Excite Holdings Co.,Ltd.

Given the nature of businesses built on communication networks, there is a risk that cyberattacks, unauthorized access, or system failures could result in the leakage of important information or unauthorized alteration of programs. Although information security guidelines have been established, regular backups are conducted, and constant monitoring systems are in place, complete avoidance is difficult due to technical limitations and cost-effectiveness constraints. If such an event occurs, it could have a significant impact on management through third-party liability claims or loss of credibility.

The Group depends on specific external companies for the communication environment and data centers essential to its internet business, and there is a risk that failures or disasters occurring outside the Company's direct control could significantly impede business continuity. In the Broadband Business, access lines are provided under contracts with NTT East, NTT West, IIJ, and others, and if these contracts are terminated or their terms are changed, a review of sales strategy and pricing policy would be required, which could affect business performance.

All of the Group's businesses are based on the internet, and there is a risk that unforeseen factors such as deterioration of the communication environment, a slowdown in the spread of smart devices, the adverse effects of unauthorized use, or the introduction of new legal regulations could hinder business expansion. Media services, which rely mainly on advertising revenue, are directly affected by economic fluctuations, and a deterioration in economic sentiment could affect business performance.

Since all services are provided via the internet, in the event of a natural disaster such as an earthquake or typhoon, or an act of terrorism, losses could arise from the suspension or loss of computer systems, network disconnection, or similar disruptions. While measures are being taken through the use of cloud services such as AWS and the establishment of remote work systems, in the event of a large-scale disaster, complete business continuity may become difficult, posing a risk of significant impact on business performance.

The web media and content operated by the Platform Business rely on traffic from major search engines such as Google, and changes in search engine algorithms that affect display rankings could directly impact the number of visitors. Although SEO measures are continuously implemented, specification changes on the part of search engines are an external factor that is difficult to control, and this may have a certain impact on the Group's business performance.

The Group is subject to a wide range of laws and regulations, including the Personal Information Protection Act, the Pharmaceuticals and Medical Devices Act, the Medical Care Act, the Telecommunications Business Act, and the Specified Telecommunications Act, and there is a risk that the introduction of new regulations or the strengthening of existing regulations could increase costs or restrict business activities. In particular, with respect to the pharmaceutical wholesale sales license (valid until May 2031) held in the Medical business, if an administrative disposition such as license revocation or a business suspension order were imposed, it would have a direct impact on business activities. A response system has been established through the operation of the Safety and Compliance Committee and coordination with outside counsel.

The Company holds intangible fixed assets such as goodwill and software, and if profitability declines significantly due to changes in business plans or market conditions, impairment accounting may become necessary. Since recognizing impairment losses directly affects the Company's business performance and financial position, continuous monitoring of changes in underlying assumptions is important.

The Company has a policy of actively utilizing M&A and capital/business alliances to strengthen existing businesses and expand into new business areas, but there is a risk that changes in the management or business environment could prevent the anticipated effects from being realized, resulting in failure to achieve strategic objectives. Although due diligence by outside experts is conducted to reduce risk, delays in the integration process or unexpected changes in the business environment could affect business performance.

Delays in responding to rapid technological innovation or development costs exceeding expectations could affect business performance, and there are also inherent risks associated with promoting the use of generative AI, such as the generation of misinformation, infringement of third-party rights, and information leakage. If new laws or guidelines concerning generative AI are established or strengthened, a review of service operations and development systems would be required, and delays in responding to competitors' technological progress could lead to a decline in credibility and competitiveness.

Shinichi Saijo, Representative Director, President and CEO, and his asset management company CASK Co., Ltd. hold 60.37% of the Company's total issued shares, placing them in a position to influence the Group's decision-making. There is a possibility that the interests of the controlling shareholder may not align with those of minority shareholders, and there is also a risk that XTech Inc., the largest shareholder group, could become a competitor in the future as it expands its investee companies, although competition prevention measures have been established through a prior confirmation process.