The Imamura Securities Co.,Ltd.

If trading volume in the secondary market contracts due to a decline or stagnation in stock prices, brokerage commissions, investment trust distribution fees, and other revenues may decrease, potentially affecting business results and financial condition. It is difficult to predict the timing and duration of such declines or stagnation, and the Company is working to mitigate this risk by expanding revenue in areas other than equities.

Competition is intensifying due to competition with banks and others resulting from deregulation, entry by companies from other industries, and mergers and business alliances among competitors. If the Company is unable to maintain its competitiveness, this may affect its business results and financial condition. The Company strives to maintain and enhance its competitiveness by enriching its product lineup, operating internet trading in-house, and developing sales staff who are trusted by customers.

The Company's primary customers are individual investors, and changes in individual investors' investment behavior due to factors such as age, market conditions, economic trends, and tax system changes may directly affect business performance. The Company aims to expand its revenue base by focusing on acquiring new customers, and judges the likelihood of this risk materializing to be low.

The Company owns the land and buildings of all its head office and branches, and groups its fixed assets on a branch-by-branch basis; however, market prices for some of these assets have declined significantly. If a decline in profitability or other factors makes it impossible to recover the amount invested, recognition of impairment losses may affect business results and financial condition.

The Company is registered as a Type I Financial Instruments Business operator and as an Investment Advisory and Agency Business operator. If the Company violates laws or regulations, it may be subject to revocation of registration, suspension of business, or an improvement order. Because the Company's business consists of a single segment, revocation of registration could affect not only business results and financial condition but also the Company's continuity as a going concern. The Company places great importance on legal and regulatory compliance in its operations.

Financial instruments business operators are required to maintain a capital adequacy ratio of at least 120%, and falling below this level may result in orders for business suspension or revocation of registration. In addition, if the ratio declines significantly, it may become difficult for the Company to take on risk, potentially causing it to miss revenue opportunities. The Company sets an upper limit on the amount equivalent to market risk and calculates the ratio on each business day, operating so as not to fall below 200%.

The Company holds financial assets for its own account that carry fluctuation risks related to stock prices, bond prices, interest rates, exchange rates, and other factors. If market prices fluctuate sharply, losses may occur, potentially affecting business results and financial condition. The Company judges the likelihood of this risk materializing to be low by thoroughly managing risk.

If a cyberattack results in virus or malware infection or unauthorized access, or if information is leaked intentionally or through negligence, this may result in compensation payments or loss of social credibility, potentially affecting business results and financial condition. The risk of new attack methods emerging is increasing due to advances in AI technology and technological innovations such as quantum computing. While recognizing that this risk is on an increasing trend, the Company continues to implement countermeasures, conduct drills, and provide training for all officers and employees.

If a failure occurs in the computer systems or communication lines used for business operations due to hardware or software defects, human error, unauthorized access, disasters, power outages, or other causes, this may affect business results and financial condition depending on the scale of the failure. The Company has implemented measures such as redundant configuration of systems and communication lines, pre-implementation testing of software, enhanced monitoring functions, and drills for responding to disasters and power outages.

If the Company is forced to scale back its business due to a natural disaster, infectious disease outbreak, or other event, this may affect business results and financial condition. In particular, because the Company's sales base is concentrated in the Hokuriku region, the impact would be especially large if infrastructure in that region were to be paralyzed. The Company has implemented measures such as installing computer systems essential for business continuity in robust data centers.