ENVIRONMENTAL CONTROL CENTER CO.,LTD.

The Environmental Measurement Certification Business, which serves as the foundation of the Group, is a regulated business, and the market environment and competitive landscape can change significantly due to trends in environmental regulations by government authorities and revisions to measurement and analysis methods such as JIS standards. Failure to respond to these changes may adversely affect profitability and earnings capacity. As a countermeasure, the Group continuously implements capital investment and human resource development.

Orders from government agencies account for approximately 20–30% of total order value, with seasonality concentrated particularly in April through June. Since contracted work is subject to competitive bidding, order forecasts are not certain due to non-participation in bids or contracts being awarded to other companies, which may affect the business outlook. The concentration of order timing may also affect the stability of business performance.

In addition to the Environmental Measurement Certification Business, the Group conducts business while maintaining registrations under multiple laws, including as a Specified Measurement Certification Business Operator, Work Environment Measurement Organization, Construction Consultant, Construction Business, and Designated Survey Organization under the Soil Contamination Countermeasures Act. If any of these registrations are revoked for any reason, it may hinder the execution of the relevant business. As a countermeasure, the Group strives to maintain its registrations through compliance with each law and regulation and by assigning multiple qualified personnel.

Analysis facilities such as technical centers handle samples containing chemical substances and flammable/explosive organic solvents, giving rise to inherent risks such as health hazards to analysis personnel, fires within facilities, operational suspension due to exceeding wastewater/exhaust standards, soil and groundwater contamination, and impacts on the surrounding environment. In particular, if the technical center, which handles more than half of the total number of analyzed samples, is forced to suspend operations due to an earthquake or accident, this could have a material impact on the achievement of business plans. As countermeasures, the Group implements education and training based on standard operating manuals, special health checkups, regular inspections of wastewater and exhaust treatment equipment, monitoring based on voluntary control standards, and risk diversification through three analysis facility locations.

The Company has entered into a syndicated loan agreement with its financial institution partners to ensure stable fundraising, and this agreement includes financial covenants. If these covenants are breached, the Company could lose the benefit of the grace period, which may have a material impact on its financial position. This is a risk that requires particular attention during periods of deteriorating business performance.