Hakuten Corporation

Because the advertising and event industry is heavily influenced by trends in corporate spending on sales promotion, a prolonged downturn in the domestic economy that leads to substantial cuts in corporate promotional investment could reduce revenue through the scaling down of event and exhibition projects and a decline in the number of orders received. The Company has secured stability by avoiding dependence on specific clients and building a broad customer base, but it remains structurally vulnerable to a deterioration in the macroeconomy.

Securing capable personnel is essential for sustained growth. If changes in the hiring environment prevent the Company from securing the necessary personnel, if planned training cannot be carried out as intended, or if capable personnel leave the Company, this could adversely affect operating results. The Group is addressing this through active recruitment activities and the development of training programs, but intensifying competition in the labor market remains an ongoing risk factor.

If a serious accident occurs during the installation of exhibition booths and other structures or during the operation of large-scale events, there is a risk of a decline in orders due to loss of customer trust, as well as the risk of claims for damages exceeding the coverage amount of liability insurance. The Company has taken measures such as establishing a quality and safety management department, formulating and disseminating accident-response manuals, and entering into liability insurance contracts; however, in the event of an unforeseen serious accident, this could have a material impact on the Company's financial position and operating results.

During live streaming of press conferences, seminars, online events, and the like, disruptions to internet connections or malfunctions of filming equipment could lead to a loss of customer trust and claims for damages. The Company addresses this through the establishment of a dedicated online streaming team, formulation of accident-response manuals, internal sharing of past incidents, and the conclusion of IT liability insurance contracts; however, this risk continues to exist given the increasing complexity of the IT environment.

In the course of business operations, the Company has opportunities to receive personal information and confidential information from clients, and there is a risk that, in the event of an unforeseen incident resulting in leakage, tampering, or improper use of such information, the amount of damages claimed could exceed the insurance coverage amount. Furthermore, in the event of a serious information incident, regardless of the amount of damages involved, the Company's social credibility could be damaged, potentially affecting its financial position and operating results. The Company has taken measures such as raising information management awareness through training for officers and employees and entering into insurance contracts.

If exhibitions and events are repeatedly postponed or cancelled due to natural disasters such as earthquakes, disasters occurring elsewhere, or the spread of specific infectious diseases, this could result in the loss of sales opportunities and affect the Company's financial position and operating results. Because the Company's core business consists of events and exhibitions premised on in-person attendance, it has a structural vulnerability whereby its business continuity is threatened by sudden changes in the external environment. There is no specific description of a business continuity plan (BCP) in the securities report.

The Group is subject to numerous relevant laws and regulations, including the Construction Business Act, and is required to respond to the enactment and revision of such laws. Failure to comply with these regulations could result in restrictions on business activities, affecting the Company's financial position and operating results. The Company promotes management that emphasizes compliance, but it must continue to respond to changes in the regulatory environment.

As of the date of filing of the securities report, the Company has not received notice of, or had litigation filed against it; however, there is a possibility that unforeseen litigation could be filed by a third party beyond the Group's awareness. Depending on the outcome of such litigation, there is a risk of impact on the Company's financial position and operating results, and the potential risk increases as the scale of business operations expands.