Laboro.AI Inc.

If investment in AI technology contracts due to macroeconomic factors, there is a risk that the AI solutions-related market in which the Group operates will shrink. While market growth is expected against the backdrop of expanding DX demand, the structure is such that deterioration in the external environment directly impacts business performance. The Group's policy is to respond by identifying market changes at an early stage and developing new customers and markets.

Since confidential information and personal information are handled when providing solutions to client companies, if an information leak occurs due to human operational error or other unforeseen factors, there is a risk that the resulting costs, such as liability for damages, and loss of customer trust could damage business relationships. The Group has obtained ISMS certification and addresses this risk through the development and appropriate operation of various information management regulations.

Representative Director and CEO Tetsuo Shiibashi and Representative Director, COO and CTO Hiromasa Fujiwara possess specialized knowledge and skills and play important roles in management strategy and business strategy; there is a risk that if either of them were to leave, it could have a material impact on the Group's business, financial position, and business results. The Group is strengthening its organizational structure by promoting information sharing and delegation of authority at the Board of Directors, but the degree of dependence remains high. Although the likelihood of occurrence is low, the impact is assessed as high.

If the recruitment, retention, and development of specialized personnel such as machine learning engineers, solution designers, and AX producers do not proceed as planned, there is a risk that the Group will be unable to build a project execution structure capable of responding to customer demand. Competition in the AI technology talent market is intense, and difficulty in hiring or employee turnover could become a constraining factor on business expansion. The Group strives to curb its turnover rate through proactive recruitment measures and enhancement of its personnel evaluation system.

In the AI solutions industry, the pace of technological innovation is extremely rapid, and there is a risk that the Group may be unable to maintain sufficient technological superiority due to technological innovations exceeding expectations or the emergence of discontinuous alternative technologies. Loss of technological superiority is directly linked to a decline in the ability to acquire and retain customers, which may affect the Group's financial position and business results. The Group is responding by securing diverse talent and building its development structure.

There are competitors worldwide in the AI solutions business, and new entrants continue to appear, including capital participation by major companies from other industries. If competitors have superiority in financial strength, technological development capability, price competitiveness, etc., the Group may find itself at a disadvantage in acquiring and retaining customers, and profit margins may deteriorate due to intensifying price competition. There is also a risk that the market structure could change rapidly due to competitive dynamics in the still-immature AI-related market.

In the EU, the AI Act has been enacted and is being implemented in phases, and in Japan as well, consideration of new legislative measures targeting generative AI is progressing. If new laws, regulations, or guidelines are introduced in the future, additional compliance requirements or technical constraints may arise for the solutions provided by the Group, potentially constraining business activities. Costs associated with addressing ethical issues such as discrimination, privacy infringement, copyright infringement, and the spread of misinformation may also increase.

The Group is actively considering investments in and M&A of companies and businesses with expected business synergies, but there is a possibility that anticipated synergies may fail to materialize, the acquired company may fail to meet performance targets, or PMI (post-merger integration process) may not proceed smoothly, leading to talent attrition or operational disruption. In such cases, the investment recovery period may be prolonged, and impairment losses on goodwill or investment amounts may need to be recognized, which could affect the Group's financial position and business results. The Group's policy is to carefully consider candidates through selection, due diligence, and negotiation of terms.

The Group conducts business operations and provides services through its subsidiaries, but there is a risk that management at the expected level may become difficult due to deteriorating performance, fraud or scandals, legal violations, information security issues, or changes in local regulations at subsidiaries. If such events occur, there is a possibility that brand value and creditworthiness could decline, and costs such as damages could arise, potentially constraining business activities. The Company strives to strengthen governance through the development of internal regulations, prior consultation and approval processes, dispatch of officers, and internal audits.

In the fiscal year ended September 2025, the top three clients accounted for 29.0% of total sales, and dependence on specific customers remains. If the scale of transactions with major clients shrinks sharply due to unforeseen factors, the impact on business performance would be significant. The Group continues efforts to reduce the sales ratio attributable to major clients by developing new business partners.