Disclaimer:This report is a partial translation of the Annual Securities Report of the Company originally preparedin Japanese, based on information gathered at the time of its preparation and is not in any way intended
as a commitment to future implementation. In the event of any discrepancies in words, accounts,
figures or the like between this report and the original, the original Japanese version shall govern.

Annual Securities Report(Report in accordance with Article 24,
Paragraph 1 of the Financial Instruments and Exchange Act)English excerpt translation of the “Yukashoken-Hokokusho”
For the 39th fiscal year from January 1, 2023 to December 31, 2023

Findex Inc.
(E25283)

Table of Contents

page

Cover
Part 1 Corporate Information ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1

I. Corporate Overview・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1

1. Key Financial Data・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

1

2. History・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

3

3. Description of Business ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

4

4. Subsidiaries and Other Affiliated Entities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

6

5. Employees ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

6

II. Overview of Business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

8

1. Management Policy, Business Environment, and Issues to Address・・・・・・・・・・・・・・・・・・・

7

2. Policy and Initiatives Related to Sustainability ・・・・・・・・・・・・・・・・・・・・・・・・・・・

9

3. Business Risks・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

15

4. Management's Discussion and Analysis of Financial Condition, Operating Results and Cash Flows・・・・・・

17

5. Important Management Contracts・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

22

6. Research and Development Activities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

23

III. Information about Facilities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

26

1. Summary of Capital Investments・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

26

2. Major Facilities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

26

3. Planned Additions, Retirements and Other Changes of Facilities・・・・・・・・・・・・・・・・・・・・

26

IV. Information about Reporting Company・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

27

1. Company’s Shares, etc.・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

27

2. Acquisition and Disposal of Treasury Shares・・・・・・・・・・・・・・・・・・・・・・・・・・・・

32

3. Dividend Policy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

32

4. Corporate Governance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

33

V. Financial Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

44

1. Consolidated Financial Statements, etc.・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

45(1) Consolidated Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

45(2) Others・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

67

2. Non-consolidated Financial Statements, etc.・・・・・・・・・・・・・・・・・・・・・・・・・・・・

68(1) Non-Consolidated Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・

68(2) Major Assets and Liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

77(3) Others・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

77

VI. Outline of Share-Related Administration of Reporting Company・・・・・・・・・・・・・・・・・・・・・

78

VII. Reference Information of Reporting Company・・・・・・・・・・・・・・・・・・・・・・・・・・・・

79

1. Information on the Parent of Reporting Company・・・・・・・・・・・・・・・・・・・・・・・・・・

79

2. Other Reference Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

79Part 2 Information on Guarantors, etc. for Reporting Company・・・・・・・・・・・・・・・・・・・・・・・・・

80

[Cover][Document title]

Annual Securities Report (“Yukashoken Hokokusho”)[Clause of stipulation]

Article 24, Paragraph 1 of the Financial Instruments and Exchange Act[Place of filing]

Director-General of Kanto Finance Bureau[Filing date]

March 28, 2024

[Fiscal year]

39th Fiscal Period (January 1, 2023 through December 31, 2023)[Company name]

Kabushiki Kaisha Findex[Company name in English]

FINDEX Inc.

[Title and name of representative]

Teruo Aibara, President and CEO[Address of registered headquarters]

7-2, Otemachi 1-chome, Chiyoda-ku, Tokyo[Telephone number]

03-6271-8958 (Main number)[Contact person]

Takashi Murakami, Corporate Officer, Finance and Investor Relations[Nearest place of contact]

7-2, Otemachi 1-chome, Chiyoda-ku, Tokyo[Telephone number]

03-6271-8958 (Main number)[Name of Administrative Contact]

Takashi Murakami, Corporate Officer, Finance and Investor Relations[Place for public inspection]

Tokyo Stock Exchange, Inc.
2-1 Nihonbashi Kabuto-cho, Chuo-ku, Tokyo

Part 1 Corporate Information
I. Corporate Overview
1 Key Financial Data
(1) Consolidated Key Financial Data
Fiscal year
Fiscal year ended

35th
36th
37th
38th
39th
December 31, December 31, December 31, December 31, December 31,
2019
2020
2021
2022
2023
4,281,539
4,004,859
4,968,885
4,541,242
5,191,735

Net sales(JPY in thousands)

Recurring profit(JPY in thousands)

746,551

643,362

944,593

1,055,708

1,527,453(JPY in thousands)

499,249

430,457

636,027

722,779

1,059,140

Comprehensive income(JPY in thousands)

499,249

430,457

635,796724,240

1,056,045

Net assets(JPY in thousands)

2,842,569

3,073,285

3,512,533

4,042,937

4,845,360

Total assets(JPY in thousands)

3,464,967

3,796,913

4,556,563

4,980,780

5,934,285

Net assets per share(JPY)

111.03119.84136.84

157.63188.67

Basic earnings per share

(JPY)

19.50

16.81

24.84

28.21

41.31

Diluted earnings per share

(JPY)

－

－

－

－

－

Equity-to-asset ratio

(%)

82.0

80.8

76.9

81.1

81.5

Return on equity

(%)

18.5

14.6

19.4

19.2

23.9

Price earnings ratio

(x)

69.43

69.06

40.50

17.51

24.93

(JPY in thousands)

1,670,010

542,550

750,353

693,848

842,844(JPY in thousands)(367,665)(146,266)(493,367)(230,160)(296,937)(JPY in thousands)(207,325)(201,957)(183,341)(142,020)(270,494)(JPY in thousands)

1,778,004

1,972,330

2,045,974

2,287,747

2,563,160(persons)

273

276

282

282

290

Profit attributable to ownersof parent

Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Cash and cash equivalents at
end of period
Number of employees(Notes)

1. Diluted earnings per share for the 35th and 39th fiscal year are not described here because there are no issuable shares.
2. Diluted earnings per share for the 36th, 37th and 38th fiscal years are not described here because there are no issuable
shares with dilutive effects.
3. The Company has introduced a stock benefit trust (J-ESOP). For the purpose of calculation of net assets per share, thenumber of Company shares held by J-ESOP is included in the number of treasury shares deducted from the total numberof shares issued and outstanding at the end of the fiscal year. In addition, for the purpose of calculating basic earnings
per share, the average number of shares of the Company's share held by the stock benefit trust is included in the treasury
shares deducted from the average number of shares outstanding during the fiscal year.
4. The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) has been applied fromthe beginning of the 38th fiscal year, and the key financial data for the 38th fiscal year and onwards are those after theapplication of the said accounting standards.

- 1 -(2) Key Financial Data of Findex Inc.
Fiscal year
Fiscal year ended

35th
36th
37th
38th
39th
December 31, December 31, December 31, December 31, December 31,
2019
2020
2021
2022
2023
4,241,356
3,982,323
4,924,598
4,487,352
5,153,469

Net sales(JPY in thousands)

Recurring profit(JPY in thousands)

660,748

738,919969,359

1,056,439

1,481,101

Profit(JPY in thousands)

454,296

514,871

671,969

737,639

1,028,077

Investment income whenequity method is applied(JPY in thousands)

－

－

－

－

－

capital stock(JPY in thousands)

254,259

254,259

254,259

254,259

254,259(shares)

26,608,800

26,608,800

26,608,800

26,608,800

26,608,800

Net assets(JPY in thousands)

2,883,943

3,199,072

3,671,494

4,201,464

4,970,533

Total assets(JPY in thousands)

3,501,638

3,899,555

4,678,409

5,146,346

6,057,614(JPY)

112.64124.75143.16163.98193.81

8.00

8.00

8.50

9.50

13.00

[2.50][2.50][2.50][3.00][4.00]

Total number of issued shares

Net assets per share
Dividends per share[Interim dividend per share included
above](JPY)

Basic earnings per share

(JPY)

17.75

20.11

26.24

28.79

40.10

Diluted earnings per share

(JPY)

－

－

－

－

－

Equity-to-asset ratio

(%)

82.4

81.9

78.4

81.6

82.1

Return on equity

(%)

16.5

16.9

19.6

18.7

22.4

Price earnings ratio

(x)

76.30

57.74

38.34

17.16

25.69

Payout ratio

(%)

45.1

39.8

32.4

33.0

32.4

Number of employees(persons)

263

269

274

280

285

Total shareholder return

(%)

253.2

218.8

191.5

98.1

200.2

[Comparison benchmark: TOPIX](%)[118.1][126.8][143.0][139.5][178.9]Highest share price

(JPY)

1,464

1,665

1,345

1,078

1,054

Lowest share price

(JPY)

507

528

905

470

472

(Notes)

1. Diluted earnings per share for the 35th and 39th fiscal year are not shown because there are no issuable shares.
2. Diluted earnings per share for the 36th, 37th and 38th fiscal years are not described here because there are no issuable
shares with dilutive effects.
3. The Company has introduced a stock benefit trust (J-ESOP). For the calculation of net assets per share, the number ofCompany shares held by J-ESOP is included in the number of treasury shares deducted from the total number of sharesissued and outstanding at the end of the fiscal year. In addition, for the purpose of calculating basic earnings per share,
the average number of shares of the Company's share held by the stock benefit trust is included in the treasury sharesdeducted from the average number of shares outstanding during the fiscal year.
4. The highest and lowest share prices are those on the Tokyo Stock Exchange (Prime Market) from April 4, 2022, andthose on the Tokyo Stock Exchange (First Section) before that.
5. The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) has been applied fromthe beginning of the 38th fiscal year, and the key financial data for the 38th fiscal year and onwards are those after theapplication of the said accounting standards.

- 2 -2 History
Month/Year
January 1985
December 1987
May 1992
July 1993
May 1994
March 1998
September 2000

matterShikoku Kanei Kogyo Co., Ltd. established in Matsuyama City, Ehime Prefecture(capitalized at ¥5,000 thousand).
Business closed and corporate status dormant.
Company name changed to Shake Hands Inc. and reopened.
Company name changed to Pioneer Shikoku Co.
Started developing software for medical use

December 2002

Company name changed to PSC Inc.
Joint research with Ehime Medical Association, Ehime University Medical Informatics Department, andothers began on construction of medical association intranet work, etc.
Participated in the development support of the Nichii-Medical Standard Receipt Software as a primarydevelopment member of the ORCA project from the Japan Medical Association.
The business model of electronic medical record research and development was adopted as "Ehime
Prefecture Active Venture Support Project" in FY2002 and FY2003.
Released electronic medical record REMORA.

April 2003
October 2003

Tokyo Branch opened in Minato-ku, Tokyo.
Released Claio, a data management software for medical use.

February 2006
October 2009

Head office relocated to Nagaki-cho, Matsuyama, Ehime.
Osaka branch opened in Chuo-ku, Osaka.

March 2011
September 2011

Listed on JASDAQ (Standard) of the Osaka Securities Exchange.
Head office relocated to Sanbancho, Matsuyama, Ehime.

November 2012
July 2013
November 2014

Opened Sapporo Branch in Kita-ku, Sapporo City and Fukuoka Branch in Hakata-ku, Fukuoka City.
Listed on the JASDAQ (Standard) of the Tokyo Stock Exchange following the merger of the Osaka
Securities Exchange and the Tokyo Stock Exchange.
Company name changed to Findex Inc.

November 2014
March 2015

Listed on the First Section of the Tokyo Stock Exchange from JASDAQ (Standard).
Fukuoka branch relocated to Chuo-ku, Fukuoka city.

June 2015
July 2015

Tokyo branch renamed Tokyo head office, shifting to dual headquarters structure
Acquired the business of Try For Inc.

March 2001
May 2002

January 2017
February 2017

Matsuyama Head Office was renamed Shikoku Office and the Headquarter was centralized in Tokyo.
Established consolidated subsidiary Eagle Matrix Consulting, Co., Ltd.

August 2018
February 2019

Consolidated subsidiary Eagle Matrix Consulting, Co., Ltd changed its name to EMC Healthcare Co., Ltd.
Released GAP-screener, the gaze analyzing perimeter.

August 2019
December 2020

Naha Branch opened in Naha City.
Tokyo Head Office relocated to Chiyoda-ku, Tokyo.

February 2021
March 2021

Invested in Digital Entertainment Asset Pte. LTD.
Invested in CROSS SYNC. Inc.

April 2021
April 2021

Released GAP, the gaze analyzing perimeter.
Established a consolidated subsidiary, Fitting Cloud Inc.

April 2021
May 2021

Kyoto Branch opened in Nakagyo-ku, Kyoto.
Niigata Branch opened in Chuo-ku, Niigata City.

April 2022

Moved from the First Section of the Tokyo Stock Exchange to the Prime Market following thereorganization of the Tokyo Stock Exchange market.
Registered head office changed to Tokyo Head Office.
EMC Healthcare Co., Ltd. became an equity-method affiliate of the Company from a consolidated subsidiaryas a result of the exercise of stock options by its managements and employees.

April 2022
July 2022- 3 -3 Description of Business
The Group consists of the Company, one consolidated subsidiary, and one equity-method affiliate.
Effective from the fiscal year 2023, the reportable segments were reorganized into three segments: Medical Business, Public
Business, and Health Tech Business. For details, please refer to “Section 5 Financial Status 1 Consolidated Financial
Statements (i) Consolidated Financial Statements Notes Segment Information, etc.”(1) About the Group's Products
The main products and its features of the Group are as follows (*indicates a consolidated subsidiary). Products from EMC
Healthcare, which is an equity-method affiliate, are omitted here.
Reportable Segment
Medical Business

Public Sector Business

ClaioDashboard
Claio
C-ScanDocuMaker
PDI+MoveBy
C-NoteMapleNote
REMORA
ID-Cam/Claio-Cam
UniversalSearcher
ConnectFAX
LIS Endoscopy System
LIS Ultrasound System
ProRad RIS
ProRad RS
ProRad QA
Gateway System
C-Peri/C-Peri ME (PMDA approved)
C-Nys/C-Nys ME (PMDA approved)
Remotalk-Cloud
Cloud Backup Service
Dodo
PiCls Medical Avenue
PiCls On-shin
PiCls AAdE-Report
PiCls Booking Assistant
PiCls Referral
Weberi*Bricks*Valloon*DocuMaker Office (medical)
DocuMaker Office (non-medical)

Health Tech Business

DocuMaker Shelf
GAP-screener (PMDA approved)
GAP (PMDA approved)- 4 -Main Products
Integrated Browsing System
Data Management Software
Document Integrated Archiving Software
Medical Document Management Software
PDI Import / Export Software
Clinical Record Entry Software
Perinatal Software
Electronic Medical Record
Digital Camera Solution
Medical Big Data Search Software
Management System for Referrals by FAX
Endoscopy Department Software
Ultrasonic Division SoftwareRadiology Information SoftwareRadiological Reporting Software
Integrated Image Detection Software
Visual Field Viewer
Nystagmus Analysis Support System
Security Service
Task Management Application for Families
Patient Information App
Telemedicine Software

Internet Browsing Virtualization Service
Cloud-based General-purpose EDC/Questionnaire
SystemClosed-cloud Data Storage
Document management Software for Administrative
Sections
Public Records Management and Electronic
Approval software
Electronic Bookkeeping Solutions
Gaze Analyzing Perimeter for Checkup Facilities
Gaze Analyzing Perimeter for Eye Clinics andHospitals

(2) Business Structure
The business diagram for transactions between the Company and its consolidated subsidiary and equity-method affiliate isomitted due to immateriality.

*Reference: Trends in the number of facilities where the products have been installed or units of the products sold
2,500

1,987
1,911

2,000

1,757

1,823

1,675
1,558
1,500

1,000

500

0
FY2018FY2019

Medical Business (# of facilities)

FY2020

FY2021

Public Sector Business (# of facilities)- 5 -FY2022

FY2023

Health Tech Business (# of units sold)4 Subsidiaries and Other Affiliated Entities

Company Name

Address

Capital(JPY inthousands)

Principal Business% ofvotingrights(%)

Business Transactions with
the Company[Consolidated Subsidiary]
Nakagyo,
Kyoto

Fitting Cloud Inc.

10,000

Medical Business

70.0

The company provides cloud-based
IT services.
Directors serve concurrently.
Some operations are contracted oroutsourced.

18.9

The company offers medical facility
management consulting and otherproposals for medical data
management solutions, as well as
contracted R&D and development ofhealth tech-related products.
Directors serve concurrently.
Bonds are underwritten.

[Equity-Method Affiliate]

Chiyoda,Tokyo

EMC Healthcare Co., Ltd.

100,000

Health TechBusiness

5 Employees(1) Information about Consolidated Companies
As of December 31, 2023
Segments

Number of employees (persons)

Medical Business

269

Public Sector Business

9

Health Tech Business

12

Total

290

(2) Information about Reporting Company
Number of employees (persons)285

Average age(years)Average years of service (years)
39.6

6.3

As of December 31, 2023
Average annual salary(JPY in thousands)
5,741
As of December 31, 2023

Segment

Number of employees (persons)

Medical Business

264

Public Sector Business

9

Health Tech Business

12

Total

285

(Notes)1. The number of employees is the number of full-time employees. The number of temporary employees (part-timers andemployees from temporary staffing agencies) is omitted because the total number is less than 10/100 of the total number of
employees.
2. Average annual salary includes extra wages.

(3) Status of Labor Unions
No labor union has been formed, but labor-management relations are amicable.

- 6 -(4) Percentage of female employees in management positions, rate of male employees taking childcare leave, and gender wage
gap for workers(i) Reporting Company
FY2023
Percentage offemale employees
in management
positions (%)(Note 1)

Rate of male
employees taking
childcare leave (%)(Note 2)

Gender wage gap for workers (%) (Note 1)
All workers

Of which, fulltime employees

Remarks

Of which, nonfull-time
employees
Compensations are set
considering employees'
knowledge, experience, andabilities, adjusting themaccording to the roles'

8.6

50.0

60.6

63.5

difficulty levels. While there
115.4 may be differences incompensations based on roledisparities, there are no
distinctions based on age,gender, nationality, or othersimilar factors when
performing the same role.

Note 1 Calculated based on the provisions of “Act of the Promotion of Women’s Active Engagement in Professional Life” (ACTNo.64 of 2015).
Note 2 Calculated the rate of taking childcare leave in Article 71-4 item 1 of the “Ordinance for Enforcement of the Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family Members”(Ordinance of the Ministry of Labor No. 25 of 1991) based on “Act on Childcare Leave, Caregiver Leave, and Other Measures
for the Welfare of Workers Caring for Children or Other Family Members” (Act No. 76 of 1991).
(ii) Consolidated Subsidiary
This information is omitted because the consolidated subsidiary Fitting Cloud Inc. is not obligated to disclose theinformation pursuant to the provisions of “Act on the Promotion of Women’s Active Engagement in Professional Life”(Act No. 64 of 2015) and “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers
Caring for Children or Other Family Members” (Act No. 76 of 1991)- 7 -II. Overview of Business
1 Management Policy, Business Environment and Issues to Address
Matters related to business conditions, accounting conditions, etc., described in the Annual Securities Report that may have amaterial effect on investors' decisions include the following.
Forward-looking statements in the text are based on the judgment of the Group as of the end of the current consolidated fiscal
year.
(1) Management Policy
In order to realize its corporate philosophy of "enriching society with Technologies and Creation", the Group believes it isessential to quickly develop and provide high-quality solutions that meet the needs of the medical community. Its basic
management policy is to promote "research and development that allows its employees to feel the joy of creating things" basedon "the search for new ideas and technologies" and to provide "products that exceed customer expectations and contribute to
the further development of society.
(2) Business Environment
In the medical industry, digital technology adoption is surging forward, with multiple government-led digitalization (DX)initiatives in progress. The initiation of using My Number card (ID card) as health insurance cards, the move towards eprescriptions, and the expedited integration of data through cloud-based technology have all fueled a high demand for DX
solutions. Furthermore, there's a growing need for regional healthcare collaboration to establish seamless care that spans fromacute treatment through recovery to the patient's return home. In response to concerns over the excessive workload ofphysicians, an amendment to the Medical Care Act, set to take effect in April 2024, seeks to encourage changes in physicians'
work practices. In this environment, the Group will continue to aggressively develop and market its products and services toattract additional product and replacement installations for existing customers, as well as to make its products and services
available to an even greater number of customers through new initiatives.
In the public sector industry, there is little competition in the Group’s target segment, and the need for digitalization isincreasing year by year, even more so than in the medical industry. The Group will continue to expand sales of its products
because the business environment is very favorable, with interest in its products coming from government organizations ofvarious sizes, and the sales activities have been going smoothly.
In the health tech industry, the reclassification of COVID-19 to a Class 5 category under the infectious diseases law has
created more opportunities for us to showcase our products at various conferences and exhibitions. This increased visibility
has significantly boosted interest in our Gaze Analyzing Perimeter, "GAP," among healthcare professionals. While there areother head-mounted display-type perimeters like “GAP” available both domestically and internationally, “GAP” sets itself
apart with its innovative testing approach. This unique methodology is unmatched by any other device on the market, providing
us with a significant competitive advantage.
The Group plans to intensify our marketing efforts through partners to further increase “GAP's” sales. Our commitment isto ensure that customers, both in Japan and globally, are aware of the superior performance and uniqueness of our product.
(3) Priority Business and Financial Issues to Address
The Group will address the following priority business and financial issues.
(i) Retaining of right talents to strengthen product development and sales capabilities
The Group believes that the source of its competitiveness is the product quality, and that the quality lies in its deep
knowledge of its overall business domain, its ability to gather information to understand customer’s needs, and its highdevelopment capability to quickly commercialize products based on this knowledge. Although there is no shortage of staff inthe development department at the present stage, the Group will strive to retain right talent with high skills and a sense of
mission, both new graduates and mid-career hires. On the sales side, the Group recognize that it is essential to hire personnel
on an appropriate scale to match the speed of business expansion, and it will continue its efforts to secure personnel with agood balance of knowledge and skills in all areas of its business.
(ii) Extending the scope of business into peripheral areasa. Development of cloud services
Since its establishment, the Group has been expanding its business by installing its products to medical institutions
nationwide, focusing on in-hospital information systems, and in the future will also focus on linking with external services
associated with medical care and forming medical communities. By promoting digitalization in the medical industry, the Groupwill contribute to the reduction of environmental burdens, and by providing cloud-based solutions, it will digitally connect not
only medical institutions and patients, but also pharmacies, transportation, home nursing stations, and various other people,
goods, and services to improve the convenience and efficiency of a series of medical treatment cycles.
b. Sales of medical software and medical devices overseas
The Group has maintained and expanded its business stably through the provision of software to medical institutions within- 8 -Japan. As it fully embarks on international expansion, essential for its further growth, the Group will continue to push forwardwith projects to provide medical solutions in India in FY2024. Additionally, the Group began shipping its device, the Gaze
Analyzing Perimeter, “GAP,” to Europe, the Middle East, and North Africa on December 1, 2023, through its main distributor
in these regions, Rexxam Co., Ltd. The device will be available in around 50 countries, marketed as 'FIELDNavigator,' an
OEM product of Rexxam Co., Ltd. Looking ahead, the Group plans to broaden its sales to include India and ASEAN countries.
To achieve this, the Group is committed to securing the necessary medical device approvals in each target country.

2 Policy and Initiatives Related to Sustainability
The Group's approach to sustainability and its initiatives are as follows. Forward-looking statements are based on the judgmentof the Group as of the end of the current consolidated fiscal year, and the results could differ significantly due to various factors.
As a business entity engaged in activities with a high degree of public interest, the Group emphasizes the fulfillment of its
social responsibilities. The Group supports the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD) and is actively working towards achieving the Sustainable Development Goals (SDGs) advocated by the United Nations.
Through business activities that consider Environmental, Social, and Governance (ESG) factors, the Group aims to create aprosperous society. In terms of environmental initiatives, the Group contributes to environmental protection through digitalizationand efficiency improvements to reduce paper usage, setting ESG investment frameworks, reducing CO2 emissions, andpromoting clean energy. In its social initiatives, the Group is working to reduce work tasks in medical settings and narrow
medical disparities, as well as to build and maintain a healthy working environment that enhances employee engagement.
●Governance
The Group has established a "Sustainability Committee" to promote its efforts to solve social and corporate sustainability
issues, including consideration of global environmental issues such as climate change, respect for human rights, and fair andappropriate business activities for all stakeholders including employees, as business opportunities.
The Committee consists of the Representative Director, the Department Manager of the Administration Department, and an
Executive Officer as its members. The Committee has established a forum to review, formulate, and evaluate measures twice ayear to confirm the current status of climate-related issues and to discuss and take measures to resolve these issues. The
Sustainability Committee discusses and finalizes the reported climate-related risks and response policies, which are thenreflected in the business activities of each department through the Sustainability Team and monitors the status of the responses.

●Risk management
The Group is dedicated to recognizing, assessing, and overseeing the various risks linked to its business operations. The
Group aims to handle these risks effectively, striving for sustainable growth and the long-term increase in corporate value. Its
analysis encompasses a wide range of ESG related risks, including market trends, regulatory changes, technologicaladvancements, and evolving societal needs. The Group also values internal feedback and the perspectives of its employees,
integrating them into the risk evaluation process.
The effectiveness and progress of The Group's risk management strategies are consistently reviewed by the Sustainability- 9 -Committee. These reviews are then communicated to both management and stakeholders. For details on how The Groupmanages risks associated with climate change, please see "1. Approach to sustainability and initiatives" Information on othertypes of risks can be found in "3. Business Risks."(1) Approach and Efforts Towards Climate Change
In line with the Prime Market Corporate Governance Code, The Group has performed a scenario analysis on how climatechange could affect its business, in alignment with the TCFD recommendations. We have made this information public andplan to extend its analysis scope in the future. This effort will guide its management strategies and enhance its reporting on
the financial impacts of climate change. Although the software industry contributes minimally to greenhouse gas emissions,
The Group acknowledges the significance of recognizing and managing business risks and opportunities related to climatechange. This approach is essential for fostering a sustainable society. Additionally, The Group has enrolled in the Carbon
Disclosure Project (CDP) to affirm its commitment. By endorsing the TCFD recommendations, The Group is committed tointensifying its climate change mitigation efforts and aiding in the creation of a decarbonized society.
●Governance
Under a robust governance framework, the Company considers climate change measures as one of its most critical issues.
The Company actively discloses information about its efforts to stakeholders, continuously makes improvements, andmanages through systems such as environmental management systems. Furthermore, the Company conducts management
reviews on the outcomes.
●Strategy
In order to properly understand the risks and opportunities of climate change, the Group sets two scenarios and analyzed"acute" and "chronic" as 4°C scenarios, which are "scenarios in which temperatures rise as expected without progress inclimate change measures, and physical risks and opportunities arise from this increase”. On the other hand, the Company
analyzed "policy and regulation," "market," and "reputation" as the 2°C scenario, which is "a scenario in which various
activities are implemented to prevent global warming and risks and opportunities arise from the transition to a decarbonizedsociety”.
[Scenario setup]
Multiple internationally accepted climate change scenarios are referenced in the analysis of climate-related risks andopportunities.
A scenario in which policies and regulations are
IPCC
implemented to achieve a decarbonized society andShared Socio-economic Pathways (SSP 1.9)
2°C
the global temperature increase from pre-industrial
Shared Socio-economic Pathways (SSP 2.6)
scenario
times is limited to less than 2°C. Transition risk is■IEA
high, but physical risk is lower than in the 4°C
Net Zero Emissions by 2050 Scenario (NZE)
scenario.
This scenario assumes that the announced targets,
such as national targets in the Paris Agreement, will
IPCC
4°C
be achieved. No new policies or regulations are
Shared Socio-economic Pathways (SSP 8.5)
scenario
introduced, and global energy-derived CO2■IEA
emissions continue to increase. Transition risk is low, World Energy Outlook
but physical risk is high.
[Scenario Analysis Procedure]- 10 -

[Scenario Analysis Results]
In the scenario analysis, specific studies were conducted for the Company’s major businesses, and a qualitative analysis
was conducted based on the major risks and opportunities as of 2030.

Impact Levels Large：≥100M yen, Medium：10-100M yen, Small ： <10M yen- 11 -

●Risk Management[Process for identifying and assessing climate-related risks]〈Risk Identification Process〉
The Sustainability Committee, led by the CEO, carries out a biannual screening for climate-related risks. This process
draws on data consolidated from various departments. Risks are evaluated based on two criteria: their frequency and theirimpact on our business. This assessment helps in gauging their significance.
〈Priority Setting Process for Risk Response〉
To determine the priority for addressing risks, The Group considers both their impact level and frequency. These factors
are combined to assess risks in terms of their significance to The Group and the difficulty of implementing a response. For
risks deemed significant, The Group develops a strategic response policy.
The following figure represents the results of the risk analysis in this scenario analysis.

[Process for managing climate-related risks]
Climate-related risks identified and assessed by the Sustainability Committee and policies for addressing them arereported to the Board of Directors at least twice a year and as needed.
The Board of Directors discusses and finalizes the reported climate-related risks and response policies. The Sustainability
Committee will then pass these policies on to the Sustainability Team, which will monitor the progress of each department's
business activities.

- 12 -

●Indicators and Targets
By 2030, the Group aims to achieve a 4.2% reduction in Scope 1 and 2 emissions from the previous fiscal year's levels,in line with the SBT 1.5°C target. Additionally, it sets a goal to reduce Scope 3 GHG emissions by 50%, using a sales-based
intensity target for measurement.
Actual GHG emissions in Scope 1, Scope 2 and Scope 3 (FY2022)
Scope１

13 tCO2

Scope２209 tCO2

Scope３

4,093 tCo2

Total

4,315 tCO2

(2) Approach and Initiatives Regarding Human Capital
In recent corporate management, there is an urgent need to build an organization that respects diversity. The scope of thiseffort is not limited to the traditional promotion of female employees, but also encompasses a wide range of issues, such as
to promote inclusions of any nationalities, religions, and sexual minorities. The Group is committed to meeting thesechallenges and fulfilling its social responsibility as a company that supports the physical and mental wellness of people bycreating and maintaining a diversity-friendly work environment and promoting inclusive hiring practices.
●Strategy〈Talent Development Strategy〉
In the area of human resources development, The Group actively promote employees to key positions, regardless of gender,
nationality, or age, but according to their past achievements and preferences. It also actively transfers authorities, creating
many opportunities for employees to take on new challenges, such as considering new business opportunities and exploringnew business fields. Approximately 98% of the Group’s Directors and managers are mid-career hires. Although it is possiblethat the percentage of mid-career hires in management positions will decline in the future due to the promotion ofexperienced employees to management positions, the Group has not set a voluntary and measurable goal for the promotionof mid-career hires to management positions because the percentage is expected to remain high. Regarding the promotionof non-Japanese nationals to management positions, the Group recognizes that it will be a necessary challenge in the future
to hire non-Japanese nationals as needed, promote them to management positions, and set voluntary and measurable targets,considering its business development. The Group’s action plan based on the Act on the Promotion of Women's Active
Engagement in Professional Life sets a target of increasing the percentage of women in management positions to 9% by2026 and to 18% by 2030 (8.6% as of December 31, 2023). The Group will measure the effectiveness of its action planannually starting in March 2023 to achieve these goals, while promoting specific measures such as providing training ande-learning opportunities for female employees who wish to be promoted to management positions.
Following are the measures related to our Talent Development Strategy.
- Enhancement of the internal training system and flexible personnel placement- Strategic job rotations aligned with each employee's desired career path to maximize their growth potential- Promotion of diversity-conscious recruitment and talent development to foster an organizational culture resilient toexternal changes〈Workplace Environment Improvement Policy〉
The Group regards maintaining an environment where employees can work comfortably as a critical management issue. A
positive workplace environment not only enhances employee satisfaction but also directly contributes to increased
productivity. Through these initiatives, the Group aims to support the well-being of its employees, thereby contributing to
the long-term growth of the company. Following are the measures related to our Workplace Environment Improvement
Policy.
- Creation and maintenance of a healthy workplace environment that fosters high employee engagement-

Expansion of employment opportunities through the efficient increase of regional and international presence
Establishment of flexible work styles to accommodate diverse employee needs-

Support for skill development through internal initiatives, aligning with the personal goals of employees, andenhancing opportunities for promotion-

Encouragement of reskilling by offering sabbatical leaves for employees- 13 -

●Indicators and Targets
The Group is developing key performance indicators and setting goals focused on human capital to unlock the fullpotential of its employees and drive sustainable growth. Here are the specific strategies being put into place.
-

Increase the ratio of female workers in managerial positions to 18% by 2030.
Starting from 2023, the Group has implemented a job-based approach to human resource management that includes-

opportunities for job rotation.
By 2025, The Group's goal is to facilitate career advancement for 20% of its employees through an internal internship-program, offering experiences in different departments.
The Group is working towards earning certification as a Health and Productivity Management Organization
2022 Actual

Employee Survey Response Rate (%)
Employee Engagement

2023 Actual

96.0%
-

2025 Target

96.0%

96.0%

3.2

Above 3.5

Stress Check Response Rate (%)

88.0%

86.0%

100%

Turnover Rate (%)

6.5%

9.7%

4.0%

19

8

25

Ratio of Foreign National Employees (%)*

0.3%

0.98%

1.5%

Ratio of Independent External Directors (%)

33.3%

37.5%

44.4%

Number of Part-time Work System Users

Number of Applications for Qualification
Incentives

-

18

24

Average Annual Paid Leave Days Taken

-

18.8

21.0

Average Monthly Overtime Hours

-

17.5

16.5

8.6%

9.0%

Ratio of Women in Management Positions

3.8%*The ratio of foreign national employees is a figure that represents our group of companies. All other figures apply to individualcompanies (including part-time employees and temporary staff).
*The ratio of female workers in managerial positions is based on the figures for full-time employees of individual company.

- 14 -

3 Business Risks
The following are the major risks that management recognizes as having the potential to materially affect the consolidated
company's financial position, operating results, and cash flows, among other matters related to the business and accounting
conditions described in the Annual Securities Report.
Forward-looking statements in the text are based on the judgment of the Group as of the end of the current consolidated fiscal
year.
(1) Incidents and Accidents Related to Information Security
The Company handles a significant amount of information that should be managed with a high level of security, including
patient information from hospitals and administrative documents. To protect all information from loss, misuse, alteration, anddamage, it continuously implements physical, technical, and managerial security measures. In 2012, the Company obtained
certification for Information Security Management System (ISMS) for maintenance services related to large-scale hospitals'
medical information systems. Since then, the Company has expanded the scope of certification gradually, and currently, allinformation system maintenance services are ISMS certified. Additionally, in August 2021, it also obtained ISMS Cloud Security
certification for maintenance services. The Company has established a Personal Information Management System (PIMS)
compliant with the Japanese Industrial Standards for Personal Information Protection Management System - Requirements (JISQ 15001) to strengthen internal systems, and it conducts ongoing education and awareness campaigns for employees.
Furthermore, as the frequency and sophistication of cyber attacks increase, and incidents affecting organizational operations
become more frequent, the Company recognizes the growing demand for cybersecurity and risk consulting services among
medical institutions and government organizations. In response, it provides customers with optimal security measures andsupport the enhancement of cyber resilience.
However, if an information security incident were to occur due to unforeseen circumstances, the Group's credibility could bedamaged, its corporate image could be tarnished, or the ISMS certification could be revoked, which could affect the Group'sbusiness and earnings.
(2) Incidents and Accidents Concerning Personal Information
When providing medical system installation services to medical institutions, the Company may temporarily receive personal
information stored by such institutions. The Company is fully aware of the importance and risks associated with the handling of
personal information and have established personal information protection regulations to ensure that personal information is
managed appropriately. In addition to disclosing its personal information protection policy on the website, the Company has
established action guidelines and guidelines that conform to these rules and policies, and it ensures thorough management of
personal information through education and training. In January 2008, the Company received the Privacy Mark certification.
However, in the event of a leakage of personal information due to unforeseen circumstances in the information management
process, etc., there is a possibility that the Company may be subject to claims for substantial damages, revocation of Privacy
Mark certification, or fines, which may affect its business and performance.
(3) Litigation, etc.
Although there are currently no pending cases, lawsuits, etc. may occur for some reason, such as (i) and (ii) listed below, which
may affect the Group’s business performance. (However, the Group is prepared for the risk of compensation damages andexpenses related to its IT business by purchasing liability insurance for such claims.)(i) In the event that users suffer damages due to a defect in the Group’s products caused by its negligence, its business performance
may be affected due to monetary compensation or loss of trust.
(ii) When introducing its products to medical institutions, the Company may be entrusted with medical institution information,
including patients' personal information, for data migration work. In the unlikely event that such information is leaked to outside
parties due to a flaw in the internal information management system, the Group’s business and earnings could be affected byfinancial compensation or loss of social credibility.
(4) Obsolescence of Products and Services
Our Group's development department is engaged in the improvement of existing products and the research and developmentof new products. However, in the unlikely event that new technologies or services that the Group does not anticipate become
popular, the Group's products may become obsolete, which may affect the Group's business performance. In addition, a reductionin product prices due to intensified competition in the market may affect our group's business performance.
(5) Dependence on the Specific Officer and Retaining and Training Right Talent(i) Dependence on the specific officer
Teruo Aibara is the President and CEO of the Company and is deeply involved in the Company's sales and development
activities. However, the Company's dependence on him has decreased as a result of the current division of duties and delegationof authorities. However, if for some reason it becomes difficult for him to continue his duties at the Company in the future, theCompany's business performance may be affected.
(ii) Retaining and Training Right Talent
the Company’s employees are required to have advanced knowledge of medical care and IT and the ability to make proposals.
The Company will continue to strive to expand its workforce through ongoing recruiting activities and education and training
programs. However, failure to hire and train employees in a planned manner could affect the business expansion and prospects.

- 15 -

(6) Relationship with Sales Partners
As an R&D-oriented organization, the Group has a policy of supplying products and expanding sales through its partners. The
Company maintains good relationships with its sales partners. However, in the event that the Group's sales partners change theirbusiness strategies, switch to other companies' products, or for some other reason do not maintain good relationships andterminate their distributorship agreements, the Group will be forced to bear the financial or time burden of supporting users inareas far from its sales bases, which may affect the Company’s business results. In this case, the Company may incur financial
or time-related burdens related to support for users in areas far from its sales offices, which may affect its business performance.
(7) Intellectual Property Rights
The Group strives to protect its independently developed logic, products, etc. by acquiring intellectual property rights, such as
patent rights, in Japan and overseas. However, there is a possibility that these rights may be challenged, invalidated, or
circumvented by third parties, and competitive advantage is not guaranteed by these patent rights, etc.
At this point in time, the Group has not confirmed that any invalidity claims have been filed against its patents, or that anyother intellectual property rights such as patents, trademarks, or copyrights that would affect its business activities have beenobtained by any other organization. However, due to significant technological innovation in software, there is a possibility that
the Group's software may inadvertently infringe on the intellectual property rights of a third party, or that a patent right notrecognized by the Group may have been granted, and that the third party may file a suit for damages or injunction against theuse of the software, claiming infringement of its intellectual property rights, or seek monetary compensation for such a suit. In
such cases, there is a possibility that the Group may be sued for damages, injunction of use, etc., and may be forced to bear thefinancial burden of such lawsuits, which may affect the business performance of itself.
(8) Impact of Infectious Diseases
Infectious disease outbreaks can have a significant impact on the operations of medical institutions, which are our key
customers. If the situation worsens significantly, it could lead to prolonged or postponed system implementations in these
institutions, potentially affecting the performance of the Group.

- 16 -

4 Management's Discussion and Analysis of Financial Condition, Operating Results and Cash Flows(1) Business Overview of the Fiscal Year ended December 31, 2023
In the domestic medical industry, where the Group primarily operates, changes to the insurance systems for reimbursing medical
treatment fees, nursing care fees, and disability welfare service fees are slated to take effect from April 2024 in what is known as
the “triple” amendments. This has led to a growing focus on improving operational practices and re-evaluating information
management in the medical field. Additionally, there are active discussions regarding the promotion of the “Medical DX (Digital
Transformation) Reiwa Vision 2030” proposed by the government, including the “establishment of a national medical
information platform”, “standardization of electronic medical records”, and “digitalization of medical fee revision”.
Furthermore, the business environment surrounding the Group had undergone significant changes due to the COVID-19
pandemic. Those changes had also influenced the approach to software investments in the healthcare industry. Among the large
hospitals, there has been an increasing recognition that digitalization is essential not only for streamlining internal operations but
also for enhancing accessibility and quality of healthcare services within the community, including collaborations with otherhospitals, pharmacies, and caregiving institutions. Simultaneously, there is a growing willingness to invest in advanced solutions
for supporting medical practices, which improve the working conditions of physicians and healthcare professionals, as well as
platforms that enable direct electronic communications with patients.
In response to these industry trends and on-site needs, the Group is actively engaged in the sales expansion of existing products
and the development and implementation of new services utilizing cloud-based technology.
Also, we are beefing up our sustainability initiatives. We actively participate in initiatives related to climate change, such as
endorsing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), joining the Japan Climate
Initiative (JCI), and responding to questionnaires from the Carbon Disclosure Project (CDP) regarding climate change initiatives
both domestically and internationally. Additionally, to achieve an increase in the ratio of female managers, we have formulated
an action plan in accordance with the Act on Promotion of Women's Participation and Advancement in the Workplace, andimplemented various measures such as consulting on career plans and providing trainings. From April 2023, we have been
implementing measures to improve the working environment, including reducing regular working hours and establishing a full
remote work system for employees residing in distant domestic locations or overseas. These efforts aim to enhance the quality ofwork-life for our employees. Moreover, we have also publicly announced the "My Jinken Declaration," promoted by the Ministryof Justice, also have registered as a supporter for the “barrier-free of mind” project led by Tokyo Metropolitan Government,
implementing various multi-faceted initiatives to promote sustainable management. We are committed to fulfilling our social
responsibility as a company meeting the needs of society by providing innovative solutions, and supporting healthcare and thewell-being of individuals, thus contributing to the development of new social infrastructure.
The consolidated financial results for the fiscal year ended December 31, 2023 are as follows.

Net sales
Operating profit
Recurring profit
Profit attributable toowners of the parent

Fiscal year
Fiscal year
ended December ended December
31, 2022
31, 2023
4,541,242
5,191,735
1,028,522
1,496,570
1,055,708
1,527,453
722,779

1,059,140

650,493
468,047
471,745

14.3％
45.5％
44.7％

(JPY in thousands)
FY2023
achievement
rate
102.5%
114.0%
114.8%

336,36146.5％

114.7%

Change(amount)

Change(%)

Regarding the fiscal year ended December 31, 2023, consolidated net sales were ¥5,191,735 thousand (+14.3% YoY), operating
profit was ¥1,496,570 thousand (+45.5%), recurring profit was ¥1,527,453 thousand (+44.7%), and profit attributable to ownersof the parent was ¥1,059,140 thousand (+46.5%). Due in large part to the strong performance of our Medical Business segment,
both sales and profits exceeded the performance of the same period last year.
Consolidated results by the reportable segments of the current fiscal year are as follows.
From the first quarter of the current fiscal year, we reorganized our reportable segments into the following three segments:
Medical Business, Public Sector Business, and Health Tech Business. To enable year-on-year comparisons, financial results ofthe fiscal year ended December 31, 2022 have been restated under the new segments.
≪Medical Business≫(JPY in thousands)

Net sales
Operating profit

Fiscal year ended
December 31, 2022
4,352,187
1,267,070

Fiscal year ended
December 31, 2023
4,935,926
1,625,997

Change (amount)583,738
358,927

Change (%)
13.4%
28.3%

Mainstay products in the Medical Business segment include the image data management software Claio, the progress note
system C-Note, and the document management system DocuMaker. These flagship products are rated highly in large hospitals
that provide advanced healthcare services and therefore command a stable share of the market. As core hospital solutions, they

- 17 -

play integral roles essential to the delivery of medical care. The number of Claio users exceeded 1,500 in November 2023,
indicating a consistent growth in customer base.
Regarding the fiscal year ended December 31 2023, consolidated net sales in this segment were ¥4,935,926 thousand (+13.4%
YoY) and operating profit was ¥1,625,997 thousand (+28.3%). Implementation projects for large hospitals are progressing well,and the sales of packaged products are also performing steadily. Additionally, it is noteworthy that our consulting department,
newly established in January 2023, has been performing well.
During FY2023, we have been focusing on sales of packaged products to both existing and new customers in Japan. As a result,
45 hospitals and 109 clinics newly installed, added on, or updated our solutions during this period. In November 2023, welaunched Cloud Backup Service, enabling local hospitals and clinics to securely store and manage backup data of medical
information, as well as documents that need to be kept in facilities, in a cloud storage system. As for the sale of Claio in India, wehave continuously been in detailed discussions with Toyota Tsusho Corporation (headquartered in Aichi Prefecture, hereinafterreferred to as TTC), who will be leading the marketing and sales operations, about the timing and pricing for the product launch.
Fitting Cloud Inc., a subsidiary specializing in cloud-based solutions, started initiating a collaborative research project with
Kyoto University Hospital's School of Medicine to leverage AI in automating documentation tasks in medical settings in October
2023. Fitting Cloud has actively been working towards integrating the findings from this research into FINDEX products.
Additionally, during the 43rd Joint Conference on Medical Informatics held in November 2023, Fitting Cloud introduced various
products designed to align with the upcoming reforms in the working practices of physicians scheduled in April 2024.
≪Public Sector Business≫(JPY in thousands)

Net sales
Operating profit or loss

Fiscal year ended
December 31, 2022
121,286(33,258)

Fiscal year ended
December 31, 2023
187,405
41,364

Change (amount)
66,11974,623

Change (%)
54.5%－

The Public Sector Business segment was established this fiscal year.
In this segment, we mainly sell DocuMaker Office, an archive management and e-approval solution, to mostly government
ministries and agencies, local governments, public corporations and medical institution that can leverage its powerful features.
The installation of e-approval and document management solution is accelerating on the back of the central government’s pushfor DX, which in turn is leading to a rise in enquiries about, and negotiations for, the installation of packages for government
offices and also medical institutions.
Regarding the fiscal year ended December 31 2023, consolidated net sales in this segment were ¥187,405 thousand (+54.5%
YoY) and operating profit was ¥41,364 thousand (versus the year-earlier operating loss of ¥33,258 thousand).
Regarding packages sold to local governments, the cumulative number of package installations has reached 26 since the service
launch. In the first half of the fiscal year 2024, we have five ongoing implementations with a prefecture, independentadministrative agencies, and national universities scheduled for acceptance. Focusing on building a track record for futurebusiness expansions, we are prioritizing sales activities that emphasize scale over quantity, achieving steady results. We are
actively engaged in negotiations for operational projects in the latter half of the fiscal year 2024 and beyond, with proposals
expected to be implemented from the first quarter of 2024 onwards. Considering that our high-level consulting skills and useroriented, user-friendly solutions have a strong reputation, we anticipate gaining many more contracts going forward.
Furthermore, by proactively pursuing collaboration with other systems, we believe there are opportunities for additional orders
from existing projects in the future. A subscription business model is adopted to this service. Profit growth generated by thebuildup of monthly service fees is anticipated, as the number of existing users increases in the future.
As for the packages aimed at the administrative departments at medical facilities, we have been actively expanding sales since2022, with a primary focus on large and medium-sized hospitals, which are our existing users. Since the launch of the service, thecumulative number of installations has reached six, with five new orders secured in 2023. Additionally, three deployments are
confirmed to commence by spring 2024. Furthermore, our product obtained JIIMA certification in December 2023, meeting thelegal requirements for the Electronic Health Record (EHR) Scanner Storage Software Certification System. This not only
enhances the existing hospital Function Evaluation (Note1) support features but also anticipates expanded sales opportunities as asolution compliant with the Electronic Bookkeeping Law.
≪Health Tech Business≫(JPY in thousands)

Net sales
Operating loss

Fiscal year ended
December 31, 2022
69,253(205,288)

Fiscal year ended
December 31, 2023
68,403(170,791)

Change (amount)(849)
34,496

Change (%)(1.2)－

In the Health Tech Business segment, we focused our efforts on domestic sales and on preparations of overseas sales expansionof our gaze analyzing perimeter, or GAP (Note2) for short. GAP is an affordable, groundbreaking wearable device that enhances
availability by measuring a patient’s visual field with a completely different approach to that of conventional examination
methods. It can also contribute to the early detection of retinal diseases, such as glaucoma and other conditions that lack obvious- 18 -

symptoms in the early stages. Unlike a conventional visual field examination, the product does not require the use of a dark room,
thus shortening the examination time and alleviating the burden on the patient. Moreover, by promoting the use of GAP atfacilities that conduct medical exams and health checkups, early-stage retinal disease patient data can be shared with R&D
centers in Japan and overseas with the potential for it to contribute to the innovation of technology and solutions in numerous
fields, including pharmaceuticals and life insurance.
Regarding the fiscal year ended December 31 2023, consolidated net sales in this segment were ¥68,403 thousand (-1.2% YoY).
We recorded an operating loss of ¥170,791 thousand, versus the year-earlier operating loss of ¥205,288 thousand. Net sales
slightly decreased year on year due to the impact of EMC Healthcare Co., Ltd. (headquartered in Tokyo) being removed from thescope of consolidation. On the other side, our operating loss decreased for the same reason, resulting in a smaller loss.
During the current consolidated fiscal year, we have been conducting demonstrations and sales of the products at domestic
medical facilities, and stepping up sales of GAP-screener (Note3) to nationwide health checkup facilities in collaboration with
TTC. There were 14 domestic shipments of these products in the fiscal year ended December 31 2023. In October 2023, we
exhibited GAP and co-hosted a seminar at the “77th Annual Congress of Japan Clinical Ophthalmology” attracting considerable
interest from numerous healthcare professionals. Furthermore, in November 2023, an explanation of GAP as a medical device
was featured in a specialized ophthalmology journal, marking progress in our promotional activities.
We also continue to undertake initiatives with a view to expanding overseas. Through one of our sales distributors Rexxam Co.,
Ltd. (headquartered in Osaka, hereinafter referred to as Rexxam), we have started the mass-manufacturing process of the products
to target shipments to the EU countries within 2023. We are also working to acquire pharmaceutical regulatory approval in India
and Indonesia.
In our efforts toward international expansion, we commenced shipments to the EU, the Middle East, and some countires inNorth Africa through one of our sales distributors Rexxam from December 2023. In the initial batch, we shipped 46 units.
Moving forward, the product, under the name "FIELDNavigator," will be sold in approximately 50 countries as an OEM productof Rexxam.
In addition, because the product can be used to detect not only visual field abnormality, but also MCI (Note4), it was adopted by
the Japan Agency for Medical Research and Development (AMED) for the R&D of a screening program for slight cognitive
dysfunctions, utilizing digital phenotyping of gaze point response and eyeball movements, as part of its 2021 research project for
medical-engineering collaboration and implementation of artificial intelligence. We continue to pursue R&D together with Kyoto
University, as we expect new medical devices will be introduced to the medical frontline over the next few years.
(Note1) Hospital Function Evaluation: A system used to assess and evaluate the functions and quality of medical services
provided by hospitals in Japan. It helps in ensuring the standardization and quality of healthcare services acrossvarious medical institutions, including general hospitals and other healthcare facilities.
(Note2) Gaze Analyzing Perimeter, GAP (Notification No. of medical device manufacturing and sales 38B2X10003000002)(Note3) Gaze Analyzing Perimeter, GAP-screener (Notification No. of medical device manufacturing and sales
38B2X10003000003)(Note4) Abbreviation for Mild Cognitive Impairment. A stage of symptoms between those of healthy individuals and thosewith dementia, which has not yet progressed to dementia.

- 19 -

(2) Financial Position
FY2022
Assets (Total)
Liabilities (Total)
Net assets (Total)

FY20234,980,780
937,842
4,042,937

5,934,285
1,088,925
4,845,360(JPY in thousands)
Change (amount)953,505
151,082
802,422(Assets)
Total assets amounted to ¥5,934,285 thousand, an increase of ¥953,505 thousand from the end of the previous fiscal year.
(i) Current assets
Current assets amounted to ¥5,006,955 thousand as of FY2023 end, an increase of ¥878,652 thousand from FY2022 end,
which is mainly composed of an increase of ¥279,413 thousand in cash and deposits, an increase of ¥88,453 thousand in notes
receivable - trade and an increase of ¥460,145 thousand in contract assets.
(ii) Non-current assets
Non-current assets amounted to ¥927,330 thousand as of FY2023 end, an increase of ¥74,852 thousand from FY2022 end,
which is mainly composed of an increase of ¥39,044 thousand in intangible assets, an increase of ¥49,840 thousand ininvestments and other assets, partially offset by a decrease of ¥14,032 thousand in tangible assets.
(Liabilities)
Total liabilities as of FY2023 end amounted to ¥1,088,925 thousand, an increase of ¥151,082 thousand from the end of theprevious fiscal year.
(i) Current liabilities
Current liabilities amounted to ¥772,846 thousand as of FY2023 end, an increase of ¥118,843 thousand from FY2022 end,
which is mainly composed of an increase of ¥103,712 thousand in income taxes payable.
(ii) Long-term liabilities
Long-term liabilities amounted to ¥316,078 thousand as of FY2023 end, an increase of ¥32,238 thousand from FY2022
end, which is mainly composed of an increase end of ¥46,338 thousand of provision for share awards.
(Net assets)
Net assets amounted to ¥4,845,360 thousand as of FY2023 end, an increase of ¥802,422 thousand from FY2022 end. This wasprimarily due to an increase of ¥784,967 thousand in retained earnings.

- 20 -

(3) Cash Flows

693,848(230,160)(142,020)

842,844(296,937)(270,494)(JPY in thousands)
Change (amount)
148,995(66,776)(128,473)

321,668

275,413(46,255)

2,045,974

2,287,747

241,772(79,895)－

79,8952,287,747

2,563,160

275,413

FY2022
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at the beginningof the fiscal year
Decrease in cash and cash equivalents
resulting from exclusion of subsidiaries
from consolidation
Cash and cash equivalents at the end of the
fiscal year

FY2023

Cash and cash equivalents (hereafter “cash”) as of FY2023 end amounted to ¥2,563,160 thousand, an increase of ¥275,413
thousand from FY2022 end (up 12.0%). Cash flows from each activity and their significant components are as follows:(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥842,844 thousand, an increase of ¥148,995 thousand compared to
FY2022. This is mainly attributable to ¥1,524,453 thousand of income before income taxes, and ¥562,845 thousand of increasein trade receivables.
(Cash flows from investing activities)
Net cash used in investing activities amounted to ¥296,937 thousand, an increase of ¥66,776 thousand compared to FY2022.
This is mainly attributable to ¥254,278 thousand of acquisition payment for intangible assets (mainly software for sales).
(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥270,494 thousand (The dividend payment for the previous consolidated
fiscal year was ¥232,020 thousand). In the previous consolidated fiscal year, our former subsidiary EMC Healthcare Co., Ltd.
secured short-term borrowings of ¥100,000 thousand.
(4) Information Related to Capital Resources and Liquidity of Funds
With regard to the Company’s financial resources for capital and liquidity of funds, its basic policy is to secure stable sourcesof liquidity and funds necessary for its business operations.
The main demand for funds is for personnel expenses related to research and development, as well as operating expenses suchas selling, general and administrative expenses.
In principle, working capital is provided by cash flows from operating activities, but the Company's policy is to use direct andindirect financing as circumstances require.
(i) Interest-bearing debt
Not applicable.
(ii) Commitment Line
The Company has not established commitment lines of credit with correspondent banks.
(5) Critical Accounting Estimates and Assumptions used in Making such Estimates
The consolidated financial statements of the Group are prepared in accordance with accounting principles generally acceptedin Japan. Significant accounting estimates used in the preparation of these consolidated financial statements and the assumptions
used in making such estimates are described in "V. Financial Information, 1. Consolidated Financial Statements, (1) Consolidated
Financial Statements, Notes to the Consolidated Financial Statements, Significant Accounting Estimates”.
(6) Management Policies and Strategies, Objective Indicators for Judging the Achievement of Management Objectives
The Company considers the ratio of ordinary income to net sales as a key management indicator for growth and profitability,
and return on equity (ROE) as a key indicator for capital efficiency, and its goal is to improve and enhance these indicators.
The management of the Company strives to maximize corporate value by formulating the best management policies based on
the current business environment and available information.
Based on the Company’s corporate philosophy of "enriching society with technologies and creation," it will continue to ensure
the efficiency, soundness, and transparency of its management, maximize its business capital, and strive to become a company
that is highly trusted and appreciated by its shareholders, customers, and society at large.

- 21 -

(7) Production, Orders and Sales(i) Production
The results of production by segments for FY2023 are as follows:
Segments
Production (JPY in thousands)
Medical Business
1,411,824
Public Sector Business
73,155
Health Tech Business
150,086
Total
1,635,066(Note) Amounts are based on FY2023 total production costs.
(ii) Orders Received
The results for orders received by segments for FY2023 are as follows:
Orders received
Segments
YoY change (%)(JPY in thousands)
Medical Business
3,814,842
115.2
Public Sector Business
197,551
204.4
Health Tech Business
58,64348.8
Total
4,071,037
115.3(iii) Sales results
The table below shows sales results by segments for FY2023 are as follows:
Segments
Sales (JPY in thousands)
Medical Business
4,935,926
Public Sector Business
187,405
Health Tech Business
68,403
Total
5,191,735

5 Important Management Contracts
N/A- 22 -

YoY change (%)
107.8
114.7
92.1
106.4

Order backlog(JPY in thousands)
1,679,265
96,224
13,918
1,789,408

YoY change (%)
158.6
305.6
58.9
160.7

YoY change (%)
113.4
154.5
98.8
114.3

6 Research and Development Activities≪Medical Business≫(1) Basic Policy on Research and Development Activities
In this segment, the Company enhances its corporate value as an R&D-oriented company specializing in hospital information
systems and medical network solutions, and research and develop innovative technologies that will become the next-generation
medical information infrastructure while responding quickly and accurately to the needs of the market. The core of its productdevelopment is the knowledge of medical information technology that the Company has accumulated tup to today, as well as
highly challenging research that is difficult for other companies to follow. Its basic policy is to pursue this and conduct researchthat will become part of the foundation for realizing a healthy and safe society through medical care.
In addition, this segment is concurrently conducting R&D on product functions for public document management andauthorization systems for municipalities, public companies, and external organizations of ministries and agencies. The
Company’s basic policy is to research and develop enduring technologies, bearing in mind that such R&D forms part of thesocial infrastructure, as in the medical industry, in terms of providing safe and stable services at public organizations.
(2) Research and Development Organizational Structure and its Management System
In this segment, as of the end of FY2023, 76 staffs (26.2% of employees), including the director in charge as manager, areinvolved in research and development. In medical system development, the Consulting Department and other departments workwith many stakeholders to formulate research themes based on the direction of medical policy and technological innovations
surrounding medical care, and to examine the products and services that will be needed in the future.
The Board of Directors discusses and decides on the selection of R&D themes, project organization, budgets, etc., and theprogress of each R&D project is then reported to the Board of Directors.
(3) Research and Development Activities in FY2023
In this segment, the Company has conducted research and development to enhance the functionality of its hospital information
system package products. Additionally, It has worked on research related to the implementation of products that facilitate thetransition from on-premises to cloud-based solutions in large-scale hospital operations. Furthermore, It has initiated research on
the implementation of medical document creation using generative AI, aiming to alleviate the workload of healthcare
professionals.
≪Public Sector Business≫(1) Basic Policy on Research and Development Activities
In this segment, as of the end of FY2023, 3 staffs (1.03% of employees), including the director in charge as manager, are involved
in research and development. The Company has been conducting research and development on product functionalities for document
management and approval systems tailored for local governments, public enterprises, and quasi-governmental agencies. From theperspective of providing safe and stable services to public facilities, its approach parallels that of the healthcare industry. With theaim of forming a part of the societal infrastructure, its research and development efforts prioritizes the exploration of sustainable
technologies.
(2) Research and Development Organizational Structure and its Management System
In this segment, the Company is conducting new technology development based on the hospital document management system,
the medical version of DocuMaker, which has received significant research and development resources in the past. The sales
consulting team continuously absorbs market needs and considers research themes promptly.
The selection of research and development themes, project organization, budget, etc., are discussed and decided upon by theboard of directors. Subsequently, the progress of research and development is reported to the board of directors for each project,and decisions regarding the continuation or discontinuation of research and development activities are considered and made.
(3) Research and Development Activities in FY2023
In this segment, the Company had advanced its efforts to adapt DocuMaker Office" as a document management and electronic
approval system for large-scale organizations with a distributed configuration. It has expanded the receipt function using email andenhanced support for reference documents. Additionally, It has conducted research and development on efficient document
management functions such as system enforcement and application for official seals. In large municipalities, the Company analyzed
data from other systems, including masters, documents, and approval flows, to achieve seamless migration to DocuMaker Office.
≪Health Tech Business≫(1) Basic Policy on Research and Development Activities
In this segment, as of the end of FY2023, 14 staffs (4.8% of employees) are involved in research and development, with thedirector in charge as the manager. The Company is focusing on R&D activities to enhance its corporate value as a healthcare
service company that utilizes medical engineering, artificial intelligence, and data analysis technologies, to create new markets,
to improve people's health and quality of life (QOL), and to enhance the productivity of companies and organizations.
The Company’s basic policy is to conduct research on basic technologies that can be provided to the market as innovative
products and services with a view to reach overseas markets, not only within the company but also with domestic and overseas- 23 -

medical institutions and research organizations.
(2) Research and Development Organizational Structure and its Management System
In this segment, the R&D team is organized around the Business Strategy Office, conducting basic research in cutting-edge
areas as well as developing core technologies for implementation in products. In addition to regular weekly meetings, theCompany introduced a virtual office environment with constant connectivity so that meetings can be held at home or betweensites in a timely manner when discussions are necessary. In addition, joint research with medical institutions is conducted andresults are managed in collaboration with AMED and other organizations.
The Board of Directors discusses and decides on the selection of R&D themes, project organization, budgets, etc., and theprogress of each R&D project is then reported to the Board of Directors, and the continuation or discontinuation of R&D activities
is discussed and decided.
(3) Research and Development Activities in FY2023
In this segment, the Company is working to enhance the functionality of GAP the Gaze Analyzing Perimeter, and at the sametime, it conducts research on the application of this device for the diagnosis of early dementia in collaboration with Kyoto
University after obtaining the AMED budget.
As a result of the above R&D activities, a total of ¥52,898 thousand in R&D expenses of ¥32,814 thousand in the Medical Business,¥1,459 thousand in the Public Sector Business, and ¥18,624 thousand in the Health Tech Business was recorded in FY2023.
List of Patented Technologies and Logics
Patent holder

Registration
numberCountry

Date ofapplication

Findex Inc.

4390222Japan

28NOV2008

Electronic data authentication using timestamps

Findex Inc.

5469985

Japan

06OCT2009

Data transfer between databases (optical character recognition)

Findex Inc.

4917667

Japan

07DEC2010

Local application control via script

Findex Inc.

63393129,280,253
2869195

Japan
U.S.
The EU

28JUN201203AUG201203AUG2012

Application integration (launcher)Findex Inc.

6080586
9,639,970
202412743048611201506275X
MY-173006-A

Japan
U.S.
South Korea
India
Singapore
Malaysia

13FEB2013
29MAR2013
29MAR2013
29MAR2013
29MAR2013
29MAR2013

Recognition of on-screen texts (dot pattern recognition)

Findex Inc.

6660193Japan

29JAN2016

Electronic signature management system using degradedsignature handwriting images

Findex Inc.

7246044

Japan

06MAR2019

Visual inspection system (virtual sphere)

Findex Inc.

2020-103472
202180040186.1
21825524.8
17/937,780

Japan
PCT
China
The EU
U.S.

16JUN2020
27APR2021
02DEC2022
17NOV2022
04OCT2022

Perimeter for testing the central scotoma in subjects' visual
fieldsFindex Inc.

2020-141312
21860978.2
202347016224
18/173,724

Japan
PCT
The EU
India
U.S.

25AUG2020
02JUL2021
16FEB2023
10MAR2023
23FEB2023

Visual detection system (determining whether the target was
visible at the time of display)*

Findex Inc.

2020-184793
21888921.0
202347033652
18/305,325

Japan
PCT
The EU
India
U.S.

05NOV2020
13SEP2021
21APR2023
12MAY2023
22APR2023

Eye movement-based characteristic testing system*

FindexInc.and Ehime
University2022-007923

Japan

21JAN2022

Visual field testing device utilizing machine learning*

Findex Inc.

2021-210070

Japan
PCT

24DEC2021
08NOV2022

Visual field testing device with visual feedback functionality**

Summary* As the application is currently under review, we have filled in the registration number field with the application number.

- 24 -

III. Information about Facilities
1 Summary of Capital Investments
There were no disposals or sales of significant facilities in FY2023.

2 Major Facilities(1) Reporting Company
Major facilities of the Company are as follows:

Office Name
(Location)

Segment

Headquarters(Chiyoda-ku, Tokyo)

Medical Business
Public Sector Business
Health Tech Business
Medical Business
Public Sector Business
Health Tech Business

As of December 31, 2023
Book value (JPY in thousands)
Number ofTools,
Employees
Building
furniture
Total(persons)
and fixtures

Equipment

Sales & Development

27,812

9,368

Shikoku Office
General Operations(Matsuyama-shi,
and Development
2,764
27,607
Ehime)
facilities, etc.
Osaka Office
Medical Business
Sales & Development
1,261
1,921
(Chuo-ku, Osaka)
Sapporo Office
Medical Business
Sales & Development
1,643
0(Kita-ku, Hokkaido)
Fukuoka Office
Medical Business
Sales & Development
1,077
408
(Chuo-ku, Fukuoka)
Naha Office
Medical Business
Sales
－
－
(Naha-shi, Okinawa)
Kyoto Office
Medical Business
Sales & Development
4,622
736
(Nakagyo-ku, Kyoto)
Niigata Office
Medical Business
Sales & Development
7,180
1,374
(Chuo-ku, Niigata)(Notes)1. The headquarters office is a leased property, and the rent for FY2023 was ¥92,384 thousand.
2. The Shikoku office is a leased property, and the rent for FY2023 was ¥47,280 thousand.
3. The Osaka office is a leased property, and the rent for FY2023 was ¥23,866 thousand.
4. The Sapporo office is a leased property, and the rent for FY2023 was ¥6,793 thousand.
5. The Fukuoka office is a leased property, and the rent for FY2023 was ¥12,144 thousand.
6. The Naha office is a leased property, and the rent for FY2023 was ¥2,847 thousand.
7. The Kyoto office is a leased property, and the rent for FY2023 was ¥7,413 thousand.
8. The Niigata office is a leased property, and the rent for FY2023 was ¥7,600 thousand.

37,181

85

30,371

126

3,183

38

1,643

11

1,485

9

－

2

5,359

7

8,555

7

(2) Domestic Subsidiaries

Company Name

Office name
(Location)

Fitting Cloud Inc.

Headquarters(Nakagyo-ku,
Kyoto)

Segment
MedicalBusiness

Equipment

As of December 31, 2023
Book value (JPY in thousands)
Number of
Employees
Tools, furniture
Building
Total(persons)
and fixtures

Administration
Facility(3) Overseas Subsidiaries
N/A

3 Planned Additions, Retirements and Other Changes of Facilities
N/A- 25 -

-

1,390

1,309

5

IV. Information about Reporting Company
1 Company’s Shares, etc.
(1) Total Number of Shares(i) Total number of shares
Type
Common shares

Total number of authorized shares (shares)
78,336,000

Total

78,336,000(ii) Issued shares
Name of financial instruments
Number of issued shares as of the Number of shares issued as of the exchange on which securities areType
end of the fiscal year (shares)
date of submission
listed or authorized financial(December 31, 2023)(March 28, 2024)
instruments business association towhich securities are registered
CommonTokyo Stock Exchange
26,608,800
26,608,800
sharesPrime Market
Total
26,608,800
26,608,800-

Description

Number of shares in a trading unit:
100 shares-(2) Share acquisition rights(i) Stock option plans
The 5th stock subscription rights issued based on the resolution of the Board of Directors meeting held on February 25,
2020, have expired as of March 29, 2023, due to not meeting the exercise conditions.
(ii) Shareholder rights plansN/A(iii) Share acquisition rights for other uses
N/A(3) Exercise of bonds with share acquisition rights with exercise price revision clause, etc.
N/A(4) Changes in total number of issued shares, share capital, etc
Month/date/year

Change in total
number of issued
shares (shares)

Balance of total
number of issued
shares (share)

Change in sharecapital(JPY in thousands)

Balance of sharecapital(JPY in thousands)

Change in legal
capital surplus(JPY in thousands)

Balance of legal
capital surplus(JPY in thousands)

From Jan 1, 2018
To Dec 31, 2018*

470,400

26,608,800

4,939

254,259

4,939

224,259(Note) Increase due to the exercise of stock acquisition rights.
(5) Shareholding by shareholder category
As of December 31, 2023
Category

Public sector

Shareholding status (100 shares per unit)
Financial
Foreign investors, etc.
Financial instruments
Other
Individuals
institutions
business
corporations Companies, Individuals and otheretc.
operators

Total

Number of shareholders(persons)

-

13

24

25

56

11

4,162

4,291

Number of shares held
(Units)-77,260

6,153

1,736

31,55984

149,243

266,035

Shareholding ratio (%)

-

29.04

2.31

0.65

11.87

0.03

56.10

100.00Shares lessthan one unit
(shares)
5,300-(Notes) 1. "Financial Institutions" includes 1,544 units of the Company's shares held by Custody Bank of Japan, Ltd. (Trust AccountE) as trust assets under the employee incentive plan "Stock Benefit Trust (J-ESOP). The Company shares held by Custody
Bank of Japan, Ltd. (Trust Account E) are presented as treasury shares in the financial statements.
2. 8,078 units of treasury shares are included in "Individuals and Other" and 88 shares are included in " Shares less than one
unit”. The number of shares of treasury shares as recorded in the shareholders' register and the number of shares actually
held by the Company as of the end of the fiscal year are the same as those recorded in the shareholders' register.

- 26 -

(6) Major Shareholders

Name or designation

Address

As of December 31, 2023
Ratio of shares
held to total
Number of
number ofshares held
shares issued(shares)(excluding
treasury shares)(%)
7,707,600
29.87

Teruo Aibara

Minato-ku, Tokyo

The Master Trust Bank of Japan, Ltd. (Trust
Account)

2-11-3 Hamamatsucho, Minato-ku, Tokyo

2,631,500

10.20

Mizuho Trust & Banking Co., Ltd. Securities
Custody Trust 0700068

3-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo

1,440,000

5.58

3-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo

1,440,000

5.58

1,004,600

3.89

Mizuho Trust & Banking Co., Ltd. Securities
Custody Trust 0700067
Caceis Bank/Quintet Luxembuurg Sub AC /1-3 Place Valhubert 75013 Paris France

Ucits Customers Account(Standing proxy: The Hongkong & Shanghai

11-1, Nihonbashi 3-chome, Chuo-ku, Tokyo

Banking Corporation Limited, Tokyo Branch)
Custody Bank of Japan, Ltd. (Trust Account)

8-12, Harumi 1-chome, Chuo-ku, Tokyo

970,600

3.76

Ehime Bank, Ltd.

2-1 Katsuyama-cho, Matsuyama City, Ehime

967,200

3.75

867,946

3.36

761,000

2.95

275,000

1.07

18,065,446

70.01

240 GREENWICH STREET, NEW YORK,The Bank of New York Mellon 140040

NY 10286, U.S.A.
(Shinagawa Intercity Tower A, 2-15-1 Konan,(Standing proxy: Settlement Sales Division,
Mizuho Bank, Ltd.)

Minato-ku, Tokyo)

Keiji Takemura

Matsuyama City, Ehime Prefecture

SCBHK AC Liechtensteinische Landesbank AG

Staedtle 44, 9490 Vaduz, Liechtenstein(Standing proxy: MUFG Bank, Ltd.)(7-1, Marunouchi 2-chome, Chiyoda-ku,
Tokyo)

Total(Notes)-1. Of the above shares held, the number of shares related to trust activities are as follows:
The Master Trust Bank of Japan, Ltd. (Trust Account) 2,631,500 shares
Custody Bank of Japan, Ltd. (Trust Account) 969,500 shares
2. Although JP Morgan Asset Management Co., Ltd. and its joint holders, JP Morgan Securities plc are listed in the Large
Shareholding Report made available for public inspection as of October 20, 2016 as owning the following shares as of
October 14, 2016, the Company is unable to confirm the number of shares beneficially owned as of the voting rights
exercise record date. Therefore, these shares are not included in the above list of major shareholders.
The contents of such large shareholding report are as follows.
Number ofPercentage of share
Name
Address
shares held
certificates, etc.
(shares)held (%)
JPMorgan Asset Management
2-7-3 Marunouchi, Chiyoda-ku, Tokyo
1,063,500
4.08(Japan) Limited.
Tokyo Building
JPMorgan Securities Japan Co.,
2-7-3 Marunouchi, Chiyoda-ku, Tokyo(26,500)(0.10)Ltd.
Tokyo Building
London, UK E14 5JP Canary
J.P. Morgan Securities plc
93,9000.36
25 Bank Street, Wolfe.
3. In a change report made available for public inspection on March 22, 2022, Baillie Gifford & Co. is listed as holding thefollowing shares as of March15, 2022, but the Company is unable to confirm the number of shares beneficially owned asof the voting rights exercise record date. The number of shares held by Baillie Gifford & Co. is not included in the above
list of major shareholders.
The contents of the change report are as follows.
Number ofPercentage of share
Name
Address
shares held
certificates, etc.
(shares)held (%)
Baillie Gifford & Co.

1 Calton Hill, Greenside Row, Edinburgh
EH1 3AN Scotland- 27 -

1,293,600

4.86

(7) Voting Rights(i) Issued shares
As of December 31, 2023
Category
Shares with no voting rights
Shares with restricted voting rights(treasury shares, etc.)
Shares with restricted voting rights (other)
Shares with full voting rights (treasury
shares, etc.)

Number of voting rights
Number of shares (shares)(units)-Description
-

-

-

-

(Treasury shares)
common807,800
shares----Shares with full voting rights (other)commonshares25,795,700

Shares less than one unit

commonshares5,300

Standard shares of the257,957 Company with no restrictions
on rights--

Total number of issued shares
26,608,800
Aggregate voting rights of all shareholders
257,957(Note) Common stock in "Fully Voting Shares (Other)" includes 154,400 shares of the Company held by Custody Bank of Japan, Ltd.
(Trust Account E) as trust assets of the employee incentive plan "Stock Benefit Trust (J-ESOP). The Company shares held by
Custody Bank of Japan, Ltd. (Trust Account E) are presented as treasury shares in the financial statements.
(ii) Treasury shares, etc.
As of December 31, 2023
Name of shareholder

Number of
Number of shares shares held in
Address of shareholder held in own name others’ names(shares)(shares)

Total number Ratio of shares heldof shares held to total number of(shares)shares issued (%)

7-2, Otemachi 1chome, Chiyoda-ku,
807,800
807,800
3.04
－
Tokyo
Total
807,800
807,800
3.04－(Note) In addition to the above, 154,400 shares of the Company's stock held by Custody Bank of Japan, Ltd. (Trust Account E) are
shown as treasury shares in the financial statements.
(Treasury share)
Findex Inc.

- 28 -

(8) Stock Ownership Plan for Directors, Other Officers and Employees[Employee Stock Ownership Plan]At the Board of Directors meeting held on October 29, 2015, the Company resolved to introduce an incentive plan called
the "Stock Benefit Trust (J-ESOP)" (the "Plan"), to enhance the linkage between our share price, performance, and employee
treatment, and to share economic benefits with our shareholders. This is aimed at boosting the motivation and morale ofemployees towards improving share price and performance. Under this Plan, employees are granted company sharespurchased from the market.
This plan is a system to provide the Company's shares to the Company's employees who meet certain requirements inaccordance with the Share Benefit Regulations established by the Company in advance.
The Company grants points to employees in accordance with their individual contribution levels, etc., and when they acquire
the right to receive benefits under certain conditions, the Company grants them shares of the Company's shares equivalent to
the points granted. The Company shall acquire the shares to be granted to employees, including those for the future, withmoney set up in advance in a trust, and shall manage them separately as trust assets.
It is expected that the introduction of this system increases the Company's employees' interest in improving the Company's
share price and business performance and contribute to their being more motivated than ever to engage in their work.
(i) Overview of the Employee Stock Ownership Plan

a. The Company establishes "Share Benefit Regulations" upon the introduction of this plan.
b. The Company will place money in trust (other benefit trust) with Mizuho Trust & Banking Co., Ltd. (re-trusted to: Custody
Bank of Japan, Ltd.
c. The trust bank acquires the Company's shares with the money entrusted to it.
d. The Company grants "points" to employees in accordance with the Share Benefit Regulations.
e. The trust bank exercises voting rights in accordance with instructions from the trust manager.
f. Employees receive a benefit in the form of Company shares equivalent to the "points" accumulated by the trust bank after
the acquisition of the entitlement.
(ii) Total number of shares to be granted to employees
194,200 shares
Persons eligible to receive beneficiary rights and other rights under the Plan:
Persons who have vested the right to receive property benefits in accordance with the provisions of the Share Benefit
Regulations- 29 -

[Restricted Stock Compensation Plan]
The Company has introduced a Restricted Stock Compensation Plan for Directors (hereinafter referred to as "the Plan")
aimed at providing incentives to our directors (excluding directors who serve on audit committees, etc., and external
directors) to achieve sustainable improvement in our company's value and further enhance value sharing with ourshareholders.
(i) Overview of the Restricted Stock Compensation Plan
This system involves granting monetary compensation rights based on resolutions of our Board of Directors to allocate
restricted stock to eligible directors, generally on an annual basis. These monetary compensation rights are then converted
into tangible assets by providing them to the company, which issues or disposes of ordinary shares and holds them.
The total amount of monetary compensation rights granted to eligible directors under this system shall not exceed 100
million yen annually.
The payment amount per ordinary share issued or disposed of to eligible directors under this system is determined by the
Board of Directors based on the closing price of our company's ordinary shares on the Tokyo Stock Exchange on the lastbusiness day before the date of each resolution of the Board of Directors to determine the terms of the offering of suchordinary shares (or, if no transactions are concluded on that date, the closing price on the most recent trading day before
that date), provided that the amount shall not be unduly favorable to the eligible directors. The specific timing andallocation of payments to each eligible director shall be determined by the Board of Directors following deliberation by
the Compensation Committee.
(ii) The type and total number of restricted shares with transfer restrictions issued or disposed of to the eligible directors
The restricted stock with transfer restrictions issued or disposed of to the eligible directors under this system shall becommon shares of the Company, and the total number of common shares issued or disposed of within one year from thedate of the regular general meeting of shareholders for each fiscal year shall not exceed 100,000 shares per year.
(iii) The scope of persons eligible to receive benefits or other rights under this system
Directors of the Company (excluding directors who are audit committee members and external directors), executive
officers who do not concurrently serve as directors of our company, and directors of our subsidiaries.

- 30 -

2 Acquisition and Disposal of Treasury Shares[Class of shares]
common shares(1) [Acquisition by Resolution of General Meeting of Shareholders]
N/A(2) [Acquisition by Resolution of Board of Directors’ Meeting]N/A(3) [Acquisition Not based on Resolution of General Meeting of Shareholders or Board of Directors’ Meeting]N/A(4) [Disposal of Acquired Treasury Shares and Number of Treasury Shares Held]FY2023
Number of
Total amountsharesdisposed (JPY(shares)in thousands)-

Category
Acquired treasury shares offered to subscribers
Acquired treasury shares canceled
Acquired treasury shares transferred for merger, shareexchange, share delivery or company split
Other

Current period
Number of
Total amountsharesdisposed (JPY(shares)in thousands)
-

-

-

-

-

-

-

-

-

18,487

11,998--

Number of Treasury shares held
807,888807,888(Notes)1. The number of shares held as treasury shares during the period under review does not include the number ofshares purchased for shares less than one unit from March 1, 2024 to the date of submission of the Annual
Securities Report.
2. The "Others (Disposition of treasury stock through restricted stock compensation)" for the fiscal year 2023
represents the disposition of treasury stock as restricted stock compensation conducted on May 11, 2023
3. In addition to the above, 154,400 shares of the Company's share held by Custody Bank of Japan, Ltd. (Trust
Account E) as trust assets of the employee incentive plan "Stock Benefit Trust (J-ESOP)" are shown astreasury shares in the financial statements.

3 Dividend policy
The Company intends to maximize its corporate value by establishing its position in the market through innovative productcapabilities and advanced consulting skills. To achieve this, the Company’s policy is to pay dividends based on a comprehensive
assessment of its business performance, financial position, and achievement of its business plan, while maintaining andexpanding internal reserves to continue to make necessary investments.
The Company's Articles of Incorporation stipulate that the Board of Directors may pay dividends from surplus in accordancewith the provisions of Article 459, Paragraph 1 of the Companies Act. In addition to year-end and interim dividends, the Articles
of Incorporation stipulate that the Company may distribute dividends from surplus by specifying a record date.
The interim dividend for FY2023 was 4.00 yen per share. The Company has also decided to pay a year-end dividend of 9.00
yen per share, taking into consideration its business performance and future business development.
Internal reserves will be effectively used to secure talented human resources and to enhance software assets for sale, which are
the foundation for business growth, and the Company will strive to build a system that returns profits to shareholders over thelong term.
Dividends from surplus for the current fiscal year are as follows.
Total amount of dividends
Dividend per share
Date of resolution(JPY in thousands)(JPY in thousands)
August 9, 2023
Board of Directors
103,203
4.00
Ordinary General Meeting ofMarch 27, 2024
232,208
9.00
Shareholders- 31 -

4 Corporate Governance(1) Overview of Corporate Governance(i) Basic Policy on Corporate Governance
The Company regards corporate governance as a management governance function to maximize corporate value forstakeholders and recognizes that strengthening corporate governance is an important management responsibility.
The Company has adopted the current structure in order to establish a fair and transparent management system and internal
control system in order to aggressively extend its business and increase its corporate value along with the growth of thedigitalization market.
In order to respond appropriately and flexibly to changes in economic conditions and the market environment, theCompany will strive to strengthen corporate governance by enhancing the functions of the Board of Directors, monitoringand supervising business execution, and further enhancing internal controls, while striving to disclose timely and appropriate
information to stakeholders and respecting the rights of shareholders.
(ii) Overview of the corporate governance system and reasons for adopting the system
There is the Board of Directors and the Audit and Supervisory Committee within the Company. The Company's Board of
Directors consists of five Directors (excluding Directors who are members of the Audit and Supervisory Committee), one ofwhom is an Outside Director, and three Directors who are members of the Audit and Supervisory Committee, two of whom
are Outside Directors.
At the Board of Directors meetings, the Board of Directors confirms the progress of sales activities and budgets, examines
performance forecasts and takes necessary measures, and actively discusses important management matters in order toinvigorate the Board of Directors and ensure mutual checks and balances.
Audit and Supervisory Committee members fulfill their oversight function by attending meetings of the Board of Directors
and other important meetings to express their opinions as necessary, inspecting important documents, and conducting
interviews with Directors. In principle, the Audit and Supervisory Committee meets once a month to exchange information
among the committee members, to further enhance the audit function, and to conduct effective audits in cooperation with theaccounting auditors and the Internal Audit Office.
The Company has established the Human Resources and Remuneration Committee, a voluntary committee consisting of
the President and CEO and three Outside Directors (all of whom are independent Outside Directors), to deliberate on thedetermination of individual compensation amounts, compensation levels, and compensation systems for management andDirectors. The Board of Directors makes the final policy decision respecting the report of the Human Resources andRemuneration Committee.
The Company's corporate governance structure is as follows:- 32 -

(iii) Other matters regarding corporate governancea. System to ensure that the execution of duties by Directors and employees complies with laws and regulations and the
Articles of the Company
All Directors and employees of the Company are required to perform their duties with a high sense of ethics andconscience, to comply with laws, regulations, and internal rules, and to act in a responsible manner in line with social norms.
In addition, the Company has established a whistle-blowing system that allows employees to directly provide information on
violations of laws, regulations, and internal rules and regulations, and is working to enhance a more substantive control
system.
b. System for the storage and management of information related to the execution of duties by the Directors
The Company's Directors appropriately store and manage important information, such as minutes of general meeting ofshareholders and Board of Directors’ meetings, in accordance with their respective duties and internal regulations. In
addition, other important information and documents related to the execution of duties by Directors are appropriately stored
and managed in accordance with the Document Management Regulations and are maintained in a condition that allows
access as necessary.
c. Rules and other systems concerning the management of the risk of losses
The Company manages risks within the authority granted to each department, and cross-company risks are managed by the
Administration Department. The Company takes necessary measures to prevent the occurrence of risks and eliminates andmitigates business risks after investigation and deliberation. In the unlikely event of the occurrence of a risk that could havea significant impact on the company overall, a management-level risk task force chaired by the Representative Director has
been established and a system is in place to ensure that a prompt and appropriate response is implemented.
d. System to ensure the efficient execution of duties by the Directors
To ensure the efficiency and appropriateness of the Board of Directors, the Company has established regulations regarding
the operation of the Board of Directors. In order to better monitor, supervise, and execute business operations, the Board of
Directors delegates duties to the CEO, Executive Directors, and corporate officers, and makes necessary decisions on
matters to which it has delegated business execution decisions, in accordance with the organization or procedures stipulated
in internal rules and regulations. In principle, the Board of Directors reviews the rules and regulations as necessary for therevision or abolition of laws and regulations and for the improvement of efficiency in the execution of duties.
e. The structure to ensure the proper conduct of business within the corporate group consisting of the Company and its
subsidiary
The Company manages and operates its subsidiary in accordance with the " Regulations for Management of Subsidiaries
and Affiliates of the Company”. The Company's subsidiary is required to be audited by the Company's Internal Audit
Department. The Company has a system in place to ensure that important matters affecting the Company and its groupcompany is reviewed from multiple perspectives at the Executive Committee before being deliberated by the Board of
Directors of the Company. As a system for reporting to the Company on the execution of duties by Directors of thesubsidiary, the Company requires its subsidiary to report to the Company on a regular and ad hoc basis, including priordiscussions on important matters. The Company requires its subsidiary to submit important management matters to theBoard of Directors of the Company in advance in accordance with the "Regulations for Management of Subsidiaries andAffiliates of the Company”. The Audit and Supervisory Committee members, either by themselves or through the Audit andSupervisory Committee, have established an appropriate system, including close cooperation with the accounting auditor
and the Internal Audit Department of the Company, to monitor and audit the Company’s subsidiary efficiently andappropriately.
f. Matters concerning the personnel to be appointed if requested by the Audit Committee to assist in its duties, mattersrelated to ensuring the effectiveness of instructions from the Audit Committee to such personnel, and matters concerning
the independence of such personnel from directors (excluding those who are Audit Committee members)
In the event that the Audit and Supervisory Committee assigns employees to assist it in the performance of its duties, toensure the effectiveness of the Audit and Supervisory Committee's instructions to such employees, the employees shall not
be subject to the direction or orders of directors (excluding directors who are members of the Audit and Supervisory
Committee) or other employees, etc. in the performance of their duties. In addition, the Company has a system in place totake necessary measures to ensure independence, such as requiring the consent of the Audit and Supervisory Committee forthe transfer, evaluation, and disciplinary action of employees who provide support services.
g. A system for directors (excluding those who are audit committee members) and employees to report to the Audit
Committee, as well as other reporting mechanisms to the Audit Committee, and a system to ensure that individuals whoreport to the Audit Committee are not treated unfavorably as a result of their reporting
The Company's Representative Director and Executive Directors shall report at Board of Directors meetings on theexecution of business operations under their responsibility as well as important matters concerning the Group at appropriate
times. If any violation of laws or ordinances, etc. or any other fact that may cause material damage to the Company or theGroup is discovered, the Company's Directors (excluding Directors who are members of the Audit and Supervisory
Committee) and employees, etc. are required to immediately report such violation to the Audit and Supervisory Committee.
Directors, corporate auditors, and employees of the Company's subsidiaries are required to immediately report to the Audit
and Supervisory Committee any violations of laws and regulations or other facts that may cause material damage to theGroup. In addition, with regard to the status of internal control over financial reporting and accounting standards, etc., asystem is maintained to enable Directors (excluding Directors who are members of the Audit and Supervisory Committee)
and employees to respond appropriately to requests for explanations from the Audit and Supervisory Committee.
Furthermore, the Company ensures that persons who report to the Audit and Supervisory Committee are not subjected to any
disadvantageous treatment in terms of personnel affairs because of such reports.

- 33 -

h. Other systems to ensure that audits by the Audit and Supervisory Committee are conducted effectively and Matters related
to the policy for the treatment of expenses or debts incurred in the execution of duties by Audit Committee members
The Audit and Supervisory Committee participates in important meetings, conducts audits of the effectiveness of internal
controls, attends internal audits, exchanges opinions with auditing firms, and listens to audit results in order to enhance its
auditing activities. In the event that an Audit and Supervisory Committee member requests advance payment or
reimbursement of expenses incurred in the performance of their duties, the Company will pay such expenses, unless thepayment is deemed unnecessary for the Audit and Supervisory Committee member's duties.
i. System for Eliminating Antisocial Forces
The Company and its group recognize that the elimination of anti-social forces is an important management issue from theperspective of corporate social responsibility and corporate defense. The Company and its group shall reject any and all
relationships, including business transactions and support, with antisocial forces. The Company shall not accept any
unreasonable requests from anti-social forces and shall take resolute action in cooperation with the police and other relevant
agencies in the event of interference with management activities, slander, or other damage. In addition, in order to preventand restrain transactions with anti-social forces, the Company has defined a clause for the elimination of organized crimegroups to reject any relationship with such groups, and regularly trains its Directors, officers, and employees to ensure thatthey are fully aware of this clause.
(iv) Status of development of risk management system
This item is same to (iii) Other matters regarding corporate governance, C. “Rules and other systems concerning themanagement of the risk of losses”.
(v) Outline of the contents of the liability limitation agreement with the Directors (excluding those who are Executive
Directors, etc.)
The Articles of Incorporation of the Company stipulate that the Company and its Directors (excluding those who are
Executive Directors, etc.) may enter into an agreement to limit liability for damages due to negligence of duties inaccordance with Article 427, Paragraph 1 of the Companies Act, and the Company has entered into such agreement. The
maximum amount of such contract is the minimum liability amount stipulated by laws and regulations.
(vi) Matters relating to liability insurance contracts for Directors and Officers
The Company has concluded a Directors’ and Officers' liability insurance policy with an insurance company as stipulated
in Article 430-3, Paragraph 1 of the Companies Act. The scope of the insured under such insurance policy is the Directors of
the Company, and the insured does not bear the premiums. The insurance policy is intended to cover the insured's
compensation for damages and litigation costs. However, in order to ensure that the insured's performance of his/her duties
is not compromised, the policy does not provide coverage for certain exclusions, such as acts committed with knowledge
that the acts are in violation of laws and regulations.
(vii) Number of Directors
The Company's Articles of Incorporation stipulate that the Company shall have no more than 12 Directors and no morethan 6 Directors who are Audit and Supervisory Committee members.
(viii) Election of Directors
The Company's Articles of Incorporation stipulate that resolutions for the election of Directors shall be adopted by amajority of the votes of shareholders present at a meeting where shareholders holding one-third or more of the voting rights
of shareholders who are entitled to exercise their voting rights are present. The Articles of Incorporation also stipulate thatthe resolution for the election of Directors shall not be made by cumulative voting.
(ix) Decision-making body of dividends from surplus
The Company's Articles of Incorporation stipulate that matters stipulated in Article 459, Paragraph 1 of the Companies
Act, such as dividends from surplus, may be determined by resolution of the Board of Directors, except as otherwise
provided by law. The purpose of this is to ensure and return profits to shareholders in a flexible manner by making bothresolutions the authority of the Board of Directors.
(x) Exemption of Directors from liability
Pursuant to Article 426, Paragraph 1 of the Companies Act, the Company stipulates in its Articles of Incorporation that
Directors (including former Directors) may be exempted from liability for damages due to negligence of duties by aresolution of the Board of Directors to the extent permitted by law. The Company's Articles of Incorporation stipulate that
Directors (including former Directors) may be exempted from liability for damages for negligence of their duties by aresolution of the Board of Directors to the extent permitted by laws and regulations. The purpose of this provision is tocreate an environment in which Directors can fully demonstrate their abilities and fulfill their expected roles in theperformance of their duties.

(xi) Requirements for special Resolution at the General Meeting of Shareholders
The Company's Articles of Incorporation stipulate that the requirements for special resolutions of the General Meeting of
Shareholders stipulated in Article 309, Paragraph 2 of the Companies Act shall be met by two-thirds or more of the voting
rights of shareholders present at the meeting where shareholders holding one-third or more of the voting rights ofshareholders who are entitled to exercise their voting rights are present. The purpose of this provision is to facilitate smooth
operation of the General Meeting of Shareholders by relaxing the quorum for special resolutions at the General Meeting of
Shareholders.

- 34 -

(xii) Decision-making body for share buyback
The Company's Articles of Incorporation stipulate that the Company may acquire treasury shares by a resolution of theBoard of Directors pursuant to Article 165, Paragraph 2 of the Companies Act, in order to achieve a flexible capital policy inresponse to the business environment.
(xiii) Basic Policy Concerning the Control of Stock Companies
The Company recognizes that the basic policy regarding the control of stock companies is an important matter and iscontinuously reviewing it but has not adopted any specific policy or anti-takeover measures at this time.
(xiv) Activities of the Board of Directors
During FY2023, the Company held 22 meetings of the Board of Directors, and the attendance record for each Director is
as follows:
Title
Name
Number of times attended
Attendance ratio
President & CEO
Teruo Aibara
22100%
Director and Department Manager of Medical
22
100%
Kohji Kondo
Sales Solutions Dept.
Director and Department Manager of
Hiroaki Hasegawa
22100%
Consulting Dept.
Director and Department Manager of
Riki Miyakawa
22
100%
Software Package Development Dept.
Director
Akira Ono
22100%
Director
22
100%
Kouji Yamauchi(Audit & Supervisory Committee Member)
Director
Takashi Kitada
22
100%(Audit & Supervisory Committee Member)
Director
Akira Yamada
22
100%(Audit & Supervisory Committee Member)
The major deliberation items of the meetings of Board of Directors for FY2023 are as follows:
Statutory matters
Matters related to management, business, and financial strategies
Matters related to organizational restructuring, business allocation, and personnel changes
Matters related to financial statements, performance, and investments
Matters related to compliance, governance, and sustainability, etc.
During FY023, our company has held the Human Resources and Remuneration Committee meetings twice, and theattendance status for each meeting is as follows:
Title
Name
Number of times attended
Attendance ratio
President & CEO
Teruo Aibara
2100%
Director
Akira Ono2
100%
Director
Takashi Kitada
2
100%(Audit & Supervisory Committee Member)
Director
2
100%
Akira Yamada(Audit & Supervisory Committee Member)
The major deliberation items of the Human Resources and Remuneration Committee meetings for FY2023 are as follows:
Policies and procedures regarding the nomination of Directors
Policies and procedures for determining compensation and other benefits for directors (excluding audit committee
members)- 35 -

(2) Officers(1) List of Officers
Eight men and zero woman (Ratio of female board members: -%)Number oftheTerm of Company’s
office shares held
(shares)

Title

Name

Date of
Birth

Board member
President and CEO

Teruo
AibaraBoard member
Director and
Department Manager
of Medical Sales
Solutions Dept.

April 1990 Joined Shikoku Nippon Denki Software K.K.
September July 1993 Joined Pioneer Shikoku K.K. (now the Company)(Note 3)25, 1966 February 1994 Director of the Company
May 1994 President and CEO of the Company (to present)

Kohji
Kondo

August 1984 Joined Suncherry Data Systems Co.
March 22, April 2005 Joined the Company
1964
April 2007 Corporate Officer of the Company
July 2008 Director of the Company (to present)

Board member
Director and
Department Manager
of Consulting Dept.

HiroakiHasegawa

Career summary(Note 3)

7,707,600

123,081

April 1993 Joined TEIJIN Limited
August 5, December 2008 Joined BML, INC.
July 2009 Joined the Company(Note 3)15,081
1968
April 2010 Corporate Officer of the Company
December 2010 Director of the Company (to present)
April 1998 Joined NEC Corporation
Board member
August 2009 Joined the Company
Director andRiki
July 17, June 2012 Corporate Officer of the Company
Department Manager Miyakawa
3,081
1972
July 2014 Corporate Officer and General Manager of System (Note 3)
of Software Package
Development
Development Dept.
March 2016 Director of the Company (to present)
April 1980 Joined the Japan Chamber of Commerce andIndustry
April 2005 General Manager in charge of new projects
April 2007 General Manager of Business Department andNew Business Promotion Department
April 2010 Director of International Affairs Department andSecretary General of the APEC/SME Summit
February
Implementation Headquarters(NotesBoard member
Akira Ono 4, 1954 April 2012 Director International Office
1, 3)April 2014 Director and Secretary General, Japan-Tokyo
Federation of Commerce and Industry
April 2016 Director and Secretary General, Tokyo Federationof Commerce and Industry
March 2022 Director of the Company (to present)
April 2023 Councilor, Tokyo Chamber of Commerce Alliance(to present)
February 1995 Joined Honda Service Center Ltd.
Board member
Kouji
October 3, May 2008 Joined the Company(Notes(Audit & Supervisory Yamauchi
July 2008 Corporate Auditor of the Company
1965
2, 4)
Board Member)March 2016 Director of the Company (Audit and Supervisory
Committee Member) (to present)
March 1985 Registered as a Certified Public Accountant
April 1998 Joined Deloitte Touche Tohmatsu LLC
Board member(NotesTakashiFebruary July 1999 Partner, Deloitte Touche Tohmatsu LLC(Audit & Supervisory
October2014
CertifiedPublicAccountant
Takashi
Kitada1, 2, 4)1,000
Kitada24, 1956
Board Member)
Accounting Office (to present)
March 2016 Director of the Company (Audit and Supervisory
Committee Member) (to present)
April 1987 Joined Shinwakai Suginami Hospital
June 1991 Joined Umezono Hospital (now Tama
Rehabilitation Hospital)
June 1993 Joined Hojo Hospital
Board member
July 1999 Representative Director of Best Care K.K.
(NotesAkira
November December 2017 Representative Director, J-Top Inc. (to 1, 2, 4)(Audit & Supervisory
Yamada4,
1963
Board Member)present)
February 2019 Representative Director, Valupp Inc. (topresent)
October 2021 Director of the Company (Audit and Supervisory
Board Member) (to present)
Total
7,849,843(Notes) 1. Akira Ono, Takashi Kitada and Akira Yamada are Outside Directors.
2. The Company's Audit and Supervisory Committee is as follows:
Chairperson: Kouji Yamauchi, Committee Member: Takashi Kitada, Committee Member: Akira Yamada
3. One year from the conclusion of the Ordinary General Meeting of Shareholders held on March 27, 2024
4. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on March 27, 2024
5. The Company has appointed one Alternate Audit and Supervisory Board Member as provided for in Article 329,
Paragraph 3 of the Companies Act to fill a vacancy in the number of Directors who are Audit & Supervisory Board
Members as provided for in laws and regulations. The biography of the alternate Audit and Supervisory Board Member
is as follows:- 36 -

Name

Date of Birth

TakuyaAyukawa

January 17, 1992

Career summary

Number of the
Term ofCompany’s shares
officeheld (shares)

December 2017 Registered as an attorney-at-law(Notes 6,
June 2019 Joined Sato Sogo Law Office (current position) 7)-

6. Mr. Takuya Ayukawa is an attorney at Sato Sogo Law Office and the Company has a legal advisory agreement with
the Company.
7. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on March 27, 2024(ii) Outside Directors
The Company has three Outside Directors.
Mr. Akira Ono, an Outside Director, has extensive knowledge and leadership experience at the Japan Chamber of Commerceand Industry (JCCI), where he served, in relation to policy requests to the government and national government in general andcorporate promotion and support, in addition to his experience as the Secretary General of the Japanese Chamber of Commerceand Industry overseas twice, and his extensive knowledge of international business, including extensive support for overseas
expansion of companies and international business as an officer in charge of international affairs. In light of his current
position, the Company expects that he will provide appropriate advice and supervision to the management of its group fromthe perspectives of both governance and business promotion as its group expands its business both domestically and globallyin the future. He has no special interest in the Company.
Outside Director Takashi Kitada, who is a member of the Audit and Supervisory Board, has been appointed to this position
based on his extensive auditing experience as a certified public accountant and his expertise in finance and accounting, which
the Company believes will contribute to further strengthening the corporate governance of itself. In the past, he was a memberof Deloitte Touche Tohmatsu LLC (currently Deloitte Touche Tohmatsu LLC), the Company's accounting auditor. The
Company has a business relationship with Deloitte Touche Tohmatsu LLC in terms of payment of audit fees, etc., but theamount of such fees is minimal, accounting for less than 0.1% of the total revenue of the said auditing firm. He was engaged
in auditing services of the Company by the same auditing firm until fiscal 2011, but has not been involved in any auditing
services of the Company since that time. He holds 1,000 shares of the Company's stock. Other than this, there are no personal,
capital, business, or other relationships of interest between the Company and Mr. Kitada.
Outside Director Akira Yamada has been appointed based on the Company's judgment that he will contribute to further
strengthening the corporate governance of the Group, given his expertise based on his many years of work experience at
medical institutions and his broad insight as a corporate manager in the nursing care business. He has no special interest in the
Company.
Although the Company has not established criteria or policies regarding independence for the appointment of Outside
Directors, the Company makes decisions regarding their appointment based on the basic concept that they must have sufficient
independence to perform their duties as Outside Directors independent of the Company's management, taking into
consideration their backgrounds and relationships with the Company.
(iii) Relationship between supervision or auditing by Outside Directors and internal audits, audit committee audits, andaccounting audits, and relationship with the internal control division
Two of the three Outside Directors are members of the Audit and Supervisory Committee, and through their attendance atmeetings of the Board of Directors, etc., they receive reports from the Internal Audit Department on the results of audits
conducted in the previous fiscal year, audit plans for the current fiscal year, and audit progress, as well as other importantmatters and themes as appropriate. In addition, they regularly exchange opinions with the internal audit division and theaccounting auditor, in an effort to enhance the management monitoring function in cooperation with them.

- 37 -

(3) Audits(i) Audits by the Audit and Supervisory Committee
The Audit and Supervisory Committee, consisting of three Directors (including two Outside Directors) who are Audit andSupervisory Committee members, fulfills its monitoring function by attending meetings of the Board of Directors and otherimportant meetings to provide necessary opinions, inspecting important documents, and conducting interviews with Directors.
In addition, the committee enhances audits by auditing the effectiveness of internal control systems, attending internal audits,exchanging opinions with the accounting auditors, and hearing the results of audits.
In principle, the Audit and Supervisory Committee meets once a month to exchange information among Audit andSupervisory Committee members, to further enhance the audit function, and to conduct effective audits in cooperation with
the Accounting Auditor and the Internal Audit Office.
Director Kouji Yamauchi, a member of the Audit and Supervisory Committee, has extensive auditing experience as a fulltime corporate auditor of the Company and as a Director who is a full-time Audit and Supervisory Committee member. Outside
Director Mr. Takashi Kitada has extensive auditing experience as a certified public accountant and has considerable expertisein finance and accounting. Mr. Akira Yamada has professional knowledge and broad insight as a manager from his long yearsof business experience in medical institutions.
The Company held 16 meetings of the Audit and Supervisory Committee during the fiscal year under review, and theattendance of each Audit and Supervisory Committee member is as follows:
Name
Number of times held
Number of times attended
Kouji Yamauchi
16 times
16 times
Takashi Kitada
16 times
16 times
Akira Yamada
16 times
16 times
The detailed matters considered by the Audit and Supervisory Committee are the preparation of the audit report, the audit
policy and audit plan, and other matters related to the execution of duties by the Audit and Supervisory Committee members,
as well as the independence of the accounting auditor, matters related to audit services, and consent to compensation and othermatters as resolved by the Audit and Supervisory Committee. The key audit items for the 39th fiscal year are as follows:a. Decision-making process at the Board of Directors and other important meetingsb. Status of establishment and operation of internal control systems
c. Status of establishment and operation of corporate information disclosure system
d. Business Report and Consolidated Financial Statements and Non-Consolidated Financial Statements
e. Independence of the accounting auditor, audit methodology, audit quality, and appropriateness of audit results
In addition, as activities of full-time Audit and Supervisory Board Members, based on their characteristics, they closelycooperate with the accounting auditors and the Internal Audit Office, actively strive to improve the audit environment andcollect internal information, monitor and verify the status of establishment and operation of internal control systems on a daily
basis, and share information and communicate with the part-time Outside Audit and Supervisory Board Members.
(ii) Internal audit
In order to strengthen the compliance system, the Company has established an Internal Audit Office under the direct controlof the President and CEO and assigns one person as the head of the Internal Audit Office and another person in charge ofauditing from other departments according to the content of the audit. The Internal Audit Office manager and the person in
charge of auditing conduct audits of all departments from the perspective of whether business operations are being conductedefficiently in accordance with laws and regulations and the rules established by the Company, and whether internal controls
are functioning effectively. Audit results are reported to the President and CEO, and recommendations and advice are given to
improve business activities and ensure appropriate management. Audit results are reported to the Board of Directors meeting,
Audit and Supervisory Committee and the accounting auditor, and advice is obtained from those organizations, which
determines the matters to be checked intensively at the next audit, and other matters are determined in cooperation with thoseorganizations as necessary to conduct more effective audits.
(iii) Accounting auditsa. Name of audit firm
Deloitte Touche Tohmatsu LLC
b. Years of continuous auditing
19 yearsc. Certified public accountants who executed the audit duties
Akio Nakahara
Keita Ochid. Composition of assistants for audit engagement
Seven certified public accountants and three others- 38 -

e. Policy and reasons for appointing audit firm
As a policy for deciding on the dismissal or non-reappointment of the accounting auditor, the Audit and Supervisory
Committee will decide the content of the proposal for the dismissal or non-reappointment of the accounting auditor to besubmitted to the General Meeting of Shareholders when it determines that such action is necessary, such as when there is aproblem with the accounting auditor's performance of its duties.
In the event that the accounting auditor is deemed to fall under any of the items of Article 340, Paragraph 1 of theCompanies Act, the accounting auditor shall be dismissed with the unanimous consent of the Audit and Supervisory
Committee members. In this case, the Audit and Supervisory Committee member selected by the Audit and Supervisory
Committee will report the dismissal of the accounting auditor and the reason for the dismissal at the first general meetingof shareholders convened after the dismissal.
f. Evaluation of the Audit Firm by the Audit and Supervisory Committee
The Company's Audit and Supervisory Committee evaluates the audit firm.
The Audit and Supervisory Committee collected information from the Company's finance and accounting department,internal audit department, and the accounting auditor itself regarding the independence of the accounting auditor, the audit
system, and the status and quality of audits, and found the independence of the accounting auditor and the auditing methods
and results to be appropriate. In addition, based on the policy for determining the dismissal or non-reappointment of theaccounting auditor and other evaluation criteria, the Company evaluated that an appropriate audit can be expected to continue,and determined that it is appropriate to reappoint Deloitte Touche Tohmatsu LLC.
(iv) Details of audit fees, etc.
a. Audit fees paid to auditing certified public accountants, etc.
FY2022
FY2023
Fees
for
audit
Fees
for
non-audit
Fees
for
audit
Fees for non-audit
Category
certification services
services
certification services
services(JPY in thousands)(JPY in thousands)(JPY in thousands)(JPY in thousands)
Reporting company
27,00027,000Consolidated
subsidiaries
Total
27,00027,000
Remuneration based on audit certification services in the previous consolidated fiscal year includes an amount of 1,500
thousand yen of additional remuneration.
b. Audit fees paid to the same network (Deloitte) to which certified public accountants, etc. belong (excluding fees specified ina. above)
FY2022
FY2023
Fees
for
audit
Fees
for
non-audit
Fees
for
audit
Fees for non-audit
Category
certification services
services
certification services
services(JPY in thousands)(JPY in thousands)(JPY in thousands)(JPY in thousands)
Reporting company
1,920
1,920
Consolidated
subsidiaries
Total
1,920
1,920
Non-audit services for the Company include tax return review services for Deloitte Tohmatsu Tax Co, which belongs to thesame network as the Company's certified public accountants.
c. Other important information on audit fees, etc.
N/A
d. Policy on determination of audit fees
The number of audit days, the nature of the audit, and the size of the Company are comprehensively taken into
consideration when determining the audit fee.
e. Reasons for the Audit and Supervisory Committee’s consent to fees, etc. for the accounting auditor
The Audit Committee considered the appropriateness and reasonableness of the content of the results of the audit by theaccounting auditor, the performance of the duties of the accounting audit, and the basis for the calculation of the
remuneration estimate, and as a result, decided to consent to the amount of remuneration, etc. paid to the accounting auditor.

- 39 -

(4) Remuneration, etc. of Officers(i) Matters concerning the policy regarding the determination of the amount of remuneration, etc. for officers or the
method for calculation thereof
At a meeting of the Board of Directors held on February 10, 2021, the Company adopted a resolution on the policy for
determining the details of individual remuneration, etc. of Directors (Excluding Directors who are members of the Audit andSupervisory Committee. Furthermore, at the Board of Directors meeting held on February 13, 2023, certain revisions wereresolved.
Regarding the individual compensation of directors for the current fiscal year, it is determined in accordance with the “Policy
for Determining Director Remuneration”. The Board of Directors consults with the Human Resources and Remuneration
Committee for the initial proposal, considers the committee's recommendations, and makes decisions at the Board of Directors'
meetings.
The decision policy regarding the individual director's remuneration is as follows:a. Basic Policy
The Company's basic policy is to link the remuneration of Directors to shareholders' profits so that it can function as anincentive to continuously increase corporate value, and to set the remuneration of Individual Directors at an appropriate levelbased on their respective responsibilities.
Specifically, the remuneration for Executive Directors shall consist of base remuneration as fixed remuneration and sharebased remuneration, while outside directors and directors who are members of the Audit and Supervisory Committee, who areresponsible for the supervisory function, shall be paid only base remuneration in consideration of their duties.
b. Policy regarding the determination of the amount of remuneration, etc. for each Director for basic remuneration (monetary
remuneration) (including policy regarding the determination of the timing or conditions of granting remuneration, etc.)
The basic remuneration of the Company's Directors shall be a fixed monthly amount, which shall be determined by the
Board of Directors based on the report of the Human Resources and Remuneration Committee, taking into consideration the
Company's performance, position, responsibilities, and years in office, among other factors.
However, the remuneration of Directors who are members of the Audit and supervisory Committee shall be determined byconsultation among the Directors who are members of the Audit and supervisory Committee.
The basic remuneration shall be a fixed remuneration as compensation for "fulfillment of responsibilities" and to ensure astable livelihood and shall be paid in cash at the end of each month, divided by 12.
The base remuneration is annually reviewed by April, and the revised base remuneration is applied from the April payment.
c. Policy for determining the details of non-monetary remuneration and the method for calculating the amount or number of nonmonetary remuneration, etc.
Non-monetary compensation shall be in the form of restricted stock. In principle, restricted transferable shares shall be
granted every year. The number of shares of such non-monetary compensation, etc. shall be determined by the Board of
Directors based on the report of the Human Resources and Remuneration Committee, taking into consideration the Company's
performance, position, responsibilities, and years in office.
d. Policy on determining the amount of monetary and non-monetary remuneration as a ratio of the amount of remuneration, etc.,
paid to each Director
The Human Resources and Remuneration Committee shall consider the ratio of remuneration by type of Director, based on
the Company's performance level and the remuneration level benchmarked to other companies of the same type and size as
the Company. The Board of Directors shall respect the report of the Personnel and Compensation Committee and determine
the details of individual remuneration, etc. for each Director based on the proposed remuneration by type indicated in the said
report. The Board of Directors shall determine the proportion of each type of remuneration based on the report of the Human
Resources and Remuneration Committee, taking into consideration the Company's business performance, position,
responsibilities, and years in office, etc. In the case of full-time Directors, in principle, monetary remuneration shall be 80%
to 90% and non-monetary remuneration shall be 10% to 20%.
e. Matters concerning the determination of individual director's remuneration and other benefits
The determination of individual director's remuneration and other benefits shall be referred to the Human Resources andCompensation Committee by the Board of Directors for consultation on the draft proposal, taking into account the committee's
recommendation, and decided upon by the Board of Directors.
Remuneration for Directors is limited to the total amount of remuneration determined by the General Meeting of Shareholders,with the specific amount of each individual remuneration to be determined by the Board of Directors. In order to enhance fairness
and transparency, the amount, level, and system of remuneration for management and directors are deliberated by the Human
Resources and Compensation Committee (chaired by the President and CEO and composed of three Independent Outside
Directors), the majority of whose members are Outside Directors. The Board of Directors makes the final policy decision basedon the report of the Human Resources and Compensation Committee. In addition, the remuneration of Directors who are Audit
and Supervisory Committee members is determined through consultation among the Directors who are Audit and Supervisory
Committee members.
The maximum amount of remuneration for Directors (excluding Directors who are Audit & Supervisory Committee Members)
and Directors who are Audit & Supervisory Committee Members is ¥150,000 thousand and ¥30,000 thousand per year,
respectively, as resolved at the 31st Ordinary General Meeting of Shareholders held on March 29, 2016. As of the conclusion of
the Ordinary General Meeting of Shareholders, the number of Directors excluding members of the Audit and Supervisory- 40 -

Committee was six, and the number of Directors who are members of the Audit and Supervisory Committee was five. In addition,at the 38th Ordinary General Meeting of Shareholders held on March 28, 2023, the Company passed a resolution to pay
remuneration to Directors (excluding Directors who are members of the Audit and Supervisory Committee and outside directors)
in an amount separate from the above remuneration limit. The amount of the monetary remuneration receivable shall be no morethan ¥100,000 thousand per year. As of the conclusion of the said Ordinary General Meeting of Shareholders, the number of
Directors excluding members of the Audit and Supervisory Committee was five, and the number of Directors who are membersof the Audit and Supervisory Committee was three.
(ii) Total amount of remuneration by title, total amount of remuneration, type of remuneration, and number of eligible
Directors and Officers of the reporting company
Total amount of remuneration by each category
Total amount of(JPY in thousands)
Number of eligible
Category
compensation
Officers (persons)Non-monetary(JPY in thousands)
Basic remuneration
remuneration
Directors (excluding Audit andSupervisory Committee members and
65,01263,7501,262
5Outside Directors)
Directors (Audit and Supervisory
Committee Members) (excluding
7,110
7,110
1
－
Outside Directors)
Outside Officers
17,00417,0043－(Notes) 1 Amounts paid to Directors do not include employee salaries of Directors who concurrently serve as employees.
2 Non-monetary compensation includes the amount of expenses recognized in the current fiscal year based on the Restricted
Stock Compensation System.
(iii) Total amount of consolidated remuneration by Director
Not stated as there are no persons whose total amount of consolidated remuneration is ¥ 100 million or more.
(iv) Employee salaries of officers concurrently serving as employees
N/A(5) Stock held(i) Standards for and views on classification of investment shares
The Company classifies investment shares as pure investment if the investment is solely for the purpose of benefiting fromchanges in the value of the shares or dividends on the shares, and as non-pure investment if the purpose of holding the shares is
to strengthen business ties, maintain good business relationships, or build long-term relationships of trust. When the purpose ofinvestment is to strengthen business collaboration, maintain good business relationships, or build long-term relationships of trust,the shares are classified as investment shares for purposes other than pure investment.
(ii) Investment shares held for purposes other than pure investmenta. Shareholding policy, method of verification of the rationale for shareholdings, and details of verification by the Board of
Directors of appropriateness of shareholdings in individual issues.
The Company holds investment shares for purposes other than pure investment when it judges that holding such shares willlead to the continuation of good business relationships and the building of long-term relationships of trust and will contributeto the enhancement of the Company's corporate value over the medium to long term. In accordance with this policy, theCompany's Board of Directors examines the rationale for holding such shares at each annual meeting and reviews theholding/sale of each individual issue. The rationale for holding each share is verified by qualitatively examining the purposeof holding the share, as well as quantitatively examining the benefits of holding the share, such as trading conditions, shareprice, and dividend amount, to determine if the cost of capital is commensurate with the benefits. Quantitative holding effects
for each individual share are not described as they are related to the Company's trade secrets and confidentiality obligations.
b. Number of issues and balance sheet amount
Number of issues (issues)
2Unlisted shares

Total carrying amount (JPY in thousands)
199,130--

Shares other than unlisted shares[Issues whose number of shares increased in the fiscal year 2023]
Total acquisition price related to
Number of issues
the increase in the number of(issues)shares (JPY in thousands)
Unlisted shares

1

150,180

Shares other than unlisted shares--[Shares whose number of shares decreased in the fiscal year 2023]
N/A- 41 -

Reason for the increasein the number of shares
Conversion from SAFE
investment to equity-

c. Information on the number of shares for each specified investment stock and deemed holding stock, carrying amount on thebalance sheet, etc Deemed shareholdings
N/A(iii) Investment shares held for pure investment purposes
N/A- 42 -

V. Financial Information
1. Basis for Preparation of Consolidated and Non-consolidated Financial Statements(1) The consolidated financial statements of the Company are prepared in accordance with the “Regulation on Terminology,
Forms, and Preparation Methods of Consolidated Financial Statements” (Ordinance of the Ministry of Finance No. 28 of1976).
(2) The Company’s non-consolidated financial statements are prepared in accordance with the “Regulations Concerning Terms,
Forms and Preparation Method of Financial Statements” (Ministry of Finance Ordinance No. 59 of 1963, hereinafterreferred to as "Regulations for Financial Statements”).
The Company falls under a special company submitting financial statements and prepares its financial statements pursuant
to the provision of Article 127 of the Regulation on Financial Statements.

2. Audit Certificate
The Company’s consolidated and non-consolidated financial statements for the fiscal year (January 1, 2023 through December
31, 2023) have been audited by Deloitte Touche Tohmatsu LLC in accordance with the provisions of Article 193-2, Paragraph 1of the Financial Instruments and Exchange Act.

3. Special Measures to Ensure the Appropriateness of Consolidated Financial Statements, etc.
The Company makes special measures to ensure the appropriateness of its consolidated financial statements. Specifically, theCompany joins the Financial Accounting Standards Foundation (FASF) for the purpose of properly understanding the content ofaccounting standards, or accurately responding to changes in accounting standards. In addition, the Company participates inseminars on accounting standards held by auditing firms.

- 43 -

1 Consolidated Financial Statements, etc.
(1) [Consolidated Financial Statements](i) [Consolidated Balance Sheets](JPY in thousands)
As of December 31, 2022
ASSETS
CURRENT ASSETS
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Total current assets
NON-CURRENT ASSETS
Tangible assets
Buildings
Accumulated depreciation
Buildings, net
Other
Accumulated depreciation
Others, net
Total tangible assets
Intangible assets
Software
Other
Total intangible assets
Investments and other assets
Investment securities
Leasehold deposits
Deferred tax assets
Other
Total Investments and other assets
Total non-current assets
TOTAL ASSETSLIABILITIESCURRENT LIABILITIES
Accounts payable - trade
Accounts payable - other
Income taxes payable
Other
Total current liabilities
NON-CURRENT LIABILITIESProvision for share awards
Other
Total non-current liabilities
TOTAL LIABILITIESNET ASSETS
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
Non-controlling interests
TOTAL NET ASSETSTOTAL LIABILITIES and NET ASSETS- 44 -

As of December 31, 2023

2,413,747
32,3801,052,240
276,637
165,417
3,975
146,61237,291
4,128,302

2,693,160
120,834
1,066,487
736,783
216,844
3,967
118,376
50,502
5,006,955

85,899(35,189)
50,709181,573(128,995)
52,578103,287

69,065(22,702)46,363
176,258(133,366)
42,891
89,255251,005344
251,349

290,050344
290,394

56,700158,234
139,836
143,068
497,839
852,477
4,980,780

199,130
163,574
174,643
10,332547,680
927,330
5,934,285

81,209142,630
227,529*202,633
654,00239,37999,701
331,241*302,524
772,846

186,787*97,052
283,839
937,842

233,125*82,952
316,078
1,088,925

254,259
224,259
4,372,694(812,506)
4,038,706

254,259
224,259
5,157,662(791,956)
4,844,223

4,230
4,042,937
4,980,780(5,386)(5,386)
6,522
4,845,360
5,934,285

(ii) [Consolidated Statements of Income and Consolidated Statements of Comprehensive Income][Consolidated Statements of Income](JPY in thousands)
Fiscal year ended
December 31, 2023

Fiscal year ended
December 31, 2022
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Foreign exchange gains
Subsidy income
Royalty income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Total non-operating expenses
Recurring profit
Extraordinary income
Gain on reversal of share acquisition rights
Insurance claim income
Total extraordinary income
Extraordinary losses
Compensation for damage
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent*1 4,541,242

2,722,846
1,694,323
1,028,522

5,191,735
1,862,259
3,329,476*3,*4 1,832,906
1,496,570

47
16,896
7,671
1,390
1,627
27,63372
16,86911,7401,660
54030,883448
448
1,055,708

1,527,453

4,743
4,743

19,00019,0001,060,451
371,708(35,497)336,210724,240
1,461
722,779*6 22,000*2 1,818,396

*3,*4

*5

- 45 -*1*2

22,0001,524,453
495,465(32,443)
463,022
1,061,431
2,291
1,059,140

[Consolidated Statements of Comprehensive Income, Cumulative](JPY in thousands)
Fiscal year ended
December 31, 2022
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to noncontrollinginterests- 46 -

Fiscal year ended
December 31, 2023

724,240

1,061,431

724,240(5,386)* (5,386)
1,056,045

722,779

1,053,753

1,461

2,291

(iii) [Consolidated Statement of Changes in Equity]
Fiscal year ended December 31, 2022 (From January 1, 2022 to December 31, 2022)(JPY in thousands)
Shareholders ‘equity

Balance at beginning of
periodCumulative effects ofchanges in accounting
policies
Restated balance

Share capital

Capital surplus

254,259

224,259

Total
Treasury shares shareholders’equityRetainedearnings
3,844,949(818,446)

3,505,021

23,175254,259

224,259

Share
acquisitionrights

Noncontrolling
Total net assetsinterests

4,743

2,769

23,175

3,868,124(818,446)

3,512,533
23,175

3,528,196

4,743

2,769

3,535,708

Changes during period
Dividends of surplus(232,041)(232,041)(232,041)

Profit attributable toowners of parent

722,779

722,779

722,779

5,940

5,940

13,832

13,832

Disposal of treasury
sharesChange in scope of
consolidation
Net changes in items
other than shareholders'equityTotal changes during
periodBalance at the end of
period5,940
13,832(4,743)

1,461(3,281)--

504,569

5,940

510,509(4,743)

1,461

507,228

254,259

224,259

4,372,694(812,506)

4,038,706

-

4,230

4,042,937

Fiscal year ended December 31, 2023 (From January 1, 2023 to December 31, 2023)
Shareholders’ equity

Share capital Share capital
Balance at beginning of
period254,259

224,259Retainedearnings

Treasuryshares4,372,694(812,506)(JPY in thousands)
Accumulated othercomprehensive income
NonTotal
Total net
Valuation
Total
accumulated controlling
assetsdifference oninterests
shareholders’
otheravailable-forequity
comprehensiv
sale securitiese income
4,038,706

-

-

4,230

4,042,937

Changes during period
Dividends of surplus(270,789)(270,789)(270,789)

Profit attributable toowners of parent

1,059,140

1,059,140

1,059,140

17,166

17,166

Disposal of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during
periodBalance at end of period(3,383)

20,549(5,386)(5,386)

2,291(3,094)--784,967

20,549805,517(5,386)(5,386)

2,291

802,422

254,259

224,259

5,157,662(791,956)

4,844,223(5,386)(5,386)

6,522

4,845,360- 47 -

(iv) [Consolidated Statements of Cash Flows](JPY in thousands)
Fiscal year ended
December 31, 2022
Cash flows from operating activities
Profit before income taxes
Depreciation
Amortization of software
Share-based payment expenses
Increase (decrease) in provision for share awards
Interest and dividend income
Foreign exchange losses (gains)
Subsidy income
Insurance claim income
Compensation for damage
Interest expenses on borrowings and bonds
Gain on reversal of share acquisition rights
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accounts payable - other
Other, net
SubtotalInterest and dividends received
Subsidies received
Proceeds from insurance income
Interest paid
Compensation paid for damage
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Purchase of intangible assets
Payments of leasehold deposits
Proceeds from refund of leasehold deposits
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Cash flows from financing activities
Repayments of short-term borrowings
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period- 48 -

Fiscal year ended
December 31, 2023

1,060,451
61,855
193,105
29,077(47)(16,896)(7,671)448(4,743)(107,514)(41,263)(143,221)
49,550(73,354)
999,77525
64,220(448)(369,723)
693,848

1,524,453
45,181
212,564
2,525
51,507(73)(16,869)(11,740)(19,000)
22,000(562,845)(23,182)(41,829)(38,410)
97,1371,241,418
28
19,000(22,000)(395,602)
842,844(156,000)
156,000(72,767)(240,633)(1,280)83,372
1,148(230,160)(160,000)
156,000(28,697)(254,278)(10,213)277(23)(296,937)

100,000(10,000)(232,020)(142,020)
321,668
2,045,974(270,494)(270,494)
275,4132,287,747(79,895)-* 2,287,747* 2,563,160

[Notes to the Consolidated Financial Statements][Basis of Presenting Consolidated Financial Statements]
1. Disclosure of scope of consolidation
Number of consolidated subsidiaries: 1
Name of the consolidated subsidiary: Fitting Cloud Inc.
2.

Disclosure about application of the equity method
Number of affiliates accounted for using the equity method: 1
Name of the equity-method affiliate: EMC Healthcare Co., Ltd.

3.

Disclosure about fiscal year of consolidated subsidiaries
The fiscal year end of the consolidated subsidiary, Fitting Cloud Inc. is March 31.
The consolidated financial statements are prepared based on the provisional settlement of accounts as of theconsolidated balance sheet date.

4.

Disclosure of Accounting Policies(1) Valuation standards and methods for significant assets(i) Securities
Other securities
Non-marketable securities, etc.
Stated at cost determined by the moving-average method.
(ii) Inventories
Merchandise and finished goods, goods in progress, raw materials
Stated at cost determined by the specific identification method (the amount stated in the balance sheet is
calculated by writing down the book value based on any decline in profitability).
Supplies
Last purchase price method (the amount on the balance sheet is calculated by writing down the book value
based on any decline in profitability).
(2) Depreciation method for significant depreciable assets(i) Tangible assets (excluding lease assets)
The declining-balance method is used. However, the straight-line method is used for buildings and structuresacquired on or after April 1, 2016. The useful lives of major depreciable assets are as follows:
Buildings:
8-18 years
Vehicles:2- 6 years
Tools, furniture and fixtures: 2-15 years(ii) Intangible assets (excluding lease assets)
Software for sale
The larger of the amortized amount based on the estimated sales volume or the equally allocated amount basedon the expected sales period (within 2 years) is recorded.
Software for internal use
The straight-line method is used based on the estimated useful life (5 years) within the Company.
(3) Accounting policy for significant reserves
Provision for share awards
To provide for the payment of Company shares to employees in accordance with stock benefit regulations, theCompany records an amount based on the estimated amount of stock benefit obligations as of the end of thecurrent fiscal year.
(4) Accounting policies for significant revenues and expenses
The main performance obligations in the Group's main businesses related to revenue from contracts withcustomers and the usual time at which these performance obligations are satisfied (the usual time at which revenue
is recognized) are as follows.
(i) Software
These transactions are related to the sale of self-developed software, including medical solutions such as
Claio the data management software and DocuMaker the document management system, and DocuMaker
Office the document management system mainly targeting municipalities and public corporations. With respect
to software, the Company believes that performance obligations are fulfilled in accordance with the progress of
system implementation. Therefore, except for contracts with very short terms, the Company estimates thedegree of completion of performance obligations and recognizes revenue over a certain period based on the
degree of completion. The percentage-of-completion estimate is based on the actual percentage of the estimatedtotal cost incurred (input method).
For contracts with very short durations, revenue is recognized at one point in time on the date of acceptance.

- 49 -

(ii) Hardware
These transactions are related to sales of commercial hardware products such as servers and PCs, which occur
incidental to the sale of the Group's product, software. For sales of products, revenue is recognized at the time
the products are delivered to the customer.
(iii) Support
These transactions are related to maintenance services and other services that are provided on an ongoingbasis after the software is newly introduced. Since the Group's products are often used by both medical
institutions and local governments to manage important information, maintenance contracts are concluded withusers. Under these contracts, the Group is obligated to provide services over the contract period and recognizes
revenue over the service period specified in the contract because the Group believes that the customer will
receive benefits as it fulfills its obligations over the service period specified in the contract.
(iv) Other
These are transactions related to entrusted development, system services and engineering. The Groupsometimes undertakes entrusted development, system services and engineering utilizing its knowledge, knowhow, and experience in healthcare and medical solutions. With regard to contracted development, etc., theCompany believes that performance obligations are fulfilled in accordance with the progress of the work.
Therefore, except for contracts with very short durations, the Company estimates the degree of progress insatisfying performance obligations and recognizes revenue over a certain period based on the degree ofprogress. The percentage-of-completion estimate is based on the actual percentage of the estimated total cost
incurred (input method).
For contracts with very short durations, revenue is recognized as of the date of acceptance.
(5) Scope of funds in the consolidated statements of cash flows
Cash on hand, readily available deposits, and short-term investments with maturities of three months or less at thetime of acquisition that are readily convertible into cash and are exposed to insignificant risk of changes in value.
(6) Other Significant Matters to the Preparation of the Consolidated Financial Statements
Restricted Stock Compensation Plan
Under our Restricted Stock Compensation Plan, compensation provided to the Directors and Executive Officers
is expensed over the relevant service period.
[Significant Accounting Estimates]
Revenue recognition using the input method based on an estimate of total cost(1) Amount recorded in the financial statements for FY2023(JPY in thousands)
FY2022
Net sales based on input method
Net sales from projects in progress at the end of FY2023

FY2023

1,256,271

1,878,776

251,488669,802(2) Information of Significant Accounting Estimates Related to the Identified Items
The Group estimates the progress of fulfilling obligations that are to be met over a certain period, except for very
short-term contracts, and recognizes revenue over this period based on the estimated progress. To estimate progress,
the Group use the input method, which is based on the ratio of actual costs incurred to the total estimated costs. The
estimation of total costs takes into account the size and complexity of each project and is individually performed bydepartment managers. These managers possess specialized knowledge and experience in project management, as
well as system integration and linkage, and base their estimations on customer specifications.
The primary assumptions in estimating the total costs, which form the basis for revenue recognition, include the
man-hours and outsourced expenses expected from development and implementation work. Given that theseestimates carry a degree of uncertainty, revisions may be required in response to changes in the work’s scope or the
emergence of additional tasks. Such revisions could significantly affect the consolidated financial statements in thesubsequent fiscal year and beyond.

- 50 -

[Change in accounting policy][Application of the Accounting Standard for Fair Value Measurements]
The Accounting Standard for Fair Value Measurements (ASBJ Statement No. 31, June 17, 2021) was applied from the
beginning of the current consolidated fiscal year. In accordance with the transitional provisions set forth in paragraph 27-2 of the
Accounting Standard for Fair Value Measurements, it has been decided to apply the new accounting policies prescribed by the
Accounting Standard for Fair Value Measurements prospectively. This application has no impact on the consolidated financial
statements.
[Unapplied accounting standards, etc.]∙ “Accounting Standard for Income Taxes – Current” (ASBJ Statement No. 27, October 28, 2022, ASBJ)∙ “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 25, October 28, 2022, ASBJ)∙ “Guidance on Accounting Standard for Tax Effect Accounting” (ASBJ Guidance No. 28, October 28, 2022, ASBJ)(1) Overview
In the course of deliberations at the time of transferring the practical guidelines on tax effect accounting at the JICPA to
the ASBJ, it was decided that the following two issues would be considered again after the release of ASBJ Statement
No. 28 “Partial Amendments to Accounting Standard for Tax Effect Accounting” etc. in February 2018. The results ofthe consideration are as follows.
・Classification of tax expenses (taxation on other comprehensive income)・Tax effect on the sale of shares of subsidiaries (shares of subsidiaries or affiliates) when the group corporation
taxation is applied.
(2) Expected date of application
The accounting standard will be applied from the beginning of the fiscal year ending December 31, 2025.
(3) Effect of adoption of the said accounting standard, etc.
The effect of the application of the “Accounting Standard for Income Taxes-Current” and other related accounting
standards on the consolidated financial statements is currently under evaluation.
[Additional information][Accounting Method in Stock Benefit Trust (J-ESOP)]At the Board of Directors meeting held on October 29, 2015, the Company resolved to introduce the “Stock Benefit Trust (JESOP)”, an incentive plan to provide employees with shares of the Company purchased from the market in order to further link
the Company’s stock price and performance with the treatment of employees and share the economic benefits with shareholders,
thereby increasing employees’ motivation and morale toward improving the share price and performance. The Company resolved
to introduce an incentive plan, “Stock Benefit Trust (J-ESOP)”, which provides employees with shares of the Company
purchased from the market.
In connection with this introduction, Trust & Custody Services Bank, Ltd. (Trust Account E) (currently Custody Bank ofJapan, Ltd. (Trust Account E)) acquired 194,200 shares of the Company's shares between November 13, 2015 and November 26,
2015.
For accounting treatment of the said stock benefit trust, the gross amount method is applied to record the assets and liabilitiesof the trust as corporate assets and liabilities in the consolidated balance sheets, in accordance with the “Practical Solution on
Unification of Accounting Policies Applied to Associates Accounted for Using a Trust” (Practical Issues Task Force No. 30,
March 26, 2015). The Company has adopted the gross amount method.
(Trust Account E) are presented as treasury shares in the net assets section of the consolidated balance sheets. The amountrecorded at the end of FY2022 was ¥124,277 thousand and the number of shares was 161,100. The amount recorded at the end of
FY2023 was ¥119,108 thousand and the number of shares was 154,400.
[Disposal of Treasury shares as Restricted Stock Compensation]
The Company completed the payment procedures on May 11, 2023, for the disposal of treasury shares as restricted stock,which was resolved at the Board of Directors meeting held on April 14, 2023.
(1) Overview(i)

Disposal date

May 11, 2023

(ii)

Class and number of shares subject to Disposal

18,487 shares of common stock of the Company(iii)

Disposal priceJPY 649 per share(iv)

Total value of Disposal

JPY 11,998,063- 51 -

(iv)Allottees of shares and number thereof; number ofshares to be allotted

Directors of the Company (excluding Directors who are
the member of the Audit & Supervisory Committee, andOutside Directors):
3 Directors, 9,243 shares
Executive Officers of the Company:
4 Executive Officers, 9,244 shares(2) Purpose and Reasons for Disposal
At the Board of Directors meeting held on February 13, 2023, the Company decided to introduce the Restricted Stock
Compensation Plan (hereinafter the “Plan”) for its Directors (excluding Directors who are Audit & Supervisory Committee
members and Outside Directors) and Executive Officers (hereafter referred to as "Eligible Recipients"). Following thisdecision, a resolution to distribute treasury shares was passed at the Board of Directors meeting on April 14, 2023. The
purpose of introducing the Plan is to provide incentives for the sustainable growth in corporate value and to encourage a
deeper alignment of interests with our shareholders.

- 52 -

[Notes to Consolidated Balance Sheets]* Contract liabilities in the other category are as follows:

Current liabilities (Other)

63,092(JPY in thousands)
FY2023, Consolidated(January 1, 2023
to December 31, 2023)
79,557

Non-current liabilities (Other)

40,37538,064FY2022, Consolidated(January 1, 2022
to December 31, 2022)[Notes to Consolidated Statements of Income]*1 Revenue from contracts with customers
Net Sales are not broken down into revenues arising from contracts with customers and other revenues. The amount ofrevenue arising from contracts with customers is presented in “Notes to the Consolidated Financial Statements (Revenue
Recognition), 1. Information on revenue broken down from contracts with customers”.
*2 Ending inventory is the amount after devaluation of book value due to decline in profitability, and the following loss on
valuation of inventories is included in cost of sales.
(JPY in thousands)
FY2022, Consolidated
FY2023, Consolidated(January 1, 2022
(January 1, 2023
to December 31, 2022)
to December 31, 2023)
292

25,762*3 Major items and amounts of selling, general and administrative expenses are as follows.
FY2022, Consolidated(January 1, 2022
to December 31, 2022)(JPY in thousands)
FY2023, Consolidated(January 1, 2023
to December 31, 2023)

Salary supplement

802,806

893,198*4 Total research and development expenses included in general and administrative expenses and manufacturing costs for theperiod under review are as follows.
(JPY in thousands)
FY2022, Consolidated
FY2023, Consolidated(January 1, 2022
(January 1, 2023
to December 31, 2022)
to December 31, 2023)
39,01652,898*5 Gain on reversal of subscription rights to shares
FY2022 (January 1, 2022 to December 31, 2022)
The "Gain on reversal of share acquisition rights" recorded as extraordinary income for the previous fiscal year results fromthe write-back due to the expected forfeiture of stock options.
FY2023 (January 1, 2023 to December 31, 2023)
N/A*6

Compensation for damage
FY2022 (January 1, 2022 to December 31, 2022)
N/A
FY2023 (January 1, 2023 to December 31, 2023)
The Company compensated for damages caused by malfunctions in its system at a client’s site.

[Notes to Consolidated Statements of Comprehensive Income]*Reclassification adjustments for other comprehensive income and tax effect amountFY2022, Consolidated(January 1, 2022
to December 31, 2022)
Valuation difference on available-for-sale securities
Current period amount－
Reclassification adjustments－
Before tax effect－Tax effect－
Valuation difference on available-for-sale securities－
Total accumulated other comprehensive income－- 53 -(JPY in thousands)
FY2023, Consolidated(January 1, 2023
to December 31, 2023)(7,750)－(7,750)2,363(5,386)(5,386)

[Notes to Consolidated Statement of Changes in Equity]
FY2022 (January 1, 2022 to December 31, 2022)
1. Matters concerning the class and total number of outstanding shares and the class and number of treasury shares
Number of shares
Number of shares
Number of shares
Number of shares
as of January
as of December
increased in FY2022
decreased in FY2022
1, 2022 (shares)
31,
2022 (shares)(shares)(shares)Issued shares
Common shares

26,608,800--

26,608,800

Total

26,608,800--

26,608,800

Common shares (Notes 1.2)

995,175-

7,700

987,475

Total

995,175-

7,700

987,475

Treasury shares(Notes)2.

1. The decrease of 7,700 shares in the number of common shares of treasury shares is due to the decrease in the portion
for the Stock Benefit Trust Account resulting from the retirement of employees.
2. The number of shares of treasury shares at the beginning and end of FY2022 include 168,800 shares and 161,100
shares respectively, of the Company’s shares held by Custody Bank of Japan, Ltd.
Matters concerning share acquisition rights
N/A

3. Matters related to dividends(1) Dividends paid
(Resolution
Class of shares
adopted)March 29, 2022
Ordinary General
Meeting of
Shareholders

Common shares

Aggregate dividends(JPY in thousands)

Dividend per share(JPY)

154,694

6.00

Record date

Effective date

December 31, 2021

March 30, 2022

August 9, 2022
Common shares
77,347
3.00
June 30, 2022
September 9, 2022
Board of Directors’
meeting(Notes)1. The “Total amount of dividends” resolved at the Ordinary General Meeting of Shareholders on March 29, 2022
includes dividends of ¥1,012 thousand paid to the Company’s shares (treasury shares) held by Custody Bank of Japan,
Ltd.
2. “Total amount of dividends” resolved by the Board of Directors on August 9, 2022 includes ¥492 thousand of dividends
for the Company’s shares (treasury shares) held by Custody Bank of Japan, Ltd.
(2) Dividends with a record date in FY2023 but an effective date in FY2024
Aggregate
Dividend per(Resolution
Source ofdividends
shareClass of shares
Record date
Effective date
(JPY in
adopted)dividends(JPY)
thousands)
March 28, 2023
Retained
December 31,
Ordinary General
Common shares
167,585
6.50
March 29, 2023
earnings
2022
Meeting of
Shareholders(Note)“Total amount of dividends” resolved at the Ordinary General Meeting of Shareholders on March 28, 2023 includes
dividends of ¥1,047 thousand for the Company's shares (treasury shares) held by Custody Bank of Japan, Ltd.

- 54 -

FY2023 (January 1, 2023 to December 31, 2023)
1. Matters concerning the class and total number of outstanding shares and the class and number of treasury shares
Number of shares
Number of shares
Number of shares
Number of shares
as of January
as of December
increased in FY2023
decreased in FY2023
1, 2023 (shares)
31, 2023 (shares)(shares)(shares)Issued shares
Common shares

26,608,800--

26,608,800

Total

26,608,800--

26,608,800

Common shares (Notes 1.2)

987,475-

25,187962,288

Total

987,475-

25,187962,288

Treasury shares(Notes)2.

1. The decrease of 25,187 shares in the number of common shares of treasury shares is due to the issuance of 18,487
shares as restricted stock and the withdrawal of 6,700 shares from the Stock Benefit Trust Account resulting from theretirement of employees.
2. The number of shares of treasury shares at the beginning and end of FY2023 include 161,100 shares and 154,400
shares, respectively, of the Company’s shares held by Custody Bank of Japan, Ltd.
Matters concerning share acquisition rights
N/A

3. Matters related to dividends(1) Dividends paid
(Resolution
Type of shares
adopted)March 28, 2023
Ordinary General
Meeting of
Shareholders

Common share

Aggregate dividends(JPY in thousands)

Dividend per share(JPY)

167,585

6.50

Record date

Effective date

December 31, 2022

March 29, 2023

August 9, 2023
Common share
103,203
4.00
June 30, 2023
September 9, 2023
Board of Directors’
meeting(Notes)1. “Total amount of dividends” resolved at the Ordinary General Meeting of Shareholders on March 28, 2023 includes
dividends of ¥1,047 thousand for the Company’s shares (treasury shares) held by Custody Bank of Japan, Ltd.
2. “Total amount of dividends” resolved by the Board of Directors on August 9, 2023 includes ¥629 thousand of dividends
for the Company's shares (treasury shares) held by Custody Bank of Japan, Ltd.
(2) Dividends with a record date in the current fiscal year but an effective date in the following fiscal year
Aggregate(Resolution
Source ofDividend per share
dividends
Class of shares
Record date
(JPY)
adopted)dividends(JPY in thousands)

Effective date

March 27, 2024
Retained
December 31,
Ordinary
Common share
232,208
9.00
March 28, 2024
earnings
2023
General Meetingof Shareholders(Note)“Total amount of dividends” resolved at the Ordinary General Meeting of Shareholders on March 27, 2024 includes
dividends of ¥1,389 thousand for the Company's shares (treasury shares) held by Custody Bank of Japan, Ltd.

- 55 -

[Notes to Consolidated Statements of Cash Flows]
Relationship between cash and cash equivalents at the end of the period and the amount of items shown on the
consolidated balance sheets(JPY in thousands)
FY2022
FY2023(January 1, 2022 to(January 1, 2023 to
December 31, 2022)
December 31, 2023)
Cash on hand and in banks

2,413,747

2,693,160

Time deposits with original maturities exceeding three months(126,000)(130,000)

Cash and cash equivalents

2,287,747

2,563,160[Leases]
Operating lease transactions
Future lease payments under for non-cancelable leases
FY2022(As of December 31, 2022)(JPY in thousands)
FY2023(As of December 31, 2023)

Due within one year

149,390

138,141

Due after one year

399,892

261,751549,283

399,892

Total[Financial instruments]
1. Status of Financial Instruments(1) Policies for financial instruments
The Group’s policy is to procure necessary working capital based on its business plan by the most appropriate method
according to the nature of the funds. It is the Company’s policy not to engage in derivative transactions or speculativetransactions. If it becomes necessary to engage in derivative transactions in the future to avoid risks, the Company’s policy is
to execute such transactions after establishing rules and regulations.
(2) Description of financial instruments and their risks
Trade notes and accounts receivable are exposed to customer credit risk.
All accounts payable, which are trade payables, are due within one year. Accounts payable are exposed to liquidity risk.
(3) Risk management system for financial instruments(i) Management of credit risk (risk related to nonperformance by counterparties)
In accordance with the receivable management rules and credit management rules, the Group’s administration department
periodically monitors the status of business partners with respect to operating receivables, and manages due dates andoutstanding balances for each business partner in cooperation with the department in charge to early identify and alleviate
concerns about collection.
(ii) Management of market risk (risk of fluctuations in interest rates, etc.)
The Company avoids the risk of interest rate fluctuations by procuring funds at fixed interest rates.
(iii) Management of liquidity risk (risk of being unable to make payments on due dates) related to fund procurement
The Group manages liquidity risk by maintaining liquidity on hand while the administrative department manages the cash
flow situation on a monthly basis.
(4) Supplementary explanation concerning fair value of financial instruments
Since variable factors are incorporated in the calculation of the fair value of financial instruments, the adoption ofdifferent assumptions may cause the relevant value to fluctuate.

- 56 -

2. Fair value of financial instruments
The balance sheet carrying amount and fair value of financial instruments and their differences are as follows:.
FY2022 (As of December 31, 2022)(JPY in thousands)
Amount on Consolidated
Balance Sheet

Leasehold deposit
Total amount of assets

Market Value

Difference

158,234

156,866(1,368)158,234

156,866(1,368)FY2023 (As of December 31, 2023)(JPY in thousands)
Amount on Consolidated
Balance Sheet

Leasehold deposit
Total amount of assets(Notes)Market Value

Difference

163,574

162,974(600)

163,574

162,974(600)*1 “Cash and deposits”, “Notes receivable”, “Accounts receivable”, “Accounts payable”, and “Income taxes payable” areomitted because they are cash and their fair value approximates their book value due to their short maturities.
*2 Shares, etc. without market quotations are not included in the above table. The consolidated balance sheet amounts ofsuch financial instruments are as follows.
(JPY in thousands)
Category

FY2022

FY2023

Unlisted securities

56,700199,130

Payments for investments in capital

133,320

10(Note) 1. Estimated Redemption Amount of Financial Receivables After the Consolidated Balance Sheet Date
FY2022 (As of December 31, 2022)
Due after one year
Due after five years
Due within one year
and within five years and within ten years
Cash on hand and in banks
2,413,747-(JPY in thousands)
Due after ten years-

32,380---Accounts receivable

1,052,240---

Leasehold deposits

18,571

139,663--3,516,939

139,663--

Due within one year

Due after one year
and within five years

Due after five years
and within ten years

Due after ten years

2,693,160---

Notes receivable

Total
FY2023 (As of December 31, 2023)

Cash on hand and in banks(JPY in thousands)

120,834---

Accounts receivable

1,066,487---

Leasehold deposits

19,093

144,481--3,899,575

144,481--

Notes receivable

Total(Note) 2. The expected redemption subsequent to the consolidated balance sheet date for other interest-bearing liabilities
FY2022 (As of December 31, 2022)
N/A
FY2023 (As of December 31, 2023)
N/A
3. The breakdown for each level of fair value of financial instruments
The fair value of financial instruments is classified into the following three levels according to the observability and materialityof the inputs used to measure fair value.
Level 1 fair value: The fair value determined by quoted prices for the assets or liabilities in question in an active market, among
the inputs related to the calculation of observable fair value.
Level 2 fair value: The fair value determined using observable inputs other than Level 1 inputs for the calculation of fair value.
Level 3 fair value: The fair value determined using unobservable inputs for the calculation of fair value.
If multiple inputs are used that are significant to their fair value measurement, the fair value measurement is categorized in its
entirely in the level of the lowest level input that is significant to the entire measurement.

- 57 -

Financial instruments other than those measured at fair value
FY2022 (As of December 31, 2022)
Market value (JPY in thousands)

Category

Level 2

Level 1

Level 3

Total

Leasehold deposits-

156,866-

156,866

Total-

156,866-

156,866

FY2023 (As of December 31, 2023)
Market value (JPY in thousands)

Category

Level 2

Level 1

Level 3

Total

Leasehold deposits-

162,974-

162,974

Total-

162,974-

162,974(Note) A description of the valuation techniques and inputs used in the fair value measurements
Leasehold deposits
The fair value of leasehold deposits is measured based on the present value of the expected collection amount discounted at
the risk-free rate based on a reasonably estimated collection period, and is classified as Level 2 fair value.
[Securities]
Other securities
FY2022 (As of December 31, 2022)
Unlisted securities (amount on the consolidated balance sheet: ¥56,700 thousand) are not stated as they do not havemarket prices.
FY2023 (As of December 31, 2023)(JPY in thousands)
Types(ⅰ) Stock
Items for which theconsolidated balance sheet
carrying amount exceeds theacquisition cost

Consolidatedbalance sheet
carrying amount－(ii) Accounts
Receivable(ⅲ) Other
Subtotal(ⅰ) Stock

Items for which theconsolidated balance sheet
carrying amount does notexceed the acquisition cost

Acquisition cost

Difference

－

－

－

－

－

－

－

－

－

－

－

142,430

150,180(7,750)(ii) Accounts
Receivable

－

－

－

(iii) Other

－

－

－

142,430

150,180(7,750)142,430

150,180(7,750)Subtotal
Total(Note) Unlisted securities (amount on the consolidated balance sheet: ¥56,700 thousand) are not stated as they do nothave market prices.

- 58 -

1.

[Tax effect accounting]
The breakdown of the main causes of deferred tax assets and deferred tax liabilities
FY2022(As of December 31, 2022)

Deferred tax assets
Accrued enterprise taxes
Depreciation and amortization
Provision for share awards
Inventory valuation loss
Tax carryforward loss
Other
Total deferred tax assets
Deferred tax liabilities
Prepaid labor insurance premiums
Total deferred tax liabilities
Net deferred tax assets
2.

(JPY in thousands)
FY2023(As of December 31, 2023)

13,34635,02756,9707,264
2,281
26,167141,056

18,04940,01971,103
15,7494,096
26,983
176,001(1,220)(1,220)139,836(1,358)(1,358)
174,643

Reconciliation between the effective statutory tax rate and the actual effective tax rate after the application of tax effectaccounting when there is a major difference between them
FY2022 (December 31, 2022)
Notes are omitted because the difference between the statutory tax rate and the effective tax rate is less than 5/100 of thestatutory tax rate.
FY2023 (December 31, 2023)
Notes are omitted because the difference between the statutory tax rate and the effective tax rate is less than 5/100 of thestatutory tax rate.

1.

[Revenue Recognition]
Information on disaggregation of revenue from contracts with customers
FY2022 (January 1, 2022 to December 31, 2022)(JPY in thousands)
Reportable Segments
MedicalBusiness

Public Sector
Business

Health TechBusiness

Total

Timing of revenue recognition
Revenue recognized at one point in time

1,772,833

59,33246,007

1,878,173

Revenue recognized over a period of time

2,577,869

61,95323,246

2,663,069

Revenue from contracts with customers

4,350,702

121,286

69,2534,541,242

Net sales to external customers

4,350,702

121,286

69,2534,541,242(JPY in thousands)
Reportable Segments
MedicalBusiness

Public Sector
Business

Health TechBusiness

Total

By Service Type
Software2,510,450

121,286－

Hardware285,619－－285,619

Support

1,367,122－－

1,367,122

Other

187,510－

69,253

256,764

Revenue from contracts with customers

4,350,702

121,286

69,2534,541,242

Net sales to external customers

4,350,702

121,286

69,2534,541,242- 59 -

2,631,736

FY2023 (January 1, 2023 to December 31, 2023)(JPY in thousands)
Reportable Segments
MedicalBusiness

Public Sector
Business

Health TechBusiness

Total

Timing of revenue recognition
Revenue recognized at one point in time

1,443,063

35,374

44,774

1,523,212

Revenue recognized over a period of time

3,492,863

152,030

23,6283,668,523

Revenue from contracts with customers

4,935,926

187,405

68,403

5,191,735

Net sales to external customers

4,935,926

187,405

68,403

5,191,735(JPY in thousands)
Reportable Segments
MedicalBusiness

Public Sector
Business

Health TechBusiness

Total

By Service Type
Software2,812,278

187,405－

2,999,684

Hardware316,338－－

316,338

Support

1,510,039－－

1,510,039

Other297,270－

68,403

365,674

Revenue from contracts with customers

4,935,926

187,405

68,403

5,191,735

Sales to external customers

4,935,926

187,405

68,403

5,191,735

2. Information that forms a basis for understanding revenue from contracts with customers
The foundational information for understanding revenue is as stated in the consolidated financial statements, “Notes to theConsolidated Financial Statements (Basis of Presenting Consolidated Financial Statements) 4. Disclosure of Accounting
Policies (4) Accounting policies for significant revenues and expenses”.
Information on the relation between satisfaction of performance obligations based on contracts with customers and cash
flows arising from the contracts, and amount and timing of revenue that is expected to be recognized in and after FY2024
from contracts with customers that existed as of December 31, 2023
(1) Balance of contract assets and contract liabilities（JPY in thousands）
3.

FY2022
Receivables arising from contracts with customers(beginning balance)
Receivables arising from contracts with customers(ending balance)

FY2023
1,218,805

1,084,621

1,084,621

1,187,321

Contract assets (beginning balance)

38,770276,637

Contract assets at end of period

276,637

736,783

Contract liabilities (beginning balance)

120,822

103,467

Contract liabilities at end of period

103,467

117,622

Contract assets mainly relate to the rights of the Company and its consolidated subsidiary to unbilled consideration forsoftware and contracted development and other revenue recognized based on the stage of completion as of the balance sheet
date. Contract assets are reclassified to receivables arising from contracts with customers when the Company and its
subsidiary’s rights to the consideration become unconditional.
In FY2023, increases in contract assets were mainly due to an increase in software and contracted development, etc.
across fiscal years and large projects.
Contract liabilities primarily relate to advances received from customers for maintenance and other services withcustomers for which revenue is recognized over a specified period of time. Contract liabilities are reversed upon revenue
recognition.
The amount of revenue recognized in FY2023 that was included in the contract liability balance at the beginning of theperiod was ¥57,356 thousand. There was no amount of revenue recognized from performance obligations that were satisfied(or partially satisfied) in prior periods.

- 60 -

(2) Transaction prices allocated to remaining performance obligations
The total transaction price allocated to the remaining performance obligation at the end of FY2023 was ¥1,090,525
thousand. The Company and its consolidated subsidiary expect to recognize revenue from these remaining performanceobligations generally within five years. The Company and its consolidated subsidiary apply the practical expedient method
to note the transaction prices allocated to the remaining performance obligations and do not include in the notes contracts
that are initially expected to be in effect for one year or less.

- 61 -

[Segment Information]
Segment information
1. Overview of reportable segments
The Group's reportable segments are components of the Group for which separate financial statements are available andwhich are subject to periodic review by the Board of Directors to determine the allocation of management resources andevaluate their performance.
Beginning with FY2023, the Group has revised the reporting method for the “Office System”, previously classified underthe “System Development”, in light of its growing quantitative and qualitative significance. It is now reported as a separate
reportable segment. As a result, the reportable segments have been redefined, moving from the previous two categories of“System Development” and “Health Tech” to three distinct categories: “Medical Business”, “Public Sector Business”, and“Health Tech Business”. Furthermore, the segment information for FY2022 has been restated to reflect reportable segmentclassification for FY2023.
The business activities of each reportable segment are as follows.
[Medical Business]
The development and sales of medical solutions, consulting services, aggregation and analysis of medical data
[Public Sector Business]
The development and sales of document management solutions[Health Tech Business]
The development and sales of medical devices and the analysis of medical data2.

Calculation of net sales, income or loss, assets, and other items by reportable segments
The accounting treatment of the reported business segments is generally the same as that described in the "Basis of
Presenting Consolidated Financial Statements".

3.

Information on net sales, income or losses, assets, and other items by reportable segments
FY2022 (January 1, 2022 to December 31, 2022)
Reportable Segments
MedicalBusiness

Public Sector
Business

Health TechBusiness

Total

Adjustment(Note 1)(JPY in thousands)
Total amount on
consolidated
Financial
Statements(Note 2)

Net sales
Sales to external
4,350,702
121,286
69,2534,541,242
4,541,242
customers
Intersegment sales or
1,485
1,485
(1,485)transfers
Total
4,352,187
121,286
69,2534,542,727(1,485)
4,541,242
Segment income (loss)
1,267,070(33,258)(205,288)
1,028,522
1,028,522
Segment assets
1,997,798
25,258
222,6132,245,671
2,735,108
4,980,780
Other Items
Depreciation and
221,129
1,893
31,937
254,960
254,960
amortization
Increase in tangible and282,426
25,846308,273308,273
intangible assets(Notes)1. The adjustment amount for sales is from the elimination of inter-segment transactions.
The adjustment amount for segment assets is corporate assets not allocated to any reporting segment (primarily cash anddeposits not attributable to any reporting segment of ¥2,407,533 thousand, and investment securities of ¥56,700
thousand).
2. Total segment income or losses are the same as operating income in the consolidated statements of income.
FY2023 (January 1, 2023 to December 31, 2023)
Reportable Segments
MedicalBusiness

Public Sector
Business

Health TechBusiness

Total

Adjustment(cNote 1)(JPY in thousands)
Total amount on
consolidated
Financial
Statements(Note 2)

Net sales
Sales to external
4,935,926
187,405
68,403
5,191,735
5,191,735
customers
Intersegment sales ortransfers
Total
4,935,926
187,405
68,403
5,191,735
5,191,735
Segment income (loss)
1,625,997
41,364(170,791)
1,496,570
1,496,570
Segment assets
2,505,533
163,936
224,305
2,893,775
3,040,510
5,934,285
Other Items
Depreciation and
228,246
5,988
23,511
257,746
257,746
amortization
Increase in tangible and220,444
29,941
27,774
278,161
278,161
intangible assets(Notes)1. The adjustment amount for segment assets is corporate assets not allocated to any reporting segment (primarily cash

- 62 -

and deposits not attributable to any reporting segment of ¥2,670,833 thousand, and investment securities of ¥199,130
thousand).
2. Total segment income or losses are the same as operating income in the consolidated statements of income.

- 63 -

[Related information]
FY2022 (January 1, 2022 to December 31, 2022)
1. Information by product and service
This information is omitted because the same information is disclosed in the segment information.
2. Information by geographic area
(1) Net sales
This information is omitted because sales to external customers in Japan account for more than 90% of the
net sales in the consolidated statements of income.
(2) Tangible assets
The amount of tangible assets located in Japan exceeds 90% of the amount of tangible assets on the
consolidated balance sheet, thus this information is omitted.
3. Information by major customers
N/A
FY2023 (January 1, 2023 through December 31, 2023)
１．Information by product and service
This information is omitted because the same information is disclosed in the segment information.
2. Information by geographic area
(1) Net sales
This information is omitted because sales to external customers in Japan account for more than 90% of the
net sales in the consolidated statements of income.
(2) Tangible assets
The amount of tangible assets located in Japan exceeds 90% of the amount of tangible assets on the
consolidated balance sheet, thus this information is omitted.
3. Information by major customer
N/A
Amortization of goodwill and unamortized balance by reportable segments
FY2022 (January 1, 2022 to December 31, 2022)
N/A
FY2023 (January 1, 2023 through December 31, 2023)
N/A
Gain recognized on negative goodwill by reportable segments
FY2022 (January 1, 2022 to December 31, 2022)
N/A
FY2023 (January 1, 2023 to December 31, 2023)
N/A
Impairment loss on non-current assets by reportable segments
FY2022 (January 1, 2022 to December 31, 2022)
N/A
FY2023 (January 1, 2023 to December 31, 2023)
N/A- 64 -

[Information on related parties]
FY2022 (January 1, 2022 to December 31, 2022)
N/A
FY2023 (January 1, 2023 to December 31, 2023)
N/A[Per Share Information]
FY2022(January 1, 2022,
to December 31, 2022)

FY2023(January 1, 2023,
to December 31, 2023)

Net assets per share (JPY)157.63188.67

Basic earnings per share (JPY)

28.21

41.31

(Notes) 1. Diluted earnings per share for FY2022 are not described here because there are no issuable shares with a dilutive effect.
2. Diluted earnings per share for FY2023 are not described here because there are no issuable shares.
3. Earnings per share and diluted earnings per share were calculated based on the following:
FY2022
FY2023(January 1, 2022,(January 1, 2023,
to December 31, 2022)
to December 31, 2023)
Basic earnings per share
Profit attributable to owners of parent(JPY in thousands)
Profit not belonging to commonshareholders(JPY in thousands)
Profit attributable to owners of parent related tocommon shares(JPY in thousands)
Average number of outstanding commonshares during the period(shares)722,779

1,059,140－－

722,779

1,059,140

25,617,486

25,637,246

5th series of Share Acquisition Rights
by resolution of the Board of
Directors meeting held on February
Overview of dilutive shares that are not includedin the calculation of diluted earnings per share as25, 2020－
they have no dilutive effects
Number of Share Acquisition Rights:
2,830(Common shares: 283,000 shares)(Notes): 1. For the purpose of calculating basic earnings per share, the average number of the Company’s shares held by Custody
Bank of Japan, Ltd. (Trust Account E) during FY2022 and FY2023 are 164,939 shares and 157,082 shares, respectively.
[Significant Events after Reporting Period]
N/A- 65 -

5. [Consolidated annexed detailed statements][Schedule of bonds payable]
N/A[Schedule of borrowings]
N/A[Schedule of asset retirement obligations]
N/A(2) [Other]
Quarterly financial information for FY2023
Cumulative period

Nine Months
Three months Six months
ended
ended March ended June 30,
September 30,
31, 2023
2023
2023

Net sales (JPY in thousands)

Year ended
December 31,
2023

1,251,802

2,249,242

3,474,339

5,191,735

Profit before income taxes (JPY in thousands)

292,219

411,372

817,017

1,524,453

Profit attributable to owners of the parent(JPY in thousands)

199,428

283,881567,203

1,059,140

7.78

11.08

22.13

41.31

1st Quarter

2nd Quarter

3rd Quarter

7.78

3.29

11.05

Basic earnings per share (JPY)
Accounting period
Basic earnings per share (JPY)- 66 -

4th Quarter
19.18

2 [Non-consolidated Financial Statements, etc.](1) [Non-consolidated Financial Statements](i) [Non-consolidated Balance Sheet](JPY in thousands)
FY2022(As of December 31, 2022)
ASSETS
CURRENT ASSETS
Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Prepaid expenses
Other
Total current assets
Non-current assets
Tangible assets
Buildings
Vehicles and transportation equipment
Tools, furniture and fixtures
Total tangible assets
Intangible assets
Software
Manufacturing know-how
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and affiliates
Leasehold deposits
Long-term prepaid expenses
Deferred tax assets
Other
Total investments and other assets
Total non-current assets
TOTAL ASSETS- 67 -FY2023(As of December 31, 2023)

2,407,533
32,380*1,051,313
276,637
165,417
3,975
146,612
21,433*15,311
4,120,615

2,670,833
120,834
1,063,225
736,783
216,844
3,967
118,376
27,066*25,119
4,983,049

50,709218
51,588102,51746,363
165
41,416
87,946251,005
111,000
344
362,349

290,050
74,000344
364,394

56,7007,000
158,234
12,516
192,185
134,227
560,864
1,025,731
5,146,346

199,130
7,000
163,574
14,170236,461
1,887
622,223
1,074,564
6,057,614（単位：千円）
FY2022(As of December 31, 2022)
LIABILITIESCURRENT LIABILITIES
Accounts payable - trade
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposit received
Other
Total current liabilities
Non-current liabilities
Long-term advances received
Long-term deposits received
Provision for share awards
Other
Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity
Share capital
Capital surplus
Capital reserve
Total capital surplus
Retained earnings
Other retained earnings
Unappropriated retained earnings
Total retained earnings
Treasury shares
Total shareholders' equity
Valuation and translation adjustments
Net unrealized gains on securities
Total valuation and translation adjustments
TOTAL NET ASSETSTOTAL LIABILITIES and NET ASSETS- 68 -FY2023(As of December 31, 2023)

81,209*39,835*151,882*101,420

66,641
227,477
47,15662,35024,205
120
661,042

77,436331,189
115,943
78,587
26,590771,00240,37556,548
186,787129
283,839
944,881

38,06444,807233,12580
316,078
1,087,080

254,259

254,259

224,259
224,259

224,259
224,259

4,535,453
4,535,453(812,506)
4,201,464

5,289,358
5,289,358(791,956)
4,975,919

4,201,464
5,146,346(5,386)(5,386)
4,970,533
6,057,614

(ii) [Non-consolidated Statement of Income and Comprehensive Income]（JPY in thousands）
FY2022(As of December 31, 2022)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Interest on securities
Foreign exchange gain
Subsidy income
Other
Total non-operating income
Recurring profit
Extraordinary income
Gain on reversal of share acquisition rights
Insurance claim income
Total extraordinary income
Extraordinary losses
Compensation for damage
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit4,487,352
1,821,643
2,665,709*1, *2 1,638,122
1,027,587

FY20223(As of December 31, 2023)*1*1 5,153,469*1*1 1,890,061*1, *2

3,263,407
1,814,464
1,448,942

24
45
16,896
7,671*1 4,213
28,852
1,056,439

27
16,86911,740*1 3,475
32,158
1,481,101

4,743
4,743

19,00019,0001,061,182
368,044(44,501)
323,542
737,639

22,00022,0001,478,101
491,935(41,912)450,023
1,028,077

*1 45

*1

*3

- 69 -*4

(iii) [Non-consolidated Statement of Changes Equity]
FY2022 (From January 1, 2022 to December 31,2022)(JPY in thousands)
Shareholders’ equity
Capital surplus
SharecapitalBalance at the beginning of theperiod254,259Retained earnings
Other retained
Total shareholders'earnings
Treasury shares
equityTotal Retained
Unappropriatedearnings
retainedearnings

Legal capitalsurplus

Total capitalsurplus224,259

224,259

4,006,679

4,006,679

23,17523,175

4,029,854

4,029,854

Dividends of surplus(232,041)(232,041)(232,041)

Profit737,639

737,639

737,639

Cumulative effects of changes inaccounting policies
Restated balance

254,259

224,259

224,259(818,446)

3,666,751
23,175(818,446)

3,689,926

Changes during the period

Disposal of treasury shares

5,940

5,940

Net changes of items other thanthose in shareholders’ equity
Total changes during the period

-

-

-

505,598

505,598

5,940

511,538

Balance at the end of the period

254,259

224,259

224,259

4,535,453

4,535,453(812,506)

4,201,464

ShareacquisitionrightsBalance at the beginning of theperiodTotal net assets

4,743

Cumulative effects of changes inaccounting policies
Restated balance

3,671,494
23,175

4,743

3,694,669

Changes during the period
Dividends of surplus(232,041)

Profit737,639

Disposal of treasury shares
Net changes of items other thanthose in shareholders’ equity

5,940(4,743)(4,743)

Total changes during the period(4,743)506,795

Balance at the end of the period-

4,201,464- 70 -

FY2023 (From January 1, 2023 to December 31,2023)(JPY in thousands)
Shareholders ‘equity
Capital surplus
SharecapitalBalance at the beginning of theperiod254,259Retained earnings
Other retained
Total shareholders'earnings
Treasury shares
equityTotal Retained
Unappropriatedearnings
retainedearnings

Legal capitalsurplus

Total capitalsurplus224,259

224,259

4,535,453

4,535,453(812,506)

4,201,464

Dividends of surplus(270,789)(270,789)(270,789)

Profit

1,028,077

1,028,077

1,028,077(3,383)(3,383)

20,54917,166

Changes during the period

Disposal of treasury shares
Net changes of items other thanthose in shareholders’ equity
Total changes during the period

-

-

-

753,905

753,905

20,549774,454

Balance at the end of the period

254,259

224,259

224,259

5,289,358

5,289,358(791,956)

4,975,919

Valuation and translation
adjustments
Net unrealized Total valuation Total net assets
gains onand translation
securities
adjustments
Balance at the beginning of theperiod--4,201,464

Changes during the period
Dividends of surplus(270,789)

Profit

1,028,077

Disposal of treasury shares
Net changes of items other thanthose in shareholders’ equity

17,166(5,386)(5,386)(5,386)

Total changes during the period(5,386)(5,386)

769,068

Balance at the end of the period(5,386)(5,386)

4,970,533- 71 -

[Notes to Non-consolidated Financial Statements][Significant accounting policies]
1. Accounting policy for measuring assets(1) Accounting policy for measuring securities
Shares issued by a subsidiary and an equity method affiliate
Stated at cost using the moving-average method
Other securities
Shares with no market price, etc.
Stated at cost using the moving-average method(2) Accounting policy for measuring inventories
Merchandise and finished goods, work in process, raw materials
Stated at cost using the identified cost method (Cost of inventories is written-down when their carrying amounts
become unrecoverable).
Supplies
Stated at cost determined by last purchase price method (Cost of inventories is written-down when their carrying
amounts become unrecoverable).
2. Accounting policy for depreciation of assets(1) Tangible assets
Facilities attached to buildings and structures acquired on or after April 1, 2016 are depreciated using the straightline method, and other property, plant and equipment are depreciated using the declining-balance method.
The useful lives of major assets are as follows:
Buildings
8-18 years
Vehicles2-6 years
Tools, furniture and fixtures 2-15 years(2) Intangible assets
Software for sale in the market
The larger of the amortized amount based on the estimated sales volume or the amortized amount evenly distributed
over the estimated salable period (2 years) is recorded.
Software for internal use
Amortization of software for internal use is calculated by the straight-line method over the estimated useful life (5years).
Other intangible assets
Other intangible assets are stated at cost determined by straight-line method.
3. Basis for reserves
Provision for share awards
The Company records an amount based on the estimated amount of stock benefit obligations as of the end of the
fiscal year to prepare for providing the payment of the Company share to employees in accordance with stock
benefit regulations.
4. Reporting of significant revenues and expenses
The following is a description of the main performance obligations in the Company's main business related to revenue
from contracts with customers and the usual time at which the performance obligation is satisfied (the usual point ofrevenue recognition)(1) Software
The transactions are related to sales of self-developed software such as the document management software Claioand the documentation software for municipalities and public organizations DocuMaker Office. With regard to
software, the Company has determined that performance obligations are fulfilled in accordance with the progressof software implementation. Therefore, except for contracts with very short terms, the Company estimates thedegree of progress toward fulfillment of performance obligations and recognizes revenue over a certain period oftime based on the degree of progress. For progress estimates calculate based on the actual occurrence rate against
total estimated cost (input method).
For contracts with very short terms, revenue is recognized at a point in time on the date of acceptance.
(2) Hardware
These are transactions related to the sale of commercial hardware products such as servers and PCs that occur inconjunction with the sale of software, which are the Company’s products. For sales of products, revenue isrecognized at the time the products are delivered to the customer.
(3) Support
These are transactions related to maintenance services that are provided on an ongoing basis after software is
newly introduced. The Company has maintenance agreements with its users, since the Company’s products
manage important information both in medical institutions and in local governments. Under these contracts, theCompany is obligated to provide services over the contract period and recognizes revenue over the service period- 72 -

specified in the contract because the Company believes that the customer will receive benefits as it fulfills its
obligations over the service period specified in the contract.
(4) Other
These are transactions related to entrusted development, system services and engineering. The Company
undertakes entrusted development, system services and engineering utilizing its knowledge, know-how, andexperience in healthcare and medical software. With regard to entrusted development, etc., the Company has
determined that performance obligations will be fulfilled in accordance with the progress of the work. Therefore,
except for contracts with very short terms, the Company estimates the degree of progress toward fulfillment of
performance obligations and recognizes revenue over a certain period of time based on the degree of progress. For
progress estimates calculate based on the actual occurrence rate against total estimated cost (input method).
For contracts with short terms, revenue is recognized at points in time on the dates of acceptance.
5. Other Significant Matters Fundamental to the Preparation of the Consolidated Financial Statements
Restricted Stock Compensation Plan
Under our Restricted Stock Compensation Plan, compensation provided to the Directors and Executive Officers is
expensed over the relevant service period.
[Significant accounting estimates]
The following is a list of items for which an accounting estimate has been made and the amount has been recorded in thefinancial statements for FY2023 that may have a material effect on the financial statements for FY2024.
1. Revenue recognition using the input method based on an estimate of total cost(1) Amount recorded in the financial statements for FY2023(JPY in thousands)
FY2022
Net sales based on input method
Net sales from projects in progress at the endof FY2023

FY2023

1,237,941

1,878,776

251,488669,802(2) Details of significant accounting estimates related to the identified items
Details of significant accounting estimates related to the identified items is omitted because the same informationis stated in the “Notes to the consolidated financial statements”.
2. Impairment of non-current assets(1) Amount recorded in the financial statements for FY2023
Recorded amount of non-current assets with indications of impairment(JPY in thousands)
FY2022

FY2023

Tangible assets

9,294

7,543

Intangible assets

111,000

74,000(2) Details of significant accounting estimates related to the identified items
The Company decides of whether impairment should be recognized or not based on undiscounted future cash
flows from the asset group in case of any indication of impairment of non-current assets. At the end ofFY2023, theHealth Tech Business asset group was identified as having indications of impairment, but no impairment loss wasrecorded as the total undiscounted future cash flows exceeded the carrying value of the asset group.
The above undiscounted future cash flows are calculated on the basis of the medium-term business plan approvedby the Board of Directors, which uses key assumptions such as sales and profit projection based on sales volume
projection and expense projection such as labor, material, and outsourcing costs.
Although the Company carefully examines the recognition of signs of impairment and the recognition of
impairment losses, it may be necessary to record impairment losses in the next fiscal year if the conditions andassumptions on which the estimated amounts are based change due to changes in market conditions or theCompany’s business conditions.
[Changes in accounting policies][Application of the Accounting Standard for Fair Value Measurements]
The Accounting Standard for Fair Value Measurements (ASBJ Statement No. 31, June 17, 2021) was applied from the
beginning of FY2023. In accordance with the transitional provisions set forth in paragraph 27-2 of the Accounting Standard- 73 -

for Fair Value Measurements, it has been decided to apply the new accounting policies prescribed by the AccountingStandard for Fair Value Measurements prospectively. This application has no impact on the consolidated financial
statements.
[Changes in Presentation][Balance Sheet]
In the previous fiscal year, “Contributions”, under “Investments and other assets”, which were previously disclosed
independently, were deemed to lack significant materiality in terms of amount. Consequently, starting from FY2023, they
have been included under “Other” within “Investments and other assets”. To reflect this change in presentation, the financial
statements of FY2022 have been reclassified.
As a result, in the balance sheet of FY2022, “Contributions” under “Investments and other assets” of ¥133,320 thousand
and “Other” of ¥907 thousand have been reclassified as “Other” under “Investments and other assets” totaling ¥134,227
thousand.
[Additional information][Valuation Method in “Stock Benefit Trust” (J-ESOP) ]Notes have been omitted because the same information on transactions in which the Company’s shares are issued to
employees through a trust is presented in the “Notes to Consolidated Financial Statements (Additional Information)”.
[Disposal of Treasury Shares as Restricted Stock Compensation]
The disposal of treasury shares as restricted stock compensation is not noted here because the same information is includedin the “Notes to Consolidated Financial Statements (Additional Information)”.
[For non-consolidated balance sheets]*Monetary receivables from and payables to a subsidiary and an equity method affiliate are as follows
FY2022(As of December 31, 2022)(JPY in thousands)
FY2023(As of December 31, 2023)

Short-term monetary receivables

873

1,082

Short-term monetary payables

16,272

7,821[For non-consolidated statement of income, cumulative]
1. Transactions with a subsidiary and an equity method affiliate are as follows.
FY2022(As of December 31, 2022)
Operating transactions

54,223(JPY in thousands)
FY2023(As of December 31, 2023)
64,409Non-operating transactions
1,245
1,320
2. The approximate percentages of expenses included in selling expenses were 57% in FY2022 and 58% inFY2023, andthe approximate percentages of expenses included in general and administrative expenses were 43% in FY2022 and
42% in FY2023.
Major components of selling, general and administrative expenses are as follows.
(JPY in thousands)
FY2022
FY2023(As of December 31, 2022)(As of December 31, 2023)
Salaries

791,422

893,198

Travel and transportation expenses

110,167

120,986

Depreciation

33,47028,094

3. Share acquisition rights
FY2022 (From January 1, 2022 to December 31,2022)
Gain on reversal of share acquisition rights recorded in extraordinary income in FY2023 is due to the reversal of stock
options in anticipation of their expiration.
FY2023 (From January 1, 2023 to December 31,2023)
N/A- 74 -

4. Compensation for Damages
FY2022 (From January 1, 2022 to December 31,2022)
N/A
FY2023 (From January 1, 2023 to December 31,2023)
The Company compensated for damages caused by malfunctions in its software at a client’s site.
[Tax effect accounting]
1. Significant components of deferred tax assets and liabilities
FY2022(As of December 31, 2022)
Deferred tax assets
Accrued enterprise taxes
Depreciation
Valuation of bonds of subsidiaries and affiliates
Provision for share awards
Long-term deposits received
Other
Total deferred tax assets
Deferred tax liabilities
Prepaid labor insurance premiums
Total deferred tax liabilities
Net deferred tax assets(JPY in thousands)
FY2023(As of December 31, 2023)

13,34657,59718,04973,87430,50056,97030,50071,103

17,247
17,744
193,405

13,66630,626
237,819(1,220)(1,220)
192,185(1,358)(1,358)236,461

2. Significant differences between the statutory effective tax rate and after the application of tax effect accounting, by major
category that caused the differences
FY2022 (As of December 31, 2022)
Notes are omitted because the difference between the statutory effective tax rate and after the application of tax
effect accounting is less than 5/100 of the statutory effective tax rate.
FY2023 (As of December 31, 2023)
Notes are omitted because the difference between the statutory effective tax rate and after the application of tax
effect accounting is less than 5/100 of the statutory effective tax rate.
[Revenue Recognition]
Information that provides a basis for understanding revenue from contracts with customers is presented in [Revenue
Recognition] in “Notes to the consolidated financial statements”, and therefore, notes have been omitted.
(Significant subsequent events)
N/A- 75 -

(iv) Non-consolidated annexed detailed schedules
Annexed detailed schedule of non-current assets(JPY in thousands)

Category

Types of assets

Tangible
assetsIntangible
assetsBalance atthebeginningof FY2023

Increase in
FY2023

Original
cost
Accumulatedacquired atdepreciation
the end of
FY2023

Buildings

50,709

-

-

4,345

46,36322,702

69,065

Vehicles

218

1,113

-

1,166

165

3,267

3,432

Tools, furniture andfixtures

51,58821,480730

30,92141,416129,050

170,467

Total

102,517

22,594730

36,43487,946

155,019

242,965

software251,005

254,278-

215,234

290,050

3,371,846

3,661,896

Manufacturing knowhow

111,000--

37,00074,000111,000

185,000

344

-

-

-

344

-

344

362,349

254,278-

252,234

364,394

3,482,846

3,847,240

Other
Total

(Notes)Depreciati
on orDecrease
Balance atamortizatio
the endinnof FY2023
FY2023for
FY2023

1. The increase in tools, furniture, and fixtures during the current period is mainly due to the purchase of PCs.
2. The breakdown of increase in software (for sale on the market) by major product is as follows: Claio: ¥53,809
thousand, REMORA: ¥28,479 thousand, DocuMaker: ¥76,811 thousand, C-Scan: ¥7,593 thousand, PDI+MoveBy: ¥7,413
thousand, ProRad: ¥12,512 thousand, GAP: ¥23,457 thousand, Medical Avenue: ¥12,005 thousand, DocuMaker Office:¥29,941 thousand.

Annexed detailed schedule of provisions(JPY in thousands)
Account
Provision for share awards

Balance at the
beginningof FY2023

Increase in FY2023

Decrease in FY2023

Balance at the end of
FY202352,9996,660

233,125

186,787(2) [Major assets and liabilities]
This information is omitted as indicated in “Consolidated financial statements”.
(3) [Other]
N/A- 76 -

VI. Outline of Share-Related Administration of Reporting Company
Fiscal year

From January 1 to December 31

General Meeting of Shareholders

Within 3 months after the end of each fiscal year

Record date for dividend

December 31

Record dates for dividend of
surplusJune 30
December 31

Number of shares per unit of
the Company’s stock

100 shares

Repurchase of shares of less thana standard unit
Address where repurchases
are processed

1-4-1 Marunouchi, Chiyoda-ku, Tokyo
Stock Transfer Agency Business Planning Dept., Sumitomo Mitsui Trust Bank,
LimitedAdministrator ofshareholders’ register

1-4-1 Marunouchi, Chiyoda-ku, Tokyo
Sumitomo Mitsui Trust Bank, Limited

Offices available for
repurchase－

Charges for repurchaseFree of charge
Public notices of the Company shall be given by electronic means.

Method of public noticehttps://findex.co.jp
However, that in the event accidents or other unavoidable reasons prevent public
notice by electronic means, the notice can be given in the Nihon Keizai Shimbun.

Special benefits to shareholders

None(Notes) According to the Company’s Articles of Incorporation where the rights of shareholders holding shares of less than astandard unit are prescribed, the holder of shares of less than a standard unit shall not be entitled to exercise the rights ofshareholders in connection with such below-unit shares other than those rights listed below:(i) The rights stipulated in each item of Article 189, Paragraph 2, of the Companies Act.
(ii) The right to request acquisition of share with put option.
(iii) The right to receive allotment of offered shares or offered share subscription rights.

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VII. Reference Information of Reporting Company
1 [Information on the Parent of Reporting Company]
The Company has no parent company or equivalent as prescribed in Article 24-7, Paragraph 1 of the Financial Instruments andExchange Act.

2 [Other Reference Information]
The Company filed the following documents between the beginning of the fiscal year ended December 31, 2023 and the datewhen this Securities Report (Yukashoken-Hokokusho) was filed.
(1) Securities Report and Accompanying Documents and Confirmation NoteFiscal Year the 38th (From January 1, 2022 to December 31, 2022) Submitted to the Director of the Kanto Local
Finance Bureau on March 29, 2023
(2) Internal Control Report and Attached Documents
Submitted to the Director of the Kanto Local Finance Bureau on March 29, 2023
(3) Quarterly Securities Reports and Confirmation Notes
The 1st quarter of 39th period (from January 1, 2023 to March 31, 2023) Submitted to the Director of the Kanto Local
Finance Bureau on May 11, 2023
The 2nd quarter of 39th period (from April 1, 2023 to June 30, 2023) Submitted to the Director of the Kanto Local
Finance Bureau on August 9, 2023
The 3rd quarter of 39th period (from July 1, 2023 to September 30, 2023) Submitted to the Director of the Kanto Local
Finance Bureau on November 13, 2023
(4) Extraordinary Report
Submitted to the Director of the Kanto Local Finance Bureau on March 29, 2023
An extraordinary report according to the provision of Article 24-5, Paragraph 4, of the Financial Instruments andExchange Act and Article 19, Paragraph 2, Item 9-2 (Matters that require a resolution of a general meeting ofshareholders), of the Cabinet Office Ordinance on Disclosure of Corporate Information, etc.

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Part II Information on Guarantors, etc. for Reporting Company
N/A- 79 -