UNOFFICIAL TRANSLATION
The formal official document is in Japanese.

Summary of Consolidated Financial Results for the
Fiscal Year ended September 30, 2015 (Japanese Accounting Standards)
November 4, 2015
Listed Company Name: MTI Ltd.
Listing Exchanges: Tokyo Stock Exchange
Securities Code:9438
URL: http://www.mti.co.jp
Representative:
Toshihiro Maeta, President and Chief Executive Officer
Contact:
Hiroshi Matsumoto, Director
Phone: +81-3-5333-6323
Scheduled date of annual meeting of shareholders: December 23, 2015
Scheduled date to submit the Securities Report (Yuka Shoken Houkokusho): December 24, 2015
Scheduled date of dividend payment: December 24, 2015
Supplementary documents for financial results: Yes
Quarterly results briefing: Yes (for securities analysts and institutional investors)(Figures less than one million of yen are omitted)

1. Consolidated business results for the year ended September 30, 2015
(October 1, 2014 – September 30, 2015)(1) Consolidated operating results(Percentages represent year-on-year changes)
Net sales

Operating income

Millions of yen

For the year ended September 30, 2015
For the year ended September 30, 2014
(Note) Comprehensive income:% Millions of yen

Ordinary income% Millions of yen

Net income% Millions of yen

33,461
8.0
4,245 66.0
4,144 64.5
30,9852.7
2,557 122.5
2,519 125.0
Year ended September 30, 2015: 2,728 million yen (110.9%)
Year months ended September 30, 2014: 1,293 million yen (109.6%)
Net income
Net income
Return on
Return on Assets
per shareper share/diluted
Equity％Net income

％

％

48.52
47.67
20.6
20.0
26.63
26.49
15.1
15.5
Year ended September 30 2015: -95 millions of yen
Year ended September 30 2014: -53 millions of yen

12.7
8.3

Yen

For the year ended September 30, 2015
For the year ended September 30, 2014
(Reference) Equity in earnings (losses) of affiliates:%

2,607 94.9
1,337 159.0

Yen

The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. Net income per share and net income per sharediluted are based on the number of shares after the stock split.

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Year ended September 30 ,2015
Year ended September 30 ,2014(Reference) Shareholders’ equity:

Equity ratio

Millions of yen

24,738
16,591
16,768
9,722
Year ended September 30 2015: 16,034 millions of yen
Year ended September 30 2014: 9,291 millions of yen

Net assets per share
%

Yen

64.8
55.4

281.48184.49The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. Net income per share and net income per sharediluted are based on the number of shares after the stock split.

(3) Consolidated cash flows
Net cash providedby (used in)operating activities

Net cash providedby (used in)investing activities

Net cash providedby(used in)financing
activities

Millions of yen

Millions of yen

Millions of yen

Millions of yen

4,587
3,600

-1,707-1,867

3,921-375

11,6084,782

For the year ended September 30, 2015
For the year ended September 30, 2014

Cash and cash
equivalent

2. Dividends
Dividend per share
End of
End of
End offirst
third
2nd period
quarterquarter
Yen

Yen

For the year ended September 30, 2014–
10.00
For the year ended September 30, 2015–
12.00
Year ending 9/16 (forecast)–
8.00(Note) Revisions to dividend forecasts published most recently: Yes

Year end

Annual

Yen

Yen

Yen

–
–
–

12.00
8.00
8.00

–
–
16.00

Amount ofDividends on
Dividend ratio
dividends paid
equity(Consolidated)(Total)(Consolidated)

427
794

%

%

31.9
28.9
33.8

4.6
6.0

The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. The dividend per share at the end of the fiscal year

ended September 30, 2014 and at the interim end of the fiscal year ended September 30, 2015 are calculated based on the number of shares before thestock split, but the year-end dividend per share is calculated based on the number of shares after the stock split. For more information, please refer to“Cautionary statement with respect to forward-looking statements, special note.”

3. Forecast for consolidated business results for the fiscal year ending September 30, 2016
(October 1, 2015 – September 30, 2016)
Net sales

For the first halfending September
30, 2016
Full year(Percentages represent year-on-year changes.)
Profit (loss)
Net income
Ordinary income attributable to owners
per shareof parent

Operating income

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen%

Yen

17,200

3.5

2,000

-5.1

1,980

-2.7

1,130

3.8

19.84

35,000

4.6

4,700

10.7

4,660

12.4

2,700

3.6

47.40

* Notes(1) Important changes of subsidiaries during the term (changes in specified subsidiaries resulting in change in scope of
consolidation): Not applicable
New: –
Exception: –(2) Changes in accounting policies and changes or restatement of accounting estimates(i) Changes in accounting policies due to the modification in accounting methods:(ii) Changes in accounting policies other than (i):(iii) Changes in accounting estimates:(iv) Restatement:Yes
Not applicableNot applicableNot applicable(3) Number of outstanding shares (common shares)(i) Number of outstanding shares at the end of period (including treasury shares):9/15: 60,226,800 shares
9/14: 53,621,200 shares(ii) Number of treasury shares at the end of period
9/15: 3,260,928 shares
9/14: 3,260,928 shares(iii) Average number of shares during the period
9/15: 53,734,513 shares
9/14: 50,239,276 shares
The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. The number of outstanding shares at the endof the period (including treasury shares), the number of treasury shares at the end of the period, and the average number of shares during theperiod are the numbers after these stock splits.

(Reference) Summary of financial results
1. Nonconsolidated financial results for the year ended September 30, 2015
(From October 1, 2014 - September 30, 2015)(1) Nonconsolidated operating results
Net sales
For the year ended
September 30, 2015
For the year ended
September 30, 2014

(Percentages are shown as year-on-year changes)
Ordinary income
Net income

Operating income

Millions of yen％

Millions of yen％

Millions of yen％

Millions of yen％

31,297

7.4

4,125

59.3

4,111

58.6

2,499

143.8

29,149

4.8

2,589

176.2

2,591

175.6

1,025

64.8

Net income pershare
For the year ended
September 30, 2015
For the year ended
September 30, 2014

Fully diluted net
income per share
Yen

Yen

46.52

45.70

20.41

20.30

The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. Net income per share is based on the number ofshares after the stock split.

(2) Nonconsolidated financial position
Total assets
For the year ended
September 30, 2015
For the year ended
September 30, 2014

Net assets

Equity ratio

Net assets per share

Millions of yen

Millions of yen％

Yen

23,256

15,76567.2

274.52

15,769

9,234

57.2

179.26(Reference) Shareholders’ equity
As of September 30, 2015: 15,638 millions of yen

As of September 30, 2014: 9,027 millions of yen

The Company conducted a 2-for-1 common stock split that became effective on April 1, 2015. Net assets per share are based on the number of shares
after the stock split.

* Status of review
As of the date of disclosure of this earnings release, an audit of the financial statements is being carried out with the Financial Instruments andExchange Act.

* Cautionary statement with respect to forward-looking statements
The forward-looking statements included in this material are based on the Company’s judgments, assumptions, and convictions based on information
available to the Company at the time of publication of this document and may differ materially from actual results for a range of factors, including
conditions of Japanese and overseas economies, changes in the situation of operations in Japan and overseas, and uncertainties and potential risks
inherent in forward-looking statements. The risks and uncertainties include unforeseeable effects of future events. For the assumptions underlying theforecasts and other notice on the use of earnings forecasts, please refer to “(2) Outlook for the fiscal year ending September 2015” on page 3 in theaccompanying material.
The Company will hold a briefing on earnings chiefly for securities analysts and institutional investors on Thursday, November 5, 2015. A video of
the briefing and a document to be used at the briefing will be posted on the Company’s website as soon as the briefing ends.

Accompanying Materials – Contents
1. Operating results and financial conditions.......................................................................................

2(1) Analysis of operating results....................................................................................................................... .........

2(2) Analysis of financial conditions.................................................................................................................... .......

4(3) Basic policy regarding profit distribution to shareholders and dividends for the fiscal year ended September
30, 2015 and the fiscal year ending September 30, 2016.....................................................................................

5(4) Business risks......................................................................................................................... ..............................

5

2. Business group................................................................................ .....................................................

9(1) Description of business...................................................................................................................... ..................

9(2) Business distribution diagram..............................................................................................................................

9

3. Management policy......................................................................................................... ......................

10(1) Basic management policy....................................................................................................................................

10(2) Target management indexes............................................................................................................ .....................

10(3) Medium- to long-term management strategy.......................................................................................................

10(4) Issues to address....................................................................................................................... ............................

11

4. Basic policy for the selection of accounting standards................................................................................................

12

5. Consolidated financial statements........................................................................................................

13(1) Consolidated balance Sheet................................................................................................................................

13(2) Consolidated statement of income and comprehensive income.........................................................................

15(3) Consolidated statement of changes in shareholders’ equity...............................................................................

17(4) Consolidated statement of cash flows................................................................................................................

19(5) Notes on consolidated financial statements.........................................................................................................

21

6. Nonconsolidated financial statements..................................................................................................................

26(1) Balance sheet........................................................................................................................ ...............................

26(2) Statement of income............................................................................................................................................

28(3) Statement of changes in shareholder’s equity.....................................................................................................

29(4) Notes on financial statements..............................................................................................................................

31

7. Other ............................................................................................................................. ..........................................

31(1) Changes in officers..............................................................................................................................................

31

1

1．Operating results and financial conditions(1) Analysis of operating results1) Overview of the fiscal year ended September 30, 2015
(Period from October 1, 2014 to September 30, 2015)
Although sales of smartphones slowed in terms of units, the penetration of smartphones continued to climb thanks
to solid replacement demand, among other factors, during the release of new models.
In this environment, the Company aggressively conducted promotions, mainly during the shopping season for
terminal units and the release of new models, and expanded the number of paying smartphone subscribers to 6.0
million at the end of September 2015 (up 0.6 million from the end of September 2014).
The number of paying subscribers on feature phones continued to decline to 1.94 million at the end of
September (down 0.52 million from the end of September 2014). Despite this, the total number of paying
subscribers at the end of September rose to 7.94 million (up 0.08 million from the end of September 2014), helpedby the efforts of focusing on the expansion of the number of smartphone paying subscribers.
Net sales climbed to ¥33,461 million (up 8.0% year on year), mainly due to the improvement of averagerevenue per user (ARPU) in mainstay services, as well as an expansion in sales of the unmetered plan with flatrate monthly charges for cellphone carriers. Gross profit also rose to ¥28,022 million (up 7.8% year on year).
Operating income came to ¥4,245 million (up 66.0%) and ordinary income was ¥4,144 million (increasing
64.5%), reflecting the effective and appropriate control of selling, general and administrative expenses, in addition
to the increase in gross profit.
Net income also rose to ¥2,607 million (climbing 94.9%), reflecting the increase in ordinary income and theposting of extraordinary income associated with gains from the sale of investment securities, thereby offsetting theposting of extraordinary loss pertaining to the amortization of goodwill and the increase in income taxes.
Consolidated operating results(Period from October 1, 2014 to September 30, 2015)

Fiscal year ended
September 30, 2015

Fiscal year ended
September 30, 2014

ChangeAmountPercentage

Millions of yen

Millions of yen

Millions of yen%

33,461

30,985+2,476

+8.0

5,439

4,988

+450

+9.0

Gross profit

28,02225,996+2,025+7.8

SG&A

23,77623,439+337+1.4

Operating income

4,245

2,557

+1,688+66.0

Ordinary income

4.144

2,519

+1,624+64.5

Current net income

2,607

1,337

+1,269+94.9

Net sales
Cost of sales

Note: Figures are rounded down to the nearest millions of yen.

Breakdown of SG&A

(Period from October 1, 2014 to September 30, 2015)
Fiscal year ended
September 30, 2015

Fiscal year ended
September 30, 2014

Millions of yen

Millions of yen

Total

23,776Advertising expenses

ChangeAmountPercentage

Millions of yen%

23,439

+337

+1.4

9,077

8,268

+809

+9.8

Personnel expenses

5,770

5,815

-44

-0.8

Commission fee

3,727

3,443

+283

+8.2

Subcontract expenses

1,326

1,803

-476

-26.4

Depreciation

1,318

1,706

-387

-22.7

Other

2,555

2,402

+153

+6.4

2

2) Outlook for the fiscal year ending September 2016
(Period from October 1, 2015 to September 30, 2016)
In the fiscal year ending September 2016, the Company will continue to focus on initiatives to expand the numberof paying subscribers on smartphones and implement measures to improve the average revenue per user (ARPU),
thereby achieving its consolidated earnings targets.
The Company’s strength lies in the fact that it has developed the largest sales channel by far for promoting salesof its own and other companies’ content to customers at cellphone shops throughout Japan. Leveraging thisstrength, it will strive to promote the sales of its own content that generates high ARPU and boost the number ofpaying subscribers on smartphones.
By responding to their needs, the Company will also work to enhance the lineup of high value-added services toenhance customer satisfaction, and by taking advantage of its strength, it will increase the ratio of customers who
subscribe to services that generate high ARPU among paying smartphone subscribers.
In conjunction with a service integrating music, books and video, the Company will work to enhance video
content in particular. Specifically, it will strengthen the lineup of video content by expanding the number of titlesof Hollywood movies, with a view to expanding the number of paying subscribers to the integrated service andimproving ARPU.
The Maps & Navigation service and the Weather Information service, which had been conducted separately,
were integrated in July, allowing customers to subscribe to both services simultaneously. The Company will focus
its efforts on the expansion of the number of paying subscribers to this integrated service as well.
In the Healthcare-related service, KARADAmedica, a service via our website where healthcare providers
answer questions on health 24 hours a day for a monthly fee of 400 yen (excluding taxes), has been performing
well since its launch in June. The Company will continue to expand the number of paying subscribers to thisservice as well.
Considering the strong growth potential of the Healthcare-related service in the future, the Company will
undertake the service from a medium- to long-term perspective. During the fiscal year under review, it
successfully expanded the service significantly beyond the business domain that it had engaged in. In the fiscal
year ending September 2016, it will take a variety of measures to achieve sales growth.
Earnings forecast for the six months of the fiscal year ending September 30, 2016
(Period from October 1, 2015 to March 31, 2016)

Consolidated Profit and Loss
Net sales

17,200 millions of yen( an increase of 3.5% y-o-y)Operating income

2,000 millions of yen( an decrease of 5.1% y-o-y)Ordinary income

1,980 millions of yen( an decrease of 2.7% y-o-y)Profit attributable toowners of parent

1,130 millions of yen( an increase of 3.8% y-o-y)Earnings forecast for the fiscal year ending September 30, 2016
(Period from October 1, 2015 to September 30, 2016)

Consolidated Profit and Loss
Net sales

35,000 millions of yen( an increase of 4.6% y-o-y)Operating income

4,700 millions of yen( an increase of 10.7% y-o-y)Ordinary income

4,660 millions of yen( an increase of 12.4% y-o-y)Profit attributable toowners of parent

2,700 millions of yen( an increase of 3.6% y-o-y)3(2) Analysis of financial conditions
1) Analysis of financial conditions in the year ended September 30, 2015a) Assets, liabilities and net assets
At the end of the fiscal year under review, total assets rose ¥7,969 million from the end of September 2014, to¥24,738 million. Current assets rose ¥8,028 million, reflecting the increase in cash and deposits, accounts
receivable-other, and notes and accounts receivable-trade, while non-current assets fell ¥58 million yen, chiefly
due to the decrease in deferred tax assets, although there was an increase in software.
Current liabilities increased ¥1,466 million, largely due to increases in income taxes payable and the current
portion of long-term loans payable, while non-current liabilities declined ¥364 million, mainly reflecting thedecrease in long-term loans payable.
Net assets climbed ¥6,868 million due to the implementation of a public offering for capital increase and theposting of ¥2,607 million in net income, even though cash dividends were paid.
Total assets

Net assets

Equity ratio

Millions of yen

Millions of yen%

24,738
16,768

16,591
9,722

64.8
55.4

As of September 30, 2015
As of September 30, 2014b) Cash flows
At the end of the fiscal year under review, cash and cash equivalents were ¥11,608 million, representing an
increase of ¥6,825 million from the end of September 2014. Cash flows by activities and principal factors in thefiscal year under review were as follows.
Net cash provided by operating activities was ¥4,587 million (inflow of ¥3,600 million for the previous fiscal
year). This is mainly a reflection of income before income taxes and minority interests and depreciation, thereby
offsetting the increase in notes and accounts receivable-trade and income taxes paid.
Net cash used in investing activities stood at ¥1,707 million (outflow of ¥1,867 million for the previous fiscal
year). Principal factors included the purchase of intangible assets (mainly software).
Net cash provided by financing activities came to ¥3,921 million (outflow of ¥375 million for the previous
fiscal year). Principal factors included proceeds from issuance of common stock, which offset the payment of cash
dividends.
(Reference) Cash flows indicators
Fiscal year
ended
September
30, 2011

Fiscal year
ended
September
30, 2012

Fiscal year
ended
September
30, 2013

Fiscal year
ended
September
30, 2014

Fiscal year
ended
September
30, 2015

Equity ratio (%)

59.7

61.9

53.7

55.4

64.8

Equity ratio based on market value (%)

84.1

69.5

73.0

161.0

188.6

Ratio of cash flows to interest-bearing
liabilities (%)

12.1

6.0

16.6

13.9

13.0

Interest coverage ratio (times)

219.0

273.6

570.6

616.6

1414.4Equity ratio: Shareholders’ equity / Total assets
Equity ratio based on market value: Market capitalization / Total assets
Ratio of cash flows to interest-bearing liabilities: Interest-bearing liabilities / Net cash provided by operating activities
Interest coverage ratio: Net cash provided by operating activities / Interest payments
Notes:
1. These indicators are calculated based on consolidated financial results.
2. Cash flows refers to net cash provided by operating activities in the consolidated statements of cash flows.
3. Interest-bearing liabilities refer to all liabilities in the consolidated balance sheet for which interest is paid. Interest payment refers to the interest
payment amount in the consolidated cash flows statement.

2) Financial outlook for year ending September 30, 2016a) Assets, liabilities and net assets
The Company expects assets, liabilities, and net assets at the end of the fiscal year ending September 2016 to begreater than those at the end of the fiscal year under review.
Total assets are expected to increase, mainly reflecting the increase in cash and deposits, as well as notes andaccounts receivable-trade.
4Total liabilities are expected to rise due to the increase in accounts payable-trade and income taxes payable,
even though the current portion of long-term loans payable will decrease.
Total net assets are expected to climb due to the recording of net income, even though dividends will be paid.

b) Cash flows
The Company expects cash and cash equivalents at the end of the fiscal year ending September 2016 to be greaterthan those at the end of the fiscal year under review.
Net cash is expected to be provided by operating activities. This is mainly a reflection of income before income
taxes and minority interests and depreciation, thereby offsetting the increase in notes and accounts receivabletrade and income taxes payable.
Net cash is expected to be used by investing activities, largely because of the purchase of intangible assets(mainly software).
Net cash is expected to be used by financing activities, chiefly for the payment of cash dividends.
(3) Basic policy regarding profit distribution to shareholders and dividends for the fiscal year ended
September 30, 2015 and the fiscal year ending September 30, 2016
The important issues identified by the Company include the enhancement of market capitalization through thecreation and the expansion of corporate value, and the continual distribution of dividends.
In distributing profits, the Company aims to provide shareholder returns with a total target payout ratio (*) of
35% in the medium term. To achieve this goal, the Company will remain true to its basic capital policy ofachieving sustainable medium to long-term growth in net sales and income while returning profits to theshareholders, and work to secure a sufficient amount of internal reserves to carry out aggressive businessdevelopment in the future.
With respect to the year-end dividend payments for the fiscal year under review, the Company previously
planned to pay ¥6 per share, but considering the record high income for the consolidated full-year results thatsignificantly exceeded the previous forecast, it now expects to pay ¥8 per share. As a result, annual dividends are
expected to be ¥14 per share (an increase of ¥5.5 per share over the previous fiscal year).
As for the payment of dividends in the next fiscal year, the Company expects to pay annual dividends of ¥16
per share, with interim dividends of ¥8 per share and year-end dividends of ¥8.
* The ratio of total dividends paid and purchase of treasury shares to consolidated net income
Total dividends paid

Acquisition of treasury stock

Net income

Total payout ratio

(1)

(2)

(3)

[(1) + (2)] / (3)794 millions of yen-

2,607 millions of yen

30.5%(4) Business risks
We are providing the main items viewed as potential risk factors for our business development. Items that are notnecessarily risk factors for our business development but that are important and useful for making investment
judgments and items important for understanding our business activities are actively disclosed to investors.
We are aware of the possibility of these risks occurring, and we will work to prevent them and will respondpromptly if they should occur. However, decisions on investment in shares in the Company need to be made in
careful consideration of these items and items contained in this report. Furthermore, please keep in mind that theitems mentioned below do not cover all possible risks associated with investing in our shares.
Items regarding the future are based on assessments we have made as of the time of releasing our financial
statement (November 4, 2015).
1) Over-reliance on certain individuals
President and Chief Executive Officer Toshihiro Maeta plays a central role in creating new business models andplays an important role in promoting operations. To create a management structure that does not depend
excessively on President Maeta, we are working to cultivate human resources. However if Mr. Maeta is everunable to perform his duties for some reason, our results may be impacted significantly.

52) Unexpected changes in the business environment
In our core mobile content business, actual net sales, cost of sales, selling, general and administrative expenses,
and other results may differ significantly from our current forecasts for the reasons below. In this case, we could
be forced to change our management policy and strategy, which could have a significant impact on our results.
a) Changes in the market environment result in factors of uncertainty that could not be foreseen when making
business plans. Such changes could include the increase in paid subscribers for smartphone services fallingwell below our targets, or the decrease in paid subscribers for feature phone services being much bigger than
expected, or the utilization of paid contents declining and user preferences changing rapidly due to theemergence of free contents.
b) We are unable to differentiate ourselves from competing companies in terms of content material, quality or
price, and therefore are unable to acquire the target number of paid subscribers. Either that, or the competition
for new subscribers with competing firms becomes sharper and price competition intensifies, which causes
subscribers to our services to replace them with services of competitors or makes it harder to maintain costcompetitiveness and secure the target number of paid subscribers.
c) Technical innovations proceed at a rapid pace and there are changes to the development/provision of services
that meet the needs of smartphone users. The form of income and services/technologies become obsolete due
to delays in responding to the advancing technologies. Content production costs increase more than expected,
an efficient development system for content development cannot be maintained and earnings cannot be
secured.
d) Cannot obtain the target number of paid subscribers due to a sudden saturation/reduction of the mobile
contents market, or because advertising could not produce the desired impact on sales due to a drastic change
in the way paid subscribers are gained, among other factors, or obtaining profit becomes difficult due to a
bigger-than-expected increase in cost for acquiring contents.
e) As for the fee-based billing services provided by the Company or those the Company handles for othercompanies, the percentage of subscribers obtained through cellphone shops across Japan, its mainstay sales
channel for mobile devices, is extremely high. As a result, it may become difficult to secure additional new
subscribers if the roles of the sales channel change dramatically for various reasons, such as the introductionof legal restrictions and administrative guidance, the imposition of restrictions by cellphone carriers, andchanges in the business environment.
f) In the fee-based billing services provided by the Company or those the Company handles for other companies,
the number of new subscribers tends to change when cellphone carriers launch new models of mobile devices(sales seasons are usually in March, July, August and December). As a result, it may become difficult tosecure additional new subscribers if the effects of new model launches during sales seasons for mobile
devices are less than expected or if no effects of new model launches are expected.
g) We engage in the healthcare-related information service business, the market for which is expected to expandin the future and which is believed to have high growth potential over the medium to long terms. However, it
is difficult to forecast the impact of the business and an unexpected change may result in our failure toachieve the initial business plan or create the expected effect, with the result that earnings may not justify theprior investment.
h) Laws and regulation that could be relevant to our industry include the Act against Unjustifiable Premiums
and Misleading Representations, Unfair Competition Prevention Act, Consumer Contract Act, Act on theProtection of Personal Information, Act on Specified Commercial Transactions, Medical Care Act,
Pharmaceutical Affairs Act, Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors,
Antimonopoly Act, and Act on Regulation on Soliciting Children by Using Opposite Sex Introducing Service
on Internet.
3) Dependence on specific businesses
As below in the last two consolidated fiscal years, the Company depended heavily on cellphone carriers in termsof sales: The ratio of sales to cellphone carriers accounted for a high percentage of total sales. If cellphone carrierschange their policies on Internet connection services, the Company’s results and future business development
could be seriously impacted.
6

Fiscal year ended
September 30, 2014

Fiscal year ended
September 30, 2015

ClientClientAmount(thousand yen)Amount(thousand yen)

Ratio(％)

Ratio(％)

NTT DOCOMO, INC.

16,346,906

52.8

NTT DOCOMO, INC.

18,302,589

54.7

KDDI CORPORATION

8,515,951

27.5KDDI CORPORATION

8,111,366

24.2

SoftBank Corp.

2,086,536

6.7

SoftBank Corp.

2,493,734

7.5(Note) Consumption tax is not included in the above amounts.

4) Content provided by content holders
Copyright licenses for much digital content, including music, books, video and others, are held exclusively bycontent holders. If copyright license agreements with content holders are amended or terminated and we are nolonger able to provide popular content, we will not be able to obtain the content from other sources and our results
could be seriously impacted.
5) Hiring, retaining, and cultivating human resources
As described in Issues to address, the Company continues to enhance its marketing capacity, quality control
capacity, development capacity, design capacity, and sales capacity to expand operations and achieve sustainablegrowth. If we cannot hire, retain, and cultivate human resources with high skills for enhancing those capacities,
our results could be seriously impacted.
6) Information networks become inoperable
Our operations use communication lines and information systems. If they cannot be used for a long period due tothe disconnection of communication lines caused by natural disasters or accidents, systems going down due to agreater-than-expected surge in access, viruses, or the hacking of computers, we could be forced to suspend
operations, which could seriously impact our results.
7) Personal information leaks
We thoroughly protect personal information by building a tight control system to ensure information security,
developing rules and regulations on the handling of information, and providing education and training for our
employees and business partners. However, if a problem arises due to a personal information leak, our results
could be seriously impacted.
8) Intellectual property right infringement
We are always careful not to infringe on a third party’s intellectual property rights. However, we may infringe on athird party’s intellectual property rights without realizing it. If we have to pay damages or suffer other losses as aresult of a third party’s claim for damages or filing an injunction or other lawsuits, our results could be seriously
impacted.
9) Uncollected charges
We commission chiefly cellphone carriers to collect monthly charges from paid subscribers. If the continuance ofagreements with carriers becomes difficult or fees for the collection of charges change due to changes in theirbusiness strategies, among other reasons, or if uncollected charges increase under some circumstances, our results
could be impacted.
10) Ensuring the security and health of websites
We provide certain services that allow the general public to communicate with each other using the services’
messaging functions. If any major trouble occurs due to a violation of the terms of use, among other reasons, the7Company could be held responsible or the credibility and image of the Company’s services could decline, which
could impact the Company’s results.

8

2．Business group
As of September 30, 2015 our business group consisted of 20 companies made up of MTI and affiliatedcompanies, is primarily involved in the contents business. A general overview of the group is provided
below.
(1) Description of business
Contents distribution
MTI Ltd.
(2) Business distribution diagram

9

3．Management policy(1) Basic management policy
The Company aims to help realize the future society that will be brought about by mobile devices. To this end, it
will continually provide customers with user-friendly services that employ cutting-edge technologies and offer
satisfactory quality and product variety by extensively understanding their views and expectations. The Company
also aims to position itself as lifelong friend that customers can continually call upon by offering emotionallymoving experiences, and become a “mobile dream factory” that produces a series of services which makecustomers’ dreams come true and their lives more convenient and enriching.
(2) Target management indexes
The rate of sales growth and the degree of improvement in operating income ratio are important management
indexes for us here at MTI. We aim to continuously raise corporate value by always improving these indexes. To
achieve sustainable growth, the Company will enhance its capabilities in marketing, quality control, thedevelopment of products and services, design, and sales. By continuing to improve these capabilities that are
essential for business expansion, it seeks to address changes in market environments and customer needs flexibly.
(3) Medium- to long-term management strategy
Our strategy is to use a portion of the stable earnings generated by our content distribution and Real Affiliate
business, our main earnings pillars, to invest in fields with high growth potential with the aim of fostering new
fields capable of generating steady earnings. At the same time, we will invest in fields expected to have large
markets and high growth.
We will also strive to increase the number of subscribers in new fields amid the rapid growth in the market for
smartphone services. Additionally, we will aggressively work to create business opportunities by developing newservices targeting smartphones and we will work to realize sustained sales and continuous growth of profits.
Medium- to long-term management strategies for each contents category are explained below.
a) Improvement in average revenue per user (ARPU) in the content businessWith smartphones on the verge of surpassing the high level of 50% penetration, customers are expected to be
increasingly demanding in search of services that are easier to use and understand, while at the same time
requesting services that offer added value that is greater than that of the current services going forward.
Music, books, comics and video are uniquely popular among customers. That being said, the Company expects
that the video-streaming market will continue to grow. To improve ARPU, it is therefore seeking to enhance thelineup of video content through an increase in the number of Hollywood movie titles.
In addition, it will facilitate the integration of individual services that have been conducted separately to date
(integration of music, books, comics and video, integration of Weather Information and Maps & Navigation
services, etc.), and continue to push forward with efforts to enhance the value of individual services, thereby
improving ARPU.
b) Strengthening of the Real Affiliate (RAF) Network
The sales channel (RAF network), through which cellphone shops encourage customers visiting them to subscribe
to MTI’s own or other companies’ content, enjoys the largest and most overwhelming operation scale among thesame type of businesses owing to the expansion of transactions with cellphone shops nationwide.
Given the advantage of the established sales bases throughout Japan, the Company will expand the number ofshops for the RAF network and strengthen its sales system to provide detailed support to cellphone shops
nationwide. Through these efforts, it will focus its efforts on securing opportunities to deliver content that
customers need most.
The RAF network was established to encourage customers to subscribe to MTI’s content. The Company
successfully launched the business by including other companies’ content in the service after the penetration ofsmartphones. It will work on other uses of the service as well.
c) Initiatives in the Healthcare-related business
The Company seeks to conduct the Healthcare-related business from a medium- to long-term perspective, given
its future growth potential and the possibility of becoming a service that will be used by customers as a “lifetime
friend.”Currently, “Luna Luna” provides a healthcare service that aligns with the life stages of women, by enhancing
services that comprehensively support them in terms of pregnancy, childbirth and child rearing, and the predictionof menstruation and ovulation dates. The Company will further enhance this service.
The number of paying subscribers to KARADAmedica, a service via our website where healthcare providers
answer questions on health 24 hours a day, continues to rise. The Company will therefore enhance the service and10

work to strengthen collaborations with other healthcare services.
It is also planning to develop a service covering all types of healthcare support. It will facilitate the collaboration
between and the integration of services such as genetic analysis, electronic prescription records, health checkups,
nutritional counseling, and the linkage of devices and work to establish a new business scheme.

(4) Issues to address
1) Enhancing marketing capacity
Customer needs are continuously changing and becoming more varied due to the evolution of mobile devices andthe expanding base of mobile content users. We realize the importance of constructing a system for continuously
improving our marketing capacity by accurately grasping these trends and delivering contents with a high degreeof customer satisfaction.
To this end we have strengthened organizational systems for our marketing divisions, bolstered personnel withspecialized capacity and promoted the education and training of personnel by enhancing in-house training
systems. These steps are allowing us to make marketing capacity, one of our strengths, even stronger.
2) Enhancing quality control capacity
We are aware that in order to encourage customers to use mobile contents on a continuing basis, customer needs
obtained from marketing research must of course be reflected in the actual sites. We are also aware of theimportance of building a strong quality control system in order to provide a product line up and a level of qualitythat will satisfy these customers.
To this end we have clarified the procedures and quality standards for each step in the production of our content
materials, while conducting thorough management of these steps. At the same time we have made continuous
improvements through the training and education of personnel as well as through PDCA activities, while buildinga system for the efficient production of high-quality content materials.
3) Enhancing development capacity
We will be able to provide mobile content services with even higher added value as mobile handsets become evenmore advanced and as the speed and capacity of communication infrastructures increase. Building a high quality
technical development system will be essential for continuing to win the support of customers well into the future.
To promote development methods that can quickly and flexibly respond to changes in the technologicalenvironment, we are working to acquire and develop skilled personnel, while raising the technical skill levels ofall development personnel. We will also promote offshore development to realize a high-quality and efficientsystem.
4) Enhancing design capacity
Services for smartphones allow for improved contents operability and greater expression. We realize that it isimportant to have a system in place for providing high quality designs, an extremely important point whencustomers select which services they will use.
Therefore, we are researching user interfaces and customer preferences, while working to acquire and develop
highly skilled personnel. In this manner we are building a system capable of providing high quality designs.

5) Enhancing the sales capacity
The acquisition of subscribers through cellphone shops nationwide, the mainstay sales channel of mobile devices,
has proved to be the most efficient method for acquiring paying subscribers on smartphones on a monthly billingbasis. Thus, the Company believes that it is important to develop cellphone shops that promote the sales of theCompany’s own content and the content that it handles for other companies.
For these reasons, the Company will take initiatives to establish a business structure capable of providing more
meticulous support to cellphone shops nationwide. These initiatives include establishing sales offices in major
cities outside the Tokyo metropolitan area which have a large number of cellphone shops, and by focusing on
securing, training, and developing human resources with superior sales skills.

11

4．Basic policy for the selection of accounting standards
The Group intends to compile its consolidated financial statements based on the Japanese accounting standard forthe time being, considering the possibility of comparing the terms of financial statements and performances
between companies. It will adopt the International Financial Reporting Standards (IFRS), factoring in thesituations in Japan and abroad.

12

5．Consolidated financial statements（1） Consolidated balance sheet（Thousands of yen）

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Advance payments-trade
Prepaid expenses
Accounts receivable-other
Income taxes receivable
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Facilities attached to Buildings
Accumulated depreciation
Facilities attached to Buildings, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Total property, plant and equipment
Intangible assets
Software
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

13

Previous fiscal year

Current fiscal year

(As of September 30, 2014)(As of September 30, 2015)

4,782,677
6,294,778
139,778
470,832
65,90238,554
378,136
121,194-108,691

11,608,562
6,885,765
101,422
349,083
841,190

12,183,163

20,211,420

321,505-221,131-239,325－
358,149
138,341-71,095

331,197

100,373

91,871

267,290-224,631

303,237-248,620

42,65854,617143,032

146,488

2,150,300
2,355
25,0342,254,746
336
22,1682,177,690

2,277,251

813,082
489,586
883,432
99,694-21,317796,241
501,636
792,649
30,1452,264,478

2,103,083-17,589

4,585,200

4,526,824

16,768,363

24,738,244

（Thousands of yen）

Liabilities
Current liabilities
Accounts payable-trade
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Deferred tax liabilities
Allowance for coin usage
Provision for directors’ bonuses
Other

Previous fiscal year

Current fiscal year

(As of September 30, 2014)(As of September 30, 2015)

976,524

1,179,484
518,679
2,571,997
448,157
1,354,619
368,952－
2,317,692
442,983
674,912321,253
2,391
277,447
29,894684,324－
234,836
29,673487,313

Total current liabilities

5,727,424

7,193,715

Non-current liabilitie
Long-term loans payables
Net defined benefit liability
Negative goodwill
Other

500,000
768,368
49,659141

79,925
832,740
40,541
141

Total non-current liabilities

1,318,168

953,349

7,045,593

8,147,064

2,596,342
3,111,863
4,305,998

4,947,984
5,469,051
6,300,484-695,491-695,491

9,318,712

16,022,029

74,19883,691-31,735-69,979-7,837-62,969

Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

14-27,516

12,884

206,905
224,667

127,100
429,165

9,722,770

16,591,180

16,768,363

24,738,244

（2）Consolidated statement of income and consolidated comprehensive income
Consolidated statement of income（Thousands of yen）
Previous fiscal year

Current fiscal year

(from October 1, 2013
to September 30, 2014)(from October 1, 2014
to September 30, 2015)

Net sales
Cost of sales

30,985,078
4,988,462

33,461,440
5,439,149

Gross profits

25,996,616

28,022,291

Selling, general and administrative expenses

23,439,513

23,776,605

Operating income

2,557,102

4,245,685

Non-operating income
Interest income
Dividends income
Amortization of negative goodwill
Compensation income
Subsidy income
Other

261
4,559
10,533
7,416
378
8,868

257
6,060
9,117
12,118
8,983
19,718

Total non-operating income

32,01756,255

8,784
53,104

4,689
95,78024,815
8,477
23,912Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Share issuance cost
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on step acquisitions
Gain on sales of non-current assets
Gain on sales of investment securities
Gain on sales of shares of subsidiaries and associates
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary loss
Loss on retirement of noncurrent assets
Impairment loss
Loss on retirement of noncurrent assets
Loss on sales of investment securities
Loss on valuation of investment securities
Amortization of goodwill
Settlement package
Other

－
2,783
5,016
69,688

157,674

2,519,431

4,144,266－－－
38,55048,04733,50915,011
734,287
7,106
17,70586,598807,621－73,784
109,558
1,087
137,756
52,391

5,183
142,579
74,287－
1,566

Total extraordinary loss
Income before income taxes－
39,999227,551
15,147－376,144504,750

2,229,885

4,447,136

Income taxes-current
Income taxes-deferred

878,625
29,505

1,673,359
78,974

Total income taxes

908,131

1,752,334

1,321,753

2,694,801

Income before minority interests
Minority interests in net income (loss)
Net income

15-16,085

87,3701,337,838

2,607,431

Consolidated statement of comprehensive income（Thousands of yen）
Previous fiscal year
(from October 1, 2013
to September 30, 2014)
1,321,753

Current fiscal year
(from October 1, 2014
to September 30, 2015)
2,694,801

33,764-62,455－

9,450
15,067
7,010

739

1,957

-27,951

33,484Comprehensive income

1,293,801

2,728,286(Comprehensive income attributable to)Comprehensive income attributable to ownersof parent
Comprehensive income attributable to minority
shareholders

1,317,717

2,647,831-23,91580,454

Income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associateaccounted for using equity method
Total other comprehensive income

16（3） Consolidated statement of changes in shareholders’ equity
Previous fiscal year (from October 1, 2013 to September 30, 2014)(Unit: Thousands of yen)
Shareholders’ equity

Balance at the beginning ofcurrent period

Capitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’ equity

2,562,740

3,078,260

3,393,859-695,269

8,339,591

Cumulative effects of changes inaccounting policies
Restated balance－
2,562,740

3,078,260

33,60233,602

3,393,859-695,269

8,339,591

Changes of items during theperiodIssuance of new shares exercise(Exercising share point)

67,205

Dividends from surplus-439,410-439,410

Net income

1,337,838

1,337,838-222

Purchase of treasury stock
Changes in the scope of
consolidation

13,709-222
13,709－Other
Net changes of items other thanshareholders’ equity
Total changes of items during theperiod33,60233,602

912,138-222

979,121

Balance at the end of the current
period2,596,342

3,111,863

4,305,998-695,491

9,318,712

Other accumulated comprehensive income

Balance at the beginning ofcurrent period

Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustments

provisionforretirement
benefits

40,434

22,150－

Subscription
Total otherrights toaccumulatedsharescomprehensive
income62,584

227,004

Minority
interests

Total net
assets239,830

8,869,010

Cumulative effects of changes inaccounting policies
Restated balance－
40,434－

22,15062,584

227,004

239,830

8,869,010

Changes of items during theperiodIssuance of new shares-exercise(Exercising share point)

67,205

Dividends from surplus-439,410

Net income

1,337,838

Purchase of treasury stock-222

Changes in the scope of
consolidation

13,709－Other
Net changes of items other thanshareholders’ equity

33,764-53,885-69,979-90,100-20,098-15,162-125,361

Total changes of items during theperiod33,764-53,885-69,979-90,100-20,098-15,162

853,760

Balance at the end of the current
period74,198-31,735-69,979-27,516

206,905

224,667

9,722,77017

Current fiscal year (from October 1, 2014 to September 30, 2015)(Unit: Thousands of yen)
Shareholders’ equity

Balance at the beginning ofcurrent period

Capitalstock

CapitalsurplusRetainedearnings

Treasury
stock

Total
shareholders’equity2,596,342

3,111,863

4,305,998-695,491

9,318,712

Cumulative effects of changes inaccounting policies
Restated balance

39,7232,596,342

3,111,863

2,351,641

2,351,641

4,345,721

39,723-695,491

9,358,436

Changes of items during theperiodIssuance of new shares exercise(Exercising share point)

4,703,282

Dividends from surplus-641,261-641,261

Net income

2,607,431

2,607,431－

Purchase of treasury stock
Changes in the scope of
consolidation-11,406-11,406

5,547

Other

5,547

Net changes of items other thanshareholders’ equity
Total changes of items during theperiod

2,351,641

2,357,188

1,954,763－

6,663,593

Balance at the end of the current
period4,947,984

5,469,051

6,300,484-695,491

16,022,029

Other accumulated comprehensive income

Balance at the beginning ofcurrent period

Valuationdifference on
available-forsale securities

Foreigncurrencytranslation
adjustments

provisionforretirement
benefits

74,198-31,735-69,979

Subscription
Total otherrights toaccumulated
Sharescomprehensive
income-27,516

206,905

Minority
interests

Total net
assets224,667

9,722,770

Cumulative effects of changes inaccounting policies
Restated balance

39,72374,198-31,735-69,979-27,516

206,905

224,667

9,762,493

Changes of items during theperiodIssuance of new shares exercise(Exercising share point)

4,703,282

Dividends from surplus-641,261

Net income

2,607,431

Purchase of treasury stock－

Changes in the scope of
consolidation-11,406

Other

5,547

Net changes of items other thanshareholders’ equity

9,492

23,897

7,010

40,400-79,805

204,497

165,093

Total changes of items during theperiod9,492

23,897

7,010

40,400-79,805

204,497

6,828,686

Balance at the end of the current
period83,691-7,837-62,969

12,884

127,100

429,165

16,591,180

18

（4） Consolidated statement of cash flows（Thousands of yen）

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Amortization of negative goodwill
Increase (decrease) allowance for doubtful accounts
Increase (decrease) allowance for coin usage
Increase (decrease) in provision for retirement benefits
Increase (decrease) in net defined benefit liability
Interest and dividends income
Interest expenses
Loss (gain) on step acquisitions
Equity in loss (income) of affiliates
Share issuance cost
Settlement package
Loss (gain) on retirement of noncurrent assets
Loss (gain) on sales of property, plant and equipment
Loss (gain) on valuation of investment securities
Gain on sales of investment securities
Loss on sales of stocks of subsidiaries and affiliates
Gain on reversal of subscription rights to shares
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in advance payments
Decrease (increase) in prepaid expenses
Decrease (increase) in accounts receivable-other
Increase (decrease) in notes and accounts payable-trade
Increase (decrease) in accounts payable-other
Increase (decrease) in accured expenses
Increase (decrease) in accured consumption taxes
Other, net
Subtotal

Previous fiscal year

Current fiscal year

(from October 1, 2013
to September 30, 2014)(from October 1, 2014
to September 30, 2015)

2,229,885

4,447,136

1,740,416

1,348,744

73,784

142,579

134,664

286,973-10,533-9,117-51,173-42,221-105,443-42,611-509,636－

659,637

122,687-4,821-6,318

8,784

4,689

－

-33,50953,104

95,780－24,815－

15,147

109,558

74,287－-9,827

137,756

39,9991,087-734,287-38,550-7,106-48,047-17,705

85,581-604,616

38,50438,356-191,844

122,376

70,049-775,180

34,720202,106-22,818

206,900

83,644

5,887

238,070

52,376-220,527

609,039

4,495,851

5,557,383

4,821

6,318

Interest and dividends income received
Interest paid
Income taxes (paid) refund-5,839-3,243-894,253-973,267

Net cash provided by (used in) operating activities

3,600,579

4,587,190

19

（Thousands of yen）

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds of sales property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries and associates
Proceeds from sales of shares of subsidiaries andassociates
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from purchase of shares of subsidiaries resulting
in change in scope of consolidation
Payments for sales of shares of subsidiaries resulting inchange in scope of consolidation
Proceeds from collection of lease and guarantee deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Repayments of long-term loans payable
Proceeds from long-term loans payable
Redemption of bonds
Proceeds from issuance of common shares
Purchase of treasury shares
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

Previous fiscal year

Current fiscal year

(from October 1, 2013
to September 30, 2014)(from October 1, 2014
to September 30, 2015)-17,873-34,741405

66-1,677,283-1,394,157-140,781-106,690

15,675－－-60,867

1,950

－

－

-68,933

26,899987-48,265-21,998

2,993

511

-30,860-21,516-1,867,140-1,707,341－-7,76299,440－-81,520－

45,993

4,581,722-222－-439,410-641,261－-11,000-375,717

3,921,698

8,736

24,337

Net increase (decrease) in cash and cash equivalents

1,366,457

6,825,885

Cash and cash equivalents at beginning of period

3,416,219

4,782,677

Cash and cash equivalents at end of period

4,782,677

11,608,562

20

（5）Notes on consolidated financial statements(Notes relating to going concern assumptions)Not applicable.
(Notes relating to significant items for preparation of consolidated financial statements)
1. Items concerning the scope of consolidation
Our consolidated subsidiaries are the following 17 companies, all of which are consolidated.
TeraMobile, Inc.
FIL Corporation
music.jp, Inc.
comic.jp, Inc.
movile Ltd.
Jibe Mobile, K.K.
Mediano Ltd.
MShift, Inc.
Mytrax Inc.
EverGene Ltd.
J Bridge Ventures, Inc.
Sonicnaut Co., Ltd.
ZERO-A Co., Ltd.
CLIMB Factory Co., Ltd.
PHARUMO, Inc.
KARADAmedica, Inc.
LHR Service, Inc.
The liquidation proceedings for MGM Holdings Inc. and Mega Mobile Inc., which were included in the
Company’s consolidated subsidiaries in the previous consolidated fiscal year, were completed, and they havethus been excluded from the scope of consolidation.
Hotarubi Co., Ltd., which was included in the Company’s consolidated subsidiaries in the previous
consolidated fiscal year, has been excluded from the scope of consolidation because the Company transferred
its entire shareholding.
Social Appli Payment Service, Inc. miyoo, Inc., and Jibe Solutions, Inc., which were included in the
Company’s consolidated subsidiaries, were terminated due to the absorption-type merger, and they have thus
been excluded from the scope of consolidation.
CLIMB Factory Co., Ltd. and PHARUMO, Inc. have been included in the Company’s consolidated
subsidiaries as a result of acquiring all the shares of these two companies in the consolidated fiscal year underreview.
KARADAmedica, Inc. and LHR Service, Inc., two newly established companies, have been included in the
Company’s consolidated subsidiaries from the consolidated fiscal year under review.
2. Items concerning the application of equity method(1) Number of equity method affiliates: 2
SHANGHAI HYRON MTI CO., LTD.
Video Market Corporation
CLIMB Factory Co., Ltd., which was to be treated as an equity method affiliate in the
consolidated fiscal year under review, is not accounted for under the equity method because it has
become a consolidated subsidiary due to the acquisition of additional shares.
(2) If an equity method affiliate has its closing date on other than the consolidated closing date, thefinancial statements as of the end of the month preceding the consolidated closing date are used forthe preparation of the consolidated financial statements.
(3) Names of non-equity method affiliates
livepass, Inc.
Reason for not applying the equity method
The company above is not accounted for under the equity method because its effect on such items
as net income and retained earnings of this term is insignificant and also immaterial as a whole.
3. Items concerning the accounting periods of the consolidated subsidiaries and the like
One of the consolidated subsidiaries, MShift, Inc., closes its books as of December 31 each year. With respect
to MShift, Inc., financial statements prepared pursuant to the provisional closing of books conducted as of the21

end of the month preceding the consolidated closing date are used for the preparation of the consolidated
financial statements. The closing dates of other consolidated subsidiaries are the same as the consolidated
closing date.
4. Items concerning accounting standards(1) Valuation standards and methods for significant assets
Securities
Other securities
Other securities with market value
The market value method based on market prices and the like at the closing date is applied.
(Unrealized holding gains and losses are accounted for as a component of net assets, and the costsof sold securities are mainly computed based on the moving average method.)
Other securities without market value
A historical cost method based on the moving average method is applied.
(2) Depreciation methods for significant depreciable assetsa) Property, plant and equipment
The declining-balance method is applied. Their main useful lives are as follows:
Buildings and accompanying facilities: 3 - 18 years
Tools, furniture and fixtures: 3 - 20 yearsb) Intangible assets
Software
Software used in the company
The straight-line method based on the useful lives within the company (2 - 5 years) is applied.
(3) Basis for significant allowancesa) Allowance for doubtful accounts
To prepare for losses on the collection of receivables, the allowance for doubtful accounts
provides an estimated amount of uncollectibles. The amount of the allowance for general
receivables is based on the historical loan loss ratio. As for certain receivables such as doubtful
accounts receivable etc., the recoverability of each receivable is examined individually, and theestimated unrecoverable amounts are recognized as the allowance.
b) Allowance for coin usage
With respect to the cost of sales arising from the use of coins etc. provided to the subscribers to“music.jp” etc. through services provided by the Group including Chakuuta Full® or Chakuuta®,
the Company provides an accrued amount of payment in a future period as of the end of thecurrent consolidated fiscal year.
c) Provision for directors’ bonuses
To prepare for outlays for officers’ bonuses, an amount applicable for the current consolidated
fiscal year is provided based on the estimated amount of payment.
(4) Reserves for retirement benefitsa) Period reversion method
To prepare for the retirement benefits of employees, an actual amount at the end of the current
consolidated fiscal year is provided based on the estimated amount of retirement benefit
obligations as of the end of the current consolidated fiscal year.
b) Expense processing method on actuarial difference
Actuarial gains and losses are amortized from the following consolidated fiscal year ofoccurrence, using the straight-line method over the average remaining service period of
employees at the time of occurrence in each consolidated fiscal year.
(5) Standards for conversion of significant foreign currency-denominated assets and liabilities into
Japanese yen
Receivables and payables denominated in foreign currencies are translated into Japanese yen at
the fiscal year-end spot exchange rates, with the translation difference included in the current
statements of income. The assets, liabilities, earnings, and expenses of overseas subsidiaries, aswell as those of overseas equity method affiliates, have been translated into Japanese yen at theprevailing spot exchange rates at the end of the month preceding the consolidated settlement date,
and the translation difference has been included in foreign currency translation adjustment under
net assets.
However, the assets, liabilities, earnings, and expenses of J Bridge Ventures, Inc., an overseas
subsidiary, have been translated into Japanese yen at the prevailing spot exchange rates of theconsolidated settlement date, and the translation difference has been included in foreign currency
22

translation adjustment and minority interests under net assets.
(6) Amortization method and period of goodwill
Positive goodwill and negative goodwill from the period on or before September 30, 2010 are
amortized in accordance with the equal installment method over a period of time, which isestimated individually according to the effect of goodwill.
(7) Scope of cash and cash equivalents reported in consolidated statements of cash flows
Cash on hand, readily available deposits and short-term investments, which are highly liquid,
only exposed to small risks for value changes and have maturities of terms not exceeding threemonths at the time of purchase, are considered to be cash and cash equivalents.
(8) Other important items
Accounting for consumption taxes
Transactions are recorded at amounts exclusive of taxes such as consumption taxes.
(Change in accounting policies and the like)
Effective from the consolidated fiscal year under review, the Company adopted the “Accounting Standard
for Retirement Benefits” (ASBJ Statement No. 26, May 17, 2012; “the Accounting Standard for Retirement
Benefits”) and the “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25,
March 26, 2015; “the Guidance on Accounting Standard for Retirement Benefits”) in accordance with theprovisions set forth in the main clauses of paragraph 35 of the Accounting Standard for Retirement Benefits
and paragraph 67 of the Guidance on Accounting Standard for Retirement Benefits. Consequently, theCompany revised the calculation method of its obligations for retirement benefits and service cost andchanged the method of determining the discount rate from a method of using a discount rate based on anumber of years close to the average remaining period of services of employees to the single weighted
average discount rate, reflecting the estimated period of the payment of retirement benefits as well as theamount thereof in the estimated period.
The Accounting Standard for Retirement Benefits, etc. has been adopted in accordance with the transitional
treatment as stipulated in paragraph 37 of the Accounting Standard for Retirement Benefits. The amounts
affected by changes in the calculation of retirement benefit obligations and service costs have been adjusted
in the re-measurements of retained earnings at the beginning of the consolidated fiscal year under review.
As a result, at the beginning of the consolidated fiscal year under review, the net defined benefit liability
declined 61,720 thousand yen, while the retained earnings increased 39,723 thousand yen. The impacts on
operating income, ordinal income, and income before income taxes and minority interests are minimal.
(Segment information)【Segment information】
Consolidated financial results for the year ended September 30, 2015.
Segment information is omitted since the Group consists of a single segment concerning content distribution
for mobile phones (operation of websites) and related services.

23

(Per share information)

Net assets per share
Net income per share

Previous fiscal year

Current fiscal year

(from October 1, 2013
to September 30, 2014)(from October 1, 2014
to September 30, 2015)

Yen
184.49
Yen
26.63

Yen
281.48
Yen
48.52

Yen

Yen

26..4947.67

Diluted net income per share

Net income per share is calculated on the following basis.
Previous fiscal year

Current fiscal year

(from October 1, 2013
to September 30, 2014)(from October 1, 2014
to September 30, 2015)

Net income per share
Thousand of yen
1,337,838－
Thousand of yen
1,337,838
50,239,276

Thousand of yen
2,607,431－
Thousand of yen
2,607,431
53,734,513－－

Increase in common stock

255,223

965,121(Include subscription rights to shares)

255,223

965,121

Net income
Amount not attributed to common stockholders
Income applicable to common stock
Average number of shares outstanding to common stock
Diluted net income per share
Net income adjustment

Stock acquisition rights
Summary of potential stock not included in the calculation Stock acquisition rightsof amount of diluted net income per share since there was Dates of resolution by the board Dates of resolution by the board
no dilutive effect.
of directorsof directors
January 28, 2010
May 1, 2015
(Number of the stock acquisition (Number of the stock acquisitionrights: 460 rights)
rights: 1,531 rights)
February 18, 2010
(Number of the stock acquisitionrights: 200 rights)
January 27, 2011
(Number of the stock acquisitionrights: 726 rights)
February 5, 2014
(Number of the stock acquisitionrights: 913 rights)(Note) We conducted a 2-for-1 share split which became effective as of April 1, 2014. And also we conducted a 2-for-1 effective asof April 1, 2015. Net assets per share and net income per share are calculated on the assumption that these share splits were carriedout at the beginning of the previous fiscal year.

(Events after the reporting period)
Not applicable.

(Omission of disclosure)Notes are not presented related to consolidated balance sheets, consolidated statements of operations,consolidated statement of changes in shareholders’ equity and the like, consolidated statements of cash
24flows, lease transactions, transactions between related parties, tax effect accounting, financial merchandise,securities, derivatives trading, retirement benefit, stock options and the like, business combination and thelike, asset retirement obligation, real estate for rent and the like since the necessity to disclose those withthese financial results is not considered significant.

25

6．Nonconsolidated Financial Statement（1）Balance sheet（Thousands of yen）

AssetsCurrent assets
Cash and deposits
Notes receivable-trade
Accounts receivable-trade
Merchandise
Supplies
Advance payments-trade
Prepaid expenses
Accounts receivable-other
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and accompanying facilities
Accumulated depreciation
Buildings and accompanying facilities, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Total property, plant and equipment
Intangible assets
Patent right
Right of trademark
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and affiliates
Long-term loans receivable from employees
Long-term prepaid expenses
Lease and guarantee deposits
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total noncurrent assets
Total assets

26

Previous fiscal year

Current fiscal year

(As of September 30, 2014)(As of September 30, 2015)

3,643,825
122
6,148,960

10,160,400－
17,77036,619404,436
65,497368,091
66,879－6,615,782
22,353
12,272
28,950307,052
827,652
345,932
49,968-103,416-64,942

10,648,787

18,305,423

310,666

310,666-214,239-229,941

96,42780,725

176,538

179,488-150,348-152,530

26,18926,958

122,617

107,683508
19,381
2,175,930
1,849

611
17,3052,064,099
1,849

2,197,669

2,083,865

473,506
816,871233
67,825
486,440
843,036
134,129472,908
957,344351
9,660
477,648760,619
98,177-21,234-17,5072,800,808

2,759,202

5,121,095

4,950,752

15,769,882

23,256,175

（Thousands of yen）

Liabilities
Current liabilities
Accounts payable-trade
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Allowance for coin usage
Provision for directors’ bonuses
Other
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Provision for retirement benefits
Other
Total noncurrent liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Legal capital surplus
Other capital surplus
Total capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings brought forward
Total retained earnings

Previous fiscal year

Current fiscal year

(As of September 30, 2014)(As of September 30, 2015)

808,071－
2,273,494
427,474
657,696
303,200
474,235
121,193
277,447
28,662
4,138

938,172
500,000
2,548,848
416,332
1,311,022
337,159
347,685
79,472
234,836
28,443
8,914

5,375,614

6,750,888

500,000
659,637
141－
739,595
141

1,159,778

739,737

6,535,392

7,490,626

2,596,342

4,947,984

2,401,412
5,242

4,753,053
5,242

2,406,654

4,758,295

7,462

7,462

4,638,416

6,536,434

4,645,879

6,543,897

Treasury stock-695,491-695,491

Total shareholders’ equity

8,953,385

15,554,686

74,19883,762

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Total valuation and translation adjustments
Subscription rights to shares
Total net assets
Total liabilities and net assets

27

74,19883,762206,905

127,100

9,234,490

15,765,549

15,769,882

23,256,175

（2）Statement of income（Thousands of yen）
Previous fiscal year

Current fiscal year

(from October 1, 2013
to September 30, 2014)(from October 1, 2014
to September 30, 2015)

29,149,330
3,966,219

31,297,953
4,243,618

Gross profits

25,183,110

27,054,334

Selling, general and administrative expenses

22,593,697

22,928,352

Operating income

Net sales
Cost of sales

2,589,413

4,125,982

Non-operating income
Interest income & dividend income
Other

4,632
8,041

6,657
24,951

Total non-operating income

12,67431,609

5,401
4,956

3,889
42,033

10,35745,9222,591,730

4,111,669－－－
40,6333,130
734,287
3,166
17,70540,633758,290－69,172
107,024
1,087
137,756
391,142
8,767

5,183
120,377
58,025714,950

665,113

1,917,413

4,204,846

861,567
30,712

1,621,593
83,695

Total income taxes

892,279

1,705,289

Net income (loss)

1,025,134

2,499,556

Non-operating expeses
Interest expenses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on extinguishment of tie-in shares
Gain on sales of investment securities
Gain on liquidation of subsidiaries
Gain on reversal of subscription rights to shares
Total extraordinary income
Extraordinary loss
Loss on sales of non-current assets
Impairment loss
Loss on retirement of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Loss on valuation of shares of subsidiaries and associates
Loss on liquidation of subsidiaries
Total extraordinary loss
Income before income taxes
Income taxes-current
Income taxes-deferred

28－
39,999441,526－

（3）Statement of changes in shareholders’ equity
Previous fiscal year (from October 1, 2013to September 30, 2014)(Unit: Thousands of yen)
Shareholders’ equity
Capital surplus
Capitalstock

Balance at the beginning ofcurrent period

2,562,740

Capitalsurplus2,367,809

Othercapitalsurplus5,242

Retained earnings
Total
capitalsurplusRetainedearnings

2,373,051

7,462

Other
retainedearnings

Total

Treasury
stock

Total
shareholders’ equity

4,060,155-695,269

8,300,677

Earnedsurplus4,052,692－

Cumulative effects of changes inaccounting policies
Restated balance

2,562,740

2,367,809

33,60233,602

5,242

2,373,051

7,462

4,052,692

4,060,155-695,269

8,300,677

Changes of items during theperiodIssuance of new shares-exercise(Exercising share point)

33,602

67,205

Dividends from surplus-439,410-439,410-439,410

Net income

1,025,134

1,025,134

1,025,134

Purchase of treasury stock

-222

-222

Net changes of items other thanshareholders’ equity
Total changes of items during theperiod33,60233,602－33,602－585,723585,723-222

652,707

Balance at the end of the current
period2,596,342

2,401,412

5,242

2,406,654

7,462

4,638,416

4,645,879-695,491

8,953,385

Valuation andtranslation adjustments

Balance at the beginning ofcurrent period

Valuationdifference on
available-forsale securities

Total
Valuationandtranslation
adjustments

40,43440,434

Subscription
rights tosharesTotal
net assets

222,353

8,563,465－

Cumulative effects of changes inaccounting policies
Restated balance

40,43440,434

222,353

8,563,465

Changes of items during theperiodIssuance of new shares-exercise(Exercising share point)

67,205

Dividends from surplus-439,410

Net income

1,025,134

Purchase of treasury stock-222

Net changes of items other thanshareholders’ equity

33,76433,764-15,447

18,317

Total changes of items during theperiod33,76433,764-15,447

671,024

Balance at the end of the current
period74,19874,198206,905

9,234,490

29

Current fiscal year (from October 1, 2014 to September 30, 2015)(Unit: Thousands of yen)
Shareholders’ equity
Capital surplus
Capitalstock

Balance at the beginning ofcurrent period

2,596,342

Capitalsurplus2,401,412

Othercapitalsurplus5,242

Retained earnings
Total
capitalsurplus2,406,654

Retainedearnings

7,462

Cumulative effects of changes inaccounting policies
Restated balance

2,596,342

2,401,412

2,351,641

2,351,641

5,242

2,406,654

7,462

Other
retainedearnings

Total

Treasury
stock

Total
shareholders’equity4,638,416

4,645,879-695,491

8,953,385

39,72339,723

4,678,139

4,685,602

Earnedsurplus39,723-695,491

8,993,108

Changes of items during theperiodIssuance of new shares-exercise(Exercising share point)

2,351,641

4,703,282

Dividends from surplus-641,261-641,261-641,261

Net income

2,499,556

2,499,556

2,499,556－

Purchase of treasury stock
Net changes of items other thanshareholders’ equity
Total changes of items during theperiod

2,351,641

2,351,641－

2,351,641－

1,858,294

1,858,294－

6,561,577

Balance at the end of the current
period4,947,984

4,753,053

5,242

4,758,295

7,462

6,536,434

6,543,897-695,491

15,554,686

Valuation andtranslation adjustments

Subscription
rights tosharesTotal
net assets

206,905

9,234,490

Total
Valuation
Valuationdifference on
andavailable-fortranslation
sale securities
adjustments
Balance at the beginning ofcurrent period

74,19874,198Cumulative effects of changes inaccounting policies
Restated balance

39,72374,19874,198206,905

9,274,213

Changes of items during theperiodIssuance of new shares-exercise(Exercising share point)

4,703,282

Dividends from surplus-641,261

Net income

2,499,556－

Purchase of treasury stock
Net changes of items other thanshareholders’ equity

9,563

9,563

-79,805-70,241

Total changes of items during theperiod

9,563

9,563

-79,805

6,491,336

Balance at the end of the current
period83,762

83,762

127,100

15,765,549

30

（4） Notes on financial statements(Notes on concerning going concern assumption)
Not applicable.

7．Other（1） Changes in officers (tentative December 23, 2015)① New director candidates
Director Zhou Muzhi
Director Hikaru Yamamoto② Director expected to retire
Executive Vice President Haruo Taneno
Senior Managing Director Tsuguo Takahashi

31