IWAKI CO.,LTD.

The semiconductor, LCD panel, and chemical product markets, which are the major demand sources for chemical pumps, are subject to significant fluctuations in market conditions, and business performance is affected by demand trends and capital investment trends in production facilities. If the market environment deteriorates, deterioration in orders and inventory buildup may occur. The Group is addressing this by appropriately reviewing its focus markets as needed.

The Group is promoting business expansion in North America, Europe, Asia, and other regions, but changes in overseas market conditions, competitive circumstances, and the timing of new product development may affect business performance. In particular, there is a risk that the price competitiveness of the Company's products may decline due to trends in U.S. tariff policy. In addition, under the one-country-one-distributor policy, there is a risk that the Company may not be able to switch distributors promptly when a distributor's competitiveness declines, which the Company addresses by dispatching local staff, among other measures.

Deterioration in the domestic industrial economic environment, industry consolidation, and the relocation of manufacturing bases overseas may cause domestic demand, which forms the Company's revenue base, to stagnate or decline over the long term. Under the Medium-Term Management Plan 2027, the Company targets consolidated net sales of ¥53.0 billion for FY2028 (ending March 2028), of which ¥29.5 billion is targeted from overseas, aiming to minimize the risk of declining domestic demand by increasing the overseas sales ratio.

The Group holds foreign-currency-denominated sales, purchases, assets, and liabilities, primarily in U.S. dollars and euros. Since foreign-currency-denominated sales exceed foreign-currency-denominated purchases, and foreign-currency-denominated assets exceed foreign-currency-denominated liabilities on a group-wide basis, a stronger yen may adversely affect business performance and financial condition.

Many of the Company's products use components made from metals, including rare earths, and resins as raw materials, and purchase prices are affected by fluctuations in market prices. If prices rise due to supply-demand conditions for raw materials or other factors, this may affect the Group's business performance.

Although strict controls are implemented by the quality control department, it is not possible to completely eliminate the occurrence of unforeseen major quality issues. If a product defect leading to product liability claims occurs, this may result in a significant decline in corporate reputation and a decrease in net sales. The Group addresses this through product liability insurance coverage and a defect-elimination project framework.

In its overseas expansion through 19 affiliated companies in 15 countries, the Group is required to comply with security export control regulations under the Foreign Exchange and Foreign Trade Act. Violations may result in criminal penalties such as imprisonment and fines, as well as administrative sanctions such as export bans, which could have a material impact on sales and profits. In addition, changes in domestic and overseas regulations such as the Product Liability Act, the Antimonopoly Act, and environmental laws pose a risk of constraining business operations.

In M&A transactions undertaken for business expansion, sufficient due diligence may not be conducted due to time constraints and other factors, and contingent liabilities or unrecognized liabilities may come to light after an acquisition. Additionally, with respect to joint ventures, since the Company does not have control over its joint venture partners, optimal decision-making cannot be guaranteed, and if contract termination or similar events occur, this may affect business performance and financial condition. The Group strives to avoid such risks by utilizing external institutions and strengthening cooperation among relevant departments.

The Company differentiates itself from low-priced products from emerging-market manufacturers through high-quality, highly durable products based on more than 60 years of development and manufacturing experience. However, if the quality of competing products improves and the Company's products are unable to maintain their competitive advantage, this may affect business operations and performance. The Company intends to continue differentiation through the promotion of basic research and core technology development utilizing its Technology Center and the development of "Only One" products.

If a failure occurs due to system or server downtime, hacker intrusion, computer viruses, or other causes, this may disrupt order-receiving and production activities and affect business performance. In addition to utilizing data centers, operational monitoring, and appropriate operational management, the Group is working to improve IT literacy and minimize the risk of information leaks through the development of internal regulations and information security education.