dip Corporation

The Company's business depends on internet information sites and communication networks. If systems become inoperable due to large-scale disasters, computer viruses, unauthorized external intrusion, communication failures, or similar events, business activities may be disrupted. In the event of a system failure, loss of trust could lead to suspension of transactions, lawsuits, or claims for damages, which may affect business results and financial condition. As countermeasures, the Company continuously implements system backup arrangements and security measures.

The Human Resources Services and DX Business handle large volumes of personal information. If a serious incident such as an information leak occurs, it could result in legal liability, loss of trust from customers and job seekers, and damage to brand image, potentially affecting business results and financial condition. The Company has adopted SSL communications across all relevant systems and implemented measures to prevent unauthorized access, and holds Privacy Mark certification (obtained July 2004) and ISO27001 certification (transitioned November 2006 and maintained since).

The Human Resources Services is subject to legal regulations such as the Employment Security Act, the Labor Standards Act, and the Act on Equal Employment Opportunity for Men and Women. Amendments to laws or tightening of regulations could restrict business activities or increase compliance costs. In addition, since the Company provides services for qualified professionals such as nurses, revisions to laws such as the Act on Public Health Nurses, Midwives, and Nurses could also affect business operations. There is also a risk that if the Company's license for paid employment placement business (License No. 13-Yu-303788, valid until January 31, 2027) were revoked for any reason, continuation of the employment placement business would become impossible.

If competitors obtain utility model rights, patents, or similar rights, the Company's competitive advantage may decline, and litigation risk may arise. There is also a risk that a third party may already hold patents or other rights related to the Company's business operations, resulting in costs if the Company's activities are found to infringe on them, as well as a risk that the Company's own intellectual property rights may be infringed by third parties. Although the Company is not currently aware of any specific such cases, if such a situation were to arise, it could affect business operations and results.

The core Human Resources Services is affected by the hiring plans of companies placing job advertisements. If the business environment fluctuates significantly due to economic trends, employment conditions, the spread of infectious diseases, or similar factors, business results may be significantly affected. In the DX Business as well, although demand for business automation continues to expand, similar risks from fluctuations in the business environment due to economic trends and other factors exist. In FY2025 (ended February 2025), sales of the Human Resources Services were ¥56,262 million (88.1% of total sales), indicating a high degree of dependence, and the impact would be particularly significant in the event of market contraction.

In the Human Resources Services, there are numerous competitors in each segment, including part-time and temporary staffing, temporary placement, full-time employment, specialized professions, and nurse placement. If the Company fails to respond adequately to intensifying competition or new entrants, its business operations and results may be affected. In the DX Business as well, similar risks may arise if competitors emerge with strengths equal to or greater than the Company's broad customer base and direct sales capabilities, which are its core strengths. The Company aims to build relationships with users by introducing services ahead of competitors and continuously providing new features.

If natural disasters such as earthquakes, tsunamis, typhoons, floods, or fires, progression of climate change, or the outbreak and spread of infectious diseases occur in areas where the Company conducts business, its business operations and results may be affected. As countermeasures, the Company has established guidelines for employee actions in the event of a disaster, implemented earthquake-resistance measures for buildings and systems, introduced data backup systems and safety confirmation systems, conducted disaster drills, and stockpiled disaster supplies. To respond to infectious diseases, the Company works to ensure employee safety through thorough dissemination of response policies and the implementation of telework.

In FY2025 (ended February 2025), the Human Resources Services accounted for 88.1% (¥49,662 million) of consolidated net sales of ¥56,386 million, indicating an extremely high degree of dependence, creating a risk that fluctuations in the sales of this business would directly affect overall business results. To diversify the business portfolio, the Company launched the DX Business in April 2019, and sales of the DX Business grew to ¥6,723 million in FY2025 (ended February 2025) (up from ¥5,981 million in the previous fiscal year). However, if the DX Business does not progress as planned, dependence on the Human Resources Services may continue.

At present, laws and regulations specifically targeting the internet or digital technologies remain limited. However, if future enactment or revision of laws affects the Human Resources Services or DX Business, or if compliance costs increase, business operations and results may be affected. In particular, the DX Business utilizes new technologies such as AI and RPA, requiring close attention to changes in regulatory trends targeting these technologies. The Company conducts its business activities while continuously monitoring trends in laws and regulations.

The Company positions the DX Business as a strategic pillar for reducing dependence on the Human Resources Services. In FY2025 (ended February 2025), sales grew 12.4% year on year to ¥6,723 million; however, if progress does not proceed as originally planned due to the emergence of competitors or changes in the market environment, the diversification effect on the business portfolio may be limited, creating a risk that dependence on the Human Resources Services will continue. The DX Business leverages the customer base and direct sales capabilities cultivated through job information services as its strengths, but growth may slow if competitors emerge with similar or superior strengths.