BTM, Inc.

Securing, retaining, and developing excellent talent is important for improving competitiveness and business development, but if this does not proceed as planned, or if excellent talent leaves the company, this could become a constraint on competitiveness and business expansion, potentially having a material impact on business performance and financial condition. The Group addresses this through appropriate evaluation, compensation, enhanced benefits, and training.

The DX Promotion Business is operated based on the Worker Dispatching Act and the Employment Security Act. If issues related to disguised subcontracting are identified or violations of laws and regulations occur, this could lead to business suspension or revocation of the worker dispatching business license. In addition, if grounds for revocation of a paid employment placement business license are met, this could also impede business continuity. The Group has established a legal compliance system through the appointment of management officers responsible for compliance, regular status checks, and the establishment of compliance regulations.

As a listing maintenance criterion of the Tokyo Stock Exchange, the Company must satisfy the formal requirement for market capitalization of tradable shares. If capital policy measures do not succeed, or if a deterioration in stock market conditions occurs, the market capitalization of tradable shares may fail to increase or may decline. The Group strives to increase the number of tradable shares through the exercise of stock options and to enhance corporate value through business performance expansion.

The domestic DX-related market is projected to expand approximately twofold from FY2023 to FY2030, but if market growth slows due to unforeseen legal regulations or changes in corporate IT investment needs, this could have a material impact on the Group's business performance and financial condition. The Group addresses this through monitoring of market trends and training for engineers.

Numerous operators exist in the IT Engineering Service and DX Solution Service markets, and external partner companies can be both business partners and competitors. If an economic downturn or price competition leads to depressed transaction unit prices and a decline in engineer utilization rates, this could have a material impact on business performance and financial condition. The Group focuses on education and training aimed at enhancing the added value of its engineers.

Rapid technological evolution, including generative AI, is driving automation and efficiency improvements in the system development process, significantly changing the skill requirements demanded of engineers. If the Group is unable to respond in a timely manner to technological innovations that render its existing experience less applicable, this could have a material impact on business performance and financial condition. As countermeasures, the Group has established an external training support system, book purchase subsidies, development programs, and online study sessions, among others.

Continuous securing of engineers is essential for the continuation and expansion of the DX Promotion Business. If recruitment activities, M&A, securing of external partner companies, and freelance engineers do not proceed as planned, this could have a material impact on business performance and financial condition. The Group seeks to rapidly increase the number of immediately deployable engineers through timely review of recruitment media, strengthened contact with external partner companies, and active use of M&A.

Since the Group permanently employs a large number of engineers as full-time employees, if changes in economic conditions or the business environment lead to a decline in the utilization rate of personnel, a decrease in working days, or a decline in transaction unit prices, the cost ratio could rise, potentially having a material impact on business performance and financial condition. The Group works to strengthen its ability to respond to changes in the business environment and prevent credit deterioration by enhancing its training system.

In contracted development work within the DX Solution Service, if unexpected additional costs arise or delivery delays and system defects result in damages claims, this could lead to deteriorating project profitability and a decline in social credibility, potentially having a material impact on business performance and financial condition. The Group has established progress management, sufficient communication with business partners, and a confirmation system involving supervisory staff.

The Company grants stock acquisition rights as stock options to officers and employees, and as of the end of the current consolidated fiscal year, the number of potential shares was 143,400 shares (5.07% of the total issued shares of 2,827,000 shares). The Company plans to continue utilizing this system going forward, and the exercise of these rights may dilute the share value and voting rights ratio of existing shareholders.