Cocolive, Inc.

The Company holds personal information entrusted by customers, and if information leakage occurs due to intentional acts or negligence by officers or employees, there is a risk of not only reputational decline but also claims for damages. In addition, the investigation process to identify causes may significantly affect the execution of normal business operations. The Company addresses this through establishing a management framework including outsourcing partners, developing various internal regulations, and providing continuous training to officers and employees.

The Company's net sales depend on KASIKA, and if KASIKA's net sales decline significantly, it could directly affect the Company's business and results of operations. The Company strives to maintain and strengthen competitiveness that is not affected by changes in the external environment, while reducing its dependence on KASIKA by developing other services and expanding their sales, which remains a challenge.

The Company's services are operated on "Sakura no Cloud," a platform provided by SAKURA internet Inc. If a failure or insufficient processing capacity occurs in this service, there is a risk that service provision to customers could be interrupted or delayed, damaging the Company's credibility. In addition, changes in SAKURA internet Inc.'s management strategy or price revisions could also affect the Company's business results. The Company is examining alternative cloud services to ensure a continuous service provision structure.

The Company's services depend on internet communication networks, and there is a risk that service provision could be suspended if the network is disrupted due to large-scale natural disasters, terrorism, war, etc., or if server downtime occurs due to unexpectedly high access volumes or cyberattacks. The Company has implemented measures such as redundancy of systems and servers, monitoring of operational status, and strengthening of quality control systems, but complete prevention is difficult.

It is difficult to fully grasp the intellectual property rights held by third parties in the Company's business areas, and intellectual property rights of which the Company is unaware may already exist or may be newly established in the future. If an infringement is determined to have occurred, it could affect business operations, results of operations, and financial condition through royalty payments, claims for damages, or injunctions against all or part of the business. The Company conducts investigations as necessary regarding the business models and technologies adopted during the development stage.

Compliance rules are becoming increasingly sophisticated and complex year by year, and a delayed response to legal amendments could affect the results of operations and financial condition through impacts on business activities. The Company addresses this by confirming the latest situation at the quarterly Risk and Compliance Committee, developing various internal regulations, and providing continuous training to officers and employees.

As the head office is located in Tokyo, if an unexpected abnormal event occurs beyond expectations, such as a large-scale disaster like an earthquake or flood, or a cluster outbreak within the facility, normal work may become difficult, potentially lowering service levels. The Company has implemented measures to reduce the impact on operations, such as diversifying work locations and establishing methods for confirming the safety of employees during remote work.

The Company has granted stock acquisition rights to officers and employees for the purpose of enhancing their motivation and morale, and as of the filing date of this document, the ratio of potential shares to the total number of issued shares has reached 17.41%. If these stock acquisition rights are exercised, the per-share value of the stock could be diluted, potentially affecting the stock price.

There are multiple competing companies in the marketing automation tool market in which the Company operates, and with the spread of cloud markets such as SaaS, new entrants of various sizes may increase. If intensified competition prevents the Company from achieving its planned business development, it could affect business results through increased cancellations by existing customers and greater difficulty in acquiring new customers. The Company strives to maintain its competitiveness by strengthening its service development capabilities and continuously improving its services.

If corporate investment in IT systems stagnates due to deterioration in the economic climate or business conditions, market expansion may fall short of the Company's expectations. In particular, the real estate industry, to which the Company's customers belong, is highly susceptible to economic fluctuations, interest rate trends, land prices, and surging material costs, which poses a risk of directly affecting real estate companies' willingness to invest in IT systems.