for Startups, Inc.

If the number of startups or the supply of funding decreases significantly due to deterioration of domestic and overseas economic conditions, geopolitical risk, or fluctuations in financial and capital markets, recruitment demand in the core Human Capital Business may decline, potentially affecting the Group's financial position and business results. As countermeasures, in addition to expanding its customer base and range of positions handled, the Company has newly launched a startup M&A intermediary service to diversify its revenue base.

Although the paid recruitment placement business requires a permit, entry barriers are low, and according to a survey by the Ministry of Health, Labour and Welfare, the number of private-sector recruitment placement agencies has continued to trend upward. The newly launched M&A intermediary business also does not require a license and has low entry barriers, and intensifying competition among industry peers may affect the Group's financial position and business results. The Company strives to expand its market share through differentiation focused on startups and growth companies and by building close relationships with clients.

The Human Capital Business accounts for the majority of consolidated net sales, making the Group's revenue base highly dependent on this business. If changes in the market environment or a decline in competitiveness beyond expectations occur in this business, it could directly affect the Group's financial position and business results as a whole. The Company is strengthening the recruitment and development of specialized personnel to establish the startup M&A intermediary service as a new pillar of growth, and is working toward early profitability.

The Human Capital Business operates as a paid recruitment placement business under the Employment Security Act with a permit from the Minister of Health, Labour and Welfare, which must be renewed every five years; if any disqualifying event occurs, the permit could be revoked or a business suspension order issued. In addition, while the M&A intermediary business currently does not require a license, future revisions to relevant laws and regulations or tightened regulation could affect business operations. The Company addresses this by promptly monitoring trends in revisions to relevant laws and regulations and conducting regular compliance training.

The Human Capital Business handles a large volume of personal information, and if unauthorized external access occurs or information is leaked due to intentional or negligent acts by officers or employees, the Company could face damages claims, brand value impairment, and loss of social credibility, potentially affecting its financial position and business results. The Company addresses this through the establishment of personal information management regulations, acquisition of Privacy Mark certification (renewed every two years), and enrollment in insurance to cover damages arising from personal information leaks.

If valuation losses occur on shares held by the Group or shares held by funds formed through subsidiaries, due to delayed exits by investee companies or discrepancies between actual results and business plans, this could affect the Group's financial position and business results. Investments are mainly made in unlisted companies being supported through the Human Capital Business, and the Company works to mitigate risk through thorough examination of business models and market conditions at the time of investment and regular monitoring of conditions after investment.

Initiatives in new businesses may result in additional investment in personnel, information systems, and advertising expenses, temporarily worsening profit and loss, while M&A and capital alliances carry the risk of failing to achieve expected business outcomes due to unrealized synergies, limitations of due diligence, or delays in PMI. If expected returns are not realized, impairment losses on investment securities or goodwill may occur, affecting business performance; the Company addresses this through thorough prior examination of synergies with existing services and associated risks.

Securing personnel is essential to the Human Capital Business, and a certain training period is required before new hires can perform as expected. If the Group is unable to secure the personnel it needs in a timely and appropriate manner, this could affect its financial position and business results. The Company addresses this through company-wide recruitment initiatives and by developing a work environment where employees can work with a sense of fulfillment and ease.

Representative Director and CEO Yuichiro Shimizu plays an important role in management policy and branding, and if he becomes unable to perform his duties for any reason, this could affect the Group's financial position and business results. On January 1, 2026, the Company transitioned to a co-representative system, with Yukiko Koda newly appointed as Representative Director and COO, and is working to strengthen its management organization through appropriate delegation of authority and reinforcement of its personnel structure.

The Company uses information networks and computer systems extensively in its business operations, with databases stored in the cloud; if a network failure or server outage occurs due to a disaster or accident, or if unauthorized access by a malicious third party occurs, this could affect the Group's financial position and business results. The Company works to mitigate this risk through the introduction of antivirus software, implementation of information security training, and redundant configuration of communication networks.