Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Unfavorable macroeconomic conditions in the United States
• Competition in the food service distribution industry
• Increases in fuel costs
• Increases in commodity prices
• Disruption of relationships with vendors and increases in product prices
• US government tariffs on products imported into the United States, particularly from China
• Changes in consumer eating and dining out habits
• Disruption of relationships with or loss of customers
• Our ability to execute our acquisition strategy
• Availability of financing to execute our acquisition strategy
• Our ability to renew or replace the current lease of our warehouse in Georgia
• Control of the Company by our Chief Executive Officer and principal stockholder
• Failure to retain our senior management and other key personnel
• Our ability to attract, train and retain employees
• Changes in and enforcement of immigration laws
• Failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wage, overtime and other health and safety laws
• Product recalls, voluntary recalls or withdrawals
• Failure to protect our intellectual property rights
• Any cyber security incident, other technology disruption or delay in implementing our information technology systems
• The development of an active trading market for our common stock

Mitigation Strategies

• Passing along increased fuel costs to customers (partially)
• Fixing prices for a certain supply period through negotiation with suppliers
• Streamlining inventory turnover
• Passing portions of price fluctuation to customers
• Implementing a time clock system and switching from annual salary to hourly wage for production workers to comply with DOL requirements
• Developing a robust anti-corruption compliance program

Supply Chain Management

Responsible Procurement

• Maintaining long-term relationships with major suppliers
• Utilizing dual-sourcing for suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather conditions impacting production and supply chain

Transition Risks

• Regulatory changes impacting ingredients and nutritional content of food products

Environmental Metrics

Governance Achievements

• Established anti-corruption compliance program

Climate Goals & Targets

Environmental Challenges

• Unfavorable macroeconomic conditions in the US
• Competition in the food service distribution industry
• Increases in fuel costs
• Increases in commodity prices
• Disruption of relationships with vendors and increases in product prices
• US government tariffs on products imported into the United States, particularly from China
• Changes in consumer eating and dining out habits
• Disruption of relationships with or loss of customers
• Failure to retain senior management and other key personnel
• Inability to attract, train and retain employees
• Changes in and enforcement of immigration laws
• Failure to comply with various federal, state and local rules and regulations regarding food safety, sanitation, transportation, minimum wage, overtime and other health and safety laws
• Product recalls
• Failure to protect intellectual property rights
• Cybersecurity incidents
• Severe weather, natural disasters and adverse climate changes
• Current indebtedness
• Difficulties in integrating acquired businesses

Mitigation Strategies

• Centralized inventory procurement system for negotiating power with suppliers
• Outsourcing telephone-based sales and customer service to China
• Strategically placed distribution centers and trucking fleet
• Proprietary information system for efficient management
• Acquisition strategy to consolidate market share
• Developing management technology systems
• Providing value-added items
• Dual-sourcing method for suppliers
• Long-term agreements with suppliers for stable pricing
• 100% satisfaction guarantee and non-penalty refund policy
• Insurance to provide coverage for potential liability
• Procedures to ensure compliance with employment eligibility verification requirements
• Measures to improve internal control over financial reporting

Supply Chain Management

Responsible Procurement

• Carefully selected group of suppliers to ensure product quality, availability and competitive pricing
• Direct management of major vendors for large and frequent purchases
• Engaging brokers for smaller suppliers of specialty goods

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather conditions

Environmental Metrics

Governance Achievements

• Instituted structural changes including the retirement of the former Co-Chief Executive Officer and Chairman of the Board. Now has an independent Chairman of the Board and three other independent directors.
• Hired a General Counsel and Chief Compliance Officer, a Chief Operations Officer, and a new Chief Financial Officer.
• Hired a Vice President and Head of Internal Audit and a Vice President of Compliance and Associate General Counsel.

Climate Goals & Targets

Environmental Challenges

• Material weaknesses in internal control over financial reporting.
• Delinquency in filing periodic reports with the SEC due to additional review and procedures relating to a merger and complex technical and accounting issues.
• COVID-19 pandemic impact on sales in 2020.
• Competition in the foodservice distribution industry.
• Increases in fuel costs.
• Supply chain disruptions.
• Shortage of qualified labor.
• Unfavorable macroeconomic conditions in the U.S.
• Related party transactions and possible conflicts of interest.
• Increased commodity prices and availability.
• U.S. government tariffs on products imported into the United States.
• Severe weather, natural disasters and adverse climate changes.
• Cybersecurity incidents and technology disruptions.
• Current indebtedness affecting liquidity and ability of future financing.
• Interest rate risk.

Mitigation Strategies

• Implementing measures to improve internal control over financial reporting, including hiring additional financial personnel, formalizing processes, and implementing controls to obtain documentation.
• System integrations on accounting and procurement software were substantially completed in March 2021.
• Working to implement improvements recommended by the Special Investigation Committee.
• Cooperating with the SEC investigation.
• Maintaining long-term relationships with suppliers to better manage potential supply chain disruptions.
• Consolidating procurement on bulk and frequently sold items to minimize costs.
• Using a dual-sourcing method for suppliers to negotiate lower prices.
• Delivery route optimization and fleet utilization improvement to minimize fuel cost risk.
• Investing in technological advancements to improve operational efficiency and customer satisfaction.
• Managing debt portfolio to achieve a desired proportion of fixed and floating rate debts and employing interest rate swaps.

Supply Chain Management

Responsible Procurement

• Maintaining a large supplier network through a vendor pool with a carefully selected group of suppliers to ensure product quality, availability and competitive pricing.
• Consolidating procurement on bulk and frequently sold items.
• Engaging brokers for smaller suppliers of specialty goods.

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather, natural disasters

Environmental Metrics

Social Achievements

• Launched an Operations Leadership Development Program aimed to develop the next generation of general manager leaders.
• Revamped compensation and benefits programs in 2022, rolling out a comprehensive management incentive bonus and long-term incentive equity plan to include a broader group of non-executive employees. Enhanced benefit plan designs with lower employee premiums and more free benefits were adopted for 2023.

Governance Achievements

• Three out of five members of our Board of Directors are Asian and two out of five are women. At the corporate level, nearly 47% of our director and above positions are held by women.
• Implemented a robust anti-corruption compliance program.

Climate Goals & Targets

Environmental Challenges

• Low margins in the foodservice distribution industry and periods of significant or prolonged inflation or deflation.
• Qualified labor shortages.
• Unfavorable macroeconomic conditions in the United States.
• Competition in the foodservice distribution industry.
• Increases in fuel costs.
• Disruption of relationships with vendors and increases in product prices.
• Dependency on the timely delivery of products from vendors, particularly the prolonged diminution of global supply chains.
• Disruption of relationships with or loss of customers.
• Changes in consumer eating and dining out habits.
• Related party transactions and possible conflicts of interests.
• Failure to protect our intellectual property rights.
• Failure to retain our senior management and other key personnel.
• Changes in and enforcement of immigration laws.
• Failure to comply with various federal, state and local rules and regulations.
• Product recalls.
• Costs to comply with environmental laws and regulations.
• Litigation.
• Increases in commodity prices.
• U.S. government tariffs on products imported into the United States, particularly from China.
• Severe weather, natural disasters and adverse climate change.
• Unfavorable geopolitical conditions.
• Any cyber security incident, other technology disruption or delay in implementing our information technology systems.
• Current indebtedness affecting our liquidity and ability of future financing.
• Failure to acquire other distributors or wholesalers.
• Scarcity of and competition for acquisition opportunities.
• Difficulties in integrating operations, personnel, and assets of acquired businesses.
• Inability to regain compliance with Nasdaq listing requirements.
• Significant stockholders’ ability to significantly influence the Company.
• Material weaknesses in internal control over financial reporting.

Mitigation Strategies

• Outsourcing telephone-based sales and customer service to two call centers located in China.
• Consolidating procurement on bulk and frequently sold items.
• Implementing a comprehensive management incentive bonus and long-term incentive equity plan.
• Strengthening procedures to ensure compliance with employment eligibility verification requirements.
• Implementing appropriate policy and maintaining a robust anti-corruption compliance program.
• Implementing measures designed to improve internal control over financial reporting, including hiring additional financial personnel, formalizing processes, and implementing controls to obtain documentation.

Supply Chain Management

Responsible Procurement

• Dual-sourcing method for suppliers.

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather, natural disasters

Transition Risks

• Regulatory changes, market shifts