GiXo Ltd.

In the fiscal year under review, West Japan Railway Company accounted for 43.8% of total sales performance (¥1,049,843 thousand), TRAILBLAZER Inc. accounted for 22.0% (¥527,642 thousand), and Asahi Group Japan, Ltd. accounted for 11.9% (¥284,596 thousand), with the top three clients together reaching 77.7% of total sales performance. If a client company's business performance deteriorates, key counterpart personnel are transferred or leave, or internal evaluations change, this could have a material impact on the Group's operating results and business performance. Although the Group seeks to diversify its dependence by expanding into multiple departments and areas within a single client, the structural risk remains high.

The Group's business promotion is fundamentally based on acquiring, securing, retaining, and developing highly skilled personnel who possess both strategic consulting expertise and data science expertise; however, the recruitment market for such scarce talent is highly competitive. If internal development and external recruitment do not proceed as planned and human resources become insufficient, this could affect operating results and business performance through a decline in service delivery capability. This risk is assessed as having a "high" likelihood of occurrence, and the Group considers it one of its most critical risks.

If a material compliance violation or legal violation occurs, this could affect corporate value, business performance, and operations through a decline in social credibility. As countermeasures, the General Affairs and Human Resources Department takes the lead in ensuring thorough awareness through monthly all-company meetings and the formulation of internal regulations, while the Group Risk Management Committee, chaired by the Head of the Management Foundation Strengthening Division, has been established with a reporting structure to the Board of Directors. However, it is difficult to completely prevent intentional or unforeseen material violations, and this risk is assessed as having a "medium" likelihood of occurrence and a "high" degree of impact.

The Group is promoting the expansion of its cross-industry product business and the use of M&A aimed at future discontinuous growth, and profit margins may decline due to increased additional investment in personnel, systems, and software. If new businesses or acquired companies/businesses do not launch, expand, or develop as planned, this could affect the Group's operating results and business performance. This risk is assessed as having a "medium" likelihood of occurrence and a "high" degree of impact, and balancing aggressive growth investment with profitability remains a challenge.

While significant expansion of the related market is anticipated against the backdrop of a declining working population, increasing IoT adoption, and intensifying corporate competition, there is a risk that demand may fluctuate due to deterioration in client companies' business performance or changes in investment toward other management reform initiatives or technologies. If deterioration in domestic or overseas economic conditions affects the business environment, this could affect the Group's operating results and financial position. This risk is assessed as having a "medium" likelihood of occurrence and a "high" degree of impact, and it embodies a structural vulnerability whereby the business is dependent on client companies' investment decisions.

If the Group unintentionally infringes on a third party's intellectual property rights, this could affect its business, corporate value, and business performance through claims for damages or payment of intellectual property royalty fees. In addition, regarding infringement of the Group's own intellectual property rights by third parties, although the Group continuously investigates and monitors similar services and businesses, complete prevention is difficult, and there is a risk that protection of intellectual property rights may be compromised. The Group addresses this to the extent possible through close communication with patent firms, but this risk is assessed as having a "medium" likelihood of occurrence and a "high" degree of impact.

For projects requiring advanced technical capabilities and experience and expertise in agile project execution, the Group relies on outsourcing to specialists in specific fields. Although the Group is promoting the diversification of outsourcing across multiple partners, if it is unable to secure the necessary outsourcing partners due to an increase in projects requiring highly specialized skills, this could affect the Group's operating results and business performance. This risk is assessed as having a "medium" likelihood of occurrence and a "high" degree of impact, and reliance on external resources could become a bottleneck for business continuity.

Given the nature of the business, which involves receiving and analyzing highly confidential information such as management secrets, business secrets, and personnel confidential information from client companies, if information leakage or damage occurs due to human error or unauthorized external access, this could have a material impact on business performance through the burden of liability for damages or loss of client trust. The Group has implemented measures such as redundant configurations across multiple cloud services, storage in locked environments, ID and password management, collection of written pledges, and compliance training; however, risks such as simultaneous outages of all cloud services or unforeseen cyberattacks cannot be completely eliminated.

At present, there are no laws or regulations that directly regulate the Group's business itself, and the Group has obtained Privacy Mark certification (JIS Q15001) in response to the Act on the Protection of Personal Information. However, future changes in laws and regulations, changes in regulatory standards or applicable criteria, or the formulation of voluntary industry rules could affect its business, corporate value, and business performance. This risk is assessed as having a "low" likelihood of occurrence and a "high" degree of impact, and the Group must continue to closely monitor trends toward stricter regulation in the data analytics and AI fields.

In the analytics and AI industry, technological changes, shifts in client needs, and the rollout of new services and algorithms by competitors are occurring on a daily basis. The Group's business model, centered on enduring management issue-setting and problem-solving capabilities along with general-purpose analytics capabilities, is structured to be less directly affected by technological innovation; however, if disruptive innovation beyond expectations or significant commoditization of alternative or advanced technologies occurs, this could affect competitiveness and business performance. This risk is assessed as having a "low" likelihood of occurrence and a "medium" degree of impact, and the risk level is judged to be relatively low.