TOKYO AUTOMATIC MACHINERY WORKS, LTD.

The major customers of the Packaging Machinery business belong to the confectionery and food industries, where changes in tourism demand and economic conditions directly affect customers' willingness to invest in capital expenditure. If customers' capital expenditure is curtailed, orders and sales in the Packaging Machinery business may decline, potentially adversely affecting the Company's overall business performance and financial condition. The annual securities report does not disclose specific countermeasures.

In the Production Machinery business, sales dependence on Johnson & Johnson Vision Inc. is high; in FY2024 (ended March 2024), the company accounted for ¥8,261 million (61.4%) of net sales of ¥13,458 million. In FY2026 (ending March 2026), sales to the company declined significantly to ¥2,375 million (24.5%) of net sales of ¥9,692 million, and changes in the company's capital expenditure trends could have an extremely large impact on the Production Machinery business and overall company performance. The annual securities report does not disclose specific diversification measures.

Concerns about a global economic slowdown stemming from U.S. trade policy may affect the capital expenditure plans of overseas customers, including the major customer Johnson & Johnson Vision Inc. Should capital expenditure be curtailed or postponed, this could lead to a decline in orders in the Production Machinery business, adversely affecting overall company performance and financial condition. The annual securities report does not disclose specific hedging measures.

Since Packaging Machinery recognizes revenue on an acceptance basis and Production Machinery recognizes revenue on a percentage-of-completion basis and an acceptance basis, sales may be recognized at a timing different from initial plans due to circumstances of the Company or its customers. In particular, for large-scale projects, this could significantly affect period profit/loss at quarter-end or year-end, reducing the predictability of business performance. The annual securities report does not disclose specific countermeasures.

The Company's main production base is concentrated in Kashiwa City, Chiba Prefecture, and its head office (sales and administrative functions) is concentrated in Chiyoda-ku, Tokyo. Should a large-scale natural disaster occur in these areas, there is a risk of serious disruption to production and sales activities. Because of the geographic concentration of production facilities, securing alternative production arrangements may be difficult, which could seriously affect business performance and financial condition. The annual securities report does not disclose specific BCP measures.