MIRAIT Holdings Corporation

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Business Risks

The MIRAIT Group is exposed to the following risks that could affect its operating results and financial position.

1.Risks associated with excessive dependence on particular clients

The main clients of MIRAIT Group are telecommunications carriers such as the NTT Group. Owing to the fact that they account for a large portion of net sales, their capital expenditures or technological breakthroughs and other factors could affect the Group’s business results.

2.Risks associated with safety and quality issues

The MIRAIT Group is wholly committed to ensuring safety and quality controls needed to deliver quality engineering and services that deserve customers’ trust and appreciation, by leveraging the integrated safety and quality management system operated by its business companies.

However, in the event of serious accidents, quality issues or other contingencies, there may be severe social consequences which may result in the loss of clients’ confidence and restrictions on the Group’s operating activities, affecting its business results.

3.Risks associated with the management of critical information

In handling critical information, such as technical data and personal information provided by clients, the MIRAIT Group is wholly committed to the prevention of leakage of classified information through the use of ISMS (information security management system) operated by the business companies.

In the event of unforeseen information leakage, however, the Group may suffer liability for damages with potential impact on its financial results. Such event may also result in the loss of client’s confidence, affecting the Group’s business results.

4.Risks associated with uncertainties regarding clients’ credit quality

The MIRAIT Group adopts measures to avoid credit risks, such as the use of external credit agencies for client credit risk management, and contract document reviews by the legal section.

However, if uncertainties arise regarding the credit quality of a client, the Group may not be able to collect fees for engineering work or may be forced to delay construction work, which could affect the Group’s business results.

5.Risks associated with assets held by the Group

The MIRAIT Group holds assets such as real estate and securities that are required for operational purposes. Significant fluctuation of the fair values thereof could affect the Group’s business results.

6.Risks associated with natural disasters

The MIRAIT Group has adopted countermeasures against events such as natural disasters including earthquakes, but the occurrence of contingencies such as shortages of electricity, fuel or materials resulting from such events may affect the Group's business results.