WASH HOUSE CO.,LTD.

If land prices rise or land tax systems are revised, thereby increasing the options available to landowners, it may become difficult to secure land for opening directly operated stores. There is also a risk that soaring rental rates could make it difficult to lease land where profitability can be expected. Store openings that prioritize the role of an advertising tower may result in lower profitability compared to other stores, and changes in the ratio of FC stores to directly operated stores may affect operating results.

In FY2025 (ending December 2025), sales from the FC business accounted for 14.2% of total sales. If the development of new FC owners does not proceed as planned due to domestic and overseas economic trends, or if existing FC owners' motivation to open new stores declines, this may affect operating results and financial condition. As with directly operated stores, FC stores also face the risk of difficulty securing store sites due to rising land prices or tax system revisions. The Company seeks to maintain relationships with FC owners through package sales and, after store opening, through operational management and detergent supply.

Numerous self-laundry stores exist nationwide, and there are also competitors that aim to sell equipment and build brands. If competition with rival companies intensifies or new entrants emerge, this may affect the business and operating results. The Company seeks to differentiate itself through staffed support via a remote-control system, cashless payment via the WASH House App, and a centralized store management approach.

As of the end of FY2025 (ending December 2025), the Company had 107 full-time employees, a small organization, and its internal management structure remains commensurate with this scale. It is unclear whether the Company can respond organizationally in an appropriate and sufficient manner amid business expansion and diversification of operations. If staff reinforcement does not proceed as planned or if existing personnel leave the Company, organizational efficiency may decline, potentially affecting performance and business development. The Company intends to further strengthen its internal management structure going forward.

The Company anticipates expanding into fields related to its current businesses, but it is expected to take a certain amount of time before stable sales and profits are recorded, which may temporarily lower the overall profit margin. There is no guarantee that new businesses will proceed as planned, and unexpected changes in the environment may prevent the Company from achieving the expected results. If these risks materialize, they may affect the Company's operating results.

The self-laundry equipment used by the Group primarily consists of washers and dryers manufactured by AQUA Corporation, and the Group has requested modifications to proprietary specifications. The management cameras and remote-control systems are also designed to be compatible with AQUA Corporation's specifications. If, due to a change in that company's management policy or other factors, the supply of equipment with proprietary specifications can no longer be secured, this may have a material impact on the business and operating results. The Company believes stable supply is ensured due to the cooperative relationship dating back to its founding, but no alternative procurement measures are specified.

Self-laundry sales are highly susceptible to seasonal factors, particularly weather. When there are few rainy days, or in the case of heavy rain caused by typhoons, demand may decrease, potentially reducing sales at directly operated stores. There is also a risk that if water supply restrictions or outages result in an insufficient supply of water needed for washing, sales may decline due to the suspension of washing machine operation. These external factors are beyond the control of the Group and constitute a source of seasonal fluctuation in performance.

At the end of the current consolidated fiscal year, the balance of security deposits was ¥243 million (5.5% of total assets), paid to lessors in connection with the leasing of sites for directly operated stores. There is a risk that part or all of these deposits may become unrecoverable due to the financial failure of the depositee or other reasons, and that they may not be returned in the event of early termination before the expiration of the contract period, depending on the contract terms. The proportion relative to total assets, at 5.5%, is of a certain scale, raising concerns about the impact on financial condition.

The Group's finance business is subject to the Money Lending Business Act, and interest rates are subject to the Investment Deposit and Interest Rate Act and the Interest Rate Restriction Act. If these laws are amended or new regulations are introduced, this may affect performance. Changes in laws and regulations are a factor beyond the control of the Group, and no specific countermeasures are disclosed in the annual securities report.