Metaplanet Inc.

Bitcoin prices fluctuate significantly due to supply-demand dynamics, macroeconomic conditions, regulatory developments, and other factors. In a medium- to long-term downturn, the fair value of held Bitcoin may decline. Under Japanese GAAP, cryptoassets are measured at fair value, with valuation differences recognized in profit or loss for the period. Consequently, even if the business is performing well, significant valuation gains or losses may arise depending on the price at fiscal period-end, causing substantial fluctuations in operating results. While the Group's fundraising and Bitcoin Income Business are designed with volatility in mind, a prolonged decline in Bitcoin prices could impede the execution of the growth strategy and fundraising plans.

The Group's strategy is premised on maintaining an "mNAV premium," whereby the Company's market capitalization exceeds the market value of its Bitcoin holdings, and on leveraging that premium to raise funds through equity and other means to improve BTC Yield. If fluctuations in the cryptoasset or equity markets, or a decline in market valuation, cause mNAV to fall below 1x, the Group may need to reconsider the optimal timing and methods for fundraising and Bitcoin acquisition, potentially delaying its plans to expand holdings. Although the Group addresses this through diversification of fundraising methods (preferred stock, borrowings, etc.) and enhanced disclosure, there is no guarantee that the premium will be maintained on a stable basis.

The Group's policy is to flexibly issue MS Warrants (stock acquisition rights with exercise price reset provisions) and common shares to raise funds for Bitcoin acquisition. Even during periods of declining share price, exercise of such rights may proceed, diluting the ownership ratio and per-share value of existing shareholders. In addition, if deteriorating equity market conditions or reduced investor risk appetite cause exercise of the MS Warrants to proceed more slowly than anticipated, the timing and scale of Bitcoin acquisitions may be constrained, affecting execution of the growth strategy. While the Group aims to achieve an effect that exceeds dilution through an increase in Bitcoin holdings per share, realization of this effect depends on market conditions.

The Group utilizes credit facility agreements collateralized by Bitcoin, managing risk by maintaining a loan-to-value (LTV) ratio with a certain margin relative to collateral value. However, if a sharp price decline beyond expectations causes the collateral value to fall below the contractual threshold, a margin call requiring additional collateral, or a forced sale of collateral assets, may occur, potentially reducing Bitcoin holdings at an unintended time. This could directly affect the Group's treasury strategy, which is premised on long-term holding, as well as its financial condition.

Most of the Group's Bitcoin holdings are managed in cold wallets and other facilities operated by institutional-grade custodians. However, if a custodian becomes insolvent, deposited assets may be incorporated into the bankruptcy estate and become unrecoverable. In addition, if theft or loss occurs due to hacking, unauthorized access, internal fraud, or similar events, insurance coverage is limited and may not fully compensate for the loss. Although the Group has implemented measures such as distributed custody across multiple custodians, multi-signature arrangements, and security assessments by external specialists, complete elimination of this risk is difficult.

As part of the Bitcoin Income Business (Options Trading), the Group employs put and call option selling strategies to earn premium income. In the event of a sharp price decline, the Group may be obligated to acquire Bitcoin at a level above the market price; conversely, in the event of a sharp price surge, it may incur an opportunity loss relative to the gains that would have been obtained by simply holding the underlying Bitcoin. In addition, because cash or Bitcoin is held as collateral during the contract period, flexibility in fund management is reduced in the event of sudden market changes. Although the Group has an internal policy limiting the scale of these operations to approximately 5% of Bitcoin NAV, large price fluctuations could result in returns falling short of expectations or in losses.

Under the FY2024 tax reform, cryptoassets held by corporations that satisfy certain transfer restriction requirements (such as technical measures preventing transfer) are excluded from mark-to-market taxation at fiscal period-end, and the Group currently operates so as to satisfy these requirements. However, if future tax reforms, changes in interpretation, or determinations by tax authorities result in a finding that these requirements are not met, the Group could become liable for substantial corporate tax and other payments on unrealized gains on its Bitcoin holdings, which could have a material impact on cash flow and financial condition. In addition, the introduction of a 20% separate taxation on cryptoasset income for individual investors could reduce the relative advantage of gaining Bitcoin exposure through equities, potentially affecting the valuation of the Company's shares and the terms of its fundraising.

If Bitcoin were reclassified as a security in the United States, or if the Group were determined to be an investment company under the U.S. Investment Company Act, the Group could become subject to registration requirements and various restrictions on its business activities. In Japan, discussions are also underway regarding a shift in the regulatory framework from the Payment Services Act to the Financial Instruments and Exchange Act; if enhanced regulation of custody operations and derivatives transactions is implemented, the Group would need to obtain new licenses, revise its operations, and strengthen its internal management systems, increasing compliance costs. Such regulatory changes could have wide-ranging effects on the Group's business activities, financial condition, and operating results.

Execution of the Bitcoin strategy and derivatives trading operations relies heavily on the expertise, experience, and judgment of specific executives and key personnel, including President and Representative Director Simon Gerovich and Chief Bitcoin Strategy Officer Dylan Le Clair. If these key individuals become unavailable due to illness, retirement, or other reasons, the Group's ability to make agile decisions and execute its strategy could be impaired. Although the Group is working to share knowledge internally, develop personnel, and strengthen its organizational structure, there is no guarantee that these measures will function sufficiently.

Since 2024, the Bank of Japan has ended its negative interest rate policy and raised its policy rate, which stood at 0.75% as of December 2025. Further rate hikes could increase the cost of yen-denominated fundraising, affecting profitability, while yen appreciation could reduce the yen-denominated valuation of Bitcoin holdings, affecting financial condition, capital policy, and market valuation. In addition, as an increasing number of companies adopt Bitcoin as a core element of their treasury strategy, competition to acquire additional Bitcoin may intensify due to the entry of better-capitalized competitors, potentially constraining the Group's ability to acquire Bitcoin at the pace and terms it envisions.