1Copyright (C) Crossfor All Rights Reserved

Strictly ConfidentialJASDAQ (Standard)

Stock code: 7810

Crossfor Co., Ltd.Results of Operations for the Fiscal Year Ended July 31, 2018

September 27, 2018

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Precautions regarding This Presentation

This presentation contains outlooks, plans, targets and other forward-looking statements. These statements are

based on current assumptions regarding upcoming events and trends. There is no assurance that these

assumptions are accurate. Consequently, actual results of operations may differ significantly from these forward-

looking statements for a number of reasons.

Unless otherwise stated, financial data in this presentation is based on generally accepted accounting principles in

Japan.

Crossfor has no obligation to revise forward-looking statements that have been announced, irrespective of the

occurrence of any events in the future, except in cases where required by disclosure rules.

Information in this presentation about companies other than Crossfor is based on sources available to the public.

This presentation does not constitute a solicitation for the purchase or sale of securities of any type, even if there

are statements to this effect. Furthermore, this presentation cannot be used as the basis for a contract or

obligation of any type.

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Contents

I. Company Overview

II. FY7/18 Financial Results

III. Growth Strategy

… 4

… 12

… 27

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I. Company Overview

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Company Overview

Company name Crossfor Co., Ltd.

Foundation August 1987

Head office/BranchHead office: 7-11-4, Kokubo, Kofu-shi, YamanashiTokyo branch: T&T Okachimachi Building, 4-8-5, Taito, Taito-ku, Tokyo

Representative President Hidetaka Dobashi

Capital 683 million yen (As of July 31, 2018)

Fiscal year end End of July

Number of employees 90 (As of July 31, 2018)

Group companiesCrossfor H.K. Limited (Hong Kong)Crossfor (Shenzhen) Co., Ltd.

Listed Exchange Tokyo Stock Exchange JASDAQ Standard

BusinessManufacturing and sales of jewelry and accessories using Dancing Stone and of parts for overseas

Auditor KPMG AZSA LLC

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History

Crossfor created the Dancing Stone market and is now enlarging this market worldwide

2011年9月有料掲載1,000店舗

1987 2000 2010 2015 2020

2010Developed

Dancing Stone

Enlargement of the Dancing Stone

marketUsed Dancing

Stone to create a new

market

Established the Dancing Stone

brand

2011Started selling Dancing Stone

2012Started selling Dancing Stone

overseas

2016Obtained a patent for Dancing Stone

in China

1987 Established

1999Invented

Crossfor cut*

2001Started selling Crossfor New

York brand

Import of jewelry

* Original diamond cut with a central cross

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Business Activities – Our Exclusive Dancing Stone Technology

What is Dancing Stone?

A revolutionary technique for jewelry

In November 2010, our President Hidetaka Dobashi invented a new jewelry setting in which the slightest movement of the wearer is converted into energy that makes the diamond swing incessantly, to the extent that

“it never stops glittering on your neckline.”

Being minute, gentle and elegant, the movement looks as if it is dancing. Thus, we named it Dancing Stone.

The center stone swings and flickers along with a person's heart beat and breath.

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Business Activities – Our Exclusive Dancing Stone Technology

The mechanism for “dancing” in response to even tiny body movements

Obtained a patent for Dancing Stone in Europe and other 8 countries

Japan China USA

Russia

South Korea

Australia Canada

Taiwan

Using an ordinary jump ring

The contact area using an ordinary jump ring is large. If the contact point is fixed,

the stone stops swinging.

Using Dancing Stone's jump ring

The contact area using Dancing Stone’s jump ring is small like a point. As a result of less friction, the stone swings constantly with the best effect.

EuropeEuropean Patent

Convention

includes 38 countries

(Note)

◆Patent pending in more than 10 countries◆Obtained a design right in Japan, China, USA, India, etc.

Note: Germany, France, UK, Italy, Netherlands, Austria, Spain, Switzerland, Turkey, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece, Croatia, Hungary, Ireland, Iceland, Albania, Liechtenstein, Lithuania, Luxembourg, Latvia, Monaco, Macedonia, Malta, Norway, Poland, Portugal, Romania, Serbia, Sweden, Slovakia, Slovenia and San Marino

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Overseas manufacturers (assembly of finished jewelry)

Wholesalers/Retailers

Business Activities – OEM Sales in Japan and Overseas Jewelry Parts Sales

Sale of jewelry parts(Overseas sale of parts: 32% of sales)

Manufacture and sale of jewelry(OEM/Crossfor brand: 68% of sales)

Consumers

■Domestic business ■Overseas business

Operations in Japan are primarily the OEM sale of finished jewelry produced by Crossfor. Crossfor sells jewelry parts in other countries to enlarge the Dancing Stone market worldwide

Crossfor Group

Orders/OEMSales

Sale of Crossfor brand products

Licensing agreements

Sale of parts

Sale of finished jewelry

Sale of OEM, Crossfor brand and other products

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Crossfor Highlights 1-1 – High Profitability (Sale of jewelry parts)

High profit margins are secured because supplying added value creates brand value

Crossfor Other companies

Goods for sale Framework, functions Parts

Substitutes None (a patented exclusive technology) Many

Competitors None (patent keeps out competitors) Many

Added value Possible (provision of new designs) Difficult

ブランド価値=ロイヤリティー

Creation of brand value No brand value (price competition)

Crossfor’s price structure Price structure at other companies

Brand value＝ Loyalty

Loyalty (value) increases with the retail price

Brand value is added at a fixed rate to the retail

price

Cost

Margin

Higher retail priceLower retail price

Brand value＝ Loyalty

Unable to add brand value to prices

Cost

MarginSelling price

(Cost plus a fixedamount of margin)

Higher retail priceLower retail price

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Crossfor

Partner factory (1)

Partner factory (2)

Partner factory (3) Production stopped

Partner factory (4)

Crossfor Highlights 1-2 – Fabless Production and Sale of Jewelry Parts

Growth backed by efficient production and cost-efficient sales strategy

Export of finished products

Uses a large volume of precious metals

→High tariffs, high cost of manufacturing×√ Export of parts

Uses small amount of precious metals

→ Low tariffs, low cost of manufacturing

Allows growth of overseas sales at a low costFabless for efficient and streamlined manufacturing

Provision of parts (not finished products) and know-how

Efficiency for various different items in small numbers with fast deliveries

No production disruption even when a trouble occurs

Keep fixed expenses low by concentrating only on

handling and sales

Output is quickly shifted to an alternate factory.

A nationwide network of partner factories to support production

There are strict limitations and high tariffs for exports of precious metals from Japan

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II. FY7/18 Financial Results

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Consolidated Financial Results

Consolidated Income Statement

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FY7/17 FY7/18 Change Change (%)

Net sales 4,211 4,063 -148 -3.5%

Japan2,762(65.6%)

2,794(68.8%)

+31 +1.2%

Overseas1,448(34.4%)

1,268(31.2%)

-180 -12.4%

Gross profit 2,024(48.1%)

1,833(45.1%)

-190 -9.4%

Selling, general and administrative expenses

1,207(28.7%)

1,598(39.3%)

+391 +32.3%

Operating profit 816(19.4%)

234(5.8%)

-581 -71.3%

Ordinary profit 793(18.8%)

220(5.4%)

-573 -72.2%

Profitattributable to owners of parent

532(12.6%)

117(2.9%)

-414 -78.0%

Consolidated Income Statement Summary

( ): % to sales

(Millions of yen)

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FY7/17 FY7/18 Change Major factors

Net sales 4,211 4,063 -148

Japan 2,762 2,794 +31Slight increase due to the effect of TV commercials

Overseas 1,448 1,268 -180Sales down because of an increase in the volume of imitation Crossfor products

Gross profit 2,024 1,833 -190

Gross profit margin 48.1% 45.1% - Decrease in high-margin overseas sales

Selling, general and administrative expenses

1,207 1,598 +391

Advertising expenses

12 269 +256 Rise in TV commercial expenses

Depreciation 36 85 +49 Increase due to head office relocation and capital expenditures

Operating profit 816 234 -581

Ordinary profit 793 220 -573

Profit attributable to owners of parent

532 117 -414

Changes in Consolidated Income Statement

(Millions of yen)

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中国

Japan

68.8%

India

3.2%Thailand

6.7%

15.6%

5.7%

Others

Sales by Region (YoY Change)

FY7/18Overseas sales

1,268 million yen

31.2%

Overseas sales1,448 million yen

34.4%

FY7/17

Japan

65.6%

16.8%

4.6%

6.8%

China

India

Others

6.2%

Thailand

2,762 million yen

China

2,794 million yen

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FY7/17 FY7/18

ChangeChange

(%)Net sales Comp. Net sales Comp.

Japan 2,762 65.6% 2,794 68.8% +31 +1.2%

Overseas 1,448 34.4% 1,268 31.2% -180 -12.4%

China 709 16.8% 635 15.6% -74 -10.5%

Thailand 192 4.6% 273 6.7% +80 +41.9%

India 285 6.8% 130 3.2% -155 -54.4%

Others 261 6.2% 230 5.7% -31 -3.5%

Sales by Region (YoY Change)

(Millions of yen)

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Japan

68.8%

India

3.2%Thailand

6.7%

15.6%

5.7%Others

Sales by Region (Vs. 1H FY7/18)

FY7/18 (Full year)Overseas sales1,268 million yen

31.2%

Overseas sales626 million yen

28.1%

1H FY7/18

11.9%

3.7%

12.5%

China

Others

2,794 million yen

India

Japan

1,599 million yen

71.9%

China

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Consolidated Financial Results

Consolidated Balance Sheet

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Changes in Consolidated Balance Sheet

3,756 3,816

0

1,000

2,000

3,000

4,000

5,000

As of Jul. 31, 2017 As of Jul. 31, 2018

1,249 1,254

0

1,000

2,000

3,000

4,000

5,000

As of Jul. 31, 2017 As of Jul. 31, 2018

1,741 1,756

0

1,000

2,000

3,000

4,000

5,000

As of Jul. 31, 2017 As of Jul. 31, 2018

1,581 1,640

0

1,000

2,000

3,000

4,000

5,000

As of Jul. 31, 2017 As of Jul. 31, 2018

Current assets Current liabilities

Non-current assets Non-current liabilities

(Millions of yen) (Millions of yen)

(Millions of yen)(Millions of yen)

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As of Jul. 31, 2017

As of Jul. 31, 2018

Change Change (%) Remarks

Current assets 3,756 3,816 +60 +1.6%

Cash and deposits 1,646 442 -1,204 -73.1%Decrease due to an increase in inventories

Inventories 1,415 2,555 +1,139 +80.5%Increase in outsourced inventories

Other assets 694 819 +124 +18.0%

Non-current assets 1,741 1,756 +14 +0.8

Property, plant and equipment

1,506 1,506 +0 +0.0

Intangible assets 117 110 -7 -6.2%

Investments and other assets

117 139 +21 +18.2%

Total assets 5,498 5,572 +74 +1.4%

Consolidated Balance Sheet: Assets

(Millions of yen)

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Consolidated Balance Sheet: Liabilities and Net Assets

As of Jul. 31, 2017

As of Jul. 31, 2018

Change Change (%) Remarks

Current liabilities 1,249 1,254 +4 +0.4%

Notes and accounts payable-trade 223 190 -33 -15.0%

Short-term loans payable

708 959 +250 +35.4%

Other current liabilities 317 105 -212 -66.9%

Non-current liabilities 1,581 1,640 +59 +3.8%

Long-term loans payable

1,578 1,639 +60 +3.8%

Other non-current liabilities 2 1 -0 -30.1%

Total liabilities 2,831 2,895 +64 +2.3%

Shareholders’ equity 2,672 2,667 -4 -0.2%

Accumulated other comprehensive income

(5) (4) +0 -15.8%

Share acquisition rights - 13 +13 -

Total net assets 2,667 2,677 +10 +0.4%

(Millions of yen)

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Consolidated Financial Results

Consolidated Cash Flows

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Consolidated Cash Flows

(Millions of yen)

FY7/17 FY7/18 Remarks

Cash flows from

operating activities 100 (1,290) Increase in inventories

Cash flows from

investing activities (973) (81)Purchase of property, plant and equipment

Free cash flows (873) (1,372)

Cash flows from

financing activities 1,929 171 Increase in loans payable

Net increase (decrease) in

cash and cash equivalents1,060 (1,204)

Cash and cash equivalents

at end of period 1,646 442

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Consolidated Financial Results

FY7/19 Outlook

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FY7/19 Outlook

FY7/18 Results FY7/19 Forecasts Change Change (%)

Net sales 4,063 4,344 +280 +6.9%

Operating profit 234 350 +115 +49.2%

Ordinary profit 220 341 +121 +55.2%

Profitattributable to owners of parent

117 204 +87 +74.7%

Net income per share 7.02 yen 12.24 yen +5.2 yen +74.4%

Dividends 7.20 yen 2.50 yen -4.70 yen -

(Millions of yen)

SG&A expenses: No TV commercials and measures to hold down expenses; only highly effective advertising/marketing activities. Investing in machinery needed for activities for the next stage of growth.

Net sales: In Japan, plan to strengthen OEM sales to current customers. Overseas, participating in Middle East jewelry exhibitions for the first time and increasing our presence in the Middle East.

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III. Growth Strategy

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Unit: Trillions of yen

The global jewelry market is growing steadily and sales are forecast to rise to ¥49.2 trillion in 2020

The Global Business Climate

8.2

Europe *

Russia China

USA

India

Hong Kong

Taiwan

Singapore

Japan *

Source: Prepared by Crossfor based on “FY2013 Cool Japan Development and Collaboration Promotion Project” of the Ministry of Economy, Trade and Industry* Europe and Japan data are for the accessory market (jewelry, handbags and watches) due to data availability. Europe is the sum of sales in UK, France, Germany and Italy.

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Major Goals for FY7/19

Establish core businesses other than Dancing Stone

1. Increase sales of tennis bracelets

2. Increase Deco Rin sales

3. Develop new products

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The origin of the tennis bracelet

During a tennis match at the U.S. Open in 1987, Chris Evert suddenly asked for a time out. Her diamond bracelet hook had broken and the bracelet had fallen off. She needed time to look for it. Chris later referred to the bracelet as a “tennis bracelet” and the name has been used for bracelets of that type ever since.

1. Increase sales of tennis bracelets

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Many women know about tennis bracelets.

Benefit 1 – No need for promotional activities

Tennis bracelets are already a major product at jewelry stores worldwide.

Benefit 2 – Crossfor sells jewelry to more than 250 buyers worldwide, including relationships with Swarovski and many other globally well-known companies

Tennis bracelets are popular but cannot be mass produced because of the difficulty of fabricating these bracelets.

Benefit 3 – Crossfor can use sophisticated machinery to produce these bracelets, making it possible to accept high-volume orders from well-known companies around the world

Why the tennis bracelet market is an excellent fit for Crossfor

1. Increase sales of tennis bracelets

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Crossfor techniques vs. methods of other companies

◆Conventional production◆ ◆ Crossfor production◆

Hand made by skilled artisans

・ Parts are cast, resulting in a high weight and cost

・ High production cost due to high wages of skilled workers

・ Variations in quality of work done by each individualInconsistencies and waste involving assembly of bracelets and stone settings

Mechanized fabrication of bracelets

・ Precision stamping process results in light weight of metal and a low cost

・ Low cost due to automation

・ Beautiful bracelets are assembled consistently with outstanding quality of assembly of bracelets and stone settings

No other company in Japan has a high-quality hollow frame production machine

1. Increase sales of tennis bracelets

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The part to be formed into a hollow frame is cut out of a metal sheet

The cut-out parts are placed on the slide

Hollow sections are connected by welding

Completion of the hollow frame!This machine produces about 325cm every hour (equivalent to about 18 tennis bracelets)

Hollow frame production machine

1. Increase sales of tennis bracelets

Tennis bracelet production machine

Stamped from above to create the hollow frame section

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Stones are transported on a conveyor belt

All stones are oriented in the same direction

Each stone is set in place by a stamper

Downward oriented stones are pointed up and placed on the conveyor belt again

Completion of the setting!This machine produces about 650cm every hour (equivalent to about 36 tennis bracelets)

Stone setting machine

1. Increase sales of tennis bracelets

Stones are picked up one by one and placed above the hollow frame

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2. Increase Deco Rin sales

The flexibility to create original designs that match any fingernail color and pattern

Adjustable size ensures a perfect fit for everyone

Authentic gold jewelry with gold content of at least 20%

Size adjustment section is structured for just the right fit on any finger

Pink gold creates a tone that goes well with skin color

Deco Rin Features

Shopper’ bagSuede pouch

Infinite number of designs

Total of 6 designs

Applied for utility model registration on August 24, 2018

Our product line -Rich designs

Six-item set priced at ¥30,000- Comes with an exclusive display case

Novelty goodsOriginal packages

Accessories - Each item comes with the following accessories

Ideal for carrying jewelry when going out or travelling

Present with the purchase

of the six-item set

Freebee

Two-stage case for displaying the full set of Deco Rin

POP -A6-size explanatory pamphlet

A shape for a perfect finger-fit

Decorated on a base

Create your original designed ring

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3. Develop new products

New directions for Dancing Stone, eyeglasses, wallets and other leather goods, and other new products and ideas

Create innovative new products other than Dancing Stone and tennis bracelets

Reference: Tennis ring