enish,inc.

As in the previous fiscal year, the Company recorded significant operating loss, ordinary loss, and net loss for the current fiscal year, and events exist that raise material doubt about the going concern assumption. As countermeasures, the Company raised ¥727,315 thousand through the exercise of the 19th series of stock acquisition rights and ¥300,146 thousand through the exercise of the 20th series of stock acquisition rights, working to stabilize its financial base; however, because the sales trends of existing titles and sales forecasts for new titles involve future projections, material uncertainty has not been resolved at this time. The financial statements have been prepared on a going concern basis, and the effects of this uncertainty are not reflected in the financial statements.

The Company has issued stock options for directors and employees as well as stock acquisition rights for fundraising purposes. As of the end of December 2025, the number of potential shares stood at 9,821,000 shares, equivalent to 25.7% of the total issued shares of 38,137,560 shares. If these stock acquisition rights are exercised, the number of issued shares will increase, potentially diluting the value per share. Additional issuances may be made in the future for the purpose of securing talented personnel and raising funds, and dilution risk continues to exist on an ongoing basis.

As the proportion of sales from native app games increases, reliance on revenue from Apple Inc. and Google Inc. has grown. If either company changes its business strategy or fee rates, this could directly affect the Company's revenue structure. Although the Company provides services across multiple platforms, including SNS platforms, concentration on the App Store and Google Play remains a structural risk.

Numerous competitors exist in the mobile game market, and competition with makers of games for PCs and dedicated consoles has also expanded amid the shift to smartphones. The Company is responding by releasing highly distinctive titles, but if competition intensifies further and results in user attrition from existing titles or underperformance of new titles, this could have a material impact on business performance. Under conditions of continued losses, there is also a structural challenge in that the capacity for investment to maintain competitiveness is limited.

The Company's primary revenue source is in-app item purchases, and continued spending behavior by users underpins its business performance. If expected revenue is not achieved due to changes in user preferences or a decline in willingness to make purchases, this could have a material impact on business performance. Given that losses have already been recorded over multiple periods, a decline in paid-item revenue poses a risk of further deterioration of the financial base.

Browser-based titles aimed at female users, such as "Boku no Restaurant II" and "Garusho☆," serve as a stable revenue base, but changes in user preferences or a contraction of the browser game market could affect the Company's business performance. The browser game market as a whole is on a downward trend, and dependence on these titles constitutes a medium- to long-term risk factor. The Company is promoting the development of new native titles, but there is a risk of a revenue gap arising during the transition period.

The development and operation of mobile games requires the production of large volumes of items and characters, and the Company relies on multiple external contractors in addition to in-house production. Production and development costs may increase beyond expectations due to difficulty in securing production contractors amid an increase in new market entrants, rising labor costs, and exchange rate fluctuations. If cost increases occur under conditions of continued losses, this poses a risk of further deterioration of the financial base.

The Company's business depends on internet communication networks, and there is a risk that service provision could be suspended due to natural disasters, access congestion, unauthorized external intrusion, and other causes. Although the Company has implemented measures such as utilizing external data centers and performing regular backups, in the event of a failure, in addition to direct damages such as compensation claims, indirect deterioration of business performance could occur due to a decline in brand trust. Similarly, in the event of a leak of personal information, the Company's business and performance could be affected by loss of credibility and claims for damages.

The mobile game market is closely linked to the rapid evolution of internet environments, network technology, and device performance, and the pace of technological innovation is extremely fast. The Company strives to support multiple platforms and enhance its development environment, but if it fails to respond to technological innovation in a timely manner, this could lead to a decline in competitiveness and affect business performance. As continued losses constrain the capacity for R&D investment, the risk of delayed technological response is relatively elevated.

Securing and developing talented personnel is an important challenge for the Company, and while it is promoting measures such as introducing telework and enhancing employee benefits, if recruitment and development do not proceed as planned, this could result in increased outsourcing costs and insufficient accumulation of in-house know-how. In addition to intensifying competition for talent within the mobile game industry, there is also a risk that continued deterioration in business performance could weaken the Company's competitiveness in recruitment. With respect to the management of intellectual property rights, the Company is strengthening its internal management system to address the risk of removal of information by officers and employees, but in the event that it inadvertently infringes on the intellectual property rights of a third party, it could face claims for damages and other consequences.