CREAL Inc.

The Company is subject to regulations such as the Building Lots and Buildings Transaction Business Act, the Financial Instruments and Exchange Act, and the Real Estate Specified Joint Enterprise Act, and amendments to laws or the establishment of new regulations may require changes to business operations or result in new costs. In particular, CREAL is operated based on the Real Estate Specified Joint Enterprise Act, and tightening of regulations through amendments to this act could have a significant impact on business operations. The Company is not currently aware of any facts that would constitute grounds for revocation of licenses or permits, but if grounds for disqualification arise in the future, this could impede business continuity.

The Company holds large volumes of confidential information and personal information of customers, business partners, and CREAL members, and in the event of unforeseen external leakage, there is a risk of liability for damages and reputational damage. The Company has established a management framework including formulation of information management rules, appointment of a personal information management officer, and compliance with relevant laws and regulations, but complete prevention cannot be guaranteed.

CREAL is operated using external servers and communication network systems, and system downtime, unauthorized access, cyberattacks, and similar incidents may impede operations. Should problems occur, there is a risk of impact on business performance through reputational damage, and stable operation of the system, which underpins the platform business, is a prerequisite for business continuity.

Natural disasters such as earthquakes, storms, and floods, as well as the spread of infectious diseases, may significantly impair the value of properties held by the Company. Given consideration to demand at the time of sale, the properties held by the Group have a high proportion located in the Tokyo metropolitan area, and the impact on business performance would be particularly significant in the event of a large-scale disaster or deterioration of the regional economy in that area.

Changes in the real estate market driven by economic conditions, interest rate trends, and land price fluctuations may result in valuation losses on inventory assets, difficulty in property acquisition, and declining profitability. On the other hand, by raising funds directly from individuals through CREAL, the Company avoids reliance on bank borrowings and has established an investment framework that is not affected by changes in financial institutions' lending stance.

In CREAL's real estate specified joint enterprise funds, the Company makes subordinated investments equal to 5-20% of the total project amount, and if a loss occurs upon sale, the Company preferentially bears the loss up to the amount of the subordinated investment. In a downturn phase of the real estate market, the Company seeks to avoid losses by extending the operating period by up to 60 months, but if sales losses nevertheless occur frequently, this could affect business performance. Note that no project has incurred a sales loss from the commencement of the service through the end of the current consolidated fiscal year.

The Company procures quality projects from a wide-ranging network including brokerage firms, facility operators, general business corporations, and individual real estate owners, but if acquisition does not proceed as planned, this would affect business performance through a decrease in sales and various fee income. The Company addresses this by maintaining a broad network that avoids concentration on specific companies, but difficulty in acquisition tends to surface during phases of soaring real estate prices.

For operational assets such as hotels and elder care facilities, revenue and property value can fluctuate significantly depending on the capabilities and creditworthiness of the operating business. If problems arise in the operational framework or concerns emerge regarding the creditworthiness of an operator, this could affect business performance through the occurrence of uncollectible receivables or a decline in property value.

As of the end of March 2026, the number of registered CREAL members reached 130,000, and there has been no track record of undersubscription in the past; however, continued growth of the business going forward requires an increase in membership and continued expansion of GMV. If membership growth slows and falls below the level needed to support target GMV, this could lead to a decrease in listed projects or failure to establish funds, thereby affecting business performance.

The number of potential shares from stock acquisition rights granted as incentives to directors, corporate auditors, and employees is 905,500 shares (equivalent to 2.5% of the 36,066,200 total issued shares), and the value of existing shareholders' shares may be diluted upon exercise of these rights. The Company is considering continued use of the stock option system going forward, and dilution risk from additional grants will continue.