Macbee Planet, Inc.

Transaction volume with the top two clients, centered on DMM.com LLC and SBI Holdings, Inc. (including group companies), accounts for nearly 40% of the total, resulting in high revenue dependence on specific clients. If new client acquisition does not progress due to competitors offering value-added services, deterioration in the business performance of these clients or changes in transaction terms could have a material impact on the Group's business results. The Company is working to reduce this dependence through new client development and differentiation of its services.

The Group provides installment payment options for advertising fees to a specific client group as an ancillary feature, and accounts receivable of ¥2,750 million were recorded as of the end of the consolidated fiscal period under review. Should the client group experience business failure or similar events, this could affect the Group's financial position and business results. Although the Group considers additional credit risk to be minimal due to joint and several guarantees from multiple guarantors and continuous monitoring, the risk has not been completely eliminated.

The Group has carried out M&A transactions, including making Net Marketing Co., Ltd. (now All Ads Co., Ltd.) a wholly owned subsidiary in March 2023. If integration efforts do not proceed as planned or expected synergies and profits are not realized, business results could be temporarily affected by goodwill impairment. There is also a risk that contingent liabilities or unrecognized liabilities may arise after the fact. Countermeasures include conducting various due diligence procedures and thorough deliberation at management meetings and Board of Directors meetings.

Multiple competitors exist in the performance-based marketing market, and if well-financed companies enter the market as new competitors, or if market size fails to expand as expected due to the introduction of new regulations, this could have a material impact on the Group's business development and results. The Group seeks to differentiate itself through extensive expertise and technology utilization, but the risk of delayed response to changes in the competitive environment remains.

The Group uses cookie technology to collect users' behavioral history and is subject to laws and regulations such as the Act on the Protection of Personal Information, the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceuticals and Medical Devices Act, and medical advertising guidelines. If new laws are enacted or amended, or if new self-regulatory rules are established within the industry, restrictions may arise on service provision, potentially having a material impact on business development and results. While this is not currently an impediment to the business, continuous monitoring of changes in the regulatory environment is necessary.

Transactions with certain major media account for a large proportion of advertising placement, and if the relationship with these media changes due to shifts in media policy or a decline in competitiveness resulting from obsolescence of the Group's services, this could have a material impact on business results. The Group strives to build favorable relationships with major media companies, but the risk of dependence on media-side decision-making cannot be eliminated.

LTV Marketing has sustained growth owing to the ease of measuring its effectiveness and its high cost-effectiveness; however, if new advertising models are developed and gain market acceptance, a delayed response by the Group could have a material impact on business development and results. There is also a risk that profitability could decline and pressure profits if the Group fails to respond to changes in market trends and client needs. The Group addresses this by continuing to develop new products and improve existing ones.

The Group's services utilize cloud services such as AWS to systematize advertisement delivery and results management over the internet. If service is interrupted due to hardware, software, or communication line malfunctions, human error, computer viruses, power outages, natural disasters, or similar events, this could have a material impact on business results through loss of credibility or claims for damages. Because of the high degree of dependence on cloud services, the Group also bears risks arising from external factors.

As of the end of the consolidated fiscal year under review, the number of employees (full-time employees only) was 182, and the Group operates its business with a small, elite workforce. If it becomes difficult to secure excellent personnel with specialized skills, or if unexpected events such as the resignation of engineers or long-term sick leave occur, this could affect business development and results. While the flexibility afforded by a small organization is a strength, the structure entails a high degree of dependence on specific personnel, meaning the impact could be relatively significant should personnel-related risks materialize.

The shares held by Director Masakazu Matsumoto (including those held through his asset management company, MG LLC) and founder Yusuke Kojima together account for more than 40% of the total number of issued shares as of the end of the consolidated fiscal year under review. If the shareholding ratio of these two individuals declines, this could affect the market price of the Company's shares and the exercise of voting rights, among other matters. While both individuals maintain a policy of acting as stable shareholders with consideration for the interests of minority shareholders, the concentration of shares presents a governance risk for minority shareholders.