MTI Ltd.

If the company falls behind in catching up with rapidly advancing technology, its services may become obsolete, potentially resulting in the number of service users falling below expectations. There is also a risk that development costs required to adopt new technologies may exceed expectations, making it difficult to maintain an efficient development structure. As countermeasures, the company continuously promotes the development of high-value-added solutions utilizing the latest technologies such as AI, and continues to strengthen its development structure.

If differentiation from competitors becomes difficult, there is a possibility that revenue from each service may not be secured as planned. Intensifying price competition, including from free services, could lead to customer attrition to competitors' services and a decline in cost competitiveness, creating a risk that maintaining relationships with service users and business partners becomes difficult. The company is working to develop new customers and create added value by maximizing synergies within the group.

If communication line disruptions or system downtime caused by natural disasters, accidents, unauthorized access, or other factors continue for an extended period, the company may be forced to suspend operations, potentially having a material impact on its business, results of operations, and social credibility. The company's cloud services primarily use AWS and Microsoft Azure as major data centers, and there is also a risk of service disruption if failures occur at these providers and alternative measures cannot be established. As countermeasures, the company implements data backups, builds system trouble response measures, and strengthens information security, including countermeasures against unauthorized access.

The Content Business accounts for an extremely large proportion of the group's profits, and the business structure is highly dependent on distribution licenses from content holders and on mobile carriers. If these business partners change their business strategies, making it difficult to continue contracts, this could have a material impact on the company's results of operations and financial position. Since the main sales channel is concentrated in mobile phone shops nationwide, diversifying sales channels remains a challenge.

The company is focusing on the Healthcare Business, which is expected to grow, but unexpected changes in the business environment could prevent it from achieving its business plans, potentially resulting in insufficient future revenue to justify the upfront investment. Since major customers span local governments, hospitals, dispensing pharmacies, and health checkup institutions, there is also a risk that changes such as the abolition, revision, or introduction of laws and regulations affecting these customer industries could affect the company's management. The company conducts its business operations while paying particular attention to regulatory trends.

The company group handles a large volume of personal information, and if a leak occurs, it could have a material impact on results of operations and financial position. The company thoroughly protects personal information through the establishment of strict management systems, ensuring information security, developing and enhancing information handling regulations, and providing education, training, and awareness activities for employees and business partners. Compliance with the Personal Information Protection Act is a particularly important related legal requirement.

If various laws and regulations, including the Medical Care Act, the Act on Pharmaceuticals and Medical Devices, the Payment Services Act, the Personal Information Protection Act, the Consumer Contract Act, the Specified Commercial Transactions Act, the Antimonopoly Act, and the Act against Unjustifiable Premiums and Misleading Representations, are revised or newly enacted, the company may be forced to change service content, incur increased operating costs, or restrict or suspend business operations. The company has multiple business areas, including the Healthcare Business and the School DX Business, that are susceptible to regulatory changes, and there is a risk that the costs of responding to regulatory changes could affect results of operations and financial position.

Representative Director and President Toshihiro Maeda plays a central and important role in creating new business models and promoting each business, and if he becomes unable to perform his duties for any reason, this could affect results of operations and financial position. To avoid excessive dependence on him, the company is focusing on developing and strengthening its personnel and aims to decentralize its management structure.

Utilizing the latest technologies such as AI and developing the development structure are essential for expanding business scale and achieving sustainable growth; however, amid the ongoing labor shortage and shortage of IT personnel both domestically and internationally, if the company is unable to secure sufficient personnel, this could affect its results of operations and financial position. Recognizing the retention, development, and acquisition of excellent personnel as an important issue, the company continuously invests in human resources and promotes work-style reforms.

Through new businesses, business alliances, and corporate acquisitions, the company holds intangible assets such as software and goodwill, as well as financial assets such as shares in affiliated companies. If changes in the business environment prevent the company from achieving the results originally planned, and it determines that sufficient future economic benefits to justify the investment recovery cannot be expected, impairment losses or losses on business divestiture may occur, potentially affecting results of operations and financial position. Although the company conducts appropriate impairment assessments, accurately predicting the timing and amount of such occurrences is difficult, and inherent uncertainty exists in these estimates.