ARIGATOU SERVICES COMPANY,LIMITED

The Group has entered into multiple franchise agreements with Hard Off Corporation, BOOKOFF Corporation, MOS FOOD SERVICES and others, and any breach of these agreements could lead to contract termination, business suspension, or claims for damages. If a violation occurs, the resulting loss of social credibility could spill over into banking relationships and other franchise agreements, affecting overall performance through a decline in customer traffic at existing stores. As of the filing date of this document, it is stated that no contract violations have occurred.

As the Group operates as a franchisee, it entrusts its operating policies to the product strategies and management conditions of its FC headquarters, and decisions made by the headquarters could lead to a decline in customer traffic or average customer spending. In addition, if approval from the FC headquarters cannot be obtained when opening original-brand stores in the food service business, business expansion may be constrained. This represents a structural risk in which the Group's own independent management decision-making is restricted.

The Group finances security deposits, guarantee money, and store construction and interior equipment associated with new store openings through borrowings from financial institutions, and the proportion of interest-bearing debt to total liabilities and net assets is at a high level. If interest payments and bond interest increase due to future interest rate hikes or changes in financial conditions, this could adversely affect performance. While strengthening equity capital is stated as a policy, no specific numerical targets are disclosed.

The reuse business (Hard Off, Off House, Hobby Off, BOOKOFF) is operated under business licenses granted by the Public Safety Commission based on the Antique Dealer Business Act. If it is discovered that stolen goods have been purchased, an obligation to return the goods without compensation within one year arises, affecting performance. Should a license be revoked due to a fraudulent incident, this could have a material impact on the entire reuse business. Although a legal compliance system is maintained through thorough adherence to FC headquarters manuals, the risk cannot be completely eliminated.

The food service business is subject to regulation under the Food Sanitation Act, and the occurrence of serious incidents such as food poisoning at stores could affect performance. The Group assigns food hygiene managers to all stores, undergoes regular food hygiene inspections by the FC headquarters, and has entered into comprehensive store insurance contracts that include special provisions covering profit losses from food poisoning and specified infectious diseases. It is stated that no material accidents, lawsuits, or administrative guidance have occurred to date, but future risk cannot be denied.

The Group holds personal information such as consent forms obtained at the time of purchase in the reuse business, membership data for the "Tomato & Onion" birthday club, and delivery customer information for "MOS Burger," and is subject to regulation under the Personal Information Protection Act. As employees are able to view customer information through membership cards, an unforeseen information leak could lead to a decline in sales due to loss of customer trust and payment of damages. A management system including confidentiality obligations and access restrictions is established under the customer information management regulations.

For the Group, which is fundamentally a service business, the development and securing of personnel such as store managers is the foundation of business operations, and if development does not proceed as planned or necessary personnel cannot be secured, store operations may be hindered. Responding to work-style reform related laws could also lead to rising labor costs and difficulty in securing necessary personnel. While the Group addresses this through regular new graduate recruitment and promotion of part-time and temporary staff to full-time positions, changes in the labor environment remain an ongoing challenge.

The reuse business relies on the purchase of used goods from general consumers as the foundation of its procurement, and purchasing conditions fluctuate depending on new product market trends and competitors' store openings, meaning stable procurement in terms of both quality and quantity is not guaranteed. Insufficient procurement leads to lost opportunities, while excessive procurement leads to inventory buildup and increased loss rates, either of which could affect performance. No specific measures by the Group to stabilize procurement are explicitly disclosed in the securities report.

If the future recoverability of fixed assets such as stores declines, recording impairment losses could affect the Group's financial position and operating results. In addition, deferred tax assets are based on uncertain forecasts and assumptions regarding future taxable income, and if they are judged to be unrecoverable due to deteriorating performance, tax audit results, or future tax reform, this could lead to an increase in tax expenses. Both represent structural risks in which changes in accounting estimates directly affect financial figures.

If natural disasters such as earthquakes, typhoons, or abnormal weather occur in areas where stores are located, difficulties in continuing store operations could lead to decreased sales, reduced procurement of purchased goods, and the incurrence of facility restoration costs. In addition, overseas operations carry risks such as differences in laws, systems, culture, and business customs across countries, as well as exchange rate fluctuations, and unexpected problems could make it difficult to recover investments. These risks stem from geographic and geopolitical factors and are subject to limited control by the Group.