I-FREEK MOBILE INC.

The Company operates businesses utilizing internet technology and must constantly respond to technological innovation and changes in user needs. Responding to such changes may result in additional expenditure, and if the Company's response speed lags behind competitors, it could have a material impact on its business and results of operations. The Company has adopted a policy of continuously monitoring industry trends, technological innovation, and changes in user needs.

In the Content Business, the Company provides services after obtaining usage permission for copyrights and neighboring rights from copyright holders. Therefore, if a copyright holder independently develops a similar business, or if the Company fails to acquire high-quality rights, its business and results of operations may be affected. Relationships with copyright holders and competition to acquire rights are important preconditions for business continuity, and the structure is highly dependent on external parties.

While the Company requires creators to guarantee, in contracts, that they will not infringe on third-party intellectual property rights, if management is inadequate, third parties may file claims for damages due to rights infringement. Although the Company has established contract terms allowing secondary use across all businesses, the risk remains that deficiencies in the management system could affect its results of operations.

If trouble occurs in the servers or distribution systems managing services, disruptions to service operations may occur, potentially affecting the Company's business and results of operations. The Company strives to prevent and avoid system trouble through measures such as load balancing of web servers, redundancy of database servers, server resource monitoring, and regular backups, but complete elimination of such risk is difficult.

The Company acquires personal information, customer information, and confidential information of client companies in the course of its business activities. If information leakage occurs due to unforeseen circumstances, the Company's business and results of operations may be affected through claims for damages or loss of credibility. The Company has established information security regulations and personal information protection regulations, and has implemented measures such as restricting access to information and concluding confidentiality agreements with all employees.

In the DX Business, qualitative differentiation such as securing excellent engineers and sales capability is required, and low-price strategies by competitors or requests for price reductions from clients may make it difficult to secure orders or may lead to a decline in technical service fees. The Company seeks to secure appropriate profits and expand its business by improving the quality of technical services and promoting strategic sales and technical education, but there is a risk that intensifying competition could affect its results of operations.

In the staffing operations of the DX Business, the Company has obtained a worker dispatching business license from the Minister of Health, Labour and Welfare. However, if the Company falls under grounds for disqualification or violates laws and regulations, it may be subject to a business suspension order or revocation of its license. In addition, the Worker Dispatching Act and related laws and regulations are subject to ongoing review, and legal amendments may affect the Company's business and results of operations. The Company recognizes that there are currently no matters in violation of laws and regulations, and responds appropriately each time laws are amended.

With a view to expanding its business domain, the Company is considering investments and financing such as establishing subsidiaries, mergers and acquisitions, and capital participation. However, due to factors such as the financial condition of target companies and the emergence of unconfirmed liabilities (including contingent liabilities), initially planned profits may not be achieved. Although the Company strives to avoid risk by conducting detailed due diligence, it is difficult to fully predict the impact of such investments and financing on its financial position and results of operations, and there is also a risk that such investments may become unrecoverable.

The Company raises funds through long-term borrowings for the purpose of expanding sales and investing in new initiatives, and future increases in interest rates may raise fundraising costs, affecting its financial position and results of operations. In addition, if the Company is unable to raise funds due to sudden changes in the internal or external environment, there is a risk of delays in launching new businesses or difficulty in continuing operations. The Company has adopted a policy of negotiating with multiple financial institutions to secure optimal financing.

The Company's business locations and equipment such as servers are concentrated in Tokyo. If unforeseen circumstances such as major earthquakes, typhoons, or other natural disasters, accidents, or fires occur, resulting in business suspension, equipment damage, or restrictions on power supply, business activities may be disrupted, potentially affecting results of operations. The geographic concentration of locations and equipment increases business continuity risk, making the effectiveness of the BCP an important issue.