LiB Consulting Co.,Ltd.

With technological advances such as generative AI, there is a possibility that client companies themselves will become able to substitute for consulting activities provided by the Company, such as information gathering and opportunity/threat analysis. This could reduce demand for existing services and affect business performance. While the Company strives to secure a competitive advantage through building proprietary methodologies and a commitment to execution, timely response to technological change remains a challenge.

As the Company's business locations are concentrated in Chuo-ku, Tokyo, if a major disaster such as a Tokyo Metropolitan Area earthquake or a Nankai Trough earthquake were to occur, the Company could be affected by business suspension or facility damage due to head office destruction, power outages, or disruption of social infrastructure. While the Company strives to build a BCP (Business Continuity Plan) framework, an unforeseen event could affect business performance and financial condition.

If client companies curtail consulting spending due to deterioration in domestic and overseas economic conditions, fluctuations in foreign exchange rates, or changes in tax systems or laws and regulations, this could affect the Company's financial position and business performance. In particular, a global economic downturn similar to the Lehman Shock would have a significant impact on performance. Since the Company's clients are diversified across various sizes rather than concentrated in specific companies, the impact of individual client trends is considered minor.

Continued expansion of the business requires the ongoing addition of talented consultants, and if the Company is unable to secure and develop the personnel it seeks, this could directly affect the performance of the Company's business, which is highly dependent on consultants. The Company is addressing this through enhanced in-house education and training programs for inexperienced hires and more active recruitment of new graduates, but intensifying competition in the labor market remains an ongoing risk.

Given the nature of management consulting services, the Company handles highly confidential management information and personal information of clients. Should an unforeseen incident result in an information leak, this could have a significant impact on social credibility and result in response costs that affect business performance. While the Company conducts guidance and training upon joining the Company and on a regular basis, complete prevention is difficult.

The Company actively utilizes M&A to bridge the speed gap between business growth and talent acquisition, but if the expected effects are not achieved due to overpayment, mismatches in corporate culture, or PMI failures, this could affect business performance and financial position. The Company places emphasis on confirming soft-side compatibility during due diligence and gives consideration to cultural integration during PMI in order to minimize the risk of talent attrition.

The management consulting industry has low barriers to entry, and against the backdrop of new client needs such as DX and generative AI response, a polarization is progressing between companies with strong response capabilities and those without. If industry consolidation progresses and the Company is unable to maintain its competitive advantage, this could affect business performance and financial position. The Company seeks to differentiate itself through the accumulation of proprietary know-how, the development of new methodologies, and a commitment to execution.

Founder and Representative Director Gen Seki is the largest shareholder and plays an important role across the Company's business activities overall, resulting in a considerable degree of dependence on the representative director in management activities. Should the representative director become unable to continue business activities for any reason, this could affect business performance and financial position. The Company is working to avoid excessive dependence by strengthening its management framework and developing management personnel.

The cumulative number of potential shares under the stock option plan based on stock acquisition rights is 959,463 shares, equivalent to 15.0% of the total issued shares of 6,400,000 shares. If these rights are exercised, the value of shares per unit could be diluted, potentially affecting share price formation. As the Company is at a stage immediately following its listing, this is a risk that requires attention with respect to the impact on existing shareholders.

Regarding the goodwill of ¥429,192 thousand recorded from the acquisition of Goofy Inc. (January 2024) (balance of ¥321,894 thousand as of the end of the current consolidated fiscal year) and the goodwill of ¥152,537 thousand recorded from the acquisition of Flow Group Inc. (June 2025) (balance of ¥141,414 thousand), impairment could occur if business plans do not progress as expected due to changes in market conditions or other factors. While the performance of both companies is currently favorable, the goodwill amortization period is 8 years for both, and medium- to long-term monitoring is necessary.