Sansei Technologies, Inc.

Economic fluctuations, natural disasters such as earthquakes and typhoons, and pandemics may damage the Group's facilities or cause business activities such as order intake and production to stagnate. In addition, if a rapid change in the business environment causes a decline in the creditworthiness of business partners or a default, receivables collection risk may materialize and affect business performance and financial condition. Although the Group makes ongoing efforts to gather information on the credit status of business partners, complete avoidance of this risk is difficult.

The Group manufactures and sells products that are related to human life, such as amusement machinery for amusement parks, stage equipment for theaters and halls, and elevators. If unexpected product defects or accidents occur, this may have a material impact on business performance and financial condition. Although the Group thoroughly ensures product safety, it inherently carries product liability risk and the risk of a decline in social credibility.

In the amusement machinery field, the Group has major consolidated subsidiaries in North America and the Netherlands, and its major customers are located around the world. As a result, the Group is exposed to various risks, including changes in regulations and tax systems specific to each overseas country, changes in economic conditions, and political and social risks. The materialization of these risks may affect business performance and financial condition, and there are concerns that the scope of impact could expand due to heightened geopolitical risk.

The Group holds tangible fixed assets used in business operations and intangible fixed assets such as goodwill arising from corporate acquisitions. If an unexpected and rapid change occurs in the business or market environment, impairment accounting treatment may become necessary, which may affect business performance and financial condition. In particular, goodwill recorded through M&A carries the risk of being recognized as a lump-sum loss if the profitability of the acquired business deteriorates.

The Group is subject to a wide range of laws and public regulations both in Japan and overseas, including those related to the environment, labor, occupational health and safety, trade, intellectual property, antitrust law, the Construction Business Act, and the Building Standards Act. If the Group's response to amendments or repeals of these laws and regulations, or to new legislation, is insufficient, it may be subject to fines or administrative sanctions, which may affect business performance and financial condition.

Due to the Group's global production and sales operations, the performance of overseas subsidiaries is affected by foreign exchange fluctuations in the consolidated financial results. In addition, foreign exchange fluctuations affect purchase and sales amounts in foreign-currency-denominated purchasing, sales, and service transactions. Although hedging measures such as forward exchange contracts are employed, a sudden change in exchange rates may affect business performance and financial condition.

The Group raises funds through borrowings from financial institutions, and if interest rate levels rise, the burden of interest payments will increase, which may affect operating results. Although the Group strives to minimize the interest burden with due consideration to economic rationality, complete avoidance is difficult during periods of rising market interest rates.

The Group holds investment securities for purposes such as maintaining and strengthening business relationships. If a significant decline in the overall stock market continues, impairment losses may occur, affecting business performance and leading to a decline in the equity ratio. The Group periodically examines and reviews the benefits and risks of the securities held and their contribution to enhancing corporate value.

The Group holds customer information, business partner information, and other important information. If a failure occurs in information systems due to cyberattacks, unauthorized access, or similar incidents, or if confidential information or personal information is leaked, the Group's business performance and financial condition may be affected due to a decline in social credibility, among other factors. Although the Group is working on implementing security measures, thorough employee education, and establishing an information management system, the increasing sophistication of cyber threats requires continuous response.

As a publicly listed company on the Standard Market of the Tokyo Stock Exchange, the Company is constantly exposed to the risk that a large number of its shares may be acquired for some purpose. If a hostile takeover or similar action were to occur, it could affect management stability and corporate value.