YOKOHAMA GYORUI CO., LTD.

Due to intensified sales competition resulting from the decrease in local fish retailers caused by the increase in mass merchandisers and the expansion of distribution outside the market, there are concerns about a decline in the performance of intermediary wholesalers, which are the Company's main sales channel. If the deterioration in the performance of intermediary wholesalers spreads, it could directly affect the Company's sales and earnings. The Company is working to mitigate this risk by supporting the improvement of intermediary wholesalers' financial conditions, as well as implementing credit management and receivables protection.

The Company operates under the permission of Yokohama City and Kawasaki City and is subject to regulations such as the Wholesale Market Act, the Yokohama Central Wholesale Market Ordinance, and the Kawasaki Central Wholesale Market Business Ordinance. Amendments to these regulations or the introduction of new legal regulations could affect the Company's performance. In addition, if the Company falls into any of the following categories—an equity ratio of less than 10%, a current ratio of less than 100%, or ordinary losses for three or more consecutive periods—there is a risk that Yokohama City or Kawasaki City may issue an order for improvement measures related to the Company's assets. The Company continues to gather information on and respond to legal regulations, while also making management efforts to satisfy the above financial standards.

The marine products distribution industry undergoes drastic changes on both the production and consumption sides, and fluctuations in fish prices caused by imbalances in supply and demand may affect the Company's performance. A decline in fish prices directly leads to a decrease in the value of goods handled, posing a risk of squeezing profits. The Company seeks to diversify this risk by diversifying its sales channels and expanding the volume of goods handled.

Amid growing consumer interest in food safety, if a food safety issue arises with the marine products handled by the Company, it could affect the Company's performance and social credibility. The occurrence of food-related accidents or hygiene issues poses a risk of leading to suspension of transactions, decreased sales, and reputational damage. The Company thoroughly implements market-version HACCP (hygiene management incorporating HACCP concepts) and strives to ensure the safety of the market.