AI inside Inc.

Sales of the core service "DX Suite" account for the majority of the Company's revenue, and if sales of this service decline significantly due to changes in market conditions or other factors, it could have a direct impact on business performance. To reduce the risk of revenue source concentration, the Company is working on research and development of new services and expanding its product lineup.

The AI/DX market is a field expected to grow in the future, and new entrants, both domestic and overseas, may enter the market. The Company believes it has secured a competitive advantage through product characteristics, implementation track record, patents held, and know-how, but if sufficient differentiation cannot be achieved or if competition intensifies, it could affect the Company's business and performance.

Research and development in the AI technology field in which the Company operates is progressing globally, and the pace of technological innovation is extremely rapid. If the Company falls behind in responding to technological innovation, its competitiveness could decline, potentially affecting its business and performance. The Company addresses this by continuously promoting research and development activities.

In the course of business, the Company may receive personal information and other confidential information from customers, and if leakage, tampering, unauthorized use, or similar incidents occur, this could result in claims for damages from customers, losses not covered by cyber insurance, and loss of credibility. The Company has taken measures such as obtaining ISO/IEC 27001 certification, obtaining Privacy Mark certification, taking out cyber insurance, and implementing systematic countermeasures by the internal IT group, but it cannot completely eliminate this risk.

The Company places importance on sales through agents, and the proportion of sales through agents is expected to increase going forward. If, for any reason, agency contracts are not renewed, transaction terms change, or there are sharp fluctuations in customer acquisition due to the sales policies of OEM partners, this could affect business performance.

Representative Director, President and CEO Taku Tokushi, as the founder, plays an important role in formulating and executing management policy and business strategy, and if he becomes unable to carry out his duties, this could affect the Company's business and performance. The Company is working to establish an organizational structure that does not rely excessively on a specific individual, through information sharing with and delegation of authority to executive staff.

As of March 31, 2026, the Company had 130 employees, a relatively small workforce, making the recruitment and development of talented personnel an important issue for business growth. If the Company is unable to sufficiently recruit the necessary personnel, if personnel development does not progress, or if current employees resign, this could constrain business expansion and affect performance.

At present, the Company recognizes that there are no specific legal regulations directly restricting its business, but if new legal regulations, including those related to AI and personal information, are introduced, or if the application of existing regulations changes, business operations could be constrained. The Company addresses this by continuously strengthening its legal compliance framework and conducting internal training.

The Company is considering M&A as a means of business expansion, but contingent liabilities or unrecognized liabilities that could not be identified through due diligence may come to light after an acquisition. In addition, if the economic value of goodwill recorded as a result of M&A declines due to changes in the business environment or other factors, necessitating impairment, this could affect the Company's financial position and business results.

The Company's business depends on computer systems and communication networks, and if unexpected trouble occurs due to a sharp increase in access, natural disasters, accidents, or other causes, or if a failure occurs in the cloud servers used, this could hinder the stable operation of services and affect business performance. The Company has implemented countermeasures such as server load balancing, resource monitoring, regular backups, and cyber insurance coverage.