AVIX,Inc.

Outdoor installation of Pole Vision and Cyber Vision is subject to regulation under each prefecture's outdoor advertising ordinance, and operation of an outdoor advertising business requires notification to each prefectural governor. If legal regulations change, restrictions may arise on the installation and operation of products, potentially affecting business performance. There is no specific description of current countermeasures.

Video and information distribution in the Digital Signage-related Business and SNS operations in the Value Creating Business depend on communication network systems. If communication is disrupted due to a natural disaster or accident, or if malfunctions occur in the hardware/software managed and operated by the Company, business activities may be impeded, potentially affecting business performance. There is no specific description of redundancy or recovery measures against system failures.

Purchase transactions for LED display units manufactured in China are conducted in foreign currency, and fluctuations in exchange rates directly affect business performance and financial condition. Suppliers are limited to three companies, and if the trading relationship deteriorates or procurement of LED display units becomes difficult, business continuity could be impaired. The Company states that it strives to maintain continuous and favorable trading relationships, but there is no specific description of alternative procurement measures.

If changes occur in China's political system or if labor costs rise, this could affect the procurement system for LED display units. Because suppliers are concentrated among three companies in China, there is vulnerability to geopolitical risk and changes in China's domestic economic environment. There is no description of specific risk-hedging measures or securing of alternative procurement sources.

Goodwill arising from the succession of part of the business of Proterus, Inc. through an absorption-type company split in November 2021 amounted to ¥276,842 thousand at the end of the fiscal year under review, accounting for 7.5% of total assets. Although goodwill is amortized each period, if signs of impairment are recognized, the Company will consider recognizing an impairment, and if an impairment loss occurs, it could materially affect business performance. Although impairment testing is conducted periodically, there is no description of specific countermeasures.

If unforeseen events occur domestically or overseas—such as natural disasters including typhoons, earthquakes, and tsunamis, social unrest due to disease or pandemics, economic crises caused by turmoil in financial and capital markets, or political instability such as riots or terrorism—this could affect the business performance of the Company's group. There is no description of specific countermeasures such as a business continuity plan (BCP).