Quarterly Consolidated Financial Results for the First Three Quarters of Fiscal
Year Ending March 31, 2023 (Japanese Accounting Standards)
January 31, 2023
Name of listed company: Digital Arts Inc.
Securities code:

Listed on:

Tokyo Stock Exchange
Prime Market2326

URL https://www.daj.jp
Representative Director,
Representative: (Title)(Name) Toshio Dogu
President and CEO
General Manager of theContact:(Title)(Name) Isao Konishi (TEL) 03-5220-6045
Administration Department
Scheduled date for submission
Scheduled date to start
February 3, 2023
of quarterly report:
dividends distribution:
Preparation of supplementary explanatory ： Yes
documents for quarterly results:
Holding of quarterly results briefing:： No(Figures shown are rounded down to the nearest million yen.)

１．Consolidated financial results for the first three quarters of the fiscal year ending March 31, 2023 (April
1, 2022 –December 31, 2022)(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 three quarters of year
7,658
14.5
3,228
6.7
3,241
7.0
2,235
ending March 31, 2023
First three quarters of year
6,686
40.7
3,024
53.3
3,027
52.7
2,081
ended March 31, 2022
(Note) Compreh First three quarters of year 2,240million (7.4%) First three quarters of year 2,086million
ensiveending March 31, 2023
yen
ended March 31, 2022
yenincome:Profit per share(basic)First three quarters of year
ending March 31, 2023
First three quarters of year
ended March 31, 2022

7.4
52.7(53.0%)

Profit per share(diluted)YenYen

159.25156.10148.34144.89(2) Consolidated financial position
Total assets

Net assets

Million yen
As of December 31, 2022
19,840
As of March 31, 2022
19,341(Reference) Equity capital: As of December 31, 2022

Equity ratio

Net assets per share

Yen
Million yen
13,34767.1
948.36
12,15962.7
863.96
13,314million yen As of March 31, 2022 12,129million yen％

2. Dividends
Annual dividends
1Q-end2Q-endYen

3Q-endYen

Year ended March 31, 2022
30.00
－Year ending March 31, 2023
35.00
－Year ending March 31, 2023(forecast)(Note) Revisions to most recently announced dividend forecast ： NoYear-end

AnnualYenYenYen－－

40.00

70.00

40.00

75.00

3. Forecast of consolidated financial results for the year ending March 31, 2023 (April 1, 2022 – March31, 2023)(Percentage figures represent changes from same period of previous year.)
Profit attributable toOperating profit
Ordinary profit
Profit per shareowners of parent

Net sales

Million yen%

Million yen%

Yen

Full year
10,500 16.0
4,700 13.9
4,700(Note) Revisions to most recently announced results forecasts: ：NoMillion yen%

Million yen%

13.7

3,250

12.0

231.49

* Notes(1) Changes in important subsidiaries during the first three quarters of fiscalyear ending March 31, 2023:： 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： Yes
consolidated financial statements(Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Primary Notes (3) Notes toquarterly consolidated financial statements (Application of special accounting methods to the preparation of quarterly
consolidated financial statements)" on page 8 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
standards, etc.:
2) Changes in accounting policies due to reasons other than thosestated in 1):
3) Changes in accounting estimates:
4) Restatement:

None
None
None

(4) Number of shares outstanding (common stock
1) Number of shares issued and outstanding As of December
31, 2022(including treasury shares)
2) Number of treasury shares

None

As of December
31, 2022

14,133,000
93,833First three quarters

3) Average number of shares issued andof year ending
outstanding in each period (cumulative total)

March 31, 2023

As of March 31,2022
As of March 31,2022

14,133,000
93,731First three quarters
14,039,217

of year ended

14,032,979

March 31, 2022

* 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
three Quarters of Fiscal Year Ending March 31, 2023 (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 Three Quarters of Fiscal Year Ending March 31, 2023 ......... 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 ...................................... 42. Quarterly Consolidated Financial Statements and Primary Notes ................................................................................. 5(1) Quarterly consolidated balance sheet ....................................................................................................................... 5(2) Quarterly consolidated statement of income and comprehensive income ................................................................ 6Quarterly consolidated statement of income............................................................................................................... 6Quarterly consolidated statement of comprehensive income ..................................................................................... 7(3) Notes to quarterly consolidated financial statements ................................................................................................ 8(Notes on the premise of a going concern) ................................................................................................................. 8(Notes on significant changes in the amount of shareholders’ equity) ........................................................................ 8(Application of special accounting methods to the preparation of quarterly consolidated financial statements) ......... 81

1. Qualitative Information on Financial Results for the First Three Quarters of Fiscal Year Ending March31, 2023
(1) Explanation about business results
During the first three quarters of the consolidated fiscal year under review (April 1 through December 31, 2022),
Japan saw economic activities returning to normal. As COVID-19 vaccinations spread, restrictions on activities andborder control measures were relaxed. On the other hand, rising raw materials prices due to the prolonged war in
Ukraine and the sharp weakening of the yen against the dollar caused uncertainty in the outlook for the Japaneseeconomy.
In the security industry, in which the Digital Arts Group (the “Group”) operates, cyber attacks diversified and intensified,including ransomware, Emotet and Agent Tesla, which is remote control malware that steals confidential informationfrom keyboard operations. That expanded demand for security products. Not only among large companies but also atsmall and medium enterprises that lag behind in security measures, demand for newly introducing security products isexpanding.
In addition, cyberattacks are becoming increasingly sophisticated. There are numerous malware intrusion paths,
including vulnerabilities in virtual private networks (VPNs), remote desktop, connection to websites and e-mail. To
minimize the damage from these cyberattacks, the Security Operation Center (SOC), the Endpoint Detection andResponse (EDR) and other solutions for detecting and responding to incidents are of increasing significance. In light ofthat, the Company released the i-FILTER@Cloud D Alert Reporting Service as a new low-cost option for the rapid
detection of incidents for customers facing difficulties in hiring personnel or security cost issues.
Today, damage caused not only by unknown threats and malicious files but also by phishing, which sends email oruses other means to direct users to fake websites, is on the increase. Phishing websites look so similar to websites offinancial institutions and online shopping websites that it can be very difficult to tell them apart. For protection from thethreats of these phishing websites, the i-FILTER@Cloud is newly equipped with a credential protection function, whichuses the Company's original technology that allows credential information to be sent to URLs that have been confirmed
to be secure while blocking such transmission to any website that is not confirmed to be secure. In a bid to grow into acomprehensive security provider, the Company is taking a range of measures to meet customers' needs and to increase
the value added to products.
As a result, net sales for the first three quarters of the consolidated fiscal year under review amounted to 7,658 million
yen (up 14.5% year on year), operating profit reached 3,228 million yen (up 6.7% year on year), ordinary profit came to3,241million yen (up 7.0% year on year), and profit attributable to owners of parent was 2,235 million yen (up 7.4% yearon year).
Overview of Consolidated Business Results(Million yen)First three quartersof year ended
March 31, 2022

First three quartersof year ending
March 31, 2023

Net sales

6,686

7,658＋971＋14.5

Operating profit

3,024

3,228＋203＋6.7

Ordinary profit

3,027

3,241＋213＋7.0

Profit attributable toowners of parent

2,081

2,235＋154＋7.4

2

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise sector market, the Group gained new projects by adding new functions including antivirus functions
and sandbox functions to i-FILTER and m-FILTER to meet demand for total security. Sales of m-FILTER increased
steadily as a result of high marks given to the use of the PPAP method (sending the Zip file protected by a password bye-mail and sending the password by a separate e-mail) and a function to deal with targeted attacks, including attacks
using Emotet. In addition, net sales for Digital Arts Consulting Inc., a subsidiary offering security consulting services,increased with a progress achieved in new customer acquisition in line with greater corporate demand for cybersecurityand digital transformation (DX) consulting.
As a consequence, net sales in this market reached 3,847 million yen, up 15.5% year on year.
Public Sector Market
In the public sector market, the Group recorded sales from projects related to the GIGA School Concept, which ran
from before the previous fiscal year and which focused on proposing solutions to support local government efforts tostrengthen security measures that were ramped up from the fiscal year under review. As a result, sales of the i-FILTER
and m-FILTER series grew as brisk orders were won from local governments.
As a consequence, net sales in this market stood at 3,482 million yen, up15.1% year on year.

3Consumer Sector Market
In the consumer sector market, the Group focused on collaborating with mobile network carriers and MVNOs and onsales of i-FILTER for Multiple Devices, which can be used on multiple operating systems using a single serial ID.
As a consequence, net sales in this market amounted to 327 million yen, up 0.1% year on year.

(2) Explanation about financial position(Assets)
Total assets at the end of the third quarter of the consolidated fiscal year under review increased 498 million yen fromthe end of the previous fiscal year to 19,840 million yen. This was due mainly to an increase of 299 million yen in cash
and deposits and an increase of 209 million yen in notes and accounts receivable - trade.
(Liabilities)
Total liabilities at the end of the third quarter of the consolidated fiscal year under review declined 688 million yen
from the end of the previous consolidated fiscal year to 6,492 million yen. This was due mainly to a decrease of 357
million yen in advances received and a decrease of 331 million yen in income taxes payable.
(Net assets)
Net assets at the end of the third quarter of the consolidated fiscal year under review grew 1,187 million yen from theend of the previous fiscal year to 13,347 million yen. This was mainly due to an increase in retained earnings due to therecording 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 three quarters of the consolidated fiscal year under review remained steady overall, andthere was therefore no change in the forecast of consolidated financial results for the year ending March 31, 2023
announced on May 10, 2022.
The Company has determined the results forecasts based on information available on the day of these financial
results for the first three months of the year ending March 31, 2023. 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)First three quarters of fiscal2023(As of December 31, 2022)

Fiscal 2022
(As of March 31, 2022)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - tradeFinished goods
Supplies
Other

15,773
1,216

16,072
1,426

0
3

112

111

117

17,105

17,631

206

211

Software
Other

1,317
209

1,329
175

Total intangible assets

1,526

1,505

Investments and other assets

503

492

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

Total non-current assets
Total assets

2,236

2,209

19,341

19,840

44760

71
429

95
5,684

85
5,326

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

546

528

7,130

6,442

48

48

Other

1

1

Total non-current liabilities

50

50

7,181

6,492

713
953

713
953

Retained earnings
Treasury shares

10,758

11,941△307△308

Total shareholders' equity

12,11813,300

1113

1113

12
17

12
21

12,15913,347

19,341

19,840Total 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 assets5(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first three quarters

Cost of sales

First three quarters of fiscal2022(from April 1, 2021
to December 31, 2021)
6,686
1,940

(Million yen)First three quarters of fiscal2023(from April 1, 2022
to December 31, 2022)
7,658
2,651

Gross profit

4,746

5,006

Selling, general and administrative expenses

1,721

1,778

Operating profit

3,024

3,2280101

Miscellaneous income

1091

Total non-operating income

312

3,027

3,241

Gain on reversal of share acquisition rights

10

Total extraordinary income

10－0Net sales

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

Ordinary profit
Extraordinary income

Extraordinary lossesLoss 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

6－0

3,029

3,242

944

1,003

2,084

2,238

3

2

2,081

2,235

Quarterly consolidated statement of comprehensive income
Consolidated first three quarters

ProfitFirst three quarters of fiscal2022(from April 1, 2021
to December 31, 2021)
2,084(Million yen)First three quarters of fiscal2023(from April 1, 2022
to December 31, 2022)
2,238

12

Other comprehensive income
Foreign currency translation adjustment

12

Comprehensive income

Total other comprehensive income

2,086

2,240

Comprehensive income attributable toComprehensive income attributable to owners ofparent
Comprehensive income attributable to noncontrolling interests

2,083

2,238

327

(3) 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, whichincludes the first three quarters of the consolidated fiscal year under review, and such tax expenses are calculated
by multiplying this estimated effective tax rate by profit before income taxes.

8