- Investor Relations
- Management Policy
- Risk Factors
Among the matters relating to the business and financial condition of the MarketEnterprise Group, the following are considered to be important factors that may have a significant impact on investors’ decisions. In addition to matters that directly constitute risk factors, we also disclose other matters that we consider important for investment decisions, in the interests of proactive information disclosure.
The Group fully recognizes the possibility that these risks may materialize and will endeavor to prevent their occurrence and respond promptly should they arise. Investors are therefore advised to carefully consider the matters described in this section together with the other information contained in this report when making investment decisions concerning the Company’s shares.
The matters described below reflect the Group’s assessment as of the date of submission of this report and do not represent an exhaustive list of all risks that may arise in the future. (1) Second-hand Online Business
① Securing the Supply of Second-hand Goods
The purchase of second-hand goods is the foundation of the Group’s revenue-generating activities. To establish a stable purchasing base, the Group focuses on web marketing for its purchasing websites and conducts various advertising and promotional activities to enhance brand awareness. It also diversifies its purchasing channels through a contact center that provides preliminary appraisals by telephone and email, as well as delivery-based, in-store, and on-site purchasing services, with an emphasis on customer convenience.
However, changes in economic conditions, the emergence of competitors and resulting increases in purchasing prices, the supply and distribution of new products, or changes in consumer sentiment may make it difficult for the Group to secure a stable supply of second-hand goods in terms of both quality and volume.
② Purchase of Stolen Goods
With the growth of the second-hand market and the increase in the circulation of pre-owned products, the trading of stolen goods has become a social concern. The Group seeks to prevent the circulation of stolen goods by refraining from purchasing items suspected of being stolen and maintaining close cooperation with the police.
In addition, to comply with the Antique Dealings Act, the Group links its records of purchased goods with its business systems. This enables the Group to cooperate promptly and appropriately with police investigations and to facilitate the return of stolen goods to their rightful owners without compensation when necessary.
Nevertheless, given the nature of the business, it is difficult to eliminate the risk of purchasing stolen goods entirely. Such purchases may result in losses because the Group may be legally required to return the goods to their rightful owners without compensation. Related incidents may also undermine public trust in the Group and adversely affect its business performance.
③ Purchase of Counterfeit Products
Counterfeit products, particularly in categories such as branded bags and watches, are widely circulated and remain a social concern. The Group works to prevent the purchase of counterfeit products by providing ongoing training and development for its appraisal staff. The Company is also a member of the Association Against Counterfeit Product Distribution (AACD), through which it gathers information and works to prevent the distribution and purchase of counterfeit and illicit products.
However, due to the nature of the business, it is difficult to eliminate this risk completely. Any incident involving counterfeit products may damage the Group’s credibility and adversely affect its business performance.
④ Impact of Infectious Diseases, Natural Disasters and Other Events
The spread of infectious diseases, such as COVID-19, may lead to restrictions on economic activity and requests for people to refrain from going out. Such circumstances could require the Group to shorten store operating hours or partially restrict on-site purchasing services, thereby affecting its financial position, operating results and cash flows.
Similar events, as well as other natural disasters, may also disrupt the Group’s business operations.
⑤ E-commerce Market Trends
The Group operates an Internet-focused second-hand business. Accordingly, the continued expansion of e-commerce is an important underlying condition for the Group’s growth.
According to the Ministry of Economy, Trade and Industry, the domestic B-to-C e-commerce market reached approximately ¥26.1 trillion in fiscal 2024, an increase of 5.1% year on year, and has continued to expand in recent years.
Nevertheless, the history of e-commerce is relatively short, and its future development remains uncertain. Unexpected developments arising from its rapid expansion, the introduction of new regulations in response to related issues, or other unforeseen events may prevent the e-commerce market from growing as expected and adversely affect the Group’s business development and operating results.
⑥ Trends in the Second-hand Market
The second-hand market has attracted growing interest, and new entrants, including flea-market applications, have become increasingly prominent. The Group operates a distinctive Internet-focused second-hand business model and seeks to establish strong barriers to entry by leveraging its strengths in web marketing, IT and business operations.
However, intensifying competition within the industry may adversely affect the Group’s operating results.
⑦ Reliance on Specific Services
More than half of the Group’s revenue from its Second-hand Online Business is generated through Yahoo! JAPAN Auctions, operated by LY Corporation.
To reduce its reliance on any single service, the Group is developing and operating inventory-linked systems and expanding other sales channels. As of the date of submission of this report, the Group has secured four sales channels, including direct sales that do not rely on online marketplaces. It is also working to develop new product categories beyond its conventional sales routes.
Although these initiatives are intended to optimize the Group’s sales channels and reduce its dependence on specific services, the discontinuation of Yahoo! JAPAN Auctions or other unforeseen events that make the service unavailable as a sales channel could adversely affect the Group’s operating results.
⑧ Transactions with Overseas Customers
Within the Group’s Second-hand Online Business, machinery products, including used agricultural equipment, are exported to overseas customers. Consequently, the Group is exposed to country risks, including changes in the political or economic conditions of the countries and regions to which it exports, social instability, and unexpected changes in laws and regulations.
The Group seeks to mitigate these risks through close information sharing with shipping and customs clearance providers, as well as ongoing information gathering. However, if such risks materialize and make it difficult to continue export transactions in the relevant regions, the Group’s operating results and financial position may be adversely affected.
⑨ Tight Supply and Demand in the Shipping Market
The Group is working to expand the volume of machinery products, including used agricultural equipment, handled by its Second-hand Online Business. Further growth in this area depends in part on increasing exports of used Japanese agricultural machinery.
However, geopolitical risks and other factors may cause instability in the global shipping market, including a shortage of shipping containers. Such instability could delay shipments to certain export destinations, reduce export volumes and adversely affect the Group’s operating results.
(2) Mobile & Telecommunications Business
① Procurement of Communication Lines from Network Operators
In its Mobile & Telecommunications Business, the Group procures communication lines from network operators for the provision of Internet connectivity services.
If contracts with these providers are terminated or their terms are changed, the Group may need to review its business strategy and pricing policies. Depending on the circumstances, this could affect the Group’s operating results and financial position.
In addition, disruptions in the supply chain for communication devices could lead to inventory shortages and prevent the Group from supplying products to customers in a timely manner, resulting in lost business opportunities and potentially adversely affecting its operating results.
② Dependence on External Providers for Communication Lines
The Group does not own its own telecommunications infrastructure. Instead, it procures communication lines and related services from external providers and delivers mobile communication services through its own platform.
Accordingly, prolonged interruptions in communication lines or other services supplied by these providers could affect the Group’s financial position and operating results. Similarly, deterioration in business relationships with communication line providers, or other factors that disrupt procurement, could adversely affect the Group’s business development, operating results and financial position.
③ Competitive Environment
Competition in the mobile communications market is expected to intensify further, not only among existing competitors but also as new companies enter the market, including companies from other industries.
The Group seeks to differentiate its services through pricing, communication speed and quality, and value-added services. It also aims to further improve its services and strengthen its brand.
Nevertheless, intensifying competition, including improvements in competitors’ services, the emergence of new business models, an increase in the number of competitors, or market entry by major companies with significant influence, may reduce the Group’s profitability through lower competitiveness and increased advertising and promotional expenses. This could adversely affect the Group’s operating results and financial position.
(3) Digital Marketing
① Attracting Visitors through Search Engines
Many Internet users rely on search engines to obtain information. As a result, the efficiency with which users access the Group’s websites is significantly affected by search engine rankings and usage trends.
The Group strives to provide content that supports users’ purchasing decisions and to maintain user-friendly website structures. However, if the Group is slow to respond to changes in search engine algorithms, its websites may receive less favorable search rankings. A resulting decline in visitor acquisition efficiency could adversely affect the Group’s operating results.
② Declining Value of Website Content
The Group operates media businesses that provide information through websites featuring specialized articles written and edited by professional editorial staff. It seeks to maintain and improve content quality by securing and developing personnel capable of producing specialized articles and by sharing systems, expertise and know-how.
However, the growing ability of companies and individuals to disseminate and obtain information through social media may reduce the relative value of the information provided by the Group’s media platforms. If the value of the Group’s content declines as a result, its business and operating results may be significantly affected.
③ Reliability of Content
The Group seeks to ensure that all parties involved in producing content for its media platforms comply with applicable laws and regulations and follow established procedures, including thorough reviews before publication. It also works with experts to establish supervisory systems that help ensure compliance with relevant laws and the reliability of published content.
Nevertheless, if content lacking accuracy or impartiality is published for any reason, the resulting decline in content credibility could affect the Company’s business and operating results.
④ Website Functions
The Group seeks to respond to user needs by improving the ways in which information is provided and expanding content, such as user reviews, in accordance with changes in the market environment for each of its Internet media platforms.
However, if the Group is unable to introduce attractive content or accurately identify changing user needs, it may become difficult to enhance website functions sufficiently. This could weaken the Group’s competitive position and adversely affect its business and operating results.
⑤ Competitive Environment
The Group’s online media business operates in an environment where multiple competitors are already present, and further market entry by new competitors is expected.
The Group seeks to strengthen its competitive advantage by maintaining the quality, breadth and timeliness of specialized articles written and edited by professional editorial staff, while developing services that respond to customer needs and differentiate its offerings from those of competitors.
However, improvements in competitors’ services, the emergence of new business models, an increase in the number of competitors, or entry by major companies with significant market influence may weaken the competitiveness of the Group’s services and adversely affect its business and operating results.
(4) IT Systems
① System Failures and Other Issues
The Group’s business processes rely on internally developed IT systems. To ensure the reliability and availability of these systems, the Group uses multiple web services and maintains backup arrangements in case of emergencies.
Nevertheless, system failures may occur for various reasons, including natural disasters, fires, computer viruses, communication failures, unauthorized acts by third parties, excessive server loads and human error. If the systems are unable to operate normally, the Group’s operating results may be adversely affected.
② Technological Changes
The IT and Internet industries, which underpin the Group’s business operations, are experiencing rapid technological innovation.
The Group actively responds to these changes by accumulating knowledge and expertise in advanced technologies and recruiting skilled engineers. However, if the Group fails to keep pace with technological developments, its technological advantages and service competitiveness may decline, adversely affecting its operating results.
(5) Legal Regulations
① Antique Dealings Act
Due to the nature of the Group’s business, products handled in its Second-hand Online Business fall under the category of second-hand goods as defined by the Antique Dealings Act. Accordingly, the Group’s business operations are subject to this Act, and its business locations operate under licenses issued by the relevant prefectural public safety commissions.
The Group conducts its business in compliance with the Act, including thorough identity verification of sellers and proper maintenance of records of second-hand goods transactions. No violations have occurred since the Company’s establishment through the date of submission of this report. The Group also provides thorough internal training on the Act and conducts employee tests as appropriate to assess their understanding.
The Group therefore considers that no events currently exist that would prevent the continuation of its business. However, if a violation of the Act occurs in the future and results in the revocation of a business license or other sanctions, the Group’s business activities could be significantly affected.
② Act on the Protection of Personal Information
Due to the nature of its business and the requirements of the Antique Dealings Act, the Group obtains personal information when purchasing goods and stores and manages this information in electronic databases. It also obtains personal information when selling and shipping products.
The Group takes thorough measures to prevent the leakage of personal information outside the organization. These include establishing internal rules and operating manuals, strengthening physical management and monitoring systems, providing employee training, and enhancing IT system security.
Nevertheless, if personal information is leaked, the resulting loss of social credibility and substantial expenses associated with the incident could adversely affect the Group’s operating results.
③ Other Legal Regulations
The Group conducts mail-order sales through the Internet and is therefore subject to the Act on Specified Commercial Transactions.
In recent years, legislation governing Internet-related activities has advanced in response to problems arising online. The introduction of new regulations or amendments to existing laws and regulations may restrict the Group’s business activities and adversely affect its business development and operating results.
(6) Business Operations Structure
① Recruitment and Training
Securing, developing and retaining talented personnel is an important management priority for the Group in achieving sustainable growth.
The Group actively recruits both new graduates and mid-career professionals and works to secure and develop capable employees. It also seeks to improve employee retention through a clear corporate vision and behavioral guidelines, regular internal training, personnel systems and enhanced employee benefits.
However, if the Group is unable to recruit the personnel it requires according to plan, or if employees and executives who have received training leave the Group, its operating results may be adversely affected.
② Dependence on Specific Individuals
The Company’s Representative Director and President, Yasushi Kobayashi, is its founder and has served as Representative Director and President since its establishment.
The Group is working to establish an organizational business management structure that does not depend excessively on any individual. Initiatives include recruiting and developing talented personnel and standardizing business processes.
However, Mr. Kobayashi’s statements in the mass media and other public forums currently play an important role in shaping the Group’s brand. The Group is strengthening its organizational structure to ensure that brand development can be sustained at an organizational level as well.
Nevertheless, if Mr. Kobayashi becomes unable to continue performing his duties for any reason, the Group’s business development and other activities may be affected.
③ Impairment of Fixed Assets
The Group holds fixed assets, including property, plant and equipment and goodwill. In accordance with applicable accounting standards, the Group applies impairment accounting and assesses the recoverability of the carrying amounts of these assets based on the future cash flows expected to be generated by them. Assets requiring impairment are appropriately written down.
However, if a significant deterioration in the business environment or a decline in the profitability of businesses associated with these assets makes it unlikely that the investments will be recovered, impairment losses may arise. Such losses could adversely affect the Group’s financial position and operating results.
(7) Other Risks
① Dividend Policy
The Company considers the return of profits to shareholders to be one of its important management priorities.
The Group is currently in a growth and expansion phase. It therefore aims to strengthen its financial position and expand its business by retaining earnings, reinforcing its management foundation and making proactive investments in business development. The Company believes that achieving further business growth in this way represents the greatest return it can provide to shareholders.
The Company’s policy of enhancing corporate value through business and earnings growth remains unchanged. However, as its business performance reaches key milestones, it intends to discuss specific shareholder return plans, including the timing of the commencement of dividend payments.
② Recoverability of Deferred Tax Assets
The Group assesses the recoverability of deferred tax assets based on forecasts and assumptions concerning future taxable income.
If these forecasts or assumptions change and the Group determines that some or all of its deferred tax assets are no longer recoverable, the amount of deferred tax assets recognized may be reduced. This could adversely affect the Group’s operating results and financial position.
③ Dilution of Share Value through the Exercise of Stock Acquisition Rights
The Company grants stock acquisition rights to its directors and employees as an incentive.
If these stock acquisition rights are exercised, the number of shares outstanding may increase, resulting in dilution of the value per share and potentially affecting the Company’s share price in the future.
As of the end of the fiscal year under review, the number of potential shares represented by exercisable stock acquisition rights was 215,100, equivalent to 4.02% of the total number of issued shares of 5,354,900.
For further details regarding stock acquisition rights, please refer to “Section 4: Information on the Company, 1. Status of Shares, (2) Status of Stock Acquisition Rights, etc.” in this annual securities report.
The Group fully recognizes the possibility that these risks may materialize and will endeavor to prevent their occurrence and respond promptly should they arise. Investors are therefore advised to carefully consider the matters described in this section together with the other information contained in this report when making investment decisions concerning the Company’s shares.
The matters described below reflect the Group’s assessment as of the date of submission of this report and do not represent an exhaustive list of all risks that may arise in the future. (1) Second-hand Online Business
① Securing the Supply of Second-hand Goods
The purchase of second-hand goods is the foundation of the Group’s revenue-generating activities. To establish a stable purchasing base, the Group focuses on web marketing for its purchasing websites and conducts various advertising and promotional activities to enhance brand awareness. It also diversifies its purchasing channels through a contact center that provides preliminary appraisals by telephone and email, as well as delivery-based, in-store, and on-site purchasing services, with an emphasis on customer convenience.
However, changes in economic conditions, the emergence of competitors and resulting increases in purchasing prices, the supply and distribution of new products, or changes in consumer sentiment may make it difficult for the Group to secure a stable supply of second-hand goods in terms of both quality and volume.
② Purchase of Stolen Goods
With the growth of the second-hand market and the increase in the circulation of pre-owned products, the trading of stolen goods has become a social concern. The Group seeks to prevent the circulation of stolen goods by refraining from purchasing items suspected of being stolen and maintaining close cooperation with the police.
In addition, to comply with the Antique Dealings Act, the Group links its records of purchased goods with its business systems. This enables the Group to cooperate promptly and appropriately with police investigations and to facilitate the return of stolen goods to their rightful owners without compensation when necessary.
Nevertheless, given the nature of the business, it is difficult to eliminate the risk of purchasing stolen goods entirely. Such purchases may result in losses because the Group may be legally required to return the goods to their rightful owners without compensation. Related incidents may also undermine public trust in the Group and adversely affect its business performance.
③ Purchase of Counterfeit Products
Counterfeit products, particularly in categories such as branded bags and watches, are widely circulated and remain a social concern. The Group works to prevent the purchase of counterfeit products by providing ongoing training and development for its appraisal staff. The Company is also a member of the Association Against Counterfeit Product Distribution (AACD), through which it gathers information and works to prevent the distribution and purchase of counterfeit and illicit products.
However, due to the nature of the business, it is difficult to eliminate this risk completely. Any incident involving counterfeit products may damage the Group’s credibility and adversely affect its business performance.
④ Impact of Infectious Diseases, Natural Disasters and Other Events
The spread of infectious diseases, such as COVID-19, may lead to restrictions on economic activity and requests for people to refrain from going out. Such circumstances could require the Group to shorten store operating hours or partially restrict on-site purchasing services, thereby affecting its financial position, operating results and cash flows.
Similar events, as well as other natural disasters, may also disrupt the Group’s business operations.
⑤ E-commerce Market Trends
The Group operates an Internet-focused second-hand business. Accordingly, the continued expansion of e-commerce is an important underlying condition for the Group’s growth.
According to the Ministry of Economy, Trade and Industry, the domestic B-to-C e-commerce market reached approximately ¥26.1 trillion in fiscal 2024, an increase of 5.1% year on year, and has continued to expand in recent years.
Nevertheless, the history of e-commerce is relatively short, and its future development remains uncertain. Unexpected developments arising from its rapid expansion, the introduction of new regulations in response to related issues, or other unforeseen events may prevent the e-commerce market from growing as expected and adversely affect the Group’s business development and operating results.
⑥ Trends in the Second-hand Market
The second-hand market has attracted growing interest, and new entrants, including flea-market applications, have become increasingly prominent. The Group operates a distinctive Internet-focused second-hand business model and seeks to establish strong barriers to entry by leveraging its strengths in web marketing, IT and business operations.
However, intensifying competition within the industry may adversely affect the Group’s operating results.
⑦ Reliance on Specific Services
More than half of the Group’s revenue from its Second-hand Online Business is generated through Yahoo! JAPAN Auctions, operated by LY Corporation.
To reduce its reliance on any single service, the Group is developing and operating inventory-linked systems and expanding other sales channels. As of the date of submission of this report, the Group has secured four sales channels, including direct sales that do not rely on online marketplaces. It is also working to develop new product categories beyond its conventional sales routes.
Although these initiatives are intended to optimize the Group’s sales channels and reduce its dependence on specific services, the discontinuation of Yahoo! JAPAN Auctions or other unforeseen events that make the service unavailable as a sales channel could adversely affect the Group’s operating results.
⑧ Transactions with Overseas Customers
Within the Group’s Second-hand Online Business, machinery products, including used agricultural equipment, are exported to overseas customers. Consequently, the Group is exposed to country risks, including changes in the political or economic conditions of the countries and regions to which it exports, social instability, and unexpected changes in laws and regulations.
The Group seeks to mitigate these risks through close information sharing with shipping and customs clearance providers, as well as ongoing information gathering. However, if such risks materialize and make it difficult to continue export transactions in the relevant regions, the Group’s operating results and financial position may be adversely affected.
⑨ Tight Supply and Demand in the Shipping Market
The Group is working to expand the volume of machinery products, including used agricultural equipment, handled by its Second-hand Online Business. Further growth in this area depends in part on increasing exports of used Japanese agricultural machinery.
However, geopolitical risks and other factors may cause instability in the global shipping market, including a shortage of shipping containers. Such instability could delay shipments to certain export destinations, reduce export volumes and adversely affect the Group’s operating results.
(2) Mobile & Telecommunications Business
① Procurement of Communication Lines from Network Operators
In its Mobile & Telecommunications Business, the Group procures communication lines from network operators for the provision of Internet connectivity services.
If contracts with these providers are terminated or their terms are changed, the Group may need to review its business strategy and pricing policies. Depending on the circumstances, this could affect the Group’s operating results and financial position.
In addition, disruptions in the supply chain for communication devices could lead to inventory shortages and prevent the Group from supplying products to customers in a timely manner, resulting in lost business opportunities and potentially adversely affecting its operating results.
② Dependence on External Providers for Communication Lines
The Group does not own its own telecommunications infrastructure. Instead, it procures communication lines and related services from external providers and delivers mobile communication services through its own platform.
Accordingly, prolonged interruptions in communication lines or other services supplied by these providers could affect the Group’s financial position and operating results. Similarly, deterioration in business relationships with communication line providers, or other factors that disrupt procurement, could adversely affect the Group’s business development, operating results and financial position.
③ Competitive Environment
Competition in the mobile communications market is expected to intensify further, not only among existing competitors but also as new companies enter the market, including companies from other industries.
The Group seeks to differentiate its services through pricing, communication speed and quality, and value-added services. It also aims to further improve its services and strengthen its brand.
Nevertheless, intensifying competition, including improvements in competitors’ services, the emergence of new business models, an increase in the number of competitors, or market entry by major companies with significant influence, may reduce the Group’s profitability through lower competitiveness and increased advertising and promotional expenses. This could adversely affect the Group’s operating results and financial position.
(3) Digital Marketing
① Attracting Visitors through Search Engines
Many Internet users rely on search engines to obtain information. As a result, the efficiency with which users access the Group’s websites is significantly affected by search engine rankings and usage trends.
The Group strives to provide content that supports users’ purchasing decisions and to maintain user-friendly website structures. However, if the Group is slow to respond to changes in search engine algorithms, its websites may receive less favorable search rankings. A resulting decline in visitor acquisition efficiency could adversely affect the Group’s operating results.
② Declining Value of Website Content
The Group operates media businesses that provide information through websites featuring specialized articles written and edited by professional editorial staff. It seeks to maintain and improve content quality by securing and developing personnel capable of producing specialized articles and by sharing systems, expertise and know-how.
However, the growing ability of companies and individuals to disseminate and obtain information through social media may reduce the relative value of the information provided by the Group’s media platforms. If the value of the Group’s content declines as a result, its business and operating results may be significantly affected.
③ Reliability of Content
The Group seeks to ensure that all parties involved in producing content for its media platforms comply with applicable laws and regulations and follow established procedures, including thorough reviews before publication. It also works with experts to establish supervisory systems that help ensure compliance with relevant laws and the reliability of published content.
Nevertheless, if content lacking accuracy or impartiality is published for any reason, the resulting decline in content credibility could affect the Company’s business and operating results.
④ Website Functions
The Group seeks to respond to user needs by improving the ways in which information is provided and expanding content, such as user reviews, in accordance with changes in the market environment for each of its Internet media platforms.
However, if the Group is unable to introduce attractive content or accurately identify changing user needs, it may become difficult to enhance website functions sufficiently. This could weaken the Group’s competitive position and adversely affect its business and operating results.
⑤ Competitive Environment
The Group’s online media business operates in an environment where multiple competitors are already present, and further market entry by new competitors is expected.
The Group seeks to strengthen its competitive advantage by maintaining the quality, breadth and timeliness of specialized articles written and edited by professional editorial staff, while developing services that respond to customer needs and differentiate its offerings from those of competitors.
However, improvements in competitors’ services, the emergence of new business models, an increase in the number of competitors, or entry by major companies with significant market influence may weaken the competitiveness of the Group’s services and adversely affect its business and operating results.
(4) IT Systems
① System Failures and Other Issues
The Group’s business processes rely on internally developed IT systems. To ensure the reliability and availability of these systems, the Group uses multiple web services and maintains backup arrangements in case of emergencies.
Nevertheless, system failures may occur for various reasons, including natural disasters, fires, computer viruses, communication failures, unauthorized acts by third parties, excessive server loads and human error. If the systems are unable to operate normally, the Group’s operating results may be adversely affected.
② Technological Changes
The IT and Internet industries, which underpin the Group’s business operations, are experiencing rapid technological innovation.
The Group actively responds to these changes by accumulating knowledge and expertise in advanced technologies and recruiting skilled engineers. However, if the Group fails to keep pace with technological developments, its technological advantages and service competitiveness may decline, adversely affecting its operating results.
(5) Legal Regulations
① Antique Dealings Act
Due to the nature of the Group’s business, products handled in its Second-hand Online Business fall under the category of second-hand goods as defined by the Antique Dealings Act. Accordingly, the Group’s business operations are subject to this Act, and its business locations operate under licenses issued by the relevant prefectural public safety commissions.
The Group conducts its business in compliance with the Act, including thorough identity verification of sellers and proper maintenance of records of second-hand goods transactions. No violations have occurred since the Company’s establishment through the date of submission of this report. The Group also provides thorough internal training on the Act and conducts employee tests as appropriate to assess their understanding.
The Group therefore considers that no events currently exist that would prevent the continuation of its business. However, if a violation of the Act occurs in the future and results in the revocation of a business license or other sanctions, the Group’s business activities could be significantly affected.
② Act on the Protection of Personal Information
Due to the nature of its business and the requirements of the Antique Dealings Act, the Group obtains personal information when purchasing goods and stores and manages this information in electronic databases. It also obtains personal information when selling and shipping products.
The Group takes thorough measures to prevent the leakage of personal information outside the organization. These include establishing internal rules and operating manuals, strengthening physical management and monitoring systems, providing employee training, and enhancing IT system security.
Nevertheless, if personal information is leaked, the resulting loss of social credibility and substantial expenses associated with the incident could adversely affect the Group’s operating results.
③ Other Legal Regulations
The Group conducts mail-order sales through the Internet and is therefore subject to the Act on Specified Commercial Transactions.
In recent years, legislation governing Internet-related activities has advanced in response to problems arising online. The introduction of new regulations or amendments to existing laws and regulations may restrict the Group’s business activities and adversely affect its business development and operating results.
(6) Business Operations Structure
① Recruitment and Training
Securing, developing and retaining talented personnel is an important management priority for the Group in achieving sustainable growth.
The Group actively recruits both new graduates and mid-career professionals and works to secure and develop capable employees. It also seeks to improve employee retention through a clear corporate vision and behavioral guidelines, regular internal training, personnel systems and enhanced employee benefits.
However, if the Group is unable to recruit the personnel it requires according to plan, or if employees and executives who have received training leave the Group, its operating results may be adversely affected.
② Dependence on Specific Individuals
The Company’s Representative Director and President, Yasushi Kobayashi, is its founder and has served as Representative Director and President since its establishment.
The Group is working to establish an organizational business management structure that does not depend excessively on any individual. Initiatives include recruiting and developing talented personnel and standardizing business processes.
However, Mr. Kobayashi’s statements in the mass media and other public forums currently play an important role in shaping the Group’s brand. The Group is strengthening its organizational structure to ensure that brand development can be sustained at an organizational level as well.
Nevertheless, if Mr. Kobayashi becomes unable to continue performing his duties for any reason, the Group’s business development and other activities may be affected.
③ Impairment of Fixed Assets
The Group holds fixed assets, including property, plant and equipment and goodwill. In accordance with applicable accounting standards, the Group applies impairment accounting and assesses the recoverability of the carrying amounts of these assets based on the future cash flows expected to be generated by them. Assets requiring impairment are appropriately written down.
However, if a significant deterioration in the business environment or a decline in the profitability of businesses associated with these assets makes it unlikely that the investments will be recovered, impairment losses may arise. Such losses could adversely affect the Group’s financial position and operating results.
(7) Other Risks
① Dividend Policy
The Company considers the return of profits to shareholders to be one of its important management priorities.
The Group is currently in a growth and expansion phase. It therefore aims to strengthen its financial position and expand its business by retaining earnings, reinforcing its management foundation and making proactive investments in business development. The Company believes that achieving further business growth in this way represents the greatest return it can provide to shareholders.
The Company’s policy of enhancing corporate value through business and earnings growth remains unchanged. However, as its business performance reaches key milestones, it intends to discuss specific shareholder return plans, including the timing of the commencement of dividend payments.
② Recoverability of Deferred Tax Assets
The Group assesses the recoverability of deferred tax assets based on forecasts and assumptions concerning future taxable income.
If these forecasts or assumptions change and the Group determines that some or all of its deferred tax assets are no longer recoverable, the amount of deferred tax assets recognized may be reduced. This could adversely affect the Group’s operating results and financial position.
③ Dilution of Share Value through the Exercise of Stock Acquisition Rights
The Company grants stock acquisition rights to its directors and employees as an incentive.
If these stock acquisition rights are exercised, the number of shares outstanding may increase, resulting in dilution of the value per share and potentially affecting the Company’s share price in the future.
As of the end of the fiscal year under review, the number of potential shares represented by exercisable stock acquisition rights was 215,100, equivalent to 4.02% of the total number of issued shares of 5,354,900.
For further details regarding stock acquisition rights, please refer to “Section 4: Information on the Company, 1. Status of Shares, (2) Status of Stock Acquisition Rights, etc.” in this annual securities report.
