【Business Risks】
The following is major risks that management recognizes as having the potential to significantly affect the company's financial position, operating results, and cash flows, among other matters related to the business and accounting conditions described in this document. The major risks that management recognizes as having the potential to materially affect the Company's financial position, operating results, and cash flow position are described below. The Group recognizes the possibility that these risks may arise, and has a policy to avoid such risks and to take appropriate measures in the event that they do arise. However, we believe that decisions regarding the Group's management situation and future business should be made after careful consideration of the following items. However, we believe that decisions regarding the Group's management situation and future business should be made after careful consideration of the following matters. The Group's risk management system consists of the Risk Management Regulations and the Risk Management Committee, which reports and examines risks that occur on a daily basis. The Group's risk management system includes the establishment of risk management regulations and the reporting and discussion of day-to-day risks at meetings of the Board of Directors in an effort to prevent and respond to risks as early as possible. Exceptional or unforeseen risks are reported to the Board of Directors and reviewed by the Board of Directors. The President and Representative Director plans to invoke the risk response system to deal with exceptional or unforeseen risks.
(1)Risks Related to Business Environment
Slumping M&A Market
Likelihood of Occurrence: Low
Impact: Large
We believe that the M&A market will continue to grow in response to expanding needs for business succession-type M&A, strategic M&A to divest non-core businesses, and M&A as a medium- to long-term growth strategy method, as the number of successorless companies increases. However, if acquisition needs shrink or the number of successorless companies decreases due to economic downturn or natural disasters, the M&A market may stagnate, which may affect our group's business performance and financial position.
Competition with Other Companies in the Same Industry
Likelihood of Occurrence: High
Impact: Large
The M&A brokerage business does not require permits, licenses, qualifications, or large capital investments, and we believe that the barriers to entry are relatively low. The Group has accumulated knowledge and know-how through its experience and has developed a system for sharing these within the company. The Group has developed a system to share knowledge and know-how accumulated through past experience within the company. The Group is taking various measures to respond to this situation, such as developing in-house systems to share knowledge and know-how accumulated through past experience, thereby increasing the speed at which new employees can produce results. However, intensifying competition with other companies in the industry may affect the Group's business performance and financial position. However, intensified competition with other companies in the same industry may affect the Group's operating results and financial position.
Legal Restrictions
Likelihood of Occurrence: Medium
Impact: Large
Currently, there are no laws or regulations that directly regulate M&A brokerage services, and no licenses, permits, or qualifications are required. However, if some regulations are enacted or revised in the future, the M&A brokerage business will be regulated in some way, However, if some regulation is enacted or revised in the future that restricts the M&A brokerage business, the Group's business performance and financial position could be affected. However, if any regulations were to be imposed on the M&A brokerage business in the future due to enactment or revision of laws and regulations, it may affect the business performance and financial position of the Group. Meanwhile, the Small and Medium Enterprise Agency has launched a registration system for M&A support organizations, and intermediary businesses and advisory firms that meet certain requirements The Company's group is also a registered M&A support organization. The Company's group is also a registered business entity. However, if the Group ceases to be a registered entity in the future due to changes in registration requirements or revisions to the system, the Group's business performance and financial position may be affected. In addition, if laws related to M&A are revised, the M&A needs of society may also change, which may affect our group's business performance and financial position. In addition, if laws related to M&A are revised, the M&A needs of society may also change, which may affect the Group's business performance and financial position. In addition, other legal revisions to the Companies Act, Financial Instruments and Exchange Act, tax laws, and other laws related to M&A transactions and schemes may affect the promotion of M&A transactions, which may affect the Group's business performance and financial position. In the event that the promotion of M&A transactions is affected by other legal amendments such as the Companies Act, Financial Instruments and Exchange Act, and tax laws related to M&A transactions and schemes, the Group's business performance and financial position may be affected. At present, we are not aware of any specific legal revisions that would cause risks to materialize, but if the possibility of risks materializing were to arise, we would be required to take appropriate measures. However, we plan to take necessary measures as soon as possible in the event that a risk materializes.
(2)Risks Related to Our Business
Changes in Business Performance
Likelihood of Occurrence: Medium
Impact: Large
The M&A brokerage services provided by our group are based on a contingency fee system for companies that wish to sell their shares, so we receive the majority of our fees at the time the deal is concluded. Therefore, the majority of compensation is received at the time the deal is concluded. Therefore, our business performance may fluctuate significantly depending on the timing of the closing of deals. Therefore, the performance of the Group may fluctuate significantly depending on the timing of the deal closing. Since contingency fees vary depending on the size of the project, we are working to avoid large fluctuations in business performance by increasing the number of projects we are contracted to handle. However, temporary fluctuations in the number of contracted projects or the size of contracted projects may cause large fluctuations in our business results, which may affect our business performance and financial position. However, temporary fluctuations in the number of contracted projects and the size of contracted projects may cause significant fluctuations in business performance, which may affect the Group's business results and financial position.
Technology Innovation
Likelihood of Occurrence: Low
Impact: Medium
AI technology, which is related to our group's business, is a field where research and development is progressing daily and the pace of technological innovation is extremely fast. The Group will respond to these technological innovations and strive to strengthen its business foundation using AI. However, a delay in responding to technological innovations could reduce the Group's competitiveness and affect its business performance and financial position. However, delays in responding to technological innovations could reduce our competitiveness and affect our business performance and financial position. However, delays in responding to technological innovation could reduce the Group's competitiveness and affect its operating results and financial position.
Lawsuit
Likelihood of Occurrence: Low
Impact: Medium
The Group endeavors to enhance service quality and establish a robust compliance framework, and as of the date of submission of this document, there are no lawsuits or other legal proceedings that have a material impact on its operating results. However, if the Group were to become subject to litigation in the future due to any factors, such litigation could have an impact on the Group’s operating results and financial condition.
Dependence on M&A Brokerage Business
Likelihood of Occurrence: Low
Impact: Medium
The Group relies on the M&A brokerage business for the majority of its revenues. We believe that the M&A market will continue to expand due to the growing need for M&A for business succession and growth strategies. However, if significant changes occur in the M&A market due to fluctuations in economic conditions or the occurrence of social problems, the Group's management performance and financial position may be affected.
Natural Disasters, etc.
Likelihood of Occurrence: Low
Impact: Large
As the Group stores a significant portion of its data on external servers, circumstances such as natural disasters that render such data inaccessible, or situations in which the Group itself suffers substantial damage and is unable to carry out its business activities, could have an impact on the Group’s operating results and financial condition.
(3)Risks Related to Organizational Structure
Recruitment and Training of Personnel
Likelihood of Occurrence: Low
Impact: Large
The M&A brokerage business relies heavily on human resources, and we consider the acquisition and development of human resources to be one of the most important management issues. We consider the acquisition and training of human resources to be one of the most important management issues. However, if the Company is unable to acquire human resources in a timely manner due to changes in the employment situation or other factors, if a large number of human resources leave the Company, or if the development of human resources does not progress as planned, the Group's business results and financial position may be affected. However, if we are unable to acquire human resources in a timely manner due to changes in the employment situation, if a large number of human resources leave the company, or if training does not proceed as planned, our group's business performance and financial position may be affected.
Information Security Management
Likelihood of Occurrence: Low
Impact: Large
Since the Group often handles confidential corporate information, it concludes nondisclosure agreements with its customers and is obligated to maintain confidentiality. The Group has established internal rules to prevent the leakage of customer information. The Group has established internal rules and regulations to ensure that customer information is not leaked. The Group has established internal rules to prevent customer information from being leaked. However, if customer information subject to confidentiality obligations is leaked due to unforeseen circumstances, the Group may be subject to claims for damages and loss of credibility, which could adversely affect the Group's business performance. However, if customer information subject to confidentiality obligations is leaked due to unforeseen circumstances, the Group's business performance and financial position may be affected due to claims for damages or loss of trust. In addition, the Group may obtain personal information for M&A-related needs and when registering for e-mail newsletters. The Group may also obtain personal information when registering for M&A-related needs or e-mail newsletters. In accordance with the Act on the Protection of Personal Information and related laws and regulations, the Group strictly manages personal information by establishing rules and regulations regarding the protection of personal information. The Group strictly manages personal information by establishing rules and regulations regarding the protection of personal information in accordance with the Act on the Protection of Personal Information and related laws and regulations. However, despite these measures, unforeseen circumstances may lead to the leakage of personal information or unauthorized access to personal information. However, despite these measures, in the event of leakage or unauthorized use of personal information due to unforeseen circumstances, the Group's business performance and financial position could be affected due to a loss of trust in the Group. This could have a negative impact on the Group's business performance and financial position.
Dependence on the CEO
Likelihood of Occurrence: Low
Impact: Medium
Shunsaku Sagami, the Company’s Representative Director, is the founder of the Group and its chief executive officer. As of September 30, 2025, he is also a major shareholder, holding 58.0% of the Company’s outstanding shares, and plays a critical role in the formulation, decision-making, and execution of the Group’s management policies and business strategies. In order to avoid excessive dependence on any single individual, the Group has been working to establish a management structure that does not rely unduly on Mr. Sagami by promoting information sharing among directors and senior management through the Board of Directors and management meetings, strengthening management control systems, and developing future executive leadership. However, at present, the Group remains highly dependent on Mr. Sagami. Accordingly, if for any reason he becomes unable to continue to manage the Group’s operations, and if the recruitment or development of successor management has not progressed sufficiently, this could have an adverse impact on the Group’s financial position, operating results, and cash flows.
Rapid Organizational Expansion
Likelihood of Occurrence: Low
Impact: Medium
As of September 30, 2025, the Company operates with six directors, three auditors, and 690 employees across the Group. The Group intends to continue actively recruiting personnel and expanding its organizational scale. While the Group plans to hire and develop personnel in order to establish internal control systems and operational execution structures that are appropriate for its future workforce composition, there is a risk that these initiatives may not be implemented in a timely manner or that key personnel may leave the Group. In such cases, internal management controls and operational execution frameworks may not function effectively, which could hinder the Group’s business expansion and adversely affect its operating results and financial condition.
(4) Other Risks
Dilution of Share Value Due to Exercise of Stock Acquisition Rights
Likelihood of Occurrence: High
Impact: Small
The Group has granted stock options with vesting over a five-year period following listing to its directors, employees, and other eligible persons as an incentive to enhance long-term corporate value. In addition, the Group has issued trust-type stock options to secure and retain talented personnel in the future. If these stock options are exercised, the value per share of the Company’s common stock may be diluted, which could affect the market price of the Company’s shares. As of September 30, 2025, the number of shares underlying outstanding stock options totaled 4,025,889 shares, representing 7.4% of the total number of issued shares of 54,101,335.
For further details regarding the stock options, please refer to “Part IV: Information on the Filing Company, 1. Status of Shares, (2) Stock Options and Other Rights to Subscribe for Shares.”
Relationship with Major Shareholders
Likelihood of Occurrence: Medium
Impact: Medium
Shunsaku Sagami, the Company’s Representative Director and President, is a major shareholder of the Company and, as of September 30, 2025, holds 58.0% of the voting rights of the total issued shares. Mr. Sagami intends to continue holding a certain level of voting rights as a stable shareholder and, in exercising such voting rights, to pursue the common interests of shareholders while also giving due consideration to the interests of minority shareholders. The Group also recognizes Mr. Sagami as a stable shareholder. However, if for any reason Mr. Sagami’s shareholding were to decrease in the future, this could affect the market price of the Company’s shares, the exercise of voting rights, and other related matters.