GEOCODE CO.,Ltd.

Web Marketing Business is heavily dependent on advertising media from Google and LINE Yahoo. If the provision of advertising space from these media companies is disrupted, it would directly affect business activities and financial results. The Company strives to maintain good relationships with both companies, but the high degree of dependence itself constitutes a structural risk.

Competition may intensify in both the Internet Advertising market and the cloud market due to service improvements by competitors and new market entrants. If differentiation and competitive advantage are not adequately secured, this could lead to increased sales costs, slower acquisition of new contracts, and increased cancellation of existing contracts, putting pressure on business results. The Company is responding through continuous improvement of service quality.

In the Internet Advertising and cloud markets, technological innovation and changes in customer needs occur rapidly, requiring responses to new technologies including generative AI. Failure to respond appropriately to such changes could reduce competitiveness and affect business activities and financial results. The Company routinely engages in the utilization of the latest technologies and the collection of industry trend information.

The SEO service is heavily dependent on the Google and Yahoo! JAPAN search engines. If the Company fails to adequately respond to algorithm updates or to the emergence of alternative search engines, the value of its services could be impaired, affecting business results. The oligopolistic structure of domestic search engines concentrates this risk.

Since all services are provided via the Internet, system failures caused by software defects, natural disasters, power outages, computer virus infections, or increasingly sophisticated cyberattacks could force a temporary suspension of services. The Company has established security measures, vulnerability defenses, and rapid recovery systems, but the risk cannot be completely eliminated.

In the course of conducting business, the Company handles customers' confidential and personal information. If an information leak occurs due to unforeseen circumstances, this could result in unexpected costs such as damages and reputational risk. The Company has established information management regulations, strengthened server security, and implemented measures to prevent unauthorized access, but complete prevention cannot be guaranteed.

Daisuke Haraguchi, the founder and Representative Director and President, plays an extremely important role in determining sales strategy, development, and management policy. If he becomes unable to perform his duties, this poses a risk of significant impact on business activities and financial results. The Company is working to expand and develop executive staff and build a division-of-labor system through delegation of authority, but resolving this dependence remains a work in progress.

Securing and developing excellent personnel is essential for providing high-value-added services. If recruitment and development do not proceed as planned, this could reduce competitiveness and constrain business expansion. The Company is engaged in active recruitment, enhancement of education and training systems, and early development of capable personnel, but there is a risk of falling short of plans due to intensifying competition in the labor market.

Advertisers using web advertising are subject to regulations such as the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceuticals and Medical Devices Act, and medical advertising guidelines. Amendments to laws, new legislation, or the establishment of industry self-regulation could affect the Company's business activities. The Company has adopted an advertisement review system based on quality control regulations, checklists, and contracts with specialized law firms, but there is a risk of increased costs in responding to changes in the regulatory environment.

In a revenue model centered on continuous transactions, if cancellations exceed expectations due to the emergence of competitors or customer troubles, the stability of continuous revenue growth could be undermined, affecting business results. The profit plan is formulated based on past results incorporating a certain level of cancellations, but if the amount of cancellations exceeds the amount of new contracts, the revenue base would be impaired.