November 28th, 2023

Year Ending March 31st, 2024 – Q2

Financial Results Explanatory Material

Securities code: 6736

SUNCORPORATION’s Business©SUNCORPORATION All rights reserved.

Management Philosophy

MISSIONMISSION

Resolving social issues withSUNCORPORATION’s technologies

Management
philosophy

Making people happy through telecommunication& entertainment

Corporate philosophy

Company slogan

VALUES

Guidelines for Action“Maintaining the spirit of a venturecompany”
Dreams, Challenges and Creations
 View success as the starting point for new success Treat improvement and elimination of waste aspermanent issues
 Progress stops the moment you say “this is fine”
 Don’t be satisfied with yesterday’s success The moment you succeed is exactly when you shouldreflect on your actions

3
3©SUNCORPORATION All rights reserved.

Business Overview

Developing the Business in Three Segments
Revolving around Technology
Global Data Intelligence(digital intelligence)● Developing and selling mobile forensic
equipment● Selling mobile data backup solutions
for mobile phone shops

Entertainment（amusement machines and games）

New IT-Related（M2M/IoT）● Developing, manufacturing, and selling

Amusement machines● Planning, developing, and manufacturing
amusement machines● Developing video content for amusement

machines

industrial communications equipment
and IoT solutions● Developing and selling B2B operational
support solutions using SmartGlassGames● Developing and selling game content©KK/AMW/P-I ©KK/AMW/P-I Ⅱ©KK/AMW/P-I M ©KK/K/P-IⅢ©JFJ CO., LTD. ALL RIGHTS RESERVED.

Ikki Unite distributed on Steam©SUNSOFT

4©SUNCORPORATION All rights reserved.

History

Domestic Business Growth along with Accelerated
Global Expansion Since the Early 1990s
2020
Launch of AceReal for docomo, aremote operation support solution
using 5G and AR SmartGlass

2010
2007
Acquisition of Cellebrite’sshares1985

1971
Establishment of
SUNCORPORATION

Development of family-oriented
softwareLaunch of SUNSOFT series

Sales diagram

1985

Development and release of
Rooster series mobile routers
Full-scale entry into M2M
marketDevelopment and release of
SUNCORPORATION brandmodem, My Looper 300

Acceleration of global expansion
1971

1980

1990

2000

2020

Founded with the aim of
manufacturing and sellingelectronics-related equipment

Completed head office building in
Konan City, Aichi Prefecture,established business structure,and pursued expansion

Established SUNCORPORATION
brand, developed and sold industry’s
first system, and expanded sales
offices across Japan

Listed on JASDAQ, acquired
100% ownership of Cellebrite, andaccelerated global expansion

Celebrated 50th anniversary offounding and shifted toward
global company

5©SUNCORPORATION All rights reserved.

SUNCORPORATION’s Global Business

Growing through businesses that are not limited to specific areas by combining
technologies and expertise developed in domestic businesses with newtechnologies and talent exchange acquired globally

Domestic
Technologies

Globally
Development of newtechnologies and talentexchange

Quality & safety

Wireless/IoT/security

Sales channel
expansion not limited
to specific areas

Sales and distribution
system6
6©SUNCORPORATION All rights reserved.

Financial Highlights for Q2 of the Year Ending March 31st, 2024

While unit sales are recovering due to the resolution of the semiconductor
shortage, the impact of increased raw material costs is significant andoperating profit is sluggish as a result
POINT 1

POINT 2

Revenue ¥from sales

4,648 million

Operatingprofit（vs. plan: 43 %）¥71 million(vs. plan: 13 %）While sales increased with the resolution of thesemiconductor shortage, sales of control
boards decreased due to a slump in pachinko
machine operation

The worsening cost price due to increased raw
material costs had a significant impact, andincreased outsourcing expenses also impacted
operating profit

September 2023
ActualFY Ending March2024 Plan
Progress Rate

FY Ending March2024 Plan

FY Ending March2024 Forecast

FY Ending March2025 Plan

4,648

43%

10,80010,000 to 11,000

13,300Operating profit

71

13%

560

10 to 100

1,680

Operating profit
margin (%)

1.5%

2.88%

5.2%

-

12.6%

(Unit: million yen)

Sales

7

©SUNCORPORATION All rights reserved.

Relationship with Cellebrite (Performance)

Profit or loss on valuation occurring due to the Cellebrite shares we own
has an impact on SUNCORPORATION’s performance (ordinary profit,
current net income)Maintaining uniqueness withrespect to various operations


Broad sales network based onsales to domestic law
enforcement agencies andsales of communicationequipment is a strength

Supporting continuous growth
as a stable shareholderAffiliate specializing in digital
intelligence with site in Israel

Listed on U.S. NASDAQ market

Listed on TSE Standard Market
The impact of derivative liabilities
will be resolved by August 2026

8

©SUNCORPORATION All rights reserved.

Relationship with Cellebrite (Business)

Driving domestic forensic products and digital intelligence market
Supplying related products, training, and services



Developing and selling our own related products,
such as F-Note, for the Japanese market

Providing original training for forensic productusers to the market

Strengths acquired from selling
forensic products on theJapanese market
Experience and expertise in rapid,
targeted development of cutting-edge
forensic products and technologies for
the Japanese market

UFED Ultra
System that facilitates digital investigation
agencies’ legal access to mobile phones ofall kinds and collection of digital evidence

Granting right to sell products
such as UFED in Japan

Cellebrite Guardian
SaaS-based integrated system for saving
evidence data, administrative sharing, etc.

9

©SUNCORPORATION All rights reserved.

Reference Materials: Market Value of SUNCORPORATION GroupThe market capitalization of SUNCORPORATION’s shareholdings in Cellebrite, which is an equitymethod affilite of SUNCORPORATION listed on the NASDAQ market (95,597,718
shares held), is approximately 116.4 billion yen, and SUNCORPORATION’S market capitalization
valuation is only around 50.4 billion yen, so undervaluation of the share price is increasing
Unit: 100 million yen
Rate: Converted at a rate of 150 yen to 1 USD
Compared based on SUNCORPORATION’s share price of
2,100 yen on November 22, 2023

Market value of
Cellebrite’s total
issued shares

1,164

Market value of Cellebrite

shares held by
SUNCORPORATION

Cellebrite shares’
market value

504
SUNCORPORATION
shares’ market value

10©SUNCORPORATION All rights reserved.

Business Relationship with Other Overseas Companies

Acquiring Share of APAC Security Market
with Solutions Specializing in Information Collection
and Analysis on the Deep Web and Dark Web
Sixgill
Head office: Tel Aviv, Israel
Year established: 2014
Company name: Sixgill Ltd.
Website: https://cybersixgill.com/

Agreement with Israeli Corporation
Sixgill for first domestic distribution
rights to Cybersixgill

Cybersixgill

Product Features
Intelligence solution specializing in information collection andanalysis on the deep web and dark web. Since it was
launched in 2014, it has been used by governmentorganizations, law enforcement agencies, and privatecompanies in countries around the world for various
purposes, including incident response, investigation of
cybercrime, narcotics crimes, etc., and handlingcyberterrorism at the national level.
Compared to rival intelligence solutions, it boasts around 10
times*1 the information collection capacity.

Main Target Clients• Financial services• Security service providers• Governments and law enforcement agencies• Security-sensitive large corporations, publicly listed corporations, etc.

*1 This value was created by SUNCORPORATION based on
feedback from existing users.

11©SUNCORPORATION All rights reserved.

Position of Consolidated Subsidiary EKTECH (Business)

Providing the company’s own network-related products/services
and security solutions
Aiming to expand business through synergy via
proactive technology and talent exchange

About EKTECH• Network solutions company with a site in Malaysia• Founded in 2002
• Subsidiary of SUNCORPORATION since February 2023

Solution
Thinkers

Technologist

Solution
Providers• Rooster-related
equipment• IoT-related services• Security products

Main Target Clients• Major domestic banks• Construction and development
companies• Plantation operators• Mobile communications companies

Providinginstallation and maintenance of
主なnetwork-related
equipment for office buildings,
顧客
condominiums, etc.
Management and maintenance services forbank ATM networks

12©SUNCORPORATION All rights reserved.

Global Talent Exchange

Approach to Global Talent Exchange■Background to implementation
SUNCORPORATION aims to create new futures by supplying the market
with products and services that have unique features which rival companies
do not possess and which are suited to different times and regions.
In this regard, we recognize that the shortage of outstanding global IT talentable to master advanced technologies and create new ideas in the current IT
market, which is growing dramatically, is a key management issue, and weare devoting effort to attract talent with the aim of resolving it.
■Global talent exchange in Israel
We are devoting effort to attracting outstanding global IT talent both in Japanand overseas.
In particular, we are actively implementing talent exchange in Israel, where
our consolidated subsidiary Cellebrite’s head office is located and where wehave various connections.

President Utsumi and company staff visiting
Tel-Hai College in Israel

Purpose of
Implementation

Regional Characteristics of Israel

To secure outstanding
global IT talent in the AI
and information security
fieldsKnown as the Silicon Valley of the Middle
East, this is a region where technology isdeveloping and growing. In particular,
there are many companies with theirown specialized technologies in theinformation security field

Key Recent Exchange-Related News

13

2022

Student from Tel-Hai College in northern Israel joined SUNCORPORATION’s R&D
division

August–September 2023

Two students from Tel-Hai College worked on development of an AI-based solution
during a one-month summer internship in SUNCORPORATION’s R&D division

September 2023

At the invitation of the Association for the Advancement of Israel-Japan Academic
and Cultural Relations, students from Hebrew University participating in a study tourin Japan took a company tour

©SUNCORPORATION All rights reserved.

Initiatives in First Half of Fiscal Year by Segment
Segment

External Environment

Initiatives

Global DataIntelligence

With law enforcement agencies leading the way, the market is growing significantly,
centering on the Asia-Pacific region• Secured a competitive edge by supplying training for users
while expanding sales for the next-generation solution UFED
Ultra

Cutting-edge digital intelligence tools are now becoming indispensable solutions

Pachinko and pachislot machine market

Entertainment

Smart game machines were introduced in November 2022 and have performed well,with demand for new machines growing, centered on smart pachislot machines. While
supply difficulties caused by the semiconductor shortage are heading toward recovery, • While the game machine parts business decreased year-onfuture uncertainties exist, such as increasing material costs and the decrease inyear, we are steadily creating hit products and increasing
pachinko parlors
visibility on the market
Game content market

Games, which are a form of entertainment that could be enjoyed at home even during
the pandemic, have established a position and are expanding. Game development
has entered an era when games can be enjoyed by one person on one computer, andthe number of games to be released on various platforms is increasing, leading tomore intense competition

New IT-Related

The IoT’s base is expanding further, and demand is growing for monitoring/control
systems that can be accessed remotely for industrial equipment, etc. In addition, themovement toward processing more data locally on the network equipment side usingedge computing and decreasing cloud dependence/load is starting to gather pace
While overall semiconductor supply is recovering, parts continue to increase in cost,which may impact the supply of our products and profits, so at present the situation is
uncertain

14• We focused efforts on retro games, which are becoming
especially popular in the WestWe developed a Nintendo Switch version of Ikki Unite• We released the SE220, a compact model that seeks todeliver stable communications and availability to support IoT
environments, and the LBX8110 for edge computing, whichenables AI image analysis and data processing, and we aim
to further expand the business• With respect to decreased profits, we are securing profits byrevising selling prices and increasing sales of services suchas maintenance services and SunDMS©SUNCORPORATION All rights reserved.

Financial Results for Q2 of Fiscal Year Ending March 31st, 2024/
Measures for Second Half of Fiscal Year Ending March 31st, 2024

©SUNCORPORATION All rights reserved.

Summary of Financial Results for Q2 of Fiscal Year Ending March 31st, 2024

Due to Cellebrite becoming an equity-method affiliate, sales decreased by 16,547 million yen
Cellebrite’s net profit in Q2 was negative due to a loss on valuation of derivatives, so an equity
method loss was recorded, and SUNCORPORATION’s net profit was -4,229 million yen
FY Ended March2023

FY Ending March 2024

Q2
（Unit: million yen）

Q2

Actual Results

Actual Results

Full-year
Year-on-Year
Change（%）

Forecast

Turnover21,1954,648(78.1)

10,000 to
11,000Operating profit(1,445)

71

-

10 to
100

Ordinary profit

12,788(4,448)-6,414(4,229)-Net profit for thequarter attributable toowners of parent

16©SUNCORPORATION All rights reserved.

Factors Impacting Changes in Turnover●Increase factor
Global DI
Sales increased due to
new product sales andprice revisions●Breakdown of impact
Entertainment
Decrease in control board
sales due to slump in pachinko
game machine operation●Increase factor
New IT
Resolution ofsemiconductor
shortage

FY Ended March 2023
Q2 turnover(reference value)*Turnover excludes Cellebrite’s sales●Increase factor
New IT
Received orders for
new solutions

Unit: million yen

FY Ending March 2024
Q2 turnover

17©SUNCORPORATION All rights reserved.

Factors Impacting Changes in Operating Profit●Increase factor
SG&A expenses
Improved expenses
due to revising SG&A
expenses, etc.

Unit: million yen●Increase factor
New IT
Resolution ofsemiconductor
shortage●Increase factor
Global DI
Increased profit due to
new product sales andsales increase

FY ended March 2023
Q2 operating profit(reference value)*Operating profit excludes Cellebrite’s operating profit●Increase factor
Entertainment
Increase in development
commissions●Breakdown of impact
New IT
Cost pressure due toincreasing raw material costs

18

FY ending March 2024
Q2 operating profit©SUNCORPORATION All rights reserved.

Turnover and Operating Profit by Segment
FY Ended
March 2023
Q2 Actual
Results

FY EndingMarch 2024
Q2 Actual
Results

Turnover

339

484

42.8%

• Providing cutting-edge digital intelligence tools, associated training, etc. toaddress the explosive increase in the amount of digital evidence and criminals(organizations) with technological expertise

Operating profit

31

59

90.3%

• Aiming to improve legal access to all kinds of mobile phones and improve digital
evidence collection productivity with the next-generation solution UFED Ultra

Operating profit
margin

9%

12.2%

35.6%

• Aiming to contribute to processing and collection of massive volumes of data by
investigation agencies through investing in AI development

3,135

2,742

(12.5%)• The game machine-related business achieves content development with strong
product appeal and high-quality control boards for specific industries and clients

Segment

Year-on Year
Change（％）

TopicsGlobal Data Intelligence

TurnoverEntertainment
Operating profit

Operating profit
marginTurnover

340

341

0.3%

Operating profit
marginAiming to maintain cost-effective revenue over the long term

10.8％

12.4%

15.1%

• In the “retro game” genre, which is regaining popularity especially in Westernmarkets, we expect to further expand revenue by making effective use of ourmany IPs

822

1,430

74.0%

• Promoting product development with 5G and edge AI as key concepts

420.0%• The industrial network device Rooster is dual SIM compatible, making it possible
to duplicate various communication carrier lines. It enables response when faults
occur with communication carrier networks.

-• SunDMS enables alive monitoring and Rooster enables integrated management,
making it possible to greatly reduce the operation and management burden andmaintenance costs of multiple IoT devices installed in remote locations

New IT-Related
Operating profit• The game content business provides full in-house services, from development tooperation, for mobile games using the “Shanghai” brand, an IP with high visibility

20
2.4％

104
7.3%

*Actual results for Q2 of the fiscal year ended March 2023 exclude Cellebrite’s sales*Operating profit is the operating profit before allocating the head office’s management expenses

19©SUNCORPORATION All rights reserved.

Measures in Second Half of the Year by Segment

Segment
Global DataIntelligence

External Environment

Our Initiatives

With law enforcement agencies leading the way, the market is growing,
centering on the Asia-Pacific region
Cutting-edge digital intelligence tools are now becoming indispensable
solutions
In the pachinko and pachislot machine market, smart game machines wereintroduced in November 2022 and have performed well, with demand for new
machines growing, centered on smart pachislot machines.

Entertainment

While supply difficulties caused by the semiconductor shortage are heading
toward recovery, future uncertainties exist, such as increasing material costs
and the decrease in pachinko parlors

In the game content market, games, which are a form of entertainment that
could be enjoyed at home even during the pandemic, have established aposition and are expandingGame development has entered an era when games can be enjoyed by one
person on one computer, and the number of games to be released on various
platforms is increasing, leading to more intense competition

New IT-Related• Strengthening sales activities in the Asia-Pacific region• In response to growing requests to address diversifying cybercrimes, we will startoffering a new supply of relevant products within Japan, based on the global digital
intelligence tool information that we possess• We aim to increase the sense of unity with game machine makers and expand ourmarket share by developing models that leverage the style and technicalcapabilities we have acquired to date
• We will strive to ensure profits by pursuing greater efficiency in development andmanufacturing• Leveraging our retro game IP, we plan to release:
Shanghai Legend for the Nintendo Switch™ in December 2023
and Hebereke 2 for the Nintendo Switch™ by the end of March 2024

With digital transformation essential to resolving the labor shortage andimproving productivity, the IoT’s base is expanding further, and demand is
growing for monitoring/control systems that can be accessed remotely forindustrial equipment, etc.

• Achieving stable operation with SunDMS, which is invaluable for line redundancy
and maintenance/operation, leading to differentiation from other companies andfurther increasing sales of Rooster

Demand for industrial network equipment that enables stable operation overa long time without much cloud dependence/load is increasing• Aiming for increased sales in the new edge computing market

While the semiconductor shortage is recovering, parts continue to increase incost, which may potentially impact the supply of our products and profits• Further expanding Rooster for industrial network equipment• Creating added value through stock business that visualizes and analyzes (BI/AI)
huge amounts of data obtained via OKUDAKE sensor solutions and IoT devices• Aiming to increase overseas sales by leveraging EKTech’s sales channels

20©SUNCORPORATION All rights reserved.

Shareholder Returns

Basic Policy
To strengthen our future business development and operating base, we will distribute profit while
taking into account medium- and long-term changes in free cash flow and also considering balancing
it with stability and internal reserves
FY Ended March 2023

Dividend

FY Ending March 2024

（Annual）

20.00 yen

40.00 yen（End of period）

20.00 yen

40.00 yen

0 yen

0 yen

6.8%

-

(End of Q2）
Dividend payout ratio (consolidated)*The dividend for the year ending March 31st, 2025, has not been determined at this time.

21©SUNCORPORATION All rights reserved.

SUNCORPORATION’s Growth Strategy©SUNCORPORATION All rights reserved.

Diagram of Future Growth
SUNCORPORATION
unconsolidated sales

Increasing existing business and exploring
new growth areas

20.0
billion yen

TurnoverNew IT-Related（M2M/IoT）

Global DataIntelligence

New areas

Expanding sales channels byusing the excellent stability andreliability we have developed as
an advantage and collaboratingwith companies with whom there
is a strong synergy effectStrengthening sales
activities in AsiaPacific region andoffering new products

To Be Continued
Entertainment
Amusementmachines & games
Expansion of market
share and growth basedon pursuing greater
efficiency

Existing
business areas

Time

23

©SUNCORPORATION All rights reserved.

Revising the Medium-Term Management Plan

Since our planned activities, including new product release plans

Backgroundto revision

as well as plans for investing in personnel, organizational
improvements, etc. and M&A measures, are becoming more specificand we continue making preparations aimed at future growth, wewill revise our medium-term management plan

Futureorientation

We intend to disclose a revised plan and measures, with thefiscal year ending March 2024 as the target

24©SUNCORPORATION All rights reserved.

Approach to Growth Strategy

Improved
corporate value
Increased sales

Enhancing high-added
value products

Expanding sales channels/
enhancing product lineup

Specific measures
Improving earnings
structure of existing
business

Collaborating withoverseas subsidiaries,
companies, and regions

Specific measures
Strengthening groupmanagement basethrough talent
strengthening

Investment/M&A ingrowth fields

Entering new
business areas(Entertainment business)

Strategy for increasing sales

Strategy for improving profit

Improved profitability

Strengthening group management/expanding synergy（Global Data Intelligence business/New IT business)

25©SUNCORPORATION All rights reserved.

Initiatives Aimed at Improving Corporate Value

Working to improve corporate value by pursuing both growthstrategy and financial/investment strategy

Initiatives Aimed at Improving Corporate Value
Drivers of improving corporate value
Spread enhancement
Profit improvement/
growthDetails of
main
initiatives

 Revising medium-term
management plan
Growth  Entering new businessareas (including M&A instrategy
growth fields）

PER improvement

Increased capitalefficiency

Shareholder returns

Use of cash and deposits:
optimal allocation to growthinvestment and shareholder
returns
Strengthening relationships forstable growth of subsidiaries
Enhancing shareholder returns

Financial/investment
strategy 26

 Actively holding 1-on-1
meetings with investorsIR Revamping corporatewebsite (planned)
strategy©SUNCORPORATION All rights reserved.

Investment in Growth Fields

Currently formulating cash allocation to maximize corporate
value, revolving around revising existing businesses, investingin growth businesses, and exploring new areas
Cash on hand
Retained earnings/
Interest-bearing
liabilities

Acquisition of treasury shares

Shareholder
returns

Cash flow

Dividends

Capital investment

Sustained
growthReinvestment

 Improving productivity using IT
 Improving work environment (work style reform) Enhancing R&D facilities
 Maintaining investment in business base

Anticipated R&D fields

Smart factories
Healthcare

Strategic
investment

M&A, etc.

Growthinvestment

Data business Incorporating new products/technology(including venture investment, etc.)
 Expanding M2M business field/area

New areas

Personnel investment

Security

27©SUNCORPORATION All rights reserved.

Change in M&A Policy

Shifting from M&A focused on existing businesses to an M&A
policy that explores a wide range of possibilities for new growth
April 2020–March 2021

April 2021–March 2022

April 2022–March 2023

PolicyConsidering M&A for the purposeof expanding existing businesses

Considering M&A for the purpose of
reducing costs and increasing
efficiency of existing businesses

Considering M&A with potential to
become new portfolio

Sectors
considered

Related product manufacturing, DX
services, DX solutions, etc.

Production companies inentertainment business, new ITrelated vendors, etc.

Drones and various mobility-related
businesses, information securityrelated businesses, etc.

RegionDomestic

Domestic, Europe,
Asia

Seeking possibilities
without area restrictions

No. of cases
considered

５companies

11 companies

17 companies

28©SUNCORPORATION All rights reserved.

Strengthening Group Management Base through Strengthening Personnel

Strengthening thedevelopment of technicaltalent, enabling advanced
technologies to be linked
to results

Starting discussion of management
issues we are facing
Establishing talent development as amanagement priority

Personnel strategy orientation
Establishing a work
environment that facilitates
work

Developing humancapitalOrganization that creates

Acquiring talentinnovation

Enhancing and revising training
and education systemImproving employee satisfactionUsing overseas internships

Enhancing benefits packageUsing talent management
system

Diversity measures

Strengthening collaboration witheducational institutions

Global recruitment fromoverseas and abroad







Sharing internal expertise29

Corporate climate thatencourages people to take onchallenges
Implementing merit point-based
assessment system
Fostering culture that creates
connections between people©SUNCORPORATION All rights reserved.

Reference Materials: Market Value of SUNCORPORATION GroupThe market capitalization of SUNCORPORATION’s shareholdings in Cellebrite, which is aholding company of SUNCORPORATION listed on the NASDAQ market (95,597,718 shares
held), is approximately 116.4 billion yen, and SUNCORPORATION’S market capitalization
valuation is only around 50.4 billion yen, so undervaluation of the share price is increasing
Unit: 100 million yen
Rate: Converted at a rate of 150 yen to 1 USD
Compared based on SUNCORPORATION’s share price of
2,100 yen on November 22, 2023

Market value of
Cellebrite’s total
issued shares

1,164

Market value of Cellebrite

shares held by
SUNCORPORATION

Cellebrite shares’
market value

504
SUNCORPORATION
shares’ market value

30©SUNCORPORATION All rights reserved.

Disclaimer

The purpose of this document is to provide information about the company’s business, management strategy andperformance. It is not intended to solicit investment in securities issued by SUNCORPORATION.
Furthermore, this document was created based on financial results and corporate data available as of November 14, 2023.
The opinions and forecasts included in this document are based on the company’s judgment at the time the material was
prepared. SUNCORPORATION makes no guarantees or promises regarding the accuracy or completeness of theinformation, which is subject to change without notice in the future.
IR inquiries: IR contact point, SUNCORPORATION
E-mail: ir@sun-denshi.co.jp