baudroie,inc.

If the Company is unable to adequately respond to the daily evolution of IT technologies, orders from customer companies may decrease, potentially affecting the Company's operating results and financial condition. A decline in customers' IT investment due to economic downturn may also contribute to reduced orders. The Company addresses this risk by continuously working to incorporate advanced IT technologies.

Customers' IT investment is highly susceptible to economic conditions and business trends, and if the Japanese economy stagnates or deteriorates, customers' IT investment may decline, potentially affecting the Group's business performance. As a countermeasure, in addition to incorporating advanced IT technologies, the Company strives to secure stock-type revenue that serves as a foundation for stable earnings.

If the Company's competitiveness relatively declines due to improvements in competitors' service capabilities or intensified price competition, this may lead to lower profitability and other effects, potentially affecting the Company's operating results and financial condition. The Group works to secure competitive advantage through strengthening human resource capabilities, providing high-value-added services, and maintaining favorable business relationships with customers.

While securing and developing excellent human resources is essential for business expansion, if recruitment and training do not proceed as planned or if mass turnover occurs, it may become difficult to secure the necessary personnel, potentially affecting the business and operating results. The Group addresses this by actively promoting recruitment and development of human resources.

The Company is subject to regulations such as the Worker Dispatching Act (License No.: Haken 13-304512, valid until August 31, 2027) and the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors. If the Company becomes subject to disqualification grounds or violates relevant laws and regulations, it may be ordered to suspend business or have its license revoked. In addition, enactment, amendment, or changes in interpretation of laws and regulations may also affect business activities. The Company strives to comply with laws and regulations, and recognizes that no factors currently exist that would impede the continuation of its licenses and permits.

The Group is pursuing business expansion through investment activities such as M&A. If, after an acquisition, issues that could not be identified during prior due diligence arise—such as the emergence of contingent liabilities or the discovery of previously unrecognized liabilities—or if business development does not proceed as planned, it may become necessary to record impairment losses on goodwill, among other effects, potentially affecting the business and operating results. The Company conducts detailed prior due diligence on the financial condition and contractual relationships of target companies and makes decisions after sufficiently examining the risks involved.

The Group has not experienced any litigation to date; however, if unforeseen troubles or litigation arise in the future, the content and amount of damages involved could affect business performance and business development. At present, no specific litigation risk has materialized.

The Company holds customers' confidential information and personal information through its business activities. If information leakage occurs due to human error, system failure, or unforeseen factors, it may result in loss of social credibility and liability for damages to customers, potentially affecting the business and operating results. The Company takes measures against this through obtaining ISO27001:2013 (ISMS) certification, establishing and operating internal regulations, and thorough employee training.

It is difficult to completely eliminate compliance-related risks, and if a situation arises that violates laws and regulations, it may affect the business and operating results. The Group works to ensure thorough awareness through the formulation and operation of internal compliance regulations and the periodic implementation of training.

Shigehiro Tominaga, the Representative Director and President, is a major shareholder holding 39.34% of the total number of issued shares. If his shareholding decreases for any reason, this may affect the market price of the Company's shares and the exercise of voting rights, among other matters. While he maintains a policy of serving as a stable shareholder with consideration for the interests of minority shareholders, the risk of changes in his shareholding status cannot be eliminated.