Ficha Inc.

In FY2025 (ended June 2025), the top three customers by sales accounted for 67.0% of total net sales, with major customers concentrated among automobile and automobile-related companies. Changes in capital expenditure trends or production plans in the automotive industry, or changes in the business relationships with major customers, could have a direct and significant impact on the Group's business results. The Group seeks to reduce this risk by maintaining favorable relationships with major customers while actively pursuing the acquisition of new customers, including in other markets.

Image recognition software for in-vehicle cameras and drive recorders, the Group's core business, faces the risk of market contraction due to the introduction of new legal or industry regulations, in-house development or reduced outsourcing by customer companies, and sluggish new vehicle sales trends, among other factors. Changes in the market environment directly affect the Group's order volume and net sales. The Group seeks to reduce this risk through continuous monitoring of market trends and active expansion into other markets.

In the Group's business fields, technological innovation centered on deep learning technology is progressing rapidly, creating the risk of the emergence of alternative technologies or competing products, as well as changes in the technology standards or platforms on which the Group depends. If the Group's technological innovation does not proceed as expected, the competitiveness and added value of its products may decline, potentially adversely affecting its business and results of operations. As a countermeasure, the Group is working to recruit and develop outstanding personnel, but the possibility that the pace of technological change will exceed expectations cannot be ruled out.

In contract development transactions, order amounts are determined taking into account estimated man-hours, difficulty, and risk; however, significant changes in customer-requested specifications or the occurrence of defects may cause actual development man-hours to substantially exceed the original plan, resulting in deteriorated project profitability. In addition, there is a risk of revenue recognition being pushed back to the following quarter or the following fiscal year due to changes in delivery timing or delays in inspection and acceptance caused by significant specification changes or unforeseen troubles. These factors reduce the accuracy of the Group's earnings forecasts for each period.

The Group primarily undertakes contract development for projects expected to reach mass production; however, if development is suspended due to changes in customers' sales plans or other factors, the Group may be unable to obtain the originally anticipated contract development revenue and license revenue. Because license revenue is recognized in connection with the manufacture, sale, and use of customer products, it is structurally susceptible to direct impact from changes in customers' sales plans. These risks reduce the stability and predictability of the Group's earnings.

Hui Cao, Representative Director, President, CEO and CTO, possesses specialized knowledge and expertise in management strategy and development strategy, and plays an important role in the Group's operations. If he were to step down, it could have a significant impact on the Group's business and results of operations from both management and technology perspectives. The Group is working to strengthen its organizational structure through information sharing and delegation of authority at the Board of Directors level, but currently remains highly dependent on him.

The Group holds confidential customer information and personal information through its business activities, and there is a risk of information leakage arising from human operational errors, system failures, cyberattacks, and other causes. If an information leak were to occur, it could result in a loss of social trust and liability for damages, potentially having a serious impact on the Group's business and results of operations. Although the Group has implemented measures such as developing internal regulations, thoroughly educating employees, and introducing information security equipment, it is difficult to completely eliminate this risk.

It is difficult for the Group to fully grasp all third-party intellectual property rights in its business fields, and the possibility of unknowingly infringing on the patents of other companies cannot be ruled out. If infringement were to occur, it could affect the Group's business and results of operations through claims for damages or other actions by third parties. While the Group takes measures to the extent investigation is possible, because this is a field of rapid technological innovation, the risk of conflict with new patent rights continues to exist.

The Group is actively pursuing overseas business expansion, including establishing development sites overseas; however, unexpected changes in laws or regulations, political or economic conditions, or sharp exchange rate fluctuations in the countries where it operates could affect its business and results of operations. In particular, exchange rate fluctuations directly affect the yen-denominated amount of revenue, constituting a financial risk factor. As the Group expands its overseas locations, its exposure to these country risks tends to increase.

The Group's policy is to actively promote the development and recruitment of engineers to support future business expansion; however, intensifying competition for talent in the IT and AI fields may prevent the Group from securing personnel as planned. In addition, the departure of personnel to outside organizations could also affect the Group's business and results of operations. As the Group is a small organization, the departure of even a small number of personnel poses a risk of a relatively large impact on its business execution capabilities.