FreeBit Co., Ltd.
Q1 Financial Results Briefing for the Fiscal Year Ending April 2021
September 11, 2020

Presentation
Shimizu: I am Shimizu, Director, Executive Vice President and CFO of FreeBit Co., Ltd. I would like to explain
about the material for the financial results for the first quarter of the fiscal year ending April 2021.
Today, we have these three items for the agenda: consolidated financial results, financial results andbusiness progress by segment, and the progress of consolidated results. I will explain those items.

The first item is consolidated financial results.
This is for the first quarter of the fiscal year ending April 2021. Sales were JPY13.417 billion, EBITDA was
JPY912 million, operating income was JPY617 million, and ordinary income was JPY586 million. Profit
attributable to owners of parent in the quarter came in at JPY218 million.
In some segments, sales have declined due to the spread of the infectious disease of coronavirus. However,infrastructure-related services, including the accumulation from the previous fiscal year, have been
relatively favorable, which enabled us to manage to end with the increase.
Operating income increased substantially YoY, reflecting the improvement achieved through the liquidationof unprofitable businesses and the increase in profits from infrastructure-related services, which I
mentioned earlier.

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1Ordinary income increased due to an increase in operating income.
The final profit increased by JPY399 million from a negative JPY180 million in the previous fiscal year, and as
a summary, we have achieved a large increase in profit.

This is the quarterly trend of performance.
As stated in the chart on the right-hand side which shows most recent quarterly trends, compared to thefourth quarter, both sales and operating income declined. However, if you look at the track record of thequarterly performance, we ended with good increase in terms of operating income.
When compared with the fourth quarter, it is apparent in the first quarter that we have a business model
where profit weighted heavily in the second half of the fiscal year. As a result, although the profit declined, I
believe that the results for the first quarter was fairly stable.

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Although there has been no major change in the composition ratio of net sales, looking by segment,
InfraTech and Real Estate Tech increased in terms of both net sales and segment profit and loss. For AdTech
and EdTech, both net sales and segment profit declined in the first quarter.
Details of this result will be provided in the section on business results by segment.

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Continuing on, this is a waterfall variance analysis of sales YoY.
In Infrastructure-Related Businesses, InfraTech and Real Estate Tech combined generated an increase insales of JPY493 million in total. In addition, HealthTech Business was able to generate the increase of JPY435
million.
On the other hand, again, EdTech and AdTech Businesses have been strongly affected by the spread of the
new coronavirus infections.

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In terms of operating income, while it is in line with changes in net sales, the Internet Infrastructure
Category increased by JPY142 million.
In the HealthTech Business, which will be explained later, we were able to achieve profit in one quarter,
which contributed to profit largely resulting in the increase of 85.3% YoY.

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5This is the trend for the profit structure of the summary of the consolidated financial results
Again, sales have remained almost unchanged. I think that the ratio of the cost of sales has changed
considerably.
Including the demand for remote-working, the primary sales portion meaning the portion of sales for thebusiness with high gross profit margin to cost of sales was good, resulting in the profit structure shown here.

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6Regarding changes in SG&A expenses, we have made impairment loss of goodwill, et cetera, in the previous
four quarters. As a result, SG&A expenses decreased compared with the previous quarter.

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As for the changes in the number of employees, the expansion of the business has already been completed,
therefore the number of employees has been shifting to a trend of leveling off.

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We have newly added the data for the changes in net sales and operating income per employee to thereport this time.
As we believe that you are well-aware, our consolidated net sales have been substantially growing in SILKVISION 2020.
While sales per employee have been steady because of the increasing trend in the number of employees,
operating income per employee has tended to be somewhat sluggish. I believe that we will need torecognize and address this issue as a future business challenge.

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9Moving onto the analysis of ordinary income YoY. As a result of the increase in operating income, ordinary
income ended at JPY586 million.

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In terms of net income, it has grown from a negative JPY180 million to a positive JPY218 million. We wereable to achieve the increase in net income as a result of the increase in net sales, operating income, andordinary income.
In addition, while the decrease in corporate taxes contributed to an increase of JPY89 million, the actual
amount of corporate taxes paid is increasing due to the increase in the number of companies making profit.
In the previous fiscal year, there were some factors such as the reversal of deferred tax assets, and as aresult of such adjustments, corporate taxes have been decreased resulting in the situation shown in thisfigure.

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In terms of BS, there has been a relatively large change from the end of the previous fiscal year. Both asset
and liabilities have increased reflecting the measures we are taking under coronavirus pandemic tostrengthen on-hand funding and the increased transaction volume in the HealthTech Business.

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We will move onto our business results and progress by segment.
As for the progress of InfraTech-Related Business, net sales increased 3.9% YoY and segment profit and loss
increased 104.4% YoY. This is attributable to two factors: one is the substantial increase in demand forremote-working due to the spread of new coronavirus infection, and the other is the accumulation fromprevious fiscal year.
Let me explain the portion of segment profit and loss in the variance analysis.
Firstly, mobile profits are growing substantially due to the demand for remote-working. In addition, in the
B2C Business domain, profit increased as a result of the decreased fixed cost and increased sales ofcollaborative services.
Furthermore, the improvement has been achieved in profit through the liquidation of unprofitablebusinesses, and we have succeeded Tone Mobile Business in the previous fiscal year. Partially because wehave made relatively smooth progress in some of these areas, we have been able to accumulate profits.
On the other hand, considering the overall trend including this segment, the growth of mobile sales andprofits is extremely stronger than that of fixed-line sales and profits. From a medium-term perspective, we
believe that this trend will become extremely strong in the future. Thus we are seeking measures toimplement in line with this trend.

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13This is a topic related to InfraTech. We started providing a new service in Tone Mobile, which we took overthe business in the previous fiscal year.
We started the sales of new smartphone, e20, in February 2020. This is a model in which AI functions andbasic functions are greatly improved and various functions are expanded with paying an attention to AI.
In addition, in April, we have begun offering the function of “Safety Reports”, which is the newly added
support function for measures against coronavirus infectious disease.
The bottom of the page is the trend in the number of stores handling Tone Mobile. The alliance with acamera maker, Kitamura Co., Ltd., is proceeding smoothly. Soon, we are expecting to reach a network ofnearly 100 stores in total, making steady progress in establishing a structure to acquire new members in the
future.

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As for the progress of the Real Estate Tech Business, both net sales and segment income increased YoY.
In this business, we have achieved the increase of JPY23 million due to the sales from constructions, aprimary sales portion, which have been steadily carried out even under the circumstances of thecoronavirus, and continuous increase in profits from the previous fiscal year's accumulated portion.
In addition, we are reviewing fixed costs in the Real Estate domain and making progress in reducing losses inthis area.
On the other hand, the scale of our Real Estate Tech Business has been enlarged significantly and in
conjunction with this, personnel expenses have been considerably expanded in the previous fiscal year.
These portions came up as somewhat negative.

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As for the topics, we were able to newly construct 44,000 units per quarter, which enabled us to achieve609,000 units as the number of units we offer.

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Continuing onto the progress in the AdTech Business.
In this business, both sales and segment profit and loss started with significant effect of the spread of newcoronavirus.
On the other hand, some services have been gradually recovering since the second half of the first quarter,or June onwards, therefore I think the effect of coronavirus will be limited to some extent.
In terms of variance analysis of segment profits and losses, firstly, the gross profit component decreased by
JPY17 million. SG&A expenses, which are sales promotion expenses precisely, was increased additionally inthe first quarter resulting in the drop of JPY44 million, which led to the final segment profit and loss of
JPY121 million.

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In the AdTech Business, the President has been changed from Tomomatsu to Yoshizawa. Under theguidance of Yoshizawa, we have set a new message as the slogan "Marketing x Technology." Our policy is to
aim to increase new corporate value in the form of a MarTech company.

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As we mentioned here under the title of the development of the Influencer DX, our Group is considering oneof the evolutionary forms of the affiliate model, and we would like to expand new services including theones for influencers by leveraging our technologies.
As a first step, we entered into a capital and business alliance with the influencer platform, BitStar, on June
1, 2020. We have also begun offering a new YouTube channel management support service on August 20.

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19Moving onto the progress in HealthTech Business.
Since the start of HealthTech Business, we have basically remained in the red. However, in the previous
fiscal year, we conducted the liquidation of unprofitable business and also progress was made in somebusiness. As a result, in this fiscal year, we were able to start profitable from the first quarter for the firsttime.
This was due to an increase in profits as a result of the increase in sales of FreeBit EPARK Healthcare, Inc.
and the liquidation of the unprofitable business of the HealthTech Business of FreeBit itself. As a result, sales
increased significantly YoY.

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Finally, regarding the EdTech Business, both sales and profits have declined sharply due to the spread of the
new coronavirus infectious disease.
In particular, publishing and training, which are large in the scale in the EdTech Business, have beensignificantly affected. In addition, as we are considering the possibility of a prolonged impact, we intend tostrengthen sales of digital and online-related products.
In a waterfall format, gross profit declined to negative JPY271 million, due to a decline in sales. On the other
hand, there is a portion of the increase in profits due to the curtailment of expenses and the amortization of
goodwill. Therefore, on YoY, the loss is limited to certain extent. However, in the perspective of the declined
sales, the segment turned out to be the one with substantial issue in the first quarter.

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Finally, this is the progress of consolidated business results.
Again, the Infrastructure-Related service increased in the first quarter. In terms of a completion ratio to theplan, while sales progressed as shown in the ratio, operating income and ordinary income look better in theratio than its actual progress because of the delay in the expenditure for the investment which was
postponed to this fiscal year.

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On the other hand, at our Group, we continue to be concerned about the new normal with coronavirus andafter coronavirus.
There is a recognition that economic activities are entering the resumption mode after the gradual lifting of
the declaration of state of emergency nationwide as well as in the metropolitan area. On the other hand, I
believe that the outbreak of the new type of coronavirus in autumn and winter continues to be an existingrisk, and also that there are some companies managed to remain in business through the primaryemergency financing. Thus, we believe the outlook for the economy and economic activities in the future
will remain difficult to predict.
In the explanation of the full-year financial results in June, we have set a policy for the current fiscal year. As
one of the policies in the medium-term business plan, we must be thinking about focusing on the
optimization of our portfolio in the future.
I believe that this is the most important issue in light of the destabilization of the economic environmentthat I mentioned earlier. We will work on addressing the issue as the most important business challenge.

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At the same time, there are roughly three investment fields that have not been implemented due to theimpact of new coronavirus infections.
Those are review and optimization of fixed networks and data centers, establishing new office environment
and expansion of remote-work environment suitable for the new normal, and expansion of humanresources in light of new growth strategy. We are going to implement these initiatives throughout this fiscalyear.
On the other hand, there was a lot of remote working in the first quarter, and in terms of the progress of thebusiness, we have not been proceeding with this plan as expected. In order to recover this portion, we
would like to spend expenditure to certain extent and implement it from the second quarter onward.

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Lastly, I would like to explain about the measures being taken by our Group against new virus infectious
diseases.
As stated here, we will place top priority to the health of our customers, business partners, employees andtheir families. In this effort, we continue to apply remote working for the work as principle. We would like tocontinue to conduct our business activities safely while considering the total aspects of our work such as
curbing business trips and meals, and voluntary restraints on meetings with large numbers of people.
In addition, as our own initiative, we provide “freebit Save You” to our employees.
We developed and manage this application so that in the event that employee is not feeling well, actions
can be taken by the administrative department and others, and also so that this will raise everyone’s
awareness. From the record in this app, the average rate of coming in the office in our Company is 30% or
less.
With this, I am concluding my remarks on the financial results of the first half of the fiscal year.
Thank you very much for today.
[END]______________
Document Notes
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1.
2.

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TollfreePortions of the document where the audio is unclear are marked as follows: [Inaudible].
This document has been translated by SCRIPTS Asia.

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