Tobila Systems Inc.

AI-powered delivery of nuisance calls and nuisance SMS has been confirmed, and if the Company fails to respond promptly to fraud methods using new technologies, there is a risk that the Company's services could rapidly become obsolete. In addition, changes in the specifications of operating environments such as OS could make it impossible to achieve the expected functionality. As countermeasures, the Company is actively recruiting excellent engineers, establishing an organization to keep up with the latest technology trends such as AI, analyzing trends in fraud methods through dedicated researchers, and reducing the impact of specific technological changes by expanding into multiple fields.

While the Company holds a high market share in the nuisance call filtering market, there is a risk of price competition and intensified competition due to an increase in new entrants, including companies from other industries and overseas, as the market expands. The Company's competitive advantage could decline due to competitors' short-term launch of similar services or their catching up in user data collection. As countermeasures, the Company is maintaining and expanding its user base of approximately 15 million users, strengthening its sales model with major telecommunications carriers, and building barriers to entry by improving database accuracy through cooperation with related organizations.

Dependence on sales to major domestic telecommunications carriers has reached approximately 60%, and if contracts are not renewed or transaction terms change, this could have a material impact on the Company's business and results of operations. The same risk applies if the conclusion of contracts for new services is delayed or fails to materialize. As countermeasures, the Company is working to maintain good relationships through the regular provision of proprietary survey reports, strengthening cooperation with all three major telecommunications carriers, and focusing on expanding the Solutions Business, which is not dependent on telecommunications carriers.

The Company holds personal information and purchase history of customers obtained through the provision of services, and is subject to regulation under the Act on the Protection of Personal Information. If such information were to be leaked externally, the Company's credibility could decline, potentially having a material impact on its business and results of operations. As countermeasures, the Company has obtained and renewed the Privacy Mark, established personal information management regulations, clarified business flows and authority structures, and thoroughly implemented employee training and strengthened security systems.

The Company holds confidential databases including information provided by public institutions such as police organizations, various types of information related to phone numbers, and incoming/outgoing call logs of nuisance phone numbers. If information leakage occurs due to cyberattacks or human error, trust relationships with police organizations and business partners could be damaged, potentially adversely affecting the Company's business and results of operations. As countermeasures, the Company manages access through an internet-disconnected environment in a dedicated room where mobile phones are prohibited, implements security measures from three aspects—hardware, software, and human management systems—and carries out planned security investments.

The Company's nuisance information database enhances its credibility and reliability through cooperation with telecommunications carriers, police organizations, and related government ministries and agencies. If this cooperation were to be disrupted for any reason, the reliability of the database and external credibility could decline, potentially adversely affecting the Company's business and results of operations. As countermeasures, the Company is working to maintain and strengthen relationships, including by launching information exchange meetings with related organizations, while also building an operational structure that does not depend on specific organizations, based on massive data accumulation through independent research and information gathering.

The Company's headquarters functions and major facilities such as product warehouses are concentrated in Nagoya City, Aichi Prefecture. If equipment damage or power supply restrictions occur due to natural disasters such as the Nankai Trough earthquake or typhoons, or due to fire, this could disrupt headquarters functions, business activities, and service provision, potentially affecting business results. As countermeasures, the Company has implemented network redundancy and data backup at a remote data center, introduced a full flextime system and remote work, and formulated a business continuity plan (BCP); however, if an event of a scale exceeding these measures occurs, an impact on business results would remain.

The Company holds customers' personal information and purchase history and is subject to regulation under the Act on the Protection of Personal Information. If laws are amended or regulations are strengthened, this could lead to increased compliance costs and constraints on business operations. While the Company maintains a compliance system through the acquisition and renewal of the Privacy Mark and the establishment of personal information management regulations, continuous response to changes in the regulatory environment is required.

Some of the Company's services are realized using functions provided by operating environments such as OS, and future changes in the specifications of such operating environments could make it impossible to achieve the expected functionality. In addition, if service quality declines or customer response is inadequate, there is concern about adverse effects on business and results of operations, including reputational risk. As countermeasures, the Company is strengthening the recruitment of excellent engineers and developing a system to keep up with the latest technology trends.

The Company's list of risks includes talent outflow risk and employment/personnel risk as important risks, and securing excellent engineers and specialized personnel is directly linked to maintaining the Company's competitiveness. If talent outflow or recruitment difficulties occur in responding to technological innovation or expanding into new businesses, this could hinder service development capabilities and business growth. As countermeasures, the Company continues to actively recruit excellent engineers while introducing flexible working arrangements combining a full flextime system and remote work, striving to retain and secure talent.