Business and Other Risks

Below is a list of what we believe are the potential risk factors concerning our Group’s business and other matters.

Matters that are not necessarily risk factors but are considered important for investors to make investment decisions are listed below in view of proactive information disclosures. The decision to invest in Asteria stock should be made after careful consideration, although it is our Group’s policy to recognize the possibility that risks may arise and make efforts to avoid or address them if they do arise. The forward-looking statements in this document are based on information available to our Group as of the end of the current fiscal year.

1. Impact of the COVID-19 Pandemic

The COVID-19 pandemic is affecting economic activities on a global scale. In line with our Business Continuity Plan guidelines, our Group is striving to offer a flexible system such as telework and staggered work hours to ensure the continuity of business operations. However, if the situation persists, the number of business meetings may decrease, so may that of new projects, and the inability to meet clients face-to-face may result in a temporary or partial decline in the customer service levels. These factors may affect our Group’s business performance.

2. Overseas Business

Based on the management policy, our Group is proactively expanding overseas. Currently, our Group’s main markets are North America and Europe, but we will also extend our target market to include Asian markets.
These countries have risks unique to a specific country stemming from changes in laws and regulations, politics, economies, culture and religion, as well as the impact of the pandemic.
If emergencies or unforeseen circumstances arise that pose a challenge to our business, our Group’s business performance may be affected negatively.
In addition, the business performance, assets, and liabilities of our Group’s overseas subsidiaries and affiliates in local currencies are translated into Japanese yen and reflected in consolidated financial statements. It is difficult to completely avoid the aforementioned risks, and fluctuations in foreign exchange rates may affect the business performance and financial position of our Group.

3. New Products and Services

Our Group strives to boost earnings through the launch of valuable new products and services to the market. We consider it important for our business growth to increase revenues through the development of attractive new products and services. With this in mind, we have been actively incorporating innovative nascent technologies developed in recent years, such as smart devices, IoT-related technology, and blockchain-related technology, at an early stage as the core of our business strategy. However, due to rapid technological change in the software industry, which is extremely difficult to predict, it is not always possible for us to keep up with the pace of innovation and develop attractive new products in a timely manner. If we make wrong predictions and fall behind in technological innovation and market trends, our business and earnings may be affected due to a significant difference in our corporate earnings forecasts.

4. Litigation Risks

As of the date of submission of this document, there is no lawsuit filed against our Group. That said, due to the nature of our Group’s business, in which intellectual property rights are the root of our value, and because we have businesses overseas, unexpected lawsuits may be brought against us overseas, not just in Japan.
Our Group strives to eliminate the possibility of lawsuits to the extent possible through various measures, including the establishment of “Compliance Regulations,” the creation of a risk management committee, and internal training to ensure that all employees are aware of the importance of legal compliance. However, in the event of a lawsuit of any kind, depending on the nature and outcome of the lawsuit, our Group’s performance may be affected.

5. Merger and Acquisition (M&A)

Our Group aims to expand into overseas markets, and M&A is positioned as one of the effective means to achieve this goal. Consequently, we will carry out M&A as necessary in the future.
We intend to conduct a thorough due diligence on the target company’s business, financial position, legal affairs, etc., in order to minimize risks; however, we cannot rule out the possibility that events not confirmed or assumed at the time of investigation may occur or be discovered after the M&A is executed, or that the business development after M&A may not proceed as planned. In such cases, our Group may not be able to achieve the initially expected contribution to our business performance, and in some cases, we may be required to write down the value of investment in the company, which may affect the Group’s business performance, etc.

6. Profitability of New Products and New Versions

Our Group is constantly engaged in research and development of new products and new versions of products. These new products and new versions are developed and offered in anticipation of the growth of markets. However, if the market does not grow as expected, or if competing products emerge unexpectedly, which could slow down the growth of earnings, our Group’s business results may be affected.

7. Securing Human Resources

In order to provide quality products that meet market needs, our Group focuses on managing a small number of highly talented and motivated individuals. As we continue to expand our business, we intend to actively recruit and train talent and provide an attractive work environment. However, if we are unable to secure sufficient human resources, our Group’s business and earnings may be affected.

8. Defects in Software Provided by Our Group

Our Group takes utmost care in quality control to prevent software defects (malfunctions, bugs, etc.) due to reasons attributable to the Group, and has taken measures to mitigate risks in the event of software defects arising from software license agreements, casualty insurance, and other measures. Although no such serious defects have occurred since the release of our products, there is no guarantee that defects attributable to our Group will not occur in the future. Therefore, the occurrence of liability for damages caused by software defects or loss of public trust may affect our Group’s business and earnings.

9. Intellectual Property Risks

As of the date of submission of this document, our Group has not confirmed that any patents, trademarks, or other intellectual property rights that could affect our Group’s business activities have been acquired by any third party. In addition, we have not received any warning or been sued for infringement of intellectual property rights by any third party since the establishment of our company. However, in the event that a third party claims infringement of intellectual property rights in relation to our business activities in the future, we may be forced to halt our operations or bear financial burdens such as compensation for damages. Other possibilities include royalty payments that would be required to obtain a license to third party intellectual property, or the failure to obtain such a license. In any of these cases, our Group’s operations and business performance may be affected.