【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
Potential time of occurrence: within 3 years
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
Potential time of occurrence: no specific time
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
Potential time of occurrence: no specific time
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
Potential time of occurrence: within 1 year
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
Potential time of occurrence: within 3 years
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
Potential time of occurrence: no specific time
Impact: Medium
The Group is striving to improve service quality and establish a compliance system. There have been no lawsuits filed against the Company. However, there is a possibility that a lawsuit may be filed against us in the future for some reason. However, there is a possibility that lawsuits may be filed against our group for some reason in the future, and as a result, our group's business performance and financial position may be affected.
Dependence on M&A brokerage business
Likelihood of occurrence: Low
Potential time of occurrence: within 3 years
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
Potential time of occurrence: no specific time
Impact: Large
Since most of the data held by the Group is stored on external servers, in the event that the data stored on these servers becomes unavailable due to natural disasters or other causes, or if the Group itself is severely damaged, the Group may be forced to suspend operations. Therefore, if the data stored on these servers becomes unavailable due to natural disasters or other causes, or if the Group itself is severely damaged, the Group's business performance and financial position may be affected. In such cases, the Group's business performance and financial position could be affected.
(3) Risks related to organizational structure
Recruitment and training of personnel
Likelihood of occurrence: Low
Potential time of occurrence: within 3 years
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
Potential time of occurrence: no specific time
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 regulations 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
Potential time of occurrence: no specific time
Impact: Medium
Shunsaku Sagami, the Company's Representative Director, is the founder and chief executive officer of the Company's group, and as of September 30, 2023, he is a major shareholder of the Company, owning 63.63% of the Company's shares. He is a major shareholder of the Company, holding 63.63% of the Company's shares as of September 30, 2023, and plays an important role in the formulation, decision-making, and execution of management policies and business strategies. He plays an important role in the planning, decision-making and execution of management policies and business strategies. In order to avoid excessive dependence on him, we will share information among directors and executives at meetings of the Board of Directors, management meetings, etc., strengthen the management control system, and develop management executives. We are working to develop a management system that is not overly dependent on Mr. Yoshida by sharing information among directors, officers, and employees at board meetings and management meetings, strengthening the management control system, and developing management executives to avoid excessive dependence on Mr. Yoshida. However, at present, the Company is highly dependent on this director. However, at the present time, the Company is highly dependent on Mr. Kuroda, However, at present, there is a high degree of dependence on this director. If he is unable to manage our group for any reason, or if we have not made progress in recruiting and training his successor, our group's business performance and financial position may be affected.
Rapid organizational expansion
Likelihood of occurrence: Low
Potential time of occurrence: within 1 year
Impact: Medium
As of September 30, 2023, we had 5 directors, 3 auditors, and 258 employees. We will continue to actively recruit and expand our organization. We will continue to actively recruit and expand our organization. However, in the event that these measures cannot be implemented at the appropriate time, the Group may be forced to make changes in the workforce structure. However, if these measures cannot be implemented at the appropriate time, or if human resources leave the company, the internal management and business execution systems will not function effectively and the Group's business development will be affected. However, if these measures fail to be implemented in a timely manner or if human resources leave the company, the internal management and business execution systems may not function effectively, which may hinder the Group's business development and affect the Group's business performance.
(4) Other risks
Dilution of share value due to exercise of stock acquisition rights
Likelihood of occurrence: High
Potential time of occurrence: within 3 years
Impact: Small
The Group grants stock options to directors, employees, and others with vesting over a five-year period after listing for the purpose of incentivizing them to improve the long-term corporate value. In addition, trust-type stock options are issued to secure excellent human resources in the future. If the stock options are exercised, the value per share of the Group's stock will be diluted and may affect the formation of the share price. As of September 30, 2023, there were 6,294,564 latent shares resulting from stock acquisition rights, representing 10.86% of the 57,983,115 outstanding shares.
Liquidity of our stock
Likelihood of occurrence: Medium
Potential time of occurrence: within 1 year
Impact: Medium
As of September 30, 2023, the Company's ratio of shares in circulation was 35.94%. Going forward, the Company plans to raise funds for growth in line with the Group's business plan through a public offering of new shares, a partial secondary offering to Representative Director Shunsaku Sagami, and an increase in the number of tradable shares through the exercise of stock options. The Company intends to increase the liquidity of its shares by raising funds for growth in line with the Group's business plan, requesting a partial secondary offering to Representative Director Shunsaku Sagami, and increasing the number of shares in circulation by exercising stock options. However, if for some reason the liquidity of the Company's shares declines from the time of listing, trading of the Company's shares in the market may stagnate, which could lead to a decline in the demand for the Company's shares. However, if for some reason the liquidity of the Company's shares is lower than at the time of listing, trading in the market may stagnate, which may adversely affect the supply-demand relationship for the Company's shares.
Relationship with Major Shareholders
Likelihood of occurrence: Medium
Potential time of occurrence: no specific time
Impact: Medium
Shunsaku Sagami, President and Representative Director of the Company, is a major shareholder of the Company, holding 63.63% of the total number of shares issued and outstanding as of September 30, 2023. As of September 30, 2023, he holds 63.63% of the voting rights of all outstanding shares. As a stable shareholder, Shunsaku Sagami will continue to hold a certain amount of voting rights and will exercise his voting rights in pursuit of the common interests of shareholders. In exercising his voting rights, he has a policy to pursue the common interests of shareholders and also consider the interests of minority shareholders. In addition, the Company's group However, in the event of a decrease in the number of shares held by Mr. Kato, a major shareholder, for any reason in the future, the Company's group will take such action as it deems necessary to protect the common interests of shareholders and the interests of minority shareholders. However, in the event of a decrease in the number of shares held by the major shareholder, there may be an impact on the market price of the Company's shares and the exercise of voting rights.
Dividend Policy
Likelihood of occurrence: Low
Potential time of occurrence: no specific time
Impact: Small
The Group regards the return of profits to shareholders as an important management issue, but at this time, we believe that the greatest return to shareholders will come from aggressively investing capital in business expansion and sustainable growth. However, at this time, we believe that the greatest return to shareholders will come from aggressively investing capital in business expansion and sustainable growth, and we have not paid a dividend since our founding. Therefore, we have not paid dividends since the establishment of the company. We have not paid a dividend since the company's foundation. However, at this point, the possibility and timing of dividend payments have not yet been determined.