J ESCOM HOLDINGS,INC.

If the filming of mail order programs becomes impossible due to the spread of infectious diseases or if talent misconduct leads to the cancellation of appearances, this could disrupt program production and delay the creation of new programs. This could adversely affect the Group's business performance. As countermeasures, the Group is advancing infectious disease countermeasures and BCP system development, but it is difficult to completely eliminate the impact of external factors.

Due to the nature of digital gifts as a product, if a system failure occurs in the Digital Marketing Business, business continuity may become difficult, directly impacting performance. Since digital gifts are premised on immediate provision through a system, alternative means in the event of a failure are limited. Information security enhancement is being promoted, but the risk of unforeseen failures remains.

The Group is actively pursuing M&A as a growth strategy, but if a business does not progress as planned after an acquisition, or due to goodwill amortization, performance may be temporarily affected. In addition, despite conducting due diligence, there is a risk that contingent liabilities or unrecognized liabilities may arise after the fact. If such events materialize, they could have a material impact on the Group's business performance and financial condition.

The Group's businesses are closely related to various intellectual property rights such as copyrights, trademark rights, and patent rights. If the Group's own intellectual property is infringed, or if the Group infringes on the intellectual property of a third party, there is a risk of injunctions or claims for damages arising. Leakage of confidential information could also affect performance and financial condition. The Group is working to thoroughly instill awareness of intellectual property protection internally, but it is difficult to completely eliminate this risk.

The Group holds customers' personal information obtained through product purchases and membership registrations, and if an unforeseen event leads to external leakage, this could result in loss of consumer trust, decreased sales, and the occurrence of damages compensation costs. The Group addresses this through the development of internal management systems based on its privacy policy and the conclusion of confidentiality agreements with external contractors, but complete prevention cannot be guaranteed.

The Group is subject to legal regulations such as the Act on Specified Commercial Transactions, the Act on Regulation of Transmission of Specified Electronic Mail, the Act against Unjustifiable Premiums and Misleading Representations, and the Act on Settlement of Funds. If these are amended or new laws are enacted, this could affect performance and financial condition. In overseas expansion as well, compliance with local laws and regulations is required, and there is a risk that costs for responding to changes in the regulatory environment will increase. The Group has established an internal management system to ensure compliance.

If litigation with a significant impact on performance or litigation with major social impact occurs in the future, and an unfavorable ruling is made against the Group, this could have a material impact on performance and financial condition. As business scale expands and M&A activity increases, the risk of legal disputes arising tends to increase.

In the event of a large-scale natural disaster such as a major earthquake, in addition to direct damage to business sites and employees, business continuity may become difficult, affecting performance and financial condition. The Group implements disaster countermeasures such as cloud backup of important data, but it is difficult to completely avoid the impact of a large-scale disaster.

As the Group operates services utilizing the internet, if systems are shut down due to unforeseen cyberattacks, computer virus infections, or system troubles, this could result in the loss of various data, loss of trust, decreased sales, and the occurrence of customer response costs. The Group is promoting the strengthening of information security, but complete defense is difficult given the increasing sophistication and diversification of threats.

The Group has expanded into overseas markets and is exposed to country risks such as economic downturns, unexpected changes in laws and regulations, political factors, and social unrest caused by terrorism or war. If these events occur, it may become difficult to continue overseas operations, which could affect the Group's performance and financial condition. The uncertainty of the business environment overseas, including the risk of the spread of infectious diseases, is higher compared to domestic operations.