MAX CO.,LTD.

A decline in the number of new housing starts in Japan negatively affects the Industrial Equipment segment (nailers, pneumatic tools, home environment equipment), while global paperless trends and the decline in Japan's working-age population negatively affect the Office Equipment segment (staplers, staples, etc.). A medium- to long-term decline in demand is anticipated due to the declining birthrate and aging population, and if this progresses faster than expected, the impact on business performance could be significant. In response, the Company is enhancing its lineup of tools for concrete structures, focusing on replacement demand, focusing on the character display business, and promoting operational efficiency.

The Group has overseas sales (mainly denominated in US dollars and euros) and overseas procurement (denominated in US dollars, Chinese yuan, and Thai baht), and sharp fluctuations in exchange rates affect net sales, cost of sales, non-operating income/loss, and net assets. Based on the plan figures for FY2027 (ending March 2027), the foreign exchange sensitivity is ¥240 million for the US dollar and ¥110 million for the euro in terms of sales, and ¥90 million for the US dollar and ¥110 million for the euro in terms of operating income (annualized). The Group seeks to mitigate fluctuation risk through foreign exchange netting (marrying).

The Group manages surplus funds mainly through yen-denominated corporate bonds and municipal bonds (fixed interest rates), and there is a risk that net assets will decrease due to a decline in bond prices when interest rates rise. In addition, retirement benefit expenses and liabilities are calculated based on assumptions such as the discount rate, so interest rate fluctuations may affect business results and financial position. In response, the Company in principle limits the maturity of purchased bonds to within five years, and reviews its personnel system as appropriate with respect to retirement benefits.

The Group conducts much of its procurement, production, and sales overseas, and changes in economic security policies, trade friction, and trade policies in various countries, as well as deterioration in relations between nations due to terrorism, war, and other factors, could disrupt overseas business activities. Political and diplomatic issues as well as unexpected changes in legal systems and regulations could also affect business results and future plans. The Group closely monitors political and economic conditions, reflects them in management strategy and earnings forecasts, and works to strengthen its BCP framework.

The Company's domestic manufacturing and development sites are concentrated in Gunma Prefecture, and if a natural disaster such as an earthquake or wind/flood damage, or a workplace accident or infectious disease outbreak occurs on a scale exceeding expectations, asset damage or difficulty in maintaining operations could adversely affect the business. The Company addresses this risk through seismic reinforcement work, ISO 22301 (BCMS) certification (obtained in March 2016), and the establishment of multi-site manufacturing systems for key products. It is also working to minimize the impact of activity restrictions due to infectious diseases and other factors through workstyle transformation.

If a failure occurs in the information infrastructure due to a cyberattack or other cause, it could disrupt operations or the products and services sold, and leaks of confidential information or personal information could damage brand image and lead to customer attrition, adversely affecting business results and financial position. The Company addresses this through the implementation of an ISMS risk response plan based on ISO/IEC 27001 certification (obtained in April 2004), the formulation of a basic information security policy, and the development of a BCP. In April 2026, the Company established M-PSIRT (a dedicated team for responding to product security incidents) to strengthen its product security response.

Sales of tools for concrete structures accounted for ¥42.7 billion (approximately 40% of consolidated net sales) in FY2026 (ending March 2026), with rebar tying machines and similar products driving growth. If the Company loses its technological advantage, if a binding method emerges to replace wire tying, or if there is a rapid shift toward construction methods that do not use rebar, demand for rebar tying machines and similar products could decline, adversely affecting business results and future plans. The Company continues to monitor market trends and invest in strengthening cost competitiveness and securing a sustainable technological advantage.

The Company uses ordinary steel wire rod as a raw material for consumables such as staples, nails, screws, and rebar tying machine wire, and prices may fluctuate due to shortages of raw materials such as iron ore, coal, and oil, or due to demand trends in other countries. A sharp rise in raw material prices could adversely affect business results, and defects or shortages of parts could also adversely affect the reliability and reputation of products. The Company addresses this through continuous cost reduction efforts, sales price revisions, and supplier evaluation and auditing.

Due to the declining birthrate and aging population, the domestic working population is decreasing, intensifying competition to secure talented personnel. If recruitment and retention lag, operations may become overly dependent on specific individuals, undermining long-term operational efficiency and sustainable growth. The Company works to strengthen organizational capability by understanding employee motivation through engagement surveys, focusing recruitment activities on the development of new graduate hires, hiring experienced personnel including highly specialized talent, and giving consideration to age-based workforce composition.

As the Company conducts business activities in many countries and regions, rapid establishment or revision of laws and regulations due to changes in social conditions could impose new cost burdens, and violations of laws and regulations due to governance failures or inadequate internal controls could result in a loss of trust, damage to brand image, and customer attrition. The Company works to reduce the risk of violations by collecting information on regulatory changes and considering responses, to raise compliance awareness through employee compliance training, and through the monthly publication of a