TECHNO HORIZON CO.,LTD.

In the four markets of educational ICT, corporate DX, vision systems, and FA robotics, there is a possibility that superior products and services will be introduced due to strategic changes by competitors or new entrants from other industries. This could reduce the competitiveness of the Group and have a significant impact on business performance. In response, the Group continuously monitors economic conditions, market environment, customer needs, and investment trends, and flexibly reflects these in its management and business plans to respond swiftly to change.

Sales of interactive whiteboards in the Imaging & IT Business have seasonality concentrated around the budget execution periods of the education market (summer vacation and fiscal year-end), while the Robotics Business is directly affected by demand contraction in the machine tool and electronics industries. There is a risk that dependence on specific markets and periods could undermine the stability of business performance. In response, the Group is promoting diversification of its revenue structure by expanding stock-type revenue such as maintenance and support services and accelerating expansion into adjacent markets.

Intensifying price competition with domestic and overseas manufacturers could cause significant declines in selling prices, and future competitive advantage is not guaranteed even for products with high market share. There is also a risk that sales volumes could decline due to the introduction of new products by competitors. In response, the Group is strengthening cost competitiveness through thorough cost reduction, differentiating through proprietary technology, quality, and reliability, and reviewing its business portfolio.

Continuous development of differentiating technologies is essential for sustainable growth, but the results of R&D are inherently uncertain, and there is a possibility that expected technologies or products may not be achieved. In addition, if it becomes difficult to secure and develop highly skilled personnel, this could have a significant impact on business performance and growth. In response, the Group is promoting efficient market analysis, resolution of technical challenges, and new product development by its development departments, as well as talent acquisition through new graduate and mid-career hiring and post-employment training.

The Group procures raw materials and components, including semiconductors, from numerous external suppliers, and if it becomes difficult to obtain these at planned quantities or prices for any reason, it may be unable to secure planned production volumes, which could significantly affect business performance. In particular, dependence on procurement from Asian countries heightens geopolitical risk. In response, the Group conducts regular audits and surveys of suppliers and diversifies procurement routes to ensure stable supply.

Although the Group has established a quality management system by obtaining ISO9001, ISO14001, and ISO13485 certifications, the occurrence of product defects cannot be completely eliminated, and defects leading to product liability claims risk significantly damaging the company's reputation and reducing sales. In addition, delays in progress or unexpected defects in software development carry the risk of liability for damages. In response, the Group operates a quality management system compliant with international standards across all processes from development and design to manufacturing, sales, and service.

The Group conducts sales activities in Europe, the United States, and ASEAN countries, manufactures at its local subsidiary in China, and procures components from Asian countries, and unforeseen changes in laws and regulations, fluctuations in the political and economic environment, social disruption due to terrorism, war, or infectious diseases, and infrastructure failures could impede business activities. In response, the Group conducts prior surveys of countries it enters and gathers information on subsequent legal and regulatory changes to reduce risk.

As the Group expands its overseas business, foreign currency-denominated transactions have arisen, and large fluctuations in foreign exchange rates affect foreign currency-denominated sales and purchases, significantly impacting business performance. Fluctuations in either the yen's depreciation or appreciation direction pose a risk to profitability. In response, the Group works to reduce overall foreign exchange risk by improving the balance of transaction currencies, increasing yen-denominated transactions, expanding overseas procurement, and reviewing production countries.

As a result of actively pursuing corporate acquisitions as part of its growth strategy, goodwill and intangible fixed assets have increased, and if the future earning power of acquired companies declines, impairment processing may become necessary, which could affect business results and financial condition. In addition, a significant deterioration in the management environment or earnings condition of group companies could also affect the valuation of shares in affiliated companies. In response, the Group conducts deliberations on the validity of acquisitions from financial, strategic, and risk perspectives prior to acquisition, and conducts regular monitoring after acquisition.

If confidential information held in connection with business activities is leaked due to unforeseen events such as unauthorized access or cyberattacks, this could affect business performance through substantial cost burdens and damage to the company's image. With the advancement of digitalization, the threat of cyberattacks is increasing. In response, the Group monitors the appropriate management and operation system for its internal network and information equipment through the establishment of information management regulations and guidelines and the regular convening of an Information Security Committee.