Koukandekirukun, Inc.

As the renovation market expands in scale, entry into e-commerce by companies from other industries such as real estate and home appliances is increasing, creating a risk that the competitive environment for the Company, which operates services over the Internet, will deteriorate. If intensified competition reduces customer acquisition capability or price competitiveness, this could directly affect net sales and profit margins. The Company strives to improve brand recognition and maintain customer acquisition for Koukandekirukun through SEO measures, advertising operations, and media activities.

Most customer acquisition for the Company's EC site comes through search sites, and if search engine operators change their logic, there is a risk that conventional SEO measures will cease to function, causing a significant decline in customer acquisition. A decline in customer acquisition would lead directly to a decrease in the number of orders received, potentially having a material impact on business performance. While the Company continuously implements SEO measures, it faces a structural vulnerability due to its high dependence on external platforms.

The Company concentrates its logistics functions, from receiving to shipping products, at a single product center in Yokohama City, Kanagawa Prefecture, creating a risk that if this base becomes inoperable due to a natural disaster or fire, inventory losses and delays or temporary suspension of services could occur. Although inventory is covered by insurance, there is no alternative base from a business continuity standpoint, and opportunity losses and customer attrition during the recovery period could affect business performance.

In FY2026 (ending March 2026), dependence on the three major suppliers (Panasonic Living Co., Ltd. 21.56%, Yokoyama Co., Ltd. 14.72%, and Hashimoto Sohgyoh Co., Ltd. 14.47%) reaches a combined 50.75%, creating a risk that procurement could be seriously disrupted if it becomes difficult to continue transactions or if product supply is interrupted. If securing alternative suppliers proves difficult, this could affect sales and customer satisfaction through a reduced product lineup or delivery delays.

Most operations, from order receipt, ordering, and inventory management to shipping and revenue recognition, depend on the operations management system, creating a risk that the entire business could halt in the event of a system failure. Depending on the length of the recovery period, this could result in lost sales opportunities and a decline in customer trust, potentially having a material impact on business performance. Although backup systems, backup measures, and security measures are in place, complete elimination of failure risk is difficult.

Against increasingly sophisticated cyberattacks, the Company has implemented measures such as firewalls, WAF, communication encryption, IP address restrictions, and access rights management; however, if an attack exceeding expectations occurs, there is a risk of system intrusion or service suspension. If an attack succeeds, in addition to disrupting business continuity, it could lead to leakage of customer information and loss of trust, potentially affecting business performance.

The Company holds large amounts of personal information such as customer names and addresses through its EC business, creating a risk that if an information leak occurs, claims for damages and loss of trust could affect business performance and financial condition. As a business operator handling personal information under the Act on the Protection of Personal Information, the Company is working to strengthen internal regulations, internal management systems, and system security, but complete prevention of leakage cannot be guaranteed.

Founder and Representative Director and President Masashi Kurihara plays a critical role across overall business activities including management policy and strategy, creating a risk that management continuity could be impaired if he becomes unable to perform his duties for any reason. Although authority is being delegated to other directors and executive staff, a high degree of dependence on this particular individual continues at present.

Representative Director and President Masashi Kurihara holds 59.97% of the total issued shares, including holdings through his asset management company and family members, resulting in a structure in which he has dominant influence over voting rights exercised at shareholders meetings. If his shareholding were to decrease significantly for any reason, this could affect the stock market price and the exercise of voting rights.

The Company is subject to regulation under laws such as the Act on Specified Commercial Transactions, the Act against Unjustifiable Premiums and Misleading Representations, the Water Supply Act, and the Electrical Construction Work Act, creating a risk that new legal regulations or amendments to or reinterpretations of existing laws could force changes to business operations. While the Company states that there are currently no regulations with a materially significant impact on business continuity, increased costs of responding to changes in the regulatory environment and business constraints could affect business performance. The Company is addressing this through the development of its compliance system and employee education.