Vector HOLDINGS Inc.

In the consolidated fiscal year under review, the company recorded an operating loss of ¥593,102 thousand and operating cash flow of negative ¥619,301 thousand, resulting in circumstances that raise material doubt about the going concern assumption. As countermeasures, the company is pursuing entry into AI-related services (rental of computing resources on high-performance servers), expansion of the electronic contract service "VECTOR SIGN", and profitability improvement through mutual synergies within existing internet businesses; however, if these measures do not proceed as planned, there is a possibility of a material impact on the continuity of the business.

Since the ICT business is conducted entirely over the internet, if communication lines are disrupted due to natural disasters or similar events, or if system troubles occur in server equipment, the company may be unable to provide services to users, which could affect business performance. The company continuously implements load balancing across multiple servers, backups, and server capacity expansion in line with growth in user numbers, but risks remain that unexpected large-scale failures may not be fully addressed.

The company obtained Privacy Mark certification in November 2005 and has established and operates a personal information protection framework compliant with JIS Q 15001; however, if personal information is leaked due to unforeseen circumstances, this could result in reduced credibility, contraction or suspension of transactions, and damages claims, thereby affecting business performance. Given the internet-centric nature of the business, the volume and sensitivity of personal information held is high, and the impact of any leakage could be extensive.

Databases for the ICT business are protected by security measures such as firewalls, and the database for the software sales service is configured independently with access restricted to a limited number of internal personnel; however, if a data leak occurs, it could lead to reduced credibility, contraction or suspension of transactions, and damages claims, affecting business performance. There is also a risk that existing security measures could become obsolete as cyberattacks become more sophisticated and diverse.

Although virus checks and content reviews are conducted prior to release, if malfunctions or computer virus infections occur across many of the products handled, this could lead to a decline in the company group's credibility and affect business performance. While exemption clauses are established in the terms of use, there remains a risk of legal and social responsibility being pursued if widespread damage occurs.

The company outsources credit card payment processing to eContext, Inc. and, as a general rule, does not retain card information in-house; it has also introduced 3D Secure and a proprietary monitoring system. Nevertheless, if card information is leaked or unauthorized use increases, this could result in reduced credibility, contraction or suspension of transactions, and damages claims, affecting business performance.

As of March 31, 2026, the organization is small in scale, with 11 officers and 23 employees, making it difficult to secure personnel well-versed in computer technology and listed-company management operations. If efforts to secure personnel and strengthen management structures do not proceed smoothly, appropriate organizational responses may not be possible, potentially disrupting operations. Conversely, even if personnel are secured and structures are strengthened, profitability may deteriorate due to increased fixed costs from higher personnel, training, and equipment expenses.

The company is subject to regulation under various laws including competition law, consumer protection, privacy protection, labor, intellectual property rights, taxation, and foreign exchange. Violations could result in administrative sanctions or guidance, leading to reduced trust and corporate image as well as financial burdens that could affect business performance. There is also a risk that changes in laws, new enactments, or changes in interpretation could prevent the company from developing its business as expected.

As a countermeasure to the material events relating to the going concern assumption, the company has entered the AI-related services field, centered on rental of computing resources on high-performance servers under a contract with Cue Digital International Pte. Ltd.; however, as this is a new business, there is uncertainty regarding the timing and scale of monetization. If intensifying competition in the AI market, technological changes, or changes in the business conditions of the partner company prevent the planned profitability improvement from being realized, there is a risk of further deterioration in the financial condition.

As part of measures to improve profitability of existing businesses, the company is promoting the acquisition of registered users for its electronic contract service "VECTOR SIGN"; however, the electronic contract market has many competitors, and there is a possibility that user acquisition may not proceed as planned. Sluggish growth in registered users would make it difficult to achieve the profitability improvement plan, creating a risk of delay in resolving the circumstances relating to the going concern assumption.