MITANI SANGYO Co., Ltd.

Due to the increasing sophistication and frequency of cyberattacks, there is a risk of leakage of confidential and personal information belonging to the corporate group and its customers, as well as system outages. In particular, the Company handles a large volume of customer information through its system integration and outsourcing businesses, and thus bears an extremely high social responsibility. As countermeasures, the Company has obtained ISO27001 certification, introduced EDR, established backup environments, and conducted targeted email attack drills, among other measures.

The Company is subject to a wide range of laws and regulations, including the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, and there is a risk that business activities may be restricted due to unforeseen legal or regulatory changes or diverse interpretations of laws. The Company holds multiple licenses and permits, including a pharmaceutical manufacturing license, a sales license, and registration as a general dealer of poisonous and deleterious substances, and the impact on the business would be significant if any of these were revoked. As countermeasures, the Company regularly reviews the status of its licenses and permits, gathers information on legal and regulatory changes at an early stage, and conducts compliance education while maintaining internal and external whistleblowing systems.

The Company conducts overseas operations, primarily in Vietnam, including resin and electronics manufacturing and chemical products manufacturing and sales, and is exposed to country risks such as political instability, economic fluctuations, sharp exchange rate movements, changes in legal systems, and changes in labor conditions. Should these risks materialize, they could have a material impact on the Company's financial position and business results. As countermeasures, the Company has strengthened cooperation with Aureole Expert Integrators Inc., which handles local legal and labor management, regularly collects information on local conditions, and has established a system for setting up a response headquarters in Japan in the event risks materialize.

The Company experienced a serious incident involving improper transactions in 2004, and while it has continuously worked to prevent recurrence, if fraudulent conduct were to occur, it could result in legal liability, administrative sanctions, reputational damage, and deterioration of business performance. As countermeasures, the Company has established the "Mitani Sangyo Group Charter of Corporate Ethics," implemented compliance education, undertaken measures to improve employee engagement, fostered a corporate culture that ensures psychological safety, and thoroughly publicized its internal whistleblowing system.

Natural disasters such as an earthquake directly beneath the Tokyo metropolitan area, a Nankai Trough earthquake, and increasingly severe typhoons and heavy rainfall could affect the Company's business sites and impact its financial position and business results. During the 2024 Noto Peninsula Earthquake, the Company promptly confirmed the safety of personnel and gathered damage information, confirming that there was no significant damage. As countermeasures, the Company regularly formulates and conducts tabletop exercises for its Business Continuity Plan (BCP), conducts disaster prevention drills four times a year, has installed a seismically isolated IDC (Internet Data Center), and has established the "Action Guidelines for Protecting Lives from Natural Disasters."

The Company holds securities of business partners primarily for the purpose of maintaining and expanding business relationships, and if the fair value or substantial value of these securities fluctuates due to stock price movements or changes in the financial condition of the issuing companies, this could impact the Company's financial position and business results. All securities held are classified as "other securities." As countermeasures, the Company reviews the transaction status of each individual security holding annually and makes decisions on whether to continue or newly acquire holdings, taking into account the risk-return balance relative to the cost of capital.

As the volume and variety of products, goods, and services provided has increased along with the expansion of existing businesses and the creation of new businesses, if quality defects occur, this could impact business results through repair, replacement, returns, and payment of damages. As countermeasures, each business division and subsidiary has established a quality management system, and the review mechanisms covering all processes from development to manufacturing are periodically reviewed. When quality complaints arise, the Company ensures thorough investigation of root causes and formulation and implementation of recurrence prevention measures.

In business investments such as the acquisition of shares or equity interests, capital expenditures, and the establishment of new companies, there is a risk of failure to recover invested funds, failure to achieve business plans, and additional losses arising from withdrawal. Should these risks materialize, they could impact the Company's financial position and business results. As countermeasures, investments above a certain scale are reported to the Board of Directors from the planning stage, and the Company has established a system for careful decision-making that takes into account regulatory, competitive, and financial risks as well as opportunity loss risk, along with a system for regular progress reporting.

The Company experienced various impacts on its business environment during the outbreak of COVID-19, and if infectious diseases spread or become prevalent in the future, this could impact the Company's financial position and business results. As countermeasures, in addition to continuously implementing routine infection prevention measures, the Company has established a system to implement infection countermeasures that prioritize the safety and peace of mind of employees, customers, and local communities, while closely monitoring the nature and spread trends of infectious diseases when outbreaks occur.

In the development, manufacturing, and sale of active pharmaceutical ingredients, functional materials, packaged software, and original furniture, there is a risk of receiving demands for injunctions against manufacturing and sales or claims for damages due to infringement of third-party intellectual property rights, as well as a risk that the Company's own intellectual property rights may be infringed by third parties. Should these occur, they could impact the Company's financial position and business results through restrictions on business activities and litigation costs. As countermeasures, the Company thoroughly investigates intellectual property rights, conducts training for employees, and considers policies for the protection and utilization of intellectual property rights.