Business and other risks

Business and other risks

We list the main matter that it is thought the factor of the risk. In addition, we disclose below even that we do not necessarily correspond to a risk factor from the viewpoint of active information disclosure about the matter that it is thought important that investors' judgement. Moreover, We act as our group for evasion of the outbreak and correspondence when it occurred after having recognized possibility of these risk outbreak. The matter about the future in the sentence securities report (September, 2016 period) (is called "this book" as follows.) our group determined as of (December 26, 2016) on a presentation day.

1.Franchise method

The Brokerage FC duties reach by the franchise (FC) method of the real estate lease mediation shop, and favorable increase of the number of FC participation stores becomes the key of the success. Our group cannot maintain excellent service. Other companies give service more than our group. There is a low-level service offer or an illegal act in some FC participation shop and takes the image damaging of the whole FC. FC corporate member intends original business development in a group. When the above-mentioned thing happens, the number of FC participation stores decreases or fails to rise and may adversely affect the business showings of Our group.

2.IT System

The system development is related with a business base deeply, and development by the company, the trust to the other companies, the system purchase from the other companies which an FC participation shop needs, are important management issues. A large amount of cost may be required for the development of the new system, the purchase, as a result, may adversely affect the business showings of our group. Furthermore, we back up a computing system, the database, but we suffer damage or compensation of the damage may be requested from FC participation shop, a real estate owner, a resident or an entering applicant by the interruption of the influence on database due to our system failure, large-scale wide area disaster or computer virus or the service and, as a result, may adversely affect the business. In addition, even if the WEB site of our group shows it to general consumers free, and a system stopped it for a certain period of time, We think that We are less likely to receive compensation for damages request from public consumers, but if such situations are repeated, We will lose trust of WEB site in itself and may adversely affect the business.

3.Property management duties: About Restoring construction work

In Property Management business, our group undertakes restoring construction work from the residents or the real estate owner at the time of the resident withdrawal. "The regulations about the prevention of the dispute to affect the rental contract of the house in Tokyo" were enforced in Tokyo, and it was shown definitely that the expense to suffer from restitution in construction burdened the real estate owner other than the case of intention, the fault of the resident. Although we have introduced a flat rate system for cost burdens on restoration work, there are also cases of actual expenses settlement, which may reduce the Group's revenue related to the restoration work. Furthermore, it may adversely affect the business showings of our group when the regulations like the future spread in the major cities of the whole country.

4. On domestic real estate market conditions

The overall business of the Group is largely affected by trends in the domestic real estate market situation. In the brokerage FC business, we are indirectly influenced by real estate rental market conditions through real estate leasing business operators. In addition to the real estate rental market situation, we are directly receiving the impact of wage level trends, rent contract renewal situation, vacancy situation, etc. in the Brocarage business (real estate brokerage business) and Property Management business . Furthermore, in the PI · Fund business (real estate investment business and fund management business), if real estate market conditions decline, it is possible that impairment of tangible fixed assets owned by the Group may occur. In the future, if the current domestic real estate market stagnation becomes prolonged or worsens, there is a possibility that the Group's financial condition, business performance and cash flow situation may be adversely affected.

5. About Interest-Bearing Debt

The Group procures funds necessary for business development mainly from borrowings from financial institutions. If deterioration of the performance or financial situation of the Group, the rumor, the dissemination of rumors, etc. occurs, or when financial instability arises, the necessary funds cannot be secured at reasonable conditions and the cash position can be difficult. In addition, if there is a significant change in future interest rate trends, the Group's operating results may be adversely affected by an increase in interest expense.

6. About deferred tax assets

The Group records deferred tax assets of ¥ 2,938 million in the consolidated balance sheet as of the end of the consolidated fiscal year based on forecasts regarding future taxable income. However, if the Company determines that it is not possible to obtain the estimated amount of taxable income corresponding to the amount of deferred tax assets according to the future performance of the Group, the Company shall reduce the amount of deferred tax assets recorded As a result, there is a possibility that the Group's financial condition, business performance and cash flow situation may be adversely affected.

7. Securing personnel in business development

The Group develops Brokerage business, Property Mnagement, PI · fund business and other businesses using real estate information network as a platform and also carries out business development abroad. In developing these businesses, we believe that highly specialized knowledge on real estate business is required for executives and employees, and how to secure and educate talented persons who have the skills required by the group we think that it is an important issue. If sufficient human resources cannot be secured or educated, there is a possibility of hindering future business development, and there is a possibility that the Group's business results may be adversely affected.

8. Information management

Property information and real estate owner information etc. are accumulated in the database of our group's intermediary business as data by registering the rental property of FC affiliated companies. In addition, occupants may be accumulated as individual information data when searching for rental properties on our website. Furthermore, in property management business, PI · fund business, information on residents and real estate owners are registered in the leasing management system etc. of the Group. Regarding these information, the Group has a duty of confidentiality, and we are trying to prevent leaks by strengthening our in-house management system and adopting a system to prevent external infiltration. However, in the event of leaks of these data to the outside due to internal management system problems or invasion from outside the company, due to damages to the Group and claims of damaging credit, etc., the Group's financial condition, business performance and cash flow It may adversely affect the situation.

9. About dilution of our common stock

The Company has 160 units of the Company's 5th Stock Acquisition Rights (hereinafter referred to as the "5th Stock Acquisition Rights") with the issue date of March 30, 2011 as the number of shares of the Company's common stock 4,800,000 As of the date of submission of this document, 79 pieces (2,370,000 shares of the Company's common stock to be a target) remain. The number of shares of common stock of the Company (2,370,000 shares) to be delivered when all remaining 5th stock acquisition rights are exercised is approximately 14.8% of the number of outstanding ordinary shares (16,028,060 shares) as of the date of this submission. In the event that the 5th stock acquisition rights are exercised, there will be a serious dilution of the Company's ordinary shares already issued as of the date of submission of this document, possibly adversely affecting the market price of the Company's common stock.

10. Changes in Real Estate Related Legal System

Revocation and new construction of related real estate related laws such as related housing land building trading business law, land use planning law, construction business law, building standard law, urban planning law, unjustifiable prize and misleading prevention law interfere with future business development There is a possibility that this could have a negative impact on the Group's business results.

11. About natural calamity lands

Due to natural disasters such as earthquakes and wind and flood disasters, or the occurrence of sudden accidents, damage or loss of real property owned by each business, lease management agreement and sublease agreement concluded may be canceled. In that case, the Group's financial condition, business performance and cash flow situation may be adversely affected.