LANCERS,INC.

With the rise of generative AI, individual customer needs are changing, particularly in categories such as writing and image production. If the Group is unable to respond to technological innovation and changes in user needs, or if substantial costs are required for system investment, personnel expenses, etc., this may affect business performance. In response, the Group is promoting the establishment of new request categories utilizing generative AI, improving matching accuracy, and implementing deliverable visualization functions, while also actively working to recruit and develop excellent engineers.

Many companies operate in the labor field, including crowdsourcing, and if competition with companies offering similar services intensifies, sufficient differentiation is not achieved, or innovative changes occur in the business domain, this may affect business performance. In response, the Group is seeking to improve competitiveness by pursuing appropriate usability, ensuring site safety, enhancing customer support, and developing its business based on a freelancer-first code of conduct.

The Platform Business (Single Segment) holds personal and confidential information, and if information is leaked due to unauthorized external access or deficiencies in internal management systems, this may lead to claims for damages and loss of social credibility, affecting business performance. In response, the Group has established an information security policy, implements strict information management and internal training, and renewed its Privacy Mark certification in April 2025.

The Group has recorded goodwill in connection with past M&A activities, and if performance plans at the time of share acquisition are not achieved, impairment processing will be required, which may significantly affect the Group's financial position and business performance. In addition, there is a risk that impairment of share value or business assets may arise if contingent or unrecognized liabilities are discovered after investment, or if business integration does not proceed as planned. In response, the Group is conducting appropriate due diligence and advancing appropriate personnel placement and organizational structure development to achieve strategic objectives.

The Group plans to continue investing in marketing expenses, advertising expenses, personnel expenses, outsourcing expenses, etc. to raise awareness, expand its user base, and enhance new services. However, against the backdrop of market changes driven by the rise of generative AI and the diversification of freelance careers, if the expected investment effects are not achieved and expense burdens increase, this may affect business performance. In response, the Group has strengthened its budget-versus-actual management system and monitors investment effectiveness as appropriate.

As of the filing date of this document, the number of potential shares from stock acquisition rights is 2,594,500 shares, equivalent to 16.0% of the total number of issued shares of 16,245,228 shares. The Group is considering continued use of stock-based compensation systems, and if stock acquisition rights granted in addition to those currently granted are exercised in the future, this may dilute the value of shares held. As of February 29, 2024, stock acquisition rights and bonds with stock acquisition rights were also issued to business partners.

Since the Group provides functions that allow free dissemination of information in transactions between users, there is a risk that inappropriate postings such as false information or defamatory remarks may occur. If detection is delayed or malicious reviews are posted, resulting in a decline in the credibility of the site or the operator, this may affect business performance. In response, the Group regularly reviews its terms of use and guidelines, conducts content monitoring using AI and visual inspection, has established a reporting system for nuisance conduct and violations, and has implemented functions to detect malicious cases.

The growth of the freelancer population and expansion of related markets are premised on the development of the business; however, changes in labor-related laws and regulations, or a slowdown in the growth of the freelancer population or stagnation in the spread of side jobs, may affect business performance. The broadly defined freelancer population has reached 13.03 million, up 39.1% from ten years ago ("Freelance Survey 2024"), and market expansion is expected due to the New Freelance Act enacted in April 2023 and other factors. As such, the Group judges that the likelihood of this risk materializing is relatively low.

Representative Director, President and CEO Yosuke Akiyoshi has served as chief executive officer since the company's founding and plays an extremely important role not only in determining management policy and business strategy but also in the areas of sales, technology, and finance. If, for any reason, he becomes unable to continue his duties, this may affect business performance. In response, the Group is sharing information among officers and executive employees at the Board of Directors and other bodies, strengthening its management organization, and developing a management structure that does not rely excessively on him.

The Group has tax loss carryforwards, and if a downturn in business performance or other factors result in losses that cannot be fully deducted within the carryforward period, the normal corporate tax, resident tax, and business tax rates will be applied to taxable income, which may affect business performance. On the other hand, if business performance proceeds favorably, there is also a possibility of receiving the carryforward deduction within the period, meaning that the tax burden is directly linked to business performance trends.