January 19, 2018

Consolidated Financial Results
for the Fiscal Year Ended November 30, 2017
(Japanese Accounting Standards)
Name of listed company:
Listing:
Stock code:
URL:
Representative:
Contact person:

NCXX Group Inc.
Tokyo Stock Exchange, JASDAQ Standard6634
http://www.ncxxgroup.co.jp/
Tsukasa Akiyama, Representative Director and President
Naoki Ishihara, Representative Director and Vice President
Tel: +81-3-5766-9870
Scheduled date of General Shareholders’ Meeting:February 22, 2018
Scheduled date to file Securities Report:
February 22, 2018
Scheduled date to commence dividend payments:－
Supplementary explanatory materials prepared:
None
Explanatory meetings:
None(Millions of yen with fractional amounts discarded, unless otherwise noted.)

1. Consolidated Financial Results for the Fiscal Year Ended November 30, 2017
(From December 1, 2016 to November 30, 2017)(1) Consolidated Operating Results
Net sales

Operating income

Fiscal year ended
Millions of yen%
Millions of yen%
12,198(0.3)(914)
November 30, 201712,231
64.9(619)
November 30, 2016
Note:
Comprehensive income
For the year ended November 30, 2017: ¥1,022 million [-%]For the year ended November 30, 2016: ¥(930) million [- %]Earnings
per share

Diluted net
income per share(Percentages indicate year-on-year changes.)
Profit attributable toOrdinary income
owners of parent
Millions of yen%

Millions of yen

%

(940)
(770)

-

902
(1,068)-Return on equity
(ROE)

Yen
Yen
Fiscal year ended
60.68
November 30, 2017(71.77)
November 30, 2016
Reference: Equity in earnings of affiliates
For the year ended November 30, 2017: ¥43 million
For the year ended November 30, 2016: ¥- million

Ordinary income/
Total assets

Operating margin

%

%

%

24.2
(26.1)

(7.5)
(5.5)

(7.5)
(5.1)

(2) Consolidated Financial Position
Total assets
As ofMillions of yen
11,532
November 30, 201713,459November 30, 2016
Reference: Equity
As of November 30, 2017: ¥3,865 million
As of November 30, 2016: ¥3,593 million

Net assets

Equity ratio

Net assets per share

Millions of yen

%

4,526
3,800

33.5
26.7

Yen

259.74241.60(3) Consolidated Cash Flows
Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash andcash equivalents at
end of the fiscal year

Millions of yen

Millions of yen

Millions of yen

Millions of yen(1,388)
341

3,929
686

(1,851)(2,047)

Fiscal year ended
November 30, 2017
November 30, 2016

2,529
1,881

2. Cash Dividends
Annual dividends per share

Fiscal year ended
November 30, 2016
Fiscal year ended
November 30, 2017
Fiscal year ending
November 30, 2018
(forecasts)

First
quarter

Secondquarter

Third
quarter

Fiscalyear-end

AnnualTotal amount ofdividends(annual)Payout ratio(consolidated)

Dividends on net
assets(consolidated)

Yen

Yen

Yen

Yen

Yen

Millions of yen

%

%

-

0.00

-

0.00

0.00

-

-

-

-

0.00

-

0.00

0.00

-

-

-

-

0.00

-

0.00

0.00

-

3. Consolidated Financial Forecasts for the Fiscal Year Ending November 30, 2018
(From December 1, 2017 to November 30, 2018)
Net sales

Fiscal year ending
November 30, 2018

Operating income(Percentages indicate year-on-year changes.)
Profit attributable
Earnings
Ordinary income
to owners ofper share
parentMillionsof yen%Millionsof yen%Millionsof yen%Millionsof yen%Yen

11,398

(6.6)

743

-

698

-

563

(37.6)

37.84

Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in a change in the scope of
consolidation): Yes
New:
8 companies (Corporate names) Versatile Inc., Versatile Milano S.R.L., MEC S.R.L.SOCIETA’AGRICOLA, FISCO International Limited, FISCO International(Cayman) Limited, FISCO International (Cayman) L.P., FACETASM,
e frontier, Inc.
Excluded:
7 companies (Corporate names) CAICA Inc., SJ Asia Pacific Limited, Hua Shen Trading (International)
Limited, Rapid Capital Holdings Limited, 星際富通（福建）網絡科技有限公司, 星際富溢（福建）信息諮詢有限公司, NCXX Solutions Inc.
(2) Changes in accounting policies, changes in accounting estimates, and restatement of revisions
a. Changes in accounting policies due to revisions to accounting standards and other guidelines: Noneb. Changes in accounting policies due to reasons other than a. above: Nonec. Changes in accounting estimates: None
d. Restatement of revisions: None
(3) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of November 30, 201715,030,195 shares
As of November 30, 201615,030,195 sharesb. Number of shares of treasury stock at the end of the period
As of November 30, 2017
146,473 shares
As of November 30, 2016
156,058 sharesc. Average number of shares
For the year ended November 30, 2017
For the year ended November 30, 2016

14,875,370 shares
14,885,214 shares

(Reference) Summary of Non-consolidated Operating Results
Non-consolidated Financial Results for the Fiscal Year Ended November 30, 2017
(From December 1, 2016 to November 30, 2017)(1) Non-consolidated Operating Results(Percentages indicate year-on-year changes.)
Net sales
Fiscal year ended
November 30, 2017
November 30, 2016

Operating income

Millions of yen%

Millions of yen

94
27(249.2)(89.1)

(815)
(135)

Earnings
per share
Fiscal year ended
November 30, 2017
November 30, 2016

Ordinary income%-

Profit (loss)%-

Millions of yen

(868)
(154)

Millions of yen

(599)
(75)

%
-

Diluted earnings
per share
Yen

Yen(40.16)(5.02)-(2) Non-consolidated Financial Position
Total assets
As ofMillions of yen
November 30, 2017
8,272
November 30, 2016
9,067
Reference: Equity
As of November 30, 2017: ¥4,127 million
As of November 30, 2016: ¥4,640 million

Net assets

Equity ratio

Net assets per share

Millions of yen

%

Yen

4,149
4,660

49.9
51.2

276.92
310.67* This report is unaudited.
* Proper use of earnings forecasts and other special matters
The financial forecasts in this report reflect projections based on management’s future assumptions, expectations, andplans as of the issue date of this report. Actual financial results could differ materially from the predicted values due to risks
associated with future changes in economic conditions, markets, etc., and other uncertain factors. For information about theconditions, assumptions, and other factors underlying the financial forecasts, please see “1. Analysis of Operating Resultsand Financial Position (1) Analysis of Operating Results” beginning on page 2 of this report.

Attachment Contents
1. Summary of Operating Results ………..……………………………………………….……….….….…......

2(1) Summary of Operating Results for the Fiscal Year Ended November 30, 2017…………………..….…....

2(2) Summary of Financial Position as of November 30, 2017………………………………………………...

9

2. Basic Policy Regarding Selection of Accounting Standards ……………………………………………………

10

3. Consolidated Financial Statements and Key Notes………………………………………………………..….…

11(1) Consolidated Balance Sheets………………………………………………………………………………..

11(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ……….…..

13

Consolidated Statements of Income......……………………………………………………………….….… 13
Consolidated Statements of Comprehensive Income......…………………………………………………… 14(3) Consolidated Statements of Changes in Equity.……………………………………………………….........

15(4) Consolidated Statements of Cash Flows ……………………………………………………………….…... 17(5) Notes to Consolidated Financial Statements..………………………………………..………..…..………... 19(Note Concerning Going Concern Assumption).…………………………………………………………… 19(Additional Information) …………………………………………………..………………………………

19(Segment Information)..………………………………………………………………..…………………… 19(Per Share Information).…………………………………………………………….………………………

22(Subsequent Events) ………………………………………………………………..…….………………… 23

1

1. Summary of Operating Results(1) Summary of Operating Results for the Fiscal Year Ended November 30, 2017
Forward-looking statements in this document are judged to be appropriate by the Group (the Company and its
consolidated subsidiaries) as of the last day of the fiscal year under review.
1) Operating Results for the Fiscal Year Ended November 30, 2017
In the fiscal year ended November 30, 2017, the Japanese economy saw corporate earnings follow a recovery trend,
supported by the Japanese government’s economic policies together with monetary policies. On the other hand, theeconomic outlook still remains uncertain, based partly on unstable political trends overseas and concerns about the impactof geopolitical risk.
The Japanese government has incorporated the concept of the Fourth Industrial Revolution into its growth strategy. In
the Fourth Industrial Revolution, physical things of all kinds, including automobiles and home electric appliances, will beconnected to the Internet, making Cyber-Physical Systems a reality. A Cyber-Physical System is a system that quantifies
various states of the Physical Part of the real world that are subject to control, and quantitatively analyzes this data in the
Cyber Part to derive new insights and knowledge, which are then fed back and used to control the Physical Part of the realworld. The general belief is that the ability to collect and retain big data from the Physical Part of the real world throughIoT technology, and the ability to manage and analyze this data through AI and blockchain technologies in the Cyber Part,
will be crucial to success.
In this operating environment, in January 2017, the Company entered into a capital and business tie-up with Terilogy
Co., Ltd. (Listing: 3356 TSE JASDAQ; Headquarters: Chiyoda-ku, Tokyo; President: Akihiko Abe) to jointly develop
products that combine the NCXX Group’s IoT device development technologies with Terilogy’s security technologies.
Terilogy provides cutting-edge solutions in network security for major Japanese corporations to create a society where IoT
devices can be used safely, protecting key equipment, systems and information from various online threats.
In April 2017, CAICA Inc. (“CAICA”) (Listing: 2315 TSE JASDAQ; Headquarters: Meguro-ku, Tokyo; President: NiuYu) became an equity-method affiliate, instead of a consolidated subsidiary, in light of voting rights being below 50%. Thisdecision was made because an adequate relationship of cooperation has been established based on a capital and business
partnership, including the proactive exchange of personnel on a project basis, the introduction of a Bitcoin payment system
for the TITICACA Online Shop operated by subsidiary TITICACA, Co. Ltd. (“TITICACA”) and the development of an
attendance management system using blockchain technology for subsidiary NCXX Inc. Further information can be foundin the “Notice regarding capital and business alliance with SJI Inc., and conversion to a subsidiary by private placement of
new shares and acceptance of share subscription rights, and loan” (Japanese only) issued on June 1, 2015. (SJI changed its
trade name to CAICA in February 2017.) Since the capital and business partnership will remain in force without
modification in the future, CAICA does not have to be a consolidated subsidiary of the Company, and as a Group company,
CAICA will be able to continue working on new services for Cyber-Physical Systems for the Fourth Industrial Revolution
envisioned by the Group, including participating in joint development projects that combine its blockchain and AI
technologies with the IoT technologies of subsidiary NCXX Inc.
In August 2017, the Company transferred 51% of the shares outstanding in consolidated subsidiary NCXX Solutions
Inc. (“NCXX Solutions”) and 49% of the shares outstanding in NCXX Inc. to CAICA. As a result, NCXX Solutions
changed from a consolidated subsidiary to an equity-method affiliate. The aim of this transaction is to spur growth at bothcompanies by combining CAICA’s latest AI and blockchain technologies with NCXX Solutions’ know-how in IoT-related
services through device products that are highly relevant to NCXX Inc. Moreover, this move is in line with our plan tocreate a business structure able to rapidly introduce products that address latent needs in the marketplace. We aim toaccelerate the development of device products that link IoT and blockchain technology, such as IoT payment platform
services that utilize cryptocurrencies and tokens, through collaboration with Fisco Cryptocurrency Exchange Inc., a groupmember of FISCO Ltd. (“FISCO”), the parent company, leveraging its cryptocurrency platform while providing
information about cryptocurrency markets including Bitcoin. For example, this initiative entails providing smart locks*1 andsettlement systems for condominiums and rental offices in the sharing economy, as well as providing smart keys*2 for rental
cars and car sharing services, in addition to ride hailing services.
*1, *2: Smart locks and smart keys are devices that allow people who have paid and registered to then access a designatedproperty or automobile, locking and unlocking access using their smartphones or other electronic devices.
Meanwhile, the brand retail platform business*3 was launched in 2016. To expand this business, in December 2016,
Versatile Inc. (“Versatile”) and FISCO International Limited (“FIL”) became consolidated subsidiaries of the Company.
after their shares were acquired from FISCO Ltd., the parent company. Together with these subsidiaries, the Company
commenced the trademark licensing business of CoSTUME NATIONAL, which is engaged in import and sales operations.
The Company has begun exploring business expansion initiatives with CoSTUME NATIONAL in Asia using fashion
accessories, as well as wine and other retail business, as a foothold in the region.
Additionally, in April 2017, the Company entered into a capital and business partnership agreement with CSMEN Co.,2

Ltd. (“CSMEN”) (Listing: 3083 TSE JASDAQ; Headquarters: Chuo-ku, Tokyo; President: Masao Aoki), acquiring 19.01%
of its shares. CSMEN is a retail company focused on apparel sales, operating 50 stores in Japan (as of November 30, 2017)
under brands including the METHOD and RyugiAssaku casual wear brands. Moreover, in May 2017, Versatile acquired a
51% stake in FACETASM, which operates 50 stores in Japan (as of April 30, 2017) under its FACETASM brand of casual
fashion, turning it into a subsidiary.
*3 The “brand retail platform business” refers to the retail business including general merchandise and apparel, and thelicensing business for brand trademarks.
In regard to the agricultural ICT business (NCXX FARM) undertaken by the Company, the Group will work to promote
the commercialization of “sixth-order industrialization” initiatives, which involve the growing, processing and sale ofagricultural products, and a franchise business, which involves packaged sales combining chemical soil management basedon a patented farming method and digital management based on ICT systems.
In terms of “sixth-order industrialization” initiatives, in July 2017, the Group’s Keema Curry with Yellow Tomatoes, apouched curry made from cherry tomatoes, won an award at the 2017 Iwate Unmei-mon!! Gran Prix (2017 Furusato Food
Competition in Iwate Prefecture), a local food contest in Iwate Prefecture.
In the franchise business, the Group regularly conducts presentations on the franchise business at its proprietary testingplot. It has seen an increase in tours and inquiries from across Japan; including the use of these presentations by local
municipalities and educational institutions as part of their training programs. Looking at its track record of introducing
systems for the fiscal year ended November 30, 2017, the Group delivered systems to companies in Iwate Prefecture. As a
new development initiative, the Group developed and began trial operation of a prototype data recording and management
app that can be used by farmers to easily monitor harvest and management data. Development has continued with a view tolinking the app with weather and market information and to the Group’s ICT and accounting systems in the future. In thearea of ICT systems, the Group commenced the development of an environmental management prediction system, as a new
function designed to automatically perform environmental management by comprehensively integrating the growth ofvegetables and factors essential to health management. In addition, the current system has achieved a solid track record todate and the addition of new functions will significantly enhance its user friendliness. Considering those factors, the Grouphas proactively conducted advertising activities such as running magazine and video advertisements, as well as holding
events to dramatically expand the franchise business from the next fiscal year onward.
The Group will continue working to establish a business model for harvesting safe food materials in a stable andefficient manner by upgrading ICT systems and accumulating expertise at its proprietary testing plot.
Looking at consolidated business results, net sales increased on account of additions to the scope of consolidation,
namely TITICACA in August 2016 and Gloria Tours Inc. (“Gloria Tours”) in October 2016. Meanwhile, net sales declined
because CAICA and NCXX Solutions became equity-method affiliates, from February and September, 2017 respectively.
In addition, NCXX Inc. has been developing a successor model to its LTE data telecommunications terminal, one of its
core products, and plans to introduce the new model to the market in 2018. In the run-up to the introduction of this new
successor model, certain customers have refrained from purchasing the current model. As a result, sales proceeds fell shortof budget. In addition, e-tabinet.com (“e-tabinet.com”) had maintained a gradual recovery following a string of terrorist
incidents by the Islamic State since the previous year. However, in April 2017, the bankruptcy of Tellmeclub Inc. became asocial issue, leading to the outflow of customers to larger travel agencies. This resulted in a decline in the number ofrequests for travel estimates from customers at e-tabinet.com. Consequently, sales proceeds of e-tabinet.com fell short ofbudget.
Turning to operating income, profits decreased in line with the aforementioned decrease in net sales. Operating income
also declined because the Group proactively conducted advertising activities, such as running magazine and video
advertisements, as well as holding agriculture-related events. These activities were undertaken to dramatically expand apps
and systems in the agricultural ICT business, as well as the franchise business from the next fiscal year onward.
As a result of these efforts, consolidated net sales were ¥12,198 million, down 0.3% year on year. perating loss was¥914 million, compared to an operating loss of ¥619 million in the previous fiscal year. The ordinary loss was ¥940 million,
compared to an ordinary loss of ¥770 million in the previous fiscal year. Profit before income taxes was ¥1,024 million,
compared with a loss before income taxes of ¥863 million in the previous fiscal year. Profit attributable to owners of parent
was ¥902 million, compared with a loss attributable to owners of parent of ¥1,068 million in the previous fiscal year.
Since goodwill amortization associated with companies becoming subsidiaries is an expense unrelated to cash outflows,a considerable gap emerges in changes in cash flow and fluctuations in operating income and below. EBITDA, anbenchmark that takes these factors into consideration, was ¥(447) million, compared with ¥18 million a year earlier.
EBITDA = operating income + depreciation + amortization of goodwill (selling, general and administrative expenses)

3

Business performance by segment in the fiscal year under review was as follows:
ICT, IoT, Device Business
NCXX Inc. focused on providing solutions using GX410NC and GX420NC, OBD II-type automotive telematic datacollecting units launched in 2015. In collaboration with NCXX Solutions, NCXX Inc. developed the safe driving assistanceservice Drive Care (http://www.care-dynamics.jp/obd2/), an OBD II solution for nursing care transportation service
vehicles, and rolled it out in August 2016.
This system enables the managers or supervisors of businesses that provide various transportation services for nursing
care facilities and other customers to confirm the status of multiple fleet vehicles operating simultaneously. The system canmonitor any dangerous driving behaviors (sudden starts, sudden stops, sharp turns) that may arise while each vehicle isbeing operated. By displaying these incidents in formats that are easy for managers and supervisors to understand, such as
lists and graphs, they will be able to better monitor the driving behavior of drivers and provide appropriate instructions
tailored to each driver. In addition, managers and supervisors will be able to ascertain the extent of improvement of eachdriver and follow up on drivers appropriately by continuously checking driving performance data.
Also, the system can be used to reduce the maintenance and management costs of welfare service vehicles by making
effective use of the various types of data that can be obtained. For example, managers and supervisors will be able toimprove average fuel economy by instructing drivers on environmentally friendly driving practices, curtail wear of tires
and other parts of vehicles, and issue vehicle inspection alerts to prevent vehicle malfunctions.
In the fiscal year ending November 30, 2018, the Group will continue to provide automotive telematic solutions that
integrate high-valued-added communication devices and software, as well as various other types of solutions.
e frontier, Inc., which conducts software development and sales, became a subsidiary in July 2017. e frontier sells
internally developed software, such as AI-driven programs for the games of go, shogi and mahjong. The company has
strengthened download-based sales of licenses to its approximately 500,000 e-mail newsletter subscribers. It will alsobolster content sales in creative fields, such as software for computer graphics (CG) production. In terms of specificmeasures, e frontier is preparing to sell polygon data collections that can be used easily by creators of games, video andother content. It is also making preparations to produce digital books together with CG artists.
As a result, segment sales in the fiscal year ended November 30, 2017 were ¥893 million, down 29.9% year on year.
Segment loss was ¥438 million, compared with a segment loss of ¥365 million in the previous fiscal year.
FinTech Systems Development BusinessIn addition to a continuous and consistent order intake from existing customers, NCXX Solutions steadily received
orders from new customers in the current fiscal year, following on from the previous fiscal year. These orders included asystem reconstruction project for a regional bank, and systems development in connection with the liberalization of theenergy sector from a major gas company. NCXX Solutions has seen steady hiring of engineers and business order intake
centered on financial systems at the Kanto Division, as well as at its offices in Chubu, Kansai and Kyushu.
In terms of collaboration with Group companies, NCXX Solutions is working to enhance services with respect to thefree smartphone app “FISCO app” and the PC browser version “FISCO Web,” which it supplies to its parent company
FISCO. We have been continuing our measures to enhance services, including the release of upgraded versions from time
to time featuring faster search capabilities and additional functions such as coordination with favorites and alerts, as well asa job-hunting app aimed at graduating students who are looking for jobs.
In addition, NCXX Inc. has been pursuing initiatives in the area of IoT services. As one such initiative, NCXX Inc. hasconcentrated on the development of solutions utilizing the aforementioned GX410NC/GX420NC, OBD II-compliant
automotive telematic data collecting units. We have developed and now provide "Bus Rides" as a smartphone app that
displays the current location of shuttle buses for driving schools, preschools and other organizations, and any delays; and"Hazard Maps" as a service for displaying maps of hazardous areas (i.e., where drivers brake hard, accelerate fast, or turnsuddenly) with a greater likelihood of accidents based on data acquired from IoT.
Furthermore, in the field of agricultural ICT, NCXX Solutions is undertaking version upgrades in step with expansion in
the Company’s franchise business, including providing functions to perform automatic recovery in the event of an error incommunications systems. Also, NCXX Solutions has become a member of the Council of Industry-Academia-Government
Collaboration of the Ministry of Agriculture, Forestry and Fisheries, with plans to conduct a demonstration trial fordeveloping a model for increasing the production volume of tomatoes.
As noted earlier, in September 2017, the status of NCXX Solutions was changed from a consolidated subsidiary of theCompany to an equity-method affiliate.
CAICA has steadily pushed ahead with various measures to improve its financial health, such as reducing
interest-bearing debt and thoroughly cutting expenses. The shareholders' equity ratio improved sharply to 72.0% from
21.7% at the end of the previous fiscal year, thanks to the steady repayment of interest-bearing debt, the execution of shareacquisition rights, and the accumulation of profits. In November 2017, CAICA raised ¥2,330 million through the issuance4

of new shares via a third-party allotment to fund M&As and capital and business alliances.
In addition, as disclosed in the medium-term management plan “A Stage of Proactively Advancing to New Growth,”
CAICA has adopted a policy of proactively conducting M&As and capital and business alliances to expand the scale of its
business. Based on this policy, in the fiscal year ended November 30, 2017, CAICA implemented the M&As and capitaland business alliances shown in the following table.
February 2017
August 2017
August 2017
August 2017
September 2017

Made Tokyo Tech Corporation, which handles systems development, into a subsidiary
Made NCXX Solutions Inc. a subsidiary
Converted NCXX Inc. into an equity-method affiliate
Accepted capital increase by allotment of new shares to third parties for Fisco
Cryptocurrency Exchange Inc.
Formed a capital and business alliance with FISCO Ltd.
Formed a capital and business alliance with Oceans inc.

CAICA has acquired systems development engineers and customers by conducting M&As and business alliances withpeer companies in the same industry and companies that offer prospects for capturing synergies in FinTech-related
businesses. CAICA conducts business primarily in Tokyo, whereas NCXX Solutions has bases in western Japan,
specifically Nagoya, Osaka, and Fukuoka. By making NCXX Solutions a subsidiary, CAICA is now able to provide
systems development services throughout Japan. CAICA aims to win orders for FinTech-related projects that could notpreviously be undertaken by each individual subsidiary. To this end, CAICA will share knowledge of FinTech-related
businesses that it has amassed to date with the subsidiaries it has acquired to facilitate coordination on systems
development among CAICA and its subsidiaries Tokyo Tech Corporation and NCXX Solutions. For example, CAICA will
provide integration services for the construction of IoT settlement platforms using cryptocurrency and tokens, as well as
utilize IoT and blockchain technologies. With the capital and business alliance with Oceans inc. (“Oceans”), CAICA has
begun implementing measures to undertake the initial development of the KIZUNA Platform system, as well as thedevelopment of various systems that will be needed in connection with upgrading and expanding services. Going forward,
CAICA aims to expand business with end-user companies such as Oceans, along with expanding business with the major
system integrators that make up its existing customer base.
As noted earlier, in February 2017, the status of CAICA was changed from a consolidated subsidiary of the Company toan equity-method affiliate.
Care Dynamics Limited (“Care Dynamics”) is a provider of ASP systems to nursing care businesses. It has alreadydeployed ASP systems at more than 400 nursing care facilities. With the launch of services such as support for the
introduction of nursing care robots and the provision of nursing care ICT, Care Dynamics has evolved into a comprehensive
nursing care business support enterprise.
As a service for assisting caregivers, Care Dynamics offers nursing care robots as a sales agency, distribution of
instructive leaflets of corporations using manga illustrations, and services for creating advertisements. Care Dynamics
continues to provide tours of nursing care facilities that have adopted the "Drive Care" OBD II solution for nursing caretransportation services, and offers free trials of the solution.
Moreover, Care Dynamics provides a replacement support service and reassesses electricity providers to help nursing
care facilities cut their electricity bills. Care Dynamics also offers a service that introduces systems for saving water.
As a result, segment sales in the fiscal year ended November 30, 2017 were ¥3,070 million, down 60.8% year on year.
Segment loss was ¥36 million, compared with segment loss of ¥61 million in the previous fiscal year.
Internet Travel BusinessIn the Internet travel business, e-tabinet.com and their subsidiaries have received a large number of positive commentsfrom many highly satisfied customers for their ability to fulfill their increasingly diverse and sophisticated needs, amid a
proliferation of travel products and services. The crucial factor behind this success is that e-tabinet.com has been able tobuild a solid structure as Japan's only Internet-based travel agency offering customized services with a carefully chosen
staff of highly experienced registered "travel concierges" (travel consultants).
In 2015, e-tabinet.com launched a specialized site for inbound tourists visiting Japan from abroad, and implemented
search engine optimization with a focus on Asia. The number of tourists visiting Japan is projected to increase by 17% to
28 million by the end of the fiscal year ended November 30, 2018, a pace far greater than what had been initiallyanticipated. This is expected to lead to shortages in the tourism facilities needed to support the large number of tourists
visiting Japan. Against this backdrop, e-tabinet.com set up a new dedicated skiing website in English to address the strong
demand for this information among inbound tourists visiting Japan. In October 2016, e-tabinet.com published information
on 204 ski courses at resorts in Japan in cooperation with Jitsugyo no Nihon Sha, Ltd., a long-standing publisher founded in
1897. Jitsugyo no Nihon Sha publishes business and trade journals as well as literary works and other materials.

5Additionally, e-tabinet.com will also focus on the market for para-sports ahead of the Tokyo 2020 Olympic and Paralympic
Games. In October 2016, it made Gloria Tours Inc., a company specializing in sending Paralympic athletes to various
events and organizing numerous international para-sports tournaments, a subsidiary. Along with the concierge business of
Web travel Co., Ltd., e-tabinet.com seeks to build a niche market base that most general travel agencies would find difficult
to serve.
Meanwhile, the number of travel concierges has been growing steadily, increasing sharply from 380 at the previous
fiscal year-end to 450 as of September 30, 2017. In addition, e-tabinet.com has been advancing the crowdsourcing businessas a platform for concierges to make the most of their unique talents in areas other than travel. By fostering a stronger senseof community and belonging among concierges, e-tabinet.com will work to recruit and retain talented personnel.
The travel concierges take the lead in planning Kodawaru Hito No Tabi (“Journeys for the Discerning Traveler”) travel
itineraries, an initiative that has continued for the past few years, as part of which new Kodawari No Tabi travel packages
are announced every month. In September 2017, they released “Travel Canada by Rail,” a trip featuring luxury, fine dining
and stunning natural scenery. In October, their special travel package was “Feeling the Pulse of the Earth in New Zealand,”a journey to the geothermally active regions and fjords steeped in Maori culture. In November, they released a travel
package called “An Enjoyable Asian Cruise for First-Time Passengers,” a trip to rediscover various well-trodden sites in
Asia. Looking ahead, the travel concierges will continue to propose interesting Kodawari no Tabi
Amid a gradual recovery from a string of terrorist attacks by the Islamic State since the previous year, overseas travelbusiness sales were ¥1,973 million, centered on best-selling packages to Europe and honeymoon packages to Australia, anddomestic travel business sales were ¥209 million. Business performance had remained on a gradual recovery pathfollowing the impact of the terrorist attacks. However, in April 2017, the bankruptcy of Tellmeclub Inc. became a social
issue, leading to the outflow of customers to larger travel agencies. This had an impact on the number of requests for travel
estimates. For the Web travel website, the number of requests for travel estimates decreased by 10% year on year. For thee-tabinet.com website, the number of requests for travel estimates also decreased by 10% year on year. However, as a resultof measures to enhance order rates, the number of orders received increased by 11% year on year, and the gross profit
margin was maintained at 16%, mostly the same as in the previous fiscal year.
As a result, segment sales in the fiscal year ended November 30, 2017 were ¥2,183 million, up 34.4% year on year.
Segment loss was ¥1 million, compared with segment profit of ¥10 million in the previous fiscal year.
Brand Retail Platform Business
TITICACA has closed 18 stores in a twelve-month period, reducing the number of stores from 111 as of October 31,
2016 to 93 as of the end of October 2017. TITICACA has been pushing ahead with structural reforms, such as the closureof unprofitable stores and revisions to its personnel system. As a result, it restored operating profitability in the fiscal year
ended October 31, 2017.
As a coordinated Group measure this fiscal year, TITICACA participated in a camping event sponsored by GARVY, a
popular outdoor and family camping magazine published by Jitsugyo no Nihon Sha, in August 2017, in a bid to raise
recognition of its brand in this particular customer category.
As a result, segment sales in the fiscal year ended November 30, 2017 were ¥5,926 million, up 296.3% year on year.
Segment loss was ¥63 million, compared with segment loss of ¥15 million in the previous fiscal year.
Information Service Consulting Business
The information service consulting business provides consulting services on business strategy, recruiting assistance andother business matters, as well as advisory services for retail stores. Versatile, which became a subsidiary in December
2016, sells wine imported from overseas subsidiary MEC S.R.L. SOCIETA’ AGRICOLA, operates a food business, and has
a global licensing business for CoSTUME NATIONAL. Versatile aims to grow this business by acquiring trademarks in
Europe and the United States to complement its existing trademark licensing business across Asia. In the fiscal year ended
November 30, 2017, there were barely any sales. An operating loss was posted that represents SG&A expenses.
As a result, segment sales in the fiscal year ended November 30, 2017 were ¥71 million. Segment loss was ¥57 million.
2) Outlook for the Fiscal Year Ending November 30, 2018
The Company aims to upgrade and expand IoT-related services, including automotive telematic solutions. It also aims
to provide services that integrate IoT and blockchain technologies, and to offer cryptocurrency services and other services
related to the cryptocurrencies and various tokens issued by Group companies, such as NCXX Coin. Working closely with
CAICA and NCXX Solutions, which have become equity-method affiliates in the current fiscal year, the Company willseek to provide the aforementioned services as early as possible. The Company will also strive to implement steady andefficient agribusinesses through the introduction of ICT, and expand these initiatives to the franchise business. Moreover, asa new initiative, the Company will work to develop an AI-based cryptocurrency trading system, along with investing incryptocurrencies and various tokens using this system.
NCXX Inc., which handles IoT devices, will proactively undertake software development using GX410NC, an

6automotive telematics product. In addition, rather than supplying terminals that only perform data telecommunications,
NCXX will augment terminals with high value-added functions such as AI and image analysis capabilities, in an effort todevelop new edge device products.
Care Dynamics will continue to expand sales of its ASP system to nursing care providers. Leveraging its 400-strong
network of service customers, Care Dynamics will meet the various needs of the elderly and nursing care facilities with afull range of services. These services include support for the introduction of nursing care robots, including the HAL® robot
suit developed by CYBERDYNE Inc. and monitoring systems, as well as services to reduce air conditioning costs andbackup power supply services using simple solar panels.
The e-tabinet.com group will continue to deliver high-quality personalized travel services brimming with the spirit of
hospitality by recommending Kodawari No Tabi (“Journeys for the Discerning Traveler”) travel packages. Along with this,the group will focus on recruiting new travel concierges not only from among candidates in Japan, but also those living
abroad as it works to upgrade and enhance training courses such as e-learning programs that travel concierges can attend
from home. Moreover, the group will proactively form collaborations with leading partners to provide 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. Notably, in the fiscal year ending November 30, 2018, thegroup will push ahead with market development initiatives targeting the European market as well as the Asian region.
Meanwhile, in the previous year, the group acquired the shares of Gloria Tours Inc., a company specializing in sending
Paralympic athletes to various events and organizing numerous international para-sports tournaments. e-tabinet.com will
focus on further developing the market for para-sports ahead of the 2020 Tokyo Olympic and Paralympic Games. Alongwith the travel concierge business of Web travel Co., Ltd., e-tabinet.com seeks to build a niche market base that mostgeneral travel agencies would find difficult to serve.
In the agricultural ICT business, the Company will mark its third settled planting since expanding its proprietary testingplot to a total area of 5,421 m2 (1,640 tsubo). During this settled planting, the Company will verify further increases in theharvest using high-density cultivation techniques, which are one feature of its patented farming method known as “stacked
planter cultivation.” The Company is also conducting “sixth-order industrialization” initiatives, which involve the growing,processing and sale of agricultural products. Here, the Company has commenced shipments to nationwide supermarket
chains, in addition to conducting local farm-direct sales and sales at supermarkets in Iwate Prefecture, with the aim offurther expanding sales channels. In the franchise business, the Company has developed an additional “recording andmanagement app” for farmers that enables them to monitor harvest and management statistics. It has also advanced
development of an “environmental management and prediction system” that will conduct automated environmental
management by comprehensively integrating factors essential to vegetable growth and factors essential to healthmanagement. The Company will strive to ensure that these initiatives lead to increased sales.
TITICACA, Co., Ltd. (“TITICACA”) has been pushing ahead with the closure of unprofitable stores and revisions to its
personnel system. As a result, it restored operating profitability on a full-year basis in October 2017. In addition,
TITICACA will work to expand its customer base and put revenues and earnings on an even more stable footing. This will
be done by providing services mindful of offering greater customer convenience, such as the release of an official
smartphone app, and the introduction of mobile payment services for Chinese tourists.
Versatile Inc. (“Versatile”) will implement measures to develop and popularize IoT-related services for the fashionindustry, along with working to expand and put the brand retail platform business on a stable footing so that it becomes a
new earnings driver. In the process, Versatile will seek to expand the trademark licensing business of CoSTUMENATIONAL, which conducts the marketing, import and sale of fashion accessories, as well as wine and other retailbusiness, along with business expansion initiatives based on those businesses in Asia.
e frontier, Inc. (“e frontier”) has a track record in the development and sales of products such as AI Shogi, AI Igo and AI
Mahjong software programs featuring AI-driven thinking routines. e frontier will develop a cryptocurrency trading systemusing its AI technologies. In the future, e frontier aims to sell licenses to general consumers and corporate customers who
conduct cryptocurrency trading. In systems development, e frontier will work closely with CAICA, an integrator of allmanner of systems development pertaining to cryptocurrency and a partner with whom e frontier has entered into abusiness alliance. CAICA has a track record of deploying a cryptocurrency derivative system and high-frequency trading
system*4. In e frontier’s development project, the company will conduct development by obtaining and analyzing CAICA’spast trading information from cryptocurrency exchanges in Japan and abroad (i.e. obtain vast volumes of data including
price, order book information and trading volume by price).
In addition, e frontier has entered into a business alliance with Fisco Cryptocurrency Exchange Inc. Under this alliance,e frontier will conduct demonstration trials at the latter company’s cryptocurrency exchange and will provide vast amountsof past trading information. Moreover, the company aims to develop systems with higher usability by providing expertise7

obtained as a user of the aforementioned cryptocurrency derivative system and high-frequency trading system.
Furthermore, e frontier will start a cryptocurrency investment management business in earnest based on the use of thesesystems.
*4 The derivative system and high-frequency trading system aims to automatically generate profits by covering multiple
cryptocurrency exchanges in Japan and overseas, and checking and analyzing trends in those exchanges.
These systems will give users opportunities to generate gains, while holding down risk considerably.
Based on the foregoing measures, the Company's consolidated business forecast for the fiscal year ending November 30,
2018 is as follows. The Company is forecasting net sales of ¥11,398 million, operating income of ¥743 million, ordinary
income of ¥698 million and profit attributable to owners of parent of ¥563 million. EBITDA is projected at ¥935 million.
EBITDA = operating income + depreciation + amortization of goodwill (selling, general and administrative expenses)

8(2) Summary of Financial Position as of November 30, 2017
1) Assets, Liabilities, and Net Assets
AssetsTotal assets were ¥11,532 million as of November 30, 2017, a decrease of ¥1,927 million from a year earlier. The main
components of this change were increases of ¥647 million in cash and deposits, ¥768 million in advance payments-trade,¥3,377 million in investment securities, and decreases of ¥1,137 million in notes and accounts receivable-trade, ¥350
million in short-term loans receivable, ¥3,974 million in goodwill, ¥1,343 million in long-term loans receivable.
Liabilities
Total liabilities were ¥7,006 million, a decrease of ¥2,653 million from a year earlier. The main components of thischange were decreases of ¥300 million in the current portion of bonds, ¥2,148 million in interest-bearing debt*, and ¥118
million in provision for bonuses.
Net Assets
Total net assets were ¥4,526 million, an increase of ¥725 million from a year earlier. The main contributing factors wereincreases of ¥994 million in capital surplus, ¥902 million in retained earnings, ¥125 million in valuation difference on
available-for-sale securities, ¥468 million in non-controlling interests, which were partly offset by a decrease of ¥1,809
million in capital stock.
* Interest-bearing debt is the sum of short-term loans payable, current portion of long-term loans payable and long-termloans payable2) Cash Flows
Cash and cash equivalents ("cash") at November 30, 2017 were ¥2,529 million, an increase of ¥647 million from theprevious fiscal year-end.
Cash flows during the fiscal year under review and analysis of the main components are as follows:
Cash Flows from Operating Activities
Net cash used in operating activities was ¥1,388 million, compared with net cash provided by operating activities of¥341 million in the previous fiscal year. The primary reasons were a gain on sales of investment securities of ¥2,973
million, a gain on sales of shares of subsidiaries of ¥887 million and an increase in advance payments of ¥470 million, themain factors reducing cash. These factors were partly offset by profit before income taxes of ¥1,024 million andimpairment loss of ¥1,830 million, the main factors increasing cash.
Cash Flows from Investing Activities
Net cash provided by investing activities was ¥3,929 million, compared with net cash provided by investing activities of¥686 million in the previous fiscal year. The positive factors were ¥6,491 million in proceeds from sales of investment
securities, and ¥611 million from collection of long-term loans receivable. Negative factors were ¥2,797 million in
payments for the purchase of investment securities, and ¥490 million in payments for the purchase of shares in subsidiaries
resulting in change in scope of consolidation.
Cash Flows from Financing Activities
Net cash used in financing activities was ¥1,851 million, compared with net cash used in financing activities of ¥2,047
million in the previous fiscal year. This was mainly due to repayment of long-term loans payable of ¥2,059 million andpayments for redemption of bonds with subscription rights to shares of ¥300 million, the main factors reducing cash. These
cash outflows were partly offset by proceeds from long-term loans payable of ¥342 million and proceeds from issuance ofshares resulting from exercise of subscription rights to shares of ¥244 million, the main factors increasing cash.

9

(Reference) Cash Flow Indicators
Fiscal year ended
November 30,
2013

Fiscal year ended
November 30,
2014

Fiscal year ended
November 30,
2015

Fiscal year ended
November 30,
2016

Fiscal year ended
November 30,
2017

Equity ratio (%)

60.6

48.7

32.0

26.7

33.5

Market-value equity
ratio (%)

203.4

89.1

87.7

55.3

51.2

Interest-bearing debt
to cash flow ratio(Years)

－

169.9

－

17.7

－

Interest coverage
ratio (Times)

－

71.3

－

3.1

－

Notes: Calculation methods for cash flow indicators
Equity ratio: total net assets – non-controlling interests / total assets
Market-value equity ratio: market capitalization / total assets
Interest-bearing debt to cash flow ratio: interest-bearing debt / operating cash flow
Interest coverage ratio: operating cash flow / interest payments* Interest-bearing debt represents all liabilities recorded on the consolidated balance sheets for which interest is paid.
* The figures used for cash flow and interest payments represent net cash provided by operating activities and interest paid,
respectively, recorded on the consolidated statements of cash flows.
* Interest-bearing debt to cash flow ratio and interest coverage ratio for the fiscal years ended November 30, 2013, 2015
and 2017 are not disclosed because operating activities used net cash in those fiscal years.

2. Basic Policy Regarding Selection of Accounting Standards
The Group has adopted Japanese GAAP as its accounting standards in order to ensure comparability with peer industry
companies in Japan.

10

3. Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheets(Thousands of yen)
Fiscal 2016
(As of November 30, 2016)

Fiscal 2017
(As of November 30, 2017)

1,881,667
1,736,837
884,860

5,770
174,556(162,362)
5,352,563

2,529,595
599,269
1,066,862
3,931
245,7363,617
15
114,228
970,582
15,0005,840
416
325,010(53,097)
5,827,009

1,328,715(707,310)
621,404
46,700(33,013)
13,686
1,077,483(925,436)
152,046
298,354135
1,085,626

1,523,941(1,174,291)
349,650
89,553(65,410)
24,142
1,119,713(950,393)
169,320
192,132－
735,245

135,289
4,371,717
22,916
4,529,923

62,710397,006
6,300
3,964
469,982

153,872
1,551,743
1,739,624
847,021(1,800,467)
2,491,794
8,107,344
13,459,907

3,531,593
163,181396,140
628,537(219,321)
4,500,130
5,705,358
11,532,367

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise
Finished goods
Work in process
Raw materials
Supplies
Accounts receivable - other
Advance payments - trade
Short-term loans receivable
Suspense payments
Deferred tax assets
Other
Allowance for doubtful accounts
Total current assets
Non-current 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
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Software
Goodwill
Trademark right
Other
Total intangible assets
Investments and other assets
Investment securities
Long-term accounts receivable - other
Long-term loans receivable
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets－
208,295
7,717
29
46,995
202,436
365,760－－11

(Thousands of yen)
Fiscal 2016
(As of November 30, 2016)

Fiscal 2017
(As of November 30, 2017)586,979
249,334

600,601
191,660

300,000

1,165,000

1,844,650
338,608
283,738
51,05986,999258,231
63,81564,284
93,8444,500,206

836,382
259,459
350,077
24,50916,601
268,271
28,7802,076
67,796
106,000
13,376
16,592
48,2503,995,438

1,165,000
2,719,875
29,724335,224
703,564
205,774
5,159,163
9,659,369

1,637,685
29,708360,907
767,129
215,450
4,175,881
3,010,881

1,819,748
1,776,350
33,104(107,897)
3,521,304

10,0002,770,501
935,697(86,159)
3,630,038

14,695
1,131
56,53372,35937,539169,334
3,800,538
13,459,907

139,894(57)
95,981
235,818
22,211
637,979
4,526,047
11,532,367

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term loans payable
Current portion of convertible bond-type bonds with shareacquisition rights
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Asset retirement obligations
Deferred tax liabilities
Provision for bonuses
Provision for product warranties
Provision for sales returns
Provision for loss on store closing
Other
Total current liabilities
Non-current liabilities
Convertible bonds with subscription rights to shares
Long-term loans payable
Net defined benefit liability
Asset retirement obligations
Deferred tax liabilities
Other
Total non-current liabilities
Total liabilities
Net Assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets－
186,659
92,000－12－

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating loss
Non-operating income
Interest income
House rent income
Foreign exchange gains
Share of profit of entities accounted for using equity method
Miscellaneous income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Commission fee
Other
Total non-operating expenses
Ordinary loss
Extraordinary income
Gain on sales of shares of subsidiaries
Reversal of provision for bonuses
Gain on sales of non-current assets
Gain on reversal of subscription rights to shares
Gain on reversal of estimated damages on delays
Reversal of allowance for doubtful accounts
Gain on bargain purchase
Gain on change in equity
Gain on sales of investment securities
Other
Total extraordinary income
Extraordinary losses
Loss on retirement of non-current assets
Loss on valuation of investment securities
Loss on sales of shares of subsidiaries
Impairment loss
Provision for loss on store closing
Loss on sales of non-current assets
Provision of allowance for doubtful accounts
Loss on liquidation of subsidiaries
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes
Income taxes - deferred
Total income taxes
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent

Fiscal 2016
(From December 1, 2015
to November 30, 2016)12,231,134
9,848,278
2,382,855
3,002,419(619,563)

Fiscal 2017
(From December 1, 2016
to November 30, 2017)12,198,921
7,604,901
4,594,019
5,508,575(914,555)

39,834
14,432－－

12,881
4,293
43,082
43,691

14,031
1,124
69,42328,428132,377

148,261
54,22871,540－49,19637,336
158,072(940,251)

17,396
219,886(770,026)－

182,271
14,936933
600
58,586
28,66536,745888,152－－

25,6052,973,909
503
3,891,693

390
323,130

－
553

－
－
2,968

－

7,505
867

6,912

－

450
1,830,642

321,868
12,8504,152
66,070－3,554
416,869(863,765)
35,136(304)
34,832(898,597)
169,837(1,068,435)

13

－

－

－
81,790

－
4,145
2,708
1,926,649
1,024,792
157,377
8,856
166,233
858,559(44,033)
902,592

Consolidated Statements of Comprehensive Income(Thousands of yen)

Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustments
Share of other comprehensive income of entities accounted forusing equity method
Total other comprehensive income
Total comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

Fiscal 2016
(From December 1, 2015
to November 30, 2016)(898,597)

Fiscal 2017
(From December 1, 2016
to November 30, 2017)858,559

15,015
1,116(47,548)

125,199(1,188)39,020－427(31,415)(930,013)

163,458
1,022,017(1,020,165)
90,151

1,065,710(43,692)14

(3) Consolidated Statements of Changes in Equity
Fiscal 2016 (From December 1, 2015 to November 30, 2016)(Thousands of yen)
Shareholders’ equity
Capitalstock
Balance at the beginning of the fiscal year

Capitalsurplus1,819,748

Retainedearnings

1,708,701

1,101,539

Treasurystock(150,840)

Total shareholders’equity4,479,148

Changes during the fiscal year
Issuance of new shares

67,64867,648Transfer to legal capital surplus orother capital surplus from capitalstock due to capital reduction
Loss attributable to owners of parent(1,068,435)(1,068,435)

Purchase of treasury stock(10,324)(10,324)

Transfer of treasury shares

53,26753,267

Change of scope of consolidation
Net changes of items other thanshareholders’ equity
Total changes during the fiscal year－

67,648(1,068,435)

42,942(957,843)

Balance at the end of the fiscal year

1,819,748

1,776,350

33,104(107,897)

3,521,304

Accumulated othercomprehensive income

Balance at the beginning of the fiscal
year

Valuationdifference on
availablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustments

Total
accumulated
othercomprehensive income

Subscription
rights toshares

Noncontrollinginterests

Total
net assets

(320)

14

104,081

103,775

30,185113,290

4,726,400

Changes during the fiscal year
Issuance of new shares

67,648Transfer to legal capital surplus orother capital surplus from capitalstock due to capital reduction
Loss attributable to owners of parent(1,068,435)

Purchase of treasury stock(10,324)

Transfer of treasury stock

53,267

Change of scope of consolidation
Net changes of items other thanshareholders’ equity

15,015

1,116(47,548)(31,415)

7,353

56,04331,981

Total changes during the fiscal year

15,015

1,116(47,548)(31,415)

7,353

56,043(925,862)

Balance at the end of the fiscal year

14,695

1,131

56,53372,35937,539169,334

3,800,538

15

Fiscal 2017 (From December 1, 2016 to November 30, 2017)(Thousands of yen)
Shareholders’ equity
Capitalstock
Balance at the beginning of the fiscal year

Capitalsurplus1,819,748

Retainedearnings

1,776,350

Treasurystock

33,104(107,897)

Total shareholders’equity3,521,304

Changes during the fiscal year
Issuance of new shares
Transfer to legal capital surplus orother capital surplus from capitalstock due to capital reduction(1,809,748)

124,831

124,831

1,809,748－

Profit attributable to owners of parent

902,592

Purchase of treasury stock

902,592(12,982)

Change in ownership interest of parent
due to transactions with
non-controlling interests(183,930)

Change of scope of consolidation(756,498)(12,982)(183,930)

34,720(721,778)

Net changes of items other thanshareholders’ equity－

Total changes during the fiscal year

(1,809,748)

994,150

902,592

21,738

108,733

Balance at the end of the fiscal year

10,0002,770,501

935,697(86,159)

3,630,038

Accumulated othercomprehensive income

Balance at the beginning of the fiscal
year

Valuationdifference on
availablefor-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustments

Total
accumulated
othercomprehensive income

Subscription
rights toshares

Noncontrollinginterests

Total
net assets

14,695

1,131

56,53372,35937,539169,334

3,800,538

Changes during the fiscal year
Issuance of new shares

124,831Transfer to legal capital surplus orother capital surplus from capitalstock due to capital reduction－

Profit attributable to owners of parent

902,592

Purchase of treasury stock(12,982)

Change in ownership interest of parent
due to transactions with
non-controlling interests(183,930)

Change of scope of consolidation

－

－

－

－

－

－

(721,778)

Net changes of items other thanshareholders’ equity

125,199(1,188)39,448

163,458(15,327)

468,644616,776

Total changes during the fiscal year

125,199(1,188)39,448

163,458(15,327)

468,644725,509

Balance at the end of the fiscal year

139,894(57)

95,981

235,818

22,211

637,979

4,526,047

16

(4) Consolidated Statements of Cash Flows(Thousands of yen)
Fiscal 2016
(From December 1, 2015
to November 30, 2016)

Fiscal 2017
(From December 1, 2016
to November 30, 2017)(863,765)
120,956
321,868
517,372(36,745)(249,973)(47,504)(1,000)(41,172)(5,263)

1,024,792
212,551
1,830,642
254,073

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation and amortization
Impairment loss
Amortization of goodwill
Gain on bargain purchases
Increase (decrease) in allowance for doubtful accounts
Decrease in provision for bonuses
Increase (decrease) in provision for product warranties
Decrease in provision for loss on store closing
Decrease in net defined benefit liability
Increase in other provision
Share-based compensation expenses
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of loss (profit) of entities accounted for using equity
methodLoss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Gain on sales of shares of subsidiaries
Loss on retirement of non-current assets
Loss on retirement of non-current assets
Difference on execution of asset retirement obligations
Gain on reversal of estimated damages on delays
Gain on reversal of subscription rights to shares
Loss (gain) on change in equity
Decrease in notes and accounts receivable-trade
Decrease (increase) in inventories
Decrease (increase) in advance payments
Decrease (increase) in accounts receivable –other
Increase (decrease) in notes and accounts payable-trade
Decrease in accounts payable –other
Decrease in accrued consumption taxes
Increase (decrease) in accrued expenses
Increase in advances received
Other, net
SubtotalInterest and dividend income received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

9,566(39,834)
148,261
29,416－(43,691)

－

867

－

－

(2,973,909)(887,702)
6,912
81,236(3,967)(182,271)
7,505
2,996
8,084
(58,586)(600)－

1,470,894
385,528
59,584
93,405(547,726)(619,079)(86,487)(39,716)
52,26517,004425,851
87,058(110,995)(60,334)
341,58117－

134,212(56,052)
14,000(47,691)
(276)
143
2,088
(12,883)
71,540(2,970)－－(25,605)
86,678(214,177)(470,126)(209,323)
149,635(155,899)(3,659)142,874
11,658(171,237)(1,256,135)
6,496(80,004)(58,396)(1,388,039)

(Thousands of yen)
Fiscal 2016
(From December 1, 2015
to November 30, 2016)

Fiscal 2017
(From December 1, 2016
to November 30, 2017)(112,885)
34,591(38,203)2(50,964)(59,950)－554,359(10)
52,238(133,698)
9,456(97,002)8,273(27,228)(2,797,907)
6,491,645－(9,547)－(5,748)(490,371)

512,670

281,601－

577,075(4,518)(60,964)(420,000)
37,929－14,960(10,068)
180,629－
1,833
686,866(20,000)
330,000(344,918)
611,709(136,080)
260,893(524,300)
417
3,929,054(434,714)
779,000(2,653,994)(100,000)(295,340)
342,804(2,059,670)－

300,000－－(300,000)(2,862)(7,266)(1,104)－84,700244,999(10,284)(33)(1,554)(12,982)－－－229,320(2,047,010)(4,910)(1,023,474)
2,905,141
1,881,667(1,851,972)(41,113)647,928
1,881,667
2,529,595

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of intangible assets
Payments for asset retirement obligations
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries
Payments for investments in capital
Proceeds from sales of investments in capital
Payments for purchase of investments in subsidiaries resulting
in change in scope of consolidation
Proceeds from purchase of investments in subsidiaries resulting
in change in scope of consolidation
Proceeds from sales of shares of subsidiaries resulting inchange in scope of consolidation
Payments for sales of investments in subsidiaries resulting inchange in scope of consolidation
Payments of short-term loans receivableCollection of short-term loans receivable
Payments of long-term loans receivableCollection of long-term loans receivable
Payments for guarantee deposits
Proceeds from collection of guarantee deposits
Payments for distribution of dividends
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net decrease in short-term loans payable
Proceeds from long-term loans payable
Repayment of long-term loans payable
Redemption of bonds
Proceeds from issuance of bonds with subscription rights tosharesPayments for redemption of bonds with subscription rights tosharesRepayments of lease obligations
Payments for installment payables-property and equipment
Proceeds from issuance of shares resulting from exercise ofsubscription rights to shares
Purchase of treasury stock
Cash dividends paid
Dividends paid to non-controlling interests
Proceeds from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the fiscal year
Cash and cash equivalents at end of the fiscal year18

(5) Notes to Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Additional Information)(Application of Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company has adopted "Implementation Guidance on Recoverability of Deferred Tax Assets" (ASBJ Guidance No.
26, March 28, 2016) from the first three months of fiscal 2017.
(Segment Information)
1. Overview of reportable segments
The Company’s reportable segments are components of the Company for which separate financial information isavailable. They are periodically examined by the Board of Directors for the purpose of deciding on resource allocation andassessing business results.
The Group formulates comprehensive strategies at the Company Head Office and is expanding business activities
related to the products and services it handles. The Group’s businesses are made up of segments classified based on
products and services, as follows.
Effective from fiscal 2017, due to an increase in consolidated subsidiaries, the number of segments has been increased
from three to six segments. The Company’s six new segments are the ICT, IoT, Device Business, FinTech System
Development Business, Internet Travel Business, Brand Retail Platform Business, Information Service Consulting Businessand Other. Previously, the Company had three segments: the Device Business, the Internet Travel Business, and the Brand
Retail Platform Business.
Segment information for fiscal 2016 has been prepared and disclosed based on the reportable segments adopted after the
corporate reorganization.
Segment
I CT, IoT, Device Business

FinTech System Development
Business
Internet Travel Business

Brand Retail Platform BusinessInformation Service
Consulting Business
Other

Description of business
Management of Group businesses and research and development (R&D) activities in
the agricultural ICT business and robotics business
Development and sale of communication devices applying various wireless systems
Provision of systems solutions and maintenance services incidental to the above
Purchasing and sale of mobile communication-related products in China
Systems development
Cloud services
ASP services for nursing care centers
Operation of e-marketplace for travel-related products
Travel agency services for companies and individuals
Travel estimate services
Travel concierge services
Retailing of general merchandise, apparel and other items
Brand license businessRestaurant business
Various consulting services, including investor relations (IR) support services,financial strategies, business strategies, and recruitment support services
Fund arrangement and administration services
Grape farming, and wine brewing and sales
Wine sales
Software development and sales

2. Calculation method for amounts of net sales, income and loss, assets and liabilities, and other items by reportablesegment
The accounting policies and methods for reportable segments are the same as those shown in the notes to theconsolidated financial statements.
Segment profit for reportable segments is based on operating income.

19

3. Information on net sales, profit and loss, assets and liabilities, and other items by reportable segment
Fiscal year ended November 30, 2016 (From December 1, 2015 to November 30, 2016)(Thousands of yen)
Reportable segment
I CT, IoT,
DeviceBusiness

FinTechSystemDevelopment
Business

Internet
TravelBusiness

Brand
RetailPlatformBusiness

Information
Service
Consulting
Business

1,274,595

7,836,945

1,623,855

1,495,738－－ 12,231,134

623

2,216

－

－

－

－

Total

1,275,218

7,839,162

1,623,855

1,495,738

Segment profit (loss)(365,311)(61,244)

10,894(15,223)

－

Other

Total

Adjustments Consolidated

Net sales
Sales to third parties
Inter-segment sales
and transfers

Segment assets
Other items
Depreciation andamortization
Amortization of
goodwill
Increase in property,
plant and equipment
and intangible
assets－12,231,134

2,840(2,840)－－－ 12,233,975(2,840)12,231,134－－(430,886)(188,677)(619,563)－

9,473,826

3,986,080

13,459,907

982,318

5,655,077

640,079

2,196,350

1,381

49,835539

22,337－－74,094

46,862120,956－

486,523

30,848－－－517,372－

517,372

1,763

57,665

1,266

14,621－－75,317

153,074

228,391*Notes: 1. Segment profit is adjusted to operating loss in the consolidated statements of income. Adjustments for segment

profit mainly represent general and administration expenses that are not allocated to reportable segments.
2. Adjustments for segment assets of ¥5,301,519 thousand represent corporate assets that are not allocated toreportable segments (cash and deposits, short-term loans receivable, and others.)
3. Adjustments for depreciation and amortization of ¥47,501 thousand represent depreciation and amortization
related to corporate assets.
4. Adjustments for increase in property, plant and equipment and intangible assets mainly represent the increasein corporate assets.

20

Fiscal year ended November 30, 2017 (From December 1, 2016 to November 30, 2017)(Thousands of yen)
Reportable segment
I CT, IoT,
Devicebusiness

FinTechSystemDevelopment
Business

Internet
TravelBusiness

Brand
RetailPlatformBusiness

Information
Service
Consulting
Business893,2943,070,723

2,183,047

5,926,905

71,41953,531

12,198,921

43,011

88

7,601

54,805

2,176－

107,683

Total

936,305

3,070,811

2,190,648

5,981,711

73,59553,531

12,306,604(107,683) 12, 198,921

Segment profit (loss)(438,154)(36,276)(1,154)(63,897)(57,779)

23,553(573,709)(340,846)(914,555)

Segment assets

704,657

9,114

371,0073,519,940

115,650

222,997

4,943,368

6,588,998

11,532,367

Other items
Depreciation andamortization
Amortization of

20,761

44,227539

130,9278,221－

204,676

7,875

212,551－

137,037

30,84832,277

20,44533,463254,073－

254,073

29,292

6,453

1,250

107,074－－

144,071

82,505

226,576

Other

Total

Adjustments Consolidated

Net sales
Sales to third parties
Inter-segment sales
and transfers

goodwill
Increase in property,
plant and equipment
and intangible
assets－ 12, 198,921(107,683)－*Notes: 1. Segment profit is adjusted to operating loss in the consolidated statements of income. Adjustments for segment

profit mainly represent general and administration expenses that are not allocated to reportable segments.
2. Adjustment for segment assets of ¥6,588,998 thousand comprises corporate assets not allocated to thereportable segments and eliminations to offset claims and obligations of consolidated subsidiaries.
3. Adjustments for depreciation and amortization of ¥9,168 thousand represent depreciation and amortization
related to corporate assets.
4. Adjustments for increase in property, plant and equipment and intangible assets mainly represent the increasein corporate assets.

21

(Per Share Information)
Fiscal 2016
(From December 1, 2015 to November 30, 2016)

Fiscal 2017
(From December 1, 2016 to November 30, 2017)

Net assets per share¥241.60

Net assets per share¥ 259.74

Net loss per share¥71.77

Net income per share¥60.68－

Diluted loss per share－

Diluted loss per share

Notes: 1. The basis for calculating the amounts for net income (loss) per share and diluted net income per share is as follows:
Fiscal 2016
(From December 1, 2015
to November 30, 2016)

Fiscal 2017
(From December 1, 2016
to November 30, 2017)(1,068,435)(902,592)－－

Gain (loss) attributable to owners of parent related to common shares(Thousands of yen)

(1,068,435)

902,592

Average number of common shares during the period (Shares)

14, 885,214

14,875,370

Adjustments to profit attributable to owners of parent(Thousands of yen)－－

[ Of which, interest expenses (after tax adjustment)(Thousands of yen) ]

(－)

(－)

Increase in number of common shares (Shares)－－[ Of which, convertible bonds with subscription rights to shares(Shares) ]

(－)

(－)

Net income (loss) per share
Gain (loss) attributable to owners of parent (Thousands of yen)Amounts not attributable to common shareholders(Thousands of yen)

Diluted net income per share

Subscription rights to
Subscription rights toshares attached to NCXX
shares attached to NCXXGroup Inc.’s 11th SeriesGroup Inc.’s 11th Seriesof Subscription Rights toof Subscription Rights toShares (960 subscription
Shares (960 subscription
rights for 96,000
rights for 96,000
underlying shares)
underlying shares)
Subscription rights to
Subscription rights toshares attached to NCXX
shares attached to NCXX
Inc.’s 5th Series ofInc.’s 5th Series ofUnsecured Convertible
Unsecured Convertible
Bonds with Subscription
Bonds with Subscription
Rights to Shares (1,165
Rights to Shares (1,165
subscription rights forsubscription rights for
1,069,788 underlying
1,069,788 underlying
shares)shares)Subscription rights to
Subscription rights toshares attached to NCXX
shares attached to NCXXGroup Inc.’s 13th SeriesGroup Inc.’s 6th Series ofof Subscription Rights to
Unsecured Convertible
Shares (1,000
Bonds with Subscription
subscription rights for
Rights to Shares (30100,000 underlying
subscription rights forshares)466,562 underlying
shares)Subscription rights toshares attached to NCXXGroup Inc.’s 13th Seriesof Subscription Rights toShares (1,000 subscription
rights for 100,000
underlying shares)
2. Although there were potentially dilutive shares, diluted net income per share for fiscal 2016 is not disclosed as a net loss per
share was recorded.
3. Diluted net income per share for fiscal 2017 is not disclosed as there were no shares with a potentially dilutive effect.

Outline of dilutive shares excluded from the calculation ofdiluted net income per share because of not having a dilutive
effect22

(Subsequent Events)
I. Notice concerning issuance conditions and other matters for the 14th Series of Stock Options (subscription rights
to shares)
The Company has passed a resolution on the specific issuance details pertaining to the “Issuance of Subscription Rights
to Shares as Stock Options” approved by its 33rd Ordinary General Meeting of Shareholders held on February 23, 2017.
Details regarding the issuance are as follows.
1. Outline of the issuance of subscription rights to shares(1) Issue date of subscription rights to shares

January 15, 2018

(2) Number of subscription rights to shares to be issued

900 (Number of underlying shares for each subscription right toshares: 100 shares)(3) Issue price of subscription rights to sharesNo monetary payment shall be required.

(4) Class and number of underlying shares

90,000 shares of the common stock of the Company(5) Amount payable upon the exercise of subscription
rights to shares¥458 per share(6) Total amount of shares to be issued upon theexercise of subscription rights to shares¥41,220,000(7) Exercise period of subscription rights to shares

January 16, 2020 to January 15, 2023

(8) Amount of the issue price to be incorporated incapital stock and capital reserve in the event newshares are issued upon the exercise of subscription
rights to shares

Amount to be incorporated in capital¥229 of the amount payable per share
Amount to be incorporated in capital reserve¥229 of the amount payable per share(9) Number of eligible recipients of subscription rights
to shares

Directors of the Company 5
Directors of subsidiaries 3
Employees of subsidiaries 2

2. Matters concerning transactions with the controlling shareholder
A portion of the issuance of these subscription rights to shares will be allotted to Mr. Osamu Fukami, who concurrently
serves as Director of FISCO Ltd., the parent company. Therefore, the issuance of these subscription rights to shares is
considered to be a transaction with the controlling shareholder.
(1) Consistency with the Corporate Governance Report
In its Corporate Governance Report, the Company has established “Guidelines Concerning Measures to Protect
Minority Shareholders When Undertaking Transactions with the Controlling Shareholder.” Under these Guidelines, theCompany has set the following policy: “The Company makes reasonable decisions on transactions with the controllingshareholder, as it would with transactions under ordinary conditions, based on an understanding of the market conditions
surrounding each transaction and objective information on the relevant market and other factors. Accordingly, the Company
takes appropriate steps to ensure that the interests of minority shareholders are not undermined.” The aforementioned
subscription rights to shares were determined in accordance with the foregoing guidelines. The allotment of stock options
to the Director holding the concurrent post is designed to align the Director’s interests with those of shareholders byallowing him to bear a certain degree of responsibility for the Company’s business performance and stock price. The
Company believes that this arrangement can be expected to enhance the Group’s business performance and corporate value,
thereby contributing positively to the interests of all shareholders, including minority shareholders. Based on this belief, theCompany has determined that the arrangement is in accord with the aforementioned guidelines.
(2) Matters concerning measures to ensure fairness and measures to avoid conflicts of interest
The subscription rights to shares have been submitted to and approved by resolution at the 33rd Ordinary General
Meeting of Shareholders, and have been issued based on rules and procedures established internally.
In addition, the issuance details and conditions are appropriate as they are consistent with the details and conditions
found in conventional issuances of subscription rights to shares.
Mr. Osamu Fukami, who concurrently serves as a Director of FISCO Ltd., the parent company, has participated in thisresolution. However, the Company has obtained an opinion from its legal adviser stating that the granting of stock options
within the scope resolved upon at the General Meeting of Shareholders does not constitute a conflict of interest.
(3) Summary of opinion from an individual free of any conflicts of interests with the controlling shareholder
indicating that the transactions do not undermine the interests of minority shareholders
When the Board of Directors passed a resolution on January 15, 2018 to approve the issuance of the subscription rights
to shares, the Company obtained an opinion from Outside Director Sadatomo Matsudaira, an independent Board Member
free of any conflicts of interests with the controlling shareholder. In his opinion, Mr. Matsudaira stated that the subscription

23

rights to shares would be issued based on rules and procedures established internally; the issuance details and conditions
are appropriate as they are consistent with the details and conditions found in conventional issuances of subscription rights
to shares, and that the subscription rights to shares would not undermine the interests of minority shareholders.。
(Reference)
Board of Directors’ resolution
January 15, 2018
Date of approval by the General Meeting of Shareholders

February 23, 2017

II. Signing of syndicated loan agreement by consolidated subsidiary
TITICACA, Co. Ltd. (“TITICACA”), a consolidated subsidiary of the Company, has signed a syndicated loan
agreement (hereinafter, the “Syndicated Loan Agreement”) with The Bank of Yokohama, Ltd., the arranger, and executed
the Syndicated Loan Agreement on December 15, 2017. Additionally, the Company has assumed joint and several
suretyship for the Syndicated Loan Agreement based on a resolution passed by its Board of Directors on November 16,
2017.
1. Purpose of signing the syndicated loan agreement
The purpose of the syndicated loan agreement is to ensure flexible and stable fund procurement by securing acommitment line through the syndication method, stabilize fundraising by refinancing existing long-term debt according tocash flows, and systematically reduce interest-bearing debt, in order to strengthen the financial position in addition to
executing growth strategies.
2. Outline of the syndicated loan agreement
Syndicated loan agreement
Agreement format
Agreement amount
Agreement date
Execution date
Agreement period
Use of funds

Repayment method

Guarantor
Collateral
Arranger and agent
Participating financial
institutions

Commitment line¥250 million

Term loan¥300 million
December 13, 2017
December 15, 2017

1 yearWorking capital

5 years
Refinancing funds
From the end of January 2018, repayment of
5.0% of the total amount every three months (aLump-sum repayment on maturity datetotal of 14 payments) and repayment of 30.0%of the total amount on the maturity date(a total of 1 payment)
The Company (TITICACA’s parent)
Unsecured
The Bank of Yokohama, Ltd.
THE SHIGA BANK, LTD.

THE HOKURIKU BANK, LTD.

III. Other important investments
TITICACA, Co. Ltd., a consolidated subsidiary of the Company, commenced investment in cryptocurrency.
1. Purpose of investment
TITICACA is considering undertaking new cryptocurrency-related businesses. By harnessing experience and dataobtained through this investment in cryptocurrency, TITICACA will work to generate new earnings streams through the
integration of existing businesses and cryptocurrency-related businesses.
2. Description of cryptocurrency investment(1) Name of main cryptocurrency: Bitcoin(2) Amount of investment (acquisition cost): ¥1,000 million
3. Significant impact on business activities
TITICACA has determined that this investment will help to improve business performance over the medium and longterms.
4. Fund procurement method
Internal funds

24