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 Second Quarter of the Fiscal Year Ending February 28,
2023 (Japanese GAAP)
October 14, 2022
Company name
Stock Code
Representative

Listing Market TSE

Metareal, Inc.
6182
(Title)URL https://www.metareal.jp
Representative Director and CEO (Name) Junichi Goishi
Director, General Manager of Group
Contact(Title)(Name) Taketo Arakawa
TEL 03-6685-9570
Administration Division
Scheduled date of filing of
Scheduled date of commencement of
October 14, 2022
quarterly report:
dividend payment
Preparation of supplementary materials for quarterly financial results: Yes
Holding of quarterly financial results briefing: Yes(Figures are rounded down to the nearest million yen)
1. Consolidated Financial Results for the Second Quarter of the Fiscal Year Ending February 28.2023 (March 1, 2022 to August 31,
2022)(1) Consolidated Results of Operation (Cumulative)(Percentages indicate year-on-year changes.)
Net sales

Operating income

Q2 FY2/23

Millions of yen
2,161

%
5.4

Q2 FY2/22

2,049

5.3

(Note)
Comprehensive
incomeQ2 FY2/23

Millions of yen% Millions of yen
241 177.2
270
87109Millions of yen

Net income per share(100.2%)

Net income attributableto owners of parent% Millions of yen%
150.1
109 100.2

Ordinary income

12.2

108

Q2 FY2/22

241.1

54

-

54Millions of yen (-%)

Diluted net income per
share

Yen
Yen
Q2 FY2/23
10.29
10.12
Q2 FY2/22
5.15
5.05(Note) [Accounting Standards for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020) and other accounting standards
have been applied from the beginning of the first quarter of the fiscal year under review. Figures related to the second quarterof the fiscal year ended February 28, 2023 are based on the application of these accounting standards. The rate of increase or
decrease compared to the same quarter of the previous fiscal year was calculated using the figures for the second quarter of the
fiscal year ended February 28, 2022 prior to the application of this accounting standard, and the figures for the second quarterof the fiscal year ended February 28, 2023 after the application of this accounting standard.
(2) Consolidated Financial Position

Q2 FY2/23
FY2/22

Total assets
Millions of yen
4,667
4,908

Net assets
Millions of yen
1,213
1,098

Shareholders' equity ratio
%
25.1
21.5

(Reference)
Q2 FY2/23
1,172Millions of yen
FY2/22
1,057Millions of yen
Shareholders' equity(Note) [Accounting Standards for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020) and other accounting standards
have been applied from the beginning of the first quarter of the fiscal year under review. Figures related to the second quarterof the fiscal year ended February 28, 2023 are based on the application of these accounting standards.
2. Dividend payment

Annual dividend per share
End of Q1

End of Q2
Yen

End of Q3
Yen

FY2/220.00
FY2/230.00
FY2/23 (Forecast)(Note) Revisions to the most recently announced dividend forecast: None

Year-end

Total

Yen

Yen

Yen

-

0.00

0.00

-

0.00

0.00

Consolidated Business Forecasts for the Fiscal Year Ending February 28, 2022 (March 1, 2022 to February 28, 2023)(Percentages indicate year-on-year changes.)
Net sales

Operating income

Millions of yen%

Millions of yen

4,299

3.4

306

233.7

~5,380 ~29.4~803~773.9Full year

Net income attributable to Net income perowners of parent
share

Ordinary income% Millions of yen-% Millions of yen

%

Yen

-

-

-

-

(Note) 1. Revisions to the most recently announced business forecasts: None
◆Consolidated Business Forecasts by Segment(Percentages indicate year-on-year changes.)
Net sales
Full year

Millions of yen

MT businessHT business
Metaverse business
Other corporate expenses

Operating income%

Millions of yen%

3,074~3,674

4.8~25.2

503~91332.3~140.0

1,191~1,550△2.4~27.1

158~351△12.8~92.9

33~154639.9~-△421~△315

-

-

-

△39

-

(Note) 1. Due to the rapid growth in net sales since the fiscal year ended February 28, 2018, we have not disclosed earnings forecasts
for the fiscal year ending February 28, 2019 and beyond.
In accordance with our initial policy of resuming disclosure of company forecasts when sales growth rate is below 50%(1.5 times growth), we disclosed business forecasts for the fiscal year ending February 28, 2022. However, there was asignificant downturn in business performance, as a result of the need to revise business forecasts during the period.
At present, we believe that it is difficult to accurately forecast business forecasts at a fixed point, and therefore, in thefiscal year ending February 28, 2023, we will disclose business forecasts in a range that assumes multiple scenarios.
Specifically, for the MT business, certain predictions can be made for document AI translation, which has been a mainstay
product for some time, while speech AI translation, which has commenced full-fledged operations since last year, ishighly novel and it is difficult to predict the market size and the degree of growth. As a result, if the growth rate of speech
AI translation is high, it is at the upper limit of the range, and if low, it is the lower limit.
The HT business is particularly affected by the convergence of the new coronavirus infectious disease, which is the upper
limit of the range if COVID-19 pandemic converges quickly, and the lower limit if it does not converge during the current
fiscal year.
In the metaverse business, there is a strong correlation with the extent to which the trends toward global progress in thetechnical environment (hardware and telecommunications) in the metaverse area accelerate. The faster the pace ofprogress, the higher limit of the range. The slower the pace, the lower limit.
It is difficult to forecast the timing of the convergence of the new coronavirus infectious disease. However, we assume
that the situation regarding the new coronavirus infectious disease will continue during the fiscal year ending February 28,
2023.
2. As described in (Note) 1, the consolidated business forecasts of [Ordinary income], [Net income attributable to owners ofparent] and [Net income per share] for the fiscal year ending February 28, 2023 are not disclosed at this time due to theuncertainty of the business environment. In the future, if the accuracy of our forecasts increases, we will promptly
disclose concrete figures.
3. [Accounting Standard for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020) and other standards have been
applied from the beginning of the fiscal year ended February 28, 2023. The above forecasts are based on figures after theapplication of these accounting standards. Year-on-year changes are calculated using the figures for the fiscal year ended
February 28, 2022 prior to the application of this accounting standard, and the figures for the fiscal year ended February
28, 2023 after the application of this accounting standard.

※ Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries resulting in changes in scope of
consolidation): None
(2) Adoption of special accounting methods for presenting quarterly consolidated financial statements: Yes(Note) For details, please refer to [2.Quarterly Consolidated Financial Statements, (4) Notes on Quarterly Consolidated Financial
Statements (Application of Accounting Procedures Specific to Preparation of Quarterly Consolidated Financial Statements)]
on page 8 of the Appendix.
(3) Changes in accounting policies, changes in accounting estimates and restatements① Changes in accounting policies due to revisions of accounting standards, etc.: Yes② ① Changes in accounting policies due to other reasons: None
③ Changes in accounting estimates: None
④ Restatements: None
(Note) For details, please refer to [2.Quarterly Consolidated Financial Statements, (4) Notes on Quarterly Consolidated Financial
Statements (Changes in Accounting Policies)] on page 8 of the Appendix.
(4) Number of shares outstanding (common stock)① Number of shares outstanding at the end of
the period (including treasury stock)

Q2 FY2/23

10,688,460 shares

FY2/22

10,657,660 shares② Treasury shares at the end of the year

Q2 FY2/23

468 shares

FY2/22468 shares③ Average number of shares outstanding during
Q2 FY2/23
the period (cumulative)

10,679,770 shares

Q2 FY2/22

10,657,223 shares※ This quarterly financial report is not subject to the quarterly review 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. Qualitative
Information on Quarterly Financial Results (4) 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.

○ Table of Contents of the Appendix
1. Qualitative Information on Quarterly Financial Results

2(1) Results of Operations ……………………………………………………………………………………………

2(2) Financial Position ……………………………………………………………………………………………

2(3) Cash Flows ………………………………………………………………………………………

2(4) Consolidated Business Forecasts ………………………………………………………………

3

2. Quarterly Consolidated Financial Statements and Major Notes ……………………………………………………

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

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

5

Quarterly Consolidated Statements of Income
For the Six-month Period ………………………………………………………………………………………

5

Quarterly Consolidated Statements of Comprehensive Income
For the Six-month Period ………………………………………………………………………………………

5(3) Quarterly Consolidated Statements of Cash Flows ………………………………………………………………

6(4) Notes on Quarterly Consolidated Financial Statements ………………………………………………………

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

8(Notes on Significant Changes in Shareholders' Equity) …………………………………………………………

8(Application of Accounting Procedures Specific to Preparation of the Quarterly Consolidated Financial Statements)

8(Changes in accounting policies) ……………

8(Additional Information) …………

8

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

9(Segment Information) ………………………………………………………………

10(Per share Information) ……………

12(Significant Subsequent Events) ………………………………………………………

12

- 1 -

1. Qualitative Information on Quarterly Financial Results(1) Results of Operations
During the second quarter of the current fiscal year (March 1, 2022 to August 31, 2022), the MT business continued toperform strongly, but expenses such as research and development expenses were incurred in the metaverse business due toupfront investments.
As a result, our group posted net sales of 2,161,415 thousand yen (up 5.4% year on year), operating income of 241,803
thousand yen (up 177.2% year on year), ordinary income of 270,386 thousand yen (up 150.1% year on year), and profit
attributable to owners of parent of 109,871 thousand yen (up 100.2% year on year) for the cumulative second quarter of thecurrent fiscal year.
Sales from businesses other than the metaverse business were 2,157,164 thousand yen (up 5.2% year on year), and operating
income was 467,799 thousand yen (up 35.8% year on year).
The performance of each business segment is as follows:
The name of the reportable segments that had been [GU business] since the third quarter of the previous fiscal year has beenchanged to [Metaverse business]. This change had no impact on segment information.
① MT business
As for the MT business, sales were 1,470,474 thousand yen (up 1.5% year on year), due to continuous strong sales. Segment
income was 324,524 thousand yen (up 19.8% year on year).
② HT business
As for the HT business, sales were 686,689 thousand yen (up 14.1% year on year), and segment income was 137,879 thousandyen (up 48.6% year on year).
③ Metaverse business
As for the metaverse business, sales were 4,251 thousand yen (compared to 0.1 million yen in the same period of the previous
fiscal year), and segment loss was 225,995 thousand yen (compared to a segment loss of 257,169 thousand yen in the same
period of the previous fiscal year).
(2) Financial Position(Assets)
Current assets decreased by 29,557 thousand yen from the end of the previous fiscal year to 2,919,136 thousand yen at the endof the second quarter of the current fiscal year. This was mainly due to a decrease of 135,349 thousand yen in notes and accounts
receivable, a decrease of 33,667 thousand yen in allowance for doubtful accounts, and an increase of 11,169 thousand yen in
cash and deposits. Non-current assets decreased by 211,305 thousand yen from the end of the previous fiscal year to 1,748,021
thousand yen. This was mainly due to a decrease of 46,649 thousand yen in property, plant and equipment and a decrease of
125,601 thousand yen in intangible assets.
(Liabilities)
Current liabilities decreased by 352,427 thousand yen from the end of the previous fiscal year to 2,082,243 thousand yen at
the end of the second quarter of the current fiscal year. This was mainly due to a decrease of 283,090 thousand yen in provision
for surcharge, a decrease of 100 million yen in short-term loans payable, and an increase of 60 million yen in bonds due within
one year. Non-current liabilities decreased by 3,328 thousand yen from the end of the previous fiscal year to 1,371,356 thousand
yen. This was mainly due to an increase of 203 million yen in bonds and a decrease of 192,990 thousand yen in long-term debt.
(Net assets)
Net assets increased by 114,891 thousand yen from the end of the previous fiscal year to 1,213,558 thousand yen at the end of
the second quarter of the current fiscal year. This was mainly due to an increase of 109,871 thousand yen in retained earnings
due to the recording of net income attributable to owners of parent.
(3) Cash Flows
Cash and cash equivalents at the end of the second quarter of the current fiscal year increased by 15,908 thousand yen fromthe end of the previous fiscal year to 2,426,052 thousand yen.
The status of each cash flow during the second quarter of the current fiscal year and its factors are as follows.
(Cash flows from operating activities)
Net cash provided by operating activities was 147,349 thousand yen (compared to 313,528 thousand yen provided in thesame period of the previous fiscal year).
This was mainly due to the recording of income before income taxes of 225,896 thousand yen, a decrease in provision forsurcharges of 283,090 thousand yen, the recording of depreciation and amortization of 240,639 thousand yen, a decrease in- 2 -notes and accounts receivable-trade of 140,166 thousand yen, and income taxes paid of 97,185 thousand yen.
(Cash flows from investing activities)
Net cash used in investing activities was 84,731 thousand yen (compared to 231,563 thousand yen used in the same periodof the previous fiscal year).
This was mainly due to purchase of intangible assets of 74,492 thousand yen.
(Cash flows from financing activities)
Net cash used in financing activities was 44,677 thousand yen (compared to 200,452 thousand yen used in the same period of
the previous fiscal year).
This was mainly due to proceeds from issuance of bonds of 293,375 thousand yen and repayments of long-term debt of
192,990 thousand yen.
(4) Consolidated Business Forecasts
Our two management themes for the future are:
① [Metaverser] initiative of the metaverse business
The metaverse business will strive toward the [Metaverser] initiative that has been concluded at the end of the previous two
years (For details, please refer to the [Financial Results for the Fiscal Year Ended February 28, 2022 (March 2022 to May 2022)]).
Previously, Travel DX Corporation, which operates the VR travel service, served as the main activity. Going forward, MATRIXCorporation, which operates [doors anywhere] as Metaverser platform, will serve as the main activity. As another new service,
we will also promote the metaverse office to be sold at Rozetta Corp. and [VR clone] to meet the digital clones of celebrities anddeceased persons in the virtual space.
② Stable growth of the MT businessWe will maintain stable growth of 5-20% per year in the MT business, which provides services such as [T-4OO] [T-3MT] for
document AI translation and [ON YAKU] for speech AI translation.
The impact of COVID-19 pandemic on our business results is as follows.
In the second quarter of the fiscal year under review, there has been no significant change in corporate trends since the mostrecent quarter, and both the document AI automatic translation division, our core product, and the speech translation division,
which is a new product, have finished in line with expectations.
From our passive style, which has relied heavily on the creation of leads through previous exhibitions, we continuously create
active and active contact opportunities by making business improvements, proposing product mixes, and holding webinars toexisting customers.
The document AI automatic translation division, which handles the core products [T-4OO] and [T-3MT], is trending online
against the order intake plan (lower limit) that serves as the basis for the business forecasts.
Following the reaching of a certain phase of the development of the new product, the conferencing and speech translation tool
[ONYAKU], we have commenced further business expansion in May. As a result, the number of inquiries and businessnegotiations has been on an increasing trend, and the market is gradually developing, so we will continue to work to expand
orders.
We are also continuing the [Switching to the Maturity Phase] described in the Consolidated Financial Results for the Second
Quarter of the Fiscal Year Ending February 28, 2022, and we are working to expand usage and increase the unit price of orders
by revitalizing our customers, who are currently subscribing to our contracts.
In addition, we are accelerating educational activities in the industrial translation industry to further expand the automatictranslation market.
Although the impact of COVID-19 pandemic on the MT business is slight, it is possible that the impact will be significant
depending on the economic stagnation caused by the expanding infectious situation in the future.
In the HT business, business performance is affected to a certain extent by trends in action restrictions associated with the
expansion of the COVID-19 pandemic, etc.
In the first half of the fiscal year ended February 28, 2023, the seventh wave of the pandemic expanded and prolonged, andnet sales remained at a level slightly above the same period of the previous fiscal year. In the latter half of the fiscal year, we
expect both net sales and operating income to exceed the results for the same period of the previous fiscal year, assuming thatthe trend toward the lifting of the action restrictions will continue, despite an increase in expenses such as the upfront hiring of
replacement personnel.
The impact of COVID-19 pandemic on the metaverse business is immaterial.

- 3 -2. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly Consolidated Balance Sheets(Thousands of yen)Previous fiscal year
(February 28, 2022)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Goodwill
Software
Software in progress
Other
Total intangible assets
Investments and other assets
Investment securities
Other
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
Income taxes payable
Provision for bonuses
Advances received
Provision for surcharge
Other
Total current liabilities
Non-current liabilities
Corporate bonds
Long-term debt
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Common stock
Capital surplus
Retained earnings
Treasury stock
Total shareholders' equity
Share subscription rights
Total net assets
Total liabilities and net assets- 4 -Current second quarter(August 31, 2022)

2,396,860
452,567
18,467
165,987△85,189
2,948,694

2,408,030
317,218
15,974229,434△51,5212,919,136

208,740

162,091

14,496
893,720
61,62823,511
993,356

10,603
831,142
5,877
20,132867,754319,675
437,554757,230
1,959,327
4,908,021

277,780440,394
718,175
1,748,021
4,667,158

94,145100,000
385,980
74,00091,94048,3591,006,259
283,090
350,895
2,434,670

96,146385,980
134,000
83,313
46,198
1,007,352
329,251
2,082,243

252,000
1,055,530
67,155
1,374,685
3,809,355

455,000
862,540
53,816
1,371,356
3,453,600

783,5111,757,458△1,482,498△951
1,057,519
41,146
1,098,666
4,908,021

786,021
1,759,968△1,372,627△951
1,172,411
41,146
1,213,558
4,667,158

(2) Quarterly Consolidated Statements of Income and Quarterly Consolidated Statements of Comprehensive Income(Quarterly Consolidated Statements of Income)(For the Six-month Period)(Thousands of yen)Previous second quarter(March 1, 2021)
To August 31, 2021)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Research and development expenses
Provision for bonuses
Retirement benefit expenses
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividends income
Foreign exchange gain
Subsidy income
Reversal of allowance for doubtful accounts
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of investments accounted for using equity
methodBond issuance expenses
Other
Total non-operating expenses
Ordinary income
Special loss
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Total special loss
Income before income taxes
Income taxes
Net income
Net income attributable to owners of parent

Current second quarter(March 1, 2022)
To August 31, 2022)

2,049,746
711,435
1,338,310

2,161,415
782,451
1,378,963

472,900
145,460
4,359
4,974
623,379
1,251,074
87,236

396,581
129,3152,113
3,564
605,585
1,137,159
241,80366
9
1,150
25,102
10,98837,31732886
13,04934,042989
48,999

6,773

6,959

7,596

5,232

2,077
16,447108,106

6,624
1,601
20,417
270,386※1 25,111
25,111
82,995
28,11554,87954,8792,435※2 42,054
44,489225,896
116,025
109,871
109,871(Quarterly Consolidated Statements of Comprehensive Income)(For the Six-month Period)(Thousands of yen)Previous second quarter(March 1, 2021)
To August 31, 2021)
Net income
Comprehensive income
Comprehensive income (loss) attributable to:
Owners of parent
Non-controlling interests- 5 -Current second quarter(March 1, 2022)
To August 31, 2022)

54,87954,879109,871
109,871

54,879-109,871-(3) Quarterly Consolidated Statements of Cash Flows(Thousands of yen)Previous second quarter(March 1, 2021)
To August 31, 2021)
Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of goodwill
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued bonuses
Increase (decrease) in provision for surcharge(decrease in △)Interest and dividend income
Loss (gain) on equity method investments
Loss (gain) on valuation of investment-securities
Loss (gain) on sales and retirement of non-current
assets
Subsidy income
Interest expenses
Bond issuance expenses
Increase (decrease) in advances received(Increase) decrease in notes and accounts receivabletrade(Increase) decrease in inventories (increase in △)Increase (decrease) in trade payables
Increase (decrease) in accrued expenses (decrease in△)
Increase (decrease) in consumption tax receivable
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
Purchase of investments in subsidiaries and associates
Payment for loans receivable
Proceeds from loans receivableCollection of lease and guarantee deposits
Cash flows from investing activities- 6 -Current second quarter(March 1, 2022)
To August 31, 2022)

82,995284,270
11,38025,111△3,004△1,434

225,896
240,639
3,893△38,484△2,160-△283,090

△76
7,596
-

△32
5,232
42,054-

2,435△25,102
6,773
212,845△13,049
6,959
6,624
1,027

19,997140,166△4,143△22,448

2,493
2,001

△73,328△40,126△46,699△77,215
397,518
76
25,102△6,773△105,517
3,122
313,528△48,972△25,245
228,26232
13,049△6,959△97,185
10,149147,349△2,974△227,764△871△3,500
△500
1,356
2,691
△231,563△929
757△74,492△10,850
782△84,731(Thousands of yen)Previous second quarter(March 1, 2021)
To August 31, 2021)
Cash flows from financing activities
Increase (decrease) in short-term borrowings (△)
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
Dividends paid
Purchase of investments in subsidiaries that does not
result in change in scope of consolidation
Purchase of treasury stock
Cash flows from financing activities
Effect of exchange rate change on cash and cash
equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the quarter- 7 -Current second quarter(March 1, 2022)
To August 31, 2022)△22,000
200,000△249,459△14,960△100,000
293,375△37,000△192,990△13,083-

5,020△63,943-△50,000-△89△200,452△44,677△382△2,031△118,869
2,288,014
2,169,145

15,9082,410,143
2,426,052

(4) Notes on Quarterly Consolidated Financial Statements(Notes on Going Concern Assumptions)Not applicable.
(Notes on Significant Changes in Shareholders' Equity)
Not applicable.
(Application of Accounting Procedures Specific to Preparation of the Quarterly Consolidated Financial Statements)
Income taxes are calculated by multiplying the income before income taxes by the forecasted effective tax rate, which iscomputed by matching the forecasted yearly income taxes with the forecasted yearly income before taxes.
However, if the calculation of tax expenses using the estimated effective tax rate yields a significantly unreasonable result,the statutory tax rate is used.
(Changes in Accounting Policies)(Application of Accounting Standards for Revenue Recognition)[Accounting Standard for Revenue Recognition] (ASBJ Statement No. 29, March 31, 2020). Effective from the beginning of
the first quarter of the current fiscal year, the Company and its consolidated subsidiaries adopt the [Revenue Recognition
Accounting Standard] to recognize revenue at the amount expected to be received in exchange for the promised goods orservices when control of the goods or services transfers to customers.
With regard to the application of the Revenue Recognition Accounting Standards, etc., in accordance with the transitional
treatment stipulated in the proviso in paragraph 84 of the Revenue Recognition Accounting Standards, the cumulative effect ofretrospectively applying the new accounting policy prior to the beginning of the first quarter of the current fiscal year isadjusted to retained earnings at the beginning of the first quarter of the current fiscal year, and the new accounting policy isapplied from the beginning balance of the current fiscal year.
As a result, there is no impact on income for the second quarter of the current fiscal year. In addition, there is no impact on
the beginning balance of retained earnings.
In accordance with the transitional treatment set forth in paragraph 28-15 of the [Accounting Standards for Quarterly
Financial Statements] (ASBJ Statement No. 12, March 31, 2020), information on the decomposition of revenue arising fromcontracts with customers for the second quarter of the previous fiscal year has not been presented.
Due to the application of the Revenue Recognition Accounting Standards, etc., from the first quarter of the previous fiscal
year, we have decided to include [Notes and accounts receivable] that had been presented under [Current assets] in the[Contract assets] under [Other] from the first quarter of the fiscal year under review. In accordance with the transitional
treatment stipulated in paragraph 89-2 of the Revenue Recognition Accounting Standards, no reclassifications have been madefor the previous fiscal year using the new presentation method.
(Additional Information)(Application of Treatment for Application of Tax Effect Accounting for Transition from the Consolidated Tax Payment System
to the Group Comprehensive Accounting System)
We and some of our domestic consolidated subsidiaries have not applied the provisions of Paragraph 44 of [Implementation
Guidance on Accounting Standard for Tax Effect Accounting] (ASBJ Guidance No. 28, February 16, 2018) regarding the items
for which the non-consolidated tax payment system has been revised in conjunction with the transition to a group-wide tax
system and the transition to a group-wide tax system established in the [Act on Partial Amendments to the Income Tax Act] (ActNo. 8 of 2020), due to the treatment of Paragraph 3 of the [Accounting Standard for Tax Effect Accounting" (ASBJ Statement
No. 39, March 31, 2020), and deferred tax assets and liabilities have been based on the provisions of the tax law prior to therevision.
(Application of Accounting Standards for Calculation of Market Value)[Accounting Standard for Calculation of Market Value] (ASBJ Statement No. 30, July 4, 2019). We have applied the [Current
Value Accounting Standards] and other accounting standards from the beginning of the first quarter of the current fiscal year,
and decided to apply the new accounting policies established by the Current Value Accounting Standards, etc. in the future inaccordance with the transitional treatment stipulated in Article 19 of the Current Value Accounting Standards and Article 44-2 of[Accounting Standards for Financial Instruments] of ASBJ Statement No. 10 of July 4, 2019. The Company does not hold any
financial instruments with a fair value on the quarterly consolidated balance sheet, and there is no impact on the quarterly
consolidated financial statements.
(Accounting Estimates Associated with the Spread of Novel Coronavirus Infection)
There were no significant changes in the contents of the previous fiscal year's annual securities report during the second quarterof the current fiscal year regarding the impact of the new type of coronavirus infectious disease in our group.

- 8 -(Notes to the Quarterly Consolidated Statements of Income)※1 Impairment loss
Previous second quarter (From March 1, 2021 to August 31, 2021)
1. Amount of impairment loss
During the second quarter of the current fiscal year, our group recorded impairment loss on the following assets.
Location
Shinjuku-ku, Tokyo

Application
Business assets

Type

Amount (thousands ofyen)

Software in progress

25,111

2. Method of grouping assets
Business assets are grouped on the basis of the smallest unit that generates cash flow that is largely independent of the
cash flows of other assets or asset groups.
3. Background to recording impairment loss
As a result of the reassessment of profitability and the consolidation of development and operating resources forexisting development projects and related businesses, we cannot expect significant future development and use of somedevelopment and operating projects. As a result, we estimated the recoverable amount to be zero in terms of bothobtaining cash flow from internal use and cost reduction, and recorded an impairment loss.
Current second quarter (From March 1, 2022 to August 31, 2022)
Not applicable.
※2 Loss on valuation of investment securities
Previous second quarter (From March 1, 2021 to August 31, 2021)
Not applicable.
Current second quarter (From March 1, 2022 to August 31, 2022)
With regard to the investment securities of VoiceApp Co., Ltd. that we hold, we judge that the real value has declined
significantly, and we record 42,054 thousand yen, which is the unrealized gain or loss, as a loss on valuation of investment
securities under extraordinary loss.

- 9 -(Segment Information)[Segment Information]
Ⅰ Previous second quarter (From March 1, 2021 to August 31, 2021)
1. Information on net sales and income (loss) by reportable segment
Reportable Segments
Metaverse
business

Total(Thousands of yen)Amounts on the
consolidated
Adjustment
financial(Note 1)statements(Note 2)MT businessHT business

1,448,043

601,601100

2,049,746-

2,049,746

5,469

19,760-25,229△25,229-

1,453,513

621,362100

2,074,976△25,2292,049,746

270,944

92,776△257,169

106,551△19,314

87,236

Net sales
Net sales tounaffiliatedcustomers
Intersegment sales
or transfer
Total
Segment income orloss (△)(Note) 1. Adjustments to segment income or loss (△) of 19,314 thousand yen includes eliminations of intersegment transactions andcorporate expenses. Corporate expenses mainly consist of expenses related to the administrative departments of the parent
company that are not attributable to reportable segments.
2. Segment income or loss (△) is adjusted with operating income in the quarterly consolidated statements of income.
2. Information on impairment loss on non-current assets or goodwill by reportable segment(Significant impairment loss on non-current assets)
During the second quarter of the fiscal year under review, intangible assets of ¥25111000 were recorded in the MT
business for software under development as a result of the profitability assessment and the liquidation of projects toconsolidate resources.

- 10 -

Ⅱ Current second quarter (From March 1, 2022 to August 31, 2022)
1. Information on net sales and income (loss) by reportable segment and breakdown of income(Thousands of yen)
Reportable Segments
Metaverse
business

Total

Amounts on the
consolidated
Adjustment
financial(Note 1)statements(Note 2)MT businessHT business

1,432,777
14,814

686,689-

1,432,777
701,504-

1,432,777
701,504

22,882

-

4,251
-

4,251
22,882-

4,251
22,882

1,470,474

686,689

4,251

2,161,415-

2,161,415

124,443

619,1314,251

747,826-

747,826

1,346,030

67,558-1,413,589-

1,413,589

Revenue from contracts
with customers

1,470,474

686,689

4,251

2,161,415-

2,161,415

Net sales to unaffiliatedcustomers

1,470,474

686,689

4,251

2,161,415-

2,161,415

3,023

21,621-

24,644△24,644-

1,473,497

708,3114,2512,186,060△24,644

2,161,415

324,524

137,879△225,995

236,409

5,394

241,803

By type of goods or services
Machine translation
Human translation
metaverse
Consigned development
Revenue from contracts withcustomers
Revenue recognition by period
Goods or services that aretransferred at one time
Goods or services that aretransferred over a period oftime

Intersegment sales ortransfer
Total
Segment income (loss)(Note) 1. Adjustments to segment income or loss (△) of 5,394 thousand yen include eliminations of intersegment transactions andcorporate expenses. Corporate expenses mainly consist of expenses related to the administrative departments of the parent
company that are not attributable to reportable segments.
2. Segment income or loss (△) is adjusted with operating income in the quarterly consolidated statements of income.
2. Changes in reportable segments(Change of Segment Name)
Effective from the third quarter of the previous fiscal year, the name of the reportable segments that had previously
been the [GU business] has been changed to the [Metaverse business]. This change was made to the segment name, andthis change had no impact on segment information. Segment information for the second quarter of the previous fiscal
year is also presented with the new name.

- 11 -

(Per share Information)
Net income per share and the basis for calculating it, and diluted net income per share and the basis for calculating it are as
follows.
Previous second quarter(From March 1, 2021 to August 31,
2021)(1) Net income per share

Current second quarter(From March 1, 2022 to August
31, 2022)

5.15 yen

10.29 yen

54,879109,871--

54,879109,871

10,657,223

10,679,770

5.05 yen

10.12 yen--

213,899

177,336(Basis of calculation)
Net income attributable to owners of parent (thousandsof yen)Amount not attributable to common shareholders(thousands of yen)
Net income attributable to owners of parent related tocommon stock (thousands of yen)
Average number of shares of common stock
outstanding during the period (shares)(2) Diluted net income per share(Basis of calculation)
Adjustment to net income attributable to owners ofparent(thousands of yen)
Increase in number of common shares (shares)
Outline of potential shares that had not been included in
the calculation of diluted net income per share because
they had no dilutive effect, and that had changed-

significantly since the end of the previous fiscal year
(Significant Subsequent Events)
Not applicable.

- 12 --