April 13, 2018

Consolidated Financial Results
for the Three Months Ended February 28, 2018
(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 to file Quarterly Securities Report:
April 13, 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 Three Months Ended February 28, 2018
(From December 1, 2017 to February 28, 2018)(1) Consolidated Operating Results
Net sales
Millions of yen(Percentages indicate year-on-year changes.)
Profit attributable toOrdinary income
owners of parent

Operating income%

Millions of yen%

Three months ended
4,006
(1.7)
1,285
February 28, 2018
Three months ended
4,074
58.0
(78)
February 28, 2017
Note:
Comprehensive income
Three months ended February 28, 2018: ¥1,575 million [91.8%]
Three months ended February 28, 2017: ¥821million [-%]
Earnings per
share
Three months ended
February 28, 2018
Three months ended
February 28, 2017

Millions of yen%

Millions of yen

%

966

-

1,216

95.4

(122)

-

622

-

Diluted earnings
per share

Yen

Yen

81.75

-

41.84

34.39

(2) Consolidated Financial Position
Total assets
As ofMillions of yen
12,891February 28, 2018
11,532
November 30, 2017
Reference: Equity
As of February 28, 2018: ¥5,429 million
As of November 30, 2017: ¥3,865 million

Net assets

Equity ratio

Net assets per share

Millions of yen

%

6,104
4,526

42.1
33.5

Yen

364.81259.74

2. Cash Dividends
Annual dividends per shareFirst
quarter

Secondquarter

Third
quarter

Fiscalyear-end

Annual

Yen

Yen

Yen

Yen

Yen

Fiscal year ended
November 30, 2017

-

0.00

-

0.00

0.00

Fiscal year ending
November 30, 2018

-

0.00

-

0.00

0.00

Fiscal year ending
November 30, 2018
(forecasts)

Note: Changes since most recently announced dividend forecast: None

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

Note: Changes since most recently announced earnings forecast: None
Notes:(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in a change in the scope of
consolidation): None
(2) Application of special accounting practices for quarterly consolidated financial statements: None
(3) 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
(4) Number of common shares issued
a. Total number of issued shares at the end of the period (including treasury stock)
As of February 28, 201815,030,195 shares
As of November 30, 201715,030,195 sharesb. Number of shares of treasury stock at the end of the period
As of February 28, 2018
146,473 shares
As of November 30, 2017
146,473 sharesc. Average number of shares (Quarterly cumulative total)
For the three months ended February 28, 2018
14,883,721 shares
For the three months ended February 28, 2017
14,882,356 shares*This report falls outside the scope of quarterly review procedures by Certified Public Accountants or the independent auditor.
* Proper use of earnings forecasts and other special matters
The forward-looking statements, including earnings forecasts, contained in these materials are based on information
currently available to the Company and on certain assumptions deemed to be reasonable. These statements do not guaranteethat the Company will achieve its earnings forecasts. In addition, actual business and other results may differ substantially
due to various factors.

Attachment Contents
1. Qualitative Information Concerning Quarterly Financial Statements………..…………………………………

2(1) Description of Business Results.…………………………….……………………………………………....

2(2) Description of Financial Position..………………………….……………………………………………….

5(3) Description of Consolidated Earnings Forecasts and Other Forward-Looking Information………………

5

2. Quarterly Consolidated Financial Statements and Key Notes…………………………………………………

7(1) Consolidated Balance Sheets………………………………………………………………………………..

7(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income ……….…..

9

Consolidated Statements of Income(Three months ended February 28, 2018) ......………………………………………………………………

9

Consolidated Statements of Comprehensive Income(Three months ended February 28, 2018) ......……………………………………………………………… 10(3) Notes to Consolidated Financial Statements..………………………………………..………..…..………... 11(Note Concerning Going Concern Assumption).……………………………………………………………

11(Notes Regarding Significant Change in Shareholders’ Equity).…………………………………………… 11(Segment Information)..………………………………………………………………..…………………… 11

1

1. Qualitative Information Concerning Quarterly Financial Statements
Forward-looking statements in this document are judged to be appropriate by the Group (the Company and its
consolidated subsidiaries) as of the date of filing this report.
(1) Description of Business Results
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 first three months of the fiscal year under review.
In the three months of the fiscal year ending November 30, 2018, the Japanese economy continued to expand
moderately, stimulated by government measures. Overseas, however, the outlook was uncertain with concerns about
destabilizing trends in politics and 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 2016, the size of the Cyber-Physical System / IoT market, a strategic focus for the Company, increased to ¥194.0
trillion globally and ¥11.1 trillion in Japan. By 2030, the market is expected to grow to ¥404.4 trillion globally and ¥19.7
trillion in Japan. Looking at fields that have outstanding growth rates in Japan, the agriculture sector has posted an averageannual growth rate of 20.2%. (Source: 2017 Survey of Trends in Emerging Fields by the Japan Electronics and Information
Technology Industries Association)
In this business environment, in January 2018, the Company entered into a business alliance agreement with Fisco
Cryptocurrency Exchange Inc. (“FCCE”) regarding the development of an AI trading system for cryptocurrency by efrontier, Inc. (“e frontier”), a subsidiary of the Company. 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. As a new
initiative, e frontier has now begun developing an AI-based cryptocurrency trading system. Leveraging its aforementioned
experience in software development, e frontier is considering the development of investment decision-making functions
using probabilistic decision-making processes based on accumulated data logs, as well as genetic algorithms and machinelearning techniques. In the future, e frontier aims to sell licenses to general consumers and corporate customers who
conduct cryptocurrency trading. e frontier will aim to use the system to support derivative trading in various tokens, such as
FISCO Coin, NCXX Coin and CAICA Coin, in addition to cryptocurrencies such as Bitcoin. Moreover, e frontier has
started investing in Bitcoin in conjunction with performing demonstration trials of the software it is currently developing.
Turning to another initiative in January 2018, NCXX Solutions Inc. (“NCXX Solutions”), an equity-method affiliate of
the Company, conducted a stock swap to become a wholly owned subsidiary of CAICA Inc. (“CAICA”), another
equity-method affiliate. By converting NCXX Solutions into a wholly owned subsidiary, CAICA will strive to further
increase operational efficiency and synergies, as well as bolster consolidated profitability and enhance Group-wide
corporate value. The Company and NCXX Solutions will continue to undertake IoT-related joint development even after
NCXX Solutions becomes a wholly owned subsidiary of CAICA as described above.
Moreover, in February 2018, the Company entered into a capital and business partnership with CSMEN Co., Ltd.
(Listing: 3083 TSE JASDAQ; Headquarters: Chuo-ku, Tokyo; President: Masao Aoki), an apparel brand retailer. This wasdone by underwriting a portion of a capital increase through a third-party allotment of shares of CSMEN. CSMEN offers
prospects for capturing synergies with the Company’s brand retail platform business.
In the agricultural ICT business (NCXX FARM), following on from the previous fiscal year, the Group continued topromote the commercialization of “sixth-order industrialization business” initiatives, which involve the growing,processing and sale of agricultural products, and a franchise business, which involves conducting packaged sales thatcombine chemical soil management based on a patented farming method and digital management based on ICT systems.
In “sixth-order industrialization business” initiatives, the Group began full-scale growing of ground cherries. In
December 2017, the Group launched sales of ground cherries at Ginga Plaza, a shop selling regional specialties from Iwate
Prefecture in Tokyo, in addition to selling this product at farmers’ markets. In February 2018, the Group’s ground cherries
were spotlighted by a news program covering farmers’ markets. The program was produced by Iwate Menkoi-TV, a local
television station in Iwate Prefecture.
In addition, as a pilot program, the Group has started growing strawberries (Tochiotome) in stacked planters. Thismethod stands in stark contrast to the conventional method of growing strawberries on raised benches. The planters arestacked on alternate levels of shelves. This technique enables the Group to make more effective use of space, thereby
increasing the number of strawberry plants per area and the size of the harvest. The Group will continue to advance
verification trials during the current fiscal year, with the aim of commercializing this strawberry product in earnest.

2

In the franchise business, the Group regularly conducts presentations on the franchise business at its proprietary test plot.
It has continued to address various needs, including the use of these presentations by local municipalities and various
agricultural groups as part of their training programs. In the previous fiscal year, the Group began trial operation of a data
recording and management app that can be used by farmers to easily monitor harvest and management data. The Group is
taking this trial operation to the next level by reflecting feedback from the verification results in the app, with the aim ofcommercializing it as early as possible. The Group has continued to conduct development with a view to linking the app
with weather and market information and to the Group’s ICT and accounting systems in the future. In the area of ICT
systems, in the previous fiscal year the Group commenced the development of an environmental management prediction
system, as a new function designed to automatically perform environmental management by comprehensively integrating
factors essential to the growth of vegetables and factors essential to health management. The Group will continue to pushahead with the development of this system in the current fiscal year. The Group will continue working to establish abusiness model for harvesting safe food materials in a stable and efficient manner by upgrading ICT systems andaccumulating expertise at its proprietary testing plot.
Looking at consolidated business results, NCXX Inc. (“NCXX”) saw sales and profits surpass forecasts due to growthin sales of GX410NC/GX420NC, the OBD II-compliant automotive telematic data collecting unit. These units were
supplied to businesses to which NCXX provides telematics services. The businesses use these services to raise theiroperating efficiency, reduce costs, and support safe driving. Going forward, these units offer prospects for growth in sales
volumes for applications such as fleet management of business vehicles and the use of the units overseas. Following on
from the previous fiscal year, TITICACA, Co. Ltd. (“TITICACA”) has continued to push ahead with structural reforms,
such as the closure of unprofitable stores and revisions to its personnel system. As a result, TITICACA has further reduced
its SG&A expenses, leading to much larger operating income than initially forecast. Consequently, TITICACA has restored
profitability by dramatically improving its earnings. TITICACA will continue to improve earnings by continuallyadvancing structural reforms. Furthermore, in the course of developing the aforementioned AI-based trading system for
cryptocurrency, e frontier has started investing in Bitcoin in conjunction with performing demonstration trials of software it
is currently developing. e frontier has already delivered significant results by generating gains on this investment.
Meanwhile, net sales finished the period with a slight decline owing to the conversion of CAICA and NCXX Solutions
into equity-method affiliates. However, operating income rose significantly year on year due to improved businessperformance at NCXX and TITICACA, as well as the recording of gains on investment in cryptocurrency in the Group’s
proprietary account.
As a result of these efforts, consolidated net sales were ¥4,006 million, down 1.7% year on year. Operating income was¥1,285 million, compared to an operating loss of ¥78 million in the same period of the previous fiscal year. Ordinary
income was ¥966 million, compared to an ordinary loss of ¥122 million. Income before income taxes was ¥1,232 million,
up 60.2% year on year. Profit attributable to owners of parent was ¥1,216 million, up 95.4% year on year. EBITDA, areference indicator reflecting the amortization of goodwill associated with the conversion of companies into subsidiaries
was ¥1,331 million, compared to ¥146 million in the same period of the previous fiscal year.
EBITDA = operating income + depreciation + amortization of goodwill (selling, general and administrative expenses)
In the three months ended February 28, 2018, the Group has already posted business results that exceed its consolidated
financial forecasts for the fiscal year ending November 30, 2018. However, the Group is still closely reviewing its financial
forecasts for the full fiscal year. If it becomes necessary to revise the financial forecasts after this review, the Group willpromptly disclose any revisions to its forecasts.
Business performance by segment in the three months ended February 28, 2018 was as follows:
From the three months ended February 28, 2018, the FinTech Systems Development Business and the Information
Service Consulting Business were excluded from the reportable segments and the Cryptocurrency and Blockchain Business
was added as a new reportable segment.
IoT-Related Business
NCXX focused on providing solutions that use GX410NC/GX420NC, its OBD II-compliant automotive telematic datacollecting unit, which has been available for sale since 2015.
In addition, NCXX secured the compatibility of UX302NC, an LTE/3G data telecommunications terminal sold since2014, and developed UX302NC-R, a new device that has passed the Inter-Operability Testing (IoT) certification of NTT
DOCOMO, INC., in addition to featuring upgrades reflecting customer requests. UX302NC-R is scheduled for launch
sometime in spring 2018 and is expected to contribute immensely to sales in the current fiscal year.
The Group will continue to provide automotive telematic solutions that integrate high-valued-added communication
devices and software, as well as providing various M2M/IoT solutions.

3

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 new services such as support for the
introduction of nursing care robots since the previous fiscal year 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, we offer nursing care robots as a sales agency, distribute instructive leaflets ofcorporations, and services for creating advertisements. We also plan tours of nursing care facilities that have adopted the“Drive Care” OBD II solution for nursing care transportation vehicles.
Moreover, we provide a replacement support service and reassess electricity providers to help nursing care facilities cut
their electricity bills. We also offer a service that introduces systems for saving water. Additionally, we have launched a
new service to present proposals for reducing insurance premiums.
As a result of the aforementioned reclassification of segments, the ICT, IoT, Device Business and the FinTech Systems
Development Business have been integrated to form the IoT-Related Business. In addition, net sales and operating income
decreased sharply following the conversion of NCXX Solutions Inc. into an equity-method affiliate.
As a result, segment sales for the three months ended February 28, 2018 were ¥233 million, down 88.5% year on year.
The segment loss was ¥103 million, compared with a segment loss of ¥43 million in the same period in the previous fiscal
year.
Internet Travel Business
Amid a flood of travel products, e-tabinet.com and its subsidiaries provide services that meet the diverse andincreasingly advanced needs of consumers. It has received many comments from highly satisfied customers. Web travel Co.,
Ltd. (“Web travel”) has built an unparalleled reputation as Japan’s only Internet-based custom-itinerary travel agency with
its travel concierges, who are hand-picked travel consultants with extensive experience.
In 2015, we launched a website specifically for foreign tourists, and raised our profile in search engine results targeting
Asia as a part of efforts to promote travel services. The number of tourists visiting Japan increased by 17% year on year to
28 million by the end of fiscal 2017. Going forward, we remain committed to further improving our website for foreign
tourists, widening our focus to cover not only Asia but also Europe and the U.S
Gloria Tours Inc. (“Gloria Tours”), which joined the Group in October 2016, specializes in sending Paralympic athletes
to various events and organizing numerous international para-sports tournaments. Interest in para-sports events has
increased every year ahead of the 2020 Tokyo Olympic and Paralympic Games. In the current fiscal year, Gloria Tours sent
Paralympic athletes to the PyeongChang Paralympics, thereby assisting with the travel needs of the athletes and theirfamily members. Going forward, Gloria Tours will continue to redouble efforts in para-sports. In addition, as part of these
efforts, Gloria Tours is working to raise awareness and encourage widespread adoption of para-sports. To this end, Gloria
Tours supported the publication of a new para-sports journal with help from para-athlete associations and Jitsugyo no
Nihon Sha, Ltd.
Meanwhile, with steady growth in the number of registered travel concierges, we are seeking talented personnel for
crowd sourcing operations as a means to leverage the unique skills of these concierges in areas other than travel. Morespecifically, we are taking measures to enhance a sense of belonging by outsourcing work that leverages the skills ofconcierges, such as helping in the information publishing business of parent company FISCO Ltd., writing short comments
for investor relations news at FISCO IR Ltd., and translating web pages of interest to foreign tourists.
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 December 2017, the travel concierges released “Day Trips from Paris,” a travel package
designed to make trips to France even more appealing. In January 2018, the special travel package was “Macao,” acrossroads of East and West, and in February 2018, the travel concierges released “Visit the Outlying Okinawan Islands,” atravel package designed to allow travelers to enjoy a slower pace of life. Looking ahead, the travel concierges will continue
to propose interesting Kodawari no Tabi.
Amid a gradual recovery from terrorist attacks since the previous year, overseas travel business sales were ¥403 million,
centered on mainstay honeymoon packages to Europe and Australia, and domestic travel business sales were ¥38 million.
In total for the Web travel website and the e-tabinet.com website, the number of requests for travel estimates from
customers declined 19% from the previous year, slightly impacted by a decrease in requests for travel estimates for Asia.
The number of orders received was up 3% year on year in the three months ended February 28, 2018 and the gross profit
margin held steady at 15%. Conditions in Europe have returned to a stable footing, leading to a gradual recovery in thenumber of orders received. With an increasing number of travelers to Europe and the Americas, the number of orders
received is expected to continue following a similar trend going forward.

4

Gloria Tours reported a decrease in overseas sales due to a decline in overseas trips by groups of athletes immediately
after the PyeongChang Paralympics. However, at this time, overseas sales have surpassed expectations, helped in part by
the rescheduling of overseas trips that had been postponed in the previous year.
As a result, segment sales in the three months ended February 28, 2018 were ¥441 million, up 12.6% year on year. The
segment loss was ¥4 million, compared with a segment loss of ¥18 million in the same period in the previous fiscal year.
Brand Retail Platform Business
TITICACA had 94 stores as of the end of January 2018, reflecting the opening of one store (Yokohama World Porters)in the three months ended February 28, 2018, after closing down 18 stores over the previous twelve-month period,
compared with 111 stores as of the end of October 2016. TITICACA restored operating profitability in January 2018 as aresult of the closure of unprofitable stores and structural reforms, including revisions to the personnel structure.
In marketing initiatives, TITICACA implemented a tie-up with Coco, an animated film produced by Disney/Pixar
Animation Studios, which tells the story of a young boy’s grand adventure through the rich and vibrant community of theLand of the Dead. From March 2018, a massive campaign featuring character merchandise reflecting the film’s worldview
was held at all TITICACA stores in Japan (except for stores in major shopping malls and standalone* outlet stores) and
TITICACA’s online shopping website. Even after the launch of sales, the campaign merchandise has continued to perform
steadily.
Versatile Inc. sells wine imported from overseas subsidiary MEC S.R.L. SOCIETA’ AGRICOLA, operates a foodbusiness, 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 thethree months ended February 28, 2018, there were barely any sales. An operating loss was posted that represents SG&A
expenses.
As a result, in the three months ended February 28, 2018, segment sales were ¥1,962 million, up 18.8% year on year,
and segment operating income came to ¥87 million, up 30.7%.
Cryptocurrency and Blockchain Businesse frontier has started investing in cryptocurrency in a proprietary account, and has recorded sales and gains related tothis investment. Furthermore, in the course of developing the aforementioned AI-based trading system for cryptocurrency, efrontier has started investing in Bitcoin in conjunction with performing demonstration trials of software it is currently
developing. e frontier has already delivered significant results. Taking into account this investment performance, e frontier
will continue to conduct demonstration trials, as it works to commercialize the AI-based trading system for cryptocurrency.
As a result, in the three months ended February 28, 2018, segment sales were ¥1,360 million and segment operating
income came to ¥1,360 million.
(2) Description of Financial Position
1) Assets, Liabilities, and Net Assets
AssetsTotal assets at February 28, 2018 increased ¥1,359 million to ¥12,891 million compared with the end of the previous
fiscal year. The main factors behind this change comprised a decrease of ¥1,142 million in cash and deposits, an increase of¥146 million in notes and accounts receivable - trade, an increase of ¥146 million in advance payments - trade, an increaseof ¥1,000 million in short-term loans receivable, and an increase of ¥774 million in cryptocurrency.
Liabilities
Total liabilities were ¥6,787 million, a decrease of ¥219 million from the end of the previous fiscal year. The main
components of this change were decreases of ¥212 million in notes and accounts payable - trade and ¥235 million in
accrued expenses, and an increase of ¥104 million in advances received.
Net Assets
Total net assets increased ¥1,578 million, compared with the end of the previous fiscal year, to ¥6,104 million. The mainchanges included increases of ¥1,216 million in retained earnings and ¥353 million in valuation difference on
available-for-sale securities.
2) Business and Financial Issues to Be Addressed
In the three months ended February 28, 2018, there were no significant changes to the issues to be addressed by theGroup.

5

(3) Description of Consolidated Earnings Forecasts and Other Forward-Looking Information
There have been no changes to the consolidated financial forecasts announced in the financial report (kessan tanshin)titled “Consolidated Financial Results for the Fiscal Year Ended November 30, 2017” published on January 19, 2018.

6

2. Quarterly Consolidated Financial Statements and Key Notes(1) Consolidated Balance Sheets(Thousands of yen)
Fiscal 2017
(As of November 30, 2017)

1Q Fiscal 2018
(As of February 28, 2018)

2,529,595
599,269
1,070,793
245,736
3,632
114,228
970,582
15,000416
15,899314,951(53,097)
5,827,009

1,386,639
745,934
991,445294,866
10,21776,486
1,117,457
1,015,000－
790,065
248,353(52,550)
6,623,915

735,245

726,80262,710397,006
6,300
3,964
469,982

62,763382,9715,760
3,961
455,455

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

4,058,001
155,290454,340
627,441(209,631)
5,085,442
6,267,701
12,891,617

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Accounts receivable - other
Advance payments - trade
Short-term loans receivable
Deferred tax assets
Cryptocurrency
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
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 assets7

(Thousands of yen)
Fiscal 2017
(As of November 30, 2017)

1Q Fiscal 2018
(As of February 28, 2018)

600,601
191,660

387,630
366,800

1,165,000
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
697,194
222,348
114,310
7,066
62,008372,937
21,627955
37,34593,0007,792
14,602
62,032
3,632,652

1,637,685
29,708360,907
767,129
215,450
3,010,881
7,006,319

1,638,740
32,010368,717922,251
192,909
3,154,629
6,787,282

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

10,0002,770,501
2,152,538(84,239)
4,848,800

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

493,698(991)
88,326
581,032
23,379651,122
6,104,334
12,891,617

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
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 assets8(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income(Three months ended February 28, 2018)(Thousands of yen)

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

1Q Fiscal 2017
(From December 1, 2016
to February 28, 2017)
4,074,676
2,687,766
1,386,909
1,465,434(78,524)

1Q Fiscal 2018
(From December 1, 2017
to February 28, 2018)
4,006,728
1,411,985
2,594,743
1,309,332
1,285,411

6,569
1,975
21,710－3,338
33,593

6,020
－
2,368
89,752734
98,87525,051
48,424－－
4,074
77,549(122,480)

11,787
10,366201,021
192,004
2,742
417,922966,364

888,152
557
2,968
－
－
891,678－－－
190,850
85,440276,2908－－
8769,189
114,083
1,625
115,709653,480
30,685
622,794

－
4,943
5,353
10,2971,232,357
2,547(1,080)1,466
1,230,890
14,0491,216,841

9

Consolidated Statements of Comprehensive Income(Three months ended February 28, 2018)(Thousands of yen)

ProfitOther 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

1Q Fiscal 2017
(From December 1, 2016
to February 28, 2017)
653,480

1Q Fiscal 2018
(From December 1, 2017
to February 28, 2018)
1,230,890

115,837(2,618)55,069347,498(1,823)(7,651)－
168,288821,768

6,297
344,321
1,575,211

791,91329,854

1,562,055
13,15510

(3) Notes to Consolidated Financial Statements(Note Concerning Going Concern Assumption)
None(Notes Regarding Significant Change in Shareholders’ Equity)
None(Segment Information)
I Three months of the fiscal year ended November 30, 2017 (From December 1, 2016 to February 28, 2017)
1. Information on net sales, profit and loss by reportable segment(Thousands of yen)
Reportable segment
IoT-Related
Business

Internet
TravelBusiness

Brand Retail
PlatformBusiness

Cryptocurrency
and Blockchain

Other

Adjustments

Amounts in the
consolidated
financialstatements

Total

Business

Net sales
Sales to third
partiesIntersegment sales
and transfers
Total
Segment profit(loss)

2,026,369

392,377

1,652,497

－

3,431

4,074,676－

4,074,676

4,700

222

79

－

－

5,001

(5,001)－2,031,069

392,599

1,652,576

－

3,431

4,079,677(5,001)

4,074,676(43,754)(18,619)

66,966－(36,185)(31,593)(46,931)(78,524)

Note: Segment profit (loss) 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.
II Three months of the fiscal year ending November 30, 2018 (From December 1, 2017 to February 28, 2018)
1. Information on net sales, profit and loss by reportable segment(Thousands of yen)
Reportable segment
IoT-Related
Business

Internet
TravelBusiness

Brand Retail
PlatformBusiness

Cryptocurrency
and Blockchain
Business

Other

Adjustments

Amounts in the
consolidated
financialstatements

Total

Net sales
Sales to third
partiesIntersegment
sales andtransfers
Total
Segment profit(loss)

233,074

441,993

1,962,368

1,360,857

8,434

4,006,728－

4,006,728

5,092

442

89

－

－

5,624

(5,624)－

238,166

442,436

1,962,457

1,360,857

8,434

4,012,353(5,624)

4,006,728(103,310)(4,755)87,516

1,360,857(25,562)

1,314,745(29,334)

1,285,411

Note: Segment profit (loss) is adjusted to operating profit in the consolidated statements of income. Adjustments forsegment profit mainly represent general and administration expenses that are not allocated to reportable segments.

11

2. Note on Change in Reportable Segments
In the three months ended February 28, 2018, the Company changed its previous six segments, specifically the ICT, IoT,
Device Business, the FinTech System Development Business, the Internet Travel Business, the Brand Retail Platform
Business, the Information Service Consulting Business, and Other, to the five segments comprising the IoT-Related
Business, Internet Travel Business, Brand Retail Platform Business, Cryptocurrency and Blockchain Business, and Other.
The reasons for this change are outlined below.
The Company has integrated the FinTech System Development Business, which had previously been disclosed as areportable segment, and the ICT, IoT, Device Business, which had also been disclosed as a reportable segment, into asingle segment and has renamed the segment as the IoT-Related Business. In conjunction with the reshaping of the
management structure, this change was made based on the similar methods for determining resource allocations andassessing business results in the relevant businesses.
In addition, the Company has renamed the cryptocurrency-related business, which had previously been included in
Other in the previous fiscal year, as the Cryptocurrency and Blockchain Business, and has added it to the reportablesegments. This change was made due to the increased significance of this business in terms of business volume.
Moreover, the Company has integrated the wine business, which had previously been included in Other in the previous
fiscal year, into the Brand Retail Platform Business. In conjunction with the reshaping of the management structure, thischange was made based on the similar methods for determining resource allocations and assessing business results in therelevant businesses.
Furthermore, the Company has excluded the Information Service Consulting Business, which had previously been
disclosed as a reportable segment, and reclassified it as Other. This change was made due to the diminished importance of
this business in terms of business volume owing mainly to the downsizing of business operations.
Segment information for the three months ended February 28, 2017 has been prepared and disclosed based on thereportable segments adopted after the aforementioned changes.

12