Kokopelli Inc.

The Company's services are provided on an AWS foundation, and if AWS becomes unavailable due to system errors, malicious acts, natural disasters, or other causes, this could result in damages to customers and a decline in service reliability. The Company recognizes that the likelihood of this risk materializing is not high, and has established a continuous monitoring system and a rapid recovery framework, while adopting AWS, which satisfies FISC security standards.

Given the nature of the business, which handles large volumes of personal and confidential information, if information leakage, tampering, or unauthorized use occurs, this could impact business results and financial condition through compensation claims from customers and a decline in service reliability. The Company has obtained Privacy Mark and ISO 27001 certification, and addresses this risk through system measures to prevent external unauthorized access, training for officers and employees, and cyber insurance coverage.

The Company operates its business with "Big Advance" as its core service, and if changes in economic conditions, technological innovation, or a decline in competitiveness occur, this could have a material impact on business results and financial condition. The Company strives to maintain competitiveness through continuous usability improvements, functional enhancements leveraging its proprietary AI algorithms, and the promotion of R&D activities.

As a notified telecommunications carrier under the Telecommunications Business Act, the Company is obligated to maintain the secrecy of communications, among other requirements, and in the FinTech field, new legislation such as amendments to the Banking Act is being developed. If additional regulations are introduced in the future or conflicts with existing regulations arise, this could affect business operations and results. The Legal and Compliance Department works together with retained legal counsel to gather the latest information and respond accordingly.

The Company has formed partnerships with more than 70 regional financial institutions to expand "Big Advance," and if there are changes in these financial institutions' strategies or difficulties in developing member companies, growth in the number of member companies could be hindered, affecting business results. The Company strives to maintain good relationships through biannual "BA Conferences" and capital and business alliances with some financial institutions.

With numerous competitors entering the domestic software and cloud-related markets, if differentiation becomes difficult and competitiveness declines, this could affect business results and financial condition. The Company recognizes that its member-expansion model through financial institutions nationwide presents a high barrier to entry, and maintains its competitive advantage through functional enhancements leveraging its proprietary AI algorithms and usability improvements.

The pace of technological innovation surrounding cloud services and AI is rapid, and if the Company's response is delayed, unexpected development costs and other expenses could arise, affecting business results and financial condition. The Company seeks to continuously respond to technological innovation through the active introduction of new technologies, the development of a creative work environment, and the promotion of R&D activities.

As the Company operates a subscription-based business model, if the retention rate falls significantly below expectations due to a decline in service appeal, reduced competitiveness relative to competitors, or a mismatch with customer needs, this could affect business results and financial condition. The Company seeks to maintain and improve the retention rate through additional feature development and enhanced support.

If the Company is unable to sufficiently recruit talented personnel with the advanced technical skills necessary for business expansion, or if their development does not progress, this could constrain business expansion and affect business results and financial condition. In addition to active recruitment activities, the Company has established a framework for securing and developing personnel through cultivating a positive corporate culture and enhancing its personnel system and employee benefits.

The Company operates "BIG ADVANCE GLOBAL" mainly in the Kingdom of Thailand, and country risks such as political factors, changes in laws and regulations, deteriorating economic conditions, exchange rate fluctuations, terrorism, and infectious diseases are latent risks that could affect business results and financial condition. The Company is strengthening its monitoring system through enhanced collaboration with local partner companies and outside experts, as well as through the development and acquisition of personnel specialized in overseas business.