JM HOLDINGS CO.,LTD.

In the course of handling a wide range of fresh food, processed food, and daily perishables, the occurrence of foreign object contamination, provision of inappropriate ingredients, suspension of product supply due to foot-and-mouth disease or avian influenza, or discovery of hazardous substance or radioactive contamination could affect business performance and financial condition. As countermeasures, the Company complies with management methods based on ISO9001 (Quality Management System), and strives to minimize risk through thorough hygiene and temperature control, enhancement of food inspection systems, and ensuring traceability.

Due to the decline in the working-age population and changes in employment patterns, it has become difficult to recruit full-time employees and part-time workers. If personnel recruitment and development do not proceed as planned, increased recruitment costs and rising hourly wage rates could affect business performance. As countermeasures, the Company actively promotes recruitment of new graduates and mid-career full-time employees, while closely monitoring regional hourly wage rates to ensure timely recruitment of part-time workers.

As the Company conducts business primarily through supermarket and restaurant stores, damage to stores or processing/distribution centers caused by natural disasters or accidents, or restrictions on business activities due to the spread of infectious diseases such as COVID-19, could disrupt procurement, distribution, and sales activities, thereby hindering business continuity. Damage to fixed assets and inventory, reduced operating hours or business suspension, and expenditure of countermeasure costs could affect business performance and financial condition.

In the Supermarket Business and Restaurant Business, if it becomes difficult to secure initially expected performance due to sluggish economic conditions and personal consumption, or intensified competition from the entry of competitors, and store operating income deteriorates, this could affect business performance and financial condition. As a countermeasure, the Company has adopted a policy of accelerating new store openings, aiming for 8 to 10 new stores per year, to expand earning power.

As of the end of the current consolidated fiscal year, the Company has opened 14 "Japan Meat Seisenkan" stores on the premises of home centers developed and operated by Joyful Honda Co., Ltd. In FY2025 (ended July 2025), approximately 27.3% of the Group's consolidated net sales came from stores located within these home centers. Depending on trends in Joyful Honda's customer draw and store policies, this could have a material impact on the Group's business performance and financial condition.

As the basic policy is to develop stores through leased properties, if properties matching conditions cannot be secured at the planned opening timing, or if operating income after opening does not progress as planned, this could affect business performance. In addition, if the recovery of invested amounts is prolonged, or if lease deposits and security deposits become unrecoverable due to deterioration in the lessor's financial condition, this could also affect financial condition. The Company aims to stably secure an ordinary income to sales ratio of 4% or more at existing stores.

The Company is subject to legal regulations such as the Food Sanitation Act, the Food Labeling Act, and the Act against Unjustifiable Premiums and Misleading Representations. If violations occur and administrative dispositions are imposed, this could lead to a decline in credibility and affect business performance and financial condition. In addition, adverse effects on personal consumption and restrictions on or increased burdens on business activities due to tax reforms such as consumption tax rate increases or reduced tax rates, or legal amendments, could also affect business performance and financial condition. As a countermeasure, the Company treats legal compliance as its top priority and strives to develop systems such as establishing regulations and manuals.

The Company's diverse operations, including product procurement and sales, depend on communication networks and computer systems, with certain operations outsourced to external data centers. If equipment damage occurs due to natural disasters or accidents, or if system failures, network failures, virus infections, or cyberattacks occur, this could disrupt operations and affect business performance and financial condition.

In connection with the operation of store facilities and the collection and delivery of products, utility costs and transportation costs are continuously incurred, and large quantities of petroleum products such as trays and film are used in food sales. If electricity charges, fuel costs, and packaging material prices rise due to a surge in crude oil prices, this would be a factor increasing cost of sales and selling, general and administrative expenses, which could affect business performance and financial condition.