MINKABU THE INFONOID, Inc.

Short-term interest-bearing debt at the end of the fiscal year under review, ¥7,489,500 million (approximately ¥7,490 million when converted from thousand-yen figures to million-yen scale), significantly exceeds cash and deposits of ¥1,303 million, and this has been recognized as an event raising material doubt about the going concern assumption. Repayment and renewal of borrowings are being managed under continuous monitoring based on agreements with lending financial institutions, and funds are said to be secured for the immediate term; however, if relations with financial institutions deteriorate or business performance worsens, there is a possibility of a material impact on cash flow.

Advertising revenue continues to account for a high proportion of Media Business sales, and amid the ongoing slump in the ad network advertising market, if there is a significant economic slowdown or a further decline in advertising unit prices, this may affect the financial position and operating results. The Company is promoting diversification of its revenue model, including non-traffic-based revenue, but the relative decline in advertising dependence remains a work in progress.

The Solutions Business primarily serves financial institutions and other customers and deals in financial and economic information, so if a sharp economic slowdown or market fluctuation occurs, advertising placements and investment in solutions products by financial institutions could decline significantly. The impact would be particularly large if a decrease in the number of individual investor account openings and use of paid services occurs simultaneously with a decrease in order volume from financial institutions. The Company is working to stabilize this through the expansion of its product offerings and diversification/packaging of its revenue model.

The Media Business relies on web search engine optimization as one of its main routes for user acquisition, and if specification changes to search engines—including generative AI utilization by Google LLC and others—turn out to be significantly larger and more abrupt than anticipated, user acquisition may stagnate, potentially affecting the financial position and operating results. There is also concern that progress in third-party cookie restrictions could affect targeted advertising and advertising effectiveness measurement, potentially leading to a decline in advertising unit prices. The Company continues to respond through measures such as the use of first-party data.

In the field of solutions automation utilizing the internet and generative AI, technological innovation is intense and customer needs are constantly changing. If unexpectedly rapid technological innovation occurs and the Group falls behind in responding, the obsolescence of its technologies and services could reduce their appeal to customers, potentially affecting the financial position and operating results. The Company is promoting the development of services and products that respond to the latest technology, but there is a risk that the pace of change may outstrip its ability to respond.

The Group handles identification information of service users and personal information held by customers in certain contexts, and if information is leaked due to unauthorized external access or human error, this could affect the financial position and operating results through a loss of social trust, among other consequences. The Company has implemented measures such as establishing personal information handling regulations and thorough internal training, but given the increasing sophistication of cyberattacks, complete protection remains difficult to achieve.

Since the core of the business involves providing services through computer systems centered on cloud servers, if a system failure occurs due to equipment malfunction, natural disaster, computer virus, or unauthorized access, this could cause customers to lose business opportunities or profits. If such a failure is due to gross negligence on the part of the Group, there is a risk it could lead to claims for damages and a significant loss of credibility. The Company has implemented stable-operation measures such as system redundancy.

The Company may consider acquisitions, joint ventures, or strategic alliances with other companies to enhance corporate value, and even with prior due diligence, if significant changes in the market environment after an acquisition occur, contingent liabilities arise, or previously unrecognized liabilities come to light, this could affect the financial position and operating results. The same risk applies if an acquired company does not progress as planned and invested funds cannot be recovered. The Company's policy is to conduct sufficient risk analysis of finance, legal matters, and business, as well as analysis of normalized earnings power, before proceeding.

The Group has subsidiaries that have filed notifications as telecommunications carriers, and if related laws and regulations or self-regulatory rules are enacted or amended, or if there are changes in the interpretation of laws, this could affect business development and operating results. In particular, in the financial products information business, such as securities information, changes in laws, regulations, practices, or legal interpretations surrounding the financial industry directly affect the business. The Company has established a system to gather information and take countermeasures at an early stage, but depending on the scope and speed of regulatory changes, an adequate response may prove difficult.

Continuous employment and development of highly motivated, capable personnel is important for achieving sustained growth, and if the Group encounters difficulty securing the personnel it seeks, this could affect its business and operating results. Amid a reduction in scale following group organizational restructuring—resulting in three fewer companies compared to the end of the previous fiscal year and 236 employees (including an average of 168 temporary employees)—the Company is responding through measures such as enhancing its training system, supporting work-life balance, and utilizing recruitment agency services.