Ishii Food Co.,Ltd.

The Company manages products from planning through sales in accordance with relevant laws and regulations such as the Food Sanitation Act and the JAS Act. However, if an unexpected product issue occurs, there is a risk that the evaluation of not only the affected product but the entire product lineup of the Group could decline. Although customer service center and social media feedback are utilized for product improvement, a decline in evaluation could affect business results and financial condition.

Food safety is ensured through the operation of the FSSC22000 certification obtained in October 2013 and the Company's own procurement standards. However, various external risks exist, including avian influenza, radioactive contamination, water pollution, and pesticide residues. If an unexpected food safety incident occurs, it could have a material impact on business results and financial condition.

Major raw materials and packaging materials are procured from companies outside the Group. If a supplier is unable to supply as planned due to a disaster or other cause, there is a risk of production delays or loss of sales opportunities. In situations where dependence on a single or a small number of suppliers increases, a disruption in procurement could directly affect business results and financial condition.

There is a risk that market changes caused by external factors such as unusual weather, radioactive contamination, and avian influenza, as well as exchange rate fluctuations affecting overseas raw materials, could impact the securing of raw material supply volumes and their prices. Although the Company addresses this by diversifying suppliers, a surge in raw material prices could affect business results and financial condition.

No litigation with a material impact was filed during the fiscal year under review; however, if significant litigation arises in the future and substantial damages liability is determined, it could affect business results and financial condition. Given the characteristics of the food industry, there is a latent litigation risk related to product quality and safety.

If a large-scale earthquake or other natural disaster occurs in an area housing product manufacturing plants or infrastructure such as servers, damage to production equipment and infrastructure networks could affect business results and financial condition. In addition, since water is used in the food manufacturing process, if water quality issues affecting human health occur, operations may be suspended.

Overall operations, including order receipt, shipping, and billing, are processed via computer systems. If a system problem occurs due to virus intrusion or an unforeseen incident, there is a risk of lost sales opportunities, billing omissions, and extraordinary costs associated with recovery. Given the extensive reliance of operations on these systems, the impact of a system failure on business continuity would be significant.

In response to the spread of infectious diseases such as COVID-19, measures such as home standby, work suspension, and encouragement of remote work have been implemented. However, if factory employees become infected and the infection spreads within a plant, there is a risk of lost sales opportunities due to production suspension. Since remote work is difficult to implement at manufacturing sites, the impact would be particularly significant in the event of a widespread outbreak.