unerry,Inc.

If regulatory authorities such as the Personal Information Protection Commission and the Japan Fair Trade Commission impose restrictions on the use of location data for advertising and analytics purposes, this would directly constrain the Company's revenue opportunities. Because location data has the potential to lead to personal identification depending on how it is accumulated and utilized, the risk of tightened regulation is ever-present. The Company addresses this through obtaining the LP Mark from LBMA Japan and complying with industry guidelines, but the impact of regulatory changes cannot be completely eliminated.

If Apple Inc. or Google LLC tightens the conditions for acquiring location data on iOS/Android, the number of apps integrated with location data would decrease, reducing the volume of logs collected. A decrease in the absolute volume of acquired data would lead to lower AI analysis accuracy, making it difficult to provide targeted advertising delivery and services based on big data analysis. The Company continuously monitors rule changes by both companies and works to reduce this risk by developing alternative means of acquiring location data.

If general users express discomfort with data collection on SNS or blogs, and negative perceptions of the use of location data spread, the number of companies seeking to utilize location data may decrease, affecting the Company's business performance. The Company ensures transparency by mandating an end-user consent process at the time of SDK integration, but it is difficult to fully control the spread of such reputational issues.

If the system goes down due to unpredictable factors such as a surge in access, power outages, computer viruses, unauthorized external intrusion, or natural disasters, business activities would be disrupted, affecting performance. In addition, information leakage due to human error or defects in outsourced development apps could also affect operating results. The Company has established a system of reviewing its basic system design approximately once a year, improving load capacity, and enabling rapid response led by the Chief Information Security Officer.

If a natural disaster exceeding assumptions, such as an earthquake, lightning strike, or fire, occurs, information stored on servers and other systems could be lost, making it difficult to continue providing services, which could affect the business and performance. The Company has established offices in highly disaster-resistant buildings and established business processes and rules that support company-wide remote work, but the risk remains that it may not be able to fully respond to disasters of an unexpected scale.

The development of new services and businesses involves additional investment such as hiring personnel and developing systems, and it may take time before stable revenue is generated. If business development does not proceed as planned, the Company may be unable to recover its investment, and risk factors specific to new businesses could affect performance.

The Company is expanding overseas as part of its business growth strategy, but if unexpected regulatory changes or social disruption due to political instability occur, business development may not proceed as originally planned, affecting performance. The Company conducts research on local market trends and relevant laws and regulations before entering a market, but the risk of sudden changes in the external environment cannot be completely eliminated.

Companies engaged in location-data-based marketing are on an increasing trend, and since technical barriers to entry are not particularly high, entry by major companies with financial strength and brand power could intensify price competition, leading to price reductions in services and a decline in market share. There is also a risk that if a competing service utilizing an entirely new concept or technology gains market acceptance, the relative competitive advantage of the Company's services could decline. The Company strives to differentiate itself and build a stable revenue structure through the deployment of its SaaS product, Analytics & Visualization Service (Shopper Mieru), and the development of its proprietary AI algorithms and Ambient technology.

The pace of technological innovation in the IoT and AI fields is extremely rapid, and if the Company falls behind in responding to new technologies, its offered technology could become obsolete, or if newly adopted technology fails to gain market penetration, its business competitiveness could decline, affecting performance. There is also a possibility that significant funds may be required for developing new technologies and services to meet customer needs. The Company has established a company-wide system for collecting and sharing the latest technologies and customer needs, and is actively working to secure and develop excellent talent to accumulate know-how.

Sales of the Analytics & Visualization Service tend to be concentrated in the third quarter (January to March), and in the 10th fiscal year (FY2025, ending June 2025), quarterly operating profit was heavily skewed, with ¥179,536 thousand in the third quarter compared to ¥29,185 thousand in the fourth quarter. Since fixed costs within cost of sales and selling, general and administrative expenses arise on a regular basis, there is a structural risk that profitability declines significantly in quarters other than the third quarter.