TOBA,INC.

The Group's customers are in industries such as digital equipment, semiconductors, automobiles/automotive parts, medical equipment, and precision equipment, and the Group supplies machinery and tools for capital investment to these industries. If capital investment in these industries sharply declines due to changes in economic conditions, this could have a significant impact on the Group's financial position, business results, and cash flows. As a countermeasure, the Group is implementing various cost reduction measures and working to strengthen its earnings base.

The Group extends credit to customers and bears credit risk. If a customer's business condition deteriorates due to unforeseen circumstances, receivables held by the Group may become uncollectible, which could have a significant impact on the Group's financial position, business results, and cash flows. The Group strives to avoid credit risk by utilizing in-house know-how and external information from the start of transactions.

The Group conducts business activities overseas, and if political upheaval, social unrest, or unexpected changes in political and economic systems occur in the countries concerned, business activities themselves could become impossible. Such events could have a significant impact on the Group's financial position, business results, and cash flows. The Group strives to minimize risk by strengthening cooperation with suppliers and reinforcing its sales management structure through the dispersed establishment of local subsidiaries at major overseas locations.

As a specialized trading company selling machinery, tools, and equipment for the manufacturing industry, the Group's business performance could be affected by environmental pollution arising from business activities or by the enforcement of new regulations regarding greenhouse gas emission reductions. The Group has obtained ISO14001 certification and undergoes regular oversight by external organizations, and as part of its response to the TCFD, it monitors and works to reduce greenhouse gas emissions.

The Group holds a large volume of information assets in the course of its business, and if information is leaked due to unforeseen circumstances, the Group could be held liable for damages. The Group has systematically developed and operates information management regulations, and has implemented security measures across all systems to prevent information leakage.

If legal regulations concerning the Group's main products, such as Control Equipment, FA Equipment, and Industrial Equipment, are revised, abolished, or newly enacted in the future, this could affect the Group's business development. The Group strives to minimize risk by accurately gathering necessary information through participation in various industry associations.

The pace of technological innovation in industry is remarkably fast, and products handled in the machine tool industry are becoming increasingly precise and diverse, making the securing and development of personnel with specialized knowledge an important issue. If the Group falls behind in securing and developing human resources, it may lose ground to competitors, which could affect business results. The Group is addressing this issue based on its "Human Resource Development Policy" and "Internal Environment Improvement Policy."

The Group uses numerous assets at its head office and branch offices nationwide, including real estate such as land and buildings, movable property such as furniture and fixtures, and leased assets. If a natural disaster such as an earthquake or flood, or an unforeseen accident such as an epidemic, occurs, this could result not only in property damage but also in difficulty conducting normal business operations and sales activities. To prevent an impact on its financial position, business results, and cash flows, the Group carries out necessary maintenance and management of each asset.