Home Position Co., Ltd.

At the end of the fiscal year under review (FY2025, ending August 2025), the balance of real estate held for sale and other items stood at ¥10,682,616 million (converted from thousand-yen units, approximately ¥10,683 million), accounting for approximately 73.8% of total assets, and inventory turnover period lengthened from 6.5 months in the previous fiscal year to 7.5 months. There is a risk of inventory becoming stagnant, discount sales, and recognition of inventory valuation losses due to declining customer demand or changes in preferences, and the Company recognizes that this risk could materialize within a few months depending on the external environment. As a countermeasure, the Company adjusts the level of real estate held for sale and other items by weighing both business opportunities and risks.

The balance of interest-bearing debt at the end of the fiscal year under review was ¥7,703,992 thousand (approximately ¥7,704 million), and further increases are expected going forward as business scale expands. The Company recognizes that if financial institutions change their credit policies due to deterioration in real estate market conditions or tightening of government regulations, fund procurement could become difficult, potentially affecting business results and financial position. As a countermeasure, in addition to maintaining close communication with financial institutions, the Company raised funds through a third-party allotment of new shares to KEIAI Star Real Estate Co., Ltd. in FY2025 (ended August 2025).

In the Detached House Sales Business, the Company's core business, land acquisition costs are susceptible to price fluctuations depending on economic trends and supply-demand conditions in the real estate market, and individual customers' purchasing intent is also affected by interest rate trends, tax systems, and other factors. Changes in these various conditions could simultaneously and adversely affect both land acquisition costs and sales demand, and the Company recognizes that the likelihood of this risk materializing and its impact are considerable. As a countermeasure, the Company constantly monitors the external environment and strives to reflect changes promptly in its land acquisition and sales activities.

Since the wood shock of around April 2021, prices of lumber, metals, various materials, transportation costs, and labor costs have remained persistently high, and the Company recognizes that the likelihood of this risk materializing and its impact are considerable. If the cost increases are passed on to sales prices, there is a risk that price levels will exceed general consumers' purchasing intent, leading to reduced demand. As a countermeasure, the Company is working to reduce costs at the design and construction stages, secure alternative building materials and multiple suppliers, and ensure a stable supply of construction craftsmen.

In the sales areas of Shizuoka, Aichi, Gifu, Kanagawa, Saitama, Tokyo, and Chiba prefectures, the Company competes with major detached house sales companies, house manufacturers, and local housing supply companies, and it recognizes that competition with major companies could intensify further within the next few years in Shizuoka Prefecture, its main area. If intensifying competition affects land acquisition, construction work, and sales activities, it could impact business results and financial position. As a countermeasure, the Company is promoting expansion of the number of units sold in the Kanto area and product differentiation in terms of cost and design.

If the number of construction subcontractors decreases or they become unable to meet the Company's required standards due to a shortage of construction craftsmen or economic trends in the construction industry, construction delays and delivery delays could occur, potentially affecting business results and financial position, and the Company recognizes that this risk could materialize within a few months depending on the external environment. Since revenue is recognized on a property delivery basis, delivery delays directly affect performance within the period. As a countermeasure, the Company is working to develop new subcontractors, utilize on-site management systems, and thoroughly manage quality and safety through regular reporting meetings with outsourcing partners.

Hiroyuki Tomono, the founder and Representative Director and President, has played an important role in determining management policy and strategy since the Company's establishment, and the organizational structure is currently still in a transitional stage. The Company recognizes that if unforeseen circumstances make it difficult for him to continue his executive duties, this could affect business results and financial position, but it assesses the likelihood of this materializing as low. As a countermeasure, the Company is working to strengthen its organizational structure through the development of internal management systems and human resource development.

All 10 locations are concentrated in the Tokai and Kanto areas, creating a risk that a large-scale disaster or changes in regional economic trends in these two areas could directly affect business results and financial position. In particular, Shizuoka Prefecture, the Company's founding base, is an area with a high risk of large-scale disasters such as a Nankai Trough earthquake, representing a vulnerability to business continuity. As a countermeasure, the Company is establishing new sales locations over the medium to long term to expand its business area, with the aim of ultimately building a nationwide supply system.

In addition to numerous laws and regulations such as the Building Lots and Buildings Transaction Business Act, the Construction Business Act, and the Building Standards Act, the Company holds licenses and permits such as a real estate transaction business license (Minister of Land, Infrastructure, Transport and Tourism license) and a general construction business license, and if any of these were revoked or renewal were refused, business activities would be significantly constrained. At present, no facts constituting a violation of legal regulations have occurred, and the Company assesses the likelihood of this materializing as low, but recognizes that the impact would be significant should such a violation occur. As a countermeasure, the Company has established and operates a Compliance Committee, consults with its retained legal counsel, and collects information on legal amendments and conducts internal training.

KEIAI Star Real Estate Co., Ltd. is an equity-method affiliate holding approximately 36% of the Company's issued shares, and the capital and business alliance relationship with this company could affect the Company's management policy. In addition, if the shareholding of Hiroyuki Tomono, Representative Director and President (including his asset management company), were to decrease significantly, this could affect the stock market price and the exercise of voting rights. Furthermore, the exercise of stock acquisition rights covering 363,202 potential shares (equivalent to 3.9% of the total number of issued shares of 9,360,198 shares) could dilute the share value and voting rights ratio of existing shareholders.