TOP Financial Group (TOP) risk factors, FY2026 10-K

Risks Relating to our Corporate Structure

1. 01We rely on dividends and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business

Risks Relating to Doing Business in the Jurisdictions in which the Operating Subsidiaries Operate

1. 02Geopolitical tensions and international trade policies may adversely affect our business, financial condition and results of operations
2. 03The Hong Kong legal system embodies uncertainties which could limit the legal protections available to Our Operating Subsidiaries
3. 04The Hong Kong regulatory requirement of prior approval for the transfer of shares in excess of a certain threshold may restrict future takeovers and other transactions
4. 05The enforcement of foreign civil liabilities in the Cayman Islands and Hong Kong is subject to certain conditions. Therefore, certain judgments obtained against us by our shareholders may be difficult to enforce in such jurisdictions

Risks Relating to our Ordinary Shares

1. 06Our Class A Ordinary Shares may be delisted from Nasdaq if we do not regain compliance with the minimum bid price requirement, and any share consolidation we effect to regain compliance may not be successful
2. 07Any of these factors may result in large and sudden changes in the volume and price at which our Class A Ordinary Shares will trade
3. 08If securities or industry analysts do not publish or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding our Class A Ordinary Shares, the market price for our Class A Ordinary Shares and trading volume could decline
4. 09The sale or availability for sale of substantial amounts of our Class A Ordinary Shares in the public market and/or securities that are exercisable or convertible into our Class A Ordinary Shares could adversely affect their market price
5. 10Because the amount, timing, and whether or not we distribute dividends at all is entirely at the discretion of our board of directors, you must rely on price appreciation of our Class A Ordinary Shares for return on your investment
6. 11You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law
7. 12We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies
8. 13There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences
9. 14We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our Class A Ordinary Shares less attractive to investors

Risks Relating to our Business and Industry

1. 15Our Operating Subsidiaries have a relatively short operating history compared to some of our established competitors and face significant risks and challenges in a rapidly evolving market, which makes it difficult to effectively assess our future prospects
2. 16If we fail to address any or all of these risks and challenges, our business may be materially and adversely affected
3. 17Unfavorable financial market and economic conditions in Hong Kong, China, and elsewhere in the world could materially and adversely affect our business, financial condition, and results of operations
4. 18The online brokerage service industry and the financial services industry are intensely competitive. If we are unable to compete effectively, we may lose our market share and our results of operations and financial condition may be materially and adversely affected
5. 19During the years ended March 31, 2026 and 2025, our top five customers accounted for a significant portion of our total revenues. The loss of any such customers or a material decline in their trading activities through us would have an adverse effect on our operating results
6. 20Our current level of commission and fee rates may decline in the future. Any material reduction in our commission or fee rates could reduce our profitability
7. 21The level of commission and fee rate we need to pay our execution brokers may increase in the future. Any material increment in our commission or free rates could reduce our profitability
8. 22We may not succeed in promoting and sustaining our brand, which could have an adverse effect on our future growth and business
9. 23Our businesses depend on key management executives and professional staff, and our business may suffer if we are unable to recruit and retain them
10. 24Another Operating Subsidiary, Winrich, is a licensed money lending company governed by the Money Lenders Ordinance in Hong Kong to carrying on business as a money lender
11. 25Our revenues and profits are highly volatile, and fluctuate significantly from quarter to quarter, which may result in volatility of the price of our Class A Ordinary Shares
12. 26We face additional risks as we offer new products and services, transact with a broader array of clients and counterparties and expose ourselves to new geographical markets
13. 27If we are unable to achieve the expected results with respect to our offering of new products and services, our business, financial condition, and results of operations could be materially and adversely affected
14. 28We may undertake acquisitions, investments, joint ventures, or other strategic alliances, which could present unforeseen integration difficulties or costs and may not enhance our business as we expect
15. 29Any negative publicity with respect to the Company, our directors, officers, employees, shareholders, or other beneficial owners, our peers, business partners, or our industry in general, may materially and adversely affect our reputation, business, and results of operations
16. 30Our operations may be subject to transfer pricing adjustments by competent authorities
17. 31Fraud or misconduct by our directors, officers, employees, agents, clients, or other third parties could harm our reputation and business and may be difficult to detect and deter
18. 32We may be subject to litigation and regulatory investigations and proceedings and may not always be successful in defending ourselves against such claims or proceedings
19. 33We may not be able to fully detect money laundering and other illegal or improper activities in our business operations on a timely basis or at all, which could subject us to liabilities and penalties
20. 34We regularly encounter potential conflicts of interest, and failure to identify and address such conflicts of interest could adversely affect our business
21. 35Geopolitical risks and political uncertainty may adversely impact economic conditions, increase market volatility, and negatively affect the demand for our services, our results of operations and financial condition
22. 36We may need additional funding but may not be able to obtain it on favorable terms or at all
23. 37If our insurance coverage is insufficient, we may be subject to significant costs and business disruption
24. 38We may face intellectual property infringement claims, which could be time-consuming and costly to defend and may result in the loss of significant rights by us
25. 39Any failure to protect our intellectual property could harm our business and competitive position
26. 40Fluctuations in the value of Renminbi and regulatory controls on the convertibility and offshore remittance of Renminbi may adversely affect our results of operations and financial condition
27. 41We may be affected by the currency peg system in Hong Kong
28. 42Increases in labor costs may adversely affect our business and results of operations
29. 43We may incur losses or experience disruption of our operations as a result of unforeseen or catastrophic events, including pandemics, terrorist attacks, or natural disasters
30. 44Aggressive competition could reduce our market share, revenues and profits
31. 45Failure to protect client data or prevent breaches of our information systems could expose us to liability or reputational damage
32. 46Attrition of customer accounts and failure to attract new accounts could have a material adverse effect on our business, financial condition and results of operations
33. 47A failure in our information technology, or IT, systems could cause interruptions in our services, undermine the responsiveness of our services, disrupt our business, damage our reputation and cause losses, all while exposing us to various cybersecurity and other operational risks
34. 48Our brokerage operations have exposure to liquidity risk
35. 49Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations
36. 50We may fail to update our risk management policies and internal control system as needed and such policies and procedures may otherwise be ineffective, which may expose us to unidentified or unexpected risks
37. 51We may not be able to obtain additional capital when desired, on favorable terms or at all. If we fail to meet the capital requirement pursuant to the Securities and Futures (Financial Resources) Rules, our business operations and performance will be adversely affected
38. 52Internet-related issues may reduce or slow the growth in the use of our services in the future. In particular, our future growth depends on the further acceptance of the internet and particularly the mobile internet as an effective platform for assessing trading and other financial services and content