1st Quarter ended June 30, 2019

Financial Results Supplementary Information

Digital Media Professionals Inc.
https://www.dmprof.com/en

August 7, 2019
The views and forecasts that appear in these materials represent determinations made by the Company at the time thematerials were created. The accuracy of the information therein is not guaranteed.
Please be aware of the possibility that actual performance and results may differ considerably due to a variety of factors.
Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

1Table of contents
Business description・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 3

1st Quarter ended June 30, 2019
Financial highlights・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4
Results of each business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 5

Balance sheet・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 6
Fiscal Year Ending March 31, 2020
Financial forecasts・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 7

Progress of priority measures・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 8
Blueprint for Future Growth・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9
Reference) Major activities so far from April 2019・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 10

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2

Business description
Business
IP Core*1 License
Business

LSI ProductBusinessDescription
Development and license offer of hardware IP (logic design data etc.) and software IP(mainly hardware control drivers and supporting tools for contents creation) necessary
for drawing detailed images and artificial intelligence*2 (AI) such as deep learning*3a) License fee
Compensation through offering IP core license in the process of developing products
such as home appliances by customersb) Running royalty
Compensation received according to the number of products incorporating IP coreshipped by customers
Development, manufacturing (outsourced) and sales of graphics LSI*4 (SoC*5) mainly
for amusement equipment
Development, manufacturing (outsourced) and sales of AI LSI (FPGA*6) for AI
equipment

Professional ServiceBusiness

Provision of design service of studying and optimizing the entire SoC system byintegrating various IP cores of the Company, software service of developing andoptimizing algorithm based on GPU*7/vision /AI technology cultivated throughdevelopment of in-house products, etc.

Major Customers

Semiconductor
manufacturer/Manufacturer of final
product with embedded
semiconductor

Semiconductor trading
company/Manufacturer offinal product withembedded semiconductor
Manufacturer of final
product with embeddedsemiconductor*1: Partial circuit modules within an LSI, designed for a specific function (e.g. graphics IP core). IP stands for Intellectual Property.
*2: Software and system that enable computers to make human-like perceptions and judgments such as computer programs that understand and judge sentences, images,conversations, sounds, etc.
*3: A type of machine learning method that realizes artificial intelligence by utilizing human brain imitated neural network mechanism, which is being commercialized in the fieldof image recognition*4: Large-scale integrated circuits composed of silicon wafers (materials with properties intermediate between conductors and insulators used in the manufacture ofsemiconductor products). LSI stands for Large Scale Integration and is also called "semiconductor“.
*5: Integrated circuit (design method) that integrates a series of functions (systems) required on one semiconductor chip. SoC stands for System on a Chip.
*6: Integrated circuit that allows buyers or designers to set and change the configuration after manufacturing. FPGA stands for Field Programmable Gate Array.
*7: Arithmetic unit or processor specialized in real-time image processing represented by computer games. GPU stands for Graphics Processing Unit. By utilizing its better
performance in parallel computing performance than CPU, technologies called GPGPU (General-Purpose computing on GPU) that apply its computing resources topurposes other than image processing are applied to the AI​​/deep learning field.

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3

1st Quarter ended June 30, 2019

Financial highlights
Net sales and profits decreased in the first quarter
1st Quarter ended
June 30, 2018

1st Quarter ended
June 30, 2019

Net sales

13761▲76Operatingincome
Ordinaryincome▲52▲154▲102▲47▲195▲148Net income▲47▲195▲148(Unit: million yen)Amount change●Net sales
Dropped due to falloff of NEDO commissioned revenue and decrease in IP running royalty etc.

●Operating income
Operating loss expanded due to increased expenses for strengthening the development system in addition to
the impact of decrease in sales.
●Ordinary income
Share issuance cost of ¥56 million regarding business and capital alliance with and the implementation of thethird-party allotment to Yamaha Motor Co., Ltd. was recorded as non-operating expenses, even thoughquarterly subsidy income of ¥17 million regarding NEDO project “AI Platform for Artificial Intelligence (AI): An
Energy Efficient AI Engine” was recorded as non-operating income
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4

1st Quarter ended June 30, 2019

Results of each business
IP core license businessNet sales ¥34 million

YoY change ▲¥22 million●Decrease in running royalties from game console customers●New license contract of ZIA edge AI IP "DV series"

LSI product businessNet sales ¥0.2 million

YoY change▲¥3 million●Recorded sales of AI FPGA（RS1 small lot sales same period last year）

Professional service business Net sales ¥26 million

YoY change ▲¥52 million●Falloff of the sales of ¥47 million from development of power-saving AI engines
commissioned by NEDO last year (receiving subsidy from this fiscal year, that isrecorded in non-operating income)●Recorded sales for automobile from May（From April last year）

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1st Quarter ended June 30, 2019

Balance sheet●Equity increased due to Business and capital alliance with Yamaha Motor●Investments (human resources, etc.) are planned for future expansion ofbusinesses centered on AI field.
(Unit: million yen)March 31,2019

June 30,2019

Amountchange

2,063

2,511448

320

926605

2,383

3,437

1,054366

134

▲232

1818▲0Total liabilities

385153▲232

Total net assets

1,998

3,284

1,286

Total liabilities and netassets

2,383

3,437

1,054

Current assets
Non-current assets
Total assets
Current liabilities

Non-current liabilities

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6Fiscal Year Ending March 31, 2020

Financial forecasts
No changes from the forecasts disclosed on May 10, 2019
(Unit: million yen)

Result for 1Q
ended June 2019

Forecast for 6months ending
September 2019

Forecast for fiscalyear ending
March 2020

Net sales

61400

1,300

Operatingincome
Ordinaryincome▲154▲11530▲195▲13530

Net income▲195▲13520●RS1 sales are expected in each quarter from 2Q.
●New share issuance cost recorded in 1Q is expected to be offset withsubsidies from NEDO in full fiscal year.

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7Fiscal Year Ending March 31, 2020

Progress of priority measures●Expanding RS1 business
ZEEG, a joint venture between Sammy and Universal Entertainment adopts RS1 for the chassis
with common specification. Machines will be shipped to the pachinko/pachislot halls from 2019.

●Expanding Portfolio and Sales of AI Products
・Hardware IP with smaller size and higher performance (ZIATM DV720 IP core release)・Enhanced software product lineup (Release of license plate recognition software “ZIATM Plate”)
・Enhanced performance of FPGA products (ZIATM C3 KIT version up)●Strengthening Collaboration with Customers and Cultivating Specific Fields
・Business and capital alliance with Yamaha Motor Co., Ltd.
Started specific discussions and initiatives in business alliance fields such as development ofautomatic/autonomous driving system in low speed area and development of labor saving/
automation system in agricultural area using robotics technology etc.
・Expansion into medical AI field (adopted as NEDO’s “Project for Accelerating Innovative AI ChipDevelopment”)
Research and development of AI hardware for AI pathology imaging system for cancer
companion diagnostics

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8Blueprint for Future Growth
Evolve into the world's leading "AI Computing Company"
Integrated development of AI algorithms, software and hardware

Expansion into the growing IoT/AI field
Development of ZIA platform• Processor IP• Software• Modules• Strengthening of ecosystem with partners• Overseas expansion
AI solutions for Mobility / Industry• Autonomous driving• Robotics
Expansion of the SoC / Module Business• High value-added modules• High-volume AI productsAI

Stable management foundation in theamusement market where we can win
Expand sales of RS1
Aiming for top share in amusement SoC

Phase 1

Current positionPhase 2

Phase 3Copyright (C) Digital Media Professionals Inc. All Rights Reserved.

9Reference) Major activities so far from April 2019
Each item is linked to PR/IR news of DMP’s website (in Japanese).

Announcement/Event DateContentApril 3-5, 2019

Partners exhibited ZIATM C3 KITs at AI (Artificial Intelligence) EXPO

April 10, 2019

Release of ZIA™ C3 KIT Ver. 7.1

May 10, 2019

Business and capital alliance with Yamaha Motor Co., Ltd.

May 16, 2019

Image processing processor “RS1” adopted by ZEEG, a joint venture between Sammy and Universal
Entertainment as units and parts for pachinko/pachislot machines

May 17, 2019

Acquired certification of International standard “ISO9001”

May 20-23, 2019

Exhibit at “Embedded Vision Summit 2019” (Santa Clara, California, USA)May 21, 2019

Release of ZIA™ DV720 IP Core

June 7, 2019

President Yamamoto invited to the Pitch to the Minister hosted by Mr. Takuya Hirai, Minister in charge ofInformation Technology Policy

June 12-14, 2019

Exhibit at “Image Sensing Show 2019”

June 24, 2019

Release of ZIA™ C3 KIT Ver. 7.2

July 24, 2019

Mr. Takuya Hirai, Minister in charge of Information Technology Policy, visited DMP

July 30, 2019Release of license plate recognition software “ZIA™ Plate”

August 7, 2019

“Research and development of AI hardware for AI pathology imaging system for cancer companiondiagnostics” adopted as NEDO’s “Project for Accelerating Innovative AI Chip Development”

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10

<Inquiries>
Digital Media Professionals Inc. Corporate Planning Department
Tel. +81-3-6454-0450

URL: https://www.dmprof.com/en/ir/

Forward-looking statements contained within this document are based on currently available
information and involve risks and uncertainties, including macroeconomic conditions andtrends in the industries in which we are engaged. As such, actual results may differ
materially from those anticipated.

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11