Financial Results
for the 6 Months Ended
June 30,2018
July31,2018
SIOS ,Corp.
（Stock Code: 3744 on the Second Section of Tokyo Stock Exchange）© SIOS Corporation All rights Reserved.

Table of Contents
Ⅰ Summary of Business Results for the 6Months Ended June 30,2018
Ⅱ Progress Achieved for First 6 months of FY
2018
Ⅲ Medium-Term Sales and Profit plan andBusiness Forecasts for Fiscal Year Ending
December 31, 2018
© SIOS Corporation All rights Reserved.

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Ⅰ

Summary of Business Results
for the 6 Months Ended
June 30 ,2018© SIOS Corporation All rights Reserved.

3

Consolidated Financial Resultsfor the 6 Months Ended June 30,2018
Results for the
6 months ended
June 30,2017

Results for the
6 months ended
June30,2018

Net Sales

6,226

Gross profit

2,162

6,270
2,056
127
131
79
166

(In millions of yen)

OperatingincomeOrdinary
income173
184

Profit attributableto owners ofparent

89

EBITDA260

Change%Change+44+0.7%

△106

△4.9%

△45

△26.5%△52△28.5%△10△12.0%△94△36.2%※EBITDA・・・Operating Income＋Depreciation＋Amortization of goodwill© SIOS Corporation All rights Reserved.

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Consolidated Net Sales in First Halves of the Past 5 Fiscal Years(In millions of yen)

Net sales were slightly up
from the same period the year before

7,000

6,238

6,226

6,270

1H FY 2016

1H FY 2017

1H FY 2018

6,000

4,392

5,000
4,000

3,626

3,000
2,000

1,00001H FY 2014

1H FY2015© SIOS Corporation All rights Reserved.

5

Consolidated Operating Income and R&D
spending over Past 5 Fiscal Years（In millions of yen）
400

 Operating income for the first half of FY 2018 down by
45 million yen from the same period the year before.
 Continue investment in research and development.

305300221200100282264

R&D spending

430-100330173286127△55OperatingIncome
1H FY 2014

1H FY 2015

1H FY 2016

© SIOS Corporation All rights Reserved.

1H FY 2017

1H FY 20186

Consolidated EBITDA in First Halvesof the past 5 fiscal years.

EBITDA in the first half of FY 2018 down by 94(In millions of yen) million yen from the same period the year
before
450
400

417

350

260

300250

166

200
150
10076
△21500-50
1H FY 2014

1H FY 2015

1H FY 2016

© SIOS Corporation All rights Reserved.

1H FY 2017

1H FY 20187

Consolidated Balance Sheets（In millions of yen）

Currentassets4,141

投資その他

476

Total
liabilities
3,772

Total net
assets1,076

 Tangible fixed assets 169
 Intangible fixed assets 61

Currentassets
4,275

投資その他



Total net
assets1,147

 Tangible fixed assets 219
 Intangible fixed assets 70

As of December 31, 2017


484

Total
liabilities
3,902

As of June 30,2018

Current assets ： An increase of 66 million yen in work in progress, anincrease of 62 million yen in cash and deposits
Current liabilities ： An increase of 288 million yen in advance received
Fixed liabilities： An decrease of 66 million yen in long term loan payable© SIOS Corporation All rights Reserved.

8Analysis of Consolidated Cash Flows(In millions of yen)

△70△111△92,249

2,311

255

Cash and cash
equivalents asof December
31,2017

Cash flows fromoperatingactivities

Cash flows frominvesting activities

Cash flows fromfinancing
activities

Effect ofexchange ratechange on cash
and cashequivalents

Cash and cash
equivalents asof June 30, 2018

 The SIOS Group had Sufficient cash and cash equivalents
as of June 30,2018 thanks to substantial cash flows
collected from operating activities.
© SIOS Corporation All rights Reserved.

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Open System Infrastructure BusinessNet sales

3,543 million yen, up 3.5% year on year

Segment profit

20 million yen, down 81.2% year on year
Net sales（In millions of yen）

Net sales

Japan

3,543

3,424

 Sales of LifeKeeper, core product was declined YoY.
 Sales of software products sourced from Red Hat,

Up3.5％

Inc.increased.
 OSS＊ support and OSS-related products increased
steadily.

Overseas

Down
81.2%

107

 Sales decreased in all areas except Europe.

Segment profit

20Segment profit
1H FY 2017

1H FY 2018

A decline in gross profit ratio of products sold and lesssales of LifeKeeper resulted in a decrease in segment
profit.
Note: See the Glossary on Page 24 for descriptions of terms with an asterisk.

© SIOS Corporation All rights Reserved.

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Application BusinessNet sales

2,727 million yen, down 2.7% year on year

Segment profit

107 million yen, up 63.1% year on year
Net sales（In millions of yen）

Net sales

2,801

 Sales of software applications for MFPs* declined YoY.

2,727

 Revenue from providing financial institutions with supportfor system development and implementation declined.

Down
2.7%

 Sales of business support systems to regional banks andother financial institutions surged.

Segment profit

Segment
profit107

65

Up 63.1％
1H FY2017

 Segment profit jumped as a result of a decrease of 50
million yen in amortization of goodwill and assets
related to customers, which more than offset an

1H FY2018

increase in expenses associated with new businesses.

© SIOS Corporation All rights Reserved.

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Sales of LifeKeeper and Software Applications for MFPs
Reasons fordecliningsales

A fall in high-volume deals for both products compared with thesame period the year before- Sales of software applications for MFPs slowed in the April-June quarter afterachieving a solid performance in the preceding quarter.

Sales generated fromhigh-volume deals

H1 of FY 2017

Actions tobe taken

H1 of FY 2018

 Work more closely with sales partners
 Focus sales efforts on pursuing high-volume deals
 Push sales of such new products as a new generationof SIOS Coati*, log capturer NX Plus*, and Easy Fax*
© SIOS Corporation All rights Reserved.

12ⅡProgress Achievedfor First 6 months of FY 2018

© SIOS Corporation All rights Reserved.

13

3 Key Medium-Term Strategic Initiatives

1Expand into newBusiness segments
Including Fintech

2Continue to invest inResearch anddevelopment3

Become more
Competitive in corebusiness© SIOS Corporation All rights Reserved.

141. Expand into New Business Segments including Fintech
SIOS and Rhelixa, Inc. formed a capital and business alliance,
under which to jointly develop a cloud-based platform foranalyzing epigenomes.

andThe alliance will provide SIOS withopportunities to acquire expertise inanalyzing epigenomes and to expand
its business into the bioscience field.

The alliance will provide Rhelixa with
opportunities to acquire cloud technologythat enables the development of aplatform for analyzing epigenomes and toaccelerate its business.

Under this alliance, SIOS is better positioned to launch apromising new business as part of efforts to achieve its missionof “making the impossible possible for the people of the world.”© SIOS Corporation All rights Reserved.

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2. Continue to Invest in Research and Development
California-based SIOS Technology Corp. opened an R&D centerat the University of South Carolina to jointly research anddevelop leading-edge AI technologies with the university.
SIOS Technology Corp.

Step up R&D efforts for AItechnologies

 Develop new AI-enabled technologies and products Participate in research projects initiated by theuniversityR&D

 Recruit skilled talent from the campus through aninternship program and other programs

University of South Carolina

AINurture students tobecome AI specialists

 Provide students with opportunities to learn fromSIOS engineers the latest AI technologies and apply
them to address real-world issues
 Use SIOS-supplied software to work on leading-edge
AI technologies© SIOS Corporation All rights Reserved.

163. Become More Competitive in Core Businesses
Conduct SIOS Coati projects to incorporate the latest IT solutions
from around the world into our offerings
Capitalize on technical expertise inapplications development provided
by a global cloud player
SIOS

Offer enterprise SaaS* designed to
fully automate a business cycle
Credit-card billing

Authorization necessary
for the provision ofservices

Clients

Use the serverless architecture on Amazon
Web Services* to offer secure services on aglobal scale

Marketing automation

Product websites
Social ads© SIOS Corporation All rights Reserved.

173. Become More Competitive in Core BusinessesAWS Summit Tokyo2018
One of the largest cloudcomputing conferences in Japan

Our presentation on theapplication of a serverlessarchitecture drew a capacityaudience.
Presentation heldon May 30, 2018••

Title: Rewriting the SIOS Coati Program Using ServerlessArchitecture
Presented by Masataka Kurihara, a member of the board of SIOS
Technology Corp. , and SIOS Technology, Inc.

© SIOS Corporation All rights Reserved.

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Ⅲ

Medium-Term Sales and Profit
Plan and Business Forecasts forFiscal Year Ending December
31, 2018© SIOS Corporation All rights Reserved.

19

Medium-Term Sales and Profit Plan
Establish basis of growth in next 3 years andachieve net sales of 15.5 billion yen and EBITDA of 1.1billion yen in FY2020

12.0

NetSales

6.5

7.3

12.4

(In millions of yen)

700

650

290

2013
Results

2014
Results

1,100

9.3
490

120

13.0

14.2

15.5

EBITDA

420

(40)
2015
Results

2016
Results

2017
Results© SIOS Corporation All rights Reserved.

2018
Plan

2019
Plan

2020
Plan20Consolidated Business Forecast for Fiscal YearEnding December31,

Results for the
6 months endedJune30,2018(In millions of yen)

Forecast for fiscalyear ending
December 31, 2018(in millions of yen )Percentage ofachievement

Net sales

6,270

13,00048.2%

Operatingincome12733038.5%

Ordinary
income

131

330

39.7%

Profit attributableto owners ofparent

79260

30.4%

EBITDA

166

420

39.5%

© SIOS Corporation All rights Reserved.

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Initiatives in 2H FY 2018
1 Expand into new business segments including Fintech
Accelerate growth of management support system
for financial industry

2 Continue to invest in research and development

Continue to invest in research and development of
Cloud/AI arena

3

Become more competitive in core businesses

Strengthen marketing activity ofLifekeeper/Software applications for MFPs
© SIOS Corporation All rights Reserved.

22About SIOS

SIOS is Innovative Open Solutions
SIOS Corporation has been focused on commercializing Open-source software based primarily on Linux, andmarketing and providing support for software products developed in-house. We recently launched products andservices that leverage such emerging technologies as artificial intelligence, Fintech and cloud computing.
We are committed to pursuing Innovative software solutions to remain in the global IT arena as Influential playerthat continues to create greater value and contribute to a better society.
Headquarters
CapitalEstablished

SIOS building, 2-12-3 Minami-Azabu Minato-ku, Tokyo,Japan

1,481 million yen
May23, 1997

No. of employees

481 on a consolidated basis（as of June 30, 2018）

Main consolidated
subsidiaries

Japan:U.S.A:
SIOS Technology Inc. SIOS Technology Corp.
Glugent Inc.
Keyport Solutions, Inc.
Profit Cube Inc.
© SIOS Corporation All rights Reserved.

23

GlossaryPage

Term

Description

10

LifeKeeper

A failover software product that automatically switches a failed primaryserver to a backup server

10Software Products sourced
from Red Hat, Inc.

Open-source software products developed by Red Hat,Inc. a provider of
open-source solutions.

10OSS（Open-source software）

11

Software applications forMFPs

12

SIOS Coati

12

LogCapturerNXPlus

12

EasyFAX

Application for converting a document received via fax into a digital form
and renaming and storing it in an automatically created folder according
to sender and receipt date

14FintechAn emerging technology for facilitating innovations in the financial sector.

15

Cloud

A new form of computing that provides computing resources as services
over internet

17

Amazon Web Service

17

Serverless Architectures

17SaaS

Software whose source code which is the fundamental component of theprogram, is made available for free and can be used, modified, andredistributed.
A multifunction peripheral (MFP) is a piece of office equipment thatincorporates print, scan, copy, and fax capabilities into one unit. SIOS
develops, markets, and updates Quick Scan and Speedoc, document
management software applications running on an MFP.
Cloud-based service for automatic system failure detection and recovery
Application for recording image and operation logs of what is copied,
faxed, printed, and scanned on an MFP by users

Cloud-based services provided by Amazon.com, Inc.
Technology that enables the use of a system without the need to build aserver environment
A software distribution model in which a provider hosts a software
application and makes it available to customers over the Internet© SIOS Corporation All rights Reserved.

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Cautionary Statement
Forward-looking statements about the Company`s business outlook contained in thisdocument reflect management`s assumptions and judgements made on the basis ofavailable information, and may include risks and uncertainties. We caution that significant
risks and uncertainties could cause actual performance to differ materially from what is
discussed in the forward-looking statements. Significant risks and uncertainties that might
affect our performance include, but are not limited to, the economic environment andmarket conditions in which we operate.

For inquiries about this document
Call the IR section of SIOS, Inc. on 03-6411-5111（+81-3-6401-5111 from outside Japan）
or fill in and send an online inquiry form available at:https://lp.sios.jp/MRK_Inquiry_IR.html© SIOS Corporation All rights Reserved.

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