Quantum Solutions Co.,Ltd.

In the current consolidated fiscal year, the Company recorded operating loss, ordinary loss, and net loss attributable to owners of the parent, and operating cash flow was negative, giving rise to material doubt about the going-concern assumption. As countermeasures, the Company is pursuing accelerated monetization of the AI Solutions business, a turnaround to profitability in the Eyelash Care business, and fundraising including the 12th series of stock acquisition rights; however, since the feasibility of these measures depends on market conditions and investor intentions, material uncertainty remains. The consolidated financial statements do not reflect the effects of this uncertainty.

As of April 30, 2025, the total number of potential shares from stock acquisition rights was 18,183,600 shares, equivalent to 39.7% of the total issued shares of 45,822,696 (after deducting treasury shares). If these stock acquisition rights are exercised, there is a risk that the value of shares held by existing shareholders and their voting rights ratio will be significantly diluted. As the Company continues its policy of utilizing stock acquisition rights as a fundraising method, dilution pressure may continue going forward.

In the AI infrastructure business, entry barriers exist due to existing industry players when entering the domestic market. In addition, tightening of government regulations related to AI development is anticipated going forward, posing a risk of impacting business development. While the Group claims to possess world-leading AI technology, if regulatory tightening materializes, the Company may be forced to revise its business plans.

In the AIDC business, there is a risk of supply chain disruption stemming from US-China tensions. If US government regulations are tightened, the Group's advantage in procuring equipment and components such as GPU servers may be undermined. The Group relies on overseas subsidiaries for GPU server procurement, so rising procurement costs or supply disruptions could directly affect business continuity.

As the Group has overseas subsidiaries and presents its consolidated financial statements in yen, it is exposed to translation risk from exchange rate fluctuations. Because the AI Solutions business relies on overseas subsidiaries for GPU server procurement, purchase prices are subject to foreign exchange risk upon yen conversion, and if foreign-currency-denominated sales proceeds continue to be held, exchange rate risk persists even after sales. No specific countermeasures such as foreign exchange hedging are disclosed in the securities report.

Amid intensifying competition in the global market, competition to acquire well-known IP and the tightening of contract terms are advancing, posing a risk to business development. If the Company is slow to respond to changes in gaming media or user needs, profitability and market competitiveness may be adversely affected. There is also a risk that project progress could be hindered if securing development partners, personnel, or development funding becomes difficult.

In the enterprise AI solutions business, there is a risk that the Company will be unable to maintain its competitive advantage if it fails to keep pace with changes in AI technology and market trends. The AI field has an extremely short innovation cycle, making continuous development investment and talent acquisition essential. While the Group is focused on expanding its customer base, delays in technological responsiveness could lead to customer attrition and loss of new orders.

Although the Group has not currently been subject to any lawsuits related to intellectual property infringement, the possibility cannot be ruled out that third-party intellectual property rights (including business model patents) may apply to the Group's related businesses. If intellectual property rights not recognized by the Group have already been established, infringement lawsuits could significantly hinder business operations and result in liability for damages. While the Group is working to acquire intellectual property rights in the AI game business, there is no guarantee that all risks can be fully covered.

The Group holds personal customer information through mail-order and in-person sales, creating a risk of information leakage from unauthorized external access. If an information leak occurs, it could adversely affect business results and financial condition through claims for damages and loss of social trust. The Group has established systems such as thorough employee training to comply with the Personal Information Protection Act, but complete defense cannot be guaranteed given the increasing sophistication of cyberattacks.

In the Eyelash Care business, eyelash staff are required to hold a beautician's license, and combined with the declining working population and increasing labor mobility, securing staff may become difficult even during periods of strong performance. There is also a risk that changes in customer preferences could shrink needs and market size, potentially leading to a decline in competitiveness relative to competitors. The Group aims to maintain its advantage through sales capability and planning strength in a niche field, but it explicitly states there is no guarantee of this.