BCC Co.,Ltd.

In each of the IT Sales Outsourcing Business (targeting major IT companies), Healthcare Business (targeting nursing care facilities), and Other Business (targeting small and medium-sized businesses and entrepreneurs) segments, if investment needs change rapidly due to changes in the overall industry or the business environment of client companies, customer demand may decline, potentially affecting business results and financial condition. In particular, the Healthcare Business is structurally susceptible to the effects of legal amendments related to social security costs. The Company is responding to this by increasing the number of client companies, providing an education program specialized in IT sales, and offering multiple services for the nursing care industry.

The staffing services industry is highly competitive among companies, and there is a risk that if other companies newly enter the IT sales staffing market, the Company's services may no longer match customer needs. Additionally, if price competition intensifies in the IT services industry, the Company may be unable to secure expected revenue. The Company strives to avoid price competition by leveraging its first-mover advantage in IT sales staffing and strengthening relationships through personal exchanges with suppliers and client companies.

In the IT Sales Outsourcing Business, the Company has opportunities to handle personal information and confidential information of client companies. If confidential information is leaked due to computer viruses, unauthorized access, human error, or operational failures of client systems, this could result in claims for damages from client companies or loss of trust. The Company obtained certification as a Privacy Mark-accredited business operator in 2007 and strives to strengthen its information security system, and has also taken out liability insurance; however, depending on the nature of an incident, damages that cannot be fully covered by insurance may occur.

Staffing services are regulated under the Worker Dispatching Act, and there is a material risk that business continuity could become impossible due to business suspension or revocation of the staffing business license if the Company becomes subject to disqualification grounds or commits legal violations. The Company holds a worker dispatching business license (valid until April 30, 2027) and a fee-charging employment placement business license (valid until May 31, 2027), and related laws such as the Employment Security Act and the Personal Information Protection Act are subject to continuous review. The Company has established a legal compliance system through collaboration with its retained attorney, collection of the latest information, and training of officers and employees; however, if legal amendments significantly disadvantageous to the Company are enacted, this could have a material impact on business results and financial condition.

The IT Sales Outsourcing Business is a business model in which inexperienced and young personnel in the IT industry are recruited, trained, and dispatched. If new recruitment becomes difficult due to a rise in the effective job openings-to-applicants ratio resulting from changes in the labor market, or if the number of resignations increases, providing services to customers may become difficult, potentially affecting business results and financial condition. The Company is working on human resource development through its proprietary education program, but responding to rapid changes in the labor market remains a challenge.

Representative Director and President Kazuhiko Ito, as the founder, plays an important role ranging from determining management policy and business strategy to promoting business in each department and conducting external negotiations. If he becomes unable to perform his duties for any reason, this could affect business results and financial condition. The Company is working to strengthen its management organization by expanding and developing the number of executive officers and employees and delegating authority, but currently remains highly dependent on this specific executive.

The Company is actively considering M&A to expand its business scale, and there is a risk that recovery of invested funds may become difficult due to significant changes in the market environment after an acquisition, failure of the target company to achieve its business plan, or the discovery of financial issues that were difficult to detect during due diligence. In PMI as well, there is a risk of goodwill impairment or unexpected expense recognition due to mismatches in management policy or organizational culture, employee turnover, delays in system integration, or failure to achieve synergies. The Company strives to manage these risks through thorough due diligence, establishment of integration promotion teams, and monitoring of key KPIs, but the possibility that plans may be derailed by unforeseen events cannot be ruled out.

As the Company has multiple subsidiaries, there is a risk that fraudulent activity, legal violations, material financial misstatements, personal information leaks, labor issues, or reputational damage could occur at a subsidiary due to changes in laws and regulations, deficiencies in internal controls, delays in information communication, or inadequate audit systems. If such issues occur, this could have a material impact on the overall performance, financial condition, and creditworthiness of the group. The Company strives to reduce these risks through dissemination of a group-wide compliance policy, regular internal audits, external audits, oversight through its governance structure, and education and training.

The Company grants stock options as incentives to officers and employees, and as of the end of the current fiscal year, the number of potential shares from stock acquisition rights had reached 45,780 shares (approximately 4.1% of the 1,119,740 shares issued). The Company may issue additional stock options in the future to secure talented personnel, and if these stock acquisition rights are exercised, the value of shares held by existing shareholders may be diluted.

As a result of active investment in human resources, advertising, and other areas, the Company had tax loss carryforwards as of the end of its 12th fiscal year. If these loss carryforwards expire due to future tax reforms or the expiration of the carryforward period, the Company's corporate tax, resident tax, and enterprise tax burden may increase, potentially affecting business results and financial condition. In addition, the Company holds several unlisted shares as investment securities, and there is a risk that their valuation may decline due to deterioration in the business condition or bankruptcy of the investee companies.