Risk Report (including declaration pursuant to Art. 289 Para. 5 HGB) The following information applies to the parent company SINGULUS TECHNOLOGIES AG as well as to the SINGULUS TECHNOLOGIES Group. In the course of our opportunities and risk management the parent company occupied a leading role. Risk Management The risk management system is an integral component of the entire planning, controlling and reporting processes in all relevant legal entities and business divisions and targets the systematic identification, assessment, monitoring and documentation of risks. Taking into account defined risk categories, the risks of the business areas and operating units are identified and evaluated with respect to probability of occurrence and amount of damage. This includes risks, which are material to the assets, liabilities, earnings and financial position of the company. The assessment of the amount of damage is usually performed in view of the impact of the risks on the operating result (EBIT). The tasks of the people responsible include the development and, if applicable, the initiation of measures to avoid, reduce, hedge and insure risks. In the course of our controlling processes throughout the year essential risks as well as initiated countermeasures are monitored. In addition to the regular reporting there is a group-internal reporting obligation for unexpectedly occurring risks. The central risk management reports to the Executive Board about the identified risks once per quarter and once per business year to the Supervisory Board. The risk management system enables the Executive Board to identify essential risks at an early stage and to initiate countermeasures. The identified risks are correspondingly taken into account within the accounting and reporting of the companies. Corporate opportunities are not considered within the risk management system but discussed in the course of regular strategy meetings, analyzed in Executive and Supervisory Board meetings and, if applicable, taken into account within the annually prepared operating budgets. In the course of the strategy processes the opportunities for additional, profitable growth are determined and included in the decision-making process. The direct responsibility for the early identification of opportunities and their realization rests upon the Executive Board. The efficiency of the risk management processes as well as the adherence of the rules and regulations defined in the risk management manual of SINGULUS TECHNOLOGIES are subject to a routinely review by the auditors in the course of the legal audit requirements in the course of the audit of the financial statements. In this connection it is reviewed whether the early risk detection system is suitable of identifying company-threatening risks and developments at an early point in time. If scope for improvement is identified, the necessary corrective measures for the modification of the risk management are implemented. The risk management system of the SINGULUS TECHNOLOGIES AG safeguards that the corporate opportunities and risks are identifiable at an early stage and that the Group is able to respond actively and efficiently. Therefore, this system meets the legal requirements for an early risk detection system and is in accordance with the German orporate governance principles. The following paragraphs explain the risk areas and individual risks, which are able to materially affect the assets, the financial and the earnings position of the SINGULUS TECHNOLOGIES AG from today’s perspective, on the basis of the overall Group. Risk areas As a globally operating company we are dependent on the economic trends of the global economy. In addition, due to competition there is a risk of losing market shares. In addition to the segment Optical Disc the SINGULUS TECHNOLOGIES Group is active in the industrial areas of solar and semiconductors. This diversification serves for the reduction of dependency from only one business division. We are continuously analyzing our market environment and our competitive situation. Constant customer contact and the resulting market proximity provide us with important information about the requirements of our customers. The information gained enables us to develop and offer products suitable to meet the market's requirements and to further expand our competitive position. With this we intend to neutralize negative overall economic trends to a large extent. In the following the existing individual risk are described in detail. Procurement market risks The availability, price increases and quality of procured components pose a risk for SINGULUS TECHNOLOGIES. For the segment procurement and purchasing credit assessments of our suppliers are thus performed on a regular basis. Moreover, the deliverability as well as the meeting of our quality requirements for supplied parts are constantly monitored. A further part of the risk management is performed through inventory management. This task includes the review of the turnover and scope of raw materials and supplies as well as the analysis of the age distribution of goods and purchased parts. Due to a significant decline in demand for our products increased write-offs on our inventories in the Optical Disc segment became necessary in the business year 2009. In addition, in this connection write-offs were necessary due to the value adjustment of several semi-finished and finished products in the Optical Disc segment. Overall, write-offs of inventories in the amount of € 15.1 million were recognized in the year under review. If the demand does not improve in the business year 2010, increased write-offs on inventories will be indispensable due to large scope and movement figures in the future. IT risks In order to safeguard orderly business operations companies have to rely on information technology. To minimize the risk of a discontinuation of business processes because of a system failure, several safety measures have been implemented. Amongst others, this includes access control systems, emergency plans, and an uninterrupted power supply of critical systems, backup systems as well as regular data mirroring. To ensure data safety against unauthorized access we employ firewall systems and virus scanners. Furthermore, the privacy of data and their availability is safeguarded through relevant access restriction systems. Project management risks Project management has to make sure that the internal and external logistics can be implemented smoothly. This is important to minimize the acceptance period of our products by the customer. In the segments Optical Disc and Semiconductors SINGULUS TECHNOLOGIES only recognizes sales after the final acceptance by the customers. Potential delays in acceptance are circumvented by on-site management and ongoing support of the commissioning at the site. An exception to the principle of sales realization after acceptance exists in the segment Solar. Here, production orders are booked pursuant to the percentage-of-completion method. Potential risks already emerge during the calculation of projects under uncertainty. To manage the risks within this segment we already use proven methods during the proposal stage to assess the impact of potential cost deviations compared with the forecast figures. With a continuing monitoring of changes in the parameters parallel to the project’s progress potential project risks can be identified at an early stage and necessary measures initiated. Technology risk The SINGULUS TECHNOLOGIES Group is operating in competitive markets. To ensure market success products with reliable state-of-the-art technology are required. This requires the continuous improvement of the products already available on the market. A key aspect of the review of the development risk is the analysis of market requirements. The risk of an erroneous development or a late development has to be regarded as quite high. We reduce this risk through the cooperation with partners and customers as well as through our evaluation process, which continuously assesses the efficiency, success probabilities and general conditions of the development projects. An essential part of this is the monitoring of the planning of the different development projects. The analysis of success probabilities and therefore the identification and seizing of opportunities, which safeguards the competitiveness of the company and increases it, is therefore an essential aspect of the strategy planning. Sales market risks A high risk exists in the marketing and sales area. The segment’s task is to recognize and evaluate sharp declines in demand or risks of potentially misleading assessments in individual markets or products. External data such as market research results but also close contacts with our customers help to improve the evaluation of future trends. These risks are considered materially and can result in substantial impacts on the company's results. Due to the global economic slump the demand for capital goods declined dramatically. This resulted in a decline in sales of 45 % in 2009 compared with the previous year. The order backlog as of December 31, 2009 was 50.6 % below the prior-year level. Both the Optical Disc segment and the Solar division were affected by this decline. In addition, write-offs in the amount of € 9.5 million were recognized in the business year 2009, which concerned the reduction of the fair values of customer relationships from the acquisition of the Blu-ray activities from the Oerlikon Balzers AG. This was mainly due to the aforementioned decline in overall economic activities as well as uncertainties with respect to the further development of production capacities of the format developer SONY. The resulting burden on earnings was significant in the year under review, but non-cash and therefore not threatening the substance of the company.

Foreign exchange and counterparty risks With respect to currency risks resulting from invoicing in foreign currencies the principles of hedging are applied. As the main instrument to hedge specific country risks we employ export credit insurance. The creditworthiness and payment behavior of customers are constantly monitored and relevant credit limits are determined. In addition, risks are limited through credit insurances and bank guarantees. The payment performance of some customers continued to deteriorate in the business year 2009. In this connection accounts receivable from machine deliveries in previous years, which were neither covered by credit insurance nor bank guarantees, were written off. Specifically, in the year under review individual value adjustments on accounts receivable in the amount of € 11.2 million in total were recognized. Overall, the write-offs at the end of the year under review amounted to € 7.3 million. From today’s point of view we therefore expect this to sufficiently cover the counterparty risks. Financial risks The SINGULUS TECHNOLOGIES Group is exposed to financial risks in particular with respect to liquidity risks, default risks, foreign-exchange risks and interest rate risks. To safeguard the financial solvency as well as the financial flexibility of the SINGULUS TECHNOLOGIES Group at all times, a liquidity reserve in the form of credit lines and cash is held. In this connection with effect from December 14, 2007 a syndicated credit facility in the amount of € 60.0 million was signed. Due to the drop in sales in 2009, it became clear in the summer 2009, that the agreed covenants could not be met until Q4/2009. Therefore, the Executive Board proactively engaged in talks with the loan-providing banks and in March 2010 agreed a new maximum credit line € 41.5 million with a term until the end of 2012. As of December 31, 2009 the net debt amount to € 11.7 million and the equity ratio 62.9 %. Within the scope of this medium-term loan facility, the financing banks demanded extensive securities. In addition, new financial covenants were agreed in this loan agreement, whose breaching entitles the banks to demand repayment of the loan. Forward-looking, the compliance with the covenant is monitored by the company and the banks. The Executive Board is currently expecting to be able to comply with the covenants until the end of the loan agreement. If the operating result improves in 2010, there will not be a liquidity squeeze. In particular, the second purchase price installment for the acquisition of the remaining shares of STANGL has to be paid by the end of 2010. For the payment of the outstanding purchase price installment (€ 10 million) the credit line may not be used. To secure the second purchase price installment SINGULUS transferred the 100 % of the STANGL shares held to a security trustee, who holds these shares as security for the claims of the former STANGL shareholders and the syndicated loan providers. In addition to the already mentioned capital increase of € 15.1 million, the sale of the subsidiary HamaTech APE and the real estate in Sternenfels was already realized in February 2010 to improve the liquidity situation. In this connection a liquidity inflow in the amount of € 6.5 million was recorded in March 2010. To detect liquidity risks at an early stage, liquidity budgets are drawn up on a regular basis. To analyze default risks the portfolios of accounts receivable of the individual companies in the SINGULUS TECHNOLOGIES Group are reviewed in short time intervals. Strategy risk The SINGULUS TECHNOLOGIES AG has developed a long-term growth strategy. In periodical meetings the Executive Board and the Supervisory Board as well as the senior managers evaluate the growth strategy of the Group and, if necessary, initiate corrective measures. Assessment of the overall risk situation The scope of the reduced credit line is sufficient, if a pick-up in demand for Blu-ray machines will materialize in 2010. Additional risks resulting in a permanent or material deterioration of the assets, financial and earnings situation of the SINGULUS TECHNOLOGIES Group do not exist from today’s point of view. From an organizational point of view all requirements are met to gain knowledge about emerging risk situations at an early stage. Essential features of the internal monitoring system and the risk management system of the SINGULUS TECHNOLOGIES AG Group with respect to accounting processes. In the SINGULUS TECHNOLOGIES Group the internal monitoring and risk management system is considered an integrated system following the definition of the Institut der Wirtschaftsprüfer in Deutschland e.V. (Institute of Auditors in Germany), Düsseldorf. Accordingly, an internal monitoring system includes the principles, procedures and measures implemented by the management of the company for the organizational implementation of the decisions of the management. Specifically this includes: _ securing the efficacy and efficiency of business operations _ the correctness and reliability of internal and external accounting _ the compliance with regulations relevant for the company The risk management system includes the entirety of all organizational rules and measures for the identification of risks as well as the handling of identified risks from entrepreneurial activities.  With respect to the accounting process and the consolidated accounting process the following structures and processes have been implemented within the SINGULUS TECHNOLOGIES Group: The overall responsibility for the internal monitoring system with respect to the accounting process and the consolidated accounting process rests upon the Executive Board. By means of a clearly defined management and reporting organization all companies included in the consolidated financial statement are included. In the course of the accounting process and the consolidated accounting process, the characteristics of the internal monitoring and risk management system are deemed material, which materially affect the consolidated financial statements and the overall statement of the consolidated statements including the consolidated status report. This includes primarily the following elements: _ identification of material risk areas and monitoring with impact on the Group-wide accounting process. _    monitoring of the Group-wide accounting process and the relevant results at the Executive Board level _    preventive monitoring measures in the finance and accounting departments of the Group as well as in the subsidiaries included in the consolidated financial statements In addition, the insights gained from the ongoing reporting process influence the further development of the internal monitoring system.