SAISON TECHNOLOGY CO.,LTD.

In providing the System Contracting Business for financial and distribution/retail companies as well as public cloud services, if information security deficiencies occur—such as communication network failures or personal data leakage due to cyberattacks or computer viruses—this may result in loss of credibility, loss of customers, damages claims, and other impacts. As countermeasures, the Company has built an ISMS-compliant framework, established internal rules taking into account GDPR and other countries' regulations, built a CSIRT, introduced CSPM services, and conducted regular security training.

Global climate change may alter the living foundations of customers, business partners, and employees, potentially causing changes in the business environment, and is positioned as an important medium- to long-term risk. In addition, if major earthquakes, fires, infectious diseases, or other events cause significant disruption to system operation and support services, this may affect business performance and financial condition through damages claims or loss of trust. As countermeasures, the Company implements earthquake- and fire-resistance measures for data centers, security measures, securing access routes to external resources, and enhancement of internal education.

The design and construction of information systems is knowledge-intensive and labor-intensive work, and securing excellent engineers with a certain level of skill or above is essential for business expansion. If the Company is unable to secure the necessary engineers due to a tight labor market, insufficient follow-up support for new hires in a telework environment, or mass resignations, business development may be constrained. As countermeasures, the Company is working to minimize mismatches by increasing touchpoints with employees from application through joining the Company, activating real communication, and developing diverse career paths and employee-friendly systems and environments.

In contracted development projects, even for projects judged to have appropriate profitability at the time of order, project management issues during the development stage, or unexpected expansion of development scope or increases in man-hours, may result in the project becoming unprofitable. In such cases, business performance and financial condition may be affected by recording of order losses, damages claims due to delivery delays, and impairment losses on related assets. As countermeasures, the Company has introduced checksheets by the Project Review Committee, promoted company-wide development standards and procedures, and conducts regular monitoring.

The Company is focusing on developing proprietary services and software to strengthen market competitiveness, but particularly the development of new services involves high uncertainty. If future revenue plans are revised downward, or if development plans are delayed or costs increase such that the investment recovery plan is expected to fall short of the original plan, the Company may record impairment losses on fixed assets. As countermeasures, the Company monitors progress through the Project Review Committee and milestone reviews, promotes modern development, and grasps customer needs and shares information at management meetings.

Sales to Credit Saison Co., Ltd. account for 31.1% of total consolidated net sales, and if sales to this company decline, business performance and financial condition may be affected. In addition, if sales of the core software product "HULFT" decline due to changes in the market environment or intensifying competition, this may have a material impact on business performance and financial condition. As countermeasures, the Company is diversifying risk by promoting business expansion into new technologies and new fields, thereby developing more profitable businesses in new markets and with new customers.

As the Company promotes global expansion of "HULFT," "DataSpider Servista," and "HULFT Square" and focuses on the DX field, differences in legal systems in certain regions may give rise to issues related to intellectual property rights. There is a possibility of being sued for damages for infringing on others' intellectual property rights, or being unable to obtain licenses and thus unable to provide certain technologies, products, or services, either of which may affect business performance and financial condition. As countermeasures, the compliance department and risk management department, among others, verify third-party intellectual property and appropriately manage the Company's own intellectual property.

In global corporate activities, including intra-group transactions such as providing products and services to overseas offices and outsourcing development, as well as the use of services from overseas vendors, sudden foreign exchange fluctuations may affect business performance and financial condition. The securities report does not describe specific countermeasures such as hedging methods, and the significance of this risk may increase as global business expansion proceeds.