ReYuu Japan Inc.

The company has recorded operating losses continuously since FY2022 (ended April 2022), and events exist that raise material doubt about the going concern assumption. In the fiscal year under review (FY2025, ended October 2025), net sales expanded to ¥6,259 million (from ¥4,731 million in the prior period), and operating profits of ¥15 million in Q3 and ¥26 million in Q4 were achieved, leading to the judgment that the material uncertainty has been resolved. However, profitability has been limited to the most recent quarters, and continued attention to the stability of the financial base remains necessary.

Of the ¥6,259 million in net sales for FY2025 (ended October 2025), the reuse-related business accounted for ¥6,140 million (98.1% of the composition), indicating extremely high dependence on this business. If the price advantage of reuse devices is undermined by rising procurement prices due to exchange rate fluctuations or by price cuts on new devices by manufacturers and telecommunications carriers, this could have a direct and material impact on overall business performance.

In FY2025 (ended October 2025), net sales to Internet Initiative Japan Inc. were ¥1,632 million (26.1% of net sales) and net sales to Optage Inc. were ¥763 million (12.2%), with the top two customers accounting for approximately 38% of net sales, representing a high degree of concentration. If these major customers change their purchasing policies or reduce transactions, this could materially affect the company's net sales and earnings.

Procurement of reuse mobile devices depends on purchases from domestic and overseas partner companies and buybacks from end users, but there is no environment guaranteeing inexpensive, stable, and continuous supply. If dependence on procurement from specific companies, exchange rate and international situation fluctuations, rising procurement prices due to soaring resource prices or semiconductor shortages, and a significant decline in market circulation volume due to the spread of trade-in programs by telecommunications carriers occur together, it may become difficult to secure devices at reasonable prices, hindering sales.

Demand for reuse mobile devices relies on a price advantage premised on the price differential with new devices. If device manufacturers or mobile network operators implement significant price reductions on new devices, the price advantage of reuse devices could be significantly undermined, risking a decline in demand. In addition, if higher procurement prices resulting from reduced circulation volume are passed through to sales prices, this could also reduce net sales and earnings through a decline in demand.

The company is actively expanding product procurement and sales in overseas markets, and when the yen depreciates, procurement costs from overseas rise, risking pressure on profit margins. In addition, if country risks such as political instability, economic fluctuations, or changes in laws and regulations in counterparty countries, or credit risks related to local companies materialize, overseas business strategies may not succeed as intended, potentially affecting business performance.

The company handles customers' personal information, including names, dates of birth, and addresses, in connection with device buybacks, online sales, and rental service applications, and stores such data on in-house servers and outsourced cloud environments. The company has obtained the Privacy Mark and ISO27001 certification (Mobile Refurbish Center (Refurbishment & Recycling Processing)) and works to strengthen management, but if an information leak occurs due to theft of documents or unauthorized network intrusion, this could affect business performance through damages lawsuits, compensation claims, and loss of public trust.

The company is subject to regulation under a wide range of laws and guidelines, including the Telecommunications Business Act, the Secondhand Articles Dealers Act, the Act on Prevention of Unauthorized Use of Mobile Phones, the Act on Specified Commercial Transactions, and the Personal Information Protection Act. If these legal regulations are revised in the future, or if the company violates such regulations, this could affect business performance through restrictions on business operations or administrative sanctions.

The company is considering initiatives related to crypto assets as a new area of growth, but this field inherently involves uncertainties such as market conditions, price volatility, and institutional and regulatory developments. Depending on the content and progress of such initiatives, this could affect future business operations and financial condition; the company intends to proceed carefully, separating the potential impact from its existing businesses.

If an outbreak of infectious disease occurs, business activities may be restricted, reducing the procurement and sale of reuse mobile devices and thereby decreasing both net sales and earnings. In the past, procurement difficulties caused by the COVID-19 pandemic were a factor in the operating loss recorded in FY2022 (ended April 2022), and a recurrence of similar circumstances could have a significant impact on business performance.