Direction of medium-term management plan.

4. Main measures for achieving medium-term management plan.

(1) Expanding existing Web3 businesses.

Increasing the asset value of KaiKacoin (CICC).

The KaiKacoin issued by CAICA DIGITAL <2315> is expected to be used as a game Fi currency for gaming, among other applications, to increase its asset value.

Expanding the services of "Zaif INO".

For NFT Launchpad "Zaif INO", we are conducting comprehensive activities from the NFT-ization of works created by creators to marketing, and in November 2023, we will implement KaiKacoin payment at "Zaif INO" and in December, we will achieve the first sale of NFTs that can be paid for with KaiKacoin. In January 2024, credit card payments became possible, and in May 2024, we started providing an NFT distribution service (NFT card) using NFC tag function through collaboration with TOPPAN, improving the utility. ※ If you purchase "Zaif INO Digital Premium Tickets" with KaiKacoin, you can get a discount from the normal price.

By purchasing a 'Zaif INO Digital Premium Ticket' with Kaikacoin, you can receive a discount on the regular price.

Development of Web3 style data storage service.

The company is developing a next-generation storage service that utilizes blockchain technology. Conventional storage services have potential security risks associated with data center security, and they plan to improve security through the use of distributed ledger technology. In addition, they plan to contribute to the expansion of use cases by using KaiKacoin for payments ※. Our strategy is to expand our business domain and improve usability to expand our share.

As an example of BtoB payment using KaiKacoin, they have started an electronic bookkeeping service that uses KaiKacoin and distributed storage technology for unalterable and perpetual operation.

(2) Expansion of SI business through DX consulting.

Based on the operational and operational record of Zaif, a conventional cryptocurrency exchange, and NFT Launchpad "Zaif INO", they will provide Web3 business development expertise to companies that own CtoC platforms and IP ※1. As for the main "IT service business", they aim to fundamentally reform their revenue structure by acquiring high-priced upstream development projects by establishing a new system. As part of this effort, they organized a new scrum team using agile development in addition to the classical waterfall development system. ※1 Started providing "CAICA Web3 For Biz" as consulting for commercialization of Web3.

We have begun offering 'CAICA Web3 For Biz' as consulting for business development in Web3.

※2 Agile development has the greatest feature in repeating the development process from "plan -> design -> implementation -> testing" in small cycles of functional units. It is strong against specification changes and can shorten the period until service introduction.

(3) Business expansion through M&A.

They continue to position M&A as an important strategy and consider the following target companies.

-Blockchain-related companies

They target companies that provide services that use blockchain technology, injecting their expertise to expand their business further.

-Companies with high affinity to Web3.

We aim for higher profitability by targeting game development companies and companies with original IPs and creating synergy with our company.

- System development companies

To respond to the demand surplus created by the strong system investment motivation, we will expand the business through the acquisition of resources (human capital, etc.) obtained through M&A and the development of new customers.

5. Securing human resources The challenge in promoting the above measures is to secure personnel specialized in certain fields and high-spec personnel. We recognize that it is important to focus on acquiring talent, and plan to use recruitment activities through headhunting companies and referral companies specializing in specific areas, as well as by enhancing our current employee referral system. The plan is to increase the number of personnel (including partners) in the 'IT Service Business' to 725 people (an increase of 57 people from the end of the 2023 fiscal year) by the end of the final year of the medium-term management plan in October 2026, with an assumed 8.5% increase in revenue per person.

6. Points of attention for our company At our company, we not only concentrate on the IT service business, which generates stable cash flow in a favorable order environment, but also evaluate the direction of differentiation (high growth and high added value) with other system development companies through the utilization of blockchain technology and collaboration with the Web3 business as a suitable strategy that makes the most of our company's strengths. On the other hand, in terms of the medium-term management plan (numerical targets), we feel that it is somewhat lacking for our company, which leads the growth area, but we perceive it as a baseline that is in line with our existing targets. We have determined that the point is how we expand the business (including 'Zaif INO' and Web3 consulting) and acquire high value-added projects, as well as expand the business through M&A, aiming for upside potential. In particular, we are paying attention to how the expansion of the Web3 business will affect our revenue structure and growth model. In the world of Web3, coins (tokens) that are highly utilitarian are used and transaction fee income is the source of revenue; thus, the transformation to a revenue structure that is less influenced by changes in the market and more stable (stabilization of revenue) will be further advanced. In addition, it is important to find and support powerful titles and startups to contribute to the growth of the company, as the growth of alliance partners is linked to the growth of our company. By surrounding many seeds of growth on the platform ('Zaif INO,' etc.) and producing successful cases from there, we can receive high evaluations as a growth model that fully enjoys the benefits of the upside. Also, we are interested in entering the South Korean market as a new initiative. If we can accumulate successful examples of cryptocurrency and NFTs in the active South Korean market, it may accelerate our domestic expansion. In any case, it is clear that securing human resources, including strengthening human resources through M&A, is the key to incorporating both the growth of DX consulting, which is expanding, and the potential of medium- to long-term Web3 business.

8. Points of attention for our company At our company, we not only concentrate on the IT service business, which generates stable cash flow in a favorable order environment, but also evaluate the direction of differentiation (high growth and high added value) with other system development companies through the utilization of blockchain technology and collaboration with the Web3 business as a suitable strategy that makes the most of our company's strengths. On the other hand, in terms of the medium-term management plan (numerical targets), we feel that it is somewhat lacking for our company, which leads the growth area, but we perceive it as a baseline that is in line with our existing targets. We have determined that the point is how we expand the business (including 'Zaif INO' and Web3 consulting) and acquire high value-added projects, as well as expand the business through M&A, aiming for upside potential. In particular, we are paying attention to how the expansion of the Web3 business will affect our revenue structure and growth model. In the world of Web3, coins (tokens) that are highly utilitarian are used and transaction fee income is the source of revenue; thus, the transformation to a revenue structure that is less influenced by changes in the market and more stable (stabilization of revenue) will be further advanced. In addition, it is important to find and support powerful titles and startups to contribute to the growth of the company, as the growth of alliance partners is linked to the growth of our company. By surrounding many seeds of growth on the platform ('Zaif INO,' etc.) and producing successful cases from there, we can receive high evaluations as a growth model that fully enjoys the benefits of the upside. Also, we are interested in entering the South Korean market as a new initiative. If we can accumulate successful examples of cryptocurrency and NFTs in the active South Korean market, it may accelerate our domestic expansion. In any case, it is clear that securing human resources, including strengthening human resources through M&A, is the key to incorporating both the growth of DX consulting, which is expanding, and the potential of medium- to long-term Web3 business.

Please prioritize concentration on the 'IT Service Business,' which generates stable cash flow in a favorable order environment, under the current favorable conditions of the strong order intake environment, while utilizing blockchain technology in collaboration with the Web3 business for differentiation (high growth and high added value) from other system development companies. Our company's utilization of such a strategy that takes advantage of our company's strengths is evaluated as reasonable. On the other hand, in terms of the medium-term management plan (numerical targets), we feel that it is somewhat lacking for our company, which leads the growth area, but we perceive it as a baseline that is in line with our existing targets. We have determined that the point is how we expand the business (including 'Zaif INO' and Web3 consulting) and acquire high value-added projects, as well as expand the business through M&A, aiming for upside potential. In particular, we are paying attention to how the expansion of the Web3 business will affect our revenue structure and growth model. In the world of Web3, coins (tokens) that are highly utilitarian are used and transaction fee income is the source of revenue; thus, the transformation to a revenue structure that is less influenced by changes in the market and more stable (stabilization of revenue) will be further advanced. In addition, it is important to find and support powerful titles and startups to contribute to the growth of the company, as the growth of alliance partners is linked to the growth of our company. By surrounding many seeds of growth on the platform ('Zaif INO,' etc.) and producing successful cases from there, we can receive high evaluations as a growth model that fully enjoys the benefits of the upside. Also, we are interested in entering the South Korean market as a new initiative. If we can accumulate successful examples of cryptocurrency and NFTs in the active South Korean market, it may accelerate our domestic expansion. In any case, it is clear that securing human resources, including strengthening human resources through M&A, is the key to incorporating both the growth of DX consulting, which is expanding, and the potential of medium- to long-term Web3 business.

(Written by Fisco Guest Analyst Ikuo Shibata)