TOYO SECURITIES CO.,LTD.

Operating revenue from the company's core financial instruments business is significantly affected by fluctuations in domestic and overseas financial instrument markets, and this may cause substantial changes in financial position and business performance. As a community-based retail securities company, the company works to expand its customer base and secure stable earnings that are not swayed by temporary market fluctuations.

In addition to internet-trading-only securities companies and other retail-focused competitors, competition has been intensifying due to entry from other industries and industry consolidation, and if the company is unable to maintain its competitive advantage, this may affect its financial position and business performance. On the other hand, the company views the rising demand for individual asset management as a business opportunity and aims to be the securities company of choice by providing services with high customer satisfaction.

The company is subject to legal regulations including laws and various rules related to the financial instruments business, and if it violates these, its business continuity, financial position, and business performance may be affected. The company strives to ensure legal compliance by strengthening the compliance framework, internal control framework, and audit department of the sales division, as well as strengthening governance by management.

Under the Financial Instruments and Exchange Act, the company is required to maintain a capital adequacy ratio of 120% or higher, and if it falls below this level, it may be subject to a supervisory order from the Financial Services Agency. As of the end of March 2026, the capital adequacy ratio was 388.6%, and the company judges the likelihood of falling below 120% to be low.

If business activities are restricted due to large-scale disasters such as earthquakes, tsunamis, or floods, natural disasters caused by climate change, or the spread of pathogenic infectious diseases, this may affect business continuity. In the event of an infectious disease outbreak, the company implements thorough hygiene management and remote work arrangements to minimize the impact on business continuity.

If unlawful acts, harassment, or other misconduct occur in the course of sales activities, the company may become subject to litigation or other legal proceedings, which may affect its financial position and business performance. At present, no material lawsuits have been filed, but the company strives for prevention and response through thorough compliance frameworks in the sales division, the establishment of a customer consultation office, and the operation of an internal whistleblowing system (hotline).

If the computer systems essential for business operations, including internet trading, experience failures due to quality defects or unauthorized external access, this may affect the company's financial position and business performance. In November 2018, the company migrated its core system and now receives a jointly-used service (ASP-type service) from an external vendor, while also obtaining a US assurance standard AT-C 320 report to confirm the effectiveness of its IT governance.

If important internal information, including customer information, is improperly leaked, the resulting loss of trust may affect the company's financial position and business performance. The company has established an organizational structure and internal regulations related to information security, and works to protect information assets by sharing cybersecurity information through exchanges with other companies in the same industry and membership in the Financial ISAC.