FreeBit : Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending April 30,2024

December 11, 2023

NOTE：This document was prepared by machine translation, and no manual modification has been made to the translated contents. This document is to be used only as a reference, and in cases any differences occur between English version and the original Japanese version, the Japanese version shall prevail.

Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending

		April 30, 2024 (Japanese GAAP)
				December 8, 2023
Listed company	FreeBit Co., Ltd.		Listing: Tokyo Stock
name		Exchange
Code No.	3843	URL https://freebit.com/
Representative	(Title)	President, CEO and CTO	Name: Atsuki Ishida
		Director and General Manager of
Contact	(Title)	Group Corporate Planning	Name: Ikuko Wada	TEL [phone]
		Division

Date of Quarterly Report Release

Supplementary documents available for quarterly financial results: Yes Quarterly financial results briefing: Yes

Start Date of

-

Dividend Payout:

(Video streaming only)

(all amounts rounded down to the nearest million yen)

Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending April 30, 2023 (from May 1,

2023 to October 31, 2023)
(1) Consolidated Operating Results (Cumulative)	(percentages shown represent year-on-year % change)
										Net income
		Net sales		Operating income	Ordinary income	attributable to
										owners of the parent
Six months ended		Millions of		%	Millions of		%	Millions of	%	Millions of	%
		yen			yen			yen		yen
October 31, 2023		27,073		-	3,071		-	3,014	-	1,980	-
October 31, 2022		22,581		5.7	1,962		-4.5	1,805	-9.7	843	-24.7

(Note)	Millions
Comprehensive FY2024/04 2Q	2,485of yen	(-%)	FY2023/04 2Q
income
	Net income per share	Net income per share
				(Diluted)
Six months ended		Yen			Yen
October 31, 2023		99.22			98.21
October 31, 2022		44.87			44.55

Millions

1,234of yen (-15.6%)

(Note) Consolidated subsidiary GIGAPRIZE Co., Ltd. and its subsidiaries have changed the date of their fiscal year-end from March 31 to April 30. As the second quarter of the current fiscal year is a transitional period for changing the date of their fiscal year-end, percentages representing year-on- year change has been omitted.

(2) Consolidated Financial Position

	Total assets	Net Assets	Shareholders'Equity
	Ratio
As of	Millions of yen	Millions of yen	%
October 31, 2023	35,895	13,109	27.8
April 30,2023	35,926	11,032	22.9

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(Reference)			Millions			Millions
Shareholders'	October 31, 2023	9,961of yen	April 30,2023	8,242of yen
equity:
2. Dividends
			Dividend per shar
		End of 1Q	End of 2Q		End of 3Q		End of Term		Total
		Yen	Yen		Yen		Yen		Yen
FY2023/04		-	0.00		-		8.00		8.00
FY2024/04		-	0.00
FY2024/04 (forecast)				-		27.00		27.00

(Note) Revisions during this quarter of dividends forecast for fiscal year: Yes.

For revisions to the dividend forecast, please refer to the "Notice of Upward Revisions to the Full- year Financial Results for the Fiscal Year Ending April 2024 and Revisions (Dividend Increase)" announced today (December 8, 2023).

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3.Forecast of Consolidated Financial Results for the Year Ending April 30,2024 (May 1, 2023 to April 30, 2024)

(percentages shown represent year-on-year % change)

							Profit		Net income per
	Net sales	Operating income	Ordinary income	attributable to
	share
							owners of parent
	Millions	%	Millions	%	Millions	%	Millions		%	Yen
	of yen		of yen		of yen		of yen
FY2024/04	53,000	13.3	5,500	37.2	5,200	40.3	3,000		67.4	150.27

(Note) Revisions during this quarter of previously disclosed consolidated business results projection for FY2024: Yes

For revisions to the consolidated financial results forecast, please refer to the "Notice of Upward Revisions to the Full-year Financial Results Forecast for the Fiscal Year Ending April 2024 and Revisions (Dividend Increase)" announced today (December 8, 2023).

• Notes

1. Transfers in significant subsidiaries during the quarter (changes in specified subsidiaries resulting in transfers in the scope of consolidation): None
2. Special accounting treatments used in preparation of the quarterly consolidated financial statements:

None

1. Changes in accounting policies, changes in accounting estimates, restatements

1. ① Changes resulting from revisions to accounting standards, etc.: None

   ② Changes other than those specified above: None

   ③ Changes in accounting estimates: None

   ④ Restatement of revisions: None

2. Number of outstanding shares (common shares)

• Outstanding shares at period end(including treasury stock)

• Treasury shares at period end
  ③ Average shares outstanding during the period (quarterly cumulative)

2Q	FY2024/04	23,414,000Shares	FY2023/04	23,414,000Shares
2Q	FY2024/04	3,441,941Shares	FY2023/04	3,453,741Shares
2Q	FY2024/04	19,964,620Shares	2Q FY2023/04	18,803,743Shares

• Quarterly financial results are outside the scope of quarterly reviews by a certified public accountant or an auditing firm.
• Explanations and other special notes concerning the appropriate use of business performance forecasts (Notes on forward-looking statements)
  The earnings forecasts and other forward-looking statements herein are based on information currently available to the Company and on certain assumptions deemed to be reasonable, and do not constitute guarantees by the Company of future performance. Actual results may differ materially from the forecast depending on a range of factors. Please refer to "(3) Consolidated Results Forecasts and Other Forward- looking Information" of P.11" Qualitative Information on Quarterly Financial Results" for the assumptions upon which the forecasts are based and for notes regarding the use of the forecasts.

(Method of obtaining or viewing supplementary material on quarterly financial results and a summary explanation of quarterly financial results)

• Supplementary materials for quarterly financial results will be disclosed on TDnet on the same day and will also be posted on our website.
• A summary explanation of the quarterly financial results will be posted on our website promptly with the recorded videos.

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○Appendix - Table of Contents

1.	Qualitative Information on Quarterly Financial Results ………………………………………………………	5
	(1)	Operating Results …………………………………………………………………………………………………	5
	(2)	Financial Position ………………………………………………………………………………………………	11
	(3)	Consolidated Results Forecasts and Other Forward-looking Information ……………………………	11
2.	Quarterly Consolidated Financial Statements and Major Notes ………………………………………………	12

1. Quarterly Consolidated Balance Sheets ………………………………………………………………………… 12
2. Quarterly Consolidated Statement of Income and Comprehensive Income ………………………………… 14 Quarterly Consolidated Statements of Income

	Second quarter consolidated cumulative accounting period …………………………………………	14
	Quarterly Consolidated Statements of Comprehensive Income
	Second quarter consolidated cumulative accounting period …………………………………………	15
(3)	Quarterly Consolidated Statements of Cash Flows ……………………………………………………………	16
(4)	Notes to Quarterly Consolidated Financial Statements ……………………………………………………	18
	(Notes regarding the going concern assumptions) ……………………………………………………………	18
	(Notes regarding changes impacting shareholders'equity) ………………………………………………	18
	(Changes in the scope of consolidation or the scope of application of the equity method) ……	18
	(Segment Information) ……………………………………………………………………………………………… 18

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1. Qualitative Information on Quarterly Financial Results

1. Operating Results

Forward-looking statements in the text are based on judgments as of the end of the current quarter. The consolidated subsidiary GIGAPRIZE Co., Ltd. ("GIGAPRIZE") and its subsidiaries has changed the

date of their fiscal year-end from March 31 to April 30, which is the same as our consolidated fiscal year-end. As a result, the consolidated subsidiary in the current fiscal year has an irregular settlement of accounts for the 13-month period from April 1, 2023 to April 30, 2024. In the second quarter of the fiscal year under review, the seven-month period from April 1, 2023 to October 31, 2023 has been incorporated into the consolidated settlement.

For more information on the change in the fiscal year-end, see "2.Quarterly Consolidated Financial Statements and Major Notes (4) Notes to Quarterly Consolidated Financial Statements (Changes in the scope of consolidation or the scope of application of the equity method)" of p.18.

The official names and explanations of the names used in "Explanation of Operating Results" are as follows.

Name in use	Official name	Explanation
5G	5th Generation	Abbreviation for 5th Generation Mobile Communications System,
which is one of the next generation communications standards
		Concept of the next-generation distributed Internet, which
web3	Web3(Web 3.0)	enables users to exchange data and content directly with each
		other without going through a huge platform
MVNO	Mobile Virtual Network Operator	Virtual mobile operator
		A generic term for a data center or server group, providing
Cloud	Cloud Computing	software, etc. to users over a network and data is stored and
		operated
		A system that allows goods to communicate with each other by
IoT	Internet of Things	equipping them with a communication function, thereby enabling
automatic recognition and automatic control without human
		intervention.
MVNE	Mobile Virtual Network Enabler	MVNO support provider
Metaverse	Metaverse	Virtual space that is used over the Internet
AI	Artificial Intelligence	Techniques that use computers to study or conduct human
intellectual behavior
		One of TONE Laboratory's demonstration test projects
TONE Care	TONE Care	An online service promptly provides customers various health
consultations remotely, such as consultations on health concerns
		and counseling on the overuse of children's smartphones
DX	Digital Transformation	Reforming products, services, business models, etc. by utilizing
data and digital technologies
NFT	Non-Fungible Token	Technology that can clarify whether digital content is real, who
is the producer, and who is the owner

Our group is promoting corporate management with a view to the 10-year plan from 2021 to 2030. In line with this, we have promoted management to achieve net sales of 50 billion yen and operating income of 5 billion yen in the three-yearmedium-term management plan "SiLK VISION 2024" that ends in the fiscal year ending April 2024.

As a result, business progress in each reportable segment was favorable, and the consolidated earnings forecast for the fiscal year ending April 2024 was also expected to be higher than expected due to the results for the second quarter of the fiscal year under review exceeding the initial forecast.

Going forward, we will continue to focus our management resources on the mobile revolution, lifestyle revolution, and production revolution domains, which we consider to be growth domains worldwide, while contributing to the realization of a sustainable society. In this way, we will aim to expand our business through technologies that grow exponentially as "5G/web3 era Platform

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Maker".

The business operations of each reportable segment are as follows. <5G Infrastructure Support Business>

In addition to support services for entry into the MVNO business and business support services for ISP, we are promoting support services for various business corporations to introduce cloud and IoT, etc. We will also build next-generation networks and data centers to respond to 5G era. As well as strengthen our service provision by leveraging our cloud infrastructure and deploy services that utilize 5G, and eSIM (embedded SIM), and expand services that combine these and other business resources.

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<5G Lifestyle Support Business>

In addition to providing mobile communications services using smartphones and other devices targeting individuals and Internet-related services via fixed-line lines, we are promoting the provision of 5G Homestyle (Internet Services for Collective Housing). In 5G Homestyle, we are also focusing on establishing new services other than Internet services targeting housing complex.

We will develop and provide services with an eye to future changes in lifestyles in 5G/web3 era using "TONE" devices, which are our proprietary smartphones using Maker's Maker platforms. In addition to being limited to existing businesses, we will also develop and expand new services in fields such as 5G Workstyle and 5G Healthstyle,5G Lifestyle,5G Carlifestyle, while "TONE" is responsible for the positioning of our group's technologies as Showroom.

As we expand services with an awareness of 5G marketing and expanding influencer marketing, we are promoting Internet marketing and ad technology-related businesses with a view to web3. In addition, we are developing Bizmodel Maker, which is a system that enables Creator Maker, a platform that enables creators and influencers, including YouTuber, to spread their own works, and companies that start new businesses to provide services via their own platforms.

In the second quarter of the fiscal year under review, while there are concerns about a temporary slowdown in the growth pace due to the impact of the slowdown in overseas economies and high prices, solid growth is expected in the domestic IT market environment. However, while 5G and web3 are expected to penetrate, their spread is still in the development stage. In addition, in our group, we consider it highly likely that all business areas will be affected by the emergence of disruptive technologies and changes in the market environment.

In this environment, we have positioned the current fiscal year as "Transformation Term" again. We will respond to rapid technological and other changes and reexamine our business, organizational, and human resources strategies. We will also implement strategic investing that effectively utilizes the Group's management resources. In this way, we will strive to establish our position as Platform Maker of the "5G/web3 age" at the earliest possible time.

The operating results of each reportable segment are as follows.

• 5G Infrastructure Support Business

In the fixed-line network, the use of many services via the Internet continues to increase due to an increase in online video viewing at home and the use of rich contents and SNS, including games, along with changes in working styles and lifestyles, and the generalization of online- format conferences and classes, such as the spread of telework and home-based learning. As a result, network costs remain on a high trend.

In the mobile network business, the provision of inexpensive plans by major mobile telecommunications carriers and the deployment of these plans under subbrands continue to affect the growth of proprietary MVNO service providers, but the growth of the mobile market as a whole continues and is expected to expand in the future, including the expected increase in the use of these plans for IoT and inbound tourists.

Against this backdrop, in the 5G Infrastructure Support Business segment, MVNE's support business for MVNO expanded, net sales were 4,924,334 thousand yen (up 4.1% year on year) and segment income was 906,637 thousand yen (up 23.6% year on year).

• 5G Lifestyle Support Business

As explained in "5G Infrastructure Support Business", network costs are rising in the fixed- line network services market, but the market for 5G Homestyle (Internet Services for Collective Housing), one of the Group's main services, is steadily expanding as the high-speed broadband environment aimed at improving the asset value of buildings and occupancy rates is being standardized, and the use of telework, online classes, video content viewing, and other services has been recognized as standard. As a result, the market size of these services is expected to steadily expand in the future. In light of this business environment, we have begun providing

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faster Internet connection services and Internet connection services to multi-purpose facilities, as well as services for detached rental housing. In addition, as part of our efforts to realize "Smart Town" (a town where the convenience of urban infrastructures is enhanced through the use of digital technologies), we will propose new lifestyles and lifestyles in 5G/web3 era utilizing various advanced technologies in community town "LIVING TOWN Minato Mirai".

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In 5G Lifestyle (mobile communications services for individuals and Internet-related services), we provide smartphone devices with an eye to the arrival of 5G/web3/ metaverse era in smartphone services "Tone Mobile" that utilize the proprietary technologies offered by our group. We are also working to resolve a variety of social issues, such as the development of a watch-and-watch service "TONE Family" for families equipped with "TONE Anshin AI" that monitors families in AI as a unique service using smartphones. As well as providing specialist counseling on "overuse smartphones" in "TONE Care", a next-generationon-line health consulting service with a view to solving the social issue of Internet dependency, which is a danger worldwide. In order to increase the number of subscribers to "Tone Mobile", we implemented marketing measures centered on performance-based advertising in view of cost-effectiveness.

Against this backdrop, in the 5G Lifestyle Support Business segment, the number of units offered as services in 5G Homestyle (Internet Services for Collective Housing) remained steady. As a result, net sales were 13,654,665 thousand yen (up 22.4% year on year) and segment income was 1,746,247 thousand yen (up 78.2% year on year).

As GIGAPRIZE and its subsidiaries responsible for 5G Homestyle changed the fiscal year-end in the current fiscal year, in the second quarter of the fiscal year under review, the seven-month period from April 1, 2023 to October 31, 2023 has been incorporated into the consolidated fiscal year-end. Furthermore, even in a comparison of the second quarter of the fiscal year under review over the same six-month period as the previous second quarter, both net sales and segment income increased due to the smooth performance of the business itself.

• Corporate and Creator 5G DX Support Business

In the Internet marketing and ad technology services offered by Full Speed Co., Ltd. (Full Speed), economic activity began to normalize due to the relaxation of behavioral restrictions along with the transition to a new type of coronavirus infectious disease, and demand for advertising also increased. In this environment, we worked to promote DX in our Internet marketing-related business by leveraging our accumulated Internet marketing expertise. We are also moving forward with initiatives for new businesses for medium-term growth. We have strengthened our efforts to expand creator economies (economic zones in which creators monetize through their own skills) via platform "StandAlone", allowing creators to disseminate information themselves without going through major platforms, and maximize the value of this information. We have also strengthened our provision of NFT issuance support services for creators and improve operational efficiency and control costs by implementing PMI after making Full Speed a wholly owned subsidiary.

Against this backdrop, in the Corporate and Creator 5G DX Support Business segment, as a result of favorable customer acquisition for affiliate services, net sales were 9,799,019 thousand yen (up 21.3% year on year) and segment income was 428,812 thousand yen (up 67.8% year on year).

As a result of the above, net sales were 27,073,021 thousand yen (up 19.9% year on year), operating income was 3,071,664 thousand yen (up 56.5% year on year), ordinary income was 3,014,188 thousand yen (up 67.0% year on year), and profit attributable to owners of parent was 1,980,899 thousand yen (up 134.8% year on year).

(Reference 1)

Net sales comparison with the six-month period excluding the impact of the previous second quarter cumulative period and the change in the fiscal year-end

					(Thousands of yen)
	FY2023/04		(Reference)
Segment		FY2024/04	Change		Change (%)
Second quarter
		Second quarter
5G Infrastructure Support Business	4,732,570		4,924,334	191,764		4.1
5G Lifestyle Support Business	11,156,960		11,923,235	766,275		6.9
Corporate and Creator 5G DX	8,075,885		9,799,019	1,723,133		21.3
Support Business
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Adjusted amount	-1,383,499	-1,304,998	78,500	-
Total	22,581,915	25,341,590	2,759,675	12.2

(Note) For the second quarter of the fiscal year ending April 2024, these figures are unaudited reference values calculated for purposes of comparing net sales.

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