REAL GATE INC.

Natural disasters such as increasingly frequent earthquakes, concentrated heavy rainfall, and larger typhoons may cause a significant decline in the value of real estate owned by the Company, affecting business performance. In particular, since the Company's operated real estate is concentrated in the Tokyo metropolitan area, there is also a compounded regional concentration risk in the event of a large-scale disaster in the metropolitan area. The Company strives to avoid risk and minimize damage through the development of disaster response manuals and training.

Since revenue and cost of sales from property sales are recognized upon delivery, performance in each period can fluctuate significantly depending on the presence or absence of one-off transactions involving high amounts per transaction. If the delivery of a planned property or the sale amount does not proceed as expected, it will directly affect performance for that period. Compared to stock-type income, the lower stability of earnings represents a financial challenge.

Construction work is outsourced to partner companies, and if issues such as deterioration of construction quality, on-site accidents, or violations of the Waste Management Act occur, this may result in a decline in the Company's credibility and liability for damages. In addition, if the increase in acquired properties leads to placing numerous construction orders within the same period, there is a risk that it may become difficult to secure sufficient available construction companies, as well as risks of increased outsourcing costs due to rising building materials and labor costs, and risk of construction delays. The Company strives for thorough management of partner companies, but risks stemming from its structural dependence on external parties remain.

If defects or the need for repairs due to aging arise in properties designed and constructed by the Company, additional construction costs or damages from serious defects may affect business performance. The same risk applies if a serious accident involving injury or damage to the constructed property occurs, and the Company's credibility is significantly impaired due to the payment of damages. Since most of the target properties are old buildings, there is an inherent risk that latent structural and seismic issues may become apparent.

The Company holds licenses and permits such as the Real Estate Brokerage License (Tokyo Governor License (4) No. 90947, valid until September 18, 2029), First-Class Architect Office Registration (Tokyo Governor Registration No. 62066), and Specific Construction Business License (Tokyo Governor License (Special-6) No. 151421), which may be revoked in the event of amendments or abolition of related laws and regulations, or violations of compliance. Revocation of licenses would directly impede business continuity, and the degree of impact is explicitly stated as significant. The Company strives to comply with various conditions and related laws and regulations, and no grounds for revocation have currently arisen.

Tangible fixed assets are on an increasing trend due to the growth in Company-owned properties and capital investment in idle real estate under the Master Lease service. If the utilization status of assets or cash flow conditions deteriorate in the future, necessitating impairment treatment, this may affect business performance and financial condition. The Company applies the "Accounting Standard for Impairment of Fixed Assets" to address this, but the potential for occurrence is explicitly stated as high.

Economic recession, rising interest rates, consumption tax hikes, and similar factors may affect business performance. Since major tenants are small and medium-sized enterprises such as startups and venture companies, demand is susceptible to economic trends, and if there is a decline in the real estate market or a significant drop in property occupancy rates, there is a risk that, for properties under Master Lease arrangements, the rent collected from tenants may fall below the rent paid to owners. The Company addresses this through speedy project execution and flexible selection of operating formats.

Since operating funds are mainly procured through borrowings from financial institutions, fluctuations in interest rate levels and the financial environment may affect business performance and financial condition. Some contracts with financial institutions include financial covenants, and there is a risk that a breach could require lump-sum repayment. While the real estate redevelopment business has a relative advantage in a rising interest rate environment due to lower costs and shorter construction periods compared to new construction, further sustained interest rate hikes would affect operating results through increased interest expenses.

With 93 employees (as of September 30, 2025), the Company is a small organization in which each employee's scope of work is broad, making the securing and development of personnel who possess both specialized skills and generalist capabilities a key factor in business expansion. In addition, founder and Representative Director Yutaka Iwamoto plays an important role in determining management policy and strategy and in driving the business forward, and if he becomes unable to perform his duties, this may affect business performance and business development. The Company seeks to mitigate this dependency risk through more active mid-career hiring, enhanced education and training, and the establishment of an organizational management structure.

CyberAgent, Inc., the parent company, holds 63.74% of the Company's outstanding common shares, and may exert influence regardless of the wishes of other shareholders on matters such as the appointment and dismissal of directors, organizational restructuring, amendments to the articles of incorporation, and decisions regarding surplus. In addition, if the parent company sells the Company's shares due to changes in market conditions or other factors, this may affect the Company's capital structure. One of the Company's six directors concurrently serves as a Senior Managing Executive Officer and Director of the parent company, indicating a personal relationship linkage with the parent company as well.