RIDE ON EXPRESS HOLDINGS Co.,Ltd.

The home delivery food market is expanding against a backdrop of increasing single-person and dual-income households and the impact of the COVID-19 pandemic, but if major companies enter the market or price competition with food retailers intensifies, it could adversely affect the Group's business results. While the Group's strengths lie in entry barriers created by purchasing power, fresh food expertise, and brand recognition, it may be difficult to respond to competitive environment changes that exceed expectations.

Due to the nature of sushi, sales of the core brand Ginnosara (Delivery Sushi) are concentrated around the Obon and year-end/New Year holidays, and in FY2025 (ended March 2025), 101.1% of operating profit was concentrated in the second half, reflecting a marked seasonal bias. If business operations were to be suspended during peak periods, there is a risk that the impact on annual business results would be extremely significant.

Procurement prices for seafood and other ingredients are subject to fluctuations from foreign exchange rates, abnormal weather, fishing restrictions, the introduction of carbon taxes, and stricter plastic regulations, which pose a risk of rising procurement, logistics, and fuel costs. The Group strives to diversify its procurement routes and secure alternative production areas and materials, but if environmental changes or regulatory tightening progress beyond expectations, it could lead to disruptions in product supply or a significant deterioration in profit margins.

The Group has established its own strict standards for taste, quality, size, production area, and other factors, but if it becomes difficult to secure ingredients meeting these standards due to abnormal weather or poor catches, maintaining quality may become difficult, which could affect business results. In addition, the Group depends heavily on the logistics functions of Mitsubishi Shokuhin Kaisha, Ltd. for most of its ingredient procurement, and if that company's logistics systems or food centers were to become inoperable due to natural disasters or other events, there is a risk of serious disruption to business continuity.

As of March 31, 2026, the Group had 90 franchisee companies and 468 stores. If a franchisee experiences deteriorating financial conditions in other businesses it operates, this could lead to increased unpaid amounts or withdrawal from the brand, potentially affecting the Group's business results. There is also a risk that inappropriate operation by franchisees, beyond the reach of the Group's support, could damage the brand's reputation.

Due to the nature of the home delivery business, the Group holds a large amount of personal information and relies heavily on digital infrastructure such as its in-house developed store and web ordering systems and GPS dispatch system. If systems were to be shut down due to increasingly sophisticated cyberattacks such as ransomware or security incidents at outsourcing partners, it could result in lost order opportunities during peak periods, recovery costs, and loss of social credibility, potentially having a serious impact on business results.

Securing sufficient quality and quantity of management candidates, IT/AI specialist personnel, and store operation crew members is essential for promoting the mid- to long-term growth strategy, overseas expansion, and new businesses. If there is a shortage of personnel, increased costs due to wage increases, or delays in training plans, this could hinder store opening plans and business development. The Group employs more than 3,000 part-time workers, and changes to systems related to social insurance and working conditions could also lead to increased labor costs.

Given the nature of the business handling fresh food, if a food poisoning incident or similar event were to occur, it could have a significant impact on business results. The Group has established a dedicated department that regularly conducts hygiene assessments and bacterial testing at each store, and has established an objective hygiene management system by outsourcing to external specialist firms, but it is difficult to completely eliminate this risk.

If dissatisfaction with product quality or services, or negative rumors, spread through the media or the internet, this could damage the brand image and social credibility regardless of factual accuracy, potentially affecting business results. In addition, if a social incident related to food safety, such as mad cow disease or avian influenza, were to occur, there is a risk that orders could decline due to consumer anxiety, even if there is no actual problem with the Group's ingredients.

The Group makes venture investments in promising technology-related venture companies, but since the unlisted companies being invested in carry numerous uncertain factors, there is a possibility that the invested capital may not be recovered. Although the Group conducts evaluations of products, markets, risks, and management teams at the investment consideration stage, if investment losses occur, they could affect business results.