Noevir Holdings Co., Ltd.

The consignment sales format for Counseling Cosmetics is subject to regulation under the "Act on Specified Commercial Transactions." If this law is amended, the Company may be forced to review its sales methods, which could affect business results. In addition, sales of basic skincare products are heavily concentrated around the biannual "Skin Care Fair," creating a seasonally skewed structure in which the success or failure of this event significantly affects business performance. The Group's relevant departments gather information and respond appropriately as needed.

Since cosmetics are highly discretionary products, unpredictable economic fluctuations that lead to sluggish personal consumption directly affect net sales and profits. In particular, high-priced Counseling Cosmetics are highly sensitive to consumer purchasing sentiment, and there is a risk that demand could decline sharply during an economic downturn. The Group takes countermeasures by forecasting demand based on sales data and formulating production plans accordingly.

Changes in consumer behavior due to climate change affect both the Cosmetics Business and the Pharmaceuticals & Food Business. In addition, changes in regulations and systems related to climate change response could impose new cost burdens or constraints on business activities. The Group promotes measures to address environmental and climate change issues, centered on the Environmental Impact Reduction Committee.

If the Shiga Plant, the Cosmetics Business's main production site, or the Mie Plant, the Pharmaceuticals & Food Business's main production site, were damaged by a large-scale earthquake, typhoon, heavy rain, or other natural disaster, or affected by an infectious disease outbreak, this could result in production line shutdowns, disruption to product supply, and recovery costs. There is also a risk that damage to information systems or data loss could occur simultaneously, causing a broad shutdown of operations across the Company. The Group has established a framework enabling relevant departments to discuss and implement countermeasures.

If complaints or negative rumors regarding product safety arise, this could damage the Company's brand and reduce sales, while also exposing the Company to litigation risk under the Product Liability Act. If defective materials are found to have been mixed into key raw materials or purchased goods, additional costs such as recall expenses and compensation payments may arise. The Group has established a quality control system for its manufactured and sold products and strives to maintain high quality standards.

Because cosmetics are highly discretionary products, even products that are successfully developed and commercialized may not be accepted by the market. If the Company is slow to respond to the need for new products with efficacy suited to changing times, it may become difficult to differentiate from competitors, reducing market competitiveness. The Group continuously works on developing high value-added products.

There is a possibility of unintentionally infringing on another company's patent, such as in cases where a product is developed and sold before a competitor's patent application is published. If such infringement is discovered, the Company may incur costs related to product specification changes or recalls, and may face claims for damages, potentially affecting business results. The Group conducts thorough patent and trademark research during product development, and its relevant departments gather information and respond appropriately as needed.

The Company is subject to a wide range of laws and regulations applicable to the manufacture and sale of cosmetics, pharmaceuticals, and food products, including the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices, as well as quality, safety, and environmental standards, and accounting, labor, and business relationship regulations. If these laws and regulations are amended or newly enacted, business activities may be temporarily restricted, potentially affecting business results. The Group's relevant departments gather information and work to ensure thorough legal compliance.

If increasingly sophisticated cyberattacks result in unauthorized access, or if unpredictable computer virus infections cause large-scale system failures, leaks of confidential information, or data tampering, this could have a significant impact on business results and corporate credibility. Because the Company processes manufacturing and logistics data for a wide variety of products using advanced information systems, the scope of impact from a system outage is extensive. The Group regularly implements information security system enhancements as well as internal education and training, and continuously strengthens both technical and organizational countermeasures.

If a serious aircraft accident were to occur at consolidated subsidiaries Noevir Aviation Co., Ltd. (air transport business), Japan Flight Safety Co., Ltd. (Aircraft Pilot Training Business), or Noevir Aviation Inc. (Aircraft & Vessel Wholesale/Retail and Air Transport (U.S.)), this could not only affect business results but also seriously damage the brand and credibility of the Group as a whole. The Group makes every effort to comply with relevant laws and regulations and to ensure thorough flight safety.