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Micware (MWC) boosts FY2026 earnings and executes major 241-for-1 stock split

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6-K

Rhea-AI Filing Summary

Micware Co., Ltd. is holding its annual general meeting by written resolution, asking shareholders to approve financial statements for the 23rd fiscal year (March 1, 2025–February 28, 2026) and elect one new director, Kazunori Mori.

For this fiscal year, consolidated revenue reached 22,233,692 thousand yen, up 5.0% year-on-year, led by contract development revenue of 17,688,510 thousand yen, up 4.9%. Operating profit was 2,231,187 thousand yen, up 14.7%, and net income attributable to owners of the parent was 1,534,354 thousand yen, up 31.4%, showing stronger profitability despite higher development investment.

The company focuses on SDV (Software-Defined Vehicles), connected services, and LBS (Location-Based Services), is expanding globally with subsidiaries in North America, Asia, and Europe, and increased group headcount to 561 employees. After year-end it executed a 241-for-1 stock split, raising issued shares to 58,054,490, and is preparing a Nasdaq Global Market listing via ADSs, supported by a previously filed Form F-1.

Positive

  • Profitability improving: Operating profit rose to 2,231,187 thousand yen (up 14.7% year-on-year) and net income attributable to owners of the parent increased to 1,534,354 thousand yen (up 31.4%), indicating stronger earnings leverage on modest 5.0% revenue growth.
  • Strategic global expansion and listing plan: The company is building overseas operations in the U.S., Asia, and Europe and preparing a Nasdaq Global Market listing via ADSs, supported by a filed Form F-1, which could broaden its investor base and financing options.

Negative

  • None.

Insights

Micware delivered strong profit growth and is positioning for a Nasdaq listing.

Micware reported consolidated revenue of 22,233,692 thousand yen, up 5.0%, with operating profit of 2,231,187 thousand yen and net income attributable to owners of the parent of 1,534,354 thousand yen, up 31.4%. Margin expansion came despite higher development spending.

The business is anchored in SDV-focused contract development and LBS, with contract development revenue of 17,688,510 thousand yen and royalty revenue of 3,096,186 thousand yen. Other revenue grew 34.2%, suggesting progress in newer service lines. Long-term debt totals 4,587,127 thousand yen, partly funding expansion.

Strategically, Micware is globalizing through subsidiaries in the United States, Asia, and Europe and preparing a Nasdaq Global Market listing via ADSs, following a Form F-1 filing on March 6, 2025. A 241-for-1 stock split effective March 31, 2026 lowers the share price per unit to support future capital policies. Future filings may clarify listing progress and how growth investments balance with profitability.

Consolidated revenue 22,233,692 thousand yen 23rd fiscal year, up 5.0% year-on-year
Operating profit 2,231,187 thousand yen 23rd fiscal year, up 14.7% year-on-year
Net income attributable to owners 1,534,354 thousand yen 23rd fiscal year, up 31.4% year-on-year
Contract development revenue 17,688,510 thousand yen Primary income source, up 4.9% year-on-year
Royalty revenue 3,096,186 thousand yen License-based revenue, down 4.3% year-on-year
Other service revenue 1,448,996 thousand yen Includes map data and maintenance, up 34.2% year-on-year
Stock split ratio 241-for-1 Effective March 31, 2026; issued shares to 58,054,490
Long-term debt balance 4,587,127 thousand yen Consolidated long-term borrowings at fiscal year-end
Software-Defined Vehicles financial
"our Group focuses its business on SDVs (Software-Defined Vehicles)—vehicles designed and developed to enhance vehicle functionality"
Vehicles whose key features and performance are controlled and updated primarily through software rather than fixed hardware designs. Like a smartphone that gains new apps and capabilities over time, these cars can receive over-the-air updates that add features, improve efficiency, or fix issues, which matters to investors because it can extend product life, create ongoing revenue from software services, lower recall risk, and change how value is created and captured in the auto industry.
Location-Based Services financial
"LBS (Location-Based Services), a system that uses location data from smartphones and other devices"
American Depositary Shares financial
"preparing for a listing on the U.S. Nasdaq Global Market via American Depositary Shares (ADS)"
American depositary shares (ADSs) are a way for investors in the United States to buy shares of foreign companies without dealing with international markets directly. They represent ownership in a foreign company's stock and are traded on U.S. stock exchanges, making it easier for American investors to buy, sell, and own parts of companies from around the world.
asset retirement obligations financial
"changed its accounting treatment to recognize restoration costs as asset retirement obligations under liabilities"
Asset retirement obligations are a company’s recorded promise to pay for dismantling, cleaning up, or restoring property when a long-lived asset is retired — for example decommissioning a plant or removing equipment. Companies estimate the future cleanup cost today and book it as a liability (and add the cost to the asset), so it affects the balance sheet, reported profits over time, and future cash needs; investors watch it like a planned bill that can reduce cash available for returns.
deferred tax assets financial
"The Group recognizes deferred tax assets based on various forecasts and assumptions, including revenue projections"
An item on a company’s balance sheet showing tax benefits it can use later to reduce future tax bills — think of it as an IOU from the tax system for past losses or timing differences. It matters to investors because it can boost future cash flow and apparent value if the company expects profits ahead, but those benefits vanish if the company cannot generate taxable income and the asset must be reduced.
Form 6-K: How Foreign Companies Report to the SEC →

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May 2026

 

Commission File Number: 001-43279

 

Micware Co., Ltd.

 

Kobe Asahi Building 25th Floor
59 Naniwa-machi, Chuo-ku
Kobe, Hyogo 650-0035

 

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒          Form 40-F ☐

 

 

 

 

 

 

Notice of the Annual General Meeting of Shareholders of Micware Co., Ltd. by Written Resolution

 

On or about May 18, 2026, in accordance with the rules and regulations of the Japanese Companies Act, Micware Co., Ltd. (the “Company”) caused a notice and accompanying information, including voting instructions, to be sent to all holders of its ordinary shares (“Ordinary Shares”) as of the record date of February 28, 2026 with respect to its annual general meeting of shareholders by written resolution for the following purpose, as more fully described in the notice:

 

Matter to be Reported:

 

Business Report for the 23rd Fiscal Year (March 1, 2025, to February 28, 2026)

 

Matters to be Resolved:

 

Item 1: Approval of the Financial Statements for the 23rd Fiscal Year (March 1, 2025, to February 28, 2026)

 

Item 2: Election of One Director

 

Holders of Ordinary Shares who wish to vote are required to submit a consent form provided by the Company by May 29, 2026, Japan Standard Time.

 

A complete copy of the English translation of the notice is attached as Exhibit 99.1.

 

The notice furnished in this report as Exhibit 99.1 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

 

1

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Notice of the Annual General Meeting of Shareholders by Written Resolution (English Translation)

 

2

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Micware Co., Ltd.
     
  By: /s/ Takuma Segawa
    Mr. Takuma Segawa
    Chief Financial Officer

 

Date: May 18, 2026

 

3

 

Exhibit 99.1

 

May 18, 2026

 

To Our Shareholders

 

59 Naniwa-cho, Chuo-ku, Kobe

Micware Co., Ltd.

Kenji Narushima, Representative Director

 

Annual General Meeting of Shareholders

to be held by Written Resolution

 

We would like to express our sincere gratitude for your continued support.

 

In accordance with Article 319, Paragraph 1, and Article 320 of the Companies Act, we intend to treat the resolutions of the Annual General Meeting of Shareholders as having been adopted as of May 29, 2026, without holding the meeting, based on the written resolution by all shareholders entitled to exercise voting rights regarding the Company’s proposals outlined below.

 

Accordingly, if you agree to the proposals outlined below, please affix your seal to the attached consent form and return it to us by the date specified above.

 

Sincerely,

 

Details

 

Resolutions to Be Adopted

 

Item 1: Approval of Financial Statements for the 23rd Fiscal Year (March 1, 2025, to February 28, 2026)

 

Item 2: Election of One Director

 

The summary of each agenda item is as described in the “Reference Documents for the Annual General Meeting of Shareholders”

 

  End

 

 

 

 

Reference Documents for the Annual General Meeting of Shareholders

 

1. Proposals and Reference Items

 

Agenda Item No. 1: Approval of Financial Statements for the 23rd Fiscal Year (March 1, 2025, to February 28, 2026)

 

Pursuant to the provisions of Article 438, Paragraph 2 of the Companies Act, the Company is required to obtain approval of its financial statements at the Annual General Meeting of Shareholders; therefore, we hereby request your approval of the financial statements for the Company’s 23rd fiscal year.

 

The Board of Directors has determined that the financial statements accurately present the Company’s assets and financial results in accordance with applicable laws and regulations and the Articles of Incorporation.

 

Agenda Item No. 2: Election of One Director

 

To further strengthen the Company’s management structure, we hereby request the election of one new director.

 

The candidate for election is as follows:

 

Director Kazunori Mori

 

Mr. Mori’s background is as follows.

 

 

Name

(Date of Birth)

 Biography, Position, Responsibilities, and Significant Concurrent Positions
 

Kazunori Mori

(Born on

October 8, 1977)

 April 2000 Joined Toyota Tsusho Corporation
  April 2024

General Manager, Advanced Mobility Services Division,

Toyota Tsusho Corporation

  April 2025 President and CEO, NEXTY Electronics Corporation
  September 2025

President and Representative Director, Resheed Co., Ltd.

(Current Position)

 

End

 

2

 

 

(Attached Documents)

 

Business Report

 

(March 1, 2025 - February 28, 2026)

 

1. Matters Concerning the Current Status of the Corporate Group

 

(1) Operational Progress and Results

 

During this consolidated fiscal year, the Japanese economy showed signs of a gradual recovery, driven by widespread wage increases and a rebound in inbound tourism demand, while energy and material prices remained elevated. The Bank of Japan ended its negative interest rate policy and intensified efforts toward normalizing monetary policy, marking a turning point away from the prolonged period of exceptional monetary easing. Meanwhile, the yen continued to weaken in the foreign exchange market, and the impact on corporate earnings and import costs became apparent.

 

In the global economy, uncertainty remained high against the backdrop of the effects of monetary tightening in Europe and the United States, the slowdown in the Chinese economy, and the uncertainty surrounding the situations in Ukraine and the Middle East. In the automotive industry, while technological innovations such as electrification, autonomous driving, and software-driven systems are advancing, the business environment continues to undergo multifaceted changes, including the impact of global supply-demand adjustments and constraints on parts procurement.

 

Under the vision “Be There Be Now,” our Group focuses its business on SDVs (Software-Defined Vehicles)—vehicles designed and developed to enhance vehicle functionality and value primarily through software—connected services, and LBS (Location-Based Services), a system that uses location data from smartphones and other devices to provide information and services tailored to a person’s location. During this fiscal year, while the global economy was affected by persistently high inflation and geopolitical risks, signs of demand recovery were observed in major markets. In the automotive industry, the trends toward electrification, automation, and software-driven solutions accelerated further, making this a year in which opportunities for technological innovation coexisted with changes in the competitive environment for our Group.

 

In this environment, based on our medium-term management plan, the Group focused on expanding our software platform business and creating new value in the mobility services sector, while also working to improve profitability and strengthen our corporate foundation. As a result, while we achieved certain results, we also incurred increased expenses due to higher development investments.

 

(Contract Development Revenue)

 

Regarding contract development revenue, which constitutes the Group’s primary source of income, we have established a system capable of meeting customer needs by securing a sufficient workforce of in-house and outsourced development resources. As a result, contract development revenue totaled 17,688,510 thousand yen (up 4.9% year-on-year).

 

3

 

 

(Royalty Revenue)

 

Royalty revenue, which is recognized based on the number of units sold for software provided by our Group, amounted to 3,096,186 thousand yen (down 4.3% year-on-year).

 

(Other Revenue)

 

The Group’s other revenue primarily consists of service businesses including map data provision, maintenance service and other new businesses currently under development. For this fiscal year, this revenue amounted to 1,448,996 thousand yen (up 34.2% year-on-year).

 

As a whole, consolidated revenue for this fiscal year was 22,233,692 thousand yen (up 5.0% year-on-year), consolidated operating income was 2,231,187 thousand yen (up 14.7% year-on-year), consolidated ordinary income was 2,240,587 thousand yen (up 19.7% year-on-year), and net income attributable to owners of the parent was 1,534,354 thousand yen (up 31.4% year-on-year).

 

(2) Capital Expenditures

 

The total amount of capital expenditures made by the corporate group during this consolidated fiscal year was 302,965 thousand yen.

 

These capital expenditures primarily consisted of renovation work and the purchase of equipment related to the opening of Micware Innovation Lab Kobe (MIL-KOB), an increase in leased assets related to the Mvcube business, and the implementation of a new accounting system.

 

(3) Status of Business Acquisitions from Other Companies

 

With the aim of strengthening our business foundation and expanding our business scope in the mobility sector, our Group carried out the following business acquisitions during this consolidated fiscal year.

 

    (a) On March 31, 2025, we acquired the NaviCon-related business and the NaviBridge-related business from Denso Corporation.

 

    (b) On April 1, 2025, we acquired the business related to the development, provision, and maintenance of taxi dispatch systems from Denso Ten Co., Ltd.

 

Through these business acquisitions, we will redouble our efforts to expand our business and enhance corporate value in the future.

 

(4) Status of Fundraising

 

During this consolidated fiscal year, there were no issuances of new shares, nor any issuances or exercises of stock options or similar instruments.

 

We have raised long-term funds from financial institutions; the major breakdown is as follows. For the balance of long-term borrowings, please refer to “1. (11) Major Lenders of the Corporate Group (February 28, 2026).”

 

4

 

 

  Lender Amount Raised
  The Awaji Shinkin Bank 300,000 thou yen
  Total 300,000 thou yen

 

In addition, the balance of short-term borrowings raised for working capital increased by 800,000 thousand yen compared to the end of the previous fiscal year.

 

(5) Issues to be Addressed

 

The mobility industry, to which our Group belongs, is facing a major turning point against the backdrop of the sophistication of in-vehicle systems, advances in autonomous driving and advanced driver-assistance technologies, and the shift toward SDVs, which continuously enhance vehicle value through software. Furthermore, uncertainties surrounding trade policies and fluctuations in the earnings environment of automakers are factors driving the need for greater flexibility in business planning and investment decisions across the entire automotive industry.

 

In this environment, mobility is evolving beyond a mere means of transportation to become a platform centered on software, data, and services. Accordingly, our Group must continuously evolve in both business operations and management structure, building upon the strengths we have cultivated in in-vehicle software development and location-based technologies. With this understanding, our Group will focus on addressing the following challenges.

 

(a) Group Organization

 

Our Group transitioned to a holding company structure on March 1, 2024, and has since promoted management that emphasizes a sense of unity across the entire Group. Looking ahead, as we advance the sophistication of our existing businesses, take on new business challenges, and fully expand our operations in global markets, we recognize that management transparency, the clarification of decision-making processes, and the establishment of a governance structure meeting global standards will become even more critical.

 

Moving forward, we will strive to achieve an optimal balance between the strategic planning and oversight functions of the holding company and the swift business execution of each operating company. We will advance the enhancement of internal management systems and performance metrics, and work to strengthen a group management structure capable of sustaining growth even in a rapidly changing business environment.

 

(b) Expansion into New Business Areas

 

Historically, our Group has focused primarily on B2B business, with the aim of maximizing the use of our management resources, including the technologies, development expertise, and customer relationships we have cultivated over the years. In particular, we have continuously worked to strengthen our technical capabilities and enhance our services in fields such as in-vehicle software and location-based technologies.

 

5

 

 

At the same time, changes in the business environment surrounding the mobility sector in recent years have heightened the importance of creating new value using software and data. In light of these circumstances, our Group views expansion into new business areas—utilizing the know-how and technologies we have cultivated—as a key priority for medium- to long-term growth, while placing emphasis on compatibility and synergy with our existing businesses. Moving forward, we will continue to carefully assess business viability and risks while gradually advancing necessary R&D investments to create new revenue opportunities.

 

(c) Promoting Globalization

 

Historically, our Group has primarily served domestic manufacturers as its main clients and conducted business centered on the Japanese market. However, with the advancement of IT technology, the significance of national borders in software development and business operations has shifted. We recognize that, with an eye toward future growth, the importance of management from a global perspective is increasing year by year.

 

Based on this understanding, our Group has been progressively establishing overseas bases to diversify our development structure and build a foundation for future customer acquisition. Although the scale of our operations is currently limited, we are deepening our understanding of the characteristics and needs of each market through our business bases in key regions such as the United States, Asia, and Europe.

 

Going forward, we will strive to strengthen our business foundation in the global market in a phased and steady manner, while prioritizing synergies with existing businesses and risk management.

 

(d) Human Resources

 

To drive expansion into the new business areas mentioned above and advance our globalization efforts, it is essential to secure and develop talent with diverse and advanced expertise in fields such as software, AI, data utilization, business development, and global management. At the same time, competition for talent—particularly in the IT and software sectors—is intensifying, and challenges such as rising labor and recruitment costs are becoming apparent.

 

Based on the fundamental principle that “a company is its people,” we will continue to pursue multifaceted recruitment efforts, alongside creating a rewarding work environment, establishing appropriate evaluation and compensation systems, and enhancing education and training programs. Through these efforts, we aim to build an organization where the growth of each employee and the enhancement of corporate value form a virtuous cycle.

 

  (e) Strengthening Internal Management Systems

 

As our Group’s business grows, we anticipate an increase in long-term outsourced software development projects and projects for the development of advanced new services. Furthermore, as the corporate group expands, we believe there is a need to further strengthen compliance and governance.

 

6

 

 

Therefore, in addition to implementing a core system to achieve more precise project profit and loss management, we are sequentially introducing various approval request systems.

 

Furthermore, to systematically address the increasingly complex and sophisticated accounting standards, various legal regulations, and diverse societal demands, we intend to implement a continuous learning program.

 

(6) Recent Financial Assets and Profit/Loss Status

 

  (a) Financial assets and profit/loss status of the previous three consolidated fiscal years and the reported consolidated fiscal year

 

 

(Consolidated)

Category

 Fiscal Year Ended
2023/2		 Fiscal Year Ended
2024/2		 Fiscal Year Ended
2025/2

Fiscal Year Ended
2026/2 (Reported
Fiscal Year)

 

Revenue

(thousand yen)

 14,655,879 18,074,061 21,180,424 22,233,692
 

Ordinary Profit

(thousand yen)

 1,182,174 2,159,608 1,872,446 2,240,587
 

Net Income attributable to Owners of the Parent

(thousand yen)

 444,514 1,526,613 1,167,798 1,534,354
  Net Income per Share (yen) 239,888.90 902,077.44 5,051.24 6,594.19
 

Total Assets

(thousand yen)

 10,948,144 12,398,501 24,077,245 18,520,064
 

Net Assets

(thousand yen)

 4,308,760 5,036,201 6,973,594 8,550,953
 

Net Assets per Share

(yen)

 2,260,826.56 3,035,684.99 29,341.30 35,757.72

 

(Note) 1. Effective from the fiscal year ended February 2023, we have adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and related standards from the beginning of the fiscal year, and the figures for this consolidated fiscal year reflect the results after applying these standards.
  2. “Net Income per Share” is calculated based on the average number of shares outstanding during the period.
  3. “Net Assets per Share” is calculated based on the total number of shares outstanding at the end of the period.
  4. Revenue amounts do not include consumption tax.

 

7

 

 

  (b) Financial assets and profit/loss status of the previous three fiscal years and the reported fiscal year (Non-consolidated)

 

 

(Non-consolidated)

Category

Fiscal Year Ended

2023/2

(20th)

Fiscal Year Ended
2024/2

(21st)

Fiscal Year Ended
2025/2

(22nd)

(Reported Year)

Fiscal Year Ended
2026/2

(23rd)

 

Revenue

(thousand yen)

 13,859,131 17,307,136 3,412,120 4,569,429
 

Ordinary Profit

(thousand yen)

 1,007,021 1,856,269 (298,143) 727,642
 

Net Income

(thousand yen)

 371,445 1,320,527 (261,751) 602,743
 

Net Income per Share

(yen)

 200,456.21 780,301.33 (1,132.19) 2,590.41
 

Total Assets

(thousand yen)

 10,529,642 11,802,396 13,880,803 13,630,397
 

Net Assets

(thousand yen)

 4,009,694 4,454,205 4,828,121 5,393,001
 

Net Assets per Share

(yen)

 2,163,893.23 2,684,873.98 20,883.78 23,150.50

 

(Note) 1. Starting from the 20th fiscal year, we have adopted the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and related standards from the beginning of the fiscal year, and the figures for this fiscal year reflect the results after applying these standards.
  2. Due to a corporate spin-off in March 2024, certain business operations were transferred to Micware Automotive Co., Ltd. and three other companies.
  3. “Net Income per Share” is calculated based on the average number of shares outstanding during the period.
  4. “Net Assets per Share” is calculated based on the total number of shares outstanding at the end of the fiscal year.
  5. Revenue amounts do not include consumption tax.

 

(7) Status of Major Parent and Subsidiary Companies

 

  (a) Status of the Parent Company

 

Not applicable.

 

8

 

 

  (b) Status of Principal Subsidiaries

 

  Company Name Capital Percentage of
Voting Rights		 Principal Business Activities
  Micware North America, Inc. USD 1mil 70.0% Planning, contract development, and sales of system solutions
  Micware Asia Pacific Co., Ltd. BHT 34mil 70.6% Planning, contract development, and sales of system solutions
  Micware Europe GmbH

EUR 25thou

 100.0% Planning, contract development, and sales of system solutions
 

Micware Navigations Co., Ltd.

 JPY 350mil 100.0% Development, implementation, operational support, maintenance, and licensing of in-vehicle navigation systems
 

Micware Automotive Co., Ltd.

 JPY 350mil 100.0% Planning, development, operational support, and sales of in-vehicle IVI systems
 

Micware Mobility Co., Ltd.

 JPY 350mil 100.0% Development of digital cockpits for automobiles and business utilizing dashcam footage

 

(Note) 1. Micware Europe GmbH was acquired through a share transfer from O-WELL Corporation (formerly O-WELL GERMANY GmbH) on March 28, 2024.
  2. Micware Navigations Co., Ltd. (formerly DataBroad Co., Ltd.) succeeded the micNexus Company business of our company through a corporate split (absorption-type split) conducted by our company on March 1, 2024, and changed its company name at the same time.
  3. Micware Automotive Co., Ltd. (formerly HI Co., Ltd.) succeeded to our micAuto Company business of our company through a corporate split (absorption-type split) conducted by our company on March 1, 2024, and changed its company name at the same time.
  4. Micware Mobility Co., Ltd. succeeded to our micMobility Company business of our company through a corporate split (new entity split) conducted by our company on March 4, 2024.

 

9

 

 

(8) Main Business Activities

 

Our Group primarily provides software and related services in the mobility sector. Considering recent changes in our business structure and our global expansion, we have organized our business activities into the following three categories.

 

  Business Brands Description
 

LBS

(Location-Based Services)

 This business area provides software and services centered on location-based technology and is one of the core businesses of our Group. We primarily plan, develop, and provide navigation software for automobiles, as well as applications and related services that utilize location data.
 

SDV

(Software-Defined Vehicle)

 Based on the concept of the Software-Defined Vehicle, in which a vehicle’s functions and value are defined and evolved through software, this business area primarily provides support for the design and development of in-vehicle software.
  Others This business area focuses on research and development activities aimed at creating new businesses with an eye toward future growth. Within this area, we conduct surveys, prototyping, and technical verification to explore the potential of new technologies and services, while seeking synergies with our existing businesses.

 

(9) Major Offices of the Corporate Group (as of February 28, 2026)

 

  NO Location Name Location
  1 Kobe Headquarters Kobe, Hyogo
  2 Kobe Office Kobe, Hyogo
  3

MIL-KOB

(Micware Innovation Lab - Kobe)

 Kobe, Hyogo
  4 Tokyo Headquarters Minato-ku, Tokyo
  5 Tokyo Office Minato-ku, Tokyo
  6 Tokyo Satellite Office Minato-ku, Tokyo
  7

MIL-OSK

(Micware Innovation Lab - Osaka)

 Osaka, Osaka
  8 Sapporo Office Sapporo, Hokkaido
  9 Shin-Yokohama Office Yokohama, Kanagawa
  10 Nagoya Office Nagoya, Aichi
  11 Hokuriku Office Toyama, Toyama
  12 Hakata Office Fukuoka, Fukuoka
  13 MICWARE NORTH AMERICA, INC. United States
  14 MICWARE ASIA PACIFIC CO., LTD. Thailand
  15 Micware Europe GmbH Germany

 

10

 

 

(10)  Employee Status of the Corporate Group (as of February 28, 2026)

 

  Number of Employees in the Corporate Group Change from the previous fiscal year end
  561 +29

 

(Note) 1. The number of employees refers to the number of personnel on the Group’s payroll.
  2. The status of our employees (non-consolidated) is as follows.

 

  Number of Employees at the Company Change from the end of the previous fiscal year
  36 +5

 

(11)  Major Lenders of the Corporate Group (February 28, 2026)

 

  Lender Long-term loan balance
  Sumitomo Mitsui Banking Corporation 1,538,700 thou yen
  MUFG Bank, Ltd. 1,291,695 thou yen
  The Awaji Shinkin Bank 1,220,620 thou yen
  The other 5 banks 536,112 thou yen
  Total 4,587,127 thou yen

 

(Note) Includes long-term borrowings due within one year; excludes other short-term borrowings.

 

(12)  Other Important Matters Concerning the Current Status of the Corporate Group

 

In addition to further expanding our existing businesses, our Group has been preparing for a listing on the U.S. Nasdaq Global Market via American Depositary Shares (ADS) to achieve sustainable growth through new business ventures and full-scale entry into the global market. Furthermore, on March 6, 2025 (U.S. time), following the end of this fiscal year, we publicly filed Form F-1 with the U.S. Securities and Exchange Commission (SEC).

 

We view this listing as a significant milestone for our Group in accelerating our global business expansion. We believe it will lead to enhanced global recognition and credibility, the acquisition of talented personnel and strategic partners, and the creation of new growth opportunities. Moving forward, we will continue to further strengthen our governance and internal control systems with a view to the stock listing, while working to enhance our corporate value over the medium to long term.

 

11

 

 

2. Matters Concerning Shares (as of February 28, 2026)

 

(1) Total Number of Authorized Shares

 

520,000 shares

 

(2) Total Number of Shares Issued

 

240,890 shares (including 7,936 treasury shares)

 

(3) Number of Shareholders

 

54 (including treasury stock)

 

(4) Major Shareholders (Top 10 excluding treasury stock)

 

  Rank Shareholder Name Number of
Shares Held		 Percentage of
Voting Rights
  1 Toyota Motor Corporation 28,470 11.8%
  1 Honda Motor Co., Ltd. 28,470 11.8%
  3 Kenji Narushima 26,000 10.8%
  4 Masahide Shigeno 19,500 8.1%
  5 Takuma Segawa 15,210 6.3%
  6 Hideaki Tokuhara 14,300 5.9%
  7 Hiroyuki Makino 9,750 4.0%
  8 O-well Corporation 9,230 3.8%
  9

Automotive Industry Support Fund 2021 Limited Partnership

 8,000 3.3%
  10 Mitsubishi UFJ Capital No. 9 Limited Partnership 5,980 2.5%

 

(5) Other Important Matters Regarding Shares

 

As of April 30, 2025, Morpho, Inc. acquired 1,764 shares of the Company’s common stock by subscribing to the Company’s treasury stock.

 

The Company conducted a stock split on March 31, 2026, at a ratio of 241 shares for every 1 share of common stock. Consequently, the total number of authorized shares increased to 125,320,000 shares, and the total number of issued shares increased to 58,054,490 shares.

 

12

 

 

3. Matters Concerning Stock Options, etc.

 

(1) Summary of stock acquisition rights, etc., granted to the Company’s officers as compensation for the performance of their duties as of the end of this consolidated fiscal year

 

  Name Second Series Stock Acquisition Rights
  Number of stock acquisition rights 59
 

Number of holders Directors (excluding outside directors)

2
  Class and number of shares subject to stock acquisition rights 10,530 shares of the Company’s common stock
  Issue price of stock acquisition rights No cash payment is required.
  Value of assets to be contributed upon exercise of stock acquisition rights 13,231 yen per share
  Exercise period of stock acquisition rights From October 31, 2022, to February 23, 2028
  Main conditions for exercising stock acquisition rights

●

Limited to cases where the Company’s common stock is publicly listed.

 

●

The holder must be a director, corporate auditor, or employee of the Company or a subsidiary of the Company at the time of exercise.

 

(2) Summary of stock acquisition rights, etc., granted to the Company’s employees, subsidiaries’ officers, and their employees as compensation for the performance of their duties as of the end of this consolidated fiscal year

 

  Name First Series Stock Acquisition Rights
  Number of stock acquisition rights 184
 

Number of holders Employees (excluding those who also serve as officers of the Company)

 34
  Class and number of shares subject to stock acquisition rights 23,920 shares of the Company’s common stock
  Issue price of acquisition rights No cash payment is required.
  Value of assets to be contributed upon exercise of acquisition rights 6,924 yen per share
  Exercise period of stock acquisition rights From February 24, 2020, to February 23, 2028
  Main conditions for exercising acquisition rights

●

Limited to cases where the Company’s common stock is publicly listed.

 

●

The holder must be serving as a director, corporate auditor, or employee of the Company or a subsidiary of the Company at the time of exercise.

 

13

 

 

  Name Second Series Stock Acquisition Rights
  Number of stock acquisition rights 27
 

Number of holders Employees (excluding those who also serve as officers of the Company)

17

  Class and number of shares subject to stock acquisition rights 3,250 shares of the Company’s common stock
  Issue price of stock acquisition rights No cash payment is required.
  Value of assets to be contributed upon exercise of stock acquisition rights 13,231 yen per share
  Exercise period of stock acquisition rights From October 31, 2022, to February 23, 2028
  Main conditions for exercising Stock acquisition rights

●

Limited to cases where the Company’s common stock is publicly listed.

 

●

The holder must be a director, corporate auditor, or employee of the Company or a subsidiary of the Company at the time of exercise.

 

(3) Summary of stock acquisition rights, etc., granted to the officers and employees of the Company and its subsidiaries as compensation for the performance of their duties during this consolidated fiscal year

 

There are no applicable items.

 

14

 

 

4. Matters Concerning Company Officers

 

(1) Status of Directors and Corporate Auditors (as of February 28, 2026)

 

  Position Name Responsibilities and Significant Concurrent Positions
 

Representative Director, Chairman and President

 Kenji Narushima ―
 

Representative Director, Deputy President

 Masahide Shigeno

Director, Micware Automotive Co., Ltd.

Director, Micware Create Co., Ltd.

Director, Sdtech Inc.

  Director Kazuyuki Kawabata ―
  Director Asami Sadoi

Outside Director, O-Well Corporation

Representative, Office muMore

  Director Jerzy Marek Rudzinski

Supervisory Board Member, Makolab SA
Senior Advisor, FQS Poland Limited

Management Committee

  Director Yuko Osumi

Global Customer Manager, Bose

Automotive G.K.(Current)

  Director Rieko Okada

Outside Corporate Auditor, Arcadia Inc. (Current)

Representing Okada Certified Public Accountant Office (Current)

 

Full-time Corporate Auditor

 Umei Fujita

Corporate Auditor, Micware Automotive Co., Ltd.

Corporate Auditor, Micware Navigations Co., Ltd.

Corporate Auditor, Micware Mobility Co., Ltd.

  Corporate Auditor Mitsunori Yabe Representative, Yabe Certified Public Accountant Office
  Corporate Auditor Wakako Isaka Counsel, TMI Associates

 

(Note) 1. Directors Kazuyuki Kawabata, Asami Sadoi, Marek Rudzinski, Yuko Osumi, and Rieko Okada are outside directors.
  2. Corporate Auditors Mitsunori Yabe and Wakako Isaka are outside corporate auditors.
  3. Director Rieko Okada and Corporate Auditor Mitsunori Yabe are certified public accountants and possess a considerable degree of expertise in finance and accounting.
  4. Corporate Auditor Wakako Isaka is a licensed attorney and possesses a considerable degree of expertise in legal matters.

 

15

 

 

(2) Matters Concerning Retired Corporate Officers

 

  Name Resignation Date Reason for Resignation Position at the Time of Resignation
  Kazuhisa Shitanaka February 28, 2026 Personal reasons Director
  Kotaro Seike February 28, 2026 Personal reasons Director

 

(3) Summary of the Limited Liability Agreement

 

With respect to directors (excluding executive directors, etc.), the Company has established a limited liability agreement based on a resolution adopted at the Extraordinary General Meeting of Shareholders held on March 29, 2018; and with respect to corporate auditors (excluding a full-time corporate auditor), a resolution adopted at the Annual General Meeting of Shareholders held on May 21, 2018, regarding the limitation of liability under Article 423, Paragraph 1 of the Companies Act, the Company has amended its Articles of Incorporation to permit the conclusion of agreements limiting liability for damages (hereinafter referred to as “Limitation of Liability Agreements”) in cases where the requirements prescribed by laws and regulations are met (provided, however, that the maximum limit of liability under such agreements shall be the minimum liability limit prescribed by laws and regulations). Furthermore, pursuant to the provisions of Article 427, Paragraph 1 of the Companies Act and the Articles of Incorporation as amended, the Company has entered into such Liability Limitation Agreements with five outside directors (Kazuyuki Kawabata, Asami Sadoi, Jerzy Marek Rudzinski, Yuko Osumi, and Rieko Okada) and two outside corporate auditors (Mitsunori Yabe and Wakako Isaka).

 

(4) Summary of the Directors and Officers Liability Insurance Policy

 

Not applicable.

 

(5) Amount of remuneration, etc., for directors for this fiscal year

 

  (a) Matters Concerning the Policy for Determining Individual Directors’ Compensation

 

The Company resolved the policy regarding the determination of individual directors’ compensation, etc. (hereinafter referred to as the “Determination Policy”) at the Board of Directors meeting held on April 18, 2022. The summary is as follows.

 

  (i) Basic Policy

 

The Company’s basic policy regarding directors’ compensation is to establish a compensation system linked to shareholder interests so that it functions effectively as an incentive to achieve the sustainable enhancement of corporate value, and to set the compensation for each individual director at an appropriate level based on their respective responsibilities. Specifically, the compensation for executive directors consists of a base salary as fixed compensation and executive bonuses; however, the Board of Directors may determine non-monetary compensation, such as shares, in response to changes in the business environment. Furthermore, for outside directors who perform supervisory functions, only a base salary will be paid, in light of their duties.

 

16

 

 

  (ii) Base Compensation

 

The basic remuneration of the Company’s directors shall be a monthly fixed amount, determined through comprehensive consideration of factors such as position, responsibilities, and years of service, while also taking into account industry standards, the Company’s performance, and employee salary levels.

 

  (iii) Policy for determining the content and amount or calculation method of performance-based compensation, etc. (including the policy for determining the timing or conditions for granting compensation, etc.)

 

The Company defines executive bonuses and non-monetary compensation in the form of shares, etc. (including stock acquisition rights, etc.) as performance-based compensation.

 

Regarding executive bonuses, in order to foster a greater focus on improving performance in each fiscal year, such bonuses shall be paid in cash. The amount of the bonus shall be determined on a semi-annual or annual basis, considering factors such as the degree to which the operating profit targets for each fiscal year have been met, and shall be paid at a fixed time each year. Specifically, prior to payment, the Board of Directors shall approve the maximum amount of executive bonuses, and the Representative Director, delegated by the Board of Directors, shall determine the bonus amount for each individual director after consultation with a designated nomination and convening committee.

 

Regarding non-monetary compensation in the form of shares, etc., the Representative Director, delegated by the Board of Directors, determines the duties for each individual officer based on the performance targets decided by the Board of Directors for each fiscal year, and calculates the compensation according to the achievement rate. Currently, the Board of Directors has not resolved the performance targets subject to non-monetary compensation in the form of shares or the specific calculation of the number of shares.

 

The reason for delegating the authority to determine individual remuneration amounts to Representative Director Kenji Narushima is that we believe he is best positioned to make the most appropriate judgments, given his deep familiarity with the Company’s business and his ability to view the entire company from a bird’s-eye perspective; however, with the aim of ensuring transparency in conjunction with our listing in the U.S., we have decided that, starting this fiscal year, we will seek the advice of a voluntary Nomination and Remuneration Committee composed of a majority of independent outside directors.

 

    (b) Matters concerning resolutions of the General Meeting of Shareholders regarding directors’ remuneration, etc.

 

The limit on the total amount of remuneration, etc., for directors was set at 400,000,000 yen(annual amount; excluding salaries for employees) pursuant to Extraordinary General Meeting of Shareholders held on February 28, 2023, and the limit on the total amount of remuneration for auditors was set at 20,000,000 yen (annual amount) pursuant to a resolution adopted at the 15th Annual General Meeting of Shareholders held on May 21, 2018.

 

17

 

 

Total remuneration, etc., for directors and corporate auditors for this consolidated fiscal year

 

    Total
Remuneration, etc.
(thousand yen)		 Total by Type of Remuneration (thousand yen)

Number of

Eligible Officers
(persons)

  Category of Officer Base Compensation Performance-Based
Compensation		 Non-monetary
compensation, etc.
  Directors 183,481 80,481 103,000 – 9
  (outside directors included above) (20,040) (20,040) (–) (–) (5)
  Corporate Auditor 15,600 15,600 – – 3
  (outside corporate auditors included above) (7,200) (7,200) (–) (–) (2)
  Total 199,081 96,081 103,000 – 12
  (outside members included above) (27,240) (27,240) (–) (–) (7)

 

(6) Matters Concerning Outside Directors

 

  Category Name

Board of Directors

Number of Attendances

Board of Corporate Auditors

Number of Attendances

 Main Activities
  Directors Kazuyuki Kawabata

13/13

 –

Drawing on his background in the financial industry, he actively offers his opinions on proposals and matters under deliberation, primarily from the perspective of corporate management.

  Director Asami Sadoi

12/13

 –

Drawing on the broad knowledge and expertise she cultivated at a major electronics manufacturer, she actively offers her opinions on agenda items and matters under deliberation, primarily from the perspective of corporate management and as a woman.

 

18

 

 

  Category Name

Board of Directors

Number of Attendances

Board of Corporate Auditors

Number of Attendances

 Main Activities
  Director Jerzy Marek Rudzinski

13/13

 – Drawing on the broad knowledge and expertise he cultivated at a major European electrical equipment manufacturer, he actively offers his opinions on agenda items and matters under deliberation, primarily from the perspective of corporate management in overseas markets.
  Director Yuko Osumi

10/10

*Appointed in 2025/5

 – Leveraging the broad knowledge and expertise she has cultivated in the automotive industry, she actively offers her opinions on agenda items and matters under deliberation, primarily from the perspective of corporate management.
  Director Rieko Okada

10/10

*Appointed in 2025/5

 – Drawing on her extensive experience as a certified public accountant and her broad business acumen, she plays a vital role as an outside director, actively offering insights—particularly from the perspectives of financial accounting and internal controls.
  Corporate Auditor Mitsunori Yabe

13/13

 12/12 With his extensive experience as a certified public accountant and broad business acumen, he plays an important role as an outside corporate auditor, offering proactive insights primarily from the perspectives of financial accounting and internal controls.
  Corporate Auditor Wakako Isaka

13/13

 12/12

With her extensive experience as a lawyer and broad insight, she plays an important role as an outside corporate auditor, offering proactive opinions primarily from the perspectives of corporate legal affairs and compliance.

 

(Note) One written resolution has been excluded from the calculation of the number of Board of Directors meetings.

 

5. Matters Concerning Accounting Auditors

 

As the Company is not a company required to appoint an accounting auditor under the Companies Act, there are no applicable matters.

 

19

 

 

 

Consolidated Financial Statements

  

 

 

 

 

 

 

 

 

 

 

23rd Fiscal Year

 

 

 

From March 1, 2025
To February 28, 2026

 

 

 

 

 

 

 

 

 

 

Micware Co., Ltd.

 

 

 

 

 

20

 

 

Consolidated Balance Sheet

(As of February 28, 2026)

 

(Unit: Thousand Yen)

 

Account   Amount     Account   Amount  
Assets     Liabilities  
Current Assets     14,121,630     Current liabilities     6,890,239  
Cash and Deposits     8,259,659     Accounts Payable     1,379,171  
Accounts Receivable and Contract Assets     5,191,316     Contract Liabilities     60,523  
Inventory     116,841     Short-term Debt     2,821,924  
Other     553,813     Accrued Income Taxes     614,235  
Fixed Assets     4,398,433     Other     2,014,384  
Property, Plant, and Equipment     1,919,730     Non-current liabilities     3,078,871  
Buildings and Structures     1,977,624     Long-term Debt     2,565,203  
Vehicles and Transport Equipment     43,051     Deferred Tax Liabilities     11,179  
Tools, Furniture, and Fixtures     788,943     Other     502,488  
Land     295,496     Total Liabilities     9,969,110  
Other     38,618     Net Assets  
Accumulated Depreciation   △ 1,224,004     Shareholders’ Equity     8,326,343  
Intangible Assets     240,875     Capital     480,000  
Goodwill     33,955     Capital Surplus     1,004,996  
Other     206,919     Retained Earnings     7,194,223  
Investments and Other Assets     2,237,827     Treasury Stock   △ 352,877  
Investment Securities     316,999     Accumulated Other Comprehensive Income     3,561  
Leasehold and Security Deposits     1,111,752     Unrealized Gains on Other Securities   △ 116,918  
Deferred Tax Assets     798,769     Foreign Currency Translation Adjustment     120,480  
Other     10,395     Non-controlling Interests     221,048  
Allowance for Doubtful Accounts   △ 90     Total Net Assets     8,550,953  
Total Assets     18,520,064     Total Liabilities and Net Assets     18,520,064  

 

(Note)Amounts are rounded down to the nearest thousand yen.

 

21

 

 

Consolidated Income Statement

(From March 1, 2025 to February 28, 2026)

 

(Unit: Thousand Yen)

 

Account   Amount  
Revenue             22,233,692  
Cost of Goods Sold             14,132,487  
Gross Profit             8,101,205  
Selling and General Administrative Expenses             5,870,017  
Operating Profit             2,231,187  
Non-operating Income                
Interest and Dividend Income     14,274          
Foreign Exchange Gains     10,208          
Other     37,415       61,897  
Non-operating Expenses                
Interest Expense     49,565          
Other     2,931       52,497  
Ordinary Profit             2,240,587  
Extraordinary Income                
Gain on Negative Goodwill     106,804          
Gain on Sale of Fixed Assets     1,350       108,155  
Extraordinary Losses                
Loss on Valuation of Investment Securities     91,020          
Loss on Disposal of Fixed Assets     14,955       105,975  
Profit Before Income Taxes             2,242,767  
Income Taxes, Resident Taxes, and Enterprise Taxes     1,043,179          
Income Tax - Deferred   △ 353,177       690,001  
Net Income             1,552,765  
Net Income attributable to Non-controlling Interests             18,410  
Net Income attributable to Owners of the Parent Company             1,534,354  

 

(Note)Amounts are rounded down to the nearest thousand yen.

 

Net income or net loss (-)             1,552,765  
Other comprehensive income                
Unrealized gains on other securities           △ 112,100  
Foreign currency translation adjustment             49,997  
Total other comprehensive income           △ 62,103  
Comprehensive Income             1,490,662  
(Breakdown)                
Comprehensive income attributable to owners of the parent             1,459,791  
Comprehensive income attributable to non-controlling interests             30,870  

 

22

 

 

Consolidated Statement of Changes in Equity

(From March 1, 2025 to February 28, 2026)

 

(Unit: thousand yen)

 

    Shareholders’ Equity  
    Capital     Capital
Surplus		     Retained
Earnings		     Treasury
Stock		     Total
Shareholders’
Equity		  
Balance at the beginning of the current fiscal year     480,000       933,494       5,735,571     ∆ 431,315       6,717,751  
Cumulative effect of changes in accounting policies     –       –     ∆ 75,702       –     ∆ 75,702  
Opening balance for the current fiscal year reflecting the change in accounting policy     480,000       933,494       5,659,868     ∆ 431,315       6,642,048  
Changes during the current fiscal year     –       –       –       –       –  
Dividends from retained earnings     –       –       –       –       –  
Net Income attributable to Owners of the Parent Company     –       –       1,534,354       –       1,534,354  
Purchase of treasury stock     –       –       –       –       –  
Disposal of treasury stock     –       71,501       –       78,438       149,940  
Net changes in items other than shareholders’ equity during the current fiscal year     –       –       –       –       –  
Total changes during the current consolidated fiscal year     –       71,501       1,534,354       78,438       1,684,294  
Balance at the end of the current consolidated fiscal year     480,000       1,004,996       7,194,223     ∆ 352,877       8,326,343  

 

(Unit: thousand yen)

 

    Accumulated Other Comprehensive Income                  
    Unrealized
gains on
other securities		     Foreign currency
translation
adjustment		     Total accumulated
other comprehensive
income		     Non-controlling
interests		     Total Net Assets  
Balance at the beginning of the current fiscal year   ∆ 4,818       70,483       65,664       190,178       6,973,594  
Cumulative effect of changes in accounting policies     –       –       –       –     ∆ 75,702  
Opening balance for the current fiscal year reflecting the change in accounting policy   ∆ 4,818       70,483       65,664       190,178       6,897,891  
Changes during the current fiscal year     –       –       –       –       –  
Dividends from retained earnings     –       –       –       –       –  
Net Income attributable to Owners of the Parent Company     –       –       –       –       1,534,354  
Purchase of treasury stock     –       –       –       –       –  
Disposal of treasury stock     –       –       –       –       149,940  
Net changes in items other than shareholders’ equity during the current fiscal year   ∆ 112,100       49,997     ∆ 62,103       30,870     ∆ 31,232  
Total changes during the current consolidated fiscal year   ∆ 112,100       49,997     ∆ 62,103       30,870       1,653,062  
Balance at the end of the current consolidated fiscal year   ∆ 116,918       120,480       3,561       221,048       8,550,953  

 

(Note)Amounts are rounded down to the nearest thousand yen.

 

Notes to the Consolidated Financial Statements

 

23

 

 

(Notes on Material Matters Forming the Basis for the Preparation of the Consolidated Financial Statements)

 

1. Matters Concerning the Scope of Consolidation

 

(1) Number and Names of Consolidated Subsidiaries

 

● Number of Consolidated Subsidiaries                 8 companies

 

● Names of Consolidated Subsidiaries

 

Micware Automotive Co., Ltd.

Micware Navigations Co., Ltd.

Micware Mobility Co., Ltd.

Micware Operations Co., Ltd.

Micware Create Co., Ltd.

Micware North America, Inc.

Micware Asia Pacific Co., Ltd.

Micware Europe GmbH

 

Micware Challenged Co., Ltd. changed its name to Micware Create Co., Ltd. on May 26, 2025.

 

(2) Matters concerning the fiscal year of consolidated subsidiaries

 

The fiscal year-end dates of the consolidated subsidiaries are consistent with the consolidated fiscal year-end.

 

2. Accounting Policies

 

(1) Asset Valuation Principles and Methods

 

(a) Valuation Principles and Methods for Securities

 

Other securities

 

Items other than securities without market prices

 

Market value method based on market prices as of the balance sheet date (valuation gains and losses are recognized directly in the net assets, and the cost of selling items is calculated using the moving average method)

 

Securities without market prices

 

Cost method using the moving average method

 

(b) Valuation Principles and Methods for Inventories

 

Merchandise, finished goods and raw materials

 

Cost method using the weighted average method (Balance sheet values are calculated using the method of writing down book values based on a decline in profitability)

 

24

 

 

(2) Depreciation Method for Fixed Assets

 

(a) Tangible Fixed Assets

 

The straight-line method is used.

 

The major useful lives are as follows.

 

  Buildings and structures:   6 - 47 years
  Vehicles and Transportation Equipment:   3 - 6 years
  Tools, Furniture, and Fixtures:   2 - 15 years

 

(b) Intangible Fixed Assets (excluding goodwill)

 

The straight-line method is used.

 

The major useful lives are as follows:

 

Software for internal use

 

The straight-line method is used based on the estimated useful life within the company (5 years).

 

(3) Accounting Standards for Material Provisions

 

Allowance for Losses on Orders

 

To prepare for future losses related to custom software development and similar activities, we recognize provisions on an individual basis for contracts where losses are expected to occur in the next consolidated fiscal year or later and where the amount can be reasonably estimated.

 

Allowance for Doubtful Accounts

 

To prepare for losses due to bad debts, the Company records an allowance for uncollectible amounts based on historical bad debt ratios for ordinary receivables and by individually assessing the collectability of specific receivables, specifically those at risk of becoming uncollectible.

 

(4) Accounting Principles for Revenue and Expenses

 

The Group recognizes revenue based on the following five-step approach.

 

Step 1: Identify contracts with customers

 

Step 2: Identify the performance obligations in the contract

 

Step 3: Determine the transaction price

 

Step 4: Allocate the transaction price to the performance obligations in the contract

 

Step 5: Recognize revenue when (or as) the performance obligations are satisfied

 

25

 

 

The Group primarily engages in the development of software for cockpit systems for major automakers, providing coordinated control systems for in-vehicle networks and car navigation systems in response to the increasing electrification of automobiles. Its main customers are major domestic automakers and automotive equipment manufacturers, primarily those specializing in car navigation systems.

 

The details of the primary performance obligations in the Group’s main business related to revenue arising from contracts with customers, and the ordinary timing at which those performance obligations are satisfied (the ordinary timing of revenue recognition), are as follows.

 

Revenue is measured as the amount of consideration promised in contracts with customers, net of returns, discounts, and rebates.

 

The consideration for these performance obligations is collected generally within one year after the performance obligations are satisfied, in accordance with separately stipulated payment terms, and does not contain any material financial elements.

 

(a) Revenue Recognition for Custom-developed Software

 

The Company primarily engages in contract software development. For these transactions, performance obligations are satisfied over a period of time, and revenue is recognized based on the percentage of completion of those performance obligations. The percentage of completion is measured using the input method, based on the ratio of cumulative actual costs incurred to estimated total costs at the end of each reporting period, and estimates are revised if there is a possibility of a change in the progress toward completion.

 

(b) Revenue Recognition from Licensing

 

Royalty income is generated primarily from the sale of products that include licenses related to the Group’s intellectual property (software provided to customers). Royalty revenue is generated based on the licensee’s sales revenue, and revenue is recognized when the licensee sells the relevant product and reports the sale to the Group. Furthermore, for license grants where the Group determines that it acts as an agent, revenue is recognized as the net amount—calculated by subtracting the amount paid to the other party from the amount received in exchange for the license provided by that other party.

 

(c) Revenue Recognition for Maintenance and Services

 

This primarily consists of software maintenance and related services provided to customers, and the Group has an obligation to provide maintenance and services based on maintenance contracts with customers. These maintenance contracts are transactions that satisfy performance obligations over a period of time, and revenue is recognized based on the progress of satisfying those performance obligations.

 

(5) Other Material Fundamental Matters to Preparing the Consolidated Financial Statements

 

(a) Basis for converting material foreign currency-denominated assets or liabilities into Japanese yen

 

Monetary assets and liabilities denominated in foreign currencies are translated into yen at the spot exchange rate on the consolidated balance sheet date, and translation differences are recognized as profit or loss. Assets and liabilities of overseas subsidiaries and other entities are translated into yen at the spot exchange rate on the consolidated balance sheet date, while revenue and expenses are translated into yen at the average exchange rate for the period. Translation differences are recorded in the foreign currency translation adjustment account and non-controlling interests within the equity section.

 

26

 

 

(b) Amortization Method and Period for Goodwill

 

Goodwill is amortized on a straight-line basis over the period in which the benefits are reasonably expected to be realized.

 

(Note on Changes in Accounting Policies)

 

(Change in Accounting Treatment for Asset Retirement Obligations)

 

Previously, the Company recognized asset retirement obligations related to restoration obligations under real estate lease agreements by reasonably estimating the amount of security deposits associated with such lease agreements that could not be recovered, and recognizing as an expense the portion deemed to be this period’s burden. However, in light of the recent surge in restoration costs and to more appropriately present the Company’s financial position and operating results, effective from this consolidated fiscal year, the Company has changed its accounting treatment to recognize restoration costs as asset retirement obligations under liabilities and to include the corresponding retirement costs in tangible fixed assets for depreciation.

 

The cumulative effect of this change in accounting policy, calculated based on the difference between the cumulative amount of depreciation and interest expenses through the end of the previous fiscal year under the new method and the cumulative amount recognized as an expense through the end of the previous fiscal year for leasehold deposits not expected to be recovered, has been reflected in the opening balance of this fiscal year.

 

As a result, compared to the previous method, tangible fixed assets at the end of this fiscal year increased by 209,461 thousand yen, leasehold and guarantee deposits increased by 142,762 thousand yen, deferred tax assets by 40,291 thousand yen, and asset retirement obligations by 481,703 thousand yen, while selling, general and administrative expenses for this fiscal year increased by 19,012 thousand yen. Consequently, operating profit, ordinary profit, profit before income taxes, net income, and net income attributable to owners of the parent each decreased by 19,012 thousand yen.

 

Net assets per share and net income per share for this consolidated fiscal year decreased by 81.62 yen and 81.71 yen, respectively.

 

Due to the cumulative effect of the change in accounting policy reflected in the book value of net assets at the beginning of this consolidated fiscal year, the opening balance of retained earnings in the consolidated statement of changes in equity after retroactive application decreased by 75,702 thousand yen.

 

(Notes on Accounting Estimates)

 

Among the items recorded in the consolidated financial statements for this fiscal year based on accounting estimates, those that may have a material impact on the consolidated financial statements for the next fiscal year are as follows.

 

(1) Revenue recognition under software development contracts, etc.

 

(a) Amounts recorded in the consolidated financial statements for this fiscal year

 

Contract Assets 3,349,713 thousand yen

 

27

 

 

(b) Information regarding material accounting estimates related to identified items

 

For custom software development contracts, etc. (hereinafter referred to as “software development contracts, etc.”), the Group estimates the percentage of completion of performance obligations that are satisfied over a certain period and recognizes revenue over that period based on such percentage of completion. This estimation method is based on the input method using the percentage of incurred costs to total estimated costs.

 

Software development contracts, etc., vary in specifications depending on customer requirements, resulting in the individual nature of the development work. Furthermore, since changes in work content or revisions to man-hours may be necessary due to new facts or changes in circumstances discovered after development has commenced, the estimation of total estimated costs incorporates development man-hours as a key assumption.

 

Although the total estimated cost is estimated to reflect the latest situation as of the end of this consolidated fiscal year, if the assumptions underlying the estimate change due to new facts or changes in circumstances discovered after the start of development, this could have a material impact on the amount of revenue recognized in the consolidated financial statements for the following consolidated fiscal year.

 

(2) Recoverability of deferred tax assets

 

(a) Amounts recorded in the consolidated financial statements for this fiscal year

 

Deferred tax assets: 798,769 thousand yen

 

(b) Information regarding material accounting estimates related to identified items

 

The Group recognizes deferred tax assets based on various forecasts and assumptions, including revenue projections regarding future taxable income. Deferred tax assets are recognized only to the extent that recovery is deemed probable after careful consideration of trends in past taxable income and projections of future taxable income. Therefore, if it is determined that the probability of recovery has decreased, the carrying amount of deferred tax assets may be reduced to the recoverable amount. This determination is based on whether one of the following criteria is met: the adequacy of taxable income before adjustments for temporary differences based on earnings capacity, the adequacy of taxable income before adjustments for temporary differences based on tax planning, or the adequacy of future taxable income arising from temporary differences.

 

In determining the adequacy of taxable income before adjustments for temporary differences based on earning power, we estimate taxable income for the fiscal year in which the temporary differences are expected to be resolved and for the carryback and carryforward periods. Taxable income is estimated based on the figures underlying the annual budget used within the Group, with appropriate adjustments made for external factors such as the business environment and the status of plan progress based on past performance.

 

28

 

 

Although these estimates reflect the latest situation as of the end of this consolidated fiscal year, they may be affected by future changes in uncertain economic conditions. If the timing and amount of actual taxable income differ from the estimates, this could have a material impact on the amounts of deferred tax assets and income tax adjustments in the consolidated financial statements for the following consolidated fiscal year.

 

(Notes to the Consolidated Balance Sheet)

 

1. Inventories

 

  Raw Materials and Supplies   116,841   thousand yen

 

2. Commitment Line Agreements

 

To improve capital efficiency and ensure the efficient funding of working capital when needed, our Group has entered into commitment line agreements with two correspondent banks. The outstanding balance of undrawn commitments under these agreements as of the end of this consolidated fiscal year is as follows.

 

  Commitment Amount   5,000,000   thousand yen
  Outstanding Loan Balance   800,000   thousand yen
  Net amount   4,200,000   thousand yen

 

(Notes to the Consolidated Statement of Changes in Equity)

 

1. Classes and total number of shares outstanding as of the end of this fiscal year

 

  Class of shares Number of shares
at the previous
fiscal year end

This fiscal year
Number of Shares Issued

This fiscal year
Number of shares decreased

 Number of shares
at this fiscal year end
  Common stock 240,890 shares – shares – shares 240,890 shares

 

2. Types and numbers of treasury stock as of the end of this fiscal year

 

  Class of shares Number of shares
at the previous
fiscal year end

This fiscal year
Number of shares added

This fiscal year
Number of shares decreased

 Number of shares
at this fiscal year end
  Common stock 9,700 shares – shares 1,764 shares 7,936 shares

 

3. Matters concerning dividends

 

Not applicable.

 

4. Class and number of shares subject to stock acquisition rights as of this consolidated fiscal year (excluding those for which the first day of the exercise period has not yet arrived)

 

Type and number of shares subject to stock acquisition rights at the end of this consolidated fiscal year

 

Not applicable, as the rights cannot be exercised.

 

29

 

 

(Notes on Financial Instruments)

 

1. Matters Concerning the Status of Financial Instruments

 

The Group manages its funds primarily through short-term deposits or, in principle, highly secure financial instruments, and raises funds through borrowings from banks and other financial institutions.

 

We strive to mitigate customer credit risk related to accounts receivable and contract assets in accordance with our credit management regulations. Furthermore, investment securities consist of shares in companies with which we have business relationships; while they are exposed to market price fluctuation risk, we regularly monitor market values and the financial condition of issuers (business partners) and continuously review our holdings in light of our relationships with these companies.

 

Most accounts payable are due within one year. Furthermore, borrowings are used for working capital (primarily short-term). We manage liquidity risks associated with operating liabilities and borrowings by preparing and regularly updating cash flow plans.

 

2. Matters Concerning the Fair Value of Financial Instruments

 

The carrying amounts, fair values, and differences between them on the consolidated balance sheet as of February 28, 2026 (this fiscal year end) are as follows. Note that securities without market prices (carrying amount of 46,478 thousand yen) are not included in “Other securities”. Furthermore, notes have been omitted for “Cash and Deposits”, “Accounts Receivable and Contract Assets”, “Accounts Payable”, “Income Taxes Payable”, and “Short-term Borrowings” because they consist of cash or are settled within a short period, and their fair values approximate their book values.

 

(Unit: thousand yen)

 

    Consolidated
Balance Sheet
Carrying amount (*1)		 Fair value (*1) Difference
  (1) Investment securities      
  Other securities 270,520 270,520 –
  (2) Long-term debt (*2) (4,587,127) (4,564,168) 22,958

 

(*1) Items recorded as liabilities are indicated in ().

 

(*2) Includes long-term debt due within one year.

 

(Note 1)Explanation of valuation techniques and inputs used to calculate fair value

 

Financial instruments are classified into the following three levels based on the observability and materiality of the inputs used to determine fair value.

 

Level 1 fair value:

 

Fair value calculated based on (unadjusted) quoted prices in an active market for identical assets or liabilities

 

Level 2 fair value:

 

Fair value calculated using directly or indirectly observable inputs other than Level 1 inputs

 

Level 3 Fair Value:

 

Fair value determined using material unobservable inputs

 

30

 

 

When multiple inputs that have a material impact on the calculation of fair value are used, the fair value is classified at the level with the lowest priority in the calculation of fair value among the levels to which those inputs belong.

 

Investment securities

 

Listed shares are valued using market prices. Since listed shares are traded in active markets, their fair value is classified as Level 1.

 

Long-term borrowings

 

Among long-term borrowings, those with variable interest rates reflect market interest rates in the short term, and since the Company’s credit status has not changed significantly since the loans were executed, their fair value is considered to approximate their carrying amount; therefore, they are carried at their carrying amount and classified as Level 2 fair value. The fair value of long-term borrowings with fixed interest rates is calculated using the discounted present value method based on the total amount of principal and interest, the remaining term of the debt, and an interest rate that takes credit risk into account; these are classified as Level 2 fair values.

 

(Note 2) Securities without market prices

 

(Unit: Thousands of yen)

 

  Category Amount recorded on
the consolidated
balance sheet
  Unlisted stocks 46,478

 

These are not included in “Other securities.”

 

(Notes on Revenue Recognition)

 

1. Breakdown of Revenue

 

The Group is engaged in the software development business. The breakdown of revenue arising from contracts with major customers is as follows.

 

(Unit: Thousands of yen)

 

    This Fiscal Year
  Custom-developed software 17,688,510
  Software licensing 3,096,186
  Maintenance, services, etc. 1,448,996
  Total 22,233,692

 

2. Basic Information for Understanding Revenue

 

As described in “2. Accounting Policies”, “(4) Accounting Standards for Revenue and Expenses” in the Notes on Material Matters Forming the Basis for the Preparation of the Consolidated Financial Statements.

 

31

 

 

3. Information for Understanding Revenue Amounts for This and Subsequent Fiscal Years

 

(1) Balances of Contract Assets and Contract Liabilities, etc.

 

(Unit: Thousands of yen)

 

    This fiscal year
end (February 28,
2026)
  Receivables arising from contracts with customers 1,841,602
  Contract assets 3,349,713
  Contract liabilities 60,523

 

Contract assets represent the portion of the Group’s rights to receive consideration in exchange for the fulfillment of performance obligations related to the development of systems according to customer specifications in the Group’s software development operations, excluding receivables. Contract assets are reclassified as receivables when the rights to receive consideration become unconditional, such as upon customer acceptance.

 

Contract liabilities represent the portion of consideration received from customers for the Group’s various operations that exceeds the amount already recognized as revenue. Contract liabilities are reclassified as revenue when performance obligations are satisfied through the provision of various services.

 

Amount recognized as revenue during the this consolidated fiscal year that was included in contract liabilities at the beginning of the period was 28,963 thousand yen.

 

(2) Transaction price allocated to remaining performance obligations

 

As of the end of this consolidated fiscal year, there are no material contracts with an initially estimated contract term exceeding one year. Furthermore, for contracts with an initially estimated contract term of one year or less, we have omitted disclosure in accordance with practical expedients.

 

(Notes on Per Share Information)

 

  Net Assets per Share 35,757.72 yen
  Net Income per Share 6,594.19 yen

 

(Notes on Material Subsequent Events)

 

(Stock Split)

 

On March 31, 2026, the Company implemented a stock split and made partial amendments to the Articles of Incorporation in connection with the stock split, as described below. This stock split was implemented to lower the price per investment unit of the Company’s shares, thereby enabling the smooth execution of future capital policies.

 

(1) Method of Stock Split

 

One share of the Company’s common stock held by a shareholder listed in the latest shareholder register as of the record date has been split into 241 shares.

 

32

 

 

(2) Number of Shares Increased by the Split

 

Total number of shares issued prior to the stock split: Common Stock: 240,890 shares

 

Number of shares increased by the stock split: Common stock: 57,813,600 shares

 

Total number of shares issued after the stock split: Common stock: 58,054,490 shares

 

(3) Schedule

 

  Board of Directors Resolution Date February 16, 2026
  Record Date March 30, 2026
  Effective Date March 31, 2026

 

(4) Partial Amendment to the Articles of Incorporation

 

In conjunction with the above stock split, pursuant to the provisions of Article 184, Paragraph 2 of the Companies Act, we have amended the Articles of Incorporation to increase the Company’s total authorized share capital from 520,000 shares to 125,320,000 shares, effective as of March 31, 2026, the effective date of the stock split.

 

(5) Impact on Per-Share Information

 

The per-share information, assuming that the stock split had been conducted at the beginning of this fiscal year, is as follows

 

Net assets per share: 148.37 yen

 

Net income per share: 27.36 yen

 

33

 

 

 

 

 

 

 

Financial Statements

 

 

 

 

 

23rd Fiscal Year

 

 

 

 

 

 

From March 1, 2025

To February 28, 2026

 

 

 

 

 

 

 

 

 

 

Micware Co., Ltd.

 

 

 

 

 

34

 

 

Balance Sheet

(As of February 28, 2026)

 

(Unit: Thousand Yen)

 

  Account   Amount     Account   Amount  
  Assets     Liabilities  
  Current Assets     8,070,992     Current Liabilities     5,179,589  
  Cash and Deposits     3,828,405     Accounts Payable     446,473  
  Accounts Receivable     872,739     Short-term Debt     3,737,477  
  Prepaid Expenses     197,323     Accounts Payable     324,605  
  Short-term Loans Receivable     2,192,963     Accrued Expenses     153,214  
  Other Receivable     528,290     Advances Received     236  
  Consumption Tax Receivable     178,356     Accrued Income Taxes     327,257  
  Other     272,913     Other     190,324  
                       
  Fixed Assets     5,559,405     Long-term Liabilities     3,057,806  
  Property, Plant, and Equipment     1,610,729     Long-term Debt     2,565,203  
  Buildings     1,929,945     Asset Retirement Obligations     481,703  
  Vehicles and Transportation Equipment     22,345     Other     10,900  
  Tools, Furniture, and Fixtures     188,703              
  Land     295,496     Total Liabilities     8,237,395  
  Other     36,384     Net Assets  
  Accumulated Depreciation   ∆ 862,145              
              Shareholders’ equity     5,509,920  
  Intangible Fixed Assets     80,554     Capital     480,000  
  Software     80,554     Capital Surplus     918,160  
              Capital Reserve     682,504  
  Investments and Other Assets     3,868,121     Other Capital Surplus     235,656  
  Investment Securities     316,999     Retained Earnings     4,464,637  
  Shares of Affiliates     1,903,000     Other Retained Earnings     4,464,637  
  Lease and Guarantee Deposits     1,098,531     Unappropriated Retained Earnings     4,464,637  
  Deferred Tax Assets     541,408     Treasury Stock   ∆ 352,877  
  Other     8,271              
  Allowance for Doubtful Accounts   ∆ 90     Valuation and Translation Adjustments   ∆ 116,918  
              Valuation Difference on Other Securities   ∆ 116,918  
                       
              Total Net Assets     5,393,001  
  Total Assets     13,630,397     Total Liabilities and Net Assets     13,630,397  

 

(Note) Amounts are rounded down to the nearest thousand yen.

 

35

 

 

Income Statement

(From March 1, 2025 to February 28, 2026)

 

(Unit: Thousand Yen)

 

Item   Amount  
Revenue             4,569,429  
Cost of Goods Sold             2,573  
Gross Profit             4,566,856  
Selling and General Administrative Expenses             4,390,817  
Operating Profit             176,038  
                 
Non-operating income                
Interest and Dividend Income     542,043          
Foreign Exchange Gains     40,008          
Other     25,186       607,238  
                 
Non-operating expenses                
Interest Expense     49,522          
Commissions Paid     1,654          
Other     4,457       55,633  
Ordinary Profit             727,642  
                 
Extraordinary income                
Gain on Sale of Fixed Assets     1,350       1,350  
                 
Extraordinary Losses                
Loss on Disposal of Fixed Assets     11,952          
Loss on Valuation of Investment Securities     91,020       102,973  
Profit Before Income Taxes             626,019  
                 
Income Taxes, Resident Taxes, and Enterprise Taxes     297,086          
Income Taxes - Deferred   ∆ 273,810       23,275  
Net Income             602,743  

 

(Note) Amounts are rounded down to the nearest thousand yen.

 

36

 

 

Statement of Changes in Shareholders’ Equity

(From March 1, 2025 to February 28, 2026)

 

(Unit: Thousand Yen)

 

    Shareholders’ Equity  
          Capital Surplus     Retained Earnings  
 

Capital

Capital Reserve

Other Capital
Surplus

Capital Surplus
Total

   Other retained
earnings		  

Retained

Earnings
Total
    Unappropriated
Retained Earnings		  
Balance at the beginning of the current period     480,000       682,504       164,154       846,658       3,937,597       3,937,597  
Cumulative effect of changes in accounting policies     –       –       –       –     ∆ 75,702     ∆ 75,702  
Opening balance reflecting the change in accounting policy     480,000       682,504       164,154       846,658       3,861,894       3,861,894  
Changes for the current period                                                
Net income     –       –       –       –       602,743       602,743  
Disposal of treasury stock     –       –       71,501       71,501       –       –  
Net changes in items other than shareholders’ equity     –       –       –       –       –       –  
Total changes for the current period     –       –       71,501       71,501       602,743       602,743  
Balance at end of period     480,000       682,504       235,656       918,160       4,464,637       4,464,637  

 

(Unit: Thousand Yen)

 

    Shareholders’ Equity     Valuation and
Translation Adjustments		        
    Treasury
Stock		     Total
Shareholders’ Equity		     Valuation
Difference on
Other Securities		     Total
Valuation and
Translation
Adjustments		     Total
Equity		  
Balance at the beginning of the current period   ∆ 431,315       4,832,940     ∆ 4,818     ∆ 4,818       4,828,121  
Cumulative effect of changes in accounting policies     –     ∆ 75,702       –       –     ∆ 75,702  
Opening balance reflecting the change in accounting policy   ∆ 431,315       4,757,237     ∆ 4,818     ∆ 4,818       4,752,419  
Changes for the current period                                        
Net income     –       602,743       –       –       602,743  
Disposal of treasury stock     78,438       149,940       –       –       149,940  
Net changes in items other than shareholders’ equity     –       –     ∆ 112,100     ∆ 112,100     ∆ 112,100  
Total changes for the current period     78,438       752,683     ∆ 112,100     ∆ 112,100       640,582  
Balance at end of period   ∆ 352,877       5,509,920     ∆ 116,918     ∆ 116,918       5,393,001  

 

(Note) Amounts are rounded down to the nearest thousand yen.

 

37

 

 

Notes to the Financial Statements (Non-consolidated)

 

(Notes on Material Accounting Policies)

 

1. Valuation Standards and Methods for Assets

 

(1) Valuation Principles and Methods for Securities

 

Shares of Subsidiaries and Affiliates

 

Cost method using the moving average method

 

Other securities

 

Items other than securities without a market price

 

Market value method based on market prices as of the balance sheet date (valuation differences are accounted for using the direct net asset method, and cost of sales is calculated using the moving average method)

 

Securities without market prices

 

Cost method using the moving average method

 

(2) Valuation standards and methods for inventory

 

Merchandise, finished goods, and raw materials

 

Cost method using the weighted average method (Balance sheet values are calculated using the method of writing down book value based on a decline in profitability)

 

2. Depreciation Method for Fixed Assets

 

(1) Tangible Fixed Assets

 

The straight-line method is used.

 

The major useful lives are as follows.

 

  Buildings:   6 - 47 years
  Vehicles and Transportation Equipment:   3 - 6 years
  Tools, Furniture, and Fixtures:   3 - 15 years

 

(2) Intangible Fixed Assets

 

The straight-line method is used.

 

The major useful lives are as follows.

 

Software for internal use

 

The straight-line method is used based on the useful life within the company (5 years).

 

3. Basis for converting foreign currency-denominated assets into Japanese yen

 

Monetary receivables and payables denominated in foreign currencies are converted to yen at the spot exchange rate on the balance sheet date, and any resulting translation differences are recognized as profit or loss.

 

38

 

 

4. Basis for recording provisions

 

Provision for Losses on Orders

 

To prepare for future losses related to custom software development and similar activities, we recognize provisions on an individual basis for contracts where losses are expected to occur in the next consolidated fiscal year or later and where the amount can be reasonably estimated.

 

Allowance for Doubtful Accounts

 

To prepare for losses due to bad debts, the Company records an allowance for uncollectible amounts based on historical bad debt ratios for ordinary receivables, and by individually assessing collectability for specific receivables, specifically those at risk of becoming uncollectible

 

5.Accounting Principles for Revenue and Expenses

 

The Company recognizes revenue based on the following five-step approach.

 

Step 1: Identify contracts with customers

 

Step 2: Identify the performance obligations in the contract

 

Step 3: Determine the transaction price

 

Step 4: Allocate the transaction price to the performance obligations in the contract

 

Step 5: Recognize revenue when (or as) the performance obligations are satisfied

 

The Company is engaged in the business of providing cooperative control systems for in-vehicle networks and car navigation systems in response to the advancement of automotive electronics, primarily through the development of software for cockpit systems for major automakers. Its main customers are major domestic automakers and automotive equipment manufacturers, primarily those specializing in car navigation systems.

 

The details of the primary performance obligations in the Company’s main business related to revenue arising from contracts with customers, and the usual time at which those performance obligations are satisfied (the usual time of revenue recognition), are as follows.

 

Revenue is measured as the amount of consideration promised in contracts with customers, net of returns, discounts, and rebates.

 

The consideration for these performance obligations is collected generally within one year after the performance obligations are satisfied, in accordance with separately established payment terms, and does not contain any material financial elements.

 

(a)Revenue Recognition for Custom-Developed Software

 

The Company primarily engages in contract software development. For these transactions, performance obligations are satisfied over a period of time, and revenue is recognized based on the percentage of completion of those performance obligations. The percentage of completion is measured using the input method, based on the ratio of cumulative actual costs incurred to estimated total costs at the end of each reporting period, and estimates are revised if there is a possibility of a change in the progress toward completion.

 

(b)Revenue Recognition from Licensing

 

Royalty income is generated primarily from the sale of products that include licenses related to the Company’s intellectual property (software provided to customers). Royalty revenue is generated based on the licensee’s sales, and revenue is recognized when the licensee sells the relevant product and reports the sale to the Company. Furthermore, for license grants where the Company determines that it acts as an agent, revenue is recognized as the net amount—calculated by deducting the amount paid to the other party from the amount received in exchange for the license provided by that other party.

 

39

 

 

(c)Revenue Recognition for Maintenance and Services

 

This primarily consists of software maintenance and related services provided to customers, and the Company has a performance obligation to provide maintenance and services based on maintenance contracts with customers. These maintenance contracts are transactions that satisfy the performance obligation over a period of time, and revenue is recognized based on the progress of satisfying the performance obligation.

 

(d)Revenue Recognition for Management Guidance

 

The Company primarily provides management guidance regarding corporate operations to its Group affiliates. Since revenue from these transactions is calculated by applying a fixed rate to the sales revenue reported by its Group affiliates, the Company recognizes revenue at the end of each reporting period when such sales revenue is reported.

 

6.Other Fundamental Matters for Preparing Financial Statements

 

Accounting Treatment of Consumption Tax, etc.

 

Consumption tax and local consumption tax are accounted for using the tax-exclusive method.

 

(Note on Changes in Accounting Policies)

 

(Change in Accounting Treatment for Asset Retirement Obligations)

 

Previously, the Company recognized asset retirement obligations related to restoration obligations under real estate lease agreements by reasonably estimating the amount of security deposits associated with such lease agreements that could not be recovered, and recognizing as an expense the portion deemed to be this period’s burden. However, in light of the recent surge in restoration costs and to more appropriately present the Company’s financial position and operating results, effective from this fiscal year, the Company has changed its method to recognize restoration costs as asset retirement obligations under liabilities and to include the corresponding removal costs in tangible fixed assets for depreciation.

 

The cumulative effect of this change in accounting policy, calculated based on the difference between the cumulative amount of depreciation and interest expenses through the end of the previous fiscal year under the new method and the cumulative amount recognized as an expense through the end of the previous fiscal year for the portion of security deposits ultimately deemed unrecoverable, has been reflected in the opening balance of this fiscal year.

 

As a result, compared to the previous method, tangible fixed assets at the end of this fiscal year increased by 209,461 thousand yen, leasehold and guarantee deposits increased by 142,762 thousand yen, deferred tax assets by 40,291 thousand yen, and asset retirement obligations by 481,703 thousand yen, while selling, general and administrative expenses for this fiscal year increased by 19,012 thousand yen. Consequently, operating profit, ordinary profit, profit before income taxes, and net income each decreased by 19,012 thousand yen.

 

40

 

 

Net assets per share and net income per share for this fiscal year decreased by 81.62 yen and 81.71 yen, respectively.

 

Due to the cumulative effect of the change in accounting policy reflected in the book value of net assets at the beginning of this fiscal year, the opening balance of retained earnings in the statement of changes in shareholders’ equity after retroactive application decreased by 75,702 thousand yen.

 

(Notes on Accounting Estimates)

 

Among the items recorded in the financial statements for this fiscal year based on accounting estimates, those that may have a material impact on the financial statements for the next fiscal year are as follows.

 

(1)Recoverability of deferred tax assets

 

(i)Amounts recorded in the financial statements for this fiscal year

 

Deferred tax assets: 541,408 thousand yen

 

(ii)Information regarding material accounting estimates related to identified items

 

The Company recognizes deferred tax assets based on various forecasts and assumptions, including revenue projections regarding future taxable income. Deferred tax assets are recognized only to the extent that recovery is deemed probable after careful consideration of trends in past taxable income and projections of future taxable income. Therefore, if it is determined that the likelihood of recovery has decreased, the amount of deferred tax assets recognized may be reduced to the recoverable amount. This determination is based on whether one of the following criteria is met: the adequacy of taxable income before adjustments for temporary differences based on earnings power, the adequacy of taxable income before adjustments for temporary differences based on tax planning, or the adequacy of future taxable income arising from temporary differences.

 

In determining the sufficiency of taxable income before adjustments for temporary differences based on earning power, we estimate taxable income for the fiscal year in which the temporary differences are expected to be resolved and for the carryback and carryforward periods. Taxable income is estimated based on the figures used as the basis for the Company’s annual budget, with appropriate adjustments made for external factors such as the business environment and the status of plan progress based on past performance.

 

Although these estimates reflect the latest situation as of the end of this fiscal year, they may be affected by future fluctuations in uncertain economic conditions. If the timing and amount of actual taxable income differ from the estimates, this could have a material impact on the amounts of deferred tax assets and income tax adjustments in the financial statements for the following fiscal year.

 

41

 

 

(Notes to the Balance Sheet)

 

Monetary Receivables and Payables from Affiliated Companies

 

  Short-term monetary receivables   3,542,233   thousand yen
  Long-term monetary receivables   –   thousand yen
  Short-term monetary liabilities   1,550,498   thousand yen
  Long-term monetary liabilities   –   thousand yen

 

(Commitment Line Agreement)

 

The Company has entered into commitment line agreements with two correspondent banks to efficiently secure working capital. The outstanding balance of undrawn loans and other items as of the end of this fiscal year is as follows.

 

  Commitment Amount   5,000,000   thousand yen
  Outstanding Loan Balance   800,000   thousand yen
  Net amount   4,200,000   thousand yen

 

(Notes to the Income Statement)

 

  Transactions with Affiliates        
  Transaction Volume from Operating Transactions        
  Operating revenue   4,562,927   thousand yen
  Operating expenses   2,216,380   thousand yen

 

  Transaction volume from transactions other than operating transactions        
  Non-operating income   36,093   thousand yen
  Non-operating expenses   3,494   thousand yen

 

(Notes to the Statement of Changes in Shareholders’ Equity)

 

  Class and number of treasury stocks as of the end of this fiscal year        
  Common stock   7,936   shares

 

(Notes on Deferred Tax Accounting)

 

Breakdown of deferred tax assets and deferred tax liabilities by major cause

 

  Deferred tax assets        
  Depreciation expense   280,950   thousand yen
  Shares in Affiliated Companies   151,847   thousand yen
  Investment securities   143,114   thousand yen
  Asset retirement obligations   151,090   thousand yen
  Other   40,102   thousand yen
  Subtotal of deferred tax assets   767,106   thousand yen
  Valuation allowance   (159,826)  thousand yen
  Total deferred tax assets   607,279   thousand yen

 

42

 

 

  Deferred tax liabilities        
  Property, plant, and equipment   65,871   thousand yen
  Total deferred tax liabilities   65,871   thousand yen
  Net deferred tax assets   541,408   thousand yen

 

(Notes on Transactions with Related Parties)

 

1. Subsidiaries and Affiliates, etc.(Unit: thousand yen)

 

Type Company Name

Percentage Ownership

(Held by) Percentage

Percentage of

Relationship

Transactions

Details

 Transaction
Amount		 Account Ending Balance
Subsidiary

Micware

Automotive Co., Ltd.

Ownership

Direct 100%

Management Guidance and Business Administration

 

Agency Sales

 

Research and Development Outsourcing

 

Treasury and Financing

 

Dispatching Board Director

 

Secondment of Personnel

 

Guaranteed Liabilities

 Management Guidance and Business Administration (Note 1) 2,232,163 Accounts Receivable 413,047

Agency Sales (Note 2)

 

Research and Development Outsourcing (Note 3)

15,201

 

292,933

 Accounts Payable 28,575

Funds Received (net)

 

Interest Income (net) (Note 4)

339,844

 

8,082

 Short-term Debt 841,095
Secondment of Personnel (Note 5) 229,006 Accounts Receivable 164,862
Guaranteed Liabilities (Note 6) 800,000 – –
Micware Navigations Co., Ltd.

Ownership

Direct 100%

Management Guidance and Business Administration

 

Agency Sales

 

Research and Development Outsourcing

 

Treasury and Financing

 

Secondment of Personnel

 

Guaranteed Liabilities

 Management Guidance and Business Administration (Note 1) 1,417,553 Accounts Receivable 14,671

Agency Sales (Note 2)

 

Research and Development Outsourcing (Note 3)

1,725,503

 

345,196

 Accounts Payable 264,915

Cash Deposits (net)

 

Interest Income (net) (Note 4)

922,848

 

15,822

 Short-term Debt 978,775
Secondment of Personnel (Note 5) 163,772 Accounts Receivable 160,531
Guaranteed Liabilities (Note 6) 800,000 – –

 

43

 

 

Type Company Name

Percentage Ownership

(Held by) Percentage

Percentage of

Relationship

Transactions

Details

 Transaction
Amount		 Account Ending Balance
 

Micware Mobility

Co., Ltd.

Owned

Direct 100%

Management Guidance and Business Administration

 

Agency Sales

 

Research and Development Outsourcing

 

Treasury and Financing

 

Secondment of Personnel

 

Guaranteed Liabilities

 Management Guidance and Business Administration (Note 1) 853,328 Accounts Receivable 121,737
 

Agency Sales (Note 2)

 

Research and Development Outsourcing (Note 3)

988,346

 

203,214

 Accounts Payable 120,279
 

Cash Deposits (net)

 

Interest Income (net) (Note 4)

562,304

 

8,643

 Short-term Debt 1,155,744
  Secondment of Personnel (Note 5) 125,121 Accounts Receivable 118,185
  Guaranteed Liabilities (Note 6) 800,000 – –
 

Micware Operations

Co., Ltd.

Owned

Direct 100%

Management Guidance

 

Business Management Outsourcing

 

Guaranteed Liabilities

 Business Management Outsourcing for group companies (Note 1) 853,793 Accounts Payable 93,699
  Guaranteed Liabilities (Note 6) 800,000 – –
 

Micware Create

Co., Ltd.

Owned

Direct 100%

Management Guidance and Business Administration

 

Dispatching Board Director

 

Guaranteed Liabilities

 Guaranteed Liabilities (Note 6) 800,000 – –
 

Micware Europe

GmbH

Owned

Direct 100%

 Contract Work

Acceptance of Capital Increase (Note 7)

 345,460 – –

 

44

 

 

Transaction Terms and Policies for Determining Transaction Terms

 

  (Note 1) Management guidance fees and fees for business administration services are determined through mutual consultation based on the content and man-hours of the services provided, as well as the scale of the subsidiary’s business. Payment terms are month-end billing with payment due by the end of the following month; there are no terms that are particularly disadvantageous or advantageous compared to general business practices.

 

  (Note 2) The Company handles sales procedures (such as order processing, invoicing, and payment collection) on behalf of the subsidiary for a portion of the subsidiary’s sales. While the Company does not typically receive commissions for such agency sales, for certain transactions, it receives commissions within a range deemed reasonable, taking into account the man-hours required for administrative processing and the details of discussions with the subsidiary. Commissions are calculated as a fixed percentage based on transaction volume or administrative burden. Furthermore, these transaction terms are not unfairly advantageous or disadvantageous compared to terms for transactions with general third parties.

 

  (Note 3) For research and development outsourcing fees, we pay an amount calculated by adding appropriate administrative expenses to the cost based on personnel expenses, material costs, and outsourcing fees necessary for the outsourced work. Payment terms are month-end billing with payment due by the end of the following month; there are no terms that are particularly advantageous or disadvantageous compared to general business practices.

 

  (Note 4) With regard to treasury and financing, these are transactions conducted under the Group’s Cash Management System (CMS), and the transaction amounts represent the average balance during the period. Interest rates are determined reasonably, taking market interest rates into account.

 

  (Note 5) Expenses related to secondments are calculated based on personnel costs borne by the Company, such as salaries, bonuses, and social insurance premiums, and are recovered from subsidiaries as secondment fees. The transaction amount shown is the average balance during the period. The authority to issue commands and instructions during the secondment period is held by the subsidiary. Furthermore, the terms of these transactions are neither particularly advantageous nor disadvantageous compared to those of transactions with general third parties.

 

  (Note 6) The Company has received debt guarantees from five domestic subsidiaries for its bank loans. No guarantee fees are paid.

 

  (Note 7) The Company fully accepted a capital increase conducted by its subsidiary Micware Europe GmbH and paid in 20,000 euros.

 

(Notes on Revenue Recognition)

 

Information Forming the Basis for Understanding Revenue Arising from Contracts with Customers

 

The information necessary to understand revenue arising from contracts with customers is included in the “Notes on Revenue Recognition” section of the “Notes to the Consolidated Financial Statements” in the consolidated financial statements; therefore, these notes are omitted.

 

45

 

 

(Notes on Per Share Information)

 

  Net Assets per share 23,150.50 yen
     
  Net income per share 2,590.41 yen

 

(Note regarding material subsequent events)

 

(Stock Split)

 

As of March 31, 2026, the Company has implemented a stock split and made partial amendments to the Articles of Incorporation in connection with the stock split, as described below. This stock split was implemented to lower the price per investment unit of the Company’s shares, thereby enabling the smooth execution of future capital policies.

 

    (1) Method of Stock Split

 

    One share of the Company’s common stock held by shareholders listed in the final shareholder register as of the record date below has been split into 241 shares.

 

    (2) Number of Shares Increased by the Split

 

    Total number of shares issued prior to the stock split: Common stock: 240,890 shares

 

    Number of shares increased by the stock split: Common stock: 57,813,600 shares

 

    Total number of shares issued after the stock split: Common stock: 58,054,490 shares

 

    (3) Schedule

 

  Date of Board of Directors Resolution: February 16, 2026

 

  Record Date: March 30, 2026

 

  Effective Date: March 31, 2026

 

    (4) Partial Amendment to the Articles of Incorporation

 

  In conjunction with the above stock split, pursuant to the provisions of Article 184, Paragraph 2 of the Companies Act, the Company has amended the Articles of Incorporation to increase the Company’s total authorized share capital from 520,000 shares to 125,320,000 shares, effective as of March 31, 2026, the effective date of the stock split.

 

    (5) Impact on Per-Share Information

 

    The per-share information, assuming that the stock split had been conducted at the beginning of this fiscal year, is as follows.

 

    Net assets per share: 96.06 yen

 

    Net income per share: 10.75 yen

 

46

 

 

Audit Report

 

The Board of Corporate Auditors of Micware Co., Ltd. has prepared this Audit Report following deliberations regarding the execution of duties by the Directors during the 23rd fiscal year, from March 1, 2025, through February 28, 2026, and hereby reports as follows.

 

  1. Audit Methods and Content of the Corporate Auditors and the Board of Corporate Auditors

 

  (1) The Board of Corporate Auditors established audit policies and the allocation of duties. In addition to receiving reports from each auditor regarding the status and results of audits, the Board received reports from the directors and others regarding the execution of their duties and requested explanations as necessary.

 

  (2) Each Corporate Auditor, in accordance with the audit policies and allocation of duties established by the Board of Corporate Auditors, communicated with the Directors, the Internal Auditing Department, and other employees, endeavored to gather information and establish an appropriate audit environment, and conducted audits using the following methods;

 

We attended Board of Directors meetings and other important meetings, received reports from directors and employees regarding the execution of their duties, requested explanations as necessary, reviewed important approval documents, and investigated the status of operations and assets at the head office. Furthermore, regarding subsidiaries, we communicated and exchanged information with the directors of the subsidiaries and received business reports from them as necessary.

 

Based on the above methods, we reviewed the Business Report and its accompanying supporting documents for the fiscal year in subject.

 

Furthermore, we examined the general ledgers and related materials, and reviewed the financial statements (balance sheet, income statement, statement of changes in shareholders’ equity, and notes to the financial statements) and their accompanying schedules for the fiscal year in subject.

 

47

 

 

2. Results of the Audit

 

  (1) Audit Results of the Business Report, etc.

 

  (i) We acknowledge that the Business Report and its accompanying schedules fairly present the Company’s financial position in accordance with laws and regulations and the Articles of Incorporation.

 

  (ii) We have not identified evidence of misconduct by the directors in the performance of their duties or any material facts constituting a violation of laws, regulations, or the Articles of Incorporation.

 

  (2) Audit Results of the Financial Statements and their Supporting Schedules

 

We recognize that the financial statements and their supporting schedules fairly present the Company’s financial position and results of operations in all material respects.

 

April 17, 2026

 

Micware Co., Ltd. Board of Corporate Auditors

 

Full-time Corporate Auditor: Umei Fujita ㊞

 

Outside Corporate Auditor: Wakako Isaka ㊞

 

Outside Corporate Auditor: Mitsunori Yabe ㊞

 

48

Source: View Original Filing on SEC EDGAR

FAQ

How did Micware (MWC) perform in its 23rd fiscal year?

Micware reported consolidated revenue of 22,233,692 thousand yen, up 5.0% year-on-year. Operating profit reached 2,231,187 thousand yen and net income attributable to owners of the parent was 1,534,354 thousand yen, up 31.4%, reflecting improved profitability despite higher development investment.

What corporate actions did Micware (MWC) take regarding its shares?

Micware implemented a 241-for-1 stock split effective March 31, 2026. Total authorized shares increased to 125,320,000, and issued shares rose to 58,054,490. The aim is to lower the price per investment unit, supporting smoother execution of future capital policies and potential equity financing.

Is Micware (MWC) planning an overseas stock market listing?

Micware is preparing for a listing on the U.S. Nasdaq Global Market via American Depositary Shares. On March 6, 2025 (U.S. time), it publicly filed a Form F-1 with the SEC. The company views this as a key step to enhance global recognition, attract talent, and create new growth opportunities.

What items are Micware (MWC) shareholders voting on by written resolution?

Shareholders are being asked to approve the financial statements for the 23rd fiscal year and to elect one new director, Kazunori Mori. The company will treat the resolutions as adopted as of May 29, 2026, if all shareholders entitled to vote submit written consents by the required deadline.

How leveraged is Micware (MWC) and what borrowing facilities does it have?

Micware’s consolidated long-term debt totaled 4,587,127 thousand yen, with main lenders including Sumitomo Mitsui Banking Corporation and MUFG Bank. It also maintains commitment line agreements totaling 5,000,000 thousand yen, of which 800,000 thousand yen was drawn, leaving 4,200,000 thousand yen undrawn at fiscal year-end.

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