MEIWA INDUSTRY CO., LTD.

The Toyota Motor Group accounted for 57.5% of the Company's consolidated net sales in the current fiscal year, resulting in a business structure in which performance is significantly affected by the automobile production and sales trends of the group. Although the Company is working to expand its global sales channels, fluctuations in demand from the Toyota Motor Group may directly affect the Company Group's business results and other outcomes.

The purchase price of plastic resin, a key raw material, fluctuates in line with crude oil market conditions, creating a risk that soaring crude oil prices or exchange rate fluctuations could push up manufacturing costs. Although the Company addresses this through timely price negotiations, diversification of procurement routes, and total cost reduction activities, if cost increases cannot be sufficiently absorbed, profitability may be adversely affected.

In the automotive parts industry, sales prices have tended to decline due to ongoing cost reduction demands, and price competition with other companies in the same industry is intensifying. Although the Company addresses this through differentiation in technology and quality as well as active cost reduction activities, if it is unable to meet customer requests on price, this may lead to loss of orders or a decline in profitability.

As the Company advances overseas expansion as part of its globalization strategy, there is a risk of political and economic instability, changes in laws and regulations, rising labor costs, labor disputes, and social unrest such as riots, terrorism, or war in the regions where it operates. Should any of these events occur, they could impede the execution of local operations and have a material impact on the Company Group's business results and other outcomes.

Since the financial statements of overseas subsidiaries are prepared in local currencies, fluctuations in exchange rates at the time of translation into the consolidated financial statements affect consolidated performance figures. In a stronger yen environment, the performance of overseas subsidiaries diminishes when translated into yen, and there is also a risk that exchange rate fluctuations affect raw material procurement costs.

Although the Company has established a detailed management system from design and development through to manufacturing and has obtained ISO and other quality certifications, if an unexpected quality defect occurs, it could result in substantial costs such as recall response and a decline in social credibility. Given that automotive parts are directly linked to safety, quality issues could also seriously affect business relationships.

Although the Company has taken measures such as establishing an information security committee and distributing servers, there is a risk that cyberattacks, computer virus infections, or unforeseen disasters could lead to leakage of confidential or personal information, or cause critical systems to go down. Should these occur, they could disrupt business continuity and damage social credibility, potentially affecting business results and other outcomes.

Although the Company has taken preventive measures such as establishing a crisis management system, conducting regular inspections of production and disaster-prevention equipment, and diversifying risk, there is a risk that a natural disaster or unforeseen accident could delay or halt production and delivery activities not only for the Company Group but also for its customers and suppliers. The resulting ripple effect throughout the supply chain may affect the Company Group's business results and other outcomes.

In each country where it conducts business, the Company is subject to a variety of legal regulations, including business and investment permits, import/export restrictions, and security-related measures, and strives to comply with them. However, future regulatory changes or any violations occurring for any reason could affect business results and other outcomes. In particular, as global expansion continues, it is necessary to continuously monitor regulatory trends in each country.

While the Company works to protect its own technologies and know-how through patents and other means, and strives to prevent infringement of other companies' intellectual property rights, in regions where such protection is difficult, it may not be possible to prevent the manufacture of similar products. In addition, if the Company's products or technologies are found to infringe on the intellectual property rights of other companies, this could affect business results and other outcomes through damages litigation and similar actions.