MEIWA CORPORATION

The Group extends credit to a wide range of business partners in Japan and overseas in the course of sales activities. If the creditworthiness of a business partner deteriorates or a business partner becomes insolvent, this may affect the Group's business results and financial position. As a countermeasure, the Group conducts periodic credit surveys, and has established a risk management system whereby the granting of credit to business partners whose credit amount exceeds a certain threshold is deliberated at management meetings.

The Group handles a wide range of raw materials and products for various goods both domestically and internationally, and significant fluctuations in commodity markets, supply-demand balance, or foreign exchange rates may affect net sales and profit/loss. While the Group seeks to minimize foreign exchange fluctuation risk through the use of forward foreign exchange contracts and other measures, the impact on business results and financial position cannot be entirely eliminated in periods of unstable market conditions or supply-demand imbalance.

If the market value of listed shares held by the Group declines, this may affect its business results and financial position. As a risk mitigation measure, the Group continuously reviews the rationale for holding such shares; however, depending on market conditions, the risk of valuation losses remains.

The Group makes business investments in multiple companies with the aim of expanding its business territory and obtaining capital gains. If the value of an investee significantly declines, the Group may be unable to recover invested funds or may incur additional losses upon withdrawal, which may affect its business results and financial position. The Group strives to minimize this risk by establishing a business investment management system and conducting appropriate management.

The Group is strengthening transactions with China and other Asian countries, and if unforeseeable events occur due to changes in local laws and regulations or political factors, this may affect the Group's business results and financial position. Although the Group has established a system to monitor and appropriately respond to political and economic developments in each country, it may be difficult to fully respond to sudden changes in geopolitical risk or the regulatory environment.

In the import and export and domestic sale of a wide variety of products, the Group is subject to numerous laws and regulations, including the Foreign Exchange and Foreign Trade Act, the Export Trade Control Order, the Act on the Evaluation of Chemical Substances and Regulation of Their Manufacture, etc., and the Act on Proper Transactions of Specified Commercial Transactions. Failure to fulfill these obligations may restrict business activities and affect business results and financial position. There is also significant litigation risk related to claims for damages arising from violations of laws and regulations, which the Group addresses through the development of internal rules, thorough dissemination to employees, and consultation with legal counsel.

The Group conducts business activities across a wide range of regions in Japan and overseas, and if a large-scale natural disaster or a pandemic caused by an infectious disease occurs, this may affect business results and financial position due to disruption of business operations and loss of business opportunities. In the event of such an occurrence, the Group has established a system to set up an emergency response headquarters headed by the Representative Director and President, enabling prompt assessment of the situation and appropriate response.

The Group handles various types of business-related information, including accounting data, and if information leakage or loss occurs, this may affect its business results and financial position. The Group has established regulations concerning the handling of information and an information management system, and further ensures thorough information management by outsourcing the operation and management of core system servers to an external specialized organization.