SEIHYO CO.,Ltd.

The Niigata Plant and Sanjo Plant have obtained ISO22000:2005 certification, and the Company is working to strengthen its quality assurance and control systems. However, if defective products contaminated with foreign matter are distributed, or unforeseen problems occur in the manufacturing process, product recalls or production suspensions may result. Such events pose a risk of materially affecting the Company's business performance and financial condition.

The sales market for the Company's products is limited to Japan, so a domestic economic downturn and the resulting decline in demand directly affect business performance. Unforeseen events affecting consumer trends, as well as changes and diversification in consumer preferences, may also affect business performance and financial condition. While the Company seeks to maintain competitiveness by strengthening new product development capabilities and reducing manufacturing costs, its ability to respond to changes in the macro environment is limited.

Since the Company's products are distributed mainly through continuous transactions with wholesalers and retailers, changes in the business conditions or sales policies of these industries or specific companies may result in lost sales opportunities or affect sales prices. A high degree of dependence on specific distribution channels poses a risk that a shift in a business partner's policy could directly and significantly impact business performance.

Due to the nature of the ice cream business, net sales are structurally concentrated heavily in the summer season (particularly the second quarter), meaning that full-year performance is significantly affected by summer weather conditions. If a cool summer or other abnormal weather occurs, sales during that period may decline substantially, potentially having a serious impact on full-year performance.

OEM supply to client companies depends heavily on external factors beyond the Company's control, such as the business performance and procurement policies of client companies. If a client company's business performance deteriorates, its procurement policy changes, or unexpected contract terminations or price reduction requests occur, this may materially affect the Company's business performance and financial condition.