Dive Inc.

If securing dispatched staff, which forms the foundation of the Tourism HR business, does not proceed as planned due to changes in employment conditions or labor demand, it may become difficult to respond to customer needs, potentially affecting the financial position and operating results. Measures such as continuous recruitment via the Company's website and internet advertising, regular campaigns, and repeat-client retention are being implemented, though the likelihood is assessed as "medium" and the impact as "high".

The Company is subject to a wide range of legal regulations, including the Worker Dispatching Act (license valid through December 31, 2027), the Employment Security Act (valid through May 31, 2030), and the Hotel Business Act, and there is a risk that business activities could be restricted due to license revocation or legal amendments. In particular, if the shift of dispatched staff to permanent employment or direct hiring accelerates faster than anticipated, this could lead to a decline in sales. As countermeasures, the Company gathers information in advance from its retained attorneys and labor and social security attorneys and conducts internal training.

Although COVID-19 is currently classified as a Category V infectious disease, if a similar new infectious disease were to emerge and behavioral restrictions were to become prolonged, this could force restrictions on tourism facilities that are clients of the Tourism HR business and closures of glamping facilities, etc. in the Regional Revitalization business, potentially significantly affecting the financial position and operating results. While the likelihood is assessed as "low," the impact is assessed as "high," and countermeasures assume fixed cost reductions and preparations to request financial institution support and secure funding.

Opening new accommodation facilities in the Regional Revitalization business typically takes one to one-and-a-half years from proposal to opening, and there is a risk that plans could be abandoned due to difficult negotiations with local governments or opposition from local residents. The impact is assessed as "high," which could result in failure to achieve revenue plans. As a countermeasure, multiple candidate sites for openings are selected in parallel, and priorities among other candidate sites are adjusted when plans for a particular site are revised.

Given the nature of the business, which handles large volumes of personal information of dispatched staff and customers, if information leakage, unauthorized access, or tampering were to occur, this could affect the financial position and operating results through legal liability and damage to brand image. The Company has implemented multi-layered security measures, including Privacy Mark certification, locked server management, HDD encryption and MDM implementation, PC BIOS password settings, remote lock and wipe functions, and regular checks of operation logs.

Both the Tourism HR business and the Regional Revitalization business experience their peak season in summer, with August sales accounting for over 10% of annual sales in FY2019 (ending March 2019), prior to the COVID-19 pandemic, resulting in significant quarter-to-quarter performance fluctuations. This tendency toward summer concentration has been reconfirmed in both FY2024 (ending June 2024) and FY2025 (ending June 2025), which may affect investors' performance evaluations. The Company aims to reduce such fluctuations by expanding its client base and business portfolio across all four seasons.

Some accommodation facilities operated in the Regional Revitalization business operate under fixed-term contracts based on the designated administrator system under the Local Autonomy Act, and there is a risk that revenue plans may not be achieved if contracts cannot be renewed or if the designated administrator withdraws. Both the likelihood and impact are assessed as "medium." Countermeasures include negotiating to secure longer contract periods and participating in re-bidding if a designated administrator withdraws.

The Company has adopted a stock option system aimed at increasing the motivation of officers and employees to improve performance, and there is a possibility that share value could be diluted if these options are exercised in the future. Both the likelihood and impact are assessed as "medium," and this is recognized as a risk that could materialize within the next few years. On the other hand, the Company expects this to contribute to shareholder benefit through improved morale of officers and employees and enhanced corporate value.

If profitability declines due to significant changes in the business environment or management conditions, there is a risk that impairment losses on owned fixed assets could occur. In fact, in the financial results for FY2025 (ending June 2025), the Company determined that indications of impairment were recognized with respect to "Craft Hotel Setouchi" and recorded an impairment loss of ¥109,871 thousand as an extraordinary loss. Going forward, the Company plans to further tighten prior verification of necessity and profitability for new capital investment projects.

Representative Director and President Kiyoshi Shoji plays an important role in formulating overall management policy and business strategy, and if any unforeseen circumstances were to affect him, this could impact the financial position and operating results. The likelihood is assessed as "low" and the impact as "medium." The Company is working to build a system that avoids excessive dependence through delegation of authority, promotion of collective decision-making, and development of management executives.