FUNDINNO,INC.

Contract fees in the primary domain accounted for 88.5% of consolidated operating revenue (FY2025, ended October 2025), and since these are flow-based revenues generated only upon deal completion, there is a risk that operating revenue could fall below the break-even point if startup fundraising falls short of expectations. The company recorded operating losses continuously from its founding through FY2024 (ended October 2024), leaving challenges in the stability of its revenue base. As countermeasures, the company is diversifying revenue by acquiring corporate and institutional investors and expanding services in the growth and secondary domains.

If the company's classification changes due to future deterioration in business performance or revisions to business plans, the valuation allowance for deferred tax assets could increase, potentially having a material impact on consolidated business results and financial condition. In addition, as of the end of FY2025 (ended October 2025), the company has tax loss carryforwards, and as corporate tax at the normal rate is recorded along with the recovery of business performance, indicators such as net income per share may be affected. The company strives for appropriate accounting treatment through periodic reassessment of recoverability.

The company is registered as a Type I Small-Amount Electronic Public Offering Service Provider (registered in 2016) and a Type I Financial Instruments Business Operator (registered in 2021). If the company's registration is revoked or it receives a business suspension or improvement order due to violation of laws and regulations, this could cause significant disruption to its core business activities. In particular, revocation of the Type I Financial Instruments Business registration could have a material impact on business continuity. The company addresses this risk by strengthening cooperation with the Kanto Local Finance Bureau and the Japan Securities Dealers Association, and by developing its internal control systems.

If personal information of customers or confidential information of business partners obtained through business activities is leaked externally due to unforeseen circumstances, this could lead to a decline in trust in the company's services and claims for damages, potentially having a material impact on business results and financial condition. The company addresses this through the establishment of a Security Division, monitoring by the Information Security Committee, and enrollment in cyber risk insurance, but it is difficult to completely eliminate this risk.

If negative posts on the internet and social media, or media reports, cause reputational damage that spreads, this could affect business results, financial condition, and social credibility regardless of the veracity of the claims. Given the nature of the company as an unlisted stock investment platform, the risk that investor loss cases could trigger reputational damage is particularly high. The company has established a system for education, training, and guidance for all employees, as well as a framework for early risk detection through monitoring of the internet and social media.

If the company violates customer due diligence obligations under the Act on Prevention of Transfer of Criminal Proceeds, or if anti-social forces conduct transactions while concealing their identity, this could result in administrative sanctions and loss of trust, potentially having a material impact on the business, business results, and financial condition. The company has established a legal compliance framework including the collection of identity verification documents, creation of customer records, and retention of transaction records, and has built a system to exclude anti-social forces in the screening of investors and unlisted companies.

As a financial instruments business operator, the company is legally required to maintain a capital adequacy ratio of 120% or higher, and if this falls below the required level, the company could face registration revocation, business suspension, or an improvement order. As of the end of FY2025 (ended October 2025), the company's capital adequacy ratio was 649.7%, substantially exceeding the required maintenance level, but the company continuously monitors its non-fixed capital amount and risk-equivalent amount to strive to maintain an appropriate level.

Due to revisions and refinements to the Financial Instruments and Exchange Act, major securities companies have been entering the unlisted stock investment market one after another, and competition with similar services such as corporate bonds and social lending is also intensifying. If the company is unable to maintain its competitiveness, this could affect business results and financial condition. The company aims to expand its share of the unlisted stock investment market by leveraging entry barriers such as licenses, systems, and screening expertise accumulated since its founding in November 2015.

The company has continuously made upfront investments in system development, hiring of sales personnel, and advertising activities, and recorded operating losses from its founding through FY2024 (ended October 2024). While the company plans to continue making such investments, if the expected effects are not achieved, this could affect business results and financial condition. The company thoroughly verifies investment returns both before and after implementation, and aims to lower the break-even point by curbing cost increases through DX (digital transformation).

Representative Director and CEO Yuki Shibahara and Representative Director and COO Manabu Oura, as founders, play important roles in determining management policy and business strategy, and if either becomes unable to perform their duties for any reason, this could affect business results and financial condition. In addition, there is a risk that appropriate business operations could become difficult if the appropriateness of outsourcing arrangements with Aqlear Inc., headed by Executive Officer Tomoki Hiraishi, cannot be ensured. The company aims to reduce dependence on its founders through the introduction of an executive officer system, human resource development, and the establishment of internal control systems, while the outsourcing arrangement with Aqlear is planned to be resolved through in-house transition or migration to other outsourcing partners.