Akatsuki Inc.

While the game industry and comics industry to which the Group belongs are growth markets, if overall market growth slows significantly due to unexpected legal regulations, trends among telecommunications carriers, or other factors, this may affect the Group's business and results of operations. The domestic comics market turned negative in 2025, declining 1.7% year on year to ¥692.5 billion, requiring a response to changes in the market environment. As countermeasures, the Group is promoting a focus on game development with an eye to global trends and strengthening competitiveness through the production of original works.

The Group's applications are provided through app markets operated by Apple Inc. and Google Inc., and the Group pays collection agency fees, system usage fees, and other charges to each operator. If there are changes in fee rates or shifts in business strategy by these operators, this may affect the Group's results of operations, including a deterioration in profit margins. The Group addresses these trends by timely gathering information from industry associations.

In the Games & Comics Business, there are numerous domestic and overseas competitors, and competition has intensified with operators targeting PCs and dedicated game consoles as well as on a global scale due to the spread of smartphones. If competition intensifies, the number of users and usage of the services provided may decline, which may affect results of operations, including a decline in net sales. The Group addresses this by focusing on continuously providing differentiated titles, strengthening brand power, and providing high-value-added services.

The Group's business is closely related to the internet environment and network technology, and the pace of technological innovation in communication technology and devices is extremely rapid. If the Group fails to respond to the speed of technological innovation in a timely manner, this may affect results of operations, including a decline in net sales. The Group is making active investments by securing opportunities for training and education on new technologies and acquiring information on new technologies through venture investments.

The Group's business is entirely dependent on communication networks, and if the system goes down due to natural disasters, accidents, a surge in access, or cloud service outages, or if a system failure occurs due to computer viruses or intrusion by crackers, the Group's business and results of operations will be seriously affected. In addition, if a leakage of personal information occurs, this may result in liability for damages, loss of social trust, and expenditures for building additional information management systems. The Group addresses this by enhancing staffing in the information systems department and investing sufficiently in information security expenses.

For titles in the Games & Comics Business that use third-party IP, if the policies of the Group do not align with those of the IP licensor, if contract terms change significantly upon contract renewal, or if the IP becomes unavailable, this may affect the Group's business and results of operations. In situations of high dependence on IP, there is a risk that it becomes difficult to continue operating certain titles. The Group strives to limit the impact when such risks occur by promoting the development of original titles and the creation of its own IP.

The Group is actively engaged in M&A, capital and business alliances, and investments in startups and other companies, but if contingent liabilities not identified during due diligence arise or business plans are not achieved, it may become difficult to recover the invested capital. In addition, with respect to goodwill and tangible fixed assets arising from M&A, if the expected profits are not achieved due to changes in the business environment after the acquisition, an impairment loss may occur, which may affect the Group's financial position and results of operations. The Group addresses this through thorough due diligence prior to investment and sufficient examination of the rationality of business plans.

As the Group's business expands, it is essential to continuously recruit excellent personnel with advanced technical and planning capabilities, but if the Group is unable to secure or develop personnel meeting its recruitment standards as planned, this may affect the Group's business and results of operations. Demand for highly specialized personnel is particularly high in the development departments, and the environment for recruitment competition is fierce. The Group addresses this by enhancing staffing in the recruitment department, actively holding recruitment events, expanding internal and external training programs, and introducing goal management and one-on-one systems.

The Group invests in cryptocurrencies through cryptocurrency exchanges, and significant short-term fluctuations in trading prices or losses from security breaches or cyberattacks may affect the Group's financial position and results of operations. In addition, with respect to investments in startups and other companies through Dawn Capital 1 Investment Limited Partnership and EMOOTE PTE. LTD., there is a possibility that investment recovery may not be achieved due to the investee's failure to achieve its business plan or deterioration in growth potential. The Group strives to reduce investment risk by conducting detailed due diligence.

The Group's services are subject to numerous legal regulations, including the Act on the Protection of Personal Information, the Act against Unjustifiable Premiums and Misleading Representations, the Payment Services Act, and the Telecommunications Business Act, and the Group's business may be constrained by administrative sanctions resulting from regulatory violations or by the strengthening of laws and enactment of new laws. In addition, if the provision of game content or original works is restricted due to stricter regulation of content expression or the enactment of new laws, this may affect results of operations and business development, including a decline in net sales. The Group maintains its legal compliance system by developing internal check flows and operational flows and by timely gathering information from industry associations.