Ame Kaze Taiyo, Inc.

There is a risk of unauthorized acquisition or tampering of customer information due to malicious external access, or system outages caused by natural disasters or other events. Should such an event occur, it could lead to legal liability and damage to the company's image. In response, the company has obtained ISMS certification, implements data encryption, enforces strict access controls, conducts regular system diagnostics by external organizations, and provides information security education to all employees.

The company invests in companies necessary for its business development and may make additional investments in the future. Listed shares are subject to mark-to-market valuation at fiscal year-end, and there is a risk of valuation losses due to fluctuations in stock market conditions. For shares without a market price, there is a risk of recognizing valuation losses if the substantial value declines significantly due to deterioration in the issuing company's financial condition. If these risks materialize, they could have a material impact on the company's financial position and operating results.

As of the end of the 11th fiscal year, tax loss carryforwards of ¥1,883,704 thousand existed, and the company has continuously recorded net losses since its founding. There are tax restrictions on the use of loss carryforwards, and if taxable income does not arise as planned, corporate tax and other taxes will be levied at the standard rate, which may adversely affect net income and cash flow. The timing of materialization is positioned as long-term.

Since operating the online platform is the company's core service, system downtime caused by overload, software defects, unauthorized access, natural disasters, power outages, or other factors directly impacts the financial position and operating results. Although the company continuously strengthens its systems and implements security measures, complete elimination of this risk is difficult. The likelihood of materialization is assessed as medium, and the impact as high.

If an increasing number of producers leave the domestic agriculture and fisheries industry due to changes in the natural environment or the progression of rural depopulation and aging, the volume of listings on the platform could decrease, damaging the revenue base of the company's core service, the direct-from-producer app "Poketto Marche." The company's revenue is directly dependent on the volume of listings by producers, and a structural contraction on the supply side poses a significant challenge to business continuity. The likelihood of materialization is assessed as medium, and the impact as high.

In pursuing new services and new businesses for further business expansion, additional investments in personnel, system development, fixed assets, advertising expenses, and other areas may occur. If the speed of market expansion or the scale of growth falls short of initial expectations, the company may be forced to discontinue or withdraw from the business, resulting in losses from asset disposal or impairment. The likelihood of materialization is assessed as medium, and the impact as high.

Hiroyuki Takahashi, the founder and Representative Director and President, plays an extremely important role across all business activities, including determining management policy and business strategy. There is a risk that the company's financial position and operating results could be affected if he becomes unable to perform his duties. In response, the company is expanding its executive management personnel, recruiting and developing talent, and building a division-of-labor structure through delegation of authority, but resolving this dependence will take time. The likelihood of materialization is assessed as medium, and the impact as high.

The company is subject to a wide range of laws and regulations, including the Act against Unjustifiable Premiums and Misleading Representations, the Act on Specified Commercial Transactions, the Act on the Protection of Personal Information, the Act on Improving Transparency and Fairness of Digital Platforms for Consumer Transactions, the Food Labeling Act, and the Travel Agency Act. There is a risk that changes in laws, enactment of new legislation, or changes in the views of regulatory authorities could cause the business to fall out of compliance. In addition, if producers listing on the platform fail to comply with laws and regulations, this could also lead to a decline in the platform's reputation. The company addresses this through coordination with its legal counsel and the establishment of a Risk and Compliance Committee.

There is a tendency for net sales and operating income to be concentrated in the fourth quarter (October to December). In the 11th fiscal year, the fourth quarter accounted for 34.1% of sales composition with operating income of ¥70,439 thousand, whereas the second quarter accounted for 16.6% of sales composition with an operating loss of ¥48,959 thousand, showing a significant divergence. This is mainly due to the concentration of orders for Local Government Support Services and the year-end peak in demand for furusato nozei (hometown tax) donations. Because it is difficult to forecast full-year results based solely on first-half or quarterly performance, caution is required when making investment decisions.

There are strong competitors in the e-commerce and travel businesses, and if competitors leverage their capital strength and sales capabilities to enhance their services, it could affect the company's business and operating results. The sales commission for the direct-from-producer app "Poketto Marche" was raised from 15% to 20% in January 2022, and from 20% to 23% in April 2024, and further changes in the future could affect competitiveness. The likelihood of materialization is assessed as medium, and the impact as medium.