Helios Techno Holding Co.,Ltd.

A large portion of the sales of Nakan Techno Co., Ltd. (Manufacturing Equipment Business) and Phoenix Electric Co., Ltd. (Lamp Business) depends on exports to China and Taiwan. If sudden political changes, legal changes, economic upheavals, natural disasters, or acts of terrorism/war materialize in these countries, they could have a material impact on the Group's business results and financial position. In addition, if trade friction, additional tariffs, or sharp currency fluctuations spill over into the supply chain, there is a risk that indirect demand declines could affect the Group's overall performance.

Most of Nakan Techno Co., Ltd.'s sales relate to a portion of LCD panel manufacturing equipment, and demand is linked to the supply-demand conditions of LCD panels, while also being exposed to the large swings in supply and demand—concentrated orders followed by sharp declines—that are characteristic of manufacturing equipment. If supply-demand fluctuations exceed expectations, they could have a material impact on the Group's business results and financial position through order volatility. The high degree of dependence on specific customers and specific products is a factor that amplifies this fluctuation risk.

Nakan Techno Co., Ltd. and Phoenix Electric Co., Ltd. continuously engage in product technology development, but if development does not proceed as initially planned, or if developed technologies cannot be commercialized as expected, this could have a material impact on the Group's business results and financial position. In an industry with rapid technological innovation, development delays or failure to commercialize pose a risk directly linked to a decline in competitiveness.

In the electronics industry to which Nakan Techno Co., Ltd. and Phoenix Electric Co., Ltd. belong, price competition is intense, and the trend of restraining investment costs in manufacturing equipment continues. If competition intensifies further and selling prices decline beyond expectations, this could have a material impact on the Group's business results and financial position. While the Group's strength lies in offering high-precision, high-quality products, responding to price pressure remains an ongoing challenge.

The Group belongs to an industry characterized by rapid technological innovation, and the risk of being subject to patent infringement lawsuits from other companies cannot be entirely ruled out. Although the Group actively pursues patent acquisition and pays close attention to preventing infringement of other companies' patents during product development, if a dispute arises, the value of the Group's proprietary technology could be significantly impaired, which could have a material impact on the Group's business results and financial position.

The Group recognizes the leakage of customer information and confidential information as a significant risk that could undermine customer trust, and works to prevent external leaks through thorough dissemination of information security regulations and the establishment of internal systems. Nonetheless, if a leakage of confidential information occurs due to unforeseen circumstances, it could have a material impact on the Group's business results and financial position.

Mercury lamps, a key product of Phoenix Electric Co., Ltd.'s Lamp Business, contain trace amounts of sealed radioisotopes, and the business is conducted under a license granted by the Nuclear Regulation Authority pursuant to Article 3, Paragraph 1 of the Act on the Regulation of Nuclear Source Material, Nuclear Fuel Material and Reactors [radioisotope-related regulations]. If grounds for revocation or suspension of the license arise (Article 26, Paragraphs 1 and 2 of the same Act), continuation of the Lamp Business could become difficult, which could have a material impact on the Group's business results and financial position. The Company states that at present there are no factors that would impede continuation.

The Group's production sites are concentrated in Himeji City, Hyogo Prefecture, and Sakura City, Chiba Prefecture, and there is a risk that large-scale natural disasters such as earthquakes or typhoons could cause severe damage to production and development sites. Because geographic diversification is limited due to this concentration of sites, a single disaster could directly affect the Group's overall production capacity, which could have a material impact on the Group's business results and financial position.

At Nakan Techno Co., Ltd., a portion of payment collection for machinery and equipment occurs after completion of technical acceptance inspection following installation, creating a risk that payment collection could be delayed if the acceptance process is prolonged. In particular, for large-scale projects, the scale of collection delays could become significant, which could have a material impact on the Group's business results and financial position.

Phoenix Electric Co., Ltd. faces intense competition for talent in securing the personnel needed for new product development, manufacturing, and sales expansion. If the Company is unable to secure the necessary personnel, this could have a material impact on the Group's business results and financial position through a decline in product development and sales capabilities.