Future Innovation Group, Inc.

The Company aims to enhance management agility and efficiency through the transition to a holding company structure; however, if the initially anticipated synergy effects cannot be sufficiently realized, this may adversely affect financial condition and business results. Although the Company is working to strengthen a unified cooperative structure across the group, there is an inherent risk of delayed response to the changing business environment.

In the IoT business, the Company relies heavily on internet communication networks to provide cloud services, mobile information, and voice services, creating a risk that services may be temporarily suspended due to natural disasters, server overload, unauthorized external access, computer virus infection, or similar causes. In the event of a failure, this could lead to claims for damages from customers and a decline in credibility, potentially affecting the business and results of operations. As countermeasures, the Company outsources server storage to external data centers and selects highly disaster-resistant facilities.

Products delivered by the Group to customers are required to have high reliability, and while the Group has established a quality control system to prevent defects, if it becomes difficult to respond appropriately and promptly to significant customer losses caused by product defects, this may result in claims for damages and a decline in credibility. Such cases may also be subject to the Product Liability Act, entailing legal risk as well.

In the information and communications industry, the Group competes with numerous operators, and there is a risk that economic downturns or new market entrants could intensify competition, leading to reduced orders or orders won at low prices. In the semiconductor and automotive industries (Machine business), capital investment fluctuates cyclically with periods of significant growth and reduction, and in the robotics industry, increased new entrants intensifying price competition and a slowdown in capital investment amid economic downturns may also affect business results.

The industries to which the Group belongs experience continuous technological innovation. If products and services fail to match market needs, market introduction is delayed, research and development costs become excessive, or the knowledge of sales and support personnel fails to keep pace with technological innovation, situations may arise in which the Group cannot meet customer requirements, potentially affecting business results. Continuous development and introduction of products and services is required to maintain technological superiority and sales prices.

In the IoT business, the Company is subject to regulation under the Telecommunications Business Act as an MVNO operator, and while it has established a compliance system to observe principles such as the "secrecy of communications," if it is found to be in violation of laws and regulations, it may receive a business improvement order or penalty from the Minister of Internal Affairs and Communications. In addition, amendments to or new enactments of the Telecommunications Business Act, the Radio Act, the Product Liability Act, and other laws may affect the business and results of operations.

The Group adopts an elite small-team structure, creating a risk that the unexpected departure of core employees could cause significant changes to the team composition. If the Group faces difficulty in sufficiently securing and developing personnel, this may become a constraining factor on business development. While the Group addresses this through active recruitment, training, and providing an attractive working environment, continuous securing of human resources remains a challenge as the business expands.

Through its business activities, the Group handles customer business content and personal information, and it strives to strengthen its information management systems; to date, no information leakage or similar problems have occurred. However, if personal information or important information is leaked externally due to negligence on the part of the Group or unlawful acts by third parties, this may lead to claims for damages from customers and a decline in credibility, potentially affecting the business and results of operations.

Overseas business development is one of the Group's strategies; however, there is a risk that differences in business customs, changes in laws and regulations, significant changes in economic conditions, or unexpected foreign exchange fluctuations could significantly affect business operations and management. In addition, since it takes a certain amount of time and funding for overseas businesses to become established and realize investment returns, there is a possibility that the initially expected business development and business profits may not be achieved.

During the spread of the novel coronavirus (COVID-19), demand actually decreased among bus, taxi, and hotel operators that are service recipients of the IoT business, and in the Machine business, reduced orders, canceled projects, and delays actually occurred due to production stagnation and postponed capital investment at the overseas bases of automotive-related customers. If another outbreak of infectious disease becomes serious or prolonged, this could have a material impact on business activities, financial position, and business results. The Group continues to implement measures such as remote work, flextime systems, and encouraging the use of web conferencing.