Batonz. Co., Ltd.

M&A support institutions are both customers using the Company's M&A SaaS and important sources of sell-side deal listings, accounting for approximately 50% of new listings registered on the M&A platform. If withdrawal of major M&A support institutions occurs due to service quality deterioration or intensifying competition, the supply of deals could decrease significantly, potentially having a material impact on business performance. The Company is strengthening collaboration with M&A support institutions through SaaS service improvements and various initiatives, and from April 2026 onward, will in principle require registration under a registration system.

The software underlying the operation of the M&A platform and provision of SaaS services forms the foundation of the business, but there is a possibility that fatal defects or flaws, cyberattacks, unauthorized access, infrastructure failures, or similar issues could lead to service outages. Service outages or diminished reliability could directly lead to customer attrition and liability for damages, having a material impact on business performance and financial condition. The Company strives to prevent defects through prior verification in staging environments and by strengthening its quality maintenance system.

In operating the M&A platform and providing its services, the Company handles large volumes of personal information, corporate information, and confidential information of users, and if external leakage or unauthorized use occurs, this could result in loss of trust and claims for damages. Given the nature of M&A transactions, the confidentiality of information is extremely high, and the impact of any leakage could be severe. The Company strives to strengthen its information security framework through ISMS certification, development of internal regulations, and training for officers and employees.

Since the SME M&A Guidelines were established in 2020, they have been revised repeatedly in 2023 and 2024, and in August 2025 the "SME M&A Market Reform Plan" was announced, indicating that the regulatory environment is changing rapidly. If the Company were to cause an event in violation of the guidelines, this could result in significant disruption such as administrative guidance or revocation of registration as an M&A support institution, and business constraints from new legislation are also anticipated. The Company thoroughly complies with the guidelines and self-regulatory rules and implements necessary responses as needed.

Given the structure of the platform, it is difficult to fully grasp and manage all negotiations, contract terms, and performance status between transacting parties, and if intentional provision of false information or fraudulent conduct occurs, this could damage the credibility of the platform and the Company. Loss of credibility directly leads to user attrition and difficulty acquiring new users, potentially undermining the business foundation. The Company is working to improve the comprehensiveness of registration screening for all users and deals, continuous monitoring, and contract content verification.

Amid rapid technological innovation such as generative AI, if difficulties arise in acquiring and utilizing know-how and technology, relative competitiveness against competitors could decline. In particular, if it becomes difficult to secure tech-lead talent, including those skilled in AI utilization, this could lead to delays in service development and quality deterioration. The Company is actively incorporating generative AI technology into its products, promoting operational efficiency and service improvement.

Nihon M&A Center Holdings, Inc. has a business relationship in which it receives referral fees upon the completion of M&A deals, and is also an equity-method affiliate holding 26.47% of the Company's total issued shares, placing it in a position to exert a certain degree of influence over the Company's management decisions through the exercise of voting rights. If the company were to sell its shares in the Company in the future, this could affect the market price. The Company ensures the appropriateness of transactions through prior approval by the Board of Directors and regular monitoring, while maintaining independent management.

The number of potential shares from stock acquisition rights granted as incentives to officers and employees is 836,000 shares (as of the end of May 2026), equivalent to 17.71% of the 4,721,600 total issued shares. Since additional grants are expected to continue going forward, if exercise progresses, the value per share could be diluted, potentially affecting the share price. The Company's policy is to continue utilizing its stock option program to secure excellent talent and enhance employees' awareness of participation in management.

The M&A platform industry has low barriers to entry, requiring no licenses or permits, and several companies currently offer similar services, with further new entrants expected going forward against the backdrop of the expanding SME M&A market. Entry by major capital groups or expansion by existing operators could result in sellers, buyers, and M&A support institutions shifting to other companies, increased customer acquisition costs, and a decline in the number of deals closed. The Company seeks to differentiate itself through product development incorporating M&A know-how and its advantage as a first-mover operator.

System usage fees and FA Support Service (Paid Option for Sellers) fees associated with M&A deal closures are recognized as revenue at the time of transfer execution, but fraudulent conduct in which parties attempt to avoid payment by not reporting the fact of a deal closure has occurred, and in past fiscal years there have been cases where collection was abandoned. If such fraudulent conduct becomes more malicious and complex, opportunity losses could expand and affect business performance. The Company has implemented measures such as system-based detection of transaction progress, mandatory interim reporting, and expanded warranty insurance coverage, and considers the current impact to be limited.