DIGITAL PLUS, Inc.

The Group is fully dependent on internal and external networks and various systems, and there is a risk that system failures or service outages may occur due to disasters, accidents, cyberattacks, computer viruses, hacker intrusions, sudden increases in access, and other causes. If a failure becomes prolonged, this could result in lost revenue opportunities, a decline in user trust, complaints, and increased response costs, which could have a material impact on business results and financial condition. As a countermeasure, the Group is enhancing servers and other equipment and implementing technical measures, and is promoting initiatives to avoid failures.

The Group holds a large amount of personal information of its members, and there is a risk that confidential information and personal information may be lost, leaked, or misused by employees or external business partners, or improperly obtained through unauthorized network intrusion by third parties. If such incidents occur, this could adversely affect business results and financial condition due to loss of trust, damage to the brand, and significant costs such as litigation. As a countermeasure, the Group has established the "Personal Information Management Regulations" and the "Information Management Regulations," implements technical measures utilizing external experts, and has taken out personal information leakage insurance.

The Group's business is subject to laws and regulations such as the "Act on Prevention of Transfer of Criminal Proceeds," the "Payment Services Act," the "Act against Unjustifiable Premiums and Misleading Representations," the "Act on the Prohibition of Unauthorized Computer Access," the "Copyright Act," and the "Act on the Protection of Personal Information." If violations occur or the Group fails to adequately respond to legal amendments or the enactment of new laws, this could affect business development, business results, and financial condition. Changes in the regulatory environment in the FinTech market are particularly impactful and require prompt response. As a countermeasure, the Group has established a legal compliance system through collaboration with retained legal counsel and the construction of an internal management framework.

The Group operates in the FinTech market, where there is a risk that the business environment may change significantly due to an increase in competing services, advances in technological innovation, and amendments to laws and regulations. If the Group fails to respond appropriately to these changes, it may need to review the content of the services it provides and its business operations, and undertake system responses, which could affect business results and financial condition. As a countermeasure, the Group is actively investing in human resources, marketing, and new businesses, and is focusing on maintaining its competitive advantage.

Multiple operators have entered the businesses and services offered by the Group, and there is a risk that competition for customer acquisition may intensify due to the expansion of existing operators and new entrants such as major companies. If intensified competition leads to price competition or increased user acquisition costs, this could affect business results and financial condition through a decline in profitability. As a countermeasure, the Group strives to secure a competitive advantage through active investment in human resources, marketing, and new businesses.

Securing and developing excellent human resources is an important factor for the Group's continued business growth; however, if the Group is unable to secure or develop human resources as planned, or if key personnel leave, this could constrain business development and disrupt operations, thereby affecting business results and financial condition. In particular, in the FinTech field, competition to acquire specialized personnel is intense, making this risk more likely to materialize. As a countermeasure, the Group strives to acquire, develop, and utilize excellent human resources through the active promotion of mid-career and new graduate recruitment and the establishment of an internal education system.

If difficulties arise in establishing an internal management system suited to the scale and content of the business, this could affect business development, business results, and financial condition. The Group recognizes the need to further enhance its internal management system as its business expands. As a countermeasure, the Group is enhancing corporate governance through its transition to a company with an Audit and Supervisory Committee, the appointment of multiple outside directors, mutual coordination among internal audits, audits by the Audit and Supervisory Committee, and accounting audits, as well as appropriate collaboration with tax accountants, certified public accountants, and lawyers.

If the Group becomes involved in illegal acts or disputes caused by third parties, or is held legally liable, due to the placement of inappropriate advertising or content in violation of laws and regulations, system failures, or inappropriate operations, this could affect business results and financial condition through damage claims, loss of trust, and other factors. Given the nature of the FinTech Business, appropriate management of advertising and content is particularly important. As a countermeasure, the Group produces content and operates services based on internal manuals, and has established a system for compliance with laws and industry guidelines.

There is a possibility that third parties may bring lawsuits or claims against the Group alleging infringement of intellectual property rights regarding trademarks, software, systems, content, and other items used by the Group in its business, which could affect business development, business results, and financial condition. Although the Group currently believes it does not infringe on the intellectual property rights of third parties, there is no guarantee that the risk of infringement can be completely eliminated. As a countermeasure, the Group is proceeding with the acquisition of trademark rights and the establishment of a monitoring and management system covering copyrights, portrait rights, and other rights.

At present, the Company has not determined whether or when it will implement dividends, and its policy for the time being is to prioritize retained earnings to strengthen its financial structure and expand its business. The Company states that it will consider shareholder returns in the future based on its financial condition, business results, and cash flow situation; however, no specific timing or level has been indicated, which is a risk factor for investors expecting dividends. Shareholder returns are expected to remain limited until the Company's long-term stable business foundation is established.