CyberBuzz, Inc.

The Group's advertising products depend on major SNS platforms such as Instagram, Facebook, X, TikTok, and LINE, and delayed responses to changes in user trends or the emergence of new SNS platforms directly affect business performance. In addition, there is a risk that changes in platform terms of service or regulations could render existing advertising methods unusable. As countermeasures, the Group is collecting information on trends in each SNS and organizing influencers into membership networks; however, if responses to such changes are delayed, this could impact business performance and financial condition.

In influencer marketing, the core of the SMM Business, continuously securing influencers who match advertiser needs is essential. If an influencer fails to comply with advertising review standards or becomes involved in controversy outside of the Company's projects, this may adversely affect business performance and brand image, as such situations fall outside the Company's control. The Company strives to build close networks through continuous introduction of advertising projects and provision of information on laws and guidelines, but the risk of deteriorating trust relationships cannot be eliminated.

The Group is subject to regulations including the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceuticals and Medical Devices Act, the Act on the Protection of Personal Information, the Copyright Act, and the Act on Improving Transactions Involving Specified Entrusted Businesses, and there is a risk of administrative sanctions if influencer posts are deemed to constitute stealth marketing. Although the Company has established a system for reviewing all posts through AI tools and dual internal/external checks, controversy arising from third-party copyright or portrait rights infringement or inappropriate posts could damage brand image and lower social credibility. There is also a risk that the business could be constrained by the enactment of new laws or changes in the interpretation of existing laws.

Malware, computer viruses, unauthorized intrusion, errors by officers or employees, natural disasters, system overload, and other factors could result in damage such as leakage of important data, unauthorized alteration of programs, or system downtime. If such events occur, they could lead to third-party damage claims or a decline in the Group's credibility, potentially having a significant impact on business performance and financial condition. Although security measures are being implemented, the risk of these measures becoming compromised continues to exist.

The Group holds personal information obtained through the SMM Business, HR Business, and Live Streaming Platform Business, and manages it in accordance with its privacy policy. If an information security incident occurs or a problem arises in the process of collecting personal information, damage such as compensation claims or loss of credibility could occur, potentially affecting business performance and financial condition. Although a management system compliant with the Act on the Protection of Personal Information has been established, it is difficult to completely eliminate this risk.

In the internet advertising market, technological innovation progresses daily and numerous competitors are operating businesses, requiring continuous responses to trend changes and provision of added value to client companies. If the Company's existing services and technologies become obsolete and it becomes difficult to respond to changes, or if it becomes unable to accurately respond to client needs, this could affect business performance and financial condition. The Group is continuously working on introducing new technologies, strengthening and expanding service functions, and securing engineers.

While the domestic internet advertising market grew steadily by 9.6% year-on-year and the domestic social media marketing market grew by 12.8% year-on-year in 2024, advertisers' advertising spending tends to fluctuate with social conditions and economic changes. If domestic macroeconomic trends or the business environment of major industry sectors deteriorate, this could affect the Group's business performance and financial condition. While market growth is expected to continue, there is a risk of directly experiencing the effects of reduced advertising budgets during economic downturns.

In the Group's management, officers and senior staff, including the Representative Director who possess specialized knowledge, skills, and experience, play an extremely important role in determining and executing management policies and business strategies. If these officers or employees resign or retire for any reason and it becomes difficult to recruit successors, this could affect business performance and financial condition. Developing successors and establishing an organizational management system remain ongoing challenges.

If the profitability of a target company declines due to changes in the business environment following an acquisition or capital/business alliance, impairment losses may occur, and if the alliance is dissolved, this could affect financial condition and business results. Although due diligence is conducted in advance, the Company recognizes that it is difficult to reasonably predict all risks. As measures to mitigate the materialization of such risks, the Company dispatches directors and observers and conducts continuous monitoring of business performance.

In launching new businesses or establishing new subsidiaries, delays in business progress relative to plans or changes in the business environment could affect sales and profit. There is also a risk of additional costs arising, such as securing personnel or expanding facilities beyond the initial plan. As countermeasures, the Company conducts regular monitoring at management meetings and board meetings, and controls overall business risk by establishing criteria for scaling back or withdrawing from businesses.