FORVAL CORPORATION

If the business environment of small and medium-sized enterprises (SMEs), the Company's primary customers, deteriorates more than expected due to high crude oil prices, yen depreciation, or a slowdown in the domestic economy, the SME market itself may contract and affect business performance. A similar risk may also arise if service development for the Visualization Companion-type Management Support Service business is delayed. As 20.4% of net sales are collected via leasing companies, changes in the economic environment and legal system surrounding the leasing industry may also affect business performance.

The Company conducts business activities in ASEAN countries such as Cambodia, Vietnam, Indonesia, and Myanmar. If laws and various regulations are enacted or revised in these countries and regions, local business activities may be restricted. The regulatory environment in each country is fluid, creating a risk of increased compliance costs or forced business contraction.

When launching new businesses with high profitability and growth potential, the Company often forms alliances with external companies that possess know-how and infrastructure. Changes in the business direction or schedule of alliance partners may affect the progress of new businesses. In addition, since judgments are based on currently available information, they inherently contain potential risks, and unexpected changes in circumstances could have a material impact on business performance.

The Company is developing services to solve management challenges in line with Society 5.0, utilizing advanced technologies such as IoT, AI, big data, and robotics. If development is delayed or fails to gain market support, business performance may be affected. As countermeasures, the Company is establishing specialized teams, hiring specialized personnel, and promoting collaboration with external companies, but the risk of being unable to keep pace with the speed of technological innovation remains.

Since the Company's core business is consulting services in the five fields of information and communications, overseas, environment, human resource education, and business succession, securing and developing high-quality personnel is essential, and if this does not proceed as expected, business performance may be affected. As countermeasures, the Company is promoting the practice of health management, introducing telework and free-work systems, and developing e-learning systems and HR systems that encourage employees to obtain external qualifications, but acquiring talent in an increasingly competitive hiring market remains an ongoing challenge.

The telecommunications carriers that supply communication services are limited to a small number of companies, and if these carriers change their policies, causing fluctuations in call rate costs or agency commission terms, this could directly affect the Group's business performance. Although the Company maintains relationships with many business partners to respond to diverse customer needs, the risk of supplier concentration in the telecommunications field has not been resolved.

In the course of handling various types of information, including customer information, if a leak of personal information or other data occurs, the Company could suffer a decline in social credibility and face claims for damages, which could affect subsequent business development and performance. As countermeasures, the Company is strengthening safety measures such as firewalls, anti-virus systems, and access restrictions, and conducting educational training for employees, but risks associated with increasingly sophisticated cyberattacks continue to exist.