Green Monster Inc.

Strengthened privacy regulations by Apple Inc. and Google LLC pose a risk of making targeted advertising and conversion measurement more difficult. In fact, following the release of iOS 14.5, user targeting using IDFA became restricted, resulting in a decline in both revenue and profit in FY9 (July 2021 to June 2022) compared to the prior period. While improvements have been made since FY10 through media optimization using SKAN and enhanced advertising creatives, additional risk remains going forward due to further policy changes stemming from tightening privacy regulations, primarily in Europe and the United States.

As of the end of the current consolidated fiscal year, VCs and others held 300,000 shares of the Company (9.57% of total issued shares). If VCs and others sell their shares on the market following listing, this could temporarily disrupt the supply-demand balance of the Company's shares and affect share price formation. In addition, the number of potential shares from stock acquisition rights is 289,600 shares (9.24% of total issued shares), presenting a risk of dilution of existing shareholders' equity value upon exercise of these rights. Both risks have a high likelihood of occurrence and could materialize within one year.

If major advertisers (securities companies and FX companies) that account for a large share of sales reduce or suspend their promotions, this will directly impact the Group's net sales. In FY12, GMO Financial Holdings, Inc. group companies accounted for more than half of total net sales, indicating a high degree of dependence on specific advertisers. In FY10, sales were actually impacted when a specific securities company withdrew due to organizational restructuring. The Group addresses this risk through monitoring via ASPs and the continuous development of alternative advertisers.

Consolidated subsidiary FP Consulting Co., Ltd. handles personal information and asset holding information in its financial planning services for corporations and organizations, while Financial Intelligence Co., Ltd. handles personal information of students in its individual investment school, creating a risk of information leakage due to unauthorized access or other causes. If an information leak occurs, it could impact business results through claims for damages or a decline in credibility. The Group addresses this through compliance with the Act on the Protection of Personal Information, establishment of an information management system, and thorough employee training.

Because the Group provides services via the Internet, a system failure caused by natural disaster, accident, unauthorized access, or other causes could halt service provision, resulting in direct damage and a decline in credibility. While the Group has implemented system redundancy and security measures to prevent unauthorized access, the impact of any failure could extend to business results.

Goodwill of ¥227,042 thousand was recorded as of the end of the current consolidated fiscal year, and a loss on valuation of investment securities of ¥49,999 thousand was recorded during the current consolidated fiscal year. The Group intends to continue pursuing capital and business alliances and M&A going forward, and if such initiatives do not proceed as originally planned due to changes in the business environment or other factors, impairment losses on goodwill or losses on valuation of shares may occur, impacting business results. When executing such transactions, the Group conducts detailed prior review of the target company's finances, legal affairs, and business, and analyzes risks and normalized earning power.

In FY12, net sales related to "FX Navi" accounted for 67.5% of consolidated net sales, indicating a high degree of dependence on a specific app. If sales from this app decline due to reduced user intent to open accounts amid lower foreign exchange volatility or the emergence of strong competitors, it would have a significant impact on the Group's overall business results. As a countermeasure, the Group is working to expand transactions in other apps and services, but dependence remains high at present.

In FY12, the top two ASPs accounted for approximately 94% of net sales via ASPs, indicating a significant concentration of transactions with specific ASPs. If a material change occurs in the credit standing of an ASP, there is a risk of cash flow disruptions or the occurrence of uncollectible bad debts. The Group addresses this by setting credit limits for each customer and developing alternative ASPs, but there are constraints on developing alternatives given the limited number of ASPs with expertise in financial institution advertising.

Strengthened regulations or new legislation under the Act on the Protection of Personal Information, the Act against Unjustifiable Premiums and Misleading Representations, the Financial Instruments and Exchange Act, and other laws may constrain business operations. In particular, as a response to regulations on stealth marketing, the Group voluntarily implements PR labeling and content checks using an internal NG word list, but changes in the regulatory environment may require revisions to investment education content and advertising operations. The Group has established a legal review structure with its retained attorney to address this.

While the Company currently perceives limited competition in the experiential investment education app market, the competitive environment could intensify due to the entry of major companies with capital and brand strength, businesses with new technologies or business models, or the emergence of media that can encourage novice investors to open accounts more efficiently than the Company. If excessive price competition occurs, it could impact business results, and the Company is working to enhance its competitive advantage through continued securing of development resources and service enhancement.