PRONEXUS INC.

As the company handles confidential pre-disclosure data of client companies, including insider information, an information leak or breach could have a material impact on business performance. As countermeasures, the company implements multi-layered preventive measures, including obtaining written pledges, conducting regular education and testing, isolating handling spaces, establishing traceability systems, and regularly convening an Information Security Committee.

With the increasing sophistication of cyberattack methods in recent years, the risk of information leakage or service disruption due to computer virus infection and similar causes has grown, and system failures caused by human error, accidents, or disasters may also affect business performance. As countermeasures, the company has established a multi-layered defense and CSIRT framework based on its Basic Policy on Information Security and the Ministry of Economy, Trade and Industry's "Cybersecurity Management Guidelines," and conducts regular risk assessments by third-party organizations.

Amendments to the Companies Act, the Financial Instruments and Exchange Act, and other laws may change the demand, specifications, and content of the products and services provided by the company. Actual examples include the electronization of shareholder meeting documents from March 2023, changes to the quarterly disclosure system effective April 2024, and the paperless conversion of investment trust-related documents; in some cases, decreases in printing demand or page counts have had a negative impact on sales. As a countermeasure, the company is making priority investments and development efforts in services and solutions less susceptible to legal and regulatory changes, as well as in new business areas, as a key theme of its medium-term management strategy.

Since sales of prospectuses and sales materials associated with IPOs, financing, and investment trusts fluctuate in order volume depending on conditions in the securities market, a deterioration in market conditions could affect business performance. As countermeasures, the company is working to expand orders for continuous disclosure documents such as notices of convocation of shareholder meetings, annual securities reports, and quarterly financial results, as well as for system services, consulting services, and IR-related products that are less affected by securities market conditions.

In the listed company business, changes in the number of listed companies directly correspond to changes in the number of customers; therefore, if the number of listed companies decreases due to stricter listing standards or other market rule changes by stock exchanges, sales may be affected. As a countermeasure, the medium-term management plan sets forth an evolution into a "corporate communication support" company not limited to disclosure and IR, and the company is promoting new business areas—such as corporate events and recruitment support—that are not affected by fluctuations in the number of listed companies.

Approximately 60% of the customers of products and services for business corporations, which account for approximately 75% of revenue, are companies with a March fiscal year-end, resulting in a concentration of sales in the first quarter (April–June); first-quarter revenue for FY2026 (ending March 2026) stood out at ¥11,938 million (36.4% of total). While order trends in the first quarter significantly affect full-year performance, excess production capacity in other quarters poses a risk of deteriorating profitability; the company is building a balanced production system by improving its in-house production ratio and utilizing outsourcing partners.

Competitors exist in the fields of Listed Company Disclosure-Related and IR, as well as Financial Instruments Disclosure-Related services, and changes in market share or declines in order unit prices could lead to fluctuations in sales and profit. As countermeasures, the company seeks to avoid competitive risk and expand growth opportunities by improving the quality and functionality of its services, developing new solutions from a broad range of perspectives, providing BPO services, and developing new business areas with less competition where the company's strengths can be leveraged.

In the event of a large-scale natural disaster such as an earthquake or flood, or a pandemic, there is a risk of suspension or interruption of disclosure document preparation support operations, which could also affect client companies' decision-making, fundraising, and the functioning of capital markets. In addition, the event business, centered on Cine Focus Co., Ltd., also carries a risk of lost business opportunities due to event cancellations. As countermeasures, the company has implemented measures such as system redundancy, promotion of remote work, transfer of operations to other locations, staggered work hours, shift work, and dispersal of offices.

In M&A transactions aimed at expanding business areas, particularly in the IT sector, sellers' asking prices can escalate, potentially leading to an increase in one-time expenses and adversely affecting business performance. In addition, if initially expected revenue or return on investment fails to materialize, or if the discount rate used for goodwill valuation rises due to higher long-term interest rates, this could impact business performance through goodwill impairment or similar effects. Although risk, profitability, and investment recoverability are examined through prior due diligence, uncertainty remains.

Securing and developing human resources is important to respond to increasing order volumes and business area expansion; in particular, in growth areas centered on the "non-print field," securing professional talent with specialized knowledge and experience is an urgent priority. If the acquisition and development of excellent talent does not proceed as planned, it may affect business development, performance, and growth prospects from a long-term perspective. As a countermeasure, the company is focusing on revising its personnel system and enhancing internal training programs.