ImageONE Co., Ltd.

The company has recorded continuous operating losses since FY2019 (ending September 2019); the previous fiscal year recorded an operating loss of ¥844,815 thousand and a net loss of ¥889,625 thousand, and the current fiscal year also recorded an operating loss of ¥410,383 thousand and a net loss of ¥559,333 thousand, giving rise to material doubt about the company's ability to continue as a going concern. As countermeasures, the company is promoting the establishment of a revenue base for new businesses ("ONE Viewer" and "ONE Payment"), the selection and withdrawal from unprofitable businesses, fundraising through equity and debt finance, and reductions in selling, general and administrative expenses. If improvement does not progress, there is a risk that the continuation of business itself could become difficult.

It was discovered that a former representative director and a former director had engaged in improper provision of money and goods, inappropriate receipt/payment of money and circumvention of conflict-of-interest transaction regulations, and inappropriate accounting treatment relating to revenue recognition, leading to the correction of past annual securities reports on January 31, 2024. In March 2025, the Securities and Exchange Surveillance Commission recommended an administrative monetary penalty payment order, and the company has recorded the equivalent amount as an extraordinary loss. Prompted by this, the company is conducting an investigation through a third-party committee and working to strengthen its disclosure system and accounting control system and to thoroughly implement recurrence prevention measures.

In connection with the reuse rental business for recycled EV batteries, lawsuits have been filed against the company by Wonderland Co., Ltd. and nine other companies seeking damages, delivery of movable property, restitution of unjust enrichment, and payment of rental fees, among other claims, with the total claimed amount reaching ¥735,936 thousand. Depending on the outcome of the litigation, there is a possibility of a material impact on business performance, and the company plans to respond by asserting and proving its legal position and considering legal measures.

The Healthcare Solutions business is strongly affected by policy changes such as medical-related laws and regulations and revisions to the medical fee schedule; if revisions to the medical fee reimbursement system reduce medical institutions' appetite for IT investment, or if IT investment is curtailed due to deteriorating profitability of medical institutions caused by the spread of new infectious diseases or an economic downturn, this could affect the company's business results. In addition, in the Global Environment Solutions business, reductions in public works budgets and changes in regulatory standards could also affect business performance. The company is working to diversify risk through new product development and new market development.

Because the medical systems field is strongly affected by information technology, the emergence of new technologies, new methods, and new products, as well as the rise of competitors, may cause the products handled by the company to become obsolete or lose market value. In the GEO Solutions field as well, competitors offering similar services exist, and if the company cannot respond to intensifying price competition and service level demands, this could affect business performance. The company is responding through new product development, version upgrades, and strengthened information sharing with major business partners.

In the course of sales, installation, and maintenance operations, the company has opportunities to handle customers' confidential and personal information; if important data leaks or system failures occur due to cyberattacks, unauthorized access, computer virus intrusion, or employee errors, this could lead to claims for damages, affecting the company's credibility, business, and performance. The company obtained ISO/IEC 27001 (ISMS) certification in 2010, and implements regular maintenance, backups, and unauthorized access prevention measures, while also carrying cyber insurance.

If defects or other issues occur in the software, systems, or products developed and sold by the company, causing damage to users, resolving resulting claims for damages could require significant costs and time, potentially affecting the company's credibility and performance. The company shares the status and history of responses to customer inquiries via a management ledger, striving for early resolution and problem avoidance.

The company procures computers, servers, semiconductor-equipped devices, medical supplies, and other items from both domestic and overseas sources; increased demand for semiconductors or unforeseen events such as infectious disease outbreaks, wars, or conflicts could cause procurement and delivery costs to rise significantly, or make procurement and delivery itself impossible, leading to delays or halts in product shipment. The company is responding by diversifying its suppliers and building a stable procurement system.

Some of the products handled by the company, including medical devices and pharmaceuticals, have expiration dates set by their manufacturers; if products past their expiration date are distributed due to human error or trouble, resulting in serious harm to health, this could lead to revocation of licenses such as those for medical device sales businesses and the incurrence of substantial compensation costs, affecting sales and earnings. The company is working to improve and strengthen its expiration date management system through regular physical inventory counts and thorough operational implementation and verification.

If the company is found to have infringed on the intellectual property rights of others and is subject to claims for damages, resolving the legal dispute could require significant costs, potentially affecting the company's credibility, business, and performance. The company uses external experts to work on acquiring rights to its own intellectual property and preventing infringement of the rights of others.