Risk Factors

JDI has established the necessary rules and systems, including the “Risk Management Rules”, based on the “Management of Risks of Loss” outlined in the “Basic Policy on the Internal Control System.” These measures are designed to prevent risks from occurring and to minimize their impact should they occur. The “Risk Management Rules” define operational procedures for risk management, including an annual process to identify, analyze and address risks, with the goal of ensuring sustainable and smooth business operations. The PR&IR Department serves as the principal department overseeing these activities.

In line with the risk management framework, each responsible department evaluates the likelihood (frequency) and potential impact (e.g., on sales and profits) of anticipated risks. For risks deemed highly significant, departments prioritize their assessment and formulate and implement measures to avoid, mitigate, or transfer them. The PR&IR Department conducts hearings and other assessments to confirm the implementation status and evaluate the effectiveness of these measures across departments. The results of the annual risk assessment are reported to the Board of Directors following a management review and are communicated to all employees. In addition, risk analysis and countermeasures are incorporated into the formulation of business plans and medium-term business plans.

The following outlines the major risks that may materially affect JDI's financial position, operating results, and cash flows. Please note that this list does not cover all potential risks. JDI may also be affected in the future by risks that are currently unforeseen or considered to be of lower significance.
Any forward-looking statements contained herein reflect the judgment of JDI as of June 23, 2026.

(1) Strategic Risks

① Market Trends and Competitive Environment
Likelihood of Occurrence: High		Impact Level: Significant
Risk Display products, which account for a significant portion of JDI's sales, are affected by fluctuations in end-product markets and changes in the competitive environment. Specifically, significant market volatility driven by economic conditions, shifts in consumer preferences, or seasonality may result in decreased sales, increased costs due to excess inventory, valuation losses, and opportunity losses due to reduced factory utilization. Intensified competition may also lead to declining sales and price pressure.
Countermeasures JDI closely monitors customer demand trends and strives to appropriately manage inventory and production. Under the BEYOND DISPLAY strategy, JDI aims to maintain and expand sales, as well as maintain and optimize selling prices through transformation of its product portfolio. In the display business, JDI is improving efficiency by reviewing its production structure, including the end of production at the Mobara Fab and consolidation of domestic production into the Ishikawa Fab. In addition, JDI is promoting business operations that emphasize profitability through optimization of its product mix. In the sensor and advanced semiconductor packaging businesses, JDI leverages technologies cultivated through its display business, while pursuing differentiation from competitors through collaboration with external partners to maintain its competitive advantage. To more accurately understand its competitive environment, JDI will continue to conduct competitor and external environment analyses.

 

② Technology and R&D
Likelihood of Occurrence: Low		Impact Level: Significant
Risk JDI is engaged in the manufacturing and sales of displays that require advanced technologies, and securing technological superiority is critically important for its competitiveness. To maintain and enhance its high level of technological advantage, JDI continuously promotes R&D activities. However, if JDI's technologies are not adopted by customers, or if competitors' technological advancements lead to a relative decline in JDI's superiority, it could result in decreased sales, thereby impacting its business, performance, and financial condition.
Countermeasures As a technology-driven company built on proprietary technologies, JDI is committed to addressing societal challenges and improving people's lives. In its R&D efforts, JDI carefully selects research targets, conducts progress reviews during development, and determines whether to continue or discontinue projects based on its technology strategy, taking into account competitor developments, product commercialization trends, and customer needs. From a medium- to long-term perspective, JDI is also working to enhance the knowledge and skills necessary for technological development and to improve the efficiency of development and manufacturing processes. Through these initiatives, JDI aims to maintain and strengthen its technological competitiveness.

 

③ Collaboration and Partnerships with Other Companies
Likelihood of Occurrence: Medium		Impact Level: Significant
Risk JDI collaborates with external companies, including material suppliers, equipment manufacturers, and customers. These collaborations aim to strengthen competitiveness, improve profitability, maintain a long-term supply system, and develop new technologies and products. To further enhance competitiveness, JDI may pursue new collaborations, strategic partnerships, investments, or acquisitions in the future. However, these corporate strategies may not be maintained or implemented due to various factors such as financial constraints, changes in strategic objectives, issues in technology management or product development, regulatory approvals from relevant authorities, and market fluctuations. In addition, if these initiatives fail to deliver sufficient results after implementation, JDI's performance and financial condition could be adversely affected.
Countermeasures When engaging in corporate collaborations, investments, or other partnerships, JDI conducts risk analyses of target markets and businesses, as well as the financial condition and other relevant factors of partner companies before making decisions. During implementation, JDI monitors the progress of collaborations and partnerships and makes strategic adjustments or organizational changes as necessary to execute effective business portfolio management.

(2) Financial Risks

① Fundraising
Likelihood of Occurrence: High		Impact Level: Significant
Risk JDI secures operating funds through borrowings from Ichigo Trust.  However, if JDI encounters difficulties in borrowing from Ichigo Trust or financial institutions, or if other fundraising methods do not function effectively, or if asset sales do not proceed as planned, JDI may be unable to secure necessary funds. This could hinder its business operations. In addition, increased interest payments associated with borrowings could negatively impact JDI's financial condition. If the stock acquisition rights are not exercised or only partially exercised, there is a risk of insufficient funding. Conversely, if the rights are exercised, the resulting dilution of shares could reduce the ownership ratio of existing shareholders and potentially affect shareholder value.
Countermeasures JDI has been working to improve its business structure, including reducing fixed costs, through structural reforms such as voluntary retirement programs and the end of production at the Mobara Fab. In addition, JDI raised c. JPY 9.6 billion through the partial exercise of the 14th stock acquisition rights by Ichigo Trust on May 13, 2026. JDI will continue to request the exercise of such stock acquisition rights from Ichigo Trust and aims to improve cash flow and strengthen its financial base by enhancing business performance through the promotion of the BEYOND DISPLAY growth strategy. JDI also aims to diversify its funding sources and enhance funding stability through more sophisticated cash management. JDI will continue its efforts to ensure financial soundness, including reducing its dependence on external funding.

 

② Foreign Exchange Fluctuations
Likelihood of Occurrence: High		Impact Level: Medium
Risk Fluctuations in exchange rates affect transactions with overseas customers, the sales prices and costs of products and services denominated in foreign currencies, and the conversion of foreign subsidiary financials, impacting performance and financial condition. In addition, the assets and liabilities of overseas subsidiaries, which are denominated in local currencies, are converted into Japanese yen when preparing consolidated financial statements. As a result, JDI's financial position is also subject to the effects of foreign exchange fluctuations.
Countermeasures To minimize the short-term impact of major currency fluctuations, JDI employs operational hedging measures such as foreign exchange matching (offsetting dollar-denominated payments with dollar-denominated collections) and netting (shortening settlement periods for foreign currency receivables and payables). These measures help reduce foreign exchange risk. Although JDI currently faces constraints in establishing long-term hedging transactions, the company plans to reconsider optimal hedging strategies once its credit standing improves.

 

③ Relationship with the Controlling Shareholder
Likelihood of Occurrence: High		Impact Level: Significant
Risk As of March 31, 2026, Ichigo Trust is JDI's controlling shareholder, holding 78.2% of JDI's voting rights and exerting significant influence over resolutions at the General Meeting of Shareholders. In addition, Scott Callon, a director of JDI, serves as the Representative Director and CEO of Ichigo Asset Management, Ltd., the investment advisor to Ichigo Asset Management International, Pte. Ltd., which is the investment manager of Ichigo Trust. Accordingly, a potential conflict of interest may arise between the interests of Ichigo Trust and JDI in connection with JDI's management decisions. If Ichigo Trust decides to sell its shares in JDI, the method and scale of such a sale could affect the supply-demand balance and market price of JDI's shares.
Countermeasures In FY21/3, JDI transitioned to a Company with Three Committees. These include the Audit Committee, Nominating Committee, and Compensation Committee, each composed of a majority of external directors. This structure is designed to ensure the independence and transparency of JDI's management. In addition, independent directors make up the majority of JDI's Board of Directors, establishing a system to appropriately monitor and mitigate the influence of the controlling shareholder. Regarding transactions with Ichigo Trust and its related companies, Scott Callon does not participate in the Board of Directors' deliberations or resolutions concerning such transactions in order to avoid conflicts of interest. Furthermore, to comply with the listing standards of the Tokyo Stock Exchange Prime Market, JDI is promoting measures to diversify its shareholder composition. In addition, when shares are sold, JDI provides appropriate information sharing based on independent management decisions, while giving due consideration to the impact on the market.

 

④ Non-Compliance with Listing Maintenance Standards
Likelihood of Occurrence: High		Impact Level: Significant
Risk As of March 31, 2026, JDI was in a state of negative equity and did not satisfy the Tokyo Stock Exchange Prime Market listing requirement regarding net assets. Accordingly, if JDI fails to eliminate its negative equity by the end of March 2027, its shares will be subject to delisting. In addition, JDI's free-float ratio stands at 20.1%, which does not meet the Prime Market listing requirement of 35% or higher. Through its capital alliance with Ichigo Trust, JDI has been granted a special exemption, allowing a compliance plan period until the end of March 2028. If JDI fails to meet the standard within this period, its shares will be subject to delisting. Furthermore, if the free-float ratio declines as a result of the conversion of preferred shares or the exercise of stock acquisition rights, compliance with the requirement may become even more difficult. If improvements in net assets through asset sales and financial measures, as well as improvements in JDI's shareholder composition, do not proceed as planned, JDI's shares may become subject to delisting.
Countermeasures To comply with the listing requirement regarding net assets, JDI aims to record gains on the sale of assets and is considering various financial measures, including requesting additional exercises of stock acquisition rights. With respect to the Mobara Fab, where production ended in November 2025, JDI continues discussions with multiple potential buyers and is working toward an early sale. To enhance its financial soundness over the medium to long term, JDI will continue its efforts to reduce fixed costs through the structural reforms implemented since FY26/3 and to strengthen profitability through the promotion of the BEYOND DISPLAY growth strategy. To comply with the listing requirement regarding the free-float ratio, JDI recognizes the importance of reducing the ownership ratio of its controlling shareholder, Ichigo Trust. In addition to improving business performance, JDI will continue to promote understanding among market participants through proactive disclosure and earnings briefings regarding its initiatives, progress, and future outlook, with the aim of diversifying its shareholder base.

 

⑤ Significant Events or Conditions Related to the Going Concern Assumption
Likelihood of Occurrence: High		Impact Level: Significant
Risk JDI continues to face conditions that raise substantial doubt about its ability to continue as a going concern. During FY26/3, JDI recorded operating losses, impairment losses, and net losses attributable to owners of the parent. In addition, JDI was in a state of negative equity as of the end of FY26/3. Accordingly, circumstances exist that raise substantial doubt about JDI's ability to continue as a going concern. Furthermore, JDI continues to operate in a challenging competitive environment. There is a risk that an early return to profitability may be delayed due to the impact of U.S. tariff policies, persistently high costs for raw materials, energy, and transportation resulting from global inflation, disruptions to supply chains caused by shortages of semiconductors and memory devices and heightened geopolitical risks, and reduced sales resulting from weaker customer demand. In addition, fundraising activities and capital enhancement measures are still in progress, including negotiations with counterparties. Depending on the outcome of these efforts, JDI's funding capabilities and cash flow could be materially affected. Based on these factors, material uncertainty regarding the going concern assumption exists as of the date of this report.
Countermeasures JDI is promoting its BEYOND DISPLAY growth strategy, which aims to transform the company from a display-focused manufacturer by adding sensors and advanced semiconductor packaging as new pillars of its business. Through the restructuring of its product and business portfolio, JDI seeks to achieve an early return to profitability and sustainable business growth. In the display business, JDI implemented the end of production at the Mobara Fab and executed an agreement for the transfer of the Tottori Fab during FY27/3. JDI is also working to improve profitability through production consolidation at the Ishikawa Fab and a focus on high value-added products. In addition, JDI is continuing workforce reductions in Japan and overseas, including voluntary retirement programs, with the objective of establishing an organizational structure aligned with the business scale following the reorganization of its production sites. On the financial front, JDI will continue to implement timely and appropriate fundraising and capital enhancement measures, including the transfer of Mobara Fab, flexible borrowings in response to funding needs, the sale of low-efficiency assets, the liquidation of trade receivables and other assets, and continued requests for the exercise of stock acquisition rights held by Ichigo Trust.

(3) Hazard Risks

① Major Earthquakes, Natural Disasters, and Infectious Diseases
Likelihood of Occurrence: Medium		Impact Level: Significant
Risk JDI's business performance could be significantly affected if a major earthquake, large-scale typhoon, flood, or other natural disaster caused by climate change were to damage employees, facilities, or the supply chain, resulting in substantial disruptions to product supply. Similarly, incidents such as fires or explosions that cause serious harm to employees or surrounding areas could not only severely impact JDI's business performance but also lead to a loss of societal trust. In the event of a pandemic, lockdowns or outbreaks of infections at JDI's sites or within its supply chain could disrupt the delivery of products and services. To mitigate the impact of such disasters, JDI has subscribed to various insurance policies that it considers appropriate for the level of risk. However, these policies may not fully cover all potential damages.
Countermeasures JDI has established Business Continuity Plan (BCP) regulations and a Crisis Management Committee to minimize the impact of unforeseen events on production activities and ensure rapid recovery. In emergencies, JDI activates disaster escalation protocols to share updates, sets up a response headquarters, and works with relevant departments to enable accurate and swift action. JDI has also developed basic safety and health policies and related regulations, establishing a safety and health management system to prevent fires, explosions, and chemical leaks, thereby maintaining safe and stable operations. As part of its disaster preparedness, JDI conducts regular drills for all employees and provides training on the use of safety confirmation systems. At manufacturing sites, JDI regularly conducts emergency response drills for various risks, including fires and chemical or gas leaks. In response to pandemics, JDI has implemented guidelines and action plans. These include restrictions on commuting, business trips, and in-person meetings depending on the situation, to reduce infection risks. JDI has also established internal procedures and attendance rules for cases where employees or their cohabiting family members test positive, aiming to prevent the spread of infection and minimize operational disruption.

 

② Information Security
Likelihood of Occurrence: Medium		Impact Level: Medium
Risk JDI holds confidential information in various forms related to its own technologies, as well as those of customers and suppliers. This includes research and development, manufacturing, sales, business activities, and personal information of stakeholders. Although JDI implements appropriate management measures to protect this information, there is no guarantee that these measures will remain effective in the future. If a cyberattack or other incident leads to the leakage of information managed by JDI, and if such information is improperly obtained or used by third parties, it could result in lawsuits for damages and adversely affect JDI's business performance, financial condition, and social reputation.
Countermeasures To prevent the loss or leakage of confidential information due to misconduct or other factors, JDI has established an Information Security Policy and related regulations. JDI has also set up an Information Security Committee and manages security in compliance with international standards (ISO27001). To mitigate security risks, JDI implements measures such as network monitoring, regular penetration testing to identify potential vulnerabilities, strengthening security protocols to accommodate changes in work styles, and providing regular security education and cybersecurity training for all employees. In the event of an information security incident, JDI follows an escalation protocol to share updates and works closely with relevant departments to ensure accurate and timely responses.

 

③ Geopolitical Risks
Likelihood of Occurrence: Low		Impact Level: Significant
Risk JDI operates manufacturing facilities in Japan and the Philippines and outsources assembly processes to EMS (Electronics Manufacturing Services) providers in China and Taiwan. JDI also has global sales offices, with a significant portion of its total sales coming from overseas customers. In conducting international business operations, JDI is exposed to various geopolitical risks, including economic and political instability in foreign countries, deteriorating relationships with local employees, stricter foreign exchange controls, unexpected new or amended regulations, unfavorable changes in tax systems, legal frameworks, and business environments, administrative measures such as taxation, military impacts from wars or terrorism, and anti-Japanese sentiment that may lead to boycotts. These factors could adversely affect JDI's business, performance and financial condition. In addition, amid rising geopolitical tensions in recent years, customers are increasingly seeking supply chains that do not rely on specific countries or regions. Failure to respond to such requirements could adversely affect JDI's business through the loss of business opportunities or less favorable transaction terms.
Countermeasures In countries and regions where geopolitical risks are increasing, JDI collects information from multiple sources and establishes systems that enable rapid responses. JDI is also promoting supply chain diversification by considering and implementing a wider range of procurement sources and outsourced manufacturing partners, with the aim of reducing excessive dependence on specific countries or regions. In addition, JDI strives to minimize the impact of supply chain disruptions, customer production adjustments due to semiconductor shortages, and rising costs for materials, energy, and transportation on its business operations.

(4) Operational Risks

① Quality
Likelihood of Occurrence: Low		Impact Level: Significant
Risk JDI has established a rigorous quality assurance system at its domestic and overseas manufacturing sites, as well as at outsourced manufacturing partners, to provide customers with high-performance and highly reliable products and services. However, if defects are found in JDI products or services, JDI may be held liable under product liability laws or other legal obligations. In addition, large-scale litigation or product recalls could result in a loss of customer confidence and social credibility, thereby adversely affecting the value of JDI's corporate brand, business performance, and financial condition.
Countermeasures Based on its Quality Policy, JDI has established a quality management system under which all departments involved in planning, design, manufacturing, sales, and services operate the PDCA (Plan-Do-Check-Act) cycle and continuously implement improvements in cooperation with suppliers. For display products, JDI has obtained ISO 9001:2015 certification for its quality management system on a group-wide basis. In addition, manufacturing sites producing automotive display products have obtained IATF 16949:2016 certification, a quality management system standard specific to the automotive industry. As preventive and response measures for product quality and product liability issues, JDI has established and operates various rules and procedures, including the FMEA (Failure Mode and Effects Analysis) Operational Rules and the Product Safety Rules. To prepare for the occurrence of quality-related issues, JDI has established a framework that enables prompt and reliable corrective actions and customer support.

 

② Procurement of Raw Materials and Components
Likelihood of Occurrence: High		Impact Level: Significant
Risk JDI procures raw materials, components, and other supplies from multiple suppliers. As a result, supply delays, shortages, or significant price increases may lead to production delays, increased costs resulting from alternative sourcing, or higher procurement costs. In addition, if procured raw materials or components contain defects, flaws, or specification deficiencies, this may result in delays in product deliveries to customers, product returns, inventory valuation losses, complaints, or legal claims and litigation. Although JDI strives to mitigate these risks through quality control of procured materials and supplier diversification, certain raw materials and components are sourced from a limited number of suppliers due to their specialized nature, and in some cases, it may be difficult to change suppliers. If risks associated with such procured materials and components materialize, JDI's financial condition and business performance could be adversely affected.
Countermeasures To mitigate the impact of rising raw material prices, JDI seeks to pass increased costs on to product prices and implements cost reduction measures. To ensure stable procurement, JDI works to reduce risks by maintaining appropriate inventory levels, establishing multiple supply sources, and verifying suppliers' business continuity planning (BCP) systems in advance. JDI also maintains a database of supplier production locations and has established a framework that enables prompt coordination with suppliers in the event of a disaster. To promote sustainable and responsible procurement, JDI distributes “JDI Supply Chain Sustainability Guidebook” to all Tier 1 suppliers as well as Tier 2 suppliers that provide materials through trading companies, and requests compliance with its requirements. In addition, JDI conducts periodic self-assessments using “Voluntary JDI Supplier Sustainability Survey” to confirm suppliers' compliance with these requirements.

 

③ Climate Change and Environmental Regulations
Likelihood of Occurrence: Medium		Impact Level: Significant
Risk The increasing frequency and severity of natural disasters associated with rising global temperatures may disrupt JDI's supply chain, reduce productivity, and increase business continuity planning (BCP) costs. In addition, strengthened efforts toward decarbonization (carbon neutrality) may result in increased costs, while insufficient environmental initiatives that fail to meet customer requirements could lead to reduced business opportunities. The future introduction of carbon pricing could also adversely affect JDI's business performance and financial condition. Furthermore, stricter environmental laws and regulations in Japan and overseas may increase compliance-related costs. Any violation of such laws or regulations could adversely affect JDI's business performance and social reputation.
Countermeasures JDI recognizes climate change as one of its key management issues and promotes environmental initiatives under the leadership of its CEO, who has overall responsibility for environmental matters. In addition, JDI conducts scenario analyses based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to identify climate-related risks and opportunities. As adaptation measures against the physical impacts of climate change, JDI is diversifying its supplier base and maintaining a certain level of product inventory. JDI also evaluates appropriate inventory levels for raw materials and components based on BCP assessments and plans to expand the use of outsourced manufacturing in a strategic manner. To address environmental regulations, JDI has established an environmental management system to ensure compliance with environmental laws and regulations and to respond promptly to regulatory changes. In addition, JDI discloses environmental performance data and calculates and discloses greenhouse gas emissions data, including Scope 3 emissions. Furthermore, JDI will continue to promote energy conservation and renewable energy initiatives in preparation for the potential introduction of carbon pricing.

 

④ Internal Controls and Compliance
Likelihood of Occurrence: Medium		Impact Level: Significant
Risk In FY20/3, JDI identified inappropriate accounting practices in prior fiscal years, which resulted in a material weakness in internal control over financial reporting. As a result, in July 2020, shareholders filed a lawsuit against the Company and ten former directors seeking damages of approximately ¥3,858 million, alleging losses arising from such deficiencies. To address this issue, the Company established the Governance Improvement Committee and implemented company-wide recurrence prevention measures. As a result, the material weakness was remediated by the end of FY21/3, and effective internal control reporting has been maintained since then. However, despite ongoing efforts to prevent recurrence, if such measures fail to function effectively or new deficiencies in internal control arise, the reliability of JDI's financial reporting could be adversely affected. In addition, JDI is subject to various domestic and international laws and regulations relating to commercial transactions, antitrust matters, intellectual property rights, product liability, environmental protection, human rights, occupational safety, and import and export controls. Violations of such laws and regulations could result in administrative penalties, criminal sanctions, suspension of business transactions, loss of social credibility, or other significant damage to the Company.
Countermeasures To prevent the recurrence of inappropriate accounting practices, JDI continues to implement measures including the systemization and enhancement of accounting operations. With respect to the lawsuit, the Company will continue to respond appropriately based on the claims asserted by the plaintiffs. In accordance with the Basic Compliance Rules, JDI has established a Compliance Committee as a forum where relevant departments discuss and promote various measures aimed at establishing, disseminating, and embedding compliance systems and practices throughout the organization. In addition, JDI operates an internal whistleblowing system to facilitate the correction of compliance violations and maintain public trust. JDI also conducts periodic compliance surveys of employees to monitor compliance practices and encourage the reporting of potential issues. To ensure strict compliance with the Antimonopoly Act and competition laws in various countries, JDI continues to strengthen compliance programs, employee education activities, and response measures in the event of violations.

 

⑤ Securing Human Resources
Likelihood of Occurrence: Medium		Impact Level: Significant
Risk JDI recognizes that securing and retaining the human resources necessary for the continuity and smooth operation of its business is an important management issue. As JDI's workforce has been reduced due to the voluntary retirement program and other measures implemented during FY27/3, there is a risk that JDI may not be able to secure a sufficient workforce with the skills required to maintain stable operation of existing businesses, launch new businesses, and expand business domains. In addition, increased dependence on specific personnel could hinder the launch and execution of business initiatives as planned. Furthermore, if employee turnover increases or employee motivation declines due to the business environment surrounding the Company or its business performance, the development of human resources and the transfer of technology and expertise may not proceed smoothly. These factors could adversely affect JDI's business, operating results, and financial condition through disruptions to business continuity, declines in operational efficiency, or delays in the growth of new businesses.
Countermeasures Taking into account its business scale and business strategy, JDI is working to establish an organizational structure that enables the smooth operation of both existing and new businesses even under a limited workforce. Specifically, JDI is reviewing business processes and promoting operational consolidation and efficiency improvements. In addition, by clarifying business priorities and implementing appropriate personnel assignments and role sharing, JDI seeks to foster an organization in which employees can maximize their strengths. JDI is also promoting greater operational efficiency and workload reduction through the utilization of AI. At the same time, it seeks to mitigate excessive dependence on specific personnel by encouraging the sharing of knowledge and technical expertise through on-the-job training (OJT) and by establishing systems under which multiple employees can perform key functions. Through these initiatives, JDI aims to maintain and enhance its organizational capabilities while stabilizing its human resource base, including support for the advancement of new businesses, in response to changes in the business environment.

 

⑥ Intellectual Property Rights
Likelihood of Occurrence: Medium		Impact Level: Medium
Risk JDI conducts its business utilizing technologies that constitute a source of its competitive strength and recognizes the appropriate management and utilization of intellectual property rights as important to the execution of its business. The Company has transferred a portion of its intellectual property rights, including patents, to a subsidiary of Ichigo Trust and conducts its business under royalty-free licenses granted for such intellectual property rights. Accordingly, if changes occur in the contractual assumptions underlying such licensing arrangements or in the nature of the Company's business activities, JDI's business operations may be adversely affected. In addition, JDI continues to create new intellectual property through research and development activities. However, if JDI is unable to obtain intellectual property rights, if there is a risk of infringing third-party intellectual property rights, or if JDI is unable to secure necessary licenses from third parties on reasonable terms, its competitive position may be adversely affected. These factors could adversely affect JDI's business, operating results, and financial condition.
Countermeasures With respect to the intellectual property rights transferred to a subsidiary of Ichigo Trust, JDI has secured royalty-free licensing rights and appropriately manages the relevant contractual arrangements while maintaining close coordination with the relevant parties to ensure stable business operations. For intellectual property created in the future, JDI promotes the appropriate management and utilization of such intellectual property in alignment with its business strategy and research and development activities. In addition, JDI has established a framework to respond appropriately to potential claims of intellectual property infringement or changes to licensing terms through the assignment of specialized personnel and cooperation with external experts. Furthermore, in the development and design of new technologies, JDI conducts thorough prior-art searches and investigations of third-party intellectual property rights. JDI also strives to improve the effectiveness of intellectual property acquisition and utilization by maintaining a comprehensive understanding of intellectual property laws, examination standards, and procedures in the relevant jurisdictions.

 

⑦ Human Rights
Likelihood of Occurrence: Medium		Impact Level: Significant
Risk If human rights violations, such as forced labor or child labor, occur within JDI's supply chain, JDI may face difficulties in procuring raw materials and components. In addition, suspension of transactions by customers or other suppliers could adversely affect JDI's business performance, financial condition, and social reputation.
Countermeasures JDI promotes measures in accordance with the United Nations Guiding Principles on Business and Human Rights (UNGPs). To address human rights issues within its supply chain, JDI distributes JDI Supply Chain Sustainability Guidebook and requests compliance with its requirements. In addition, JDI conducts periodic self-assessments to verify suppliers' compliance with such requirements. To ensure responsible mineral sourcing, JDI conducts conflict minerals surveys to confirm that its procurement activities do not contribute to the financing of armed groups. JDI also provides regular employee training and awareness programs on human rights, harassment, and related issues.