Enigmo Inc.

The Group's revenue is primarily dependent on operating income from "BUYMA," and there is a risk that competitiveness may decline due to the expansion of the EC market, the independent EC development by apparel EC operators and apparel manufacturers, and the provision of high-value-added services by new entrants. Increased costs associated with competitive measures may also put pressure on business performance. In response, the Group is considering and implementing the strengthening of competitive advantages in existing businesses and business diversification through M&A and capital alliances.

The business is subject to regulation under numerous laws, including the Act on Specified Commercial Transactions, the Act on Consumer Protection for Digital Platform Transactions, intellectual property laws, and the Act on the Protection of Personal Information, and there is a risk that violations of laws, amendments, or new legislation could affect the business. There is also a risk that the frequent occurrence of illegal listings could become a social problem, or that laws regulating internet transactions themselves could be enacted. The Group seeks to reduce this risk by operating its sites in compliance with relevant laws and regulations and by responding promptly to new legislation and amendments.

Although the Group implements strict management of members' personal information at external data centers, sets access permissions, and has obtained Privacy Mark certification, if personal information is leaked due to unauthorized external access or unforeseen circumstances, it could affect the business, performance, and the company's social credibility. There is also a risk of delayed response to recent changes in personal information regulation trends. The Group carries out the establishment of monitoring systems and periodic reviews of information management as appropriate.

Since the Group's core business is the operation of internet shopping sites, network failures caused by natural disasters such as earthquakes and fires, power outages, unauthorized external access, or errors by officers and employees could significantly impact business operations. In the event of a failure, in addition to direct damage, there are also risks of litigation, damages claims, and damage to social credibility. The Group addresses this through monitoring operations to prevent and detect cyberattacks and failures, and by establishing systems to respond to various types of trouble when they occur.

On "BUYMA" and "BUYMA TRAVEL," an unspecified large number of members independently list and conduct transactions, creating risks of infringement of ownership rights, intellectual property rights, privacy, and other rights, as well as risks of conflicts with related laws and regulations. In the event of trouble, the Group may be held legally responsible, and even where there is no legal liability, damage to the brand image could have a material impact on the business and performance. The Group addresses this by reviewing prohibited items in the terms of use and continuously improving monitoring methods.

"BUYMA" and "BUYMA TRAVEL" offer credit card payment, and while the Group prevents fraudulent use by third parties through human and system monitoring, if fraudulent use cannot be prevented, damages may arise from compensating users or from a decline in credibility. If such damage expands, it could affect performance and future business development. The Group strives to prevent fraudulent use through the operation of a comprehensive risk assessment system.

In the internet market, related technologies and business models change rapidly, and new business models utilizing smartphones, tablets, and other devices are expanding. If the Group fails to respond to these changes and cannot adopt the technologies and business models necessary to strengthen existing services and introduce new services in a timely and effective manner, it could have a material impact on performance. The Group seeks to reduce this risk by responding proactively and flexibly to technological innovation and changes in business models.

Investments and financing for business expansion, such as the establishment of subsidiaries, joint ventures, and acquisitions, may become large in scale relative to the Group's current business size, and there is a risk that new businesses may not develop as planned due to unforeseen factors. It is difficult to reliably predict the impact of the business conditions of investees, and if investments cannot be recovered, it could have a material impact on performance. The Group seeks to reduce this risk through regular information sharing and monitoring of the status of investees and new businesses.

As of the end of January 2025, Sony Group Corporation is an other affiliated company holding 25.2% (including potential shares) of the Company's shares, and has appointed one outside director. If Sony Group changes its management policy or business strategy (including its policy regarding shareholding in the Company) in the future, it could affect the Group's business development and performance. The Group strives to reduce this risk through regular information sharing.

The Group records goodwill and intangible fixed assets arising from corporate acquisitions and amortizes them over a certain period; however, if the expected results are not achieved due to changes in the business environment or other factors, an impairment loss may be recorded, which could affect performance and financial position. Although the Group judges that the goodwill in question appropriately reflects future earning power, the risk of a decline in earning power due to changes in the external environment cannot be ruled out. The Group addresses this by regularly monitoring and managing the status of investees.