SANIX HOLDINGS INCORPORATED

Changes in national policy or market conditions could significantly alter the business environment of the Group. As the Group operates multiple licensed businesses, including the solar power generation business and the waste treatment business, the scope of impact from regulatory changes is broad. The Group continuously collects information and strives to respond appropriately, but the impact on business results and financial condition cannot be completely eliminated.

In the solar power generation business, key components such as solar cell modules and mounting frames are procured from overseas manufacturers, so fluctuations in exchange rates directly affect procurement costs. The Group is working to reduce this risk by expanding yen-denominated transactions, but significant exchange rate fluctuations could affect business results and financial condition.

If a large-scale earthquake, typhoon, or other natural disaster occurs in the regions where factories, the head office, branches, and other facilities are located, business activities could become difficult to conduct for an extended period. The Group seeks to minimize damage and achieve early recovery by formulating and disseminating a BCP (Business Continuity Plan), but an unforeseen large-scale disaster could have a material impact on business results and financial condition.

The Group operates licensed businesses subject to multiple laws and regulations, including the Construction Business Act, the Act on Specified Commercial Transactions, the Waste Management and Public Cleansing Act, and the Electricity Business Act, creating a risk that a regulatory violation in one business could spread to affect licensed businesses across the entire Group. The Group fully transitioned to a holding company structure in October 2025 and has taken measures to limit the impact on other businesses by having each operating company obtain its own licenses. The Group also thoroughly implements compliance training and gathers information through regular visits to consumer affairs centers.

In the Environmental Resource Development Business, waste plastic is used as recycled fuel at the Tomakomai Power Plant; if a serious malfunction of the power generation equipment causes an extended operational shutdown, revenue from this business could be significantly impaired. The Group strives to maintain stable operations through equipment renewal and regular maintenance, but the risk of unforeseen equipment failure remains.

Due to the nature of its business, the Group holds a large amount of customer personal information, and if an information leak were to occur, it could severely damage corporate credibility and adversely affect business results and financial condition. The Group works to reduce this risk by regularly conducting information security knowledge checks and establishing a system in which only those who pass may use information terminals.

A decline in the market value of held assets or a deterioration in future cash flows could result in the recognition of impairment losses on fixed assets. Although the Group believes it has recorded the necessary impairment losses at this time, changes in the business environment could lead to additional impairment charges that affect business results and financial condition.