Risk Information

Among the matters concerning the status of our group and the status of accounting, the main matters that maybe considered risk factors and other matters that may have a significant impact on the judgment of investors are as follows. Please note that the following forward-looking statements are based on the judgments of our group and are subject to uncertainties that could cause actual results to differ materially.

(1) Risks related to industry and customer trends

The Company's major customers are the management and administrative levels of corporations. In our business for corporations, our business performance may be affected if our customers' human resource development needs decline and their training budgets are reduced due to reasons such as economic conditions and trends in Japan and overseas.

(2) Risks related to competition

In the organizational consulting business targeting corporations, many companies, including other training companies, consulting companies, and think tank training companies, have entered the market, and we recognize that competition will become even more intense in the future. If we are unable to maintain our superiority over other companies in terms of content using Shikigaku, know-how related to Shikigaku, and the ability to develop services using Shikigaku, which have been the source of our competitiveness against other companies, our business performance may be affected.

(3) Risks related to securing consultants

One of the key factors that determine the success or failure of our main service, management consulting services, is the quality of our consultants. Therefore, to provide high-quality services, it is essential to secure consultants with appropriate skills, knowledge, and experience.

We intend to continue our efforts to secure such consultants. If we are unable to secure instructors with the skills, knowledge, and experience we need in the future, our services may be severely hindered and our business performance may be affected.

(4) Risks related to the development of new businesses and services

To achieve further growth, in addition to core management consulting services, we plan to develop platform services, such as "Shikigaku" cloud, as a new core business that does not depend on human operation and will lead to a stable revenue base. However, if these businesses do not grow as expected, it may have an impact on our mid-to-long-term business performance.

(5) Risks related to internal control systems

The Company has been implementing measures to enhance corporate governance to maximize corporate value.
Also, to ensure the appropriateness of operations and the reliability of financial reporting, we have established, developed, and are operating a system to ensure the effective functioning of internal controls related to these matters. However, if a situation arises in which the establishment of an adequate internal control system cannot keep pace with the rapid expansion of business and other factors, it may be difficult to conduct appropriate business operations, which may affect the Company's business development, financial position, and business performance.

(6) Risks related to dependence on specific managers, etc. and securing and training of human resources

Koudai Ando, President and Representative Director of the Company, and Keisuke Kajiyama, Director, have been the promoters of the Company's business since its establishment and play important roles in various areas such as sales. Recognizing this fact, the Company has established a personnel structure to prevent excessive dependence on Mr. Ando and Mr. Kajiyama to mitigate management risks, and has positioned the hiring and training of human resources as an important management issue because of future business development.

However, at present, the Company is highly dependent on both of them (total sales of both of them accounted for 29.4% of total sales in the fourth fiscal year), and we do not expect them to leave the Company. But, if for some reason both of them resign or become unable to perform their duties, or if it becomes difficult to secure and train sufficient human resources to meet the needs of business development, or if staff with specialized knowledge, skills, and experience, represented by directors and executives, resign or retire and it becomes difficult to recruit their replacements, the Company's business development, financial position, and operating results may be affected.

Also, if Kenji Fukutomi, the creator of "Shikigaku" and the head of "Shikigaku" Laboratory of the Company, leaves the Company, there will be no hindrance to the Company's business, as the transfer of know-how related to "Shikigaku" has been completed and the rights belong to the Company. However, if Fukutomi leaves the Company and establishes a company that competes with the Company, it may affect the Company's business development, financial position, and operating results, although we believe that we can secure a competitive advantage by increasing the leading edge and the recognition of "Shikigaku".

(7) Risks associated with being a small organization

Our company is a small organization, and our business execution system and internal control system are correspondingly small. However, if these measures do not progress in a timely and appropriate manner, the Company's business development, financial position, and business performance may be affected.

(8) Risks related to the management of personal information

As we handle personal information through our business, we pay close attention to the appropriate management of personal information and the prevention of outflows by establishing a personal information protection policy and management system by the "Act on the Protection of Personal Information" and other relevant laws.
However, there is still a possibility that personal information may be leaked due to system malfunctions, negligence, or intentional acts by internal or external parties. If such a situation were to occur, it could lead to claims for damages or loss of trust in our company, which could affect our business development, financial position, and business performance.

(9) Risks related to the management of confidential customer information

Since we sometimes handle confidential information of our customers in the course of our business operations, we have prepared regulations on information security as well as regulations on the prevention of insider trading by customers, and we are making efforts to thoroughly educate our employees. However, if such confidential information is leaked to outside parties due to unforeseen circumstances or other reasons, the Company's business development, financial position, and business performance may be affected due to damages or a decline in trust.

(10) Risks related to the management of intellectual property

We have registered the trademark "Shikigaku" as one of the means to improve the social recognition of our services and to increase the name recognition of our brand, and our policy is to register the necessary 39 service names as trademarks and to protect and manage them as our intellectual property rights. However, if our intellectual property rights are infringed for any reason, it may affect our business.

At the moment, we are aware that we do not infringe the intellectual property rights of any third party, and we have not received any notification from any third party that we infringe the intellectual property rights of any third party. In providing our services, we have taken measures such as collaborating with legal counsel to ensure that we do not infringe on the intellectual property rights of third parties, including copyrights and trademark rights, but there is a possibility that our business may be affected if we unintentionally infringe on the intellectual property rights of third parties. However, in the event of an unintended infringement of a third party's intellectual property rights, our business may be affected.

(11) Risks related to information security

① Program failure
There is a possibility of service interruptions and data corruption due to faulty parts in the developed programs. In such an event, our financial position and business performance may be significantly affected due to compensation for damages from client companies, loss of public trust, etc.
② System failures
Due to an increase in the number of accesses or human negligence, there is a possibility that system downtime, data interruption, or other problems may occur. In such an event, our financial position and business performance may be significantly affected due to compensation for damages to client companies, loss of public trust, etc.
③ Hacking and virus infection
As we provide some of our services via the Internet, there is a possibility of intrusion by hackers and damage caused by data destruction or virus infection. Although we take the utmost care with the protection provided by our network equipment, the occurrence of such incidents may have a significant impact on our financial position and business performance.

(12) Risk of uncollectibility of trade receivables

The Company strives to manage credit risk by conducting adequate credit management and posting a certain amount of allowance for doubtful accounts for trade receivables and other assets. However, the Company's financial position and business performance may be affected by debt losses or additional allowance for doubtful accounts due to credit concerns of creditors.

(13) Risk of natural disasters and accidents

In the event of a major earthquake, typhoon, or other natural disasters that cause extensive damage to our head office, other offices, or customers, our business development, financial position, and operating results may be affected.

(14) Risks that may affect business performance due to rumors, misinformation and media reports

Although we take appropriate measures to deal with malicious rumors, if our reputation worsens or rumors are spread, our sales and recruitment activities may be hindered, which may have an impact on our business development, financial position, and operating results.

(15) Other risks

① Short history of the Company
As the Company was established in March 2015 and has a short history, it is not possible to obtain financial information for a sufficient period to make comparisons of periodic performance, and the performance of past fiscal years alone may not be sufficient information to judge future performance.
② Dilution of share value due to the exercise of stock acquisition rights
The Company grants stock acquisition rights to its officers and employees to incentivize them. In the future, the Company may also grant stock acquisition rights as an incentive to its officers and employees.
If these stock acquisition rights are exercised, new shares of the Company's stock will be issued, which may dilute the value of the shares and the percentage of voting rights held by existing shareholders.
③ Dividend policy
The Company is currently in the process of growth, and while it is important to avoid the outflow of business funds, enhance internal reserves, and aim for further business expansion, we also believe that it is important to provide stable returns to our shareholders and other stakeholders. In the future, we will strive to establish a stable management base and strengthen our earning power, and will make appropriate management decisions and pay dividends on a case-by-case basis, taking into account our business performance and future business development.