AIDA ENGINEERING, LTD.

The Company Group conducts production and sales activities in the Americas, Europe, China, Asia, and other regions, and is inherently exposed to risks such as unexpected changes in policies, laws, and regulations, significant and abrupt fluctuations in foreign exchange rates, and social disruption caused by terrorism, epidemics, or war. Depending on local conditions, this could have a material impact on business performance and financial condition. No specific countermeasures are described in the securities report.

The Company Group manufactures products at factories around the world in accordance with quality control standards, but there is no guarantee that all products will be free of defects or that recalls will not occur. If a large-scale recall or product liability claim occurs, it could result in significant costs and a decline in corporate reputation, leading to a decrease in sales. The Company Group has product liability insurance, but there is no guarantee that it will fully cover the ultimate amount of damages, nor is continued coverage on acceptable terms guaranteed.

The Company Group's main raw materials are steel products, including steel materials, and significant fluctuations in their prices directly affect manufacturing costs. A sharp rise in raw material prices could compress profit margins and have a material impact on business performance and financial condition. No specific hedging measures against price fluctuation risk are described in the securities report.

Sales of products for the automotive industry account for more than three-quarters of the Company Group's total sales, resulting in a business structure in which performance is heavily affected by the business conditions and capital expenditure trends of the automotive industry. If a downturn in the automotive industry or a reduction in capital expenditure occurs, it could have a material impact on the Company Group's business, performance, and financial condition. The high degree of dependence on a specific industry is a risk factor affecting the stability of earnings.

In the global market for forging and pressing machinery, the Company Group's main product, competition with other companies in the same industry exists in terms of quality, price, delivery time, service, and other factors. If oversupply or a significant decline in demand occurs within the industry, further intensifying sales competition, it could have a material impact on the Company Group's performance. No specific countermeasures to strengthen competitiveness are described in the securities report.

Employee retirement benefit obligations and expenses are calculated based on actuarial assumptions such as the discount rate, and if actual results differ from these assumptions or the assumptions are changed, this will affect the expenses recognized and the liabilities recorded in future accounting periods. This could have a material impact on the Company Group's performance and financial condition. Changes in the interest rate environment directly affecting the amount of the obligation through the discount rate is a risk that warrants particular attention.

The Company's main factory is located in northwestern Kanagawa Prefecture (southern part of the Kanto Plain), where a major earthquake is anticipated to occur in the future, and if a major earthquake or other natural disaster occurs, it could significantly disrupt production activities. Damage to the main factory would directly impair product supply capacity, posing a risk of a material impact on performance. No specific BCP (Business Continuity Plan) is described in the securities report.

In recognizing revenue from construction contracts, assessing impairment of fixed assets, and determining the recoverability of deferred tax assets, the Company Group makes accounting estimates based on certain assumptions, including estimated total construction costs, the recoverable amount of fixed assets, expected order volumes for major products, and gross profit margins. If these assumptions fluctuate beyond expectations, it could have a material impact on financial position and operating results. In particular, the accuracy of construction cost estimates in order-based businesses is directly linked to the stability of performance.

The spread of the novel coronavirus has had a serious impact on the global economy in the past, and there remains a risk of future infectious disease outbreaks caused by new viruses. Economic stagnation associated with the spread of infectious diseases and reconsideration of customers' capital expenditure plans could have a material impact on the Company Group's financial position, operating results, and cash flow status. No specific infectious disease countermeasures or business continuity measures are described in the securities report.

If operations at the Company's own manufacturing facilities or within its supply chain are affected by extreme weather events such as floods and other natural disasters associated with global warming, this could result in lost sales opportunities and require substantial expenses to restore operational facilities. Because climate change risk can extend across the entire supply chain, there are concerns about broad business impacts that go beyond damage to a single factory. No specific climate change countermeasures (such as TCFD-related responses) are described in the securities report.