IACE TRAVEL Corporetion.

The occurrence of earthquakes, typhoons, infectious diseases, conflicts, and similar events may result in the suspension of tourism infrastructure and transportation, travel restrictions, and declines in travel demand. As the Group has overseas subsidiaries, there is also a risk of business restrictions arising from changes in political and economic conditions in each country and revisions to local laws and regulations. The Group has taken measures such as diversifying customers and suppliers, diversifying business locations, and developing system infrastructure; however, if large-scale events beyond expectations occur, this could have a material impact on the Group's overall business performance and operations.

In addition to competition with existing travel companies, there are risks of market entry by emerging companies with innovative business models, strengthened direct sales by suppliers such as airlines, and the risk of existing systems becoming obsolete. The Group seeks to differentiate itself through UI/UX improvements, new feature development, a 24-hour assistant service, and discounted commission rates; however, if competition intensifies beyond expectations or the Group falls behind in technological innovation, a decline in competitiveness could have a material impact on business performance and business development.

Due to the nature of the travel business, the Group handles a large volume of customers' personal information, giving rise to risks of information leakage through cyberattacks, employee misconduct, or negligence. The Group has obtained Privacy Mark certification (JIS Q 15001), established a personal information protection management system, and implements regular training for all employees and internal audits; however, if a leak occurs, it could significantly affect business performance and operations through loss of social credibility and the occurrence of legal liability and penalties.

In the BTM Service, contracted companies use a business travel arrangement system, making stable system operation a prerequisite for business continuity. If the system is suspended due to hacking, virus infection, natural disasters, or similar causes, service provision could be disrupted, and if prolonged, could lead to the suspension of orders. The Group has implemented security measures and redundancy, but the impact on business performance and operations in the event of a failure remains high.

In the course of business activities, there is a risk that complaints regarding services or quality from customers, business partners, or third parties could arise and develop into unforeseen litigation. The Group strives to establish compliance regulations, provide internal training, and strengthen its systems, and currently there are no material lawsuits or claims; however, depending on the content and outcome of litigation, there could be a significant impact on business performance and business development.

Maintaining registration as a Type 1 Travel Agency (registration number 883, valid until March 9, 2028) under the Travel Agency Act is a prerequisite for business continuity, and if the registration is revoked, the Group would no longer be able to operate its travel business. Laws and regulations such as the Act against Unjustifiable Premiums and Misleading Representations and the Consumer Contract Act, as well as IATA-accredited travel agency authorization, form the basis of the business, and the introduction of new laws and regulations, or the revision, abolition, or reinterpretation of existing laws and regulations, could also have a significant impact on business performance and business development.

Transactions with government agencies and US military forces in Japan are determined through public tenders, so depending on the tender results, contracts may be terminated or significantly reduced. There is also a risk that budget cuts or policy changes could lead to revisions of tender conditions, affecting business performance and business development. The Group strives to improve the quality of its responses, but tender results are subject to external factors, limiting stability.

Due to business customs centered on corporate transactions, settlement by accounts receivable is common; in FY2026 (ending March 2026), against net sales of ¥3,015,280 thousand, accounts receivable of ¥3,550,227 thousand were recorded, with the ratio of accounts receivable to total assets at a high level of 61.5%. If collection of accounts receivable becomes difficult due to deterioration in business partners' performance or bankruptcy, there is a risk of impact on cash flow and business performance. The Group strives to strengthen accounts receivable management and credit management, but the high ratio of accounts receivable represents a financial vulnerability.

World Joint Corp, a company independent of the Group, uses the name "IACE Travel" in the United States, and if an incident occurs that damages that company's brand image, there is a risk that the Group could be confused with it, damaging the Group's credibility and brand image. The Group has agreed with that company to restrict the use of the name outside the United States and implements measures such as appropriate information disclosure, web monitoring, and requests for removal, but the risk of information spreading cannot be completely eliminated.

Due to labor shortages and intensifying competition in the labor market, there is a risk that the Group may be unable to secure personnel with the skills and experience it requires, as well as a risk that the loss of personnel could affect business operations and growth strategy. The Group strives to strengthen recruitment activities and training, but securing personnel with specialized knowledge specific to the travel industry remains an ongoing challenge.