SOCIALWIRE CO., LTD.

Based on the medium-term targets formulated in FY2025 (ended March 2025), the Company expects increases in customer retention rate, customer count, and customer unit price through improvements in product value; however, if the realization of these effects is delayed or falls short of expectations, this may affect business activities, financial position, and operating results. There is a risk that if the effects of the growth strategy prove limited, a comprehensive review of the medium- to long-term revenue plan may be required.

Against the backdrop of the spread of remote work and revisions to the Personal Information Protection Act, the risk of malware infection and information theft through targeted attacks is increasing. If important data is leaked or systems become inaccessible, this may have a material impact on business continuity, reliability, and financial position. While the Company recognizes the protection of confidential information as an important issue and has implemented countermeasures, complete defense remains difficult.

The Company Group actively utilizes AI across the organization; however, if regulations on the use of generative AI by governments and others are imposed, terms of use are changed by external service providers, or the Company fails to respond promptly to the rapid progress of AI technology, this may result in a decline in competitiveness or force a transformation of the business model. Delays in system investment needed to respond to technological innovation pose a risk of affecting business activities, financial position, and operating results.

GENIEE, Inc., the parent company, holds 49.0% of voting rights, and 5 of the 9 directors are dispatched from the parent company, meeting the criteria for a parent company based on substantial control. While no competing service currently exists within the GENIEE group, if a competing service is created due to changes in the GENIEE group's policies or business environment, this may affect the Company Group's business and performance.

The product services provided by the Company Group are in a field without legal regulation, where new entry is relatively easy; if differentiation from competitors becomes difficult, there is a risk that securing orders and profitability may become difficult. While the Company seeks to maintain competitiveness through strengthening media relations, recommendation functions, and dedicated staff customer support, there is a possibility that its differentiation advantage may be lost due to numerous new entrants.

The Company Group provides services by entrusting customers' pre-disclosure information and personal information in advance; if information leakage occurs due to unexpected system trouble or negligence by a related supplier, this may lead to a decline in the trust relationship with customers. While operations are conducted based on thorough employee awareness, strict system safeguards, and legally binding prohibitions on the leakage of confidential information, complete prevention cannot be guaranteed.

The Company Group implements M&A, capital participation, and capital alliances in expanding the scale of existing businesses and entering new businesses; if the progress of business plans after an acquisition or alliance falls significantly below the initial outlook, this may affect financial position and operating results. In addition, since financing conditions such as interest rates are affected by financial markets, there is also a risk of rising fundraising costs.

The Company Group depends on communication networks and outsources part of important operations such as server management to external parties; if the communication network is disrupted due to a natural disaster or accident, this may hinder the continuous provision of services. While the Company has implemented redundancy in communication networks and system construction as well as appropriate security measures, in the event of a failure there is a risk of lost revenue opportunities, decreased reliability, and the occurrence of complaints.

The Company Group is composed of businesses with multiple service portfolios, and promotes the active promotion of employees to managerial positions and delegation of authority for the growth of each service. If the leadership and business management capabilities of the managerial layer are not appropriately and continuously developed, this may affect medium- to long-term business growth.

The Company Group actively promotes new business development to expand business scale and diversify revenue sources; however, if development requires more man-hours than expected or the revenue plan is significantly delayed, losses may occur due to the loss of prospects for investment recovery. In addition, if the expected synergies from business alliances and the like are not achieved, this also poses a risk of affecting financial position and operating results.