KIYO Learning Co.,Ltd.

In the B2C and B2B e-learning markets, competition for differentiation through expansion of existing operators' online courses and AI utilization is intensifying. If large-capital new entrants imitate in the short term the five organizational capabilities the Company emphasizes—learning system development capability, content development capability, web customer acquisition capability, low-cost operations, and AI utilization capability—this could result in a decline in market competitiveness and increased response costs. The Company addresses this by continuing to invest in and improve these five organizational capabilities.

The Company's services are provided via the internet, and if a system failure or network disconnection occurs due to natural disasters or cyberattacks such as ransomware, this could have a significant impact, including damage to social credibility. The Company prepares for this through server infrastructure enhancement, security reinforcement, and monitoring system development, but complete protection against unpredictable troubles is difficult.

The Company holds important information such as personal information of course participants and video content of certification courses, and if information is leaked due to unauthorized access or other causes, this could have a material impact on operating results and financial position due to loss of trust among course participants and business partners. The Company has established an information security framework led by the Representative Director and President and has obtained ISMS certification (ISO/IEC27001) and the Privacy Mark, but the risk cannot be completely eliminated.

If a large-scale natural disaster, war, terrorism, financial instability, or similar event occurs, this could affect the business through a decline in consumer sentiment or a reduction in corporate investment in human resource development. In particular, if the examinations for the certification courses handled by the Company are postponed or cancelled for an extended period, or if corporate investment in human resource development is significantly restricted, the impact on operating results and financial position would be substantial. Given the nature of its web-based services, business continuity, including remote work arrangements, is possible, and the Company addresses this through strengthening new customer acquisition, enhancing repeat sales to existing customers, and diversifying its business portfolio.

Because the exam dates for the Company's core certification courses are concentrated in the second half of the fiscal year, accrual-basis revenue is structurally weighted toward the second half, and in the first half, accrual-basis revenue tends to fall short relative to advertising expenditure. In the actual results for the fiscal year ended December 2025, ordinary loss for the first half was ¥(164,706) thousand while ordinary income for the second half was ¥468,536 thousand, showing a marked seasonal disparity. If sufficient cash-basis revenue cannot be secured in the first half, this could have a material impact on business performance.

In the EdTech and internet-related markets, the pace of technological innovation, including AI, is extremely rapid, and the market environment is changing drastically. If technological innovation accelerates beyond the Company's expectations, making timely service updates and securing technical talent difficult, or if system investment or personnel costs increase significantly, this could affect operating results and financial position. The Company addresses this through monitoring the latest technology trends, promoting AI utilization, intellectual property strategy, and securing and developing technical talent.

In the B2C certification acquisition business, search-linked advertising is a primary means of customer acquisition, but strengthened advertising strategies by competitors and technological advances such as AI search could reduce customer acquisition capability and numbers, or worsen the cost-effectiveness of advertising expenditure. The Company is diversifying its customer acquisition methods, including SEO measures, video advertising, and SNS utilization, but dependence on specific channels remains.

Securing and developing excellent talent is essential for continued business expansion, but if hiring does not proceed as planned, or if talent attrition occurs due to changes in the labor market or business environment, this could impede business operations and expansion. In particular, securing IT and AI talent needed to respond to technological innovation could become a challenge.

Mr. Takayoshi Ayabe, Representative Director and President, is the founder and a major shareholder of the Company, and plays an important role in determining management policy and business strategy. If, for any reason, he becomes unable to continue his duties, this could affect the Company's business performance. The Company is working to reduce this dependence by strengthening information sharing among directors on the Board and reinforcing the management organization, but dependence currently remains.

As part of its growth strategy, the Company may undertake investments and financing, including M&A, and while these are carried out after detailed prior analysis and review, unexpected problems, failure to achieve plans, cost overruns, or similar issues could result in not achieving the expected investment effect. Failure of such investments or financing could lead to deterioration of the financial structure, affecting operating results and financial position.