FRONTEO Announces Capital Increase of Consolidated Subsidiary
2017. 01. 31
TOKYO, Jan. 31, 2017 (GLOBE NEWSWIRE) — FRONTEO, Inc. (NASDAQ:FTEO) (TSE:2158) (“FRONTEO” or the “Company”), a leading provider of international litigation support and big-data analysis services, today announced that a resolution was passed at the Company’s Board of Directors meeting held on January 31, 2017 that its consolidated subsidiary FRONTEO Healthcare, Inc. (“FRONTEO Healthcare”) will increase its capital through third-party allotment underwritten entirely by FRONTEO. As a result, the capital of FRONTEO Healthcare will become greater than 10% of the capital of FRONTEO, rendering it a specified subsidiary of FRONTEO.
- Reason for underwriting of capital increase
FRONTEO Healthcare engages in research and development of artificial intelligence (“AI”) systems utilizing the AI engine “KIBIT” uniquely developed by the FRONTEO group and enhancement of service systems, to contribute to improving the quality of medical and nursing services. In order to further expand its business in the future, FRONTEO Healthcare resolved a capital increase for the purpose of strengthening its capital and financial base, and FRONTEO resolved to underwrite it.
- Outline of the consolidated subsidiary whose capital will be increased
(1) DesignationFRONTEO Healthcare, Inc. (2) Location2-12-23, Kounan, Minato-ku, Tokyo 108-0075 Japan (3) Title and name of representativeChief Executive Officer Naritomo Ikeue (4) Business contentsClinical trial information analysis support service
Data analysis service to improve the in-hospital environment
Health care information services
Other healthcare-related information analysis businesses (5) Capital amount¥27,000,000 (6) Date of foundationApril 16, 2015 (7) Major shareholders and shareholding ratiosFRONTEO, Inc.89.2%Four individual shareholders10.8% (8) Relationship with FRONTEOCapital relationsCurrently FRONTEO holds 89.2% of voting rights, but this capital increase will result in FRONTEO holding 99.3% of voting rights.Personnel relationsDirector and Vice President of FRONTEO concurrently holds the office of CEO of FRONTEO Healthcare. Additionally, two Directors of FRONTEO concurrently hold the offices of Officers of the subsidiary.Business relationsFRONTEO is entrusted by FRONTEO Healthcare on management operations and business of customer development support etc., and also has a licensing agreement with FRONTEO Healthcare (9) Settlement dayMarch 31
- Content of payment for capital increase
(1) Amount of payment for capital increase¥500,000,000 (capital: ¥300,000,000, capital reserve: ¥200,000,000) (2) Capital amount after capital increase¥327,000,000 (3) Underwriter of capital increaseFRONTEO, Inc. (4) Payment due dateFebruary 1, 2017 (planned) (5) Shareholder composition after capital increaseFRONTEO, Inc.99.3%Four individual shareholders0.7%
To make the payment for capital increase, part of the funds procured on December 1, 2016 by the issuance of the subscription for the 2nd unsecured bonds with convertible bond type stock acquisition rights by third-party allotment will be allocated. FRONTEO Healthcare will utilize the increased capital paid to promote existing projects relating to the healthcare business. More specifically, the increased capital will be allocated as shown in rows 1), 2) and 3) in the Table “Specific uses of the amount to be funded” below and also previously announced in the “Notice of the Issuance and the Subscription for the 2nd Unsecured Bonds with Convertible Bond Type Stock Acquisition Rights by Third-Party Allotment” on November 14, 2016.
(Reference) “Specific uses of the amount to be funded”
(millions of yen)Scheduled disbursement timing1) System development for existing projects relating to the healthcare business380December 2016 – November 20192) Establishment of operation & maintenance systems for existing projects relating to the healthcare business70April 2017 – November 20193) Development of sales system for existing projects relating to the healthcare business50September 2017 – November 20194) New investments into research and development 300December 2016 – November 20195) Tie-up and M&A for accelerating the development of the healthcare business including cultivation of cooperators and capital participation 1,675December 2016 – November 2019 Total2,475
- Future perspective
Impact of the payment for capital increase above on the consolidated business performance for this term is minor.
This document has been translated from the original Japanese-language document for reference purposes only. If there are any differences or discrepancies between the original Japanese-language document and this English translation, the original Japanese-language document shall supersede this English translation.
About FRONTEO, Inc.
FRONTEO, Inc. (Nasdaq:FTEO) (TSE:2158) supports the analysis of big data based on behavior informatics by utilizing its technology, “KIBIT”. FRONTEO’s KIBIT technology is driven by FRONTEO AI based on knowledge acquired through its litigation support services. The KIBIT incorporates experts’ tacit knowledge, including their experiences and intuitions, and utilizes that knowledge for big data analysis. FRONTEO continues to expand its business operations by applying KIBIT to new fields such as healthcare and marketing. FRONTEO was founded in 2003 as a provider of e-discovery and international litigation support services. These services include the preservation, investigation and analysis of evidence materials contained in electronic data, and computer forensic investigation. FRONTEO provides e-discovery and litigation support by making full use of its data analysis platform, “Lit i View®”, and its Predictive Coding technology adapted to Asian languages.
For more information about FRONTEO, contact email@example.com or visit http://www.fronteo.com/global/