OKAMOTO GLASS CO., LTD.

Sales to the Seiko Epson group accounted for ¥1,212,749 thousand (25.6% of total sales) in the current consolidated fiscal year, indicating a high degree of dependence on a specific customer. Although the Company maintains a favorable business relationship with the group, there is no guarantee that the Company's products will continue to be adopted in the future, and changes in the trading relationship would directly affect business performance. No specific measures to reduce this dependence are explicitly disclosed in the securities report at this time.

Although the Company pioneered the market for Reflector Mirrors for Projectors, competition has emerged as other specialty glass manufacturers have entered the market alongside its expansion. If declines in selling prices due to intensifying competition cannot be offset by increased sales volume or cost reductions, business performance may be affected. The Company is working to strengthen its competitiveness by advancing the development of materials and precision molding technologies for miniaturization, heat resistance, and improved reflectivity.

The Optics Business is the Company's main segment, accounting for 44% of consolidated net sales for FY2026 (ending March 2026), centered on the manufacture and sale of Reflector Mirrors for Projectors and the Fly-Eye Lens, among others. If the market for optics-related products shrinks due to changes in economic conditions or technological innovation, business performance could be materially affected. The Company intends to continue centering its business development on the Optics Business going forward, and diversification of business is limited.

The Group conducts part of its export transactions in foreign currencies, and sharp fluctuations in exchange rates could lead to a decline in sales or the incurrence of foreign exchange losses. As countermeasures, the Company periodically reviews foreign-currency-denominated order unit prices with business partners and enters into forward foreign exchange contracts against actual export transactions to reduce risk. However, a risk remains that even yen-denominated exports could see reduced orders due to rapid exchange rate fluctuations.

Some of the Group's borrowings are subject to financial covenants, and if consolidated net assets, consolidated ordinary income, or other metrics breach these covenants, an obligation to repay ahead of schedule could arise. In a downturn in business performance, liquidity risk could become apparent, making the maintenance of financial soundness an important management issue. The specific content of the covenants and the margin before breach are not disclosed in the securities report.

The Group holds substantial fixed assets, with manufacturing and sales in the Optics Business as its principal business. If the financial performance of ongoing businesses deteriorates for any reason, or if business assets are sold, the Company may need to recognize impairment losses on fixed assets or losses on sale, which could affect business performance. In particular, as concentrated investment in the Optics Business continues, the risk of impairment is relatively high in the event of market contraction.

The Group has concentrated production in Kashiwa City, Chiba Prefecture, and Kashiwazaki City, Niigata Prefecture, to achieve operational efficiency; however, if a severe natural disaster or other event occurs in these regions, disruption to production activities could adversely affect the Group's operating results and financial condition. The geographic concentration of production sites is a risk factor from a BCP perspective, and details of an alternative production framework are not explicitly disclosed in the securities report.

Some of the Company's key raw materials are subject to price fluctuations driven by market conditions or are sourced from a limited number of suppliers, and an inability to procure them at appropriate prices and volumes could lead to increased manufacturing costs. If such cost increases cannot be sufficiently passed on to product prices, business performance may be affected. Specific measures regarding diversification of suppliers or securing alternative materials are not explicitly disclosed in the securities report.

The Group is in a position to obtain important information, such as customers' product development and production plans, at an early stage, and if an information leak were to occur, the Company could face liability for damages as well as a decline in reputation that could affect business performance. The Company operates under strict compliance-related rules and has implemented measures to prevent information leaks in advance, but these measures do not guarantee complete prevention.

The Group has sales offices in Taiwan and China, and business performance could be affected by factors such as changes in local economic conditions, revisions or abolition of legal regulations, differences in business customs, changes in labor relations, political and social changes, and the occurrence of terrorism or infectious diseases. In particular, heightened geopolitical risk in China and Taiwan could affect the stable operation of sales offices. Specific details of risk mitigation measures are not disclosed in the securities report.