Daikokuya Holdings Co.,Ltd.

At the end of the current consolidated fiscal year, there exist events that raise material doubt about the going concern assumption due to declining revenue and continued losses. The company states that it strengthened its financial base by implementing loan refinancing and fundraising through a third-party allotment of new shares in December 2025 as planned, but it recorded a loss again in the fourth quarter, and full-scale recovery of earning power remains a challenge. The company currently judges that no material uncertainty regarding the going concern assumption exists; however, investors need to continue monitoring business performance trends.

The Group relies on borrowings from financial institutions and equity finance as fundraising methods, but these require negotiation, which constrains flexible and agile fundraising. Fundraising activities may be affected by financial conditions such as interest rate trends and changes in the stance of financial institutions with which the Group does business, and in such cases, business activities may be affected. The company states that it is working to strengthen its profit and loss and financial structure through improved profitability and business expansion.

The pawnshop and secondhand goods trading business is subject to regulations under the Secondhand Articles Dealers Act, the Pawnshop Business Act, the Act on Prevention of Transfer of Criminal Proceeds, the Act on Specified Commercial Transactions, and other laws, while the Electric Equipment Business is subject to regulations under the Industrial Safety and Health Act, the Electricity Business Act, and other laws, and requires explosion-proof type certification. If a violation of laws and regulations occurs, or if it becomes difficult to respond to new laws and regulations, there is a risk of disruption to continued business operations, revocation of business licenses, or dispositions such as business suspension. The company states that it is working to establish a legal compliance system, but changes in the regulatory environment may affect business performance and financial condition.

Unlike new goods, it is difficult to adjust the purchase volume of used goods, making stable procurement of merchandise extremely important. Stable securing of used goods may become difficult due to economic conditions, an increase in competing purchasing operators, changes in customer sentiment, fluctuations in precious metal prices, and other factors. The company is diversifying its procurement channels through store purchases, event purchases, home delivery purchases, used goods auctions, and the acquisition of on-site purchasing businesses, but if procurement is disrupted, business performance may be affected.

In the used brand goods retail industry and the pawnshop industry, troubles related to counterfeit goods have become a social problem, making customer protection an important issue. The company strives to eliminate counterfeit goods through the training of purchasing staff with advanced specialized knowledge and the use of authenticity appraisal equipment and systems, but depending on the frequency of trouble occurrence, business performance may be affected by a decline in the reliability of merchandise handled.

Personnel with authenticity appraisal capabilities are essential for purchasing and pawning used goods at appropriate prices, and securing sufficient appraisal staff in line with business expansion is directly linked to business performance. Prices for items other than those with market rates, such as precious metals, are not fixed, and the level of appraisal capability greatly affects profitability. If the company is unable to secure sufficient appraisal staff, business performance may be affected.

The company conducts business processing using information systems and communication networks, and there is a possibility of system downtime or loss/leakage of important data due to natural disasters, accidents, computer viruses, or hacking. The company strives to control and manage maintenance and preservation measures as well as information management systems, but if unauthorized access or system failures exceeding expectations occur, social credibility and business performance may be affected.

Regarding personal information acquired in the course of business activities, the company has established a personal information protection policy and personal information protection regulations, and takes measures for operational management. However, if a leakage of personal information occurs for any reason, the company may lose the trust of customers, which may affect business performance.

The majority of sales are store sales, and since the company operates nationwide with a focus on the Greater Tokyo, Kinki, and Chubu regions, physical damage to stores and merchandise due to large-scale natural disasters or unforeseen accidents may affect business performance and financial condition. Since most stores are leased, there is a risk that stores may be forced to close for reasons attributable to the landlord even if the store is performing well, and there is also a risk that deposits paid may become partially or wholly unrecoverable due to the landlord's bankruptcy or other reasons.

The company aims to expand its business through corporate acquisitions, capital participation, and business alliances in order to improve management efficiency and strengthen competitiveness, but changes in the macroeconomic environment, industry trends, and the business strategies of each company may affect the progress of capital and business alliances and their contribution to business performance. If alliance negotiations fail to reach agreement or the expected synergies are not obtained, it may become difficult to recover investment costs, posing a risk of adverse effects on financial condition.