FY2025_Audit Report_English_Translation 2

English translation of FY2025_ 決算報告書 .pdf FY2025 Business Report and Consolidated Financial Statements Full English Translation Source file: FY2025_ 決算報告書 .pdf This document translates the attached Japanese PDF into English without summarization. Layout is reorganized only as necessary to preserve readability in Word. English translation of FY2025_ 決算報告書 .pdf Independent Auditor’s Audit Report June 23, 2026 To: Naxis Co., Ltd. Board of Directors Yaesu Audit Corporation Chuo - ku, Tokyo Designated Partner / Engagement Partner / Certified Public Accountant: 高城 慎一 [signature] Engagement Partner / Certified Public Accountant: 白濱 寛 [signature] Designated Partner / Engagement Partner / Certified Public Accountant: 藤井 千春 [signature] Audit Opinion Pursuant to the provisions of Article 444, Paragraph 4 of the Companies Act, we have audited the consolidated financial statements of Naxis Co., Ltd. for the consolidated fiscal year from January 1, 2025 to December 31, 2025, namely, the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in shareholders’ equity, etc., and the notes to the consolidated financial statements. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position and the results of operations for the period covered by such consolidated financial statements of the corporate group consisting of Naxis Co., Ltd. and its consolidated subsidiaries, in conformity with accounting standards generally accepted in Japan. Basis for Audit Opinion We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are described in “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements.” In accordance with the provisions concerning professional ethics in Japan, we are independent of the Company and its consolidated subsidiaries and have fulfilled our other ethical responsibilities as auditors. We believe that we have obtained sufficient and appropriate audit evidence to provide a basis for our opinion. Emphasis of Matter — Distribution and Restrictions on the Use of the Consolidated Financial Statements: The consolidated financial statements are prepared on the assumption that only the Company and the financial institutions that are lenders to the Company are the intended users, and they should not be used by persons other than the Company and the financial institutions that are lenders to the Company. Other Information: The other information consists of the business report and the supplementary schedules thereto. Management is responsible for preparing and disclosing the other information. In addition, the Audit & Supervisory Board Member is responsible for monitoring the directors’ execution of duties in developing and operating the reporting process for the other information. Our audit opinion on the consolidated financial statements does not cover the other information, and we do not express any opinion on the other information. Our responsibility in the audit of the consolidated financial statements is to read the other information and, in doing so, consider whether there are material inconsistencies between the other information and the consolidated financial statements or our knowledge obtained in the course of the audit, and, in addition, pay attention to whether there are indications of material errors in the other information other than such material inconsistencies. If, based on the procedures we have performed, we conclude that there is a material misstatement in the other information, we are required to report that fact. We have no matters to report concerning the other information. Responsibilities of Management and the Audit & Supervisory Board Member for the Consolidated Financial Statements Management is responsible for preparing and fairly presenting the consolidated financial statements in conformity with accounting standards generally accepted in Japan. This responsibility includes designing and operating such internal English translation of FY2025_ 決算報告書 .pdf control as management determines is necessary to enable the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare the consolidated financial statements on the premise of a going concern and, when it is necessary to disclose matters relating to going concern in accordance with accounting standards generally accepted in Japan, disclosing such matters. The Audit & Supervisory Board Member is responsible for monitoring the directors’ execution of duties in developing and operating the financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our responsibility is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and, based on the audit performed, to express an opinion on the consolidated financial statements in an audit report from an independent standpoint. Misstatements may arise from fraud or error and are considered material if they could reasonably be expected to influence the decisions of users of the consolidated financial statements, individually or in the aggregate. In accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit, and we perform the following: • Identify and assess the risks of material misstatement, whether due to fraud or error. Design and perform audit procedures responsive to those risks. The selection and application of audit procedures depend on the auditor’s judgment. Also, obtain sufficient and appropriate audit evidence as a basis for the audit opinion. • Although the purpose of an audit of consolidated financial statements is not to express an opinion on the effectiveness of internal control, in performing risk assessment, we consider internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. • Evaluate the appropriateness of accounting policies adopted by management and their application, and the reasonableness of accounting estimates and related disclosures made by management. • Conclude whether it is appropriate for management to prepare the consolidated financial statements on the premise of a going concern and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the premise of a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our audit report to the notes to the consolidated financial statements, or, if the notes to the consolidated financial statements regarding the material uncertainty are inadequate, to express a modified opinion on the consolidated financial statements. Our conclusions are based on audit evidence obtained up to the date of the audit report, but future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate whether the presentation and notes to the consolidated financial statements conform to accounting standards generally accepted in Japan, and whether the presentation, structure, and contents of the consolidated financial statements, including related notes, and the transactions and accounting events underlying the consolidated financial statements are fairly presented. • Obtain sufficient and appropriate audit evidence concerning the financial information of the Company and its consolidated subsidiaries in order to express an opinion on the consolidated financial statements. We are responsible for directing, supervising and reviewing the audit of the consolidated financial statements. We remain solely responsible for our audit opinion. We report to the Audit & Supervisory Board Member regarding the planned scope and timing of the audit, significant audit findings, including material weaknesses in internal control identified during the audit, and other matters required by auditing standards. We provide the Audit & Supervisory Board Member with a statement that we have complied with the provisions concerning professional ethics in Japan regarding independence, and we report all relationships and other matters that may reasonably be thought to bear on our independence, as well as the content of safeguards applied to eliminate or reduce impediments when applicable. English translation of FY2025_ 決算報告書 .pdf Interest Relationships There are no interest relationships between the Company and its consolidated subsidiaries and our audit corporation or engagement partners that are required to be stated pursuant to the Certified Public Accountants Act. End English translation of FY2025_ 決算報告書 .pdf Naxis Co., Ltd. Consolidated Financial Statements From January 1, 2025 To December 31, 2025 English translation of FY2025_ 決算報告書 .pdf Consolidated Balance Sheet (As of December 31, 2025) (Millions of yen) Account (Assets) Amount Account (Liabilities/Net Assets) Amount Current assets 10,887 Current liabilities 6,908 Cash and deposits 5,638 Accounts payable 2,447 Notes receivable 203 Short - term borrowings 2,892 Accounts receivable 3,056 Current portion of long - term borrowings 342 Inventories 1,285 Current portion of lease obligations 147 Short - term loans receivable 10 Deposits received 13 Other 700 Income taxes payable 358 Allowance for doubtful accounts △ 6 Other accounts payable 88 Non - current assets 3,952 Accrued expenses 294 Property, plant and equipment 2,530 Provision for bonuses 161 Buildings 205 Other 166 Structures attached to buildings 458 Long - term liabilities 4,098 Structures 3 Long - term borrowings 2,108 Machinery and equipment 526 Lease obligations 893 Vehicles 3 Provision for country risk 538 Tools, furniture and fixtures 63 Deferred tax liabilities 255 Land 327 Liability for retirement benefits 192 Leased assets 940 Provision for directors’ retirement benefits 111 Construction in progress 5 Other 0 Intangible assets 119 Total liabilities 11,006 Software 119 Shareholders’ equity 2,942 Investments and other assets 1,304 Share capital 30 Investment securities 319 Capital surplus 2 Long - term prepaid expenses 449 Retained earnings 2,910 Deferred tax assets 56 Accumulated other comprehensive income 891 Other 479 Foreign currency translation adjustment 891 Total assets 14,839 Total net assets 3,833 Total liabilities and net assets 14,839 English translation of FY2025_ 決算報告書 .pdf English translation of FY2025_ 決算報告書 .pdf Consolidated Statement of Income (From January 1, 2025 to December 31, 2025) (Millions of yen) Account Amount Net sales 18,678 Cost of sales 13,256 Gross profit 5,422 Selling, general and administrative expenses 3,251 Operating profit 2,171 Non - operating income 238 Interest income 36 Foreign exchange gains/losses 132 Equity in earnings/losses of affiliates 11 Other 58 Non - operating expenses 533 Interest expenses 204 Foreign exchange gains/losses 55 Other 275 Ordinary profit 1,875 Extraordinary income 166 Gain on sale of property, plant and equipment 165 Other 1 Extraordinary losses 192 Loss on disposal of property, plant and equipment 6 Other extraordinary losses 186 Net income before income taxes 1,850 Income taxes — current 788 Total income taxes 870 Income taxes — deferred 82 Net income 980 Net income attributable to non - controlling interests — Net income attributable to owners of parent 980 English translation of FY2025_ 決算報告書 .pdf Consolidated Statement of Changes in Shareholders’ Equity, Etc. (From January 1, 2025 to December 31, 2025) (Millions of yen) Item Share capital Capital surplus Retained earnings Total shareholders’ equity Foreign currency translation adjustment Total net assets Balance at end of December 2024 30 2 1,930 1,962 700 2,662 Changes during the period Issuance of new shares — — Dividends of surplus — — Net income attributable to owners of parent 980 980 980 Items other than shareholders’ equity (net) — 191 191 Total changes during the period — — 980 980 191 1,171 Balance at end of December 2025 30 2 2,910 2,942 891 3,833 English translation of FY2025_ 決算報告書 .pdf Business Report From January 1, 2025 to December 31, 2025 1. Matters Concerning the Current Status of the Company 1 - 1. Progress and Results of Business During the consolidated fiscal year under review (January 1, 2025 to December 31, 2025), the domestic economy saw improvements in the employment and income environment, and it is considered that a moderate recovery trend will continue going forward. In the global economy, the outlook is recognized as likely to remain uncertain due to the impact of U.S. tariff policies, the stagnation of the Chinese economy, and geopolitical risks such as the situation in the Middle East and Russia – Ukraine. At our Group, under the medium - term management plan formulated during the consolidated fiscal year under review, we will further promote the establishment of a profit - focused structure capable of withstanding the effects of the recent sharp fluctuations in foreign exchange rates, and, with respect to personnel, the securing of young human resources and the development of next - generation executive candidates. Under these circumstances, the performance of our Group during the consolidated fiscal year under review was as follows. Consolidated net sales were 18.68 billion yen, a decrease of 7.7% compared with the previous consolidated fiscal year, mainly due to a decrease in orders caused by customer factors and because fiscal 2024 had been strong. Operating income was 2.17 billion yen, a decrease of 0.2% compared with the previous consolidated fiscal year, due to improvements in the gross profit margin resulting from production efficiency improvements, among other factors. Ordinary profit decreased to 1.87 billion yen, a decrease of 18.4% compared with the previous consolidated fiscal year. Although there was an increase in gains from foreign exchange forward contracts related to settlements due to the weak yen, the foreign exchange fluctuations from the beginning to the end of the period were milder than in fiscal 2024, resulting in smaller year - end valuation gains and losses on foreign currency assets. Net income attributable to owners of parent decreased to 980 million yen, a decrease of 26.0% compared with the previous consolidated fiscal year, due to the occurrence of expenses related to the relocation of the factory at the China base and gains on sale of the former factory, among other factors. 1 - 2. Status of Fund Procurement, etc. (1) Fund procurement There was no significant fund procurement to be reported. (2) Capital investment There was no significant capital investment to be reported. 1 - 3. Status of Assets and Income/Losses for the Immediately Preceding Three Consolidated Fiscal Years 58th term 59th term 60th term 61st term 62nd term Current consolidated fiscal year Net sales (hundred million yen) 177.3 178.6 173.9 202.4 186.8 Net income (hundred million yen) 15.3 6.0 5.4 13.2 9.8 Net income per share (thousand yen) 26.4 10.4 9.4 22.9 16.9 Total assets (hundred million yen) 131.6 133.9 127.2 145.3 148.4 Net assets (hundred million yen) 4.7 9.0 10.7 26.6 38.3 English translation of FY2025_ 決算報告書 .pdf 1 - 4. Issues to Be Addressed (1) Development of new markets (2) Securing and developing excellent human resources (3) Strengthening relationships with suppliers (4) Effective utilization of assets and facilities 1 - 5. Principal Business Activities Design, manufacture, and sale of apparel auxiliary materials 1 - 6. Principal Bases, etc. of the Corporate Group and Status of Employees (1) Principal sales offices and factories ① Sales offices: Tokyo, Osaka, Nagoya ② Production bases: Fukui, Shanghai, Qingdao, Dongguan, Vietnam, Indonesia, Thailand, Bangladesh (2) Status of employees ① Number of employees [Consolidated] 1,075 persons (down 10.5% from the previous consolidated fiscal year) [Non - consolidated] 163 persons (up 1.9% from the previous consolidated fiscal year) ② Average age [Consolidated] 37 years [Non - consolidated] 39 years 1 - 7. Major Borrowing Sources and Borrowing Amounts Borrowing source Borrowing balance (hundred million yen) MUFG Bank 20.7 Japan Finance Corporation 9.2 Mizuho Bank 5.7 1 - 8. Other Important Matters Concerning the Current Status of the Company There are no important matters to be reported. 2. Matters Concerning Shares 2 - 1. Status of the Top 10 Shareholders (1) Total number of authorized shares: 230,000 shares (2) Total number of issued shares: 57,850 shares (3) Number of shareholders at the end of the consolidated fiscal year: 1 person (4) Top 10 shareholders Shareholder name Number of shares held Shareholding ratio 中村 待朋 57,850 shares 100% (5) Status of shares delivered during the consolidated fiscal year to officers of the Company as consideration for execution of duties There are no important matters to be reported. English translation of FY2025_ 決算報告書 .pdf 3. Matters Concerning Company Officers 3 - 1. Matters Concerning Company Officers of the Company Name Position and responsibility Status of important concurrent positions 中村 待朋 Representative Director and President 大隅 勝治 Director and CMO 奥野 崇士 Director and CFO 中村 香 Audit & Supervisory Board Member 3 - 2. Total Amount of Remuneration, etc. of Officers for the Fiscal Year Under Review Unit: thousand yen Category Number of recipients Basic remuneration Performance - linked remuneration, etc. Non - monetary remuneration, etc. Total Directors 3 persons 64,200 - - 64,200 Audit & Supervisory Board Member 1 person - - - - Total 4 persons 64,200 - - 64,200 English translation of FY2025_ 決算報告書 .pdf 4. Matters Concerning Accounting Auditor (1) Name of accounting auditor Yaesu Audit Corporation (2) Amount of remuneration, etc. 15.5 million yen 5. Matters Concerning the Establishment of Systems, etc. to Ensure Proper Business Operations 5 - 1. System to Ensure that the Execution of Duties by Directors Complies with Laws and Regulations and the Articles of Incorporation Directors deeply recognize that the establishment of compliance is the foundation of management and take the initiative in sincerely complying with the Group Code of Conduct and other regulations concerning compliance. 5 - 2. System Concerning the Preservation and Management of Information Relating to the Execution of Duties by Directors In order to appropriately record and preserve information concerning the execution of duties by directors, prevent information leakage and unauthorized use, and make effective use of information, regulations concerning information shall be systematized and an appropriate management system for company information shall be established. 5 - 3. Regulations and Other Systems Concerning Management of the Risk of Loss of the Company (1) Under the basic policy concerning the establishment of a risk management system, appropriate management systems shall be established to address major risks such as quality, safety, environment, compliance, information, and profit/loss. (2) With respect to responses in emergencies and large - scale disasters, an emergency management system including business continuity shall be established. (3) Each department and each base shall improve organizational risk management capabilities through the implementation of risk management education, etc. (4) The Human Resources and General Affairs Department shall promote management concerning company - wide risks. 5 - 4. System to Ensure that the Execution of Duties by Directors and Employees Is Conducted Efficiently (1) An executive officer system shall be adopted in order to enable agile business execution. (2) Decision - making standards, regulations on authority over duties, and other rules shall be established in order to respond to changes in the business environment and to improve management efficiency, such as speeding up decision - making and execution of duties. 5 - 5. System to Ensure Proper Business Operations in the Corporate Group (1) Based on the basic policy concerning Group operations, the Company shall promote the establishment, at each Group company, of a reporting system from each Group company to the Company. (2) In accordance with the business characteristics of each Group company, the Company shall promote the establishment of systems to address major risks such as quality, safety, environment, compliance, information, profit/loss, and large - scale disasters, and shall build risk management systems at each Group company. The Company shall also promote the implementation of risk management education for each Group company by the relevant departments of the Company, and shall ensure the effectiveness of the risk management systems of each Group company through monthly reporting meetings to directors. (3) The Company shall clarify the functions and roles of each company within the entire Group; support each Group company in designing institutions and organizations suited to its business characteristics and scale; promote effective use of management resources within the Group; and promote support, guidance, and cooperation for the business of each Group company. In addition, in order to smooth communication with each Group company and promote mutual understanding and cooperation in dealing with various te chnical, sales, transaction, and other issues surrounding the Group, headquarters meetings, cross - functional meetings, and other meetings shall be held from time to time. English translation of FY2025_ 決算報告書 .pdf (4) As a Group, rules including management philosophy and the code of conduct shall be shared, internal regulations suited to the characteristics of each Group company’s business shall be promoted, and a compliance system shall be established. 5 - 6. Matters Concerning Policies on Treatment of Expenses, etc. Arising from the Execution of Duties by the Audit & Supervisory Board Member and Other Systems to Ensure Effective Audits by the Audit & Supervisory Board Member (1) When the Audit & Supervisory Board Member makes a claim for expenses incurred in the execution of duties, directors shall respond appropriately in order to ensure the effectiveness of audits. (2) Through regular meetings between the Representative Director and the Audit & Supervisory Board Member, opinions shall be exchanged concerning the status of the development of the audit environment for the Audit & Supervisory Board Member and important audit issues, etc., and mutual communication shall be promoted. 5 - 7. System to Ensure the Appropriateness of Financial Reporting (1) The necessary internal control system shall be established to ensure the appropriateness of financial reporting. English translation of FY2025_ 決算報告書 .pdf Supplementary Schedule (Business Report Related) From January 1, 2025 to December 31, 2025 1. Details of concurrent positions of company officers as executive directors, etc. of other companies As stated in “3. Matters Concerning Company Officers” in the Business Report. English translation of FY2025_ 決算報告書 .pdf Notes to Consolidated Financial Statements From January 1, 2025 to December 31, 2025 Notes Concerning Significant Matters That Form the Basis for Preparation of Consolidated Financial Statements, Etc. 1. Matters Concerning Scope of Consolidation (1) Number of consolidated subsidiaries and names of major consolidated subsidiaries Number of consolidated subsidiaries: 8 companies Names of major consolidated subsidiaries: Shanghai Naxis Trademark Co., Ltd.; Qingdao Naxis Trademark Co., Ltd.; Dongguan Naxis Trademark Printing Co., Ltd.; Shanghai Naxis Trading Co., Ltd.; Naxis Vietnam Co., Ltd.; Naxis Indonesia Co., Ltd.; Bangladesh Naxis Co., Ltd.; Naxis Holdings Co., Ltd. (2) Names, etc. of major non - consolidated subsidiaries Name of major non - consolidated subsidiary: India Naxis Co., Ltd. Reason for exclusion from the scope of consolidation: The non - consolidated subsidiary is small in scale, and its total assets, net sales, net income (amount corresponding to equity interest), retained earnings (amount corresponding to equity interest), etc. do not have a material effect on the consolidated financial statements. (3) Matters concerning fiscal years, etc. of consolidated subsidiaries The fiscal year - end dates of the consolidated subsidiaries coincide with the consolidated fiscal year - end date, except for Bangladesh Naxis Co., Ltd. (June 30). For Bangladesh Naxis Co., Ltd., consolidation is based on financial statements prepared through a provisional settlement of accounts equivalent to a regular annual closing as of the consolidated fiscal year - end date. However, material transactions with Bangladesh Naxis Co., Ltd. that occurred between its fiscal year - end date and the consolidated fiscal year - end date have been adjusted as necessary for consolidation. 2. Matters Concerning Application of the Equity Method (1) Number of affiliates accounted for using the equity method and names of major companies, etc. Number of affiliates: 1 company Name of major consolidated subsidiary: Thailand Naxis Co., Ltd. 3. Matters Concerning Accounting Policies (1) Valuation standards and methods for assets ① Valuation standards and methods for securities Other securities, other than shares, etc. without market prices: Fair value method (valuation differences are processed by the method of direct inclusion in net assets in full, and cost of sales is calculated by the moving - average method). Shares, etc. without market prices: Cost method based on the moving - average method. ② Valuation standards and methods for derivatives Derivatives: Fair value method. ③ Valuation standards and methods for inventories Finished goods, raw materials, and work in process: Cost method based on the monthly moving - average method (balance sheet amount is calculated by the method of writing down book value due to decline in profitability). (2) Depreciation/amortization methods for fixed assets ① Property, plant and equipment (excluding leased assets): Declining - balance method; provided, however, that buildings acquired on or after April 1, 1998 (excluding facilities attached to buildings), and facilities attached to buildin gs and structures acquired on or after April 1, 2016, are depreciated using the straight - line method. The principal useful lives are as follows: Buildings: 38 years; Facilities attached to buildings: 10 to 15 years; Structures: 15 years; Machinery and equipment: 5 to 10 years; Vehicles: 4 years; Tools, furniture and fixtures: 4 to 10 years. ② Intangible fixed assets (excluding leased assets): Straight - line method is adopted. ③ Software: Straight - line method is adopted. Software for internal use is based on the period available for use within the Company (5 years). ④ Leased assets: Leased assets related to finance lease transactions that transfer ownership: the same depreciation method as that applied to owned fixed assets is adopted. Leased assets related to finance lease transactions that do not English translation of FY2025_ 決算報告書 .pdf transfer ownership: the straight - line method with the lease term as the useful life and residual value as zero is adopted. With respect to finance lease transactions other than those for which ownership of the leased property is deemed to transfer to the lessee, for lease transactions in which the lease transaction commencement date was before the beginning of the first fiscal year of application of Accounting Standard for Lease Transactions (Accounting Standards Board of Japan Statement No. 13), accounting treatment is based on the method for ordinary rental transactions. (3) Standards for recording provisions ① Allowance for doubtful accounts: To provide for losses from bad debts on receivables such as trade receivables and loans receivable, the estimated uncollectible amount is recorded based on the historical bad debt ratio for general receivables and based on individual consideration of recoverability for specific receivables such as doubtful receivables. ② Provision for country risk: In order to provide for payment of additional taxes in international taxation, the expected payment amount examined based on past experience is recorded. ③ Provision for directors’ retirement benefits: In order to provide for payment of retirement benefits to directors, the estimated amount at the end of the consolidated fiscal year based on internal regulations is recorded. (4) Standards for recording revenue and expenses Revenue from sales of merchandise or products mainly consists of sales through wholesale or manufacturing, etc.; pursuant to sales contracts with customers, the Group has a performance obligation to deliver merchandise or products. The Group determines that this performance obligation is satisfied at a point in time when the merchandise or products are delivered and the customer obtains control over such merchandise or products, and recognizes revenue at the time of delivery. The Company plans, manufactures, and sells apparel auxiliary materials. For the sale of such merchandise and products, because the period from shipment to delivery is several days, revenue is recognized at the time of shipment. * As stated in “3. Matters Concerning Accounting Policies,” “(4) Standards for recording revenue and expenses.” (5) Other significant matters that form the basis for preparation of consolidated financial statements ① Method for translating foreign currency - denominated assets and liabilities, etc. into Japanese currency: Foreign currency - denominated assets and liabilities are translated at the exchange rate as of the fiscal year - end date. ② Method of accounting for retirement benefits: Liabilities for retirement benefits are recorded at the expected amount as of the end of the consolidated fiscal year in order to provide for employees’ retirement benefits. Notes Concerning Revenue Recognition 1. Basic information for understanding revenue As stated in “3. Matters Concerning Accounting Policies,” “(4) Standards for recording revenue and expenses.” Notes Concerning Accounting Estimates Items whose amounts are recorded in the consolidated financial statements for the consolidated fiscal year under review based on accounting estimates and that may have a significant effect on the consolidated financial statements for the following consolidated fiscal year are as follows. Deferred tax assets: 56 million yen Deferred tax liabilities: 255 million yen Notes Concerning Consolidated Balance Sheet 1. Assets pledged as collateral and obligations related to collateral (1) Assets pledged as collateral: Land 327 million yen; Buildings 75 million yen. (2) Obligations related to collateral: Short - term borrowings 1,094 million yen; Current portion of long - term borrowings 791 million yen. 2. Accumulated depreciation of property, plant and equipment: △ 2,732 million yen Notes Concerning Consolidated Statement of Changes in Shareholders’ Equity, Etc. 1. Type and total number of issued shares at the end of the consolidated fiscal year (1) Common shares: 57,850 shares English translation of FY2025_ 決算報告書 .pdf Notes Concerning Financial Instruments 1. Matters concerning the status of financial instruments The Group limits fund management to short - term deposits, etc., and procures funds through borrowings from banks and other financial institutions. Customer credit risk related to notes receivable and accounts receivable is reduced in accordance with the credit management regulations. The purposes of borrowings are working capital (mainly short - term) and capital investment funds (long - term). Derivatives are conducted within the scope of actual demand in accordance with the foreign exchange risk management regulations. 2. Matters concerning fair values, etc. of financial instruments The carrying amounts on the consolidated balance sheet, fair values, and differences between them as of December 31, 2025 (the consolidated fiscal year - end date for the current period) are as follows. Cash is omitted from the notes, and deposits, notes receivable, accounts receivable, notes payable and accounts payable, and short - term borrowings are settled within a short period and their fair value approximates book value; therefore, notes are omitted. Unit: million yen Consolidated balance sheet amount Fair value (*) Difference (1) Long - term borrowings (2,108) (2,041) 67 (2) Derivative transactions 376 376 - * Amounts recorded under liabilities are shown in parentheses ( ). (Note) Explanation of valuation techniques and inputs used to calculate fair value Financial instruments are classified into the following three levels according to the observability and significance of the inputs used to calculate fair value. Level 1 fair value: Fair value calculated using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value: Fair value calculated using directly or indirectly observable inputs other than Level 1 inputs. Level 3 fair value: Fair value calculated using significant unobservable inputs. When multiple inputs that have a significant effect on the calculation of fair value are used, fair value is classified into the level with the lowest priority in the fair value calculation among the levels to which each of those inputs belongs. Long - term borrowings These fair values are calculated using the discounted present value method based on the total amount of principal and interest and an interest rate that takes into account the remaining term of the obligation and credit risk, and are classified as Level 2 fair value. Derivative transactions The fair value of foreign exchange forward contracts is calculated using the discounted present value method based on observable inputs such as exchange rates, and is classified as Level 2 fair value. Notes Concerning Per Share Information Net assets per share: 66,250 yen 83 sen Net income per share: 16,931 yen 32 sen Notes Concerning Significant Subsequent Events There are no significant subsequent events to be reported.