LOIVE Co., Ltd

In the fitness market, the number of facilities has increased due to heightened health awareness after the COVID-19 pandemic and diversifying customer needs, intensifying competition. The Company seeks to differentiate itself through its women-focused brand offerings, its operating track record of 200 stores (as of the end of March 2026), and high-quality lessons delivered by full-time employee instructors. However, if competition intensifies further or the competitiveness of the Company's services declines, this may affect its business results and financial condition.

The Company utilizes information systems for customer management, attendance management, accounting operations, and other purposes, with maintenance and management conducted jointly by a dedicated department and outside contractors. However, if a system failure occurs due to network outages, computer viruses, natural disasters, human error, or other causes, it could disrupt a wide range of operations and affect the Company's business results and financial condition.

The Company operates stores nationwide, and if a natural disaster such as a major earthquake or torrential rain results in store closures, disruption of communication networks, or suspension of public transportation, this could seriously impede business operations. The Company strives to mitigate this risk by establishing an emergency information-gathering system, regularly conducting evacuation and disaster-prevention drills, and maintaining business continuity through stores less affected by such events; however, the timing of such events is difficult to predict.

If the spread or prevention of infectious diseases leads to voluntary restrictions on going out, store closures, reduced operating hours, or cancellation of lessons, causing serious economic impact, market contraction, or a slowdown in personal consumption, this may affect the Company's business results and financial condition. The Company's policy is to consider and implement measures to ensure employee safety and maintain business continuity in the event of an outbreak.

The Company's Boutique Studio Business (Single Segment) operates on a membership basis and holds personal information such as members' names and addresses. Although the Company has established a management system based on the Personal Information Protection Act and internal regulations, if an unforeseen incident such as a leak occurs, it could result in a loss of social trust or claims for damages, which may affect the Company's business results and financial condition.

The Company regards securing and developing personnel who share its purpose as an important issue, focusing on strengthening recruitment, developing training systems, and building human resources systems. However, due to the progression of the declining birthrate and aging population and domestic economic conditions, if the Company is unable to recruit and develop excellent personnel meeting its required standards as planned, this may lead to a decline in service quality and affect its business results and financial condition.

The Company holds fixed assets related to its stores, verifying investment recovery plans at the time of store opening and continuously monitoring them thereafter. However, if impairment accounting becomes necessary due to a decline in store profitability or a significant drop in the market value of held assets, an impairment loss would be recorded, which may affect the Company's business results and financial condition. The likelihood of manifestation is explicitly stated as "high" in the Annual Securities Report, indicating this is recognized as a short-term risk.

The Company's basic policy is to open stores in commercial facilities and busy areas near train stations, deciding on store openings after carefully examining location, lease terms, and profitability. However, delays in identifying candidate sites, discrepancies in lease terms, failure to attract sufficient customers, and increases in unpaid membership fees, among other factors, may prevent the Company from securing profitability. In addition, because the Company primarily leases its properties, there is a risk—particularly with fixed-term building lease agreements—that contracts will not be renewed upon expiration, which could impede the continuation of store operations.

The Company primarily procures funds for security deposits, facility construction, and fixtures and equipment associated with new store openings through borrowings from financial institutions. As of the end of the fiscal year under review, the balance of interest-bearing debt was ¥3,569 million, and the equity ratio was 25.6%, indicating a relatively high reliance on interest-bearing debt. This reliance on interest-bearing debt is expected to remain at a high level going forward as new stores continue to open, and fluctuations in interest rate levels or an inability to raise funds as planned may affect the Company's business results and financial condition.

Ayaka Maekawa, President and Representative Director, is the founder of the Company and plays an important role in formulating and deciding management policies and business strategy; she has also personally guaranteed obligations related to lease agreements for some stores. While the Company seeks to reduce this dependence through information sharing at Board of Directors and management meetings and the development of management executives, if she becomes unable to continue performing her duties, this may affect the Company's business results and financial condition.