Mars Group Holdings Corporation

Pachinko halls, the Group's primary sales customers, are subject to legal regulations such as the Entertainment Business Law, National Public Safety Commission regulations, and prefectural ordinances, and notification is required when using the Prepaid Card System (Personal/Smart Gaming Machine Dedicated Unit). If these legal regulations are revised, it could hinder the introduction and installation of products at pachinko halls, potentially having a material impact on business performance and financial condition. As a countermeasure, the Company has transitioned to a holding company structure to build a system capable of flexibly responding to changing needs.

If profit margins and market share decline due to intensifying sales competition, it could have a material impact on business performance and financial condition. As a development-oriented corporate group, the Group focuses on product development that meets customer needs as well as product-out type product development, and seeks to differentiate itself through product superiority and a robust service system. The Group is also working to provide swift and detailed responses by reviewing its sales structure.

If a customer with a large outstanding receivable balance goes bankrupt, it could have a material impact on business performance and financial condition. In accordance with credit management regulations, the Group carefully conducts credit limit investigations of sales customers, and has established a system to minimize the impact of bad debts through information sharing among Group companies.

If corporate confidential information or customer data were to leak, it could damage social credibility and hinder business activities, potentially having a material impact on business performance and financial condition. As a countermeasure, the Company implements strict management in accordance with information management regulations, and has built a system compliant with ISMS (Information Security Management System).

Although the Company conducts careful investigations to avoid infringing on intellectual property rights held by other companies, if litigation is brought against the Company and it incurs substantial damages or is subjected to a business suspension, it could have a material impact on business performance and financial condition.

As part of its growth strategy, the Group carries out M&A and investments aimed at capital gains; however, the materialization of contingent liabilities related to M&A or deterioration in the performance of investee companies could have a material impact on business performance. With respect to investments aimed at capital gains, fluctuations in stock prices and exchange rates could have a material impact on business performance and financial condition. For M&A, the Group strives to avoid risk through rigorous due diligence.

If it is determined, based on accounting standards for impairment, that an impairment loss should be recognized on fixed assets held by the Group, it could have a material impact on business performance and financial condition.

If a large-scale natural disaster exceeding expectations occurs, causing the collapse of a production plant or a management center that consolidates and manages corporate confidential information and customer data, or causing a system failure, the Group may be forced to suspend business operations, potentially having a material impact on business performance. As a countermeasure, the Company has built facilities prepared for natural disasters and established a backup system.