SERAKU Co., Ltd.

In the business strategy of expanding horizontally into other areas centered on IT technology, there is a risk that competitiveness will decline if the Group fails to respond adequately to changes in the business environment or fails to capture customer needs. The Group seeks to differentiate itself through onsite-type and solution-type technical support and the development of proprietary services, but if this advantage is undermined for any reason, it could have a significant impact on business strategy, financial position, and business performance.

The Group's services depend on the IT investment trends of client companies, and there is a risk of being affected by clients' restraint of IT investment due to deteriorating economic conditions. If demand for management efficiency improvements or fluctuations in the business cycle worsen the business environment, this could affect business performance.

Amid chronic labor shortages in the IT industry, securing and developing excellent talent forms the foundation of business growth. The Group continues to invest in human capital, including enhancing its training system, but if it is unable to secure the necessary talent due to increased turnover or weak recruitment, this could affect its business and performance.

Because the Group handles clients' confidential information and personal data in the process of system development, operation, and service provision, an information leak would have a significant impact on social trust. Although the Group has obtained ISO/IEC 27001 certification and works to operate, maintain, and improve its ISMS, there is no guarantee that information leakage can be completely prevented in the future, and if data were to leak externally, it could have a substantial adverse effect on business performance.

The staffing service business operates under a license from the Minister of Health, Labour and Welfare based on the Worker Dispatching Act (valid until March 31, 2026), and there is a risk that if the Group falls under any disqualification or revocation grounds, its business license could be revoked or business operations suspended. In addition, if the Worker Dispatching Act, the Employment Security Act, the Labor Standards Act, or other related laws are amended, new laws enacted, or their interpretations changed, business operations could be restricted, potentially affecting performance. At present, no facts corresponding to disqualification or revocation grounds have been identified.

There is a risk that dispatched and contracted engineers and staff could cause accidents or unlawful acts through errors in the course of performing their duties, leading to litigation or other claims against the Group. The Group has established a management system to prevent such accidents in advance, but depending on the content of litigation and the amount claimed, this could affect its business and performance.

Ryuki Miyazaki, the founder and Representative Director, plays a critical role ranging from determining management policy and business strategy to building business models and commercializing them, and the Group's operations overall are highly dependent on his management capabilities. The Group is strengthening its management structure through information sharing at Board of Directors and business division meetings as well as delegation of authority, but if he becomes unable to continue executing his duties for any reason, this could affect business development and performance.

If important facilities of the Group or its business partners are damaged due to natural disasters such as earthquakes or unforeseen accidents, this could affect business performance and financial condition.