The CLOMO business, the Group's mainstay business, provides MDM services to companies in the form of SaaS using the cloud through subscription contracts. Client companies lend mobile terminals (smartphones, tablets, etc.) with CLOMO installed to their employees, etc., who can then provide information to their employees, receive deliverables from their employees, and manage their employees' working hours through these mobile terminals.

However, this business is subject to domestic and international economic conditions, client trends, rapid technological evolution, and diversifying client needs, and delays in responding to these factors may affect the Group's financial position and operating results.

The CLOMO business, our mainstay business, has many sales channels through cell phone sales companies and cell phone sales agents, and the top Group companies of our sales partners account for 50.2% of our sales (as of June 30, 2024). Although we have established a good relationship with such sales partners, the financial position and operating results of the Group may be affected if the good relationship is damaged due to an unexpected change in the sales policy of the sales partner or a serious defect caused by our Group.

The Group operates a CLOMO business and an investment business, but as of the date of submission, no sales have been recorded for the investment business, and all sales for the current consolidated fiscal year were generated by the CLOMO business. Therefore, if the growth of the MDM market, to which the CLOMO business belongs, does not proceed as expected, or if the Group is unable to respond appropriately to changes in the business environment, the financial position and operating results of the Group may be affected. On the other hand, as stated in (4) above, the Group intends to develop new businesses in order to diversify its revenue sources, and will continue to build an alternative revenue base.

The Group's mainstay business is the CLOMO business, but in order to diversify its revenue sources, the Group intends to develop new businesses while carefully examining the risks involved. If the development or monetization of new businesses does not proceed as planned, we may not be able to recover our investment, for example, we may be required to record an impairment loss. In addition, depending on the nature of the new business, there may be additional risks inherent in the business. Depending on the nature and progress of these new businesses, the Group's financial position and operating results may be affected.

In the CLOMO business, which is our mainstay business, we make contracts with end users, who are our corporate customers, in conjunction with sales of mobile handsets by cell phone sales companies and cell phone sales agents. Therefore, end-users may switch to mobile handsets sold by other companies due to deterioration in the relationship between end-users and mobile phone sales companies or mobile phone sales agents, or other factors, and terminate their contracts without the Group's involvement. Although we anticipate future cancellations in our budgets and business plans, a cancellation that exceeds our expectations could affect the financial position and operating results of our group.

As a measure to address this risk, the Company has established a generous support system that promptly resolves customer inquiries. In addition, the Company conducts periodic interviews to strengthen relationships with customers and holds step-up seminars where customers can learn about the use of CLOMO MDM. We are working to ensure that customers can continue to use our products even after switching mobile devices through these support and customer success activities.

In the MDM market to which the CLOMO business belongs, if price competition intensifies due to new entrants or competition with other companies, and if contracts cannot be concluded at the expected unit price, the financial position and business performance of the Group may be affected.

In addition, our group provides CLOMO services using the operating systems and infrastructure provided by so-called "platforms" such as Apple Inc. These platforms also provide their own MDM services, but if they change their fee structures or usage restrictions for our group, or if they stop providing services to our group, our group's financial position and operating results may be affected.

The Group handles the information assets of numerous client companies in connection with its business operations. The Group has established information system management regulations and conducts education and training on information security for its directors and employees to ensure thorough information management. The Group also uses a system with integrated threat management capabilities, and furthermore, it is strengthening its information security system by implementing measures such as receiving checks from outside experts.

However, in the event of an external cyber attack, erasure of important data due to employee negligence, or unauthorized acquisition by employees, as well as the leakage of important information assets to outside parties for any reason, the Group's financial position and operating results may be affected due to loss of public trust in the Group, liability for damages, etc. In addition, if important information assets are leaked to outside parties for any reason, the Group's financial position and operating results may be affected due to loss of public trust and liability for damages.

There is no evidence that the Minebea Group has been involved in any problems with third parties, such as major lawsuits or claims, that could have a significant impact on future business performance. However, in the course of its business activities, there is a risk of being the subject of various lawsuits, including those related to intellectual property rights, the environment, labor, etc. If a serious lawsuit is filed that may have a significant impact on future business performance, or depending on the outcome of the lawsuit, the Group's business and business performance may be affected. In light of these risks, we are striving to enhance internal controls and strengthen compliance in the execution of our business activities.

In addition, in order to prevent lawsuits related to intellectual property rights in the course of business development, our group conducts patent searches of intellectual property rights through patent firms, and we are not aware of any infringement of intellectual property rights of other companies by our group's technology or other products. However, it is difficult to fully grasp the intellectual property rights of third parties related to our group's operations, and we cannot deny the possibility that our group may infringe on the intellectual property rights of other companies without our knowledge. In such cases, the Group's financial position and operating results may be affected by claims for damages as infringement of intellectual property rights.

The Group provides its services over the Internet using cloud services provided by Apple Inc., Google LLC, Microsoft Corporation, and others. Therefore, damage to the Internet communication network due to natural disasters or accidents, or server downtime due to an unexpected surge in access, may cause problems in the provision of our group's services. In such an event, compensation to end-users and other expenses would be incurred, which may affect the financial position and business performance of the Group.

As a countermeasure to this risk, we will strengthen the system to promptly recover from failures, etc., based on distributed backup data.

To ensure the appropriateness of its operations and the reliability of its financial statements, the Group appropriately operates an internal control system. In addition, the Group has established an Internal Audit Office, has developed and enhanced compliance-related regulations, and conducts ongoing training and other educational activities for employees to ensure compliance with laws and regulations. However, in the event of intentional or unforeseen serious violations of compliance or laws and regulations, the Group's social credibility may be damaged, which may affect its financial position and business performance.

Our group is a small organization with 157 employees (as of the end of the current fiscal year), and our business execution system is designed accordingly. Our policy is to train employees and Career according to future business expansion and to enhance the business execution system. However, if these measures do not proceed in a timely and appropriate manner, the financial position and business performance of our group may be affected. In addition, if we are unable to cope with a rapid increase in the number of employees, or if a number of employees leave the company, our business plan may not progress as expected, resulting in a long-term decline in competitiveness or lost opportunities, which may affect the financial position and business performance of our group.

Tsutomu Sasaki, the founder, President and CEO our group, has provided strong leadership to our group since its establishment by planning and implementing management policies and strategies and promoting system development. Most of the intellectual property rights owned by our group are the work of Mr. Sasaki. Although our group has established a stable management system by delegating authority to the leaders of each department, there is a possibility that the financial position and business performance of our group may be affected in the event of an unforeseen event that occurs to Mr. Sasaki.

The Group believes that it is necessary to secure appropriate human resources in line with the expansion of its business, and needs to secure personnel with advanced technical skills, mainly in software development.
However, if the Group is unable to secure human resources smoothly, its financial position and operating results may be affected.

The Company grants stock acquisition rights to its officers and employees as an incentive. When these stock acquisition rights are exercised, new shares of the Company's stock are issued, which may dilute the value of the shares and the percentage of voting rights held by existing shareholders. As of the end of the current fiscal year, the number of latent shares resulting from these stock acquisition rights was 93,740 shares, equivalent to 1.76% of the total number of outstanding shares of 5,303,750 shares.

The ratio of shares of the Company held by venture capitalists and investment partnerships formed by venture capitalists (hereinafter referred to as "venture capitalists, etc.") to the total number of shares issued by the Company was 5.17% as of the end of the current consolidated fiscal year. The ratio of shares of the Company held by venture capitalists and investment partnerships formed by venture capitalists (hereinafter referred to as "venture capitalists, etc.") to the total number of outstanding shares of the Company was 5.17% as of the end of the current fiscal year. Depending on the trend of the Company's stock price, there is a possibility that the venture capitalists, etc. may sell all or part of their holdings of the Company's stock, which may cause short-term damage to the supply-demand balance of the Company's stock in the stock market and affect the market price of the Company's stock.

As measures to address this risk, the Company will conduct IR activities for sound stock price formation, such as financial results briefings for general shareholders and ongoing meetings with institutional investors, as well as shareholder building from a medium- to long-term perspective.

The Group is developing a business model of licensing and providing technologies developed in-house, rather than contracted development, and plans to invest a large portion of its budget in research and development, which forms the basis of its business model. However, in the event of a major deviation from forecasts or a change in R&D policy, the Group may not be able to recover the invested funds and business development may be delayed, which may affect the Group's financial position and operating results. However, in the event of a major failure in forecasting or a change in R&D policy, the Group may not be able to recover the invested funds and business development may be delayed, which may affect the financial position and business performance of the Group.

In order to create new sources of revenue, our group invests in companies that have a high affinity with our group's business areas, companies that solve social issues, and companies that are active locally in Kyushu, where our group is headquartered. Depending on the business conditions of the investee companies, the Group may incur valuation losses on its securities holdings, which may affect the Group's business development, business performance, and financial position. In addition, there is no guarantee that we will be able to sell the shares of the investee at a price that exceeds the acquisition cost, and there is a possibility that the expected capital gain will not be realized or that the invested funds will not be recovered.

Our group has a software development company based in Vietnam as an overseas subsidiary, which operates a contracted development business there and also outsources some of the parent company's development work. Therefore, changes in Vietnam's politics, economy, laws, and regulations, social turmoil such as war and terrorism, and unforeseen drastic changes in the labor environment could affect the Group's business performance and financial position. Although the subsidiary became a consolidated subsidiary in the current fiscal year, only its balance sheet is consolidated in the current fiscal year because the deemed acquisition date is April 1, 2024.

The CLOMO business, the Group's mainstay business, provides MDM services to enterprises in the form of SaaS using the cloud, and the cost of sales includes usage fees for cloud services. Since these usage fees are paid mainly in U.S. dollars, a rapid depreciation of the yen could increase the cost of sales and affect the financial position and operating results of our group. In addition, our group has an overseas subsidiary based in Vietnam, and exchange rate fluctuations may affect our group's financial position and operating results when converting the financial statements of this subsidiary into yen.

In accordance with the Financial Instruments and Exchange Law and other laws and regulations, as well as the "Timely Disclosure of Corporate Information, etc." (hereinafter referred to as "Timely Disclosure Rules") of the Securities Listing Regulations established by the Tokyo Stock Exchange, we will promptly disclose information in a transparent, fair, and continuous manner. Even in cases not covered by laws and regulations or the Timely Disclosure Rules, we will actively and fairly disclose information that we deem important or useful for shareholders and investors to understand our company. We do not disclose personal information, customer information, or information that may infringe on the rights of related parties.

Information required by the Timely Disclosure Rules shall be disclosed through the Timely Disclosure Network (TDnet) provided by the Tokyo Stock Exchange in accordance with the Rules, and shall also be promptly posted on the Company's website after being disclosed through TDnet. Information not covered by the Timely Disclosure Rules, but deemed important or useful, will be widely disclosed by posting it on the Company's website.

To prevent insider trading, the Company has established internal transaction control regulations to prevent insider trading. In addition, the Company holds regular internal training sessions to prevent insider trading, including not only the Company's own shares but also the shares of business partners, etc., from which insider information may be obtained in the course of duties, in order to ensure thorough awareness among officers and employees.

The statements other than those relating to past or present facts are forward-looking statements, and are based on plans, expectations, and judgments based on information currently available to the Company and certain assumptions that are judged to be reasonable. Therefore, actual results may differ from the disclosed forecasts, etc., due to variable factors such as economic conditions and various other uncertainties.

In order to prevent the leakage of information that could affect the stock price of the Company, such as financial information (including quarterly financial information), the Company has established the period from the day following the date of the full-year and quarterly financial results to the date of the announcement of financial results as a "Quiet Period. During the quiet period, the Company refrains from making any comments regarding financial results. However, this does not apply to cases in which the Company recognizes that there is or may be a significant impact on the capital market. In addition, the Company will make timely announcements regarding revisions to earnings forecasts, dividend forecasts, and explanations of differences in accordance with the Timely Disclosure Rules.