POPER Co.,Ltd.

The Company holds large volumes of personal information on students, business partners, and employees, as well as confidential information belonging to client companies. If information leakage occurs due to unauthorized external access or similar causes, there is a risk of reputational damage, loss of social credibility, and claims for damages. The Company has implemented measures including obtaining and maintaining ISO/IEC 27001:2022 and Privacy Mark (P Mark) certifications, access authority management, physical blocking of external storage media, and information security training for all officers and employees.

The majority of the Company's services are provided on Amazon Web Services (AWS). If AWS experiences an outage or failure, or if the contract with Amazon is terminated, this could result in damages to customers, additional cost burdens, and brand impairment. System failures caused by computer viruses or intrusions by crackers pose similar risks. The Company works to prevent failures and minimize their impact through continuous monitoring, backups, and redundancy of cloud servers.

For the Company, which centers on a subscription-based recurring revenue model, a decline in retention rates among existing education providers or stagnation in customer unit price directly impairs the revenue base. If retention rates fall significantly below projections due to churn to competitors, reduced satisfaction with additional features or support, or weak acquisition of mid-sized and large-scale customers, losses could continue. The Company is working to improve customer satisfaction by increasing staffing in the customer success department.

The majority of the Company's revenue is concentrated in its core SaaS product, Comiru, and other related offerings. If new areas (such as education DX for schools and local governments, ComiruPay, etc.) fail to spread as anticipated, or if the expected effect of reducing churn is not achieved, diversification of revenue sources will be delayed, leaving the business foundation vulnerable. These new areas are still in an early stage and inherently carry the risk of becoming newly subject to related laws and regulations. The Company is working to reduce this dependence by strengthening partnerships and maximizing platform value.

The expansion of the number of classrooms adopting the Company's services among education providers and the number of user IDs depends on advertising and sales activities. If the number of new acquisitions falls below plan, this directly leads to a slowdown in growth. In the fiscal year under review, the LTV/CAC ratio was 12.4x and the CAC payback period was 9.7 months, making the maintenance of marketing investment efficiency an important issue. The marketing department seeks to mitigate this risk by continuously researching advertising market conditions and new methods.

The long-term decline in the birthrate is reducing the school-age population, and competition to secure students is expected to intensify in the education industry. If the declining birthrate progresses rapidly and the overall education market shrinks significantly, this could affect the Company's business and results of operations. The Company seeks to mitigate this impact by not limiting its customer base to cram schools, but instead targeting a broad range of customers with the structure of "instructors and students."

In the EdTech field, competition is intensifying not only with existing competitors but also with new entrants, and this could lead to customer attrition and increased costs, potentially worsening business results. The Company seeks to maintain its competitiveness by maintaining an agile development structure and continuing to respond swiftly to customer needs. It also continuously works to enhance Comiru's functionality, expand its service lineup, and strengthen its management support system.

To reduce development costs, the Company outsources programming design and coding to individuals residing in China and Taiwan. If contracts are terminated or revised under unfavorable terms due to unforeseen circumstances such as changes in laws and regulations, deterioration in diplomatic relations, natural disasters, or infectious disease outbreaks, this could result in a decline in service quality or delays in development. The Company seeks to reduce this risk by strengthening the hiring of domestic development personnel, but geopolitical risk remains inherently present on an ongoing basis.

Shingo Kurihara, the founder and Representative Director, plays an extremely important role in determining management policy and business strategy, and there is a risk that if he becomes unable to continue performing his duties, this could affect the Company's business and results of operations. In addition, his personal guarantee has been attached to bank borrowings, extending this dependence risk into financial matters as well. The Company is working to reduce this dependence through enhanced information sharing at board meetings and the strengthening of its management organization, but the state of dependence continues at present.

As of the end of the fiscal year under review, the Company had tax loss carryforwards. If estimates of future taxable income decrease, it may become necessary to write down deferred tax assets (recording a valuation allowance), which could affect results of operations and financial position. In addition, if tax law amendments impose restrictions on the deduction of loss carryforwards, corporate income taxes may be recorded at a rate close to the statutory effective tax rate, potentially reducing net income and cash flow for the period.