IIJ Announces Full Year and Fourth Quarter Financial Results for the Fiscal Year Ended March 31, 2013

IIJ Announces Full Year and Fourth Quarter Financial Results for the Fiscal
Year Ended March 31, 2013

TOKYO, May 15, 2013 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. ("IIJ")
(Nasdaq:IIJI) (TSE:3774) today announced its full year ("FY2012") and 4^th
quarter ("4Q12") consolidated financial results for the fiscal year ended
March 31, 2013 (from April 1, 2012 to March 31, 2013). ^1


Highlights of Financial Results for FY2012
                                                 
Revenues                     JPY106,248 million    ($1,128.4 million, up
                                                   9.2% YoY)
Operating Income             JPY7,753 million     ($82.3 million, up
                                                   22.0% YoY)
Net Income attributable to   JPY5,301 million     ($56.3 million, up
IIJ                                                45.6% YoY)
                                                 
▪ Revenues increased by 9.2% YoY. Revenues for network services, systems
integration and ATM operation business each continued to grow YoY.
▪ Operating income increased by 22.0% YoY. Gross margin of network
services, systems integration and ATM operation business each increased
while SG&A slightly increased.
                                                 
Financial Target for FY2013
                                                 
Revenues                     JPY117,000 million   ($1,242.6 million, up
                                                   10.1% YoY)
Operating Income             JPY9,400 million     ($99.8 million, up
                                                   21.2% YoY)
Net Income attributable to   JPY6,000 million     ($63.7 million, up
IIJ                                                13.2% YoY)
Annual Cash Dividend         JPY22.00 per share   (up 17.3% YoY)
                                                                           

Overview of FY2012 Financial Results and Business Outlook

"We finished pretty well this fiscal year as each of our business progressed
as planned. Our revenues exceeded JPY100 billion for the first time since the
inception of the company. The business developments we accomplished should
position IIJ for further growth in the coming years," said Koichi Suzuki, the
founder and CEO of IIJ.

"We continue to enjoy greater network efficiency by having multiple revenue
sources on our large network infrastructure. We remain as a top ISP choice for
large network operators who require broader bandwidth and stable connectivity.
As for systems integration, we're seeing more large scale projects, supported
by the overall Japanese economy recovery. ATM operation business, a stock-type
revenue, turned positive and has become a revenue and income driver. We're
confident our strategic businesses continue to contribute to our overall
revenue and earnings growth further.

"We've been working vigorously to expand cloud and overseas businesses this
fiscal year. Our continued efforts to introduce and promote attractive cloud
services that would encourage more cloud adoption by enterprises have led this
fiscal year's cloud revenue to approximately JPY6.2 billion. Along with
continued revenue growth, we decided to double the size of our container type
datacenter in Matsue, the western suburbs of Japan. We're well positioned in
the Japanese cloud market as we've been engaging in the operation of systems
and network ever since the establishment which should differentiate us from
competitors. We've also made good progress for overseas business by expanding
service facilities and accumulating orders of large server construction and
operation projects. Currently, these businesses would be small portion of our
total revenue, but we expect them to be our business scale-up drivers.

"As the outsourcing of IT systems by business enterprises becomes a norm in
the Japanese society gradually, we see a huge growth opportunity ahead of us.
We target the increase of revenue and operating income by 10.1% and 21.2% YoY
for FY2013.

"We're excited to announce we invited Mr. Katsu as our new President, Chief
Operating Officer, and a representative director, which appointment should
become effective at the next shareholders meeting this coming June. I will
remain as CEO and co-work with him. This new management structure should
further enhance our competitive advantages and take IIJ to the next level of
growth. We must stay aggressive in taking effective means to scale up as a
growing company in a growing market," concluded Suzuki.

^1Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with U.S. GAAP. All financial figures
are unaudited and consolidated. The translation of Japanese yen into U.S.
dollars is solely for the convenience of readers outside of Japan. The rate
used for the translation was JPY94.16 per US$1.00, which was the noon buying
rate on March 29, 2013.

FY2012 Financial Results Summary

Operating Results Summary
                                FY2011       FY2012       YoY %
                                                           Change
                                JPY millions JPY millions 
Total Revenues                   97,315       106,248      9.2
Network Services                 63,410       65,232       2.9
Systems Integration (SI)         31,469       37,205       18.2
Equipment Sales                  1,112        1,491        34.1
ATM Operation Business           1,324        2,320        75.2
Total Costs                      77,326       84,394       9.1
Network Services                 49,985       50,692       1.4
Systems Integration (SI)         24,979       30,425       21.8
Equipment Sales                  980          1,318        34.5
ATM Operation Business           1,382        1,959        41.8
SG&A Expenses and R&D            13,636       14,101       3.4
Operating Income                 6,353        7,753        22.0
Income before Income Tax Expense 5,976        7,757        29.8
Net income attributable to IIJ   3,641        5,301        45.6


Segment Results Summary
                                FY2011       FY2012
                                JPY millions JPY millions
Total Revenues                   97,315       106,248
Network services and SI business 96,497       104,487
ATM operation business           1,324        2,320
Elimination                      506          559
Operating Income (Loss)          6,353        7,753
Network service and SI business  6,631        7,629
ATM operation business           (194)        239
Elimination                      84           115

We have omitted segment analysis because most of our revenues are dominated by
Network services and Systems Integration (SI) business.

FY2012 Results of Operation

Revenues

Total revenues were JPY106,248 million, up 9.2% YoY.

Network Services revenue was JPY65,232 million, up 2.9% YoY.

Revenues for Internet connectivity services for corporate use were JPY16,027
million, up 9.0% YoY. The increase was mainly due to the increasing demands
for broader bandwidth by network operators.

Revenues for Internet connectivity services for home use were JPY5,466
million, down 4.4% YoY. While our LTE mobile data communication service, which
was introduced in February 2012, has been accumulating orders continuously,
the cancellations of old type connectivity services continued.

WAN services revenues were JPY25,168 million, down 1.9% YoY. There were some
downward effects in revenues due to renewals and/or cancellations of contracts
although we accumulated new orders during FY2012.

Outsourcing services revenues were JPY18,571 million, up 7.2% YoY. The revenue
growth was mainly led by the continuous demands on "IIJ GIO Hosting Package
Services" and datacenter-related services.

Network Services Revenues Breakdown
                                             FY2011       FY2012       YoY %
                                                                        Change
                                             JPY millions JPY millions 
Internet Connectivity Service (Corporate Use) 14,707       16,027       9.0
IP Service^2                                  9,299        10,217       9.9
IIJ FiberAccess/F and IIJ DSL/F               3,151        3,170        0.6
IIJ Mobile Service^3                          2,013        2,401        19.3
Others                                        244          239          (1.9)
Internet Connectivity Service (Home Use)      5,717        5,466        (4.4)
Under IIJ Brand                               911          1,350        48.2
hi-ho                                         4,222        3,489        (17.4)
OEM                                           584          627          7.3
WAN Services                                  25,667       25,168       (1.9)
Outsourcing Services                          17,319       18,571       7.2
Total Network Services                        63,410       65,232       2.9


Number of Contracts for Connectivity Services
                                        as of          as of          YoY
                                         March 31, 2012 March 31, 2013 Change
Internet Connectivity Services           93,807         114,614        20,807
(Corporate Use)
IP Service (-99Mbps)                    923            905            (18)
IP Service (100Mbps-999Mbps)            344            401            57
IP Service (1Gbps-)                     132            207            75
IIJ Data Center Connectivity Service    323            306            (17)
IIJ FiberAccess/F and IIJ DSL/F         44,510         48,940         4,430
IIJ Mobile Service^4                    46,329         62,517         16,188
Others                                   1,246          1,338          92
Internet Connectivity Services (Home     397,191        489,223        92,032
Use)
Under IIJ Brand                          42,721         102,256        59,535
hi-ho                                    153,901        149,000        (4,901)
OEM                                     200,569        237,967        37,398
Total Contracted Bandwidth               857.7 Gbps     1,218.7Gbps    361.0

^2IP Service revenues include revenues from the Data Center Connectivity
Service.

^3 Revenue from mobile data communication service for home use is included in
Internet Connectivity service (home use).

^4 Contracts of IIJ Mobile Service are of mobile data communication service
for corporate use.

SI revenues were JPY37,205 million, up 18.2% YoY.

Systems construction revenue, a one-time revenue, was JPY15,825 million, up
31.9% YoY. The increase was led mainly by the increase in both number and
scale of systems construction projects as well as the accumulation of overseas
construction projects. Systems operation and maintenance revenue, a recurring
revenue, was JPY21,380 million, up 9.8% YoY. The increase was mainly due to
the continuous demands on "IIJ GIO Component Services."

The orders received for SI and equipment sales for FY2012 totaled JPY41,923
million, up 22.3% YoY. In the breakdown, the orders received for systems
construction and equipment sales was JPY17,180 million, up 30.6% YoY, and the
orders received for systems operation and maintenance was JPY24,743 million,
up 17.1% YoY.

The order backlog for SI and equipment sales as of March 31, 2013 amounted to
JPY20,081 million, up 19.1% YoY. In the breakdown, the order backlog for
systems construction and equipment sales was JPY3,703 million, down 3.5% YoY,
and the order backlog for systems operation and maintenance was JPY16,377
million, up 25.8% YoY.

Equipment sales revenues were JPY1,491 million, up 34.1% YoY.

ATM Operation Business revenues were JPY2,320 million, up 75.2% YoY. The
increase was in accordance with the increase in the numbers of newly placed
ATMs. As of May 15, 2013, 625 ATMs are placed.

Cost and expense

Total cost of revenues was JPY84,394 million, up 9.1% YoY.

Cost of Network Services revenue was JPY50,692 million, up 1.4% YoY, stayed
almost flat. Gross margin was JPY14,540 million, up 8.3% YoY and gross margin
ratio was 22.3%.

Cost of SI revenues was JPY30,425 million, up 21.8% YoY. The increase was
mainly due to the increase in purchasing costs along with the increase in
systems construction revenues as well as the increase in outsourcing-related
and personnel-related costs. Gross margin was JPY6,780 million, up 4.5% YoY
and gross margin ratio was 18.2%.

Cost of Equipment Sales revenues was JPY1,318 million, up 34.5% YoY. Gross
margin was JPY173 million and gross margin ratio was 11.6%.

Cost of ATM Operation Business revenue swas JPY1,959 million, up 41.8% YoY.
The increase was in accordance with the number of newly placed ATMs. Gross
margin was JPY360 million compared to gross loss of JPY58 million for FY2011.
Gross margin ratio was
15.5%.

SG&A and R&D Expenses

SG&A and R&D expenses in total were JPY14,101 million, up 3.4% YoY (JPY13,636
million in FY2011). The ratio of SG&A and R&D expenses to the total revenue
was 13.3%, down 0.7 points compared to the ratio of FY2011.

Sales and marketing expenses were JPY8,059 million, up 1.4% YoY. The increase
was mainly due to the increase in advertizing expenses. Amortization expenses
of customer relationship related to IIJ Global Solutions Inc. was JPY367
million (JPY425 million in FY2011).

General and administrative expenses were JPY5,632 million, up 6.3% YoY. The
increase was mainly due to the increase in personnel-related expenses
(JPY5,300 million in FY2011).

Research and development expenses were JPY410 million, up 5.5% YoY (JPY389
million in FY2011).

Operating income

Operating income was JPY7,753 million, up 22.0% YoY mainly because gross
margin of each revenue line increased.

Other income (expenses)

Other income (expenses), including interest expenses, dividend income and
foreign currency gains, was an income of JPY4 million (an expense of JPY377
million for FY2011).

Income before income tax expenses

Income before income tax expenses was JPY7,757 million, up 29.8% YoY.
(JPY5,976 million for FY2011)

Net Income

Income tax expense was JPY2,608 million (JPY2,525 million for FY2011), which
consists of corporate, inhabitant and other income taxes of JPY2,551 million,
enterprise taxes and other taxes of JPY584 million and deferred tax benefit of
JPY527 million.

Equity in net income of equity method investees was JPY168 million (JPY124
million for FY2011) mainly due to net income of Internet Revolution, Inc. and
Internet Multifeed Co.

As a result of the above, net income was JPY5,317 million, up 48.8% YoY
(JPY3,575 million for FY2011).

Net income attributable to IIJ

Net income attributable to non-controlling interests was JPY16 million mainly
related to net income of Trust Networks Inc (net loss of JPY66 million for
FY2011).

Net income attributable to IIJ was JPY5,301 million, up 45.6% YoY (JPY3,641
million for FY2011).

FY2012 Financial Condition

Balance Sheets

As of March 31, 2013, the balance of total assets was JPY82,111 million,
increased by JPY8,618 million from the balance as of March 31, 2012 (JPY73,493
million as of March 31, 2012).

As for current assets as of March 31, 2013, as compared to the respective
balances as of March 31, 2012, accounts receivable increased by JPY3,043
million and cash and cash equivalents decreased by JPY1,278 million mainly due
to the payment of income taxes and the repayment of borrowings. As for
noncurrent assets, as compared to the respective balance as of March 31, 2012,
property and equipment increased by JPY3,290 million, resulting mainly from
investments in network and servers. As for current liabilities, as compared to
the respective balance as of March 31, 2012, accounts payable increased by
JPY2,169 million and income taxes payable decreased by JPY540 million.

As for the balances of capital lease obligations, as compared to the
respective balances as of March 31, 2012, capital lease obligations-current
portion increased by JPY508 million to JPY3,505 million and capital lease
obligations-noncurrent increased by JPY629 million to JPY5,370 million due to
investments in network and servers. The balance of long-term borrowings,
including current portion, as of March 31, 2013 was decreased to JPY1,990
million, resulting from the repayment of JPY1,010 million.

As of March 31, 2013, the balance of other investments was JPY3,771 million,
increased by JPY833 million from the respective balance as of March 31, 2012.
The breakdown of other investments were JPY2,123 million in nonmarketable
equity securities, JPY1,310 million in available-for-sale securities and
JPY338 million in other.

As of March 31, 2013, the balance of non-amortized intangible assets
(excluding telephone rights) such as goodwill was JPY6,077 million, and the
breakdown of non-amortized intangible assets were JPY5,970 million in goodwill
and JPY107 million in trademark. The balance of amortized intangible assets,
which was customer relationships, was JPY4,665 million, decreased by JPY558
million as compared to the respective balance as of March 31, 2012.

Total IIJ shareholders' equity as of March 31, 2013 was JPY37,607 million,
increased by JPY4,919 million from the respective balance as of March 31,
2012. IIJ shareholders' equity ratio (total IIJ shareholders' equity/total
assets) as of March 31, 2013 was 45.8%.

Cash Flows

Cash and cash equivalents as of March 31, 2013 were JPY12,259 million compared
to JPY13,537 million as of March 31, 2012.

Net cash provided by operating activities for FY2012 was JPY9,753 million
compared to net cash provided by operating activities of JPY11,659 million for
FY2011. While operating income increased compared to FY2011, there was an
increase in accounts receivable as well as in payments for income taxes.

Net cash used in investing activities for FY2012 was JPY5,946 million compared
to net cash used in investing activities of JPY5,954 million for FY2011 mainly
due to payments for purchase of property and equipment of JPY5,589 million
(JPY6,167 million for FY2011).

Net cash used in financing activities for FY2012 was JPY4,996 million compared
to net cash used in financing activities of JPY5,464 million for FY2011, due
to principal payments under capital leases of JPY3,679 million (JPY3,426
million for FY2011), FY2011 year-end dividends and FY2012 interim dividends
payments of JPY709 million in total (JPY608 million for FY2011) and net
repayment of borrowings of JPY610 million (net repayment of JPY1,430 million
for FY2011).

FY2013 Financial Targets

Our financial targets for FY2013 are as follows:

                                                       (JPY in millions)
                  Revenues Operating Income before Income Net Income
                            Income    Tax Expense          attributable to IIJ
1H FY2013 Target   54,500   3,400     3,200                2,000
Full FY2013 Target 117,000  9,400     9,000                6,000

We target revenue of JPY117.0 billion, up 10.1% YoY. We expect network
services revenues to increase, our cloud-related revenues to be over JPY10
billion, systems construction revenue, a one-time revenue, to increase,
overseas revenues to be accumulated and ATM operation business revenues to
continuously increase.

For operating income, we target JPY9.4 billion, up 21.2% YoY. We expect gross
margin and gross margin ratio of network services, systems integration and ATM
operation business to increase along with each revenue growth. We also
anticipate profit contribution from cloud as it turns positive. SG&A should
increase but would not go up as much as the gross margin. 

For income before income tax expense (benefit), we target JPY9.0 billion, up
16.0% YoY, considering interest expenses and others.

For net income attributable to IIJ, we target JPY6.0 billion, up 13.2% YoY,
expecting income taxes benefit of approximately JPY0.7 billion related to a
subsidiary, Trust Networks Inc.

FY2013 Dividend Forecast

Our FY2013 dividend forecast is as follows:

                                                         
                     Interim            Year-end           Full Year
FY2013 Dividend       JPY11.00           JPY11.00           JPY22.00
(forecast)            (forecast)         (forecast)         (forecast)
FY2012 Dividend       JPY8.75* (paid)    JPY10.00           JPY18.75
(scheduled)                              (scheduled)        (scheduled)

While we give full consideration in securing our funds to strengthen our
financial position and to prepare for our middle to long term operation and
business development, we seek to achieve stable and continuous dividends to
our shareholders.

Based on our Company's Article of Incorporation, we plan to pay our dividend
twice a year, at interim and at fiscal year-end. The dividends for interim and
fiscal year-end are decided at the Company's board of directors and at the
general meeting of shareholders, respectively.

As for FY2012 year-end dividend, we have revised it from JPY8.75 to JPY10.00
per share of our common stock as announced on February 8, 2013. We have paid
interim dividend of JPY8.75 per share of our common stock for FY2012 interim
period. FY2012 total dividend per share of our common stock is scheduled to be
JPY18.75.

For FY2013, we target to pay a total dividend of JPY22.00 per share of common
stock (JPY11.00 for the interim period and JPY11.00 for the fiscal year-end).

*IIJ conducted a 1:200 stock split on common stock with an effective date of
October 1, 2012. The above figures are retroactively adjusted to the stock
split.

Reconciliation of Non-GAAP Financial Measures

The following table summarizes the reconciliation of adjusted EBITDA to net
income attributable to IIJ in our consolidated statements of income that are
prepared in accordance with U.S. GAAP.

Adjusted EBITDA
                                                    FY2011       FY2012
                                                    JPY millions JPY millions
Adjusted EBITDA                                      13,534       15,309
Depreciation and Amortization^5                      (7,144)      (7,508)
Impairment loss on other intangible assets           (37)         (48)
Operating Income                                     6,353        7,753
Other Income (Expense)                               (377)        4
Income Tax Expense                                   2,525        2,608
Equity in Net Income of EquityMethod Investees      124          168
Net income                                           3,575        5,317
Net loss (income) attributable tononcontrolling     66           (16)
interests
Net Income attributable to IIJ                       3,641        5,301


CAPEX
                                      FY2011       FY2012
                                      JPY millions JPY millions
CAPEX, including capital leases        10,917       10,405
Acquisition of Assets by Entering into 4,750        4,816
Capital Leases
Purchase of Property and Equipment     6,167        5,589

^5Depreciation and amortization includes impairment loss on other intangible
assets. (See IIJ's consolidated financial statements for details).

Presentation

Presentation materials will be posted on our web site
(http://www.iij.ad.jp/en/ir/) on May 15, 2013.

About Internet Initiative Japan Inc.

Founded in 1992, IIJ is one of Japan's leading Internet-access and
comprehensive network solutions providers. IIJ and its group of companies
provide total network solutions that mainly cater to high-end corporate
customers. IIJ's services include high-quality systems integration and
security services, Internet access, hosting/housing, and content design.
Moreover, IIJ has built one of the largest Internet backbone networks in
Japan, and between Japan and the United States. IIJ listed on the U.S. NASDAQ
Stock Market in 1999 and on the First Section of the Tokyo Stock Exchange in
2006.

Statements made in this press release regarding IIJ's or management's
intentions, beliefs, expectations, or predictions for the future are
forward-looking statements that are based on IIJ's and managements' current
expectations, assumptions, estimates and projections about its business and
the industry. These forward-looking statements, such as statements regarding
FY2012 revenues and operating and net profitability, are subject to various
risks, uncertainties and other factors that could cause IIJ's actual results
to differ materially from those contained in any forward-looking statement.
These risks, uncertainties and other factors include: IIJ's ability to
maintain and increase revenues from higher-margin services such as systems
integration and outsourcing services; the possibility that revenues from
connectivity services may decline substantially as a result of competition and
other factors; the ability to compete in a rapidly evolving and competitive
marketplace; the impact on IIJ's profits of fluctuations in costs such as
backbone costs and subcontractor costs; the impact on IIJ's profits of
fluctuations in the price of available-for-sale securities; the impact of
technological changes in its industry; IIJ's ability to raise additional
capital to cover its indebtedness; the possibility that NTT, IIJ's largest
shareholder, may decide to exercise substantial influence over IIJ; and other
risks referred to from time to time in IIJ's filings on Form 20-F of its
annual report and other filings with the United States Securities and Exchange
Commission.

                                                              
                                                              
Internet Initiative Japan Inc.
Consolidated Balance Sheets (Unaudited)
(As of March 31, 2012 and March 31, 2013)
                                                              
                                                  
                                   As of March 31, As of March 31, 2013
                                    2012
                                   Thousands of    Thousands of Thousands of
                                    JPY             U.S. Dollars JPY
ASSETS                                                         
CURRENT ASSETS:                                                
Cash and cash equivalents           13,536,824      130,192      12,258,872
Accounts receivable, net of
allowance for doubtfulaccounts of
JPY 107,919 thousand and            15,722,135      199,285      18,764,703
93,934thousand at March 31, 2012
and March 31, 2013,respectively
Inventories                         752,075         13,824       1,301,684
Prepaid expenses                    1,848,344       26,467       2,492,164
Deferred tax assets -current        939,370         11,118       1,046,828
Other current assets, net of
allowance fordoubtful accounts of
JPY 10,732 thousand atMarch 31,    891,560         16,745       1,576,718
2012 and March 31, 2013,
respectively
Total current assets                33,690,308      397,631      37,440,969
INVESTMENTS IN EQUITY METHOD        1,406,634       17,860       1,681,723
INVESTEES
OTHER INVESTMENTS                   2,938,146       40,052       3,771,262
PROPERTY AND EQUIPMENT, net of
accumulateddepreciation and
amortization of JPY
25,693,163thousand and JPY         19,735,546      244,539      23,025,755
29,516,394 thousand at March31,
2012 and March 31, 2013,
respectively
GOODWILL                            5,788,333       63,402       5,969,951
OTHER INTANGIBLE ASSETS -Net        5,396,469       50,886       4,791,431
GUARANTEE DEPOSITS                  1,899,815       21,787       2,051,449
DEFERRED TAX ASSETS -Noncurrent     24,760          1,739        163,773
NET INVESTMENT IN SALES-TYPE        935,446         9,538        898,040
LEASES-Noncurrent
Prepaid expenses -Noncurrent        1,536,932       23,376       2,201,108
OTHER ASSETS, net of allowance for
doubtfulaccounts of JPY86,388
thousand and JPY71,727thousand at  140,857         1,230        115,805
March 31, 2012 and March 31,
2013,respectively.
TOTAL                               73,493,246      872,040      82,111,266
                                                  
                                   As of March 31, As of March 31, 2013
                                    2012
                                   Thousands of    Thousands of Thousands of
                                    JPY             U.S. Dollars JPY
LIABILITIES AND SHAREHOLDERS'                                  
EQUITY
CURRENT LIABILITIES:                                           
Short-term borrowings               9,000,000       99,830       9,400,000
Long-term borrowings -current       1,010,000       10,726       1,010,000
portion
Foreign exchange gains (losses)     2,997,292       37,229       3,505,471
Accounts payable —trade             9,093,657       116,537      10,973,120
Accounts payable —other             659,266         10,081       949,264
Income taxes payable                2,210,089       17,734       1,669,849
Accrued expenses                    2,277,307       24,070       2,266,427
Deferred income -current            1,495,468       19,181       1,806,074
Other current liabilities           717,342         8,538        803,902
Total current liabilities           29,460,421      343,926      32,384,107
LONG-TERM BORROWINGS                1,990,000       10,408       980,000
CAPITAL LEASE OBLIGATIONS           4,741,241       57,035       5,370,365
-Noncurrent
ACCRUED RETIREMENT AND PENSION      1,805,683       22,431       2,112,085
COSTS-Noncurrent
DEFERRED TAX LIABILITIRES           652,280         4,377        412,132
-Noncurrent
DEFERRED INCOME -Noncurrent         1,547,159       27,211       2,562,208
OTHER NONCURRENT LIABILITIES        600,215         6,969        656,191
Total Liabilities                   40,796,999      472,357      44,477,088
COMMITMENTS AND CONTINGENCIES                                  
                                                              
SHAREHOLDERS' EQUITY:                                          
Common-stock—authorized, 75,520,000
shares;issued and outstanding,     16,833,847      178,779      16,833,847
41,295,600 shares atMarch 31, 2012
and March 31, 2013, respectively
Additional paid-in capital          27,260,318      289,935      27,300,325
Accumulated deficit                 (10,990,348)    (67,959)     (6,399,088)
Accumulated other comprehensive     (23,533)        2,801        263,770
loss
Treasury stock—758,800 shares held
by thecompany at March 31, 2012    (392,079)       (4,164)      (392,079)
and March 31,2013, respectively
Total Internet Initiative Japan     32,688,205      399,392      37,606,775
Inc. shareholders' equity
NONCONTROLLING INTERESTS            8,042           291          27,403
Total equity                        32,696,247      399,683      37,634,178
TOTAL                               73,493,246      872,040      82,111,266
                                                              
(Note1) The U.S. dollar amounts represent translations of yen amounts at the
rate of JPY 94.16 which was the noon buying rate in NewYork City for cable
transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New Yorkprevailing as of March 29, 2013.

                                                              
                                                              
Internet Initiative Japan Inc.
Consolidated Statements of Income (Unaudited)
(For the fiscal year ended March 31, 2012 and March 31, 2013)
                                                              
                                                 
                                   Fiscal Year     Fiscal Year Ended
                                  Ended           March 31, 2013
                                   March 31, 2012
                                  Thousands of    Thousands of  Thousands of
                                   JPY             U.S. Dollars  JPY
REVENUES:                                                      
Network services:                                              
Internet connectivity services     14,706,511      170,212       16,027,134
(corporate use)
Internet connectivity services     5,717,417       58,052        5,466,198
(home use)
WAN services                       25,666,524      267,294       25,168,425
Outsourcing services               17,318,954      197,224       18,570,641
Total                              63,409,406      692,782       65,232,398
Systems integration:                                           
Systems construction               11,997,680      168,064       15,824,938
Systems operation and maintenance  19,471,641      227,062       21,380,158
Total                              31,469,321      395,126       37,205,096
Equipment sales                    1,111,722       15,834        1,490,906
ATM operation business             1,324,156       24,640        2,320,086
Total revenues                     97,314,605      1,128,382     106,248,486
COST AND EXPENSES:                                             
Cost of network services           49,984,821      538,362       50,692,190
Cost of systems integration        24,978,607      323,118       30,424,802
Cost of equipment sales            980,279         14,001        1,318,344
Cost of ATM operation business     1,382,194       20,811        1,959,597
Total cost                         77,325,901      896,292       84,394,933
Sales and marketing                7,946,852       85,583        8,058,481
General and administrative         5,299,608       59,818        5,632,430
Research and development           388,761         4,354         410,000
Total cost and expenses            90,961,122      1,046,047     98,495,844
OPERATING INCOME                   6,353,483       82,335        7,752,642
OTHER INCOME (EXPENSE):                                        
Interest income                    34,602          273           25,708
Interest expense                   (299,271)       (3,051)       (287,314)
Foreign exchange gains (losses)    (4,549)         1,191         112,136
Net gains (losses) on sales of     (3,154)         144           13,565
other investments -net
Losses on write-down of other      (159,592)       (210)         (19,788)
investments
Other -net                         54,701          1,698         159,915
Other income (expense) -net        (377,263)       45            4,222
INCOME FROM OPERATIONS BEFORE
INCOMETAX EXPENSE AND EQUITY IN   5,976,220       82,380        7,756,864
NET INCOMEOF EQUITY METHOD
INVESTEES
INCOME TAX EXPENSE                2,525,486       27,693        2,607,582
EQUITY IN NET INCOME OF EQUITY     123,776         1,784         168,065
METHOD INVESTEES
NET INCOME                         3,574,510       56,471        5,317,347
LESS: NET LOSS ATTRIBUTABLE        66,453          (177)         (16,693)
TONONCONTROLLING INTERESTS
NET INCOME ATTRIBUTABLE TO         3,640,963       56,294        5,300,654
INTERNETINITIATIVE JAPAN INC.
                                                 
                                   Fiscal Year     Fiscal Year Ended
                                  Ended           March 31, 2013
                                   March 31, 2012
NET INCOME PER SHARE                                           
BASIC WEIGHTED-AVERAGE NUMBER      40,536,800                   40,536,800
OFSHARES (shares)
DILUTED WEIGHTED-AVERAGE NUMBER OF 40,556,400                   40,572,600
SHARES (shares)
BASIC WEIGHTED-AVERAGE NUMBER      81,073,600                   81,073,600
OFADS EQUIVALENTS (ADSs)
DILUTED WEIGHTED-AVERAGE NUMBEROF 81,112,800                   81,145,200
ADS EQUIVALENTS (ADSs)
BASIC NET INCOME PER SHARE(JPY /  89.82           1.39          130.76
U.S. Dollars / JPY)
DILUTED NET INCOME PER SHARE(JPY  89.78           1.39          130.65
/ U.S. Dollars / JPY)
BASIC NET INCOME PER
ADSEQUIVALENT(JPY / U.S. Dollars 44.91           0.69          65.38
/ JPY)
DILUTED NET INCOME PER
ADSEQUIVALENT(JPY / U.S. Dollars 44.89           0.69          65.32
/ JPY)
                                                              
(Note) The U.S. dollar amounts represent translations of yen amounts at the
rate of JPY 94.16 which was the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York prevailing
as of March 29, 2013.

                                                                                                                 
                                                                                                                 
Internet Initiative Japan Inc.
Consolidated Statements of Shareholders' Equity (Unaudited)
(For the fiscal year ended March 31, 2012 and March 31, 2013)

                                                Internet Initiative Japan Inc. shareholders' equity                    
                                     Comprehensive              Accumulated   Shares of                        Additional NON
                         Total      income       Accumulated  other         common      Common     Treasury  Paid-in    CONTROLLING
                          equity     (loss)      deficit      comprehensive stock       Stock      Stock     Capital    INTERESTS
                                                                income (loss) outstanding
                         Thousands  Thousands     Thousands    Thousands     Shares      Thousands  Thousands Thousands  Thousands
                          of JPY     of JPY        of JPY       of JPY                    of JPY     of JPY    of JPY     of JPY
BALANCE, APRIL 1, 2011    29,641,350              (14,023,259) (85,134)      41,295,600  16,833,847 (392,079) 27,318,912 (10,937)
Purchase of
noncontrollinginterests  (5)                                                                            (19,395)   19,390
of
consolidatedsubsidiaries
Subsidiary stock         --                                                                             (66,042)   66,042
issuance
Stock-based compensation 26,843                                                                         26,843     
Comprehensive income                                                                                             
(loss):
 Net Income (loss)      3,574,510  3,574,510     3,640,963                                                         (66,453)
 Other Comprehensive    61,601     61,601                    61,601                                                
loss,net of tax
Total comprehensive      3,636,111  3,636,111                                                                      
income
Dividends paid           (608,052)               (608,052)                                                         
BALANCE, MARCH 31,2012   32,696,247              (10,990,348) (23,533)      41,295,600  16,833,847 (392,079) 27,260,318 8,042
Purchase of
noncontrollinginterests  2,688                                                                          --         2,688
of
consolidatedsubsidiaries
Stock-based compensation 40,007                                                                         40,007     
Comprehensive income                                                                                             
(loss):
 Net Income (loss)      5,317,347  5,317,347     5,300,654                                                         16,693
 Other
Comprehensiveincome, net 287,283    287,283                   287,303                                               (20)
of tax
Total comprehensive      5,604,630  5,604,630                                                                      
income:
Dividends paid           (709,394)               (709,394)                                                         
BALANCE, MARCH 31, 2013   37,634,178              (6,399,088)  263,770       41,295,600  16,833,847 (392,079) 27,300,325 27,403
                                                                                                                 
                                                                                                                 
(For the fiscal year ended March 31, 2013 (In USD))
                                                Internet Initiative Japan Inc. shareholders' equity                    
                                     Comprehensive              Accumulated   Shares of                        Additional NON
                         Total      income       Accumulated  other         common      Common     Treasury  Paid-in    CONTROLLING
                          equity     (loss)        deficit      comprehensive stock       Stock      Stock     Capital    INTERESTS
                                                                income (loss) outstanding
Foreign exchange gains    Thousands  Thousands     Thousands    Thousands     Shares      Thousands  Thousands Thousands  Thousands
(losses)                  of USD     of USD        of USD       of USD                    of USD     of USD    of USD     of USD
BALANCE, APRIL 1,2012    347,241                 (116,720)    (250)         41,295,600  178,779    (4,164)   289,511    85
Purchase of
noncontrollinginterests  29                                               --                                       29
of
consolidatedsubsidiaries
Stock-based compensation 424                                                                            424        
Comprehensive income                                                                                             
(loss) :
 Net Income (loss)      56,471     56,471        56,294                                                            177
 Other
Comprehensiveincome, net 3,051      3,051                     3,051                                                 0
of tax
Total comprehensive      59,522     59,522                                                                         
income:
Dividends paid           (7,533)                 (7,533)                                                           
BALANCE, MARCH 31, 2013   399,683                 (67,959)     2,801         41,295,600  178,779    (4,164)   289,935    291
                                                                                                                 
(Note) The U.S. dollar amounts represent translations of yen amounts at the rate of JPY 94.16 which was the noon buying rate in New
York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York
prevailing as of March 29, 2013.

                                                              
                                                              
Internet Initiative Japan Inc.
Consolidated Statements of Cash Flows (Unaudited)
(For the fiscal year ended March 31, 2012 and March 31, 2013)

                                     Fiscal Year    Fiscal Year Ended
                                    Ended          March 31, 2013
                                     March 31, 2012
                                    Thousands of   Thousands of Thousands of
                                     JPY            U.S. Dollars JPY
OPERATING ACTIVITIES:                                          
Net income                           3,574,510      56,471       5,317,347
Adjustments to reconcile net income
to net cash provided by operating                              
activities:
Depreciation and amortization        7,143,631      79,735       7,507,808
Impairment loss on intangible assets 37,000         510          48,000
Provision for retirement and pension 187,287        2,272        213,963
costs,less payments
Provision for (reversal of)          82,046         (114)        (10,712)
allowance for doubtfulaccounts
Loss on disposal of property and     62,368         155          14,638
equipment
Net (gain) loss on sales of other    3,154          (144)        (13,565)
investments
Impairment of other investments      159,592        210          19,788
Foreign exchange losses, net         14,202         614          57,829
Equity in net income of equity       (123,776)      (1,785)      (168,065)
method investees
Deferred income tax expense          35,714         (5,598)      (527,128)
(benefit)
Others                               67,470         419          39,377
Changes in operating assets and
liabilities net of effectsfrom                                
acquisition of business and a
company:
Decrease (increase) in accounts      626,783        (30,865)     (2,906,215)
receivable
Decrease in net investment in        330,961        397          37,406
sales-typelease―noncurrent
Increase in inventories, prepaid
expensesand other current and       (161,418)      (25,725)     (2,422,332)
noncurrent assets
Increase (decrease) in accounts      (2,928,912)    19,978       1,881,105
payable
Increase (decrease) in income taxes  1,842,553      (5,798)      (545,914)
payable
Increase in deferred                 276,175        10,780       1,015,049
income-noncurrent
Increase in accrued expenses
andother current and noncurrent     429,998        2,063        194,201
liabilities
Net cash provided by operating       11,659,338     103,575      9,752,580
activities
INVESTING ACTIVITIES:                                          
Purchase of property and equipment   (6,167,434)    (59,354)     (5,588,815)
Proceeds from sales of property and  350,136        5,777        543,978
equipment
Purchases of available-for-sale      (269,218)      (519)        (48,903)
securities
Purchases of other investments       (186,115)      (4,966)      (467,622)
Investment in an equity method       (24,647)       (1,062)      (100,000)
investee
Proceeds from sales of               226,346        --           --
available-for-sale securities
Proceeds from sales of other         94,285         1,168        109,944
investments
Payments of guarantee deposits       (39,403)       (1,746)      (164,417)
Refund of guarantee deposits         26,045         184          17,349
Payments for refundable insurance    (6,604)        (8)          (737)
policies
Refund from insurance policies       42,948         --           --
Acquisition of a newly controlled    --             (2,433)      (229,058)
company,net of cash acquired
Other                                (594)          (188)        (17,620)
Net cash used in investing           (5,954,255)    (63,147)     (5,945,901)
activities
                                                              
                                     Fiscal Year    Fiscal Year Ended
                                    Ended          March 31, 2013
                                     March 31, 2012
                                    Thousands of   Thousands of Thousands of
                                     JPY            U.S. Dollars JPY
FINANCING ACTIVITIES:                                          
Proceeds from issuance of short-term
borrowingswith initial maturities   3,370,000      754          71,000
over three months andlong-term
borrowings
Repayments of short-term borrowings
with initialmaturities over three   (620,000)      (11,480)     (1,081,000)
months and long-term borrowings
Principal payments under capital     (3,425,680)    (39,071)     (3,678,940)
leases
Net increase (decrease) in
short-term borrowings withinitial   (4,180,000)    4,248        400,000
maturities less than three months
Proceeds from issuance of subsidiary --             27           2,570
stock to minority shareholders
Dividends paid                       (608,052)      (7,534)      (709,394)
Net cash used in financing           (5,463,732)    (53,056)     (4,995,764)
activities
EFFECT OF EXCHANGE RATE CHANGES      (18,142)       (944)        (88,867)
ONCASH AND CASH EQUIVALENTS
                                                              
NET INCREASE (DECREASE) IN CASH      223,209        (13,572)     (1,277,952)
ANDCASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING 13,313,615     143,764      13,536,824
OFYEAR
CASH AND CASH EQUIVALENTS, END       13,536,824     130,192      12,258,872
OFYEAR
                                                              
ADDITIONAL CASH FLOW INFORMATION:                              
Interest paid                        297,862        3,050        287,158
Income taxes paid                    481,580        37,468       3,527,987
                                                              
NONCASH INVESTING AND FINANCING                                
ACTIVITIES:
Acquisition of assets by entering    4,749,695      51,150       4,816,248
into capital leases
Facilities purchase liabilities      659,266        10,081       949,264
Asset retirement obligation          42,273         283          26,620
Acquisition of a company:                                      
Assets acquired                     --             4,292        404,139
Liabilities assumed                 --             1,108        104,321
Noncontrolling interests            --             1            118
Cash paid                           --             3,183        299,700
Cash including acquired assets      --             750          70,642
Acquisition of a newly controlled   --             2,433        229,058
company,net of cash acquired
                                                              
(Note1) The U.S. dollar amounts represent translations of yen amounts at the
rate of JPY 94.16 which was the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New Yorkprevailing as of March 29, 2013.

4th Quarter FY2012 Consolidated Financial Results (3 months)

The following tables are highlight data of 4th Quarter FY2012 (3 months)
consolidated financial results (unaudited, for the 3 months ended March 31,
2013).

Operating Results Summary
                                4Q11         4Q12         YoY %
                                                           Change
                                JPY millions JPY millions 
Total Revenues:                  26,563       29,558       11.3
Network Services                 16,167       16,717       3.4
Systems Integration (SI)         9,761        11,604       18.9
Equipment Sales                  233          623          167.7
ATM Operation Business           402          614          52.7
Cost of Revenues:                20,672       23,229       12.4
Network Services                 12,398       12,720       2.6
Systems Integration (SI)         7,712        9,431        22.3
Equipment Sales                  193          569          193.7
ATM Operation Business           369          509          38.0
SG&A Expenses and R&D            3,535        3,619        2.4
Operating Income                 2,356        2,710        15.0
Income before Income Tax Expense 2,196        2,811        28.0
Net Income attributable to IIJ   1,251        2,188        74.9


Network Service Revenue Breakdown
                                             4Q11         4Q12         YoY %
                                                                        Change
                                             JPY millions JPY millions 
Internet Connectivity Service (Corporate Use) 3,787        4,244        12.1
IP Service                                   2,389        2,782        16.5
IIJ FiberAccess/F and IIJ DSL/F              799          773          (3.3)
IIJ Mobile Service                           539          629          16.6
Others                                        60           60           0.3
Internet Connectivity Service (Home Use)      1,389        1,356        (2.4)
Under IIJ Brand                               241          382          58.6
hi-ho                                         1,000        811          (18.9)
OEM                                           148          163          9.1
WAN Services                                  6,489        6,288        (3.1)
Outsourcing Services                          4,502        4,829        7.3
Network Services Revenues                     16,167       16,717       3.4

Reconciliation of Non-GAAP Financial Measures (4th Quarter FY2012 (3 months))

The following table summarizes the reconciliation of adjusted EBITDA to net
income in our consolidated statements of income that are prepared in
accordance with U.S. GAAP.

Adjusted EBITDA
                                                    4Q11         4Q12
                                                    JPY millions JPY millions
Adjusted EBITDA                                      4,285        4,722
Depreciation and Amortization                        (1,892)      (1,964)
Impairment loss on other intangible assets           (37)         (48)
Operating Income                                     2,356        2,710
Other Income (Expense)                               (160)        101
Income Tax Expense                                   922          653
Equity in Net Income (loss) of Equity Method         (29)         36
Investees
Net income                                           1,245        2,194
Net Loss (Income) attributable to non-controlling    6            (6)
interests
Net Income attributable to IIJ                       1,251        2,188

The following table summarizes the reconciliation of capital expenditures to
the purchase of property and equipment in our consolidated statements of cash
flows that are prepared and presented in accordance with U.S. GAAP.

CAPEX
                                                    4Q11         4Q12
                                                    JPY millions JPY millions
CAPEX, including capital leases                      2,265        1,953
Acquisition of Assets by Entering into Capital       632          774
Leases
Purchase of Property and Equipment                   1,633        1,179

                                                              
                                                              
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Income (Unaudited)
(Three Months ended March 31, 2012 and March 31, 2013)
                                                              

                                  Three Months    Three Months Ended
                                 Ended           March 31, 2013
                                  March 31, 2012
                                 Thousands of    Thousands of   Thousands of
                                  JPY             U.S. Dollars   JPY
REVENUES:                                                      
Network services:                                              
Internet connectivity services    3,786,887       45,073         4,244,105
(corporate use)
Internet connectivity services    1,389,488       14,396         1,355,560
(home use)
WAN services                      6,489,229       66,787         6,288,667
Outsourcing services              4,501,619       51,286         4,829,036
Total                             16,167,223      177,542        16,717,368
Systems integration:                                           
Systems Construction              4,648,913       63,729         6,000,759
Systems Operation and Maintenance 5,112,100       59,507         5,603,166
Total                             9,761,013       123,236        11,603,925
Equipment sales                   232,973         6,623          623,603
ATM operation business            401,804         6,516          613,500
Total revenues                    26,563,013      313,917        29,558,396
COST AND EXPENSES:                                             
Cost of network services          12,397,820      135,095        12,720,525
Cost of systems integration       7,711,543       100,161        9,431,170
Cost of equipment sales           193,690         6,043          568,947
Cost of ATM operation business    368,996         5,407          509,138
Total cost                        20,672,049      246,706        23,229,780
Sales and marketing               2,006,664       21,534         2,027,664
General and administrative        1,379,078       15,774         1,485,233
Research and development          149,321         1,125          105,940
Total cost and expenses           24,207,112      285,139        26,848,617
OPERATING INCOME                  2,355,901       28,778         2,709,779
OTHER INCOME (EXPENSE):                                        
Interest income                   9,555           62             5,819
Interest expense                  (72,144)        (737)          (69,417)
Foreign exchange gains            8,920           1,326          124,841
Net gains (losses) on sales of    (2,984)         --             --
other investments -net
Losses on write-down of other     (75,015)        --             --
investments
Other—net                         (27,930)        423            39,876
Other expense — net               (159,598)       1,074          101,119
INCOME FROM OPERATIONS BEFORE
INCOMETAX EXPENSE AND EQUITY IN  2,196,303       29,852         2,810,898
NET INCOMEIN EQUITY METHOD
INVESTEES
INCOME TAX EXPENSE               921,880         6,939          653,414
EQUITY IN NET INCOME (LOSS) OF    (29,560)        386            36,377
EQUITYMETHOD INVESTEES
NET INCOME                        1,244,863       23,299         2,193,861
LESS: NET LOSS ATTRIBUTABLE       6,453           (58)           (5,492)
TONONCONTROLLING INTERESTS
NET INCOME ATTRIBUTABLE           1,251,316       23,241         2,188,369
TOINTERNET INITIATIVE JAPAN INC.
                                                              
                                  Three Months    Three Months Ended
                                 Ended           March 31, 2013
                                  March 31, 2012
NET INCOME PER SHARE                                           
BASIC WEIGHTED-AVERAGE NUMBER     40,536,800                    40,536,800
OFSHARES (shares)
DILUTED WEIGHTED-AVERAGE          40,564,400                    40,583,800
NUMBEROF SHARES (shares)
BASIC WEIGHTED-AVERAGE NUMBER     81,073,600                    81,073,600
OFADS EQUIVALENTS (ADSs)
DILUTED WEIGHTED-AVERAGE          81,128,800                    81,167,600
NUMBEROF ADS EQUIVALENTS (ADSs)
BASIC NET INCOME PER SHARE(JPY / 30.87           0.57           53.98
U.S. Dollars / JPY)
DILUTED NET INCOME PER SHARE(JPY 30.85           0.57           53.92
/ U.S. Dollars / JPY)
BASIC NET INCOME PER
ADSEQUIVALENT (JPY / U.S.        15.43           0.29           26.99
Dollars / JPY)
DILUTED NET INCOME PER
ADSEQUIVALENT (JPY / U.S.        15.42           0.29           26.96
Dollars / JPY)
                                                              
(Note) The U.S. dollar amounts represent translations of yen amounts at the
rate of JPY 94.16 which was the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York prevailing
as of March 29, 2013.

                                                              
                                                              
Internet Initiative Japan Inc.
Quarterly Consolidated Statements of Cash Flows (Unaudited)
(Three Months ended March 31, 2012 and March 31, 2013)
                                                              

                                     Three Months   Three Months Ended
                                    Ended          March 31, 2013
                                     March 31, 2012
                                    Thousands of   Thousands of Thousands of
                                     JPY            U.S. Dollars JPY
OPERATING ACTIVITIES:                                          
Net income                           1,244,863      23,299       2,193,861
Adjustments to reconcile net income
to net cashprovided by operating                              
activities:
Depreciation and amortization        1,892,149      20,861       1,964,291
Impairment loss on other intangible  37,000         510          48,000
assets
Provision for retirement and         38,182         517          48,701
pensioncosts, less payments
Provision for (reversal of)
allowance for doubtfulaccounts and  36,194         (112)        (10,570)
advances
Loss on disposal of property and     22,752         107          10,045
equipment
Net losses on sales of other         2,984          --           --
investments
Impairment of other investments      75,015         --           --
Foreign exchange losses (gains)      (17,886)       798          75,113
Equity in net loss (income) of
equity methodinvestees (net of      29,560         (386)        (36,377)
dividend)
Deferred income tax benefit          (72,460)       (7,212)      (679,103)
Others                               32,765         279          26,224
Changes in operating assets and
liabilities net of effectsfrom                                
acquisition of business and a
company:
Increase in accounts receivable      (301,511)      (35,488)     (3,341,586)
Decrease (increase) in net
investment in                        103,590        (2,150)      (202,461)
sales-typelease―noncurrent
Decrease in inventories, prepaid
expenses and other current and       886,578        5,629        530,039
noncurrent assets
Increase in accounts payable         935,852        19,343       1,821,357
Increase in income taxes payable     1,009,680      13,534       1,274,354
Increase in deferred income―         396,394        2,532        238,400
noncurrent
Decrease in accrued expenses,
othercurrent and noncurrent         (1,272,330)    (930)        (87,505)
liabilities
Net cash provided by operating       5,079,371      41,130       3,872,783
activities
INVESTING ACTIVITIES:                                          
Purchase of property and equipment   (1,633,158)    (12,518)     (1,178,696)
Proceeds from sales of property and  55,871         757          71,272
equipment
Purchase of available-for-sale       (150,270)      (81)         (7,653)
securities
Purchase of other investments        (80,000)       (644)        (60,620)
Proceeds from sales of               222,467        --           --
available-for-sale securities
Proceeds from sales of other         32,080         184          17,310
investments
Payments of guarantee deposits       (19,134)       (823)        (77,463)
Refund of guarantee deposits         4,731          21           1,986
Payments for refundable insurance    (182)          (2)          (183)
policies
Other                                3,983          (85)         (8,002)
Net cash used in financing           (1,563,612)    (13,191)     (1,242,049)
activities
                                                  
                                     Three Months   Three Months Ended
                                    Ended          March 31, 2013
                                     March 31, 2012
                                    Thousands of   Thousands of Thousands of
                                     JPY            U.S. Dollars JPY
FINANCING ACTIVITIES:                                          
Principal payments under capital     (923,078)      (9,965)      (938,318)
leases
Net cash used in financing           (923,078)      (9,965)      (938,318)
activities
EFFECT OF EXCHANGE RATE CHANGES      16,172         (869)        (81,840)
ONCASH AND CASH EQUIVALENTS
                                                              
NET INCREASE IN CASH AND CASH        2,608,853      17,105       1,610,576
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING 10,927,971     113,087      10,648,296
OFTHE PERIOD
CASH AND CASH EQUIVALENTS, END       13,536,824     130,192      12,258,872
OFTHE PERIOD
                                                              
(Note1) The U.S. dollar amounts represent translations of yen amounts at the
rate of JPY 94.16 which was the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of
New York prevailing as of March 29, 2013.

Note: The following information is provided to disclose Internet Initiative
Japan Inc. ("IIJ") financial results (unaudited) for the fiscal year ended
March 31, 2013 ("FY2012") in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Fiscal Year Ended March 31, 2013

[Under accounting principles generally accepted in the United States ("U.S.
GAAP")]

                                                              May 15, 2013
Company name: Internet        Exchange listed: Tokyo Stock      
Initiative Japan Inc.         Exchange First Section
Stock code number: 3774       URL: http://www.iij.ad.jp/
Representative: Koichi Suzuki, President, Representative                    
Director and CEO
Contact: Akihisa Watai,       TEL: (03) 5259-6500
Managing Director and CFO
Annual general shareholder's meeting: Scheduled on June 26, 2013
Payment of dividend: Scheduled to be started on June 27, 2013
Filing of annual report (Yuka-shoken-houkokusho) to the regulatory
organization in Japan: Scheduled on June 28, 2013
Supplemental material on this fiscal year results: Yes
Presentation on this fiscal year results: Yes (for institutional investors
and analysts)

             (Amounts of less than JPY one million are rounded)
1.
Consolidated
Financial
Results for                                          
the Fiscal
Year Ended
March 31,
2013
(April 1,
2012 to March                                        
31, 2013)
(1)
Consolidated                                         (% shown is
Results of                                              YoY change)
Operations
                                          Income before Net Income
             Total         Operating     Income        attributable
              Revenues      Income        Tax Expense   to
                                                        IIJ
             JPY      %    JPY      %    JPY      %    JPY      %
              millions      millions      millions      millions
Fiscal Year
Ended March   106,248  9.2  7,753    22.0 7,757    29.8 5,301    45.6
31, 2013
Fiscal Year
Ended March   97,315   18.1 6,353    53.4 5,976    55.9 3,641    13.7
31, 2012
(Note1) Total
comprehensive Fiscal Year Ended March 31, 2013: JPY5,588 million (up
income        50.9% YoY)                                                    
attributable
to IIJ
             Fiscal Year Ended March 31, 2012: JPY3,703 million (up        
              25.5% YoY)
(Note2) Income before income tax expense represents income from
operations before income tax expense and equity in net income in             
equity method investees, respectively, in IIJ's consolidated
financial statements.

                                                             
                                                          Income
                  Basic Net    Diluted Net  Net Income    before  Total
                  Income       Income       attributable  Income  Revenues
                 attributable attributable to IIJ to     Tax     Operating
                  to IIJ       to IIJ       Total         Expense Margin
                  per Share    per Share    Shareholders' to      Ratio
                                            Equity        Total
                                                          Assets
                 JPY          JPY          %             %       %
Fiscal Year Ended 130.76       130.65       15.1          10.0    7.3
March 31, 2013
Fiscal Year Ended 89.82        89.78        11.7          8.2     6.5
March 31, 2012
(Reference)
Equity in net
income of equity  Fiscal Year Ended March 31, 2013: JPY168 million             
method
investees
                 Fiscal Year Ended March 31, 2012: JPY124 million             
(Note) IIJ conducted a 1:200 stock split on common stock with an effective
date of October 1, 2012. Accordingly, basic net income attributable to IIJ
per share and diluted net income attributable to IIJ per share have been        
calculated as if the stock split was conducted at the beginning of the
previous consolidated fiscal year.

(2) Consolidated                                             
Financial Position
                                                   Total IIJ     Total IIJ
                   Total    Total    Total IIJ     Shareholders' Shareholders'
                  Assets   Equity   Shareholders' Equity        Equity
                                     Equity        to Total      per Share
                                                   Assets
                  JPY      JPY      JPY millions  %             JPY
                   millions millions
As of March 31,    82,111   37,634   37,607        45.8          927.72
2013
As of March 31,    73,493   32,696   32,688        44.5          806.38
2012

                                                             
(3) Consolidated Cash                                         
Flow
                                                                 Cash and Cash
                         Operating    Investing    Financing    Equivalents
                          Activities   Activities   Activities   (End of the
                                                                 Period)
                         JPY millions JPY millions JPY millions JPY millions
Fiscal year ended         9,753        (5,946)      (4,996)      12,259
March 31, 2013
Fiscal year ended         11,659       (5,954)      (5,464)      13,537
March 31, 2012

                                                                     
                                                       
2.                                                                        
Dividends
          Dividend per Shares                                             
                                                    Total                    Ratio of
                                                    cash      Payout Ratio   Dividends to
          1Q-end 2Q-end   3Q-end Year-end Total    dividends (consolidated) Shareholder's
                                                    for                      Equity
                                                    the year                 (consolidated)
          JPY    JPY      JPY    JPY      JPY      JPY       %              %
                                                    millions
Fiscal
Year Ended --     1,500.00 --     1,750.00 3,250.00 659       18.1           2.1
March 31,
2012
Fiscal
Year Ended --     1,750.00 --     10.00    1,760.00 760       14.3           2.2
March 31,
2013
Fiscal
Year
Ending     --     11.00    --     11.00    22.00             14.9           
March 31,
2014
(forecast)
(Note) IIJ conducted a 1:200 stock split on common stock with an effective date of October
1, 2012.

                                                                                   
3. Target of Consolidated Financial Results for the Fiscal Year Ending March        
31, 2014
(April 1,
2013                                                               (% shown is
through                                                        YoY change)
March 31,
2014)
                                      Income before                Basic Net
          Total         Operating     Income Tax    Net Income     Income
         Revenues      Income        Expense       attributable   attributable
                                      (Benefit)     to IIJ         to IIJ
                                                                   per Share
         JPY      %    JPY      %    JPY      %    JPY      %     JPY
          millions      millions      millions      millions
Interim
Period
Ending    54,500   6.6  3,400    4.2  3,200    0.8  2,000    (0.3) 49.34
September
30, 2013
Fiscal
Year
Ending    117,000  10.1 9,400    21.2 9,000    16.0 6,000    13.2  148.01
March 31,
2014

* Notes

(1) Changes in Significant Subsidiaries for the Fiscal Year Ended March 31,
2013

  (Changes in significant subsidiaries for the Fiscal Year Ended March 31,
  2013 which resulted in changes in scope of consolidation): None

(2) Changes in Significant Accounting and Reporting Policies for the Quarterly
Consolidated Financial Statements

  1) Changes due to the revision of accounting standards: Yes

  2) Others: No

(3) Number of Shares Outstanding (Shares of Common Stock)

  1) The number of shares outstanding (inclusive of treasury stock):

  As of March 31, 2013:41,295,600 shares

  As of March 31, 2012:41,295,600 shares

  2) The number of treasury stock:

  As of March 31, 2013:758,800 shares

  As of March 31, 2012:758,800 shares

  3) The weighted average number of shares outstanding:

  For the Fiscal Year Ended March 31, 2013:40,536,800 shares

  For the Fiscal Year Ended March 31, 2012:40,536,800 shares

  (Note) IIJ conducted a 1:200 stock split on common stock with an effective
  date of October 1, 2012. Number of shares outstanding (shares of common
  stock) in the above have been calculated as if the stock split was conducted
  at the beginning of the previous fiscal year (the fiscal year ended March
  31, 2012).

(4) Others

  IIJ conducted a 1:200 stock split on common stock with an effective date of
  October 1, 2012. The below table provides the dividends retroactively
  adjusted to reflect the stock split.

                                
                                Dividend per Shares
                                2Q-end Year-end Total
                                JPY    JPY      JPY
Fiscal Year Ended March 31, 2012 7.50   8.75     16.25
Fiscal Year Ended March 31, 2013 8.75   10.00    18.75


[English Translation]
May 15, 2013
Company name: 1-105 Kanda Jimbo-cho, Chiyoda-ku, Tokyo
Internet Initiative Japan Inc.

Company representative: Koichi Suzuki, President and Representative Director
(Stock Code Number: 3774 The First Section of the Tokyo Stock Exchange)

Contact: Akihisa Watai, Managing Director and CFO
TEL: 03-5259-6500

              Information Pertaining to Our Largest Shareholder

                                           
1. About Our Largest Shareholder (As of March 31, 2013)
Name            Relationship   Its Ownership  Securities Exchanges where its
                               Percentage (%) Shares are Listed
                                           Tokyo Stock Exchange, Inc.
                                              (First Section)
Nippon                                     Osaka Securities Exchange, Co.,
                                              Ltd. (First Section)
Telegraph and  IIJ is NTT's   29.9           Nagoya Stock Exchange, Inc.
                affiliate                    (First Section)
Telephone      company        (5.0)          Fukuoka Stock Exchange
Corporation                                 Sapporo Stock Exchange
("NTT")                                     New York Stock Exchange, Inc.
                                           London Stock Exchange plc.
(Notes) The percentage in parentheses is the indirect ownership by NTT
included in the figure above.

2. Position of the Listed Company (IIJ) within NTT Group and other
relationships

  a) Position of the Listed Company (IIJ) within NTT Group

  The ownership percentage by NTT, which is IIJ's largest shareholder, was
  29.9% as of March 31, 2013, including its indirect ownership. However, IIJ's
  business activities are not affected by NTT's ownership in IIJ and IIJ is
  maintaining its management independence.

  b) Personal Relationships with NTT Group

  IIJ's board of directors consists of 12 members including 4 outside
  directors. Takashi Hiroi, an outside director (part-time director) of IIJ,
  is an employee of NTT (General Manager of Business Planning Division of
  NTT). However, he is monitoring IIJ's business operations as an outside
  director and does not have any personal relationships, such as family
  relationships, with IIJ's other directors and auditors. He did not acquire
  any interest such as capital or business relationships upon becoming an
  outside director.

3. Business Relationship with NTT Group

  IIJ uses services provided by Nippon Telegraph and Telephone East
  Corporation ("NTT East") and Nippon Telegraph and Telephone West Corporation
  ("NTT West") for a significant portion of IIJ's access circuits as well as
  services provided by NTT Communications Corporation ("NTT Communications")
  for a significant portion of IIJ's domestic and international backbones. The
  amount paid to NTT East and West, and to NTT Communications for their
  telecommunication circuits was JPY1,455 million and JPY3,311 million,
  respectively for the fiscal year ended March 31, 2013.

  IIJ leases a part of Internet data center facilities from NTT Group
  companies to provide Internet data center services to IIJ's customers. The
  amount paid to NTT Group related to the lease of Internet data center
  facilities were JPY1,695 million for the fiscal year ended March 31, 2013.

4. Policy Concerning Measures to Protect Minority Shareholders in Transactions
with NTT Group

  Business transactions with the NTT Group are within the scope of normal
  business practices and there is no special contract made in relation to the
  investment by NTT Group.

CONTACT: IIJ Investor Relations
         Tel: +81-3-5259-6500
         E-mail: ir@iij.ad.jp
         URL: http://www.iij.ad.jp/en/ir

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