M-mart Inc.

The Company operates a BtoB E-Marketplace Business, but many companies have already entered this field, and there is a risk that the number of seller and buyer companies could decrease significantly due to the emergence of new entrants offering innovative services or the actions of existing competitors. In addition, there is a possibility that companies listing or exhibiting products on the platform could launch their own independent sites and conduct direct transactions without going through the Company. The Company is responding through differentiation in the number of business partners, transaction items, and pricing, as well as expansion of buyer memberships; however, if the number of listing companies, exhibited items, or completed transactions decreases significantly, this could affect the Company's business results and financial position.

The Company's services are provided via communication networks, and while security measures are implemented throughout the system, rapid innovation in IT technology means that unauthorized access and similar threats cannot be completely eliminated. If a system failure or information leakage occurs due to a cyberattack by a third party, this could result in a suspension of operations and have a material impact on the Company's business results and financial position. The Company continuously implements security measures across its entire system, but keeping pace with the speed of technological innovation remains a challenge.

The Company's service infrastructure depends on computer systems, and if a large-scale system failure occurs, whether intentional or due to negligence, this could result in a suspension of operations and affect the Company's business results and financial position. The Company has implemented measures such as server decentralization and regular data backups, but these measures do not guarantee complete prevention of failures. Given the nature of the E-Marketplace Business, a system outage would directly lead to a loss of transaction opportunities.

Sumio Murahashi, the founder and Representative Director and President, plays a critical role in determining management policy and strategy, and if he were to become unable to perform his duties due to unforeseen circumstances, this could affect the Company's business results and financial position. The Company is working to mitigate this risk through strengthening its management organization, delegating authority, and enhancing recruitment and development of human resources, but at present the degree of dependence on him remains high. Dependence on a specific individual is a risk that investors should monitor from the perspective of business continuity.

The Company's business operations require a stable supply of system development personnel with advanced specialized knowledge, and if the Company is unable to secure sufficient personnel when needed, or if employees in positions of responsibility unexpectedly resign, this could affect the Company's business results and financial position. Amid intensifying competition in the IT talent market, recruiting and retaining excellent engineers has become an industry-wide challenge. The Company addresses this through support for technical skill acquisition, accumulation of development know-how, and personnel recruitment and development policies aligned with business expansion.

If legal regulation of the internet is strengthened and its use is restricted, growth in the e-commerce market could slow or contract, which could affect the Company's business results and financial position. A similar risk exists if new laws or regulations are enacted, or if unforeseen circumstances result in violations of laws and regulations. Since the Company's core business is the e-marketplace-type service, trends in internet-related regulation are directly linked to the foundation of its business.

The Company currently does not pay royalties or patent usage fees in its business operations, but if a third party obtains a patent in the Company's business field in the future, or if a patent already exists that the Company is not aware of, the Company could face claims for compensation, damages, or injunctions against use. Should such a situation arise, it could affect the Company's business results and financial position. It is important to continuously monitor trends in patent applications and rights establishment in the e-marketplace field.

If a dispute arises between a seller company and a buyer company, the Company's brand image could deteriorate, affecting its business results and financial position. There is also a reputational risk in which various rumors, including those not based on fact, could influence the actions of stakeholders and other third parties. The Company implements measures such as screening at the time of listing applications and verification of product listings, but given the nature of the transaction platform, it is difficult to completely prevent disputes arising from individual transactions.

The Company continues to offer new services in response to user requests, but providing new services requires substantial technology development costs, capital expenditure, and preparation time. If unforeseen circumstances prevent progress as planned, or if invested capital cannot be recovered, this could affect the Company's business results and financial position. Given the rapid pace of technological innovation in the IT industry in particular, the risk of obsolescence of development investment must also be kept in mind.

If natural disasters such as earthquakes, typhoons, or tsunamis, fires, or the spread of various infectious diseases occur, this could have a serious impact on the Company's business operations. In particular, if a large-scale natural disaster occurs, normal business operations may become impossible, which could affect the Company's business results and financial position. Since the Company's services depend on internet infrastructure and social infrastructure, multiple compounding risks may materialize in the event of a widespread disaster.