Landix Inc.

The real estate industry's business performance is closely linked to macroeconomic factors such as economic trends, interest rate levels, and land prices, and fluctuations in market interest rates, consumption tax increases, revisions to real estate taxation systems, and changes in the psychology of prospective home buyers may affect business performance. In addition, increases or decreases in land purchase costs and construction costs directly affect operating results and financial condition. The Group has adopted a policy of striving to avoid occurrence and respond promptly, but details of specific countermeasures have not been disclosed.

As of the end of March 2026, inventories were recorded at ¥14,685,087 thousand, and there is a risk that in the event of sluggish sales, discounted sales could reduce profits, and valuation losses could occur on stagnant inventory. Since real estate sales are recognized as revenue at the time of property handover, fluctuations in handover timing due to market conditions or customer circumstances may also affect business performance. As a measure to mitigate inventory risk, the company has a policy of promoting discounted sales, which in itself could become a factor pressuring profits.

The company relies on borrowings from financial institutions for business funds such as property acquisition and construction, and in a rising market interest rate environment, increased interest payments could affect operating results. Since the primary source of funds for repaying interest-bearing debt is proceeds from property sales, there is a risk that delays in the timing of sales or sale amounts falling below expectations could disrupt cash flow. This structure creates financial vulnerability arising from both changes in the interest rate environment and the progress of sales.

The company is subject to legal regulations such as the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the City Planning Act, and the Construction Business Act, and revisions or abolition of related laws and regulations, the introduction of new regulations, or violations of legal compliance could have a material impact on operating results and financial condition. The real estate brokerage licenses of Landix Inc. (Tokyo Governor License (5) No. 81306, valid until October 25, 2027) and Grande Co., Ltd. (Tokyo Governor License (5) No. 82738, valid until January 16, 2029) are the principal licenses, and no grounds for revocation currently exist. Maintaining a legal compliance system is a prerequisite for business continuity.

Real estate procurement is conducted after prior investigation of factors such as location, area, ground conditions, surrounding environment, and price, but intensifying competition with other companies and rising land prices may make it difficult to procure properties as planned. If procurement falls short of plan, securing inventory for sale becomes difficult, directly affecting sales and profits. Intensifying competitive conditions in the real estate market pose the dual risks of rising procurement costs and difficulty in securing properties.

Under the Act for Promotion of Quality Assurance in Housing, the company bears defect warranty liability or liability for non-conformity with contracts for 10 years for the main structural parts and rainwater intrusion prevention parts of newly built houses, and for 2 years for used houses. If a serious defect is found in a sold property, the company, as the seller, may bear compensation and repair costs even if the cause lies with a third party, which could also damage its creditworthiness. This is also linked to litigation risk, and the occurrence of compensation costs could affect operating results and financial condition.

The company manages various business information, including personal information, on information systems, and is working on security measures such as the introduction of IT asset management tools. If unauthorized access or cyberattacks cause malfunction or shutdown of critical systems or leakage of confidential information, this could affect operating results and financial condition. In the case of personal information leaks, there is also a risk of damages claims and loss of social credibility.

Contingent accidents and natural disasters such as fires, earthquakes, tsunamis, wind and flood damage, and terrorism pose a risk of loss, deterioration, or damage to held properties, impairing their asset value. In addition, the occurrence of a disaster could dampen real estate investment sentiment, potentially affecting business performance through reduced demand. Due to the nature of the real estate business, the company is exposed to a dual structure of risk: physical damage to properties and deterioration in market sentiment.

If a significant decline in the profitability of cash flows or a significant decline in the market value of held fixed assets is recognized due to sudden changes in economic conditions or deterioration in financial conditions, the application of impairment accounting could affect operating results and financial condition. Recognition of impairment losses is a risk that could temporarily cause substantial deterioration in profit and loss, and tends to materialize during sudden changes in the economic environment. It is also a risk linked to the uncertainty of accounting estimates.

Stock acquisition rights have been granted as incentives to officers and employees, and the number of potential shares as of the end of the consolidated fiscal year under review was 42,000 shares (equivalent to 0.7% of the total number of issued shares of 5,695,586 shares). If new shares are issued upon exercise of stock acquisition rights, the value of shares held by existing shareholders may be diluted. The current dilution rate of 0.7% is limited, but the impact could expand depending on future granting activity.