ZOA CORPORATION

Competition in store openings and price discounting with home appliance/camera mass retailers and PC specialty stores is intensifying, placing the company in a challenging operating environment characterized by falling average selling prices and declining profit margins. The company seeks to differentiate itself through a comprehensive service combining PCs and related products with intangible offerings such as Service & Support, but depending on future market trends and competitive developments, this could affect the company's financial position and business results.

The average selling prices of PC units and peripheral equipment, the company's core products, are highly volatile, and price fluctuations exceeding the company's forecasts could directly affect business results. Given a business structure centered on PC-related products, the company faces a high degree of dependence on price fluctuation risk, which remains a challenge.

If the product lineup fails to adequately respond to changes in customer needs, inventory may increase, potentially affecting the company's financial position and business results. The company continues to adjust inventory through collaboration between the merchandising planning team and stores, including inter-store transfers and POS data analysis, but risks remain of delayed responses to shifts in demand.

The company operates a Real Estate Sales business, and if the real estate market stagnates due to a deterioration in the economic environment, the company may be unable to sell its real estate held for sale at the anticipated timing and price. Reduced liquidity in the real estate market could lead to delays in fund recovery or the recognition of losses, posing a risk to business results.

As of the end of FY2026 (ending March 2026), the balance of guarantee deposits paid was ¥191,428 thousand (3.6% of total assets), and there is a risk that part or all of this amount may become unrecoverable due to the economic failure of lessors or other causes. In addition, mid-term cancellation of a lease contract before the end of its term may require payment of a contractual penalty, creating a risk of financial burden.

The company's policy in principle is to open stores primarily in used properties with existing fixtures left in place ("tsukeide" properties), selecting only properties that satisfy certain conditions after strict examination of store opening terms such as guarantee deposits and rent, as well as the population within the trade area and the competitive situation. This policy may limit store opening opportunities, and if the store opening policy is changed due to a major revision of the products handled or other factors, this could result in increased store opening costs or delays in opening timing.

Opening a store with a floor area exceeding 1,000 square meters requires notification under the Large-Scale Retail Store Location Law, so the company's basic policy is to open stores at a scale not subject to this regulation. If the store opening policy is changed in the future or if this law is amended, this could result in increased store opening costs or delays in opening timing, potentially affecting the company's financial position and business results.

Price displays on flyers and price cards, as well as the provision of premiums, are subject to regulation under the Act against Unjustifiable Premiums and Misleading Representations, and any violation could affect the company's credibility and business results. The company conducts strict checks by multiple internal departments, but the risk of erroneous displays or delayed responses to legal amendments cannot be eliminated.

The company handles customers' personal information through its membership program, affiliated credit cards, telecommunications line intermediary services, and other operations, and any leakage or unauthorized use of such information could result in a loss of credibility and significant impact on business operations. The company formulated its "Personal Information Protection Management Regulations" in October 2003 and conducts regular training for all employees, including part-time staff, but recognizes that the risk of leakage cannot be reduced to zero.

The PCs, displays, and other products handled by the company are subject to regulation under laws such as the Act on the Promotion of Effective Utilization of Resources, the Waste Management Act, and the Electrical Appliance and Material Safety Act (PSE Act), and any changes to these laws could affect the company's financial position and business results. Attention must be paid to the risk of increased compliance costs and sales restrictions arising from legal amendments.