MICREED Co.,Ltd.

Small and individually-operated restaurants, the Company's main customers, continue to face a challenging business environment, including delayed recovery in demand for after-parties and large-scale banquets, and lost sales opportunities due to labor shortages. Rising raw material and energy prices, and the impact on the global economy of the Trump administration's high tariff policy, are also increasing uncertainty about the outlook. Furthermore, if a major competitor operating BtoC EC services were to enter the small restaurant market, it could have a material impact on the Company's business results and other matters.

During the spread of COVID-19 from FY2020 onward, the Company's business results declined significantly due to requests for restaurant closures and shortened operating hours. Although COVID-19 has subsided, there remains a risk that the spread of a new infectious disease in the future, and any resulting restrictions on restaurant operations and general public behavior, could have a significant impact on the Company's business results.

The prices of ingredients handled by the Company are affected by domestic and international commodity market conditions and exchange rate fluctuations, and issues such as depletion of marine resources also affect market conditions. The Company mitigates price increases through multiple procurement sources and competitive bidding, including changing suppliers, but if market conditions change beyond expectations or if there are sharp exchange rate fluctuations, a surge in procurement prices could affect the Company's business results and other matters.

Purchases from Kokubu Group Corporation, a major shareholder, accounted for 45.4% of total purchase amount (FY2026, ending March 2026), indicating a high degree of dependence on a specific supplier. Although the Company takes measures such as price negotiations and securing alternative products, if any disruption occurs in transactions with this company, it could disrupt business operations and affect the Company's business results and other matters.

The Company's services involve a wide range of operations, including product procurement and sales, conducted over communication networks utilizing IT systems, and the Company has implemented security measures such as redundancy in both hardware and software. However, due to advances in IT technology, unauthorized access and hacking cannot be completely eliminated, and if a cyberattack by a third party results in information leakage or a large-scale system failure, it could affect the Company's business results and other matters due to business suspension and other effects.

The Company takes measures to minimize business suspension time in the event of a system failure, including regular data backups and annual drills of emergency switchover procedures. However, if a large-scale system failure occurs, whether intentional or accidental, business operations may have to be suspended, which could affect the Company's business results and other matters.

If a natural disaster such as an earthquake, typhoon, or tsunami, or a fire or the spread of infectious disease occurs, it could have a serious impact on business operations. In particular, since the Company has only one shipping base, there is a high risk that normal business operations would become impossible if that base were to suffer major damage from a large-scale disaster.

The Company outsources all product deliveries to external transport companies, with deliveries generally scheduled during restaurants' food preparation hours. If labor shortages or fuel price increases at transport companies become severe, the delivery costs borne by the Company could increase substantially, or the Company may be unable to secure delivery companies, resulting in delivery failures that could affect the Company's business results and other matters.

The Company's operations rely heavily on key management personnel, including Representative Director and President Reiko Katayama, and the Company is working to build a structure that reduces excessive reliance as the business expands. However, at present, if key management personnel become unable to perform their duties for any reason, it could affect the Company's business results and other matters.

The Company is subject to legal regulations such as the Food Sanitation Act, the Basic Act on Food Safety, the Food Labeling Act, and the JAS Act, and while it thoroughly enforces education and conduct based on its compliance regulations, stricter regulations or new regulations could restrict business activities. Additionally, if an incident such as foreign matter contamination or false labeling occurs in the manufacturing or distribution process, it could severely damage customer trust and have a material impact on the Company's business results and other matters.