Tokyo Stock Exchange 1st Section: Securities Code 3992

Needs Well Inc.

Supplementary Materials on Financing
with 5th Series of Share Acquisition Rights through ThirdParty Allotment (Subject to Exercise Price Amendment)
November 25, 2020

1. Purpose of financing(1) Growth strategy(2) Investment strategy(3) Details on use of funds

2. Overview of share acquisitionrights
3. Structure of share acquisitionrights
4. Features of share acquisitionrights
5. Frequently asked questions(FAQ)

1. Purpose of financing(1) Growth strategy
Work to expand sales in focus sectors
Aim for sales of 10.0 billion JPY (CAGR: 23.1%) in FY2023/9
Market scale (our forecast)2025

123.0 bil. JPY

2018

66.7 bil. JPY

Smart cities market

2022

990.0 bil. JPY

2018

460.0 bil. JPY

AI’s major markets*

2023

19.6 bil. JPY

Logistics industry is facing a serious labor shortage as theselection of diversifying needs continues to increase.
There is urgent demand for immediate investment instreamlining, improving quality, and reducing
environmental burden through the use of AI, IoT, etc.

Connected Business
Proceed to engage in connected technologies to enrich
lives, such as smart cities which utilize IoT and AI to makethe entire neighborhood more efficient and convenient, etc.

Solutions Business
Demand for investment is high due to structural reform forDX.
Introduce unique and differentiated products withintegration functions that utilize AI and RPA.

M&A
Expand the scale of existing technologies andstrengthen/introduce new technologies. Focus on logistics,
connected functionality, AI, IoT, web, etc.

* AI’s major markets: Image recognition, speech recognition, speech synthesis, language analysis,
search and retrieval, translation

billion JPY
FY2023/9

Sales growth

4.7+billion JPY[Breakdown]• Existingbusinesses• M&A

2.4 bil. JPY
2.3 bil. JPY

M&A

2018

64.0 bil. JPY

10.0

Unit: billion JPY

Existing businesses

Logistics IoT software solutions
market (WMS, etc. )Logistics Business5.3

billion JPY
FY2020/9

第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

31. Purpose of financing(2) Investment strategy
Active investment torealize our growth strategy;
2.7 billion JPY by FY2023/9
Research and development
Proactive investment to quickly incorporate future-oriented
and cutting-edge technologies based on client needs andmarket trends.

Recruitment and training

Investment target
by FY2023/9

Funds raised through thisseries of financing

Total

Total 1.46 bil. JPY

2.7 bil. JPY
0.2 bil. JPY
0.5bil. JPY

0.20 bil. JPY
0.38bil. JPY

Acquire and train highly competent engineers andpersonnel proficient in proposal-based sales who cancontribute to projects in an upstream process. Continue torecruit highly competent new graduates and strengthen
development and proposal systems.

M&A, capital and business alliances
Active pursuit of M&A growth in addition to improving
performance from the utilization of internal resources.
Continue to explore peripheral fields that have thepotential for synergies with our existing businesses.
• Acquire cutting-edge technologies in order to provide
Needs Well’s unique products and services anddifferentiate ourselves from competitors• Expand into new business fields

2.0bil. JPY

0.88

bil. JPY

第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

4

1. Purpose of financing(3) Details on use of funds
Secure funds for upfront investment
to establish and strengthen the business foundation
12/2020 – 9/2022

M&A, capital/businessalliances

0.88

billion JPY

12/2020 – 9/2022

Personnel acquisition,
education/training

0.38

billion JPY

Logistics system-related
technologies

Employee recruitment

Connected functionality-related
technologies

Policy for retaining/securingpersonnel

Underlying technologies for AI andIoT

Technical training and management
education

Research anddevelopment

0.20billion JPY

Designing, manufacturing, andtesting prototypes that utilize
cutting-edge technologies such as
AI and IoTMarketing research, exploration,and development of new
solutions/services
Intellectual property with patents,
trademarks, etc.

Web solutions-related technologies
Other peripheral technologies thathave the potential for synergies withNeeds Well’s existing businesses

12/2020 – 9/2023

Strengthen
development
systemEnhance researchand development• Acquire cutting-edge technologies in order to provide Needs Well’s unique products andservices and differentiate ourselves from competitors• Expand into new business fields
第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

5

2. Overview of share acquisition rights
5th series of share acquisition rights through third-party allotment (share acquisition rights
subject to exercise price amendment [subject to suspension provisions])
Estimated amount of funds raised

1.46 billion JPY *Amount calculated based on initial exercise priceNo. of share acquisition rights

16,000 units

No. of potential shares /dilution rate

No. of potential shares: 1,600,000 shares Dilution rate (vs. total no. of voting rights): 18.82%(Total no. of voting rights as September 30, 2020: 85,032 units)

Exercisable period

December 14, 2020 to December 13, 2022 (2 years)

Exercise price

Initial918 JPY (Closing price on the trading day immediately preceding the issuance resolution date [November 25, 2020])

Upper limit

NoneLower limit

551 JPY (60% of initial exercise price)

Amendment toexercise price

90.5% of the closing price on the trading day immediately preceding the exercise request date (but not below thelower limit of the exercise price)

Suspension provision

Needs Well may, at its own discretion, specify a period during which the allottee is not permitted to exercise shareacquisition rights.
Suspensions may be specified up to 6 months before the final day of the exercise period.

Optional acquisition by Needs Well

Needs Well may acquire the remaining share acquisition rights at 100% of the issue price by providing prior notice atleast 2 weeks in advance.

Purchase request by allottee

If the stock price falls below the lower limit of the exercise price for 5 consecutive trading days, or within 30 days
before the final day of the exercisable period, the allottee can request to purchase the remaining share acquisitionrights at 100% of the issue price.
Needs Well will acquire the share acquisition rights remaining on the final day of the exercisable period at 100% of
the issue price.

AllotteeMizuho Securities Co., Ltd.

Note) Please refer to the press release titled ”Notice on Issuance of 5th Series of Share Acquisition Rights through Third-Party Allotment (Issuance of ShareAcquisition Rights Subject to Exercise Price Amendment [Subject to Suspension Provisions])” issued on November 25, 2020 for more information.
第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

6

3. Structure of share acquisition rights◼ The exercise price will be amended to an amount equal to 90.5% of the closing price on the Tokyo Stock

Exchange on the trading day immediately preceding the exercise request◼ The exercise price will not be amended to fall below the lower limit of the exercise price◼ Needs Well may suspend the exercise of share acquisition rights as many times as necessary by

specifying that period for suspension◼ The amount of funds raised will change depending on future stock price movements

Exercisable period: 2 years (December 14, 2020 to December 13, 2022)

Stockprice

Exercisesuspended

Exercisesuspended

9.5% discount11/25
Issuanceresolution

Needs Well’sstock price(illustration)

Stock price
12/11
Allotment

Exerciseprice
9.5% discount

9.5% discountExercise price lower limit: 551 JPY* The above is an illustration designed to provide an example of the structure for the share acquisitionrights and does not guarantee that Needs Well’s stock price will perform as depicted above.

Time

第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

7

4. Features of share acquisition rights
Design that can secure financing needed to meet funding demands
While raising funds through the planned allottees exercising the share acquisition rights at theirown discretion, Needs Well will be able to maintain flexibility in financing by issuing specified
suspensions based on current demand for funds and stock prices.

Consideration provided for excessive dilution
This arrangement differs from convertible bond-type bonds with share acquisition rights (standardMSCBs) where the number of potential shares increases when the exercise price is amended
downward as the maximum number of shares to be increased by exercising share acquisition rights
is fixed regardless of the movement of Needs Well’s stock price after issuance, and the dilution ofshare value is limited to a maximum of 18.81% (vs. total number of issued shares).

Expectation to reduce impact on stock priceThrough the establishment of a lower limit for exercise prices, this arrangement has been designedwith consideration for controlling exercise during stock price slumps and avoiding the retention ofan excessive supply of Needs Well shares, which could lead to a further stock price slump.
The share acquisition rights are subject to suspension provisions, and if Needs Well does notdesire the allottee to exercise the share acquisition rights considering stock price movements orother factors, this method allows Needs Well to specify designated suspension periods.

Ensures flexibility of capital policy
Flexibility of capital policy can be ensured as, if a change in capital policy is necessary, all of theremaining share acquisition rights can be acquired throughout the issuance period at thediscretion of Needs Well.
第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

85. Frequently asked questions (FAQ) (1)1.

Why did you choose thisscheme (share acquisitionrights [subject to exerciseprice amendment])?

In choosing a fundraising method from the various selection ofequity financing methods available, we have attached importanceto whether that method is able to raise an amount of funds that
corresponds with our funding demands, in addition to whether it
is composed based on a structure that is able to reduce theimpact on stock prices and control excessive dilution in order toprovide due consideration to the interests of existing
shareholders.

2.

Why didn’t you choose toperform a public offering?

While it is possible to raise the full amount of funds at one time
when new shares are issued all at once through a public offering,etc., we also believe that this would cause a one-time dilution ofper-share profit for that full amount at the same time, which may
have a significant impact on the stock price.

3.

Why didn’t you choose toperform a bankborrowing?

We believe that raising funds through bank borrowing is not anappropriate method for this series of financing as the total
amount of funds raised would become a liability, resulting in a
decline in financial soundness.

第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/2020

95. Frequently asked questions (FAQ) (2)4.

What are your thoughts
on dilution?

The maximum number of shares to be issued by exercising theshare acquisition rights is fixed at 1,600,000 shares, and thedilution rate shall not exceed 18.82%, the ratio of shares to total
voting rights as of September 30, 2020.
In addition, by allocating the funds raised through this series ofequity financing to its intended use, we will be able to further
expand business, improve profits, and strengthen the financial
position of Needs Well. As a result, we believe that this willcontribute to improving the profitability and corporate value of
Needs Well in the medium to long term, and we therefore believethat issuing these share acquisition rights is a rational course ofaction that will contribute to improving shareholder value.

5.

How will you procure
funding if exercises don’t
achieve the expectedresults?

If the expected amount of funding cannot be raised through theexercise of the share acquisition rights, funds will be allocatedfrom cash on hand and borrowings from banks to fulfill theintended use of the funds.

6.

How much will this impact
the business performancefor the current fiscal year?

The impact of issuing share acquisition rights through third-party
allotment will be reflected in the medium to long term, and theimpact on business performance for the current fiscal year
(FY2021/9) will be immaterial.
Furthermore, we believe that using the funds that are raised forthe purposes described in the press release and making thenecessary investments at the current point in time will contributeto future business performance.

第三者割当による第5回新株予約権(行使価額修正条項付)を用いた資金調達に関する補足説明資料
2020/11/25
Supplementary Materials on Financing with 5th Series of Share Acquisition Rights
through Third-Party Allotment (Subject to Exercise Price Amendment), 11/25/202010• This document has been prepared with the intention to provide information on the issuance of the 5thseries of share acquisition rights through third-party allotment (subject to exercise value change), and not
for the purpose of soliciting investment or engaging in any other similar act. When making any investment
decision, investors are asked to do so through their own judgment and at their own discretion.
• All statements described herein have been prepared by Needs Well based on our current outlook, forecast,and assumptions that are vulnerable to risk factors, which may result in actual performance differing fromthat portrayed in these statements. These risk factors and uncertainties include general information fromdomestic and international sources such as general fluctuations in industries and market environments,interest rates, and foreign exchange rates.
• Needs Well shall not be held liable for any impact or damages caused by the information contained herein.
• Unauthorized copying, reproduction, or transmission of this document is prohibited for any purpose.
Corporate Communication Division, Needs Well Inc.
TEL: +81-3-6265-6763 e-mail: ir-contact@needswell.com