ADTEC PLASMA TECHNOLOGY CO.,LTD.

The Group's principal customers are semiconductor-related companies, and there is a risk that the market size may fluctuate significantly due to short-term adjustments in the supply-demand balance of the semiconductor market. While mid- to long-term growth driven by technological innovation is anticipated, sudden short-term changes in demand may directly affect operating results and financial condition. As countermeasures, the Group regularly monitors and verifies customers' investment trends and order status, and maintains a flexible production system.

In the High-Frequency Power Supplies for Plasma and Matching Unit businesses, multiple competitors exist, and if a competitor introduces a groundbreaking new product or expands its repair and maintenance capabilities, this may lead to a decline in selling prices through order competition, affecting operating results and financial condition. The Company seeks to differentiate itself through higher-performance products and enhanced repair and maintenance services, but the risk of technological innovation by competitors exceeding expectations cannot be eliminated.

The Group continues to make active investments in research and development and to launch new products in the market; however, if delays occur in research and development that result in delayed market introduction of new products, this could lead to a decline in competitiveness and affect operating results and financial condition. Given the rapid pace of technological innovation in the semiconductor and LCD industries, development delays carry the risk of directly resulting in lost market opportunities.

While the Group has not to date received any claims alleging infringement of other companies' intellectual property rights, if third-party patent rights are newly established or registered in the future, or if patents exist that the Group is unaware of, claims for damages, injunctions against use, or payment of consideration may arise, affecting operating results and financial condition. Given the industry characteristic of active research and development activity, management of intellectual property rights is positioned as a key issue in the conduct of business.

The Group manufactures products both domestically and overseas and exports to customers around the world, resulting in a large volume of foreign-currency-denominated transactions; sharp fluctuations in exchange rates may therefore affect operating results and financial condition. As the Group expands into its three main markets of North America, Europe, and Asia, its exposure to foreign exchange risk is structured to expand along with business growth.

The Group manufactures products using raw materials purchased from external suppliers, and if a supply shortage, delay, or stoppage occurs due to a sudden surge in demand, a disaster, or other causes, this may affect production plans and make it impossible to ensure a stable supply of products. These factors are external factors beyond the Group's control, and although the Group focuses on securing inventory and maintaining a stable supply system, it is difficult to eliminate this risk entirely.

The Group has established an ISO9001-certified quality system and builds in quality from the design stage; however, there is no guarantee that defects will not occur in any product or service, and if accidents, market recalls, or production stoppages occur at customers, the Group may be held liable for damages. If a large-scale recall or similar event occurs, substantial recall costs, compensation expenses, or a decline in sales could materially affect operating results and financial condition.

The Group holds important business information, personal information, and confidential information belonging to business partners, and if information leakage, disclosure, or system outages occur due to cyberattacks, theft, or loss, this could result in loss of customers, decline in social credibility, and liability for damages. Unforeseen incidents, including the destruction or falsification of important data, are recognized as a risk that could affect operating results and financial condition.

In the Group's overseas expansion into its three main markets of North America, Europe, and Asia, if difficulties arise in securing local sales and service personnel, personnel turnover occurs, or administrative and management issues arise, the Group may be unable to supply products to the market in a timely manner, affecting operating results and financial condition. Although the Group has established a global sales structure, the difficulty of securing personnel in each region could constrain business expansion.

As the Group conducts business globally, it is subject to various laws and regulations, including those relating to import and export, competition law, anti-bribery measures, environmental protection, and transfer pricing taxation; violations of these could result in a decline in social credibility, fines, or the need to respond to lawsuits for damages. Laws and regulations in various countries tend to become stricter each year, and there is also a risk that unforeseen future revisions to laws and regulations could affect business activities.