VALUE GOLF Inc.

The total number of golf course users nationwide has been on a downward trend, from 91.29 million in FY2022 to 87.50 million in FY2024, as the structural contraction of the market driven by the declining birthrate and aging population continues. This could constrain the medium- to long-term growth of the Golf Business, which accounts for 79.1% of sales composition. While the industry as a whole is working to cultivate younger and female golfers, this does not guarantee a recovery in the golfer population.

The core service "1-Nin Yoyaku Land" has grown, with 1.245 million registered members and annual total bookings at 108.9% of the previous fiscal year in FY2026 (ending January 2026). However, if the number of members or bookings declines significantly, or if contracted golf courses no longer perceive customer acquisition benefits commensurate with the monthly usage fee (fixed plus volume-based charges), contract cancellations or non-renewals may occur, directly impacting business performance. As this is a core service supporting the revenue base of the Golf Business, any impairment to it would have a significant impact on operating results.

Golf is an outdoor sport, and booking cancellations occur due to seasonal fluctuations and adverse weather such as typhoons, the rainy season, extreme heat, and snowfall. If golf courses are temporarily closed due to typhoon damage or heavy snow, recovery may take a considerable period, directly affecting the volume-based revenue model. In the Travel Business (15.0% of sales composition), natural disasters, epidemics, and geopolitical risks at travel destinations may also lead to trip cancellations or reduced demand.

The golf equipment market, in which consolidated subsidiary G-Zip Co., Ltd. operates, is estimated at ¥376.0 billion, down 1.1% year on year, according to the "Leisure White Paper 2025." A decrease in absolute demand due to the decline in the number of golfers, and limitations on product performance improvement due to competition rule regulations, have been pointed out. If performance falls short of forecasts, valuation losses on inventory or impairment losses on fixed assets may occur, potentially affecting the group's overall operating results and financial position. The Group strives to prevent excess inventory through appropriate inventory management and sales forecasting.

The Group handles imported products through direct overseas purchasing and other means, and fluctuations in exchange rates may affect procurement prices and quantities. Although the Group has established and operates an "Exchange Rate Risk Management Regulation," if exchange rates fluctuate sharply beyond expectations, it may become difficult to procure goods at planned prices and quantities, potentially adversely affecting business performance.

The ASP services and EC services of the Golf Business, including "1-Nin Yoyaku Land," depend on internet technology, and any delay in responding to technological innovation could result in the services becoming obsolete or losing competitiveness. Additionally, if substantial system development costs are required to respond to such changes, fundraising may become difficult. The Group is working to keep abreast of the latest technologies and to build a framework for developing new functions and improving services.

The Group conducts business operations that depend on information and communications networks, centered on ASP services. If the communications network is disrupted or becomes uncontrollable due to system malfunctions, access congestion, cyberattacks, human error, or natural disasters, substantial time and cost may be required for recovery. Although the Group is expanding server facilities and improving its operational framework, service outages would lead directly to a loss of customer trust and revenue.

The Group holds personal information of registered members and others, centered on the Golf Business (approximately 1.245 million members), and if a leak occurs, it could result in claims for damages and loss of trust, potentially having a material impact on operating results and financial position. The Group has established a Personal Information Protection Regulation and an Important Information Management Regulation, manages access rights to file servers, implements physical security measures, and supervises outsourcing contractors, but this does not guarantee complete prevention.

The Group may conduct corporate acquisitions to expand its business domains, and if unrecognized contingent liabilities arise after an acquisition, or if a subsidiary's profits fall significantly below expected levels, a substantial write-down of the balance of subsidiary shares and goodwill may become necessary. Although due diligence on financial condition and contractual relationships is conducted in advance, there is no guarantee that all risks can be identified beforehand.

Michio Minakuchi, President and Representative Director, Executive Officer, plays a critical role in all aspects including management policy, business strategy, negotiations with key business partners, and formulation of profit plans, and his inability to perform his duties would have a significant impact on management. Additionally, as the organization is small, the outflow of talented personnel or delays in recruitment and development could impede service provision, new service development, internal management systems, and corporate governance. The Group is working to strengthen its management organization and advance recruitment and development of personnel, but this does not guarantee progress as planned.