Digital Garage, Inc.

While the payment market and e-commerce market continue to expand, if the expansion of market size stagnates due to changes in personal consumption trends or economic conditions, this may affect business performance growth. As a countermeasure, the Group is expanding its business domains while maintaining the payment business as its core, and is working to diversify revenue through the development of new services utilizing next-generation technology.

Intensifying competition in the payment and internet-related fields may lead to price competition and increased costs, and there is a risk that future competitiveness may decline due to the emergence of competitors with new technologies. As a countermeasure, the Group is developing and diversifying services that match customer needs, and building a framework for gathering the latest technology information from startups by leveraging its global network.

The Group's businesses are subject to regulations under various laws, and guidelines from supervisory authorities. If part of the business is restricted due to the enactment or amendment of laws or the formulation of new self-regulatory rules, this may have a material impact on business performance. As a countermeasure, relevant departments centered on the Corporate Headquarters are strengthening their response framework for the introduction and revision of legal regulations, through advice and information gathering from lawyers and external organizations.

If customer information is leaked externally for any reason, this may result in issues of social credibility and damage compensation, affecting business performance. As a countermeasure, the Group obtains external certifications for each business, while strengthening its information security department and conducting regular security education.

If a system failure occurs due to hardware or software malfunction, human error, communication line failure, computer virus, cyberterrorism, natural disaster, etc., this may affect business performance. As a countermeasure, in addition to duplicating communication networks and systems and introducing appropriate security measures, the Group has established a CSIRT (Computer Security Incident Response Team) to build a response framework for security incidents.

If recruitment cannot be carried out as planned or if employee turnover increases, this may affect business expansion. As a countermeasure, the Group is focusing on securing, retaining, and developing talent through improved treatment including raising wage levels, personnel appointments emphasizing ability and performance, formulation of a "Human Capital Management Policy," and enhancement of internal training programs.

If an employee in a key position for business strategy leaves, or if the development of successors for key positions is delayed, this may affect the evolution and continuity of the business. As a countermeasure, the Group focuses on developing next-generation management talent by selecting candidates for future executive positions and fostering a management perspective through dialogue programs with officers.

Startup companies that are investees involve many uncertain factors, and business performance may be affected by economic trends, technological innovation, changes in the stock market, and other factors. As a countermeasure, the Group carefully selects investees using members with specialized knowledge, and works to reduce market volatility risk by diversifying its investment portfolio to avoid excessive concentration in specific fields.

External factors beyond the Group's control, such as the growth status of investee startup companies and overall stock market trends, may have a material impact on business performance. As a countermeasure, the Group regularly monitors the market value, financial condition, and fundraising status of investees, and is promoting off-balance-sheeting through the sale of investee shares and a shift to fund-type investments based on the Medium-Term Management Plan, in order to reduce the impact of fair value fluctuations on consolidated business performance.

In businesses acquired through M&A, if the initially expected results or synergies are not achieved due to deterioration of the business environment or other factors, or if the corporate value of the acquired company significantly declines, impairment losses may occur, affecting operating results and financial condition. As a countermeasure, the Group aims to build an organizational structure that can flexibly respond to changes in the market environment and to establish a rapid decision-making process.