WILSON LEARNING WORLDWIDE INC.

In the current consolidated fiscal year, the Company recorded an operating loss of ¥70,733 thousand, an ordinary loss of ¥91,977 thousand, and a net loss attributable to owners of the parent of ¥140,227 thousand, and in the previous consolidated fiscal year it also recorded an operating loss of ¥393,918 thousand and negative operating cash flow of ¥348,282 thousand. There is no visibility for new fund procurement from financial institutions, and circumstances exist that raise material doubt about the going concern assumption. As a countermeasure, the Company completed the issuance of new shares and the third series of stock acquisition rights through a third-party allotment on August 28, 2025, aiming to strengthen its financial condition, but the outlook for stabilizing its financial base has still not been obtained.

If the downturn in business revenue continues, maintaining liquidity on hand will become difficult, and securing means of fund procurement will become a critical management issue. Applications for new financing from financial institutions have not been realized, and the Company relies on securing funds through new share issuances and intra-group fund transfers. Although further capital enhancement measures are being considered and pursued, no concrete outlook has been obtained.

Approximately 60% of the Group's net sales are overseas sales, and the Company's royalty revenue is also derived from overseas subsidiaries, so foreign exchange fluctuations directly affect operating results, financial position, and competitiveness. In particular, there is a possibility of adverse effects if the yen fluctuates significantly against the US dollar, raising concerns about the long-term impact on business performance. Although plans are formulated using an assumed exchange rate set at the beginning of the period, no measures have been taken to completely eliminate foreign exchange fluctuation risk.

The Company holds a large amount of personal information in connection with the conduct of its business, and the possibility of information leakage due to unforeseen circumstances cannot be ruled out. If an information leak were to occur, it could adversely affect business performance through a decline in social credibility, incurrence of substantial response costs, and damage to brand value. Although the Company states that it is working to establish a management system, specific details of countermeasures have not been disclosed.

If deficiencies arise in the internal information transmission and decision-making process, delays or errors in disclosure may occur, affecting investor confidence. There have been past instances of delayed disclosure of financial results, and this is recognized as an important issue going forward. Although the Company states that it is working to establish a timely disclosure system, the effectiveness of that system requires continued monitoring.

Wilson Learning Europe LTD. (United Kingdom) and Wilson Learning France (France) have been transferring their operations to Wilson Learning Corporation (United States) since August 2024, proceeding with operational rationalization. Wilson Learning China (China), in view of country risk, continues to downsize its business toward liquidation, and a major overhaul of the group structure is underway. Additional costs and impacts on earnings may arise in connection with this restructuring.

Net sales have declined significantly since FY2020 (ending March 2020), and the Company has recorded significant operating losses, ordinary losses, and net losses over multiple periods. Although net sales show a recovery trend in the current consolidated fiscal year, losses continue, and a fundamental improvement in the revenue structure has not yet been achieved. The Company is promoting measures such as focusing on licensed-type projects and expanding joint promotions with external partners, but the timing of their effects remains uncertain.