i Cubed Systems, Inc.

Revenue from the group company that is the largest sales partner accounts for 47.6% of net sales (FY2025 (ended June 2025) actual), indicating an extremely high degree of dependence on a specific sales partner. If this partner unexpectedly changes its sales policy or a serious malfunction occurs that damages the relationship, it could have a direct and severe impact on net sales. While a good relationship is currently maintained, concrete measures toward diversification remain limited.

In the MDM market to which the CLOMO Business belongs, there are concerns about price competition arising from new entrants and intensifying competition, which could make it difficult to contract at expected unit prices. Furthermore, platform providers such as Apple, Google, and Microsoft offer their own MDM services, and if there are changes to fee structures or usage restrictions, or if service provision is discontinued, there is a risk that the business foundation itself could be shaken. If market growth does not proceed as expected, this could also affect the financial position and business performance.

The group's earnings are heavily dependent on the CLOMO Business, and the Investment Business, which began in 2022, has not yet reached the stage of generating continuous, stable earnings. If growth in the MDM market slows or there is a delay in responding to changes in the business environment, the impact on performance would be direct and significant due to the lack of alternative revenue bases. Although the company has set a policy of diversifying revenue sources through new business development, the establishment of an alternative foundation is still in progress at this time.

Given the nature of the business, which handles the information assets of numerous client companies, there is a risk of information leakage due to external cyberattacks, employee negligence, or unauthorized acquisition. While measures such as formulating information systems management regulations, conducting training, using unified threat management systems, and undergoing ISMAP registration review have been implemented, if a leak occurs, it could result in loss of social trust and liability for damages, potentially having a material impact on the financial position and business performance.

Since the CLOMO Business contracts with end users via mobile phone retailers and agencies, end users may cancel without the group's involvement when switching to another company's mobile devices. Although future cancellations are factored into budgets and business plans, if cancellations exceed expectations, it will directly affect sales and earnings. As a countermeasure, the company is implementing customer success activities such as robust support systems, regular meetings, and step-up seminars.

Since services are provided using cloud services from Apple, Google, Microsoft, and others, if internet communication networks are damaged by natural disasters or accidents, or if servers go down due to unexpected surges in access, service provision could be disrupted. This could result in compensation to end users and other costs, potentially affecting the financial position and business performance. As a countermeasure, the company is strengthening its recovery systems using distributed backup data for rapid restoration.

The company has a policy of investing heavily in research and development to support a business model based on licensing proprietary technology, but if user needs and competitive trends significantly deviate from expectations, or if a change in direction becomes necessary, there is a risk that the invested funds may not be recouped. Delays in business development could also result in lost opportunities, posing a risk to the financial position and business performance. Although a policy decision-making process based on research and reports has been established, the speed of technological change limits forecasting accuracy.

Tsutomu Sasaki, the founder and Representative Director, Executive Officer, President and CEO, leads management policy, strategic planning, and system development, and most of the group's intellectual property rights belong to him. While the company is working to build a stable management structure through delegation of authority to department leaders, if an unforeseen event were to occur affecting him, it could have a material impact on the financial position and business performance in both management and technology aspects.

The group is a small organization, and securing personnel with advanced technical skills such as software development is a prerequisite for business expansion. If personnel recruitment does not proceed smoothly, or if there is an inadequate response to rapid increases in staff or a wave of resignations, there is a risk of delays in the progress of business plans, a decline in long-term competitiveness, and lost opportunities. Although the company has set policies for employee development, strengthening recruitment, and enhancing operational execution systems, there is no guarantee that these measures will proceed in a timely and appropriate manner.

Since cloud service usage fees included in the cost of sales for the CLOMO Business are primarily denominated and paid in US dollars, a sharp depreciation of the yen would increase the cost of sales and squeeze profits. In addition, translating the financial statements of the Vietnamese overseas subsidiary into yen is also affected by exchange rate fluctuations. At present, no specific countermeasures such as hedging instruments are explicitly disclosed in the securities report, leaving a structural vulnerability to foreign exchange risk.