MORITA HOLDINGS CORPORATION

Since the main customers are government agencies and general corporations, changes in national policy and economic conditions directly affect business performance. In overseas operations, country risk and foreign exchange fluctuation risk exist, and if unpredictable events such as political or legal changes, wars, or terrorism occur, they may affect operating results and financial condition. This is positioned as a particularly important risk.

Although manufacturing is conducted based on statutory safety standards and proprietary specifications, it is not guaranteed that defects can be eliminated from all products or that recalls can be completely prevented. If a large-scale recall or product liability claim occurs, it may have a material impact on operating results and financial condition, and this is classified as a particularly important risk.

The Company has established the "Morita Group Compliance Basic Policy" and works on legal compliance, information disclosure, respect for human rights, and severing relationships with antisocial forces, but compliance risks cannot be completely avoided. If a situation arises that violates laws and regulations, it may affect operating results and financial condition, and this is positioned as a particularly important risk.

Since raw materials and parts are procured from numerous suppliers, if delivery delays or price surges occur due to problems with a supplier's management condition or production capacity, procurement of key materials may become difficult. If procurement disruptions occur, they may affect operating results and financial condition through the disruption of manufacturing activities.

The Company continuously engages in research and development of new technologies and new products, but if innovative technologies and products cannot be developed and provided in a timely manner, sustainable growth and profitability may be undermined due to a decline in competitiveness. Delays in responding to customer needs could lead to a loss of market share, which may affect operating results and financial condition.

The Company strives to secure diverse and excellent human resources for sustainable growth, but if the acquisition, development, and placement of human resources do not proceed as planned, business activities may stagnate. A shortage of human resources may affect functions such as product development, manufacturing, and sales, which may affect operating results and financial condition.

The Company holds tangible and intangible fixed assets such as business facilities, real estate, and goodwill acquired through corporate acquisitions, and verifies recoverability through future cash flows by applying impairment accounting. If the expected amount of future cash flows decreases due to future changes in the environment, an impairment loss may occur, which may affect operating results and financial condition.

If natural disasters such as earthquakes and typhoons, accidental disasters such as fires and power outages, or the spread of infectious diseases occur, damage to the Group's facilities or a slowdown in economic activity in Japan and overseas may result. Such unpredictable events directly affect business continuity and may affect operating results and financial condition.

The Company holds confidential business and technical information as well as personal information, and while it has implemented information security enhancement measures such as strengthening management systems and employee training, it cannot completely eliminate the possibility of system failures or leakage of confidential information due to cyberattacks, unauthorized access, or computer virus intrusion. If such events occur, they may affect operating results and financial condition through loss of trust and legal liability.

Retirement benefit expenses and obligations are calculated based on actuarial assumptions such as the discount rate and the expected rate of return on pension assets, and if actual results diverge from these assumptions, the impact will be recognized systematically over future periods. As a mitigation measure, the Company and its major domestic consolidated subsidiaries have implemented a policy to transition part of their defined benefit corporate pension plans to defined contribution corporate pension plans.