adish Co., Ltd.

Because the Customer Relations Business operates in a growth market, new competitors may enter the market, and there is a risk that competitiveness could decline if low-cost, high-quality services emerge. In addition, if the Group is slow to respond to new technologies or business models, its services may become non-competitive, potentially affecting its business and operating results. The Group is working on developing new services while closely monitoring market needs and technology trends.

The Group handles confidential information, including personal information and confidential information of client companies, and if such information were to leak externally, trust from client companies could be significantly damaged, potentially having a material impact on the Group's business and operating results. As countermeasures, the Group has obtained ISMS certification and the Privacy Mark, concluded non-disclosure agreements, and implemented measures such as account management systems, entry/exit control systems, and installation of surveillance cameras, but these measures do not guarantee complete prevention.

Intensifying competition for talent within the industry may lead to the Group's personnel leaving for other companies or make new hiring difficult. In addition, if securing temporary employees (part-time staff) who handle the practical work of service provision becomes difficult due to rapid changes in the recruitment market, service provision and sales activities could be hindered. The Group is working to strengthen internal communication and to develop, promote, and recruit external personnel.

The Group has established a 24-hour, 365-day service provision system and is highly dependent on communication networks. If server outages, computer virus damage, unauthorized external intrusion, system malfunctions, or communication disruptions due to disasters or power outages occur, service provision could be disrupted, and if the cause of the failure lies with the Group, this could lead to a decline in trust from client companies.

The Group's service contracts generally run for six-month terms, and cancellation is effected when either party provides written notice three months in advance, meaning sudden cancellations may occur regardless of the Group's intentions. If cancellations occur frequently among highly profitable clients, this could affect the Group's operating results and financial position.

The consolidated subsidiary adish International Corporation operates in the Republic of the Philippines, a country characterized by frequent legal amendments, creating a risk that business could become subject to legal restrictions due to the enactment of new laws and regulations. In addition, natural disasters such as typhoons could cause communication system failures, disruption of employees' commutes, and paralysis of urban functions, and expanding terrorist activity could also disrupt service provision.

Representative Director Hiroki Edo possesses extensive knowledge and experience regarding the Group's business and related markets, and plays an important role across the full range of business activities, including determining management policy and business strategy. If, for any reason, it becomes difficult for him to carry out his duties, this could affect the Group's operating results. The Group is working to establish systems and to recruit and develop personnel in order to avoid excessive dependence on him.

The Group records deferred tax assets in relation to deductible temporary differences and tax loss carryforwards. However, if a review of recoverability results in changes due to a decline in taxable income from changes in the business environment or tax reform, deferred tax assets may be written down, potentially affecting operating results and financial position.

Some of the Group's businesses provide services to prefectural boards of education, public schools, and private school corporations, and are therefore affected by trends in education budgets of the national and local governments. If education budgets are cut due to changes in national or local government policy or a deterioration in fiscal conditions, this could affect the Group's business and operating results.

The Group has a subsidiary in the Republic of the Philippines, and since its financial position and operating results denominated in local currency are translated into yen when preparing the consolidated financial statements, fluctuations in exchange rates may affect the value after conversion into yen. In addition, transactions with some clients are conducted in foreign currency, and the exchange rate used at the time of conversion may affect operating results.