Digital Garage, Inc.
-FY June 30, 2013 –Financial ReportAugust 14, 2013

Contents

Mission and Business Model ・・・・・・・・

3

Investment Highlights・・・・・・・・・・

7

Group Financial Performance Review ・・・・

9

Segment Performance Review ・・・・・・・ 17
Appendix・・・・・・・・・・・・・・・・・ 41-2-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Mission and Business Model-3-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG’s Mission
context company

Digital Garage creates
innovative business context
for the new internet age andprovides unique businesssolutions for new lifestyles,
society and industries bylinking:-4-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG’s Business Modelcontext company

Produce and incubate Internet businesses

with optimal use of our three core strengths: IT, MT and FT★ Information Technology★ Marketing Technology★ Financial Technology-5-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG's Unique Incubation Model with Enabling Platform
context company

DG continues to incubate and offer original internet services
using unique enabling platform since earliest days of Internet

Twitter

1995-2000

2000-2008

Advertising/promotion

Advertising and promotion

2008-

Payment infrastructure

Social media marketing

e-commerce/social media commerce
Completion of Japan’s largest payment infrastructure
Number of affiliated websites: Over 80,000

Over 700 national clients

Enabling Platform/Two Profit Bases-6-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Investment Highlights
context company

Record ordinary profit in the first year of new mid-term plan
〜 88% increase in revenue, 25% increase in operating profit before
goodwill amortization, EBITDA increase 2X to 5.9 Billion Yen 〜■ Business Segment Highlights

Ⅰ

Incubation Segment■ Internet software developer Neo has completed the M&A and began operating on all
cylinders■Expansion of DG Incubation’s global portfolio and favorable market condition

Ⅱ

Marketing Segment■ Capital and business alliance with Dentsu (Big Data business, discover andcommercialize leading edge marketing technology)■ Formation of audience data business project team with DG, Dentsu, Kakaku.com※Established a JV for Science Incubation (Dentsu ScienceJam Inc.)

Ⅲ

Payment Segment■ Establish econtext ASIA as a holding company in HK to create payment business HQ■ Strategic alliance with 3 major Japanese credit card companies and target Asia
businesses-7-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Big Data Project and Strategic Alliance
context company

DG spearheading new businesses across US, Japan and Asia.
〜Capital and business alliance between Dentsu and 3 major credit card companies for big data business〜-8-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Group Financial Performance Review-9-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

FY13.6 Summary: Profit and Loss (Consolidated)
context company

Revenue increased 88% YoY, EBITDA doubled〜 Ordinary profit reached a record high of 3 billion yen〜(¥ million)

Net sales

FY13.6

FY12.6（Cumulative Actual）（Initial Forecast）

Ratio（Cumulative Actual）（Year-on-Year） （Actual vs Forecast）

14,90325,00027,964

87.6%

11.9%

Incubation

2,610

2,800

2,509

-3.9%

-10.4%

Marketing

8,558

9,200

11,043

29.0%

20.0%

Payment

3,734

13,00014,412286.0%

10.9%

1,621

1,650

1,322

-18.4%-19.9%

Incubation

1,632

500

290

-82.2%-42.0%

Marketing

511

600

472

-7.6%

-21.3%

Payment

549

1,400

1,303

137.3%-6.9%

Ordinary income

2,708

2,800

3,078

13.7%

9.9%

Net income

2,106

1,700

2,715

28.9%

59.7%

EBITDA

2,967

4,000

5,900

98.9%

47.5%

Operating income

Note: Operating income per segment is based on figures prior to elimination or Group deduction. EBITDA is based on preliminary calculation.
Change in Veritrans Group’s Mar16 FY reporting. (March end extending to Jun end) Results reported over 15 month period.
Copyright © 2013 Digital Garage, Inc. All Rights Reserved-10-Consolidated Sales/Operating Income Before Amortization
context company〜 Operating profit is down 18% YoY but operating profit before
depreciation is 25% higher〜（¥ million）【Revenue】【Operating profit before goodwill amortization】
25% increase YoY

88% increase YoY
FY13.6 / 27,964

FY12.6 / 1,809

FY13.6 / 2,261

FY12.6 / 14,903-11-

Copyright © 2013 Digital Garage, Inc. All Rights ReservedComparisons of Incubation Segment’s Performancecontext company〜 Reduction in sale of stocks but agile software developer Neo has
begun full operation 〜（¥ million）-12-

Copyright © 2013 Digital Garage, Inc. All Rights ReservedComparisons of Marketing Segment’s Performance〜 Growth gaining traction in web marketing businessand investing in data business 〜

context company（¥ million）-13-

Copyright © 2013 Digital Garage, Inc. All Rights ReservedComparisons of Payment Segment’s Performancecontext company〜 Domestic online payment business is growing steadily 〜
econtext ASIA files for listing in HKSE（¥ million）【Net Sales】【Operating Income】

7,984

789

Note: Change in Veritrans Group’s FYMar16 FY reporting. (March end extending to Jun end) Results reported over 15 month period.
First half 9 months period. Second half 6 months period.

-14-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

FY13.6 Financial Summary for B/S（Consolidated）
context company（¥ milliom）

FY12.6

FY13.6Year-on-Year

Current assets

28,00533,837+5,832

Cash and deposits

12,30815,329+3,021

Receivables

7,577

9,037

+1,460

Money held in trust

3,404

3,768

+364

operational investment securities

1,904

2,641

+737

21,333

22,173

+840

912

2,038

+1,126

investments

4,299

5,521

+1,222

investment real estate

2,677

3,102

+425

Goodwill

12,104

9,968-2,136

Total assets

49,33856,010+6,672Current liabilities

28,50521,801-6,704

Deposits

14,956

18,229+3,273

payment-business-related items

Short-term borrowing

10,740305-10,435

3.8 billion yen reduction

Fixed liabilities

355

6,950

+6,595on interest bearing liabilities

Long-term borrowing

183

6,799

+6,61628,861

28,752-109

Fixed assets
Tangible Fixed Aassets

Total liabilities

Reason for change/Remarks

payment-business-related items

Veritrans moving head office■ Quick Ratio

98%(12/6)→155%(13/6)■ Equity ratio

Net assets

20,47627,258+6,782

Issued capital

6,017

7,330

+1,313

Reserves

9,703

11,016+1,313Retained earnings

4,505

7,003

+2,498

Minority interest

174

1,468

+1,29449,33856,010+6,672

Liabilities/Net assets-15-

41%(12/6)→46%(13/6)
Allocation of new shares to Dentsu

Card companies investing in econtext ASIA

Copyright © 2013 Digital Garage, Inc. All Rights ReservedForecast for June 2014
context company〜 Planning for 14% increase in revenue YoY, 36% increase in operating
profit YoY, 13% increase in ordinary profit YoY〜
-Incubation segment leads as market environment improves for investment exits, includes listing expenses for econtext ASIA-

FY12.6

FY13.6

FY14.6（Cumulative Actual）（Cumulative Actual）（Cumulative Forecast）

14,90327,96432,000

Incubation

2,610

2,509

5,000

Marketing

8,558

11,043

12,000

Payment

3,734

14,412

15,000

1,621

1,322

1,800

Incubation

1,632

290

1,100

Marketing

511

472

650

Payment

549

1,303

1,150

Ordinary income

2,708

3,078

3,500

Net income

2,106

2,715

2,100

EBITDA

2,967

5,900

4,800

(¥ million)

Net sales

Operating income

Note: The segment ordinary profit does not include the HQ cost

-16-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

FY 2013 Segment Performance Review-17-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Concept and Slogan of the New Mid-term Business Plancontext company-18-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG’s Three Headquarters
context company

Three HQs
Settlement HQ

DG Group HQ-19-

Incubation Center andAgile Development HQ

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG’s Incubation Stream and Payment Segment
context company

Combining the cutting-edge technologies
and expanding into growth of emerging markets- Cutting-edge digital media- Development, marketing, acquisition of
payment technologies, investment- Media development/takeover/M&A

2011-present- Develop monetization platform-Develop New Media-Pursuit user growth/sharing experience-Execute monetization2013-20152012-2013

Establishing next generation
development network which goes far
beyond world-famous agile
development process

From Japan to the world
From the U.S. to Japan
Mutually beneficial
investment

Creating critical presence through the
Incubation Center in the U.S.

Connect with Settlement HQ
Investment in Asia focused settlement
platforms-20-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Business Segments
新たな事業セグメント
context company

Incubation Segment
Integration of incubation-related businesses(Integration of Media Incubation and Venture Incubation)
Investment to cultivate promising startups inside and outside Japan
Development of media services inside and outside Japan
Technology/business development using Lean Startup methodology

Marketing Segment
Establishment of new marketing business(DG&Ibex Company and CGM Marketing run as one unit)
DMP business utilizing advertisement andpromotion as well as audience data from media ofgroup companies

Payment Segment
Centralization of settlement businesses
resulting from consolidation of VeriTrans(Spin-out of payment business from the Hybrid
Solution business unit)

Payment platform in Asia
One of the largest online settlement
infrastructures in Japan-21-

Copyright © 2013 Digital Garage, Inc. All Rights ReservedIncubation Segment
context company

Ⅰ

Incubation
インキュベーション
Net Sales

Operating Income

FY12.6

Full Year Actual

2,610 million yen

1,632 million yen

FY13.6

Full Year Actual

2,509 million yen

290 million yen

FY14.6

Full Year Forecast

5,000 million yen

1,100 million yen➤ DG Incubation, Inc.
Invests and incubates cutting-edge Internet startups➤ Open Network Lab, Inc.
Provides support to Internet business entrepreneurs with global visions➤ Neo Innovation, Inc.
Offers software development solutions and entrepreneurship support by agile
development methodology-22-

Copyright © 2013 Digital Garage, Inc. All Rights ReservedIncubation Segment: Business Concept
context company

Establishment of incubation ecosystem within DG Group network
Maximize investment results with global incubation ecosystem, which covers comprehensively
from discovery/investment to agile/business development and support
Collaboration with MIT,
Provision of topnotch mentors andglobal development environment

Incubation experiencefor over 20 years

Sourcing
Investment

Business
Development
Agile
Development
Japan market localization,business support basedon the know-how learned
from the collaboration
with Twitter

-23-

N.A.

S.A.

Asia

Euro

Fusion of agile development
and lean startup
methodology

Copyright © 2013 Digital Garage, Inc. All Rights ReservedIncubation Segment: Business Strategy
context company

Overseas investment focused on Silicon Valley
Investment and development for prospective venture companies originated from Japan
Utilization of global agile development network/San Francisco Incubation Center
Establishment of multi-directional investment/development including import/export and global models

Import model

Export model・Prospective venture investment/development

・Prospective Japanese venture investment

・Global development support with Japanese・Global development support Lean Global
ventures originated from Japan

market localization for overseas businesses

Media Lab Fund

Stage-specific investmentin prospective ventures

Seed
stage

Early
stage

IPO

u Utilization of agile
development network

M&A

u Collaboration with
new Incubation Center

Middlestage ˜Accelerate
Global Incubation-24-

Incubation of prospective
seed-stage Japanese ventures

http://onlab.jp/

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG Incubation: Highlights
context company

Actively investing in international and domestic startups
Supporting growth by integrating DG’s payment and marketing solutions
Current portfolio

Current major new investments

NumberBook Value

Equity60

2,473

Domestic company

18

1,061

Overseas company

42

1,412

Fund

4

433

Total

64

2,906

Category

MEDIA DO Co.,Ltd.

all companies seeking to develop and expand their eBookbusinesses. Currently providing contents to LINE manga.

iRidge, Inc. [Domestic/ad tech]popinfo has been offer a push notification service and its
related service for smart phones to build new communication
with the customers. Winner of O2O Grand Prix by EC
Research Institute.

Kiip, Inc. [Overseas/ad tech]Develops and operates a smartphone app based ad platform.
Integrated in over 600 apps in the US. Installed in (Yahoo JapanApp).

■ Distribution by sector (equity)
Ad
Technology,
18.3%

Company
numberbasis
Commerce,
16.7%[Overseas/media]

MEDIA DO is also a leading eBook distributor that supports(million yen)

Ad

New
Project

Technology,
7.7%Media Lab Fund [Overseas/Seed]

Google Ventures and other big VC fund will
co-invest into venture companies run by
MIT Media Lab graduates.

Value
basis

Driving Global Incubation with maximum
utilization of the DG group’s Enabling Platform

Commerce,
14.5%

-25-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Open Network Lab: Highlights
context company

Established Onlab as the leading seed accelerator in Japan.
・ In 3 years of full operation, we nurtured over 150 entrepreneurs/engineers representing 40 teams.
・ Preparing for programs/events for overseas expansion in San Francisco, Asia, etc.

Current state of seed accelerator program

Mentors for entrepreneurs■Participants not just domestic but from all over the world ■ Events held periodically with high profile
entrepreneurs

・PJ Hyett, Github Founder・Alistair Croll, Lean Analytics author・Andrew Johns, Growth hacker for Facebook, Quora■Investments from top tier VC
AnyPerk,Inc
3 rd party perks business for corps
Accepted in Ycombinator

Github Founder COO
PJ Hyett

Kiip
FounderCEO
Brian Wong

Greylock Partners
AndrewJohns

Zendesk
FounderCEO
Mikkel Svane■ Opened co-working spaces in Daikanyama
and Kamakura to host entrepreneurs

AppSocially,Inc
Mobile app customer acquisition tool
Accepted in 500startups＜Daikanyama＞

WHILL,Inc
Next generation personal mobility
business Accepted in 500 startups＜Kamakura＞

Preparing a collaboration with San Francisco Incubation
Center slated to open in November.

-26-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Neo Innovation, Inc. : Highlights
context company

Neo Innovation:

Neo has transformed into a global software development and design company
assisting varieties of Fortune 100 companies and startups with product innovation.
New Management Team
Kaoru Hayashi

Board MemberGroup CEO, Digital Garage
Joi ItoBoard Member

Director, MIT Media Lab
Ian McFarland

ChairmanGlobal Coverage
Vision Statement:
Neo seeks to inspire the world to make software in a fundamentally better
way; a way that leads to more value for society, organizations, and thecreators themselves.

North America
San Francisco(HQ)
New York
Columbus
Cincinnati

EuropeEdinburgh

Ex-Principal, Pivotal Lab

Dan Riedel

President & CEO

Ex-CEO/COO of various agile software &consulting companies
Joi OkadaSouth America

Montevideo/Uruguay

Asia

Singapore

Board Member

Neo’s Enterprise Customers

President & CEO, Digital Garage
USEvan Henshaw-PlathCTO

Ex-CTO of Odeo which was
Twitter’s former company
Eric Ries

General Partner

Lean Startup Advocate＜Client List＞
AT&T, HP, Pitney Bowes, Salesforce, VirtualHR, Adobe, GE, ICANN,
The Weather Channel, Yammer, Standard Chartered, Turnstone etc.
-27-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Marketing Segment
context company

Ⅱ

Marketing
Net Sales

Operating Income

FY12.6

Full Year Actual

8,593 million yen

511 million yen

FY13.6

Full Year Actual

11,043 million yen

472 million yen

FY14.6

Full Year Forecast

12,000 million yen

650 million yen➤ DG&Ibex company
Supports Client's business through Online to Offline strategy and web marketing➤ CGM Marketing, Inc.
Develops and provides ad products incorporating social media audience data,and cutting-edge ad technology➤ NaviPlus Co., Ltd.
Offers website support tools including personalized recommendation engines-28-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Marketing Segment: Business Strategy
context company

Digging deeper into existing business and establishing next generation strategic business rapidly◆ Growth of solid Marketing Solution Business accelerated⇒Further branding of No.1 social business company = DG and practice of O2O strategy◆ Group-wide efforts to develop Audience Data Business into next-generation mainstay through capital/businessalliance with Dentsu⇒Establishing Business Intelligence Service by introducing cutting-edge technologies in the U.S. ahead of others

Group resources
Payment

Introducing
latest US
technologies

Group-related DB
Settlement/
recommendation

Shopping

Recommendation/Development

Integrated DBMedia
Expandingtowards Asia

-29-

Media

Other

Existing media DB
Copyright © 2013 Digital Garage, Inc. All Rights Reserved

DG&Ibex Company Highlights
context company

Cumulative
Results in FY13.6 (July to June)
2013年6月期（2012年7月〜2013年6月）の実績
Total sales

Number of clients

Sales per client

10.04 billion yen

296 companies

3,392 million yen(Year-on-year) +25%

(Year-on-year) ±0%(Year-on-year) +26%

Achieved 25% YoY growth and historical high 10BN Yen in sales【Sales growth】【Growth Factor】
Provided successful digital solutions to customers with focus on
ROI by leveraging our knowledge of social media

Year-on-Year
前年比

+25%

uSolutionl Continuous sales growth of affiliate marketing from financial
and cosmetic companies

uMedial Shopping mall point transactions grew by 34% YoY to 42BN Yen
l Started O2O service that guides customers from point mall tophysical stores

uAd Technology

l Establishing a new business audience data with Dentsul Optimization of customer communication by utilizing audience data
-30-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

CGM Marketing: Highlights
context company◆ Kiip, one of the fastest growing smartphone ad and rewards platforms, will develop smartphone ad andreward business in Japan with Digital Garage◆Expanding social media advertisement business(Twitter, Facebook, LinkedIn)
Grew new businesses by utilizing innovative ad techl Started ad distribution to smartphone apps through Kiip’s
platforml Kiip launched a new O2O solution service that allows
customers receive rewards at convenience storesl Kiip was used in Yahoo! Japan app and is expected help
obtain deals from major publishers

Continuous growth of existing business（Social Media Ads,Tweetmanager)l Ad distribution through social media show steady growthl Partnered with Dentsu and ADK to grow users of-31-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

NaviPlus: Highlights
context company

Continues to be the top recommendation service provider in Japan
Enhanced advertisement optimization capability that could be applied to big data projects in the future〜 Introduced to 600+ websites in Japan 〜
We aim to become the top

Business Model

Marketing Vendor tool provider in Japan

Increase purchase CVR of website visitors andincrease profitability of ecommerce merchants byproviding recommendations and site search functions

Comprehensive Marketing Tool
Review
PostingEngine[User’s Purchase Process in ecommerce websites]
Visit
WebsiteSearch/CompareSite
SearchEngineRecommend Engine

Purchase
Integration with site search engine “Kotohako” enabled us toprovide a one-stop proprietary marketing tool

Avoid having
users leave thewebsiteExpanding marketing solution
utilizing big data
Customer Acquisition
SEM/SEO Ads

Customers who viewed
this product also viewed
these products

Measurement/Analysis
of web accessFeaturedrecommendations-32-

Big Data
Project

Conversion
Optimization
Search/Recommenda
tion

Copyright © 2013 Digital Garage, Inc. All Rights ReservedPayment Segment
context company

Ⅲ

Payment
Net Sales

Operating Income

FY12.6

Full Year Actual

3,734 million

546 million

FY13.6

Full Year Actual

14,412 million

1,303 million

FY14.6

Full Year Forecast

15,000 million

1,150 million➤ econtext ASIA Limited
Payment headquarters to expand e-commerce platforms globally➤ ECONTEXT, Inc.
Integrates online and offline businesses as the convenience store payment pioneer➤ VeriTrans Inc.
Provides leading e-commerce payment solutions➤ PT MIDTRANS (VeriTrans Indonesia)（23％ owned by econtext ASIA）（Indonesian JV）➤ VeriTrans Shanghai（50％ owned by econtext ASIA）-33-（Chinese JV）

Copyright © 2013 Digital Garage, Inc. All Rights ReservedPayment Segment: Business Strategy
context company

To scale Japan’s payment platform into Asia’s No.1 payment platform•

Success of econtext Japan and VeriTrans is based on building customer centric products and solution•

For each region that econtext ASIA does business, we plan to adapt into local culture

Payment HQ
Major Asiancompanies

Japan

Asia

One of the largest payment platform

Asia’s No.1 payment platform

Indonesia

Cutting-Edge Technology

oriented developments

Long Tail Strategy

-34-

China

Quality controlled in Japan

Local culture/customer

Indonesia

CAGR26%

Hong Kong（¥ 100 million）

Alliance/JV【Combined net sales】

Real estate firm ofa majorconglomerate inIndonesia

China

Payment solution
provider with exGinren
management teamin Shanghai
Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Highlight: Domestic Payment Business
context company

Fy13.6（July to June）Results
Number ofaffiliated websites

Number of transactions

Total amount of transactions

90,640149.76 million

７35.5billion yen（Year-on-year）+70.5%（Year-on-year）+14.9%（Year-on-year）+23.7%

New Capital and Business Alliances with the Three Major Credit Card Companies
to expand payment business【Growth Factor】
uGrowth of existing online payment businessØ The transaction amount processed by the twocompanies grew by 23%Ø Strengthened partnership with 3 major credit cardcompaniesu Business development in growing areas
Ø Entered into offline payment service business(IVR Payment Solution)

Transaction Value (100 million)【Transaction Value】
VeriTrans

econtext

1,899

2,008

Year-on-year+32%

Year-on-year

+23%

TM

Ø Started smartphone payment service
Ø Preparing solution for SME ecommerce merchants

Note: Although VeriTrans has been consolidated since FY13.6, abobe numbers include VeriTrans’s for comparison convenience.

-35-

Copyright © 2013 Digital Garage, Inc. All Rights ReservedNew Payment Service: VeriTrans mPOS
context company

Launched a new smartphone payment service VeriTrans ｍPOS

〜 A payment service that can handle international transactions and can beprovided as OEM products 〜Japan
Smartphone Apps
Card Reader Device
Payment Service
Payment Management■Private-Label:

Target merchants with physicalstores■OEM:

Provide smartphone payment
systemOverseas
Target Asian Market■ Key Features/Functions of VeriTrans mPOS：☑ Provide as OEM

Clients can use the payment service under their own brand☑ Highly-Versatile

The payment service can be easily deployed globally by packaging and modularization☑ Multi-Language System
The system supports Japanese, English, Chinese, Indonesian, and Vietnamese☑ Multi-device usage

Clients can use multiple devices to complete transactions that can be managed by one
administration screen-36-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

San Francisco Incubation Center
context company

SF Incubation Center will open this fall and become the core of Lean Global
Our SF Incubation Center is located in the heart of San Francisco - 717 Market Street. The
renovation work will be completed this fall, and we will accelerate our creation of our global
incubation ecosystem by providing co-working space, hosting events, and showcasing startups
and new technologies at our multi-purpose incubation center.
＜Interior Design Plan＞＜Exterior Design Plan＞

Opening event

Joi Ito, co-founder of Digital Garage and Director of MIT MediaLab, will host New Context Conference 2013 San Franciscowith the theme of East Meets West on November 5 th and 6th-37-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Global Incubation Ecosystemcontext company

Creation of a Sustainable and Global Incubation Ecosystem
Global Internet World
Start-ups

ReInvest-38-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Please note that the business forecasts and strategies covered in today’s presentation are based on our current evaluation and future results may vary significantly depending on unforeseeable
events or circumstances.This announcement is solely for the purpose of the investors relationship and is not for making any solicitation for investment in any securities. This announcement does
not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior toregistration or qualification under the securities laws of any such jurisdiction. Any securities of our consolidated subsidiaries have not been registered under the U.S. Securities Act of 1933, as
amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities
Act. Any public offering of securities to be made in the United States will be made by means of a prospectus. Such prospectus will contain detailed information about the company making theoffer and its management and financial statements.

Appendix-40-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Change of Business Segments
context company

We reorganized our business segments as a result of further expansion of our incubation business andVeritrans becoming Digital Garage’s consolidated subsidiary① Consolidated incubation related businesses/functions into Incubation Segment② Consolidated marketing related businesses/functions into Marketing Segment③ Consolidated payment related businesses/functions including Veritrans into Payment Segment◆FY 2012◆FY 20131

HQ/Corporate

HQ/Corporate• Group CEO’s Div. • Corporate Strategy Div.
• Technology Div. • DGUS

• Group CEO’s Div.

Ⅰ

Venture Incubation Segment• DG Incubation

Ⅱ

Media/Incubation Segment

Ⅱ Marketing Segment
2

Hybrid Solution Segment• DG&Ibex• econtext

Note:
1. New companies/divisions are underlined

Ⅰ Incubation Segment• DG Incubation• Open Network Lab• DGUS• Neo• Incubation Business Strategy Office• Open Network Lab• Media Incubation Div. • New Context• CGM MarketingⅢ

1• Corporate Strategy Div.

• DG&Ibex• CGM Marketing• NaviPlus（Subsidiary of Veritrans）

Ⅲ Payment Segment
3-41-• econtext• econtext ASIA
• Veritrans and its subsidiaries (excl. NaviPlus)
Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Financial Summary : Quarterly Profit and Loss (Consolidated)
context company(¥ million)

FY12.6

FY13.6

1Q

2Q

1H

3Q

4Q

2H

1Q

2Q

Net sales

3,418

2,879

6,297

5,202

3,403

8,605

5,307

8,539 13,846

Incubation

583

17

600

1,973

37

2,010

131

616

748

497

1,263

1,761

Marketing

1,906

1,939

3,845

2,295

2,416

4,711

2,364

2,748

5,113

2,825

3,104

5,930

Payment

928

922

1,851

933

949

1,882

2,810

5,174

7,984

3,158

3,269

6,428

437

-134

302

1,708

-389

1,319

-51

523

472

151

698

849

Incubation

387

-136

250

1,650

-268

1,381

-258

56

-202

-20

512

492

Marketing

142

139

282

163

65

228

129

120

249

55

167

223

Payment

154

128

282

142

126

268

308

480

789

253

260

514

Ordinary income

594

70

665

2,193

-149

2,044

167

1,000

1,167

719

1,191

1,910

Net income

533

77

610

1,747

-251

1,496

213

700

913

1,294

507

1,801

EBITDA

698

163

861

2,292

-186

2,106

696

1,573

2,269

2,050

1,581

3,631

44

44

88

44

56

100

200

333

533

211

195

406

Operating income

Amortization

1H

3Q

4Q

2H

6,482

7,636 14,118

Note: Operating income per segment is based on figures prior to elimination or Group deduction.

-42-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

Appendix

Dentsu ScienceJam
context company

Established a joint venture with Dentsu to commercialize cutting-edge scientific research
Established a joint venture with Dentsu to commercialize scientific research led by brilliant scientists andresearchers in Japan, preventing a drain of talented brains to foreign countries and seeking new business
opportunities in conjunction with global companies in Japan. As the first project, we focus on brain science whichis getting attention as a new research area after the Internet and DNA and accelerate joint research, productdevelopment, and technology licensing business.
CapitalDentsu
DG

66.7%
33.3%

Collaborate with Prof.
Mitsukura of Keio Univ.,
an expert in brain-wave
measurement and analysis

Researchers/Sci
entists

DentsuGlobal Companies inJapann Planning, Prototypingn Product promotionn Invest in spin-off businesses②Joint research①Discovering
talentedresearchers

Consumer electronics
companies③Product development④License technology
Automobile
companies＜Focus Areas＞
l Brain sciencel Bid data analysis
l Humanoidl Smart gridl Digital fabricationn Business incubationn Invest in spin-off businesses

Digital Garage-43-

Consumer goods
vendors, etc.
Copyright © 2013 Digital Garage, Inc. All Rights Reserved

PRESS RELEASE
context company

ReleaseDate

Release Contents

2013.8.1＜Digital Garage ＞
Digital Garage and Dentsu to establish a joint venture, Dentsu ScienceJam,
to commercialize results of latest scientific research＜econtext ASIA＞

2013.7.29

Notice of Consolidated Subsidiary Company's Listing Application
to Hong Kong Exchanges and Clearing Limited

2013.7.23

2013.7.9＜CGM Marketing ＞

CGM Marketing to accelerate its acquisition of advertiser and publisher clientsfor the Kiip smartphone advertising and reward platform＜CGM Marketing ＞
CGM Marketing to accelerate the expansion of Kiip, a smartphone advertisement andrewards technology, to convenience stores, bringing O2O solutions to national chains2013.7.2

2013.6.28＜Digital Garage ＞
Digital Garage Forms Business Alliance with Credit Saison＜econtext ASIA＞
Digital Garage Group's econtext ASIA to establish VeriTrans Shanghai, a joint venture
to provide online settlement service in China's local currency-44-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved

PRESS RELEASE
context company

ReleaseDate

Release Contents

2013.4.26＜econtext ASIA＞
Digital Garage Group's econtext ASIA and JCB Agree on the Capital and Business Alliance2013.3.29＜econtext ASIA＞
Digital Garage Group's econtext ASIA and Credit Saison Agree on the Capital andBusiness Alliance for business partnership in Japan and Asia

2013.2.27＜econtext ASIA＞
Digital Garage Group's econtext ASIA and Sumitomo Mitsui Card
Agree on the Capital and Business Alliance2013.2.26＜Digital Garag＞
Digital Garage Begins O2O Marketing Using Kiip's Advertising & Rewards Technology

2012.12.13＜Digital Garag＞
Digital Garage Introduces a Smartphone Advertisement and Rewards Platform Kiip
to Japan2012.11.29＜Neo＞
New Context Announces Name Change To Neo Innovation
To Accelerate Global Business Development Under "Neo"2012.11.19＜Digital Garage ＞

Digital Garage Invests in Vuzz Which Operates "SnapDish Food Camera
To Help Its Global Expansion throughout Asia As The Largest External Stakeholder-45-

Copyright © 2013 Digital Garage, Inc. All Rights Reserved