COMTURE CORPORATION

In contract-based work, if the estimated man-hours or development period at the time of order receipt is exceeded, this may adversely affect business performance. Although management is thoroughly enforced through estimation meetings, weekly progress meetings, and monthly performance review meetings by the Quality Control Department, if an estimation discrepancy arises due to unforeseen circumstances, there are risks of recording a provision for construction losses, delivery delays, damage claims, or contract termination. Although risk is minimized by principally adopting quasi-delegation contracts based on performance ratio, some contract-based agreements still retain the risk of profitability deterioration.

In system construction, it is difficult to completely prevent the occurrence of system defects and similar issues, which may result in additional costs for defect remediation, impacts on customers' existing systems, and delays in the development schedule or acceptance timing. Bearing legal responsibility such as liability for non-performance of obligations or liability for non-conformity with contracts may also adversely affect business performance. Although quality assurance measures are implemented by the Quality Control Department, the risk cannot be completely eliminated.

The Company provides solutions based on global de facto standard products such as Salesforce.com, Microsoft, SAS, and SAP, resulting in high dependence on these specific platforms. If for some reason the competitive advantage of these platforms declines, this may adversely affect business performance. Although the Company currently recognizes the long-term maintenance of market share, there is no guarantee of continuity.

While the Platform & Operation Services Business tends to receive continuous orders, if contract terms are changed or terminated due to changes in customer policy, temporary excess personnel may occur, and the burden of fixed costs may pressure business performance. In addition, if damage occurs to a customer due to an employee's operational error, there is a risk that the Group will bear the resulting damages. Due to the nature of the business, difficulty in adjusting personnel upon contract termination is a factor that heightens fixed cost risk.

The Group is subject to a wide range of laws and regulations, including the Patent Act, Copyright Act, Worker Dispatching Act, Personal Information Protection Act, and Labor Standards Act, and is required to respond to legal amendments and changes in interpretation in line with changes in social conditions. In particular, if the regulatory authorities change their interpretation regarding the distinction between contract-based agreements and worker dispatch agreements, changes to the operational structure would be required, which may adversely affect business performance. Currently, contract-based and quasi-delegation agreements account for the majority, and tightening of regulations under the Worker Dispatching Act could directly affect the business model.

Given the nature of the business, which handles personal information and confidential customer information, if an information leakage occurs, this may adversely affect business performance through loss of trust and damage claims. The Company obtained Privacy Mark certification in February 2004 and passed the periodic renewal review in February 2026, and has implemented measures such as mandatory submission of confidentiality pledges upon joining and annually, and thorough information management at the departmental and individual level. However, the risk of information leakage due to some factor cannot be completely eliminated.

Human resources are a key management resource, and the recruitment and development of excellent talent is a prerequisite for business continuity. In FY2026 (ending March 2026), the ratio of outsourcing expenses to total manufacturing costs was a high 48.8%, and if it becomes difficult to timely secure outsourced personnel meeting the required technical level, this may also adversely affect business performance. Competition for recruitment is intensifying amid a fluid labor market, and there is also a risk if a large number of employees resign.

The Group positions M&A and capital and business alliances as one of its key management strategies, and while due diligence and stock valuation and purchase price allocation by external experts are conducted, the initially anticipated synergies or business expansion effects may not be achieved. If the excess earning power of a target company is impaired due to significant changes in the management environment or business conditions, an impairment loss on goodwill may occur, which could adversely affect business performance and financial position. Although a deliberation and approval process is undergone at the Board of Directors, future uncertainty cannot be completely eliminated.

Influenced by the scale and progress schedule of customers' IT investment budgets, both net sales and ordinary income tend to be higher in the second half than in the first half (FY2026 (ending March 2026): net sales 48.9% in the first half and 51.1% in the second half; ordinary income 44.1% in the first half and 55.9% in the second half). In the first half, fixed costs increase due to non-operating time and training expenses for new graduate hires, while SG&A expenses are incurred roughly evenly, making profitability in the first half structurally lower. There is no guarantee that second-half net sales will exceed those of the first half, and if IT investment is curtailed due to fluctuations in customer performance, this could significantly affect annual results.

Although there is currently no fact of any significant legal dispute concerning intellectual property rights held by others, if the Group becomes a party to a legal dispute concerning intellectual property rights in the future, it may be subject to damage claims or injunctions. Regardless of the validity of the dispute counterpart's claims, resolving the dispute may require significant time and expense, posing a risk of adverse effects on business strategy and business performance. Although the Group conducts business with sufficient attention to intellectual property rights, the risk cannot be completely eliminated.