ASAKA INDUSTRIAL CO.,LTD.

As transactions concentrated with a single company increase, there is a risk that bad debts may occur due to unforeseeable deterioration in a business partner's financial condition. While measures such as securing deposit guarantees, receiving payments via endorsed bills, and periodically obtaining reports from research firms are implemented for certain transactions, there is no guarantee that these measures can completely prevent such occurrences, and this may adversely affect business results and financial condition.

Seasonal products such as Outdoor Goods & Construction/Agricultural Equipment and snow removal-related items account for a large proportion of the business, and unusual weather such as a prolonged rainy season, extreme heat, or light snowfall due to warm winters directly affects demand. Although the Company works to establish a stable supply system during peak demand periods and carefully considers appropriate inventory levels, weather factors are beyond its control and may adversely affect business results and financial condition.

An economic downturn or exchange rate fluctuations in major export countries such as the United States and Central Africa may adversely affect the export business. Import transactions also involve foreign currency-denominated transactions, and while hedging through forward exchange contracts is implemented, significant exchange rate fluctuations may adversely affect business results and financial condition.

In the event of a large-scale earthquake or other operational disruption events, there is a risk that production capacity could be significantly reduced. Although periodic disaster prevention inspections, equipment checks, and renewal of aging equipment are conducted, there is no guarantee that impacts on production lines can be completely prevented.

Sales and other operations depend on the core system, and if a system failure or internet environment trouble occurs, it may adversely affect business results and financial condition. As a countermeasure, the core system is housed at an external data center, and a system has been established that allows access to the order-receiving and placing system under the same conditions at all locations, as well as a redundant setup enabling shipment from either the head office or the main Ibaraki site.