I3 : Consolidated Financial Results for the Six Months Ended December 31, 2021

Consolidated Financial Results

for the Six Months Ended December 31, 2021

[Japanese GAAP]

February 8, 2022

Company name: i3 Systems, Inc.

Stock exchange listing: Tokyo Stock Exchange

Code number: 4495

URL: https://www.i3-systems.com/

Representative: Tsutomu Sasaki, President and CEO

Contact: Takashi Ono, Manager, Accounting and Finance Department

Phone: [phone]

Scheduled date of filing quarterly securities report: February 8, 2022

Scheduled date of commencing dividend payments: -

Availability of supplementary explanatory materials on quarterly financial results: Yes

Schedule of quarterly financial results briefing session: Yes (for institutional investors, analysts and individual investors) (Amounts of less than one million yen are rounded down.)

1. Consolidated Financial Results for the Six Months Ended December 31, 2021 (July 1, 2021 - December 31, 2021)

(1) Consolidated Operating Results (cumulative)

(% indicates changes from the previous corresponding period.)

Net sales

Operating profit

Ordinary profit

Profit attributable to

owners of parent

Six months ended

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

December 31, 2021

1,205

－

453

－

453

－

314

－

December 31, 2020

－

－

－

－

－

－

－

－

(Note) Comprehensive income:
	Six months ended December 31, 2021:	¥314 million ( － %)
	Six months ended December 31, 2020:	－ million ( － %)
		Basic earnings		Diluted
			earnings
		per share
		per share
	Six months ended	Yen		Yen
	December 31, 2021	59.88		58.72
	December 31, 2020	－		－

(Note) The Company did not begin preparing quarterly consolidated financial statements until the second quarter of the fiscal year ending June 30, 2022, and therefore the figures for the six months ended December 31, 2020 and year-on-year changes are not presented.

(2) Consolidated Financial Position

	Total assets	Net assets	Equity ratio
	Millions of yen	Millions of yen	%
As of December 31, 2021	2,890	1,988	68.7
As of June 30, 2021	－	－	－

(Reference) Shareholders' equity: As of December 31, 2021: ¥1,987 million As of June 30, 2021: － million

(Note) The Company did not begin preparing quarterly consolidated financial statements until the second quarter of the fiscal year ending June 30, 2022, and therefore the figures for the six months ended December 31, 2020 are not presented.

2. Dividends

		Annual dividends per share
	1st quarter-end	2nd quarter-end	3rd quarter-end		Year-end	Total
Fiscal year ended	Yen	Yen	Yen		Yen	Yen
-	0.00	－		10.00	10.00
June 30, 2021
Fiscal year ending	-	0.00
June 30, 2022
Fiscal year ending
June 30, 2022			－		10.00	10.00
(Forecast)

(Note) Revision to the forecast for dividends announced most recently: None

3. Consolidated Financial Results Forecast for the Fiscal Year Ending June 30, 2022 (July 1, 2021 - June 30, 2022) (% indicates changes from the previous corresponding period.)

	Net sales		Operating profit	Ordinary profit	Profit attributable to	Basic earnings
		owners of parent	per share
Full year	Millions of yen		%	Millions of yen	%	Millions of yen	%	Millions of yen	%	Yen
2,569		-	732	-	734	-	469	-	89.60

(Note) The Company did not begin preparing quarterly consolidated financial statements until the second quarter of the fiscal year ending June 30, 2022, and therefore year-on-year changes are not presented.

* Notes:

(1) Changes in significant subsidiaries during the period: None

(Changes in specified subsidiaries resulting in changes in scope of consolidation)

Newly added:	- companies
Excluded:	- companies

1. Accounting methods adopted particularly for the preparation of quarterly consolidated financial statements: Yes
2. Changes in accounting policies, changes in accounting estimates and retrospective restatement
3. 1. Changes in accounting policies due to the revision of accounting standards: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
4. Total number of issued and outstanding shares (common shares)
5. 1. Total number of issued and outstanding shares at the end of the period (including treasury shares):

	December 31, 2021:			5,259,450 shares
	June 30, 2021:			5,238,350 shares
2) Total number of treasury shares at the end of the period:
	December 31, 2021:		121 shares
	June 30, 2021:		121 shares
3) Average number of shares outstanding during the period:
	Six months ended December 31, 2021:		5,244,767 shares
	Six months ended December 31, 2020:		5,182,697 shares

• These quarterly financial results are outside the scope of quarterly review by certified public accountants or an audit firm.
• Explanation of the proper use of financial results forecast and other notes
  The financial results forecasts and other forward-looking statements herein are based on information currently available and certain assumptions considered to be reasonable, and the Company does not in any way guarantee the achievement of the projections. Actual results may differ significantly from these forecasts due to a wide range of factors. For assumptions underlying the financial results forecasts and notes on their use, please refer to "(3)
  Explanation of consolidated Financial Results Forecast and Other Forward-looking Information in 1. Qualitative Information on Quarterly Financial Results" on page 4 of the attached material.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Financial Results...........................................................................................	2
(1)	Explanation of Operating Results.........................................................................................................................	2
(2)	Explanation of Financial Position ........................................................................................................................	4
(3)	Explanation of Consolidated Financial Results Forecast and Other Forward-looking Information .....................	4
2. Quarterly Consolidated Financial Statements and Principal Notes ..........................................................................	5
(1)	Quarterly Consolidated Balance Sheets ...............................................................................................................	5
(2)	Quarterly Consolidated Statements of Income and Comprehensive Income........................................................	6
(3)	Quarterly Consolidated Statements of Cash Flows ..............................................................................................	8
(4)	Notes to Quarterly consolidated Financial Statements .........................................................................................	9
	(Notes on going concern assumption) .............................................................................................................	9
	(Notes in case of significant changes in shareholders' equity) .......................................................................	9
	(Accounting methods adopted particularly for the preparation of quarterly consolidated financial
	statements).......................................................................................................................................................	9
	(Changes in accounting policies).....................................................................................................................	9
	(Segment information, etc.)...........................................................................................................................	10
	(Significant subsequent events) .....................................................................................................................	10

1

1. Qualitative Information on Quarterly Financial Results

The Company did not begin preparing quarterly consolidated financial statements until the second quarter of the fiscal year ending June 30, 2022, and therefore analytical comparisons with the same period of the previous fiscal year and the end of the previous fiscal year have not been performed.

(1) Explanation of Operating Results

During the six months ended December 31, 2021, the lifting of the state of emergency following a decline in the number of those infected with COVID-19 raised expectations for a recovery in economic activity, but with the emergence of new variants of the virus and concerns about the impact on the economy of soaring prices for commodities such as crude oil, the outlook for the economic environment remained unclear.

Based on its mission of "Making IT More Accessible," the i3 Group's vision is that of "A Solution Company that Brings Smiles." Driven by these concepts, the Company builds services that transform corporate activity by utilizing the best technology and the highest level of engineering available. Our goal is to continue to take on the challenge of creating chains of innovative services that enrich people's lives.

In the six months ended December 31, 2021, the Company continued to strengthen its workforce in preparation for continuous growth in the business going forward, and took proactive steps to recruit human resources, mainly in the Product Development, Sales, and Customer Success divisions. The Company was recently recognized for the second consecutive year by the Great Place to Work® Institute Japan, which performs awareness surveys of employees in accordance with global standards, and which scored i3 Systems highly in the 2022 edition of the Best Workplaces rankings. We are continuing to make positive changes to the working environment to facilitate the acquisition and retention of outstanding human resources. Moreover, 20% of new graduates who are set to join the Company in April 2022 are foreign nationals, which represents the Company's commitment to building a diverse organization.

In addition, we are aggressively working on initiatives to generate additional sources of revenue through new products, new services, M&A, and CVC (corporate venture capital), with the objective of achieving sustainable growth for the i3 Group. During the second quarter of the fiscal year ending June 30, 2022, we established a new division specializing in the field of investments, and which has already begun investment activities. Investments will mainly target mobile, SaaS, security, and other areas closely related to the Company's business domain. We may also invest in companies involved in resolving societal issues and in local companies operating in Kyushu, where the Company is headquartered. By doing so we seek to generate chains of innovation and contribute to the creation of new value, thus making IT more accessible.

As a result of such initiatives, consolidated net sales in the six months ended December 31, 2021, were ¥1,205,418 thousand, operating profit was ¥453,591 thousand, ordinary profit came to ¥453,767 thousand, and profit attributable to owners of parent was ¥314,034 thousand.

Operating performance by segment was as follows.

In the second quarter of the fiscal year ending June 30, 2022, the Company changed from reporting the previous single segment to classifying its figures into two segments: the "CLOMO Business" and the "Investment Business."

1. CLOMO Business

In the CLOMO Business we offer subscription-basedB-to-B SaaS using the cloud, mainly the CLOMO MDM mobile device management service, which we first began providing in 2010, and the CLOMO SECURED APPs service for mobile devices. In December 2021, it was announced that we had achieved the No.1 share of the MDM market (own brand) for the 11th consecutive year since FY 2011 (Note 1).

In the six months ended December 31, 2021, we continued to utilize remote sales over web conferencing systems with the aim of expanding the number of corporations deploying our products. We are working to promote a better understanding of how to use CLOMO services, and an appreciation of their quality, by proactively releasing case studies on deploying our services to meet a new demand for MDM that has arisen from social changes such as mobile device management at elementary and secondary schools through the GIGA

2