AViC Co., Ltd.

In the Digital Marketing Business, capable personnel who accurately understand media operators' algorithms are the source of business value. If it becomes difficult to secure such personnel or if they leave the company, this could reduce competitiveness and hinder business expansion. The Group addresses this by focusing on the active recruitment and development of capable personnel.

Although the internet advertising market is on an expanding trend, it is susceptible to economic fluctuations and changes in advertisers' advertising strategies. In the event of an economic downturn, advertisers may reduce their advertising placements, which could affect the Group's business performance and financial condition. The Group is addressing this by actively promoting customer diversification.

Although the internet advertising business is not subject to licensing, depending on the content of advertisements, it may be subject to regulations such as the Act against Unjustifiable Premiums and Misleading Representations and the Pharmaceutical and Medical Device Act. In addition, the enactment of new laws or changes in the interpretation of existing laws applicable to internet-related businesses could affect the Group's business, performance, and financial condition. The Group has established a compliance framework through a multi-layered review system using checklists and regular in-house training.

Since the Group provides services primarily using internet communications, communication network failures may occur due to equipment malfunction, software defects, computer viruses, human error, or other causes. In the event of such a failure, the Group's business performance and financial condition could be seriously affected. The Group has established a robust backup system and takes measures to prevent failures before they occur.

If advertisements or other materials infringe on third parties' intellectual property rights, such as by misappropriating others' photographs or text, this could result in claims for damages, injunctions, or licensing fees, which could affect the Group's business performance and financial condition. At present, there have been no instances of infringement or related claims. The Group seeks to avoid infringement through the development of internal rules and guidelines and a workflow for review prior to advertisement placement.

The internet advertising industry is undergoing rapid technological innovation, and advertisers' needs are constantly changing and diversifying. If the Group's response is delayed, its competitiveness may decline, which could affect its business performance and financial condition. The Group addresses this by continuously incorporating the latest technologies and trends and conducting ongoing in-house training and development.

Numerous competitors already exist in the internet advertising industry, and an increase in new entrants is expected as the market expands. If competitors develop innovative technologies or competition intensifies, this could affect the Group's business and performance. The Group addresses this by striving to maintain and continuously improve service quality.

Representative Director and President Sogo Ichihara and other executive officers are well versed in the internet advertising industry and play important roles in determining management and business strategy. If these executive officers were to retire or resign, this could affect the Group's business and performance. The Group aims to mitigate this impact by promoting delegation of authority and the institutionalization of know-how within the organization.

The Group has recorded goodwill and customer-related assets arising from corporate acquisitions, and if expected results are not achieved due to changes in the business environment or other factors, an impairment loss may be recognized. Recognition of an impairment loss would affect the Group's business performance and financial condition. While the Group currently judges that these assets appropriately reflect future earning power, continuous monitoring of changes in the external environment is necessary.

Through the top shareholders, Sogo Ichihara and Midas LPS (holding 34.3% of issued shares) and Kyohei Iwata and Midas LPS (holding 22.3%), if changes in the management policy of Midas Capital Co., Ltd. or other factors result in the intentions of the substantial voting rights holders in each LPS no longer being reflected, this could have a significant impact on shareholder resolutions such as the appointment or dismissal of officers and organizational restructuring. In addition, if other companies within the Midas group of companies were to lose public trust due to legal violations or other issues, this could affect the Group's business performance and financial condition through reputational impact, even in the absence of a direct relationship.