Mirrativ,Inc.

"Mirrativ" relies on mobile networks and IT systems on external data centers, and there is a risk of system downtime due to sudden surges in access, power outages, unauthorized access, natural disasters, and other factors. If a failure occurs, profits could decline due to user churn and special costs incurred for recovery. The Company addresses this through system redundancy, enhanced security, and continuous capital investment, but cannot completely eliminate unpredictable factors.

The majority of net sales depend on billing via smartphone applications, with the proportion of sales via Apple Inc. reaching 36.2% and via Google LLC reaching 14.2% in FY2025 (ending December 2025). There is a risk that changes in fees, terms, or policies by either company could make it difficult to continue providing the application as before. The Company is working to diversify risk by introducing web payments and other means of diversifying payment methods, but dependence remains high.

The Company obtains personal information from "Mirrativ" users and is subject to obligations under the Act on the Protection of Personal Information. In the event of a leak, the Company could be significantly affected in its business, results of operations, and financial condition due to response costs, damages, and loss of credibility. The Company addresses this through obtaining and maintaining ISMS certification, establishing personal information protection regulations, and ongoing awareness activities for employees.

The "Live Gaming market" in which the Company operates is a new market, greatly influenced by laws and regulations, policy trends, domestic and international economic conditions, and changes in individual preferences. If market growth slows, there is a possibility that the number of loyal users, ARPLU, ARPPU, and Live Gaming sales may not expand. While the Company benefits from the spread of smartphones across all generations and the speeding up and lower pricing of internet environments as tailwinds, uncertainty remains high given that this is a new market.

Numerous companies in Japan and overseas have entered the smartphone live streaming service business, and intensifying competition with companies possessing capital strength, marketing capabilities, and development capabilities is anticipated. Increased costs to counter intensifying competition and user churn could reduce the number of active users, potentially affecting business results. The Company counters this through partnerships with game companies, platform characteristics that emphasize communication, and differentiation through "Live Gaming."

Given the nature of a live streaming platform in which an unspecified large number of users participate, it is difficult to completely prevent illegal acts such as defamation, slander, and copyright infringement. If problematic conduct occurs, the Company could be held responsible as the platform provider, potentially damaging its brand image and credibility and leading to user churn. The Company addresses this through a reporting system, outsourcing to external monitoring, development of various blocking functions, and obtaining music usage licenses from JASRAC and NexTone.

Due to upfront investment in Live Gaming, the Company recorded consecutive net losses for the period and negative cash flow from operating activities through FY2024 (ending December 2024). Although the Company turned profitable in FY2025 (ending December 2025), if future upfront investments exceed expectations or sales growth falls short of plans, losses could recur and affect the Company's financial condition. In addition, when tax loss carryforwards are exhausted, the normal corporate tax rate will apply, which is expected to affect cash flow.

The Company has been actively pursuing M&A, including making iBraid LLC (now iBraid Inc.) a wholly owned subsidiary in October 2024 and making CasCode Inc. an equity-method affiliate in February 2025. If the expected synergies cannot be realized due to deterioration in the financial condition of target companies or other factors, impairment of goodwill could occur, potentially affecting business results and financial condition. The Company makes decisions after conducting due diligence and careful deliberation at the Board of Directors, but cannot completely eliminate uncertainty.

Mirrativ coins are subject to the Payment Services Act, which imposes notification, reporting, and deposit obligations. In addition, as a telecommunications carrier, the Company is obligated to protect the secrecy of communications, and violations could result in administrative sanctions such as business suspension orders or business improvement orders. The Company complies with relevant laws and regulations and consults with legal counsel, but changes in the interpretation of laws and regulations or new regulatory tightening could affect its business and results of operations.

Given the nature of the business, which centers on game streaming, there is a risk of infringing on third-party intellectual property rights of which the Company is unaware. If the Company faces claims for damages, injunctions, or royalty payments, dispute resolution costs and losses could arise, potentially affecting its results of operations and financial condition. The Company addresses this through the development of guidelines, collaboration with game companies, monitoring of streaming, and awareness-raising activities for users.