Presentation Material for
FY04/2024 Q2 Financial Results
December 8,2023
HEROZ, Inc. ｜4382｜

NoticeThis document is an excerpt translation of the original Japanese document and is only
for reference purposes. In the event of any discrepancy between this translated
document and the original Japanese document, the latter shall prevail.

Contents
1. Financial Highlights
2. FY04/2024 Second Quarter Performance (Consolidated)
3. Acquisition of shares of A.I. Squared,Inc.
4. Initiatives in each business segment

5. Frequently Asked Questions and Answers
6. HEROZ Group Structure
7. Reference Materials© 2023 HEROZ Co., ltd.

2

01
Financial Highlights© 2023 HEROZ Co., ltd.

3

※ Consolidated financial statements are disclosed from the third quarter of the fiscal year ending April 30, 2023.
Please note that YoY comparisons are based on consolidated figures for the current quarter and nonconsolidated(non-consolidated) figures for the same period last year.

Financial Highlights◼

◼

FY04/2024 Second Quarter
Performance Summary

Initiatives for
FY04/2024 Second Quarter

Acquisition of shares of
A.I. Squared,Inc.

◼
◼

Net sales were 2,335 million yen (+205%, YoY) ,and EBITDA was 449 million yen (+374%, YoY),
and Operating Profit was 252 million yen (+572% YoY) in the first half of the current fiscal year.
In the AI/DX business, HEROZ's BtoB sales increased by 41.5% YoY only in the second quarterdue to aggressive customer acquisition activities.
BtoC sales also growing on the back of the Shogi boom.
In the AI Security business, sales grows steadily as the number of customers continues to increase.
Operating Profit is on track to achieve 63% of the full-year forecast.
Full-year forecasts are expected to be attainable in terms of sales and various profits.

◼

Our dedicated LLM team has launched the βversion of “HEROZ ASK for Enterprise" as our first LLMrelated product for enterprise companies. Continuing to develop products more suited to corporate
practice in preparation for the release of a paid version◼

Released "Kishin Learning", a learning service for beginner to intermediate Shogi players, in midOctober. Membership gains were much higher than expected, contributing to the increase inrecurring revenue this quarter.

◼

On November 24, 2023, we announced the acquisition of shares in A.I. Squared, Inc. and theconversion of AI Square into a group company.
In conjunction with the acquisition, the company signs a business alliance agreement with BroadBand
Tower, Inc.

◼
◼

We will promote AIX(AI Transformation) in the contact center domain through the contact center
services provided by A.I. Squared, Inc. and HEROZ's core AI development technology and LLM
utilization know-how.

© 2023 HEROZ Co., ltd.

4

02
FY04/2024 Second Quarter
Performance (Consolidated)© 2023 HEROZ Co., ltd.

5

Our Key Performance Indicator◼ We have set EBITDA, a measure of cash generation, as a key performance indicator and aim to sustainably

Performance Indicators for
Business Profitability
EBITDAEBITDA

increase corporate and share value through EBITDA growth.
◼ Formula: Operating profit + amortization and other non-cash expenses (amortization of goodwill, security deposits,stock compensation expense, etc.)◼ Years of depreciation

・Investment in servers for machine learning: Mainly 5-year useful life and declining-balance method
・ Amortization period of goodwill (amount)
VarioSecure, Inc. 14 years（2,180 million yen）,StrategIT, Inc. 9years（219 million yen）

◼ We intend to address more generic problem solving with AI SaaS as our group strategy.

Performance Indicators for
AI SaaS Business

ARR*
ARR
リカーリング売上
Recurring Revenue Ratio
解約率
Churn
rate

We will focus our management efforts on the following indicators that are important to our AI SaaS business model.
◼ ARR（Annual Recurring Revenue）

An important indicator essential for understanding the growth and profitability of SaaS businesses.
Estimated as 12 times the last month of the quarter.
◼ Recurring Revenue Ratio

Indicator of ongoing sales that can be booked on a regular monthly basis.
◼ Churn rate

The churn rate of existing customers is an important indicator of the stability of the above recurring sales.

© 2023 HEROZ Co., ltd.

6

Performance Summary (May 2023-October 2023)
HEROZ Group Consolidated(FY04/2024 Q2)Net Sales

2,335

mil yenYoY ＋205.2%

EBITDA449

mil yenYoY ＋374.3%

Operating Profit

252

mil yenYoY ＋572.1%

AI SaaS KPI

ARR

2,958

mil yenYoY ＋375.9%

Recurring Revenue Ratio

AI Security
Recurring churn rate

62.4%

0.6%

YoY ＋22.3%pt

YoY -0.2%pt* Recurring Revenue is the sum of HEROZ’s BtoB recurring sales and BtoC subscription sales, VarioSecure's managed security services sales, and StrategIT's subscription sales and maintenance sales.
** Recurring churn rate is the churn rate for managed security services in the AI Security service.
© 2023 HEROZ Co., ltd.

7

Performance Overview (May 2023-October 2023)◼ Net sales increased significantly due to the effect of M&A and growth in both BtoB and BtoC businesses.
◼ EBITDA and Operating Profit are on track to meet the full-year forecasts, at 56.2% and 63.0%, respectively.

FY04/2023
Q2 Results

FY04/2024
Q2 Actual(Non-Consolidated)（Consolidated ）Net sales

765

EBITDA

Earnings Forecast

Progress against
Earnings Forecast

YoY(Announced onJune 9, 2023)

2,335+205.2%

4,800

48.7%

94

449

+374.3%

800

56.2%

Operating Profit

37

252

+572.1%

400

63.0%

Ordinary Profit

38

212

+451.0%

385

55.3%

Net Income (loss)

-513

-30

-

30

-

(Units: JPY millions)

attributable toowners of the parent

Impact of the consolidation of A.I. Square, Inc. will be disclosed in the future upon careful examination.
© 2023 HEROZ Co., ltd.

8

Key Performance KPIs (by Quarter)
EBITDANet Sales(Units: JPY millions)(Units: JPY millions)

300

1,400

279

1,217

1,100
1,118
1,114

1,200

258 256
Mainly due toincreased sales in
HEROZ's BtoB
business, profit
growth was achieved
while continuing toinvest in thebusiness.

250

※

1,000
200

170
800
150
600

400

108
367 386 374

429

100

389
354 374 371 381 375

95
83

79

78

200

53

47

50

41

40
22

0

0
1Q

2Q

3Q

FY04
2021

4Q

1Q

2Q

3Q

FY04
2022

4Q

1Q

2Q

3Q

FY04
2023

4Q

1Q

2Q

FY04
2024

1Q

2Q

3Q

FY04/2021

4Q

1Q

2Q

3Q

4Q

FY04/2022

1Q

2Q

3Q

FY04/2023

4Q

1Q

2Q

FY04
2024

※Various investments for
growth in the next fiscal year
© 2023 HEROZ Co., ltd.

9

Recurring Revenue increased significantly◼ Recurring sales continued to increase in the second quarter, although the ratio of recurring sales declined slightly due to the impact of asignificant increase in solution-based sales.
◼ Expect to see a full-scale increase in recurring type sales as paid versions of various SaaS products are launched in the future.
(Units: JPY millions)

1,400

Net Sales

Recurring Revenue

100.0%

Raito of Recurring Revenue

90.0%

1,200
1,000

80.0%

64.9%
64.1%

64.8%

70.0%

60.2%

800

60.0%
600

37.5%

38.5%

40.1%

39.3%

40.5%

39.9%

400
200

1,114
714

374

354
133

381

371
144

149

713

1,118
725

1,217
50.0%

732

389

375
150

1,100

152

40.0%
30.0%

155

0

20.0%

1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023

4Q

1Q

2Q

FY04/2024

Recurring sales ratio in this slide is by quarter (every 3 months).
© 2023 HEROZ Co., ltd.

10

ARR for the entire group was approximately 2.9 billion yen,
the best earnings ever
(Units: JPY millions)

ARR

ARR grows significantly

3,500

2,872

3,000

2,827

2,898

2,958

375.9%
ARR is 2,958 mil yen

YoY growth +2,500◼ Recurring Revenue is the sum of BtoC and

BtoB subscription revenue and BtoB
recurring revenue in AI/DX services,and management security service revenue in
AI Security services.

2,000

1,500

◼ In management security services, the
1,000
543

600

600

597

616

company continues to enjoy a high share of
the market for SMEs, due to its consistent
support system.

621

500

◼ Continuous increase in "Shogi Wars"-related
0
1Q

2Q

3Q

FY04/2022

4Q

1Q

2Q

3Q

FY04/2023

4Q

1Q

2Q

FY04/2024

subscription sales since 1Q of this fiscal year,
contributing to ARR growth© 2023 HEROZ Co., ltd.

11

Recurring revenues are expected to continue to increase
With product launches
Recurring revenue breakdown (by quarter)(Units: JPY millions)

56

50

50

52

99

101

105

110

Details of revenues

Future Outlook

BtoB Recurring Contracts

Multiple products to be launched

HEROZ's BtoB and StrategIT, Inc. recorded
ongoing maintenance and operation sales.
Operating a lot of long-term projects for morethan one year.

Expect growth through SaaS
monetization, such as the release of the"HEROZ ASK" "JOINT", etc.

Subscription of Shogi Wars, etc
Shogi Wars paid subscriber growth wasmaintained at 9.3% YoY.
558

57

55

94

99

1Q

2Q

3Q

562

4Q

FY04/2023
AI Security
Managed Security Service

569

569

1Q

2Q
FY04/2024

Subscription of
Shogi Wars, etc

BtoB
Recurring Contracts

Establishing the
Shogi Wars Economic Zone
Released new Shogi-related content
such as "Kishin Analytics" and "Kishin
Learning," and expect further growth.

AI Security
Managed Security Service

Entering thegrowing security industry

No. 1 share of the domestic market for
firewall-type security services for small andmedium-sized enterprises
Churn rate remains low at less than 1%.

Expanding areas of support for existing
services.
Developing services that expand thescope of MSS to enter the zero-trust
security domain.

© 2023 HEROZ Co., ltd.

12

Performance by Segments (May 2023-October 2023)■ AI/DX services significant growth due to M&A and organic growth ,also, EBITDA margin at 37.6%, high profitability◼ AI Security service is deployed by VarioSecure and maintains high profitability with an EBITDA margin of 42.9%.

FY04/2023
Q2 Results

FY04/2024
Q2 Actual(Non-Consolidated)（Consolidated ）Net Sales

765

Segment Profit
EBITDA

YoY

YoY（Consolidated ）（Excluding M&A impact）

1,038

35.7%

14.6%

246

321

30.2%

-

304

390

28.3%

-

39.7%

37.6%

-2.1%pt-

Net Sales

-

1,306

-

-

Segment Profit

-11

431

-

-

EBITDA

-11

560

-

-

EBITDA Margin

-

42.9%

-

-

-197

-501

-

-

（Units: JPY millions）

AI/DX
services

EBITDA Margin

AI Security
services

Segment Profit adjustment Segment Profit※Segment information is disclosed from the third quarter of the fiscal year ending April 30, 2023. Segment Profit adjustment of -501 million yen represents corporate expenses that are notallocated to each segment.
Segment Profit of -11 million yen in the AI Security business for the period ending April 2023 includes due diligence expenses associated with the acquisition of the company as a
subsidiary.

© 2023 HEROZ Co., ltd.

13

AI/DX Services Segment◼ This segment includes BtoC, mainly Shogi Wars, BtoB, which handles AI Solution for customers, and SaaS implementation and SaaS-linked

development business, which is being developed by StrategIT.
◼ In the second quarter of this fiscal year, sales increased significantly as a result of the strengthening of the BtoB sales structure.

Both BtoC and BtoB sales
increased significantly YoY

FY04/2024
Q2 Actual（Units: JPY millions）

Recurring Revenue Ratio
Net Sales

1,038

30.7％

◼ Shogi-Wars related sales progressed, maintaining sales that grewsignificantly in Q1. Continuing to approach a wide range of users tomaximize the number of Shogi players, taking advantage of therecent Shogi boom.
◼ HEROZ's BtoB business landed on significantly higher sales YoY

Operating Margin
Operating
Profit321

31.0％

and QoQ as an increase in LLM-related projects and thestrengthening of the Company's sales structure began to bereflected in sales.
Ahead of offering a paid version of "HEROZ ASK," the company ismoving ahead to capture recurring sales.

EBITDA Margin
EBITDA390

37.6％© 2023 HEROZ Co., ltd.

14

AI/DX Services Segment
BtoB business of HEROZ (non-consolidated) achieved a significant increase in sales
HEROZ's BtoB business saw a significant increase in revenue due to an increase in the number of projects and inquiries as well as the acquisition of large-scale
projects in response to increased investment and attention to AI, including LLM. （YoY+41.5％）

HEROZ BtoB BusinessNet sales (by Quarter)

BtoB Businesssales per employee

BtoB Business
Trends in the number of active projects

・Sales per employee increased significantly.

YoY

・ Utilization rate also increased, rising about
20% YoY.

+41.5%

・ Promoting efficiency in the work environment formembers by establishing a system for precise
management of utilization ratios and timely
assignments.

Revampedsales structure

1Q

2Q

3Q

FY04/2022
2022/04期

4Q

1Q

2Q

3Q

FY04/2023
2023/04期

4Q

1Q

2Q

FY04/2024
2024/04期

1st harf

2nd harf

FY04/2022

1st harf

2nd harf

FY04/2023

・Strengthened sales efforts and significantly increased
the number of projects.
・ Increase in LLM-related projects in addition to theentertainment, finance, and construction projects that
we have been developing in the past.
・ The increase in revenue was not a one-time event, but
the establishment of a system to continuously increase
the number of projects was a success.

1st harf

Nov. Dec.

FY04/2024

2022

Jan.

Feb. Mar. Apr.

May

Jun.

Jul.

Aug. Sep.

Oct.

2023
© 2023 HEROZ Co., ltd.

15

AI/DX Services Segment
BtoC continues to grow around 10%, surpassing initial forecasts.
BtoC business grew steadily due to the effects of increased attention to Shogi following Sota Fujii's first ever 8 championships victory, collaboration with the popular
Shogi manga "Ban'ou ", and the release of "Kishin Learning", an e-learning service to promote beginner to be intermediate Shogi players.

HEROZ BtoC BusinessNet sales (by Quarter)

Kishin Learning
Paid Membership Trends
・On October 11, we launched "Kishin Learning," alearning tool to improve your Shogi skills. Initial
number of paying subscribers far exceeded
expectations.

YoY
+9.8%

・ Reduce churn rates and increase the number ofcustomers consistently by continually enhancing
content.

1Q

2Q

3Q

FY04/2022
2022/04期

4Q

1Q

2Q

3Q

FY04/2023
2023/04期

4Q

1Q

2Q

FY04/2024
2024/04期

10月11日
10月21日
10/11
10/21 10月31日
10/31 11月5日
11/5 11月10日
11/10 11月20日
11/20 11月30日
11/30
Paid memberships
有料会員数(実績)(Actual)Paid memberships
有料会員数（当初予想）(Initial forcastl)

Commended by
Japan Shogi Association
・With Fujii's success, the number of "Shogi Wars" users
and the number of games played have increased
significantly in recent years.
・ Based on the business vision of "maximizing the Shogi
population," the company received an award from theJapan Shogi Association on November 16 for its
contribution to the popularization and promotion of Shogi.

Photo credits： Japan Shogi Association© 2023 HEROZ Co., ltd.

16

AI Security service Segment◼ This segment is developing the business of implementing the HEROZ Group's AI into the security business developed by

VarioSecure.

Recurring sales ratio is high at 87.2%.

FY04/2024
Q2 Actual（Units: JPY millions）

Recurring Revenue Ratio
Net Sales

1,306

87.2 ％
Operating Margin

Operating
Profit431

33.1 ％◼ Net sales generally progressed as planned.

◼ Operating Profit is expected to decrease due to growth investments

based on the medium-term management policy, mainly in hiring
personnel for service planning, engineering, and operation support,
as well as in advertising expenses to strengthen marketing.
◼ As for the progress of expenses, lower recruiting costs due to thestart of direct recruiting and lower personnel expenses due to thedelay in the start of employment contributed to theoverachievement of profits.

EBITDA Margin
EBITDA

560

42.9 ％◼ Started streamlining operations at SOC (Security Operation Center)using HEROZ's AI.

© 2023 HEROZ Co., ltd.

17

AI Security Service Segment
Steady progress in mainstay Managed Security services

・ Sales of the mainstay Managed security
services grew steadily as the number of endusers increased.

AI Security Service Segment
Net sales (by Quarter)・ Managed Security Service is an integrated
Internet Security service that provides
comprehensive support throughout the entire
process, from security implementation andconstruction to maintenance and operation
Top share of the firewall/UTM operation andmonitoring services market for companies withless than 1,000 employees

YOY+3.0%※Managed
Security Service

・ Integration Services offers one-time fee-based
sales services, such as sales of security
equipment and system construction.
1Q

2Q

3Q

4Q

1Q

FY02/2022

2Q

3Q

4Q

FY02/2023

Managed Security Service

1Q

2Q

FY02/2024

Integration Service※ VarioSecure, Inc. is consolidated from 3Q 2023

© 2023 HEROZ Co., ltd.

18

AI Security Service Segment
Managed Security Services steadily increased end-user numbers with low churn rates
Managed Security Service
Churn Raito (by Quarter)

Managed Security Service
Number of end users（by Quarter）
・Steady increasein the number ofusers
・Contribution tostable revenue base

1.1%
1.0%
0.9%
0.9%

0.9%

0.8%

0.9%
0.8%

0.8%

0.8%

0.7%

0.8%

0.8%

0.8%

0.8%

0.8%
0.8%

0.8%
0.8%

0.6%
0.5%

0.6%

Advances in Server Threat Protection
Solutions

Churn rate remains stable at below 1%.
・Increased sales of
products effective
against malware andransomware
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY02/20192019/2期

FY02/2020
2020/2期

FY02/2021
2021/2期

FY02/2022
2022/2期

FY02/2023
2023/2期

FY02
2024/22024
期© 2023 HEROZ Co., ltd.

19

Balance Sheet (as of October 31, 2023)◼ The cash and deposits currently held by the Company will be gradually appropriated for investments to realize the Company's mid- to longterm growth strategy.
◼ With the grouping of VarioSecure Inc. and StrategIT Inc, there is a goodwill balance of 2.2 billion yen in intangible fixed assets.

Units: JPY millions

As of 4/30/2023(Consolidated)(A)

As of 10/31/2023(Consolidated)(B)

Increase and decrease(B-A)

Current Assets

4,963

4,833

△130

Cash anddeposits

3,798

3,551

△246 due to payment of income taxes

3,709

3,684

△25

Property, plantand equipment

273

216

△20

Intangible assets

2,640

2,660

19

Investments andother assets

831

807

△23

8,673

8,517

△155

Current Liabilities

994

990

△4

Fixed Liabilities

1,598

1,433

△164

Net Assets

6,080

6,093

13

Fixed Assets

Total Assets

Decrease mainly© 2023 HEROZ Co., ltd.

20

03
Acquisition of shares of A.I. Squared,Inc.

© 2023 HEROZ Co., ltd.

21

About A.I. Squared, Inc.

Company name

A.I. Squared, Inc.

Developed

December, 2015

Capital stock

90 million yen

Number of Employees

21

Performance（FY06/2024
1st Quarter）

Net Sales:90 million yen
Operating Profit:-2 million yen
EBITDA :-1 million yen

Adress3-9-3 Iwamoto-cho, Chiyoda-ku, Tokyo

Business

Provision of various IT services andconsulting using artificial intelligence (AI)

Representative Director
Senior Director
Director
Excective Officer

Web site

Masaki Ishida
Akihito Ogino
Tomohiko Hori
Tou GoTomonori Fujie
Mayuko Miyauchi

Provides AI solutions in the contact center domain,
including automatic response systems, automatic
summarization and classification systems, etc.,with natural language processing at the core.

Utilized in operator support systems,
customer support AI chatbots,
HR and administration-specific AI chatbots, etc.

AI summarization service featuringfeatures such as reasonably priced
generated summaries, etc.

https://www.ai2-jp.com/※ Plan to change the fiscal year end to February in consideration of joining our group© 2023 HEROZ, Inc.

22

Overview of A.I. Squared Inc.’s Services
Developing business automation solutions in the contact center domain, including automatic response systems and automatic summarizationand classification systems, by applying machine learning and deep running to natural language processing.

Voice Recognition System
AI2ASR
Cloud-based
voice recognition system

Automatic Analysis System
QuickSummary（QS)
Supporting customer’s voice
analysis and productivity
improvement of call centers.

Automatic Response System
QuickQA（QQA）
Highly Accurate FAQ Recommendations to Support
Phone CallsMachine-learning FAQ search service
that can also be used as a chatbot

System to Support create FAQ
FAQ Finder
Automatically extracts Q&A from dialogue history andpresents them as FAQ candidates© 2023 HEROZ Co., ltd.

23

Main Customers
Contributing to improving the productivity of contact center operations for various customers through its main services,
the “Quick QA” automated response system and the “Quick Summary” automated summarization and classification system.

© 2023 HEROZ Co., ltd.

24

A.I. Squared, Inc.’s Performance Trends
While we have continued to invest in growth, we plan to return to profitability this fiscal year by returning to a growth path and controlling costs.
Recurring revenue account for more than 80% of total sales.

Sales are expected to increase for the full year of this fiscal year.
Operating Profit is expected to return to profitability.

A.I. Squared, Inc.’s Performance Trends(Units: JPY millions)
Net Sales
400

Operating Profit

90.0%

68.1%

80.5%

77.6%

350

Recurring Revenue Raito

82.7%
80.0%

300

70.0%

250

60.0%

200

346

360

340

150

50.0%
40.0%

・Founded in December 2015 with the vision of "Achieving a dramaticincrease in white-collar labor productivity through cutting-edge AI”.
・We have been expanding the provision of various services for contact
centers based on natural language processing AI.
・Although the company had intended to post a loss in the past due tovarious growth investments and preparation costs for IPO, it has changed
its policy and expects to post a profit this fiscal year through cost control.

100
30.0%

50

90
10

0

-54

-100

FY06/2022

-2

-68

-50
FY06/2023

・ Aiming for high business growth by expanding services for contact
centers in cooperation with “HEROZ ASK” in the future.

20.0%

Assumption of return to 10.0%
profitability in this fiscal year

FY06/2024

FY06/2024

1Q(Forcast)

0.0%© 2023 HEROZ Co., ltd.

25

Our aim in acquiring the shares in Company A◼ Strengthening our position as a total AI solution partner◼ Aiming to capture the contact center market, a promising market for the introduction of generative AI

Social Implementation of AI
Introduction Know-how
Construction

Finance

Domain Knowledge forContact Center

Entertainment

Time-series
analysis

Reinforcement
learning

Image analysis

Mathematicaloptimization

natural language
processing© 2023 HEROZ Co., ltd.

26

Our understanding of the contact center market◼ BPO market is expected to maintain growth at a CAGR of 5%, but high turnover and recruitment difficulties remain major challenges◼ Fundamental reform through technology is inevitable

Trends in Contact Center Market Size

（Units :JPY trillions）

1.31

Challenges facing the contact center industry

Need for efficient and effective managementof multiple channels
Chronic labor shortage due to difficulty in continuous
recruitment and high turnover

1.07

CAGR 5.1%

Difficult to optimize resource management

Provide ongoing and advanced training opportunities
2022

2026

(Source: Call Center White Paper 2023 Contact Center)© 2023 HEROZ Co., ltd.

27

Expectations for Generative AI in Contact Centers◼ Contact centers are one of the most promising markets for the adoption of ChatGPT and other generative AI◼ We are also promoting PoC with our partners

Use of Generative AI in Call Centers

HEROZ’s Initiative

Already in use
すでに活用している活用を検討中Considering utilizing
現段階では活用予定はない
No plans to utilize it at this time.

その他
No plans for utilization
無回答
No answer

Growth potential through the use ofgenerative AI is very large.
(Source: Call Center White Paper 2023 Contact Center)© 2023 HEROZ Co., ltd.

28

Overall picture of contact center operations and the tasks
covered by the product◼ The combined use of our company and AI-Square's products will expand the scope of business covered and enable a wider range of support.

Operation
Received
imformation

Customer
Authentication

Informationcollecting

Analysis

Management
ProblemSolving

QQA※

HEROZ ASK

Extra
value

HEROZ's areas of service

Response

RecordKeeping

CreateFAQ

QS※

Generative AI➢ Speech and dialogue recognition➢ Friendly dialogue➢ Issue Classification➢ Create FAQ➢ Proposed response➢ Call logging➢ Text Summary➢ Resource allocation

A.I. Squared, Inc.’s areas of service

Ongoing
Training※QQA：「QuickQA」
QS：「QuickSummary」

call
Loggingresource
allocation

Traditional AI© 2023 HEROZ Co., ltd.

29

A Case Study of Advanced Customer Success Operations for Shogi Wars
◼ As an example, in the area of FAQ creation and CS operations, the company has a track record of improving the efficiency andsophistication of Shogi Wars' inquiry response.

Issue
✓
✓
✓
✓

EffectNumerous inquiries requiring expertise were received daily.
Inquiry response was highly personalized, and user satisfaction
was greatly affected when the person in charge was notavailable.
Depending on the type of inquiry, it often took a long time torespond.
There was a sense that we may not have been able to extract
potential user demand.

Questions

Generate reply text

✓
✓
✓
✓
✓
✓

Reduced response time
Ensure accuracy
Promote standardization of operations
Ensure coverage ratio
Cost efficiency
Accumulation of Knowledge

Correct the
reply text.

Managementteam© 2023 HEROZ Co., ltd.

30

Post-merger synergy creation plan
◼ Aiming to create and expand the market for contact center products by leveraging the strengths of both companies, starting from the
expansion of sales opportunities through sales collaboration.

Step 1◼ Expand sales opportunities
for HEROZ ASK and Quick
QA/Quick Summary throughsales collaboration◼ Steadily develop projects thatmeet the needs that AI
Square has not been able tomeet up to now, utilizing
HEROZ's knowledge.

Expansion of sales
opportunities

Step 2◼ Value-add each other's
existing products

Step 3◼ As a solution partner, expand
AI service suite for contact
centers and increase market
share in the contact center
marketStep 4…
◼ Expanding the scope ofbusiness automation andachieving AI transformation(AIX) in contact centers◼ Redesign product lineup to
match business processes

Enhancement of existingproducts

Contact Center Solution
Development

AIX in Contact Centers© 2023 HEROZ Co., ltd.

31

04
Initiatives in each business segment© 2023 HEROZ Co., ltd.

32

Group Business Structure◼ We have two businesses: AI/DX business and AI Security business.
◼ A.I. Squared, Inc. will be classified as an AI/DX business
AI/DX Services

Segment

BtoC

Business
Contents

Main KPI

BtoB※1 MAU：Monthly Active User
※2 MPU：Monthly Paid User
※3 ARPPU：Average Revenue Per Paid User

AI Security
Services

Shogi SaaS business forindividuals, including "Shogi
Wars," utilizing AI and othertechnological capabilities that won
the World Computer Shogi
Championship.

Provide solutions to customer issues
through data analysis and AI
development.
Provide AI Solution that can beutilized in practical operations for awide variety of customers.

Support for SaaS implementationand development of systems that
integrate APIs between SaaS. Selling
API applications on the app market.

Managed security and integration
services for secure Internet use,
primarily for small and medium-sizedbusinesses.

Recurring Revenue⚫ MAU※1⚫ Billing rate
⚫ MPU※2⚫ ARPPU※3

Recurring Revenue and Solution
revenue⚫ Recurring Revenue Ratio⚫ number of customers⚫ number of employees⚫ utilization rate/unit cost
⚫ revenue per employee⚫ Number of projects in operation

Recurring Revenue and Solution
revenue⚫ number of customers⚫ number of employees⚫ utilization rate/unit cost
⚫ revenue per employee⚫ number of apps
acquired/churned⚫ ARPPU※3

Recurring Revenue⚫ number of customers⚫ churned⚫ revenue per customer© 2023 HEROZ Co., ltd.

33

Initiatives in AI/DX Services

Main Achievements in the
2nd Quarter of FY04/2024

Initiatives for
FY04/2024◼

Our dedicated LLM group is now offering a beta version of “HEROZ ASK” to enterprise companies, whichannounced its rebranding in September. Continuing to adjust the service with a view to making it a paid service
after the first of the year.

◼

“Shogi Wars" has seen a significant increase in the number of users and games played through commemorative
events and various collaborations, driven by the recent excitement in the Shogi world.
On October 11, Shogi launches "Kishin Learning," a learning service for beginner to intermediate level Shogi
players.

◼

In the BtoB business, sales increased significantly ,thanks to the strengthening of the customer base by oursales organization and measures to improve the utilization ratio of engineers by the front-office divisions.
Inquiries related to generative AI are also increasing, and we are aiming for continued growth.

◼

Launched "HEROZ ASK," a product specializing in specialized content, available for a fee from the
beginning of the year.
“HEROZ ASK for Enterprise" will be available for a fee from the beginning of the year. In addition, we aim toincrease recurring sales by developing products specialized for business promotion in individual fields.

◼

Acquired shares of A.I. Squared, Inc. and made it a group company.
As part of our AI SaaS strategy, we made A.I. Squared, Inc. a consolidated subsidiary.
Leveraging the know-how of both companies, we will promote AIX in the contact center industry and domain.

◼

Synergies with Group Companies
HEROZ's AI is installed in the network security operation and monitoring service (SOC) of VarioScure, Inc.
Some functions are now in operation, promoting semi-automation of SOC operations.

© 2023 HEROZ Co., ltd.

34

From Digital Transformation (DX) to AI Transformation（AIX）
We have been helping companies DX in their core operations, but the asymptotic process of digitization was inevitable
Going forward, we will support discontinuous change by maximizing the power of the Large Language Model (LLM).

AI Transformation
Can be directed and interacted with in natural language, eliminating
the need for an asymptotic process for digitization.

✓ Automation of crossorganizational/whole businessand manufacturing processes
achieved with fewer resources

Realizing of LEAP FROG

Continuous process is inevitable

Digitalization✓ Digitization of
analog and physical data

DigitalTransformation

Digitalization✓ Digitalization of businessprocesses across theorganization✓ Digitization of individual
business andmanufacturing processes✓ Changing business model
for customer-driven value
creation✓ Reform business model for"superior customer-driven
value creation

Possible with more generic AI.

Specialized AI is assumed.

※ Based on the definition in the DX Report by the Ministry of Economy, Trade and Industry© 2023 HEROZ Co., ltd.

35

LLM Product “HEROZ ASK” β version Release and Future Roadmap◼ Our LLM Gr is currently promoting research activities for product development and future commercialization using generative AI.
◼ The β version of "HEROZ ASK for Enterprise" is now available for enterprise companies, and approximately 20 customers are using it on a trial
basis within 2 months of its release. Evolution to an industry-specific LLM product is also under consideration.
Current Development Status：closed β ver.

HEROZ ASK
for Enterpriseplan to release this release and domain specialization in the future.

HEROZ ASK
for Enterprise

LLM Products for
Contact Centers

For Construction
Industry LLM
Products
Note: The roadmap is subject to change without notice◼ Revamped Closed Beta to offer ChatGPT (LLM) foreasy business use by anyone.
◼ Under development with the aim of providing a service
that can be used casually, with a minimum monthly
fee of 900 yen/account.
◼ Currently developing specialized products for contact
centers through integration with A.I. Squared, Inc. andsynergy with “Quick QA”/”Quick Summary”.
◼ Results have been verified internally, including
automation of inquiry response operations.
◼ Starting with an exhibit at the Construction DX
Exhibition, we plan to offer LLM specialized in theconstruction domain to construction businesses.
◼ Currently planning field studies with partners© 2023 HEROZ Co., ltd.

36

The classification of LLM services as seen by HEROZ and our positioning.
The mainstream service in the current market is the construction service using Azure OpenAI.
We looking ahead to future trends, offers customization to meet the individual needs of each company at a realistic cost using LLM.

• The currently mainstream ChatGPT
service in the market.

Original LLM• In the future, as Bing Chat Enterpriseand ChatGPT Enterprise become thefirst choice for customer companies,
similar services will be phased out.

Cost

This approach could have thegreatest effect if successful,
but it is overwhelmingly
expensive.

Fine Tuning
Construction
service using
Azure OpenAI

ChatGPT

In-context
Learning

The approach that will
become a trend in the
future.

The mainstream approachbased on Vector Store andPrompting.

low

high
Degree of customization ≒ Added value© 2023 HEROZ Co., ltd.

37

“HEROZ ASK" Service Overview◼ Now offering a closed β version of "AI Assistant" SaaS service for enterprises.
◼ Scheduled to be paid from the beginning of the year. ※「ASK = Always Seek Knowledge」

Features of “HEROZ ASK”

Capable of loading in-house data
Flexible access control
High security level

User-specific settings are
possible
Enhanced Halcyonation
Measures© 2023 HEROZ Co., ltd.

38

Case Study: Regulatory Search in the Construction Industry
By customizing GPT, we were able to provide more concise and accurate responses,
and our answers to home building exam questions improved to a passing level.
Currently, we plan to continue customization and bring it up to the level of passing the first-class architect exam.
“HEROZ ASK” can produce a levelof accuracy that significantly
exceeds the ChatGPT4 response
rate for specific areas

Our customized GPT wasable to answer some buildingcode questions correctly,
but the GPT-4 responses
were marked by plausible
deniability (red text).

percentage of correct answers
to home building exam
Answers containing plausible lies
© 2023 HEROZ Co., ltd.

39

Launched "Kishin Learning," a Shogi learning service.
◼ On October 11, 2023, we started providing the "Kishin Learning" service as a learning content within "Shogi Wars".
◼ Kishin Learning" is an e-learning service for Shogi beginners to kyu-kyu ranks, aiming for promotion to Shodan.
You can enjoy the unique curriculum of "Shogi Wars" with video commentary by popular professionals who are active in the media. Fun content
that will help you become stronger in a short period of time.
◼ Designed as a service that allows a beginner to become a Shogi Shodan in one year, whereas it is usually said that it takes several years for a
beginner to become a Shogi Shodan.
Aiming to reach Shodan with 1 hour of study per day, 365 hours per year.

Kishin Learning: Introduction Video
https://youtu.be/_KljKk4gXsI© 2023 HEROZ Co., ltd.

40

Initiatives in AI Security Services◼ Provides services to make corporate Internet use safe and comfortable. Boasts the top share of
the firewall/UTM operation and monitoring service market in Japan for small- and medium-sizedbusinesses, with a churn rate that remains low at less than 1%.

Main Achievements in the
2nd Quarter of FY04/2024◼ As an initiative related to entering the growing security market, vulnerability assessment services
were launched this quarter. Release roadmap for new services progressed as planned.
◼ “AI SOC" project is underway to streamline operations and management tasks by utilizing
HEROZ's AI technology. Started semi-automation of a series of operations.
◼ Expand the scope of managed service support and strengthen competitivenessIn 3Q, work on adding vulnerability assessment lineup and unauthorized terminal visualization
service for internal LAN, etc.

Initiatives for
FY04/2024◼ Entering the growing security market
Design and development of IDaaS linked to our services for entry into the zero-trust security
domain utilizing our existing services.
Aiming to develop services that fit the scale of small and medium-sized businesses◼ Strengthen new sales structure different from existing sales network
To strengthen the new sales structure, aggressive investment in inside sales and marketing forservice planning and new agency development.
Significant increase in the number of leads, etc., and continued strengthening of customer
development© 2023 HEROZ Co., ltd.

41

Topics①

Launched vulnerability assessment service◼ Strengthened one-stop corporate security support services with the launch of vulnerability assessment services.

Diagnose and report on vulnerabilities incustomer networks and applications.
Flexible support for security enhancements
based on vulnerability assessments throughVarioSecure's extensive security-related
services.

© 2023 HEROZ Co., ltd.

42

Topics ② AI SOC Project◼ Promoting a project to streamline network security operation and management tasks using HEROZ's AI technology.

“AI SOC“ project• Automation of operational tasks andsystemization of highly technical tasks with AI.
• Expected benefits include reduced costs andimproved service quality• Currently, AI has been introduced for somesetting change operations to achieve semiautomation of a series of operations.
• In the future, AI will be introduced into support
operations.
The project will be promoted with a view toproviding this service on an OEM basis.

© 2023 HEROZ Co., ltd.

43

Topics③ Strengthen new sales structure
different from existing sales network◼ Promoting the establishment of a strong direct sales structure based on the medium-term management plan policy.
Various KPIs are showing significant improvement.

Initiatives and effects of each sales measure◼ Marketing Measures
Strengthened appeal to target customer segments andlead nurturing for webinar participants.
The number of subscribers to the newsletter increased
significantly. Significant increase in new webinar
attendees and requests for information materials,
resulting in highly qualified leads.

◼ Inside-sales Measures
Improve the quantity and quality of leads through moreaggressive efforts in telephone sales and the introductionof a lead screening flow and management tools.

© 2023 HEROZ Co., ltd.

44

Strategic Policy: Future IDaaS Business- Zero-Trust Development for Small and Mid-Size Companies◼ From cloud computing to office environments, we will continue to provide security services suited to the scale of small and midsize
companies. Ensure security and reduce operation and maintenance labor.

Future Zero-Security Service Strategy• Conceptualized a managed service thatprovides zero-trust security with minimal
configuration.
• Provide services at the minimum level
necessary to meet the budgetary sense andlevel of service of our main customers,
Japanese SMEs.
• The above measures will be realized mainly
using the following services.
.“Vario SASE”, a cloud-based network
security system;“Vario IDaaS”, a business application portal;and “Vario EDR”, which detects and protects
against the latest cyber attacks.

© 2023 HEROZ Co., ltd.

45

05
Frequently Asked Questions and Answers© 2023 HEROZ Co., ltd.

46Frequently Asked Questions and Answers◼ Some of the frequently asked questions and answers we receive in relation to our most recent financial results announcement.

Q1. Evaluation of HEROZ’s BtoB growth and future prospects⇒With regard to BtoB sales as of the 1st quarter of the current fiscal year announced in September, although thenumber of projects and inquiries had increased significantly as a result of the strengthening of the sales structure,
the posting of sales was delayed compared to the assumption made at the beginning of the fiscal year due to a delayin the delivery period and other factors.
In the 2nd quarter of the current fiscal year, several new projects were launched at the beginning of the period, andthe number of projects continued to increase in the latter half of the quarter, indicating that the aggressive sales
activities since the second half of last year have borne fruit and are beginning to be reflected in net sales.

We believe that the increase in sales in the second quarter was not a temporary phenomenon due to the AI boom, butrather a result of our BtoB organization's shift to a structure that is more committed to sales, including a stronger
customer base due to a strengthened sales structure and a significant improvement in the utilization ratio of paid
engineers due to more efficient management.
Q2. Prospects for Achievement of Full-Year Earnings Forecasts⇒ We believe that we will be able to achieve our full-year forecasts in terms of sales and profits,even excluding the effect of the consolidation of AI-Square.

© 2023 HEROZ Co., ltd.

47

06
HEROZ Group Structure© 2023 HEROZ Co., ltd.

48

Company Overview
Name

HEROZ, Inc.

Location

PMO Tamachi , 5-31-17 Shiba, Minato -k u,
Tok yoEstablished

April 2009

Representatives

Tak ahiro Hayashi/Tomohiro Tak ahashi

Business
Description

AI/DX Service
AI Security Service▍Director and Officer
Representative Director CEO

Takahiro Hayashi
Graduated from Waseda University
Joined NEC as a technology engineer
Experience at IT strategy division, business planning division
Founded HEROZ

Representative Director CRO

Membership
2023

Acquired shares of A.I. Squared, Inc. and made it a group company.

2022

Acquires shares of VarioSecure, Inc. through third -party allotment andmakes it a consolidated subsidiary
Acquired shares of StrategIT Corporation and made it a consolidated
subsidiary.
Moved to the Tokyo Stock Exchange Prime Market

2021

Tomohiro Takahashi

Japan Deep Learning Association
The Japan Society for Artificial Intelligence

Graduated from Waseda University
Joined NEC as a technology engineer
Experience at Business Planning Division, BIGLOBEFounded HEROZ

Director CTO

Keiichi Iguchi

Capital and business alliances with VarioSecure
Director CFO

2019

Listed on the First Section of Tokyo Stock Exchange (TSE)2018

Listed on Tokyo Stock Exchange (TSE) Mothers

2017

Capital and business alliances with Takenaka Corporation
and Koei Tecmo Games2016

JVA2016 Small and Medium Enterprise Award
Capital and business alliance with Bandai Namco Entertainment

Executive Officer

2013

Shogi AI, developed by engineers who was member of HEROZ at that time formerly
with HEROZ, defeated a shogi professional

Shu Kikuchi

2012

Launched mobile app, “Shogi Wars ”

Hiroya Mori
Executive officer
in charge LLM strategy

Kyota Sekiin charge
Business Success Division

Graduated from Tokyo Institute of Technology
Joined NEC Central Research Labs
Graduated from Aoyama Gakuin University
Passed the CPA Examination
After joining an auditing firm and a consulting firm, served as General Managerof the Finance Division of PERSOL HOLDINGS CORPORATION
Graduated with a Master's degree from the University of Tokyo
Joined Panasonic Corporation and Deloitte Tohmatsu Consulting G.K.
Involved in projects such as new business strategy development
Joined NYK Corporation, Apple Computer Inc,
Just Systems Corporation, and other AI solution companies,.
Appointed as Executive Officer of the Company in July 2023

© 2023 HEROZ Co., ltd.

49

Global Leader in Mind Game AI

Chess AI

Shogi AI

Go AI

Deep Blue (’97) defeated aprofessional Chess player

AI developed by our engineers who
was member of HEROZ at that time
defeated a professional Shogi(Japanese Chess) player (’13)

Google acquired Deep Mind (’14)
AlphaGo, developed by Deep Mind,
defeated a professional Go player (’16)

IBM

Google© 2023 HEROZ Co., ltd.

50

Our Vision

Creating the future throughartificial intelligence (AI) revolutions© 2023 HEROZ Co., ltd.

51

The AI revolution we started in the chess world
Shogi Wars, our core business, is not just a Shogi application, but a Gaming Platform that has contributed greatly
to the revolution of the Shogi world itself through cutting-edge AI technology.

➢7 mil users➢500 thousands MAU➢Played a total of over 800 mil times

From "competition" to "collaboration”
The Age of Humans vs.AI

The Age of Human with AI

Evolution of the Shogi world

Growing pessimism that shogi is over

Human intelligence evolves with AI

A new era has arrived in which
practicing with AI is the norm.

In 2017, PONANZA won against thenMeijin Amahiko Sato

Professionals are now studying Shogi
through AI(we also launched Kishin Analytics)

Sota Fujii, the 7th crown, is the poster
child of AI.

.
© 2023 HEROZ Co., ltd.

52

The Importance of the "AI Revolution" we have caused in the Shogi WorldTo advance society by properly implementing innovative technologies in the world.

A Revolution in
Learning

A Revolution insense of values➢ Shogi is taught steadily by alimited number of masters➢ Belonging to Encouragement
association is authoritative.

➢ Shogi is warfare. Being strongin chess is a principle that runs
through everything➢ Using AI to measure the board
and look back on moves is thenorm.

➢ Shogi is a game. The
attractiveness of each chessplayer is important.

➢ Dan acquisition is now possible
through an app.

➢ Technology became a partner inco-creation.

Non-professionals can achieve
a professional look in less time.

Not simply improving productivity,
but fundamentally transforming thevalue we provide.

➢ Technology is a competitor

A Revolution inentertainment value➢ Only the core fans will enjoy
watching it.

➢ Shogi is a game to be playedand enjoyed by oneself.

➢ AI makes it clear at a glance
which move changed the game➢ Shogi is also enjoyable to watch

Gamification
makes daily work more fun

The direction we are heading© 2023 HEROZ Co., ltd.

53

Group Structure◼ With the consolidation of VarioSecure Inc. and StrategIT Inc. as consolidated subsidiaries, we have shifted to the group management

structure.

◼ Owns approximately 43% of thecompany◼ Appoints majority of directors◼ Owns approximately 91% of the company◼ Dispatches 2 directors◼ Dispatches 3 directors

Listed on the TSE Standard Market (4494)
Deemed acquisition date ：2022/8/31

Venture company inits 5th year of operation
Deemed acquisition date ：2022/9/30© 2023 HEROZ Co., ltd.

54

07
Reference Materials© 2023 HEROZ Co., ltd.

55

HEROZ Group Strategy◼ Based on the knowledge gained from our experience in solving individual customer issues, we will aim for

SaaS-type business management driven by intelligence such as our data utilization and AI in the future.（HEROZ 2.0）

HEROZ 1.0

HEROZ 2.0
More versatile issue resolution

Individual issue resolution●●prediction AI

×customer

data

HEROZ AIHEROZ GroupWe will expand AI to a wider range of society by realizing intelligent SaaS,
utilizing the core technology of algorithm and AI development cultivated through Shogi AI, and the advanced knowhow accumulated through solving individual problems.

© 2023 HEROZ Co., ltd.

56

Overall Group Strategy ：AI SaaS
◼ We will evolve the products of our company and group companies into more intelligent data-driven software by making the most of ouraccumulated expertise in advanced AI implementation and our strength as an engineering group.

Pillars ofBusiness

AI SaaS Products

Customized AI

Mind Sports

VarioSecure Security Services

StrategIT iPaaS

data

Advanced AI implementation
know-howUsing Deep LearningWorld’s Strongest Shogi AI

Engineers committed towinning cultivated by Shogi AI.

Data analysis technology toapply customer Big Data

Preparation for the implementation of vision

HEROZ Group

Embodying the vision throughout the group© 2023 HEROZ Co., ltd.

57

Aspect of the SaaS market and our views of the major trends◼ While the SaaS market in Japan is expected to grow steadily, there is still room for further penetration.
◼ To reach the approximately 10 trillions yen potential market, it is necessary to grasp the trends in the Japanese SaaS market.

Our view of future trends
in the SaaS market
in the SaaS market

Enterprise Software Market
in Japan （SI）

10.8

tn yentn yen potential market

10

SaaS Market in Japan(2026)

1.7 tn yen
CAGR

11%

SaaS Market in Japan(2022)

Diversification of needs

Diversifying market needs will accelerate SaaS adoption,and increase demand for operational expertise

Integration with legacy systems
For the foreseeable future, the integration of on-premiseand cloud systems is inevitable, and the transition to zerotrust security will be done in phases.

Need for integrated management
Multiple SaaS deployments increase the burden ofsystem management and operations

1.1tn yen(Source: IDC Japan Domestic Enterprise IT Market Forecast, Fuji Chimera Research Institute, Software Business New Market 2022 Edition)© 2023 HEROZ Co., ltd.

58

Our perception of the challenges of implementing SaaS
By resolving trends that could be barriers to SaaS adoption through technology, we aim to materialize a latent market.

Diversification of needs◼ Rapid changes in the business environment

Issue hypothesis
behind the trend

have led to diversification of issues andcircumstances faced by customers.
◼ Many high-level IT professionals are

unevenly distributed among SIers andcannot promote implementation andoperation customized to the specific needsof each company.

Integration with legacy systems◼ Traditional perimeter defenses are reaching◼ Handling multiple SaaS is becoming thetheir limits as remote work and cloud
adoption accelerate.
◼ Especially, small and medium-sizedenterprises (SMEs), where "one-person
information systems" is an issue, are unable
to respond to recent security trends such as
Zero Trust.

Security

Advanced AI implementation
know-how

Need for integrated management

norm, and management costs are becoming
bloated.
◼

Therefore, there is a need for a migration
service to ensure consistency andcentralized management of information
managed within each SaaS.

iPaaS

Products of our group companies
Machine resources to increase the value of the product© 2023 HEROZ Co., ltd.

59

What we think AI SaaS should be like
We will support the provision of the ideal SaaS usage environment required by our clients by making full use of ouraccumulated know-how and technology.

顧客

CRM

HEROZ GROUP

HR

Automated and optimized
SaaS-to-SaaS collaboration
Automated operations
and maintenance

mail

SaaS Big Data
accumulated through business activities

Chat

Advanced Security

MA
Learning with AI© 2023 HEROZ Co., ltd.

60

Social implementation of AI with "real-world capabilities" to promote AIX
Accelerate your company's AI Transformation (AIX) by enhancing core operations with AI.

Takenaka
Corporation

Toyo Engineering
Corporation～Spave Control System～

IRIS OHYAMA Inc.～
Sales Forecast ～~EPC Toughening System ~AI to accelerate
structural design
work

Stock Suggestion AI
based on domestic
stock holdings

Risk detection AI for
constructability

AI to control the balance
between comfort and energy
savings

Takenaka
Corporation～ Structural Design~

Sales Forecast AI

SMBC Nikko Securities Inc.
～ Stock Portfolio Diagnosis ～© 2023 HEROZ Co., ltd.

61

Overview of VarioSecure Inc.
Name

VarioSecure Inc.

Established

June 2001

capital

749 million yen

Employees

84

Performance(FY02/2023)(IFRS)Sales revenue: 2,634 million yen
Operating profit: 581 million yen
Net income: 383 million yen

Head Office
Location

Sumitomo Corporation Nishiki-cho Building 5F,
1-6 Kanda Nishiki-cho, Chiyoda-ku, Tokyo

Osaka Office Location

Osaka Office
Fukuoka Office

1-2-19 Kitahorie, Nishi-ku, Osaka-shi, Osaka

Fukuoka Office Location

1-12-17, Hakataekihigashi,
Hakata-ku, Fukuoka-shi, Fukuoka

Business

Managed Security Services
Integration Services

President and Representative Director
Director
Director
Director (From HEROZ)
Director (From HEROZ)
Director (From HEROZ)
Outside Director
Director and Audit Committee
Director and Audit Committee
Director and Audit Committee

Yasushi Kajiura
Satoshi Yamamori
Hideko Isoe
Takahiro Hayashi
Keiichi Iguchi
Hiroya Mori
Masataka Shiba
Kenji Sakai
Hideo Fukai
Hidetaka Nishina

Webhttps://www.variosecure.net/

Certification

ITSMS（ISO20000）、ISMS（ISO27001）、privacy markTokyo Head
Office(As of August 31, 2023 ）© 2023 HEROZ Co., ltd.

62

Toward the Realization of an AI Security Company
Provide customers with new safety and security in the age of zero-trust through the power of AI by utilizing a variety of corporate data.
Supporting Digital Transformation by supporting corporate safety and security from the ground up

Automation of one-stop
service for customers

device data
Various hardware
usage data stored
in the company's
network✓ AI replaces complicated security
settings and operations✓ Anyone can easily implement
advanced security

transmission data
User behavior datacollected via the
network

Aggregation ofa wide variety of data

Insight Extraction

Advanced andsemi-automatedoperations

systemdevelopment

data scienceAIdevelopment

SaaS usage data
Usage data for
multiple SaaS
accounts

personalized data
Data varies by
individual andindividual company

Basic AI Technology

Turning Non-IT
Professionals into IT
Professionals✓ Setting up and maintaining asecurity environment on thesame level as largeorganizations

Reproduction of theprofessional skills of amaster craftsman✓ Identifying and handlingirregularities that only an
experienced veteran would
notice.

© 2023 HEROZ Co., ltd.

63

(Reference) Providing services
that make Internet use safe and comfortable
Service Category

Managed Security Services

Integration Services

Service Form

Installation support, operation and maintenance
24 hours/365 days, nationwide in Japan

Equipment sales and construction

Revenue Model

Recurring type (monthly charge)

one-time fee-type① Integrated Internet Security Services(Managed type)Protecting Internet Entrances

For organizations with less than 50
members

Dedicated equipment for managed security services

Integrated security equipment for SMEs

VSR—VarioSecure Router

VCR—VarioCommunicate Router

Data retention in case of emergency② Data Backup Services
Service Content① Sales of intefrated security equipment for SMEs
(Sales type)

Dedicated equipment for data backup services

VDaP—Vario Data Protect② Network Integration Services• Procurement and construction of network
equipment
Construction of company network(wireless LAN network)

Rogue Terminal Detection, Vulnerability
Management③ Vario-NSS(Network Security Suite)

Assists in detecting and responding to cyberattacks④ Vario-EDR Services© 2023 HEROZ Co., ltd.

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(Reference) VarioSecure's business model◼ Provided mainly as an adjunct to the Internet connection

Collective offer
Proposal and Sales

agency agreement(OEM/Distributor)
Sales Support

Internetconnection＋
Security
Services

Sales
Agent

Security
Services

Cutomers

Usage fees￥￥

Monthly fee

Monthly fee(Japanese
Companies)

supports© 2023 HEROZ Co., ltd.

65

Overview of StrategIT Inc.

Name

StrategIT Inc.

Establish

July,2019

Capital

124 million yen

Employees

25(excludes outsourcing)

Location

PMO Tamachi 7F, 5-31-17 Shiba, Minato-ku, Tokyo

Buisiness

SaaS Solution Implementation Support
SaaS API Linkage Development Service
Operation of app store (SaaStainer)

President andRepresentative
Director
Director and CTO
Director
Director
Director

Fumie KatoWeb

https://www.StrategIT.jp/

Our vision is to contribute to management improvement by integrating"Strategy" and "IT“
And our mission is to bring the power of SaaS to all companies
We aim to be a company that promotes the utilization and valueenhancement of SaaS

Yuhei Kawamoto
Masaki Moriwaki（Outside Director）
Takahiro Hayashi（Outside Director)
Hiroya Mori（Outside Director）© 2023 HEROZ Co., ltd.

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StrategIT’s Business Overview
Develop various APIs (linked systems) for SaaS vendors to improve the convenience of SaaS, utilizing know-how gained
through SaaS introduction consulting for BtoB.
Business model to sell developed APIs to general companies through our SaaStainer (app store)

１）Existing Services● SaaS Implementation
SaaS Solution Implementation Support

・Main and high-growth/high-profitability business
・Focus on mid-size projects (from 30 million yen)・Incorporation of Microsoft Dynamics(NetSuite, freee, Microsoft Dynamics, etc.)●

Collaborative Development
API integration development
System integration, development of linked
applications

・Developed an API system for SaaS vendors to link SaaS
vendors by utilizing our know-how of SaaS implementation
・ Have contacts with top SaaS listed companies ARR

Official Apps
Apps for major SaaS solution functions●

SaaStainer
App store（SaaStainer）
Providing a platform for SaaS solution information

・Recurring Sales Model
・Number of registered SaaStainer accounts: 1,091
companies
・Number of listed apps: 60, Number of paid apps: 18
・Pillars of future growth２）New Products Development
MasterHub API Platform（MAPIP）
Collaborative Platform Application

・In-house development of API integration platform application

・Provide customers with an environment that allows them todevelop their own API integration© 2023 HEROZ Co., ltd.

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Notes◼ The forward-looking statements contained in this material are based on information currently
available to the Company, but are not guarantees of future performance and are subject to various
risks and uncertainties. Actual results may differ from the forward-looking statements contained ordeemed to be contained herein due to changes in the business environment and other factors.

◼ This document contains information about our company and other companies, etc., and we makeno representations or warranties as to the accuracy or completeness of the information contained
herein.

© 2023 HEROZ Co., ltd.

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