IDOM Inc.

In the domestic used car market, approximately 8 million vehicles are traded annually through auto auctions, with prices fluctuating daily according to supply and demand. If unexpected market fluctuations such as sharp price increases or decreases occur, it may become difficult to secure appropriate gross profit, potentially affecting business performance and financial condition in the short term. The Company strives to reduce the impact of market fluctuations by building a purchasing and sales system that assesses the condition and market value of each vehicle.

While the used car market has a broad base of operators and has not become dominated by a few major players, intensifying competition could lead to changes in the purchasing environment or excess/shortage of inventory, making it difficult to secure appropriate profit margins and potentially affecting business performance and financial condition in the short term. The Company has adopted a policy of aiming to expand market share while maintaining appropriate sales prices.

Used cars have historically been positioned as a necessity for which a certain volume of distribution has been maintained regardless of economic trends; however, in an economic downturn, sales volume may decline in the short term, potentially affecting business performance and financial condition. The Company believes this represents a deferral rather than a disappearance of demand for used cars, but a short-term impact on business performance cannot be ruled out.

Although the Company considers factors such as surrounding population and competitive conditions when selecting store locations, if profitability deteriorates due to changes in the surrounding environment after a store opens, impairment of store-related assets may become necessary, potentially affecting business performance and financial condition. The Company, in principle, does not acquire land and incorporates early termination clauses into contracts to enable flexible store closures.

The Company procures funds necessary for opening large-format stores through borrowings from banks and other financial institutions, and an increase in interest-bearing debt may affect its financial base. If the fundraising environment deteriorates due to changes in financial conditions, it may affect business performance and financial condition. The Company comprehensively considers its store opening plans, funding needs, and operating cash flow, and strives to secure a stable revenue base and financial soundness.

If the Company is unable to secure the excellent personnel it expects due to intensifying competition for talent, or if recruitment costs increase, there may be a shortage of personnel necessary for business operations, potentially affecting business performance and financial condition. In addition to formulating personnel plans, strategic staff allocation, and renewing evaluation systems, the Company promotes the discovery and resolution of organizational issues through regular visualization and quantification of employee engagement.

In its used car sales business, the Company handles large amounts of customers' personal information, and if an external leak occurs, it may affect business performance and financial condition due to loss of credibility and legal liability. The Company has established internal regulations such as personal information management rules, information security rules, and confidential information management rules, and is working to strengthen its risk management system and thoroughly educate employees.

As the Company operates stores nationwide, if stores are damaged or business operations are suspended due to weather damage such as typhoons or heavy snow, or other natural disasters, it may affect business performance and financial condition. However, since inventory consists of vehicles that can be relocated, the Company expects that even if store relocation costs arise, they would remain within the scope of normal investment, and it implements necessary disaster prevention measures.

If reputational damage occurs regarding products, services, etc., it may affect business performance and financial condition through deterioration of the corporate image. The Company's basic policy is to respond promptly and appropriately based on facts, and it has established preventive measures as well as a cooperative structure with internal and external stakeholders in the event such issues arise.

The Company Group is subject to regulations such as the Secondhand Articles Dealers Act, the Road Transport Vehicle Act, and the Insurance Business Act, and if laws and regulations are revised or new legal regulations are established, it may affect business performance and financial condition due to constraints on business operations and increased compliance costs. The Company strives to mitigate legal risk through the establishment of a legal department, cooperation with retained attorneys, and necessary employee training.