YUKE'S Co.,Ltd.

The Group conducts global development and sales activities, and foreign currency-denominated transactions are subject to the effects of exchange rate fluctuations. Depending on future transaction conditions and exchange rate trends, business performance may be affected. No specific countermeasures are explicitly stated in the securities report.

In order to respond to the rapid technological innovation in the game and entertainment industry, securing excellent engineers and developing new graduates is considered extremely important. The Group carries out both new graduate recruitment and mid-career recruitment in parallel; however, if it is unable to sufficiently secure or develop the human resources it seeks, this may hinder high-quality content development and affect business performance.

The Group's products and services involve numerous intellectual property rights such as patent rights, trademark rights, copyrights, and portrait rights. If a lawsuit is filed by a third party alleging infringement of intellectual property rights, or if the use of a right becomes impossible, this could lead to unexpected additional costs such as royalty fees or suspension of product/service provision. The Group states that it takes thorough care in rights processing, investigation, and confirmation.

As home game consoles become more sophisticated, the development period for game software is lengthening and development/production costs, including outsourcing expenses, are rising globally. If there are delays in technical compatibility with new game consoles or poor market penetration, this could lead to significant delays in game software release timing or an inability to recover production costs, potentially having a material impact on business performance.

In addition to users' personal information, the Group manages technical and business information related to game software entrusted by client companies as confidential information. If information leakage occurs due to negligence or unauthorized access/computer viruses by a third party, the Group may face legal liability claims from users or claims for damages/suspension of transactions from client companies.

The Group formerly sold products such as character merchandise, and if a serious defect is discovered after release, this could result in demands for returns, claims for damages, or voluntary recalls from purchasers. This could lead to unexpected cost burdens and a decline in corporate credibility, potentially affecting business performance.

A resurgence of infectious diseases such as COVID-19 or a deterioration in the global situation could cause delays or interruptions to development projects, or the cancellation or postponement of AR live events and various other events. Such events could affect business performance through lost sales opportunities and increased costs for the Group.