MTG Co., Ltd.

The Group strives to align with consumer needs through the development of new brands and products and marketing activities; however, by their nature, these efforts involve uncertainty and may not achieve the initially intended results. Since the degree of alignment with consumer needs has a significant impact on sales and profit, there is a risk that this could adversely affect the Group's financial position and business results. As a countermeasure, the Group continuously withdraws brands and products that no longer meet consumer needs.

There is a concentration on specific brands and products such as ReFa and SIXPAD, and business activities aimed at increasing the number of core products involve uncertainty due to various factors, which may adversely affect the Group's financial position and business results if the initially intended results are not achieved. If revenue continues to be highly dependent on specific brands, a decline in the competitiveness of such brands could directly impact overall business performance. As a countermeasure, the Group is working to expand its business models, including B2B business and subscription business.

Since the company's founding, Mr. Tsuyoshi Matsushita, who serves as Representative Director and President, has played a critical role in driving the Group's overall business promotion and brand development, and if he becomes unable to continue performing his duties for any reason, this may adversely affect the Group's financial position and business results. Dependence on a specific individual who is fundamental to the business constitutes a significant risk from the perspective of business continuity. As a countermeasure, the Group is working to introduce a group management approach based on the PC (Profit Center) system, cultivate successors, and build an organizational business management structure.

Since the Group receives supplies of parts and products from external partners both in Japan and overseas, if natural disasters, geopolitical issues, sudden political instability (war, civil war, conflict, riots, terrorism, etc.), regulatory changes, or bankruptcy of partners occur, this may affect supply and adversely affect the Group's financial position and business results. There is also a risk that soaring raw material prices could make it difficult to secure parts and materials at reasonable prices. As a countermeasure, the Group promotes early identification of risk indicators through regular meetings of the "Partner Cooperation Council" and risk diversification through purchasing from multiple suppliers.

In the course of continuous new product development, if a large-scale recall occurs due to unintended product defects, or if a product defect leads to health damage or other product liability claims, this may adversely affect the Group's financial position and business results. With the expansion into the food business domain, risks related to food safety have also newly emerged. As a countermeasure, the Group strengthens collaboration with manufacturing partners, conducts on-site quality audits, has introduced a review system involving specialist advisors, and has established a process control system in the food business area.

Although foreign exchange risk arising from intra-group transactions is centrally managed by the Company, sudden fluctuations in exchange rates may adversely affect the Group's financial position and business results. As the expansion of overseas business increases foreign currency transactions, the impact of exchange rate fluctuations grows accordingly. As a countermeasure, the Group appropriately executes forward foreign exchange contracts in accordance with its foreign exchange management regulations to reduce foreign exchange risk.

As patents and other intellectual property rights are filed daily around the world, there is a risk that the Group may unintentionally infringe on third-party patent rights and become subject to claims such as injunctions against product sales or damages. In addition, if competitors or counterfeiters engage in business involving counterfeit or similar products, there are concerns about damage to brand value and adverse effects on the Group's financial position and business results. As a countermeasure, the Group continuously strengthens its intellectual property management department, conducts thorough prior investigations, and takes measures against counterfeit products while raising consumer awareness and providing alerts.

With Japan's working population on a declining trend, if hiring does not proceed as planned or if the planned development of internal human resources becomes difficult, this could lead to a decline in competitiveness and hinder business expansion, adversely affecting the Group's financial position and business results. Securing and developing excellent human resources is a driving force for business promotion, and any stagnation in this area directly affects medium- to long-term growth potential. As a countermeasure, the Group is working to measure and improve engagement scores, conduct proactive recruitment activities through collaboration between the HR department and outside experts, and cultivate management talent utilizing the PC system.

The Group holds information assets such as personal information, customer information, and confidential business information, and if information leakage occurs due to unforeseen unauthorized access, this may adversely affect the Group's financial position and business results. Information leaks could also damage brand credibility and lead to legal liability. As a countermeasure, the Group is enhancing its information infrastructure, strengthening security measures centered on IT infrastructure, improving employees' IT literacy through training, and has obtained Privacy Mark certification.

The Group is required to comply with a wide range of laws and regulations both domestically and internationally (including the Act against Unjustifiable Premiums and Misleading Representations, the Pharmaceuticals and Medical Devices Act, the Specified Commercial Transactions Act, the Antimonopoly Act, and various overseas laws and regulations), and if a compliance violation occurs, including individual misconduct, this may damage social trust and brand value and adversely affect the Group's financial position and business results. Continuous response to changes in the regulatory environment is also required, such as the enforcement of the Act on Improving Transactions with Specified SME Subcontractors from January 2026. As a countermeasure, the Group aims for early detection and correction of legal violations through the establishment of a Compliance Committee, various training programs, and the development of an internal whistleblowing system.