Nissan Securities Group Co., Ltd.

Trends in domestic and overseas financial and commodity markets, as well as changes in the economic environment, directly affect business earnings. If trading stagnation or declines caused by war, terrorism, natural disasters, or similar events persist, earnings could deteriorate beyond management's projections. The Group continuously monitors market trends, but it is difficult to completely eliminate the impact of such external factors.

The Group engages in proprietary trading business, and risks not originally anticipated may materialize due to sudden market fluctuations or similar events. While a risk management framework based on daily monitoring under internal regulations has been established, in the event of extreme market volatility, losses exceeding the assumptions of this management framework may occur, potentially affecting operating results.

Nissan Securities Co., Ltd. is registered as a Financial Instruments Business Operator under the Financial Instruments and Exchange Act (Director-General of Kanto Local Finance Bureau (Kinsho) No. 131) and holds a Commodity Futures Trading Business license under the Commodity Derivatives Act (valid until the end of December 2028, renewed every 6 years). If these licenses were revoked, this would have a material impact on business operations. While no grounds for revocation currently exist, ongoing responses to future legal amendments and regulatory tightening are continuously required.

If a failure occurs in any of the various computer systems used in operations, including internet trading, this could affect business results. There is also a risk that the effectiveness of new system investments, made after considering cost-effectiveness, may fall below expectations relative to investment costs. Depending on the scale of failures caused by natural disasters or system malfunctions, business continuity could be disrupted.

Customers' personal information, such as phone numbers, addresses, and bank account details, is managed via computer systems. If such information were leaked due to unauthorized external access or deficiencies in internal management systems, this could lead to legal liability and loss of social trust. While a rigorous internal management framework has been established, complete prevention is difficult given the increasing sophistication of cyberattacks and similar threats.

As of March 31, 2026, two lawsuits related to commodity futures trading are pending, with a combined claim amount of ¥374,871 thousand. These relate to transactions conducted under the Commodity Derivatives Act prior to the transition to a comprehensive exchange system in July 2020, with customers alleging illegal conduct and seeking damages; the Group maintains that all transactions were conducted in compliance with applicable laws and regulations. Depending on how the litigation progresses, this could affect operating results and financial condition.

In the event of an outbreak of an infectious disease such as COVID-19, if officers or employees become infected, the Group may be forced to close offices or suspend business operations, which could affect operating results and financial condition. While infection prevention measures such as remote work and staggered commuting times have been implemented, the risk remains that business continuity could be disrupted in the event of a large-scale outbreak.

NSHD Co., Ltd., the largest shareholder, holds 37.82% (20,814 thousand shares) of the Company's total issued shares and is in a position to influence the Company's management and decision-making through the exercise of voting rights and other means. In addition, Hideaki Nike, Representative Director and President, concurrently serves as Representative Director of NSHD Co., Ltd., the controlling shareholder, creating a risk of conflicts of interest. The Company has established an independent decision-making framework involving management, including four independent outside directors, and strives to ensure the independence of management.

The Company has conducted transactions with Unicom Group Holdings Co., Ltd., including bond redemption of ¥2,500,000 thousand and interest payments of ¥32,410 thousand, constituting related party transactions with a controlling shareholder and others. While these transactions have been reviewed and approved by the Board of Directors for reasonableness and appropriateness, there remains a latent risk that the fairness of transaction terms could harm the interests of general shareholders. Unicom Group Holdings Co., Ltd. is effectively an asset management company for the Representative Director and President and others, and shares the same shareholder structure as NSHD Co., Ltd.