English translation

Summary of Financial Statements
for the First Quarter of Fiscal Year Ending December 31, 2020
[Japanese GAAP] (Non-consolidated)
May 12, 2020
Company Name

SymBio Pharmaceuticals Limited

Listing: Tokyo Stock Exchange

Securities Code4582

URL: https://www.symbiopharma.com/

Representative

Representative Director,
President and Chief Executive Officer

Fuminori Yoshida

Contact Person

Corporate Officer and Chief Financial Officer Takaaki Fukushima

Scheduled Date to File Quarterly May 13, 2020
ReportTEL +81-3-5472-1125

Date of Dividend
Payment (plan)

Supplementary materials for the quarterly financial statements:

Yes ・ No

Holding of quarterly earnings performance review:

Yes ・ No—

(Amounts of less than one million yen are rounded down.)
1. Business Results for the First Three Months of FY 2020 (January 1, 2020 to March 31, 2020)(1) Operating Results (cumulative)(Percentages indicate year-on-year changes.)
Net Sales

Operating Profit (Loss)

Ordinary Profit (Loss)

Profit (Loss)

Millions of yen%

Millions of yen%

Millions of yen%

Millions of yen

%

551
1,611

(65.8)
81.4

(961)
(595)

—
—

(991)
(616)

—
—

(992)
(616)

—
—

Q1 FY 2020
Q1 FY 2019

Earnings (Loss) per Share Diluted Earnings per Share
Yen

Yen

Q1 FY 2020
(35.84)—Q1 FY 2019(29.92)—(Note 1) On July 1, 2019, the Company conducted a 1-for-4 consolidation of common stock. Earnings per share have been
calculated based on the assumption that this consolidation was conducted at the beginning of FY 2019.
(Note 2) Diluted earnings per share is not stated above due to recording of a net loss per share, despite the potential dilution ofshares.
(2) Financial Position
Total Assets
Q1 FY 2020 (as of March 31, 2020)
FY 2019 (as of December 31, 2019)(Reference) Shareholders’ equity:

Net Assets

Equity Ratio

Millions of yen

Millions of yen

%

5,142
5,273

4,472
4,400

75.5
71.7

Q1 FY 2020 (as of March 31, 2020)
FY 2019 (as of December 31, 2019)―1―

3,880 million yen
3,779 million yen

2. Dividends
Annual Dividend per Share
1st QuarterYen

2nd Quarter
Yen

3rd Quarter
Yen

Fiscal Year End
Yen

Full Year

FY 2019—
0.00
FY 2020—
FY 2020 (Forecast)
0.00(Note) Revision of dividend forecasts recently announced:

—

0.00

0.00

—
Yes ・ No

0.00

0.00

Yen

3. Earnings Forecasts for FY 2020 (January 1, 2020 to December 31, 2020)(Percentages indicate year-on-year changes.)
Operating Profit(Loss)Net Sales
Millions of yen% Millions of yen

Full Year
3,404
20.0
(5,090)(Note) Revision of earnings forecasts recently announced:

Ordinary Profit(Loss)

Earnings (Loss) per
Share

Profit (Loss)% Millions of yen% Millions of yen

%

Yen

—

—

—

(158.98)(5,134)
Yes ・ No

(4,803)

Notes:(1) Application of special accounting treatment in preparation of quarterly financial reports: Yes ・ No
(2) Changes in accounting policies, changes in accounting estimates and restatements after error corrections(a) Changes in accounting policies due to revision of accounting standards:

Yes ・ No(b) Changes in accounting policies due to other reasons:Yes ・ No(c) Changes in accounting estimates:

Yes ・ No(d) Restatements after error corrections:

Yes ・ No

(3) Number of issued shares (common stock)(i) Total number of issued shares at the end of
the year (including treasury shares)(ii) Total number of treasury shares at the endof the year(iii) Average number of shares during the year
(cumulative)

Q1 FY 2020

28,465,381 shares

FY 2019

26,437,681 shares

Q1 FY 2020

21,593 shares

FY 2019

22,593 shares

Q1 FY 2020

27,683,335 shares

Q1 FY 2019

20,619,157 shares(Note) On July 1, 2019, the Company conducted a 1-for-4 consolidation of common stock. Total number of issued shares at the endof the year, total number of treasury shares at the end of the year, and average number of shares during the year have been
calculated based on the assumption that this consolidation was conducted at the beginning of FY 2019.
* Summary of the quarterly financial statements is not subject to quarterly reviews by certified public accountants or accounting
corporations.
* Explanation regarding the appropriate use of earnings forecasts and other matters
All forecasts presented in this document, including earnings forecasts, are based on the information currently available to theCompany and assumptions judged to be reasonable. Actual results may differ substantially from these forecasts due to various
factors. Regarding the assumptions on which the Company’s earnings forecasts are based and their usage, please refer to “1.
Qualitative Information on Quarterly Financial Results (3) Explanation of earnings forecasts and other forward-looking
information” on Page 8 of the attachment.

―2―

Index of the attachment
1. Qualitative Information on Quarterly Financial Results ........................................................................................................................ 4(1) Explanation of business results ........................................................................................................................................................ 4(2) Explanation of financial position...................................................................................................................................................... 8(3) Explanation of earnings forecasts and other forward-looking information ...................................................................................... 8
No revision was made to the earnings forecasts for FY 2020 as of the date of this document. .............................................................. 8
2. Quarterly Financial Statements and Primary Notes ............................................................................................................................... 9(1) Quarterly balance sheet .................................................................................................................................................................... 9(2) Quarterly statement of income ....................................................................................................................................................... 11(3) Notes to quarterly financial statements .......................................................................................................................................... 12(Notes to going concern assumptions) ............................................................................................................................................. 12(In case of significant changes to shareholders’ equity) ................................................................................................................... 12(Significant subsequent events) ....................................................................................................................................................... 13―3―

1. Qualitative Information on Quarterly Financial Results(1) Explanation of business results
Progress in the Company’s business for the first three months of the fiscal year under review is as follows.
(i) Domestic business[Establishment of the Company’s own salesforce]
The Company will transition the sale of TREAKISYM® in Japan to its own sales organization from January 2021 after its
business partnership agreement with Eisai Co., Ltd. (“Eisai”) expires in December 2020. In doing so, the Company aims to attainprofitability in FY 2021 and achieve sustainable growth thereafter to solidify its future business development.
During the first three months of the fiscal year under review, the Company continued to expand and train its team of
TREAKISYM® sales representatives and regional sales managers, who are at the core of its nationwide sales organization,
thereby making substantial progress toward the final stage of establishing its own nationwide sales structure during the first halfof FY 2020. Further, continuing from the previous fiscal year, in addition to enhancing our distribution and logistics capabilities
through logistics bases strategically situated in eastern and western Japan, we made steady progress in enhancing our internal
infrastructure, including enterprise resource planning (ERP) and other information systems. Through these efforts, we are making
steady progress toward establishing a highly productive, high-performance salesforce backed by extensive expertise andexperience.
[Issues concerning product defects]
The Company currently imports lyophilized injectable formulation of TREAKISYM® from Astellas Deutschland GmbH(“Astellas Deutschland”), a subsidiary of Astellas Pharma Inc. Contamination and appearance defects were found in somebatches imported in 2019 for sale in Japan, and the extent of the contamination and defects significantly exceeded limits
permitted by quality standards stipulated in the supply agreement entered between the Company and Astellas Deutschland. To
prevent recurrence of similar quality issues, the Company has filed complaints with Astellas Deutschland and strongly urged
Astellas Deutschland to fulfill its responsibilities as the supplier, including implementing corrective and preventive action(CAPA). However, we could not see any signs of improvement in the first three months of FY 2020, as defect rates remained
high in a number of batches imported from Astellas Deutschland and delivery dates continued to be unreliable. As a result, theCompany continued to face issues with the supply of TREAKISYM®, which resulted in lower inventory level year on year;
accordingly, sales of TREAKISYM® in the first three months of FY 2020 lagged behind the level recorded in the same period of
the previous fiscal year. The Company expects the high defect rates and unreliable delivery dates to persist through the first halfof FY 2020, which will subsequently cause shipments of TREAKISYM® to its sales agent Eisai to decline year on year. To
recover the inventory level of TREAKISYM® as soon as possible, we will continue discussions with Astellas Deutschland andmanage its progress in addressing the quality and supply issues toward lowering the defect rates and stabilizing supply.
[Anticancer agents: SyB L-0501 (lyophilized powder formulation), SyB L-1701 (ready-to-dilute (“RTD”) formulation), SyB
L-1702 (rapid infusion (“RI”) formulation) (generic name: bendamustine hydrochloride; trade name: TREAKISYM®)]
The Company obtained manufacturing and marketing approval for first-line treatment of low-grade non-Hodgkin’s lymphoma(low-grade NHL) (Note 1) and mantle cell lymphoma (MCL) in December 2016, for recurrent/refractory low-grade NHL and MCL
in October 2010, and for chronic lymphocytic leukemia (CLL) in August 2016. TREAKISYM® is thus widely used in the field ofmalignant lymphoma. Further, the combination treatment (BR therapy) of TREAKISYM® and rituximab was newly included in
the Guidelines for Tumors of Hematopoietic and Lymphoid Tissues 2018 edited and published by the Japanese Society of
Hematology in July 2018, becoming recommended as a choice for standard treatment for all previously approved indications.
With this development, TREAKISYM® has established its foothold as the standard treatment for malignant lymphoma.
In July 2018, the Company obtained approval to partially revise the manufacture and marketing authorization, allowing
TREAKISYM® to be used in combination with not only rituximab but also other new anti-CD20 antibodies for the treatment of
CD-20 positive follicular lymphoma (FL), a typical histologic type of low-grade NHL. As a new treatment option,
TREAKISYM® is being offered to patients in combination with obinutuzumab (Note 2), which was launched in August 2018. In
March 2019, the Company obtained approval for a partial change to its application concerning the use of TREAKISYM® as apretreatment agent for tumor-specific T-cell infusion therapy (Note 3). This allowed TREAKISYM® to be used as a pretreatment
agent for Kymriah® intravenous infusion (Note 4), the first chimeric antigen receptor T-cell (CAR-T) therapy (Note 5) to be approvedin Japan (included in the National Health Insurance price list in May 2019). The status of TREAKISYM® as the standard―4―

treatment for malignant lymphoma is further solidified as its use as a pretreatment agent for regenerative medicine and otherpharmaceutical products continues to spread.
The Company conducted a Phase III clinical trial of BR therapy targeting recurrent/refractory diffuse large B-cell lymphoma(r/r DLBCL), the fourth indication of TREAKISYM® following already-approved indications. In November 2019, the Company
announced that it obtained favorable results with the overall response rate—the primary endpoint of the trial—exceeding
expectations, and in May 2020, the Company applied for approval of a partial change to the manufacturing and marketing
authorization of TREAKISYM®. The new indication was added in response to serious need at clinics and hospitals as there wasno reliable standard treatment. Patient advocacy and academic groups have petitioned to the regulatory authorities for theapproval of BR therapy. The Company expects to obtain approval in the first half of 2021 and expects TREAKISYM® to be
widely available as a treatment option for many patients after obtaining approval.
In September 2017, the Company concluded an exclusive license agreement with Eagle Pharmaceuticals, Inc. (head office:
New Jersey, U.S.) and obtained exclusive rights to develop and market TREAKISYM® liquid formulation (RTD and RI liquid
formulations) (Note 6) in Japan. For the RTD liquid formation, the Company filed an application for approval in September 2019
following consultations with the Pharmaceutical and Medical Devices Agency and plans a launch in the first three months of FY
2021. For the RI liquid formulation, the Company initiated a clinical trial in November 2018, with the primary goal of confirming
its safety, and completed patient enrollment in March 2020. The Company expects to obtain approval in the latter half of FY
2022 after promptly filing for an application once the trial has ended. The RI liquid formulations of TREAKISYM ® will
significantly reduce the time required for administration to 10 minutes, down from the 60 minutes required by the currently
available freeze-dried (“FD”) powder and RTD formulations. This will greatly lessen the burdens placed on patients andhealthcare providers, enabling the Company to provide substantial added value. Furthermore, the protection of multiple patents
for liquid formula manufacturing will make it possible to extend the life of these products until 2031, further strengthening thefoundation of the Company’s business growth.
(Note 1)

Non-Hodgkin’s lymphoma (NHL) refers to malignant lymphoma other than Hodgkin’s lymphoma. Malignant
lymphoma is a cancer of the lymphatic system in which lymphocytes develop malignant growths. The majority ofJapanese malignant lymphoma patients are suffering from NHL.

(Note 2)

Obinutuzumab (Gazyva®, marketed by Chugai Pharmaceutical Co., Ltd.): Like rituximab recommended by treatment
guidelines for non-Hodgkin’s lymphoma in Japan and overseas, obinutuzumab is a glycoengineered type II anti-20
monoclonal antibody that directly binds to CD20 (a protein expressed on B-cells other than stem cells or plasma cells)
on target B-cells to attack and destroy them along with the body’s immune system.

(Note 3)Tumor-specific T-cell infusion therapy is a treatment method in which tumor-specific T-cells (T-cells that specificallyrecognize cancer cells) taken from cancer patients are artificially bestowed with cancer specificity extracorporeally,
amplified and then administered to the patient.

(Note 4)

Kymriah® intravenous infusion (generic name: tisagenlecleucel; marketed by Novartis Pharma K.K.): Kymriah®
intravenous infusion is the first chimeric antigen receptor T-cell (CAR-T) therapy approved within Japan. The
Company received manufacturing and marketing approval for Kymriah® for use in the treatment of CD19 positive
recurrent/refractory B-cell acute lymphoblastic leukemia (B-ALL) and CD19 positive recurrent/refractory diffuse
large B-cell lymphoma (DLBCL) in March 2019. Kymriah® intravenous infusion was included in NHI price listings in
May 2019.

(Note 5)Chimeric antigen receptor T-cell (CAR-T) therapy is a type of tumor-specific T-cell infusion therapy that introduces
genes that code chimeric antigen receptors (CARs) into T-cells, amplifies these cells and then infuses them. These
chimeric antigen receptors are produced by combining the intracellular domains of T-cell receptors with the antigen
binding sites of antibodies capable of recognizing membrane antigens attached to tumor cells. In clinical trials using
CARs to target CD19 that expresses on B-cells, CD19-targeting CARs were introduced into T-cells that were later
administered to patients with B-cell tumors. These modified cells produced clear clinical effects.

(Note 6)

RTD and RI are pre-dissolved liquid formulations that differ from currently available freeze-dried (“FD”) powder
injection. RTD (ready-to-dilute) will significantly reduce the preparation time and labor cost for healthcare providers,and RI (rapid infusion) will reduce infusion duration to 10 minutes from the current 60 minutes, providing significant
benefit and value to both patients and healthcare providers.

―5―[Anticancer agents: SyB L-1101 (intravenous formulation) and SyB C-1101 (oral formulation) (generic name: rigosertib
sodium)]The Company’s U.S. licensor, Onconova Therapeutics, Inc. (head office: Pennsylvania, U.S., “Onconova”), is conducting a
global Phase III clinical trial (with trial sites in more than 20 countries) of the intravenous formulation of rigosertib for higherrisk myelodysplastic syndromes (HR-MDS) which do not respond to the current standard treatment with hypomethylating agents,
relapse after treatment under the current standard of care, or are intolerant to hypomethylating agents. The Company is
responsible for clinical development in Japan and began the clinical trial in December 2015. Fifty patients were enrolled as ofApril 30, 2020. In March 2020, Onconova announced that global patient enrollment (final target of 360 patients) was completed.
Onconova also stated in the same announcement that it expected to obtain the top-line results (primary endpoints) of the trial in
the second half of 2020 and that it was scheduled to present the results at an academic conference within the same year. Based on
the results of the trial, the Company plans to apply for approval in Japan at the same time as in the U.S. and Europe.
As for the oral formulation of rigosertib, Onconova has completed Phase I/II clinical trials in the U.S. for the target indicationof first-line HR-MDS (in combination with azacitidine (Note 7)), and results suggested that the oral formulation of rigosertib andazacitidine were safe and effective when combined. The Company started a domestic Phase I clinical trial in June 2017 toconfirm the tolerability and safety of the oral formulation of rigosertib for Japanese patients. We have proceeded with patient
enrollment since the first patient was enrolled in October 2017 and completed the enrollment process in June 2019. Aftercompletion of this trial, the Company plans to take part in a global trial for combination therapy with azacitidine for the first-line
treatment of patients with higher-risk MDS, which Onconova is currently considering conducting. Data from this global trial wasannounced at the 61st American Society of Hematology (ASH) Annual Meeting and Exposition in December 2019. Based on thisdata, Onconova announced during the same month that it is discussing the design of a Phase II/III adaptive clinical trial testing
this combination therapy as a first-line treatment for HR-MDS.
(Note 7)

Azacitidine (Vidaza®, marketed by Nippon Shinyaku Co., Ltd.): This hypomethylating agent (for injection) wasapproved in 2011 upon successful confirmation of extended overall survival for the first time in the Phase III clinical
trial for the indication of MDS, and is currently used as a first-line drug for MDS patients who have difficulties inhematopoietic stem cell transplantation. MDS is a preleukemic state, and decrease in tumor suppressor gene due toexcessive methylation of DNA is thought to be related to the disease. Hypomethylating agents such as azacitidine arethought to suppress progress to leukemia by restoring tumor suppressor gene with a deterrent effect against
methylation of DNA.

[Antiviral drug: SyB V-1901 (generic name: brincidofovir)]
On September 30, 2019, the Company concluded an exclusive global licensing agreement for intravenous and oral formulationof antiviral drug brincidofovir (Note 8) (SyB V-1901; “BCV IV” and “BCV Oral,” respectively) with Chimerix Inc. (head office:North Carolina, U.S., “Chimerix”). Under this agreement, the Company acquired the exclusive rights for the worldwide
development, marketing, and manufacture of BCV for all human indications, excluding smallpox. With the global rights to BCV,
the Company is transitioning into a global specialty pharmaceutical company with an integrated supply system for high-quality
pharmaceutical products.
BCV Oral has demonstrated highly active antiviral effects in clinical trials conducted in Europe and the U.S. by Chimerix.
These trials have also confirmed that BCV Oral has broad-spectrum antiviral effects. Based on these findings, the Company plans
to promote clinical development of the drug globally.
The Company will initially develop BCV IV for the treatment of viral hemorrhagic cystitis (Note 9) (vHC) occurring after
hematopoietic stem cell transplantation, which are niche markets with high unmet medical demand. To deliver brincidofovir topatients requiring treatment as promptly as possible, we will conduct clinical development in Japan ahead of the rest of the world,
aiming to secure approval for the drug. At the same time, we will conduct global clinical trials of BCV IV that extend to Europe
and the U.S. while targeting a global rollout of the drug. Spurred on by the idea that it can be widely used throughout the field of
surgical transplantation including hematopoietic stem cell transplantation and other organ transplantation, we are planning
clinical development of BCV IV as a treatment for viral infections occurring after kidney transplantation. We are also looking to
expand our business in Europe, the U.S. and Asia (including China), where organ transplant markets are larger than Japan, withan eye toward forming partnerships that take advantage of the regional characteristics of these target diseases. At present, we are
discussing future global development for BCV IV and BCV Oral with prominent researchers in a variety of specialized fields
overseas.

―6―

(Note 8)

Brincidofovir (BCV) has a structure in which cidofovir (an antiviral drug already approved and marketed in the U.S.
and Europe, but unapproved in Japan; “CDV”) is bound to a lipid chain (hexadecyloxypropyl; “HDP”). It is quickly
absorbed into the lipid bilayer membrane and efficiently transfers into cells, and then the bound lipid chain ismetabolized and separated from the structure by intracellular phospholipases. This process generates an activator(CDV-PP; CDV diphosphate) that is retained in the cells for a long period of time, dramatically raising thecompound’s antiviral activity. Furthermore, BCV avoids nephrotoxicity, a fundamental issue plaguing CDV, since
HDP conjugation prevents the accumulation of the compound in renal tubular epithelial cells through organic aniontransporter 1 (OAT1) and CDV is released at low levels in the bloodstream.

(Note 9)

Viral hemorrhagic cystitis (vHC): Among viral infections that frequently occur following hematopoietic stem celltransplantation, hemorrhagic cystitis caused by the BK virus or the adenovirus accompanies particularly severe
symptoms, including frequent urination, abdominal pain and pain experienced during urination. This type ofhemorrhagic cystitis is particularly likely to occur in transplantation between unrelated donors and in umbilical cord
blood transplantations, which are relatively common in Japan. Its extreme refractory nature is further complicated by
the length of time required for reconstruction of the immune system, which hinders treatment in many cases. In severecases, it can cause disseminated infection and become fatal. There have also been reports of fatal kidney failure cases
caused by these viral infections. Drugs currently used in treatment, including cidofovir (CDV), are either unapproved
or off-label.

[Arbitration proceedings against the Medicines Company]
The Company initiated an arbitration against The Medicines Company (head office: New Jersey, U.S., “MDCO”) on October
11, 2017 under the rules of the International Chamber of Commerce, seeking damages of 82 million US dollars (approximately 9
million yen) arising from MDCO’s repudiation of the license agreement entered between the Company and MDCO for exclusive
rights to SyB P-1501 (IONSYS in the U.S.). In its Request for Arbitration, the Company claimed that MDCO failed to provide
the Company with adequate assurance of performance of its contractual obligations as stipulated in the license agreement bywithdrawing IONSYS from markets in the U.S. and Europe and ceasing related marketing activities, and that such failure by
MDCO is a material breach of the license agreement. The license agreement was terminated on November 30, 2017, as MDCO
failed to remedy its breach of contract within the stipulated time, and the Company subsequently terminated the development of
SyB P-1501 on February 9, 2018. Arbitration proceedings against MDCO are still ongoing. Note that on January 6, 2020,
Novartis AG (head office: Switzerland) announced that it had completed the acquisition of MDCO. The Company expects toreceive an arbitration award in the first half of FY 2020.
(ii) Business outside Japan
SyB L-0501 is also marketed in South Korea, Taiwan, and Singapore, and product sales of SyB L-0501 in these countries werein line with the Company’s forecasts.
(iii) Licensing of new drug candidates
The Company plans to focus on planning and promoting the development of the antiviral drug brincidofovir in-licensed in
September 2019. At the same time, we will continue working on our existing initiatives of reviewing multiple licensing projects
at all times and searching and evaluating new drug candidates for potential in-licensing. Through these efforts, we aim to create
long-term business value as a profitable biopharmaceutical company with growth potential.
(iv) Business results
As a result of the above, the total net sales is 551,369 thousand yen for the first three months of the FY 2020, primarilyreflecting product sales of TREAKISYM®, and overall net sales fell 65.8% year on year.
Selling, general and administrative expenses totaled 1,089,611 thousand yen (-9.6% year on year), including research anddevelopment (“R&D”) expenses of 438,113 thousand yen (-7.1% year on year) primarily due to expenses associated with clinical
trials for the intravenous formulation of TREAKISYM® and the intravenous and oral formulations of rigosertib, as well as otherselling, general and administrative expenses of 651,497 thousand yen (-11.1% year on year), including upfront spending toestablish an internal sales structure.
As a result, an operating loss of 961,910 thousand yen was recognized in the first three months of FY 2020 (versus an
operating loss of 595,948 thousand yen in the same period of FY 2019). Due to non-operating expenses of 29,517 thousand yen,primarily comprising foreign exchange losses of 15,983 thousand yen and share issuance cost of 12,786 thousand yen, ordinary
loss totaled 991,220 thousand yen (versus an ordinary loss of 616,009 thousand yen in the same period of FY 2019) and bottom-―7―

line loss in the first three months of the FY 2020 totaled 992,170 thousand yen (versus a loss of 616,959 thousand yen in thesame period of FY 2019).
Segment information has been omitted since the Company operates within a single segment, which includes the research anddevelopment, manufacturing, and marketing of pharmaceutical drugs and other related activities.

(2) Explanation of financial position
Total assets as of March 31, 2020 stood at 5,142,794 thousand yen, a decrease of 131,160 thousand yen from the previous fiscal
year end. This was primarily due to decreases of 247,732 thousand yen in accounts receivable–trade, 178,975 thousand yen in
consumption taxes receivable, and 34,705 thousand yen in cash and deposits offsetting increases of 146,099 thousand yen inmerchandise and finished goods, 37,696 thousand yen in prepaid expenses, 28,569 thousand yen in software in progress, and11,157 thousand yen in lease and guarantee deposits.
Total liabilities stood at 669,964 thousand yen, a decrease of 203,874 thousand yen from the previous fiscal year end, owing
mainly to decreases of 98,281 thousand yen in accounts payable–trade, 61,961 thousand yen in accounts payable–other, and 46,441
thousand yen in income taxes payable.
Under net assets, decreases of 28,909 thousand yen in share acquisition rights and 992,170 thousand yen in retained earnings
due to the recording of a bottom-line loss were offset by increases of 547,490 thousand yen in capital surplus and 545,326
thousand yen in share capital. As a result, total net assets increased by 72,713 thousand yen from the previous fiscal year end to
4,472,829 thousand yen.
The equity ratio consequently rose 3.8 percentage points from the previous fiscal year end to 75.5%.

(3) Explanation of earnings forecasts and other forward-looking information
No revision was made to the earnings forecasts for FY 2020 as of the date of this document.

―8―

2. Quarterly Financial Statements and Primary Notes(1) Quarterly balance sheet(Unit: thousands of yen)
FY 2019(as of December 31, 2019)
AssetsCurrent assets
Cash and deposits
Accounts receivable–trade
Merchandise and finished goods
Prepaid expenses
Advances paid
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings, net
Tools, furniture and fixtures, net
Construction in progress
Total property, plant and equipment
Intangible assets
Software
Software in progress
Total intangible assets
Investments and other assets
Shares of subsidiaries
Leasehold and guarantee deposits
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable–trade
Accounts payable–other
Income taxes payable
Other
Total current liabilities
Non-current liabilities
Provision for retirement benefits
Total non-current liabilities
Total liabilities―9―

Q1 FY 2020(as of March 31, 2020)

3,910,830
549,275—
94,002
41,791
275,324
16,267
4,887,491

3,876,124
301,543
146,099
131,698
40,404
96,349123,258
4,715,477

34,734
19,242
21,51375,49133,887
19,904
21,51375,305

94,974
145,551
240,525

96,285
174,120
270,406

070,44670,446
386,463
5,273,955

081,60381,604427,316
5,142,794

120,913639,482
87,75624,066872,219

22,631
577,52141,31526,742
668,212

1,619
1,619
873,838

1,752
1,752
669,964

(Unit: thousands of yen)
FY 2019(as of December 31, 2019)
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Share acquisition rights
Total net assets
Total liabilities and net assets

14,870,639
14,843,137(25,919,496)(15,077)3,779,202
620,9134,400,116
5,273,955―10―

Q1 FY 2020(as of March 31, 2020)

15,415,965
15,390,628(26,911,667)(14,099)3,880,826
592,0034,472,829
5,142,794

(2) Quarterly statement of income(For the first three months of FY 2020)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Interest on tax refund
Total non-operating income
Non-operating expenses
Commission expenses
Share issuance costs
Foreign exchange losses
Other
Total non-operating expenses
Ordinary profit (loss)
Profit (loss) before income taxes
Income taxes–current
Total income taxes
Profit (loss)

Q1 FY 2019(from January 1, 2019
to March 31, 2019)
1,611,458
1,002,568
608,890
1,204,838(595,948)(Unit: thousands of yen)
Q1 FY 2020
(from January 1, 2020
to March 31, 2020)
551,369
423,669
127,700
1,089,611(961,910)

67
76
144

87
120
207

2,640
757
16,807—
20,205(616,009)(616,009)
950
950(616,959)—
12,786
15,983
747
29,517(991,220)(991,220)
950
950(992,170)―11―

(3) Notes to quarterly financial statements(Notes to going concern assumptions)None to be reported.
(In case of significant changes to shareholders’ equity)
In the first three months of FY 2020, the Company issued new shares due to the exercise of some of share acquisition rights
pertaining to the 33rd, 36th, 37th, 38th, 47th and 50th warrants. As a result, share capital and capital surplus each increased by
545,326 thousand yen. The total value of treasury shares increased 2,490 thousand yen as a result of a share repurchase.
Further, the company disposed of treasury shares due to the exercise of some of share acquisition rights issued in the 33rd, 36th,and 38th warrants. As a result, the total value of treasury shares fell 3,259 thousand yen and other capital surplus increased 2,176
thousand yen.
The disposal of treasury shares in response to the request to sell shares by shareholders of less-than-one unit of shares led to
declines of 452 thousand yen in the total value of treasury shares and 12 thousand yen in other capital surplus.
As a result, as of March 31, 2020 share capital was 15,415,965 thousand yen, capital surplus 15,390,628 thousand yen, and thetotal value of treasury shares 14,099 thousand yen.

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(Significant subsequent events)
1. Issuance of the 52nd warrant (stock options)On April 24, 2020, the Company issued and granted share acquisition rights in the form of stock options to ４ directors as
indicated below. This issuance of share acquisition rights was based on a resolution by the Board of Directors on March 26, 2020.
Number of share acquisition rights
4,600 units
Class and number of shares to be issued upon
the exercise of share acquisition rights

115,000 shares of common stock

Issue price of share acquisition rights and total
issue amountIssue price: 8,100 yen
Total issue amount: 37,260,000 yen

Amount to be paid in per share: 324 yen
Individuals who receive share acquisition rights shall offset the amount toAmount to be paid in for share acquisition rights
be paid in for the relevant share acquisition rights against cash
compensation equivalent to the amount.
Exercise price of share acquisition rights

Exercise price per share: 1 yen

Exercise period of share acquisition rights

From March 27, 2023 to March 26, 2030

Conditions for the exercise of share acquisitionrights(1) Individuals to whom these share acquisition rights are granted must
hold a position as a director or employee with the Company or with anaffiliate to exercise these rights. However, this will not apply to
directors at the Company or its affiliates who have left their positions
due to expiry of their terms of offices, employees at the Company or
its affiliates who have retired as a result of reaching retirement age or
directors or employees at the Company or its affiliates who have been
deemed to have left their positions or retired amicably by the Board of
Directors.
(2) Other conditions will be as established in the Share Acquisition Rights
Allocation Agreement concluded between the Company and the
directors.

Increase in share capital in case of the issuanceof shares through the exercise of shareacquisition rights

Increases in share capital related to the issuance of shares through theexercise of share acquisition rights shall be equal to one half of the
maximum amount by which share capital can be increased as calculated inaccordance with Article 17 of the Ordinance on Company Accounting.
Any fraction less than one yen arising therefrom shall be rounded up to thenearest one yen.

Matters regarding transfer of share acquisitionrightsTransfers will require approval from the Board of Directors.

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2. Issuance of the 53rd warrant (stock options)On April 24, 2020, the Company issued and granted share acquisition rights in the form of stock options to 119 employees as
indicated below. This issuance of share acquisition rights was based on a resolution by the Board of Directors on March 26, 2020.
Number of share acquisition rights
15,000 units
Class and number of shares to be issued upon
the exercise of share acquisition rights

375,000 shares of common stock

Issue price of share acquisition rights and total
issue amountIssue price: 8,100 yen
Total issue amount: 121,500,000 yen

Amount to be paid in per share: 324 yen
Individuals who receive share acquisition rights shall offset the amount toAmount to be paid in for share acquisition rights
be paid in for the relevant share acquisition rights against cash
compensation equivalent to the amount.
Exercise price of share acquisition rights

Exercise price per share: 1 yen

Exercise period of share acquisition rights

From March 27, 2023 to March 26, 2030

Conditions for the exercise of share acquisitionrights(1) Individuals to whom these share acquisition rights are granted must
hold a position as a director or employee with the Company or with anaffiliate to exercise these rights. However, this will not apply to
directors at the Company or its affiliates who have left their positions
due to expiry of their terms of offices, employees at the Company or
its affiliates who have retired as a result of reaching retirement age or
directors or employees at the Company or its affiliates who have been
deemed to have left their positions or retired amicably by the Board of
Directors.
(2) Other conditions will be as established in the Share Acquisition Rights
Allocation Agreement concluded between the Company and theemployees.

Increase in share capital in case of the issuanceof shares through the exercise of shareacquisition rights

Increases in share capital related to the issue of shares through the exerciseof share acquisition rights shall be equal to one half of the maximum
amount by which share capital can be increased as calculated inaccordance with Article 17 of the Ordinance on Company Accounting.
Any fraction less than one yen arising therefrom shall be rounded up to thenearest one yen.

Matters regarding transfer of share acquisitionrightsTransfers will require approval from the Board of Directors.

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