HitoMile Co., Ltd.

Due to the decline in the adult population and reduced per-capita consumption, the core alcoholic beverage sales market is expected to contract over the long term. The Group is advancing the development of a logistics platform and restructuring toward non-alcoholic product handling and the paid delivery business, but market contraction may affect business performance and financial condition.

In sales to restaurants, competition with major liquor retailers has intensified, while in sales to households, diverse competitors such as supermarkets, convenience stores, and e-commerce operators exist. Unforeseen competitor activity or changes in customer preferences could adversely affect the Group's sales and earnings.

As the business expands, recruiting, developing, and retaining talented personnel has become a critical challenge, with securing delivery drivers to expand the logistics network being an especially urgent priority. While the Company has implemented measures such as support for obtaining driver's licenses and expanding employee dormitories, insufficient recruitment or personnel attrition due to harassment or deteriorating working conditions could impact performance through service quality decline and reputational damage.

Licenses and permits such as the liquor sales business license and motor truck transportation business permit are essential to the continuation of core operations, and safety regulations are being strengthened through laws such as the Comprehensive Transport Safety Act. If a license is revoked or administrative action is taken in the future, it could disrupt core business activities, and increased regulatory compliance costs may affect business performance and financial condition.

The Group positions information security and personal information protection as a key management priority, strengthening its systems and providing employee training. Should an external leak or unauthorized use of personal information occur, it could damage social trust, reduce sales, and result in compensation costs, thereby affecting business performance and financial condition.

The Company raises funds through interest-bearing debt, and rising interest rates or financial market disruption could increase financing costs, make refinancing difficult, or force fundraising on unfavorable terms. Additionally, some borrowings are subject to financial and asset covenants, and a breach could result in loss of the benefit of the term and materially affect the financial condition.

M&A is one of the Company's strategies for business expansion and entry into new areas, and while thorough due diligence is conducted, impairment of goodwill and other assets, unforeseen business issues, or transaction-related costs may arise after execution. In capital and business alliances as well, if initial expected results are not achieved, contract termination or withdrawal of investment may occur, affecting business performance and financial condition.

The Company applies accounting standards for the impairment of fixed assets, and if the profitability of fixed assets or lease assets declines due to business underperformance or other factors, recognition of impairment losses may become necessary. Recognition of impairment losses would directly and adversely affect the Group's business performance and financial condition.

In the event of a natural disaster such as a major earthquake, tsunami, or wind, flood, or snow damage, physical damage to products, stores, logistics facilities, and information systems, as well as disruption to sales and logistics activities, may occur. Since the Group's facilities are concentrated in the 23 wards of Tokyo, a disaster occurring in that area would have a significant impact on business performance and financial condition.

SKY Group Holdings, Inc., the parent company, holds 46.8% of the Company's issued shares, and the outcome of its voting rights exercise could affect the Group's decision-making. Furthermore, if the Company or the parent company group changes its management policy or business development in the future, a competitive relationship could arise, potentially affecting business performance and financial condition.