Transaction Media Networks Inc.

The Company provides services by connecting to major payment platforms such as NTT DATA's "CAFIS," Japan Card Network's "CARDNET," and Sumitomo Mitsui Card's "stera." If a failure occurs in any of these networks or a connection agreement is terminated, providing services could become difficult. The Company's payment processing center is connected to all of these networks, resulting in a high degree of dependence.

The payment processing center depends on the facilities of a specific data center operator, creating a risk that service outages could occur due to large-scale communication failures, hardware damage, human error, or similar causes. This could lead to lost revenue opportunities and contract cancellations resulting from a decline in customer trust. During the fiscal year under review, the Company completed relocation of the data center and established a stable operating system.

The Company manages personal information such as credit card numbers, names, and addresses. If an information leak occurs due to human error or unauthorized access, this could lead to increased response costs and a loss of social credibility. PCI DSS certification (valid until September 2026) is a prerequisite for providing credit card payment gateway services, and if the certification were ever revoked, it could become difficult to provide some services.

As of March 31, 2026, tax loss carryforwards exist. If business performance progresses smoothly going forward and the loss carryforwards are exhausted, corporate tax, resident tax, and enterprise tax will be recorded based on the normal tax rate, affecting net income and cash flow for the period. The likelihood of materialization is explicitly stated as "high," and attention should be paid to the increased tax burden during the performance recovery phase.

The Cashless Payment Services Business accounts for the majority of sales, but there is a risk that transaction volume and the number of connected terminals could decline due to a future decrease in e-money usage and an increase in new entrants accompanying the spread of QR/barcode payments. The Company seeks to reduce this risk through monitoring of the business plan and revenue diversification via the Information Processing Business and other operations.

In FY2026 (ending March 2026), purchases from PAX Japan Co., Ltd. accounted for 78% of the purchase value of terminal sales revenue. If the company's production system were disrupted by a natural disaster, infectious disease, economic friction, or similar cause, procurement of payment terminals could become difficult, resulting in a lost revenue opportunity. The Company is diversifying its procurement routes by entering into procurement agreements with multiple manufacturers, but a skewed composition ratio remains.

Much of the Information Processing Business remains in the upfront investment phase, and if the transition to the growth phase does not proceed as planned, this could affect business performance. The Company seeks to minimize this risk by strengthening investment monitoring and clarifying withdrawal criteria, but uncertainty regarding business launches remains.

The Company promotes M&A as a means of business expansion. If integration and utilization of management resources does not proceed smoothly after execution, the expected business expansion may not be achieved, and impairment of goodwill and similar assets could occur. The Company works to reduce various risks through due diligence, but integration risk cannot be completely eliminated.

Competition to acquire highly skilled talent is intensifying due to a widening supply-demand gap for domestic IT engineers. If the Company is unable to secure sufficient personnel necessary for business expansion, or if core personnel leave, delays in business development could result. The Company is continuously working to improve compensation and working conditions, but the shortage of IT talent is a structural issue across the industry as a whole.

The Company procures hardware such as data center equipment, software, and payment terminals from overseas, creating a risk that shortages or price increases could materialize due to exchange rate fluctuations, US tariff policy, US-China economic friction, the Russia-Ukraine situation, and similar factors. To prevent a decline in profitability due to delivery delays or increased procurement costs, the Company is strengthening cooperation with payment terminal manufacturers to secure inventory and is reviewing its procurement strategy.