IKEGAMI TSUSHINKI CO., LTD.

The Company supplies products to regions including the United States, Europe, Asia, the Middle East, and Russia. Should the prolonged situation in Ukraine or turmoil in the Middle East region cause resource price increases and inflation that adversely affect the global economy, this could adversely affect sales activities and the Group's operating results and financial condition. As countermeasures, the Group is strengthening collaboration with its local subsidiaries in the United States, Germany, and Singapore, closely monitoring conditions in each region, and reinforcing its supply chain.

Should exchange rates fluctuate due to changes in the international situation, this could adversely affect the operating results and financial condition of the Group, which conducts overseas operations. To minimize this risk, the Group utilizes hedging tools such as forward exchange contracts.

Should unforeseen events occur, such as damage to production facilities from large-scale earthquakes, typhoons, or other natural disasters, accidents at factories, or accidents during product transportation or storage at external warehouses, this could disrupt factory operations and supply to customers, adversely affecting operating results and financial condition. As countermeasures, the Group promotes environmentally conscious production activities through ISO14001 certification and has established earthquake disaster manuals.

Although the Group pays close attention to quality and safety from the design stage through manufacturing and inspection, it is not possible to eliminate all product quality risks, and product liability (PL) issues or claims for damages due to product defects may arise. As countermeasures, the Group conducts design reviews from the design stage, thoroughly performs quality and performance evaluation testing prior to commercialization, and conducts pre-shipment testing through its quality control department.

While the Group is advancing the development of new products and new technologies for domestic and overseas markets, intensifying competition with rival companies in each business could cause a relative decline in product competitiveness, adversely affecting operating results and financial condition. As countermeasures, the Group is focusing on acquiring and utilizing next-generation technologies, and thoroughly incorporates the formulation and execution of market marketing strategies into feedback for product development.

As the Group conducts business both domestically and internationally, it is subject to legal regulations in each country. Violations of laws and regulations or actions contrary to societal expectations could result in legal penalties, litigation, or social sanctions, as well as loss of customer trust. As countermeasures, the Group has established a Risk Compliance (RC) Committee that oversees compliance across the organization, and promotes employee awareness of legal compliance through risk management and compliance training.

Commitment line agreements with three partner banks include financial covenants concerning decreases in net assets and the recording of ordinary losses. Should the Group violate these covenants, it may be required to repay borrowings at the lenders' request, potentially affecting its financial condition. The Group has entered into these agreements to ensure flexibility and stability in meeting funding needs and to improve capital efficiency; however, it should be noted that the risk of violation increases during periods of deteriorating business performance.