Kurashicom Inc.

The D2C Domain's net sales are directly dependent on the number of purchasers and per-purchaser sales at Hokuou, Kurashi no Dougu-ten. If customer acquisition capability declines due to changes in user needs stemming from social and economic conditions, intensifying competition, rising advertising costs, or delayed response to new devices and technologies, this could result in a slowdown in the pace of sales growth or an increase in marketing expenses. The annual securities report designates this as a "particularly important risk," and the company's policy is to continue efforts on both content supply and app/SNS customer acquisition.

The company holds large volumes of personal information, including member registration data, and if such information is leaked externally or misused for any reason, this could have a material impact on financial position, business results, and the company's social credibility. The annual securities report designates this as a "particularly important risk"; the company acquired Privacy Mark certification in August 2023 (renewed every two years) and addresses this risk through the development of basic regulations on personal information protection, internal training, and building a management framework.

As the majority of the business is conducted via the internet, a large-scale system failure caused by a surge in access load, natural disasters, cyberattacks, or other causes could affect financial position and business results. The annual securities report designates this as a "particularly important risk," and the company works to reduce this risk through strengthening server infrastructure, building internal systems, and preparing responses for when failures occur.

D2C sales of household goods and other items through Hokuou, Kurashi no Dougu-ten account for the majority of the Group's net sales, and if D2C Domain sales decline due to a decrease in users or market contraction, this would have a direct impact on financial position and business results. The annual securities report designates this as a "particularly important risk," and the company's policy is to continue working on developing revenue sources outside of D2C, such as the Brand Solution Domain, in addition to strengthening user engagement.

The competitive advantage of the life culture platform relies on culture assets such as brand value, and if these are impaired by unforeseeable events, resulting in a loss of user engagement, the platform may cease to function effectively, affecting business results and financial position. The annual securities report designates this as a "particularly important risk," and the company strives to maintain stakeholder trust through content distribution, quality control, regulatory compliance, and enhanced internal controls.

The company holds fixed assets such as goodwill arising from acquisitions of companies through share acquisitions, and if impairment processing becomes necessary due to a deterioration in earnings or other factors, this could affect business results and financial position. The annual securities report designates this as an "important risk," and the company's policy is to address it through continuous earnings control and appropriate assessment of the recoverability of the book value of fixed assets.

In the D2C Domain, product delivery is outsourced to transport companies, and a fixed delivery fee is collected from purchasers; as a result, if delivery costs rise in an environment where passing on costs to prices is difficult, this could affect financial position and business results. The annual securities report designates this as an "important risk," and the company's policy is to address it through continued investment in delivery operation efficiency and business process improvements.

Some of the products handled are produced outside Japan, such as in China, and country risk exists arising from regulatory and legal changes and political and economic instability in foreign countries. If this risk materializes, it could affect performance through impacts on purchase prices due to exchange rate fluctuations and disruptions to product procurement such as delivery delays, and the annual securities report designates this as an "important risk." The company currently hedges this risk by diversifying suppliers, and its policy is to fully consider this risk when selecting new major suppliers.

Representative Director and President Kohei Aoki plays a central role in management policy and strategy, and Director and Vice President Yuko Sato plays a central role in business promotion, with both serving important roles across overall business activities; if both were to retire or resign and it became difficult to hire successors, this could affect performance and business development. The annual securities report designates this as an "important risk," and the company strives to reduce this dependence by delegating authority to and developing other directors and employees.

In operating the D2C Domain, the company conducts business based on multiple laws and regulations, including the Act on Specified Commercial Transactions, the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceuticals and Medical Devices Act, and the Household Goods Quality Labeling Act; violations of laws, legal amendments, or the enactment of new laws could affect the business and performance. The annual securities report designates this as an "important risk," and the company works to strengthen its compliance framework by utilizing advice from retained legal counsel while having legal personnel confirm the legal compliance of internal operating rules and review contracts.