TEMONA.inc.

The Group's business premise is the continued expansion of the EC market, but there is a possibility that the EC market may not develop as expected due to tightened regulations or the occurrence of troubles. In addition, numerous companies operate in the EC field, and if the Group is unable to achieve sufficient differentiation or functional improvement, or if competition intensifies due to new entrants, this may adversely affect the Group's business and performance. The Group seeks to differentiate itself through the continuous expansion of service functions.

Many companies using "Subsc Store," "Tamago Repeat," and "Subscat" handle consumable products such as health foods, supplements, and cosmetics, and there is a risk that the subscription mail-order market may shrink due to tightened or revised regulations surrounding these markets. In addition, the EC operators that are the Group's customers are subject to regulations such as the Act on Specified Commercial Transactions, the Act against Unjustifiable Premiums and Misleading Representations, and the Pharmaceuticals and Medical Devices Act, and if further legal obligations are imposed, this may affect the Group's business and performance. The Group continuously gathers information and has established a system for prompt response.

The Group's services depend on internet communication networks and computer systems, and there is a risk of servers going down due to system intrusion from unauthorized access, failures caused by access exceeding expected levels, or unforeseen events such as natural disasters (earthquakes, tsunamis) or fires and power outages. Should such an event occur, it may lead to a decline in social credibility and brand image and the payment of damages, potentially having a material impact on the Group's business and performance. The Group addresses this through security measures, capital investment, and system operation at data centers.

In the course of its business operations, the Group holds personal information and confidential information of related parties, and if intentional or negligent acts by related parties or business partners result in leakage or misuse of such information, the Group may be held legally responsible, including for damages. In addition, this poses a risk of damaging the credibility and brand of the Group and its operated services, which may affect its business and performance. The Group has obtained Privacy Mark certification (obtained in July 2014) and ISMS certification (obtained in March 2019), and has developed internal regulations and conducted training for officers and employees.

"Subsc Store," "Tamago Repeat," and "Subsc Store B2B" depend on outsourced data center operators for the supply of servers and racks, and if the outsourced provider's services are delayed or become unavailable due to unforeseen natural disasters or illegal acts, the Group's own service provision may also be delayed or suspended. The Group limits its outsourcing to highly reliable providers equipped with access control, disaster prevention equipment, and safety measures, but the risk cannot be completely eliminated. If a service suspension occurs, it may lead to customer attrition and deteriorating business performance.

The Group's main services generate revenue through royalty income from partners such as payment agency operators, and if problems arise in the management condition of such partners, this poses a risk of directly leading to a decrease in royalty income. Given the revenue structure, the impact may be greater in cases of high dependence on specific partners. The Group strives to maintain relationships with partners, but it is difficult to completely avoid risks arising from external factors.

Hayato Sagawa, the founder and Representative Director and Chairman, plays an important role in determining management policy and strategy, and if he becomes unable to perform his duties due to unforeseen circumstances, this may affect the promotion of business and performance. The Group is working to mitigate this risk through the establishment of a co-representative system, the enhancement of its management structure, and the strengthening of development of personnel to lead the next generation. However, as the organization is small in scale, establishing a substitute structure may require a certain amount of time.

The Group is a small organization, and as its business expands, it needs to acquire excellent personnel in a timely manner; if recruitment is difficult or delayed, this may hinder appropriate organizational response and efficient business operations. In addition, if a significant number of employees resign within a short period, this poses a risk of adversely affecting business operations. The Group is committed to active recruitment activities and employee development, and aims to expand its internal management structure.

The Group has a policy of actively pursuing new services and new businesses, and profit margins may decline due to additional expenditures such as advance investment in systems and advertising expenses. If the expansion and growth of new businesses do not proceed as originally planned, there is a risk that the Group will be unable to recover its investment, affecting its business and performance. Investment decisions regarding new businesses must be made carefully, but balancing growth investment with profitability remains a challenge.

The Group has adopted a stock option system and may issue share subscription rights, new shares, bonds with share subscription rights, and the like in the future; the issuance and exercise of these instruments poses a risk of diluting the value per share. In addition, changes in supply and demand resulting from the exercise of such rights may affect stock price formation. At present, the Group's policy is to prioritize the enhancement of retained earnings and to consider returning profits to shareholders in the future while taking business results into account.