Jedat Inc.

If all or a significant portion of software source code, development environments, and customer license information—managed redundantly across multiple locations in Chuo-ku, Tokyo, Osaka City, Osaka Prefecture, and other sites—were lost due to a large-scale disaster, this could have a material impact on business continuity. Although the Company has implemented countermeasures through multiple redundant management, this does not entirely eliminate the risk of complete loss.

The domestic market that the Company targets is expected to continue contracting for some time, presenting a risk of shrinkage in the sales base. As countermeasures, the Company is strengthening sales expansion in overseas FPD markets and introducing new products into overseas semiconductor markets; however, if these measures are delayed or inappropriate, business performance could be affected. The Company also aims to expand its share in the domestic market by uncovering demand for high-reliability design needs.

In markets such as semiconductors and FPDs, technological innovation proceeds extremely rapidly, requiring timely incorporation of cutting-edge needs into products; however, it takes considerable time from research and commercialization of new technology to market recognition and business realization. If the Company fails to accurately capture changes in market needs and its products' competitiveness relatively declines, business performance could be affected. There is also no guarantee that new products will be accepted by the market, which constitutes a risk factor.

As a research and development-oriented company, securing talented personnel and sufficient capital is essential to continuing business operations; failure to secure these could lead to a relative decline in product competitiveness. Maintaining competitiveness in the semiconductor and FPD fields, where technological innovation is rapid, requires continuous investment in research and development, and constraints on both personnel and capital could directly affect business performance.

The Company registers patents and other intellectual property rights while considering cost-effectiveness, striving to protect its rights; however, it may receive infringement notices due to the establishment of third-party patents of which the Company is unaware. In such cases, substantial costs, including litigation expenses, could arise, potentially affecting business performance. The Company seeks to reduce infringement risk through thorough internal education and guidance for outsourcing partners.

The Company procures some of its complementary products from overseas venture companies; if these partner companies fall into financial difficulty or are acquired, there is a risk that investments in preemptive sales activities and other efforts may not be recovered. Although the proportion of sales from purchased products is relatively low at approximately 20%, the loss of key products could affect business performance. Since the partner companies are overseas ventures, monitoring their management stability remains a challenge.