About Us

From the President
Junya Tsutsumi, Representative Director and President, Acrodea, Inc.

July 2017 marked 13 years since the founding of the company in 2004. In its early days of establishment, Acrodea was an engineering company supporting the software (middleware) built into mobile phones released in Japan. As a key contributor to industry at that time, we were proud that our product market share commanded an installation base of nearly 100% in so-called feature phones at the time.

Since 2008, however, the penetration of smartphones, such as the iPhone introduced from the US and various Android handsets, has resulted in a rapid contraction to the so-called feature phone business. In fact, many companies active in the mobile industry at the time fell by the wayside, withdrawing from such operations, de-listing from the stock exchange, shuffling chief executives, or otherwise experiencing vast changes to their business environments.

No longer able to generate revenues under its existing business operations, Acrodea subsequently went through a second inception phase by shifting newly to a service-driven company primarily targeting smartphones. Those succeeding eight years in which we attempted to launch smartphone services during the second inception phase overshadowed the five years after founding the company with its feature phone businesses—indeed, a long period of time.

Among our services launched during this second inception phase, the mobile game title featuring Japan’s national soccer team and the management system for demo handsets at au and docomo retail stores were examples of long-term steady revenues for Acrodea. Some other hit products on occasion generated large revenues. Unfortunately, we never attained the profitable levels experienced during our feature phone era. In fact, I feel highly responsible for this extended period of continuing losses, and am most sorry to have left our shareholders inconvenienced.

Most recently, Acrodea advanced a series of reforms since the beginning of 2017. Utilizing the year ended August 2017, we positioned the ensuing year ending in August 2018 as the start of our third inception. First, since repeated market financing brings about dilution and a diminution of large, stable shareholders that can affect the core of business management. We therefore considered how to receive a large shareholder that could provide fresh, long-term support. Thankfully, a new partner who could be a stable, large shareholder was found, and has allowed the current management organization to be largely retained. The resulting conditions, I feel, provide a environment for steady business management.

Next, a large-scale reorganization of the business operations took place. New businesses yet to bear any fruit were canceled to the extent of not inconveniencing any partners, and related investments were otherwise suspended. Personnel involved in these businesses were also rationalized to lighten the burden of the company. Selling and administrative expenses were downsized to fit within the scale of ongoing gross profits. Thus, company offices were relocated, consulting agreements were terminated, and other selling and administrative expenses were reviewed extensively.

Although the fiscal year sustained losses up until the second quarter, we believe that most of the dead wood has been cleared out. Acrodea will henceforth disclose its financial accounts under EBITDA, a standard for determining enterprise value that is easy for shareholders to understand. Under EBITDA, Acrodea recorded black ink for the third and fourth quarters, a clear indication that the company has truly turned the corner.

During the year, two attractive products have been completed through an emphasis on IoT-related research and development. The first product is the intercom IoT system that can allow responding to the intercom on the front door of a residence without being actually at home, by linking the intercom to the smartphone. Product rollouts are proceeding mainly in connection with new, large-scale condominium projects. Since construction periods are long, penetration of the product may appear to be slow. Nonetheless, occupants in buildings that have adopted the system have created an extremely favorable reputation for the offering, particularly among women residents who have pronounced the most praise. In the future, we expect to announce products that support single dwelling homes and small complexes as well. Acrodea wants to develop this product methodically so that society will eventually consider the smartphone to be second nature in responding to a residential intercom.

The second product relates to a sports IoT device. “Bringing forth the best ideas for IT service solutions proximate to the user” relates to our corporate motto and origin of the company name. We consequently endeavored to develop a service concept that can supply an innovative user experience through IoT. The first result was successful IoT product development of a baseball (official Japanese hard ball) embedded with sensors. Several parties have already evaluated the product, which has generated much anticipation. We believe the product can be offered broadly to the baseball industry in Japan and ultimately has potential for the U.S., which is a large market.. With patenting successfully completed, Acrodea intends to ramp up full sales activities. A series of new products will be developed in this category of sport IoT, and your expectations are welcome in advance of future announcements.

Acrodea also consolidated a new business within its group for operations that were already profitable, as a measure for definite black ink under EBITDA. Unfortunately, some M&A projects from the prior year met with significant failure. Reflecting heavily on this, we have focused solely on deals that can produce results with reliable partners. Company employees have been involved deeply to rigorously negotiate the contracts. A recent project led to acquisition of a business held by a large shareholder. The real estate subletting business of Shibuya Nikuyokocho Company became a wholly owned subsidiary to produce an organization for definite, steady cash flow, which the business is, in fact, already generating steadily.

Most recently, new business expansion has led to acquisition of a systems company for bingo gaming (gambling) held in Guam (U.S.). In Japan, bingo suggests a game for winning prizes at year-end parties, but more sophisticated playing rules in Guam are authorized for gambling with bingo, and the business is already earning large income. Bingo is available at casinos through the U.S. as well. Acquiring a highly profitable business as a subsidiary is highly significant for improving EBITDA, but the injection of Acrodea’s smartphone know-how provides expectations for significant revenue growth. Smartphone development will readily support growth to areas beyond Guam. Moreover, we foresee domestic casino development to emerge, based on passage of IR (integrated resort) legislation within Japan. Acrodea looks forward to preparing for and proposing bingo systems as a service to future casinos in Japan, since the systems cultivated in Guam make the game easy for any player to follow.

As described above, the various measures forged in the past months lead to expectations for steady black ink under EBITA for the upcoming year and beyond. Since goodwill and amortization expenses will accrue to our profit and loss, black ink reported on the income statement may experience some phased delay. Nonetheless, our most important goal and target for management will be to grow EBITDA, and the secondary target will be to eliminate doubts to continuity as a going concern, which has been outstanding for a long time. I resolve strongly to recover the business as a stable listed company under the most genuine definition.

The company has not released a mid-term plan previously, but shall do so on this occasion of launching its third inception phase. Everyone in the company is prepared to engage as a team, as we advise our shareholders about this plan.

The American band Boston was a favorite of mine many years ago, and people who are not too young may remember the group. Their third album was called Third Stage. Eight years after release of a second album, Third Stage was released despite myriad problems with the record label and management. I sense a similar situation at Acrodea. We got a big break at our founding, struggled through eight years during our second inception phase, and have an opportunity to recover at this third inception phase, just like Boston’s Third Stage.

Certainly, the entire company intends to take strides forward through activities faithful to the company’s vision of enriching everyone’s lives through IT. Acrodea shall take sincere steps to keep its commitments to shareholders, employees, families of its employees, customers and suppliers, and all other stakeholders.

Your watch and continued support over Acrodea, reborn through a large number of reforms, is most appreciated.