SHIKIGAKU. Co.,Ltd.

The Group's primary clients are corporate management and executive personnel, and there is a risk that deterioration in domestic and overseas economic conditions and business trends could reduce clients' human resource development needs, leading to cuts in training budgets. The consulting and training market is highly sensitive to economic conditions, raising concerns about direct impacts on sales during economic downturns. There is currently no description of specific countermeasures, and the structure remains highly dependent on the external environment.

The Organizational Consulting Business faces numerous competitors, including training companies, consulting firms, and think-tank-affiliated training companies, and competition is expected to intensify further. If the Company is unable to maintain its advantage over other companies in content, know-how, and service development capabilities using "Shikigaku," the source of its competitiveness, this could have a material impact on business performance. Since the uniqueness of Shikigaku is the core of its competitive advantage, its obsolescence or imitation by others represents the greatest risk.

The quality of the Management Consulting Service depends heavily on the quality of its consultants, making it essential to secure personnel with appropriate skills, knowledge, and experience. If the Company is unable to secure consultants at the necessary level in the future, this could cause significant disruption to service provision and affect business performance. While the Company maintains a policy of continuing to secure such personnel, given the increasingly competitive labor market, talent acquisition remains an ongoing challenge.

While current sales are centered on the Management Consulting Service, the Company has adopted a policy of developing platform services such as Shikigaku Cloud, which do not depend on personnel utilization, as a new core business for medium- to long-term growth. If these new businesses do not grow as expected, this could affect medium- to long-term business performance and the establishment of a stable earnings base. The transition away from a human resource-dependent business model is a key strategic issue, and its success or failure is directly linked to corporate value.

Representative Director and President Kodai Ando and Director and Vice President Keisuke Kajiyama have been driving forces of the business since its founding and play important roles in various areas including sales. If either of them were to resign or become unable to perform their duties, this could have a material impact on business operations, financial condition, and operating results. The Company is working to strengthen its personnel structure to avoid excessive dependence, but at present the degree of dependence on both individuals remains high.

Due to the rapid expansion of the business, there is a possibility that the development of internal management systems may fail to keep pace. If appropriate business operations become difficult, this poses a risk of impact on financial condition and operating results. The Company is working to enhance corporate governance and to build, develop, and operate an effective internal control system, but the gap with the pace of growth could become a challenge.

Through its business, the Company handles personal information and clients' confidential information, and there is a risk of information leakage due to system malfunctions, negligence, or intentional acts. If a leak occurs, it could develop into serious problems such as damage claims, loss of credibility, and violations of insider trading prevention regulations, potentially affecting business operations, financial condition, and operating results. While the Company has implemented measures such as formulating a personal information protection policy, establishing a management system, and thoroughly educating employees, reducing this risk to zero is difficult.

Program failures, system outages, hacking, virus infections, and similar incidents could cause service interruptions or data corruption. Since part of the service is provided via the internet, the Company is constantly exposed to the risk of external cyberattacks, and if such an incident occurs, it could have a significant impact on financial condition and business performance through damage claims from clients and loss of social credibility. While measures such as protection via network equipment have been implemented, complete defense remains difficult.

The Company may undertake business investments such as corporate acquisitions, subsidiary establishment, and alliances for the purpose of business expansion and improving profitability, and if the businesses of investee companies do not progress as planned, or if management resources cannot be utilized efficiently, this could affect business performance and financial condition. In addition, if profitability declines or asset values decline due to falling market prices, this poses a risk of impairment losses or losses on sale affecting financial condition. While the Company conducts advance evaluations of risk and recoverability for investment projects, it states that reliable forecasting is difficult.

If the Company's reputation deteriorates or false rumors spread, this could disrupt sales and recruitment activities, potentially affecting business operations, financial condition, and operating results. Given the nature of the business model, which is centered on the unique theory of Shikigaku, damage to brand image could directly harm both customer acquisition and talent recruitment. While the Company strives to respond appropriately to malicious rumors, there are limits to risk control in an environment where information spreads rapidly via social media and similar channels.