BRANU Inc.

If the Company fails to meet its hiring plans for excellent personnel essential to business expansion, or if personnel turnover occurs due to changes in the labor market or business environment, this may hinder business operations and expansion, potentially affecting operating results and financial condition. The Company utilizes diverse recruitment methods, including recruitment agencies, new graduate hiring, scout tools, and referral hiring, while implementing turnover prevention measures such as enhancing internal communication and improving evaluation systems.

If large companies with financial strength and brand power enter the construction SaaS market and competition exceeds the Company's expectations, this may affect operating results and financial condition. The Company seeks to build a first-mover advantage through its cumulative transaction track record with over 5,000 companies, sales know-how, and continuous development investment.

The Company collects receivables related to its owned media construction services through credit sales companies, aiming to reduce credit risk and promote installment payments by users. If it becomes difficult to continue transactions with credit sales companies, or if conditions such as fees change, the Company's ability to promote service adoption may decline, potentially affecting operating results and financial condition. The Company mitigates this risk through transactions with multiple credit sales companies.

Tatsuya Natomi, the founder and Representative Director, plays a central role in management policy and business strategy. If it becomes difficult for him to perform his duties, this may have a material impact on operating results and financial condition. The Company is working to strengthen its management structure, delegate authority, and develop personnel, but reducing this dependence will take time.

Technological innovation is rapidly progressing in the IT and internet fields, and in particular, the rise of generative AI carries the risk of diminishing the added value of existing services. If the Company is unable to effectively utilize new technologies, its competitiveness may decline, potentially affecting operating results and financial condition. The Company addresses this through hiring specialized engineers, engaging technical advisors, and promoting internal projects to utilize AI.

The Company is promoting the planning and development of new services utilizing generative AI. However, due to the speed of technological innovation, changing customer needs, and intensifying competition, the development resources and sales systems invested may not align with market demands, potentially failing to achieve the expected monetization. In addition, social concerns regarding the accuracy and reliability of AI, and the emergence of legal or ethical issues, may cause sales growth to fall short of expectations or result in ongoing cost burdens.

The Company's internet-based services carry the risk of service disruption due to computer virus infections, unauthorized access, cyberattacks, or physical damage from large-scale disasters. In particular, if unexpected disruptions, such as ransomware attacks or inadequate management by outsourcing partners, cause delays in recovery, this may adversely affect operating results and financial condition. The Company addresses this through server monitoring by external vendors, regular backups, ensuring redundancy, and formulating a business continuity plan.

As the Company handles customers' personal and confidential information in providing its services, if information leakage, tampering, or unauthorized use occurs, this may result in damage claims from customers or loss of trust, potentially affecting operating results and financial condition. The Company has obtained ISO27001 certification, conducts continuous employee training, and implements system measures to prevent external unauthorized access, but complete elimination of this risk is difficult.

In expanding the business alliance with Watanabe Pipe Co., Ltd., the outsourcing agreement with BBLUE Corporation, a former subsidiary, plays an important role. If, for any reason, the transaction agreement with BBLUE Corporation is not renewed or the transaction terms are changed, this may hinder the expansion of sales with Watanabe Pipe Co., Ltd., potentially affecting the Company's business and performance. To ensure the soundness of the transaction, discussions are held at board of directors meetings attended by outside directors.

The number of potential shares from stock acquisition rights granted as incentives to officers and employees is 210,500 shares (4.7% of the total number of issued shares). If exercised, this may dilute the share value and voting rights ratio of existing shareholders. The likelihood of occurrence is high, and the impact is expected over a medium-term time horizon.