FreeBit Co., Ltd.
Q2 Financial Results Briefing for the Fiscal Year Ending April 2019
December 14, 2018

Presentation
Tanaka: Thank you for coming. I’m Tanaka, Representative Director and President of FreeBit Co., Ltd. Today,
I would like to explain the financial results for the second quarter of the fiscal year ending April 2019. Thankyou for your cooperation.

First of all, I would like to focus on the topics of consolidated performance. As for consolidated net sales, weachieved a year-on-year increase of 10.8%, thanks to the continued strong performance of the condominium
Internet and the growth in sales of the HealthTech Business. We have achieved the highest quarterly sales forthe second consecutive year. In terms of operating income, we achieved a year-on-year increase of 139.6%
thanks to improved profitability in the HealthTech and Mobile Businesses, as well as an increase in gross profit
on the condominium Internet. Overall, we believe that both sales and profits were very strong.
Looking at the situation of the individual businesses, first of all, in the Broadband Business, the condominium
Internet continued to expand. However, up to the current quarter, we continued to make upfront investments
to strengthen our structure to accommodate this increase in sales. To date, however, the strengthening of
the GIGAPRIZE Group's structure will almost be concluded. With the continued increase of sales incondominium Internet, we have entered a phase in which revenues will also expand in the future.
In the HealthTech Business, sales increased by 164% year on year, owing to the fact that FreeBit EPARK
Healthcare Inc. is growing very well. Although it is still in the black on a non-consolidated basis, we are still

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1continuing to make up-front investments, and we are continuing to make investments for the next stage of
growth. The Comet Care Business, which we acquired this fiscal year, is now our business from the first halfof the fiscal year, and we are steadily increasing sales.
In addition, regarding the recent acquisition of ALC, we have started to consolidate only in the balance sheet
from the second quarter. I mean, the consolidated financial position that we have disclosed this time includes
this balance sheet. However, it has not yet been included in the PL in the first half of the fiscal year, because
it will be consolidated from the second half. This new segment is scheduled to be disclosed from the second
half of the fiscal year under review as the EdTech Business. Tone Mobile, an equity method affiliate, achieved
a surplus on a single month basis in September. In the mobile business environment, there are various
changes in the world and the competitive environment is tough, but we have achieved a surplus on a nonconsolidated basis. We are pleased with the situation as a whole.

In terms of figures, net sales was 21.497 billion yen as I mentioned earlier, an increase of 10.8%. The amountof increase was more than 2.0 billion yen year-on-year. The EBITDA was 1.628 billion yen, which was anincrease of 460 million yen, slightly less than 40% increase year-on-year. Operating income was 1.013 billion
yen, an increase of 139%, more than doubling compared with the same period of the previous fiscal year.
Ordinary income and net income, which recorded losses in the previous fiscal year, increased approximately
by 700 million yen to 800 million yen. As a result, both items were profitable, and PL's results were favorable.
After closing the second quarter with these figures, the progress toward the full-year plan has not reached50%. However, in our case, there are a number of businesses where sales and operating income are very
concentrated in the fourth quarter, and I would like to state that the internal budget for the full-year businessresults has also been solid.
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Looking at the graph, as I mentioned at the beginning, net sales for the quarter reached a record high. With a
total of 11.062 billion yen, the Group has reached the stage where we are continuing to grow steadily. The
Broadband and HealthTech Businesses saw a substantial increase in sales compared to the same period of theprevious fiscal year, and particularly the Broadband Business saw a 27% increase in sales. This is largely
attributable to the growth of the GIGAPRIZE Group's condominium Internet business. In addition, theHealthTech Business recorded net sales of 1.4 billion yen, an increase of 164% year on year. This is because
we have entered a specific growth phase from the start-up phase of the new business and could record
earnings from the Business to a satisfactory extent, and the Business is becoming a very large part of theGroup.

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Looking at individual analyses, sales from condominium Internet increased by 1.58 billion yen, compared to19.4 billion yen in the same period of the previous year, and sales of the HealthTech Business increased by
870 million yen. As shown in the graph, these two factors accounted for the majority of the 10.8% increase insales.

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5There are various changes in operating income compared to net sales. First, the HealthTech business was stillin the red in the previous fiscal year, but in the current fiscal year, it became profitable on a monthly basis
from the end of the previous period, and also in this fiscal year it has been performing well. As a result,operating income increased by 420 million yen compared to the loss in the previous fiscal year. The
condominium Internet business is increasing its profits and gross profit; as a result, operating income
increased by 400 million yen. In terms of the Mobile Business, the FreeBit Group's MVNE business accounts
for an extremely large percentage. In the MVNE business, although the competitive environment is intense,
we have shifted to the phase of capturing profits from that of expanding users, and this has resulted in an
increase in profits as a business. The reasons for the decline in sales and profits are still the GIGAPRIZE Groupand the Ad-Tech segment. Because we continued to make up-front investments in these businesses in thefirst half of the fiscal year yet, it resulted in the decline in profits.

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Looking at the structure of sales and cost, the graph is fairly large in this period compared to the previous
fiscal year. We have this form of graph to the second quarter, but since the performance of ALC will be addedfrom the third quarter, we will provide a larger graph then.

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In terms of network expenses, the Mobile Business is moving from the phase of increasing sales and acquiring
users to the profit-earning phase, so costs are leveling off.

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In terms of SG&A expenses, as I have mentioned several times, personnel expenses have increased slightly
due to the strengthening of the structures of GIGAPRIZE and Ad-Tech, for which we had ongoingly made upfront investments. However, as this has almost run its course, our business plan is that SG&A expenses will
not increase in comparison with sales growth in the future, but rather that SG&A expenses will be graduallycurbed, and the profitability will increase.

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In terms of changes in the number of employees, although there will be no major changes in the normal
course of business from now on, the addition of ALC has resulted in the addition of more than 200 full-time
employees. As a result, the total number of employees is now 1,200 on a consolidated basis, both within andoutside the Group.

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10Next, we will analyze the differences in ordinary income. In the previous fiscal year, we had a loss of 3 million
yen. In this graph, we started almost from around zero, and there was a positive difference in operating
income for the current fiscal year of 590 million yen. In addition, equity in loss of affiliates in Tone Mobile has
been changed to a profit and investment loss has been decreasing. These resulted in an increase in ordinary
income of 738 million compared to the previous fiscal year.

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11Ordinary income also increased 730 million yen. In addition, the loss on impairment of fixed assets was also
lower than in the previous fiscal year, and although net income was only 9 million yen, we were able to returnto profitability in this fiscal year. With regard to net income, we will increase operating income in the thirdand fourth quarters, and we expect that we will move forward in a positive direction in line with this, and we
expect the numbers to become more visible in the graph.

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As for the balance sheet, the size of the graph has changed because the total assets have increased as a resultof the consolidation of ALC's BS. The composition of the content itself is not such a large imbalance, so themost recent balance sheet shows that, although there were some increases in cash and deposits and goodwill
from the acquisition of ALC, net assets remained almost unchanged, and a slight increase was recorded.

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So far was the overall situation of the whole Group, and I would like to give you a more detailed descriptionof the situation in each of our businesses. In Broadband Business, net sales rose 27.2%. However, segment
income decreased by 29%. As I have mentioned several times, the reason for the increase in sales is that the
GIGAPRIZE Group's condominium Internet business is performing well. The main reason for the decline inearnings and profits were the fact that we spent a lot of money last year or until the first half of this fiscal year
to strengthen the structure to support this extremely large increase in sales of the GIGAPRIZE Group. As aresult, sales increased but profits decreased. However, with regard to the increase in SG&A expenses at
GIGAPRIZE, the strengthening of the structure has almost completed. Therefore, in the second half of the
fiscal year, we plan to enter the stage of earning profits in the fourth quarter of the current fiscal year, because
the SG&A expenses will not increase so much, while sales in the fourth quarter will be very strong.

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The number of condominium Internet installations in the Broadband Business segment is on track to reachthe estimate of 349,000 units for the current fiscal year, which is progressing very smoothly. The downturn inthis segment is improbable unless any special factor arises.

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In addition to simply building up the number of houses, we are also involved in a variety of related businesses.
First, we formed an alliance with Saisan Co., Ltd., a major LP gas company. OEM is based on the provision of
the Internet for condominiums as mentioned earlier, but we are working with Saisan, in order to expand thealliance among various sales activities.
The other is the Aeon Housing business. This is still in the red. Although the GIGAPRIZE Group is able to absorb
this loss because of the strong performance of the condominium Internet, we are still in the phase of achieving
profitability.
Rather than expanding our network of directly managed stores, we are working to further promote our subfranchise alliance, and we have announced that this alliance is accelerating.

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Subsequently, with regard to the progress made in the Mobile Business, this is no longer in the phase ofincreasing sales. The consumer market is also highly competitive, and various changes are taking place, suchas the improvement of services and the direction of price reductions for the three major carriers. In our MVNE
business, we have changed the direction of sales of services for companies, IoT, and so on. Therefore, we havebeen promoting the acquisition of more profitable users than aiming to increase the number. As a result, lastyear we recorded a segment loss of 310 million yen, but this year we converted to a segment profit of 76
million yen.
Since the scale of sales is still sufficient at this point in time, we are working to increase profits by promoting
sales conversion to high-value-added services or services for corporate customers in order to enhance
profitability.

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Next, in Ad-Tech business, net sales increased 1.7% and segment income decreased 21.7%. The overall
performance was firm, and we were able to secure a solid level of profits.
However, in terms of medium-term growth, not only the current extension, but we will also challenge to takeon new fields. Each is not a large investment, but under the concept of incubation, we are also investing inhuman resources and a variety of technologies. As a result, while sales are increasing, profits are decreasing
because of slightly increasing expenses.
This is to proceed while considering if we continue to invest, and even if we continue, how to control the scaleof investment, while looking at the profit situation. However, we will secure the amount of profit as planned.
At the stage such as a temporary increase in profit of 30%, this is not the most recent phase, but we willproceed steadily. The consolidated group will manage what we have now as an important source of profit.

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Qualitatively, the Group's affiliate business is highly regarded by heavy users in Japan. We are moving forwardwith the provision of such expertise to Asian countries and the linking of Japanese clients to Asian countries,
and we are doing very well in Taiwan. I would like to inform you that we are moving forward with the provisionof this business to other ASEAN countries.

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In addition, we have an offshore location in Cebu, the Philippines. This is because we are developing Ad-Tech,and the cost of engineers is becoming extremely high in Japan, or it is difficult to attract human resources. We
are therefore working to ensure that our business in Japan is not delayed by strengthening our base in Cebu.
In addition, the entire Group is investing in development in a variety of fields, so we are moving forward withefforts to use our Cebu Base in the Philippines successfully.

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In addition, the Group has launched a new services business, TAKIBI media, which can be used as a reference
example. The outdoor field is attracting attention in terms of glamping and other factors. This is only a reportthat we have started the TAKIBI business because we have expertise in building media and we have been able
to effectively utilize the links with manufacturers and other clients.

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In addition, as we have been promoting already, we are replacing the legacy business with the cloud business,by selling cloud services while downsizing the legacy business.

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Finally, in the HealthTech Business, Freebit EPARK Healthcare is steadily increasing sales and recording
operating income. Since it is still in the investment phase, we should not try to get profits first, but instead
use sales promotion expenses to expand the user base. Or, in order to develop new services, we will invest
aggressively at an appropriate level of development investment.
As a result, sales and the number of users is increasing. However, we are not making a large profit at this time,
and we are currently in the investment phase. As previously reported, we have already achieved profitability
on a monthly basis, and we are making investments while controlling profits.
Other services such as Comet Care, such as nursing care, have become the basis of our sales performance.
Therefore, we will continue to work hard to expand our services not only in Freebit EPARK Healthcare, butalso in other related healthcare businesses.

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As for its qualitative progress, as shown in the graph, the number of EPARK Healthcare pharmacies that use
pharmacies for a month is steadily increasing. The number of people going to the pharmacy is 800 million ayear, so we have a very large market, so I would like you to understand that there is still room for further
development.

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Sales number of electronic medicine handbooks has also surpassed 420,000 in total. There are various
competing types of medicine handbooks, but among them, it has an extremely strong presence. As a result of
our efforts to build a service that is even more user-friendly than other companies, such as reservations forpharmacies, and the management of family members, we have gained the support of users and the numberof downloads is increasing, and we will further continue to do this carefully.

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Since it has not yet been included in the consolidated PL, we will discuss this from the second half of the fiscal
year, but we started EdTech business as a new reportable segment in November. ALC is a very long-establishedlinguistic education company that will celebrate its 50th anniversary next year.
As you may know, this is the ENGLISH JOURNAL, a monthly magazine with voices, and it has been publishedevery month since 1971. It contains native English-language articles, and it can be used as a cassette tape, ora CD now, and it can be purchased as a magazine.
The hearing marathon, which it has held since the same time, has been attended by a cumulative total of 1.2
million people, and it continues until now. The Group is now considering how to make it easier to use throughthe Internet, and how to raise the number of users and awareness.
In terms of the learning system, the Kikutan series is very famous as a study tool, as it is now said that almost
100% of students are aware of it. The Kikutan is a very large brand, and we will comprehensively roll out thesetypes of content to IT services. The FreeBit Group will start the EdTech business from language education, andwe would appeal to the world that, if we use new services or free-bit services, we can achieve results inlanguage education rather than using other companies. We would like to explain in our earnings
announcement the results, the release of new services, and whether or not the numbers are good or bad.

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Next, in the forecast of consolidated results for the fiscal year under review, first of all, I would like to explain
our focus measures. In the Broadband Business, we expect the number of condominium Internet services toincrease further in the future. This is to be recorded as net sales, so we will be able to properly operate thesystem in such a way that we cannot adequately capture the demand. As we have already secured andstrengthened our structure for this purpose, we will continue to do our utmost to ensure that there are noerrors in our operations.
In the Mobile Business, as I mentioned earlier, we will continue to provide high-value-added services andprovide high-priced services in an effort to improve profitability. Although it has not yet contributed much toearnings, but we are also conducting some technologically meaningful experiments for the future.
In addition, as I explained earlier, we would like to expand our AdTech Business in Asia, and I would like toannounce it to you as soon as possible and publicize it.
The Cloud Business is not in a major development, but we will continue to make steady progress in achieving
solid results.
The HealthTech Business will continue to expand significantly. FreeBit EPARK Healthcare Co., Ltd. has achieved
profitability on a non-consolidated basis. However, when we combine various services in the HealthTech
Business, the segment is still in the red. Therefore, we plan to move forward with both efforts to achieve
profitability in the segment while expanding sales.

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As for the current progress, as you can see in this document, although it is in the second quarter stage, noneof the items has reached 50% yet. However, net sales or operating income of several businesses of the Groupare concentrated in the fourth quarter. Therefore, the business results are usually skewed toward the fourth
quarter each year, and the business plan for the current fiscal year has been formulated in accordance in thisexpectation. We are currently in the process of implementing our business plan, believing that we will be able
to achieve these sales and profits in line with our consolidated earnings forecast.

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For this reason, I would like to say that the FreeBit Group is steadily moving ahead with its targets for the
fiscal year ending April 2020, with consolidated net sales of 50 billion yen and consolidated operating incomeof 5 billion yen.
I would like to conclude the explanation of the financial results for the second quarter of the fiscal year ending
April 2019.
There is a section to ask questions later on, so I'm going to give you more explanation. Thank you very much.
I would like to start a Q&A response, so please ask if you have any questions.
There were no particular questions, so we would like to conclude the results briefing for the second quarter.
Thank you very much for your participation.
[END]______________
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