T.KAWABE&CO.,LTD.

The Group has entered into license agreements with renowned brands such as "Polo Ralph Lauren" and "Jill Stuart," obtaining manufacturing and sales rights, but the contract terms are conventionally short at 2-3 years, and revised terms at renewal or changes in management policy due to M&A on the part of the licensor may affect the contracts. If the Group becomes unable to maintain the partnership or if significant changes occur to the contracts, this may disrupt the market supply of products and affect the Group's financial position, business performance, and cash flows. The Group states that it is implementing various measures to avoid such risks, but specific details are not disclosed.

In addition to licensed products, the Group also develops its own planned products, and conducts investigations, applications, and registrations for intellectual property rights such as patents, utility models, designs, and trademarks through specialized patent firms. However, due to the existence of legal systems that do not presuppose the existence of registration and the nature of industrial property rights, which are subject to the outcome of national registration examinations, the Group states that it cannot guarantee the comprehensiveness of its investigations. There is a possibility that the Group may be sued by third parties in the future for damages, injunctions, etc., and should such a situation arise, it may disrupt product development and sales, affecting the Group's financial position, business performance, and cash flows. The Group states that it is not currently aware of infringing on any third party's intellectual property rights.

The Group conducts product manufacturing mainly in China and other Asian regions, but risks exist such as unforeseen changes in laws and regulations, vulnerability of industrial infrastructure, and geopolitical or political turmoil caused by terrorism or war. If these risks materialize, production activities overseas may be disrupted, potentially affecting the Group's financial position, business performance, and cash flows. It has also been noted that a decrease in domestic production volume due to concentration of overseas production could lead to the consolidation of production sites, resulting in the disadvantage of production being overly concentrated in one location.

The Group's production activities are mainly based overseas (China and other Asian regions), and fluctuations in exchange rates may cause production costs to rise or lead to restructuring of distribution. The Group states that the enforcement or revision of laws in other countries could similarly affect production costs and distribution systems, and in such cases, this may affect the Group's financial position, business performance, and cash flows. Specific hedging measures are not disclosed.

In addition to personnel with leadership abilities based on experience and knowledge, securing talented designers and merchandisers capable of developing products that capture fashion trends is essential for advancing the Group's business. Currently there is no surplus workforce, and if a large number of talented employees were to leave the company simultaneously, or if the Group were unable to sufficiently secure qualified personnel, this could disrupt business operations and affect the Group's financial position, business performance, and cash flows. The Group has positioned the securing and development of talented personnel and the prevention of their departure to outside companies as an important issue.

The Group holds a large amount of personal information in customer management for in-store sales, e-commerce sales, and other operations, and states that it takes thorough care in managing this information. In the event that customer information were to leak to outside parties, this could damage trust and affect the Group's financial position, business performance, and cash flows. Specific details of security measures are not disclosed.

The Group supplies products to its stores and customers through domestic and international logistics networks, but if natural disasters or man-made disasters such as war occur domestically or overseas, the supply chain may be affected, potentially stalling business operations and product supply. Given the concentration of production in China and other Asian regions, the impact of a disaster occurring in that region could be particularly significant. Specific details of the Group's BCP (business continuity plan) are not disclosed.