B&P Co.,Ltd.

Sales to the top 10 customers account for approximately 28% of net sales, resulting in a relatively high degree of dependence on specific customers. If sales conditions deteriorate due to changes in the business policies of such customer companies, this could have a material impact on the consolidated results of operations of the Group. The Group has adopted diversification of business partners as a management policy and is working to reduce this concentration.

Inkjet Print, the Group's core business, requires no special technology or patents, resulting in low barriers to entry, and numerous competitors exist, with competition expected to intensify further going forward. There is no guarantee that the Group can establish an advantage over competitors, and price competition and other factors could have a material impact on results of operations. The Group is working to maintain and enhance its competitiveness by leveraging the experience and know-how accumulated through its business operations since October 1985.

The Group's results of operations are heavily dependent on demand for advertising and promotional activities in the domestic market. If the domestic economic slowdown becomes prolonged, there is a risk that business results could fluctuate due to a contraction in corporate advertising and promotional activities. If large-scale activity restrictions are implemented due to a resurgence of COVID-19, domestic companies' sales promotion activities could stagnate, potentially affecting results of operations. The Group's policy is to closely monitor economic conditions and take timely countermeasures.

The prices of ink and inkjet paper used in manufacturing may rise due to climate change or surges in crude oil prices. If the Group is unable to sufficiently pass on increases in raw material costs to product prices, or if it is difficult to improve profitability through procurement of alternative materials, this could have a material impact on results of operations and financial condition. The Group seeks to mitigate this risk by continuing transactions with multiple material manufacturers and considering alternative materials as appropriate.

As digitalization progresses and the importance of information systems increases, if an unforeseen incident results in the external leakage of personal information or other data, this could lead to claims for damages and loss of credibility, potentially having a material impact on results of operations. The Company obtained Privacy Mark certification in 2010 and has established an appropriate management and internal audit system, while group company Idei Co., Ltd. obtained ISO27001 certification in 2008. The Group continues to work on enhancing security and ensuring strict confidentiality.

As the working-age population declines due to the falling birthrate and aging population, labor shortages are occurring across all industries, and this shortage is expected to continue going forward. If the Group is unable to adequately secure human resources, this could lead to reduced production capacity, resulting in delivery delays and quality deterioration, which could damage customer trust and have a material impact on results of operations. The Group's human resources department is continuously working to secure personnel.

If facilities or employees suffer significant damage due to natural disasters or other events, operations at some or all of the Group's production sites could be suspended, potentially resulting in delays in production and shipment and substantial costs for facility repairs. This poses a risk of a material impact on business activities, results of operations, and financial condition. The Group seeks to mitigate this risk by dispersing production sites across Osaka, Yokohama, Nagoya, and Fukuoka, although complete prevention cannot be guaranteed.

The Group is subject to various legal regulations concerning waste disposal responsibility, environmental protection, personal information protection, taxation, and other matters, and further tightening of regulations may occur in the future. If regulations are tightened, this is expected to lead to expanded restrictions on business activities and increased costs, which could have a material impact on the Group's business activities. Each business division and administrative department work together to ensure full compliance with relevant laws and regulations.

The Group is pursuing M&A activities aimed at growth and enhancing corporate value; however, if prior investigation or consideration is insufficient or oversights occur, or if an acquired business does not develop as planned, this could result in the inability to recover invested funds or the incurrence of additional costs. This poses a risk of a material impact on results of operations, growth outlook, and business development. The Group's policy is to conduct M&A after fully considering market trends, customer needs, the target company's results of operations and financial condition, and market competitiveness.

The total number of potential shares related to stock acquisition rights granted as incentives to officers and employees was 38,500 shares as of the end of the current consolidated fiscal year, equivalent to 1.7% of the total number of issued shares of 2,326,800 shares. If these rights are exercised within the exercise period (October 21, 2021 to September 20, 2028), this could dilute the value of shares held by existing shareholders and their voting ratio. This is positioned as an incentive program aimed at enhancing long-term corporate value.