Iceco Inc.

Ice cream, the Company's core product, is a seasonal item, and there is a risk that sales may decline in the event of a cool summer. In the fiscal year under review, 57.4% of operating profit was concentrated in the second quarter, while the third and fourth quarters combined accounted for only 9.9%. Weather-related factors cause large fluctuations in business performance, which reduces the predictability of full-year results.

In the Frozen Business, Create S.D Co., Ltd. accounts for 21.7% of total sales, and Don Quijote Co., Ltd. and its group companies account for 18.7%, with the top two combined reaching approximately 40%. In addition, purchases from NAX Corporation, a major supplier, account for 26.5% of total purchases. If these business relationships were to shrink or be terminated, this could have a material impact on the Company's business results and financial condition.

In the Supermarket Business, the occurrence of food poisoning, contamination by foreign objects, inadequate food labeling, or similar incidents could lead to a loss of customer trust. Although the Company implements temperature control and preventive measures, the possibility of issues arising in ensuring safety and quality due to external factors or inadequate internal response cannot be completely eliminated. A loss of trust would directly lead to a decline in sales, which could affect the Company's business results and financial condition.

In the food distribution industry to which the Frozen Business belongs, competition across business types and formats is intensifying among retailers, and industry restructuring is progressing, raising the possibility that customers may consolidate their wholesale trading partners or change trading channels. The risk of a change in trading channels also increases if complaints accumulate regarding the shelf-stocking and ordering operations attached to the Full Maintenance Service. The Company addresses this by strengthening its Full Maintenance Service, but a reduction or termination of transactions could affect its business results.

In the Supermarket Business, competition across business types and formats is intensifying, including entry by drugstore chains into the supermarket and convenience store markets. The Company seeks to differentiate itself by focusing on the three fresh food categories (produce, seafood, and meat), but if effective differentiation cannot be achieved, it may become difficult to implement the intended business strategy, which could affect the Company's business results and financial condition.

Inadequate response to changes in various laws and regulations applicable to each business field, such as the Road Traffic Act and the Food Sanitation Act, or the occurrence of legal violations, could affect the Company's business results and financial condition. Although the Company has established its "Code of Conduct" and "Compliance Regulations" and conducts training for all officers and employees, it recognizes that it is difficult to completely eliminate compliance-related risks.

The Company holds fixed assets at the offices of the Frozen Business and the stores of the Supermarket Business, and a decline in their real value or profitability could necessitate impairment accounting. Although the Company conducts thorough profitability management at each office and store and implements efficiency and sales promotion measures for underperforming locations, the occurrence of impairment losses could affect its business results and financial condition.

Providing the Full Maintenance Service requires the continued employment of skilled delivery staff, but labor shortages and rising labor costs are becoming increasingly serious due to the declining working population across Japan. If the Company is unable to secure personnel as planned, or if labor costs rise further, additional costs may arise in personnel expenses and outsourced delivery costs, which could affect its business results and financial condition. The Company is addressing this through active recruitment activities and personnel training aimed at early skill development and retention.

The Company extends credit primarily in the Frozen Business, and there is a possibility that bad debt losses may occur due to credit concerns at counterparties. Although the Company strives to manage credit risk through thorough credit management and the recording of a certain level of allowance for doubtful accounts, if additional allowances become necessary, this could affect its business results and financial condition.

The Chairman of the Board and Representative Director/President, together with his asset management company (KAN Corporation), hold 45.1% of the total issued shares, giving them significant influence over voting outcomes at general shareholders' meetings. If the shareholdings of these major shareholders were to decrease significantly for any reason, this could affect the market price of the Company's shares and the exercise of voting rights. Although the major shareholders have stated a policy of giving consideration to the interests of minority shareholders, a structural risk of share concentration remains.