m-up holdings, Inc.

The entertainment platform market is subject to rapid change due to diversifying artist activity policies and fan preferences, as well as evolving internet technology. If the Group's planning and proposal capabilities decline, or if competitors offer more advantageous platforms, this could lead to a decrease in the number of paying members and a decline in customer unit price. As a countermeasure, the Group continues to evolve its services while suppressing development risk through horizontal deployment of successful cases within the Group.

Collection of membership fees and other charges depends on external payment infrastructure, including major mobile carriers, app store payments such as Apple and Google, and credit card payments. If a payment service provider changes its management policy, significantly raises its fee rates, experiences a system failure that halts payment functions, or if it becomes difficult to continue the contract, this could adversely affect service provision, maintenance of paying members, fee collection, and profitability. The Group's policy is to avoid excessive dependence on any particular means by building and maintaining diverse payment channels.

Services such as the paid membership fan club/fan site, e-commerce, and electronic ticketing depend on advanced external cloud infrastructure, and face risks of increasingly sophisticated cyberattacks—including unauthorized access, malware, ransomware, and DDoS attacks—as well as system failures caused by natural disasters. If a significant failure or leak of personal information occurs, this could lead to a decline in social credibility, incur system repair and recovery costs, result in claims for damages, and damage brand image. The Group implements multi-layered defense measures, including server redundancy, 24/7 monitoring, regular vulnerability assessments, and automatic scaling technology.

The Fan Club & Fan Site Business is operated based on contracts with artists and talent, and if a group disbands or suspends activities, the closure of the fan club site may become unavoidable. In the EC Business, postponement or cancellation of product launches, and in the ticketing business, postponement or cancellation of live performances, concerts, or events, could also affect the Group's business results, financial position, and cash flows. Because the intentions of content holders significantly affect the foundation of the business, the Group seeks to diversify risk by diversifying the range of content handled.

The EC Business and Electronic Ticket Business handle personal information and are subject to related laws and regulations such as the Act on the Protection of Personal Information. If personal information is leaked, lost, or falsified externally due to cyberattacks, negligence by related parties, or misconduct by outsourcing partners, this could result in legal liability such as penalties and administrative dispositions, claims for damages, a decrease in the number of paying members, and damage to brand image. The Group thoroughly implements security management measures such as maintaining Privacy Mark certification, strictly limiting access privileges, and providing regular information security training.

The Group is subject to a wide range of legal regulations, including the Act on Specified Commercial Transactions, the Act against Unjustifiable Premiums and Misleading Representations, the Act on Prohibition of Unauthorized Reselling of Tickets, and the Act on the Limitation of Liability for Damages of Specified Telecommunications Service Providers. If legal amendments or new regulations force major changes to service content or operating systems and cause a rapid increase in response costs, or if a violation of related laws results in administrative disposition, criminal penalties, or corrective orders, this could restrict business development, decrease the number of paying members, and result in damages costs. The Group thoroughly conducts legal checks in cooperation with specialized attorneys and provides regular legal training to employees.

The digital content and various products the Group offers involve a wide range of intellectual property rights, including copyrights, trademark rights, and design rights. If unauthorized copying or piracy distribution occurs on the internet, or if unexpected claims of rights infringement arise, this could result in costs for resolving legal disputes, suspension of distribution of certain content, and a decline in social credibility. To appropriately acquire and manage its own rights and prevent infringement of third-party rights licensed by content holders, the Group thoroughly conducts prior legal checks and strict rights management at each phase.

The Group holds highly confidential information from content holders such as production companies and talent agencies, including image and video data, artists' activity plans, and business know-how, and faces the risk of leakage due to malicious intent or negligence, or information leaks caused by cyber incidents. If confidential information is leaked externally, this could destroy the relationship of trust with content holders, lead to contract cancellations and stagnation in acquiring new business, and result in large claims for damages or litigation, potentially having a material impact on business development, business results, and financial position. The Group has established an information management system that includes entering into strict confidentiality agreements, obtaining pledges from all officers and employees, and restricting physical and system access privileges.

Representative Director Koichiro Mifuji plays an important role across the overall management of the company, including determining management policies and business strategies, negotiating with important business partners, and formulating and promoting profit plans. If he were to leave the company or become unable to adequately execute his duties, this could affect business development as well as business results, financial position, and cash flows. The Group is working to strengthen its management organization and develop a management structure that does not depend excessively on a specific individual.

In the Electronic Ticket Business, if concerts or events are cancelled or postponed nationwide or in specific regions due to force majeure factors such as large-scale natural disasters, terrorist attacks, or large-scale outbreaks of new infectious diseases, this could temporarily decrease the volume of electronic tickets handled and significantly reduce fee income. In addition, when refunding ticket fees due to event cancellation, depending on contract terms, the Group may be forced to bear part of the refund administrative fees or payment infrastructure costs. The Group seeks to diversify its portfolio by spreading the range of artists and various entertainment events handled.