GVA TECH,Inc.

The Company has recorded operating losses continuously since its founding, as upfront investments in service delivery costs, personnel hiring, and advertising expenses for customer base expansion have pressured profitability. If technological innovation, competitor entry, or existing customer cancellations exceed expectations, operating losses may continue, potentially adversely affecting the financial position. The Company expects to be able to record profits going forward through revenue expansion and improved profitability.

Certain loan agreements include financial covenants related to net assets and deposit balances as of the end of each month, as well as ordinary income/loss from FY2025 (ending December 2025) onward, and breach of these covenants could result in loss of the benefit of time and an obligation to repay in full. This poses a risk of materially adversely affecting the Company's financial position. The Company appropriately secures funding through borrowings from financial institutions and other means, and believes the impact will be limited.

Compliance is required to ensure that the AI contract review module of "OLGA" does not violate Article 72 of the Attorney Act (prohibition of unauthorized practice of law), and although guidelines were published by the Ministry of Justice in August 2023, changes to the content or interpretation of the law could constrain the business. The Company has obtained legal opinions of compliance from external law firms and conducts legal checks by its retained counsel when expanding functionality. There is a risk that changes in legal interpretation could force a fundamental review of the delivery format of the Company's core service.

Compliance is required to ensure that document preparation support for registration applications provided by "GVA Hojin Toki" does not violate Article 73 of the Judicial Scrivener Act (prohibition of business by non-judicial scriveners), and changes to the content or interpretation of the law could constrain the business. The Company positions this service strictly as support for document preparation by the applicant themselves and has obtained legal opinions of compliance from external law firms. There is a risk that a change in legal interpretation could require a fundamental redesign of the service.

In the legal tech market, new entrants of various sizes are expected against the backdrop of cloud adoption, including companies with greater capital strength, technological capabilities, sales capabilities, and customer bases than the Company. If competitors' service capabilities improve or price competition intensifies, causing a relative decline in the Company's competitiveness, this could affect the financial position and operating results. The Company is countering this through strengthening product development capabilities, continuous product improvements, and branding based on added value.

In the IT and AI industries, research and development is progressing rapidly both domestically and internationally, and new technologies are constantly being created, making it essential for the Company to maintain the technological capabilities that are the source of its competitiveness. If the Company falls behind in responding to rapid technological innovation, this could result in sluggish growth in new contracts and cancellations by existing customers, affecting operating results and financial position. The Company continuously works to gather the latest technology and secure talented personnel.

In the course of business operations, the Company has opportunities to handle personal information and confidential information of client companies, and if information assets are leaked externally due to cyberattacks, errors by officers or employees, natural disasters, or other causes, this could lead to claims for damages, litigation, or loss of social credibility. The Company has implemented measures such as obtaining third-party certification under ISO/IEC 27001:2022, establishing information security regulations, conducting regular training for officers and employees, and entering into confidentiality agreements with outsourcing partners.

Each service is provided via the internet and is highly dependent on communication networks and infrastructure. If a large-scale system failure occurs due to natural disasters, program defects, unauthorized access, or other causes, service provision could be halted, affecting operating results and financial position. The Company has established a stable operational framework through building on AWS, redundant backups, and a cloud monitoring center operating 24 hours a day, 365 days a year.

As the Company has adopted a recurring revenue model, preventing cancellations by existing customers and increasing unit prices are key to continued growth. If deteriorating economic conditions lead customers to restrain IT investment, or if cancellations exceed expectations, this could affect operating results and financial position. As of the end of the fourth quarter of FY2025 (ending December 2025), the average monthly unit price per customer was ¥120 thousand, and the Company assesses that the financial impact among mid-sized and large enterprise customers is minor.

Although there is no capital relationship between the Company and GVA Law Office, which was founded by the Company's Representative Director, there is a risk that the two may be mistaken for affiliated companies due to sharing the "GVA" name. If GVA Law Office experiences deteriorating business performance, troubles, or scandals, it could be perceived as being part of the Company's group, potentially affecting the Company's business performance.