FreeBit Co., Ltd.
Q2 Financial Results Briefing for the Fiscal Year Ending April 2020
December 13, 2019

Presentation
Tanaka: I am Tanaka from FreeBit Co., Ltd. Today, I will explain our financial results for the second quarter ofthe fiscal year ending April 2020.

First, I will explain the consolidated results for the first quarter of the fiscal year under review.
Net sales totaled 27.094 billion yen, EBITDA was 1.95 billion yen, and operating income was 986 million yen.
Net sales increased by 5.596 billion yen, or 26.0% YoY. EBITDA also increased by 321 million yen, or 19.8% YoY
and reached 1.95 billion yen. However, operating income was 986 million yen, down 26 million yen, or 2.6%
from 1.013 billion yen recorded in the same period of the previous fiscal year.
The biggest factor behind the decline in operating income despite the increase in sales was the fact that ALC
Press, Inc., which belongs to the EdTech business and was made a subsidiary last year, posted a loss in thefirst half of the fiscal year. This is not an unexpected deficit. As we will explain later, the business structure of
ALC is designed to run a loss in the first half of the fiscal year, and to recover the loss and make a full-year
profit in March and April.
In the AdTech business, operating income declined YoY, partly due to a sluggish external environment inrecent years. Overall, despite an increase in sales, operating income remained almost unchanged from theprevious year and decreased by 26 million yen.

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As a result, ordinary income was approximately the same as the previous fiscal year at 908 million yen.
However, ordinary income increased YoY due to the absence of the investment loss on equity method which
was recorded in the same period last year.
Net income was a negative 181 million yen, down by 191 million yen YoY, and remained almost unchanged
from the same period last year. This was mainly due to a YoY increase in corporate income taxes, which was
attributable to the profitability of subsidiaries in group companies during this period.

Next, we will discuss qualitative topics. As I mentioned earlier, consolidated net sales rose 26.0%. This wasdue in part to the addition of the EdTech business from the previous year and the continued significant growthof the real estate tech business based on the Giga Prize Group, resulting in a 26.0% increase.
Operating income was primarily attributable to the seasonal factors in the EdTech business, which I
mentioned earlier, and to other factors including the YoY decline in the AdTech business.
Regarding the status of individual segments, as a new topic, the InfraTech business succeeded Tone Mobile
business which had been accounted for by the equity method from the CCC Group. This is not included in the
2nd quarter figures as it took place on December, but will be reflected in the figures going forward.
Then, as for the Real Estate Tech business, condominium Internet sales continued to grow significantly and,on a YoY basis, sales have increased by 52.0%. This business segment has been achieving an extremely large
increase in revenues.
Next, the HealthTech business is growing steadily and sales increased 5.2% YoY. On the other hand, its income
decreased YoY. One reason for this is that we have been expanding our sales structure, and the other is that
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we are seeing a decline in one-time revenues. Frankly, this was not expected. As for the progress, theHealthTech business is currently below our first-half plan.
However, since the launch of new services in the second half of the fiscal year has been steady since lastmonth, we are aiming to recover the negative portion of the first half by developing new services in the second
half of the fiscal year.
However, there is a little uncertainty about whether or not the HealthTech business alone will be able torecover and meet the profit targets for the first half of the fiscal year. As there are a variety of businesssegments in our group, we are working hard to achieve consolidated results, including upside in othersegments such as the condominium Internet.
As the EdTech business started in the third quarter of the previous year, in the first quarter and second quarterof the current fiscal year, revenues have simply been added on a YoY basis.
However, due to its education-related business structure, profits are concentrated in March and April, and in
the first half of the fiscal year under review, the segment was a negative contributor to the results. However,for the full fiscal year, the segment is expected to achieve the targets based on profits in March and April asplanned and to contribute to consolidated results and profits. You might be concerned if you view only thesecond quarter figures, but the segment is making progress in line with the plan.

The graph above shows the trends in net sales on a quarterly basis that I have just mentioned. As you see, thebar for the fourth quarter of the previous fiscal year is remarkably high, and the plan for the current fiscal year
also calls for significantly higher sales and operating income in the fourth quarter compared to the otherquarters.
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3However, sales may not reach the year-earlier level in the fourth quarter because an extra three-months’
worth of sales was included last year as ALC was consolidated. The segment is currently progressing to
generate more profits in the fourth quarter than last year.

The graph above illustrates the composition of net sales. As shown in the graph, in terms of our sales, theInfraTech business, the Real Estate Tech business, and the AdTech business continue to be the three main
pillars. The HealthTech Business is a venture business, and although it is trending upward, it accounts for only
5.4% of the total. The EdTech business, or the businesses that joined the Group through mergers andacquisitions last year, accounted for 10.0% of the total.
At present, the Real Estate Tech business is experiencing a 52.0% increase in sales YoY, as I mentioned in theprevious topic. Looking ahead, I think the Real Estate Tech business will become the biggest component ofsales for a certain period of time.
However, as each segment is making various efforts, the composition of net sales for the whole group couldchange periodically, or we are aiming at such development. The current composition is as shown above, andthe Real Estate Tech business is expected to grow for the short term.

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Looking at the YoY analysis of net sales, net sales increased from 21.497 billion yen to 27.094 billion yen. Thiswas mainly attributable to the significant contributions made by the EdTech business and the Real Estate Techbusiness, as I have explained so far. The EdTech business grew through acquisition and the Real Estate Techbusiness has taken in a portion of the rapid growth that is currently occurring.

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5With the operating income of 1.013 billion yen in the second quarter of the previous year as a base, the Real
Estate Tech business posted very strong growth. Both net sales and operating income grew significantly.
Operating income increased by 595 million yen, or approximately 600 million yen, YoY. Looking at this, one
may expect that sales and profits would increase greatly, but the AdTech business and the Health Techbusiness posted a YoY decline in operating income of approximately 150 million yen and 110 million yen,respectively. The Health Tech business has been slightly behind the plan, but is expected to recover in the
future.
The InfraTech business has matured considerably, so we are streamlining this business so that it can turn
positive on a YoY basis. In the second quarter, operating income decreased 89 million yen YoY. At this stage,
operating income in the quarter increased to 1.244 billion yen from 1.013 billion yen YoY, but the amountearned by the Real Estate Tech business was reduced by other businesses.
Moreover, the EdTech business, which was newly added, posted a 258 million yen decline in operating income
due to seasonal factors. As a result, operating income was 986 million yen overall.
Despite this current structure, each business segment is designed to increase profit independently although
the growth rate and the timing of profitability differ in each segment. As such, there may be some periods inwhich the profit growth becomes higher depending on the timing. I believe that he fourth quarter of thecurrent fiscal year in particular will be one of those.

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In addition, in order to illustrate the seasonality of the EdTech business, which I mentioned several times, theresults of ALC, including the figures before consolidation are shown in the graph above.
As can be seen from this graph, both net sales and operating income are concentrated in the fourth quarter.
In other words, they increase in the fourth quarter. In particular, the figure was very high in the fourth quarterof last fiscal year due to the fact that sales of three extra months were included as an accounting treatment
for consolidating operations.
The forecast for the fourth quarter of the current fiscal year does not include extraordinary factors such as
three extra months of sales. As the bars shown in the dotted line illustrates, compared to the other quarters,
sales will be considerably larger and operating income will increase accordingly in the fourth quarter.
Therefore, I would like to say that the EdTech business is expected to be profitable for the full fiscal year as
well.

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Looking at the earnings structure, the height of the bar graph itself shows that the scale of the business is
considerably larger than that of the previous year or the year before that due to the increase in net sales.
Although there are seasonal factors in the earnings structure itself, the business is in the process of making
structural changes to its revenue structure by gradually expanding sales. Therefore, the business is expected
to be able to generate even higher profits on a full year basis.

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8Selling, general and administrative (SG&A) expenses rose 42.5% YoY. This was attributable to the addition of
the EdTech business by acquisition, which resulted in a simple increase in personnel expenses, in particular,
and an increase in the amortization of goodwill associated with the acquisition.

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As for the employees in the SG&A expenses, the portion added to the EdTech business is shown in darkest
blue, which is simply added. In addition, the number of employees in the HealthTech Business is increasing.
This is due to the strengthening of the sales system, and is increasing as planned.
So far, up to the second quarter, this has been a factor behind the decline in profits. However, I’d appreciate
if you could see this salesforce increase as a measure to strengthen its structure and expand earnings fromthe third quarter onward.

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10Ordinary income rose 23.7% YoY to 908 million yen in the second quarter, from 734 million yen recorded in
the same period last year. The main factors behind this increase were the normal increase in operating incomein the business and the decline in investment loss on equity method. The negative factor was the addition of
the EdTech business. This is the same structure as operating income, but despite the negative impact of
EdTech, ordinary income increased 23.7%, partly due to the fact that the number of items that affected theresults was fewer than that for the operating income.

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11Next, regarding the bottom line, we receive many questions from our shareholders. We are often asked why
net income is small despite these sales figures and well-generated operating income and EBITDA. The graphshows the factors that affected the results in the second quarter.
With the exception of the EdTech business, ordinary income increased by 424 million yen, so without otherfactors, we are in a position to achieve this level of net income. However, there are quite a large number ofsubsidiaries within the consolidated group, and if each subsidiary makes profit, income taxes is levied. This
portion of corporate income taxes amounted to 82 million yen. In addition, there are several subsidiaries,
including listed companies, which are not 100% owned. Profits made by those companies are excluded fromthe consolidated results as income attributable to non-controlling shareholders. This amounted to 140 million
yen. These were the two major factors behind the decline in the group's net income.
In the EdTech business, net income decreased more than ordinary income. This was due to the inclusion of anegative 345 million yen in the second quarter. In addition to the negative seasonal factors, deferred tax
assets, etc. that had been accumulated by ALC in the past, were reversed in the current fiscal year after having
consolidated the acquired company. As a result, the negative figure was recorded in the second quarter.
Going forward, the structure of the portion earned by subsidiaries will remain unchanged, as it relates toearnings from subsidiaries. However, the reversal of deferred tax assets in the EdTech business is a temporary
factor, and the profits of FreeBit Corporation and its wholly owned subsidiaries are also concentrated in the
fourth quarter.
As for net income, we expect it to turn positive for the full fiscal year, and we hope that you will feel
comfortable with the fact that there were special factors in this quarter as well.

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The following graph shows the status of the balance sheet. Looking at the figures at the end of the previous
fiscal year and up to the second quarter of the current fiscal year, there has been no significant change.
Goodwill has been added, but some goodwill has been amortized. As a result, the amount of goodwill has
decreased from 2.534 billion yen to 2.114 billion yen. As the amount of net assets and shareholders' equity
remained almost unchanged, the capital adequacy ratio of 23.0% also remained unchanged, and total assets
declined slightly.

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Below, we provide an overview for each segment.
First, in the InfraTech business, sales decreased 0.3% YoY. Currently, the business is very mature, and as you
can see in the graph, there have been no major fluctuations in sales over the past few years. Profits may be
skewed to some extent depending on the timing of renewal of equipment and renewal of contracts withcarriers. The segment profit of 212 million yen for the second quarter of the fiscal year under review seems
to be the normal level.

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Next, as for the topics of the InfraTech business, we acquired the Tone Mobile business only from Tone Mobile,which was an equity-method affiliate. This business was absorbed into DTI, our subsidiary to start the service
on December 1.

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As for the purpose of this integration, there are three items. First of all, our group's DTI company operates a
B to C business for individuals, and the Tone Mobile business is also a B to C business. So if we simply include
the Tone Mobile business in our group, the scale of our business will expand, and we will be able to unify the
B to C marketing and branding areas, so the marketing effects will also increase.
Second, we collaborated with the FreeBit Group and Tone Mobile, formerly a CCC Group company, throughfurther collaboration with Alps Alpine. This time, by absorbing the Tone Mobile business, we will be able torespond to our alliance with Alps Alpine in a unified manner within the FreeBit Group and to develop anddeliver new services in the CaaS domain and develop the latest technologies related to them in a unified way.
Third, by expanding the scale of our business, we will be able to integrate the various overlapping
organizational functions, thereby improving management efficiency. Each of these began on December 1.

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In this context, we are working with Alps Alpine to transform our Car-Life business through various Internet
services using CASE/MaaS and other keywords. Through collaboration with Alps Alpine, we aim to achieve
this goal.
As can be seen from the information above, the parts jointly developed by FreeBit and Tone have been
integrated. Therefore, we would like to create a new world with Alps Alpine by providing services including
the service of digital key using the block chain technology, or the service of managing the key of a car using
the Internet rather than physical, as an IoT. The InfraTech business segment will proceed with these.

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Next, regarding the Real Estate Tech business, the figures increased significantly in the second quarter of the
fiscal year under review, as I mentioned at the beginning. Net sales increased 52.0% and segment income
also grew substantially as a result.
As it is still in the expansion phase, SG&A expenses have increased YoY in each quarter. But the increase incosts has settled down somewhat recently. We expect that the continuation of the upward trend in sales willlead to higher profits and a higher earnings growth rate. For the time being, the Real Estate Tech business has
become a so-called cash cow, or the most profitable segment in our group.

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18This expansion is based on the number of units for which the segment provides services. The number
increased 18.3% YoY and finally exceeded 503,000 units. In the remaining six months, it is expected to reach
596,000 units. In terms of the number of condominium Internet services we provide to these condominiums,
we are already at the top level in the industry, and we are growing to the point where we can reach the top
in the real sense.

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If this kind of growth continues, our corporate value will naturally rise. You may know that the stock price ofGiga Prize has moved up considerably. The current market capitalization is 30 times greater than when we
made it a subsidiary in 2009.
I am ashamed to say that the market capitalization of Giga Prize, which is a subsidiary of our group, is greaterthan that of FreeBit's consolidated group. Our business is to acquire companies that will be added to the new
segments as business investments and nurture these businesses. In this sense, we have achieved great successand our corporate value has risen steadily. To reflect this in the stock price of FreeBit, we will conduct investor
relations (IR) activities properly. We will continue to expand our businesses, and since the corporate value ofeach business is the fundamental value of FreeBit as a whole, I would like to ensure that this value is reflectedin our stock price as well.
In fact, in addition to Giga Prize, there is another listed company called Full Speed. Based on the current stock
price, the value has doubled since the acquisition of Full Speed. It once rose to five times.
Our overall business strategy is to increase the corporate value of the operating companies in these strategic
segments. In the case of listed companies, each company raises its share price, or even companies that have
not yet been listed are engaged in activities to raise their corporate value further by looking for various options,such as listing so that their corporate value can be raised in the future.
I hope that shareholders will recognize this as a success story. We will do this for other operating companies
as well.

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In the Real Estate business, we have continued to offer some new services. First, we are offering SPES, a newservice for condominiums that we announced on September 26.
The real estate properties in the world are currently the biggest driver of Giga Prize's growth, and the provisionof the Internet to newly built properties during the fiscal year is the most important driver of growth. In fact,
however, there are many buildings built in the past, the cumulative number, of course, is greater than that of
the new buildings.
However, as a matter of course, there are people living in the buildings already built. Also, it may be impossible
to find out the existing conditions, what equipment is used or how they were constructed. As they differ,depending on when the buildings were constructed, the equipment work used to require greater care.
This SPES is designed to use the existing telephone lines that are installed without exception and make them
Ethernet. This technology was originally developed in order to provide IP services in a car, or in a narrow space,and as a result of our ongoing development and research with NEC Networks & System Integration to increase
the distance and use, we finally came to the point where it could be used on a commercial basis.
We are using this technology to provide Giga Prize services for a large number of properties built in the past,
so we hope you will recognize this as an extremely large tool for growth for the end of this fiscal year and forthe next fiscal year onwards.
On the other hand, the ISP service with Misawa Homes has started as a new initiative. We have beencollaborating with a variety of major house manufacturers and developers and Misawa Homes newly joined.
This concludes the comment on the Real Estate Tech business.

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Next, I will comment on the AdTech business. Sales increased 6.8% YoY. However, income decreased 28.6%.
Despite the current difficult external environment, the segment struggled to increase sales by 6.8%.
Internet advertising companies and agency businesses, as well as affiliate companies including ourselves are
struggling but compared to others, we are doing a good job, growing sales YoY However, profits as a whole
have been declining. Compared to the past, in order to increase sales, while responding to cookie privacy
issues and other issues that have been discussed worldwide, the Company has increased various development
personnel costs and personnel costs for responding to clients' performance.
Nevertheless, sales are increasing and there are factors that make us much stronger than our competitors.
We believe that if things get tougher, there will be companies that will inevitably shrink their business in the
future.
Compared to such companies, our stance remains positive. The market itself is expanding as this businessdomain reaches the point where Internet advertising surpasses TV advertising. We are working hard every
day to ensure that we can return to a profit growth trajectory by operating properly.

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22Through these initiatives, we are focusing on businesses in cross-border domains. The Asian market, of course,
is growing at an extremely high rate in countries excluding Japan, and the Internet advertising market is
growing at a faster rate than in Japan. We provide a variety of services to capture this growth.
Until last year, we had achieved greater-than-expected success in the Taiwanese and other markets, and ourpolicy is to provide this service to Southeast Asia as well.

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Within this policy, the global affiliate platform was released this month. By leveraging these services, we are
expanding our business in Southeast Asia. This will be a challenge as a new business in a new area, but it will
not start from scratch. There are also models that have succeeded in Taiwan, and we are expanding thesemodels. Therefore, I think that we are making relatively steady progress in this area.

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Next, regarding the HealthTech business, more than three years have passed since we started this business,and since its inception we have achieved rapid growth. However, as our goal, we are still in the early stagesof our efforts to develop new services and strengthen our sales structure. Up-front costs may be incurred insome quarters, but in terms of net sales or the number of customers, we are doing very well, so at some point
we expect steady growth, including in profits, in the future.
In the fiscal year under review, profit declined YoY. However, as I mentioned earlier, in the first half of thecurrent fiscal year, sales of services which generate a one-time gain struggled somewhat, and this was notplanned. However, since we are now in a position to properly rebuild our business structure and generateadequate sales in the second half of the fiscal year, we are ready to recover from this situation.
To recover from this situation, we strengthened our sales structure. Since hiring costs are incurred when we
strengthen our human resources, we incurred costs in the second quarter, either temporarily or on the basisof increased personnel costs. As a result, in the second quarter, profits declined YoY.

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25However, as a factor in the recovery, in terms of the number of monthly reservations for the business as awhole, the figures for the height of the graph are not shown, but the curve shows an upward trend.
It is growing at a fairly steady pace because there is such need as shortening the time required to receive aprescription from a doctor and then receive it at a dispensing pharmacy. At this time of the year, there is a
growing need from those who do not want to take their children to pharmacies because of the outbreak of
influenza or from those who do not want to have their children stay at medical institutions for a long time.
This graph shows that the need to send prescriptions online and make reservations based on such needs isrising as awareness grows.

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I think everyone has a drug notebook, but most still carry a paper notebook or forget it every time. If you havea drug notebook, the dispensing fees for patients will decrease slightly, which will result in cost savings.
However, many people do not carry a drug notebook because they are not well aware of this.
If you put this into your smartphone app, you will be more likely to carry it, because you are less likely forgetyour smartphone. The number of downloads at stores that are automatically booked has been increasing
significantly due to our alliance, which allows for automatic bookkeeping of medication records in thepharmacy notebook of one's smartphone after receiving a medicine, and so on.
There are still many stores where the automatic recording service is not available. However, thanks to ourdaily sales activities, it has become highly regarded in the industry, and the number of downloads exceeded
900,000. This month, the total number of downloads is expected to exceed 1 million.
This is a small part of the population of 120 million, although it has already gained the top market share,
because the recognition of the digitization and app version of the drug notebook is still low in the world. We
will continue our educational activities, and we plan to increase the number of downloads to 5 million, 10
million, and 30 million, beginning now, from the starting point of 1 million.

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Next, I will comment on the EdTech business. This is based on ALC which became a subsidiary in the third
quarter of last year. As sales and segment profits are biased toward the fourth quarter as I mentioned several
times, the graph looks like the one above.
For the full year, we expect that a large profit will be posted in the fourth quarter and the full year results will
be positive. This unstable graph is not acceptable to us. In doing this business, we acquired ALC with theintention to launch a subscription-based educational service. We are currently developing a variety of services
and we aim to become a company that can generate profits throughout the year by adding many services that
customers pay on an ongoing basis, for example, as monthly learning fees.
Furthermore, as March and April represent the beginning of the fiscal and school years, there should be nochange in the basis for the concentration of needs. In the next few years, we will strive to create a structurein which the subscription-type service will generate profits throughout the year while generating profits inthe fourth quarter in the form of bonuses.
Regarding the current fiscal year, I would like to say only that a deficit was recorded in the first half, but that
it is okay for the entire year.

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As a result of these efforts, we are currently making progress on a consolidated basis for the fiscal year ending
April 30, 2020. First, we will take on the challenge of initiatives in CASE/MaaS markets through qualitative
measures and collaboration with Alps Alpine in the InfraTech business. In addition, we have been providing
virtual data center services such as FreeBit Cloud VDC for many years, but since the user base has also grownconsiderably, our InfraTech business will be able to raise revenues.
In the Real Estate Tech segment, the Company plans to further expand the number of plus and partner homebuilders and developers, which are growing steadily. Likewise, we have started a SPES to provide additional
services for existing properties to the major manufacturers that we have tied up with, and the introduction ofthis system from the second half of this fiscal year has become a major theme.
In the Real Estate business, there is a business we are doing with AEON. This means that we will contribute tohouse manufacturers by creating an environment in which we can increase the number of partners and, incooperation with AEON, increase the number of tenants on the entire condominium Internet. Although we
struggled at the beginning of the year, it has grown steadily. We are working to become profitable in the next
fiscal year or at the end of this fiscal year, and to clearly demonstrate our raison d'etre in our business.
Although the AdTech segment has struggled in terms of the external environment, we are working to increase
earnings by offering a variety of services. First, since we have formed an alliance with a video editing platform
company, we are moving forward with the use of video advertising video marketing not only for pure branding
advertising, but also for acquisition-type conversion-type marketing.
The Ad-Tech Segment is focused on promoting global affiliate services in earnest, with Southeast Asia as themain battlefield.

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In the HealthTech segment, the number of downloads of our drug notebook has exceeded 1 million, as I
mentioned earlier. By spreading this system, it is already a major achievement that people send prescriptions
from their drug notebooks and lead to reservations, so by increasing the installed base, the first thing we cando is to achieve further growth.
Second, the FreeBit Consolidated Group provides nursing care recording systems for nursing care facilities
other than dispensing pharmacies that are used by the largest companies in the industry. In the second halfof the year, we plan to combine this service with EPARK Healthcare's services for dispensing pharmacies, andto launch services that will improve the convenience of these operating companies and patients. We intend
to put even greater effort into this area.
This is a mechanism that we have been operating for some time to reduce the disposal of pharmaceuticals,
and that makes effective use of what is in stock at pharmacies in the marketplace. In addition, we have beenworking to reduce the costs of pharmacies by purchasing new products jointly. These services will contributeto the HealthTech Business Segment from the third quarter. The deficit increased slightly in the first half ofthe year. We would like to ask for your thoughts on the second half of the year.
While developing new services below the surface, EdTech's existing businesses are performing well. In thecurrent fiscal year, we will not have to explain surprising results to you, both above and below, but will be
successful from the next fiscal year onwards from what is progressing below the surface. I would like to saythat we are aiming to ensure that our results will not be too sluggish. This is the progress made in each of thesegments.

As a result, although we have made progress with regard to the figures, we have achieved approximately halfof our net sales, and since the business structure is concentrated on the fourth quarter, there is no problem.
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Operating income and other items are concentrated in the second half of the fiscal year, especially the fourth
quarter. Therefore, although our plan is basically in line with our plan, we need to make a considerable profit
in the fourth quarter, so we have to do our best every day, with each group company or each individual
working together as one. Although we may be concerned about some of our shareholders, we are continuing
to do our utmost to do our business. We would like to ask for their continued support in the future as we
continue to do our best to do so.
This concludes the explanation of the second quarter of the fiscal year ending April 2020. Thank you very
much.
[END]
______________
Document Notes
1.
2.

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