COSMO BIO COMPANY,LIMITED

End users of the Group consist largely of researchers at universities, public research institutions, and corporations, so a decline in public research funding or corporate R&D spending directly affects business performance and financial condition. While the Group is working to develop existing businesses as well as nurture and expand new businesses, the structure is such that a decline in sales is unavoidable during periods of contraction in research spending. This is classified as a "particularly important risk" in the Annual Securities Report.

Many of the Group's suppliers are overseas companies, and if such a supplier undergoes an M&A transaction, there is a risk that the resulting restructuring of the sales system in Japan could lead to higher purchase prices or the loss or reduction of domestic sales rights. The Company strives to secure stable business rights by building trust-based relationships with suppliers and forming special relationships such as capital and business alliances, but if the business rights with a major supplier are lost or reduced, it could have a material impact on business performance and financial condition. This is classified as a "particularly important risk" in the Annual Securities Report.

Many of the Group's products are imported goods settled in foreign currency, resulting in a structure where exchange rate fluctuations directly affect cost of sales. While the Group hedges within a certain range of actual demand through forward foreign exchange contracts based on internal policy, sharp fluctuations in exchange rates or significant changes in accounting standards could affect business performance and financial condition. This is classified as a "particularly important risk" in the Annual Securities Report.

In the domestic market for life science research-related products, there is a risk of falling into price competition due to intensifying competition within the industry, and the activities of competitors affect the Group's business performance. The Group seeks differentiation through strengthening marketing capabilities, timely introduction of new products, and enhanced proposal-based sales activities, but if competition intensifies further, an adverse impact on business performance and financial condition is expected. This is classified as a "particularly important risk" in the Annual Securities Report.

Some of the Group's products fall under the Pharmaceuticals and Medical Devices Act, the Poisonous and Deleterious Substances Control Act, and other related laws and regulations, and if a regulatory violation occurs due to an accident or other cause, there is a risk that business activities could be partially restricted. The Group has established a dedicated department to ensure thorough legal compliance, but if there are amendments to regulations or the introduction of unforeseen new regulations, response investments would be required, potentially affecting business performance and financial condition.

The Group is composed of multiple affiliated companies, and it is working to enhance corporate governance in order to achieve synergies through the provision of a wide range of life science research-related products and services. However, if governance shortcomings arise at affiliated companies due to rapid business expansion or other factors, this could affect the Group's overall business performance and financial condition.

The Group conducts business investments and fund management investments based on internal policy, but there is a risk that sudden changes in financial and market conditions could cause unexpected fluctuations in the value of held assets. In addition, significant changes to accounting standards or tax systems could affect business performance and financial condition, requiring continuous monitoring to maintain stable performance.