INTRANCE CO.,LTD.

The Group has recorded operating losses, ordinary losses, net losses attributable to owners of the parent, and negative operating cash flows for four consecutive fiscal periods, giving rise to material doubt about its ability to continue as a going concern. On February 9, 2026, the Company raised a total of ¥1,303 million, comprising ¥1,297 million of convertible bonds with stock acquisition rights and ¥6 million of stock acquisition rights, and cash and deposits stood at ¥1,504 million as of the end of March 2026; however, since conversion to shares and exercise of these securities have not yet occurred, uncertainty continues. The Company is pursuing measures such as improving its revenue structure, cutting costs, and raising additional funds, but failure to achieve these plans could have a material impact on business continuity.

As of the end of March 2026, the Company did not satisfy the "market capitalization" criterion among the Growth Market listing maintenance standards, and entered a one-year improvement period starting April 2026. If the Company fails to meet the criterion within the improvement period, it will be delisted following designation as a security under supervision (under review) and subsequently as a security to be delisted. Delisting could have a material impact on business operations, including the loss of fundraising means and a decline in creditworthiness.

Since the Group primarily procures the purchase price equivalent for real estate properties through borrowings from financial institutions, its reliance on interest-bearing debt relative to total assets is relatively high. A rise in interest rate levels would increase funding costs and affect business performance, and if funding becomes insufficient due to changes in the financial environment, it may become difficult to proceed with projects. As countermeasures, the Company is increasing the number of financial institutions it deals with and diversifying its fundraising methods, negotiating with multiple banks for each project to avoid dependence on specific financial institutions.

The Group holds real estate for sale primarily with a view to selling within one year, but if sales do not proceed as planned due to sudden market fluctuations or other factors, this may result in recording valuation losses on inventory or inventory buildup. Furthermore, if real estate for sale must be sold at a price significantly below plan or becomes difficult to sell, cash flow may deteriorate significantly, potentially hindering the repayment of borrowings. The Company conducts market analysis and considers prospective buyers at the property acquisition stage, but it is difficult to completely eliminate market fluctuation risk.

The Group operates hotel facilities under fixed-term building lease agreements in its hotel operation business, but such agreements are typically long-term, and cases are anticipated in which cancellation is not possible before the contract term expires. Even if hotel facility operations do not proceed as planned, rent continues to be incurred, which may affect operating results and financial condition. In particular, given the current situation of four consecutive years of losses, the prolongation of fixed cost burdens carries the risk of accelerating financial deterioration.

In the real estate revitalization business, revenue and cost of sales are recognized at the time properties are sold, and since the amount per transaction is large and the number of properties sold annually is small, timing shifts in sales have a significant impact on business performance. Because the business model involves formulating or completing a value-up plan for a property before selling it to investors, if the sale timing shifts from plan due to market fluctuations or prolonged negotiations, quarterly and annual results may fluctuate substantially. This magnitude of earnings volatility also makes it difficult for investors to forecast performance.

Rent increases for fixed-term building lease agreements in the hotel operation business and rising property purchase prices in the real estate revitalization business have intensified price competition with competitors. If the Company loses out to competitors, it may be unable to secure properties for lease or acquisition, making it difficult to maintain or expand business scale and potentially affecting business performance. The Group seeks to differentiate itself through early acquisition of property information and its proprietary revitalization methods, but competing with rivals that have greater financial strength remains an ongoing challenge.

The Company holds a license under the Building Lots and Buildings Transaction Business Act (Tokyo Governor License (2) No. 105555, valid from November 21, 2025 to November 20, 2030) and registration as a Type II Financial Instruments Business and Investment Advisory and Agency Business under the Financial Instruments and Exchange Act (Kanto Local Finance Bureau (Financial Instruments) No. 1732), both of which are essential to its core business activities. If, for any reason, the license or registration were revoked or renewal were denied, this could have a material impact on business activities. In addition, business performance may also be affected by amendments or abolition of related laws and regulations such as the Building Standards Act, or by the introduction of new regulations.

The Group outsources design and construction work for real estate revitalization to external design firms and construction companies, and since optimal revitalization methods are adopted for each individual property, it is difficult to reduce costs through standardization. If an outsourcing or subcontracting partner experiences business difficulties, or if problems arise in design or construction work, this could hinder real estate revitalization efforts and result in the inability to provide quality assurance after sale. While the Company comprehensively considers design and construction capability, track record, cost, and financial condition when selecting subcontractors, it is difficult to completely eliminate external risks.

As of the end of the current consolidated fiscal year, the Group is a small organization with four directors, three auditors, and 48 consolidated employees, and its internal management system remains commensurate with this organizational scale. If human and organizational responses fail to keep pace with business expansion and strengthening of the management system does not proceed as planned, appropriate business operations may become difficult, potentially affecting business performance. In addition, if fraud or illegal acts by officers or employees occur, this could affect operating results, financial condition, and social credibility, making the ongoing enhancement and strengthening of the internal control system an ongoing challenge.