FreeBit Co., Ltd.
Q3 Financial Results Briefing for the Fiscal Year Ending April 2020
March 13, 2020

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

First, I will explain about the consolidated results.
Net sales for the third quarter in the fiscal year ending April 2020 was JPY4.006 billion. EBITDA was JPY2.653
billion. Operating income was JPY1.198 billion. Ordinary income was JPY1.113 billion. Net income wasnegative JPY238 million.
On a YoY basis, net sales increased by JPY5.942 million, or 17.4%. However, operating income was down 26.4%
and ordinary income was down 13.9%. The reason for this is that net sales was about JPY5.9 billion comparedwith the previous year, due to the start of EdTech business and the growth of the Real Estate Tech business.
The increase in net sales was 17.4%, resulting in a relatively steady increase.
However, operating profit was negative compared to the previous fiscal year. One of the major reasons forthis is that the progress of the existing business in the EdTech business, which began last fiscal year, is notsatisfactory. Another reason is that even though we have purchased the EdTech business with a plan to growby expanding the business in the digital domain and have been moving forward, the progress of the conversion

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into this digital business has lagged behind, and this has resulted in a 26.4% decline in operating income fromthe previous fiscal year.
Ordinary income decreased by approximately 14% on a YoY basis, due to a decrease in operating income.
Net income declined JPY215 million on a YoY basis as operating income and ordinary income decreased.

Based on the results up to this point, the Company has released a revised forecast for the full fiscal year.
Regrettably, we have made downward revisions to net sales and profits.
Let me briefly explain the details. As I mentioned earlier, although net sales were steady compared to theprevious fiscal year, we were expecting to achieve much higher net sales according to the full-year forecast.
On the contrary, we are still lagging the target in the reservation service of the HealthTech business, due inpart to changes in Google’s search algorithms, and other factors.
In addition, in the InfraTech business, there was a telecommunications service for corporations, and this has
not yet generated profits, so some businesses have been sold to a third party. As a result of the sale of thesebusinesses, their sales have fallen short of the plan, which is why they are falling short of the plan.
In the EdTech business, sales from existing businesses have not been met as planned so far, and the digitaltransformation service has been delayed, resulting in negative results.

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In the EdTech business, the number of orders actually declined due to the rapid cancellation of overseas
training and study services as a result of the expansion of the new coronaviruses. In light of these factors, wehave revised our sales forecast.
Compared to the JPY57 billion target, we expect net sales of JPY55 billion, a 3.5% decrease.
However, as the previous fiscal year reached JPY5.0365 billion throughout the year, we expect to see anincrease in revenue of around JPY5 billion.
Furthermore, with regard to operating income and ordinary income, we expect operating income of JPY2.4
billion and ordinary income of JPY2.3 billion from JPY3.8 billion, respectively, which are approximately 40%
below our initial forecast of JPY4 billion.
Accordingly, we forecast net income of JPY0.4 billion, compared with JPY1 billion.
However, this net income is expected to be negative even based on the expected results of the sale of thebusinesses within the InfraTech business, which is expected to be a gain on the sale of the businesses.
Although we are making positive progress in terms of sales growth in our business, we regret to report thatour profit targets have not been met. Based on these results, we would like to take steps toward the next
fiscal year and to create a new growth trajectory.

In addition to the revision of the business results in the release announced today, the Board of Directors madea decision regarding the acquisition of treasury stock, and we have also announced that decision.
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4The spread of the new coronavirus has greatly shaken the global market, and the Japanese stock market has
also fallen sharply. Our stock has also been greatly affected, and we have judged that the significantly reduced
price of our stock due to the impact that the market had is quite different from the fair value that we think.
Therefore, we intend to implement measures to increase earnings per share by acquiring the Company’streasury stock and returning profits to the market.
In terms of the actual acquisition scale, the maximum number of shares that can be acquired is expected tobe 2.5 million shares. This represents approximately 11% of the total number of shares issued by the Company.
In addition, the total acquisition price for the shares is set at a maximum of JPY2 billion.
Up until now, the scale of the share buybacks we have conducted has been around JPY300 million. However,given that the current stock market is in an emergency, we have decided to acquire treasury stock in
considerably larger scale than in the past.
The purchase period will start on March 16, next Monday, and is scheduled to expire on September 30, 2020,
which will be approximately six months.
I hope you will understand this, thank you.

Let me now return to the results of the third quarter and continue the explanation.
First, I would like to talk about the topic of qualitative information. As I mentioned earlier, sales increased by
17.4%. This is due to the start of the EdTech business and the expansion of the Real Estate Tech business.

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5Operating income declined 26.4% due to a decline in the existing businesses in the EdTech business and adelay in advancing into the digital field.
By segment in the consolidated results, as a topic for the InfraTech business, it was transferred from Tone
mobile inc., which was an affiliate company accounted for using the equity method, on December 1 last year,
and we took it over.
In the InfraTech business, the demand for teleworking is increasing considerably in the world, and we arereceiving a great deal of inquiries for our Cloud services.
In the Real Estate Tech business, although some areas have not yet reached the targets, sales have grownsignificantly compared to the previous fiscal year, and have increased by 34.2% up to now. Segment profit
also rose 61.2%, and the results were favorable.
In the HealthTech business, our Group Company, FreeBit EPARK Health Care, Inc. steadily increased its sales,up 11.0% from the previous fiscal year. However, as we have not yet achieved the target number ofreservations, we are working to increase the number.
In addition, some businesses in the HealthTech business were not successfully generating profits, andtherefore we sold them during the third quarter. This, in part, has allowed us to make a profit in the
HealthTech segment as a whole.
Lastly, in regard to the EdTech business, as I have mentioned several times, progress in the digital domain andthe transition have been delayed. In addition, due to the revision of the consumption tax, we paid thedifference in past payments, resulting in a decrease in both sales and profits.
These are the performance topics for the third quarter.

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Next, the slide is showing the quarterly performance trends.
Some businesses in the second quarter captured the demand coming from the consumption tax hike, so forthe current quarter, sales were slightly lower than the previous quarter.

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As a result, the sales composition ratio has gradually changed, and the Real Estate Tech business is currently
seeing significant growth in sales. This represents a 34.2% increase over the previous year, and a 61.2%
increase in profits.
In other areas, the AdTech business has been steadily increasing its sales. Nevertheless, the growth rate
turned to about 7% from double-digit rate. As a result, the share of the Real Estate Tech business in sales has
increased considerably.
Since the EdTech business was newly launched last year, its sales have simply been added. However, profits
were negative due to the delayed plan and negative JPY473 million. In light of the consolidated results, now
is a very difficult time, and the Group as a whole urgently needs to turn this business into a profit and convert
it into a growth business as soon as possible.

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As shown in the waterfall chart, third-quarter sales increased from JPY34 billion to JPY40 billion, mainly
attributable to the addition of the Real Estate Tech and EdTech businesses.

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9Next, even though the Real Estate Tech business significantly increased profit, the AdTech business posted
negative profit despite sales increase, and the EdTech business also posted considerable negative profit. As aresult, operating income as a whole decreased.

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In terms of the differences in the profit structure of P&L, from the graphs shown, you will understand that thescale of the business is growing quite large. The cost-to-sales ratio has remained largely unchanged despite
the fact that the scale of our business has grown, and we are now in a position to seek further improvements
in profitability.
However, we think this gradual growth of our business will make it easier for us to generate profits in the
future, which is a positive step towards structural progress. We deem profitability improvement as one of theissues to be tackled.

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11Next, SG&A expenses.
SG&A expenses increased, due to the addition of personnel expenses and advertising expenses, in conjunction
with the business succession of Tone mobile.

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12This graph shows employees I just mentioned. The acquisition of one business didn’t lead to a dramaticincrease, but it resulted in a slight increase on the whole.

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Next is the variance analysis in ordinary income.
Equity in losses of affiliates decreased JPY215 million YoY, which positively affected the results. While on theother hand, as I mentioned multiple times, the decrease in the EdTech business had a negative impact, andresulted in a 13.9% YoY decrease in ordinary income.

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The major factor for negative net income is the decline in the EdTech business.
Looking ahead, there is an environment in which we can significantly increase profit in areas other than the
EdTech business. Some segments have not reached their targets as expected in this fiscal year. However, thenon-EdTech business is structurally growing, and we have an organization system in place that enables us togrow in the next fiscal year and beyond as well, so I am not worried about that.
Since the EdTech business has just started last year, there are more things left to revamp the EdTech business,so we think of it as a way to improve its structure and speed up while reviewing it.

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In terms of balance sheet comparisons, there has been little change from the end of the previous fiscal year.
That’s it about the topics of the third quarter.

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Looking at the progress of each business segment, first, net sales in the InfraTech business is flat. It declined
0.8% but remained almost unchanged. However, profits have been negative on the whole, partly due to a
decline in gross profit coming from the landline telephone network.

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As we acquired the Tone mobile business, the results will be reflected in the profit from the fourth quarter
onwards. The number of stores that offer the Tone mobile service has been increasing as a whole, partly due
to the fact that more and more Camera Kitamura stores are handling the service now.

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In addition, we have worked with Alps Alpine. Since September 2018, we have repeatedly made PR activities,
and this has been transferred to us, including the cooperation between Tone mobile and Alps Alpine, so wehave inherited the know-how and technology that they have built up in their business from the past.
We are planning to implement new initiatives toward the practical application of digital key basic technologies
within 2020. Even though it is not sure when it will start, we are currently advancing these initiatives behindthe scenes.

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In addition, Tone mobile launched a new device on February 20, which is highly regarded by the market as ahighly functional device as a low-priced Android device.

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20This is about the Real Estate Tech business.
In a word, this business is making steady progress. However, profits are significantly different depending onquarters for this fiscal year. In the previous fiscal year, there was an upward trend from the first quarter tothe fourth quarter. However, there were some variations in each quarter due to a variety of factors. We havebeen hearing concerns from shareholders.
We do not have major problems. There are some changes in each quarter depending on the measures orplans of the major house builders who have been partnered with us. We have received considerably moreorders than last year, which will lead us to continue to grow in the future as well.

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21This shows the number of condominium internet installations, and we have achieved a 47.1% YoY increase to532,000 units. As of the end of March, the cumulative total is 596,000 units. The business is making muchprogress this month as well, and I think you will see that the business is continuing to grow considerably.

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While the number of houses offered continues to increase, we are continuing to provide new services. As our
new initiative, we have announced the SPES service for collective houses, which started offering in January
this year.
This is a service that allows existing facilities to be effectively utilized for existing buildings. We developed andlaunched this service jointly with Broadcom and NEC. Its installation work for a new building is very easy, butthere are a number of issues when it comes to installation to existing buildings since there are alreadyresidents. We developed this service to solve the issue and have received great expectations from housebuilders, so that we expect this to become a trigger to greatly increase the number of houses we offer in thenext fiscal year and beyond.

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Next, I will talk about the progress in the AdTech Business.
Cumulative sales has continued to increase, but sales of this third quarter has declined slightly compared tothe second quarter.
Operating profit and segment profit have increased compared to the previous quarter because of not only
the sales increase, but also structural reforms within the Company and reforms to improve productivity. We
will continue to strengthen these efforts to grow from the next fiscal year onward.

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We are also working on offering, in Asia, the successful web marketing models in Japan, which has been our
medium- to long-term theme for the past few years. We are expanding this business into Taiwan, Malaysia,
and elsewhere.

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25You may be worried that the recent coronavirus problem put us in a difficult situation. However, since this isa new medium- to long-term growth initiative, it has generated almost no sales and profits as a whole at thispoint. So, our business results are completely unrelated to the current coronavirus problem.
The coronavirus is expected to settle down in the future, and as a medium- to long-term initiative, we willcontinue to develop this area.

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Under such a situation, we have established a Malaysian base in the third quarter, and this business will be
nurtured from a long-term perspective.

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Shown is the results of the HealthTech business.
This business increased sales, and the segment profit/loss also turned to positive, partly due to the very strong
growth of FreeBit EPARK Health Care, Inc.
As we are still working on this as a venture business, the first quarter and the second quarter of this fiscal year
did not proceed as planned in the first half of this fiscal year. As a result, the segment profit/loss was negative,
but the business has improved from the third quarter and has returned to profitability based on theexperience up to the first quarter. Therefore, we consider this business to be a business that its sales andprofit will be positive or maintain a growth trajectory from the next fiscal year onward.

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Looking at the user numbers that form the basis for the business, the number of monthly contracts withpharmacies is steadily increasing, as shown in the graph. In addition, we have been steadily developing
services for pharmacies, and the expansion of these services has been highly evaluated by pharmacies,
resulting in an increase in the number of contracts.

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In addition, the number of actual users, who are patients who get drug prescription, is also increasing. We areoffering a web service that enables users to make an appointment, and our electronic drug notebook app isalso increasingly gaining users as a replacement for a paper drug notebook. This app allows users to digitally
record their drug usage history, not in the form of paper. So once users use it, they can keep storing the history,
and it will result in higher repeated usage for our services. For that reason, we are working to increase thisnumber of users.
The total number of downloads exceeded 1.1 million. Among several types of electronic pharmaceuticalnotebooks apps, compared to our competitors, our app has the largest number of users and market share, so
we intend to continue to do our best in this area.

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In regard with the EdTech business, we have lost some of the existing businesses. This is due in part to therecent coronavirus problem, but it is mainly attributable to the normal business operation. In this area, there
are many venture companies emerging, and even companies other than venture companies are becoming
more competitive compared to the past. Nevertheless, we have not yet been able to strengthen our businesscompetitiveness, so we are continuing to lower our share.
We will continue our efforts to improve the productivity of the existing businesses. We have acquired ALC
PRESS INC. with the aim to digitize our educational business and transform it into EdTech business. A little one
year has passed since the acquisition, but we have not made much progress. We are therefore planning toincrease the speed of our efforts to digitize our business and to compete with other digital companies bytaking advantage of our competitive strengths.
Figures have fallen in this fiscal year compared to the previous fiscal year when we acquired them, and this isdifferent from what we envisioned. Therefore, we plan to take a serious stance in responding to this situation.
These are the results of our segments.

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From here on, I will discuss about the focusing areas in each segment, as stated in the revisions to our businessresults.
First of all, in the InfraTech business, Cloud services are extremely becoming popular, and demand is growing
for teleworking, including the coronavirus problem, so we will strengthen our services in the areas.
Since the Tone mobile service is expanding in cooperation with Camera Kitamura, the Company plans toincrease the number of its stores that offer the service.
In the Real Estate Tech business, we are continuing to strengthen our collaboration with major home builders,and our goal is to have them properly install new services such as SPES.
In the AdTech business, sales continue to increase, but the domestic market environment in Japan has various
difficulties due in part to the current problem of coronaviruses. However, we are expanding our services to
the Asia region, so as soon as the problem of coronaviruses settles down, we will expand our business not
only in Japan but also in the Asian market.
As previously mentioned, the HealthTech business for pharmacies has been making steady progress. As
another measure, we are working with the nursing care market, and we are providing a nursing care system
for major nursing facilities as FreeBit. We are collaborating the business with the FreeBit EPARK Health Carebusiness to develop them into a large business.

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32With respect to EdTech, as I mentioned earlier, we are focusing on the transformation into the digital domain,which is the primary objective of the Group. Our theme is to implement the digital transformation in a proper
manner.
This is the status of our third quarter financial results.
In addition to the results, the Company has revised its earnings forecasts today. Unfortunately, this is a
downward revision, and we are sincerely reflecting on this and intend to make a fresh start to the next growth.
Since there has been some recent market turmoil, we have decided to conduct share repurchases. The
Company desires to take the buyer’s perspective to stabilize the market demand and turmoil as much as
possible. In terms of our current share price, we believe that there is a considerable divergence from the fairvalue that we believe. Therefore, we have announced that we will conduct share repurchases on aconsiderably different scale from the past.
We still have a few months to go for this fiscal year, and we look forward to your continued support. Thankyou very much for your attention.
[END]______________
Document Notes
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This document has been translated by SCRIPTS Asia.

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