Maruo Calcium Co., Ltd.

Certain raw materials can only be obtained from a limited number of specific suppliers, and since procurement includes overseas sourcing, there is a risk that procurement volumes and unit prices could fluctuate significantly due to political and economic conditions in supplier countries or exchange rate movements. If procurement stability is compromised, this could directly affect product supply and profitability. At present, the Annual Securities Report does not describe specific alternative procurement measures.

There is a risk that the Company cannot completely prevent third parties from manufacturing and selling similar products, as well as a risk that the Company's own products may be deemed to infringe on the intellectual property rights of other companies. Although the Company strives to develop proprietary technology and protect intellectual property rights, either scenario, if it occurs, could adversely affect business performance and financial condition. This risk is closely tied to the fundamentals of the Company's differentiation strategy.

If unexpected bad debts occur due to credit concerns at business partners, this could adversely affect business performance and financial condition. The Company manages trade receivables through credit aging analysis, strict enforcement of collection terms, and the establishment of allowances, but unforeseen circumstances cannot be completely eliminated. Failure to collect trade receivables leads directly to the recognition of losses.

The Company designs and manufactures products based on international quality control systems and carries product liability insurance, but if a serious quality issue exceeding the insurance limit were to occur, there is a risk of losing trust in the products and the Company. Quality issues could lead to customer attrition and claims for damages, potentially adversely affecting business performance and financial condition.

If manufacturing facilities are damaged by a large-scale industrial accident or natural disaster, stable supply of products may become difficult, potentially adversely affecting business performance and financial condition. The Company addresses this through diversification of production sites and the formulation of business continuity plans (BCP), but there remains a residual risk that disasters exceeding expected scale cannot be fully addressed.

The Company assesses the recoverability of deferred tax assets based on forecasts and assumptions regarding future taxable income, but if forecasts of taxable income are revised downward, part or all of the deferred tax assets may be reduced. Reversal of deferred tax assets would temporarily reduce net income and also adversely affect financial condition.

If business performance deteriorates significantly or real estate prices decline, impairment losses on fixed assets may occur, potentially adversely affecting business performance and financial condition. The Company applies impairment accounting standards, and losses must be recognized once it is determined that the book value of an asset exceeds its recoverable amount. Given the scale of capital investment as a manufacturing company, the resulting impact could be correspondingly large.