ACCESS CO., LTD.

In addition to the continuing operating losses from prior fiscal years, the company has recorded a substantial net loss for the current period, including costs related to the internal investigation and special investigation since October 2024, resulting in a declining trend in cash levels. Uncertainty remains regarding transactions with a specific major customer in the Network Business, and if sales fall short of initial projections, concerns about cash flow may arise due to a decrease in operating cash flow. As countermeasures, the company is implementing initiatives to continue transactions with the major customer, optimizing business scale by reducing research and development expenses, and continuously considering fundraising through capital markets and bank borrowings.

If confidential information, including customer information and personal information, is leaked due to cyberattacks or information incidents, this may result in loss of credibility, claims for damages, and a decline in competitiveness due to leakage of the company's technology. In addition, there is a risk of claims for damages from customers if security issues arise in the provided products or services. As countermeasures, the company has obtained and operates under ISO/IEC 27001:2013 certification, strengthens countermeasures against cyberattacks and network management, and conducts timely vulnerability assessments by third parties.

The entire group, including the U.S. subsidiary IP Infusion Inc., is obligated to comply with U.S. export control regulations, economic sanctions-related laws, and other regulations, but the company itself recognizes that there are areas for improvement in the subsidiary's business processes and the depth of counterparty screening. If sanctioned by regulatory authorities, this may adversely affect the financial position and business results. As countermeasures, the company is confirming the interpretation and scope of application of laws and regulations based on legal advice, developing internal rules, and thoroughly implementing counterparty screening.

New enactments, revisions, or changes in interpretation of legal regulations in each country may restrict business activities and increase costs. In addition, if fraudulent acts or compliance violations by directors or employees occur, this may result in a decline in social credibility, suspension of transactions, and risk of significant fines or claims for damages. As countermeasures, the company has established the "Code of Conduct" and "Compliance and Risk Management Regulations", set up a Compliance and Risk Management Committee, conducts internal audits, and continues ongoing internal education.

As the company has bases overseas, including in the U.S. and Germany, and develops and provides products and services globally, there is a risk that business activities may be restricted by export controls, technology transfer restrictions, tariff increases, and other measures in various countries resulting from changes in the international situation. In particular, if this hinders the global development and provision of products and services, it may adversely affect the financial position and business results. As countermeasures, the company conducts regular monitoring of the international situation and changes in legal regulations in cooperation with external experts, including local attorneys.

If it is difficult to execute M&A transactions on appropriate terms or achieve synergy effects, this may adversely affect the financial position and business results. In addition, regarding intangible fixed assets, including goodwill held as a result of M&A, there is a risk that impairment losses or unexpected amortization may occur if the economic value declines due to changes in the business environment. As countermeasures, the company conducts screening of deals by relevant departments, thorough due diligence utilizing external experts, and monthly performance checks and management support for subsidiaries after completion.

In the software industry, technology and product life cycles are shortening, and if the company fails to develop new products or technologies that accurately capture market needs, or if innovative technologies emerge from competitors, there is a risk that investments in research and development expenses and software assets may not be recovered. This could make it difficult to achieve growth strategies and may adversely affect the financial position and business results. As countermeasures, the company is concentrating investment in fields with competitive advantage that leverage its existing customer base and technology areas, and strengthening evaluation and monitoring of business plans before and after investment.

In contracted development projects, if specification changes requested by customers or initial estimate overruns occur, this may result in significant deviation from the development plan, leading to unplanned additional development costs, penalties associated with delivery delays, and opportunity losses due to loss of customer trust. In particular, there is a risk of an increase in unprofitable projects when there is a shortage in the quality or quantity of project managers. As countermeasures, the company is clarifying the scope of responsibility and requirements definition at the contract stage, actively recruiting project managers and continuously reviewing the organizational structure, and having the responsible executive officer conduct monitoring.

Due to intensifying global competition for talent in the software industry, if it becomes difficult to secure and develop personnel with specialized technical skills, sales and marketing capabilities, and global organizational management capabilities, this may hinder the achievement of business plans. In addition, if inappropriate labor management occurs, such as excessive workload or harassment, this could significantly damage corporate credibility and adversely affect the financial position and business results. As countermeasures, the company is utilizing diverse recruitment channels, building attractive compensation and fair personnel evaluation systems, managing attendance using its own product (Linkit Kintai), and enhancing the internal reporting system.

As the company provides products and services to global customers, it is affected by global economic fluctuations, price fluctuations, and industry trends, and a decrease in shipments of semiconductors and final products incorporating the company's products may adversely affect the financial position and business results. In addition, there is a risk that significant fluctuations in exchange rates may affect financial figures in the translation of overseas business results and foreign currency-denominated assets and liabilities into yen. As countermeasures, the company implements early recovery measures by closely monitoring market trends and customer conditions, and maintains a policy of minimizing the holding of foreign currency-denominated assets to the extent necessary.