OIZUMI Corporation

Pachinko halls, the end users of the Group's core gaming machine peripheral equipment, are subject to regulation under the Act on Control and Improvement of Amusement Business, etc. and prefectural ordinances. Delays in inspections by prefectural public safety commissions when establishing or renovating gaming facilities could affect the Group's business performance. While the products themselves are not directly subject to legal regulation, they depend on the operating environment of customer gaming facilities, requiring close monitoring of regulatory trends.

Pachislot and pachinko machines are required to comply with the "technical standards" set forth in the National Public Safety Commission Rules, and revisions to these standards could affect the Group's business performance. In addition, the validity period of certification (the period during which sale is permitted) for each model is set at three years under the National Public Safety Commission Rules, institutionally constraining the product lifecycle. Depending on the timing and content of standard revisions, there is a risk that major revisions to product development and sales plans may be required.

The Food & EC Business is subject to laws and regulations related to food safety and consumer trust, including the Food Sanitation Act, the JAS Act, the Act against Unjustifiable Premiums and Misleading Representations, and the Product Liability Act, as well as environmental and recycling-related regulations such as the Containers and Packaging Recycling Act and the Waste Management and Public Cleansing Act. In the event of violations, such as issues involving health hazards, the Group may face food recalls (voluntary recalls) or restrictions on business activities, which could affect its business performance. This business area requires ongoing compliance with a wide range of legal regulations.

The Group is strengthening its compliance system, including taking care not to infringe on third parties' intellectual property rights, but there remains a possibility that litigation may be filed in connection with transactions. If litigation such as claims for damages arises, it could affect business performance and corporate image. While measures are currently in place to minimize such risks, complete elimination is difficult.

Under the accounting standards for impairment of fixed assets, if the total undiscounted future cash flows of an asset group showing signs of impairment fall below its book value, the book value must be written down to the recoverable amount and an impairment loss recognized. Depending on future earnings conditions, impairment losses may arise, which could have a significant impact on the Group's business performance and financial position. Particular attention is needed to the risk that, in a group structure operating multiple businesses, deteriorating profitability in a specific business could spill over into asset valuations.