WonderPlanet Inc.

The core title "Crash Fever" accounted for over 40% of total net sales in the fiscal year ended August 2025, resulting in a high degree of revenue dependence on a specific title. If sales of this title decline and fall short of planned figures, this could have a direct impact on the Company's business and results of operations. As a countermeasure, the Company is pursuing revenue diversification through the maintenance and expansion of other existing titles and the development and operation of new mobile games.

With the increasing sophistication of smartphones and the rising sophistication of user needs, mobile game development periods have become notably longer and development costs have risen significantly, while advertising expenses required for effective user acquisition are also on an increasing trend. If development schedules are delayed or discontinued, or if advertising fails to achieve the expected effect, the Company may be unable to recover its substantial investments, which could affect its business, results of operations, and financial condition. The Company strives to build a stable financial foundation through progress management on a per-title basis and by implementing advertising based on a careful assessment of cost-effectiveness.

The Company procures funds for mobile game development and operation costs through equity as well as bank borrowings and bond issuances, resulting in a high interest-bearing debt ratio. If interest rates fluctuate due to changes in the financial environment, or if the Company's creditworthiness declines, this could lead to increased interest payments and affect its business, results of operations, and financial condition. In addition, the Company holds tax loss carryforwards, and if taxable income does not arise as planned, this could result in an increased corporate tax burden and affect cash flow.

The Company's mobile games are provided to users in Japan and overseas through the App Store (Apple Inc.) and Google Play (Google LLC), resulting in a high degree of dependence on these platform operators. If these platform operators implement changes in business strategy or alter their fee rates, this could have a direct impact on the Company's revenue structure. As a countermeasure, the Company intends to appropriately monitor trends among platform operators through information gathering from industry associations and other sources.

In the mobile game market, competition is intensifying due to the presence of numerous companies offering similar services, and any delay in responding to changes in user preferences could lead to a decline in user numbers or a failure to achieve expected revenue. While the Company's policy is to accurately grasp user needs and provide differentiated services relative to competitors, its business and results of operations may be affected if it becomes difficult to respond to rapid changes in preferences. The Company continues to pursue a differentiation strategy leveraging the development and operational know-how it has accumulated to date.

The development and operation of mobile games requires compliance with laws and regulations such as the Act against Unjustifiable Premiums and Misleading Representations (prevention of misleading representations regarding benefits and quality) and the Payment Services Act (handling of in-game currency). If new laws or regulations are enacted, or existing regulations are revised or their interpretation changed, or if reputational issues arise even without any legal violation, this could affect the Company's business and results of operations. The Company strives to stay abreast of the latest developments and respond appropriately through consultation with its retained legal counsel and by complying with the guidelines of, and participating in seminars held by, the Japan Online Game Association.

The Company's business is entirely dependent on communication networks and computer systems, and if a system outage occurs due to a natural disaster, accident, sudden surge in access, or a cloud service outage, among other causes, the Company's business and results of operations could be seriously affected. A similar risk exists in the event of unauthorized access resulting from computer viruses or intrusion by crackers. While the Company strives to prevent unauthorized external access by implementing appropriate security measures, complete prevention remains difficult.

Yuki Tokikawa, Representative Director, President and CEO, plays an important role as founder in determining and executing management policy and business strategy, resulting in a high degree of dependence on him. If, for any reason, he becomes unable to continue executing management duties, this could affect the Company's business and results of operations. The Company is promoting information sharing and delegation of authority through the Board of Directors, the Executive Officers' Meeting, and business progress reporting meetings, and is working to establish a management structure that does not rely excessively on a specific individual.

The internet-related field is a rapidly changing industry marked by continuous development of new technologies and introduction of new services, and any delay in responding to technological innovation could result in a decline in competitiveness or service quality. Additional expenditures on system costs and personnel costs may also increase in order to respond to new technologies. The Company addresses this through the recruitment and development of engineers, the establishment of a creative working environment, and a focus on acquiring smartphone-related technologies, knowledge, and know-how.

The Company utilizes collaboration with third parties, licensing agreements with copyright holders, and outsourcing of production to external creators in the development and operation of mobile games. Depending on the business strategy changes or new business development of these partners, the Company may be forced to change its development and operation policies. In addition, changes to the terms of contracts with collaboration partners could have a direct impact on the Company's results of operations. The Company seeks to reduce this risk by distributing outsourcing among multiple creators and continuously developing new IP.