ABEJA,Inc.

In digital transformation-related industries, the pace of technological innovation and business model change in the global market is rapid, and failure to create technologies and services suited to market trends could lead to a loss of competitiveness. The Company is engaged in continuous development of new technologies and services and securing excellent talent, but if its response is delayed, this could have a material impact on its business results and financial position.

Numerous competitors exist, ranging from major players in other industries to highly specialized emerging companies, and several companies offer similar services. Intensifying competition may make it difficult to acquire and retain customers. The Company seeks to differentiate itself through strategic investment in the "ABEJA Platform" and by accumulating a track record of AI implementation.

In the fiscal year ended August 2025, sales to SAKURA internet Inc. accounted for 17.2% of total net sales, and sales to SOMPO Holdings, Inc. accounted for 12.9%, indicating a high degree of dependence on specific business partners. If orders decrease due to changes in the business strategies of these business partners, this may affect the Company's business results and financial position. The Company is working to reduce this dependence by developing new customers and expanding transactions with existing customers.

Competition for acquiring generative AI (particularly LLM) engineers, data scientists, and AI robotics-related personnel is intensifying, and failure to secure the necessary talent as planned could hinder business expansion. The Company is actively working to acquire, retain, and develop such talent, but if the recruitment and development of highly skilled technical personnel does not progress, this may affect its business results and financial position.

The Company positions development of new functions, expansion beyond its current business domains, and M&A and capital/business alliances as means of growth. However, there is a possibility of development delays, delayed monetization in new fields, discovery of contingent or unrecognized liabilities at M&A target companies, or impairment of shares and goodwill due to failure to achieve business plans. The Company conducts careful review of revenue forecasts and prior due diligence, but if unexpected problems arise, this may affect its business results and financial position.

When implementing AI robotics in real-world physical spaces, there is a risk of launch delays, additional costs, or temporary suspension of operations due to factors such as safety and product liability, information and control system security, procurement and maintenance, and personnel and organizational structure. The Company seeks to mitigate these risks through standardization of acceptance criteria, clarification of division of responsibilities, monitoring and redundancy, and strengthening of its organizational structure, but if these risks materialize, they may affect the Company's business results and financial position.

"ABEJA Platform" is operated on cloud services such as GCP and AWS, and there is a risk that service provision could become impossible due to natural disasters, overload, cloud service failures, cyberattacks, and other factors. With the expansion of AI robotics deployment, the risk of suspension due to on-site equipment failures or communication disruptions has also increased, and in the event of a failure, reputational damage and customer claims for damages are anticipated. The Company prepares for such risks through data backups and distributed placement across data centers.

Due to the nature of its business, the Company handles confidential information such as customers' sales data and personal information such as image data used for facial recognition. If an information leak occurs, this could lead to liability for damages and loss of customer trust. In addition to establishing information security regulations and personal information protection regulations, the Company has obtained Privacy Mark and ISMS certification (ISO/IEC 27001) and strives for appropriate operations, but risks remain from unforeseen factors such as human operational errors.

Laws, guidelines, and industry norms related to AI ethics and AI robotics may be enacted or revised in the future, and if additional responses become necessary, the Company's business could be constrained. The Company also examines in advance the impact of and response to changes in internet-related regulations, including the Telecommunications Business Act, but stronger regulation may affect its business results and financial position.

As of the end of the fiscal year under review, tax loss carryforwards of ¥3,697 million existed, and corporate income tax at the normal rate is not currently levied. If the loss carryforwards are used or expire, or if a reversal of deferred tax assets becomes necessary due to a revision of future taxable income forecasts or tax reform, this would result in an increase in the corporate tax burden and may affect the Company's business results and financial position.