ATLED CORP.

If a serious defect or flaw is discovered after a product or service has been launched, this could result in substantial response costs in addition to significantly damaging trust in the product or service. Minor issues occur in several instances each year, and the Company strives to resolve and prevent defects and flaws through rigorous software testing during the development process.

The Company's cloud services handle a large amount of user company information, including personal information, and if information leakage or deletion of important data occurs due to unauthorized external access or errors by officers or employees, this could significantly damage trust and result in claims for damages, affecting the Company's business results and financial position. The Company is constantly exposed to this risk and is promoting strengthened information management systems, including thorough security measures, data backup systems, and access authority management.

Cloud services are provided using internet communication networks and external cloud services, and if a system failure occurs due to natural disasters, hardware/software malfunctions, unauthorized access, overload, or similar causes, the continuity of service provision may be disrupted. Minor incidents occur every year, and the Company strives to prevent such risks through measures including redundancy of internet lines and computer systems as well as security measures.

The workflow market is on an expansionary trend against a backdrop of operational efficiency improvements, work-style reforms, and strengthened internal controls; however, there is no guarantee that market size and demand trends will develop as expected, and if a deterioration in the economic environment causes a slowdown in corporate IT and system investment, this could affect the Company's business results and financial position. As a countermeasure, the Company strives to stimulate the workflow market by disseminating workflow-related information through public relations activities.

The Company operates the Workflow Business (Single Segment) only, providing package software and cloud services such as "X-point" and "AgileWorks" exclusively. If changes occur in the business environment or the competitiveness of the products/services declines, the Company may be significantly affected due to the lack of business diversification, raising concerns about the impact on its business results and financial position.

The workflow market includes multiple competing companies providing package software and cloud services, including companies whose groupware or ERP products have workflow functions. If competition intensifies going forward due to business expansion by competitors or new entry by major companies, this could affect the Company's business results and financial position. The Company strives to maintain and enhance the competitiveness of its products and services through continuous functional enhancement.

In the IT industry, the pace of technological innovation is rapid, and continuously incorporating cutting-edge technology into products and services requires substantial management effort and cost. If the Company finds it difficult to respond to new technologies or its development response is delayed, the competitiveness of its products and services may decline, and expanded additional system and development investment may worsen profitability and reduce earnings. As a countermeasure, the Company strives to actively gather technical information, absorb technical know-how, and apply it to product development.

The Company's sales activities are heavily dependent on partner companies, with the top five sales destinations accounting for roughly 50% of the Company's total sales. If it becomes difficult to continue transactions with major partner companies or if changes occur in each company's business strategy, this could affect the Company's business results and financial position. The Company is working to reduce this risk by strengthening sales and technical support and by developing new alliance partners.

In the IT industry, it is a seller's market for engineers, and if hiring becomes difficult or existing personnel leave, this could hinder the smooth operation and expansion of the business. In addition, increased costs for securing, retaining, and developing talented personnel could affect profitability. The Company strives to secure stable personnel through promoting work-style reforms and recruitment activities.

SoftCreate Holdings Co., Ltd., the parent company, holds 51.3% (3,840 thousand shares) of the Company's total issued shares and is in a position to influence the Company's management decisions through the appointment and dismissal of directors at shareholders' meetings, among other means. The parent company's interests may not align with those of other shareholders, and if a significant change occurs in the future in the parent company's business strategy or in the Company's positioning, this could affect the Company's business results and financial position.