eMnet Japan.co.ltd.

The combined intermediary amount (media costs) for Google LLC and Meta Platforms, Inc. accounts for 75.3% of total media costs, indicating an extremely high degree of dependence on specific media platforms. If either company changes its business policies or fails to renew contracts, this could directly impact the Company's business activities and performance. The Company strives to maintain good business relationships with both companies, but it remains difficult to completely eliminate this dependence risk.

Amid ongoing advances in new technologies such as generative AI and the successive introduction of new services utilizing them, a delayed response to such environmental changes could result in service obsolescence and reduced competitiveness. In addition, if substantial investment becomes necessary to respond to new technologies and services, this could affect the Company's financial position and business results. The Company is working on continuous evaluation of new technologies and securing excellent talent.

The Company utilizes generative AI for the purpose of improving operational efficiency and service levels; however, if social regulations are strengthened, this could lead to a decline in operational efficiency and service levels. Furthermore, if the use of generative AI results in the external leakage of trade secrets or private data, or in copyright infringement, there is a risk of damages claims and reputational damage. The Company is working to strengthen governance by limiting available tools, formulating guidelines, and conducting training.

The internet advertising business has many new entrants, and the number of companies seeking to strengthen their competitiveness through M&A or business alliances is increasing, intensifying the competitive environment. Intensified price and service competition for customer acquisition could lead to a decline in profitability. The Company strives to secure competitive advantage through differentiation via its one-stop service and collaboration through its capital and business alliance with SoftBank Corp.

The advertising market, including the internet advertising market, is sensitive to economic conditions and macroeconomic changes, and advertisers tend to curtail advertising investment during economic downturns or periods of weak consumption. Complex factors such as the spread of infectious diseases, geopolitical tensions, fluctuations in energy and resource prices, and high inflation and interest rate trends pose risks of reduced advertising demand. Should such events occur, they could affect the Company's financial position and business results.

While there are currently no direct legal regulations governing the internet advertising business, if an advertiser violates various laws such as the Trademark Act, Copyright Act, Act against Unjustifiable Premiums and Misleading Representations, or the Act on the Protection of Personal Information, there is a risk that the Company could be deemed to have facilitated the illegal act. Future amendments to laws, enactment of new legislation, or establishment of self-regulatory rules could also impose significant constraints on business activities. The Company has established advertising handling guidelines and has dedicated personnel who review advertising content.

In the course of internet advertising delivery, the Company may acquire personal information, and if an information leak occurs, this could affect the Company's financial position and business results through damages claims and other consequences. In response to the risk of unauthorized external access and internal information leakage, the Company has established internal regulations for handling personal information in compliance with the Act on the Protection of Personal Information and conducts appropriate management. The risk of data leakage arising from the use of generative AI has also been recognized as a new challenge.

The Company's one-stop service model relies on the expertise of its staff, making the securing, retention, and development of excellent talent an essential element for business continuity and expansion. If recruitment plans are not achieved or excellent talent leaves the Company, this could constrain business development and affect performance. The Company is working to develop and secure human resources through active recruitment activities focused on new graduate hiring and by enhancing its educational system.

As of the end of December 2025, SoftBank Corp. is the parent company holding 40.91% of the Company's total issued shares, and changes in SoftBank's management policy could affect the Company's business operations and performance. The Company has appointed independent outside directors to ensure management independence and strives to establish a governance framework to protect minority shareholders, but the risk remains that the parent company's exercise of voting rights could influence the Company's decision-making.

In internet advertising transactions, advertising fees include media fees payable to media operating companies, so if an advertiser becomes insolvent and payment cannot be collected, the Company bears the resulting loss, including the media fees. The Company has established credit management regulations to reduce credit risk, but it remains difficult to completely eliminate the risk of non-collection due to deterioration in an advertiser's financial condition.