Aiming Inc.

The three titles 'Ken to Mahou no Logres: Inishie no Megami,' 'Dragon Quest Tact,' and 'Kage no Jitsuryokusha ni Naritakute! Master of Garden' account for the majority of total net sales, resulting in a high degree of dependence on specific titles. If sales of these titles deteriorate rapidly due to changes in the market environment or user trends, it could have a direct and material impact on the Group's overall business performance. While the Group is working to reduce this dependence through the release of new titles, there is also a concurrent risk that the development and procurement of new titles may not proceed as planned.

In the smartphone online game market, rapid changes in market share due to new entrants by major companies, intensifying price competition, and fierce competition for user acquisition are progressing. If the Group's competitive advantage declines due to the rise of competitors, it may become difficult to secure the planned number of users, which could lead to deteriorating profitability. The Group's strength lies in its know-how in game planning, development, and operation, but a delayed response to changes in the competitive environment could affect operating results and business development.

The Group's games are provided in accordance with the terms of service of major platform operators, including Apple Inc. and Google LLC, and the Group pays collection agency fees, system usage fees, and other charges. If platform operators change their system usage fee rates or shift their business strategies, this could have a direct impact on the Group's cost structure and profitability. In addition, if platform operators become unable to collect accounts receivable, this could also affect the Group's business performance.

Social concerns have been raised regarding the excessive inducement of gambling-like impulses in smartphone online games, and in 2012, the Consumer Affairs Agency issued a view that 'complete gacha' violated the Act against Unjustifiable Premiums and Misleading Representations. If, in response to future changes in social conditions, existing laws are reinterpreted or new legal regulations are introduced, the Group's business could be significantly restricted, which may have a major impact on its performance. The Group does not employ complete gacha and strives to comply with laws and regulations, but responding to changes in the regulatory environment remains a challenge.

The Group is subject to multiple legal regulations, including the Act on the Protection of Personal Information, the Unauthorized Computer Access Law, the Act on Specified Commercial Transactions, and the Payment Services Act, with in-game virtual currency falling under the scope of the Payment Services Act. In the event of an unforeseen violation of regulations, the Group could face administrative sanctions such as business suspension, which could seriously impact business continuity. The Group strives to comply with relevant laws and regulations, but future tightening of laws or the establishment of new regulations could restrict its business activities.

The Group's business is entirely dependent on communication networks and computer systems. If systems go down due to natural disasters, accidents, a surge in access, power outages at data centers, or cloud service outages, this could seriously affect the Group's business and performance. Similarly, there is a risk of system failures caused by computer viruses or unauthorized access by hackers. Although the Group has implemented appropriate security measures, complete defense is difficult to achieve given the increasing sophistication of cyberattacks.

The smartphone online game market is undergoing significant innovation in network technology and server operation technology. If the business environment changes rapidly due to the spread of new technologies or services not anticipated by the Group, it may become difficult to respond promptly. In addition, responding to such changes may incur substantial costs, posing a risk of pressure on profitability. The Group intends to respond to technological developments in a timely manner, but delays in responding could directly lead to a decline in competitiveness.

If further refinement of game features becomes necessary to respond to changes in market needs, production costs exceeding initial expectations may be incurred, which could put pressure on business performance. In addition, if inventory assets for titles under production become obsolete due to rapid market changes, valuation losses may occur, affecting the Group's financial position and operating results. The Group diversifies its production outsourcing partners and conducts strict inventory valuation, but there is a risk that its response may not keep pace depending on the speed of market change.

Representative Director and President Tadashi Shiiba, as the founder, plays an extremely important role in technical decision-making, management policy, and business strategy determination, resulting in a high degree of dependence on him. If any unforeseen circumstances affecting him arise, or if he steps down, this could have a material impact on the Group's operating results and future business development. The Group is strengthening its organizational response through delegation of authority and personnel expansion, but building an alternative management structure remains a challenge.

Amid intensifying competition for talent acquisition in the online game industry, if the Group is unable to secure personnel with the qualities and skills that meet its hiring criteria, or if existing personnel leave, this could affect its business development and performance. The Group strives to develop personnel and prevent turnover through on-the-job training after joining the company and the holding of various study sessions, but competition with rival companies for talent acquisition remains an ongoing challenge. In particular, a shortage of specialized personnel related to game development and operation poses a risk that could directly lead to delays in the development of new titles.