ASUA Inc.

The core consulting business depends on the logistics industry, which has a market size of approximately ¥24 trillion. However, 99% of companies in this industry are small and medium-sized operators with 100 or fewer trucks, and there is a possibility that management damage could intensify due to the "2024 Problem" (truck driver overtime regulations) or economic downturn. Given the fragility of the customer base, if new sales activities stagnate or existing customers cancel services, it would directly impact the Company's business performance.

Sales from the Consulting business account for approximately 55.6% of total company sales (FY2025 (ending June 2025)), and the high degree of dependence on this specific business continues. Although the Company is promoting the development of the Telecommunications Network Solutions business and cross-selling strategies, the structure in which sales trends in the Consulting business significantly affect overall business performance persists.

Sales to the Tokyo Trucking Association (a general incorporated association) account for approximately 12.7% of total sales (FY2025 (ending June 2025)), creating a risk of being directly affected by changes to the association's subsidy programs or changes in Tokyo's fiscal conditions and policies. Although the Company is focusing on expanding sales of new products and developing other businesses, dependence remains high, and a decline in sales to the association would have a significant impact on business performance.

In the Consulting business, specialized staff provide outsourced safety activity services on-site, but depending on operational conditions, a certain level of quality may not be guaranteed. In addition, a large volume of administrative processing occurs daily, and if errors occur in administrative management or clerical processing, this would affect business performance and business development.

Multiple competitors exist for each of the Company's solutions, and while the Company seeks to differentiate itself through product functionality, quality, and pricing, if a competitor introduces a new product with distinctly superior functionality or if extreme low-price competition intensifies, the Company's competitive advantage could be undermined. Changes in the competitive environment could affect performance in terms of both acquiring new customers and retaining existing ones.

In the Telecommunications Network Solutions business, the Company has obtained construction business licenses (two licenses from the Governor of Aichi Prefecture, valid until September 2027 and December 2029, respectively) and a secondhand dealer license, and these licenses and permits are a prerequisite for continuing the business. If new legal regulations are introduced, existing regulations are abolished, amended, or reinterpreted, or a serious legal violation occurs, the Company could have its licenses revoked or face a business suspension order, which could impede business continuity.

The Company has obtained Privacy Mark certification and manages confidential information entrusted by customers, but if information leakage or misuse occurs due to employees or outsourcing partners, there is a risk of loss of the Company's social credibility as a business. Loss of credibility could lead to customer attrition and stagnation in new orders, potentially having a material impact on business performance and business development.

Contracts with the Tokyo Trucking Association and others tend to concentrate on deliveries at the end of March (fiscal year-end), resulting in a tendency for profits to be concentrated in the third quarter. If contract execution is delayed or customer-related delays occur in the inspection and acceptance process, sales may not be recorded as planned; in particular, if inspection and acceptance scheduled for June (the final month of the fiscal year) is pushed back to the following period, it would directly affect performance for that period.

New technologies, including generative AI such as ChatGPT, are being developed one after another. The Company is working to respond through training and securing excellent personnel, but if significant environmental changes occur due to technological innovation exceeding expectations, the Company's response may not keep pace, potentially reducing the competitiveness of existing services. Loss of technological superiority would directly affect customer acquisition and retention, potentially impacting business performance and business development.

Securing and developing excellent personnel for business expansion is an important management issue, and the Company is working to enhance recruitment activities and evaluation systems. However, if the Company is unable to secure necessary personnel at the appropriate time or if capable in-house personnel leave, this would impede business operations. In addition, if the surge in labor costs becomes prolonged, the resulting cost increase could put pressure on business performance.