KYORITSU AIR TECH INC.

Since dampers and diffusers, the Company's main products, are products for capital investment, fluctuations in domestic economic conditions, business trends, and construction demand directly affect business performance. There is a risk that orders may decrease in periods when corporate capital investment appetite declines. In addition, a decline in order unit prices due to intensified competition among industry peers could also be a factor putting pressure on business performance.

If competition for order acquisition among industry peers intensifies in the dampers and diffusers market, a decline in sales unit prices may occur, creating a risk of reduced profitability. Price competition is particularly likely to materialize during periods of sluggish construction demand and may affect both net sales and profit margins. The securities report does not include a description of specific countermeasures.

There is a risk that trade receivables and other amounts may become uncollectible due to deterioration in the financial condition of business partners or changes in their sales trends. The Company Group works to prevent the occurrence of bad debt through credit setting and continuous monitoring of credit conditions; however, if the business environment of a business partner changes suddenly, bad debt may occur, potentially affecting business performance.

Since the main material for diffusers is aluminum, if international aluminum prices rise, procurement prices will surge, increasing manufacturing costs and potentially adversely affecting business performance. As a measure to avoid procurement price surges, the Company conducts overseas procurement, but this cannot completely eliminate the risk of price fluctuations.

Since raw materials such as aluminum are procured from overseas in foreign currency, in a period of yen depreciation procurement costs will rise, potentially affecting business performance. The securities report does not describe specific countermeasures such as foreign exchange hedging, and there is a risk that exchange rate fluctuations will directly spill over into the cost structure.

The Company Group is pursuing business development in overseas markets and is exposed to country risks such as unexpected changes in laws and regulations, economic fluctuations, and social unrest in the countries where it operates. If such events occur, it may become difficult to continue overseas operations and secure profitability, potentially affecting the business performance and financial condition of the Group as a whole.

If unexpected changes in laws and regulations occur in countries where the Company conducts overseas business, restrictions on business operations may arise, creating a risk of additional costs or difficulty in continuing operations. Since the regulatory environment in each country may change due to political and economic conditions, continuous monitoring is necessary, but the description of specific countermeasures in the securities report is limited.

If a defect occurs in a product, costs for product warranty and repair work may arise, potentially affecting business performance. The Company Group produces products in accordance with quality standards such as quality standard documents, and has taken measures to minimize the impact on business performance in the event of a claim for damages by taking out product liability insurance. However, costs for handling claims not covered by insurance and the risk of brand damage remain.