WASEDA GAKUSHUKENKYUKAI CO.,LTD.

If a safety management incident occurs at a school facility, such as an injury or the intrusion of a suspicious individual, it could lead to a decline in the Company's reputation and an increase in related costs, which could affect its financial position and operating results. As countermeasures, the Company conducts regular facility inspections and equipment upgrades, manages entry and exit with IC cards along with a notification service for parents, and has employees guide and escort students during commuting to and from school.

The Company holds a large volume of personal information on students and their parents, and in the event of a leak, the resulting liability for damages and loss of social credibility could have a significant impact on the Company's financial position and operating results. In response, the Company has established personal information protection regulations, developed access rights management, log monitoring, and camera surveillance systems for its core systems, and provides ongoing training to employees.

If litigation seeking damages or other claims is filed based on relevant laws and regulations such as the Copyright Act, the Act against Unjustifiable Premiums and Misleading Representations, the Subcontract Act, and the Labor Standards Act, it could affect the Company's financial position and operating results. As countermeasures, the Company has centralized the acquisition of licenses for teaching material creation at head office, implemented unified prior checks of promotional materials, and strengthened its legal compliance system.

If the Company is unable to secure well-located properties due to soaring land prices or if the environment of a target area changes significantly, a substantial divergence from the opening business plan may occur, which could affect the Company's financial position and operating results. As countermeasures, the Company conducts timely market analysis of regional economic conditions and demographic trends, gathers property information through diverse channels, and develops a flexible response system.

In the education industry, large and small group-instruction and individual-instruction cram schools compete with one another, and many competitor stores targeting overlapping customer bases exist in the areas where the Company operates. If competition intensifies further and market share stagnates, it could affect the Company's financial position and operating results. The Company seeks to differentiate itself through operations centered on full-time teachers, opening stores in residential areas, and providing meticulous, student-first instruction.

Transactions with related parties raise concerns about the possibility of transactions on unfavorable terms or the outflow of shareholder interests, and if there is no opportunity to deliberate on the details of such transactions or if transactions are conducted on unfavorable terms, it could affect operating results and financial position. The Company ensures soundness and appropriateness by requiring deliberation and approval by the Board of Directors, and going forward, in principle, does not intend to enter into new related party transactions.

Recruiting and training full-time teachers and part-time staff is essential to providing high-quality educational services, but if the Company is unable to secure and develop such personnel as planned, it may lead to a decline in service quality, which could affect the Company's financial position and operating results. As countermeasures, the Company is working to strengthen new graduate recruitment, actively conduct mid-career hiring, expand training and education systems, and improve the personnel evaluation system.

Japan's declining birthrate and major reforms to the education system could affect the Company's financial position and operating results. On the other hand, against the backdrop of parents' growing awareness in selecting cram schools, the Company is addressing this need through high-quality classes and thorough, attentive student care.

The Company operates only in four prefectures in the Kanto region: Gunma, Tochigi, Saitama, and Tokyo, and in the 33rd fiscal period its sales were highly dependent on three prefectures, with Gunma accounting for 36%, Tochigi for 20%, and Saitama for 38%. If economic deterioration, disasters, or a loss of competitive advantage due to new entrants occurs in these regions, a decrease in new and continuing students could affect operating results. The Company is considering minimizing this concentration risk through medium- to long-term area expansion.

Representative Director and Chairman Toshio Yoshihara and his asset management company hold 62% or more of the total issued shares (excluding treasury shares), placing them in a position that could significantly influence decision-making, including the appointment and dismissal of officers. If shares held by him are sold in the future, it could affect the market price and trading conditions of the Company's shares.