S-Pool,Inc.

Staffing services require a license from the Minister of Health, Labour and Welfare under the Worker Dispatching Act, while paid employment placement services require a license under the Employment Security Act. In the event of a violation of laws or regulations, the Group's business license could be revoked or an order for full or partial suspension of operations could be issued. The Group has assigned a dedicated department to each licensed company and has established internal workflows and a compliance monitoring system to address this risk.

Laws and regulations applicable to the Group's business, such as the Labor Standards Act, the Worker Dispatching Act, the Employment Security Act, and the Act on the Protection of Personal Information, are expected to continue to be amended or reinterpreted in response to changes in social conditions. Such regulatory changes could affect business operations and the revenue structure. Regarding social insurance and employment insurance, the burden of contributions may increase due to legal amendments or guidance from regulatory authorities, which could affect business performance.

Demand for the Disability Employment Support Service is subject to a certain degree of influence from the statutory employment rate prescribed under the Act on Employment Promotion of Persons with Disabilities. If future legal amendments relax or abolish the employment obligation, demand for this service could decline significantly, materially affecting business operations. The Group has established a compliance framework for related laws and regulations through cooperation between the business division and the legal department.

The Disability Employment Support Service is based on an independently developed business model, and its reputation could be damaged by imitation by competitors or reputational harm. There is also a risk that business activities could be restricted by new regulations, administrative guidance, or the establishment of guidelines. If such events occur, it may become difficult to operate the business as planned, which could materially affect business performance.

The Disability Employment Support Service operates outdoor and indoor rental farms, and farm operations could be disrupted by natural disasters such as typhoons and earthquakes, human error, accidents, facility issues, or unlawful acts by third parties. A prolonged suspension of farm operations would directly affect business performance, and there is a risk that a decline in reliability and corporate image could make it difficult to retain and acquire customers. The Group has assigned a dedicated department to ensure thorough construction and maintenance of facilities, but this risk cannot be completely eliminated.

The Group centrally manages the personal information of dispatched staff and others through its core operating systems. If unauthorized access or an internal information leak occurs, it could damage the Group's corporate image and give rise to legal liability, materially affecting the business and business performance. In addition, staff working at client call centers and similar sites may have access to customers' personal information and trade secrets, creating a risk of leakage. As countermeasures, the Group has established personal information protection regulations, made security investments, obtained confidentiality agreements from staff at the time of hiring, and conducts regular education and training.

The Group actively considers and executes acquisitions of companies and business investments in related and similar business fields. If such initiatives do not proceed as planned due to internal or external factors, the value of acquired assets could be impaired or profitability could decline. As a result, there is a risk that impairment of goodwill or fixed assets, or valuation losses on shares of affiliated companies, could occur, affecting business performance. The Group seeks to improve performance through prior due diligence and post-acquisition sharing of information and sales networks within the Group, but this risk cannot be completely avoided.

The Group operates business locations nationwide, and business activities could be disrupted in the event of a natural disaster or a new infectious disease outbreak. In particular, if the farm facilities used for the Disability Employment Support Service are damaged by typhoons, earthquakes, heavy snow, heavy rain, tornadoes, or similar events and operations become difficult to sustain over a long period, business performance could be affected. While the nationwide distribution of business locations helps to diversify risk, concentrated damage to farm facilities could directly impact business continuity.

The Group relies heavily on computer systems and network infrastructure for much of its business management activities. If a system outage or network failure occurs due to unforeseen trouble, business performance could be affected. As countermeasures, the Group has installed backup servers and outsourced operations to an external data center, but complete avoidance of system failures cannot be guaranteed.

The Group's sustainable growth depends on securing and developing both employees and dispatched staff. If recruitment initiatives fail to achieve the expected results, delays in business development or disruptions to operations could occur. For employees, the Group conducts recruitment events, internships, training by job level, and health management promotion, while for dispatched staff it is expanding recruitment locations and introducing web-based interview systems. However, there is a risk that intensifying competition in the labor market could make it difficult to secure personnel.