Risks and factors that may affect the Group's operating results and financial position are described below. Recognizing the existence of these risks, the Group will continue to strive to minimize the impact of such risks and to respond appropriately in the event of such risks.

The forward-looking statements in this section are based on our judgment as of the end of the fiscal year under review.

1Changes in the Japanese economy and the overseas business operations of client companies

Many of our Group's client companies have development, design, and manufacturing bases in Japan. Providing human resources and technical services to these clients is the foundation of our business. Consequently, major changes in the Japanese economy and changes in the overseas business development policies of client companies may have a material impact on the Group's performance.

2Permits and Regulations

In accordance with the Law Concerning the Securing of the Proper Operation of Worker Dispatching Undertakings and the Protection of Dispatched Workers (hereinafter referred to as the "Worker Dispatching Law") and the Employment Security Law, the Group has granted permissions, applications and notifications as follows.

Status of permission and notification for our Group business

Law Regulator Licence number Acquisition Expiration
Worker dispatch business
BeNEXT Technologies Inc. Worker Dispatching Law Ministry of Health,
Labor and Welfare
Ha13-314322 Oct. 2019 Sept. 2022
BeNEXT Partners Inc. Worker Dispatching Law Ministry of Health,
Labor and Welfare
Ha13-070297 Nov. 1999 Oct. 2022
BeNEXT Solutions Inc. Worker Dispatching Law Ministry of Health,
Labor and Welfare
Ha13-304279 Apr. 2009 Mar. 2022
Paid employment placement business
BeNEXT Technologies Inc. Employment Security Act Ministry of Health,
Labor and Welfare
13-Yu-311247 Oct. 2019 Sept. 2022
BeNEXT Partners Inc. Employment Security Act Ministry of Health,
Labor and Welfare
13-Yu-306802 Nov. 2014 Oct. 2022
BeNEXT Solutions Inc. Employment Security Act Ministry of Health,
Labor and Welfare
13-Yu-303951 Apr. 2009 Mar. 2022

The Group's business is subject to labor-related laws and regulations. In the event of any conduct or event that violates relevant laws and regulations, the Group's business performance may be seriously affected by the cancellation of business permits or the suspension of business operations by the relevant authorities. The reasons for the cancellation of the license are stipulated in Article 14 of the Temporary Staffing Law, Article 6 of the Supplementary Provisions, and Article 32 of the Employment Security Law.

In order to avoid such incidents, the Internal Audit Office monitors the status of compliance with relevant laws and regulations through internal audits and regularly checks them at the Compliance Committee.
In addition, revisions to related laws and regulations may cause restrictions or the impacts on the Group's business. In response, we ascertain the situation and respond as necessary by confirming our membership in industry associations and announcements by relevant government agencies.

3Securing Human Resources

Our Group strives to recruit and retain human resources while understanding the needs of client companies. However, in the event that it becomes difficult to secure the human resources required by client companies due to sudden changes in the economic environment or the loss of trust in our Group, our Group's performance may be adversely affected.

4Regular employment of employees

Our employees are permanently employed as full-time employees, not only those engaged in the worker dispatch business, but also those engaged in the contracting and outsourcing business. On the other hand, business contracts with client companies are in limited period.

We endeavor to provide our employees with opportunities to work at all times through education and training to meet the needs of our corporate clients and the cultivation of new client companies. However, if a sudden change in the economic environment or a loss of confidence in our Group results in a situation where contracts are terminated or orders from client companies are suspended at the same time, our Group's performance could be adversely affected.

5Management of client information

Because employees of the Group have the opportunity to come into contact with highly confidential information about client companies in the course of their business operations, we have established client information management regulations, put in place a system for appropriate information management, and continuously conduct education and training for all employees in an effort to improve the level of information management.

Despite these efforts, in the event of a leak or improper use of various types of information, the Group's performance could be adversely affected by claims for damages or the loss of public confidence.

6Management of personal information

The Group handles a large amount of personal information, including employees and job seekers. To ensure the proper management of such information, the Group has established personal information protection regulations and related regulations. The Group strives to raise employees' awareness of information management through the acquisition of the Privacy Mark, employee education, and the distribution of related information, and strives to comply with these regulations.

Despite these efforts, in the event of an unexpected incident, such as a leak of personal information, our Group's performance could be affected by claims for damages or the loss of public confidence.

7Occupational accidents

We recognize that health and safety management should be adapted to specific business environments because the workplaces of our Group's employees vary from development and design departments to production plants and logistics facilities. For this reason, we are working to prevent occupational accidents in peacetime by providing safety and health education and training for site managers in cooperation with our business partners for each department to which we are assigned.

Nevertheless, in the event of unforeseen circumstances, our Group's performance could be adversely affected by a deterioration in the Group's corporate image or claims for damages.

8Operation of subcontracting (outsourcing) business

In our Group, we provide services under subcontracting (outsourcing in some cases). In this case, unlike temporary staffing contracts, our Group provides business execution instructions and assumes management and supervisory responsibilities.

The Group enters into agreements with client companies in advance to consider and prepare risks that may arise in the provision of such services, and endeavors to maintain the quality of the services it provides. However, in the event of unforeseen circumstances, delays in delivery or defects in deliverables, the Group's business performance may be adversely affected by a deterioration in its relationship with client companies or the occurrence of compensation for damages.

9Upfront investment in businesses

The Group actively considers and implements corporate acquisitions and capital tie-ups as effective management methods for expanding the scope of its business. Accordingly, in addition to utilizing borrowings and other financing methods, there is a possibility that earnings will be affected by 1-time expenses, amortization of goodwill, etc. In addition, these business investments do not necessarily contribute to the Group's performance as expected, and it may take time for them to contribute to the Group's performance. Moreover, impairment of goodwill may occur, which may have an impact on the Group's performance and financial condition.

10Overseas Business Development

We are expanding our overseas operations in the UK and Southeast Asia. Therefore, if the economic environment in the United Kingdom, Europe, and Southeast Asia deteriorates significantly, or if the Group is unable to recover its investment funds due to a business environment that differs in laws, regulations, market practices, or other factors, the Group's performance could be adversely affected.

11Occurrence of natural disasters, etc.

In the event of a large-scale natural disaster or accident that damages the facilities of our Group's business locations or client companies, our Group's performance could be adversely affected.