Risk Factors

Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our common stock. Hikari Tsushin continuously makes every possible effort to avoid or reduce these risks, but cannot necessarily guarantee that all risks can be completely avoided. These risk factors may not necessarily include all risks that could arise with regard to the Group’s operations in the future. The items listed below contain forward-looking statements deemed appropriate by the Group as of the release of the annual report, unless otherwise stated.

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Sales Distribution agreement risk

The Group relies on the contractual coverage with certain communication carriers and manufacturers. The decision by these carriers and manufacturers to change their policies could negatively impact the Group’s operating results. Also, in case the communication carriers change the fee structure or sales policies by the change in the government’s policy, the Group may be impacted.

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Sales of own services risk

The Group invests and actively develops in companies involved in new businesses its sales of own services. The Group is now accelerating expansion of new our services that the profits increase after sales of own services, but costs of sales are caused ahead. Therefore, in case dissolution of a contract by changing the marketing emvironment or stopping of service provision could be affected negatively.

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Management of Personal Information

The Group maintains and manages personal information obtained through business operations, as well as trade secrets regarding the Group’s technology, marketing and other business operations. Even though the Group makes every effort to manage this information appropriately, the Group’s business performance and financial situation may be subject to negative influences in the event of an unanticipated leak of such information and such information is obtained and used illegally by a third party.

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Securities investment risk

We maintain an investment portfolio of various holdings, types, and maturities. These investments are subject to general credit, liquidity, market, and interest rate risks, which may be exacerbated by unusual events that have affected global financial markets. If the global credit market continues to deteriorate, our investment portfolio may be further impacted and we could determine that more of our investments have experienced an other-than-temporary decline in fair value, requiring further impairment charges that could adversely impact our financial results.

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Laws and regulations risk

The business activities of Insurance and SHOP are subject to various lows and regulations in Japan. Changes in such laws and regulations, and additional expenses to comply with the amendments may affect business results and financial position.

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Corporate acquisition risk

The Group engages in M&A activities as one of its management strategies for the expansion of its operations. Through these activities, the Group seeks to maximize its corporate value by optimizing its business portfolio through synergies with companies and operations targeted through M&A activities. However, in cases where the Group is unable to realize the expected profit and benefits of M&A activities, this could have an adverse impact on its business results.

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