The Sailor Pen Co.,Ltd.

The Group has recorded consecutive operating losses and net losses attributable to owners of the parent, and recognizes that a material event exists that raises substantial doubt about its ability to continue as a going concern, given concerns that this could exacerbate cash flow within one year from the end of the current fiscal year under review. Cash and deposits at the end of the current consolidated fiscal year stood at only ¥534 million, while the balance of long- and short-term borrowings from banks and the parent company reached ¥1,874 million. As countermeasures, the Group is promoting profitability improvement measures in both the Stationery Business and the Robotics Equipment Business, and has obtained a commitment from the parent company, Plus Corporation, to provide substantial financial support in the event of an emergency. The Group has determined that no material uncertainty exists.

The Stationery Business is selectively concentrated on fountain pens and ink for fountain pens, and if the number of fountain pen users in domestic and overseas markets declines more rapidly than expected, this could have a material impact on business performance and financial position. This is set against a backdrop of declining birth rates and intensifying competition in the writing instruments industry, as well as shortening product cycles. As countermeasures, the Group is strengthening its entry-class product lineup and working to maintain and cultivate new users through experiential promotional activities such as trial-writing events and the "Fountain Pen Buffet."

The Group uses resin materials, metal materials, gold bullion, and other raw materials, and increases in procurement unit prices or supply instability due to economic or political circumstances could affect business performance and financial position. In particular, if the current surge in crude oil prices, gold bullion prices, and logistics costs becomes prolonged, this raises concerns about the impact on gross profit and operating profit. As countermeasures, the Group is implementing cost reductions through purchasing from multiple suppliers, use of alternative materials, and production efficiency improvements, and is also optimizing its product mix by expanding sales of non-gold materials (such as steel) nib products.

Amid diversifying market needs and shortening product cycles, whether new products gain market acceptance directly impacts sales. There is also a risk that new technologies could emerge that replace or render obsolete the functions of existing fountain pens and fountain pen inks, and trends among competing products could affect business performance and financial position. As countermeasures, in addition to leveraging existing technologies, the Group is engaged in research and development targeting next-generation products, and launched a ballpoint pen featuring "Que Será Ink," jointly developed by three Plus Group companies, in February 2026.

Order amounts in the Robotics Equipment Business fluctuate significantly in line with capital expenditure trends in Japan and overseas, resulting in a substantial impact on performance during economic downturns or periods of restrained capital investment. To address this risk, the Group is focusing on securing orders for automated machinery for the food container and medical device industries, where stable demand is expected, while also strengthening its local sales structure in the U.S. market and building collaborative relationships with domestic molding machine manufacturers and machinery trading companies.

As the Group expands its business by establishing overseas sales bases in the EU, Southeast Asia, and the United States, it faces various risks associated with international operations, including foreign exchange risk, unstable political conditions, financial instability, region-specific legal systems, unexpected changes in investment regulations or tax systems, rising labor costs, and inadequately developed intellectual property protection systems. Sudden changes in the political, economic, and legal systems of each country could affect business performance and financial position, and the Group is proceeding with global business expansion while remaining mindful of overseas risks.

As a result of actively promoting sales in overseas markets in both the Stationery Business and the Robotics Equipment Business, receivable collection periods tend to lengthen, necessitating strengthened comprehensive receivables management that accounts for country risk and foreign exchange risk. If collection delays or bad debts occur, this could adversely affect the financial position.

Given the anticipated shortening of product cycles in the Stationery Business and continued specification changes due to technological innovation in the Robotics Equipment Business, there is a possibility of obsolescence (stagnation or obsolescence) not only of products but also of raw materials. There is a risk that recording inventory valuation losses could affect business performance, and the Group is working to implement production planning that links PSI (production, sales, and inventory) and to reduce inventory through systems and data integration.

If disruptions to information systems occur due to power outages, disasters, cyberattacks, defects in software or information equipment, or loss or falsification of internal information, this could lead to suspension of business operations or leakage of critical information, potentially affecting business performance and financial position. Although the Group implements appropriate security measures, complete defense remains difficult given the increasing sophistication of cyberattacks.

The Group's medium- to long-term growth is highly dependent on the capabilities of individual employees, and it recognizes that securing and retaining excellent personnel at the appropriate time is essential. If personnel acquisition does not proceed as planned, or if existing personnel leave the Group, this could affect future growth, business performance, and financial position. While the Group continues to focus on securing and developing personnel, the risk of difficulty in securing talent persists against a backdrop of intensifying competition in the labor market.