TABIKOBO Co. Ltd.

The company has recorded operating losses, ordinary losses, and net losses for four consecutive fiscal years since FY2021 (ending March 2021). In the fiscal year under review, it recorded an operating loss of ¥112 million (¥111,626 thousand), an ordinary loss of ¥108 million (¥108,419 thousand), and a net loss attributable to owners of the parent of ¥768 million (¥767,900 thousand), and the company recognizes that events exist that raise material doubt about its going concern assumption. Losses associated with the repayment of employment adjustment subsidies and special investigation expenses significantly increased the net loss. On the other hand, cash and deposits at the end of the fiscal year under review amounted to ¥2,604 million (¥2,603,535 thousand), an increase of ¥124 million (¥124,289 thousand) from the end of the previous fiscal year, and the company judges that there is no material concern regarding near-term cash flow.

There is a risk that travel demand will decline significantly due to weather fluctuations, changes in the global situation such as terrorism or war, economic deterioration, natural disasters, sharp exchange rate fluctuations, and the global spread of infectious diseases. In particular, when infectious diseases spread, travel restrictions and requests for voluntary restraint imposed by governments around the world can be extensive, potentially having a material impact on the group's business and results of operations. Since the group's mainstay products are overseas travel products, its earnings sensitivity to such changes in the external environment is high.

In the travel business, competition is intensifying beyond the traditional framework of the travel industry, involving not only existing domestic and overseas travel companies but also emerging venture companies, new entrants from other industries, and C to C-type accommodation intermediary services. If competition intensifies beyond the company's expectations, it may affect the group's business and results of operations. As a countermeasure, the company differentiates itself through specialized, flexible, and speedy responses from destination-specific concierges, focusing on internet sales.

Since the group's mainstay business is overseas travel departing from and returning to Japan, it is highly dependent on air travel, and flight reductions or discontinuations by airlines, as well as reductions in seat allocations for Japanese travelers due to increased inbound demand, directly affect the business. In addition, the company records commission income from airlines as part of its revenue, and reductions or elimination of such commissions may also affect its business results. As a countermeasure, the company is promoting measures to improve contribution margin, such as reducing labor hours through system improvements.

Since the company conducts foreign currency-denominated transactions in the procurement and sale of overseas travel products, it is constantly exposed to foreign exchange fluctuation risk. In a yen-depreciation phase, the yen-equivalent amount of foreign currency-denominated cost of sales increases, reducing gross profit, and rising travel costs also lead to sluggish bookings, resulting in a negative impact on business results. Although the company strives to mitigate this risk through foreign exchange forward contracts and other means, complete avoidance is difficult, and this also affects the yen conversion of the financial statements of overseas consolidated subsidiaries.

With the development of the internet, there has been an increase in cases where airlines, accommodation facilities, optional tour operators, and others sell directly to consumers, expanding purchasing behavior that bypasses travel agencies. If the number of travelers preferring direct-sale products increases, it may affect the group's transaction volume and business results. As a countermeasure, the company strives to maintain good relationships with suppliers and enhance customer trust in its own services.

Since the group's services are provided primarily through the internet environment, cyberattacks such as computer viruses or hacker interference, as well as unexpected system failures, could impair the stable provision of services and affect the group's business and results of operations. Although security measures have been implemented, the company recognizes that it is difficult to implement measures that anticipate every possible contingency.

The group records and manages customers' personal information, such as names, email addresses, dates of birth, addresses, and telephone numbers, on servers, and if an information leak occurs, it could lead to a decline in credibility and affect the group's business and results of operations. The company has obtained the Privacy Mark (issued by the Japan Institute for Promotion of Digital Economy and Community) and has implemented systems and procedures for personal information protection as a countermeasure.

The company is required to renew its registration as a Type 1 Travel Agency (Registration No. 1683, valid through June 23, 2030) every five years, and if it falls under any grounds for refusal or revocation of registration, it may be ordered to suspend operations. In addition to the Travel Agency Act, the company is also subject to regulations such as the Act against Unjustifiable Premiums and Misleading Representations, the Consumer Contract Act, and the Act on Specified Commercial Transactions, and violations of laws or the amendment or introduction of new regulations may affect the group's business and results of operations. The company has established a compliance structure through the development of internal management systems and other measures.

Since travel demand tends to be concentrated in the summer vacation period (July to September), the group's net sales and profits are also concentrated in that period, resulting in seasonal fluctuations in which net sales and profits decline in other periods. In the 31st fiscal year, quarterly operating income (loss) was a profit of ¥2,768 thousand in the first quarter (July to September), a loss of ¥34,240 thousand in the second quarter (October to December), a profit of ¥9,785 thousand in the third quarter (January to March), and a loss of ¥89,939 thousand in the fourth quarter (April to June), with losses in the second half of the year, particularly the fourth quarter, being notable. This seasonal fluctuation is a factor that undermines the stability of full-year business results.