ALMEDIO INC.

The Company has recorded operating losses on a non-consolidated basis for 10 consecutive fiscal periods from FY2017 (ended March 2017) through FY2026 (ending March 2026), and recognizes that this constitutes a material event that raises significant doubt about the going concern assumption. As a countermeasure, the Company has formulated the "Medium-Term Management Plan 2026," and based on an evaluation using the funding plan for the following fiscal year, has determined that no material uncertainty regarding the going concern assumption exists. However, if the plan is not achieved, this could have a serious impact on the Company's financial condition.

The Company's consolidated subsidiaries, Alsi (Suzhou) Inorganic Materials Co., Ltd. and Almy (Suzhou) Technology Co., Ltd., conduct business activities in China, which inherently involves risks such as changes in laws and regulations, labor disputes, anti-Japanese sentiment, and changes in the political and economic environment. Should such unforeseen events occur, they could significantly disrupt production and sales activities and adversely affect the performance and financial condition of the Group as a whole.

With production bases in China and sales to various countries including Europe and the United States, the Group's business structure is such that exchange rate fluctuations directly affect its performance. Movements in either the yen's appreciation or depreciation may affect procurement costs and sales revenue, potentially adversely affecting performance.

The Group is engaged in new business initiatives aimed at securing stable earnings and achieving sustainable development; however, expenses for research and development, capital investment, and personnel recruitment are incurred in advance, and it takes a certain period of time to generate stable earnings. If progress does not proceed as planned due to changes in market conditions or customer trends, there is a risk that invested funds may not be recovered, which could adversely affect performance.

The Group procures certain important raw materials and components from companies outside the Group, and there is a risk that a supply disruption caused by a disaster or other event at a supplier could lead to production delays or lost sales opportunities. In addition, delays in responding to large orders or a continuous rise in procurement prices could also adversely affect performance.

The Group is subject to a wide range of legal regulations in Japan and in each country where it operates, covering product manufacturing, safety, labeling, transportation, sales, import/export controls, tariffs, and other matters. Any violation of laws and regulations could result in loss of credibility, penalties, and litigation risk, and responding to regulatory amendments may require costs and time exceeding expectations.

Technological innovation is progressing rapidly in the markets where the Group operates, and changes in social infrastructure and intensifying market competition could adversely affect performance. Delayed response to technology trends could lead to a decline in product competitiveness and loss of market share.

The Group's headquarters, manufacturing, and R&D facilities in Japan and China face the risk of significant damage from natural disasters such as earthquakes, fires, and floods, as well as terrorism, computer virus attacks, and outages or malfunctions of information systems. In addition to business interruption and delays in production and shipment due to facility damage, the resulting facility repair costs could adversely affect performance.

A global pandemic of infectious disease could trigger a chain of disruptions, including the suspension of business activities by customer companies, interruptions to distribution networks, and shutdowns at the Group's own facilities, production subcontractors, and suppliers of parts and materials. This could result in stagnant sales activities and delays in production and shipment, adversely affecting performance.

In business activities conducted in various countries, unexpected changes in laws and regulations, social disruption caused by terrorism or war, or travel bans and delays in new product development due to the spread of infectious diseases could temporarily and adversely affect performance. The Group's business structure exposes it to country risk on both fronts: production bases in China and sales to Europe and the United States.