COMO CO.,LTD.

In the food industry, incidents undermining food safety—such as product misrepresentation and false labeling of expiration dates—occur frequently, and as consumer safety awareness rises, an inadequate response could cause damage severe enough to threaten a company's continued existence. If large-scale product recalls or product liability claims arise due to unforeseen product defects or the inadvertent contamination of raw materials with inappropriate substances, this may affect business performance and financial condition. As countermeasures, the company has implemented a quality control manual based on FSSC22000, established a preventive system, prepared a response manual, and taken out product liability insurance.

Because the company's products, leveraging the characteristics of long-life bread, are manufactured only at the head office plant and sold nationwide, there is a risk that if the head office plant is forced to halt operations due to an accident or a natural disaster such as an earthquake or typhoon, product supply would come to a complete stop. Since there is no alternative production site, if a natural disaster or other event exceeding the scope anticipated by the company's crisis management measures were to occur, it could have a material impact on business performance and financial condition. This item clearly indicates the limitations of the current crisis management measures and warrants particular attention as a concentration risk.

Prices of primary processed agricultural products used as key raw materials, such as wheat flour, sugar, and fats and oils, as well as eggs and raisins, may rise sharply due to reduced harvests caused by abnormal weather in producing regions or tightening supply-demand balances. In addition, rising crude oil prices may increase costs for fuel such as heavy oil, as well as for packaging materials and containers. If procurement prices rise sharply, this may affect business performance and financial condition; while the company strives to mitigate this risk through diversification of suppliers, complete avoidance is difficult.

Because the product characteristics of long-life bread require raw materials with special properties, if a supplier were to suddenly fail financially, securing alternative procurement could become difficult. The company strives to mitigate this risk by assessing suppliers' financial conditions based on information gathered from research organizations and the industry, and by diversifying its supplier base; however, due to the specialized nature of these raw materials, there are limits to securing alternative sources. If procurement of raw materials becomes impossible, this could lead to a halt in product supply, potentially affecting business performance and financial condition.

The company is subject to a wide range of legal regulations, including the Food Sanitation Act, the Product Liability Act, the Act against Unjustifiable Premiums and Misleading Representations, the Food Labeling Act, and environmental recycling-related laws and regulations. Failure to comply with these could result in restrictions on business activities or increased costs. Unforeseen tightening of legal regulations or the introduction of new regulations could likewise restrict business activities or increase costs, potentially affecting business performance and financial condition. The company works to ensure legal compliance through the development of various internal regulations and coordination between the responsible department and related departments.