Escrow Agent Japan, Inc.

Although the Group is promoting digital transformation (DX), many of its operations remain dependent on labor-intensive processes. If clerical errors, accidents, or misconduct by employees occur, the Group may bear liability for compensation for performance and other obligations, which could affect its operating results and financial condition. As countermeasures, the Group is implementing simplification and standardization through improvements to business processes and manuals, building an action plan for a clerical error reporting system, and developing measures to prevent recurrence.

The Group provides services utilizing a wide variety of cloud systems. If system failures, malfunctions, unauthorized use, or similar incidents occur, the Group may bear liability for damages and other obligations, which could affect its operating results and financial condition. The Group seeks to reduce this risk through the development of management regulations based on its Basic Information Security Policy, response to legal amendments, and appropriate operational management.

Human resources are an extremely important management resource for the Group. If the Group is unable to sufficiently secure or develop the talent it requires, or if a large number of employees leave at the same time, this could disrupt business operations and affect the Group's operating results and financial condition. The Group implements measures to encourage long-term employee retention, including proper operation of its personnel evaluation system, development of a rewarding work environment, and enhancement of employee benefits.

If any Group company, officer, or employee intentionally or negligently violates laws or regulations, and this results in administrative measures such as business suspension orders from regulatory authorities, or the filing of lawsuits, the Group may become unable to provide its services, which could affect its operating results and financial condition. The Group strives to strengthen its company-wide compliance management system through regular meetings of the Compliance and Risk Management Committee, development of internal regulations, and obtaining Privacy Mark certification, among other measures.

If large-scale natural disasters such as earthquakes or typhoons, man-made disasters such as war, terrorism, or fire, or the spread of large-scale epidemics (including COVID-19) occur, normal business activities may become impossible, which could affect the Group's operating results and financial condition. The Group has implemented measures to minimize the occurrence of failures by installing and distributing business server systems and other infrastructure in disaster-resistant facilities.

The Group has business segments that are significantly affected by trends in the housing loan market and the domestic real estate distribution market. If these markets deteriorate rapidly, the number of transactions handled could decline significantly, which could affect the Group's operating results and financial condition. The Group continuously monitors market trends, including through dialogue with customers, while focusing on shifting toward business areas expected to expand over the long term, such as the inheritance market, and developing new services.

Depending on economic conditions, business partners may experience credit concerns, and unforeseen credit loss risks may materialize, resulting in the occurrence of bad debt losses or the need for additional provisions to the allowance for doubtful accounts, which could affect the Group's operating results and financial condition. The Group strives to prevent the occurrence of non-performing receivables through the establishment of credit limits for each business partner based on its credit management regulations, continuous monitoring of creditworthiness, and receivable protection measures as necessary.

Sales to Escrow Agent Japan Judicial Scrivener Corporation accounted for 14.4% of total consolidated net sales at the end of the fiscal year under review. If this corporation's management policy or business strategy changes and transaction terms significantly deteriorate or transactions are substantially reduced, this could affect the Group's operating results and financial position. The Group is focusing on expanding its sales base so as not to depend on specific business partners, through the development of new business partners and the deepening of relationships with existing ones.

If reputation, rumors, or speculation reported in the media or on internet bulletin boards lead to a reduction or suspension of transactions with business partners, this poses a risk that could affect the Group's operating results and financial condition. The Group addresses this risk through timely and appropriate disclosure of information and by establishing a system for early response in the event a reputational issue arises.