ATOM CORPORATION

If doubts arise regarding the safety of ingredients or if food-related incidents such as food poisoning occur, store sales may decline due to brand image deterioration, loss of social trust, business suspension, or the occurrence of damages, potentially affecting business results. The Company has built an ingredient database in cooperation with group company Colowide MD Co., Ltd., and conducts hygiene management incorporating HACCP principles, internal audits, hygiene inspections by external testing institutions, and regular bacterial testing at all stores.

Changes in consumer behavior, including lifestyle changes, growing health consciousness, and strengthening trends toward frugality and selective consumption, combined with surging raw material and energy costs, may affect business results and financial condition if the market changes beyond the Company's expectations. The Company implements store strategies adapted to lifestyle changes and measures responsive to preference and foot-traffic trends, but there is a risk that the Company's response may not keep pace depending on the speed and scale of such changes.

If it becomes difficult to secure raw materials due to disease outbreaks, unfavorable weather, natural disasters, geopolitical risks, or similar factors, or if procurement prices surge due to fluctuations in market prices or foreign exchange rates, this may affect business results and financial condition. Because the Company uses a wide variety of ingredients, the risk of concentrated dependence on suppliers is high, and although the Company has established a stable procurement system in cooperation with group companies, it remains vulnerable to sudden changes in the external environment.

If suitable properties matching location and leasing conditions cannot be secured for new store openings, or if forecasts of consumer preferences prove incorrect and the menu, price range, or service concept fails to gain customer support, planned capital investment may not be executed as intended, potentially affecting business results. The Company operates a wide range of formats, including Steak Miya, Nigiri no Tokubei / Kaisen Atom, and Karubi Taisho, centered mainly in the Chubu, Tohoku, and Northern Kanto regions, and decides on store openings after comprehensively considering location and leasing conditions.

The Company primarily opens stores by leasing land and buildings, and deposits guarantee money and construction cooperation funds with landowners. If part or all of these deposits become unrecoverable due to deterioration in the depositary's financial condition, or in the case of early contract termination, the Company may be forced to forfeit these funds, resulting in losses that could affect business results and financial condition. Since construction cooperation funds are recovered through offset against rent payments and guarantee deposits are recovered through a lump-sum refund at contract termination, this scheme also entails the risk of funds being tied up over a long period.

Securing personnel and improving operational capabilities are essential to restaurant operations, and if the hiring environment deteriorates, labor costs rise, or personnel development is delayed, store operations may be disrupted, potentially affecting business results and financial condition. The Company continuously promotes branding, personnel evaluation systems, improvement of a comfortable working environment, and strengthening of its recruitment system, but the risk remains at a high level amid the worsening labor shortage across the entire food service industry.

If directly operated stores continue to record operating losses, or if the market value of owned land declines significantly, impairment losses may be recognized under fixed asset impairment accounting, potentially affecting business results and financial condition. The Company owns land, equipment, and other assets primarily centered on its operating stores, and there is a risk that impairment could occur simultaneously across multiple stores during a downturn in business performance.

If forecasts of future taxable income are revised, or if tax loss carryforwards are expected to arise, and it is determined that part or all of the deferred tax assets cannot be recovered, this may affect business results and financial condition. The Company estimates future taxable income based on its business plan to calculate deferred tax assets, but there is a risk that these estimates may need to be revised due to significant changes in business performance or the operating environment.

If a failure occurs in information and communication systems due to computer viruses, cyberattacks, or similar causes, or if personal information such as customer survey data or confidential information is leaked or misused, this may affect business results and financial condition through loss of social trust or the filing of damages claims. The Company works to reduce these risks through regular video-based training, submission of confidentiality pledges, rules requiring password protection for emails, and preventive measures implemented by the information systems department.

If large-scale earthquakes, storm and flood damage, tsunamis, heavy snow, or other natural disasters occur, or if lifeline services are disrupted or logistics networks are cut off, or if dining-out opportunities decrease due to the spread of infectious diseases or business restriction requests are issued by authorities, this could significantly affect store operations, logistics, and employee attendance, potentially impacting business results and financial condition. The Company has established a Business Continuity Plan (BCP), utilizes SECOM's safety confirmation service, and conducts disaster drills involving all employees once per quarter, maintaining a system for rapid response in the event of a disaster.