Note:This document is a translation of a part of the original Japanese version and provided for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail.

Consolidated Financial Results

for the Three Months Ended March 31, 2020

[Japanese GAAP]

May 14, 2020 Company name: Uzabase, Inc. Stock exchange listing: Tokyo Code number: 3966 URL: http://www.uzabase.com Representative: Yusuke Umeda / Yusuke Inagaki Chief Executive Officer / Chief Operating Officer Contact: Daisuke Chiba Executive Officer, Chief Financial Officer Phone: 03-4533-1999 Scheduled date of filing quarterly securities report: May 14, 2020 Scheduled date of commencing dividend payments: - Availability of supplementary briefing material on quarterly financial results: Yes Schedule of quarterly financial results briefing session: Yes

(Amounts of less than one million yen are rounded down)

1. Consolidated Financial Results for the Three Months Ended March 31, 2020 (January 01, 2020 to March 31, 2020)

(1) Consolidated Operating Results (% indicates changes from the previous corresponding period.)

Net sales EBITDA * Operating

Profit(Loss) Ordinary

Profit(Loss)

Loss attributable to owners of

parent

Three months ended Million yen % Million yen % Million yen % Million yen % Million yen %

March 31, 2020 3,171 11.4 (42) - (263) - (317) - (473) -

March 31, 2019 2,847 91.3 (179) - (380) - (395) - (296) -

* EBITDA = Operating Profit + Depreciation + Amortization

(Note) Comprehensive income: Three months ended March 31, 2020: ¥ (569) million [ - %]

Three months ended March 31, 2019: ¥ (361) million [ - %]

Basic earnings

per share Diluted earnings per

share

Three months ended Yen Yen

March 31, 2020 (14.35) -

March 31, 2019 (9.54) -

* Diluted earnings per share for the fiscal year ended March 31, 2019 and 2020, respectively, are not indicated, though the Company

has dilutive shares, because a net loss was recorded for the period.

(2) Consolidated Financial Position

Total assets Net assets Capital adequacy

ratio

As of Million yen Million yen %

March 31, 2020 19,940 6,788 26.8

December 31, 2019 20,958 7,131 28.0 (Reference) Equity: As of March 31, 2020: ¥ 5,349 million

As of December 31, 2019: ¥ 5,871 million

2. Dividends

Annual dividends

1st

quarter-end 2nd

quarter-end 3rd

quarter-end Year-end Total

Yen Yen Yen Yen Yen

Fiscal year ended December 31, 2019 - 0.00 - 0.00 0.00

Fiscal year ending December 31, 2020 -

Fiscal year ending December 31, 2020

(Forecast) 0.00 - 0.00 0.00

(Note) Revision to the forecast for dividends announced most recently: No

3. Consolidated Financial Results Forecast for the Fiscal Year Ending December 31, 2020(January 01, 2020 to December 31, 2020)

(% indicates changes from the previous corresponding period.)

Net sales EBITDA Operating

profit Ordinary profit

Profit attributable to

owners of parent

Basic earnings per share

Million yen % Million yen % Million yen % Million yen % Million yen % Yen

Full year 15,000～

16,000

19.8

～27.8

- - - - - - - - -

(Note) Revision to the financial results forecast announced most recently: No

Maximizing subscription revenue is of the utmost importance for the management policy of the Uzabase Group. We will primarily focus on increasing Monthly Recurring Revenue (*1) (“MRR”) for our B2B SaaS (*2) businesses, which include SPEEDA, FORCAS, and INITIAL, as well as Paid Membership revenue for NewsPicks and Quartz. Financial targets for FY12/2020 include net sales of JPY 15 billion to JPY 16 billion (+19.8% YoY to +27.8% YoY) and positive EBITDA, which is expected to result from growth in the existing businesses and effects from the reform of the US business. However, due to the risks associated with the advertising business from the change in business environment and the temporary suspension of operations in the SPEEDA China business amid an outbreak of the novel COVID-19, as well as our intentions to make agile and flexible investments during the financial year to align with the progress of our businesses, we have decided not to disclose targets for operating profit, ordinary profit, and net profit attributable to parent company shareholders at this point.

(*1) Monthly Recurring Revenue is a metric for stock-type businesses that excludes any one-off payments by customers such as

initial costs.

(*2) SaaS stands for Software as a Service, which refers to an online service with monthly and/or yearly subscription fees.

* Notes:

(1) Changes in significant subsidiaries during the three months ended March 31, 2020

(changes in specified subsidiaries resulting in changes in scope of consolidation): No

New - (Company name: )

Exclusion: - (Company name: )

(2) Accounting policies adopted specially for the preparation of quarterly consolidated financial statements: No

(3) Changes in accounting policies, changes in accounting estimates and retrospective restatement

1) Changes in accounting policies due to the revision of accounting standards: No

2) Changes in accounting policies other than 1) above: No 3) Changes in accounting estimates: No 4) Retrospective restatement: No

(4) Total number of issued shares (common shares)

1) Total number of issued shares at the end of the period (including treasury shares):

March 31, 2020: 33,040,334 shares

December 31, 2019: 32,949,578 shares

2) Total number of treasury shares at the end of the period:

March 31, 2020: 258 shares

December 31, 2019: 258 shares

3) Average number of shares during the period:

Three months ended March 31, 2020: 33,000,863 shares

Three months ended March 31, 2019: 31,063,014 shares

Contents of the Attachment

1. Qualitative Information on Quarterly Operating Results …………………………………… 2

(1) Overview of Operating Results…………………………………………………………………… 2

(2) Overview of Financial Condition………………………………………………………………… 4

(3) Prospects for the Fiscal Year Ending December 31, 2020………………………………………… 4

2. Quarterly Consolidated Financial Statements……………………………………………………… 5

(1) Quarterly Consolidated Balance Sheets…………………………………………………………… 5

(2) Quarterly Consolidated Statements of Income and Comprehensive Income …………………… 7

(3) Notes to Quarterly Consolidated Financial Statements…………………………………………… 9

Note to Going Concern Assumptions …………………………………………………………… 9

Material Changes in Shareholders’ Equity ……………………………………………………… 9

Segment Information ……………………………………………………………………………… 9

Additional Information …………………………………………………………………………… 11

Subsequent Events………………………………………………………………………………… 12

1. Qualitative Information on Quarterly Operating Results

(1) Overview of Operating Results

During the three months ended March 31, 2020 (“1Q20”), the domestic IT service sector revenue has increased for eight

consecutive years, up 4.1% YoY in 2019 reaching JPY12.6 trillion (report from Ministry of Economy, Trade and Industry, Japan

released in Feb 2020). Domestic SaaS (“Software as a Service”) market size are growing CAGR 12% and will reach approximately

JPY820 billion in market size by 2023 (Fuji Chimera Research Institute report on Software business market 2019). Personal

smartphone ownership rate has reached 64.7% in 2018, up 3.8 points YoY (report from the Ministry of Internal Affairs and

Communications, Japan released on May 31, 2019). Furthermore, internet advertising market has reached JPY2 trillion in 2019 for

the first time and has increased by 22.9% YoY reaching JPY2.1 trillion, exceeding the television advertising market (report from

DENTSU INC. announced on March 2020). The US domestic internet marketing market has increased 121.8% YoY reaching

USD107.5 billion which is equivalent to JPY12.1 trillion (report by PwC and IAB, “IAB internet advertising revenue report” in

May 2019).

Under these business circumstances, 1Q20 revenue of Uzabase, Inc. and its’ group companies (“UB Group”) is increasing.

SPEEDA business has steadily acquired new IDs resulting in the growth of MRR*1. NewsPicks business revenue has increased

due to the increase in the number of paid subscription and the steady growth of advertising sales.

EBITDA for existing business of SPEEDA business and NewsPicks business has increased while EBITDA for other B2B

businesses has also turned positive. For Quartz business, while EBITDA is still in deficit as it is in the phase of shifting its business

to paid subscription model, due to the cost-saving initiatives in 2019 for advertising business, deficit has decreased YoY. For

operating loss, while the existing business is recording operating profit, the amortization of goodwill in relation to the acquisition

of Quartz has impacted.

As a result, for the three months ended March 31, 2020, net sales were JPY 3,171 million (up 11.4% YoY), EBITDA of deficit

of JPY42 million (deficit of JPY179 million in 1Q19), operating loss of JPY263 million (operating loss of JPY380 million in 1Q19)

and ordinary loss of JPY317 million (loss of JPY395 million in 1Q19). Loss attributable to owners of parent was JPY473 million

(loss of JPY296 million in 1Q19) as there was income tax of JPY185 million.

Operating results for business segment

UB Group has several businesses domestically and abroad and company-wide corporate cost is very complicated. In order to

better reflect the profitability of each reporting business segment, starting from 1Q20, we have revised the cost allocation

methodology of company-wide cost using a reasonable allocation criterion. To be more precise, we have divided company-wide

corporate cost into the following two categories and for Indirect Cost, it will not be allocated to each reporting segment.

▪ Direct Cost: cost that is directly linked to each report business or services.

▪ Indirect Cost: Company-wide cost that is not directly linked to each business segment, cost that occurs in relation to

consolidated group operations such as listing fees, auditing fees and officer’s remuneration

In addition, aside from the EBITDA for each reporting segment, to better disclose the profitability of each reporting business

segment, we have disclosed Direct EBITDA and Segment EBITDA, which is a key business performance indicator. They are

calculated as below.

▪ Direct EBITDA of each reporting segment is the amount of Segment Profit (loss) plus Depreciation and amortization, and

Amortization of goodwill. It is equivalent to the amount of EBITDA before allocation of Indirect Cost.

▪ Segment EBITDA is the amount of Direct EBITDA minus Indirect Cost (Company-wide cost). Company-wide cost is

allocated to each reporting business segment based on the proportion of net sales of each reporting segment.

(1) SPEEDA Business

While the growth of newly acquired IDs in China and other Asian markets were weak due to the COVID-19, domestic newly

acquired IDs increased steadily. In collaboration with our equity-method affiliate Mimir, Inc. (“Mimir” which we acquired

to a wholly owned subsidiary in April 2020), we have added “Expert Opinion” provided by Mimir to SPEEDA original

contents “SPEEDA Trends”. We can now conduct surveys to experts in the Mimir expert network and get opinions from

experts on prospects for various trends and to grasp versatile key points necessary when planning business strategy or for

new business developments.

As a result, for SPEEDA business for 1Q20, MRR reached JPY420 million. Segment net sales were JPY1,289 million (up

23.8% YoY), segment profit of JPY580 million (up 26.3% YoY), Direct EBITDA of JPY585 million (up 26.3% YoY) and

segment EBITDA of JPY513 million (up 23.1% YoY).

The YoY change and analysis were derived using the new allocation methodology (hereinafter, same for other Businesses).

1 Monthly Recurring Revenue is a metric for stock-type businesses that excludes any one-off payments by customers such as initial costs.

(2) NewsPicks Business

For NewsPicks, aside for the usual business operations, we have provided information on COVID-19 with featured editorial

and video contents on Post-COVID-19. The comment from Pro Pickers had added deep and versatile views to the editorial

and video contents which had boosted the credibility of NewsPicks as a reliable media source and differentiating it from

other medias. With these efforts from our end and from the increase in demand for reliable news source during this COVID-

19 situation, trial use for paid subscription has increased largely from the end of March and paid subscription itself is also

increasing in a tripled pace.

As a result, for NewsPicks business for 1Q20, MRR has came up to JPY184 million. Advertising revenue also steadily

increased, resulting in segment revenue of JPY1,267 million (up 24.3% YoY), segment profit of JPY168 million (down

23.1% YoY), Direct EBITDA of JPY192 million (down 14.5% YoY) and segment EBITDA of JPY121 million (down 32.4%

YoY).

*1 Number of IDs is the number of users registered to NewsPicks service (not the cumulative total number of people)

*2 Paid subscription IDs are the total of users registered to paid service (not the cumulative total number of people) and

business users who has access to services provided to premiumusers. Paid users consist of premium user and academia user.

Premium user has access to NewsPicks original contents and overseas paid contents. Academia user has access, in addition

to the same service as premium users, attend lectures provided by industry celebrities as well as Academia books selected

by NewsPicks (1 book per month) and enroll in online courses. Premium user pays a monthly fee of JPY1,600 (for one year

subscription, monthly fee will be JPY1,250, student plan for JPY500), academia user pay monthly fee of JPY5,000 (for

half-year subscription, monthly fee will be JPY4,000).

On November 1, 2019, fee of premium user plan was changed and users that subscribed before the change of fee pay monthly

fee of JPY1,500.

(3) Quartz Business

Quart business is shifting its business model towards a monthly subscription model business. While the year-on-year

decrease in advertising sales, cost-savings initiatives since 2019 have resulted in reduced deficit in EBITDA. 1Q20 MMR

was JPY 12 million. Paid subscription user and MRR is growing steadily however it currently accounts only for a small

portion of the entire net sales.

As a result, for Quartz business for 1Q20, segment net sales were JPY289 million (down 54.1% YoY), segment loss of

JPY833 million (segment loss of JPY892 million in 1Q19), deficit in Direct EBITDA of JPY666 million (deficit of JPY723

million in 1Q19) and deficit in segment EBITDA of JPY682 million (deficit of JPY752 million in 1Q19).

(4) Other B2B Business

For other B2B business, INITIAL which is a database for startups and FORCAS which is a B2B marketing platform both

steadily increased new contract acquisition. Especially during 1Q20 FORCAS MRR reached JPY80 million and contributed

largely to revenue growth. INITIAL also became profitable for the full year in FY2019, the third year since the acquisition

and was profitable during 1Q20.

As a result, for other B2B business for 1Q20, segment net sales were JPY330 million (up 101.8% YoY), segment profit of

JPY18 million (segment loss of JPY19 million in 1Q19), Direct EBITDA of JPY 24 million (deficit of JPY15 million in

1Q19) and segment EBITDA of JPY5 million (deficit of JPY22 million in 1Q19).

(2) Overview of Financial Condition

(Assets)

As of March 31, 2020, the balance of total assets was JPY19,940 million, a decrease of JPY1,018 million from the balance as

of December 31, 2019. The major breakdown of fluctuation in balance of current assets from the balance as of December 31,

2019 was: a decrease in cash and deposits by JPY622 million and a decrease in notes and accounts receivable - trade by JPY398

million due to the collection of accounts receivables. For non-current assets, goodwill decreased by JPY221 million from the

balance as of December 31, 2019 due to amortization of goodwill and currency conversion.

(Liabilities)

As of March 31, 2020, the balance of total liabilities was JPY13,151 million, a decrease of JPY675 million from the balance

as of December 31, 2019. The major breakdown of fluctuation in balance of current liabilities from the balance as of December

31, 2019 was: a decrease in income taxes payable by JPY616 million due to the payment of income taxes. For non-current

liabilities, long-term borrowings decreased by JPY448 million from the balance as of December 31, 2019.

(Net assets)

As of March 31, 2020, the balance of total net assets was JPY6,788 million, a decrease of JPY342 million from the balance as

of December 31, 2019. The major breakdown of fluctuation and balance of net assets from the balance as of December 31, 2019

was: a decrease in retained earnings byJPY 473 million due to the loss attributable to owners of parent of JPY473 million, and

the increase in non-controlling interests by JPY178 million due to additional injection from external investors to the Fund

managed by UB Ventures, Inc. which is a consolidated subsidiary.

(3) Prospects for the Fiscal Year Ending December 31, 2020

For the three months ended March 31, 2020, MRR which is an important key performance indicator for Uzabase group has

increased steadily without being impacted by the COVID-19. SPEEDA Business net sales and EBITDA have both continued to

increase by more than 20% YoY. NewsPicks Business paid subscription is expected to increase further in the second quarter of

FY2020 as trial use for paid subscription has increased largely, in a tripled pace, from the end of March due to the increased demands

for reliable news source during this COVID-19 situation. We are expecting further growth for subscription business from 2Q of

FY2020. For Quartz Business, while advertising sales decreased YoY, cost-savings initiatives since 2019 have resulted in reduced

deficit in EBITDA by JPY69 million. Determining the size of the impact of COVID-19 on the economy at this point is extremely

difficult, however, from our current business situation, we have not revised our full-financial targets for the fiscal year ending

December 31, 2020 which was announced on February 12, 2020.

For any temporary costs associated with the restructuring of the Quartz business will be disclosed in a timely manner once the

exact figures are finalized. Details of the Quartz Business restructuring are disclosed in 2. Quarterly Consolidated Financial

Statements (3) Notes to Quarterly Consolidated Financial Statements, (Subsequent events) of this document.

2. Quarterly Consolidated Financial Statements

(1) Quarterly Consolidated Balance Sheets

(Million yen)

As of December 31, 2019 As of March 31, 2020

Assets

Current assets

Cash and deposits 7,954 7,331

Notes and accounts receivable - trade 1,916 1,518

Other 378 407

Allowance for doubtful accounts (24) (18)

Total current assets 10,224 9,239

Non-current assets

Property, plant and equipment 344 522

Intangible assets

Goodwill 8,870 8,649

Other 130 157

Total intangible assets 9,001 8,807

Investments and other assets 1,388 1,370

Total non-current assets 10,733 10,700

Total assets 20,958 19,940

(Million yen)

As of December 31, 2019 As of March 31, 2020

Liabilities

Current liabilities

Accounts payable - trade 319 250

Current portion of bonds payable 102 102

Current portion of long-term borrowings 1,123 1,408

Income taxes payable 730 114

Other 2,856 3,059

Total current liabilities 5,131 4,935

Non-current liabilities

Bonds payable 276 246

Long-term borrowings 8,378 7,929

Other 41 41

Total non-current liabilities 8,695 8,216

Total liabilities 13,826 13,151

Net assets

Shareholders' equity

Share capital 4,096 4,104

Capital surplus 3,029 3,039

Retained earnings (1,006) (1,479)

Treasury shares (0) (0)

Total shareholders' equity 6,118 5,663

Accumulated other comprehensive income

Valuation difference on available-for-sale securities (0) (0)

Foreign currency translation adjustment (246) (313)

Total accumulated other comprehensive income (247) (314)

Share acquisition rights 10 11

Non-controlling interests 1,249 1,428

Total net assets 7,131 6,788

Total liabilities and net assets 20,958 19,940

(2) Quarterly Consolidated Statements of Income and Comprehensive Income

Quarterly Consolidated Statements of Income (For the 1Q - three months)

(Million yen)

For the three months ended March 31, 2019

For the three months ended March 31, 2020

Net sales 2,847 3,171

Cost of sales 1,216 1,549

Gross profit 1,630 1,621

Selling, general and administrative expenses 2,010 1,885

Operating loss (380) (263)

Non-operating income

Interest income 0 2

Foreign exchange gains 11 -

Gain on investments in investment partnerships - 4

Other 6 3

Total non-operating income 17 11

Non-operating expenses

Interest expenses 17 28

Foreign exchange losses - 13

Investment partnership management fee 14 17

Other 0 5

Total non-operating expenses 32 65

Ordinary loss (395) (317)

Extraordinary income

Gain on reversal of share acquisition rights 311 -

Total extraordinary income 311 -

Loss before income taxes (84) (317)

Income taxes - current 276 78

Income taxes - deferred (29) 107

Total income taxes 247 185

Loss (331) (503)

Loss attributable to non-controlling interests (34) (29)

Loss attributable to owners of parent (296) (473)

Quarterly Consolidated Statements of Comprehensive Income (For 1Q - the three months)

(Million yen)

For the three months ended March 31,2019

For the three months ended March 31,2020

Loss (331) (503)

Other comprehensive income

Valuation difference on available-for-sale securities (0) (0)

Foreign currency translation adjustment (29) (66)

Total other comprehensive income (30) (66)

Comprehensive income (361) (569)

Comprehensive income attributable to

Comprehensive income attributable to owners of parent (326) (540)

Comprehensive income attributable to non-controlling

interests (34) (29)

(3) Notes to Quarterly Consolidated Financial Statements

[Note to Going Concern Assumption]

There is no corresponding item.

[Material Changes in Shareholders’ Equity]

There is no corresponding item

[Segment Information]

For the three months ended March 31, 2019 (January 1, 2019 to March 31, 2019)

1) Segment net sales and segment operating profit (loss)

(Unit: JPY millions)

Reporting Segment

Adjustments *1

Consolidated *2 SPEEDA

Business NewsPicks Business

Quartz Business

Other B2B Businesses

Total

Net Sales

External Customers 1,037 1,017 629 162 2,847 － 2,847

Intersegment 3 2 0 0 6 (6) －

subtotal 1,041 1,019 629 163 2,853 (6) 2,847

Segment profit (loss) 459 218 (892) (19) (234) (145) (380)

*1 Adjustments to segment profit (loss) includes JPY(0) million for the elimination of transaction between segments and JPY(145) million for the company-wide cost that is not allocated to each reporting Segment. Company-wide cost consists mainly of administrative and general expense of corporate functions that is not attributable to each reporting segment.

*2 Segment profit (loss) is equivalent to operating profit (loss) recorded in the consolidated financial statement. *3 The Company has disclosed Direct EBITDA and Segment EBITDA, which is a key business performance indicator, starting

from the first quarter of the fiscal year ending December 31, 2020, to better disclose the profitability of each reporting business segment.

Direct EBITDA and Segment EBITDA for reporting segments are as follows:

SPEEDA Business

NewsPicks Business

Quartz Business

Other B2B Businesses

Elimination Total

Segment profit (loss) 459 218 (892) (19) (145) (380)

Depreciation and amortization 4 6 13 0 16 42

Amortization of goodwill － － 154 3 － 158

Direct EBITDA *4 463 225 (723) (15) (129) (179)

Allocation of company-wide costs *5

(46) (45) (28) (7) 128 －

Segment EBITDA *5 416 179 (752) (22) (0) (179)

*4 Direct EBITDA of each reporting segment is the amount of Segment Profit (loss) plus Depreciation and amortization, and Amortization of goodwill. It is equivalent to the amount of EBITDA before allocation of Indirect Cost. (Direct cost: cost that is directly linked to each report business or services).

*5 Segment EBITDA is the amount of Direct EBITDA minus Indirect Cost (company-wide cost). Company-wide cost is allocated to each reporting business segment based on the proportion of net sales of each reporting segment. (Indirect Cost: Company-wide cost that is not directly linked to each business segment, cost that occurs in relation to consolidated group operations such as listing fees, auditing fees and officer’s remuneration)

For the three months ended March 31,2020 (January 1, 2020 to March 31, 2020)

1) Segment net sales and segment operating profit (loss)

(Unit: JPY millions)

Reporting Segment

Adjustments *1

Consolidated *2 SPEEDA

Business NewsPicks Business

Quartz Business

Other B2B Businesses

Total

Net Sales

External Customers 1,288 1,266 289 327 3,171 － 3,171

Intersegment 1 1 － 2 4 (4) －

subtotal 1,289 1,267 289 330 3,176 (4) 3,171

Segment profit (loss) 580 168 (833) 18 (67) (196) (263)

*1 Adjustments to segment profit (loss) includes JPY (0) million for the elimination of transaction between segments and JPY(196) million for the company-wide cost that is not allocated to each reporting segment. Company-wide cost consists mainly of administrative and general expense of corporate functions that is not attributable to each reporting segment.

*2 Segment profit (loss) is equivalent to operating profit (loss) recorded in the consolidated financial statement. *3 The Company has disclosed Direct EBITDA and Segment EBITDA, which is a key business performance indicator, starting

from the first quarter of the fiscal year ending December 31, 2020, to better disclose the profitability of each reporting business segment.

Direct EBITDA and Segment EBITDA for reporting segments are as follows:

SPEEDA Business

NewsPicks Business

Quartz Business

Other B2B Businesses

Elimination Total

Segment profit (loss) 580 168 (833) 18 (196) (263)

Depreciation and amortization 5 14 14 3 17 54

Amortization of goodwill － 10 153 3 － 166

Direct EBITDA *4 585 192 (666) 24 (178) (42)

Allocation of company-wide costs *5

(72) (71) (16) (18) 178 －

Segment EBITDA *5 513 121 (682) 5 (0) (42)

*4 Direct EBITDA of each reporting segment is the amount of Segment Profit (loss) plus Depreciation and amortization, and Amortization of goodwill. It is equivalent to the amount of EBITDA before allocation of Indirect Cost. (Direct cost: cost that is directly linked to each report business or services).

*5 Segment EBITDA is the amount of Direct EBITDA minus Indirect Cost (company-wide cost). Company-wide cost is allocated to each reporting business segment based on the proportion of net sales of each reporting segment. (Indirect Cost: Company-wide cost that is not directly linked to each business segment, cost that occurs in relation to consolidated group operations such as listing fees, auditing fees and officer’s remuneration)

2) Changes to Reporting Segments

Starting from this first quarter of the fiscal year ending December 31, 2020, the Company has revised the cost allocation

methodology of company-wide cost using a reasonable allocation criterion to better reflect the profitability of each reporting

business segment.

The segment information for the three months ended March 31,2019 has been derived using the changed methodology.

[Additional Information]

Amidst the slowdown in business activities due to the COVID-19 pandemic, many companies, particularly in the USA, have

been putting restraints on their advertising expenditures. These factors have affected the advertising business of Quartz Media, Inc.

(hereinafter referred to as “Quartz”), a US-based business media covering the global market acquired by Uzabase in July 2018. As

such, Uzabase has decided to take the necessary steps to eliminate any potential future risks at an early stage, which will involve a

shift towards a leaner structure through a fundamental business reform focused on restructuring the advertising business. At the

same time, Quartz’s paid subscription business, launched after the acquisition by Uzabase, continues to demonstrate steady growth

as planned, and Uzabase intends to maintain the focus on expanding it further.

Under these circumstances, we conducted impairment testing of the goodwill, that was recorded from the acquisition of Quartz,

in accordance with US GAAP, Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other”. We assessed

qualitative factors to determine whether there is a likelihood of more than 50 percent that the fair value of a reporting unit is less

than its carrying amount including goodwill based on an assessment of relevant events and circumstances. The book value of

Goodwill as of March 31, 2020 was JPY8,168 million.

For qualitative assessment, although determining the size of the impact of COVID-19 on the economy at this point is extremely

difficult, we have conducted the assessment with the best estimate possible at this time based on macro-economic environment,

external forecast reports on the industry and market which Quartz belongs to and with the current order status and several scenarios.

Regarding impact from COVID-19, while there are various views, based on the World Economic Report from IMF (International

Monetary Fund), we have assumed that the pandemic will fade in the second half of 2020 and global economy to grow in 2021 as

economic activity normalizes helped by policy support and have evaluated company forecast. In addition, for digital marketing

industry, internet services for enterprise are likely to gradually recover after 2021 while it may take some time for industries such

as travel industries that were gravely hit by the COVID-19 to recover.

Additionally, while looking at several scenarios to handle the various uncertainties such as the economic situation and the above-

mentioned business restructuring conservatively, Cash Flow of Quartz for the fiscal year ending December 31, 2020 is projected to

be higher than the base scenario of the impairment testing conducted at the end of FY2019, even by looking at the current order

situation and the past five years of order history.

Based on this, we have concluded that the likelihood of the fair value of the reporting unit including goodwill is less than it’s

carrying amount is less than 50% and have not recognized any impairment loss in relation to this goodwill.

[Subsequent Events]

(1) Business Restructuring at Quartz Media, Inc.

Uzabase has resolved at its meeting of the Board of Directors held on May 14, 2020 to undertake a business restructuring at

its US subsidiary Quartz.

1) The reason for business restructuring at Quartz

Under its mission of building a global business intelligence infrastructure, Uzabase has been actively expanding beyond

Japan, starting with the establishment of an Asian branch of SPEEDA in 2013.

As part of these efforts, Uzabase acquired Quartz, a US-based business media covering the global market, in July 2018.

However, amidst the slowdown in business activities due to the COVID-19 pandemic, many companies, particularly in the

USA, have been putting restraints on their advertising expenditures. These factors have affected the advertising business of

Quartz. As of 1Q 2020, net sales have recorded a significant drop of 54.1%, or around JPY 340 million, on a year-on-year

basis. As such, Uzabase has decided to accelerate efforts to reorganize Quartz’s business and to eliminate any potential future

risks at an early stage, which will involve a shift towards a leaner structure through a fundamental business reform focused on

restructuring the advertising business.

At the same time, Quartz’s paid subscription business, launched after the acquisition by Uzabase, continues to demonstrate

steady growth as planned, and Uzabase intends to maintain the focus on expanding it further.

2) Future Outlook

Uzabase will promptly report associated temporary costs at Quartz as soon as the exact figures are finalized.

(2) Completion of funding for Issuance of New Shares Through Third-Party Allotment

Uzabase has resolved at its meeting of the Board of Directors held on March 25, 2020 to issue common shares through a third-

party allotment (hereinafter referred to as the “Third Party Allotment”) to Mitsubishi Estate Co., Ltd and the payment procedures

of the funding has been completed on April 16, 2020. Overview of the Third-Party Allotment are as follows.

(Overview of the Third-Party Allotment)

Number and Type of Shares Offered 657,400 shares of common stock

Issue Price JPY1,521 per share

Total Payment Amount JPY999 million

Amount of Capital Increase and Reserve to Be Increased

Capital Increase JPY499 million Reserve Increase JPY499 million

Method of Offering or Allotment All shares allotted via Third-Party Allotment

Allotment to Mitsubishi Estate Co., Ltd.

Date of Payment April 16, 2020