YRGLM Inc.

The Group's principal business areas are the internet advertising market and the EC market, and its business may be affected by increased difficulty in site operations due to the introduction of new regulations or technological innovation, or by a contraction in internet advertising demand or EC transactions caused by sharp economic fluctuations. The Group is also closely monitoring, as risks that could spill over to client companies, uncertainty about the outlook for the domestic economy stemming from exchange rate fluctuations, surging resource prices, geopolitical risks in Eastern Europe and the Middle East, and high inflation and monetary tightening in the U.S. and Europe. The Group maintains a policy of monitoring environmental changes with a high degree of vigilance.

Revenue related to the core service "AD EBiS" accounted for approximately 44.2% of revenue in the current period, indicating a high degree of dependence on this service. If demand for the service changes significantly due to changes in the market environment or economic conditions, or if competition intensifies due to an increase in competing services or new market entrants and the Group is unable to achieve sufficient differentiation or functional improvements, this could have a material impact on the Group's business performance. Many companies operate in the internet advertising market, and competitive risk continues to exist.

"AD EBiS" is built on a system for measuring the effectiveness of internet advertising, but changes in policy by ad delivery operators, media, and browser service operators could restrict or prohibit the automatic collection of information. If data that is currently being collected becomes unobtainable, this could lead to a decline in service quality or the incurrence of additional costs for data collection, potentially affecting business performance. The Group maintains a policy of striving to collect equivalent data through its own proprietary methods.

Active technological innovation is progressing in internet-related markets, and from 2025 onward the rapid adoption of generative AI has become particularly notable. If unexpected technological innovation occurs, there are concerns about increased system development costs, and about a decline in technological competitiveness and service competitiveness if the Group is unable to respond in a timely manner. The Group is building a development structure capable of rapidly deploying new technologies to existing services while closely monitoring industry trends.

The Group's business depends on the internet environment, and if a system failure occurs due to a large-scale program defect, a surge in access concentration, a computer virus, or similar cause, or if held big data is lost, this could adversely affect trust relationships with users and, through the occurrence of liability for damages and other consequences, affect the Group's business and business performance. The Group thoroughly reinforces its systems and security and has established a structure enabling rapid recovery in the event of any trouble.

The Group holds personal information and privacy information through the provision of internet-related services, and there is a risk of legal liability, including claims for damages, and reputational damage in the event of intentional or negligent external leakage or misuse by related parties or business partners, or unintended violations of the GDPR. As countermeasures, the Group maintains its Privacy Mark certification (obtained in December 2006), has established personal information management regulations, conducts internal training, and implements protective measures such as firewalls and other security tools.

The Group's business is regulated by laws such as the Act on the Handling of Information Distribution Platforms, the Unauthorized Computer Access Law, the Act on Regulation of Transmission of Specified Electronic Mail, the Telecommunications Business Act, and the Act on Development of an Environment that Provides Safe and Secure Internet Use for Young People, and internet-related laws and regulations have gradually been developed in recent years. If new laws are enacted in the future, or if interpretations of existing laws change, the Group's business could be constrained, potentially affecting its business performance. The Group works to mitigate such risks in cooperation with its legal counsel and patent attorneys.

The Marketing DX Support Business is a subscription business, and expanding its scale requires upfront investment such as system development investment and advertising investment, meaning profit margins may decline during phases of upfront investment. In addition, there is a risk that if business expansion or growth does not proceed as expected despite upfront investment having been made, the investment may not be recovered. With respect to capital expenditures accompanying business expansion as well, if actual user numbers or access volumes deviate significantly from forecasts, investment exceeding the initial plan may become necessary.

The Group is a small organization with 329 employees (as of September 30, 2025), and securing personnel with business development and management capabilities as well as system engineering skills is a challenge. In addition, Susumu Iwata, Representative Director, President, Executive Officer and CEO, is the founder and a major shareholder, and plays an extremely important role in determining management policy and business strategy; there are concerns about the impact should he become unable to continue his duties. The Group is advancing efforts to build a structure that reduces excessive dependence on specific individuals, including through the introduction of an executive officer system and the strengthening of its management organization.

The Group regards M&A as an important option for business expansion, but if the operation of acquired businesses or future acquisitions do not proceed as planned due to changes in the market environment or other factors, this could affect the Group's business and business performance. In the Commerce Support Business as well, there is a risk that a decline in the business performance of official partners could lead to a decrease in payment processing fee revenue, along with risks of additional costs and liability for damages arising from delays in work progress in EC contracted development or from defects occurring after customer acceptance.