Allied Architects, Inc.

As of the end of December 2025, the company did not meet the market capitalization criteria of the Tokyo Stock Exchange Growth Market and entered an improvement period starting January 1, 2026. If the criteria are not met by the end of December 2026, the company will be designated as a securities under supervision and then as securities to be delisted, resulting in delisting on July 1, 2027. In addition, from 2030, a market capitalization criterion of ¥10.0 billion is scheduled to apply to companies that have been listed on the Growth Market for more than five years. The company is also considering applying for a market segment change to the Standard Market, but the application date and approval date have not been determined, and there is a possibility that approval may not be granted.

In the previous consolidated fiscal year, inappropriate accounting practices were discovered in the global business, leading to the establishment of an investigation committee. Investigation-related expenses of ¥729 million were recorded, and the activities of the investigation committee concluded in June 2025. As recurrence prevention measures, the company has strengthened its three lines of defense, established a risk management committee, and appointed four external advisors, among other measures. However, if a similar incident recurs, it could lead to a loss of social credibility, administrative sanctions, damages claims, and other consequences that could have a material impact on the business and financial results.

Through the subsidiary Allied Crypto, Inc., established in March 2026, the company has begun portfolio management of crypto assets and yield operations through DeFi, staking, and other means. If the market prices of Bitcoin, Ethereum, and other crypto assets decline significantly, the valuation of held and managed assets could decrease, potentially having a material impact on the financial position and business results. This business is currently in an investment phase, and revenue from it has not been incorporated into the earnings forecast for FY2026 (ending December 2026). If the business does not contribute to earnings as planned, there is also a risk that recovery of upfront investments will become difficult.

In the Marketing AX Support Business, which integrates the former Product Business and former Solution Business, the company is promoting a transition to a "three-layer support model" based on data analysis, and has set a medium-term target of ¥5.0 billion in net sales and ¥500 million in operating profit (10% operating margin) for FY2027 (ending December 2027). If the three-layer support model does not permeate as expected, if the expansion of the solution ratio falls short of plan, or if client companies' needs for upstream support do not sufficiently materialize, achieving the medium-term target will become difficult. The company aims to expand the solution ratio to 80% by 2027, but since client companies' dependence on marketing budgets remains unchanged, a contraction of the overall advertising market continues to be a risk factor.

The company has built a business model centered on the VOC data analysis solution "Kaname.ax" that analyzes a cumulative total of 41.65 million pieces of consumer voice data using AI. However, due to the rapid evolution of generative AI technology, competitors may offer equivalent or superior AI analysis services at lower cost. In addition, if the terms of use, pricing, or availability of external AI services (such as large language models) used by the company change or are discontinued, this could affect business operations. Regulatory tightening in Japan and overseas, including the EU AI Act, and the emergence of legal issues related to copyright and privacy, may also constrain the use of AI.

The company provides marketing support utilizing various SNS platforms such as Instagram, X (formerly Twitter), LINE, and TikTok. Since these are not platforms operated by the company itself, there are risks such as the decline in influence of existing SNS platforms due to the emergence of new SNS services, service restrictions due to changes in advertising policies by SNS operators, and service disruptions due to malfunctions of linked SNS platforms. As countermeasures, the company is designing services to reduce dependence on specific SNS platforms and advancing support for diverse data sources in "Kaname.ax," but if such risks expand rapidly, they could affect business results.

In the fiscal year under review, the company recorded an operating loss due to one-time expenses, including ¥729 million in investigation costs related to the inappropriate accounting matter. While the company expects to return to operating profit in FY2026 (ending December 2026), if earnings do not recover as planned in the business plan, this could affect cash flow. Although relationships with client banks remain favorable, if the financial position and business results deteriorate, agile fundraising could become difficult, posing a risk of disruption to business activities.

With the launch of the crypto-related business, the company must comply with crypto asset-related laws and regulations, including the Payment Services Act and the Financial Instruments and Exchange Act. Laws and regulations concerning crypto assets are still being developed both in Japan and overseas, and regulatory tightening or the enactment of new laws could constrain the continuation and expansion of the business. In addition, DeFi protocols and smart contracts inherently carry technical risks such as hacking and program vulnerabilities, and if these risks materialize, they could disrupt the stable provision of services.

To promote the "three-layer support model," it is essential to secure upstream talent capable of data analysis and strategy formulation, product development talent utilizing AI technology, and creative talent. In addition, in the newly entered crypto field, competition for talent with advanced expertise in crypto asset management, blockchain technology, and DeFi is intensifying. If the company is unable to secure the necessary talent as planned, this could result in a decline in competitiveness and constraints on business expansion, potentially affecting business results.

"Kaname.ax" collects, accumulates, and analyzes a cumulative total of over 41.65 million pieces of consumer voice data, including UGC on SNS, reviews, surveys, and call center data, creating risks of unauthorized external access and internal information leakage. The company complies with data protection laws, including the Act on the Protection of Personal Information, and has implemented technical measures such as data anonymization and access controls. However, if personal information is leaked for any reason, this could affect business results through damages claims and loss of credibility.