LFS

1. Corporate philosophy is to change and design sports, practicing sports and social business to address social issues. 2. Business model divided into sports school business (over 70% sales) and social business (approx 30% sales). Sports school business offers unique program cultivating non-cognitive skills with proprietary system milabo. Social business has expanded as new growth driver. 3. Earnings highlights: Net revenue increased by 13.5% to $74.8 million, income from operations increased by 20.7% to $4 million, adjusted income from operations increased by 41.8% to $4.4 million. 4. Growth strategies: Expand foundational sports school business by strengthening service quality, acquiring customers, developing untapped areas. Expand market share in club activities by leveraging first mover advantage, five strong barriers to entry. Improve operating profit margins by increasing unit prices, reducing costs, digital transformation. 5. Human resource strategies: Scalable labor infrastructure, operational system without gaps, efficient organizational structure, talent supply infrastructure, strong recruitment pipeline. 6. Phase by phase strategies for club activities business: Phase one pilot project completed, phase two scaling to government designated cities, phase three remote and mobile management model for nationwide expansion.

For the fiscal year ending December 2026, forecast strong double-digit growth across both top and bottom lines. Project net revenue to reach between $82.9 million and $95.7 million, income from operations to range between $4.5 million and $5.4 million. Focus on steadily improving operating margins.

The company's business is broadly divided into two segments. The sports school business accounts for over 70% of sales. It offers a unique program cultivating non-cognitive skills like leadership and teamwork, and has been ranked number one in Japan for number of members and schools for four consecutive years. The social business accounts for approximately 30% of sales, has expanded strongly as a new growth driver, with sales contribution increasing by three percentage points since fiscal year 2023. In 2025, both segments achieved record high revenues, with the sports school business increasing by 7.8% and the social business by 32.8%.

Q: With your NASDAQ listing, you plan to expand your overseas operations. What are your chances of success with your business model in the U.S. or globally?

A: Nasdaq listing is a pivotal opportunity to lay groundwork in creditworthiness and financial resources for overseas markets. Strategy is to focus on M&A of sports schools, fitness clubs, education-related companies in developed countries. Confident in gaining market share by incorporating non-cognitive skills, visualization system.

Q: When acquiring a foreign company with a different country or culture, what kind of plan do you have in place to ensure a successful PMI?

A: Company has successfully PMI in acquired companies as planned. In overseas expansion, welcome partners sharing same philosophy. Respect local cultures while incorporating strengths in non-cognitive skills and technology.

Q: The number of members in the school program has only slightly increased. You mentioned that you focused resources on the club activities program, but are you concerned that this might slow down the growth of the school program, which is the foundation of your business?

A: Strategically reallocated resources temporarily to secure high trust government projects, core school business remains priority. Aim to further expand market share by inside sales, social media advertising, M&A, alliances. Recruitment of instructors progressing smoothly, system in place for hybrid growth of both businesses.

Q: How do you plan to retain existing sports school members in the future? Given the economic factors such as rising prices in Japan, I'd like to know your future plans.

A: Value offered is development of non-cognitive skills through close support of real-life instructors, not replaceable by AI. Premiumization of value is way to retain customers.

Q: Now that we've entered the first year of the reform period for club activities, what is the current progress?

A: Entered first year of reform implementation period, just about to accelerate efforts. Focused on building safe and high-quality operational model in phase one. Now shifting to scaling to designated cities in phase two, targeting 2,000 schools in Tokyo's 23 wards and designated cities nationwide.

Q: You recently issued a press release regarding preparations for listing on the Tokyo Stock Exchange. You are already listed on Nasdaq, so why are you aiming to list on the domestic market at this time? Also, could you tell us about the timeline for the listing?

A: Listing on Nasdaq for global expansion and fundraising, but main business is Japan's school club activities reform. Listing on Tokyo Stock Exchange to prove absolute credibility and governance as public entity in Japan. Currently working on preparations, aim to realize as soon as possible, will inform of specific details through disclosure or press releases.

Q: How did the financial results for the fiscal year ending December 2025 compare to the initial financial forecast?

A: Performance in terms of revenue and income from operations fell firmly within initial forecasts. Shifted human resources to take over large-scale projects in Nagoya temporarily suppressed school business growth, but company as a whole secured planned levels for top and bottom lines.