Bell-Park Co.,Ltd.

There is a risk that the mobile phone sales market may shrink significantly due to the diversification of sales methods and channels, such as the spread of internet sales. A contraction in sales scale could have a material impact on the Group's business results and business plans. As a countermeasure, the Company is promoting efforts to address four management challenges.

The "Agency Agreement" with SoftBank Corp. is a precondition for the Group's main businesses, with the SoftBank Group accounting for approximately 90% of net sales and purchase amounts. Although the contract is automatically renewed annually, if grounds for termination such as poor business performance, breach of trust, or a material change in the management entity arise, this could have a material impact on business continuity. As a countermeasure, the Company strives to thoroughly comply with laws and regulations and to strengthen education, training, and management systems for officers and employees.

The Group's earnings structure is such that merchandise sales tend to be in deficit, which is offset by Commission Income (Recurring Commissions, Agency Commissions, etc.) received from mobile network operators; the terms of such transactions, including the amount of commission income, the period subject to payment, and purchase prices, are subject to change based on the business policies of SoftBank Corp. If significant changes to these transaction terms occur, this could have a material impact on business results and business plans. The Company strives to improve its evaluation through education and training for officers and employees and by strengthening its management systems.

Since services of the SoftBank Group account for approximately 90% of net sales and purchase amounts, changes in the timing of new product launches, pricing plans, or advertising policies by the group, or a deterioration in image due to legal violations, etc., could have a material impact on the Group's business results. In addition, since store opening plans are also affected by the strategy of SoftBank Corp., changes in that company's strategy could affect the Company's store opening plans. As a countermeasure, the Company is promoting the strengthening of its management systems to improve evaluations from customers and the SoftBank Group.

If large-scale natural disasters such as fires, earthquakes, and wind or flood damage, the spread of a serious infectious disease, or geopolitical risks such as the U.S.-China conflict or the situation in Russia and Ukraine materialize, this could result in a slowdown in business activities, a decrease in the number of store visitors, disruption of the supply chain, a surge in purchase prices, and other effects that could impact business results, financial condition, and business plans. The Company is taking measures such as developing crisis management manuals and BCPs, stockpiling emergency supplies, taking out casualty insurance, and securing merchandise in advance.

Against the backdrop of increased demand for parts, production adjustments by manufacturers, and fluctuations in exchange rates, supply constraints for products sold and increases in purchase prices may occur. Loss of sales opportunities due to supply delays or stockouts, and a decline in customers' purchasing motivation and a prolonged replacement cycle due to rising product prices, could lead to a decrease in sales volume, potentially impacting business results, financial condition, and business plans. The Company strives to maximize sales opportunities through stable supply by strengthening cooperation with business partners and securing appropriate inventory levels.

The Company is subject to regulation under various laws, including the Telecommunications Business Act, as well as environmental, fair competition, consumer protection, personal information protection, labor, and tax laws, and violations could result in administrative sanctions, fines, claims for damages, termination of agency agreements, suspension of business, and other penalties. In addition, the introduction of unfavorable laws or regulatory amendments in the future could have a material impact on business results and business plans. The Company addresses this through thorough dissemination of its "Compliance Code" and ongoing education and training.

The Company may conduct corporate acquisitions, business transfers, or investments in new businesses to expand its operations and build new pillars of profit. If problems that could not be identified during prior due diligence arise, or if changes in the business environment prevent the initially expected effects from being achieved, this could impact business results, financial condition, and business plans through the impairment of tangible and intangible fixed assets. The Company strives to reduce this risk by conducting detailed research and analysis and making decisions after thorough deliberation by the Board of Directors.

Securing sales staff for carrier-certified shops and corporate sales personnel is an essential requirement for the main businesses; however, if the number of retirees increases due to the increasing sophistication of operations and changes in the recruitment environment, and it becomes difficult to secure and develop human resources as planned, this could impact business results and business plans. The Company is promoting the continuation of regular new graduate recruitment and year-round mid-career recruitment, education, training, and on-the-job training by specialized departments, and the improvement of the work environment through support for balancing work with childcare and other responsibilities.

While holding confidential business information, personal information, and information on business partners, increasingly sophisticated and complex cyberattacks or misconduct by officers and employees could result in the suspension of operational systems, and the tampering, leakage, or destruction of data. If such incidents occur, this could impact business results and business plans through a loss of credibility, loss of business opportunities, claims for damages, and termination of important contracts. The Company strives to strengthen information security by reinforcing the structure of its information systems department and implementing various security measures.