AS ONE CORPORATION

The Company's core business is e-commerce for consumables in the research and development, industrial, and medical fields. If changes occur in product orientation or purchasing methods, the competitive advantage of the e-commerce tools could be lost, potentially having a material impact on business activities. To respond to the trend of "from ownership to usage," the Company is expanding its rental equipment business, and a new Rental & Calibration Center (with floor space 3.3 times that of the existing facility) is under construction, scheduled to begin operations at the end of 2026. The Company is also continuously working to improve usability through functional enhancements to its e-commerce tools and renewal of its search engine.

The Company procures products from 33 countries worldwide, and there is a risk that procurement activities could be disrupted in the event of armed conflict or trade friction. In fact, the closure of the Strait of Hormuz following the US-Iran military conflict at the end of February 2026 has caused global instability in the procurement of plastic and synthetic rubber products. By region, China accounts for the largest procurement amount (¥3.0 billion), followed by Southeast Asia (¥2.2 billion). The Company responds by diversifying procurement regions and securing multiple suppliers.

There is a large volume of labor-intensive work, such as order processing with suppliers and dealers and product information registration, and if the Company fails to respond to DX, it could develop a high-cost structure and lose competitive advantage. DX technology is advancing rapidly, making continuous response essential. The Company secures an annual IT investment budget of approximately ¥700 million and continuously strengthens its DX infrastructure and develops business applications.

If the Company's business systems become infected with viruses or malware, part or all of business activities may be forced to halt. If confidential information, including personal data, or the product database were to be leaked, this could result in compensation costs and a decline in competitiveness. The Company has implemented security measures based on a zero-trust approach using multiple vendors, and is also advancing company-wide BCP planning.

80% of consolidated net sales are shipped from five distribution centers nationwide. If operations are suspended due to material handling equipment failure or staff shortages, part or all of business activities may be forced to halt. The Company has established a system for rapid recovery through regular maintenance and parts replacement of material handling equipment, as well as service contracts with manufacturers. In the event of a prolonged suspension, the Company has prepared measures to switch to transshipment from other centers or direct delivery from suppliers.

Sales of directly imported products, including self-planned private-brand products and self-imported goods, amount to ¥17.4 billion. When the yen depreciates, the yen-denominated procurement cost rises, reducing profitability. It is estimated that a ¥1 depreciation in the yen against the dollar reduces gross profit by approximately ¥40 million. In principle, the Company passes on the impact of exchange rate fluctuations to sales prices, and considers hedging measures such as forward exchange contracts as appropriate in the event of sharp fluctuations.

Within the human resource base that has supported 16 consecutive years of revenue growth, competition for talent acquisition is intensifying across the industry ahead of the retirement of the second baby-boomer generation, and human resource attrition or recruitment difficulties could affect competitiveness. The Company is promoting HR system reforms, including diverse recruitment, talent development programs, flexible work arrangements, and incentive system design. It is also working to maintain the motivation of individual employees through quarterly engagement surveys.

In addition to large-scale investments in distribution centers and IT systems, the Company actively pursues investments to acquire external resources, such as M&A and equity investments. If such investments fail to achieve their intended results, this could lead to impairment losses or valuation losses, or become a bottleneck to business growth. Important investment proposals are pre-screened by an investment committee composed of the CEO, CIO, and CFO, which comprehensively evaluates profitability and qualitative significance, with final decisions made by the Board of Directors.

Multiple systems, centered on the core system, are intricately interconnected, and if a failure occurs in a particular system, the impact could spread widely, potentially halting part or all of business activities. The Company maintains performance through regular maintenance and has established a system for early recovery in the event of malfunctions by securing backups.

The Company is subject to a wide range of laws and regulations, including the Pharmaceuticals and Medical Devices Act, the Construction Business Act, the Product Liability Act, the Act on the Control of Poisonous and Deleterious Substances, and the Act on Promotion of Subcontracting Small and Medium Enterprises. Violations could result in penalties such as fines or suspension of business dealings by trading partners. The Legal Department and business divisions gather information on regulatory trends and disseminate it internally, maintaining a compliance system through regular exchanges of information with the Company's advisory law firm.