TAKAYOSHI Holdings, INC.

In the Share Shop Business, producers hold ownership of the products, but temperature control and product checks at stores are handled by employees of the Company's group. Should food poisoning or other health harm occur due to a product listed for sale, this could lead to a decline in credibility and a decrease in store sales. As countermeasures, the Company provides producers with guidance on laws, regulations and hygiene management, maintains sales floor management manuals, and conducts employee training.

Vegetables, the Company's mainstay product, are subject to market price fluctuations caused by climate change and natural disasters. Because the Company adopts a consignment sales method, fluctuations in the unit price of vegetables directly affect operating revenue and profit when sales volume remains constant. The Company is working to develop producers in order to raise the proportion of distribution accounted for by products other than agricultural produce, but if these measures do not succeed, this could adversely affect business performance and financial position.

The direct-sales business is also operated by other organizations, and producers are free to choose to list their products at other direct-sales outlets, food delivery services, or registration-based e-commerce sites as well. If differentiation is insufficient, this may result in the loss of producers and a decline in store sales. The Company's group seeks to differentiate itself through supply stabilization via a network of direct-sales outlets and a destination store strategy.

Because the business model is platform-based, procurement of products and price determination rights lie with the producers. If the number of registered producers fails to grow as expected, or if there is insufficient volume of listed products or an imbalance in product categories, the appeal of store merchandise may decline. The Company continues to develop new producers, but if sufficient results are not achieved, this could affect business performance and financial position.

In the physical store-based platform business, store location significantly affects operating revenue and profit. The Company makes store opening decisions based on comprehensive analysis of factors such as the area of surrounding farmland, distribution of producers, trade area population, and rent. If suitable properties are limited or if actual conditions diverge from prior analysis, the Company may fail to achieve its initial plans, which could adversely affect business performance and financial position.

If the necessary personnel cannot be secured in line with ongoing store opening plans, achievement of those plans may become difficult. The Company seeks to secure personnel by promoting local part-time employees to contract employees and region-specific full-time employees, but if sufficient personnel cannot be secured, this could affect business performance and financial position.

In the event of a major natural disaster such as a typhoon, storm or flood damage, or earthquake, facility operations may be suspended due to damage to store equipment or shopping centers, and deliveries to stores may decrease due to damage suffered by producers. The Company seeks to diversify risk through nationwide expansion, but if a natural disaster occurs in a specific region, this could affect business performance and financial position in that region.

Unauthorized intrusion, computer virus infection, natural disasters, communication line trouble, and other factors could cause the information system to stop functioning or result in large-scale data destruction. The Company has implemented measures such as applying the latest anti-virus software and using data centers of external vendors with high security levels, but if an unforeseeable failure occurs, this could affect business performance and financial position.

The Company holds personal information of producers, business partners, and employees, and strives to comply with laws and regulations by establishing regulations for managing specific personal information and regulations for managing personal information in general. Should a leak of personal information occur, this could lead to claims for damages and a decline in credibility, thereby affecting business performance and financial position.

Continued sluggish store profits or a sharp deterioration in economic and financial conditions could result in the recognition of impairment losses on fixed assets. In addition, if performance falls short of the business plan, it may become necessary to review the recoverability of deferred tax assets. In either case, this could affect business performance and financial position and become a factor causing fluctuations in financial figures.