NAKANISHI MFG.CO.,LTD.

The majority of sales are directed to the domestic Japanese market, and business performance is affected by trends in domestic capital investment and public works projects. In particular, school lunch center projects, which are a major sales channel, tend to involve large sales amounts per case, and declining demand due to the falling birthrate, aging population, and population decline may adversely affect the company's financial position and business results. In response, the company is working to strengthen its competitiveness and expand market share through the development of high-value-added products, service provision, and cost reduction.

The company leases out a portion of the floors in its Tokyo Head Office building (Chuo-ku, Tokyo), and trends in the real estate market—such as rising vacancy rates for office buildings, declining rent levels, and increased supply of nearby rental properties—may affect rental income. The Real Estate Leasing Business is the company's second-largest revenue source after the Commercial Kitchen Equipment Manufacturing and Sales Business, and a deterioration in market conditions would directly affect the company's financial position.

Raw material prices for the company's products are affected by market fluctuations, and supply chain disruptions caused by disasters or bankruptcies affecting suppliers may cause interruptions or shortages in the supply of raw materials. Should such circumstances arise, rising manufacturing costs or production stoppages could adversely affect the company's financial position and business results. There is no specific mention of countermeasures such as utilizing multiple suppliers, and details of risk management are limited.

Although most production and sales activities are conducted domestically, some products are imported from overseas, and fluctuations in exchange rates affect import costs. In a weak yen environment, import costs may rise, potentially reducing profitability. In response, the company conducts hedging transactions such as forward exchange contracts on a contract-by-contract basis to minimize the impact of exchange rate fluctuations.

In the event of a disaster such as a major earthquake, tsunami, or large typhoon, sales, production, logistics, and head office functions may be disrupted, potentially adversely affecting the company's financial position and business results. In response, the company reduces business continuity risk by distributing its head office functions between Tokyo and Osaka, and its production and development bases between Nara Prefecture and Gunma Prefecture.

If a serious safety or quality problem occurs with a manufactured or sold product, it could damage the company's social reputation and result in damages claims, adversely affecting the company's financial position and business results. The company has established quality assurance departments at both of its plants to build a product inspection and quality control system, and has also taken out product liability (PL) insurance as a precaution.

Fundraising relies primarily on borrowings from financial institutions, and significant changes in financial market conditions or the supply-demand environment for funds could raise fundraising costs or make fundraising difficult, adversely affecting the company's financial position and business results. In response, the company maintains relationships with multiple financial institutions and has established a stable fundraising framework by concluding a commitment line agreement with one of its main banks.

If a customer's business performance deteriorates sharply, frequent payment delays or defaults could adversely affect the company's financial position and business results. In response, the company manages payment due dates and outstanding balances for each business partner in accordance with its credit management regulations, and strives to prevent the occurrence of non-performing receivables due to worsening financial conditions of customers.

If it is determined that all or part of the deferred tax assets are not recoverable, they will be deducted as a valuation allowance and recorded as an adjustment to income taxes, potentially adversely affecting the company's financial position and business results. Details are described in the notes to the financial statements under "Critical Accounting Estimates," and the impact would become apparent if the outlook for future taxable income changes.

As of March 31, 2026, the top 10 major shareholders held approximately 60% of the total issued shares, resulting in low market liquidity for the company's stock. If a major shareholder were to sell a large volume of shares on the market for any reason, it could have a significant impact on the market price of the company's stock. In response, the distribution of the fiscal year-end bonus in treasury stock in March 2026 increased the number of participants in the employee stock ownership plan, contributing to securing stable shareholders.