Basis Corporation

In the fiscal year under review, sales to SoftBank Corp. reached ¥1,954,064 million (24.5% of net sales), indicating a high degree of dependence on telecommunications carriers. If carriers reduce capital expenditure, price competition intensifies, or customers advance in-house handling of operations, there is a risk that sales could decline significantly. As a countermeasure, the Company is promoting the development of new industries and new customers through IoT Engineering Service, but the impact could be significant if progress is delayed.

As of the end of the fiscal year ended June 2025, the interest-bearing debt ratio reached 14.6% of total assets, and loan agreements with financial institutions include financial covenants. If these covenants are breached, lenders may demand repayment, causing the loss of the benefit of time and requiring immediate repayment, which could seriously affect cash flow. If it becomes difficult to secure funds, there is a risk that this could adversely affect the continuity of the Company.

Due to frequent opportunities to handle customers' confidential and personal information, such as through home visits for IoT device installation, there is a risk that if an information leak occurs, it could result in compensation costs, suspension of business transactions, and loss of credibility, thereby hindering business activities. Countermeasures include obtaining ISO27001 certification (acquired December 2009) and ISO27017 certification (acquired June 2024), conducting regular security training and ISMS audits, and enrolling in personal information leakage insurance.

Construction work under Mobile Engineering Service is subject to general construction business licenses (electrical work and telecommunications construction work), and staffing operations are regulated under the Worker Dispatching Act. If licenses are revoked, business suspension orders are issued, or laws and regulations are changed or newly established, restrictions on business development could arise, potentially affecting the Company's financial condition and business results. Risk is mitigated through regular confirmation of license maintenance requirements by legal counsel and the use of self-check lists.

The Company positions M&A as an important growth strategy and actively pursues it; however, due to the limitations of due diligence, new legal or business risks may materialize, or expected investment returns may not be achieved. If expected returns are not realized, impairment losses on held investment securities, goodwill, and other assets may occur, adversely affecting business results. The Company aims to reduce this risk by thoroughly examining synergies and risks with existing businesses.

As the Company's scale expands, the continuous recruitment and development of talented personnel who share its corporate philosophy has become an important challenge. If the Company is unable to sufficiently secure or develop the personnel it needs, or if there is significant outflow of personnel, this could affect business development, financial condition, and business results. Although active recruitment activities are planned, securing personnel remains highly challenging amid intensifying competition in the labor market.

To expand nationwide infrastructure construction and operations, the Company relies on outsourcing to individual and corporate Basis Partners. If relationships with partners cannot be maintained for any reason, or if it becomes difficult to develop new partners, this could affect business development and business results. Although the Company strives to build good relationships, alternative means are limited in the event of partner withdrawal or difficulty securing partners.

Kimitaka Yoshimura, the founder and Representative Director and President, plays a critical role across management policy and business strategy decisions as well as overall corporate management, and if he becomes unable to continue his executive duties, this could affect business operations and financial results. The Company continues to promote information sharing and delegation of authority within the Board of Directors, as well as training programs to develop next-generation executive talent, in an effort to reduce this dependence.

The Company operates its business centered on its proprietary business management system, "BLAS," and if damage occurs due to large-scale disasters, power outages, system or network failures, unauthorized access, computer viruses, or similar causes, this could affect its financial condition and business results. While measures such as data protection, power supply assurance, and unauthorized access countermeasures are implemented through the use of data centers, risks arising from external factors beyond the Company's control remain.

If natural disasters such as earthquakes, tsunamis, or typhoons, pandemics, terrorist attacks, or the disruption or suspension of information systems or communication networks occur, this could impede smooth business operations or interrupt business activities, thereby affecting financial condition and business results. The Company aims to reduce business continuity risk by establishing a system for immediately setting up a response headquarters and by developing and operating business continuity plan (BCP) measures.