TRANSLATION FOR REFERENCE ONLY

September 30, 2016
(This English translation was released on October 7, 2016)
Company Name
RepresentativeInquiries

Aplix IP Holdings Corporation
Ryu Koriyama, CEO & Representative Director(Code: 3727, TSE Mothers)
Kengo Nagahashi, Director(Tel: 050-3786-1715)

Notification: Shift from an investment-based to recoup-based business structure, and theclosure of non-profitable departments to restore profitability

Aplix IP Holdings Corporation announced that at a meeting on September 30, 2016, its Board of Directors resolved toclose non-profitable departments in order to make the shift from an investment-based to recoup-based business structureso that it can accelerate growth in the IoT solutions business Details are as follows.

1. Business restructuring in IoT solution businessIn the IoT solution business, which is one of Aplix’s core operations, it appears that many Japanese customers andcustomers overseas have started to adopt Aplix’s IoT solution, and there is reason to believe that customer segments willcontinue to expand rapidly in the future. In the domestic market, however, the number of manufacturers of home appliances
is declining and production in Japan is consequently falling. Faced with these developments, Aplix evaluated the cost ofsales activities to land new accounts other than domestic customers, who are already considering adopting the IoT solution.
Thus, the domestic sales department that was working to finding potential Japanese customers will be closed. The
development teams will take over the responsibilities for the customers who have already considered adopting the IoTsolution. With regard to the sales activities to land new accounts, Aplix will now work through its sales representatives
overseas and work to land new accounts in other countries.
The IoT market is still in its infancy, and thus not many solutions that take advantage of IoT have been created. Over theyears Aplix has employed a trial and error approach to design, and has developed products for different industries. It has
also planned for various industries services that it independently created from scratch. Today, however, there are alreadymanufacturers in various industries who have adopted Aplix’s IoT solution, so rather than developing products and solutionson its own, Aplix can now achieve shorter delivery times and provide more competitive services sooner by using theproduction knowledge and industry knowledge of customers derived from their own business experience in their industry.
Because Aplix’s aim is to help further boost growth of profits, it decided to close the production and planning department thatprovided products and solutions developed through its trial-and-error, built-from-scratch approach.
Aplix believes that it can accelerate the growth of IoT solution business in the future by creating next generation IoTsolutions through its commissioned development business. It will rapidly secure profitability by working in close cooperation
with domestic and overseas customers in various industries who have started using Aplix’s IoT solution. In regards to theemployees who do not want to transfer to the overseas sales department or a development department such as those forapplications, firmware, or servers, Aplix will help them find another field.

Note: This press release is provided to share information about Aplix business activities, and it is not intended to solicit investment in Aplix shares. While the materials may describe information such as forecasts related tofuture business performance, this information has been created based on the judgment of Aplix at the time the materials were created. As a result, Aplix offers no guarantee that the conditions described will come to pass,
and any of the information described is subject to change without notice in the future.

The departments to be closed and number of employees affected are as follows.
(a) The department to be closed: Domestic sales department, the production and planning department of Aplix’s IoT
solution business(b) Number of employees: 23
The 23 employees affected by this closure account for 49 percent of all employees (47 people) in the IoT solution
business.
2. Future prospects
The effects these decisions will have on the financial performance of Aplix IP Holdings Corporation for the quarter ending
December 2016 are currently being studied.
Aplix will promptly disclose information in the future when there is a need to record expenses as a result of carrying out
these decisions, as well as when it recognizes that these changes may have a significant impact on the group’sperformance.
Although Aplix is still studying the effect these decisions may have on group performance in the next year and beyond, it
expects the closure of non-profitable departments to help reduce fixed costs. If circumstances that need to be announced
arise, Aplix will promptly disclose the related information.

Disclaimer: This English translation is for reference purposes only. In the event of any discrepancy between the Japanese original
and this English translation, the Japanese original shall prevail. We assume no responsibility for this translation or for direct,
indirect or any other form of damage arising from the translation.

Note: This press release is provided to share information about Aplix business activities, and it is not intended to solicit investment in Aplix shares. While the materials may describe information such as forecasts related tofuture business performance, this information has been created based on the judgment of Aplix at the time the materials were created. As a result, Aplix offers no guarantee that the conditions described will come to pass,
and any of the information described is subject to change without notice in the future.