Vega corporation Co.,Ltd.

The Group depends on stores operated on Rakuten Ichiba, Amazon, and Yahoo! Shopping, and if relationships with mall operators deteriorate, terms of service are violated, system failures occur, or a mall closes, sales could be significantly affected. Although the Group is strengthening its own e-commerce channels, the proportion of sales from internet malls remains high, and a substantial revision of commission rates also poses a risk that would directly affect business performance.

Most of the products handled are imported in foreign currency from China, other parts of Asia, and Europe, so exchange rate fluctuations directly affect procurement costs. Although hedging is conducted through forward exchange contracts and foreign currency deposits, significant exchange rate fluctuations could have a substantial impact on the Group's business results and financial condition.

Since most products sold are proprietary planned products, the accuracy of demand forecasting affects inventory levels. If orders fall short of forecasts, this leads to excess inventory, inventory valuation losses, and deteriorating cash flow, while if orders exceed forecasts, stockouts result in lost sales opportunities. The Group is working to improve the accuracy of demand forecasting and order planning as an ongoing challenge.

Business operations presuppose stable internet connectivity and stable operation of information systems. If a system failure occurs due to natural disasters, unauthorized access, computer viruses, server overload, or similar causes, service provision could become difficult. Although the Group addresses this through regular data backups and distribution across multiple data centers, if recovery takes time, the impact on business performance could be significant.

In operating internet sales sites, the Group holds a large volume of personal information of registered members, creating a risk of leakage due to unauthorized external access or employee error or misconduct. If a leak occurs, loss of trust and claims for damages could affect the Group's business results and financial condition. The Group has implemented preventive measures through establishment of personal information protection regulations and employee training.

Since most products sold depend on imports from China, various Asian countries, and Europe, there is a risk that product supply from these regions could be temporarily halted in the event of war, terrorism, political instability, natural disasters, epidemics, strikes, or similar events. The Group addresses this through diversification of production bases and development of new partner factories, but if concentration in specific regions remains, an impact on business performance could occur.

The E-commerce Business has low barriers to entry, and if competitors intensify price competition or offer new value-added services, there is a risk that the Company's competitive advantage could decline. The Company is seeking differentiation through strengthening proprietary planned products, improving site usability, and enhancing brand value, but changes in the competitive environment could affect business results.

Product delivery to customers is entirely outsourced to delivery companies, and given the business characteristic of large furniture being a core product category, if delivery companies withdraw from large-item delivery services or request price increases, the resulting cost increases could affect business results. To diversify this risk, the Company strives to maintain relationships with multiple delivery companies and to develop new partnerships.

The Company is subject to legal regulations such as the Act against Unjustifiable Premiums and Misleading Representations, the Act on Specified Commercial Transactions, the Product Liability Act, and the Unfair Competition Prevention Act. If safety or labeling issues arise with products or advertising expressions, significant cost burdens or a decline in sales due to reputational damage could be expected. The Company is working to ensure legal compliance through thorough employee training and the establishment of a compliance framework.

Securing personnel for product planning, design, and systems engineering is key to business growth, and if the Company is unable to hire the necessary personnel as planned, this could hinder product development capabilities and improvements in platform usability. The Company's own site and the platform construction for new businesses also rely heavily on engineering personnel, and intensifying competition for hiring could affect business results.