DAISHO CO.,LTD.

Safety issues in the food industry, such as mislabeling, false country-of-origin labeling, and residual pesticide problems, continue to occur, and consumer concern is rising. The Company has established manufacturing and quality control systems in accordance with FSSC22000, but if an unforeseeable quality problem occurs, significant effort and cost may be required for recovery, potentially affecting business performance.

The Company's main products, liquid and powdered seasonings, are primarily intended for use with meat, vegetables, and fresh fish, and demand is linked to trends in fresh food consumption. If fresh food consumption declines due to outbreaks of livestock diseases such as BSE, avian influenza, or foot-and-mouth disease, or due to the invocation of safeguard measures, there is a possibility of a direct impact on the Company's sales volume and business performance.

There is a risk that prices may fluctuate significantly due to international supply and demand trends for crude oil and raw materials, which could also affect packaging materials, manufacturing costs, and logistics costs. The Company seeks to secure stable procurement through multi-supplier purchasing and planned purchasing, but if prices surge sharply and beyond expectations, this may affect business performance through an increase in manufacturing costs.

There is a risk of significant damage due to natural disasters such as earthquakes, fires, and wind and flood damage at various sites, including the head office functions and production facilities. Depending on the extent of damage, corporate activities may be disrupted, potentially having a material impact on the Company's business performance through production stoppages and other effects.

Weather fluctuations such as cool summers, warm winters, and typhoons may cause fresh food prices to surge, reducing consumer purchasing motivation and thereby affecting the sales performance of the food business. The Company seeks to minimize the impact through diversification of sales channels and products, but if weather fluctuations exceed forecasts, an impact on business performance may not be avoidable.

The Company is subject to a wide range of laws and regulations, including the Food Sanitation Act, the JAS Act, the Product Liability Act, the Containers and Packaging Recycling Act, the Waste Management Act, the Food Recycling Act, and the Energy Conservation Act. The legal affairs department and specialists work together to maintain a compliance system, but if corporate activities are restricted due to future tightening, revision, or enactment of new laws and regulations, this may affect business performance.

Information related to development, production, sales, and logistics is managed centrally by computer, exposing the Company to risks such as system trouble, unauthorized access, computer virus intrusion, and internal leakage of confidential information. Although thorough security measures have been implemented, if the system becomes unusable for a certain period or social trust declines, this may affect business performance.

In response to the outbreak and spread of infectious diseases, the Company has implemented measures such as formulating internal guidelines in line with Ministry of Health, Labour and Welfare guidance, introducing telework and staggered commuting hours, and restricting business trips and meetings. However, if further spread of infection leads to a temporary halt in manufacturing or voluntary restraint of sales activities, this may have a significant impact on the Company's business performance.