PRIME STRATEGY CO.,LTD.

Although the Company currently perceives no strong competitors for KUSANAGI, multiple competitors with superior scale, capital strength, and technological capabilities exist in the cloud integration domain, and continued new entrants are also anticipated. If intensifying price competition or the emergence of similar services makes differentiation difficult, this could affect the Group's operating results and financial condition. In response, the Group seeks to maintain a competitive advantage through strengthening its technological capabilities, improving service quality, and acquiring and retaining intellectual property rights.

Because the Group handles everything from cloud server maintenance to application development on an integrated basis, securing highly skilled technical personnel proficient across all layers is an important business challenge. If personnel cannot be secured as planned, this could affect business development and performance. The Group is working to prevent this from becoming a serious risk by promoting operational efficiency, including automation using AI and standardization of environments through unification of the KUSANAGI platform.

The Group's business premises KUSANAGI's operation on the services of cloud providers such as AWS and Microsoft Azure, and if a system failure occurs at a cloud provider itself due to a natural disaster or accident, this could affect the Group's operating results and financial condition. The Group addresses this by continuously monitoring service operation status and maintaining a system for prompt recovery upon detection of a failure or its early signs.

The Group's business is centered on WordPress, and if WordPress's share of the CMS market declines, demand for the Group's products and services may decline, which could affect operating results and financial condition. Concentrated dependence on a specific platform constitutes a structural risk to business continuity. In response, the Group has adopted a policy of expanding support for CMS platforms other than WordPress and is promoting the development of products and services that are not dependent on the share of any particular CMS.

The Group's content is provided to users through cloud providers' marketplaces, and if it becomes difficult to conclude or continue contracts due to changes in a cloud provider's business policy, fluctuations in commission rates, or failure to meet requirements, the Group may be unable to provide its content, which could affect its business performance and business development. The Group's policy is to regularly gather information from personnel at each provider and to respond appropriately to the trends of each cloud provider; as of the date of submission of this document, no situation affecting contract continuation, etc. has arisen.

The cloud computing market is characterized by rapid technological innovation, and if the Group is unable to respond to such innovation, or if technological innovation that is difficult to respond to arises, the Group could lose its competitive advantage, which could affect its operating results and financial condition. The Group keeps abreast of technology trends through participation in various events and seminars and regular in-house study sessions, and continuously engages in research and development aimed at providing new services.

In the course of its business, the Group handles the information assets of numerous client companies, and if leakage, tampering, unauthorized use, or the like occurs, this could affect management through loss of social credibility and the incurrence of liability for damages. In addition to establishing information security-related regulations, the Group implements systematic measures such as preventing unauthorized external access and the intrusion of computer viruses, and strives to prevent information security incidents before they occur.

As of November 30, 2025, the Group is a small organization with only 28 employees, and if an imbalance arises between the internal control system and future business expansion, appropriate business operations may become difficult, which could affect performance. Currently, the Group has established an internal control and business execution system appropriate to its scale, but delays in establishing such systems during the growth phase constitute a potential risk.

On December 26, 2025, the tender offer by GMO Internet Group, Inc. was completed, and that company became the Company's parent company. Although the Company recognizes that its operational autonomy and independence are maintained, if GMO Internet Group, Inc.'s basic policy toward the Group changes, this could affect the Group's business and performance. In addition, with the parent company's voting rights ratio exceeding 50%, the risk of reduced share liquidity also coexists.

The Group prepays for reserved instances from cloud providers with the aim of reducing computing resource costs for customers; however, if usage of customer services falls short of forecasts and excess holdings remain unused at expiration, the unused prepaid reservation amounts would become a loss, which could have a negative impact on operating results, financial condition, and cash flow. The Group's policy is to address this by closely monitoring the gap between the collection cycle for sales fees from customers and the burden of prepaid expenses, and by strengthening its grasp of actual usage conditions.