DISCLAIMER: This document was prepared using our machine translation, and no manual modification has been made to thetranslated contents. This document is to be used solely as a reference and in cases where any differences occur between English
version and the original Japanese version, the Japanese version shall prevail. The consolidated financial statements in thisdocument are unaudited.

Consolidated Financial Results for the Fiscal Year Ended February 29, 2024 (Japanese GAAP)
April 15, 2024
Company name

MetaReal Corp.

Stock Code
Representative

6182(Title)Contact(Title)Listing Market TSE

URL https://www.metareal.jp
Representative Director and CEO (Name) Junichi Goishi
Director, General Manager of Group(Name) Taketo Arakawa
Administration Division

Scheduled date of annual general
May 29, 2024
shareholders meeting
Scheduled date of filing of annual
May 30, 2024
securities report

TEL 03-6685-9570

Scheduled date of commencement of dividend payment-

Preparation of supplementary materials for financial results: Yes
Holding of financial results briefing: Yes(Figures are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Fiscal Year Ended February 29, 2024 (March 1, 2023 to February 29, 2024)(1) Consolidated Results of Operation(Percentages indicate year-on-year changes.)
Net sales

Operating income

Net income attributable toowners of parent
Millions of yen
%
%
55.5
534
29
29 millions of yen (-%)

Ordinary income

Millions of yen
Millions of yen%%
FY2/24
4,177
746
44.8
△2.7
FY2/23
4,292
3.2
515
460.6
(Note) Comprehensive income FY2/24
535 millions of yen (-%)

Millions of yen

803
516
FY2/23

Net income to
Ordinary income Operating income
shareholders' equity
to total assets
to net assets
Yen
%
%
%
49.13
39.1
18.5
17.9
2.73
2.8
11.3
12.0
FY2/23△16 millions of yen△17 millions of yen

Net income per share Diluted net income per shareYen
FY2/2449.79
FY2/23
2.77(Reference) Income on equity method investments

FY2/24(2) Consolidated Financial Position
Total assets
FY2/24
FY2/23(Reference) Shareholders' equity

Net assets

Millions of yen

Millions of yen

4,458
4,220

1,681
1,133

FY2/24

1,640 millions of yen

Shareholders' equity ratio
%
36.8
25.9

Net asset per shareYen
152.33102.19FY2/23 1,092 millions of yen(3) Consolidated Cash Flows
Cash flows from operating Cash flows from investing Cash flows from financing Cash and cash equivalent at
activities
activities
activities
the end of the year
Millions of yen

Millions of yen

Millions of yen

Millions of yen

930
507

△122
△155

△271
△217

3,078
2,542

FY2/24
FY2/23
2. Dividend payment

FY2/23
FY2/24
FY2/25(Forecast)End of Q1
Yen-

Annual dividend per share
End of Q2
End of Q3
Year-end
Yen
Yen
Yen
0.00
0.00
0.00
0.00
0.00

-

0.00

Total
Yen
0.00
0.00
0.00

Total amount of dividends Payout ratio Dividend on equity(Total)(Consolidated) (Consolidated)
Millions of yen
-

%
-

%
-

3. Consolidated Business Forecasts for the Fiscal Year Ending February 28, 2025 (March 1, 2024 to February 28, 2025)(Percentages indicate year-on-year changes.)
Net sales
Millions of yen

Full year

4,946

Operating income% Millions of yen
18.4

Ordinary income

Net income attributable toowners of parent

Net income per
share

%

Millions of yen%

Millions of yen%

Yen

412 △44.8

-

-

-

-

-

(Note) Regarding the consolidated business forecasts for [Ordinary income], [Net income attributable to owners of the parent] and[Net income per share] for the fiscal year ending February 28, 2025, while uncertainty in financial plans such as fund-raising interms of both liabilities and equity associated with Metareal AI of new businesses has been mitigated, there are items that arehighly difficult to forecast such as non-operating income (loss) and extraordinary income (loss), which are not disclosed at thistime. We plan to disclose specific figures promptly once we are able to make more accurate projections.
◆Consolidated Business Forecasts by Segment(Percentages indicate year-on-year changes.)
Net sales

Operating income

Full year

Millions of yen%

Millions of yen%

AI business

3,600

17.8

519

△44.5

HT business

1,146

2.6

210

44.7

Metaverse business

200

-

△200

-

Other corporate expenses

-

-

△118

-

(Note) Since the second quarter of the fiscal year ended February 28, 2024, the name of the reportable segment of the [MT business]has changed to the [AI business].
Previously, the segment centered on AI translation was called the [MT business]. However, as for our future corporate strategy
and current situation, we are looking toward broader AI services, including [generative AI], and we have changed the name tothe [AI business] to represent the actual situation more appropriately.
This is only a name change, and there are no revisions to the numerical classification. [Metareal AI] which had been includedin the MT business until the first quarter of the consolidated fiscal year under review is also included in the [AI business].
※ Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of
consolidation): Yes
Newly consolidated: - Excluded: Travel DX Corporation(2) Changes in accounting policies, changes in accounting estimates and restatements① Changes in accounting policies due to revisions of accounting standards, etc.: None
② Changes in accounting policies other than ①: None
③ Changes in accounting estimates: None
④ Restatements: None
(3) Number of shares outstanding (common stock)① Number of shares outstanding at the end of
the period (including treasury stock)② Treasury shares at the end of the year
③ Average number of shares outstanding during
the period

FY2/24

10,768,460 shares

FY2/23

10,688,460 shares

FY2/24490 shares

FY2/23468 shares

FY2/24

10,728,123 shares

FY2/23

10,683,847 shares

(Reference) Summary of Non-consolidated Results of Operation
1. Non-consolidated Financial Results for the Fiscal Year Ended February 29, 2024 (March 1, 2023-February 29, 2024)(1) Non-Consolidated Results of Operation(Percentages indicate year-on-year changes.)
Operating revenue
Operating income
Ordinary income
Net income
Millions of yen
Millions of yen
Millions of yen
Millions of yen%%%%
FY2/24
664
267
99
159
△0.3
△18.1
FY2/23
666
326
27.6
△60.1
△6
△245
Diluted net income per
share
Yen
Yen
FY2/2414.87
14.67
FY2/23△23.01(Note) The main reason for achieving profitability in ordinary income is the reduction of [Provision for doubtful accounts ofsubsidiaries and associates], and the main reason for achieving profitability in net income is that loss on valuation of
Net income per shareinvestment securities occurred in the fiscal year ended February 28, 2023, but did not occur in the fiscal year ended February
29, 2024.
(2) Non-consolidated Financial Position
Total assets
Millions of yen

FY2/24
FY2/23(Reference) Shareholders' equity

Net assets

Shareholders' equity ratio
%
478
18.7
305
11.0
FY2/23264 millions of yen

Millions of yen

2,336
2,412
FY2/24437 millions of yen

Net asset per share
Yen
40.66
24.73

* This consolidated financial report is not subject to audit by a certified public accountant or an auditing firm.
* Explanations and other special notes concerning the appropriate use of business forecasts(Cautionary Statement with Respect to Forward-Looking Statements)
Forecasts regarding future performance in this material are based on information currently available to the Company and certain
assumptions that the Company deems to be reasonable at the time this report was prepared. The Company does not make promises
about the achievements. Actual results may differ significantly from the forecasts due to various factors. Please refer to "1. Overview
of Results of Operation, (2) Consolidated Business Forecasts" on page 3 of the Appendix for the assumptions underlying the forecasts
and cautions concerning the use thereof.
(Method of Obtaining Financial Results Briefing Materials)
Supplementary materials for financial results were disclosed on the TDnet on the same date.
We also plan to hold a briefing for institutional investors, analysts and long-term individual shareholders on Thursday, April 18,
2024.
Information on this briefing session is provided on our website.

○ Table of Contents of the Appendix
1. Results of Operations and Financial Position ………………………………………………………………………………

2(1) Overview of Results of Operation and Financial Position ………………………………………………………………

2(2) Consolidated Business Forecasts …………………………………………………………………………………………

3

2. Basic Approach to Selection of Accounting Standards ………………………………………………………………………

3

3. Consolidated Financial Statements and Major Notes ………………………………………………………………………

4(1) Consolidated Balance Sheets ……………………………………………………………………………………………

4(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income …………………………

6

Consolidated Statements of Income …………………………………………………………………………………

6

Consolidated Statements of Comprehensive Income ………………………………………………………………

7(3) Consolidated Statements of Changes in Shareholders' Equity ……………………………………………………………

8(4) Consolidated Statements of Cash Flows …………………………………………………………………………………

10(5) Notes on Consolidated Financial Statements ……………………………………………………………………………

12(Notes on Going Concern Assumptions) ………………………………………………………………………………

12(Changes in Scope of Consolidation or Scope of Equity Method Application) ………………………………………

12(Changes in Presentation Methods) ……………………………………………………………………………………

12(Additional Information) ………………………………………………………………………………………………

12(Notes to the Consolidated Statements of Income) ……………………………………………………………………

13(Business Combinations) ………………………………………………………………………………………………

14(Segment Information) …………………………………………………………………………………………………

15(Per share Information) …………………………………………………………………………………………………

18(Significant Subsequent Events) ………………………………………………………………………………………

18

- 1 -

1. Results of Operations and Financial Position(1) Overview of Results of Operation and Financial Position① Overview of Results of Operation for the Fiscal Year under Review
During the fiscal year under review, orders received, net sales, and operating income in the AI business hit record highs. In
the HT business segment, income compared to the same period of the previous fiscal year decreased, but losses in the Metaverse
business decreased.
As a result, our group posted net sales of 4,177,759 thousand yen (down 2.7% year on year), operating income of 746,324
thousand yen (up 44.8% year on year), ordinary income of 803,788 thousand yen (up 55.5% year on year), and profit attributableto owners of parent of 534,135 thousand yen (profit attributable to owners of parent of 29,631 thousand yen in the previous fiscal
year).
Businesses other than the Metaverse business recorded total sales of 4,174,864 thousand yen (down 2.5% year on year) andoperating income of 975,508 thousand yen (up 4.1% year on year).
The performance of each business segment is as follows:
Since the fiscal year under review, the name of the reportable segment of the [MT business] has changed to the [AIbusiness]. This change had no impact on segment information.
In addition, from the current fiscal year, in order to more appropriately evaluate the results of operations by reportablesegment, we have changed the method of measuring income or loss of business segments. Comparison and analysis for thecurrent fiscal year are based on the new measurement method.
① AI business
As for the AI business, the number of orders received was steady, at 3,192,850 thousand yen (up 13.1% year on year). Sales
were 3,057,288 thousand yen (up 5.0% year on year) due to the impact of consigned projects etc., and segment income was935,971 thousand yen (up 28.7% year on year), including the impact of upfront investment on the new [Metareal AI] business.
As for the [Metareal AI] project, which was developed and provided in this fiscal year as a growth measure in the short tomedium term, we aim to contribute to business results at an early stage. We have commenced various proposals and sales
using generative AI, mainly for large-scale customers, resulting in large-scale orders.
② HT business
As for the HT business, sales were 1,117,576 thousand yen (down 18.4% year on year), and segment income was 145,555
thousand yen (down 45.9% year on year).
③ Metaverse business
Mid-to-short term growth measures were shifted to the [Metareal AI] project. The Metaverse business reduced investment
from a long-term perspective by 10±5 years. As a result, sales were 2,894 thousand yen (down 71.8% year on year), andsegment loss was 229,184 thousand yen (segment loss of 421,509 thousand yen in the previous fiscal year).
② Overview of Financial Position for the Fiscal Year under Review(Assets)
Total assets at the end of the fiscal year under review increased by 237,332 thousand yen from the end of the previous fiscal
year to 4,458,042 thousand yen.
Current assets increased by 554,865 thousand yen from the end of the previous fiscal year to 3,528,142 thousand yen. Thiswas due mainly to an increase of 553,489 thousand yen in cash and deposits, a decrease of 70,186 thousand yen in notes,
accounts receivable and contract assets, and a decrease of 35,346 thousand yen in allowance for doubtful accounts.
Non-current assets decreased by 317,533 thousand yen from the end of the previous fiscal year to 929,899 thousand yen.
This was mainly due to a decrease of 56,939 thousand yen in property, plant and equipment, a decrease of 238,692 thousand
yen in intangible assets, and a decrease of 21,901 thousand yen in investments and other assets.
(Liabilities)
Liabilities at the end of the fiscal year under review decreased by 310,819 thousand yen from the end of the previous fiscal
year to 2,776,571 thousand yen.
Current liabilities increased by 16,459 thousand yen from the end of the previous fiscal year to 2,005,951 thousand yen. Thiswas due mainly to an increase of 60,041 thousand yen in income taxes payable, a decrease of 45,376 thousand yen in advances
received, and an increase of 30,000 thousand yen in the current portion of corporate bonds payable.
Non-current liabilities decreased by 327,279 thousand yen from the end of the previous fiscal year to 770,619 thousand yen.
This was mainly due to a decrease of 270,980 thousand yen in long-term debt, a decrease of 29,000 thousand yen in bonds, anda decrease of 27,328 thousand yen in lease obligations.

- 2 -(Net assets)
Net assets at the end of the fiscal year under review increased by 548,152 thousand yen from the end of the previous fiscal
year to 1,681,470 thousand yen.
This was mainly due to an increase of 534,135 thousand yen in retained earnings as a result of recording profit attributable toowners of the parent.
③ Overview of Cash Flows for the Period under Review
Net cash provided by operating activities was 930,880 thousand yen, net cash used in investing activities was 122,012
thousand yen, and net cash used in financing activities was 271,869 thousand yen. As a result, cash and cash equivalents(hereinafter "cash") at the end of the fiscal year under review increased by 536,436 thousand yen from the end of the previous
fiscal year to 3,078,464 thousand yen.
(Cash flows from operating activities)
Net cash provided by operating activities was 930,880 thousand yen. Cash inflow was mainly attributable to income before
income taxes of 803,072 thousand yen, depreciation and amortization of 356,497 thousand yen, and a decrease in notes,
accounts receivable and contract assets of 134,898 thousand yen. Cash outflow was mainly attributable to income taxes paid of
308,726 thousand yen and a decrease in allowance for doubtful accounts of 110,058 thousand yen.
(Cash flows from investing activities)
Net cash used in investing activities was 122,012 thousand yen. Cash inflow was mainly attributable to proceeds fromliquidation of investment securities of 2,812 thousand yen and recovery of loans receivable of 2,144 thousand yen. Cashoutflow was mainly attributable to purchase of intangible assets of 65,556 thousand yen, purchase of investment securities of
55,128 thousand yen, and purchase of property, plant and equipment of 6,718 thousand yen.
(Cash flows from financing activities)
Net cash used in financing activities was 271,869 thousand yen. Cash inflow was mainly attributable to proceeds from longterm debt of 150,000 thousand yen and proceeds from issuance of bonds of 146,911 thousand yen. Cash outflow was mainly
attributable to repayments of long-term debt of 405,980 thousand yen and redemption of bonds of 149,000 thousand yen.
(2) Consolidated Business Forecasts
Our two management themes for the future are:
① [Metaverser] concept in the Metaverse business and its method [Metaverse×AI]
As a long-term growth strategy aiming to achieve results in five years or longer, the Metaverse business will focus on the
Metaverser initiative and Metaverse×AI as a means of implementing it.
② AI business including [Metareal AI] projects
We will continue to aim for stable growth in the AI business, which provides services such as [T-4OO] [T-3MT] for AI technicaldocument translation and [Onyaku] for AI speech translation.
The [Metareal AI] project, which we launched this fiscal year as a service provider, will expand the target market fromtranslation to document generation in general by utilizing various generative AI technologies, including GPTs, in the field oftechnical documents, which is our strength. We will contribute to customer growth by providing mainly specialized document
AI specializing in problem-solving specific to individual industries, government agencies, and individual companies, and byproviding overwhelming work efficiency and support for the creation of new services.
We aim to grow by 20% through the AI business, including the [Metareal AI] project.

2. Basic Approach to Selection of Accounting Standards
In light of the comparability of consolidated financial statements between periods and between companies, our group intends
to continue to prepare consolidated financial statements under Japanese GAAP.
However, our policy is to appropriately consider the application of the International Financial Reporting Standards (IFRS) as
necessary in light of various circumstances and business description in Japan and overseas.

- 3 -3. Consolidated Financial Statements and Major Notes(1) Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(February 28, 2023)
AssetsCurrent assets
Cash and deposits
Notes, accounts receivable and contract assets
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Building and structure
Tools, furniture and fixtures
Leased assets
Accumulated depreciation
Total property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loan
Deferred tax asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term borrowings
Current portion of long-term loans payable
Current portion of corporate bonds
Accounts payable-other
Lease obligations
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Non-current liabilities
Corporate bonds
Long-term debt
Lease obligations
Deferred tax liabilities
Total non-current liabilities
Total liabilities- 4 -Current fiscal year
(February 29, 2024)

2,523,695
280,313
16,075
195,242△42,051
2,973,276

3,077,184
210,127
18,100229,434△6,705
3,528,142

18,896685,40286,968△673,331
117,936

22,027654,447
86,968△702,446
60,997

6,709
647,051572
16,374378
671,086

419,465
2,837
9,638
452
432,393

86,071
23,77910,562
337,478
108,497△107,979
458,4091,247,433
4,220,709

142,5429,601
187
279,256
38,187△33,266
436,508
929,899
4,458,042

74,270100,000
385,980
134,000
96,64626,80628,91344,860859,439
238,575
1,989,491

65,323100,000
400,980
164,000
117,587
27,32888,95445,632814,062
182,082
2,005,951

388,000
669,550
40,349
1,097,899
3,087,391

359,000
398,570
13,02028
770,619
2,776,571

(Thousands of yen)Previous fiscal year
(February 28, 2023)
Net assets
Shareholders' equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Total accumulated other comprehensive income
Share subscription rights
Total net assets
Total liabilities and net assets- 5 -Current fiscal year
(February 29, 2024)

786,021
1,759,968△1,452,866△951
1,092,171

792,541
1,766,488△918,731△986
1,639,312

41,146
1,133,318
4,220,709

1,011
1,011
41,146
1,681,470
4,458,042

(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income(Consolidated Statements of Income)(Thousands of yen)Previous fiscal year
(From March 1, 2022 toFebruary 28, 2023)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Remuneration for directors
Salaries, allowances and bonuses
Research and development expenses
Advertising expenses
Provision for doubtful receivables
Provision for bonuses
Retirement benefit expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Commissions received
Interest income
Subsidy income
Reversal of allowance for doubtful accounts
Other
Total non-operating income
Non-operating expenses
Interest expenses
Commissions paid
Share of loss of investments accounted for using equity
methodBond issuance expenses
Provision for doubtful receivables
Other
Total non-operating expenses
Ordinary income
Special income
Income on sales of non-current assets
Gain on liquidation of investment securities
Total special income
Special loss
Loss on sales and retirement of noncurrent assets
Impairment loss
Loss on valuation of investment securities
Total special loss
Income before income taxes
Income taxes – current
Income taxes - deferred
Total income taxes
Net income
Net income attributable to owners of parent- 6 -Current fiscal year
(From March 1, 2023 to
February 29, 2024)

4,292,042
1,506,580
2,785,461

4,177,759
1,357,814
2,819,944

160,314787,237
264,696
210,390
152
8,964
7,221
831,060
2,270,037
515,424

225,706
741,561
123,759
141,135
109
1,929
6,968
832,448
2,073,620
746,324

63
15,252
27,295
8,302
50,913

11,00763
3,770
75,044
2,903
92,78812,896
1,895

10,1752,817

17,016

16,3236,624
10,0001,101
49,534
516,803

3,088
2,920
35,324
803,788

-

831
2,812
3,644

5,880
68,455
233,763
308,099
208,703
135,376
43,695
179,071
29,631
29,631

32
4,327
4,359
803,072
211,01757,919268,937
534,135
534,135(Consolidated Statements of Comprehensive Income)(Thousands of yen)Previous fiscal year
(From March 1, 2022 toFebruary 28, 2023)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Total other comprehensive income
Comprehensive income
Comprehensive income (loss) attributable to:
Owners of the parent company
Non-controlling interests- 7 -Current fiscal year
(From March 1, 2023 to
February 29, 2024)

29,631

534,135

29,6311,011
1,011
535,147

29,631-

535,147-

(3) Consolidated Statements of Changes in Shareholders' Equity
Previous fiscal year (From March 1, 2022 to February 28, 2023)(Thousands of yen)
Shareholders' equity
Common stock
Opening balance

Capital surplus

Retained earnings

783,5111,757,458

2,510

2,510

△1,482,498

Total shareholders'equityTreasury stock△951

1,057,519

Change during the year
Issuance of shares (exercise of sharesubscription rights)
Net income attributable to owners ofparent5,020
29,631

29,631

Purchase of treasury stock-

Net change in items other thanshareholders' equity-

Total changes of items during the year
Ending balance

2,510

2,510

29,631-

34,652786,021

1,759,968△1,452,866△951

1,092,171

Accumulated other comprehensive income
Share subscription
rightsTotal net assets

Valuation difference Total accumulated
on available-for-sale other comprehensive
securities
incomeOpening balance--

41,146

1,098,666

Change during the year
Issuance of shares (exercise of sharesubscription rights)

5,020

Net income attributable to owners ofparent29,631

Purchase of treasury stock-

Net change in items other thanshareholders' equity--

Total changes of items during the year

-

-

-

34,652Ending balance--

41,146

1,133,318

- 8 -

-

Current fiscal year (From March 1, 2023 to February 29, 2024)(Thousands of yen)
Shareholders' equity
Common stock
Opening balance

Capital surplus

Retained earnings

786,021

1,759,968

6,520

6,520

△1,452,866

Treasury stock△951

Total shareholders'equity1,092,171

Change during the year
Issuance of shares (exercise of sharesubscription rights)
Net income attributable to owners ofparent13,040534,135

Purchase of treasury stock534,135△34

Net change in items other thanshareholders' equity
Total changes of items during the year
Ending balance

6,520

6,520

534,135△34

547,140

792,541

1,766,488△918,731△986

1,639,312

Accumulated other comprehensive income
Share subscription
rightsTotal net assets

Valuation difference Total accumulated
on available-for-sale other comprehensive
securities
incomeOpening balance

△34

-

-

41,146

1,133,318

Change during the year
Issuance of shares (exercise of sharesubscription rights)

13,040Net income attributable to owners ofparent534,135

Purchase of treasury stock△34

Net change in items other thanshareholders' equity

1,011

1,011

Total changes of items during the year

1,011

1,011

-

548,152

Ending balance

1,011

1,011

41,146

1,681,470

- 9 -

1,011

(4) Consolidated Statements of Cash Flows(Thousands of yen)Previous fiscal year
(From March 1, 2022 toFebruary 28, 2023)
Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Impairment loss
Increase or decrease in allowance for doubtful
accounts (△ indicates decrease)
Increase or decrease in accrued bonuses (△ indicatesdecrease)
Increase in provision for surcharges (△ indicatesdecrease)
Interest and dividend income
Loss on valuation of investment securities (△indicates gain)
Loss or gain on equity method investments (△indicates gain)
Loss on sales and retirement of noncurrent assets (△indicates gain)
Subsidy income
Interest expenses
Bond issuance expenses
Increase or decrease in advances received (△ indicatesdecrease)
Increase or decrease in notes and accounts receivableand contract assets (△ increased)
Increase or decrease in inventories (△ indicatesincrease)
Increase or decrease in trade payables (△ indicatesdecrease)
Other
Sub-totalInterest and dividends received
Subsidy income
Interest paid
Income taxes paid
Income taxes refund
Cash flows from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Purchase of investment securities
Proceeds from liquidation of investment securities
Proceeds from liquidation of subsidiaries andassociates
Payment for loans receivable
Proceeds from loans receivable
Cash flows from investing activities- 10 -

Current fiscal year
(From March 1, 2023 to
February 29, 2024)

208,703475,735
7,786
68,455803,072
356,497
6,709
4,327

△34,006△110,058△3,498771△283,090

-

△63

△63

233,763-

17,016

16,323

5,880

△799

△15,252
12,896
6,624△3,77010,175
3,088△146,886△45,376

173,122

134,898

2,392△2,024△19,874△8,946△4,952
704,752
63
15,252△12,896△215,866
16,027507,333

22,217
1,187,042
63
3,770△10,175△308,726
58,905930,880△6,078757△139,623-△6,718831△65,556△55,128
2,812

-

802

△12,450
1,659△155,735△1,2002,144△122,012

(Thousands of yen)Previous fiscal year
(From March 1, 2022 toFebruary 28, 2023)
Cash flows from financing activities
Proceeds from issuance of bonds
Redemption of bonds
Proceeds from long-term debt
Repayment of long-term debt
Repayment of lease obligations
Proceeds from issuance of common stock upon
exercise of share subscription rights
Purchase of treasury stock
Cash flows from financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase or decrease in cash and cash equivalents (△indicates decrease)
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year

- 11 -

Current fiscal year
(From March 1, 2023 to
February 29, 2024)

293,375△104,000△385,980△26,293

146,911△149,000
150,000△405,980△26,806

5,020

13,040△217,877△34△271,869△1,836△561

131,883

536,4362,410,143
2,542,027

2,542,027
3,078,464

(5) Notes on Consolidated Financial Statements(Notes on Going Concern Assumptions)Not applicable.
(Changes in Scope of Consolidation or Scope of Equity Method Application)(Changes in Scope of Consolidation)
Travel DX Corporation, our consolidated subsidiary, has been excluded from the scope of consolidation because it was
extinguished through an absorption-type merger in which MATRIX Corporation, also a consolidated subsidiary, is thesurviving company.
(Changes in Scope of Equity Method Application)
VR Music Inc., which had been our equity method investee, has been liquidated and therefore has been excluded from thescope of application of the equity method.
(Change of Presentation Methods)(Consolidated Balance Sheets)[Contract assets] that had been included in [Other] under [Current assets] during the previous fiscal year are included in[Notes receivable, accounts receivable and contract assets] under [Current assets] from the current fiscal year due to theirmateriality. Accordingly, the name of the line item presented under [Notes and accounts receivable] under [Current assets] hasbeen changed to [Notes receivable, accounts receivable and contract assets]. To reflect this change in presentation, theconsolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the [Current assets] section, [Notes and accounts receivable] of 278,738 thousand yen and [Other] of 196,817
thousand yen have been reclassified as [Notes receivable, accounts receivable and contract assets] of 280,313 thousand yen and[Other] of 195,242 thousand yen.
(Consolidated Statements of Cash Flows)[Increase or decrease in contract assets (increase in △)] which was included in [Other] under [Cash flows from operating
activities] in the previous fiscal year is included in [Increase or decrease in trade receivables and contract assets (increase in△)] from the current fiscal year due to its materiality. Accordingly, the name of the item that had previously been presented as[Increase or decrease in notes and accounts receivable-trade (increase in △)] under [Cash flows from operating activities] ischanged to [Increase or decrease in notes and accounts receivable-trade and contract assets (increase in △)]. To reflect thischange in presentation, the consolidated financial statements for the previous fiscal year have been reclassified.
As a result, in the [Cash flows from operating activities] section, [Increase or decrease in notes and accounts receivable-trade(increase in △)] of 174,698 thousand yen and [Other] of △6,528 thousand yen have been reclassified as [Increase or decreasein notes and accounts receivable-trade and contract assets (increase in △)] of 173,122 thousand yen and [Other] of △4,952
thousand yen.
(Additional Information)(Handling of Accounting and Disclosure for Application of the Group Comprehensive Accounting System)
We and some of our domestic consolidated subsidiaries have shifted from the consolidated tax payment system to the groupwide system since the fiscal year under review. Accordingly, accounting and disclosure of income taxes, local income taxes,
and tax-effect accounting are conducted in accordance with the [Treatment of Accounting and Disclosure for Application of theGroup Comprehensive Accounting System] (Practical Issues Task Force No. 42, August 12, 2021. Hereinafter [Practical Issues
Task Force No. 42]). In addition, in accordance with Paragraph 32(1) of the Practical Issues Task Force No. 42, we do notdeem the impact of changes in accounting policies due to the application of Practical Issues Task Force No. 42.

- 12 -

(Notes to the Consolidated Statements of Income)(1) Revenue from contracts with customers
Revenue from contracts with customers and other revenues are not presented separately. The amount of revenue arising fromcontracts with customers is as described under [(Segment Information)].
(2) Impairment loss
Previous fiscal year (From March 1, 2022 to February 28, 2023)
1. Amount of impairment loss
The Group recorded impairment loss on the following assets during the period under review.
Location

Application

Type

Amount (thousands of yen)

Chioda-ku, Tokyo

Business assets

Tools, furniture andfixtures4,587

Chioda-ku, Tokyo

Business assets

Software in progress

1,904

Chioda-ku, Tokyo

Business assets

Software61,963

Total

68,455

2. Method of grouping assets
Business assets are grouped based on the smallest cash-flow-generating unit to be largely independent of the cash flows ofother assets or asset groups.
3. Method of calculating the recoverable amountThe recoverable amount of business assets is measured by value in use, and is calculated by discounting future cash flows
from operating activities using the cost of capital (19.1%) that also takes into consideration the equity risk premium. Assets
with negative future cash flows from operating activities are valued at zero.
4. Background to recording of impairment loss
As a result of reassessment of the profitability of existing development projects and related businesses and consolidation ofdevelopment and operating resources, book value was written down to the recoverable amount and the resulting decrease wasrecorded as an impairment loss.
Current fiscal year (From March 1, 2023 to February 29, 2024)
This information is omitted because it is not material.
(3) Loss on valuation of investment securities
Previous fiscal year (From March 1, 2022 to February 28, 2023)
We have determined that the real value of the following holdings of investment securities (stocks with no market prices etc.)
has declined significantly. Accordingly, we have recorded the difference in valuation under extraordinary losses, as losses on
valuation of investment securities.
(Thousands of yen)
Investment securities

Loss on valuation of investment
securities

Synamon Inc.

7,525

VoiceApp, Inc.

60,116alt Inc.

166,122

Current fiscal year (From March 1, 2023 to February 29, 2024)
Not applicable.

- 13 -

(Business Combinations)(Transactions Under Common Control)
Merger of consolidated subsidiaries
1. Summary of transactions(1) Name and business of the companies subject to business combination① Surviving company
Company name: MATRIX Corporation
Business description: VR business② Absorbed company
Company name: Travel DX Corporation
Business description: Virtual travel business(2) Effective date of the business combination
December 1, 2023
(3) Legal form of the business combination
Absorption-type merger in which MATRIX Corporation is the surviving company and Travel DX Corporation is theabsorbed company(4) Company name following the business combination
MATRIX Corporation(5) Other matters related to overview of the transaction
Aim of the business combination is to further improve management efficiency.
2. Overview of accounting treatment
Accounting has been treated as transactions under common control, based on [Accounting Standard for Business
Combinations] (ASBJ Statement No. 21, January 16, 2019) and [Implementation Guidance on Accounting Standard forBusiness Combinations and Accounting Standard for Business Divestitures] (ASBJ Guidance No. 10, January 16, 2019).

- 14 -

(Segment Information)[Segment Information]
1. Overview of Reportable Segments
The target segments of the Company are components of the Company for which separate financial information isavailable and which are regularly reviewed by the Board of Directors in order to determine the allocation of management
resources and evaluate business performance. Our business is centered on the machine translation business and theMetaverse business, and we operate the translation outsourcing business as a peripheral business.
(1) AI business
The AI (Artificial Intelligence) business provides AI machine-translation services and generative AI services basedon the corporate missions of [liberate Japan from linguistic impairment] and [liberate humanity from the shackles ofmanual labor].
(2) HT business
The HT (Human Translation) business provides outsourced services, such as traditional human translation,interpretation, and language training.
(3) Metaverse business
The Metaverse business provides various services. By integrating cutting-edge technologies such as AI, AR(Augmented Reality: Augmented Reality), VR (Virtual Reality: Virtual Reality), 5G/6G/G7 (High-speed, Multiple
Connections), 4K/8K/12K (Super-Resolution), video distribution solutions, robotics, and HA (Human Augmentation:
Human Extension), we aim to realize a world in which people around the world can interact, work, and enjoy theirlives [with anyone anytime, anywhere].
(Change of Segment Name)
Since the fiscal year under review, the name of the reportable segment that had been the [MT business] has changed tothe [AI business]. This change was made to the segment name only. There was no impact on segment information. Segment
information for the previous fiscal year is also presented under the new name.
2. Method of calculating net sales, income (loss), assets and other items by reportable segment
The accounting methods used for the reportable segments are based on the accounting policies adopted for the
preparation of the consolidated financial statements.
Segment income is based on operating income. Intersegment sales and transfers are based on prevailing market prices.
(Changes in Measurement Methods of Income or Loss of Business Segments)
In order to more appropriately evaluate the results of operations of each reportable segment, we have decided to revise
the cost allocation within the headquarters function in light of the increasing importance of company-wide business
management along with changes in the scope of our business in recent years and other factors. As a result, the effect of cost
reduction activities undertaken by the administrative division at headquarters was included in adjustments to segment
income. However, from the fiscal year under review, the allocation method has been changed in light of the ratio of services
provided to each company.
Segment information for the previous fiscal year is prepared based on the new measurement method for reportablesegment income or loss.

- 15 -

3. Information on net sales, income (loss), assets and other items by reportable segment and breakdown of income
Previous fiscal year (From March 1, 2022 to February 28, 2023)(Thousands of yen)
Reportable Segments
AI businessBy type of goods or services
Machine translation

Metaverse
business

HT business

Total

Adjustments(Notes 1, 3,
4)

Amounts on the
consolidated
financialstatements(Note 2)2,820,840

32,742-

2,853,583-

2,853,583

Human translation
Metaverse

35,922-

1,337,262-

10,256

1,373,184
10,256-

1,373,184
10,256

Consigned development

55,018--55,018-55,0182,911,781

1,370,005

10,256

4,292,042-

4,292,042

263,425

1,233,162

7,076

1,503,663-

1,503,663

2,648,355

136,8423,180

2,788,378-

2,788,378

2,911,781

1,370,005

10,256

4,292,042-

4,292,042

2,911,781

1,370,005

10,256

4,292,042-

4,292,042

6,092

45,620-51,712△51,712-

Total

2,917,873

1,415,625

10,256

4,343,755△51,712

4,292,042

Segment income or loss (△)

727,228

268,941△421,509

574,660△59,236

515,424

2,573,572

829,515

430,825

3,833,914

386,795

4,220,709

439,21221,7092,923

463,845

11,889475,735

-

7,786

-

7,786

-

7,786

72,607--72,607△4,152

68,455

138,726

3,613

3,056

145,396306

145,702

Revenue from contracts withcustomers
Revenue recognition by
periodGoods or services that aretransferred at one time
Goods or services that aretransferred over a period oftime
Revenue from contracts
with customers
Net sales to unaffiliatedcustomers
Intersegment sales ortransfer

Segment assets
Other
Depreciation
Amortization of goodwill
Impairment loss
Increase in property, plantand equipment, andintangible assets(Note) 1.

2.
3.
4.

Adjustments to segment income or loss (△) of △59,236 thousand yen include an elimination of intersegment transactionsof 251,391 thousand yen and a corporate expenses not attributable to reportable segments of △310,627 thousand yen.
Corporate expenses mainly consist of expenses related to the administrative departments of the parent company that are
not attributable to reportable segments.
Segment income or loss (△) is adjusted with operating income in the consolidated statements of income.
Adjustments to segment assets of 386,795 thousand yen are corporate assets not attributable to reportable segments. They
mainly consist of assets related to the parent company and deferred tax assets.
The depreciation and amortization adjustment of 11,889 thousand yen included in adjustments to other items represents
depreciation and amortization related to parent-company assets. Adjustments to impairment loss of △4,152 thousand yen
represent adjustments to unrealized gains and losses. Adjustments to the increase in property, plant and equipment andintangible assets of 306 thousand yen represent increases related to parent-company assets.

- 16 -

Current fiscal year (From March 1, 2023 to February 29, 2024)(Thousands of yen)
Reportable Segments
AI business(Note 5)Metaverse
business

HT business

Total

Adjustments(Notes 1, 3,
4)

Amounts on the
consolidated
financialstatements(Note 2)By type of goods or services
2,813,002
48,19630,015
1,087,560-

2,843,018
1,135,756-

2,843,018
1,135,756

196,089

-

2,894
-

2,894
196,089-2,894
196,089

3,057,288

1,117,576

2,894

4,177,759-

4,177,759

313,843

980,059

1,192

1,295,095-

1,295,095

2,743,444

137,517

1,702

2,882,663-

2,882,663

3,057,288

1,117,576

2,894

4,177,759-

4,177,759

3,057,288

1,117,576

2,894

4,177,759-

4,177,759

6,129

42,303

13,40561,839△61,839-

Total

3,063,417

1,159,879

16,3004,239,598△61,839

4,177,759

Segment income or loss (△)

935,971

145,555△229,184

852,342△106,017

746,324

2,852,864

718,257

169,595

3,740,716

717,325

4,458,042

356,792

18,036-374,829△18,331356,497

Amortization of goodwill

-

6,709

-

6,709

-

6,709

Impairment loss

-

-

4,327

4,327

-

4,327

62,743

8,030

1,500

72,275-72,275

Machine translation
Human translation
Metaverse
Consigned development
Revenue from contracts withcustomers
Revenue recognition by
periodGoods or services that aretransferred at one time
Goods or services that aretransferred over a period oftime
Revenue from contracts
with customers
Net sales to unaffiliatedcustomers
Intersegment sales ortransfer

Segment assets
Other
Depreciation

Increase in property, plantand equipment, andintangible assets(Note) 1.

2.
3.
4.
5.

Adjustments to segment income or loss (△) of △106,017 thousand yen include an elimination of intersegment
transactions of 244,176 thousand yen and a corporate expenses not attributable to reportable segments of △350,194
thousand yen. Corporate expenses mainly consist of expenses related to the administrative departments of the parent
company that are not attributable to reportable segments.
Segment income or loss (△) is adjusted with operating income in the consolidated statements of income.
Adjustments to segment assets of 717,325 thousand yen are corporate assets not attributable to reportable segments. They
mainly consist of assets related to the parent company and deferred tax assets.
The depreciation and amortization adjustment of △18,331 thousand yen included in adjustments to other items is anadjustment to depreciation and amortization related to parent-company assets and unrealized gains and losses.
Sales related to generative AI are included in [Machine translation] for platform-type sales, and sales related to consigned
development are included in [Consigned development].

- 17 -

[Information on impairment loss on noncurrent assets by reportable segment]
Previous fiscal year (From March 1, 2022 to February 28, 2023)
Impairment loss on noncurrent assets of 72,607 thousand yen has been recorded for the AI business. In addition, theCompany has recorded △ 4,152 thousand yen as an adjustment to unrealized gains and losses.
Current fiscal year (From March 1, 2023 to February 29, 2024)
Impairment loss on noncurrent assets of 4,327 thousand yen has been recorded for the Metaverse business.
(Per share Information)
Previous fiscal year
(From March 1, 2022 to February
28, 2023)

Current fiscal year
(From March 1, 2023 to February
29, 2024)

Net assets per share

102.19 yen

152.33 yen

Net income per share

2.77 yen

49.79 yen

Diluted net income per share

2.73 yen

49.13 yen

(Note) The basis for calculating net income per share and diluted net income per share is as follows.
Previous fiscal year
(From March 1, 2022 to February
28, 2023)

Current fiscal year
(From March 1, 2023 to February
29, 2024)

Net income per share
Net income attributable to owners of parent(thousands of yen)

29,631

534,135--

29,631

534,135

10,683,847

10,728,123--

Increase in number of common shares (shares)

175,353

143,742(Share subscription rights (shares))(175,353)(143,742)

Amount not attributable to common shareholders(thousands of yen)
Net income attributable to owners of parent related
to common stock (thousands of yen)
Average number of shares of common stock
outstanding during the period (shares)

Diluted net income per share
Adjustment to net income attributable to owners ofparent (thousands of yen)

Outline of potential shares that had not been
14th share subscription rights by
included in the calculation of diluted net income per resolution of the Board of Directors
share because they had no dilutive effect

14th share subscription rights by
resolution of the Board of Directors

at the meeting held on July 14, 2020 at the meeting held on July 14, 2020
Number of share subscription rights: Number of share subscription rights:
12,188 rights(1,218,800 shares of common

12,188 rights(1,218,800 shares of common

stock)

stock)(Significant Subsequent Events)
Not applicable.

- 18 -