FRONTEO Inc. (Headquarters: Minato-ku, Tokyo; President and CEO: Masahiro Morimoto; hereinafter referred to as FRONTEO) has launched an AI solution for economic security business measures equipped with its proprietary specialized AI "KIBIT.""KIBIT Seizu Analysis"We are pleased to announce that we have developed a new technology for analyzing shareholder control networks (hereinafter referred to as the "Technology") and have filed a patent application. This technology makes it possible to calculate shareholder influence based on shareholding ratios with greater accuracy, and to detect remote effective control as well as related risks.

[Patent outline]
Application number: Japanese Patent Application No. 2024-151028
Patent filing date: January 2024, 9

The technology for which this patent application has been filed adds to the technology (patent registration number: 7121366) that already has a patent for applying a unique correction method to the calculation of indirect shareholding ratios in the analysis of multi-layered shareholder control networks, by detecting "remote control routes" with even greater accuracy and visualizing comprehensive effective control and related risks.

For example, if Company A owns 51% of Company B's shares and Company B owns 30% of Company C's shares, the general method of calculating indirect shareholding ratios would result in Company A's indirect shareholding ratio in Company C being 15.3%. The previous patented technology made it possible to adjust the indirect shareholding ratio by assuming that Company A, which effectively controls Company B, actually owns 30% of Company C's shares. This method enables much more effective detection of remote control than other methods, but its detection ability may be reduced for special network structures.

This technology can detect remote effective control with 100% accuracy for any network structure, and furthermore, it is possible to detect influence based not only on effective control relationships, but also on more flexible risk definitions such as information leaks.

Figure: Example of effective control of Company Y by Company X and detection of information leakage risk at Company Z

In recent years, due diligence on business partners and investment targets has been positioned as an essential element in addition to the main business, financial, and legal aspects. Through research and development of AI technology that realizes innovative analysis and its social implementation, FRONTEO will grasp the effective control status and potential risks of shareholders, and support the formulation and promotion of corporate strategies and the realization of long-term business continuity plans.

■About KIBIT Seizu Analysis　URL:https://osint.fronteo.com/
KIBIT Seizu Analysis is a system that uses FRONTEO's in-house developed AI engine "KIBIT" to analyze networks such as supply chains and the state of control by a company's beneficial shareholders for the purpose of economic security measures. We currently offer three solutions:
①Supply chain analysis solution: Understand choke points (strategically important points) in the supply chain, potential connections with concerned organizations, and degree of dependence.
②Shareholder control network analysis solution: Analyze the influence between shareholders in a complex network using a unique method that adjusts for indirect shareholding ratios to understand the propagation of hidden control
3) Researcher network analysis solution: Regarding research and development related to sensitive technology, analyze the personal connections of researchers, focusing on their organizations, etc., and understand the risks based on this.

■ About FRONTEO　URL:https://www.fronteo.com/
FRONTEO supports the judgment of experts in various fields who face social issues day and night through the provision of its proprietary specialized AI "KIBIT," and creates the starting point for innovation. Unlike general-purpose AI, our proprietary natural language processing technology (patented in Japan and the United States) enables high-speed and high-precision analysis without relying on the amount of training data or computing power. In addition, by utilizing patented technology that maps (visualizes the structure) the analyzed information, "KIBIT" can directly influence the insights of experts, and in recent years, KIBIT's technology has also been used in hypothesis generation and target discovery in drug discovery.
Through KIBIT's unique technology and approach, we aim to realize the philosophy of "providing solutions that do not overlook risks and opportunities buried in records, and realizing fairness in the information society." We are promoting social implementation in various fields of legal tech AI.
Founded in August 2003, listed on the Tokyo Stock Exchange Mothers (currently Tokyo Stock Exchange Growth) on June 8, 2007. Has operations in Japan, the United States, South Korea, and Taiwan. Obtained Type 6 medical device manufacturing and sales license, and filed for controlled medical device sales. Capital: 26 yen (as of August 898,618, 2024).

*FRONTEO, KIBIT, and Seizu Analysis are registered trademarks of FRONTEO in Japan.