CRI Middleware Co., Ltd.

Domestic game-related audio and video products maintain competitive advantage through track record of adoption and relationships of trust with customers, but if other companies bring highly competitive products or alternative technologies to market, this could affect the Group's business performance. Although a stable revenue base has been formed at present, sustained competitiveness must be maintained in the game market, where technological innovation moves rapidly.

The Company continues to make development investments in the mobility market business as a future core business, but changes in relationships with major customers or trends in the automotive industry could affect business performance. In addition, if a defect attributable to the Company occurs in parts or systems incorporating the Company's technology or products, this entails risks of damage claims and loss of credibility.

The Company continues to make technology development investments in CRI TeleXus, a real-time video, audio, and information transmission and reception platform, but if unforeseen enactment or tightening of laws and regulations in various countries necessitates extensive changes to product specifications, this could affect the Group's business performance. Since this platform is premised on global deployment, it is necessary to continuously monitor regulatory trends in multiple countries.

The Group conducts overseas business primarily centered on China, and there are latent risks such as unforeseen changes in policy, legal systems, and licensing systems, deterioration of economic conditions, worsening relations with Japan, terrorism or war, and social disruption due to the spread of infectious diseases. If these risks materialize, they could have a material impact on the continuation and profitability of overseas business.

The Group holds confidential information and personal information of customers and business partners, as well as intellectual property related to its own technology, and has taken measures such as obtaining ISMS certification and conducting awareness-raising activities through internal training. However, if information is leaked or disclosed externally due to cyberattacks, unauthorized access, computer viruses, or similar causes, this could affect the Group's business performance through the occurrence of damage claims or loss of credibility.

Since the Group's product development requires a high level of technical capability, recruiting and training excellent engineers is an important management issue. If intensifying competition for talent acquisition impedes engineer recruitment or if the number of employees leaving increases significantly, this could affect the Group's business performance through a decline in development capability. The Company is working to improve the working environment and compensation.

The Group is pursuing active business expansion through M&A and capital and business alliances, and states that it carefully examines investment targets. However, if progress after investment does not proceed as planned, valuation losses on investment securities may occur, which could affect the Group's business performance and financial condition.

As of the end of September 2025, the total number of potential shares from stock acquisition rights was 692,137 shares, equivalent to 12.4% of the total number of issued shares of 5,578,150 shares. If these are exercised, this could result in dilution of the Company's share value and affect the supply-demand balance of share trading, thereby affecting share price formation. The targets are stock options (5th series stock acquisition rights) and third-party allotment stock acquisition rights-attached bonds (4th series unsecured convertible bonds).

The Company protects technology and know-how accumulated through product development by obtaining patents and keeping trade secrets confidential, but there is a possibility that the Company may unintentionally infringe upon the intellectual property rights of a third party, such as through the establishment of intellectual property rights by a third party, and become subject to litigation. In this case, risks of damage claims and loss of credibility may arise, which could affect the Group's business performance.