Asaka Riken Co.,Ltd.

The Precious Metals Business is heavily dependent on supply-demand fluctuations in the electronic components and devices industry, while the Environmental Business is heavily dependent on the printed circuit board industry, and the Group continues to have a high degree of purchasing dependence on specific business partners. Intensifying competition among operators due to soaring precious metal prices and expanding recycling demand, along with increased customer demands for cost reductions, could result in customers switching to other companies or a decline in profit margins. As countermeasures, the Group is working to maintain transactions with existing customers, acquire new customers, and diversify revenue through new businesses such as the LiB recycling business.

The prices of the Group's core products, such as precious metals and processed copper products, fluctuate due to global factors including political and economic trends in supplying and consuming countries and foreign exchange rates, and significant price fluctuations may affect the Group's financial position and business results. The Group utilizes "forward transactions," in which the selling price is fixed at the same time as the purchase timing, to reduce price fluctuation risk between purchasing and selling. The Group also strives to secure revenue sources, such as processing fee transactions, that are not affected by fluctuations in metal prices.

As of the end of September 2025, interest-bearing debt stood at ¥5,621 million, and its dependence ratio on total assets was at a high level of 40.72%. Some borrowings are subject to financial covenants requiring net assets and ordinary income to remain above certain amounts, and if these covenants are breached due to a deterioration in business performance, there is a risk that the loss of the benefit of the time limit could be triggered, requiring lump-sum repayment. The Group seeks to reduce interest rate fluctuation risk by, in principle, using fixed interest rates for long-term borrowings and utilizing interest rate swaps (including a ¥6.0 billion long-term borrowing agreement concluded in December 2024).

Given the nature of its business, which uses a large number of chemical substances, the Group must comply with laws such as the Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in the Environment and Promotion of Improvements to the Management Thereof, the Water Pollution Control Act, the Waste Management and Public Cleansing Act, and the Poisonous and Deleterious Substances Control Act, and stricter legal standards may result in additional capital expenditure burdens. In addition, there is a risk that procurement of raw materials could become difficult due to stricter regulations regarding responsible raw material procurement or inadequate supplier responses, leading to a decrease in product sales volume. The Group addresses these risks through education and training for officers and employees, acquisition of certifications addressing conflict mineral-free sourcing, and establishment of a system for promptly sharing information on regulatory changes within the company.

The Group's business uses poisonous and deleterious substances, and if management issues arise due to accidents at plants or transport vehicles, this could cause harm to employees and the surrounding area, as well as affect the Group's financial position and business results. The Group works to prevent disasters and minimize damage through periodic inspection of equipment, repair of aging buildings, disaster prevention drills, and thorough adherence to operational manuals, and has obtained certification from the Minister of Economy, Trade and Industry under the Business Continuity Strengthening Plan certification system.

Since production sites are concentrated in Koriyama City, Fukushima Prefecture, business continuity could become difficult in the event of natural disasters such as earthquakes, typhoons, or floods, or explosions and fires caused by combustible elements such as hydrogen and titanium. Some buildings are aging, and the risk of disruption to business operations, particularly from earthquakes, is high. The Group is prepared to minimize damage and quickly restore operations through periodic inspection of equipment, repair of aging buildings, and disaster prevention drills, and has obtained certification from the Minister of Economy, Trade and Industry under the Business Continuity Strengthening Plan certification system.

As part of restructuring the business portfolio for medium- to long-term growth, the Group is actively allocating management resources to new businesses, including the LiB recycling business, but there is a risk that upfront investments may not be recovered due to numerous uncertainties, such as failure to achieve R&D targets or delays in business plans. The Group strives to improve the probability of success through information exchange among related departments centered on the Corporate Planning Department, meticulous strategy formulation, efficient schedule management, and continuous acquisition of specialized knowledge.

Since operations are heavily dependent on IT systems, if the systems become unavailable for any reason, this could disrupt operations and affect the Group's financial position and business results. The Group works to reduce this risk through measures such as installing firewalls, implementing anti-virus measures, preparing backup equipment, and performing regular data backups.

The Group applies accounting standards related to impairment of fixed assets, and must recognize impairment losses when the recoverable amount of each fixed asset falls below its book value, which means a decline in asset value could affect the Group's financial position and business results. The Management Committee monitors the profitability of each business to maintain and improve earning capacity, and the Group has established a system to take timely and appropriate measures when signs of deteriorating business performance are observed.

Amid the continuing decline in the working population, the Group recognizes that securing excellent human resources is becoming more difficult, and if it is unable to secure human resources amid rapidly changing employment conditions, this could affect long-term growth and business results. The Group focuses on developing human resources through active recruitment of new graduates and experienced personnel, enhancement of education and training programs, and a cycle of experiential learning through on-the-job training, while also working to reduce turnover rates by improving the workplace environment through regular employee awareness surveys.