NANO MRNA Co., Ltd.

If the enterprise value of an investee company declines due to delays in research and development, intensified competition, business underperformance, or other factors, valuation losses or losses on sale of investment securities may occur, which could have a material impact on business performance and financial condition. There is also a risk that expected returns may not be obtained due to a prolonged investment recovery period. The Company seeks to mitigate this risk through thorough due diligence, post-investment monitoring and hands-on support, and ongoing review of its investment recovery policy.

A portion of the Company's revenue depends on management fees and success fees from investment funds, and if the formation of new funds does not proceed as planned, this may affect the revenue base. The Company seeks to secure a stable fund formation base by strengthening collaboration with domestic and overseas institutional investors and the SBI Group, utilizing co-investment schemes, and securing diverse fundraising methods.

As all pipeline programs are still under research and development, if development delays, termination of alliances, or failure to conclude out-licensing agreements occur, this may make it difficult or delay the recovery of invested funds due to increased research and development costs and reduced future licensing revenue, which could have a material impact on operating results. The Company strives to mitigate this risk by changing development policies in response to medical needs and development trends, and by seeking out alliance partners.

Although the Company has shifted to an early out-licensing strategy to avoid large-scale capital investment, negative operating cash flow is expected to continue until steady out-licensing is realized. The Company addresses this by prioritizing research and development projects to focus on high-quality projects, tightening progress management, and considering efficient fundraising methods.

Changes in financial and investment-related laws and regulations in various countries, tax reforms, geopolitical risks, exchange rate fluctuations, and deterioration of the global financial market environment may reduce investors' willingness to invest, decrease inflows of investment funds, and delay the formation and execution of investment deals. The Company addresses this by building networks of investors and business partners in multiple regions, including the United States and China, strengthening collaboration with local partners, and continuously gathering information on regulatory and geopolitical developments in each country.

The Company outsources non-clinical and clinical trials to contract research organizations and the manufacture of investigational drugs to contract manufacturing organizations. If these contracted organizations go bankrupt, terminate contracts, or fail to meet agreed conditions, this could have a material impact on business continuity due to increased costs of selecting alternative organizations and delays in clinical trials. The Company seeks to mitigate this risk by strengthening relationships through regular liaison meetings and daily communication, and by exploring alternative candidate organizations.

The RNA drug development market is highly competitive with domestic and overseas peers, and if competitors develop more advantageous products, the probability of successfully out-licensing the Company's pipeline may decline, which could have a material impact on business continuity. The Company strives to maintain the value of its research and development portfolio by improving the quality of drug discovery seeds, regularly confirming competitive advantages, and flexibly changing priorities.

Not all filed patent applications are guaranteed to be granted, and if the Company is unable to obtain licenses for third-party patents or is required to pay substantial royalties, out-licensing to other companies may become difficult, which could affect the business plan and operating results. In addition, if a patent dispute with a third party arises, this could have a material impact on business strategy. The Company strives to prevent such occurrences through patent searches conducted internally and through patent firms, but notes that complete avoidance is difficult.

The Company's supply of cosmetic materials to Albion Co., Ltd. is highly dependent on that customer, and if orders fall below expectations or if the products are no longer accepted in the market due to the launch of superior competing products or changes in customer needs, this could affect operating results through a decline in cosmetic material supply revenue. The Company strives to mitigate this risk by promptly grasping consumer needs to improve products and develop new products, and by ensuring thorough quality control.

As of the end of the current consolidated fiscal year, the Company had a small organization of 23 employees, and if employees face difficulties in performing their duties or if there is a mass resignation, this could affect various operations. The same risk arises if the Company is unable to hire appropriate personnel at the expected timing. The Company addresses this through education and training, documentation of business procedures to reduce reliance on specific individuals, and improving motivation through the introduction of stock-based compensation and a performance-based personnel system.