Hammock Inc.

While market expansion is expected due to the progress of DX and cloud adoption, the rapid spread of generative AI may cause significant changes or declines in market needs for the Company's products due to changes in business processes and customer purchasing behavior. Technological innovation in the IT industry and changes in corporate business models are increasing the degree of impact. The Company aims to detect and respond to market trends at an early stage by strengthening customer success, sales, and marketing.

Competitors exist for all of the Company's solutions, and if new entrants with distinctly superior functionality or extreme price competition intensify, the Company's competitive advantage could be undermined. The Company currently differentiates itself through unique functionality, quality, rapid feature additions, and pricing, but maintaining this advantage on an ongoing basis is a challenge. The Company is advancing appropriate responses to market needs through monitoring of competitor trends and strengthening customer success and sales.

The pace of technological innovation in the IT industry is rapid, particularly with respect to AI technology, and if the Company is unable to respond to technological innovation beyond expectations, it could lead to customer attrition and a decline in competitiveness. The Company has established an R&D department and is working to reduce this risk by monitoring trends in new technologies, including AI, and systematically introducing new technologies into its own products.

Recruiting and developing talented personnel across all areas—sales, development, customer success, and administration—is key to business growth. In the Japanese market, where engineer shortages are particularly severe, failure to meet recruitment plans or a higher-than-expected number of resignations could impact business performance. The Company is strengthening recruitment and improving employee retention through the introduction of remote work, clarification of career paths, enhanced training, and support for obtaining qualifications.

The Company's products handle personal information such as business card data, and in the event of an information leak, there is a risk of reduced revenue due to loss of trust and potential claims for damages. The Company has obtained ISMS and Privacy Mark certifications and has established internal control systems, while also equipping its products with functions to prevent the leakage of personal information as preventive measures.

While the Company maintains thorough quality control through an established development framework, an independent quality control department, and sufficient testing, an unexpected large-scale system failure or defect could have a material impact on business operations, business performance, and financial condition. The Company strives to minimize the impact of any such occurrence through failure response and support system development.

Because usage fees for cloud services (such as Amazon Web Services) are denominated in US dollars, expenses increase when the yen depreciates. In addition, payments to overseas development contractors may also increase in yen terms during yen depreciation, and a prolonged expansion of yen weakness could impact business performance. The Company mitigates expense fluctuations by entering into forward exchange contracts for a certain amount of US dollars to fix the payment rate.

Because products under development are capitalized as software assets, fluctuations in development content and man-hours may increase or decrease the amount capitalized, affecting business performance. In addition, depending on the cash flow situation of the asset group, there is a risk that impairment losses on fixed assets may occur. The Company aims to detect early signs of impairment through monthly tracking of capitalized asset amounts and business performance, and to respond appropriately, including through budget revisions.

The Company utilizes offshore development for product development, but the number of outsourcing partners is limited, resulting in a high degree of dependence on specific partners. If transactions with a partner are discontinued or the partner goes bankrupt, product development may not proceed as planned, potentially affecting business operations and performance. The Company aims to reduce this risk by continuously considering the expansion of its pool of outsourcing partners.

Daisuke Wakayama, the President and Representative Director and a major shareholder, plays a significant role in determining management policy and business strategy, and if he becomes unable to perform his duties, it could impact business operations and performance. The Company aims to reduce this risk by improving the effectiveness of organizational management through appropriate operation of the management committee and board of directors, clarifying the division of roles among officers, and delegating authority through the development of management-level personnel.