GLOBERIDE, Inc.

Economic downturns or demand contraction in major markets, including Japan, North America, Europe, and Asia, may adversely affect business performance and financial condition. Natural disasters such as earthquakes and floods may also affect demand. As countermeasures, the Group has established "pursuit of market superiority," "revitalization and soundness of the domestic market," and "expansion into overseas markets" as pillars of its management strategy, and is working to strengthen its support base and revitalize the market.

Due to the business structure, which includes overseas production and sales of products, the Group is significantly affected by foreign exchange fluctuations. Although hedges such as forward exchange contracts are implemented, there is no guarantee that sudden exchange rate fluctuations can be completely avoided, and this may adversely affect business performance and financial condition.

The Group is exposed to fierce competition in both domestic and overseas markets, and in recent years, low-price competition has progressed due to the rise of competitors and Chinese products. A decline in product prices may adversely affect business performance and financial condition. As countermeasures, the Group is working on the development of new products and new technologies, promoting cost reductions, and strengthening brand appeal.

Working capital is mainly procured through borrowings from financial institutions, and while interest rates currently remain at low and stable levels, there is a possibility of future interest rate increases. Depending on the management condition of financial institutions and market trends, this may adversely affect business performance and financial condition.

Since products are used in the natural environment, the Group is affected by natural environment-related laws and regulations in each country. If regulations or restrictions are strengthened, this may adversely affect business performance and financial condition through suppression of demand for sports and leisure activities. As a countermeasure, the Group has established the "BE EARTH FRIENDLY" mark system and is working on the development of environmentally friendly products and environmental protection activities with related organizations.

Manufacturing bases are concentrated in Asian regions such as China, Thailand, and Vietnam, and if political or economic turmoil or unexpected legal regulations occur in these regions, there is a risk of significant disruption to production and sales. This may adversely affect business performance and financial condition due to a decline in production volume and sales. The Group strives to minimize risk by diversifying the risk of concentration in specific regions and strengthening its production system.

Due to global business operations with production and sales bases around the world, if an abnormal situation such as a pandemic like the spread of COVID-19 occurs, business operations may become difficult, which could have a significant impact on business performance and financial condition. Based on risk management standards, the Group implements risk reduction and avoidance measures such as reducing employees' infection risk, preventing the spread of infection in the workplace, and business continuity responses.