March 22, 2021
Company Name:

Alphax Food System Co., Ltd.

Name of representative:

Takamori Tamura,President and Representative Director
Stock code: 3814
Tokyo Stock Exchange, JASDAQ
Kenji Kikumoto,
Senior Executive Officer, General Manager of
IR & Public Relations Office+81(0)836-39-5151
https://www.afs.co.jp/

Inquiries:

Telephone:
Website:Notice Regarding Disclosure of "Shareholder Value Drivers for the Medium-Term Management
Plan for the Fiscal Years Ending September 2021 to September 2023"

Based on the contents of the "Notice of Issuance of New Shares by Third Party Allotment and Issuanceof First Series Stock Acquisition Rights (with Exercise Price Revision Clause), Second Series Stock
Acquisition Rights (with Option to Revise Exercise Price) and Third Series Stock Acquisition Rights"
disclosed on March 3, 2021 (hereinafter referred to as the "Disclosure of Capital Increase by Third Party
Allotment", only in Japanese), the Company has prepared a document detailing the shareholder value
drivers that will drive the realization of the "Medium-Term Management Plan for the Fiscal Years Ending
September 30, 2021 to September 30, 2023 (hereinafter referred to as the "Medium-Term Management
Plan", only in Japanese)" disclosed on November 27, 2020.
Since our establishment in 1993, based on our corporate motto of "contributing to the development offood culture through information systems," we have been developing products, services, and systems witha high cost-performance with the aim of becoming an "information system infrastructure" for the entire
restaurant industry, based on our management policy of "securing maximum profits for our customers by
reducing losses (food ingredients/labor costs). In particular, in recent years, we have seen a rapid increase
in inquiries for our “Restaurant Management System ®”, which thoroughly eliminates foodstuff loss, andour patented “automated ordering system”, which is an extended function of ““Restaurant Management
System ®”.
The funds acquired through the "Capital Increase through Third-party Allotment" will be used tostrengthen these efforts, and we plan to use the funds to invest in the construction of IT infrastructure to
expand our service infrastructure to the restaurant industry.
Please refer to the attachment for details.
For your reference, we have also provided an overview of our business, which is the background to our
medium-term management plan.

Shareholder value driver of medium-term management plan

Alphax Food System Co., Ltd.［3814］

Alphax Food System Co., Ltd.
Fiscal year ending September 30, 2021 - Fiscal year ending September 30, 2023

Drivers of shareholder value
in the mid-term business plan
Contributing to the development of food cultureusing information systems

Targets for the fiscal year ending September 30, 2023
Sales revenue ¥3.7 billion, Operating income ¥880 million
March 22, 2021

Copyright © ALPHAX・FOOD・SYSTEM CO.,LTD. All rights reservedShareholder value driver of medium-term management plan

Alphax Food System Co., Ltd.［3814］

Contents
I.

Introduction - Purpose of this document ............................................................................................... 1

II.

Drivers of shareholder value strengthened in the mid-term business plan ............................................. 2
Strengthening the ability to support the digital transformation of the restaurant industry ........................... 2

III.

Company overview ............................................................................................................................... 6

A leading player in information systems infrastructure for the entire restaurant industry ............................. 6
Company philosophy ................................................................................................................................... 7
Company policy ........................................................................................................................................... 8
Business overview ....................................................................................................................................... 9IV.

Strengths of our business .................................................................................................................... 11

Overview of DX support capabilities........................................................................................................... 11V.

Visualization of the story of improving corporate value ....................................................................... 25
Visualization with GCC managementTM....................................................................................................... 25
Organizing the company's strategy as seen from GCC ManagementTM and its significance to DX promotion 26

Disclaimer ..................................................................................................................................................... 27

Copyright © ALPHAX・FOOD・SYSTEM CO.,LTD. All rights reservedShareholder value driver of medium-term management plan

Alphax Food System Co., Ltd.［3814］

I. Introduction - Purpose of this document
The purpose of this document is to explain the shareholder value drivers that promote the realization of the"Medium-Term Management Plan for the Fiscal Years Ending September 30, 2021 to September 30, 2023 (the"Medium-Term Management Plan")" disclosed on November 27, 2020 (in Japanese only), based on the disclosure of"Notice of Issuance of New Shares by Third Party Allotment and Issuance of First Series Stock Acquisition Rights (withExercise Price Revision Clause), Second Series Stock Acquisition Rights (with Option to Revise Exercise Price) and
Third Series Stock Acquisition Rights" announced on March 3, 2021 (in Japanese only).
For details on financing, please refer to the attached "Explanatory Materials on Financing (inJapanese only)”.

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II. Drivers of shareholder value strengthened in the mid-term business plan
Strengthening the ability to support the digital transformation of the restaurant industry
Using "Self-service," "automation," and "AI Robots" to clarify and reduce the two major costs in therestaurant industry
Since its founding in 1993, Alphax Food System Co. Ltd., (herein, "the company") has been providing total solution
systems (ASP/package system + industry-specific POS systems, ordering systems, and peripheral services businesses)
by developing high cost-performance products, services and systems with the aim of creating "information systems
and infrastructure" for the entire restaurant industry under a business policy of “ensuring maximum profits forcustomers by reducing losses (foodstuffs/labor costs), and based on the company's motto of "contributing to thedevelopment of food culture using information systems". The company has therefore been promoting digitaltransformation through "self-checkout" and "automation" transformation, in order to support transparency and cost
reductions in the two major costs in the food service industry (foodstuffs and labor costs). Under the "Mid-TermBusiness Plan for the Period September 2021–September 2023" (herein termed the "Mid-Term business plan)
disclosed by the company on November 27, 2020, the company will particularly strengthen its "automated orderingsystem" and the fully non-contact self-checkout "Self-Shot" which are in strong demand in the era of the "New
Normal" of contact-avoidance, hygiene, and working styles resulting from the effects of the coronavirus pandemic
and the worsening labor shortage. Furthermore, although not reflected in the figures presented in the plan, we areaiming to achieve the number one position for food service AI robots, which are expected to offer significant labor
cost reductions. Through these initiatives, we will solidify our position as the "only one" and "number one" in thefood service industry through transparency and cost reductions in the industry's two major cost categories andstrengthen our ability to create long-term shareholder value (herein termed "shareholder value drivers").
DX through the "automated ordering system": Improving profit margins by five percentage points *through food loss reductions
A major factor influencing the achievement of the Mid-Term business plan will be increased demand for our"automated ordering system", which is an extension of our core product, the patented "Restaurant Business
Management System®". In the food service industry, the relationship between foodstuff inventory and menu items
is complex, and from the perspective of responsible supply, excessive orders are placed, which according to our
research, results in an average food loss of approximately 5% * of sales revenue.
The company's "automated ordering system" is based on a system used in the manufacturing industry for proper
inventory management. It automatically manages foodstuff inventory in conjunction with sales based on "recipe
breakdowns" of menu items and reduces food loss by automatically ordering the required inventory without relying
on human intuition. As of the fiscal year ending September 2019, 458 restaurant chain stores had introduced the"automated ordering system", and saw an improvement in gross profit margins through reduced food loss and laborcosts. It should be noted that even when creating a central kitchen (herein termed "CK"), it is difficult to provide afundamental solution from the perspective of reducing food loss because the issues of recipes and ingredientmanagement are simply transferred from stores to the CK. A further profit increase can be expected by creating a CK
combined with our “automated ordering system”.
*This is the average for users of our system since 1987.
※ Results for the fiscal year ending September 2020 are omitted due to the effects of the coronavirus pandemic.

▉

DX benefits of our “automated ordering system” and its efficacy as a driver of shareholder value

The problem of food waste in the restaurant industry
The complexities of food inventory and menus result in excess orders when entrusted to human intuition

Food loss amounts to 5% *of sales revenue
The effects of introducing the company's automated ordering system
Based on "recipe breakdowns," the system accurately assesses ingredient inventory and menu trends toautomatically order the appropriate quantities of ingredients.
The following results were confirmed at a restaurant chain of 458 stores that introduced the system in 2019,
resulting in reduced food waste and lower labor costs.

A 5% improvement in gross profit margin through reduced food waste= a clear effect expected to contribute to increased sales at the company.
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Alphax Food System Co., Ltd.［3814］

Achieving the financial targets of the Mid-Term business plan and pursuing theupside by raising ¥800 million
Under the "Mid-Term business plan for the period September 30, 2021 to September 30, 2023"*1 disclosed by thecompany on November 27, 2020, we will strengthen our ability to support "self-service" and "automation" in thefood service industry through our total solution systems, and by focusing on the promotion of DX through the"automated ordering system" described above. As of June 2020, 3,026 stores were expected to sign contracts for the
automated ordering system, a 6.6x increase over the previous year, and we anticipate 85% of these stores will sign
contracts for three terms. Although the company posted a loss for the fiscal year ending September 2020 due to theimpact of the coronavirus pandemic, based on these assumptions, the company plans for sales revenue of ¥3.7 billion,
operating income of ¥880 million, and net income of ¥600 million for the fiscal year ending September 30, 2023. For
the benefit of allottees' understanding, the ¥800 million to be financed indicated in the "Third-Party Allocation of
Newly Issued Shares" announced today, will be used for IT investments to strengthen our DX support capabilities in
the food service industry.
*1: https://www.afs.co.jp/category/ir/PDF/201127_n10283.pdf▉

The company motto, the value offered, and the financial targets set out in the mid-term business plan
(Fiscal Year ending September 2023)

Company motto

Contributing to the development of food culture using information systems
Delivering value to the restaurant industry

Promoting DX in the restaurant industry
Transparency and cost reductions in two major cost areas (ingredients and labor) through"self-service" and "automation"
Mid-term business plan

As of June 2020, 3,026 stores are expected to sign contracts for the automated ordering system, a 6.6x
increase over the previous year; we anticipate 85% of these stores will sign contracts for three terms.

A focus on promoting DX through the use of the "automated ordering system"
Strengthening capability in providing total solutions to the food service
industry
Target market size for value creation in the medium term
Business expansion targeting 98,302* restaurant chain stores = ¥10,000 usage fee per month per store = 98,246
x 10,000 x 12 =A direct market size of approximately ¥12 billion + a peripheral restaurant DX market several times that size
Targeting the restaurant DX several times the size of that above through comprehensive DX promotion, including
AI robots and full self-checkouts
Strengthening DX support capabilities for the restaurant industry with ¥300 million in funding: Accelerate
the promotion of transparency and cost reduction in the restaurant industry through "self-service,""automation," and "AI robots" and seize the market potential described above as a business opportunity
to accelerate growth.
*We search for the number of restaurant outlets provided by Digital Advantage Corp. as our target (as ofMarch 5, 2021).

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Shareholder value drivers not factored into the targets––Commercialization of AI robots
The company is also working to commercialize AI robots, which are in great demand for infection control and labor
cost reductions as a result of the COVID-19 pandemic. As explained in the document issued by the company on
September 7, 2020 titled "Gourmet conveyor sushi ‘Sushi Choshi Maru’" begins trial adoption of autonomous AI
serving robots." Choshi Maru Ltd., (Head office: Hamada 2-39, Mihama Ward, Chiba City, Chiba Prefecture; President
and CEO Mitsuru Ishida) has begun a trial adoption of the "Service Shot" food service AI robot at its "Sushi Choshi
Maru Narashino" branch. In November 2020, the company also launched sales of a disinfection AI robot equippedwith an ultraviolet (UV-C) lamp as part of its robot lineup. There are currently various similar robotics initiatives in
the restaurant industry; however, the company has over the past year been building a particularly strong competitive
advantage over its competitors by developing its own components and proprietary software to meet the on-siteneeds of the restaurant industry, based on its wealth of practical experience of on-site operations. We aim to build
market share until other companies catch up and quickly realize the upside that is not included in the mid-term
management plan.
In the meantime, the company will continue to build market share, aiming to quickly realize upsides not included in
the mid-term business plan. The impact of these on the financial figures remains undetermined at this time but will
be disclosed as soon as they become known.

▉

Stores which have adopted the "Service Shot" AI service robot, its in-store activities, and the competitive
advantage of the company's AI robot

Point

Contents
Pathfinding

Evaluation

Contents

Overview and competitive advantage of thecompany's robot
・ A fully autonomous mobile food-delivery robot, inwhich the onboard AI remembers a stationary
position, uses sensors to detect obstacles (tables,
chairs, people, walls etc.) when delivering food, andcan determine routes within the store and follow
them・ Easily adaptable to both food delivery and clearing
tables・ Ready to deploy
・ Layout changes can be handled by store staff alone
・ If set up approximately, it can operate entirely
without the staff
・ Able to carry both food and drink at the same time
・ Fully enclosed

Functionality
Evaluation
LineupContents
Evaluation

・ If set up approximately, it can operate entirely
without the staff
・ Can propose a one-stop solution offering
comprehensive infection control and cost
reductions such as self-checkout and automaticordering
・ Achieves one-stop, hassle-free, and comprehensive
cost reductions

Conventional and third-party AI robots
・ Conventional type: In many cases, route guidancetags are attached to the ceiling, and the robot
follows the route traced by the sensors installed in
the ceiling・ AI: Difficulties when handling both serving andclearing up
・ Conventional type: Complexity and cost of
installation creates barriers to widespread use
・ Conventional type: Layout changes cannot be
handled by store staff
・ AI: Can only handle serving food; store staff areneeded for clearing up
・ AI: Other companies are facing difficulties carrying
both food and drink at the same time
・ AI: Other companies' products currently do nothave fully enclosed form factors
・ AI: Other companies' products require drinks to behandled by staff. Insufficient infection prevention
・ Compared to the company's product, an inferior
lineup in terms of overall capabilities, including
labor reduction and food cost reduction capabilities
・ Inferior to the company's product in terms of onestop comprehensive cost reduction

Aiming to establish itself as the number one AI robot in the restaurant industry within a year byleveraging competitive advantage
The target is the restaurant industry's 2019 sales of ¥14.5 trillion *1 x 25-30% labor costs *2 = ¥4-5 trillion※ 1: Japan Food Service Association "Trends in the estimated size of the restaurant industry food service market as seen from the data (Excelfile)" http://www.jfnet.or.jp/data/data_c.html※ 2: CXD Next, (A Casio Group company) "Sales Aggregation Management Service" data, https://tenpo.casio.jp/column_industry/detail246.html

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Synergies through self-service, automation, and AI robots
Substantial synergies are expected from the self-checkout system, automated ordering system and AI robots thathave worked thus far. When an order is received for any of the three products or services, there is a fairly goodchance that all three will be ordered. Moreover, all three initiatives serve as stock, contributing to a stablerevenue base over the long term, and by providing a one-stop service combining them, it will be possible tobuild high barriers to entry and establish an extremely strong competitive advantage.
The robots are characterized by the fact that they can be introduced quickly, and immediately demonstrate
their cost-reducing effects. This is expected to have the effect of filling in gaps in sales of automated orderingsystem, which require time for meetings to be held for their implementation, meetings that might have been
delayed due to the coronavirus pandemic.
Development of the robot is being provided to partner companies in China and other countries. For thedevelopment of AI robots, the source of differentiation will be the development of components and software
tuning based on practical knowledge of the sites of their use more than AI-related technology itself. Thus, if you
are number one* by market share and grasp Big Data for practical knowledge, it becomes possible to secure asustainable competitive advantage. In other words, it is believed that the addition of practical knowledge datafrom AI robots will further strengthen drivers of long-term shareholder value.
The three initiatives will open up the "era of the new normal" for the restaurant industry in the fields of contactavoidance, hygiene and ways of working to overcome the effects of the coronavirus pandemic and theworsening labor shortage and, as a result, will contribute to "ensuring maximum profits for clients by reducing
losses (foodstuffs/labor costs). Through these initiatives, the company will consolidate higher market share in
information systems and services company in the restaurant industry and strengthen its long-term drivers ofshareholder value.
* From "2019 IT Solution Market" by Fuji Chimera Research Institute, Inc.
▉ Overview of synergies from the three initiatives and the significance of AI robots as a driver ofshareholder value

If a contract is agreed on for any of the following, there is a highlikelihood all items will be contracted

AI robots, in which the company currently has a particularly strong competitive advantage, offer promise as ahook product for expanding overall sales, as they are immediately effective even given the effects of thecoronavirus pandemic, and require little effort to introduce.
The source of differentiation for AI robots is not so much the technology itself as the development ofcomponents and software tuning based on practical knowledge from the sites of their use.
Understanding the Big Data of practical knowledge will ensure a sustainable competitive advantage.

Strengthening drivers of long-term shareholder value
using AI robots
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55Shareholder value driver of medium-term management planIII.

Alphax Food System Co., Ltd.［3814］

Company overview

A leading player in information systems infrastructure for theentire restaurant industry
Mr. Tamura, the company’s president and CEO, was a systems engineer who developed inventory management
systems for the manufacturing industry. He developed a food distribution management system at his previous post,
and founded the company based on that experience. In the manufacturing industry, inventory management andautomatic ordering of inventory for the parts to construct a single product is used as a matter of course, but
restaurants chains, which are very much a livelihood, have a large number of stores, the scale of each store being
significantly smaller than that of a factory, thus it takes time and effort to construct such inventory management
systems. In response to these issues, leveraging the company's knowledge of the manufacturing industry, thecompany has developed a system to solve business problems in the restaurant industry, such as food waste. Thissystem was completed in the latter half of the 1980s but was temporarily suspended due to the low performanceand capacity of computers at the time, which made it impossible to process large volumes of information. However,with improvements in computing performance and the development of IoT technologies such as cloud computing,as well as society's focus on food waste, the company has once again begun to develop sales of this system.

▉

Company overview

Company name

ALPHAX FOOD SYSTEM CO., LTD

Established:

December 9, 1993

President

Takamori Tamura

Head office location

128 Chizaki, Sanyo Onoda-shi, Yamaguchi (in Eijio Park)

Capital¥537 million

Accounting period

September 30

Main business

ASP services, system equipment, peripheral services, hotels

Date of listing

September 15, 2006

Listed stock exchange

JASDAQGrowth［Securities Code: 3814］(As of September 30, 2020)▉

President Tamura, the founder of the company, has actually been obsessed with automated ordering forover 30 years.

The founder of our company, the current President Tamura, originally started his career as a system engineer at acommercial construction developer, where he completed an automatic ordering system for all the loss-making
restaurants using the large general-purpose machines of that time and turned all the restaurants profitable, which
was the beginning of our company's business.
For more information, please visit our website at a special page for our 30th anniversary.
https://www.afs.co.jp/category/information/30th.html

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Company philosophy
The following is the company's management philosophy, which has played a key role in the direction of the businesspresented thus far.

Company philosophy
First, the company is above all, its people, and we value independence and entrepreneurship, and attach importanceto the actions of each individual.
Second, the customer is the standard for all products and services, and we ground our day-to-day activities in acustomer-focused attitude.
Third, the basis for all the products and services we provide is "low cost," and we ourselves operate a simple
organization with a small head office and try to improve productivity through people.
Four, we will not forget to act according to our sense of values, and without leaving our cornerstone, "food."
Five, we will strive to create a flat and flexible organization that is simultaneously both firm but relaxed.

Action guidelines
1. Our products and services:First, the product must be of high quality, and "considered from the customer's point of view."
Second, the product must be "something that surprises and excites the customer."
2. Our employees:
First, the environment must be one where you are respected as an individual, where you can always makesuggestions, where you have the opportunity to develop your skills, and where you can fulfill family responsibilities.
Second, we must constantly improve ourselves and make decisions with a strong sense of ethics and with all
stakeholders in mind, at times beyond the boundaries of the organization.
3. Through the company's business:
First, we must contribute the improvement of the global environment, the development of the food service
industry, and the development of local communities.
Second, we must strive for a "co-creative future" through good communication between companies and between
people.
4. As a company, we strike a balance in everything we do:First, appropriate profits must be ensured and distributed to customers, employees, and shareholders.
Second, we must establish and maintain an overwhelmingly strong position in the fields in which our company isconcentrated.

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Company policy
Contributing to the development of food culture through information systems
Becoming the number one company for providing information systems and services to the restaurant
industry
Restaurant industry systems remain in a situation similar to that of the past, in which computers were loaded with
their own respective operative systems for which business systems were developed independently and without
thought for compatibility, resulting in issues of food waste. In the same way that computer operating systems havebeen unified and business systems' functionality upgraded, the company is working to provide the most user-friendly
and cost-effective information systems and infrastructure in the restaurant industry.
In promoting our business activities, we have focused on three capabilities: 1. Master construction and operation
capabilities, 2. Optimal system construction capabilities, and 3. Usability improvement capabilities. Through thesethree capabilities, we will evolve from a pioneer in the construction of information systems and infrastructure in therestaurant industry to a one-of-a-kind entity.

Know-how (practical knowledge Big Data) gathered since the company's founding is difficult to imitate.
We are proud of our systems and services development capabilities based on a deep understanding of the foodservice industry that we have cultivated in the field since the company's founding; this is something we believe will
be difficult for other companies to imitate. We believe that we can maintain a strong competitive advantage overemerging AI-based IT companies through our extensive knowledge of the field. With the capabilities above, we areaiming to becoming the number one company for the provision of information systems and infrastructure to therestaurant industry using the positive spiral shown below.

▉

A positive spiral of shareholder value creation

The value the company group aims to provide

Enhanced capabilities to deliver the value we offer

In the food service
industry build
infrastructure of
information systems
which are easy to
use and costeffective

Toward the development offood culture
contributing using
information systems

Ⅰ.

Master construction
and operation
capabilities

Ⅱ.

Optimal systems
construction
capabilities

Ⅲ.

Capability to improveusability

Delivering value through three capabilities

Becoming the number one company for providing
information systems and services to the restaurant industry

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Shareholder value driver of medium-term management plan

Alphax Food System Co., Ltd.［3814］

Business overview
Promoting DX through a total solution system for the food services industry
As already mentioned, the company, through each department as a whole, provides a total solution system(ASP/package systems + industry-specific POS systems, ordering systems, and peripheral services). The company's
business segments are divided into its ASP business and its hotel business, with the ASP business further divided into
three sub-segments. The ASP business is centered on the mainstay "Restaurant Business Management SystemⓇ" andits extended function, the automatic ordering system, to provide a complete range of hardware, software, andperipheral services, including POS systems and self-checkout systems. For peripheral services, we provide consulting
services for replacing non-grid electric boilers by utilizing our expertise in operating self-powered non-grid data
centers. In addition, the company acquired a hotel business in 2017, which it is being used to accumulate food service
industry know-how and as a venue for hands-on testing of newly developed services.

▉

The company group's business for the fiscal year ending September 30, 2020

Business segment

Top-line sales
revenue
Bottom-line segment
profit(Yen, millions)

Business description

ASP/Package
systemsbusiness

851.4

Providing ASP services with the ASP/Package system business at its
core

Systems
equipment

325.1

The systems equipment business includes POS, order entry
systems, and a table-ordering system

Peripheralservices

61.8

The peripheral service business is engaged in supplies, repairs, andsales of products related to the company's systems and energy
cost reduction businesses.

Hotel business

52.7

Management and operation of the Natural Green Park Hotel andoperation of restaurants and cafes in order to implement andoperate a total system consisting of the ASP service business,
systems equipment business, and the peripheral services business

Consolidated

Total consolidated sales revenue: ¥1.291 billion; consolidated operating income ¥508
millionASP
Servicesbusiness

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Alphax Food System Co., Ltd.［3814］

List of business services

The following diagram shows an overview of the company's ASP services. The company develops everything fromserver settings to databases in-house.

▉

Overview of the company's ASP services

CK = Central Kitchen

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Shareholder value driver of medium-term management planIV.

Alphax Food System Co., Ltd.［3814］

Strengths of our business

Overview of DX support capabilities
Deployment of "Restaurant Business Management SystemⓇ" and "automatedordering System" to the food service industry
The company's core business is its "Restaurant Business Management System®" and its optional "automatedordering system". To the best of the company's knowledge, we remain the only company in the restaurant industry
to offer an automated ordering system. We will explain why automated ordering system, which are a matter ofcourse in the manufacturing and retail industries, are not prevalent in the restaurant industry, the reasons for this,and the strengths of the services we provide.

Cost structure in the food service industry
In the restaurant industry, on average, there is a 5% loss when information systems and infrastructure are not inplace. This loss includes food ordering and labor cost losses. The average operating profit in the restaurant industry
is 6%, which means that reducing this loss has the potential to almost double operating profit.

▉

General restaurants' profit structure and the state of food waste

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Overview of "Restaurant Business Management SystemⓇ" and "automated ordering system""Restaurant Business Management System Ⓡ " is a core business/standard system that systematized restaurant
operations in Japan for the first time in 1987, seeking cost reductions and maximum profits with a core focus on foodwaste in the restaurant industry.
The reason behind the lack of information infrastructure in the restaurant industry is that, unlike products in theretail industry, there is not a one-to-one relationship between the menu served to customers and the ingredientspurchased. POS utilize the same system as those in the retail industry, so menu items sold can be tracked. However,
the ingredients consumed in producing the menu items sold cannot be properly costed, stocked, or automaticallyordered without breaking down the recipes and linking them to an inventory of ingredients purchased.

▉

The black box of restaurants

AI sales forecasting is expected to have a significant impact through the adoption of automated orderingsystem
AI sales forecasting systems are expected to become more pervasive in the future, but an appropriate system forordering and inventory management is a prerequisite for realizing its beneficial effects. That is, AI sales forecasting
systems are expected to have greater effect when integrated with our automated ordering system.

▉

Implementing a sales forecasting system without an appropriate ordering and inventory management
system shows little promise

Point

Retail industry

Food service industry

Current status of ordering andinventory management systems

Already exist and are pervasive

Systems that are expected to beeffective are uncommon

Effects of AI sales forecasting
systems in driving profit growth

Large

Small

AI sales forecasting is expected to be highly effective in the food service industry through theintroduction of our automated ordering system

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Master development to break down and organize recipes into ingredients
To solve the problem of the lack of correspondence between menu items consumed and ingredients purchased, it isnecessary to break down the menu items into ingredients, consider yield, and link items to the inventory to bepurchased. This kind of management is commonplace in the manufacturing industry, but in the restaurant industry,
the number of menus and the frequency of menu changes are high, stores are small in scale but large in number,companies lack the personnel to create information systems, and outside companies only provide systems that canbe used to build masters, but do not build masters themselves. To solve these problems, we analyze our customers,build masters, and construct information systems ourselves.

▉

Building a master to expand from menus to ingredients

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Appropriate inventory management
On the other hand, inventory management of foodstuffs is more complex than in the retail business; for example,
when purchasing a box containing ten packs of mackerel with five fish in each pack, it is necessary to convert units
from boxes or packs to the units of foodstuff––mackerel––and manage these. The same problem occurs with soy
sauce and other seasonings; however, our restaurant management system can convert and manage them.
▉“Restaurant Business Management SystemⓇ” and “automated ordering system” are optimally linked toconsider differences in units

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Alphax Food System Co., Ltd.［3814］

Promoting the SDGs in the food service industry through “automated ordering system”
The Sustainable Development Goals (SDGs), adopted by the United Nations in 2015 for the period from 2016 to 2030
contain a total of 16 goals. Among these goals, we believe that our automated ordering system, which is a growth
driver in our medium-term management plan, will contribute to the following five areas in particular:▉

Five SDGs we are addressing with our “automated ordering system”

・We are contributing to reductions in food loss, such as expired products and waste
resulting from over-ordering.

・

By curbing over-ordering and appropriate reductions in the number of deliveries, weare contributing to a dramatic reduction in exhaust gas and CO2 emissions generated
by deliveries.

・We are also contributing to a cleaner global environment by reducing the amount ofmethane gas generated, which resulted from past disposal practices in landfills.

・

By automating previously manual-ordering processes, the working environment is
improved dramatically as the burden on employees created by ordering is reduced
to zero.

・This leads to improvements in service, which is the ultimate value of its operation.

・Moreover, the ability to accurately computerize the ordering process, which waspreviously impossible, will maximally reduce food loss, dramatically improve
profitability, and lead to stable growth through economic and businessrationalization.

・Rationalization of ordering using patented technology is certain to continue todevelop together with technological innovation and operational know-how going
forward, all of which are rooted in industrial and technological innovation.

・In terms of our responsibilities in producing and using foodstuffs, using the rightamount of ingredients in the right amount without waste contributes to minimizing
the burden on the global environment.

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Alphax Food System Co., Ltd.［3814］"Restaurant Business Management System®" service overview

Service name“Restaurant
businessmanagement
System”
Fully
automatedordering
systemRole
Businessmanagement
Fully automatedordering

Cafeteria,
lunchbox, and catering
industry
supportsystem"Picnic"

Cafeteria, lunchbox,
andcatering
industry support

Nutritional analysis
support system

Nutritional
analysis

Service overview
・Food loss optimization (allocation of food and personnel costs)
using the world's first "sales management" + "production andrecipe management"

・A system that organizes theoretical inventory and automates theordering of food and supplies
Enables replenishment orders to be placed while taking recipes
into accountNutritional and costing calculations, which have conventionallybeen calculated separately, are considered together, andnutritional values, balance charts, and in-process production costs
can be checked on-screen
Able to create/simulate weekly and monthly menus
Able to determine neutral, acid and alkaline content, calculate
calories, and perform other total ingredient/nutritional analysis
from recipes based on the fifth revision to the Standard Tables ofFood Composition
The results of analysis can be graphed to visualize the nutritionalbalance
Allergens on the menu can be checked, helping to create a safemenu
The number of individual items ordered is automatically calculated
based on the number of plates and an inventory of ingredients
conducted at the end of each monthThis system solves the problem of inventory and ordering for"single item management," which has been considered the biggest
challenge in the management of conveyor sushi restaurants
The first system in Japan to systematize the operations of the foodand beverage departments of the hotel and inn industry
Reduces food loss, thus lowering costs
Improves working practices in the hotel and inn industry, which
tend to be labor intensive
The Restaurant Business Management System® core system
All store ingredients are ordered from suppliers from this system
Automatically performs calculations for inventory problems(packaging, the same ingredients stored in multiple locations,changes in purchase prices, and issues with inaccurate calculationsof unit prices)
Linking to head office enables accurate inventory and reducesadministration
Achieves cost reduction by managing labor costs, one of the twolargest costs for restaurants
Aggregation can be performed to suit any type of business or
payroll system
Enables the creation of a company-wide system spanning stores to
offices to factories
Accurate coverage across various methods of reservation (PCorders, mobile e-mail, auto-call, fax) and three order styles(takeout, delivery, home delivery)
Full utilization of sales and customer data

・
・

・
・

・
・
・

Conveyor
support"Kururin"sushi
systemConveyor sushi
support・・

Hotel and inn foodcontrolsystem"Food Staff"

Hotel and inn
support

・・

CK/Logistics centersystemOnlinestore
inventory and order
quantity
aggregation system"Inventory
Detective"

CK & logistics
management

・・・

Attendance record
management
system "Timely"

Attendance
recordmanagement

Onlinestore
inventory andorder quantity
aggregation

・
・
・
・
・

Online order system"E-food Order"

Online orders
・

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System equipment business
The company's systems equipment business sells proprietary products such as POS systems and order entry systems,
which are important information-gathering terminals for restaurant companies to improve the accuracy of
information analysis at head office, as well as general-purpose terminal products incorporating the company's
software. By combining these products with our “Restaurant Business Management SystemⓇ” and “automatedordering system”, we are able to provide comprehensive, integrated support for restaurant management.
In recent years, we have gradually shifted our focus away from the fiercely competitive POS device field to application
sales, while at the same time focusing on software support for self-checkout registers (under the company's productname, "Self-Shot") and various general-purpose equipment, for which demand is growing in response to the serious
labor shortage in the restaurant industry.
We have also begun to provide AI server robots and sterilization AI robots through our product "Service Shot."▉"Self-Shot," a self-checkout system that can be linked to “automated ordering system”

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Server AI robot (Product name: “Service Shot”)
Our product "Service Shot" is a non-contact, food-enclosing, and self-navigating food-delivery robot, which
improves the efficiency of front-of-house operations and responds to the new COVID paradigm, as the spreadof the novel coronavirus shows no sign of slowing. The restaurant industry continues to face a serious labor
shortage, and we expect the "Service Shot" to be adopted nationwide as a solution that is both labor saving
and efficient as well as a non-contact solution to the coronavirus.

"Service Shot" can also automatically identify navigation routes
In addition to the chronic shortage of labor, the need for the introduction of food-delivery robots in the foodservice industry is increasing day-by-day to cope with the non-contact store operations necessitated by thecoronavirus pandemic. At the same time, many typical food service robots use navigation tags attached to theceiling, with the food service robot following the route of the sensors installed on the ceiling; however, thismethod has created a barrier to their widespread use due to the complexity and cost of their installation.
Our "Service Shot" is a food service robot that navigates fully autonomously, with the onboard AI remembering
its stationary position, and using the robot's sensors to detect obstacles (tables, chairs, people, walls, etc.) inorder to create a route when bringing food to tables. No sensor installation work is therefore required whenintroducing the Service Shot: The system can be easily set up by store staff, who will also be able to handlechanges in navigation routes resulting from changes to store layouts etc., after the Service Shot has been
installed. It also features an airtight design, carrying food inside a hygienic antibacterial-treated storage box.
Achieve further efficiency by linking with our other systems equipment
Self-ordering, additional order guidance, and self-service checkout are also possible by linking this system withour customer order terminal ordering system "Order Shot" and self-service checkout system "Self-Shot." In
addition to its food service function, table clearing functionality and "recommendation" functionality, in which
the server robot goes to customers' seats to encourage them to order more food, are planned for release in
the near future.
▉

The "Service Shot" AI server robot intended for the food service industry

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Food service industry adoption case study (1): Trial adoption at the gourmet conveyor-belt sushi chain"Sushi Choshi Maru"
As explained in the document issued by the company on September 7 2020 titled "Gourmet conveyor sushi‘Sushi Choshi Maru’ begins trial adoption of autonomous AI serving robots," Choshi Maru Ltd., (Head office:Hamada 2-39 Mihama Ward, Chiba City, Chiba Prefecture; President and CEO Mitsuru Ishida) has begun a trial
adoption of the "Service Shot" food service AI robot at its "Sushi Choshi Maru Narashino" branch.
The simplicity of configuring settings and operation was highly valued by the client's employees. Moreover,it gained popularity as a mascot among children who visit the store and has been evaluated highly by both
employees and customers. No ceiling sensor installation work is required, the AI automatically identifies
navigation routes, and hygiene is also improved.
Food service industry adoption case study (2): Adoption begun at the Kamori Kanko Group "Sapporo
Teine Golf Club Clubhouse"
On September 16, 2020, the company introduced Service Shot to the "Sapporo Teine Golf Club Clubhouse,"which is operated by Kamori Kanko Co. Ltd. (Head office: Sapporo, Hokkaido; Chairman and CEO: Kimihito
Kamori).
At this golf club, the food service robot was being considered as a means of studying employees’ work practices
and how to protect them from COVID. The manager responsible for promoting the service adopted the Service
Shot with favorable evaluations: "no preparation period was required," "cleanliness of food storage," and"diverse applications for food service robots.” In particular, their comment that "no preparation period was
required" was similarly highly regarded by "Sushi Choshi Maru" mentioned above. In addition to the"recommendation function," in which the food service robot goes to customers' seats and encourages them toorder more food, another key point in adopting the system was that it can be linked to other systems provided
by our company and that various applications to store operations can be expected in the future.
Creating a "Service Shot" lineup from November 2020
In the food and beverage industry, which has been forced to adjust business hours and close due to thecoronavirus pandemic, there is a growing demand for food-delivery AI robots in exploring non-contact customer
service. Against this backdrop, from November 2020 the company has added two new models of food service
robot, the α2 and the α3, in order to promote the use of food service AI robots in the food service industry
going forward. The newly added robots are differentiated in function and application to meet a broad range ofdemands.
▉

The Service Shot lineup

α1 (Left: Standard, Right: Design cutting available)

α2

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α3

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Current differentiation and acquiring Japanese market share in the period leading up to imitation byother companies
In terms of operational excellence, our AI food service robot "Service Shot" offers various competitive
advantages over other products.
The "Service Shot" is the only non-contact, food-enclosing, self-navigating food-delivery robot available atpresent, and there is clear differentiation from the products of other major companies, which are fully open or
non-autonomous. Moreover, although a food service robot, "Service Shot" can also clear tables, differentiating
it from other food service robots. It is also the only such robot to be able to deliver drinks and can contribute
greatly to operational efficiency in the food service industry, which generates revenue from drinks. This is
supported not through the robots themselves, but rather by software and peripheral components, such as drink
covers that we have created through our long involvement in the restaurant industry.
Although the major points of differentiation above can be imitated well enough, the company is taking a
direction that aims to take advantage of the time needed to follow in its steps and to gain domestic market
share through significant operational excellence.

Sterilization AI robot
In November 2020 the company also launched sales of a sterilization AI robot equipped with an ultraviolet (UVC) lamp as part of its robot lineup. This sterilization robot uses UV-C with spectral lines of 253.7nm and 185nm.
Within the UV-C spectrum, spectral lines around 253.7nm are considered to be particularly capable atsterilization, while at 185nm it produces ozone (O3) from oxygen (O2) in the air. This sterilization AI robot offers
not only sterilization, but also deodorization effects using the ozone it creates. Moreover, as there are concerns
about the effects of using UV light for sterilization on humans who do so, the autonomously navigating,sterilization AI robots will take over the role of disinfecting spaces.
▉

Sterilization AI robot

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Overview of main services in the systems equipment business (other than robots)

Service nameSelf-checkout system
Cashless system
POS agent aggregation service

Customer
attraction andsales
promotion
services

Original prepaid
card

Store
information
systemSuper MultiFunctional PC-POS
Software "FOOD
GENESIS 21"

MAP marketing
support system"Order Shot""Handy Shot""Table Shot""e-Store Acting
Manager"α-Net Intranet Business System

Web server service

Service Shot

Service overview
・This allows customers to settle their tabs by themselves
・
Promoting self-checkout stores to address issues such as labor
shortages, rising labor costs, and changing working styles
・Facilitates simple, error-free accounting at restaurants with complex
accounts
・
Our "AFS Collection and Communication Technology Center"gathers information from POS installed in stores over the Internet
for use by head and other offices. Once data are collected, they are
aggregated/processed/analyzed on a dedicated server and
immediately fed back to the client・Server-managed prepaid gift cards that improve cash flow whileproviding branding and attracting customers
・
Low implementation costs, and demonstrable efficacy in acquiring
new customers and increasing sales in a short period of time.
・We provide effective and ready-to-use sales tools for food service(area marketing/trading area analysis data) that can be used as abenchmark in reliably progressing the opening of restaurants anddriving regional sales strategies.
・
Fully featured, with general accounting, online aggregation, online
delivery, billing and payment cancellation, workplace attendance
aggregation, nutritional chart graph sheet, issuing function, shift
forecasting and management, intranet ordering, inventory andpurchasing, intranet catering, disposal and expense, e-mailcommunication, and customer database aggregation and delivery
functions.
・
Ultra-high-performance terminals that can perform eight roles in asingle unit: general orders, table orders, inventory, ordering,inspection, workplace attendance, traceability, and survey
functionality
・A handy terminal that can perform six roles: standard orders, tableorders,survey,inventory/ordering/inspection,
workplaceattendance, and menu commentary and traceability functions
・Instant transmission of orders to the kitchen, eliminating stresswhen taking customer orders and reducing ordering errors by
employees, thereby enabling reduced labor costs, increased unit
prices, and reduced food loss
・
POS leasing packages
・The ability to identify business losses simply by entering data
・
By entering information such as orders, purchases, inventory,
workplace attendance, expenses, sales, and EDI generated in storesfrom an Internet browser on personal computers installed in stores,
the CK/logistics center can collect and transmit information fromeach store simultaneously. Automatic conversion for use on coresystems such as the "Restaurant Management SystemⓇ" and"Attendance record management system" is also possible・
Our company, which specializes in the food industry, handles
everything from initial construction to operation and maintenanceon behalf of our customers. This revolutionary service enables theconstruction of "information networks" quickly, easily, and at a low
cost
・
A fully autonomous mobile food-delivery robot, in which theonboard AI remembers a stationary position, uses sensors to detectobstacles (tables, chairs, people, walls, etc.) when delivering food,and can determine routes within the store and follow them

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Energy cost reduction business
Acquiring technological capabilities through construction of off-grid data centers
Adoption of special electric boilers and power volume control technology to achieve significant energy
cost reductions
Due to the aging of our former data center, we completed construction of our new data center in September 2017as a maximally disaster-resistant off-grid data center (off-grid data center = a data center that generates 100% of its
own power). In order to achieve an entirely off-grid system, we are planning to introduce technology to reduce theenergy consumption of not only the data center facilities, but the head office and related office buildings to theutmost. By addressing not only the main power supply of the data center, but also the monitoring/development/callcenter/shipping center/head office building, this is the first facility of its kind in Japan that can continue service
without stopping not only in the data center server equipment system, but also all administrative and normal
business service offices in the event of a disaster. In reducing CO2 emissions as much as possible, this is also in linewith the government's basic policy of promoting "ZEB" (Zero Energy Buildings) to improve the energy efficiency ofoffice buildings, which account for more than 30% of Japan's energy consumption, in the face of increasingly serious
global warming, and was the first of its scale in Japan to receive five stars from the Building-Housing Energy-efficiency
Labeling System (BELS). Increased disaster resilience and reduced costs resulting from off-grid operations contributeto smoother operations of our core business, the automated ordering system.
By utilizing the power adjustment technology developed through the conversion of this data center to become offgrid, we succeeded in reducing fuel costs to zero and total energy costs by half at the Natural Green Park Hotel, which
we acquired in September 2017. Specifically, we removed the fuel oil boiler equipment and replaced it with aregenerative electric boiler system.
Going forward, we will provide comprehensive consultation on conversion to regenerative and electric boilers, which
can completely eliminate fossil fuel costs, and advance this business as a service that can significantly reduce energy
costs for customers in the food service industry and in complementary hotel facilities.

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Hotel business
Hotel management which also serves as a space for the development andvalidation of the company's products and services
Acquisition of the Natural Green Park Hotel
The company acquired its hotel business from Mr. Tamura through the acquisition of the Natural Green Resort in2017. This is because the company believes that through the succession and operation of this business, it will become
possible to accurately identify the needs of the food service industry, the company's main customer base, in a timely
manner, and to test new products and services; this is expected to produce synergies with the company's existing
business. Natural Green Resort, located in Sanyo Onoda city, Yamaguchi Prefecture, is a facility operated under the
motto, "basic best balance," valuing all of the basics, striving for harmony between people and nature, and giving
maximum consideration to the health of both the earth and people. Situated in Eijio Park, it is reputed to be a "hotel
in harmony with the natural environment," and with "health" as its keyword, it aims to operate facilities that will besupported throughout the century.

▉

Natural Green Park Hotel

Source: From the Natural Green Park Hotel website

Due to delays in IT adoption and systemization, the food and beverage departments of hotels remain
stuck in "the old ways"
In the management of hotels and inns, food and beverage departments, which provide meals and follow behind
accommodation departments, which provide front-of-house services, are considered to be extremely important. Thisis because the importance of food and beverage departments has been increasing in recent years due to a shift fromgroups of customers to individual customers. However, in their current state, these remain labor-intensive
workplaces. Furthermore, the relationship between restaurant and banquet hall departments and supplies
departments should be well coordinated to improve efficiency, but this has not advanced.
The causes of this are delays in IT adoption and delays in systemization. There are many hotels and inns where theordering process and the linked inventory management of foodstuffs and equipment are still performed manuallyand remain in a vicious cycle in which the manner in which hotel employees work has not been reviewed.
We therefore support hotel and inn management by utilizing the services and know-how we have cultivated in our
ASP services business. This has been evaluated highly as a food control system that can thoroughly "systematize" and"visualize" the production and management of the food and beverage departments of the hotel and inn industry.

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Alphax Food System Co., Ltd.［3814］

A representation of support for hotel food and beverage departments

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Alphax Food System Co., Ltd.［3814］

V. Visualization of the story of improving corporate value
Visualization with GCC management TM
Integrating financial and non-financial information that captures the hearts andminds of all stakeholders
The GCC management🄬 is an analytical framework developed by J-Phoenix Research to evaluate the sustainabilityof shareholder value by integrating non-financial information and financial information with a focus on the happinessof all stakeholders. The happiness of investors is measured by a framework of three elements of corporate value,
while the happiness of employees is measured by the five-tier model of human needs, created by the prominent
American psychologist Abraham Maslow. People typically feel happy when their five needs are satisfied. A company
with a built-in framework to raise its employees’ happiness can be determined to be more sustainable than acompany with the same shareholder value but without such a framework.
The concepts that associate the five levels of needs with the three factors of corporate value are Growth (in sales),Connection (of people and businesses, leading to improved Return on Invested Capital), and Confidence. JPR has
defined “Excess return generated from a strategy that incorporates the enhancement of happiness of all employees
under the GCC concept” as Happiness Value Added🄬.
The enhancement of happiness is “why such a company exists,” the raison d'être of the company, while the viewpointof corporate value is “how the enhancement of happiness is associated with its value.” The use of this framework
makes it easy to explain the concept of creating corporate value to its employees. Moreover, this facilitates thedisclosure of non-financial information, which is required for complying with the Stewardship Code. It also facilitates(1) the integration of financial and non-financial information, (2) management in consideration of ROIC and capitalcosts (addressing corporate governance), and (3) systemization and visualization in coping with ESG and SDGs.
*ESG is an acronym for Environment, Social, and Governance. The idea that ESG's three perspectives are necessary for the long-term growth of acompany is spreading worldwide. The SDGs were adopted at the United Nations Summit in September 2015 and are the goals set by 193 UN
member states to achieve in the 15 years from 2016 to 2030. As both are emphasized by long-term investors, it is expected that long-term
investors' equity investment will increase for listed companies that are highly evaluated from these two perspectives.

▉

Analysis of corporate value creation by GCC ManagementTM that attracts stakeholders

Source: JPR

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Organizing the company's strategy as seen from GCC
ManagementTM and its significance to DX promotion
The following figure shows the arrangement of the above framework. We believe that by promoting suchbusinesses, we will be able to improve the happiness of our shareholders and employees. In line with this framework,
we will disclose our business results and the progress of our mid-term business plan in an easy-to-understand andempathetic manner. By promoting DX based on this framework, it will become easier for engineers and others toshare in the direction we are taking and believe this will strengthen our DX support capabilities.

▉

Visualization of the corporate value creation process using the GCC Management™ framework.

By presenting the overall picture in an easy-tounderstand form to all stakeholders, it becomes
possible to visualize the overall picture and the
direction we are taking, and as a result, to increase
our ability to promote DX.

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Disclaimer
This document contains forward-looking statements such as forecasts, outlooks, targets, and plans related to thecompany. These statements are based on information available to the company at the time of this document's
creation, as well as on forecasts and other assumptions made at that time. These statements are based on certain
premises and assumptions, which may include premises and assumptions based on the subjective expectations or
judgments of the company's management.
In addition, due to various risks and uncertainties, information may prove to be inaccurate, or may not materializein the future. Accordingly, the company's actual results, business performance, and financial position may differ fromthe company's forecasts, outlooks, targets and plans.
The information contained in this document is for information purposes only, and is not intended as an offer,solicitation of investment, or recommendation to buy or sell any form of security, financial instrument, or transaction.
In addition, the accuracy, completeness, fairness, or certainty of its contents is not guaranteed. The company
therefore assumes no liability for any damages resulting from the use of this document.
Note that the copyright and all other rights related to his document belong to the company.

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