BEENOS : Consolidated Financial Results (Japanese Accounting Standards) for 2Q FY2021

This is a translation of the original Japanese release. The Japanese text shall prevail in case of any variance between this version and the Japanese text.

(Revised) Consolidated Financial Results (Japanese Accounting Standards)

For the Second Quarter Ended 31 March 2021

Company Name	BEENOS Inc.
Stock Code	3328
Representative	President and Group CEO
Contact	Executive Officer
Scheduled filing date of the Annual	14 May 2021
Securities Report

Supplementary documents for quarterly results: Yes

Quarterly results briefing: Yes (for Analysts)

		6 May 2021
Stock Exchange Listing	Tokyo
URL http://www.beenos.com
Shota Naoi
Hisanori Matsuda	(TEL) 03-5739-3350
Scheduled date of commencement	―
of dividend payment

(Amounts rounded down to the nearest million yen)

1. Consolidated Financial Results for the Second Quarter Ended 31 March 2021 (1 October 2020 - 31 March 2021)

(1) Consolidated Results of Operations (Accumulated Total)

(% show year-on-year changes)

Net sales

Operating income

Ordinary income

Net income

Million yen

%

Million yen

%

Million yen

%

Million yen

%

2Q FY2021

12,423

△13.0

751

△71.3

732

△71.9

284

△83.4

2Q FY2020

14,286

22.2

2,616

―

2,605

―

1,711

―

Comprehensive

(Note) Income

2Q FY2021

988 Mil. yen ( △38.4%)

2Q FY2020

1,605 Mil. yen (

―%)

Net income per share

Net income per share

(basic)

(diluted)

Yen

Yen

2Q FY2021

22.32

20.92

2Q FY2020

138.27

―

(2) Consolidated Financial Position

Total assets

Net assets

Equity ratio

Net assets per share

Million yen

Million yen

%

Yen

2Q FY2020

22,952

12,437

53.7

949.10

FY2020

23,029

11,210

48.3

882.12

(Reference) Shareholders'

2Q FY2021 12,335 Million yen

FY2020

11,130 Million yen

equity

2. Dividends

Dividend per share

End of 1Q

End of 2Q

End of 3Q

Year-end

Total

Yen

Yen

Yen

Yen

Yen

FY2020

―

0.00

―

20.00

20.00

FY2021

―

0.00

3. Consolidated Forecasts for the Fiscal Year Ending 30 September 2021 (1 October 2020 - 30 September 2021)

We are refraining from disclosing our consolidated forecast for FY2021. Please refer to "Explanation of Outlook for FY2021" on pg. 7 for details.

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• Notes

(1) Changes of important subsidiaries during period			:	None
New companies: -(Company name: -)		Excluded companies: -(Company name: -)
(2)
(3) Changes in accounting policies and changes or restatement of accounting estimates
①	Changes in accounting policies caused	by revision	of
accounting standards			:	None
②	Changes in accounting policies other than ①	:	None
③	Changes in accounting estimates			:	None
④	Restatement			:	None
(4) Number of shares outstanding (common shares)
	Number of shares outstanding at the end of
①		2Q FY2021			13,335,995	FY2020	13,335,995
period (including treasury shares)
				Shares		Shares
	Number of treasury shares at end of period					339,202		717,670
②		2Q FY2021			Shares	FY2020	Shares
	Average number of shares outstanding during
③	2Q FY2021			12,769,350	2Q FY2020	12,377,430
the term
				Shares		Shares

• Status of a quarterly review

This financial summary does not need to undergo auditing.

• Explanations and other special notes concerning the appropriate use of business performance forecasts

The forward-looking statements such as result forecasts included in this document are based on the information available to the Company at the time of the announcement and on certain assumptions considered reasonable, and the Company makes no representations as to their achievability. Actual results may differ materially from the forecast depending on a range of factors.

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○Table of Contents

1.Qualitative Information for this Fiscal Year's Results	4
(1) Business Performance Report	4
(2) Financial Status Report	6
(3) Outlook for FY2021	7
2.Quarterly Financial Statements and Major Notes	9
(1)	Quarterly Consolidated Balance Sheet	9
(2)	Quarterly Consolidated Profit & Loss Statement and
	Quarterly Consolidated Statement of Comprehensive Income	10
	Quarterly Consolidated Profit & Loss Statement
	Consolidated Cumulative 2nd Quarter	11
	Quarterly Consolidated Statement of Comprehensive Income
	Consolidated Cumulative 2nd Quarter	12
(3)	Quarterly Consolidated Statement of Cash Flows	13
(4)	Notes on Consolidated Financial Statement	15
	(Notes regarding the premise of on-going concerns)	15
	(Notes regarding significant changes in the amount of shareholder's equity)	15
	(Segment Information)	15

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1. Qualitative Information for this Fiscal Year's Results

(1) Business Performance Report

The BEENOS Group aims to be on the "Global Platform Frontier" and continue to create platforms that will connect Japan with the world to create new standards and possibilities for people, products and experiences.

Our objective this year is to "establish a position that competitors cannot catch up to" in the Global Commerce Business, "shift to higher ticket items and fortify foreign sales" in the Value Cycle Business and "create a new SaaS-type system specific to the entertainment industry" in the Entertainment Business. We also believe that the effects of the COVID-19 pandemic will have a long-term effect and will take the necessary measures to adapt in the most appropriate manner for the safety and the growth of our businesses.

In the second quarter, the Global Commerce Business continued to leverage its position with the cheapest available shipping rates to its respective countries to increase its share of the market. The Value Cycle Business has conducted multiple measures, including the opening of additional brick and stores, to increase its purchasing ability of higher ticketed items to turn over and sell. The Entertainment Business focused on the sales of official merchandise of performing artists and aimed to create a scheme that would not depend heavily on in-person events. As a result, the E-Commerce Business showed strong growth in sales and operating income. The Incubation Business recorded minimal sales on investments. The new businesses have continued its efforts to support Japanese companies and content holders with their global penetration and advancement by joining partnerships with places such as Alibaba Group's CtoC marketplace "Taobao" and flea market app "Xianyu" as well as Southeast Asia's largest EC platform, "Lazada". As we continue to connect Japan with the world's largest EC markets, we aim to create new markets that crosses borders.

As a result, the 2nd quarter consolidated net sales were 12,423 Million JPY (down 13.0% year on year), operating income was 751 Million JPY (down 71.3% year on year), ordinary income was 732 Million JPY (down 71.9% year on year), and net income attributable to owners of parent was 284 Million JPY (down 83.4% year on year). The main reason for the big decrease year on year is because we recorded sales of operational investment securities last year (about 2.8 Billion JPY), but sales in the same category were minimal year to date.

The consolidated GMV for the 2nd quarter was 31.9 Billion JPY (up 30.2% year on year).

The book value for our operational investment securities at the end of March 2021 was 4.8 Billion JPY. The market value has risen to 20.9 Billion JPY which is an increase of 0.8 Billion JPY in book value and 1.4 Billion JPY in market value since the end of FY2020.1

The achievements of each business segment are as follows.

① E-Commerce Business i)Global Commerce Business

The Overseas Forwarding and Proxy Purchasing Business (From Japan) has formed a business alliance with Mercari, Inc. in November 2019 which has driven the growth of its GMV. Furthermore, as COVID-19 has delayed or suspended international distribution, we have made a concerted effort to provide alternative shipping methods to foreign countries which has led to an increased pace in sales. The United States has particularly seen an increase in orders as we are able to implement an original shipping service that provides shipping charges at less than half the normal cost which gives us leverage over competitors. We have seen an increase in orders placed in Taiwan, which is one of our focal countries, through aggressive campaigning. We have also made it easier for Japanese EC services to make their products available on Buyee through "Buyee Connect" which can be simply done by installing a few tags on the EC service's website. Popular websites such as LOCONDO.jp and FASHION WALKER have already used this service. Buyee Connect allows users to purchase through major foreign payment services such as PayPal and Alipay as well as receiving customer support in

1 The market value for listed companies is calculated at its stock price. Unlisted companies are calculated based on our number of shares with the price of the most recent stock issuance (if a company has recorded allowance for loss on investments, it is priced at book value). This amount has been calculated internally and has not gone through the auditing process.

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various languages including English and Chinese.

The Global Shopping Business (To Japan) has continued to automate its operations and conducted marketing strategies aimed at individual users to increase its number of active users. Though COVID-19 has hit the United States hard, where our distribution center is located, operations were delayed temporarily by the pandemic, but has returned to normal by the end of the 2Q.

As a result, the net sales were 3,838 Million JPY (up 36.9% year on year) and operating income was 1,293 Million JPY (up 64.8% year on year).

ii) Value Cycle Business

The Apparel Reuse Business has seen a decrease in demand for luxury items with the continuing spike of COVID-19 and the declaration of a state of emergency in major Japanese cities but has been able to improve its operating margins though the improvement of gross profit margins and optimizing advertising costs. On the purchasing side, we have opened 3 Brandear brick and mortar stores in Tokyo to continue the purchasing of luxury items in the first quarter. These efforts have increased the average unit price of purchased items. Furthermore, our online appraising service, "Brandear Bell", has started appraising watches and accessories and our delivery purchasing service has now implemented an insurance service on its deliveries up to 5 Million JPY. These non-face to face measures have improved our purchasing services and led to a steady flow of purchases. On the selling side, we have partnered with the Taiwan and Southeast Asia E-Commerce juggernaut, "Shopee," to sell merchandise abroad. This has led to an increase in foreign sales which now comprises of 10.3% of all sales in 2Q (foreign composition was 6.3% on 2Q FY2020). We have also started a back-order service where customers can have items they are interested be shipped to any of Brandear or JOYLAB's locations where they can see it first-hand before purchasing the item.

The Liquor Mediation Business has increased its marketing to purchase items from restaurants and bars. As a result, purchases increased. On the selling side, sales were doing well due to consumers purchasing liquor to drink at home as well as an increase in demand for Japanese whiskey that is no longer in circulation.

As a result, net sales were 5,728 Million JPY (down 9.6% year on year) and operating income was 130 Million JPY (up 120.6% year on year).

iii)Entertainment Business

The Entertainment Business continues to see a downward trend of large-scale events due to the COVID-19 pandemic which has led to a decrease in sales at concert venues. However, we have seen a steady increase in sales as we have focused on selling merchandise via E-commerce at online events. We have also optimized operation to cut on fixed costs which has increased operating margins.

The Global Product Business has seen healthy sales in its original cosmetic brands, such as "366 (San Roku Roku). "

As a result, the net sales were 2,772 Million JPY (up 24.9% year on year) and operating income was 162 Million JPY (compared with operating loss of 28 Million JPY in 2Q FY2020).

For the E-Commerce Business as a whole, net sales were 12,339 Million JPY (up 8.6% year on year) and operating income was 1,587 Million JPY (up 94.6% year on year).

②Incubation Business

The Investment and Consultation Business has focused on investing in startups in online marketplaces and

online payments in emerging countries and Japanese inbound tourism in Japan. We have teamed up with one of our domestic investments, Vpon JAPAN Inc., to create a digital solution on the cross-border front. This partnership with BEENOS Travel Inc. will operate the "Japan inbound media promotion verification" service that will gauge how inbound-related advertisements and articles have converted to users actually visiting the target region. We currently find ourselves in the stage where we can synergize with the companies we have

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invested in. Inbound related startups are still in a rough position with the COVID-19 pandemic, but we remain focused on projects that we can release once the pandemic settles down. Though we have only recorded minimal sales on investment securities, many of our investments have seen their numbers recover back to, or even beyond, what it was when the pandemic started due to a global shift to the digital sector. We will continue to monitor these companies and make any sales at the opportune moment.

The Start-up Business has a start-up that has partnered with one of Southeast Asia's largest EC platforms, "Lazada," and has continued in 2Q to partner Mercari with Alibaba Group's CtoC marketplace "Taobao" and flea market app "Xianyu." This allows users on "Taobao" and "Xianyu" to make purchases on Japan's "Mercari." As we cover the translation of product information, offer multi-lingual customer support and take care of logistics to ship overseas, Japanese companies are able to list onto the previously mentioned platforms without doing any special operation on their side. BEENOS Entertainment Inc., a subsidiary that works on the assistance of the digital transformation of the entertainment industry, has launched an EC platform "Groobee" that allows artists, etc. in the entertainment industry to create an EC website in as little as 5 business days. In the travel industry, Metro Engines has teamed up with BEENOS Travel Inc. to operate "Monthly Hotel", a hotel booking site tailored to long term bookings.

As a result, net sales for the were 123 Million JPY (down 95.8% year on year) and operating loss was 421 Million JPY (compared with an operating income of 2,448 Million JPY in 2Q FY2020).

The book value for our operational investment securities at the end of March 2021 was 4.8 Billion JPY and the market value was 20.9 Billion JPY (book value as of September 2020 was 3.9 Billion JPY and market value was

1. 19.5 Billion JPY).2

2. Financial Status Report

• Financial Status Analysis

(i) Assets

Assets totaled 22,952 Million JPY at the end of the 2Q, down 77 Million JPY from the end of the previous fiscal year.

Current assets totaled 19,611 Million JPY, down 246 Million JPY from the end of the previous fiscal year. This was mainly attributable to an increase of 840 Million JPY in marketable investments in securities and a decrease of 462 Million JPY in cash and deposits, 420 Million JPY in notes and accounts receivable-trade and 645 Million JPY in accounts receivable-trade.

Total non-current assets were 3,340 Million JPY, up 169 Million JPY from the end of the previous fiscal year. This was mainly due to an increase of 132 Million JPY of investment securities and 61 Million JPY of software which is included in other of intangibles.

(ii) Liabilities

Total liabilities at the end of the 2Q of the current fiscal year decreased by 1,304 Million JPY from the end of the previous fiscal year to 10,515 Million JPY.

Total current liabilities amounted to 8,699 Million JPY, down 984 Million JPY from the end of the previous fiscal year. This was mainly due to a decrease in deposits received of 1,348 Million JPY and an increase of 360 Million JPY in accounts payable-other.

Total non-current liabilities were 1,815 Million JPY, down 319 Million JPY from the end of the previous fiscal year. This was mainly due to a decrease of 171 Million JPY in long-term loans payable and 154 in deferred tax liabilities.

2 The market value for listed companies is calculated at its stock price. Unlisted companies are calculated based on our number of shares with the price of the most recent stock issuance (if a company has recorded allowance for loss on investments, it is priced at book value). This amount has been calculated internally and has not gone through the auditing process.

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1. Net assets
   Net assets at the end of the 2Q of the fiscal year under review increased by 1,226 Million JPY from the end of

the previous fiscal year to 12,437 Million JPY. This was mainly due to an increase of 408 Million JPY in treasury shares and an increase of 503 Million JPY in unrealized gains on available-for-sale securities.

②Cash Flow Report

Cash and cash equivalents (hereinafter referred to as "cash") at the end of the 2Q amounted to 9,885 Million JPY, a decrease of 334 Million JPY from the end of the previous fiscal year.

The status of each Cash Flow for this fiscal year are outlined below.

(Net cash provided by operating activities)

Net cash used in operating activities decreased by 150 Million JPY during the first half of the fiscal year under review. The main reasons for the increase were income before income taxes and minority interests of 733 Million JPY, an increase of 663 Million JPY due to a decrease in notes and accounts receivable-trade, and an increase of 659 Million JPY due to a decrease in accounts receivable-other. The main reasons for the decrease were a decrease in deposits received of 1,007 Million JPY and income taxes paid of 1,133 Million JPY.

(Net cash provided by investment activities)

Net cash used in investing activities amounted to 217 Million JPY. Major outflows included purchase of intangible assets of 94 Million JPY and purchase of investment securities of 54 Million JPY.

(Net cash provided by financing activities)

Net cash used in financing activities amounted to 34 Million JPY. The main factors contributing to this increase were proceeds from exercise of stock options of 372 Million JPY, and the main factors contributing to the decrease were repayments of long-term loans payable of 150 Million JPY and cash dividends paid of 251 Million JPY.

(3) Outlook for FY2021

We are refraining from disclosing our consolidated FY2021 forecast as we have determined that it is not logical to forecast the timing and amount of sales of operational investment securities in the Incubation Business. Moreover, we need to be flexible regarding the timing and amount we plan to invest in our new businesses as we closely monitor the upcoming circumstances.

We do believe that disclosing our forecast is very important in making investment decisions, so we will proceed to disclose the forecast for our E-Commerce Business which is more transparent.

Given the status of our financial results and the projections we currently have, we have decided to make the following adjustments to the forecast we released on 5 November 2020.

The updated forecast as well as the reasoning behind the adjustments are outlined as follows.

【Global Commerce】

There has been a large increase in orders from North America, where we are now able to provide shipping at a cheaper cost. We foresee this increase to continue which will boost GMV, net sales and operating income. The effects of COVID-19 on logistics were not considered in these projections.

【Value Cycle】

The COVID-19 pandemic and ensuing declaration of a state of emergency by the Japanese government to refrain from going outdoors has led to an increase in purchases of brand-named items and apparel but has negatively affected sales due to a decrease in consumer appetite. We will continue to be conservative with our

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forecast in this segment and will decrease the forecasted sales. However, operating income is expected to increase slightly due to controlling gross profit ratios and costs, mainly in advertising.

【Entertainment】

We anticipated to flat line from last year due to the continuation of COVID-19 preventing large gatherings such as live concerts, but as we have seen positive results in the sales of merchandise via E-Commerce in coordination with online events as well as our original cosmetic brands doing better than initially projected, we will be making an upward adjustment to GMV, net sales and operating income in this segment.

E-Commerce Business Forecast		(Unit: Billion JPY)
		Global Commerce	Value Cycle	Entertainment	Total
Previously	GMV	34.2	13.0	8.0	55.2
Net Sales	7.6	13.0	4.0	24.6
Announced
(A)
Operating	2.15	0.18	0.0	2.33
	Income
	GMV	39.7	12.0	10.6	62.4
Adjusted
Net Sales	7.8	12.0	4.4	24.3
(B)
Operating	2.55	0.18	0.14	2.87
	Income
	GMV	5.5	▲1.0	2.6	7.2
Difference
Net Sales	0.2	▲1.0	0.4	▲0.3
(B-A)
Operating	0.40	0.0	0.14	0.54
	Income
	GMV	16.1%	▲7.7%	32.5%	13.0%
Percent
Net Sales	2.6%	▲7.7%	10.0%	▲1.2%
Change (%)
Operating	18.6%	0.0%	―	23.2%
	Income
FY2020 Results (Reference)
		Global Commerce	Value Cycle	Entertainment	Total
GMV		29.7	12.1	8.2	50.1
Net Sales		5.9	12.1	4.0	22.1
Operating Income	1.68	0.10	▲0.09	1.69

※As of 1Q FY2021, the names of the following business segments have changed. The "Cross Border Business" is now the "Global Commerce Business" and the "Retailing and Licensing Business" is now the "Entertainment Business." The subsidiaries within each business segment remains the same.

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2. Quarterly Financial Statements and Major Notes

(1) Quarterly Consolidated Balance Sheet

				(Unit:1,000 JPY)
			Year-end FY2020	2Q FY2021
			(30 September 2020)	(31 March 2021)
Assets
	Current assets
		Cash and deposits	9,976,285	9,514,258
		Notes and accounts receivable	1,110,244	690,064
		Operational investment securities	3,966,499	4,807,075
		Products	1,553,412	1,715,338
		Accounts receivable	2,090,188	1,444,204
		Other	1,167,282	1,446,492
		Allowance for doubtful accounts	△5,600	△5,600
		Total current assets	19,858,313	19,611,833
	Fixed assets
		Tangible Assets
		Buildings and structures	581,194	628,367
		Accumulated depreciation	△297,855	△322,337
		Buildings and structures, net	283,339	306,030
		Vehicles	9,549	9,680
		Accumulated depreciation	△8,716	△9,010
		Vehicles, net	833	670
		Tools, materials and supplies	205,497	192,357
		Accumulated depreciation	△147,248	△135,479
		Tools, materials and supplies, net	58,249	56,877
		Total tangible assets	342,421	363,578
		Intangible assets
		Goodwill	374,785	322,190
		Other	167,754	228,567
		Total intangible assets	542,539	550,758
		Investments etc.
		Investment securities	1,776,419	1,908,931
		Deferred tax assets	68,772	57,834
		Other	441,221	459,393
		Total investments etc.	2,286,413	2,426,159
		Total fixed assets	3,171,375	3,340,496
	Total assets	23,029,688	22,952,329

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					(Unit:1,000 JPY)
				Year-end FY2020	2Q FY2021
				(30 September 2020)	(31 March 2021)
Liabilities
	Current liabilities
		Notes and accounts payable-trade		348,387	311,807
		Short-term loan	1,600,000	1,600,000
		Current portion of long-term loans payable		300,000	300,000
		Accounts payable-other	3,373,049	3,733,866
		Deposits received		2,373,894	1,025,828
		Income taxes payable	783,695	815,035
		Other		904,829	912,871
		Total current liabilities	9,683,855	8,699,408
	Fixed liabilities
		Long-term loans payable	1,721,617	1,550,000
		Deferred tax liabilities		212,544	57,780
		Asset retirement obligations	201,420	208,019
		Total fixed liabilities		2,135,582	1,815,799
	Total liabilities	11,819,437	10,515,207
Net assets
	Shareholders' equity
		Capital stock		2,775,840	2,775,840
		Capital surplus	3,903,953	3,963,263
		Retained earnings		5,462,007	5,494,635
		Treasury Stock	△778,700	△369,899
		Total shareholders' equity		11,363,100	11,863,839
	Other accumulated comprehensive income
		Valuation difference on securities		△286,179	216,941
		Foreign currency translation adjustments	53,939	254,484
		Total other accumulated comprehensive		△232,239	471,426
		income
	Share subscription rights	79,389	101,856
	Total net assets		11,210,251	12,437,121
Total liabilities and net assets	23,029,688	22,952,329

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1. Quarterly Consolidated Profit & Loss Statement and Quarterly Consolidated Statement of Comprehensive Income
   Quarterly Consolidated Profit & Loss Statement

Consolidated Cumulative 2nd Quarter

					(Unit:1,000 JPY)
				2Q FY2020	2Q FY2021
				(1 October 2019 -	(1 October 2020 -
				31 March 2020)	31 March 2021)
Net sales			14,286,146	12,423,819
Cost of sales			6,259,410	6,193,003
Gross profit			8,026,735	6,230,816
Selling, general and administrative expenses	5,410,668	5,479,532
Operating income (△ losses)			2,616,067	751,283
Non-operating income
	Interest income			43	113
	Subsidy income			7,925	49,204
	Gain on investments in partnerships			68,795	-
	Other			24,350	24,825
	Total non-operating income			101,115	74,143
Non-operating expenses
	Interest expenses			4,362	7,128
	Equity in loss of affiliates			32	45,000
	Foreign exchange losses			14,799	35,088
	Commissions paid			91,242	34
	Loss on investments in partnerships			-	5,318
	Other			809	222
	Total non-operating expenses			111,246	92,792
Ordinary income			2,605,936	732,634
Extraordinary income
	Gain on reversal of subscription	rights to	8,806	609
	shares
	Total extraordinary income			8,806	609
Income ( △ ) before income taxes and	minority	2,614,742	733,243
interests
Income taxes			655,363	796,766
Income taxes-deferred			289,942	△348,517
Total income taxes			945,306	448,249
Income before income			1,669,436	284,993
Loss (△) attributable to non-controlling interests	△42,016	-
Net profit attributable to owners of parent	1,711,453	284,993

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Quarterly Consolidated Statement of Comprehensive Income

Consolidated Cumulative 2nd Quarter

			(Unit:1,000 JPY)
		2Q FY2020	2Q FY2021
		(1 October 2019 -	(1 October 2020 -
		31 March 2020)	31 March 2021)
Net Income or Loss (△)	1,669,436	284,993
Other comprehensive income
	Valuation difference on securities	△48,888	502,829
	Foreign currency translation adjustments	△13,826	195,839
	Share of other comprehensive (loss) income in	△1,133	4,996
	associates

Total other comprehensive income

Quarterly Comprehensive income

(Breakdown)

Comprehensive income attributable to ownersof parent

Comprehensive income attributable to non- controlling interests

△63,848703,665

1,605,588988,659

1,647,605988,659

△42,016

-

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(3) Quarterly Consolidated Statements of Cash Flows

		(Unit:1,000 JPY)
	2Q FY2020	2Q FY2021
	(1 October 2019 -	(1 October 2020 -
	31 March 2020)	31 March 2021)
Net cash provided by (used in) operating activities
Income (△) before income taxes and minority	2,614,742	733,243
interests

Depreciation and amortization

Amortization of goodwill

Stock-based Compensation Expense

Interest and dividends income

Interest expenses

Foreign exchange losses (Gains:△)

Equity in losses of affiliates (Gains:△)

Loss on investments in partnership (Gains:△)

Gain on reversal of subscription rights to shares

Decrease in notes and accounts receivable- trade (Increase:△)

Increase in operational investment securities (Increase: △)

62,449	66,230
51,552	52,932
41,285	76,820
△43	△113
4,362	7,128
△539	109
32	45,000
△68,795	5,318
△8,806	△609
1,838,981	663,922
11,003	△136,049

Decrease in inventories (Increase:△)

Increase (decrease) in accounts receivable- other (△ increased)

Increase in notes and accounts payable-trade (Decrease:△)

Increase in accounts payable-other(Decrease: △)

164,389△161,671

△225,010659,096

24,395△41,406

△580,724337,838

	Increase in deposits received (Decrease:△)	276,736	△1,007,377
	Increase in	consumption taxes payable	40,741	△118,296
	(Decrease:△)

Other

Subtotal

Interest and dividend received

Interest expenses paid

Income taxes refunded

Income taxes paid

Net cash provided by (used in) operating activities

Cash flow from investing activities

Purchase of property, plant and equipment

Purchase of intangible assets

Purchase of investment securities

Payments for lease and guarantee deposits

Proceeds from collection of lease and guarantee deposits

Proceeds from distributions from investment partnerships

Payments for transfer of business

Other

Cash flow from investing activities

△113,564	△261,537
4,133,187	920,068
12,733	106
△4,250	△7,088
75,943	69,941
△219,913	△1,133,225
3,997,700	△150,197
△7,913	△51,140
△42,102	△94,548
△131,592	△54,177
△21,846	△24,343
45	-
8,235	6,167
△160,000	-
100	83
△355,073	△217,958

13

	(Unit:1,000 JPY)
2Q FY2020	2Q FY2021
(1 October 2019 -	(1 October 2020 -
31 March 2020)	31 March 2021)

Cash flow from financing activities

Increase in short-term loans payable (Decrease:△)

Repayment of long-term loans payable

Purchase of treasury stock

Sales of treasury stock

Purchase of treasury stock of subsidiaries in consolidation

Cash dividends paid to non-controlling interests

Proceeds from issuance of subscription rights to shares

Cash dividends paid

△950,000	-
-	△150,000
△114,857	△5,327
162	-
△180,450	-
-	372,607
1,418	-
△215,567	△251,572

Cash flow from financing activities				△1,459,294	△34,293
Effect of exchange rate change on cash and cash	△4,723	68,301
equivalents
Net	increase	in	cash	and	cash	2,178,608	△334,147
equivalents(Decrease:△)
Cash and cash equivalents at the beginning of the	5,478,335	10,220,118
year
Cash and cash equivalents					7,656,944	9,885,970

14

1. Notes on Quarterly Consolidated Financial Statements (Notes regarding the premise of on-going concerns)
   Not Applicable

(Notes regarding significant changes in the amount of shareholder's equity) Not Applicable

(Segment Information, etc.) 【Segment Information】

I Previous Consolidated Cumulative 2nd Quarter(1 October 2019 - 31 March 2020) 1.Information regarding sales, profit or loss, and liabilities by reporting segment

(Unit:1,000 JPY)

				Reporting Segment				Recorded
									Amount on
			E-Commerce Business
						Adjustments	Quarterly
						Incubation		Consolidated
		Global	Value	Entertain		Total	(Note)1	Profit & Loss
		Subtotal	Business
		Commerce	Cycle	ment				Statement
									(Note)2
Net Sales
Sales	to	2,794,854	6,337,944	2,218,825	11,351,625	2,934,521	14,286,146	―	14,286,146
Customer
Internal
Sales	or
Transfer		8,475	―	92	8,567	40,911	49,478	△49,478	―
Between
Segment
Total		2,803,329	6,337,944	2,218,918	11,360,192	2,975,432	14,335,625	△49,478	14,286,146
Segment		785,075	59,357	△28,648	815,783	2,248,916	3,064,699	△448,632	2,616,067
Earnings

(Note) 1．The segment earnings or loss adjustment of △448 Million JPY includes the deletion of inter-segment transactions of △1,830 Million JPY, company-wide revenue of 2,042 Million JPY, that is not distributed to each reporting segment, and company-wide cost of △661 Million JPY. Company-wide revenues are mainly the Company's received commission from each subsidiary. Company-wide costs are mainly the Company's administrative costs toward the subsidiaries.

2.Segment Losses are adjusted in the operating income of the Quarterly Consolidated Profit & Loss Statement.

1. Current Consolidated Cumulative 2nd Quarter (1 October 2020 - 31 March 2021) 1.Information regarding sales, profit or loss, and liabilities by reporting segment

								(Unit:1,000 JPY)
				Reporting Segment				Recorded
									Amount on
			E-Commerce Business
						Adjustments	Quarterly
						Incubation		Consolidated
						Total	(Note) 1
		Global	Value	Entertain		Profit & Loss
		Subtotal	Business
		Commerce	Cycle	ment				Statement
									(Note) 2
Net Sales
Sales	to	3,833,657	5,728,382	2,771,489	12,333,529	90,290	12,423,819	―	12,423,819
Customer
Internal
Sales	or
Transfer		4,545	155	957	5,659	33,700	39,359	△39,359	―
Between
Segment
Total		3,838,202	5,728,538	2,772,447	12,339,188	123,990	12,463,178	△39,359	12,423,819

15

Segment		1,293,490	130,965	162,898	1,587,354	△421,469	1,165,884	△414,600	751,283
Earnings
(Note) 1．The segment earnings or loss adjustment of △414 Million JPY includes the deletion of inter-segment
	transactions of 1,553 Million JPY, company-wide revenue of 178 Million JPY, that is not distributed to
	each reporting segment, and company-wide cost of △595 Million JPY. Company-wide revenues are
	mainly the Company's received commission from each subsidiary. Company-wide costs are mainly the
	Company's administrative costs toward the subsidiaries.
	2.Segment Losses are adjusted in the operating income of the Quarterly Consolidated Profit & Loss
	Statement.

2. Notes regarding changes in reporting segments

As of 1Q FY2021, the names of the following business segments have changed. The "Cross Border Business" is now the "Global Commerce Business" and the "Retailing and Licensing Business" is now the "Entertainment Business." The subsidiaries within each business segment remains the same.

We have reflected the name change in 2Q FY2020's segment information.

16