Wellness Communications Corporation

The Company continuously invests in systems to develop new services and packages leveraging the experience accumulated in the health management support business, and may make investments of a certain scale. If the target business fails to generate the expected returns, it could affect the Company's business performance and financial condition. As a countermeasure, the Company invests only after thoroughly examining the validity of the business plan, and after launch, monitors progress and revises plans as necessary.

The financial condition of health insurance associations is deteriorating due to soaring medical costs, and if this leads to a review of health checkup programs or the dissolution of client health insurance associations, the Company could simultaneously lose the association and the affiliated companies. Additionally, if the Ministry of Health, Labour and Welfare's promotion of PHR, EHR, electronic prescriptions, and related infrastructure progresses, the competitive advantage of the Company's services could be undermined, affecting business performance. As a countermeasure, the corporate division continues to conduct research on corporate information and industry trends using information-gathering tools.

In the Health Management Cloud Business, various companies are entering the occupational health field amid the HR tech trend, and if competitors gain an advantage in technological development capability, price competitiveness, or sales capability, the Company could fall into a disadvantageous position in the sales competition, making it difficult to retain and acquire customers. If competitors offer superior services, the Company may fail to achieve expected earnings, affecting its business plan. As countermeasures, the Company promotes the use of digital marketing, collaboration with agencies, and the development and provision of services that reflect customer needs.

Amid the HR tech trend and regulatory reforms, various systems and tools are being developed in the health management field, and if technological innovation undermines the competitive advantage of the Company's products, it could affect operating results. In particular, the Health Management Cloud Business, centered on Growbase, is expected to face intensifying market competition due to the emergence of competing systems. As a countermeasure, the Company has adopted a policy of actively promoting the accumulation of knowledge and know-how on the latest technologies.

Yasuhide Matsuda, the President and Representative Director, has possessed high-level expertise in occupational health management and the health checkup industry since the Company's founding, and plays important roles in business promotion and expansion, personnel recruitment, and business strategy formulation. If he becomes unable to carry out his duties, it could affect the Company's business promotion. As countermeasures, the Company is promoting the delegation of authority through the expansion of executive officers and other positions, and has established a decision-making system based on collective deliberation, such as through management meetings.

Sensitive information such as attribute information of examinees and health checkup results is accumulated on the servers of i-Wellness and Growbase, creating a risk of data leakage or destruction due to unauthorized access, computer viruses, or employee errors. If such an event materializes, it could lead to claims for damages or litigation from client companies, health insurance associations, etc., and result in a loss of social trust. As countermeasures, the Company continues to operate ISMS certification (ISO27001), and implements database encryption, firewalls, 24-hour monitoring, and regular vulnerability assessments.

The leakage or disclosure of sensitive personal information, including health checkup results handled by the Company, could develop into a major incident affecting the Company's continued existence. If a leakage occurs, it may result in a loss of social trust, a decrease in customers, and claims for damages from affected individuals, which could have a material impact on the Company's business and operating results. As countermeasures, the Company has obtained and maintains ISMS certification, conducts annual regular training and competency tests for all employees, and manages outsourcing partners through audit checklists.

If SOMPO Holdings, Inc. (voting rights ratio of 32.08%), the Company's largest shareholder, changes its management policy or business strategy (including its policy on holding the Company's shares), this could result in the emergence of businesses competing with the Company, affect the Company's financial condition and operating results, and impact the liquidity and price formation of the Company's shares. In addition, if changes occur in personnel assignments or the resolution of concurrent positions related to Ashita no Team Co., Ltd., a consolidated subsidiary, this could affect that company's governance structure. Regarding related party transactions, an internal control system has been established to obtain board of directors' approval based on the related party transaction regulations.

If related laws and regulations such as the Health Insurance Act, the Health Promotion Act, the Industrial Safety and Health Act, the Act on Assurance of Medical Care for Elderly People, the National Health Insurance Act, and the Personal Information Protection Act are amended, this could have a material impact on the Company's business and operating results through changes in the operations of client companies and health insurance associations. Although the Company does not directly hold any licenses or permits, there is a risk that changes in clients' regulatory compliance could indirectly affect the Company's business. As a countermeasure, the Company has compiled a list of applicable laws and regulations, with each department monitoring legal and regulatory trends through various media in a timely manner, and reviewing and updating the list in principle once every half year.

In the Health Checkup Solutions Business, there is seasonal fluctuation in the number of health checkup examinees, which increases from summer, peaks in autumn, and declines in spring. In FY2026 (ending March 2026), net sales for the first quarter were ¥2,118 million with an operating loss of ¥73 million, and for the fourth quarter, net sales were ¥1,941 million with an operating loss of ¥103 million, both tending to be lower compared to other quarters. This seasonal fluctuation could cause significant variation in quarterly performance, potentially affecting investors' evaluation of the Company's results. As a countermeasure, the Company aims to smooth out fluctuations by bringing forward the timing of health checkups for each client and through effective encouragement of examinees to undergo checkups.