Meiko Electronics Co., Ltd.

The Company's major customers are set makers in the automotive, smartphone, information & communications, and industrial equipment sectors, and if conditions in customer industries deteriorate due to economic trends, natural disasters, or other factors, this may affect business performance and financial condition. The Company is strengthening the semiconductor package board and Electronic Equipment Business (Contract Development) as new pillars to diversify impact, but recognizes that in the event of sudden market changes, impact will arise depending on the timing and scale of the risk materializing.

An unforeseen surge in the prices of materials such as crude oil, copper, and gold may affect raw material procurement costs, and if this is not reflected in price negotiations with business partners or if procurement of raw materials is disrupted, this may affect business performance and financial condition. The Company strives to reduce risk through commodity derivatives and other means, but such measures alone cannot mitigate or eliminate the risk entirely, and it is recognized that some degree of impact is unavoidable should this risk materialize.

While demand for electronic circuit boards is expected to expand due to increasing electronic content in vehicles, EV adoption, and IoT proliferation, global competition is intensifying due to low-price offensives from China, Southeast Asia, and other regions, making technological differentiation essential. The Company is advancing development of core technologies such as fine-line wiring, heat dissipation, and micro-hole drilling, but if new technologies diverge from market needs or if yield rates deteriorate, this may affect business performance and financial condition, and this is recognized as a risk inherent in business operations that may materialize on an ongoing basis.

The Company is making aggressive capital investments to optimize production capacity in line with demand trends, but if capital investment becomes excessive due to economic downturn or if there are changes in set makers' strategies or delays in the start-up of new equipment, this may result in increased depreciation expense burden or impairment losses, affecting business performance and financial condition. The Company judges that the probability of impairment risk materializing due to individual capital investments is not high, but external factors such as sudden changes in industry market conditions, natural disasters, and infectious diseases cannot be mitigated or eliminated solely through the Group's risk management.

The Company is making aggressive capital investments to respond to increasing demand for automotive boards, boards for smartphones, and other products, as well as to address technological innovation, and the proportion of borrowings to total assets reached 36.2% as of the end of FY2026 (ending March 2026). The Company recognizes that if changes in the financial environment or circumstances at partner banks make new borrowing or refinancing difficult in the future, or if interest rates rise, this may affect fundraising as well as business performance and financial condition.

The Company needs to hold foreign currency-denominated assets such as US dollars for factory operations in China and Vietnam, and is affected by fluctuations in the US dollar, Chinese yuan, Japanese yen, and other currencies. The Company strives to reduce a certain degree of risk through currency matching and foreign exchange hedging, but recognizes that if unforeseen exchange rate fluctuations occur, this may affect business performance and financial condition, and that this is not a risk that can be mitigated or eliminated solely by the Group itself.

The Company has established local subsidiaries in China and Vietnam to conduct production and sales activities, but may face difficulties such as public health issues including infectious diseases, changes in environmental regulations, laws, or tax systems, infrastructure failures, political instability, anti-Japanese demonstrations, labor disputes, asset expropriation, war or conflict, and remittance restrictions. The Company recognizes that if such unforeseen events occur, this may cause problems in the management of production facilities and business execution, and may also result in substantial liabilities or obligations arising from compliance with regulations such as environmental protection, affecting business performance and financial condition.

The Company holds confidential information related to customer information, technology, sales, personal data, and overall management, and faces risks of unauthorized access, tampering, and leakage arising from cyberattacks or human error. The Company has introduced MDR (24-hour, 365-day monitoring and early incident response) by an external specialist provider and strives to enhance its security measures, but recognizes that if leakage or loss of information occurs, this may affect business performance and financial condition, although the probability of such risk materializing is considered low.

The Company implements capital alliances and joint ventures with other companies that possess the technology, products, sales networks, customer bases, and human resources necessary for business growth, but if there are significant changes in the market environment or competitive landscape, businesses may not develop as planned, the initially anticipated effects may not be achieved, and additional costs or impairment losses may arise. The Company recognizes that such risks cannot be mitigated or eliminated solely through the Group's own management measures, and that some degree of impact is unavoidable should this risk materialize.

Competition for talent acquisition is intensifying due to the progression of the declining birthrate and aging population, increased labor mobility, and diversification of work styles and values, making the acquisition, retention, and development of excellent human resources an essential element of sustainable growth. The Company is implementing measures such as continuing base pay increases exceeding the price level, a stock-based compensation plan, a scholarship repayment support program, and provision of childcare facilities, but recognizes that if talent acquisition or prevention of attrition of existing personnel does not progress, this may affect business performance and financial condition.