TAKE AND GIVE. NEEDS Co., Ltd.

According to surveys by the Statistics Bureau of the Ministry of Internal Affairs and Communications and other sources, the population of men and women of marriageable age is on a declining trend, raising concerns about a medium- to long-term contraction of the wedding ceremony and reception market. The Company is responding through entry into the inbound wedding business and renewal of store concepts, but if the market contraction proceeds at a pace exceeding expectations, this may affect its business performance and financial position.

The Company has led the house wedding market since its founding in 1998, but if the market environment changes significantly, such as the emergence of new wedding styles replacing house weddings, delays in the Company's response may affect its business performance and financial position. The Company strives to grasp trends and enter new formats through marketing that reflects changes in social conditions, lifestyles, and needs by generation.

The Group's hotel business is extremely highly dependent on inbound demand, with the proportion of foreign guests reaching approximately 90% under normal conditions. If overseas travel restrictions or travel advisories are imposed due to wars, conflicts, or the spread of infectious diseases, the number of foreign guests could decline sharply, which may have a material impact on the Company's business performance and financial position.

The outbreak and spread of infectious diseases or other epidemics can lead to a slowdown in economic and social activity through a decrease in inbound visitors to Japan and reduced domestic outings and consumer sentiment. If such conditions continue over a prolonged period, business operations may be forced to suspend or other unforeseen circumstances may arise beyond expectations, which may affect the Company's business performance and financial position.

The Group raises funds from financial institutions for purposes such as the acquisition and renovation of self-owned properties and investments and loans to subsidiaries, and its balance of interest-bearing debt has increased significantly due to additional borrowings associated with the deterioration in business performance caused by the impact of COVID-19. If interest rates rise significantly due to future changes in the financial environment, this may affect the Company's business performance and financial position through an increase in interest expenses, among other factors.

The Group applies the "Accounting Standard for Impairment of Fixed Assets" and performs impairment measurement by calculating future cash flows and other factors related to its held assets. If cash flows generated from held assets deteriorate in the future, or if events such as a significant decline in projected future cash flows occur, impairment losses may arise, which may affect the Company's business performance and financial position.

The Group has positioned the hotel business as a pillar of its growth strategy in its long-term management policy and intends to continue promoting the opening of new hotels. However, if construction costs rise more than expected, this could lead to an increased burden of initial investment and higher running costs, which may affect the Company's business performance and financial position.

The Group regards securing and developing human resources as one of its most important challenges, and is focusing on active recruitment activities and the development of goal management and training systems. However, if the necessary personnel cannot be secured and developed as planned, the expansion of business performance in each business segment may not proceed as planned, which may affect the Company's business performance and financial position.

The Group handles personal information and confidential information of customers and business partners through its business activities, and has established a strict management framework based on relevant laws such as the Act on the Protection of Personal Information and internal regulations. However, if an information leakage incident occurs due to cyberattacks, human error, system failures, or other causes, the Company may suffer a decline in social credibility and be subject to sanctions, which may affect its business performance and financial position.

The facilities constructed and operated by the Group are subject to a wide range of legal regulations, including the Building Standards Act, the Fire Service Act, and the Sewerage Act, as well as the Travel Agency Act, the Hotel Business Act, the Food Sanitation Act, and the Labor Standards Act. Should the Group violate any of these regulations and be ordered by administrative authorities to take corrective measures, this could prevent the Company from opening new stores or renovating existing stores as planned, and may affect its business performance and financial position through a decline in social credibility.