Fund Creation Group Co.,Ltd.

Revenue in the Asset Management Business is heavily dependent on real estate funds, and sharp fluctuations in the real estate market or adverse market trends could affect operating results. In addition, fees and other income derived from the core product "Legit" account for 27.89% of Asset Management Business revenue (FY2025 (ended November 2025)), which also entails a risk of dependence on a specific fund. As a countermeasure, the company is diversifying its revenue sources by forming a variety of funds targeting domestic and overseas real estate, solar power generation facilities, vehicles, equities, and other assets.

Acquisition fees, disposition fees, and other income derived from "Legit" are one-time fees that arise only when an SPC acquires or sells real estate or other assets, and do not accrue on a continuous basis. In periods when no acquisitions or sales of real estate or other assets occur at each SPC, there is a risk that the Group's operating results will fluctuate significantly. As a countermeasure, the Group aims to increase stable asset management fees by building up fund assets under management and entrusted asset balances.

Aizawa Securities Co., Ltd. accounts for a certain proportion of the offerings of each fund managed and operated by the Group, and if the company changes its policy or if the business relationship shrinks or disappears, it could affect the Group's business activities and operating results. Dependence on a specific sales channel is a risk that goes to the core of the Group's fund formation and distribution capabilities. As a countermeasure, the Group is pursuing both the expansion of new sales channels and the strengthening of its relationship with Aizawa Securities in parallel.

The Group's operating funds depend primarily on borrowings from financial institutions, and if new financing cannot be executed as planned due to breaches of, or restrictions imposed by, loan covenants, or if interest rates rise significantly, this could affect the Group's operating results and financial position. Consolidated total assets expanded to ¥7,315 million in FY2025 (ended November 2025), and the stability of fundraising is a precondition for business continuity. As a countermeasure, the Group strives to maintain good relationships with its lending financial institutions and to diversify its funding sources.

The Asset Management Business and the Investment Bank Business are subject to a wide range of laws and self-regulatory rules, including the Financial Instruments and Exchange Act, the Act on Specified Joint Real Estate Ventures, the Act on Investment Trusts and Investment Corporations, and the Building Lots and Buildings Transaction Business Act. If new regulations are applied due to future legal amendments or expansion of the scope of business, or if issues arise that constitute grounds for revocation of licenses, the Group could be subject to business suspension orders or license revocation. As a countermeasure, the Group provides regular compliance training for officers and employees and strives to ensure thorough legal compliance.

Katsuhiro Tajima, Representative Director and President, has been deeply involved in marketing for customer acquisition, product development, and other matters since the company's founding in December 2002, and leads the Group as its top management. If he were to resign or become unable to perform his duties, it could affect the Group's business activities and operating results. As a countermeasure, the Group is continuously pursuing the strengthening of its management structure and the development of systems to reduce excessive dependence on him.

As of November 30, 2025, the Group had only 23 employees (including temporary staff), and its internal control system remains commensurate with this scale. If the Group is unable to secure the necessary personnel as planned and cannot smoothly enhance its internal control system, or if costs such as recruitment and personnel expenses increase, this could affect the Group's business activities and operating results. As a countermeasure, the Group conducts regular new graduate recruitment, timely hiring of personnel with specialized knowledge, and continuous education and training.

The Securities Investment Division of the Investment Bank Business invests in mid-tier listed companies and high-quality unlisted companies. For listed companies, a decline in stock price, and for unlisted companies, delays in listing preparation or a listing-time stock price significantly below expectations, could prevent the Group from achieving expected returns, affecting its operating results and financial position. As a countermeasure, the Group continuously monitors the business performance and market trends of investee companies and supports their growth by providing various solutions beyond financial support.

The Solar Power Investment Division is subject to legal regulations under the Act on Special Measures Concerning Procurement of Renewable Energy and related laws and regulations, and changes to the feed-in tariff system or similar systems could affect the formation and operation of funds managed by the Group. Changes in government policy are outside the Group's control and directly affect its revenue structure. As a countermeasure, the Group continuously obtains and reviews the latest information on various legal regulations and continuously assesses the impact on fund formation and operation.

The Group holds real estate and other assets as inventories, and if the market value falls below the acquisition cost due to deterioration in market conditions or other factors, the Group must recognize a valuation loss in accordance with the "Accounting Standard for Measurement of Inventories." It has been disclosed that in the Investment Bank Business, revenue and profit margins fluctuate significantly depending on whether owned real estate is sold, and the recognition of valuation losses directly affects operating results and financial position. As a countermeasure, the Group carefully monitors changes in market conditions and strives to prepare and disclose appropriate financial statements in accordance with accounting standards.