Cookpad Inc.

The Group's business foundation is concentrated exclusively in the recipe posting and search service "Cookpad." Delays in feature enhancement or unexpected events that reduce service convenience could directly lead to a decline in the number of users. If service operation becomes impossible, this could have a severe impact on the entire business. The Group seeks to mitigate this risk through continuous investment in feature enhancement and responsiveness to user needs.

The pace of technological innovation in the internet industry is rapid, and in particular, the rapid spread of generative AI technology may hinder active content posting by users and community engagement, potentially reducing the relative value of the Company's platform. If the Company fails to respond appropriately, such as by presenting new cooking experiences suited to the AI era, this could affect its business and results of operations. The Group is addressing this through securing engineers and conducting research activities related to AI and other new technologies.

Although the Company is a leader in the recipe field, there is a risk that competition will intensify due to new entrants and service expansion by companies with AI technology, capital strength, marketing power, and broad customer bases. If intensified competition leads to customer attrition or increased costs, this could affect the Group's business and results of operations. The Group seeks to maintain and enhance its competitive advantage through continuous feature enhancement and technology investment, but uncertainty remains.

Regarding personal information obtained through services such as "Cookpad," the Company is subject to obligations under Japan's Act on the Protection of Personal Information and laws of other countries, including the EU's GDPR. If leakage, falsification, or unauthorized use occurs, this could result in damage compensation costs and a decline in brand image. The Group has established a protection and management framework, including personal information management regulations, operational process development, and thorough internal training for officers and employees, but the risk cannot be completely eliminated.

System failures caused by various factors such as overload due to sudden increases in access, power outages, software defects, computer viruses, unauthorized external intrusion, and natural disasters could disrupt business activities. There is also a risk that system malfunction or defects could lead to loss of trust, resulting in suspension of transactions or claims for damages. The Group addresses this through preventive system management frameworks, but it is difficult to completely eliminate unpredictable factors.

Akimitsu Sano, the founder, serves as Director and Representative Executive Officer of the Company and is a major shareholder holding 63.57% of the Company's voting rights, giving him dominant influence over important decisions, including the appointment and dismissal of officers. If Mr. Sano's management philosophy changes in the future, this could significantly affect the Group's business strategy. From the standpoint of protecting minority shareholders' interests, this should be noted as a governance-related uncertainty.

If new laws or regulations targeting internet use and internet-related services are enacted, or if interpretations of existing laws change, this could impose restrictions on the Group's business operations. In international business expansion as well, if it becomes difficult to address differences in laws, systems, and regulations across countries, this could hinder business promotion. The Group addresses this through establishing a legal compliance framework, but changes in the regulatory environment are external factors that are difficult to predict.

The Group operates recipe services globally, but if it becomes difficult to address potential risks such as differences in laws, systems, regulations, political and social conditions, culture, religion, user preferences, and business customs across countries, as well as currency fluctuations, business promotion could be hindered. If these risks materialize, this could affect the Group's business and results of operations. Adapting to the unique environment of each country is key to business success.

As the business expands, securing and developing personnel with new technology skills, including AI, and advanced technical skills is essential. If this does not proceed as planned, or if existing personnel leave the Company, this could result in a decline in competitiveness and constraints on business expansion. The Group maintains a policy of continuous annual recruitment of new graduates and invests in personnel development, but competition for IT and AI talent is intensifying across the industry.

When the Group conducts M&A, if integration with the acquired company or relationship building with partners does not proceed as planned, or if the initially expected synergies are not achieved, the Group may not be able to recover profits commensurate with the funds, time, and other burdens invested. If such a situation occurs, this could affect the Group's financial position and results of operations. Managing the integration process is an important challenge when executing M&A.