AXXZIA : 【Delayed】Notice Regarding Acquisition of Shares in Huit Laboratories, Inc.

	March 15, 2022
Company name:	AXXZIA Inc.
Representative:	Dan Taku, president	and
	representative director
	Securities code: 4963,	TSE
	Mothers
Contact person:	Yasuhito Fukui, director
	Telephone: [phone]

Notice Regarding Acquisition of Shares in Huit Laboratories, Inc.

AXXZIA Inc. (the "Company") announces that, during a meeting held on March 4, 2022, its Board of Directors reached the decision to acquire all shares in Huit Laboratories, Inc., converting the latter into a subsidiary. All shares of Huit Laboratories are currently held by Senshukai Co., Ltd., and the Company's Board of Directors has resolved to conclude a share transfer agreement with Senshukai that will facilitate the consignment of shares in Huit Laboratories to the Company.

1. Reasons for acquisition of shares

Since its establishment, the AXXZIA Group has operated in accordance with its corporate philosophy: "Our company name has been created from the word of XX (female's chromosome) and ASIA(=AZIA). We will present 'Asian Beauty' with innovative and passionate attitude from Japan to the world." AXXZIA recognizes that its corporate group is regarded as a nicher within the industry, and it accordingly maintains a basic nicher strategy of discovering market segments through which it can leverage its strengths and devote management resources. Through this strategy, the company has become a leader in a variety of local market segments, thereby establishing a competitive advantage.

Drawing strength from this basic strategy and competitive advantage, the Company targeted a further breakthrough by listing on the Mothers section of the Tokyo Stock Exchange on February 18, 2021 and raising funds through a public stock offering. The most substantial purpose of this public offering was the establishment of a capital investment fund (2.0bn yen) for the construction of a new plant. To date, the Group has developed cosmetics and dietary supplements for thematically niche markets (anti-aging care, eye care, etc.) while simultaneously developing these markets. The Company reached the decision to establish a new plant because it believes that it must rapidly develop, manufacture, and launch a wide variety of products in small quantities to ensure that it can continue to introduce thematic products to niche markets in the future.

At the time of this release, the Company has reached the decision to allocate the capital investment fund it established for the construction of this new plant to the acquisition of shares in Huit Laboratories, thereby shortening time required for the construction and launch of the plant and reducing risks associated with securing manufacturing expertise and human resources before the launch. The total funds used to complete this acquisition will be less than the amount the Company planned to use for the establishment of the plant when it conducted its initial public offering. Accordingly, this decision will enable the Company to reduce investment expenditures and secure opportunities to invest in new research and development activities and recruitment of human resources.

Huit Laboratories owns a cosmetics and quasi-pharmaceutical product manufacturing plant (the "Yatsugatake Plant"), as well corresponding land and structures, in Hokuto, Yamanashi Prefecture. This plant's manufacturing facilities are comparable to those that the Company had originally planned

to construct when it made the decision to build a new plant. Located within a rich natural environment, the Yatsugatake Plant uses natural Yatsugatake water pumped directly from the plant grounds as the base for its products. Huit Laboratories is engaged in the manufacture, wholesale, and online and catalog sale of cosmetics and quasi-pharmaceutical products, including its own brand of basic skincare products, LisBlanc. Furthermore, Huit Laboratories operates an OEM business that is underpinned by its extensive track record in the area of production.

The acquisition of all shares in Huit Laboratories will enable the AXXZIA Group to assemble skincare brands of different price ranges that can be separated and classified by sales channel and customer base. Additionally, this acquisition will allow the Group to utilize Huit Laboratories' manufacturing facilities, thereby speeding up its product development. Furthermore, the acquisition will enable the Group to leverage the expertise that Huit Laboratories has developed through its OEM business to quickly develop thematic cosmetics and quasi-pharmaceutical products that will form new pillars of its business strategy.

In light of the factors indicated above, the AXXZIA Group believes it has high affinity with Huit Laboratories and can collaborate with the latter to conduct mutually beneficial management. By generating synergy with Huit Laboratories, the Group will seek to maximize its corporate value and facilitate future growth.

2. Outline of the subsidiary to be transferred (Huit Laboratories, Inc.)

(1)	Name:	Huit Laboratories, Inc.
(2)	Location:	725-1 Shibusawa, Nagasaka-cho, Hokuto City, Yamanashi
(3)	Name and title of	Hiroyuki Suzuki, president and representative director
representative:
(4)	Business:	Manufacture	and sale of	cosmetics and	quasi-pharmaceutical
products, subcontracted manufacturing, etc.
(5)	Capital:	100mn yen
(6)	Established:	July 1, 2016
	Major shareholders
(7)	and their ownership	Senshukai Co., Ltd. (100%)
	ratios:
	Relationships	Capital:		None
(8)	between the	Personal:		None
Company and Huit	Business:		None
	Laboratories:
(9)	Operating results and financial standing of Huit Laboratories over the past three years
	Accounting period:	FY12/19		FY12/20	FY12/21
(JPY)	Net assets:		753mn		759mn	727mn
↓	Total assets:		901mn		930mn	858mn
	Net assets per share:		75,330		75,982	72,700
	Net sales:		782mn		753mn	717mn
	Operating income:			17mn		30mn	11mn
	Ordinary income:			17mn		31mn	13mn
	Profit attributable to			11mn		18mn	(9mn)
	owners of parent:
	Net income per share:		1,198		1,852	(981)

3. Outline of the company from which shares will acquired

(1)	Name:	Senshukai Co., Ltd.
(2)	Location:	1-6-23, Doshin, Kita-ku,Osaka-shi, Osaka
(3)	Name and title of	Kenji Kajiwara, president and representative director

	representative:
(4)	Business:	Online and catalog sales, etc.
(5)	Capital:	100mn yen
(6)	Date of	November 9, 1955
establishment:
(7)	Net assets:	33,202mn yen (FY12/21)
(8)	Total assets:	52,476mn yen (FY12/21)
		East Japan Railway Company (12.18%)
		Brastsheave Co., Ltd. (7.78%)
		Toppan Inc. (3.92%)
	Major shareholders	Sumitomo Mitsui Banking Corporation (3.55%)
(9)	and their ownership	Dai Nippon Printing Co., Ltd. (3.22%)
ratios*:	The Master Trust Bank of Japan, Ltd. (Trust account; 2.46%)
		Nippon Life Insurance Company (1.69%)
		MUFG Bank, Ltd. (1.61%)
		Sumitomo Mitsui Trust Bank, Limited (1.50%)
		Yuugengaisya Sauzan (1.26%)
		Capital:	None
	Relationships	Personal:	None
(10)	between the	Business:	None
Company and	Relationships
	Senshukai:	with affiliated	None
		parties:

Note: Information regarding major shareholders and their ownership ratios is current as of June 30, 2021.

4. Number of shares to be acquired, the acquisition price, and the status of the Company's shareholdings prior to and following the acquisition

	Number of shares	0 shares
(1)	held before the share	(No voting rights)
	transfer:	(0% of voting rights owned)
(2)	Number of shares to	10,000 shares
be acquired:	(10,000 voting rights)
(3)	Acquisition price:	860mn yen for common shares in Huit Laboratories, Inc.
	Number of shares to	10,000 shares
(4)	be held following the	(10,000 voting rights to be held)
	share transfer:	(100% of voting rights)

5. Schedule

1. Date of resolution

	adopted by the Board	March 4, 2022
	of Directors:
(2)	Date of share	March 4, 2022
	transfer agreement:
(3)	Scheduled date of	April 1, 2022
	share transfer:

6. Future outlook

The Company projects that this acquisition (and resulting goodwill) will have negligible impact on its future business performance.