SODA NIKKA CO., LTD.

The Group primarily engages in the sale and purchase of various basic materials, processed products, and other goods, with customers and delivery destinations spanning virtually all industries. In the event of a sudden change in the economic environment in Japan or globally, the Group's business performance could be affected in the same manner as other companies in the same or different industries. While the Group's dependence on any specific industry is low, its structure exposes it broadly to macroeconomic fluctuations.

When prices of traded products fluctuate, the Group aims to pass on appropriate price adjustments; however, there is no guarantee that such pass-through can be fully implemented, and if insufficient pass-through occurs frequently or in large amounts, it could affect business performance. Price fluctuations also affect the valuation of product inventories, and while the Group strives to operate with minimal inventory through thorough order management, complete avoidance of this risk is difficult.

The Group has established stock points equipped with chemical tanks and warehouses in Hokkaido (Kushiro), Sendai, Shizuoka, and Hiroshima, and the majority of the products handled there are hazardous materials such as poisonous and deleterious substances. Although the Group regularly holds disaster prevention and safety meetings and conducts facility inspections, there is no guarantee that accidents caused by large-scale disasters such as earthquakes can be completely prevented, and if such an event occurs, it could have a material impact on business performance.

The Group sells products procured from reputable manufacturers based on customer specifications, but there is no guarantee that delivery errors due to misunderstandings among the parties involved will never occur. If such an error occurs, significant costs may arise from handling claims and remediation with the counterparty, which could affect business performance.

The Group records an allowance for doubtful accounts for receivables such as accounts receivable, and conducts credit management by performing credit investigations of business partners on a regular or as-needed basis. However, not all receivables are secured through collateral or other protective measures, and if an unexpected large-scale bad debt occurs due to a sudden deterioration in a business partner's creditworthiness, it could affect business performance.

The Group holds securities as strategic shareholdings for the purpose of maintaining relationships with business partners and banks. If the value of these held securities declines significantly due to a sharp drop in stock prices or deterioration in the financial condition or bankruptcy of an investee, the Group may be forced to recognize an impairment or valuation loss. If such amounts become substantial, business performance could be affected.

The Group has established internal regulations for the management of customer information and confidential information, thoroughly communicated them to employees, and implemented security measures for its computer systems. However, if an unforeseen incident results in the external leakage of important information or a system failure, it could lead to a loss of trust and require enormous costs and time to recover, potentially affecting business performance.