GLOBAL-DINING, INC.

A decline in the number of customers visiting stores due to unseasonable weather or abnormal weather conditions, and soaring food material prices or procurement disruptions caused by livestock epidemics such as avian influenza, can affect business performance. In addition, since many of the Group's stores are concentrated in Tokyo, there is a high risk that, in the event of a large-scale disaster (earthquake, infectious disease, terrorism, etc.), continuing operations would become difficult, including impacts on the logistics network in the greater Tokyo area. The securities report also suggests that there are limits to geographic diversification as a countermeasure.

The Group leases and directly operates all of its stores, and there is a possibility that lease agreements may not be renewed, or early termination may be forced upon the Group, due to circumstances on the lessor's side. Even stores performing well may face unplanned closures, which directly affects the stability of the Group's revenue base. Should such events occur, they are expected to affect operating results, financial position, and business performance.

While new store openings are carefully selected based on location, customer-drawing potential, and cost, plans may be forced to change, be postponed, or be canceled. In connection with changing the business format of or closing underperforming stores, losses on disposal of fixed assets, penalties for contract cancellations, restoration costs, and other expenses may arise beyond expectations. This is explicitly identified as a risk that could affect operating results and financial position.

The Group applies impairment accounting treating each store as an independent cash-generating unit, and periodically assesses indicators of impairment. If profitability declines significantly due to sudden changes in the external environment, or if a decision is made to close a store, an impairment loss may be recognized. Since the recognition of impairment losses directly affects financial position, this is a financial risk of high importance.

The Group is promoting the development of new business formats, the enhancement of existing formats, and expansion into new businesses in order to expand its revenue base. However, if forecasts of the economic environment or market changes are insufficient, there is a risk that the Group will be unable to provide products and services matching customer needs in a timely manner. If the development of new businesses does not proceed as planned, it may adversely affect business performance and financial position.

The Group is highly dependent on Kozo Hasegawa, the founder and Representative Director and President, across the entire scope of management, including the development of new business formats, store development, and management guidance for subsidiaries. Although successor development is being advanced through the introduction of an executive officer system and the appointment of a vice president, there are concerns about a material impact on business performance should he step down from management. While the successor system is being developed, the risk of dependence continues to exist.

The Group is subject to regulations such as the Food Sanitation Act, the Basic Act on Food Safety, the Health Promotion Act, and the Act on the Protection of Personal Information, and strives for compliance through strengthening the sanitation inspection system with inspection teams and food directors, and developing privacy policies. However, if the Group fails to comply with regulations, or if a food poisoning incident or serious sanitation problem occurs, it may affect operating results and financial position.

The financial statements of overseas subsidiaries denominated in local currencies are converted into yen for the preparation of consolidated financial statements, and significant fluctuations in foreign exchange rates could affect business performance. In addition, depending on future fundraising methods, foreign exchange gains or losses may arise. As overseas business expands, the importance of foreign exchange risk may increase.

The Group strives to build an appropriate compliance and governance framework, and has established a system to consult with attorneys and others in advance regarding matters of concern. However, if material litigation is brought against the Group and the outcome of a ruling differs from the Group's assertions or expectations, it may affect operating results and financial position.