Third Quarter Flash Financial Report for Fiscal Year Ended March 31, 2025

Note: This document has been translated from a part of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

February 6, 2025

Consolidated Financial Results

for the Nine Months Ended December 31, 2024

(Under Japanese GAAP)

(Yen amounts are rounded down to millions, unless otherwise noted.)

1. Consolidated financial results for the nine months ended December 31, 2024 (from April 1, 2024 to December 31, 2024)

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2. Cash dividends

3. Overview and management policy for the fiscal year ending March 31, 2025

To achieve the mission of carrying bit in safety and security, the Company provides mobile telecommunications service and mobile solution service, and operates the business that provides telecommunications and authentication infrastructure whose identification and authenticity are secured by FPoS, the Company's patented technology (hereinafter referred to as the "FPoS business"). FPoS is a technology which was recognized by the Financial Services Agency as conducive to ensuring security and improving convenience of financial transactions. In the mobile telecommunications service, the Company agreed with NTT DOCOMO, INC. (hereinafter referred to "DOCOMO") about the interconnection with DOCOMO's voice and SMS network in February 2024 and the Company plans to provide new service based on the interconnection in May 2026. Herewith, the Company will be able to develop new business as Neo-Carrier and the Company assumes to provide 10 million mobile telecommunications lines in 2034. In the FPoS business, its technical security and institutional reliability owing to accreditation under the Electronic Signatures Act have been so evaluated that it is expected to grow in geometric progression and the Company assumes to provide 100 million electronic certificates in 2034. The Company assumes that these service and business will bring us domestic net revenue of 240 billion yen and profit after tax of 36 billion yen in 2034.

First, the Company will proceed to prepare for the interconnection with DOCOMO's voice and SMS network for the launch of new service in May 2026 and will make efforts to expand customer base through actions to increase awareness at the same time, and the Company will continue to make efforts to establish evaluation of FPoS and to expand cases using FPoS.

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* Notes

1. Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in the change in scope of consolidation): None
2. Adoption of accounting treatment specific to the preparation of quarterly consolidated financial statements: None
3. Changes in accounting policies, changes in accounting estimates, and restatement
4. 1. Changes in accounting policies due to revisions to accounting standards and other regulations: None
   2. Changes in accounting policies due to other reasons: None
   3. Changes in accounting estimates: None
   4. Restatement: None
5. Number of issued shares (common shares)
6. 1. Total number of issued shares at the end of the period (including treasury shares)

(ii) Number of treasury shares at the end of the period

(iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year)

• Review of the Japanese-language originals of the attached consolidated quarterly financial statements by certified public accountants or an audit firm: None.
• Proper use of earnings forecasts, and other special matters
  A financial results meeting will be held on Friday, February 7, 2025 for institutional investors, analysts and the press. The Company plans to post a video of this financial results meeting on its website promptly after the meeting is held.

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1. Explanation on operating results, etc.

1. Explanation on operating results for the nine months ended December 31, 2024
2. 1. Mobile Telecommunications Service (MVNO/MVNE business)
      Upon a ruling by the Minister of Internal Affairs and Communications in June 2020, since the Company launched the "Nihon Tsushin SIM" which provides flat-rate voice plans equivalent to those of major mobile phone operators in July 2020, the Company has continued to achieve growth both in the number of subscribed lines and quarterly revenue.
      As an awareness improvement measures to accelerate growth of "Nihon Tsushin SIM", the Company conducted first time TV commercials ("We cannot subtract any further. 290 yen" edition) and conducted the similar advertising on the Internet in the nine months ended December 31, 2024 (hereinafter referred to as the "current nine months"). Though this time TV commercials were only in Kanto region and Shizuoka prefecture and only from June 2024 to August 2024, it worked well enough as the measure to improve awareness, because "Nihon Tsushin SIM" got introduced by the Kanto key station and local television station.
      Also, the Company increased the data amount of "Reasonable Minna-no Plan" and "Reasonable 30-GB Plan" with keeping their rate unchanged on September 30, 2024, to enhance competitiveness. This allows the product lineup of "Nihon Tsushin SIM" (please see below) to be posted in a comparison website and their marketability and price competitiveness are highly valued.
      In addition, the voice service of the "Nihon Tsushin SIM" is not provided in prefix method, which has been adopted by many of MVNOs, and the Company provides services of comparable call quality as major mobile phone operators, though the price of the service is the lowest in Japanese mobile telecommunications industry.
      The Company considers the "communication quality," "billing plan" and "procedure and support" important and focuses on increasing customer satisfaction. And the Company was awarded the first prize of total satisfaction in the category of MVNO for the customer satisfaction survey on the mobile phone service for 2024, by J.D. Power Japan, Inc.
      Due to the awareness being improved and the products being evaluated, the revenue from "Nihon Tsushin SIM" has been growing steadily for both individual and corporate subscribers. As a result, the mobile telecommunication service has continued to see growth.
      In addition, as the Company applied to DOCOMO for the interconnection with its voice and SMS network in June 2022 and agreed with DOCOMO about the interconnection in February 2024, the Company is aiming for starting new service based on the interconnection with DOCOMO's voice and SMS network in May 2026 (scheduled). The Company decided to adopt the solution provided by ng-voice GmbH, a telecommunication software provider whose headquarter is in Hamburg, Germany, as voice core system of the Company in the current nine months (Please see the Company's press release on December 5, 2024 for detail). The Company will advance the formulation of network for the interconnection with DOCOMO's voice and SMS network continuously.
      Product lineup of "Nihon Tsushin SIM"

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1. Mobile Solution (MSP business)
   In the telecommunications business through local mobile networks (local 4G/5G business) among the mobile solution (MSP business), the Company aims to build actual results in the U.S., where there are many advanced showcases, and leverage this experience to expand in Japan. The U.S. subsidiary of the Company operates a business that provides SIMs used for connections with local mobile networks in the U.S. market.
   As announced in December 2023, the Company's U.S. subsidiary, JCI US Inc. (hereinafter referred to as "JCI US"), entered a contract with the State of Utah in the U.S. to implement a statewide Citizens Broadband Radio Service (CBRS) (local 4G/5G) for an educational and telehealth network. It means that JCI US entered a contract with the State of Utah through the University of Utah and the Utah Education and Telehealth Network (hereinafter referred to as "UETN") to provide the Company's Secure LTE Network Gateway Platform (NGP) services in its first major commercial implementation. The local 4G/5G networks envisioned in this contract will replace and expand the service requirements of Wi-Fi and provide secure (private/closed) networks for the current and future users of high-speed broadband services implemented by the University of Utah and UETN. JCI US will provide all necessary SIMs and/or other Hardware Security Modules (HSM) to enhance connectivity to networks for the people of the State of Utah.
   Through the U.S. subsidiary, the Company is accumulating technologies and expertise on the telecommunications business through local mobile networks (local 4G/5G business), and by taking advantage of these technologies and expertise, the Company provides SIMs that can connect to local mobile networks set up by partner and customer companies. The Company will continue to accumulate knowledge in Japan and the U.S. and will take advantage of this knowledge to develop case examples in the local 4G/5G business.
   In addition, the Company takes advantage of the technology and infrastructure of SIM authentication which the Company has developed in the U.S. to provide the new service based on the interconnection with DOCOMO's voice and SMS network.
2. FPoS business
   As digital transformation (DX) is underway in many areas of society and the economy, the importance of digital IDs is recognized again, and the Company is pushing forward with a business that will establish and provide digital IDs that can be used on smartphones using FPoS, which is the Company's patented technology and the technology being recognized by the Financial Services Agency as conducive to ensuring security and improving convenience of financial transactions. The authentication by FPoS is i) verification of a customer's identity by private key and electronic certificate, which are equipped with an IC chip in a customer's Individual Number Card, ii) generation of private key and issuance of electronic certificate by electronic certification authority, that is accredited under the Electronic Signatures Act, in Hardware Security Module (HSM) built in a customer's smartphone (iPhone and Android), and iii) guarantee of the identity (confirmation of the person's identity) and authenticity (confirmation that the person's intent is not falsified) of a customer by examining the combination of a public key contained in an electronic certificate and a private key.
   That is to say, an Individual Number Card is a trust anker in the authentication by FPoS and FPoS has a high-level security equal to an Individual Number Card. While an Individual Number Card has restriction on its purpose of use and its range of use as a digital ID is limited to Myna-portal, etc., FPoS has no restriction on its purpose of use and it can be used as a digital ID and authentication infrastructure in a wide range of areas by local governments and business operators.
   When a customer uses a service through applications on a smartphone, there is a problem that the customer could be impersonated and the customer's data (including personal information) could be falsified, however, if that service is secured by FPoS, the customer could not be impersonated and the data could not be falsified, because FPoS has a high-level security equal to an Individual Number Card. And there is also a problem that the customer cannot manage the business operators who have link to the customer's data (including personal information), however, if that service is secured by FPoS, the customer can confirm and manage the business operators who have link to the customer's data (including personal information) easily, because FPoS has a function of "Dynamic Opt-in" which displays the list of the business operators who have link to the customer's personal information and enables the customer to authorize or revoke the link to their personal information.
   To demonstrate the above potential of FPoS, the Company cooperates with Mebuku Ground Inc., a private- public partnership company made up of Maebashi City, private-sector business enterprises and universities.

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Since October 2022, Mebuku Ground Inc. operates "Mebuku App" which issues "Mebuku ID," a digital ID using FPoS technology.

The "Mebuku ID" is not only far more secure than other IDs, but is also highly regarded by many local governments, companies, and organizations for its ability to link data across business operators, and for its "Dynamic Opt-in" function that provides information of which business operators or services are eligible to link the data.

In December 2023, "Mebuku Pay," Maebashi City's electronic local currency, was launched through "Mebuku ID" and "Mebuku App" (announced by Maebashi City and Mebuku Ground Inc. in September 2023). "Mebuku Pay" was designed and developed with the highest priority placed on giving back payment data to the local community by ensuring that it remains in the community and is utilized locally. The Company believes that "Mebuku ID" and "Mebuku Pay" can be an effective means to solve social issues, as they enable communities to reap the benefits of social and economic digitalization.

In addition, benefit money to support childbirth and nurturing in Maebashi City can be paid in "Mebuku Pay." This is achieved because of the high-level security of "Mebuku ID" and ability to link personal information safely and surely owing to a consent of the person by a function of "Dynamic Opt-in."

As the Company released "FPoS library" which is a component of the core functions of FPoS in May 2024, the business operators who provide services through the applications for smartphones can incorporate the "FPoS library" into their applications and enable their applications to have functions of identity verification, person authentication and data linking at the same level as "Mebuku ID." Furthermore, as an amendment of business implementation method of "my electronic certificate," which is a certification work under the Electronic Signatures Act, was accredited in October 2024, the applications that incorporate "FPoS library" become able to use a legal basis digital ID. For example, if ABC bank incorporates "FPoS library" into the ABC bank application, "my electronic certificate" will be issued in the ABC bank application (Please see the Company's press release on October 7 and 8, 2024 for detail).

As a result of the above, the Group's consolidated net revenue for the current nine months was 6,675 million yen, an increase of 1,287 million yen (up 23.9%) compared to the nine months ended December 31, 2023 (hereinafter referred to as the "same period of the previous year"). This was because of the growth of the flat- rate or semi-flat-rate voice services centered on "Nihon Tsushin SIM."

Cost of revenue was 3,810 million yen, an increase of 811 million yen (up 27.1%) compared to the same period of the previous year. This was due to an increase in mobile network procurement costs associated with the growth of "Nihon Tsushin SIM." However, the increase in cost of revenue can be contained because the mobile networks of both data and voice communications procured by the Company from DOCOMO have been set not to exceed the amount of the appropriate costs under efficient management plus appropriate profit.

Gross profit was 2,865 million yen, an increase of 476 million yen (up 19.9%) compared to the same period of the previous year. The sales, general and administrative expenses was 2,185 million yen, an increase of 607 million yen compared to the same period of the previous year. This was because of the payment of 249 million yen as the measure to raise awareness in the current nine months and posting of 33 million yen as the advanced survey cost, etc. for the interconnection with DOCOMO's voice and SMS network. The operating profit was 679 million yen (810 million yen in the same period of the previous year), and ordinary profit was 699 million yen (839 million yen in the same period of the previous year).

In addition, in the current nine months, the Company posted 38 million yen which is the amount equivalent to depreciation balance of DOCOMO's existing interconnection equipment as extraordinary losses (burden charge of removing cost for telecommunication equipment) pursuant to DOCOMO's Terms and Conditions for the Interconnection, because DOCOMO needs to exchange the equipment for the interconnection of data communication with the Company as the Company strengthens the data communication networks procured from DOCOMO due to the growth of the mobile telecommunication service.

As a result of the above, quarterly profit attributable to owners of parent was 556 million yen (1,062 million yen in the same period of the previous year, which includes 363 million yen as extraordinary profit).

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1. Explanation on financial position for the nine months ended December 31, 2024

1. Assets, liabilities, and net assets

Assets

Current assets at the end of the current third quarter were 4,113 million yen, an increase of 560 million yen compared to the end of the previous year. This was due to increases of 211 million yen in cash and deposits and 133 million yen in accounts receivable - other. Non-current assets were 1,467 million yen, an increase of 610 million yen compared to the end of the previous year. This was due to increases of 145 million yen in property, plant and equipment, 131 million yen in intangible assets, and 300 million yen in long term loan.

As a result, total assets amounted to 5,581 million yen, an increase of 1,171 million yen compared to the end of the previous year.

Liabilities

Current liabilities at the end of the current third quarter were 1,892 million yen, an increase of 589 million yen compared to the end of the previous year. This was due to increases of 477 million yen in accounts payable - trade and 220 million yen in deposits received. Non-current liabilities were 96 million yen, a decrease of 30 million yen compared to the end of the previous year.

As a result, liabilities amounted to 1,988 million yen, an increase of 559 million yen compared to the end of the previous year.

Net assets

Net assets at the end of the current third quarter were 3,592 million yen, an increase of 612 million yen compared to the end of the previous year. This was due to recording 556 million yen in quarterly profit attributable to owners of parent.

As a result, the equity ratio was 61.2% (62.8% at the end of the previous year).

(ii) Status of cash flows

Cash and cash equivalents at the end of the current nine months were 2,729 million yen, an increase of 211 million yen compared to the end of the previous year.

The status of cash flows and their factors during the current nine months are as follows.

Cash flows from operating activities.

Net cash provided by operating activities totaled 926 million yen (an inflow of 851 million yen in the same period of the previous year). This was due to payment of income taxes of 275 million yen, despite recording quarterly profit before income taxes of 661 million yen, depreciation expense of 139 million yen and an increase of 477 million yen in trade payables.

Cash flows from investing activities.

Net cash used in investing activities totaled 705 million yen (an outflow of 147 million yen in the same period of the previous year). This was due to payment for purchase of property, plant and equipment of 211 million yen, payment for purchase of intangible assets of 195 million yen and payment for long term loan of 300 million yen.

Cash flows from financing activities.

Net cash used in financing activities totaled 9 million yen (an inflow of 78 million yen in the same period of the previous year).

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1. Explanation on future forecast information such as consolidated business forecast
   To achieve the mission of carrying bit in safety and security, the Company provides mobile telecommunications service and mobile solution service, and operates the business that provides telecommunications and authentication infrastructure whose identification and authenticity are secured by FPoS, the Company's patented technology (hereinafter referred to as the "FPoS business"). FPoS is a technology which was recognized by the Financial Services Agency as conducive to ensuring security and improving convenience of financial transactions. In the mobile telecommunications service, the Company agreed with NTT DOCOMO, INC. (hereinafter referred to "DOCOMO") about the interconnection with DOCOMO's voice and SMS network in February 2024 and the Company plans to provide new service based on the interconnection in May 2026. Herewith, the Company will be able to develop new business as Neo-Carrier and the Company assumes to provide 10 million mobile telecommunications lines in 2034. In the FPoS business, its technical security and institutional reliability owing to accreditation under the Electronic Signatures Act have been so evaluated that it is expected to grow in geometric progression and the Company assumes to provide 100 million electronic certificates in 2034. The Company assumes that these service and business will bring us domestic net revenue of 240 billion yen and profit after tax of 36 billion yen in 2034.
   First, the Company will proceed to prepare for the interconnection with DOCOMO's voice and SMS network for the launch of new service in May 2026 and will make efforts to expand customer base through actions to increase awareness at the same time, and the Company will continue to make efforts to establish evaluation of FPoS and to expand cases using FPoS.

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Quarterly consolidated financial statements

Quarterly consolidated balance sheets

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