tax | (122) | ||
Other comprehensive income (loss), after tax | ¥ 0 | ¥ 0 | ¥ 278 |
Other Comprehensive Income (L_4
Other Comprehensive Income (Loss) - Changes in AOCI (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance, beginning of period | ¥ 491,257 | ¥ 600,058 | ¥ (117,555) |
Net change during the year | 0 | 0 | |
Balance, end of period | (208,343) | 491,257 | 600,058 |
Foreign currency translation adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Balance, beginning of period | 0 | (278) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 278 | ||
Net change during the year | 0 | 0 | ¥ 278 |
Balance, end of period | ¥ 0 | ¥ 0 |
Other Comprehensive Income (L_5
Other Comprehensive Income (Loss) - Reclassification out of AOCI (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Other-net | ¥ 24,377 | ¥ 19,718 | ¥ 4,153 |
Income tax expense | 576,250 | (87,519) | 15,961 |
Net (loss) income | ¥ (990,731) | ¥ (539,170) | 17,335 |
Foreign currency translation adjustments | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Other-net | 400 | ||
Income tax expense | (122) | ||
Net (loss) income | 278 | ||
Total amount reclassified | 278 | ||
Foreign currency translation adjustments | Amount reclassified | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Total amount reclassified | ¥ 278 |
(Loss) Earnings Per Share (Deta
(Loss) Earnings Per Share (Details) - JPY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share | |||
Net (loss) income attributable to shareholders of the Company | ¥ (990,731) | ¥ (539,170) | ¥ 17,335 |
Weighted average common shares outstanding | 4,877,404 | 4,024,692 | 3,747,296 |
Effect of dilutive instruments: | |||
Weighted average common shares for diluted computation | 4,877,404 | 4,024,692 | 4,272,302 |
Basic | ¥ (203.13) | ¥ (133.97) | ¥ 4.63 |
Diluted | ¥ (203.13) | ¥ (133.97) | ¥ 4.06 |
Class A Common | |||
Earnings Per Share | |||
Weighted average common shares outstanding | 1 | 1 | 1 |
Effect of dilutive instruments: | |||
Weighted average common shares for diluted computation | 1 | 1 | 1 |
Basic | ¥ (203.13) | ¥ (133.97) | ¥ 4.63 |
Diluted | ¥ (203.13) | ¥ (133.97) | ¥ 4.06 |
Common | |||
Earnings Per Share | |||
Net (loss) income attributable to shareholders of the Company | ¥ (990,731) | ¥ (539,170) | ¥ 17,335 |
Weighted average common shares outstanding | 4,877,404 | 4,024,692 | 3,747,295 |
Effect of dilutive instruments: | |||
Stock options | 599,800 | 799,500 | 525,007 |
Weighted average common shares for diluted computation | 4,877,404 | 4,024,692 | 4,272,302 |
Basic | ¥ (203.13) | ¥ (133.97) | ¥ 4.63 |
Diluted | ¥ (203.13) | ¥ (133.97) | ¥ 4.06 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - JPY (¥) ¥ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value of Financial Instruments | ||
Borrowings - net of current portion, carrying amount | ¥ (746,588) | ¥ (668,380) |
Borrowings - net of current portion, estimated fair value | ¥ (759,185) | ¥ (644,499) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Assets measured at fair value | ¥ 5,753,061 | ¥ 5,713,466 | ¥ 4,757,465 |
Liabilities measured at fair value | 5,961,404 | 5,222,209 | |
Impairment loss, right-of-use asset - operating lease | 20,979 | 69,989 | 34,721 |
Impairment loss, assets measured on nonrecurring basis | 24,289 | 106,501 | 44,546 |
Impairment loss on long-lived assets | 63,211 | 106,501 | 44,546 |
Bell Epoque Trademark [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Impairment of Intangible Assets (Excluding Goodwill) | ¥ 38,922 | ||
Minimum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Percentage of weighted average cost of capital | 11.30% | ||
Maximum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Percentage of weighted average cost of capital | 21% | ||
Nonrecurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Impairment loss, leasehold improvements | ¥ 3,165 | 36,512 | 9,825 |
Impairment loss, right-of-use asset - operating lease | 20,979 | 69,989 | 34,721 |
Impairment loss, assets measured on nonrecurring basis | 63,211 | 106,501 | 44,546 |
Nonrecurring | Trademark | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Impairment loss, assets measured on nonrecurring basis | 38,922 | ||
Nonrecurring | Reacquired franchise rights | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Impairment loss, assets measured on nonrecurring basis | 145 | ||
Nonrecurring | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Leasehold improvements | 359,376 | 213,314 | 161,330 |
Right-of-use asset - operating lease | 1,824,095 | 1,578,828 | 1,829,968 |
Impairment loss, assets measured on nonrecurring basis | 2,345,568 | 1,792,142 | 1,991,298 |
Nonrecurring | Level 3 | Trademark | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Trademark and reacquired franchise rights | 153,458 | ||
Nonrecurring | Level 3 | Reacquired franchise rights | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Trademark and reacquired franchise rights | 8,639 | ||
Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Assets measured at fair value | 0 | 0 | |
Liabilities measured at fair value | ¥ 0 | ¥ 0 | ¥ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) - JPY (¥) ¥ in Thousands | 12 Months Ended | ||||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Aug. 15, 2022 | May 10, 2022 | |
Related Party Transaction [Line Items] | |||||
Long-term debt | ¥ 908,840 | ¥ 910,661 | |||
Kouji Eguchi | |||||
Related Party Transaction [Line Items] | |||||
Balance due from related party | ¥ 189 | ||||
Long-term debt | ¥ 314,700 | ||||
Kouji Eguchi | Class A Common | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 100% | 48.05% | |||
Kouji Eguchi | Common | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 48.05% | ||||
Kabushiki Kaisha No Track | Accrued expenses | |||||
Related Party Transaction [Line Items] | |||||
Accrued expenses due to related party | ¥ 110 | 110 | ¥ 110 | ||
Kabushiki Kaisha No Track | Selling, general and administrative expense. | |||||
Related Party Transaction [Line Items] | |||||
Consulting fees paid to related party | ¥ 600 | ¥ 600 | ¥ 600 | ||
Tomoya Ogawa | Common | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 0.58% | 0.59% | 0.71% | ||
Kabushiki Kaisha LTW | Accrued expenses | |||||
Related Party Transaction [Line Items] | |||||
Accrued expenses due to related party | ¥ 330 | ¥ 110 | |||
Kabushiki Kaisha LTW | Selling, general and administrative expense. | |||||
Related Party Transaction [Line Items] | |||||
Consulting fees paid to related party | ¥ 3,000 | ¥ 1,200 | ¥ 1,200 | ||
Corporate auditor | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 0.36% | 0.36% | 0.44% | ||
Aoyama Consulting Group Co., Ltd. | Accrued expenses | |||||
Related Party Transaction [Line Items] | |||||
Accrued expenses due to related party | ¥ 110 | ¥ 110 | |||
Aoyama Consulting Group Co., Ltd. | Selling, general and administrative expense. | |||||
Related Party Transaction [Line Items] | |||||
Consulting fees paid to related party | 1,200 | ¥ 1,200 | ¥ 1,200 | ||
Kazuyoshi Takahashi | |||||
Related Party Transaction [Line Items] | |||||
Long-term debt | ¥ 99,706 | ||||
Kazuyoshi Takahashi | Corporate bond which matures August 15, 2022 | |||||
Related Party Transaction [Line Items] | |||||
Long-term debt | ¥ 50,000 | ||||
Interest rate | 5% | ||||
Kazuyoshi Takahashi | Corporate bond which matures December 31, 2022 | |||||
Related Party Transaction [Line Items] | |||||
Long-term debt | ¥ 40,000 | ||||
Common stock | Kouji Eguchi | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 38.61% | ||||
Common stock | Kazuyoshi Takahashi | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage | 26% |
Subsequent Events (Details)
Subsequent Events (Details) ¥ in Thousands, $ in Millions | 12 Months Ended | ||||||||||||
Jan. 01, 2022 JPY (¥) | Oct. 01, 2021 JPY (¥) | Aug. 31, 2021 JPY (¥) | Dec. 31, 2021 JPY (¥) item | Dec. 31, 2020 JPY (¥) item | Dec. 31, 2019 JPY (¥) item | Dec. 31, 2022 JPY (¥) | Aug. 31, 2022 JPY (¥) | Jun. 29, 2022 USD ($) | May 10, 2022 JPY (¥) | Apr. 19, 2022 USD ($) | Jan. 18, 2022 USD ($) | Oct. 31, 2021 | |
Subsequent event | |||||||||||||
Number of salons | item | 312 | 290 | 283 | ||||||||||
Nasdaq maintain a minimum market value | $ | $ 35 | $ 35 | $ 35 | ||||||||||
Subsequent Event | |||||||||||||
Subsequent event | |||||||||||||
Corporate bond | ¥ 40,000 | ¥ 50,000 | |||||||||||
Subsequent Event | Act on Settlement of Funds | Minimum | |||||||||||||
Subsequent event | |||||||||||||
Net assets | ¥ 100,000 | ||||||||||||
ZACC | |||||||||||||
Subsequent event | |||||||||||||
Percentage of ownership interest | 100% | 60% | |||||||||||
Cash consideration | ¥ 148,000 | ¥ 152,986 | ¥ 370,000 | ||||||||||
Initial payment to acquire businesses | 69,014 | ||||||||||||
Initial percentage of voting equity interests acquired | 60% | ||||||||||||
Fair value of the consideration transferred | ¥ 270,000 | ||||||||||||
ZACC | Subsequent Event | |||||||||||||
Subsequent event | |||||||||||||
Fair value of the consideration transferred | ¥ 148,000 | ||||||||||||
Relaxation Salons | |||||||||||||
Subsequent event | |||||||||||||
Cash consideration | ¥ 202,686 | ¥ 86,916 | ¥ 23,813 | ||||||||||
Directly-operated salons | |||||||||||||
Subsequent event | |||||||||||||
Number of salons | item | 188 | 150 | 107 | ||||||||||
Franchise fees | |||||||||||||
Subsequent event | |||||||||||||
Number of salons | item | 124 | 140 | 176 |