Aplix Corporation

In the Stock Business, sales from a single client, Star Service Co., Ltd., accounted for 33.6% of consolidated revenue for FY2025 (ending December 2025), indicating a high degree of dependence on a specific client. If the business relationship with this client were to be terminated, the profitability of the Group as a whole, particularly the Stock Business, could decline significantly. As of now, no specific measures to reduce this dependence are disclosed in the securities report.

The MVNO market, which accounts for a large portion of the Group's revenue through the MVNO Service, is highly competitive and saturated. The Group is pursuing differentiation by expanding from its existing low-cost mobile phone sales business into MVNO OEM provision to other companies and into voice and data communication services, but if such differentiation efforts fail, there is a risk of being driven out of the market. The success or failure of differentiation strategies relative to competitors is a key factor affecting the Group's business performance.

The Group applies IFRS, under which goodwill is not amortized on a straight-line basis; however, if indicators of impairment arise due to deterioration in the operating results of an acquired company, and the recoverable amount falls below the carrying amount of goodwill, an impairment charge becomes necessary. If such an impairment charge occurs, it could have a material impact on the Group's operating results and financial position. Unlike under Japanese GAAP, goodwill remains cumulatively on the balance sheet, creating a structure in which the business performance of acquired companies is directly linked to financial risk.

It cannot be entirely ruled out that third parties have already obtained, or may in the future obtain, patents or other intellectual property rights that conflict with technologies used by the Group. As a result of an infringement lawsuit, the Group could be held liable for damages or could be enjoined from conducting all or part of its business. In addition, if employees bring lawsuits regarding compensation for employee inventions, this could also affect business performance; the Group addresses this by establishing regulations on employee inventions.

If contracts that constitute important elements in each of the Group's businesses are terminated or expire, or are not smoothly renewed, business performance could be affected. This applies to the contracts described under "Material Contracts" in the securities report, and the stability of the business relationships underpinning business continuity has a direct impact on performance. Specific contract details and counterparties are described in "Part II, Business Overview, 5. Material Contracts, etc."

There are risks of system failures or information leaks due to software or hardware malfunctions, human error, earthquakes, fires, power outages, computer virus intrusions, and similar causes. While the Group strives to manage and maintain equipment, enhance security, establish operational rules, and provide employee training, if network or information system functionality deteriorates or stops, business activities could be affected. This risk is increasing as corporate activities become more dependent on IT.

The Group handles personal information and has implemented strict management systems, information security measures, established internal regulations, and provides education, training, and awareness programs for employees and business partners. However, if a leak of personal information were to occur, the Group's financial position and operating results could be affected. There is also a risk of secondary damage, such as loss of credibility and liability for damages.

The knowledge and experience of specific management personnel, including the Representative Director, play an important role in the Group's management and business execution and are regarded as important management resources. If these members of management were to become unable to perform their duties due to unforeseen circumstances, the Group's business performance could be affected. Specific measures such as successor development or delegation of authority are not disclosed in the securities report.

The Group may engage in strategic alliances involving corporate acquisitions or investments, or enter new businesses, in order to develop technology and capture promising markets. Although the Group states that it conducts sufficient due diligence, if businesses resulting from strategic alliances or new business ventures do not progress as initially planned, or if the financial condition of an investee deteriorates, business performance could be affected. This is also linked to goodwill impairment risk, and post-M&A business management is an important challenge.

The Group has transactions with overseas customers and foreign-currency-denominated sales, and also pays overseas business activity expenses and technology introduction costs from overseas in foreign currencies, such that amounts received and paid in yen fluctuate due to exchange rate movements. In addition, when translating foreign-currency-denominated assets and liabilities into yen at the end of each quarter, even if there is no change in value in foreign currency terms, the yen-translated amount may fluctuate due to exchange rate movements, potentially affecting business performance. Specific countermeasures such as foreign exchange hedging are not disclosed in the securities report.