Ubiteq, INC.

Due to declining demand for banknote discrimination sensor modules and the suspension of telematics onboard device shipments, the company has recorded operating losses for five consecutive fiscal periods since FY2021 (ended June 2021), and in the fiscal year under review also recorded a significant net loss attributable to impairment losses on fixed assets, giving rise to material events that raise substantial doubt about the going concern assumption. As a countermeasure, the company has formulated the "Ubiteq New 3-Year Plan" (FY2026 (ending June 2026) to FY2028 (ending June 2028)) and is promoting a shift toward its proprietary SaaS service business, but achieving operating profitability and improved cash flow remains a future challenge. As of the end of the fiscal year under review, the company held cash and deposits of ¥1,244 million, and while it has determined that no material uncertainty exists, there is a risk that its financial condition could deteriorate if the plan is not achieved.

In the IoT Business, the company develops and sells new technologies for both hardware and software, but there is a possibility that major electronics manufacturers may shift to in-house development of comparable technologies, raising concerns about deteriorating performance due to intensified competition. In addition, since the company aims to create new markets, market size and customer needs remain unclear, making it difficult to forecast the impact on business performance. There is also a risk of delayed monetization, as new services and new systems may take a long time to translate into revenue.

The company is focusing on enhancing the functionality of its services and products and on research and development activities in order to respond to rapid changes in the IT environment, but if technological progress exceeds expectations, alternative technologies or products emerge, or technical standards change, the company may struggle to respond, which could affect its business performance. The risk that accumulated technology and know-how could lose their competitive advantage is particularly likely to materialize as technological innovation in the IoT and AI fields accelerates.

The company procures components from numerous external suppliers, and faces the risk of increased procurement costs due to rising industry demand, higher raw material prices, and foreign exchange fluctuations, particularly for semiconductors. If defects are found in procured components and the necessary components cannot be adequately secured, delivery delays may occur, which could affect business performance. The company is working to avoid procurement risk by strengthening collaboration with existing suppliers, developing new procurement sources, and reviewing procurement specifications.

The company has adopted a fabless production system without owning factories, and production is currently concentrated at domestic contract manufacturing plants. If trouble that disrupts manufacturing or legal/regulatory issues occur at a contract manufacturing plant, this could affect procurement and sales plans, adversely affecting business performance. The company gives careful attention to maintaining quality and production lines through thorough screening in selecting contract manufacturers and providing technical guidance.

The company designs and manufactures products in accordance with global quality control standards through ISO9001 certification, but because it is focused on developing new products, including its own proprietary products, it is difficult to guarantee that all products are free of defects. If a product defect occurs, costs associated with product liability claims and similar matters may arise, which could adversely affect business performance.

The company has accumulated technology and know-how that differentiate its products from those of other companies, but it is difficult to fully protect all of it through intellectual property rights, creating a risk of leakage or infringement of technology, know-how, and intellectual property rights. Conversely, there is also a risk that the company may infringe on the intellectual property rights of third parties, and if it receives a claim for damages or is subject to litigation, this could adversely affect its financial position, business performance, and social credibility. The company implements appropriate contract execution and investigation of third-party rights with the cooperation of specialists such as attorneys and patent attorneys.

The company is subject to regulations under the Product Liability Act (PL Act) and environmental laws and regulations concerning hazardous substances and waste, among others, and if these legal regulations are amended or abolished, or new legal regulations are introduced, this could affect the company's operations and business performance. While the company currently conducts its business activities in compliance with these legal regulations, there is a risk that costs will arise in responding to changes in the regulatory environment.

The company's business relies heavily on computer systems and networks, and while it has obtained "ISO/IEC 27001:2022" and "JIS Q 27001:2023" certifications and implemented various countermeasures, if a major system failure or communication network failure occurs due to hardware or software defects, large-scale natural disasters, computer virus intrusion, or similar causes, this could affect business performance. As the shift toward the SaaS service business progresses, dependence on systems is further increasing, heightening the significance of this risk.

There is an absolute shortage of specialized personnel such as analog circuit design engineers, embedded/firmware design engineers, and network engineers, and if personnel attrition occurs or hiring plans are not achieved, this could adversely affect business expansion and performance. In addition, the company is a small organization with 9 officers and 81 employees (as of June 30, 2025), and if its internal management system fails to appropriately respond to business expansion and increases in personnel, this poses a risk of affecting business operations and performance. The company is working to secure and develop personnel through strengthened recruitment activities, expanded education and training programs, and support for obtaining qualifications.