THE NIHON SEIMA CO.,LTD.

In the Food Business, rising prices of raw materials including wheat may affect operating results. There is a risk that increased manufacturing costs for pasta and retort sauces will put pressure on earnings; however, the securities report does not disclose specific countermeasures.

The recent rise in labor and logistics costs may affect the operating results of the Food Business. There is a risk that a deterioration in the cost structure will lower profit margins; however, the securities report does not disclose specific countermeasures.

If quality issues such as foreign object contamination occur in the Food Business, product recalls may become necessary, which could affect business performance and financial condition. There is a risk that brand damage and recall costs will lead to deteriorating performance; however, the securities report does not disclose specific preventive or response measures.

The Industrial Materials Business imports jute products and other goods, and foreign exchange fluctuations and rising raw material prices may reduce price competitiveness. In a weak-yen environment, import costs rise, and if it is difficult to pass these costs on to selling prices, there is a risk that earnings will deteriorate.

Since jute products are mainly imported from the India and Bangladesh region, instability in the political and economic situation in that region (country risk) may affect procurement. Combined with natural disasters and uncertain logistics conditions, there is a risk that stable procurement will become difficult.

If a recall occurs due to quality issues or similar problems in the Industrial Materials Business, it may affect operating results. There is a risk that recall response costs and deteriorating relationships with business partners will put pressure on performance; however, the securities report does not disclose a specific quality control system.

The Mat Business sells Automotive Floor Mats, and economic trends in the automotive industry as well as recall issues and production adjustments by automobile manufacturers may affect operating results. If dependence on a specific manufacturer is high, there is a risk that sales could decline significantly due to supply chain changes and similar factors.

Because taxable income in past years has been unstable, deferred tax assets have been recorded based on conservative scheduling; however, if future performance deteriorates and taxable income cannot be calculated in excess of deductible temporary differences, there is a possibility that deferred tax assets will be written down. If such a write-down occurs, there is a risk that it will expand net loss for the period and worsen the financial condition.

Concerns persist over global supply instability in wheat, oil, and other commodities due to the prolonged Russian invasion of Ukraine and the unstable situation in the Middle East. Rising prices for raw materials, including wheat used in pasta production for the Food Business, and energy costs may affect operating results, and if cost increases cannot be passed on to selling prices, there is a risk that earnings will deteriorate.