J-Holdings Corp.

In the current consolidated fiscal year, the Company recorded operating loss, ordinary loss, net loss attributable to owners of the parent, and negative operating cash flow, and events casting significant doubt on the going concern assumption continue to exist. In the previous consolidated fiscal year, the Company fell into negative net worth, but this was resolved through fundraising of ¥409,140 thousand from the issue price and partial exercise of the 8th series stock acquisition rights. However, because strengthening the revenue base depends heavily on external factors, material uncertainty regarding the going concern assumption remains recognized at present.

The grid-scale storage battery business is significantly affected by changes in energy policy and systems such as electricity market rules, and if such systems are revised, abolished, or new regulations are introduced, this could have a material impact on demand structure and profitability. In addition, in the solar power generation facility electricity sales business, there is a possibility that all or part of the licenses and permits related to the FIT system (feed-in tariff system) may not be obtained, or may be revoked. Under the capital and business alliance with Recharge Power, the Company plans to acquire grid-scale storage facilities with a total investment of approximately ¥15.0 billion, meaning the scope of impact from systemic risk is substantial.

The waste treatment business is regulated by the Waste Management and Public Cleansing Act and related laws, and if the Company receives administrative dispositions such as revocation of licenses or business suspension, this could have a material impact on the business and financial condition. The validity period of industrial waste treatment business licenses is five years, and continuation of the business could become difficult if the Company is judged non-compliant with standards at the time of renewal or if new license acquisition is not approved. The Company currently complies with the standards, but the situation could change due to future legal revisions or changes in administrative judgment.

The regenerative medicine-related business is operated based on the Act on the Safety of Regenerative Medicine and the Pharmaceuticals and Medical Devices Act, and administrative guidance or regulatory changes may require the acquisition of new licenses or a review of the manufacturing system. If licenses cannot be obtained or renewed, continuation of the business may become difficult. The cell culture processing center (CPC) was completed in December 2025, and exosome purification and sales have only just begun, making response to regulatory risk during the business launch phase a key challenge.

Installation of storage batteries requires grid connection negotiations with power transmission and distribution operators, and delays in development schedules or increased costs may occur due to restrictions on power receiving conditions or connectable capacity, or prolonged decision-making on connection feasibility. Based on the capital and business alliance with Recharge Power, the Company plans to acquire one storage facility in December 2026, and delays in grid connection would directly affect the outlook for early revenue contribution, raising concerns about the impact on the Company's overall business plan.

The grid-scale storage battery business is conducted through order-based development, and if changes in electricity market prices or other factors alter demand-side investment decisions, and customer acquisition does not proceed as planned, this could affect the business plan. This business was newly launched in the current consolidated fiscal year and is at a stage where revenue contribution is expected, but it is highly vulnerable to changes in the market environment. Changes in customer demand would affect both the grid-scale storage facility development and sales business and the fund management business.

While the regenerative medicine-related market is expected to grow, new entrants and technological innovation by competitors are progressing, and the emergence of lower-cost, higher-quality alternative products or difficulty in differentiation could reduce market competitiveness. There is also a risk that the pace of market growth and customer demand could slow more than expected, depending on the accumulation of scientific evidence. The Company is advancing research, development, and sales of exosomes based on a joint research agreement with Juntendo University, but as this is an early stage of commercialization, its resilience to changes in the market environment is limited.

Exosomes and processed cell products, as biologically derived products, require strict quality control, and if contamination, mutation during the manufacturing process, or quality variation between lots occurs, product recalls or suspension of sales may become necessary. If new scientific findings or reports of side effects regarding safety come to light, confidence in the products could decline, potentially hindering sales. As the cell culture processing center was only completed in December 2025, stabilizing the manufacturing process is an urgent task.

At the stable-type final disposal site in Kurashiki City, Okayama Prefecture, operations are conducted using large collection and transport vehicles and heavy machinery, and if environmental pollution occurs due to a large-scale natural disaster or unforeseen accident, or if a serious industrial accident occurs, the Company may bear restoration costs and compensation, which could have a material impact on the business and financial condition. The Company conducts regular monitoring such as water quality testing and safety education based on the Waste Management and Public Cleansing Act, but the risk cannot be completely eliminated.

The Group holds a large amount of personal information, including that of real estate purchasing customers and prospective purchasers, and if such personal information is leaked externally due to unauthorized access, criminal activity, or other unforeseen events, this could adversely affect business performance through loss of social trust, damage to corporate image, decreased sales, and liability for damages. The Company is establishing internal rules and developing security policies, but continuous strengthening of countermeasures is required to respond to increasingly sophisticated cyber threats.