Flier Inc.

Customer retention rate is fundamental to the business, and a sharp increase in the number of cancellations would directly affect the financial position and operating results. Although the current customer base is growing and its attributes are diversifying, the risk of a sudden increase in cancellations cannot be eliminated. The Company is working to enhance customer support, continuously understand customer needs through sales activities, and develop feature improvements.

The emergence of similar services imitated by other companies or offering superior price advantages may erode the Company's competitive advantage and affect operating results. There are also concerns about user attrition and increased user acquisition costs due to market entry by companies with strong capital resources and brand recognition. The Company seeks to establish a unique position by maintaining and expanding favorable relationships with publishers, authors, and bookstores.

If unexpected rapid changes or technological innovations occur in AI technology and the Company's response is delayed, this could lead to a decline in the uniqueness and competitiveness of its services, affecting business performance. Currently, the Company utilizes generative AI in its content production process and has begun partially applying it to the creation of summary manuscripts for works whose copyright protection period has expired. The Company is building an appropriate utilization framework in cooperation with intellectual property specialist lawyers.

The Company handles a large volume and wide variety of corporate and personal information, and in the event of a leak or misuse, it could face claims for damages and a loss of social credibility, significantly impacting business performance. In addition to obtaining ISMS certification, the Company has implemented internal regulations, regular employee training, enhanced system security, and internal audits. Strengthening of personal information protection regulations in various countries may also affect the Company's services.

Creating and distributing summaries requires prior consent from publishers and authors, and if such relationships are refused or terminated, it would become difficult to create and distribute summaries, leading to reduced profitability. The Company recognizes that obtaining consent for AI-generated summaries is an area where copyright judgments may vary and consent may be difficult to obtain, making relationship maintenance highly important. The Company continues to cultivate new relationships with publishers and authors while maintaining favorable existing relationships.

Providing the smartphone app "flier" is critically dependent on the Apple and Google platforms, and changes in either company's business strategy or trends could affect the Company's business development and operating results. The Company continuously monitors the platform operators' trends and strives to respond flexibly.

Media Do Co., Ltd. holds 57.99% of the Company's shares and is in a position to influence management decisions through the appointment and dismissal of directors at shareholders' meetings. The parent company's interests may not align with those of other shareholders, and changes in the parent company's management policy or deterioration of its financial condition could have a significant impact on the Company's financial position and operating results. The parent company has a policy of gradually reducing its equity stake, and the Company continues to strengthen its governance.

As of the end of February 2025, the equity ratio was 38.3%, and the Company recognizes the need to further improve this ratio. The Company may raise funds in light of future business conditions and financial status, which could affect its financial position and operating results. The Company has established a system for regularly monitoring cash flow and capital/debt structure to improve financial stability.

If the Company is unable to secure capable personnel or fails to utilize its human resources effectively, business growth may be hindered, affecting operating results. The Company places importance on personnel who possess specialized skills as well as an understanding and ability to practice the corporate philosophy and code of conduct, and there are concerns about intensifying competition for recruitment. The Company is undertaking initiatives such as internal training and designing evaluation systems to instill its six values.

Under a management policy aiming for non-continuous growth, the Company is actively pursuing new business development, which may require substantial investment funds, creating risks of share dilution through equity financing or impaired financial stability due to increased borrowing. There is also a risk that erroneous decisions in business selection could disperse management resources, resulting in insufficient resource allocation to growth businesses, as well as a risk of increased management costs due to diversification. The Company has established a system in which the Board of Directors sets KPIs and monitors each business.