Waqoo Inc.

In related party transactions with Japan Medical & Beauty Co., Ltd., a company wholly owned by a director of the parent company SBC Medical Group Co., Ltd., there is a risk that transactions may not be conducted on an arm's-length basis or that inappropriate revenue recognition may occur. The Group conducts deliberation and resolution at Board of Directors meetings and checks by the Board of Corporate Auditors and internal audit, but if governance fails to function properly, this may affect the Group's business and operating results.

In the beauty and cosmetics industry, which is the domain of the Group's main businesses, the competitive environment is becoming increasingly severe due to intensifying competition in the mature domestic market, the expanding influence of global competitors, and new entrants from other industries. The Group seeks to address this through improvements in quality and service, but if it fails to respond appropriately to the competitive environment, this may affect its financial position and operating results.

The Group holds personal information in the course of providing services and is subject to obligations under the Act on the Protection of Personal Information. If personal information is leaked outside the company due to unauthorized external access or unforeseen circumstances, this may affect the Group's business, operating results, and social credibility. The Group ensures thorough management through the establishment of information security regulations and regular internal training for all employees.

The Group's business depends on the internet environment, and if unforeseen system trouble occurs due to hardware malfunction, human error, computer viruses, cyberattacks, natural disasters, or other causes, this could disrupt business activities and affect operating results. The Group implements appropriate security measures, but these do not guarantee complete prevention.

The blood processing services offered in the Medical Support Business may not see the expected increase in users due to the development of new treatment methods, drug discovery, and other factors. There is also a risk that the enactment, amendment, or tightening of related laws and regulations, such as the Act on the Safety of Regenerative Medicine, could slow the growth in the number of treatments performed at medical institutions. If these risks materialize, they may affect the Group's business development and operating results.

The Group is subject to various laws and regulations, including the Act on Pharmaceuticals and Medical Devices, and in December 2013 received a corrective action order from the Consumer Affairs Agency for violation of the Act against Unjustifiable Premiums and Misleading Representations in connection with the sale of health foods. If future changes to laws and regulations, the enactment of new regulations, or administrative sanctions arising from differences in interpretation with regulatory authorities occur, this could restrict business activities and have a material impact on operating results. The Group strives to prevent recurrence through pre-publication review of advertisements and strengthening of its legal affairs framework.

The Group outsources manufacturing of its EC products to external contract manufacturers, and its dependence on one primary contractor (Hoshi Chemicals Co., Ltd.) is relatively high. If operations become impossible or contracts are terminated due to natural disasters, fires, labor disputes, infectious diseases, or other causes, this could disrupt the smooth supply of products and have a material impact on operating results. The Group seeks to reduce this risk by maintaining good relationships with contractors and establishing management systems.

The Group handles cosmetics, and if doubts about safety arise in the general market regarding products or raw materials that are identical or similar to those handled by the Group, reputational damage may occur, affecting the Group's business and operating results. The Group complies with relevant laws and regulations and implements strict management based on its own standards, but reputational damage caused by external factors cannot be completely controlled.

The majority of the D2C Business's sales are accounted for by two products, the "HADA NATURE Cleansing" and the hair-growth carbonated head spa "sodatel," resulting in a continued high degree of dependence on specific products. If sales volume of these products declines significantly due to poor sales performance, this may affect the Group's financial position and operating results. Diversifying the product portfolio remains a challenge.

The Group primarily procures working capital through borrowings from financial institutions, and as of the end of September 2025, interest-bearing debt accounted for 22.9% of total assets. In a period of rising market interest rates, an increase in interest expenses and other costs may affect operating results and financial position. The Group's policy is to diversify its funding methods and strengthen its equity capital.