FLIGHT SOLUTIONS Inc.

The company recorded an operating loss of ¥276 million in FY2026 (ending March 2026), giving rise to material doubt about its going concern assumption. The primary cause was the further postponement of the delivery deadline for a large-scale order for "Incredist Premium III" to FY2027 (ending March 2027). The company states there are currently no concerns regarding cash flow as it is negotiating additional financing with financial institutions, but risks remain of further delays in the project or failure to secure financing.

The delivery deadline for the large-scale "Incredist Premium III" order has been repeatedly postponed, from FY2025 (ending March 2025) to FY2026 (ending March 2026), and now to FY2027 (ending March 2027), creating high uncertainty regarding the timing of revenue recognition. Delivery delays lead to upfront recognition of development costs and deferral of revenue, directly contributing to the continued expansion of operating losses. The company expects multiple large-scale orders to be delivered in FY2027 (ending March 2027), but the risk of further postponement cannot be ruled out.

Intensifying competition from major industry peers and new market entrants may affect the company's business performance. The company currently maintains a competitive advantage based on technological expertise accumulated since the early days of the internet and digital broadcasting, but there is a risk that this advantage could be lost due to changes in the market environment.

In the area of system infrastructure, including OS, networks, and equipment, the pace of technological innovation is rapid, requiring continuous updating of advanced know-how, including AI tools. The company is advancing organizational operations capable of responding quickly to environmental changes, but if technological innovation exceeds expectations, business performance may be affected.

In the fields where the company operates, the possibility that its technology may conflict with patent rights and other intellectual property rights already held by third parties cannot be completely ruled out. Should infringement be established, this could result in liability for damages and constraints on business operations, potentially having a material impact on performance. While the company conducts timely checks through patent firms and other means, it is difficult to identify in advance all intellectual property rights that may be established in the future.

If defects (malfunctions, bugs, delivery delays, etc.) occur in the solutions provided by the company, this may affect business performance through the occurrence of liability for damages and loss of customer trust. In addition, unpredictable events such as large-scale disasters (earthquakes, flooding, etc.), computer viruses, power outages, and communication failures may also cause system trouble that affects business performance. While the company implements disaster countermeasures through backups, it is difficult to completely eliminate all risks.

In system development under contract agreements, unexpected troubles or delays in progress may cause development man-hours to significantly exceed the initial plan, potentially worsening project profitability. The company determines order amounts and manages man-hours based on considerations of workload, difficulty, and risk, but for complex system development, the risk of deviation from plans cannot be completely eliminated.

Securing excellent human resources in each department is an important challenge for achieving stable growth, and the current recruitment plan is proceeding smoothly. However, if the company fails to secure and develop personnel meeting future requirements as planned, this may affect business operations and performance. If securing personnel to strengthen the management structure is delayed, this may also make appropriate organizational responses difficult, posing a risk of disruption to business operations.

While the company utilizes some partner companies in providing various services, if there is a shortage of high-quality, cost-appropriate partner companies as the business expands, this may affect business operations and performance. Since securing the quality and quantity of subcontractors is directly linked to the company's service delivery capability, developing and maintaining partner companies remains an ongoing challenge.

If a large-scale outbreak of infectious disease leads to prolonged restrictions on activity, this could result in decreased IT investment due to economic downturn and delays in the delivery of imported components due to supply chain disruptions, potentially affecting the company's performance. For the company, which handles products including hardware such as payment terminals, delays in procuring components pose a risk that directly affects product delivery schedules.