Def consulting,inc.

Competition for IT consultants and IT engineers, who underpin the growth of the Consulting Business, is intensifying. If the Company is unable to acquire and develop excellent personnel as planned, or if employees leave for other companies, this could lead to a decline in competitiveness and service levels. Although the Company is actively promoting recruitment activities, in a market environment characterized by intense competition for highly specialized personnel, there is a risk that this could constrain the expansion of business scale.

The Digital Asset Treasury Business holds and manages crypto-assets (mainly ETH), and the crypto-asset market is subject to extremely large price fluctuations and may also experience reduced liquidity. If price declines exceed expectations or the Company is forced to temporarily withdraw from the market, this could have a material impact on its financial position and business results.

Laws, tax systems, accounting standards, and supervisory frameworks concerning crypto-assets, both in Japan and overseas, are still being developed. Future legal amendments or regulatory tightening could have a material impact on treasury management policy, holding strategy, transaction costs, and other factors. In particular, there is a risk that new regulations such as enhanced disclosure obligations, stricter taxation, and registration requirements could affect the Company's financial position and business results.

The crypto-assets held and managed by the Company are subject to risks such as protection of cryptographic keys, wallet management, cyberattacks, and unauthorized outflows. If the management system does not function as intended, this could result in damage, theft, or outflow of crypto-assets. In addition to losses and damage to credibility, this could also give rise to difficulties in audit and accounting verification, posing a risk to the Company's financial position and business results.

Ether (ETH), the primary asset of treasury management, may experience significant changes in market conditions due to technical and institutional factors such as major upgrades to the Ethereum network, vulnerabilities in smart contracts, sharp fluctuations in gas fees, and changes to staking rewards. If these factors cause the price or liquidity of ETH to fluctuate beyond expectations, this could affect the Company's financial position and business results.

The Company is currently continuing to invest in building business foundations from the founding stage of each business, and is working toward achieving profitability. If businesses do not progress as planned, operating losses and negative operating cash flow may continue, and if fundraising is not realized as planned, this could affect business development, business results, and financial position.

For the purposes of fundraising, business expansion, and strengthening the financial base, the Company may issue additional shares or stock acquisition rights, which could dilute the equity ratio of existing shareholders. Depending on the issuance terms and market conditions, this could adversely affect the supply-demand balance and market price of common shares.

The Consulting Business is carried out on a project-by-project basis, but due to increasingly sophisticated client demands, increasing complexity of projects, and changes in the business environment, even projects expected to be profitable at the time of order acceptance may fail to secure profitability due to increased work hours. If project management is inadequate and quality declines, or if unexpected circumstances arise, this could affect the Company's financial position and business results.

When implementing M&A and similar transactions, increases in one-time expenses and goodwill amortization expenses are anticipated, which could temporarily have an adverse effect on business results. If revenue and investment recovery do not proceed as initially expected, there is a risk that impairment of goodwill and other factors could affect the Company's financial position and business results.

In the course of business operations, the Company may hold confidential information and personal information of clients. Although access restrictions and measures to prevent external intrusion have been implemented, if an information leak occurs due to unforeseen circumstances, this could have a material impact on social trust. Costs associated with responding to damage claims and other matters could arise, potentially affecting the Company's financial position and business results.