August 29, 2019
To whom it may concern:
Company name: FRONTEO, Inc.
Representative: Masahiro Morimoto,
Chief Executive Officer and President
(Tokyo Stock Exchange Code: 2158)
(NASDAQ: FTEO)
Contact: Tomohiro Uesugi, Chief Financial Officer, Chief Administrative Officer
Telephone: +81-3-5463-6344
Notice regarding FRONTEO’s Absorption-Type Merger with FRONTEO Healthcare, Inc.
FRONTEO, Inc. (the “Company”) today announced that, at its Board of Directors meeting held on August 29, 2019, the Board resolved to approve the absorption-type merger (kyuushuu-gappei) of FRONTEO Healthcare, Inc. (“FHC”) into the Company.
Since this merger is a simplified merger (kan-i-gappei) of a wholly-owned, consolidated subsidiary, certain disclosure items and details have been omitted.
Particulars
1. Purpose of the Merger
FHC is a wholly-owned subsidiary of the Company that provides healthcare services as part of the FRONTEO Group’s AI solution business. The Board approved this absorption-type merger between the Company and FHC, with the Company as the surviving company and FHC as the merged company, for the purpose of optimizing management and making the best use of management resources.
2. General Information Regarding the Merger
(1) Schedule
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Resolution of Board: |
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August 29, 2019 |
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Signing of merger agreement: |
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August 29, 2019 |
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Scheduled date of merger (effective date): |
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October 16, 2019 |
(Note) Since this merger is a simplified merger (kan-i-gappei) for the Company under Article 796, Paragraph 2 of the Companies Act of Japan (the “Act”) and a short form merger (ryakushiki gappei) under Article 784, Paragraph 1 of the Act for FHC, a general meeting of shareholders for approval of the merger agreement will not be held by either of the companies.
(2) Type of merger
An absorption-type merger with the Company as the surviving company and FHC as the merged company.
(3) Details of allotment related to the merger
Since FHC is a wholly-owned subsidiary of the Company at the time of the merger, there will be no issuance of new Company shares, capital increase or cash payment by the Company as a result of the merger.
(4) Handling of share subscription rights (shinkabu yoyakuken) and bonds with share subscription rights (shinkabu yoyakuken-tsuki shasai) of the merged company FHC has not issued share subscription rights (shinkabu yoyakuken) or bonds with share subscription rights (shinkabu yoyakuken-tsuki shasai).
3. General Information Regarding Companies Involved in the Merger (amounts based on generally accepted accounting principles in Japan as of June 30, 2019, except as otherwise noted)
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Surviving company |
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Merged company | ||
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(1) |
Company name |
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FRONTEO, Inc. |
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FRONTEO Healthcare, Inc. | ||
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(2) |
Location of head office |
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2-12-23 Kounan, Minato-ku, Tokyo |
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2-12-23 Kounan, Minato-ku, Tokyo | ||
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(3) |
Name of representative |
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Masahiro Morimoto, Chief Executive Officer |
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Kuniko Nishikawa, Chief Executive Officer | ||
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(4) |
Line of business |
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LegalTech AI business and AI solution business |
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Data analysis business in the healthcare field | ||
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(5) |
Capital (thousands) |
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JPY 2,568,651 |
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JPY 327,000 | ||
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(6) |
Established |
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August 8, 2003 |
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April 16, 2015 | ||
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(7) |
Number of shares issued |
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38,149,862 shares |
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53,700 shares | ||
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(8) |
Fiscal year end |
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March 31 |
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March 31 | ||
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(9) |
Major shareholders and ownership ratio (as of March 31, 2019) |
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Masahiro Morimoto |
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18.15% |
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FRONTEO, Inc. 100% |
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Japan Trustee Services Bank, Ltd. (Trust Account) |
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7.92% |
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Focus Systems Co., Ltd. |
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7.82% |
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Naritomo Ikeue |
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7.11% |
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Japan Trustee Services Bank, Ltd. (Trust Account 9) |
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3.28% |
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The bank of New York Mellon Corporation |
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2.21% |
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The Dai-ichi Life Insurance |
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1.43% |
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Tadahiro Kanbayashi |
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1.14% |
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Junichi Hayashi |
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1.00% |
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NORTHERN TRUST CO. (AVFC) RE IEDU UCITS CLIENTS NON LENDING 15 PCT TRETY ACCOUNT |
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0.76% |
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(10) |
Financial position and business results for most recent fiscal year (as of and for the fiscal year ended March 31, 2019) | ||||||
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Consolidated (year ended |
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Non-consolidated (year |
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1) |
Net assets (thousands) |
JPY |
4,622,000 |
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JPY |
165,249 |
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2) |
Total assets (thousands) |
JPY |
13,442,624 |
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JPY |
267,113 |
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3) |
Net sales (thousands) |
JPY |
11,262,070 |
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JPY |
184,374 |
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4) |
Operating income (loss) (thousands) |
JPY |
244,410 |
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JPY |
(9,861 |
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5) |
Ordinary income (loss) (thousands) |
JPY |
203,121 |
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JPY |
(9,779 |
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6) |
Net income (loss) (thousands) |
JPY |
52,249 |
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JPY |
(10,069 |
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7) |
Net assets per share |
JPY |
113.96 |
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JPY |
3,077.28 |
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8) |
Net income (loss) per share |
JPY |
1.37 |
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JPY |
(187.51 |
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4. Status after Merger
After the merger, there will be no change in the name, location of head office, name and title of representative, line of business, capital or fiscal year-end of the Company.
5. Future Outlook
Since this is an absorption-type merger with the Company’s wholly-owned subsidiary, the impact of the merger on consolidated business results will be minor.
Reference: Forecast for consolidated business results for the year ending March 31, 2020 (disclosed May 15, 2019) and consolidated business results for the year ended March 31, 2019.
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Net sales |
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Operating |
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Ordinary income |
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Net income | ||||
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Forecast for consolidated business results for year ending March 31, 2020 |
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JPY |
11,600 |
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JPY |
200 |
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JPY |
116 |
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JPY |
10 |
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Consolidated business results for year ended March 31, 2019 |
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JPY |
11,262 |
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JPY |
244 |
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JPY |
203 |
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JPY |
52 |