Management Policy

Business Risks

The following includes major items that may have an important effect on the judgment of investors regarding the risks concerning our corporate group and other risks.

(1)General
Our corporate group stipulates in our management ideals that we will obey the relevant laws and regulations and act with sincerity, and we will see to it that all directors and employees do not deviate from said laws and regulations and action norms However, if any act corresponding to deviation occurs and if our company is directly faced with a compliance-related problem, it is possible that our corporate group's business performance may be negatively affected as a result of the actions taken by the relevant government control agency, the initiation of a lawsuit, the damage to reputation, etc.
(2) Intellectual Property Rights
Our company has implemented measures for the purpose of protecting intellectual rights so that we do not infringe the intellectual rights of any outside party and the intellectual rights of our corporate group are not violated by any outside party. However, it is impossible to prevent an outside party from initiating a lawsuit on the ground of infringement of intellectual rights, or to prevent our intellectual rights being violated by an outside party. Therefore, in the event that such an event occurs, the business results of our corporate group may be negatively affected.
(3)Product Liability and Premiums Indication
Our corporate group has implemented a control system in accordance with the established control standards. We are also covered by product liability insurance. However, it is not possible to eliminate the possibility that a situation may develop whereby compensation for damages that are not covered by insurance is demanded, or a large-scale product recall is needed, as a result of a lawsuit regarding a product defect or improper labeling of product packages. Therefore, in the event that such an event occurs, the business results of our corporate group may be negatively affected.

Certain parts of our products are made overseas. For this reason, changes in the political or economic situation overseas, turmoil in international society due to war, terrorism, or the like, or the occurrence of a natural disaster, may cause impairment to the stable supply of our group's products and the business results of our corporate group may be negatively affected.

Sales receivables from our group's business consist of credit-sales by providing a certain credit line to each customer. Even though our group performs stringent credit control, there is no guarantee that we can collect our sales receivables in full. For this reason, the unexpected deterioration of a customer's credit standing or a customer's bankruptcy, may negatively affect the business results of our corporate group.

The products sold by our corporate group are facing an increasingly fiercer price competition with low-priced products from China etc. both throughout Asia and in Japan. Even though our corporate group is endeavoring to strengthen our overseas production capacity and implementing the strategic measure of increasing the proportion of local procurement, there is the possibility that our corporate group's business results may be negatively affected by the decline in sales prices and the reduction of sales volume as a result of competition with overseas products.

The purchase prices of products sold by our corporate group are affected by changes in the prices of raw materials. If price increases are shifted to purchase prices, our corporate group's business results may be negatively affected.

The financial situation and the business results of our corporate group have fluctuated in the past due to changes in the market value of the assets we hold. There is no guarantee that our group will not be forced to record a loss sometime in the future due to a change in the market value of the assets we hold.

Our group endeavors to deal with possible risks by creating a firewall and taking other measures designed to prevent infiltration from outside the system with the aim of securing the safety of our information management system. However, it is not possible to completely eliminate the possibility that our information management system could become inoperative due to the leakage of confidential corporate information or the leakage of private information due to unexpected unlawful access from outside or by infection with a computer viruses. The information management system could also become inoperative due to damage to the system's facilities caused by a natural disaster, accident, or problem in the communication lines. Should such an event occur, it could lead to poorer business performance or, depending on the size of the damage, negatively affect our corporate group's business results.

Our corporate group endeavors to monitor closely the relevant exchange rate at the time of signing a contract for export or import deals within the range of real demand regarding foreign exchange fluctuation risks. However, a change in the exchange rate that exceeds the range of our initial estimation may negatively affect the business results or the financial situation of our corporate group.

In the event that the offices of our corporate group or our customers are damaged by an earthquake or other natural disaster, our sales and procurement activities may be directly or indirectly affected. Should such an event occur, the business results or the financial situation of our corporate group may be negatively affected.

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