Announcement of Capital and Business Alliance with Fez Inc.

SHIFT Inc. (“SHIFT,” headquartered in Minato-ku, Tokyo, Japan; Masaru Tange, CEO and Representative Director) announced today that it has formed a capital and business alliance (this “Alliance”) with Fez Inc. (“Fez,” headquartered in Chiyoda-ku, Tokyo, Japan; Jumpei Itami, Representative Director), entering into a share subscription agreement to purchase Class C preferred shares through a third party allotment and acquire a 2.4% equity interest in Fez on a fully diluted basis.

1. Reason for the capital and business alliance
As SHIFT has been expanding its software quality assurance business since 2009, it has served clients in a wide variety of industries, such as financial, retail, logistics, and entertainment. Moreover, toward achieving its growth strategy, “SHIFT 1000,” which aims at ¥100 billion of net sales, SHIFT has been strategically acquiring businesses to expand and enrich its service portfolio. SHIFT has also shifted its corporate branding from “SHIFT as a software testing company” to “SHIFT as a sellable services producer” to realize ¥100 billion of net sales. As this new catchphrase indicates, SHIFT will commit to bringing success to the businesses of its customers.

As one way to develop its services, SHIFT has been addressing digital transformation (“DX”)*1. Leading companies in a wide range of industries utilize new technologies to be more competitive. This “wave” of DX is impacting major industries, including retail. In collaboration with Fez, this situation/opportunity allows SHIFT to accelerate DX in this market and establish its solid presence as a DX service provider/accelerator by working closely with innovation-driven clients, such as drugstores.

To promote its branding, “SHIFT as a sellable services producer,” SHIFT will focus on customers facing challenges such as “DX,” and expand its value-added services to assist these customers in becoming more competitive. For this reason, SHIFT believes that steadily building its presence in markets with high growth potential will promote its branding, “SHIFT as a sellable services producer.”

This Alliance aims to assist Fez, a rapidly growing innovator that transforms markets with high growth potential, in many aspects including capital, business and engineering. Furthermore, by accessing Fez’s client base in the retail industry, SHIFT will acquire new customers and strengthen relationships with its existing customers, and thereby expand transactions with them.

To commit to Fez’s growth and success, in addition to providing equity capital, SHIFT will provide Fez with services including system engineering and quality assurance to assist Fez in developing cutting-edge systems.

As a retail-tech company and a change-making partner in the retail industry, Fez builds and offers two platforms: 1) Retail DX, which is a data-driven platform that assists both retailers and manufacturers of fast-moving consumer goods (“FMCG”), such as cosmetics, detergent and shampoo, in growing their revenues by proving information on how to display products and increase revenues at retail outlets and 2) an online-merges-with-offline (“OMO”)*2 marketing platform, which boosts both retailer and FMCG manufacturer revenues.

Having formed partnerships with major drugstore operators in Japan, Fez has access to data on over 50 million consumers who have made purchases at these partner drugstores. For Fez to acquire clients and grow, SHIFT will assist Fez in a variety of respects including financial, service development and business growth. Through this Alliance, SHIFT and Fez will accelerate DX in the retail industry and their revenue growth.

*1: “DX (Digital Transformation)” is a trend in which companies aim at transforming their businesses including their daily operations by utilizing new technologies.

*2: OMO is a retail marketing concept to maximize customer experience by integrating online and offline data.

For further information, please kindly refer to the document below.
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