GreenBee, Inc.

Rapid technological innovation in the software industry poses a risk that the technologies and products held by the Group may become obsolete and lose competitiveness. While the multimedia-related technologies of our founding business are maturing and gradually declining, the DX Service Business faces short-term profit pressure from rising acquisition costs, and the GX Service Business incurs sales and development investment burdens. As countermeasures, we carefully examine the future potential and profitability of new businesses and services while continuously pursuing technology development.

For inventories, property and equipment, and intangible assets (such as software), if profitability declines or market value falls significantly, write-downs or impairment losses may be required under accounting standards. In particular, for raw materials (book value of ¥28 million as of the end of the consolidated fiscal period), if projected sales volume falls significantly short of actual results, write-downs or impairment losses may occur, potentially affecting business performance and financial position. We strive to avoid declines in profitability by preventing over-investment.

Against the backdrop of increasingly complex products and technologies, shortened delivery times, and diversification and complication of usage environments, there is a risk that quality issues may arise in software products. If quality issues become apparent, they could have a material impact on business performance and financial position. We implement project management from development through delivery for each project and strive to thoroughly enforce quality control.

Major domestic and overseas companies and venture firms hold intellectual property rights such as patents across a wide range of fields, making it practically impossible to completely eliminate the risk that the Group may infringe on the intellectual property rights of others. If claims for license fees or damages arise from other companies, this could affect business performance and financial position. We continuously promote the collection of intellectual property and licensing information related to relevant technologies and the securing of our own patents.

If personal information or personally identifiable information held by the Group is leaked externally due to unforeseen circumstances, this could result in loss of trust arising from violations of personal information protection laws in Japan, Europe, and elsewhere, as well as payment of damages or fines, potentially affecting business performance and financial position. We have established a personal information protection policy and built protective systems, and are working to ensure thorough compliance among all employees.

The Group is a small organization of approximately 50 employees, and amid an industry environment with a serious shortage of software development engineers, the loss of talented personnel or difficulty in hiring could affect product and service delivery, quality, and the maintenance of competitiveness. Securing, developing, and retaining talent is essential as the business expands, and failure to achieve this could affect business performance and financial position. We are working to diversify and continuously select development locations and to improve the working environment.

In actual results for the fiscal year ended December 2025, the top four companies accounted for 66.3% of sales, indicating a high degree of dependence on specific customers. Future sales projections may fluctuate significantly due to poor performance of major sales partners, changes in their management policies, business suspension or slowdown due to natural disasters or accidents, or changes in market conditions. We continue to work on promoting the adoption of new and existing products in order to expand sales beyond our major sales partners.

There is a risk that the Group's royalty unit prices may decline more than expected due to declines in customer product unit prices, intensifying price competition with competitors, and price revisions accompanying increases in volume as the market expands. Since royalty unit prices are determined based on the term, quantity, and specifications of license agreements, unexpected changes in unit prices could affect business performance and financial position. We address this through continuous enhancement of product added value.

While our policy is to utilize business and capital alliances, joint ventures, M&A, and similar means as tools for business expansion, if the initially anticipated synergy effects are not realized, or upon termination of an alliance, this could affect business performance and financial position. In addition, contingent liabilities may arise after an acquisition, previously unrecognized liabilities may come to light, or impairment of goodwill may become necessary. We conduct detailed financial and contractual due diligence in advance and carefully examine synergy effects and risks.

The Group continuously conducts transactions denominated in foreign currencies, and fluctuations in exchange rates may affect business performance and financial position. Given the ongoing nature of our business, complete avoidance of foreign exchange risk is difficult. We strive to mitigate the impact through reducing foreign currency deposits held and utilizing forward exchange contracts.