DAYTONA CORPORATION

The Group's products are centered on leisure and touring use by motorcycle riders from early spring to early winter, and there is a risk that sales will decline due to rainfall or abnormal weather during the peak season. Because the business model is highly seasonal, deteriorating weather during specific periods tends to directly impact overall performance, potentially adversely affecting business results and financial condition. No effective countermeasures have been disclosed by the company.

Foreign currency-denominated transactions in the Domestic Wholesale Business and Asia Wholesale Business are exposed to foreign exchange rate fluctuation risk. Although hedges such as forward exchange contracts are used as needed for major transactions, complete avoidance is not possible, and sharp exchange rate fluctuations could significantly affect business results. In particular, there is a risk that rising import procurement costs could squeeze profitability.

The Group holds fixed assets, and if land prices decline or the profitability of businesses utilizing such assets deteriorates, losses may need to be recognized under impairment accounting. This could adversely affect business results and financial condition. There is no specific disclosure in the securities report regarding the current status of impairment occurrences or the scale of the assets involved.

The Group holds a large amount of personal information through internet sales of motorcycle parts and accessories, and if an information leak occurs, business results could be affected by loss of social trust and significant expenses associated with incident response. While the Group complies with the Act on the Protection of Personal Information and strives to enforce strict management, this does not guarantee complete prevention. As the EC business expands and the volume of personal information held increases, the potential risk also grows.

Although COVID-19 was reclassified as a Category V infectious disease in May 2023 and behavioral restrictions were lifted, if various infectious diseases spread among shipping and receiving personnel in the future, there is a risk that delays in product shipment operations could lead to lost sales opportunities continuing for a certain period. In addition, an outbreak of infectious disease overseas could halt factory operations in supplier countries, cause raw material supply shortages, or create shipping container shortages, leading to delivery delays and rising transport costs that could affect business results and financial condition. Infection prevention regulations have currently been lifted, calling into question the effectiveness of the response system in the event of an emergency.

Inventory is evaluated quarterly based on sales conditions, inventory turnover period, and other factors, but if product demand fluctuates significantly due to sudden market changes beyond management's control, inventory stagnation may occur. If the valuation policy for excess inventory diverges from actual conditions, inventory valuation may decline, increasing merchandise valuation losses and reducing profit. The highly seasonal and trend-driven nature of motorcycle accessories is a factor that heightens this risk.

Goodwill of ¥650 million related to shares of an affiliated company acquired in October 2017 is being amortized over 10 years, and the balance after 8 years stands at ¥130 million. If the subsidiary's business performance falls below the business plan formulated at the time of acquisition, there is a risk that the goodwill balance will be subject to impairment treatment. Although the balance is limited at ¥130 million, the subsidiary's business performance trends remain a factor that warrants continued attention.

The logistics bases, such as offices and warehouses, for the Domestic Wholesale Business are concentrated in Shizuoka Prefecture and Aichi Prefecture, and if damage exceeding BCP assumptions occurs due to natural disasters such as earthquakes or wind and flood damage, business results and financial condition could be adversely affected. The geographic concentration of logistics bases carries the risk of limited alternative options in the event of a large-scale disaster. While it is disclosed that a BCP has been formulated, details such as specific alternative sites or recovery time objectives are not disclosed.