Toyokumo, Inc.

In providing cloud services, the Group handles a large amount of information assets, and if important information were to leak externally, this could affect business performance through a decline in social credibility or the occurrence of claims for damages. The Group recognizes that the possibility of this risk materializing is ever-present, and strives to manage and protect information assets through the establishment of a basic information security policy and the acquisition of ISO/IEC 27001 certification (registration number ISA-IS-0127).

The pace of technological innovation in the internet and cloud industry is rapid, and there is a risk that service competitiveness may decline if the Group fails to respond in a timely manner. In addition, unexpected system investment required to respond to new technologies may occur and could affect business performance. As countermeasures, the Group is working to continuously develop engineers and actively adopt AI technology to improve productivity and competitiveness.

If a failure occurs in the systems that form the infrastructure for providing cloud services, the resulting service outage could affect business performance. The Group recognizes small-scale failures as a risk that may occur on a routine basis, and works to prevent trouble before it occurs through server load balancing, regular backups, and monitoring of operational status.

If competition in the Cloud Services for Businesses market intensifies and the Group's current price advantage is undermined, this could adversely affect business performance. The Group seeks to maintain its competitive advantage by continuing efficient business operations and focusing on developing services that are intuitive to use.

kintone Integration Services, which depend on Cybozu, Inc.'s "kintone," accounted for approximately 60% of consolidated net sales for the current fiscal year, creating a risk that business performance could be significantly affected by intensifying competition for that service, among other factors. As a risk mitigation measure, the Group is expanding sales of the Anpi Confirmation Service and "NotePM," offered by Project Mode Co., Ltd. (which became a consolidated subsidiary on January 8, 2025), and is broadening its cloud service lineup through the development and dissemination of new services.

kintone Integration Services are provided based on the Partner Network Official Partner Basic Agreement with Cybozu, Inc. If the agreement is terminated due to a breach of termination clauses or other reasons, it could become difficult to continue providing this service, which accounts for approximately 60% of net sales, potentially having a material impact on business performance. The Group considers the likelihood of this risk materializing to be extremely low, and strives to maintain a good relationship with Cybozu, Inc.

As part of its growth strategy, the Group has a policy of utilizing M&A, and if projected earnings are not achieved as planned, impairment losses on goodwill or valuation losses on investment securities and shares of affiliated companies may occur, potentially affecting the Group's financial position and business performance. The Group's policy is to conduct prior due diligence to examine the financial condition and contractual relationships of target companies and consider risks before proceeding.

If the Group is unable to recruit and develop personnel with the excellent technical skills necessary for business expansion as planned, this could affect business performance. The Group regards the payment of appropriate compensation and the development of an environment where employees can fully utilize their abilities as important management priorities, and continues to focus on recruiting and developing personnel.

The Group is not currently aware of any legal regulations that directly regulate its business itself, but it is subject to the Telecommunications Business Act, and if new laws and regulations are established in the future, their content could affect business performance depending on the details. The Group's policy is to work with legal counsel and other experts, closely monitor developments in relevant laws and regulations, and respond promptly.

Yuji Yamamoto, the founder and Representative Director and President, plays an important role in driving the business as the person with ultimate responsibility for management, and if he were to become unable to continue executing his duties, this could affect business performance. To avoid excessive dependence on him, the Group is working to develop and strengthen its management structure by cultivating executive personnel.