ASEED HOLDINGS CO.,LTD.

The Group is subject to a wide range of legal regulations, including the Food Sanitation Act, the Liquor Tax Act, alcoholic beverage manufacturing and sales licensing, labor-related regulations, and environmental laws. If legal violations occur due to changes in laws or the introduction of new regulations, the Group may face penalties or social sanctions, potentially affecting business performance and brand trust. As countermeasures, the Group is promoting the development of legal and tax personnel while thoroughly enforcing the "Acecoook Way" (behavioral guidelines) to raise compliance awareness and prevent misconduct.

In the vending machine operation retail business, the proportion of sales to the amusement arcade industry is relatively high, and changes in the business environment or regulations/ordinances affecting this industry could directly impact business performance and financial condition. As a risk mitigation measure, the Group continuously monitors industry trends while strengthening sales efforts toward offices and factories to achieve a more balanced sales composition.

In the beverage manufacturing business, contract manufacturing for brand owners accounts for a high proportion of sales, and business performance and financial condition may be affected by weather fluctuations and changes in brand owners' outsourcing policies. As countermeasures, the Group aims to strengthen collaboration with brand owners and enhance added value through proposal-based planning, while expanding its own brands to achieve stable factory utilization and reduce the risk of declining production volumes.

While manufacturing and selling RTD (low-alcohol beverage) products, stricter regulations on alcoholic beverage sales are being considered due to concerns over health hazards and adverse social effects from inappropriate alcohol consumption, and consumer demand may also shrink due to rising health consciousness. These factors could lead to a decline in sales revenue and damage to brand value. In response, the Group is promoting the provision of health-conscious products, such as alcohol-taste beverages, and ensuring compliance with related laws and regulations.

Although the Group pursues the highest level of quality control, an unforeseen serious quality problem could have a significant impact on business performance and brand trust. Under a policy of prioritizing customer safety and responding promptly in the event of a quality incident, the Group continues to invest sufficient management resources in advancing quality control and improving production systems.

The Group conducts overseas business through investment in an equity-method affiliate engaged in beverage manufacturing and sales in Vietnam, which entails inherent risks such as unexpected changes in laws and regulations, weaknesses in industrial infrastructure, and social and political risks. The materialization of these risks could disrupt overseas business activities and affect business performance and future plans, and the Group is working to minimize such risks by establishing an information-gathering system through local resident staff and collaborating with specialized institutions.

Securing and developing the human resources essential for maintaining and growing the business is a challenge, and failure to secure personnel with the necessary skills, or the loss of such personnel, could affect business performance. As countermeasures, the Group is implementing branding based on the Acecook Group Charter to enhance loyalty, promoting personnel exchanges among group operating companies, and regularly holding management training sessions for the next generation of executives.

The Group has positioned capital alliances and M&A aimed at enhancing corporate value as part of its medium- to long-term management strategy. However, if expected results are not achieved due to deterioration in the financial condition of investees, an impairment of the value of held shares may be necessary; and if contingent liabilities arise after acquisition, unrecognized liabilities are discovered, or a significant divergence from the business plan occurs, impairment of goodwill may be necessary, either of which could affect business performance.

If the profitability of held fixed assets declines or their market value falls significantly, the application of impairment accounting may require the recognition of extraordinary losses, potentially affecting business performance. As countermeasures, the Group regularly evaluates the profitability of fixed assets and considers whether to continue holding them or how to utilize them, and strives to suppress the occurrence of impairment losses by properly valuing fixed assets acquired through new acquisitions and M&A.

The vending machine operation retail business and the beverage manufacturing business consume large amounts of fuel and electricity, raising concerns about cost increases due to climate change and a decline in evaluation by consumers and investors due to insufficient environmental measures. In addition, sudden natural disasters could damage manufacturing equipment, cause shortages of raw material supply, or reduce the functionality of social infrastructure, potentially affecting business performance and financial condition. In response, the Group is promoting greenhouse gas reduction through energy-saving equipment and vehicles, and has established a system whereby, in the event of a large-scale disaster, a response headquarters is set up within the holding company to confirm employee safety, assess damage conditions, and provide support within the Group.