Freee K K : Notice Regarding Issuance of New Shares and Secondary Offering of Shares

March 22, 2021

Company name	freee K.K.
Representative	Daisuke Sasaki,
CEO and Representative Director
Code No.	4478, Tokyo Stock Exchange
Mothers
Contact	Sumito Togo, CFO and Director
(TEL. [phone])

Notice Regarding Issuance of New Shares and Secondary Offering of Shares by way of International Offering

freee K.K. ("the Company") hereby announces that on March 22, 2021, its board of directors has resolved matters relating to the issuance of its new shares by way of an international offering (the "International Primary Offering") and the secondary offering of shares by way of an international offering (the "International Secondary Offering" and together with the International Primary Offering, the "International Offering") as set forth in 1. and 2. below.

The purpose of the International Primary Offering is to enhance corporate value and shareholder value by actively and flexibly making investments to accelerate the growth of the business. The Company also believes that the International Offering is expected to further broaden its shareholder base and improve the liquidity of its shares.

1. Issuance of new shares by way of an international offering

(1) Class and Number of Shares to be Offered	4,600,000 shares of common stock of the Company, the aggregate of (i) and (ii) described below: (i) 4,000,000 shares of common stock of the Company, issued for purchase by the Underwriters described in (4) below; and (ii) A maximum of 600,000 shares of common stock of the Company, additionally issued for purchase by the Underwriters upon exercise of the option, described in (4) below.
(2) Method of Pricing	The amount to be paid in will be determined on a date falling in the period from March 25, 2021 (Thu) to March 29, 2021 (Mon) (the "Pricing Date") by a process equivalent to the book building process set out under Article 25 of the Regulations Concerning Underwriting, etc. of Securities provided by the Japan Securities Dealers Association ("JSDA").
(3) Increases in the Amounts of Stated Capital and Additional Paid-in Capital	The amount of stated capital to be increased will be 1/2 of the maximum amount of stated capital increase, as calculated in accordance with Article 14, Paragraph 1 of the Rules of Account Settlement of Corporations, with any fraction of less than one yen resulting from the calculation being rounded up to the nearest yen. The amount of the additional paid-in capital
increase shall be the amount obtained by subtracting the amount of stated capital increase from the maximum amount of stated capital increase.
(4) Method of Offering	The offering will be made outside of Japan, mainly in the United States and Europe (in the United States, limited to sales to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act), and all of the shares described in (1)(i) above shall be severally and not jointly purchased by several underwriters (the "Underwriters"). The Company will also grant the Underwriters an option to purchase additional newly issued shares of common stock of the Company, as described in (1)(ii) above. The issue price (offer price) with regard to the International Primary Offering will be determined based on the provisional range calculated by multiplying the closing price of regular trading of the common stock of the Company on the Tokyo Stock Exchange on the Pricing Date (or, if no closing price is quoted on that date, the closing price of the immediately preceding date) by 0.90 ~ 1.00 (with any fraction less than one yen being rounded down), by a process equivalent to the book building process set out under Article 25 of the Regulations Concerning Underwriting, etc. of Securities provided by JSDA, taking into account market demand and other conditions.
(5) Compensation for the Underwriters	The Company will not pay any underwriting fees to the Underwriters. The aggregate amount of the difference between (a) the issue price (offer price) in the International Primary Offering and (b) the amount to be paid to the Company by the Underwriters will be retained by the Underwriters.
(6) Payment Date	April 6, 2021 (Tue)
(7) Delivery Date	April 7, 2021 (Wed)
(8) The amount to be paid in, the amount of increase in stated capital and additional paid-in capital, the issue price (offer price), and any other matters necessary for the International Primary Offering will be delegated to Daisuke Sasaki, CEO and Representative Director or the person delegated by the CEO and Representative Director.

2. Secondary offering of shares by way of an international offering

(1) Class and Number of Shares to be Sold	481,800 shares of common stock of the Company.
(2) Selling Shareholders and Number of Shares to be Sold	DCM VI, L.P. A-Fund, L.P. 303,600 shares 178,200 shares
(3) Selling Price	Undetermined (The selling price shall be determined on the Pricing Date; provided, however, that such selling price shall be the same as the issue price (offer price) for the new shares as set out in 1. above.)
(4) Method of Offering	The offering will be made outside of Japan, mainly in the United States and Europe (in the United States, limited to sales to qualified institutional buyers pursuant to Rule 144A under the U.S. Securities Act), and all of the shares described in (1) above shall be severally and not jointly purchased by the Underwriters.
(5) Delivery Date	The delivery date shall be the same day as the delivery date set out in 1. above.
(6) The approval of the selling price and any other matters necessary for the International Secondary Offering will be delegated to Daisuke Sasaki, CEO and Representative Director or the person delegated by the CEO and Representative Director.
(7) If the International Primary Offering is cancelled, the International Secondary Offering shall also be cancelled.

(For Reference)

1. Change in the number of issued shares as a result of the International Primary Offering

Total number of issued shares (as of March 22, 2021): 49,709,249 shares

Increase in number of shares as a result of the International Primary Offering: 4,600,000 shares

Total number of issued shares after the International Primary Offering: 54,309,249 shares

Notes:

1. These figures are based on the assumption that the Underwriters exercise all of the options set forth in (1)(ii) of "1. Issuance of new shares by way of an international offering" above.

2. These figures do not reflect the increase in the number of issued shares as a result of exercise of stock acquisition rights on or after March 1, 2021.

2. Use of proceeds

• (1) Use of proceeds raised this time

  With respect to the net proceeds from the International Primary Offering, which we estimate to be, in total, up to 42,480 million yen, the Company intends to use as investment funds for future growth as follows, and until the specific demand for funds arises and the timing of payment is determined, the Company intends to invest the proceeds in financial instruments, etc. with a high degree of safety.

  • 1) 31,480 million yen for potential acquisitions and investments with the aim of developing new services, enhancing the Company's existing products and acquiring new customers for the Company's SMB empowerment platform including the Company's cloud-native integrated ERP solutions, B2B platform and financial platform. Such use includes the payment of the purchase price for the planned acquisition of shares of Sight Visit Inc. and subsequent investments and financings in its operations. If the Company decides in-house development would be more efficient, or if the Company does not conduct such acquisitions or investments, the Company expects to use any remaining net proceeds for operational expenses and research and development expenses, including recruiting and personnel expenses for engineers, aimed at developing new services and enhancing the Company's existing products through the Company's in-house development.

  • 2) 8,000 million yen for sales and marketing expenses, including advertising and marketing activities and personnel expenses aimed at acquiring new customers and upselling and cross-selling our products to existing customers.

  • 3) 3,000 million yen for server-related expenses and personnel expenses for customer support.

    The estimated net proceeds amount above was calculated based on the closing price of the Company's shares on March 19, 2021 (Fri) as reported by the Tokyo Stock Exchange, Inc.

• (2) Change in the use of proceeds raised last time

  Not applicable.

• (3) Expected impact on operating performance

There will be no change to the consolidated business forecast for the fiscal year ending June 30, 2021 as a result of the International Primary Offering. The Company believes that it will improve and strengthen the Company's financial position and contribute to medium- and long-term growth and improvement in profitability.

3. Lock-up

With regard to the International Offering, DCM VI, L.P. and A-Fund, L.P., the selling shareholders, as well as Daisuke Sasaki and Ryu Yokoji, the Company's shareholders, have agreed with the Underwriters not to conduct sales, etc. of the shares of common stock of the Company (excluding, among others, the International Secondary Offering) during the period beginning on the Pricing Date, and ending on the 90th day from the delivery date of the International Primary Offering set forth in (7) of "1. Issuance of new shares by way of an international offering" above (the "lock-up period"), without the prior written consent of the Underwriters.

In addition, the Company has agreed with the Underwriters that it will not carry out certain transactions including the issuance of shares of common stock of the Company, the issuance of securities convertible into or exchangeable for shares of common stock of the Company, and the issuance of securities which serves as rights to acquire or receive shares of common stock of the Company (excluding, among others, the International Offering, the issuance or delivery of shares of the common stock of the Company upon exercise of stock acquisition rights, any other issuance or delivery of shares of the common stock of the Company or stock acquisition rights as a part of an incentive scheme including but not limited to the issuance or delivery of restricted stock and stock acquisition rights provided that the aggregate number of shares of common stock of the Company and shares of common stock of the Company to be obtained upon the exercise of stock acquisition rights issued or delivered pursuant to such incentive scheme since the Pricing Date does not exceed 0.1% of Company's total issued shares on a fully diluted basis, stock splits, etc.) during the lock-up period without the prior written consent of the Underwriters.

In the above circumstances, the Underwriters, at their discretion, are authorized to partially or wholly waive such agreements even during the lock-up period.