NEOJAPAN Inc.

Since the cloud service infrastructure depends on internet communication networks, services may be suspended due to natural disasters, accidents, sudden increases in access, or data center failures. If service suspension occurs, this could lead to a decline in business performance. As a countermeasure, the company has established risk diversification through the use of multiple data centers and a regular backup system.

There is a possibility of customer information leakage due to computer virus infiltration or unauthorized external intrusion, as well as deletion of important data due to errors by officers or employees. Such incidents could cause direct and indirect damage, in addition to undermining trust in cloud services, thereby affecting business and performance. The company addresses this through careful selection of data centers with consideration for disaster resistance and security, as well as regular backups.

Rising demand for engineer recruitment has made it increasingly difficult to secure excellent new graduate talent, and reduced working hours due to work-style reforms tend to require more time than before for skill development through on-the-job work. If talent acquisition and development do not proceed as planned, this may hinder business development and affect business growth and performance. The company addresses this through direct recruiting, referral hiring, use of internships, enhancement of internal and external training, and building stable relationships with partner companies.

Akinori Saito, the Representative Director since the company's founding, has led business planning, operations, and development activities, and if he were to become unable to be involved in business development due to an unforeseen accident or otherwise, this could adversely affect the business and performance. The company is working to review its internal executive structure, promote information sharing, delegation of authority, and division of duties among executives and senior staff, and to build a management structure that does not depend excessively on a specific individual.

While the company actively uses open source software in product and service development, license conditions may sometimes be unclear, creating a risk of unintentionally infringing on third parties' intellectual property rights during the development process. If infringement occurs, there is a risk of damage claims lawsuits and other unforeseen damages. The company addresses this through careful investigation by internal responsible departments and, as necessary, collaboration with specialists.

Expansion of related laws such as the Personal Information Protection Act and the Worker Dispatching Act, or the enactment of new laws, may restrict the scope of business activities. While the company currently believes there are no legal regulations that impede its business development, future tightening of regulations could adversely affect business results. The company aims to mitigate this risk by appropriately gathering information on trends in legal amendments and establishing a system capable of responding in a timely manner.

While recurring revenue is gradually accumulating at overseas subsidiaries operating in the ASEAN region (Malaysia, Thailand, and the Philippines), profitability is expected to take more time to achieve, and the company plans to achieve profitability in FY2028 (ending January 2028); however, if net sales do not expand as planned, this could affect business results and financial condition. The company addresses this by having the management of overseas subsidiaries centrally grasp management conditions and the business environment in a timely manner, and through monitoring at board of directors meetings and other venues.

As the overseas business expands, unexpected changes in laws, regulations, and tax systems in each country, as well as social disruptions and other circumstantial changes, may affect business results and financial condition. In addition, market trends such as foreign exchange rates could also be a factor causing performance fluctuations. The company addresses this through timely understanding of the business environment via the management of overseas subsidiaries and monitoring at board of directors meetings and other venues.