Fusic Co., Ltd.

Rapid technological innovation centered on generative AI and AI agents is increasing the risk that existing services and business models will become obsolete in a short period of time. If the Company is slow to respond to technological changes, this could result in a decline in service competitiveness, as well as deteriorating profitability due to increased costs for additional investment and securing specialized personnel. The Company is actively engaged in continuously gathering information on the latest technology trends and acquiring related expertise.

The Company's services depend on the continuous provision of services by employees, particularly those in the Technology Division, and if the Company is unable to secure and retain appropriate personnel at the appropriate time, or if labor costs rise sharply, this could affect business operations, business performance, and financial condition. In addition to utilizing diverse recruitment channels and enhancing training programs, the Company is working to create an attractive working environment through appealing compensation systems, fair personnel evaluation systems, and the promotion of remote work.

The Company's services are highly dependent on AWS, and if a system failure occurs within AWS itself due to cyber-attacks, unauthorized access, or other causes, this could result in lost business opportunities, damage to customers, and reduced credibility due to service interruption or quality degradation. The Company is strengthening its systems through redundant and scalable system architecture, as well as by promoting a multi-cloud strategy utilizing Azure and GCP.

The cloud market in which the Company operates is growing rapidly, but if corporate IT investment stagnates due to a deterioration in economic conditions or business trends, this could affect business performance and financial condition. The Company is working to strengthen its revenue base and achieve sustainable growth by expanding its recurring revenue business through the enhancement of the MSP Service.

The Company's revenue growth is highly dependent on the expansion of the AWS market, and if the AWS market shrinks or Amazon Web Services, Inc. changes its business strategy, this could have a material impact on the Company's business performance and financial condition. As a countermeasure, the Company is promoting a multi-cloud strategy including Azure and GCP, and continues to gather information on Amazon Web Services, Inc.'s market trends and business strategy.

The AWS resale business is based on an SPA contract with Amazon Web Services, Inc., and if the contract is terminated due to a breach of termination clauses or other reasons, it could have a material impact on business operations, business performance, and financial condition. At present, there are no facts that constitute grounds for termination, and the Company has been certified as an Advanced Partner, but the Company will continue to work to maintain a good relationship while also advancing its response to other cloud platforms.

In the fiscal year ended June 2025, two companies, Machinowa Co., Ltd. and Uchida Yoko Co., Ltd., accounted for more than 30% of net sales, indicating a high degree of dependence on specific clients. Should the contractual relationship with these clients be terminated, it could have a material adverse effect on business performance and financial condition. As a countermeasure, the Company is working to strengthen its relationships with both companies while also diversifying its customer portfolio by expanding sales with other clients.

The two founding directors, Sadayoshi Notomi and Yoichiro Hamasaki, play important roles in the formulation and execution of management policies and strategies, and if either of them becomes unable to perform their duties, this could affect business operations, business performance, and financial condition. To avoid excessive dependence, the Company is working to strengthen its management structure by sharing information with and delegating authority to executive staff.

Since the Company handles confidential and personal information of clients in the course of AWS implementation and operation and cloud service provision, unauthorized external access or human error could result in information leakage, loss, or falsification, potentially leading to reputational damage or losses from damage compensation claims. The Company addresses this risk through obtaining ISO/IEC 27001:2022 and ISO/IEC 27017:2015 certifications, thorough access rights management, employee training, and enrollment in cybersecurity insurance.

If cloud services are suspended or delayed due to natural disasters such as earthquakes, power outages, communication failures, cyber-attacks, human error, or other causes, this could result in reputational damage and lost business opportunities, affecting business performance and financial condition. The Company is minimizing such impacts by promoting BCP measures, including thorough internal awareness efforts, continuous operational testing, development of remote work environments, and establishment of a business recovery system using backup lines.