DATA HORIZON CO.,LTD.

With the expansion of the healthcare market, competitors exist whose business models overlap with those of the Group. If the Group loses its competitive advantage to such competitors, price competition may intensify, potentially affecting operating results and business development. The Group seeks to differentiate itself through its long-cultivated medical-related database and receipt (medical claims) analysis technology, as well as through the creation of new services in cooperation with business alliance partners. The Group strives to maintain competitive advantage through the continuous improvement and development of existing and new services.

Data Health-related Services depend on subsidy support such as the Insurer Effort Support System, which is part of the national policy aimed at optimizing medical expenses. If there are changes to such support systems, or if subsidies are reduced or abolished, business performance may be affected. In addition, with respect to the handling of anonymized processed information in Data Utilization Services, the enactment or revision of related laws and regulations such as the Act on the Protection of Personal Information may affect business operations. As a countermeasure, the Group has adopted a policy of reviewing its products as needed in line with national and local government policies.

The Group handles a large amount of personal information in the course of providing its services, and if personal information were leaked due to fraud or accident, it could affect operating results through damages compensation and loss of credibility. As a countermeasure, the Company and its consolidated subsidiary DeSc Healthcare, Inc. have obtained and renewed Privacy Mark certification and have also obtained ISMS certification, building an internal information protection framework. Furthermore, the Group has established an Information Security Management Committee to continuously maintain its information security system and manage related risks.

As of the end of March 2026, DeNA Co., Ltd. is the parent company holding 51.49% of the Company's total issued shares (after deduction of treasury shares). Any change in DeNA's management policy could affect the Group's business operations, financial position, and operating results through the exercise of voting rights. On June 29, 2022, the two companies entered into a capital and business alliance agreement, and they are advancing collaboration in the healthcare business while mutually respecting the independence of each other's business operations. On the other hand, the risk that the parent company's intentions could constrain the Company's management decisions is structurally inherent.

Due to the recognition of impairment losses and other factors in the previous consolidated fiscal year, net assets declined to ¥476 million, giving rise to a situation raising material doubt about the going concern assumption. In the current consolidated fiscal year, the Group achieved a turnaround to profitability through fixed cost reductions from business efficiency improvements and consolidation of business locations, as well as a reduction in depreciation and amortization burden. Having secured credit lines from five financial institutions and the parent company DeNA Co., Ltd., the Group has determined that there is no material concern regarding cash flow for the immediate future. However, the situation giving rise to material doubt about the going concern assumption still remains, and future profit growth and improvement of financial position remain essential.

In the information industry, difficulty in securing excellent human resources continues, and if the Group is unable to acquire necessary personnel as planned or if excellent employees leave the company, this may affect operating results and business development through delays in product development, failure to achieve sales plans, increased overtime hours, and increased recruitment expenses. As a countermeasure, in addition to continuing active recruitment activities, the Group is continuously working to develop a flexible and comfortable working environment in which diverse talent can thrive, as well as improving treatment, striving to improve employee retention rates.