AlphaPolis Co.,Ltd.

The business model of converting internet content into published books has attracted attention, leading to an increase in new entrants using similar models. The Group continues to implement measures to raise brand awareness and improve author and user satisfaction, but if these measures fail to achieve the expected effects, it may impact the Group's financial position and operating results.

E-book sales are mainly conducted through Media Do Co., Ltd., which accounted for 54.5% of consolidated net sales in the fiscal year under review. In addition, distribution of print books relies entirely on Seiunsha Co., Ltd. If the Group is unable to continue transactions with either company, it may have a material impact on the Group's financial position and operating results.

The diversification of information media accompanying the development of digital networks has led to a shrinking book market and increasingly fragmented customer needs. If the Group is unable to expand and strengthen its offering of attractive books as planned, it may impact the Group's financial position and operating results.

Regarding the resale price maintenance system permitted for copyrighted works, the Japan Fair Trade Commission has indicated that abolition would be desirable from the standpoint of competition policy, and the system may be abolished in the future. If abolished, price competition would arise, potentially impacting the financial position and operating results of the industry as a whole and of the Group.

If disputes over copyrights, trademarks, or other rights arise with authors or other companies, they could develop into litigation and significantly damage the Group's credibility. The Group works to reduce this risk through advisory agreements with specialized attorneys, but significant changes to or new enactment of laws and regulations could also impact the Group's financial position and operating results.

The Publishing Business holds personal information of a large number of authors and users, and the Group continuously implements company-wide measures to protect personal information. In the event of a leak of personal information, the Group's credibility would be significantly damaged, potentially impacting its financial position and operating results.

The Group's own websites are structured to allow an unspecified large number of users to post content, creating a risk that acts contrary to public order and morals or inappropriate content may occur. If a surge in users or other factors make it impossible to control all inappropriate conduct, the Group's brand and credibility could be damaged, potentially impacting its financial position and operating results.

The websites and applications provided by the Group are operated online, creating a risk of system failures due to sudden surges in access, server outages caused by disasters, or intrusion by computer viruses or crackers. If a system outage occurs, service provision would be suspended, potentially impacting the Group's financial position and operating results.

Yusuke Kajimoto, the founder and Representative Director and President, plays a central role in driving the business, from formulating management policy and business strategy to maintaining relationships with business partners, resulting in a high degree of dependence on him. The Group is working to build a division-of-labor structure through the development of management executives and delegation of authority, but if Mr. Kajimoto becomes unable to continue performing his duties, it may impact the Group's financial position and operating results.

The Group has a policy of utilizing corporate acquisitions as a means of diversifying business development leveraging its own IP, and works to reduce risk by conducting due diligence in advance. However, if the business environment changes drastically after an acquisition or the expected effects are not achieved, impairment of goodwill and other factors may impact the Group's financial position and operating results.