Growth xPartners Incorporated.

If unauthorized access or computer viruses cause the leakage, falsification, or unauthorized use of confidential information related to client companies' strategies and business policies, or customer and transaction information handled by delivered systems, this could have a significant impact on operating results and financial condition through a decline in credibility and liability for damages. As countermeasures, the Company implements the conclusion of confidentiality agreements, the acquisition and maintenance of ISMS certification, systematic access prevention measures, and the establishment and operation of a system for collecting and sharing external threat information internally.

In system development within the DX Promotion Support business, if a project cannot be completed as planned in terms of delivery deadlines and man-hour estimates, or if defects occur after system implementation, this may lead to deterioration in profitability due to additional costs, claims for damages from customers, a decline in credibility, and other issues that could affect business performance. As countermeasures, the Company endeavors to prevent troubles and deterioration in profitability through risk identification prior to contracting, appropriate progress management, and sufficient communication with client companies and outsourcing partners.

In a phase of rapid business expansion, the development of internal management systems may fail to keep pace, and corporate governance may not function effectively, potentially resulting in deficiencies in internal controls related to financial reporting and adversely affecting business performance and financial condition. As countermeasures, the Company positions the development and operation of internal controls related to the reliability of financial reporting as an important management issue, regularly confirms the necessity of personnel recruitment in line with the expansion of business scale, and continuously works to inspect and improve its management systems.

Representative Director and President Shinichi Watanabe plays a central role in formulating and promoting management strategy and in negotiations with major business partners, and if he becomes unable to perform his duties for any reason, this may have a certain impact on the Company's business and performance. As countermeasures, the Company is promoting the delegation of authority to the management team under the holding company structure, while also working to develop and strengthen successor personnel.

In the fiscal year under review, Nipro Corporation and Nipro Digital Technologies Corporation accounted for high proportions of consolidated net sales, at 11.0% and 19.9%, respectively, and if these client companies change their management policies or curtail IT investment and reduce orders due to deteriorating business performance, this may have a certain impact on business performance. As countermeasures, the Company is promoting the establishment of strategic partnerships, including the capital and business alliance concluded with Toyota Tsusho Corporation (in March 2021), and is expanding transactions into diverse industries such as telecommunications, construction, and information services.

If the Company is unable to secure personnel with advanced specialized knowledge and skills as planned, or if excellent personnel leave the Company, this may lead to a decline in competitiveness and constraints on business development. In addition, excessive reliance on outsourcing partners and external partners may lead to difficulties in quality control and deterioration in profitability, as well as the risk of a decline in mid- to long-term competitiveness due to obstacles in the accumulation of know-how among employees. As countermeasures, the Company continuously implements the strengthening of mid-career and new graduate recruitment, the enhancement of educational systems, the review of personnel evaluation systems, and the institutionalization of diverse working styles.

In the information services industry, technological innovation and changes in customer needs occur very rapidly, and fierce technological competition involving new languages and new technologies is taking place; a delayed response could lead to a decline in the competitiveness of services and affect business performance. As countermeasures, the Company continuously analyzes the latest technology and market trends, updates the content of education and training, provides an environment for voluntary research into the latest technologies through in-house study sessions, and actively introduces new technologies in actual projects.

At GxP Technologies India Pvt. Ltd., a subsidiary established in Kerala, India in April 2025, if local business expansion and personnel recruitment do not proceed as planned, or if business activities are hindered by changes in laws and regulations or country risk, this may affect competitiveness and the realization of the mid- to long-term growth strategy. As countermeasures, the Company ensures governance through the dispatch of officers from the Company, has established a system for grasping progress through regular meetings with each headquarters department, and applies a headquarters approval process for important management decisions.

In transactions denominated in Indian rupees, such as transactions with the Indian subsidiary and personnel and other expenses at the local subsidiary, fluctuations in exchange rates may cause revenues and expenses translated into yen to fluctuate, affecting business performance and financial condition; in particular, when the yen depreciates, there is a risk of increased overseas costs and translation losses on the consolidated financial statements. As countermeasures, the Company implements cash management through consideration of transactions on a yen basis, the use of hedging methods such as forward exchange contracts, and periodic review of fund management and remittance policies at overseas locations.

The Company positions the accumulation of DX technology assets, such as in-house developed software assets and educational content, as an important element of its competitive strategy; if such accumulation does not proceed as planned, this may lead to a decline in competitiveness and added value, affecting mid- to long-term business performance. As countermeasures, the Company strives for steady accumulation of DX technology assets through the formulation of research and development plans, securing of budgets, and regular progress monitoring.