CS-C.Co.,Ltd.

The digital marketing market, which is the primary business domain of the Company Group, is still in a growth phase, and an increase in new entrants by domestic and overseas operators is expected. If the market size falls below expectations due to reductions in marketing budgets or the introduction of new regulations, this may affect the Company Group's financial position and operating results. As a countermeasure, the Company is strengthening the technology and reliability of the SaaS-based integrated marketing tool "C-mo" and building entry barriers through early deployment.

In the internet industry, technologies, industry standards, and client needs change rapidly, making timely response to technological innovation essential for maintaining the competitiveness of the Local Business DX business. Risks exist including obsolescence of adopted and developed new technologies, incurrence of substantial improvement costs, bugs and defects in services applying new technologies, and intensified competition with competitors that have introduced new technologies earlier. If it becomes difficult to respond to these risks, business performance may be adversely affected.

The Local Business DX business depends on computer systems and communication networks, and there is a risk that system troubles caused by equipment failure, excessive access, natural disasters, cyberattacks, employee operational errors, and other factors could impede business operations. Although measures such as constant monitoring, regular backups, load balancing, security measures, and the establishment of internal controls have been implemented, the occurrence of trouble due to unpredictable factors may affect the business and operating results.

The Company Group positions M&A and business alliances as means of expanding its business, and implements them through a process involving alignment with management strategy, synergy evaluation, due diligence, and board deliberation. However, if the planned results are not achieved, or if problems not identified at the time of investment consideration are discovered later, impairment of the value of acquired shares or business assets may become necessary, which may affect operating results and financial position.

The Company Group is subject to various legal regulations such as the Act on the Protection of Personal Information, the Employment Security Act, and the Labor Standards Act, and if new regulations are applied due to future legal amendments, business development may be constrained. In addition, it is necessary to ensure the legality of advertising distribution in relation to the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceutical and Medical Device Act, the Health Promotion Act, the Copyright Act, and other laws, and if inappropriate advertising distribution occurs, this may affect the business and operating results. Although an internal advertising monitoring system has been established as a company policy, the risk of violations cannot be entirely eliminated.

The Company Group endeavors to acquire intellectual property rights and conducts investigations into third-party rights infringement in cooperation with experts; however, there is a possibility that existing intellectual property rights not recognized by the Company Group may exist, or that third parties may newly acquire copyrights or other rights. In such cases, the Company Group may be subject to claims for damages, injunctions, or royalty payment demands, which may affect its business and operating results.

Amid rapid business growth, the continuous recruitment of excellent personnel and the development and retention of existing personnel are essential; however, if securing and developing personnel meeting the recruitment criteria does not proceed as planned, this may lead to a decline in service quality and competitiveness, affecting business development and operating results. There is also a risk of dependence on a specific individual (Representative Director and President Ken Sugihara), and to mitigate the impact should he become unable to perform his duties, the Company is proceeding with delegation of authority, personnel development, and the establishment of an information-sharing system.

In terms of the composition ratio of net sales, the Local Business DX business accounted for 86.0% on a cumulative basis in the fourth quarter of FY2025 (ending September 2025), indicating a high degree of dependence on a specific industry. If domestic economic conditions worsen or if there is a sharp decline in demand for services targeted at various industries, this may affect the Company Group's financial position and operating results. As countermeasures, the Company is diversifying its business portfolio through the expansion of services for the travel industry and the development of the Physical Stores business (8.8% on a cumulative basis in the fourth quarter).

To ensure stable service operation and improve client satisfaction, continuous capital investment is necessary to accommodate growth in the number of clients and traffic, as well as to introduce new services and enhance security. If the actual number of clients or traffic deviates significantly from projections, the timing, content, and scale of capital investment may need to be changed, and an increase in capital expenditure amounts or depreciation expense burden may affect operating results and financial position.

The Company has not paid any dividends since its founding, and at present, neither the possibility nor the timing of dividend payments has been determined, as priority is given to allocating funds to growth investments. In addition, funds raised through the public offering at the time of the stock listing are planned to be allocated to sales promotion expenses, capital investment, recruitment expenses, and repayment of borrowings; however, if the launch of new businesses or changes in the management environment cause investment returns to fall below expectations, or if more effective uses arise, the planned use of funds may be changed.