I-ne Co., Ltd.

Large-scale earthquakes, typhoons, floods, and other natural disasters, as well as the outbreak of infectious diseases, may delay or interrupt the business activities of the company group, and may also affect the entire supply chain (suppliers, delivery destinations, logistics) and employees, which may affect the financial position and business performance. The company seeks to reduce business continuity risk through the development and distribution of a BCP manual, promotion of digitalization of operations, and the establishment of flexible working arrangements.

Market prices of natural oils and fats and petroleum-related raw materials are affected by geopolitical risk, exchange rate fluctuations, and supply-demand balance, and in the event of sharp price fluctuations, the company may be unable to secure target profits. In particular, geopolitical risk surrounding the Strait of Hormuz could have a significant impact on business performance, and it is currently difficult to estimate this impact with certainty. The company seeks to mitigate the impact through cost reduction measures and collaboration with multiple suppliers.

As revenue is concentrated in the three core brands "BOTANIST," "YOLU," and "SALONIA," competition in each category has intensified due to the entry of major manufacturers and an increase in products with similar concepts. If support for the core brands fluctuates due to changes in consumer preferences or intensifying competition, this may affect the financial position and business performance. As countermeasures, the company is promoting diversification of its brand portfolio and securing intellectual property rights.

In the past, deficiencies were identified in the organizational management system for related party transactions, resulting in the correction of the consolidated financial statements in previously submitted securities reports, and it was determined that there was a material weakness in disclosure controls that had a significant impact on financial reporting. If the development of an internal management system suited to the expanding scale of business is delayed, this may affect the business and business performance. The company is formulating and implementing recurrence prevention measures and working to establish and operate appropriate internal controls.

As "BOTANIST," "YOLU," and "SALONIA" have grown, dependence on specific manufacturing contractors and partner factories has increased, and there is a risk of temporary inventory shortages until alternative suppliers can be secured if a contractor's business deteriorates or its supply capacity declines. If stable supply can no longer be obtained due to changes in a contractor's business policy or other factors, this may affect the financial position and business performance. The company addresses this through diversification of factories, selection of alternative contractors, and securing stable inventory.

The company conducts overseas sales primarily in Asia and the United States, and changes in local economic conditions, exchange rate fluctuations, changes in legal regulations, and political and social factors may affect the financial position and business performance. In particular, there is a risk that changes in China's economic conditions and business trends could spread to trends across the Asian region as a whole. The company addresses this by strengthening the management systems and internal regulations of overseas subsidiaries and enhancing company-wide profit and loss management, including foreign exchange management.

New product development, a key driver of continued growth, involves uncertainties such as changes in customer needs and the launch of similar products by competitors, and if sales fall below expectations or development is discontinued, this may affect business performance and the financial position. The company seeks to reduce uncertainty through phased investment decisions and gate management based on its proprietary brand management system, IPTOS (Idea, Plan, Test, Online & Offline, Scale). It is also working to enhance the sophistication of its product development process through AI utilization and JBIST (Japan Beauty Science Institute).

The company is subject to a wide range of laws and regulations, including those governing cosmetics (Pharmaceutical and Medical Device Act), food (Food Sanitation Act, Health Promotion Act), beauty appliances (Product Liability Act), and advertising displays (Act against Unjustifiable Premiums and Misleading Representations), and future changes in laws or the enforcement of new laws may restrict major business activities. If improper representations or violations of the Act on Specified Commercial Transactions occur, this may affect the financial position and business performance. The company thoroughly ensures compliance with laws through the establishment of a checking system for relevant laws and regulations and the operation and training of compliance regulations.

As the company holds confidential information of the group, business partners, and customers, the risk of information leakage, loss, or damage due to computer viruses or security breaches is increasing, and if such an incident occurs, it may affect the financial position and business performance through loss of social trust, liability for damages, and decreased competitiveness. The company addresses this through obtaining Privacy Mark certification, continuous server monitoring, operation of personal information protection regulations, and internal training.

Timely recruitment of talented personnel is a key challenge in driving growth, including global expansion, but if the recruitment and development of personnel does not proceed as planned due to intensifying competition in the labor market or other factors, this may affect the financial position and business performance. The company addresses this by creating an environment for challenge and growth through business growth and continuously building an attractive personnel system.