AKIBA Holdings Co. , Ltd.

Consolidated subsidiaries ADTEC Co., Ltd. and HPC Tech Co., Ltd. procure some products and raw materials from overseas, and exchange rate fluctuations affect assets and liabilities related to foreign currency-denominated transactions as well as procurement prices. Although hedging measures such as forward exchange contracts are employed, complete avoidance of risk is difficult, and exchange rate fluctuations may adversely affect business performance and financial condition.

The memory products market in which ADTEC Co., Ltd. operates is subject to intense competition from large and small companies both domestically and internationally. Competitors may possess higher profitability and price competitiveness than ADTEC, and if pricing pressure intensifies or competitiveness declines, this may adversely affect the business performance and financial condition of the Group as a whole.

The prices of semiconductor memory such as DRAM and flash memory, which are the primary raw materials handled by ADTEC in its memory products, repeatedly fluctuate cyclically and are highly susceptible to demand trends. The global semiconductor shortage has made procurement of certain materials difficult in the Memory, PC-related Devices & IoT Business, and since market fluctuations directly affect product prices, the risk of adverse impact on business performance and financial condition continues.

The processing technologies and other aspects of electronic components handled by ADTEC involve a wide range of applicable intellectual property rights, and there is a possibility that its products and technologies may inadvertently infringe on the intellectual property rights of other companies. Although utmost care is taken to avoid infringement, if a dispute arises, damages or other costs may adversely affect business performance and financial condition.

While ADTEC focuses on stabilizing product quality, unforeseeable defects or malfunctions in products or components may result in claims for damages from customers. Although insurance has been obtained to cover risks under the Product Liability Act, if damages exceeding the coverage amount occur, business performance and financial condition may be adversely affected.

Personal information is handled through ADTEC's PC recycling and collection processing, Buddy Net's BPO & Contact Center Business, and Diamond Pets & Resort's inn operations, giving rise to a risk of information leakage. Although a strict management system has been established and companywide employee training is conducted, if a significant data leak occurs, claims for damages and loss of credibility may adversely affect business performance and financial condition.

ADTEC and Buddy Net have collection periods from customers that are longer than payment periods to suppliers, and working capital needs arising from sales growth are financed through borrowings from financial institutions. Changes in financial institutions' lending stance or interest rate trends may increase the cost of fundraising, potentially adversely affecting business performance and financial condition.

Buddy Net and Branch Techno have major telecommunications carriers and telecom-related companies as their primary customers, making their performance susceptible to changes in the market environment and regulatory trends within the telecommunications industry. If demand contracts or regulations are tightened in the telecommunications industry, it may directly impact the Group's business performance.

The Group is actively pursuing entry into new markets and M&A activities to build new pillars of profitability, aiming to expand its revenue base and corporate scale. However, if M&A activities fail to achieve expected results, or if problems that are difficult to predict emerge afterward, this may adversely affect the overall business performance of the Group.