FIRSTLOGIC,INC.

The Company operates information services specialized in investment real estate, and its business performance is affected by trends in the real estate transaction market resulting from changes in economic conditions, interest rate trends, land prices, laws and regulations, and tax systems. Since the Company's revenue source is advertising income from real estate companies, renovation companies, and other operators, deterioration in the business conditions of these operators or reductions in their advertising expenditures directly lead to a decline in revenue. Deterioration in the market environment may have a chain reaction effect on both the number of members and the number of customers.

Around June 10, 2025, unauthorized access by a third party was confirmed, and there is a possibility that held information, including personal information, was leaked. The Company reported and consulted with the relevant police station and the Personal Information Protection Commission, and implemented recurrence prevention measures such as blocking the unauthorized access route, strengthening monitoring, reviewing authentication and authorization management, and making vulnerability countermeasures a standard practice. Risks of damage claims from customers and loss of credibility have materialized, raising concerns about the impact on business results and financial condition.

A large portion of traffic to the Company's sites comes via search sites, making the Company heavily dependent on search engine display results. Although the Company implements measures to achieve top rankings using proprietary SEO know-how, if the effectiveness of SEO measures declines due to changes in the top-ranking policies of search engine operators, the effect of attracting users would be significantly reduced. A decrease in user acquisition would spread to both the number of members and advertising revenue, potentially having a material impact on business results.

In the real estate investment portal field, the Company currently recognizes that full-scale entry by major operators is limited; however, if existing operators expand or major companies enter the market in earnest, competition to acquire real estate investors and real estate companies would intensify. Intensified competition could lead to price competition and increased member acquisition costs, potentially reducing profitability. The Company recognizes that it maintains a competitive advantage through its proprietary SEO and content know-how and its certain market share.

The Company's business is entirely dependent on smartphones, PCs, and communication networks, and if a system failure occurs due to natural disasters, accidents, unauthorized access, computer viruses, or other causes, business operations would be severely affected. Unpredictable factors such as a sudden surge in access, power supply outages at data centers, and cloud service outages could also cause system downtime. Although the Company has implemented appropriate security measures, complete elimination of these risks is difficult, raising concerns about the impact on business results and financial condition.

The Company's business is subject to regulations such as the Telecommunications Business Act, the Act on the Limitation of Liability for Damages of Specified Telecommunications Service Providers, and the Act on Prohibition of Unauthorized Computer Access, and is obligated to protect the secrecy of communications and take measures to prevent unauthorized access. Laws and regulations governing internet-related businesses continue to be developed, and if new laws are enacted or the interpretation of existing laws changes, increased response costs or business constraints may arise. If the Company's response to stricter regulations is delayed, this may affect business results and financial condition.

Naohiro Sakaguchi, the Representative Director and President, is the founder of the Company and plays an extremely important role in technical decision-making, management policy, and business strategy decisions. Although the Company is working to reduce this dependence by separately appointing a Chief Technology Officer and strengthening information sharing at the Board of Directors and the management organization, if Mr. Sakaguchi becomes unable to continue his duties, this may affect business results and financial condition.

With the rapid expansion of the business domain, further staffing increases are required in each department, including development, sales, and administration. If personnel development or the recruitment of external personnel does not proceed as planned, or if capable personnel leave the Company, this could lead to a decline in competitiveness and constrain business expansion. As the organization is small in scale, there is also a risk that the expansion of the internal control system will not keep pace with business expansion.

The Company strives to exclude inappropriate information through screening of real estate companies and system-based input restrictions, but there are limits to confirming the accuracy and appropriateness of listed property and company information, and the risk of inappropriate information being posted due to intentional acts or negligence by real estate companies or others cannot be eliminated. If a serious problem or legal liability arises, this could damage the site's reputation and credibility and give rise to damage claims, potentially affecting business results and financial condition. The Company recognizes that no serious problems have arisen in past fiscal years.

Unexpected rises in U.S. market interest rates, unfavorable fluctuations in exchange rates, deterioration in the creditworthiness of bond issuers, and the materialization of country risk may lead to a decrease in unrealized gains on held securities, or to impairment or valuation losses. For foreign securities, country risk also exists due to credit concerns in the relevant country. If these market risks materialize, they may adversely affect business results and financial condition.