Uematsu Shokai Co.,Ltd.

As a specialized trading company for machinery and tools, the Company has a close relationship with capital investment trends, and a downturn in equipment-related demand could affect its business performance. The Company's performance tends to be susceptible to trends in capital investment, which is considered a leading indicator of economic conditions.

Although the Company diversifies risk through a customer base spanning the five Tohoku prefectures and the Kanto region (Tokyo and two prefectures), it remains susceptible to economic impacts in capital investment-related fields and holds potential credit risk. In a downturn in the domestic economy, additional allowance for doubtful accounts may be required, which could affect profitability. The Company strives to prevent the occurrence of non-performing receivables through continuous monitoring of customers' credit conditions.

There is a risk that inventory turnover may slow and inventory may become stagnant due to shortened product life cycles, design changes, shorter lead times, changes in purchasing policies, and other factors arising from rapid shifts in demand. If stagnant inventory occurs, disposal of such inventory may be required, which could adversely affect profitability. The Company complies with its inventory management regulations and works to prevent the occurrence of stagnant inventory.

Although the Company has dispersed its sales offices across the Tohoku region and parts of the Kanto region, natural disasters such as earthquakes could cause severe damage to facilities and equipment. In addition, if suppliers are affected by disasters, delays or suspensions in the supply of products could occur, potentially affecting the Company's financial position and business results.