Money Forward, Inc.

The Company is registered as an electronic payment intermediary business operator under the Banking Act (Kanto Local Finance Bureau Director (Electronic Payment) No. 3). If a violation of laws or regulations occurs or administrative disposition is issued, it may become difficult for the Company to provide account aggregation functions for banks and other institutions within Money Forward Cloud and Money Forward ME. The same impact may arise if it becomes difficult to maintain contracts with banks and other institutions. The Company thoroughly complies with the Banking Act and other relevant laws through the establishment and operation of internal management controls, and as of the date of submission of this document, no event that would constitute grounds for revocation has occurred.

The Group obtains personal information such as website login credentials for financial institutions and other entities. If personal information is leaked due to unauthorized external access or deficiencies in internal management systems, this may result in claims for damages and loss of social credibility. The possibility cannot be denied that a malicious third party could intrude into systems, resulting in the deletion or unauthorized acquisition of important data such as users' personal information and account information. As countermeasures, the Company has implemented firewall installation, external security assessments, data encryption, antivirus measures for employee devices, and membership in the Nippon CSIRT Association, among other measures.

In the Business segment, which accounts for more than 70% of the Group's net sales, there is a possibility that the contract value per sales employee or hiring may not proceed as planned, and that unit price increases through cross-selling may not progress as expected. In addition, credit risk exists in the factoring business, and there is a possibility of recording substantial bad debt losses due to deterioration in market conditions. Although most of this risk is transferred to insurance companies, the Group as a whole bears a portion of the credit risk.

The Platform Services Business has a business structure that requires upfront investment such as the hiring of development and sales personnel and advertising activities, and has continuously recorded operating losses since its founding. If hiring and training do not proceed as expected, or if marketing activities fail to achieve the anticipated effect, this may have a material impact on the business and results of operations. The Group plans to continue investing in personnel recruitment and training as well as public relations and marketing costs, and there is uncertainty regarding the timing of profitability.

In the field of the Platform Services Business, centered on Money Forward Cloud and Money Forward ME, many companies are conducting business, and if competition intensifies or sufficient differentiation is not achieved, this may affect the business and results of operations. The Group is working to improve its competitiveness through the pursuit of optimal usability, the provision of distinctive services and content, and the enhancement of customer support. However, the Group is constantly required to respond to new entrants from Japan and overseas and to changes in the strategies of existing competitors.

The Group holds fixed assets such as goodwill and software, and if impairment processing becomes necessary due to deterioration in profitability or other factors, this may affect the Group's business results and financial position. In addition, regarding investment securities in startup companies in the SaaS/Fintech field and internet/technology-related fields, impairment processing may become necessary if the growth potential and profitability of the investee companies do not materialize as expected. These impairment risks may become apparent along with increases in M&A and investments and loans accompanying business expansion.

The Group's services are highly dependent on systems, and service outages caused by unforeseen events such as sudden surges in access, software defects, computer viruses, and natural disasters may lead to loss of revenue opportunities and loss of social credibility. The Group has implemented continuous capital expenditure, constant monitoring of servers and networks, and an automatic notification system for signs of failure, but complete prevention is difficult. Litigation risk also accompanies the occurrence of a service outage.

Business expansion of the Group requires securing excellent human resources who share empathy with the Mission, Vision, and Values, but if sufficient personnel cannot be acquired due to intensifying competition for talent or changes in market needs, or if personnel turnover occurs, this may affect the business and results of operations. In particular, there is a risk of dependence on Representative Director, President and Group CEO Yosuke Tsuji, and there is concern about the impact if it becomes difficult for him to perform his duties. The Group has established "Talent Forward" as a key theme and is working to create a workplace that offers both job satisfaction and ease of work.

The billing agency and accounts receivable collection business, as well as the accounts receivable purchase business, operated by Money Forward Kessai Co., Ltd., are currently not subject to legal regulation under industry laws such as the Installment Sales Act, the Money Lending Business Act, or the Banking Act, but there is a possibility that they may become subject to regulation in the future due to the enactment of new laws or changes in the interpretation of existing laws. In addition, the two-month payment purchase brokerage business is subject to the Installment Sales Act and the Act on Prevention of Transfer of Criminal Proceeds, and deficiencies in internal management systems or the introduction of new legal regulations may make it difficult to provide some functions of the Money Forward Business Card service. These regulatory changes may impede the continuity of the Group's business and may adversely affect its business results.

The Group has adopted a stock option system (subscription rights to shares) and a restricted stock compensation system for officers and employees, and may continue to utilize these systems in the future. If new shares are issued through the exercise of subscription rights to shares or based on the restricted stock compensation system, the value of shares held by existing shareholders may be diluted. In addition, at present, the possibility and timing of dividend payments remain undetermined, and the Group continues its policy of allocating retained earnings to investments for business expansion.