SENKON LOGISTICS CO., LTD.

The Group's principal businesses, including the motor truck transportation business, warehousing business, and customs brokerage business, are subject to regulation under various related laws. Amendments to existing regulations or the enactment of new regulations may result in additional cost burdens. In addition, if the Group were to violate any regulations for any reason, part of its business activities could be restricted, which may affect its financial position and operating results.

In the transportation business, which is a core business of the Group, a significant rise in fuel costs due to trends in global crude oil conditions and exchange rate fluctuations may affect the Group's financial position and operating results. Although the Group strives to promote efficient operations and eco-driving, it is difficult to completely avoid fuel cost increases caused by external factors.

The occurrence of large-scale natural disasters (earthquakes, typhoons, storm and flood damage, snow damage, etc.) may cause damage to vehicles, logistics warehouses, sales offices, information networks, and other facilities, as well as disruption or stagnation of business activities due to the severance of transportation routes or power outages. Although the Group works to minimize the impact through the development of disaster prevention manuals and the maintenance of fire, earthquake, and cargo insurance coverage, it is not possible to avoid all such damage.

If serious accidents occur, such as vehicle accidents, product accidents, or industrial accidents, customer trust and social credibility may be impaired, and the Group may be subject to administrative dispositions such as suspension of vehicle use or suspension of business operations at its offices. Although the Group regularly holds meetings to promote health and safety and engages in compliance and accident-prevention activities, it is not possible to completely eliminate this risk.

The Group finances a large portion of its working capital and capital expenditure through borrowings from financial institutions, and future funding costs may be affected depending on trends in market interest rates. Although the Group strives to reduce interest-bearing debt and avoid interest rate fluctuation risk through fixed-rate borrowings, a rise in interest rates may affect its financial position and operating results.

Through its business activities, the Group handles confidential information and personal information of client companies. If system outages, information leaks, or data loss occur due to unauthorized external access or computer virus infection, customer trust and social credibility may be impaired. The Group strives to maintain and improve its information security management system through obtaining ISO27001 certification, obtaining Privacy Mark certification, and thoroughly managing access authorization and passwords.

If the Group is unable to secure personnel in line with its recruitment plans, or if the outflow of existing employees continues, opportunity losses may occur, which may affect its financial position and operating results. The Group strives to secure, develop, and appropriately assign diverse talent, and works to improve employee retention rates through the promotion of work-style reforms, improvement of the working environment, and the introduction of incentive programs.

The Group holds numerous tangible fixed assets for business use, including land, buildings, vehicles, and machinery and equipment. If the assumptions underlying its original business plans deviate due to trends among client companies or changes in the business environment beyond expectations, impairment losses may need to be recognized due to a decline in profitability. If impairment losses are recognized, this may have a material impact on the Group's financial position and operating results.

The Group is working on business expansion overseas for the purpose of sustainable growth; however, if events such as sudden political, economic, or exchange rate fluctuations, tightening of legal regulations, deterioration of security due to terrorism or riots, or large-scale natural disasters occur in various regions, this may affect the Group's financial position and operating results. The combined effect of country-specific risks and exchange rate risks unique to overseas operations constitutes a risk factor that differs from that of domestic business.