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RELATED PARTY TRANSACTIONS
 9 Months Ended
Sep. 30, 2024
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 17 — RELATED PARTY TRANSACTIONS

 

The related parties had material transactions for the nine months ended September 30, 2024 and 2023 consist of the following:

 

Name of Related Parties   Nature of Relationship as of September 30, 2024
Yoshiyuki Aikawa   Controlling shareholder, director and CEO of the Company
Yoshiko Aikawa   Representative director of a subsidiary of the Company
Mizuho Yamashita   Director of a subsidiary of the Company
Medical Corporation Shobikai   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Kowakai   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Nasukai   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Aikeikai   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Jukeikai   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Ritz Cosmetic Surgery   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Association Junikai   The relatives of CEO of the Company being the Members of the MC
Medical Corporation Association Furinkai   The relatives of CEO of the Company being the Members of the MC
Japan Medical & Beauty Inc.   Controlled by the CEO of the Company
SBC Inc., previously known as SBC China Inc.   Controlled by the CEO of the Company
Hariver Inc.   Controlled by the CEO of the Company
Public Interest Foundation SBC Medical Promotion Foundation   The relative of CEO of the Company being a Member of Public Interest Foundation SBC Medical Promotion Foundation
AI Med Inc.   Controlled by the CEO of the Company
General Incorporated Association SBC   The CEO of the Company being the Member of General Incorporated Association SBC
Amulet Inc.   Controlled by Mizuho Yamashita, a director of a subsidiary of the Company
SBC Irvine MC   Significantly influenced by the Company
SBC Tokyo Medical University, previously known as Ryotokuji University   The CEO of the Company is the chairman of SBC Tokyo Medical University
SBC Shonan Osteopathic Clinic Co., Ltd.   The CEO of the Company is a principal shareholder of SBC Shonan Osteopathic Clinic Co., Ltd.
Waqoo Inc.   The CEO of the Company is a principal shareholder of Waqoo Inc.
General Incorporated Association Taiseikai   The relatives of CEO of the Company being the Members of General Incorporated Association Taiseikai

 

 

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

 

During the nine months ended September 30, 2024 and 2023, the revenue transactions with related parties are as follows:

 

           
   For the Nine Months Ended
September 30,		 
   2024   2023 
Medical Corporation Shobikai  $43,637,973   $41,167,021 
Medical Corporation Kowakai   37,846,051    30,136,659 
Medical Corporation Nasukai   34,722,269    31,847,843 
Medical Corporation Aikeikai   15,025,186    14,545,313 
Medical Corporation Jukeikai   4,819,541    2,149,228 
Medical Corporation Ritz Cosmetic Surgery   4,016,818    1,404,970 
Japan Medical & Beauty Inc.   29,776    157,276 
Hariver Inc.   14,888    16,691 
SBC Inc., previously known as SBC China Inc.   2,166    369 
Public Interest Foundation SBC Medical Promotion Foundation   85    1,005 
General Incorporated Association SBC   802    579 
SBC Tokyo Medical University, previously known as Ryotokuji University   44,792    244,321 
Yoshiyuki Aikawa   77,374    56,320 
Mizuho Yamashita   —    19,551 
Amulet Inc.   —    3,649 
AI Med Inc.   726    1,684,703 
SBC Irvine MC   960,938    971,404 
Medical Corporation Association Furinkai   7,985,014    729,898 
Medical Corporation Association Junikai   3,510,845    199,853 
General Incorporated Association Taiseikai   2,527    — 
SBC Shonan Osteopathic Clinic Co., Ltd.   20,717    — 
Total  $152,718,488   $125,336,653 

 

As of September 30, 2024 and December 31, 2023, the balances with related parties are as follows:

 

Accounts receivable  September 30,
2024		   December 31,
2023		 
Medical Corporation Shobikai  $9,006,704   $9,251,427 
Medical Corporation Nasukai   6,348,783    8,447,448 
Medical Corporation Kowakai   5,859,012    7,841,059 
Medical Corporation Aikeikai   2,071,943    4,661,649 
Medical Corporation Jukeikai   626,376    1,358,213 
Medical Corporation Association Furinkai   1,625,567    1,039,074 
Medical Corporation Ritz Cosmetic Surgery   680,866    520,891 
Medical Corporation Association Junikai   1,181,369    348,187 
Japan Medical & Beauty Inc.   —    139,767 
SBC Tokyo Medical University, previously known as Ryotokuji University   3,580    66,546 
AI Med Inc.   —    2,329 
SBC Inc., previously known as SBC China Inc.   42    45 
Public Interest Foundation SBC Medical Promotion Foundation   —    37 
SBC Shonan Osteopathic Clinic Co., Ltd.   3,444    — 
SBC Irvine MC   426,565    — 
General Incorporated Association Taiseikai   343    — 
General Incorporated Association SBC   585    — 
Total  $27,835,179   $33,676,672 

 

 

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

 

Finance lease receivables  September 30,
2024		   December 31,
2023		 
Medical Corporation Shobikai  $2,234,930   $2,568,709 
Medical Corporation Kowakai   2,834,875    2,779,347 
Medical Corporation Nasukai   3,777,961    2,019,117 
Medical Corporation Aikeikai   1,748,170    1,782,124 
Medical Corporation Jukeikai   694,175    335,317 
Medical Corporation Ritz Cosmetic Surgery   1,782,274    79,439 
Total  $13,072,385   $9,564,053 
Less: current portion   8,443,338    6,143,564 
Non-current portion  $4,629,047   $3,420,489 

 

Due from related party, net  September 30,
2024		   December 31,
2023		 
SBC Irvine MC  $3,111,013   $3,238,209 
Less: allowance for credit loss   (3,111,013)   (3,238,209)
Total  $—   $— 

 

Long-term investments in MCs – related parties  September 30,
2024		   December 31,
2023		 
Medical Corporation Shobikai  $7,001   $7,090 
Medical Corporation Kowakai   7,001    7,090 
Medical Corporation Nasukai   7,001    7,090 
Medical Corporation Aikeikai   7,001    7,090 
Medical Corporation Jukeikai   7,529,763    7,626,184 
Medical Corporation Ritz Cosmetic Surgery   12,003,302    12,157,011 
Total  $19,561,069   $19,811,555 

 

Advances from customers  September 30,
2024		   December 31,
2023		 
Medical Corporation Shobikai  $9,225,862   $13,438,645 
Medical Corporation Kowakai   3,566,378    4,237,765 
Medical Corporation Nasukai   3,884,143    4,117,597 
Medical Corporation Aikeikai   914,864    1,168,947 
Medical Corporation Jukeikai   83,188    85,044 
Medical Corporation Ritz Cosmetic Surgery   80,978    10,177 
SBC Shonan Osteopathic Clinic Co., Ltd.   9,656    — 
Medical Corporation Association Furinkai   432,863    — 
Medical Corporation Association Junikai   796,083    — 
Total  $18,994,015   $23,058,175 

 

 

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

 

Notes payable – related parties  September 30,
2024		   December 31,
2023		 
Medical Corporation Shobikai  $11,173,364   $5,264,101 
Medical Corporation Kowakai   7,042,663    3,855,650 
Medical Corporation Nasukai   2,036,020    4,099,032 
Medical Corporation Aikeikai   478,489    1,561,642 
Medical Corporation Jukeikai   486,040    268,552 
Medical Corporation Ritz Cosmetic Surgery   644,806    268,445 
Total  $21,861,382   $15,317,422 
Less: current portion   10,202,360    3,369,203 
Non-current portion  $11,659,022   $11,948,219 

 

Due to related party  September 30,
2024		   December 31,
2023		 
Yoshiyuki Aikawa  $3,532,453   $3,583,523 
Total  $3,532,453   $3,583,523 

 

           
   For the Nine Months Ended
September 30,		 
Allowance for credit loss movement  2024   2023 
Beginning balance  $3,238,209   $2,867,455 
Provision for credit loss   617,804    282,934 
Recovery of credit loss   (745,000)   — 
Ending balance  $3,111,013   $3,150,389 

 

The balances of due to and due from related parties represent the outstanding loans to and from related parties, respectively, as of September 30, 2024 and December 31, 2023. These loans are non-secured, interest-free and due on demand.

 

The Company made a prepayment of JPY2.4 billion (approximately $18.32 million when payment was made) in December 2022 to purchase a patent use right ready to be used on January 1, 2023 with the useful life of sixteen years from SBC Tokyo Medical University, previously known as Ryotokuji University. SBC Tokyo Medical University later became a related party of the Company in March 2023 when the CEO of the Company became the chairman of the university. As SBC Tokyo Medical University was not a related party at the time the patent use right was purchased, this was not identified as a related party transaction.

 

In February 2023, the Company paid off the retirement compensation expense accrued to Yoshiko Aikawa.

 

During the nine months ended September 30, 2024 and 2023, the Company purchased medical equipment and cosmetics of $7,452,954 and $2,041,663, respectively, from Japan Medical & Beauty Inc., which was recognized and included in the cost of revenues.

 

Also see Note 2(a), 4, 7, 9, 12, 13 and 15 for more transactions with related parties.