TANABE CONSULTING GROUP CO.,LTD.

The Company employs a team consulting model, but if a mass outflow of personnel occurs or recruitment, training, and retention do not progress smoothly, this could constrain business expansion and affect operating results and financial condition. As countermeasures, the Company is promoting reinforcement of new graduate and career recruitment through investment in recruitment branding, early skill development utilizing digital educational content through the "TCG Academy," motivation enhancement through a personnel system linked to FCC generation, and workplace environment improvement through Smart DX investment.

The Company manages confidential customer information obtained through consulting operations and customer information of past business partners, and if information leakage occurs due to unauthorized external access or errors by internal personnel, this could damage the Company's credibility and affect operating results and financial condition. The Company positions information management as a top management priority and implements employee training based on personal information protection regulations and information systems management regulations, conclusion of confidentiality agreements with outside contractors, and appropriate supervision.

Given the nature of consulting operations, officers and employees have opportunities to access undisclosed information of client companies, and should insider trading occur, it could significantly damage the Group's credibility and affect business strategy and operating results, among other matters. The "Compliance Ethics Charter" stipulates the prohibition of insider trading and the handling of information obtained in the course of business, and the Company continuously provides guidance and education to officers and employees regarding compliance with confidentiality obligations.

As part of its diversification strategy in the management consulting field, the Company positions M&A as an important strategic option, but if problems arise in group management due to rapid expansion of group companies, appropriate business operations could become difficult, affecting operating results and financial condition. As countermeasures, the Company and TANABE CONSULTING Co., Ltd. dispatch officers and executives to group companies for supervision, the Corporate Strategy Division attends board meetings and management meetings of group companies and receives regular reports, and progress is confirmed at the Company's board meetings and management meetings.

If defective products occur in goods and notebooks manufactured through outsourcing to external processing contractors, this could result in burdens such as discounts, remanufacturing, recall, and disposal, affecting operating results and financial condition, and there is also a risk of claims for damages under the Product Liability Act (PL Act) if accidents arise from product defects. The Company focuses on establishing a quality control system, including supplier management, and prepares for such risks by taking out product liability insurance (PL insurance).

The Company provides educational content via the cloud through ACADEMY CLOUD+®, but if a prolonged communication network failure occurs due to a disaster, power outage, or similar cause, this could make it impossible to provide content, leading to customer attrition and affecting operating results and financial condition. The Company has established failure countermeasures such as external access control, authentication, virus checking, and data backup, as well as a recovery framework in the event of a failure, and strives to improve system reliability.

If the Group unknowingly infringes on intellectual property rights held by third parties, or if intellectual property rights held by the Group, such as consulting know-how, design, and DX-related technology, are infringed by third parties, this could affect operating results and financial condition. The Legal Affairs Department of the Corporate Strategy Division responds with the utmost care based on specialized expertise, but complete elimination of this risk remains difficult.

In business activities in overseas fields such as cross-border M&A and overseas PR, if risks specific to overseas markets materialize—such as the enactment, revision, or repeal of laws and regulations, changes in various regulations, social and political turmoil caused by terrorism, war, or regional conflicts, and exchange rate fluctuations—this could impede overseas business activities and affect business strategy and operating results, among other matters. The securities report does not describe specific countermeasures, emphasizing the difficulty of foreseeing such risks.

The Company provides support for digital marketing, BPR/DX, and AI adoption and utilization as part of its DX/AX promotion support for client companies, but if unforeseeable malfunctions or information management risks arise due to further technological innovation, this could impede business operations or cause damage to client companies, potentially affecting operating results and financial condition. The rapid pace of technological innovation and the difficulty of predicting risks in advance are cited as distinctive features of this risk.

While the Company is currently not subject to restrictions such as licensing requirements from relevant government ministries and agencies, if it becomes subject to some form of restriction due to future enactment or revision of laws and regulations, this could affect operating results and financial condition. The consulting industry is currently a lightly regulated sector, but this is recognized as a risk of future regulatory tightening.