GarageBank Corporation positions compliance with laws and the strengthening of internal controls as priority management issues for the sustainable enhancement of corporate value. We provide ongoing training to all officers and employees to confirm that operations are conducted in line with applicable laws and internal regulations, and we maintain and improve our compliance framework through regular reviews.
If competing companies offer services similar to ours, we may be required to revise our business strategy, which could adversely affect our results and financial position.
To mitigate this risk, we are strengthening our business foundation and have obtained a patent on the system that realizes the integrated process of valuation, application, and contract management required to deliver an app-based sale-and-leaseback service.
This patent covers core elements of the online sale-and-leaseback service, providing a barrier against the entry of similar services by third parties.
Our principal trade receivables, lease receivables, are exposed to customer credit risk.
We address this risk through periodic reviews of credit limits in accordance with our credit management rules and dedicated handling of overdue receivables.
In addition to eKYC and AML controls applied at transaction time, we have developed and operate a proprietary credit model that combines diverse data sources, including movable-asset portfolios, to reduce credit risk.
We fund the procurement of movable assets associated with our core sale-and-leaseback business primarily through equity raises from investors, borrowings from financial institutions, and bond issuance.
However, depending on financial market conditions and our financial position, we may not be able to raise funds in a timely manner under our preferred terms. A rise in market interest rates may increase funding costs for working capital and refinancing, which could affect our results and financial condition.
To address this, we are diversifying our funding by securitizing movable assets (small movable goods and vehicles).
If valuations diverge from market prices, our business performance and financial condition could be adversely affected.
To mitigate this, we use proprietary methods and machine-learning models to determine the value of items from images alone, and we continuously monitor secondary-market price movements to respond rapidly to changes.
Our service is delivered over the internet. To ensure stable operation, we are reinforcing server infrastructure, strengthening security, and improving our system management framework.
However, large-scale program defects, natural disasters, accidents, or unauthorized access could cause system failures, which may lead to reputational damage or compensation liabilities and affect our results and financial position.
We recognize that growth-anticipating investment in systems and infrastructure is required to maintain stable operation and improve customer satisfaction.
If customer growth exceeds our expectations, advance investment in servers and software may be needed, leading to higher-than-planned expenditures and potential impacts on operations and performance.
Securing, developing, and retaining talent is essential to business expansion. Failure to acquire necessary talent in a timely manner, or unexpected attrition, could disrupt operations and growth and affect performance.
Yoshihito Yamamoto, our founder and Representative Director, possesses extensive experience and knowledge of our business and plays a critical role in formulating management policy and business strategy.
We are reducing single-person dependency by sharing information with directors and senior staff and strengthening our management organization. However, if he were unable to continue in his role for any reason, our results and financial position could be affected.