istyle Inc.

The Group holds detailed personal information of registered members, including names, email addresses, purchase histories, and skin type data, and if leakage, tampering, unauthorized access, or similar incidents occur, this could result in claims for damages, loss of credibility, and increased response costs. Although the Group has established a privacy policy and conducts internal training, it explicitly states that unforeseen events cannot be completely ruled out.

The Group's overall business, including media services, e-commerce sites, and physical store operations, depends on internet infrastructure, creating a risk that service provision could be interrupted due to power outages, natural disasters, hardware malfunctions, unauthorized external intrusions, and similar events. Although the Group has implemented dual protective measures such as cloud migration, use of earthquake-resistant data centers, firewall deployment, and regular vulnerability inspections, credibility loss or claims for damages may arise in the event of failures exceeding expectations.

Active technological innovation continues in the internet-related field, and if the Group's response to new technologies such as AI and IoT is delayed, this could result in additional system development costs as well as a decline in competitiveness and loss of users. Although the Group closely monitors new technology trends, primarily through its systems department, and has established a rapid development framework, the possibility that responses to unexpected technological innovation may be hindered cannot be ruled out.

Numerous laws and regulations both domestic and international, including the Act on the Limitation of Liability for Damages of Specified Telecommunications Service Providers, the Personal Information Protection Act, the Pharmaceutical and Medical Device Act, and the Act on Specified Commercial Transactions, apply to the Group's business, and new legislation or changes in the interpretation of existing laws could affect business operations, financial position, and business results. As overseas locations are also subject to the legal systems and laws of their respective countries, regulatory risks are wide-ranging.

The Group is expanding product wholesale, e-commerce sales, store operations, and beauty portal site development primarily in East Asia, centered on China and Hong Kong, but if it becomes difficult to address potential risks such as differences in laws, political and social conditions, culture, and business customs in each country, business promotion could be impeded. In addition, there is exchange rate risk associated with transactions denominated in local currencies, and if significant divergence occurs between assumed and actual exchange rates, this could affect the Group's financial position.

The Group pursues business and capital alliances and M&A with the aim of expanding business scale and diversifying revenue sources, but if integration with acquired companies or the establishment of alliance relationships does not proceed as planned, the initially anticipated synergies may not be achieved, making it difficult to recover the investment. In addition, if it is determined that expected results will not be achieved for acquired goodwill due to changes in the business environment or competitive landscape, an impairment loss must be recognized, which would affect the Group's financial position.

In the internet business centered on the beauty and cosmetics field around @cosme, if competition intensifies due to entry by major companies, acquiring and retaining users could become difficult, which could affect business operations, financial position, and business results. The Group is working to strengthen the revenue structure of its Beauty Platform by expanding BtoB and BtoC services, but there is also a risk of declining users if its services fail to capture user needs.

Tetsuro Yoshimatsu, the founder and Representative Director and Chairman, plays a critical role in determining and executing management policy and business strategy, and if he becomes unable to continue performing his duties, this could have a significant impact on business operations, financial position, and business results. The Group is working to reduce this dependence through enhanced information sharing at Board of Directors and management meetings, the addition of representative directors, and the establishment of a personnel committee to promote next-generation talent development, but the risk has not been completely eliminated.

The Group continues to open flagship stores such as "@cosme TOKYO" and "@cosme STORE" locations, but if significant divergence arises in store revenue plans due to rapid changes in market conditions or significant changes in the economic environment, it may become necessary to recognize impairment losses on store fixed assets. In addition, in inventory management, if sales forecasts are mistaken, inventory shortages or excess inventory may occur, which could affect financial position and business results.

Along with business expansion and new business development, the Group needs to secure personnel with advanced management capabilities and system technology skills, but if it is unable to sufficiently secure and develop the personnel it seeks, or if outflow of personnel progresses, this could hinder normal business operations and the expansion of new businesses. Although the Group is promoting the establishment of training systems and personnel retention measures, there is no guarantee that it will be able to stably secure the necessary personnel in a highly competitive labor market.