Dualtap Co.,Ltd.

The real estate industry to which the Group belongs is significantly affected by economic trends, financial conditions, real estate market conditions, and the enactment or abolition of real estate-related tax systems. In particular, fluctuations in land prices and construction costs, as well as interest rate trends, affect sales prices and pose a risk of reducing customers' willingness to purchase Asset Management Condominiums. The Real Estate Sales Business accounted for 82.5% of consolidated net sales for FY2025 (ended June 2025), so any impact on this business directly affects overall performance.

Sales of Asset Management Condominiums, the Group's core business, inherently involve investment risks such as deterioration of occupancy rates, declines in rental market rates, and rising interest rates. If contracts are concluded without customers fully understanding these risks due to insufficient explanation by sales staff, litigation or other disputes may arise, damaging the Group's trustworthiness. Furthermore, since sales channels depend on referrals and additional purchases from existing customers, any damage to trust would directly affect the continued expansion of new contracts. If aggressive sales practices by other companies in the same industry become a social problem, strengthened legal regulation could also hinder the execution of the Group's sales plans.

In procurement centered on properties within Tokyo's 23 wards, if procurement costs exceed plan due to rising land prices or construction costs, or if such cost increases cannot be passed on to sales prices, this will affect business performance and financial condition. In addition, since the funding settlement schedule is generally set within approximately three months after completion, if the sales period exceeds the funding settlement period, funding and inventory burdens will arise for unsold properties. There is also a risk that development plans could be disrupted if issues such as soil contamination are discovered after construction has begun, or if the seller fails to fulfill its liability for defects.

If prices of construction materials or labor costs rise beyond expectations, construction costs—a major component of cost of sales—will increase, affecting business performance and financial condition. If unforeseen events such as the bankruptcy of subcontracted construction companies, or accidents or quality problems during construction occur, development as planned may become difficult. If a construction company goes bankrupt after completion of construction and fails to fulfill its liability for non-conformity with the contract, the Company may be obligated to perform repairs, potentially resulting in unexpected costs.

If the execution of sales plans becomes difficult due to a sharp economic downturn, rising interest rates, or changes to real estate-related tax systems, completed inventory may become stagnant, potentially worsening cash flow. There is also a risk that, under the application of the "Accounting Standard for Measurement of Inventories" (ASBJ Statement No. 9), valuation losses may be recognized for real estate for sale and real estate for sale in process if market value falls below acquisition cost. Fluctuations in the timing of property handover also carry a risk of performance volatility, as expected sales and profits may be carried over to the following fiscal period.

The Group primarily procures development funds for land acquisition and construction costs through borrowings from financial institutions. As of FY2025 (ended June 2025), the balance of interest-bearing debt reached ¥2,635,644 million (raw figures in thousands of yen), with an interest-bearing debt dependency ratio of 48.1%. If sales underperform or if changes in financial conditions lead to rising interest rates or difficulty in securing borrowings, this could have a material impact on business performance and financial condition. Although the Group follows a policy of analyzing the feasibility of sales plans on a case-by-case basis to avoid dependence on specific financial institutions, vulnerability to changes in the external environment remains.

The Group's real estate transactions are subject to numerous laws and regulations, including the Building Lots and Buildings Transaction Business Act, the Building Standards Act, and the City Planning Act. If further tightening of regulations on studio apartments (one-room mansions), centered on Tokyo's 23 wards—such as raising minimum unit floor area requirements or imposing taxes on small-unit collective housing—progresses, this may affect business activities. If key licenses such as the Building Lots and Buildings Transaction Business license (valid until September 22, 2026) or condominium management business registration are revoked, this would hinder the Group's core business activities and have a material impact on performance. In addition, regarding the 10-year liability for defects on newly built homes, if warranty limits under housing defect liability insurance are exceeded or coverage becomes inapplicable, this could lead to increased repair costs and a decline in creditworthiness.

Within the Leasing Management (Sublease / Management Contracting) operations of the Real Estate Management Business, the Group leases properties from condominium owners and subleases them to tenants. If occupancy rates for subleased properties decline and rental income from tenants falls more than expected, this could affect business performance. Since occupancy rates are influenced by external factors such as regional rental supply and demand, market rent levels, and property competitiveness, there are limits to the Group's ability to control this on its own.

As a small organization with 219 employees (as of June 30, 2025), securing, developing, and retaining excellent personnel with advanced knowledge and experience in the Real Estate Sales Business and Overseas Real Estate Business is essential. If the Group is unable to secure the necessary personnel, or if officers or employees leave the Company, this could affect business performance and financial condition. In addition, founder and President and Representative Director Takahiro Usui plays a crucial role in determining policy for the Group's core businesses. If an unforeseen event were to prevent him from performing his duties, this could affect business performance and financial condition.

The Group holds personal information of its customers and has implemented measures such as adopting systems to prevent unauthorized external access, setting data access permissions, establishing personal information protection regulations, and providing training through the Compliance Committee. Nevertheless, if important information is leaked externally due to unauthorized use or other unforeseen events, this could lead to a decline in trust and claims for damages, potentially affecting business performance and financial condition.