Annual Report 2019

Table of contents
To our stakeholders
About Cybernics
Business Outline
About HAL
Medical HAL
Cybernics Treatment
Global expansion of Medical HAL
HAL Single Joint Type
HAL Lumbar Type
Neuro HALFIT
Business Highlight
Endeavor towards Sustainable Business
Analyst Interview "Dawn of Cybernics Industry"
Interview of the new Director: Yoshihiro Yasunaga

Forward-Looking Statements
Many of the statements included in this annual report contain forward-looking statements
and information such as forecasts, plans and targets identified by the use of terminology
such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,”“project,” “will”or similar phrases.
CYBERDYNE, INC. (the “Company”) bases these statements on beliefs as well asassumptions made using information currently available to the Company. As thesestatements reflect the Company’s current views concerning future events, thesestatements involve risks, uncertainties and assumptions. The actual future performanceof the Company, its consolidated subsidiaries and its affiliates accounted for by the equity
method (the “Group”) could differ materially from these forward-looking statements.
In addition, information relating to companies other than the Company and the Group
that is included in this annual report has been derived from public sources. As a result,
the Company has not verified this information from the standpoints of accuracy andappropriateness. Moreover, the Company in no manner guarantees this information.
Accordingly, please refrain from making investment decisions that are overly reliant on
the forward-looking statements contained in this annual report. The Company cautions
prospective investors not to place undue reliance on these forward-looking statements
when making investment decisions. All written and oral forward-looking statements
attributable to the Company or persons acting on the Company’s behalf are qualified intheir entirety by these cautionary statements.

Editorial policy
CYBERDYNE, INC. published this annual report to provide continue generating value
for sustainable growth.
In preparing this report, we use charts and photographs to communicate with ourmany stakeholders, and we strive to make it easy to read and understand.
In addition, our company adopted the International Financial Reporting Standards(IFRS) for the year ended March 31, 2018. Unless otherwise noted, information in thisannual report is based on IFRS.
The following are trademarks registered by CYBERDYNE in Japan. Some trademarks are also registered in other regions.
“HAL” Registered trademark No. 5300686 No. 5302317 No. 5924213“Hybrid Assistive Limb” Registered trademark No. 5178998“HALFIT” Registered trademark No. 5419254“CYBERDYNE “Registered trademark No. 5164351 No. 5172034 No. 5403306“Zero Burdening-care” Registered trademark No. 5753991“Cyin” Registered trademark No. 6054731“Cybernics Treatment” Registered trademark No. 5986327

Scope of This Report
Timeframe
March 2019 Fiscal Year (April 1st, 2018 - March 31st, 2019)
・Latest information at issue date as of September, 2019 is also included as muchas possible
・When the applicable period and scope differ depending on the topics, this fact is
individually stated clearly.
OrganizationCYBERDYNE, Inc. and its consolidated group ("CYBERDYNE")To our stakeholders

Annual Report 2019

“Create the Future” Yoshiyuki Sankai

Our company has celebrated its 15 year anniversary on June
24th, 2019. Coincidently, 2019 happened to be a milestone
year in Japan, as the new Reiwa Era started in the Japanesecalendar.
Since the collapse of the bubble economy, Japan has entereda long period of stagnation without finding a next step. At thesame time, it has rapidly entered an aging society with a lowbirthrate. The global economy was also undergoing a majorsocial change. When we look at the ranking of the world's
market capitalization in 2006, when our company started to raise
funds, the top 4 were large companies with a long corporate
history and there was only 1 venture company. In 2018, the top
4 companies were all emerging companies that was recently
incorporated.

In this way, innovation developed new areas around the world,
and although this doesn't happen over night, it still led to majorindustrial and social changes. First it was the robot industry,then it was IT industry. We will be the next challenger bringing
about the new wave of innovation. HAL for medical use became
a medical device in Japan, the United States, and Europe, and is
now being developed in Asia and the Middle East. In this way, we
are accelerating our efforts to become an international platform.
CYBERDYNE was established in June 2004 as a university venture
to solve various social problems facing the super-aged society.
In order to solve various social issues in the increasingly serious
situation with a declining birthrate and an aging population, we
are focusing on business promotion to create the ideal future byresearching, developing, manufacturing, and shipping innovative
Cybernics systems, focusing on medicine, welfare, life, and theworkplace, utilizing a new field "Cybernics" that combines humanresources, robots, and information.
We have also developed a variety of innovative Cybernics devices
and interfaces and advanced AI-Robot products to enable early
detection and prevention for health maintenance, to improve
our aging workforce, and to respond to the shrinking workforce.
Our products are based on a new concept of IoH/IoT technology(Internet of people and things).
Through this technology, the human nervous system,
physiological system, and environmental system are connectedto the supercomputer, and big data of human and things areaccumulated, analyzed, and AI processed, thus accelerating thecreation of a new Cybernics Industry that fuses "Humans" with
"Cyberspace and Physical Space".

To our stakeholders

Annual Report 2019

List of main events in fiscal year ended March 31, 20192018.07.02

2018.07.12

2018.09.26

2018.10.01

2018.10.16

Presentation of Cybernics Industry to G20 DelegationCYBERDYNE Headquarters (Japan)

1st Year of Reiwa (2019) marked the beginning of an exciting
new era for CYBERDYNE. In June, 2019 a total of 160 ministers,
ministerial-level officials and government officials from the G20
in trade and the digital economy visited our company to discuss
the frontlines of the Cybernics industry. We look forward to futureinternational cooperation.
We would like to express our heartfelt gratitude to all those whohave supported and worked with us. Thank you for your continued
support.

2018.10.29

2018.11.02

2018.11.13

2018.11.30

2018.12.03

2019.03.24
CYBERDYNE, INC.
President/CEO

Acquisition of Photoacoustic Imaging business
Reinforcement of its technology to develop a diagnostic imaging apparatus.
Establishment of Cybernics Excellence Japan
CEJ Fund accerelates generation of "Cybernics Industry"
Start of selling Cyin for Living Support to the public in Japan
Enable patients having difficulties in speaking or moving, to communicate andcontrol various devices
Osaka Robocare Center opened.
Open Robocare Center as 1st franchise center
Cybernics Treatment at Malaysia started.
First in Asia Pacific (APAC). Adopted in hopsital operated by SOCSO
Formation of alliance with LPixel
Reinforce development of medical Big Data analysis
AIG General Insurace applies reinbursement to HAL training programFirst private insurance for HALFIT
Cybernics Treatment started in Italy.
Adopted at medical institute specialized for brain & nerve system disorder.
Implementation of shareholder benefit program
Shareholders and the family members receive discount for HALFITUrayasu RoboCare Center opened.
6th Robocare Center
Tsukuba Robocare Center opened.
Established as a base of sales and training for Cybernics Technologies
Formation of comprehensive collaboration partnership with Tsukuba Bank

2019.03.28

Collaborate to develop local community through solving social problems andcreating new industry

About Cybernics

Annual Report 2019
Most renowned research result of Cybernics is the world’s first cyborg-type robot “Robot
Suit HAL”, which is now commercialized as a product of the Company.
The company name is derived from the utilization of innovative “cybernic” technologies
and the suffix “dyne” which derives from the Greek dunamis meaning force/power.
“CYBERDYNE” therefore means “power generated by Cybernics” and expresses thecompany spirit that all employees hold to dearly.

Cybernics is a new academic field that fused/combined cross- disciplinary fields.
The core disciplines of Cybernics are field academic field related to human, robots andinformation systems; however, it also embraces various fields such as neuroscience,
AI, Robotics, system engineering, information technology, physiology, psychology,
behavioral science, philosophy, ethics, law, business administration and etc.
Various social issues that people and the society face today are so complex that crossdisciplinary approach is necessary to tackle them. Yoshiyuki Sankai, a professor at the
University of Tsukuba in Japan, who is now also President and CEO of CYBERDYNE, INC.
(the “Company”) championed Cybernics as a new academic field that could approachthese issues from multiple perspectives.

AI

Robotics

Neuroscience

SystemEngineering
Behavioral
Science

Philosophy,
Ethics, Law,
Busiess etc.

Psychology

Physiology

Information
Technology
and Data
ScienceAnnual Report 2019

Business Outline
The business of CYBERDYNE and its group companies (collectively referred to as the"Group") is to realize “Society 5.0/5.1”, a future society based on the idea of Techno-PeerSupport where human and technology live together and support each other. This goal isattained through revolutionary changes in industry and society, and The Group seeks toutilize “Cybernics Technology” that handles “human” + Cyberspace” + “Physical space”,
to create a “Cybernics Industry” for this transition following the breakthroughs of the
Robotics Industry and IT Industry.

The Group’s business has a unique advantage in its ability to access and integrate
information within the human body (e.g. Brain-nerve and vital systems) in addition to
information outside the human body (behavior, life and environmental information) andapplying them to different fields such as medicine, nursing care, production, household,and work places. All of the Group’s devices and interfaces are compatible with Internetof Humans/Internet of Things (“IoH/IoT”), and through these products, information of
the brain- nerve, vital, physiological, behavioral, life and environmental systems can be
integrated and connected to a super computer.
The Group aims to realize a system where Big Data of the aforementioned information
are accumulated, analyzed and processed with AI. The Group simultaneously works on
research and development, business development and formation of business alliances
to further accelerate the emergence of a Cybernic Industry that will solve the problems
facing society.

Fusion of『Human』+『Cyber/Physical Space』:= Creation of a new industry "Cybernics Industry"AI

Neuroscience

Physical
space

Human

Robotics

Behavioral
Science

IoH/IoT

SystemEngineering

Integrated
Cybernics System

Cyber
space

Philosophy,
Ethics, Law,
Busiess etc.

Psychology

Physiology

Information
Technology
and Data
ScienceAbout HAL

Annual Report 2019

Principles of HAL

Main types of HAL

HAL is world’s first wearable cyborg which reads “bioelectrical signal” that is
generated upon body movement and enables voluntary movement.

CYBERDYNE currently offers the following types of HAL to the market, and willcontinue to develop new types to expand its usage

01

Move the body

HAL Lower Limb Type
Medical Use (Cybernics Treatment)
・ For Treatment that improves and regenerates the physicalfunction of the wearer
For Well-being (Neuro HALFIT)・For Neuro HALFIT that improves and regenerates thephysical function of the wearer"Bioelectrical signal" reflected onvoluntary movement is sent frombrain to target muscle.

02

HAL reads signal

HAL sensor detects bioelectricalsignal leaked on skin surface

03

HAL Lumbar TypeFor Well-being (Neuro HALFIT)・For Neuro HALFIT that improves and regenerates thephysical function of the wearer
For Care Support
・Reduces the burden placed on the muscles of the lumbar
region and the intervertebral disc during caregiving
activities such as assistance in transfer and postural change
For Labor Support
・Reduces the burden on the lumbar muscles andintervertebral discs during heavy work, such as lifting andcarrying heavy objects

Support according tointension

Based on bioelectrical signal andmovement information, HAL assists
voluntary movement of wearer with
controle of power unit of each joint.

04

Establish iBF loop

Throughaseriesofflows,
bidirectional biofeedback loop (iBF)that starts in the brain and returns
to the brain through HAL assistanceare established. HAL enables more
active "meaningful" movement withlower efforts, which is thought tostrengthen and regulate the proper
connections between the cranial
nerves.

HAL Single Joint TypeFor Well-being (Neuro HALFIT)・For Neuro HALFIT that improves and regenerates thephysical function of the wearer

Annual Report 2019

Medical HAL
HAL Lower Limb Type

Cybernics Treatment

HAL Lower Limb Type is a Wearable Cyborg designed for a person who havedifficulty moving due to neurological / musculur disease or injury. The device induces
improvement and regeneration of physical function through the mechanism explainedin the next content.

Cybernics Treatment is an innovative treatment technology that promotes functional
improvement and regeneration of the brain, nervous system, and musculoskeletal
system. With HAL, a patient who has difficulty moving his or her legs can repeat thefunction improvement and function regeneration loop synchronized with his or her motion
intention with little muscle load. This effectively alters the functions of the brain, nerves,and musculoskeletal systems.
How functional improvement of HAL works

Cybernics Treatment

Annual Report 2019

Example of Cybernics Treatment
HAL for Medical Use Lower Limb Type is always used in combination with a fall prevention system that could support the users weight. Typically each therapist wouldsupervise one patient, however the facility in Malaysia who have been using the technology since October 2018, have been working on new challenges so a therapist
could supervise multiple patients, or having an experienced patient supervise other patient on better use of HAL.

Cyberdyne Care Robotics, Bochum
Germany

Pusat Rehabilitasi PERKESO Tun Abdul Razak, Melaka,
Malaysia

Global Expansion of HAL

Annual Report 2019

HAL is currently available in 9 countries.
In this annual report period, Italy, Malaysia, Philippines and Bulgaria newly adopted HAL.

Germany*Public Workers
compensation
Insurance

Poland*World's first private
insurance

Britain

CanadaBulgaria

France
Japan

Italy

U.S.
Brooks Cybernics Treatment Center
SNI Swedish Medical Center

TaiwanIndia

Saudi Arabia
ALJ HospitalThailandPhilippines

Singapore
Indonesia

Malaysia

SOCSO Rehabilitation Center(Operated by Social Security
Organization)

Countries with HALCountries in which discussion is underway to introduce HAL

HAL Single Joint Type

Annual Report 2019

HAL Single Joint TypeHAL Single Joint Type is product designed to support people with difficulty moving
body due to brain, nervous and musculoskeletal system disorders. By combining theattachment, the device could induce improvement and regeneration of physical function
in various body parts. The compact design enables a wearer to use the device while lying
down or sitting down, making it ideal for users in the acute phase.

*Set up of HAL Single Joint Type for elbow joints

The device can be attached on various body parts, such as elbows, knees, and ankles.
The company is also developing an expansion kit to increase its effect, such as asuspension kit to support the movements of the upper extremity, which offers flexibility
in meeting user needs.

Hip Joint
Attachment

Knee Joint
Attachment

New ProductAnkle Joint
Attachment

Annual Report 2019

HAL Lumbar Type
HAL Lumbar TypeThe HAL Lumbar Type was available in three models with different operating
environments and specifications. However, to improve usability, a new model has beendeveloped to integrate the function of Well-being model, which can be worn by people
with weak legs and back to support trunk movement and stand-and-sit movement to
induce improvement of their physical functions, and Care-support model for nursing
care such as transfer support.

How HAL Lumbar Type works

Location of pasting
sensor*HAL Lumbar Type Care-support・Well-being

01 Sensor is attached 02 Generates
on low back to
detect bioelectricalsignalnaturalassistaccordingto signal, posture,
movement, etc.

HAL Lumbar Type for Well-being (BB04)

03 Body

is assisted
through lumbar belt
and support belt

04 Care support model allows heavy

duty safely by retrieving burden at
lumbar. Well-being model is to assist
movement such as sit-to-stand andmaintain / improve motor function.

HAL Lumbar Type for Labor Support (LB03)

This model supports both care-giver and care-receiver. It allows care-receivertrunk and sit-to-stand movemen easily and maintain / improve trunk and lower
limb function. Also, it assists preventing care-giver from low back pain by retrieving
burden of low back muscle and intervertebral disc during nursing.

This model reduces the burden on the lower
back when workers lift heavy items or maintainbending posture at various sites other thannursing care facilities, such as airports,
logistics facilities and factories.

Neuro HALFITNeuro HALFIT is a service currently offered at 12 facilities in Japan called "Robocare
Center". Neuro HALFIT is a program that induces improvement in the function of brainnerve-muscular systems for those with weakened bodily functions and disability. Neuro
HALFIT utilizes the technical feature of the world's first Wearable Cyborg HAL. Using
HAL, it induces improvement in the function of brain-nerve-muscular systems for those
who have difficulty standing, sitting and walking.

Annual Report 2019

Neuro HALFIT utilizing HAL Lower Limb Type and Single Joint Type for persons with disabilities

Bending and stretching knees

Ambulatory exercise on treadmil

Exercise with parallel bars

Bending and stretching elbows

Neuro HALFIT for elderly using HAL Lumbar Type

Trunk Back and Forth（straight）

Squat (with bar）

Trunk Back and Forth（twist）

Front Lunge

Business Highlight

Annual Report 2019

Status of operation

Changes in operating number of HAL

Revenue was posted at ¥1,709 million for the fiscal year ended March 31, 2019. Although
the temporary sales from the program hosted by the from Japan Ministry of Health,
Labor and Welfare is no longer into effect, rental and maintenance services, themainstay of the company business have increased steadily.
The graph below shows sales for the last 5 years.

HAL for Medical Use Lower Limb TypeThe fiscal year ended March 2019 saw the start of new development in Malaysia and
Italy. In parallel with clinical trials and clinical research aimed at expanding the scope of
diseases covered, we will promote initiatives for insurance listing and overseas expansion.
291

300
257

250

Revenue

200

2,100

150

1,800

1,660

1,500

1,265
1,200

631

300

1,709

100

354

214

50

312

328

392

125

268
1,167
1,061

183
648

End ofMar. 2015（J-GAAP)End ofMar. 2016（J-GAAP)

Service (Service
transferred at a pointof time)Rental・
Maintenance798(Service transferredover time)

322

0

Product Sales

End ofMar. 2017（IFRS）End ofMar. 2018（IFRS）

0(Assets transfered
at a point of time)

226

900
600

594

1,728

End ofMar. 2019（IFRS）

Effective from the year ended March 31, 2017, the Company discloses its figures basedon International Accounting Standards (IFRS). For the above chart, "revenue" is used
for fiscal years after IFRS came into effect and for fiscal years before that "net sales" isstated based on Japanese-GAAP.

188
140
111

End ofMar. 2015

End ofMar. 2016

End ofMar. 2017

End ofMar. 2018

End ofMar. 2019

HAL Lumbar Type
Both HAL Lumbar Type Care Support model (used at nursing home) and Labor Support(used at factories, distribution facilities, airports, agriculture, etc.) model grew steadily.
Also, in August 2019, we launched a new product, HAL Lumbar Type Care Support Wellbeing, which supports both caregivers and carereceiver, and we expect further growthin the future.
1600
1,491

1400
1219

1200
1000

988

800

274

600

498

400

216

200
0

89

44
45

End ofMar. 2015

572

372
Operating number at otherthan nursing home

919
714

847

282
End ofMar. 2016

End ofMar. 2017

End ofMar. 2018

End ofMar. 2019

Operating number atnursing homeEndeavor towards sustainable business
In September 2015, Sustainable Development Goals (“SDGs“) were adopted in
the UN Sustainable Development Summit. SDGs are a collection of 17 global
goals and 169 targets that constitute an action plan for humans, the planet andprosperity. The global goals of SDGs are common goals for all people on earth,including industry and civil society, not only for the government. As a memberof the society, the Group will make a contribution to achieve the SDGs, which isrelevant to its business activities.
Endeavor of the entire Group towards achievement of the SDGs

Based on the philosophy “Technology for humans and society,” the Group sets forth “research anddevelopment of technologies and business activities that can be used for peaceful purposes” as acorporate principle. The focus of the Group is currently on solving social issues related to aging
population and declining birthrate. In order to address these issues, the Group develops innovative
Cybernics Technology mainly in the three fields of medicine, care support and living support(including work environment). Furthermore, based on the above philosophy, the Group will notconsider using its technologies for military purposes because if they are used for the developmentof weaponry or support to military action, that would damage people and society rather thanserving them. As an additional measure, upon entering a new business field or offering the Group’s
products, the Company’s Peace and Ethic Committee will discuss whether there is a possibility thatits technologies would be used for military purposes.
The Group’s business activities and activities related to generating the Cybernics Industry
currently contribute to some of the SDGs that are colored on the chart above, such as “Good Healthand Well-Being,” “Industry, Innovation and Infrastructure,” “Peace Justice and Strong
Institutions.” The Group recognizes other goals as issues that people and society needs to solve andit will contribute to solving these issues in the future.

Contribution to solving social problems through the Group’s products

Based on its corporate philosophy, the Group performs research and development and social
implementation of its innovative products to solve issues that people and societies are currently
facing. For example, Medical HAL is used for treatment of patients with difficulties to move due
to diseases and injuries. Medical HAL is expected to induce improvement and regeneration of thephysical functions of a patient, to the extent that the patient no longer requires the device to move.
Furthermore, the Group also works on Cyin for Living Support, a communication device designed fora patient with difficulties in verbal communication or physical movement due to severely progresseddiseases. These products could promote independence of a disabled person and reduce the burdenof a caregiver. As such, the Group makes a contribution to reduce inequalities between the disabled
and the non-disabled through the aforementioned products. The Group also makes contribution
to solve other issues such as problematic work environment and workplace with shortage ofmanpower.
Furthermore, climate change is said to cause various natural disasters. During the fiscal year
under review, Japan was struck by heavy rain in July Heisei 30, which caused heavy damages
from flooding and landslide in west part of Japan. After observing the damages through news andreceiving requests from the stakeholders, the Group immediately reconfigured the setting of HAL

Annual Report 2019
Lumbar Type for Labor Support and deployed the customized
unit to support volunteer workers in disasters sites of Okayama
Prefecture. Few weeks later, the Group also worked withother stakeholders to support volunteer workers in disasters
sites of Hiroshima Prefecture and preventing economy
class syndromes in emergency shelters. Following thesesuccesses, the Group will work with local municipalities toprepare a safety system, which could allow the Group to deploy
HAL Lumbar Type quickly in case of any natural disasters.
Products of the Group are worn by their users or operated
beside the users. As such, the Group regards safety of the
products as the highest importance. To guarantee the safety ofthe products, the Group ensures they are made to conform tostandards of International Standards Organization (“ISO”) andvarious other standards.

HAL Lumbar being used toremove the debris(Okayama Pref. July 2018)

Endeavor to promote coordination with partners

The Group works to promote industrial and social transformation from the current “consumptionbased economy” to next-generation “social problem solving economy” through creation of Cybernic
industry. To that end, the Group led the establishment of the “CEJ Fund (CEJ stands for Cybernic
Excellency Japan)” as a framework to shape new industry. The fund provides both business andfinancial support to startup companies that contributes to the development of people and society.
This endeavor contributes to one of the SDGs, “Industry, Innovation and Infrastructure.” It also
promotes collaboration among industry, academia and government in Japan and overseas.
Through this endeavor, the Group works to build a foundation to promote the entire process of theresearch and development to social implementation. In this way, the Group will quickly implement
innovative technologies to contribute to solving social problems related to the aging population,
declining birthrate and disabilities, as well as to providing advanced standards of prevention andtreatment for diseases and injuries.

Endeavors to create a pleasant workplace environment

The most important management resource for sustainable business development is humanresources. In order to nurture and reinforce the human resources, the Group conducts various
endeavors. The Group prepares various work arrangements such as irregular working hoursystem, flextime system and discretionary work system to suit the nature of the work and thedifferent needs of the employees. Furthermore, it also prepares parental leave and family careleave, and there are records of employees using these benefits regardless of genders. With regard
to nurturing of human resources, the Group creates training plans annually to improve individual
skills and knowledge. The Group holds a number of internal seminars and also provides support for
employees to participate in external seminars related to their jobs.
Also, a clinical psychologist of the Group and an industrial physician work together to conduct
interviews with employees on a regular basis to maintain good physical and mental state of theemployees.

Analyst interview: Dawn of Cybernics Industry
We invited Kyoichiro Shigemura an eminent analyst in a field of medicine and health care, for aninterview with Yoshiyuki Sankai, President and CEO of the Company, to discuss the Company’s

Annual Report 2019
system and we might be able to find out that the standard protocol may not be exactly workout forthat person. So if we do that in medical fields for example, we could realize "personalized medicine".

challenges to shape the future.
(This interview took place on July 18, 2019)
Shigemura

Shigemura

I believe “information” will be the important keyword for CYBERDYNE's business inthe coming years. Am I right to say that?
SankaiSankai

The Company have been developing various types of Cybernic Systems such as Wearable

Cyborg HAL, sensing technologies such as Cyin and VS-AS01 (temporary name) or Cleaning Robots
and Transportation Robot capable of navigating autonomously. All of these systems are carefully
designed to help users with their needs. But that is not all. All of our applications are installed witha communication function, so it could gather information related to the users and their surrounding
environment and transmitting those information to the Cyberspace in order to make the systemeven more effective or even more suited for each users. This vision to gather, analyze and feedback
information related to human and things are something I had in mind before we were listed on thestock market. For example, there are many sorts of informations such as informations of brainnerve system, vital system, physiological system and environment. Anyway, we are formulating a
way to gather all information that is considered to be meaningful. Most of the systems required to
do this are developed by CYBERDYNE. But we also coordinate with other companies and research
institutes to access technologies that takes too much time to develop inhouse. As such, we wereable to formulate this in a relatively short time. Simultaneously, we are gradually preparing asystem to accumulate information to Cloud and Super Computers, systems to analyze accumulated
datas and systems to feedback the results to human and applications. People say CYBERDYNE is
a company that develops HAL, but in the coming years, you should be able to see another side of
CYBERDYNE as operators of information.

A lot of companies are trying to gather, analyze and utilize information, but could CY-

BERDYNE become the leader in this challenge?
Data will not be meaningful unless if there is plenty of data for each set of information.

It sounds simple, but its not easy because in most business fields there are competing products.
Since most product does not dominate the entire market, companies have to work together ifthey hope to do a good data analysis. There are companies who are determined to do this, butthese arrangements are delicate and time consuming. Sometimes there are different barriers. For
example a company that makes hardware, might be using a software of a different company. A
company that makes software may not have a direct interaction with the actual users.
That said, our Cybernics System is a IoH/IoT (Internet of Humans/ Internet of Things) application that
could not only gather information of the environment, but also within the human body. Furthermore,
one of our device, Medical HAL is now categorized as a robot capable of inducing recovery in thephysical function and its the only robot of the kind capable of doing so. As such Medical HAL is being
disseminated globally as a platform technology. In addition, our work covers the entire process of
research and development to social implementation and we develop the system related to human,robot and information ourselves. So we are currently in a position that could enable us to collectdata from the entire world. Also, the reason why we focus on medical is because medical is theindustry with the highest restriction. So if we can make it work in the medical field we can transfer
it to applications in other business field and it should work fine.
The devices, including devices and interfaces used in fields other then medical or products
developed by others that we work with will also be connected to this grand scheme.

Interviewer: Kyoichiro Shigemura
Shigemura

So what will CYBERDYNE do withthose accumulated Big Data?
Sankaiin 1991 and started serving as an analyst from 2000. He

Cybernics Systems are capable ofhandling various kind of information. If all of thevarious information of all of our users are gathered
as a Big Data, we might be able to discover trends
of relationship between information that we wereunable to see before. This could lead to findingsthat could solve problems in our society.

Oralternatively, we could extract information of acertain person or a

Kyoichiro Shigemura joined Nomura Securities Co., Ltd.
now works as the head of the Medicine and HealthcareTeam. He has extensive knowledge in Japanese medical
and long- term care system as well as the analysis ofhealthcare companies. He is passionate about discovering
companies that seek to break the stereotypes within theexisting industry. His major was psychology at Waseda
University. He is a member of the Securities Analysts
Association of Japan. He is a 3rd dan in Aikido.

Analyst interview: Dawn of Cybernics Industry

Annual Report 2019

Now, one of the important topic for leaders who arelooking to handle data, is the topic of data privacy. Our
company is well prepared towards even the most extreme

disease so it was also very important to put

policy changes, as we are already confortable working withthe priority on this disease at the beginningthe medical field, which is a field known for strict privacy

to support such patients. On the otherhand,policy. We are also a member of the World Economic

since this disease is a rare orphan disease, we

Forum, which is one of the organization that is discussing

experienced some difficulty getting enoughhow information should be managed in the future. Thispatients to complete the clinical trial.

way, not only we could make contribution to the important

Another reason why its taking some time

discussions based on our experiences, but we could also

to become profitable is because of insurance

keep track of whats being discussed in the forefront of thispoint that were set for Cybernic Treatment.

topic and swiftly conform to change if any policies are to be

The pricing towards treatment using HAL isannounced.

higher compared to traditional rehabilitation,

Shigemurabut in comparison to pricing from the German

We started to see activities from CEJ Fund.

Please tell us the plans for CEJ Fund.

public workers compensation insurance etc. it

SankaiCEJ Fund is a scheme to accelerate the emrgence

number of neuromuscular disease populationof Cybernics Industry. We made this to support venture

being significantly low in comparison tocompanies in field of medicine, AI, Big Data and etc. CEJ

diseases like stroke, facilities that is adopting

Fund will not only provide funding, but it will
also provide other forms of support
IP, legal and so on.

is low. Even with the low insurance points and

such

as

in

field

of

technology,

business,

There are so many venture companies and individuals withunique technologies, so the role of CEJ Fund is to encourage their challenges.
CYBERDYNE was also making capital alliances and business alliances with venture companies
from the aforementioned perspective, but when we were doing this on our own, we were only ableourtechnology is gradually increasing. Once we have the approval for stroke, the number of units
adopted is likely to grow rapidly.
Shigemura

Can you elaborate on stroke approval. Would that further accelerate the disseminationof Cybernics Treatment?

to interact with company that we could easily spot. However with the CEJ Fund, we can now also

SankaiDue to the vast number of patients suffering from the after effect of stroke, an alternative

utilize the network of the fellow investors. So we saw a boost in the venture companies we aremethod that could induce further improvement of physical function or accelerate the improvementaware of and using this scheme we hope to accelerate the creation of Cybernics Industry evencould be met with a huge demand. There are a lot of researches of pharmaceuticals that is proving

further.

good results towards stroke and combination of pharmaceutical and HAL could lead to even greater
result, so we would like to investigate that further. To turn something into medical device, one has

Shigemura

5 years has passed since the listing on the stock market and CYBERDYNE seem tobe ready for global expansion. On the other hand, CYBERDYNE seems to be taking some time toto go through clinical trial. We are trying out different models and protocols in multiple countries
in order to conduct trials smoothly.

become profitable. How do you plan to increase the value of the company?
SankaiIf we divide are business, it will be rental of product, sales of product and service with the

product. The main core is the rental of product and we have been increasing the revenue in thissince the listing.
In Japan, we started our challenges to offer our medical technology towards, neuromusculardisease. At that point, there was no treatment method that was effective towards neuromuscular

Shigemura

It feels like the speed of HAL spreading to new countries is getting faster. What should

we expect on oversea expansion?
SankaiIn June, there was a Ministerial Meeting on Trade and Digital Economy in our city, Tsukuba.

Upon that, the ministerial delegation visited our company headquarters. We were able to present
our challenges to the delegation and since then, we started to receive various contacts

Analyst interview: Dawn of Cybernics Industry

Annual Report 2019became a great supporter of this technology. The Minister is being very generous to share theinformation of HAL to Ministers and public institutes of other countries in South East Asia.
We could sell directly and do well in Thailand or the Philippines as those countries have beenworking with Japanese countries for sometime. But upon entering other region, the diverse cultureof Malaysia will be a great path. The nation has a group of people with Chinese background as well as
Indian background and due to its religious connection, it could act as our pathway to Islamic countries.
Another point I can make about South East Asia is that the countries seem to have a tight bondwith each other, so we witness Malaysian hospitals or government personnel introducing our
products to their counter parts of neighbour countries and we truelly appreciate the support weare receiving so far.
Our business in Malaysia is expanding at the speed that we never experienced before so we arevery excited to work in Malaysia.

which could really help our business outside of Japan. I scheduled to travel to various places andShigemura

frankly the schedule is quite tough. But I hope to do my part, in order to start offering our technology

a patient lecturing how to use HAL to other patients.

to many countries and regions as possible.
For countries that we started operating in, we succeeded on building a good relationship with
our partner hospitals and we are working to reinforce that relationship evenmore. Our partner
hospitals tends to be leading hospitals in each countries in both the size and the quality. Not only
we exchange information with each other, partners are also acting as the base for disseminationin each countries.
With regards to oversea expansion of our medical device, application of medical device
clearance is another important factor to consider. Since we went through U.S. style, EU Styleand Japanese style application, we can say we have experience with all the major applicationstyles. As such we can file the application faster, allowing us to spread our technology faster.
Furthermore, initially we had to do the entire process of sales, lecturing of how to use the device
and maintenance. However now that we worked together with our partners, we can now trust thepartners to take on some of those roles on our behalf. Clinical results that is coming in from aroundthe world is also very good, so we will keep on going.
ShigemuraCYBERDYNE commenced its challenges in Asia. In comparison to the EU or US

market, do you find it easy or difficult to do business in Asia?
SankaiWe have made adjustment to suit the business customs for each countries and region. For

South East Asia, we find it easier to offer our technology through flat monthly fee model. Malaysia
was the first Asian country other than Japan to adopt our technology. We were able to deliver
24 units to Malaysian hospital that is operated by the Public Social Security Organization called
SOCSO. We were also able to present this technology to the Malaysian Minister, who

SankaiIn our previous encounter, you told me that in SOCSO Rehablitation enter, you witness

Our partners in Malaysia have gone through the same training course to learn how to use

HAL. However the circumstances of each facility, in this case SOCSO rehablitation center, leads torevolution of how the training is done. So in this particular facility, in the first stages the therapist
will closely supervise the treatment with the HAL units. However once the patient gets used to it,
the therapist will lecture the patient so they can use it with less supervision. For the patients, its
about themselves, so they tend to be very motivated to use HAL and find more effective ways to use
HAL. They also help fellow patients by lecturing how to use the device and exchange information
about it. If I put it my way, this is "Techno-Peer Support" where a person connects with others
through technology and technology coexists with people at a high level.
When these findings on better ways to use HAL and results are reported to the facility owner, thisinduces further revolution of the facility.

Analyst interview: Dawn of Cybernics Industry
Shigemura

I get the impression that CYBERDYNE is currently facing some challenges to spread

Cybernics within US. Could you provide the update on the US business?

Annual Report 2019business fields will become important. We prepared our Cybernics Technology as technologies with
IoH/ IoT function for all of our business fields. We will now enter into the phase where we will polisheach technology. We will also gather and analyze information. We will feed back the findings from

SankaiAfter receiving the approval from the U.S. FDA, we commenced working together with

Brooks Rehablitation in Jacksonville Florida from March 2018. Since then we worked together andwitness great clinical results. Through these work, we have been increasing the exposure of HAL
as a medical device amongst the U.S. medical community and simultaneously we have been making
preparation towards expanding the clearance to stroke. While we have a clinical trial running inJapan, we are considering to run a separate stroke trial in the U.S. We would like to try if we cancatch up to the stroke trial in Japan. In a country like the U.S., which is known to be the leader ofthe global medical device market, it is very important to form a strong relationship with a institutewith a strong research background alongside a stron business background. We are currently
discussing terms with a top class research hospital in the U.S. on research project on HAL. We arealso considering to integrate the regenerative medicine in this project.
Shigemura

In Europe, one private insurance company announced a new insurance policy for HAL.

Cybernic Treatment is also spreading in Poland, Italy and Bulgaria. Please tell us about the outlook
for the European market.
SankaiIn Europe we started by coordinating with Bergmannsheil hospital in Germany. In the firststages, we wanted to avoid producing multiple protocols that does not work well. We wanted tofocus on establishing one good protocol that could produce high medical effect by working together
with a good team. Thanks to their support, the relevant team was able to accumulate vast amountof data related to Cybernics Treatment within few years time. Now we are moving on to the newphase which led us to spread our technology to Poland, Italy, Bulgaria and other countries weare discussing with. We aim to enter new markets like France and Britain, while diseminating thetechnology within the countries we already operate in.
Shigemura
SankaiCYBERDYNE does a lot of things. How do you set priorities on each projects?

In order to create a new industry, we can't bear to focus on just one project. We must

proceed multiple projects simultaneously. However we are already over the initial stage ofpreparation so gradually we can start concentrating on each projects. We have gone through a toughprocesses. For example, clinical trial required to turn a product into a medical device, performance
evaluation testing, quality management systems and obtaining each types of approvals. But after
going through those project, we became professionals of each processes.
Shigemura
Sankai

Please summarise the fiscal year under review.

In the fiscal year under review, we put a lot of effort into combining our business fields

with Cybernics Technology. To make a new industry based on Cybernics, connection of different

those information to humans and society.

Interview of new Director

Annual Report 2019

We conducted an interview with Yoshihiro Yasunaga, newly appointed Director who is also working
as the head of the Sales Department to discuss his contribution to the Company so far and hishave the best effect. Everyone we meet can easily image that a device can support its wearer whenenthusiasm towards the challenges to as the newly appointed Director.

the brain, nerves, muscles and HAL. As that integrates the function of the wearer’s brain-nerve sys-

(This interview took place on August 2, 2019)
Q

What made you join the Company and what is your role in the Company?

its worn. However the biggest feature of HAL is that it is able to form a loop of nerve signal between
tem and HAL, it induces improvement and regeneration of physical functions. As such the medical
effects seem to remain even after the wearer takes off HAL. When they find out about that, both theprofessionals in the facility and actual users gets really excited, and I find that to be the best partabout being a sales person in this company.
Q

A lot of our stakeholders have a high interest in the U.S. market due to its market size. We havebeen working together with Brooks Rehabilitation in Florida, but can you tell us the outlook of thismarket?
Yasunaga

We have been working together with Brooks Rehabilitation to gather good clinical data.

We now have reasonable amount of data now, so we are utilizing that for our sales activity. We sent
two of our sales person from Japan for the U.S. market but we will higher local staffs and accelerate the sales work.
Q

What about the European market?

Yasunaga

Europe also entered into a phase where we can speed up the business development so

we sent the manager who would supervise the entire business from Japan in the fiscal year ended
March 31, 2019. Our base in Europe, Germany, is a market with a huge potential so we will keep
Yasunaga

I found out about Cyberdyne on 2008 when HAL was featured in a TV program called“Jonetsu Tairiku (情熱大陸)” At that time, I had a strong urge to solve the situation where elderly

on working towards further dissemination. Furthermore, we will work to spread our technology toother countries in the West such as Italy, and also to the East such as Poland and Bulgaria.

person is forced to take care of elderly person due to lack of personnel. HAL seemed to have theQpotential to really solve this problem and I joined CYBERDYNE as General Manager of Businessthat so? Do you find it more difficult to spread in the East?

Administration. I was incharge of preparing for market listing and I was also involved in General
Affairs and HR, but after 2010 I started doing sales to reinforce the Company's revenue structure.
I am now in charge of the entire sales department, supervising the sales of product in Japan andoutside of Japan. I am also managing the Neuro HALFIT.
Q

It feels like sales oversea is accelerating. How is our product being received by customers over-seas?
Yasunaga

Generally speaking, it is said that there are economical disparity between the West and East. Is

Yasunaga

We can say the same thing about South East Asia. But when compared to the “West”

there does seem to be some economical disparity. So not every hospitals and facility is capable ofrenting our HAL System. But once they see the unique medical effect of HAL, even in the lower endof the disparity, the facilities would still be willing to adopt the technology.
Q

We started offering the technology to South East Asia. What impression do you have towards

this market so far?
We recently had our HAL introduced to South East Asia and several ceremonies were

Yasunaga

The market is small compared to the so called “advanced countries”, but we really feel

held to celebrate that. At that time, we had several local media featuring those ceremonies andthe eagerness to adopt new things from our customers in the South East Asia and they are also very

thanks to that we are receiving a positive feedback in Malaysia, Philippines and Thailand. However,quick to make decisions. We also learn new ideas from these new market. We based our protocolin countries we have never been to, they don’t necessary know about HAL. Alike any other countries,

on one therapist for each patient. But a partner in Malaysia sometimes tries new idea such as one

we have to steadily do our sales activities.

therapist looking over multiple patients or therapist just putting it on to the patient and patient does

There are many ways we can sell our product but usually showing the actual use case seem tothe rest of the training on their own. In Japan, medical teams struggles

Interview of new Director

Annual Report 2019from lack of personnel. So we might be able to learn from these challenges.

Ankle Joint Attachment(available from July)Q

Lumbar Type for Well-being (BB04)(available from August)a

Robocare Center is increasing very fast. While we have HAL being used for treatment in thehospitals, what is the role of Neuro HALFIT and Robocare Center.
Yasunaga

When a person is struck by a injury or a disease, they will be sent to the hospital. Hospital

comes up with a protocol and once they reach a certain stage of improvement they will move out.
Neuro HALFIT was established as a facility for those who wishes to continue training after they areout of the hospital or for those who wants to try out HAL. The main targets are those with stroke,
New menu that integrates the movements in actual life
Neuro-Robotics Rehabilitation and Cybernics Centre, Melaka, Malaysia
Q

We started offering new product this year, such as the Ankle Joint Attachment for HAL Single

Joint Type and Lumbar Type that supports both caregivers and care receivers. How is the reaction
from our users?

but it is thought to be effective for person who is having difficulty improving their body functions. To
meet the growing demands, we have been increasing the number of Robocare Centers around theworld since October, 2018. We have support from insurance companies like AIG and Sompo Japan
to organize an environment so that more people can consider Neuro HALFIT as a option to improve,
but at this point the insurance coverage has not led to significant increase of visitors at this point, so
we have to work harder so more people knows about this scheme.

Ankle Joint Attachment for HAL Single Joint Type is one of the few available product

Neuro HALFIT also has a role as a base for training of HAL professionals. We installed ourin the market capable of training dorsiflex movement of the ankle joint, so we are receiving high

HAL System to different business fields. But in order to get the best outcome out of HAL, weinterest from the medical teams. As for the new lumbar device, initially our customers had to rent

have to work together with our users to standardize the operation. Staffs of Robocare Centera separate unit for care giving use and training use. But now they just need one so our customers

trains their operating techniques, in order to lead our users as the leader of HAL Operation.

Yasunaga

Furthermore, another role of Robocare Center is to be the first to adopt new products and develop

usability increased rapidly. Furthermore, we installed a new mode where it can be used without
attaching a sensor. So it can now be worn under 10 seconds, allowing our users to use it in various
situations. We haven’t really been displaying our usage for the training use, so its still on a low
profile in the oversea market. But it is receiving high interest from the oversea market. Not only it
can be used to maintain the balance in seated position, it can also be used for training of standing

new training programs.
Q

The new Robocare Centers are mostly established through coordination with external partners.

Under what perspective do you select the partners?

so it can be used for many training courses. Japanese government were spending money to aid the

Yasunaga

people who require heavy care. However they are gradually shifting their policy towards preventing

a city with certain amount of population. Furthermore, we need to select a partner who knows about

Success of Neuro HALFIT relies on getting a lot of customers. So we look for partners inthe state where they would need care. We would like to support that trend and these products are

HAL and who has a mind set to really spread the technology. Our current partners of Neuro HALFIT

suited for the new policy.

are either really experienced HAL users, distributors or educational institutes.

Interview of new Director

Annual Report 2019
try to understand the technology and what we are trying to do, and forming a long lasting relationshipwith such distributors.
Q

Please finish off with a message to our stakeholders as the newly appointed Director.

Yasunaga

I believe our product is something necessary in the society with growing number of

elderly people with low birthrate. My mission is to spread the technology quickly and making it stick.
I kindly ask all of our stakeholders to support our challenges.

Presentation at Tsukuba Robocare Center Opening Ceremony (March, 2019)
Q

How do you plan to develop the Neuro HALFIT

Yasunaga

There are some large cities left where we haven’t set up Robocare Centers. I would liketo look for good partners to cover all the large cities. For our customers of Neuro HALFIT, it will
help them if the service is available somewhere close from their home. So it may not be as large
scale as Robocare Centers, but I would like to prepare a small facility where our customers can use
HAL casually.
Q

Is the business of Neuro HALFIT profitable?

Yasunaga

There are lot of demands for Neuro HALFIT Service and that demand is likely to increase

further with the aging situation in Japan. For most customers, once they use HAL they feel theeffect and they tend to keep on using it. So I believe Neuro HALFIT service is profitable and there
is no worry about business continuity. The new Robocare Centers will take some more time until it
becomes profitable, but for Robocare Centers we operate directly, it is making profit.
Q

We are about half way past the current fiscal year. For the remainder of the year, what kind ofchallenges would you like to make.
Yasunaga

I would like to focus on accelerating the business overseas and spreading the new

products. Especially for the new products, getting the numbers out in short amount of time will be
the key to generate greater sales. There is a limit on how much we can do we the number of our own
sales team. So we must work together with distributors both within and out of Japan. Candidates
who are just interested won’t do. We hope to find a distributor who can reallyManagement structure

Annual Report 2019

Members of Board of Directors

Hiroaki Kawamoto

Yoshiyuki Sankai
Born June 24, 1958 (Male)Ph.D. in Engineering

President and CEO

Description of the positions, personal history, assignments and other important position held outside the Company
2003/7

Professor of Functional Engineering, University of Tsukuba

2004/4

Professor of Information & Systems, University of Tsukuba(present)

2004/6

Director at incorporation of CYBERDYNE

2006/2President and CEO of CYBERDYNE (present)

2009/9Director of the Center for Cybernic
Research, University of Tsukuba

2010/3

2014/6

Program manager of the Impulsing Paradigm Changes throughDisruptive Technology Program (ImPACT) hosted by the Cabinet
Office of Japan

Description of the positions, personal history, assignments and other important position held outside the Company

Professor of Information & Systems, University of Tsukuba
Executive Research Director of the Center for Cybernic
Research, University of Tsukuba

Core Researcher of Funding Program for World-Leading
Innovative R&D on Science and Technology Program (FIRST)
hosted by the Cabinet Office of Japan
Years in service as Director

Special interest in CYBERDYNE

15 yearsnone

Shinji Uga

Number of company shares owned
Common3,042,000 SharesClass B
77,696,000 Shares

Certified Public Accountant

Director

Born February 15, 1970 (Male)

Associate Professor of Information & Systems, University ofTsukuba (present)

2004/6

Director at incorporation of CYBERDYNE

2015/4

2005/8

Researcher at Japan Association for the Advancement ofMedical Equipment(Important position held outside CYBERDYNE)

2006/2

Director of CYBERDYNE (present)

2017/10 Executive Research Director of the Center for Cybernics
Research, University of Tsukuba (present)(Important position held outside CYBERDYNE)

Ph.D. in Engineering

Director

Born August 25, 1974 (Male)

Associate Professor of Information & Systems, University of Tsukuba

Years in service as Director

Special interest in CYBERDYNE

15 yearsnone

Kinichi Nakata
Born May 12, 1962 (Male)

Outside Director
Independent Officer

Number of company shares owned
Common14,000 Shares

Ph.M.D. in Medicine

Description of the positions, personal history, assignments and other important position held outside the Company
1989/7

Worked for Nihon University School of Medicine

2008/3Councillor at Japanese Association for Coronary Artery Surgery(present)

2008/6

Outside Director of CYBERDYNE (present)

1996/10 Councillor at Japanese Society for Artificial Organs
2003/3

Technical Committee on Industrial Promotion of Medical
Electromagnetic Drive Systems
2003/10 Lecturer at Nihon University School of Medicine (present)

MBA(Important position held outside CYBERDYNE)
Lecturer at Nihon University School of Medicine

Years in service as Director

Special interest in CYBERDYNE

Number of company shares owned

11 yearsnone–

Description of the positions, personal history, assignments and other important position held outside the Company
2008/9Joined CYBERDYNE

Kazumasa Yoshida

2001/10 Joined Chuo Aoyama Audit Corporation (Now known as
PricewaterhouseCoopers)

2009/2

Director (present) and head of Financial Affairs and Accounting
Unit of CYBERDYNE

Born August 20, 1958 (Male)

2005/10 Assigned to PricewaterhouseCoopers Shanghai office

2013/12 Head of Corporate Unit of CYBERDYNE (present)

1994/4

2007/6

Joined Tomen Corporation (Now known as Toyoda Tsusho)

Description of the positions, personal history, assignments and other important position held outside the Company

Joined Ridgeway Capital Partners Ltd.

Years in service as Director

Special interest in CYBERDYNE

10 yearsnone

Yoshihiro Yasunaga
Born May 1, 1978 (Male)

Outside Director
Independent Officer

Number of company shares owned
Common60,000 Shares

Certified Public Accountant (U.S.)

Director

2016/7

2003/6

President and CEO of Intel Kabushiki Kaisha

2017/12 Outside Director of Mynavi Corporation (present)(Important position held outside CYBERDYNE)

2012/6

Outside Director of Onkyo Corporation (present)

2013/6

Outside Director of CYBERDYNE (present)

2014/6

Outside Director of TDK Corporation (present)

2015/6

Outside Director of Mamezou Holdings Co., Ltd. (present)

Outside Director of Onkyo Corporation
Outside Director of TDK Corporation

Masters in academics

Joined Takefuji Corporation

2013/4

Representative Director of Suzuka Robocare Center Co., Ltd. (present)

2002/7

Joined Tyco Healthcare Japan Inc

2013/9Representative Director of Oita Robocare Center Co., Ltd. (present)

2006/10 Joined ON Semiconductor Japan Ltd.

2017/11 Outside Director of SUMS, Inc. (present)

2008/4

Joined CYBERDYNE,INC. as Head of Business Management

2018/4

Representative Director of Shonan Robocare Center Co., Ltd. (present)

2013/1

Manager of the Sales Department (present)

2019/2

Outside Director of Okayama Robocare Center Co., Ltd. (present)(Important position held outside CYBERDYNE)
Outside Director of SUMS, Inc.
Years in service as Director

Special interest in CYBERDYNE

–

none

Outside Director of Mamezou Holdings Co., Ltd.
Outside Director of FreeBit Co., Ltd.
Outside Director of Mynavi Corporation

Description of the positions, personal history, assignments and other important position held outside the Company
1997/4

Outside Director of FreeBit Co., Ltd. (present)

1984/10 Joined Intel Corporation

Years in service as Director

Special interest in CYBERDYNE

6 years

none

Hikari Imai
Born July 23, 1949 (Male)

Outside Director
Independent Officer

Number of company shares owned
Common60,000 Shares

MBA

Description of the positions, personal history, assignments and other important position held outside the Company
Number of company shares owned
Common8,000 Shares

1974/10 Joined Yamaguchi Securities Co., Ltd.

2015/6

Outside Director of CYBERDYNE (present)

1983/1Joined Morgan Stanley Co., Ltd.

2016/6

Outside Director of PACIFIC METAL CO., LTD. (present)

1993/4

Joined Merrill Lynch Securities Company

2016/12 Director and Chairman of 3DOM Inc. (present)

1999/1 Vice Chairman of Merrill Lynch Japan Securities Company,
Limited2007/11 Director, Vice President of RECOF Corporation
2008/4President and CEO of RECOF Corporation

2012/4

Outside Director of Olympus Corporation

2019/1Chairman of the Keiaikai Medical Foundation (present)(Important position held outside CYBERDYNE)
Outside Director of PACIFIC METAL CO., LTD.
Director and Chairman of 3DOM Inc.
Chairman of the Keiaikai Medical Foundation

Years in service as Director

Special interest in CYBERDYNE

Number of company shares owned

4 yearsnone–Corporate Governance

Annual Report 2019

Members of Audit and Supervisory Board
Yutaka Fujitani
Born April 1, 1953 (Male)

1. The Company’s basic approach to corporate
governanceOutside Audit andSupervisory Board Member (Full-time)
Independent Officer

Description of the positions, personal history, assignments and other important position held outside the Company
1975/4

Joined The Mitsubishi Bank, Ltd.
(Now known as The Bank of Tokyo Mitsubishi UFJ, Ltd.)Years in service as
Audit and Supervisory Board Member

Born May 4, 1956(Male)

Joined KPMG AZSA LLC.
Outside Audit and Supervisory Board Member of CYBERDYNE (present)

Special interest in CYBERDYNE

Number of company shares owned

none

–

8 years

Cees Vellekoop

2005/1
2011/6

Outside Audit andSupervisory Board Member

Description of the positions, personal history, assignments and other important position held outside the Company
1981/5
1992/5

Registered as attorney-at-law at Court of Rotterdam District ofAmsterdam District
Admitted in Japan as attorney for foreign law
Years in service as
Audit and Supervisory Board Member

Born August 18, 1971 (Male)

Joined Allen & Overy Gaikokuho Kyodo Jigyo Horitsu Jimusho

2005/10 Admitted in England and Wales as attorney-at-law
2007/6

Audit and Supervisory Board Member of CYBERDYNE (present)

Special interest in CYBERDYNE

Number of company shares owned

none

–

12 years

Kenichiro Okamura

2003/5

Outside Audit andSupervisory Board Member

Certified Public Accountant

Description of the positions, personal history, assignments and other important position held outside the Company
1994/4

Joined Chuo Audit Corporation

2015/6

2007/2

Representative Director of Kabushiki Kaisha BizNext (Now
known as Kaede Accounting Advisory Inc.) (present)

Outside Audit and Supervisory Board Member of SG Holdings
Co., Ltd. (present)

2016/6

Outside Director of Kanematsu Sustech Corporation (Audit Comittee)

2009/9Representative Director of Tokyo-IAS Inc. (Present)(Important position held outside CYBERDYNE)

2011/6

Senior Partner of Akasaka Sogo Accounting Firm Co., Ltd.
(Now known as Kaede Tax Corporation) (present)

2011/6

Outside Audit and Supervisory Board Member of CYBERDYNE(Present)
Years in service as
Audit and Supervisory Board Member

Kazuro Kawamata
Born April 11, 1953 (Male)

Representative Director of Kaede Accounting Advisory Inc.
Outside Audit and Supervisory Board Member of SG Holdinigs Co., Ltd
Outside Director of Kanematsu Sustech Corporation (Audit Comittee)

Special interest in CYBERDYNE

Number of company shares owned

none

–

8 years

Outside Audit andSupervisory Board Member

Description of the positions, personal history, assignments and other important position held outside the Company
1976/3Joined Kanto Bank, Ltd. (now known as the Tsukuba Bank,

2010/3

Limited)2008/4

2009/6

Director and Manager of the Human Resources Department of the
Tsukuba Bank, Limited

2012/6
Senior Vice President and General Manager of Audit Departmentof The Kanto Tsukuba Bank, Limited (now known as the Tsukuba
Bank, Limited)
2013/6

Managing Director and Manager of the Human Resources Departmentof the Tsukuba Bank, Limited

Audit and Supervisory Board Member of the Kanto Tsukuba
Bank, Limited (now known as the Tsukuba Bank, Limited)

Audit and Supervisory Board Member of the Company (present)

Years in service as
Audit and Supervisory Board Member–

The Company takes measures to improve corporate
governance by enhancing transparency and ensuring
compliance throughout operations in order toincrease corporate value over the long term.
The Company believes that it is vital to build
constructive relationships with all of its stakeholders
as part of corporate governance. Corporate
governance is important from the standpoint of, notonly making sure that the decisions the Company
makes and actions it takes do not violate laws andmarket regulations, but also ensuring that it has
not ignored the demands of the society and that it isindeed contributing to the society. The company also
believes that high levels of transparency are essential
for the proper functioning of corporate governance.
To this end, the Company takes a proactive stanceon disclosing information to shareholders, investors,
employees and customers, which go beyond thelegally required level.

2019/6

President and CEO of Tsukuba Business Services Limited

Special interest in CYBERDYNE

Number of company shares owned

none

–

2. Corporate organizationCYBERDYNE, INC. is a company with a Board of
Directors that holds a meeting (the “Board Meeting“)at least once a month to rapidly make decisions
and supervise whether the Members of the Boardof Directors (the “Board Members“) appropriately
execute their duties. The Board of Directors iscomprised of seven Members of the Board of
Directors, three of whom are Outside Member of theBoard of Directors, forming a structure that enables
the Board of Directors to efficiently reach decisions
and make business judgments.
The Company is a company with an Audit andSupervisory Board. The Audit and Supervisory Board
consists of three Outside Audit and Supervisory Board
Members who proactively voice their opinions at theBoard Meeting to enhance supervision.

and perform audits from an objective standpoint withregard to business execution and important decisionmaking by the Members of the Board of Directors.
The Board Members’ compensation is of theBoard of Directors is debated by the Compensation
Committee which consists of at least three membersof the Board of Directors or the Audit and Supervisory
Board appointed by the Representative Director. The
Compensation Committee thensubmits its opinions about the Board Members to theBoard of Directors.
With the objective of preventing problematicconflicts of interest in the Company’s relationshipwith the University of Tsukuba and Japan Science andTechnology Agency (JST), the Company ensures there
is at least the same or a higher number of independent
Outside Board Members with no affiliations with the
University of Tsukuba and JST than the number ofInternal Board Members excluding the Members withpotential conflicts of interest with the university andJST.
As a result, Outside Member of the Board of
Directors have the ability to veto ordinary resolutions
as necessary during Board Meetings when there areproblematic conflicts of interest with the Universityof Tsukuba and JST. The Company thereby, has aneffective system to prevent problematic conflicts ofinterest.
For the purpose of protecting non-controllinginterests, the Company has put in place a systemfor obtaining resolutions at the Board of Directors
based on preapprovals from a committee comprising
the Outside Board Members and Outside Audit andSupervisory Board Members when decisions must
be made concerning transactions between the
Company and Yoshiyuki Sankai, who is a controllingshareholder of the Company, and the Sankai HealthFoundation and the Sankai Science and Technology
Promotion Foundation (collectively referred to as the“Foundations”), both of which are represented andmanaged by Yoshiyuki Sankai, as well as transactions
between the Company and the trustees, directors orcontrollers of the Foundations.

Corporate Governance
The Company has also established the Peace andEthics Committee to prevent the use of its advanced
technologies from harming people or creating military
weapons. All Outside Board Members and Outside
Audit and Supervisory Board Members, in addition
to the President and CEO, are Members of the Peaceand Ethics Committee. Before entering a businessfield outside the areas of medicine, living support,
and labor support, which are defined in the Company
Code of Conduct, the Peace and Ethics Committee
investigates, deliberates and reaches a decisionon whether the Company’s advanced technologies
could eventually be used to harm people or to create
military weapons. The committee then submits its
findings to the Board of Directors.
3. System to ensure the appropriateness ofbusiness operations and implementation statusof the system
i. System to ensure the appropriateness ofbusinesses
The Company resolved a system to ensure theappropriateness of business operations of Membersof the Board of Directors in compliance with laws,
regulations and Articles of Incorporation and thestructure to ensure the appropriateness of otherbusiness as below at the Board of Directors’ Meeting.
(a) Systems to ensure that Members of the Boardof Directors and employees of the Company and thesubsidiaries (collectively the “Group”) perform theirduties in accordance with laws, regulations and the
Articles of Incorporation• The Company shall establish compliance-related
internal regulation embodying the Company Codeof Conduct, for the Group’s Member of the Boardof Directors and employees to ensure adherence tolaws, regulations, the Articles of Incorporation andother internal regulations.
A designated Member of the Board of Directorof the Company shall have cross-organizational
control over the Group’s compliance initiatives. The
designated Member of the Board of Directors (the“Risk and Compliance Director”) shall disseminate
the spirit of compliance to Members of the Board of
Directors and employees of the Group to identify andsolve problems.
• The Company shall establish the Affiliated Company
Management Policy and in conformity with that,appoint Members of the Board of Directors ofsubsidiaries and, if necessary, Members of Audit
and Supervisory Board Member of subsidiaries. The
Company shall approval subsidiaries’ importantmatters and take up part of their administrative
works. Consequently the Company shall ensure theappropriateness of the affected companies’ businesspursuant to the Affiliated Company Management
Policy.
• The Company shall establish the Internal Audit
Office who will work directly under the Company CEO.
The Internal Audit Office shall conduct internal auditsof the Group in accordance with the Internal Audit
Policy and Affiliated Company Management Policy tocheck the compliance status with laws, the Articles ofIncorporation, and other internal

Annual Report 2019
regulations and monitor the overall risk management
status. The Internal Audit Office shall report theresults of the internal audits to the Company CEO,the Audit and Supervisory Board, and the Board of
Directors.
• The Company shall establish and operate theHotline System Policy as a mean for employees todirectly provide information about legally suspicious
behaviors. The method of providing information bymeans of oral communication, e-mail, chat andopinion box shall be the subject of the Hotline System
Policy.

(e) System to ensure reporting on the performanceof duties by subsidiaries’ Members of the Board of
Directors to the Company• The Company shall establish the Affiliated Company
Management Policy. Pursuant to the Policy and thesubsidiaries shall report the status of their duties to
the Company’s supervisory units where necessary.

(b) System to store and manage information related tothe execution of duties by the Company’s Member ofthe Board of Directors• The Company shall establish the Document
Management Policy which states the method ofstoring and managing information related to the
execution of duties. Pursuant to the law and thispolicy, the information related to the execution ofduties shall be recorded and stored in paper orelectronic format.
• Members of the Board of Directors and Membersof the Audit and Supervisory Board shall be able tobrowse the information at all times.

• When the Audit and Supervisory Board requests
assignment of staff to assist with its duties, the Boardof Directors may designate appropriate employees
who shall serve as assistants or as assistants witha concurrent post upon consulting with Audit andSupervisory Board.
• During the assistance period, the supervisory
authority over the designated employees shall bedelegated to the Audit and Supervisory Board, andthe employees shall not be subject to the chain ofcommand of the Board of Directors. Any performance
evaluation and personnel changes concerning theassistant shall require the consent of the Audit andSupervisory Board.

(c) Policies, procedures and other systems of theCompany and the Group to manage the risk of losses• In order to strengthen the risk management
structure of the Group, the Risk and ComplianceDirector shall put a relevant operating unit in chargeof each risk category and each operating unit incharge shall define risk scopes, risk profiles, self
evaluation policies and guidelines. The Director in
charge of finance shall monitor risks across theorganization and address company wide risks.
• When a new risk arises, the Company CEO shallquickly appoint a Member of the Board of Directors
or a head of operating unit in charge of handling suchrisks.
(d) System of the Group to ensure the efficient
execution of duties by Members of the Board of
Directors of the Company and the Group• As a system to ensure the efficient execution ofduties by Members of the Board of Directors, theBoard of Directors shall meet once a month and shallconduct extraordinary meetings whenever necessary.
• Regarding the execution status of matters resolvedby the Board of Directors, each in-charged Member ofthe Board of Director or in-charged head of operating
unit shall report on a regular basis and the Audit andSupervisory Board shall perform audits.
• The Company shall establish Medium-termbusiness policy and, if necessary, update them tocope with the changes in the business environment.
The status of business performance in that regard
shall be reported to the Board of Directors’ whenevernecessary.
• The Company shall also establish the AffiliatedCompany Management Policy in order to manage
subsidiaries under the supervision of a related unitsof the Company. Consequently, Members of the Boardof Directors of the subsidiaries can execute theirduties efficiently.

(f) Matters regarding employees who assist the Audit
and Supervisory Board with the fulfilment of its duties(g) System for Members of the Board of Directors andemployees of the Company to report to the Audit andSupervisory Board, and a system for Members of theBoard of Directors and employees of subsidiaries, or
the Company’s personnel who received reports from
Directors and employees of subsidiaries, to report to
the Audit and Supervisory Board of the Company.
• Members of the Board of Directors and employeesof the Company as well as Members of the Boardof Directors and employees of subsidiaries shallreport any significant matters that i) are against
the law or the Articles of Incorporation and ii) areconsidered dishonest acts iii) may have a significant
impact on the Company, to the Audit and Supervisory
Board immediately. In addition, if a Member of the
Audit and Supervisory Board asks for a report from
Members of the Board of Directors or employees of
the Group pursuant to the law, Auditing Standards orRegulations of Audit and Supervisory Board Meeting
established by the Audit and Supervisory Board,
the relevant Members of the Board of Directors or
employees in concern shall report promptly.
In order to improve comprehensiveness of the report
regarding any significant matters i), ii) and iii) above,
Members of the Board of Directors and employeesof the Company as well as Members of the Boardof Directors and employees of the subsidiaries shallendeavor to conduct hearing and gather informationfrom the reports stated in this clause and mattersstated in Internal Audits, hotlines and Accounting
Audits.
• Pursuant to the Hotline System Policy, if mattersthat may violate the law or corporate compliance in
the Group are reported, the Risk and ComplianceDirector shall report the contents reported and theresearch results to the full-time Members of the
Audit and Supervisory Board.

• The Internal Audit Office of the Company shallreport the status of the internal audits of the Groupto Audit and Supervisory Board Members of theCompany. Furthermore, the Risk and ComplianceDirector shall report the status of the Group to Audit
and Supervisory Board Members of the Company
when necessary.
(h) System to ensure that a person who made a reportto an Audit and Supervisory Board Member will not be
put in a disadvantageous position
The Company shall not conduct any treatment thatputs a person in a disadvantageous position becauseof his/her report made to an Audit and Supervisory
Board Member.
(i) Matters regarding the Company policy of processing
auditing fees
When a Member of the Audit and Supervisory
Board requests an advanced payment or quick
reimbursement of expenses necessary for their duty,
the Company shall pay them promptly unless theexpenses are recognized unnecessary for their duty.
(j) Other systems to ensure the effective executionof audits by Members of the Audit and Supervisory
Board of the Company• Members of the Board of Directors and employeesof the Company and the subsidiaries shall comply withrequests for hearing, visitation and other methods of
examination by Member of the Audit and Supervisory
Board in order to secure the effectiveness of theaudits.
• The Company shall provide enough opportunities
for Members of the Audit and Supervisory Board
to exchange opinion with Member of the Boardof Directors, Accounting Auditors and any otherpersonnel required to appropriately execute the duty
as an auditors.
• Upon request of Members of the Audit andSupervisory Board, the Company shall also provide
enough opportunities for them to coordinate withsubsidiaries’ Member of the Audit and Supervisory
Board and to gather information from employees ofthe subsidiaries.
ii. Implementation status of the systems toensure appropriateness of business
operations
The Group established and implemented theaforementioned systems. Notable actions conductedwithin this fiscal year, which are thought to beimportant with regard to internal control are statedbelow.
(a) Corporate Compliance System
All members of the Group endeavor to be compliant
with the laws and regulations in execution of theirduties in accordance with internal policies, suchas the Company Code of Conduct based on the
aforementioned compliance systems. Furthermore,in order to detect or avoid violation of compliance atthe earliest opportunity, the Hotline System Policy
and its method of utilization shall be notified torelated personnel in a thorough fashion.

Corporate Governance(b) Risk Management System
For the Group, the Risk and Compliance Director of
the Company determines the operating unit in chargeof each risk category, monitors the risk status andresponds accordingly. Furthermore, the status of thisrisk management is subject to internal audits
and audits conducted by the Audit and Supervisory
Board Member.
(c) Effeciency of the duty by Members of the Boardof Directros
For the Group, the Board of Directors shall meet oncea month with provisional Board of Directors Meetings
conducted whenever necessary, in order to check thereports of business execution (including reports fromsubsidiaries), progress of business for the fiscal year(including subsidiaries), and so on.
4. Status of internal audits and audits by Audit andSupervisory Board Members
The Company has an Internal Audit Office that consistsof one internal auditor and performs necessary
operational audits based on the Internal Audit Policy.
Internal Audit Office contributes to the enhancementof the Company’s internal control systems.
As the head of Internal Audit Office concurrently
belongs in the Corporate sector as a leader ofGeneral Affairs and HR team, an internal audit on
General Affairs and HR team shall be conducted by a
substitute auditor selected by the president and CEO.
Audits by the Audit and Supervisory Board involves
operational audits, such as audits of the businessexecution by Directors, based on Auditing Standards
and Regulation of Audit and Supervisory Board
Meeting. Outside Audit and Supervisory Board
Members include an experienced business person(SVP of a large bank), a CPA and an attorney elected
for their expert knowledge of accounting, legal affairs
and risk management. Therefore, the Company
puts in place a system with effective management
oversight functions.
Internal Audit Office coordinates with full-time Audit
and Supervisory Board Member upon establishmentof an annual internal audit plan. Results of internal
audits are reported to the President and CEO and
Audit & Supervisory Board Members. Furthermore,
if issues related to internal control are found in the
midst of internal audits, Internal Audit Office provides
proposals for improvement to the unit in charge ofthe internal control process. Internal Audit Office
coordinates with Audit & Supervisory Board Members
as well as accounting auditors by exchanging
opinions or information, so that audit can be executed
effectively.
5. Status of accounting audits
For the fiscal year ended on March 31, 2018, theCompany entered into an audit engagement contract
with Deloitte Touche Tohmatsu LLC, and received
accounting audits performed by this accounting
auditor. Its Auditing team consists of two partners

Annual Report 2019
and twenty three support members which comprises
five CPAs and eighteen other professionals, toperform audits.

7. Implementation status of risk management
structure

This activity is a significant support to the supervisionof each Board Member’s business execution by the
Board of Directors.

The Group continues to enhance its risk management
system implementing and/or updating its Codeof Conduct, the Risk Management Policy, etc., inalignment with changes in the risk environment.
Since sound management practices and a stableearnings foundation through risk control are key
priorities for the Company, it has an advisory contract
with a law firm “ TMI Associates” to receive advice andguidance about all legal matters when needed.

6. Relationships with Outside Members of the Boardof Directors and Outside Audit and Supervisory
Board Members
The Company has three Outside Members of theBoard of Directors and three Outside Audit andSupervisory Board Members.
The Company has not set any standards or specificpolicies regarding the independence of its Outside
Members of the Board of Directors and Outside Audit
and Supervisory Board Members.
Instead, the Company appoints Outside Membersof the Board of Directors and Outside Audit andSupervisory Board Members based on their extensive
experience as management, as well as their deep
insight about research, finance, accounting andlegal affairs, for the purpose of building an effective
corporate governance system from an external
standpoint.
The Company expects its Outside Members of theBoard of Directors and Outside Audit and Supervisory
Board Members to supervise the business executionof its Members of the Board of Directors.
Outside Director Kazumasa Yoshida provides his
opinions and proposals regarding management ingeneral in the Board Meetings from the standpointof the experienced executive in a global company.
While Kazumasa Yoshida holds 60,000 shares of theCompany as of June 25th, 2019 when the securities
report was submitted, it was deemed to have nosignificance. Furthermore, between the Company
and Kazumasa Yoshida,there is no human, capital,business affiliation or any other conflicts of interests.
In addition, while Kazumasa Yoshida currently serves
as the outside Directors of Onkyo Corporation,
TDK Corporation, Mamezou Holdings, Co. Ltd.,FreeBit Co., Ltd., MyNavi Corporation and previously
served as President and CEO of Intel Kabushiki
Kaisha and vice president of Intel Corporation, theCompany does not have any human, capital, businessaffiliations or other conflicts of interest with the seven
aforementioned companies.
The Company does not have any human, capital,business affiliations or other conflicts of interest withother Outside Members of the Board of Directors andOutside Audit & Supervisory Board Members.
Outside Audit and Supervisory Board Members
supervise the business execution of Inside Membersof the Board of Directors and other management.
Audit and Supervisory Board Members conduct
an audit of the business execution of Members of
the Board of Directors and an audit of accounting
documents and the methods and results of audits
performed by the accounting auditor. As it is statedin “4. Status of internal audits and audits by Audit andSupervisory Board Members,” Audit and Supervisory
Board Members coordinates their audits in terms ofscopes, risk profiles, schedules, communication andso on. Audit and Supervisory Board Members report
the process and results of their audits at the Meetingof the Board of Directors on a regular basis.

8. Compensation for Members of the Board of Directors and Members of the Audit and Supervisory
Board
i. Total compensation for Members of the Board of Directors and Members of the Audit andSupervisory Board Members by officer type, breakdown by compensation type and number of them
Officer type

Breakdown of compensation (Millions of yen)

Total
compensation(Millions of yen)

Base salary

33

33

4

13

13

6

Directors (Excluding outside directors)

Stockoptions

Bonus

Retirement
benefits

Number ofapplicable officers(people)Audit and Supervisory Board
Members (Excluding outside Audit andSupervisory Board Members)
Outside directors and Audit andSupervisory Board Members

ii.

Total consolidated compensation by each
Members of the Board of Directors and Memberof the Audit and Supervisory Board

Since there are no Members of the Board of Directors
or no Members of the Audit and Supervisory Board
who have received a total consolidated remunerationof more than ¥100 million no items are reported.
iii. The policy to determine amount andcalculation method of compensation for
Members of the Board of Directors andMembers of the Audit and Supervisory Board
The Company established a Compensation
Committee to discuss compensation for the Membersof the Board of Directors and Audit and Supervisory
Board Members. The Compensation Committee will
determine the amount of compensation within thelimits approved by the Ordinary General Meeting of
Shareholders.
The upper limit of compensation for a Member ofthe Members of the Board of Directors, resolved atthe 2nd Ordinary General Meeting of Shareholders on
May 31, 2006, is ¥100 million per year.
The upper limit of compensation for a Member ofthe Audit and Supervisory Board, resolved at the 3rd
Ordinary General Meeting of Shareholders on June
28, 2007, is ¥50 million per year.
9. Share buyback decision mechanism
In accordance with Article 165-2 of the Companies
Act, the Company’s Articles of Incorporation state thatshare buybacks may be implemented byresolution of the Board of Directors with the objectiveof flexibly returning profits to shareholders.
10. Interim dividends
The Company’s Articles of Incorporation allow aninterim dividend to be paid to shareholders, classshareholders and registered beneficiaries listed in theshareholders’ register as of the close of September
30 every year, by resolution of theBoard of Directors, for the purpose of flexibly
returning profits to shareholders.
11. Outline of limitation of liability contracts
In accordance with Article 427-1 of the Companies
Act, the Company’s Articles of Incorporation permit
the Company to enter into contracts that limit theliability of Members of Board of Directors (excludingInternal Directors) and Members of the Audit andSupervisory Board for damages as defined by Article
423-1 of the Companies Act. The amount of the limit
in liability for damages in these contracts is the sameamount defined by law.
12. Outline of exemption from liability
In accordance with Article 426-1 of the Companies
Act, the Company’s Articles of Incorporation state thatthe Board of Directors can pass a resolution to exempt
the Company’s Members of the Board of Directors(including former Members of the Board of Directors)
and Members of the Audit and Supervisory Board
from liability to the fullest extent allowable by law fordamages defined by Article 423-1 of the Companies
Act in the pursuit of their duties, in order to ensurethat they are able to fully apply their abilities in thefulfillment of their expected roles.

Corporate Governance
13. Number of Members of the Board of Directors
The Articles of Incorporation state that the Company
shall have no more than eight Members of the Boardof Directors.
14. Election requirements for Members of theBoard of Directors
The Company’s Articles of Incorporation state that
resolutions for the election of Members of the Boardof Directors may only be passed with a majority
vote of the shareholders in attendance, which must
represent at least one third of the voting rights of allshareholders able to exercise their voting rights. The
Articles of Incorporation state that cumulative voting
is not allowed for resolutions to elect Members of theBoard of Directors.
15. Matters subject to resolution by the General
Meeting of Shareholders, which can be decided
by resolution of the Board of Directors
The Company’s Articles of Incorporation state that theBoard of Directors may pass a resolution to determine
dividends on surplus, as prescribed by Article 4545 of the Companies Act to shareholders, classshareholders and registered pledgee of shares, who
are registered or recorded on the last shareholder
registry as of the close of September 30 each year.
16. Requirements for special resolutions onimportant matters at General Meeting of
Shareholders and General Meeting of Class
Shareholders
The Company’s Articles of Incorporation state that
resolutions on important matters at the General
Meeting of Shareholders, as defined by Article 3092 of the Companies Act, require two-thirds of thevotes of shareholders in attendance, which must
represent at least one-third of the voting rights of allshareholders able to exercise their voting rights.
The Articles of Incorporation also state that
resolutions on important matters at the General
Meeting of Class Shareholders, as defined by Article
324-2 of the Companies Act, require two-thirds ofthe votes of shareholders in attendance, which must
represent at least one-third of the voting rights of allshareholders able to exercise their voting rights.
These regulations are intended to facilitate
the smooth operation of the General Meeting of
Shareholders and the General Meeting of Class
Shareholders by relaxing the requirements for aquorum on special resolutions put to a voteat the General Meeting of Shareholders and theGeneral Meeting of Class Shareholders.

MD&A
This dual class structure reflects the concentrationof voting rights with Yoshiyuki Sankai and theFoundations (see 2. Corporate Organization,
Paragraph 6), to ensure that the Company’s advanced
technologies are used for peaceful purposes only, andto prevent the misuse of these technologies in orderto harm humans or to create military weapons.
The Group’s vision for the future is to create a
Cybernic Industry—a new industrial field that will
support people by solving issues directly caused byaging and declining birth rate. To realize this vision,
the Company must coordinate business managementwith research and development in Cybernic
Technologies.
Yoshiyuki Sankai created the Company’s Cybernic
Technologies, and continues to be a central figure in
Cybernic research. He is also a business leader who
seeks to make this innovative technology widely
available for the benefit of society. For the Groupto increase corporate value (i.e., share profits withshareholders), Yoshiyuki Sankai must be a stable
leadership figure in the management of the Company
in the future. This scheme has been adopted toensure he remains so.
At this juncture,Yoshiyuki Sankai plans to transfer
a portion of the Class B Shares he owns to theFoundations without compensation in order to ensure
the continuity of this scheme. The Foundations intend
to hold these Class B Shares inperpetuity. As holders of Class B Shares, theFoundations have created the following guidelines
concerning the exercise of voting rights with theobjective of ensuring that the Group’s advanced
technologies are used for peaceful purposes only andpreventing damage to the corporate value of theCompany. As the owner of Class B Shares issued
by the Company, the Foundations shall vote against
resolutions that contain language defined in a and b
below, through the exercise of its voting rights at theGeneral Meeting of Shareholders and the General
Meeting of Class Shareholders. Any changes to theFoundations’ guidelines for the exercise of theirvoting rights shall require approval by resolution of
their boards of trustees, and these changes shall bemade public by a method chosen by the Foundations.
a. Resolutions concerning the election and dismissalof a Member of the Board of Directors, where theMember of the Board of Directors to be elected or
dismissed would likely manage the Group in a waythat is detrimental to its corporate value or hinder thepeaceful use of its advanced technologies.
b. Other resolutions that, if passed, would likely
damage the corporate value of the Group or hinder
the peaceful use of its advanced technologies.

17. Class B Shares
The Company’s Articles of Incorporation state that
10 Class B Shares constitute one share unit and 100
Common Shares constitute one share unit. As voting
rights are granted for each share unit, a shareholderof Class B Shares has 10 times as many voting rights
compared to a shareholder of Common Shares withan equal number of shares.

18. Status of shares held by the Company
The number of issuing entities of shares that theCompany invested for purposes other than pureinvestments and its total value on the balance sheet
9 issuing entities, ¥2,314 million

1. Explanation of operating results
The Group aims to establish Society 5.1, a new visionof society where the “humans” are combined with thecyberspace (virtual world) and physical space (realworld) of Society 5.0, by utilizing innovative Cybernics
Technology. The Group continues to drive themovement to revision society and industry to realize
Society 5.0/5.1 as a future “Techno-Peer Support
Society” where humans and technology support eachother.
The Group’s business is to implement Cybernics
Technology powered by Internet of Humans/Internetof Things (“IoH/ IoT”), Robots, and AI, to createa Cybernics Industry that will connect medicine,
nursing-care, production, household, and work placein order to solve the various problems that a hyperaging society must tackle. The Group’s business hasa unique advantage in its ability to access andintegrate information within the human body(e.g. Brain-nerve and vital systems) in addition to
information outside the human body (behavior, lifeand environmental information) and applying themto different fields such as medicine, nursing care,production, household, and work places. All of
the Group’s devices and interfaces are compatible
with Internet of Humans/Internet of Things (“IoH/
IoT”), and through these products, information of
the brain- nerve, vital, physiological, behavioral, lifeand environmental systems can be integrated andconnected to a super computer. The Group aims torealize a system where Big Data of the aforementioned
information are accumulated, analyzed andprocessed with AI. The Group simultaneously
works on research and development, businessdevelopment and formation of business alliances
to further accelerate the emergence of a Cybernics
Industry that will solve the problems facing society.
During the consolidated fiscal year ended March 31,
2019, the Group carried out the following activities.
Status of research and development
While the Group is best known for research anddevelopment of HAL, it is working on various otherproducts as well.
For example, the Group developed “Cyin”, whichapplies the highly sophisticated sensing technology
of HAL to process and analyze various types of vital
information. Cyin for Living Support has been madecommercially available on September 2018 as acommunication device that supports users who havedifficulty speaking or moving due to severely disabling
disorders. Cyin for Living Support was designated to
be a tax-free device on April 2019. The Group alsoplans to offer this technology to support other typesof research in the future.

Annual Report 2019
The Group is working on projects to prevent or
diagnose diseases in the cardiovascular system,and has developed a palm-sized device “VS-AS01 forElectrocardiogram and Pulse Wave Examination” thatseeks to detect early symptoms of arteriosclerosis
and arrhythmias that are major causes of stroke andheart disease. The Group obtained medical device
clearance for this device from the Japanese Ministryof Health, Labour and Welfare on December 2018,
and also obtained public health insurance coveragefor the examination of arterial stiffness using thisdevice in medical facilities on January 2019. The
Group is currently preparing an external applicationof “VS-AS01 for Electrocardiogram and Pulse Wave
Examination” that will improve its usability for public
consumption. In addition, the Group continues to workon further development of photoacoustic imaging
technology that analyzes data of microcapillary
vessels in real time and other sensing devices forvarious types of vital information.
Furthermore, the Group has commercialized a nextgeneration Cleaning Robot CL02, which is equippedwith the highest quality autonomous navigation andenvironmental recognition technology. The Groupbegan selling this new model in March 2018. The
Group plans to convert and apply this state-of-theart mobility technology for other application such as
the Transportation Robot, a robot to improve mobility
for the elderly, a robot to support transfers from awheel chair, a robot to support bathroom use forthe disabled, and a guardian robot to watch over anelderly person.
Other projects that the Group is working on are
a Clothing Type HAL to promote maintenance andimprovement of walking function for the wearer, a robotthat communicates and watches over an elderly user
while monitoring vital and environmental information
to ensure their safety during activities of daily living,
and a robot that can dock to toilets to support bathroom
use for users who have difficulty walking on their own.
Status of Business Operation(Business operation around the medical application)
The Group continues its efforts to establish Cybernic
Treatment, a treatment program using Medical
HAL systems that aims to induce improvement andregeneration of the functions of the brain, nerves andmuscles, into a global standard of treatment.
In order to expand the target patient population ofeach market clearance to include stroke, which is adisease with over eight million patients in Japan and
U.S. combined, an investigator-initiated multicenter
clinical trial using the HAL for Medical Use Lower
Limb Type Single-Leg model is in progress at 15
different medical institutions. This clinical trial isscheduled to be complete within the fiscal year
ending March 31, 2020. Furthermore, the Grouphas developed a 2S size product of the Medical HAL
system, and is in discussion with the Japanese

MD&A
Pharmaceuticals and Medical Device Agency toreceive clearance for a reduction of the minimum
height requirement to use HAL for patients withneuromuscular disease. In addition, an investigatorinitiated clinical trial led by Kyoto University Hospitalfor the HAL for Well-being Single Joint Type, alightweight and compact device that can be appliedon the knee or the elbow, is being prepared as atreatment for stroke in the acute stage.
With regards to market development outside Japan,
the market clearance decision from the U.S. Foodand Drugs Administration on December 2017 thatspecifically describes therapeutic effects to improve
gait function in its Indication for Use sprung theGroup’s efforts to market the medical application to
the Asia Pacific region in addition to Europe and the
U.S. The Group is also making preparations to obtainmarket clearance for products other than Medical
HAL on a global scale.
In the U.S., the Company set up a joint venture,CYBERDYNE & BROOKS, Inc., with Brooks
Rehabilitation Hospital, which is known as one of
the busiest rehabilitation hospital groups in the U.S.
The Brooks Cybernic Treatment Center opened inJacksonville, Florida on March 2018, and has been
educating and spreading the concept of Cybernic
Treatment across the medical community throughconferences and exhibits, while accumulating
clinical experience and results. Meanwhile, theGroup is making preparations to speed up businessdevelopment in the U.S. by reinforcing its sales force.
In Europe, the Group has been providing its medical
treatment service with the device covered by public
workers compensation insurance in Germany, and it
is taking procedures necessary to obtain public healthinsurance coverage
as well. In terms of sales activities, HAL is alreadybeing used in a hospital in Poland, and in addition,
Italy became the third European country to adopt
HAL following the announcement made by anadvanced rehabilitation research center specializingin neurological diseases (San Girolamo Center)in November 2018. Outside of Europe, the Groupstarted to offer HAL to Saudi Arabia in 2017. A pilot
trial of HAL to treat spinal cord injury patients waslaunched on March 2019 under the leadership of
the Saudi Arabian Ministry of Health. It is currently
taking place in multiple medical institutions ownedby the public sector. The Group also started offering
HAL to medical facilities in the Asia Pacific Region.
On November 2018, SOCSO Rehabilitation Center,a medical institution owned by the Malaysian Social
Security Organization (a government organization),
adopted a total of 24 units of Medical HAL and other
HAL systems (Single Joint Type and Lumbar Type),
making them the operator of the largest number
of HAL units in one site. In April 2019, the A. Zarate
General Hospital in the Philippines also adopted 12
units of HAL Lower Limb Type. The Group is currently
in a process to obtain medical device clearance from

Annual Report 2019
Thai FDA so that the Group can spread HAL to
Thailand, which is known to be the largest medical
device market in South East Asia.

Nagoya Gate Tower, etc.

Robots were in operation.

Status of business alliance

Result(Business operatoin around applications to support
caregivers and care receivers)

The Group continues to advance business allianceswith insurance companies in order to improve thesystem for implementation of its technology into
society. With its business ally, AIG Japan Holdings
Kabushiki Kaisha, the Group has been offering a
training program to improve walking function using
HAL to 50 school students under the age of
18 with disabilities in the lower limb since October
2017. This campaign was expanded in March 2019,enabling more people to receive the benefit of the
program at more facilities. AIG General Insurance
announced an additional program on January 2019,
which offers its insured persons under automobile
insurance and accident insurance, access to the“HAL FIT” program for free (initially starting at 10
sessions) at training centers such as the Robocare
Centers. Sompo Japan Nipponkoa Insurance Inc. also
made an announcement on January 2019, to cover
the expenses of training with HAL that is prescribedby doctors for its insured persons under automobile
insurance.
The Group also formed a number of alliances withventure companies with unique technologies. To
accelerate the emergence of the Cybernic Industry,
the Group established the Cybernic Excellence Japan
Fund 1 Investment Limited Partnership (“CEJ Fund”)
in July 2018. CEJ Fund will support and nurture
venture companies and it has already commenced its
operation by taking part in an investment towards apromising startup.

As the result of the aforementioned, in the fiscal year
ended March 31, 2019, the Group recorded revenue of¥1,709 million (1.1% decrease year on year) mainly
due to the increase in rental income from products
such as Medical HAL while income from selling the
HAL Lumbar Type for Care Support decreased. Grossprofit ratio improved 2.1 points to 71.8% year on year,
resulting in the gross profit of ¥1,227 million (1.9%
increase year on year).
Research and development expenses were recorded
at ¥998 million (19.8% increase year on year), mainly
due to development of new products at the Company’s
own expense and consigned research projects. In
addition other selling, general and administrative
expenses increased to ¥1,454 million (4.6% increase
year on year).
Other income was recorded at ¥406 million (11.5%
increase year on year), mainly due to income fromconsigned research projects, while other expenses
were recorded at ¥11 million (179.4% increase year
on year). Operating loss was recorded at ¥830 million(26.0% increase year on year).
Furthermore, finance income was recorded at ¥239
million due to financial assets measured at fair value
through profit or loss, profit related to CEJ Fund wererecorded at ¥61 million, and income tax expenses
were recorded at ¥74 million mainly due to deferred
tax expenses. As a result, the Group improved by ¥41
million and recorded ¥632 million (6.1% decrease
year on year) in the loss attributable to owners of theparent.
The Company forms business and capital allianceswith various startup companies that develop unique
technologies. The Company calculates the fair valueof such companies that are not listed on the market
using the IFRS 9 “Financial Instruments”. As a result
the financial assets measured at fair value throughprofit or loss ¥213 million was posted as “financeincome” for the fiscal year ended March 31, 2019.
Furthermore, the deferred tax expense in relation
to this valuation was calculated at ¥68 million andposted as “income tax expenses”. As such, the impact
on the calculation of the profit was ¥146 million.

For devices that support patients and elderly persons
outside of medical institutions, the Group mainly
promotes two devices aimed at improving their
independence and quality of life. HAL for Well-being
Lower Limb Type is designed for receivers of carewith disabled or weakened lower limb function. HAL
Lumbar Type for Well-being is also designed forreceivers of care but with weakened function in the
body’s core and lower limbs. The Group is preparing
a new model of HAL Lumbar Type for Well-being thatwill integrate the algorithms used in functions to
support the caregivers, allowing adopting facilities
gain greater utilization and efficiency with the device.
There is also a potential for change in the field of wellbeing and support for independence. In the Council
on the Investments for the Future that was held in
October 2018, the Japanese government stated that in
the next revision of their nursing care compensation
rates, they intend to reinforce the incentives thatreward healthcare providers who successfully
improve the independence of care receivers. As such
the Group will continue to develop new products thatenable greater results for this goal.
The Group is also coordinating with leading facilities
in each region of Japan to reinforce the HAL FIT
fitness training service. The Company coordinatedwith Eijyu, a Designated Non-profit Organization,
to establish the Osaka Robocare Center in October
2018. The Company also coordinated with the General
Incorporated Association Japan Wheelchair Sports
Association to establish the Urayasu Robocare Centerin December 2018. The Company also establishedTsukuba Robocare Center on March 2018 inside
the Group’s facility “Cyberdyne Studio”. Additional
centers in Okayama and Sendai are scheduled toopen in May 2019 and the Group plans to continue
establishing additional centers in other major cities
of Japan.
(Business operation around applications in household
and workplace)
In its effort to improve the workplace environment,
the Group continues to implement HAL Lumbar
Type for Labor Support to large clients in aviation,
construction, logistics, etc. The latest model of thisdevice is installed with dust proof and waterproof
functions. The next-generation Cleaning Robot
CL02 is being utilized in major Japanese airports,
commercial facilities operated by Mitsui Fudosan Co.,
Ltd., such as Diversity Tokyo Plaza, Lalaport Toyosu,
etc., and office buildings operated by Sumitomo
Corporation such as the Sumitomo Corporation
Osaka Building, Sumitomo Corporation

Numbers of operating units
As of the end of March 2019, 291 units of Medical
HAL were in operation worldwide including thoseused for clinical research. Out of the aforementioned
number, 77 were rented out in Japan for treatment.
252 units of HAL for Well-being Single Joint Type
were in operation and most of the units were used byhospitals in Japan for clinical research.
There were a total of 357 units combined of HAL
for Well-being Lower Limb Type and HAL for Living
Support Lower Limb Type (older model) in operation
as of end of March 2019. While the number of HAL for
Well-being is increasing following adoptions by carefacilities in hospitals in Japan, the older model HAL
for Living Support Lower Limb Type is starting to meetits service life and the Group is decommissioning theunits that have exceeded it. As of the end of March
2019, 919 units of HAL Lumbar Type for Well-being
and Care Support were in operation.
As of end of March 2019, 572 units of HAL Lumbar
Type for Labor Support were in operation. Operating
units are steadily increasing due to implementation in
airports, factories and warehouses. As of March 2019,
44 units of Cleaning Robot and Transportation

Risk Factors
Risks associated with business operations
Set out below are some of the major risks associatedwith the business operations of the Group as well asother potential risks that the Group may face. Listed
items include risks that may not apply directly, buthave been included in order to disclose information
fairly and accurately as they are thought to beimportant for investors upon making sound investing
decisions. While the Group recognizes the possibilitiesof the listed risks occurring and will take necessary
measures either to avoid their occurrence or to react
appropriately to reduce damages, investors shouldcarefully consider both the stated risks and otherrisks unstated, prior to making an investment.
Furthermore, please keep in mind that the items
set out below do not cover all of the potential risks.
The stated risks are based on assumptions andbeliefs derived from information currently available
to the Group and they may be altered due to change ofcircumstances in the future.
1. The Group business in a novel business category
The Group’s main product is HAL, the world’s first
Cyborg type robot,developed by Yoshiyuki Sankai,
President and CEO. The Group is currently
developing business of Medical HAL in Germany
and Japan. Also in Japan, the Group is developing
business of HAL for Well-being Lower Limb Type, HAL
Single Joint Type, HAL Lumbar Type for Care/Labor
Support, and others. The Group’s technologies arethought to be applicable to various fields, including
medicine, living support, labor support,
entertainment and so on. However, since the Groupis working in a novel business category, uncertainty
is very high, and there is no guarantee that themarket will grow steadily. Moreover, if penetration of
the Group’s products does not progress as planned,
or if the Group is unable to achieve profitability, its
business performance, financial condition, andfuture business development may be affected.
2. Competition
The Group is planning to go into the fields of medicine,care support and living support mainly centered on
HAL.
Currently, wearable robots with autonomous control
systems are being developed by companies in Japanand elsewhere in the world but the Cybernic voluntary
control technology that utilizes BES originating fromthe brain is the Group’s original technology. Due tothis differentiation of technologies, the Group canmaintain its competitive edge. Intellectual properties
related to HAL such as the basic principles of Cybernic
voluntary control are jointly held by the Group and the
University of Tsukuba.

Annual Report 2019
The Group has exclusive rights to use all of the patentrights that give it a competitive advantage in thewearable robot market. However, various enterprises
in Japan and overseas are proceeding with researchand commercialization of wearable robots. If thecompetitive environment surrounding the Group wereto change, for example with the new entry of a large
number of companies, including major technology
companies, into the commercial robotics field, there
is a possibility that some of theGroup’s potential competitors have or may havesubstantially greater capital, human and otherresources, more efficient cost structures, higher
brand recognition and more diversified product lines
than the Group.
With regard to advanced products such as HAL, while
the research and development and commercialization
processes, which include
verification tests, safety standards certification,
medical device approval and insurance coverage, areextensive, both in terms of the length in time and costs
involved, they are not always certain of success. In abusiness environment such as the above, if anothercompany succeeds in developing newer technologies
or more effective products
than the Group’s products, the Group will not beable to maintain the competitiveness of its products
and the Group’s business performance, financial
condition, and future business development may beaffected.
Applicatioin number/
Registration number(Date of application)

Name of invention/Inventor
Type of invention

2004-068790/4200492(2004/03/11)

Wearable action assist device
Inventor: Yosiyuki Sankai

2004-040168/4178185(2004/02/17)

Wearable action assist device, and controlling
methods of drive source in wearable action
assitst device, and its program
Inventor: Yosiyuki Sankai

2004-045354/4178186(2004/02/20)

Wearable action assist device, and method andprogram for controlling wearable action-assist
deviceInventor: Yosiyuki Sankai

2005-018295/4178187(2005/01/26)

Wearable action assist device and control
programInventor: Yosiyuki Sankai

3. Risk associated with internal organizational
structure
The Company was established on June 24, 2004
and has the following issues which are specific to a
venture business.
i) The Group heavily relies on Yoshiyuki Sankai,
the founder and President and CEO, in terms ofmanagement and development of new technology.
If he becomes unable to perform his duties in theGroup for some reason, the Group’s businessperformance and future business development
might be affected.
ii) The Group has secured a sufficient number of
excellent research and development staff. If vital
staff members were to resign, the Group’s
speed of product development might be affected.

iii) As business expands, the Group intends toincrease staff in sales, production and controlling
units, and to further reinforce the internal control
system. However, if the Company is not successful
at keeping competent personnel and reinforcing
internal controls, the Group’s business performanceand future business development might be affected.
4. Risks associated with dependence on limited
range of products
The main product of the Group is HAL, whose net
sales comprised the majority of the Group’s net sales
as of the end of March 2017. It is estimated that HAL
will continue to be the main source of the Group’s
profit going forward. If there is a delay in getting
approval for HAL as a new medical device by theUnited States Food and Drug Administration, or adelay in creating laws and regulations, healthcare
policy, or insurance systems such as health insurance
in targeted countries, the Group’s business andprofitability may be affected.
In addition to these factors, if any other factors wereto preclude the market expansion potential of HAL,
such as lawsuits or other legal action arising fromthe use of HAL, the emergence of new technologies
or technological innovation that replace HAL, theintroduction of more competitive products in the samegenre, changes in relevant laws and regulations, andchanges in the relationship with the University ofTsukuba regarding the grant of exclusive rights tothe use of intellectual property related to HAL, theGroup’s business performance, financial condition,and future business development might be affected.
5. Approval of medical devices
In order to sell HAL and other Group products asmedical devices, the products need to obtain approval
from authorities in each country andregion after undergoing certain tests andexaminations based on local laws and regulations.
The Group has obtained approval for HAL as a
medical device in the EU, U.S., Saudi Arabia andJapan. However, there is no guarantee that the Groupwill succeed in
obtaining approval for HAL and other Group products
as medical devices in other country or region. Even if
approval can be obtained, the timing of the approval
may differ by countries and regions. Furthermore
if laws and regulations in respective countries andregions were to be revised after approval is obtained,
the approval might be canceled or not renewed. Insuch cases, the Group’s business performance,
financial condition and future business development
might be affected.

6. Insurance coverage
The spread and penetration of Cybernic Treatmentusing HAL and other Group products is reliant toa certain extent on such treatment being coveredby public and private health insurances in many
countries and regions, with insurance payments forsuch treatment being available from public insurance
institutions and private health insurance companies,
and so forth. The Group recognizes this as a major
issue. However, insurance systems may vary between
countries and regions, and aspects such as the scopeof coverage and payment levels are determined
separately by the respective public insurance
institutions and private insurancecompanies in each country and region. The status ofthese determinations may affect the Group’s businessperformance, financial condition, andfuture business development.
7. Alliances and acquisitions
The Group recognizes that acquiring patents and otherintellectual properties from third parties, acquiring
businesses, and forming joint ventures and strategic
alliances domestically or overseas are major steps tobe taken for accelerating its business development
and it will continue to examine such steps proactively
going forward. However, when undertaking an
acquisition or entering into an alliance and so forth,
it is difficult to predict the effect of the acquisition oralliance completely
beforehand. Moreover, there is no guarantee thatthe acquisition or alliance and so forth will proceedsmoothly. When acquiring intellectual property or abusiness, or entering into a joint venture or strategic
business alliance, there is no guarantee that an
anticipated effect will be obtained within an initiallyprojected time frame, and the Group may be unable toutilize the effects from an acquisition or alliance andso forth appropriately. In such a situation, the Group’sbusiness performance, financial condition, and futurebusiness development might be affected.
8. Risks associated with business implementationin the EUi) Medical HAL acquired CE Marking as a medical
device, a world first for a robotic medical device.
It was accredited by the world-class independent
accreditation organization TÜV Rheinland AG in June2013 as a Class IIa device, under the Medical Devices
Directives (“MDD”) for certifying compliance with EUlaws and regulations, which are required for exporting
medical devices to EU markets. This accreditation isvital for conducting business activities for HAL in theEU.
However, if it were confirmed that HAL did
not meet the requirements of the MDD or ISO
13485 (international standards for quality control
management systems for medical equipment), theCE Marking may be canceled and so forth. If suchan event were to hinder the Group’s businessdevelopment in the EU market, the Group’s businessperformance and future business development
might be affected.

Risk Factorsii) The Group started its business in Germany
in August 2013. Since the Deutsche Gesetzliche
Unfallversicherung (German Statutory Accident
Insurance) admitted the application of labor
insurance, the entire fee for the treatment with
HAL for member patients of public labor insurance
institution, “the Berufsgenossenschaft Rohstoffe
und Chemische Industrie (Professional Associationof Raw Materials and Chemical Industry; “BG RCI”).”
Currently, the Group provides therapeutic services
mainly to those patients covered by public labor
insurance with BG RCI as its business partner.
The Group plans to develop its business in Germany
further, mainly through hospitals affiliated with BG
RCI, and then develop its business throughout theentirety of the EU. Nevertheless, if for example theGroup were obliged to change its plan to develop
business at BG RCI affiliated hospitals due to achange in BG RCI’s policy, the Group’s businessdevelopment in Germany and future businessdevelopment in the EU might be affected. In such acase, the Group’s business performance and futurebusiness development might be affected.
9. Risks associated with overseas businesses ingeneralThe Group intends to expand its business abroad.
However, the Group recognizes the following risks
associated with overseas operations. These risks
might affect the Group’s business performance,
financial condition, and future business development.
• Geopolitical risks associated with political andeconomic situations including terrorism, and soforth• Risk of changes in legal and tax systems• Risk of differences in commercial and tradecustoms• Risk of general strikes or other disruptions inworking conditions• Risk of difficulties in managing local personnel andbusiness operations due to cultural differences andother factors• Risk of difficulties in repatriation of funds to Japan• Risk associated with fluctuations in foreignexchange rates
10. Loss of clients due to product malfunctions
The Group continuously strives to improve the qualityof its products based on ISO 13485 (international
standards for quality control management systems
for medical equipment). There is no guarantee,
however, that its products will be free of deficiency orthat product liability claims or recalls will not occur inthe future. If damages were to occur due to a productdefect, product liability claims would be covered
entirely or in part by product liability insurance;
however, a decline in the Group’s and the products’social credibility might affect its businessperformance, financial condition, and future businessdevelopment.

Annual Report 2019
11. Intellectual property

12. Legal risks

14. Peace and Ethics Committeei) The Group’s HAL systems employ unique technologythat utilizes a wearer’s BES. The patent rights fortechnologies used in HAL are jointly held by the
University of Tsukuba and the Company, except
for patents independently owned by the Company.
The Company concluded a contract concerning an
exclusive license for use of thesepatented technologies. This contract is a significant
prerequisite for the Group to conduct businessactivities and will be valid until the expiry date of
the licensed intellectual property rights. However, if
it becomes difficult to continue the contract for any
reason, such as a breach of the contract, a petition
for bankruptcy, a merger, an acquisition of significant
assets, or an assignment of the Company’s key
business line, the Group’s business performance,
financial condition, and future business development
might be affected.
ii) To date, the Group has neither received any claims
from, nor been involved in a lawsuit with any third
party concerning intellectual property such as patentrights related to the Group’s business.
Moreover, the Group considers it unlikely that its
business operations would be materially hindered
due to a problem arising in relation to infringement
on intellectual property such as other parties’ patentrights during its business operations. The Group takes
measures to avoid problems concerning intellectual
property infringement by conducting continuous
technical investigations.
However, for research and development-orientatedenterprises such as the Group, it is very difficult toentirely avoid the occurrence of problems concerning
intellectual property infringement. In the future, if
the Group is involved in litigation with third
parties, the Group’s policy is to consider concrete
countermeasures individually depending on thedetails of each case in consultation with lawyers andpatent attorneys. It will, however, be time consuming
and costly to reach a settlement, regardless of thevalidity of the counterparty’s claim. Furthermore,
although the Group manages its technologies withthe utmost care, if a third party infringes upon theGroup’s technologies, settlement of the issue will betime consuming and costly. In such cases, the Group’sbusiness strategies, business performance, financial
condition, and future business development might beaffected.

The Group’s business is subject to restrictions due tothe application of the respective laws and regulationsof each country and region, including the items listed
below. For example, in various business activities inwhich the Group is involved domestically orinternationally, the Group is subject to laws andregulations concerning intellectual property rights
and product liabilities related to technologies,
products, services and so on, as well as regulations
related to pharmaceutical affairs, commercial
transactions, and import and export restrictions; tax
obligations, including tariffs; laws and regulations
concerning anti-bribery and corruption, antitrust,labor, consumers, personal information, theenvironment, foreign exchange; and various otherlaws and regulations. Moreover, the Group may
encounter unexpected issues relating to these laws
and regulations or business customs. In particular,
since some of the Group’s products are medical
devices designated under the Pharmaceuticals andMedical Devices Act of Japan, the Group had to obtainthe manufacture and distribution approval from the
MHLW. Similarly, in other countries
and regions, local regulatory authorities’ approvals
may be required, along with supervision fromsupervisory authorities.
Approval inspections are conducted to validate theeffectiveness and safety of the products. It is possiblethat an application could be denied or an approval
could be delayed as a result of the inspection. Evenif sales of the merchandise are started after approval,
it is possible that approval could be canceled due tothe occurrence of problems in product effectivenessand safety. In addition to the above, if the Group wereto violate any laws or regulations applicable to its
business, it could be subjected to civil, administrative,or criminal sanctions, which might
affect the Group’s social credibility. In such a case, theGroup’s business performance or financial condition
may be materially affected.

The Group has also established the Peace andEthics Committee to prevent the use of its advanced
technologies to harm people or to create military
weapons. All outside directors and outside Audit
and Supervisory Board Members, in addition to the
President and CEO, are members of the Peace andEthics Committee. Committee resolutions require amajority vote of two-thirds or more of those attending.
Before entering fields outside the areas of medicine,
living support and disaster recovery,
which are defined in the Company Code of Conduct,
the Peace and Ethics Committee investigates,deliberates and reaches a decision on whether
the Group’s advanced technologies could be used
to harm people or to create military weapons as aconsequence of entering this business field. The
committee then submits its findings to the Board of
Directors.
The result of the Committee’s examinationand verification might not necessarily contributeto improving the Group’s short-term businessperformance.

13. Risks associated with personal information
The Group obtains the personal information of
HAL users. The number of staff within the Group
who are able to access this personal information islimited, and the Group has concluded nondisclosureagreements with all executives and employees.
Moreover, the Group has taken adequate measures
for the protection of personal information, including
the establishment of Regulations for Protectionof Personal Information and the appointment ofa Person in Charge of Protection Management of
Personal Information, and no problem, such asleakage of personal information, has occurred to date.
However, if a problem, such as leakage of customer
information, were to occur, claims for damages and a
decline in the Group’s social credibility might affect its
business, financial status,and business performance.

Risk Factors

Annual Report 2019

Risks associated with the President’s engagement
as a University professor

Matters associated with advanced device
businesses in general1.

1. Risks associated with development businesses
in general

Risks associated with the President’s
engagement as a professor at the University ofTsukuba

Yoshiyuki Sankai, President and CEO of the Company,
holds concurrent positions as a professor of the
University of Tsukuba and as the program manager
for the Impulsing Paradigm Change throughDisruptive Technologies (“ImPACT”) program of the
Cabinet Office of Japan. Details ofi) measures to avoid conflicts of interest between
the Group, the University of Tsukuba, and the Japan
Science and Technology Agency (“JST”), which is
implementing the ImPACT program, arising fromconcurrent positions as the President and CEO of theCompany, aprofessor at the University of Tsukuba, andthe program manager of ImPACT and ii) impediments
to performance of duties as the President and CEO
are as follows:i. Measures to avoid conflicts of interest
All decisions related to conflicts of interest, includingtransactions and conclusions of joint research
agreements with the University of Tsukuba or JST aremade by the Board of Directors. A structure to prevent
conflicts of interest has been established, underwhich the decisions concerning the University ofTsukuba are made by the five directors (of whom three
are outside directors) excluding Yoshiyuki Sankai andanother member affiliated with the University ofTsukuba, and the decisions concerning the JST aremade by the six directors (of whom three are outside
directors) excluding Yoshiyuki Sankai. In addition, astructure is in place under which matters pertaining
to conflicts of interest are being monitored monthly
through an audit by the Audit and Supervisory Boardand reported to the CEO, the Internal Audit Office anda responsible member of the Board of Directors.
ii. Impediments to performance of duties as
President and CEO
Although duties related to Cybernic research by
the Group, the University of Tsukuba and ImPACT
Program are integral and inseparable, the influenceof duties of a faculty member of the University ofTsukuba in Japan (lectures, attendance at intramural
meetings as a university professor, etc.) and Program
Manager of ImPACT on duties specific to the President
and CEO of the Company (attendance at the Board of
Directors meetings, approval of requests, responses
to investors, etc.) are limited
and do not disturb performance of duties as President
and CEO at all.However, should Yoshiyuki Sankai
prioritize his duties as a university professor orprogram manager of ImPACT over his position asa President and CEO of the Company, the Group’s
financial condition and business performance might
be affected.

In the field of cutting-edge technology development,
companies around the world vie with each other for
quality and speed of technological innovation. Also,
they must invest large amounts of funds over thelong term in the processes from basic research,development and manufacturing of advanced robots
to their sales, since they must proceed in accordancewith the various regulations in each country. Against
this backdrop, research and development entail many
uncertainties and such risks are inherent in the
products the Group is now developing and will develop
in the future. Under its business plan, the Group isalso developing its business towards achieving
insurance coverage in each country by expanding
business domains (various diseases, long-term care,etc.). However, there is no guarantee that the Groupwill expand its business domains as planned, andexists a risk that the applied insurance systems will
be reviewed or changed in the future with respect
to the scope of coverage and payment amounts. If
such risks were to materialize, the Group’s business,financial condition, and businessperformance might be affected.
2. Risks associated with creation of newly
developed products
The Group explores and creates newly developed
products through joint research with research
institutions, centering on the University of Tsukuba,
and one of its important business strategies is therelease of multiple newly developed products inaddition to HAL for Medical/Well-being Lower Limb
Type, HAL Single Joint Type as well as
HAL Lumbar Type for Care/Labor Support, which havealready been commercialized.
However, there is no guarantee that such new
products will be successfully explored and created.
Accordingly, if exploration and creation activitiesof new products were to be hindered for somereason, the Group’s financial condition and businessperformance might be affected.
3. Risks associated with progress delays inherent toresearch and development
The Group is efficiently advancing research anddevelopment as a research and development
oriented company group by establishing cooperative
relationships with external partners, centeredon joint research with the University of Tsukuba.
However, since there is no guarantee that researchand development activities will advance as planned, insome cases, the initially planned results of researchand development may not be obtained, the start orcompletion of various experiments may be delayed,
and acquisition of approval for manufacturing andmarketing medical devices may be delayed or limited.

To avoid such situations as much as possible, theGroup manages and evaluates the progress of eachproduct under development in a timely manner andtakes such measures as prioritizing products underdevelopment and changing the levels of management
resources invested
in products or deciding to suspend development
temporarily. Thus, the Group reduces the risk of a
sharp increase in research and development
expenses. However, if research and development
does not proceed as planned, the Group’s, business,financial condition, and businessperformance might be affected.
Risks related to the dual class share structure
1. Outline of the Scheme
Under the Group’s philosophy that “Technology
exists for humans and society” the Group employs
the advanced technologies centered around HAL
for peaceful purposes. The peaceful application ofCybernic Technologies to improve, support, enhance,and regenerate users’ bodily functions matches theneeds of the hyper aging society, and leads to therise of the Group’s long-term corporate value.
However, this technology could be put to use in nonpeaceful purposes such as in lethal weaponryin the military industry. In order to raise funds fromthe market while ensuring that the Company’s
innovative technologies are used solely forpeaceful purposes, Class B Shares are issued
separately from the listed Common Shares. (Thescheme involving the Company’s Class B Sharesis hereafter referred as “Scheme”)
The Group’s vision for the future is to create ahuman-assistive industry—a new industrial field thatwill support people by solving issues directly faced byaging and declining birthrate. To realize this vision,
the Group must coordinate business managementwith R&D of Cybernic Technologies. Yoshiyuki Sankai
created the Group’s Cybernic Technologies, andcontinues to be a central figure in Cybernic research.
He is also a business leader who seeks to make thisinnovative technology widely available for the benefitof the society. For the Group to increase corporate
value (i.e., common interest of shareholders),
Yoshiyuki Sankai must be a stable leadership figurein the management of the Company in the future. This
Scheme has been adopted to ensure he remains so.
To explain in detail, while Class B Shares are ranked
the same as Common Shares and paid the sameamount as Common Shares with regard to dividends
and distribution of residual assets, Class B Sharesdiffer from Common Shares in traded units. Common
Shares are traded in units of 100 shares, and Class B
Shares are traded in units of 10
shares. This grants a holder of Class B Shares 10
times as many voting rights as a holder of Common
Shares when they have equal numbers of shares.

Current holders of Class B Shares are Yoshiyuki
Sankai, the founder and President and CEO of theCompany, and the foundations (hereinafter referred
to collectively as “the Foundations”) of which
Yoshiyuki Sankai serves as Representative Director.
As of March 31, 2019, Yoshiyuki Sankai holds 3,042,000
Common Shares and 77,696,000 ClassB Shares. Together, this represented approximately
86% of the total number of voting rights for theCompany.
Set out below is certain information concerning thisScheme, Common Shares and Class B Shares.
i. Outline of the shares
Common SharesClass B Shares

Dividends of surplus anddistribution of residual assets

Receive the same amount of dividendsof surplus per share in the same rank

The number of sharesconstituting one unit

100 Shares(1 voting rights
per 100 shares)

10 Shares(1 voting rights
per 10 shares)

Article of incorporation topreclude a resolution of theCommon Shareholders' Class
Shareholders’ Meeting

Yes

None

Shares with put option

None

Yes
(1 Class B Sharefor 1 Common
Share)

Shares subject to call

None

Yes
(1 Class B Sharefor 1 Common
Share)

Share split or consolidation

Executed into the same numbers ofshares simultaneously

Listing

ListedUnlistedii. Difference between the share units of the twoshare types
While shareholders of both Common Shares andClass B Shares receive the same amount of dividends
and distribution of residual assets at thesame priority level, they differ in the number ofshares that constitute one share unit. One hundred(100) Common Shares constitute one shareunit whereas ten (10) Class B Shares constitute one
share unit. As such, a shareholder of Class B Shares
has 10 times as many voting rights as a shareholderof Common Shares when they have the equal numberof shares.
As of the consolidated financial year ended March
31, 2019, the number of shares of each class issued
is 137,445,809 Common Shares and 77,700,000 ClassB Shares. Yoshiyuki Sankai, the President and CEOof the Company, holds 3,042,000 Common Sharesand 77,696,000 Class B Shares, which represents
approximately 38% of all issued and outstanding
shares of the Company. Also, Yoshiyuki Sankai holds
85% of the total number of voting rights related to
the Company, making him capable of determining
matters for resolution in the General Meeting of
Shareholders such as the selection of directors or
reorganization by acting on his own.

Risk Factors
iii. Scheme to prevent changes of shareholders ofClass B SharesClass B Shares are issued for the purpose of
preventing the Group’s technology from being used toharm people or to create military weapons. In orderto prevent Class B Shares from being transferred topeople or entities other than the shareholders ofClass B Shares as of the submission date of theCompany’s Annual Securities Report released onJune 26, 2019 or other internal personnel of theCompany, the Articles of Incorporation of theCompany states thata) The approval of the Board of Directors is necessary
upon the transfer of the Class B Shares to any person
other than the shareholders of theClass B Shares. Andb) When a shareholder of the Class B Shares has
died and 90 days have passed without succession, or
within 90 days, a transfer to any other shareholders of
the Class B Shares has not occurred, and theCompany is requested* to approve the acquisitionof the Class B Shares by any person other than theshareholders of Class B Shares, all of the Class B
Shares held by the departed shareholder shall be
exchanged for one Common Share per Class B Shareupon acquisition.
* A request for approval as set down in Article 136 and137 of the Companies Act.
iii. Scheme to prevent changes of shareholders ofClass B SharesClass B Shares are issued for the purpose of
preventing the Group’s technology from being used toharm people or to create military weapons. In orderto prevent Class B Shares from being transferred topeople or entities other than the shareholders ofClass B Shares as of the submission date of theCompany’s Annual Securities Report released onJune 26, 2019 or other internal personnel of theCompany, the Articles of Incorporation of theCompany states thata) The approval of the Board of Directors is necessary
upon the transfer of the Class B Shares to any person
other than the shareholders of theClass B Shares. Andb) When a shareholder of the Class B Shares has
died and 90 days have passed without succession, or
within 90 days, a transfer to any other shareholders of
the Class B Shares has not occurred, and theCompany is requested* to approve the acquisitionof the Class B Shares by any person other than theshareholders of Class B Shares, all of the Class B
Shares held by the departed shareholder shall be
exchanged for one Common Share per Class B Shareupon acquisition.
* A request for approval as set down in Article 136 and137 of the Companies Act.

Annual Report 2019
The shareholders of Class B Shares as of thesubmission date of the Company’s Annual Securities
Report, June 26, 2019 are Yoshiyuki Sankai and theFoundations, and the number of Class B Shares heldis 77,696,000 shares and 4,000 shares respectively.
In order to preserve the continuity of this Scheme,
Yoshiyuki Sankai plans on transferring part of theClass B Shares he holds as of this submission dateto the Foundations at no cost. Furthermore, there are
no plans for the Foundations to release the Class B
Shares in their possession.
As a shareholder of Class B Shares, the Foundations
established guidelines on the execution of their voting
rights, to prevent the Group’s
technologies from being used to harm people orto create military weapons, damaging the Group’s
corporate value.
The Foundations will exercise its voting rights related
to the Class B Shares they hold against resolutionsin the General Meeting of Shareholders and General
Meeting of Class Shareholders in the cases statedbelow. Furthermore, a resolution of the board
meeting of the Foundations will be required to alter
these guidelines, and the change will be announced
by a method determined by the Foundations:a) if in resolutions for the dismissal or appointment
of directors will lead to the misuse of the Group’s
innovative technology or damage the Group’s
corporate valueb) for all other resolutions, if the passing of theresolution leads to the prevention of peacefulutilization of the Group’s innovative technologies
or damage to the Group’s corporate value

iv. Breakthrough provision
In order to dissolve this Scheme upon a situation
where a shareholder with only a small portion of theissued shares controls the Company, if the shares
held by one acquirer is over three quarters of thetotal number of issued shares (excluding the treasury
stock) as a result of a takeover bid, all Class B Shares
will be converted to Common Shares in accordancewith the Breakthrough provision (see note) stated in
the Articles of Incorporation.
(note) The Breakthrough provision refers to theprovision that allows the dissolution of
the Scheme upon the appearance of an acquirer withmore than a certain ratio of holding shares.

v. Sunset provision
As stated in iii) above, Yoshiyuki Sankai plans totransfer portions of Class B Shares he holds to theFoundations at no cost in order to preserve thecontinuity of this Scheme. This Scheme is planned tobe continued after the resignation from the post of
director by Yoshiyuki Sankai, who is the developer of
the Group’s innovative technologies, or his death.
However, since there is the possibility that thedecision made by the Foundations after Yoshiyuki
Sankai’s resignation from the post of director(excluding cases where he holds multiple posts or isreappointed to the post immediately after resignation)
does not match the will of the Company shareholders(including holders of the Common Shares), an
intention verification procedure of shareholders will
be conducted by the conclusion of the last General
Meeting of the Shareholders held in the fiscal year
ending within one year of the date of Yoshiyuki Sankai’s
resignation or within 3 months after the end of thelast fiscal year that ends within 5 years’ time since
the most recent intention verification procedure ofshareholders. More specifically, the Sunset provision(see note) in the Articles of Incorporation states that
if the shareholders of Common Shares and Class B
Shares who hold one third of the total voting right(calculated using 100 Class B Shares for each shareunit) participate in the intention verification procedureand two thirds (2/3) of those who participated agree,
all Class B Shares will be converted to Common
Shares of the Company.
(note) The Sunset provision refers to the provisionthat enables the dissolution of the
Scheme under circumstances where the purpose of
introducing class shares
has ended or where the Scheme is clearly against thewill of the majority of shareholders, according to therelevant intention verification procedure explained
above.
vi. Elimination of the Meeting of Class Shareholders
comprised of shareholders of Common Shares
The Company’s Articles of Incorporation states that,the execution of actions stated in each item of Article
322-1 of the Companies Act, unless stated otherwise
by law or by the Articles of Incorporation, does not
require the resolution of the Meeting of Class
Shareholders comprised of shareholders of Common
Shares.

However, to ensure that the elimination of the
Meeting of Class Shareholders does not negatively
impact the shareholders of Common Shares, out of
the actions stated in each item of Article 322-1 of theCompanies Act,(a) reverse share splits, share splits, free allocationof shares, free allocation of stock acquisition rights,
allocation of shares as well as stock acquisition rights
to shareholders, share transfers (excluding
cases where the share transfer is conducted together
with other companies) and changes to the calculationof share units shall be executed at the same timing
and same ratio as stated by the Articles
of Incorporation, and(b) in the case that a merger agreement where theCompany will be absorbed, or a share exchange
agreement or share transfer plan (limited to cases
where the share transfer is conducted together
with other companies) where the Company will
become a wholly owned subsidiary, is approved bya Meeting of Shareholders (if an approval by the
Meeting of Shareholders is not required, resolution by
the Board of Directors) of all relevant companies, allClass B Shares shall be converted to Common Sharesas stated by the Articles of Incorporation.
2. Risks of this Scheme
Class B Shares have been issued for the purpose of
preventing the Group’s technology from being used toharm people or to create military weapons. However,this Scheme also presents potential risks statedbelow. If such risks were to materialize, rights andinterests of the shareholders of the Company’s
Common Shares may be affected.
(a) Risk associated with the strong influence of theshareholders of Class B Shares from their voting
rights. As of the fiscal year ended on March 31, 2019,
Yoshiyuki Sankai holds 3,042,000 Common Sharesand 77,696,000 Class B Shares which accounts
for 38% of the total number of issued shares. Thisequates to 85% of the total number of voting rights of
the Company, giving him strong influence overbusiness matters. This will limit the influence ofthe shareholders of Common Shares on corporate
matters. As a result, if the voting rights by theshareholders of Class B Shares are exercised toensure the peaceful use of the Group’s innovativetechnology, the Company may take actions that theshareholders of Common Shares do not generally
view as beneficial.

Risk Factors(b) Risk associated with the prevention of acquiring
shares of the Company The Company’s Articles
of Incorporation provide that 10 Class B Sharesconstitute one share unit and 100 Common Sharesconstitute one share unit. As voting rights are granted
for each share unit, a shareholder of Class B Shares
has 10 times as many voting rights as a shareholderof Common Shares with an equal number of shares.
While the Breakthrough provision and the Sunset
provision are stated in the Articles of Incorporation,
the conditions in which all of the Class B Sharesare converted to Common Shares are limited tocircumstances where the acquirer as a result of atake over bid holds three quarters (3/4) of the total
numbers of issued Common Shares and Class B
Shares, and where two thirds (2/3) of all shareholders
who took part in the intention verification procedures
agree to the conversion of the Class B Shares to
Common Shares, respectively.
(b) Risk associated with the prevention of acquiring
shares of the Company The Company’s Articles
of Incorporation provide that 10 Class B Sharesconstitute one share unit and 100 Common Sharesconstitute one share unit. As voting rights are granted
for each share unit, a shareholder of Class B Shares
has 10 times as many voting rights as a shareholderof Common Shares with an equal number of shares.
While the Breakthrough provision and the Sunset
provision are stated in the Articles of Incorporation,
the conditions in which all of the Class B Sharesare converted to Common Shares are limited tocircumstances where the acquirer as a result of atake over bid holds three quarters (3/4) of the total
numbers of issued Common Shares and Class B
Shares, and where two thirds (2/3) of all shareholders
who took part in the intention verification procedures
agree to the conversion of the Class B Shares to
Common Shares, respectively.
Therefore, there is the possibility that this Scheme
may prevent acquisitions that may benefit theshareholders of Common Shares.
(c) Risk associated with the elimination of the Meetingof Class Shareholders comprised of shareholders ofCommon Shares The execution of actions stated ineach item of Article 322-1 of theCompanies Act, unless stated otherwise by law orby the Articles of Incorporation, does not require
the resolution of the Meeting of Class Shareholders
comprised of shareholders of Common Shares,
so the decisions made by the Company may not reflect
the will of the shareholders of Common Shares.
(d) Risk associated with the conversion of the ClassB Shares Because Class B Shares include the rightto request acquisitions under acquisition terms, thereis the possibility that a future conversion of Class B
Shares to Common Shares will increase the total
number of authorized Common Shares issued on themarket, and the market price of the Common Shares
may be affected.

Annual Report 2019
Other risks

4. Loss brought forward for tax purposes

1. Dividend policy

Since the Group has been making upfront
investments in development as a corporate researchand development group, it has a significant amountof retained losses carried forward for Japanese
corporate tax purposes. Should there be any changes
to the Japanese tax systems in the futuresuch that restrictions are tightened on deduction oflosses brought forward, the Group might lose theopportunity to recover part of the capital that it has
invested in research and development or suffer othereffects that might affect its business, financial
condition, and business performance.

The Company has not been able to pay dividends toshareholders since its establishment, and as of the
publication of this report, is still not in a position
where it is allowed to pay dividends in accordancewith the Companies Act. At this time, the Company’s
policy is to prioritize achieving profitability quickly
by improving its financial strength through retaining
earnings and reinvesting in research and development
activities. On the other hand, the Company considers
returns to shareholders to
be an important management issue and will consider
possible payment of dividends in the future taking into
account its financial condition and business results.
However, if the Company’s earnings plan does notproceed as envisaged, and it continues to be unable toachieve steady earnings, it may not be able to return
profits to shareholders in the formof dividends.
2. Risks associated with financing and fund procurement
The Group records large amounts of upfront researchand development expenses in association with theprogress of its research and development activities,
resulting in continued recording of operating
losses. The Group’s funding needs are expected toincrease as its business proceeds, including operating
capital, research and development investment, andcapital expenditures. The Group plans to continue
strengthening its financial base making use of funds
such as governmental subsidies. However, depending
on how successful the Group is at securing profits andraising capital, its financial condition and businessperformance might be affected.
3. Recording negative retained earnings brought
forward
The Group has been focusing on research anddevelopment activities, and has therefore recordeda large amount of upfront research and development
expenses, as well as negative retained earnings
brought forward. The Group aims to achieve
profitability quickly and to establish a strong financialbase by posting stable profits. However, there is arisk that the Group’s business might not proceed
as planned, and that the Group may be unable toeliminate the recording of negative retained
earnings brought forward, which might affectits business, financial condition, and businessperformance.

5. Fluctuations in foreign exchange rates
Since the financial results of overseas Group
companies are translated from local currency
into Japanese yen when reflected in the Group’s
consolidated financial statements during consolidated
account settlement, the Group is exposed to risk fromthe effects of fluctuations in foreign exchange rates.
Therefore, if foreign exchange rates were to fluctuate
sharply in the future, the Group’s financial condition
andbusiness performance might be affected.

Financial Statements

Annual Report 2019

Consolidated Statement of Financial Position (from April 1, 2018 to March 31, 2019)
Unit : Millions of yen
2018

Unit : Millions of yen
2018

2019

2019

Liabilities and equity

AssetsLiabilities

Current assets

Current liabilities

Cash and cash equivalents

10,8208,796

Trade and other receivables

385

257

Trade and other payables

274

284

20,00420,505

Other current liabilities

386

370

Total current liabilities

659

654

—

544

Other financial assets
Inventories

565

901

Other current assets

32

169

Total current assets

31,80730,627401

463

Non-current assets
Operating lease assets
Property, plant and equipment

11,339

11,624

Intangible assets

90

70

Investments accounted for using
equity method

474

456

Other financial assets

2,406

2,431

Other non-current assets

81

74

Total non-current assets

14,791

15,11846,59845,746

Total assets

Non-current liabilities
Third-party interests in
CEJ FundProvisions

91

91

Deferred tax liabilities

145

254

Other non-current liabilities

29—

Total non-current liabilities

265

889

925

1,543

Share capital

26,744

26,745

Capital surplus

26,49526,494

Total liabilities
EquityTreasury shares

(0)

(0)

Other components of equity(65)(1,048)Retained earnings(7,476)(7,972)

Total equity attributable toowners of the parent

45,69844,217

Non-controlling interests

(24)

(15)

45,674

44,20345,59845,746

Total equity
Total liabilities and equity

Financial Statements

Annual Report 2019

Consolidated statement of profit or loss (from April 1, 2018 to March 31, 2019)
Unit : Millions of yen
2018

2018

2019

Revenue

1,728

1,709

Cost of sales

(523)

(481)

Gross profit

1,204

1,227

(834)

(998)

(1,390)(1,454)(2,223)(2,453)

Selling, general andadministrative expenses
Research and development
expenses
Other selling, general andadministrative expenses
Total selling, general andadministrative expenses
Other income

364

406

Other expenses

(4)

(11)

(659)

(830)

Finance income

13

239

Finance cost

(6)

(15)

Gains related to CEJ Fund

Operating profit (loss)

Consolidated statement of comprehensive income (from April 1, 2018 to March 31, 2019)
Unit : Millions of yen
Profit (loss)

(643)

(394)

(858)

(394)

(858)

Exchange differences ontranslation of foreign operations

(12)

14

Total of items that may bereclassified to profit or loss

(12)

14

(406)

(845)

(1,084)(1,487)(1,076)(1,480)

Other comprehensive income
Items that will not bereclassified to profit or loss
Financial assets measured
at fair value through othercomprehensive income
Total of items that will not bereclassified to profit or loss
Items that maybe reclassified to
profit or loss—

61

Share of profit (loss) ofinvestments accounted for using
equity method

(21)

(24)

Comprehensive income

Profit (loss) before tax

(672)

(589)

Comprehensive income attributable to

Income tax expense

(6)

(74)

Owners of parent

(678)

(643)

Non-controlling interests

Profit (loss)

Total other comprehensive
income, net of tax

Comprehensive income
Profit (loss) attributable to
Owners of parent
Non-controlling interests

(673)

(632)

(5)

(11)

(678)

(643)

Basic earnings (loss) per share (yen)(3.13)(2.94)

Diluted earnings (loss) per share (yen)(3.13)(2.94)

Profit (loss)
Earnings (loss) per share

2019
(678)

(8)

(7)

(1,084)(1,487)

Financial Statements

Annual Report 2019

Consolidated statements of changes in shareholders’ equity (from April 1, 2018 to March 31, 2019)
Unit : Millions of yen
Equity attributable to owners of parent
Capitalstock

Capitalsurplus

Other components of equity

TreasurysharesFinancial assets measured
at fair value through othercomprehensive income

Foreign currency translation
adjustments of foreign
operations

Stock Acquisition Rights

April 1, 2018

26,744

26,495

(0)

(77)

(7)

19

Profit (loss)

–

–

–

–

–

–

Other comprehensive income

–

–

–

(858)

10

–

Total comprehensive income

–

–

–

(858)

10

–

Issuance of new share

1

(2)

–

–

–

–

Transfer from other components ofequity to retained earnings

–

–

–

(135)

–

–

Equity transaction with noncontrolling interest

–

–

–

–

–

–

Total transactions with owners

1

(2)

–

(135)

–

–

26,74526,494–(1,071)

3

19

March 31, 2019

Equity attributable to owners of parent
Other components of equity
Total
April 1, 2018
Profit (loss)

Retainedearnings

Non-controllinginterests

Total

Total equity(65)(7,476)45,698(24)

45,674

–

(632)

(632)

(11)

(643)

(848)

–

(848)

4

(845)

Total comprehensive income

(848)

(632)

(1,480)(7)(1,487)Issuance of new share

–

–

(1)

–

(1)

(135)

135

–

–

–

Equity transaction with noncontrolling interest

–

–

–

17

17

Total transactions with owners

(135)

135

–

17

16

(1,048)(7,972)

44,217(15)

44,203

Other comprehensive income

Transfer from other components ofequity to retained earnings

March 31, 2019
(Rounded down to the closest millions of yen)

Financial Statements

Annual Report 2019

Consolidated statements of cash flows (from April 1, 2018 to March 31, 2019)
Unit : Millions of yen
2018

2018

2019

(672)

(569)

Depreciation and amortization

399

436

Finance income

(13)

(239)

Finance cost

6

15

Gains related to CEJ Fund

—

(61)

21

24

(38)

(336)

(6)

128

85

24

Share of loss (profit) ofinvestments accounted for using
equity method
Decrease (increase) in inventories
Decrease (increase) in trade andother receivables
Increase (decrease) in trade andother payables
Other
Subtotal

157

(138)

(62)

(716)

Interest received

10

17Interest paid

(1)

(0)

Income taxes paid
Payments for administrative
expenses etc. related to CEJ FundNet cash provided by (used in)operating activities

–

–

–

(76)

(53)

(775)

Purchase of investments
Proceeds of redemption of
investments
Payments into time deposits
Purchase of property, plant andequipment
Purchase of intangible assets(43,000)(28,000)

(48)

(7)

Purchase of investment securities
Proceeds from sale of investment
securities
Proceeds of investments
accounted for using equity method
Other(1,563)

(618)

700

–

(495)

(5)

0

2

(2,484)(1,917)

Cash flows from investing activities

Net cash provided by (used in)investing activities

2019

Cash flows from financing activities

Cash flows from operating activities
Profit (loss) before tax

Unit : Millions of yen

43,00030,000–(2,500)(1,077)(789)

Contributions into CEJ Fund fromthird-party investors
Proceeds from stock issuance tonon-controlling interests
Other
Net cash provided by (used in)financing activities
Net increase (decrease) in cash andcash equivalents)
Cash and cash equivalents at
beginning of fiscal year
Effect of exchange rate changes oncash and cash equivalents
Cash and cash equivalents at endof year

–

680

–

4

(23)

(14)

(23)

670

(2,558)(2,025)

13,378

10,8202(3)

10,8208,796

Notes to consolidated financial statements
Notes to consolidated financial statements following the conversion to IFRS
standards are disclosed on CYBERDYNE website.
Please refer to “English translation of the financial reporting parts of theAnnual Securities Report for the Fiscal Year Ended March 31, 2019“, which canbe accessed from the Investor Relation Page.

Corporate & Investor Information

Annual Report 2019

Matters regarding the Company shares

Main offices of operations and factories
S h a re h o l d i n g
Number of shares held
ratio (%)
(shares)Common Share
3,042,000
37.52Class B Share
77,696,000

Name of shareholder
Yoshiyuki Sankai
Daiwa House Industries Co., Ltd.

Common Share

30,000,000

13.94

GCAS BANA LONDON US CLIENT

Common Share

3,739,033

1.73

STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST,
Common ShareBOSTON SSBTC A/C UK LONDON BRANCH CLIENTS - UNITED KINGDOM

2,940,000

BBH FOR GLOBAL X ROBOTICS AND ARTIFICIAL INTELLIGENCE ETF

Common Share

2,848,484

1.32

The Nomura Trust & Banking Co., Ltd. (Investment Trust Account)

Common Share

2,184,300

1.01

1.36

Japan Trustee Service Bank of Japan. Ltd. (Trust Account)

Common Share

1,950,500

0.90

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

Common Share

1,426,400

0.66

RBC IST 15 PCT LENDING ACCOUNT-CLIENT ACCOUNT

Common Share

864,993

0.40

BBH FOR MATTHEWS ASIA GROWTH FUND

Common Share

768,500

0.35

As of end of March 31, 2019

Common Share
Status of shares (100 shares per 1 share unit)
Government andlocal government

Financial
institution

Financial instrument
service operators

Foreign investors

Other
corporations

Non-individuals

Individuals

Individual
investors etc.

Total

Status of sharesless then one
share unit (share)

Number of shareholder(person)

16

58

507

212

116

89,91190,820

Number of shareholder(unit)

87,822

20,571

321,299

172,494

1,010

770,922

1,374,118

Shareholding ratio%

6.39

1.50

23.38

12.55

0.08

56.10

100

34,009Note 1. Yoshiyuki Sankai is in possession of both Common Share and Class B Share
Note 2. Out of 138 shares in the treasury stock, 100 was included in “Individual investors etc.“ and 38 was included in “status of shares less then one share unit“

Class B Share

As of end of March 31, 2019
Status of shares (100 shares per 1 share unit)

Classification

Number of shareholder(person)Government andlocal government

Financial
institution

Financial instrument
service operators

Foreign investors

Other
corporations

Non-individuals

The Company

Subsidiaries(Outside Japan)

Subsidiaries(Within Japan)

Name

Location

Head Quarters

Tsukuba, Ibaraki, Japan

Next-generation multipurpose robotized production facility Koriyama, Fukushima, Japan
Bochum, North Rhine-Westphalia,
Cyberdyne Care Robotics GmbHGermanyCYBERDYNE Europe GmbH

Bochum, North Rhine-Westphalia,
GermanyCYBERDYNE USA Inc.

Jacksonville, Florida, USA
Seattle, Washington, USA

CYBERDYNE & BROOKS, Inc.

Jacksonville, Florida, USA

Suzuka RoboCare Center Co., Ltd.

Suzuka, Mie, Japan

Shonan RoboCare Center Co., Ltd.

Fujisawa, Kanagawa, Japan

Oita RoboCare Center Co., Ltd.
CEJ Capital, Inc.

Beppu, Oita, Japan
Tsukuba, Ibaraki, Japan

Cybernic Excellence Japan Fund 1 Investment Limited
Partnership

Shibuya, Tokyo, Japan

Status of employees(i) Status of employees in the Group (as of March 31, 2019)

Classification of shareholders by shareholder types

Classification

Division

Individuals

Individual
investors etc.

Total

Status of sharesless then one
share unit (share)

2

1

3

Number of shareholder(unit)

400

7,769,600

7,770,000

Shareholding ratio%

0.01

99.99

100

Number of employees

Change from previous fiscal year

84 members(47 members)

Increase of 9 members(Decrease of 16 members)(Notes)(1) The number of employees includes full-time employees and members on temporary transfer assignments. It does not include the number ofMembers of the Board of Directors who also hold positions as Company employees or dispatch workers sent from a temp agencies.
(2) The number of contract employees are stated in the brackets (). This number includes part-time workers but excludes those who work in theGroup as second jobs.
(3) Since the Group is involved in a single segment of business related to robots, information of employees for each segment is omitted.

(ii) Status of employees in the Company (as of March 31, 2019)
Number of employees

Change from previous fiscal year

Average age

Average years in service

65 members(41 members)

Increase of 3 members(Decrease of 3 members)

41.8 years old

5.0 years(Notes)(1) The number of employees includes full-time employees and members on temporary transfer assignments. It does not include the number ofMembers of the Board of Directors who also hold positions as Company employees or dispatch workers sent from a temp agencies.
(2) The number of contract employees are stated in the brackets (). This number includes part-time workers but excludes those who work in theGroup as second jobs.