e-Seikatsu Co.,Ltd.

In the cloud/SaaS market for the real estate industry, there is a risk that the Group's competitiveness may decline due to the entry of major companies with substantial capital and brand strength, or the emergence of competitors utilizing new technologies. It cannot be entirely ruled out that a third party could technically reconstruct an equivalent system, and intensifying competition may adversely affect the Group's business, financial position, and operating results. The Company intends to maintain its competitive advantage through operational know-how specialized in the real estate industry and technical barriers to entry.

The Group's customer base is concentrated in the real estate industry, providing services for rental brokerage, rental property management, sales brokerage, and other business types. If an economic downturn occurs in the real estate industry as a whole, or if system investment contracts or the regulatory environment changes, the Group's financial position and operating results may be directly affected. Since diversification of the customer base is limited, the structure is highly sensitive to industry-specific risks.

The internet-related field is a rapidly changing industry with successive developments of new technologies and introductions of new services, and the cloud/SaaS domain also requires responsiveness to technological innovation. If the Group's response is delayed, this could lead to a decline in competitiveness and failure to capture customer needs, potentially adversely affecting the Group's financial position and operating results. The Company adopts in-house development as a basic principle and strives for continuous technological responsiveness.

The Group provides SaaS that handles customers' important data, and it is impossible to completely eliminate the risk of unauthorized access, virus intrusion, or personal information leakage due to increasingly sophisticated and complex cyberattacks. In the event of a serious cyber incident, system outages, data corruption, damages claims, and loss of social trust could adversely affect the Group's business, financial position, and operating results. As countermeasures, the Company has implemented structural separation, a zero-trust architecture, obtained three international certifications (ISO/IEC 27001, 27017, and 20000), and taken out cyber risk insurance.

The service infrastructure for the Company's SaaS relies primarily on AWS, operated by Amazon in the United States, and if the contract with that company is terminated or significantly changed, business continuity could be disrupted. In addition, since transactions with that company are denominated in US dollars, sharp foreign exchange fluctuations could adversely affect the Group's financial position and operating results. Foreign exchange forward contracts are mainly used as a means of reducing exchange rate risk.

It is impossible to completely eliminate defects in sophisticated software, and there is a risk that critical defects could occur even in the SaaS provided by the Group. If defects that disrupt operations cannot be appropriately resolved, this could lead to loss of customer trust, claims for damages, and adverse effects on operating results. The Company strives to develop highly reliable systems and, in principle, stipulates disclaimer clauses in its contracts.

If the system infrastructure built on the IaaS environment is damaged by natural disasters such as earthquakes, typhoons, or tsunamis, or by accidents, fires, or terrorism, business activities could be disrupted. Regarding situations where business operations are hindered by a pandemic or similar event, if an outbreak exceeding expectations occurs, this could adversely affect the Group's financial position and operating results. The Company has already established a remote work system for all employees and a sales structure utilizing web conferencing, and has selected an IaaS provider with world-class stability.

The Group adopts in-house development as a basic principle, and securing excellent personnel with specialized knowledge and skills is a prerequisite for business expansion; however, because the organization is small in scale, there is a risk that the expansion of human capital may not proceed as planned. There are operations that depend on specific officers and employees, and there is a risk that the resignation of such personnel could disrupt business operations. Going forward, the Company intends to strengthen its workforce through the training of existing employees and recruitment activities, as well as to promote the standardization and formalization of operations.

The Company has filed a notification as a telecommunications carrier and, as a personal information handling business operator under the Personal Information Protection Act, is subject to that law. If new laws and regulations targeting internet users, services, and businesses are enacted, existing laws are reinterpreted, or regulations concerning information distribution and disclosure items in the real estate field are strengthened, the Group's business activities could be constrained. The Company intends to closely monitor developments in relevant laws and regulations and respond appropriately.

The software and programs developed by the Group are improvements or combinations of publicly known basic technologies, and there is a possibility that they may unintentionally infringe on the intellectual property rights of third parties (particularly business model patents and trademark rights). If infringement is found, this could adversely affect the Group's financial position and operating results through damages claims, royalty payments, injunctions, and loss of credibility. At present, there have been no lawsuits, and the Company takes appropriate measures such as filing and registering trademarks when launching new services.