&Do Holdings Co.,Ltd.

The Group holds multiple licenses and permits, including the real estate transaction business license, construction business license, and money lending business registration, which are essential to its main business activities. If a license or permit is revoked due to misconduct or an officer becoming subject to disqualification requirements, business activities could be disrupted, potentially having a material impact on operating results and financial condition. No grounds for revocation currently exist, but the Group is addressing this risk through thorough legal compliance.

The Group is subject to regulations such as the Building Lots and Buildings Transaction Business Act, the Construction Business Act, the Architects Act, and the Money Lending Business Act. Amendment or abolition of these laws, or the enactment of new legal regulations, could affect operating results and financial condition. In particular, regulatory changes spanning both the real estate and finance business domains could have wide-ranging effects. The Group currently maintains thorough legal compliance, but will need to respond to future changes in the regulatory environment.

The real estate industry, to which the Group belongs, is highly susceptible to economic conditions, interest rate trends, land price trends, and housing tax systems. A significant rise in interest rates or land prices could reduce the purchasing intent of prospective homebuyers. In addition, changes in financial institutions' lending stance could make it difficult to acquire real estate for sale or business land, and rising costs for business land, materials, and construction could squeeze business profits. Furthermore, the onset of a declining phase in Japan's population and number of households could be a factor reducing housing demand.

The real estate industry includes numerous operators, including major companies, and the Group faces competition from companies that surpass it in capital strength, sales capability, and brand power. The Group leverages its uniqueness, such as its "one-stop housing service" and House Leaseback Business, as strengths, but if competition intensifies, the Group may not be able to expand its business as planned. This includes the risk of franchise members switching to competitors' brands, which could affect operating results and financial condition.

In the Reverse Mortgage Guarantee Service within the Financial Business, if a guarantee principal defaults on its obligations, the Group is obligated to make subrogated repayments to the financial institution. A significant decline in land prices due to deterioration in the real estate market could reduce the value of collateral real estate, resulting in guarantee receivables with insufficient collateral. If the sale price of the collateral real estate falls below the outstanding loan balance, or if the property cannot be sold, a bad debt loss will occur. These factors could affect the Group's operating results and financial condition.

The Group procures working capital for the acquisition of business land and real estate for sale, property acquisition for the House Leaseback Business, and operating loans for the Financial Business, primarily through borrowings from financial institutions. As of the end of June 2025, the Group's consolidated interest-bearing debt balance stood at ¥47,948 million, with the interest-bearing debt dependency ratio to total assets reaching 66.6%. Significant fluctuations in the current interest rate level could affect operating results. Although this represents a decrease of ¥6,978 million compared to the same period of the previous year, the dependency ratio remains high.

The success of the Franchise Business depends on steady growth in the number of member stores, but low-quality service provision or unlawful conduct by some franchisees could damage the image of the Franchise Business as a whole. In addition, if the Group is unable to maintain high-quality services, or if franchisees defect to competitors' brands, the number of member stores could decline or stagnate. As of June 30, 2025, the Group operates a franchise chain of 725 stores nationwide, and maintaining its management structure is an important challenge.

The Group obtains various types of personal information in the course of its business activities and is classified as a personal information handling business operator. The Group focuses on protecting personal information through thorough internal information management systems, including those covering franchise members, but if personal information is leaked due to unforeseen circumstances, it could result in decreased sales due to loss of trust and expenses arising from damage compensation.

Masahiro Ando, the founder and Representative Director, Chairman and CEO, plays an important role ranging from determining management policies, management strategy, and business strategy to their implementation and promotion. If he becomes unable to perform his duties as a manager for any reason, this could affect the Group's operating results and future business development. As a countermeasure, the Group strives for organizational operation through continuous education and training, knowledge sharing, strengthening personnel in each department, and establishing operating rules and manuals.

The Group primarily practices hiring of new graduates, and differentiates itself from competitors through thorough education and development policies based on the permeation of its corporate philosophy and management principles, although developing human resources requires a corresponding amount of time. As of June 30, 2025, the number of employees stood at 663. If the speed of hiring and developing personnel does not match the scale of business, or if existing personnel leave for outside opportunities, this could become a constraint on business expansion and affect operating results and financial condition.