Tobila : Non-consolidated Financial Results for the Second Quarter of the Fiscal Year Ending October 31, 2022

(Percentages represent year-on-yearchanges)

Non-consolidated Financial Results for the Second Quarter of the Fiscal Year Ending October 31, 2022

(Six Months Ended April 30, 2022)

[Japanese GAAP]

June 10, 2022

Company name:	Tobila Systems Inc.	Listing: Tokyo Stock Exchange
Securities code:	4441	URL: https://tobila.com
Representative:	Atsushi Akita, Representative Director and President
Contact:	Takuya Yuki, Director and CFO
	Tel: [phone]

Scheduled date of filing of Quarterly Report:	June 10, 2022
Scheduled date of payment of dividend:	-
Preparation of supplementary materials for quarterly financial results:	Yes
Holding of financial results meeting:	Yes

(All amounts are rounded down to the nearest million yen)

1. Non-consolidated Financial Results for the Second Quarter (November 1, 2021 - April 30, 2022) of the Fiscal Year Ending October 31, 2022

(1) Results of operations

		Net sales			Operating profit	Ordinary profit				Profit
		Million yen	%			Million yen		%	Million yen	%		Million yen	%
	Six months ended Apr. 30, 2022	838	20.9			280		(2.0)	271	(5.0)				157	(20.3)
	Six months ended Apr. 30, 2021	693	17.6			286		18.1	286	32.7				197	32.5
		Net income per share		Diluted net income per share
				Yen						Yen
	Six months ended Apr. 30, 2022			15.03						14.87
	Six months ended Apr. 30, 2021			19.09						18.65
(2) Financial position
		Total assets		Net assets	Equity ratio
			Million yen		Million yen				%
	As of Apr. 30, 2022			2,425				1,545				63.7
	As of Oct. 31, 2021			2,170				1,489				68.6				1,489
	Reference: Shareholders' equity (million yen) As of Apr. 30, 2022:	1,545	As of Oct. 31, 2021:
2. Dividends
									Dividend per share
				1Q-end	2Q-end		3Q-end	Year-end	Total
				Yen			Yen			Yen			Yen		Yen
	Fiscal year ended Oct. 31, 2021			-		0.00		-			12.90			12.90
	Fiscal year ending Oct. 31, 2022			-		0.00
	Fiscal year ending Oct. 31, 2022										-			11.10			11.10
	(forecasts)
	Note: Revision to the most recently announced	dividend forecast: None

3. Earnings Forecast for the Fiscal Year Ending October 31, 2022 (November 1, 2021 - October 31, 2022)

(Percentages represent year-on-year changes)

	Net sales		Operating profit	Ordinary profit	Profit		Net income
			per share
	Million yen	%	Million yen	%	Million yen	%	Million yen	%	Yen
Full year	1,636	14.8	513	(11.5)	504	(12.8)	333	(13.7)	32.05

Note: Revision to the most recently announced earnings forecast: None

* Notes

1. Application of special accounting methods for presenting quarterly non-consolidated financial statements: None
2. Changes in accounting policies and accounting-based estimates, and restatements
3. 1. Changes in accounting policies due to revisions in accounting standards, others: Yes
   2. Changes in accounting policies other than 1) above: None
   3. Changes in accounting-based estimates: None
   4. Restatements: None
4. Number of outstanding shares (common shares)
5. 1. Number of shares outstanding at the end of the period (including treasury shares)

As of Apr. 30, 2022:	10,617,000 shares	As of Oct. 31, 2021:	10,479,900 shares
2) Number of treasury shares at the end of the period
As of Apr. 30, 2022:	98,150 shares	As of Oct. 31, 2021:	89,150 shares
3) Average number of shares outstanding during the period
Six months ended Apr. 30, 2022:	10,474,237 shares	Six months ended Apr. 30, 2021:	10,348,144 shares

• The current quarterly financial report is not subject to quarterly review by certified public accountants or auditing firms.
• Explanation of appropriate use of earnings forecasts, and other special items

Cautionary statement with respect to forward-looking statements

Forecasts of future performance in these materials are based on assumptions judged to be valid and information available to Tobila Systems' management at the time these materials were prepared, but are not promises by Tobila Systems regarding future performance. Actual results may differ significantly from these forecasts for a number of reasons.

	Tobila Systems Inc. (4441) Financial Results for the Second Quarter of FY10/22
Contents of Attachments
1. Qualitative Information on Quarterly Financial Performance	2
(1)	Explanation of Results of Operations	2
(2)	Explanation of Financial Position	3
(3)	Explanation of Earnings Forecast and Other Forward-looking Statements	4
2. Quarterly Non-consolidated Financial Statements and Notes	5
(1)	Quarterly Non-consolidated Balance Sheet	5
(2)	Quarterly Non-consolidated Statement of Income	6
(3)	Quarterly Non-consolidated Statement of Cash Flows	7
(4)	Notes to Quarterly Non-consolidated Financial Statements	8
	Going Concern Assumption	8
	Significant Changes in Shareholders' Equity	8
	Changes in Accounting Policies	8
	Segment and Other Information	9

1

Tobila Systems Inc. (4441) Financial Results for the Second Quarter of FY10/22

1. Qualitative Information on Quarterly Financial Performance

(1) Explanation of Results of Operations

In the first half of the current fiscal year, economic activity in Japan recovered gradually as the severe situation that restricted economic activity eased due to progress with vaccinations of CIOVID-19. However, the outlook remains uncertain as the economy has yet to recover to the pre-pandemic level. Moreover, rising raw material prices and volatility in the financial and capital markets due to the ongoing Russia-Ukraine tensions has created growing uncertainty over the outlook for the global economy.

Japan lowered the age of adulthood from 20 to 18. As a result, a variety of scams targeting these new adults have emerged. Moreover, numerous scams about refund concerning COVID-19 vaccines, smishing, SMS phishing scams to steal personal information, and Russia-Ukraine war charity donations have caused enormous amount of losses. In this manner, specialized fraud schemes are becoming ever more sophisticated as the world continues to change.

There is thus a growing need for protection against these scams, including for family members and friends. We have been focusing on our spam filter service to deter these criminal activities. In the landline filtering services category, we started offering with KDDI CORPORATION a service called the Fraudulent Call Automatic Block. This is Japan's first malicious call automatic blocking service for landline phones that does not require an add-on unit. Users do not require a special device because automatic blocking equipment for malicious calls is placed in KDDI's network.

The TobilaPhone Mobile fraud and spam filtering service became the first app to be certified as an Outstanding Fraudulent Call Prevention Device recommended by the Japan National Crime Prevention Association. This certification further increases the recognition of the effectiveness of this app. In addition, "Fraudulent Message Automatic Block" service that automatically blocks malicious SMS and e-mail messages and displays a warning was provided free to au, UQ mobile and povo users of KDDI CORPORATION and OKINAWA CELLULAR TELEPHONE COMPANY. This expansion has led to an increase in the number of users of our service. There were many marketing campaigns for the purpose of raising awareness of 280blocker, an app that blocks malicious advertisements.

TobilaPhone Cloud, a cloud business phone service, has been a priority business of us. To make this service even more convenient, we have launched an optional service that allows users to select an area code when making and receiving calls with a landline phone number. No special connection or equipment is needed. These actions and the quality of our service are highly evaluated by users. We received the "Leader" award at the "IT review Grid Award 2022 Spring" in three segments, PBX, IVR and IP telephone. The award is given to products with high customer satisfaction based on user reviews.

Orders for TobilaPhone Biz, an upgraded version of TobilaPhone for corporate users, have increased significantly as it was registered as a "Select Item" by NTT East and NTT West. As a new business, we have developed and launched Talk Book, an AI sales support tool that realize the visualization of sales discussions and data-driven sales.

In addition, we are using various measures to increase the number of monthly active users (see note) for our services. As a result, more than 14 million users now use our services.

The businesses and business models of Tobila Systems have received recognition in many ways. One example is the December 2021 selection of Tobila Systems by The Small and Medium Enterprise Agency of the Ministry of Economy, Trade and Industry for inclusion in the "300 Most Promising SMEs and Small Businesses."

The Board of Directors resolved to select the Prime Market of the Tokyo Stock Exchange began using its new trading categories in April 2022. We will continue to take actions aimed at achieving consistent growth of sales and earnings and the medium to long-term growth of corporate value.

In the first half, net sales increased 20.9% year-on-year to 838,953 thousand yen, operating profit decreased 2.0% to 280,389 thousand yen, ordinary profit decreased 5.0% to 271,798 thousand yen and profit was down 20.3% to 157,389 thousand yen.

Note: MAU is an important KPI for determining the contribution of our products and services to eliminating problems caused by fraud and spam. Our revenue is, however, not always directly affected by an increase or decrease in MAU because contracts with customers such as telecommunications companies have different

2

Tobila Systems Inc. (4441) Financial Results for the Second Quarter of FY10/22

terms.

Business segment performance was as follows: Fraud and spam prevention services

There are three service categories in this segment. A filtering service that blocks fraudulent and other malicious calls on mobile phones is the core business. The other categories are a filtering service for landline phones and TobilaPhone Cloud, a filtering service for phones used by businesses. We continued to focus on building an even larger and more powerful foundation for the provision of filtering services.

As a result, first half sales were 808,188 thousand yen, up 23.9% from one year earlier, and segment profit increased 8.2% to 466,713 thousand yen.

Others

Other services include a website design and operation support service, development projects outsourced by other companies and other activities. We do not intend to increase the scale of operations in this segment. First half sales decreased 25.9% from one year earlier to 30,764 thousand yen, and the segment profit was 20,876 thousand yen, down 16.5%.

Total operating profit is the sum of the profit of the two segments minus corporate expenses, which are not allocated to the reportable segment. Corporate expenses mainly consist of selling, general and administrative expenses that are not attributable to the reportable segment. In the first half, corporate expenses increased 21.6% from one year earlier to 207,200 thousand yen mainly because of higher administrative expenses because of the larger scale of operations.

1. Explanation of Financial Position 1) Assets, liabilities and net assets Total assets

Total assets increased 255,094 thousand yen from the end of the previous fiscal year to 2,425,110 thousand yen at the end of the second quarter of the current fiscal year. This was attributable mainly to increases of 132,100 thousand yen in cash and deposits, 38,463 thousand yen in accounts receivable-trade and contractual assets and 65,896 thousand yen in investments and other assets.

Liabilities

Total liabilities increased 198,917 thousand yen from the end of the previous fiscal year to 879,925 thousand yen. The main factors include increases of 12,687 thousand yen in accounts payable-trade and 217,971 thousand yen in contractual liabilities and a decrease of 25,020 thousand yen in long-term borrowings.

Net assets

Total net assets increased 56,176 thousand yen from the end of the previous fiscal year to 1,545,185 thousand yen. The main factors include an increase in share capital and capital surplus of 16,040 thousand yen each due to the exercise of share acquisition rights as stock options and the booking of profit of 157,389 thousand yen, and a decrease of 134,040 thousand yen in retained earnings due to dividends paid.

2) Cash flows

Cash and cash equivalents (hereinafter, "net cash") at the end of the first half of the current fiscal year increased 132,100 thousand yen from the end of the previous fiscal year to 1,277,833 thousand yen. Cash flows by category are as described below.

Cash flows from operating activities

Net cash provided by operating activities amounted to 347,227 thousand yen compared with 203,184 thousand yen in the same period of the previous fiscal year. This was mainly due to profit before income taxes of 247,753

3