YE DIGITAL Corporation

Sales to Yaskawa Electric Corporation (an affiliated company in which the Company holds a 37.9% voting rights ratio) and its group companies accounted for 50.2% of sales in FY2025 (ending February 2025). If there is a significant change in the management policy or business development of the Yaskawa Electric group, it could have a major impact on the Group's business activities, business performance, and financial condition. In response, the Company strives to maintain and continue favorable partner relationships not only in existing areas but also in new areas.

Sales to Fujitsu Limited and its group companies accounted for 11.0% of sales in FY2025 (ending February 2025). If transactions are reduced due to changes in the Fujitsu group's order trends or other reasons, it could affect the Group's business performance. The scope and value of transactions have expanded from the basic software contract development work that existed at the time of the Company's founding, and managing the degree of dependence is a challenge. The Company strives to maintain and continue partner relationships in new areas.

In the execution of projects such as system construction and software development, unforeseen circumstances may cause individual projects to be interrupted, delayed, or suffer deteriorating profitability, and on a large scale, this could affect business performance and financial condition. In response, the Company is working to improve employees' project management skills, repeatedly confirm required specifications with customers, strictly adhere to schedules, and strengthen company-wide project management.

If quality problems such as defects (bugs) or service failures occur in the products and services provided, additional costs for rework or recall and compensation for damages may arise, which could affect business performance and financial condition. The Company has established a Quality Assurance Division and strives to thoroughly implement quality control based on internal standards at each stage of design, development, production, maintenance, and operation.

As future growth depends on the development and sale of innovative new products and services, if the Company is unable to sufficiently predict technological advances and changes in demand in the market and fails to develop attractive products and services, future growth and profitability may decline, affecting business performance and financial condition. In response, the Company continuously gathers and analyzes information to quickly capture market changes, and continuously develops new products and services.

If information assets entrusted to the Company for customer system construction are leaked due to unauthorized access such as computer viruses or cyberattacks, or due to natural disasters, it could result in claims for damages from customers and loss of credibility as an IT company, affecting business performance and financial condition. The Company takes preventive measures such as thorough security management of information equipment and networks, employee training on information management, and entering into confidentiality agreements with outside contractors.

While securing intellectual property rights such as patents and copyrights is important in system and software development, the possibility of problems related to intellectual property rights arising due to differences in legal systems among countries around the world cannot be completely ruled out, which could affect business performance and financial condition. In response, the Company implements necessary measures such as protecting and preserving its own technology and know-how, exercising caution to prevent infringement of third parties' intellectual property rights, and acquiring intellectual property rights and entering into contracts with business partners.

In the information services industry, labor mobility is increasing, particularly among younger employees, and if the Company is unable to secure excellent personnel as planned, it could affect business performance and financial condition. In response, the Company actively conducts new graduate and mid-career hiring, enhances its educational environment, has introduced a bonus system for employees who obtain qualifications, and strives to improve employee satisfaction through continuous improvement of the working environment and work-style reform initiatives.

If social disruption occurs due to large-scale natural disasters such as earthquakes, tsunamis, or floods, accidents such as fires, or the spread of infectious diseases, this could significantly hinder business activities such as the provision of products and services through changes in major clients' IT investment plans, affecting business performance and financial condition. In response, the Company strives to ensure business continuity through the formulation and ongoing review of disaster response manuals, implementation of response drills, dispersal of business locations to Kitakyushu, Shibuya, and other locations, and development of remote work environments.