Kohsai Co.,Ltd.

The Company's main business is order-made jewelry production and Jewelry Parts Products production, and it faces the risk of bad debt occurrence due to bankruptcy of customers, etc. Although the Company strives to strengthen its management system, such as setting credit limits for each business partner, if bad debt were to occur, it could affect business performance.

The Company strives for thorough quality control, but the possibility of defective products arising from unusual factors cannot be completely denied. If product recall responsibilities arise, this could affect business performance through recall costs and deterioration of relationships with business partners.

The Company strives to secure intellectual property rights, such as by entering into confidentiality agreements with business partners, but the possibility of rights infringement by other companies cannot be denied. If infringement occurs, including the possibility of developing into litigation, this could affect business performance through legal response costs and restrictions on business activities.

The Company strives for stable procurement of gold, platinum, and other bullion, which are its main raw materials, but gross profit margin, among others, may be affected by sharp fluctuations in bullion prices. Since bullion is directly linked to the cost structure of jewelry manufacturing, there is a risk that a rise in the cost ratio during periods of surging market prices could put pressure on earnings.

The Company positions the securing and development of excellent human resources as an important issue, and is actively engaged in recruitment activities and employee training and education. However, if these measures do not have a sufficient effect, it may become difficult to maintain technical and quality standards, which could adversely affect business results.

The Company has established a health and safety management system and conducts maintenance and inspection of equipment and preservation of employees' working environment, but if an accident or large-scale natural disaster occurs, there is a risk that production and sales activities could be interrupted due to human and physical damage. If such a situation occurs, it could have a material impact on business performance.

If emergencies such as war or terrorism, or an unknown infectious disease such as the novel coronavirus, were to spread, business performance could be affected by restrictions on going out and suspension of business activities, among other factors. Since the Company's main business is order-made jewelry production, there is a risk that a sharp decline in demand or suspension of factory operations could directly impact earnings.