ASIRO Inc.

The Legal Media "Bengo4 Navi" relies primarily on organic search traffic from major search engines as its main user acquisition channel, and there is a risk that inflow could sharply decline due to algorithm changes. As countermeasures, the Group is strengthening customer acquisition via listing advertisements and brand recognition initiatives (unifying the service name to "Bengo4 Navi" in May 2023) to increase branded search traffic, but this has not fundamentally resolved the dependency. If an algorithm change occurs, securing listing slots may become difficult, directly impacting business performance.

Dependence on the top three clients (Forit, Inc., Adire Law Office (a legal professional corporation), and Open Co., Ltd.) reached a combined 46.5% of sales in the current consolidated fiscal year (November 2024 to October 2025), representing a high concentration risk on specific customers. Sales from Adire Law Office surged from ¥350,580 thousand to ¥1,075,864 thousand compared to the previous consolidated fiscal year, and the impact would be significant if listing were suspended due to a change in that firm's policy or disciplinary action by a bar association. The Group is pursuing new customer development, but if this does not proceed as planned, it could materially affect business performance.

In the consolidated financial statements prepared under IFRS, goodwill of ¥1,138,725 thousand related to the Media Business is recorded, accounting for 23.6% of total assets at the end of the current consolidated fiscal year. Since goodwill is not amortized under IFRS, there is a risk that a larger impairment loss could be recognized at once compared to Japanese GAAP if future profitability declines. If key assumptions used in impairment testing (number of Legal Media listings, number of inquiries from derivative media, and a discount rate of 12.2%) deteriorate, this could materially affect business performance.

The Group provides marketing support services to attorneys and is subject to regulations under the Attorney Act, including Article 72 (prohibition of soliciting legal cases for the purpose of compensation), as well as the rules and guidelines of each local bar association. Changes in the content or interpretation of regulations, or the establishment of new regulations, could restrict part of the business, and if a client attorney receives disciplinary action equivalent to or exceeding suspension of practice, listing would be suspended, directly affecting sales. The Group has established a compliance system and conducts employee training, but the risk of failing to respond promptly to changes in the regulatory environment cannot be eliminated.

The Group holds personal information of users and clients, and there is a risk of information leakage due to intentional or negligent acts by external intruders or internal personnel. The Group has implemented a management system, employee training, and unauthorized access countermeasures based on its "Personal Information Protection Policy" and "Personal Information Handling Regulations," but if an information leak occurs, it could lead to loss of trust, legal liability, and disruption to business operations, potentially affecting business performance.

The Group has borrowings from financial institutions and faces the risk of increased funding costs due to rises in market interest rates. Some borrowings are subject to financial covenants, and if breached, this could result in a pledge of time deposits capped at ¥100 million or the loss of the benefit of time (acceleration of repayment). While the Group is not currently in breach of any financial covenants, liquidity risk could materialize in a downturn in business performance.

The Group conducts business under a paid employment placement business license (Ministry of Health, Labour and Welfare, valid until November 30, 2029) for the HR Business, and a small-amount short-term insurance business registration (Financial Services Agency) for the small-amount short-term insurance business. If grounds for disqualification or revocation arise, the licenses could be revoked or a business suspension order issued, making it impossible to continue the relevant business. There are currently no such issues, but the risk cannot be eliminated if officers or employees commit legal violations or similar acts.

Representative Director and President Hiroto Nakayama is the founder of the former Athlete Co., Ltd. (Ashiro), and has played a central role in determining management policy and developing new businesses since the company's founding. If he becomes unable to perform his duties for any reason, there is a risk of significant disruption to the management structure and business operations. While the Group is proceeding with appropriate delegation of authority and securing personnel, dependence on him remains high at present.

The Company grants stock acquisition rights as stock options to officers and employees, and as of the filing date of this document, the number of potential shares reaches 665,300 shares (equivalent to 9.0% of the total number of issued shares of 7,380,568 shares). The Company is considering continued use of the stock option program going forward, and if exercise of these rights proceeds, it could dilute the share value and voting rights ratio of existing shareholders.

In the internet industry, technological innovation and changes in customer needs are extremely rapid, and delays in response directly lead to a decline in service competitiveness. The Group continues to invest in human resources and capital, internalize sales functions, and strengthen customer success functions, but if it fails to respond promptly to unexpected technological innovation or rapid shifts in needs, this could affect business performance.