NANSIN CO., LTD.

The Group operates globally in Japan, Malaysia, and China, and there is a risk that deterioration in political and economic conditions, import/export or foreign investment regulations, economic sanctions between nations, or social disruption caused by terrorism, war, or infectious diseases could impede business activities. If such events materialize, they could lead to suspension of operations at overseas sites or loss of sales opportunities, potentially affecting operating results and financial condition.

The Group is affected by economic trends and demand fluctuations in each of the Japan, Malaysia, and China markets, and there is a possibility of economic slowdown, changes in demand structure, and intensifying price competition. Deterioration of these market conditions could reduce sales and profitability, potentially affecting operating results and financial condition.

In the pursuit of high-quality, competitively priced procurement, concentration on specific suppliers may occur, and materials and parts requiring special technology or performance are available from only a limited number of suppliers. If supply from suppliers is halted due to emergencies such as natural disasters, fires, terrorism, or infectious diseases, there is a risk of production stoppages or increased costs. The Group strives to minimize such impacts by strengthening cooperation with suppliers, but in the event of a supply-demand tightness or prolonged disruption beyond expectations, this could affect operating results and financial condition.

If a large-scale recall or corrective action occurs due to a product defect or malfunction, substantial costs will be incurred, and there is a risk of decline in product evaluation and corporate image and reduced sales. The Group is fully committed to ensuring optimal quality according to product characteristics, but the occurrence of quality issues cannot be completely eliminated.

In connection with business activities in Japan and overseas, the Group may become subject to litigation or other legal proceedings, and an unfavorable ruling could result in damages or business restrictions. Depending on the outcome of legal proceedings, this could have a material impact on operating results and financial condition.

While the Group strives to acquire intellectual property to differentiate its products from those of other companies and works to prevent infringement of third-party intellectual property rights, it cannot completely eliminate the risk of being sued by third parties or of infringing third-party intellectual property rights. If a dispute concerning intellectual property rights arises, it could affect operating results and financial condition through litigation costs, damages, or suspension of product sales.

As the importance of networks and systems in business activities increases, the Group implements safety management measures for hardware and software and conducts information security education for employees; however, there is a risk that cyberattacks, unauthorized access, disasters, or other events could result in leaks of confidential or personal information or the suspension of critical operations. If such events occur, they could affect operating results and financial condition through loss of trust, legal liability, or business suspension.

There is a risk that material prices could surge due to sudden changes in supply-demand conditions, natural disasters, or political changes in producing countries, leading to increased manufacturing costs. If manufacturing costs rise due to demand or market fluctuations beyond expectations and price pass-through is difficult, profitability could deteriorate, potentially affecting operating results and financial condition.

Due to global business operations spanning Japan, Malaysia, and China, the Group holds transactions, assets, and liabilities denominated in multiple currencies, and significant exchange rate fluctuations could affect operating results and financial condition. In particular, sharp fluctuations in yen appreciation or depreciation directly affect import/export transactions and the translation of overseas subsidiaries' results.

The Group has development, manufacturing, and sales bases in Japan, Malaysia, and China, and there is a risk that facility damage or operational disruption could occur due to natural disasters such as large-scale earthquakes, typhoons, heavy rain, or floods, accidents such as fires, or the outbreak of infectious diseases. If a disaster, accident, or infectious disease of a scale beyond expectations occurs, it could have a material impact on operating results and financial condition through delays or stoppages in parts procurement, product manufacturing, sales, and logistics.