Kanamic Network Co.,LTD

The Long-Term Care Insurance Act undergoes periodic revisions, including a review of long-term care remuneration once every three years, with a revision implemented in 2024 as well. If the Group is slow to respond to such revisions, it may lose its competitive advantage relative to competitors, potentially leading to delayed customer adoption, service reductions, or customers switching to other providers. The Group addresses this risk through information gathering via participation in advisory bodies and various industry organizations, as well as by developing services that are less susceptible to the effects of legal and institutional changes.

There are multiple competitors in the domestic cloud service market for the long-term care and medical fields, and an increase in new entrants is anticipated as the market expands. The Group has built a competitive advantage by providing a multi-disciplinary collaboration system since the enforcement of the Long-Term Care Insurance system in 2000, but intensifying competition could have a material impact on its business and results of operations. As a countermeasure, the Group continues to provide region-based services and promote the development of an information-sharing platform.

The internet-related field is a rapidly changing industry with a continuous stream of new technologies and services, and responses to new technologies accompanying the spread of smartphones are also required. If the Group is slow to respond to technological innovation, it may face reduced competitiveness as well as increased spending on additional systems and personnel costs, which could have a material impact on its results of operations. The Group is focusing on recruiting and developing engineers and acquiring smartphone-related technologies and know-how.

The Group acquires users' personal information in the operation of its various services, and if personal information were to leak due to unauthorized access from outside or other causes, this could result in a loss of social trust and have a material impact on the Group's business and results of operations. Given the nature of the medical and long-term care fields, the confidentiality of the personal information handled is particularly high. As countermeasures, the Group has implemented system-based restrictions on access privileges, established a personal information protection management system, conducted employee training, and obtained Privacy Mark certification (renewed for the ninth time in May 2024).

The Group's services primarily use websites as their information and communication medium, and if a system failure or server capacity shortage were to occur due to natural disasters, accidents, unauthorized intrusion or manipulation errors by hackers, or an explosive increase in users, this could seriously affect service provision and business transactions. In accordance with the Ministry of Economy, Trade and Industry's "Cybersecurity Management Guidelines" and "Business Continuity Plan Formulation Guidelines," the Group implements multi-layered defenses, organizational measures, and business continuity measures.

Kanamic Cloud Service accounts for a high proportion of the Group's total net sales, resulting in a high degree of dependence on this service. If this service were to diverge from customer needs or lose its competitive advantage relative to competitors, this could have a material impact on the Group's business and results of operations. To diversify revenue sources, the Group is actively working to expand its Platform Service and Healthy Life Extension Service and to develop new services.

Minoru Yamamoto, the founder and Chairman of the Board of Directors, has played a central role in formulating, determining, and executing management policy and business strategy since the company's founding, and there are concerns that results of operations could be affected should he become unable to continue his duties. The Company is working to build a management structure that does not depend excessively on a specific individual, including by granting representative authority to individuals other than him.

As of September 30, 2025, the Group is a small organization with 310 employees, and securing and developing system development personnel necessary to enhance the added value of its services is key to business growth. If the Group is unable to recruit personnel appropriately, or if a pandemic restricts employees' business activities, this could have a significant impact on results of operations, compounded by the Group's small organizational scale. The Group is working to strengthen its recruitment and development structure and thoroughly implement safety management through the active use of external resources and the introduction of remote work.

The Group is proceeding with new store openings in its fitness business aimed at extending healthy life expectancy, and formulates its business plans based on customer traffic forecasts derived from regional characteristics, population distribution, and competitive conditions, among other factors. If economic conditions deteriorate or the assumptions underlying customer traffic forecasts change, this could have a material impact on results of operations. The Group is working to verify customer traffic at existing stores, improve the precision of candidate site selection for new stores, and monitor competitors' store-opening trends.

The Group holds tangible fixed assets such as equipment and fixtures, as well as intangible fixed assets such as software and goodwill arising from the acquisition of shares, and is exposed to impairment risk arising from declines in asset value. If the profitability of an acquired company were to decline significantly, this could affect the Group's results of operations. The Group carries out appropriate accounting treatment in accordance with impairment accounting rules while striving to build assets of high added value.