NIHON TRIM CO.,LTD.

The Electrolyzed Hydrogen Water Alkaline Ionizer accounts for 38.7% of consolidated net sales, and the Water Purification Cartridge accounts for 24.2%, resulting in a high degree of dependence on alkaline ionizer-related businesses. If business operations are disrupted, the impact on performance would be significant. The Company is working to mitigate this risk through growth in the Bottled Water business and the Medical-Related Business.

Face-to-face explanatory sales—including workplace sales, installation referral sales, in-store event sales, and sales during maintenance visits—account for 78.4% of alkaline ionizer sales. Should a situation arise, such as during the COVID-19 pandemic, where opportunities for face-to-face contact are restricted, sales opportunities would decrease, affecting business performance. The Company is also focusing on building non-face-to-face channels such as remote sales and web marketing.

Since raw materials and components are procured from numerous suppliers both in Japan and overseas, it may become difficult to secure necessary materials due to natural disasters, market condition changes, or suppliers' procurement circumstances. The Company is working to secure multiple suppliers for the same components and to establish a domestic procurement system, and also recognizes the risk that delays in responding to SDGs may affect business performance.

If a defect is discovered in the Electrolyzed Hydrogen Water Alkaline Ionizer, product liability claims or a large-scale recall could occur, potentially affecting business performance. Products are manufactured at the Company's own factory, which has obtained ISO13485 and ISO9001 certification in accordance with the QMS Ministerial Ordinance, and all products are covered by product liability insurance. At the bottling plant in Indonesia as well, facility management and employee training are conducted with the aim of achieving quality control standards equivalent to those in Japan.

In the Cell Bank Service business, disruptions to the maintenance of cell quality may occur due to suspension of reagent supply, shortages of liquid nitrogen supply, or equipment malfunctions. Stem Cell Institute Inc. undergoes inspections by third-party certification bodies for AABB and ISO9001, and strives to maintain and improve quality and equipment operations.

If violations of related laws and regulations by other businesses are reported in the mass media or on social media, the Company Group may also suffer reputational damage, potentially affecting its business and performance. The Company actively participates in industry association initiatives to strengthen compliance, striving to maintain a sound market environment.

The alkaline ionizer business requires medical device manufacturing and marketing certification and a marketing business notification under the Pharmaceuticals and Medical Devices Act, while the Cell Bank Service business requires a specific cell processing product manufacturing license under the Act on the Safety of Regenerative Medicine. Amendments to or strengthening of related laws and regulations, new legislation, or violations could result in penalties, litigation, or social sanctions under the law, potentially affecting business performance. The Company has established an information-gathering framework utilizing industry association networks.

Amid the growing threat of cyberattacks, if a malfunction of internal information systems or a cyberattack results in the leakage or unauthorized use of personal information, this could lower social trust and lead to compensation payments, affecting business performance. The Company continuously implements information security measures, centralized management of IT assets, continuous monitoring of devices, collaboration with external specialist organizations, and employee training.

In the event of a large-scale natural disaster or an unforeseen accident such as a fire, damage to production facilities, business interruption, and recovery costs could occur, affecting business performance. The spread of new infectious diseases poses a similar risk. As part of its BCP, the Company has begun outsourcing production of some products to diversify risk across production sites.