kurashiru inc.

Although the internet advertising market remains on an expansionary trend, fluctuations in corporate advertising budgets due to economic changes and continued competition with other advertising media could have a material impact on the Company's earnings. As a countermeasure, the Company is promoting diversification of revenue sources by launching new businesses beyond advertising revenue.

The Company is subject to various laws and regulations, including the Telecommunications Business Act, the Provider Liability Limitation Act, the Act against Unjustifiable Premiums and Misleading Representations, and the Specified Commercial Transactions Act. Future enactment or revision of laws and regulations could restrict part of the Company's operations or require new responses. The Company continuously develops and strengthens its legal compliance system and provides employee training.

As the Company's main business is providing information via the internet, a large-scale system failure caused by an unexpected surge in access, natural disaster, cyberattack, unauthorized access, or similar events could have a material impact on business operations, operating results, and financial condition. The Company thoroughly strengthens its systems and security for stable operations and has established a system for rapid recovery.

Founder and representative Yusuke Horie plays a central role in formulating and executing business strategy, and if any unforeseen event were to occur affecting him, it could currently have a material impact on business operations, operating results, and financial condition. The Company is working to strengthen talent development and its management structure to avoid excessive dependence, but the degree of dependence remains high at this time.

Numerous competitors exist across the Kurashiru, TRILL, Kurashiru Reward (RechiChare), and LIVEwith services, and competition may intensify due to the expansion of new entrants with capital strength, marketing capabilities, and customer bases. A decline in competitive advantage could lead to customer attrition and increased costs, potentially affecting business operations, operating results, and financial condition.

The rapid advancement of AI technologies, including generative AI, presents multiple compounded risks: changes in the competitive environment, content quality risk (erroneous generation of food safety and allergy information), intellectual property infringement, and tightening regulations (such as domestic AI business operator guidelines and the EU AI Act). In response, the Company is developing internal guidelines, strengthening its quality control system, and continuously monitoring regulatory developments.

The LIVEwith business and subsidiary businesses depend on revenue from external live streaming platforms such as TikTok LIVE, Pococha, and IRIAM. If contracts are terminated or terms changed due to inappropriate streaming by creators or deterioration in the performance of external platforms, there is a risk of revenue decline and reputational damage. The Company seeks to mitigate this risk by maintaining ongoing relationships with multiple platforms, establishing live streaming guidelines, and conducting regular monitoring.

If integration with an acquired company does not proceed as planned or expected synergies are not realized following an M&A transaction, it may become difficult to recover the invested funds and time. Additionally, if business plans are not achieved, impairment of goodwill may be required, which could affect operating results and financial condition.

As parent company LINE Yahoo Corporation holds 54.54% of voting rights and intends to continue holding its stake, the number of shares in circulation is limited, and reduced liquidity may lead to sluggish trading and worsening supply-demand balance in the market. In addition, there are 2,463,740 potential shares (stock acquisition rights), equivalent to 5.7% of the 42,618,560 total shares issued, and the exercise of these rights could result in dilution of per-share value.

LINE Yahoo Corporation holds 54.54% of voting rights and is able to unilaterally pass ordinary resolutions at the general shareholders' meeting, creating a risk that decisions may be made that differ from the interests of other shareholders. In addition, changes in the terms of content transactions with the parent company group, or expansion of competing businesses within the group, could affect the Company's business. The Company has appointed four outside directors to ensure effective oversight for the protection of other shareholders' interests.