The following list is a key risk that management recognizes as having a significant impact on the financial position, operating results and cash flow conditions of a consolidated company.

Matters concerning the future in the text are based on the judgment of the YUSHIN Group as of the end of March 2021.

Economic Conditions

The demand for products of the YUSHIN Group is affected by the economic situation in the customer's country and the capital investment of the plastic injection molding industry, which is the main sales destination. If capital investment demand shrinks due to economic fluctuations, the Group's business performance and financial position may be affected.

Exchange Rate Fluctuations

The YUSHIN Group has local subsidiaries around the world to sell its products. Therefore, fluctuations in exchange rates affect consolidated business results through the conversion of the financial statements of subsidiaries. In addition, the parent company reduces the effects of exchange rate fluctuations by using yen-denominated transactions in principle. On the other hand, in sales through overseas consolidated subsidiaries, the subsidiaries are affected by exchange rate fluctuations. Therefore, fluctuations in exchange rates may affect the Group's business results and financial condition.

Price Competition

In the industry to which the YUSHIN Group belongs, there is fierce price competition worldwide.

The Group is working to promote measures to minimize business risks by reducing manufacturing and sales costs and developing new products. Even so, if the selling price of Group products is forced to be reduced due to the price reduction offensive by competitors, the Group's business performance and financial position may be affected.

Quality Problems

In order to provide high quality products to the market, the YUSHIN Group has established standards for quality control, and has built a high quality control system that complies with international standards by constantly working on thorough control and appropriate measures. In addition, the Group is making further improvements every day and working to promote measures to minimize business risk. However, there is no situation in any manufacturer where all products are defect-free and no compensation costs are incurred due to the defects. Therefore, there is a risk of defects with weaknesses even in the advanced management system. In order to cover these risks, we take out contract liability insurance and product liability insurance. However, these insurances do not cover all compensation amounts, so if a serious quality problem occurs, the Group's business performance and financial position may be affected.

Purchasing

The YUSHIN Group secures multiple reliable suppliers in order to obtain high-quality raw materials, parts, etc. in a timely manner and to obtain the necessary and sufficient numbers for manufacturing products. In this way, the Group is working to curb fluctuations in purchase prices and promote measures to minimize business risks. However, if the supply chain is affected by an unexpected natural disaster or accident, the supply of parts is restricted or discontinued due to the deterioration of the business condition of the supplier, or the supply is restricted due to increased demand in the market, the Group's business may be affected. In addition, depending on the raw materials purchased, prices are linked to market prices, so price fluctuations due to increased demand in the market or inflow of investment funds may affect product costs. In such cases, the Group's business performance and financial position may be affected.

Human Resources

In order to accelerate global business development, the YUSHIN Group is taking measures to hire and train necessary human resources and improve treatment so that employment can be maintained. The Group is also working to promote measures to minimize business risks, such as improving efficiency by utilizing IT tools and supporting the active participation of women. However, in the following cases, the required expertise and technical skills may be lacking. This is the case when it is not possible to secure sufficient human resources to respond to the speed of business development, when the training is not successful, or when the personnel in charge of the specialized field are lacking due to retirement or leave of absence. There is also the possibility that employee wages will skyrocket, especially in emerging countries. In such a case, the Group's business performance and financial position may be affected.

Information Security

The YUSHIN Group holds confidential business and technical information such as business partners obtained through business activities. The Group strives for strict control of this information. In addition, the Group utilizes various computer systems and IT networks throughout our business. Therefore, the Group is working to strengthen information security measures, educate and enlighten officers and employees, and promote measures to minimize business risks. However, in the following cases, the social credibility of the Group may decline, business activities may be interrupted, countermeasure costs may be incurred, or transactions may be suspended. This is the case when information is leaked due to a cyber-attack, computer virus infection, unauthorized access, information system malfunction, etc., or when an unexpected situation such as destruction, falsification, or system outage of important data occurs. In such cases, the Group's business performance and financial position may be affected.

Natural Disasters, etc.

The YUSHIN Group's bases and business partners are located on a global scale, and the Group is working to promote measures to minimize business risks in order to respond in the event of a natural disaster. However, in the event of a natural disaster such as an earthquake or storm or flood, or an infectious disease, our business may be restricted due to physical or human damage. In such a case, the Group's business performance and financial position may be affected.

Infectious Diseases

The YUSHIN Group's bases and business partners are located on a global scale, and in order to prevent the spread of infectious diseases, the Group strives to promote measures to minimize business risks by implementing thorough hygiene management, staggered work hours, and efficient business operations through the use of telework, web conferencing, etc. in case of emergencies. Nevertheless, in the event that policies such as city blockades and curfews are imposed in various countries due to the spread of infectious diseases such as the new coronavirus, the Group's production and sales activities may not be able to proceed as planned, and as a result, the Group's business performance and financial position may be affected.

Workplace Accidents

Although the YUSHIN Group pays careful attention to the health and safety of its employees to prevent occupational accidents, the risk of occurrence always exists. In the event of an occupational accident, in addition to human losses such as death or injury to employees, the Group may have to compensate customers for delays in delivery of our products due to temporary suspension or delay of work. In such a case, the business performance and financial position of our group may be affected.

Revenue Recognition

The YUSHIN Group's revenue recognition for Take-out robots, etc. is in principle based on the acceptance inspection standard. In particular, due to the fiscal year of Japanese companies and the characteristics of the customer's industry, deliveries tend to increase in the fourth quarter centered on the last month of the fiscal year. Depending on the delivery dates of other companies' products that are delivered and inspected at the same time and the status of customer inspections, the expected sales and cost of sales may be recorded in the following consolidated fiscal year. As a result, the Group's business performance and financial position may be affected. In addition, the Group recognizes revenue from Custom-ordered equipment for medical in Europe at the time it determines that it has satisfied its performance obligations under the terms of its contracts with customers. The content of the contract with the customer differs depending on the case. Depending on the terms of the contract, revenue may be recognized after a certain period of time has passed since the delivery or acceptance was completed. For projects in which the amount of the order is high, the timing of the recording of net sales and cost of sales may affect the Group's business performance and financial position.