Good Com Asset Co.,Ltd

At the end of the consolidated fiscal year under review (October 31, 2025), the balance of interest-bearing debt stood at ¥27,798 million, with the interest-bearing debt dependency ratio rising sharply to 60.1% from the previous fiscal year-end (¥19,828 million, 50.2%). As business scale expands along with the expansion of procurement areas, borrowing levels are expected to remain elevated, and in a rising interest rate environment, increased financial costs would directly affect operating results. While the Company is promoting diversification of funding methods, the upward trend in dependency ratio is increasing risk.

The Group has adopted a structure in which it concludes numerous procurement contracts with only a deposit paid upfront, and pays the real estate procurement funds within a few months after the property is delivered. As the Group expands its procurement areas to the Tokyo metropolitan area (Tokyo and three neighboring prefectures) and the Kansai region, there is a risk that if the delivery timing of multiple properties overlaps in the future, a large amount of property acquisition costs will be concentrated temporarily, causing liquidity to decline sharply. If sales delays and market deterioration occur simultaneously, the impact on cash flow could be particularly severe.

While the Group is expanding its procurement areas centered on Tokyo's 23 wards to the Tokyo metropolitan area (Tokyo and three neighboring prefectures) and the Kansai region, amid continuing increases in land prices and construction costs, if cost increases cannot be passed through to sales prices, profitability will be squeezed. In addition, if the business environment changes between the conclusion of a procurement contract and delivery, and the contractual obligations become disadvantageous, accounting treatment (such as recognition of losses) may become necessary. In the Livenup Group as well, difficulty in securing profits due to rising procurement costs and construction costs exists as a similar risk.

Since sales are recognized on a delivery basis, if delays in completion or delivery occur due to insufficient coordination with outsourcing partners, opposition movements by neighboring residents, or natural disasters, sales and profit may become significantly skewed toward specific quarters or the full fiscal year. In particular, when bulk deliveries of multiple buildings to corporations and others are concentrated, the magnitude of fluctuation in business performance widens, making it difficult for investors to assess performance. This structural bias risk is inherent in the business model.

Real estate sales to corporate Wholesale customers and to private REITs and private placement funds are significantly affected by the economic environment, interest rate trends, and changes in corporate investment policies. Real estate fund transactions involve large transaction amounts and complex schemes, and if agreement among transaction participants cannot be reached, delays in fund formation may occur, potentially causing sales recognition to be significantly delayed. Since a decline in real estate investment sentiment affects multiple sales channels simultaneously, the impact on business performance can be substantial.

The Group provides rent guarantees for vacancies to individual investors who have purchased properties, and vacancy guarantee costs increase when occupancy rates decline. In addition, the subsidiary Roombank Insure Co., Ltd. conducts rent debt guarantee operations, and if deterioration in the economic and employment environment leads to increased subrogation payments or lower recovery rates, an increase in allowance for doubtful accounts or actual bad debts may occur, affecting financial condition. These guarantee obligations carry the risk of simultaneously worsening during economic downturns.

The Group is subject to numerous legal regulations, including the Building Lots and Buildings Transaction Business Act, the Financial Instruments and Exchange Act, and the Real Estate Specified Joint Enterprise Act, and each Group company holds licenses and registrations such as real estate transaction business licenses, condominium management company registrations, and financial instruments business registrations. If any of these licenses or registrations were revoked, or if legal regulations were substantially changed, this would directly affect business continuity. The Group is working to strengthen its compliance system, and as of the filing date of this document, no grounds for revocation have occurred.

The Group holds personal information on numerous customers and tenants, and has obtained Privacy Mark certification and implemented internal security enhancements and training programs. However, due to the increasing sophistication and cunning of cyberattacks, information leakage may occur even with these measures in place, leading to a decline in social trust and impact on business operations. Given the nature of the business, which handles the personal and financial information of real estate investment customers, reputational risk in the event of a leak is particularly significant.

The Group positions M&A as one option for business expansion and conducts due diligence using outside experts; however, if the initially expected synergies or business expansion effects are not achieved, impairment losses on goodwill may occur, affecting operating results. In addition, if new businesses do not progress as planned, this would similarly have an adverse effect on financial condition. As the Group expands, the absolute amount of these risks tends to increase.

The Group may hold condominiums as inventory financed by borrowings from financial institutions in order to extend the sales period, and if an accident such as a natural disaster occurs during that period and the market value falls below the acquisition cost, it becomes necessary to recognize a valuation loss based on accounting standards related to inventory valuation. As the Tokyo metropolitan area, which carries a high risk of natural disasters such as earthquakes, is the Group's main procurement area, multiple properties could be simultaneously affected in the event of a large-scale disaster. While measures such as BCP formulation are being advanced, the amount of risk expands as inventory levels rise.