Petgo Corporation

In FY2026 (ending March 2026), approximately 60% of total sales were generated through storefronts on Rakuten Ichiba, Yahoo! Shopping, Amazon.co.jp, and au PAY Market, indicating a high degree of dependence on specific malls. If any of these malls raise fee rates, change terms of service, experience system failures, or close, this could directly affect business continuity and earnings. The Group is working to reduce this dependence through diversification across multiple malls and operation of its own e-commerce site, but a fundamental resolution has not yet been achieved.

In FY2026 (ending March 2026), the top two suppliers accounted for approximately 72% of total purchase amounts, indicating a high concentration risk in the supply chain. If trading conditions with major suppliers deteriorate significantly or transaction volumes decrease, this could hinder product procurement and affect business results. While the Group has a policy of developing new suppliers, alternative procurement means are currently limited.

As of the end of March 2026, interest-bearing debt stood at ¥1,116,519 thousand, with a debt dependency ratio (interest-bearing debt to total assets) at a high level of 35.3%. Capital expenditures and working capital are mainly funded through financial institution borrowings, and rising interest rates going forward could increase interest payment burdens, potentially affecting business results and financial condition. While fundraising, including refinancing, has proceeded smoothly to date, there is a risk that fundraising could become difficult if the credit environment deteriorates.

Multiple competitors exist in the pet commerce market, and intensifying competition could lead to customer attrition, declining sales prices, and increased advertising expenses. The Group aims to maintain its competitive advantage through UI/UX optimization to strengthen subscription commerce and expansion of DTC brand products, but a decline in the number of new and existing customers poses a risk that would directly affect business results. In particular, given the current high dependence on third-party e-commerce platforms, intensifying competition within malls could directly pressure earnings.

The Group is subject to numerous laws and regulations, including the Pet Food Safety Act, the Pharmaceuticals and Medical Devices Act, the Act against Unjustifiable Premiums and Misleading Representations, the Act on Specified Commercial Transactions, and the Act on the Protection of Personal Information, and violations or regulatory tightening due to legal amendments could affect business results. In particular, if the license for retail sale of veterinary pharmaceuticals (Kanagawa Prefecture) were revoked, sales of veterinary pharmaceuticals would become impossible, causing significant disruption to business activities. While the Group strives to maintain its compliance management system and employee training, the risk of delayed response to regulatory amendments remains.

Through its e-commerce business, the Group holds large volumes of personal information such as customers' names and addresses, and if information leakage occurs due to unauthorized external access or unforeseen circumstances, this could have a significant impact on business results and social credibility. While the Group has established management systems including data encryption, access controls, and Privacy Mark certification (obtained in March 2018), complete defense is difficult given the increasing sophistication of cyberattacks.

The Pet Media Business depends on marketing through SNS platforms centered on Instagram, and if the Group is slow to respond to changes in user usage trends or the rise of emerging SNS platforms, this could reduce customer acquisition capability and advertising effectiveness, affecting business results. There is also a risk that changes to advertising-related terms and regulations could render conventional advertising methods unusable, as well as a risk of reduced credibility due to platform security issues. While the Group has established an information-gathering system, its control over platform-side decision-making is limited.

The Group has recorded goodwill related to past business combinations, and if the profitability of subsidiaries and others deteriorates significantly, resulting in undiscounted future cash flows falling below the book value of goodwill, impairment processing may become necessary. If impairment processing occurs, it could have a significant temporary impact on financial position and business results.

Hiroshi Kurosawa, Representative Director and President, plays a central role in formulating management policies and strategies, resulting in a high degree of dependence on him. If he becomes unable to perform his duties for any reason, this could reduce the Group's business execution capability and delay decision-making, potentially affecting business results. While the Group is advancing the delegation of authority and information sharing to other directors and employees, resolving this dependence will take time.

As of the end of the month preceding the filing date, the number of potential shares from stock options was 289,600, equivalent to 15.3% of the total number of issued shares of 1,889,200. If these options are exercised, the issuance of new shares could dilute the value per share and voting rights ratio. The purpose is to provide incentives to officers, employees, and external collaborators, and additional grants may be made in the future.