Business risks

The following describes matters related to the Group's business and management conditions that are considered potential risk factors.
Please note that forward-looking statements in this document reflect the Group's judgment as of the date of submission of the Annual Securities Report (June 25, 2025).

(1) Risks related to business strategy

Risks	Details and impacts on the Group	Responses
Business models, competitive environment	In the BtoC Subscription Business, amid growing environmental and health orientations among customers, the Group makes it easier to obtain high-value-added products such as organic and other specially cultivated produce and processed foods, with an approach that emphasizes safety, through highly convenient services based on e-commerce. It regards online supermarkets and food delivery by regional consumer cooperatives and other retail outlets, as well as the delivery of frozen ready-to-eat meals and similar services, as businesses closely related to the e-commerce food market. This poses the risk that a tightening focus of related businesses on the sale of food products may lead to more intense competition in the food segment of the e-commerce market. The BtoB Subscription Business handles food services and management for company cafeterias, public offices, schools, nursery schools, and other facilities, as well as inpatient food services at hospitals and food services at elderly care facilities under contract. Competition among major players in the food service industry has intensified in recent years. Price competition may lead to lower contract prices. The Vehicle Operation Services Business handles vehicle operations and management outsourced by private sector companies and local governments. The Social Services Business provides food services for kindergartens and elementary and middle schools under contract to local governments; manages and operates after-school clubs, libraries, children’s centers, and other facilities; and provides diverse services outsourced by private sector companies. Demand for highly efficient business operations has intensified as progressively lower birth rates and an aging population lead to lower tax revenue for local governments and pressure to cut costs is growing at private sector firms. One risk is that the Group’s business and business performance may be affected if it were unable to adapt appropriately to such an environment.	The Group expects continuing growth, driven by the growing environmental and health orientation of customers, in both e-commerce food markets and markets for the high value-added foods offered by the Company. In addition, it believes that the business environment will provide numerous opportunities because of factors such as increasing use of alliances in the food service business and accelerating outsourcing of services from the public to the private sector. The Company will strive to differentiate itself from the competition by proposing new value, such as unique products and experiences that can be enjoyed only from its services, as it quickly ascertains potential needs in response to the differing challenges facing individual customers and swiftly deploys products and services to meet them.
Accidents	In the BtoC Subscription Business and the BtoB Subscription Business, the Group provides food ingredients and meal services. One risk is that issues such as food poisoning, contamination, or food-allergy incidents rooted in the Group’s sanitation management or other responsibilities may lead to consequences such as temporary suspension of operations at production facilities or liability for compensation for damages. In the Vehicle Operation Services Business, the Group manages vehicle operation services under contract to clients. One risk is that a serious traffic accident or other incident may result in liability for compensation for damages. In the Social Services Business, the Group operates and manages public facilities under contract. One risk is that a serious accident or other incident in facility operations may generate liabilities to provide compensation for damages or orders from the local government or other agency with jurisdiction to suspend business operations. Another potential risk is that any such incident may damage trust in and the reputation of the Group and impact on the Group’s businesses and business performance as a result.	To prevent any serious incidents, the Group strives to comply with laws and regulations on safety as well as the Group’s own internal regulations, standards, manuals, and other rules. It also carries out regular internal auditing to ascertain the state of business operations.

(2) Risks related to climate change

Risks	Details and impacts on the Group	Responses
Large-scale storm and flood damage	Since the Group handles products from primary industries such as agriculture, fisheries, and livestock, there is a risk that its businesses and business performance may be impacted by issues such as shortages and lower quality due to storm or flood damage in producing regions, such as the effects of large-scale typhoons or torrential downpours. Another risk is that such large-scale storm or flood damage may affect product distribution or logistics, impede shipments or deliveries and thereby affecting the Group’s businesses and business performance.	By engaging in transactions with producers across Japan and by maintaining the capacity to procure key products from multiple producing regions in principle, the Group has adopted a structure under which it can supply products from other producing regions if inclement weather in a specific region results in poor harvests or lower quality products in that region.
Reducing greenhouse gas emissions and food waste	Amid global efforts to restrict greenhouse gas emissions and reduce food waste, delays in the Group’s response may damage trust in and the societal standing of the Group. Another risk involves the potential effects of increasingly common extreme weather events associated with climate change on the supply of agricultural produce and other products.	In 2020, the Group introduced its Green Shift strategy, whereby it promotes reductions in greenhouse gas emissions across the entire supply chain, including farms, processing plants, and logistics facilities, and last-mile deliveries. The Group is also pursuing measures to reduce food waste. These efforts include making active use of nonstandard produce and boosting household food waste reduction efforts by boosting sales of meal kits.

(3) Supply chain risks

Risks	Details and impacts on the Group	Responses
Raw material quality	Group products may provide false or misleading information concerning the quality or use of agricultural chemicals due to mislabeling by producers. In addition, a consensus on the safety of radioactive contamination of foods has yet to be reached within society, and the Group may prove unable to immediately adapt to future laws or regulations concerning such matters. In such cases, the Group’s business and business performance may be affected by damage to brand image, loss of trust, or other factors resulting from potential administrative guidance or sanctions issued or claims or demands for compensation from customers.	Although specific quality requirements differ based on the added value pursued and customers targeted, the Group’s major brands have established their own standards addressing product handling. They deliver vegetables, seafood, and meats for which production areas can be identified, through direct purchase from producers. To the extent possible, produce is grown without the use of pesticides or chemical fertilizers, while processed food products are made using as few additives as possible. It also carries out on-site inspections and residual pesticide testing for agricultural products. For processed foods and other products, the company has established its own testing systems, utilizing external experts and third-party organizations. Furthermore, it strives to secure objective and rational quality and safety, including providing guidance on hygiene management to supplier manufacturers. The Group also promotes training and educational activities for its employees, such as conducting quality assurance training for new hires upon their entry into the company.
Concentration on logistics facilities	The Group operates its own logistics centers, where distribution processes such as product inspections, storage, sorting, and packing are centralized. Products are shipped to customers from the following logistics facilities: those in the cities of Ebina and Atsugi, Kanagawa Prefecture, for e-commerce brands; the logistics center in Narashino, Chiba Prefecture for Daichi wo Mamoru Kai; and four facilities nationwide for the Radish Boya brand. There are risks of loss of inventory, delayed shipments, service interruptions, or other occurrences that could impact the Group’s businesses and business performance in cases such as the inability to use these logistics centers due to natural disasters, fires, or other incidents or resulting effects on employee attendance.	The Group plans to continue shipments to customers to the extent possible in the event of an emergency by adjusting delivery operations to use those of the seven facilities nationwide that remain operable.
Transaction relations with Yamato Transport in logistics operations	In Oisix, which accounts for more than 50% of the net sales of the Group’s main segment, the BtoC Subscription Business, products are delivered to customers via Yamato Transport. The Group’s business and business performance may be affected by factors such as significant increase in shipping charges or reduction in business relationships with the Yamato Transport in light of the recent situation in the logistics industry.	The Group strives to maintain positive relations with the Yamato Group through activities such as joint projects not just for last-mile delivery, but procurement logistics.
Governance throughout the supply chain	The Group pursues business in cooperation with numerous partners in processes ranging from procurement through logistics and last-mile delivery. The Group’s business and business performance may be affected by compliance violations such as increases in on-the-job accidents due to working environments, violations of human rights, or concealment of improprieties at any point along this supply chain.	Through close communication and cooperation with suppliers in its supply chain, the Group works to monitor security systems and identify risks and to avoid and mitigate such risks. It also strives to avoid risks through insurance and disclaimers or cancellation provisions in contracts.

(4) Information about security risks

Risks	Details and impacts on the Group	Responses
System failure	The Group’s food delivery business operations depend in large part on business management computer systems for operations ranging from website administration through the receipt and placement of orders, purchasing, inventory, shipping, and sales. The Group’s businesses and business performance may be affected in the event of failures or other issues affecting Group computer systems due to factors such as greater than expected volumes of orders received or other sudden increase in access or infection by computer viruses, deliberate action of sabotage, or bugs in related applications.	In its business management systems, the Group employs backup systems and data and other redundancy measures, and implement and manage firewalls, virus checks, and other measures to avoid external attacks.
Handling of personal information	In selling products through e-commerce and other means, the Group receives names, addresses, and other information from customers and retains large volumes of personal information. Accordingly, the Group qualifies as a business operator handling personal information under the Act on the Protection of Personal Information. The Group’s business and business performance may be affected by the obligation to provide compensation for damages or by damage to reputation resulting from an external leak of personal information concerning the Group’s customers or other parties.	As part of its efforts related to personal information, the Group earned Information Security Management System (ISMS)* certification in 2018. It also encrypts data, employs strict access controls, and undergoes regular system diagnostics by an outside agency. Other efforts include the establishment of information management rules and manuals, education and training for program developers, and thorough in-house training for all employees. * Information Security Management System (ISMS): A system for managing the security of information assets in the organization
Responding to technological innovation	The e-commerce and Internet industries in which the Group engages in business experience continuous technological innovations and the introduction of new services. The Group’s business and business performance may be affected by delays in its response to technological innovations and other developments, unforeseen increases in investments or costs related to computer systems, and other technological matters.	The Group strives to proactively make advances by modifying its service models or introducing new features in businesses in connection with technological innovations and other developments.

(5) Human resource risks

Risks	Details and impacts on the Group	Responses
Management of human resources	President and Representative Director Kohey Takashima, who played a vital role in the Group’s founding and leads its business operations, plays a vital role in Group business activities overall, including in management policies and strategies. The Group is highly dependent on him as an individual. The Group’s business and business performance may be affected if the performance of its duties were impeded for any reason.	To build a management structure that is not overly dependent on Mr. Takashima, the Group is promoting efforts such as delegating authority to other Directors and employees.
Securing and developing human resources	As the Group’s market grows and competition intensifies, the struggle to secure human resources will intensify, leading to developments such as an outflow of human resources from the Group or impediments to securing human resources. In addition, rapid growth in business volumes due to sharp increases in orders received may lead to reduced efficiency due to personnel shortages in product shipping, customer service, and other operations. The Group’s business and business performance may be affected by such event.	Recognizing the need to secure and develop capable human resources as its businesses grow rapidly, the Group strives to train and secure human resources internally as well as hire human resources from outside the organization. In addition, operations such as shipping at logistics centers and customer service to handle customer inquiries and other customer needs involve labor intensive aspects. These lead to the need to always assign certain number of human resources efficiently. Accordingly, the Group strives to ensure appropriate hiring and training for such human resources.

(6) Legal and other risks

Risks	Details and impacts on the Group	Responses
Major laws and regulations	The Group is required to comply with numerous laws and regulations, chiefly the Food Sanitation Act, the Act on Promotion of Recycling and Related Activities for Treatment of Cyclical Food Resources, the Act against Unjustifiable Premiums and Misleading Representations, the Health Promotion Act, the Consumer Contract Act, the Road Transportation Act, the Antimonopoly Act, the Act on Securing the Proper Operation of Worker Dispatching Businesses and Protecting Dispatched Workers, and the Building Standards Act. The Group’s business and business performance may be affected by restrictions or suspension of business activities if these laws or regulations are not complied with.	To avoid such risks, the Group has established various rules and guidelines, including those on ethics, to maintain a compliance promotion structure and to educate and raise awareness among officers and employees, a part of which is annual compliance training. It also established the Corporate Ethics Hotline as an internal whistleblowing program for compliance violations recognized by officers or employees and carries out investigations and corrective measures based on the details of reports received through the hotline, as necessary.

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