SiriusVision CO., LTD.

Following the previous consolidated fiscal year, the Company recorded a significant operating loss, ordinary loss, and net loss attributable to owners of parent in the current consolidated fiscal year as well, and events casting material doubt on the going concern assumption continue to exist. As countermeasures, the Company is implementing thorough cost reductions, including a review of its business portfolio involving a fundamental review and withdrawal from overseas operations, a freeze on R&D activities, and cancellation and consolidation of offices. On the financial front, the Company expects to secure funds for the time being through the sale of held securities, fixed cost reductions, and procurement of working capital from financial institutions, and has determined that there is no material concern regarding cash flow as of the end of the current consolidated fiscal year.

With the aim of shifting management resources toward the image inspection business, the Company is actively promoting the utilization of external management resources, including M&A and the establishment of new companies, and may continue to implement similar measures in the future. If personnel secured through acquisitions are unable to maintain morale due to differing cultural backgrounds, if the Company is unable to build an appropriate product portfolio, or if unexpected material problems are discovered after an acquisition, business performance may be affected. While recognizing these risks, the Company intends to continue such measures where judged effective for its growth strategy.

Demand for image inspection equipment is increasing due to improved living standards and stricter compliance requirements in the pharmaceutical market; however, if major technological changes occur, such as the spread of technologies like digital signage that allow package surface information to be modified via communication means, there is a risk that existing demand for image inspection may decline. While the Company judges changes in social needs, such as greater tolerance for errors or reduced emphasis on design, to be of low probability, if technological substitution occurs, it may affect business performance and financial position. The Company continues to closely monitor market trends.

The Company group develops and sells high-quality original software for high-end enterprise customers, requiring engineers with advanced development skills capable of operating hardware to its limits. There is a chronic shortage of software engineers in the labor market, and if the Company lacks highly skilled engineers internally, it may need to rely on outsourced development or hire engineers at higher cost, increasing costs. If planned development becomes difficult, business performance and cash flow may be affected.

Image inspection equipment consists of conveyance equipment, imaging equipment (cameras and lighting), and software, but the Company group supplies only the software, resulting in high dependence on manufacturers of conveyance equipment and imaging equipment. If conveyance equipment or imaging equipment prices rise sharply due to semiconductor shortages or increases in metal material and parts prices, there is a risk that the overall price of image inspection equipment may become unacceptable in the market. Although the Company group procures materials from a long-term perspective, if procurement prices rise sharply or procurement becomes difficult, business performance and financial position may be affected.

Although the Company group has established a thorough quality assurance system, unexpected product defects, if they occur, may affect business performance. In the image inspection business, services are provided utilizing IT technologies such as software and communication services, and if significant technological innovation occurs in the IT field, resulting in restrictions on the use of such new technologies, business performance may be affected. The Company continues to work on strengthening its quality assurance system.

Overseas sales in the current consolidated fiscal year accounted for 9.8% of consolidated net sales, a decrease of 0.4 percentage points from the previous consolidated fiscal year. The Company group adopts a policy of conducting transactions in yen wherever possible to minimize the impact of foreign exchange fluctuations, but if exchange rates fluctuate significantly, business performance and financial position may be affected. While the overseas sales ratio currently stands at approximately 10%, the Company aims to expand into new business areas through the construction of new overseas networks, and attention must be paid to future changes in foreign exchange exposure.

The transfer of industry-specific specialized knowledge and technology is essential to business execution, and securing and developing excellent human resources is recognized as an important challenge for business development and expansion. If the Company is unable to appropriately secure and develop human resources, or if key personnel leave, business performance and other aspects, including future business development, may be affected. In particular, maintaining the morale of personnel with differing cultural backgrounds during organizational integration phases following M&A also poses a challenge.

Unexpected events such as economic and political changes, natural disasters, war, terrorism, and infectious disease pandemics cannot be avoided by the Company group alone, and if such events occur, business performance may be affected. These risks stem from the external environment, and the Company group's means of directly avoiding them are limited. The Company has indicated a policy of recognizing these risks and striving to avoid such events and respond appropriately should they occur.