Keyware Solutions Inc.

The Group has a high degree of sales dependence on specific customers such as NEC and its affiliated companies, NTT and its affiliated companies, and JR and its affiliated companies. In the current consolidated fiscal year, combined sales to these three groups totaled ¥11,090,568 thousand (48.8% of total sales). Changes in these customers' business conditions or ordering policies could directly impact the Group's business performance. As a countermeasure, the Group is working to acquire new customers by expanding its business domain through the expansion of core businesses and the creation of new businesses.

Many projects are based on the fiscal year (April to March of the following year), and there is a tendency for revenue to be concentrated in the fourth quarter due to concentrated delivery deadlines. This seasonal fluctuation may affect cash flow management and the accuracy of business performance forecasts during the fiscal year. As a countermeasure, the Group formulates profit plans that incorporate seasonal fluctuations into its single-year plan and focuses on expanding orders for projects with less seasonal variation.

In the Contract Software Development Service, due to the diversity of customer needs and the necessity of addressing the latest technologies, it may be difficult to finalize detailed service content at the contract stage, which could result in a discrepancy between initial estimates and actual man-hours. If profitability deteriorates, this could affect the Group's business performance. The Group addresses this through a monitoring system by an independent project management department at the time of contract conclusion, plan preparation, and process completion, as well as a mechanism designating important projects as "company-wide review target projects."

Outsourcing costs account for approximately 40% of cost of sales, and the stable securing of highly skilled business partners is a prerequisite for business execution. Competition for business partners is occurring across the IT industry, and if the Group is unable to continuously secure quality business partners, this could affect its business performance. The Group is working to strengthen relationships as business partners through a shift to contract-based ordering, consolidation of business partners, and the establishment of long-term stable transactions.

If malfunctions, bugs, delivery delays, or other defects occur in the systems provided by the Group, this could result in liability for damages to customers or loss of social credibility, thereby affecting business performance. In addition to process monitoring by an independent project management department, the Group has established a system in which a shipment approval meeting conducts a final check of bug status and quality prior to delivery.

The Group's services are heavily dependent on the capabilities and qualities of information technology engineers, and securing personnel with expertise in IT consulting and project management know-how in particular is important for the Group's future business strategy. If the Group is unable to secure the necessary engineers due to a tight labor market or other factors, this could affect its business performance. The Group strives to secure talent through active recruitment of new graduates and mid-career hires, as well as the introduction of an evaluation and compensation system based on ability and performance.

In the information services industry, the pace of technological innovation is rapid, making continuous updates to advanced know-how and systems essential. If the Group's technologies become obsolete due to technological innovation exceeding expectations, this could reduce competitiveness and affect business performance. The Group addresses this by conducting training for the acquisition of new technologies and continuously working to create new technologies and services.

Amendments to existing laws and regulations or the enactment of new laws could result in changes to service content or the incurrence of new costs, and any violation of laws and regulations could lead to a loss of social credibility. The Group has established a compliance system through internal audits of the entire Group conducted by an internal audit department independent of other departments, as well as regular compliance training.

In the process of building customers' information systems, the Group is in a position to obtain internal information on customers' operations, and if an unforeseen incident results in the external leakage of customer information or employees' personal information, this could lead to a loss of social credibility or claims for damages, affecting business performance. As a company certified under QMS, ISMS, and the Privacy Mark, the Group is working to promote quality-focused development and operations and to strengthen personal information management.

If the Group is affected by natural disasters such as earthquakes or typhoons, or by the spread of infectious diseases, all or part of its business operations could be significantly impacted or suspended, and business performance could also be affected if business partners are affected. The Group addresses this by clarifying its response policy through the establishment of disaster response regulations and by developing a telework environment to support business continuity in the event of an emergency.