YMIRLINK, Inc.

The main product "Cuenote FC" accounted for 59.4% of total consolidated net sales in the fiscal year under review, and if sales of this product decline significantly due to intensifying competition or changes in the market environment, it could have a major impact on the Group's business performance. As a countermeasure, the Group is working to expand sales of "Cuenote SMS" to diversify its revenue sources.

Barriers to entry in the ASP/SaaS market are not necessarily high, and there is a risk that price competition will intensify as competitors, including major companies with financial strength and brand power, develop and introduce similar services. The Group is addressing this by leveraging first-mover advantages while differentiating itself through the development and improvement of new features.

Currently, the business is expanding steadily against the backdrop of a sustained increase in customer companies' willingness to invest in IT, but if IT investment declines due to changes in the domestic and overseas political and economic situation, it could affect the Group's business and performance. This is a structural risk with a high degree of dependence on the external environment.

In the internet business domain, new technologies and services are introduced frequently, and if technological innovation occurs that renders existing experience less applicable, there is a risk that the competitiveness of the services provided will decline. In addition, unplanned system investments may become necessary to respond to new technologies, which could affect business performance. The Group strives to maintain its technological advantage by actively collecting and acquiring information on new technologies.

There is a risk that services may be suspended due to a wide range of factors, including internet line failures, failures of SMS transmission/reception equipment, server and network equipment malfunctions, program defects, and unauthorized external access or virus infection. Service outages can lead to reduced revenue, loss of user trust, and damage to brand image. The Group implements multi-layered countermeasures, including line redundancy, equipment redundancy, regular backups, and vulnerability testing.

The Group provides services in which customers' personal information and confidential information are registered, and if such information assets are leaked externally, it could damage the corporate image, undermine social credibility, and give rise to claims for damages, thereby affecting business performance and financial position. The Group promotes multi-layered countermeasures, including the use of ISMS and ISMS Cloud Security certifications (obtained in 2013 and 2023), monitoring by the Information Security Committee, and firewalls.

As a notified business operator under the Telecommunications Business Act, the Group bears an obligation to protect the secrecy of communications, and internet-related laws and regulations, such as the Act on Regulation of Transmission of Specified Electronic Mail, continue to be developed; if new regulations are enacted, business operations could be constrained. In the event of a legal violation, this could have a material impact on business performance, business operations, and social credibility. The Group addresses this through the establishment of a compliance system for relevant laws and regulations, training for officers and employees, and advance information gathering.

Against the backdrop of a declining working population due to the falling birthrate and aging population, as well as changes in industrial structure, the environment for securing specialized technical personnel is becoming increasingly severe, and recruitment and labor costs are also rising. If the Group is unable to secure personnel as planned, or if existing engineers leave for other companies, this could affect business development, performance, and financial position. The Group is actively engaged in recruitment and training activities using a variety of media and methods.

Regarding ROC Co., Ltd., which became a subsidiary in the previous consolidated fiscal year, if market conditions or the business environment change suddenly and result in a significant deviation from the originally planned business plan, losses may occur, potentially affecting the Group's business results and financial position. While synergies are expected from the subsidiary's inclusion, responding to changes in the external environment remains a challenge.

If the controlling shareholder, ITEC Hankyu Hanshin Co., Ltd. (which holds 51.8% of the Company's shares), sells the Company's shares on the market due to a review of the core business structure by Hankyu Hanshin Holdings, this could affect the market price of the Company's shares. If the shares are transferred to a specific third party, this could also affect the Group's management strategy. The Company has entered into an agreement with the parent company group to ensure independence and autonomy.