Risk of Infringing Third-Party Intellectual Property Rights

「The company believes that its game applications do not infringe the plaintiff's patents and will establish the validity of its arguments in the course of the proceedings. Even if the company's arguments are not accepted in the lawsuit, it believes that it can redesign all of the elements identified by the plaintiff. Accordingly, regardless of the outcome of the lawsuit, the company intends to continue providing the "MementoMori" service.」

「The plaintiff alleged that the company's two game applications, "MementoMori" (distributed since October 2022) and "Phantom Beast Contract Crypto Act" (distributed from February 2015 to June 2023), infringe patents held by the plaintiff, presented terms for granting a licence to use those patents, and held discussions with the company. However, the plaintiff did not accept the company's position and proceeded to file the lawsuit. The company believes that its game applications do not infringe the plaintiff's patents and will establish the validity of its arguments in the course of the proceedings. Even if the company's arguments are not accepted in the lawsuit, it believes that it can redesign all of the elements identified by the plaintiff. Accordingly, regardless of the outcome of the lawsuit, the company intends to continue providing the "MementoMori" service. ② Amount claimed: ¥1 billion plus delay damages」

「The company was sued by SEGA CORPORATION (hereinafter, the "plaintiff") in the Tokyo District Court on 30 September 2024.」

「During the first six months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「During the first three months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「As of the date of submission of this document, another company has proposed granting the company a licence to use intellectual property rights held by that company, and the group is considering how to respond to the proposal. If, through coordination with its legal adviser, patent attorney and others, the group comes to develop its business using another company's intellectual property rights, this could materially affect the group's business and results of operations.」

「During the first three months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「During the first nine months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「During the first nine months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「The group seeks to obtain intellectual property relating to the services it provides. It also considers the risk of intellectual property rights being taken outside the company by its officers and employees or temporary staff supplied by staffing agencies, and seeks to mitigate this risk by strengthening its internal control systems.」

「During the first nine months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「During the first six months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「During the first nine months of the current consolidated fiscal year, there were no material changes in the occurrence of major risks that management recognizes could materially affect the financial position, operating results or cash flows of the consolidated companies, among matters concerning the business and accounting conditions described in the quarterly report, or in the business and other risks described in the securities report for the previous consolidated fiscal year.」

「During the first quarter of the current consolidated cumulative period, there were no occurrences of matters that could materially affect investors’ investment decisions among the matters relating to the business and financial position described in this quarterly report, nor were there any material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year.」

「The company seeks to obtain intellectual property relating to the services it provides. It also considers the risk of intellectual property rights being taken outside the company by its officers and employees or temporary staff supplied by staffing agencies, and seeks to mitigate this risk by strengthening its internal control systems.」

「During the cumulative third quarter of the current fiscal year, there were no occurrences of matters concerning the business situation, accounting situation or other matters described in the quarterly report that could have a material impact on investors’ decisions, and no material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year.」

「During the cumulative second quarter of the current fiscal year, there were no occurrences of matters concerning the business situation, accounting situation or other matters described in the quarterly report that could have a material impact on investors’ decisions, and no material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year.」

「During the cumulative first quarter of the current fiscal year, there were no occurrences of matters concerning the business situation, accounting situation or other matters described in the quarterly report that could have a material impact on investors’ decisions, and no material changes to the “Business and Other Risks” described in the annual securities report for the previous fiscal year.」

「As of the present time, the company is not aware of any instance in which a third party has filed or notified it of an infringement lawsuit concerning intellectual property rights. The company also works closely with its legal adviser and patent attorney and believes that it does not infringe any other company's intellectual property rights. However, if it were to infringe a third party's intellectual property without its knowledge, it could face claims for damages or injunctions against use, which could affect its business and results of operations.」