Risk Management Policy

　The IT industry in which our group operates is characterized by extremely rapid changes and shifts. Given the scope of our group's diversified business operations, the types of risks we face are equally diverse. For us to navigate the fast-changing market and technological environment, we are required to act flexibly. We are committed to swiftly addressing unexpected threats while seizing new growth opportunities. Based on this understanding, our risk management is positioned as a driver to meet the expectations of all stakeholders and contribute to the sustainable improvement and development of our corporate value.
　Going forward, we will expand our business scope and increase corporate value by combining organic growth from our existing businesses and inorganic growth through M&A, all while fully leveraging our core value of “Creativity x Tech”. Our group aims to achieve sustainable growth while safeguarding corporate value by properly identifying all internal and external risks, preventing them before they occur, and minimizing losses should they arise. By building a flexible and resilient corporate foundation through risk management, we will press ahead in realizing our management philosophy and purpose, as well as achieving our management strategy.

Risk Management System

　We have established a Risk Management Committee to serve as the central coordinating body for risk management within our group. The committee is chaired by the President and consists of members including members of the Audit and Supervisory Committee (Outside Directors), the Head of the Internal Audit Department, and the Head of the Administration Department. We assess and verify risks that affect our group and implement risk controls—such as formulating preventive measures—for identified operational risks. Furthermore, to minimize losses resulting from the materialization of risks, we regularly analyze risks that have already arose, report them to key decision-making bodies such as the Board of Directors, and strive to prevent their recurrence.

　　　

Risks Related to the Business Environment

• (i) Changes in the IT Market and Technological Innovation

  　The mobile game, internet and e-commerce markets in which we operate, have continued to grow significantly due to the spread of smartphones and an increasing number of internet users.
  　However, contracting markets, economic downturns, or market volatility could adversely affect our performance and financial position.
  　In addition, in the IT industry, where technological innovation is rapid, failure to respond to the latest technologies such as generative AI in a timely and appropriate manner may impact our services’ abilities to be competitive or render our business models obsolete. Furthermore, because our services rely on major platforms, changes in terms of service, fee revisions, and other policy changes could affect our business and performance. Our group will continue to monitor the latest technological trends, expand our services, and respond appropriately to platform regulations. However, should rapid market changes or drastic shifts in the business environment occur that exceed our expectations, our business and financial performance may be affected.

  　　　

  (ii) Competition

  　To improve competitiveness, we offer unique content and create websites in pursuit of optimal usability, and work to diversify services, improve the quality and enhance customer support, among other efforts. However, intensifying competition with corporations providing similar services and new up-and-coming business operators may affect our business and performance.

  　　　

  (iii) Disasters, Spread of Infectious Diseases, and Accidents

  　In the event of an earthquake, a typhoon, a tsunami or other natural disasters, as well as fires, power outages, international conflicts, or the spread of infectious diseases such as COVID-19, our business operations may be severely affected. For example, a large-scale natural disaster could lead to an unavoidable temporary suspension of service in affected areas. Furthermore, damage to facilities, power supply restrictions, or severe material or human losses caused by natural disasters or international conflicts, could render business operations difficult or impossible to maintain. Should such circumstances arise, our performance may be affected.

　　　

Business Strategy Risks

• (i) Management Policy and Business Portfolio Management

  　In the rapidly changing IT industry, our group leverages our source of competitive value of “Creativity x Tech” to actively build, optimize, and diversify our business portfolio. To achieve sustainable growth for each business and enhance corporate growth, we recognize the importance of formulating our management policies and medium-term business plan in line with market trends, technological innovations, societal changes. Additionally, optimal management resource allocation and group-wide management and organizational strategies are essential.
  　However, if management policies and strategies fail to function in a timely and appropriate manner in response to rapid technological advancements, changes in the competitive environment, or diversification of market needs—or if our allocation of management resources and the strengthening of organizational functions do not keep pace with the speed of environmental changes—business portfolio management may become ineffective. This may lead to a decline in competitiveness and deteriorating profitability, which may hinder our sustainable growth and have an adverse effect on our business performance and financial position.

  　　　

  (ii) M&A Strategy

  　As part of our growth strategy aimed at continuously enhancing corporate value and expanding our business scope, our group views inorganic growth through M&A as a key pillar alongside organic growth in our existing businesses. When executing M&A, we select business areas where synergies with existing businesses can be expected and target companies where our assets can be utilized. Before moving forward, we conduct comprehensive due diligence across business, financial, legal, and IT domains. After thoroughly evaluating a company and assessing its potential risks, decisions are deliberated by the Investment Committee and finalized by the Board of Directors.
  　However, if contingent liabilities arise or unrecognized liabilities are discovered after our pre-acquisition due diligence, if business performance declines due to changes in market conditions following the acquisition, or if the post-merger integration does not proceed as planned, anticipated synergies or business growth may fail to materialize. As a result, delays in the business plan established at the time of acquisition could occur, which may adversely affect our operating results and financial condition.

　　　

Financial Risks

• (i) Impairment of Goodwill and Other Assets from M&A

  　Our group actively pursues M&A to drive growth, resulting in a recording of intangible fixed assets such as goodwill, customer-related assets, and marketing-related assets. When conducting M&A transactions, we analyze the target company’s projected profitability and potential group synergies. Post-acquisition, we regularly monitor the progress of business plans and profitability to ensure proper valuation and management. However, should drastic changes in the market conditions or intensified competition occur post-acquisition, or if progress falls short of expectations, the profitability of the assets recorded may decline, potentially requiring impairment losses.
  　As of the end of the current consolidated fiscal year, our group recorded 1,834 million JPY in goodwill arising from M&A transactions and 510 million JPY in customer-related assets. By combining the strengths of the acquired companies with our digital marketing capabilities, we have driven growth in these assets since their initial acquisition. However, should significant deviations from the business plan established at the time of acquisition occur due to factors such as sudden market changes, we may record a goodwill impairment loss, which could affect our operating results and financial position.

  　　　

  (ii) Fluctuations in the Market Value of Financial Assets Held

  　Our group makes direct investments in venture companies and contributes capital to limited liability investment partnerships (funds) with the aim of creating business synergies, developing new business opportunities, and fostering companies with high growth potential. We rigorously pre-screen target companies and their business operation, financial condition, and future growth projections before investing. We then regularly monitor companies after investing to appropriately identify and manage risks. While we are proactive in this regard, there is a risk that market volatility or other factors can lead to a decline in the market value of financial assets held by us. In addition, unlisted target companies may face performance downturn or operational uncertainties. If these factors render invested capital unrecoverable, resulting in valuation or impairment losses, it could have an adverse effect on our operating results and financial position.

  　　　

  (iii) Risk of Shareholder Value Dilution Due to Equity Financing

  　To support growth strategies aimed at sustainably improving corporate value and expanding our business footprint—whether through M&A, new business development, or growth investments in existing businesses—we may pursue equity financing to optimize our capital structure and meet funding needs. Potential funding mechanisms include public offerings, private placements, and the issuance of stock options. When executing equity financing, we will make decisions carefully, giving due consideration to the appropriateness of the use of funds and the prevention of dilution of existing shareholders’ interests and stock value. If the total number of outstanding shares increases due to the issuance of new shares or other reasons, there is a risk that the value per share will be diluted, and changes in the supply and demand balance in the stock market may have an adverse effect on our stock price.
  　The share acquisition rights and unsecured convertible bonds with share acquisition rights, based on the underwriting agreement between our group 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, this phased approach is expected to prevent a temporary oversupply of shares on the stock market, mitigating the impact on the interests of existing shareholders.
  　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 our group’s common stock is capped at 5,054,383 shares, unless adjusted. Since the maximum number of shares to be delivered is fixed regardless of stock price, the dilution ratio will not exceed expectations.
  　In addition, with the aim of expanding our business performance and increasing 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 boosting motivation and morale while enhancing group-wide cohesiveness. 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, which we believe will directly contribute to enhancing share value.

  　　　

  (iv) Fundraising

  　Our group considers securing the necessary funds and maintaining appropriate liquidity to be key management priorities to promote various growth investments, including M&A, and to ensure stable long-term operations and development. When raising funds, we strive to establish a flexible and stable funding structure by assessing our cash position, project future funding needs, maintaining good relationships with our financial institutions, and formulating appropriate funding plans.
  　However, in the event of changes in our business performance or fluctuations in the financial market and financing environment, the timing, scale and conditions of fund procurement through borrowings, corporate bonds and the issuance of new shares may differ from expectations. This may lead to a decrease in funding liquidity and an increase in procurement costs, which may delay or require reassessment of our growth investments such as M&A. As a result, our business development, performance and financial position may be adversely affected.

　　　

Business Operation Risks

• (i) Crypto Assets

  　Our group holds crypto assets primarily for apps operated by Paddle Inc., which enable users to exchange points for crypto assets. While we are implementing security measures and reinforcing our monitoring framework, the possibility of unauthorized access by malicious third parties leading to leaks, loss, or theft of our crypto assets cannot be ruled out. Such an event would adversely affect our performance and financial position. Furthermore, crypto assets are subject to substantial short-term market price volatility, which could also affect our performance.
  　Therefore, in order for investors to accurately assess the profitability of our businesses, we have introduced ”Adjusted EBITDA” as a performance metric that excludes the impact crypto asset price fluctuations. We also strive to disclose information that supports sound investment decisions.

  　　　

  (ii) Foreign Exchange

  　The Entertainment Business provides content to users worldwide through digital distribution services or local overseas publishers, with sales of in-game items and other content collected in local currencies by foreign platform operators. As a result, exchange rate fluctuations may affect the company’s business performance.

  　　　

  (iii) Product Quality Assurance

  　Our group operates a diverse range of businesses, including comparison sites and media platforms in the Digital Marketing Business, online D2C product sales, and game applications in the Entertainment Business. We recognize that improving the quality of the products, services, and content we provide, as well as ensuring their reliability, are our top priorities for earning and maintaining the trust of our clients, users, and business partners.
  　For this reason, in the D2C business, we select reliable business partners who are capable of manufacturing high-quality products and procuring raw materials. We are also dedicated to maintaining strong relationships with our clients, attending on-site inspections as necessary to enforce quality control, and implementing employee education and compliance awareness programs. Across our media and comparison site businesses, we strive to ensure the accuracy, objectivity, and transparency of the content we publish. In our Entertainment Businesses, we remain dedicated to delivering a safe and enjoyable experience for all players.
  　However, if the use of products sold in the D2C business adversely affects the health of customers, or if inaccurate information or inappropriate content is posted on media and comparison sites, it may cause a loss of trust from users and business partners and a deterioration of the brand image, which may adversely affect our business results and financial position.

　　　

Risks Related to the Organizational Structure

• (i) Hiring, Training, and Retaining Employees

  　Our group positions human resources and organization as the source of value creation for driving sustainable corporate value growth. For this reason, we focus on hiring, training, and retaining individuals who strongly resonate with our purpose, philosophy and align with the core values of “Ateam People” along with highly specialized individuals and next-generation leaders who will drive business growth. Through various systems, development programs, and workplace improvements, we aim to foster autonomous growth and enhance employee engagement.
  　However, if we are unable to hire individuals aligned to our culture and values or specialized individuals required for business execution in a timely and appropriate manner due to intensifying competition for employees in the IT industry and changes in the employment environment, or if specialized employees leave due to delays in development plans or factors that hinder the exercise of abilities, there is a risk that business operations, new business development, and M&A efforts may be hindered. As a result, the group's growth rate could slow, which may have a negative impact on the group's performance and financial position.

  　　　

  (ii) Fostering and Preserving Organizational Culture

  　We regard our unique corporate culture built on our corporate philosophy, “Ateam Purpose”, and “Ateam People”, as the source of our sustainable development and competitive advantage. Through various internal communication initiatives, we are working to foster an organizational culture in which all employees can embody our philosophy and culture.
  　However, amid rapid business expansion, increasing number of group companies, organizational diversification, and work style changes, and work styles change, there is a risk that understanding of and alignment with philosophy and culture may become diluted. If this impacts the company's values and code of conduct that constitutes our strengths, and if these principles are not properly passed on to the next generation, there is a risk that the sense of unity and cohesion of the organization will decline, leading to a loss of creativity and innovative spirit. As a result, the group's brand image may decline and the organization may stagnate, which may have a negative impact on the sustainable enhancement of corporate value, business performance and financial position.

  　　　

  (iii) Dependence on Specific Managers and Fostering of Successors

  　Takao Hayashi, President and Founder of our company, possesses extensive experience as an engineer. He has driven the growth of our group since its establishment and plays an extremely important role in a wide range of management decisions, including the formulation of management strategies. To build a sustainable management structure that prevents over-reliance on any particular executive, our group is promoting the conversion of certain entities into subsidiaries and delegating authority to heads of business divisions and others, while also focusing on developing the next generation of leaders and executive candidates who will lead our group in the future.
  　Even so, in the event that he is no longer able to continue in his current capacity, or if leadership development fail to progress as intended, there is a possibility that the decision-making process will stagnate and organizational cohesion could weaken. As a result, the group's business development, performance, and financial position may be adversely affected.

  　　　

  (iv) Internal Control System

  　Our group recognizes that effective corporate governance is indispensable for achieving sustainable growth and enhancing medium-to-long-term corporate value. Therefore, we will continue to strengthen our management base alongside business scale, enhancing our internal control systems to ensure efficient and effective management.
  　However, should we fail to establish an adequate internal control management system, or if one is not established in a timely manner following rapid business expansion, our performance and business development may be adversely affected.

　　　

Risks Related to Compliance

• (i) Laws and Regulations

  　In our business areas, the following laws and regulations apply: primarily the “Act on the Prevention of Unfair Trade Practices and Unfair Representations,” the “Act on the Protection of Personal Information,” the “Act on Specified Commercial Transactions,” the “Act on Payment Services,” the “Act to Partially Amend the Financial Instruments and Exchange Act and the Act on Payment Services,” the “Act on Securing the Quality, Efficacy, and Safety of Pharmaceuticals, Medical Devices, and Other Products,” and the “Act on Prohibition of Private Monopolization and Ensuring Fair Trade,” among other relevant laws, regulations, and guidelines Additionally, our expansion into new business domains through M&A and adoption of new technologies like generative AI subjects our group to a broader set of legal regulations. We are committed to educating our executives and employees through measures such as establishing strict compliance systems and providing compliance training. Services provided by our group may be subject to restrictions due to new or amended laws and regulations. Furthermore, in the event of a delay or failure to comply with any of these legal amendments and the occurrence of any violation of laws and regulations, our business, operating results, and financial position could be adversely affected by a loss of social trust, administrative penalties, or administrative fines.

  　　　

  (ii) Intellectual Property Rights

  　We actively protect our intellectual property (IP) rights and take great care to ensure that we do not infringe on the IP rights of third parties. When licensing our IP rights to third parties or obtaining licenses for third-party IP rights, we ensure proper oversight through license agreements. However, the unauthorized use or infringement of IP rights owned by the group or an affiliated third party could result in the deterioration of our profitability and brand image. In addition, if we unintentionally infringe on a third party's IP rights due to differences in interpretation of scope or contract conditions, or if we infringe on rights due to the use of new technologies such as generative AI, we may be sued for damages or injunctions. Not only would it require significant time and expense to resolve the issue, but it could also lead to the suspension of services among other consequences, which could adversely affect our business, operating results, and financial condition.

  　　　

  (iii) Management of Personal Information

  　We collect and maintain a large amount of personal information in connection with our various services. To prevent external leakage and falsification, we strictly control personal information in accordance with relevant laws and regulations by enforcing the business flow and authority system when handling personal information, implementing security measures such as access restriction and encryption, and providing education for officers and employees. However, there is a possibility that incidents such as the leakage or unauthorized use of personal information may occur due to cyberattacks, unauthorized access, intentional or negligent acts by relevant parties, or unforeseen circumstances of contractors or other third parties. As a result, this could lead to claims for damages, administrative sanctions, and a loss of public trust, among other consequences, which could adversely affect our business, operating results, and financial condition.

  　　　

  (iv) Safety and Integrity of Services

  　Some of the services and content provided by our group have functions that enable users to communicate with each other. In order to protect minors using our services and to ensure a safe environment, we explicitly define inappropriate conduct in our terms of service and vigilantly monitor usage. Those who violate our terms are subject to measures from warnings to account or membership termination. However, as the number of users increases, it may not be possible to completely eliminate inappropriate behavior, and if disputes arise between users, we may be held legally liable regardless of the terms of service. Additionally, even if our legal responsibility does not come into question, business and performance may be affected by factors such as deterioration of the content’s brand image.

  　　　

  (v) Litigation

  　We strive to prevent legal and regulatory violations by promoting legal compliance and maintaining internal oversight systems. However, regardless of fault by officers or employees, there is a risk of litigation, labor disputes, or other legal actions arising from unexpected trouble with users, business partners, employees, or other third parties. Furthermore, potential litigation or disputes could emerge over IP rights, personal information management, and the safety and soundness of our services.
  　Depending on the nature and outcome of such lawsuits and legal measures, it may take a significant amount of time and money to resolve the issues, while potentially damage our public trust, which may adversely affect our business, operating results and financial position.

　　　

Risks Related to Information Security

• (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) Intellectual Property Rights

  　Cyberattacks 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 prevent 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

  　As inadequate response to an information security incident could have a serious impact on our business activities, we are continuously working to strengthen our information security system. We’ve established the Ateam HD CSIRT (Computer Security Incident Response Team) to strengthen cyber security governance for the entire company and 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.