TWINBIRD CORPORATION

Timely procurement of products and components from manufacturing partners is essential to the Group's maintenance of competitiveness, and rising procurement prices due to increased labor costs, etc. at manufacturing partners could adversely affect business performance and financial condition. As countermeasures, the Group promotes strengthening partnerships with excellent manufacturing partners and reducing costs through parts commonization via VA/VE activities, while also considering reflecting significant price surges in selling prices according to market conditions.

The Company imports products and components from overseas manufacturing partners settled in currencies other than Japanese yen, and sharp fluctuations in exchange rates could adversely affect business performance and financial condition. As countermeasures, the Company implements hedging through forward exchange contracts, and is promoting the development of a business structure less susceptible to exchange rate fluctuations by expanding overseas sales and aiming to raise the domestic manufacturing ratio to 50%.

The Group is focusing on new product development, but it cannot always accurately predict which products and technologies will gain market support, and if sales prove sluggish, future growth and profitability may decline, adversely affecting business performance and financial condition. As a countermeasure, the Group carefully assesses the validity of appeal points and market positioning at the new product planning stage, aiming to develop both high-value-added products and products with competitive pricing.

If further declines in selling prices continue due to intense price competition at major sales channels such as home appliance retailers and EC sites, this could adversely affect business performance and financial condition. As countermeasures, the Group is promoting the provision of high-value-added products and services targeting specific user segments, and strengthening customer touchpoints to convey "essential value."

If a serious defect occurs in the Group's products or services, this could result in liability for damages and substantial remediation costs, as well as a decline in credibility and brand image, adversely affecting business performance and financial condition. As countermeasures, the Group has established a rigorous quality assurance system through ISO9001 certification and the development of quality manuals, and transfers risk through product liability insurance.

If a claim that the Group's products infringe upon a third party's intellectual property rights is upheld, the Group may become unable to use important technologies or be held liable for substantial damages, and there is also a risk that the Group cannot completely prevent third parties from manufacturing and selling similar products. As countermeasures, the Group works to secure rights such as patents, designs, and trademarks, and thoroughly implements a system to confirm in advance the risk of infringing third-party intellectual property rights prior to bringing products to market.

The Group handles personal information and confidential information of customers and business partners, as well as its own proprietary technical information, and if unforeseen circumstances result in data falsification, destruction, leakage, or system outages, this could lead to a decline in credibility and brand image and adversely affect business performance and financial condition. As a countermeasure, the Group has established a multi-layered information management system combining technical measures (such as unauthorized access prevention), organizational measures through the Information Security Committee and CSIRT, and human measures such as confidentiality agreements and training for employees.

The Group procures products from overseas manufacturing partners and conducts sales activities in overseas markets through sales agents, and sudden policy changes, economic fluctuations, international conflicts, etc. in each country could adversely affect business performance and financial condition. As a countermeasure, the Group is promoting a reduction in its dependence on overseas procurement by aiming to raise the domestic manufacturing ratio to 50% through the utilization of manufacturing resources in the Tsubame-Sanjo region of Niigata Prefecture.

If natural disasters such as earthquakes, floods, typhoons, or infectious diseases occur in regions where the Group conducts business activities domestically and overseas, production, sales, logistics, and services of the Group and its business partners could be suspended, disrupting the supply chain and adversely affecting business performance and financial condition. As countermeasures, the Group continuously implements BCP documentation, the development of crisis response manuals, and risk transfer through insurance, aiming to reduce the impact on business activities.