YUTAKA TRUSTY SECURITIES CO., LTD.

The prices of commodities such as precious metals (gold, platinum, etc.), agricultural products, and energy may fluctuate significantly due to conditions in international financial markets, foreign exchange rates, interest rate trends, geopolitical risk, and other factors. Price fluctuations affect the trading activity of general customers and directly impact performance through brokerage commissions and other fees. The Company aims to stabilize its revenue base by responding to the diverse needs of both individual and corporate clients.

In addition to its brokerage business, the Company conducts proprietary trading based on its own market views, and the resulting profit and loss directly affects performance as trading gains or losses. If losses occur due to sudden changes in market conditions or other factors, this may adversely affect the Company's financial position. The Company has established a dedicated department and dedicated personnel, and works to strengthen strict operational management based on internal regulations as well as dealer training.

The Company is subject to a wide range of regulations, including the Financial Instruments and Exchange Act, the Commodity Derivatives Act, and related laws and regulations, exchange rules, self-regulatory rules, the Consumer Contract Act, and the Act on the Protection of Personal Information. If the Company violates these regulations, it may be subject to administrative sanctions such as revocation of registration or license, or suspension of business, which could have a material impact on performance. The Company strives to ensure legal compliance through the development of its compliance system.

Under the Financial Instruments and Exchange Act, if the capital adequacy ratio falls below 120%, the Company may be subject to an order for suspension of business or other measures from the Prime Minister. As of the end of March 2026, the capital adequacy ratio stood at 445.1%, well above the regulatory threshold; however, if the ratio declines due to sudden changes in market conditions or other factors, this could affect performance and financial position.

Under the Commodity Derivatives Act, if the net assets regulation ratio falls below 120%, the Company may be ordered to change its business methods; if it falls below 100%, a business suspension order may be issued; and if there is no prospect of recovery, the Company's license may be revoked. As of the end of March 2026, the net assets regulation ratio stood at 690.4%, well above the regulatory threshold; however, if net assets are impaired due to sudden market changes or other factors, this could affect the continuity of the business.

If customers' personal information or trading information is leaked, lost, or misused due to cyberattacks, unauthorized access, internal misconduct, incidents at outsourced service providers, or other causes, this may affect performance and financial position through reporting obligations to the Personal Information Protection Commission, damages, administrative sanctions, costs for recurrence prevention, and reputational damage. The Company maintains its Privacy Mark certification (obtained in 2006, renewed every two years) and continuously works to enhance its information management system, employee training, and incident response framework.

Natural disasters, power outages, communication failures, system failures at exchanges or clearing organizations, cyberattacks, ransomware, and other events may disrupt operations such as order acceptance and execution, margin management, and deposits and withdrawals. In the event of a system failure, the Company may face damages claims from customers, measures by administrative or self-regulatory bodies, recovery costs, and reputational damage, which could affect performance and financial position. The Company continues to develop and review its backup systems, management of outsourced service providers, and failure response procedures.

If a sales representative causes damage to a third party through acts beyond their authority in the course of brokerage business activities, the Company, as employer, may be held liable for damages. Even where authority has been internally restricted, employer liability may still arise, raising concerns about the potential impact on performance. The Company strives to prevent such occurrences by developing internal regulations and strengthening its management system for sales representatives.

As market liberalization and internationalization progress, entry into the commodity derivatives trading business by companies from other industries and foreign-affiliated firms may increase, which, together with competition among existing operators, could affect the Company's business environment. If intensifying competition leads to higher customer acquisition costs or lower commission levels, profitability may decline.

For electricity traded on the Tokyo Commodity Exchange, while hedging demand from corporate customers is expected, low market liquidity, price volatility, regulatory changes, and trends in customer hedging demand may affect the Company's brokerage trading and revenue opportunities. The electricity market inherently carries regulatory change risk, and the Company is responding while closely monitoring the state of market infrastructure development.