Aoba-BBT,Inc.

The Recurrent Education business is centered on internet-based online education, and if the market does not achieve steady growth, business performance may deteriorate. In addition, if the Company fails to recognize the impact of generative AI on online education as an opportunity and does not make appropriate investments, this could also affect business performance. As a countermeasure, the Company continues to enhance the functionality of its proprietary online learning system "AirCampus®."

In the Recurrent Education business, in addition to private training companies, consulting firms, and think-tank-affiliated companies, universities that have become independent administrative agencies are increasingly entering the adult education market, and intensified price and service competition due to the emergence of competitors from overseas is also anticipated. If the Company is unable to maintain its competitive advantage in content production and its online learning system, this could affect business performance. As a countermeasure, the Company is concentrating management resources on large-scale proposals for developing next-generation management talent and strengthening corporate sales.

Business Breakthrough University was established utilizing special measures under the "Career Education Promotion Special Zone" based on the Act on Special Zones for Structural Reform, and if the legal system is changed, the university may become subject to new legal regulations or restrictions. In addition, if the university fails to meet the standards set forth in the University Establishment Standards, Graduate School Establishment Standards, etc., or violates the agreement with Chiyoda Ward, there is a risk that the Ministry of Education, Culture, Sports, Science and Technology could revoke the establishment permit or issue a closure order or recommendation. The Company maintains a policy of preferentially allocating management resources to university operations in order to comply with the agreement.

The Group holds and manages a large volume of customers' personal information, and if information is leaked, lost, falsified, or misused due to unauthorized external access, human error, or intentional acts by employees, this could damage the Company's credibility and result in losses from damages, significantly affecting business performance. As countermeasures against hackers and computer viruses, the Company has established operational management at ISMS-compliant data centers and a 365-day, 24-hour staffed monitoring system, but such risks cannot be completely eliminated. The Company also continuously works to comply with the Personal Information Protection Act and related guidelines.

The Group's services are closely dependent on computer and internet technology and communication networks, and service provision may become impossible due to power supply shortages, disasters, computer viruses, defects in in-house developed software, and other causes. If such an event occurs, it could lead to damages claims from users and loss of social credibility, significantly affecting the business. The Company has established a system to immediately notify monitoring personnel via mobile phone email, etc., when signs of failure appear or a failure occurs.

The pace of technological innovation in the computer and internet fields is remarkably rapid, and if the technological environment changes drastically due to the spread of new technologies not anticipated by the Group, existing technologies may be unable to keep up, affecting business development. There is also a risk that additional costs incurred in responding to such changes could affect business performance. The Group strives to maintain and improve service levels by appropriately incorporating new system technologies and security-related technologies.

Business Breakthrough University and its graduate school are obligated under the School Education Act to undergo periodic evaluations by certified evaluation organizations (at least once every 7 years for the university, and once every 5 years for the professional graduate school), and if the evaluation results are "non-compliant" or similar, there is a risk that rumors, speculation, or media reports could spread. If the Company fails to respond appropriately, or if the evaluation results spread among the general public in a manner that has a negative impact regardless of the Company's response, the university's brand image could be damaged, potentially affecting business performance.

Securing instructors with accurate insight into the latest economic and management issues is essential for the Company's content production, and if it becomes difficult to secure such instructors under appropriate contract terms, this could seriously hinder content production and affect business performance. In addition, if instructors, casters, or other performers are involved in an accident, incident, or scandal, the relevant content may become unusable, which could also hinder the production of new content. There are also concerns about the impact on business performance if negative effects on the Company's brand image spread among the general public.

The Group records assets such as land, buildings, and goodwill on its consolidated balance sheet, and if the fair value of these assets declines significantly or the profitability of each business deteriorates significantly, losses may arise from the application of impairment accounting, affecting business performance. In particular, goodwill acquired through M&A carries the risk that contingent liabilities or previously unrecognized liabilities may come to light after the acquisition. The Company conducts appropriate due diligence and risk assessment when carrying out corporate acquisitions and alliances.

If the Company is unable to secure the human resources needed to respond to business expansion and diversification of operations as planned, or if business operations become difficult due to the departure of existing personnel, this could hinder business activities and affect performance. In addition, if the organizational development and expansion of internal management systems required for business expansion do not proceed smoothly, this could also affect operations, performance, and business development. The Group is working to strengthen its human resources department and continuously develop its organizational structure and internal management systems.