UNITED, Inc.

Rapid technological progress, including generative AI, is constantly producing new technologies and services. Failure to respond in a timely and appropriate manner poses a risk that existing businesses will become obsolete and lose competitiveness. The Group is addressing this through early information gathering leveraging its network with startups and through M&A.

Against the backdrop of rising demand for digital talent development, new entrants into the education business and job matching business are increasing, and competition in quality, price, and service is expected to intensify. If the Company cannot maintain its competitive advantage, its business performance may be affected. The Company is addressing this by differentiating its business model through new business launches, M&A, and strategic investments.

The population of elementary through high school students, the target segment for the individualized tutoring school service, is gradually declining due to the falling birthrate, and this trend is expected to continue. If aggressive new store openings and enhancement of online learning do not proceed as planned, business performance may be affected. There is also a seasonal fluctuation risk due to the concentration of sales in the summer, winter, and spring course periods.

There is a risk that valuation losses on held securities may arise due to deterioration in the performance of invested startup companies or the discovery of management issues. In addition, if sales cannot proceed as expected due to IPO market and stock market trends, or due to continued holding obligations or contractual restrictions, maximization of returns may not be achieved. Investments in early-stage companies tend to require a long period until recovery, making the timing of realization difficult to predict.

The Company records goodwill, intangible assets, and fixed assets through M&A, new store openings, system investments, and other activities. If the anticipated profitability, business plans, or synergies are not realized, or if market conditions deteriorate, impairment losses may occur. The occurrence of impairment losses would affect business performance and financial condition. The Company carefully examines business plans, profitability, and investment recoverability when making such decisions.

The education, job matching, and ad-tech businesses handle users' personal information, while the investment business handles confidential information of investee companies, creating a risk of information leakage due to cyberattacks or system failures. With the expanding use of generative AI and AI agents, information management risks are becoming more complex, including prompt injection and cyberattacks that exploit AI. While the Company strives to establish usage rules, access management, and monitoring systems, complete elimination of such risks is difficult.

The ad-tech and content businesses utilize cookie information and proprietary identifiers, and changes in personal information protection laws accompanying the development of international rules on cross-border data could have a material impact on the business and performance. There is also a risk that changes in the policies of advertising agencies, ad networks, and DSP operators could make it difficult to continue ad delivery. If measures against fraudulent advertising, such as ad fraud, are inadequate, compensation for damages to clients may be required.

The job matching business is subject to regulation under the Employment Security Act, and due to the business structure involving subcontracting to external digital talent, there is a risk of being deemed disguised contracting (false subcontracting). If a violation of laws or regulations occurs due to inadequate internal controls, it may affect the business and performance. The Company strives to establish systems that ensure independence in labor management and business operations.

When conducting M&A, mergers, divestitures, and similar transactions aimed at optimizing the Group's business portfolio, the Company conducts sufficient prior due diligence; however, there remains a possibility that the initially anticipated effects will not be achieved due to subsequent changes in market conditions or unforeseen circumstances. In particular, M&A in new business areas may involve additional business-specific risk factors. If the anticipated synergies are not realized, this could affect business performance and financial condition.

Directors and executive officers play important roles in formulating management strategy and developing business, and the departure of such personnel could significantly affect management. There is also a risk that business growth could be hindered by difficulties in recruiting excellent talent, an increase in employee turnover, or unsuccessful talent development. The Company is addressing this by strengthening recruitment and training and by building its own personnel systems.