EIWA CORPORATION

Industrial measurement and control equipment, which accounts for approximately 50% of net sales, carries the risk that capital expenditure demand may halt or be delayed due to deterioration in the domestic and overseas economic environment. A decline in demand for equipment replacement could have a substantial impact on business performance, reflecting a business structure with high sensitivity to economic fluctuations.

If a business partner goes bankrupt due to deterioration in the economic environment, there is a risk that trade receivables may become uncollectible. The Group conducts regular credit checks on ongoing business partners and implements measures to secure receivables for large transactions, but depending on the scale and number of bankruptcies, this could have a substantial impact on business performance.

The Group is involved in the delivery of equipment and devices used in production facilities, and if unforeseeable non-conformities arise after delivery, leading to incidents or accidents, the Group could suffer business losses alongside the manufacturer. Such events could have a substantial impact on business performance, underscoring the importance of product quality control.

Because budget execution related to government agencies and private-sector facilities tends to be concentrated in the second half of the fiscal year, net sales, ordinary income, and net income all tend to be concentrated in the second half. Since the majority of selling, general and administrative expenses are fixed costs, profitability in the first half tends to be lower, which may affect investors' assessment of business performance.

If confidential information or personal information belonging to business partners or the Group is leaked due to external attacks, unauthorized access, or internal negligence, this could result in loss of credibility and legal liability, potentially having a substantial impact on business performance. As countermeasures, the Group has implemented EDR (Endpoint Detection and Response) and expanded authentication and access management functions, building an advanced security framework in conjunction with endpoint measures.

If natural disasters such as earthquakes or typhoons, or accidental disasters such as fires, cause significant damage to the Group's business locations or supplier facilities, there is a risk of temporary suspension of sales activities or delays in product delivery. Such events could have a substantial impact on business performance, with concerns about ripple effects across the entire supply chain.

As a general trading company handling industrial measurement and control equipment and industrial machinery, if environmental pollution or similar issues arise from business activities, this could lead to decontamination costs, liability for damages, and loss of social credibility. The Group has obtained ISO14001 certification and continuously and systematically promotes environmental conservation activities, but this cannot completely eliminate the risk.

If a large-scale infectious disease spreads domestically or internationally, this could delay or halt customers' capital expenditure plans, while also disrupting the Group's own sales and business activities, potentially having a significant impact on business performance. The Group works to reduce infection risk for employees and business partners and ensure business continuity through thorough crisis management, but depending on the scale of the spread, a temporary decline in business performance may be unavoidable.