Globe-ing Inc.

Human capital is the most important asset in the consulting business, and if intensifying competition for talent causes the securing of excellent personnel to fall behind the pace of business expansion, or if turnover of existing personnel occurs, there is a risk of increased recruiting costs and operational inefficiency. The Group aims to move away from headcount dependency by improving per-capita productivity through the use of AI/DX, but recognizes that securing and developing talent remains essential for sustainable growth.

In the fiscal year under review, the combined sales ratio of the top five clients reached 47.9% of total net sales, and the top ten clients reached 60.8%, with particularly high dependence on Honda Motor Co., Ltd. (15.4%), MTG Co., Ltd. (11.9%), and Persol Cross Technology Co., Ltd. (8.0%). If contracts with these specific clients are terminated in a short period due to changes in their management policies or business performance, or if contract terms are forced to change such as through scale reductions, this could materially affect the Group's financial position and operating results. As a countermeasure, the Group is working to expand its sales base through new client acquisition and diversification of projects across multiple departments and multiple projects.

The consulting business has low barriers to entry, as it requires no licensing system, qualification restrictions, or large-scale capital investment, resulting in numerous competitors ranging from major operators to individual practitioners, with continued intensification of competition, including from new entrants, expected going forward. If the Group cannot appropriately respond to price and service competition, this could affect its business development, operating results, and financial position. The Company is addressing this through strengthening relationships with CxO-level executives and pursuing competitive advantage through the use of AI and cloud services.

The Group's operating revenue is mainly dependent on the consulting business, and if the business fails to develop as expected due to the introduction or revision of new legal regulations or other unforeseen factors, this could materially affect the financial position and operating results. The Group is seeking to diversify its revenue base through joint research and development in the cloud product business, active recruitment of consultants, acquisition of strategically important clients, and expansion of service offerings, but at present the majority of revenue continues to be derived from the consulting business.

The consulting business is a knowledge-intensive business in which the service level of consultants directly determines quality, making quality management fundamental to business continuity. If the Company is unable to provide services of the quality expected by clients, this could impede contract continuity and new client acquisition, affecting business development, operating results, and financial position. The Company is working to maintain and improve quality through education and training, but there remains a risk of variability in personnel quality and quality deterioration during phases of rapid business expansion.

Revenue recognition for consulting services is based on a percentage-of-completion method calculated as the ratio of actual hours incurred to estimated total service hours. If the percentage of completion fluctuates due to delays in the work process from unforeseen events on long-term projects, this could affect operating results and financial position for each quarter or the following consolidated fiscal year. The Company works to prevent the materialization of this risk through careful review of total estimated service hours at project inception and monthly monitoring.

The Company established a subsidiary in China in January 2024 and has been conducting business activities there, but various regulations and economic, social, and political risks in each country may prevent progress and earnings from developing as expected. In addition, since the financial statements of overseas subsidiaries are prepared in local currency and translated into yen when preparing consolidated financial statements, fluctuations in exchange rates may also affect financial position and operating results (impact: minor). The Company maintains close information sharing with the heads of overseas subsidiaries and continues to gather information on local economic and social conditions.

In providing consulting services, the Company holds confidential and personal information of clients and is bound by confidentiality obligations under non-disclosure agreements. If an information leak occurs due to unforeseen circumstances, this could result in damages claims, contract termination, and significant harm to social credibility. The Company has implemented measures such as monitoring of PC logs, strict access restrictions, and thorough guidance to officers and employees on information management.

Representative Director Sosuke Wajima, as founder, plays an important role in business promotion, management policy, and the acquisition of new projects, and if he becomes unable to continue his management duties, this could affect business development, financial position, and operating results. As a countermeasure, the Company has introduced a system with multiple representative directors and a rotation system among representative directors to prevent concentration of authority in a specific director, but the risk of dependence on the founder has not been completely eliminated.

The number of potential shares from stock options granted for incentive purposes has reached 3,487,900 shares (equivalent to 12.1% of the total issued shares of 28,728,000), with the exercise period commencing on September 21, 2026, subject to annual exercise limits under vesting provisions. If these stock options are exercised, or if new stock options are issued and exercised in the future, the value of held shares may be diluted. The Company may continue to utilize stock-based compensation plans for officers and employees going forward, and the risk of dilution remains ongoing.