SILVER LIFE CO., LTD.

Prices of food ingredients such as vegetables, meat, fish, and grains are affected by domestic and overseas commodity market conditions, transportation costs, and exchange rate fluctuations. In addition, manufacturing costs are subject to significant fluctuation due to rising energy and raw material prices and increasing labor costs. The Company takes measures such as securing multiple raw material procurement sources, restructuring menus using alternative ingredients, and introducing solar power generation equipment; however, if market conditions or exchange rates fluctuate beyond expectations, the resulting increase in manufacturing costs could affect business performance and financial condition. This is classified as a "particularly important risk" in the Company's securities report.

The occurrence of incidents such as foreign object contamination, food mislabeling, or mass food poisoning caused by viral infection could lead to consumer distrust of food in general and damage trust and confidence in the Company's products. The Company has obtained FSSC22000 certification and established a hygiene and quality control system; however, if an accident or incident occurs at a producer or during the distribution process, it could have a material impact on business performance and financial condition. This is classified as a "particularly important risk" in the Company's securities report.

Takahisa Shimizu, the Representative Director, plays a central role in formulating management policy and business strategy, planning and promoting the medium-term management plan, and planning and promoting new businesses. The Company seeks to reduce this dependence by enhancing information sharing at Board of Directors meetings and establishing a voluntary Nomination and Compensation Committee; however, if for any reason he becomes unable to continue his duties, it could have a material impact on business and business performance. This is classified as a "particularly important risk" in the Company's securities report.

The meal delivery service market for the elderly is steadily expanding due to growth in the elderly population and increased reliance on private-sector services as municipal subsidies are reduced; however, competition is expected to intensify due to new entrants by major companies and rivalry with adjacent industries such as food retailers and other competitors in the same business. The Company seeks to establish its market position by leveraging manufacturing scale advantages through expansion of FC franchise stores, food ingredient sales to elderly care facilities, OEM, and EC frozen bento sales; however, intensifying competition could affect business performance and financial condition.

The Company is subject to a wide range of legal regulations, including the Food Sanitation Act, the Act on Promotion of Small and Medium Retail Business, the Antimonopoly Act, the Consumer Contract Act, the Act on Specified Commercial Transactions, the Act against Unjustifiable Premiums and Misleading Representations, the Food Recycling Act, the Containers and Packaging Recycling Act, the Act on Promotion of Global Warming Countermeasures, and the Energy Conservation Act. The Company strives for compliance through compliance training, collaboration with outside experts, and strengthened coordination between the production and legal departments; however, the tightening, revision, or repeal of laws, or the enactment of new regulations, could restrict business activities and affect business performance and financial condition.

Since FC franchise stores are independently operated, the Company's oversight may not extend to every detail, creating a risk that events adversely affecting the brand may occur. In addition, since many franchisees are individual business operators whose financial foundations are not necessarily stable, if the management of FC franchise stores deteriorates due to worsening economic conditions or disasters, this could affect business performance and financial condition through increased accounts payable or store withdrawals. Furthermore, if planned new store openings cannot be secured due to intensifying competition or other factors, this could also affect business performance.

Business expansion requires diverse personnel in areas such as sales, manufacturing, product development, systems, and marketing, and the Company works to secure such personnel through new graduate hiring, promotion of part-time workers to full employee status, mid-career hiring, and utilization of the Specified Skilled Worker system. However, if the Company is unable to secure the necessary personnel as planned, if personnel attrition occurs, or if personnel development does not proceed as expected, this could reduce competitiveness and constrain business expansion, thereby affecting business performance.

If a large-scale earthquake, typhoon, heavy rain, or other disaster damages the head office, factories, warehouses, or FC franchise stores, or disrupts roads or communication networks, store operations and procurement, production, and delivery could be hindered, disrupting business activities and potentially incurring substantial repair costs. There is also a risk that the outbreak of infectious diseases such as COVID-19 or influenza within factories or warehouses could lead to production halts or shipment delays. The Company addresses these risks through factory decentralization and strengthened collaboration with partner factories; however, they could still affect business performance and financial condition.

In procurement and sales operations that utilize communication networks and computer systems, if a system failure occurs due to a natural disaster, accident, unauthorized intrusion by a computer virus, or employee error, this could affect business performance and financial condition. In addition, due to the nature of meal delivery services for the elderly, the Company handles a large amount of personal information, and if information leakage occurs due to a system failure or unauthorized disclosure, this could affect business performance and financial condition through legal violations, damages, and other consequences.

If false information about the Company, its products, or services is disseminated and spreads via social media or internet bulletin boards, it could damage the Company's or its products' image and affect business performance and financial condition. The Company monitors and analyzes posts on social media and the internet; however, it is difficult to completely prevent the spread of inappropriate information, and given the nature of the business—providing food products for the elderly, where trustworthiness is particularly emphasized—the impact of reputational damage could be significant.