26 July, 2016(Translation)
Company Name
Representative

EPS Holdings, Inc.
Yan Hao, Chairman &CEO

Stock Code4282, TSE First Section

Contact

Shuzo Orihashi, Director & Executive Corporate Officere-mail

ir@eps.co.jp

Announcement of Reorganization of Group Companies in the SMO Business Segment

EPS Holdings, Inc. (hereinafter referred to as “the Company”) resolved at the meeting of its Boardof Directors today to conduct a reorganization of group companies in the SMO business segment
accompanied by the merger of consolidated subsidiaries as follows;

1. Objective of the Reorganization
By the means of share exchange at January 1, 2016, Sogo Rinsho Holdings Co., Ltd.
(hereinafter referred to as "Sogo Rinsho HD") became the wholly owned subsidiary of theCompany.
As a result, the Company occupied largest share in the SMO market in Japan. This time, inorder to realize further growth as a leading company in the market, and also to build a management
structure to maximize the corporate value, the Company conducted a reorganization in SMO
business segment.
Specifically, EP-Mint Co., Ltd. and Sogo Rinsho Science Co., Ltd., both are operating companiesof the SMO Business Segment, were merged and EP-Sogo Co., Ltd. (hereinafter, referred to asthe "EP-Sogo") newly started from May 1, 2016, as the largest company in the SMO market.
Originally, we planned to build a management structure under Sogo Rinsho HD, intermediateholding company, in the SMO business segment.
However, we decided to construct a more integrated structure due to following reasons;● Further reorganization and restructuring is expected in the market.
● More rapid decision-making is required.
2. Overview of the Reorganization
EP-Sogo (wholly owned subsidiary of Sogo Rinsho HD) and Sogo Rinsho HD will be integrated
by absorption-type merger, and EP-Sogo become the surviving company
The overview of merger and reorganization are as follows;3. Outline of the Merger（１） Date of the merger (effective date)
October 1, 2016 (Scheduled)（２） Method of the merger
EP-Sogo is company surviving absorption-type merger and Sogo Rinsho HD is company absorbed inabsorption-type merger.

（３） Allocation resulting from the merger
On the occasion of this merger, EP-Sogo will allocate the Company of all the treasury shares, acquired bythis merger, in compensation of Sogo Rinsho HD shares held by the Company.

4. Outline of the Merging Companies
Surviving company①Registered trade name

EP-Sogo Co., Ltd.

②Location of Head Office

1-8,Tsukudocho,Shinjuku-ku,Tokyo③Title and name of Representative

Representative Director Shinro Tashiro④Business description

SMO business⑤Capital

478 million Yen⑥Date established

December 24, 1999

⑦ Fiscal year end

September 30⑧Employees

1,431（July 1, 2016）⑨Principal shareholder, and persantages of shares held

Sogo Rinsho HD 100％

⑩RelationshipbetweenCapital ties

Sogo Rinsho HD (the wholly owned subsidiary of

the listed company andthe Company) owns 100% of the outstanding

the company

sharesHuman relations

Shinro Tashiro serves as the representative
director of EPS Holdings, and the representative
director of EP-Sogo.
Haruo Nishino serves as the director of EPS
Holdings, and the director of EP-SogoBusiness relationship

The Company provides management assistanceto EP-Sogo. The Company borrows money from
EP-Sogo.

⑪Operating and financial results for the last three years
Fiscal year end

2013/92014/92015/9Net Assets

(※1)

3,547

3,932

4,111

Total Assets

（(※1)

4,648

5,420

5,467

Net asset worth per share(※1)

922.84

1,023.20

1069.76

Net Sales

(※1)

5,703

6,288

6,486

Operating Income(※1)

400901

599

Ordinary income

(※1)

407

910

612

Net Income

(※1)

239

491

361

Net Income per Share

(※2)

62.30

127.87

94.06

Dividends per share

(※2)

55.00

35.00

47.00

(※1：million JPY)(※2：JPY)

Company to be merged①Registered trade nameSogo Rinsho Holdings Co., Ltd.

② Location of Head Office2-4-1,Nishi-Shinzyuku,Shinzyuku-ku,Tokyo③ Title and name of Representative

Representative Director Shinro Tashiro④ Business description

Strategic formulation for Group companies operating SMO Businesses; controland management of Group companies⑤ Capital

80 million JPY⑥ Date established

December 20 , 1989

⑦ Fiscal yaer end

September 30⑧ Employees

30 (July 1,2016)⑨ Principal shareholder and percentage of shares held

The Company 100％

5. Post-merger status (Plan)
By this merger, there will be no change of the trade name, the head office location, a title and thename of representative director, business line and an accounting period of EP-Sogo (survivingcompany).

Separately from this matter, it will be capital reduction for 100 million JPY. (Executed effective on August31, 2016)

6. Future Outlook
There will be no impact on the Company’s consolidated financial results since the merger is amerger between the wholly owned subsidiaries of the Company.
以上[Reference]