ULS Group, Inc.

The Group specializes in high-value-added consulting in the strategic IT investment domain, and currently recognizes no direct competitors. However, if other companies actively enter this domain, the Group's unique position could be lost, potentially affecting business performance. As a countermeasure, the Group maintains a high-quality support system through the accumulation, organization, and application of organizational knowledge such as ULBOK.

In the strategic IT investment domain, the pace of IT technology innovation is remarkably fast, and if the Group fails to adequately respond to technological advances that exceed expectations, its competitiveness could decline, potentially affecting business performance. In particular, the Group has designated the expansion of AI-driven consulting, including AI-driven development, as a priority item from FY2026 (ending March 2026), and delays in technology acquisition constitute a significant risk to business strategy. As a countermeasure, the Group positions the organizational maintenance of ULBOK and the acquisition of advanced IT technologies as its highest priority.

Various risks accompany project execution, including estimation risk, credit risk, quality risk, and outsourcing management risk, and if business expansion or changes in business content proceed faster than expected, the current risk management framework may not function effectively. The Group has established the Delivery Excellence Office (DEO) and an Internal Audit Office reporting directly to the President to manage risks from specialized and company-wide perspectives. However, since improving the capability of the management framework requires a certain amount of time, there is a risk that framework development may not keep pace during phases of rapid business expansion.

With the expansion of AI-driven development projects, an increase in contracted projects under fixed-price contracts is expected, and if the volume of development work is misestimated, significant cost overruns, work delays, or liability for damages could result. As a countermeasure, the Group has established internal policies to focus on projects that can leverage the business know-how accumulated in ULBOK, and to enter into fixed-price contracts only after customer requirements have been clarified through the subdivision of work and contracts. However, the Group recognizes that it is difficult to avoid all such risks even with these measures.

As of March 31, 2026, the number of consultants engaged in the Consulting Business was 713, and the number of consultants is one of the major factors determining the scale of revenue. If the necessary personnel cannot be secured due to an increase in resignations or difficulties in recruitment, this could significantly affect business expansion. As a countermeasure, the Group implements personnel placement that considers aptitude and career plans, highly transparent personnel evaluations, and comprehensive compensation, development, and welfare programs, but there is no guarantee that these measures will remain effective in the future.

Shigeru Urushibara, the founder and Chairman, plays an important role in management policy and strategic decision-making, business development, and brand strength enhancement, and as of March 31, 2026, is also the largest shareholder, holding 40.2% of total shares issued. If any unforeseen circumstance were to befall the Chairman for any reason, this could affect business performance and business development. The Company is working to build a management structure that is not excessively dependent on the Chairman as the business expands, but resolving this dependence will take time.

Under the applicable revenue recognition standard, customer acceptance is a key factor in determining the amount of revenue recognized, and if the timing of acceptance is delayed or expected to be delayed due to circumstances on the customer's part, this could affect business performance for the relevant period. The Group has established and operates strict internal rules regarding project quality management aimed at receiving acceptance as scheduled, but delays caused by circumstances on the customer's side cannot be fully controlled.

The Company makes direct or indirect equity investments in companies with promising IT technologies and in customers and partner companies expected to generate synergies. If the initially anticipated synergies fail to materialize, or if the growth potential or profitability of the investee companies does not develop as expected, a decline in share price or substantial value could necessitate impairment of investment securities, potentially affecting business performance.

Due to the nature of its business, the Group frequently handles confidential customer information, including personal information, and if problems arise in information management, this could affect business performance through liability for damages or loss of customer trust. At present, there have been no material information leaks or claims for damages, and the Group implements strict management based on internal regulations, but future risk cannot be eliminated given the increasing sophistication of cyberattacks and other factors.

Major customers, which are large-scale business operators, are in some cases requiring substantive compliance—rather than mere best-effort obligations—with regard to sustainability-related matters such as climate change response, human rights and labor issues, and fair trading practices. If the level of requirements demanded by customers advances beyond expectations, this could affect business performance through increased response costs or impacts on continued business relationships. The Group has established a Sustainability Committee directly under the Board of Directors and is advancing initiatives across the entire Group.