UNOFFICIAL TRANSLATION
The formal official document is in Japanese

Summary of Consolidated Financial Results for the First Quarter of
Fiscal Year Ending September 30, 2023 (Japanese Accounting Standards)

February 8, 2023
Listed Company Name: MTI Ltd.
Listing Exchanges: Tokyo Stock Exchange
Securities Code:9438
URL: https://ir.mti.co.jp/eng/
Representative:
Toshihiro Maeta, President and Chief Executive Officer
Contact:
Hiroshi Matsumoto, Senior Managing Director
Phone: +81-3-5333-6323
Scheduled date to submit the Quarterly Securities Report (Shihanki Houkokusho): February 14, 2023
Scheduled date of dividend payment: –Supplementary documents for quarterly results: Yes
Quarterly results briefing (Japanese): Yes (for securities analysts and institutional investors (on demand))(Figures less than one millions of yen are omitted)

1. Consolidated business results for the three months ended December 31, 2022
(October 1, 2022– December 31, 2022)(Percentages represent year-on-year changes)(1) Consolidated operating results (cumulative total)
Net salesFirst quarter of fiscal year ending
September 30, 2023
First quarter of fiscal year ended
September 30, 2022
(Note) Comprehensive income:Operating income

Millions of yen% Millions of yen

7,091

8.2

Profit attributable toowners of parent

Ordinary income% Millions of yen% Millions of yen

%

–

–

(590)

–

252

14.7

(61)

(88)

6,551
3.9
451
(18.5)
395(20.2)
Three months ended December 31, 2022: (639) millions of yen –%Three months ended December 31, 2021: 175 millions of yen 20.9%
Net income
per share
YenFirst quarter of fiscal year ending
September 30, 2023
First quarter of fiscal year ended
September 30, 2022

Net income
per share/diluted

Yen(10.77)

–

4.62

4.62

(2) Consolidated financial position
Total assets

Net assets

Millions of yen

As of December 31, 2022
As of September 30, 2022
(Reference) Shareholders’ equity:

Equity ratio

Millions of yen%

29,28016,78329,265
17,877
As of December 31, 2022: 13,056 millions of yen
As of September 30, 2022: 14,065 millions of yen

44.6
48.1

2. Dividends
End of firstquarter
Fiscal year ended
September 30, 2022
Fiscal year ending
September 30, 2023
Fiscal year ending
September 30, 2023 (forecast)End of second
quarter

Dividend per share
End of third
quarterYear end

Annual

Yen

Yen

Yen

Yen

Yen

–

8.00

–

8.00

16.00

8.00

–

8.00

16.00

–

(Note) Revision of dividend forecast for during this period : No

3. Forecast for consolidated business results for the fiscal year ending September 30, 2023
(October 1, 2022 – September 30, 2023)
Net sales
For the first half
Full year(Percentages represent year-on-year changes.)
Profit attributable to
Net income
Ordinary income
owners of parent
per share

Operating income

Millions of yen%

Millions of yen%

12,70026,000

(2.1)
(1.8)

200
800

(66.6)(8.1)

Millions ofyen%Millions of yen%

Yen

0 (100.0)400 (17.7)

(740)
(600)

–
–

(13.55)(10.99)(Note) Revisions to forecasts for consolidated business results published most recently: No

* Notes(1) Important changes of subsidiaries during the term (changes in specified subsidiaries resulting in change in scopeof consolidation): Not applicable
New: –
Exception: –(2) Application of specific accounting treatment to the preparation of quarterly consolidated financial statements: Not
applicable(3) Changes in accounting policies and changes or restatement of accounting estimates(i) Changes in accounting policies due to the modification in accounting methods:(ii) Changes in accounting policies other than (i):(iii) Changes in accounting estimates:(iv) Restatement:

Not applicableNot applicableNot applicableNot applicable(4) Number of outstanding shares (common shares)(i) Number of shares outstanding at the end of period (including treasury shares):12/2022: 61,263,000 shares
09/2022: 61,263,000 shares(ii) Number of treasury shares at the end of period
12/2022: 6,453,173 shares
09/2022: 6,450,273 shares(iii) Average number of shares during the period (quarterly consolidated cumulative period)
Three months ended 12/2022: 54,810,804 shares Three months ended 12/2021: 54,751,252 shares* This Summary of Consolidated Financial Results for the First Quarter is not included in the scope of quarterly review
by certified public accountants or audit corporations.
* Cautionary statement with respect to forward-looking statements
The forward-looking statements included in this material are based on the Company’s judgments, assumptions, and convictions
based on information available to the Company at the time of publication of this document and may differ materially from actual
results for a range of factors, including conditions of Japanese and overseas economies, changes in the situation of operations inJapan and overseas, and uncertainties and potential risks inherent in forward-looking statements. The risks and uncertainties include
unforeseeable effects of future events. The information on consolidated earnings forecasts and other future forecasts on page 4 of
the Accompanying Materials describes notes on the assumptions of the earnings forecasts and the use of the earnings forecasts.
A video (Japanese) of the briefing on earnings for the first quarter for securities analysts and institutional investors will be madeavailable on demand on the Company's website.

Accompanying materials – Contents
1. Qualitative information on financial results for the current quarterly settlement .................................................... 2(1) Explanation on operating results ..................................................................................................................... 2(2) Explanation on financial position .................................................................................................................... 3(3) Explanation of future forecast information including consolidated forecast .................................................. 4
2. Quarterly consolidated financial statements ............................................................................................................. 5(1) Quarterly consolidated balance sheet .............................................................................................................. 5(2) Quarterly consolidated statements of income and quarterly consolidated statements of comprehensive
income ............................................................................................................................................................. 7(3) Notes concerning quarterly consolidated financial statements ....................................................................... 9(Notes concerning going concern assumption) .............................................................................................. 9(Segment information, etc.) .......................................................................................................................................... 91

1.Qualitative information on financial results for the current quarterly settlement(1) Explanation on operating results
Overview of the first quarter of fiscal year ending September 30, 2023
(Period from October 1, 2022 to December 31, 2022)
The Group is actively engaged in the healthcare business and the school DX business, both of which are
expected to expand in the future, in order to enhance its corporate value over the medium to long term.
During the first quarter under review, consolidated net sales stood at ¥7,091 million (up 8.2% year on year)and gross profit at ¥4,552 million (down 2.2% year on year), attributable to an increase in cost of sales.
The operating loss and an ordinary loss were ¥61 million (compared to operating income of ¥451 million in
the same period of the previous year) and ¥88 million (compared to ordinary income of ¥395 million in thesame period of the previous year), respectively, due to an increase in selling, general and administrative(SG&A) expenses.
A loss attributable to owners of parent came to ¥590 million (compared to profit of ¥252 million in the sameof the previous year). This mainly reflected the postponement of the recording of deferred tax assets andincome taxes-deferred in the consolidated financial statements in accordance with the current accounting
standards for the income tax-related treatment of a gain on the transfer of shares, associated with the transfer
of some of the shares in Boshimo Ltd., a consolidated subsidiary, to MTI Healthcare Holdings Inc., aconsolidated subsidiary, in October 2022.
Consolidated business results(Period from October 1, 2022 to December 31, 2022)
First quarter
First quarterof the fiscal year ending of the fiscal year ended
September 30, 2023
September 30, 2022

ChangeAmountPercentage

Millions of yen

Millions of yen

Millions of yen%

Net sales

7,091

6,551

+539

+8.2

Cost of sales

2,538

1,895

+643

+34.0

Gross profit

4,552

4,656

(103)

(2.2)

SG&A

4,613

4,204

+408

+9.7

Operating profit (loss)

(61)

451

(512)

－

Ordinary profit (loss)
Profit (loss) attributable toowners of parent

(88)

395

(484)

－

(590)

252

(843)

－

Breakdown of SG&A
(Period from October 1, 2022 to December 31, 2022)
First quarter
First quarterof the fiscal year ending of the fiscal year ended
September 30, 2023
September 30, 2022

ChangeAmountPercentage

Millions of yen

Millions of yen

Millions of yen

%

4,613

4,204

+408

+9.7

Advertising expenses

479

360

+118

+33.0

Personnel expenses

1,989

1,912

+76

+4.0

Commission fee

746

753

(6)

(0.8)

Subcontract expenses

560

440

+120

+27.3

Depreciation

289

303

(13)

(4.5)

Other

549

435

+113

(26.0)

Total

2

Operating results by segment are as follows.
Effective from the first quarter of the consolidated fiscal year under review, the classification of reportablesegments has been revised. Comparison and analysis for the first quarter under review are based on the new
segments.
① Content business
The content business includes B2C monthly billing services (excluding the “Luna-Luna” healthcare service
for women and the “CARADA medica” health Q&A service in cooperation with healthcare professionals)
and the B2B original comic distribution business that offers original comic content to comic distributors.
The number of paying subscribers in this segment came to 3,180,000 (down 20,000 from the end of
September 2022), remaining almost flat. The net decrease in the number of paying subscribers for thisbusiness is on a downward trend, reflecting continuing growth in the number of paying subscribers to the“AdGuard” security app.
Net sales came to ¥5,118 million (up 10.3% year on year) mainly due to video sales at the consolidated
subsidiary Video Market Corporation, despite a decrease in the number of paying subscribers compared tothe same period last year.
Operating income was ¥1,439 million (down 6.2% year-on-year) due to an increase in SG&A expenses
resulting from a rise in advertising expenses to promote “AdGuard” membership.
② Healthcare business
The healthcare business includes B2C monthly billing services under the “Luna-Luna” and “CARADA
medica” brands and B2B and B2B2C healthcare services for medical institutions and local governments,
such as the cloud drug record service and the maternal health record book app.
This segment served 580 thousand of paying subscribers. The figure was 10 thousand smaller than at theend of September 2022. On the other hand, the number of pharmacies that offer the cloud drug record
service came to 1,382 at the end of December 2022 (up 118 from the end of September 2022), as the resultof great efforts focused on increasing the number of pharmacies whose motivation to introduce such service
is growing.
Net sales came to ¥1,011 million (up 11.3% year on year), given expanded sales of Cloud drug record
service and Childcare DX service, etc. Despite the ongoing burden of upfront investment spending, theoperating loss stood at ¥172 million (compared to a loss of ¥336 million in the same period of the previousyear), attributable to cost containment measures.
③ School DX business
The school DX business includes school DX business developed for educational institutions by the
consolidated subsidiary Motivation Works Inc.
Net sales amounted to ¥155 million (up 178.5% year on year) due to an increase in monthly usage feesfrom educational institutions that newly introduced the “BLEND” cloud-based school business support
system in April 2022. Despite the significant increase in net sales, the operating loss amounted to ¥246
million (compared to a loss of ¥121 million in the same period of the previous year) due to an increase insubcontracting expenses resulting from stricter recording of software assets from the second half of theprevious fiscal year.
④ Other business
Other business includes the B2B-type AI business operated by Automagi Inc., a consolidated subsidiary,
and the Company’s DX support business for large companies and solution business.
Net sales amounted to ¥1,190 million (down 5.6% year on year). The operating loss was ¥393 million(compared to an operating loss of 36 million yen in the same period of the previous year), primarilyreflecting an increase in the cost of sales as a result of the ongoing response to low-margin projects in the
DX support business for major corporate customers.

(2) Explanation on financial position
At the end of the first quarter under review, total assets increased ¥14 million from September 30, 2022, to¥29,280 million.
Regarding the assets, the current assets increased ¥137 million, mainly due to a rise in cash and deposits.
Non-current assets fell ¥122 million primarily due to decreases in goodwill and customer-related assets,
despite an increase in software.
3Regarding the liabilities, the current liabilities increased ¥1,250 million, mainly reflecting rises inaccounts payable-trade and income taxes payable. Non-current liabilities fell ¥141 million chiefly due to a
decline in long-term borrowings.
Net assets decreased ¥1,094 million due to a loss attributable to owners of parent of ¥590 million anddividend payments.
(3) Explanation of future forecast information including consolidated forecast
The Company will work hard to expand sales and cut losses of its healthcare business, which is expected toplay a key role in increasing revenue and earnings in the future. In the content business, it will make every
effort to increase the number of paying subscribers by expanding sales of the “AdGuard” security-related app
and striving to bolster the original comic distribution business.
Also, the Group will focus on expanding the school DX business that Motivation Works Inc., a subsidiary of
the Company, is actively working to develop. Given the high level of business inquiries about “BLEND”, thecloud-based school affairs support system provided by Motivation Works, upfront investment to strengthen
the business structure by increasing personnel and using subcontractors to deal with growing use of the system,
as well as to develop new versions of “BLEND” that will contribute to introduction costs is likely continue
for the time being; however, this upfront investment will lead to further sales growth.
The Company takes medium- and long-term perspectives in its engagement in the healthcare business, which
has strong potential for future growth and compared with B2C transactions, may move toward a more stable
stock-type business through the establishment of long-term business relationships with customers. Therefore,
the Company is committed to implementing a variety of measures to achieve sales growth.
The cloud drug record service is particularly in high demand in dispensing pharmacies and we will increase
the number of introducing stores through enhancing cooperation with Medipal Holdings, our business partner.
This is because it can contribute to the sustained growth of sales in the healthcare business.
It will also enhance childcare-related services with a focus on local governments that have introduced the“Boshimo”, a maternal health record book app, and will advance digital cooperation among local governments,
hospitals, and residents, thereby advancing its “Boshimo” childcare DX platform strategy to enable thehealthcare business to make a contribution to profit in the medium term.
The Company continues to hold its consolidated earnings forecasts for the first half of the fiscal year ending
September 30, 2023 and for the entirety of the fiscal year as announced on November 9, 2022.
Earnings forecast for the first half of the fiscal year ending September 30, 2023
(Period from October 1, 2022 to March 30, 2023)
Consolidated(Millions of yen)

YoY(%)Net sales

12,700(2.1)

Operating profit

200(66.6)

Ordinary profit

0(100.0)(740)-

Loss attributable toowners of parent

Earnings forecast for the fiscal year ending September 30, 2023
(Period from October 1, 2022 to September 30, 2023)
Consolidated(Millions of yen)

YoY(%)Net sales

26,000(1.8)

Operating profit

800

(8.1)

Ordinary profit

400(17.7)

Loss attributable toowners of parent

(600)

-

4

2. Quarterly consolidated financial statements（1） Quarterly consolidated balance sheet（Unit: thousands of yen）
Previous fiscal year
(As of September 30, 2022)

Current fiscal year
(As of December 31, 2022)

AssetsCurrent assets
Cash and deposits

12,097,658

12,623,445

Notes and accounts receivable-trade, and contract assets

4,294,825

4,709,021

Other2,420,195

1,616,861

Allowance for doubtful accounts(34,097)(33,441)

18,778,582

18,915,887

193,060

203,291

Software2,058,982

2,127,927

Goodwill

655,709586,464

Customer-related assets

912,600

807,300

Other

163,473

192,4813,790,765

3,714,174

3,675,499

3,667,426

337,475

330,440

2,394,793

2,359,027

Other

106,411

101,049

Allowance for doubtful accounts(10,904)(10,904)

Total investment and other assets

6,503,275

6,447,037

10,487,102

10,364,503

29,265,684

29,280,391

Total current assets
Non-current assets
Property, plant and equipment
Intangible assets

Total intangible assets
Investments and other assets
Investment securities
Leasehold and guarantee deposits
Deferred tax assets

Total non-current assets
Total assets

5

(Unit: thousands of yen)Previous fiscal year
(As of September 30, 2022)

Liabilities
Current liabilities
Account payable-trade
Short-term borrowings
Current portion of long-term borrowings
Accounts payable - other,
Income taxes payable
Contract liabilities
Provision for bonuses
Other1,068,638

Current fiscal year
(As of December 31, 2022)－
751,780
1,221,218
19,2362,356,643－
968,835

1,711,087
50,000751,780
1,426,468
544,998
2,150,501
207,138
795,136

Total current liabilities

6,386,353

7,637,111

Non-current liabilities
Long-term borrowings
Retirement benefit liability
Other

3,178,010
1,816,159
7,432

2,990,905
1,861,460
7,345

Total non-current liabilities

5,001,601

4,859,710

Total liabilities

11,387,955

12,496,822

Net assets
Shareholders' equity
Share capital
Capital surplus
Retained earnings
Treasury shares

5,218,512
6,768,841
5,224,287(3,257,237)

5,218,512
6,782,193
4,193,974(3,257,237)

13,954,404

12,937,443

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans

75,55489,490(53,931)

115,577
56,674(53,256)

Total accumulated other comprehensive income

Total shareholders' equity

111,114

118,994

Subscription rights to shares
Non-controlling interests

110,774
3,701,436

109,133
3,617,997

Total net assets

17,877,729

16,783,568

29,265,684

29,280,391

Total liabilities and net assets

6

（2） Quarterly consolidated statements of income and quarterly consolidated statementof comprehensive income
Quarterly consolidated statement of income
For the first quarter(Unit: thousands of yen)
For the first quarterof the previous fiscal year
(from October 1, 2021
to December 31, 2021)

For the first quarterof the current fiscal year
(from October 1, 2022
to December 31, 2022)

Net sales
Cost of sales

6,551,430
1,895,025

7,091,062
2,538,631

Gross profit

4,656,405

4,552,430

Selling, general and administrative expenses

4,204,930

4,613,844

451,474(61,414)

19
－
9,539

19
6,811
17,204

9,559

24,035

1,421

3,030

45,11834,19019,05814,131

65,59851,352395,435(88,730)

1,348
3,240
4,700

743
13,450－Operating profit (loss)
Non-operating income
Interest income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity
methodOther
Total non-operating expenses
Ordinary profit (loss)
Extraordinary losses
Loss on retirement of non-current assets
Loss on sale of investment securities
Loss on step acquisitions
Total extraordinary losses

9,289

14,194

Profit (loss) before income taxes

386,146(102,925)

Income taxes-current
Income taxes-deferred(21,396)
211,446

510,494
34,384

Total income taxes

190,049544,879

Profit (loss)

196,096(647,804)

Loss attributable to non-controlling interests(56,742)(57,587)

Profit (loss) attributable to owners of parent

252,838(590,217)

7

Quarterly consolidated statement of comprehensive income
For the first quarter(Unit: thousands of yen)
For the first quarterof the previous fiscal year
(from October 1, 2021
to December 31, 2021)

For the first quarterof the current fiscal year
(from October 1, 2022
to December 31, 2022)

Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

196,096(647,804)(43,018)
7,465
(717)

257
(32,517)674

16,17339,466(20,097)

7,880

Comprehensive income

175,998

639,923(Comprehensive income attributable to)Comprehensive income attributable to ownersof parent
Comprehensive income attributable to non-controllinginterests

232,131(582,336)(56,133)

57,58783) Notes concerning quarterly consolidated financial statements(Notes concerning going concern assumption)
Not applicable.
(Segment information, etc.)【Segment information】
Ⅰ First Quarter of Previous Fiscal Year (Period from October 1, 2021 to December 31, 2021)
1. Information on net sales, profit or loss for each reporting segment and revenue breakdown information
Reporting segment
Content
business

Otherbusiness(Unit: thousands of yen)Amountreported on the
Adjustment
quarterly
amountconsolidated(Note)1
statement ofincome(Note)2

Healthcare
business

School DX
business

4,577,581

868,562

55,834753,425

6,255,404－

6,255,404

5,844

38,733－

251,448

296,025－

296,025

Revenue from contracts
with customers

4,583,425

907,295

55,834

1,004,874

6,551,430－

6,551,430

Sales to outside customers

4,583,425

907,295

55,834

1,004,874

6,551,430－

6,551,430

Internal sales between
segments or transfers

56,488979－

256,289313,757(313,757)

－

Total

4,639,914

908,275

55,834

1,261,163

6,865,187(313,757)

6,551,430

1,534,829(336,722)(121,368)(36,098)

1,040,640(589,166)

451,474

Total

Net salesGoodsorservicestransferred at a point in
time
Goods
or
servicestransferred over time

Segment income (loss)(Note) 1. The segment income (loss) adjustment of -¥589,166 thousand includes the elimination of inter-segment transactionsof ¥2,333 thousand and corporate expenses not allocated to each reporting segment of -¥591,499 thousand.
Corporate expenses are composed largely of general and administrative expenses not attributed to any reporting
segment.
2. The segment income (loss) represents the result of adjustment to operating income reported on the quarterly
consolidated statement of income.

2. Information on impairment loss on non-current assets or goodwill and others for each reporting segment(Material change in goodwill)In the other business, goodwill of 149,142 thousand yen was recorded in the first quarter of the current
fiscal year due to the acquisition of additional shares of AI Infinity Co., Ltd., which made the company aconsolidated subsidiary.

9Ⅱ First Quarter of Current Fiscal Year(Period from October 1, 2022 to December 31, 2022)
1. Information on net sales, profit or loss for each reporting segment and revenue breakdown information
Reporting segment
Content
business

Otherbusiness(Unit: thousands of yen)Amountreported on the
Adjustment
quarterly
amountconsolidated(Note)1
statement ofincome(Note)2

Healthcare
business

School DX
business

5,042,451

995,112

155,485

713,758

6,906,808－

6,906,808

10,606

12,877－

160,770

184,254－

184,254

Revenue from contracts
with customers

5,053,057

1,007,989

155,485

874,529

7,091,062－

7,091,062

Sales to outside customers

5,053,057

1,007,989

155,485

874,529

7,091,062－

7,091,062

Internal sales between
segments or transfers

65,412

3,366－

315,556

384,335(384,335)

－

Total

5,118,469

1,011,355

155,485

1,190,086

7,475,397(384,335)

7,091,062

1,439,217(172,968)(246,850)(393,372)

626,025(687,439)(61,414)Total

Net salesGoodsorservicestransferred at a point in
time
Goods
or
servicestransferred over time

Segment income (loss)(Note) 1. The segment income (loss) adjustment of -¥687,439 thousand includes the elimination of inter-segment transactionsof -¥8,459 thousand and corporate expenses not allocated to each reporting segment of -¥678,979 thousand.
Corporate expenses are composed largely of general and administrative expenses not attributed to any reporting
segment.
2. The segment income (loss) represents the result of adjustment to operating income reported on the quarterly
consolidated statement of income.

2. Information on impairment loss on non-current assets or goodwill and others for each reporting segment
Not applicable.
3. Matters regarding change in reporting segments and others
Due to the increased importance of the school DX business operated by its consolidated subsidiary,
Motivation Works Inc., the internal management classification was reviewed, and as a result, the reporting
segments were changed from the previous three segments of "Content business," "Healthcare business," and"Other business" to four segments of "Content business," "Healthcare business," "School DX business," and"Other business" from the first quarter of the current fiscal year.
The segment information for the first quarter of the previous fiscal year is based on the new segments
after the change.

10