I'LL INC.

Since its founding, the Group has primarily targeted mid-sized and small/medium enterprises as its customer base, and fluctuations in the business environment and economic conditions surrounding this segment may directly affect the Group's business performance. In addition, if the Group is unable to continue providing services and products that match the needs of mid-sized and small/medium enterprises, this may impact its business performance and business development. Because the customer base is concentrated in a specific segment, there is a structural risk of a sharp decline in demand during periods of macroeconomic deterioration.

The "Aladdin Office Series," the flagship product of the System Solutions business, faces intensifying competition from competitor products, low-priced commercial packages, and cloud-based software, amid rising demand for packaged software across the IT industry as a whole. If competitors' products undergo further performance enhancements, this could create pressure to lower product prices and lead to customer attrition, potentially affecting the Group's business performance and business development. Although the Group has adopted a policy of continuous performance enhancement, responding to changes in the competitive environment remains a challenge.

The Web Solutions business is centered on the Group's proprietary cloud services such as "CROSS MALL" and "CROSS POINT," and includes composite proposals that integrate core systems with various market services. If damage is caused to customers due to changes in linked services or system troubles involving the Group's services, this could result in liability for damages. Because the structure involves multiple interconnected services, the scope of impact tends to broaden in the event of a failure, raising concerns about the effect on business performance and business development.

The Group depends on communication networks such as personal computers, computer systems, and cloud services, and unpredictable factors such as natural disasters, accidents, sudden surges in access, or power supply interruptions could cause system downtime that affects its business and performance. Furthermore, although the Group takes appropriate security measures against unauthorized access such as computer viruses and hacker intrusions, if a system failure occurs, it could affect business performance. Given the business model's high dependence on communication networks, ensuring service continuity in the event of a failure is an important challenge.

The information services industry is characterized by rapid technological innovation, and if new technologies and services become widespread due to innovations exceeding expectations—particularly in AI technology—the software and services provided by the Group could become obsolete, potentially affecting its business performance and business development. The development department continuously works on improving existing products and conducting research and development, but a delayed response to technological change could lead to a decline in competitiveness. There is also a similar risk of downward pressure on product prices due to intensifying competition with rivals.

The Group continues to hire both new graduates and mid-career professionals, but securing excellent talent has become difficult due to rising demand for engineers. If the Group is unable to secure and develop personnel as planned, this could hinder business development and affect business growth and performance. As a countermeasure, the Group continues its initiative of hiring talented engineers in regional areas on the premise of remote work, and is working to diversify its recruitment channels.

Through its business activities, the Group obtains highly confidential information such as customers' business partner information and personal information. If such information is leaked, lost, or misused due to unauthorized external access, system defects or failures, human error, or intentional acts by employees, this could damage the Group's reputation and result in liability for damages. As countermeasures, the Group has obtained ISMS certification (ISO27001, ISO27017) and the Privacy Mark (JISQ15001), and is strengthening its information management system through thorough dissemination of internal regulations, continuous training, and individually concluded confidentiality agreements with temporary staff. However, even with these measures in place, the risk of information leakage cannot be completely eliminated, and the potential impact on business performance and business development remains.