MIKIKOGYO CO.,LTD.

The Group conducts business under a wide range of laws and regulations, including the Construction Business Act, the Building Standards Act, the Architects Act, the Building Lots and Buildings Transaction Business Act, the National Land Use Planning Act, the City Planning Act, and the Housing Quality Assurance Act. Amendments to these laws could increase business operating costs or impose business constraints, potentially having a material impact on operating results. There is currently no specific description of countermeasures, and continuous monitoring of regulatory trends is required.

Regarding the licenses and registrations required to conduct the construction and real estate businesses, it is stated that there are currently no grounds for revocation or non-renewal. However, if licenses were revoked or could not be renewed for some reason in the future, business continuity could become difficult, potentially having a material impact on operating results. The securities report does not describe specific preventive measures.

The construction industry tends to have its performance affected by trends in public investment by national, prefectural, and municipal governments, and a reduction in public investment directly impacts operating results through decreased order opportunities. If public investment continues to be restrained due to fiscal consolidation, the Group's sales and profits could be pressured. The securities report does not describe specific countermeasures.

Private-sector capital investment could contract due to companies reviewing their investment plans amid employment insecurity, and a decline in private construction investment would affect the Group's orders and sales. During economic downturns, private investment tends to cool rapidly, increasing the risk of performance volatility. The securities report does not describe specific risk mitigation measures.

The housing construction and sales business faces the risk of declining housing demand due to changes in the economic environment such as worsening income outlooks stemming from employment insecurity, substantial increases in interest rates, and substantial declines in land prices. In addition, changes to or abolition of the special tax deduction system for housing loans could lead to changes in purchase timing or reduced demand, potentially having a material impact on operating results. The securities report does not describe specific demand-stimulation measures or countermeasures.

Due to declining housing demand or changes in purchase timing, there is a risk that the sales period for real estate held for sale will be prolonged, leading to increased inventory. An accumulation of inventory would result in the tying up of funds, potentially having a material impact on the Group's financial position. The securities report does not describe specific measures for inventory management or fund allocation.

A substantial rise in interest rates increases the repayment burden of housing loans, which reduces prospective buyers' willingness to purchase homes, leading to a decline in demand for the housing construction and sales business. Since sudden changes in the interest rate environment can rapidly spread throughout the housing market, this could have a material impact on the Group's operating results. The securities report does not describe specific hedging measures against interest rate risk.

The Group operates a commercial and residential land and building leasing business, and changes in lease terms and conditions or supply-demand conditions in surrounding areas, among other factors, may lead to changes in or termination of lease contracts. If contracts are terminated or terms deteriorate, this would affect operating results through decreased rental income. The securities report does not describe specific countermeasures such as tenant diversification or risk management.

When newly acquiring real estate for leasing purposes, or when commencing leasing or changing terms for existing properties, there is a risk that development or the conclusion/amendment of lease agreements may not proceed as planned. Delays in development or in concluding contracts could lead to shifts in the timing of revenue recognition or the incurrence of additional costs, potentially affecting operating results. The securities report does not describe a specific project management framework.

A substantial decline in land prices could impair the value of real estate for sale and rental real estate held by the Group, potentially having a material impact on financial position and operating results through the recognition of valuation losses or impairment. Since deterioration in real estate market conditions is also linked to declining housing demand, this could constitute a compound risk factor. The securities report does not describe specific asset valuation management or countermeasures.