TSUKURUBA Inc.

The Group depends on the secondary housing distribution market through its cowcamo Business, and a prolonged downturn in the real estate market due to economic deterioration or other factors may affect operating results. Although the membership accumulation model provides a certain level of resilience to market fluctuations, responding to an economic downturn exceeding expectations would be difficult. In addition, a consumption tax hike, a significant rise in housing loan interest rates, or the abolition of preferential tax measures related to real estate could also reduce customers' willingness to purchase.

The Group's competitive advantage may be undermined by new entrants from technologically advanced companies into its business domain, or by the entry into the Japanese market of overseas companies with similar business models. While the Company is strengthening its competitiveness through enhanced member relationships and the development of new technologies and services, if the moves of competitors exceed expectations, this could affect operating results and financial position. Competition with existing real estate portal operators and brokerage operators also remains an ongoing risk.

The Group conducts business based on internet-related technologies and operates in a market environment where the pace of technological innovation and changes in customer needs are extremely rapid. If the Company fails to respond promptly when innovative technologies are developed, or if it incurs substantial additional system development costs to respond, this may affect operating results and financial position. The Company is working on developing cutting-edge technologies such as data analytics, AI adoption, and support for diverse devices, as well as securing talented personnel.

The Group's services are provided via the internet, and a system failure caused by a natural disaster, accident, unauthorized access, or other cause could result in direct damage as well as a decline in service reliability. In addition, the Group handles business partner information, property information, and personal information, and if unauthorized access from outside or intentional or negligent acts by related parties result in an information leak, this could lead to claims for damages and a loss of credibility. As countermeasures, the Company is implementing system redundancy, vulnerability testing, and the establishment and operation of an information security management system.

Expansion of the cowcamo Business requires planned recruitment and development of agent personnel, and if recruitment and development do not proceed as planned due to a tight labor market or organizational factors, business performance may deteriorate. The Company is working to standardize and improve the efficiency of agent operations through the development of proprietary business tools, thereby building a system that reduces dependence on individual personnel, but intensifying competition for recruitment remains an ongoing risk. Difficulty in securing technical personnel, including software engineers, could also lead to delays in development schedules and increased costs.

The Group procures working capital through borrowings from financial institutions, and if operating results or financial position deteriorate or financial instability occurs, the Group may be unable to secure necessary funds on reasonable terms, resulting in difficulty in cash flow management. Some of the overdraft agreements and other contracts the Group has entered into include financial covenants, and any violation of or conflict with these covenants could result in the loss of the benefit of the term and affect the financial position and cash flow. Furthermore, if there is a significant change in future interest rate trends, an increase in interest expenses could affect operating results.

For In-house Planned Products, the Company may bear liability for non-conformity with contracts to purchasers, and if a serious defect requiring substantial repair costs occurs in a relevant property, this may affect operating results and financial position. In addition, if sales performance deteriorates after property acquisition and real estate market prices decline, there is a risk of a write-down in the value of inventory assets. Since brokerage transactions account for the majority of business, the overall risk is limited, but the risk may increase as In-house Planned Products expand.

The Group's business is premised on licenses and permits based on laws and regulations such as the Building Lots and Buildings Transaction Business Act and the Banking Act, and if the enactment or revision of new laws and regulations subjects the business to new regulatory requirements, this may affect operating results and financial position. If the real estate brokerage license (Tsukuruba Inc.: valid until January 23, 2030; Tsukuruba Box Inc.: valid until December 7, 2027) is revoked or its renewal is denied, this would seriously impede business activities. A violation of the fair competition code concerning real estate representations would also lead to a decline in customer trust.

If officers and executive employees with specialized knowledge, skills, and experience, including the Representative Director, resign or retire, and it becomes difficult to recruit successors, this may affect business development. In addition, if the Company is unable to sufficiently secure and develop talented personnel when needed, or if personnel turnover progresses, this may impede ongoing business expansion and the promotion of new businesses. The Group recognizes continuous recruitment, development, and retention of personnel as an important issue, but the disclosure of specific countermeasures remains limited.

The Group has issued stock options (share subscription rights) to officers and employees, and if these rights are exercised, the share value and voting rights ratio of existing shareholders may be diluted. As of the filing date of this document, the number of potential shares from share subscription rights and others (excluding treasury share subscription rights) was 996,533 shares, representing 8.0% of the total of 12,396,233 shares, which is the sum of the total number of issued shares of common stock and the number of potential shares. In addition, the exercise of the right to request acquisition in exchange for common stock attached to the Class A shares may also dilute share value and voting rights ratio.