AsiaQuest Co.,Ltd.

The Group's business is centered on digital integration, and its growth strategy assumes the continued expansion of the DX market. If the market does not expand as expected, this may affect business results and financial position. As a countermeasure, the Group is building a portfolio through the expansion of applicable technology fields and Consulting domains, as well as the development of new products and services.

As the DX market grows rapidly, the number of new competitors entering the market may increase. If the Company fails to sufficiently differentiate itself from competitors, this may affect business results and financial position through the loss of order opportunities and deteriorating profitability due to price competition. The Company's policy is to differentiate itself through its unique technological capabilities and services, but the details of specific countermeasures remain limited.

In the DX market, the pace of technological innovation is rapid, and responding to new technologies may require substantial cost and time. If the Company is unable to respond appropriately, the competitiveness of its services may relatively decline, which could adversely affect business results and financial position. The Company addresses this by constantly monitoring industry trends and preparing its engineers to respond to new technologies.

System development projects are undertaken based on man-hour estimates, and if estimation errors or work delays result in excess costs, this may lead to deteriorating project profitability as well as delays in revenue recognition and payment collection due to delayed acceptance. The Company strives to prevent deteriorating profitability through budget-to-actual management and progress monitoring in coordination between business divisions and administrative departments, but it is difficult to completely eliminate this risk.

In the course of operating systems for client companies, the Company has opportunities to be entrusted with personal information, and if an external leak occurs for any reason, this may affect business results and financial position through liability for damages and loss of social credibility. The Company has obtained ISMS (ISO/IEC 27001:2013) certification for its IoT services and cloud services, and promotes the appropriate handling and strict management of information.

Through system development for client companies, the Company has opportunities to handle information assets such as confidential information and intellectual property, and if a security incident occurs due to human operational error or unforeseen factors, this may affect business results and financial position through liability for damages and loss of social credibility. The Company promotes thorough awareness through the development of information security regulations and the regular implementation of education and training.

Amid the worsening shortage of IT personnel, if the Company is unable to secure the personnel required under its plans, this may hinder smooth service provision and active order-taking activities, thereby affecting business results and financial position. The Company recognizes that it has strong recruiting capability due to its early focus on building organizational culture and recruitment public relations, but the structural issue of a market-wide personnel shortage continues.

Part of the Digital Transformation Business (Single Segment) involves the dispatch of IT engineer personnel, which is subject to regulation under the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Protection of Dispatched Workers. If the Company has difficulty responding to future legal amendments or if a violation of laws and regulations occurs, this may affect business results and financial position through, among other things, a decline in customer trust. The Company addresses this through thorough legal compliance, but the risk of legal amendments remains as an external factor.

Chairman and CEO Jun Momoi, as the founder, plays an important role in business operations, and the Company's current degree of dependence on him is recognized as high. If, for any reason, he becomes unable to continue performing his duties, this may have a significant impact on business operations. The Company is working to reduce this dependence through strengthening its management structure and developing and recruiting executive personnel, but a short-term resolution remains difficult.

The Group's policy is to actively expand its overseas business, but it may be exposed to various risks, including unforeseen changes in laws and regulations, political and economic changes, foreign exchange fluctuations, differences in business customs and employment systems, and changes in tax systems. If these risks materialize, this may affect business results and financial position. Descriptions of specific measures to mitigate overseas risks are limited in the securities report.