AGEHA Inc.

AI-related technologies, including generative AI for image generation and copywriting support, are evolving extremely rapidly, with new features and services emerging one after another. If the Company's response falls behind, it could lead to stagnation in operational efficiency and a widening competitive gap with rivals, potentially affecting the business and operating results. The Company closely monitors trends in advanced technology and strives to improve service quality and efficiency through proactive adoption.

Due to the execution cycle of client companies' recruiting and advertising budgets, delivery deadlines are concentrated in February through March, with 38.26% of net sales concentrated in the second quarter. The full-year operating loss for the fiscal year under review was ¥73,617 thousand, and operating losses were recorded in the first, third, and fourth quarters alike. If delays occur in the timing of client acceptance inspections, this could further affect business performance and financial position during the relevant period; the Company is working to level out this seasonality through business expansion.

Under its in-house production policy, the Company positions human resources as its most critical management resource, and securing and retaining talented personnel is a key challenge for business expansion. If changes in the labor market make timely recruitment difficult, or if personnel attrition occurs, this could affect business development and operating results. The Company continues to actively recruit new graduates and mid-career hires, focus on internal training, and implement measures to improve retention rates.

As of the end of the fiscal year under review, the market capitalization of tradable shares was close to the formal listing requirements set by the Tokyo Stock Exchange, presenting a risk of falling short of the listing maintenance criteria. As countermeasures, the Company is pursuing share price improvement through recovery of business performance and enhancement of corporate value, encouraging officers and employees to exercise stock options, and requesting cooperation from major shareholders for partial sales of their holdings. In addition, the Company listed on the Nagoya Stock Exchange Next Market in June 2025 to raise its visibility.

Corporate recruiting budgets and advertising/public relations budgets tend to be adjusted in line with economic conditions, and the Company's sales are heavily dependent on these budgets. If the economic outlook deteriorates, client budget cuts could directly affect the Company's operating results. The Company continuously monitors economic trends and maintains a system for internal discussion and deliberation when signs of sudden change are detected.

The Company considers M&A as one option for business expansion. If unforeseen matters not anticipated in prior due diligence come to light after execution, or if changes in market conditions prevent business development from proceeding as planned, this could affect operating results and other outcomes. The Company plans to reduce such risks by conducting detailed business, financial, and legal due diligence utilizing experts such as lawyers and certified public accountants.

In the course of business operations, the Company has occasion to handle clients' confidential information and personal data. If information leakage occurs due to unforeseen circumstances such as virus infection, this could affect the Company's financial position and operating results through a decline in social credibility and brand image, as well as payment of damages. The Company obtained Privacy Mark certification in September 2014 and is working to build and maintain a management system capable of withstanding virus attacks by enhancing IT security measures.

In some segments of the branding market and the marketing (promotion) market, barriers to entry are not necessarily high, and competition may intensify. If the Company is unable to maintain its competitiveness, this could adversely affect operating results. The Company continuously gathers competitive information and holds discussions and deliberations in response to market changes.

As of the end of the fiscal year under review, potential shares from stock acquisition rights totaled 55,300 shares, equivalent to 3.86% of the total number of issued shares of 1,433,500 shares. If the share price exceeds the exercise price and the exercise conditions are met, there is a risk of dilution of the value per share.

Takahiro Minato, the founder and Representative Director and President, plays a critical role in driving the business, and if he becomes unable to continue his executive duties, this could affect business development and operating results. His shareholdings, including those held through his asset management company, account for 56.51% of the total number of issued shares, giving him significant influence as a major shareholder. The Company continues to develop and strengthen its management talent to reduce excessive dependence on any single individual.