Techfirm Holdings Inc.

With the increase in large-scale projects, the risk of unprofitable projects and damage claims due to delivery delays is rising. Although profitability is examined in advance for contract development projects, complete prevention of unprofitable projects cannot be guaranteed. As countermeasures, the Group is working to strengthen communication with clients, conduct reviews according to project scale, and improve project management skills.

Because the Group handles confidential customer information and personal data through its business activities, if an information leak occurs, it could have a material impact on business results and financial condition due to loss of credibility and claims for damages from customers. The Group has taken measures such as establishing an Information Security Committee, obtaining public certifications, and enrolling in professional liability insurance for specialized businesses.

Securing and developing excellent human capital capable of handling advanced technologies and large-scale projects is essential for medium- to long-term growth, but if this does not proceed as planned, or if there is loss of personnel or a decline in productivity, it could have a material impact on business development and results. The Group aims to secure and retain talent through branding enhancement, career-specific education systems, expanded qualification subsidies and training programs, and improvements to the workplace environment.

The Group is subject to various laws and regulations, and while it currently recognizes no regulations that would significantly impede its business, unexpected new legislation or changes in the interpretation of existing laws could affect business development, results of operations, and financial condition. The Group has established compliance management, legal review of contracts, training for all employees, and a collaborative framework with retained legal counsel.

In addition to domestic and overseas economic conditions, IT investment trends, and changes in laws, tax systems, and accounting standards, diversifying customer needs, technological evolution, and intensified price competition from new entrants may affect business results. Delayed response to rapid changes in customer needs or technological innovation would affect business development, results of operations, and financial condition. The Group aims to strengthen its business foundation and profitability through securing excellent human capital and R&D of the latest technologies.

If human or physical damage occurs due to natural disasters such as earthquakes or fires, terrorism, or pandemics of infectious diseases, it could have a material impact on business results and financial condition. The Group is working to reduce risk through the formulation and continuous review and improvement of its Business Continuity Plan (BCP), as well as the establishment of a safety confirmation system and the systematic implementation of disaster preparedness drills.

In expanding overseas business into regions where market growth is expected, fluctuations in political and economic conditions, unexpected changes in legal regulations, import/export and foreign capital restrictions, and social disruption due to war, terrorism, or conflict may affect business results and financial condition. The Group utilizes the information networks of local staff and closely monitors economic conditions and regulatory trends to establish a system for timely and appropriate response.

The Group continuously implements strategic investments for medium- to long-term growth, such as research and demonstration testing of new technologies and the discovery and development of new products and services. However, changes in the market environment or failure to achieve expected investment results could affect business strategy, results of operations, and financial condition. The Group aims to mitigate risk through phased investment based on IT technology trends and by considering partnerships with leading companies for high-risk, large-scale projects.

There is no guarantee that server or network failures caused by natural disasters, computer viruses, or other factors can be completely eliminated, and a prolonged system outage could affect business results and financial condition due to loss of credibility and claims for damages from customers. The Group has built a stable system operation framework through the use of highly reliable external data centers, regular backups and operational monitoring, and strengthened quality control systems.

While the Group is focused on expanding its Cross-Border Distribution Platform Business, the ICT Solutions business still accounts for a high proportion of net sales, and a significant decline in that business could affect results of operations, financial condition, and cash flow. The Group aims to diversify its business portfolio by expanding the Cross-Border Distribution Platform Business and actively promoting the development and commercialization of proprietary solutions leveraging its ICT knowledge and expertise.