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 38th fiscal year from January 1, 2022 to December 31, 2022

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・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

7

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

7

2. Business Risks・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

13

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

15

4. Important Management Contracts・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

19

5. Research and Development Activities・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

20

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

22

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

22

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

22

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

22

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

23

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

23

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

27

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

27

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

28

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

39

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

40(1) Consolidated Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

40(2) Others・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・

64

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

65(1) Non-Consolidated Financial Statements・・・・・・・・・・・・・・・・・・・・・・・・・・・

65(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 29, 2023

[Fiscal year]

38th Fiscal Period (January 1, 2022 through December 31, 2022)[Company name]

Kabushiki Kaisha Findex[Company name in English]

FINDEX Inc.

[Title and name of representative]

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

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

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

Atsushi Fujita, Department Manager, Administration Dept.

[Nearest place of contact]

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

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

Atsushi Fujita, Department Manager, Administration Dept.

[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

34th
35th
36th
37th
38th
December 31, December 31, December 31, December 31, December 31,
2018
2019
2020
2021
2022
3,603,344
4,281,539
4,004,859
4,968,885
4,541,242

Net sales(JPY in thousands)

Ordinary income(JPY in thousands)

593,878746,551

643,362

944,593

1,055,708

owners of the parent
company(JPY in thousands)

398,015499,249

430,457

636,027

722,779

Comprehensive income(JPY in thousands)

398,015499,249

430,457

635,796724,240

Net assets(JPY in thousands)

2,545,449

2,842,569

3,073,285

3,512,533

4,042,937

Total assets(JPY in thousands)

3,114,829

3,464,967

3,796,913

4,556,563

4,980,780

Book-value per share

(JPY)

99.44

111.03119.84136.84

157.63

Net income per share

(JPY)

15.43

19.50

16.81

24.84

28.21

Diluted net income per share

(JPY)

15.30

-

-

-

-

Equity ratio

(%)

81.7

82.0

80.8

76.9

81.1

Return on equity

(%)

14.8

18.5

14.6

19.4

19.2

P/E ratio

(x)

34.87

69.43

69.06

40.50

17.51

(JPY in thousands)

597,524

1,670,010

542,550

750,353

693,848

Cash flows from investing
activities(JPY in thousands)(539,824)(367,665)(146,266)(493,367)(230,160)

Cash flows from financing
activities(JPY in thousands)(675,695)(207,325)(201,957)(183,341)(142,020)(JPY in thousands)

682,984

1,778,004

1,972,330

2,045,974

2,287,747(persons)

242

273

276

282

282

Net income attributable to

Cash flows from operating
activities

Cash and cash equivalents at
end of year
Number of employees(Notes)

1. Diluted net income per share for the 35th fiscal year is not shown because there are no issuable shares.
2. Diluted net income per share for the 36th, 37th and 38th fiscal years is not shown because there are no issuable shares
having possibilities of diluting stock value.
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 stock deducted from the total numberof shares issued and outstanding at the end of the fiscal year. In addition, for the purpose of calculating net income pershare and diluted net income per share, the average number of shares of the Company's stock held by the stock benefit
trust is included in the treasury stock 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 current consolidated fiscal year, and the key financial data for the current consolidated fiscal year
are those after the application of the said accounting standards.

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

34th
35th
36th
37th
38th
December 31, December 31, December 31, December 31, December 31,
2018
2019
2020
2021
2022
3,557,306
4,241,356
3,982,323
4,924,598
4,487,352

Net sales(JPY in thousands)

Ordinary income(JPY in thousands)

635,420

660,748

738,919969,359

1,056,439

Net income(JPY in thousands)

439,628454,296

514,871

671,969

737,639

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)

2,631,776

2,883,943

3,199,072

3,671,494

4,201,464

Total assets(JPY in thousands)

3,196,832

3,501,638

3,899,555

4,678,409

5,146,346(JPY)

102.81112.64124.75143.16163.98

7.50

8.00

8.00

8.50

9.50

(2.00)(2.50)(2.50)(2.50)(3.00)

Total number of shares issued

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

Net income per share

(JPY)

17.04

17.75

20.11

26.24

28.79

Diluted Net income per share

(JPY)

16.90

-

-

-

-

Equity ratio

(%)

82.3

82.4

81.9

78.4

81.6

Return on equity

(%)

16.0

16.5

16.9

19.6

18.7

P/E ratio

(x)

31.57

76.30

57.74

38.34

17.16

Payout ratio

(%)

44.0

45.1

39.8

32.4

33.0

Number of employees(persons)

236

263

269

274

280

Total shareholder return

(%)

69.2

173.8

150.3

131.7

67.9

[Benchmark: TOPIX total returnindex](%)[84.0][99.2][106.6][120.2][117.2]Highest share price

(JPY)

897

1,464

1,665

1,345

1,078

Lowest share price

(JPY)

462

507

528

905

470

(Notes)

1. Diluted net income per share for the 35th fiscal year is not shown because there are no residual issuable shares.
2. Diluted net income per share for the 36th, 37th and 38th fiscal years is not shown because there are no issuable shares
having possibilities of diluting stock value.
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 stock deducted from the total number of sharesissued and outstanding at the end of the fiscal year. In addition, for the purpose of calculating net income per share anddiluted net income per share, the average number of shares of the Company's stock held by the stock benefit trust is
included in the treasury stock deducted 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 current fiscal year, and key management indicators for the current fiscal year are those after theapplication of the said accounting standards.

- 2 -2 History
Month/Year
January 1985

matterShikoku Kanei Kogyo Co., Ltd. established in Matsuyama City, Ehime Prefecture (capitalized at ¥5,000).

December 1987
May 1992

Business closed and corporate status dormant.
Company name changed to Shake Hands, Inc. and reopened.

July 1993
March 1998
September 2000

Company name changed to Pioneer Shikoku Co.
Company name changed to PSC Inc. and began medical software development and consulting services.

December 2002
April 2003

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 of the Japan Medical Association.
Participated as a vendor in the Shikoku 4-prefecture electronic medical record network collaboration projectof the former Ministry of International Trade and Industry's "Advanced IT-based Networking Promotion
Project for Medical Care".
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.
Tokyo Branch opened in Minato-ku, Tokyo.

October 2003
February 2006

Released Claio, a data management software for medical use.
Head office relocated to Nagaki-cho, Matsuyama, Ehime.

October 2009
March 2011

Osaka branch opened in Chuo-ku, Osaka.
Listed on JASDAQ (Standard) of the Osaka Securities Exchange.

November 2012
July 2013
November 2014
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.
Listed on the First Section of the Tokyo Stock Exchange from JASDAQ (Standard).

July 2015
January 2017

Acquired the business of Try For Inc.
Matsuyama Head Office was renamed Shikoku Branch Office and the Head Office was centralized in Tokyo.

February 2017
August 2018

Established consolidated subsidiary Eagle Matrix Consulting, Co., Ltd.
Consolidated subsidiary Eagle Matrix Consulting, Co., Ltd changed its name to EMC Healthcare Co., Ltd.

February 2019
August 2019

Released GAP-screener, a gaze analyzing perimeter.
Naha Branch opened in Kume, Naha City.

December 2020
February 2021

Tokyo Head Office relocated to Chiyoda-ku, Tokyo.
Invested in Digital Entertainment Asset Pte. LTD.

March 2001
May 2001

May 2002

March 2021
April 2021

Capital alliance with CROSS SYNC. Inc.
Released GAP, a gaze analyzing perimeter.

April 2021
April 2021

Established a consolidated subsidiary, Fitting Cloud Inc.
Kyoto Branch opened in Nakagyo-ku, Kyoto.

May 2021
April 2022

Niigata Branch opened in Chuo-ku, Niigata City.

April 2022
July 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.

- 3 -3 Description of Business(1) About the Group's Products
The Group consists of the Company, one consolidated subsidiary, and one equity-method affiliate, and is engaged inbusiness activities such as development and sales of medical software, office solutions, and medical devices. Their positioning
and main product lines are as follows (*indicates an equity-method affiliate). Effective from the first quarter of 2023, thereportable segments will be reorganized into three segments: Medical Business, Public Business, and Health Tech Business.
Reportable Segment
System Development

ClaioDashboard
Claio.
C-ScanDocuMaker
PDI+MoveBy
LIS Endoscopy System
LIS Ultrasound System
ProRad RIS
ProRad RS
ProRad QA
Gateway System
C-NoteMapleNote
ID-Cam/Claio-Cam
DigiWorker
DocuMaker Office (medical)
REMORA
WebLi
Home Assessment System
Personal Health Notebook
Stress Check System
C-Nys ME (PMDA
approved)
On-shin
UniversalSearcher
Dodo
Medical Avenue
WeberiBricksHealth Tech

ValloonDocuMaker Office (nonmedical)
DocuMaker Shelf
GAP-screener (PMDA
approved)
GAP (PMDA approved)
CALM-M (PMDA approved)
Baby-Moni
Wellness Passport
OwlCareMain Products
Integrated Browsing System
Data Management Software
Document Integrated Archiving Software
Medical Document Management
Software
PDI Import / Export Software
Endoscopy Department Software
Ultrasonic Division SoftwareRadiology Information SoftwareRadiological Reporting Software
Integrated Image Detection Software

Companies
Findex Inc.
and
Fitting Cloud Inc.

Clinical Record Entry Software
Perinatal Software
Digital Camera Solution
RPA tools for Medical Institutions
Document management Software for
Administrative Sections
Electronic Medical Record
Referral Letter Software
Home-Visit Nursing Care Planning
Support System
Medication Management App
Nystagmus Analysis Support System
Telemedicine Software
Medical Big Data Search Software
Task Management Application for
Families
Patient Information App
Internet Browsing Virtualization Service
Cloud-based General-purpose
EDC/Questionnaire System
Closed-cloud Data Storage
Public Records Management andElectronic Approval software
Electronic Bookkeeping Solutions
Gaze Analyzing Perimeter for Checkup
Facilities
Gaze Analyzing Perimeter for Eye
Clinics and Hospitals
Body Motion Sensor
Baby Monitoring System
Health Care Services
Nursing Care Service- 4 -Findex Inc.

*EMC
Healthcare Co.,Ltd.

(2) Business Structure
The Group has two reportable segments: the System Development and the Health Tech. The system development consistsof sales of medical information software and office solutions, respectively, while the health tech focuses on sales of GAP/GAPscreener, gaze analyzing perimeters.
The business diagram for transactions between the Company and its consolidated subsidiary and equity-method affiliate isomitted due to immateriality.
[Business Diagram]

Trends in the number of facilities where the products have been installed or units of the products sold- 5 -

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

SystemDevelopment

70.0

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

[Equity-Method Affiliate]
The company offers medical
institution management consulting
and other proposals for medical data
Chiyoda,management solutions, etc., as well as
EMC Healthcare Co., Ltd.
111,113 Health Tech
18.9
Tokyo
contracted R&D and development ofhealth tech-related products.
Directors serve concurrently.
Bonds are underwritten.
(Note) As of July 1, 2022, the Company's shareholding in EMC Healthcare Co., Ltd. decreased, and it became an equity-method
affiliate.

5 Employees(1) Information about Consolidated Companies
As of December 31, 2022
Segment

Number of employees (persons)

System Development Business

265

Health Tech Business

17

Total

282

(2) Information about Reporting Company
Number of employees (persons)280

Average age(years)Average years of service (years)
38.9

6.8

As of December 31, 2022
Average annual salary(JPY in thousands)
5,321
As of December 31, 2022

Segment

Number of employees (persons)

System Development Business

263

Health Tech Business

17

Total

280

(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 -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, Key Management Indicators and Medium-term Business Plan
In order to realize the its corporate philosophy of "enriching society with Technologies and Creation", the Company believes
it is essential 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.
On February 13, 2023, the Company announced a revised version of its medium-term business plan "Vision for 2025",
which was originally released on July 5, 2021. As stated in this document, it has set the following mid-term goals and willproceed with various measures and projects to achieve them.

From FY2023 to FY2025, the Company’s medium-term goals are to achieve continuous growth of 20% or more of
consolidated net sales and an ordinary income margin of 30% or more.
To achieve these goals, the Company will work on each of its business, targeting net sales of ¥6,330,000 thousand andordinary income of ¥2,100,000 thousand in FY2025. Specific sales targets for each business are ¥5,320,000 thousand for the
medical business, which continues to enjoy stable demand, and ¥330,000 thousand and ¥680,000 thousand for the publicbusiness and health tech business, respectively, which have product lines with high profit margins.
Other quantitative management targets are to maintain a dividend payout ratio of 30% or more for FY2025, and to set anannual dividend of ¥18.00.

- 7 -In addition to the conventional business goals, the revised medium-term business plan redefines the identity of the Company,
and proactively refers to the disclosure of non-financial information and its goals. As stated above, the Company will focus
on the three main pillars, which are "concentration of management resources", "promotion of advanced research anddevelopment", and "contribution to the formation of a sustainable society", and will carry out initiatives to achieve the goals
from each of these perspectives.
Digitalization is an irreversible trend in all kinds of industries, and digitalization is an urgent need in the medical industry
and public sector, where the Company is engaged to extend its business activities. The Company will strive for growth in eachof its business by meeting these demands, and at the same time, it will fulfill its role as a company while being conscious of
the need to ensure sustainable business activities toward the formation of a society in which all people can lead healthy lives.
(2) Business Environment
The outbreak of covid-19 pandemic has put a damper on the willingness of medical institutions to invest in software in
2022. However, the trend of digitalization for the purpose of improving operational efficiency and protecting the environment
is an urgent need regardless of industry, and the trend to promote digitalization in medical institutions is no exception. With
multiple government-led healthcare digitalization projects underway and the acceleration of cloud-based data integration, suchas the My Number Card (ID card) and e-prescription initiatives, demand for digitalization solutions shows no signs of abating.
In this environment, the Company will continue to aggressively develop and market its products and services to attract
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 Company’s target segment, and the need for digitalization isincreasing year by year, even more so than in the medical industry. The Company 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.
Regarding the health tech segment, the market is booming, with many domestic and foreign companies selling headmounted display-type perimeters similar to GAP, a visual field analyzer developed by the Company. Among these, there arevery few head-mounted perimeters with the same testing logic and high accuracy as the GAP, and the Company believes thatits product is competitive enough in the booming perimeter market. The Company expect further intensification of competitionin the future, but it will accelerate sales both domestically and globally by further strengthening promotional activities together
with its sales partners.
(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 Company 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 high- 8 -development capability to quickly commercialize products based on this knowledge. Although there is no shortage of staff inthe development department at the present stage, the Company 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 Company 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 diagnostic support cloud services
Since its establishment, the Company 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, theCompany will contribute to the reduction of environmental burdens, and by providing cloud-based solutions, it will digitallyconnect 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 Company has maintained and expanded its business stably through the provision of software to medical institutions
within Japan. As it moves into the start of full-scale overseas sales, which is indispensable for further growth in the future, in
2023 the Company will continue to focus on building a business model to provide medical software in India. In addition, withregard to GAP, a medical device developed by the Company, it will develop and implement parts to accommodate differencesin facial structure by race and reschedule the acquisition of regulatory approval in each country to operate the project withhigher precision in order to expand the business scale and achieve higher profitability in promoting overseas sales.
(iii) Promotion of sustainable management
As a business entity engaged in business with a high degree of public interest, the Company will emphasize the fulfillmentof its social responsibilities. It will contribute to the creation of a prosperous society through its ESG-conscious businessactivities. Specific initiatives for each item are as follows.
a. Environmental Initiatives (E)The Company will promote the digitization and streamlining of the medical treatment flow in hospitals and the decisionmaking flow in local governments, thereby reducing environmental impact through the establishment of a paperless work
style. In addition, The Company has introduced an ESG investment limit of 100 million yen by 2025 and are considering
investing in related companies, indirectly contributing to environmental protection by supporting initiatives related to building
a sustainable society, such as CO2 emission reduction, CFC-free measures, securing water resources, and promoting clean
energy.
b. Social Initiatives (S)The Company will contribute to the correction of medical disparities and improvement of people's wellbeing through its
business, such as streamlining the flow of medical treatment in the medical industry and spreading the use of easy and highly
accurate visual field tests. In addition, the Company has been making efforts to build and maintain a healthy work environment
where employees can work comfortably for years by conducting employee surveys, proactively introducing remote work
scheme, and reassigning employees based on their requests. Based on the above efforts, the Company endorses the "My Jinken
Declaration" proposed by the Ministry of Justice to achieve a society where everyone respects each other's human rights, andthe Company has made the declaration public.
c. Governance Initiatives (G)The Company anticipates further business expansion. Under a corporate governance system that complies with laws,
regulations, and social demands, all managements and employees will practice sound and fair management with a high senseof ethics. In this section, The Company will describe its approach to human capital, ensuring diversity, and information security
among its governance initiatives. Refer to "IV. Status of the Submitting Company, 4 Status of Corporate Governance, etc." forthose related to Directors.
i. Approach to 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 Company 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.
In the area of human resources development, The Company actively promote employees to key positions, regardless ofgender, nationality, or age, but according to their past achievements and preferences. It also actively transfer authorities,
creating many opportunities for employees to take on new challenges, such as considering new business opportunities andexploring new business fields. Approximately 98% of the Company’s Directors and managers are mid-career hires.

- 9 -Although it is possible that the percentage of mid-career hires in management positions will decline in the future due to thepromotion of experienced employees to management positions, the Company has not set a voluntary and measurable goal
for the promotion of mid-career hires to management positions because the percentage is expected to remain high. Regarding
the promotion of non-Japanese nationals to management positions, the Company 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 voluntaryand measurable targets, considering its business development. The Company’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% by 2026 and to 18% by 2030 (3.8% as of December 31, 2022). The Company will measure
the effectiveness of its action plan annually starting in March 2023 to achieve these goals, while promoting specific measures
such as providing training and e-learning opportunities for female employees who wish to be promoted to management
positions.
ii. Information Security
The Company handles a great deal of information that must be properly managed at a high security level, such as hospitalpatient information and official government document information. To protect all information from loss, misuse, alteration,or corruption, the Company has continuously implemented physical, technical, and administrative security measures, andobtained Information Security Management System (ISMS) certification in August 2012 and ISMS cloud security
certification in August 2021. Iｔ also has established a personal information protection management system in compliancewith the Japanese industry standard Personal Information Protection Management System - Requirements (JIS Q 15001) tostrengthen the Company’s internal system, and it also educates and enlightens its employees as needed.
In addition, cyber-attacks have become more frequent and sophisticated in recent years, and there have been frequent
incidents that have had a significant impact on organizational operations. As demand for cyber security and risk consulting
services from healthcare and government organizations increases, the Company continues to provide its clients with optimalsecurity measures and support them in improving their cyber resilience.
In accordance with the Prime Market Corporate Governance Code, the Company has conducted a scenario analysis of therisks and opportunities that climate change poses to its business based on the recommendations of the Task Force on Climaterelated Financial Disclosure (TCFD) and disclosed relevant information. In the future, it will expand the scope of the analysis
and reflect the results in its management strategies and will strive to enhance its disclosure of information on financial impacts.
Although the software industry is an industry that emits only a small amount of greenhouse gases from its operations, theCompany believes that it is very important for itself to understand and monitor business risks and opportunities and to respondto climate change issues under an appropriate framework, in order to build a sustainable society. Amidst the growing
momentum toward decarbonization throughout society, including the 2050 Carbon Neutral Declaration, the Company hasregistered its status to the Carbon Disclosure Project (CDP) disclosure system. At the same time, as mentioned above, theCompany expressed its endorsement of the TCFD's recommendations and will implement the following disclosures in linewith its framework. In order to continue contributing to the formation of a decarbonized society, the Company will take theopportunity of its endorsement of the TCFD recommendations to further promote climate change measures.
Governance
The Company 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 humanrights, and fair and appropriate business activities for all stakeholders including employees, as business opportunities.
The Committee consists of the Representative Director, the Department Manager of the Administration Department, andan Executive Officer as its members. The Committee has established a forum to review, formulate, and evaluate measures
twice a year 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 arethen reflected in the business activities of each department through the Sustainability Team and monitors the status of the
responses.
Under these systems, the Company proactively disclose information on the status of its efforts to address climate change,
its most important theme, to its stakeholders, and manage them through the environmental management system and othermechanisms while making continuous improvements.

- 10 -

Strategy
In order to properly understand the risks and opportunities of climate change, the Company sets two scenarios andanalyzed "acute" and "chronic" as 4°C scenarios, which are "scenarios in which temperatures rise as expected without
progress in climate change measures, and physical risks and opportunities arise from this increase”. On the other hand, theCompany analyzed "policy and regulation," "technology," "market," and "reputation" as the 2°C scenario, which is "ascenario in which various activities are implemented to prevent global warming and risks and opportunities arise from thetransition to a decarbonized society”.
[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]- 11 -

[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.

Risk Management[Process for identifying and assessing climate-related risks]
The Sustainability Committee, chaired by the Representative Director, will identify climate-related risks twice a year
based on information gathered from each department, evaluate them in terms of "probability of occurrence" and "impact on
the Company’s business," prioritize them, and consider and decide on a response policy for important risks.
[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.
Indicators and Targets
The Company aims to reduce Scope 1 and 2 emissions by 4.2% of GHG emissions from the previous year by 2030, in
accordance with the SBT 1.5-degree target. The Company regularly manages the progress of these efforts and are promoting
initiatives to further ensure its contribution to the realization of a decarbonized society.
Actual GHG emissions in Scope 1 and Scope 2 (FY2021)
Scope1

20 tCO2

Scope2194 tCO2

Total

214 tCO2*The Company will prepare for the disclosure of Scope 3 in the next fiscal year.

- 12 -

2 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 Group handles a large amount of product development information in the course of its business. In August 2012, theGroup obtained Information Security Management System (ISMS) certification for its medical information system maintenanceservices for large hospitals. In August 2012, it obtained Information Security Management System (ISMS) certification for its
medical information system maintenance operations for large hospitals. In August 2021, it also obtained ISMS cloud security
certification for its maintenance operations.
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.
(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.

- 13 -

(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 Covid-19 Pandemic
The decision to move the category of covid-19 infection to "category 5" and other such developments have prompted thepromotion of socioeconomic activities in Japan while taking appropriate countermeasures against infection. However, since there
is little hope for a conclusion to the outbreak of covid-19 in the near future, if the impact of the outbreak becomes more serious,
the implementation of software for medical institutions, which are the major customers of the Group, may be prolonged or
postponed, which may affect its business performance.

- 14 -

3 Management's Discussion and Analysis of Financial Condition, Operating Results and Cash Flows(1) Business Overview of the Fiscal Year Ended December 31, 2022
■ Market Trends and Performance of the Company
The Group develops comprehensive medical software and medical devices of its own, providing them from large hospitals to
local clinics nationwide, with university hospitals as lead users. At the same time, the Group offers office solutions to the local
governments and public corporations and engages in new businesses in the health tech and medical cloud computing. In this area,
the impact of covid-19 pandemic has accelerated the digital transformation of medical institutions, and non-contact medical careusing new technologies and AI is becoming more widespread than ever before, including the introduction of telemedicine and theuse of medical robots. Furthermore, the Japanese government has designated 2022 as the first year of digitalization in healthcare,and has announced that industry, government, and academia will work together to promote the utilization of medical big data, andas efforts in this area are gaining momentum, more medical institutions are expected to actively install solutions equipped withthe latest technologies.
While demand for system renewal remained stable in 2022, the prolonged pandemic ofcovid-19 led to a higher weight ofcapital investment motivation among medical institutions related to pandemic countermeasures. However, with the decrease in
the risk of serious illness, the lowering of the classification of infectious diseases from "Class 2" to "Class 5" and the increased
discussion of removing masks, life has gradually been returning to normal, and the Group’s sales activities, which were limited
due to the impact of pandemic measures at each facility, have almost returned to the same level as before. Furthermore, as thenumber of cases of digitalization solutions being installed not only in medical institutions but also in the public sector, such as
municipalities and public corporations, is increasing year by year, further expansion of demand for the Group’s office solutions is
expected in the future.
In 2022, the Group’s main goals were to maintain stable sales and further improve profitability, and it prioritized sales of
packaged products to medical institutions, the development of new services, and the acquisition of new customers in the public
sector.
As a result, the Group’s performance in the current consolidated fiscal year was in line with the initial forecast. Net sales
decreased by 8.6% compared to the same period of previous fiscal year, to ¥4,541,242 thousand, operating income increased by
11.7% to ¥1,028,522 thousand, ordinary income increased by 11.8% to ¥1,055,708 thousand, and net income attributable toshareholders of the parent company increased by 13.6% to ¥722,779 thousand.
Effective from the beginning of the current fiscal year, the Group has adopted the "Accounting Standard for Revenue
Recognition" (ASBJ Statement No. 29, March 31, 2020). For details, please refer to "V. Financial Information (1) Consolidated
Financial Statements [Change in Accounting Policies] and [Segment Information, etc.] Segment Information 2. Method of
calculating net sales, income or loss, assets, and other items by reportable segment".
■ Overview of segment≪System Development Business≫
The following is the result of the System Development business.

Net sales
Operating income

FY2021
4,922,640
1,137,726

FY2022
4,473,474
1,233,811

Change (amount)(449,166)
96,084(JPY in thousands)
Change (%)(9.1%)
8.4%〇 Medical System
Findex Inc. is a leading company of medical information technology solutions and services and offers a wide range ofintelligent solutions. Amongst of them, “Claio”, electronic image filing system, “C-Note”, electronic medical record system, and“DocuMaker”, document management system, are flagship products and have maintained a high reputation and stable market
share in large healthcare organizations.
During this consolidated fiscal year (hereafter referred to as “FY2022”), the Company focused on sales of the vendor-neutral
packaged products to the Company’s existing customers as well as new customers, and 48 hospitals and 85 clinics newly adopted,
augmented, or updated its solutions, achieving sales of ¥4,352,187 thousand.
As for the progress of the strategic alliance with Toyota Tsusho Corporation, in the Company’s first collaborative project toimplement the Company’s flagship product Claio to Sakra World Hospital (Bangalore, India), it launched test operations andfacilitated toward smoother cutover. The Company will continue more detailed test and research to create local-realistic
operation. Also, the Company discussed on promotion, sales channel and maintenance structure with an eye on successful roll outof Claio and C-Note in India.
Fitting Cloud Inc., a subsidiary of the Company which delivers cloud-enabled solutions, launched development and offering of
the next-generation cloud-based infrastructure well designed for patient guidance applications at general hospitals in 2022. In
fact, its solutions have been launched and gone live at Kyoto University Hospital, one of Japan’s top-tier university hospitals, inJanuary 2023. Scaling to next height, it released three new products in developing cloud-based EDC (Electronic Data Collection)systems and cloud-based virtual browsing environment, conducting exhibition and sales promotion at relevant academic
conferences.

- 15 -

〇 Office System
In this segment, the Company delivers products, mainly such as “DocuMaker Office”, document management systems. The
Company’s main target includes ministry-affiliated organizations and local governments as well as healthcare organizations, forwhich it can leverage on strengths derived from this DocuMaker Office. Spurred by acceleration of digitalization, those main
targets have been promoting the introduction of electronic approval systems and official document management systems, andinquiries and pre-sale consultations have been increasing accordingly.
Sales of this product have been steady to the target for FY2022, with 27 new or additional installations during FY2022,
resulting in cumulative sales of ¥121,286 thousand. During the fourth quarter of FY2022, one project has launched operation at aTokyo Metropolitan Government-affiliated organizations, and other projects, at one ministry-affiliated organizations and at one
municipality, made progress, respectively.
The Company has established trusted relationship by its proven abilities and solutions and been highly reputed as “Close onsite engagement with clients, with high consulting skills to identify issues and propose precise solutions” and “High UI/UX, easyto-use system from the user’s perspective”. The Company has been steadily winning several large-scale projects at many publicorganizations.
Several negotiations have been concurrently under way just before next-year budget fix and proposals. The Company will
accelerate digitalization in their official document management and approval process, not only of local governments, but also of
independent administrative agencies and foundations.
In the medical field, the Company also expect high demand, especially from large and medium-sized healthcare organizations,which are its existing clients, and in this fourth quarter of FY2022, 2 installations at large healthcare organizations made progress.
The Company is also pleased to cross-sell these cloud-based services that support their back-office operations.
≪Health Tech Business≫
The following is the results of the Health Tech business.
FY2021
Net sales
Operating income (loss)

FY2022

49,215(217,006)

69,253(205,288)

Change (amount)
20,037-(JPY in thousands)
Change (%)
40.7-

In this segment, the Company focused its efforts on domestic sales and on strategy formulation towards successful roll out inoverseas, of GAP (Note 1), a Gaze Analyzing Perimeter, and GAP-screener (Note 2). The GAP is an affordable, but breakthroughwearable device that contributes to the early detection of retina diseases such as glaucoma. This solution eliminates the need for adark room, which was formerly needed for exam, shortening exam time and reduces the patient’s burden.
Furthermore, by promoting the use of this solution at comprehensive medical exams and checkup facilities, and by collecting
real-world data, contribution to the technological and solution innovation, in various fields such as pharmaceuticals and life
insurance, can be expected.
As of December 31, 2022, including those sold in the previous quarters, this perimetry has been introduced to 35 healthcareorganizations in Japan. Domestically, the Company augmented GAP introduction to university hospitals and clinics. For medical
checkup facilities, the Company lend GAP and charge on a pay per test, so that they can easily conduct visual field test as an
optional item.
However, due to the Company’s inability to establish a sufficient sales structure in Japan and delays in application for theEuropean Medical Device Regulation (EU-MDR), the Company was unable to reach its targeted sales volume in both Japan andoverseas in FY2022. As a result, there is about 1-to-2-year delay from the original sales plan. Replenishing resources andconducting delicate scheduling, the Company will continue to expand sales in FY2023 both in Japan and overseas.
Additionally, the Company has been continuously conducting joint research with Kyoto University, it found that the GAP's
usefulness in detecting is not only visual field abnormalities but also MCI (early-stage dementia).
Japan Agency for Medical Research and Development (“AMED”) adopted, in its 2021 Artificial Intelligence Implementation
Research Project for Medical Engineering Collaboration, “the R& D of a screening program for slight cognitive dysfunctions,
utilizing digital phenotyping of gaze point response and eyeball movements”. Innovative medical devices will be introduced overthe next several years. In order to solve many problems faced by the aging society, the Company will continue to engage in R& D
and evolve core technologies and products from various perspectives.
(Note 1) GAP (Notification No. of medical device manufacturing and sales 38B2X10003000002)(Note 2) GAP-screener (Notification No. of medical device manufacturing and sales 38B2X10003000003)- 16 -

(2) Financial Condition
FY2021
Assets (Total)
Liabilities (Total)
Net assets (Total)

FY2022
4,556,563
1,044,029
3,512,533

4,980,780
937,842
4,042,937(JPY in thousands)
Change (amount)
424,216(106,186)
530,403(Assets)
Total assets as of FY2022 end amounted to ¥4,980,780 thousand, an increase of ¥424,216 thousand from FY2021 end.
(i) Current assets
Current assets amounted to ¥4,128,302 thousand as of FY2022 end, an increase of ¥422,700 thousand from FY2021 end,
which is mainly composed of an increase of ¥241,772 thousand in cash and deposits, and an increase of ¥276,637 thousand incontract assets.
(ii) Non-current assets
Non-current assets increased ¥32,031 thousand in tangible assets due to a ¥22,575 thousand increase in buildings related tothe head office relocation, ¥12,404 thousand in intangible assets due to a ¥12,404 thousand increase in software, and ¥42,920
thousand in investments and other assets due to a ¥79,493 thousand decrease in leasehold deposits. The balance at the end of
the current consolidated fiscal year was ¥852,477 thousand (up ¥1,516 thousand from the end of the previous consolidated
fiscal year).
(Liabilities)
The balance of liabilities at the end of the current consolidated fiscal year was ¥937,842 thousand, a decrease of ¥106,186
thousand from the end of the previous consolidated fiscal year.
(i) Current liabilities
Current liabilities amounted to ¥654,002 thousand as of FY2022 end, a decrease of ¥171,723 thousand from FY2021 end,
which is mainly composed of a decrease of ¥142,418 thousand in accounts payable trade.
(ii) Long-term liabilities
Long-term liabilities amounted to ¥283,839 thousand as of FY2022 end, an increase of ¥65,536 thousand from FY2021
end, which is mainly composed of an increase end of ¥23,173 thousand of allowance for stock allowances.
(Net assets)
Net assets amounted to ¥4,042,937 thousand as of FY2022 end, an increase of ¥530,403 thousand from FY2021 end. This wasprimarily due to an increase of ¥527,745 thousand in retained earnings.

- 17 -

(3) Cash Flows

750,353(493,367)(183,341)

693,848(230,160)(142,020)(JPY in thousands)
Change (amount)(56,504)
263,207
41,32173,644

321,668

248,023

1,972,330

2,045,974

73,644-(79,895)(79,895)

2,045,974

2,287,747

241,772

FY2021
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

FY2022

Cash and cash equivalents (hereafter “cash”) as of FY2022 end amounted to ¥2,287,747 thousand, an increase of ¥241,772
thousand from FY2021 end (up 11.8%). 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 ¥693,848 thousand, a decrease by ¥56,504 thousand compared to
FY2021.This is mainly attributable to ¥1,060,451 thousand of Income before income taxes, partially offset by ¥369,723 thousandof Income tax payments.
(Cash flows from investing activities)
Net cash used in investing activities amounted to ¥230,160 thousand, a decrease by ¥263,207 thousand compared to FY2021.
This is mainly attributable to ¥240,633 thousand of acquisition payment for intangible assets (mainly software for sales).
(Cash flows from financing activities)
Net cash used in financing activities amounted to ¥142,020 thousand, a decrease by ¥41,321 thousand compared to FY2021.
This is mainly attributable to ¥100,000 thousand of proceeds from short-term debt, partially offset by ¥232,020 thousand of
dividend payments.
(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.

- 18 -

(7) Production, Orders and Sales(i) Production
The results of production by segment for FY2022 are as follows:
Segment
Production (JPY in thousands)
System Development Business
1,373,110
Health Tech Business
162,998
Total
1,536,109(Note) Amounts are based on FY2022 total production costs.
(ii) Orders Received
The results for orders received for FY2022 are as follows:
Orders received
Segment
YoY change (%)(JPY in thousands)
System Development Business
3,409,475
95.3
Health Tech Business
120,049
134.7
Total
3,529,524
96.3

YoY change (%)
91.7
91.7
91.7

Order backlog(JPY in thousands)
1,090,061
23,628
1,113,690

YoY change (%)
135.2
84.7
133.5

(iii) Sales results
The table below shows sales results by segment for the fiscal year ended March 31, 2012.
Segment
Sales (JPY in thousands)
YoY change (%)
System Development Business
4,473,474
90.9
Health Tech Business
69,253
140.7
Adjustment (Note 1)(1,485)50.0
Total
4,541,242
91.4(Notes)1. Adjustments are due to elimination of intersegment transactions.
2. Sales results by major customer and the ratio of such sales results to total sales results for the two mostrecent consolidated fiscal years are as follows.
FY2021
FY2022Company nameAmountAmountPercentage (%)
Percentage (%)(JPY in thousands)(JPY in thousands)
NEC Corporation
591,11411.9
3. Information on NEC Corporation forFY2022 is omitted because the ratio of sales results to total sales
results is less than 10/100.

4 Important Management Contracts
The Company has entered into a strategic partnership agreement as follows:
Contracting
Title ofDate ofCompanyCountry
Contents of Contract
Party
Contract
Agreement
Strategic Alliance
1. Overseas sales of medical
softwareFindex Inc.
ToyotaStrategic
May 6th,
2. Installation of GAP-screener(The
TsushoJapan
Partnership
2022(Gaze Analyzing Perimeter,
Company)
Corporation
Agreement
PMDA approved and MDR
conformed) to domestic checkup facilities- 19 -

Term of Contract
From May 6th 2022
to May 5th 2025
(This will be
automaticallyrenewed in oneyear increments)

5 Research and Development Activities≪System Development 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 FY2022, 80 staffs (27.3% 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. On the other hand, in thedevelopment of systems for local governments, the Company is developing new technologies based on the framework of
DocuMaker, a medical version of the in-hospital document management system for which many R&D resources have been
invested. The Company’s sales consulting team quickly absorbs market needs and examines research themes.
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 FY2022
In this segment, in addition to enhancing the functionality of its hospital information system package product, the Company
conducted research and development of "Medical Avenue," an application that enables seamless procedures for medical
examinations at large hospitals. It also conducted basic research on qualification verification technology, which is one of thekeys to promoting the spread of electronic prescriptions, an important issue for medical digitalization.
In the area of software solutions for local governments, the Company conducted research and development on theimplementation of a complex flow of the approval function of DocuMaker Office and a secure and efficient paper document
management function. In the area of systems for public hospitals and universities, the Company achieved a high degree ofautomation through its efforts to automate processes from the occurrence of administrative events to settlement operations.
≪Health Tech Business≫(1) Basic Policy on Research and Development Activities
In this segment, as of the end of FY2022, 12 staffs (4.1% 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
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. Thirteen people, including the Executive
Director, are engaged in R&D at bases nationwide, conducting basic research in cutting-edge areas as well as developing coretechnologies for implementation in products. In addition to regular weekly meetings, the Company introduced a virtual officeenvironment with constant connectivity so that meetings can be held at home or between sites in a timely manner when
discussions are necessary. In addition, joint research with medical institutions is conducted and results are managed incollaboration 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 FY2022
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.

- 20 -

As a result of the above R&D activities, a total of ¥39,016 thousand in R&D expenses of ¥18,789 thousand in the systemdevelopment business and ¥20,226 thousand in the health tech business was recorded in FY2022.

- 21 -

III. Information about Facilities
1 Summary of Capital Investments
There were no disposals or sales of significant facilities in FY2022.

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

Office Name
(Location)

Segment

As of December 31, 2022
NumberBook value (JPY in thousands)
ofTools,
Employee
Building
furnitureTotalsand fixtures(persons)

Equipment

Headquarters
System Development
Sales & Development
30,204
10,982(Chiyoda-ku, Tokyo)
Health Tech
Shikoku Office
General Operations
System Development(Matsuyama-shi,
and Development
3,221
36,154
Health Tech
Ehime)
facilities, etc.
Osaka Office
System Development
Sales & Development
1,460
416
(Chuo-ku, Osaka)
Health Tech
Sapporo Office
System Development
Sales & Development
1,838
0(Kita-ku, Hokkaido)
Health Tech
Fukuoka Office
System Development
Sales & Development
1,164
653
(Chuo-ku, Fukuoka)
Health Tech
Naha Office
System Development
Sales(Naha-shi, Okinawa)
Health Tech
Kyoto Office
System Development
Sales & Development
5,024
1,169
(Nakagyo-ku, Kyoto)
Health Tech
Niigata Office
System Development
Sales
7,795
2,212
(Chuo-ku, Niigata)
Health Tech
(Notes)1. The headquarters office is a leased property, and the rent for FY2022 was ¥120,033 thousand.
2. The Shikoku office is a leased property, and the rent for FY2022 was ¥47,051 thousand.
3. The Osaka office is a leased property, and the rent for FY2022 was ¥23,866 thousand.
4. The Sapporo office is a leased property, and the rent for FY2022 was ¥6,793 thousand.
5. The Fukuoka office is a leased property, and the rent for FY2022 was ¥12,144 thousand.
6. The Naha office is a leased property, and the rent for FY2022 was ¥2,847 thousand.
7. The Kyoto office is a leased property, and the rent for FY2022 was ¥7,413 thousand.
8. The Niigata office is a leased property, and the rent for FY2022 was ¥7,600 thousand.

41,187

77

39,375

127

1,877

36

1,838

12

1,817

13

-

2

6,193

8

10,0085(2) Domestic Subsidiaries

Company Name

Office name
(Location)

Segment

Equipment

As of December 31, 2022
Book value (JPY in thousands)
Number of
Employees
Tools, furniture
Building
Total(persons)
and fixtures

Headquarters
SystemAdministration(Nakagyo-ku,
770
770
2
Development
Facility
Kyoto)(Note) EMC Healthcare Co., Ltd. was excluded from domestic subsidiaries as of July 1, 2022, as the Company's shareholding ratio
decreased, and it became an equity method affiliate.
Fitting Cloud Inc.

(3) Overseas Subsidiaries
Not applicable

3 Planned Additions, Retirements and Other Changes of Facilities
Not applicable- 22 -

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

Total number of shares authorized to be issued (shares)
78,336,000

Total

78,336,000(ii) Issued shares
Name of listed financial
Number of shares issued as of the Number of shares issued as of the
instruments exchange or registeredend of the fiscal year (shares)
date of submission
and licensed financial instruments(December 31, 2022)(March 29, 2023)
association
CommonTokyo Stock Exchange
26,608,800
26,608,800
stock
Prime Market
Total
26,608,800
26,608,800
TypeContents
Number of shares per unit:
100 shares-(2) Share Warrants(i) Stock option plans
The details of the stock option plan are described in the " V. Financial Information, 1. Consolidated Financial Statements,(i) Consolidated Financial Statements, Notes to Consolidated Financial Statements, Stock Options".
(ii) Rights plans
Not applicable(iii) Other stock acquisition rights
Not applicable(3) Exercises of Moving Strike Convertible Bonds, etc.
Not applicable(4) Changes in Number of Issued Shares, Share Capital and Legal Capital Surplus
date

Changes in total
number of issued
shares (shares)

Balance of total
number of issued
shares (shares)

470,400

26,608,800

From January 1, 2018
To December 31, 2018 (Note)

Changes in share Balance of share Changes in legal
Balance of legal
capital (JPY in capital (JPY in
capital surplus
capital surplus
thousands)
thousands)(JPY in thousands) (JPY in thousands)
4,939

254,259

4,939

224,259(Note) Increase due to exercise of stock acquisition rights.
(5) Shareholding by Shareholder Category
As of December 31, 2022
Shareholding status (100 shares per unit)
Category

National andlocal
governments

Financial
institutions

FinancialserviceprovidersOther
corporations

Foreign investors, etc.
Nonindividuals

Individuals
Individuals and other

Total

Number of shareholders(persons)

-

12

32

38

60

18

5,579

5,739

Number of shares held
(Units)-73,032

13,314

1,712

12,688105

165,179

266,030

Percentage of shareholdings
(%)

-

27.45

5.01

0.64

4.77

0.04

62.09

100.00Shares lessthan one unit
(shares)
5,800-(Notes) 1. "Financial Institutions" includes 1,611 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 stock in the financial statements.
2. 8,263 units of treasury stock are included in "Individuals and Other" and 75 shares are included in " Shares less than one
unit”. The number of shares of treasury stock as recorded in the shareholders' register and the number of shares actually heldby the Company as of the end of the fiscal year are the same as those recorded in the shareholders' register.

- 23 -

(6) Major Shareholders

Name

Address

As of December 31, 2022
Percentage ofshares held tothe total
Number of
number ofshares held
issued shares(shares)(excluding
treasurystock) (%)
7,707,600
29.89

Teruo Aibara

Minato-ku, Tokyo

The Master Trust Bank of Japan, Ltd.

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

2,061,100

7.99

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

Custody Bank of Japan, Ltd. (Trust Account)

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

1,008,800

3.91

Ehime Bank, Ltd.

2-1 Katsuyama-cho, Matsuyama City, Ehime

967,200

3.75

The Bank of New York Mellon 140040

240 GREENWICH STREET, NEW YORK, NY
10286, U.S.A.

497,600

1.92

491,200

1.90

410,374

1.59

Mizuho Trust & Banking Co., Ltd. Securities
Custody Trust 0700067(Standing proxy: Settlement Sales Division,
Mizuho Bank, Ltd.)(Shinagawa Intercity Tower A, 2-15-1 Konan,
Minato-ku, Tokyo)

Keiji Takemura

Matsuyama City, Ehime Prefecture

Nomura Securities Co., Ltd.
(Standing proxy: Sumitomo Mitsui Banking

13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo

Corporation)
Nomura Securities Co., Ltd.

(1-1-2 Marunouchi, Chiyoda-ku, Tokyo)
13-1, Nihonbashi 1-chome, Chuo-ku, Tokyo

Total(Notes)-346,470

1.34

16,370,344

63.45

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) 2,061,100 shares
Custody Bank of Japan, Ltd. (Trust Account) 1,007,400 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.
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 as ofthe voting rights exercise record date. The number of shares held by Baillie Gifford & Co. is not included in the above list ofmajor 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- 24 -

1,293,600

4.86

(7) Voting Rights(i) Issued shares
As of December 31, 2022
Category
Shares with no voting rights
Shares with restricted voting rights(treasury stock, etc.)
Shares with restricted voting rights (other)
Shares with full voting rights (treasury
stock, etc.)

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

-

-

-

(Treasury stock)common826,300
stock

-

-

-

-

Shares with full voting rights (other)commonstock

25,776,700

Shares less than one unit

common
stock

5,800

Standard shares of the257,767 Company with no restrictions
on rights--

Total number of shares issued
26,608,800
Voting rights held by all shareholders
257,767(Note) Common stock in "Fully Voting Shares (Other)" includes 161,100 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 stock in the financial statements.
(ii) Treasury stock, etc.

Name of shareholder

As of December 31, 2022
Number ofshares held
Percentage of shares
Number of shares
Total number
under the nameheld to the total
Address of shareholder held under own
of shares heldof othernumber of issued
name (shares)(shares)(shares)shares (%)

7-2, Otemachi 1chome, Chiyoda-ku,
826,300
826,300
3.11
Tokyo
Total
826,300
826,300
3.11(Note) In addition to the above, 161,100 shares of the Company's stock held by Custody Bank of Japan, Ltd. (Trust Account E) are
shown as treasury stock in the financial statements.
(Treasury stock)
Findex Inc.

- 25 -

(8) Share Ownership Plan for Directors, Other Officers and Employees(i) Outline of Employee Stock Ownership PlanAt 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"), under which the Company will provide its employees with shares of its
stock 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 stock price and performance.
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 stock 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
stock price and business performance and contribute to their being more motivated than ever to engage in their work.
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- 26 -

2 Acquisition and Disposal of Treasury Stock
Type of sharescommon stock(1) Acquisition by Resolution of General Meeting of Shareholders
Not applicable(2) Acquisition by Resolution of Board of Directors’ Meeting
Not applicable(3) Acquisition Not based on Resolution of General Meeting of Shareholders or Board of Directors’ Meeting
Not applicable(4) Disposal of Acquired Treasury Stock and Number of Treasury Stock HeldFY2022
Number of
Total amountsharesdisposed (JPY(shares)in thousands)-

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

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

-

-

-

-

-

-

-

-

-

-

-

-

Treasury stock held
826,375
826,375(Notes)1. The number of shares held as treasury stock during the period under review does not include the number ofshares purchased for shares less than one unit from March 1, 2023 to the date of submission of the Annual
Securities Report.
2. In addition to the above, 161,100 shares of the Company's stock 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 as treasury
stock 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 FY2022 was 3.00 yen per share. The Company has also decided to pay a year-end dividend of 6.50
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, 2022
Board of Directors
77,347
3.00
Ordinary General Meeting ofMarch 28, 2023
167,585
6.50
Shareholders- 27 -

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:- 28 -

(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. System to ensure the appropriateness of business operations of 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 related to employees to assist the Audit and Supervisory Committee in the event that the Audit and Supervisory
Committee requests the appointment of such employees to assist the Audit and Supervisory Committee in the performanceof its duties, Matters related to ensuring the effectiveness of instructions given by the Audit and Supervisory Committee tosuch employees and matters related to the independence of such employees from Directors (Excluding Directors who aremembers of the Audit and Supervisory Committee)
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. System for Directors (excluding Directors who are members of the Audit and Supervisory Committee) and Employees toReport to the Audit and Supervisory Committee and Other systems for reporting to the Audit and Supervisory Committee
and systems to ensure that persons reporting to the Audit and Supervisory Committee will not be treated unfavorably
because of such 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- 29 -

disadvantageous treatment in terms of personnel affairs because of such reports.
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 educates its Directors, officers, and employees to ensurethat they are fully aware of this clause.
(iv) Status of development of risk management system
The Company manages risks within the scope of authority granted to each department, and cross-company risks aremanaged by the Administration Department, which takes all necessary measures to prevent the occurrence of risks and toeliminate or mitigate business risks after conducting investigations and deliberations. In the unlikely event of the occurrenceof a risk that could have a significant impact on the company as a whole, a management-level risk task force headed by the
President and CEO has been established to ensure that a prompt and appropriate response is implemented.
(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.

- 30 -

(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.
(xii) Decision-making body for share buyback
The Company's Articles of Incorporation stipulate that the Company may acquire treasury stock 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.

- 31 -

(2) Directors and Corporate Auditors(1) Board of Directors and Executive Officers
Male: 8, Female: 0 (Percentage of female board members: -%)Position

Name

Date of
Birth

Career summary

Number oftheTerm of Company’s
office shares held
(shares)

April 1990 Joined Shikoku Nippon Denki Software K.K.
September July 1993 Joined Pioneer Shikoku K.K. (now the Company)(Note 3) 7,707,600
25, 1966 February 1994 Director of the Company
May 1994 President and CEO of the Company (to present)
Board member
August 1984 Joined Suncherry Data Systems Co.
Director of
Kohji
March 22, April 2005 Joined the Company(Note 3)120,000
MedicalKondo
1964
April 2007 Corporate Officer of the Company
Solutions
July 2008 Director of the Company (to present)
April 1993 Joined TEIJIN Limited
Board member
Director of
HiroakiAugust 5, December 2008 Joined BML, INC.
July 2009 Joined the Company(Note 3)
12,000
Hospital
Hasegawa
1968
April
2010
Corporate
OfficeroftheCompany
Solutions
December 2010 Director of the Company (to present)
April 1998 Joined NEC Corporation
Board member
August 2009 Joined the Company
Director of
Riki
July 17, June 2012 Corporate Officer of the Company(Note 3)
SystemMiyakawa
1972
July 2014 Corporate Officer and General Manager of System
Development
Development Dept.
March 2016 Director of the Company (to present)
April 1980 Joined the Japan Chamber of Commerce and Industry
April 2005 General Manager in charge of new projects
April 2007 General Manager of Business Department and New
Business Promotion Department
April 2010 Director of International Affairs Department andSecretary General of the APEC/SME Summit
Akira
February 4,(NotesBoard member
Implementation Headquarters
Ono
1954
1, 3)
April 2012 Director International Office
April 2014 Director and Secretary General, Japan-Tokyo
Federation of Commerce and Industry
April 2016 Director and Secretary General, Tokyo Federation ofCommerce and Industry (to present)
March 2022 Director of the Company (to present)
February 1995 Joined Honda Service Center Ltd.
Board member(Audit &Kouji
October 3, May 2008 Joined the Company(NotesJuly 2008 Corporate Auditor of the Company
Supervisory
Yamauchi
1965
2, 4)
March
2016
DirectoroftheCompany(AuditandSupervisory
Board Member)Committee Member) (to present)
March 1985 Registered as a Certified Public Accountant
April 1998 Joined Deloitte Touche Tohmatsu LLC
Board member(Notes(Audit &Takashi February 24, July 1999 Partner, Deloitte Touche Tohmatsu LLC
October2014
CertifiedPublicAccountant
Takashi
Kitada1, 2, 4)
1,000
Supervisory
Kitada1956
Accounting Office (to present)
Board Member)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 Co.
(Notes(Audit &Akira
November December 2017 Representative Director, J-Top Corporation (to 1, 2, 4)
Supervisory
Yamada4, 1963
present)
Board Member)
February 2019 Representative Director, Valupp Corporation (topresent)
October 2021 Director of the Company (Audit and Supervisory
Board Member) (to present)
Total
7,840,600(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 28, 2023
4. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on March 29, 2022
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:
President and
CEO

Teruo
Aibara- 32 -

Name

Date of Birth

Career summary

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

Registered as an attorney-at-law, January 2016
(Notes 6,
April 2018 Joined Sato Sogo Law Office (current
7)
position)
6. Mr. Jun Ishikane is an attorney at Sato Sogo Law Office and the Company has a legal advisory agreement with theCompany.
7. Two years from the conclusion of the Ordinary General Meeting of Shareholders held on March 29, 2022

Jun Ishikane

December 29,
1988(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.

- 33 -

(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
Tetsu Yamada
16 times
16 times
The main 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 38th 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 Audit and Supervisory
Committee and the accounting auditor, and advice is obtained from the Audit and Supervisory Committee and the accounting
auditor, which determines the matters to be checked intensively at the next audit, and other matters are determined incooperation with the Audit and Supervisory Committee and the accounting auditor as necessary to conduct more effective
audits.
(iii) Accounting auditsa. Name of audit firm
Deloitte Touche Tohmatsu LLC
b. Years of continuous auditing
18 yearsc. Certified public accountants who executed the audit duties
Hiroyasu Kawai
Keita Ochid. Composition of assistants for audit engagement
Eight certified public accountants and two others- 34 -

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.
FY2021
FY2022
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
25,80025,500Consolidated
subsidiaries
Total
25,80025,500
Remuneration based on audit certification services in the previous consolidated fiscal year includes an amount of 800
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)
FY2021
FY2022
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.
Not applicable.
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.

- 35 -

(4) Remuneration, etc. of Directors and Corporate Auditors(i) Matters pertaining to the policy for determining the amount of remuneration, etc. for directors and corporate auditors or the
method for calculating the amount of remuneration, etc.
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. The same shall apply hereinafter in (i)).
The Board of Directors consulted the Personnel and Compensation Committee on the draft proposal and obtained its reportin accordance with the "Policy for Determining Directors' Remuneration, etc.", and Teruo Aibara, Representative Director,
made the decision in accordance with the report, which the Board of Directors considers to be appropriate.
The policy for determining the details of remuneration, etc. for each Individual Director 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 stockbased 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 Personnel 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 will be reviewed by April of each year, and the revised base remuneration will be applied from theApril 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 Personnel Compensation 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 percentage of the amount of remuneration,etc., paid to each Director
The Personnel and Compensation 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 theCompany. The Board of Directors shall respect the report of the Personnel and Compensation Committee and determine thedetails 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 Personnel& Remuneration Committee, taking into consideration the Company's business performance, position, responsibilities, andyears in office, etc. In the case of full-time Directors, in principle, monetary remuneration shall be 80% to 90% and nonmonetary remuneration shall be 10% to 20%.
e. Matters relating to the determination of the details of remuneration, etc. of Directors
The Board of Directors shall consult with the Personnel and Compensation Committee on drafts regarding the details of
remuneration, etc. for directors, and the Board of Directors shall decide the details based on the Committee's report.
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 compensation for management and directors are deliberated by the Personnel
and Compensation Committee (chaired by the President and CEO and composed of three Independent Outside Directors), themajority of whose members are Outside Directors. The Board of Directors makes the final policy decision based on the reportof the Personnel 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
Committee was 6, and the number of Directors who are members of the Audit and Supervisory Committee was 5. In addition, at- 36 -

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 6, and the number of Directors who are members of
the Audit and Supervisory Committee was 3.
(ii) Total amount of remuneration by position, 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
Number of(JPY in thousands)
Category
compensation
eligible officers
Basic
Stock
Retirement(JPY in thousands)(persons)Bonus
remuneration
optionbenefits
Directors (excluding Audit andSupervisory Committee members and66,78066,7806
Outside Directors)
Directors (Audit and Supervisory
Committee Members) (excluding
6,810
6,810
1
Outside Directors)
Outside Officers
14,253
14,2533(Note) Amounts paid to Directors do not include employee salaries of Directors who concurrently serve as employees.
(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
Not applicable(5) Shareholdings(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 stock is verified by qualitatively examining the purposeof holding the stock, as well as quantitatively examining the benefits of holding the stock, such as trading conditions, stock
price, and dividend amount, to determine if the cost of capital is commensurate with the benefits. Quantitative holding effects
for each individual stock are not described because they are related to the Company's trade secrets and confidentiality
obligations.
b. Number of issues and carrying amountUnlisted securities

Number of Issues
1

Total carrying amount (JPY in thousands)
56,700--Shares other than unlisted securities[Shares whose number of shares increased in the current fiscal year]
Not applicable[Shares whose number of shares decreased in the current fiscal year]
Not applicablec. Number and carrying amount of specified investment shares a deemed holdings of investment shares by issue
Specified investment shares
Not applicable
Deemed shareholdings
Not applicable- 37 -

(iii) Investment shares held for pure investment purposes
Not applicable- 38 -

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, 2022 through December
31, 2022) have been audited by Deloitte Touche Tohmatsu LLC in accordance with the provisions of Article 193-2, Paragraph1 of
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.

- 39 -

1 Consolidated Financial Statements, etc.
(1) [Consolidated Financial Statements](i) [Consolidated Balance Sheets]
FY2021(As of Dec. 31, 2021)
ASSETS
CURRENT ASSETS:
Cash and deposits
Notes and accounts receivable - trade
Notes receivable – trade
Accounts receivable - trade
Contract assets
Merchandise and finished goods
Work in process
Raw materials and supplies
Other current assets
Total current assets
NON-CURRENT ASSETS:
Tangible assets
Buildings
Accumulated depreciation
Buildings, net
Others
Accumulated depreciation
Others, net
Total tangible assets
Intangible assets
Software
OthersTotal intangible assets
Investments and other assets
Investment securities
Leasehold deposits
Deferred tax assets
OthersTotal Investments and other assets
Total non-current assets
TOTAL ASSETSLIABILITIESCURRENT LIABILITIES:
Accounts payable - trade
Short-term borrowings
Accounts payable - other
Income taxes payable
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIES:
Provision for share-based remuneration
Other long-term liabilities
Total long-term liabilities
TOTAL LIABILITIESNET ASSETS
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Stock acquisition rights
Non-controlling interests
TOTAL NET ASSETSTOTAL LIABILITIES and NET ASSETS- 40 -(JPY in thousands)
FY2022(As of Dec.31,2022)

2,171,974
1,218,805
123,858
16,492
142,988
31,481
3,705,601

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

54,854(26,719)
28,134
172,026(128,904)
43,121
71,25685,899(35,189)
50,709181,573(128,995)
52,578103,287

238,600
344
238,944251,005344
251,349

56,700237,728
114,509131,823
540,760
850,961
4,556,563

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

223,627
20,00098,621
223,933
259,544825,726

81,209142,630
227,529*202,633
654,002

163,649
54,653
218,303
1,044,029

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

254,259
224,259
3,844,949(818,446)
3,505,021
4,743
2,769
3,512,533
4,556,563

254,259
224,259
4,372,694(812,506)
4,038,706
4,230
4,042,937
4,980,780

(ii) [Consolidated Statements of Income and Consolidated Statements of Comprehensive Income][Consolidated Statements of Income](JPY in thousands)
FY2022(As of Dec.31,2022)

FY2021(As of Dec. 31, 2021)
Revenue
Cost of revenue
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Foreign exchange gain
Subsidy income
Government grant income
Royalty income
Other-non-operating income
Total non-operating income
Non-operating expenses
Interest expense
Amortization of organizing expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on reversal of share acquisition rights
Total extraordinary income
Income before income taxes and other adjustments
Income tax -current
Income tax -deferred
Total income taxes
Net income
Net income (loss) attributable tonon-controlling interests
Net income attributable to owners of the parent

2,556,655*3, *41,635,934
920,720*14,541,242*21,818,396
2,722,846*3, *41,694,323
1,028,522

22
10,087
3,200
8,740
1,390
795
24,23647
16,896
7,671
1,390
1,627
27,6332361
363
944,593448
448
1,055,708*5944,593
319,720(10,923)
308,796
635,796*54,743
4,743
1,060,451
371,708(35,497)336,210724,240

(230)

1,461

636,027

722,779

4,968,885*22,412,230- 41 -

[Consolidated Statements of Comprehensive Income, Cumulative]
FY2021(As of Dec. 31, 2021)
Net income
Comprehensive income(Components)
attributable to owners of parent
attributable to non-controlling interests- 42 -(JPY in thousands)
FY2022(As of Dec.31,2022)

635,796
635,796724,240
724,240

636,027(230)

722,779
1,461

(iii) [Consolidated Statement of Changes in Equity]
Fiscal year ended December 31,2021 (From January 1, 2021 to December 31,2021)(JPY in thousands)
Shareholders’ equity
Share
capitalBalance at the beginningof the period

Capitalsurplus254,259Retainedearnings

224,259

Treasuryshares3,415,181(825,158)

Total
Shareholders’equity3,068,542

ShareacquisitionrightsNon-controlling
Total net assetsinterests

4,743

-

3,073,285

Changes during
the period
Dividends ofsurplusProfit attributable toowners of parent(206,259)(206,259)(206,259)

636,027

636,027

636,027

6,711

6,711

Disposal of

6,711

Treasury shares
Net changes in
items other than

2,769

2,769

shareholders' equity
Total changes--

429,767

6,711

436,479-2,769

439,248

254,259

224,259

3,844,949(818,446)

3,505,021

4,743

2,769

3,512,533

during the period
Balance at theend of the period

Fiscal year ended December 31,2022 (From January 1, 2022 to December 31,2022)(JPY in thousands)
Shareholders’ equity
Share
capitalBalance at the beginningof the period

Capitalsurplus254,259Retainedearnings

224,259

Treasuryshares3,844,949(818,446)

Total
shareholders’equity3,505,021

ShareacquisitionrightsNon-controlling
Total net assetsinterests

4,743

2,769

3,512,533

Cumulative effects ofchanges in

23,17523,17523,175accounting policies
Restated balance

254,259

224,259

3,868,124(818,446)

3,528,196

4,743

2,769

3,535,708

Changes during the period
Dividends ofsurplusProfit attributable toowners of parent(232,041)(232,041)(232,041)

722,779

722,779

722,779

5,940

5,940

13,832

13,832

Disposal of

5,940

treasury shares
Change in scope of

13,832

consolidation
Net changes in
items other than

(4,743)

1,461(3,281)shareholders' equity
Total changes
during the period
Balance at theend of the period--

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- 43 -

(iv) [Consolidated Statements of Cash Flows](JPY in thousands)
FY2021(As of Dec. 31, 2021)
Cash flow from operating activities
Income before income taxes and other adjustments
Depreciation
Amortization of software
Increase (decrease) in provision for share-based
remuneration
Interest and dividend income
Foreign exchange losses (gains)
Government grant income
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
SubtotalInterest and dividends received
Subsidies received
Interest paid
Income taxes paid
Total operating activities
Cash flow from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchases of tangible assets
Purchases of intangible assets
Purchase of investment securities
Proceeds from sales of shares of subsidiaries andassociates
Payments for investments in capital
Payment for leasehold deposits
Proceeds from refund of leasehold deposits
Other
Total investing activities
Cash flow from financing activities
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from share issuance to non-controllingshareholders
Dividends to shareholders
Total financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at the end of the period- 44 -FY2022(As of Dec.31,2022)

944,593
75,943
231,991

1,060,451
61,855
193,105

27,921

29,077(22)(10,390)(8,740)2(511,959)
28,527
198,991(57,859)
46,813965,812
22
8,740
(2)
(224,219)
750,353(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(153,000)
156,000(69,332)(199,976)(56,700)(156,000)
156,000(72,767)(240,633)
-

1,650

-

(105,220)(138,409)
76,040(4,419)(493,367)(1,280)83,372
1,148(230,160)

20,000-100,000(10,000)

3,000-(206,341)(183,341)
73,644
1,972,330(232,020)(142,020)
321,668
2,045,974-(79,895)*2,045,974*2,287,747

[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.
EMC Healthcare CO., Ltd, which was a consolidated subsidiary in the previous fiscal year, was excluded from thescope of consolidation as of July 1, 2022, because the Company's shareholding ratio decreased, and it became an
equity-method affiliate.
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.
Effective from the current fiscal year, EMC Healthcare Co., Ltd. is included in the scope of equity-method affiliates
due to a decrease in the Company's shareholding ratio and it became an equity-method affiliate.

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: 3 to 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 3 years) is recorded.
Software for internal use
The straight-line method is used based on the estimated useful life (5 years) within the Company.
(iii) Lease assets
The straight-line method is used, where the lease period is deemed as the useful life of the asset and theresidual value is set as zero.
(3) Accounting for significant deferred assets
Initial expenses
The entire amount is expensed at the time of expenditure.

- 45 -

(4) Accounting policy for significant reserves(i) Allowance for doubtful accounts
The allowance for doubtful accounts is provided for possible losses on receivables based on the historical
write-off ratio for general receivables and on the estimated amount of uncollectible receivables based on acase-by-case determination of collectability for specific receivables such as doubtful receivables.
(ii) Allowance for stock benefits
To provide for the payment of Company stocks 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.
(5) 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 the"Claio" image filing system and the "DocuMaker" document management system, and the "DocuMaker
Office" 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 the degree 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 estimated total cost incurred (input
method).
For contracts with very short durations, revenue is recognized at one point in time on the date of acceptance.
(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, etc.
These transactions are related to maintenance services and other services that are provided on an ongoing basis
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 with users.
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 systems. 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.
(6) 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.

- 46 -

[Significant accounting estimates][Revenue recognition using the input method based on an estimate of total cost](1) Amount recorded in the consolidated financial statements for the current fiscal year
Sales based on input method ¥1,256,271 thousand(Of which, sales of projects in progress in the current fiscal year: ¥251,488 thousand)(2) Information on significant accounting estimates for identified items
For performance obligations to be fulfilled over a specified period of time, the Company estimates the percentage ofcompletion toward fulfillment of the performance obligation and recognizes revenue over a specified period of time basedon the percentage of completion, except for contracts with very short durations. The percentage-of-completion method isused to estimate the percentage of completion based on the ratio of the actual cost incurred to the estimated total cost.
The number of man-hours used to calculate the total estimated cost is subject to a certain level of uncertainty, and if itneeds to be revised due to changes in the nature of the work or the occurrence of additional work, it may have asignificant impact on the consolidated financial statements in the following fiscal year or later.
[Change in accounting policy][Application of Accounting Standard for Revenue Recognition, etc.]
The Company has adopted the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020)
from the beginning of the current fiscal year and recognizes revenue at the amount expected to be received in exchange for thepromised goods or services when control of the promised goods or services is transferred to the customer.
As a result of this change, revenue from software and contracted development, etc., which were previously recognized at asingle point in time, are now recognized over a fixed period of time, except for contracts with very short durations, as a result ofconsideration of the identification of performance obligations and the timing of satisfaction of performance obligations.
The cumulative effect of retrospective application of the new accounting policy prior to the beginning of the current fiscal year
is added to or deducted from retained earnings at the beginning of the current fiscal year, and the new accounting policy isapplied from the balance at the beginning of the current fiscal year.
In addition, "Notes and accounts receivable," which was presented in "Current assets" in the consolidated balance sheet for theprevious fiscal year, is included in "Notes receivable," "Accounts receivable," and "Contract assets" from this fiscal year.
However, in accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for Revenue
Recognition, no reclassification has been made for the previous fiscal year. The impact on per share information is stated in therelevant section.
As a result, net sales increased ¥216,572 thousand, cost of sales increased ¥39,099 thousand, and operating income, ordinary
income, and income before income taxes and minority interests each increased ¥177,472 thousand in the current consolidated
fiscal year. The balance of retained earnings at the beginning of the period increased by ¥23,175 thousand.
The effect on per share information is stated in the relevant section. In accordance with the transitional treatment prescribed in
Paragraph 89-3 of the Accounting Standard for Revenue Recognition, "Revenue Recognition" notes for the previous consolidated
fiscal year are not stated.
[Application of Accounting Standard for Measurement of Fair Value, etc.]
The Accounting Standard for Fair Value Measurements (ASBJ Statement No. 30, July 4, 2019. Hereinafter referred to as the"Fair Value Accounting Standard.")is effective as of the beginning of the current fiscal year, and the new accounting policies
prescribed by the Accounting Standard for Fair Value Measurements will be applied prospectively, in accordance with thetransitional treatment prescribed in paragraph 19 of the Accounting Standard for Fair Value Measurements and paragraph 44-2 ofthe Accounting Standard for Financial Instruments. The Company has decided to apply the new accounting policy set forth in thefair value calculation accounting standard prospectively. This change has no impact on the consolidated financial statements.
In addition, in the notes to "Financial Instruments," the Company has decided to provide notes on items such as the breakdownof the fair value of financial instruments by level. However, in accordance with the transitional treatment prescribed in paragraph
7-4 of the "Guidance on Disclosures about Fair Value of Financial Instruments" (ASBJ Guidance No. 19, July 4, 2019), no notes
are provided for those items related to the previous fiscal year in these notes.

- 47 -

[Unapplied accounting standards, etc.]∙ Guidance on Accounting Standard for Measurement of Fair Value" (ASBJ Guidance No. 31, June 17, 2021)(1) Overview
The new standard establishes the treatment of calculation of fair value of investment trusts and notes to the fair value ofinvestments in partnerships, etc., in which the net amount equivalent to the equity interest is recorded on the balance
sheet.
(2) Effective date
The accounting standard will be applied from the beginning of FY2023.
(3) Effect of adoption of this accounting standard
The effect of the application of the "Guidance on Accounting Standard for Measurement of Fair Value" on the
consolidated financial statements is currently under evaluation.
∙ "Accounting Standard for Income Taxes - Current " (ASBJ Statement No. 27, October 28, 2022, Accounting Standards
Board of Japan)∙ Accounting Standard for Presentation of Comprehensive Income" (ASBJ Statement No. 25, October 28, 2022)∙ "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.
[Change of display method][Consolidated Statements of Cash Flows]
Subsidy income" and "Subsidy received," which were omitted from "Cash flows from operating activities" in the previous
consolidated fiscal year, are separately presented in the current consolidated fiscal year because their amounts have become moresignificant. To reflect this change in presentation, the consolidated financial statements for the previous consolidated fiscal year
have been reclassified.
As a result, "Subsidy income" of -¥8,740 thousand and "Subsidy received" of ¥8,740 thousand were reclassified as "Cashflows from operating activities" in the consolidated statements of cash flows for the previous fiscal year.
[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 stock price and performance. The Company resolved
to introduce an incentive plan, "Stock Benefit Trust (J-ESOP)," which provides employees with shares of the Company purchasedfrom 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 stock 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,- 48 -

March 26, 2015). The Company has adopted the gross amount method.
(Trust Account E) are presented as treasury stock in the net assets section of the consolidated balance sheets. The amountrecorded at the end of the previous fiscal year was ¥130,217 thousand and the number of shares was 168,800. The amountrecorded at the end of the current fiscal year was ¥124,277 thousand and the number of shares was 161,100.

- 49 -

[Notes to Consolidated Balance Sheets]* Contractual liabilities in the other category are as follows:(JPY in thousands)
FY2022, Consolidated(January 1, 2022
to December 31, 2022)

Contract liabilities (current liabilities)

63,092Contract liabilities (non-current liabilities)

40,375[Notes to Consolidated Statements of Income]1 Revenue from contracts with customers
Revenues 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)
FY2021, Consolidated
FY2022, Consolidated(January 1, 2021
(January 1, 2022
to December 31, 2021)
to December 31, 2022)
2,729
292
3 Major items and amounts of selling, general and administrative expenses are as follows
FY2021, Consolidated(January 1, 2021
to December 31, 2021)
salary supplement784,611(JPY in thousands)
FY2022, Consolidated(January 1, 2022
to December 31, 2022)
802,806

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)
FY2021, Consolidated
FY2022, Consolidated(January 1, 2021
(January 1, 2022
to December 31, 2021)
to December 31, 2022)
27,06939,016

5 Gain on reversal of subscription rights to shares
Previous consolidated fiscal year (January 1, 2021 to December 31, 2021)
Not applicable
Current consolidated fiscal year (January 1, 2022 to December 31, 2022)“Gain on reversal of subscription rights to shares" recorded in extraordinary income in the current consolidated fiscal year
is due to the reversal of stock options in anticipation of their expiration.
[Notes to Consolidated Statements of Comprehensive Income]Not applicable- 50 -

[Notes to Consolidated Statements of Changes in Net Assets]
FY2021 (January 1, 2021 to December 31, 2021)
1. Matters concerning the class and total number of outstanding shares and the class and number of treasury stock
Number of shares
Number of shares
Number of shares
Number of shares
as of January
increased in FY2021
decreased in FY2021
as of December
1, 2021 (shares)(shares)(shares)31, 2021 (shares)
Issued stocks
Common stock

26,608,800--

26,608,800

Total

26,608,800--

26,608,800

Common stock (Notes 1.2)

1,003,875

-

8,700

995,175

Total

1,003,875

-

8,700

995,175

Treasury stock(Notes)1. The decrease of 8,700 shares in the number of common shares of treasury stock 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 stock at the beginning and end of FY2021 include 177,500 shares and 168,800 shares,
respectively, of the Company's shares held by Custody Bank of Japan, Ltd.

Matters concerning stock acquisition rights
Type of shares
Number of shares to be issued upon exercise of stock
Balance as of
to be issued
acquisition rights (shares)
December
Breakdown of stock
upon exercise
Category
31, 2021
As ofacquisition rightsof the stock As of January Increase in
Decrease in(JPY inDecember 31,
acquisition
1, 2021
FY2021
FY2021
thousands)
2021
rightsSubmitting
company
Stock acquisition rights
4,743(Parent
as stock options
Company)
Total
4,743
2.

3. Matters related to dividends(1) Dividends paid
(Resolution
Class of shares
adopted)March 26, 2021
Ordinary General
Meeting ofCommon stock

Aggregate dividends Dividend per share(JPY in thousands)(JPY)

141,803

5.50

Record date

Effective date

December 31, 2020

March 29, 2021

Shareholders
August 12, 2021
Board of Directors’Common stock
64,456
2.50
June 30, 2021
September 13, 2021
meeting(Notes)1. The "Total amount of dividends" resolved at the Ordinary General Meeting of Shareholders on March 26, 2021 includes
dividends of ¥976 thousand paid to the Company's shares (treasury stock) held by Custody Bank of Japan, Ltd.
2. "Total amount of dividends" resolved by the Board of Directors on August 12, 2021 includes ¥435 thousand of
dividends for the Company's shares (treasury stock) 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
Dividend per(Resolution
Class ofdividends
Source ofshare
Record dateeffective dateadopted)shares(JPY individends(JPY)
thousands)
March 29, 2022
Ordinary General
Retainedcommon stock
154,694
6.00 December 31, 2021
March 30, 2022
Meeting of
earnings
Shareholders(Note)
1. "Total amount of dividends" resolved at the Ordinary General Meeting of Shareholders on March 29, 2022 includes
dividends of ¥1,012 thousand for the Company's shares (treasury stock) held by Custody Bank of Japan, Ltd.

- 51 -

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 stock
Number of shares
Number of shares
Number of shares
Number of shares
as of January
increased in FY2022
decreased in FY2022
as of December
1, 2022 (shares)(shares)(shares)31, 2022 (shares)
Issued stocks
Common stock

26,608,800--

26,608,800

Total

26,608,800--

26,608,800

Common stock (Notes 1.2)

995,175-

7,700

987,475

Total

995,175-

7,700

987,475

Treasury stock(Notes)1. The decrease of 7,700 shares in the number of common shares of treasury stock 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 stock 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 stock acquisition rights
Type of shares
Number of shares to be issued upon exercise of stock
Balance as of
to be issued
acquisition rights (shares)
December
Breakdown of stock
upon exercise
Category
31, 2022
As ofacquisition rightsof the stock As of January Increase in
Decrease in(JPY inDecember 31,
acquisition
1, 2022
FY2022
FY2022
thousands)
2022
rightsSubmitting
company
Stock acquisition rights(Parent
as stock options
Company)
Total
2.

3. Matters related to dividends(1) Dividends paid
(Resolution
Type of shares
adopted)March 29, 2022
Ordinary General
Common stock
Meeting of
Shareholders
August 9, 2022
Board of Directors’
meeting(Notes)Aggregate dividends(JPY in thousands)

Dividend per share(JPY)

Record date

154,694

6.00

December 31, 2021

March 30, 2022

77,347

3.00

June 30, 2022

September 9, 2022

Class of shares

Common stock

1. "Total amount of dividends" resolved at the Ordinary General Meeting of Shareholders on March 29, 2022 includes
dividends of ¥1,012 thousand for the Company's shares (treasury stock) 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 stock) 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
Dividend per(Resolution
Class ofdividends
Source ofshare
Record dateadopted)shares(JPY individends(JPY)
thousands)
March 28, 2023

effective dateOrdinary General
Meeting ofMarch 29, 2023

common stock

167,585

Retainedearnings

6.50

December 31, 2022

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 stock) held by Custody Bank of Japan, Ltd.

- 52 -

[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)
FY2021
FY2022(January 1, 2021 to(January 1, 2022 to December
December 31, 2021)
31, 2022)
Cash on hand and in banks
2,171,974
2,413,747
Time deposits with original maturities exceeding three months(126,000)(126,000)
Cash and cash equivalents
2,045,974
2,287,747[Leases]
Operating lease transactions
Future lease payments under for non-cancelable leases
FY2021(as of December 31, 2021)(JPY in thousands)
FY2022(as of December 31, 2022)

Due within one year

87,473

149,390

Due after one year

125,854399,892

Total

213,328

549,283[Financial instruments]
1. Status of Financial Instruments(1) Policy 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.
Short-term borrowings are financed at fixed interest rates and are mainly for working capital.
(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.

- 53 -

2. Fair value of financial instruments
The balance sheet carrying amount and fair value of financial instruments and their differences are as follows:.
FY2021 (as of December 31, 2021)
Amount on Consolidated
Balance Sheet(JPY in thousands)
237,728

Leasehold deposit
Total amount of assets(Notes)Market Value(JPY in thousands)

Difference(JPY in thousands)

238,378650

238,378650

237,728*1 "Cash and deposits", "Note and account receivable", "Accounts payable", "Short-term borrowings”, “Accrued
expenses" and "Income taxes payable" are omitted because the fair values approximate their book values due to cash andshort term settlements.
*2 Shares that do not have market prices and for which it is extremely difficult to determine fair value are not included in
the above table. The carrying amounts of such financial instruments on the consolidated balance sheets are as follows:
Category

FY2021 (JPY in thousands)

Unlisted securities

56,700

Payments for investments in capital

115,620

FY2022 (as of December 31, 2022)
Amount on Consolidated
Balance Sheet(JPY in thousands)
158,234

Leasehold deposit
Total amount of assets(Notes)Market Value(JPY in thousands)

Difference(JPY in thousands)

156,866(1,368)156,866(1,368)158,234*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.
Category
FY2022 (JPY in Thousands)
Unlisted securities

56,700

Payments for investments in capital
133,320(Note) 1. The expected settlement subsequent to the consolidated balance sheet date for monetary receivables andinvestments in securities with maturity dates
FY2021 (as of December 31, 2021)
Due after one year
Due after five years
Due within one year
Due after ten years
and within five years and within ten years(JPY in thousands)(JPY in thousands)(JPY in thousands)(JPY in thousands)
Cash on hand and in banks
2,171,974
Notes and accounts receivable
1,218,805
Leasehold deposits

78,01558,049101,663-

Total

3,468,795

58,049101,663-

2,413,747

Due after one year
and within five years(JPY in thousands)-

Due after five years
and within ten years(JPY in thousands)-

32,380---1,052,240---

FY2022 (as of December 31, 2022)
Due within one year
(JPY in thousands)
Cash on hand and in banks
Notes receivable
Accounts receivable

Due after ten years(JPY in thousands)-

Leasehold deposits

18,571

139,663

-

-

Total

3,516,939

139,663--- 54 -

2. The expected redemption subsequent to the consolidated balance sheet date for other interest-bearing liabilities
FY2021 (as of December 31, 2021)
Due after one year
Due after five years
Due within one year
Due after ten years
and within five years
and within ten years(JPY in thousands)(JPY in thousands)(JPY in thousands)(JPY in thousands)
Short-term borrowings
20,000Total
20,000
FY2022 (December 31, 2022)
Not applicable
3. The breakdown for each level of fair value of financial instruments and other disclosures
The fair value of financial instruments is classified into the following three levels according to the observability
and materiality of the inputs used to measure fair value.
Level 1 fair value: Fair value measured using observable inputs, i.e. quoted prices in active markets for assets or
liabilities that are the subject of the measurement.
Level 2 fair value: Fair value measured using observable inputs other than Level 1 inputs.
Level 3 fair value: Fair value measured using unobservable inputs
If multiple inputs are used that are significant to their fair value measurement, the fair value measurement iscategorized in its entirely in the level of the lowest level input that is significant to the entire measurement.
Financial instruments other than those measured at fair value
FY2022 (as of December 31, 2022)
Market value (JPY in thousands)
Level 2
Level 3

Level 1

Total

Leasehold deposits-

156,866-

156,866

Total-

156,866-

156,866(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
FY2021 (as of December 31, 2021)
Unlisted securities (amount on the consolidated balance sheet: ¥56,700 thousand) are not stated as they do not havemarket prices and it is extremely difficult to determine their fair value.
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.

- 55 -

[Stock options]
Outline and number of stock options and changes therein(1) Outline of stock options
Year 2020
5th Stock Option Plan
Company Name
Title and number of grantees
Number of stock options granted by stock type
(Note 1)Findex Inc.
2 Directors and 9 employees of the company
Common stock 283,000 shares

Grant dateFebruary 28, 2020

Vesting conditions(Note 2)Requisite service period

Not specified

Exercise period (Note 3)

April 1, 2021
(From April 1, 2008 to March 31, 2025)

Number of stock acquisition rights (Note 3)

2,830

Type, description and number of stocks to be issued
Common stock 283,000 shares
upon exercise of stock acquisition rights (Note 3)
Amount to be paid-in upon exercise of the new
1,258
stock acquisition rights (JPY) (Note 3)
Issue price and amount paid into capital when stocks
Issue price 1,676
are issued upon exercise of stock acquisition rights
Capitalization 1,676(JPY) (Note 3)
Conditions for exercise of stock acquisition rights(Note 3)(Notes)1. The number of stock options is translated into the number of shares.
2. The conditions for exercising the stock acquisition rights are as follows:(i) The Stock Acquisition Rights may be exercised only if the amount of consolidated operating income exceeds
JPY1,115 million in any consolidated fiscal year from the fiscal year ending December 31, 2020 to the fiscal
year ending December 31, 2022. In determining the amount of consolidated operating income, reference shall bemade to the consolidated operating income in the consolidated statement of income (or the statement of income
if consolidated financial statements are not prepared) as stated in the annual securities report of the Company,
and the calculation shall exclude stock compensation expenses related to these SARs, if any, and the amount ofsuch stock compensation expenses shall be calculated from the time such annual securities report is The amountof such consolidated operating income shall be applied from the time the annual securities report is filed. If there
is any significant change in the concept of the indicator to be referenced due to the application of International
Financial Reporting Standards, etc., the Board of Directors shall separately determine the indicator to bereferenced.
(ii) The grantee must be a Director, corporate auditor or employee of the Company or its affiliates (Affiliatedcompanies as defined in the Regulations Concerning Terminology, Forms and Preparation Methods of Financial
Statements, etc.) at the time of exercising the stock acquisition rights. However, this shall not apply in cases ofretirement from office due to expiration of term of office, mandatory retirement age, or other justifiable reasons.
3. The following is a summary of the information as of the end of the current fiscal year. As of the end of the monthprior to the month in which the securities report was submitted (February 28, 2023), there were no changes in these
items.
[Additional information]
Matters to be stated in "IV. Information about Reporting Company, 1. Company’s Shares, etc., (2) Share Warrants (i) Stock
option plans" are summarized in the notes related to stock options, etc.

- 56 -

(2) Number of stock options and changes therein
The following tables cover stock options that existed during the year ended December 31, 2022. The number of stock
options is translated into the number of shares.
(i) Number of stock options
Year 2020
5th Stock Option Plan
Findex Inc.

Company Name
Non-vested(shares)

Outstanding as of December31, 2021

283,000

Granted-Forfeited

283,000

Vested-unsettled balance-

After vesting(shares)

Outstanding as of December31, 2022-

Vested-Exercised-

Forfeited-

Balance of options not exercised-(ii) Per-share price information
Year 2020
5th Stock Option Plan
Findex Inc.

Company Name
exercise price(JPY)

Average stock price upon exercise

(JPY)

1,258
-

Per-share fair value at grant date
(JPY)
14,068(Note) Estimation of the number of stock options vested:
Basically, since it is difficult to reasonably estimate the number of future forfeitures, only the actual number of forfeitures
is reflected. For paid stock options with performance conditions, the number of forfeitures due to non-vesting of rights is
estimated in consideration of the vesting conditions.

- 57 -

[Tax effect accounting]Major components of deferred tax assets and deferred tax liabilities(JPY in thousands)
FY2022(as of December 31, 2022)

FY2021(as of December 31, 2021)
deferred tax assets
Accrued enterprise taxes
Depreciation and amortization
Provision for stock benefits
Net operating loss carry forwards (Note 2)
Other
Subtotal deferred tax assets
Valuation allowance for net operating loss carry forwards(Note 2)
Valuation allowance for the sum of deductible temporary
differences
Valuation allowance (Note 1)
Total deferred tax assets
Deferred tax liabilities
Prepaid labor insurance premiums
Total deferred tax liabilities
Net deferred tax assets

12,651
37,511
49,91325,32017,563142,960

13,34635,02756,9702,281
33,431141,056(25,320)-(2,192)-(27,512)
115,448

141,056

(938)
(938)
114,509(1,220)(1,220)139,836(Note 1) The main component of this change, which is a significant change in the amount deducted from deferred tax assets(valuation allowance), is due to the exclusion of EMC Healthcare Co., Ltd. from the scope of consolidation.
(Note 2) Tax loss carryforwards and their deferred tax asset carryforwards by expiration date
FY2021 (as of December 31, 2021)
Due after one Due after two Due after three Due after four
Due within one
year
years
years
years
year
and within two and within and within four and within five
(JPY inyears
three years
years
years
thousands)(JPY in(JPY in(JPY in(JPY inthousands)
thousands)
thousands)
thousands)
Net operating
loss carryforwards (*1)
Valuation
allowance
Deferred tax
asset(*1) Tax loss carryforwards are multiplied by the statutory tax rate.

--

Due after
five years(JPY inthousands)

Totalamount(JPY inthousands)

25,32025,320(25,320)(25,320)--

FY2022 (as of December 31, 2022)
Due after one Due after two Due after three Due after four
Due within one
year
years
years
years
Due after fiveyear
and within two and within and within four and within five
years (JPY in(JPY inyears
three years
years
years
thousands)
thousands)(JPY in(JPY in(JPY in(JPY inthousands)
thousands)
thousands)
thousands)
Net operating
loss
2,281
carry forwards(*2)
Valuation
allowance

Totalamount(JPY inthousands)

2,281

-

Deferred tax
2,281
asset
(*3) 2,281(*2) Tax loss carryforwards are multiplied by the statutory tax rate.
(*3) Deferred tax assets are recorded for the tax loss carried forward of ¥2,281 thousand (multiplied by the legal effective taxrate). Such deferred tax assets are related to consolidated subsidiaries and are deemed to be fully collectible in the following
fiscal years or later, based on the expected future taxable income and other factors.

- 58 -

2. 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
FY2021
FY2022(December 31, 2021)(December 31, 2022)
Effective statutory tax rate
30.50%(Adjustments)
Change in valuation allowance
2.25
Other
(0.06)
Actual effective tax rate after the application of tax
32.69
effect accounting(Note) 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.
[Revenue Recognition]
1. Information on disaggregation of revenue from contracts with customers(JPY in thousands)
Reportable Segment
System development
Health Tech
Timing of revenue recognition
Revenue recognized at one point in time
Revenue recognized over a period of time
Revenue from contracts with customers
Sales to external customers

1,832,165
2,639,822
4,471,988
4,471,988

Total

46,007
23,246
69,253
69,253

1,878,173
2,663,069
4,541,242
4,541,242(JPY in thousands)
Reportable Segment
System development
Health Tech
By Service Type
SoftwareHardwareSupport, etc.
Other
Revenue from contracts with customers
Sales to external customers

2,631,736
285,619
1,367,122
187,510
4,471,988
4,471,988

69,253
69,253
69,253

Total
2,631,736
285,619
1,367,122
256,764
4,541,242
4,541,242

2. Information that forms a basis for understanding revenue from contracts with customers
The basis for understanding revenues is described in “V. Notes to Consolidated Financial Statements (5) Accounting policies
for significant revenues and expenses”.
3. 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 the following
fiscal year from contracts with customers that existed as of December 31, 2022
(1) Balance of contract assets and contract liabilities(JPY in thousands)
FY2022
Receivables arising from contracts with customers (beginning balance)
1,218,805
Receivables arising from contracts with customers (ending balance)
1,084,621
Contract assets (beginning balance)
38,770Contract assets at end of period
276,637
Contract liabilities (beginning balance)
120,822
Contract liabilities at end of period
103,467
Contract assets mainly relate to the rights of the Company and its consolidated subsidiaries 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
subsidiaries' rights to the consideration become unconditional.
In the current fiscal year, 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.

- 59 -

The amount of revenue recognized in the current period that was included in the contract liability balance at the beginningof the period was ¥60,268 thousand. There was no amount of revenue recognized from performance obligations that weresatisfied (or partially satisfied) in prior periods.
(2) Transaction prices allocated to remaining performance obligations
The total transaction price allocated to the remaining performance obligation at the end of the current fiscal year was¥1,167,916 thousand. The Company and its consolidated subsidiaries expect to recognize revenue from these remaining
performance obligations generally within five years. The Company and its consolidated subsidiaries apply the practical
expedient method to note the transaction prices allocated to the remaining performance obligations and do not include in thenotes contracts that are initially expected to be in effect for one year or less.

- 60 -

[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.
The Group's reportable segments are the system development business and the health tech business, and the businessactivities of each reportable segment are as follows.
[System development business]
Development of medical software, medical data integration and analysis, office system development[Health Tech Business]
Management consulting for hospitals and medical data analysis, development of medical device
2.

3.

Calculation of net sales, income or loss, assets, and other items by reportable segments
The accounting method of the reportable segments is in accordance with the accounting policies adopted to prepare theconsolidated financial statements. Income of reportable segments are operating income-based figures.
Intersegment sales and transfers are based on prevailing market prices.
As described in "Changes in Accounting Policies," the Company has applied the Accounting Standard for Revenue
Recognition from the beginning of the current fiscal year, and has changed its accounting method for revenue recognition,and therefore, the calculation method of reportable segment income or loss has been changed in the same manner.
As a result of this change, net sales to external customers in "system development business" segment increased by¥211,326 thousand and segment income increased by ¥173,943 thousand in the consolidated fiscal year under review,compared with the previous method. Similarly, sales to external customers in "Health Tech Business" segment increased by¥5,246 thousand and segment loss decreased by ¥3,528 thousand in the consolidated fiscal year under review.
Information on sales, income or losses, assets, and other items by reportable segments
FY2021 (January 1, 2021 to December 31, 2021)
Reportable Segments
Systemdevelopment

Health Tech

Total

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

Net sales
Sales to external customers
4,919,669
49,215
4,968,885
4,968,885
Intersegment sales or transfers
2,970
2,970
(2,970)Total
4,922,640
49,215
4,971,856(2,970)4,968,885
Segment income (loss)
1,137,726(217,006)
920,720
920,720
Segment assets
4,398,754
262,651
4,661,405(104,842)
4,556,563
Other Items
Depreciation and amortization
271,634
36,300307,935
307,935
Increase in tangible and intangible
217,956
33,186251,142251,142
assets(Notes)1. Adjustments are due to elimination of intersegment transactions.
2. Total segment income or losses are the same as operating income in the consolidated statements of income.
FY2022 (January 1, 2022 through December 31, 2022)
Reportable Segments
SystemDevelopment

Health Tech

Total

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

Net sales
Sales to external customers
4,471,988
69,2534,541,242
4,541,242
Intersegment sales or transfers
1,485
1,485
(1,485)
Total
4,473,474
69,2534,542,727(1,485)
4,541,242
Segment income (loss)
1,233,811(205,288)
1,028,522
1,028,522
Segment assets
4,773,661
207,118
4,980,780
4,980,780
Other Items
Depreciation and amortization
223,023
31,937
254,960
254,960
Increase in tangible and intangible
282,426
25,846308,273308,273
assets(Notes)1. Adjustments are due to elimination of intersegment transactions.
2. Total segment income or losses are the same as operating income in the consolidated statements of income.
Related information
FY2021 (January 1, 2021 to December 31, 2021)
Information by product and service
This information is omitted because the same information is disclosed in the segment information.

- 61 -

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
Name
NEC Corporation

Net sales
591,114(JPY in thousands)
Related Segment Name
System Development Business

FY2022 (January 1, 2022 through December 31, 2022)
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
Not applicable
Amortization of goodwill and unamortized balance by reportable segment
FY2021 (January 1, 2021 to December 31, 2021)
Not applicable
FY2022 (January 1, 2022 through December 31, 2022)
Not applicable
Gain recognized on negative goodwill by reportable segment
FY2021 (January 1, 2021 to December 31, 2021)
Not applicable
FY2022 (January 1, 2022 to December 31, 2022)
Not applicable
Impairment loss on non-current assets by reportable segment
FY2021 (January 1, 2021 to December 31, 2021)
Not applicable
FY2022 (January 1, 2022 to December 31, 2022)
Not applicable- 62 -

Information on related parties
FY2021 (January 1, 2021 to December 31, 2021)
Not applicable
FY2022 (January 1, 2022 to December 31, 2022)
Not applicable[Per Share Information]

Book-value Per Share (JPY)FY2021(January 1, 2021,
to December 31, 2021)
136.84FY2022(January 1, 2022,
to December 31, 2022)
157.63

24.84

28.21

Basic earnings (loss) per share (JPY)

Diluted earnings per share(Notes) 1. No statement is indicated above for the number of diluted earnings per share because there were no diluted shares withdilutive effect.
2. Earnings per share and Diluted earnings per share were calculated based on the following:
FY2021
FY2022(January 1, 2021,(January 1, 2022,
to December 31, 2021)
to December 31, 2022)
Book-value Per Share
Net income attributable to owners of parent(JPY in thousands)
Amount not belonging to commonshareholders (JPY in thousands)
Net income attributable to owners of parent
pertaining to common stock(JPY in thousands)
Average number of shares of common
stock outstanding during the fiscal year (shares)

636,027

722,779--

636,027

722,779

25,608,544

25,617,486

-

-

-

-

Diluted earnings per share
Net income adjustments attributable toowners of parent company(JPY in thousands)
Increase in shares of common stock(shares)

5th series of stock acquisition
5th series of stock acquisitionrights by resolution of therights by resolution of theBoard of Directors meeting held
Board of Directors meeting held
Outline of potential common stock excluded
from the computation of diluted earnings per
on February 25, 2020
on February 25, 2020
share due to its non-dilutive effectNumber of stock acquisition
Number of stock acquisitionrights: 2,830
rights: 2,830
Common stock: 283,000 shares
Common stock: 283,000 shares(Notes): 1. For the purpose of basic earnings per share and diluted earnings per share, the average number of theCompany's shares held by Custody Bank of Japan, Ltd. (Trust Account E) during the previous consolidated fiscal year andthe current consolidated fiscal year are 173,881 shares and 164,939 shares, respectively.
2. As stated in "Changes in Accounting Policies," the Company has applied the "Accounting Standard for Revenue
Recognition" (ASBJ Statement No. 29, March 31, 2020), and followed the transitional treatment stipulated in the proviso
of paragraph 84 of the "Accounting Standard for Revenue Recognition. As a result, net assets per share and net income pershare increased by¥ 5.72 and ¥4.81, respectively. Diluted net income per share is not presented since there are no residual
securities with dilutive effects.
[Significant Subsequent Event]Not applicable- 63 -

5. [Consolidated annexed detailed statements][Schedule of bonds payable]
Not applicable[Schedule of borrowings]
Balance at the
beginning of theCategory
current period(JPY in thousands)

Balance at the end of
the current period

Average interest rate
(%)
0.045

Short-term borrowings

20,000-Total

20,000--Due date-[Schedule of asset retirement obligations]Not applicable(2) [Others]
Quarterly financial information for FY2022
Cumulative period
Net sales (JPY in thousands)

Three months
Nine Months
Six months ended
ended March 31,
ended September
June 30, 2022
2022
30, 2022

Year ended
December 31,
2022

1,264,576

2,233,641

2,999,658

4,541,242

Income before income taxes (JPY in thousands)

381,314481,236

523,386

1,060,451

Net income attributable to owners of the parent(JPY in thousands)

258,717319,996349,751

722,779

Basic earnings per share (JPY)

10.10

12.49

13.65

28.21

Accounting period

1st Quarter

2nd Quarter

3rd Quarter

10.10

2.39

1.16

Basic earnings per share (JPY)- 64 -

4th Quarter
14.56

2 [Non-consolidated Financial Statements, etc.](1) [Non-consolidated Financial Statements](i) [Non-consolidated Balance Sheet](JPY in thousands)
FY2021(As of December 31, 2021)
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
Bonds payable to affiliated companies
CapitalLeasehold deposits
Long-term prepaid expenses
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
TOTAL ASSETS- 65 -FY2022(As of December 31, 2022)

2,144,846
25,547*1,181,645
113,720
12,992
142,747
15,438*15,6423,652,581

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

27,730880
41,281
69,89350,709218
51,588102,517

217,538
148,000
344
365,882

251,005
111,000
344
362,349

56,7007,000
100,000
115,620
236,757
14,065
157,8542,055(100,000)
590,053
1,025,828
4,678,409

56,7007,000
133,320
158,234
12,516
192,185907
560,864
1,025,731
5,146,346

(JPY in thousands)
FY2021(As of December 31, 2021)
LIABILITIESCURRENT LIABILITIES
Accounts payable- trade
Accounts payable - others
Accrued expenses
Income taxes payable
Accrued consumption taxes
advances received
deposit received
Other current liabilities
Total current liabilities
LONG-TERM LIABILITIESLong-term advances received
Long-term deposits received
Provision for share-based remuneration
Other long-term liabilities
Total long-term liabilities
TOTAL LIABILITIESNET 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
Stock acquisition rights
TOTAL NET ASSETSTOTAL LIABILITIES and NET ASSETS- 66 -FY2022(As of December 31, 2022)

223,627*97,368
64,672
223,810
103,552
51,192
24,387
788,611

81,209*151,882
66,641
227,477
47,15662,35024,205
120
661,042

54,526
163,649
127
218,303
1,006,914

40,37556,548
186,787129
283,839
944,881254,259

254,259

224,259
224,259

224,259
224,259

4,006,679
4,006,679(818,446)
3,666,751
4,743
3,671,494
4,678,409

4,535,453
4,535,453(812,506)
4,201,464
4,201,464
5,146,346

(ii) [Non-consolidated Statement of Income and Comprehensive Income](JPY in thousands)
FY2021(As of December 31, 2021)
Revenue
Cost of revenue
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Interest on securities
Foreign exchange gain
Subsidy income
Other
Total non-operating income
Ordinary income
Extraordinary income
Gain on reversal of share acquisition rights
Total extraordinary income
Income before income taxes and other adjustments
Income taxes -current
Income taxes -deferred
Total income taxes
Net income- 67 -FY2022(As of December 31, 2022)*14,924,598*12,411,334
2,513,264*1,*21,565,885
947,378*14,487,352*11,821,643
2,665,709*1,*21,638,122
1,027,587

22*145
10,0878,740*13,085
21,980969,359

24*145
16,896
7,671*14,21328,852
1,056,439*3969,359
319,597(22,208)
297,389
671,969*34,743
4,743
1,061,182
368,044(44,501)
323,542
737,639

(iii) [Non-consolidated Statement of Changes Equity]
FY2021 (From January 1, 2021 to December 31,2021)(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

3,540,969

3,540,969(825,158)

3,194,329

Dividends of surplus(206,259)(206,259)(206,259)

Net income

671,969

671,969

671,969

Changes during the period

Disposal of treasury shares

6,711

6,711

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

-

-

-

465,710465,710

6,711

472,421

Balance at the end of the period

254,259

224,259

224,259

4,006,679

4,006,679(818,446)

3,666,751

StockacquisitionrightsBalance at the beginning of theperiodTotal net assets

4,743

3,199,072

Changes during the period
Dividends of surplus(206,259)

Net income

671,969

Disposal of treasury shares k

6,711

Total changes during the period-

472,421

Balance at the end of the period

4,743

3,671,494- 68 -

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)

Net income

737,639

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

StockacquisitionrightsBalance at the beginning of theperiodTotal net assets

4,743

Cumulative effects of a changes inaccounting policies
Restated balance

3,671,494
23,175

4,743

3,694,669

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

Net income

737,639

Disposal of treasury shares

5,940

Net changes of items other thanthose in shareholders’ equity y(4,743)(4,743)

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

Balance at the end of the period-

4,201,464- 69 -

[Notes to Non-consolidated Financial Statements][Significant accounting policies]
1. Valuation methods for assets(1) Valuation methods for securities
Shares issued by a subsidiary and an equity method affiliate
Shares issued by a subsidiary and an equity method affiliate are carried at cost determined by the moving averagemethod.
Other securities
Non-marketable securities
Non-marketable securities classified as other securities are carried at cost determined by the moving averagemethod.
(2) Valuation methods for inventories
Merchandise and finished goods, work in process, raw materials
Inventories are stated at cost determined by the specific identification method (Cost of inventories is written-down
when their carrying amounts become unrecoverable).
Supplies
Supplies are stated at cost determined by last purchase price method (Cost of inventories is written-down when theircarrying amounts become unrecoverable).
2. Depreciation method for non-current assets(1) Tangible assets (excluding leased assets)
Tangible assets are calculated by the declining balance method. However, buildings and structures acquired on orafter April 1, 2016. are calculated by the straight-line method. The useful lives of major assets are as follows:
Buildings 8-18 years
Vehicles 3-6 years
Tools, furniture and fixtures 2-15 years(2) Intangible assets (excluding leased 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) Leased assets
Leased assets are calculated by the straight-line method where the lease term is deemed as the useful lives of theasset and the residual value is set as zero.
3. Basis for reserves(1) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on past experience for normal receivables and on an estimate of
the collectability of receivables from companies in financial difficulty.
(2) Provision for share-based remuneration
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 stock to employees in accordance with stock
benefit regulations.

- 70 -

4. Reporting of significant revenues and expenses
The following is a description of the main performance obligations in the Company's main business related torevenue from contracts with customers and the usual time at which the performance obligation is satisfied (the usual
time at which revenue is recognized)(1) Software
The transactions are related to sales of self-developed software such as medical solutions for image filing system“Claio” and "DocuMaker Office," a document management system mainly targeted at municipalities and publicorganizations. With regard to software, the Company has determined that performance obligations are fulfilled inaccordance with the progress of software implementation. Therefore, except for contracts with very short terms, theCompany 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 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, the Company
is obligated to provide services over the contract period and recognizes revenue over the service period 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) Others
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.

- 71 -

[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 the current fiscal year that may have a material effect on the financial statements for the following
fiscal year.
1. Revenue recognition using the input method based on an estimate of total cost(1) Amount recorded in the financial statements for FY2022(JPY in thousands)
FY2022
Net sales based on input method

1,237,941(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”.

- 72 -

2. Impairment of non-current assets(1) Amount recorded in the financial statements for FY2022
Recorded amount of non-current assets with indications of impairment(JPY in thousands)
FY2021

FY2022

Tangible assets

8,899

9,294

Intangible assets

148,000

111,000(2) Details of significant accounting estimates related to the identified items
The Company makes a determination 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 of thecurrent fiscal year, the Health Tech business asset group was identified as having indications of impairment, but noimpairment loss was recorded because the total undiscounted future cash flows exceeded the carrying value of theasset 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]
1.Accounting Standard for Revenue Recognition“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020. Hereinafter the“Revenue Recognition Standard”) and related guidelines have been adopted from the beginning of the current fiscal
year. In line with this adoption, revenue is recognized upon the transfer of control of the promised goods or services tocustomers in an amount that reflects the consideration to which they expect to be entitled in exchange for those goods
or services.
As a result of this change, revenue from software and contracted development, which were previously recognized ata single point in time in principle, are now recognized over a fixed period of time, except for contracts with very shortterms, after reviewing the identification of performance obligations and the timing of satisfaction of performanceobligations.
In adopting the Revenue Recognition Standard, in accordance with the transitional treatment set forth in the proviso
of Article 84 of the Revenue Recognition Standard, the cumulative impact of retrospective application of the standards
prior to the beginning of the current fiscal year was added to or subtracted from retained earnings at the beginning of
the fiscal year. The new accounting policy is applied from the balance at the beginning of the current fiscal year.
In addition, "Notes receivable-trade" and "Accounts receivable-trade," which were included in "Current assets" on
the balance sheet in the prior fiscal year, are included in "Notes receivable-trade", "Accounts receivable-trade" and"Contract assets" from this fiscal year.
As a result, revenue increased ¥216,242 thousand, cost of revenue increased ¥38,770 thousand, and operating
income, ordinary income, and income before income taxes each increased ¥177,472 thousand in the current fiscal year.
In addition, the balance of at the beginning of the period increased ¥23,175 thousand.
2. Accounting Standard for Fair Value Measurement“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, July 4, 2019. Hereinafter the“Accounting Standard for Fair Value Measurement”) has been adopted from the beginning of the fiscal year, and inaccordance with the transitional treatment set forth in Article 19 of “Accounting Standard for Fair Value Measurement”
and Article 44-2 of “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019), theCompany will continue to apply new accounting policies prescribed by Accounting Standard for Fair Value
Measurement and other standards into the future. The impacts of this adoption on the financial statements are
immaterial.

- 73 -

[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 the consolidated financial statements”.

- 74 -

[For non-consolidated balance sheets]*Monetary receivables from and payables to a subsidiary and an equity method affiliate are as follows(JPY in thousands)
FY2021(As of December 31, 2021)

FY2022(As of December 31, 2022)

808
4,033

873
16,272

Short-term monetary receivables
Short-term monetary payables[For non-consolidated statement of income, cumulative]
1. Transactions with a subsidiary and an equity method affiliate are as follows.
(JPY in thousands)
FY2021(As of December 31, 2021)
Operating transactions

33,55254,223945

1,245

Non-operating transactions
2.

FY2022(As of December 31, 2022)

The approximate percentages of expenses included in selling expenses were 59% in the previous fiscal year and 57%
in the current fiscal year, and the approximate percentages of expenses included in general and administrative expenses
were 41% in the previous fiscal year and 43% in the current fiscal year.
Major components of selling, general and administrative expenses are as follows.
(JPY in thousands)
FY2021(As of December 31, 2021)

FY2022(As of December 31, 2022)

Salaries

769,256

791,422

Travel and transportation expenses
Depreciation

109,188
42,496110,167
33,4703. Stock acquisition rights
FY2021 (From January 1, 2021 to December 31,2021)
Not applicable
FY2022 (From January 1, 2022 to December 31,2022)
Gain on reversal of share acquisition rights recorded in extraordinary income in the current fiscal year is due to thereversal of stock options in anticipation of their expiration.

- 75 -

[Tax effect accounting]
1. Significant components of deferred tax assets and liabilities
FY2021(As of December 31, 2021)
Deferred tax assets
Accrued enterprise taxes
12,651
Depreciation
46,62030,500Allowance for doubtful accounts
Valuation of bonds of subsidiaries and affiliates
Provision for stock benefits
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)
FY2022(As of December 31, 2022)
13,34657,597-49,91330,50056,97019,107
158,793

17,247
17,744
193,405

(938)
(938)
157,854(1,220)(1,220)
192,185

2. Significant differences between the statutory effective tax rate and after the application of tax effect accounting, bymajor category that caused the differences.
FY2021 (As of December 31, 2021)
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.
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.
[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)
Not applicable- 76 -

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

Category

Tangible
assetsIntangible
assetsType ofassetsDepreciation or
Balance atIncrease in Decrease in amortization
the end
FY2022
FY2022
forof FY2022
FY2022(JPY in thousands)
Original cost
Accumulated acquired atdepreciation
the end of
FY2022

Buildings

27,73032,318-9,339

50,70935,18985,899Vehicles

880

-

-

661

218

3,239

3,458

Tools, furnitureand fixtures

41,28145,479035,17351,588125,456

177,044

Total

69,89377,798045,174

102,517

163,885

266,402software217,538

229,616

234

195,915251,005

3,156,611

3,407,617

Manufacturingknow-how

148,000--

37,000111,000

74,000185,000

344

-

-

-

344

-

344

365,882229,616234

232,915362,349

3,230,611

3,592,961

Other
Total

(Notes)Balance atthebeginningof FY2022

1. The increase in buildings, tools, furniture and fixtures during the current period is mainly due to the relocation of the
Headquarters office in Tokyo.
2. The breakdown of increase in software (for sale on the market) by major product is as follows: Claio: ¥60,241
thousand, REMORA: ¥14,640 thousand, DocuMaker: ¥78,266 thousand, C-Scan: ¥24,381 thousand, PDI+MoveBy:¥6,526 thousand, ProRad: ¥15,742 thousand, GAP: ¥16,448 thousand, Patient Software: ¥1,389 thousand, Cloud-based
Patient Information Software: ¥8,952 thousand.

Annexed detailed schedule of provisions(JPY in thousands)
Account
Allowance for doubtful
accounts
Provision for share-based
remuneration

Balance at the
beginningof FY2022

Increase in FY2022

Decrease in FY2022

Balance at the endof FY2022

100,000-

100,000-

163,649

29,9996,861

186,787(2) [Major assets and liabilities]
This information is omitted as indicated in “Consolidated financial statements”.
(3) [Others]
Not applicable- 77 -

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 stocks of lessthan a 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 stocks of less than astandard unit are prescribed, the holder of stocks 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.

- 78 -

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, 2022 and the datewhen this Securities Report (Yukashoken-Hokokusho) was filed.
(1) Securities Report and Accompanying Documents and Confirmation NoteFiscal Year the 37th (From January 1, 2021 to December 31, 2021) Submitted to the Director of the Shikoku Local
Finance Bureau on March 30, 2022
(2) Internal Control Report and Attached Documents
Submitted to the Director of the Shikoku Local Finance Bureau on March 30, 2022
(3) Quarterly Securities Reports and Confirmation Notes
The 1st quarter of 38th period (from January 1, 2022 to March 31, 2022) Submitted to the Director of the Kanto Local
Finance Bureau on May 12, 2022
The 2nd quarter of 38th period (from April 1, 2022 to June 30, 2022) Submitted to the Director of the Kanto Local
Finance Bureau on August 9, 2020
The 3rd quarter of 38th period (from July 1, 2022 to September 30) Submitted to the Director of the Kanto Local
Finance Bureau on November 10, 2022
(4) Extraordinary Report
Submitted to the Director of the Shikoku Local Finance Bureau on March 30, 2022
An extraordinary report according to the provision of Article 24-5, Paragraph 4,of the Financial Instruments and Exchange Act and Article 19, Paragraph 2,
Item 9-2 (Matters that require a resolution of a general meeting of shareholders),of the Cabinet Office Ordinance on Disclosure of Corporate Information, etc.
(5) Correction Report and Confirmation Statements for Quarterly Report
Submitted to the Director of the Kanto Local Finance Bureau on August 9, 2022
This is a correction report and its confirmation for the quarterly report for the 1st quarter of 38th period (from January
1, 2022 to March 31, 2022).

- 79 -

Part II Information on Guarantors, etc. for Reporting Company
Not applicable- 80 -