{"url_path":"/sec/lgps/10-k/2026/item-18","section_key":"item-18","section_title":"Item 18 FINANCIAL STATEMENTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-13","source_url":"https://www.sec.gov/Archives/edgar/data/2040290/0001493152-26-032936-index.html","accession_number":"0001493152-26-032936","cik":"0002040290","ticker":"LGPS","issuer_name":"LOGPROSTYLE INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/2040290/0001493152-26-032936-index.html","primary_entity_key":"0002040290","primary_entity_name":"LOGPROSTYLE INC."},"word_count":11953,"has_tables":true,"body_markdown":"**ITEM\n18. FINANCIAL STATEMENTS**\n\n \n\nThe\nfinancial statements required by this item are found at the end of this annual report, beginning on page F-1.\n\n \n\n96\n\n \n\n \n\n**LogProstyle\nInc.**\n\n \n\n**INDEX\nTO FINANCIAL STATEMENTS**\n\n \n\n[Report of Independent Registered\nPublic Accounting Firm](#fin_001) (PCAOB ID 606)\nF-2\n\n[Consolidated Balance\nSheets as of March 31, 2026 and 2025](#fin_002)\nF-3\n\n[Consolidated Statements\nof Operations for the Years Ended March 31, 2026, 2025 and 2024](#fin_004)\nF-5\n\n[Consolidated\nStatements of Changes in Equity for the Years Ended March 31, 2026, 2025 and 2024](#fin_005)\nF-6\n\n[Consolidated\nStatements of Cash Flows for the Years Ended March 31, 2026, 2025 and 2024](#fin_006)\nF-7\n\n[Notes\nto Consolidated Financial Statements](#fin_007)\nF-8\n\n \n\nF-1\n\n  \n\n** **\n\n**REPORT\nOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n** **\n\nTo the Board\nof Directors and Stockholders,\n\nLogProstyle,\nInc.\n\n \n\n**OPINION\nON THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\nWe\nhave audited the accompanying consolidated balance sheets of LogProstyle, Inc. (the “Company”) as of March 31, 2026 and 2025,\nand the related consolidated statements of operations and comprehensive income, change in stockholders’ equity, and cash flows\nfor the years then ended March 31, 2026 and 2025, and the related notes (collectively referred to as the “consolidated financial\nstatements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position\nof the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for the years then ended March 31,\n2026 and 2025, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\n**BASIS\nFOR OPINION**\n\n** **\n\nThese\nconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion\non these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting\nOversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with\nthe U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain\nreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.\nThe Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part\nof our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing\nan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due\nto error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence\nregarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles\nused and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.\nWe believe that our audit provides a reasonable basis for our opinion.\n\n \n\n**Critical\nAudit Matters**\n\n** **\n\nCritical\naudit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required\nto be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial\nstatements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit\nmatters.\n\n \n\n/s/Bush &\nAssociates CPA LLC\n\n \n\nWe have served\nas the Company’s auditor since 2025.\n\n \n\nLas Vegas,\nNevada\n\nJuly 13,\n2026\n\nPCAOB ID\nNumber 6797\n\n \n\nF-2\n\n  \n\n** **\n\n**LogProstyle\nInc.**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**(Yen\nin thousands)**\n\n \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nASSETS \n    \n   \n\nCurrent\nassets \n    \n   \n\nCash\nand cash equivalents \n¥2,281,913  \n¥2,120,515 \n\nTrade\nnotes and accounts receivable, net \n 161,247  \n 138,373 \n\nInventories,\nnet \n 16,555,068  \n 13,612,387 \n\nConsumption\ntax receivable \n 179,603  \n 5,749 \n\nShort-term\ninvestments \n 331,484  \n 182,030 \n\nOther\ncurrent assets \n 485,136  \n 353,579 \n\nTotal\ncurrent assets \n 19,994,451  \n 16,412,633 \n\nNon-current\nassets \n    \n   \n\nProperty,\nplant and equipment, net \n 1,929,365  \n 357,527 \n\nOperating\nlease right-of-use assets \n 4,059,263  \n 4,481,941 \n\nSoftware \n 20,464  \n 27,792 \n\nLeasehold\nand guarantee deposits \n 402,318  \n 465,968 \n\nDeferred\ntax assets \n 440,688  \n 458,767 \n\nOther\nnon-current assets \n 191,602  \n 363,608 \n\nAllowance\nfor credit losses \n (81,256) \n (84,048)\n\nTotal\nnon-current assets \n 6,962,444  \n 6,071,555 \n\nTotal\nassets \n¥26,956,895  \n¥22,484,188 \n\n \n\n*The\naccompanying notes are an integral part of these consolidated financial statements.*\n\n* *\n\nF-3\n\n  \n\n \n\n**LogProstyle\nInc.**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**(Yen\nin thousands, except share data)**\n\n \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nLIABILITIES \n    \n   \n\nCurrent\nliabilities \n    \n   \n\nAccounts\npayable \n¥338,534  \n¥597,708 \n\nAccrued\nexpenses \n 131,848  \n 112,661 \n\nShort-term\nloans \n 1,605,658  \n 1,885,259 \n\nCurrent\nportion of bonds \n 6,318  \n 28,620 \n\nCurrent\nportion of long-term loans \n 4,878,372  \n 4,025,343 \n\nOperating\nlease liabilities, current \n 497,038  \n 463,129 \n\nFinance\nlease liabilities, current \n 8,357  \n 8,400 \n\nContract\nliabilities \n 260,186  \n 252,260 \n\nIncome\ntaxes payable \n 343,778  \n 248,885 \n\nOther\ncurrent liabilities \n 260,745  \n 254,956 \n\nTotal\ncurrent liabilities \n 8,330,834  \n 7,877,221 \n\nNon-current\nliabilities \n    \n   \n\nBonds \n 35,562  \n - \n\nLong-term\nloans \n 10,584,054  \n 6,858,607 \n\nOperating\nlease liabilities, non-current \n 3,647,248  \n 4,090,933 \n\nFinance\nlease liabilities, non-current \n 12,768  \n 19,062 \n\nOther\nnon-current liabilities \n 131,170  \n 121,146 \n\nTotal\nnon-current liabilities \n 14,410,802  \n 11,089,748 \n\nTotal\nliabilities \n¥22,741,636  \n¥18,966,969 \n\nSHAREHOLDERS’\nEQUITY \n    \n   \n\nCommon shares: 81,498,000\nshares authorized, 23,652,110 shares issued and 23,610,870 and 23,628,452 shares outstanding as of March 31, 2026 and March 31, 2025\nwith no stated value. \n¥924,817  \n¥924,817 \n\nCapital\nsurplus \n 1,445,333  \n 1,445,333 \n\nAdditional\npaid in capital \n (225,406) \n (238,115)\n\nRetained\nearnings \n 2,078,645  \n 1,397,387 \n\nTreasury shares \n (4,761) \n (2,539)\n\nAccumulated\nother comprehensive loss \n (3,369) \n (9,664)\n\nTotal\nshareholders’ equity \n 4,215,259  \n 3,517,219 \n\nTotal\nliabilities and equity \n¥26,956,895  \n¥22,484,188 \n\n \n\n*The\naccompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-4\n\n  \n\n** **\n\n**LogProstyle\nInc.**\n\n**CONSOLIDATED\nSTATEMENTS OF INCOME AND COMPREHENSIVE INCOME**\n\n**(Yen\nin thousands, except share and per share data)**\n\n \n\n  \n\n**Fiscal\nYear Ended**\n\n**March\n31, 2026**\n  \n\n**Fiscal\nYear Ended**\n\n**March\n31, 2025**\n  \n\n**Fiscal\nYear Ended**\n\n**March\n31, 2024**\n \n\nRevenue: \n¥22,221,163  \n¥20,650,916  \n¥14,121,840 \n\nCost of revenue \n (17,812,742) \n (17,091,646) \n (11,469,951)\n\nGross\nprofit \n 4,408,421  \n 3,559,270  \n 2,651,889 \n\n  \n    \n    \n   \n\nOperating\nexpenses \n    \n    \n   \n\nSelling,\ngeneral and administrative expenses \n (2,836,841) \n (2,216,754) \n (1,713,388)\n\nTotal operating\nexpenses \n (2,836,841) \n (2,216,754) \n (1,713,388)\n\n  \n    \n    \n   \n\nOperating\nincome \n 1,571,580  \n 1,342,516  \n 938,501 \n\n  \n    \n    \n   \n\nOther income\n(expenses): \n    \n    \n   \n\nInterest\nexpenses \n (328,962) \n (209,971) \n (422,769)\n\nOther\nincome, net \n 8,586  \n 15,699  \n 4,227 \n\nTotal\nother expenses \n (320,376) \n (194,272) \n (418,542)\n\n  \n    \n    \n   \n\nIncome\nbefore income taxes \n 1,251,204  \n 1,148,244  \n 519,959 \n\nIncome\ntax expenses \n (491,243) \n (394,623) \n (196,354)\n\nNet income \n 759,961  \n 753,621  \n 323,605 \n\n  \n    \n    \n   \n\nOther comprehensive\nincome (loss) \n    \n    \n   \n\nForeign\ncurrency translation adjustment \n 6,295  \n 7,656  \n (7,273)\n\nTotal\ncomprehensive income \n¥766,256  \n¥761,277  \n¥316,332 \n\nEarnings per share: \n    \n    \n   \n\nBasic\nand Diluted \n¥32.16  \n¥34.76  \n¥15.37 \n\nWeighted average number of\nshares of common stock outstanding \n    \n    \n   \n\nBasic\nand Diluted \n 23,627,697  \n 21,679,507  \n 21,053,384 \n\n \n\n*The\naccompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-5\n\n  \n\n** **\n\n**LogProstyle\nInc.**\n\n**CONSOLIDATED\nSTATEMENTS OF SHAREHOLDERS’ EQUITY**\n\n**(Yen\nin thousands, except share data)**\n\n \n\n  \nShares  \nAmount  \nSurplus  \ncapital  \nEarnings  \nShares  \nAmount  \nAOCI  \nTotal \n\n  \nCommon\nShares  \nCapital  \nAdditional\npaid in  \nRetained  \nTreasury\nshares  \n   \n  \n\n  \nShares  \nAmount  \nSurplus  \ncapital  \nEarnings  \nShares  \nAmount  \nAOCI  \nTotal \n\n**Balance\nat**\n\n**March\n31, 2023**\n \n 20,374,500  \n¥100,000  \n¥620,516  \n¥148,392  \n¥320,161  \n 23,658  \n¥(2,539) \n¥(10,047) \n¥1,176,483 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nNet income \n -  \n -  \n -  \n -  \n 323,605  \n -  \n -  \n -  \n 323,605 \n\nIssuance of new shares \n 1,277,610  \n 135,001  \n 135,001  \n -  \n -  \n    \n -  \n -  \n 270,002 \n\nOther\ncomprehensive income \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n (7,273) \n (7,273)\n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nBalance\nat March 31, 2024 \n 21,652,110  \n¥235,001  \n¥755,517  \n¥148,392  \n¥643,766  \n 23,658  \n¥(2,539) \n¥(17,320) \n¥1,762,817 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nNet income \n -  \n -  \n -  \n -  \n 753,621  \n -  \n -  \n -  \n 753,621 \n\nShare\nissuance upon initial public offering, net of issuance costs \n 2,000,000  \n 689,816  \n 689,816  \n (386,507) \n -  \n -  \n -  \n -  \n 993,125 \n\nOther\ncomprehensive loss \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n 7,656  \n 7,656 \n\nBalance\nat March 31, 2025 \n 23,652,110  \n¥924,817  \n¥1,445,333  \n¥(238,115) \n¥1,397,387  \n 23,658  \n¥(2,539) \n¥(9,664) \n¥3,517,219 \n\nBalance \n 23,652,110  \n¥924,817  \n¥1,445,333  \n¥(238,115) \n¥1,397,387  \n 23,658  \n¥(2,539) \n¥(9,664) \n¥3,517,219 \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nNet income \n -  \n -  \n -  \n -  \n 759,961  \n -  \n -  \n -  \n 759,961 \n\nPurchase of treasury shares \n -  \n -  \n -  \n -  \n -  \n 17,582  \n (2,222) \n -  \n (2,222)\n\nOther\ncomprehensive income \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n 6,295  \n 6,295 \n\nOther\ncomprehensive income (loss) \n -  \n -  \n -  \n -  \n -  \n -  \n -  \n 6,295  \n 6,295 \n\nStock-based\ncompensation \n -  \n -  \n -  \n 12,709  \n    \n -  \n -  \n -  \n 12,709 \n\nPayment\nfor dividend \n -  \n -  \n -  \n -  \n (78,703) \n -  \n -  \n -  \n (78,703)\n\nBalance\nat March 31, 2026 \n 23,652,110  \n¥924,817  \n¥1,445,333  \n¥(225,406) \n¥2,078,645  \n 41,240  \n¥(4,761) \n¥(3,369) \n¥4,215,259 \n\nBalance \n 23,652,110  \n¥924,817  \n¥1,445,333  \n¥(225,406) \n¥2,078,645  \n 41,240  \n¥(4,761) \n¥(3,369) \n¥4,215,259 \n\n* *\n\n*The\naccompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-6\n\n  \n\n** **\n\n**LogProstyle\nInc.**\n\n**CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n**(Yen\nin thousands)**\n\n \n\n  \n\n**Fiscal\nYear Ended**\n\n**March\n31,2026**\n  \n\n**Fiscal\nYear Ended**\n\n**March\n31,2025**\n  \n\n**Fiscal\nYear Ended**\n\n**March\n31,2024**\n \n\nCash flows\nfrom operating activities: \n    \n    \n   \n\nNet\nincome \n¥759,961  \n¥753,621  \n¥323,605 \n\nDepreciation\nand amortization \n 72,077  \n 144,087  \n 87,027 \n\nAmortization\nof debt issuance costs \n 8,292  \n 84,928  \n 40,787 \n\nStock-based\ncompensation expense \n 12,709  \n -  \n - \n\nDeferred\nincome taxes \n 18,079  \n 91,910  \n 76,049 \n\nProvision\nof allowance for credit losses \n (2,792) \n 84,048  \n - \n\nChanges\nin operating assets and liabilities: \n    \n    \n   \n\n(Increase)\ndecrease in trade notes and accounts receivable, net \n (22,874) \n 43,435  \n (43,872)\n\n(Increase)\nin inventories, net \n (2,942,681) \n (93,927) \n (2,944,684)\n\n(Increase)\ndecrease in consumption taxes receivable \n (173,854) \n 63,639  \n 239,859 \n\n(Increase)\ndecrease in prepaid expenses \n (104,298) \n (44,678) \n 16,533 \n\n(Increase)\ndecrease in advances to vendors \n (17,743) \n (70,369) \n 7,295 \n\nDecrease\n(increase) in leasehold and guarantee deposits \n 63,650  \n (119,560) \n (3,614)\n\n(Increase)\ndecrease in long-term prepaid expenses \n (86,754) \n (6,639) \n 420 \n\nIncrease\n(decrease) in accounts payables \n 72,493  \n (40,412) \n (194,318)\n\nIncrease\n(decrease) in accrued expenses \n 19,187  \n (102,236) \n 105,822 \n\nIncrease\n(decrease) in income taxes payable \n 94,893  \n 182,562  \n (48,438)\n\nIncrease\n(decrease) in contract liabilities \n 7,926  \n (100,391) \n 207,881 \n\n(Decrease)\nincrease in deposits received \n (18,665) \n 20,510  \n (11,878)\n\nOther,\nnet \n 38,630  \n (85,891) \n 58,253 \n\nNet\ncash flows (used in) provided by operating activities \n (2,201,764) \n 804,637  \n (2,083,273)\n\n  \n    \n    \n   \n\nCash flows\nfrom investing activities: \n    \n    \n   \n\nPurchase\nof short-term investments \n (450,115) \n (367,150) \n (13,800)\n\nProceeds\nfrom sales of short-term investments \n 300,662  \n 223,921  \n 50,000 \n\nPurchases\nof property and equipment \n (1,634,243) \n (37,464) \n (42,145)\n\nPurchases of software \n (2,584) \n (19,563) \n (3,186)\n\nPurchases\nof long-term investments \n -  \n (270,000) \n - \n\nPurchases\nof investment securities \n -  \n -  \n (800)\n\nProceeds\nfrom redemption of long-term investments \n 270,000  \n -  \n - \n\nOther,\nnet \n (4,356) \n (5,599) \n (3,607)\n\nNet\ncash flows (used) in investing activities \n (1,520,636) \n (475,855) \n (13,538)\n\n  \n    \n    \n   \n\nCash flows\nfrom financing activities: \n    \n    \n   \n\n(Decrease)\nin short-term borrowings, net \n (276,590) \n (685,830) \n (283,069)\n\nBorrowings\nfrom long-term loans \n 12,124,650  \n 12,946,844  \n 9,687,048 \n\nRepayments\nfor long-term loans \n (7,540,495) \n (12,708,107) \n (6,628,349)\n\nProceeds\nfrom issuance of bonds \n 50,000  \n -  \n - \n\nRedemption of bonds \n (33,500) \n (49,270) \n (49,309)\n\nPayments\nfor finance leases \n (8,412) \n (8,664) \n (7,505)\n\nPayment\nfor debt issuance costs \n (20,221) \n (67,498) \n (78,844)\n\nProceeds from issuance of\nshares \n -  \n 1,379,632  \n 270,002 \n\nPayments\nfor dividends \n (78,703) \n -  \n - \n\nPayments\nof listing expenses \n (331,966) \n (235,037) \n - \n\nPurchase\nof treasury shares \n (2,222) \n -  \n - \n\nNet\ncash flows provided by financing activities \n 3,882,541  \n 572,070  \n 2,909,974 \n\nEffect\nof exchange rate changes on cash and cash equivalents \n 1,257  \n 1,422  \n (7,273)\n\nNet increase\nin cash and cash equivalents \n 161,398  \n 902,274  \n 805,890 \n\nCash and\ncash equivalents at the beginning of the year \n 2,120,515  \n 1,218,241  \n 412,351 \n\nCash\nand cash equivalents at the end of the year \n¥2,281,913  \n¥2,120,515  \n¥1,218,241 \n\n  \n    \n    \n   \n\nSUPPLEMENTAL\nCASH FLOW INFORMATION: \n    \n    \n   \n\nCash paid\nfor interest \n¥493,261  \n¥476,650  \n¥497,731 \n\nCash paid\nfor taxes \n¥405,140  \n¥127,857  \n¥179,888 \n\n \n\n*The\naccompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-7\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n1 – ORGANIZATION AND BUSINESS**\n\n \n\n**Description\nof Business**\n\n \n\nLogProstyle\nInc. (“the Company”) and its subsidiaries (collectively, the “Group”) operate in Japan through our subsidiaries\nas a real estate developer and real estate management company. Our subsidiaries primarily offer three types of services: (i) provision\nof real estate-related services, such as design and renovation, and real estate development, (ii) hotel management and accommodation,\nand (iii) additional services such as the sale of housing equipment and materials, restaurant operation, and information technology consulting.\n\n \n\nOn\nJuly 31, 2024, LogKnot Inc. merged with and into LogSuite Inc., at which time LogKnot Inc. ceased to exist and LogSuite Inc. continued\nas the surviving corporation.\n\n \n\nOn\nDecember 19, 2024, the Company formed its wholly owned subsidiary, LogProstyle US Inc.\n\n \n\nOn\nApril 5, 2025, LogProstyle signed a Memorandum of Association (MoA) with the Dubai Department of Economy and Tourism (DET) and established\na new entity, “LogProstyle Inc For Hotel Management CO. L.L.C S.O.C” (LogProstyle Dubai).\n\n \n\nThe\nconsolidated financial statements of the Group include the Company and the entities below:\n\nSCHEDULE\nOF COMPANY AND SUBSIDIARIES \n\n  \nDate\nof Incorporation\nor Acquisition \nPlace\nof\nIncorporation \nPercentage\nof\nDirect or\nIndirect\nEconomic\nOwnership \n\nSubsidiaries \n  \n  \n   \n\nProstyle Inc. \nFebruary 2017 \nJapan \n 100.0%\n\nLogSuite Inc. \nAugust 2006 \nJapan \n 100.0%\n\nLogAsset Inc. \nFebruary 2023 \nJapan \n 100.0%\n\nLogArchitects Inc. \nSeptember 2015 \nJapan \n 100.0%\n\nChino Building Management\nInc. \nFebruary 2015 \nJapan \n 100.0%\n\nProstyleRyokan Inc. \nMay 2017 \nJapan \n 100.0%\n\nOkinawa Igeto Inc. \nJanuary 2018 \nJapan \n 100.0%\n\nKotakino Inc. \nSeptember 2013 \nJapan \n 100.0%\n\nLogKnot Vietnam Co., Ltd. \nAugust 2021 \nVietnam \n 100.0%\n\nPropolife Vietnam Co., Ltd. \nOctober 2015 \nVietnam \n 100.0%\n\nYantai Propolife Wood Industry\nCo., Ltd. \nNovember 2016 \nChina \n 100.0%\n\nLogProstyle US Inc. \nDecember 2024 \nUS \n 100.0%\n\nLogProstyle Inc For Hotel\nManagement CO. L.L.C S.O.C \nApril 2025 \nUAE \n 100.0%\n\n \n\nOn\nAugust 30, 2024, the Company purchased a 40.8% interest for an investment in a condominiums in Miyanomori, Hokkaido for ¥270,000\nthousand. The investment, which is classified as a long-term investments. The purchase was accounted for as an equity-method investment\nunder ASC 323, *Investments – Equity Method and Joint Ventures.* The investment was redeemed during the year ended March 31, 2026.\n\n \n\n**NOTE\n2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n**Basis\nof Presentation and Principles of Consolidation**\n\n \n\nThe\nfinancial statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange\nCommission. The financial statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting\nPrinciples of the United States.\n\n \n\nF-8\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\naccompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant\nintercompany transactions and balances have been eliminated in consolidation.\n\n \n\nThere\nare 4 subsidiaries as of March 31, 2026, 4 subsidiaries as of March 31, 2025, and 3 subsidiaries as of March 31, 2024, respectively,\nwhich have different fiscal year-ends from that of the Company. These subsidiaries were consolidated based on the respective year end.\nAdjustments were made for the effects of significant intragroup transactions caused by different fiscal year-ends and the remaining impacts\nwould not be material.\n\n \n\n**Reclassification**\n\n \n\nCertain\namounts in the prior period have been reclassified to conform to the current period presentation.\n\n \n\n**Use\nof Estimates**\n\n \n\nThe\npreparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires\nmanagement to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent\nassets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for\ncertain expenses during the reporting period. Significant estimates and assumptions are reflected in valuation and disclosure of accounts\nincluding: impairment of long-lived assets, valuation of stock-based compensation, recoverability of deferred taxes and allowance for\ncredit losses. Actual results could differ from these good faith estimates and judgments. \n\n**Cash\nand Cash Equivalents**\n\n \n\nCash\nand cash equivalents include cash on hand and deposits in banks that are unrestricted as to withdrawal or use. All highly liquid investments\nacquired with original maturities of three months or less are considered to be cash equivalents.\n\n \n\n**Short-Term\nInvestments**\n\n \n\nShort-term\ninvestments represent cash pledged to financial institutions as collateral for the Company’s bank loans, and term deposits placed\nwith financial institutions with original maturities of greater than three months. Short-term investments are not available for withdrawal\nor the Company’s general use until after the corresponding bank loans are repaid, or the term deposits mature. Short-term investments\nare classified as either current or non-current based on when the funds will be released in accordance with the terms of the respective\nagreements.\n\n \n\n**Trade\nNotes and Accounts Receivable**\n\n \n\nAccounts\nreceivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only the passage of time is\nrequired before payment of the consideration is due). The Group’s accounts receivable balances are unsecured, bear no interest\nand are due upon normally within a year from the date of the sale.\n\n \n\n**Allowance\nfor Credit Losses**\n\n \n\nIn\naccordance with Accounting Standards Codification (“ASC”) 326, *Financial Instruments - Credit Losses*, the Company\nestimates and records an expected lifetime credit loss on trade notes and accounts receivable and leasehold and guarantee deposits by\nutilizing historical write-off rates as a starting point for determining expected credit losses and has considered all available relevant\ninformation, including details about past events, current conditions, and reasonable and supportable forecasts, as well as their impact\non the expected credit losses. The allowance for expected credit losses is adjusted for current conditions and reasonable and supportable\nforecasts.\n\n \n\nF-9\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Inventories**\n\n \n\nInventories\nconsist of real estate inventories, raw entitled land, construction in process, including capitalized interest and housing equipment\nand material. Estimates of the lower of cost and net realizable value of inventory are determined\nby comparing the actual cost of the inventory to the estimated selling prices in the ordinary course of business based on current market\nand economic conditions, less reasonably predictable costs of completion, disposal, and transportation of the inventory.\n\n \n\nThe\ncost basis of the real estate inventories includes all direct acquisition costs including but not limited to the property purchase price,\nacquisition costs, construction costs, development costs, capitalized interest, capitalized real estate taxes and other costs. Interests\nand real estate taxes are not capitalized unless active development or construction is underway. When acquiring real estate with existing\nbuildings, we allocate the purchase price between land and building based on their relative fair values.\n\n \n\n**Property,\nPlant and Equipment**\n\n \n\nProperty,\nPlant and Equipment are stated at cost less accumulated depreciation.\n\nSCHEDULE\nOF PROPERTY, PLANT AND EQUIPMENT ARE STATED AT COST LESS ACCUMULATED DEPRECIATION \n\n \n \nUseful\nlife\n \nDepreciation\nmethod\n\nBuildings\n \n6-47 years\n \nStraight-line method\n\nLeasehold improvements\n \n4-18 years\n \nStraight-line method\n\nVehicles\n \n2 years\n \nStraight-line method\n\nTool, furniture and fixtures\n \n3-15 years\n \nStraight-line method\n\nLand\n \nIndefinite\n \n-\n\n \n\nMaintenance\nand repairs are charged to expense as incurred. Improvements of a major nature are capitalized. Construction in progress is not depreciated\nuntil ready for service. At the time of retirement or other disposition of property, plant and equipment, the cost and accumulated depreciation\nare removed from the accounts and any gains or losses are reflected in income. \n\nThe\nlong-lived assets of the Group are reviewed for impairment in accordance with ASC 360, *Property, Plant and Equipment*, whenever\nevents or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets\nto be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to\nbe generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by\nwhich the carrying amount of the assets exceeds the fair value of the assets. No impairment losses were recorded during the years ended\nMarch 31, 2026, 2025 and 2024.\n\n \n\n**Fair\nValue**\n\n \n\nThe\nCompany performs fair value measurements in accordance with ASC 820, *Fair Value Measurement*. Fair value is defined as the price\nthat would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the\nmeasurement date. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize\nthe use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value\nhierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels\nof inputs that may be used to measure fair value:\n\n \n\n●\nLevel 1—Observable\ninputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;\n\n●\nLevel 2—Observable\ninputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical\nor similar assets and liabilities; and\n\n●\nLevel 3—Unobservable\ninputs that are supported by little or no market data, which require the Company to develop its own assumptions.\n\n \n\nF-10\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Revenue\nRecognition**\n\n \n\nThe\nGroup accounts for revenue in accordance with ASC 606, *Revenue from Contracts with Customers*. The core principle of ASC 606 is\nthat the Group recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration\nto which the Group expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of\nthe following five steps:\n\n \n\n \n(1)\nidentify the contracts\nwith a customer,\n\n \n(2)\nidentify the performance\nobligations in the contract,\n\n \n(3)\ndetermine the transaction\nprice,\n\n \n(4)\nallocate the transaction\nprice to the performance obligations in the contract and\n\n \n(5)\nrecognize revenue when\n(or as) the entity satisfies a performance obligation.\n\n \n\nIn\norder for an arrangement to be considered a contract, it must be probable that the Group will collect the consideration to which it is\nentitled for goods or services to be transferred. Once the contract is determined to be within the scope of ASC 606, the Group assesses\nthe goods or services promised with each contract, determines whether those are performance obligations and the related transaction price.\nThe Group then recognizes the sale of goods based on the transaction price that is allocated to the respective performance obligation\nwhen the performance obligation is satisfied.\n\n \n\nThe\nCompany recognizes revenue from rental services under ASC 842, *Leases*.\n\n \n\nThe\nGroup recognizes revenue from sales of real estate properties, provision of hotel accommodation services, and sales of housing equipment\nand material sales.\n\n \n\n*Revenue\nfrom sales of real estate properties*\n\n \n\nRevenues\nfrom the sales of real estate properties are recognized at the point in time when title to and\npossession of the property has transferred to the customer and the Group has no continuing involvement with the property, which is generally\nupon the delivery of the real estate properties, which generally coincides with the receipt of cash consideration from the customer.\nOur contracts with customers contain a single performance obligation.\n\n \n\n*Revenue\nfrom hotel accommodation services*\n\n \n\nRevenues\nfrom hotel accommodation services are recognized during the period when services are rendered.\n\n \n\n*Housing\nequipment and material sales*\n\n \n\nHousing\nequipment and material sales are recognized at the point in time when the goods are delivered to the customer.\n\n \n\nThe\nGroup’s revenues are presented net of consumption tax collected on behalf of governments.\n\n \n\n**Leases**\n\n \n\nThe\nGroup determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains\na lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for\nconsideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic\nbenefits from the use of the asset and the right to direct the use of the asset.\n\n \n\nWe\nclassify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases\nif we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct\nfinancing lease (as a lessor):\n\n \n\n(i)\nownership is transferred from lessor to lessee by the end of the lease term;\n\n(ii)\nan option to purchase is reasonably certain to be exercised;\n\n(iii)\nthe lease term is for the major part of the underlying asset’s remaining economic life;\n\n(iv)\nthe present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or\n\n(v)\nthe underlying asset is specialized and is expected to have no alternative use at the end of the lease term.\n\n \n\nIf\nwe meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet\nany of the criteria, we account for the lease as an operating lease.\n\n \n\nF-11\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n*Lessee\naccounting*\n\n \n\nThe\nGroup recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as the\nGroup has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Group’s right to use an\nunderlying asset for the lease term. Lease liabilities represent the Group’s obligation to make lease payments arising from the\nlease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities\nare measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement\nof the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received;\nand (iii) initial direct costs incurred by the Group.\n\n \n\nAs\nthe rates implicit on the Group’s leases for which it is the lessee are not readily determinable, the Group uses its incremental\nborrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining\nthe incremental borrowing rate, the Group assesses multiple variables such as lease term, collateral, economic conditions, and its creditworthiness.\n\n \n\n*Lessor\naccounting*\n\n \n\nThe\nGroup accounts for the revenue from its lease contracts by utilizing the single component accounting policy. This policy requires the\nGroup to account for, by class of underlying asset, the lease component and non-lease component(s) associated with each lease as a single\ncomponent if two criteria are met:\n\n \n\n(i)\nthe timing and pattern of transfer of the lease component and the non-lease component(s) are the same; and\n\n \n\n(ii)\nthe lease component would be classified as an operating lease if it were accounted for separately.\n\n \n\nLease\ncomponents consist primarily of fixed rental payments, which represent scheduled rental amounts due under the Group’s leases. Non-lease\ncomponents consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for\nrepairs, maintenance, and common area expenses.\n\n \n\nIf\nthe lease component is the predominant component, the Group accounts for all revenue under such lease as a single component in accordance\nwith the lease accounting standard. Conversely, if the non-lease component is the predominant component, all revenue under such lease\nis accounted for in accordance with the revenue recognition accounting standard. The Group’s operating leases qualify for the single\ncomponent accounting, and the lease component in each of its leases is predominant. Therefore, the Group accounts for all revenue from\nits operating leases under the lease accounting standard and classify the revenue as lease income.\n\n \n\nThe\nGroup commences recognition of lease income related to the operating leases at the date the property is ready for its intended use\nby the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from leases related to fixed\nrental payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts\nreceived currently but recognized as revenue in future periods are classified as deferred revenue in other current liabilities in\nits consolidated balance sheets.\n\n \n\n**Advertising\nExpenses**\n\n \n\nThe\nGroup expenses advertising costs as they incurred. Total advertising expenses were ¥89,516 thousand, ¥71,805 thousand and ¥108,289\nthousand for the years ended March 31, 2026, 2025 and 2024, respectively, and have been included as part of selling, general and administrative\nexpenses.\n\n \n\nF-12\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Concentration\nof Credit Risk and Significant Vendors**\n\n \n\nFinancial\ninstruments that potentially subject the Group to credit risk consist primarily of trade notes and accounts receivable, net. The Group\ndoes not require collateral or other security to support these receivables. The Group conducts periodic reviews of the financial condition\nand payment practices of its customers to minimize collection risk on accounts receivable.\n\n \n\n*Customers*\n\n \n\nFor\nthe years ended March 31, 2026, 2025 and 2024, no single customer accounted for 10% or more of the Group’s total revenues. \n\n \n\nAs\nof March 31, 2026 and 2025, customers accounting for 10% or more of the Group’s total current outstanding trade notes and accounts\nreceivable, net were as follows:\n\nSCHEDULES\nOF CONCENTRATION OF RISK BY RISK FACTOR \n\n  \nMarch\n31, 2026  \nMarch\n31, 2025 \n\nCustomer A \n 16% \n -* \n\nCustomer B \n 13% \n 11%\n\n \n\n*Less\nthan 10%\n\n \n\n*Suppliers*\n\n \n\nFor\nthe years ended March 31, 2026, 2025 and 2024, no suppliers accounted for 10% or more of the Company’s total purchases.\n\n \n\nAs of March\n31, 2026 and 2025, suppliers accounted for 10% or more of the Group’s total current outstanding accounts payable were as follows:\n\n \n\n  \nMarch\n31, 2026  \nMarch\n31, 2025 \n\nSupplier A \n 20% \n -* \n\nSupplier B \n 12% \n - \n\nSupplier C \n 10% \n -*\n\nSupplier D \n -*  \n 45%\n\nSupplier E \n -*  \n 10%\n\n \n\n*Less\nthan 10%\n\n \n\n**Income\nTaxes**\n\n \n\nUnder\nFASB ASC 740, *Income Taxes*, deferred tax assets and liabilities are recognized for the future tax consequences attributable to\ndifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred\ntax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable\nincome in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and\nliabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense\nrepresents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets\nand liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced\nby a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax\nassets will not be realized.\n\n \n\nThe\nGroup recognizes the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that\nthe tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the more-likely-than-not\nrecognition threshold are measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement.\nInterest and penalties accrued related to unrecognized tax benefits are included in income taxes in the consolidated statements of income\nand comprehensive income.\n\n \n\nF-13\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**Foreign\nCurrency Translation and Re-measurement**\n\n \n\nThe\nfunctional currency of the Company and the Japanese subsidiaries are the Japanese Yen (“JPY”). The functional currency of\nthe Company’s subsidiaries, Propolife Vietnam Co., Ltd. and LogKnot Vietnam Co., Ltd. are the Vietnamese dong. The functional currency\nof the Company’s subsidiaries, Yantai Propolife Wood Industry Co., Ltd. is the Chinese yuan. The functional currency of the Company’s\nsubsidiaries, LogProstyle US Inc. and LogProstyle Inc For Hotel Management CO. L.L.C S.O.C are the U.S. dollars. Transactions denominated\nin currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the\ndates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated\ninto the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded\nin the consolidated statements of income and comprehensive income.\n\n \n\nThe\nreporting currency of the Group is the JPY, and the accompanying consolidated financial statements have been expressed in JPY. In accordance\nwith ASC 830-30, *Translation of Financial Statements*, assets and liabilities of the Group whose functional currency is not JPY\nare translated into JPY, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing\nduring the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of\naccumulated other comprehensive income (loss) within the consolidated statements of shareholders’ equity.\n\n \n\n**Segments**\n\n \n\nASC\n280, *Segment Reporting*, requires use of the “management approach” model for segment reporting. The management approach\nmodel is based on the way a company’s chief operating decision maker organizes segments within the company for making operating\ndecisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure,\nmanagement structure, or any other manner in which management disaggregates a company.\n\n \n\nThe\nGroup has three reportable segments: Real estate segment, Hotel segment and other segment, which are based on the Group’s organizational\nstructure and characteristics of products and services. Operating segments are defined as the components of the Group for which separate\nfinancial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources\nand in assessing performance. The Company’s CODMs primarily evaluate performance based on financial results. The accounting policies\nused for these reportable segments are consistent with the accounting policies used in the Group’s consolidated financial statements.\n\n  \n\n**Comprehensive\nIncome or Loss**\n\n \n\nASC\n220, *Comprehensive Income*, establishes standards for reporting and display of comprehensive income or loss, its components and\naccumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources.\n\n \n\n**Net\nIncome Per Share**\n\n \n\nBasic\nnet income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting\nperiod. Diluted net income per share reflects the potential dilution that could occur if stock options and other commitments to issue\ncommon shares were exercised or equity awards vest resulting in the issuance of common shares that could share in the net income of the\nGroup.\n\n \n\n**Stock-based\nCompensation**\n\n \n\nThe\nCompany accounts for stock-based compensation awards in accordance with ASC 718, *Compensation – Stock Compensation*. The\ncost of services received from directors of the Company (excluding independent directors), executive officers, and directors of subsidiaries\nin exchange for awards of equity instruments is recognized in the consolidated statements of income and comprehensive income based on\nthe estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or\nvesting period.\n\n \n\nF-14\n\n  \n\n** **\n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\nThe\nCompany measures a liability award under a stock-based compensation payment arrangement based on the award’s fair value remeasured\nat each reporting date until the date of settlement. Compensation cost for each period until settlement is based on the change (or a\nportion of the change, depending on the percentage of the requisite service that has been rendered at the reporting date) in the fair\nvalue of the instrument for each reporting period.\n\n** **\n\n**Related\nParties and Transactions**\n\n \n\nThe\nCompany identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, *Related Party\nDisclosures* and other relevant ASC standards.\n\n \n\nParties,\nwhich can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company\nor exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be\nrelated if they are subject to common control or common significant influence.\n\n \n\nTransactions\ninvolving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive,\nfree market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related\nparty transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations\ncan be substantiated.\n\n \n\n**Recently\nAdopted Accounting Pronouncements**\n\n \n\nIn\nDecember 2023, the FASB issued ASU 2023-09, *Income Taxe*s *(Topic 740): Improvements to Income Tax Disclosures*, to enhance\nthe transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid\ninformation. ASU 2023-09 is effective for public companies for annual reporting periods beginning after December 15, 2024, on a prospective\nbasis. The Company adopted ASU 2023-09 for the year ended March 31, 2026 (see Note 17). The adoption resulted in expanded\nincome tax disclosure requirements but did not impact the recognition or measurement of income tax amounts.\n\n \n\n**Recently\nIssued Accounting Pronouncements**\n\n \n\nIn\nNovember 2024, the FASB issued ASU 2024-03, *Income Statement – Reporting Comprehensive Income – Expense\nDisaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses*, requiring public companies to\ndisclose additional information about specific expense categories in the notes to the consolidated financial statements on an annual\nand interim basis. In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income –\nExpense Disaggregation Disclosures (Subtopic 220-40): Clarifying The Effective Date, which revises the effective date of ASU\n2024-03. ASU 2024-03 is effective for public companies for annual reporting periods beginning after December 15, 2026, and for\ninterim periods beginning after December 15, 2027, on a prospective basis. Early adoption is permitted. The Company is currently\nevaluating the impact of this standard on its consolidated financial statements and related disclosures.\n\n \n\nIn\nJuly 2025, the FASB issued ASU 2025-05, *Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for\nAccounts Receivable and Contract Assets*. The amendments in this update provide a practical expedient to simplify the estimation\nof expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for\nunder ASC 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those\nfiscal years, with early adoption permitted. The Company is currently evaluating the impacts of the adoption of ASU 2025-05 on the\nconsolidated financial statements.\n\n \n\nIn\nDecember 2025, the FASB issued ASU 2025-11, *Interim Reporting (Topic 270): Narrow-Scope Improvements*, which clarifies the guidance\nin Topic 270 to improve the consistency of interim financial reporting. The ASU provides a comprehensive list of required interim disclosures\nand introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have\na material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods\nwithin those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its interim consolidated\nfinancial statements and related disclosures.\n\n \n\nIn\nDecember 2025, the FASB issued ASU 2025-12, “Codification Improvements.” This ASU provides amendments to clarify the Codification,\ncorrect unintended application of guidance, and make minor improvements to the Codification that are not expected to have a significant\neffect on current accounting practice or create a significant administrative cost to most entities. The Company is currently evaluating\nthe impact of this standard on its consolidated financial statements and related disclosures.\n\n \n\nF-15\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n  \n\n**NOTE\n3 – CASH AND CASH EQUIVALENTS**\n\n \n\nCash\nand cash equivalents as of March 31, 2026 and\n2025 consist of the following:\n\nSCHEDULE\nOF CASH AND CASH EQUIVALENTS \n\n  \nMarch\n31, 2026  \nMarch\n31, 2025 \n\n  \nThousands\nof Yen \n\n  \nMarch\n31, 2026  \nMarch\n31, 2025 \n\nCash and deposits \n¥2,238,383  \n¥2,076,564 \n\nCash\nequivalents \n¥43,530  \n¥43,951 \n\nTotal \n¥2,281,913  \n¥2,120,515 \n\n \n\n**NOTE\n4 - TRADE NOTES AND ACCOUNTS RECEIVABLE, NET**\n\n \n\nTrade\nnotes and accounts receivable, net are summarized as follows:\n\nSCHEDULE\nOF TRADE NOTES AND ACCOUNTS RECEIVABLE \n\n  \n\n**March\n31, 2026**\n  \nMarch\n31, 2025 \n\n  \nThousands\nof Yen \n\n  \n\n**March\n31, 2026**\n  \nMarch\n31, 2025 \n\nTrade notes \n¥16,960  \n¥3,298 \n\nAccounts receivable \n 144,498  \n 135,386 \n\nLess:\nallowance for credit losses \n (211) \n (311)\n\nTrade\nnotes and accounts receivable, net \n¥161,247  \n¥138,373 \n\n \n\n**NOTE\n5- INVENTORIES, NET**\n\n \n\nThe\nfollowing table summarizes the components of the Group’s inventories as of the dates presented:\n\nSCHEDULE\nOF INVENTORIES \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\n  \nThousands\nof Yen \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nReal estate\ninventories, net \n    \n   \n\nReal\nestate properties held for sale \n¥7,513,572  \n¥6,187,759 \n\nReal\nestate properties in progress \n 8,739,298  \n 7,222,597 \n\nSubtotal \n 16,252,870  \n 13,410,356 \n\nHousing\nequipment and material, net \n 177,409  \n 140,178 \n\nOthers \n 124,789  \n 61,853 \n\nInventories,\nnet \n¥16,555,068  \n¥13,612,387 \n\n \n\nAs\nof March 31, 2026 and 2025, cumulative capitalized interest was ¥ 178,522\nthousand and ¥149,105\nthousand, respectively.\n\n \n\n**NOTE\n6 – OTHER CURRENT ASSETS**\n\n \n\nThe\nfollowing table summarizes the components of the Group’s other current assets as of the dates presented:\n\nSCHEDULE\nOF OTHER CURRENT ASSETS \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\n  \nThousands\nof Yen \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nPrepaid\nexpenses \n¥219,598  \n¥115,300 \n\nAdvances\nto vendors \n 191,859  \n 174,116 \n\nOthers \n 73,679  \n 64,163 \n\nTotal \n¥485,136  \n¥353,579 \n\n \n\nF-16\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n  \n\n**NOTE\n7– PROPERTY, PLANT AND EQUIPMENT**\n\n \n\nThe\nfollowing table summarizes the components of the Group’s property and equipment as of the dates presented:\n\nSCHEDULE\nOF PROPERTY, PLANT AND EQUIPMENT \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\n  \nThousands\nof Yen \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nBuildings \n¥196,045  \n¥98,383 \n\nLeasehold improvements \n 315,086  \n 226,697 \n\nVehicles \n 1,691  \n 1,691 \n\nTools, Furniture, and Fixtures \n 256,692  \n 234,159 \n\nLand \n 1,495,032  \n 70,894 \n\nConstruction in progress \n 10,395  \n - \n\nRight-of-use\nassets- Finance lease \n 66,955  \n 64,879 \n\nProperty plant and equipment\ngross \n 2,341,896  \n 696,703 \n\nAccumulated depreciation \n (366,325) \n (301,452)\n\nAccumulated\ndepreciation- Finance lease \n (46,206) \n (37,724)\n\nTotal \n¥1,929,365  \n¥357,527 \n\n \n\nDepreciation\nexpense for the years ended March 31, 2026, 2025 and 2024 was ¥61,438 thousand,\n¥135,623 thousand and ¥80,581 thousand,\nrespectively, of which ¥24,893 thousand, ¥95,828 thousand and ¥32,478 thousand\nare recorded under selling, general and administrative expenses, respectively.\n\n \n\n**NOTE\n8– OTHER NON-CURRENT ASSETS**\n\n \n\nThe\nfollowing table summarizes the components of the Group’s other assets as of the dates presented:\n\nSCHEDULE\nOF OTHER NON-CURRENT ASSETS \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\n  \nThousands\nof Yen \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nLong-term prepaid\nexpenses \n¥95,852  \n¥9,098 \n\nLong-term investments (*) \n -  \n 270,000 \n\nInvestment securities \n 39,084  \n 39,084 \n\nInvestments in capital \n 30,030  \n 26,400 \n\nInsurance funds \n 24,035  \n 16,850 \n\nOthers \n 2,601  \n 2,176 \n\nTotal \n¥191,602  \n¥363,608 \n\n \n\n*The\nCompany sold condominiums in Miyanomori, Hokkaido in April 2024 to a third party, and purchased\na 40.8% interest of equity method in the specified joint real estate venture that owns these\ncondominiums for ¥270,000 thousand in August\n2024. The investment, which is classified as long-term investments in the above table. The\npurchase was accounted for as an equity-method investment under ASC 323, *Investments –\nEquity Method and Joint Ventures.* The investment was redeemed during\nthe year ended March 31, 2026.\n\n \n\nF-17\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n9 – BONDS**\n\n \n\nThe\nGroup issued corporate bonds through various banks, which consist of the following:\n\n SCHEDULE\nOF GROUP ISSUED CORPORATE BONDS\n\n  \n    \n  \n  \n    \n    \n   \n\n  \nThousands\nof Yen  \n  \nThousands\nof Yen \n\n  \nPrincipal\nAmount  \nIssuance\nDate \nMaturity\nDate \nAnnual\nInterest Rate  \nBalance\nas of\nMarch 31,\n2026  \nBalance\nas of\nMarch31,\n2025 \n\nLender 1 \n¥100,000  \n9/26/2022 \n9/26/2025 \n 0.56% \n¥-  \n¥20,000 \n\nLender 2 \n 100,000  \n9/25/2020 \n9/25/2025 \n 0.83% \n -  \n 10,000 \n\nLender 3 \n 50,000  \n8/25/2025 \n8/25/2032 \n 1.00% \n 46,500  \n - \n\nAggregate outstanding principal\nbalances \n    \n  \n  \n    \n 46,500  \n 30,000 \n\nLess: unamortized bond issuance\ncosts \n    \n  \n  \n    \n (4,620) \n (1,380)\n\nLess:\ncurrent portion \n    \n  \n  \n    \n (6,318) \n (28,620)\n\nNon-current\nportion \n    \n  \n  \n    \n¥35,562  \n¥- \n\n \n\nInterest\nexpenses for corporate bonds were ¥1,996 thousand, ¥2,868 thousand and ¥2,991 thousand for the years ended March 31, 2026,\n2025 and 2024, respectively.\n\n  \n\n**NOTE 10\n— BANK AND OTHER BORROWINGS**\n\n \n\nThe\nGroup’s outstanding indebtedness borrowed from banks and other financial institutions, consist of the following:\n\n SCHEDULE\nOF BANK AND OTHER BORROWINGS\n\n  \n    \n    \n    \n   \n\n  \n   \nThousands\nof Yen \n\nIndebtedness \n **Weighted\n\naverage\ninterest rate***   \n\n**Weighted**\n\n**average**\n\n**years**\n\n**to\nmaturity***\n  \nBalance\nas of\n\nMarch 31, 2026  \n **Balance\nas of\nMarch 31, 2025** \n\nShort-term\nloans \n    \n    \n    \n   \n\nSecured loans \n    \n    \n    \n   \n\nFixed rate loans \n 2.64% \n 0.46  \n¥589,020  \n¥1,842,700 \n\nVariable rate loans (*1) \n 2.51% \n 0.70  \n 983,230  \n - \n\nUnsecured loans \n    \n    \n    \n   \n\nFixed rate loans \n 2.81% \n 0.17  \n 33,782  \n 50,000 \n\nVariable\nrate loans (*1) \n 1.98% \n 0.17  \n 2,368  \n - \n\nAggregate\noutstanding principal balances \n 2.57% \n 0.59  \n¥1,608,400  \n¥1,892,700 \n\n  \n    \n    \n    \n   \n\nLess:\nunamortized debt issuance costs \n    \n    \n¥(2,742) \n¥(7,441)\n\nShort-term\nloans \n    \n    \n¥1,605,658  \n¥1,885,259 \n\n  \n    \n    \n    \n   \n\nLong-term\nloans \n    \n    \n    \n   \n\nSecured loans \n    \n    \n    \n   \n\nFixed rate loans \n 2.93% \n 2.13  \n 4,126,972  \n 4,991,739 \n\nVariable rate loans (*2) \n 2.62% \n 2.46  \n 10,664,760  \n 5,006,510 \n\nUnsecured loans \n    \n    \n    \n   \n\nFixed rate loans \n 1.48% \n 5.36  \n 683,064  \n 960,379 \n\nVariable\nrate loans (*2) \n 1.80% \n 3.23  \n 67,987  \n - \n\nAggregate\noutstanding principal balances \n 2.65% \n 2.52  \n¥15,542,783  \n¥10,958,628 \n\n  \n    \n    \n    \n   \n\nLess: unamortized debt issuance\ncosts \n    \n    \n¥(80,357) \n¥(74,678)\n\nLess:\ncurrent portion \n    \n    \n (4,878,372) \n (4,025,343)\n\nNon-current\nportion \n    \n    \n¥10,584,054  \n¥6,858,607 \n\n \n\n*Pertained\nto information for loans outstanding as of March 31, 2026.\n\n  \n\n*1\nAnnual interest rate was\nshort-term prime rate in Japan +2.13%.\n\n \n \n\n*2\nAnnual interest rate was\nlong-term prime rate in Japan +2.80%.\n\n \n\nF-18\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nGroup borrowed funds from various financial institutions for the purchase of real estate properties and for working capital purposes.\n\n \n\nInterest\nexpenses for short-term and long-term loans were ¥316,861 thousand, ¥198,476 thousand and ¥352,904 thousand for the years\nended March 31, 2026, 2025 and 2024, respectively.\n\n \n\nIncluded\nin real estate inventory was capitalized interest of ¥158,134\nthousand, ¥124,788\nthousand and ¥138,376\nthousand for the years ended March 31, 2026, 2025 and 2024, respectively.\n\n \n\nThe term deposits, inventories, and property, plant and equipment, net, pledged as collateral for secured loans\nas of March 31, 2026 and 2025 are as follows:\n\n SCHEDULE\nOF SECURITY PLEDGED\n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\n  \nThousands\nof Yen \n\n  \n\n**March\n31, 2026**\n  \n\n**March\n31, 2025**\n \n\nTerm deposits \n¥-  \n¥5,000 \n\nInventories \n 14,652,292  \n 13,137,928 \n\nProperty,\nplant and equipment, net \n 82,434  \n 84,386 \n\nTotal \n¥14,734,726  \n¥13,227,314 \n\n \n\nCompensating\nbalances that do not legally restrict the use of cash were ¥30,030 thousand and ¥26,400 thousand as of March 31, 2026 and 2025, respectively.\n\n \n\nAs of March\n31, 2026, future minimum payments for long-term loans are as follows:\n\n SCHEDULE\nOF FUTURE MINIMUM PAYMENT FOR LONG-TERM LOANS\n\n  \nThousands\nof Yen \n\nFiscal\nYears Ending March 31, \n\n**Principal**\n\n**Repayment**\n \n\n2027 \n¥4,905,968 \n\n2028 \n 6,935,967 \n\n2029 \n 3,022,148 \n\n2030 \n 165,193 \n\n2031 \n 98,089 \n\nThereafter \n 415,418 \n\nTotal \n¥15,542,783 \n\n \n\nThere\nare no significant debt covenants related to short-term and long-term\nloans.\n\n \n\nF-19\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n11 –****FAIR VALUE MEASUREMENTS**\n\n \n\nAs\nof March 31, 2026 and 2025, the carrying amounts of cash and cash equivalents, trade receivables, accounts payable, short-term loans and other qualifying short-term financial\ninstruments approximate their fair values because of their short-term maturities.\n\n SCHEDULE\nOF FAIR VALUE OF FINANCIAL CURRENT ASSETS AND LIABILITIES\n\n  \nFair\nValue Measurements as of March 31, 2026 \n\n  \n\n**Quoted**\n\n**Prices\nin**\n\n**Active**\n\n**Markets**\n\n**for\nIdentical**\n\n**Assets**\n\n**(Level\n1)**\n  \n\n**Significant\nOther**\n\n**Observable**\n\n**Inputs**\n\n**(Level\n2)**\n  \n\n**Unobservable**\n\n**Inputs**\n\n**(Level\n3)**\n  \n\n**Fair\nValue**\n\n**at**\n\n**March\n31, 2026**\n \n\nLiability \n    \n    \n       \n   \n\nBond, including\ncurrent portion of bonds \n -  \n¥45,597  \n -  \n¥45,597 \n\nLong-term\ndebt, including current portion of long-term debt \n -  \n 15,428,782  \n -  \n 15,428,782 \n\nTotal \n -  \n¥15,474,379  \n -  \n¥15,474,379 \n\n \n\n  \nFair\nValue Measurements as of March 31, 2025 \n\n  \n\n**Quoted**\n\n**Prices\nin**\n\n**Active**\n\n**Markets**\n\n**for\nIdentical**\n\n**Assets**\n\n**(Level\n1)**\n  \n\n**Significant\nOther**\n\n**Observable**\n\n**Inputs**\n\n**(Level\n2)**\n  \n\n**Unobservable**\n\n**Inputs**\n\n**(Level\n3)**\n  \n\n**Fair\nValue**\n\n**at**\n\n**March\n31, 2025**\n \n\nLiability \n    \n    \n        \n   \n\nBond, including\ncurrent portion of bonds \n -  \n¥28,620  \n -  \n¥28,620 \n\nLong-term\ndebt, including current portion of long-term debt \n -  \n 10,843,898  \n -  \n 10,843,898 \n\nTotal \n -  \n¥10,872,518  \n -  \n¥10,872,518 \n\n \n\nLong-term\ndebt\n\n \n\nThe\nGroup’s long-term debt instruments are classified as Level 2 instruments and valued based on the present value of future cash flows\nassociated with each instrument discounted using current market borrowing rates for similar debt instruments of comparable maturity.\nThe levels are more fully described in Note 2.\n\n \n\n**NOTE\n12 – DISAGGREGATION OF REVENUES**\n\n \n\nRevenues\ngenerated from different revenue streams consisted of the following:\n\n SCHEDULE\nOF REVENUE GENERATED FROM DIFFERENT REVENUE STREAMS\n\n  \n2026  \n2025  \n2024 \n\n  \nThousands\nof Yen \n\n  \nFor\nthe Fiscal Years Ended March 31, \n\n  \n2026  \n2025  \n2024 \n\nRevenue from contracts with customers under ASC 606 \n    \n    \n   \n\nRevenue from sales\nof real estate properties \n¥19,988,948  \n¥18,360,339  \n¥12,003,423 \n\nRevenue from hotel accommodation\nservices \n 1,309,310  \n 1,353,519  \n 1,232,000 \n\nHousing equipment and material\nsales \n 234,188  \n 351,464  \n 337,113 \n\nOthers \n 660,032  \n 545,462  \n 501,641 \n\nSubtotal \n 22,192,478  \n 20,610,784  \n 14,074,177 \n\nLease\nincome from operating leases accounted for under ASC 842 \n    \n    \n   \n\nRevenue from rental services \n 28,685  \n 40,132  \n 47,663 \n\nSubtotal \n 28,685  \n 40,132  \n 47,663 \n\nTotal \n¥22,221,163  \n¥20,650,916  \n¥14,121,840 \n\n \n\nThe\nfollowing table summarizes the changes in contract liabilities as\nof the dates presented:\n\n SUMMARY\nOF CHANGES IN CONTRACT LIABILITIES\n\n  \nMarch\n31, 2026  \nMarch\n31, 2025  \nMarch\n31, 2024 \n\n  \nThousands\nof Yen \n\n  \nMarch\n31, 2026  \nMarch\n31, 2025  \nMarch\n31, 2024 \n\nBalances at the\nbeginning of the year \n¥252,260  \n¥352,651  \n¥144,770 \n\nAdditions from advance\npayments received from real estate purchasers and not yet recognized as revenue during the year \n 260,186  \n 252,260  \n 352,651 \n\nRevenue\nrecognized from opening balance of contract liabilities \n (252,260) \n (352,651) \n (144,770)\n\nBalances\nat the end of the year \n¥260,186  \n¥252,260  \n¥352,651 \n\n \n\n100%\nof total contract liabilities as of March 31, 2025, 2024 were recognized as revenue for the year ended March 31, 2026 and 2025. As of March 31, 2026,\nthe Group expects 100% of total contract liabilities to be realized in less than a year. Changes in contract liabilities are primarily\ndue to the timing of revenue recognition, billings, and cash collections.\n\n \n\nF-20\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n**NOTE\n13 - LEASES**\n\n \n\n*Lessee*\n\n \n\nThe\nGroup has entered into operating leases for hotels and offices with terms ranging from one 1 to twenty years, and finance leases for\ncertain office equipment and vehicles, with terms ranging from one 1 to seven years. The estimated effect of lease renewal and\ntermination options, as applicable, that are reasonably certain to be exercised in the determination of the lease term and initial\nmeasurement of right-of-use assets and lease liabilities was included in the consolidated financials.\n\n \n\nOperating\nlease expenses for lease payments are recognized on a straight-line basis over the lease term.\n\n \n\nThe\nfollowing table presents supplemental information related to the Group’s leases:\n\n SCHEDULE\nOF SUPPLEMENTAL INFORMATION RELATED TO THE GROUP’S LEASES\n\n  \n2026  \n2025  \n2024 \n\n  \nThousands\nof Yen \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\nFinance\nlease costs \n    \n    \n   \n\nAmortization\nof right-of-use assets \n¥8,135  \n¥8,793  \n 7,494 \n\nInterest\non lease liabilities \n 393  \n 467  \n 303 \n\nTotal finance\nlease costs \n 8,528  \n 9,260  \n 7,797 \n\nOperating\nlease costs \n 579,815  \n 560,755  \n 640,213 \n\nCash paid\nfor amounts included in the measurement of lease liabilities: \n    \n    \n   \n\nOperating\ncash flows from operating leases \n 570,549  \n 550,864  \n 654,115 \n\nFinancing\ncash flows from finance leases \n 8,473  \n 9,132  \n 7,505 \n\nOperating\nlease right-of-use assets obtained in exchange for operating lease liabilities \n 17,870  \n 997,675  \n - \n\nFinance\nlease right-of-use assets obtained in exchange for finance lease liabilities \n¥2,076  \n¥18,360  \n 5,154 \n\nRemeasurement\nof operating lease liabilities and right-of-use assets due to lease modification \n -  \n (281,403) \n - \n\n  \n    \n    \n   \n\nWeighted\naverage remaining lease term (years) \n    \n    \n   \n\nOperating\nleases \n 9.3  \n 11.0  \n 10.8 \n\nFinance\nleases \n 1.9  \n 3.6  \n 3.5 \n\nWeighted-average\ndiscount rate (per annum) \n    \n    \n   \n\nOperating\nleases \n 2.29% \n 2.29% \n 2.23%\n\nFinance\nleases \n 1.67% \n 1.66% \n 1.60%\n\n \n\nF-21\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nAs\nof March 31, 2026, the future maturity of lease liabilities is as follows:\n\n SCHEDULE\nOF MATURITY OF LEASE LIABILITIES\n\n  \nThousands\nof Yen \n\nFiscal\nYears Ending March 31, \nFinance\nLease  \nOperating\nLease \n\n2027 \n¥8,432  \n¥581,655 \n\n2028 \n 6,950  \n 556,005 \n\n2029 \n 4,868  \n 539,142 \n\n2030 \n 1,344  \n 423,584 \n\n2031 \n 73  \n 397,361 \n\nThereafter \n -  \n 2,152,313 \n\nTotal\nlease payments \n¥21,667  \n¥4,650,060 \n\nLess:\nimputed interest \n (542) \n (505,774)\n\nTotal\nlease liabilities \n 21,125  \n 4,144,286 \n\nLess:\ncurrent portion \n (8,357) \n (497,038)\n\nNon-current\nlease liabilities \n¥12,768  \n¥3,647,248 \n\n \n\n*Lessor*\n\n \n\nLease\nincome related to operating leases included income from leases on\nthe consolidated statements of income and comprehensive income. The amounts of lease income recognized on the consolidated statements\nof income and comprehensive income were as follows:\n\n SCHEDULE\nOF OPERATING LEASE INCOME\n\n  \n2026  \n2025  \n2024 \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\nFixed income from\noperating leases \n¥28,685  \n¥40,132  \n¥47,663 \n\n \n\n**NOTE\n14 – STOCK-BASED COMPENSATION**\n\n \n\nA\nperformance share plan (the “Plan”) with post-vetting delivery and related remuneration is designed to provide\ncompensation for directors (excluding independent directors), executive officers, and directors of subsidiaries.\n\n \n\nThe\nperiod of service of directors of the Company and directors of the Company’s subsidiaries who do not concurrently serve as directors\nof the Company will be the period from the date of the ordinary general meeting of shareholders to the date of the ordinary general meeting\nof shareholders for the following fiscal year, and the period of service of executive officers who do not concurrently serve as directors\nof the Company will be the period from April to March 31 (the “Applicable Period”). The period for evaluating the degree\nof achievement of performance targets will be the period of one fiscal year ending March 31 (the “Performance Evaluation Period”).\n\n \n\nThe\ntotal amount of monetary claims and cash to be granted under the Plan to the eligible directors for each performance evaluation\nperiod shall not exceed ¥200,000 thousands (excluding salaries for directors who also serve as employees), and the total number\nof Company shares to be delivered shall not exceed 500,000 shares per Performance Evaluation Period. The achievement rate of\nperformance targets is based on performance indicators (financial and/or non-financial) reflective of the Group’s\nprofitability and management policies, as determined by resolution of the Company’s board of directors in advance. The\napproval of the Plan is indicative of the Company’s priority of aligning management incentives with shareholders.\n\n \n\nThe\ndelivery of the Company’s shares will be made on the date following the later of either the end of the Relevant Period or the date\nof submission of the 20-F for the Performance Evaluation Period (the “20-F”) that the Company is required to file under the\nU.S. Securities Act of 1933. The delivery of the Company’s shares will be made pursuant to a resolution of the Board of Directors’\nmeeting to determine the issuance of shares for such delivery or the disposition of treasury shares, to be held within two months following\nthe later of the date of submission of the 20-F (the “20-F Filing Date”).\n\n \n\nThe\nfair value of performance-based restricted stock units is based on the closing price of the Company’s common stock on the grant\ndate. The issuances of the awards granted under the Plan are accounted for as a combination award in accordance with the accounting provisions\nunder ASC 718, *Compensation - Stock Compensation*.\n\n \n\nThe\nfollowing table summarizes the award activity under the Plan for the year ended March 31, 2026:\n\n** **SCHEDULE\nOF AWARD ACTIVITY UNDER THE PLAN\n\n  \nThousands of Yen, except Number of PSUs and Weighted Average Grant Date Fair Value Per Share \n\n  \nFair Value  \nNumber of PSUs  \n\n**Weighted Average**\n\n**Grant Date Fair**\n\n**Value Per Share**\n \n\nUnvested as of March 31, 2025 \n¥-  \n -  \n¥- \n\nGranted \n 81,295  \n 500,000  \n 162.59 \n\nVested \n -  \n -  \n - \n\nForfeited \n -  \n -  \n - \n\nUnvested as of March 31, 2026 \n¥81,295  \n 500,000  \n¥162.59 \n\n \n\nExpense\nfor performance-based stock units is recognized when it is probable that the performance goal will be achieved. The Company\nrecognized the following amounts in total non-employee stock-based compensation costs in relation to the Plan for the years ended\nMarch 31, 2026 and 2025:\n\n SCHEDULE\nOF NON-EMPLOYEE STOCK BASED COMPENSATION COSTS IN RELATION TO THE PLAN\n\n  \n2026  \n2025 \n\n  \n\n**For\nthe years Ended March 31,**\n \n\n  \n2026  \n2025 \n\nEquity-classified\nstock-based compensation expense \n¥12,709  \n¥- \n\nLiability-classified stock-based\ncompensation expense \n¥5,191  \n¥- \n\nStock-based compensation expense \n¥17,900  \n¥- \n\n \n\nF-22\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThere\nwas no outstanding unamortized stock-based compensation related to the Company’s equity-classified awards.\n\n \n\nThere\nwas no outstanding unamortized stock-based compensation related to the Company’s liability-classified awards.\n\n \n\n**NOTE\n15- SHAREHOLDERS’ EQUITY**\n\n \n\n*Share\ncapital shares*\n\n \n\nThe\nchanges in the number of issued shares of share capital during the years ended March 31, 2026, 2025 and 2024 were as follows:\n\n SCHEDULE\nOF CHANGES IN THE NUMBER OF ISSUED SHARES OF SHARE CAPITAL\n\n  \n2026  \n2025  \n2024 \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\nBalance at the\nbeginning of the year \n 23,652,110  \n 21,652,110  \n 20,374,500 \n\nIssuance of capital shares \n -  \n 2,000,000  \n 1,277,610 \n\nBalance\nat the end of the year \n 23,652,110  \n 23,652,110  \n 21,652,110 \n\n \n\nAll\nof the issued shares as of years ended March 31, 2026, 2025 and 2024 have been paid in full.\n\n \n\nUnder the\nCompanies Act of Japan (the “Companies Act”), issuances of capital shares, including conversions of bonds and notes, are\nrequired to be credited to the share capital account for at least 50% of the proceeds and to the legal capital surplus account (“Capital\nsurplus”) for the remaining amounts.\n\n \n\nThe\nCompanies Act permits that share capital, capital surplus and retained earnings can be transferred among these accounts under certain\nconditions upon the approval of a General Meeting of Shareholders. The Companies Act limits the increase of paid in capital in case disposition\nof treasury shares and issuance of common stock are performed at the same time.\n\n \n\n*Legal\nreserve set aside as appropriation of retained earnings and legal capital surplus*\n\n \n\nRetained\nearnings consist of legal reserves and accumulated earnings. The Companies Act provides that an amount at least equal to 10% of the aggregate\namount of cash dividends and certain appropriations of retained earnings associated with cash outlays applicable to each period shall\nbe appropriated and set aside as a legal reserve until the aggregate amount of legal reserve set aside as an appropriation of retained\nearnings and the legal capital surplus equals 25% of stated capital as defined in the Companies Act. Legal reserves may be used to eliminate\nor reduce a deficit or be transferred to other retained earnings upon approval of the General Meeting of Shareholders.\n\n \n\nF-23\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n*Treasury\nshares*\n\n \n\nThe changes\nin the number of treasury shares during the years ended March 31, 2026, 2025 and 2024 were as follows:\n\n SCHEDULE\nOF CHANGES IN THE NUMBER OF TREASURY SHARES\n\n  \n2026  \n2025  \n2024 \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\nBalance at the\nbeginning of the year \n 23,658  \n 23,658  \n 23,658 \n\nPurchase of treasury shares \n 17,582  \n -  \n - \n\nSales of treasury shares \n -  \n -  \n - \n\nBalance at the end of the\nyear \n 41,240  \n 23,658  \n 23,658 \n\n \n\nThe\nCompany’s Board of Directors authorized a share repurchase program which provided for the repurchase, from July 1, 2025 through\nJune 30, 2026, of common shares up to a maximum of the lesser of (i) 1,086,910 common shares, or (ii) common shares having an aggregate\npurchase price of $543,455 (the “Repurchase Program”). During the fiscal year ended March 31, 2026, the Company repurchased\n17,582 common shares at an aggregate cost of ¥2,222 thousands under the Repurchase Program.\n\n \n\n**NOTE\n16 - OTHER COMPREHENSIVE INCOME (LOSS)**\n\n \n\nOther\ncomprehensive income (loss) during the years ended March 31, 2026, 2025 and 2024 consists of the following:\n\n SCHEDULE\nOF OTHER COMPREHENSIVE INCOME (LOSS)\n\n  \n2026  \n2025  \n2024 \n\n  \nThousands\nof Yen \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\nForeign\ncurrency translation adjustment: \n    \n    \n   \n\nIncome\n(losses) during the year \n¥6,295  \n¥7,656  \n¥(7,273)\n\nIncome\n(losses) before tax effect \n 6,295  \n 7,656  \n (7,273)\n\nIncome\n(losses) after tax effect \n¥6,295  \n¥7,656  \n¥(7,273)\n\n  \n    \n    \n   \n\nTotal \n    \n    \n   \n\nIncome\n(losses) during the year \n¥6,295  \n¥7,656  \n¥(7,273)\n\nIncome\n(losses) before tax effect \n 6,295  \n 7,656  \n (7,273)\n\nIncome\n(losses) after tax effect \n¥6,295  \n¥7,656  \n¥(7,273)\n\n \n\n**NOTE\n17 - INCOME TAX**\n\n \n\nJapan\n\n \n\nThe\nCompany and the Japanese subsidiaries conduct its major businesses in and are subject to tax in this jurisdiction. As a result of its\nbusiness activities, the Company and the Japanese subsidiaries apply the Japanese Group Relief System and file tax returns that are subject\nto examination by the local tax authority. Income taxes in Japan applicable to the Company and the Japanese subsidiaries are imposed\nby the national, prefectural, and municipal governments.\n\nAs of March\n31, 2026, tax years ended March 31, 2019 to 2026 remain open for the local tax authority audit. The Company has received no notice of\naudit from the local tax authority for any of the open tax years.\n\n \n\nChina\n\n \n\nYantai\nPropolife Wood Industry Co., Ltd. was incorporated under the laws of China. The income tax rate is 25%. As of March 31, 2026, at least\nover seven tax years until the year ended December 31, 2025 remain open for the local tax authority audit. The Company has received no\nnotice of audit from the local tax authority for any of the open tax years.\n\n \n\nVietnam\n\n \n\nLogKnot\nVietnam Co., Ltd. and Propolife Vietnam Co., Ltd. were incorporated under the laws of Vietnam. The income tax rate is 20%. As of March\n31, 2026, at least over seven tax years until the year ended December 31, 2025 remain open for the local tax authority audit. The Company\nhas received no notice of audit from the local tax authority for any of the open tax years.\n\n \n\nFor\npurposes of the disaggregation required by ASU 2023-09, the Company determined that tax information for foreign jurisdictions, primarily\nChina and Vietnam, is not individually material to the consolidated financial statements. Therefore, the disclosures for deferred tax\nassets and liabilities, and net operating loss carryforwards are primarily attributable to the domestic (Japan) jurisdiction, and further\ndisaggregation for foreign jurisdictions is not presented.\n\n \n\nF-24\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nFor\nthe years ended March 31, 2026, 2025 and 2024,\nthe Group’s income tax expenses are as follows:\n\n SCHEDULE\nOF INCOME TAX EXPENSES\n\n  \n2026  \n2025  \n2024 \n\n  \nThousands\nof Yen \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\nCurrent \n¥473,164  \n¥302,713  \n¥120,305 \n\nDeferred \n 18,079  \n 91,910  \n 76,049 \n\nTotal \n¥491,243  \n¥394,623  \n¥196,354 \n\n \n\nAfter\nthe adoption of ASU 2023-09 on a prospective basis, a reconciliation of the effective income tax rates reflected in the accompanying\nconsolidated statements of income and comprehensive income to the Japanese statutory tax rate for the years ended March 31, 2026 is as\nfollows:\n\n SCHEDULE\nOF RECONCILIATION OF THE EFFECTIVE INCOME TAX RATES\n\nFor\nthe Fiscal Years Ended March 31, 2026 \nThousands\nof Yen  \nPercent \n\nJapanese statutory\ntax rate \n¥432,782  \n 34.59%\n\nSpecial tax on retained earnings \n 49,226  \n 3.92 \n\nEntertainment expenses not\ndeductible \n 15,630  \n 1.25 \n\nEffect of change in income\ntax rate for deferred tax assets \n    \n (0.92 \n\nChange in valuation allowance \n 4,288  \n 0.34 \n\nOther\nadjustments \n (10,683) \n (0.84)\n\nEffective\ntax rate \n¥491,243  \n 39.26%\n\n \n\nFor\nthe year ended March 31, 2025 and 2024, prior to the adoption of ASU 2023-09, a reconciliation of the effective income tax rate to the\nJapanese statutory income tax rate is as follows:\n\n** **\n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2025  \n2024 \n\nJapanese\nstatutory tax rate \n 34.59% \n 34.59%\n\nSpecial tax on retained\nearnings \n 2.10  \n 2.40 \n\nEntertainment expenses\nnot deductible \n 0.53  \n 1.77 \n\nEffect of change in income\ntax rate for deferred tax assets \n (0.92) \n 0.35 \n\nChange in valuation allowance \n (0.64) \n (0.76)\n\nOther\nadjustments \n (1.29) \n (0.58)\n\nEffective\ntax rate \n 34.37% \n 37.76%\n\n \n\nOn\nMarch 31, 2025, amendments to Japanese tax regulations were enacted into law. As a result, the Japanese statutory tax rate was increased\nfrom 34.59% to 35.43% from the fiscal year beginning April 1, 2026.\n\n \n\nThe\nimpact of differences in foreign statutory tax rates and other foreign tax adjustments is included in “Others” as the aggregated\namount for foreign jurisdictions is not material to the consolidated financial statements.\n\n \n\nF-25\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nCash\npaid for income taxes, net of refunds and disaggregated by jurisdiction, during the years ended March 31, 2026 are as follows:\n\n SCHEDULE\nOF CASH PAID FOR INCOME TAXES, NET OF REFUNDS AND DISAGGREGATED BY JURISDICTION\n\n  \nThousands\nof Yen \n\nDomestic \n¥403,684 \n\nForeign \n 1,456 \n\nTotal \n 405,140 \n\n \n\nThe\ntax effects of temporary differences that give rise to the deferred income tax assets and liabilities at March 31, 2026 and 2025 are\npresented below:\n\n SCHEDULE\nOF TEMPORARY DIFFERENCE OF DEFERRED INCOME TAX ASSETS AND LIABILITIES\n\n  \nMarch\n31, 2026  \nMarch\n31, 2025 \n\n  \nThousands\nof Yen \n\n  \nMarch\n31, 2026  \nMarch\n31, 2025 \n\nDeferred\nincome tax assets \n    \n   \n\nOperating lease\nliabilities \n¥1,402,681  \n¥1,581,389 \n\nNet operating losses carried\nforward \n 202,382  \n 202,547 \n\nLong term prepaid expenses \n 108,758  \n - \n\nInventories \n 96,262  \n 88,739 \n\nDeferred listing expenses \n -  \n 84,835 \n\nOther current liabilities \n 39,092  \n 33,763 \n\nLoss on valuation of shares of subsidiaries \n 33,737  \n 32,390 \n\nEnterprise taxes payables \n 19,656  \n 30,858 \n\nOther non-current liabilities \n 21,893  \n 30,491 \n\nAllowance for credit losses \n 29,999  \n 27,407 \n\nProperty, plant and equipment \n -  \n 16,277 \n\nFinance lease liabilities \n 6,540  \n 9,730 \n\nStock-based compensation \n 5,642  \n - \n\nOthers \n 72,541  \n 65,083 \n\nSubtotal \n 2,039,183  \n 2,203,509 \n\nLess:\nvaluation allowance \n (141,329) \n (137,041)\n\nTotal\ndeferred income tax assets \n¥1,897,854  \n¥2,066,468 \n\n  \n    \n   \n\nDeferred\nincome tax liabilities \n    \n   \n\nOperating lease right-of-use\nassets \n¥(1,372,248) \n¥(1,523,570)\n\nCapitalized interest \n (63,404) \n (51,574)\n\nOthers \n (21,514) \n (32,557)\n\nTotal\ndeferred income tax liabilities \n¥(1,457,166) \n¥(1,607,701)\n\n  \n    \n   \n\nDeferred\nincome tax assets, net \n¥440,688  \n¥458,767 \n\n \n\nThe\nrealization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future\nperiods. The Group regularly assesses the ability to realize its deferred tax assets and establish a valuation allowance if it is more-likely-than-not\nthat some portion of the deferred tax assets will not be realized. The Group weighs all available positive and negative evidence, including\nits earnings history and results of recent operations, projected future taxable income, and tax planning strategies.\n\n \n\nThe\namount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward\nperiod are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional\nweight may be given to subjective evidence such as the Group’s projections for growth. The adjustments of a valuation allowance\nagainst deferred tax assets may cause greater volatility in the effective tax rate in the periods in which the valuation allowance is\nadjusted. Based upon the level of historical taxable profit and projections for future taxable profit over the periods for which the\ndeferred tax assets are deductible, management believes it is more likely than not that the Group will utilize the benefits of these\ndeferred tax assets, net of the valuation allowance, as of March 31, 2026 and 2025. Uncertainty of estimates of future taxable profit\ncould increase due to changes in the economic environment surrounding the Group, effects by market conditions, effects of currency fluctuations\nor other factors.\n\n \n\nF-26\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nnet changes in the total valuation allowance were an increase of ¥4,288 thousand, a decrease of ¥7,320 thousand and a decrease\nof ¥3,959 thousand for years ended March 31, 2026, 2025 and 2024, respectively.\n\n \n\nAs\nof March 31, 2026, the Group had net operating losses which can be carried forward for income tax purposes of ¥620,486 thousand to\nreduce future taxable income. Periods available to reduce future taxable income vary in each tax jurisdiction and generally range from\nfour to ten years as follows:\n\n SCHEDULE\nOF FUTURE TAXABLE INCOME IN TAX JURISDICTION RAGE FROM FOUR TO TEN YEARS\n\n  \nThousands\nof Yen \n\nAfter two years\nthrough three years \n¥14,116 \n\nAfter three years through\nfour years \n 30,897 \n\nAfter four years through\nfive years \n 229,200 \n\nAfter five years through\nsix years \n 125,921 \n\nAfter six years through\nseven years \n 83,805 \n\nAfter seven years through\neight years \n 26,896 \n\nAfter eight years through\nnine years \n 109,651 \n\nTotal \n¥620,486 \n\n \n\nUncertain\ntax positions\n\n \n\nThe\nGroup evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits,\nand measures the unrecognized benefits associated with the tax positions.\n\n \n\nAs\nof March 31, 2026 and 2025, the management considered that the Group did not have any significant unrecognized uncertain tax positions.\nThe Group did not incur any interest or penalties tax for the years ended March 31, 2026 and 2025. The Group does not anticipate any\nsignificant increases or decreases in unrecognized tax benefits in the next twelve months from March 31.\n\n \n\n**NOTE\n18 – COMMITMENT AND CONTINGENCY**\n\n \n\n*Contingencies*\n\n \n\nThe\nGroup is involved in legal proceedings and claims in the ordinary course of business. In the opinion of management, none of such proceedings\nand claims will have a significant impact on the Group’s consolidated financial statements.\n\n \n\n**NOTE\n19 – SEGMENT INFORMATION**\n\n \n\nOperating\nsegments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the\nCODM, the CEO of the Company, in making decisions regarding resource allocation and performance assessment. The Company determines its\noperations constitute three operating segments and reportable segments in accordance with ASC Topic 280. The CODM assesses financial\nperformance and decides how to allocate resources based on financial results. Segment assets are reported on the Company’s consolidated\nbalance sheets. In accordance with ASU 2023-07, the Company has identified “cost of revenues” as a significant segment expense\n(“SSE”) for each reportable segment.\n\n \n\n \ni.\nReal estate: Provision\nof real estate-related services, such as design and renovation, and real estate development in Japan\n\n \nii.\nHotel: Hotel management\nand accommodation in Japan and Vietnam\n\n \niii.\nOther: Additional services\nsuch as the sale of housing equipment and materials, restaurant operation, and information technology consulting in Japan\n\n \n\nF-27\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\nThe\nfollowing table shows information by reportable segment for the years ended March 31, 2026, 2025 and 2024:\n\n SCHEDULE\nOF INFORMATION BY REPORTABLE SEGMENT\n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\n  \nThousands\nof Yen \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\nMarch 31, 2026 \n   \n   \n   \n   \n  \n\nNet\nsales: \n    \n    \n    \n    \n   \n\nExternal\ncustomers \n¥20,600,358  \n¥1,310,224  \n¥310,581  \n¥-  \n¥22,221,163 \n\nIntersegment \n 33,580  \n 147  \n 342,723  \n (376,450) \n - \n\nTotal \n 20,633,938  \n 1,310,371  \n 653,304  \n (376,450) \n 22,221,163 \n\nCost\nof revenues \n (16,453,324) \n (1,172,152) \n (514,009) \n 326,743  \n (17,812,742)\n\nOperating\nexpenses \n (1,362,798) \n (88,460) \n (139,127) \n (1,246,456) \n (2,836,841)\n\nOperating\nincome (loss) \n 2,817,816  \n 49,759  \n 168  \n (1,296,163) \n 1,571,580 \n\nOther\nincome (expenses) \n (290,863) \n 819  \n (12,108) \n (18,224) \n (320,376)\n\nIncome\n(loss) before income taxes \n 2,526,953  \n 50,578  \n (11,940) \n (1,314,387) \n 1,251,204 \n\nDepreciation\nand amortization \n (16,069) \n (38,615) \n (8,366) \n (9,027) \n (72,077)\n\nCapital\nexpenditures \n¥174,117  \n¥1,355,505  \n¥3,084  \n¥101,837  \n¥1,634,543 \n\n \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\n  \nThousands\nof Yen \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\nAs of March 31, 2026 \n    \n    \n    \n    \n   \n\nTotal assets \n 19,868,937  \n 4,934,311  \n 454,480  \n 1,699,167  \n 26,956,895 \n\n \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\n  \nThousands\nof Yen \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\nMarch\n31, 2025 \n    \n    \n    \n    \n   \n\nNet\nsales: \n    \n    \n    \n    \n   \n\nExternal\ncustomers \n¥18,819,041  \n¥1,248,784  \n¥583,091  \n -  \n¥20,650,916 \n\nIntersegment \n 21,920  \n 21,725  \n 183,549  \n¥(227,194) \n - \n\nTotal \n 18,840,961  \n 1,270,509  \n 766,640  \n (227,194) \n 20,650,916 \n\nCost\nof revenues \n (15,578,567) \n (1,112,486) \n (562,360) \n 161,767  \n (17,091,646)\n\nOperating\nexpenses \n (1,257,330) \n (94,807) \n (303,413) \n (561,204) \n (2,216,754)\n\nOperating\nincome (loss) \n 2,005,064  \n 63,216  \n (99,133) \n (626,631) \n 1,342,516 \n\nOther\nincome (expenses) \n (194,243) \n 428  \n (5,541) \n 5,084  \n (194,272)\n\nIncome\n(loss) before income taxes \n 1,810,821  \n 63,644  \n (104,674) \n (621,547) \n 1,148,244 \n\nDepreciation\nand amortization \n (15,493) \n (36,956) \n (40,951) \n (50,687) \n (144,087)\n\nCapital\nexpenditures \n¥753  \n¥18,192  \n¥15,244  \n¥3,275  \n¥37,464 \n\n \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\n  \nThousands\nof Yen \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\nAs of March 31, 2025 \n    \n    \n    \n    \n   \n\nTotal assets \n 15,409,857  \n 3,894,723  \n 344,032  \n 2,835,576  \n 22,484,188 \n\n \n\nF-28\n\n  \n\n \n\n**LOGPROSYLE\nINC.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\n  \nThousands\nof Yen \n\n  \nReal\nestate  \nHotel  \nOthers  \n\n**Reconciling\nItems**\n  \nConsolidated \n\nMarch 31, 2024 \n    \n    \n    \n    \n   \n\nNet sales: \n    \n    \n    \n    \n   \n\nExternal\ncustomers \n¥12,411,288  \n¥1,044,267  \n¥666,285  \n -  \n¥14,121,840 \n\nIntersegment \n 8,372  \n 25,533  \n 195,279  \n¥(229,184) \n - \n\nTotal \n 12,419,660  \n 1,069,800  \n 861,564  \n (229,184) \n 14,121,840 \n\nCost of revenues \n (10,016,902) \n (1,010,546) \n (656,008) \n 213,505  \n (11,469,951)\n\nOperating\nexpenses \n (1,104,605) \n (58,665) \n (206,369) \n (343,749) \n (1,713,388)\n\nOperating income (loss) \n 1,298,153  \n 589  \n (813) \n (359,428) \n 938,501 \n\nOther\nincome (expenses) \n (410,533) \n 968  \n (8,973) \n (4) \n (418,542)\n\nIncome (loss) before income\ntaxes \n 887,620  \n 1,557  \n (9,786) \n (359,432) \n 519,959 \n\nDepreciation and amortization \n (22,440) \n (47,930) \n (6,126) \n (10,531) \n (87,027)\n\nCapital expenditures \n¥2,345  \n¥6,650  \n¥32,345  \n¥805  \n¥42,145 \n\n \n\nReconciling\nitems include elimination of intersegment transactions and corporate expenses. Corporate expenses, included in reconciling items for\nthe years ended March 31, 2026, 2025 and 2024, amounted to ¥1,237,132 thousand, ¥561,204 thousand and ¥343,749 thousand,\nrespectively, which consist of certain directors compensation. Segment assets are based on those directly associated with each segment.\n\n \n\n**NOTE\n20 - NET INCOME PER SHARE**\n\n \n\nThe\ncomputation of basic and diluted net income per share for the years ended March 31, 2026, 2025 and 2024 is as follows:\n\n SCHEDULE\nOF COMPUTATION OF BASIC AND DILUTED NET INCOME PER SHARE\n\n  \n   \n   \n  \n\n  \n\n**Thousands\nof Yen**\n\n**except\nshare and per share data**\n \n\n  \n\n**For\nthe Fiscal Years Ended March 31,**\n \n\n  \n2026  \n2025  \n2024 \n\n  \n   \n   \n  \n\nNumerator: \n    \n    \n   \n\nNet\nincome \n¥759,961  \n¥753,621  \n¥323,605 \n\nDenominator: \n    \n    \n   \n\nWeighted\naverage number of common shares outstanding used in calculating basic/diluted net income per share \n    \n    \n   \n\nBasic\nand Diluted \n 23,627,697  \n 21,679,507  \n 21,053,384 \n\nNet income per share \n    \n    \n   \n\nBasic\nand Diluted \n 32.16  \n 34.76  \n 15.37 \n\n \n\nThe\n500,000 PSUs outstanding as of March 31, 2026 were excluded from the computation of diluted net income per share because the vesting\ndate, defined as the later of March 31, 2026 or the filing date of the Annual Report on Form 20-F, had not yet occurred. There were no\ndilutive securities excluded from the computation of diluted net income (loss) per share for the years ended March 31, 2025 and\n2024.\n\n \n\n**NOTE\n21 - SUBSEQUENT EVENTS**\n\n \n\nManagement\nevaluated all additional events subsequent to the balance sheet date through July 13, 2026, the date the financial statements were available\nto be issued, and determined that there are no material subsequent events that require disclosure other than as disclosed below.\n\n \n\n*Repurchase\nProgram and Dividend*\n\n* *\n\nOn\nApril 7, 2026, the Company discontinued the Repurchase Program. On May 15, 2026, the Board resolved to declare a cash dividend to be\nfunded by the remaining unused portion of the Repurchase Program in the aggregate amount of $519,414, or $0.022 per share. The dividend\nwas payable on June 30, 2026, to shareholders of record as of the close of business on June 1, 2026. The ex-dividend date for market\ntransactions was June 1, 2026, the same date as the record date.\n\n \n\nF-29"}