SPACE CO.,LTD.

The Group operates as an order-receiving contractor, and if the capital expenditure of major customers in the distribution and retail industry fluctuates due to economic trends, this may affect plans for new store openings and renovations, thereby impacting business performance. Since restraint in customers' capital expenditure directly leads to a decrease in orders received, the business structure is highly dependent on economic cycles.

If new regulations are enforced due to revisions to the amended City Planning Three Laws and related legislation, changes may occur in the store opening plans of large-scale commercial facilities, potentially impacting business performance. Since tightened regulations on store openings in the distribution and retail industry directly constrain customers' investment plans, there is a risk that this could lead to a decrease in order opportunities for the Group.

The Group holds licenses and permits such as under the Construction Business Act (Specified Construction Business, Minister of Land, Infrastructure, Transport and Tourism License (Special-7) No. 10756), the Building Lots and Buildings Transaction Business Act (Minister of Land, Infrastructure, Transport and Tourism License (6) No. 5840), and the Architects Act (registration as first-class architect offices in Tokyo, Aichi Prefecture, Osaka Prefecture, and Fukuoka Prefecture); revocation of these would cause significant disruption to business operations. Although no grounds for revocation of licenses or permits currently exist, if related laws and regulations are revised or violations occur, this may impact business performance.

Although the Group maintains a thorough system to ensure the quality of constructed properties, it is difficult to completely eliminate quality defects, and should a quality problem occur, compensation payments may arise, potentially impacting business performance. Given the nature of the business, which is centered on construction and interior work, construction quality is a risk factor affecting both customer trust and financial results.

Although the Group works to ensure safety at construction sites, should an accident occur, business suspension, revocation of business licenses or permits, fines, and other sanctions may be imposed, potentially impacting business performance. Since occupational accidents at construction sites are directly linked to the potential loss of licenses and permits, this can constitute a significant risk to business continuity.

If a disaster occurs, customers may postpone or cancel their store opening plans, potentially leading to a decrease in orders received and increased costs, thereby impacting business performance. Given the characteristics of an order-based business model, changes in customers' plans directly lead to a decrease in sales, making responses to disaster risk an important issue.

Although the Group has established personal information protection regulations and pays close attention to operational management, should information be leaked due to some cause, the Group would bear social responsibility, potentially impacting business performance. The leakage of personal information carries the risk of leading to a loss of trust from customers and business partners as well as legal sanctions.

The Group acquires customer information and information on partner contractors through its business activities, and while it pays close attention to security, should important data be lost or leaked due to a natural disaster, accident, or other cause, the Group would bear social responsibility, potentially impacting business performance. As dependence on information systems increases, maintaining a data protection system remains an ongoing challenge.