Techno Alpha Co., Ltd.

Since its founding, the Electronics business, centered on wire bonders, has accounted for a high proportion of total net sales, creating a structure in which sales trends in this business directly affect the performance of the Group as a whole. Because dependence on this specific business is high, fluctuations in demand in the relevant market amplify the risk of earnings volatility. As a countermeasure, the Company is promoting the development of new products and businesses in each business segment and strengthening the development and sales of proprietary products.

In the Electronics business, Marine and Environmental Equipment business, and Science business, the Company sells products based on distributorship agreements with domestic and overseas supplier manufacturers, and if such agreements are terminated or changed due to changes in the manufacturers' sales policies or other factors, performance may be affected. In particular, if the supply relationship with Kulicke & Soffa, the manufacturer of wire bonders, the Company's mainstay product, were to be discontinued, there is a risk of serious disruption to business continuity. As a countermeasure, the Company is working to develop new products and businesses and to strengthen the development and sales of its own products.

Since much of the Company's procurement consists of foreign-currency-denominated import transactions, sharp fluctuations in exchange rates may affect the Group's performance through import costs. As a risk mitigation measure, the Company utilizes hedging instruments such as forward foreign exchange contracts to stabilize import costs, and when exchange rate fluctuations are expected to be prolonged, it works to minimize the impact by negotiating price revisions with overseas suppliers and domestic customers.

Because the Company generally adopts the acceptance basis for recognizing revenue on machinery and equipment such as semiconductor manufacturing equipment, there is a risk that acceptance inspections will not be completed within the contractually scheduled period if delivery from manufacturers is delayed or if customers' acceptance inspections are delayed. In particular, if the acceptance of a large-scale project scheduled for the fiscal year-end month is pushed back to the following consolidated fiscal year, the timing of recording net sales and cost of sales will be deferred, potentially having a significant impact on performance for the relevant period.

Because the Group is small in scale, its internal management systems are also commensurate with that scale. If the Group is unable to respond appropriately and sufficiently in terms of personnel and organizational structure when business expands rapidly, constraints on business execution and expansion may arise, potentially affecting performance. As a countermeasure, the Company is working to grasp business conditions in a timely manner and continuously strengthen its internal management systems.