TSUBURAYA FIELDS HOLDINGS INC.

While simultaneously pursuing multiple growth themes such as IP and business investment, overseas expansion, and in-house planning and manufacturing, if the Group is unable to manage its overall management strategy, resource allocation, and investment decisions in an integrated manner, this could lead to a dispersion of management resources, continuation of unprofitable investments, and a decline in capital efficiency. As a countermeasure, the Company is disseminating its management policy through collaboration among Group companies, and is pursuing an integrated approach to organization, human resources, IP acquisition, and growth investment aimed at strengthening "products x distribution."

If licensing agreements for major IP, including the Ultraman IP, are terminated or their terms changed, if opportunities to acquire new IP are lost, or if third parties infringe on intellectual property rights, this could impact business performance and corporate value through delays in product planning, lost sales opportunities, and a decline in brand value. With the expansion of overseas operations, including in China, the complexity of rights protection and contract management by region is also increasing, and the Company is addressing this by balancing "defensive" IP management with "offensive" IP utilization.

While the continuous creation of hit machines in the amusement equipment business is a source of funds for growth investment, if unit sales fall short of plan due to demand fluctuations, changes in consumer preferences, or non-conformance with regulatory standards, this could reduce the Company's cash-generating capacity through lower sales and profits. In the Content & Digital business as well, deficiencies in demand forecasting, inventory management, and quality control pose a risk of inventory valuation losses and lost sales opportunities, and the Company is promoting standardization of product development and sales processes and reducing dependence on individual personnel through the use of data.

With the expansion of in-house planning and manufacturing, the increasing proportion of private-brand products, and overseas expansion, the complexity of the supply chain is increasing, raising concerns about dependence on specific regions for material procurement and instability in the supply network due to geopolitical risks and natural disasters. If deficiencies arise in procurement, quality control, or legal compliance, this could impact brand value, profitability, and investment capacity through supply disruptions, production stoppages, delivery delays, and lost sales opportunities, and the Company is addressing this by diversifying its procurement sources and developing sales channels.

AI/DX is positioned as a management foundation supporting the refinement of the business portfolio and improved precision in investment decision-making, but if the development of data infrastructure and utilization of digital technology does not proceed as planned, this could delay the sophistication of demand forecasting, inventory management, and operational efficiency, leading to a decline in competitiveness. In addition, if internal rules regarding AI usage, rights processing, and personal information management are inadequate, there is a risk of information leaks or intellectual property rights infringement, and the Company is promoting the development of Group-wide AI, data, and IT infrastructure along with strengthened AI governance.

As the importance of information management increases with the expansion of e-commerce, customer data management, and IP information management, if cyberattacks from outside parties, internal misconduct, or system failures occur, this could impact business continuity, performance, and corporate value through leaks of confidential information, personal information, and IP-related information, suspension of e-commerce sites, business interruption, and liability for damages. Given the expanding scope of potential attack targets, including outsourcing partners and the supply chain, the Company is addressing this by centralizing information security management across the Group and thoroughly implementing employee training.

As the complexity and speed of management decision-making increase with global expansion and growth investment, if excessive dependence arises on specific executives or personnel in charge, the absence of such individuals or unforeseen circumstances could impede decision-making and business execution. As countermeasures, the Company is working to improve the quality and speed of decision-making through the separation of oversight and execution, strengthening the Board of Directors' monitoring function, and delegation of authority, while also establishing a governance structure in which half of the directors are outside directors or independent officers.

As points of contact with stakeholders expand due to overseas expansion and new business growth, and against the backdrop of the accelerating spread of information via social media, if misconduct, insufficient information disclosure, or inadequate communication content occurs, this could have a broad and long-term impact on business performance and corporate value through a decline in trust from customers and investors, reduced revenue opportunities, and deterioration of the funding environment. The Company's countermeasures include promoting sustainability management through the Group Sustainability Committee and proactively disclosing both financial and non-financial information.

As securing and developing specialized personnel in specific fields becomes a prerequisite for strategy execution in overseas expansion and new business areas, if intensifying competition for specialized talent or the loss of core personnel prevents personnel recruitment and development from proceeding as planned, this could weaken business execution capabilities and delay or stall growth strategies. As countermeasures, the Company is promoting the securing and development of necessary personnel based on a medium- to long-term human resources strategy, strengthening core personnel responsible for building overseas operations and product development, and improving well-being through enhanced non-monetary compensation and benefits.

With the head office functions and management resources of major Group companies concentrated in the Tokyo metropolitan area, if an emergency such as a major earthquake directly beneath the Tokyo metropolitan area, a Nankai Trough earthquake, or the spread of infectious disease disrupts head office functions, information systems, logistics, manufacturing subcontractors, or coordination with overseas affiliates, this could impact business performance and corporate value through suspension of product supply, prolonged recovery, and delays in decision-making. Countermeasures include establishing a chain of command in the event of an emergency, developing a business continuity plan (BCP), and strengthening cooperation among Group companies.