SEYFERT LTD.

With the increasing activity in the internet job advertising market, not only industry peers but also major companies from other industries have successively entered the beauty industry-focused job advertising service market, intensifying the competitive environment. While the Group strives to maintain competitive advantage through the development and provision of proprietary services and the establishment of sales structures, if major companies enter the market, it may affect the business performance and financial condition of the job advertising services, referral and staffing services, and other operations.

The brand recognition cultivated through the job information magazine "re-quest/QJ" since the Group's founding is a source of its competitive advantage; however, due to the recent trend of users shifting to web media, the brand's recognition and influence may decline. The Group strives to maintain brand value through the expansion of the "re-quest/QJ navi" platform and the spread of information apps for hairdressers, but if these efforts do not succeed, it could spill over into the business performance and financial condition of the job advertising services, referral and staffing services, and other operations.

As of December 31, 2025, the Group does not meet the "tradable share market capitalization" listing maintenance standard for the Standard Market of the Tokyo Stock Exchange. Although the Group is promoting various measures to comply with the standard, depending on future business performance trends and stock market conditions, there is a risk that compliance may not improve, which could have a material impact on the continuation of the listing.

The Group's services are built on communication networks, and there is a risk that the system or communication network could become unusable due to natural disasters, accidents, computer viruses, unauthorized access by third parties, or other cyberattacks. If a loss or leakage of personal or confidential information of individual users or corporate clients occurs, it could result in a loss of social trust as well as a material impact on business performance and financial condition. The Group has established backup systems, firewalls, and disaster recovery systems to address this risk.

The Group differentiates itself from competitors not solely by relying on digital technologies such as web matching, but also by having sales personnel engage directly with customer feedback, making the stable securing and development of sales personnel essential. If sufficient human resources cannot be secured and developed, the number of customer approaches may decrease and service quality may decline, potentially affecting business performance and financial condition. Given the Group's relatively small organizational scale, securing specialized personnel in business development, systems technology, and corporate functions is also a challenge.

The Group raises business funds through borrowings from financial institutions and other means, and if financial market instability or rising interest rates occur, fundraising costs may increase. Rising procurement costs pose a risk that could directly affect business performance and financial condition, requiring continuous monitoring of changes in the financial environment.

The Group holds a large amount of personal and confidential information, including reader information, dispatched hairdresser information, and member information, and is subject to obligations under the Personal Information Protection Act. In the event of an unforeseen information leakage, the Group may face legal liability, including damage claims, as well as a loss of social trust and service credibility, which could affect business performance and financial condition. The Group has established internal regulations concerning personal and confidential information and implements protective security measures such as firewalls.

The Group provides staffing, referral, and hair & makeup arrangement services under licenses obtained pursuant to the Worker Dispatching Act, the Employment Security Act, and the Act on Improving Transactions Between Freelancers and Business Operators, but regulations concerning workers' rights have tended to tighten in recent years. If the Group becomes subject to license revocation or business suspension orders due to legal amendments or new regulations, it could have a material impact on business performance, financial condition, and social credibility. The Group strives for legal compliance through continuous internal training and strengthened management systems.

The Group may become a party to various disputes and damage claims from individual users, corporate clients, competitors, and others due to service deficiencies, labor management issues, personal information leakage, intellectual property infringement, false advertising by clients, and other causes. If legal proceedings become prolonged or costly, or if a ruling unfavorable to the Group is made, it could affect social credibility, business performance, and financial condition. Additionally, if a dispatched hairdresser dies, is injured, or becomes ill while performing duties, the Group, as the employer, may be obligated to provide compensation.

Takashi Hasegawa, who has served as Representative Director and President since the Group's founding, possesses extensive knowledge, business experience, and personal connections within the beauty industry, and plays an extremely important role in the Group's management. While the Group is strengthening its management organization through information sharing and delegation of authority to officers and senior employees, if he becomes unable to participate in management for any reason, it could affect business performance and financial condition.