[Cover][Document Submitted]

Annual Securities Report (“Yukashoken Hokokusho”)[Article of the Applicable Law Article 24, Paragraph 1 of the Financial Instruments and Exchange Act ofRequiring Submission of This Japan
Document][Submitted to]
Director-General of the Tokai Local Finance Bureau[Date of Submission]

June 26, 2024

[Accounting Period]

The 53rd Fiscal Year (from April 1, 2023 to March 31, 2024)[Company Name]Sun Denshi Kabushiki Kaisha[Company Name in English]

SUNCORPORATION (the “Company”)[Position and Name ofRepresentative]

Ryusuke Utsumi, Representative Director and President[Location of Head Office]

250 Asahi, Kochino-cho, Konan-shi, Aichi[Phone No.]0587-55-2201 (main)[Contact for Communications] Yoshimi Kimura, Senior Managing Director and Representative Director[Nearest Contact]

Nagoya Building Sakura-Kan 2F, 4-2-25 Meieki, Nakamura-ku, Nagoya-shi,
Aichi[Phone No.]052-756-5981 (main)[Contact for Communications] Yoshimi Kimura, Senior Managing Director and Representative Director[Place Where Available for
Public Inspection]

Tokyo Stock Exchange, Inc.
(2-1 Nihombashi Kabutocho, Chuo-ku, Tokyo)
SUNCORPORATION Tokyo Office(5-6-10 Tsukiji, Chuo-ku, Tokyo)-1-

Part I

Information on the Company

I. Overview of the Company
1. Key Financial Data and Trends(1) Consolidated key financial data, etc.
Fiscal term

49th term

50th term

51st term

52nd term

53rd term

Period of accountMarch 2020

March 2021

March 2022

March 2023

March 2024

Net sales(Thousands of yen)

26,220,033

26,662,815

37,205,435

37,449,092

10,045,586

Ordinary profit (loss)(Thousands of yen)

(1,875,717)

881,396

9,673,717

14,174,666(4,114,510)

Profit (loss) attributable toowners of parent(Thousands of yen)

(3,440,219)

47,3772,818,774

6,878,387(3,777,621)

Comprehensive income(Thousands of yen)

(3,585,498)(435,214)

8,375,523

13,510,337

3,531,951

Net assets(Thousands of yen)

18,605,548

20,820,746

27,040,281

35,013,806

37,259,391

Total assets(Thousands of yen)

41,636,625

49,785,150

82,088,168

41,767,380

46,838,448

Net assets per share(Yen)

556.51601.92

1,018.23

1,542.39

1,670.86

Basic earnings per share(Yen)(152.47)

2.08

117.77292.82(169.82)

Diluted earnings per share

(Yen)

-

1.98

108.47278.46-Equity ratio

(%)

30.1

28.9

29.7

83.6

79.3

Return on equity(%)(32.5)

0.3

14.5

23.2

(10.2)

Price-earnings ratio(Times)-

1,766.8

16.5

6.6

-

Cash flows from operating
activities(Thousands of yen)

(46,489)

6,110,885

3,632,940(13,518,612)

2,509,798

Cash flows from investing
activities(Thousands of yen)

(5,123,112)(910,832)

4,020,857(25,131,298)(3,562,671)

Cash flows from financing
activities(Thousands of yen)

11,236,435

3,598,193(3,036,636)

25,574,225(385,206)

Cash and cash equivalents at end(Thousands of yen) 12,674,157
21,113,250
27,438,438
2,934,094
1,519,890
of period
Number of employees
1,135
1,038
1,171
302
301
(Average number of temporary(Persons)
(86)
(88)
(102)
(89)
(93)
employees)(Notes) 1. Diluted earnings per share for the 49th and 53rd terms are not shown in the above table because basic earnings per
share were negative despite the existence of dilutive shares.
2. Price-earnings ratios for the 49th and 53rd terms are not shown in the above table because the Company recorded aloss attributable to owners of parent.
3. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) and other standards since the beginning of the 51st term. The cumulative impact of this is reflected in retained
earnings at the beginning of the term, and comparative information is not restated.
4. The figures for the 49th term reflect corrections to the financial statements of previous fiscal years. The revised
Annual Securities Report for the same periods was submitted on March 15, 2021.
5. In the 50th and 53rd terms, the Company finalized the provisional accounting for the business combination, and theconsolidated financial position for the 49th and 52nd terms reflects the details of the finalization of the provisional
accounting.
6. The significant decreases in total assets for the 52nd term and the net sales for the 53rd term are attributable to the fact

-2-

that Cellebrite DI Ltd., which was the Company’s consolidated subsidiary, and its 13 subsidiaries were excluded fromthe scope of consolidation and became equity-method associates.

-3-(2) Key financial data, etc. of the filing company
Fiscal term

49th term

50th term

51st term

52nd term

53rd term

Period of accountMarch 2020

March 2021

March 2022

March 2023

March 2024

Net sales(Thousands of yen)

7,000,751

5,484,558

8,046,965

8,051,251

8,435,466

Ordinary profit (loss)(Thousands of yen)

(128,483)(52,011)8,579,594

3,415,618

433,911

Profit (loss)(Thousands of yen)

(1,651,543)(83,575)

23,998,034

3,212,903

439,241

Share capital(Thousands of yen)

1,016,786

2,062,839

2,086,192

2,089,685

2,097,606(Shares)

22,627,400

23,961,128

23,992,328

23,998,828

24,007,728

Net assets(Thousands of yen)

3,688,462

5,655,941

32,080,501

31,876,890

37,299,093

Total assets(Thousands of yen)

10,574,043

13,465,520

47,076,287

36,848,260

45,640,321

156.22234.601,337.97

1,403.78

1,672.64

-

10.00

40.00

20.00

40.00

(-)

(-)

(20.00)(-)(-)

Total number of issued shares

Net assets per share(Yen)

Dividends per share(Of the above, interim dividends
per share)(Yen)

Basic earnings per share(Yen)(73.19)(3.66)

1,002.69

136.7819.75

Diluted earnings per share

(Yen)

-

-

1,000.79

136.5519.73

Equity ratio

(%)

33.4

41.7

68.0

86.2

81.5

Return on equity(%)(36.0)

(1.8)

127.5

10.1

1.3

Price-earnings ratio(Times)

-

-

1.9

14.1

172.2

Dividend payout ratio

(%)

-

-

4.0

14.6

2.0

353

240

224

217

209

(14)

(9)

(13)

(16)

(22)

(%)

152.2

431.0

233.1

234.0

410.5

(%)

(95.0)(128.6)(131.2)(138.8)(196.2)Highest stock price

(Yen)

2,019

4,380

4,055

2,508

3,425

Lowest stock price

(Yen)

855

1,167

1,662

1,379

1,707

Number of employees(Average number of temporary
employees)
Total shareholder return(Comparative indicator: TOPIX
Total Return Index)(Notes)(Persons)

1. Diluted earnings per share for the 49th and 50th terms are not shown in the above table because basic earnings per
share were negative despite the existence of dilutive shares.
2. Price-earnings ratios and dividend payout ratios for the 49th and 50th terms are not shown in the above table because
the Company recorded a loss.
3. The Company has applied the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31,2020) and other standards since the beginning of the 51st term. The cumulative impact of this is reflected in retained
earnings at the beginning of the term, and comparative information is not restated.
4. The highest and lowest stock prices before April 3, 2022 are prices listed on the Tokyo Stock Exchange’s JASDAQ
market, and those after April 4, 2022 are prices listed on the Tokyo Stock Exchange’s Standard Market.

-4-

2. History
Date

Overview

Apr. 1971

Established SUNCORPORATION in Konan City, Aichi, in order to manufacture and sell electronic equipment.

May 1974
Nov. 1978

Developed and launched computers for pachinko parlors
Opened an Osaka sales office in Osaka City.

Mar. 1980
Nov. 1980

Developed and launched control boards for game machines.
Opened a Tokyo sales office in Chiyoda-ku, Tokyo.

July 1985
Dec. 1985

Developed and launched home video game software.
Developed and launched analog modems for PC communication.

July 1986
Mar. 1988

Mar. 1990

Established SUNCORPORATION OF AMERICA in Illinois, U.S. (Sold its shares in March 2000.)
Reorganized the Tokyo sales office to a Tokyo business office to expand development operations.
Acquired Aiwa Kasei Co., Ltd. (now eDream Corporation., a consolidated subsidiary) to expand manufacturing
operations.
Established Sunrise Electronics Corporation in Taipei, Taiwan. (Liquidated it in August 2006.)

Apr. 1990
June 1990

Established Sun Communications Corporation in Shinjuku-ku, Tokyo. (Absorbed it in April 2008.)
Reorganized the Osaka sales office to an Osaka business office to expand development operations.

Mar. 1994
Apr. 1995

Opened a Kyushu sales office in Fukuoka City.
Opened a Nagoya business office in Nagoya City. (Closed it in December 2000.)

July 1998
Aug. 1999

Opened an American branch in California, U.S. (Closed it in February 2001.)
Invested in and established Future Dial Inc. (Sold its shares in March 2008.)

Apr. 2001
Mar. 2002

Opened a Tokyo sales office in Taito-ku, Tokyo, to strengthen sales capabilities.
Registered as an over-the-counter stock with the Japan Securities Dealers Association.

Aug. 2002
Aug. 2002

Opened a Sendai sales office in Sendai City.
Opened an e-office in Nagoya City. (Closed it in December 2006.)

Aug. 2003
Dec. 2004

Established Glory Wings Software Corporation in Shanghai, China. (Liquidated it in August 2004.)
Listed on the Jasdaq Securities Exchange, Inc.

Feb. 2005
July 2007

Integrated the Tokyo business and sales offices into a new Tokyo business office in Chuo-ku, Tokyo.
Acquired shares of Cellebrite Mobile Synchronization Ltd. (now Cellebrite DI Ltd., an equity-method associate).

Nov. 2008
Dec. 2008

Established Cellebrite GmbH (now an equity-method associate) to strengthen sales capabilities in Europe.
Established Yueyang Information Technology (Shanghai) Co., Ltd. to strengthen sales capabilities in China. (Liquidated
it in April 2014.)
Acquired shares of NIFCO Advanced Technology Inc. (Bloom techno Inc.) (Absorbed it in April 2012.)
Listed on the Osaka Securities Exchange’s JASDAQ market following the merger of the Jasdaq Securities Exchange
and the Osaka Securities Exchange.
Listed on the Osaka Securities Exchange’s JASDAQ (Standard) following the integration of the Osaka Securities
Exchange’s Hercules, JASDAQ, and NEO markets.
Relocated the pachinko parlor system sales base in the Kanto region to Taito-ku, Tokyo, to strengthen sales capabilities.
Relocated the Tokyo business office to Shinagawa-ku, Tokyo, to improve management efficiency.
Opened a Hiroshima sales office in Hiroshima City and a Saitama sales office in Saitama City to strengthen sales
capabilities. (Closed them in February 2015.)
Acquired shares of SunFuture Inc. (Sold its shares in June 2013.)

Dec. 1988

Nov. 2009
Apr. 2010
Oct. 2010
Aug. 2011

May 2012
Oct. 2012
Jan. 2013

Established Cellebrite Soluções Tecnol' ogicas Ltda. (now Cellebrite Soluções de Inteligencia Digital Ltda, an equitymethod associate) to strengthen sales capabilities in South America.

Feb. 2013
Mar. 2013

Established Cellebrite Asia Pacific Pte Ltd. (now an equity-method associate) to strengthen sales capabilities in Asia.
Concluded a capital and business alliance agreement with Fujishoji Co., Ltd. to enhance game machine planning anddevelopment capabilities.

July 2013

Listed on the Tokyo Stock Exchange’s JASDAQ (Standard) following the integration of the Tokyo Stock Exchange andthe Osaka Securities Exchange.

Sep. 2013

Opened a Mita development center in Minato-ku, Tokyo, to expand development operations.

Feb. 2014

Moved the Tokyo business office to Chiyoda-ku, Tokyo, to improve management efficiency.
Established Cellebrite UK Limited (now an equity-method associate) to strengthen sales capabilities in Europe.

Apr. 2014
Jan. 2015

Established SUNCORP USA, Inc. in California, U.S. (Liquidated it in June 2020.)
Established Cellebrite France SAS (now an equity-method associate) to strengthen sales capabilities in Europe.

Mar. 2015

Established Cellebrite Canada Data Solutions Ltd. (now Cellebrite Canada Mobile Data Solutions Ltd., an equity-method-5-associate) to strengthen sales capabilities in North America.
Aug. 2015
Sep. 2015

Acquired shares of Bacsoft, Ltd. (Sold its shares in September 2022.)

Feb. 2023

Established Cellebrite (Beijing) Mobile Data Technology Co., Ltd. to strengthen sales capabilities in China. (Liquidated
it in August 2021.)
Established Cellebrite Australia PTY Limited. (now an equity-method associate) to strengthen sales capabilities inAustralia.
Opened a Nagoya headquarters in Nagoya City, Aichi .
Established Cellebrite Technology Private Limited. (now Cellebrite Digital Intelligence Solutions Private Limited, an
equity-method associate) to strengthen sales capabilities in Asia.
Established Cellebrite Japan K.K. (now an equity-method associate) to strengthen sales capabilities in Japan.
Issued preferred shares of Cellebrite DI Ltd. to IGP SAFER WORLD, LIMITED PARTNERSHIP through a third-party
allotment of capital, to obtain growth capital for further expansion of the Mobile Data Solution business.
Concluded a business alliance agreement with Advantage Advisors Co., Ltd. and allocated convertible bonds and shareacquisition rights to the fund introduced by Advantage Advisors Co., Ltd., to receive support for the implementation of
the Group’s growth strategy. (Terminated the agreement in January 2021.)
Acquired the shares of BlackBag Technologies, Inc. (absorbed by Cellebrite DI Ltd. in December 2023) to expand thescope of the Mobile Data Solution business.
Established SUNTAC Co., Ltd. to develop human resources for management of the pachinko parlor systems business.
(Sold its shares in October 2020.)
Established Cellebrite Digital Intelligence LP (now an equity-method associate) in Delaware, U.S.
Established Cupcake Merger Sub, Inc. in Delaware, U.S. (Dissolved it through a reverse triangular merger in August2021.)
Cellebrite DI Ltd., Cupcake Merger Sub, Inc., and TWC Tech Holdings II Corp. (now Cellebrite Saferworld, Inc.,liquidated in December 2023) underwent a reverse triangular merger, with TWC Tech Holdings II Corp. as the surviving
company and Cupcake Merger Sub, Inc. as the absorbed company, and Cellebrite DI Ltd. was listed on the NASDAQ
Global Select Market.
Moved the Tokyo business office to Chuo-ku, Tokyo, and integrated the Mita development center into it, to improve
management efficiency.
Listed on the Tokyo Stock Exchange’s Standard Market following the review of the Exchange’s market classification.
Cellebrite DI Ltd. and 13 of its subsidiaries became equity-method associates as a result of a decrease in the percentageof the Company’s stake in Cellebrite DI Ltd.
Moved the Nagoya headquarters to Nagoya Building Sakura-Kan to improve management efficiency.

Apr. 2023

Acquired shares of EKTech Holdings Sdn. Bhd. (now a consolidated subsidiary).
Renamed the Mobile Data Solution business to the Global Data Intelligence business.

July 2017
Jan. 2018
Jan. 2019
Jan. 2019
Jun. 2019

Jan. 2020Feb. 2020
May 2020
Dec. 2020
Mar. 2021
Aug. 2021

Feb. 2022
Apr. 2022
Oct. 2022-6-

3. Description of Business
The SUNCORPORATION Group consists of the Company (SUNCORPORATION), six subsidiaries, and 12 associates, andmainly conducts development, manufacturing, and sales operations in the “Global Data Intelligence,” “Entertainment-related,” and“New IT-related” business segments. The name of a reportable segment has been changed from the fiscal year ended March 31, 2024.
For details, please refer to “V. Financial Information, 1. Consolidated Financial Statements, (1) Consolidated Financial Statements,[Notes], (Segment information, etc.).”The Company, five consolidated subsidiaries, and 12 equity-method associates are engaged in the Group’s main businesses. The
business activities of the Group, the positioning of the Company and its associates in these businesses, and their relationships with thesegments are as follows. The businesses are classified by segment.

Business Segment

Business Description

Key Companies
SUNCORPORATION
Cellebrite DI Ltd.
Cellebrite Inc.
Cellebrite GmbH
Cellebrite Soluções de Inteligencia Digital
Ltda
Cellebrite Asia Pacific Pte Ltd.

Global Data Intelligencebusiness

Development, manufacture, and sales of mobile datatransfer equipment.
Development and sales of digital intelligence solutions.

Cellebrite UK Limited
Cellebrite France SAS
Cellebrite Canada Mobile Data Solutions
Ltd.
Cellebrite Australia PTY Limited
Cellebrite Japan K.K.
Cellebrite Digital Intelligence Solutions
Private Limited
Cellebrite Digital Intelligence LPEntertainment-related
business

Development, manufacture and sales of game machineparts, game machine control boards and resin molded
products for game machines.

SUNCORPORATIONeDREAM Corporation

Development and sales of content distribution services.

New IT-related business

Development, manufacture, and sales ofcommunication equipment and IoT solutions.

M2M

Development and sales of business support systems for
B2B.

-7-

SUNCORPORATION
EKTech Holdings Sdn. Bhd.
EKTech Communications Sdn. Bhd.
EKTech Systems Engineering Sdn. Bhd.
EKTech Eureka MSC Sdn. Bhd.

[Business Organization Chart]
An overview of the business segments and corporate groups described above is shown in the organization chart below.

(Notes)1.
*: Consolidated subsidiaries
2. �: Associates accounted for by the equity method
3. Information on one non-consolidated subsidiary not accounted for by the equity method is omitted due to its
immateriality.

-8-4. Subsidiaries and Other Affiliated Entities
Name

Address

Share capital

Principal business

Ratio ofvoting rights
holding(%)

Relationship(Consolidated subsidiaries)
eDREAM Corporation

Kitanagoya, Aichi

EKTech Holdings Sdn. Bhd.

Selangor, Malaysia

EKTech Communications Sdn. Bhd.
(Note 2)Selangor, Malaysia

EKTech Systems Engineering Sdn. Bhd.
Selangor, Malaysia(Note 2)
EKTech Eureka MSC Sdn. Bhd.
(Note 2)Selangor, Malaysia

100.0

Manufacture, assembly, andinspection of game machineparts and M2M
communication equipment.
2 concurrent directors.

New IT-related business

100.0

1 concurrent director.

New IT-related business

100.0(100.0)-New IT-related business

100.0(100.0)-New IT-related business

100.0(100.0)-1,345 Global Data Intelligence
NIS business

47.0

50,000Entertainment-related
thousandbusinessyen
10
thousand
MYR
1,000
thousand
MYR
1,200
thousand
MYR
500
thousand
MYR(Equity-method associates)
Cellebrite DI Ltd.

Petah Tikva, Israel

Cellebrite Inc. (Note 2)

New Jersey, U.S.

Cellebrite GmbH (Note 2)

Bavaria, Germany

Cellebrite Soluções de Inteligencia
Digital Ltda (Note 2)

Sao Paulo, Brazil

Cellebrite Asia Pacific Pte Ltd. (Note 2) Singapore

Cellebrite UK Limited (Note 2)

London, U.K.

Cellebrite France SAS (Note 2)

Paris, France

35
thousand
U.S. dollars
25
thousandeuro
5,141
thousandreal
161
thousand
U.S. dollars
1
Britishpound
10
thousandeuro

2 concurrent directors.

Global Data Intelligencebusiness

47.0(47.0)-

Global Data Intelligencebusiness

47.0(47.0)-

Global Data Intelligencebusiness

47.0(47.0)-

Global Data Intelligencebusiness

47.0(47.0)-

Global Data Intelligencebusiness

47.0(47.0)-

Global Data Intelligencebusiness

47.0(47.0)-

Cellebrite Canada Mobile Data Solutions
British Columbia, CanadaLtd. (Note 2)-

Global Data Intelligencebusiness

47.0(47.0)-

Cellebrite Australia PTY Limited. (NoteNew South Wales, Australia
2)-

Global Data Intelligencebusiness

47.0(47.0)-

1 Global Data Intelligencemillion yen business47.0(47.0)-

Cellebrite Japan K.K. (Note 2)

Minato-ku, Tokyo

Cellebrite Digital Intelligence Solutions
India
Private Limited (Note 2)-

Global Data Intelligencebusiness

47.0(47.0)-

Cellebrite Digital Intelligence LP (NoteDelaware, U.S.
2)-

Global Data Intelligencebusiness

47.0(47.0)-(Notes) 1. The “Principal business” column contains the names of the segments.
2. The figures in parentheses for the ratios of voting rights holding represent the indirect holding ratios.
3. In addition to the above, there is one non-consolidated subsidiary.

-9-5. Employees(1) Information about consolidated companies
As of March 31, 2024
Segment name

Number of employees

Global Data Intelligence business8 (-)

Entertainment-related business

152 (74)

New IT-related business91 (13)Company-wide (shared)

50 (6)Total

301 (93)(Notes) 1. The number of employees represents that of regular employees (excluding those temporarily transferred from theCompany to outside companies). The annual average number of temporary employees is shown in the parentheses.
2. Temporary employees include part-time workers and dispatched staff.
3. The number of employees for “Company-wide (shared)” refers to that of employees belonging to administrative
departments that cannot be classified into specific segments.
(2) Information about the filing company
As of March 31, 2024
Number of employees

Average age (years old)

209(22)Average length of service(years)

44.2

Average annual salary (yen)

15.5

Segment name5,964,587

Number of employees

Global Data Intelligence business8 (-)

Entertainment-related business

115 (13)

New IT-related business36 (3)

Company-wide (shared)

50 (6)
Total

209 (22)(Notes) 1. The number of employees represents that of regular employees (excluding those temporarily transferred from theCompany to outside companies). The annual average number of temporary employees is shown in the parentheses.
2. Temporary employees include part-time workers and dispatched staff.
3. Average annual salary includes bonuses and extra wages.
4. The number of employees for “Company-wide (shared)” refers to that of employees belonging to administrative
departments that cannot be classified into specific segments.
(3) Status of labor unions
Although no labor union has been formed, labor-management relations are amicable.

-10-(4) Percentage of female workers in managerial positions, percentage of male workers taking childcare leave, and wage differences
between male and female workers
1) Percentage of female workers in managerial positions
Fiscal year ended
March 31, 2022 (%)
The Filing Company

Fiscal year ended
March 31, 2023 (%)
6.1

Fiscal year ended
March 31, 2024 (%)
4.5

7.1

(Notes) 1. Calculated based on the provisions of the “Act on the Promotion of Women’s Active Engagement in Professional Life”(Act No. 64 of 2015).
2. The figures above are those as of the end of each fiscal year and are calculated by dividing the number of female
managers by the total number of managers.
3. Consolidated subsidiaries are excluded from this table because they are not subject to the obligation of information
disclosure under the provisions of the “Act on the Promotion of Women’s Active Engagement in Professional Life” (ActNo. 64 of 2015) and the “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers
Caring for Children or Other Family Members” (Act No. 76 of 1991).
2) Percentage of male workers taking childcare leave
Fiscal year ended
March 31, 2022 (%)
The Filing Company

66.7

Fiscal year ended
March 31, 2023 (%)
33.3

Fiscal year ended
March 31, 2024 (%)
33.3(Notes) 1. Based on the provisions of the “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare ofWorkers Caring for Children or Other Family Members” (Act No. 76 of 1991), the percentage of employees who takechildcare leave, etc. under Article 71, paragraph (4), Item 1 of the “Ordinance for Enforcement of the Act on Childcare
Leave, Caregiver Leave, and Other Measures for the Welfare of Workers Caring for Children or Other Family
Members” (Ordinance of the Ministry of Labor No. 25 of 1991) is calculated.
2. The figures above are calculated by dividing the number of male employees who took childcare leave by the number ofmale employees whose spouses gave birth during the period from April 1 to March 31 of each year.
3. Consolidated subsidiaries are excluded from this table because they are not subject to the obligation of information
disclosure under the provisions of the “Act on the Promotion of Women’s Active Engagement in Professional Life” (ActNo. 64 of 2015) and the “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers
Caring for Children or Other Family Members” (Act No. 76 of 1991).
3) Wage differences between male and female workers
Fiscal year ended
Fiscal year ended
Fiscal year ended
March 31, 2022 (%)
March 31, 2023 (%)
March 31, 2024 (%)
Wage difference between regular male
75.1
75.6
77.0
and female workers
Wage difference between non-regular
49.3
49.0
33.9
male and female workers
Wage difference between all male and
73.4
72.9
74.6
female workers(Notes) 1. Calculated based on the provisions of the “Act on the Promotion of Women’s Active Engagement in Professional Life”(Act No. 64 of 2015).
2. The figures above are for the Filing Company.
3. Excluding regular workers who are on leave for maternity, childcare, or other reasons.
4. Non-regular workers are contract employees, temporary employees, or part-time workers.
5. The wage differences include compensation for overtime work, bonuses, etc., in addition to base salary.
6. Consolidated subsidiaries are excluded from this table because they are not subject to the obligation of information
disclosure under the provisions of the “Act on the Promotion of Women’s Active Engagement in Professional Life” (ActNo. 64 of 2015) and the “Act on Childcare Leave, Caregiver Leave, and Other Measures for the Welfare of Workers
Caring for Children or Other Family Members” (Act No. 76 of 1991).

-11-

II. Business Overview
1. Management Policy, Business Environment, Issues to be Addressed
Forward-looking statements presented in this document are based on judgments made by the Group as of March 31, 2024.
(Management policy, management strategy, etc.)
Slogan:“Ambition, Challenges and Creation”
Corporate“Making People Happy through Information Technology and Entertainment”
philosophy:
Management“Entrepreneurial Spirit”
policy:1) Focusing on the information technology and entertainment fields
2) Striving to enhance corporate value3) Taking proactive actions with entrepreneurial spirit(Management policy)
With our management policy upholding “Focusing on the information technology and entertainment fields,” “Striving to enhance
corporate value,” and “Taking proactive actions with entrepreneurial spirit,” the Group drives the following three pillar activities as a
mid- to long-term management strategy.
1) Creating new customer value in the field related to information technology (security and M2M/IoT)
2) Creating new IP in the field related to entertainment (game machines and games)
3) Developing and expanding business in global markets
Specifically, as a group of engineers equipped with capabilities of both hardware and software technologies, we fully focus on
products and services that will earn customers’ trust and strive to provide them with new value through our planning, development,
and sales strategies, which will eventually lead to the development of business that contributes to earnings. In addition, we will actively
utilize external perspectives and know-how, recognize change as an opportunity, and work toward further growth on a global scale
without fear of failure.
(Targeted management indices)
The Group considers the growth of net sales and gross profit as well as operating profit, ordinary profit and cash flows that are
based on these to be important management indices with the aim of securing continuous and stable revenue and expanding the scaleof business.
(Business environment and issues to be addressed)
We expect the economic conditions to remain uncertain due to financial instability caused by global inflation and geopoliticalrisks such as those in Ukraine, in conjunction with unpredictable trends in the future policy interest rates in the United States andJapan.
In this economic climate, the Group is working to enhance business continuity by conducting business in multiple domains inwhich we believe we can secure our competitive advantages. Specifically, responding to the social trend of utilizing the latest
technologies such as IoT, AR, and AI, in addition to the Global Data Intelligence business and the Entertainment-related business, theCompany’s New IT-related business is building new core products and services, enhancing its marketing capabilities and strengthening
cooperation with sales partners to conduct business in multiple markets. At the same time, the Company believes that the managementof its business portfolio is also important. Accordingly, the Company strives to achieve the optimal composition of its portfolio at or
below a risk level that the Company can tolerate by comprehensively taking into account market trends, competitive trends, and its
own management resources.
1) Developing and recruiting employees
The Group is taking the following initiatives to strengthen talent development and recruitment:
1. Developing human resource
2. Creating organizational structure that facilitates innovation
3. Establishing an employee-friendly work environment
4. Acquiring talent-12-In an era of remarkable technological evolution, the Company believes that it is important to develop and attract resourcefultalent who can link the Company’s advanced technologies to the improvement of corporate value. Therefore, we promote thetransformation of our employees into the Company’s human capital by retaining employees through continuous recruitment and theenhancement of education and training systems as well as HR and promotion/remuneration systems, and by sharing the know-how
accumulated in each field.
2) Reforming company structure to achieve high profitability
The Group is undertaking various reform initiatives to become a highly profitable and growing company, focusing on the key
themes of possessing a large number of products that contribute to earnings, enhancing cost efficiency, and improving its earnings
structure. Specifically, we will establish business structure that enables the development of products with higher added value by
strengthening marketing not only in the existing markets already covered by each of our businesses but also in the surrounding areasand new markets to identify needs therein. In addition, we will continue to make necessary investments in the Global Data Intelligencebusiness and the New IT-related business, whose markets are still in the development stage, to sustain growth over the medium to longterm.
3) Expanding business domains through capital alliances and business partnership
The Group will actively apply the state-of-the-art technologies it has accumulated to its own businesses to expand and, based onthese technologies, actively enter into capital alliances and business partnership with partners in business domains that are expected
to generate synergies.
In addition, in order to achieve sustainable growth over the medium to long term, the Group is working to establish future corebusinesses following the New IT-related business. By leveraging our know-how and sales network in a variety of business fields,
working with partner companies through capital alliances and business partnership, shortening product development cycle in eachfield, efficiently advancing marketing and finding new customers, and quickly establishing new businesses, we will work to increase
profits through the creation of new customer value.
<Themes to be tackled by each business>
In the field the Global Data Intelligence business serves, in recent years, in order to obtain the maximum amount of evidence
from the crime scene, it has become increasingly important to store digital evidence in addition to conventional physical evidence incriminal investigations. This has led to a wider adoption by U.S. police organizations of leading-edge digital intelligence tools, such
as Inseyets of Cellebrite, as they are now indispensable solutions. On the other hand, the difficulty of data collection, extraction, andanalysis that are required to respond to new demands, such as the monitoring of cloud computing and remote devices and datatransmission via wireless devices, continues to grow due to (i) increase in data capacity, (ii) the sophistication of smartphone security,and (iii) increase in the number of applications that adopt IoT.
In crime scenes where law enforcement personnel face increasingly sophisticated and organized cybercrimes, there has been
growing interrelationship between digital intelligence (forensics), which is investigation and analysis after the occurrence of incidents,
and active cyber defense and threat intelligence, which aim to predict and prevent criminal incidents in advance for law enforcement
agencies.
The Global Data Intelligence business considers seizing opportunities for stable revenue and offering new digital tools andsolutions in and outside of the area of digital forensics as business challenges to be tackled. It also aims to expand subscription-based
business by strengthening sales opportunities through up-selling and cross-selling, reducing the churn rate, and searching for highvalue-added products by making use of our global network.
In the Entertainment-related business, the market for the game machine business has been continuously shrinking due to thediversification of recreation activities. The Company strives to improve the marketability of its game machines by continuously
seeking new expressions through know-how acquired through video studies and game development. Amid changes in the industry,including the emergence of smart game machines, we are working to develop game machines that satisfy market needs whilestrengthening relationships with customers. At the same time, we believe that the business environment will remain difficult. Thus,
we are working to maximize cost performance through efficient business operations in the areas of development, manufacturing, andsales.
The New IT-related business continues to make proposals to customers in relation to IoT solutions to address labor shortages andimprove business operations. In addition, it continues developing router and gateway products in the Rooster series to respond to-13-

diversified telecommunication standards and changes in interfaces.
In addition, we will offer remote monitoring and control solutions that easily realize business/efficiency improvements andinnovation through IoT by providing one stop total coordination of IoT, whose technological fields tend to be diverse and complex,
with sensor devices using our routers and gateways as hubs and remote support using smart glasses.
At the same time, we believe that alliances with partner companies are also essential to respond to issues and customer needs in
the IoT field in a more sophisticated and flexible manner. Aiming to improve customer satisfaction, we will further strengthen our IoT
solutions and respond to customer needs speedily.
<Financial issues>
In August 2021, Cellebrite was listed on the Nasdaq Stock Market in the United States, allowing the Group to raise funds thatare expected to be used for strategic investments for business growth and other purposes. As a result, financial concerns havesignificantly reduced.

-14-

2. Approach to and Initiatives for Sustainability
The Group’s approach to and initiatives for sustainability are as follows:
Forward-looking statements presented in this document are based on judgments made by the Group as of March 31, 2024.
(1) GovernanceFollowing its corporate philosophy, “Making People Happy through Information Technology and Entertainment,” the Group is
conducting business activities with an entrepreneurial spirit. It believes that promoting environmental conservation activities aimed at
reducing environmental impact and preventing pollution in all aspects of its activities, products and services at the same time isconscientious corporate activities with consideration for the global and labor environments and fair and appropriate transactions. With
this in mind, we have established the Environmental Management Rules and the Environmental Management System. We strive tohave them instilled as a management foundation and promote them by continuously enhancing and expanding our environmental
improvement activities and actively preventing pollution.
(2) Strategy
The Group considers our people as the most valuable assets and believes that creating an employee-friendly working environmentand systems, unlocking the potential of each and every employee, and responding to their needs at their every stage of life will leadto the invigoration of the organization.
(3) Policies and strategies for the development of talent and internal environment
The Group promotes the recruitment of non-Japanese as well as gender equality in recruitment in all job categories. In order tosupport employees in balancing work and childcare, we are working to create an employee-friendly working environment, including
establishing maternity and childcare leave and shorter working hours systems. The increasing number of male employees have
gradually been taking childcare leave. In addition, we offer a variety of programs to support self-development, employee interaction,and revitalization. Furthermore, we believe that promoting the management of employees’ physical and mental health by implementing
health checkups, providing guidance on lifestyle-related diseases, and establishing mental health consultation desks at each site, while
striving to thoroughly manage working hours and reduce long working hours, will ultimately improve productivity and lead toenhanced corporate value.
For specific indicators, please refer to “I. Overview of the Company, 5. Employees.” Please note that the Company has not set
the relevant quantitative targets that can be measured. However, we continue to actively consider setting such targets.
(4) Risk management
The Group has built a risk management system with which it identifies risks to the Group’s business, such as global climatechange and conflicts, resulting refugee and human rights issues, and the outbreak of pandemics, continues to monitor the situations
and considers how to ensure business continuity according to the stage of those incidents.

-15-

3. Business and Other Risks
The following risks have the potential to affect the Group’s business performance, share price and financial position. Forwardlooking statements presented below are based on judgments made by the Group as of March 31, 2024.
The Group recognizes the possibility of the materialization of these risks and has established a risk management system to avoid
their materialization and respond to them if they occur. Please note that the following risk description does not cover all of the risks
related to the Group’s business.
1. Businesses of the Group
1) Global Data Intelligence business- Recent trends and the Group’s response
This business carries out the domestic sales of digital intelligence solutions developed and manufactured by Cellebrite, anassociate accounted for using equity method, as well as security products of other overseas companies. The performance of thisbusiness may be affected by significant logistics delays and exchange rate fluctuations due to wars, pandemics and other factors.
2) Entertainment-related business- Impact of laws and regulations
The customers of products sold by the Entertainment-related business are game machine manufacturers in the pachinko
industry. The pachinko industry is subject to applicable laws and regulations such as the Act on Control and Improvement of
Amusement Business. Also, industry associations of game machine manufacturers/pachinko parlors sometimes impose selfregulations under the guidance of the government. Therefore, rapid changes in the business environment for game machine
manufacturers and pachinko parlors due to amendments to laws and regulations and self-imposed regulations may have asignificant impact on the Group’s business performance.
In addition, fluctuations in demand in the industry served by the Entertainment-related business tends to be comparatively
significant. While the Group takes various initiatives to appropriately respond to market trends, it is possible that its businessperformance significantly fluctuates despite these initiatives.
- Control boards for game machinesi) Recent trends and the Group’s response
As for recent market trends, the number of units sold by game machine manufacturers is expected to decline due todecreases in the number of players and pachinko parlors. Amid these conditions, pachinko parlors are increasingly focusing
on new models of game machines that are highly entertaining and attract customers.
In order to respond to this market environment, the Group strives to build a cooperative relationship with business
partners in the development and production of game machines. The Group believes that it has a stable business relationshipwith its business partners taking into consideration its past business relationships, development and sales results, etc.
However, it is not clear whether the current business relationship can be maintained in the future depending on thecompetitive situation.
Also, business performance may fluctuate significantly due to trends in demand for game machines.
ii) Legal regulationsGame machines that incorporate control boards manufactured and sold by this business are required to conform to thetechnical standards specified in the Rules of the National Public Safety Commission No. 4 (“Rues on Certification of Game
Machines and Examination of Type”) based on the “Act on Control and Improvement of Amusement Business.” Therefore,
every model needs to go through a type test carried out by a testing agency designated by the National Public Safety
Commission as well as a type examination carried out by the Public Safety Commission of the relevant prefectures. Only
the models that pass the national type test are permitted to be sold and then only those that conform to the prefectural typeexamination are permitted to be introduced in pachinko parlors.
Any significant changes in these laws and regulations may require the business to take new measures for thedevelopment, manufacture and sale of game machines. Although the business makes efforts to respond appropriately tothese factors, there is a possibility that the sales plan and business performance, etc. of the business may be affected despite
these measures.
iii) Business relationship with certain business partners
The customers of the control boards for game machines developed and manufactured by the Group are limited to a-16-

small number of game machine manufacturers. In particular, the sales to FUJISHOJI CO., LTD. represent a comparatively
large part of its sales.
The Entertainment-related business has a stable business relationship with these game machine manufacturers and is
working to further strengthen its relationship with them by improving its planning and proposal capabilities. However, theperformance of this business may be affected by the sales situation and purchasing policies of these customers, as well as
by competition with other game machine control board manufacturers.
iv) Significant fluctuations in demand
Demand for game machines tends to increase rapidly when new models are launched and then decrease rapidly formodels other than top-selling models. Demand trends by model tend to fluctuate significantly due to changes in player
preferences, competition among game machine manufacturers, and changes in regulations for game machines. As a result,demand trends for control boards for game machines, which the Group develops, manufactures and sells, also tend tofluctuate significantly.
Although the Entertainment-related business has adopted a production system capable of responding to such changes
in demand trends, the Company may be forced to take new measures in the event that unexpected demand arises, especiallyin the recent circumstances where procuring semiconductors has become difficult, or demand for products falls significantly
short of expectations. In such cases, the performance of this business may be affected.
In addition, the performance of this business may be affected if unexpected changes are caused due to reasons such asadministrative guidance being given to the pachinko industry.
- Plastic molded products and molds
In this business, E-Dream Corporation manufactures and sells plastic injection molded products and molds. Injection
molding and mold processing technologies are indispensable for the manufacture of products of the Group’s game machine
and information technology businesses. By maintaining and improving E-Dream Corporation’s injection molding and moldprocessing technologies, we are promoting planning and proposal-based sales to the pachinko industry. However, as theGroup’s main customers are game machine manufacturers, the performance of this business may be affected by trends indemand for game machines.
3) New IT-related business- Communication devices for IoTi) Recent trends and the response of the business
The scale of the IoT communications device market is expanding rapidly due to the rapid increase in the speed andcapacity of mobile communications infrastructure, the fixed and low prices of communications charges, and the growinginterest in the Internet of Things (IoT), which refers to the connection of all types of equipment to the internet using cloudinfrastructure. However, competition in IoT communications device-related products and services is intensifying as new
players from other industries enter the market.
In this business, we will focus on the industrial IoT (IioT) market in particular, and aim to develop our business without
being caught up in price competition by quickly developing new products that accurately satisfy the needs of the market.
However, the performance of this business may be affected in the event of delayed response to market trends, the emergenceof unexpected new technologies to be addressed with new measures, or the competition with other companies.
ii) Legal regulations
Communication devices for IoT that the Group develops, manufactures, and sells are required to conform to thetechnical standards specified by the Ministry of Internal Affairs and Communications under the Telecommunications
Business Act. For this reason, each model has been examined and certified by a designated testing organization (Japan
Approvals Institute for Telecommunications Equipment [JATE] and Telecom Engineering Center [TELEC]) as necessary.
If these laws and standards are revised or abolished in the future, the New IT-related business may be forced to takenew measures, which may affect its business performance.

-17-2. Changes in the Group’s financial position and business performance
Since currencies in the financial statements of the Group’s consolidated subsidiaries and associates accounted for using
equity method outside Japan are translated into Japanese yen when we prepare consolidated financial statements, fluctuations inforeign exchange rates, such as the U.S. dollar, the Israeli shekel and the Malaysian Ringgit, may affect the Group’s financial
position and business performance.
3. Other risks in conducting business
1) Business investment, etc.
The Group will actively apply the state-of-the-art technologies it has accumulated to its own businesses to expand and, basedon these technologies, actively enter into capital alliances and business partnership with partners that are expected to generatesynergies.
However, if the expected synergies do not materialize or it is difficult to generate return on investment, it may affect theGroup’s financial position and business performance.
2) Information security
The Company and its domestic consolidated subsidiaries have established internal regulations relating to the security of
information systems, formulated a privacy policy, strengthened IT security, and conducted employee education, etc. in light ofprotecting information on management and business partners, as well as personal information.
However, if problems such as the leakage or tempering of information arise due to errors or attack from outside, etc., leading
to costs such as compensation for damages or lowered trust in the Company, it may affect the Group’s financial position andbusiness performance.
3) Intellectual property rights
In the Group, the Legal & Intellectual Property Department manages inventions created in the planning and development
process of products and services, and has established a system to promptly file patent applications in cooperation with legal
advisors and patent attorneys. We may not file a patent application for an invention if we judge that not doing so would give us
a competitive advantage. However, it is possible that the Group cannot effectively prevent other companies from manufacturing
and selling similar products and services.
On the other hand, while the Legal and Intellectual Property Department conducts preliminary patent investigations in order
to avoid infringement of the intellectual property rights of other companies, in the event that a court judges that the Group is
infringing the intellectual property rights of other companies and usage fees for the intellectual property rights or compensation
for damage are claimed, the Group’s financial position and business performance may be affected.
4) Expansion of business outside JapanThe Group is actively expanding its business overseas and strives to understand in a timely manner and appropriately
respond to political, social, and economic conditions as well as related laws and regulations in the countries and regions in which
the Group operates.
However, the Group’s financial position and business performance may be affected in the event that the Group is unable toexpand its business as planned due to unforeseen circumstances such as conflicts, natural disasters, pandemics, changes in thesocial environment, and changes in related laws and regulations in such countries and regions.

-18-

4. Management’s Analysis of Financial Position, Business Performance, and Cash Flows
For the business combination with EKTech Holdings Sdn. Bhd., which was carried out on February 2, 2023, a provisional
accounting method was applied in the previous fiscal year. As the accounting figures were finalized in the current fiscal year, theamount revised from the provisional accounting method is used for comparison between the current and previous fiscal years andanalysis thereof.
Following partial change in performance management segmentation within the Group, the name of the reportable segment“Mobile Data Solution business” has been changed to “Global Data Intelligence business” from the current fiscal year. This namechange has no impact on the segment information.
(1) Overview of business performance, etc.
The financial position, business performance and cash flows (hereinafter referred to as “business performance., etc.”) of theGroup (the Company, its consolidated subsidiaries and associates accounted for using equity method) for the current fiscal year are
summarized as follows:1) financial position and business performance
The Company as a whole posted net sales of ¥10,045 million (down 73.2% year-on-year). This is mainly because Cellebrite,
which was a consolidated subsidiary, became an associate accounted for using equity method as of December 31, 2022. Likewise,gross profit, indicative of the added value created by the Group, decreased to ¥2,963 million (down 88.4% year-on-year), andgross profit margin decreased to 29.5% (down by 38.7 points), due in part to the net sales decrease as mentioned above.
The Company posted operating profit of ¥312 million (operating loss of ¥1,711 million for the previous fiscal year) on aconsolidated basis. This is mainly because Cellebrite, which was a consolidated subsidiary, became an associate accounted forusing equity method as of December 31, 2022.
<Overview of individual segments>a. Global Data Intelligence business
Fiscal year ended
March 31, 2023
(Millions of yen)

Fiscal year ended
March 31, 2024
(Millions of yen)

Year-on-yearchange in amount(Millions of yen)

Year-on-year change
in percent(%)

Net sales

29,152

994(28,158)(96.6)

Segment profit (loss)(1,525)

131

1,656

-

Net sales decreased by ¥28,158 million mainly because Cellebrite, which was a consolidated subsidiary, became an associateaccounted for using equity method as of December 31, 2022.
b. Entertainment-related business
Fiscal year ended
March 31, 2023
(Millions of yen)
Net sales
Segment profit

Fiscal year ended Year-on-year change in Year-on-year change
March 31, 2024
amountin percent(Millions of yen)
(Millions of yen)
(%)

6,259

6,051

(208)

(3.3)

706

802

95

13.5

While net sales for the game machine business decreased as a result of decreases in the shipment volume of game machinecomponents, etc., profit for the business increased due to the easing of semiconductor shortage and the effect of effort to reduce
miscellaneous costs.
c. New IT-related business
Fiscal year ended
March 31, 2023
(Millions of yen)
Net sales
Segment profit

Fiscal year ended Year-on-year change in Year-on-year change
March 31, 2024
amountin percent(Millions of yen)
(Millions of yen)
(%)

2,064

3,022

957

46.4

138

230

92

66.6

Net sales and profit for this segment as a whole both increased because the M2M business saw the difficulty in component-19-

procurement easing although still being affected to some extent by soaring raw material prices.
<Financial position>
Assets(Millions of yen)

Liabilities(Millions of yen)

Net assets(Millions of yen)

Equity ratio(%)

Year ended March 31, 2024

46,8389,579

37,25979.3

Year ended March 31, 2023

41,767

6,753

35,013

83.6

Change

5,071

2,825

2,245

(4.3) points(Assets)
Total assets stood at ¥46,838 million, an increase of ¥5,071 million from the end of the previous fiscal year.
Current assets stood at ¥23,449 million, a decrease of ¥386 million from the end of the previous fiscal year.
The main factors for decrease were decreases of ¥3,805 million in accounts receivable and ¥1,406 million in cash anddeposits. On the other hand, the main factors for increase were increases of ¥3,300 million in money held in trust and ¥1,655
million in raw materials.
Non-current assets stood at ¥23,388 million, an increase of ¥5,457 million from the end of the previous fiscal year.
The main factor for increase was an increase of ¥9,017 million in investment securities. On the other hand, the main factor
for decrease was a decrease of ¥3,467 million in shares of subsidiaries and associates.
(Liabilities)
Total liabilities stood at ¥9,579 million, an increase of ¥2,825 million from the end of the previous fiscal year.
Current liabilities stood at ¥4,905 million, an increase of ¥880 million from the end of the previous fiscal year. The main
factors for increase were increases of ¥933 million in short-term borrowings, ¥358 million in income taxes payable and ¥109
million in contract liabilities. On the other hand, the main factors for decrease were decreases of ¥421 million in notes andaccounts payable - trade and ¥47 million in provision for bonuses.
Non-current liabilities stood at ¥4,674 million, an increase of ¥1,945 million from the end of the previous fiscal year. The
main factor for increase was an increase of ¥1,973 million in deferred tax liabilities.
(Net assets)
Net assets stood at ¥37,259 million, an increase of ¥2,245 million from the end of the previous fiscal year. The main factors
for increase were increases of ¥6,304 million in valuation difference on available-for-sale securities and ¥980 million in foreign
currency translation adjustment. On the other hand, the main factors for decrease were a decrease of ¥4,230 million in retained
earnings and an increase of ¥837 million in treasury shares.
2) Status of cash flows
Cash and cash equivalents (hereinafter referred to as “cash”) at the end of the current fiscal year amounted to ¥1,519 million(balance at the end of the previous fiscal year: ¥2,934 million). The status of each cash flow and the factors thereof for the current
fiscal year are as follows:(Cash flows from operating activities)
Net cash provided by operating activities amounted to ¥2,509 million in the current fiscal year, compared with ¥13,518
million used in the previous fiscal year. The main factor for cash inflow was an increase of ¥3,844 million in income taxes refund.
The main factor for cash outflow was an increase of ¥2,188 million in inventories.
(Cash flows from investing activities)
Net cash used in investing activities was ¥3,562 million in the current fiscal year, compared with ¥25,131 million used in
the previous fiscal year. The main factors for cash outflow were ¥4,000 million used in investments in money held in trust, ¥168
million in purchase of intangible assets, and ¥119 million in purchase of property, plant and equipment. The main factor for cash
inflow was ¥700 million provided by proceeds from cancellation of money held in trust.

-20-

(Cash flows from financing activities)
Net cash used in financing activities was ¥385 million, compared with ¥25,574 million provided in the previous fiscal year.
The main factors for cash outflow were ¥903 million used in purchase of treasury shares and ¥452 million in dividends paid. The
main factor for cash inflow was an increase of ¥991 million in short-term borrowings.
3) Results of production, orders received and salesa. Production results
Part of the Entertainment-related business of the Group carries out production. Production results by segment for the current
fiscal year are as follows:
Segment nameAmount (Thousands of yen)Entertainment-related businessYear-on-year change (%)

4,286,984

94.8(Notes) 1. The amount is based on the selling price.
2. There were significant changes in production results during the current fiscal year. This is mainly because, at the
Global Data Intelligence business, Cellebrite, which was a consolidated subsidiary, became an associate accounted
for using equity method as of December 31, 2022.
b. Order status
Part of the Entertainment-related business of the Group carries out made-to-order production. The status of orders received in
the current fiscal year is as follows:
Segment nameEntertainment-related business

Orders received(Thousands of yen)

Year-on-year change(%)

Order backlog(Thousands of yen)

Year-on-year change(%)

5,248,934

85.7

1,755,778

76.6(Notes) 1. The amount is based on the selling price.
c. Sales results
Sales results by segment for the current fiscal year are as follows:
Segment nameAmount (Thousands of yen)

Year-on-year change (%)

Entertainment-related business

6,029,195

96.7

Global Data Intelligence business

994,033

3.4

3,022,357

146.4

10,045,586

26.8

New IT-related business
Total(Notes) 1. Inter-segment transactions have been eliminated.

2. There were significant changes in sales results during the current fiscal year. This is mainly because, at the Global
Data Intelligence business, Cellebrite, which was a consolidated subsidiary, became an associate accounted for using
equity method as of December 31, 2022.
3. Sales amounts by major customers and their respective percentages to total sales for the last two fiscal years are as
follows:

Customer

FUJISHOJI CO., LTD.

Previous fiscal year
(From April 1, 2022 to March 31, 2023)

Current fiscal year
(From April 1, 2023 to March 31, 2024)

Amount (Thousandsof yen)Amount (Thousandsof yen)4,973,843-21-

Percentage (%)
13.3

4,868,505

Percentage (%)
48.5

(2) Analysis and examination of the status of business performance, etc. from the management perspective
Analysis and examination of the status of business performance, etc. from the management perspective are as follows: The
forward-looking statements presented in this section are based on judgements as of the filing date of this Annual Securities Report.
1) Significant accounting policies and estimates
The Group’s consolidated financial statements are prepared in accordance with accounting principles generally accepted inJapan. The preparation of such financial statements requires management to make decisions on the selection of accounting
policies and apply them, as well as to make estimates and forecasts that might affect the disclosed figures of assets, liabilities,
revenues and expenses. The management has made reasonable judgments on these estimates and forecasts by considering past
performance and other factors, but actual results may differ.
Although it is extremely difficult to predict trends in the future, such as increase in natural disasters, the impact of thesemiconductor shortage, and the situation of major customers, the Company has made accounting estimates taking into
consideration various factors that are considered to be reasonable as of the end of the current fiscal year based on available
external information, etc.
The significant accounting policies adopted for the Group’s consolidated financial statements are described in “V. Financial
Information, 1. Consolidated Financial Statements, etc. [Notes], (Significant accounting policies for preparation of consolidated
financial statements), 5. Accounting policies.”
2) Recognition, analysis and examination of business performance, etc. for the current fiscal year
<External environment>
The data intelligence market, which our Global Data Intelligence business serves, saw continued strong demand for digital
intelligence tools in response to increasingly sophisticated and organized cybercrimes and increase in digital evidence.
Leading-edge digital intelligence tools, such as Inseyets from Cellebrite DI Ltd. (hereinafter referred to as “Cellebrite”),
have become indispensable solutions and have been widely adopted by police organizations around world.
Regarding the pachinko and pachislot market, one of the markets that our Entertainment-related business serves, smart gamemachines began being introduced in November, 2022, and now there are popular games for these machines. Thus, the demand
for such machines, mainly smart pachislot machines, has been increasing. Meanwhile, although there have been signs of recovery
from the semiconductor supply crunch due to the global shortage, there are still issues such as the ongoing upsurge of raw material
prices, the depreciation of the yen, and a decrease in number of pachinko parlors. The future of the market thus remains uncertain.
The game content market has consolidated its position as entertainment enjoyed at home during the COVID-19 pandemic.
However, as other types of recreation activities have recovered, the market saw small contraction in developed countries.
Meanwhile, the market has been increasingly competitive as the number of games released has been increasing in an accelerated
manner because the technological advancement has made it possible for a single person to develop video game with a single PC.
In the Internet of things (IoT) market, one of the markets that our New IT-related business serves, the demand for remote
access monitoring and control system has been increasing to address labor shortages and enhance productivity. Thus, the adoptionof Rooster, our industrial network device, has been expanding as it features the strength of the Company products: long-term andstable operation. Furthermore, migration from 3G to LTE (4G) is smoothly ongoing as communication carriers are scheduled tosuccessively terminate 3G services by March 2026. While the crunch in overall semiconductor supply is easing, due to thedepreciation of the yen, component prices are continuing to soar, which may have impacts on supply of our products and our
profits, and the impacts remain uncertain at present.
The market environments of some of our core businesses are uncertain as described above. Against this backdrop, we areworking to establish new core products and services in line with the current social trend of moving towards utilization of leadingedge technologies, such as the IoT, augmented reality (AR), and artificial intelligence (AI) for further improvement of the Group’sbusiness performance.
<Competitive advantages>
In the Global Data Intelligence business, over many years, the Company served law enforcement agencies who deal with
tech-savvy criminals (criminal organizations) as well as explosive increases in digital evidence. More specifically, we have-22-

provided them with state-of-the-art digital intelligence tools, as well as training and services to enhance the productivity ofinvestigation resources. Inseyets, the next-generation solution released in January 2024, combines the advanced extraction ofPremium with the next-generation UFED. At the same time, it forms an all-in-one digital forensic solution that encompasses thefunctions of Physical Analyzer (including reader), Cloud, and Commander, contributing to a significant reduction in the working
hours of investigative agencies. The product’s full-scale deliveries began in April 2024 in Japan.
In the game machine business of our Entertainment-related business, the Company focuses on specific industries andcustomers to establish strong and trustful relationships and accumulate our expressive and technical capabilities in the certain
areas. This enables us to execute development of contents highly attractive as products, as well as development of high-quality
control boards, thus allowing us to enhance our competitive advantages.
In the game content business, the Company internally handles all phases, from development to operation, of console games
and mobile games under the famous Shanghai brand. This enables us to maintain cost-efficient profits over a long term.
Furthermore, having a number of intellectual properties (IPs) in the genre of retro games, which is regaining popularity mainlyin the European market, we have the prospect of further profit expansion through effective utilization of the IPs.
In the New IT-related business, our efforts center on the following: to maintain technological competitive advantages by
establishing strong and trustful relationships with individual communication carriers and partners, such as Sler, and acquiring
patents related to migration from 3G to LTE (4G) networks based on technologies accumulated over many years; and to further
reinforce our competitiveness by developing products with keywords being 5G and edge AI. Rooster, an industrial network device,supports dual SIM and makes it possible to use lines of different communication carriers redundantly. This device automaticallydetects a failure in a communication carrier network and switches from the main network to the sub-network, thereby eliminating
the effects of network communication failures and enabling uninterrupted operation of remote monitoring and control, and datacollection. Thus, sales of Rooster have been growing steadily.
In the IoT field, our challenge is how to reduce heavy burdens of operational control derived from a large number of IoT
devices installed in remote locations as they move from the introduction phase to the operation phase. In order to address thischallenge, SunDMS enables alive monitoring and centralized management of Rooster to realize remote and secure operation andcontrol. As a result, costs such as those for on-site maintenance personnel, operation adjustment, and travel time have been
reduced and operational burdens have been significantly eased. The company is also deploying SunDMS-Insight. This makes it
possible to collect, control, and visualize data from all types of devices and networks, including OKUDAKE Sensor and PLC(Programmable Logic Controller). In the future, we will conduct aggregation, analysis, and detection using BI/AI to improve theefficiency and security of remote operation and control in the IoT field and secure our competitive advantages.
<Management initiatives>
Regarding the Global Data Intelligence business, in crime scenes where law enforcement personnel face increasingly
sophisticated and organized cybercrimes, there has been growing interrelationship between digital intelligence (forensics), whichis investigation and analysis after the occurrence of incidents, and active cyber defense and threat intelligence, which aim to
predict and prevent criminal incidents in advance for law enforcement agencies. We are determined to fortify our training andsupport structures into more specialized ones and conduct activities of providing a lineup of products equipped with newtechnologies so that Japanese law enforcement agencies can cope with a range of modus operandi, and also enhance sales
activities in the Asia Pacific region. In response to growing calls for increasingly diverse cybercrimes to be tackled, we havebegun to domestically market relevant new products based on information on our global digital intelligence tools.
In the New IT-related business, we are committed to expanding our subscription-based business through the following
measures: further expanding the sales of the industrial network device Rooster; making efforts to develop solutions including
OKUDAKE Sensor Solution; focusing on data businesses such as data visualization and analysis; and increasing added valuesby enhancing our services. The R&D Department, which was established by integrating the Marketing Department and theTechnology Development Department to improve our earning power in October 2022, is focusing on and strengthening the next
solution software for SunDMS, while advancing the development of AI and healthcare technologies. In addition, we aim todevelop differentiated products by further strengthening our capabilities through joint research with universities that possess
technological seeds.

-23-

<Overview of products and services>
In the Global Data Intelligence business, we are moving forward with providing products, services, and support related tothreat intelligence and active cyber defense in addition to conventional digital intelligence products. Cellebrite, an associateaccounted for using equity method, announced its release of Inseyets for mobile device investigations targeting the private sector.
As an all-in-one application, Inseyets reveals facts quickly and accelerates the collection, extraction, and reporting process duringcorporate investigations. At the same time, we are focusing on sales of Pathfinder and increasing its sales. As a new product, we
aim to expand the sales of Cybersixgill, which allows users to search for information that is beyond the reach with ordinary tools.
In the game machine business of the Entertainment-related business, we work as a contractor responsible for all phases ofcontent development for pachinko and pachislot games, including planning, designing, video production, and programming, as
well as all phases related to control boards from designing to manufacturing. In addition, leveraging on our know-how in content
development, we also offer smartphone applications simulating real pachinko and pachislot machines to contribute to theoperation of real pachinko and pachislot machines in the market and raise awareness of contents.
In the game content business, several plans utilizing IPs related to retro games are now underway. We launched Hebereke2
for multiple platforms (game consoles) globally on February 29, 2024 and it has received favorable reviews on global gameevaluation sites. We also released Ikki Unite for Nintendo SwitchTM on April 18, 2024.
In the New IT-related business, more than 0.5 million units of A330 and A900, our strategic products for beverage vending
machines, have been adopted and installed by several major beverage vendors in order to reduce management costs and improvethe efficiency of their operation, such as product replenishment. Our router products such as Rooster are promoted as products
differentiated from those of other companies with the emphasis on features of network redundancy and linkage with SunDMS, adevice management service, and have been producing steady sales. Aiming to further expand our businesses, we have released
an edge computer named LBX8110, which could be equipped with an AI image analysis function, in September 2023. Serving
us as a new product in the new IoT field, this edge computer offers new solutions based on the AI technologies such as image
analysis. Lastly, our sensor device OKUDAKE Sensor has entered the full-scale introduction phase for HACCP-based
temperature management or predictive maintenance based on acceleration (vibration) sensor.
<Overview of the consolidated statement of income>
The Company as a whole posted net sales of ¥10,045 million (down 73.2% year-on-year). This is mainly because Cellebrite,
which was a consolidated subsidiary, became an associate accounted for using equity method as of December 31, 2022. Likewise,gross profit, indicative of the added value created by the Group, decreased to ¥2,963 million (down 88.4% year-on-year), andgross profit margin decreased to 29.5% (down by 38.7 points), due in part to the net sales decrease as mentioned above.
<Overview of selling, general and administrative expenses>
Consolidated selling, general and administrative expenses came to ¥2,650 million (down 90.3% year-on-year). This ismainly because Cellebrite, which was a consolidated subsidiary, became an associate accounted for using equity method as ofDecember 31, 2022.
<Overview of operating profit>
The Company posted operating profit of ¥312 million (operating loss of ¥1,711 million for the previous fiscal year) on aconsolidated basis. This is mainly because Cellebrite, which was a consolidated subsidiary, became an associate accounted forusing equity method as of December 31, 2022.
<Overview of ordinary profit (loss) and profit (loss) attributable to owners of parent>
The Company posted ordinary loss of ¥4,114 million (ordinary profit of ¥14,174 million for the previous fiscal year) on aconsolidated basis. This is mainly because it recorded share of loss of entities accounted for using equity method, amounting to¥4,498 million, due to loss on valuation of derivatives in Cellebrite. The Company posted loss attributable to owners of parentof ¥3,777 million (profit attributable to owners of parent of ¥6,878 million for the previous fiscal year).

-24-

<Overview of cash flows>
As for the growth potential of cash flows, the Company places particular emphasis on free cash flow (the sum of cash flows
from operating activities and cash flows from investing activities). Despite the refund of income taxes, free cash flows for thecurrent fiscal year showed a decrease of ¥1,052 million, mainly due to investments in money held in trust. We will continue towork to increase free cash flow by leveraging our business model while continuing to enhance safety.
<Analysis of capital resources and liquidity of funds>
a. Needs of funds
The Group needs working capital primarily for selling, general and administrative expenses, including personnel expenses
for sales and general administration activities and research and development activities. Although the Company’s business model
does not require particularly large capital expenditures, the Company belongs to a business field in which technology changes
rapidly. Thus, the Company needs funds for research and development activities such as research and development of the latest
technology, contracted development over multiple years, and software updates.
b. Financial policy
The Group procures working capital through internally generated funds and short-term borrowings. The internally generated
funds include unearned revenue received in advance for research and development activities to update software over multiple
years. With regard to working capital, which is calculated by deducting current liabilities from current assets, current assets havebeen exceeding current liabilities since before, including at the end of the current fiscal year.
We strive to reduce funding risk by increasing the balance of cash on hand above normal level, which is required to secure
inventories in the face of a semiconductor shortage, and by advancing the timing of funding. In addition, the Group aims to
improve its financial position and capital efficiency by stably accumulating retained earnings.
The Group’s management strives to develop optimal management plans and strategies based on the business environment
and available information.
The environment surrounding the Group’s information technology business is unpredictable as technological progress isremarkable and the changes and diversification of the market are significant. Nevertheless, we will speed up the introduction ofhigh-value-added products and solutions, and accelerate the expansion of a subscription-based model in addition to ourconventional pay-per-product model. Aiming for further growth, we will expand our business globally, concentrate management
resources on the information technology market, and establish a corporate structure that ensures high profitability.
The outlook for the Group’s Entertainment-related business is expected to remain uncertain due to the sluggish market
environment, significant changes in customer needs, and tangible superiority/inferiority of products in the market. Despite thesechallenges, the Group will create products that pursue entertainment value and promote new business by leveraging
communications network technology in which the Group specializes.
We will also continue to take on the challenge for future growth by focusing on the development of new markets and new
businesses, and by actively forming alliances with business partners that are expected to generate synergies.

-25-

5. Material Business Agreements, etc.
Not applicable.

-26-

6. Research and Development Activities
The Group continues to promote research and development activities, including planning and development, in order to continue
offering high-value-added products and services with superior attractiveness and quality.
The Group has a total of 153 development staff and its research and development expenses amounted to ¥1,019 million.
Research and development activities by segment are as follows:(1) Entertainment-related business
As for the development of game machine components, our main development issue is the planning and development of LCD andpresentation control boards for game machines.
As one of our major achievements during the current fiscal year, in the development of control boards for game machines, weplanned and developed control boards and LCD software that met market needs, by focusing on the development of designs andpresentations with superior design quality as well as the enhancement of our planning and proposal capabilities, and by using ouradvanced computer graphics technology. As the environment surrounding the pachinko industry faces a decreasing number of players
and diversifying needs, the Group is promoting the creation of game machines that are full of entertainment value.
The total amount of research and development expenses for the segment was ¥756 million.
(2) New IT-related businessIn the development of M2M communication devices, in the current fiscal year, we promoted the development of products withkeywords of 5G and edge AI in mind, while acquiring patents related to migration from 3G to LTE (4G) networks based ontechnologies accumulated over many years and maintaining our technological competitive advantages.
In the development of B2B operation support systems, we promoted the development of new solutions for all companies
accelerating DX based on AR and AI technologies by seeking synergies with mobile communications equipment developed in theM2M business and by expanding the scope of remote support.
The total amount of research and development expenses for the segment was ¥262 million.

-27-

III. Equipment and Facilities
1. Status of Capital Expenditures, etc.
The total amount of capital expenditures (property, plant and equipment and intangible assets, excluding goodwill) for the current
fiscal year amounted to ¥159 million, which mainly consists of manufacturing facilities for the manufacturing of development tools
and products.
Capital expenditures by segment for the current fiscal year are as follows:(1) Global Data Intelligence business
Capital expenditures of ¥2 million were invested mainly for digital intelligence tools.
(2) Entertainment-related business
Capital expenditures of ¥70 million were invested mainly for inspection equipment for control boards in the game machinecomponent business.
(3) New IT-related business
Capital expenditures of ¥84 million were invested mainly for molds used in the manufacturing of new products relating to B2B
operation support systems.
(4) Corporate wide
Capital expenditures of ¥2 million were invested mainly for company building facilities.

-28-

2. Status of Major Facilities
The major facilities of the Group are as follows:(1) Filing company
As of March 31, 2024
Office name
(Location)

Segment name

GlobalIntelligencebusiness

Headquarters(Nagoya-shi, Aichi)

-

-

200-

200

[-]

Development andsales facilities

-

-

310-

310

8
[-]

New
IT-related Development andbusinesssales facilities

-

-

-

-

[-]

Management
facilities

22,185-

10,211

32,397

34[5]

Sales facilities

-

2,913
[29.54]

-

2,913

1
[-]

Development andsales facilities

5,527

302,956[3,072.45]

71,424379,908

92
[10]

New
IT-related Development andbusinesssales facilities

180

55,347[561.31]

2,581

58,10916[3]

Management
facilities

148,206

66,999[679.48]

2,951

218,157

13[1]

Sales facilities

-

-

1,059

1,059

7
[-]

Development
facilities

62

-

475

537

15
[3]

-

-

1,040

1,040

20
[-]

Entertainmentrelated business

Data

Entertainmentrelated businessCorporate
GlobalIntelligencebusiness

Land in Kitanagoya-shi(Kitanagoya-shi, Aichi)(Note 4)

Total

Sales facilities

GlobalIntelligencebusiness

Tokyo Office(Chuo-ku, Tokyo)

Number of
employees[Persons]

Data

Corporate

Konan Office(Konan-shi, Aichi)

Book value (Thousands of yen)
Description offacilities
Buildings and
Land
Other
structures[Area in m2]

Data

Entertainmentrelated businessNew
IT-related Development andbusinesssales facilities
Corporate

Management
facilities

15,366-

4,788

20,1553[-]Entertainmentrelated business

Manufacturing
facilities-

252,897[7,946.75]-

252,897-(Notes) 1. The book value refers to the amount before deducting unrealized profit on intercompany transactions.
2. The number of temporary employees is presented separately in square brackets.
3. The Company leases part of the buildings of its Headquarters and Tokyo Office.
4. Land in Kitanagoya-shi is leased to E-Dream Corporation, our domestic subsidiary.
5. In addition to the above, the Company owns software (book value: ¥176,486 million) and software in progress (bookvalue: ¥9,532 million).

-29-

(2) Domestic subsidiary

Company name

E-Dream
Corporation

Office name
(Location)

Headquarters(Kitanagoya-shi,
Aichi)

Segment nameEntertainmentrelated business

Description offacilities

As of March 31, 2024
Number ofBook value (Thousands of yen)
employees[Persons]
Buildings andLand
structures [Area in m2]

Manufacturing
facilities

233,892

267,929[1,555.97]

Other

Total

29,361

531,183

37[61](Notes) 1. The number of temporary employees is presented separately in square brackets.
2. The land recorded in the book value of E-dream Corporation is the amount related to the leasehold portion of theCompany’s land in Kitanagoya-shi.

(3) Overseas subsidiaries
As of March 31, 2024
Book value (Thousands of yen)
Descriptionof facilities Buildings and
Land
Other
structures [Area in m2]

Company
nameOfficename(Location)

EKTech
Holdings
Sdn. Bhd.

Selangor,
Malaysia

New IT-related
Sales facilities
business

-

-

-

-

[-]

EKTechCommunica Selangor,
tions Sdn. Malaysia
Bhd.

Development
New IT-related andsales
businessfacilities

127-

79,767

79,89515[-]

EKTechSelangor,
Systems
Engineering Malaysia
Sdn. Bhd.

Development
New IT-related
and
sales
businessfacilities

-

-

1,044

1,044

24
[10]

EKTechEurekaSelangor,
MSC Sdn. Malaysia
Bhd.

Development
New IT-related andsales
businessfacilities

-

-

200

200

16
[-]

Segment
nameNumber of
employees[Persons]

Total(Note) 1. The number of temporary employees is presented separately in square brackets.

3. Plans for Facility Introduction, Retirement, etc.
(1) Major facility introduction, etc.
There are no plans for the introduction of major facilities.
(2) Major facility retirement, etc.
There are no plans for the retirement of major facilities, except for the retirement of facilities for routine renewal.

-30-

IV. Information on the Filing Company
1. Information on the Company’s Shares(1) Total number of shares, etc.
1) Total number of shares
Class

Total number of shares authorized to be issued (Shares)

Common share

48,000,000

Total

48,000,0002) Issued shares
As of the end of thecurrent fiscal year
(Shares)(March 31, 2024)

As of thefiling date (Shares)(June 26, 2024)

Common share

24,007,728

Total

24,007,728

Class

Stock exchange
on which theCompany is listed

Description

24,007,728

Standard Market of theTokyo Stock Exchange

One unit of stock
constitutes 100 shares.

24,007,728--(Note) The number of shares issued as of the filing date does not include the number of shares issued upon the exercise of shareacquisition rights between June 1, 2024 and the filing date of this Annual Securities Report.

-31-

(2) Status of the share acquisition rights
1) Details of stock option plansa. Special resolution at the General Meeting of Shareholders held on June 25, 2014
(Category and number of those who are entitled to the plan: 99 employees and 4 Directors of subsidiaries)
As of the end of the current fiscal As of the end of the previous month
Fifth share acquisition rights
yearof the filing date
(Issued on August 29, 2014)(March 31, 2024)(May 31, 2024)
Number of share acquisition rights
Class of shares to be issued upon the exercise ofshare acquisition rights
Number of shares to be issued upon the exercise ofshare acquisition rights (Shares)
Amount of payment upon the exercise of shareacquisition rights (Yen)
Exercise period of share acquisition rights
Issue price and amount to be incorporated into
capital when shares are issued upon the exercise ofshare acquisition rights (Yen)
Conditions for the exercise of share acquisitionrightsMatters relating to transfer of share acquisitionrightsMatters relating to the granting of share acquisitionrights in connection with corporate reorganization

121

71

Common share

Same as on the left

12,1007,100

1,347 per share (Note 2)

Same as on the left

From August 30, 2016 to June 24,
2024
Issue price: 1,347
Amount to be incorporated into
the capital: 674

Same as on the left
Same as on the left

(Note 1, 2)Same as on the left

(Note 1)Same as on the left--

(Notes) 1. The conditions for exercising the stock options and matters relating to the transfer of share acquisition rights, etc. are as
follows:(1) The persons who received the allotment of the share acquisition rights (hereinafter referred to as the “Share
Acquisition Rights Holders”) shall be in the position of the Company’s Director, Audit and Supervisory Board
Member, etc., or employee, or the Company’s subsidiary’s Director or employee at the time of exercising the shareacquisition rights. This shall not apply, however, if they have retired due to expiration of the term of office,mandatory retirement age, or other justifiable reasons.
(2) In the event that a Share Acquisition Rights Holder dies, inheritance shall not be permitted.
(3) The transfer of share acquisition rights shall require the approval of the Board of Directors.
(4) Other conditions shall be as stipulated in the agreement concluded between the Company and the Share Acquisition
Rights Holders.
2. If the Company conducts a stock split or a reverse split after the issuance of share acquisition rights, the exercise priceshall be adjusted according to the following formula at the time when each stock split or reverse split becomes
effective, and any fraction of less than ¥1 resulting from the adjustment shall be rounded up.
1
Pre-adjustment
Post-adjustment=
× Ratio of stock split
exercise priceexercise priceor reverse split
If the Company issues shares or disposes treasury shares at a price lower than the market value after the issuance of shareacquisition rights, the exercise price shall be adjusted according to the following formula, and any fraction of less than ¥1
resulting from the adjustment shall be rounded up.
Number of newly issued shares × Amount of payment per share
Number ofoutstanding +Market value per share
Post-adjustment
Pre-adjustment
shares=×
exercise priceexercise price
Number of outstanding shares + Number of newly issued shares-32-

b. Resolution at the meeting of the Board of Directors held on January 19, 2015
(Category and number of those who are entitled to the plan: 6 employees of subsidiaries)
As of the end of the current fiscal As of the end of the previous month
Sixth share acquisition rights
yearof the filing date
(Issued on February 5, 2015)(March 31, 2024)(May 31, 2024)
Number of share acquisition rights
Class of shares to be issued upon the exercise ofshare acquisition rights
Number of shares to be issued upon the exercise ofshare acquisition rights (Shares)
Amount of payment upon the exercise of shareacquisition rights (Yen)
Exercise period of share acquisition rights
Issue price and amount to be incorporated into
capital when shares are issued upon the exercise ofshare acquisition rights (Yen)
Conditions for the exercise of share acquisitionrightsMatters relating to transfer of share acquisitionrightsMatters relating to the granting of share acquisitionrights in connection with corporate reorganization

150

150

Common share

Same as on the left

15,00015,0001,950 per share (Note 2)

Same as on the left

From June 25, 2017 to June 24,
2024
Issue price: 1,950
Amount to be incorporated into
the capital: 975

Same as on the left
Same as on the left

(Note 1, 2)Same as on the left

(Note 1)Same as on the left--

(Notes) 1. The conditions for exercising the stock options and matters relating to the transfer of share acquisition rights, etc. are as
follows:(1) The persons who received the allotment of the share acquisition rights (hereinafter referred to as the “Share
Acquisition Rights Holders”) shall be in the position of the Company’s Director, Audit and Supervisory Board
Member, etc., or employee, or the Company’s subsidiary’s Director or employee at the time of exercising the shareacquisition rights. This shall not apply, however, if they have retired due to expiration of the term of office,mandatory retirement age, or other justifiable reasons.
(2) In the event that a Share Acquisition Rights Holder dies, inheritance shall not be permitted.
(3) The transfer of share acquisition rights shall require the approval of the Board of Directors.
(4) Other conditions shall be as stipulated in the agreement concluded between the Company and the Share Acquisition
Rights Holders.
2. If there are unavoidable reasons that require the adjustment of the exercise price, the exercise price shall be adjusted toa reasonable extent through the resolution of the Board of Directors.

-33-

c. Resolution at the meeting of the Board of Directors held on September 17, 2021
(Category and number of those who are entitled to the plan: 6 Directors, 3 Audit and Supervisory Committee Members, and 192
employees)
Ninth share acquisition rights(Issued on September 24, 2021)

As of the end of the current fiscal
year(March 31, 2024)

As of the end of the previous monthof the filing date
(May 31, 2024)

4,577

4,577

Common share

Same as on the left

45,77045,7703,249 per share (Note 3)

Same as on the left

Number of share acquisition rights
Class of shares to be issued upon the exercise ofshare acquisition rights
Number of shares to be issued upon the exercise ofshare acquisition rights (Shares)
Amount of payment upon the exercise of shareacquisition rights (Yen)
Exercise period of share acquisition rights
Issue price and amount to be incorporated into
capital when shares are issued upon the exercise ofshare acquisition rights (Yen)
Conditions for the exercise of share acquisitionrightsMatters relating to transfer of share acquisitionrightsMatters relating to the granting of share acquisitionrights in connection with corporate reorganization

From September 25, 2023 to June23, 2031
Issue price: 3,249
Amount to be incorporated into
the capital: 1,624.5

Same as on the left
Same as on the left

(Note 1, 2)Same as on the left

(Note 1)Same as on the left--

(Notes) 1. The conditions for exercising the stock options and matters relating to the transfer of share acquisition rights, etc. are as
follows:(1) The persons who received the allotment of the share acquisition rights (hereinafter referred to as the “Share
Acquisition Rights Holders”) shall be in the position of the Company’s Director, Audit and Supervisory Committee
Member, etc., or employee, or the Company’s subsidiary’s Director or employee at the time of exercising the shareacquisition rights. This shall not apply, however, if they have retired due to expiration of the term of office,mandatory retirement age, or other justifiable reasons.
(2) The heir(s) of a Share Acquisition Rights Holder shall not be permitted to exercise the share acquisition rights.
(3) The Share Acquisition Rights Holders may exercise their rights for part or all of the number of shares allotted to them.
However, less than one unit of share acquisition rights may not be exercised.
(4) Other conditions shall be as stipulated in the agreement concluded between the Company and the Share Acquisition
Rights Holders.
(5) The transfer of share acquisition rights shall require the approval of the Board of Directors.
2. The number of shares underlying one unit of the share acquisition rights is ten shares.
If the Company conducts a stock split or a reverse split after the issuance of share acquisition rights, the number ofunderlying shares shall be adjusted according to the following formula and any fraction of less than one share resulting
from the adjustment shall be rounded down.
Post-adjustment number of underlying shares = Pre-adjustment number of underlying shares × Ratio of stock split orreverse split
3. If the Company conducts a stock split or a reverse split after the issuance of share acquisition rights, the exercise priceshall be adjusted according to the following formula at the time when each stock split or reverse split becomes
effective, and any fraction of less than ¥1 resulting from the adjustment shall be rounded up.
1
Pre-adjustment
Post-adjustment=
× Ratio of stock split
exercise priceexercise priceor reverse split
If the Company issues shares or disposes treasury shares at a price lower than the market value after the issuance of shareacquisition rights, the exercise price shall be adjusted according to the following formula, and any fraction of less than ¥1
resulting from the adjustment shall be rounded up.
Number of newly issued
Pre× Amount of payment per share
Number ofshares+Post-adjustment
adjustment
outstanding shares
exercise price= exercise
×Market value per share
price
Number of+
Number of newly issued shares
outstanding shares-34-2) Rights plans
Not applicable.
3) Other share acquisition rights
Not applicable.

-35-

(3) Status in the exercise of bonds with share acquisition rights with exercise price amendment
Not applicable.
(4) Changes in the total number of shares issued, the amount of capital stock, and others
Change in total Balance of total
Changes in
Balance of
Changes in legal Balance of legal
number of shares number of shares capital stock
capital stock
capital surplus capital surplus
Dateissuedissued(Thousands of (Thousands of (Thousands of (Thousands of(Shares)(Shares)
yen)
yen)
yen)
yen)
April 1, 2019 to March
31, 2020
42,10022,627,400
7,406
1,016,786
7,406
1,030,253(Note 1)
April 1, 2020 to March
31, 2021
1,333,728
23,961,128
1,046,052
2,062,839
1,046,052
2,076,306(Note 2)
April 1, 2021 to March
31, 2022
31,20023,992,328
23,3532,086,192
23,3532,099,659(Note 1)
April 1, 2022 to March
31, 2023
6,500
23,998,828
3,493
2,089,685
3,493
2,103,152(Note 1)
April 1, 2023 to March
31, 2024
8,900
24,007,728
7,921
2,097,606
7,921
2,111,073(Note 1)
(Notes) 1. Increased due to the exercise of share acquisition rights.
2. Increased due to the exercise of share acquisition rights and the rights over the first unsecured convertible bond.
(5) Shareholding by shareholder category
As of March 31, 2024
Status of shares (One unit of stock: 100 shares)

Status ofGovernment
Financial
below
sharesForeigncorporations,etc.
Individual
Classification
andFinancial instruments
Other
one unit
investors
Total
local
institutions business corporations Other than Individual(Shares)
individuals investors and othermunicipalities
operator
Numberofshareholders
5
18
26
122
7
1,541
1,719
(Persons)
Numberofshares held
3,555
2,848
54,872
119,44555
59,259240,034
4,328(Unit)
Ratio
ofshares
1.48
1.19
22.86
49.76
0.02
24.69
100.00held (%)(Note) 1,769,277 shares of treasury shares include 17,692 units in the “Individual investors and other” box and 77 shares in the“Status of shares below one unit” box.

-36-

(6) Major shareholders

Name

Tokai Engineering Co. Ltd.

OASISINVESTMENTSII
MASTER FUND LTD.
(Standing proxy: Citibank, N.A.,
Tokyo Branch)

OASIS JAPAN STRATEGIC
FUND LTD.
(Standing proxy: Citibank, N.A.,
Tokyo Branch)

FUJISHOJI CO., LTD.
INTERACTIVE BROKERS LLC(Standingproxy:
Interactive
Brokers Securities Japan Inc.)

Number of shares
held (Shares)

Address
26-2, Aza Ishizaka, Hiroji-cho, Showaku, Nagoya-shi
MAPLES CORPORATE SERVICES
LTD, PO BOX 309, UGLAND HOUSE
SOUTH CHURCH STREET, GEORGETOWN, GRAND CAYMAN KY1-1104,
CAYMAN ISLANDS(27-30, Shinjuku 6-chome, Shinjuku-ku,
Tokyo)
MAPLES CORPORATE SERVICES
LTD, PO BOX 309, UGLAND HOUSE
SOUTH CHURCH STREET, GEORGETOWN, GRAND CAYMAN KY1-1104,
CAYMAN ISLANDS(27-30, Shinjuku 6-chome, Shinjuku-ku,
Tokyo)
1-4, Uchihonmachi 1-chome, Chuo-ku,
Osaka-shi
ONE
PICKWICKPLAZAGREENWICH, CONNECTICUT 06830
USA(2-5, Kasumigaseki 3-chome, Chiyodaku, Tokyo)

As of March 31, 2024
Percentage of shares held tothe total number of sharesissued (excluding treasury
shares) (%)

4,267,600

19.2

3,261,543

14.7

1,249,428

5.6

940,000

4.2

809,200

3.6

Michie Utsumi

Showa-ku, Nagoya-shi

680,000

3.1

Yasue Watanabe

Tempaku-ku, Nagoya-shi

680,000

3.1

CEPLUX- THE INDEPENDENTUCITS PLATFORM 2(Standing proxy: Citibank, N.A.,
Tokyo Branch)

581,000

2.6

541,625

2.4

GOLDMAN SACHSINTERNATIONAL(Standing proxy: Goldman Sachs
Japan Co., Ltd.)31, Z.A. BOURMICHT, L-8070,
BERTRANGE, LUXEMBOURG(27-30, Shinjuku 6-chome, Shinjuku-ku,
Tokyo)
BAHNHOFSTRASSE 36,P.O.BOX
8010, CH-8001 ZURICH,
SWITZERLAND(Transaction Service Division, 7-1
Marunouchi 2-chome, Chiyoda-ku,
Tokyo)PLUMTREE COURT, 25 SHOE LANE,LONDON EC4A 4AU, U.K.
(Roppongi Hills Mori Tower, 10-1
Roppongi 6-chome, Minato-ku, Tokyo)

453,800

2.0

Total

-

13,464,196

60.5

BANK JULIUS BAER AND CO.,LTD.
(Standing proxy: MUFG Bank,
Ltd.)

-37-

(7) Status of voting rights
1) Issued shares
As of March 31, 2024
Number of shares(Shares)Number of voting
rights (Units)

Details

-

-

-

-

-

-

-

-

-

(Treasury shares)
Common shares
1,769,200--

Classification
Shares without voting rights
Shares with limited voting rights(treasury shares, etc.)
Shares with limited voting rights(others)
Shares with full voting rights(treasury shares, etc.)
Shares with full voting rights(others)
Shares below one unit

Common shares

22,234,200

Common shares

4,328

-

-

24,007,728--

Total number of shares issued
Total voting rights held by all
shareholders

222,342-

222,342--2) Treasury shares, etc.
Number of shares Number of shares
held under own
held under thenamenames of others(Shares)(Shares)

As of March 31, 2024
Percentage of shares
Total
held to the total(Shares)number of sharesissued (%)

Shareholder

Address of shareholder(Treasury shares)
SUNCORPORATION

250 Asahi, Kochino-cho,
Konan-shi, Aichi

1,769,200-

1,769,200

7.36

Total

-

1,769,200-

1,769,200

7.36

-38-

2. Status of Acquisition of Treasury Shares, etc.
[Class of shares, etc.]

Acquisition of common share pursuant to Article 155, Item 3 and Article 155, Item 7 of theCompanies Act(1) Status of acquisition of treasury shares resolved at shareholders’ meeting
Not applicable.
(2) Status of acquisition of treasury shares resolved at the meetings of the Board of Directors
Classification

Total amount (Thousands of yen)

Number of shares (Shares)

Resolution of the Board of Directors (November 14,
2022)(Acquisition period: November 15, 2022 to November
14, 2023)

1,500,000

3,750,000

Treasury shares acquired before the current fiscal year

1,065,100

2,328,799

Treasury shares acquired during the current fiscal year

434,900

903,099

-

-

-

-

Treasury shares acquired during the current period--

Unexercised portion as of the filing date (%)--

Total number and total value of remaining authorizedshares under resolution
Unexercised portion as of the end of the current fiscal
year (%)(Note) The number of treasury shares acquired during the current period does not include the number of shares acquired from
June 1, 2024 to the filing date of this Annual Securities Report.
(3) Details of the acquisition not based on the resolutions of shareholders’ meetings or the meetings of the Board of Directors
Classification

Number of shares (Shares)

Treasury shares acquired during thecurrent fiscal year
(Purchase of shares below one unit)
Treasury shares acquired during thecurrent period

Total amount (Thousands of yen)46

97,88847

169,435(Note) The number of treasury shares acquired during the current period does not include the number of shares under one unit
purchased from June 1, 2024 to the filing date of this Annual Securities Report.

-39-

(4) Status of the disposition and holding of acquired treasury shares
Current fiscal year
Classification

Current period

Number of
Total amount
Number of
Total amountsharesdisposedsharesdisposed(Shares) (Thousands of yen) (Shares) (Thousands of yen)

Acquired treasury shares for which subscribers were
solicited

-

-

-

-

Acquired treasury shares that were disposed of

-

-

-

-

Acquired treasury shares transferred due to merger,
share exchange, share issuance, or corporate division

-

-

-

-

Other (Exercise of share acquisition rights)

24,95051,3795,000

10,296

Other (Post-grant type share awards)

7,106

14,633--

1,769,277-

1,764,324-

Number of treasury shares held

(Note) The number of treasury shares held during the current period does not include the number of shares that were acquired or
disposed of from June 1, 2024 to the filing date of this Annual Securities Report.

-40-

3. Dividend Policy
The Company’s basic policy on dividends is to return profits to shareholders to enhance its corporate value over the medium tolong term while striving to strike balance between dividend payout and financial security/retained earnings. In considering the levelof dividend payout, the Company also takes into account trends in its free cash flow over the medium to long term to drive businessexpansion for the future and consolidate management foundation, and looks at business performance, such as trends in profits, andfuture business outlook.
The amount of dividends of surplus for the current fiscal year are as follows:
Date of resolution

Total amount of dividends(Thousands of yen)

June 25, 2024
Resolution at the Ordinary General Meetingof Shareholders

889,538-41-

Dividend per share
(Yen)
40

4. Corporate Governance(1) Overview of Corporate Governance1) Basic policy on corporate governance
The Company strives to establish sound corporate governance by conducting business operations based on transparent
management and speedy and appropriate management decisions, observing laws, regulations, social norms, etc., and conducting
fair corporate activities.
2) Overview of corporate governance system and reasons for adopting the system
a. Overview of corporate governance system
The Board of Directors consists of six Directors who are not Audit and Supervisory Committee Members (including two
Outside Directors) and three Directors who are Audit and Supervisory Committee Members (including two Outside Directors).
In principle, the Board of Directors meets monthly. The Company has stipulated in its Articles of Incorporation that decisionmaking concerning the execution of important operations can be delegated to Executive Directors, and has introduced an
executive officer system in order to establish a flexible management system by delegating the authority to execute operations.
The Company thus has adopted a system that enables the Board of Directors to make timely decisions and strengthensupervision of those who execute operations.
The Audit and Supervisory Committee consists of three Directors who are Audit and Supervisory Committee Members(including two Outside Directors). The Audit and Supervisory Committee Members attend the meetings of the Board of
Directors, and the full-time Audit and Supervisory Committee Member attends other important meetings. The selected Audit
and Supervisory Committee Members conduct audits utilizing the internal control system and other systems in corporation
with a department in charge of internal audits while receiving reports on matters concerning the execution of duties from the
Directors, etc., examining the status of operations and assets, and reporting the results of these activities to the Audit andSupervisory Committee as necessary. The Audit and Supervisory Committee supervises and audits the execution of duties by
the Directors, etc.
The Nomination and Remuneration Committee consists of three Directors who are Nomination and Remuneration
Committee Members (including two Outside Directors). The Nomination and Remuneration Committee, which is an advisory
body to the President, has been established to secure transparency and fairness in the process of nominating candidates for
Directors and selecting Representative Directors, Directors with special titles, etc., as well as to secure a forum for discussion
for Outside Directors who are Audit and Supervisory Committee Members and to ensure that they obtain sufficient
information to form an opinion on the nomination of Directors, etc. When submitting a proposal regarding the nomination of
Directors to the Board of Directors, the Company ensures that it receives and adequately reflects the recommendation of theCommittee.
The Company has four Outside Directors, who supervise, audit, advise and make recommendations from an objective
and neutral standpoint, and play a role in ensuring the adequacy and appropriateness of decision-making of the Board of
Directors on the execution of business operations of the Company and the Board’s own execution of duties.

-42-

[Business management organization]-43-

b. Reasons for adopting the corporate governance system
The Company has adopted the Company with Audit and Supervisory Committee system in order to separate businessexecution and supervision, strengthen the audit and supervisory functions of the Board of Directors, and accelerate thedecision-making and execution of duties of the Board of Directors.
3) Other matters related to corporate governancea. Situation of development of internal control system
1. System to ensure that the execution of duties by Directors and employees complies with laws and regulations and the
Articles of Incorporation
1) Directors and employees shall conduct lawful and fair business activities that satisfy social demands in accordancewith the Director Regulations and the Employee Work Rules.
2) The Company shall establish Compliance Rules and appoint a Director in charge of compliance to ensure compliancewith laws, regulations, internal rules, etc. in conducting business activities.
3) The Company shall identify laws and regulations that apply to the Company’s business, develop a foundation tocomply with legal requirements, and provide training and education as needed.
4) A department in charge of internal audits that directly reports to the Audit and Supervisory Committee shall audit thestatus of compliance and report its findings to the Board of Directors and the Audit and Supervisory Committee.
5) In order to prevent violations of laws and regulations, the Articles of Incorporation, internal rules, etc., the Company
shall introduce an internal reporting system. In the event that a violation occurs, the Company shall promptly receive
the relevant information and take appropriate actions.
6) The Company shall resolutely eliminate and block anti-social forces and organizations, and the General Affairs
Department shall deal with such forces in close cooperation with external specialized agencies such as the police.
2. System for storage and management of information related to the execution of duties by Directors- The Company shall store and manage information related to decision-making at the meetings of the Board of Directors,
Management Committee meetings and other important meetings, information related to important decisions made by
the President and Representative Director, Executive Officers and others, and information related to financial andother management operations, risks, and compliance in accordance with laws and regulations, the Articles ofIncorporation, internal rules, etc.
3. Regulations and other systems related to the management of the risk of loss
- Based on the Risk Management Rules, the Company shall strive to minimize losses by preventing the materializationof risks and taking appropriate measures to address the risks that have materialized.
4. System to ensure the efficient execution of duties by Directors
1) The Company shall introduce an executive officer system to realize timely and highly efficient corporate management
and clarify the respective roles of Directors (excluding Directors who are Audit and Supervisory Committee
Members) and Executive Officers.
2) The Company shall establish the Board of Directors Rules to have it make decisions on important management mattersat the Board of Directors’ meetings held, in principle, once a month in accordance with relevant laws and regulations,the business judgement rule, the due care of a prudent manager, etc., and periodically report the status of the executionof duties, etc.
3) The responsibilities and authority for the execution of business shall be stipulated in the Regulations on the Divisionof Duties and the Regulations on Administrative Authority.
4) The Management Committee, which consists of Directors and Executive Officers, deliberates on the execution ofimportant business operations in order to ensure that diversified viewpoints are incorporated in the discussion.
5) Matters concerning the operation of the Board of Directors shall be stipulated in the Board of Directors Rules, andbasic matters concerning Directors shall be stipulated in the Director Regulations.
5. Other system to ensure the appropriateness of business operations in the corporate group consisting of the Company andits subsidiaries (hereinafter referred to as the “Group”)
A. System for reporting to the Company on matters relating to the execution of duties by the Directors, Executive
Officers, employees who execute business operations, persons who are to perform duties under Article 598, paragraph-44-

1 of the Companies Act, and other persons equivalent thereto (referred to as “Directors, etc.” in C. and D.) of
subsidiaries.
1) In accordance with the Subsidiary/Associate Management Rules established by the Company, the Company shallrequire its subsidiaries to submit monthly budget control tables, quarterly financial results documents, and relatedmaterials as necessary in order to accurately understand the details of the management of subsidiaries.
2) The Company shall require its subsidiaries to hold meetings of the Board of Directors in which the Company’s
Directors participate, in principle, quarterly and to report to the Company their business performance, financial
position and other important information.
B. Regulations and other systems concerning the management of risk of loss of subsidiaries
1) Based on the Company’s Risk Management Rules, the Company shall require its subsidiaries to minimize losses
by preventing the materialization of risks and taking appropriate measures against the risks that have materialized.
2) The Company shall require its subsidiaries to establish a system to report incidents that could cause significant
damage to the Group, such as violations of laws and regulations, to the department in charge of the subsidiaryconcerned, as soon as they are discovered.
C. System to ensure the efficient execution of duties by Directors of subsidiaries
1) While respecting the autonomy and independence of the management of subsidiaries, the Company shall require
subsidiaries to formulate basic policies and rules necessary for the execution of business operations in order tocontribute to the appropriate and efficient management of subsidiaries.
2) The Company shall require its subsidiaries to make decisions on important management matters at meetings ofthe Board of Directors in which the Company’s Directors participate, in principle, quarterly in accordance with
relevant laws and regulations, the business judgement rule, the due care of a prudent manager, etc., and toperiodically report the status of the execution of duties, etc.
D. System to ensure that the execution of duties by Directors and employees of subsidiaries complies with laws andregulations and the Articles of Incorporation
1) The Company shall require its subsidiaries to establish a system in which their Directors, etc. and employees
engage in legitimate and fair business activities that satisfy social demands based on the basic policies formulatedby the subsidiaries.
2) The Company shall require its subsidiaries to be evaluated by Audit and Supervisory Committee Members
appointed by the Committee and a department in charge of internal audits in order to confirm the compliancewith laws and regulations and the establishment and operation of internal control systems.
3) The Company shall require its subsidiaries to introduce and utilize the internal reporting system in order topromptly detect any violation of laws and regulations or other compliance-related problems and take remedialactions.
6. Matters concerning employee(s) who assist the duties of the Audit and Supervisory Committee- The employee(s) of a department in charge of internal audits shall assist the duties of the Audit and Supervisory
Committee as staff who assist the duties of the Audit and Supervisory Committee (hereinafter referred to as “Audit
Support Staff”).
7. Matters concerning the independence of the employee(s) described in the preceding item from Directors (excluding
Directors who are Audit and Supervisory Committee Members)
1) The Audit Support Staff shall follow the instructions and orders of the Audit and Supervisory Committee and its
members appointed by the Committee.
2) The prior consent of the Audit and Supervisory Committee is required for decisions on matters pertaining to theappointment of the Audit Support Staff.
8. Matters to ensure the effectiveness of instructions from the Audit and Supervisory Committee to employees who assist theexecution of duties by the Audit and Supervisory Committee- Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees shall cooperate
in the development of the audit environment so that the work of the Audit Support Staff who are expected to support
the duties of the Audit and Supervisory Committee can be carried out smoothly.

-45-

9. Other systems related to reporting to the Audit and Supervisory Committee of the Company
A. Systems for Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees of
the Company to report to the Audit and Supervisory Committee of the Company
1) Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees shallimmediately report to the Audit and Supervisory Committee if an event that may cause significant damage to theCompany occurs.
2) Audit and Supervisory Committee Members appointed by the Committee shall attend meetings of the Board of
Directors and other important meetings in order to understand important decision-making processes and thestatus of business execution.
3) Audit and Supervisory Committee Members appointed by the Committee may inspect important documents
related to the execution of business, such as key approval request documents, and request explanations from
Directors (excluding Directors who are Audit and Supervisory Committee Members) or employees as necessary.
B. Systems for reporting to the Company’s Audit and Supervisory Committee by Directors, Audit and Supervisory Board
Members, Executive Officers, employees who execute business operations, persons who are to perform duties
under Article 598, paragraph 1 of the Companies Act, and other persons equivalent thereto (referred to as “Directors,etc.” in this section) and employees of the Company’s subsidiaries, or persons who have received reports from such
persons
1) Directors, etc. and employees of subsidiaries shall make appropriate reports promptly when requested by an
Audit and Supervisory Committee Members appointed by the Committee of the Company to report on mattersrelated to business execution.
2) Directors, etc. and employees of subsidiaries shall immediately report incidents that could cause significant
damage to the Group, such as the violations of laws and regulations, to the department in charge of the relevant
subsidiaries as soon as they detect such incidents, and the department in charge shall report them to the Audit
and Supervisory Committee.
3) The department in charge of the Company’s subsidiaries and the department in charge of internal audits shallperiodically report the current status of internal control audits, compliance, risk management, etc. of thesubsidiaries to the Company’s Audit and Supervisory Committee.
10. Systems to ensure that a person who has made a report to the Audit and Supervisory Committee of the Company will not
be treated disadvantageously due to such report- The Company shall clearly state in the Operational Rules for Internal Reporting System that it is prohibited to treat
any Director, Audit and Supervisory Board Member or employee of the Group who has made a report to the Audit
and Supervisory Committee of the Company unfavorably on the grounds of such report.
11. Matters related to the policy on advance payment of expenses arising from the execution of duties by the Audit andSupervisory Committee Members of the Company- When an Audit and Supervisory Committee Member of the Company makes a request to the Company for advancepayment of expenses, etc. in relation to the execution of his / her duties, the Accounting Department shall deliberateon the request and promptly treat the expenses or debts as necessary unless it is proven that the expenses or debts
pertaining to the request are not necessary for the execution of the duties of the Audit and Supervisory Committee
Member in question.
12. Other systems to ensure effective audits by the Audit and Supervisory Committee of the Company- Representative Directors and the Audit and Supervisory Committee shall hold regular meetings to exchange opinions.
- The Company shall develop a system to ensure that audits by the Audit and Supervisory Committee are conductedeffectively, such as holding liaison meetings between the Audit and Supervisory Committee and the Accounting
Auditor/a department in charge of internal audits in response to requests from the Audit and Supervisory Committee,
and ensuring the attendance of Audit and Supervisory Committee Members at various meetings.
13. Basic stance on the elimination of anti-social forces and the establishment of the relevant system
A. Basic stance on the elimination of anti-social forces
1) The Company shall not provide benefits to anti-social forces nor be involved in any way with anti-social forces.

-46-2) The Company’s employees (all persons who work for the Company) shall demonstrate an attitude of not allowing
unjust intervention by anti-social forces and eliminating them in order to achieve social justice and win the trustof customers, the market, and society.
B. Systems to eliminate anti-social forces- In order to deal with anti-social forces, the Company shall state that it strives to eliminate anti-social forces in the
Compliance Rules and the Rules on Handling of Anti-Social Forces, and shall ensure that all employees are fully
aware of the Company’s determination so that they can consistently deal with anti-social forces under thesupervision of the Director in charge of compliance. As an organization, the Company deals with anti-social forces
under the supervision of the Director in charge of compliance, the head of the General Affairs Department, the headof the Legal Department and legal advisors, by seeking guidance from the police and other external organizations.
b. Situation of development of a risk management system
In order to appropriately deal with various risks faced in business activities, each department makes use of its own
expertise and experience, and the Company strives to control risks based on internal rules, such as by receiving advice fromlegal advisors and consulting tax accountants as necessary.
In addition, legal matters are managed by the Legal Department, and all of the important contracts, etc. are confirmedby legal advisors in principle to avoid unexpected risks.
c. Management of subsidiaries
The Company’s Accounting Department receives monthly reports from the Company’s subsidiaries on their financial
position and important matters in accordance with the Subsidiary/Associate Management Rules.
The Company’s Directors in charge of the Company’s subsidiaries participate in meetings of the Board of Directors, etc.
held by the subsidiaries in question, receive reports on their management status and important matters, and report them to theCompany’s Board of Directors.
The department in charge of internal audits conducts internal control audits of the Company’s subsidiaries every year,
and reports its findings to the President and Representative Director, the Board of Directors, and the Audit and Supervisory
Committee.
d. Overview of the limited liability agreement
Pursuant to Article 427, paragraph 1 of the Companies Act, the Company has entered into agreements with Directors(excluding Executive Directors, etc.) to limit their liability for damages under Article 423, paragraph 1 of the Companies Act.
The maximum amount of liability based on such agreement shall be the amount stipulated in Article 425, paragraph 1 of theCompanies Act. This limited liability is applicable only when a Director has acted in good faith and without gross negligencein the execution of his/her duties that caused the liability.
e. Directors and Officers (D&O) liability insurance contract
The Company has concluded a D&O liability insurance contract with an insurance company as prescribed in Article
430-3, paragraph 1 of the Companies Act, under which the insurance company compensates for damages and litigation costs
incurred by the insured due to a claim for damages resulting from an act (including inaction) performed by the insured inrelation to his/her duties as an officer of the Company. The insurance premium is borne by the Company in full. The Company
has taken measures to ensure the appropriateness of the execution of duties of officers, etc. by excluding the damage incurred
by officers themselves who have committed criminal acts, such as bribery, or intentional illegal acts from the scope of theinsurance.
f. Number of Directors
The Company’s Articles of Incorporation stipulate that the number of Directors (excluding Directors who are Audit andSupervisory Committee Members) shall be eight or less and the number of Directors who are Audit and Supervisory
Committee Members shall be four or less.
G. Requirements for the resolution of the appointment of Directors
The Company’s Articles of Incorporation stipulate that a resolution to elect Directors shall be adopted by a majority ofthe voting rights of the shareholders present at the General Meeting of Shareholders, where shareholders holding one third or
more of the voting rights of the shareholders who are entitled to exercise voting rights are present.
The Company’s Articles of Incorporation also stipulate that the election of Directors shall not be by cumulative voting.

-47-

h. Matters to be resolved at the General Meeting of Shareholders but may be resolved by the Board of Directors
1. Purchase of treasury shares
The Company’s Articles of Incorporation stipulate that, pursuant to Article 165, paragraph 2 of the Companies Act, theCompany may acquire treasury shares by resolution of the Board of Directors to enable the Company to execute its capital
policy in a flexible manner.
2. Dividends of surplus
The Company’s Articles of Incorporation stipulate that the Company may pay dividends of surplus (interim dividends)
pursuant to Article 454, paragraph 5 of the Companies Act by resolution of the Board of Directors, with September 30 ofeach year being designated as the record date, in order to enable flexible return of profits to shareholders.
3. Directors’ exemption from liability
The Company’s Articles of Incorporation stipulate that the Company may, by resolution of the Board of Directors,
exempt Directors (including ex-Directors) from liability under Article 423, paragraph 1 of the Companies Act to the extent
permitted by laws and regulations, provided they have acted in good faith and without gross negligence.
In addition, the Company’s Articles of Incorporation stipulate that the Company may enter into agreements with
Directors (excluding Executive Directors, etc.) that enable the Company to assume their liabilities under Article 423,
paragraph 1 of the Companies Act up to the amount stipulated by laws and regulations if the Directors have acted in goodfaith and without gross negligence.
i. Requirement for special resolution at the General Meeting of Shareholders
With the aim of ensuring the smooth operation of the General Meeting of Shareholders by relaxing the quorum for special
resolutions at the General Meeting of Shareholders, the Company’s Articles of Incorporation stipulate that resolutions
pursuant to the provisions of Article 309, paragraph 2 of the Companies Act may be passed when shareholders holding one
third or more of the voting rights of shareholders who are entitled to exercise voting rights are present at the General Meetingof Shareholders with two-thirds or more of the voting rights of such shareholders are voted to agree.
j. Activities of the Board of Directors of the filing company, the Nomination and Remuneration Committee of the company withnominating and other committees, committees voluntarily established by the filing company in relation to corporate
governance, and other similar bodies in the most recent fiscal year
1. The Board of Directors- The Board of Directors, in accordance with the internal rules on matters to be submitted to and reported to the Boardof Directors, resolves matters stipulated by laws and regulations and the Articles of Incorporation, in addition to thebasic policy on the Company’s management, important matters related to the execution of business operations, andmatters authorized by resolution of the General Meeting of Shareholders, and receives reports on matters stipulated
by laws and regulations and the status of the execution of important business operations.
- Meetings of the Board of Directors are held once a month in principle and ad-hoc meetings are held as needed. A totalof 20 meetings were held in the fiscal year ended March 31, 2023.
- The Company has established the Nomination and Remuneration Committee and the Corporate Restructuring Office
as an advisory body to the Board of Directors. The majority of the members of the Nomination and Remuneration
Committee are Outside Directors.

-48-

- At the time of filing of this report, the Board of Directors consists of the following nine members:
Attendance at the meetings of
Status of concurrent posts such as thethe Board of Directors for the
Full-time /NameNomination and Remuneration
fiscal year ended March 31,
OutsideCommittee
2024 (20 times in total)
Nomination and Remuneration
Ryusuke Utsumi
Full-time
16 times
Committee
Yoshimi Kimura

Full-time

16 times

Yonatan Domnitz

Full-time

16 times

Yakov Zlicha

Full-time

16 times

Akira Iwata

Outside16 times

Lisa Hammitt

Outside1 timeYasushi Muto

Full-time

16 times

Tomonori Shinkai

Outside16 times

Nomination and Remuneration
Committee

Nomination and Remuneration
Committee(Note) With regard to Ms. Lisa Hammitt, the status after her appointment as Outside Director on June 25, 2024 is stated.

Takashi Matsui

Outside16 times

2. Status of the Nomination and Remuneration Committee
The Company has established the Nomination and Remuneration Committee as an advisory body to the Board of
Directors. The composition of the Nomination and Remuneration Committee at the time of the filing of this report is asfollows:
Chairman: Akira Iwata
Member: Ryusuke Utsumi
Member: Takashi Matsui
The majority of the members of the Nomination and Remuneration Committee are Outside Directors, which enhances
the transparency and objectivity of the decision-making process for the nomination and remuneration of the Company’s
Directors and ensures fairness.
3. Skill matrix of each Director
The Company believes that it is important to identify appropriate skills for its Board of Directors to ensure that it may
adequately consider M&A for new businesses and business restructuring taking into consideration the Company’s businesscharacteristics and management environment. In addition, as an operating company that conducts multiple businesses, theCompany’s basic policy is to appoint Directors who possess expertise in each business, corporate management, financial
accounting, legal affairs and risk management, and global knowledge in a balanced manner in order to ensure thesupervision of business execution and robust decision-making on important matters.

-49-

SkillName

Position andresponsibilities

MarketingCorporate

Financialmanagement accounting

Legal affairs

Globaland riskBusiness

Businessknowledge (Entertainment) (Global DI)

management

Business
(IT)

Human
resources

M&A

Sales

Ryusuke
Utsumi
YoshimiKimuraPresident andRepresentative
Director
Senior Managing
Director andRepresentative
Director

�

�

�

�

�

�

�

�

�

�

�

�

Director

�

�

�

�

�

�

Director

�

�

�

�

�

�

Akira Iwata

Director

�

�

�

Lisa
Hammitt

Director

�

�

�

�

�

�

�

YonatanDomnitz
Yakov
ZlichaYasushi
Muto
Tomonori
ShinkaiTakashiMatsui

Director
Audit and Supervisory
Committee Member
Director
Audit and Supervisory
Committee Member
Director
Audit and Supervisory
Committee Member

�

�
�

�

�

�

�

�

�

�

�
�

�

(2) Directors and Audit and Supervisory Committee Members
1) List of Directors and Audit and Supervisory Committee Members
Male: 8

Female: 1

Title or position(Percentage of female Directors and Audit and Supervisory Committee Members: 11.1%)
Name

Date of birth

Brief personal history
Mar. 2008

Jun. 2012
Oct. 2018
Apr. 2019
Apr. 2020
Apr. 2020
Apr. 2020

Incubation Manager, Aichi Venture House of
Chubu
Association
forManagement
Information Technology
Manager, Industrial Support Department,
Chubu Aerospace Technology Center
Joined SUNCORPORATION
General Manager, Internal Control Office
General Manager, Internal Audit OfficeDirector of SUNCORPORATION
Director, Cellebrite DI Ltd.
(Note 3)
Director, E-Dream Corporation (to present)

Jun. 2009

President andRepresentative Director

Ryusuke
Utsumi

October 8, 1965

Term ofofficeJul. 2020

Director, SUNTAC Corporation

Feb. 2021

Chairman, Cellebrite DI Ltd.

Jun. 2021

President and Representative Director ofAug. 2021
Feb. 2023

SUNCORPORATION (to present)
Director, Cellebrite DI Ltd. (to present)
Chairman, EKTech Holding Sdn. Bhd. (topresent)-50-

Number ofshares held
(Shares)

3,900

Title or position

Name

Date of birth

Brief personal history
Oct. 1972
Sep. 1978
Feb. 1980
Sep. 1984
Oct. 1989
Nov. 1994
Sep. 1997
Sep. 2004

Senior Managing Director
and Representative Director

YoshimiKimuraApril 3, 1948

Sep. 2006
Dec. 2006
Sep. 2008
Sep. 2014
Mar. 2016
Jul. 2018
Jun. 2019
Jun. 2021
Aug. 2006
Aug. 2009

Director

YonatanDomnitz

April 21, 1981

Jan. 2010
Aug. 2012
Apr. 2020
Apr. 2020

Term ofofficePete Mauik Mitchell Accounting Firm (nowKPMG)
George Takahashi Accounting Office
Mackin Industries
President and Consultant, System Pro USA
Showa Ota & Co. (now Ernst & Young
ShinNihon LLC)
General Manager, Internal Audit Office,Goodman Co.
Managing Director and General Manager of
Administration Division, Goodman Co.
Managing Director, General Manager ofOverseas Business Management Division and(Note 3)General Manager of Administration Division,
Goodman Co.
Chairman, Avantech Vascular, Inc.
Controller, Light Lab Imaging, Inc.
Full-time Auditor, Goodman Corporation
Auditor, Greens Inc.
Director and Audit Committee Member of thesame company
Consultant for SUNCORPORATION
President and Representative Director of
SUNCORPORATION
Senior Managing Director and Representative
Director of SUNCORPORATION (to present)
Forensic Accountant,
RGL
Forensics
Accountants and Consultants, London
From ICAEW (Institute of Chartered
Accountants in England and Wales) Accreditedby the Association of Chartered Certified
Accountants (ACA)(Note 3)
forensic accountant, C. Lewis & Company LLP(London and Hong Kong)
Director and Strategic Analyst, Oasis
Management Company Ltd. (to present)
Director of SUNCORPORATION (to present)
Director, Cellebrite DI Ltd. (to present)-51-

Number ofshares held
(Shares)

7,600

700

Official title or position

Name

Brief personal history

Date of birthSep. 1994
Jan. 1996

Jul. 1999
Nov. 2002

Director

Yakov Zlicha

October 4, 1966

Jul. 2004
Jun. 2007

Jun. 2012
Nov. 2015
Apr. 2020
Jul. 2020
Apr. 1985

Apr. 1993

Apr. 1997

Nov. 2002
Jan. 2004
Director

Akira Iwata

November 30, 1950

Apr. 2004

Apr. 2016
Apr. 2016

Apr. 2020

Term ofofficeClerkship, Hamburger, Evron Law Firm
(Israel)Lawyer, Sadot Law Firm (Israel)(Member of the Israeli Bar Association sinceNovember 1995)
Tokyo
correspondent,
Maariv
Daily
Newspaper (Israel)
Business Development Manager, Japan Israel
Investment Corporation, Ltd.
Business Development Consultant, Zlicha(Note 3)
Consulting, Inc. (to present)
OEM Sales Manager, Mentor Graphics Japan
K.K. (acquired Valor Computerized Systems
Japan)
DirectorofBusiness
Development,
Screenovate Technologies Ltd. (Israel)
Representative Director and Country Manager,
Incredibuild Japan K.K.
Outside Director of SUNCORPORATION
Director of SUNCORPORATION (to present)
Associate Professor, Department of Computer
Science and Engineering, Nagoya Institute ofTechnology
Professor, Department of Electrical andComputer Engineering, Nagoya Institute ofTechnology
Chairman, Department of Electrical andComputer Engineering, Nagoya Institute ofTechnology
Vice President, Nagoya Institute of Technology
Professor, Graduate School of Engineering,
Nagoya Institute of Technology
Professor, Graduate School of Engineering, (Note 3)
Nagoya Institute of Technology
General Manager, Intellectual Property
Management Department, Techno Innovation
Center (concurrent position)
Professor Emeritus, Nagoya Institute ofTechnology (to present)
Representative Director, Encephalon
Corporation, a startup company and a national
university corporation from Nagoya Instituteof Technology (to present)
Outside Director of SUNCORPORATION (topresent)-52-

Number ofshares held
(Shares)

1,700

1,500

Official title or position

Name

Brief personal history

Date of birthAug. 1998
Jul. 2003
May 2010

Sep. 2011
June. 2015
Dec. 2017
Feb. 2019
Dec. 2019
Director

Lisa Hammitt November 13, 1962
Mar. 2020
Jan. 2022
Jan. 2023
Feb. 2023
Oct. 2023
Jan. 2024
Feb. 2024
Jun. 2024

Number ofTerm ofshares held
office(Shares)

Chief Executive Officer, Black Pearl Software
WW Strategy Lead, Artificial Intelligence andAnalytics, IBM
Director,
Corporate
Strategy
andDevelopment, Cloud Services Business Unit,
Hewlett Packard
Vice
President,
Community
Cloud,
Salesforce.com
Vice President, Watson Cloud Services, IBM
Global Vice President, Data and Artificial
Intelligence, Visa
Independent Board Member, Clear Channel
Outdoor (to present)
Senior Advisor, Brighton Park Capital (topresent)(Note 3)
Independent Board Member, Glassbox
Chairwoman of the Board of Directors, Intelsat(to present)
Independent Board Member, QuSecure (topresent)
Independent Board Member, Auterion GS (topresent)
Independent Board Director, Solliance (topresent)
Board Advisor, Asignio (to present)
Board Advisor, The Mandatum Foundation (topresent)
Outside Director of SUNCORPORATION (topresent)-53--

Official title or position

Name

Brief personal history

Date of birthNov. 1992
Mar. 2010
Oct. 2013

Director(Audit and Supervisory
Committee Member)

Yasushi Muto

May 5, 1963

Jul. 2016
Oct. 2018
Apr. 2019
Apr. 2020
Jun. 2020
Oct. 1994

Director(Audit and Supervisory
Committee Member)

Apr. 1998
Nov. 2003
Jun. 2007
Jul. 2019
Tomonori
Shinkai

October 22, 1968

Jun. 2020
Jun. 2022

Jun. 2024
Dec. 2008
Dec. 2008
Jan. 2012
Apr. 2013

Sep. 2015
Director(Audit and Supervisory Takashi Matsui November 1, 1976
Committee Member)Jan. 2019Nov. 2019
Dec. 2020

Apr. 2022

Jun. 2022
Total

Term ofofficeJoined SUNCORPORATION
General Manager, Product Management Dept.
Executive Officer, General Manager of ProductManagement Dept.
General Manager, Internal Control Office
General Manager, Internal Audit Office(Note 4)General Manager, Product Management Dept.
Corporate Auditor, E-Dream Corporation (topresent)
Director of SUNCORPORATION (Audit andSupervisory Committee Member) (to present)
Joined Cosmos & Co.
Registered as a Certified Public Accountant
Employee, Cosmos & Co.
Representative Partner, Cosmos & Co.
Supervisory Representative Partner, Cosmos &Co. (to present)(Note 4)
Outside Auditor, Pacific Industrial Co. Ltd
Outside Director of SUNCORPORATION(Audit and Supervisory Committee Member) (topresent)
Outside Board Member (Audit and Supervisory
Committee Member), Pacific Industrial Co. Ltd
Registered as a lawyer
Joined Kawakami & Hara Law Office (nowOlympia Law Office)Established Matsui Law Office (to present)
Steering Committee Member of Nagoya
Branch, Japan Intellectual Property Arbitration
Center (to present)Part-time Lecturer (Copyright Law), Nanzan
University Law School
Lecturer at the Japan Patent Attorneys
Association for Specific Infringement Litigation (Note 4)
Representation
Selection Committee Member, Okazaki City
Regional Electricity Retail Business Partner
Outside Director and Audit Committee Member,
Goodspeed Corporation (to present)
Member,NagoyaCity Administrative

Number ofshares held
(Shares)

10,000900

500Complaint Review Board (to present)
Outside Director of SUNCORPORATION(Audit and Supervisory Committee Member) (topresent)
26,800(Notes) 1. Mr. Akira Iwata, Ms. Lisa Hammitt, Mr. Tomonori Shinkai and Mr. Takashi Matsui are Outside Directors.
2. The Company has notified the Tokyo Stock Exchange that it has appointed Mr. Akira Iwata, Mr. Tomonori Shinkai and Mr.
Takashi Matsui as Independent Directors.
3. The term of office of Directors (excluding Directors who are Audit and Supervisory Committee Members) is one year (until
the conclusion of the Ordinary General Meeting of Shareholders for the last fiscal year that ends within one year after theirelection).
4. The term of office of Directors who are Audit and Supervisory Committee Members is two years (until the conclusion of
the Ordinary General Meeting of Shareholders for the last fiscal year that ends within two years after their election).
5. The structure of the Audit and Supervisory Committee is as follows:
Chairman: Yasuji Muto Member: Tomonori Shinkai Member: Takashi Matsui
6. The Company has introduced an executive officer system in order to strengthen its business execution capabilities andclarify the responsibilities of each business unit.
The Company has appointed one Executive Director, namely, Terakura Keiichi, General Manager of the Corporate
Restructuring Office and General Manager of the Legal & Intellectual Property Department.
2) Outside Directors
The Company has appointed four Outside Directors.

-54-

The Company has appointed Mr. Akira Iwata as Outside Director as he has advanced technical expertise in the fields ofartificial intelligence (AI), neural networks, deep learning, and information security, as well as extensive consulting
experience in the planning, development, and manufacturing of IoT sensor systems that would enable him to contribute to
the growth and development of the Group and monitor/supervise the execution of duties of Directors. He holds 1,500 sharesof the Company’s stock. There are no other personal, capital, or important business relationships or other interests between
the Company and Mr. Iwata.
The Company has appointed Ms. Lisa Hammitt as Outside Director as she has a wealth of experience and a proven trackrecord in achieving growth and success in a number of businesses over many years in senior management positions leading
technology companies and consumer software divisions which would enable her to strengthen the function of the Board of
Director.
The Company has appointed Mr. Tomonori Shinkai and Mr. Takashi Matsui as Outside Directors as they have expert
knowledge as a certified public accountant and as an attorney at law, and are expected to strengthen the functions of the Boardof Directors and supervise and audit business execution by Directors, etc. as Audit and Supervisory Committee Members.
The Company has not established any independence criteria or policies for the appointment of Outside Directors.
However, the Company has designated Outside Directors as Independent Directors as it judged that they do not conflict withany of the independence criteria set forth by the Tokyo Stock Exchange (Guidelines for Listing Management III 5. (3) - 2)
and that there is no risk of a conflict of interest with general shareholders.
3) Mutual cooperation between supervision or audits by Outside Directors and internal audits, audits by the Audit andSupervisory Committee, and accounting audits, and relationship with a department in charge of internal audits
Outside Directors (two of whom are Directors and Audit and Supervisory Committee Members) supervise the executionof business operations by receiving reports on the findings of internal audits and audits by the Accounting Auditor at themeetings of the Board of Directors.
The Company has established the Internal Audit Office as a department in charge of internal audits and conducts internal
audits centering on operational audits. Audit findings are reported to the President and Representative Director, and are also
reported to the Board of Directors as necessary. In addition, the relevant departments are requested to take actions for
improvement to address problems that are found during audits and the status of improvement is monitored. The status of theseinternal audits is also reported to the Audit and Supervisory Committee consisting of Directors and Audit and Supervisory
Committee Members as needed, and information on the audit findings is shared.
The Audit and Supervisory Committee and the Accounting Auditor cooperate organically at three stages (1. Formulationof an audit plan, 2. Audit implementation process, 3. Formation of an audit opinion) and mutually complement throughinteractive exchange of information on audit findings. As stated above, the Audit and Supervisory Committee, the Internal
Audit Office and the Accounting Auditor maintain mutual cooperation and strive to improve the quality and efficiency ofaudits.
(3) Status of Audits
1) Status of Audits by the Audit and Supervisory Committee
The Company’s Audit and Supervisory Committee consists of one Director who is a full-time Member of Audit andSupervisory Committee (full-time Audit and Supervisory Committee Member) and two Audit and Supervisory Committee
Members who are Independent Outside Directors (Outside Audit and Supervisory Committee Members). Mr. Tomonori
Shinkai, who is an Outside Audit and Supervisory Committee Member, has expertise and extensive experience as a certified
public accountant, and Mr. Takashi Matsui, who is also an Outside Audit and Supervisory Committee Member, has expertiseand extensive experience as an attorney.
In accordance with the audit policy and allocation of duties determined by the Audit and Supervisory Committee, theAudit and Supervisory Committee, in cooperation with the department in charge of internal audits, which supports the Audit
and Supervisory Committee as staff, attended important meetings, etc. to confirm the process and details of decision-making,received reports on matters related to the execution of duties from Directors and employees, etc., requested explanations asnecessary, inspected the contents of major approval documents and other important documents related to the execution ofduties, and investigated the status of business operations and assets at the headquarters and major offices. With respect to-55-

subsidiaries, the Company’s Board of Directors received periodic reports on the status of business from the Director in charge,
and requested explanations as necessary. Furthermore, the Audit and Supervisory Committee received reports on the findingsof audits of subsidiaries from the department in charge of internal audits, and requested explanations as necessary.
During the current fiscal year, the Company’s Audit and Supervisory Committee holds regular meetings once a monthand extraordinary meetings as necessary. The attendance of each Audit and Supervisory Committee Member is as follows:
Number of meetings

Number of meetings

heldattended

Yasushi Muto

14

14

100%

Tomonori Shinkai

14

14

100%

Takashi Matsui

14

14

100%

Name

Attendance rate

The main audit items for the current fiscal year are as follows:(Audit items)
1. Audit of the execution of duties by Executive Directors
2. Audit of reports by Directors to the Board of Directors, etc. and decision-making by the Board of Directors
3. Audit of the establishment and operation of the system to ensure the appropriate business operations (internal control
system)4. Audit of the status of the Company’s assets and management system thereof
5. Audit of statutory disclosure information, etc.
6. Audit of business reporting, etc.
7. Audit of the business operations and assets of subsidiaries, etc.
8. Audit of the appropriateness of policies, methods and results of accounting audits by the Accounting Auditor
9. Audit of accounting documents
2) Internal Audits
Internal audits are carried out by a department in charge of internal audits (one staff) that directly reports to the Audit
and Supervisory Committee under the guidance of the Audit and Supervisory Committee and the President (internal audits
related to the financial statements). In cooperation with the Audit and Supervisory Committee and the Accounting Auditor,
the department in charge of internal audits evaluates the level of compliance and efficiency of business operations to execute
them flexibly from the viewpoint of compliance and risk management, and reports its findings to the Board of Directors andthe Audit and Supervisory Committee to ensure internal control and internal checks.
3) Status of Accounting Auditsa. Name of the audit firm
Frontier Audit Corporationb. Number of consecutive years of auditing
2 yearsc. Certified Public Accountants engaged in the accounting audits
Yukio Fujii
Daisuke Hongod. Composition of assistants for accounting audits
The composition of assistants for accounting audits is determined based on the selection criteria of the audit firm.
Specifically, nine Certified Public Accountants supported the accounting audits.
e. Policy and reasons for the selection of audit firmWith regard to the appointment and reappointment of the Accounting Auditor, the Company comprehensively evaluates
the candidate proposed by the executive departments by referring to the “Practical Guidelines for Audit and Supervisory-56-

Board Members on Evaluation of and Formulation of Selection Standards for Accounting Auditors,” published by the Japan
Audit and Supervisory Board Members Association, and other guidelines, to reach a decision.
f. Evaluation of the audit firm by the Audit and Supervisory Committee
Based on the “Practical Guidelines for Audit and Supervisory Board Members on Evaluation of and Formulation of
Selection Standards for Accounting Auditors,” published by the Japan Audit and Supervisory Board Members Association,
the Company receives reports from the Accounting Auditor on audit plans, the implementation status of audits, systems toensure that duties are performed properly, quality control standards for audits, etc., and examines and comprehensively
evaluates them.
g. Change in audit firm
An audit firm that carried out the accounting audits of the Company was changed as stated below:
The 51st term (Consolidated/Non-consolidated): KPMG AZSA LLC
The 52nd term (Consolidated/Non-consolidated): Frontier Audit Corporation
The relevant description in the Company’s Extraordinary Report is as follows:
The name of the Certified Public Accountant, etc. conducting audits who are subject to the change:
The name of the Certified Public Accountant, etc. to be selected
Frontier Audit Corporation
The name of the certified public accountant, etc. to be retired
KPMG AZSA LLC
Date of change:
June 23, 2022
Date on which the selected Certified Public Accountants, etc. became the Certified Public Accountants etc. conducting
audits:July 30, 2007
Matters relating to opinions in the audit reports, etc. for the past three years that were prepared by the selected Certified
Public Accountants, etc. conducting audits:
Not applicable.
Reasons and background of the determination of the change:
The contractual term of KPMG AZSA LLC, the Company’s previous Accounting Auditor, was expired at theconclusion of the 51st General Meeting of Shareholders held on June 23, 2022. While the Company believes that
KPMG AZSA LLC has established an adequate system with which accounting audits are conducted appropriately andreasonably, the Company decided to change its Accounting Auditor to Frontier Audit Corporation by comprehensively
considering the relevant factors, including the fact that KPMG AZSA LLC has continued conducting the audits of theCompany for a long period of time as well as balance between the audits that commensurate with the business scale of
the Company and audit fees. The Company chose Frontier Audit Corporation as its new Accounting Auditor as it judgedthat the audit firm concerned has capacities to properly conduct audits with its expertise, independence and quality
management system that are required of audit firms and was expected to conduct audits from new perspectives that fit
the business scale of the Company.
Opinions on aforementioned reasons and background:
Opinion of retired Certified Public Accountants, etc. conducted audits:
The Company obtained that it has no particular opinion.
Opinion of the Audit and Supervisory Committee:-57-

It judged that they are reasonable.

4) Details of Audit Fees
a. Details of fees for Certified Public Accountants, etc. who conducted audits
Previous fiscal year
Classification

The Filing company
Consolidated subsidiaries
Total

Current fiscal year

Audit fees (Thousands

Non-audit fees

Audit fees (Thousands

Non-audit feesof yen)(Thousands of yen)of yen)(Thousands of yen)

47,000-43,000

-

-

-

-

-

47,000-43,000-(Notes) 1. Services other than audits stipulated in Article 2, paragraph 1 of the Certified Public Accountants Act are notentrusted.
2. In addition to the above, the Company paid additional fees of ¥2,402 million to KPMG AZSA LLC, the previous
Accounting Auditor, in relation to audits carried out in the fiscal year ended March 31, 2022.
3. In addition to the above, the Company paid additional fees of ¥2 million to Frontier Audit Corporation in relation toaudits carried out in the previous fiscal year.

-58-

b. Fees paid to organizations that belong to the same network as the certified public accountants, etc. who conducted audits
Not applicable.
c. Description of other important audit fees
Not applicable.
d. Policy for determining the audit fees
The Company determines the amount of audit fees paid to the audit firm after examining the details of the audit plan of
the Accounting Auditor, its execution of duties in the previous fiscal year, the basis for calculating the estimated fees, etc., byobtaining necessary documents and reports from the relevant departments and the Accounting Auditor.
e. Reasons why the Audit and Supervisory Committee gave consent to the fees for the Accounting Auditor
The Audit and Supervisory Committee has given its consent to the fees, etc. of the Accounting Auditor pursuant to
Article 399, paragraph 1 of the Companies Act after examining the details of the audit plan and the basis for the calculationof the estimated fees, etc. submitted by the Accounting Auditor, based on trends in audit time and fees, the comparison
between the audit plan and the audit results in previous fiscal years, the reports from the Board of Directors and relevantinternal departments, and the explanations from the Accounting Auditor.
(4) Remuneration for Directors
1) Matters pertaining to the policy on the determination of the amount of remuneration for Directors or the calculation method
thereofa. Matters related to the determination of the amount of remuneration for Directors and the calculation method thereof
The Company is a company with the Audit and Supervisory Committee, and the Board of Directors determines thepolicy on remuneration, etc. for Directors (excluding Directors who are Audit and Supervisory Committee Members; thesame applies hereinafter) (hereinafter referred to as the “Remuneration Policy”).
The Remuneration Policy as of the filing date was established by the resolution of the Board of Directors under theGroup’s Medium-Term Management Plan 2022-2024, and the details are as follows:
1. Basic policy
The remuneration of the Company’s Directors shall be designed to effectively function as a medium- to long-term
incentive for the continuous growth of business performance and the sustainable improvement of corporate value while
promoting value sharing with shareholders. In addition, as a basic policy, Directors’ remuneration shall enable the Company
to recruit and retain talent who are able to achieve aforementioned objectives and be at an appropriate level that iscommensurate with the roles and responsibilities expected of each Director.
Specifically, it shall consist of fixed remuneration and post-grant type share awards. The post-grant type share awards
shall consist of a restricted stock unit (hereinafter referred to as “RSU”) that does not require a certain level of businessperformance should be met and a performance share unit (hereinafter referred to as “PSU”) that requires a certain level ofbusiness performance should be met. However, PSUs will not be granted to Outside Directors.
2. Policy on the determination of the amount of basic remuneration
The basic remuneration of the Company’s Directors shall be fixed monthly remuneration (monetary remuneration).
The Representative Director prepares a draft remuneration plan according to each position and the Nomination andRemuneration Committee, in which Independent Outside Directors account for a majority, makes decisions. The basic
remuneration is paid on a designated date every month.
3. Policy on the determination of the content and amount/unit of non-monetary remuneration and the calculation method
thereofThe non-monetary remuneration, etc. is post-grant type share awards with the aim of achieving sustainable growth of
the Company’s corporate value and promoting value sharing with shareholders.
The post-grant type share award system is a system under which the Company’s common shares are granted in apredetermined number or by a predetermined calculation method after a designated period has passed since the grant of
the rights, on the condition that certain conditions are met. It consists of a RSU that does not require a certain level of-59-business performance should be met and a PSU that requires a certain level of business performance should be met.
After the expiration of the vesting period, the RSU enables that the base number of the Company’s common sharesare issued as determined on the grant date, on the condition that the RSU holder continues to be the Company’s Director
or occupy a certain position as determined by the resolution of the Company’s Board of Directors from the grant datethrough the expiration date of the vesting period.
The vesting period shall be one year from the grant date for one third of the RSUs granted, two years from the grant
date for one third, and three years from the grant date for remaining one third.
With regard to the PSU, Directors engaged in business execution will receive the common shares of the Company,
the number of which is calculated by multiplying the base share amount specified on the grant date by the coefficient
determined in accordance with the degree of achievement against the performance targets specified in the Medium-termManagement Plan, on the condition that they are continuously the Company’s Directors or have a certain status determinedby resolution of the Company’s Board of Directors from the grant date through the expiration date of the period (threeconsecutive fiscal years) covered by the Medium-Term Management Plan to which the grant date belongs.
b. Details of the resolution of the General Meeting of Shareholders on remuneration of Directors
At the 45th Ordinary General Meeting of Shareholders held on June 23, 2016, it was resolved that the amount of annual
monetary remuneration for Directors should be no more than ¥200 million. At the conclusion of the Ordinary General Meetingof Shareholders concerned, the number of Directors who are not Audit and Supervisory Committee Members was five.
In addition, at the 51st Ordinary General Meeting of Shareholders held on June 23, 2022, it was resolved to revise theamount of remuneration of Directors (excluding Directors who are Audit and Supervisory Committee Members) inaccordance with the introduction of the post-grant type share award system to grant a RSU that does not require a certain
level of business performance should be met and a PSU that requires a certain level of business performance should be met.
At the conclusion of the Ordinary General Meeting of Shareholders concerned, the number of Directors who are not Audit
and Supervisory Committee Members was six.
At the 45th Ordinary General Meeting of Shareholders held on June 23, 2016, it was resolved that the amount of annual
monetary remuneration for Directors who are Audit and Supervisory Committee Members should not exceed ¥25 million. At
the conclusion of the 45th Ordinary General Meeting of Shareholders, the number of Directors who are Audit and Supervisory
Committee Members was three.
c. Overview of the body and procedures for determining the policy on the amount of Directors’ remuneration or the calculation
method thereof
The Board of Directors, which is responsible for determining the Remuneration Policy for Directors, has entrusted thedrafting of the basic remuneration, etc. for each Director to Ryusuke Utsumi, Representative Director. The reason for theentrustment is that the Company has judged that the Representative Director is suitable for evaluating each individual Director
while taking into consideration the overall performance of the Company. The Nomination and Remuneration Committee, inwhich Independent Outside Directors account for a majority, determines the remuneration based on the draft.
In addition, the base amount of remuneration for each position, the specific details and amounts granted of the RSU and
PSU, and other important matters concerning the remuneration of individual Directors who are not Audit and Supervisory
Committee Members are decided based on the remuneration levels of companies with a business scale similar to the Company,
in a way that the higher the position, the higher the weight of non-monetary remuneration.
At the meeting of the Board of Directors held in June 2023, the details of the remuneration of individual Directors forthe current fiscal year were determined.

-60-

2) Total amount of remuneration, etc. by Director Category and by type of remuneration, etc., and number of applicable Directors
Total amount of remuneration by type
(Thousands of yen)
Number of applicable
Total amount ofMonetary
Directors
Director Category
remuneration
remuneration
Non-monetary(Persons)(Thousands of yen)remuneration, etc.
Basic remuneration
Directors (excluding Audit andSupervisory Committee Members)(excluding Outside Directors)
Directors (who are Audit andSupervisory Committee Members)(excluding Outside Directors)
Outside Directors

91,921

83,4728,448

415,24015,240-1

26,85524,9371,918

4(Notes) 1. The amount of remuneration, etc. for Directors does not include employee salaries paid to Directors who serve
concurrently as employees.
2. The amount of remuneration, etc. for Directors (excluding Directors who are Audit and Supervisory Committee
Members) is determined by the Board of Directors within the limit approved by the resolution of the General Meetingof Shareholders, taking into consideration business performance and other factors. The amount of remuneration, etc.
for Directors who are Audit and Supervisory Committee Members is determined through discussion among the
Directors who are Audit and Supervisory Committee Members within the limit decided by the resolution of theGeneral Meeting of Shareholders.
3. The total amount of non-monetary remuneration, etc. for Directors (excluding Audit and Supervisory Committee
Members) only consists of RSUs.
3) Total remuneration paid to each Officer
Not stated because there is no Officer whose overall consolidated remuneration is ¥100 million or more.

-61-

(5) Status of securities held by the Company
1) Criteria for and basic stance of classification of investment securities
The Company classifies investment shares into two categories: investment shares held for pure investment purposes, which
is held to gain profits through fluctuations in the value of shares or the receipt of dividends; and investment shares held for purposes
other than pure investment (cross-shareholdings).
2) Investment securities held for purposes other than pure investment
a. Method of verifying the rationality of shareholding policy and shareholding, and details of verification carried out by the
Board of Directors, etc. regarding the appropriateness of the holding of individual issues
Once a year, the Board of Directors verifies the rationality of the shareholding purpose and the related profits and benefitsof holding each issue of strategic shareholdings, and determines the appropriateness of holding such shares by comparing itwith the case of not holding them.
b. Number of issues and amount recorded on balance sheet
Number of
Total amount recorded on
issuesbalance sheet (Thousands of(Issues)yen)
Non-listed securities

9

153,200

Securities other than the
above

3

403,888

c. Information on the number of shares, the amount recorded on the balance sheet, etc. of specified investment shares anddeemed holdings of shares by issue
Specified investment shares
Current fiscal year Previous fiscal year
Number of shares Number of shares Purpose of shareholding, overview of business Holding ofalliance, etc., quantitative effects of shareholding
the(Shares)(Shares)Issuesand reasons for the increase in the number of Company’s
Amount recorded Amount recorded
stock
shares (Note)on balance sheeton balance sheet(Thousands of yen) (Thousands of yen)
290,800
290,800 (Purpose of shareholding) To strengthenbusiness-to-business transactions in theentertainment field.
FUJISHOJI CO.,(Overview of business alliance, etc.) To improve
YesLTD.
394,906
440,271 capabilities to plan and develop game machines
in the entertainment field.
(Quantitative effects of shareholding) (Note)(Purpose of shareholding) To strengthen
2,500
2,500
The
Ogaki
relationships in financial transactions aiming at
Kyoritsu Bank,No
stable financing, etc.
5,457
4,465
Ltd.
(Quantitative effects of shareholding) (Note)
1,157
1,157 (Purpose of shareholding) To strengthen
Mizuho Financial
relationships in financial transactions aiming at
No
Group, Inc.
3,524
2,172 stable financing, etc.
(Quantitative effects of shareholding) (Note)(Note) Since it is difficult to describe the quantitative effects of shareholding of specified investment shares, the Company
describes the method for verifying the rationality of the shareholding: Every fiscal year, the Company verifies theimportance of individual cross-shareholdings, and as a result of the verification carried out on March 31, 2024, theCompany confirms that all of its current cross-shareholdings are held for the purpose that is in line with its
shareholding policy.
3) Investment securities held for pure investment purposes
Not applicable.

-62-

V Financial Information
1. Basis of preparation of consolidated financial statements and financial statements(1) The consolidated financial statements of the Company are prepared in accordance with the “Regulation on Terminology, Forms,
and Preparation Methods of Consolidated Financial Statements” (Ministry of Finance Order No. 28 of October 30, 1976;
hereinafter “the Regulation on Consolidated Financial Statements”).
(2) The Financial statements of the Company are prepared in accordance with the “Regulation on Terminology, Forms, and Preparation
Methods of Financial Statements” (Ministry of Finance Order No. 59 of November 27, 1963; hereinafter “the Regulation on
Financial Statements”).
Falling into the category of a special company submitting financial statements, the Company prepares financial statements inaccordance with Article 127 of the Regulation on Financial Statements.
2. Note on independent audit
Pursuant to the first paragraph of Article 193-2 of the Financial Instruments and Exchange Act, the Company’s consolidated financial
statements for the fiscal year ended March 31, 2024 (From April 1, 2023 to March 31, 2024) and its financial statements for the fiscal
year ended March 31, 2024 (From April 1, 2023 to March 31, 2024) were audited by Frontier Audit Corporation.
3. Special efforts to ensure appropriateness of consolidated financial statements, etc.
In order to properly understand and respond to the impact of details or modifications of accounting standards on the Company, we
have been a member of the Financial Accounting Standards Foundation. We are actively seeking to gather information by, forexample, taking part in training courses and seminars held by the said foundation, audit corporations or other institutions that haveprofessional information, thus striving to ensure appropriateness of consolidated financial statements, etc.

-63-

1. Consolidated Financial Statements(1) Consolidated Financial Statements
1) Consolidated Balance Sheet(Thousands of yen)Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

AssetsCurrent assets
Cash and deposits

3,138,716

1,732,014

10,900,000*1 2,550,051

14,200,000*1, 4 1,812,896

Accounts receivable
Finished goods

3,892,155
265,381

86,655744,912Work in process
Raw materials

394,134
2,055,861

447,404
3,711,585

639,898(597)

714,601(499)

23,835,600

23,449,570

Money held in trust
Notes and accounts receivable - trade

Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill

454,691

425,550*3 949,043*3 949,043

225,009205,416*5 1,628,744*5 1,580,010

510,007457,630

Other

274,529

229,538

Total intangible assets

784,537

687,169

11,646,475*2 3,468,520

20,663,685*2 1,000

Other
Allowance for doubtful accounts

426,543(23,040)

457,012-

Total investments and other assets

15,518,498

21,121,697

17,931,780

23,388,877

41,767,380

46,838,448

Investments and other assets
Investment securities
Shares of subsidiaries and associates

Total non-current assets
Total assets-64-

(Thousands of yen)Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Current portion of long-term borrowings

2,411,060*4 1,989,206*6 161,395*6 1,095,392

43,77837,445

Accrued expenses
Accounts payable

290,385
1,355

246,421
23,353

Income taxes payable
Advances received

2,904
45,559361,11263,373Contract liabilities
Provision for bonuses

782,468
197,175

891,842
149,664

Other

88,73747,1994,024,821

4,905,012

Total current liabilities
Non-current liabilities
Long-term borrowings

249,111257,366

2,398,498*3 9,920

4,372,346*3 9,920

Retirement benefit liability
Other

10,42860,794

10,741
23,670Total non-current liabilities

2,728,752

4,674,045

6,753,574

9,579,057

Shareholders' equity
Share capital

2,089,685

2,097,606

Capital surplus
Retained earnings

3,317,507
30,773,457

3,316,731
26,543,187

Treasury shares(2,806,314)(3,643,498)

Total shareholders' equity

33,374,335

28,314,026

2,964,829(24,755)

9,269,293-*3 (434,203)*3 (434,203)

Deferred tax liabilities
Deferred tax liabilities for land revaluation

Total liabilities
Net assets

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment
Total accumulated other comprehensive income
Share award rights
Share acquisition rights
Total net assets
Total liabilities and net assets-65-(972,154)

8,197

1,533,715

8,843,288

27,01378,741

24,012
78,06435,013,806

37,259,391

41,767,380

46,838,448

2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income

Net sales

Previous fiscal year
(From April 1, 2022
to March 31, 2023)*1 37,449,092(Thousands of yen)
Current fiscal year
(From April 1, 2023
to March 31, 2024)*1 10,045,586

Cost of sales

11,911,774

7,081,786

Gross profit

25,537,317

2,963,799*2, 3 27,248,380*2, 3 2,650,998(1,711,062)

312,801

Interest and dividend income
Foreign exchange gains

439,2212,895,450

113,250-

Gain on valuation of derivatives
Share of profit of entities accounted for using equity
methodInterest on tax refund
Other

12,107,269-

471,222-

17,23820,607
15,641

Total non-operating income

15,930,403

149,499

15,207

9,686-

29,672-

4,498,420

5,679
23,78722,704
16,327

Selling, general and administrative expenses
Operating profit (loss)
Non-operating income

Non-operating expenses
Interest expenses
Foreign exchange losses
Share of loss of entities accounted for using equity
methodCommission for purchase of treasury shares
Other
Total non-operating expenses
Ordinary profit (loss)

44,674

4,576,810

14,174,666(4,114,510)*4 2,361

*4 0
1,417

Extraordinary income
Gain on sale of non-current assets
Gain on reversal of share acquisition rights

198

Other

-

376

2,560

1,794

Loss on sale of non-current assets
Loss on sale of shares of subsidiaries*5 4,033*5 22985,491-

Loss on valuation of shares of subsidiaries
Loss on liquidation of subsidiaries

56,78906,165*6 70,230

440

Total extraordinary income
Extraordinary losses-

Impairment losses
Other

287

Total extraordinary losses

216,833

6,836

Profit (loss) before income taxes

13,960,393(4,119,551)

Income taxes - current

114,678

376,748

Income taxes - deferred

345,366(718,678)

Total income taxes

460,044(341,930)

Profit (loss)

13,500,349(3,777,621)

Profit attributable to non-controlling interests

6,621,961-

Profit (loss) attributable to owners of parent

6,878,387(3,777,621)-66-

Consolidated Statement of Comprehensive Income

Profit (loss)

Previous fiscal year
(From April 1, 2022
to March 31, 2023)
13,500,349

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income(Thousands of yen)
Current fiscal year
(From April 1, 2023
to March 31, 2024)(3,777,621)

2,849,420

6,271,474(293,886)(2,517,685)

8,197(27,860)

1,029,900* 9,988* 7,309,572

Comprehensive income

13,510,337

3,531,951

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

7,886,460

3,531,951

5,623,876--67-3) Consolidated Statement of Changes in Equity
Previous fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Shareholders' equity
Share capital
Balance at beginning of
periodTotal
shareholders'equityCapital surplus Retained earnings Treasury shares

2,086,192

15,864,377

5,978,044(63,321)23,865,292

3,493

3,493

6,986

(3,524,995)(3,524,995)

Changes during period
Issuance of new shares exercise of shareacquisition rights
Changes in foreignsubsidiaries and affiliatedcompanies' interests in its
subsidiaries
Dividends of surplus
Profit (loss) attributable toowners of parent
Change of scope of
consolidation and equity
methodPurchase of treasury
sharesNet changes during period
in items other thanshareholders' equity
Total changes during period
Balance at end of period(9,025,368)(478,821)(478,821)

6,878,387

6,878,387

18,395,846

9,370,478(2,742,992)(2,742,992)
-

3,493

(12,546,870)

24,795,412(2,742,992)

9,509,042

2,089,685

3,317,507

30,773,457(2,806,314)

33,374,335

Accumulated other comprehensive income
Valuation
Deferred gains
difference on
Revaluation
or losses onavailable-forreserve for land
hedgessale securities
Balance at beginning of
period69,38566,331

Foreigncurrencytranslation
adjustment(434,203)

810,825

Total
accumulated
othercomprehensive
income512,338

Share award
rights-Share
acquisitionrightsTotal net assets

2,662,650

27,040,281

Changes during period
Issuance of new shares exercise of shareacquisition rights
Changes in foreignsubsidiaries and affiliatedcompanies' interests in its
subsidiaries

6,986(3,524,995)(478,821)

Dividends of surplus
Profit (loss) attributable toowners of parent
Change of scope of
consolidation and equity
methodPurchase of treasury
sharesNet changes during period
in items other thanshareholders' equity

6,878,387
9,370,478(2,742,992)
2,895,444(91,086)-(1,782,979)

1,021,377

27,013(2,583,909)(1,535,517)

Total changes during period

2,895,444(91,086)-(1,782,979)

1,021,377

27,013(2,583,909)

7,973,524

Balance at end of period

2,964,829(24,755)(434,203)(972,154)

1,533,715

27,01378,74135,013,806-68-

Current fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Shareholders' equity
Share capital
Balance at beginning of
periodCapital surplus Retained earnings Treasury shares

2,089,685

3,317,507

7,921

7,921

30,773,457(2,806,314)

Totalshareholders'equity33,374,335

Changes during period
Issuance of new shares exercise of shareacquisition rights
Dividends of surplus
Profit (loss) attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes during period
in items other thanshareholders' equity
Total changes during period
Balance at end of period

15,842(452,648)(452,648)(3,777,621)(3,777,621)(903,325)(903,325)

66,141

57,444(8,696)

7,921

(775)

(4,230,269)(837,184)(5,060,309)

2,097,606

3,316,731

26,543,187(3,643,498)

28,314,026

Accumulated other comprehensive income
Valuation
Deferred gains
difference on
Revaluation
or losses onavailable-forreserve for land
hedgessale securities
Balance at beginning of
period2,964,829(24,755)

Foreigncurrencytranslation
adjustment(434,203)(972,154)

Total
accumulated
othercomprehensive
income1,533,715

Share award
rightsShare
acquisitionrights27,01378,741

Total net assets

35,013,806

Changes during period
Issuance of new shares exercise of shareacquisition rights

15,842(452,648)

Dividends of surplus
Profit (loss) attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes during period
in items other thanshareholders' equity(3,777,621)(903,325)
57,444
6,304,464

24,755-980,352

7,309,572(3,001)(676)

7,305,894

Total changes during period

6,304,464

24,755-980,352

7,309,572(3,001)(676)

2,245,584

Balance at end of period

9,269,293-(434,203)

8,197

8,843,288

24,012

78,06437,259,391-69-4) Consolidated Statement of Cash Flows
Previous fiscal year
(From April 1, 2022
to March 31, 2023)(Thousands of yen)
Current fiscal year
(From April 1, 2023
to March 31, 2024)

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation

13,960,393
1,117,472(4,119,551)
247,236

Amortization of goodwill
Share-based payment expenses

416,259
1,378,737

52,376
26,165

Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses

94,883(70,261)(98)(48,659)

Increase (decrease) in retirement benefit liability
Interest and dividend income(24,785)(439,221)312(113,250)

Interest expenses
Foreign exchange losses (gains)

15,207(185,184)

9,686(21,678)(12,107,269)
56,789-85,491
70,230-(198)(1,417)(471,222)

4,498,420(3,623,090)(1,730,892)

741,085(2,188,368)

412,232-(423,478)(140,014)

Decrease (increase) in accounts receivable - other
Increase (decrease) in contract liabilities(3,917,619)
2,407,464(37,114)109,253

Increase (decrease) in accrued expenses
Other, net(943,894)
1,389,500

52,659(71,399)

Subtotal(2,108,979)(1,427,832)

487,292(15,207)113,250(9,686)

Income taxes paid
Income taxes refund(11,881,717)-(9,963)
3,844,031

Net cash provided by (used in) operating activities(13,518,612)

2,509,798

Loss (gain) on valuation of derivatives
Loss (gain) on valuation of shares of subsidiaries
Loss (gain) on sale of shares of subsidiaries
Impairment losses
Gain on reversal of share acquisition rights
Share of loss (profit) of entities accounted for using
equity method
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in prepaid expenses

Interest and dividends received
Interest paid-70-

(Thousands of yen)
Current fiscal year
(From April 1, 2023
to March 31, 2024)

Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Cash flows from investing activities
Net decrease (increase) in time deposits
Proceeds from cancellation of money held in trust

2,425,126-(29,696)700,000

Investments in money held in trust
Purchase of securities(10,900,000)(11,513,472)(4,000,000)-

Proceeds from redemption of securities
Purchase of investment securities
Proceeds from sale and redemption of investment
securities
Purchase of property, plant and equipment

3,387,623(6,832,038)--

46,635(909,524)(119,410)

Purchase of intangible assets
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Proceeds from sale of shares of subsidiaries resulting inchange in scope of consolidation
Other, net(138,524)(168,877)*2 (750,876)-*3 70,016-

30,3708,677

Net cash provided by (used in) investing activities(25,131,298)(3,562,671)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings(3,339,104)

991,301

Repayments of long-term borrowings
Proceeds from exercise of employee share options(19,669)5,374(57,186)
45,691(2,742,992)(903,325)

Purchase of treasury shares
Proceeds from share issuance to non-controllingshareholders
Proceeds from sale of shares of subsidiaries not resulting
in change in scope of consolidation
Dividends paid
Other, net

1,600,480-

30,514,644-(478,821)
34,312(452,648)(9,037)

Net cash provided by (used in) financing activities

25,574,225(385,206)

Effect of exchange rate change on cash and cash equivalents

903,859

23,875

Net increase (decrease) in cash and cash equivalents(12,171,826)(1,414,204)

Cash and cash equivalents at beginning of period
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation
Cash and cash equivalents at end of period

27,438,438

2,934,094*4 (12,332,517)-*1 2,934,094*1 1,519,890-71-

[Notes](Significant accounting policies for preparation of consolidated financial statements)
1. Scope of consolidation
1) Number of consolidated subsidiaries: 5
Names of the consolidated subsidiaries
E-Dream Co., Ltd
EKTech Holdings Sdn. Bhd.
EKTech Communications Sdn. Bhd.
EKTech Systems Engineering Sdn. Bhd.
EKTech Eureka MSC Sdn. Bhd.
2) Names of key non-consolidated subsidiaries
Non-consolidated subsidiaries
AceReal Co., Ltd.
(Reason for exclusion from the scope of consolidation)
AceReal Co., Ltd. has been excluded from the scope of consolidation since it is a small-sized company and none of its total
assets, net sales, and profit or loss (amount corresponding to equity) and retained earnings (amount corresponding to equity) has amaterial impact on the consolidated financial statements.
Yidi Trading (Shanghai) Co., Ltd., which was the Company’s non-consolidated subsidiary, has been excluded from theCompany’s non-consolidated subsidiaries because of its liquidation, which was completed in the current fiscal year.
2. Application of equity method
1) Associates accounted for using the equity method: 12
Cellebrite DI Ltd.
Cellebrite Inc.
Cellebrite GmbH
Cellebrite Soluções de Inteligencia Digital Ltda
Cellebrite Asia Pacific Pte Ltd.
Cellebrite UK Limited
Cellebrite France SAS
Cellebrite Canada Mobile Data Solutions Ltd.
Cellebrite Australia PTY Limited
Cellebrite Japan Co., Ltd.
Cellebrite Digital Intelligence Solutions Private Limited
Cellebrite Digital Intelligence LP
2) Names of non-consolidated subsidiaries and associates not accounted for using the equity method
AceReal Co., Ltd.
(Reason for not using the equity method)
Regarding the non-consolidated subsidiaries which are not accounted for using the equity method, neither of their profit orloss (amount corresponding to equity) nor their retained earnings (amount corresponding to equity) have a material impact on ourconsolidated financial statements and are therefore excluded from the scope of application of the equity method.
Yidi Trading (Shanghai) Co., Ltd., which was the Company’s non-consolidated subsidiary, has been excluded from nonconsolidated subsidiaries not accounted for using the equity method because of its liquidation, which was completed in the current
fiscal year.
3) Of the associates accounted for using the equity method, for those whose closing dates differ from the consolidated closing date,
the financial statements for their relevant fiscal years are used.

-72-

3. Changes in the scope of consolidation and the scope of application of the equity method
1) Changes in the scope of consolidation
Not applicable.
2) Changes in the scope of application of the equity method
Exclusion
Decreased by 1 company due to completed liquidation:
Cellebrite Saferworld, Inc.
Decreased by 1 company due to absorption-type merger:
BlackBag Technologies, Inc.
4. Fiscal year of consolidated subsidiaries
Of the Company’s consolidated subsidiaries, the following companies close their book on December 31: EKTech Holdings
Sdn. Bhd, EKTech Communications Sdn. Bhd, EKTech Systems Engineering Sdn. Bhd, and EKTech Eureka MSC Sdn. Bhd. In
preparing the consolidated financial statements, the Company uses the financial statements as of the said closing date. However,for significant inconsistencies in accounting records of transactions between consolidated companies resulting from the difference
between their closing dates and the consolidated closing date, it makes adjustments required for consolidation. The closing dates ofthe other consolidated subsidiaries coincide with the consolidated closing date.
5.Accounting policies(1) Valuation standards and methodology for material assets
1) Securities
Available-for-sale securities
Other than shares without market priceStated at market value (any valuation difference being reported directly as a component of shareholders’ equity and thecost of any securities sold being computed by the moving average method).
Shares, etc. without market priceStated at cost using the moving-average method.
Held-to-maturity debt securities: Amortized cost method (straight-line method).
2) Derivatives
Stated at market value.
3) Money held in trust for investment purposesStated at market value.
4) Inventories
Finished goods
The Company and its domestic consolidated subsidiaries mainly adopt the cost method based on the gross average method(the consolidated balance sheet value is based on a method of reducing the book value due to a decline in profitability). Its
overseas consolidated subsidiaries use the lower of cost or market method, with cost being determined principally by the firstin, first-out method.
Work in process
Expenses for product development on a contract basis and application development
Stated at cost determined by the specific identification method.
Work in process other than the above
Stated at cost determined by the gross average method.
Raw materials
The Company adopts the cost method based on the moving average method. Its domestic consolidated subsidiaries mainly
use the cost method based on the gross average method.
(2) Depreciation and amortization methods for significant depreciable assets
1) Property, plant and equipment (excluding leased assets)
The Company and its domestic consolidated subsidiaries use the declining-balance method. However, the straight-line-73-

method is applied to buildings (excluding facilities attached to buildings) acquired on or after April 1, 1998, and facilities
attached to buildings and structures acquired on or after April 1, 2016.
Its overseas consolidated subsidiaries mainly use the straight-line method.
The major useful lives are as follows.
Buildings and structures: 10 to 50 years.
2) Intangible assets (excluding leased assets and goodwill)
Software for internal use
The straight-line method is used based on the internally usable period (5 years).
Software for sale
The straight-line method is used based on the expected sales revenue (quantity) or the expected effective period (within 3
years).
Intangible assets other than the above
The straight-line method is used.
3) Leased assets
Leased assets related to finance lease transactions that do not transfer ownership
The straight-line method is used with the lease period as the useful life and the residual value as zero.
(3) Accounting standards for significant allowances and provisions
1) Allowance for doubtful accounts
In order to prepare for losses due to bad debts, the Company records an estimated uncollectible amount in consideration ofcollectibility.
2) Provision for bonuses
In order to prepare for the payment of employee bonuses, the estimated amount of payment is recorded.
3) Provision for bonuses for directors (and other officers)
In order to prepare for the payment of bonuses for directors (and other officers), estimated amount of payment in the current
fiscal year is recorded.
(4) Accounting method for retirement benefits
For the calculation of retirement benefit liability and retirement benefit expenses, the Company’s domestic consolidated
subsidiaries apply a simplified method that uses a method in which the amount required for voluntary termination at the end of
the fiscal year for retirement benefits is treated as retirement benefit obligations.
(5) Standards for translation of significant assets or liabilities denominated in foreign currencies into Japanese currency
All monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the spot exchange
rates in effect at the closing date, and the resulting translation gains or losses are recognized in the consolidated statements ofincome. The assets, liabilities, revenues and expenses of the Company’s overseas subsidiaries are translated into Japanese yen at
the spot exchange rates in effect at the closing date of the overseas subsidiaries, and the resulting translation gains or losses areincluded in the foreign currency translation adjustments under net assets.
(6) Significant hedge accounting methods
1) Method of hedge accounting
Deferred hedge accounting method is applied.
2) Hedging instruments and hedged items(Hedging instruments) Forward exchange contracts (Hedged items) Foreign currency-denominated forecasted transactions
3) Hedging policy
The Company enters into forward exchange contracts for the purpose of avoiding future exchange rate fluctuation risks
associated with foreign currency transactions.
4) Method of evaluating the effectiveness of hedging
During the period from the inception of the hedge to the determination of its effectiveness, the Company compares the-74-market fluctuations of the hedged item and the market fluctuations of the hedging instrument, and make judgement using a ratio
analysis based on the amount of fluctuations of both. The assessment of hedging effectiveness is omitted if the significant
conditions of the hedging instruments and the hedged items are the same and it can be assumed that market fluctuations can becompletely offset.
(7) Standards for the recognition of significant revenues and expenses
The details of the main performance obligations in the main business relating to revenue from contracts with customers of
the Company and its consolidated subsidiaries and the normal timing of fulfilling such performance obligations (normal timingof revenue recognition) are as follows.
1) Revenue recognition related to sale of goods
In the sale of goods, the Company manufactures and sells digital forensics equipment, entertainment-related equipment,
M2M communication equipment, etc., and recognizes the services provided by the Group in these areas as performanceobligations. In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferredto the customer at the time of delivery.
2) Revenue recognition related to development
In the development sales in the entertainment business, services to provide software developed based on orders received
from customers are recognized as performance obligations. Revenue from development sales is recognized at the time ofacceptance by the customer because the control over the software is transferred to the customer at the time of acceptance by thecustomer.
3) Revenue recognition related to license sales
In license sales, the Company sells licenses for analytic software, etc. related to digital forensics equipment, and theCompany recognizes the services provided by the Group in relation to these as performance obligations.
A software license provides customers with either the right to use the Group's software for an unlimited period of time or
the right to use the Company's software for a limited period of time.
Revenue from license sales is recognized when the control over the software license is transferred to the customer and theterm of the license agreement begins.
4) Revenue recognition related to maintenance services and software updates
The Company provides maintenance services for digital forensics equipment and M2M communication equipment and otherequipment in use by customers. In addition, the Global Data Intelligence business provides software updates and technical support
services, and the Company recognizes the services it provides in relation to these as performance obligations.
These maintenance services and software updates, etc. are transactions that satisfy performance obligations over a certain
period of time because services are continuously provided to customers during the contract period, and revenue is recognized inaccordance with the lapse of the period.
(8) Amortization method and amortization period of goodwill
Goodwill is amortized on a straight-line basis over a reasonable number of years within 20 years based on judgement on acase-by-case basis.
(9) Scope of cash and cash equivalents in the consolidated statements of cash flows
The scope includes cash on hand, deposits that can be withdrawn at any time, and short-term investments with maturities ofthree months or less from the date of acquisition that can be easily converted into cash and are subject to an insignificant risk ofchanges in value.
(Significant accounting estimates)
Previous fiscal year (From April 1, 2022 to March 31, 2023)(Valuation of investment securities held by the Company to which the price adjustment clause applies)
1 Amounts recorded in the consolidated financial statements for the current fiscal year
As the price adjustment clause, investment securities classified as Level 3 are ¥4,304,673 thousand, and the market value iscalculated using inputs that cannot be observed in the market, so there is uncertainty in estimates.
2 Information that contributes to an understanding of the content of significant accounting estimates pertaining to the identified
items

-75-

1) Calculation method
Since there is no quoted market price for the price adjustment clause, the market value is calculated using valuation
techniques such as Monte Carlo simulation according to the type of transaction and the period until maturity. Since it uses
important unobservable inputs, it is classified as Level 3 market value.
2) Major assumptions
Major assumptions are the inputs used in the mark-to-market valuation model. They include inputs that are observabledirectly or indirectly in the market, such as interest rates and the market value of securities, as well as inputs that are notobservable in the market, including material estimates such as volatility, time to maturity and expected dividend yield.
3) Impact on the consolidated financial statements for the following fiscal year
The market value of financial instruments may increase or decrease due to changes in inputs that are major assumptions,due to market changes, etc.
Current fiscal year (From April 1, 2023 to March 31, 2024)(Valuation of investment securities held by the Company to which the price adjustment clause applies)
1. Amounts recorded in the consolidated financial statements for the current fiscal year
As the price adjustment clause, investment securities classified as Level 3 are ¥12,918,819 thousand, and the market value
is calculated using inputs that cannot be observed in the market, so there is uncertainty in estimates.
2. Information that contributes to an understanding of the content of significant accounting estimates pertaining to the identified
items
1) Calculation method
Since there is no quoted market price for the price adjustment clause, the market value is calculated using valuation
techniques such as Monte Carlo simulation according to the type of transaction and the period until maturity. Since it uses
important unobservable inputs, it is classified as Level 3 market value.
2) Major assumptions
Major assumptions are the inputs used in the mark-to-market valuation model. They include inputs that are observabledirectly or indirectly in the market, such as interest rates and the market value of securities, as well as inputs that are notobservable in the market, including material estimates such as volatility, time to maturity and expected dividend yield.
3) Impact on the consolidated financial statements for the following fiscal year
The market value of financial instruments may increase or decrease due to changes in inputs that are major assumptions,due to market changes, etc.
(New accounting standards not yet applied)• Accounting Standard for Current Income Taxes, etc. (ASBJ Statement No. 27, October 28, 2022)• Accounting Standard for Presentation of Comprehensive income (ASBJ Statement No. 25, October 28, 2022)• Guidance on Accounting Standard for Tax Effect Accounting (ASBJ Guidance No. 28, October 28, 2022)(1) Overview
These accounting standards and guidance provide for the classification of income taxes when they are imposed on othercomprehensive income and for the treatment of tax effects related to the sale of shares in subsidiaries when the corporate grouptax system is applied.
(2) Scheduled date of application
Application is scheduled from the beginning of the fiscal year ending March 31, 2025.
(3) The impact of the application of the accounting standards, etc.
The effect of applying the Accounting Standard for Current Income Taxes and others to the consolidated financial
statements is currently under evaluation.

-76-

(Changes in presentation)(Consolidated balance sheet)"Securities" in "Current assets," which was presented separately in the previous fiscal year, has been included in "Other"in the current fiscal year because the amount has become insignificant.
As a result, ¥45,043 thousand, which was presented as "Securities" under "Current assets" in the consolidated balance
sheet for the previous fiscal year, has been reclassified as ¥639,898 thousand in "Other.""Deferred tax assets" in "Investments and other assets," which was presented separately in the previous fiscal year, hasbeen included in "Other" in the current fiscal year because the amount has become insignificant.
As a result, ¥196 thousand, which was presented as "Deferred tax assets" under "Investments and other assets" in the
consolidated balance sheet for the previous fiscal year, has been reclassified as ¥426,543 thousand in "Other."(Consolidated statement of income)"Loss on retirement of non-current assets," which was presented separately in the previous fiscal year under"Extraordinary losses" is included in "Other" in the current fiscal year because the amount has become insignificant.
As a result, ¥287 thousand presented as "Loss on retirement of non-current assets" under "Extraordinary losses" in the
consolidated statement of income for the previous fiscal year has been reclassified as ¥287 thousand in "Other."(Consolidated statement of cash flows)"Proceeds from sale of property, plant and equipment" in "Cash flows from investing activities," which was presented
separately in the previous fiscal year, has been included in "Other, net" in the current fiscal year because the amount has
become insignificant.
As a result, ¥2,361 thousand presented as "Proceeds from sales of property, plant and equipment" under "Cash flows frominvesting activities" and ¥28,008 thousand in "Other, net" in the consolidated statements of cash flows for the previous fiscal
year, have been reclassified as ¥30,370 thousand in "Other, net."“Proceeds from long-term borrowings” in “Cash flows from financing activities,” which was presented separately in theprevious fiscal year, has been included in “Other, net” in the current fiscal year because the amount has become insignificant.
As a result, ¥20,000 thousand presented as "Proceeds from long-term borrowings" under "Cash flows from financing
activities" and ¥14,312 thousand in "Other, net" in the consolidated statements of cash flows for the previous fiscal year, havebeen reclassified as ¥34,312 thousand in "Other, net."(Additional Information)(Debt instruments in Cellebrite)
Cellebrite, which is the Company’s associate accounted for using equity method, assessed certain restricted shares andwarrant liabilities, both of which it inherited from TWC Tech Holding II Corp. (hereafter, “TWC Corp.”), at fair value andrecognized them as liabilities based on the price adjustment clause in the merger agreement signed on August 30, 2021 when it
was listed on the NASDAQ market in the United States of America.
The Company therefore reported share of loss (profit) of entities accounted for using equity method as a result of changes
in fair value of the liabilities due to the fluctuation of Cellebrite’s share price, etc. as non-operating income/expenses.
(1) Price adjustment clause based on the merger agreement
As consideration adjustment after the closing of the transaction, if Cellebrite’s volume weighted average price (VWAP)
exceeds USD 12.5, USD 15 and USD 17.5 for 20 days out of any 30 days within five years from the closing date, every timeeach condition is satisfied, respectively, Cellebrite will issue 5,000,000 shares (up to 15,000,000 shares) for the shareholders at
the time of closing, including the Company, according to their holding ratios. Also, if change of control which is defined in themerger agreement takes place in the same period, 15,000,000 shares will be issued at the timing of occurrence of the event.
(2) Restricted shares
Cellebrite has inherited restricted shares for TWC Corp.’s sponsors. If Cellebrite’s volume weighted average price (VWAP)
exceeds USD 12.5 and USD 15 for 20 days out of any 30 days within seven years from the closing date, rights on 3,000,000
shares will be vested, respectively. When it exceeds USD 30, rights on 1,500,000 shares will be vested. Also, if change of control-77-

which is defined in the merger agreement takes place in the same period, 7,500,000 shares will be issued at the timing ofoccurrence of the event.
(3) Warrant liabilities
Cellebrite has inherited the warrant liabilities (publicly offered warrant liability and privately offered warrant liability)
issued by TWC Corp. in the merger agreement with the latter. Holders of the warrant liabilities have rights to purchase sharesof Cellebrite at the price of USD 11.5 per share on and after September 29, 2021. The warrant liabilities will expire upon eitherof five years after the closing date, redemption by Cellebrite based on certain requirements, or Cellebrite’s liquidation.
(Accounting treatment for income tax and local income tax or accounting treatment for tax effect accounting related thereto)
The Company and some of its domestic consolidated subsidiaries adopt the group tax sharing system from the current
fiscal year. In addition, in accordance with the Practical Solution on the Accounting and Disclosure under the Group Tax
Sharing System (ASBJ PITF No. 42, August 12, 2021), it carries out accounting treatment and disclosure of income taxes andlocal income taxes, or tax effect accounting related thereto.

-78-

(Notes to Consolidated Balance Sheet)*1 Among notes and accounts receivable - trade, the amount of receivables arising from contracts with customers is as follows.
Previous fiscal year
(As of March 31, 2023)
Notes receivable - trade
Accounts receivable - trade

Current fiscal year
(As of March 31, 2024)

46,773 thousand yen

40,521 thousand yen

2,503,278 thousand yen

1,772,375 thousand yen*2 Investments in non-consolidated subsidiaries and associates are as follows.
Previous fiscal year
(As of March 31, 2023)
Shares of subsidiaries and associates

3,468,520 thousand yen

Current fiscal year
(As of March 31, 2024)
1,000 thousand yen*3 In accordance with the Act on Revaluation of Land (Act No. 34 promulgated on March 31, 1998) and the Act for Partial Revision of
the Act on Revaluation of Land (Act No. 19 promulgated on March 31, 2001), land for business use was revalued. Regarding therevaluation difference, the amount equivalent to deferred tax assets pertaining to the revaluation loss was not deducted, and theamount equivalent to deferred tax liabilities pertaining to the revaluation gain was deducted and recorded as revaluation reserve forland in the net assets section.
Method of revaluation: Calculated by making a reasonable adjustment to the value calculated by the method announced for the
calculation of land value tax prescribed in Article 16 of the Land Value Tax Act as prescribed in Article 2,
Item 4 of the Order for Enforcement of the Act on Revaluation of Land (Cabinet Order No. 119
promulgated on March 31, 1998).
Date of revaluation: March 31, 2001
Previous fiscal year
(As of March 31, 2023)
The difference between the market
value at the end of the period of therevalued land for business use and thebook value after the revaluation;(119,813) thousand yen

Current fiscal year
(As of March 31, 2024)(119,813) thousand yen*4 For the accounting treatment of notes maturing on the last day of a fiscal year, the last day of the current fiscal year fell on a holiday
for financial institutions. The Company, however, treated them as having been settled on the maturity date. The amounts of matured
notes on the last day of the current fiscal year are as follows:
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Notes receivable - trade― thousand yen

358 thousand yen

Notes payable - trade― thousand yen

90,432 thousand yen*5 Accumulated depreciation of property, plant and equipment is as follows.
Previous fiscal year
(As of March 31, 2023)
Accumulated depreciation of property,
plant and equipment

2,859,355 thousand yen

Current fiscal year
(As of March 31, 2024)
3,927,337 thousand yen*6 The Company and its consolidated subsidiaries have entered into overdraft agreements with 11 banks with which they do business inorder to efficiently procure working capital.
The balance of unexecuted borrowings based on these agreements at the end of the fiscal year is as follows.
Previous fiscal year
(As of March 31, 2023)
Total amount of overdraft agreements
Outstanding borrowings
Net amountCurrent fiscal year
(As of March 31, 2024)

7,300,000 thousand yen

7,800,000 thousand yen

60,000 thousand yen

1,060,000 thousand yen

7,240,000 thousand yen

6,740,000 thousand yen-79-

(Notes to Consolidated Statement of Income)*1 Revenue from contracts with customers
Revenue from contracts with customers and other revenue are not shown separately under net sales. The amount of revenue
from contracts with customers is stated in Notes (Revenue recognition) 1. Information on the breakdown of revenue from contracts
with customers of the consolidated financial statements.
*2 Major items and amounts of selling, general and administrative expenses are as follows.
Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Salaries, allowances and bonuses

Current fiscal year
(From April 1, 2023
to March 31, 2024)

8,123,301 thousand yen

597,019 thousand yen

54,007 thousand yen

46,405 thousand yen

Provision for bonuses
Provision for directors’ bonuses (andother officers)
Retirement benefit expenses― thousand yen

1,000 thousand yen

552,186 thousand yen

18,166 thousand yen

Allowance for doubtful accounts

115,808 thousand yen

3,193 thousand yen

9,780,683 thousand yen

1,019,111 thousand yen

416,259 thousand yen

52,376 thousand yen

Research and development expenses
Amortization of goodwill*3 Total research and development expenses included in general and administrative expenses
Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Research and development expenses
included in general and administrative
expenses

9,780,683 thousand yen

Current fiscal year
(From April 1, 2023
to March 31, 2024)
1,019,111 thousand yen*4 Details of gain on sale of non-current assets are as follows:
Previous fiscal year
(From April 1, 2022
to March 31, 2023)

Current fiscal year
(From April 1, 2023
to March 31, 2024)

Other (property, plant and equipment)

2,361 thousand yen

0 thousand yen

Total

2,361 thousand yen

0 thousand yen*5 Details of loss on sale of non-current assets are as follows:
Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Other (property, plant and equipment)
4,033 thousand yen

Current fiscal year
(From April 1, 2023
to March 31, 2024)
229 thousand yen

Total

4,033 thousand yen-80-

229 thousand yen

*6 Impairment losses
Previous fiscal year (From April 1, 2022 to March 31, 2023)
In the current fiscal year, the Group recorded impairment losses on the following asset group.
Location
Usage
Type
Nagoya Headquarters (Nakamura-ku,
OfficeBuildings and structures, other
Aichi Prefecture)
In recognizing impairment losses, the Group uses reportable segments as the basis for grouping.
Due to the decision to relocate the headquarters in the current fiscal year, the buildings and structures of the headquarters are
no longer expected to be used in the future. Therefore, the book value has been reduced to the recoverable value, and the amount of
the reduction has been recorded as an extraordinary loss. The breakdown is ¥38,477 thousand for buildings and structures, ¥208
thousand for other (property, plant and equipment), and ¥31,545 thousand for restoration costs. The recoverable amount is measured
by the net selling price and is assessed as zero.
Current fiscal year (From April 1, 2023 to March 31, 2024)
Not applicable.
(Notes to Consolidated Statement of Comprehensive Income)* Reclassification adjustment and tax effect on other comprehensive income
Previous fiscal year
(From April 1, 2022
to March 31, 2023)

Current fiscal year
(From April 1, 2023
to March 31, 2024)

Valuation difference on available-for-salesecurities
Amount arising during the year

1,637,711

thousand yen

8,962,961

Reclassification adjustment

2,518,252

thousand yen

Before tax effect adjustments

4,155,963

thousand yen

8,962,584(1,306,543)

thousand yen(2,691,109) thousand yen

2,849,420

thousand yen

6,271,474

thousand yen

Amount arising during the year

(333,961)

thousand yen―

thousand yen

Before tax effect adjustments(333,961)

thousand yen―

thousand yen

40,075thousand yen―

thousand yen(293,886)

thousand yen―

thousand yen(2,918,080)

thousand yen

8,197

thousand yen

400,395

thousand yen―

thousand yen(2,517,685)

thousand yen

8,197

thousand yen(27,860)

thousand yen

1,029,900

thousand yen

9,988

thousand yen

7,309,572

thousand yen

Amount of tax effect
Valuation difference on available-forsale securities
Deferred gains or losses on hedges

Amount of tax effect
Deferred gains or losses on hedges

thousand yen(376) thousand yen
thousand yen

Foreign currency translation adjustment
Amount arising during the year
Reclassification adjustment
Foreign currency translation adjustment
Share of other comprehensive income ofentities accounted for using equity method
Amount arising during the year
Total other comprehensive income-81-

(Notes to Consolidated Statement of Changes in Equity)
Previous fiscal year (From April 1, 2022 to March 31, 2023)
1. Matters concerning issued shares
Beginning of the current
Class of sharesfiscal year
Common shares (Shares)

Increase

23,992,328

End of the current fiscal
year

Decrease
6,500-

23,998,828(Outline of the causes of changes)
The increase of 6,500 shares in issued shares was due to the exercise of stock options.
2. Matters concerning treasury shares
Beginning of the current
Class of sharesfiscal year
Common shares (Shares)

Increase

51,262End of the current fiscal
year

Decrease

1,315,125-

1,366,387(Outline of the causes of changes)
The increase of 1,315,125 shares in treasury shares is due to the purchase of 25 shares less than one unit and the acquisitionof 1,315,100 shares in accordance with the resolution of the Board of Directors.
3. Matters concerning share acquisition rights
Balance atthe end of
the current
End of the fiscal year
current(Thousands
fiscal yearof yen)Number of shares to be issued (Shares)

Classification

The filingcompany

Type ofshares to be Beginning ofissuedthe current
fiscal year

Breakdown

The 5th series of share acquisitionrights as stock options
The 6th series of share acquisitionrights as stock options
The 9th series of share acquisitionrights as stock options

Increase

Decrease

-

-

-

-

-

20,351

-

-

-

-

-

9,480

-

-

-

-

-

48,910----78,741Total
4. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Dividend per share(Yen)

June 23, 2022
Ordinary General
Meeting of
Shareholders

Common shares

478,821

20

Record date

Effective date

March 31, 2022

June 24, 2022

(2) Dividends whose record date is in the current fiscal year and whose effective date is in the following fiscal year
Total amount of
Sources ofdividends
Dividend perClass of shares
Resolution
Record date
Effective datedividend(Thousands ofshare (Yen)yen)
June 22, 2023
Ordinary General
CommonRetained452,648
20
March 31, 2023
June 23, 2023
Meeting ofsharesearnings
Shareholders-82-Current fiscal year (From April 1, 2023 to March 31, 2024)
1. Matters concerning issued shares
Beginning of the current
Class of sharesfiscal year
Common shares (Shares)

Increase

23,998,828

End of the current fiscal
year

Decrease
8,900-

24,007,728(Outline of the causes of changes)
The increase of 8,900 shares of issued shares was due to the exercise of stock options.
2. Matters concerning treasury shares
Beginning of the current
Class of sharesfiscal year
Common shares (Shares)

Increase

1,366,387

End of the current fiscal
year

Decrease

434,946

32,056

1,769,277(Outline of the causes of changes)
The increase of 434,946 shares of treasury shares is due to the purchase of 46 shares less than one unit and the acquisitionof 434,900 shares of treasury shares based on the resolution of the Board of Directors. The decrease of 32,056 shares in treasury
shares resulted from the exercise of stock options (24,950 shares) and the disposal of treasury shares as restricted stock unit
(RSU) (7,106 shares).
3. Matters concerning share acquisition rights
Balance atthe end of
the current
End of the fiscal year
current(Thousands
fiscal yearof yen)Number of shares to be issued (Shares)

Classification

The filingcompany

Type ofshares to be Beginning ofissuedthe current
fiscal year

Breakdown

The 5th series of share acquisitionrights as stock options
The 6th series of share acquisitionrights as stock options
The 9th series of share acquisitionrights as stock options

Increase

Decrease

-

-

-

-

-

5,239

-

-

-

-

-

9,480

-

-

-

-

-

63,345----78,064Total
4. Matters concerning dividends(1) Dividends paid
Resolution

Class of shares

Total amount ofdividends(Thousands of yen)

Dividend per share(Yen)

June 22, 2023
Ordinary General
Meeting of
Shareholders

Common shares452,648

20

Record date

Effective date

March 31, 2023

June 23, 2023

(2) Dividends whose record date is in the current fiscal year and whose effective date is in the following fiscal year
Total amount of
Sources ofdividends
Dividend perClass of shares
Resolution
Record date
Effective datedividend(Thousands ofshare (Yen)yen)
June 25, 2024
Ordinary General
CommonRetained
889,538
40
March 31, 2024
June 26, 2024
Meeting ofsharesearnings
Shareholders-83-

(Notes to Consolidated Statement of Cash Flows)*1 Relationship between the balance of cash and cash equivalents at the end of the period and the amounts in the items presented on the
consolidated balance sheet

Cash and deposits
Deposits ("Other" under current assets)
Time deposits with maturities of more than
three months
Cash and cash equivalents

Previous fiscal year
(From April 1, 2022
to March 31, 2023)

Current fiscal year
(From April 1, 2023
to March 31, 2024)

3,138,716

thousand yen

1,732,014

thousand yen―

thousand yen

22,194thousand yen(204,621) thousand yen(234,318)

thousand yen

2,934,094

1,519,890

thousand yen

thousand yen*2 Description of assets and liabilities of companies that became consolidated subsidiaries through acquisition of shares
Previous fiscal year (From April 1, 2022 to March 31, 2023)
Breakdown of major assets and liabilities at the time of the acquisition of EKTech Holdings Sdn. Bhd. and the relationshipwith the expenditure for the acquisition of shares are as follows.
Current assets

409,205 thousand yen

Non-current assets

96,080 thousand yen

Goodwill

540,196 thousand yen

Current liabilities(140,211) thousand yen

Non-current liabilities(61,254) thousand yen

Acquisition cost of shares

844,015 thousand yen

Cash and cash equivalents(93,139) thousand yen

Net payments for acquisitions

750,876 thousand yen

Current fiscal year (From April 1, 2023 to March 31, 2024)
Not applicable.
*3 Description of assets and liabilities of companies that are no longer consolidated subsidiaries due to the sale of shares
Previous fiscal year (From April 1, 2022 to March 31, 2023)
Breakdown of major assets and liabilities at the time of the sale of shares in Bacsoft, Ltd. and the relationship with proceedsfrom the sale of shares are as follows.
Current assets

57,372 thousand yen

Non-current assets

2,180 thousand yen

Current liabilities(88,132) thousand yen

Increase in retained earnings due to exclusionfrom consolidation

290,704 thousand yen

Foreign currency translation adjustment(132,073) thousand yen

Other63,523 thousand yen

Loss on sale of shares(85,491) thousand yen

Proceeds from sale of shares

108,081 thousand yen

Unearned portion of the proceeds(18,053) thousand yen

Foreign exchange losses(12,457) thousand yen

Cash and cash equivalents(7,553) thousand yen

Net proceeds from sales

70,016 thousand yen-84-Current fiscal year (From April 1, 2023 to March 31, 2024)
Not applicable.

*4 Breakdown of major assets and liabilities of companies that are no longer consolidated subsidiaries due to a decrease in the equity
ratio
Previous fiscal year (From April 1, 2022 to March 31, 2023)
Cellebrite DI Ltd., which had been a consolidated subsidiary of the Company, was excluded from the scope of consolidationfrom the current fiscal year because the Company's shareholding ratio decreased due to the exercise of stock options by
employees of the company. The breakdown of the decrease in major assets and liabilities due to the exclusion from the scope of
consolidation is as follows.
Current assets

38,084,663 thousand yen

Non-current assets

12,196,679 thousand yen

Total assets

50,281,342 thousand yen

Current liabilities

32,694,946 thousand yen

Non-current liabilities

9,690,370 thousand yen

Total liabilities

42,385,317 thousand yen

The decrease in cash and cash equivalents due to the exclusion from the scope of consolidation is included in "Decrease in
cash and cash equivalents resulting from exclusion of subsidiaries from consolidation."
Current fiscal year (From April 1, 2023 to March 31, 2024)
Not applicable.
(Notes to Lease transactions)Not applicable.

-85-

(Notes to Financial Instruments)
1. Matters concerning the status of financial instruments(1) Policy for financial instruments
The Group's fund management is limited to short-term deposits, etc., and temporary surplus funds are managed with highly
safe financial assets. Short-term working capital is provided by bank loans. The Company uses derivatives to avoid exchange
rate fluctuation risks associated with operating liabilities denominated in foreign currencies and does not engage in speculativetransactions.
(2) Details of financial instruments and their risks, and risk management system
Notes and accounts receivable - trade, which are trade receivables, are exposed to the credit risk of customers, etc. In orderto mitigate these risks, the Company manages due dates and balances for each customer in accordance with the credit management
regulations. As of the end of the current fiscal year, 60.8% of trade receivables were from specific major customers. Notes andaccounts receivable - trade, which are trade receivables, are due within one year.
Notes and accounts payable- trade, which are trade payables, are due within one year.
As for securities, the Company strives to reduce credit risk by mainly dealing with public and corporate bonds with highratings in accordance with the fund management regulations,
Borrowings are mainly used to finance operating transactions.
Although operating liabilities and borrowings are exposed to liquidity risk, they are managed by methods such as the timely
preparation of funding plans by the Group companies.
The execution and management of derivative transactions are carried out by the Accounting Department with the approvalof the person in charge of final decision-making in accordance with internal rules that specify transaction authority and transaction
limit amounts.
2. Matters concerning market values, etc. of financial instruments
The amount recorded on the consolidated balance sheet, the market value and the difference between them are as follows.
Previous fiscal year (As of March 31, 2023)(Thousands of yen)Amount recorded on the
consolidated balance sheet
45,043

Securities

Market value

Difference

45,043-

11,492,274

11,492,274-

Shares of subsidiaries and associates

3,468,520

77,739,844

74,271,324

Total assets

15,005,838

89,277,162

74,271,324

Long-term borrowings (including the current
portion of long-term borrowings)

292,889

284,848(8,040)Total liabilities

292,889

284,848(8,040)Investment securities (*2)(*1) Notes on cash are omitted, and notes on deposits, money held in trust, notes and accounts receivable - trade, accounts
receivable - other, notes and accounts payable - trade, accounts payable, income taxes payable, and short-term borrowings
are omitted because their market values approximate their book values as they are settled in a short period of time.
(*2) Shares, etc. without market price are not included in Investment securities. The amounts of these financial instruments
recorded in the consolidated balance sheets are as follows.
Current fiscal year (Thousands ofClassification
yen)
Unlisted shares

154,200-86-Current fiscal year (As of March 31, 2024)(Thousands of yen)Amount recorded on the
consolidated balance sheet
20,510,485

Investment securities (*2)

Market value

Difference

20,510,485-

0160,376,911

160,376,911

20,510,485

180,887,396

160,376,911

Long-term borrowings (including the current
portion of long-term borrowings)

294,811274,594(20,217)

Total liabilities

294,811274,594(20,217)

Shares of subsidiaries and associates (*2)
Total assets(*1) Notes on cash are omitted, and notes on deposits, money held in trust, notes and accounts receivable - trade, accounts
receivable - other, notes and accounts payable - trade, accounts payable, income taxes payable, and short-term borrowings
are omitted because their market values approximate their book values as they are settled in a short period of time.
(*2) Shares, etc. without market price are not included in Investment securities and shares of subsidiaries and associates. The
amounts of these financial instruments recorded in the consolidated balance sheets are as follows.
Current fiscal year (Thousands ofClassification
yen)
Unlisted shares

154,200(Note) 1. Redemption schedule for monetary claims and securities with maturity dates after the consolidated closing datePrevious fiscal year (As of March 31, 2023)(Thousands of yen)Over 1 year up Over 5 years
Up to 1 year
Over 10 years
to 5 years
up to 10 years
3,138,716-

Cash and deposits
Money held in trust
Notes and accounts receivable trade
Accounts receivable

10,900,000

-

-

-

2,550,051---

3,892,155

-

-

-

Total

20,480,922

-

-

-

Current fiscal year (As of March 31, 2024)(Thousands of yen)Over 1 year up Over 5 years
Up to 1 year
Over 10 years
to 5 years
up to 10 years
1,732,014-

Cash and deposits
Money held in trust
Notes and accounts receivable trade
Accounts receivable

14,200,000

-

-

-

1,812,896---

86,655

-

-

-

Total

17,831,566

-

-

-

2. Repayment schedule for long-term borrowings and other interest-bearing liabilities after the consolidated closing datePrevious fiscal year (As of March 31, 2023)(Thousands of yen)
Up to 1 year
Short-termborrowings
Long-term
borrowings

Over 1 year up Over 2 years up Over 3 years up Over 4 years up
to 2 years
to 3 years
to 4 years
to 5 years

Over 5years

161,395

-

-

-

-

-

43,77832,71136,50436,50436,504

106,888-87-

Current fiscal year (As of March 31, 2024)(Thousands of yen)
Up to 1 year
Short-termborrowings
Long-term
borrowings

Over 1 year up Over 2 years up Over 3 years up Over 4 years up
to 2 years
to 3 years
to 4 years
to 5 years

Over 5years

1,095,392

-

-

-

-

-

37,44543,96245,25545,25545,255

77,636

3. Matters concerning the breakdown by level of market values of financial instruments
The market value of financial instruments is classified into the following three levels according to the observability andimportance of the inputs used to calculate the market value.
Level 1 market value: Of the observable inputs to the fair value measurement, the market value calculated using quoted prices
for the assets or liabilities subject to the fair value measurement that are formed in active markets.
Level 2 market value: Of the observable inputs related to market value, market value calculated using inputs related to thecalculation of market value other than inputs related to Level 1.
Level 3 market value: Market value calculated using inputs related to unobservable market value.
If more than one input that has a significant impact on the calculation of market value is used, the market value is classified
into the lowest priority level in the calculation of market value among the levels to which those inputs belong.
(1) Financial instruments recorded on the consolidated balance sheet at market value
Previous fiscal year (As of March 31, 2023)(Thousands of yen)Classification

Market value
Level 1

Level 2

Level 3

Total

Securities
Available-for-sale securities-

45,043-45,043460,033--

460,033

Investment trusts-

6,727,568-

6,727,568

Other

-

-

4,304,673

4,304,673

460,033

6,772,612

4,304,673

11,537,318

Other
Investment securities
Available-for-sale securities
SharesTotal assets
Current fiscal year (As of March 31, 2024)(Thousands of yen)Classification

Market value
Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Shares420,138--

420,138

Investment trusts-

7,171,527-

7,171,527

Other

-

-

12,918,819

12,918,819

420,138

7,171,527

12,918,819

20,510,485

Total assets-88-(2) Financial instruments other than those recorded on the consolidated balance sheet at market value
Previous fiscal year (As of March 31, 2023)(Thousands of yen)Classification

Market value
Level 1

Level 2

Level 377,739,844

-

-

-

284,848-

284,848-

284,848-

284,848

Shares of subsidiaries and associates

77,739,844-

Total assets

77,739,844

Long-term borrowings (including thecurrent portion of long-term borrowings)
Total liabilities

Total

77,739,844

Current fiscal year (As of March 31, 2024)(Thousands of yen)Classification

Market value
Level 1

Level 2

Level 3

Total

Shares of subsidiaries and associates

160,376,911--

160,376,911

Total assets

160,376,911--

160,376,911-

274,594-

274,594-

274,594-

274,594

Long-term borrowings (including thecurrent portion of long-term borrowings)
Total liabilities(Note) 1 Explanation of valuation techniques used in the calculation of market value and inputs to the calculation of market value
AssetsSecurities
Among securities, held-to-maturity debt securities and other under available-for-sale securities are calculated based on theprices presented by the financial institutions with which the Company does business, and are classified as Level 2 market value.
Investment securities
Among investment securities, the market value of shares is based on the price at the exchange, and since they are traded in
active markets, their market value is classified as Level 1 market value. Although the market value of investment trusts is assessedusing the net asset value, the frequency of transactions in the market is low, and the market value is not recognized as a quoted pricein an active market. Therefore, the market value is classified as Level 2 market value. Since there is no quoted price for the rights
granted under the price adjustment clause, the market value is calculated using valuation techniques such as Monte Carlo simulationaccording to the type of transaction and the period until maturity and is classified as Level 3 market value.
Liabilities
Long-term borrowings
The market value of long-term borrowings is calculated based on the present value of the total amount of principal and interest
discounted at an interest rate obtained by adding a credit spread to an appropriate index such as the yield of government bonds, andthe market value is classified as Level 2 market value.
Debt instruments
Among the warrant liabilities, publicly offered warrant liabilities for which an unadjusted quoted price in an active market canbe used are classified as Level 1 market value. Since there are no quoted prices for restricted shares, the price adjustment clause,and privately placed warrant liabilities among warrant liabilities, the market value is calculated using valuation techniques such asMonte Carlo simulation according to the type of transaction and the period until maturity. Since it uses important unobservable
inputs, it is classified as Level 3 market value.
Derivative transactions
Forward exchange contracts are classified as Level 2 market value, which is calculated based on the price presented by thefinancial institutions with which the Company does business.

-89-

2 Information on level 3 market value of financial assets and financial liabilities recorded on the consolidated balance sheet
at market value(1) Quantitative information on significant unobservable inputs
Previous fiscal year (As of March 31, 2023)
Valuation techniqueClassification

Significant unobservable
input

Range of input

Investment securities

Price adjustment clauseMonte Carlo simulation

Share price volatility

51.2%

Expected dividend yield
Expected remaining
period0.0%
3.42 years

Current fiscal year (As of March 31, 2024)
Classification

Valuation techniqueSignificant unobservable
input

Range of input

Investment securities

Price adjustment clauseMonte Carlo simulation

Share price volatility

47.5%

Expected dividend yield
Expected remaining
period

0.0%
2.41 years(2) Reconciliation of beginning balance to ending balance, valuation gain or loss recognized in profit or loss for the current
periodPrevious fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Profit or loss or othercomprehensive income for Acquisition and settlement
the current fiscal year
Balance at
Recorded in
beginning ofotherRecorded inperiodprofit or loss comprehensive Acquisition
income(*1)(*2)

Investment
securities
Availablefor- salesecurities
Total assets
Liability
financial
instruments
Totalliabilities

Loss (gain) on
valuation of
the financial
liabilities held
as of theExcludedconsolidated
Balance atfrombalance sheet
end of period
consolidation
date out of theSettlement
amountrecorded in the
profit or loss
for the current
fiscal year--

4,304,673--

04,304,673---

4,304,673--

04,304,673-

10,340,059

5,950,910---

4,389,149--

10,340,059

5,950,910---

4,389,149--(*1) Included in gain on valuation of derivatives on the consolidated statement of income.
(*2) Included in valuation difference on available-for-sale securities under other comprehensive income on the consolidated
statement of comprehensive income.

-90-Current fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Profit or loss or othercomprehensive income forthe current fiscal year
Balance at
Recorded in
beginning of
otherperiodRecorded incomprehensive
profit or loss

Loss (gain) on
valuation of
the financial
liabilities held
as of theconsolidated
Balance atbalance sheet
end of period
date out of theamountrecorded in the
profit or loss
for the current
fiscal year

Acquisition and settlement

Acquisition

Settlement

income(*1)

Investment
securities
Available-for-sale
securities
Total assets

4,304,673-

8,614,146--

12,918,819-

4,304,673-

8,614,146--

12,918,819-(*1) Included in valuation difference on available-for-sale securities under other comprehensive income on the consolidated
statement of comprehensive income.
3. Explanation of the mark-to-market valuation process
The fair value of Level 3 financial instruments is measured in accordance with the Group's policies and procedures forcalculating market value and procedures for using the mark-to-market valuation model. The fair value is measured using
valuation techniques and inputs that most appropriately reflect the nature, characteristics and risks of the financial instruments
subject to valuation.

4. Explanation on the impact of changes in significant unobservable inputs on market value
Important unobservable inputs to the fair value measurement of financial instruments classified as Level 3 that aremeasured at fair value on a recurring basis are share price volatility, expected dividend yield and expected remaining period.
As for the share price volatility and the expected remaining period, the fair value increases when they increase. On the other
hand, the fair value decreases when the projected dividend yield increases.

-91-

(Notes to Securities)
1. Held-to-maturity securities
Not applicable.
2. Available for sale securities(Thousands of yen)Classification

Class(1) Shares

Securities whose amount recordedon the consolidated balance sheet
exceeds their acquisition cost

Amount recorded on
the consolidatedbalance sheet(Thousands of yen)
455,568

Difference

195,569

259,998(2) Investment trusts

2,992,626

2,974,864

17,762(3) Other

4,304,673-

4,304,673

7,752,867

3,170,433

4,582,434

4,465

5,437

(972)

(2) Investment trusts

3,734,942

4,000,000(265,057)

Subtotal

3,739,407

4,005,437(266,030)

11,492,274

7,175,871

4,316,403

Subtotal
Securities whose amount recordedon the consolidated balance sheet
does not exceed their acquisition
cost

Acquisition cost(1) Shares

Total(Note) Acquisition cost in the table represents book value after impairment.
Unlisted shares (whose consolidated balance sheet value is ¥154,200 thousand) are not included in available-for-sale securities
in the above table because they fall under the category of shares with no market price.
Current fiscal year (As of March 31, 2024)(Thousands of yen)Classification

Class(1) Shares

Securities whose amount recordedon the consolidated balance sheet
exceeds their acquisition cost
Securities whose amount recordedon the consolidated balance sheet
does not exceed their acquisition
cost

Amount recorded on
the consolidatedbalance sheet(Thousands of yen)
420,138

Acquisition cost

Difference

201,007219,130(2) Investment trusts

6,222,373

6,030,490

191,883(3) Other

12,918,819-

12,918,819

Subtotal

19,561,331

6,231,497

13,329,834(1) Investment trusts

949,153

1,000,000(50,846)

Subtotal

949,153

1,000,000(50,846)

20,510,485

7,231,497

13,278,988

Total(Note) Acquisition cost in the table represents book value after impairment.
Unlisted shares (whose consolidated balance sheet value is ¥153,200 thousand) are not included in available-for-sale securities
in the above table because they fall under the category of shares with no market price.

-92-

(Notes to Derivative Transactions)
1 Derivative transactions to which hedge accounting is not applied
Not applicable.
2. Derivative transactions to which hedge accounting is applied
Currency-related
Previous fiscal year (As of March 31, 2023)
Information is omitted due to a lack of materiality.
Current fiscal year (As of March 31, 2024)
Not applicable.
(Notes to Retirement Benefits)
1. Outline of the retirement benefit plan adopted
The Company and its consolidated subsidiaries have adopted a defined contribution pension plan as a defined contribution plan.
In addition, some consolidated subsidiaries have established an in-house lump-sum retirement allowance plan as a defined benefit
plan based on the Retirement Allowance Regulations. Certain consolidated subsidiaries also use the Smaller Enterprise Retirement
Allowance Mutual Aid System.
For the defined benefit corporate pension plan and the lump-sum retirement benefit plan held by consolidated subsidiaries, theretirement benefit liability and retirement benefit expenses are calculated using the simplified method.
2. Defined benefit plans(1) Reconciliations of beginning and ending balances of retirement benefit liability under the plan to which the simplified method isapplied(Thousands of yen)Previous fiscal year
Current fiscal year
(From April 1, 2022
(From April 1, 2023
to March 31, 2023)
to March 31, 2024)
Beginning balance of retirement benefit liability
51,061
10,428Retirement benefit expenses
3,906
2,258
Retirement benefits paid
(16,469)(825)
Contributions to the plan
(1,048)(1,120)Decrease due to exclusion from consolidation(27,022)
Ending balance of retirement benefit liability
10,428
10,741(2) Reconciliation between the year-end balance of retirement benefit obligations and the retirement benefit liability recorded on the
consolidated balance sheet(Thousands of yen)Previous fiscal year
Current fiscal year
(From April 1, 2022
(From April 1, 2023
to March 31, 2023)
to March 31, 2024)
Retirement benefit obligations
18,45019,562Estimated amount of benefits under the Smaller(8,021)(8,820)Enterprise Retirement Allowance Mutual Aid System
Net liabilities and assets recorded on the consolidated
10,428
10,741balance sheets
Retirement benefit liability
Net liabilities and assets recorded on the consolidatedbalance sheets

10,428

10,741

10,428

10,741(3) Retirement benefit expenses
Retirement benefit expenses calculated using the simplified method: Previous fiscal year: ¥3,906 thousand; Current fiscal
year: ¥2,258 thousand-93-

3. Defined contribution plan
The required contribution amount to the defined contribution plan of the Company and its consolidated subsidiaries is ¥1,278,768
thousand for the previous fiscal year and ¥51,791 thousand for the current fiscal year.

-94-

(Notes to Stock Options, etc.)
1. Amount recorded as expenses pertaining to stock options and account title
Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Cost of sales
Selling, general and administrative expenses

Current fiscal year
(From April 1, 2023
to March 31, 2024

136,178 thousand yen

1,429 thousand yen

1,359,899 thousand yen

14,015 thousand yen

2. Amount recorded as profit due to expiration caused by non-exercise of rights
Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Gain on reversal of share acquisition rights

Current fiscal year
(From April 1, 2023
to March 31, 2024

198 thousand yen

1,417 thousand yen

3. Details and size of stock options and changes in them
(1) Details of stock options
a. The filing company
5fth share acquisition rights

6th share acquisition rights

9th share acquisition rights

Employees
99
Directors
9
Subsidiaries’
Category and number of grantees (Persons) Subsidiaries’
6
4 employees
Employees
192
directors
Number of stock options by class
Common share: 293,500(Note)
Common share: 45,000 shares Common share: 49,730 sharesof shares
sharesDate of grantVesting condition

Applicable service period
Exercise period

August 29, 2014

February 5, 2015

September 24, 2021

Grantees must be theCompany’s or its
subsidiaries’ directors, Audit
and Supervisory Committee
Members, or employees at
the time of exercising therights. This shall not apply,
however, if they have retired
due to expiration of the termof office, mandatory
retirement age, or otherjustifiable reasons.

Same as on the left

Same as on the left

Not applicable.

Same as on the left

Same as on the left

From August 30, 2016
to June 24, 2024

From June 25, 2017
to June 24, 2024

From September 25, 2023
to June 23, 2031

(Note) Figures are converted to the number of shares.

-95-

(2) Size of stock options and changes in them
Stock options that existed in the current fiscal year (ended March 31, 2024) are applicable. The number of stock options isconverted to the number of shares.
1) Number of stock options
a. The filing company
5th share acquisitionrights
Before vesting

6th share acquisitionrights

9th share acquisitionrights(Shares)

End of previous fiscal year--

47,120

Grant

-

-

-

Lapse

-

-

620

Vesting--

46,500

Unvested balance

-

-

-

47,00015,000-

Vesting--

46,500Exercise

33,800

-

50

Lapse

1,100

-

680

Unexercised balance

12,10015,00045,770

5th share acquisitionrights

6th share acquisitionrights

9th share acquisitionrights

1,347

1,950

3,249

2,774.41-

2,214.38

433

632

1,384

After vesting(Shares)

End of previous fiscal year

2) Unit price informationa. The filing company

Exercise price(Yen)
Average share price at the time of(Yen)exercise
Fair unit value on the grant date(Yen)

4. Method of estimating the fair unit value of stock options granted in the current fiscal year
Not applicable.
5. Method of estimating the number of vested stock options
Since it is difficult to reasonably estimate the number of lapses in the future, the Company has adopted a method that reflects
only the actual number of lapses.

-96-

6. Of the transactions to deliver shares without consideration as remuneration, etc. for directors, details and the size of post-delivery typeshare remuneration and the status of its fluctuations(1) Details of the post-delivery type remuneration

Category and number of grantees(Persons)
Number of granted shares by class ofsharesDate of grant2022 post-delivery type
[Restricted Stock Unit (RSU)]

2022 post-delivery type
[Performance Share Unit (PSU)]

The Company’s directors (excluding Audit

The Company’s directors (excluding Audit

and Supervisory Committee Members): 6

and Supervisory Committee Members): 6

Common share: 17,300 shares

Common share: 48,900 shares

June 23, 2022

June 23, 2022

For all directors, to continuously hold the

For directors engaged in business execution

status of the Company’s directors or aamong the eligible directors, to achievecertain status as determined by resolution

performance targets defined in theof the Company's Board of Directors from

Medium-Term Management Plan, on

the grant date to the expiration date of thecondition that they are continuously thevesting period, etc.

Company’s directors or have a certain

Vesting condition

status determined by resolution of theCompany's Board of Directors from thedate of grant of the rights until the
expiration date of the period (threeconsecutive fiscal years) covered by the
Medium-Term Management Plan to which
the date of grant of the rights belongs.

Applicable service period

June 23, 2022-June 22, 2025

June 23, 2022-June 22, 2025

(2) Size of the post-delivery type and its fluctuation status
The following tables are for the post-delivery share-based renumeration for which the number of unvested shares existed in thecurrent fiscal year (ended March 31, 2024) or the number of unissued shares after vesting existed at the end of the current fiscal year
(ended March 31, 2024).
1) Amount recorded as expenses and account title
2022 post-delivery type
[Restricted Stock Unit (RSU)]
Share-based remuneration expenses
under general and administrative
8,099
expenses (Thousand yen)2022 post-delivery type
[Performance Share Unit (PSU)]-

2) Number of shares2022 post-delivery type
[Restricted Stock Unit (RSU)]
End of previous fiscal year (Shares)

2022 post-delivery type
[Performance Share Unit (PSU)]
17,30048,900Grant (Shares)--

Lapse (Shares)--

Vesting (Shares)

5,772

-

Unvested balance (Shares)

11,52848,900--

Balance of unissued shares after vesting(Shares)-97-3) Unit value information
2022 post-delivery type
[Restricted Stock Unit (RSU)]
Fair unit value on the grant date (Yen)2022 post-delivery type
[Performance Share Unit (PSU)]
1,603

1,603

7. Method of estimating fair unit value
The Company adopts an objective and reasonable share price, such as the average closing price of the Company's commonshare on the Tokyo Stock Exchange during the preceding one-month period from the day immediately preceding the date of theOrdinary General Meeting of Shareholders in the year of grant.

8. Method of estimating the number of vested shares
Since it is difficult to reasonably estimate the number of forfeitures in the future for the post-delivery type, the Company has
adopted a method that reflects only the actual number of forfeitures.

-98-

(Tax Effect Accounting)
1. Major components that caused deferred tax assets and deferred tax liabilities
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Deferred tax assets
Research and development expenses

156,106

thousand yen

238,719thousand yen

Investment securities

74,002

thousand yen

74,002

thousand yen

Shares of subsidiaries and associates

284,016

thousand yen

266,013thousand yen

Provision for bonuses

60,460thousand yen

45,567thousand yen

Tax loss carryforwards (Note 3)

173,988

thousand yen

186,130

thousand yen

Loss on valuation of inventories

39,542

thousand yen

31,422

thousand yen

Other60,201

thousand yen

102,402

thousand yen

Subtotal of deferred tax assets

848,317thousand yen

944,258

thousand yen

Valuation allowance for tax loss carryforwards (Note 2)
Valuation allowance for total deductible temporary
differences
Subtotal of valuation allowance (Note 2)(173,988) thousand yen(180,056) thousand yen(663,769) thousand yen(531,055) thousand yen(837,757) thousand yen(711,112) thousand yen

Total deferred tax assets

10,560thousand yen

233,146thousand yen

90,024
781,563
1,318,584

thousand yen
thousand yen
thousand yen

Enterprise tax receivable

186,487

thousand yen- Thousand yen

Other32,202

thousand yen

15,804 Thousand yen

Total deferred tax liabilities

2,408,862

thousand yen

Net deferred tax liabilities(2,398,301) thousand yen

Deferred tax liabilities
Valuation difference due to full fair value method
Retained earnings of subsidiaries and associates
Valuation difference on available-for-sale securities

Deferred tax assets for land revaluation
Valuation allowance
Deferred tax liabilities for land revaluation
Net deferred tax liabilities for land revaluation

139,750(139,750)(9,920)(9,920)96,952 thousand yen
481,744 Thousand yen
4,009,694 thousand yen

4,604,195

thousand yen(4,371,049) thousand yen

thousand yen
thousand yen
thousand yen
thousand yen

139,750(139,750)(9,920)(9,920)thousand yen
thousand yen
thousand yen
thousand yen(Note) 1. In the current fiscal year, the Company finalized the provisional accounting treatment for the business combination, andthe respective numbers for the previous fiscal year reflect the details of the finalization of the provisional accounting
treatment.
2. Valuation allowance has decreased by ¥126,645 thousand. This was mainly due to a decrease of ¥56,968 thousand in thevaluation allowance for provision for bonuses, a decrease of ¥38,976 thousand in the valuation allowance for loss on
valuation of inventories, and a decrease of ¥29,398 thousand in the valuation allowance for research and development
expenses.

3. Tax loss carryforwards and deferred tax assets by expiration datePrevious fiscal year (As of March 31, 2023)
Over 1 year Over 2 years Over 3 years Over 4 years
Up to 1 year
Over 5years
Total
up to 2 years up to 3 years up to 4 years up to 5 years(Thousands(Thousands (Thousands(Thousands (Thousands (Thousands (Thousandsof yen)of yen)of yen)of yen)of yen)of yen)of yen)Tax loss carryforwards (a)--29,99915,134-

128,854

173,988

Valuation allowance--(29,999)(15,134)-(128,854)(173,988)

Deferred tax assets

-

-

-

-

-

-

-

(a) Tax loss carryforwards are calculated at the normal effective statutory tax rate.

-99-

Current fiscal year (As of March 31, 2024)
Over 1 year Over 2 years Over 3 years Over 4 years
Up to 1 year
Over 5years
Total
up to 2 years up to 3 years up to 4 years up to 5 years(Thousands(Thousands (Thousands(Thousands (Thousands (Thousands (Thousandsof yen)of yen)of yen)of yen)of yen)of yen)of yen)Tax loss carryforwards (a)29,99915,134
43,863
97,132
186,130
Valuation allowance-(29,999)(15,134)-(43,863)(91,059)(180,056)

Deferred tax assets

-

-

-

-

-

6,073

6,073

(a) Tax loss carryforwards are calculated at the normal effective statutory tax rate.
2. Breakdown of major items that caused important differences between the normal effective statutory tax rate and the actual effective
tax rate after the application of tax effect accounting, if any
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Normal effective statutory tax rate

30.6

%

-%

(Adjustment)
Permanently non-deductible expenses such asentertainment expenses
Change in valuation allowance

0.1 %

-%

(6.4) %-%

Difference in tax rates of overseas subsidiaries(5.8) %-%

Retained earnings of subsidiaries and associates
Share of profit (loss) of entities accounted for using
equity method
Amortization of goodwill

4.0 %

-%

(1.0) %

-%

0.7 %

-%

Consolidation adjustment(18.9) %

-%

0.0 %

-%

3.3 %

-%

Other
Normal effective tax rate after application of tax-effectaccounting(Note) Notes for the current fiscal year are omitted as the loss before income taxes was recorded.
3. Accounting treatment for income tax and local income tax or accounting treatment for tax effect accounting related thereto
The Company and some of its domestic consolidated subsidiaries adopt the group tax sharing system from the current fiscal year.
In addition, in accordance with the Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System (ASBJ
PITF No. 42, August 12, 2021), it carries out accounting treatment and disclosure of income taxes and local income taxes, or tax effectaccounting related thereto.
(Notes to Business Combinations)
Determination of provisional treatment of business combination
For the business combination with EKTech Holdings Sdn. Bhd., which was carried out on February 2, 2023, a provisional
accounting method was applied in the previous fiscal year. The accounting figures were finalized in the current fiscal year.
As a result of the review of the initial allocation of the acquisition cost in line with the finalization of this provisional accounting
treatment, the comparative information included in the consolidated financial statements for the current fiscal year reflected thesignificant review in the initial allocation of the acquisition cost. As a result of the allocation of ¥39,280 thousand to other underintangible assets and ¥9,092 thousand to deferred tax liabilities under non-current liabilities, the provisionally calculated amount of
goodwill decreased by ¥30,188 thousand from ¥540,196 thousand to ¥510,007 thousand.

(Notes to Asset Retirement Obligations)
Information is omitted due to a lack of materiality.

-100-(Notes to Revenue Recognition)
1. Information on the breakdown of revenue from contracts with customers
Information on the breakdown of revenue from contracts with customers is provided in Notes (Segment Information, etc.) 3.
Disclosure of sales, profit (loss), asset, liability, and other items for each reportable segment and the breakdown of revenue byreportable segment of the consolidated financial statements.
2. Information that serves as a basis for understanding revenue from contracts with customers(1) Accounting standards for revenue recognition
1) Revenue recognition method (5-step approach)
Revenue is recognized based on the following 5-step approach.
Step 1: Identify a contract with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Calculate the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when or as the performance obligations are satisfied.
A separate good or service included in a contract with a customer is identified, and performance obligations are identified
by this transaction unit.
Transaction prices are measured at the amount of consideration to which the Company expects to be entitled in exchange
for the transfer of promised goods or services to customers. The consideration from the customer for the transaction is generally
received within one year from the time of the transfer of goods or services to the customer, and does not include any significant
financial elements.
If a contract includes multiple performance obligations in the Global Data Intelligence business, the transaction price isallocated to each performance obligation based on the independent sales price.

2) Recognition of revenue from major transactionsa) Global Data Intelligence businessi) Revenue recognition related to sale of goods
In the sale of goods, the Company manufactures and sells digital forensics equipment, etc., and recognizes the services
provided by the Group in relation to these as performance obligations.
In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferred tothe customer at the time of delivery.
ii) Revenue recognition related to license sales
In license sales, the Company sells licenses for analytic software, etc. related to digital forensics equipment, and theCompany recognizes the services provided by the Group in relation to these as performance obligations.
A software license provides customers with either the right to use the Group's software for an unlimited period of timeor the right to use the Company's software for a limited period of time, which is generally one to three years.
Revenue from license sales is recognized when the control over the software license is transferred to the customer andthe term of the license agreement begins.
iii) Revenue recognition related to maintenance services and software updates
The Company provides maintenance services for digital forensics equipment and other equipment in use by customers.
In addition, the Company provides software updates and technical support services, and it recognizes the services it provides
in relation to these as performance obligations.
These maintenance services and software updates, etc. are transactions that satisfy performance obligations over acertain period of time because services are continuously provided to customers during the contract period, and revenue isrecognized in accordance with the lapse of the period.

-101-b) Entertainment-related businessi) Revenue recognition related to sale of goods
In the sale of goods, the Company manufactures and sells entertainment-related equipment, etc., and recognizes theservices provided by the Group in relation to these as performance obligations.
In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferred tothe customer at the time of delivery.
ii) Revenue recognition related to development
In the development sales, services to provide software developed based on orders received from customers arerecognized as performance obligations.
Revenue from development sales is recognized at the time of acceptance by the customer because the control over thesoftware is transferred to the customer at the time of acceptance by the customer.
c) New IT-related businessi) Revenue recognition related to sale of goods
In the sale of goods, the Company manufactures and sells M2M communication equipment, etc., and recognizes theservices provided by the Group in relation to these as performance obligations.
In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferred tothe customer at the time of delivery.
ii) Revenue recognition related to development
In the development sales, services to provide software developed based on orders received from customers arerecognized as performance obligations.
Revenue from development sales is recognized at the time of acceptance by the customer because the control over thesoftware is transferred to the customer at the time of acceptance by the customer.
iii) Revenue recognition related to maintenance services
In the area of maintenance services, the Company provides maintenance extension services for M2M communicationequipment, and recognizes the services provided by the Company in relation to these as performance obligations. The
extended service period is 3-5 years.
Maintenance services are transactions that satisfy performance obligations over a certain period of time because
services are continuously provided to customers during the contract period, and revenue is recognized in accordance withthe lapse of the period.

-102-

3. Information on the relationship between the fulfillment of performance obligations based on contracts with customers and cash flows
arising from such contracts, and the amount and timing of revenue expected to be recognized in and after the following fiscal year
from contracts with customers existing at the end of the current fiscal year
Previous fiscal year (From April 1, 2022 to March 31, 2023)(1) Balance, etc. of contract assets and contract liabilities
The beginning and ending balances of contract assets and contract liabilities of the Company and its consolidated subsidiaries
for the current fiscal year are as follows:
In the consolidated balance sheet, contract assets are included in "Other" under "Current assets" and "Other" under "Noncurrent assets." In addition, contract liabilities of ¥12,020,435 thousand at the beginning of the period were recorded as revenue forthe current fiscal year.
(Thousands of yen)
Current fiscal year
Contract assets (beginning balance)

985,376Contract assets (ending balance)-

Contract liabilities (beginning balance)

18,583,858

Contract liabilities (ending balance)

782,468(2) The transaction price allocated to the remaining performance obligations;
The aggregate transaction price allocated to the remaining performance obligations and the period in which revenue is expected
to be recognized are as follows:(Thousands of yen)
Current fiscal year
Within 1 year

368,833

Over 1 year

413,635

Total

782,468

Current fiscal year (From April 1, 2023 to March 31, 2024)(1) Balance, etc. of contract assets and contract liabilities
The beginning and ending balances of contract assets and contract liabilities of the Company and its consolidated subsidiaries
for the current fiscal year are as follows:
In the consolidated balance sheet, contract assets are included in "Other" under "Current assets." In addition, contract liabilitiesof ¥367,271 thousand at the beginning of the period were recorded as revenue for the current fiscal year.
(Thousands of yen)
Current fiscal year
Contract assets (beginning balance)-

Contract assets (ending balance)

81,244Contract liabilities (beginning balance)

782,468

Contract liabilities (ending balance)

891,842-103-

(2) The transaction price allocated to the remaining performance obligations;
The aggregate transaction price allocated to the remaining performance obligations and the period in which revenue is expected
to be recognized are as follows:(Thousands of yen)
Current fiscal year
Within 1 year

398,781Over 1 year

493,060

Total

891,842-104-

(Segment information, etc.)[Segment information]
1. Description of reportable segments(1) How to decide reportable segments
Reportable segments of the Group are components withing the Group for which separate financial information is available
and are regularly used by the Board of Directors to determine the allocation of management resources and evaluate theirbusiness results.
The Group establishes business divisions by product and service in Konan Office regarding the Entertainment-related
business and the New IT-related business, and in Cellebrite regarding the Global Data Intelligence business, each of which
formulates its own comprehensive strategies for both domestic and overseas markets with respect to its products and services,and operates its business activities.
Therefore, the Group consists of segments by products and services based on business divisions, which constitute threereportable segments; Global Data Intelligence business, Entertainment-related business, and New IT-related business.
(2) Types of products and services of each reportable segment
The Global Data Intelligence business develops, manufactures, and sells mobile data transfer equipment and related
services designed for criminal investigation agencies, etc. (Digital Intelligence business).
The Entertainment-related business develops, manufactures and sells game machine-related parts such as control boards,
which are mainly sold to game machine manufacturers.
The New IT-related business mainly develops, manufactures, and sells M2M communication equipment and IoT solutions,and develops and sells business support systems for B2B.
(3) Information on changes in reportable segments, etc.
As the corporate performance management segmentation within the Company Group has partially been changed, thename of the reportable segment “Mobile Data Solution business” has been changed to “Global Data Intelligence business”
from the current fiscal year. Note that the segment name after the aforementioned change is disclosed in segment information
for the previous fiscal year. The change, however, has no impact on the segment information for the current fiscal year.
2. Method of calculating the amounts of net sales, profit (loss), assets and other items for each reportable segment
The accounting methods used for business segments are the same as those described under "Significant accounting policies
for preparation of consolidated financial statements."
Reportable segments income figures are based on operating profit. The amounts of transaction with other segments are basedon actual market prices.
Provisional accounting treatment pertaining to business combination was finalized for the current fiscal year, and the figures
for the previous fiscal year reflect the content of the finalization of the provisional accounting treatment.

-105-

3. Disclosure of sales, profit (loss), asset, liability, and other items for each reportable segment and the breakdown of revenue byreportable segment
Previous fiscal year (From April 1, 2022 to March 31, 2023)

Global Data Entertainment
New IT-relatedIntelligence-relatedbusinessbusinessbusiness

Total(Thousands of yen)Amounts
recorded on the
Adjusted
consolidated
amountfinancial(Note 1)statements(Note 2)

Net sales
Goods transferred at a point in time

10,959,517

6,231,803

2,011,083

19,202,404-

19,202,404

Goods transferred over time

18,192,916-

53,772

18,246,688-

18,246,688

Revenue from contracts withcustomers

29,152,434

6,231,803

2,064,855

37,449,092-

37,449,092

Revenue from external customers

29,152,434

6,231,803

2,064,855

37,449,092-

37,449,092

Transaction with other segments-

27,542-

27,542(27,542)-

Total

29,152,434

6,259,345

2,064,855

37,476,634(27,542)

37,449,092

Segment profit (loss)(1,525,340)

706,600

138,641(680,097)(1,030,965)(1,711,062)

Segment assets

4,450,457

4,937,267

3,055,038

12,442,764

29,324,616

41,767,380

Depreciation

969,215

66,51370,327

1,106,056

11,416

1,117,472

Amortization of goodwill

416,259--

416,259-

416,259

Other items

Share of profit of entities
471,222471,222471,222accounted for using equity method
Investments in entities accounted
3,468,520
3,468,520
3,468,520
for using equity method
Increase in property, plant and785,383
59,289165,706
1,010,379
37,6691,048,049
equipment and intangible assets(Note) 1 The main details of the adjustment amount are as follows.
(1) Adjusted amount for segment profit of ¥(1,030,965) thousand includes elimination of intersegment transactions of ¥76
thousand company-wide expenses not allocated to each reportable segment of ¥(1,031,041) thousand. The company-wide
expenses mainly consist of general and administrative expenses not attributable to any reportable segment.
(2) Adjusted amount for segment assets of ¥29,324,616 thousand mainly represents surplus operating funds (cash) of theparent company, long-term investment funds (securities and investment securities) and assets relating to its administrative
department not allocated to each reportable segment.
(3) Adjusted amount for other items is related to company-wide assets not allocated to each reportable segment, and consistsof depreciation and increases in property, plant and equipment and intangible assets.
2 Segment profit (loss) has been adjusted with operating loss on the consolidated statement of income.

-106-Current fiscal year (From April 1, 2023 to March 31, 2024)

Global Data Entertainment
New IT-relatedIntelligence-relatedbusinessbusinessbusiness

Total(Thousands of yen)Amounts
recorded on the
Adjusted
consolidated
amountfinancial(Note 1)statements(Note 2)

Net sales
Goods transferred at a point in time

71,036

6,029,195

2,421,649

8,521,881-

8,521,881

Goods transferred over time

922,997-

600,707

1,523,704-

1,523,704

994,033

6,029,195

3,022,357

10,045,586-

10,045,586

Revenue from external customers

994,033

6,029,195

3,022,357

10,045,586-

10,045,586

Transactions with other segments-

22,055-22,055(22,055)-

994,033

6,051,250

3,022,357

10,067,641(22,055)

10,045,586

Segment profit

131,566

802,159

230,934

1,164,660(851,858)

312,801

Segment assets

906,952

6,161,472

3,306,901

10,375,326

36,463,122

46,838,448

2,850

73,831

158,946

235,629

11,607247,236

Amortization of customer-related
assets

-

-

9,017

9,017

-

9,017

Amortization of goodwill--

52,37652,376-52,376

Revenue from
customers

contracts

with

Total

Other items
Depreciation

Share of loss of entities accounted
4,498,420
4,498,420
4,498,420
for using equity method
Investments in entities accounted
for using equity method
Increase in property, plant and
2,247
70,55484,015
156,8172,990
159,808
equipment and intangible assets(Note) 1 The main details of the adjustment amount are as follows.
(1) Adjusted amount for segment profit of ¥(851,858) thousand includes company-wide expenses not allocated to eachreportable segment of ¥(851,858) thousand. The company-wide expenses mainly consist of general and administrative
expenses not attributable to any reportable segment.
(2) Adjusted amount for segment assets of ¥36,463,122 thousand mainly represents surplus operating funds (cash) of theparent company, long-term investment funds (investment securities), and assets relating to its administrative department
not allocated to each reportable segment.
(3) Adjusted amount for other items is related to company-wide assets not allocated to each reportable segment, and consistsof depreciation and the increases in property, plant and equipment and intangible assets.
2 Segment profit has been adjusted with operating profit on the consolidated statement of income.

-107-

[Related Information]
Previous fiscal year (From April 1, 2022 to March 31, 2023)
1. Information by product and service(Thousands of yen)
Pachinko control
board
Revenue from externalcustomers

Mobile data transfer
Digital equipment
equipment

4,850,743

29,152,434

Other

2,064,855

Total

1,381,059

37,449,092

2. Regional information(1) Net sales(Thousands of yen)Japan

United States

9,290,024(Note) 1

Europe13,774,730

State of Israel

6,608,042

Other

4,361,712

Total

3,414,582

37,449,092

Net sales are classified by country or region based on the location of the customer.

(2) Property, plant and equipment(Thousands of yen)
Japan

State of Israel

1,532,663

United States
-

Other
-

Total
96,0801,628,744

3. Information by major customer(Thousands of yen)
Customer’s name

Net sales

Related segment name
4,973,843

FUJISHOJI CO., LTD.

Entertainment-related businessCurrent fiscal year (From April 1, 2023 to March 31, 2024)
1. Information by product and service(Thousands of yen)
Pachinko control
board
Revenue from externalcustomers

Mobile data transfer
Digital equipment
equipment

4,791,587

994,033

3,022,357

Other
1,237,607

Total
10,045,586

2. Regional information(1) Net sales
This information is omitted because revenue from external customers in Japan account for more than 90% of net sales in the
consolidated statements of income.
(2) Property, plant and equipment
This information is omitted because the amount of property, plant and equipment located in Japan exceeds 90% of the amountof property, plant and equipment on the consolidated balance sheet.
3. Information by major customer(Thousands of yen)
Customer’s name
FUJISHOJI CO., LTD.

Net sales

Related segment name
4,868,505-108-Entertainment-related business[Information on impairment losses on non-current assets by reportable segment]
Previous fiscal year (From April 1, 2022 to March 31, 2023)
Reportable segment
Global DataIntelligencebusiness
Impairment losses

Entertainment- New IT-related
related businessbusiness---

Company-wideand elimination(Note)

Total-

70,230Total

70,230(Note) The amount of" "Company-wide and eliminations" is the amount pertaining to company-wide assets that are not attributable toany segment.
Current fiscal year (From April 1, 2023 to March 31, 2024)
Not applicable.
[Information on amortization of goodwill and the unamortized balance by reportable segment]
Previous fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Global DataIntelligencebusiness

Entertainmentrelated business

New IT-related
business

Company-wide andelimination

Total

Amortization
416,259
416,259
for the year
Balance at end
510,007510,007of period(Note) In the current fiscal year, the Company finalized the provisional accounting treatment for the business combination, and therespective numbers for the current fiscal year reflect the details of the finalization of the provisional accounting treatment.
Current fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Global DataIntelligencebusiness
Amortization
for the year
Balance at endof period

Entertainmentrelated business

New IT-related
business

Company-wide andelimination

Total

-

-

52,376-52,376--457,630-

457,630[Information on gain on negative goodwill by reportable segment]
Not applicable.

-109-

[Related parties]
1. Transactions with related parties(1) Transactions between the company filing the consolidated financial statements and related parties
Non-consolidated subsidiaries and associates of the company filing the consolidated financial statements
Previous fiscal year (From April 1, 2022 to March 31, 2023)
Share
Balance at
Description Percentage
Transaction
Name ofcapital or
Relationship Description
end ofof business of voting
amountAccount
ofcompany, Location
capitalwith related
periodTypeorrights(Thousands
title(Thousands
transaction
etc.
contribution
partiesof yen)occupation holding(NIS)
of yen)Purchase of
products
Investment
Acquisition of
securities
rights under
Valuation
GlobalData
Petah Tikva,(Holding)
4,304,673
Intelligence
Cellebrite
difference
the price
Associate
1,345
Direct(2,987,443)
State ofbusiness
DI Ltd.
on
adjustment(Note)
49.5%
Israelavailableclause
Concurrent
for-saleappointment
securities
of officers
Transaction conditions and policy for determining transaction conditions(Note) Acquisition of rights under the price adjustment clause based on the merger agreement of Cellbrite DI Ltd., which is assessedat market value.
Current fiscal year (From April 1, 2023 to March 31, 2024)
Share
Balance at
Description Percentage
Transaction
Name ofcapital or
Relationship Description
end ofof business of voting
amountAccount
company, Location
capitalwith relatedofperiodTypeor(Thousands
rightstitle
contribution(Thousandsetc.
partiestransactionof yen)occupation holding(NIS)
of yen)Purchase of
products
Investment
Acquisition of
securities
Globalrights under
Valuation
Petah Tikva,(Holding)
12,918,819
Data
Cellebrite
the price
differenceIntelligenc Direct
Associate
State of
1,345
(8,965,660)
DI Ltd.
adjustmentone business 47.0%(Note)
IsraelclauseavailableConcurrent
for-saleappointment
securities
of officers
Transaction conditions and policy for determining transaction conditions(Note) Acquisition of rights under the price adjustment clause based on the merger agreement of Cellbrite DI Ltd., which is assessedat market value.

-110-Officers and major shareholders (limited to individual shareholders), etc. of the company filing the consolidated financial statements
Previous fiscal year (From April 1, 2022 to March 31, 2023)
Not applicable.
Current fiscal year (From April 1, 2023 to March 31, 2024)
Percentage
Balance at
Share
Description
Transactionof voting Relationship Description
end ofAccount
capital orofamountrightswith relatedofperiodType Shareholder Location(Thousands
title
capitaloccupation(Thousands
holding
partiestransaction
contribution or businessof yen)(held)
of yen)Director
Audit andExercise of(Held)
Yasushistock
11,988Supervisory
Officer
DirectMuto
options (8,000 shares)
Committee
0.0%(Note)
Member of
the Company(Note) The exercise of employee stock options during the current fiscal year, which had been issued pursuant to the special resolutionof the General Meeting of Shareholders held on June 25, 2014 is shown.
(2) Transactions between the consolidated subsidiaries of the company filing the consolidated financial statements and related parties
Not applicable.

-111-

2. Notes to parent company or significant associates(1) Parent company information
Not applicable.
(2) Condensed financial statements of significant associates
Previous fiscal year (From April 1, 2022 to March 31, 2023)
As of the end of the current fiscal year, the Cellbrite DI Ltd. and its 13 subsidiaries (hereinafter referred to as Cellbrite DI
Group) were significant associates. Their condensed financial statements are as follows."
The Cellbrite DI Group is subject to the calculation of share of profit of entities accounted for using equity method and isstated as a combined entity.
(Thousands of yen)
Current fiscal year
Total current assets

40,242,951

Total non-current assets

13,212,910

Total current liabilities

35,401,845

Total non-current liabilities

9,186,712

Total net assets

8,867,304

Net sales

35,929,631

Profit before income taxes

12,982,751

Profit12,959,199

Current fiscal year (From April 1, 2023 to March 31, 2024)
As of the end of the current fiscal year, Cellbrite DI Ltd. and its 11 subsidiaries (hereinafter referred to as the Cellbrite DI
Group) were significant associates. Their condensed financial statements are as follows.
The Cellbrite DI Group is subject to the calculation of share of profit of entities accounted for using equity method and isstated as a combined entity.
(Thousands of yen)
Current fiscal year
Total current assets

59,863,890

Total non-current assets

15,715,189

Total current liabilities

35,999,872

Total non-current liabilities

34,726,918

Total net assets

4,852,287

Net sales

46,110,351(Loss) before income taxes(10,717,100)(Loss)(11,502,413)-112-

(Per share information)
Previous fiscal year
(From April 1, 2022
to March 31, 2023)

Item
Net assets per share

Current fiscal year
(From April 1, 2023
to March 31, 2024

1,542.39 yen

1,670.86 yen

Basic earnings (losses) per share

292.82 yen(169.82) yen

Diluted earnings per share

278.46 yen-(Note) 1 Diluted earnings per share for the current fiscal year are not shown in the above table because the basic earnings per share
were negative despite the existence of dilutive shares.
2 The basis for calculating net assets per share and basic earnings (losses) per share is as follows.
1. Net assets per share
Item

Previous fiscal year
(As of March 31, 2023)

Total net assets (Thousands of yen)

Current fiscal year
(As of March 31, 2024)

35,013,806

37,259,391

Amount deducted from total net assets (Thousands of yen)

105,755

102,076[Of which share award rights (Thousands of yen)][27,013][24,012][Of which share acquisition rights (Thousands of yen)][78,741][78,064]

34,908,051

37,157,314

22,632

22,238Amounts of net assets related to common shares at the end of
the fiscal year (Thousands of yen)
Number of common shares used to calculate net assets per shareat the end of the fiscal year (Thousand shares)-113-

2. Basic earnings (losses) per share and diluted net earnings per share
Previous fiscal year
(From April 1, 2022
to March 31, 2023)

Item

Current fiscal year
(From April 1, 2023
to March 31, 2024

Basic earnings (losses) per share
Profit (loss) attributable to owners of parent (Thousands ofyen)Profit not attributable to common shareholders (Thousands ofyen)Profit (loss) attributable to owners of parent in relation tocommon shares (Thousands of yen)
Weighted average number of common shares during the fiscal
year (Thousand shares)

6,878,387(3,777,621)--

6,878,387(3,777,621)

23,49022,245(326,370)-[(326,370)][-]

Number of increased common shares (Thousand shares)

38-[Of which share award rights (Thousand shares)]

[22]

[-]

[Of which share acquisition rights (Thousand shares)]

[15]

[-]

Diluted earnings per share
Adjustments to profit (loss) attributable to owners of parent(Thousands of yen)
[Of which adjustments by dilutive shares of consolidated
subsidiaries (Thousands of yen)]

The Company
Details of dilutive shares not included in the calculation of The Company
The 9th share acquisition rights The 5th share acquisition rights
fully diluted earnings per share due to non-dilutive effect.
The number of dilutive shares:
The number of dilutive shares:
47 thousand shares
12 thousand shares
Cellebrite DI Ltd.
The 6th share acquisition rights
Price adjustment clause
The number of dilutive shares:
The Number of dilutive shares: 15 thousand shares
15,000 thousand shares
The 9th share acquisition rights
Publicly offered warrant liability The number of dilutive shares:
The number of dilutive shares:
45 thousand shares
19,999 thousand shares
Privately offered warrant
liability
The number of dilutive shares:
9,666 thousand shares-114-

(Significant subsequent events)
Not applicable.

-115-5) Consolidated Supplemental Schedules[Schedule of Bonds]
Not applicable.
[Schedule of Borrowings]
Balance atBalance at end of Average interest
beginning of period
periodrate(Thousands of yen) (Thousands of yen)(%)

Classification

Due date

Short-term borrowings

161,395

1,095,392

0.54-

Current portion of long-term borrowings

43,77837,4450.70-

Current portion of lease liabilities

12,500

8,635

-

-

249,111257,366

1.97 April 2025 - February 2033

8,041

20,450- April 2025 - March 2030

474,825

1,419,290

Long-term borrowings(Excluding current portion)
Lease liabilities(Excluding current portion)
Total(Note)

1
2
3

-

-

The average interest rate is the weighted average interest rate on the balance of borrowings at end of period.
The average interest rate of lease liabilities is not stated because some lease liabilities are recorded in the consolidatedbalance sheet at the amount before deducting the interest equivalent included in the total lease payment.
The amounts of long-term borrowings and lease liabilities (excluding current portion) scheduled to be repaid within five
years after the consolidated closing date are as follows.
Classification

Over 1 year up to 2
years
(Thousands of yen)Over 2 years up to 3
years
(Thousands of yen)Over 3 years up to 4
years
(Thousands of yen)Over 4 years up to 5
years
(Thousands of yen)

Long-term
borrowings

43,96245,25545,25545,255

Lease liabilities

5,852

5,345

3,819

3,513

[Schedule of Asset Retirement Obligations]
Since the amount of asset retirement obligations at the beginning of the current fiscal year and at the end of thecurrent fiscal year is 1% or less of the total amount of liabilities and net assets at the beginning of the current fiscal year
and at the end of the current fiscal year, the description is omitted pursuant to the provisions of Article 92-2 of theRegulation for Consolidated Financial Statements.

-116-

(2) [Others]
Quarterly information for the current fiscal year
First quarter(Three months(Cumulative Period)
ended June 30,
2023)(Thousands
Net sales
2,370,501
of yen)Second quarter
Third quarter
Current fiscal year
(Six months ended(Nine months ended (Fiscal year ended
September 30,
December 31, 2023) March 31, 2024)
2023)
4,648,104

7,467,638

10,045,586

Loss before income taxes(Thousandsof yen)(2,791,671)(4,450,248)(4,272,623)(4,119,551)

Loss attributable to owners ofparent(Thousandsof yen)(2,614,709)(4,229,062)(4,145,435)(3,777,621)(Yen)(117.08)(189.88)(186.29)(169.82)

Basic losses per share

Second quarter
Third quarter
Fourth quarter
First quarter(From July 1, 2023 (From October 1, (From January 1,(From April 1, 2023
to September 30, 2023 to December 2024 to March 31,
to June 30, 2023)
2023)
31, 2023
2024)(Period of account)

Basic earnings (losses) per share(Yen)(117.08)-117-(72.67)

3.76

16.55

2. Financial Statements, etc.
(1) Financial Statements
1) Balance Sheet(Thousands of yen)Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

AssetsCurrent assets
Cash and deposits

1,218,240

1,293,188

Money held in trust
Notes receivable - trade

10,900,000
32,33914,200,000*2 12,800

Accounts receivable - tradeFinished goods

2,056,963
202,032

1,414,469
665,031Work in process
Raw materials

389,138
2,016,833

440,453
3,662,185

Advance payments to suppliers
Prepaid expenses*1 33,184

433,391

26,674575,231*1 3,842,654*1 66,478

1,484,550*1 25,176

(500)

(400)

22,608,829

22,381,291

Buildings
Structures

197,651
6,831

185,2146,315

Machinery and equipment
Vehicles

31,67777

33,6620Tools, furniture and fixtures
Leased assets

66,760-50,745
10,633

Accounts receivable - other
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment

Land
Total property, plant and equipment

681,114681,114*3 984,112*3 967,686

117,984
100,542

176,486
9,532

8,040

8,040

226,566

194,059

11,632,351
1,000,093

20,647,435
1,000,093

281,005
114,600

346,580
102,766

701

410

13,028,751

22,097,285

14,239,430

23,259,030

36,848,260

45,640,321

Intangible assets
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term prepaid expenses
Guarantee deposits
Other
Total investments and other assets
Total non-current assets
Total assets-118-

(Thousands of yen)Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Liabilities
Current liabilities
Notes payable - trade169,494*2 125,614

Accounts payable - trade
Short-term borrowings*1 1,998,532*1 1,680,764-*4 1,000,000

Lease liabilities
Accounts payable - other47,1731,920
32,001

Accrued expenses
Income taxes payable

233,380
2,702

214,402360,910

Advances received
Contract liabilities

31,787
777,994

63,373
891,540

Deposits received
Provision for bonuses

10,818
185,848

11,203
137,501

Other

-

9,008

3,457,731

4,528,238

-

9,600

Deferred tax liabilities
Deferred tax liabilities for land revaluation

1,503,717
9,920

3,793,469
9,920

Total non-current liabilities

1,513,637

3,812,989

4,971,369

8,341,228

2,089,685

2,097,606

Capital surplus
Legal capital surplus

2,103,152

2,111,073

Other capital surplus

182,713174,016

Total capital surplus

2,285,866

2,285,090

154,318

154,318

1,210,000
26,280,594

1,210,000
26,267,187

27,644,913

27,631,505

Total current liabilities
Non-current liabilities
Lease liabilities

Total liabilities
Net assets
Shareholders' equity
Share capital

Retained earnings
Legal retained earnings
Other retained earnings
General reserve
Retained earnings brought forward
Total retained earnings
Treasury shares(2,806,314)(3,643,498)

Total shareholders' equity

29,214,151

28,370,704

2,991,188

9,260,515

Valuation and translation adjustments
Valuation difference on available-for-sale securities
Revaluation reserve for land

(434,203)(434,203)

Total valuation and translation adjustments

2,556,984

8,826,312

Share award rights

27,01324,012

Share acquisition rights

78,741

78,06431,876,890

37,299,093

36,848,260

45,640,321

Total net assets
Total liabilities and net assets-119-2) Statement of Income

Net sales

Previous fiscal year
(From April 1, 2022
to March 31, 2023)*2 8,051,251

Cost of sales*2 5,506,827

Gross profit
Selling, general and administrative expenses
Operating profit(Thousands of yen)
Current fiscal year
(From April 1, 2023
to March 31, 2024)*2 8,435,466*2 5,762,371

2,544,424

2,673,094*1, 2 2,367,210*1, 2 2,315,322

177,213357,772

320,2422,939,768

111,791-

Non-operating income
Interest and dividend income
Foreign exchange gains
Rental income from land and buildings
Other
Total non-operating income
Non-operating expenses
Interest expenses*2 9,536*2 9,536*2 6,143*2 28,225

3,275,690

149,552

11,942

1,567

Commission for purchase of treasury shares
Foreign exchange losses

5,679
-

22,70430,639Other

19,66318,503

Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sale of shares of subsidiaries
Gain on reversal of share acquisition rights
Other
Total extraordinary income

37,28573,413

3,415,618

433,911

108,081

-

198
-

1,417
377

108,280

1,794

0
-

139
229

70,230301-

Extraordinary losses
Loss on retirement of non-current assets
Loss on sale of non-current assets
Loss on valuation of membership
Impairment losses
Total extraordinary losses
Profit before income taxes

70,230670

3,453,668

435,035

Income taxes - current

58,379396,174

Income taxes - deferred

182,385(400,379)

Total income taxes
Profit-120-

240,764(4,205)

3,212,903

439,241

3) Statement of Changes in Equity
Previous fiscal year (From April 1, 2022 to March 31, 2023)(Thousands of yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Generalreserve

Retainedearnings
brought
forward

Total retained
earnings

1,210,000

23,546,512

24,910,831

Dividends of surplus(478,821)(478,821)

Profit3,212,903

3,212,903

Balance at beginning of
periodLegal capitalsurplus

Other capitalsurplus2,086,192

2,099,659

182,713

3,493

3,493

Total capital Legal retained
surplusearnings

2,282,373

154,318

Changes during period
Issuance of new shares exercise of shareacquisition rights

3,493

Purchase of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during period
Balance at end of period

3,493

3,493

-

3,493

-

-

2,734,082

2,734,082

2,089,685

2,103,152

182,7132,285,866

154,318

1,210,000

26,280,594

27,644,913

ShareacquisitionrightsTotal net assets

Shareholders' equity
TreasurysharesBalance at beginning of
period(63,321)

Valuation and translation adjustments

Valuation
Total
difference onshareholders'available-forequity
sale securities
29,216,075

3,250,481

Revaluation Total valuation Share award
rightsreserve for and translation
land
adjustments(434,203)

2,816,277-

48,14832,080,501

Changes during period
Issuance of new shares exercise of shareacquisition rights

6,986

6,986

Dividends of surplus(478,821)(478,821)

Profit3,212,903

3,212,903(2,742,992)(2,742,992)

Purchase of treasury
sharesNet changes in items
other than shareholders'equity(2,742,992)(259,292)-(259,292)

27,01330,593(201,686)

Total changes during period(2,742,992)(1,924)(259,292)-(259,292)

27,01330,593(203,610)

Balance at end of period(2,806,314)

29,214,151

2,991,188(434,203)

2,556,984

27,01378,741

31,876,890-121-

Current fiscal year (From April 1, 2023 to March 31, 2024)(Thousands of yen)
Shareholders' equity
Capital surplus

Retained earnings
Other retained earnings

Share capital

Generalreserve

Retainedearnings
brought
forward

Total retained
earnings

1,210,000

26,280,594

27,644,913

Dividends of surplus(452,648)(452,648)

Profit439,241

439,241

Balance at beginning of
periodLegal capitalsurplus

Other capitalsurplus2,089,685

2,103,152

182,713

7,921

7,921

Total capital Legal retained
surplusearnings

2,285,866

154,318

Changes during period
Issuance of new shares exercise of shareacquisition rights

Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders'equityTotal changes during period
Balance at end of period(8,696)(8,696)

7,921

7,921

(8,696)

(775)

-

-

(13,407)(13,407)2,097,606

2,111,073

174,016

2,285,090

154,318

1,210,000

26,267,187

27,631,505

Shareholders' equity

Balance at beginning of
period7,921

Valuation and translation adjustments

TreasurysharesTotalshareholders'equityValuationdifference on
available-forsale securities(2,806,314)

29,214,151

2,991,188

Revaluation Total valuation Share award
rightsreserve for and translation
land
adjustments(434,203)

2,556,984

27,013

Shareacquisition Total net assets
rights78,741

31,876,890

Changes during period
Issuance of new shares exercise of shareacquisition rights

15,842

15,842

Dividends of surplus(452,648)(452,648)

Profit439,241

439,241(903,325)(903,325)(903,325)

66,141

57,44457,444Purchase of treasury
shares
Disposal of treasury
sharesNet changes in items
other than shareholders'equity-6,269,327-

6,269,327(3,001)(676)

6,265,649

Total changes during period(837,184)(843,446)

6,269,327-

6,269,327(3,001)(676)

5,422,202

Balance at end of period(3,643,498)

28,370,704

9,260,515(434,203)

8,826,312

24,012

78,06437,299,093-122-

[Notes](Significant accounting policies)
1. Valuation standards and methodology for securities(1) Shares of subsidiaries and associates
Stated at cost using the moving-average method.
(2) Available-for-sale securities
Other than shares without market priceStated at market value (any valuation difference being reported directly as a component of shareholders’ equity and the costof any securities sold being computed by the moving average method).
Shares, etc. without market priceStated at cost using the moving-average method.
(3) Held-to-maturity debt securities
Amortized cost method (straight-line method)
2. Valuation methods for derivative transactions
Stated at market value.
3. Valuation standards and methodology for inventories
The valuation basis is the cost method (the balance sheet value is based on a method of reducing the book value due to a decline inprofitability).
(1) Finished goods: Gross average method(2) Work in process: Expenses for product development on a contract basis and application development:
Specific identification method
Work in process other than the above
Gross average method(3) Raw materials: Moving average method
4. Method of depreciation of non-current assets(1) Property, plant and equipment (excluding leased assets)
The declining balance method is used.
However, the straight-line method is applied to buildings (excluding facilities attached to buildings) acquired on or after April
1, 1998, and facilities attached to buildings and structures acquired on or after April 1, 2016.
The major useful lives are as follows.
Buildings: 15 to 50 years
Tools, furniture and fixtures: 2 to 6 years(2) Intangible assets (excluding leased assets)
Software for internal use
The straight-line method is used based on the internally usable period (5 years).
Software for sale
The straight-line method is used based on the expected sales revenue (quantity) or the expected effective period (within
3 years).
Intangible assets other than the above
The straight-line method is used.
(3) Leased assets
Leased assets related to finance lease transactions that do not transfer ownership
The straight-line method is used with the lease period as the useful life and the residual value as zero.

-123-5. Accounting standards for allowances and provisions(1) Allowance for doubtful accounts
In order to prepare for losses due to bad debts, the Company records estimated uncollectible amount based on the Company's
historical credit loss ratio for ordinary receivables, and on a case-by-case basis in consideration of collectability for specificreceivables such as doubtful receivables.
(2) Provision for bonuses
In order to prepare for the payment of employee bonuses, the estimated amount of payment is recorded.
(3) Provision for bonuses for directors (and other officers)
In order to prepare for the payment of bonuses for directors (and other officers), estimated amount of payment in the current
fiscal year is recorded.
6. Accounting standards for revenues and expenses recognition(1) Revenue recognition method (5-step approach)
Revenue is recognized based on the following 5-step approach.
Step 1: Identify a contract with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Calculate the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when or as the performance obligations are satisfied.
A separate good or service included in a contract with a customer is identified, and performance obligations are identified by thistransaction unit.
Transaction prices are measured at the amount of consideration to which the Company expects to be entitled in exchange for thetransfer of promised goods or services to customers. The consideration from the customer for the transaction is generally received
within one year from the time of the transfer of goods or services to the customer, and does not include any significant financial
elements.
If a contract includes multiple performance obligations in the Global Data Intelligence business, the transaction price is allocatedto each performance obligation based on the independent sales price.
(2) Recognition of revenue from major transactions
1) Global Data Intelligence businessa) Revenue recognition related to sale of goods
In the sale of goods, the Company sells digital forensics equipment, etc., and recognizes the services provided by the Groupin relation to these as performance obligations.
In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferred to thecustomer at the time of delivery.
b) Revenue recognition related to license sales
In license sales, the Company sells licenses for analytic software, etc. related to digital forensics equipment, and theCompany recognizes the services provided by the Group in relation to these as performance obligations.
A software license provides customers with either the right to use the Group's software for an unlimited period of time or
the right to use the Company's software for a limited period of time, which is generally one to three years.
Revenue from license sales is recognized when the control over the software license is transferred to the customer and theterm of the license agreement begins.
c) Revenue recognition related to maintenance services and software updates
The Company provides maintenance services for digital forensics equipment and other equipment in use by customers. In
addition, the Company provides software updates and technical support services, and it recognizes the services it provides inrelation to these as performance obligations.

-124-

These maintenance services and software updates, etc. are transactions that satisfy performance obligations over a certain
period of time because services are continuously provided to customers during the contract period, and revenue is recognizedin accordance with the lapse of the period.
2) Entertainment-related businessa) Revenue recognition related to sale of goods
In the sale of goods, the Company manufactures and sells entertainment-related equipment, etc., and recognizes the services
provided by the Group in relation to these as performance obligations.
In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferred to thecustomer at the time of delivery.
b) Revenue recognition related to development
In the development sales, services to provide software developed based on orders received from customers are recognized
as performance obligations.
Revenue from development sales is recognized at the time of acceptance by the customer because the control over thesoftware is transferred to the customer at the time of acceptance by the customer.
3) New IT-related businessa) Revenue recognition related to sale of goods
In the sale of goods, the Company manufactures and sells M2M communication equipment, etc., and recognizes the services
provided by the Group in relation to theses as performance obligations.
In the sale of goods, revenue is recognized at the time of delivery because the control over the goods is transferred to thecustomer at the time of delivery.
b) Revenue recognition related to development
In the development sales, services to provide software developed based on orders received from customers are recognized
as performance obligations.
Revenue from development sales is recognized at the time of acceptance by the customer because the control over thesoftware is transferred to the customer at the time of acceptance by the customer.
c) Revenue recognition related to maintenance services
In the area of maintenance services, the Company provides maintenance services for M2M communication equipment, andrecognizes the services provided by the Company in relation to these as performance obligations. The service period is 3-5
years.
Maintenance services are transactions that satisfy performance obligations over a certain period of time because services
are continuously provided to customers during the contract period, and revenue is recognized in accordance with the lapse of
the period.
(Significant accounting estimates)
Items for which the amount was recorded in the financial statements for the current fiscal year based on accounting estimates,
which may have a significant effect on the financial statements for the following fiscal year, are as follows.
(Valuation of investment securities held by the Company to which the price adjustment clause applies)
1. Amounts recorded in the financial statements for the current fiscal year
As the price adjustment clause, investment securities classified as Level 3 are ¥4,304,673 thousand in the previous fiscal yearand ¥12,918,819 thousand in the current fiscal year, and the market value is calculated using inputs that cannot be observed in
the market, so there is uncertainty in estimates.
2. Information that contributes to an understanding of the content of significant accounting estimates pertaining to the identified
items
1) Calculation method
The calculation method is stated in Notes (Notes to Financial Instruments) 3. Matters concerning the breakdown by level ofmarket values of financial instruments, (Note 1) Explanation of valuation techniques used in the calculation of market value
and inputs to the calculation of market value in the consolidated financial statements.

-125-2) Major assumptions
Major assumptions are the inputs used in the mark-to-market valuation model. They include inputs that are observabledirectly or indirectly in the market, such as interest rates and the market value of securities, as well as inputs that are notobservable in the market, including material estimates such as volatility, time to maturity and expected dividend yield.
3) Impact on the financial statements for the following fiscal year
The market value of financial instruments may increase or decrease due to changes in inputs that are major assumptions,due to market changes, etc.
(Additional Information)(Application of treatment of accounting and disclosure when applying the Group Tax Sharing System)
Since the same content is stated in Notes (Additional Information) of the consolidated financial statements, the description is omitted.
(Notes to Balance Sheet)*1 Monetary claims and liabilities to subsidiaries and associates
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Short-term monetary claims

3,042 thousand yen

249 thousand yen

Short-term monetary debt

116,793 thousand yen

192,149 thousand yen*2 For the accounting treatment of notes maturing on the last day of a fiscal year, the last day of the current fiscal year fell on a holiday
of financial institutions. The Company, however, treated them as having been settled on the maturity date. The amounts of the notes
matured on the last day of the current fiscal year are as follows:
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Notes receivable - trade― thousand yen

358 thousand yen

Notes payable - trade― thousand yen

50,989 thousand yen*3 Accumulated depreciation of property, plant and equipment is as follows.
Previous fiscal year
(As of March 31, 2023)
Accumulated depreciation of property,
plant and equipment

1,645,560 thousand yen

Current fiscal year
(As of March 31, 2024)
1,675,676 thousand yen*4 The Company has entered into overdraft agreements with 9 banks with which it does business in order to efficiently procure working
capital. The balance of unexecuted borrowings based on these agreements at the end of the fiscal year is as follows.
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Total amount of overdraft agreements
Outstanding borrowings

7,200,000 thousand yen― thousand yen

7,700,000 thousand yen
1,000,000 thousand yen

Net amount

7,200,000 thousand yen

6,700,000 thousand yen(Notes to Statement of Income)*1 The approximate percentage of expenses included in selling expenses was 16.7% in the previous fiscal year and 18.5% in the current
fiscal year. The approximate percentage of expenses included in general and administrative expenses was 83.3% in the previous
fiscal year and 81.5% in the current fiscal year.
Major expense items and amounts are as follows.
Previous fiscal year
(From April 1, 2022
to March 31, 2023)

Current fiscal year
(From April 1, 2023
to March 31, 2024)

Salaries, allowances and bonuses

422,266 thousand yen

430,077

thousand yen

Provision for bonuses

52,052 thousand yen

44,766thousand yen

Retirement benefit expenses

16,708 thousand yen

18,140thousand yen-126-

Depreciation

11,907 thousand yen

11,165thousand yen

Research and development expenses

929,194 thousand yen

1,014,157

thousand yen

Allowance for doubtful accounts

100 thousand yen(100) thousand yen*2 Total amount of operating transactions and non-operating transactions with subsidiaries and associates
Previous fiscal year
(From April 1, 2022
to March 31, 2023)
Net sales
Purchase of goods
Transactions other than operatingtransactions

Current fiscal year
(From April 1, 2023
to March 31, 2024)

13 thousand yen

8,314 thousand yen

595,823 thousand yen

739,430 thousand yen

12,644 thousand yen

14,837 thousand yen-127-

(Notes to Securities)
Shares of subsidiaries and associates
Previous fiscal year (As of March 31, 2023)(Thousands of yen)Classification

Amount stated on balance
sheet

Shares of associates
Total

Market value

Difference

077,739,844

77,739,844

077,739,844

77,739,844(Note)

Amounts of shares, etc. without market price recorded on the balance sheet that are not included in the above(Thousands of yen)Previous fiscal year
Classification(As of March 31, 2023)
Shares of subsidiaries
1,000,093
Total

1,000,093

Current fiscal year (As of March 31, 2024)(Thousands of yen)Classification

Amount stated on balance
sheet

Shares of associates
Total

Market value

Difference0160,376,911

160,376,911

0

160,376,911

160,376,911(Note)

Amounts of shares, etc. without market price recorded on the balance sheet that are not included in the above(Thousands of yen)
Current fiscal year
Classification(As of March 31, 2024)
Shares of subsidiaries
1,000,093
Total

1,000,093-128-

(Tax Effect Accounting)
1. Major components that caused deferred tax assets and deferred tax liabilities
Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

Research and development expenses

156,106 thousand yen

238,719 thousand yen

Investment securities

72,813 thousand yen

72,813 thousand yen

Shares of subsidiaries and associates

266,013 thousand yen

266,013 thousand yen

Provision for bonuses

56,869 thousand yen

42,075 thousand yen

Deferred tax assets

Loss carried forward

543 thousand yen- thousand yen

Loss on valuation of inventories

38,816 thousand yen

30,856 thousand yen

Other37,967 thousand yen

87,727 thousand yen

Subtotal of deferred tax assets

629,132 thousand yen

738,205 thousand yen(543) thousand yen- thousand yen(628,588) thousand yen(524,313) thousand yen(629,132) thousand yen(524,313) thousand yen― thousand yen

213,892 thousand yen

Valuation allowance for tax loss carryforwards
Valuation allowance for total deductible temporary
differences
Subtotal of valuation allowance
Total deferred tax assets
Deferred tax liabilities

1,317,230 thousand yen

4,007,361 thousand yen

Enterprise tax receivable

Valuation difference on available-for-sale securities

186,487 thousand yen- thousand yen

Total deferred tax liabilities

1,503,717 thousand yen

4,007,361 thousand yen

Net deferred tax liabilities

1,503, 717 thousand yen

3,793,469 thousand yen

Deferred tax assets for land revaluation

139,750 thousand yen

139,750 thousand yen

Valuation allowance(139,750) thousand yen(139,750) thousand yen

Deferred tax liabilities for land revaluation(9,920) thousand yen(9,920) thousand yen

Net deferred tax liabilities for land revaluation(9,920) thousand yen(9,920) thousand yen

2. Breakdown of major items that caused important differences between the normal effective statutory tax rate and the actual effective
tax rate after the application of tax effect accounting, if any

Normal effective statutory tax rate

Previous fiscal year
(As of March 31, 2023)

Current fiscal year
(As of March 31, 2024)

30.6 %

30.6 %

0.5 %

2.6 %

(0.0) %

(0.3) %

(Adjustment)
Permanently non-deductible
expenses such as entertainment
expenses
Permanently non-taxable income
such as dividends received
Equal division of municipal tax

0.1 %

0.9 %

(24.2) %(37.6) %Income taxes for prior periods

-

%

2.8 %

Other
Normal effective tax rate after
application of tax-effect accounting

-

%

0.1 %

7.0 %

(1.0) %

Change in valuation allowance

3. Accounting treatment for income tax and local income tax or accounting treatment for tax effect accounting related thereto
The Company adopts the group tax sharing system from the current fiscal year. In addition, in accordance with the Practical
Solution on the Accounting and Disclosure Under the Group Tax Sharing System (ASBJ PITF No. 42, August 12, 2021), it carries
out accounting treatment and disclosure of income taxes and local income taxes, or tax effect accounting related thereto.
(Notes to Revenue Recognition)
The information that serves as the basis for understanding revenue from contracts with customers is omitted because the same-129-

content is provided in Notes (Notes to Revenue Recognition) of the consolidated financial statements.
(Significant subsequent events)
Not applicable.

-130-4) Supplemental Schedules[Schedule of Property, Plant and Equipment, etc.](Thousands of yen)Type of asset

Balance at
beginning of
periodIncrease during Decrease during Amortization for Balance at end
the yearthe yearthe yearof period

Accumulated
depreciation

Property, plant andequipment
Buildings

197,651425

139

12,723

185,214

678,055

Structures

6,831

-

-

515

6,315

34,094

Machinery andequipment

31,677

11,637-

9,651

33,662

333,512

77

-

-

77

0

354

66,76041,427

232

57,20950,745

628,773-

11,520-886

10,633886

681,114[(434,283)]

-

-

-

681,114[(434,283)]-

984,11265,009371

81,063

967,686

1,675,676

Software117,984

157,241-

98,738

176,486-

Software in progress

100,542

53,739144,749

-

9,532

-

8,040

-

-

-

8,040

-

226,566

210,981

144,749

98,738

194,059-

VehiclesTools, furniture andfixtures
Leased assets
Land
Total property, plant andequipment
Intangible assets

Other
Total intangible assets(Note) Figures in brackets for the balance of land at the beginning of the current fiscal year and the balance at the end of thecurrent fiscal year represent the difference from the book value before the implementation of the revaluation of land forbusiness use conducted pursuant to the Act on Revaluation of Land (Act No. 34 promulgated on March 31, 1998).
[Schedule of Provisions](Thousands of yen)Account title

Balance at
beginning of
periodIncrease during Decrease during Balance at end
the yearthe yearof period

Allowance for doubtful
accounts (current)

500

400

500

400

Provision for bonuses

185,848

137,501

185,848

137,501(2) Components of major assets and liabilities
This information is omitted because the Company has prepared consolidated financial statements.
(3) Others
Not applicable.

-131-VI. Outline of Share-related Administration of the Filing Company
Fiscal year

From April 1 to March 31

Ordinary General Meetingof Shareholders

In JuneRecord date

March 31

Record date for dividendsof surplus

September 30 and March 31

Number of sharesconstituting one unit

100 shares

Purchase of shares less than
one unit
Handling office

Stock Transfer Agency Department, Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo

Transfer agent

Mitsubishi UFJ Trust and Banking Corporation
1-4-5 Marunouchi, Chiyoda-ku, Tokyo

Forward office-

Purchasing fee

FreeMethod of public notice

The Company’s method of public notice is through electronic public notice. However, if it is
not possible to give public notice electronically due to an accident or other unavoidable
circumstances, the Company will publish the notice in the Nihon Keizai Shimbun.
The Company’s electronic public notice is posted on its website at the following address:
https://www.sun-denshi.co.jp

Shareholders’ privileges

None

-132-

VII. Reference Information of the Filing Company
1. Information about Parent of the Filing Company
The Company does not have a parent company or other entity that is provided in Article 24-7, Paragraph 1 of the Financial
Instruments and Exchange Act.

2. Other Reference Information
The Company submitted the following documents during the period from the starting date of the current fiscal year to the dateon which the Annual Securities Report was submitted.
(1) Annual Securities Report and documents attached thereto, and Confirmation Letter thereof
The Annual Securities Report for the 52nd fiscal year (from April 1, 2022 to March 31, 2023) and documents attached thereto,and Confirmation Letter thereof were submitted to the Director-General of the Tokai Local Finance Bureau on June 26, 2023.
(2) Internal Control Report and documents attached thereto
The Internal Control Report and documents attached thereto were submitted to the Director-General of the Tokai Local
Finance Bureau on June 26, 2023.
(3) Quarterly Securities Report and Confirmation Letter thereof
The Quarterly Securities Report for the First Quarter of the 53rd fiscal year (from April 1, 2023 to June 30, 2023) and theConfirmation Letter thereof were submitted to the Director-General of the Tokai Local Finance Bureau on August 10, 2023.
The Quarterly Securities Report for the Second Quarter of the 53rd fiscal year (from July 1, 2023 to September 30, 2023) andthe Confirmation Letter thereof were submitted to the Director-General of the Tokai Local Finance Bureau on November 14, 2023.
The Quarterly Securities Report for the Third Quarter of the 53rd fiscal year (from October 1, 2023 to December 31, 2023)
and the Confirmation Letter thereof were submitted to the Director-General of the Tokai Local Finance Bureau on February 13,2024.
(4) Extraordinary Report
The Extraordinary Report was submitted to the Director-General of the Tokai Local Finance Bureau on June 26, 2023.
It is an Extraordinary Report based on the provisions of Article 24-5, Paragraph 4 of the Financial Instruments and Exchange
Act and Article 19, Paragraph 2, Item 9-2 (results of exercise of voting rights at general meetings of shareholders) of the Cabinet
Office Order on Disclosure of Corporate Affairs.
(5) Share Buyback Report
The Share Buyback Reports were submitted to the Tokai Local Finance Bureau on July 13, 2023, August 10, 2023, September
13, 2023, October 13, 2023, November 14, 2023, and December 14, 2023.
(6) Revised Share Buyback Report
The revised Share Buyback Report was submitted to the Tokai Local Finance Bureau on August 10, 2023.
(7) Position Statement
The Position Statement was submitted to the Tokai Local Finance Bureau on June 20, 2024.

-133-

Part II Information on Guarantors of the Filing Company
Not applicable.

-134-Independent Auditor’s Report on the Consolidated Financial Statements andInternal Control Over Financial Reporting
June 25, 2024
To the Board of Directors of
SUNCORPORATION
Frontier Audit Corporation
Shinagawa-ku, Tokyo
Designated andCertified Public

Engagement Partner

Accountant

Designated andCertified Public

Engagement Partner

Accountant

Yukio Fujii

Daisuke Hongo<Consolidated Financial Statements Audit>
Audit Opinion
Pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited the consolidated financial
statements of SUNCORPORATION for the consolidated fiscal year from April 1, 2023 to March 31, 2024, provided in “Financial
Information,” which comprise the consolidated balance sheet, the consolidated statement of income, the consolidated statement ofcomprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows, the significant
accounting policies for preparation of consolidated financial statements, other explanatory information, and the annexed consolidated
detailed schedules.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial positionof SUNCORPORATION and its consolidated subsidiaries as of March 31, 2024, and their operating results and their cash flows for the
consolidated fiscal year then ended in accordance with accounting principles generally accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under the auditing
standards are stated in “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements.” We are independent of theCompany and its consolidated subsidiaries in accordance with the code of professional ethics in Japan and fulfill other ethicalresponsibilities as an auditor. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated
financial statements for the current fiscal year. These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

-135-

Reasonableness of valuation of the fair value of liability financial instruments of Cellebrite DI Ltd. and of investment securities
recorded for the financial instruments
Key audit matter description and reasons for selection thereof

How the key audit matter was addressed in the audit

As described in “Additional Information (Liability

In order to evaluate the reasonableness of valuation of thefinancial instruments in Cellebrite),” Cellebrite DI Ltd.

fair value of CB’s liability financial instruments, we performed(hereinafter, “CB”), an associate accounted for using equity

the following audit procedures.

method of SUNCORPORATION, recorded liability financial(1) Assessment of internal control

instruments, comprising restricted shares, a price adjustment

We assessed the effectiveness of the design and operation

clause, and warrant liabilities, as derivative liabilities. As aof internal control related to the valuation of the fair value ofresult, in the current fiscal year, the Company recorded share ofCB’s liability financial instruments.

loss of entities accounted for using equity method of 4,498,420
thousand yen associated with changes in the fair value of the(2) Examination of the reasonableness of valuation of the fairvalue of CB’s liability financial instruments
In order to examine the reasonableness of valuation of thesaid liabilities due to fluctuation of CB’s share price.
In addition, the investment securities of 20,663,685

fair value of CB’s liability financial instruments, we asked

thousand yen recorded in the consolidated balance sheet include

management about the basis for the valuation, and mainly

12,918,819 thousand yen of rights recorded for CB’s liability

conducted the following procedures. The implementation offinancial instruments for the price adjustment clause, as

these procedures involved experts in the valuation of financial

described in the notes “(Significant accounting estimates)

instruments.

Valuation of investment securities held by the Company to● Examined the validity of the pricing model used to measure

which the price adjustment clause applies.”
As described in the notes to the consolidated financial

the fair value of the liability financial instruments.
● Made a comparison between the auditor’s own valuation ofstatements “(Significant accounting policies for preparation of

the liability financial instruments and the valuation by the

consolidated financial statements) 5. Accounting policies, (1)Company using experts, and analyzed trends associated

Valuation standards and methodology for material assets, 1)

with changes in inputs such as stock prices and interest

Securities,” the amount of investment securities recorded for

rates.

CB’s liability financial instruments are equivalent to(3) Examination of the reasonableness of valuation of the fair

SUNCORPORATION’s share in CB’s liability financial

value of the investment securities recorded for the financial

instruments. Therefore, they are valued at fair value in the

instruments

consolidated balance sheet based on the valuation of the fair

In order to examine the reasonableness of valuation of thevalue of CB’s liability financial instruments, and the valuation

fair value of the investment securities recorded for the financial

difference arising from the revaluation is recorded as valuation

instruments, we performed the following procedures.

difference on available-for-sale securities in the net assets after● Made a comparison between the valuation of CB’s liability

deducting deferred tax liabilities pertaining to the valuation

financial instruments and the amount equivalent to thedifference.

Company’s share therein.

The fair value of liability financial instruments classified
as Level 3 fair value is measured by a pricing model that uses
various inputs such as stock prices and interest rates. In
particular, significant unobservable inputs such as the stock
price volatility are used to measure the Level 3 fair value of
liability financial instruments.
In valuation of the Level 3 fair value of CB’s liability
financial instruments, management needs to make decisions to
select and adjust the pricing model. Therefore, the valuation of
the Level 3 fair value of CB’s liability financial instruments
involves high uncertainty in accounting estimates, and has asignificant impact on the fair value of the liability financial
instruments and on the financial position and operating results.
In addition, in estimation of the fair value of CB’s liability
financial instruments, a high level of expertise in valuation isrequired to select valuation techniques and input data.

-136-

Thus, we determined that the reasonableness of valuationof the fair value of CB’s liability financial instruments and theinvestment securities recorded for the financial instruments wasparticularly important in the audit of the consolidated financial
statements for the current fiscal year, and considered this to bea key audit matter.

-137-

Other Information
The other information consists of the information contained in the securities report other than the consolidated financial statements,
the financial statements, and the independent auditor’s reports thereon. Management is responsible for the preparation and disclosure of
the other information. The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties in thedevelopment and operation of the reporting process for the other information.
Our audit opinion on the consolidated financial statements does not cover the other information, and we do not express any formof assurance conclusion thereon.
Our responsibility in our audit of the consolidated financial statements is to read the other information and, in doing so, to consider
whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in thecourse of the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Management’s and the Audit and Supervisory Committee’s Responsibilities for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance withaccounting principles generally accepted in Japan. This includes the development and operation of internal control as management judges
necessary to enable the preparation and fair presentation of the consolidated financial statements which are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing whether it is appropriate to prepare theconsolidated financial statements in accordance with the going concern assumption and disclosing matters regarding the going concern
assumption in accordance with accounting principles generally accepted in Japan if such matters need to be disclosed.
The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties in the development andoperation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that expresses our opinion on the consolidated financial
statements from an independent point of view, based on our audit. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of theconsolidated financial statements.
We exercise professional judgement and maintain professional skepticism throughout the audit in accordance with auditing
standards generally accepted in Japan in performing the following:�Identify and assess the risks of material misstatement due to fraud or error. We design and perform audit procedures responsive tothose risks. Selecting audit procedures to be applied is at the discretion of the auditor. In addition, we obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
�Consider, when assessing risks, internal control relevant to the audit of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, although the purpose of the audit is not to express an opinion on theeffectiveness of the internal control.
�Evaluate the appropriateness of accounting policies adopted by management and their method of application, as well as thereasonableness of accounting estimates made by management and the adequacy of related notes thereto.
�Conclude whether it is appropriate for management to prepare the consolidated financial statements on a going concern basis and,based on the audit evidence obtained, whether a material uncertainty exists regarding events or conditions that may cast significant
doubt on the going concern assumption. If there is a material uncertainty regarding the going concern assumption, we are required
to raise awareness to the notes to the consolidated financial statements in the audit report, or if the notes to the material uncertainty
in the consolidated financial statements are inappropriate, we are required to issue a modified opinion on the consolidated financial
statements. While our conclusion is based on the audit evidence that we obtained by the date of the audit report, the Company may
not be able to exist as a going concern, depending on future events or circumstances.
�Assess whether the presentation of the consolidated financial statements and notes thereto are in accordance with accounting-138-

principles generally accepted in Japan, as well as the presentation, structure, and content of the consolidated financial statements,
including the related notes, and whether the consolidated financial statements fairly present the underlying transactions andaccounting events.
�Obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated
subsidiaries in order to express an opinion on the consolidated financial statements. We are responsible for the instruction,
supervision, and execution of the audit of the consolidated financial statements. We bear sole responsibility for our opinion.
We report to the Audit and Supervisory Committee on the scope and timing of implementation of the planned audit, as well as onany material audit findings, including significant internal control deficiencies identified during the audit process, and other mattersrequired under the auditing standards.
We report to the Audit and Supervisory Committee that we have observed the code of professional ethics in Japan in terms of
independence and on matters that are reasonably believed to impact our independence, as well as on details of any countermeasures if
those are applied to eliminate obstacles or on details of any safeguards if those are applied to reduce obstacles to an acceptable level.
Among the matters discussed with the Audit and Supervisory Committee, we consider those matters that are particularly importantin the audit of the consolidated financial statements for the current fiscal year to be key audit matters, and describe them in the audit
report. However, we do not present such matters in the auditor’s report if their publication is prohibited by laws and regulations, or if, in
extremely rare cases, we determine that we should not report them in the auditor’s report as doing so creates disadvantages that could
reasonably be expected to outweigh the public interest.

<Internal Control Audit>
Audit Opinion
Pursuant to Article 193-2, Paragraph 2 of the Financial Instruments and Exchange Act, we have audited the internal control reportof SUNCORPORATION as of March 31, 2024.
In our opinion, the internal control report referred to above, in which SUNCORPORATION states that internal control over financial
reporting was effective as of March 31, 2024, presents fairly, in all material respects, the result of the assessment of internal control overfinancial reporting in accordance with assessment standards for internal control over financial reporting generally accepted in Japan.

Basis for Opinion
We conducted our internal control audit in accordance with auditing standards for internal control over financial reporting generally
accepted in Japan. Our responsibilities under the auditing standards for internal control over financial reporting are stated in “Auditor’s
Responsibilities for the Audit of Internal Control.” We are independent of the Company and its consolidated subsidiaries in accordancewith the code of professional ethics in Japan and fulfill other ethical responsibilities as an auditor. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our opinion.

Management’s and the Audit and Supervisory Committee’s Responsibilities for the Internal Control ReportManagement is responsible for the design and operation of internal control over financial reporting and the preparation and fairpresentation of the internal control report in accordance with assessment standards for internal control over financial reporting generally
accepted in Japan.
The Audit and Supervisory Committee is responsible for monitoring and examining the design and operation of internal control
over financial reporting.
There is a possibility that misstatements may not be completely prevented or detected by internal control over financial reporting.

Auditor’s Responsibilities for the Audit of Internal Control
Our responsibilities are to obtain reasonable assurance about whether the internal control report is free from material misstatement,
and to issue an internal control audit report that expresses our opinion on the internal control report from an independent point of view,
based on our internal control audit.
We exercise professional judgement and maintain professional skepticism throughout the audit in accordance with auditing
standards for internal control over financial reporting generally accepted in Japan in performing the following:�Perform audit procedures to obtain audit evidence about the result of the assessment of internal control over financial reporting in-139-

the internal control report. The procedures for internal control audit are selected and applied as determined by the auditor, based on
the significance of effects on reliability of financial reporting.
�Evaluate the overall presentation of the internal control report, including management’s presentation of the scope, procedures, andresult of the assessment of internal control over financial reporting.
�Obtain sufficient and appropriate audit evidence about the result of the assessment of internal control over financial reporting in theinternal control report. We are responsible for the instruction, supervision, and execution of the audit of the internal control report.
We bear sole responsibility for our opinion.
We report to the Audit and Supervisory Committee on the scope and timing of implementation of the planned internal control audit,
the results of the internal control audit, identified significant internal control deficiencies that should be disclosed, the results of theircorrections, and other matters required under the auditing standards for internal control.
We report to the Audit and Supervisory Committee that we have observed the code of professional ethics in Japan in terms of
independence and on matters that are reasonably believed to impact our independence, as well as on details of any countermeasures if
those are applied to eliminate obstacles or on details of any safeguards if those are applied to reduce obstacles to an acceptable level.

< Fee-related Information>
The amounts of fees paid to this audit corporation and to persons belonging in the same network as this audit corporation for audit
and non-audit services for the Company and its subsidiaries are described in (3) Audits under Corporate Governance in “Information on
the Filing Company.”
Interest
There exists no special interest between the Company as well as its consolidated subsidiaries and this audit corporation or its
engagement partners which is required to be stated pursuant to the provisions of the Certified Public Accountants Act.

End of text(*) 1. The original of the independent auditor’s report stated above is separately archived by the Company (the company submitting
the securities report).
2. XBRL data is not included in the target of the audit.

-140-

Independent Auditor’s Report on the Financial Statements

June 25, 2024
To the Board of Directors of
SUNCORPORATION
Frontier Audit Corporation
Shinagawa-ku, Tokyo
Designated andCertified Public

Engagement Partner

Accountant

Designated andCertified Public

Engagement Partner

Accountant

Yukio Fujii

Daisuke Hongo<Financial Statements Audit>
Audit Opinion
Pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange Act, we have audited the financial statements of
SUNCORPORATION for the 53rd fiscal year from April 1, 2023 to March 31, 2024, provided in “Financial Information,” which
comprise the balance sheet, the statement of income, the statement of changes in equity, the significant accounting policies, otherexplanatory information, and the annexed detailed schedules.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
SUNCORPORATION as of March 31, 2024 and its operating results for the fiscal year then ended in accordance with accounting
principles generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under the auditing
standards are stated in “Auditor’s Responsibilities for the Audit of the Financial Statements.” We are independent of the Company inaccordance with the code of professional ethics in Japan and fulfill other ethical responsibilities as an auditor. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial
statements for the current fiscal year. These matters were addressed in the context of our audit of the financial statements as a whole,and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

-141-

Reasonableness of valuation of the fair value of investment securities recorded for the liability financial instruments of Cellebrite
DI Ltd.
Key audit matter description and reasons for selection thereof

How the key audit matter was addressed in the audit

The investment securities of 20,647,435 thousand yen

In the audit report on the consolidated financial statements,

recorded in the balance sheet of SUNCORPORATION for the

we determined that the reasonableness of valuation of the fair

fiscal year ended on March 31, 2024 include 12,918,819

value of liability financial instruments of Cellebrite DI Ltd. andthousand yen of rights recorded for the liability financial

of investment securities recorded for the financial instruments

instruments of Cellebrite DI Ltd. (hereinafter, “CB”) for thewas a key audit matter, and described how the matter was

price adjustment clause, as described in the notes “(Significant

addressed in the audit.

accounting estimates) Valuation of investment securities held

The description of how it was addressed is substantiallyby the Company to which the price adjustment clause applies.”

the same as in the audit of the non-consolidated financial

As described in the notes to the financial statements,

statements. Therefore, the specific description thereof is“(Significant accounting policies) 1. Valuation standards andomitted here.

methodology for securities,” the amount of investment
securities recorded for CB’s liability financial instruments areequivalent to SUNCORPORATION’s share in CB’s liability
financial instruments. Therefore, they are valued at fair value inthe balance sheet based on the valuation of the fair value ofCB’s liability financial instruments, and the valuationdifference arising from the revaluation is recorded as valuationdifference on available-for-sale securities in the net assets after
deducting deferred tax liabilities pertaining to the valuationdifference.
The fair value of liability financial instruments classified
as Level 3 fair value is measured by a pricing model that uses
various inputs such as stock prices and interest rates. In
particular, significant unobservable inputs such as the stock
price volatility are used to measure the Level 3 fair value of
liability financial instruments.
In valuation of the Level 3 fair value of CB’s liability
financial instruments, management needs to make decisions to
select and adjust the pricing model. Therefore, the valuation of
the Level 3 fair value of CB’s liability financial instruments
involves high uncertainty in accounting estimates, and has asignificant impact on the fair value of the liability financial
instruments and on the financial position.
In addition, in estimation of the fair value of CB’s liability
financial instruments, a high level of expertise in valuation isrequired to select valuation techniques and input data.
Thus, we determined that the reasonableness of valuationof the fair value of the investment securities recorded for CB’sliability financial instruments was particularly important in theaudit of the financial statements for the current fiscal year, andconsidered this to be a key audit matter.

-142-

Other Information
The other information consists of the information contained in the securities report other than the consolidated financial statements,
the financial statements, and the independent auditor’s reports thereon. Management is responsible for the preparation and disclosure of
the other information. The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties in thedevelopment and operation of the reporting process for the other information.
Our audit opinion on the financial statements does not cover the other information, and we do not express any form of assurance
conclusion thereon.
Our responsibility in our audit of the financial statements is to read the other information and, in doing so, to consider whether theother information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, orotherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Management’s and the Audit and Supervisory Committee’s Responsibilities for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting
principles generally accepted in Japan. This includes the development and operation of internal control as management judges necessary
to enable the preparation and fair presentation of the financial statements which are free from material misstatement, whether due tofraud or error.
In preparing the financial statements, management is responsible for assessing whether it is appropriate to prepare the financial
statements in accordance with the going concern assumption and disclosing matters regarding the going concern assumption inaccordance with accounting principles generally accepted in Japan if such matters need to be disclosed.
The Audit and Supervisory Committee is responsible for monitoring the execution of Directors’ duties in the development andoperation of the financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an audit report that expresses our opinion on the financial statements from an
independent point of view, based on our audit. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of the financial statements.
We exercise professional judgement and maintain professional skepticism throughout the audit in accordance with auditing
standards generally accepted in Japan in performing the following:�Identify and assess the risks of material misstatement due to fraud or error. We design and perform audit procedures responsive tothose risks. Selecting audit procedures to be applied is at the discretion of the auditor. In addition, we obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion.
�Consider, when assessing risks, internal control relevant to the audit of the financial statements in order to design audit proceduresthat are appropriate in the circumstances, although the purpose of the audit is not to express an opinion on the effectiveness of theinternal control.
�Evaluate the appropriateness of accounting policies adopted by management and their method of application, as well as thereasonableness of accounting estimates made by management and the adequacy of related notes thereto.
�Conclude whether it is appropriate for management to prepare the financial statements on a going concern basis and, based on theaudit evidence obtained, whether a material uncertainty exists regarding events or conditions that may cast significant doubt on thegoing concern assumption. If there is a material uncertainty regarding the going concern assumption, we are required to raiseawareness to the notes to the financial statements in the audit report, or if the notes to the material uncertainty in the financial
statements are inappropriate, we are required to issue a modified opinion on the financial statements. While our conclusion is basedon the audit evidence that we obtained by the date of the audit report, the Company may not be able to exist as a going concern,
depending on future events or circumstances.
�Assess whether the presentation of the financial statements and notes thereto are in accordance with accounting principles generally
accepted in Japan, as well as the presentation, structure, and content of the financial statements, including the related notes, and-143-

whether the financial statements fairly present the underlying transactions and accounting events.
We report to the Audit and Supervisory Committee on the scope and timing of implementation of the planned audit, as well as onany material audit findings, including significant internal control deficiencies identified during the audit process, and other mattersrequired under the auditing standards.
We report to the Audit and Supervisory Committee that we have observed the code of professional ethics in Japan in terms of
independence and on matters that are reasonably believed to impact our independence, as well as on details of any countermeasures if
those are applied to eliminate obstacles or on details of any safeguards if those are applied to reduce obstacles to an acceptable level.
Among the matters discussed with the Audit and Supervisory Committee, we consider those matters that are particularly importantin the audit of the financial statements for the current fiscal year to be key audit matters, and describe them in the auditor’s report.
However, we do not present such matters in the auditor’s report if their publication is prohibited by laws and regulations, or if, in
extremely rare cases, we determine that we should not report them in the auditor’s report as doing so creates disadvantages that could
reasonably be expected to outweigh the public interest.

<Fee-related Information>
Fee-related information is provided in the auditor’s report on the consolidated financial statements.

Interest
There exists no special interest between the Company and this audit corporation or its engagement partners which is required to bestated pursuant to the provisions of the Certified Public Accountants Act.
End of text(*) 1. The original of the independent auditor’s report stated above is separately archived by the Company (the company submitting
the securities report).
2. XBRL data is not included in the target of the audit.

-144-