AMIYA Corporation

The cybersecurity market is a growth industry with many competitors, and the Company also competes with giant enterprises such as major telecom carriers. The Company seeks to differentiate itself through service development, expansion of sales capabilities, and strengthening of technological capabilities. However, if intensifying competition causes the Company's products and services to fall behind those of other companies, this could have a material impact on its financial position and business results.

The Data Security Business and the Network Security Business operate in markets where technological innovation progresses rapidly, creating a risk that delays in R&D or innovation occurring faster than anticipated could render existing products and services obsolete. The Company strives to maintain competitiveness through continuous R&D, but if these efforts do not succeed, this could impact its financial position and business results.

Through its business activities, the Company has access to clients' important information and personal data, and information leakage is a material risk that directly affects its social credibility as a security service provider. The Company has implemented measures such as obtaining ISO/IEC 27001:2022 and ISO/IEC 27017:2015 certifications, establishing an Information Security Committee, and conducting employee training. However, if a leak were to occur, the resulting loss of social credibility could impact the Company's financial position and business results.

If the Company infringes on a third party's intellectual property rights due to procedural deficiencies or negligence by officers or employees, it may face claims for damages or injunctions against use. Conversely, if the Company's own intellectual property rights are infringed by a third party, this could lead to a decline in its competitive advantage. The Company exercises great care to avoid infringing on third parties' rights while also striving to appropriately protect its own intellectual property rights.

If natural disasters such as earthquakes or fires, or events such as war, terrorism, or the spread of infectious disease, cause human or physical damage or disrupt external communications infrastructure or computer networks, there is a risk that business operations could be impeded. The Company has enhanced availability by establishing a telework environment and building system backups, redundancy, and DR sites; however, in the event of a large-scale disaster, this could impact its financial position and business results.

If unforeseen events occur, such as violations of laws and regulations or fraudulent acts by internal parties, this poses a risk of a material impact on the Company's financial position and business results. The Company strives to enhance its internal control systems by establishing compliance-related regulations and setting up an internal audit department reporting directly to the President and Representative Director; however, the possibility of fraudulent acts and similar events cannot be completely eliminated.

IT software sales are generally susceptible to economic conditions, and changes in the domestic economic environment or an economic downturn could impact the Company's financial position and business results. The Company operates multiple businesses, including the Data Security Business and the Network Security Business, and seeks to differentiate itself through the development of new products and services via R&D; however, risks associated with an economic downturn remain.

More than half of the Company's sales are indirect sales via resellers, and the Company's direct involvement in end users' purchasing decisions and timing is low. This creates a risk that delays in resellers' recording of sales or unexpected fluctuations could affect monthly order forecasts. The Company strives to improve the accuracy of order forecasts through regular meetings with resellers and support such as joint sales visits; however, risks stemming from this dependent structure continue to exist.

In the Network Security Business and Data Security Business, which are provided via a cloud model, if the system goes down due to natural disasters, communication failures, unauthorized access, excessive load, or similar causes, it may become difficult to provide services to customers, creating a risk of reduced system reliability and direct damages. The Company has implemented measures such as a system configuration that emphasizes security, network load balancing, and redundancy across multiple cloud providers.

If stock acquisition rights granted as incentives to officers and employees are exercised, new shares will be issued, potentially diluting the share value and voting rights ratio of existing shareholders. The ratio of potential shares to the current total number of issued shares is 0.15%, so the scale of dilution is limited; however, this is recognized as a risk with a high likelihood of materializing and one that could occur in the short term.