KAWASE COMPUTER SUPPLIES CO,LTD.

The accelerating shift from paper to electronic media continues to make it difficult to expand the Business Forms market, and price competition among industry peers is also intensifying. Business Forms sales account for a high proportion of the Company's net sales at 55.9%, and if further market contraction or intensified price competition progresses, this could have a material impact on performance. The Company is working to improve its price competitiveness through short lead times, multiple colors, diverse product varieties, small-lot production, high quality response, and improvements in work efficiency.

Raw paper costs account for 79.1% of material costs (32.1% of manufacturing costs), and successive price increases have caused a 1.0% increase compared to the previous fiscal year. Raw paper is an essential raw material for the Company's business, and if fluctuations occur in market conditions or supply volume, performance could be affected. There is currently no description of specific hedging measures against price fluctuation risk.

In the Information Processing business, the Company is entrusted with large volumes of personal information from customers, and if a leak were to occur, this could have a significant impact on performance, including loss of existing customers, inability to expand business, and the occurrence of liability for damages. The Company has consolidated its production facilities, introduced the latest security systems, implemented access restrictions, obtained Privacy Mark certification, and conducts moral education for employees; in addition, its information center has obtained ISMS certification. However, despite these measures, leakage risk cannot be completely eliminated.

The top 10 customers by sales accounted for 35.8% of net sales in the current fiscal year, indicating a certain degree of dependence on specific customers. If a sudden change were to occur in transactions with these top 10 customers, performance could be affected. The Company maintains a policy of curbing excessive concentration of dependence through broad-based sales activities, including the development of new business partners.

The largest shareholder, Yamada Corporation, holds 14.2% of the Company's shares, and the combined shareholding ratio of the company, Mr. Yoshihiro Yamada, and his close relatives reaches 26.7% (29.4% of voting rights). While the company and related parties are not currently involved in the Company's management, changes in their future intentions regarding management or shareholding policy could affect the Company's management policy and business operations. This shareholder structure stems from capital contribution relationships at the time of the Company's founding, and structural changes may take time to materialize.

The Company's production is concentrated at a single site, the "Information Center," and if an unforeseen event such as a disaster were to occur, the lack of alternative production means could have a material impact on performance. There is no description in the securities report of specific measures such as backup facilities or a business continuity plan (BCP). The extreme concentration of production facilities at a single location is a structural issue that amplifies all business interruption risks, including natural disasters, fires, and equipment failures.