AVANTIA CO., LTD.

For land acquisition, the Company acquires properties that meet its internal standards after undergoing in-house surveys, examination, and screening; however, there is no guarantee that smooth land acquisition will always be achieved. If difficulties arise in land acquisition, it may become difficult to secure residential land for supply, which could have a direct impact on business performance. The Company seeks to reduce this risk by establishing a screening process based on internal standards.

Funds for land acquisition are financed mainly through borrowings from financial institutions, and as of the end of August 2025, the ratio of interest-bearing debt to total assets stood at a high level of 52.5%. A rise in market interest rates would increase funding costs and, through higher mortgage interest rates, could reduce consumer purchasing intent, thereby affecting both demand and business performance. Changes in housing tax policy or the consumption tax rate could similarly become factors causing fluctuations in demand.

Store openings are advanced based on comprehensive consideration of timing, location, scale, and other factors; however, if the conditions or profitability of a location do not meet the Company's standards, the Company may change the region or timing of the opening. If new store openings cannot be carried out as planned, expansion of the sales network may be delayed, which could affect business performance forecasts. The Company responds by reviewing conditions as appropriate, but depending on the external environment, plan revisions may become unavoidable.

The real estate industry to which the Group belongs is subject to a wide range of laws and regulations, including the National Land Use Planning Act, the Building Lots and Buildings Transaction Business Act, the City Planning Act, the Building Standards Act, the Construction Business Act, and the Housing Quality Assurance Act. If these regulations are amended or new regulations are enacted in the future, constraints on business operations may increase, which could affect business performance. The Company has established a system to comply with current regulations, but the content and timing of regulatory changes are external factors that are difficult to predict.

The Group handles a large amount of personal information, primarily of home purchasers, and is advancing the development of a system compliant with the Act on the Protection of Personal Information. However, if personal information is leaked due to cyberattacks, internal misconduct, or other causes, this could affect business performance through loss of customer trust, claims for damages, and administrative sanctions. The Company continues to develop its protective systems, but this does not guarantee complete prevention.

Lawsuits may be filed regarding defects in real estate developed, constructed, or sold by the Group. Depending on the content and outcome of such litigation, business performance could be affected through payment of damages, repair costs, and damage to brand image. The Company strives to maintain quality control, but it is difficult to completely eliminate the risk of latent defects after delivery.

The Group's sales regions are limited to four market areas: the Chubu region, the Greater Tokyo area, the Kansai region, and the Kyushu region, and depending on the business or product, there is a bias toward specific regions. If economic downturns, declines in land prices, changes in demographics, or other events occur in these regions, demand in the affected areas may decline, which could affect business performance. The diversification effect from regional dispersion is limited, and the high degree of dependence on specific market areas is a risk factor.

Because home purchasers tend to prefer delivery during the summer holidays or year-end, the Group's net sales and profits tend to be concentrated in the second and fourth quarters. This seasonal fluctuation creates a risk that construction and delivery work will be concentrated in specific quarters, leading to tight supply and demand for personnel and materials and increased burden on quality control. In addition, the large quarter-to-quarter variability in business performance can make it difficult for investors to evaluate performance.

If officers, employees, or others become infected, depending on the scale and extent of the spread of infection, the Company may be forced to suspend or halt business activities. In addition, restrictions on order-taking activities, decreased customer purchasing intent, and delays in the completion or delivery of construction due to shortages or delivery delays of building materials and housing equipment could affect business performance. The COVID-19 pandemic is cited as the primary example envisioned, and continued response to infectious disease risk is required.

If a large-scale earthquake, typhoon, or other natural disaster, or other unforeseeable unexpected event occurs, it may impair the value of real estate held or for sale, or delay delivery timing, which could affect business performance. Major sales regions such as the Chubu region and the Greater Tokyo area include areas with relatively high earthquake risk, and the impact of a large-scale disaster could be extensive. The Company states that it strives to avoid such occurrences and minimize risk, but it is difficult to control the occurrence of natural disasters itself.