Casa Inc.

When a tenant defaults on rent payments, the Company is obligated to make subrogated payments to the landlord. A deterioration in the domestic or international economic and employment environment could increase subrogated payments and expand the associated funding burden, and may also require additional provisions for allowance for doubtful accounts related to indemnity claims, directly affecting business results and financial condition. While the Company strives to mitigate this risk through the establishment of its own credit management system and enhanced monitoring of impaired receivables, the risk remains that future recovery performance may fall short of estimates.

As of the end of the consolidated fiscal year under review (January 31, 2026), the Company had recorded goodwill of ¥2,007,907 thousand arising from the absorption-type merger with the former Casa Inc. and goodwill of ¥222,664 thousand arising from the acquisition of shares in Profit Center Co., Ltd., together accounting for approximately 14.7% of total assets of ¥15,176,706 thousand. If the profitability or business plans assumed at the time of acquisition are not achieved, indications of impairment may be recognized, requiring the recording of an impairment loss, which could have a material impact on business results and financial condition. Although goodwill is amortized on a straight-line basis over the period in which its effects are expected to manifest, the risk of a decline in recoverability due to changes in the business environment continues to exist.

The Group primarily conducts its Rent Guarantee Business and records revenue through agents such as real estate management companies. If the number of new tenant referrals from agents decreases for any reason, or if there are changes in transaction terms with major agents or in the competitive environment, this would directly affect business performance and financial condition. Maintaining relationships with agents is fundamental to business continuity, and there is an inherent risk of concentration in specific channels.

If the rental market contracts due to fluctuations in rent levels, trends in housing construction, revisions to real estate-related laws and tax systems, population decline, or other factors, business opportunities would decrease through a reduction in new contracts and guarantee underwriting opportunities. The Group's core business, the Rent Guarantee Business, directly depends on the size of the rental market, and a deterioration in market conditions could have a wide-ranging impact on business performance and financial condition.

While no laws directly regulate the Rent Guarantee Business, a voluntary registration system introduced by the Ministry of Land, Infrastructure, Transport and Tourism began in October 2017, and future mandatory registration, the introduction of new regulations, or revisions to existing regulations could affect business operations. If changes to relevant laws and regulations, administrative guidance, or industry rules require modifications to business operation methods or management systems, this would result in increased response costs and disruption to business operations. The uncertainty in the regulatory environment poses a risk that makes formulating medium- to long-term business plans difficult.

As the Company's head office functions, including its main business locations and operations division, are located in Tokyo, and the rental properties covered by guarantees are also concentrated in the Tokyo metropolitan area, the occurrence of a large-scale earthquake or similar event in the Tokyo metropolitan area could cause serious disruption to operations due to the suspension of head office functions or system failures. Furthermore, depending on the location and scale of a disaster, tenants' ability to pay and property occupancy conditions could also be affected, potentially leading to a chain reaction of increased subrogated payments and deteriorating business performance. This geographic concentration risk is an important issue from the perspective of business continuity.

The Company relies on stable system operation for its core business functions, including screening, guarantee contract management, receivables management, and personal information management. If systems become inoperable due to accidents, fire, natural disasters, power outages, human error, software malfunctions, unauthorized external access, or other causes, this would disrupt core business operations across the board, including screening, contract management, billing, and collections. While the Company has established an emergency response framework, including backup plans, and security measures, if a failure becomes prolonged, the impact on business performance and financial condition could be significant.

The Company holds a large volume of customer information, including personal information, and if such information is lost, leaked, misused, or accessed without authorization by external parties, this would disrupt business activities, give rise to liability for damages, damage social credibility, and harm relationships with business partners. While the Company strives to prevent such incidents through Privacy Mark certification, the development of relevant internal regulations, and employee training, complete prevention is difficult given the increasing sophistication of cyberattacks and other threats, and the risk of an adverse impact on business performance and financial condition remains.

Representative Director and President Masayoshi Miyaji plays an extremely important role in overall business activities, including the determination of management policy and business strategy, and if he becomes unable to perform his duties for any reason, this could affect business performance and financial condition. While the Company is working to strengthen its management organization by developing management executives and delegating authority, it recognizes that reducing this dependence remains a work in progress.

As of the end of the consolidated fiscal year under review, the number of potential shares arising from stock acquisition rights granted to directors and executive officers was 1,438,600 shares, equivalent to 11.1% of the total number of shares including potential shares, which stands at 12,961,100 shares. New shares issued upon exercise of these rights could affect share price formation through dilution of share value and impact on supply and demand, potentially reducing the value held by existing shareholders.