Notice Regarding Capital and Business Alliance with Sony Music Entertainment (Japan) Inc.

GungHo Online Entertainment, Inc. has entered into a strategic capital and business alliance with Sony Music Entertainment (Japan) Inc. (SME). The core objective of this partnership is to enhance corporate value by leveraging the combined expertise and intellectual property of both organizations. Planned collaborative efforts include the joint development and operation of smartphone, console, and PC games, as well as the exploration of new projects utilizing the SME Group’s extensive content portfolio.

The capital alliance involves an off-market bilateral transaction in which SME will acquire 12,006,500 ordinary shares of GungHo from SON Financial LLC. This transaction, scheduled for completion on December 30, 2026, represents a 22.93% stake in GungHo’s issued shares, or 23.29% of total voting rights. As a result of this transfer, SME and its parent company, Sony Group Corporation, will become major shareholders and affiliated companies of GungHo, while SON Financial LLC and Belleisle Japan Co., Ltd. will cease to hold these designations.

The agreement includes governance provisions, such as SME’s right to subscribe for new shares to maintain its ownership ratio and requirements for GungHo to obtain prior written consent from SME for specific corporate actions, including share issuances or significant changes to existing business alliances. Both parties have committed to maintaining GungHo’s managerial independence and protecting sensitive business information. While the alliance is expected to support long-term growth, the immediate impact on GungHo’s financial results is projected to be minimal. The transaction remains subject to standard regulatory review by the Japan Fair Trade Commission.