YONDOSHI HOLDINGS INC.

The primary raw materials for jewelry, the company's core product, are internationally traded commodities such as gold and platinum, and there is a possibility that price surges resulting from fluctuations in market distribution prices and foreign exchange markets cannot be fully passed through to selling prices. This carries the inherent risk that rising raw material costs will directly compress profit margins, and the impact on operating results tends to become apparent particularly during phases of sharp increases in gold and platinum prices. The annual securities report does not describe any specific countermeasures.

The proportion of direct transactions with overseas factories for products manufactured abroad has been increasing, with the US dollar being the primary settlement currency. If the yen's exchange rate against the US dollar fluctuates, procurement costs may increase or decrease, potentially affecting operating results. As the proportion of direct transactions expands, foreign exchange exposure is structurally trending upward.

Apparel sales depend on sales through domestic specialty stores and mass merchandisers, and business performance is affected by trends in personal consumption and apparel spending. In addition, weather conditions such as a cool summer or warm winter can significantly affect market trends, potentially leading to lost sales opportunities for seasonal products. When deteriorating consumption conditions and weather uncertainty overlap, the impact on operating results could expand in a compound manner.

Fashion products such as jewelry, the core products of the FDC Products group, operate in a competitive environment involving numerous competing brands, including overseas brands. If unforeseen competitive circumstances arise that reduce brand competitiveness, or if brand image is damaged, there is a possibility of a direct adverse impact on sales and profit. The company has set forth the provision of original, high-quality products and services as a countermeasure.

Unlike new products, adjusting procurement volumes for used goods handled by Rashin Co., Ltd. is difficult, and stable procurement in terms of both quantity and quality may become difficult due to economic trends, the activities of competing buyback dealers, and market price fluctuations. In addition, there is a risk of unintentionally handling counterfeit or stolen goods, which could adversely affect business performance through a decline in customer trust. The procurement structure inherent to the used goods business represents a vulnerability that could undermine the stability of earnings.

At overseas production sites centered on Bangladesh, if political and economic conditions deteriorate, or if political upheaval, security deterioration, terrorism, or war occurs, there is a possibility of serious disruption to production activities. As the company proceeds to enhance and strengthen its overseas production bases, the structure is such that as dependence on specific countries increases, exposure to country risk also expands. The annual securities report does not describe any specific risk mitigation measures.

If retail stores and real estate facilities located in Japan suffer physical damage from a major earthquake or other natural disaster, procurement, distribution, and sales activities could be impeded, potentially disrupting business continuity. In addition, if an accident occurs affecting suppliers or the procurement/distribution network, this could similarly affect operating results. Since the store network is deployed across nearly the entire domestic territory of Japan, the scope of impact in the event of a widespread disaster is extensive.

Because the company procures products from overseas and operates retail stores across nearly the entire domestic market, if an infectious disease pandemic occurs, stagnation in overseas production and logistics as well as closures of domestic stores could have a material impact on operating results. The company has a risk structure in which both its supply chain and sales channels could be simultaneously affected. The annual securities report does not describe any specific countermeasures.

Although the company has implemented measures such as formulating a privacy policy and personal information management regulations, providing education to all employees, and enhancing system security, if a serious incident such as a leak of personal information occurs, this could affect operating results through damages claims and a decline in credibility. As a retailer holding extensive customer information, the reputational risk in the event of an information leak is correspondingly significant.