ANYCOLOR Inc.

The Company's live streaming business depends on third-party platforms such as YouTube, and if contracts are terminated due to violations of terms of use or platform value declines due to a decrease in users, this may have a material impact on business development, operating results, and financial condition. As countermeasures, the Company is diversifying revenue through content sales and events, and building a system that enables platform migration by accumulating fans across multiple channels such as SNS.

If a popular Liver suspends or ceases activities, becomes involved in a scandal or controversy, fails to renew a service contract, or if the Company fails to create new popular VTubers, this may affect the reputation of Nijisanji (VTuber Group) and the Company's operating results and financial condition. The Company aims to reduce dependence on specific VTubers through group debuts and expansion of fan communities, while also building a system that makes it difficult for Livers to act independently.

If an affiliated Liver conducts inappropriate video streaming, this could lead to a decline in the reputation of the Company or the affiliated Liver, as well as litigation or disputes, which may affect business development, operating results, and financial condition. The Company conducts compliance training and monitors streamed videos, working to strengthen its system for sound content distribution.

The Company manages content on YouTube and receives a certain percentage of revenue based on its contract with Google LLC; however, this contract is renewed annually and either party may terminate it early with 30 days' prior notice. If the contract is terminated due to bankruptcy, business transfer, breach of material terms, or other reasons, this may have a material impact on business development, operating results, and financial condition. At present, no grounds for contract termination have arisen, but continuation of the contract is not guaranteed.

The VTuber market is relatively new and still developing, and if market growth is hindered by the introduction or tightening of regulations, damage to credibility from industry troubles, deterioration in economic conditions or personal consumption, this may affect the Company's business. In addition, as a response to the issue of high-value payments by minors, the Company displays cautionary notices and cooperates with the National Consumer Affairs Center.

In addition to VTuber-specialized companies, game companies, video streaming platform operators, and talent management companies have entered the VTuber market, intensifying the competitive environment. If competitors offering more attractive services emerge and cause fans to defect, this may affect the Company's business development, operating results, and financial condition. The Company seeks to differentiate itself through the expansion of the Nijisanji brand and diversified service offerings including content sales, events, and corporate projects.

The overseas VTuber business, centered on English-speaking regions and China, is still in a developmental stage, and there are potential risks such as language and geographic factors, legal systems, tax systems, political instability, differences in culture and business practices, exchange rate fluctuations, difficulty securing talent, and competition with local competitors. If the Company is unable to address these risks, this may affect business development, operating results, and financial condition.

Amid rapid technological innovation including VR and AR, if the Company is unable to keep pace with technological trends or if the associated costs exceed expectations, this may affect business development, operating results, and financial condition. The Company has adopted a policy of actively responding to new technologies and making necessary investments, but there is a risk that the pace of technological change could make such responses difficult.

The Company holds personal information of Livers and customers, and if an information leak occurs, this may result in damages costs and loss of social trust, affecting business development, operating results, and financial condition. Similar risks exist in the event of a system outage caused by unauthorized system intrusion, computer viruses, natural disasters, or other causes. As countermeasures, the Company strictly enforces internal regulations, conducts regular internal training, and maintains information security systems and server equipment enhancements.

Riku Tasumi, the founder and Representative Director and CEO, plays an extremely important role in determining and executing management policy and business strategy, and if he becomes unable to continue his duties for any reason, this may affect business development, operating results, and financial condition. The Company is working to build a system that reduces excessive dependence on him through information sharing at Board of Directors meetings and strengthening of the management organization.