Wedge Holdings CO.,LTD.

JTRUST ASIA PTE. LTD. (JTA) has filed multiple damages lawsuits against the Group in Thailand, Singapore, and Japan, stemming from the convertible bond issue involving equity-method affiliate Group Lease PCL. (GL). In the most recent lawsuit filed on June 27, 2025, JTA is seeking payment of 7,169,005,187.50 Thai baht (equivalent to approximately ¥28.8 billion) from GL, and proceedings have taken various forms, including the GLH liquidation order (March 2024) and GL's business rehabilitation petition (already dismissed). The Group maintains that all lawsuits are without merit and continues to respond through legal channels, but depending on the progress of investigations and litigation, there is a possibility of a material adverse effect on the Group's management.

The High Court of Singapore ordered the liquidation of GLH on March 4, 2024, and liquidation proceedings by the Liquidator are ongoing. In addition, an investigation by Thailand's DSI into GLH loan transactions flagged by the Thai SEC is continuing, and the Group has not been able to identify the basis for the Thai SEC's allegations. In the Annual Securities Report, the Group has determined, in light of items 7 and 8, that there is no material uncertainty regarding the going-concern assumption; however, it is explicitly stated that depending on the progress of the investigations and liquidation proceedings, there is a possibility of an adverse effect on the Group's management and other aspects.

The Group has overseas equity-method affiliates in Thailand, Singapore, Laos, and Myanmar, and conducts business primarily in Southeast Asia. Since FY2022 (ending September 2022), the performance of these overseas businesses has been reflected in ordinary income as equity-method investment gains or losses, resulting in a relatively larger impact from exchange rate fluctuations. In addition, country risks such as drastic changes in political activity, terrorism, and social unrest in the countries of operation may affect the Group's business results and financial condition.

The Group operates motorcycle loans, asset-backed finance, solar panel loans, and microfinance in Thailand, Laos, and Myanmar, and because loan terms are long, there is a risk of delinquency and credit losses arising from economic fluctuations and other factors. Allowances for doubtful accounts are recorded taking into account the status of borrowers, the value of collateral assets, and historical loss rates, but if unforeseen credit losses occur, additional allowances may be required, which could affect the Group's financial condition and business results. When delinquencies occur, the Group promptly works to preserve and collect receivables, and in the event of credit losses, seeks to maximize recovery through the sale of collateral, among other measures.

GL Finance PLC. (GLF), a former consolidated subsidiary of equity-method affiliate GL, received notice from the National Bank of Cambodia on September 12, 2024, revoking its finance leasing license and ordering the company's liquidation, and it has entered liquidation proceedings. Regarding the impact on the Company's consolidated results, an equity-method investment loss may arise during the liquidation process, but at this point a definitive figure cannot be calculated. The Company states that it will disclose the impact promptly and appropriately once it becomes clear.

As of September 30, 2025, the parent company, Showa Holdings Co., Ltd., held a voting rights ratio of 53.24%, and 3 of the 7 members of the Board of Directors were dispatched from the Showa Holdings group, indicating a high degree of control. Although the parent company has confirmed its intention to respect the Company's independence as a listed company, the parent company's management decisions could potentially affect the Company's management in the future. Each director seeks to ensure independence by bearing the duty of due care and the duty of loyalty.

Each of the Group's businesses relies in part on communication networks connecting computer systems, creating risks of server outages due to natural disasters, accidents, or overload, as well as data deletion or unauthorized acquisition due to computer viruses or unauthorized intrusion. If such failures occur, in addition to direct damage to each business, there is a possibility of a decline in trust in the Group itself and a material impact on its business. Specific countermeasures are not detailed in the Annual Securities Report at this time.

In the Digital Finance business, personal information such as address, name, phone number, and credit card number is obtained when various loan applications are made, and the possibility of external leakage or misuse of such information cannot be entirely ruled out. If an information leak occurs, there is a risk of becoming involved in legal disputes, which could lead to a decline in the Group's credibility and affect its business results. The Group states that it pays maximum attention to the protection of privacy and personal information and is mindful of security.

In Thailand, Laos, and Myanmar, where the Digital Finance business operates, instability in the political situation due to changes in government, deterioration of the economic situation, exchange rate fluctuations, and changes in laws and regulations may adversely affect the Group's business results. In particular, political turmoil continues in Myanmar, and country risk has become manifest there. The Group continues to operate its business while closely monitoring developments in each country, but specific details of risk mitigation measures are not described in the Annual Securities Report.

Risks cited for the Content business include market contraction in Japan due to population decline and the falling birthrate and aging population, as well as the erosion of Japanese content's standing due to the rise of manga, anime, and similar content from overseas markets. Deterioration of the market environment both domestically and overseas may affect the earnings of this business. No specific countermeasures are described in the Annual Securities Report.