Visual Processing Japan Co., Ltd.

The recruitment, training, and retention of highly specialized personnel such as developers, consulting staff, and support engineers form the foundation of business continuity. If personnel acquisition does not proceed as planned, it could affect business operations, operating results, and financial condition. As countermeasures, the company is strengthening new graduate and mid-career recruitment, enhancing training systems, reviewing personnel evaluation systems, providing incentives, and improving the working environment.

In FY2025 (ending December 2025), the flagship service "CIERTO" accounted for approximately 90% of total net sales. A significant decline in CIERTO's sales due to external factors would have a direct and material impact on operating results and financial condition. As countermeasures, the company is maintaining and strengthening CIERTO's competitiveness while expanding sales of API-integrated services such as WM and MCP and strengthening collaboration with EC/CMS vendors.

Since CIERTO handles clients' confidential information and users' personal information, unauthorized external access, human error, or intentional acts by employees resulting in the leakage, loss, or falsification of information could lead to loss of credibility, damages, and unexpected costs, potentially affecting operating results and financial condition. The company obtained ISO/IEC 27001 certification in February 2007 and continuously enforces access authority management, compliance training for all employees, and compliance with the Personal Information Protection Act.

At present, CIERTO holds an advantage in the domestic DAM market due to insufficient support systems from overseas vendors and functional shortcomings among domestic vendors. However, if competition intensifies due to new entrants from domestic vendors offering similar services, the company's competitive advantage could be undermined, affecting operating results and financial condition. The company continuously monitors market trends and strives to build a system that flexibly incorporates these into its management strategy.

The global DAM market is projected to expand to USD 8.708 billion by 2028, with the domestic market projected to reach USD 261 million (compound annual growth rate of 13.7%). However, if the pace of market growth slows, or if the company is unable to grow at a comparable pace even as the market expands, it could affect its business and performance. The company continuously monitors market trends and maintains a system to flexibly reflect them in its management strategy.

If applicable laws and regulations such as the Telecommunications Business Act, Copyright Act, Unauthorized Computer Access Law, Act on Regulation of Transmission of Specified Electronic Mail, Unfair Competition Prevention Act, and Act against Delay in Payment of Subcontract Proceeds are amended or tightened, restrictions on service provision could arise, affecting business operations, operating results, and financial condition. The description of specific countermeasures in the annual securities report is limited, and continuous monitoring of regulatory trends is required.

The DAM market undergoes rapid technological innovation. If the company fails to keep pace with technological innovation, or if difficult-to-address technological innovations arise, it could lose its competitive advantage, affecting operating results and financial condition. The company strives to grasp technology trends and strengthen its ability to offer new services through participation in various events and seminars as well as regular in-house technical training.

CIERTO is a cloud service that presupposes stable operation of internet connectivity. If a communication network disconnection or network equipment failure occurs due to natural disasters, unauthorized access, or other causes, it could hinder stable service provision and affect the business and performance. The company implements security measures such as installing antivirus software and utilizing highly reliable cloud servers and cloud services.

Hiroaki Mimura, the founder and Representative Director and President, plays an extremely important role in determining sales strategy, development, management policy, and business strategy. If, for any reason, he becomes unable to perform his duties, it could affect business operations, operating results, and financial condition. The company is strengthening its management organization through the expansion and development of officers and senior staff and by building a division-of-labor system through delegation of authority.

The number of shares granted as stock options, provided as incentives for officers and employees, is 64,400 shares (a potential share ratio of 3.88% relative to the total number of issued shares of 1,661,900), and the company is considering continued issuance in the future. If these stock acquisition rights are exercised, it could dilute the value of shares held by existing shareholders and their voting rights ratio.