AUTO SERVER Co.,LTD.

The domestic used car distribution market is mature, and there is a risk that ASNET's relative value could decline due to entry from other industries or the emergence of new distribution formats. If the company fails to maintain or expand its market share, this could have a significant impact on business performance. While the company seeks to maintain its competitive advantage through proactive sales activities and enhanced functionality, it is judged that the impact would be substantial if this risk materializes.

The company concentrates its management resources on the ASNET business, resulting in an extremely high degree of dependence on a single business. In addition, auction venues operated by USS Co., Ltd. (USS) accounted for 55.6% of the transaction volume in the Auction Proxy Service (fiscal year ended December 2025), and if the contract with USS were terminated or its terms changed, this could have a significant impact on business performance. The company judges the risk of contract termination to be low given the mutually beneficial business partnership, but the structure of dependence continues.

ASNET is a membership-based internet service that handles used car information, including members' personal information, and there is a risk that unauthorized external access leading to information leakage could disrupt business operations. The company addresses this through obtaining ISO27001/ISMS certification (certification number J0322) and Privacy Mark certification (certification number 10825169) and building an information security framework, but it is judged that the impact would be substantial if this risk materializes.

The company has established a two-representative-director system, but if a representative director becomes unable to perform their duties for some reason and the management structure changes significantly, this could have a significant impact on business performance. The current policy is to formulate a succession plan through deliberation by the Nomination Committee and the Board of Directors, but the development of this framework is still in progress. It is judged that the impact would be substantial if this risk materializes.

Regarding fixed assets, including goodwill recorded through the merger associated with the 2016 MBO, if impairment occurs, this could significantly damage the company's financial position and have a substantial impact on business performance. The company assesses indications of impairment each period at a larger unit that includes goodwill, and as of the filing date, there are no indications of impairment and none are expected to materialize. While the likelihood of this risk materializing is extremely low, the degree of impact is judged to be substantial.

If economic and political conditions, exchange rate fluctuations, or a shortage of new car supply cause a decline in demand for used cars or price volatility, this could adversely affect the transaction volume and revenue of the ASNET business. In particular, when new car supply decreases, the volume of trade-in vehicles in circulation shrinks, causing used car prices to surge, while continued yen depreciation and the resulting rise in prices reduce consumer demand. As a countermeasure, the company continuously monitors market trends, but the structure of high dependence on external factors remains unchanged.

The company conducts its business using computer systems and networks, and if an unexpected failure disrupts service provision or business operations, this could affect business performance. The company has taken measures such as building redundant and multiplexed systems and establishing internal control and management frameworks through IT governance, but both the likelihood of occurrence and the degree of impact are judged to be moderate.

Representative Director Toshihito Hagiwara and the asset management company Asahi Holdings Co., Ltd. hold 65.82% of the total issued shares, and as of December 31, 2025, the tradable share ratio remains at only 32.46%. If liquidity declines, this could lead to stagnant trading and worsening supply-demand balance in the market. The company plans to improve the situation by requesting sales from existing shareholders and increasing the number of tradable shares through the exercise of stock acquisition rights, but both the likelihood of occurrence and the degree of impact are judged to be moderate.

Due to the declining birthrate, aging population, and intensifying competition for talent, if the company is unable to secure and develop excellent personnel as planned, or if personnel leave for outside opportunities, this could affect business performance. The company conducts regular recruitment activities and promotes temporary staff to permanent positions, but responding to structural changes in the labor market remains a challenge. Both the likelihood of occurrence and the degree of impact are judged to be moderate.

In the Auction Proxy Service, there is a business practice of advancing successful bid payments on behalf of ASNET members, and if such amounts become uncollectible, bad debt write-offs occur. In the fiscal year ended December 2025, the company recorded a bad debt loss of ¥2,118 thousand, and this risk exists on an ongoing basis as transaction volume increases. The company addresses this through vehicle recovery and resale to offset losses and through debt collection efforts, but the likelihood of this risk materializing is judged to be moderate.