TIEMCO LTD.

The Company's main business is the sale of products for general consumers, and diversification and changes in consumer preferences, intensifying competition with other companies, and deterioration in economic conditions may affect business performance. Although the Company places emphasis on originality in product development, if it is unable to respond to rapid changes in preferences or the emergence of competitors, there is a risk that this could lead to a decline in sales and profits.

Many of the Company's products are outdoor-related items used in the natural environment and are highly seasonal, so abnormal weather such as a cool summer or warm winter directly affects demand. In addition, if natural disasters such as earthquakes, floods, or droughts occur, outdoor activities themselves may be restricted, potentially leading to lost sales opportunities. Since these external environmental factors are beyond the Company's control, they constitute a factor causing fluctuations in business performance.

The Company conducts purchasing from overseas and sales to overseas markets, and foreign currency-denominated transactions are affected by exchange rate fluctuations. Although hedging is implemented through forward foreign exchange contracts and other means, complete avoidance is not guaranteed, and sharp exchange rate fluctuations may affect business performance. Note that since foreign currency income from exports is applied to settlement of imports, foreign exchange fluctuation risk is considered minimal.

Some of the Company's products are developed through import and export transactions with overseas companies, and changes in the political or economic conditions of the countries or regions of business partners, as well as changes in laws and regulations, may affect business continuity. If sudden regulatory tightening or political instability occurs locally, securing procurement and sales routes may become difficult, posing a risk of adverse impact on business performance.

The Company is engaged in product development that takes the natural environment into consideration, and while environmental protection-related laws and regulations have a positive effect on the business through the spread of outdoor sports, they can also become a constraint on activities and products. If environmental regulations are further tightened, changes to product design or restrictions on sales activities may occur, potentially leading to increased costs and lost sales opportunities.

Since the Company's shares are listed on the capital markets, there is a possibility that a specific investor could acquire a large volume of shares with the aim of gaining control of management, regardless of the will of stakeholders. Depending on the policies of a shareholder who acquires management control, there is a risk that the Company's management policy and business strategy could be significantly changed, having a material impact on existing business operations and performance.

The Company applies accounting standards related to impairment of fixed assets, and if profitability declines significantly, it may become necessary to recognize impairment losses on land, buildings, and other held assets. The Company monitors profit and loss on a monthly basis using stores as the minimum grouping unit and implements improvement measures for stores showing a deteriorating trend; however, if an impairment loss occurs due to a significant change in the external environment or other factors, it will affect business performance and financial condition.

If a large-scale infectious disease such as COVID-19 spreads, this may result in a decrease in the number of customers visiting stores due to voluntary restraint from going out, a decline in consumer sentiment, and restrictions on outdoor activities themselves. In addition, activity restrictions and reduced production activities in the countries or regions of business partners may disrupt the procurement and supply chain, posing a risk of compounded adverse effects on business performance.