KAYAC Inc.

Hyper-casual Games have short revenue lifespans per title, typically peaking within a few months to about a year after launch, making continuous release of new titles essential. If the Company is unable to continuously supply titles capable of acquiring large numbers of users due to development delays or other factors, this will directly affect business performance. In addition, there is a risk that changes in advertising platform policies or technical specifications could impose restrictions on ad placements.

The digital content offered by the Group is highly susceptible to changes in user preferences, and numerous competitors exist. If the Group implements initiatives that diverge from user preferences, or is unable to maintain an advantage relative to competitors, this may affect its business and performance. As countermeasures, the Group is working to maintain a pipeline for developing new content and to optimize the content life cycle.

The internet-related field is a rapidly changing industry marked by successive development of new technologies and introduction of new services. Delayed response to technological innovation may reduce competitiveness. Additional expenditures such as system investment and personnel costs may also increase in order to respond to new technologies. The Group addresses this by focusing on recruiting and developing creators and acquiring knowledge and know-how regarding new technologies.

The Group is subject to a wide range of laws and regulations, including the Act on the Protection of Personal Information, the Unauthorized Computer Access Law, the Act on Specified Commercial Transactions, the Telecommunications Business Act, the Employment Security Act, and the Worker Dispatching Act, among others. Tightening or amendment of laws, or enactment of new laws, may restrict the Group's business activities. The Group holds paid employment placement business licenses (Kayac: valid until May 2026; Kayac Bond: valid until March 2026) and a worker dispatching business license (Kayac Bond: valid until August 2026). If the Group receives a business suspension order or similar disposition, this will affect its performance. The Group seeks to mitigate this risk through thorough legal compliance.

The Group's business is entirely dependent on communication networks. If the network is disconnected or systems go down due to natural disasters, accidents, unauthorized access, or other causes, this could have a serious impact on the Group's business and performance. There is also a risk of system failure due to computer viruses or hacker intrusions. The Group works to prevent such incidents in advance through implementation of appropriate security measures, regular backups, and continuous monitoring of operational status.

The Group handles important information such as users' email addresses. If such information is leaked externally for any reason, this may result in compensation payments to affected parties, loss of social trust, and expenditures for building additional information management systems, potentially affecting the Group's business and performance. The Group is working to strengthen its information management systems through formulation of an information security policy, education and training for officers and employees, and acquisition of Privacy Mark certification, among other measures.

The Group relies heavily on three individuals—Representative Director and CEO Daisuke Yanasawa, CTO Masanori Kaihata, and CBO Tomoki Kuba—for critical decisions regarding management policy and business strategy. If, for any reason, these three individuals become unable to carry out their duties, this could significantly disrupt business operations. The Group is working to strengthen its management organization by expanding and developing management executive personnel and building a division-of-labor structure through delegation of authority.

The Group's policy is to utilize M&A as an effective means of business expansion. However, if post-acquisition issues arise that were not identified during pre-acquisition due diligence—such as the emergence of contingent liabilities or the discovery of unrecognized liabilities—or if business development does not proceed as planned, goodwill impairment may become necessary. Additionally, when a new business area not previously operated is added through an acquisition, risk factors specific to that business are also added. The Group examines such risks by conducting detailed prior screening of the target company's financial condition and contractual relationships.

Securing excellent human resources is extremely important for providing digital content, but competition for talent in the IT industry is very intense. If the Group is unable to sufficiently secure necessary personnel at the necessary times, or if capable personnel leave the Group, this may restrict business development and affect performance. In addition to external recruitment and internal development, the Group treats the creation of an environment to prevent employee attrition as an important priority.

The Group operates store businesses such as "Machi no Shain Shokudo," "Machi no Hoikuen Kamakura," "Onari Sauna," "Unko Museum OKINAWA," "DRESSY CAFE," and "International Kids School." In the unlikely event that a serious accident occurs, this could affect performance and brand value through the occurrence of liability for damages, business suspension, reputational damage, and other consequences. The Group seeks to reduce this risk through thorough quality and hygiene management, safety management, and regular water quality testing to prevent Legionella bacteria contamination.