JMACS Japan Co., Ltd.

The Company's net sales are highly dependent on domestic demand in Japan, and in particular, for metal wires, fluctuations in construction/electrical distribution, information and communications, electrical machinery, and other domestic demand directly affect business results and financial condition. Should domestic economic conditions deteriorate or capital investment contract across various sectors, there is a risk of a significant decline in net sales. The annual securities report does not describe specific countermeasures.

Copper, vinyl, polyethylene, and other materials used in the Company's main products are heavily affected by international market conditions, creating a risk that sharp increases in raw material costs will directly squeeze profitability. Prices of these materials can fluctuate rapidly due to geopolitical factors and supply-demand balance, and if pass-through to selling prices is delayed, profit margins could decline significantly. The annual securities report does not describe specific hedging measures or other countermeasures.

The markets in which the Company operates are constantly exposed to intense price competition, and responding to rapid changes in material prices may make it difficult to maintain competitive advantage. There is no guarantee that the Company can secure a competitive advantage in terms of selling prices, and if price competition with competitors intensifies, there is a risk of adverse effects on business results and financial condition. The Company states that it strives to strengthen price competitiveness, but the effectiveness of such efforts is not guaranteed.

For securities other than shares without market prices, changes in the economic environment going forward could cause fair value to fluctuate, potentially affecting business results and financial condition. In a stock market downturn, valuation losses could arise on held securities, risking impairment of net assets. The annual securities report does not describe specific risk management measures such as reducing or diversifying holdings.

The Company operates a three-plant structure consisting of the Hyogo Plant (production facilities), the Hyogo Plant (logistics facilities), and the Hyogo Plant Headquarters Building (production facilities); since these are located adjacent to one another, there is a risk that a large-scale disaster such as an earthquake could simultaneously affect all plants and halt operations. Because production and logistics functions are integrated and concentrated in one location, there is no alternative production site in the event of a disaster, and the impact on business results and financial condition could be severe. The annual securities report does not describe specific countermeasures such as a business continuity plan (BCP).

Amid the ongoing Russia-Ukraine situation and armed conflict in the Middle East, with no end in sight, there is a risk that certain raw materials will become difficult to obtain. Should supply chain disruptions occur, there is a possibility that stagnation in production activities and increases in raw material costs will affect the Company's ability to secure profits. The annual securities report does not describe specific countermeasures such as diversification of procurement sources.

The impact of changes in tariff policy accompanying a change in US administration on global politics and the economy remains unknown at this time, and there is a risk that changes in the international trade environment will spill over into raw material procurement costs and market conditions. The impact of tariff increases on international market conditions for copper and other materials could push up the Company's material procurement costs and adversely affect its ability to secure profits. The annual securities report does not describe specific countermeasures.