Note: This document is a translation from the original in the Japanese language and is for reference purposes only. In the event of any discrepancy
between this translated document and the Japanese original, the original shall prevail. The Company assumes no liability for the following:This translation or for direct, indirect or any other forms of damages arising from the translation

Quarterly Consolidated Financial Results for the First Half of Fiscal
Year Ending March 31, 2024 (Japanese Accounting Standards)

October 31, 2023

Name of listed company:
Securities code:

Digital Arts Inc.

Listed on:

2326

Tokyo Stock Exchange
Prime Market

URL https://www.daj.jp

Representative Director,(Name) Toshio Dogu
President and CEO
General Manager
Contact:(Title)(Name) Fumihiko Tanizaki (TEL) 03-5220-1670
Investor Relations Office
Scheduled date for submission
Scheduled date to start
November 8, 2023
December 4, 2023
of quarterly report:
dividends distribution:
Preparation of supplementary explanatory ：Yesdocuments for quarterly results:
Holding of quarterly results briefing:
Yes ( for institutional investors and financial analysts )Representative:(Title)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first half of the fiscal year ending March 31, 2024 (April 1, 2023 –September 30, 2023)(Percentage figures represent changes from same periodof previous year.)
Profit attributable toOperating profit
Ordinary profit
owners of parent(1) Consolidated operating results (cumulative totals)
Net sales
Million yen%

Million yen%

Million yen%

Million yen%

First half of year ending
5,563
9.4
2,188
(2.6)
2,201
(2.7)
1,521
(2.4)
March 31, 2024
First half of year ended
5,084
11.7
2,247
8.1
2,263
8.8
1,558
8.7
March 31, 2023
(Note) Comprehensive First half of year 1,526 million yen( -2.5) % First half of year ended 1,566 million yen (9.1) %income:ending March 31,
March 31, 2023
2024
Profit per share(basic)First half of year ending
March 31, 2024
First half of year ended
March 31, 2023

Profit per share(diluted)
Yen

Yen

108.90107.02111.03108.82(2) Consolidated financial position
Total assets

Net assets

Million yen
As of September 30, 2023
20,896
As of March 31, 2023
21,149(Reference) Equity capital: As of September 14,229 million
30, 2023:
yen

Equity ratio

Net assets per share％
Million yen
14,262
68.1
14,17366.9
As of March 14,141 million
31, 2023:
yen

Yen

1,025.71
1,007.27

2. Dividends
Annual dividends
1Q-endYen

2Q-end3Q-endYen

Year ended March 31, 2023
35.00－
Year ending March 31, 2024
40.00－
Year ending March 31, 2024
(forecast)(Note) Revisions to most recently announced dividend forecast:Year-end

Annual

Yen

Yen

Yen

－

40.00

75.00

－

40.00

80.00

No

3. Forecast of consolidated financial results for the year ending March 31, 2024 (April 1, 2023 – March
31, 2024)(Percentage figures represent changes from same period of previous year.)
Profit attributable to
Net sales
Operating profit
Ordinary profit
Profit per shareowners of parent
MillionMillionMillionMillion
%
%
%
%
Yen
yen
yen
yen
yen
Full year
11,500
10.2
5,150
16.7
5,150
16.3
3,550
15.9
252.86(Note) Revisions to most recently announced results forecasts: No* Notes(1) Changes in important subsidiaries during the first three months of fiscal
year ending March 31, 2024:

None(Changes in specified subsidiaries resulting in changes in scope of consolidation)
New―(Company name) , Excluding―(Company name)(2) Application of special accounting methods to the preparation of quarterly
consolidated financial statements:

Yes(Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Primary Notes (4) Notes toquarterly consolidated financial statements (Application of special accounting methods to the preparation of quarterly
consolidated financial statements)" on page 9 of the attached materials.
(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting
Nonestandards, etc.:
2) Changes in accounting policies due to reasons other than thoseNonestated in 1):
3) Changes in accounting estimates:
None4) Restatement:

None(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding As of September 30,
14,133,0002023(including treasury shares)
2) Number of treasury shares

As of September 30,
2023

As of March 31, 2023

14,133,000

259,930 As of March 31, 2023

93,833

3) Average number of shares issued and First half of year ending
13,972,909
March 31, 2024
outstanding in each period (cumulative total)

First
ended

half

of

year

March

31,

14,039,231

2023* Quarterly financial statements are not subject to quarterly audits by certified public accountants or audit corporations.
* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
Business forecasts and other forward-looking statements in this material contain predictions based on futureassumptions, outlooks and plans as of the date of publication of this material. The Company does not warrant theaccomplishment of the forecasts. Actual results may different significantly from the forecasts due to risks and uncertain
factors associated with the world economy, the state of competition, and fluctuations in foreign exchange rates andinterest rates.
For matters concerning results forecasts, please refer to “1. Qualitative Information on Financial Results for the First
Half of Fiscal Year Ending March 31, 2024 (3) Explanation about information on future forecasts such as consolidated
results forecasts” on page 4 of the attached materials.
(How to obtain supplementary materials for quarterly results)
The material is available at Digital Arts Inc. corporate website.

○Table of Contents for the Attached Document
1. Qualitative Information on Financial Results for the First Half of Fiscal Year Ending
March 31, 2024 ..................................................................................................................2(1) Explanation about business results ......................................................................................2(2) Explanation about financial position ...................................................................................4(3) Explanation about information on future forecasts such as consolidated results forecasts ..4
2. Quarterly Consolidated Financial Statements and Primary Notes .......................................5(1) Quarterly consolidated balance sheet ..................................................................................5(2) Quarterly consolidated statement of income and comprehensive income ...........................6
Quarterly consolidated statement of income
Consolidated first half ...............................................................................................6
Quarterly consolidated statement of comprehensive income
Consolidated first half ...............................................................................................7(3) Quarterly consolidated statement of cash flows ...................................................................8(4) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern) .......................................................................9(Notes on significant changes in the amount of shareholders' equity) ..............................9(Application of special accounting methods to the preparation of quarterly consolidated
financial statements) .........................................................................................................9―1―

1. Qualitative Information on Financial Results for the First Half of Fiscal Year Ending March 31, 2024
(1) Explanation about business results
During the first half of the consolidated fiscal year under review (April 1 through September 30, 2023), the Japanese
economic outlook was still unstable with rises of goods prices following the prolonged war in Ukraine and the sharp
weakening of the Japanese yen against the dollar in foreign exchange markets.
In the security industry, in which the Digital Arts Group (the “Group”) operates, demand for security products expanded
following the intensification of damaging incidents caused by diversifying cyberattacks, including ransomware and Agent
Tesla, which is remote control malware that steals confidential information from keyboard operations. Apart fromdemand from large organizations, new demand is growing for the introduction of security measures from small andmedium enterprises, which by comparison were lagging in these measures.
In this situation, the Company enhanced the linkage and features of its mainstay products of i-FILTER, m-FILTER
and FinalCode and added a broad array of security solutions to them in response to mounting needs for comprehensive
security. It also added new features including the cloud access security broker (CASB) functionality in an intensive effort
to deploy its original next-generation secure web gateway (SWG). The CASB functionality is designed to visualize andcontrol the use of cloud services. In addition, the AI Chat Filter is provided as a standard feature of i-FILTER and iFILTER@Cloud from August 2023 onwards. This highly-received feature is aimed at allowing users to use generativeAI, which attracts attention for the autonomous creation of text and other content, something that was difficult to do withconventional AI, more securely by controlling it and visualizing how it is used.
To further expand its comprehensive security products and services, the Group released an IDaaS product for safe
and secure cloud service authentication and ID management under the name of StartIn in September 2023. It is
positioned as a service for "creating new value and increasing demand," as stated in the management vision of theGroup's Medium-Term Management Plan.
Meanwhile, the cost of sales and selling, general and administrative expenses surpassed the level in the same perioda year earlier, chiefly as a result of positive investment in an unprecedented number of newly added features, and new
product releases and a surge in personnel expenses due to staff increases at the Company and a subsidiary, namely
Digital Arts Consulting Inc.
As a result, net sales for the first half of the consolidated fiscal year under review amounted to 5,563 million yen (up9.4% year on year), operating profit reached 2,188 million yen (down 2.6% year on year), ordinary profit came to 2,201
million yen (down 2.7% year on year), and profit attributable to owners of parent was 1,521 million yen (down 2.4% year
on year).
Overview of Consolidated Business Results(Million yen)First half of year
ended March 31,
2023

First half of year
ending March 31,
2024

Net sales

5,084

5,563

＋479

＋9.4

Operating profit

2,247

2,188

(58)

(2.6)

Ordinary profit

2,263

2,201

(61)

(2.7)

Profit attributable toowners of parent

1,558

1,521

(37)

(2.4)

―2―

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise section market, mainly because the Group continued to promote new optional functions to meet risingdemand for comprehensive security against the backdrop of the occurrence of extensive damage from diversifying
cyberattacks, the Group made steady progress in the efforts to win new projects. Sales of cloud service products
increased following the acquisition of an order for a new m-FILTER project as a result of high marks given to the use of
the PPAP method (sending a password-protected Zip file by e-mail and sending the password by separate e-mail) anda function to deal with targeted attacks, such as ransomware and Agent Tesla.
In addition, Digital Arts Consulting Inc., one of the Company's subsidiaries that offers security consulting services,increased the number of consulting staff and boosted sales by winning an ISMAP acquisition-related project and a new
project in which it provides comprehensive support, including security assessment and support for the implementationof security measures.
Net sales in this market reached 3,014 million yen, up 17.2% year on year.
Public Sector Market
In the public sector market, the Group won new projects for schools that had not adopted filtering, a necessary functionin the GIGA School Concept, while also receiving orders for new projects by focusing on proposing solutions to support
local governments' efforts to strengthen security measures. It also gained large products from governmental agencies
and ministries as they had given high marks to the Group's products.
As a consequence, net sales in this market stood at 2,337 million yen, up2.2% year on year.

―3―Consumer Sector Market
In the consumer sector market, the Group made intensive efforts to promote i-FILTER for Multi-Device, which can beused on multiple operating systems with a single serial ID. However, sales from mobile network carriers and MVNOs
decreased.
Net sales in this market amounted to 211 million yen, down 5.5% year on year.

(2) Explanation about financial position(Assets)
Total assets at the end of the first half of the consolidated fiscal year under review decreased 252 million yen fromthe end of the previous consolidated fiscal year to 20,896 million yen.
This was due mainly to decrease of 759 million yen in cash and deposits.
(Liabilities)
Total liabilities at the end of the first half of the consolidated fiscal year under review declined 341 million yen fromthe end of the previous consolidated fiscal year to 6,633 million yen. This was due mainly to a decrease of 144 million
yen in Accounts payable .
(Net assets)
Net assets at the end of the first half of the consolidated fiscal year under review increased 89 million yen from theend of the previous consolidated fiscal year to 14,262 million yen. This was mainly due to an increase in retained
earnings due to the recording of profit attributable to owners of parent, which outweighed a decrease in dividends paid.

(3) Explanation about information on future forecasts such as consolidated results forecasts
Operating results for the first half of the consolidated fiscal year under review remained steady overall, and there wastherefore no change in the forecast of consolidated financial results for the year ending March 31, 2024 announced on
May 9, 2023.
The Company has determined the results forecasts based on information available on the day of these financial
results for the first half of the fiscal year ending March 31, 2024. Actual results may be different from the forecasts due
to a variety of factors. If there are any significant changes, the Company will disclose them appropriately.

―4―2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly consolidated balance sheet(Million yen)
Fiscal 2023
(As of March 31, 2023)

First half of fiscal 2024
(As of September 30, 2023)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - tradeFinished goods
Supplies
Other

17,018
1,574

16,259
1,536

19
3

2
2

309

836

18,925

18,637

209

222

Software
Other

1,264
243

1,365
172

Total intangible assets

1,508

1,538

Investments and other assets

506

498

Total current assets
Non-current assets
Property, plant and equipment
Intangible assets

Total non-current assets
Total assets

2,223

2,259

21,14920,896

238
839

94
725

156
5,187

104
5,172

Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Non-current liabilities
Asset retirement obligations

502

486

6,924

6,582

48

48

Other

1

1

Total non-current liabilities

50

50

6,975

6,633

713
953

713
953

Retained earnings
Treasury shares

12,768(308)

13,728(1,186)

Total shareholders' equity

14,127

14,211

14

17

14

17

11
20

11
21

14,173

14,262

21,14920,896

Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus

Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets―5―(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first half

Net sales
Cost of sales

First half of fiscal 2023
(from April 1, 2022
to September 30, 2022)
5,084(Million yen)First half of fiscal 2024
(from April 1, 2023
to September 30, 2023)
5,563

1,668

2,128

Gross profit

3,416

3,435

Selling, general and administrative expenses

1,168

1,246

Operating profit

2,247

2,188

0

0

0
13

0
9

Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Foreign exchange gains
Miscellaneous income

02

Total non-operating income

15

13

－

0

－

0

2,263

2,201

0

Non-operating expenses
Miscellaneous loss
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights
Gain on sales of non-current assets－

04

Total extraordinary income

0

4

0

0

0

0

2,263

2,205

702

683

1,561

1,522

Extraordinary losses
Loss on retirement of non-current assets
Total extraordinary losses
Profit before income taxes
Income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

―6―

2

1

1,558

1,521

Quarterly consolidated statement of comprehensive income
Consolidated first half

ProfitFirst half of fiscal 2023
(from April 1, 2022
to September 30, 2022)
1,561(Million yen)First half of fiscal 2024
(from April 1, 2023
to September 30, 2023)
1,522

5

3

Other comprehensive income
Foreign currency translation adjustment
Total other comprehensive income
Comprehensive income

5

3

1,566

1,526

1,563

1,525

2

1

Comprehensive income attributable toComprehensive income attributable to owners ofparentComprehensive income attributable to noncontrolling interests―7―(3) Quarterly consolidated statement of cash flows(Million yen)First half of fiscal 2024
(from April 1, 2023
to September 30, 2023)

First half of fiscal 2023
(from April 1, 2022
to September 30, 2022)
Cash flows from operating activities
Profit before income taxes

2,263

2,205

Depreciation
Increase (decrease) in provision for bonuses

448
17

433
(52)

Interest income
Loss (gain) on sales of non-current assets

(0)

(0)
(4)

Loss on retirement of non-current assets
Foreign exchange losses (gains)

－
0
(12)

0
(12)

Gain on reversal of share acquisition rights
Decrease (increase) in trade receivables

(0)
(26)

(0)
22

0
8

17
(144)

Increase (decrease) in accounts payable - other
Decrease (increase) in other current assets

25
(12)

9
84

Increase (decrease) in other current liabilities
Other

(144)
6

(27)
3

Subtotal

2,573

2,534

Decrease (increase) in inventories
Increase (decrease) in trade payables

Interest and dividends received

00Income taxes paid

(717)

(784)

Income taxes refund

1,855

1,750

(32)

(45)

－

9

(402)
－

(435)
5

(434)

(466)

－
(0)

(885)

－

(615)

1

－

(560)

(561)

(560)

(2,061)

20

18

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from disposal of treasury shares
Purchase of treasury shares
Decrease (increase) in deposits for purchase oftreasury shares
Proceeds from stock issuance to non-controllinginterests
Dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents

0

881

(759)

Cash and cash equivalents at beginning of period

15,77317,018Cash and cash equivalents at end of period

16,654

16,259―8―

(4) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
(Notes on significant changes in the amount of shareholders’ equity)
There are no applicable matters.
(Application of special accounting methods to the preparation of quarterly consolidated financial statements)
Calculation of tax expenses
With respect to the calculation of tax expenses, reasonable estimations are performed on an effective tax rateestablished after applying tax accounting to profit before income taxes for the consolidated fiscal year, which
includes the first half of the consolidated fiscal year under review, and such tax expenses are calculated bymultiplying this estimated effective tax rate by profit before income taxes.

―9―