KITAZAWA SANGYO CO.,LTD.

The foodservice industry accounts for 21.5% of net sales as a customer segment for commercial kitchen equipment, while the prepared foods industry (department stores, supermarkets, etc.) accounts for 22.9%, together reaching 44.4%. As these industries are heavily affected by economic conditions, an economic downturn could directly and adversely affect the Group's business performance. The securities report does not describe specific countermeasures, merely disclosing the existence of the risk.

The Commercial Kitchen-related Business accounts for 97.6% of the Group's net sales, resulting in limited diversification of the business portfolio. This high dependence on a specific business carries the risk that fluctuations in demand or intensified competition in that market could spread to overall performance. The securities report does not describe specific countermeasures aimed at diversification.

The Group procures materials necessary for the manufacture and sale of commercial kitchen equipment from outside suppliers, and prices may rise due to changes in supply-demand conditions. Although the Group seeks to optimize supplier selection from the standpoints of supply stability, quality, and price, it may not be able to completely avoid cost increases resulting from fluctuations in market conditions. Rising raw material costs pose a risk of reducing profit margins.

Although the Group selects suppliers with an emphasis on supply stability in its materials procurement, a tightening of supply-demand conditions or dependence on specific suppliers could impair stable supply. A disruption in supply could affect product manufacturing and delivery times, potentially having an adverse effect on customer satisfaction and net sales. The securities report does not disclose specific details of supply chain countermeasures.

Both the foodservice and prepared foods industries are said to be heavily affected by economic conditions, and an economic downturn could lead to reduced capital expenditure and store closures, resulting in a significant decline in demand for commercial kitchen equipment. Since over 44.4% of the Group's net sales are derived from these economically sensitive industries, deterioration in the macroeconomy tends to directly affect business performance. The securities report does not describe specific countermeasures against declining demand.

The securities report states that various risks other than those described above are also associated with business activities. While the Company states that it strives to prevent risks from occurring and to minimize their impact when they do occur, specific risk items and details of countermeasures are not disclosed. For investors, the disclosed information is limited, making it difficult to grasp the full scope of potential risks.