Kanamic Network : Quarterly Report （First Quarter of FY 2022）

(Translation for Reference Purposes Only)

Quarterly Report

First Quarter of FY 2022

(From October 1, 2021

To December 31, 2021)

Kanamic Network Co., LTD

4-20-3 Ebisu, Shibuya-ku, Tokyo

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(Translation for Reference Purposes Only)

Contents

Page

Cover……………………………………………………………………………………………………………………………2

Part I Company Information………………………………………………………………………………………………….4

Item 1. Overview…………………………………………………………………………………………………………..4

１．Key financial data…………………………………………………………………………………………………4

２．Description of Business Activities………………………………………………….…………………………. …4

Item 2. Business Overview…………………………………………………………………………………………….…..5

１．Risk Factors ………………………………………………………………………………………………………5

２．Management's Analysis of Financial Position, Operating Results and Cash Flows………………………………5

４．Important Legal and Contractual Matters…………………………………………………………………………7

Item 3. Other Matters Related to the Company……………………………………………………………………………8

１．Share-related Information, etc. ……………………………………………………………………...………….. .8

1. Total number of shares, etc. …………………………………………………………………………………8
2. Information on Stock Options, etc. ………………………………………………………………………….8
3. Status of exercise of Moving Strike Convertible Bonds……………………………………………………..8
4. Changes in Total Number of Issued Shares and Changes in Share Capital………………………………….8
5. Major shareholders…………………………………………………………………………………………...8
6. Voting rights………………………………………………………………………………………………….9

２．Information on Directors ………………………………………………………………………………………….9

Item 4. Financial Information ……...…………………………………………………………………………………….10

１．Quarterly Consolidated Financial Statements…... ……………………………………………………………....11

1. Quarterly Consolidated Balance Sheet……………………………………………………………………...11
2. Quarterly Consolidated Statement of Income and Comprehensive Income………………………………..12 Quarterly Consolidated Statement of Income……………………………………………………………...12 Quarterly Consolidated Statement of Comprehensive Income…………………………………………….13

２．Other……………………………………………………………………………………………………………..19

Part II Information about the Guarantors of the Company………………………………………………………………….20

［Independent Auditor's Quarterly Review Report (English Translation)］

［Conformation Letter］

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(Translation for Reference Purposes Only)

【Cover】

【Document type】	Quarterly Report (Japanese: "Shihanki Hokokusho")
【Governing law】	Article 24-4-7, Paragraph 1 of the Financial Instruments and Exchange Act of Japan
【Filed with】	Director-General of the Kanto Local Finance Bureau
【Filing date】	February 14, 2022
【Fiscal term】	First Quarter of the 22nd Fiscal Year (October 1, 2021 to December 31, 2021)
【Company name in Japanese】	Kabushiki Gaisha Kanamikku Nettowa-ku
【Company name in English】	Kanamic Network Co., LTD
【Name and title of representative】	Takuma Yamamoto
	Representative Director and President
【Head office address】	Ebisu, Shibuya-ku, Tokyo
	Ebisu Garden Place Tower
【Telephone number】	[phone] (main)
【Contact person】	Kenya Wakabayashi
	Director and General Manager of the Administration Department
【Contact address】	4-20-3 Ebisu, Shibuya-ku, Tokyo
	Ebisu Garden Place Tower
【Location where a copy of this filing is	Tokyo Stock Exchange, Inc.
made available for public inspection】	(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)

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(Translation for Reference Purposes Only)

Part I【Company Information】

Item 1.【Overview】

１【Key financial data】

Term		FY 2021	FY 2022	FY 2021 (12 months)
	1st Quarter (3 months)	1st Quarter (3 months)
Accounting Period		October 1, 2020 to	October 1, 2021 to	October 1, 2020 to
	December 31, 2020	December 31, 2021	September 30, 2021
Net sales	(thousands	533,473	519,244	2,080,776
of yen)
Ordinary profit	(thousands	206,801	203,237	829,941
of yen)
Profit attributable to owners of parent	(thousands	143,646	139,788	579,583
	of yen)
Comprehensive income	(thousands	144,175	141,204	581,657
of yen)
Net assets	(thousands	1,953,762	1,981,894	1,959,242
of yen)
Total assets	(thousands	2,283,894	4,333,301	4,395,056
of yen)
Profit per share	(yen)	2.98	2.95	12.08
Diluted profit per share	(yen)	－	2.80	11.98
Equity ratio	（％）	85.5	45.6	44.5

（Note）１．Since the Company publishes consolidated quarterly financial statements, trends in key financial data for the reporting company are not shown.

２．Diluted profit per share for Q1-FY2021 is not shown because there were no dilutive securities.

３．The company has applied the "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) from the beginning of the Q1-FY2022. However, this had no impact on key financial data.

２【Description of Business Activities】

In Q1-FY2022 (the three months ended December 31, 2021), there were no material changes in the business of the Group. Furthermore, there were no changes in the Company's major subsidiaries / affiliates.

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(Translation for Reference Purposes Only)

２【Business Overview】

１【Risk factors】

No new risk factors emerged during the first quarter of FY 2022 (October 1, 2021 to December 31, 2021); And there were no significant changes in the business and other risk factors that were described in the annual report for the previous fiscal year.

２【Management's Analysis of Financial Position, Operating Results and Cash Flows】

This report contains forward-looking statements that are based on the Group's judgements as of December 31, 2021.

(1）Operating Results

During the first quarter of FY 2022 (October 1, 2021 to December 31, 2021), the Japanese economy was in a period of gradual easing in the severity of conditions brought about by Covid-19, and signs of movement toward recovery were visible.

The following can be said about the business environment in which the Group operates: the aging of Japan's extremely elderly population is resulting in an increase in long-term care costs, increase in the number of long-term care recipients, and an increase in the number of long-term care service providers. Amid this, the overall expansion of the long-term care industry continues. Furthermore, the 2021 revision to the long-term care insurance law called for a strengthened response to infectious disease outbreaks and other disasters. And, in order to spearhead the development of a framework which facilitates high- quality and efficient long-term care services, the revisions also called for the advancement of the "community-based integrated care" framework, increased utilization of ICT, expansion of the long-term care labor force, and the promotion of science-basedlong-term care through the use of MHLW's "Long-term care Information system For Evidence" (LIFE) database, which is composed of the following databases: VISIT ("monitoring & eValuation for rehabIlitation ServIces for long-Term care") database and CHASE (Care, HeAlth Status & Events) database.

Because the Group provides a service which facilitates "community-based integrated care" (the Japanese Government's framework for collaboration amongst healthcare and long-term care providers), the Group participates in joint-projects with various government ministries / agencies and the Group works to develop its systems in line with national policy. Furthermore, the Group endeavors to stay prepared to respond to revisions to the long-term care insurance law, to update its systems in a timely manner, and to reduce the workload of users of its systems, thereby improving user convenience. Through case studies conducted through MIC's "Project to Support the Creation of IoT Services", the Group promotes the collaborative utilization of various data with the Kanamic Cloud Service. And through the"Tokyo Interprofessional Communication Portal Site" (a system implemented at the prefectural-level as opposed to the traditional municipality-level), the Group has helped propel the implementation of "in-home care" on a broader scale. The Group leverages know-how it has cultivated (in healthcare and long- term care communications) through its experience with the "Kanamic Cloud Service" in order to contribute to the promotion of regional-based communication in medical care and elderly care. In addition to the aforementioned projects in support of the advancement of long-term care, the Group, as an initiative in support of the realization of "a comprehensive care framework for all generations", uses its "child-rearing support system" to help municipalities improve the efficiency of operations related to assisting community members with raising children. Furthermore, beginning in the previous fiscal year, the Group has, in collaboration with NGO Healthy City Support, been conducting systems development work aimed at standardizing data health systems used by municipalities.

The Group continued to expand upon its platform service offerings through the provision of (1) "Kanamic Easy Web Statements" and (2) "Kanamic Easy Mailing Service". These cloud-powered, digital transformation (DT) solutions help long- term care service providers streamline their billing/receipt issuance operations, with the former allowing bills/receipts to be transmitted entirely over the internet and the latter providing a business process outsourcing (BPO) service for sending bills/receipts by postal mail. The Group also continued to expand upon its platform service offerings via strengthened digital media / advertisement contents, a database-powered talent matching service, services related to the sale of physical products to healthcare / long-term care providers, IoT cloud services for assisted living facilities, and services provided through business alliances. Furthermore, the Group is moving forward with expansion activities and the selection process for future M&A activities aimed at expanding the business.

Along with the expansion of the Group's platform, an increasing amount of data is amassing in the Group's systems. And the Group uses big data analytics to develop AI services for extracting care efficacy evidence (which is needed by the national government, municipalities, and insurance companies) and conducts research activities aimed at providing solutions to patients, long-term care recipients and healthcare / long-term care providers.

The group's primary clients are long-term care service providers, and due to the COVID-19 pandemic, some long-term care services providers have been subject to certain restrictions. However, the impact of this on the Group is minor at this time.

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