BuySell Technologies Co.,Ltd.

Against the backdrop of an expanding reuse market, new entrants are increasing, and competition is intensifying due to competitors with similar business formats and entry by major companies. Intensified competition may make it difficult to secure the quality and quantity of purchased goods, which could directly affect the Group's sales and earnings. While the Group intends to continue its differentiation strategy and response to customer needs, there is also a coexisting risk of a future slowdown or contraction in market growth.

The Group is subject to regulations such as the Antique Dealers Act, the Act on Specified Commercial Transactions, the Act on Prevention of Transfer of Criminal Proceeds, and the Act on the Protection of Personal Information. Violations could result in business suspension, revocation of licenses, or penalties imposed by regulatory authorities. In particular, revocation of the antique dealer license would have a material impact on the continuity of operations. The Group has established a compliance framework including internal training, a dedicated compliance department, approval calls, and follow-up calls, but the risk of legal violations cannot be completely eliminated.

Technological advances have made it easier to produce sophisticated counterfeit goods, increasing the difficulty of authenticity verification for the Group, which handles a large volume of brand-name and high-priced items. There is also an ever-present risk of unintentionally acquiring stolen goods when purchasing precious metals, brand-name items, and the like; if discovered, the Group is obligated to return such items to the victim without compensation. The Group has implemented measures such as authenticity verification manuals, multi-person check systems, and cooperation with police authorities, but complete prevention is extremely difficult, and a large-scale incident could lead to a decline in trust and deterioration in business performance.

The Group holds a large amount of customer personal information in the course of purchasing and EC sales operations, and a leakage could result in loss of trust and payment of damages. While the Group has implemented security measures such as establishing internal regulations, employee training, and access restrictions, the risk of leakage due to cyberattacks or human error cannot be completely eliminated.

The Group centrally manages its marketing, call center, product management, and sales functions through business systems, and a system failure would disrupt the entire service provision. Natural disasters, computer viruses, unauthorized access, and excessive load could all cause such failures. Although measures such as use of cloud servers, backup systems, and external access restrictions have been implemented, the impact of a failure on business performance and trust would be extensive.

The Group achieves efficient operations by consolidating logistics and product management functions into warehouses, but a large-scale disaster such as an earthquake or fire could result in the loss of goods and require significant time and cost to restore facilities. Due to the consolidated facility structure, damage to a single site poses a high risk of spreading to the entire business, potentially having a major impact on performance.

Securing and developing specialized personnel, including appraisers, is essential to the Group's business expansion. If sufficient personnel cannot be secured amid intensifying competition, or if development plans are delayed, the volume of goods purchased may become insufficient, affecting business performance. As the scale of operations expands, the number of personnel required also increases, and rising recruitment and training costs are anticipated.

The Group has positioned M&A as an important measure in its inorganic growth strategy, but if the market or competitive environment changes significantly after an acquisition, the business plan may not be achieved. Where goodwill arises from an M&A transaction, it is premised on stably securing earnings power exceeding the amortization amount of the goodwill; however, there is a risk of goodwill impairment due to changes in the environment. The Group's policy is to proceed with M&A only after thoroughly examining the target company's business performance, financial condition, and risk profile.

The value of products handled by the Group can decline significantly in a short period due to economic obsolescence caused by changing trends or fluctuations in precious metal bullion prices, creating a risk of sharp swings in sales, particularly for high-priced items. Sales trends are also greatly affected by the presence or absence of popular products, so sudden changes in the external environment directly affect business performance.

Pledges have been established on shares equivalent to 46.56% of the total issued shares (14,376,134 shares, as of December 31, 2025), with shares held by Representative Director Kyohei Iwata, Director Hideki Yoshimura, and Midas A and Midas No. 2 pledged as collateral to multiple financial institutions. If certain events such as default occur, the pledged shares could be sold, and if a large-scale sale is carried out or becomes apparent, it would have a material impact on the market price of the Company's shares. In addition, a change in the holding policy of Mr. Hideki Yoshimura, who effectively holds 35.5% of voting rights, and any resulting sale of shares, could also affect the share price.