Move forward to the future

Kushim Inc.
3F VORT Minami Aoyama I, 6-7-2 Minami Aoyama, Minato-ku,
Tokyo 107-0062
Tel: +81-3-6427-7380 (Reception)

Kushim Report2020

Kushim Report 2020

1

Our Philosophy Contribute to continued corporate growth and aim to create a more affluent society by­providing solutions to support growth of people and organizations.

Thoughts behind Our Logo 

The red circle in the logo depicts the motif of the Japanese national flag
to denote that the company emanates from Japan.

People’s Growth

Organizations’ Growth

We provide highly satisfying, effective training services
though attractive content and flexible learning management platforms to realize the growth of all people
involved in companies.

We provide services so that customers’ ever-growing
organizations can actively cooperate at anytime, anywhere and with anyone, to share corporate principles
and objectives and to maintain organizations that areworthwhile to work for.

Symbols inside the logo depict barley, which was found etched on aclay table that has the earliest recorded name of person ever found inhistory. Barley is the world’s oldest crop and one that remains cultivated

Our Vision 

today, being an indispensable part of our lives. This was used because
it expresses the Company’s desire to be a necessary presence in the
coming digital society of the future.
The Company name is expressed in Roman characters to incorporate the image of a company with development aspects that launch it
into the world.

We aim to be a solutions company symbolic ofJapan in the Human Resources Tech (HR Tech) and
Education Tech (Ed Tech) fields.

HR TechContents
1 Thoughts behind
Our Logo

5 e-Learning

21 Message from the CFO

7 Academy

22 Financial Highlights

37 Consolidated Financial
Statements

2 Our Philosophy/
Our Vision

9 Incubation

25 Financial Review

43 Corporate Governance

3 History

11 To Our Stakeholders

47 Company Overview

Editorial Policy
Kushim Inc. issued Kushim Report 2020, its first corporate report, for the purpose of enabling all stakeholders, including shareholders and investors, an understanding of
the Kushim Group’s medium- to long-term value creation. For editing this report, we used references such as the Ministry of Economy, Trade and Industry’s Guidance forCollaborative Value Creation, gathered information of the greatest importance and strived to describe initiatives in an easily understandable manner. Going forward, theCompany shall endeavor to enhance content even further and continue to fulfill its accountability while reflecting stakeholders’ opinions.

Applicable Period
November 1, 2019–October 31, 2020

Ed TechA coined term combining human resources (HR)and technology

A coined term combining educationand technology

Startups are the driving force of market growth

In the education and IT sectors where

and attract attention for reasons such as theeducation using technology will bring about

large number of companies successfully

innovation, expectations are high of forming

procuring funding in billions of yen.

a significant market in the near future.

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Kushim Report 2020

History

History

Second Foundation Period
2019—

Source of Our Value Creation
The Company changed its name to Kushim Inc. on May 1, 2020, continuing to carry on its DNA fromfoundation and with the desire to further accelerate growth in our second foundation stage and to

Aim to be a solutions company symbolic of Japan in the
HR Tech and Ed Tech fields.

redefine the business model we had used until that time.
In anticipation of the future and to respond flexibly to social reforms, we promote business categorytransformation with the aim of achieving our vision and medium-term management goals with asense of speed.

Foundation Period

2001—2018

Increasing recognition of
online learning due to the
spread of the internet andtechnology

1997—2000

Founded at a time when computeruse was beginning to spread to­individuals, enabling digital learning

2014

1997

2020
• April 2020
Business alliance withWeb Travel Co., Ltd.

• February 2020

2018

• April 2017

Started the iLearning Business(today’s e-Learning Business)

Started joint research on­constructing AI detection­systems with Matsuo Lab.,the University of Tokyo2019• June 1997
• August 1999

Made aim-soft Inc. a subsidiary(now Kushim Soft Inc.)• November 2019

Development Period

Predecessor company established• October 2019

Launched sales of Qumu, avideo streaming solution forcompanies• August 2014

• August 2017

Listed on the Second
Section of the Tokyo
Stock Exchange

Started a business alliancewith FISCO Ltd. group­companies• December 2015

• December 2017

Started business alliancewith V-cube, Inc.

Started a capital and businessalliance with CAICA, Inc.

• April 2016

• May 2018

Changed company nameto iStudy Co. Ltd.

Launched the iStudy
ACADEMY Business

Made CCCT Inc.
(now Kushim Insight, Inc.)a subsidiary• November 2019

• March 2020

Launched sales of new learning
management system (LMS) SLAP

Capital and business­alliance with Turingum Inc.

• November 2019

• March 2020

Made Tokyo Tech Corporation(now Kushim Technologies Inc.)a subsidiary

Capital and business­alliance with FISCO
Research & Institute• December 2019

• April 2020

Joined the Blockchain
Collaboration Consortium

Business alliance with
NCXX Group Inc.

• December 2019
Business alliance with Stake
Technologies Inc.

• May 2020
Made Care Dynamics a­consolidated subsidiary• May 2020
Made e frontier, Inc. a­consolidated subsidiary• June 2020
Capital and business alliancewith regist ART Inc.

• October 2020
Business alliance with
Zettant Inc.

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Kushim Report 2020

e-Learning

e-Learning

e-Learning

SLAP

iStudy LMS

What is SLAP?

Full-spec LMS. Equipped with a rich array

SLAP is an acronym of Smart Learning Accelerator Platform and is an e-learning LMS with the serviceof functions including e-learning, training

concept of joyful learning anytime, anywhere. SLAP is an e-learning system that supports each individual’s

management, learning management,

learning and growth with a sophisticated and easily understandable interface, supporting mobile lectures and­content management, group training man-enabling learning during spare time without having to worry about finding a place to study.

agement and skill management. Ascertain
employee skills and status of qualification

1

Simple to create original
e-learning content
Create e-learning content easily by preparing learning materials in Office tools
like PowerPoint or Excel and convert
using the CreatorNEO function provided
as an add-in. And by simply adding text
to PowerPoint notes it also enables
narration through a synthesized voice.

Feature2

Multi-device support

Usable in computers, smartphones ortablets. Spare time can be used­effectively for learning, which can bedone anywhere like an office, as amatter of course, but also while outside
or on the move.

Feature3

In addition to the cloud edition,
we also provide an on-premises
editionIn addition to the cloud edition enabling
an immediate start to e-learning, we
also provide an on-premises edition forcustomers with strict security or those
operating on their own original infrastructure environment.

Sales functions have been added to ready-made content the Kushim Group handles and was released in November 2020.
Going forward, to further expand the content lineup and consider adding new functions, providing these new services associatedwith SLAP raises expectations of creating a system capable of rapidly responding to customer requirements, including shorter
development lead times.

1. Advanced technology content(planned for sequential enhancement)
Examples: AI (G-certificate examination/
E certificate), deep learning, blockchain, data
scientists, web app and web security, etc.

2. Industry typespecialized content
Examples: HR content such as “Keys toCompliance,” food education content

3. Content for qualification­acquisition (mainly IT skills)
Examples: Content for those aiming toacquire IT qualifications such as for IT project
management or Oracle Master• On-demand training

Experience
Management

Content Creation• Operational skills• Competency• Qualification registration

appropriate training plans with understand-

Create original content in
MS Office

Skill Management• IT skill diagnosis• Original skill diagnosis

ing individuals’ learning progress.

e-Content

StudioEnables skill acquisition through systematic e-learning

Video content such as for in-house training

including AI, blockchain, IoT and new business development.

can be outsourced to teaching material

Also handle content for those aiming to acquire IT qualifica-­professionals. From planning and designingtion such as IT project management or Oracle Master.

content to layout, video recording, editing
and creating materials. Kushim, which

Advanced Technology

SLAP𝛂On-demand Training• Training management/
Undergo training• Participant management• Annual training planmanagement

acquisition at a glance. Enables proposing

Three Features of SLAP
FeatureTraining
Management• General purpose iStudy content• Original content• Study progress function• Mathematical lectures • G-certificate examination• Blockchain · Data analysis

IT Skills• Oracle/Java • Information processing• Project management • Networking

Business Skills• Business development • Logic • Financial accounting• MS Office skills, etc.

­specializes in e-learning and has a wealth ofexperience in introducing it to corporations,provides support through the entire process.
High quality video recording takes place inStudio Octo, located in the highly accessible Yebisu Garden Place tower, and customers can choose from among 8 studios,including small, medium and large studios,depending on their needs.

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Kushim Report 2020

AcademyAcademy01

03

Development and Production of Advanced
IT Personnel

This is a service that carries out development of­blockchain, and produces­personnel that can provide theworld with ­cutting-edge technology as IT personnel with askill level that is advanced evenamong engineers. Through­cutting-edge technology, it
will become possible to solve
system issues as well as

We support clients’ managerial issues through a one-stop

Production­personnel dedicated to technologies like AI and

Development
We develop personnel in advanced IT fields
such as AI and blockchain technology
through e-learning and by appointing specialized instructors. While skills as a basic IT
engineer are necessary, it is possible to
make a transition into an engineer with highfuture market value.

We bring the advanced IT personnel that havebeen developed into various projects. To thepersonnel, it provides a place in which todemonstrate the skills they have cultivated,while the company that accepts them gains
personnel from a challenging field who
possess new technologies for an unknown
project that is done through guesswork. As aresult, significant synergetic effects are
generated for both parties.

Contracted Development /Security Service

Contracted System
Development
With AI, blockchain, IoT, communications (5G),
and IT security technologies as our focus
fields, we give support as a partner for POC(Proof of Concept) in anticipation of implementation in each business scenario, collaborative
research and system development.

service from planning and development to operation andmaintenance. We also provide
services such as support for
acquiring qualification certifi­

Security Consulting Service
For security issues faced by companies,
we offer appropriate advice suited to a wide
variety of business scenarios. We offer flexible
support that matches each company’s circumstances toward maintenance of a sound corporate system to handle classified informationsuch as private information.

cation like corporate qualification in the field of security,
PrivacyMark, and ISMS, as wellas measures and consultation
to improve company security.

­managerial issues.

02

04

System Engineering Service

Kushim Soft Inc., a Group subsidiary, is responsible forthis. It provides streamlined engineering services fromplanning (requirements analysis
and requirement definition) inIT system development­(programming, etc.), designand development and testing at
the implementation stage, tooperation/maintenance.

Track Record of Development
for a Wide Variety of Industries
We have a track record of being involved withsystem development for various ­businesscategories, and do not lean in favor of any
particular industry among finance, communications, transportation and distribution, manufacturing, medicine, and government. Our
engineering service fully guarantees strict
adherence to delivery dates and quality.

Support for Various
Programming Languages
We back up engineer groups who provide
technical support for open systems with
programming codes such as Java and C# andfor mainframe systems with programmingcodes like COBOL. We have a definitive trackrecord in support for projects in a wide variety
of programming languages.

Solving IT-related Concernswith Abundant Knowledge
We develop “Care Smart,” a general IT
contract service that can handle any consultations about IT. Engineers, who even carryout programming, closely support the needsof caregiving job sites. We provide secureand high-quality services that make it seem
like there is a dedicated technician within
the company.

Caregiving
DX Service

We work on building sophisticated caregiving environments through provision of ASP systems for caregiving
businesses and information

Promoting DX in the
Caregiving Field
We propose promotion of DX at each area ofcaregiving job sites by utilizing IoT for various
issues that are likely to occur on-site. This
includes “Care Online,” an ASP service forcaregiving businesses that can streamline
office work at caregiving job sites and centralize
management; collaborative platform “SCOP,”
which is linked with cloud-based caregiving
robots; and “Care Smart,” which can handle any
consultations about IT at caregiving job sites.

and communications technology such as introduction ofcaregiving robots. As a­comprehensive caregiving
business support company,
we work to make caregiving
job sites labor-saving and­efficient, and offer the best
services for all personnel associated with caregiving.

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Kushim Report 2020

Incubation

Incubation
Contracted Research of Cutting-edge Technology

Business for Social Implementation of Advanced Technology

We promote the wide use and social implemen-

In view of the progress of development intation of advanced IT technology, and support­cryptocurrency staking service applications andthe digital transformation of Japan’s industrial

considerations toward lifting bans on holding

structure. Above all, with AI, blockchain, IoT,

shareholder meetings completely online in thecommunications (5G), and IT security technolo-

fields of decentralized application/decentralized

gies as our focus fields, we give support as afinance, we have begun working on develop-

partner for POC (Proof of Concept) in anticipa-

ment of a system to manage exercising oftion of implementation in each business sce-voting rights for shareholders. This system isnario, collaborative research and system

required for the realization of hybrid shareholder

development. Tailormade verification processes

meetings that are attended both physically andand landmark designs are made possible

virtually. We completed development of thethrough collaboration with university researchsystem at the end of October 2020, and provide

institutions and major participating engineering

live streaming with quality no different from ateams around the world.

shareholders meeting that is physically attended.

DX Consulting Business

Investment and Loan andIncubation

DX Consulting
We achieve reliable system development while

This refers to all processes offered and expressed digitally.

utilizing our varied track record and expertise in

Utilizing digital technologies such as AI and IoT, we pro-each industry and operation, and also improv-

pose systems that allow companies to continually provide

ing safety and convenience. We also assemble

processes that are optimized for users.

more suitable project teams for proposals of

UI/UX Consulting

construction plans, and generate speedy results

For companies that have clear targets, and wish to improvefor system construction and development.

With a focus on advanced technology in theconstantly evolving field of IT, we conduct
investment and loans that contribute to theInvestment and Loans
We actively conduct investment and loans for advanced
technology such as AI, blockchains, IoT, communications(5G), and IT security technologies that contribute to thedigitalization of industrial structure, and support enhancement of industrial competition within Japan. Moreover, thesocial implementation and social contribution oftargets of investment and loans can be handled flexibly onthat technology. In addition, we provide various

an individual basis for each corporate entity and project, etc.

pages, we propose systems designated for improving andtypes of consulting including matters related to

Incubation

optimizing UI (User Interface).

management in business development andWe offer management consulting for topics like businessproject promotion, and support incubation.

model construction, marketing, organizational personnel,

the bounce rate or conversion rate of websites or landing

funding, and capitalization strategy, primarily for the target
companies of investment and loan that possess advanced
technology, and serve a role of incubation for business andorganization.

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Kushim Report 2020

To Our Stakeholders

12

Technologies Inc., Kushim will work to advance IT

and CFO of the Company, I advanced management

Aiming to Be Japan’s Leading
Solution Company Throughthe Ceaseless Pursuit of
Self-Transformation­engineer dispatching services and outsourced develop-

reforms based on the slogan of achieving the Company’s

ment of Web systems. In addition, leveraging its project“second founding.” By 2019, we had dramaticallytrack record in advanced technology fields such as

improved iStudy’s corporate value. I thought that would

blockchain technology, Kushim Insight, Inc. will seek to

be a good time to resign as a member of management.

upgrade and expand businesses aimed at carrying out

However, all that changed as management decided tojoint research with attractive partners and applying thesearch for attractive partner companies to expand busi-

research achievements to society. Care Dynamics

ness further. In February 2019, CAICA concluded a tender

Limited aims to become an enterprise that drives digitaloffer for the Company’s shares. With that event, Mr. Itotransformation (DX) in the nursing care field. Notably,and I were encouraged to stay onboard as directors of the“Design strategies by backcasting

Care Dynamics succeeded in improving profitability byCompany, bringing us to the present day.

leveraging synergies with Kushim Soft Inc.

from our vision for the future,

In the ensuing three years or so since then, we have

We will continue striving to achieve Group-wide optimi-

achieved a major transformation. We have undertaken

instead of predicting the futurezation. To this end, we will work to implement strategy

measures such as transforming the business structure,by the past, with the aim offormulation, Group-wide resource allocation, and expansion

and building a Group management structure with sub-of business fields considering Group-wide profits.

sidiaries through M&As. While these measures wereachieving our medium-term­management targets through the

My original involvement with iStudy Co., Ltd. began

what we had intended from the start, I am amazed atwhen I had the opportunity to serve as a part-time director

the greater-than-expected speed at which these mea-of the Company in 2017. Together with Mr. Ito, directorsures have progressed.

self-sustained growth of eachGroup Strategy

business and M&As”

President andRepresentative Director

In May 2020, we changed our name from iStudy Co.,
Ltd. to Kushim Inc. and took our first new steps as the

Efficient resource
allocation

Selection of business fields
Selection of acquisition targets

Selfsustained
growthMaking a Fresh Start, Along with Adoptinga New Company Name

Overall
strategy

Efficient resource
allocation

Hiroki Nakagawa

M&As
Synergies

M&As
Synergies

Kushim Inc.

Synergies

Selfsustained
growthPortfolio companies (consolidated subsidiaries)

Kushim Group. All employees and the entire Group have
A little more than one year has passed since I wasworked as one to overcome the difficult challenges thatappointed as the representative director of iStudy Co., Ltd.

arose after the sudden outbreak of COVID-19. I believe

in March 2019. In the past year or so, we drove transfor-that these Group-wide efforts have become a major

mation of our business formats and proactively carried out

source of strength for us.

Issues Brought into Focus Since
My Appointment that Must Be Solved

iStudy was listed on the Mothers market four years after
its founding and was redesignated to the Second Sectionof the Tokyo Stock Exchange in 2014. During this period,

iStudy Co., Ltd. has consistently provided humansociety and the external environment surrounding the

M&As under a new management framework. As a result,

Kushim is actively promoting the self-sustained

we have created synergies with aim-soft Inc. (currently

growth of each of its businesses and building a unique

resources training services to companies for more than 20

Company’s businesses had changed dramatically, and we

Kushim Soft Inc.), Tokyo Tech Corporation (currently

business portfolio using M&As. Concurrently, Kushim isyears. iStudy started out in the training business forneeded to explore new priorities for the future.

Kushim Technologies Inc.) and CCCT Inc. (currently

creating a competitive edge by generating synergies

vendor certification from Oracle, IBM and others andOne of those priorities was the need to rebuild our

between its ­businesses.

expanded to e-learning services and the LMS (Learning

corporate brand. In the industry, iStudy was well known

Management System) business. In 2017, when I took

as a provider of Oracle training, and this was its corpo-

Kushim Insight, Inc.). We have now grown into a groupwith around 70 fellow colleagues. I would like to express

With e frontier, Inc., Kushim will strive to capture

my heartfelt gratitude to all our stakeholders for their tre-synergies in content production in the e-learning

office as an outside director, I felt that although iStudy was

rate image. In reality, however, the LMS (Learning

mendous support to date.

­business field. With Kushim Soft Inc. and Kushim

a great company, it was not performing to its full potential.

Management System) business and software sales were13

Kushim Report 2020

To Our Stakeholders

the main pillars of its business. Considering this situation,

Company by carrying out corporate rebranding and con-

we first needed to create a new recognition of thecurrently setting forth a new growth strategy.

The first step was to change the Company’s name to
Kushim Inc. Incidentally, the name “Kushim” comes fromthe world’s oldest known recorded name confirmed at
the present time. The name is listed on a clay table

Major M&A Deals Since the Fiscal Year Ended October 31, 2019

Kushim’s Management Thinking
Kushim designs its management plans by carryingout backcasting to shape the ideal future.

showing an ancient transaction record made by theancient Sumerians.

aim-soft Inc. (currently Kushim Soft Inc.) (October 2019)
aim-soft Inc. (currently Kushim Soft Inc.) is a system development
company that provides system engineering services to major companies. It had share capital of ¥50 million as of May 2019, prior to the M&A
deal. Net sales in the fiscal year ended March 31, 2019 amounted to¥804.5 million. aim-soft Inc. generated 97% of its net sales from onsite
customer service work. With the SI business as its core operation, thecompany also conducted security consulting for some customers. It had
many talented engineers and an abundant track record of developing
financial systems. aim-soft Inc. had excellent communication skills
because it had appointed personnel with engineering experience asmembers of management, and had earned strong evaluations from
customers. The company was also pouring energy into personnel

training. We determined that aim-soft Inc. would be an ideal company tobring onboard as a strategic partner of the Kushim Group, which isstrongly committed to the growth of its personnel.
Following Japan’s declaration of a state of emergency due to COVID19 in April 2020, aim-soft’s businesses faced a challenging situation.
Management decided to protect the jobs of engineers by leveraging
Group synergies. In May 2020, aim-soft turned Care Dynamics Limited,which conducts nursing care system and nursing care robot businesses,
into a wholly owned subsidiary. In collaboration with the Development
Center of aim-soft’s Shimane Office, we established the ASP service
development and delivery business for nursing care providers andcommenced maintenance and management operations in July 2019.

Develop business
partners (BP)aim-soft2

New IT
engineers

3

NextEdge

Freelanceengineers

LMS business had been experiencing sluggish growth.
Since the market itself was growing, I reasoned that it
would not be impossible to grow our market share if weonly had a strategy for going on the offensive ahead ofother companies. We then rebuilt our businesses while

Increase in hiring
companies (referrals ofadvanced IT personnel)

Produceadvanced
IT personnel

the business turnaround experience I had developed in
my previous post.

1

iStudyUpgrade and expand
partner companies

Personnel seeking tochange careers

Improve organizational
capabilities

Upgrade and expand
learning content• However, management is unable to fundamentally transform thecompany itself in response to changes in current businessconditions given the heightened uncertainty about the future

A paradigm
shift inthinking

Another important thing to have when expanding

we could pave a new way forward if I made good use of

iStudy Academy
graduates• Identify how the company should be managed over the next
1–2 years or so and strive to maximize profits by efficiently using
available business resources.

business portfolio.

difficult to start rebuilding our businesses. I believed that4

• Forecasting: Make short-term predictions by projecting pasttrends into the future

capturing synergies with CAICA, as we reshaped oursales at the time, we had determined that it would to be

During the current Medium-Term Management Plan (FY2019–FY2022), the Company aims to realize the following four synergies:

IT personnel
seeking careeradvancement

On the business front, the business results of the corebusiness is business scale. However, with the level of net

A Mutually Win-Win Self-Sustained Growth Model

Expand orders
received (win high­added-value projects)

Conventional management reforms andtransformation at companies

Medium-Term Management Strategy
Formulated Through Backcasting
When I was officially appointed as president of Kushim,
I immediately began formulating a new Medium-Term
Management Plan under a new management framework. We needed to identify and reexamine issues andTokyo Tech Corporation (currently Kushim
Technologies Inc.) (November 2019)

CCCT Inc. (currently Kushim Insight, Inc.)rebuild our brands and businesses, along with crystalliz-(March 2020)

ing our intention to expand our business scale into a

Tokyo Tech Corporation has been driving growth in its business results
through the development of Web systems. Tokyo Tech is working to
upgrade and expand its e-learning business by retraining its talented
engineers in Kushim’s Academy Business and building up their knowledge
base. Tokyo Tech will recruit engineers who have completed the advanced
IT personnel course in the Academy Business, and work to expand thesystems development business, which requires even more advanced skills.

CCCT Inc. is engaged in operations ranging from cryptocurrency
exchange-related systems development to maintenance and operation andsales. CCCT is working to improve content production capabilities for thee-learning business, using its knowledge of UI/UX design and graphic
design accumulated through its businesses. At the same time, CCCT aims
to win system engineering projects that require UI/UX consulting anddesign in the Academy Business.

concrete strategy.

Kushim will implement management reforms andtransformation to reach its ideal future.
• Backcasting can be roughly defined as a long-term thoughtprocess to create an ideal future.
• Identifying how the company should be managed over the next
5–7 years from now and transform the company by dynamicallyacquiring the necessary business resources.
• In the current business environment, there is heightened uncertainty about the future. In such an environment, the power totransform the company with the aforementioned way of thinking
will serve as a source of competitiveness.

Overview of Strategy
In May 2019, we redefined our vision (i.e., our aspirations for the future)
as a blueprint for our steps to reach the next phase of growth. To realize
this vision, we have designed long-term management targets. Our
Medium-Term Management Plan (FY10/2019–FY10/2022) was formulated by backcasting from those targets.
We will work to achieve our targets as we implement gap management
regularly and revise our annual plans.

Management
message forthe futureWith the Medium-Term Management Plan, we
started out by setting forth our vision for who we
wanted to be as a company by actively transforming our

2025 Visionbusiness formats, while harnessing the assets develLong-term­managementtargets

oped by iStudy, instead of thinking along the lines of theCare Dynamics Limited (April 2020)

e frontier, Inc. (May 2020)

Care Dynamics Limited was established in 2013 and is engaged in thebusiness of supplying an internally developed ASP system to nursing careproviders. Care Dynamics has already built a track record of deploying the
ASP system at more than 400 nursing care facilities. Moreover, in addition to
the ASP system, Care Dynamics has upgraded and expanded its hardware
and telecommunication technology through measures such as support for
the introduction of nursing care robots as an agency for CYBERDYNE Inc.
and construction of smart nursing care environments using ICT. Throughthese efforts, Care Dynamics is striving to transform itself into a comprehensive nursing care business support services company that provides optimal
services to all those involved in nursing care.

past. Beginning with our ideals for the company in thee frontier, Inc. is a software development company that excels in 3D­graphics, AI and game software development, and AI and image processing. Since August 2017, e frontier has been in a business alliance with theCompany. By turning e frontier into a consolidated subsidiary, we havebeen updating the Company’s LMS user interface and function development with AI, gamification and other advances, in preparation to address
diversifying needs.

future, we reviewed the present by backcasting from our

Backcasting

ideals and considering what we should do now.

2022

Management held repeated discussions on this matter.
What emerged from those discussions was a consensus to “Move forward to the future.” Concurrently, weformulated the new management vision of “Aiming to be
Japan’s leading solution company in the fields of HR

20192019 Medium-Term Management Plan

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Kushim Report 2020

To Our Stakeholders

16

Numerical Targets of the Medium-Term Management Plan

now, the company was unable to draw up a big-picture

the sophistication of functions and abilities that contribute* Figures for the fiscal year ※2018年12月期までは非連結決算、2019年10月期は10カ月間の変則決算ended December 2018 are non-consolidated. Figures for the fiscal year ended October 2019 are for atransitional accounting period (10 months).

vision for where it was headed. When we laid out a clear

to business format diversification,” “Build teams that spark

direction and told the company that “this is where we are

growth” and “Promote capital and business alliances with

(Millions(Millionsof yen)of yen)going,” the employees saw the new direction and thepartners that offer prospects for synergies.”

Net Sales Plan

Operating Profit Plan

(Millions(Millionsof yen)of yen)

3,000 3,000

3,0683,068
2,3682,368800

organization started to accelerate forward.

800

772 772600

526 526

1,8591,859
400

We have arrived at the midway point of the Medium-Term
200

754 754125 (Operating
125 (Operating

121 121 37
resultresultresultresultresultresult

plan

plan

plan

plan

0

37
–4

profit)–4

34

our ideal vision as our goal, so achieving it will not be

profit)34

0
FY12/2018
FY12/2018FY10/2019
FY10/2019
FY10/2020
FY10/2020
FY10/2021
FY10/2021
FY10/2022
FY10/2022
resultresultresultresultresultresult

plan

plan

plan

plan

easy. However, our Group companies have restored profitability and business results have been growing steadily.
Seeing the negative impacts of the COVID-19 crisis as a

Tech and Ed Tech,” and drew up long-term manage-

precisely why I believe that setting forth a long-term

good opportunity to shift to telework and reduce fixed

ment targets through 2025 to realize this vision.

vision and clearly defining the roadmap to realizing thatcosts, we have upgraded to a lean and low-cost man-vision was—and remains—a meaningful approach.

agement framework and have been able to build up sus-

The current medium-term management targets indicate the measures we should implement by fiscal 2022

LMS

Learning
content

iStudyAcademyManagement Plan (FY10/2019–FY10/2022). We have set(EBITDA) (EBITDA)

200(Parent company)(Parent company)(Consolidated)(Consolidated)

0
FY12/2018
FY12/2018
FY10/2019
FY10/2019
FY10/2020
FY10/2020
FY10/2021
FY10/2021
FY10/2022
FY10/2022

Strengthen existing businesses further

400

1,000 1,000 1,1011,1010Four Themes Hold the Key to
Accelerating Growth600

2,000 2,000

1

As the main achievements of this approach, we have

2
Diversify business formats: Raise thesophistication of functions and abilities that
contribute to business format diversification

3
Build teams that spark growth

tained competitiveness.

in order to achieve those long-term management targets.

accomplished an extremely drastic business transforma-

For the fiscal year ending October 31, 2022, we are

We now find ourselves in what has been described astion. We launched two new business segments and con-aiming for dramatic growth, targeting net sales of ¥3.0

the “new normal”—a new and highly uncertain businessducted four M&As. I do not think anyone would havebillion or more, an operating margin of 15% or more, a net

environment that no one had anticipated at all. That is

imagined these activities possible one year ago. Until

margin of 10% or more, and market capitalization of4
Promote capital and business alliances withpartners that offer prospects for synergies

around ¥23.0–¥30.0 billion. To reach these targets, we willcontinue to actively implement our management strategies.

Medium-Term Management Targets
Net sales

Achieve¥3.0 billion or morein the fiscal year ending October 31, 2022

OperatingmarginNet margin

Marketcapitalization

Dividend
policyShareholder
returns

Achieve

Achieve

15% or more
10% or more
¥23.0–30.0 billion

Aroundin the fiscal year ending October 2022

Our basic policy is to is continuously pay out stabledividends, as we strive to return profits to shareholders,taking into consideration the totality of treasury sharesand the total amount of dividends, while giving thehighest priority to increasing the value of our shares.

We offer a shareholder benefits program for the
purpose of rewarding shareholders for their support.

At the same time, we aim to improve shareholder

With regard to strengthening existing businesses­further, first Kushim will firmly carry on the e-learning

value for our shareholders. Looking at our dividend policy,­business, which could be described as the founding busi-

we intend to continuously pay out stable dividends while

ness built up by iStudy Co., Ltd. The e-learning businessmonitoring the totality of treasury shares and the total

embodies something akin to our DNA, which should con-amount of dividends, while giving the highest priority totinue to be passed on to future generations. When it

increasing the value of shares. We will also implement acomes to strengthening business and structural reforms,

shareholder benefits program to reward our shareholders

we have no intention of taking for granted or modifying thefor their support.

core aspects of existing businesses.

While there is a gap between our target and the cur-

However, as the business environment undergoes

rent level of market capitalization, our businesses them-changes, there will inevitably be changes in our businessselves are growing steadily. We will take even stronger

formats and business models. Take, for example, LMS

strides to put our businesses on a firmer growth track.

and content, which form the core of the e-learning busi-

We will also focus on improving our corporate visibility

ness. Here, we have revised the system itself from thethrough active investor relations (IR) and public relations

users’ perspective and released the system in the new(PR) activities.

formats of SLAP and SLAPα. Going forward, we will con-Under the Medium-Term Management Plan, we havetinue to compete on the merits of our unique content,

identified four themes that we will address from the fiscal

which is backed by a proven track record, while expand-

year ended October 31, 2019 to the fiscal year ending

ing initiatives in the B2B area.

October 31, 2022. The four themes are “Strengthen exist-

Kushim has also launched the “Academy Business,” aning businesses further,” “Diversify business formats: Raise

operation centered on the development and dispatching of17

Kushim Report 2020

To Our Stakeholders

advanced IT engineers. This business makes the most of

M&As. We believe that synergies such as corporate

relevant organizations at the time mutually share theirdispatching services, was heavily impacted by Japan’s

Kushim’s expertise and human resources in providing

growth and increased corporate value can be created

opinions on personnel. In this sense, each of the Group

state of emergency declaration issued in spring 2020.

e-learning as a solution. Among all of Kushim’s businesses,

together with the target companies in conjunction withcompanies is more like a business department ofConsequently, Kushim’s overall business performance

the Academy Business suffered the heaviest impact fromour measures and initiatives.

Kushim than a subsidiary of the parent company. Put

also came under tremendous pressure. At that time, we

differently, we are creating new business departments

decided to augment losses caused by short-term exter-

through M&As. The introduction of new perspectives

nal factors with earnings from the whole Group. Basedhas transformed the awareness of employees, and weon this thinking, we managed to overcome the situation

are aiming to build an organization where the entire

through measures such as temporarily transferring per-Group shares the same awareness as it strives to reachsonnel to the e-learning business, which had experi-

its targets.

enced an upturn in business results due to the

COVID-19. However, perseverance through this difficult
period paid off, and the Academy Business is now performing very well. There is no doubt that the need for theskills of advanced IT engineers will only continue to

Taking a Hands-on Approach to
Shaping a Flat Organization with
Pleasant Workplaces

increase further.
With regard to diversifying our business formats,

I have many years of experience working in investor rela-

Kushim has launched the Incubation Business, an opera-

tions (IR) and investment consulting. For this reason, I

tion that leverages the skills and abilities of IT engineers

have naturally acquired the business skills needed towithin the Group. In the Incubation Business, we will pro-perform a reductionist corporate analysis and evaluate

mote activities such as winning orders for outsourced

companies. I also have extensive knowledge of M&As

system development projects and joint research with18

promotion of remote work. Thanks to these efforts, theProtecting Employment and Nurturing
Engineers with Human Qualities

Academy Business Department was able to restore sub-and I am well versed in techniques such as formulating

I would like to say a few words about Kushim’s perspec-

short supply, it is not a good move for management toexternal partners. In parallel, we will also enhance ourstrategies for improving corporate value. That said, intives on human resources. At the Kushim Group, ourreduce personnel on the grounds of an unexpected dete-consulting capabilities further.

practice, those skills alone are not enough to increase thefundamental principle is to protect employment. We

rioration in the business environment. What is particularly

stantial growth in its business results from July onward.
In an era when workers are generally believed to be in

To build teams that spark growth, Kushim will devote

value of an organization or business. It is crucial for man-always strive to anticipate unexpected events in the

crucial in the IT engineer profession is how effectively theefforts to the recruitment of full-time in-house personnel

agers to personally take the helm of leadership, commu-

course of managing our financial position and cash

IT engineers can work together with businesspeople whoand professional workers. In particular, we intend to drive

nicate with employees and build businesses hands-on.

flows. The Academy Business, which is based on staff

are not familiar with IT engineering. It is important to have

our Group-wide businesses forward in step with the rapid

Since my appointment as president, I have carefully

the ability to produce output that can be easily explained

growth of our organization and appropriately reinforce

shaped the management team and devised management

to customers. IT engineers can satisfy customers if theystaffing of administrative back-office departments.

strategies, while reinventing the organization. I havecan face customers’ issues sincerely and communicate in

Naturally, we have readied the funds needed to address

stayed closely attuned to what kinds of members thean agreeable manner, even if the customer is not knowl-these priorities.

company has and increased the number of meetings,

edgeable about advanced technologies. We put the high-With regard to promoting capital and business alli-

thereby setting up forums for efficient communication. I

est premium on this part of the job, but those kinds ofances, we intend to make further business investments,

have thoughtfully designed the proceedings of meetings

human qualities and skills cannot be acquired overnight.

including M&As. This is an area where we can take fulland factors such as the chain of command and discretion

That is why it is imperative that we protect employment.

advantage of the experience we have gained by being onon the job, so that it is easy for each employee to fullyWith this in mind, we intend to build a well-balanced orga-

the investment side. It is precisely because we had thesedemonstrate his or her strengths. In doing so, I havenizational structure that emphasizes human qualities, asmeans of growth available to us that we have been able

fostered a work atmosphere that encourages everyone to

we take steps such as enhancing the skills of each

to implement M&As at such an overwhelming speed. We

work closely together.

employee even further, improving the work environment

have also solidly captured synergies from those M&As.
One frequently misunderstood aspect of these activi-

The same principles apply to our relationships withand introducing new employment formats.

the subsidiaries that have become our colleagues by

Future Growth Drivers

ties is that the act of conducting M&As seldom gener-

joining the Group through M&As. Although Kushim is

ates synergies. When companies with different cultures

the parent company in terms of the capital relationship,suddenly find themselves to be members of the samethe managements of the parent and Group companies

We are strongly determined to achieve the Medium-group, synergies cannot be generated automatically.

are all on the same level. When it comes to building

Term Management Plan laid out in the current fiscal

M&As are not carried out because they will produce

businesses, we are partners in a mutually flat relation-

year. We have two growth drivers for achieving the plan:synergies. Instead, synergies are generated after theship, and it is not uncommon for general meetings and(1) continuous self-sustained growth by Group compa-

integration. Mr. Ito and I stand ready and determined tobusiness projects to be implemented with the participa-

nies and (2) dramatic growth through M&As and proac-

generate synergies with any kind of company, because

tion of companies throughout the Group. There aretive financing.

we have accumulated this kind of experience. For thissome transfers of employees between organizations. In

Based on this, we intend to complete the transfor-

reason, if we find a proper match between our invest-

these cases, personnel evaluations of these employees

mation of Kushim’s Group strategy in the third year ofment criteria and returns, we will actively implement

are carried out properly by having the supervisors of theMedium-Term Management Plan, or in other words the19

Kushim Report 2020

To Our Stakeholders

20

next fiscal year. We do not intend to increase the number

each Group company have reached the stage where theycustomers. In my view, the outcome of those efforts istold employees to constantly try to find optimal waysof business segments any further. However, the entire

can achieve self-sustained growth. From now on, I would

the pursuit of profit. After we have worked tirelessly inand methods to get things done, rather than look forGroup’s structure requires further optimization. In thelike subsidiaries to consider M&As as necessary andthis way, we should be able to realize our vision forreasons why things can’t be done. We believe that eachcurrent fiscal year, we announced a large-scale financing

achieve further growth as business enterprises.

becoming “Japan’s leading solution company.” Whenemployee has put these words into practice in their own

scheme through a rights offering. In the process of skill-

Functioning as a headquarters, Kushim will fulfill the rolethat happens, I believe that we will be much larger thanway. Through employees’ gestures, words, and manner

fully weaving this financing scheme into our sales strat-of deciding the Group’s overall portfolio. From the third

the size of Kushim’s businesses today. We will haveof speaking, I could clearly tell that the employees haveegy, we plan to conduct M&As of several companies,

year of the Medium-Term Management Plan, I believe

grown into a company that can list on the First Section

participated in their assigned projects as professionals

each with net sales of several 100 million to several bil-that we can shift to such a framework.

of the Tokyo Stock Exchange—one that can lead theand have fulfilled their responsibilities while enjoying

way forward for society. That is why I believe that wethemselves. Some personnel were given irregular trans-

can aim for such a listing.

fers or duties, but they understood their positions andlion yen. When those new colleagues have joined theGroup, I believe that optimization will be necessary,taking into consideration the shape of the entire Group.

Our Greatest Strength Is Our Ability to
Accomplish Self-Transformation

The outlook for economic conditions under the

Our job is made possible by each member providing

acted appropriately. I believe that every employee

their highest quality work to society. Moreover, whether

worked as hard as possible every day and saw this

COVID-19 pandemic has changed significantly over the

I believe that Kushim should aim to list its shares on theit is an internal meeting or an external project, we must

ordeal in a positive light, turning it into an opportunity

past few months. While trends in consumer behavior

First Section of the Tokyo Stock Exchange in the future.

never lose sight of the need to ask what kind of lastingfor new growth through a process of self-reflection.

have remained uncertain, the B2B business, our primaryThis does not mean that we should simply become aimpact our work will have on society, and what kind of

market, has already began to show the next phase of

great company by generating enough sales to justify aservices we can provide. To this end, I have been tellingwhelmingly strong solutions or unique content com-movement. With activity in the M&A market also picking

listing on the First Section of the Tokyo Stock Exchange.

our Group colleagues that I would like them to devote

pared with other companies. There are also tons ofup again, I believe that this is a unique, prime opportunity

I believe that both people and companies should pro-themselves to their work with a “Burn your heart” spirit.

companies that are conducting business based on AI,

for Kushim.

vide what they believe are products or services of theI urge my colleagues to work as hard as they can every

blockchain and other advanced technologies. That said,

highest quality to society, through their colleagues andday towards some kind of goal with a burning passion.

of all the things we have done so far, I believe that we

While remaining aware of the critical viewpoints ofare second to no other company when it comes to our­consumers and clients, I urge my colleagues to contin-

speed of self-transformation. In the short span of nearlyually work hard with integrity so that they can enjoy theone year, we conducted four M&A deals, launched two

process of exceeding the expectations of consumers

new business segments, and surmounted adverseand clients. This is important to all employees regard-­conditions caused by the COVID-19 crisis and restored

less of their department or title. I am convinced that byprofitability. We have the ability to make sincere efforts

repeating this process, we can pave the way for realiz-

to reach our goals, maximize our strengths, anding our vision.

accomplish the self-transformation of our organization.

In the past few years, the standalone businesses ofGrowth Drivers Are “Self-Sustained Growth” × “M&A” × “Finance”

Drive both self-sustained growth and M&As to achieve medium-term management targets
M&As: Properly decide and select acquisition targets based on economic conditions due to COVID-19
As of FY10/2021
Net sales target: Achieve ¥2.4 billion
EBITDA: Achieve ¥5.0 billion

As of FY10/2022
Net sales target: Achieve ¥3.0 billion
EBITDA: Achieve ¥0.7 billion

Kushim GroupKushim Inc.

Self-sustained
growth ofeach business

Growththrough
M&As

Consolidated subsidiaries (portfolio companies)

Targets

Net sales of several
100 million yen

Net sales from several
100 million to several billion yen

Finance

Allocate profits to investments,
centered on equity capital

Large-scale financing such as leveraged
buyouts (LBOs) through debt capital

Several days ago, we held a general meeting of

The Kushim Group does not necessarily have over-

Although the shape and management of our organiza-

Kushim Technologies Inc. and Kushim Soft Inc. Previously,tion have changed dramatically over a short space of

we had held this regular meeting once a ­quarter every

time, we have produced solid results without being

year. This year, the meeting was held online. Normally,swayed by those changes. I’m convinced that the abil-almost all of the meeting would be devoted to communi-

ity to achieve this is indeed Kushim’s greatest strength

cation from the management side to the personnel inand intangible asset. I believe it is the key to realizing

attendance. This year, we changed our approach. Somesustained growth.

time was scheduled in the second half of the meeting for

In the remaining two years of the Medium-Term

employees at both companies to say a few words about

Management Plan, the entire Kushim Group will pulltheir work. We wanted the employees to report on

together to reach the plan’s targets, without letting up its­matters such as the projects they have joined and theirefforts. We look forward to your continued understanding

work goals. Each employee delivered a solid report. We

and support.

were delighted to confirm that the growth of everyone
shined through in their words.
The coronavirus pandemic has made it difficult for a

October 2020

single individual to accomplish things alone. Under

Hiroki Nakagawa

these conditions, the managers and I have repeatedly

President and Representative Director

21

Message from the CFO

Kushim Report 2020

Financial Highlights* Figures for the fiscal year ended December 2017 and 2018 are non-consolidated. Figures for the fiscal year ended
October 2019 are for a transitional accounting period (10 months).

year under review. Amid growing concerns about the riskof economic downturn, the Kushim Group continues torevolutionize its own business model in preparation for an
age in which every imaginable service becomes digitalized
as a corporate group that makes it its mission to promoteindustrial DX (Digital Transformation).

Net sales

Operating profit(Thousands of yen)(Thousands of yen)

2,000,000

1,859,614

1,600,000

With regard to the e-Learning Business, we havetransition to telework and increase in need to introduce

60,0001,101,047

1,200,000

800,000

755,562754,039–4,651–30,000
400,000–60,000

oped and released a new feature of SLAPα. Meanwhile,0

as for the Academy Business, the entire system engiThe entire world was greatly shaken by the recent

neering industry was significantly impacted by COVID-19.

COVID-19 pandemic. Even in Japan, we have seen an

In contrast to the second and third quarters, in which

incredibly challenging situation as a state of emergency

even the Company faced a critical stage, each consoli-

was declared by the government and economic activities

dated subsidiary managed to turn a profit and return tocame to a halt.

normal operating status. Even though Incubation

Although domestic economic activity has gradually

Business is a new business, we completed collaborative

been showing signs of recovery since the state of emer-

research with outside agencies right on schedule, andgency was lifted, there is an incredibly strong sense ofpromoted initiatives through ties with partner companies.

uncertainty about the future, with concerns about a third

Looking at the consolidated results in the fiscal year

and fourth wave of infections and no end to the panAmidst these macroeconomic trends, we made a total
Insight, Inc., Care Dynamics Limited and e frontier, inc.—yen), and profit attributable to owners of parent was 154

into consolidated subsidiaries in the consolidated fiscal

million yen (up 173 million yen).

FY10/2019

FY10/2020(Thousands of yen)(%)

200,000

FY10/2020
Consolidated(Planned)

FY10/2020
Consolidated(Actual)Compared
to plan

1,880

1,859

99%

EBITDA

230

125

55%

Operating profit

145

34

24%

e-Learning BusinessAcademy Business

Incubation BusinessCompanywide adjustment cost

Ordinary profit

147

40

60
50,00042,58840

0–18,95920–50,000

0
FY12/2018

FY10/2019

125,000
18,000206,000

61,000FY10/2020

ROE

154

1,101 –162,00027%

Note: EBITDA = operating profit + depreciation + amortization of goodwill

74%

FY12/2018

FY10/201910.7
10(Thousands of yen)
2,000,000

13,000230,000

FY10/2020

53.9

1,500,000

1,459,332

1,547,829
1,380,180 1,350,000–51,000–180,000

01,000,000–1.4
FY10/2019

YoY

209

FY12/2017

Net assets

FY10/2020–5

Profit attributable toowners of parent

72.5
64.5

(%)

11,000200,000–200,00079.7

80100,000

EBITDA0

FY10/2020

86.1

154,940

150,000

FY12/2017

400,000

FY10/2019–69,078(Thousands of yen)

Net sales

FY12/2018100–100,000(Millions of yen)

FY12/2017

Equity ratio

million yen), operating profit was 34 million yen (up 39
million yen), ordinary profit was 40 million yen (up 45 million

FY12/2018

Profit (loss) attributable to owners of parent

under review, net sales were 1,859 million yen (up 1,105

of four companies—Kushim Technologies Inc., Kushim–90,000
FY12/2017

million yen YoY), EBITDA was 125 million yen (up 114

demic in sight.

34,8720

online education at educational institutions. After completing reform of our infrastructure foundation, we devel-

47,17430,000the Company’s solutions on account of the corporate

Director

121,073

120,000
90,000worked on obtaining projects related to the demand for

Daisuke Ito

150,000+110

million yen

500,000–4.9

Growth rate(business only)

+76%

–10

0
FY12/2017

FY12/2018

FY10/2019

FY10/2020

FY12/2017

FY12/2018

FY10/2019

FY10/2020

22

23

Kushim Report 2020

Financial Highlights

e-Learning Business
Main products and services• “iStudy LMS” and “SLAP”­learning management systems
for corporate entities• Business videos for corporate
entities• Training seminars/Services• Training/e-learning content• Video recording/Video streaming

Academy Business
Main products and services• Fee-based career introduction
service “iStudy ACADEMY”• IT engineer introduction anddispatch business• Freelance matching businessInitiatives for FY10/2020
Work styles and work environments are changing drastically due to the COVID-19 pandemic.
Amidst this, although there are inquiries and demand for the utilization of “iStudy LMS” and“SLAP,” which are learning management systems for corporate entities, companies showed atendency to refrain from considering their introduction because of the impact of the pandemic
on results, and a partial dissipation of demand was observed. Despite such circumstances,
we carefully supported introduction of specific projects, and worked toward obtaining orders.
We promote support for further introduction and are focusing efforts on extending the numberof ID provisions for SLAP and introduction of iStudy LMS.
With regard to sales of e-learning content and advanced technology-related content foreach training service, business inquiries and the number of uses has increased, and employee
education at companies is transforming into valuable investment with an eye toward thefuture. Additionally, on the topic of training content creation services, we have received largescale orders and have begun providing content for new markets based on theme of foodeducation. On the content sales website, which is the foundation of our infrastructure, we
newly released “SLAPα,” which can be used on tablets and even smartphones, in order toaddress customers’ diverse needs, and began providing an environment in which learning ispossible at any time in any location.

Initiatives for FY10/2020
In fee-based career introduction service business, we help companies to hire advanced IT
engineers and conduct contracted seminar operations in place of the company, and continue
to work on expanding services. For personnel development, in addition to the nearly 400 IT
engineers employed by CAICA Technologies Inc., we have even developed lectures on
advanced technology and promote skill advancement for our subsidiary Kushim Soft Inc.
This helps improve engineers’ skills and expands the base of system development with highadded-value using new technologies such as AI.

Net sales increased at a good rate, and the rate of profitability largely improved
Net sales

Segment profit

EBITDA(Millions of yen)

(Millions of yen)

(Millions of yen)

1,000

240

240

230

938
192

206

205

699
500

120

0

120

0
FY10/2019

FY10/2020

0
FY10/2019

FY10/2020

FY10/2019

FY10/2020

Turned a profit in 4Q, and returned to normal operating status
Net sales

Segment profit

EBITDA(Millions of yen)

(Millions of yen)

(Millions of yen)

800

60

60

0

0

691

Engineer working rate
(%)
100

24

FY10/2020 results
FY10/2021 results

November 2020
96.0%

400

13

90
80
70
Signs of recovery
from July 2020

60
50
0

Incubation Business
Main products and services• Contracted system development• Various types of consulting
including matters related to­management• Investment and loan business

0

11

12

1

2

3

4

5

6

7

8

–47

–60
FY10/2019

10

–51

26
FY10/2020–51–60

FY10/2019

FY10/2020

FY10/2019

FY10/2020

9 (Month)

Initiatives for FY10/2020
In AI-based collaborative research business in collaboration with Matsuo Lab at the Universityof Tokyo and its partner company, and Social Welfare Corporation Zenkoukai we completeddevelopment of an AI-based detection system for caregiving facilities, and were able toachieve our initial target at the end of October 2020. This collaborative development is aimed
at preventative measures against the various dangers lurking in caregiving facilities such asaccidents, rapid response, and reducing the burden of labor on caregiving employees in the
super-aged society of Japan. As a result, we believe that being able to provide caregiving
employees with an AI-based detection system contributes to a huge step forward for theentire caregiving industry.
In investment and loan business, we continue to deepen alliances with corporations thatpossess advanced technology. In addition to a business alliance with Stake Technologies Inc.,a promising startup that employs personnel who create learning content in advanced IT fields
or serve as instructors, and a capital and business alliance with Turingum Inc., which is working hard on building a unique business model in the same field, we reached a business agreement with Zettant Inc. This company has developed, among other things, electronic signature
platform SecurityHub (adopted for the Ministry of Economy, Trade and Industry’s subsidy
projects) and blockchain platform BBc-1, and works on social contributions.

Both net sales and profit grew more than anticipated
Net sales

Segment profit

EBITDA(Millions of yen)

(Millions of yen)

(Millions of yen)

300

60

60

260

150

30

30

18
0

28
FY10/201918

0
FY10/2020

61

57

0
FY10/2019

FY10/2020

FY10/2019

FY10/2020* The previous consolidated fiscal year was a 10-month period from January to October 2019.

25

Kushim Report 2020

Financial Review(1) Summary of Business Results for the
Fiscal Year Ended October 31, 2020

education at educational institutions. In the process, the e-Learning Business completed therenewal of its infrastructure base and conducted the release of newly developed functionsfor SLAPα. On the other hand, in the Academy Business, Kushim faced challenging conditions in the second and third quarters as the entire system engineering industry was heavily

In the fiscal year ended October 31, 2020, Japan’s economy faced extremely challenging

impacted by COVID-19. Relative to the second and third quarters, each consolidated sub-conditions, despite initial expectations of a gradual recovery. As a result of the global spreadsidiary has successfully restored profitability and recovered to a normal operating condition.

of COVID-19, the Japanese government issued a state of emergency declaration to prevent

In the Incubation Business, Kushim completed joint research with external institutions as

the spread of infections in Japan, and economic activity showed some signs of stagnation.

planned, despite being a new business, and advanced measures through partnerships with

After the state of emergency declaration was lifted, domestic economic activity began topartner companies.

gradually restart as the Japanese government implemented various economic policies andAs a result of the above, Kushim’s consolidated business results for the fiscal year ended

other measures. However, there are still concerns about a third and fourth wave of infections

October 31, 2020 were as follows. Net sales were ¥1,859 million (an increase of ¥1,105

and no prospects for an end to the pandemic. Based on these and other factors, the outlook

million year on year), EBITDA was ¥125 million (an increase of ¥114 million year on year),for the future is highly uncertain.

operating profit was ¥34 million (a positive change of ¥39 million from an operating loss in

Faced with these macroeconomic trends, the Kushim Group was guided by a policy ofthe previous fiscal year), ordinary profit was ¥40 million (a positive change of ¥45 million fromcontinually promoting the transformation of business formats to dramatically improve profit-

an ordinary loss in the previous fiscal year), and profit attributable to owners of parent was

ability, as set forth in its Medium-Term Management Plan (running from the fiscal year ended¥154 million (a positive change of ¥173 million from a loss attributable to owners of parent in

October 31, 2019 to the fiscal year ending October 31, 2022). Based on this policy, Kushim

the previous fiscal year). The previous fiscal year was a 10-month accounting period running

turned several companies into consolidated subsidiaries in the fiscal year ended October 31,

from January 2019 to October 2019.

2020. Kushim Technologies Inc. (“Kushim Technologies”) became a consolidated subsidiary
in November 2019, followed by Kushim Insight, Inc. (“Kushim Insight”) in March 2020, Care
Dynamics Limited (“Care Dynamics”) in May 2020 and e frontier, Inc. (“e frontier”) on May 15,
2020. Amid heightened concerns about downside risks to the economy, Kushim has continued to transform its business models.
In this manner, the Kushim Group is a group of companies whose mission is to promote
the digital transformation (DX) of industry. In this role, the Group has continued to transform
its business models in preparation for an era in which the digitalization of all kinds of services
will proceed further. In parallel, as the Group pursues synergies with its newly consolidated
subsidiaries, the e-Learning Business worked to capture demand for Kushim’s solutions
given the heightened need for shifting to telework at companies and introducing online

26

27

Kushim Report 2020

Financial Review

The following is a summary of business performance by segment. The Company’s products

system to schools and other educational institutions free of charge continued to have aand services are classified by segment as described below.

­sizable impact. In addition to this campaign, the deployment of new systems by companies
and replacement needs have also started to emerge. By working to address further deploy-

Segment

Products and services

ment of systems, the Group will focus on increasing the number of SLAP IDs and introducing• Study, LMS and SLAP learning management

iStudy LMS. Moreover, the Group made strides on the renewal of the infrastructure environ-systems for corporate entities

e-Learning Businessment. Here, the Group completed the transition to providing a stable platform by actively• Business videos for corporate entities

shifting to a public cloud environment. Through this measure, the Group will work to upgrade• Various training courses and services

and expand functionality by striving to develop updates primarily focused on providing an• Training/e-learning content• Video recording/Video streaming

even more user-friendly environment to customers who will be using the system even more.
Looking at sales of e-learning content and various training services, sales declined dueto the impact of COVID-19. However, the number of inquiries and usage has increased for• Fee-based career introduction service“iStudy ACADEMY”

Academy Business• IT engineer introduction and dispatch business (Kushim Soft and Kushim Technologies)• Freelance matching business (Kushim Soft)

Incubation Businessadvanced technology-related content, and employee education at companies is being
redefined as a forward-looking, valuable investment. In addition, in training content production services, the Group won a large order and began providing content for a new market
based on the theme of food education. On the content sales site, which serves as an infrastructure platform, the Group newly released SLAPα, which can also be accessed via tablet• Contracted system development

PCs and smartphones, in order to meet a wide range of customer needs. With the release• Various types of consulting including mattersof SLAPα, the Group has started to provide an environment where customers can learn

related to management• Investment and loan business

anytime, anywhere.
e frontier conducted sales activities for iStudy LMS and SLAP targeting its 300,000
e-mail newsletter subscribers and is working to conduct nationwide sales of these services
through the sales network of a major software distribution company that is one of e frontier’s

e-Learning Businessmajor customers. In addition, e frontier has been engaged in software development overmany years. In October 2020, e frontier started supplying Remaster AI, a high-resolution

With the iStudy LMS and SLAP learning management systems for corporate entities, thevideo and still image remastering service that incorporates AI technology. This service canGroup suffered some loss of demand, despite inquiries and needs for system use, as com-be used to generate Blu-ray-level high-definition video easily and inexpensively frompanies tended to refrain from considering the deployment of such systems due to the impact

low-resolution VHS or DVD video footage produced in the past. e frontier believes that thison their business performance amid significant changes in work styles owing to the impact

service can be expected to attract a wide range of demand from ordinary customers toof COVID-19. Even under these conditions, the Group thoughtfully supported the deploy-specialized businesses.

ment of specific projects as it worked to win orders. The campaign for offering the SLAP

28

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Kushim Report 2020

Financial Review

As a result of the above, net sales in the e-Learning Business amounted to ¥938 million

worked to promote telework at an early stage in the industry and enhance operating efficiency.

(an increase of ¥239 million year on year). EBITDA was ¥230 million (an increase of ¥24

Additionally, in the system engineering service industry, many engineers still remain without

million year on year). Segment profit was ¥205 million, up ¥12 million year on year.

work (non-operational) at this time due to continued downsizing or suspension of projects,
and temporary reductions in customer budgets due to COVID-19. Despite this environment,

Academy Business

Kushim Soft improved the non-operational status of engineers in the fourth quarter and surmounted the difficult situation it faced without reducing the number of its engineers, who areWith iStudy ACADEMY, a fee-based job referral service, the Kushim Group provides

the source of its competitiveness in the system engineering service (SES) business. This wascontract-based agency services to support the recruitment of advanced IT engineers by

the result of efforts to strengthen the expansion and augmentation of sales interfaces bycompanies and provide training. The Group works continually to upgrade and expand

leveraging Group synergies. Moreover, Kushim Soft was able to create a positive virtuous

those services. Business performance came under pressure because of factors such as thecycle where the non-operational status of engineers was improved by customers preferentially­postponement of recruitment activities and training cost reductions due to the impact ofcontacting Kushim Soft when resuming projects and requesting services. As a result, Kushim

COVID-19. In the area of human resources training, the Group continued to offer advanced

Soft achieved a steady recovery in business results. Since October 2020, the beginning of

IT courses and enhance the skills of approximately 400 IT engineers at CAICA Technologies

Kushim Soft’s fiscal year, the company has continued to remain profitable each month.

Inc. (“CAICA Technologies”), in addition to personnel at Kushim Soft Inc. (formerly aim-soft,

Kushim Soft will continue working to increase the operating rate of engineers by winning proj-

Inc.; “Kushim Soft”), a subsidiary of Kushim. Through these activities, the Group has

ects along with strengthening contracted systems development.

improved the skills of its IT engineers and contributed to upgrading and expanding its basefor developing high value-added systems.
Kushim Soft has worked to upgrade and expand support for customer systems

On May 1, 2020, Kushim Soft turned Care Dynamics into a wholly owned subsidiary. At
Care Dynamics, the complete transfer of maintenance and operation work (prime contractor)
to Kushim Soft’s Shimane Office Development Center was completed at the end of July 2020.

­development and the engineer dispatching business by enhancing the training and technicalThis transfer marked Kushim Soft’s first time to enter the nursing care business field. Carecapabilities of IT engineers with a focus on open systems, which remain in strong demand.

Dynamics has grown by introducing IT to the nursing care industry, centered on ASP services

Leveraging Group synergies, the company has also actively strengthened training of

to nursing care providers. Notably, Care Online, an ASP service, can be expected to reduce

advanced IT personnel. As a result, Kushim Soft rose above challenging conditions in the third

the workload of extremely busy nursing care sites by up to around 70%, making it a service

quarter (April, May and June 2020) to achieve a V-shaped recovery in the fourth quarter (July,that can improve operating efficiency. For this reason, Care Online has obtained large num-

August, and September 2020). The company restored monthly profitability in each month ofbers of users since the service was rolled out in 2006. The transfer of maintenance and oper-

the fourth quarter. This V-shaped recovery was made possible by the significant results pro-ation work (prime contractor) to Kushim Soft’s Shimane Office Development Center has not

duced by the following efforts. Kushim Soft recognized the negative impacts of COVID-19 atonly enabled Kushim Soft to strengthen its framework for catching up with users’ systeman early stage and decided to reduce costs in the second quarter (January, February andneeds. It has also enabled the in-house completion of certain maintenance tasks that Kushim

March 2020), steadily implemented measures and reduced fixed costs. The company alsoSoft had previously outsourced to other companies. This has contributed to cost reductions.

30

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Kushim Report 2020

Financial Review

Kushim Technologies has continued to achieve monthly profitability on a standalone

data from nursing care sites, and accidents such as stumbles and falls of nursing care facility

basis each month by building up a track record in developing Web systems and throughresidents. The project successfully developed a system that detects certain behaviors thatcost optimization. To conduct business expansion initiatives in the system engineering ser-typically occur before those accidents, using AI technologies such as deep learning, andvice industry like Kushim Soft, Kushim Technologies relocated its head office in July 2020 insends alerts to the smartphone apps of nursing care staff. In Japan’s super-aging society,view of the impact of COVID-19. The cost savings from the head-office relocation and thethis collaborative development project aims to prevent the risks of various accidents andparticipation of engineers in long-term projects, where Kushim Technologies is strong, haveother incidents that could happen at nursing care facilities, enable rapid responses to thosemade it structurally difficult for engineers to be non-operational (without work). Throughrisks, and reduce the workload of nursing care staff. The main achievement of the collabora-

close cooperation with Kushim Soft, Kushim Technologies has achieved a framework where

tive development project was the AI-based detection system for nursing care staff. The

engineers can participate in their next projects on a sliding basis when they complete their

Kushim Group believes that supplying this system as the project’s main achievement will

current projects. As a result, Kushim Technologies has continued to achieve monthly profit-

contribute to significant progress across the nursing care industry as a whole.

ability each month. Kushim Technologies will continue working to increase operating profit

In the Incubation Business, the Group also successfully generated new earnings fromby winning projects with a high order intake margin in cooperation with Kushim Soft and by

the contracted development and maintenance and operation business for systems related to

expanding sales channels to the systems development business.

blockchain technology, and to organization and management consulting. Notably, in JapanAs a result of the above, net sales in the Academy Business were ¥691 million

the Group started developing a voting rights exercise management system for shareholders,(an increase of ¥664 million year on year). EBITDA was ¥13 million (a positive change of

which is said to be needed to realize virtual general shareholder meetings based on a hybrid¥64 million from the previous fiscal year). The segment loss was ¥47 million (a positive

attendance model. Development of this system was completed at the end of October 2020.

change of ¥4 million from the previous fiscal year). Segment profit in the Academy ­BusinessThis system was developed in light of progress expected on the lifting of a ban on holding

includes ¥55 million in amortization of goodwill on the acquisition of shares of Kushim Soft,

completely online shareholder meetings. The system was developed using blockchain tech-

Kushim Technologies and Care Dynamics.

nology, which ensures that it is impossible to falsify data. It offers features that enable companies to receive questions from shareholders and shareholders to exercise their voting

Incubation Businessrights. The system will provide live streaming at a quality that matches physical shareholder
meetings with real shareholders in attendance. Test operation of the system will be carried

The joint research business with Matsuo Lab. at the University of Tokyo and its partner

out in March to the end of June, the peak season for holding general shareholder meetings,­companies, and Social Welfare Corporation Zenkoukai, completed the development of anand the results will be used to help build up the track record of service use. The Kushim

AI-based detection system for nursing care facilities and had achieved the initial goal of theGroup also began developing a shareholder benefits platform with its shareholder company

project as of the end of October 2020. The collaborative development project was under-

FISCO Ltd. The first phase of development of this platform was completed in October 2020.

taken over a period of one year. During this year, Matsuo Lab. at the University of Tokyo and

The platform comprises a special purpose website for managing information on shareholder

three partner companies worked closely together and received full support for field tests andbenefit merchandise for the shareholders of publicly listed companies that offer shareholder

advice from Zenkoukai. The project conducted simulations of various case studies of video

benefits. With the launch of the service, the Group will target companies that are finding it

32

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Kushim Report 2020

Financial Review

difficult to arrange and administer shareholder benefits, companies that are facing cost

As a result of the above, net sales in the Incubation Business were ¥260 million

issues associated with the necessary equipment, and companies that are considering intro-(an increase of ¥231 million year on year). EBITDA was ¥61 million (an increase of ¥42 million

ducing services that will allow shareholder benefits to be redeemed at stores and other loca-

year on year). Segment profit was ¥57 million (an increase of ¥38 million year on year).

tions. Going forward, the Group will continue to consider features such as trading functions
for shareholder benefit merchandise and unique customization options for companies, as

Segment profit in the Incubation Business includes ¥4 million in amortization of goodwill
on the acquisition of shares of Kushim Insight.

priorities for the next phase of development. In addition, Kushim has started developing astaking service application for cryptocurrencies. As of October 2020, this project hasentered a phase where business requirements have been defined. From the next fiscal year,
the project will transition to a development phase.

(2) Summary of Financial Condition as of the
Fiscal Year-Ended

In the investment and loan business, the Kushim Group continued to deepen partnerships with companies that possess advanced technologies. The Group formed a businessalliance with Stake Technologies Inc., a promising startup that has personnel who can pro-

Status of Assets, Liabilities and Net Assets

duce learning content and serve as instructors in advanced IT fields. It formed a capital and(Assets)business alliance with Turingum Inc., which is ambitiously building a unique business model

Total assets as of October 31, 2020 were ¥2,381 million, an increase of ¥522 million fromin these fields. In addition, the Group reached an agreement on a business alliance withthe previous fiscal year-end. Current assets stood at ¥940 million, a decrease of ¥444 million

Zettant Inc., a company that has developed projects such as the SecurityHub electronic

from a year earlier. This decrease mainly reflected a decline of ¥519 million in cash andsignature platform (adopted as a subsidized business of the Ministry of Economy, Trade anddeposits, while there was an increase of ¥113 million in accounts receivable—trade.

Industry) and the BBc-1 blockchain platform, and is also engaged in social contribution

Non-current assets stood at ¥1,441 million, an increase of ¥967 million from the previous

activities. Product development for the aforementioned development of a voting rights exer-

fiscal year-end. This increase mainly reflected increases of ¥643 million in investment securi-

cise platform was undertaken together with Zettant Inc. The development framework for theties and ¥308 million in long-term loans receivable.

staking service application for cryptocurrencies was prepared together with Turingum Inc.
In this business, the Kushim Group will continue striving to win contracted systems(Liabilities)

development projects that apply advanced technologies through the innovations andTotal liabilities as of October 31, 2020 were ¥833 million, an increase of ¥325 million from­expertise of various companies and the Group’s engineers, thereby paving the way for a

the previous fiscal year-end. Current liabilities stood at ¥421 million, an increase ofsolid track record. In terms of the impact of the COVID-19 crisis, the Group could be¥66 million from the previous fiscal year-end. This increase mainly reflected an increase ofaffected by the downturn in overall macroeconomic conditions. Looking ahead, the Group¥47 million in accounts payable—trade. Non-current liabilities stood at ¥412 million, an

will continue to closely monitor the impact on its businesses and implement response

increase of ¥258 million from the previous fiscal year-end. This increase was mainly due to­measures at an early stage. In addition, the Group will endeavor to carefully identify the prof-

an increase of ¥187 million in long-term borrowings.

itability of projects and allocate management resources to highly profitable projects.

34

35

Kushim Report 2020

Financial Review(Net assets)(4) Outlook

Net assets as of October 31, 2020 were ¥1,547 million, an increase of ¥197 million from theprevious fiscal year-end. This increase mainly reflected increases of ¥141 million in retained
earnings and ¥47 million in valuation difference on available-for-sale securities.

Changes in the macroeconomic environment due to the spread of COVID-19 are uncertain,
and the impact these changes will have on the business results of existing businesses isdifficult to predict. Also, in the progressive stage of its development, the Kushim Group(3) Summary of Cash Flows in the
Fiscal Year Ended October 31, 2020

plans to push forward with a transformation in its business formats all at once, with initiatives centered on M&As. For these reasons, given that it is difficult to accurately calculate
highly reliable figures for business results at the time of announcement of this report, theKushim Group has not disclosed business forecasts. The Kushim Group plans to announce

Cash and cash equivalents (“cash”) as of October 31, 2020 stood at ¥552 million, abusiness forecasts when it is possible to make reasonable forecasts.

decrease of ¥519 million from the previous fiscal year-end.

(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥109 million (compared with net(5) Important Matters Regarding theGoing Concern Assumption

cash used in operating activities of ¥50 million in the previous fiscal year.) The main­components were profit before income taxes of ¥156 million, depreciation of ¥31 million,
amortization of goodwill of ¥59 million, and gain on bargain purchase of ¥135 million.

(Cash flows from investing activities)
Net cash used in investing activities was ¥561 million (compared with net cash provided byinvesting activities of ¥117 million in the previous fiscal year). The main uses of cash were¥421 million for purchase of investment securities and ¥143 million for purchase of shares ofsubsidiaries resulting in change in scope of consolidation.

(Cash flows from financing activities)
Net cash used in financing activities was ¥66 million (compared with net cash provided byfinancing activities of ¥84 million in the previous fiscal year). The main components wererepayments of long-term borrowings of ¥332 million and proceeds from long-term borrowings of ¥250 million.

Not applicable.

36

37

Kushim Report 2020

Consolidated Financial Statements

38

Consolidated Balance Sheet(Unit: Thousands of yen)

(Unit: Thousands of yen)

FY10/2019

FY10/2020

FY10/2019

FY10/2020(As of October 31, 2019)(As of October 31, 2020)(As of October 31, 2019)(As of October 31, 2020)¥   73,735¥  121,297—

30,00048,79848,195232

20,365

117,397

58,687

AssetsLiabilities

Current assets
Cash and deposits

Current liabilities¥1,071,421¥  552,191

Accounts payable—trade201,147

314,886

Short-term borrowings

Merchandise and finished goods—

33,436

Current portion of long-term borrowings

Raw materials and supplies

—

4,879

Income taxes payable

112,381

34,680

Unearned revenue

1,384,949

940,074

Provision for bonuses—

14,005

Provision for retirement benefits for directors—

310

Provision for sales returns

—

1,829

Accounts receivable—trade

Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures

38,91526,788

Other

114,890

126,512

Accumulated depreciation(11,192)(8,592)

Total current liabilities

355,052

421,203

Buildings and structures, net

27,72318,196

12,529791

Long-term borrowings

151,133

338,963(5,675)

(791)

Other

2,108

73,181

153,241

412,144508,293

833,347

VehiclesAccumulated depreciation
Vehicles, net

Non-current liabilities

6,853

0

Tools, furniture and fixtures

93,68038,215

Total non-current liabilities

Accumulated depreciation(87,293)(25,273)

Tools, furniture and fixtures, net

6,386

12,942

Total property, plant and equipment

40,96331,138

Software23,254

106,711

Goodwill

273,721250,419

Other

46,595

1,626

Share capital

705,940

705,940

Total intangible assets

343,570

358,757

Capital surplus

667,838

667,838

Retained earnings(13,818)

127,204(12,656)(12,656)

1,347,304

1,488,327—

47,913

Total liabilities

Intangible assets

Investment and other assets

Net assets
Shareholder’s equity

Long-term loans receivable—

308,000

Treasury shares

Investment securities

0643,436

Total shareholders’ equity

Leasehold and guarantee deposits

63,644

49,685

Deferred tax assets

14,92333,977

Other

10,242

16,106

Total investments and other assets

88,811

1,051,206

Share acquisition rights

473,345

1,441,102

Total net assets¥1,858,294¥2,381,177

Total non-current assets
Total assets

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income

Total liabilities and net assets—

47,913

2,696

11,5881,350,000

1,547,829¥1,858,294¥2,381,177

39

Kushim Report 2020

Consolidated Financial Statements

Consolidated Income Statement

Consolidated Statement of Comprehensive Income(Unit: Thousands of yen)

(Unit: Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Remuneration for directors
Salaries, allowances and bonuses
Provision for bonuses
Legal welfare expenses
Promotion expense
Advertising expense
Rent expenses
Fee expenses
Depreciation
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating (loss) profit
Non-operating income
Interest income
Invalid unit income
Subsidy income
Gain on sales of securities
Insurance claim income
Other
Total non-operating income
Non-operating expense
Interest expenses
Loss on investments in investment partnerships
Loss on disposal of machinery
Loss on cancellation of insurance policies
Other
Total non-operating expense
Ordinary (loss) profit
Extraordinary income
Gain on bargain purchaseTotal extraordinary income
Extraordinary losses
Head office relocation expenses
Loss on disposal of license
Loss on sales of non-current assets
Total extraordinary losses(Loss) profit before income taxes
Income taxes
Income taxes—deferred
Total income taxes
Net (loss) income(Loss) profit attributable to owners of parent

40

FY10/2019

FY10/2020

FY10/2019

FY10/2020(January 1, 2019 to
October 31, 2019)(November 1, 2019 to
October 31, 2020)(January 1, 2019 to
October 31, 2019)(November 1, 2019 to
October 31, 2020)¥754,039
470,132
283,907¥1,859,614
1,324,035
535,579¥(18,959)¥154,940

25,203
77,914—
15,133
3,201
6,309
9,639
77,165
3,805—
70,185288,559(4,651)

43,689123,461
5,116
27,9796,471
5,847
33,997
50,102
6,449
59,571138,019
500,706
34,872——¥(18,959)

47,913
47,913¥202,854¥(18,959)—¥202,854
—

917
287
—
—
139
29
1,374

3,143
1,413
2,531
826
—
470
8,384

61
2,185
—
—
116
2,363
(5,641)

2,067
—
422
341
185
3,017
40,240——135,180
135,180————(5,641)
6,800
6,517
13,318(18,959)¥   (18,959)

12,621
3,964
2,415
19,000156,419
21,382(19,903)
1,479
154,940¥  154,940

Net (loss) income
Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive (loss) income
Comprehensive (loss) income attributable to
Owners of parent
Non-controlling interests

41

Kushim Report 2020

Consolidated Financial Statements

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash FlowsFY10/2019 (January 1, 2019 to October 31, 2019)

(Unit: Thousands of yen)

(Unit: Thousands of yen)
Shareholders’ equity

Share capital

Balance at beginning of period
Change in items during period
Dividends of surplus
Loss attributable toowners of parent
Net changes in items other thanshareholders’ equity
Total change in items
during period
Balance at end of period¥705,940

Capital surplus

Retaining earnings

Treasury shares¥681,755¥   5,140¥(12,656)

Total
shareholders’ equity¥1,380,180(13,917)(13,917)(18,959)—¥705,940(13,917)¥667,838(18,959)¥(13,818)(18,959)—¥(12,656)(32,876)¥1,347,304(Unit: Thousands of yen)
Accumulated other comprehensive income
Valuation difference
Total accumulated
on available-for-saleother comprehensive
securities
incomeBalance at beginning of period
Change in items during period
Dividends of surplus
Loss attributable toowners of parent
Net changes in items other thanshareholders’ equity
Total change in items
during period
Balance at end of period

¥—

¥—

Share
acquisition rights

Total net assets¥      —

¥1,380,180(13,917)(18,959)

—

—

2,696

2,696

—
¥—

—
¥—

2,696
¥2,696(30,180)¥1,350,000

FY10/2020 (November 1, 2019 to October 31, 2020)

(Unit: Thousands of yen)
Shareholders’ equity

Share capital

Balance at beginning of period
Change in items during period
Dividends of surplus
Profit attributable toowners of parent
Net changes in items other thanshareholders’ equity
Total change in items
during period
Balance at end of period¥705,940—¥705,940

Capital surplus

Retaining earnings

Treasury shares¥667,838¥ (13,818)¥(12,656)—¥667,838¥        —¥        —Totalshareholders’ equity¥1,347,304(13,917)(13,917)

154,940

154,940

141,023¥127,204—¥(12,656)(Unit: Thousands of yen)

Accumulated other comprehensive income
Valuation difference
Total accumulated
on available-for-saleother comprehensive
securities
incomeBalance at beginning of period
Change in items during period
Dividends of surplus
Profit attributable toowners of parent
Net changes in items other thanshareholders’ equity
Total change in items
during period
Balance at end of period

42

Share
acquisition rights

Total net assets¥ 2,696¥1,350,000(13,917)
154,940

47,913

47,9138,891

56,80547,913¥47,91347,913¥47,913

8,891¥11,588

197,828¥1,547,829

141,023¥1,488,327

Cash flows from operating activities(Loss) profit before income taxes
Depreciation
Amortization of goodwill
Gain on bargain purchase
Head office relocation expenses
Loss on disposal of license
Loss on disposal of machinery
Loss on retirement of non-current assets
Loss on sales of non-current assets
Gain on sales of investment securities
Decrease (increase) in trade receivables(Decrease) Increase in trade payables
Decrease in unearned revenue
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Net cash (used in) provided by operating activities
Cash flows from investing activities
Purchase of intangible assets
Payments of leasehold deposits
Proceeds from refund of leasehold deposits
Proceeds from withdrawal of investment in investment partnershipCollection of loans receivable
Loan advances
Proceeds from sales of investment securities
Purchases of investment securities
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase in short-term borrowings
Repayment of long-term borrowings
Proceeds from long-term borrowings
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

FY10/2019

FY10/2020(January 1, 2019 to
October 31, 2019)(November 1, 2019 to
October 31, 2020)¥   (5,641)
15,721
—
—
—
—
—
97
—
—
24,313(27,219)(33,295)
23,339(2,684)917(116)(48,484)—(50,368)¥  156,419
31,27659,571(135,180)
12,621
3,964
422
—
2,415
(826)
(82,294)
44,830(58,709)37,366
71,8773,143(2,112)(8,831)45,294
109,371(34,988)(9,397)32,932148,039
210,000———(57,930)(3,155)21,942—
59,463(50,000)
6,670(421,426)(227,520)(143,647)—(1,546)
117,518

28,070(1,931)(561,943)—(1,694)
100,000(13,878)
84,427
151,577
919,843¥1,071,421

30,000(332,773)
250,000(13,884)(66,657)(519,230)
1,071,421¥  552,191

43

Kushim Report 2020

Corporate GovernanceKushim has built an organizational framework that responds promptly to changes in the management environment and a

Reasons for Appointments as Outside Directors

fair management system that emphasizes shareholders, and the Company believes that maintaining this is an important

The following three people have been appointed as the Company’s outside directors to maintain management objectivity and enhance

management issue. Based on this understanding, we strive to strengthen the framework so that corporate governancecorporate governance.

functions effectively.

General Meeting of Shareholders
Appointments
and dismissals

Appointments
and dismissals

Board ofDirectors
Selection andremovalAudit

Audit andSupervisory
Committee

Appointments
and dismissals

Collaborate

Corporate
AuditorYuichi Iwano

Masakatsu Mochizuki

Hidehisa Ogawa

Mr. Yuichi Iwano was appointed as an independent director as he is judged to meet therequirements for independence, has no riskof conflict of interest with general share­
holders, and can fulfill a role of ensuring thesuitability and ability to compromise in­decision-making by the Board of Directors.

Mr. Masakatsu Mochizuki was appointed as
an independent director as he is judged tomeet the requirements for independence,
has no risk of conflict of interest with generalshareholders, and can fulfill a role of ensuring
the suitability and ability to compromise indecision-making by the Board of Directors.

Mr. Hidehisa Ogawa was appointed as
an independent director as he isjudged to be able to use his knowledge and experience as a judicial andadministrative scrivener in management of the Company, meet therequirements for independence, haveno risk of conflict of interest with general shareholders, and fulfill a role of
ensuring the suitability and ability tocompromise indecision-making by the
Board of Directors.

Risk Management
Committee
Report and collaborate

Representative
Director

Audit

ReportReason for Choosing the Current Corporate Governance Framework
Management
Meeting
Discuss andreportReport and collaborate

Internal Audit
Department

Kushim is a company with an audit and supervisory committee and a management framework of five directors (of whom one is an
outside director) and three directors who are members of the Audit and Supervisory Committee (of whom two are outside directors).

Instruct

The Company takes into account work history and relationship to the company, judges the appointment of outside officers based on

e-Learning Business Division

Audit

whether sufficient independence can be ensured in the execution of their duties as outside officers who are independent from execution of duties and can be expected to supervise the appropriateness of management decisions overall and objectively. The Audit
and Supervisory Committee comprises three members, two of whom are outside directors to realize effective audits from an inde-

Academy Business Divisionpendent standpoint. The Company judges that outside directors and Audit and Supervisory Committee members who are outside
New Business Development Officedirectors can sufficiently fulfill their management supervision functions by attending meetings of the Board of Directors, theCompany’s highest management decision-making body.

Management Division

Board of Directors

Internal Audit Department

The Board of Directors is chaired by the President and Representative
Director, and comprises eight members (of whom three are outside
directors), including directors and Audit and Supervisory Committee
members. The Board of Directors is the highest management­decision-making body and meets once a month in principle. In theevent of an important matter arising, an extraordinary Board of
Directors meeting can be held at any time.

The Internal Audit Department, an audit organization that reports
directly to the President and Representative Director, audits theCompany’s operations and assets, and conducts internal audits withthe aim of contributing to rationalization and acceleration of management, and the preservation of assets. The Internal Audit Department
is made up of the person in charge of internal control, and collaborates with the Audit and Supervisory Committee as proper.

Management Meeting

Corporate Auditor

The Management Meeting is chaired by the President andRepresentative Director, and comprises standing directors and thefour people heading each of the departments. The Management
Meeting is held as needed to speed up management and maintaincompetitiveness.

The Corporate Auditor exchanges information with the Audit andSupervisory Committee and Internal Audit Department as necessary.
UHY Tokyo & Co. was newly appointed as corporate auditor at the 24th
Ordinary General Meeting of Shareholders held on January 28, 2020.

Audit and Supervisory Committee
The Audit and Supervisory Committee comprises three director
members, of whom two are independent outside directors. The Audit
and Supervisory Committee meets once a month in principle to audit
basic management policies, matters stipulated by laws and regulations, and important matters related to management.

44

45

HirokiNakagawa
President andRepresentative
Director

Motoki Sato
Director

Kushim Report 2020

Corporate Governance46

April 2016

Director, FISCO COIN (now Zaif Inc.)

April 2002

Joined Japan Asia Investment Co., Ltd.

April 1987

Joined Jitsugyo No Nihon Sha Ltd.

February 2003

May 2016

Director, FISCO Research & Institute (current)

May 2006

Joined Foot therapy

March 2016

Joined SEQUEDGE Inc.
(now Sequedge Japan Holdings Inc.)

October 2017

Director, FISCO Digital Asset Group (current)

March 2009

Joined Titicaca Corporation

President and Representative Director,
Jitsugyo No Nihon Sha Ltd. (current)

September 2003

Director, SEQUEDGE Inc.

October 2017

Director of the Company

October 2016

August 2016

Director, regist ART Inc.

President and Representative Director,
Asaka Co., Ltd. (current)

February 2010

June 2018

General Manager, Business Development
Division, Jitsugyo no Nihon Sha, Ltd.

Joined Sequedge Partners Inc.
(now Vantage Partners Inc.)

March 2019

President and Representative Director of theCompany (current)

October 2017

Director of the Company (current)

August 2016

Director, Tokyo Tech Corporation(now Kushim Technologies Inc.) (current)

President and Representative Director,
SUN ART Co., LTD.

July 2011

November 2019

Director, SEQUEDGE INVESTMENT
INTERNATIONAL LIMITED

June 2017

Director, CCCT Inc.
(now Kushim Insight, Inc.) (current)

Director, Japan Trip Co., Ltd.
(now KMI Co., Ltd.) (current)

March 2014

March 2020

Representative Director, Sequedge Investment
Inc. (now Sequedge Japan Holdings Inc.)

June 2015

July 2020

Director, CAICA, Inc. (current)

Representative Director, SJI Inc.
(now CAICA Inc.)

January 2016

Senior Managing Director and Representative
Director, SJI Inc. (now CAICA Inc.)

February 2017

Director, Tokyo Tech Corporation(now Kushim Technologies Inc.)

August 2017

Director, NCXX Inc. (current)

August 2017

Director, NCXX Solutions Inc.

November 2017

Director, CCCT Inc.
(now Kushim Insight, Inc.) (current)

February 2018

Director, eWarrant Japan Securities K.K.
(current)

February 2018

Director, EWARRANT INTERNATIONAL LTD.
(current)

February 2018

Director, EWARRANT FUND LTD. (current)

February 2019

Vice President and Representative Director,
CAICA Inc. (current)

March 2019

Director of the Company (Audit andSupervisory Committee member) (current)

October 2019

Director, CAICA Split Preparation Company(now CAICA Technologies Inc.) (current)

November 2020

Director, CAICA Digital Partners Inc. (current)

February 2003

Joined as Administrative Manager, Nursing
Care Promotion Division, SEQUEDGE Inc.
(now Sequedge Japan Holdings Inc.)

October 2019
November 2019

March 2020

President and Representative Director,
aim-soft Inc. (now Kushim Soft Inc.) (current)

Daisuke Ito

President and Representative Director,
Tokyo Tech Corporation(now Kushim Technologies Inc.) (current)

Director

Yuichi Iwano
Outside Director

President and Representative Director,
CCCT Inc. (now Kushim Insight, Inc.) (current)

May 2020

President and Representative Director,
Care Dynamics Limited (current)

July 2020

Director, CAICA, Inc. (current)

September 2012

Director, Diamond Agency, Inc.
(now FISCO, Ltd.)March 1991

March 2014

Director, FISCO Ltd. (current)

April 2005

May 2014

Director, CareOnline Inc.
(now Care Dynamics Limited) (current)

April 2008

July 2014

President and Representative Director,
General Solutions, Inc. (now FISCO Ltd.)

December 2014

Director, Chanty co., Ltd. (current)

January 2018

Director, CAICA, Inc. (current)

Shin Suzuki

March 2019

Director of the Company (current)

Director

December 2019

Representative Director, Vulcan Crypto
Currency Financial Products K.K. (current)

August 2009
January 2013

July 2013

April 2014
April 2016
January 2018
January 2018
December 2018
December 2018
July 2019
August 2019
October 2019
October 2019

November 2019
March 2020
November 2020

Joined Japan Systems Creation Inc.
(now CAICA Inc.)
Executive Officer and General Manager,
Solutions Development Division 1,
IBeT Co., Ltd. (now CAICA Inc.)
Executive Officer and General Manager,
Solutions Business Department 2,
SJ Alpine Co., Ltd. (now CAICA Inc.)
Director, Liandi (Nanjing) Information Systems
Co., Ltd.
Director and General Manager,
Care Information Systems Department,
CareOnline Inc. (now Care Dynamics Limited)
General Manager, Service Business
Department, Domestic Business Division,
CAICA Inc.
General Manager, Business Department 1,
Operations Division, CAICA Inc.
Division Director, Business Division 1,
CAICA Inc.
CEO, President and Representative Director,
CAICA Inc. (current)
Director, CCCT Inc.
(now Kushim Insight, Inc.) (current)
Director, Tokyo Tech Corporation(now Kushim Technologies Inc.) (current)
CEO, President and Representative Director,
CCCT Inc. (now Kushim Insight, Inc.)
Director of the Company (current)
Director, Fisco Cryptocurrency Exchange Inc.
(now Zaif Inc.) (current)
Director, aim-soft Inc.
(now Kushim Soft Inc.) (current)
President and Representative Director,
CAICA Split Preparation Company(now CAICA Technologies Inc.) (current)
Director, Kushim Technologies Inc. (current)
Vice President and Representative Director,
CCCT Inc. (now Kushim Insight, Inc.) (current)
President and Representative Director,
CAICA Digital Partners Inc. (current)

March 2019

Director of the Company (current)

June 2019

Director, regist ART Inc. (current)

September 2019

Director, NCXX Solutions Inc. (current)

October 2019

Director, KMI Co., Ltd. (current)

March 2020

Director, SUN ART Co., LTD. (current)

April 1996

Hidehisa
Ogawa
Outside Director(Audit andSupervisory
Committee
member)Kenji
Yamaguchi
Director (Audit andSupervisory
Committee
member)Joined SHIMAMOTO JUDICIAL AGENT
OFFICE

November 2015

Acquired qualification as a judicial scrivener

April 2016

Registered as a judicial scrivener

April 2006

Joined Social Welfare Corporation Zenkoukai

January 2018

Acquired qualification as an administrative
scrivener

April 2007

April 2019

Opened Ogawa shiho-shoshi lawyers office

Administrative Manager,
Nursing and healthcare facility for elderly“AQUA HIGASHI-KOJIYA”

January 2020

Director of the Company (Audit andSupervisory Committee member) (current)

November 2007

General Manager, Corporate Management
Division, Nursing and healthcare facility for
elderly “AQUA HIGASHI-KOJIYA”

December 2007

Director, Nursing and healthcare facility for
elderly “AQUA HIGASHI-KOJIYA”

March 2008

Facility head, Support facility for the physicallychallenged “AMICUS HIGASHI-KOJIYA”

April 2014

Manager, Legal Affairs Division, Corporate
Management Division,
Support facility for the physically challenged“AMICUS HIGASHI-KOJIYA”

July 2018

Legal Affairs Division, Administrative Division,
Support facility for the physically challenged“AMICUS HIGASHI-KOJIYA”

March 2019

Director of the Company (Audit andSupervisory Committee member) (current)

Masakatsu
Mochizuki
Outside Director(Audit andSupervisory
Committee
member)March 2019

Auditor, FISCO Ltd. (current)

August 2019

Auditor,Fisco Cryptocurrency Exchange Inc.
(now Zaif Inc.) (current)

December 2019

Auditor, Vulcan Crypto Currency Financial
Products K.K. (current)

March 2020

Auditor, CCCT Inc.
(now Kushim Insight, Inc.) (current)

47

Kushim Report 2020

Company Overview

48(As of October 31, 2020)

Corporate Information

Major Shareholders

Corporate Stock Summary

Company Name

Kushim Inc.

Securities Code

2345

Address

3F VORT Minami Aoyama I,
6-7-2 Minami Aoyama, Minato-ku, Tokyo

Listed Stock
Exchanges

Second Section, Tokyo Stock Exchange

Date of
Establishment

Representative

Names

June 12, 1997

Number of Shares
100 shares
Per Unit

Hiroki Nakagawa

Number of Shares
4,004,600 shares
IssuedCapital¥705 million

Number of
Employees

Non-consolidated: 15
Consolidated: 85

November 1 until October 31 of thefollowing year

Fiscal Year

Stock Chart(Yen)

Number of shares

Ratio of shares owned tothe total number ofissued shares(excluding treasury stock) (%)

JAPAN SECURITIES FINANCE CO., LTD.

510,800

12.84

Custody Bank of Japan, Ltd. (Trust Account)

230,800

5.80

Takeshi Morisawa

80,0002.01

GOLDMAN SACHS INTERNATIONAL(Standing proxy: Goldman Sachs Japan Co., Ltd.)62,2001.56

Eiji Mikami

35,6000.89

J.P. Morgan Securities plc(Standing proxy: JPMorgan Securities Japan Co., Ltd.)33,2000.83

ML INTL EQUITY DERIVATIVES(Standing proxy: Merrill Lynch Japan Securities Co., Ltd.)

33,0000.82

Masanobu Tani

30,0000.75

Daichi Morita

27,0000.67

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

20,8000.52

2-for-1 stock split

3,000

Share Ownership

Websites

2,000

Financial institutions

Financial instruments
business operators

18.53 %

1.02 %

1,000

Other
individuals

75.13%

0(1,000 shares)

Other companies

Shareholding Ratio

1.30 %

30,000Foreign companies, etc.
(excluding individuals)

3.92 %

20,000Foreign companies, etc.
(individuals)

10,0000.10 %
0

1

2

3

4

5

6

7

8

FY12/20179 10 11 12 1

2

3

4

5

6

7

8

FY12/2018

9 10 11 12 1

2

3

4

5

6

7

FY10/20198

9 10 11 12 1

2

3

4

5

6

FY10/2020

7

8

9 10

Kushim Inc.
https://www.kushim.co.jp/
Kushim Soft Inc.
https://www.kushim-soft.co.jp/
Kushim Technologies Inc.
http://kushim-tech.co.jp/index.html
Kushim Insight, Inc.
https://kushim-insight.co.jp/index.html
Care Dynamics Limited
http://www.care-dynamics.jp/
e frontier, Inc.
http://www.e-frontier.com/