MicroAd, Inc.

The Group's principal business is targeted at the internet advertising market, which tends to be susceptible to economic trends and changes in social conditions. If advertisers reduce their advertising budgets due to an economic downturn, this may affect the Group's business performance. The Group seeks to reduce this risk by diversifying transactions across companies in various industries and sectors, but it may not be able to fully counter a contraction of the overall market.

The Group operates a comprehensive Data Platform Business that provides an integrated offering from data collection and AI analysis through to consulting, but there is a risk that its competitiveness may decline due to the emergence of competitors offering similar businesses. Although the Group is pursuing differentiation through the expansion of its comprehensive services, if these initiatives fail to achieve the anticipated results, this may adversely affect business performance.

The Group's business is based on internet-related technologies, and the pace of technological innovation in this field is rapid, with new services being created one after another. If the Group's response is delayed, its services may become obsolete or lose competitiveness, and additional expenditure may become necessary for improving existing systems and developing new services. The Group addresses this by establishing dedicated departments to continuously research and investigate the latest trends.

The Group's business fundamentally relies on the collection and analysis of consumer behavior data using cookies and device identifiers, but amendments to the Act on the Protection of Personal Information under its statutory review every three years, as well as ongoing consideration by OS and browser operators of additional privacy protection features, continue to be examined. Depending on these developments, the Group may need to establish new legal compliance frameworks or revise its existing services, which may affect its business performance and business development. Dedicated departments within the Legal and System Development divisions continuously monitor these trends and maintain a response framework.

The Group provides its services through computer systems such as servers, and failures at external service providers, unauthorized access, natural disasters, or software defects may result in the leakage of important data, system downtime, or service suspension. Should such events occur, there is a risk of third-party claims for damages, reputational damage, and lost business opportunities. The Group works to prevent and avoid these risks through the use of external data centers, regular backups, and monitoring of operational status.

The Group's officers and senior employees possess specialized knowledge, skills, and experience and play important roles in formulating management strategy and developing new businesses; if these personnel were to leave, this could affect the Group's business performance and business development. The internet business sector has high personnel mobility, and there is a risk that if turnover increases or recruitment falls short, the Group may not be able to secure sufficient personnel necessary for future business expansion. The Group is working to strengthen recruitment and training, but there is no guarantee that it will be able to secure the necessary personnel.

In addition to M&A, capital and business alliances, and minority investments in startups, the Group conducts investments in listed company shares utilizing proprietary alternative data and algorithms. If unexpected risks become apparent after an investment is made, or if a business plan is not achieved, it may become necessary to record an impairment loss, and sudden fluctuations in the stock market or economic conditions may also affect the Group's business performance and financial position. The Group seeks to reduce this risk through pre-investment due diligence and internal controls based on internal regulations.

The Group has subsidiaries in Asian regions such as Taiwan, China, and Vietnam, and must comply with the laws, regulations, business customs, and government regulations of each country, in addition to facing unforeseeable risks from changes in political and social conditions and foreign exchange fluctuations. Should these risks materialize, they may affect the Group's business performance.

CyberAgent, Inc. is another affiliated company holding 48.9% of the Company's voting rights, and ongoing transactions occur involving advertising sales and the purchase of advertising media. Depending on how transaction terms are set, the Company's interests may not align with those of other shareholders; however, appropriateness is ensured through a Board of Directors approval process based on the Related Party Transaction Management Regulations. Management independence is maintained, and there are no matters requiring prior approval.

The Group grants stock acquisition rights to officers and employees to enhance their motivation to improve business performance, and as of the filing date of this document, the number of potential shares outstanding has reached 1,557,200 shares (equivalent to 5.6% of the total number of issued shares). If the exercise conditions are met and these rights are exercised, this may lead to dilution of share value and affect the supply-demand balance of share trading, potentially impacting share price formation.