Fines inc.

The Video Cloud Business accounted for 97.2% of net sales in FY2025 (ended June 2025), reflecting extremely high dependence on a specific business. This structure means that a decline in the number of customers or a contraction in market size would have a direct and severe impact on overall performance. The company's growth assumptions are premised on market expansion and customer growth in this business, and there is significant risk if these premises fail to hold.

Multiple competitors exist in each field, including video distribution platforms, marketing platforms, and business consulting, and new entrants are expected to continue emerging as the DX market expands. There is a risk that intensifying competition for market share and partial imitation of services could erode competitive advantage. The company counters this through a market-in approach that responds to customer needs and by building an end-to-end service structure, but if the effectiveness of these measures cannot be sustained, performance may be affected.

There is a risk that an economic downturn driven by inflation from soaring raw material prices and rising interest rates could heighten cost concerns among target small and medium-sized enterprise customers, reducing their appetite for investment in customer acquisition and recruitment advertising. Because most customers are small and medium-sized enterprises, the revenue structure is highly susceptible to economic fluctuations. If the economic downturn is prolonged, it could affect performance through slower acquisition of new customers and an increase in cancellations among existing customers.

Representative Director and President Yukimasa Miwa plays a central role in everything from determining management policy and business strategy to development and service lineup, resulting in a high degree of dependence on his personal capabilities. Should any unforeseen event affect him, there is a risk of significant disruption to management continuity and decision-making functions. The company is delegating authority to leaders of each business division, but the establishment of this structure remains a work in progress.

Competition to secure personnel capable of DX consulting and proposing solutions tailored to customer challenges is intensifying, creating a risk that recruiting and developing talented personnel will become difficult. If personnel leave for external opportunities, this could delay business expansion plans and lower service levels. The company is strengthening its structure through revisions to its personnel system and in-house training, but the competitive environment for securing talent remains challenging.

There is a risk that computer systems could be halted or internet connectivity rendered unavailable due to unforeseen system failures, natural disasters, terrorism, or other events, impeding business operations. Cloud services depend on the environment of communication networks, servers, and other infrastructure, and in the event of a failure, a combination of impacts may arise, including lost business opportunities, refunds, damages claims, and loss of social credibility. The company employs external products and services and implements security measures, but it is difficult to eliminate this risk entirely.

The company selects specific partner companies for each specialized field of video production and provides services through them; should an unforeseen event affect a partner company or should order costs rise due to market tightness, this could have a material impact on the business and performance. In addition, maintenance and operation of the Video Cloud Business is outsourced to an external partner, and there is a risk that service provision could be disrupted if that partner withdraws from the business and no substitute can be secured. The company conducts rigorous selection, supervision, and inspection of deliverables from partner companies, but the risk of damages claims arising from latent defects remains.

Because the company handles confidential information and personal information of client companies in the course of business, it is subject to obligations under the Personal Information Protection Act, and if an information leak occurs, it could result in significant impacts such as damages claims and loss of credibility. The company has established a management framework through security measures centered on virus and hacker countermeasures, the establishment of personal information management regulations, and compliance training, but complete protection is difficult given the increasing sophistication of cyberattacks and other factors.

The company is subject to legal regulations including the Copyright Act, the Act against Unjustifiable Premiums and Misleading Representations, the Trademark Act, the Act on Pharmaceuticals and Medical Devices, and the Act against Delay in Payment of Subcontract Proceeds, and tightening of these regulations could affect the business and performance. In addition, there remains a risk of infringing third-party intellectual property rights in content production, which could result in damages claims, injunctions, or demands for royalty payments. The company has introduced review by specialized content review firms, but it is difficult to eliminate all such risks.

Because most customers are small and medium-sized enterprises, if customers become unable to pay due to economic fluctuations or other factors, delinquent receivables could increase significantly, affecting performance. In addition, the company prioritizes strengthening its financial position and retaining earnings for business expansion, and has not paid dividends in the past; the possibility and timing of future dividend payments remain undetermined, which is a risk factor for investors expecting dividends. Exercise of stock acquisition rights representing 129,300 potential shares (2.8% of total shares issued) could also result in dilution of share value.