MIYAIRI VALVE MFG. CO., LTD.

Sales of LP gas cylinder valves, the Company's core product, depend heavily on legal regulation under the High Pressure Gas Safety Act. Changes to relevant laws, regulations, and administrative policies may affect the Company's financial position and operating results. The Company states that it monitors regulatory trends closely and strives to avoid occurrence of and respond to such changes.

The prices of brass, the main raw material for LP gas cylinder valves, castings, the main raw material for steel equipment valves, and various chemical products significantly affect manufacturing costs. The prices of these raw materials also depend on foreign exchange rates, and if market prices fluctuate significantly, this may affect the Company's financial position and operating results.

28.5% of net sales are concentrated among the top three customers, resulting in a high degree of dependence on specific customers. If the sales trends, operating results, or financial condition of these customers deteriorate, this may adversely affect the Company's financial position and operating results.

The domestic market for LP gas valves, the core of the Company's business, is expected to gradually contract over the long term. If the Company continues to focus its business development solely on the manufacture and sale of LP gas valves over the long term, its financial position and operating results may deteriorate.

The Company holds marketable securities, primarily in business partners, and fluctuations in stock prices may affect its financial position and operating results. In periods of overall stock market decline, there is a risk of valuation losses on held securities.

The Company manufactures products in accordance with domestic and international quality standards and has established a thorough quality assurance system; however, should a quality defect or quality incident occur, this may affect the Company's financial position and operating results through increased external costs and a decline in the market reputation of its products. Given the nature of high-pressure gas-related products, quality incidents can lead to serious consequences.

The Company raises funds through borrowings from financial institutions and the issuance of corporate bonds, and bears the risk of fluctuations in financing costs due to financial market conditions and the Company's business performance. In periods of rising interest rates, financing costs increase, which may affect the Company's financial position and operating results.

Although the Company strives to manage its business with an emphasis on compliance, it bears the risk of litigation related to criminal, civil, antitrust, product liability, intellectual property, environmental, and other matters arising from its business activities in Japan and overseas. Depending on the outcome of such litigation, the Company's financial position and operating results may be affected.

The Company bears the risk of changes in the business environment resulting from contingent events, including natural disasters, and such changes may affect its financial position and operating results. Force majeure events such as natural disasters can directly damage production activities and the supply system.