Kyoritsu Computer & Communication Co.,Ltd.

In the Solutions Business, NEC Corporation (purchase share 44.4%, purchase amount ¥246,783 thousand) and OBIC Business Consultants Co., Ltd. (3.4%, ¥18,907 thousand) are the Company's principal suppliers. If contracts with either company were terminated or alternative procurement became difficult, this would cause significant disruption to business continuity. The Company has entered into sales authorization and sales support agreements with these companies and maintains favorable relationships, but securing alternative procurement means remains a challenge.

Nearly 100% of the Mobile Business's purchasing and sales are conducted through NTT Docomo. If contracts with NTT Docomo or Tiegaia were terminated, or if unfavorable changes to transaction terms occurred, there is a risk that the business foundation itself would be fundamentally undermined. In addition, changes to NTT Docomo's rate plans or strategy, and any relative decline in the appeal of the Docomo brand, would directly affect business performance. Furthermore, a provision exists allowing Tiegaia to terminate the agency agreement if the Company experiences credit concerns or a material change in its management structure.

Fixed assets are recorded after careful assessment of their asset value at the time of acquisition; however, if the future cash flows anticipated at acquisition are not sufficiently realized, or if doubts arise regarding recoverability, an impairment loss will be recognized. If additional substantial impairment losses were recorded, this could adversely affect the Company's financial position and operating results.

The Company promotes the securing and development of human resources through regular recruitment of new graduates and mid-career hires, as well as employee training and encouragement of qualification acquisition. However, if this does not proceed as planned, or if a large number of talented personnel leave the Company, its ability to provide optimal services and solutions to customers could decline, potentially affecting management. This is set against a background of intensifying competition for talent in the IT and telecommunications industries.

The Company is subject to numerous laws and regulations, including the Telecommunications Business Act, the Construction Business Act, the Act on the Protection of Personal Information, the Act on Prevention of Unauthorized Use of Mobile Phones, and the Act against Unjustifiable Premiums and Misleading Representations. If a violation of laws or regulations occurs, or if regulations are significantly added to or changed, business operations could be disrupted. While the Company strives to strengthen its internal control systems, including employee education and awareness activities, ongoing responses to changes in the regulatory environment are required.

The Company holds a large amount of personal and corporate information in the course of its business operations. Should an information leak occur, there is a risk of civil and criminal liability, loss of social credibility, and termination of contracts with key partner companies. As countermeasures, the Company has obtained ISO27001 certification (at its head office and each Solutions Business office), formulated a basic information security policy, obtained confidentiality agreements, and implemented education and business audits in accordance with NTT Docomo standards; however, complete prevention cannot be guaranteed.

The Company's head office, business offices, and stores are concentrated in the greater Tokyo metropolitan area. If a large-scale earthquake, fire, power outage, or similar event were to occur, business continuity could become difficult, resulting in loss of customer data and paralysis of infrastructure. In addition, since approximately 60% of the Company's customers are mid-sized and small to medium-sized enterprises, if natural disasters or a pandemic made it difficult for these customer companies to continue their businesses, this would directly affect the Company's sales as well.