V-cube, Inc.

Due to the continued deterioration in the performance of TEN Holdings, Inc. and expenses related to NASDAQ listing preparation, the Company recorded consolidated operating losses for two consecutive fiscal years. Combined with a software impairment loss, this eroded net assets and resulted in a breach of financial covenants under loan agreements with financial institutions. There is a risk that, if the right to accelerate repayment is exercised, it could have a material impact on cash flow. As countermeasures, the Company has implemented a third-party allotment capital increase, the transfer of the Professional Work Business, and the decision to sell investment securities held by Wizlearn Technologies Pte. Ltd., and has obtained consent from financial institutions not to exercise their right to accelerate repayment.

Due to the deterioration in performance in recent years, the Company has been in breach of its financial covenants for two consecutive fiscal years, which may constrain flexibility in raising new funds or negotiating refinancing. Amid concerns about the impact on cash flow, the Company is working to strengthen relationships with financial institutions, reduce liabilities, and restore its equity ratio through improved profitability.

Consolidated subsidiary TEN Holdings, Inc. has recorded operating losses for two consecutive fiscal years, and the growth and profitability of this company directly affect the financial condition of the entire group. Although the company completed its NASDAQ listing in February 2025, its stock price has since March of that year fluctuated more widely than expected, making it difficult to decide whether to raise funds through share sales. Additional fundraising is expected going forward to accelerate growth, and depending on the methods and conditions used, this may have a certain impact on the consolidated financial results.

In the online event market, a slowdown in demand and a trend toward returning to in-person events have been observed, which could adversely affect the profitability of the Event DX Business. Because the revenue structure is highly dependent on specific major clients and large-scale events, business performance is significantly affected by client policies and the presence or absence of events, and there is also a risk of falling per-project unit prices and declining profit margins due to intensifying price competition. As countermeasures, the Company is working to enhance value-added offerings, expand hybrid-compatible services, and review its project portfolio.

Due to the rapid advancement of AI technology, there is a possibility that the communication tools and solutions provided by the Group could be replaced by new technologies such as AI agents. Changes in the competitive environment carry the risk of rendering existing services obsolete and forcing a fundamental review of business strategy. The Group is closely monitoring trends in AI-related technology while working to collaborate with new technologies and appeal to its unique value proposition.

While the establishment of hybrid work has increased demand for private booth spaces, some companies have shown a trend toward a full return to the office, which could affect the utilization rate and willingness to adopt such booths at installation sites. A decline in the utilization rate carries the risk of directly worsening the profitability of this business. The Group is working to improve utilization rates and profitability through optimizing installation environments and expanding use cases.

If the trend toward face-to-face-centered work styles at companies spreads, the usage rate of online meeting and streaming solutions could decline. In particular, if cancellations progress among subscription-based clients using services such as Zoom and Qumu, this could lead to a decline in sales and worsening profitability. The Group aims to continue providing value through feature improvements and strengthened customer engagement.

In the internet-related market, the adoption of new technologies and shifts in service models are progressing rapidly, and if the Group's services fail to adapt quickly to these changes, competitiveness could decline and affect revenue. Responding to AI and other advanced technologies requires additional development costs and human capital investment, making the management of cost-effectiveness a challenge. The Group has established a system for monitoring advanced technologies and is promoting agile business development.

The Group's services depend on external cloud infrastructure, and in the event of a failure, service provision may be temporarily suspended, potentially leading to a decline in customer satisfaction and trust. If customer information is leaked or data is tampered with due to cyberattacks or internal misconduct, legal liability and reputational risks could materialize. The Group is working to strengthen risk management through the establishment of continuous system monitoring systems and the use of external audits.