INTEGRATED REPORT 2015
NCXX Group Inc.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Publication of an Integrated Report
The NCXX Group seeks to help stakeholders gain an accurate understanding of its progress on the

Editorial Policy

Medium-Term Management Plan. To this end, we consider it important to provide not only financial

This integrated report has been issued to help stake­holders develop a deeper understanding of the NCXXGroup’s activities to achieve sustainable growth.

­information, such as our business results, strategies, and overview of operations, but also a systematic
explanation of our non-financial information, such as our management philosophy and social,­environmental, and human resource information.
In line with this thinking, from fiscal 2015, we have started publication of an integrated report thatwill enhance and integrate our non-financial information even further, systematically explaining theGroup’s various activities. We are confident that the fiscal 2015 integrated report will constitute a majoradvance in communicating an overall picture of our initiatives and progress to our stakeholders.
Currently, we provide customers with the highest quality device products and Internet travel­services, aiming to become their company of choice. At the same time, we seek to create better­relationships with all of our stakeholders, including shareholders and other investors, and are there-

Note on Forward-looking Statements
This report contains information that includes forwardlooking statements. These statements are prepared basedon information available to management as of the preparation date of the report. Accordingly, actual conditions
may differ significantly from such statements or details
implied therein based on risks and uncertainties associated with changes in economic conditions and markets
and other factors.

fore aiming to grow into a company that contributes not only in terms of corporate value, but in termsof advanced social development.
The NCXX Group operates under a holding company format where our respective operating­companies link their original business models at a higher level to enhance profitability. At the sametime, we aim to drive the growth and corporate value improvement of the entire Group while solving
various social issues. We will continue our tireless endeavors to create mutual synergies between
Group companies and contribute to people and society.

Group Company Websites
NCXX Group Inc.

http://ncxxgroup.co.jp/en
NCXX Inc.

http://www.ncxx.co.jp/ (Japanese only)NCXX Solutions Inc.

http://www.ncxx-sl.co.jp/ (Japanese only)Care Dynamics Limited

Yosuke Saito

Director
General Manager
Administration Division

http://www.care-dynamics.jp/ (Japanese only)
e-tabinet.com

http://www.e-tabinet.com/ (Japanese only)

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Contents
About
NCXX Group

03 Overview of the NCXX GroupTop
Message09 Greeting

Feature05 Introducing Our Businesses

10 Message from the President	New Ways of “Communicating” and“Connecting” to Create New“Possibilities” for the Future

14 FeatureThis PDF offers various functions
to make it easier to use and tofind information.

18 Corporate Governance

Financial
Section23 Financial Section

Corporate
Data

In Pursuit of Value Burstingwith Originality

User Guide

ESG
Information

21 CSR Activities

24

Analysis of Operating Results and Financial Position

29

Consolidated Financial Statements

34

Notes

63	Company Overview /History64	Shareholder Information /Shareholder Memo

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About NCXX GroupTop Message

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03

INTEGRATED REPORT 2015
About NCXX GroupFeatureTop Message

ESG Information

Financial Section

Corporate Data

Overview of the NCXX GroupThe NCXX Group comprises NCXX and fiveconsolidated subsidiaries.
The Group’s business segments are thedevice business and the Internet travelbusiness.
The device business involves the­development-driven manufacture of communication devices. In addition to manu­
facturing communication devices, theCompany owns modem technologies
essential to basic telecommunication­functions and technological development
capabilities spanning both software andhardware aspects that are needed todevelop telecommunication device products.
The ­Company develops, manufactures, andsells wireless telecommunication devices
and provides maintenance and other­services. Other services include systems
development for industries such as manufacturing, finance, logistics, social infrastructure, and the public sector, covering
every stage from consultation through todesign, construction, operation andmaintenance.
In the Internet travel business, the­Company’s consolidated subsidiary­e-tabinet.com and its subsidiary Web travelCo., Ltd. provide travel services throughthe Internet.

NCXX Inc.

NCXX Solutions Inc.

NCXX Group Inc.
Care Dynamics Limited

e-tabinet.com(As of April, 2015)

Device Business Net Sales(¥ Millions)Internet Travel Business Net Sales(¥ Millions)

46.5

Up
%
year on year

5,000

4,000

2,000

3,000

1,500

4,613

2,000

3,150

1,000

1,000

500

1,087
0

2.0

Down
%
year on year

2,500

Fiscal 2012

Fiscal 2013

Fiscal 2014

0

1,798

1,762

Fiscal 2013

Fiscal 2014

777
Fiscal 2012

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Overview of the NCXX Group

NCXX Inc.
NCXX Inc.’s operations involve the development and saleof telecommunication devices that use various wirelessformats, and the provision of related system solutions
and maintenance services. With the goal of achieving
mass production of these telecommunications tech­
nologies, the Company has adopted the electronics
manufacturing services (EMS) and original design manufacturer (ODM) methods, and is promoting joint operations with its corporate clients, including those overseas.
It has cultivated the required commercialization technology and expertise for these operations as a fabless­company. Meanwhile, the Company responds to market
demand by constantly improving quality and supplying
the market with reliable, safe products. The Company’s
target markets are the consumer and M2M sectors within
the mobile telecommunications market, where its main
customers are telecommunications service providers andmobile virtual network operators (MVNOs), along withcorporate clients. The greatest strength of the Company
is its integrated operation from planning and development
through to sales and maintenance. This enables it toflexibly meet customers’ needs for high-variety, small-lot
production, while its ability to keep a high level of quality
sets it apart from other competing manufacturers.

NCXX Solutions Inc.
NCXX Solutions Inc.’s core business is the systems
development business, serving industries such as

manufacturing, finance, logistics, social infrastructure,and the public sector, covering every stage from consultation through to design, construction, operation, andmaintenance. The company provides integrated, full-line
services for platform construction of networks, databases, and so forth. Specifically, the company develops
systems, such as purchasing and procurement systems
that use the Internet for manufacturers and logistics service ­providers, financial strategy support systems such
as Internet banking for financial institutions, a line ofadministrative software packages for information service­providers, and network monitoring and information­processing systems for telecommunication service­providers. Moreover, the company is also aggressively
developing a software product business in which activities include jointly developing M2M products with Group
companies and the provision of application service­provider (ASP) services*.
* ASP services provide applications, software and so forth via the Internet toenable companies to advance their operations efficiently.

Care Dynamics Limited
Care Dynamics Limited (formerly Care Online Limited,name changed on January 19, 2015) develops and sells
Care Online, an ASP service for nursing care service
providers that offers a system for centrally managing
operations and information related to the nursing carebusiness, including care plan creation, nursing care service provision, and invoicing to national health insuranceorganizations. Specifically, the company expands andenhances conventional software services with NCXX’s
services in hardware and telecommunications, to provide
the highest level of service and total solutions for everyone involved in nursing care. Furthermore, in nursing
care robot marketing, the company has taken over the
consulting business from Versatile Inc., a fellow subsidiary of parent company FISCO Ltd. The company has
incorporated and continued Versatile’s expertise acrossthe board, aiming to help create an environment where
all nursing care providers can successfully introduce
nursing care robots and continue to use them.

e-tabinet.com
e-tabinet.com and Web travel Co., Ltd., primarily provide
travel services over the Internet consisting of optimal
travel itineraries sought by customers through “Travel
Estimate Services,” which enable customers to request
travel estimates online from travel agencies throughout
Japan. The company also provides “Travel Concierge
Services,” where expert travel concierges with extensive
travel experience propose customized travel itineraries
free of charge over the Internet. Other services include
providing specialized expertise and preparing optimal
travel itineraries for customers who wish to take world
trips, and customized travel itinerary preparation services
for Chinese customers.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

Introducing
Our Businesses
Device Business< NCXX Inc. >M2M Solutions

FeatureESG Information< Main Target Fields for M2M >Transport anddispatchmanagement
Buses, trucks, and taxis

Financial Section

Corporate Data

NCXX works to incorporate wireless telecommunication functions
into various equipment to provide
M2M solutions that realize­operational efficiency gains.

Remote control
and inspection
Machine to Machine (M2M) refers to asystem that automates various controls
by enabling network-connected devices
to exchange data with each other. One
key advantage of M2M is that it enables
data communication between devices
without any human intervention. For thisreason, M2M has been introduced notjust to PCs and servers, but to a diverse
array of fields, including management ofdriving conditions through integration
with vehicle driving management systems,
inventory management for vending
machines and related monitoring of malfunctions and other issues, remote surveillance and monitoring for faults andso forth of elevators and ATMs, remotereadings of water, electricity and gas
meters, and security measures.

User

Water supply andgas meters

Remote monitoring
Security and monitoring
camerasM2M
moduleNetworkInventory sales
Vending machines
and others

Operational
supportSettlements and signage

M2M module product examples

UX312NC
Real-time
information retrieval
Car navigation systems
and PCs

UX102NC

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Introducing Our Businesses< Corporate Information Provider Service >Original Brand App

Device Business< NCXX Solutions Inc. >System Solutions

We provide high value-added solutions
including integrated, full-line services
from operational and IT consultation
through to implementation. Specifically,
we offer various services, such as a“Telematics Service” for realizing lower
fuel consumption through eco-driving
guidance and accident prevention. This
service is enabled by swiftly grasping thedriving status of a vehicle from a remotelocation, including its speed, travel time,
travel distance, sudden take-off andsudden acceleration. We also provide anapp as a cloud (ASP/SaaS) service.
­Furthermore, with future business development we will develop various services,such as a “Corporate Information­Provider Service,” that provides apps as
an OEM (white label) solution to companies (mid-size and SME-sized securities
companies, human resource service
companies, smartphone handset manufacturers, and so forth).

Provide customers with up-to-date
information through original app

NCXX Solutions constantly
updates information

Able to post stock promotions based on
personalized customer marketing

Browse company information

Server(Cloud)[Compatible OSs: Android 4.0 and later,
iOS7.0 and later]
OEM (white label) usage

Customize client apps as an OEM (white label) service,provided for use by their customers

Fees can be arranged flexibly based on initial cost + revenue share.

Implementation Example
Together with FISCO Ltd., NCXX Solutions developed and launched the smartphone app “FISCO” for providing investment information on listed companies.
The app includes a “Company Information Function” that enables users tocheck multiple stocks while looking at listed companies by stock code order,
and a “Market Flash Report Function” that delivers the latest investment news
from analysts. Other functions include the “Event Schedule Function” thatenables users to view a list of important recent event information and the“­Favorites (Portfolio) Management Function” that lets users register andmanage their favorite stocks easily.

Initial customization cost andinformation fees, etc.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Introducing Our Businesses

Nursing Care Robot
Business
Device Business< Care Dynamics Limited >Total Nursing Care Business Support Services
Care Dynamics develops and sells “CareOnline,” an ASP service for nursing careservice providers offering a system forcentrally managing operations and information related to the nursing care business, such as care plan creation, nursing
care service provision, and invoicing
national health insurance organizations.
Looking ahead, the company will combine M2M technologies that utilize synergies with the NCXX Group to transition
into a “total nursing care business support company.” To this end, the company
is expanding its conventional software
service with NCXX’s hardware and services in the telecommunication field toprovide the highest level of service andtotal solutions to people involved in nursing care. It is also participating in theplanning and development of a nursing
care robot business.

Care Dynamics aims to realize the highest level of nursing care service quality
through the harmonization of people
and robots. The company supports
sales and introduction and operation ofrobots at nursing care facilities. Care
Dynamics will provide introduction
consulting based on various trial dataobtained through use of nursing carerobots in actual front-line nursing caresituations, and is now creating amanual for optimal introduction andProf. Sankai, University of Tsukuba/
CYBERDYNE Inc.
operation of nursing care robots.

ASP Services for Nursing Care
Service Providers
Care Dynamics provides “Care Online,” an operation support system for nursing care service providers. The system
is provided as cloud services corresponding to a suite ofoperations including care plan creation, nursing care service provision, and invoicing to national health insuranceorganizations. With simple operation that anyone can use
and features that can be customized to suit the characteristics of each facility, thesystem caters to a fullrange of administrative
processes in facilities. As
of December 2014, 120
nursing care service­providers have introduced
the system at over 400
facilities.

Nursing Care ICT Business
The telecommunication and communication technologies
cultivated in the nursing care robot business will be used
to supplement human workers on the front lines of nursing
care, which tend to be in short supply. This offers a way
for nursing care workers to provide higher quality services.
Care Dynamics will draw
on the basis of its accumulated experience in thenursing care solutions
business to provide­solutions that nursing
care service ­providers
truly need.

< Features of Care Online >Handy
terminal

Touch panel
Input

Input
Call

Improvement
Analysis

ISO 27001
certificationacquiredCall

Various
documents

Robust data
centerCreateVariousanalyses

Apply

Nursing careinsurance, etc.

Externalorganization

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Introducing Our Businesses

FeaturesInternet Travel Business< e-tabinet.com >Internet Travel

The main business in the Internet travelbusiness is “Customized Travel Services”
provided by e-tabinet.com’s wholly
owned subsidiary, Web travel Co., Ltd.
Specialist “travel concierges” create­multiple itineraries based on the requirements of the applicants, and propose thetravel plans via email. From these,­applicants select the travel concierge andplan that appeals to them. The service istherefore different from the package
tours offered by major travel companies,­combining high quality product proposals
brimming with hospitality and the unrivalled convenience of the Internet toprovide a service with a difference.

 roposal of high quality products brimming with hospitality that differ from major travelPcompany package tours
Unrivalled convenience of the Internet
Relatively unaffected by low price trends caused by price competition with major tour companies

Service Flow
After hearing from customers about
their goals, image, approximate budget,and other aspects of their trip, expert“travel concierges,” provide a proposal
and an estimate free of charge on a
travel plan designed according to thecustomer’s wishes. Since most of theservice is conducted through e-mail andtelephone, customers who are busy
during work hours can have a plancreated at a time that suits them. The
service also includes taking care oftiresome details, reservations, andother tasks.

STEP. 1

STEP. 2

STEP. 3

Send a travel estimate request
using a special form

Travel concierges reply withan estimate by e-mailSales talk concluded
Customers enjoy a unique,custom-made tour

Travel Concierges
Travel concierges are travel consultants who specialize in creating travel plans to meet individual
clients’ wishes. They each have their own specialty fields, enabling them to respond flexibly toincreasingly diverse customer needs. However, theInternet is a medium that does not provide face toface interaction. Therefore, we post profiles of thetravel concierges online, emphasizing their experience and personality, so that customers can feel
peace of mind when they consult us.

As of April 2015, the service hasover 337 unique and original travel
concierges registered.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureGreeting
I am pleased to open this greeting to all our shareholders and other­stakeholders as we deliver NCXX Group’s integrated report.
The machine-to-machine (M2M) market in which we are concentrating
our business is expected to continue expanding, with some forecasting
growth to more than ¥1.6 trillion by 2020. In this business environment, the
NCXX Group launched a software development business in February 2014,
making use of a corporate split to transfer the domestic operations of­systems developer SJI Inc. to our subsidiary NCXX Solutions Inc. Goingforward, the Company will extend its offerings beyond its current supply of
hardware devices to include the provision of server applications and otherapplication services to provide the growing IoT and M2M market with totalsolutions. At the same time, we will combine the technology assets of ourGroup companies to proactively develop businesses going forward in othergrowth fields such as robotics, automotive telematics, and agricultural ICT.

Tsukasa Akiyama
Representative Director and President
NCXX Group Inc.

ESG Information

Financial Section

Corporate Data

10

INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Message from the President

New Ways of“Communicating”

On April 1, 2015, we renamed our company from NCXX Inc. to NCXXGroup Inc. following an incorporation-type company split. On thesame day, we made the transition to a holding company after splitting
off our device business as a wholly-owned subsidiary and reincorporating it as NCXX Inc. This reincorporated subsidiary is a telecommunication device manufacturer involved in developing, ­manufacturingand “Connecting”

and selling telecommunications devices. It is an ­R&D-driven fablessmanufacturer, without a factory, that integrates operations from­planning and development through to sales and maintenance.
­Leveraging the characteristics of fabless manufacturing, the subsidiary
has the strength of being able to develop products rapidly with a cost

to Create New“Possibilities”
for the Future

structure capable of adapting flexibly to market prices.
Other subsidiaries within our Group include systems developer
NCXX Solutions Inc., and online travel agency e-tabinet.com. Anothersubsidiary, Care Dynamics Limited (renamed from Care Online Limited
on January 19, 2015), develops and operates Care Online, which is asystem for centrally managing operations and information in the­nursing care business.

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INTEGRATED REPORT 2015
Top Message

About NCXX GroupFeatureESG Information

Financial Section

Corporate Data

Message from the President

Results for the Fiscal Year Ended November 30, 2014
In the fiscal year ended November 30, 2014 (from December 1, 2013 to November 30,2014), the Company saw net sales increase 28.8% year on year to ¥6,375 million. On
the earnings front, this resulted in a 68.4% decrease in operating income to ¥82­million, while ordinary income rose 42.0% to ¥692 million and net income rose 46.5%
to ¥630 million.
Net sales were lower than initially forecast. This was mainly because we suspended
a sales plan for an existing product model with low gross margin and had to postpone
the timing for launching the sale of certain products in our device business.
On the other hand, net income was higher than initially forecast. This was attributable to a foreign exchange gain accrued on a foreign exchange margin trade we hadentered to hedge against the yen depreciating.

Consolidated Business Performance(Millions of yen)
8,000(Millions of yen)692

Net sales (left axis)
Ordinary income (loss) (right axis)

800

487

6,000

400

93
4,000

−101

0

−105

−204
2,000

5,026

−341
4,187
2,855

0

09/3

6,375

10/7

11/7

4,948
−400

3,809
1,864

12/7

12/11

13/11

14/11

−800

* Transitional accounting period of 16 months (April 1, 2009 to July 31, 2010) for the fiscal year ended July 31, 2010.
Transitional accounting period of four months (August 1, 2012 to November 30, 2012) for the fiscal year ended
November 30, 2012.

Outlook for the Year Ending November 30, 2015
In the device business, the Company will enlarge its domains and expand its horizons
based on its successful activities in the fiscal year ended November 30, 2014. New
business initiatives will also be undertaken by integrating different business sectors
and telecommunication devices through the effective use of development assets that
the Group has cultivated to date. Specifically, the device business will continue tofocus on the M2M market and supply a wide range of solutions. These will include
solutions to enhance convenience by embedding communication functions into
­industrial fields that had not required them before, and solutions to reduce personnel
costs by refining remote control technologies for equipment and facilities.
Moreover, in automotive products, a specialty of the device business, we aim toprovide completely new services. These services will include vehicle status monitoring
and the acquisition of a variety of vehicle data, which will be made possible by integrating outstanding automotive telematic technologies with our technology assets. To
realize these new services, we will develop servers to accumulate information gatheredfrom driving and other data sources, along with applications to apply and make effective use of this data.
Furthermore, we will accelerate our entry into the M2M market by pushing ahead
with the vertical integration of our value chain targeting this market. This will be doneby going beyond merely supplying device product hardware by incorporating softwareand application development by NCXX Solutions. In parallel, in the consumer market,
the Company will strive to efficiently develop new products by incorporating the­expertise obtained from M2M product development into consumer product lineups.
By harnessing Group synergies, we will take steps to rapidly analyze diversifying
demand trends and launch products that conform to those trends.
In the agricultural ICT business, we will keep aiming as a group to win more orders
by increasing software usability in an effort to popularize the adoption of ICT, which
can streamline and enhance the profitability of existing agriculture. At the same time,12

INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Message from the President

we will make a proactive effort on sixth-order industrialization, such as the developmentof processed products using tomatoes, including the locally produced “yellow tomatoes”
of Hanamaki City that have been adopted as a commemorative product of Hanamaki
City’s voluntary hometown tax system, “Iha Tobu Hanamaki Support Fund.”In addition, the Company initiated the development of nursing care robots in thefiscal year ended November 30, 2014. We will utilize NCXX’s assets in telecommunication technologies to promote the optimal and rapid development and commercialization of nursing care robots for the front lines of nursing care. Our aim is to developthese robots so that they can one day be controlled remotely to perform tasks such as
status monitoring, watch over elderly people, transmit voice and image data, andreceive software updates.
In the Internet travel business, we will work to upgrade and expand services byrecruiting new travel concierges and enhancing their skills through training courses. In
addition, we will strive to provide high-quality, customized travel services replete withthe spirit of hospitality by recommending Kodawari No Tabi travel packages. Moreover,the Internet travel business will initiate inbound travel services targeting overseas­visitors to Japan, whose numbers are increasing against the backdrop of the yen’s
depreciation, with a view to proactively capturing earnings opportunities.
Furthermore, the Company has been promoting a crowd sourcing business focusedon the travel business. Going forward, we will expand the crowd sourcing business tofields other than travel, with the aim of expanding it as a comprehensive creator ofcrowd sourcing platforms that are able to perform a variety of services not only for
individuals but also for companies.
In consideration of the aforementioned factors, the Company’s outlook for the fiscal
year ending November 30, 2015 is based on expectations that the recognition of sales
and profits in the device business will be concentrated heavily in the second half ofthe fiscal year ending November 30, 2015 because the device business is planning tolaunch new products in the second half. We expect these products to contribute significantly to the Company’s sales in the fiscal years ending November 30, 2015 and2016. For our full-year outlook for the fiscal year ending November 30, 2015, we aretargeting net sales of ¥11,377 million, operating income of ¥990 million, ordinary
income of ¥973 million, and net income of ¥769 million, based on the projected salesof new products.

Net Sales

Operating Income(Millions of yen)

(Millions of yen)
1,000

12,000

800

9,000

600
6,000

11,377
6,375

3,000

0

Year ended
Nov. 2014

990
400
200

Year ending
Nov. 2015 (Target)

082
Year ended
Nov. 2014

Ordinary Income(Millions of yen)

Year ending
Nov. 2015 (Target)

Net Income(Millions of yen)

1,000

1,000

800

800

600

600

973
400

630

200
0

769

400

692

200

Year ended
Nov. 2014

Year ending
Nov. 2015 (Target)

0

Year ended
Nov. 2014

Year ending
Nov. 2015 (Target)

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Message from the President

New Medium-Term Management Plan
Having reviewed the previous three-year Medium-Term Management Plan, theCompany formulated a new three-year plan (from December 1, 2013 to November
30, 2016) with the fiscal year ended November 30, 2014 as the staring year.

[Overview of the Medium-Term Management Plan and
the Background to Its Formulation]
The new Medium-Term Management Plan was launched in the fiscal year ended
November 30, 2014 with the objectives of sustaining our strong consolidated performance from the previous fiscal year and continuing to increase sales. Our view is thatthe spread of the long-term evolution (LTE) mobile telecommunications protocol andthe use of big data in the data telecommunication market will continue to spur anddiversify software and hardware content and product demand as they did in the year
ended November 30, 2013. Moreover, we foresee that competition will move beyond
telecommunication device manufacturers to include a wide range of companies partnering and competing in a broad array of fields to begin supplying a variety of products
and services for building businesses on new platforms. The scope will include telecommunication service providers as well as various types of companies supplying thesemiconductors, software, and applications. In addition, we are also expectingchanges in the political landscape to revitalize domestic demand and coax the­Japanese economy out from a prolonged recession, weighed down by a strong yen,as the currency begins to depreciate.
Against this backdrop, we are looking to leverage our performance from the previous
fiscal year to expand the domain of our device business, widening its scope. As such,
we will make effective use of the development assets accumulated in our company toenter new businesses by integrating telecommunication devices in different types ofindustries. At the same time we will make proactive use of these ­initiatives as public
relations activities to enhance name recognition of the NCXX Group and improve ourbusiness performance. Moreover, we will recover our credibility by working wholeheartedly to improve our financial standing.
In the fiscal year ended November 30, 2014, the first year of our current MediumTerm Management Plan, we formulated the following priorities, which we will strive toadvance going forward.
1  Promote business structure reforms: Strengthen sales capability and enhancebusiness profitability by demonstrating group synergies with NCXX Solutions,
Care Dynamics, and other Group companies, reorganization, and sharing
business accounts
2  Expand the device business: Introduce new products to the consumer market
in addition to the M2M market
3  Strengthen the financial structure: Implement various capital policies for­nurturing growth going forward
4  Diversify the business portfolio: Establish new businesses by integrating telecommunication devices in different types of industries, while fully developing
agricultural ICT as a business
5  Brand image strategy: Aggressively pursue public relations activities

Past Consolidated Results and Targets Going Forward

(Millions of yen)

Net sales

OperatingincomeOrdinary
incomeNet income

Year ended November 30, 2013(results)

4,948

259

487

430

Year ended November 30, 2014
(results)

6,375

82

692

630

Year ending November 30, 2015
(targets)

11,377

990

973

769

Year ending November 30, 2016
(targets)

15,422

1,800

1,778

1,424

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Feature: In Pursuit of Value Bursting with Originality
The NCXX Group began its journey in1984 with initial operations in the development and manufacture of telecommunication line equipment. Since then, theGroup has achieved impressive technology development in the field of data communication, and has earned a reputationfor excellence in telecommunications
devices such as mobile Internet devices
and M2M modules. In recent developments, the Group has integrated thesetech­nologies into fields such as nursing
care robots and agriculture, and has
started bold, proactive businesses toextend its horizons.
In 2012, the Group made e-tabinet.com
a Group company and started the Internet
travel business. Currently, the Group isleveraging its accumulated expertise inthis field to promote a comprehensive
cloud solutions business that extends
beyond the field of travel.
NCXX Group is pursuing the creationof value brimming with originality, startingwith each of these high-potential fields.

Robot BusinessWe are integrating advanced
robotics technologies with our
original telecommunications
modules. We are involved injoint development of nursing
care robots capable of remotecontrol and status monitoring.

2

Agricultural ICT

As a model case for enteringand expanding in the field ofmachine-to-machine (M2M)
communications, we are taking
on the agricultural ICT business through chemical soil
management.

3

OBD IIWe develop and sell on-board
diagnostic (OBD) data communication units that arecompatible with the OBD II*
interface, one of the leaders in
the field in terms of the numberof compatible vehicle models
and number of data obtained.

Prof. Sankai, University of Tsukuba/
CYBERDYNE Inc.

< Internet Travel Business >4Internet Travel

We operate a travel-related e-marketplace.
We also conduct a crowd sourcing
business that provides customers withcustom-made travel itineraries.

Creating
New Value
We will contribute to society byintegrating our accumulated original technologies and knowledge,
as well as our outstanding humanresources.

< Device Business >1

Corporate Data

15

INTEGRATED REPORT 2015
About NCXX GroupFeatureTop Message

Business for Creation of New Value 1

Robot Business

NCXX is jointly developing nursing carerobots with Vstone Co., Ltd.
Vstone has earned a strong reputation
as a robotic products manufacturer for its
work in the development and manufactureof bipedal robots and robots with omnidirectional sensors. The company has accumulated original expertise in fields including
sensors and motors, such as the low-costdevelopment of a bipedal robot about thesize of a child in elementary school.
Our current joint development involves
incorporating NCXX’s telecommunication
modules into nursing care robots developed by Vstone to control and monitor
them remotely and use them to keep
watch of the elderly. Furthermore, ourGroup company NCXX Solutions is continuing system development aimed at
utilizing the data collected from robots,and pursuing various possibilities thatcannot be realized with a standalone robot.
Moreover, Care Dynamics Limited,
another Group company, has customer
interface with over 400 nursing care­facilities operated by 120 companies
throughout Japan. Looking ahead, Care
Dynamics will provide marketing, sales,
and introduction support and consulting
services for the nursing care robots­developed by NCXX. As part of this, theESG Information

Financial Section

Corporate Data

Business for Creation of New Value 2

Agricultural ICT (NCXX FARM)

Prof. Sankai, University of Tsukuba/
CYBERDYNE Inc.

company will also sell products suchas the HAL® robot suit made by­CYBERDINE Inc.
NCXX Group will use the raw dataobtained from these front-line nursing
care situations to promote the nursing
care robot business. In the process, wewill contribute solutions to the challengesof an aging society with a falling birthrate
through the integration of services­provided by humans and robots.

HAL® for Care Support(Lumbar Type)
This product uses HAL’s
original system thatprovides assistance withsimple operation asneeded in accordancewith the wearer’s intention. It relieves the load on
the lumbar area of people
assisting in nursing care.
Prof. Sankai, University of Tsukuba/
CYBERDYNE Inc.

Walking Support Device(ACSIVE)
This is an unpowered
walking support device that
requires no electricity or
motors. Using the action ofa pendulum and spring, thedevice assists people inswinging their legs.
Prof. Sankai, University of Tsukuba/
CYBERDYNE Inc.

The NCXX Group’s main pillar is thedevice business, targeting the informationand communications market with its rapid
demand shifts and fierce competition.
This market requires the Group to constantly seek new initiatives for driving
business domain expansion. The Grouphas been vigorously advancing andexpanding in the M2M field, based on its
telecommunication technology assets.
One model case is the agriculture business. The Group is working on NCXX
Farm, an agricultural ICT business aimed
at vegetable cultivation driven by digitally
based chemical soil management andSafe, Secure,­Ecological Produce
and Technologies
NCXX FARM utilizes digitally based
chemical soil management. The
company is pursuing safe, secure,and ecological vegetable cultivation,such as multi-stage pot cultivationthat draws out the full natural life
force inherent in the crops, reduced
agrichemical cultivation, and efficiency increases in cultivation insmall areas.

provision of technology to growers.
The testing plot of NCXX FARM is built
on some idle land at the NCXX Group
Hanamaki Head Office. Here, we conductvarious trial tests using new agricultural
methods. We are working to create an
attractive business model in the agriculture sector, including effective methods
for land use, increasing energy saving andefficiency in agricultural operations, andlocal production for local consumption.
By creating this business model, we aim
to expand our business in order to contribute to local communities.

Creating an
Appealing
Agriculture
Business Model

Technology for­Raising Tasty
Produce
Unlike conventional approaches tocrop cultivation that are based on
instinct and experience alone, NCXXFARM converts cultivation conditions
into data in order to optimize them,enabling stable agriculture technologies to be established. The company
is also advancing initiatives with aview to providing these cultivation
technologies to growers.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureBusiness for Creation of New Value 3

About OBD II

Financial Section

Number ofcompatible vehicle
models in JapanOBD II Solution

The GX410NC developed and sold by NCXX
is a data communication unit compatible
with the OBD II interface, a leader in the fieldin terms of the number of compatible vehicle
models and number of data obtained. The
GX410NC connects with the OBD II connector mounted in a car to enable diverse­vehicle management solutions.
For example, it enables businesses andservices based on data analysis, such as
telematics insurance that determines insurance premiums based on individual driving

ESG Information

900
information by collecting, analyzing andevaluating driving information such assudden braking and sudden take-offs.
The GX410NC differs from other generalproducts by using proprietary software
technology that allows it to be compatible
with an unrivaled 900 vehicle models. The
device is also able to perform software
updates through a mobile connection andcan flexibly handle new vehicle models
released each year as well as vehicles for
special applications.

OBD II is an international standard in self-fault diagnosis performed by the onboard computer(ECU) of a vehicle.

(Vehicle modelcompatibility to be
expanded in stages)

Basic data
volume10 types(Up to 38 types
depending on thevehicle model)

Corporate Data

Compatible
with special
vehiclesCommunication
protocolHSPA/UMTS

Optimize costs for commercial vehicles
and create new business!

Cost Optimization

New Business Creation

Eco-driving support can significantly
reduce the cost of fuel. Further cost
reductions can be achieved througha lower accident rate and attendant
improvements in insurance premium
discount rates. Moreover, detecting
faults in the vehicle before they
become noticeable reduces repair
bills. Finally, the system is expected
to help increase awareness of following laws and regulations, and to
reduce driver stress through efficient
vehicle deployment.

Accumulating driving information andvehicle malfunction information
enables optimal maintenance and soforth, enabling close relationships to
be built with customers. Moreover,
the trade-in price of a used car canalso be calculated accurately, providing benefits for both the dealershipand the customer. Finally, the information can also be used for customer management and marketing,while rent-a-car, leasing companies,
and so forth can grasp customer
movements and trends from thedriving data.

17

INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureBusiness for Creation of New Value 4

Financial Section

 rowd sourcing in fields other thanC
the travel business

Internet Travele-tabinet.com operates “Tabiraku,” whereusers can receive estimates on travel frommultiple travel companies at a single point,
as well as a travel-related e-marketplace.
Furthermore, the e-tabinet.com groupcompany Web travel Co., Ltd. operates a
crowd sourcing business based on thetravel business. In this business, pre-­registered travel consultants called “travel
concierges” respond to travel requests
received via the Internet by providing eachcustomer with a customized itinerary. As of
April 2015, over 300,000 customers havealready used the service.

ESG Information

Our strategy going forward is to start inour existing online travel business by initiating inbound travel services targeting overseas visitors to Japan, whose numbers are
increasing against the backdrop of the yen’s
depreciation, with a view to proactively capturing earnings opportunities. Furthermore,
we will expand the crowd sourcing businessto fields other than travel, developing into acomprehensive creator of crowd sourcing
platforms that are able to perform a variety
of services, not only for individuals, but also
for companies. e-tabinet.com will use thesebusinesses as a driving force to propel it toan early initial public offering.

Corporate Data

Crowd sourcing in the travel businessCurrent
business fields
Lateral developmentof online businessexpertise

Lateral developmentof crowd sourcing
expertise

Captureinbound demand

Incorporate
concierges in fields
outside of travel[Inbound][Outbound]

Increase inoverseas visitors
to JapanCrowdsourcing market
expansion

18

INTEGRATED REPORT 2015
About NCXX GroupESG Information

FeatureTop Message

Financial Section

Corporate Data

Corporate Governance
I Corporate Governance System

2. Number of Directors

1. Outline of Corporate Governance System

The Company’s Articles of Incorporation stipulate that the Board of Directors comprises a maximum of
10 directors.

The Company has a corporate governance system comprising a Board of Directors, Audit &­Supervisory Board members, an Audit & Supervisory Board, and an external auditor.
The Company’s Board of Directors has seven directors, one of whom is an outside director. As the
body making management decisions, the Board of Directors resolves important business decisions inaccordance with the Board of Directors Regulations. The Board meets once a month and as the needarises to supervise the execution of duties by directors based on monthly financial statements and otherreports. It also invites the outside director to participate in Board meetings in order to obtain the outside
director’s views on management from an objective perspective based on his extensive experience.
The Company’s Audit & Supervisory Board has three members, (including two outside members),
comprising one full-time Audit & Supervisory Board member and two part-time Audit & Supervisory
Board members. The Audit & Supervisory Board meets every month, in principle, to share information
between the Audit & Supervisory Board members and facilitate efficient audits.
In addition, the Company strives to promptly grasp information on business management by h­ olding
a Management Conference once a week, with mainly the directors and general managers in attendance.
A schematic diagram of the Company’s corporate governance system is presented below.

General Meeting of Shareholders
Appoint and dismiss
Cooperate

External Auditor

Audit &
Supervisory Board

Audit

Appoint and dismiss

Instruct andreportAudit

President and CEO
Discuss and reportManagement
Conference

Cooperate

Advising Corporate
Attorney

Board of Directors

Discuss and report

Division Director &General Manager

AdviseInternal Audit Office

Audit

Instruct and report

Divisions

3. Approval Criteria for the Appointment and Dismissal of Directors
The Company’s Articles of Incorporation stipulate that the appointment of directors shall be approvedby a majority of voting rights exercised at a meeting attended by shareholders holding at least onethird of all voting rights. The Articles of Incorporation also stipulate that the appointment of directors
shall not be approved on the basis of cumulative voting.
The Articles of Incorporation also stipulate that the dismissal of a director shall be approved by
two-thirds majority of voting rights exercised at a meeting attended by shareholders holding a majorityof all voting rights.

4. Limited Liability Agreement
The Company has concluded an agreement limiting liability for damages with each outside director andoutside Audit & Supervisory Board member, pursuant to Article 423-1 of the Companies Act, based on
the provisions in Article 427-1 of the same.
The liability for damages based on this agreement is limited to either an amount larger than ¥1
million specified by NCXX in advance, or the minimum liability amount as set forth by the law,­whichever is higher.
Article 41 of the Company’s Articles of Incorporation stipulates that “NCXX can conclude an agreement limiting liability for damages with the external auditor, pursuant to Article 423-1 of the Companies
Act, based on the provisions in Article 427-1 of the same. However, the upper limit of the liability
amount under the contract shall be the amount provided in the law.” As such, NCXX’s external audit
contract with Toko Audit Corporation makes provisions for an article limiting liability. The limit on theamount of liability for damages in this contract is twice the amount of total remuneration for Toko Audit
Corporation’s auditing services.

5. Exemption of Directors and Audit & Supervisory Board Members from Liability
Pursuant to the provisions on liability set forth in Article 423-1 of the Companies Act, the Company’s
Articles of Incorporation stipulate that the Board of Directors may resolve to exempt a director(­including past directors) or Audit & Supervisory Board member (including past Audit & Supervisory
Board members) from their liability within the limit set forth by the law, provided that that person had
acted in good faith and was not grossly negligent.
The aim of this provision is to enable the directors and Audit & Supervisory Board members to fulfill
their roles to the fullest extent, and to enable the Company to appoint experienced and knowledgeable
personnel to the Board of Directors and Audit & Supervisory Board.

6. Body Making Decisions to Pay Dividends and other Distributions from Surplus
In order to flexibly return profits to shareholders, the Company’s Articles of Incorporation stipulate thatthe Board of Directors may resolve to pay an interim dividend to the shareholders and registered­pledgees of NCXX shares, listed or recorded in the final register of shareholders as of May 31 each year.

19

INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Corporate Governance

II Establishment of an Internal Control System
The Company has developed company-wide internal rules governing all business operations, andexecutes business with proper separation of management based on these rules. At the same time, theCompany has built an approval system based on rules governing the authorization of duties and thecircular approval of decisions. In order to evaluate the effectiveness and sustainability of the Company’s
internal control system, the Internal Audit Office audits each business division to ensure that theirimportant business duties are being executed both efficiently and accurately.

III Status of Internal Audits, Audit & Supervisory Board Audits
and Accounting Audits
Each Audit & Supervisory Board member attends the Board of Directors meetings to audit the executionof duties by directors. The members also exchange information as required with the president and directors of the Company to share an understanding of the management priorities and issues. In addition toauditing the Company’s minutes, circular approval documents, contracts, and business transaction
records, the full-time Audit & Supervisory Board member is mainly responsible for interviewing relevant
personnel, observing accounting audits, and conducting on-site surveys, as well as attending otherimportant meetings apart from the Board of Directors.
The Company’s Internal Audit Office, comprising one person in charge, cooperates with the Audit &Supervising Board members throughout the year to conduct the required internal audits based on aninternal audit plan. Results of the internal audits are reported in writing to the president and confirm thestatus of specific advice and recommendations given to the divisions receiving audits as well as the
improvements they have made.
NCXX has also concluded an external auditor contract with Toko Audit Corporation, under which it
periodically receives accounting audits.
The Internal Audit Office, Audit & Supervisory Board, and external auditor cooperate with one
another to conduct audits effectively and efficiently. To this end, they strive to conduct proper audits
and confirm the status of improvements in response to the findings and issues they raise by exchanging information and opinions and sharing what they find.

IV Development Status of the Risk Management System
The Company’s risk management system has rules that were developed based on the International
Organization for Standardization (ISO) from the standpoint of preventing risks. When there is information thought to represent a market, credit, business, or management risk, the Management Conference
confirms the status of compliance with laws and regulations of the Company and Group companies.
At the same time, executives in charge of each division strive to raise risk awareness by rigorously
disseminating information considered to represent a risk within their respective divisions. The Company
is also striving to strengthen its legal risk management system by concluding an advisory contract witha law firm so that it can receive timely advice and instruction on legal risks of high importance,­particularly the protection of personal information, statutory regulations, and so forth.

Internal audits are conducted periodically to verify that there are no problems with the Company’srisk management system and compliance with laws and regulations.

V Compensation of Corporate Officers
1. Total Compensation by Corporate Officer Position and Type of Compensation,
and Number of Eligible Officers
Position

Directors(excluding outside directors)
Audit & Supervisory Board members(excluding outside Audit &Supervisory Board members)
Outside officers

Total by type of compensation (Yen thousand)Total
compensation(Yen thousand)Basiccompensation

Stock
options

Bonuses

11,89911,470

429

–

–

4

–

–

–

–

–

–

1,891

1,891

–

–

–

2

Retirement
benefits

Number of
eligible
officers

Notes: 1. The 22nd Ordinary General Meeting of Shareholders, held on June 29, 2006, resolved that the total compensation for theCompany’s directors (excluding salary as an employee) shall be limited to within 300 million yen per year. Separately fromthe above, the 30th Ordinary General Meeting of Shareholders, held on February 26, 2014, resolved that the total­compensation in stock options shall be limited to within 100 million yen per year.
2. The 22nd Ordinary General Meeting of Shareholders, held on June 29, 2006, resolved that the total compensation for theCompany’s Audit & Supervisory Board members shall be limited to within 50 million yen per year.
3. There were three directors and three Audit & Supervisory Board members (of whom, two were outside Audit & Supervisory
Board members) who received no compensation in the fiscal year under review.

2. Breakdown of Compensation by Corporate Officer
Omitted from record in this report as there were no corporate officers receiving 100 million yen or morein total compensation.

3. Material Information on Salary as an Employee for Corporate Officers Serving
Concurrently as Employees
No items to report

4. Policy on Determining the Amount and Calculation Method of Corporate Officer
Compensation
The Company has not established policies on the amount or calculation method of compensation forcorporate officers.

VI Outside Director and Outside Audit & Supervisory Board Members
1. Functions and Roles Played in Corporate Governance
The Company has appointed one outside director and two outside Audit & Supervisory Board members.
Outside Director Shin Nagase has ample experience and knowledge as a managing executive of amajor airline company and think tank. He was appointed with the expectation that he will contribute tostrengthening the management framework of the Company.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Corporate GovernanceOutside Audit & Supervisory Board member Hiroyuki Matsuzaki is serving concurrently as the­ irector and General Manager of the Administrative Section of FISCO Ltd. and has advanced knowlDedge and ample experience as a business manager. He was appointed with the expectation that he willcontribute to strengthening the management framework of the Company.
Outside Audit & Supervisory Board member Takaya Nakamura has ample of experience and­knowledge of the financial business from his experience working for a major securities company and afinancial information distribution service company. He was appointed with the expectation that he willcontribute to strengthening the management framework of the Company.
Based on the above, and as noted under “2. Personnel, Capital, Business, and Other Vested­Interests between the Outside Director and Audit & Supervisory Board Members and the Company” inthis report, the outside director and outside Audit & Supervisory Board members have no noteworthy
vested interests in the Company from the standpoint of conflict of interest with general shareholders.
Furthermore, they are expected to supervise and audit the execution of duties by the Company’s­directors from an independent position posing no risk of a conflict of interest with general shareholders,since they are expected to apply an outsider’s perspective, drawing on their professional expertise andexperience and knowledge working for other companies, in offering impartial advice and opinions to
the Company.

2. Personnel, Capital, Business, and Other Vested Interests between the Outside Directorand Audit & Supervisory Board Members and the Company
The personnel, capital, business, and other vested interests between the outside director and Audit &Supervisory Board members and the Company are as follows.
Outside Audit & Supervisory Board member Hiroyuki Matsuzaki had served concurrently as a fulltime Audit & Supervisory Board member of FISCO Ltd. in the past. He is now serving concurrently as
the Director and General Manager of the Administrative Section of FISCO Ltd.
Outside Audit & Supervisory Board member Takaya Nakamura is serving concurrently as the­Director and General Manager of the Information Distribution Service Division and Sales and New
Business Development Section of FISCO Ltd.
FISCO Ltd. is the parent company of NCXX.
Other than as noted above, there are no noteworthy vested interests between companies and otherentities where the Company’s outside director and outside Audit & Supervisory Board members are
currently serving or have served in the past and the Company.

3. View Concerning the Appointment Status of the Outside Director and Audit &Supervisory Board Members
The Company has no standards or policies regarding independence from the Company for theappointment of outside directors and outside Audit & Supervisory Board members. However, as noted
above, the Company recognizes that the outside director and outside Audit & Supervisory Board­members are fulfilling their functions and roles as expected and judges that there is no problem with
their appointment status.

4. Supervision and Audit by the Outside Director and Audit & Supervisory Board Members,
Their Mutual Cooperation in Internal, Audit & Supervisory Board, and Accounting Audits,
and Relationship with the Internal Control Division
The Company’s outside director voices timely opinions at Board of Directors meetings based on­high-level knowledge and ample experience, and fulfills the functions of supervising and checking
management from an independent position from the Company’s management team.
The outside Audit & Supervisory Board members provide opinions and advice based on professional expertise and ample experience at the Company’s Board of Directors and Audit & Supervisory
Board meetings. They also maintain and strengthen the compliance of Company divisions with laws
and regulations by deliberating and exchanging information with the Internal Audit Office and an­external auditor, as well as by receiving reports from them.

[Details of Compensation for Auditing Certified Accountants and Their Staff]
Previous fiscal year
Classification

Compensation paid
for audit certification
activities(Yen thousand)Fiscal year under review

Compensation
paid for non-audit
activities

Compensation paid
for audit certification
activities

Compensation
paid for non-audit
activities

Reporting company

12,000–12,000–Consolidated subsidiaries

1,500

–

5,500

–

Total

13,500–17,500–Board ofDirectors
and Audit &Supervisory
Board
Members

Representative Director and President ··················· Tsukasa Akiyama
Representative Director and Vice President ··········· Naoki Ishihara
Director ··································································· Osamu Fukami
Director ··································································· Ryuji Yagi
Director ··································································· Yosuke Saito
Director ··································································· Jun Yamazaki
Outside Director ······················································ Shin Nagase
Audit & Supervisory Board Member ······················· Yukari Oba
Outside Audit & Supervisory Board Member ·········· Hiroyuki Matsuzaki
Outside Audit & Supervisory Board Member ·········· Takaya Nakamura

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

CSR Activities

The NCXX Group believes that it is allowed to exist in society and to continue its­business because it provides value to society and carries out its social responsibilities.
Guided by our Corporate Philosophy, “Provide new value to people based on telecommunications technology, thereby contributing to the development of a more
­efficient and comfortable society,” we are working as a group to actively engage in
CSR activities that are deeply involved with our business.

Corporate Data

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

CSR Activities

NCXX Group’s underlying desire as a manufacturer is to find ways to help people withdisabilities or elderly people achieve things that they want to do but cannot, and to take on
various individual wishes and realize them. Through our activities with various people in andoutside the company, we encounter many ways of thinking, widen our field of view, andcreate new values and ideas. We believe this helps to invigorate our organization.

Based on this stance, we are engaged in the activities introduced below and also
volunteer to support events held at nursing care facilities and the lives of aging households
in depopulated villages.
Going forward, we would like to provide opportunities for many of our employees to takethe initiative of participating in society so that they may grow as individuals and add vigor to
our company and society through their volunteer activities.

Initiatives through Business

Volunteer Participation in the Tandem Parade Pre-Eventfor the Suzuka 8hours

Contribution to Communities through the Agricultural
ICT Business

The “Kaze no Kai” holds a tandem parade the night before the Suzuka 8 Hours Endurance Road
Race (Suzuka 8hours). It is a social contribution activity, in which the contestants and former
riders gather together to give tandem rides around the Suzuka circuit carrying people with­disabilities as their passengers. The Group sponsors the tandem event on the Suzuka circuit aspart of its CSR activities.
As one its products in the M2M field, the Group is developing a GPS data logger for motorcycles (a device that logs various information about the motorcycle). In developing products formotorcycles we conduct test operation of prototypes and data collection and analysis. In addition, with a philosophy and Japanese cultural trait of “winning through a team effort,” we formed
Team WINNER Z-TECH & NCXX Group to enter the Suzuka 8hours in order to support motorcycles and Japan’s largest motorcycle race, the Suzuka 8hours.
Looking ahead, we will continue to support the activities of the Kaze no Kai and contributeto supporting the spread of motorcycle culture, which has a deep connection with our business activities.

The testing plot of NCXX FARM is built on some idle land at the NCXX Group Hanamaki Head
Office. Here, we conduct multi-variety harvesting by adopting new agricultural methods, automation of environmental management, which is important to cultivation, and optimal growing environment control, to verify effective methods for using the land and energy saving and efficiency
increases in agricultural operations. We are promoting the use of ICT in agriculture to enhancethe efficiency of conventional agriculture and improve profitability. We are also promoting initiatives to enable us to contribute to community revitalization. The farm in Hanamaki will continue
to produce business models for appealing agriculture that can realize local production for local
consumption, even in areas where thepopulation aging has advanced.

NCXX FARM accepts visitors for observation anytime
Riding tandem

Our produce is also supplied to stores in Hanamaki City

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureFinancial Section

ESG Information

Corporate Data

Financial Section

24–28	Analysis of Operating Resultsand Financial Position
29–33

Consolidated Financial Statements

34

Notes

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureESG Information

Financial Section

Corporate Data

Analysis of Operating Results and Financial Position[Review of Operations]
In the fiscal year ended November 30, 2014, the Japanese economy saw business sentiment improve,
mainly due to the Japanese government’s economic policies together with qualitative and qualitative monetary easing (QQE) by the Bank of Japan. Capital expenditure and employment continued on a recovery
trend, and the price level rose, albeit gradually. On the other hand, personal consumption showed signs ofsoftness following the consumption tax hike in April 2014, and energy and resource prices increased as aresult of the yen’s depreciation. The outlook for these and other economic conditions remains uncertain.
The information and communications market, the Company’s primary market, is seeing a rapid shift tosmart devices such as smartphones and tablets, along with continued market penetration of faster communication networks driven by LTE. As services, devices, and other offerings become increasingly homogeneous,telecom operators and the mobile virtual network operators (MVNOs) that have been steadily entering theindustry are vying to capture more customers. As this fierce competition continues, innovation is reshaping
the environment surrounding the mobile communications market in particular. Notably, signs of the emergence of highly unique new products such as wearable devices are now evident, marking the beginning of anew phase in this market.
Meanwhile, the information and communications market as a whole offers prospects for further expansion
driven by factors such as (1) changes in corporate information systems, including the popularization of cloudcomputing; (2) the use of a broad spectrum of information in business through the digitization and gathering of
this information; and (3) increased demand for information systems. Within this market, the M2M*1 field continues to attract an extremely high level of interest based on its prospects for rapid growth. Indeed, the size of theM2M market is projected to expand from around ¥230.0 billion in 2013 to over ¥1,000.0 billion in 2018.
*1 Machine to Machine (M2M) refers to a system that automates various controls by enabling network-connected devices to exchange
data with each other. One key advantage of M2M is that it enables data communication between devices without any humanintervention. For this reason, M2M has been introduced not just to PCs and servers, but to a diverse array of fields, including
management of driving conditions through integration with vehicle driving management systems, inventory management for vending
machines and related monitoring of malfunctions and other issues, remote surveillance of elevators and ATMs and related monitoring of malfunctions and other issues, remote readings of electricity and gas meters, and security measures.

In this business environment, the Company announced a new business strategy in April 2014 for the NCXXGroup as a whole, including two companies that became new NCXX Group subsidiaries in the fiscal year
ended November 30, 2014: NCXX Solutions Inc. (“NCXX Solutions”), a systems developer, and Care Online
Limited (“Care Online”), an ASP systems provider for nursing care businesses. (Care Online was renamed asCare Dynamics Limited on January 19, 2015.)
Until now, NCXX has been working to expand its M2M domains in this field by developing and supplying
communication device products on a standalone basis. Going forward, the Company will push ahead withthe vertical integration of its value chain targeting the ever growing M2M market. This will be done by having
NCXX Solutions develop device software and server applications. Through this vertically integrated value
chain, the Company aims to (1) deliver benefits by providing full-line services and (2) maximize profits acrossthe entire value chain.

As another concrete initiative to capture synergies within the Group, NCXX Solutions started developing adata logger with communication functions for motorcycles in July 2014. In this project, NCXX has been developing the communication module, while NCXX Solutions has been developing the tracking app that will
gather and analyze a variety of data. To test the prototype and facilitate continuous development, theCompany formed the Team WINNER Z-TECH & NCXX Group to enter a major motorcycle racing event called
the Suzuka 8Hours Endurance Road Race. The prototype was operated under grueling conditions, withtemperatures exceeding 35°C and a road surface temperature of over 60°C, coupled with sudden torrential
rains. However, the data logger produced solid results through to the end, completing the race without any
malfunctions or communication disruptions. Looking ahead, the Company will continue to push ahead with
development of the data logger by enhancing its usability. This will be done by modifying product specifications in line with various usage environments and supplying applications according to the usage environment,
based on the prototype. The goal is to supply an outstanding data logger product to corporate users, generalmotorcycle enthusiasts and amateur motorcycle riders.
Moreover, in the agricultural ICT business (NCXX FARM), the Company developed an app that enables
checking of environmental data and automated control of environment settings at remotely located greenhouses via smartphones. The app was displayed at the 1st Next Generation Agricultural Expo Tokyo(AGRINEXT) held in October 2014.
Furthermore, as a joint business with its parent company, FISCO Ltd., the Company developed the FISCO
smartphone app in August 2014 to provide investment information on publicly listed companies. NCXX also
simultaneously initiated a cloud service business to provide this app as a white label (OEM) solution.
In the NCXX device business, the Company launched the UX302NC and UX312NC USB data communication devices, which are compatible with quad-band LTE, in May 2014. As the Company’s core products in
the M2M field, UX302NC and UX312NC are in use across a wide range of applications, such as game consoles and mobile computing.
In June 2014, the Company announced that it commenced the design and supply of a handheld IP radio
system for business use. Until now, the Company’s development and manufacturing activities have revolved
around its core technology of communication modem systems. In addition to these development and manufacturing activities, the Company is now developing high-performance communication devices that are able
to run multiple applications. Featuring an easy-to-view, large touch panel display and IP65-level water- anddust-resistance performance, these models are developed for use in the strenuous worksite environments ofthe construction and transportation, security services, and other industries.
Additionally, the nursing care and robotics industries offer strong future growth prospects as a businessdomain that is poised to expand the horizons of the M2M field. To enter these industries, the Company commenced joint development in April 2014 of a nursing care robot with VStone Co., Ltd., a robotics product manufacturer. The trial users of the prototype have been decided from among medical corporations, social welfare
corporations, municipalities, and others, and preparations are under way to develop a commercial product.

25

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Analysis of Operating Results and Financial Position

In the agricultural ICT business (NCXX FARM), the Company commenced joint research with Iwate
University in July 2014 into disease prevention measures for plant factory cultivation using agricultural ICT. The
incidence of diseases caused by mold and other pathogens is one of the greatest challenges facing plantfactory cultivation. To suppress these diseases, the Company will conduct demonstration trials for (1) capturingmold spores using static electricity and (2) deactivating mold spores using ions generated by static electricity.
The Company will work to prevent the growth of mold and remove it from plant factories by incorporating andcontrolling these devices in ICT systems. Besides this, the Company will gather research data from the demonstration trials to predict the incidence of diseases and control the environment in advance, with the aim ofdeveloping a plant factory cultivation system that is able to suppress diseases at a low cost.
Furthermore, as noted earlier, the Company displayed its agricultural ICT system, which was developed
jointly with NCXX Solutions, at the 1st Next Generation Agriculture Expo Tokyo (AGRINEXT). The Company
attracted large numbers of visitors to its exhibit.
Turning to the Internet travel business, travel information now abounds on the Internet, thanks in part to the
popularization of smartphones. This travel information covers wide ranging topics, including information abouttransportation, such as airlines and railways, and guest accommodations, as well as information about sightseeing destinations. Considerable knowledge and experience is needed by consumers to effectively siftthrough all this information and actually make travel arrangements on their own. In particular, trips wheretravelers stop at multiple destinations can be disrupted by unforeseen risks such as sudden changes andcancellations in reservations.
The e-tabinet.com Group has received a large number of positive comments from many highly satisfied
customers for its ability to address the proliferation of travel products and services and fulfill the increasingly diverse and sophisticated needs of its customers. The crucial factor behind this success is that­e-tabinet.com has been able to build a solid structure as Japan’s only Internet-based travel agency offering
customized service with a carefully chosen staff of 320 highly experienced registered “travel concierges”(travel consultants).
The travel concierges take the lead in planning Kodawaru Hito No Tabi (“Journeys for the Discerning
Traveler”) travel itineraries, as part of which new Kodawari No Tabi travel packages are announced every
month. In September, e-tabinet.com unveiled the “Agriturismo Take in the Italian Countryside” travel package, followed by the “Christmas Market: Experience the Wonders of Europe in Winter” travel package in
October and the “Brocante (Flea Market) in France: A Treasure Hunt” travel package in November. Goingforward, the e-tabinet.com Group will continue to proudly present the finest Kodawari No Tabi travel­packages to its customers.

[Operating Results]
Looking at consolidated business results, the device business at the parent of NCXX saw sales of one existing product model decrease. The lower sales mainly reflected the Group’s decision to suspend plans to sellthis product during the fiscal year ended November 30, 2014. This decision was made mainly based on two
reasons. First, the product has a low gross margin of less than 10%, albeit with an extensive track record of
implementation, and will soon become obsolete at the end of its product lifecycle. The product had also
faced calls for further price discounts from customers in the fiscal year under review. Second, the Groupwould have been exposed to the risk of surging raw materials costs due to exchange rate movements
because it would have been responsible for ensuring a continuous supply of the product over a fixed period.
Apart from this, the start of sales of certain other new products and original design manufacturer (ODM)
products was postponed from the first to second quarter of fiscal 2014 because development periods wereextended to modify specifications and make other changes at the request of customers. Consequently, theprojected sales plans for these products were also pushed back, leaving the Group with no choice but topostpone certain sales to the next fiscal year.
Moreover, the Group recorded a foreign exchange gain upon exiting a foreign exchange margin trading
position entered into previously as a means of hedging the risk of the yen’s depreciation. From the fiscal year
ending November 30, 2015, the Group will enter into foreign currency forward contracts and other arrangements as a means of hedging risk. The Group will apply hedge accounting to match the timing of recording
the foreign currency-denominated monetary obligations for purchased materials imported to Japan (i.e., thehedge target) with profit and loss. As a result, the Group will start recording foreign exchange gains as operating income, not as non-operating income as in the fiscal year ended November 30, 2014. In this manner,
the Group plans to conduct hedging that will lower the risk of revisions to business forecasts.
As a result of these efforts, consolidated net sales were ¥6,375 million, up 28.8% year on year. Operating
income was ¥82 million, down 68.3% year on year, while ordinary income was ¥692 million, up 42.0% year
on year. Net income rose 46.5% year on year to ¥630 million. Operating income decreased due to the impact
of surging purchasing costs for certain products in step with the yen’s recent depreciation. However, derivative transactions (foreign exchange margin trading) undertaken previously as part of efforts to stabilize purchasing costs proved effective, and the Group recorded foreign exchange gains under non-operating incomethat surpassed the decrease in operating income.
Business performance by segment in the fiscal year under review was as follows:(Device Business)
The device business posted overall sales of ¥2,545 million in the M2M field, which includes automotive products such as car navigation systems and taxi radio systems. This was mainly due to steady sales of two
product models launched in the fiscal year ended November 30, 2014, namely the USB data communication
devices compatible with quad-band LTE and a handheld IP radio system for business use.
NCXX Solutions posted sales of ¥1,707 million, mainly as sales were recognized from February 2014 inconjunction with the effective date of a corporate split.

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Analysis of Operating Results and Financial Position

In terms of overall sales, certain sales in the device business were postponed to the fiscal year ending
November 30, 2015, mainly due to two reasons. First, sales of one existing product model were suspended
in view of its exposure to the risk of foreign exchange rate fluctuations and other factors. As mentioned
above, this existing product model has an extensive track record of implementation, but had faced calls forprice reductions. Second, the start of sales of certain other new products and ODM products was postponed
because development periods were extended to modify specifications and make other changes at therequest of customers.
Consequently, segment sales in the fiscal year ended November 30, 2014 were ¥4,613 million, up 46.5%
year on year. Segment income decreased 41.0% year on year to ¥183 million, mainly due to the aforementioned impact of the yen’s depreciation.

(Net Assets)(Internet Travel Business)(Cash Flows From Operating Activities)

Segment sales in the fiscal year ended November 30, 2014 totaled ¥1,762 million. These sales comprised
overseas travel business sales of ¥1,636 million, centered on honeymoon packages to Italy, Spain, andFrance, and domestic travel business sales of ¥125 million. Continuing cost-cutting initiatives proved­effective, leading to a 2.5 percentage point decline in the selling, general and administrative expense ratio.
Consequently, segment income increased 119.8% year on year to ¥37 million.

Net cash provided by operating activities was ¥1,448 million, compared with net cash used in operating
activities of ¥409 million in the previous fiscal year. The main factors increasing cash were income before
income taxes and minority interests of ¥742 million, a decrease in derivatives of ¥411 million and a decreasein advance payments of ¥253 million. The main factor reducing cash was a decrease in notes and accounts
payable—trade of ¥128 million.

[Financial Position]
The Group’s financial position as of November 30, 2014 was as follows.

(Assets)
Total assets were ¥6,979 million as of November 30, 2014, an increase of ¥2,901 million from a year earlier.
The main contributing factors were increases of ¥2,677 million in cash and deposits, ¥131 million in total
property, plant and equipment, and ¥355 million in goodwill, which were partly offset by decreases of ¥253
million in advance payments—trade and ¥411 million in derivatives.

(Liabilities)
Total liabilities were ¥3,427 million, an increase of ¥2,015 million from a year earlier. The main contributing
factors were increases of ¥1,215 million in convertible bonds with subscription rights to shares and ¥740
million in long-term loans payable (including the current portion due within one year), which were partly
offset by decreases of ¥128 million in notes and accounts payable—trade and ¥152 million in short-termloans payable.

Total net assets were ¥3,551 million, an increase of ¥885 million from a year earlier. The main contributing
factors were net income of ¥630 million, along with increases of ¥144 million in capital stock and ¥143 million
in capital surplus due to a capital increase through a third-party placement of shares.

[Cash Flows]
Cash and cash equivalents (“cash”) at November 30, 2014 were ¥3,930 million, an increase of ¥2,677 million
from the previous fiscal year-end.
Cash flows during the fiscal year under review and analysis of the main components are as follows:(Cash Flows From Investing Activities)
Net cash used in investing activities was ¥851 million, compared with net cash provided by investing activitiesof ¥75 million in the previous fiscal year. The main uses of cash were ¥134 million for purchase of property,
plant and equipment, ¥51 million for purchase of investments in subsidiaries resulting in change in scope of
consolidation, ¥162 million for purchase of investments in subsidiaries, ¥342 million for payments for transferof business, and ¥94 million for increase in short-term loans receivable.

(Cash Flows From Financing Activities)
Net cash provided by financing activities was ¥2,072 million, compared with ¥1,241 million in the previous
fiscal year. This was mainly due to proceeds from long-term loans payable of ¥940 million, proceeds fromissuance of bonds with subscription rights to shares of ¥1,209 million, and proceeds from issuance ofcommon stock of ¥281 million. These cash inflows were partly offset by net decrease in short-term loans
payable of ¥152 million and repayment of long-term loans payable of ¥199 million.

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Analysis of Operating Results and Financial Position[Risk Information]
From the standpoint of actively disclosing information to investors, the Company discloses matters that could
have a material impact on investor judgement, even external factors beyond the control of the Company andmatters that may not be considered business risks.
The items outlined below do not represent an exhaustive listing of all risks affecting investment in the
Company’s stock.
Items in the following that concern the future were assessed by the NCXX Group based on information
available as of November 30, 2014. They are subject to uncertainties and may differ from actual results.

(1) Business Characteristics
1. Group Driven by Research and Development
The Company is driven by research and development (R&D), and its source of competitiveness is the constant internal accumulation of new technology. If the Company has difficulty securing and nurturing competent technicians or suffers an outflow of competent human resources, this could have a material impact of theCompany’s business and operating results.
As a policy, the Company adapts to technological and other advancements through its R&D activities.
However, the Group may not be able to adapt promptly to changes in the business environment if they werebrought about by new unforeseen technologies. Adapting to changes in the business environment may also
involve large sums of R&D expenses and other expenses. Such events could also have a material impact on
the Group’s business and operating results.
2. Dependence on a Specific Business Segment
In the year ended November 30, 2014, the device business centered on mobile telecommunications devices
accounted for a high ratio of 72.4% of the NCXX Group’s consolidated net sales. Consequently, if market
trends and other changes in mobile phones and other telecommunications devices cause fluctuations in theoperating results of the device business, or if growth in the Company’s other business segments falls substantially below plans, this could have a material impact on the Company’s business and operating results.
3. Fabless Manufacturing
The Company outsources the manufacturing of its products to a large extent. As a result, business conditions
at the outsourcing contractors, as well as the Group’s cultivation and retention of outsourcing contractors
and in-house manufacturing capabilities, could have a material impact on the Company’s business and­operating results.
4. Relationship with Telecommunications Service Providers
The Company’s core products are data telecommunications terminals and other mobile devices developed
and manufactured based on the specifications of telecommunications service providers. Furthermore, inthese transactions the telecommunications service providers purchase all of the contracted output. As aresult, changes in the content of the contracts, sales prices, and transaction terms with the telecommunications service providers, as well as the success or failure of renewing the contracts, could have a material
impact on the Company’s business and operating results.
5. Changes in Demand for Mobile Devices
Data telecommunications terminals and other mobile devices developed and manufactured by the Company
are subject to severe product competition. As such, the trend in their demand has a tendency to change
dramatically depending on factors including technological advancement and the status of product competition.
The business is also characterized by the short turnaround in launching new products. As a policy, theCompany seeks to adapt to changes in demand with fabless manufacturing. However, the Company iscurrently dependent on specific products because it develops and manufactures a limited variety of products.
Consequently, drastic changes in demand and falls in the sale price of mobile devices brought about byfactors such as business strategies of competitors and changing customer needs could have a material
impact on the Company’s business and operating results.

(2) Dependence on a Specific Business Partner
Dependence on a specific outsourcing contractor
In the year ended November 30, 2014, TRICHEER TELECOMMUNICATION LTD. had become a major outsourcing contractor for the Company, accounting for a 44.6% monetary share of its outsourced processes.
This is because the Company outsources the manufacturing of its mobile devices. Consequently, changes inthe business transaction policy and manufacturing framework between the two companies could have amaterial impact on the Company’s business and operating results.

(3) Risks Related to Protection of Intellectual Property Rights
The Company is driven by R&D and is the rightful owner of numerous intellectual properties that have been
submitted and registered for patent and registered with design rights and trademarks. The Company also
strives to make sure that the products it develops and manufactures do not infringe on the intellectual property
rights of third parties, and understands that there are no infringements at present. However, the possibility of
infringing on the intellectual property rights of a third party in the future cannot be eliminated. Should theCompany infringe on the intellectual property rights of a third party, it may experience legal action seeking
damages, a decline in credibility, and deterioration of its corporate brand, and so forth, which could have amaterial impact on the Company’s business and operating results. Conversely, should the intellectual property
rights of the Company suffer infringement by a third party, the Company would be obliged to divert management resources toward taking the party to court and other defensive measures, which could have a material
impact on the Company’s business and operating results.

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Analysis of Operating Results and Financial Position(4) Quality Control(8) Relationship with the Parent Company

The Company must recall and repair the mobile devices it develops and manufactures in the event of a product malfunction. Moreover, should an accident caused by defective products occur, the Company may besubject to claims for damages under the Product Liability Act.
In order to prevent such product defects and accidents from occurring, the Company has developed aquality control system that also encompasses the management of outsourcing contractors and suppliers to
improve product safety and promote compliance with laws and regulations. In addition, the Company also
subscribes to product liability insurance as a contingency in the event of product accidents. However, shoulda serious product defect or incident violating the Product Liability Act occur, the Company may have to bear
product recall and repair expenses and payment of damages, as well as experience a decline in its credibility
with corporate clients and society, a deterioration in its corporate brand value, and so forth, which could havea material impact on the Company’s business and operating results.

FISCO Ltd. (listed on Tokyo Stock Exchange JASDAQ Growth) is the parent company of the Company,­holding 57.47% of the voting rights both directly and indirectly as of November 30, 2014. The Company
therefore belongs to a parent company group with FISCO at the center. As a result, changes in the parent
company group’s management policy and other circumstances could have a material impact on the
Company’s business and operating results.
Furthermore, SEQUEDGE INVESTMENT INTERNATIONAL LIMITED (unlisted), as the parent company of
FISCO Ltd., is the ultimate parent company of the Company, holding a majority of the voting rights indirectly.
Consequently, changes in the management policy and other circumstances of this company could also havea material impact on the Company’s business and operating results.

(5) Statutory Regulations on Telecommunications
The Company mainly develops products regulated by the Radio Act of Japan. As a result, trends regarding
the Radio Act and other statutory regulations on telecommunications could have a material impact on the
Company’s business and operating results.

(6) Protection of Personal Information
The Company holds the personal information and so forth of customers in its business of selling and providing product support and so forth for mobile communication devices. To prevent the acquired personal information and so forth of customers from leaking externally, the Company takes ample precautions such as
limiting access to the personal information and strengthening the internal control system by periodically conducting internal audits. However, should a leak in personal information occur, the Company may be in violation of laws and regulations as well as its confidentiality agreements with client companies. As a result, theGroup may receive claims for damages from client companies and other customers as well as experience a
decline in its credibility with corporate clients and society, a deterioration in its corporate brand value, and soforth, which could have a material impact on the Company’s business and operating results.

(7) Corporate Organization
In order to continue growing while strengthening the internal control system further at the same time, theCompany sees a need to bolster competent human resources, as well as further enhance the organizationof its administrative divisions, at each stage of business development. Consequently, should the Company
be unable bolster human resources as required at each stage of business development, or suffer an outflow of competent human resources, this could have a material impact on the Company’s business andoperating results.

(9) Fluctuations in the Foreign Exchange Market
The Company subcontracts the manufacturing of some of its products to a Chinese original design manufacturer (ODM) to enhance price competitiveness and profitability. As a result, business transactions denominatedin foreign currencies may be affected by fluctuations in the foreign exchange market. To reduce this impact,
the Company unwound a derivatives trade (foreign exchange margin trade) in the year ended November 30,
2014, and will strive in the future to make use of instruments such as foreign change forward contracts andto reconfigure its product portfolio. However, trading conditions and foreign exchange market trends in the
future could have a material impact on the Company’s business and operating results.

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Corporate Data

Consolidated Financial Statements(1) Consolidated Financial Statements
1. [Consolidated Balance Sheets](Thousands of yen)
Fiscal 2013 (As of
November 30, 2013)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade
Work in process
Raw materials
Advance payments—trade
Deferred tax assets
Short-term loans receivable
Accounts receivable—other
Derivatives
Other
Total current assets
Noncurrent assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land¥1,253,266
484,993399,669
13,423505,635
5,173
355,408
6,709
411,137
12,8033,448,220(Thousands of yen)

Fiscal 2014 (As of
November 30, 2014)¥3,930,484
665,867
484,430
3,086
251,682
17,668448,887
7,367–
42,3035,851,779

Total property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Other
Total investments and other assets
Total noncurrent assets
Total assets
Please refer to page 36 for *1

251,897(210,149)*1 41,748
31,196(23,485)
7,711
324,005(319,528)
4,476*1 151,737

315,654(219,696)*1 95,958
28,954(20,826)
8,127
404,054(322,349)
81,705*1 151,737

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)

205,673

337,529

232,168
70,072
34,651
3,554
340,446587,853
48,145–
3,566
639,565*2 20,954
62,337
83,292
629,412¥4,077,632*2 12,758
137,376
150,134
1,127,229¥6,979,008

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Corporate Data

Consolidated Financial Statements(Thousands of yen)
Fiscal 2013 (As of
November 30, 2013)

Liabilities
Current liabilities
Notes and accounts payable—trade
Short-term loans payable
Current portion of bonds
Current portion of long-term loans payable
Accounts payable—otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Provision for bonuses
Provision for product warranties
Other
Total current liabilities
Noncurrent liabilities
Convertible bonds with subscription rights to shares
Long-term loans payable
Provision for retirement benefits
Liability for retirement benefit
Deferred tax liabilities
Other
Total noncurrent liabilities
Total liabilities(Thousands of yen)

Fiscal 2014 (As of
November 30, 2014)¥  237,766
152,500
200,000*1 57,984
28,52142,82853,46026,342
307,692–
42,00015,2781,164,374¥  109,723–
200,000*1 290,675
112,999
122,392
64,48967,959219,641
21,18090,000120,510
1,419,572–*1 227,675
3,096
–
–
17,317
248,089
1,412,463

1,215,000*1 735,836–
3,407
26,492
27,6222,008,358
3,427,930

Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Foreign currency translation adjustments
Total accumulated other comprehensive income
Subscription rights to shares
Minority interests
Total net assets
Total liabilities and net assets

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)

1,068,146
875,405
516,710(35)
2,460,227

1,212,248
1,018,821
1,147,022(35)
3,378,057

12,113
12,113–
192,827
2,665,168¥4,077,632

23,12023,120858
149,041
3,551,077¥6,979,008

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Consolidated Financial Statements

2.	[Consolidated Statements of Income and Consolidated Statements ofComprehensive Income][Consolidated Statements of Income](Thousands of yen)(Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commissions paid
Stock issuance cost
Bond issuance cost
Contribution
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Gain on bargain purchase
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of property, plant and equipment
Loss on sales of subsidiaries’ stocks
Loss on valuation of investment securities
Total extraordinary losses

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥4,948,289*1 3,937,393
1,010,895*2 751,427
259,468¥6,375,427*1 5,362,987
1,012,439*2, 3 930,098
82,341

23,964
218,958
2,673
245,595

11,757
638,688
7,791
658,238

9,837
4,229
2,134
–
–
1,655
17,857487,207

21,902
2,855
5,546
5,784
11,500935
48,524
692,055

4,122
–
–
4,122

–
56,822
2,105
58,927*4 143476–
619*4 330
–
8,196
8,526

Income before income taxes and minority interests
Income taxes
Income taxes—deferred
Total income taxes
Income before minority interests
Minority interests in income
Net income

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)

490,71047,406(5,173)42,233
448,477
18,151¥  430,325

742,456
84,391
14,65999,051
643,405
13,093¥  630,311

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥448,477¥643,405

10,424*1 10,424¥458,901

11,007*1 11,007¥654,412¥440,749
18,151¥641,319
13,093

Please refer to page 36 for *1
Please refer to page 37 for *2, 3, and 4[Consolidated Statements of Comprehensive Income](Thousands of yen)

Income before minority interests
Other comprehensive income
Foreign currency translation adjustments
Total other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Minority interests
Please refer to page 37 for *1

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Consolidated Financial Statements

3. [Consolidated Statements of Changes in Net Assets]
Fiscal 2013 (From December 1, 2012 to November 30, 2013)(Thousands of yen)
Shareholders’ equity

Balance at beginning of the fiscal year
Changes during the fiscal year
Issuance of new shares
Net income
Purchase of treasury stock
Net changes of items other thanshareholders’ equity
Total changes during the fiscal year
Balance at end of the fiscal year

Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity¥  600,000¥407,259¥ 86,385¥–¥1,093,644

468,146468,146(35)

936,292
430,325
(35)

(35)
¥(35)

1,366,583¥2,460,227

430,325

468,146¥1,068,146

468,146¥875,405

430,325¥516,710

Accumulated other comprehensive income
Foreign currencytranslation
adjustments

Total accumulated
other comprehensive
incomeSubscription
rights to shares

Minority interests

Total net assets¥ 1,689¥ 1,689¥1,489¥126,173¥1,222,996
936,292
430,325(35)

10,424
10,424¥12,113

10,424
10,424¥12,113(1,489)(1,489)¥–66,654
66,654¥192,827

75,5891,442,172¥2,665,168

Fiscal 2014 (From December 1, 2013 to November 30, 2014)(Thousands of yen)
Shareholders’ equity

Balance at beginning of the fiscal year
Changes during the fiscal year
Issuance of new shares
Net income
Net changes of items other thanshareholders’ equity
Total changes during the fiscal year
Balance at end of the fiscal year

Capital stock

Capital surplus

Retained earnings

Treasury stock

Total shareholders’equity¥1,068,146¥  875,405¥  516,710¥(35)¥2,460,227

144,102

143,415

143,415¥1,018,821

630,311¥1,147,022

Foreign currencytranslation
adjustments

Total accumulated
other comprehensive
incomeSubscription
rights to shares

Minority interests

Total net assets¥12,113¥12,113¥–¥192,827¥2,665,168

287,517630,311

630,311

144,102¥1,212,248

Accumulated other comprehensive income

–
¥(35)

917,829¥3,378,057

287,517630,311
11,007
11,007¥23,120

11,007
11,007¥23,120

858
858
¥858

(43,786)(43,786)¥149,041(31,921)885,908¥3,551,077

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Consolidated Financial Statements

4. [Consolidated Statements of Cash Flows](Thousands of yen)

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Amortization of goodwill
Gain on bargain purchases
Decrease in provision for bonuses
Increase in provision for retirement benefits
Increase in retirement benefit obligations
Increase in provision for product warranties
Interest and dividend income
Interest expenses
Bond issuance cost
Stock issuance cost
Foreign exchange losses
Loss on retirement of property, plant and equipment
Gain on sales of investment securities
Loss on valuation of investment securities
Loss on sales of subsidiaries’ stocks
Decrease (increase) in notes and accounts receivable—trade
Increase in inventories(Increase) decrease in accounts receivable—other
Decrease (increase) in advance payments
Decrease (increase) in derivatives
Decrease in notes and accounts payable—trade
Increase (decrease) in accounts payable—other
Increase in accrued expenses
Increase in accrued consumption taxes(Decrease) increase in advances received
Other, net
SubtotalInterest and dividends income received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥   490,710
124,989
32,198––311–
20,000(23,964)
9,837
–
2,134
3,345
143
(4,122)–476(346,236)(151,195)
14,263(299,660)(407,688)(13,245)(28,297)
8,485
19,717111,922
15,175(420,700)
24,151(10,120)(3,316)(409,985)¥  742,456
27,65360,290(56,822)(23,015)–311
48,000(11,757)
21,902
5,784
5,546
2,838
330
–
8,196
–
39,366(51,612)(532)
253,952
411,137(128,955)
64,85075,43939,066(88,151)
88,711
1,534,987
11,632(20,328)(77,640)
1,448,650(Thousands of yen)

Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from redemption of investment securities
Purchase of investments in subsidiaries resulting in change
in scope of consolidation
Purchase of investments in subsidiaries
Proceeds from sales of investments in subsidiaries
Increase in short-term loans receivableCollection of short-term loans receivable
Payments for transfer of business
Other, net
Net cash (used in) provided by investing activities
Cash flows from financing activities
Net (decrease) increase in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Proceeds from issuance of bonds
Payment for the redemption of bonds
Proceeds from issuance of bonds with subscription
rights to shares
Proceeds from issuance of common stock
Purchase of treasury stock
Payments for installment payables—property and equipment
Net cash provided by financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the fiscal year
Cash and cash equivalents at end of the fiscal year
Please refer to page 39 for *1, 2, and 3

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)(1,050)(188,250)(1,285,050)
451,640
1,275,000(134,335)(33,616)–––––
94,908(556,556)
286,556–(1,700)75,496*2 (31,845)(162,336)–(443,475)
350,000*3 (362,247)(33,277)(851,134)

52,500119,000(61,682)
200,000–(152,500)
940,000(199,148)
200,000(200,000)–
934,006(35)(2,582)
1,241,206
4,926
911,644
341,622*1 ¥ 1,253,266

1,209,215
281,971–(6,873)2,072,665
7,036
2,677,218
1,253,266*1 ¥3,930,484

34

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Notes
(Notes to the Consolidated Financial Statements)
1. Scope of consolidation

4. Accounting standards(1) Number of consolidated subsidiaries: 5(2) Names of consolidated subsidiaries: NCXX Solutions Inc., Care Online Limited, e-tabinet.com, Web travelCo., Ltd., 星際富通（福建）網絡科技有限公司
Among the abovementioned companies, NCXX Solutions Inc. andCare Online Limited were included in the scope of consolidation fromthe fiscal year ended November 30, 2014, following the conversion ofthese two companies into subsidiaries through new share acquisitions.
In the fiscal year ended November 30, 2014, Care Online Limited
adopted Japanese script for the words “Care Online” in its
Japanese name.
(3) Number of non-consolidated subsidiaries: 1(4) Name of non-consolidated subsidiary: Webtravel Asia & Pacific Pty Limited(Reasons for exclusion from the scope of consolidation)
Because total assets, net sales, net income (loss) (proportional to equity interest), retained earnings(­proportional to equity interest) and other metrics do not have a material impact on the consolidated­financial statements.

1. Investment securities
Subsidiaries’ stocks and affiliates’ stocks
Stated at cost determined by the moving average method.
Investment securities—other
Without market quotations
Stated at cost determined by the moving average method.
2. Inventories
Valued at cost (book value is written down when profitability declines).
(i) Work in process
Specific identification method(ii) Raw materials
Moving average method

2. Application of the equity method(1) Number of non-consolidated subsidiaries and affiliates accounted for by the equity method: None(2) Name of non-consolidated subsidiary not accounted for by the equity method: Webtravel Asia & Pacific
Pty Limited(Reason for not applying the equity method)
Because total assets, net sales, net income (loss) (proportional to equity interest), retained earnings(­proportional to equity interest) and other metrics do not have a material impact on the consolidated­financial statements.

3. Fiscal year of consolidated subsidiaries

The fiscal year of consolidated subsidiary 星際富通（福建）網絡科技有限公司 ends on December 31, a different
date than the end of the Company’s fiscal year. Accordingly, the consolidated financial statements of theCompany are based on 星際富通（福建）網絡科技有限公司’s provisional accounting settlement on November 30.

(1) Valuation standards and accounting treatment for important assets(2) Method for depreciating and amortizing important depreciable assets
1. Property, plant and equipment
Property, plant and equipment are depreciated using the declining-balance method. However, buildings,
excluding fixtures, acquired on or after April 1, 1998, are depreciated using the straight-line method.
The main estimated useful lives are as follows:   Buildings and structures:
5 to 39 years   Machinery, equipment and vehicles: 2 to 10 years   Tools, furniture and fixtures:
2 to 10 years
2. Intangible assets
In-house software is amortized by the straight-line method based on the estimated in-house useful life of 3
or 5 years.
In addition, software intended for commercial sale is amortized by the straight-line method based on theremaining estimated effective sales period of 3 years.

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(3) Accounting for significant allowances

d. Method of evaluating hedging effectiveness
The Company compares cumulative market fluctuations in the hedge target and the hedge instrument
over the period from the start of hedging to the hedging effectiveness evaluation date, and arrives at anevaluation based on the amount of changes and other factors with respect to both the hedge target andhedge instrument.
The evaluation of hedging effectiveness is omitted for interest rate swaps and other instruments that
qualify for special treatment.

1. Provision for product warranties
A provision for product warranties is provided to cover product warranty costs that may be incurred after
products are sold. The provision for product warranties is determined on the basis of the estimated product warranty cost.
2. Provision for bonuses
A provision for bonuses is provided to cover the costs of bonuses paid to employees of domestic consolidated subsidiaries. The provision for bonuses is determined on the basis of the amount projected to be
paid in the fiscal year under review.

(7) Method of calculating important revenues and expenses(4) Accounting method for retirement benefits

Basis for calculating sales and cost of sales on contracted development
Completed contract basis

The Company records liabilities related to retirement benefits to cover the costs of the retirement benefits of
employees, based on the projected retirement benefit obligations at the fiscal year-end. Retirement benefit
obligations are calculated using the simplified method.
Transitional obligations for retirement benefits are expensed in equal amounts over 15 years.
In November 2003, the Company introduced a defined contribution pension plan on an optional basis.
Employees who joined the new plan have been shifted from the existing lump-sum retirement benefit plan tothe defined contribution pension plan.

(5) Standards for translating important foreign currency denominated assets and liabilities
into Japanese yen
Foreign currency denominated receivables and obligations are translated into Japanese yen using the spot
exchange rate at the consolidated fiscal year-end, and translation gains and losses are charged to income.
The assets and liabilities, as well as the revenues and expenses, of foreign subsidiaries and other such­entities are translated into Japanese yen using the spot exchange rate at the fiscal year-end, and translation
gains and losses are recorded as foreign currency translation adjustments under net assets.

(6) Accounting methods for significant hedging
a. Hedge accounting methods
Interest rate swaps that qualify for special treatment are accounted for by special treatment.
b. Hedge instrument and hedge targets
Hedge instruments: Interest rate swaps
Hedge targets:
Borrowingsc. Hedging policy
The Company executes interest rate swaps to mitigate interest rate fluctuation risk.

(8) Method and period of amortization of goodwill
Goodwill is amortized over a period of 10 years applying the straight-line method.

(9) Scope of cash and cash equivalents in the consolidated statements of cash flows
Cash and cash equivalents in the consolidated statements of cash flows consist of cash on hand, demand
deposits, and short-term investments that are readily convertible to known amounts of cash and subject toinsignificant risk of change in value and due within three months from the date of acquisition.

(10) Other notes to the consolidated financial statements
1. Accounting method for consumption taxes
National and local consumption taxes are accounted for by the net tax method.
2. Consolidated taxation
Consolidated taxation applies to some domestic consolidated subsidiaries, with e-tabinet.com as theconsolidated parent company paying the taxes.
3. Treatment of stock issuance costs
Stock issuance costs are fully expensed when they arise.
4. Treatment of corporate bond issuance costs
Stock issuance costs are fully expensed when they arise.

36

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Notes

(Change in Presentation)*2 Stakes in and exposures to non-consolidated subsidiaries and affiliates are as follows.

(Consolidated Balance Sheets)(Thousands of yen)

Provision for retirement benefits recorded in the consolidated fiscal year ended November 30, 2013 wasrestated as liability for retirement benefit from the close of the consolidated fiscal year ended November 30,
2014, following the adoption of “Accounting Standard for Retirement Benefits” (Accounting Standards Boardof Japan (ASBJ) Statement No. 26, May 17, 2012, hereinafter the “Retirement Benefits AccountingStandard”) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, May
17, 2012, hereinafter the “Retirement Benefits Guidance”).
However, the financial statements were not retrospectively restated in connection with the adoption of the
Retirement Benefits Accounting Standard and Retirement Benefits Guidance, following the transitional treatment set forth in Article 37 of the Retirement Benefits Accounting Standard.

(Consolidated Balance Sheet)*1 Collateral assets and collateralized liabilities
Assets pledged as collateral are as follows.
(Thousands of yen)

Buildings
Land
Total

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)¥ 21,871
151,097¥172,969¥ 26,533
151,097¥177,631(Thousands of yen)
Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)¥ 28,344
113,307¥ 52,013
195,306

Fiscal 2014 (As of
November 30, 2014)¥10,904¥10,904*3 Contingent liabilities (compensation for damage liabilities in connection with litigation)(Thousands of yen)

Investment securities (stocks)

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)¥30,000(Note)¥–

Note: The above is the amount the plaintiff is demanding in compensation for damage incurred from the Company’s product malfunctioning, as it pertains to consignment contract liability, malfeasance or product liability, in a lawsuit brought against the Company
by Cyber Space Communications. The amount of damages the plaintiff claims to have incurred is ¥481,999 thousand.
	  The Company will refute the plaintiff’s claims on the grounds that the product did not malfunction and the plaintiff’s lawsuit isexceedingly unjust.

(Consolidated Statements of Income)*1 Book value write down of inventory held for sale under normal conditions due to decline in profitability(Thousands of yen)

Cost of sales

Collateralized liabilities are as follows.

Current portion of long-term loans payable
Long-term loans payable

Investment securities (stocks)

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥738¥11,458

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(Consolidated Statements of Comprehensive Income)*2 Major breakdown and amount of selling, general and administrative expenses are as follows.
(Thousands of yen)

Director compensation
Salaries and allowances
Retirement benefit expenses
Commission fee
Depreciation
After-sales service expenses
Business consignment expenses

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥ 51,340
194,877
3,124
72,048
11,216
56,660107,822¥ 78,456
278,855
4,834
71,302
13,75013,794
115,220*1 Reclassification adjustments and tax effects for other comprehensive income(Thousands of yen)
Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥10,424–
10,424–
10,424¥10,424¥11,007–
11,007–
11,007¥11,007

Foreign currency translation adjustments:
Amount incurred during the fiscal year
Reclassification adjustments
Before tax effect adjustment
Tax effectForeign currency translation adjustments
Total other comprehensive income*3 Total research and development expenses included in selling, general and administrative expenses(Thousands of yen)

Research and development expenses

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥–¥1,406*4 The components of loss on retirement of property, plant and equipment are as follows.
(Thousands of yen)

Buildings and structures
Tools, furniture and fixtures

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)

¥  –
143

¥312
17

(Consolidated Statements of Changes in Net Assets)
Fiscal 2013 (From December 1, 2012 to November 30, 2013)
1 Type and number of issued shares and type and number of treasury stock(Number of shares)

Issued shares
Common shares (Note 1)
Total
Treasury stock
Common share (Note 2)
Total

Balance atthe beginning of
the fiscal year

Increaseduringthe fiscal year

Decreaseduringthe fiscal year

Balance at
end ofthe fiscal year

88,44788,447

11,542,353
11,542,353––

11,630,800
11,630,800

–
–

79
79

–
–

79
79

Notes: 1. The increase in common shares was due to a stock split and a capital increase through a third-party placement of shares, aswell as the exercise of subscription rights to shares.
2. The increase in treasury stock was due to the purchase of odd-lot shares.

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Fiscal 2014 (From December 1, 2013 to November 30, 2014)
1 Type and number of shares issued and type and number of treasury stock

2 Subscription rights to shares

Category

Filingcompany(Parent
company)

Total

Components of subscription
rights to shares

Type ofsharesunderlying
thesubscription
rights toshares

8th Series of Subscription Common
Rights to Shares(Note 1)
shares(Treasury subscription rights
to shares)(Notes 2, 3)
9th Series of Subscription CommonsharesRights to Shares(Note 4)(Treasury subscription rights
to shares)(Notes 4, 5)  –Number of shares underlying
the subscription rights to shares
Balanceat thebeginningof thefiscal year

Increaseduring the
fiscal year

Decreaseduring the
fiscal year

Balanceat theend of the
fiscal year

Balance at
end of the
fiscal year
(Thousandsof yen)

3,200
(–)

–
(2,600)3,200(2,600)

–
(–)

¥–
(–)

3,400
(–)

–
(3,400)3,400(3,400)

–
(–)

–
(–)

6,600
(–)

–
(6,000)6,600(6,000)

–
(–)

¥–
(–)

Notes: 1. The decrease in the 8th Series of Subscription Rights to Shares was due to the exercise of subscription rights to 600 sharesand the acquisition of treasury subscription rights to 2,600 shares.
2. The increase in the 8th Series of Subscription Rights to Shares was due to the acquisition of treasury subscription rights
to shares.
3. The decrease in the 8th Series of Subscription Rights to Shares was due to the retirement of treasury subscription rights
to shares.
4. The decrease in subscription rights and the increase in treasury subscription rights to the 9th Series of Subscription Rights toShares was due to the acquisition of treasury subscription rights to shares.
5. The decrease in treasury subscription rights to the 9th Series of Subscription Rights to Shares was due to the retirement oftreasury subscription rights to shares.

3 Dividends(1) Dividends paid
Not applicable(2) Dividends with a record date that belongs to the fiscal year under review, but an effective date that falls in
the following fiscal year
Not applicable(Number of shares)

Issued shares
Common shares(Note)
Total
Treasury stock
Common share
Total

Balance atthe beginning of
the fiscal year

Increaseduringthe fiscal year

Decreaseduringthe fiscal year

Balance at
end ofthe fiscal year

11,630,800
11,630,800

686,200
686,200––

12,317,000
12,317,000

79
79

–
–

–
–

79
79

Note: The increase in common shares was due to a capital increase through a third-party placement of shares conducted on
November 17, 2014.

2 Subscription rights to shares

Category

Components of subscription
rights to shares

Filing3rd Series of Unsecured
company Convertible Bonds with
(Parent
Subscription Rights tocompany) Shares(Note)
4th Series of Unsecured
Convertible Bonds with
Subscription Rights toShares(Note)
Subscription rights toshares as stock options
Total

Type ofsharesunderlying
thesubscription
rights tosharesNumber of shares underlying
the subscription rights to shares
Balanceat thebeginningof thefiscal year

Increaseduring the
fiscal year

Decreaseduring the
fiscal year

Balanceat theend of the
fiscal year

Balance at
end of the
fiscal year
(Thousandsof yen)Commonshares–643,086–

643,086¥  –

Commonshares– 1,945,101– 1,945,101

–

  –

–

–

–

–

858

  –

–

–

–

–

¥858

Note: The increase during the fiscal year was due to the issuance of bonds. The lump-sum method was adopted for reporting purposes.

39

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Notes

The breakdown of assets and liabilities of Care Online Limited at the point in time it was consolidated as a
subsidiary through the acquisition of new shares, and the relationship between the acquisition price of Care
Online Limited shares and the net amount paid to acquire Care Online Limited are as follows.

3 Dividends(1) Dividends paid
Not applicable(2) Dividends with a record date that belongs to the fiscal year under review, but an effective date that falls in
the following fiscal year
Not applicable(Consolidated Statements of Cash Flows)*1 Cash and deposits in the balance sheets and cash and cash equivalents in the consolidated statement ofcash flows at the end of the fiscal year
(Thousands of yen)

Cash and deposits
Cash and cash equivalents

Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)

Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)¥1,253,266
1,253,266¥3,930,484
3,930,484(Thousands of yen)

Current assets
Noncurrent assets
Goodwill
Current liabilities
Noncurrent liabilities
Acquisition price of Care Online Limited shares
Cash and cash equivalents of Care Online Limited
Net: Payment for the acquisition of Care Online Limited¥ 43,942
21,92438,306(28,094)(16,322)59,756(28,103)¥ 31,653*3 The main breakdown of increase in assets and liabilities in fiscal 2014, as a result of the transfer of business operations to NCXX Solutions Inc., is as follows.
(Thousands of yen)

*2 The main breakdown of assets and liabilities of subsidiaries that were consolidated by acquiring newshares in fiscal 2014
The breakdown of assets and liabilities of NCXX Solutions Inc., at the point in time it was consolidated as a
subsidiary through the acquisition of new shares, and the relationship between the acquisition price of NCXX
Solutions Inc. shares and the net amount paid to acquire NCXX Solutions Inc. are as follows.

Current assets
Noncurrent assets
Total assets
Current liabilities
Total liabilities¥264,455
51,415¥315,870¥ 41,410¥ 41,410(Thousands of yen)

Current assets
Deferred assets
Goodwill
Current liabilities
Acquisition price of NCXX Solutions Inc. shares
Cash and cash equivalents of NCXX Solutions Inc.
Net: Amount paid to acquire NCXX Solutions Inc.

¥ 480,447
88
1,079
(975)
480,640(480,447)¥     192

(Lease Transactions)(As a lessee)
Lease transactions were omitted from record in these financial statements in conformity with Article 15-3 of
the Ordinance on Consolidated Financial Statements, due to the small amount per contract and immaterialityof the content.

40

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(Financial Instruments)
1. Conditions of financial instruments(1) Policy regarding financial instruments
As a policy, the NCXX Group receives loans from banks and other FISCO Group companies primarily to
procure operating funds, in tandem with managing surplus funds in the form of short-term deposits, andinvestment and loans to other FISCO Group companies. This is done in conformity with parent company
FISCO Ltd.’s Group financial policy of optimizing funding efficiency by adjusting the surplus and shortage offunds among FISCO Group companies. Moreover, the policy of the NCXX Group is to use derivatives transactions for hedging against the risk of interest rates and exchange rates on loans payable fluctuating, and torefrain from using them for speculative purposes.

Derivative transactions are managed in accordance with internal rules that set forth transaction procedures
and transaction authority. The Company’s management division monitors information on transaction balances,
exchange rate movements, and gains or losses on derivative transactions on a daily or a monthly basis.

2. Fair value of financial instruments
The carrying amounts in the consolidated balance sheet, fair values, and their differences as of November 30,
2013 and 2014 are as follows. In addition, financial instruments, whose fair values cannot be reliably determined, are not included. (Please see “Note 2. Carrying amount of financial instruments whose fair values
cannot be reliably determined.”)Fiscal 2013 (As of November 30, 2013)(2) Content, risk, and risk management of financial instruments
Notes and accounts receivable–trade are exposed to the credit risk of customers (risk of default by customers
or counterparties). Furthermore, 32.4% of that exposure was to the NCXX Group’s largest customer as ofNovember 30, 2014. To mitigate this risk, relevant departments within each of the Group’s business divisions
strive to promptly detect and reduce the risk of trade receivables defaulting by keeping track of the due date
and amount of notes and accounts receivable by customer or counterparty.
The short-term loans NCXX makes are for managing funds in conformity with the aforementioned FISCO
Group financial policy.
NCXX’s investment securities are primarily unlisted stocks, and are therefore exposed to the risk of prices
fluctuating. To mitigate this risk, NCXX periodically screens the assessed value and financial position of theissuer of these financial instruments.
As a rule of thumb, trade payables, namely accounts payable—trade, and accounts payable—other havepayment dates that are due in one month or less. Furthermore, the loans NCXX receives are primarily for the
purpose of procuring operating funds.
Trade payables and loans payable are exposed to the liquidity risk involved in fund procurement (risk ofdefaulting on the payment date). To mitigate and manage this liquidity risk, the Company’s financial division
formulates a timely funding operation plan based on the reports it receives from the Group’s business divisions.
Certain variable interest rate loans NCXX has received are exposed to the risk of interest rates fluctuating.
To mitigate this risk, the Company uses interest rate swaps to hedge against the risk of interest payable onthese loans fluctuating. For information regarding hedge accounting methods, hedge instruments and hedge
targets, hedging policy, and method of evaluating hedging effectiveness, please refer to “Notes to theConsolidated Statements, 4 Accounting Standards, (6) Accounting methods for significant hedging.”
Certain accounts payable are procurement liabilities denominated in foreign currency in conjunction with
manufacturing consigned to an overseas ODM manufacturer. For this reason, the Company uses foreign
currency forward contracts and other arrangements to mitigate the risk of foreign exchange fluctuations
associated with those foreign currency-denominated procurement liabilities.

(Thousands of yen)

(1) Cash and deposits(2) Notes and accounts receivable—trade(3) Derivatives
Total(1) Notes and accounts payable—trade(2) Accounts payable—other(3) Current portion of bonds(4) Short-term loans payable(5) Long-term loans payable(including current portion)
Total

Carrying amount

Fair value

Difference¥1,253,266
484,993411,137¥2,149,398¥  237,766
28,521200,000
152,500¥1,253,266
484,993411,137¥2,149,398¥  237,766
28,521200,000
152,500

¥–
–
–
¥–
¥–
–
–
–

285,659¥  904,447

283,779¥  902,567(1,879)¥(1,879)

Notes: 1. Measurement of fair value of financial instruments, as well as investment securities and derivative transactions
Assets:(1) Cash and deposits and (2) Notes and accounts receivable—trade
The fair value is stated as the carrying amount because the fair value approximates the carrying amount given the short settlement
period of these instruments.
(3) Derivatives
Fair values are measured based on quotations provided by firms with which the NCXX Group has entered into foreign exchange
margin trading agreements.
Liabilities(1) Notes and accounts payable—trade (2) Accounts payable—other (3) Current portion of bonds and (4) Short-term loans payable
Fair value is stated at carrying amount because the fair value approximates the carrying amount given the short settlement period ofthese instruments.
(5) Long-term loans payable (including current portion)
Fair value is measured as the present value of the total amount of loan principal and interest, discounted using an interest rate thatwould apply to a similar new loan.

41

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Fiscal 2014 (As of November 30, 2014)

2. Carrying amount of financial instruments whose fair values cannot be reliably determined(Thousands of yen)(Thousands of yen)

(1) Cash and deposits(2) Notes and accounts receivable—trade(3) Short-term loans payable
Total(1) Notes and accounts payable—trade(2) Accounts payable—other(3) Current portion of bonds(4) Convertible bonds with subscription
rights to shares(5) Long-term loans payable(including current portion)
Total

Carrying amount

Fair value

Difference¥3,930,484
665,867
448,887¥5,045,239¥  109,723
112,999
200,000¥3,930,484
665,867
448,887¥5,045,239¥  109,723
112,999
200,000

¥–
–
–
¥–
¥–
–
–

1,215,000

1,189,551(25,448)

1,026,511¥2,664,234

1,032,154¥2,644,428

5,642¥(19,805)

Notes: 1. Measurement of fair value of financial instruments, as well as investment securities and derivative transactions
Assets:(1) Cash and deposits (2) Notes and accounts receivable—trade and (3) Short-term loans payable
The fair value is stated as the carrying amount because the fair value approximates the carrying amount given the short settlement
period of these instruments.
Liabilities(1) Notes and accounts payable—trade (2) Accounts payable—other and (3) Current portion of bonds
Fair value is stated at carrying amount because the fair value approximates the carrying amount given the short settlement period ofthese instruments.
(4) Convertible bonds with subscription rights to shares
Fair value is measured as the present value of the total amount of bond principal and interest, discounted using an interest rateadjusted for the remaining maturity and the credit risk of the bonds.
(5) Long-term loans payable (including current portion)
Fair value is measured as the present value of the total amount of loan principal and interest, discounted using an interest rate thatwould apply to a similar new loan. However, certain long-term loans payable with variable interest rates are subject to special treatment
for interest rate swaps. (Please see “Derivative Transactions” below.) The fair value of these loans is measured by discounting the total
amount of the loan principal and interest, which are accounted for together with the respective interest rate swaps, using a reasonably
estimated interest rate that would apply to a similar new loan.
Derivative transactions
Interest rate swaps subject to special treatment are accounted for together with the long-term loans payable that are the hedge
targets. Therefore, the fair value of the interest rate swaps is included in the fair value of the respective long-term loans payable.

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)¥20,954¥12,758

Unlisted stocks (investment securities)

Fair value is not disclosed because the fair value of these stocks cannot be reliably determined given that they do not have market
prices and their future cash flows cannot be estimated.
3. Maturity analysis for financial assets and investment securities with contractual maturities after the fiscal year-end
Fiscal 2013 (As of November 30, 2013)(Thousands of yen)

Cash and deposits
Notes and accounts receivable—trade
Total

Due in one
year or lessDue after one year
through five years

Due after five years
through ten years

Due after
ten years¥1,253,266
484,993¥1,738,260

¥–
–
¥–

¥–
–
¥–

¥–
–
¥–

Due in one
year or lessDue after one year
through five years

Due after five years
through ten years

Due after
ten years¥3,930,484
665,867
448,887¥5,045,239

¥–
–
–
¥–

¥–
–
–
¥–

¥–
–
–
¥–

Fiscal 2014 (As of November 30, 2014)(Thousands of yen)

Cash and deposits
Notes and accounts receivable—trade
Short-term loans payable
Total

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4. Scheduled repayments of loans, bonds, and other interest-bearing debt after the fiscal year-end
Fiscal 2013 (As of November 30, 2013)(Thousands of yen)

Short-term loans
payableCurrent portion ofbonds
Long-term loans
payableAccounts payable—
installment
purchaseTotal

Due in one
year or lessDue after one
year throughtwo years

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

Due after
five years¥152,500

¥–

¥–

¥–

¥–

¥–

200,000

–

–

–

–

–

57,984

81,292

57,94439,604

19,704

29,131

Fiscal 2014 (As of November 30, 2014)
Unlisted investment securities (carrying amount ¥12,758 thousand) are not disclosed because the fair valueof these securities cannot be reliably determined given that they do not have market prices.

2. Loss on valuation of investment securities
NCXX recorded an ¥8,196 thousand loss on valuation of investment securities (¥8,196 thousand on investment securities—other) in fiscal 2014.
Loss on valuation is recorded in full if the fair value at fiscal year-end falls more than 50% in relation to theacquisition price of investment securities. If the fall in fair value is around 30 to 50%, a loss on valuation
deemed appropriate is recorded in view of factors such as the likelihood of prices recovering.

(Derivative Transactions)
2,209¥412,693

948¥82,240

948¥58,892948¥40,552

101¥19,805–¥29,131

Fiscal 2013 (As of November 30, 2013)
Derivative transactions to which hedge accounting is not applied
Foreign exchange(Thousands of yen)

Fiscal 2014 (As of November 30, 2014)
Contract amountAmount ofcontract
exceeding
one year

Fair value

Valuation gain

¥2,884,307¥2,884,307¥–¥–¥3,027,626¥3,027,626¥143,318¥143,318(Thousands of yen)

Current portion ofbonds
Convertible bonds
with subscription
rights to shares
Long-term loans
payableAccounts payable—
installment
purchaseTotal

Due in one
year or lessDue after one
year throughtwo years

Due after two
years throughthree years

Due after three
years throughfour years

Due after four
years throughfive years

Due after
five years¥200,000

¥–

¥–

¥–

¥–

¥–

Category

Type of transaction

Off-market
transaction

Foreign exchange margin tradeLong position
U.S. dollars

Total
–

–

1,215,000–––

290,675

288,274

209,486

147,180

76,92913,967

6,442¥497,117

6,229¥294,504

6,327¥1,430,813

1,126¥148,306–¥76,929–¥13,967(Investment Securities)
1. Investment securities—otherFiscal 2013 (As of November 30, 2013)
Unlisted investment securities (carrying amount ¥20,954 thousand) are not disclosed because the fair valueof these securities cannot be reliably determined given that they do not have market prices.

Notes: 1. Calculation of fair value		Fair value is based on the exchange rate indicated by the company with which the foreign exchange margin trading agreement was concluded.
2.	The valuation gain of ¥143,318 thousand was recorded as a foreign exchange gain in the consolidated statements ofincome, and as a derivatives asset, along with the ¥267,819 thousand in initial margin for the transaction above, in the
consolidated balance sheets.

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3. Retirement benefit expenses

Fiscal 2014 (As of November 30, 2014)
Derivative transactions to which hedge accounting is applied
Interest rate

(Thousands of yen)
Fiscal 2013 (From
December 1, 2012 toNovember 30, 2013)(Thousands of yen)
Hedge accounting
methodType of transaction

Special treatment Interest rate swapof interest ratetransaction
swaps
Variable interest—
received
Fixed interest—paid

Main hedge target

Contract amountAmount of contract
exceeding one year

¥200,000¥121,662

Fair value

Long-term loans
payable(Note)(Note) Interest rate swaps to which the special treatment is applied are accounted for together with the long-term loans payabletargeted for hedging. Therefore, their fair value is included in the fair value of long-term loans payable.

¥7,556
7,245
311

4. Basis for calculation of retirement benefit obligations
Amortization period of transitional obligations for retirement benefits: 15 years
Fiscal 2014 (From December 1, 2013 to November 30, 2014)(Retirement Benefits)

1. Overview of retirement benefit plan

Fiscal 2013 (From December 1, 2012 to November 30, 2013)

1. Overview of retirement benefit plan

NCXX has adopted a lump-sum payment plan as part of its defined retirement benefit plan. In addition, anew, elective defined contribution pension plan was introduced in November 2003. Employees who elected
to join the new plan have been transferred out of the existing lump-sum retirement benefit payment plan into
the defined contribution pension plan.

2. Retirement benefit obligations(Thousands of yen)
Fiscal 2013 (As of
November 30, 2013)(1) Retirement benefit obligations(2) Unappropriated transitional obligations for retirement benefits(3) Provision for retirement benefits (1)– (2)Retirement benefit expenses(1) Premiums paid on defined contribution pension plan(2) Amortization of transitional obligations for retirement benefits¥3,511414¥3,096NCXX has adopted a lump-sum payment plan as part of its defined retirement benefit plan. In addition, anew, elective defined contribution pension plan was introduced in November 2003. Employees who elected
to join the new plan have been transferred out of the existing lump-sum retirement benefit payment plan into
the defined contribution pension plan.
Certain consolidated subsidiaries have an elective system in which employees can choose between adefined contribution pension plan and a prepaid retirement benefit plan.
NCXX applies the simplified method for calculating the liability and expenses on its lump-sum retirement
benefit plan.

2. Simplified-method defined benefit plan(1) Reconciliation of balance of simplified-method liability for retirement benefit as ofDecember 1, 2013 and balance as of November 30, 2014
(Thousands of yen)

Balance of liability for retirement benefit as of December 1, 2013
Retirement benefit expenses
Balance of liability for retirement benefit as of November 30, 2014

¥3,096311¥3,407

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Notes(2) Reconciliation of balance of retirement benefit obligations and liability for retirement
benefit on the balance sheet as of November 30, 2014

2. Stock option details, scale and change(1) Stock option details(Thousands of yen)

Retirement benefit obligations for non-funded plans
Unappropriated transitional obligations for retirement benefits
Net liability on balance sheet¥3,511(103)
3,407

Liability for retirement benefit
Net liability on balance sheet

3,407
3,407

(3) Retirement benefit expenses(Thousands of yen)

Expensing of transitional obligations for retirement benefits
Retirement benefit expenses based on the simplified method

¥311
311

3. Defined contribution pension plan
The required contributions to the defined contribution pension plans of the Company and its consolidated
subsidiaries were ¥23,796 thousand.

11th Series of Subscription Rights to Shares

Status and number of option holders

Type of share and number of stock options(Note)
Grant date
Vesting condition

Required service period
Exercise period(Note) Recorded based on the number of eligible shares(2) Stock option scale and change
Existing stock options as of fiscal 2014 (ended November 2014) are recorded herein on the basis of thenumber of eligible shares.
1. Number of stock options(Shares)
11th Series ofSubscription Rights
to Shares

4. Prepaid retirement benefit plan
Payments made to the prepaid retirement benefit plans of consolidated subsidiaries were ¥6,248 thousand.

(Stock Options)
1. Stock option expense item and amount(Thousands of yen)
Fiscal 2014 (From
December 1, 2013 toNovember 30, 2014)

Stock compensation expense under selling,
general and administrative expenses¥858

NCXX directors: 5
NCXX employees: 3
NCXX subsidiary director: 1
Common shares: 100,000 shares
October 30, 2014
An option holder must remain in continued service
from the grant date (October 30, 2014) to the vestingdate (October 30, 2016)
October 30, 2014 to October 30, 2016
October 31, 2016 to October 30, 2020

Before vesting
As of November 30, 2013
GrantedForfeited
VestedOutstanding
After vesting
As of November 30, 2013
VestedExercised
Forfeited
Exercisable–
100,000––
100,000
–
–
–
–
–

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4. Method for estimating the number of vested stock options

2. Unit price information(Yen)
11th Series ofSubscription
Rights to Shares

Exercise price
Average stock price at exercise
Fair value on the grant date

¥738
–
206

3. Method for estimating the fair value of stock options
The method for estimating fair value of the 11th Series of Subscription Rights to Shares granted in fiscal 2014
was as follows.
1. Valuation method: Black-Scholes formula
2. Main assumptions and estimates
11th Series ofSubscription
Rights to Shares

Stock price volatility(Note 1)
Estimated period to expiry(Note 2)
Estimated dividend yield(Note 3)
Risk free interest rate(Note 4)

70.56%
3 years
0%0.063%

Notes: 1. Three years (from September 2011 to September 2014) calculated based on monthly stock price results.
2. Due to insufficient data for making a reasonable estimate, the period to expiry is estimated based on the assumption that thesubscription rights to shares will be exercised at the midpoint of the exercise period.
3. Based on dividend yields in the past.
4. The yield of Japanese government bonds for the estimated period to expiry.

A method reflecting the actual number of forfeited stock options was adopted due to the fundamental­difficulty of reasonably estimating the actual number of stock options that will be forfeited in the future.

(Tax-Effect Accounting)
1. Main factors giving rise to deferred tax assets and liabilities(Thousands of yen)
Fiscal 2013 (As of
November 30, 2013)

Deferred tax assets
Accrued enterprise taxes
Provision for product warranties
Provision for bonuses
Provision for retirement benefits
Liability for retirement benefit
Excess depreciation and amortization
Loss on valuation of telephone subscription right
Loss on valuation of inventories
Loss on valuation of subsidiaries’ stocks
Carry forwards of unused tax losses
OthersDeferred tax assets subtotal
Valuation allowance
Deferred tax assets total
Deferred tax liabilities
Goodwill adjustment
Deferred tax liabilities total
Net deferred tax liabilities

Fiscal 2014 (As of
November 30, 2014)¥6,216
15,964
–
1,103
–
6,377
995
10,521
31,789829,220790
902,979(897,805)
5,173

¥

–
–
¥–

(26,492)(26,492)¥(8,823)

7,118
32,076
10,901
–
1,214
5,606
995
14,60531,789613,342
4,115
721,766(704,097)
17,668

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2. Main items giving rise to material differences between the statutory income
tax rate and effective income tax rate(%)

Statutory income tax rate
(Adjustments)
Entertainment and other non-deductible expenses
Amortization of goodwill
Dividends and other non-taxable income
Inhabitants taxes—per capita levy
Change in valuation allowance
Downward adjustment to the ending balance of deferred
tax assets due to changes in statutory tax rate
Carry forwards of unused tax losses and other deductions
Others
Effective income tax rate

Fiscal 2013 (As of
November 30, 2013)

Fiscal 2014 (As of
November 30, 2014)

38.0%

38.0%

0.2
2.5
(0.0)
0.5
(0.2)

0.6
1.7
(0.0)
0.6
(2.5)

–
(32.9)
0.5
8.6%

6.5
(31.4)(0.2)
13.3%

3. Restatement of deferred tax assets and deferred tax liabilities due tochanges in the corporate income tax rate, etc.
Following the promulgation of the “Act for Partial Revision of the Income Tax Act” (Act No. 10, 2014) on
March 31, 2014, the special corporate tax for reconstruction will no longer be levied from fiscal years beginning on or after April 1, 2014. In line with this change, the statutory income tax rate used to calculate deferred
tax assets and deferred tax liabilities for temporary differences expected to reverse in or after the fiscal year
beginning on December 1, 2014 has been reduced from the previous 38.0% to 35.6%.
As a result of this change in taxation rate, the net amount of deferred tax liabilities (less the amount ofdeferred tax assets), as well as the amount of deferred income taxes, was reduced by ¥209 thousand.

(Asset Retirement Obligations)Fiscal 2013 (From December 1, 2012 to November 30, 2013) andFiscal 2014 (From December 1, 2013 to November 30, 2014)
Under its real estate lease contract, NCXX and its consolidated subsidiaries have obligations to restore their
Head Office to its original condition when vacating it. However, this asset retirement obligation cannot be
estimated reasonably, given that the period of use of the relevant lease asset remains unclear, and the Group
has no plan for relocating. Consequently, no such asset retirement obligation was recorded in this report.

(Segment Information)[Segment Information]
1. Overview of reportable segments
The Company’s reportable segments are components of the Company for which separate financial information is available. They are periodically examined by the Board of Directors for the purpose of deciding on
resource allocation and assessing business results.
The NCXX Group formulates comprehensive strategies at the NCXX Head Office and is expanding business activities related to the products and services it handles. The NCXX Group’s businesses are made up ofsegments classified based on products and services, as follows.
Please note that the systems development business operated by NCXX Solutions Inc. and the ASP service
business for nursing care centers operated by Care Online Limited have been included in the device businessfrom the fiscal year ended November 30, 2014.
Reportable segment

Device business

Internet travel business

Description of business

Development and sale of communication devices applying various wireless systems
Development and sale of PLC modems
Provision of systems solutions and maintenance services incidental to the above
Systems development
Cloud services
ASP services for nursing care centers
Purchasing and sale of mobile communication-related products in China
Operation of e-marketplace for travel-related products
Travel agency services for companies and individuals
Travel Estimate Services
Travel Concierge Services

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2. Calculation method for amounts of net sales, income and loss, assets andliabilities, and other items by reportable segment
The accounting policies and methods for reportable segments are the same as those shown in the notes tothe consolidated financial statements.
Segment income for reportable segments is based on operating income.

3. Information on net sales, income and loss, assets and liabilities, and otheritems by reportable segment
Fiscal 2013 (From December 1, 2012 to November 30, 2013)(Thousands of yen)
Reportable segment

Net sales
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income
Segment assets
Other items
Depreciation andamortization
Amortization of
goodwill
Increase in property,
plant and equipment
and intangible assets

Device business

Internet travelbusiness

Total

Adjustments

Consolidated¥3,150,081¥1,798,208¥4,948,289¥–¥4,948,289–
3,150,081
311,860
1,948,821

11,1001,809,308
17,081
492,563

11,1004,959,389
328,9422,441,385(11,100)(11,100)(69,473)
1,636,247–
4,948,289
259,468
4,077,632

121,283

2,374

123,657

1,331

124,989–

32,19832,198–32,198

Fiscal 2014 (From December 1, 2013 to November 30, 2014)(Thousands of yen)
Reportable segment

Net sales
Sales to third parties
Inter-segment sales
and transfers
Total
Segment income
Segment assets
Other items
Depreciation andamortization
Amortization of
goodwill
Increase in property,
plant and equipment
and intangible assets

Device business

Internet travelbusiness

Total

Adjustments

Consolidated¥4,613,375¥1,762,051¥6,375,427¥–¥6,375,427–
4,613,375
183,881
1,946,745–
1,762,051
37,540512,758–
6,375,427
221,4222,459,503––(139,080)
4,519,504–
6,375,427
82,341
6,979,008

22,674704

23,3784,274

27,65332,442

27,84760,290–60,29045,871–45,871

127,476

173,348

Notes: 1. Segment income is adjusted to operating income in the consolidated statements of income. Adjustments for segment
income mainly represent general and administration expenses that are not allocated to reportable segments.
2. Adjustments for segment assets represent corporate assets that are not allocated to reportable segments.
3. Adjustments for depreciation and amortization represent depreciation and amortization related to corporate assets.
4. Increase in property, plant and equipment and intangible assets mainly represents the increase in corporate assets.

[Related Information]
187,654596

188,250–

188,250

Notes: 1. Segment income is adjusted to operating income in the consolidated statements of income. Adjustments for segment
income mainly represent general and administration expenses that are not allocated to reportable segments.
2. Adjustments for segment assets represent corporate assets that are not allocated to reportable segments.
3. Adjustments for depreciation and amortization represent depreciation and amortization related to corporate assets.

Fiscal 2013 (From December 1, 2012 to November 30, 2013)

1. Information by products and services

Disclosure is omitted as the same information is shown in segment information.

2. Information by region(1) Net sales
Disclosure is omitted as sales to external customers in Japan accounts for over 90% of net sales in the consolidated statements of income.

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(2) Property, plant and equipment[Information on impairment loss on property, plant and equipment by reportable segment]

Disclosure is omitted as the amount of property, plant and equipment in Japan accounts for over 90% of
property, plant and equipment in the consolidated balance sheets.

Fiscal 2013 (From December 1, 2012 to November 30, 2013)
Not applicable

3. Information by major customer

Fiscal 2014 (From December 1, 2013 to November 30, 2014)
Not applicable(Thousands of yen)
Name

KAGA ELECTRONICS CO., LTD.

Net sales¥1,572,025

Segment

Device Business[Information on amortized amount and unamortized balance of goodwill by reportablesegment]
Fiscal 2013 (From December 1, 2012 to November 30, 2013)

Fiscal 2014 (From December 1, 2013 to November 30, 2014)(Thousands of yen)

1. Information by products and services

Disclosure is omitted as the same information is shown in segment information.
Amortized amountUnamortized balance

2. Information by region(1) Net sales
Disclosure is omitted as sales to external customers in Japan accounts for over 90% of net sales in the consolidated statements of income.

Device business

Internet travelbusiness

Corporate andelimination

Total

¥–
–

¥ 32,198
232,168¥––¥ 32,198
232,168

Fiscal 2014 (From December 1, 2013 to November 30, 2014)(Thousands of yen)

(2) Property, plant and equipment
Disclosure is omitted as the amount of property, plant and equipment in Japan accounts for over 90% of
property, plant and equipment in the consolidated balance sheets.

Amortized amountUnamortized balance

Device business

Internet travelbusiness

Corporate andelimination

Total¥ 32,442
341,166¥ 27,847
246,687¥––¥ 60,290
587,853

3. Information by major customer(Thousands of yen)
Name

KAGA ELECTRONICS CO., LTD.
SEIRYO ELECTRIC CORPORATIONNet sales¥1,069,297
705,642

Segment

Device Business
Device Business[Information on gain on bargain purchase by reportable segment]
Fiscal 2013 (From December 1, 2012 to November 30, 2013)
No items to report
Fiscal 2014 (From December 1, 2013 to November 30, 2014)A ¥56,822 thousand gain on bargain purchase was recorded as extraordinary income subsequent to theacquisition of additional shares in a consolidated subsidiary in the Internet travel business.

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[Information on Related Parties]
1. Transactions with related parties(1) Transactions between the filing company and related parties(a) Parent company of the filing company and major shareholders (only companies and other such entities)
Fiscal 2013 (From December 1, 2012 to November 30, 2013)

Type

Parent company

Other relatedcompanies

Major corporateshareholder

Name of company
or other entity

FISCO Ltd.

Diamond Agency, Inc.

Head office location

Paid-in capitalor investment(Millions of yen)

Minato-ku, Tokyo¥ 1,208

Minato-ku, Tokyo

Index Corporation(Note 2) Setagaya-ku,
Tokyo

407

39,379Description of businessor occupation

Percentage ofvoting rights held (%)

Relationshipwith related party

Informations­ervices­business,consulting
business(Ownership ratio)
Direct (35.07)
Indirect (25.79)

Concurrent
officers

Advertising
agency services(Ownership ratio)
Direct (25.79)

Nature of transaction

Funds lentInterest received

Concurrent
officers(Note 2)(Ownership ratio)
Direct (15.41)  –

Description of businessor occupation

Percentage ofvoting rights held (%)

Relationshipwith related party

Information­services­business,consulting
business

Direct (33.11)
Indirect (24.36)

Concurrent
officers

Amount oftransaction(Thousands of yen)

¥150,000
2,638

Funds repaid

100,000

Debt guarantee received
Interest paid
Capital increase throughthird-party placementof shares
Funds lentFunds recovered
Interest received

57,920386
599,982   –

150,000
150,000
801
–

Item

Short-term loans
receivable
Accounts
receivable—other
Short-term loans
payable   –
Accrued expenses   –

Ending balance(Thousands of yen)

¥150,000–––––

Short-term loans
receivable–

Accounts
receivable—other
Long-term loans
payable–23,308

Fiscal 2014 (From December 1, 2013 to November 30, 2014)

Type

Parent company

Name of company
or other entity

FISCO Ltd.

Address

Minato-ku, Tokyo

Paid-in capitalor investment(Millions of yen)

¥1,210Nature of transaction

Funds lentInterest received
Convertible bonds with
subscription rights toshares placed
Interest paid

Amount oftransaction(Thousands of yen)

¥150,000
4,126
600,000

3,282

Item

Short-term loans
receivable
Accounts
receivable—other
Convertible bonds
with subscription
rights to shares
Accounts
payable—otherEnding balance(Thousands of yen)

¥150,000
56
600,000

3,282

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Notes(b) Companies and other entities with the same parent company as the filing company and subsidiaries of other related companies of the filing company
Fiscal 2013 (From December 1, 2012 to November 30, 2013)
Name of company
or other entity

Head office location

Paid-in capitalor investment(Millions of yen)

FISCO Capital Ltd.

Minato-ku, Tokyo

¥33

Type

Companies withthe same parent
company

Description of businessor occupation

Consulting business

Percentage ofvoting rights held (%)

Relationshipwith related party   –Concurrent
officers

Nature of transaction

Amount oftransaction(Thousands of yen)Funds borrowed
Funds repaid
Interest paid

¥490,000
490,000
1,651

Item

Ending balance(Thousands of yen)

Short-term loans
payable¥–Accrued expenses–

Fiscal 2014 (From December 1, 2013 to November 30, 2014)
Not applicable.
(c) Officers of filing company, major shareholders and other persons (Individuals only)
Fiscal 2013 (From December 1, 2012 to November 30, 2013)

Type

Officer and his relatives

Name of company
or other entity

Tsukasa Akiyama

Description of businessor occupation

Officer

Percentage ofvoting rights held (%)   –

Relationshipwith related party

Representative Director
and President of
NCXX Inc.

Nature of transaction

Debt guarantee
received

Amount oftransaction(Thousands of yen)¥141,651

Item     –

Ending balance(Thousands of yen)¥–

Fiscal 2014 (From December 1, 2013 to November 30, 2014)

Type

Officer and his relatives

Name of company
or other entity

Tsukasa Akiyama

Description of businessor occupation

Officer

Percentage ofvoting rights held (%)   –

Relationshipwith related party

Representative Director
and President of
NCXX Inc.

Nature of transaction

Debt guarantee
received

Amount oftransaction(Thousands of yen)

¥53,987

Item     –

Ending balance(Thousands of yen)¥–

Notes: 1. Transaction terms and policy on determining transaction terms and conditions
		 (1) The interest rate on funds lent or borrowed is determined reasonably based on prevailing market interest rates. Moreover, collateral is not provided.
		 (2) In regard to the third-party placement of convertible bonds with subscription rights to shares, the issue price of the bond was ¥100 per ¥100 face value and the conversion price was ¥419, the closing price of the common shares of NCXX Inc. on the Tokyo Stock
Exchange JASDAQ Standard Market on October 29, 2014, the business day before the date of the Board of Directors’ resolution on the third-party placement. The issue price was determined based on discussions with the alottees, taking into consideration the
Company’s current circumstances, including its total number of issued shares and the number of new shares to be issued through the third-party placement, along with the liquidity, volatility, and recent rate of increase in value of NCXX Inc. shares trading on thestock market, as well as various other factors related to stock market conditions.
		 (3) The Company has received debt guarantees for bank loans. The Company does not pay a fee for those debt guarantees.

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(2) Transactions between the filing company and its consolidated subsidiaries and related parties(a) Parent company of the filing company and major shareholders (only companies and other such entities)
Fiscal 2013 (From December 1, 2012 to November 30, 2013)

Type

Parent company

Name of company
or other entity

FISCO Ltd.

Head office location

Paid-in capitalor investment(Millions of yen)

Minato-ku, Tokyo¥1,208Description of businessor occupation

Percentage ofvoting rights held (%)

Relationshipwith related party

Information services
business, consulting
business(Ownership ratio)
Direct (35.07)
Indirect (25.79)

Concurrent
officers

Description of businessor occupation

Percentage ofvoting rights held (%)

Relationshipwith related party

Information services
business, consulting
business(Ownership ratio)
Direct (33.11)
Indirect (24.36)

Concurrent
officers

Nature of transaction

Funds lent

Amount oftransaction(Thousands of yen)

¥200,000Interest received

3,517

Nature of transaction

Amount oftransaction(Thousands of yen)Funds recovered
Funds lentInterest received¥200,000
200,000
5,501

Item

Short-term loans
receivable
Accounts
receivable—otherEnding balance(Thousands of yen)

¥200,000–

Fiscal 2014 (From December 1, 2013 to November 30, 2014)

Type

Parent company

Name of company
or other entity

FISCO Ltd.

Head office location

Paid-in capitalor investment(Millions of yen)

Minato-ku, Tokyo¥1,210Item

Short-term loans
receivable
Accounts
receivable—otherEnding balance(Thousands of yen)

¥200,000–(b) Companies and other entities with the same parent company as the filing company and subsidiaries of other related companies of the filing company
Fiscal 2013 (From December 1, 2012 to November 30, 2013)

Type

Companies withthe same parent
company

Name of company
or other entity

Head office location

Paid-in capitalor investment(Millions of yen)

FISCO Capital Ltd.

Minato-ku, Tokyo¥33

Description of businessor occupation

Consulting business

Percentage ofvoting rights held (%)

Relationshipwith related party

   –

   –

Nature of transaction

Amount oftransaction(Thousands of yen)Funds recovered¥80,000

Interest received

2,202

Nature of transaction

Amount oftransaction(Thousands of yen)

Item

Short-term loans
receivable
Accounts
receivable—otherEnding balance(Thousands of yen)¥––

Fiscal 2014 (From December 1, 2013 to November 30, 2014)

Type

Companies withthe same parent
company

Name of company
or other entity

Head office location

Paid-in capitalor investment(Millions of yen)

FISCO Capital Ltd.

Minato-ku, Tokyo¥33

Description of businessor occupation

Consulting business

Percentage ofvoting rights held (%)

Relationshipwith related party

   –

   –

Funds lentInterest received¥80,000
1,891

Item

Short-term loans
receivable
Accounts
receivable—otherEnding balance(Thousands of yen)

¥80,000
131

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Notes(c) Officers of the filing company, major shareholders and other persons (Individuals only)
Fiscal 2013 (From December 1, 2012 to November 30, 2013)

Type

Officer of a significant­subsidiary and his
relatives

Name of company
or other entity

Satoshi Ishii

Description of businessor occupation

Officer

Percentage ofvoting rights held (%)    –Relationshipwith related party

Representative Directorof a subsidiary

Nature of transaction

Debt guarantee
received

Amount oftransaction(Thousands of yen)

¥32,360

Item     –

Ending balance(Thousands of yen)¥–

Fiscal 2014 (From December 1, 2013 to November 30, 2014)

Type

Officer of a significant­subsidiary and his
relatives

Name of company
or other entity

Satoshi Ishii

Description of businessor occupation

Officer

Percentage ofvoting rights held (%)    –Relationshipwith related party

Representative Directorof a subsidiary

Notes: Transaction terms and policy on deciding transaction terms and conditions(1) The interest rate on funds lent is determined reasonably based on prevailing market interest rates. Moreover, collateral is not provided.
(2) The subsidiary has received debt guarantees for bank loans. The subsidiary does not pay a fee for those debt guarantees.
For reference, Satoshi Ishii stepped down from the position of Representative Director of a subsidiary, effective November 30, 2014.

2. Notes on the parent company or significant related companies(1) Parent company information
1. FISCO Ltd. (Listed on the Tokyo Stock Exchange JASDAQ Growth Market)
2. SEQUEDGE INVESTMENT INTERNATIONAL LIMITED (Unlisted)(2) Summary financial information on significant related companies
Not applicable

Nature of transaction

Debt guarantee
received

Amount oftransaction(Thousands of yen)

¥27,320

Item     –

Ending balance(Thousands of yen)

¥–

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Notes

(Business Combination)
I Absorption-Type Corporate Split by Consolidated Subsidiary
1. Overview of business combination(1) Name and business of the absorption-type corporate split target
Name of target: SJI Inc.
Business: Systems development business of SJI Inc.’s Chubu Division, Kansai Division, and Kyushu Division(2) Main reason for the business combination and rationale for deciding
on the acquisition target
By succeeding the systems development business of SJI Inc.’s Chubu Division, Kansai Division, and Kyushu
Division through an absorption-type corporate split, the NCXX Group can expect to realize a high degree ofsynergy with the strong systems development capabilities, and technological expertise for developing hardware for hosting the systems, split from the target company. This goes beyond the provision of devices as
products to include the provision of user-friendly packaged products incorporating dedicated systems andthe in-housing of various software and systems development needed for NCXX to develop new products,
which otherwise would have been outsourced. In addition, the NCXX Group can aim for business expansion,as this will enable it to build a marketing infrastructure targeting prominent companies in the respective
regions and contribute to increased sales of remote monitoring, automotive, and other M2M products.

3. Acquisition cost of acquisition target and components(Thousands of yen)

Consideration for
acquisition
Direct acquisition expenses
Acquisition cost

Cash and other payments
Fair value of 2,400 shares of NCXX Solutions Inc. stock issued
on the business combination date at ¥50,000 per share
Advisory and other fees

¥480,000
120,000
9,773¥609,773

4. Amount of goodwill, reason for goodwill, amortization method andamortization period(1) Amount of goodwill¥335,312 thousand(2) Reason for goodwill
Goodwill consists mainly of the premium expected from business expansion of the NCXX Group as a result of
the synergy between the Group’s business operations and the aforementioned systems development business.

(3) Amortization method and amortization period(3) Business combination date
January 31, 2014(4) Statutory basis of business combination
An absorption-type corporate split with SJI Inc. as the corporate split target and NCXX Solutions Inc. as the
succeeding company.

(5) Name of company after business combination
NCXX Solutions Inc.

2. Period of business results of the acquisition target includedin the consolidated financial statements
January 31, 2014 to November 30, 2014

Straight line method over 10 years

5. Amount of assets and liabilities transferred on the business combination
date and the main components(Thousands of yen)

Current assets
Noncurrent assets
Total assets
Current liabilities
Total liabilities¥264,455
51,415¥315,870¥ 41,410¥ 41,410

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6. Estimated impact on NCXX’s consolidated statement of income for fiscal
2014, and the estimation method, assuming the business combination wascompleted on December 1, 2013
(Millions of yen)

Net sales
Operating income
Ordinary income
Income before income taxes
and minority interests
Net income
Net income per share

¥382
17
17
17
11
¥0.95

(Estimation Method)(2) Main reason for the business combination and rationale for deciding on the acquisition
target company
Services provided by Care Online Limited’s own nursing care centers are expected to expand in line withgrowth in the nursing care market in Japan. At the same time, NCXX aims to leverage various synergies toexpand its device business and the business operations of Care Online. These synergies include combining
Care Online’s software and NCXX’s communication technology assets in giving rise to tablets and other new
solutions for confirming and inputting information on a timely basis on the front lines of home-visit nursing andnursing care, in response to the policies on home-visit healthcare and nursing care the government is in theprocess of promoting. (An optimal mobile platform with little impact on the human body and medical equipment can be established with the use of Personal Handyphone System (PHS) equipment said to emit low
amounts of electromagnetic waves.) In addition, the Company’s various technology assets and customer
domains can be shared to realize synergies in providing services, such as keeping watch of the elderly wholive alone, who as a group have become a social concern in Japan.

The estimated impact is calculated by subtracting information on sales and profits in the consolidated statements of income of NCXX Inc. from the information on sales and profits calculated on the assumption thatthe business combination was completed on December 1, 2013. Moreover, the amount of goodwill amortization is calculated assuming goodwill from the business combination is recognized on December 1, 2013.
Notes on this business combination have not received accounting audit certification.

(3) Business combination date

II Acquisition of Shares in Subsidiaries
1. Overview of business combination(5) Name of company after business combination(1) Name and business of acquired company
Name of acquired company: Care Online Limited
Business: Application service provider (ASP) services for nursing care centers

December 12, 2013(4) Statutory basis of business combination
Share acquisition

Care Online Limited(6) Ratio of voting rights acquired
Ratio of voting rights before share acquisition: –%Ratio of voting rights acquired on the business combination date: 100%

2. Period of business results of the acquired company includedin the consolidated financial statements
January 1, 2014 to November 30, 2014, as the effective acquisition date is December 31, 2013.

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3. Acquisition cost of the acquired company and components(Thousands of yen)

Consideration for acquisition    Cash payment
Acquisition cost

¥59,756¥59,756

4. Amount of goodwill, reason for goodwill, amortization method andamortization period(1) Amount of goodwill¥38,306 thousand

III Transactions with Entities under Common Control
Additional acquisition of shares in subsidiaries

1. Overview of business combination(1) Name and business of acquired company
Name of acquired company: e-tabinet.com
Business: Internet travel business(2) Main reason for the business combination and rationale for deciding on the acquisition
target company
NCXX acquired shares at the request of minority shareholders and to strengthen the Group’s
management structure.

(2) Reason for goodwill
Goodwill consists mainly of the premium expected from business expansion of the NCXX Group as a result of
the synergy between the Group’s business operations and the aforementioned systems development business.

(3) Business combination date(3) Amortization method and amortization period(4) Statutory basis of business combination

Straight line method over 10 years

Transactions with minority shareholders to acquire shares

5. Amount of assets and liabilities transferred on the business combination
date and the main components(5) Name of company after business combination(Thousands of yen)

Current assets
Noncurrent assets
Total assets
Current liabilities
Noncurrent liabilities
Total liabilities¥43,942
21,924¥65,866¥28,094
16,322¥44,416

6. Estimated impact on NCXX’s consolidated statement of income for fiscal
2014, and the estimation method, assuming the business combination wascompleted on December 1, 2013
Impact of the acquisition on NCXX’s consolidated statement of income for fiscal 2014 was negligible andomitted from disclosure.

June 27, September 3, and September 19, 2014

No change(6) Ratio of NCXX’s voting rights in e-tabinet.com
Before additional acquisitions: 55.47%
After additional acquisitions: 94.05%

2. Overview of accounting treatment
The aforementioned transactions concerning entities under common control were treated as transactions
with minority shareholders based on the “Accounting Standard for Business Combinations” (ASBJ Statement
No. 21, December 26, 2008) and the “Revised Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ Guidance No. 10, December 26, 2008).

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3. Acquisition cost of the acquired company and components(Per Share Information)(Thousands of yen)

Consideration for acquisition    Cash payment
Acquisition cost

(Yen)
Fiscal 2013
(From December 1, 2012
to November 30, 2013)¥162,336¥162,336

4. Amount of gain on bargain purchase and reason for gain on bargain
purchase (from shares acquired on June 27, 2014 and September 19, 2014)(1) Amount of gain on bargain purchase¥56,822 thousand(2) Reason for gain on bargain purchase

Net assets per share
Net income per share¥212.57
39.79

Although there were potentially dilutive shares, these shares
did not have a dilutive effect. Accordingly, diluted net income
per share is not disclosed.

Fiscal 2014
(From December 1, 2013
to November 30, 2014)

Net assets per share
Net income per share
Diluted net income
per share(1) Amount of goodwill¥42,367 thousand(2) Reason for goodwill
Goodwill resulted from the cost of subsidiary shares acquired from minority shareholders being greater thanthe decline in minority interests.

(3) Amortization method and amortization period
Straight line method over 10 years

51.60

Notes: 1. The Company conducted a 100-for-1 stock split of common shares on June 1, 2013. Net assets per share and net income
per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year.
2. The basis for calculating the amounts for net income per share and diluted net income per share is as follows:

The gain on bargain purchase resulted from the cost of subsidiary shares acquired from minority shareholders
being less than the decline in minority interests.

5. Amount of goodwill and reason for goodwill (from shares acquired on
September 3, 2014)¥276.14
54.07(Thousands of yen)Amounts for net income per share
Net income
Amounts not attributable to commonshareholders
Net income related to common shares
Average number of common shares during
the period (Shares)
Amounts for diluted net income per share
Adjustments to net income[Of which, interest expenses(after tax adjustment)]
Increase in number of common shares(Shares)[Of which, convertible bonds with­subscription rights to shares (Shares)]
Outline of dilutive shares excluded from the calculationof diluted net income per share because of not having
a dilutive effectFiscal 2013
(From December 1, 2012
to November 30, 2013)

Fiscal 2014
(From December 1, 2013
to November 30, 2014)¥430,325¥630,311–
430,325–
630,311

10,814,919

11,657,041

–

2,034

(–)

(2,034)–

597,795(–)(597,795)

Two types of subscription rights toshares (264 subscription rights for
660,000 underlying shares)(Note 3)

11th Series of Subscription Rights
to Shares (1,000 subscription rights
for 100,000 underlying shares)

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Notes

3. The Company issued the 8th Series of Subscription Rights to Shares and the 9th Series of Subscription Rights to Shares(collectively, “the Subscription Rights”) on June 29, 2011. Pursuant to the issuance guidelines for the Subscription Rights,
Brilliance Hedge Fund and Brilliance Multi Strategy Fund, the owners of the Subscription Rights, requested the Company topurchase all of the remaining Subscription Rights for consideration equivalent to the paid-in amount for the Subscription
Rights. Accordingly, pursuant to a resolution of the Board of Directors on June 27, 2013, the Company purchased all of theremaining Subscription Rights as of the acquisition date and cancelled all of the Subscription Rights immediately after theacquisition. Details are as follows:(1) Name of the subscription rights to sharesthat were acquired and cancelled(2) Number of subscription rights to sharesthat were acquired and cancelled(3) Acquisition and cancellation date(4) Acquisition value(5) Number of subscription rights to sharesremaining after the cancellation

8th Series of Subscription Rights to Shares and
9th Series of Subscription Rights to Shares
Total of 240 subscription rights(104 for the 8th Series of Subscription Rights to Shares and
136 for the 9th Series of Subscription Rights to Shares)June 27, 2013
Total of ¥1,337,240(¥6,334 per subscription right for the 8th Series of­Subscription Rights to Shares and ¥4,989 per subscription
right for the 9th Series of Subscription Rights to Shares)
0(Subsequent Events)
1. Incorporation-type company split
On January 26, 2015, the Board of Directors of NCXX resolved to shift to a holding company structure by
conducting an incorporation-type company split, effective April 1, 2015. Details of the incorporation-typecompany split are as follows.

(1) Purpose of the company split
NCXX is strengthening and expanding its entry into the so-called machine to machine (M2M) market, which isa growth market in which various means of information communication technology (ICT) are applied todevelop various ICT systems and configurations required for interfacing machines with other machines. This
is in contrast to the standalone smartphone and mobile telecommunication market, which is already in theprocess of saturating. In consideration of the above, NCXX’s policy had been to drive growth by securing
R&D funds for investment in select markets, while continuing to maintain a stable earnings base.
However, amid major upheavals in the foreign exchange market recently, NCXX concluded it was importantto build an efficiently competitive sales framework, capable of responding rapidly to changes in the market,
and decided to shift to a holding company structure. This will be done by implementing a company split inwhich a newly established NCXX Inc. will succeed the Company’s device business (excluding the agricultural
ICT business). The Company plans to remain in charge of growing the nursing care robotics business andagriculture business after being renamed NCXX Group Inc., the holding company of the NCXX Group.

By transitioning to a holding company, NCXX plans to specialize in managing the Group. Meanwhile, the
new structure will enable it to delegate a significant degree of business execution authority to the operatingcompanies. This can be expected to optimize Group management while enhancing the business autonomyof the operating companies and synergies within the Group. The flexibility of a holding company structure
should also contribute significantly to the speedy and smooth execution of M&A transactions as a promising
growth option for the Group.

(2) Schedule of the company split
Approval of the plan for an incorporation-type company split by the Board of Directors: January 26, 2015
Approval of the plan for an incorporation-type company split by the General Meeting of Shareholders:February 25, 2015
Effective date of the company split: April 1, 2015 (planned)(3) Method of company split
The method is an incorporation-type company split with the Company as the company to be split and a
newly established NCXX Inc. as the succeeding company. At the same time, the newly established NCXX Inc.
will assume the rights and obligations of the Company’s device business (excluding the agricultural ICT­business) as set forth below in “(5) Rights and obligations to be assumed.”(4) Company split allocation
In conjunction with the incorporation-type company split, the newly established NCXX Inc. will issue 26,000
shares of common stock, all for placement with the Company.

(5) Rights and obligations to be assumed
As set forth in the “plan for an incorporation-type company split,” dated January 26, 2015, the Company willtransfer the rights and obligations to the assets of the succeeded business, relevant employment contracts
between the Company and its employees, and other relevant contractual statuses to the newly established
NCXX Inc., and the newly established NCXX Inc. will assume those rights and obligations.
However, the newly established NCXX Inc. will not assume the liabilities of the Company.

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Notes(6) Overview of the incorporation-type company split

3. Category and amount of assets and liabilities to be assumed (Fiscal year ended November 30, 2014)
Newly established(succeeding) company(To be established April 1, 2015)

Company to be split(As of November 30, 2014)

1. Name2. Location
3. Name and title ofrepresentative
4. Business5. Capital Stock
6. Establishment(founding) date
7. Issued shares
8. Fiscal year-end
9. Major ­shareholders
and their­shareholding ratio

NCXX Inc.
(To be renamed NCXX Group Inc.,
effective April 1, 2015)
2-32-1 Kunuginome, Hanamaki City,
Iwate Prefecture
Tsukasa Akiyama, Representative Director
and President
Device business, robotics business, agriculture¥1,212 million
April 21, 1984
12,317,000 shares
November 30
FISCO Ltd.DIAMOND AGENCY, Inc.
Abit Holdings Co., Ltd.

33.11%
24.35%
2.83%

NCXX Inc.

(Millions of yen)
AssetsCategory

Liabilities
Carrying amount

Category

Carrying amountSame

Current assets
Noncurrent assets
Total

Same

Note: The figures above were calculated based on the balance sheet as of November 30, 2014. Actual amounts involved in thecompany split will take into account changes to the amounts listed above through to the effective date of the split.

Device business¥310 million
April 1, 2015 (planned)

2. Issuance of stock compensation-type stock options (subscription rights
to shares)

26,000 shares
Same
NCXX Group Inc.

100%(7) Overview of division to be split
1. Business of division to be split
Device business (excluding the agricultural ICT business)¥  842190¥1,033Current liabilities
Noncurrent liabilities
Total

¥–
–
¥–

On January 26, 2015, the Board of Directors of NCXX decided to submit a resolution for approval by the 31st
Ordinary General Meeting of Shareholders to be held on February 25, 2015, delegating it the authority to
decide the particulars for issuing and allotting subscription rights to shares, pursuant to the provisions ofArticle 236, Article 238 and Article 239 of the Companies Act. The Board of Directors plans to allot the subscription rights to shares to directors and employees of NCXX and its related companies as stock options
granted at particularly advantageous terms. The goal will be to raise the motivation and morale of the directors and employees by providing them with an incentive to enhance the Group’s earnings performance andcorporate value.
The resolution was subsequently approved by the 31st Ordinary General Meeting of Shareholders held on
February 25, 2015.
Details regarding the subscription rights to shares are as follows.

(1) Name of subscription rights to shares

2. Business performance of division to be split (Fiscal year ended November 30, 2014)

12th Series of Subscription Rights to Shares of NCXX Inc.
(Millions of yen)

Net sales

Business result ofdivision to be split (a)Business result ofcompany to be split (b)

Ratio
(a/b)

¥2,827¥6,37544.3%(2) Total number of subscription rights to shares and the class and number of underlying shares
Total number of subscription rights to shares
The maximum number of subscription rights to shares shall be 1,000. Of this, a maximum of 500 rights shallbe allotted to the directors of the Company (with a proportionate 100 of those rights allotted to the outside
directors of the Company).
Class and number of underlying shares
There shall be 100 shares of common stock underlying each subscription right to shares. And the maximum
number of shares issued upon exercise of the maximum 1,000 subscription rights to shares shall be 100,000
shares of common stock. As a result, 50,000 shares of common stock shall be issued upon exercise of the
maximum 500 rights allotted to the directors of the Company (with a proportionate 10,000 shares of common
stock going to the outside directors of the Company).

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The number of shares of common stock underlying the subscription rights to shares shall be adjusted
according to the following formula in the event the Company conducts a stock split or consolidation following
the resolution date of the General Meeting of Shareholders.
Number of underlying shares after adjustment = Number of underlying shares before adjustment
× Stock split or consolidation ratio
In addition to the foregoing, in the event of other unavoidable reasons requiring adjustment of the underlying shares, the Company shall be able to adjust the number of underlying shares within reasonable bounds
as deemed necessary.
Moreover, the adjustment shall apply only to the number of shares underlying the subscription rights toshares that have yet to be exercised as of the stock split or consolidation, and any fraction under one (1)share resulting from such adjustment shall be rounded down.

(3) Payment in exchange for the subscription rights to sharesNo monetary payment shall be required in exchange for the subscription rights to shares.

(4) Allotment date of subscription rights to shares
The decision shall be delegated to the Board of Directors of NCXX.

(5) Value of assets to be invested upon exercise of subscription rights to shares
The value of assets to be invested upon exercise of a subscription right to shares shall be the amount payable for each share received upon exercise of the subscription right to shares (hereinafter, “exercise price”)
multiplied by the number of shares to be granted per subscription right to shares.
The exercise price of a subscription right to shares shall be the higher of the closing price of the underlying
common stock on the Tokyo Stock Exchange on the allotment date of the right (the most recent previous
closing price in the event that the stock fails to trade on that date) and the average closing price on theexchange (excluding days when the stock fails to trade) for the days of the month prior to the month of theallotment date, multiplied by 1.05 (with the fraction less than one (1) yen of the resulting amount rounded up).
In the event that a split or consolidation of the Company’s common stock takes place after the allotment
date, the exercise price shall be adjusted according to the following formula, with the fraction less than one(1) yen resulting from the adjustment rounded up.
1
Exercise price after adjustment = Exercise price before adjustment ×

Stock split orconsolidation ratio

In addition to the foregoing, if the exercise price must be adjusted following the allotment date due to theCompany conducting a merger with another company, a corporate split, or reduction in capital stock, orsome accordingly unavoidable reason, the Company shall be able to adjust the exercise price within reasonable bounds as deemed necessary.

(6) Exercise period of subscription rights to shares
The starting date of the exercise period shall be two years from the day following the Board of Directors
resolution date for deciding the issuance terms of subscription rights to shares, and the expiration date shallbe five years from the day following this resolution date.

(7) Conditions for exercising subscription rights to shares
Holders of the subscription rights to shares must remain in their position as a director or employee of NCXX
and its related companies in order to exercise the rights, apart from when the Board of Directors makes a
special exception.

(8) Provisions for the Company to buy back the subscription rights to shares
1. The Company may buy back the subscription rights to shares from the holders free of charge, on a datespecified separately by the Board of Directors, in the event that a resolution for a merger agreement underwhich the Company will become the dissolving company, or a resolution for a stock exchange agreement
or stock transfer plan under which the Company will become a wholly-owned subsidiary, is approved by
the General Meeting of Shareholders (or by the Board of Directors if approval by the General Meeting of
Shareholders is not required).
2. Following the allotment date of particular subscription rights to shares, the Company may buy back theparticular subscription rights to shares from the holders free of charge if the closing price of theCompany’s common stock traded on the Tokyo Stock Exchange on any business day falls to 50% orlower than the exercise price of the particular subscription rights to shares (with fractions less than one(1) yen rounded down).
3. The Company may buy back any and all subscription rights to shares of a particular holder free of charge,
on a date specified separately by the Board of Directors, in the event that the particular holder no longer
satisfies the provisions set forth above in “(7) Conditions for exercising subscription rights to shares.”(9) Restrictions on the assignment of subscription rights to shares
Approval of the Company’s Board of Directors shall be required for the acquisition of subscription rights toshares via assignment.

(10) Matters relating to increases of capital stock and capital reserve as a result of sharesissued by the exercise of subscription rights to shares
In the event shares are issued by the exercise of subscription rights to shares, the amount of capital stock
shall be increased by half of the maximum for increase in capital, as calculated in accordance with the provisions of Article 17, Paragraph 1 of the Rules of Account Settlement of Corporations of Japan. Any fraction
less than one (1) yen resulting from the calculation shall be rounded up to the nearest one yen. The amount of
increase in capital reserve shall be the amount calculated by subtracting the aforementioned increase incapital stock from the maximum for increase in capital.

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Notes(11) Handling of fractions
Where fractions of less than one (1) share occur in the number of shares issued to holders of subscription
rights to shares upon exercising the rights, such fractions shall be rounded down.

Other terms for the allotment of subscription rights to shares shall be set forth by a separate resolution of theBoard of Directors of NCXX.

3. Exercise of the rights to the Company’s unsecured bonds with subscription
rights to shares
All subscription rights to shares to the Company’s third and fourth series of convertible bonds with subscription rights to shares (3rd series: four rights, 4th series: 815 rights) have been exercised. Details are as follows.

(1) Overview

Conversion price
Conversion price (per share)
Number of shares issued
by the conversion
Rights holder
Exercise date
Name
Conversion price
Conversion price (per share)
Number of shares issued
by the conversion
Rights holder

Exercise date

(As of February 5, 2015)
Before exercise(12) Other

Name(2) The FISCO Ltd. Group’s shareholding ratio relative to the Company’s total number ofissued shares following exercise of the subscription rights to shares

NCXX Inc. Third Series of Unsecured Convertible Bonds with
Subscription Rights to Shares¥400,000,000¥622
643,086 shares
FISCO Ltd.
February 5, 2015
NCXX Inc. Fourth Series of Unsecured Convertible Bonds with
Subscription Rights to Shares¥815,000,000¥419
1,945,101 shares
MARVEL TIME GLOBAL LIMITED (620,525 shares),FISCO Ltd. (477,326 shares),
Brilliance Multi Strategy Fund (286,395 shares),
AMANO HOMBU INC. (238,663 shares), and three other parties
From December 12, 2014 to February 5, 2015

Note: As a result of the above, the total number of issued shares of the Company increased 2,588,187 shares from November 30,
2014, to 14,905,187 shares as of February 5, 2015.

After exercise(The Company’s total number of outstanding shares)(13,784,755 shares)(14,905,187 shares)
FISCO Ltd.
4,078,300 shares (29.6%) 5,198,712 shares (34.8%)
3,000,000 shares (21.7%) 3,000,000 shares (20.1%)
FISCO DIAMOND AGENCY, Inc.(Note)
Total
7,078,300 shares (51.3%) 8,198,712 shares (55.0%)
Note: DIAMOND AGENCY, Inc. was renamed FISCO DIAMOND AGENCY, Inc. on February 12, 2015.

(3) The Company’s capital stock and capital reserve following the exercise of subscription
rights to shares (As of February 5, 2015)
1. Capital stock: ¥1,819,748 thousand
2. Capital reserve: ¥1,219,062 thousand

4. Court-mediated settlement of litigation(1) Chronology from litigation to court-mediated settlement
On November 21, 2012, a lawsuit was filed by Cyber Space Communications (Representative: Eiichiro
Murata, Representative Director and President, Location: 2-7 Hamamatsu-cho 1 chome, Minato-ku, Tokyo)
against NCXX Inc. and one other company, seeking tort compensation for damage incurred in connection
with unlawful and other activities surrounding NCXX’s product allegedly malfunctioning. The lawsuit was
subsequently heard in court in conjunction with a lawsuit filed by Eneres Co., Ltd. (Representative: Norio
Murakami, President and CEO, Registered location: Art Center of Tokyo, 1-4-1 Senju, Adachi-ku, Tokyo)
against Cyber Space Communications seeking tort compensation for damage incurred from the same allegations. NCXX has insisted throughout that the product allegedly malfunctioning was no fault of its own.
However, in response to a court recommendation to reach a settlement, NCXX has decided to settle thelawsuit, after having weighed the pros and cons of settling the claims. This was in light of the fact that two
years had passed since the lawsuit was first filed, and NCXX had incurred opportunity losses because humanresources were tied up responding to the case. The lawsuit concerns the content of sophisticated technology,
and proving NCXX was not at fault would have involved an even larger commitment of time, money and othereconomic and manpower costs over a prolonged period of time until a final and binding judgment could bereached. In addition, there was no favorable outlook in continuing to contest the case in court. Moreover,considering the claims brought against NCXX were only one part of the lawsuits for seeking damages, it wasconceivable that the damages sought would grow if the Company continued to seek a ruling on the case incourt. After broad consideration of the circumstances, NCXX concluded that seeking a prompt settlement
would benefit the Company most.

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INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureFinancial Section

ESG Information

Corporate Data

Notes(2) Overview of the court-mediated settlement[Consolidated Supplementary Schedules]

As an outcome of the court hearing of the case, as mentioned above in conjunction with the lawsuit brought
against Cyber Space Communications by Eneres Co., Ltd., a court-mediated settlement was reached
between the three parties, including Eneres Co., Ltd., on February 13, 2015 as follows.
1. NCXX will pay a settlement of ¥25,000 thousand to Eneres Co., Ltd.
2. The plaintiff, Cyber Space Communications, will waive all claims against NCXX.
3. Apart from the settlement paid as agreed, there will no longer be any claims or obligations between thethree parties.
4. Each party will bear their own expenses incurred during the lawsuits.

[Schedule of corporate bonds]

IssuerSeriesNCXX 1st Series of Unsecured
Inc.
­Ordinary Corporate Bonds
NCXX 2nd Series of Unsecured
Inc.
­Ordinary Corporate Bonds
NCXX 3rd Series of Unsecured­Convertible Bonds withInc.
­Subscription Rights to Shares
NCXX 4th Series of Unsecured­Convertible Bonds withInc.
­Subscription Rights to Shares
Total–

Issuance date

Starting balancein fiscal 2014
(Thousandsof yen)Ending balancein fiscal 2014
(Thousandsof yen)June
12, 2013
December11, 2013
February
7, 2014¥ 200,000(200,000)
–
(–)
–
(–)

¥–
(–)
200,000(200,000)
400,000(–)

November17, 2014–(–)

815,000(–)

0.5¥ 200,000(200,000)¥1,415,000(200,000)––Interest
(%)

2.25
2.25
1.0

Collateral Maturity date

None December
11, 2013
None December
10, 2014
None February
6, 2017
None November
16, 2017––

Notes: 1. Amounts in parentheses are the current portion of bonds.
2. Details on bonds with subscription rights to shares are as follows.

SeriesType of shares to be issued
Issue price of subscription rights (Yen)
Issue price of shares (Yen)
Total face amount (Thousands of yen)
Total amount of shares to be issued upon exerciseof subscription rights to shares (Millions of yen)
Percentage of shares granted per subscription
right (%)
Exercise period of the subscription rights

3rd Series of Unsecured
Convertible Bonds with
Subscription Rights to Shares

4th Series of Unsecured
Convertible Bonds with
Subscription Rights to Shares

Common shares
Gratis¥622¥400,000–

Common shares
Gratis¥419¥815,000
–

100%

100%

From February 7, 2014
to February 6, 2017

From November 17, 2014
to November 16, 2017

Note: The information above assumes that the full payment due for exercising subscription rights to shares is paid in lieu of the full redemption of the convertible bonds associated with those rights when requested by rights holders seeking to exercise their subscription rights to shares. It is further assumed that such a request is made when the subscription rights to shares are exercised.

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INTEGRATED REPORT 2015
About NCXX GroupFeatureTop Message

ESG Information

Financial Section

Corporate Data

Notes(2) Other

3. Scheduled redemptions due within five years subsequent to November 30, 2014 are as follows.
(Thousands of yen)Due in one year
or less

Due after one year
through two years

Due after two years
through three years

Due after three years
through four years

Due after four years
through five years¥200,000¥–¥1,215,000¥–¥–[Schedule of borrowings](Thousands of yen)
Category

Short-term loans payable
Current portion of long-termloans payable
Current portion of lease obligations
Long-term loans payable(excluding current portion)
Lease obligations(excluding current portion)
Other interest-bearing debt
Current portion of accounts payable—installment purchaseLong-term accounts payable—installment purchase
Total

Starting balancein fiscal 2014

Ending balancein fiscal 2014

Average interest
rate (%)¥152,500

¥–

–

–

57,984–

290,675
–

1.7
–

–
–

227,675

735,836

1.6

2015 to 2021

–

–

–

–

2,209

6,442

2.0

–

2,947
¥443,316

13,682¥846,636

2.0–2015 to 2018–

Repayment

Net sales
Income (loss) before income taxes
and minority interests
Net income (loss)
Net income (loss) per share (Yen)First quarter

Second quarter

Third quarter

Fiscal year

¥1,359,160¥3,686,797¥4,928,951¥6,375,427(24,202)(37,163)¥(3.20)

139,798
93,903¥8.07

195,516140,015¥12.04

742,456
630,311¥54.07

First quarter

Second quarter

Third quarter

Fiscal year¥(3.20)¥11.27¥3.96¥41.78(Yen)

Quarterly net income (loss)
per share

2. Litigation
Please refer to “4. Court-mediated settlement of litigation” under “Notes to the Consolidated Financial
Statements” to this report for details.

(Thousands of yen)
Due after one year
through two years

Due after two years
through three years

Due after three years
through four years

Due after four years
through five years¥288,274¥209,486¥147,180¥76,929

6,229

6,327

1,126

–

3. Interest-free loans account for ¥23,308 thousand of the balance of long-term loans payable (excluding current portion) as ofNovember 30, 2014.

[Schedule of asset retirement obligations]Not applicable(Thousands of yen)
(Cumulative period)(Quarterly period)

Notes: 1. Average interest rate represents the weighted average interest rate for the balance at November 30, 2014.
2. Scheduled repayments of long-term loans payable (excluding current portion) and other interest-bearing debt (excluding
current portion) due within five years subsequent to November 30, 2014 are as follows.

Long-term loans payable
Long-term accounts payable—installment purchase1. Quarterly and other information for fiscal 2014

63

INTEGRATED REPORT 2015
About NCXX GroupTop Message

FeatureCompany Overview
Name

Date of establishment

Capital stock

Consolidated group
employees

Business operations

Location

NCXX Group Inc.

April 21, 1984

¥1,819,748,000(as of April 1, 2015)

247

ESG Information

History
Date

Event

Apr.1984

Established as Honda Electron Co., Ltd. with capital stock of ¥10 million invested by
Honda Tsushin Kogyo Co., Ltd. Head Office was located in Himonya, Meguro-ku, Tokyo.
Started design and manufacture of telecommunication line equipment

Aug.1985

Constructed Hanamaki Plant in Hanamaki City, Iwate Prefecture and started operations

Aug.1986

Participated in the establishment of Iwateken Koudo Gijutsu Shinkou Kikou(Iwate Prefecture Advanced Technology Promotion Organization)

Aug.1987

Relocated Head Office to Shibaura, Minato-ku, Tokyo

Sept.1998

HOKUBU Communication & Industrial Co.,Ltd. and its group company become themajor shareholders

Oct.1999

Acquired ISO quality certification (ISO 9001, JQA-QM 3856)

Jan.2002

Launched world’s first 128 kbps data telecommunication cardJune2002

Established the Hanamaki R&D Center as a base for development of PHS data
telecommunication cards

Apr.2003

Established the Tokyo R&D Center and established bases for development of PLC
and wirelessSept.2003

Relocated Head Office to Kyobashi, Chuo-ku, Tokyo

Dec.2003

Acquired ISO environmental certification (ISO 14001, JQA-EM 3575)

June2004

Index Corporation acquired 2,416 shares, making the Company a subsidiary

Jan.2005

Received supreme prize for excellence in the modem category of the BCN Award

June2005

Sold the semiconductor manufacturing equipment business to SHIBAURA MECHATRONICSCORPORATION and specialized in the information and telecommunication business

Sept.2005

Changed company name from Honda Electron Co., Ltd. to Net Index Co., Ltd.

Sept.2005

Established Net Index ES Co., Ltd., and spun off the manufacturing and service divisions

Nov.2005

Introduced the W-SIM, which is the world’s smallest PHS module, and the first­SIM-STYLE voice handset

June2007

Listed on the JASDAQ securities exchange (securities code: 6634)

Nov.2010

Relocated the Head Office to Hanamaki City, Iwate Prefecture

July2012FISCO Ltd. acquired 47,401 shares, making the Company a subsidiary
Made e-tabinet.com into a subsidiary

Dec.2012

Changed company name from Net Index Co., Ltd. to NCXX Inc.

Dec.2013

Made NCXX Solutions Inc. and Care Online Limited into subsidiaries

Feb.2014

Transferred the domestic systems development business of SJI Inc. to subsidiary
NCXX Solutions Inc. through an absorption-type company split(as of April 1, 2015)

 anagement strategy formulation andMmanagement of Group companies
Planning, development, and sale ofnursing care and rehabilitation robots, etc.
Planning, development, and sale ofagricultural ICT
Businesses associated with or related
to the above
Hanamaki Head Office:2-32-1 Kunuginome, Hanamaki City,
Iwate Prefecture, Japan
TEL : +81-198-27-2851
FAX: +81-198-27-2850
Tokyo Head Office:2F CoSTUME NATIONAL Aoyama Complex,
5-4-30 Minamiaoyama, Minato-ku, Tokyo, Japan
TEL : +81-3-5766-9870
FAX: +81-3-5766-9871

Corporate Data

Financial Section

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INTEGRATED REPORT 2015
About NCXX GroupFeatureTop Message

Shareholder Information
Overview of Shares

ESG Information

Total number of issuable shares: 30,000,000
12,317,000

Number of shareholders:

2,758

Major shareholders
Number ofshares held
(shares)

Shareholding
percentage ofissued shares (%)

FISCO Ltd.

4,078,300

33.11

Diamond Agency, Inc.

3,000,000

24.36

Abit Holdings Co., Ltd.

349,000

2.83

Japan Securities Finance Co., Ltd.

261,100

2.12

Index Corporation

239,800

1.95

Tomonori Morimoto

200,000

1.62

Mizuho Securities Asia Limited Client Account 69250601(Standing proxy: Settlement & Clearing Services Division,
Mizuho Bank, Ltd.)178,700

1.45

Investment Partnership F Target Fund

105,000

0.85

Kabushiki Kaisha Okoso

71,5000.58

KST Trust Fund Investment Partnership

66,8000.54

Shareholder name

Corporate Data

Shareholder Memo

(As of November 30, 2014)

Total number of shares issued:

Financial Section

Listed exchanges

Tokyo Stock Exchange, JASDAQ

Listing dateJune 22, 2007

Securities code

6634

Business year

December 1 to November 30

Ordinary General Meetingof Shareholders

Within three months of the final closing date of each year

Shareholder record dateNovember 30

Record dates for dividends
from retained earnings

November 30, May 31

Number of shares in one
trading unit

100 shares

Method of Posting Notices

The Company provides notification by electronic notices.
However, when the Company cannot provide notices by theelectronic method due to accidents or other unavoidable reasons,it will post the notices in the Nikkei newspaper. Notices areprovided on the Company’s website at the following address
http://www.ncxxgroup.co.jp/irinfo/notification/

Transfer agent

Mitsubishi UFJ Trust and Banking Corporation,
4-5, Marunouchi 1-Chome, Chiyoda-ku, Tokyo

Handling office of thetransfer agent(postal address)

Mitsubishi UFJ Trust and Banking Corporation,
Securities Agency Division,
4-5, Marunouchi 1-Chome, Chiyoda-ku, Tokyo

Contact office of the sametransfer agent

Mitsubishi UFJ Trust and Banking Corporation
branches throughout Japan

Financial institutions(2.33%)

Financial instruments
business operator(1.15%)

Individuals and others(28.17%)

Foreign companies, etc.
(3.27%)

Shareholder
composition

Other companies(65.08%)