Seria Co.,Ltd.

All of the Company's stores are under 1,000 square meters and are currently not subject to regulation under the Large-Scale Retail Store Location Act. However, depending on candidate properties for roadside standalone stores, some may become subject to the Act. In addition, commercial facilities housing in-shop permanent stores and shopping mall tenants are subject to the Act, which may indirectly affect operating results. While the Company conducts trade area analysis and selects appropriate properties for each store format, there is a risk that store opening plans could be constrained by tightened regulations or other factors.

Intensifying industry-wide competition may result in a shortage of properties meeting store opening conditions, or force store closures due to tenant changeovers by major supermarkets or commercial facility closures. Since all of the Company's stores are leased properties, failure to achieve store opening plans or new store investment exceeding the rate of sales increase could adversely affect operating results. While the Company reviews unprofitable stores on an ongoing basis under a policy emphasizing individual store profitability, an increasingly strategic and proactive approach to store development is required.

The Company places security deposits and guarantee money with landlords, deposits sales proceeds with developers and others, and extends credit sales to FC stores and major customers, creating a risk of bad debt losses arising from unexpected bankruptcy or deteriorating creditworthiness of business partners. Although the Company records an allowance for doubtful accounts based on historical bad debt rates, additional provisions may need to be recorded individually if creditworthiness deteriorates, which could affect operating results. While the Company pays attention to changes in the creditworthiness of business partners when conducting transactions, it is difficult to completely eliminate unforeseen events.

In-store inventory is expected to continue increasing along with aggressive store opening expansion and sales floor area expansion, and rapid changes in consumer needs and purchasing trends could result in slow-moving inventory. If slow-moving inventory occurs, it could affect operating results through a sharp decline in sales in the short term and a sharp increase in inventory disposal losses in the medium to long term. The Company has built a merchandise management system utilizing a real-time POS system, and responds to consumer needs by setting the number of items handled at approximately 20,000 and replacing 500 to 700 items per month.

The proportion of the Company's foreign-currency-denominated purchases is minimal, so the direct impact of exchange rate fluctuations is limited. However, since domestic manufacturers and vendors import raw materials and products from overseas, exchange rate fluctuations may indirectly affect purchase prices with a time lag. In addition, crude oil price trends may cause fluctuations in the purchase prices of plastic products and other items, logistics costs, and utility costs, potentially affecting a wide range of product costs. Given the characteristics of the fixed-price ¥100 uniform pricing format, it is difficult to pass on cost increases to selling prices, resulting in a significant impact on profitability.

The Company applies the "Accounting Standard for Impairment of Fixed Assets" and measures the value of fixed assets every period. If the value of fixed assets declines, an impairment loss must be recorded, which could affect operating results. In particular, fixed assets such as interior fittings and equipment related to unprofitable stores are prone to impairment, and there is a risk that losses could expand in phases of worsening competitive conditions or increasing store closures. While the Company places emphasis on managing the profitability of individual stores, the possibility that impairment risk could materialize due to changes in the external environment cannot be ruled out.

Natural disasters or other unforeseen accidents could cause physical damage to stores and facilities, power outages, disruption of communication networks, and interruption of logistics networks, which could impede smooth business operations and affect operating results. Since the Company operates numerous stores nationwide, there is a risk that multiple stores could be affected simultaneously in the event of a widespread disaster. The securities report does not provide specific details of a business continuity plan (BCP).