Quants Research Institute Holdings, Inc.

M&A Intermediary Services business requires no licenses, qualifications, or large-scale capital investment, resulting in low entry barriers and high risk of intensifying competition. Our group has implemented measures such as improving new employees' speed of achieving results through knowledge sharing via a proprietary developed system, but if competition intensifies further, it may affect business performance and financial condition.

Currently, there are no laws or regulations directly regulating M&A Intermediary Services business, but if regulations are imposed through future legislation or amendments, constraints on business operations may arise. In addition, if the company ceases to be a registered business operator due to changes in registration requirements under the SME Agency's M&A support institution registration system, or if amendments to the Companies Act, Financial Instruments and Exchange Act, tax laws, etc. affect the promotion of M&A transactions, this may also affect business performance and financial condition.

Since services for companies seeking to transfer their business operate under a full success fee model, there is a structural risk that performance fluctuates significantly depending on the timing of deal closings, the number of deals closed, and deal size. While the company seeks to mitigate fluctuations by increasing the number of contracted deals, temporary fluctuations in deal closings or variation in deal size may affect business performance and financial condition.

If acquisition needs shrink due to economic downturn or natural disasters, or if the number of companies lacking successors, which supports the growth of the M&A market, decreases, there is a risk that our group's revenue base could be significantly impaired. Since the majority of revenue depends on the M&A Intermediary Services business, changes in market conditions have a direct impact on business performance.

M&A Intermediary Services business is highly dependent on personnel, and recruiting and developing talent is one of the most critical management issues. If changes in employment conditions make hiring difficult, if there is a large-scale outflow of personnel, or if training plans are delayed, this may have a material impact on business performance and financial condition. As of September 30, 2025, the group had 690 employees and continues to actively recruit, but there is also a risk that business operations could be hindered if internal management systems are not established at appropriate timing as the organization expands.

Since the company handles a large amount of confidential corporate information and personal information, if an information leak occurs, it may have a material impact on business performance and financial condition due to damage claims and loss of credibility. While the company has established internal regulations, entered into confidentiality agreements, and built a management system based on the Personal Information Protection Act, the risk of information leaks or unauthorized use due to unforeseen circumstances cannot be eliminated.

Since much of the data held by the company is stored on external servers, if data becomes unusable due to a natural disaster or if the group itself suffers severe damage making it difficult to carry out business activities, this may affect business performance and financial condition. Given the structural dependence on external servers, the effectiveness of data recovery and business continuity plans in the event of a disaster is an important issue.

Shunsaku Sagami, the founder and Representative Director and President, is a major shareholder holding 58.0% of the total issued shares and plays a central role in formulating and determining management policy and business strategy. If he becomes unable to manage the company and the recruitment and development of successor management personnel has not progressed, this may affect business performance and financial condition. While the company is working to reduce this dependence through information sharing at Board of Directors and management meetings and through executive development, the current level of dependence remains high.

AI technology related to the M&A Intermediary Services business is undergoing remarkable progress in research and development, and if the company's response to technological innovation is delayed, its competitiveness may decline, which may affect business performance and financial condition. Our group is working to strengthen its business foundation through the use of AI, but continuous response is required in this field where the pace of technological innovation is extremely fast.

Stock options and trust-type stock options have been granted for the purpose of providing incentives to officers and employees, and as of September 30, 2025, the number of potential shares reached 4,025,889 shares (equivalent to 7.4% of the total issued shares of 54,101,335 shares). If the exercise of stock acquisition rights progresses, the value per share may be diluted, potentially affecting stock price formation.