GameWith, Inc.

The domestic smartphone game market expanded to a scale of ¥1,729,000 million in fiscal year 2024; however, there is a risk that market growth could significantly slow due to the introduction of new legal regulations, technological innovation, a decline in smartphone penetration, and trends among game developers. The Group's Media business is premised on the expansion of the game market, and a contraction of the market would directly affect the Group's business and results. The Group is addressing this risk by not relying solely on the Media business and expanding into diverse game-related businesses.

Domestic internet advertising expenditure grew 9.6% year on year to ¥3,651,700 million in 2024; however, the advertising market is highly susceptible to economic conditions, and there is a risk that advertising demand could decline due to sudden economic fluctuations. In addition, if the market fails to expand steadily due to intensifying competition from other advertising media or a decline in the value of internet advertising media, this would affect the performance of the Media business, the Group's core revenue source. The Group positions the continued rise in internet penetration as the foundation for its business expansion.

On the game information media "GameWith", concentration of content on specific game titles has tended to ease compared to before; however, recently there has been a tendency for page views to concentrate around the release periods of hit console game titles. Event cancellations or release postponements due to circumstances of game companies could result in user attrition or a decline in page views due to the impact of game companies' business activities and initiatives. The Group is addressing this by diversifying the game titles it covers and selecting content matched to user preferences.

The Group relies heavily on SEO (search engine optimization) to attract users to its game information media, and if search engines change their specifications, this could significantly reduce the ability to attract users and affect the Group's business and results. Policy changes by platform operators such as Google are external factors beyond the Group's control, and the risk is high if a response is delayed. Disclosure in the securities report of specific countermeasures is limited, and the ongoing sophistication of SEO measures remains a challenge.

If a network failure occurs due to natural disasters such as earthquakes or tsunamis, unforeseen events such as fires or power outages, or unauthorized access from outside, the Group may become unable to provide its services, which could affect business activities, results, and social credibility. The Group has implemented measures such as system reinforcement, security countermeasures, and server distribution, but complete prevention is difficult. The occurrence of a failure also poses a risk directly linked to user attrition and a loss of trust from advertisers.

The Group holds personal information through the game information media "GameWith" and the fiber-optic line service "GameWith Hikari," among others, and if an information leak occurs, the Group could face legal liability, including damages, and its social credibility could be damaged, affecting its business and results. The Group has established regulations for the management of personal information, implemented protection via external servers, and conducted ongoing awareness-raising activities for employees, but the risk of cyberattacks or internal misconduct cannot be eliminated. Continued response to strengthened regulations such as the Personal Information Protection Act is also required.

The Group's Media business is subject to a wide range of legal regulations, including the Telecommunications Business Act, the Unauthorized Computer Access Law, the Act on Countermeasures for Information Distribution Platforms, and the Act against Unjustifiable Premiums and Misleading Representations. The establishment or revision of laws and regulations targeting internet-related businesses in the future could restrict part of the Group's operations or generate new compliance costs. The Group has implemented and strengthened its legal compliance system and conducted employee training, but keeping pace with the speed of changes in the regulatory environment remains a challenge.

Arteria Networks Corporation is another affiliated company that holds 21.1% of the Company's voting rights, and the Company is its equity-method affiliate. If there were to be a major change in Arteria Networks' shareholding ratio in the Company in the future, or if there were a change in business strategy or a failure of business collaboration, this could affect the liquidity and price formation of the Company's shares as well as its business results and financial condition. While independence and autonomy are currently maintained, there is an inherent risk that the intentions of the major shareholder could diverge from the interests of other shareholders.

As a small organization with 237 employees (as of May 31, 2025), if the Group fails to adequately secure specialized personnel such as writers who create original articles, or if there is an outflow of personnel, this could affect its business and results. There is also a risk related to the founder and Representative Director and President, Takuya Imaizumi, becoming unable to continue his duties; while the Group is working to reduce this dependence through the placement of executive officers and department/division heads responsible for operations, the development of such a structure is still in progress. Given the small size of the organization, internal management is centered on mutual checks, and strengthening the structure in step with business expansion remains a challenge.

The Group determines the recoverability of deferred tax assets based on forecasts and assumptions regarding future taxable income; however, if these forecasts and assumptions regarding future taxable income change, part or all of the deferred tax assets may be judged unrecoverable and written down. A write-down of deferred tax assets would directly affect the Group's business results and financial condition. In addition, the Group has no history of dividend payments since its founding, and the timing and feasibility of dividend payments remain undetermined at this time; this uncertainty regarding shareholder returns is also recognized as a financial risk.