Laxus Technologies, Inc.

Most of the Company's fixed assets consist of rental assets (branded bags), and if profitability declines due to significant changes in market trends, or large-scale damage occurs due to disasters or other causes, it may become necessary to recognize impairment losses on fixed assets. The Company conducts impairment testing each quarter, taking obsolescence and damage status into account, but future market volatility risk cannot be eliminated.

In the event of negative reports in the media or on social media, or misconduct by officers or employees, the Company's brand image and social credibility could be significantly damaged, directly and adversely affecting member acquisition. The Company addresses this by clarifying response processes and responsibilities in advance in collaboration with external experts such as lawyers, but the risk cannot be completely eliminated.

The Company's service is a subscription that stimulates consumers' latent desire for branded bags, and a significant change in consumer awareness and preferences, driven by generational shifts and other factors, poses a risk that could shake the foundation of the business. The Company continuously researches the market and works on service development, but cannot completely eliminate the risk of long-term changes in preferences.

The Company acquires and manages personal information such as the addresses and names of general consumers, and in the event of an information leak due to unauthorized external access or unforeseen circumstances, this could result in a loss of social credibility and have a material impact on business results. The Company has established an appropriate management framework through the development of personal information protection policies and internal regulations and thorough internal training, but the risk cannot be completely eliminated.

The Company provides a highly discretionary service in the form of branded bag sharing, which is susceptible to spending cutbacks in the event of an economic downturn or deterioration in the employment environment. While the Company works to secure long-term members through the provision of a prepaid instrument (Laxus Cash) and marketing initiatives, the risk of spending restraint cannot be entirely eliminated.

Unlike new products, the volume of used branded bags in circulation in the market is not constant, and in recent years market prices have continued to rise against a backdrop of yen depreciation and inflation, making it difficult to secure the necessary product lineup. The Company works to diversify its procurement channels (developing new relationships with used goods dealers, participating in auctions, etc.), but cannot eliminate the possibility that stable procurement may become difficult due to increased competition or significant price fluctuations.

The Company's service primarily uses smartphone apps and websites as customer touchpoints, and system failures caused by natural disasters, cyberattacks, program defects, or other causes could result in the loss of important data or service disruption. The Company has taken measures such as utilizing external cloud servers to distribute infrastructure and introducing monitoring tools, but cannot eliminate all risks.

If geopolitical risks such as tensions in the Middle East intensify or persist, leading to soaring crude oil prices, global inflation, and yen depreciation, this could increase procurement costs through rising transaction prices in the domestic used branded bag market, as well as increase pressure on logistics costs. The Company has taken measures such as entering into annual contracts with major logistics providers, but there are limits to its ability to absorb costs if medium- to long-term energy price increases become severe.

The Company has obtained a secondhand dealer license from the Hiroshima Prefectural Public Safety Commission and is subject to multiple legal regulations, including the Secondhand Articles Business Act, the Act on Specified Commercial Transactions, the Act on the Protection of Personal Information, and the Payment Services Act. Business activities could be restricted due to license revocation resulting from unforeseen circumstances caused by officers, employees, or business partners, or due to amendments to relevant laws or the establishment of new guidelines. The Company closely monitors legal and regulatory developments in consultation with external experts such as retained legal counsel, and strives to respond promptly.

As of March 31, 2026, borrowings accounted for 23.4% of total assets, and since the Company borrows at variable interest rates, a rise in market interest rates could affect its financial position and business results through increased funding costs. In addition, if the Company is unable to raise funds as planned due to changes in financial conditions, this could hinder its business development. While the Company has a policy of reducing its reliance on borrowings over the medium to long term, risk remains if such reduction does not proceed as planned.