AlphaPurchase Corporation

If geopolitical risks such as a Chinese blockade of Taiwan materialize, the resulting halt in supply of high-end semiconductors produced in Taiwan could paralyze global supply chains, potentially having a material impact on the operating results and financial condition of the Group. Japan, given its geographic proximity, also faces a high risk of being directly affected by the fallout of such conflicts. As countermeasures, the Group is securing surplus funds and promoting the maintenance of low fixed costs and the conversion of costs to variable costs.

Since the Group's business model is centered on an e-commerce platform, hardware or software failures, network outages, incidents at external cloud providers, or cyberattacks/ransomware that cause system shutdowns, destruction, or information leaks could lead to temporary business suspension and loss of service credibility. The Group addresses this through ISMS (ISO/IEC 27001) certification, annual third-party security assessments, and advance consideration of measures for launching backup systems.

If a major supplier or partner company with a large transaction volume suddenly terminates a contract or suffers order/shipment stoppages due to ransomware damage, the Group could also be forced to immediately halt order receipt and shipments, potentially significantly affecting short-term performance. Since switching to alternative products or suppliers requires a certain amount of time, short-term impact is unavoidable. The Group works to mitigate this impact by securing multiple procurement routes and establishing a system for introducing alternative suppliers.

Sales to ASKUL accounted for 10.9% of net sales (FY2025, ended December 2025), and together with the Japan McDonald's group, there are only two customer groups exceeding 10% of net sales. There is a possibility that ASKUL could switch to a business flow in which it procures directly from suppliers without going through the Company, and if such a termination occurs, it could have a material impact on operating results and financial condition. Although close integration between IT systems keeps the churn rate low, this risk cannot be entirely eliminated.

In the FM Business, the Company sometimes receives orders for large-scale projects exceeding ¥100 million, such as interior construction work for business hotels, and since payment is made after completion and inspection, accounts receivable can reach amounts in the hundreds of millions of yen. If a client company becomes insolvent, the resulting bad debt risk could also reach amounts in the hundreds of millions of yen, potentially affecting operating results and financial condition. While the Company exercises utmost care in credit management and past bad debts have been extremely infrequent and small in amount, future occurrences cannot be entirely ruled out.

The Company holds and manages confidential information and personal information of business partners, and if an information leak occurs due to intentional act or negligence by officers or employees, this could result not only in a loss of credibility but also in claims for damages from affected parties, and the investigation process itself could significantly impact ordinary business operations. The Company strives to prevent this through building a management system that includes outsourced parties, establishing various regulations, and providing ongoing training for officers and employees, but the risk cannot be entirely eliminated.

While DX talent with excellent consulting capabilities is essential for acquiring new customers, and highly skilled IT talent is essential for improving back-office IT productivity, the hurdles to hiring and retaining excellent DX talent are rapidly rising amid industry-wide DX promotion. If the Company is unable to secure sufficient appropriate personnel or if current employees resign, this could affect operating results and financial condition. The Company is promoting enhanced recruiting activities and expanded education and training.

The majority of the Group's intangible fixed assets consists of internally developed software, and impairment or write-off may become necessary if a business falls into deficit and cash recovery becomes persistently difficult, or if major specification changes during agile development lead to disposal. Similar risk arises if a sudden change in market or competitive conditions causes expected usage or investment recovery prospects to be lost. The Group invests in development while carefully assessing marketability and other factors.

Since there are areas where the Company competes with specialized providers of procurement management systems, it must continue to develop and offer a platform of comparable standard, and in recent years, rising IT system development and operating costs have increased fixed costs and raised the break-even point. If sales growth is insufficient to offset the increase in fixed costs, this could affect operating results and financial condition. The Company aims to improve profitability through increased sales via aggressive sales expansion.

ASKUL is the Company's parent company, holding 61.43% of voting rights, and has decision-making and veto power over ordinary resolutions such as the election/dismissal of directors and disposal of surplus and dividends, which could influence the Company's decision-making. In addition, ASKUL may change its transaction routes to a business flow that bypasses the Company, and such changes in important business relationships could affect performance. The Group seeks to ensure independence through the appointment of two independent outside directors, related party transaction management regulations, and the board resolution process.