NTT DATA INTRAMART CORPORATION

The Group's business is concentrated in "intra-mart", and if changes in customer needs occur, competitiveness in functionality or pricing versus competing products is lost, or product reliability declines, this could materially affect the Group's business results and financial condition. Furthermore, similar risks may arise if "intra-mart" becomes obsolete due to technological innovation. The Group strives to maintain competitiveness through continuous investment in product development and functional enhancement.

Web systems have low barriers to entry in the IT industry, and new products are continuously being introduced by competitors both domestically and internationally. While the Group seeks to differentiate itself through internal control functions specific to Japanese companies, such as workflow, and through price competitiveness, if competitors strengthen their products, the Group's market share may decline, which could affect its business results and financial condition.

The Group's development and sales activities are heavily dependent on relationships with distributor partners. If outsourcing costs rise sharply or it becomes difficult to secure quality outsourcing partners, the balance between revenue and outsourcing costs may be disrupted. In addition, if contracts are terminated due to changes in distributor partners' business policies, or if development of new business partners stalls, this could affect the Group's business results and financial condition. The Group strives to build long-term, stable business relationships.

Because the Group's products are sold en masse through distributor partners, if defects are discovered after sale, addressing them may require significant time and effort, and if a customer's business operations are halted as a result, the Group may become liable for damages. In system development as well, there are risks of increased development man-hours and liability for damages to customers. Currently, the Group's policy is to prioritize prompt disclosure of information and defect correction based on incident response manuals.

The Group holds technical information (related to commercial products and customer systems) and personal information (information on registered support users, seminar attendees, and sales visitors). If an information leak occurs, this could affect the Group's business results and financial condition through loss of trust, damage to corporate image, and damages claim lawsuits. The Group has established an information management system covering both software and hardware aspects, including access restrictions, password management, log management, and server management in locked server rooms.

The cloud services operated by the Group carry risks of service disruption due to dependence on alliance partners such as AWS, natural disasters, terrorism, communication infrastructure failures, and cyberattacks. In addition, failure to achieve the expected recurring revenue level due to non-continuation of usage contracts, or operating costs exceeding expectations, could also affect the Group's business results and financial condition.

"intra-mart" incorporates open source software such as Resin, Activiti, and software from the Apache Software Foundation and Eclipse Foundation. If these become unusable, if updates are discontinued making it impossible to keep pace with quality improvements or technological innovation, or if they are discontinued altogether, this could affect the Group's business results and financial condition. If it is difficult to secure alternative solutions, there is a risk of decline in product competitiveness.

The IT industry is a sellers' market for highly skilled engineers. If mass resignations occur or the labor market's liquidity declines such that the Group cannot secure personnel as planned, this may hinder smooth business operations and agile business expansion. In addition, costs related to securing, retaining, and developing personnel are expected to increase. The Group strives to secure necessary personnel through mid-career hiring and planned development of new graduates.

In FY2026 (ending March 2026), the NTT DATA Group accounted for 19.7% of net sales, and 30 of the Group's distributor partners also belong to the NTT DATA Group. During the fiscal year under review, NTT DATA Corporation's classification changed from a parent company to an "other affiliated company" due to a partial sale of its shareholding, but the Group intends to continue maintaining a cooperative relationship. If the NTT DATA Group changes its business policy or reduces transactions, this could affect the Group's business results and financial condition.

While the Group is pursuing global business expansion, there are risks inherent to overseas business development, including compliance with laws and regulations in each country, exchange rate fluctuations and restrictions, changes in social, political, and economic conditions, credit risk arising from different business customs, and difficulty securing local personnel. If these factors prevent expansion from proceeding as planned in the business plan, this could affect the Group's business results and financial condition.