Gamecard-Joyco Holdings,Inc.

According to the National Police Agency, the number of pachinko halls nationwide stood at 6,464 as of the end of December 2025, a decrease of 242 halls from the end of December 2024, and the market continues to contract. A sharp decline in the number of halls directly shrinks the market for prepaid card systems, posing a risk of impairing the Group's revenue and earnings base. Combined with the declining player population, there are also concerns about indirect effects stemming from the deteriorating business conditions of pachinko halls, the Group's customers.

The Group earns a fixed monthly fee from member stores in the form of System Usage Fees, which constitutes a primary source of revenue. If the number of member stores declines significantly for any reason, the Group's recurring revenue base would be directly impaired, potentially having a material impact on its business and financial results. Market contraction and intensifying competition with other companies for member store acquisition could be major causes of such a decline.

Pachinko halls, the Group's customers, are directly subject to regulations such as the Act on Control and Improvement of Amusement Business, the Basic Act on Countermeasures against Gambling Addiction, and National Public Safety Commission regulations, and the use of card units requires obtaining permits or filing notifications. Amendments to various legal regulations could affect the sale and installation of card units and other products. In addition, the subsidiary Nihon Game Card Co., Ltd. is registered as a prepaid payment instrument issuer under the Payment Services Act, and amendments to this act may also affect the business.

The Group depends on a single supplier for 81% of its parts procurement, and if that supplier's business condition deteriorates or its production capacity declines, sales of the Group's products could become difficult. Production of card units and other mainstay products also depends on a single company, concentrating procurement risk. If measures such as supplier diversification are not implemented, the impact on business performance could be substantial.

The subsidiary Nihon Game Card Co., Ltd. provides purchase guarantees for obligations arising from lease contracts entered into by member stores. Although these guarantees are provided after taking into account the payment capacity of member stores, losses would occur if there were a sharp increase in cases where member stores are unable to fulfill their contractual obligations. Amid the continuing contraction of the pachinko hall market, if the risk of deteriorating business conditions among member stores increases, the obligation to fulfill purchase guarantees may materialize.

In the prepaid card system industry, intense competition for member store acquisition is being waged with other companies. If the Group's competitiveness declines for any reason, this could lead to the loss of member stores and difficulty in acquiring new ones, impairing the revenue base. Intensifying competition amid an overall contracting market could further deteriorate profitability through price competition and pressure to improve terms.

There is a risk that the Group's systems and products could become obsolete due to groundbreaking inventions or the rapid emergence of new technologies by competitors. It is also possible that IT-related technological innovation could give rise to problems of prepaid card forgery, alteration, or fraudulent use. Although the Group pursues cutting-edge technology and implements thorough security measures, if the pace of technological innovation outstrips its response capabilities, its business results may be affected.

The Group has implemented measures such as establishing personal information protection rules, appointing a personal information protection officer, setting up a consultation desk, and thoroughly conducting internal training. However, if personal information is leaked due to human error, network failure, hacking, or other causes, this could affect the Group's business and financial results through loss of trust and legal liability.

If it becomes necessary to record impairment losses on fixed assets due to sudden changes in the business environment or deterioration in earnings, this could affect the Group's business and financial results. In addition, if it is determined that taxable income sufficient to utilize deferred tax assets cannot be secured due to declining profitability or other factors, a write-down would be required, which could be an additional factor worsening profit and loss.

If large-scale natural disasters such as earthquakes or typhoons, epidemics, regional conflicts, terrorist attacks, or other events cause serious damage to the information management center or to business partners on which production of mainstay products depends, this could lead to system failures and effects on production activities. The Group is advancing measures such as formulating a business continuity plan, establishing emergency contact systems, and conducting drills, but there is no guarantee that any resulting damage will be sufficiently covered by casualty insurance or other means.