GMO Financial Holdings, Inc.

GMO Click Securities, GMO Coin, and GMO Click FX are registered operators under the Financial Instruments and Exchange Act, and their business activities may be constrained by legal amendments, changes in interpretation, or changes in supervisory authorities' policies. As of the end of December 2025, each company's capital adequacy ratio (statutory standard of 120%) significantly exceeds the standard, but if it declines significantly due to fluctuations in market risk equivalent amounts, etc., procurement of capital-type funds may become necessary. If a violation of laws and regulations occurs, administrative sanctions, a decline in social credibility, claims for damages, etc. may have a material impact on GMO-FH's business results and financial condition.

GMO Coin is subject to various regulations and supervision as a registered crypto asset exchange service provider under the Payment Services Act, and may be subject to administrative sanctions such as revocation of registration or suspension of business in the event of a violation of laws and regulations. Based on the Financial System Council report published on December 10, 2025, if the regulatory basis shifts from the Payment Services Act to the Financial Instruments and Exchange Act and a system for accumulating reserve funds in preparation for crypto asset outflows is institutionalized, this may affect business activities, financial condition, business results, etc. In addition, revisions to the Foreign Exchange and Foreign Trade Act have imposed an obligation to confirm whether crypto asset transfer transactions are subject to economic sanctions, and there is a risk of administrative sanctions, criminal penalties, etc. in the event of violations.

GMO-FH's earnings are highly dependent on market conditions for stocks, foreign exchange, crypto assets, etc., and if the investment environment deteriorates due to worsening economic or political conditions, regulatory changes, etc., this may have a material impact on financial condition and business results through a decline in trading volume. GMO Click Securities implemented free stock trading commissions and mutual fund sales commissions in September 2025, and if earnings cannot be supplemented through expanded trading volume or promotion of cross-selling, this will affect business performance. Furthermore, if service obsolescence occurs due to delayed response to new technologies or new entrants, or if excellent human capital leaves the company, this may lead to a decline in competitiveness and market share.

GMO Click Securities' OTC FX (Currency-related OTC Derivatives) business accounts for a high proportion of GMO-FH's overall earnings, and if the business environment changes suddenly due to sharp fluctuations in the foreign exchange market or intensifying spread competition with competitors, this may have a material impact on GMO-FH's business activities and business results. GMO-FH is working to diversify its revenue sources through investment in the OTC CFD (Contract for Difference) and Crypto Asset Business and new businesses to reduce dependence, but at present the degree of dependence on the OTC FX business remains high. High dependence on a specific business is a factor that increases vulnerability to structural changes in that market.

In OTC FX, CFD, and crypto asset transactions, each company becomes the counterparty to customer transactions, generating proprietary positions each time. Normally, risk is avoided through offsetting trades with other customers or cover transactions with counterparties, but if cover transactions cannot be conducted properly due to system trouble or sharp market fluctuations, losses may arise depending on the position status, which may have a material impact on financial condition and business results. In particular, the crypto asset market is subject to large price fluctuations, and the impact when risk materializes is significant.

In stock margin trading, FX, CFD, and crypto asset margin transactions, if a customer does not settle a shortfall amount where settlement losses from forced liquidation exceed the deposit or margin, a bad debt loss may be incurred. The Thai subsidiary terminated its margin trading service as of December 20, 2024, and until the collection of receivables based on the contract repayment agreement is completed, additional provisions for bad debt allowance may become necessary due to declines in collateral value, etc. In addition, if a counterparty in a cover transaction falls into financial deterioration or legal liquidation, etc., bad debt losses may also occur, which may have a material impact on GMO-FH's business activities, business results, and financial condition.

GMO-FH procures funds through borrowings from banks and the issuance of corporate bonds, but if credit conditions deteriorate or financial covenants are breached, it may become difficult to procure or maintain the necessary funds. In addition, if fund demand exceeding the borrowing limits set by banks, etc. arises due to sharp market fluctuations, and appropriate funding measures cannot be taken, this may have a material impact on business activities, business results, and financial condition. GMO-FH strives to secure stable funding by building and maintaining good relationships with correspondent banks, etc., but there is a risk that responding will become difficult in the event of a sudden change in the external environment.

Most of the services provided by GMO-FH are conducted via computer systems, and if a system failure occurs due to unforeseen factors, this may have a material impact on financial condition and business results due to loss of service usage opportunities for customers, decline in social credibility, claims for damages, etc. GMO Healthtech provides medical information systems handling sensitive personal information in the Medical Platform Business (Healthtech ONE by GMO), and the risk of declining trust and claims for damages is particularly high in the event of defects or malfunctions in the system. GMO-FH conducts ongoing maintenance such as application improvements and reinforcement of hardware and network infrastructure, but depending on the severity of a failure, business continuity may be hindered.

GMO-FH handles personal information, confidential information, and customer assets of customers and business partners, and if personal information leakage, outflow of customer assets including crypto assets, destruction or falsification of important data, or suspension of information systems, etc. occurs due to cyber attacks, unauthorized access, computer virus infection, etc., this may have a material impact on GMO-FH's business activities, business results, and financial condition due to customer attrition resulting from declining trust, administrative sanctions, large claims for damages, etc. GMO Coin has implemented measures such as storing customer-deposited crypto assets in cold wallets, and GMO Healthtech has obtained ISMS certification and built and operates an information security management system, but responding to attacks that exceed the limits of these measures remains a challenge.

GMO-FH is a subsidiary of GMO Internet Group, Inc. (holding 65.85% of voting rights), and while it enjoys benefits such as customer acquisition through marketing activities utilizing the "GMO" and "Z.com" brands, legal violations, fraudulent acts, scandals, or negative rumors involving other companies within the group may affect GMO-FH's brand power and social credibility, thereby affecting financial condition and business results. In addition, fraud incidents impersonating GMO-FH's trade name, etc. have occurred, and there is a risk of reputational damage even in cases where GMO-FH is not at fault. In the fiscal year under review, the total transaction amount related to revenue with the GMO Internet Group was ¥108,687 million, and the total transaction amount related to expenses was ¥2,060 million; GMO-FH strives to ensure economic rationality in transaction terms with the group through regular contract reviews.