Mental Health Technologies Co.,Ltd.

The competitive environment is severe across all three businesses—Mental Health Solutions Business, Medical Work Shift Business, and Other—and the entry of companies with strong capital resources and brand recognition, as well as the rise of existing competitors, raises concerns about user attrition and increased customer acquisition costs. If measures to address these challenges do not succeed, securing the Group's competitive advantage and maintaining/enhancing corporate value could become uncertain. The Group has adopted a policy of continuously enhancing and improving services in response to changes in the competitive landscape.

The Group handles large volumes of personal information belonging to client companies, physicians, medical institutions, and others. If unauthorized external access occurs, or if leakage, falsification, or unauthorized use occurs due to intentional acts or negligence by related parties or business partners, this could result in claims for damages and a decline in social credibility. The Group has implemented measures such as obtaining the Privacy Mark, establishing and complying with personal information protection regulations, conducting internal training, and performing internal audits, but unforeseen incidents cannot be completely eliminated.

As of the end of the fiscal year ended December 2025, the outstanding balance of long-term borrowings reached ¥2,618 million (including ¥508 million in long-term borrowings scheduled for repayment within one year), and additional borrowing for growth investments such as M&A is anticipated. Instability in financial markets or deterioration in business performance or financial condition could prevent fundraising as planned, and a significant rise in market interest rates would increase interest expenses, putting pressure on business performance and financial condition. The Group is considering countermeasures while maintaining a flexible fundraising policy, including debt financing.

The core of the business, including the online consultation framework and medical staffing matching system, depends on the internet and internal business systems. If a system failure or information leakage occurs due to cyber attacks, unauthorized access, natural disasters, or other causes, this could result in substantial costs and a decline in social credibility. The Group has established network monitoring, routine maintenance management, and a rapid response framework, but complete protection against increasingly sophisticated and complex threats cannot be guaranteed.

The Group is subject to regulation under numerous laws, ministerial ordinances, and guidelines, including the Employment Security Act, the Industrial Safety and Health Act, the Act on the Protection of Personal Information, and the Worker Dispatching Act. New legislation or the strengthening or clarification of existing regulations could impose new constraints on business operations. Each business division and the corporate headquarters continuously monitor regulatory changes and strive for rapid response, but depending on the content of stricter regulations, an impact on business performance and operations is unavoidable.

As the business expands rapidly, there is a possibility that the development of internal management systems may not keep pace, or that significant deficiencies may be discovered in the internal control system. This could make appropriate business operations difficult and impact business performance. The Group is strengthening its framework by increasing and training personnel at the corporate headquarters and utilizing external experts, but there is no guarantee that an effective internal control system can be maintained at all times.

M&A, including the acquisition of shares in Task Force Co., Ltd. and the acquisition of shares in Meishokai Occupational Health Consultant Office and Mirai Occupational Physician Office, is positioned as a pillar of growth strategy. However, the discovery of issues that could not have been identified in advance or changes in market conditions may necessitate impairment of the acquired companies' share value or acquired assets. If this risk materializes, it could have a material impact on business performance and financial condition. The Group strives to avoid such risk through detailed due diligence, but complete elimination is difficult.

The paid employment placement business (under the Employment Security Act) operated by subsidiary Avenir Co., Ltd. and the worker dispatching business (under the Worker Dispatching Act) operated by Task Force Co., Ltd. are conducted under administrative licenses, and in the event of a serious legal violation, the license could be revoked or a business suspension order could be issued. The Group continues to thoroughly train employees and monitor compliance status through internal audits, but there is no guarantee that violations by officers or employees can be completely prevented.

The Mental Health Solutions Business is directly affected by companies curtailing health management investments due to economic conditions, while the Medical Work Shift Business is directly affected by the biennial medical fee schedule revisions and medical system reforms. These factors could result in a slowdown in market growth or changes in contracting opportunities and content. If these changes in the business environment materialize, there is a risk that sales will not expand as expected. The Group is addressing this by strengthening collaboration with specialized personnel while positioning its two core businesses as twin engines of growth.

The number of potential shares from stock options granted as incentives to directors and employees is 1,087,200 shares (as of the end of February 2026), equivalent to 9.4% of the total number of issued shares including potential shares, at 11,534,500 shares. The exercise of these stock options would dilute the share value and voting ratio of existing shareholders, and large-scale sales could also affect appropriate share price formation.