■Medium- to long-term growth strategies and topics

1. Capital and business alliance with Tiwaki, which has edge AI technology

Dawn ＜2303＞ is promoting a three-year medium-term management plan with the fiscal year ending 2025/5 as the final year. “M&A and business alliances” are listed as one of the priority measures of the medium-term management plan, and in particular, active searches have been carried out targeting “companies with knowledge in the AI field.” As a result, a capital and business alliance was announced with Tiwaki, which has advanced edge AI technology, in 2024/7. Tiwaki is an enterprise established in 2016 for the purpose of aiming to solve social issues based on edge AI technology, and aims to solve a wide range of social issues in fields such as “smart gasoline stations” and “nursing/healthcare” in addition to businesses related to “crime prevention/security,” “disaster prevention,” and “smart parking lots” by using high-speed and compact AI cameras equipped with edge devices. Since it was determined that efforts aimed at solving social issues can be further accelerated, mainly in the crime prevention field, by combining the company (Dawn)'s introduction expansion know-how to police and government offices with edge AI technology owned by Tiwaki, an agreement on this capital and business alliance was reached.

As the first stage of the capital alliance, the company (Dawn) plans to take on 5,900 shares from Tiwaki shareholders for a total payment amount of 70,800 thousand yen, and the company (Dawn) will hold 19.9% of Tiwaki's total voting rights. As a second step, it is planned to undertake convertible bonds with share acquisition rights with a total payment amount of 153,600 thousand yen, and it is planned to hold 50.2% of Tiwaki's total voting rights after the stock conversion.

Edge AI indicates AI directly mounted on a network edge device, and it is a technology that can immediately grasp results by data processing performed on the terminal side. There are many advantages such as low communication costs, high instantaneity, and complete security within the terminal. Edge AI technology is also a hot topic because edge AI technology is used in “personal computers specializing in generative AI,” which Microsoft ＜MSFT＞ in the US announced development in 2024/5. The product and service market in the domestic edge AI field will increase at an annual rate of 41.3% until 2026, and is predicted to reach 37 billion yen scale in 2027 (Ministry of Internal Affairs and Communications “Information and Communications White Paper Reiwa 5 Edition”). Tiwaki excels at reading automobile license plates using edge AI technology, and it can also be expected to create new value through application in various image analysis fields, starting with the crime prevention field, parking lot management field, etc., and fusion with the company's video cloud services.

2. “Live-X” and “disaster prevention/crime prevention apps” are gaining momentum as cloud services that will lead the next generation

In the company's cloud service, the emergency reporting system “NET119” and the video reporting system “Live119” have supported growth as two pillars. While “NET119” is maturing and “Live119” is in a growth period, the search for services that will be responsible for the growth of the next generation has continued. The 2024/5 fiscal year was a year where “Live-X” and “disaster prevention/crime prevention apps” got on a growth trajectory and solidified their ground as the pillars of the next generation. “Live-X” is a solution that applies the video reporting technology of “Live119,” and since it is suitable for 1-to-N (unspecified number) communication where site confirmation with images is important, introduction is expanding in various scenes regardless of the public or private sector in various industries such as construction machinery, electricity/gas/water, and roads. The smartphone application “disaster prevention application,” which distributes disaster prevention information by local governments, was published in the “Disaster Prevention DX Service Catalog” published by the Digital Agency, and is beginning to be newly introduced. In addition to already operating in the two major cities of Tokyo and Osaka, it is being deployed horizontally in Kochi Prefecture, Nagano Prefecture, Yawata City, etc. Also, the effectiveness of crime prevention apps has been proven by actual cases of molestation damage, and implementation at the 5 prefectural police stations in Fukui Prefecture, Shiga Prefecture, Fukushima Prefecture, Nara Prefecture, and Kagawa Prefecture began in the 2024/5 fiscal year.

3. Promote an “essential company” and actively advance into projects outside of the safety and security field

The company advocates an “essential company” in the medium-term plan currently underway, and has strengthened efforts to become an essential company for solving social issues outside of the safety and security field. As a representative example, we have received an order for system development related to Individual Number Cards and Driver's Licenses, and delivery is scheduled to be carried out during the progress period. Integration of an Individual Number Card and a driver's license is scheduled to begin in 2024, and since license information is not described on the face of the integrated card, an application for reading specific license information recorded on the IC chip is required. My Number-related fields are a new field with a large market size, and if technical capabilities and achievements are evaluated, it will be an opportunity for a leap forward with cloud services in local governments/governments other than fire departments and police. Also, in 2024/5, we will form a business alliance with Emotive Co., Ltd., and promote the “frailty (decline in reserve capacity associated with aging) prevention” business by combining the company (Dawn)'s know-how to expand introduction to local governments and dialogue AI technology owned by Emotive. In the future, we are considering promoting DX and expanding the “digital health” area, including not only local governments and government offices, but also private companies.

(Written by FISCO Visiting Analyst Hideo Kakuta)