Fujisan Magazine Service Co., Ltd.

There is a risk that the decrease in bookstores and book buyers will reduce sales opportunities and sales volumes, and that the number of magazines handled by the Group will decrease as small and medium-sized publishers increasingly go out of business. In addition, restrictions on going out and event cancellations due to pandemics and similar events could affect the acquisition of new subscribers, particularly for fashion and sports magazines. The Group intends to respond by leveraging its strength in managing its existing subscriber base to provide publishers with a stable customer base for sales and by supporting the digitalization (WEB conversion) of magazine articles.

Although no issues such as leakage of customer information occurred as of June 2025, if such a leak were to occur in the future, it could have a material impact on business operations, financial position, and operating results due to claims for damages, increased insurance premiums, and loss of credibility. The Company obtained Privacy Mark certification in January 2010 and has established Personal Information Protection Regulations, but risk cannot be completely eliminated. The Company intends to continue building the systems necessary to maintain its Privacy Mark certification.

An attack on the Company's system occurred in July 2025, causing a temporary suspension of "Fujisan.co.jp." If such attacks increase in the future, site outages and prolonged recovery times could affect the Group's business, financial position, and operating results. Leakage of personal information due to unauthorized access could also lead to legal disputes and disciplinary action by regulatory authorities. The Group is addressing this by strengthening its network backup systems and enhancing security measures.

Logistics network development has failed to keep pace with the expansion of the e-commerce market, resulting in increased delivery fees, sudden unavailability of conventional services such as Yamato's DM Mail (Yamato DM Bin), and rising outsourcing costs due to sharply increasing labor costs related to warehousing and delivery. If the supply-demand balance for logistics and labor tightens further, rising delivery costs and slower delivery speeds could drive consumers away, potentially affecting the Group's business operations, financial position, and operating results. The Group is responding by strengthening cooperation with existing outsourcing partners, improving operational efficiency by reducing non-performing inventory, and considering dual-track delivery operations.

Most operations such as delivery and product storage under the full-outsourcing service of the magazine sales support business are outsourced to New Book Co., Ltd. If it becomes difficult to continue transactions with this company, securing an alternative provider and transferring operations could take time, risking service suspension or significant delays. The Group is diversifying delivery routes, including delivery via Rakuten Books Network Co., Ltd., but alternative means remain limited. The Group intends to continue developing risk response systems, including alternative delivery route plans.

As of the end of December 2025, the total number of registered users was 4,435,640. Since the Company's revenue source—commissions from publishers—is derived from subscription fees paid by users, fluctuations in the number of registered users have a significant impact on operating results. If expansion measures do not proceed as planned, or if a decline in customer satisfaction leads to an increase in cancellations, this could affect the Group's business operations, financial position, and operating results. The Group is working to expand its user base through the transfer of subscription businesses from publishers and to maintain retention rates by offering preferential merchandise and event benefits to existing customers.

The Company relies on search engines such as Google and their search results for acquiring new customers. If changes to search ranking policies or system troubles cause search results to work against the Company, this could reduce the effectiveness of attracting visitors to its site in the short and long term, leading to a decline in registered users. In addition to continuously responding to changes in search engine algorithms, the Group is working to expand customer acquisition methods other than search engines, such as promotional appeals in magazine pages and acquiring subscribers via publishers' websites.

The long-term decline in the school-age population due to the falling birthrate, reduced demand for cram schools due to lower entrance exam competition ratios and the expansion of diverse selection methods, and further transformation of educational methods through AI could affect the Group's education business operations, financial position, and operating results. The Group intends to differentiate itself from competitors by strengthening areas that AI struggles to address through individualized, "hands-on" instruction centered on one-on-one tutoring, while also enhancing its instructional capabilities for students aiming for highly competitive universities and faculties.

Although the Company met the Tokyo Stock Exchange Standard Market's criterion of a tradable share market capitalization of ¥1 billion or more as of the end of the current consolidated fiscal year, there were periods during the fiscal year when it fell below this criterion, and the situation remains uncertain. The Company listed on the Main Market of the Nagoya Stock Exchange in October 2025 to secure trading opportunities for shareholders, but if it fails to meet the Standard Market's listing maintenance criteria, this could adversely affect its share price or liquidity. The Company aims to achieve stable share price formation and build a broader shareholder base through proactive IR activities and shareholder return measures.

Shinichiro Nishino, Representative Director, Chairman and President, plays an important role in company management as founder, including business planning and execution. If he were to become unable to perform his duties, this could affect the Group's business operations, financial position, and operating results. The Group as a whole has a small organization of 111 employees (excluding temporary staff), making the risk of dependence on a specific individual relatively high. The Company is focused on developing and strengthening its personnel in order to build a business structure that does not rely excessively on him.