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The App Business, the core of the Group, is focused on the manga app market, but barriers to entry from legal systems, regulations, and patents are low, exposing the business to risks of increased competitor entry and a slowdown in market growth. If the Group fails to respond to changes in user preferences, expected revenue may not be achieved, potentially affecting business performance. As countermeasures, the Group is developing and differentiating original titles through collaboration with major publishers, and diversifying business risk through role sharing.

The internet and smartphone-related field is a rapidly changing industry with successive development of new technologies and introduction of new services. If the Group is slow to respond to technological innovation, it may result in a decline in competitiveness and service quality. There is also a risk of expanding additional expenditures such as system investment and personnel costs to respond to new technologies. The Group addresses this through the recruitment and development of engineers, the establishment of a creative workplace environment, and the enhancement of the development environment.

The App Business is subject to legal regulations such as the Act on Electronic Consumer Contracts, the Act on the Prohibition of Unauthorized Computer Access, the Act on the Limitation of Liability for Damages of Specified Telecommunications Service Providers, and the Act against Unjustifiable Premiums and Misleading Representations. Future enactment or revision of laws and regulations may restrict part of operations or force new responses. Stricter regulation carries the risk of increasing business operation costs or forcing changes to the business model. The Group addresses this by establishing and strengthening a legal compliance system and providing employee training.

The planning, development, and operation of manga apps are carried out through collaboration with other companies. If collaboration does not proceed as expected, or if favorable relationships cannot be maintained due to unexpected changes or termination of contract terms, this may affect business continuity and performance. While relationships with partners are currently described as favorable, there is a structural risk of high dependence on specific partners. The Group's policy is to continue efforts to maintain favorable relationships going forward.

"&AND HOSTEL" in the RET Business is susceptible to fluctuations in the number of inbound foreign visitors to Japan due to changes in the economy, personal consumption, and overseas conditions, and declines in occupancy rates or room rates may affect business performance and financial condition. In addition, fluctuations in material prices, construction costs, real estate prices, and interest rate trends may make it difficult to sell acquired real estate at the expected price, creating risks of a prolonged cash conversion cycle and valuation losses on real estate held for sale. The Group's policy is to address this based on its management strategy.

"&AND HOSTEL," the accommodation facility of the RET Business, is subject to a wide range of legal regulations, including the Building Lots and Buildings Transaction Business Act, the Building Standards Act, the Hotel Business Act, the Fire Service Act, and the Food Sanitation Act. The introduction of new regulations, changes in interpretation or revision/abolition of existing regulations, or serious legal violations may affect the financial condition and business performance. The Group addresses this by establishing and strengthening a legal compliance system and providing employee training.

Both the App Business and the RET Business are fully dependent on communication networks. System downtime caused by natural disasters, human factors, surges in access, or cloud service outages, as well as system failures caused by computer viruses or intrusion by hackers, may have a serious impact on the business and performance. The Group strives to continue providing secure services through server capacity enhancement and regular system vulnerability diagnostics.

If the development of internal management systems fails to keep pace with the rapid expansion of the business, appropriate business operations may become difficult, potentially having a material impact on the business and performance. Having been established in September 2014, the Group has a short corporate history, and its management plans inevitably include uncertain elements, meaning that future performance may not be accurately assessed from past results. The Group addresses this through the development and operation of an internal control system and by thoroughly ensuring compliance with laws and internal regulations.

Stable operation of high-quality services and improvement of competitiveness require personnel with advanced technical and planning capabilities, particularly in the development department. If the Group is unable to secure talented personnel meeting its hiring standards or if personnel development does not proceed as planned, this may affect the business and performance. There is also a risk of dependence on specific officers and executive officers, and concerns exist that performance could be affected if these officers and employees are unable to continue management or business execution. The Group strives to reduce dependence on specific individuals by strengthening its organizational structure and promoting delegation of authority.

Septeni Holdings Co., Ltd. is another affiliated company that holds 21.29% of the Company's voting rights. While the independence of the Company's business activities is currently maintained, future changes in the business policy or strategy of the Septeni group could affect the Company's decision-making and performance. While there is currently said to be no business competition within the group, the risk of a policy shift cannot be ruled out.