FUJIMAK CORPORATION

Business performance trends in key customer markets such as hospitals and long-term care facilities, hotels and lodging facilities, restaurant-related industries, school and corporate cafeteria facilities, and central kitchens/food factories, as well as changes in Japan's political and economic conditions, laws, and tax systems, may affect operating results. In addition, in overseas markets such as Southeast Asia, changes in local political and economic conditions, conflicts and social unrest, and changes in laws and tax systems may affect financial position and operating results. There is no specific description of countermeasures in the securities report, leaving a structural vulnerability to the materialization of this risk.

There is a risk that rising market prices for main materials such as stainless steel and key electronic parts will pressure profits. The Company seeks to secure profit levels through planned procurement of raw materials and components, thorough reduction of manufacturing costs, and passing on some costs to product prices, but if market fluctuations cannot be fully absorbed, this may affect financial position and operating results. Cost management has become increasingly important amid the recent surge in resource prices.

Since some of the Company's main products are imported from overseas, fluctuations in exchange rates significantly affect product costs. If exchange rate fluctuations cannot be absorbed through cost reduction efforts such as expense cuts, this may affect financial position and operating results. In a yen depreciation phase, the rise in import costs poses a risk of directly pressuring profits.

The Group strives to minimize receivables collection risk through individual company-based receivables management and strict credit management, but bad debts may occur and become unavoidable due to various factors, resulting in non-performing receivables. Depending on the amount of non-performing receivables generated, this may affect financial position and operating results. The structure is such that credit risk increases when the performance of customer industries deteriorates.

The Group makes every effort to ensure product quality and safety under a strict quality control system, but should a quality or safety problem occur, it could damage the corporate image and simultaneously affect financial position and operating results. Given that commercial kitchen equipment is directly linked to food safety, quality problems carry the risk of leading to loss of customer trust and termination of business relationships.

The Group acquires personal information and other customer information from customers in the course of its business activities, and has established internal systems to prevent leakage; however, should information leak to outside parties, it could result in loss of credibility and liability for damages, thereby affecting financial position and operating results. In an environment where risks such as cyberattacks and internal misconduct are increasing, continuous strengthening of the information management system is required.

Securing and developing highly specialized, capable personnel is essential for strengthening competitiveness and business development both domestically and internationally, but competition for talent is intensifying due to the declining birthrate, aging population, and shrinking labor force. If personnel recruitment and development do not proceed as planned, this may affect financial position and operating results. In particular, securing global talent has become a challenge as overseas expansion accelerates.

The Group has manufacturing subsidiaries in China (Shanghai) and Vietnam, and sales subsidiaries in Singapore, Guam, Taiwan, Thailand, Cambodia, Malaysia, the Philippines, the United States (Los Angeles), Indonesia, and elsewhere. Changes in laws, regulations, and tax systems, as well as social unrest resulting from fluctuations in political and economic conditions in these locations, may affect financial position and operating results. While this expansion aims to diversify production bases, reduce manufacturing costs, and expand overseas sales channels, responding to geopolitical risks and regulatory changes in each country remains an ongoing challenge.

The Company holds securities for the purpose of maintaining good business relationships with customers and ensuring smooth business operations, but the asset value of such securities may increase or decrease depending on stock market trends, which may affect financial position and operating results. These holdings are in the nature of cross-shareholdings, and there is a risk of recording valuation losses in a market downturn.

The Company may conduct M&A transactions for the purpose of expanding its existing business base and strengthening related businesses. Although thorough consideration is given in advance, if the post-acquisition business does not proceed as originally planned due to factors that could not be identified beforehand, this may affect financial position and operating results. There is a possibility that goodwill impairment risk and unexpected costs arising during the integration process could become a financial burden.