Double Standard Inc.

Since the Group's core business is Web Marketing Business, its performance is significantly affected by trends in the internet-related market. If changes in usage patterns, the introduction of new regulations, or unforeseen factors impede market expansion, this may affect the Group's business development, results of operations, and financial condition. Because the business model presupposes market expansion, there is a risk that the Group will find it difficult to respond in a market contraction phase.

The Group's business is centered on Web Marketing, and is directly affected by trends in corporate internet-related investment and marketing expenditure. If corporate internet investment is curtailed due to deteriorating corporate earnings amid an economic downturn or other factors, this could adversely affect the Group's results of operations and financial condition. Although the importance of the internet to corporations has increased in recent years, the risk of business cycle fluctuations remains ever-present.

As the big data analytics market and the internet advertising market expand, competition is expected to intensify due to the entry of numerous companies. In particular, if major companies enter the market or competitors with entirely new technologies emerge, this may affect the Group's results of operations. The Group seeks to avoid price competition by responding swiftly to customer needs, but there are limits to its ability to cope with sudden changes in the competitive environment.

In the 14th consolidated fiscal year, sales to the top two customers accounted for 69.9% of total sales, indicating an extremely high degree of dependence on specific customers. This dependence has increased further due to the substantial conclusion of transactions with one major client, and if orders from such customers decrease, this could have a material impact on the Group's results of operations and financial condition. The Group intends to reduce this dependence by developing new customers and expanding sales, but a high level of dependence is expected to continue for the time being.

Director Shozo Nakajima possesses extensive experience and connections in the internet-related industry and plays an extremely important role in acquiring new customers, proposing new services, and leading business teams. If he becomes unable to continue his duties for any reason, this could affect business promotion and other activities. The Group is working to transfer know-how and establish a division-of-labor system, but has not yet completely eliminated this dependence risk.

Securing and developing the personnel necessary for business expansion is an important challenge, and if the Group is unable to secure excellent personnel as planned, this may become a constraint on business expansion or a factor in the decline of competitiveness. As of March 31, 2026, the number of consolidated employees was 137, a small scale, and the organizational structure remains commensurate with this size. If personnel reinforcement and enhancement of the internal management system do not proceed smoothly, there is a risk that appropriate organizational responses will become difficult.

The Group utilizes outsourcing to supplement technology, address personnel shortages, and respond to fluctuations in workload, but if it is unable to sufficiently secure development outsourcing partners with the necessary skills, this may constrain system development. If development delays or defects occur due to inadequate management of outsourcing partners or problems at the outsourcing partners themselves, this could undermine the Group's credibility and affect its results of operations. Given the Group's structural reliance on outsourcing, quality control at outsourcing partners is key to business continuity.

In development projects, troubles may occur or specification changes after development may need to be addressed, requiring more work-hours than initially estimated. Such unexpectedly high cost burdens may deteriorate the profitability of development projects and affect the Group's results of operations. While the Group conducts development with attention to ensuring profitability, it is difficult to completely eliminate this risk given the nature of the business.

There is a risk of infringing on third parties' intellectual property rights, such as trademark and copyright, in the production of websites and digital content, and although the Group conducts the necessary investigations, it is extremely difficult to completely eliminate the risk of infringement. If infringement of a third party's intellectual property rights occurs, this may result in claims for injunctions or damages, or the payment of compensation for the use of intellectual property rights, which could affect the Group's results of operations. To date, the Group has not been notified of any infringement claims by third parties.

If the rapid expansion of the business outpaces the establishment of a sufficient internal management system, it may become difficult to conduct appropriate business operations, which could affect the Group's business and results of operations. As the company was established in June 2012 and commenced its main business in January 2013, its corporate history and operating track record are relatively short, and past results alone may be insufficient as a basis for judging future performance and growth potential. The Group recognizes the essential need for effective corporate governance functions and is proceeding with the development of its systems, but the risk of a gap emerging relative to the pace of growth remains.