HYPER Inc.

The domestic computer market is saturated, with demand now centered on replacement purchases, and price competition is intensifying due to low-price sales through internet price comparison sites and direct manufacturer sales. The Group maintains price competitiveness by limiting inventory holdings to best-selling products and lowering purchase prices, but depending on future industry trends, this could affect business performance.

Computer products have relatively short life cycles, creating a risk that held inventory could become obsolete rapidly. Although the Group strives for appropriate inventory management and operation, if obsolescence occurs, it may affect business performance through the recognition of inventory valuation losses and similar factors.

Many computer products depend on a specific OS, and changes in OS specifications or revisions to support frameworks significantly affect product demand. In addition, depending on the supply conditions of components such as CPUs, memory, and hard disk drives, the volume of computer products in distribution could decrease, potentially affecting the Group's business performance.

The Group operates an agency business for ASKUL Corporation's mail-order office supplies service "ASKUL," but there is a risk of declining profit margins due to changes in ASKUL Corporation's management policies or intensifying market competition. Furthermore, if order processing is halted due to a system failure caused by a server attack or similar incident, it could have a direct impact on the Group's business performance.

The products handled by the Group depend heavily on a small number of major suppliers, and the Group currently maintains favorable trading relationships with them. However, if transactions with these major suppliers were to change significantly for any reason, it could disrupt product procurement and affect business performance.

The Group may undertake business transfers, M&A, and the establishment of subsidiaries for the purpose of expanding existing businesses or entering new business areas, and such funding may in some cases be financed through borrowings from financial institutions. If the financial condition or operating results of a target company deteriorate, valuation losses on securities may arise, potentially affecting the Group's business performance.

If natural disasters such as typhoons, earthquakes, or tsunamis, or infectious diseases such as COVID-19 or novel influenza, occur or spread on a scale far exceeding assumptions, there is a risk that business office operations could become difficult to sustain over an extended period. The Group strives to develop its crisis management systems, but this could affect business performance and financial condition, including through effects on the industries to which customers belong.

The Group holds a large amount of corporate and personal information, and strives to ensure thorough information management through the establishment of internal regulations and regular employee training. However, if information is leaked due to an unforeseen event, it could affect business performance through damages claims and a decline in social credibility.

If an unpredictable event causes a failure in the core system and recovery work takes a certain amount of time or longer, the suspension of order processing and related operations could affect the Group's business performance. Because business operations, including the four nationwide locations (Nagoya, Osaka, Hiroshima, and Fukuoka) and the Tokyo distribution center, depend on the system, the impact of a failure could be extensive.

The Group has adopted a stock option plan and has granted stock acquisition rights equivalent to 209,900 shares (2.1% of shares including potential shares) to directors and employees. If the stock acquisition rights are exercised, the value per share will be diluted, and if shares acquired through exercise are sold on the market, it could affect the formation of an appropriate share price through changes in the supply-demand balance.