CUBE CO., LTD.

It is extremely difficult to fully investigate the status of third parties' intellectual property rights, and if the Company is found to have infringed such rights, it may be subject to claims for damages, payment of usage fees, or suspension of product sales, among other consequences. In addition, if the Company's own intellectual property rights are used or imitated for unauthorized purposes, this may impede business operations. The Company works with its patent attorney advisor at the product planning stage to mitigate risk by taking care not to infringe on third parties' intellectual property rights.

Sales to the Korean general distributor JC FAMILY CO., LTD. accounted for 27.2% of the Company's sales amount in the fiscal year ended December 2025. If transactions decrease due to deterioration in JC FAMILY CO., LTD.'s business performance or a change in its policies, this may affect the Company's business results and financial condition. The overseas sales ratio reached 34.4% in the same period, and the risk of concentration in the Korean market is high. The Company aims to reduce this risk by accelerating business development in overseas areas outside Korea and promoting the globalization of its sales channels.

With the overseas sales ratio reaching 34.4% in the fiscal year ended December 2025, if political and diplomatic issues between Japan and Korea, changes to laws and regulations, changes in political conditions, natural disasters, epidemics, or sharp exchange rate fluctuations occur in overseas markets centered on Korea, this may have a certain impact on business development and performance. Because of the high degree of dependence on a specific region, the impact when geopolitical risks materialize is not limited. The Company has established a risk management system to gather information promptly and respond appropriately.

If the Company is unable to respond to changes in consumer needs and preferences, or fails to enhance the appeal of its products, it may become unable to maintain its competitiveness. Given the characteristics of a high-end luxury brand, maintaining brand image and product strength is directly linked to business performance. The Company constantly researches the market and strives to develop products that lead consumer preferences from innovative perspectives not bound by industry conventions.

If core systems or various cloud services are halted due to natural disasters, power outages, communication failures, cracking, computer viruses, etc., this may impede business operations, resulting in loss of credibility or missed business opportunities. Because stable operation of the EC site is directly linked to profitability in a business model centered on D2C, the impact of system failures is significant. The Company has established a system operation and management framework and implements measures such as operation monitoring, backups, and prevention of unauthorized access.

If personal information or confidential information of customers received in the course of business is leaked, tampered with, or misused, this may significantly affect business performance through customer claims for damages or loss of credibility. As the accumulation of customer information through EC sites progresses, the importance of information management is increasing. In addition to establishing information security-related regulations and implementing system-based measures, the Company has obtained the Privacy Mark and strives for safe management in accordance with its personal information management system.

If actual sales volumes differ from projections due to sudden changes in demand or mistimed product launches, this may result in stagnant inventory and the recording of inventory valuation losses, which may affect the Company's business results and financial condition. Because highly fashionable luxury brand products are strongly seasonal and trend-driven, the precision of inventory management is directly linked to profitability. The Company aims to improve its inventory turnover rate through timely inventory transfers utilizing its systems and sales warehouses, and by controlling distribution volumes across multiple sales channels.

Tomoaki Matsumura, the founder and Representative Director and Chairman, plays an important role in management strategy, coordination among business segments, and organizational management. If he becomes unable to continue performing his duties for any reason, this may affect the Company's business and performance. Because the founder's brand vision and personal connections underpin the foundation of the business, establishing a succession framework is a medium- to long-term challenge. The Company is working to strengthen its organizational structure, standardize operations, and enhance management functions, striving to establish a system that is not excessively dependent on a single executive.

The NXC Corporation group, including NEXON Japan Godo Kaisha, which holds 35.4% of the Company's voting rights, falls under the category of the Company's other affiliated companies. If changes in transaction terms occur due to the business policies of that group, this may affect the Company's financial condition and business results. There have been no transactions between the Company and the NXC Corporation group since the fiscal year ended December 2020 through the filing date of this document, but the group has a policy of maintaining its shareholding ratio in the Company for the time being. The independence of the Company's Board of Directors is ensured, and no agreements stipulating special treatment regarding approval matters have been concluded.

The tradable share ratio as of the end of the fiscal year under review remained at only 26.0%. If liquidity declines for any reason, trading in the market may stagnate, potentially adversely affecting the supply-demand balance of the Company's shares. The low level of the tradable share ratio may constrain the shares' appeal as an investment target for institutional investors. The Company plans to improve liquidity through measures such as requesting partial secondary offerings from major shareholders, increasing the number of tradable shares through the exercise of stock options, and regular share purchases by the employee stock ownership plan.