TORICO Co.,Ltd.

The Company has recorded operating losses, ordinary losses, and net losses attributable to owners of the parent for three consecutive fiscal years since FY2024 (ending March 2024), and recognizes that conditions exist that raise substantial doubt about its ability to continue as a going concern. Although structural transformation through "selection and concentration" and fundraising were implemented in FY2026 (ending March 2026), the plan to achieve full-year profitability has not been accomplished. While the Company aims to establish new revenue foundations through the Event Service, overseas business, and crypto asset investment business, uncertainty remains regarding the feasibility of a business recovery.

The domestic print comic market has shrunk by approximately 37% over five years, from ¥264.5 billion in FY2021 to ¥165.2 billion in FY2025, and the shrinking trend continues. The Group's core service, the EC Service for complete comic set sales, generated sales of ¥2,364 million in FY2026 (ending March 2026), accounting for 74.2% of total sales, creating a structure that is directly affected by the market contraction. Growth in the digital comic market is also slowing, reducing expectations for it as an alternative growth source.

The EC Service, centered on complete comic set sales, accounted for sales of ¥2,364 million in FY2026 (ending March 2026), or 74.2% of total sales, and a large portion of management resources are concentrated in operating the sourcing, sales, and shipping/delivery flows for this business. If the core EC Service stagnates or contracts, there is a risk of a severe impact on the Group's overall performance and business development. While the Company is working to cultivate new revenue pillars such as the event business, diversification of the revenue structure remains a work in progress at this time.

The Group has launched a crypto asset investment business as a new revenue foundation, exposing it to various risks including sharp price fluctuations, regulatory developments in various countries, and incidents of loss due to cyberattacks. If a sharp price decline or major regulatory changes occur, there is a possibility of a material impact on business performance and financial condition through the recording of valuation losses, among other effects. Although measures such as risk management based on internal regulations, market monitoring, and the use of highly reliable custody services have been implemented, these risks cannot be completely eliminated.

With 60 employees (as of the end of March 2026, excluding temporary employees), the organization is small in scale, and its internal management systems remain commensurate with this scale. Along with rapid business expansion, the development of overseas subsidiaries, and the launch of the crypto asset investment business, there is a possibility that the development and control of adequate internal management systems may fail to keep pace. If appropriate business operations become difficult, there is a risk of a material impact on the Group's business and performance.

Representative Director Takuro Ando is the founder and a major shareholder, and plays an important role in determining management policy and business strategy. If, for any reason, he becomes unable to continue his duties, there is a possibility of an impact on the Group's performance. While the Company is strengthening its management structure to build a system less dependent on him, a high degree of dependence continues at present.

The EC Service, comic distribution service, and Event Service operated by the Group have no special barriers to entry such as patents, and competition has intensified in recent years particularly in the digital comic service space as numerous companies have entered the market. Going forward, if the Company's strategy in the print comic complete-set sales business is imitated and competition intensifies, there is a possibility of an impact on performance. The Group is responding through differentiation and enhancement of added value, but there is uncertainty regarding the sustainability of its competitive advantage.

As the Company advances the use of new technologies such as generative AI and AI agents in its operations, there is a risk that confidential information or customers' personal information could be leaked externally due to unexpected employee operations or system vulnerabilities. If an information leak materializes, there is a possibility of an impact on performance due to loss of social trust, among other effects. While the Company is working to thoroughly manage information, it is difficult to completely eliminate risks specific to new technologies.

The Company is promoting overseas expansion mainly in East Asia and Southeast Asia through partnerships with local companies, but there is a risk that business may not develop as planned because local user preferences and laws and regulations differ from those in Japan. Appropriate control of overseas subsidiaries is a challenge, and if the development of internal management systems fails to keep pace, there is a possibility of a material impact on performance. Geopolitical risks and changes in regulations in various countries may also affect business operations.

In providing its services, the Company obtains personal information from customers and others, and while it strives to maintain its Privacy Mark certification and operational systems, the risk of information leakage due to unauthorized external access or negligence cannot be completely eliminated. If an information leak occurs, there is a possibility of an impact on performance due to claims for damages, loss of trust, and other effects. In addition, if amendments or expanded regulation occur under laws such as the Act on Specified Commercial Transactions, the Payment Services Act, and laws related to the protection of minors, there is also a risk of an impact on business operations and performance.