Artra Group Corporation

If a Honetsugi Chain member clinic engages in fraudulent billing of insurance treatment fees and is subject to administrative sanctions, or if a serious treatment accident occurs at a franchisee, the credibility of the entire chain could be undermined, potentially having a material impact on the Group's business results and financial condition. The Group strives to avoid such occurrences by introducing mechanisms to prevent fraudulent billing and thoroughly instructing judo therapists, but it is difficult to fully control the conduct of member clinics.

Insurance treatment fees are currently on a declining trend, and requirements for establishing osteopathic clinics are becoming stricter. If insurance treatment fees decline further significantly, or if establishment requirements become even stricter, the revenue base of the Honetsugi Chain Business could be directly impaired, potentially affecting the Group's business results and financial condition. The Group is working to diversify its revenue sources by focusing on expanding out-of-pocket treatments.

The Group is subject to various legal regulations across its diverse businesses, including acupuncture and osteopathic clinics, day services, and finance, and business continuity could be hindered if significantly unfavorable legal amendments are enacted. The Group strives to comply with laws and regulations and provides a business model capable of compliance, but the content and timing of any regulatory tightening are difficult to predict.

The Group provides the A-COMS Finance service to support the cash flow of acupuncture and osteopathic clinics that are members of the Artra Billing Service, by providing funds before insurance treatment fees are received. If a member goes bankrupt, there is a risk that the receivables become uncollectible. Since the repayment mechanism is structured so that repayment occurs when insurance treatment fees are paid by insurers to the Group, the risk of collection delays is considered minimal; however, if a member clinic becomes insolvent, bad debt losses may occur, potentially affecting business results. The Group strives to mitigate this risk by conducting loan screening.

If cash flow deteriorates due to advance procurement of equipment for out-of-pocket treatments, if it becomes difficult to raise additional funds for lending as the A-COMS Finance service expands, or if the substantial funding required for the operation and renewal of A-COMS does not proceed as planned, business expansion could be constrained, potentially affecting business results and financial condition. The structure is such that funding needs arise simultaneously across multiple business areas, creating a risk that deterioration in the fundraising environment could spread across the entire business.

If a system failure occurs at A-COMS, HONEY-STYLE, or Artra Store operated by the Group, claims for damages could arise, potentially affecting business results. In addition, if customer personal information handled in the course of business is leaked externally, there is a risk of loss of credibility and claims for damages. The Group strives to reduce this risk through obtaining Privacy Mark certification, internal training, and coordination among responsible staff, but complete prevention cannot be guaranteed.

The Group's sustainable growth requires the employment and development of nationally licensed professionals such as judo therapists, acupuncturists, moxibustion practitioners, and certified care workers, as well as support for member clinics and franchise stores in securing qualified personnel. While the number of nationally licensed professionals has been increasing year by year, the number of successful examination candidates is on a declining trend. If future policy shifts make it difficult to secure qualified personnel, business expansion could be constrained, potentially affecting business results and financial condition.

The Group holds tangible fixed assets such as interior fixtures at Honetsugi Day Service and Pelican stores, intangible fixed assets such as A-COMS, and shares (investment securities) of companies expected to generate business synergies. If profitability of these assets deteriorates or their market value declines significantly, impairment losses or valuation losses may occur, potentially affecting business results and financial condition.

The Group holds various seminars related to out-of-pocket treatments and other topics via the web through Artra Academy, attracting participants online. If attendance falls short of expectations, it could not only result in seminar sales falling short of targets but also have a cascading effect on equipment sales and new HONEY-STYLE contracts. Since seminars function as a customer acquisition channel for multiple businesses, poor attendance represents a cross-business risk.

If a care accident caused by gross negligence occurs at a Honetsugi Day Service franchisee and administrative sanctions are imposed, the credibility of the entire Honetsugi Day Service brand could be undermined, potentially affecting business results and financial condition. The Group strives to prevent accidents by thoroughly instructing franchisees, but there are limits to fully controlling on-site management at member stores.