SUSMED,Inc.

Development of therapeutic apps, like pharmaceuticals, requires substantial time and investment, and there is a risk that development policies may be changed, postponed, or discontinued due to clinical trial results, regulatory guidance, or changes in laws and regulations. Since there are limits to reducing the risk of individual pipelines, the company's policy is to strengthen collaboration with academic research institutions and utilize its therapeutic app development platform to efficiently explore seeds and continuously enrich its pipeline.

The therapeutic apps developed by the company fall under the category of medical devices, requiring registration as a manufacturing and marketing business under the Pharmaceuticals and Medical Devices Act (renewed every 5 years); if renewal is not approved, continuation of development becomes impossible. In addition, if regulatory approval for use is not obtained, or if the product is not covered by insurance after approval or is not granted the expected insurance reimbursement points, this may have a significant impact on the company's financial condition and business performance. The company's policy is to maintain the requirements for registration renewal by expanding personnel systems and continuously implementing appropriate business processes.

The App for Insomnia Disorder obtained manufacturing and marketing approval/permission in February 2023, and an application for partial change to the manufacturing and marketing approval matters was filed in August 2024, with approval already obtained as of September 2025; however, the business plan is formulated on the premise of insurance coverage. If specification changes or re-conducting of clinical trials occur in the process leading up to launch, the schedule of the business plan may change, which could have a significant impact on the company's long-term financial condition and business performance.

The company has recorded net losses continuously from the 2nd fiscal period (FY2017, ending June 2017) through FY2025 (ending June 2025), and does not yet have sufficiently stable revenue sources. As a research and development-oriented company, it continues to bear substantial and long-term research and development expenses, and if it is unable to secure necessary funds at the required timing, this may raise significant concerns about business continuity. As countermeasures, the company's policy is to secure diverse funding methods, including establishing joint research and development frameworks, out-licensing pipelines to other companies, and obtaining milestone income.

The company may flexibly conduct fundraising, primarily through capital increases, in line with the expansion of its research and development activities, and there is a risk that the value per share may be diluted due to an increase in the number of shares issued. As of the date of submission of this document, the number of potential shares from stock acquisition rights is 743,400 shares (equivalent to 4.4% of the total number of issued shares of 16,822,700 shares), and the company may continue to grant stock options and restricted stock in the future.

Mr. Taro Ueno, the founder and Representative Director and President, has significant influence as the chief officer across a broad range of areas, from determining management strategy to research and development, business development, and administrative operations, and if he becomes unable to continue his duties, this could have a significant impact on the company's short-term business strategy. As a countermeasure, the company is strengthening its management organization, including by having multiple directors share responsibility for different areas of operation.

The company is a small organization consisting of 4 full-time directors, 3 part-time directors, and 41 employees, and its business activities are heavily dependent on management, department heads, and a small number of research and development personnel. If recruitment and training of personnel does not proceed smoothly, or if personnel turnover occurs, this may impede medium-term business activities and have a significant impact on the company's financial condition and business performance. The company's policy is to continuously strengthen its administrative departments and expand its internal control systems in line with the expansion of its business scale.

While there are still few domestic entrants in the therapeutic app field, listed companies already exist overseas, and the domestic competitive environment is becoming increasingly severe, as evidenced by Japanese pharmaceutical companies introducing overseas therapeutic apps domestically and initiating clinical trials. Depending on the outcome of competition with competitors in research and development, clinical trials, and sales, the launch of the company's pipeline may not proceed as planned, which could have a significant impact on the company's medium-term financial condition and business performance. The company's policy is to maintain its competitive advantage by building entry barriers, primarily through the acquisition of intellectual property rights.

There is no guarantee that all patents currently under application will be granted, and even after patents are granted, the company's patented technology may become obsolete due to superior research and development by other companies. In addition, it is difficult to completely avoid disputes with third parties over infringement of intellectual property rights, and if such disputes arise, they could have a significant impact on the company's long-term financial condition and business performance. As a countermeasure, the company's policy is to stably and continuously make research and development investments of a certain scale in order to effectively utilize its existing intellectual property and build new intellectual property rights.

If system failures or security breaches occur due to viruses, unauthorized access, natural disasters, communication errors, etc., there is a possibility that important information in clinical trials may be lost or leaked. Loss of data or leakage of confidential information could have a significant impact on the company's medium-term financial condition and business performance, including the occurrence of recovery costs, delays in the development schedule, claims for damages, loss of social credibility, and termination of partnerships with business partners. The company has implemented various preventive measures, including system redundancy, but the risk cannot be completely eliminated.