BRIEF STATEMENT OF CONSOLIDATED FINANCIAL RESULTS
FOR THE 3rd QUARTER OF THE FISCAL YEAR ENDING MARCH 2022
This is an English translation of summarized consolidated financial results prepared
for the convenience of non-resident shareholders. Should there be any inconsistency
between the translation and the official Japanese text, the latter shall prevail.

February 14, 2022
Faith, Inc. (Stock code 4295, Listed on TSE 1st section)(URL https://www.faith.co.jp/)
Representative: Hajime Hirasawa, CEO/President
Contact: Chikayo Suzuki, CFO/Executive Officer
Tel: +81-3-6855-7811
Date of Submission of Securities Report: February 14, 2022
Starting Date of the Dividend Payment: —Preparation of Supplementary Materials for Quarterly Financial Results: None
Information Meeting for Quarterly Financial Results to be Held: None
Amounts are rounded down to the nearest JPY 1 million.

1. Results for the 3rd Quarter of the Fiscal Year Ending March 2022
(From April 1, 2021 to December 31, 2021)(1) Consolidated Operating Results(Percentages indicate changes compared with the same quarter of the previous fiscal year.)

Net Sales
Millionsof yenYear ending March 2022 Q3
Year ending March 2021 Q3

Operating Income%

Millionsof yen△24.2△0.8

11,44415,097

Ordinary Income
Millionsof yen

%

△8
633

－
21.3

Net Income

%

256
692

△63.0
22.8

Millionsof yen

%
－
－

△8
182

(Note) Comprehensive income: 3rd quarter of the fiscal year ending March 2022: ¥569 million (△46%); 3rd quarter of fiscal year ending
March 2021: ¥1,055 million (—%);

Net Income per ShareYear ending March 2022 Q3
Year ending March 2021 Q3

Diluted Net Income per Share

Millions of yen

Millions of yen

△0.68
14.43

－
－

(2) Consolidated Financial Position
Total Assets
Year ending March 2022 Q3
Year ending March 2021

Net Assets

Ratio of Equity CapitalMillions of yen

Millions of yen%

26,772
26,702

18,224
17,62768.1
66.0(Reference) Equity capital: 3rd quarter of fiscal year ending March 2022: ¥18,224 million; fiscal year ending March 2021: ¥17,627 million

2. Dividends
Dividends per Share
1st Quarter

Year ending March 2021
Year ending March 2022
Year ending March 2022
(Forecast)

yen
—
—

Interim

yen
5.00
5.00

3rd Quarter

yen
—
—

Year-end

yen
10.00

5.00

10.00

(Note) These figures have not been modified since the time of the most recently announced dividend forecast.

1

Total

yen
5.00

3. Forecast for the Consolidated Results for the Year Ending March 2022
（from April 1，2021 to March 31，2022）(Percentages indicate changes compared with the previous fiscal year.)

Net Sales

Full year

Operating Income

Ordinary Income

Net Income
Attributable to the
Shareholders of the
Parent Company

Millionsof yenMillions ofyenMillionsof yen%Millionsof yen15,000

△25

△230

%
－

30

%
△96.3

△380

Net Income
per Share

Yen

%
－

△30.08(Note) These figures have been modified since the time of the most recently announced business result forecast.

* Notes(1) Changes in significant subsidiaries (accompanying changes in scope of consolidation): None
Newly added subsidiaries: 0 companies (subsidiary’s name:)Removed subsidiaries: 0 companies (subsidiary’s name:)(2) Adoption of simplified accounting practices or specific procedures in preparation of the quarterly
consolidated financial reports: Applicable* For details, please refer to “2. Consolidated Financial Statements and Important Explanatory Notes, (3) Notes

Concerning the Consolidated Financial Statements (Adoption of Simplified Methods in the Preparation of theQuarterly Financial Statements)” on page 10 of the accompanying material.

(3) Changes in accounting policy, changes in accounting estimates, and restatements(i)
Changes accompanying revisions of accounting standards, etc.: Applicable(ii) Changes other than the above: None(iii) Changes in accounting estimates: None(iv) Restatements: None
(4) Outstanding shares (common shares)(i) Outstanding shares at the end of the term (including treasury shares):
The 3rd quarter of the fiscal year ending March 2022: 13,831,091 shares
The fiscal year ending March 2021: 13,831,091 shares(ii) Treasury shares at the end of the term:
The 3rd quarter of the fiscal year ending March 2022: 1,198,794 shares
The fiscal year ending March 2021: 1,197,855 shares(iii) Average number of shares during the interim accounting period:
The 3rd quarter of the fiscal year ending March 2022: 12,632,690 shares
The 3rd quarter of the fiscal year ending March 2021: 12,628,788 shares(Note) The number of shares of treasury stock at the end of the period includes the Company's sharescontributed as trust assets in the performance-based stock compensation plan (3rd quarter of fiscal year
ending March 2022: 257,200 shares, fiscal year ending March 2021: 257,200 shares).
Moreover, such shares are also included in the treasury shares that are deducted in calculating the average
number of shares during the period (the 3rd quarter of the fiscal year ending March 2022: 257,200 shares,
the 3rd quarter of the fiscal year ending March 2021: 262,500 shares).
* This financial results report is exempt from quarterly review procedures.
* Statement regarding the proper use of financial forecasts and other special remarks(Notice regarding statements concerning the future)
Statements concerning the future, such as performance forecasts, etc., described in the present material are based on
information currently available to the Company and on certain assumptions judged as reasonable by the Company. The
Company’s actual performance may differ substantially from these forecasts as a result of various factors beyond theCompany’s control. For details of cautions, etc., employed in making performance forecasts and the assumptions underlying
performance forecasts, please refer to “1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter,(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.” on page 5 of theaccompanying material .

2

Contents
1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter ····················(1) Explanation Concerning the Operating Results ··························································(2) Explanation Concerning the Financial Position ··························································(3) Explanation Concerning Future Forecast Information on the Consolidated Financial Results, etc.

2
2
5
5

2. Consolidated Financial Statements and Important Explanatory Notes ···································· 6(1) Consolidated Balance Sheet ················································································ 6(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income ······· 8(Consolidated Statement of Income) ········································································ 8(Consolidated Statement of Comprehensive Income) ····················································· 9(3) Notes Concerning the Consolidated Financial Statements················································ 10(Note Concerning the Premise of a Going Concern) ······················································ 10(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity) ·················· 10(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements) ········ 10(Changes in Accounting Policy) ··········································································· 10(Segment Information) ······················································································· 11

1. Qualitative Information Concerning the Settlement of Accounts for the 3rd Quarter(1) Explanation Concerning the Operating Results
In the Japanese information and communications field in 2020, the Internet penetration rate remained
high at 83.4%, while the percentage of households owning one or more smartphones increased to 86.8%,
far exceeding the 70.1% of households owning one or more personal computers (*1). In addition, while themovement away from television has continued since the year 2000, mainly centered on younger people,
advertising expenses for the Internet in Japan increased by 5.9% in 2020 from the previous year to ¥2,229
billion, exceeding advertising expenses for television of ¥1,655.9 billion for the second consecutive year(*2)
. This trend is also evident worldwide, where global spending on digital advertising reachedapproximately ¥40 trillion (US$355.7 billion) in 2021, an increase of 29.1% from the previous year, withspending on digital advertising exceeding 50% of the total spending on advertising for the first time (*3).
*1. Source: Ministry of Internal Affairs and Communications, 2020 Telecommunications Usage Trend Survey Results*2. Source: Dentsu Inc., 2020 Advertising Expenditures in Japan*3. Source: Dentsu Inc., Global Ad Spend Forecasts (2021-2024)

In the entertainment market in 2020, sales in the global music market centered on streaming services grewby 7.4% year over year to approximately ¥2,332.8 billion (US$21.6 billion), marking its sixth consecutive
year of growth (*4). In Japan, the production value of music software including music videos decreased by
15% year over year to ¥194.4 billion, and sales of packaged products continued to decline, but sales ofpaid music distribution increased by 11% to ¥78.3 billion. In the paid music distribution sales category,subscription audio streaming increased by 27% year over year to ¥58.9 billion, accounting for 75% of
total paid music distribution sales (*5). Conversely, large-scale events and live concerts have been
postponed and canceled due to the spread of COVID-19, and the live entertainment market in 2020 shrankby 82.4% compared to the previous year to ¥110.6 billion (*6). In 2021, music events at real venues began
to resume in accordance with the guidelines for infection prevention measures in accordance with thegovernment's basic response policy. Meanwhile, new ways of enjoying live entertainment are taking root,with many artists offering “hybrid performances” in which a limited audience is allowed into the venue
and the performance is also distributed online. With live performances in front of various audience sizes
being distributed, the scale of the digital live performance market reached ¥14 billion in 2020, and it isprojected to expand rapidly to about ¥100 billion by 2024 (*7).
*4. Source: IFPI, Global Music Report 2021
*5. Source: Recording Industry Association of Japan (RIAJ), The Recording Industry in Japan 2021
*6. Source: PIA Research Institute, Japanese Live Entertainment Market Size Preliminary Report (published May 13, 2021)*7. Source: CyberZ Co., Ltd., Domestic Digital Live Entertainment Market Trend Survey

Founded in 1992, Faith was the first company in the world to commercialize ringtones, and has steadilygrown centered on the music distribution business and in step with the spread of mobile phones. However,the spread of smartphones in today’s music market has been accompanied by the diversification of media
such as streaming, user upload content (UUC) that allows general users to easily transmit information tosociety, and social media, with the result that all kinds of activities in the music industry are changing,including content distribution methods, consumption styles and content production methods.
In this environment, the Faith Group is continuing to utilize the results of the efforts it has been pouring
into digital content distribution ever since its establishment, and is forging ahead with its Multi-Content
and Multi-Device Strategy of creating environments in which people can enjoy a wide diversity ofcontents whenever and wherever they choose. We are also strengthening the development of new services
in response to the changing market environment, which includes platforms that collect and organize theinformation flooding the Internet and provide this to users after increasing its added value.
In June 2020, Faith released Thumva, a new live streaming platform, as an Internet viewing service thatprovides a new kind of live experience. In addition to group viewing and comment posting, it also includes
a gifting function for artists, allowing the users to share a sense of excitement and unity as if they wereattending a live performance without actually being at the venue. A diverse lineup of live performancesby numerous artists and online experiential attractions have already been made available on Thumva, andwe are planning to continue live streaming with a widening variety of lineups in future. Since the launchof the service, about 320 performances have been distributed and the number of registered members hasgrown to over 160,000 (as of December 2021).
Utilizing the resources of Thumva, we launched Thumva BIZ in July 2021 as a new online service for2stores that allows customers who wish to make inquiries or consult online to begin business negotiations
with a single click. We are proposing an online store-style service that meets the requirements of thedigital transformation era, and companies in various industries have already introduced this service. In
September, we entered into a business partnership with Nippon Travel Agency, Inc., with a view tomarketing our services. Through that company’s nationwide sales network, we are planning to provide
Thumva BIZ and a number of other Faith Group services in future. Thumva BIZ will continue to expand
its sales channels as a new DX service for stores in a variety of fields, particularly in face-to-face customer
service industries.
One of Tokyo’s largest music lounges, the Faith-operated PLUSTOKYO, is continuing to operate while
taking necessary measures in accordance with the Tokyo Metropolitan Government’s guidelines forpreventing the spread of COVID-19, including the declaration of a state of emergency with regard to
COVID-19 infections, priority measures to help limit the further spread of the disease, and measures toprevent its reemergence. As a new initiative, we have organized limited-time menus and exhibition
projects in collaboration with artists and creators of anime works. We will continue to place the highest
priority on preventing the spread of infections and ensuring safety, and we will continue to operate
PLUSTOKYOKO carefully in accordance with administrative policies and action plans.
In the Label Business, we welcomed Mr. Tatsumi Yoda (President and CEO of GAGA Corporation,
Chairman of T.Y. Limited), who has been making innovative and significant contributions to the music
and film industries for many years, as our Chief Advisor for Label Management from December 2021.
Mr. Yoda will continue to serve as Chief Advisor to the Board of Directors of Dreamusic Inc., whichbecame a wholly owned subsidiary of the Faith Group on September 30, 2021, and he will also contributeto the further strengthening of the Label Business.
The Faith Group has established a regular teleworking system. In addition, we have consolidated our main
office functions, which were previously dispersed throughout the company, into the Minami Aoyama
Office, which has been completely renovated. In anticipation of changes in behavioral patterns and theestablishment of new values, we are committed to realizing diverse and efficient new ways of working
based on the concept of “activity-based working” (*8). In the future, we will continue to promote ourbusiness activities with the aim of improving management efficiency and profitability.
*8. A way of working that allows individuals to choose their workspace and style according to their work contents.

The Faith Group’s business results for the cumulative third quarter of the consolidated fiscal year ending
March 2022 were negatively impacted by year-over-year decreases in product sales in the Points Service
Business and sales in the Label Business. As a result, the Group reported net sales of ¥11,444 million (adecrease of 24.2% compared with the same period of the previous fiscal year), an operating loss of ¥8
million (compared to operating income of ¥633 million yen for the same period of the previous fiscal
year), ordinary income of ¥256 million (a decrease of 63.0% year over year), and a net loss attributable
to the shareholders of the parent company of ¥8 million (compared to net income attributable to ownersof the parent of ¥182 million for the same period of the previous fiscal year).
The Faith Group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020) and other related standards from the beginning of the first quarter consolidated
accounting period. In accordance with this change, compared with the previous accounting method, net
sales for the cumulative third quarter of the current fiscal year decreased by ¥2,365 million, the operating
loss decreased by ¥138 million, ordinary income increased by ¥138 million, and the net loss before income
taxes and minority interests decreased by ¥138 million. For details, please refer to “2. Consolidated
Financial Statements and Important Explanatory Notes, (3) Notes Concerning the Consolidated Financial
Statements (Changes in Accounting Policy)” on page 10.
Information on each business segment is as follows.
Content BusinessIn the Content Business, as sales in the existing distribution business are continuing to decline, the FaithGroup will continue to invest in new fields of growth, including new product development, interlinking
and platforming of various services to capture diversified profit opportunities, and expanding our businessoverseas.

3

We are actively developing sales activities for FaRao PRO, focusing not only on providing BGM forcommercial use, but also on expanding the functions necessary for store operations, such as solutions forstore branding and announcement functions. In the future, we will continue to create and revitalize the
new BGM market.
In Fans’, our platform of services for artists based on the D2C (*9) business model, which is expected to
expand further in future, we are enhancing the functions essential to artists’ musical activities such as
official website construction, music and video distribution, sales of artist goods, and fan club operation.
We have introduced a system that allows fans to contribute to the creation of a community by spreading
the information that creators send out by strengthening ties via SNS. In addition, by offering a service thatallows more artists to freely disseminate their works and information, we are aiming to acquire and expand
the number of users and improve the quality of the service by pursuing enhanced convenience.
*9. Abbreviation of “Direct to Consumer”—a business model for delivering services and products planned and manufactured by Faith directly to users

Regarding the performance of this segment for the cumulative third quarter of the current fiscal year, due
to a decrease in sales of carrier official website services and self-restraint of store operations in accordancewith government recommended measures against the spread of COVID-19, the Content Businessrecorded net sales of ¥1,736 million (a decrease of 21.4% year over year), and an operating loss of ¥383
million (compared with an operating loss of ¥383 million for the same period of the previous fiscal year).
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and otherrelevant standards have been applied from the beginning of the first quarter of the current fiscal year. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥380 million. However, the application of the accounting standard had no impact on theoperating loss.
Point Service BusinessIn the Point Service Business, in addition to providing point issue services to retail stores, we offer total
support for point issue data acquisition, analysis and sales promotion utilization as a series of cycles fromplanning to operation, and we provide outsourcing services that maximize retail sales promotion
efficiency.
Regarding the performance of this segment, due to a decrease in sales of goods and issuance of points atexisting member stores, net sales decreased by 85.2% year over year to ¥427 million and operating income
decreased by 63.4% year over year to ¥103 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and otherrelevant standards have been applied from the beginning of the first quarter of the current fiscal year. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥402 million. However, the application of the accounting standard had no impact on
operating income.
Label BusinessIn the Label Business, under the severe environment facing the music and video-related industry in linewith changes the music market, we are strengthening new businesses with an eye on the future in orderto overcome the present situation in which this segment remains dependent on sales of package products.
Regarding the performance of this segment, due mainly to lower sales of animation titles and lower
royalties from the use of high-profit-margin sound sources by Nippon Columbia Co., Ltd., net sales inthis segment decreased by 7.2% year over year to ¥9,280 million, and operating income decreased by
63.1% year over year to ¥270 million.
The Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and otherrelevant standards have been applied from the beginning of the first quarter of the current fiscal year. In
accordance with this change, compared with the previous accounting method, net sales in this segment
decreased by ¥582 million and operating income increased by ¥138 million.
*Product and service names appearing in this document are trademarks or registered trademarks of Faith, Inc. either in Japan or in othercountries.

4(2) Explanation Concerning the Financial Position
As of the end of the second quarter of the current consolidated fiscal year ending March 2022 (December
31, 2021), total assets increased by ¥70 million yen compared to the end of the previous consolidated
fiscal year to ¥26,772 million. This result was mainly due to increases in tangible fixed assets andinvestment securities.
Total liabilities decreased by ¥526 million compared to the end of the previous consolidated fiscal yearto ¥8,548 million. This result was mainly due to decreases in income taxes payable and asset retirement
obligations (current liabilities).
Net assets increased by ¥596 million compared to the end of the previous consolidated fiscal year to¥18,224 million. This was mainly due to an increase in the valuation difference on other marketablesecurities.
The equity ratio increased by 2.1 percentage points to 68.1% from the end of the previous consolidated
fiscal year.

(3) Explanation Concerning Future Forecast Information on the Consolidated Financial
Results, etc.
For details of the consolidated performance forecast for the fiscal year ending March 31, 2022, pleaserefer to the Notice Concerning Revision of Performance Forecast (in Japanese), which was disclosed
separately on February 14, 2022.
Moreover, there is a possibility that the actual performance figures will differ significantly from theforecast figures due to a variety of factors in the future.

5

2. Consolidated Financial Statements and Important Explanatory Notes(1) Consolidated Balance Sheet
FY 2020(As of March 31, 2021)(Assets)
Current assets
Cash and deposits
Accounts and notes receivable
Marketable securities
Commercial products
Products in progress
Primary materials and inventory goods
Corporation tax refund receivable, etc.
Other current assets
Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Intangible fixed assets
Goodwill
Other intangible fixed assets
Total intangible fixed assets
Investment and other assets
Investment securities
Deferred tax assets
Other investment and other assets
Allowance for doubtful accounts
Total investment and other assets
Total fixed assets
Total assets(Liabilities)
Current liabilities
Accounts and notes payable
Short-term loans payable
Current portion of long-term debt
Accounts payable-otherAccrued expenses payable
Income taxes payable
Reserve for bonuses
Reserve for sales returns
Contract liabilities
Asset retirement obligations
Other current liabilities
Total current liabilities
Fixed liabilities
Long-term loans payable
Net defined retirement benefits
Reserve for stock benefits for directors
Asset retirement obligations
Deferred tax liabilities
Other fixed liabilities
Total fixed liabilities
Total liabilities

6(Unit: thousands of yen)
3rd Quarter of FY 2021

(As of Dec. 31, 2021)

12,997,014
2,018,712
229,796366,536
491,10958,592
71,062519,948△18,669
16,734,103

11,658,567
2,569,101
228,393366,704
436,333
69,005
175,171
531,839△18,763
16,016,353

2,946,103

3,229,669

1,395,695
357,776
1,753,472

1,302,127
407,020
1,709,148

3,898,711
846,890
1,108,603△585,342
5,268,863
9,968,439
26,702,542

4,670,128
733,392
1,036,281△622,117
5,817,685
10,756,503
26,772,857

964,025
340,000
258,700
741,426
2,796,448
371,157
352,424
55,441－
146,892
1,140,736
7,167,251

1,180,080
340,000
228,600
637,5132,911,453
89,619212,891－
34,966－965,190
6,600,314

379,850
576,92233,12939,233874,056
4,453
1,907,645
9,074,896

215,925539,268
38,051
39,233
1,112,124
3,300
1,947,903
8,548,217

FY 2020(March 31, 2021)(Net assets)
Shareholder's equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders’ equity
Other accumulated comprehensive income
Valuation difference on marketable securities
Foreign currency translation adjustments
Cumulative adjustment for retirement benefit
obligations
Total other accumulated comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets

7(Unit: thousands of yen)
3rd Quarter of FY 2021

(December 31, 2021)

3,218,000
2,840,667
10,698,825△1,121,619
15,635,873

3,218,000
2,840,498
10,718,423△1,122,234
15,654,687

1,987,860△30,8072,528,642△8,881

34,71950,191

1,991,773－
17,627,646
26,702,542

2,569,952－
18,224,640
26,772,857

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(Unit: thousands of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income or operating loss (△ = loss)
Non-operating income
Interest income
Dividend income
Interest on marketable securities
Gain on equity method investment
Gain on investment partnership management
Gain on valuation of marketable securities
Gain on foreign exchange
Subsidy income
Miscellaneous receipts
Total non-operating income
Non-operating expenses
Interest paid
Loss on equity method investment
Loss on investment partnership management
Loss on valuation of marketable securities
Loss on foreign exchange
Miscellaneous expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of investment securities
Gain on sale of fixed assets
Total extraordinary income
Extraordinary losses
Loss on disposal of fixed assets
Loss on liquidation of subsidiaries
Loss on sale of investment securities
Loss on valuation of investment securities
Office relocation costs
Total extraordinary losses
Net income before income taxes
Corporate, local, and business taxes
Income taxes - deferred
Current quarter net income or net loss (△ = loss)
Current quarter net income attributable to non-controllinginterests
Current quarter net income or net loss attributable toshareholders of the parent company (△ = loss)

8

3rd Quarter of FY 2020

3rd Quarter of FY 2021

(April 1-Dec.31, 2020)
15,097,633
9,630,788
5,466,845
4,833,086
633,759(April 1-Dec. 31, 2021)
11,444,650
7,065,011
4,379,639
4,388,262△8,622

406
3,922
12
－
109,714
1,403－
42,39831,916
189,773

60
4,258
7
27,412
125,308－
634
193,549
10,162
361,394

4,362
13,669106,456－
631
6,007
131,127
692,405

3,428－
90,538
1,660－
668
96,295
256,476－－－

34,114141
34,25533,993－
4,931
26,75774,510140,192552,213433,351△63,381
182,24342
29,756－27,214－57,013
233,719
163,479
78,861△8,622－－

182,243△8,622

(Consolidated Statement of Comprehensive Income)(Unit: thousands of yen)

Current quarter net income or net loss (△ = loss)
Other comprehensive income
Valuation difference on other marketable securities
Foreign currency translation adjustments
Retirement benefit adjustments
Total other comprehensive income
Comprehensive income(Details)
Comprehensive income attributable to shareholders of
the parent company
Comprehensive income attributable to non-controllinginterests

9

3rd Quarter of FY 2020

3rd Quarter of FY 2021

(April 1-Dec.31, 2020)
182,243(April 1-Dec. 31, 2021)

852,820△8,56729,038873,290
1,055,534

540,781
21,925
15,472
578,179
569,557

1,055,534

569,557－－△8,622

(3) Notes Concerning the Consolidated Financial Statements(Note Concerning the Premise of a Going Concern)
Not applicable(Note in the Case of Significant Changes in the Amount of Shareholders’ Equity)
Not applicable(Adoption of Simplified Methods in the Preparation of the Quarterly Financial Statements)
Tax expenses for the Company and a portion of its consolidated subsidiaries are calculated by multiplying
the amount of net income before income taxes by the estimated effective tax rate, which is reasonably
estimated by applying tax effect accounting to estimated income before income taxes for the current
consolidated fiscal year including the third quarter under review.
(Changes in Accounting Policy)(Application of Accounting Standard for Revenue Recognition)
The Company has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29,
March 31, 2020, hereinafter the “Accounting Standard for Revenue Recognition”) and other related
standards from the beginning of the first quarter of the current fiscal year. Based on this standard, revenue
the Company expects to receive in exchange for the provision of goods and services is recognized when
the control of the goods and services is transferred to customers.
As a result of this change, in the Point Service Business, in which revenue was previously recognizedwhen points were issued to customers and cost of sales was recognized when the points were used, sincethese transactions correspond to repurchase agreements with a right of return, the Company now
recognizes revenue on a net basis. In addition, regarding the distribution of royalties to copyright holders,mainly in the Label Business, the total amount of consideration received from music users, etc., waspreviously recognized as revenue, but since the Company conducts these transactions as an agent, theCompany now recognizes revenue as the net amount received from music users, etc., minus the amount
paid to copyright holders. Moreover, in the past, revenue from music licensing fees for karaoke music in
the Label Business was recognized on a one-time basis, but as a result of examining the identification andsatisfaction of performance obligations, the Company now recognizes revenue over a certain period oftime. Furthermore, for sales with a right of return in the Label Business, the total amount of consideration
was previously recognized as revenue at the time of sale, and an adjustment allowance for sales returns
was recorded based on records of previous sales returns, but the Company now recognizes revenue as thetotal amount of consideration excluding the amount of consideration for merchandise that is expected tobe returned.
With regard to the Accounting Standard for Revenue Recognition, in accordance with the transitional
treatment stipulated in the provisions of Article 84 of the Accounting Standard for Revenue Recognition,
the cumulative effect of retrospectively applying the new accounting policy prior to the beginning of thefirst quarter of the current fiscal year was added to or deducted from retained earnings at the beginning of
the first quarter of the current fiscal year, and the new accounting policy was applied from the beginningbalance of the current fiscal year.
As a result, for the current consolidated cumulative third quarter, net sales decreased by ¥2,365,237
thousand, cost of sales decreased by ¥2,253,573 thousand, selling, general and administrative expenses
decreased by ¥249,858 thousand, the operating loss decreased by ¥138,104 thousand, ordinary income
increased by ¥138,104 thousand, and the net loss before income taxes and minority interests decreasedby ¥138,104 thousand. In addition, the balance of retained earnings at the beginning of the period
increased by ¥157,121 thousand.
Due to the application of the Accounting Standard for Revenue Recognition, the provision for sales
returns, which was presented under the current liabilities in the consolidated balance sheets in the previous
fiscal year, is included in the other current liabilities from the first quarter of the current fiscal year. In
accordance with the transitional treatment prescribed in Paragraph 89-2 of the Accounting Standard for
Revenue Recognition, no reclassification has been made to the previous fiscal year’s consolidated
financial statements to conform to the new presentation. Furthermore, in accordance with the transitional
treatment prescribed in Paragraph 28-15 of the Accounting Standard for Quarterly Financial Reporting

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(ASBJ Statement No. 12, March 31, 2020), the Company has not presented the disaggregation of revenue
from contracts with customers for the consolidated cumulative third quarter of the previous fiscal year.
(Application of Accounting Standard for Fair Value Measurement)
The Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4, 2019, hereinafter
the “Accounting Standard for Fair Value Measurement”) has been applied from the beginning of the firstquarter of the current fiscal year, and in accordance with the transitional treatment stipulated in article 19of the Accounting Standard for Fair Value Measurement and Article 44-2 of the Accounting Standard for
Financial Instruments (ASBJ Statement No. 10, July 4, 2019), the new accounting policy stipulated by
the Accounting Standard for Fair Value Measurements will be applied in the future. This change has no
impact on the Company’s quarterly consolidated financial results.

(Segment Information)
Ⅰ 3rd quarter of the previous consolidated fiscal year/FY 2020 (April 1, 2020 through Dec. 31, 2020)
1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Content

Point Service

Label

Total

Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)

Net sales
Sales to externalcustomers
Intersegment sales ortransfer amountTotal

2,209,092
145,0212,354,113

15,097,633－

15,097,633

13,402

158,569△158,569－

2,885,389 10,016,700

15,256,203△158,569

15,097,633

2,885,243 10,003,298
146

Segment income or loss
△383,563
283,063732,267
631,766
1,992
633,759(△)
Notes: 1. The segment income or loss adjustment amount of ¥1,992 thousand is calculated by eliminating intersegment transactions.
2. Segment income amounts are adjusted with operating income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.
Ⅱ 3rd quarter of the current consolidated fiscal year/FY 2021 (April 1, 2021 through Dec. 31, 2021)
1. Information on sales and profit or loss by reportable segment(Unit: thousands of yen)Content Point Service

Amount recorded in
Adjustment
Consolidated Financial
amount (Note 1) Statements (Note 2)

Label

Total

427,154

9,280,605

11,444,650－

11,444,650

427,154

9,280,605

11,444,650－

11,444,650

115

17,589272,910△272,910－

1,992,096

427,269

9,298,195

11,717,561△272,910

11,444,650△383,897

103,670

270,072△10,1541,532△8,622

Net sales
Revenue from contracts
1,736,891
with customers
Sales
toexternal
1,736,891
customers
Intersegment sales or
255,205transfer amount
Total
Segment income or loss (△)

Notes: 1. The segment income or loss adjustment amount of ¥1,532 thousand is calculated by eliminating intersegment transactions.
2. Segment income or loss amounts are adjusted with opening income in the quarterly consolidated profit and loss statement.

2. Information regarding impairment loss on fixed assets or goodwill by segment reported
This information is omitted since there is no critical impairment loss on fixed assets or significant
change in amount of goodwill.

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3. Matters related to changes in reportable segments, etc.
As described in the aforementioned “Changes in Accounting Policies” section, the AccountingStandard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020) and other related
standards have been applied from the beginning of the first quarter of the current fiscal year, with theresult that the accounting method for revenue recognition and the method for calculating the income
or loss in each business segment have been modified.
As a result of this change, for the consolidated cumulative third quarter of the current fiscal year,
compared with the previous method, in the Content Business net sales decreased by ¥380,097
thousand and in the Point Service Business net sales decreased by ¥1,402,710 thousand, but in bothcases, there was no impact on segment income or loss, while in the Label Business net sales decreasedby ¥582,518 thousand and segment income increased by ¥138,104 thousand.

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