Caulis Inc.

In FY2025 (ending December 2025), the top 10 customers accounted for 63.0% of total net sales, with the majority concentrated among financial institutions such as banks, securities companies, and credit card operators. If a customer company changes its management policy or contract terms, or if customer expansion does not proceed as planned, net sales could be directly and adversely affected. The Company is working to diversify this dependence risk by expanding transactions with customers in other industries.

The Company has established a differentiated position in the anti-money laundering market through its proprietary data monitoring approach, but there is a risk that competition will intensify due to new entrants or aggressive moves by existing competitors. In addition, if Japanese consumer spending shifts back from cashless payments to cash payments, market growth could slow, potentially affecting the Company's business development. Although the market is projected to grow at an annual rate of 15.60% or more from 2020 to 2027, the Company's competitive advantage could be undermined depending on changes in the competitive environment.

If enhanced privacy policies by Google Inc. and Apple Inc. technically increase the difficulty of device identification, the fraud deterrence effectiveness of the Company's core service "Fraud Alert" alone could decline. The anti-money laundering field is characterized by rapidly changing environments driven by new threats and technological innovation, with needs that are prone to change. If competitors gain a significant technological lead, this could have a material impact on the Company's competitiveness and revenue base.

For software services such as "Fraud Alert", unexpected bugs may be discovered after sale, and if service provision is halted or the issue remains unresolved for an extended period, this could lead to reduced sales in addition to a loss of customer trust. The Company conducts numerous quality checks and has a system in place to promptly provide update programs when bugs occur. However, although inadequacies in a customer's fraud detection confirmation system are primarily the customer's responsibility, the risk of diminished trust in the Company cannot be ruled out.

A shortage of personnel with specialized knowledge is a common challenge across the anti-money laundering industry, and if the Company is unable to secure sufficient personnel as its business expands, this could result in delays in service provision and reduced productivity. The Company focuses on mid-career hiring of experienced technical personnel who can contribute immediately, and strives to accumulate know-how and prevent personnel attrition through in-house training courses and workplace environment improvements. Securing highly skilled engineers is also essential for maintaining and strengthening the R&D system, and continued difficulty in hiring could hinder the development of new services.

Unforeseen events such as large-scale earthquakes, typhoons, fires, pandemics, and terrorist activities could disrupt the Company's operations. If an emergency situation becomes prolonged and corporate activities are significantly restricted, customer companies may curtail security investment, potentially leading to decreased sales, reduced profit margins, and longer collection periods. The Company has introduced remote work since the outbreak of COVID-19 and is working to establish a business continuity system.

Major laws such as the Act on Prevention of Transfer of Criminal Proceeds and the Act on the Protection of Personal Information have been confirmed with relevant authorities and legal experts, and the Company states that no specific legal regulations currently directly restrict its business. However, if new legal regulations are introduced or the operation of existing regulations changes in the future, this could constrain business development. The development of new services utilizing personal information may involve legal considerations, and there may be situations requiring ongoing strengthening of lobbying activities.

The Company's services are provided on AWS, and if a system failure occurs at AWS itself due to a cyberattack, natural disaster, accident, or other cause, service provision could be halted, potentially affecting the Company's business and finances. The Company has obtained ISMS certification and implements preventive measures such as strengthening server facilities and monitoring operational status. In addition, as of the end of December 2025, the Company had set SLAs for 15 companies, and there is a risk that if service commitments are not met, usage fees must be reduced within the range of the monthly usage fee.

The Company's services handle important customer information such as personal information or personal-related information, and any leakage of such information constitutes a significant risk to business operations. Information is basically encrypted and designed so that the Company alone cannot link it to individuals, but even with measures such as ISMS certification, access control management, locking management, and entry/exit management, the risk of leakage cannot be completely eliminated. If a leakage of customer information occurs, it could result in a loss of social trust and have a serious impact on the Company's business and finances.

The Company grants stock acquisition rights as incentives to officers and employees, and intends to continue utilizing this plan going forward. As of the filing date of this document, the number of potential shares outstanding was 266,300 shares (equivalent to 4.1% of the 6,530,800 total issued shares), and when these rights are exercised, the share value and voting rights ratio of existing shareholders will be diluted. The likelihood of occurrence is high, and this is expected to materialize within a few years.