Caster Co. Ltd.

Advances in new technologies including generative AI are rapidly progressing automation and labor-saving in business operations, and there is a possibility that part of the office work outsourced to the Company's group may be substituted or reduced. The Company has adopted an "AI-First Management" approach, seeking to improve efficiency in existing businesses and create new revenue sources through product development and business automation implementation utilizing generative AI and machine learning; however, if the response is insufficient, this may affect business results and financial condition.

As the Company's group operates primarily on a full remote work basis, it is highly dependent on communication networks, computer systems, chat tools, and similar infrastructure. In the event of a natural disaster, system failure, cyberattack, virus infection, or similar event, business operations may be significantly disrupted. Although the Company strives to strengthen security and manage system operations thoroughly, unforeseen failures may have a significant impact on business and performance.

The Company's group is subject to legal regulations such as the Subcontract Act, the Worker Dispatching Act, and the Employment Security Act, and has received permits from the Ministry of Health, Labour and Welfare for worker dispatching business (permit number: Haken 45-300149, valid until October 31, 2028) and fee-charging employment placement business (permit number: 45-Yu-300088, valid until October 31, 2028). If the Company falls under grounds for disqualification or violates laws and regulations, its business operations could be suspended or its permits revoked, making continuation of the business impossible. In addition, future amendments to laws and regulations or changes in their interpretation may have an adverse effect on the business.

The Company's group secures personnel with diverse expertise from both within Japan and overseas by offering a full remote work arrangement; however, future changes in the labor market may make it difficult to hire as planned for positions involved in business operations, including front and cast roles. If recruitment costs or personnel expenses increase, this may affect business and performance. The Company is actively developing its remote work environment to prevent the outflow of personnel to external parties.

Because the Company's group conducts operations by sharing information relevant to work entrusted by clients between full-time employees and outsourcing partners, there is an inherent risk of information leakage. Although the Company has established and operates a management framework including the appointment of a DPO (Data Protection Officer), acquisition of ISMS certification, and acquisition of the Privacy Mark, if an information leakage incident occurs due to unforeseen circumstances, this may affect business and performance through claims for damages, an increase in the cancellation rate, and increased secondary response costs.

The Company's group is actively investing in new businesses and continuously incurring advertising expenses in order to diversify its businesses and services. Since recovering CAC (customer acquisition cost) takes several months, profit margins may decline during the spending period, potentially resulting in a temporary operating loss. If investments in new businesses do not generate the planned revenue, or if advertising does not achieve sufficient results, this may affect business and performance. The Company strives to verify and optimize cost effectiveness (LTV/CAC).

The Company's group recorded goodwill in connection with the acquisition of shares of Glams Co., Ltd. in June 2024 and is amortizing it over a certain period. If the expected results are not achieved due to changes in the business environment or other factors, it may become necessary to record an impairment of goodwill or shares of affiliated companies, which may affect the financial condition and business results.

There are numerous competing companies in Japan operating BPO businesses, crowdsourcing businesses, and staffing and placement businesses. The Company has established a competitive advantage through the practice of full remote work, small-lot contracts starting from 10 hours per month, and automated task-skill matching using a proprietary system; however, depending on the actions of competitors, this may have a significant effect on business and performance.

Shota Nakagawa, the founder and Representative Director, has demonstrated leadership in management policy, business strategy, and service concepts as the representative since the Company's founding, resulting in a high degree of dependence on him. Although the Company is working to build a management structure that does not depend on him by delegating authority to each business division and developing personnel, if he becomes unable to perform his duties for any reason, this may affect business and performance.

The Company's group's BPaaS Business and other operations are characterized by not depending on sales from specific clients and by being less susceptible to the business conditions of specific industries or clients; however, if a prolonged economic downturn occurs that affects clients regardless of industry, the cancellation rate may rise as a target for cost reduction, which may affect business and performance. The Company expects demand to expand due to increased usage promotion among small and medium-sized enterprises and an increase in companies implementing remote work.