Ubicom Holdings, Inc.

The Mighty series of medical claims review software accounts for approximately 28% of consolidated net sales for FY2026 (ending March 2026), making it a core product. If the product were discontinued or customers switched to competitors' products, net sales could decline substantially. While the Group is working to create alternative products and services, the structure of high dependence on specific products continues.

The Medical Business's cloud services handle sensitive personal information such as patients' medical histories and prescribed medications, and if system defects, malfunctions, or personal information leakage occur, this could result in loss of trust or liability for damages. While measures are being taken through thorough quality control and ISMS certification, given the sensitive nature of medical data handled, the impact could affect both business performance and financial condition.

In contract-based engagements within the Technology Consulting Business, if specification changes or troubles result in work exceeding estimated man-hours, the Group would bear the excess costs, risking deterioration in profitability. Additionally, if a revision to the estimated execution budget for contracted development becomes necessary (progress calculated using the input method), this could affect revenue recognition. Although the Group prioritizes quasi-delegation and staffing contracts, risk remains if the proportion of contract-based work increases.

The Group has business bases in the Philippines, China, and the United States, and changes in local laws, tax systems, or policies, shifts in political and economic conditions, infrastructure failures, terrorism, epidemics, and similar events could adversely affect local business activities. There is also a risk that potential issues with business partners arising from differences in business customs from Japan could materialize. These factors could directly impact the Group's business performance.

In connection with business operations in the Philippines, China, and the United States, fluctuations in foreign exchange rates when translating local currencies into yen for consolidated financial statement preparation could affect business performance and financial condition. The Group has not implemented hedging measures such as forward exchange contracts, instead adopting a policy premised on medium- to long-term averaging. Additionally, if remittances between countries become difficult due to changes in laws, regulations, or diplomatic relations, this could also affect business operations and financial condition.

Representative Director and President Masayuki Aoki plays a central and critical role in formulating and deciding management strategy, negotiating with partners and business contacts, and operating businesses at the practical level. If he were to become unable to perform his duties, this could have a significant impact on business development and performance. While the Group aims to reduce this dependence through personnel development and reinforcement, a certain degree of dependence continues.

In the Technology Consulting Business, the pace of technological innovation is rapid, with the introduction of services using new languages and new technologies accelerating. If the Group's response is delayed, or if technological innovation and the adoption of new technologies proceed faster than expected, competitiveness could decline, affecting business performance. Continuous technology acquisition and personnel development are required as countermeasures.

Securing and developing personnel with advanced specialized knowledge, skills, and experience is essential to driving the business forward. If recruitment plans are not achieved, existing personnel leave the company, or labor costs increase sharply due to rapid wage escalation, this could affect business performance and financial condition. While measures such as granting stock options, strengthening personnel development programs, and expanding employee benefits are being implemented, the risk continues against a backdrop of intensifying competition in the IT talent market.

Philippine subsidiaries Advanced World Systems, Inc. and Advanced World Solutions, Inc. hold claims for value-added tax refunds, but delays have occurred in the refund process by the Bureau of Internal Revenue, leaving 4,531 thousand Philippine pesos unrefunded, with denial notices received for some portions. The consolidated subsidiaries have filed, or are preparing to file, lawsuits with the Court of Tax Appeals seeking to overturn the denials and obtain refunds. If the outcome differs from the authorities' position, this could affect business performance and financial condition.

As of May 31, 2026, the number of potential shares from stock acquisition rights was 356,000 shares (equivalent to 2.9% of total issued shares), and if exercised, this could dilute the share value and voting rights ratio of existing shareholders. The Group may continue to implement incentive plans going forward to secure excellent personnel, and sales of potential shares in the market could also affect the supply-demand balance, potentially impacting the formation of an appropriate share price.