SOLIZE Holdings Corporation

The Group's business domains are areas in which competition from companies engaged in similar businesses may arise, creating a risk of reduced orders and declining order unit prices due to intensifying competition. The Group seeks to differentiate itself through the added value provided by proprietary technologies accumulated through a broad range of practices spanning from design to manufacturing, as well as its ability to respond to a wide range of business areas; however, if competition intensifies rapidly and severely, this could affect business performance.

For the Group, which supports product development centered on digital technology, engineers are the most critical management resource, and securing excellent talent and developing personnel capable of handling cutting-edge technology are indispensable elements for business continuity and expansion. The Group is pursuing active recruitment activities both domestically and internationally and developing talent development systems; however, if personnel acquisition does not proceed as planned or if there is an outflow of existing personnel exceeding expectations, this may lead to a decline in sales or an increase in the cost of sales ratio.

The Group utilizes generative AI and AI-based information analysis in its business, and the scope of social implementation is expanding. Risks exist including improper use, leakage of confidential information, copyright infringement, lack of safety and accuracy, and ethical issues; failure to address these appropriately could lead to a decline in social credibility and brand image. The Group is establishing generative AI usage guidelines and expanding and continuing AI governance initiatives, but it remains difficult to completely eliminate such risks.

The Group holds fixed assets such as tangible fixed assets and goodwill, and if future estimated cash flows decline due to future changes in the environment, additional impairment processing may become necessary. The Group regularly conducts indicator assessments and measurements in accordance with impairment accounting standards; however, if the business environment deteriorates beyond expectations, this could have a material impact on the Group's financial condition and business performance.

Because major clients are automotive-related manufacturers, the Group is directly susceptible to the impact of economic conditions such as business trends, interest rates, foreign exchange, and consumer spending on the domestic automotive industry. Amid significant changes in the business environment driven by technological transformation represented by CASE, the Group is expanding into new technology fields such as MBD, software, and XR, and pursuing customer development outside the automotive industry; however, if these efforts are insufficient, there is a risk that expected sales may not be achieved.

In the fiscal year ended December 2025, sales to Honda Motor Co., Ltd. accounted for 27.1% of the Group's consolidated sales, indicating a high degree of dependence on a specific client. Should Honda change its policies or transaction terms, this could have a material impact on the Group's business performance. The Group is working to reduce this dependence through growth of new businesses and development of new clients, including overseas clients, but the risk continues if such efforts do not progress as planned.

The Group positions M&A as an effective means of business growth and may continue to pursue it going forward. Although detailed due diligence is conducted, if matters not identified or anticipated during the investigation stage arise or become apparent after the M&A is executed, or if business development does not proceed as planned, the Group may not only fail to achieve the expected contribution to business performance but may also need to record impairment on the investment value of the target company.

The Group holds a license for worker dispatch business in conducting its Engineering Services, and if it falls under grounds for license revocation such as legal violations, this could hinder business continuity. In addition, relevant laws and regulations, including the Worker Dispatch Act, may be revised in response to changes in social conditions, and if such revisions are disadvantageous to the Group's business, this could affect business performance. The Group strives to ensure legal compliance through the development of internal regulations and training of officers and employees, but there is also a risk that contracting transactions could be substantively deemed worker dispatch.

The Group handles large volumes of confidential information from client companies, requiring responses to increasingly sophisticated cyberattacks (such as computer virus infections and unauthorized access). The Group promotes the development and operation of information security regulations, annual training, and strengthened security measures for networks, servers, and personal computers; however, if confidential information is leaked externally, this could result in claims for damages from client companies, affecting business performance.

The Group transitioned to a holding company structure in July 2025, and if governance functions such as management resource allocation, review of group strategy, and monitoring and supervision of group companies do not function sufficiently, this could adversely affect business performance, financial condition, and reputation. Similar risks may also arise if the development and operation of internal controls accompanying business expansion are not carried out in a timely and appropriate manner. As the transition to the holding company structure is relatively recent, establishing the effectiveness of the governance structure remains an ongoing challenge.