Risk Factors
Listed below are the main factors that could pose a risk to Ateam HD’s business. Certain matters that do not constitute risk factors but could be important considerations in investors’ investment decisions are also disclosed below from the standpoint of proactively disclosing information. Our policy is to sufficiently recognize the potential for these risks to arise, work to prevent them from arising, and respond swiftly in cases where they do arise. Among the matters listed below, those that relate to the future, unless otherwise provided, were determined by Ateam HD as of the date of submission of this report. However, as there is inherent uncertainty, actual results may differ. Also, this is not an exhaustive list of all risks that may arise.
１．Risks Related to the Business Environment
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(i) External Environment of IT Market
The mobile game, internet and e-commerce market, the three business areas that we operate in, have continued to grow significantly due to the spread of smartphones and the increase of internet users.
However, if the growth rates of those markets slow and are affected by deterioration in economic sentiment or actual economic volatility, our performance and financial position may be affected.
Additionally, increases in raw material prices due to sharp rises in oil prices and insufficient supply could affect performance for the D2C Business. -
(ii) Competition
Ateam HD provides various content and services for the internet. To improve competitiveness, we strive to provide unique content and create websites in pursuit of optimal usability, and work to diversify services and enhance customer support, among other efforts.
However, intensifying competition with corporations providing similar services and/or new up-and-coming business operators may affect our business and performance. -
(iii) Risks Related to Disasters, Spread of Infectious Diseases, and Accidents
In the event of an earthquake, a typhoon, a tsunami or other natural disaster, a fire, a power outage, an international conflict, or the spread of infectious diseases including COVID-19 occurs, our business operations may be severely affected. For example, an unavoidable temporary suspension of services would be a possibility in areas impacted by a large-scale natural disaster.
Furthermore, in the event of occurrences that hinder the continuation of business such as damage to facilities or power supply restrictions, or in the event of serious material and human losses primarily resulting from various natural disasters or international disputes, the continuation of business itself may become difficult or impossible. If such circumstances arise, our performance may be affected.
２．Risks Related to Business
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(i) Collection of Accounts Receivable
In developing its business and services, Ateam HD makes transactions with various businesses. Those businesses may follow through with management decisions such as reviewing business strategies, which, depending primarily on the market environment and the current state of competition for each business, may cause them to withdraw from doing business and prevent integrating their businesses with other companies. Ateam HD accordingly endeavors to partner with businesses able to stably and soundly operate on an ongoing basis, but if a business partner discontinues its operations for an aforementioned or other reason, receivables due from the business partner may fall into arrears or become uncollectible. In such an event, our performance may be affected.
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(ii) Risks Related to Owing Crypto Assets
Ateam Group holds crypto assets to prepare for payments to users for apps such as “Bitwalk” in the Digital Marketing segment. Since crypto assets have high price volatility, its value may fluctuate significantly during the time of owning them, or may become substantially less valuable compared to the time of purchase.
Moreover, depending on market trends and trading volume, the price liquidity may be impaired, and trading may become impossible or difficult, or even resulting in trading them at an unfavorable price. -
(iii) Effect from Foreign Exchange
For the Entertainment Business, content is provided to overseas users through overseas digital distribution services or overseas publishers and proceeds from the sale of in-content items are collected in local currencies by the overseas platform operation businesses. As a result, exchange rate fluctuations may affect the company’s business performance.
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(iv) Product Quality Assurance
The D2C Business is centered around selling various products online. We procure high-quality products and raw materials and select reliable clients for the products we manufacture. We also strive to reinforce partnerships with our clients and manage quality control by attending inspection on the production as necessary, as well as training employees and raising awareness for legal compliance.
However, there is still a possibility that the use of products that we sell may cause health or other issues for the customer. In addition, if there is an establishment of laws and regulations in relation to D2C Business or changes in social climate, our business performance may be affected. -
(v) Investment and M&A’s
Ateam HD contributes capital in venture investment and investment in limited partnerships with the aim of nurturing and supporting companies with high growth potential from an early stage. Of the recipients of such capital contribution, those companies that have yet to make an initial public offering carry uncertainty with respect to their future, including changes in the market environment, and insufficiencies in their development or management capabilities. If such uncertainties manifest and preclude an investee company from achieving expected results and the company’s operating performance stagnates or deteriorates, such investment may not be recoverable, and our company’s business performance may be affected.
In addition to investment development, Ateam HD plans to carry out M&A in order to grow and expand business. The financial details of an M&A-eligible company along with possible risks will be examined; however, upon acquisition, if an occurrence of contingent liabilities or determination of unrecognized debt were to emerge after examination, it may affect the performance and financial condition of the company.
３．Risks Related to the Organizational Structure
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(i) Over-Reliance on the Company’s President
The President of the Company, Takao Hayashi, is the founder of the company and has played an extremely important role in Ateam HD’s growth and corporate strategy, among other areas, since the company’s establishment. His abundant experience as an engineer has been invaluable in this regard. We are striving to create a management structure that doesn’t rely too heavily on him. However, if for any reason he was no longer able to participate in the management, our performance and future business development may be affected.
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(ii) Internal Control Management System
Ateam HD recognizes that effective corporate governance is indispensable for sustainable growth and enhancement of corporate value over the medium to long term. Therefore, we will continue to strengthen our management base in line with the expansion of our business scale, promoting the development and enhancement of internal control systems to ensure more efficient and appropriate management.
However, should an adequate internal control management system is not established in time following rapid business expansion, our performance and business development may be affected. -
(iii) Securing and Training Personnel
While continuing to carry out smooth business expansion and execution of corporate management, it is extremely important for us to secure excellent personnel. However, should it not be possible to secure the necessary personnel in a timely and appropriate manner or in the event that skilled personnel leave Ateam HD, ordinary business operations and business development may be hindered, and our performance may be affected.
４．Risks Related to Compliance
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(i) Laws and Regulations
The main laws and regulations applicable to the business areas in which Ateam HD operates include the Act Against Unjustifiable Premiums and Misleading Representations, the Act on the Protection of Personal Information, the Act on Specified Commercial Transactions, the Act on the Settlement of Funds, the Act on Quality, Efficacy and Safety of Pharmaceuticals and Medical Devices, etc., and the Act on the Proper Transmission of Specified Electronic Mail, etc.
Such enactment or revision of laws and regulations, administrative actions by supervisory authorities, or the formulation or revision of new regulations may result in restrictions on the content and services provided by us. In such cases, our business, performance, and corporate image may be affected. -
(ii) Intellectual Property Rights
Ateam HD strives to protect intellectual property rights related to the businesses it operates and takes sufficient care not to infringe on the intellectual property rights of third parties. In addition, there are cases in which our company licenses intellectual property rights owned by the company to a third party or receives a license to use intellectual property rights owned by a third party for services provided by us. In such cases, we will work to strengthen our management structure by, for example, entering into trademark license agreements.
However, in the event that we unintentionally infringe on the intellectual property rights of a third party due mainly to discrepancy in the interpretation of the scope of intellectual property rights or contract terms, we may be sued by the third party regarding the infringement of intellectual property rights or receive a demand to cease the use of said intellectual property. As a result, resolving such an issue could take a large amount of costs and time, and our performance and future business development may be affected. -
(iii) Management of Personal Information
Ateam HD may obtain personal information from the users of the services and content that it provides. To prevent external leakage or falsification of personal information, our company is thorough regarding workflow and authorization systems when handling personal information and strictly maintains such information in compliance with the “Act on the Protection of Personal Information”.
However, in cases such as an information leak or unauthorized use of personal information due to a computer virus, unauthorized access, intentional actions or an accident, we may receive a claim for compensation for damages, the perceived trustworthiness of our company may decrease, and its corporate image may be negatively impacted. As a result, performance and business development may be affected. -
(iv) Safety and Integrity of Services
Using the service content that Ateam HD provides, an indeterminably large number of private users can communicate with each other independently. To protect youth, we strive to ensure the safety and integrity of services by clearly indicating in the user agreement that inappropriate use is prohibited, acquiring EMA certification, and continuously monitoring our services. We also respond to those who breach the user agreement with measures such as requesting improvement or cancelling subscriptions.
However, when the number of people using our services suddenly increases, it is difficult to be fully aware of what users are doing or how they utilize our services. Regardless of the details of our user agreement, if a problem were to occur due to inappropriate actions committed by a user using our services, our legal liability may come into question. Also, even if there is no legal liability, the business and its performance may be affected by factors such as damage to the content’s brand image. -
(v) Litigation
Ateam HD strives to prevent legal violations by promoting compliance that is based on adhering to laws and regulations. However, regardless of whether or not legal violations have been made by our company’s officers or employees, we believe there is a risk of unforeseen trouble and litigation, involving users, business partners, and other third parties and litigation regarding the above-mentioned intellectual property rights, personal information, and safety and soundness of services.
Depending on the content and result of such litigations, our business and performance may be affected. We may also be affected as a result of the large amount of costs for responding to litigations or the damage to our corporate image.
５．Risks Related to Information Security
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(i) Computer Systems and Communication Networks
Ateam HD’s business includes providing services to users through communication networks that connect computer systems such as mobile devices and PCs. To promote stable system operations, we strive for early prevention and avoidance of system trouble primarily by decentralizing servers, making periodic backups and monitoring the operational status of systems. However, in the event of a communication network outage or disruption due to an unforeseen incident (including human error on the part of employees or non-employees of our company) or any other reason, our company’s business and performance may be significantly affected.
Also, in the event that systems become inoperable for various unforeseeable reasons, such as servers being overloaded by a sudden increase in traffic to our sites, or interruptions in the power supply, it is possible that services will be suspended. As a result, our performance and the brand image may be affected. -
(ii) Cyber Security
A cyberattack could pose a significant risk to the Ateam HD’s business continuity. System malfunction or unauthorized access from outside can lead to business stoppage, leakage of customer data, and financial loss. Cyberattack methods have become more sophisticated and sophisticated in recent years, with targeted attacks and ransomware posing serious threats to businesses.
We have implemented an Identity as a Service (IDaaS) solution to enforce our identity management policies and preventing employment impersonation through multi-factor authentication. In addition, we have introduced a wide range of security products such as EDR (Endpoint Detection and Response) and SSE (Security Service Edge) based on the Zero Trust Model. However, even with these measures in place, the risk of cyberattacks cannot be completely eliminated.
In the unlikely event of a serious cyberattack, it may take time for the company to recover, and business activities may be halted. In addition, leakage of customer information or trade secrets could cause a loss of public trust and have a serious impact on business performance. -
(iii) Information Security System
Inadequate response to an information security incident could have a serious impact on our business activities, and we are continuously working to strengthen our information security system. Specifically, the Ateam HD CSIRT (Computer Security Incident Response Team) has been established to strengthen the governance of cyber security for the entire company and to build a comprehensive and multifaceted system operation system to respond to cyberattacks. We also provide security training for all employees and security incident exercises for security personnel.
However, information security risks cannot be completely mitigated, and risks such as information leaks and unauthorized access due to system vulnerabilities and human error still exist. Recognizing these risks, we are committed to further strengthening our security measures.
In the unlikely event that a serious incident involving information security occurs, our business and performance could be significantly affected. -
(iv) IT Investment
IT investment is an essential element for strengthening a company's competitiveness and improving operational efficiency, but it also entails various risks. Since a large investment is required, it may not be commensurate with the investment, or it may take some time before the expected effect is achieved. In addition, IT technology advances rapidly and may require continuous system updates and additional investment.
Ateam HD is fully aware of the risks associated with IT investments, and we are committed to maximizing the benefits of its investments through a variety of measures, including careful examination of IT investment plans and in-depth evaluations prior to system implementation. However, if problems or system failures occur during installation, our business and earnings could be significantly affected.
６．Other Risks
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(i) Risks Related to Impairment of Goodwill and Other Assets in M&A
As of the end of the current fiscal year, the Group recorded 1,300 million yen in goodwill resulting from M&A, 248 million yen in customer-related assets, and 21 million yen in marketing-related assets, mainly 1,140 million yen in goodwill of microCMS, which operates “microCMS”.
The acquired company has grown its business compared to the time of the acquisition by combining our strengths in digital marketing, and we have appropriately evaluated the impairment of these assets.
However, if there is a significant deviation from the revenue plan at the time of acquisition due to a rapid change in the market environment in the future, Ateam HD may record an impairment loss on goodwill. If such an impairment loss on goodwill is recorded, the Group's operating results and financial position may be affected. -
(ii) Risks Related to Dilution of Share Value Due to Exercise of Share Acquisition Rights
The subscription rights to shares and unsecured convertible bonds with share acquisition rights, based on the underwriting agreement between Ateam HD and AASC II P, L. P., are expected to be exercised multiple times in stages until June 26, 2029. Therefore, unlike the issuance of new shares in which dilution occurs immediately, we believe that it is easier to avoid a situation in which the supply of our shares to the stock market becomes temporarily excessive, and that the impact on the interests of existing shareholders can be limited to a certain extent.
Since a portion (2,721,617 shares) of the unsecured convertible bonds with share acquisition rights were exercised on June 13, 2025, the number of shares of Ateam HD's common stock underlying the share acquisition rights and the convertible bonds with share acquisition rights is fixed at 5,054,383 shares, regardless of stock price movements, except when adjustments are made. Since the maximum number of shares to be delivered is limited, the dilution ratio will not be higher than originally planned.
In addition, with the aim of expanding our business performance and increasing its corporate value over the medium to long term, Ateam HD issues share acquisition rights (Paid-in Stock Options) to the employees of Ateam HD and the directors and employees of subsidiaries for the purpose of further increasing motivation and morale and further enhancing the cohesiveness of the Ateam Group.If these share acquisition rights are exercised, the value of Ateam HD's stock per share may be diluted. However, the share acquisition rights are subject to the achievement of predetermined performance and share price targets as a condition for exercise, and we recognize that the achievement of such targets will contribute to the enhancement of the share value.