FUSO DENTSU CO., LTD.

Transactions with Fujitsu Limited and its group account for 8.9% of net sales and 31.4% of purchases, with particularly high dependence on the purchasing side. Should any disruption occur in these transactions for any reason, it could have a material impact on the Company's business performance. As a countermeasure, the Company regularly monitors the status of its business partners and strives to reduce credit risk by thoroughly monitoring large-scale transactions and managing credit exposure.

In contracted system development projects, if troubles arise such as misalignment of understanding with customers, issues with the project structure, or insufficient technical verification, it may become difficult to complete the project within the planned scope, budget, delivery schedule, and quality, resulting in losses. The Company addresses this through strengthened coordination between the sales and technical departments, clarifying risks at the negotiation stage, and thorough progress management, but the risk cannot be completely eliminated.

In the ICT industry, holding technical qualifications has become a prerequisite for winning business deals, making the development and retention of personnel with technical skills and qualifications fundamental to the business. If necessary personnel cannot be secured due to poor recruitment activities or an increase in employee turnover, it may become difficult to achieve business objectives. Under the basic policy of "developing self-reliant personnel," the Company actively promotes education for obtaining qualifications and continues regular and mid-career recruitment activities.

Given the nature of the ICT industry, the Company has opportunities to handle personal information belonging to customers, and if an information leak occurs, it could result in the loss of customers' social credibility and claims for damages against the Company. In addition, damage to or leakage of confidential information due to cyberattacks, virus infections, or unauthorized access could lead to a loss of the Company's own social credibility and affect its business performance and financial condition. As countermeasures, the Company has established basic regulations on information security, obtained Privacy Mark certification (March 2007), and conducts employee training through the Compliance Promotion Office.

Accidents or deteriorating management conditions at suppliers and partner companies, changes in global semiconductor supply and demand trends, and changes in the economic and distribution environment may cause delays or cost increases in the procurement of necessary products and parts, as well as delays in system development and construction work, potentially affecting business performance and financial condition. As countermeasures, the Company strives to gather procurement-related information at an early stage and to expand and strengthen cooperation with suppliers and partner companies.

The ICT industry is an environment prone to intensifying competition due to changes in customer needs driven by technological innovation and new entrants including those from other industries. If the Company falls behind in responding to technological innovation or experiences a decline in technical capability or service quality, it could affect the Company's business performance and financial condition. As countermeasures, the Company strives to stay informed of the latest technology trends and customer needs, and promotes continuous acquisition of new technical skills by its engineers.

Against the backdrop of growing interest in corporate social responsibility and the enactment or revision of new laws and regulations, compliance risk related to legal compliance and corporate ethics is increasing. If a serious violation of laws or the articles of incorporation occurs, it could lead to a decline in social credibility and affect business performance and financial condition through substantial fines or claims for damages. The Company promotes the development of its organizational structure and employee training centered on the Risk and Compliance Committee and the Compliance Promotion Office.

If natural disasters such as large-scale earthquakes or wind and flood damage caused by climate change cause harm to officers, employees, offices, or facilities, it could affect business performance and financial condition. In addition, if major business partners suffer significant damage, the resulting disruption to their sales and production activities could be a factor worsening the Company's business performance. The Company has implemented measures such as formulating a Business Continuity Plan (BCP), conducting disaster prevention drills, and establishing an employee safety confirmation system, but such measures cannot completely avoid damage.

If the market value of listed shares held by the Company declines, the value of unlisted shares declines, or bond prices decline, it could affect business performance and financial condition. The annual securities report does not disclose specific details of holding balances or countermeasures, but the structure is such that fluctuations in market conditions directly affect financial figures.

If an occupational accident occurs in connection with engagement in telecommunications-related construction work, it could result in restoration work, compensation, delays to operations, and other consequences that affect business performance and financial condition. As a countermeasure, the Company promotes appropriate labor management and safety, health, and educational activities on a company-wide and ongoing basis, striving to ensure safety in the performance of its operations.