Pro-Ship Incorporated

Mandatory application of the new lease accounting standard is imminent, and the number of companies voluntarily adopting IFRS is also increasing. While system reforms can present business opportunities, they may also render existing package products obsolete. The Group is building a response framework through strengthened collaboration with certified public accountants and consulting firms, as well as improving SEs' accounting and business knowledge; however, if timely responses are insufficient or sales competition intensifies, this may affect operating results.

The Group is centered on the development and sale of business application systems, and its operating results are structurally dependent on user companies' system investment trends. There is a risk that orders will decrease during economic downturns or when companies restrain IT investment. Since specific system reforms and changes in the economic environment directly affect user companies' investment decisions, sensitivity to demand fluctuations is high.

Because the fiscal year-end of domestic companies is concentrated in March, the Group's sales and profit also tend to be concentrated in the fourth quarter (January to March). In FY2026 (ending March 2026), quarterly net sales showed a difference of ¥1,806 million in the first quarter versus ¥2,386 million in the fourth quarter, and if acceptance inspections are delayed, recognition of sales and profit may be pushed into the following period. This seasonality is a factor that increases uncertainty in performance forecasts.

Customization projects for large-scale users tend to have prolonged development and implementation periods, and it is difficult to completely eliminate system defects and bugs. If additional costs arise to resolve defects, or if trouble occurs that affects a user company's existing systems, this may adversely affect performance. The Group enters into contracts for each development process and period and recognizes sales upon acceptance of completed portions, but this does not completely eliminate the risk.

The Group has opportunities to handle a wide variety of important information belonging to user companies, and implements strict operations based on confidentiality agreements and compliance rules. However, if information is lost, destroyed, or leaked, or if unauthorized external intrusion occurs, this may significantly affect performance through damage claims or loss of trust. Although measures to prevent internal information leaks are in place, risks associated with the increasing sophistication of cyberattacks continue to exist.

If natural disasters such as earthquakes or typhoons, unknown computer viruses, terrorist attacks, system troubles, epidemics, or the like occur, this may affect performance. While the Group is diversifying risk through cloud management of systems, a large-scale disaster in the region of its facilities could result in significant damage. This is a risk that tests the effectiveness of business continuity plans.

Due to technological innovation in the field of business application systems, there is a possibility that third parties hold intellectual property rights of which the Group is unaware. If the Group receives a lawsuit or a request for an injunction from a third party for infringement of intellectual property rights, this may require substantial cost and time and affect performance. While the Group is strengthening its internal management system, there remains a risk of being unable to fully keep pace with the speed of technological innovation.

The Group's sales approach consists of both direct sales and indirect sales through system integrators and consulting firms such as NEC, Nippon Steel Solutions, Dentsu Soken, and NTT DOCOMO Solutions. While the Group currently maintains good business relationships, if it becomes difficult for some reason to maintain collaborative or business relationships, the loss of order opportunities may affect performance. If dependence on a specific partner is high, the impact would be greater.

While overseas expansion is being pursued as part of the growth strategy, differences in laws and regulations, business practices, and infrastructure conditions in each country may hinder expansion. If unforeseen events occur that could not be anticipated through prior research, investment recovery may not proceed as planned, affecting performance. While there are opportunities to capture the sophisticated system needs of emerging markets, responding to country risk and regulatory risk remains a challenge.

Competition for talent in the software industry is intense, and there is a risk that the Group may be unable to secure excellent personnel with the knowledge and experience necessary for its operations. If capable personnel within the company leave, this may constrain business development and affect performance. The Group has positioned the recruitment of excellent personnel as a top priority issue, and from FY2025 (ending March 2025) has granted restricted stock compensation to strengthen recruitment capability and improve motivation.