I X Knowledge Incorporated

There is a risk that project prices may decline against a backdrop of intensifying competition in the information services industry and delayed response to advanced technologies. A sudden change in the economic climate or intensification of price competition could lead to an increase in unprofitable projects or failure to win projects. As countermeasures, the Company promotes understanding of customers' IT investment trends, expansion of service areas, and diversification of the technologies and business fields it addresses.

If the Company is unable to secure and develop capable engineers, it may become difficult to conduct business activities that respond to increasingly advanced and diversified technologies. A shortage of engineers directly leads to lost order opportunities and deterioration in project quality, making this a fundamental risk to business continuity. As countermeasures, the Company implements new graduate and career hiring, in-house education and training, and the acceptance of personnel dispatched from partner companies.

In increasingly complex system development projects with shortened delivery times, there is a risk that quality assurance may not proceed as planned or that costs may increase due to development period overruns. The occurrence of unprofitable projects is a risk that directly affects business results. As a countermeasure, a dedicated department is responsible for checks at the order-acceptance stage and for process progress management.

Sales to the top five major customers (including group companies) account for more than 50% of total sales, and if these customers change their business policies or their business conditions deteriorate, it could have a material impact on the Group's business results and financial condition. As countermeasures, the Company is working to acquire new customers, expand its core businesses, and create next-generation growth businesses.

The Company holds customer information, personal information, trade secrets, and other confidential information, and there is a risk that such information could be leaked or disclosed, which could result in loss of customer trust and legal liability. As an information services company handling a large amount of confidential customer information, this is an important risk to business continuity. As a countermeasure, the Company promotes timely and appropriate information security measures aimed at realizing a safe and secure business environment.

If officers, employees, or others commit compliance violations, the Company could face critical media coverage and social sanctions, lose social credibility, and suffer a material impact on business continuity. As countermeasures, the Company has established the "IKI Group Corporate Philosophy and Code of Conduct," and is working to thoroughly implement compliance education and strengthen internal control systems including risk management.

The Company is subject to the Worker Dispatching Act, the Subcontract Act, and other related laws and regulations, and there is a risk that violations could result in the application of statutory penalties. Since dispatch and outsourcing arrangements are common in the information services industry, thorough legal compliance is essential. As a countermeasure, the Company thoroughly checks compliance items on each project.

Excessive workloads for employees and inadequate occupational health and safety management pose a risk of loss of human capital and decline in social trust. The emergence of labor issues could lead to reduced recruiting strength and hinder business operations. As countermeasures, the Company promotes reduction of overtime and holiday work hours, development of health management systems, and support for mental health measures.

There are risks such as unexpected liabilities arising after investment through capital alliances, obstacles to executing business plans, failure to achieve synergies due to loss of customer base or key employees, and inability to recover the amount invested. If the originally anticipated business development becomes difficult to achieve, it could adversely affect the Company's financial condition and business results. As countermeasures, the Company conducts due diligence prior to investment and appropriate management after investment.

The occurrence of earthquakes, floods, fires, terrorism, computer virus infections, pandemics, and other events could cause all or part of business operations to be suspended, posing a risk of material impact on business continuity. As countermeasures, the Company promotes the preparation of disaster response manuals, establishment of safety confirmation systems, development of remote work systems, and construction of system backup systems.