CAREER DESIGN CENTER CO.,LTD.

The human resources services business is highly susceptible to economic fluctuations. If a large-scale natural disaster or an epidemic such as COVID-19 causes the economy to stagnate and leads to a prolonged downturn in the job-change market and the broader economy, this could affect the Company's business results and potentially result in significant losses. The Company states its policy is to work to avoid such occurrences and to respond appropriately if they occur, but details of specific countermeasures have not been disclosed.

Competitors exist in each of the Company's businesses—job advertising (web, magazines, etc.), recruitment placement, and staffing—and if competitively strong new entrants erode the Company's advantage, this could affect its business results. The Company seeks to differentiate itself by providing comprehensive solution services for business professionals aiming for career-advancing job changes and by strengthening its own brand power, but it recognizes that these differentiation measures may not necessarily be sufficient.

The job advertising business is indirectly subject to regulations under the Employment Security Act concerning recruitment methods, disclosure of working conditions, and false job advertisements, among other matters. The recruitment placement business (fee-charging employment placement business license: Minister of Health, Labour and Welfare license No. 13-U-040429) and the staffing business (Minister of Health, Labour and Welfare license: Staffing License No. 13-315344) each carry the risk of business suspension if grounds for disqualification or license revocation are met. In particular, the Worker Dispatch Act is expected to continue to be revised in response to changes in the labor market, and depending on the content of such revisions, business results could be affected. The Company has implemented countermeasures including establishing a review office, formulating advertising ethics guidelines, and utilizing specialized legal counsel.

The Company holds a large volume of personal information on job seekers. If a serious incident such as leakage, tampering, or loss of this data occurs, the Company could face legal liability as well as a loss of public trust and damage to its brand image, potentially affecting business operations, results, and financial condition. The Company has implemented technical measures such as formulating a personal information protection policy, managing access privileges, and encrypting data and communications, and has continuously renewed its Privacy Mark certification, first obtained in May 2005.

Development of the human resources services business requires securing and developing talented personnel in each business division. If the Company is unable to sufficiently secure the personnel it needs, if existing personnel leave, or if the growth of hired personnel falls short of expectations, this could adversely affect business results. The Company conducts carefully selected new-graduate and mid-career recruitment activities, but given intensifying competition in the recruitment market, continued efforts are required.

If the Company's systems go down due to natural disasters, power outages, communication failures, equipment malfunctions, virus infections, temporary overload, employee error, or other causes, service provision could be delayed or halted, potentially affecting business activities and credibility. Because the Company's service model is web-based, stable operation of its systems and networks is a critical foundation for business continuity. The Company states that it has taken necessary measures, but details of specific redundancy and business continuity plan (BCP) measures have not been disclosed.

Unauthorized external access or attacks could cause the Company's systems to go down and result in data damage or tampering, posing a risk of serious impact on business operations and credibility through site inaccessibility, data corruption, information leakage, and similar issues. The Company has implemented security management measures, but recognizes that these do not guarantee complete protection against increasingly sophisticated and diverse attack methods.

The Company outsources part of its system development, management, and operation, and relies in part on external providers such as cloud services. If a failure, security deficiency, or operational trouble occurs at an outsourcing partner, this could affect the provision of the Company's services. The Company states that it appropriately manages and supervises its outsourcing partners, but it is difficult to completely eliminate risks associated with external dependency.

If a competitor acquires a trademark representing one of the Company's services, the Company could lose the ability to use that trademark, and litigation or other actions could adversely affect its business results. Additionally, if a competitor obtains a technology-related patent for web-based information services and asserts its rights, or if a third party has already obtained a patent related to the Company's business operations that the Company's activities infringe upon, this could affect the conduct of its business. The Company has obtained trademark rights for its logo marks, company name, and product names, but states that it is currently not aware of any specific instances of infringement.

Strategic advertising activities are essential to expanding awareness of services such as type, Onna no Tenshoku type (Women's Career Change type), Tekishoku Fair, type Tenshoku Agent, type Shukatsu, type Shushoku Agent, and type IT Haken. However, it is impossible to accurately predict the effectiveness of such advertising, and if advertising expenses become excessive due to competition with other companies in the same industry, this could affect business results. Uncertainty regarding the cost-effectiveness of advertising investment is recognized as a risk that directly affects profitability.