Hobonichi Co., Ltd.

The brand value of the website "Hobonichi," which has been updated daily since 1998, and the flagship product "Hobonichi Techo" may be impaired by changes in consumer preferences, social media controversies, or other factors. A decline in brand strength could directly lead to a decrease in site visits and sales volume, potentially adversely affecting business performance. The Company strives to ensure quality through continuous content checks by internal and external parties.

"Hobonichi Techo" is a flagship product accounting for approximately 70% of net sales, and its sales trends have a direct impact on overall business performance. If market conditions deteriorate in the future due to the spread of digital schedule management tools, or if there is a decrease or delay in procurement volume, business performance could be adversely affected. Current market conditions remain solid, and the Company continues to differentiate the product through its "LIFE no BOOK" concept.

Due to the nature of "Hobonichi Techo," sales are concentrated in autumn and winter, with a notable seasonal pattern of sluggish sales in spring and summer. In FY2025 (ended August 2025), quarterly net sales were ¥3,336,734 thousand in the first quarter (38.45% of the composition ratio), compared to ¥1,121,510 thousand in the third quarter (12.92%), a gap of approximately three times, and operating profit/loss was also in deficit, with the third quarter posting -¥297,422 thousand and the fourth quarter -¥107,670 thousand. While the Company is working to develop complementary products and markets for off-peak seasons, quarterly performance fluctuations remain structurally significant.

Founder Shigesato Itoi, Representative Director, President, CEO and CCO, plays a central role in business operations, including management policy and strategy formulation, leveraging his social reputation and network, conceiving new businesses, and writing daily essays. If, for any reason, he becomes unable to continue his duties, the Company's business momentum could temporarily stagnate, potentially affecting business performance. Following the Annual General Meeting of Shareholders scheduled for November 29, 2025, a change of position to Representative Director, Chairman and CEO is planned, and the Company is working to build a structure that does not depend on a single individual.

The Company holds confidential information and personal information belonging to customers, business partners, and internal parties, and faces risks of information leakage, destruction, or falsification due to ransomware, targeted attacks, negligence, or theft. Should an information leak occur, it could result in substantial costs such as loss of credibility, damages, business suspension, and legal fines. In May 2025, the Company passed the continuation/transition audit for ISMS certification (ISO/IEC 27001:2022) and is implementing measures such as strengthening IT security, facility security, and employee training.

Key services such as content distribution, the EC business, and "Hobonichi no Gakko" depend on internal and external information systems, and system failures caused by cyberattacks, human error, or natural disasters could adversely affect business performance. The Company has eliminated single points of failure by making key systems and networks redundant, formulated a BCP, and conducts regular vulnerability testing, but the risk of unforeseeable failures remains.

As internet mail-order sales account for approximately 70% of net sales, and the entire business is premised on integration with the internet, insufficient response to rapid changes in user devices and platforms could lead to a decrease in site visits and purchasers, adversely affecting business performance. The Company is gathering information on technology trends, improving and updating its technological capabilities, and strengthening its own EC operations while expanding into external EC platforms.

Product procurement costs may rise due to increases in raw material and fuel prices, foreign exchange rate fluctuations, and rising transportation costs. If increases in procurement costs precede price revisions, profit margins could be compressed, adversely affecting business performance. The Company addresses this through reviewing suppliers, improving loading efficiency, and regularly reviewing selling prices.

The Company positions its organizational culture, based on intrinsic motivation and self-management, as the source of high-quality content and services, and if this culture ceases to function due to rapid organizational expansion or other factors, business performance could be adversely affected. Because the Company prioritizes human capital investment for long-term growth, short-term financial results may be sacrificed. During the current fiscal year, the Company conducted initiatives such as the "Hobonichi's Great Frontier Recruitment," but there remains a risk that securing talent and developing capabilities may not proceed as planned.

The Company operates its business based on a wide range of domestic and international laws and regulations, including intellectual property rights, the Act on Specified Commercial Transactions, the Consumer Contract Act, the Antimonopoly Act, the Act on the Protection of Personal Information, product safety regulations, and environmental regulations. Changes in the interpretation of laws and regulations, tightening of regulations, or the enactment of new regulations requiring stricter compliance could adversely affect business performance. The Company currently believes no material legal issues have arisen, and it continues to consult with administrative authorities and lawyers as appropriate while strengthening its legal function.