EARLY AGE CO.,Ltd.

If real estate prices enter a downward phase, buyers may refrain from purchasing in a chain reaction, significantly reducing real estate liquidity, and valuation losses on inventory assets or impairment of fixed assets may occur, potentially affecting business performance. There is also a risk that sharp fluctuations in land prices or intensified competition could make it difficult to obtain useful property information, hindering the planned supply of properties developed in-house. As a countermeasure, the Company conducts valuations based on its own real estate appraisal standards at each fiscal period end, and since the properties held are used for the leasing business that generates rental income, the impact during a price decline phase is expected to be limited.

If sudden market fluctuations, rising building procurement costs, unexpected interest rate increases, or credit contraction in financial markets occur, sales may not proceed as originally planned, resulting in inventory stagnation, which could affect business performance and cash flow. As of the end of FY2025 (ending October 2025), the inventory asset balance was ¥561,025 thousand, down from ¥1,472,423 thousand in the previous period; however, the balance of tangible fixed assets expanded to ¥12,622,131 thousand, and the risk associated with the expansion of development scale continues. As a countermeasure, the Company works to reduce risk through regular monitoring of economic trends and real estate market conditions, as well as long-term fundraising.

The Group primarily procures funds for acquiring real estate for the leasing business through borrowings from financial institutions, and free cash flow has tended to remain continuously negative as the business expands. In FY2025 (ending October 2025), total interest-bearing debt was ¥9,685,780 thousand, and the dependence on interest-bearing debt rose to 63.78% (61.03% in the previous period), while free cash flow also worsened to ¥(1,246,594) thousand. If changes in the financial environment or a decline in the Company's creditworthiness prevent sufficient fundraising, this could have a material impact on the progress of individual projects and on operating results.

The Group relies on borrowings from financial institutions for fundraising, and if changes in the financial environment or a decline in the Company's creditworthiness occur, it may become difficult to secure the necessary funds, potentially affecting the progress of individual projects and operating results. Long-term borrowings scheduled for repayment within one year increased to ¥1,178,229 thousand (¥753,189 thousand in the previous period) as of the end of FY2025 (ending October 2025), and short-term repayment pressure is also increasing. As a countermeasure, the Company avoids concentration on specific financial institutions, consults with multiple financial institutions for each individual project, and works to broaden its fundraising base beyond its core banks.

In the course of its business operations, the Group holds personal information of a large number of customers, and if an information leak occurs due to an unforeseen event, it could affect business performance through a decline in customer trust and the costs incurred in resolving the resulting trouble. The Company works to prevent the materialization of this risk by establishing personal information protection regulations, developing information management regulations and operational manuals, implementing security measures through software and equipment, and conducting employee training.

If there are amendments or abolitions of related laws and regulations such as the Building Lots and Buildings Transaction Business Act, the Act on Rental Housing Management Business, the Building Standards Act, the City Planning Act, the Construction Business Act, and the Architects Act, or the introduction of new legal regulations, this could affect the execution of the Group's various businesses. The Company holds licenses from the Minister of Land, Infrastructure, Transport and Tourism (real estate transaction business and rental housing management business) and a license from the Tokyo Metropolitan Governor (first-class registered architect office), and maintaining these licenses is a prerequisite for business continuity. As a countermeasure, the department in charge of compliance discusses and reviews information on amendments or abolitions of related laws and documents issued by regulatory authorities, striving for early identification of and response to issues.

The Group's businesses aim to realize products and services by leveraging synergies among its various businesses, making it essential to secure and develop excellent personnel with broad knowledge and experience. If the Company is unable to secure and develop the desired personnel as planned going forward, this could affect business performance. As a countermeasure, the Company focuses on retaining and developing employees through measures to improve employee motivation, including promoting mid-career hiring of personnel with track records and expertise, providing diverse working styles, and assigning personnel with an emphasis on aptitude.