Ishikawa Seisakusho, Ltd.

Since products are manufactured to order with diverse customer specifications, it is difficult to statistically estimate the probability and timing of product defects. When defects occur, additional costs arise for repairs or replacement products, and if an accident occurs at a customer site, there is a possibility of liability for damages related to personal or property damage or business interruption losses. As countermeasures, the Company has obtained international standard certification for its quality management system, established dedicated departments and committees, and taken out product liability insurance.

The Company holds listed and unlisted stocks as investment securities, and if share prices decline by a certain amount or more due to an economic downturn or other factors, there is a risk of recognizing a valuation loss on investment securities as an extraordinary loss. As countermeasures, the Company regularly monitors share prices and reports to management in a timely manner, and has set an impairment review line at a 30% decline and a mandatory write-down line at a 50% decline, taking measures including early sale as necessary.

Since the Company has adopted a defined benefit corporate pension plan and outsources the management of pension assets to external institutions, if the investment performance deteriorates due to declines in share prices or other factors, retirement benefit expenses may increase. Because economic fluctuations are affected by external factors such as domestic and international political trends and natural disasters, it is difficult to forecast the timing and extent of this risk materializing. As a countermeasure, the Company primarily selects stable-type investment products that are less susceptible to the effects of economic fluctuations.