KAINOS Laboratories, INC.

In vitro diagnostic products and medical analytical instruments are subject to approval, licensing, and monitoring systems at each stage of development, manufacturing, import, and use, and revisions to pharmaceutical affairs-related regulations in Japan and overseas may affect business performance. The Company strives to build a rigorous quality control system, including acceptance inspections of raw materials with lot-to-lot variability, to supply high-quality products; however, there is a risk that increased costs of responding to regulatory changes or delays in product supply may occur.

If research and development of in vitro diagnostic products does not proceed as planned, or if new product candidates fail to exhibit the expected stable reactivity during the clinical trial stage, extensions, interruptions, or discontinuations of the development period may occur. This could delay the market launch of new products, leading to a risk of loss of future revenue opportunities.

If a competitor launches a groundbreaking product in the Company's key product areas, or depending on the content of medical reimbursement price revisions, the Company's business performance may be affected. Intensifying competition in the in vitro diagnostic products market and reductions in insurance reimbursement prices could lower net sales and profitability.

Key raw materials related to immunology and genetics, particularly transfusion testing-related products, are highly dependent on imports, and fluctuations in foreign exchange rates may adversely affect business performance. Although the Company implements hedging measures such as forward exchange contracts, there is no guarantee that these will fully eliminate exchange rate fluctuation risk, and in a yen-depreciation environment, rising raw material procurement costs could put pressure on profitability.

Some of the products handled by the Company are licensed for development, manufacturing, and sale from products developed by other companies; therefore, changes in the licensor's policy, termination of contracts, or revisions of terms could affect business performance. If the proportion of sales derived from license-dependent products is high, there is also a risk that securing alternative products may become difficult.

The Company holds assets such as real estate and securities in connection with its business activities, and fluctuations in the market value of these assets may affect its operations. In particular, for securities, deterioration in market conditions could result in valuation losses, posing a risk of worsening financial condition.

Testing instruments, among other products, are sold infrequently, making it difficult in some cases to determine valuation based on sales results around the fiscal year-end, and their selling prices can fluctuate significantly, resulting in a high degree of estimation uncertainty in determining net realizable value. If selling prices fluctuate due to market conditions or other factors, this may affect business performance and financial condition in the following and subsequent fiscal years.

Fluctuations in interest rates and deterioration in economic conditions in various countries due to war, political upheaval, or other events may affect the Company's business performance. In particular, given the dependence on imported raw materials and transactions with overseas markets, the materialization of geopolitical risks could lead to increased procurement costs or the loss of sales opportunities.