Nyle Inc.

In the marketing-related market, the rapid spread of generative AI is changing outsourcing demand for article production, and the quality required of outsourcing partners is trending upward. In the automobile sales market as well, competition is intensifying due to increased entry by emerging operators and companies from other industries. A delayed response to new competitive entrants, technological innovation, or changes in customer needs, or the incurrence of substantial costs such as system investment and personnel expenses to address these changes, may affect business performance.

The Group obtains personal information such as members' names, email addresses, and addresses, and bears obligations under the Act on the Protection of Personal Information. If information leakage occurs due to unauthorized external access or operational errors, the Group may face claims for damages or lawsuits and could lose social trust. While measures such as access authorization settings and management of employee conduct have been implemented, the risk cannot be completely eliminated.

The Group's services depend on the internet communication environment, and there is a risk that service quality may deteriorate due to failures or changes in specifications or pricing by network operators. System downtime caused by system overload, power outages, computer viruses, unauthorized external intrusion, natural disasters, or other events may impede business continuity. Although the Group has strengthened its systems and security for stable operation and established a rapid recovery framework, the risk remains.

The Automotive Industry DX Business "Carlease Karumo-kun" has built an online end-to-end operation from application to delivery through strategic alliances with financial service providers centered on ORIX Auto Corporation. If relationships with alliance partners do not contribute to expanding the Group's customer base as expected, or if such relationships deteriorate, this could have a material impact on business continuity. Although the Group strives to maintain favorable relationships, risks arising from external factors cannot be eliminated.

The Automotive Industry DX Business operates a business model requiring upfront investment in advertising activities; advertising expenses reached ¥414,137 thousand in fiscal year 2025, and the business has continuously recorded operating losses since its launch. Although it is a subscription-based recurring revenue business in which monthly revenue accumulates as the cumulative number of contracts increases, if new product launches or marketing effects do not materialize as expected, this may affect business performance. Cash and deposits at the end of fiscal year 2025 amounted to ¥1,225,454 thousand, and cash flow is secured for the near term.

The Group utilizes major global search engine services in providing marketing solutions and acquiring users, requiring constant responsiveness to algorithm changes. Additionally, in application-related solutions and media operations, responses are required whenever major technology companies and platform operators change their operating policies. Delayed responses to such environmental changes, or increased response costs (such as system investment and personnel expenses), may affect business performance.

The Group raises funds primarily through bank borrowings and is thus exposed to interest rate fluctuation risk. If the Group is unable to absorb increased costs from rising interest rates through its business activities, this may adversely affect its financial position and business results. No specific countermeasures are described, and the structure is such that changes in the interest rate environment directly affect the financial burden.

The DX-related market is undergoing rapid change and expansion against the backdrop of increased corporate IT investment and the spread of generative AI, requiring continuous exploration of new industry DX opportunities. In the automobile sales market, the environment is changing due to diversifying consumer needs and growing demand for business efficiency improvements and non-face-to-face sales through DX. If the Group is unable to appropriately respond to such environmental changes, or if growth in related markets unexpectedly slows, this may affect the business and business performance.

Business expansion requires securing excellent personnel who resonate with the Group's mission, vision, and values, but intensifying competition for talent may make sufficient recruitment difficult. There is a risk of temporary adverse effects on business performance and productivity due to delays in development caused by recruitment mismatches, or due to departures of active employees given the industry characteristics of rapid market trend changes and high personnel mobility. Although measures such as onboarding training, on-the-job training, and career development support have been implemented, the risk cannot be completely eliminated.

As of the filing date of this document, the number of potential shares from stock acquisition rights is 1,482,500 shares, equivalent to 17.4% of the total number of issued shares of 8,536,800 shares. If existing stock acquisition rights or those to be granted in the future are exercised, the value per share may be diluted, potentially affecting the stock price. The Group may continue to grant stock acquisition rights as stock options in the future, and the dilution risk continues to exist.