CYBERDYNE,INC.

The majority of the Group's revenue comes from HAL®-related products, and this is expected to remain the primary source of revenue for the foreseeable future. If sustained market expansion of HAL® becomes unattainable due to changes in laws and regulations or healthcare policies in various countries, delays in insurance system development, the emergence of alternative technologies, or changes to the exclusive license agreement with the University of Tsukuba, this could have a material impact on the Group's business results and financial condition. The Group is pursuing the creation of new products as a key business strategy, but this does not guarantee certain results.

Selling HAL® as a medical device requires approval from regulatory authorities in each country and region, and outside the EU, Japan, and the United States, there is no guarantee that approval will be obtained, and the timing of approval varies by country and region. In addition, while insurance coverage is a key element in the widespread adoption of HAL®, the scope of applicable conditions and the level of insurance benefit payments are determined by public insurance institutions and private insurers in each country, so the status of coverage may affect business development and profitability. Even after approval is obtained, there is a possibility that the approval may not be renewed or may be revoked due to regulatory changes.

President and Representative Director Yoshiyuki Sankai plays a central role in the Group both in terms of management and new technology development, and if he becomes unable to carry out his duties, this could have a material impact on the Group's business results and future business development. He also serves concurrently as a professor at the University of Tsukuba and as a SIP Program Director, and giving priority to university or SIP duties could also have an impact. Although a decision-making structure based on Board of Directors resolutions has been established to prevent conflicts of interest, the risks associated with his concurrent positions cannot be completely eliminated.

The Group has incurred continued operating losses due to research and development expenses being recorded ahead of revenue generation, and has recorded negative retained earnings on a non-consolidated basis. Going forward, demand for funds is expected to increase for working capital, research and development investment, capital expenditure, M&A, and other purposes, and if profit generation or fundraising does not proceed as planned, this could affect the Group's financial condition and business results. The Group's policy is to prioritize strengthening internal reserves and reinvesting in research and development with the aim of achieving early operating profitability, but if the profit plan does not progress as expected, shareholder returns may also become difficult.

Yoshiyuki Sankai holds 3,042,000 shares of common stock and 77,696,000 Class B shares, giving him approximately 85% of total shareholder voting rights, which allows him to single-handedly pass resolutions at the general shareholders' meeting, including the election of directors and organizational restructuring. This limits the influence that common shareholders can exert through the exercise of their voting rights, and may also impede share purchases that would be beneficial to common shareholders. Although break-through provisions and sunset provisions are stipulated in the Articles of Incorporation, the conversion conditions are limited, and the conversion of Class B shares into common stock may affect the market price of common stock.

Companies in Japan and overseas are advancing research and commercialization of wearable robots, and the competitive environment is changing as numerous companies, including major technology companies, newly enter the commercial robotics field. Competitors may have advantages in capital, human resources, cost structure, brand, and product diversity, and if they succeed in developing newer technologies or more useful products, there is a risk that the competitive advantage of the Group's products cannot be sustained. The Group seeks to differentiate itself through the uniqueness of its Cybernic voluntary control technology, which utilizes bioelectrical signals, and joint patents with the University of Tsukuba, but there is no guarantee that this advantage will persist indefinitely.

The development of advanced technology requires substantial funding and long periods of time, and there is no guarantee that research and development activities will proceed as planned; delays in various trials or delays or restrictions in obtaining manufacturing and marketing approval for medical devices may occur. The Group has built external collaborative relationships centered on joint research with the University of Tsukuba, and seeks to reduce the risk of increased research and development expenses through progress management, prioritization, and reallocation of management resources for each product under development. However, there is no guarantee that the exploration and creation of new products can be reliably achieved, and if progress does not proceed as planned, this could affect the Group's financial condition and business results.

Domestic patents for HAL® are, in principle, jointly held by the Company and the University of Tsukuba, and the Group uses them exclusively under an exclusive license agreement; however, if continuation of the agreement becomes difficult due to breach of contract, merger, acquisition of significant assets, or other reasons, this could have a material impact on business continuity. In addition, if issues arise regarding infringement of intellectual property rights with third parties, resolving them may require significant time and expense, and similar risks exist if the Group's technology is infringed by third parties. At present, no lawsuits or claims have arisen, and the Group continues to conduct technology surveys and other efforts to avoid infringement issues.

The Group is actively promoting strategic capital investments in and business partnerships with startups in Japan and overseas as an important initiative to accelerate the creation of the cybernics industry; however, it is difficult to fully predict the effects of such investments and partnerships in advance, and there is no guarantee that the anticipated timeframe and effects will be achieved. Depending on the business conditions of investee companies, changes to share valuations may be required, which could affect the Group's financial condition and business results. The Group strives to make appropriate use of the effects of its investments and partnerships, but this does not guarantee smooth implementation.

The Group is subject to a wide range of laws and regulations in Japan and overseas, including the Pharmaceuticals and Medical Devices Act, import/export regulations, competition law, and personal information protection laws, and violations could result in civil, administrative, or criminal sanctions. The Group collects personal information from HAL® users and has established a management structure including confidentiality agreements, personal information protection regulations, and the appointment of a personal information protection manager; however, if a data leak occurs, this could affect the Group's business, financial condition, and business results through damage claims and loss of social credibility. In addition, there are also risks related to overall business activities, such as geopolitical risk, infectious diseases, disasters, and foreign exchange fluctuations.