LINKBAL INC.

The Group has recorded consecutive operating losses, ordinary losses, and net losses since FY2021 (ended September 2021), giving rise to events that raised material doubt about its ability to continue as a going concern. Having achieved a consolidated operating profit in the fourth quarter of FY2025 (ending September 2025) and holding cash and deposits of ¥914,254 thousand as of the end of the consolidated fiscal year, the Group judges that there is no material concern regarding its cash flow over the following 12 months. However, the track record of losses spanning multiple periods indicates fragility in the financial base, and the sustainability of the return to profitability will remain an important point to monitor going forward.

Against a backdrop of later marriage, an increasing rate of non-marriage, and population decline due to the falling birthrate and aging population, demand and values in the marriage-hunting (konkatsu) market are becoming increasingly diverse. If services such as "machicon JAPAN," "CoupLink," and "1on1 for Singles" fail to present sufficient appeal in response to changes in users' views on love and marriage, this could lead to a decline in service users and a shrinking market share. The Group continues to work on responding to diversifying needs, but keeping pace with the speed of change in the external environment remains a challenge.

While the Group's "machicon JAPAN" enjoys high brand recognition, if existing or new competitors with large capital, marketing power, and brand strength offer services of equal or greater quality, this could result in customer attrition and increased costs to counter such competition. The marriage-hunting and dating market is becoming increasingly online, lowering barriers to entry, and changes in the competitive environment pose a risk to the Group's business, results of operations, and financial position. The Group continues to respond to the diversifying needs of event participants, but maintaining competitive advantage remains a challenge.

Most visitors to the internet sites operated by the Group arrive via major search engines, and the Group achieves high search ranking through SEO measures. If a major search engine changes its search results display logic, existing SEO measures may become ineffective, reducing the sites' ability to attract visitors and decreasing sales opportunities for event tickets and other offerings. The structure of high dependence on search engines for customer acquisition inherently entails vulnerability to performance fluctuations caused by external factors.

The Group acquires and uses personal information such as registration data of service users, and falls under the category of a personal information handling business operator under the Act on the Protection of Personal Information. If personal information is leaked due to unauthorized external access or other causes, this could lead to reputational damage, loss of social credibility, and potential claims for damages from third parties. As countermeasures, the Group has established personal information management regulations, manages access rights to file servers, and provides information security training to all officers and employees; however, complete defense is difficult given the increasing sophistication of cyberattacks.

The Group's services are built on communication networks connecting PCs, smartphones, and computer systems, and the stable operation of event e-commerce sites and business management systems is essential. If systems are disrupted due to natural disasters, unauthorized access, computer viruses, human error, or other causes, service provision could be halted, potentially affecting the Group's business, results of operations, and financial position. Although measures such as cloud data storage, daily backups, and distributed storage have been implemented, risks arising from external and internal factors cannot be completely eliminated.

In the internet-related market, the pace of technological innovation, including advances in AI technology, is extremely rapid, and the Group is working on developing its own AI technology and expanding site functionality. If the Group misjudges the direction of technological innovation, or fails to secure web engineers with the required skills as planned, it may be unable to launch new features or services demanded by customers in a timely manner, resulting in reduced competitiveness. In addition, unexpected additional system investment or increased personnel costs required to respond to these challenges could also affect financial results.

The Group's principal business is the internet site operation business centered on "machicon JAPAN," resulting in a structure with high revenue dependence on a specific site. If site renovations or improvements are not well received by site users or customers, this could lead to a decline in the ability to attract visitors and a decrease in the number of members, affecting the Group's business, results of operations, and financial position. Dependence on a single service inherently carries the risk that a decline in that service's competitiveness or changes in the external environment will directly spread to overall business performance.

The Group's business is subject to a wide range of legal regulations, including the Act on Specified Commercial Transactions, the Act against Unjustifiable Premiums and Misleading Representations, the Act on Prohibition of Unauthorized Computer Access, the Act on Regulation of Transmission of Specified Electronic Mail, the Act on Regulation of Soliciting Acts of Dating for Money on Internet Dating Sites, and the Act on Electronic Consumer Contracts. If the Group violates these laws and regulations, or is slow to respond to legal amendments, changes in interpretation, or new regulations, this could damage the reliability of its services and brand and increase response costs. The Group strives to ensure legal compliance through the establishment of various listing standards and advertising standards and collaboration with legal counsel, but rapid response to changes in the regulatory environment continues to be required.

Kazumasa Yoshihiro, the founder and Representative Director of the Group, is also a major shareholder and holds substantial influence as the central figure in formulating and deciding management policy and business strategy. If he becomes unable to continue his duties for any reason, this could have a material impact on the Group's business, results of operations, and financial position. Although the Group is strengthening its management structure with six directors other than the Representative Director and two department heads, the high degree of dependence on the founder remains a risk characteristic of a small organization.