GMO Financial Gate, Inc.

Enhanced merchant management requirements under the revised Installment Sales Act are already in effect, and further revisions to this law or the establishment of new regulations related to the merchant business could affect business performance. In addition, if a credit card company that is a business partner violates the Act on Prevention of Transfer of Criminal Proceeds or receives administrative guidance, there is a risk of fluctuations in the Group's payment processing volume and GMV. The Group has established a system for promptly obtaining regulatory information through lawyers and external organizations to respond to such developments.

If deterioration in economic conditions, conflicts, disasters, infectious diseases, or similar events lead to changes in large-scale store development plans or the cancellation of major events, there is a risk that initial sales of payment terminals will fall below expectations. In addition, suppression of personal consumption due to consumption tax increases or higher social insurance premium burdens could affect business performance through a decrease in gross merchandise value (GMV) handled via credit card payments and other means. As countermeasures, the Group thoroughly manages progress against sales plans and works to stabilize its revenue base by expanding recurring-type sales linked to GMV.

The competitive environment in the cashless payment market is intensifying further due to the spread of new payment methods such as code-based payments, contactless payments, AliPay, and WeChat Pay. If competitive pressure causes a decline in merchant fee rates or spread levels, it may become difficult to secure profitability, which could also affect relationships with key business partners. The Group aims to secure growth and profitability through differentiation by providing solutions tailored to a diverse range of industries and business formats and through terminal and service development.

If manufacturers' production systems are disrupted due to economic security issues, the materialization of geopolitical risks, natural disasters, infectious diseases, or similar events, or if unforeseen events such as a terminal manufacturer's withdrawal from business or acquisition occur, procurement of payment terminals may become difficult, which could affect business performance. The Company has entered into procurement agreements with multiple manufacturers in Japan and overseas, and diversifies its purchasing routes while conducting quality and security scrutiny and management.

The Group's business is highly dependent on computer systems, and if a serious system disruption occurs due to a disaster exceeding expectations or a malicious attack, it could affect payment operations and undermine reliability. If an event such as fraudulent completion of a payment transaction occurs, the Group could be required to provide compensation to merchants or credit card companies, which could affect business performance. The Group has implemented protective measures such as adopting fault-tolerant systems, securing backup data and conducting restoration tests, and establishing a system for remote terminal correction.

As a result of progress in the joint deployment of the payment platform "stera" with Sumitomo Mitsui Card Company, Limited, sales attributable to that company account for 39.4% of consolidated sales for the current fiscal year, indicating a high degree of dependence on a specific business partner. Should any change occur in the collaborative relationship with this company, it could have a material impact on the Group's business performance. As a countermeasure, the Group is working to diversify its business partners by expanding transactions with other acquiring operators and agencies.

The parent company, GMO Payment Gateway, Inc., holds 56.9% of the Company's total issued shares and may influence the Company's decision-making through its decision-making authority and veto rights over fundamental matters. In addition, if the parent company group changes its management policy or business development policy, the possibility that it could become a competitor to the Company in the future cannot be ruled out. Transactions with Group companies in FY2025 (ending September 2025) amounted to ¥678,303 thousand on the revenue side and ¥380,478 thousand on the expense side, and the Company works to protect the interests of general shareholders through deliberations at board meetings attended by outside directors and the establishment of a special committee.

As of the end of FY2025 (ending September 2025), the tradable share ratio was 39.46%, which satisfies the Prime Market's continued listing criteria; however, changes in shareholder composition, capital policy measures such as share buybacks, or changes in market conditions could cause the ratio to fall below the criteria. If the criteria are not met, the Tokyo Stock Exchange may request improvement measures or a change in listing market, which could adversely affect share liquidity and the expansion of the investor base. If improvement measures such as the issuance of new shares or disposal of treasury shares are implemented, dilution of existing shareholders' equity interests may occur; the Company works to maintain an appropriate level through continuous monitoring.

The Group has entered into merchant agency agreements with credit card companies, but should a credit card company propose to cancel the agreement or change terms such as connection restrictions, the acquisition of new merchants and transaction volume could be constrained, potentially having a material impact on business performance. The Group works to reduce this risk through close collaboration via regular discussions and information sharing with major credit card companies, as well as through diversification of business partners.

If a merchant that has entered into a comprehensive merchant agreement engages in improper sales practices and consumers file chargeback claims, there is a risk that credit card companies will seek reimbursement from the Group. If fund recovery becomes difficult due to a merchant's bankruptcy or similar event, the Group could incur losses, and in the case of bankruptcy of a merchant providing specified continuous services, there is also a risk of refund claims for undelivered services. The Group works to reduce risk through measures such as identity verification, document collection, and confirmation of business licenses at the time of enrollment, monthly management of delinquent receivables, and retention of sales proceeds.