Timee, Inc.

If employment conditions change due to a deterioration in Japan's economic situation, technological innovation such as the expanded adoption of robotics and automation, or seasonal fluctuation factors, there is a risk that client demand for personnel recruitment could decline more than expected. The Company is addressing this by reducing its dependence on specific industries, expanding sales channels into new business categories, and expanding its database through increased user numbers; however, in the event of a sharp economic downturn, an impact on the business and results of operations may be unavoidable.

In addition to staffing agencies and crowdsourcing operators, new entrants including IT companies, platform operators, and job information service companies have been observed, and if price competition intensifies—including the elimination of fees—there is a risk that the profitability gained as a first mover cannot be maintained due to a decline in the fee rate, an increase in advertising expenses, and a decrease in gross merchandise value. The spot work service market has expanded rapidly in recent years, and it is possible that further competitors will enter the market. The Company is countering this through service provision leveraging its proprietary development know-how and measures to acquire new clients.

The majority of the Company's revenue is generated from the spot work service "Timee," and there is a risk that changes in social awareness and customs regarding spot work, as well as changes in workers' attitudes toward how they work, may not progress as expected. Japan's spot work service market is not as mature as the traditional fee-charging job placement service market, and there is no guarantee that usage will increase as anticipated. If changes occur in the business environment or the competitiveness of the service declines, this may affect the business and results of operations.

Against the backdrop of the implementation of the smart onboarding function and the full-scale launch of client marketing in 2023, usage by small-scale clients has been expanding, increasing the risk that fraudulent operators may be included among them. If fraudulent job postings or false or defamatory reviews are not discovered and addressed, this could lead to a decline in the Company's credibility and reputational damage, which may affect the business and results of operations. The Company has implemented multi-layered measures, including a 24/7, 365-day system for checking all job listing content, automatic suspension of fraudulent operators, and worker protection measures.

The number of potential shares from stock acquisition rights granted as incentives to officers and employees stands at 8,631,000 shares as of the filing date, equivalent to approximately 9% of the 100,662,000 total shares issued. Given that the use of the stock option system is expected to continue going forward, the exercise of stock acquisition rights may dilute the value of shares held. The Company's policy is to offset the effects of dilution through improved business performance.

The "Timee" business is subject to regulations such as the Employment Security Act and the Labor Standards Act, and if the regulatory authorities' interpretation of or guidance on matters such as the timing of the formation of an employment contract or the payment of leave allowances in the case of client-initiated cancellations were to change, this could affect the behavior of both clients and workers. The Company holds a paid employment placement business license (valid until October 31, 2027) and a worker dispatching business license (valid until October 31, 2027), and if grounds for revocation of these licenses were to arise, continuing the business would become difficult. The Company is building a system for prompt response by maintaining smooth communication with regulatory authorities through channels such as the Spot Work Association.

Due to the advance payment of wages and other compensation to workers, short-term borrowings increased from ¥10,500 million at the end of the 8th fiscal year to ¥11,110 million at the end of the 9th consolidated fiscal year, and advance payments also increased significantly from ¥9,747 million at the end of the 8th fiscal year to ¥11,845 million at the end of the 9th consolidated fiscal year, resulting in rapid expansion of the balance sheet. If interest rates rise, borrowing becomes difficult, fees charged by receivables collection agents increase, or receivables owed by clients or collection agents become uncollectible, advance payments or proceeds from sales may become uncollectible, potentially having a material impact on the business and results of operations. The Company is addressing this by entering into borrowing line agreements with multiple financial institutions and thoroughly managing credit risk.

The "Timee" business presumes the provision of services via the internet, and if unforeseen events such as natural disasters, cyberattacks, unauthorized access, or computer virus infections occur, service outages or the loss of important data could result, potentially affecting the business and results of operations. In addition, due to sole reliance on AWS, if deficiencies, failures, or contract termination occur with AWS, this could result in lost revenue opportunities and loss of public trust. The Company has implemented measures such as establishing an external monitoring system for AWS, utilizing infrastructure that meets FISC security standards, and restricting personnel with system operation authority.

The pace of technological innovation surrounding the spot work market is fast, and continuing to provide appealing UX/UI for users in their 20s and 30s in a timely and appropriate manner is key to maintaining competitiveness. If difficulties arise in acquiring technical knowledge and know-how, or if competitors develop superior services, competitiveness could decline, and additional expenditures such as system investment and personnel costs to respond to new technologies could increase. The Company is addressing this by advancing the recruitment and training of engineers and developing a creative development environment.

In operating the "Timee" service, the Company obtains personal information from workers, such as their addresses, names, and phone numbers, and if such information were leaked or misused due to unauthorized access or other causes, this could affect the business and results of operations. There is also a risk that response costs will increase if there are revisions to laws and regulations related to the protection of personal information. The Company aims to achieve appropriate information management by establishing a personal information protection policy and rules, thoroughly conducting internal training, and building a management system.