ALPHA SYSTEMS INC.

Deterioration in capital expenditure trends or business performance of customers such as telecommunications carriers, manufacturers, and service companies may directly affect the core Software Development Related Business. The Company works to build a stable business foundation through regular monitoring of customer trends and expansion into growth areas.

The full-scale application of AI to customers' business activities may change software development processes and customer needs, potentially affecting the existing business model. The Company continuously monitors the impact of AI technology while working to reduce risk by strengthening its competitive advantages.

In large-scale, increasingly complex software development with shortened delivery times, there is a risk that development costs may increase due to specification additions/changes or discrepancies in understanding with customers, or that additional costs may arise from responding to defects after delivery. The Company seeks to reduce this risk by improving estimation accuracy at the order-taking stage and strengthening project management and quality control.

There is a possibility of legal damages arising from liability for software quality defects or delivery delays, or from litigation related to intellectual property infringement. The Company works to reduce this risk by strengthening project management and quality control during the development stage.

Since customer business information and personal information are handled in software development, there is a risk that loss, destruction, or leakage caused by the Company's responsibility could lead to a decline in credibility and payment of damages. In addition to establishing and operating an information security management system based on ISO/IEC 27001 certification, the Company has set up a specialized team for responding to cyberattacks to establish an incident response framework.

Increasingly sophisticated and elaborate cyberattacks could cause customer information leaks or system failures, potentially having a material impact on business continuity and credibility. The Company has established a specialized computer security incident response team that works to collect and analyze relevant information and formulate response policies and procedures.

In cases involving software development premised on customers' hardware product manufacturing, or the procurement and delivery of hardware products, supply issues could result in liability for damages due to delivery delays. The Company works with business partners to monitor supply trends and strives to ensure stable supply, including proposing alternative products and services.

In the event of a large-scale disaster such as an earthquake, flood, or fire, or a mass infection such as influenza or COVID-19, business activities may be forced to be suspended or significantly scaled down, potentially having a material impact on business performance. The Company has formulated a business continuity plan (BCP) and promotes business continuity management, including continuous review and improvement.