GreenEnergy & Company Inc.

For GX Green Energy power generation facilities, revenue is recognized upon grid interconnection with the power utility following construction completion and customer handover. Accordingly, construction delays caused by natural disasters or delays in grid interconnection would directly reduce revenue for the relevant period. Because the revenue recognition structure depends on construction completion timing, there is also an inherent risk of concentration near period-end. The Company has not disclosed specific countermeasures at this time.

Since the primary customer base is individual consumers, macroeconomic fluctuations such as economic conditions, interest rate levels, and land price levels, as well as declines in consumer income, directly affect demand. Policy changes such as revisions to housing tax systems, amendments to the FIT system, and consumption tax rate changes could also reduce individual consumers' purchasing intent. Given the limited diversification of the customer base, a decline in demand would have a significant impact on business performance.

The decarbonization business relies on the institutional design under the amended FIT Act, and there is a risk that system changes, stricter rules, or delays in grid interconnection could reduce customers' purchasing intent. Because the direction of government policy affects the fundamental basis of the business, changes in the regulatory environment translate directly into business performance impacts. The Company has not disclosed specific countermeasures at this time.

Materials for solar power generation facilities, such as solar panels, and housing construction materials are highly dependent on imports, creating a risk that procurement prices could surge due to exchange rate fluctuations. If cost increases cannot be passed through to sales prices, profit margins would be directly squeezed. This also affects the material procurement conditions of subcontractors, raising concerns about impacts across the entire supply chain.

The Company relies heavily on subcontracting most construction work to specialized contractors such as carpenters, electricians, and plumbers through separate orders, creating a risk of being unable to secure sufficient subcontractors when sales volume increases or the sales area expands. If subcontractors experience business difficulties or are overloaded, causing construction delays, or if increased subcontracting costs due to rising material prices cannot be passed through to sales prices, business performance would be adversely affected. While construction management operations (quality, safety, process, and cost management) are handled in-house, there is a structural vulnerability in that the majority of actual construction work depends on external parties.

Under the Act on Promotion of Quality Assurance for Housing, the Company bears liability for non-conformity regarding the main structural parts and rainwater intrusion prevention parts of newly built houses for 10 years from the date of handover, and under the Building Lots and Buildings Transaction Business Act, at least 2 years for other parts. If a serious defect occurs, even if the cause lies with a third party (such as a subcontractor), the Company as seller bears the risk of incurring compensation and repair costs, raising concerns about impacts on business development due to a decline in creditworthiness. The Company is also subject to the obligation to secure financial resources under the Act on Securing Performance of Specified Housing Defect Warranty Liability.

In the event of a large-scale natural disaster such as an earthquake or typhoon, substantial costs may arise not only for repairing the Company's own facilities and construction sites but also for initial response and support activities such as building inspections and emergency measures. If the supply of materials to construction sites is disrupted due to large-scale damage to social infrastructure, this would delay completion and handover, postponing revenue recognition and affecting business performance. There is no disclosure of the geographic diversification of business areas or specific BCP countermeasures.

The Company is subject to a broad range of legal regulations, including the Electricity Business Act, Building Standards Act, Construction Business Act, Building Lots and Buildings Transaction Business Act, Agricultural Land Act, Act on Specified Commercial Transactions, and Act on the Protection of Personal Information, and there is a risk that legal amendments or the introduction of new regulations could constrain business activities. While the Company discloses that no grounds for revocation of licenses or permits have arisen at this time, changes in regulations related to renewable energy could particularly affect the fundamental basis of the business. The Company states that it strives to develop internal management systems and comply with various conditions, but detailed disclosure of the specific systems in place is limited.

Given the business characteristic of primarily serving individual customers, the Company holds a large amount of personal information, and if an information leak occurs, the resulting decline in social credibility and the costs of response would affect business performance. While the Company states that it is developing systems based on its Personal Information Protection Management Regulations, risks such as cyberattacks and internal misconduct continue to exist. As a small to medium-sized enterprise, there is no detailed disclosure regarding the scale or level of security investment.

Representative Director and President Takafumi Suzue plays an important role in management policy, management strategy, and product strategy, and as he has served as the Company's chief officer since its founding and is also a major shareholder, his departure or any unforeseen circumstances could have a significant impact on business performance. Given the Company's small scale, major aspects of its business activities depend on him, and while the Company states it is working to build an organizational management structure, this dependence continues at present. There is no specific disclosure regarding succession planning or progress in delegating authority.