DAIICHIKOSHO

CO.,

LTD.

Translation
This report is a translation of excerpts from original Japanese Flash Report and for reference purpose only. In case of discrepancy between this reportand original Japanese Flash Report, the latter shall prevail.

FY2022, the year ending March 31, 2023

Flash Report on the Consolidated Results for the Second Quarter Ended
September 30, 2022 [JGAAP]
November 9, 2022

Company Name:
DAIICHIKOSHO CO., LTD.
Stock Exchange Listing: Tokyo Stock Exchange
Code Number:
7458
URL:
https://www.dkkaraoke.co.jp/
Representative:
Tadahiro Hoshi, President
Contact:
Yasuhisa Nishihara, General Manager, Accounting Department
Phone:+81-3-3280-2151
Date to Submit the Quarterly Securities Report: November 14, 2022
Start Date for Dividend Payment: December 5, 2022
Availability of Supplementary Briefing Material on Quarterly Financial Results: Available
Schedule of Quarterly Financial Results Briefing Session: None
(Amounts below one million yen are truncated.)

1. Consolidated Performance for the Six Months Ended September 30, 2022 (From April 1, 2022, toSeptember 30, 2022)(1) Consolidated operating results(Percentage figures indicate increase/decrease from a year earlier.)
Net sales
Six months ended
September 30, 2022
Six months ended
September 30, 2021

Operating profit

Ordinary profit

Millions of yen%

Millions of yen%

Millions of yen%

60,671

53.5

5,469

―

5,773

―

39,529(7.6)(1,945)―(1,176)―

Profit attributable toowners of parent
Millions of yen

Six months ended
5,990
September 30, 2022
Six months ended(1,429)September 30, 2021
(Note) Comprehensive income:Six months ended September 30, 2022:
Six months ended September 30, 2021:

Basic earnings per share

Diluted earnings per share

%

Yen

Yen

―

109.73109.57―(26.20)―6,208 million yen ― %(1,277) million yen ― %(2) Consolidated financial position
Total assets

Net assets

Millions of yen

Millions of yen

As of September 30, 2022
184,480
As of March 31, 2022
180,389(Reference) Shareholders’ equity:
As of September 30, 2022: 106,621 million yen
As of March 31, 2022:
103,543 million yen

1

108,286
105,160

Equity ratio
%
57.8
57.4

DAIICHIKOSHO

CO.,

LTD.

2. Dividend
First Quarter
Yen――

Second Quarter
Yen
56.00
56.00

Annual dividend
Third Quarter
Yen―

Year ended March 31, 2022
Year ending March 31, 2023
Year ending March 31, 2023―
(forecast)(Note) Changes in dividends forecast from most recently announced figures: None

Year-end
Yen
57.00
57.00

AnnualYen
113.00113.003. Forecast of Consolidated Performance for FY2022, the Year Ending March 31, 2023 (From April
1, 2022, to March 31, 2023)
Net sales
Millions of yen

Year ending March 31,
2023 (full year)

126,500(Percentage figures indicate increase/decrease from a year earlier.)
Operating profit
Ordinary profit
Millions of yen
Millions of yen
%
%
%
33.5

12,000

Profit attributable toowners of parent―

12,800

Basic earnings per share

Millions of yen%
Yen
Year ending March 31,
10,00092.4
183.172023 (full year)(Note) Changes in forecast of consolidated performance from most recently announced figures: None

2―

DAIICHIKOSHO

CO.,

LTD.

*Notes(1) Significant changes in subsidiaries during the period under review (changes to specific subsidiaries resulting inchanges in scope of consolidation): None
(2) Adoption of special accounting policies for quarterly financial statements: None
(3) Changes in accounting standard, accounting estimation change and error correction
1) Changes due to changes in accounting standard: None
2) Changes due to changes in accounting standard except (3) 1): None
3) Changes due to accounting estimation change: None
4) Error correction: None
(4) Number of common shares issued
1) Number of shares issued
As of54,734,200 As of
54,734,200(including treasury shares)
September 30, 2022
shares March 31, 2022
shares2) Number of treasury shares
As of141,302 As of
141,260
3) Average number of shares
September 30, 2022
shares March 31, 2022
sharesduring the period
Six months ended
54,592,931 Six months ended
54,558,572
September 30, 2022
shares September 30, 2021
shares* These consolidated financial results are outside the scope of quarterly review by Certified Public Accountants or
auditing corporations.
* Explanation for the appropriate use of performance forecasts and other special notes:
The statements regarding forecast of financial results in this report are based on the information that is available, as
well as estimates, assumptions and projections that are believed to be reasonable at the time of publication.
Therefore, there might be cases in which actual results greatly differ from forecast values. For the conditions
underlying the assumptions made for financial results forecasts and their use, please see “Explanation of Forecastof Consolidated Performance and Other Forward-looking Information” on page 7 of the Attachments.

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DAIICHIKOSHO

CO.,

LTD.

Table of Contents - Attachments
1. Qualitative Information on Quarterly Performance ......................................................................................... 5(1) Explanation of Operating Results ................................................................................................................ 5(2) Explanation of Financial Position ................................................................................................................ 7(3) Explanation of Cash Flows .......................................................................................................................... 7(4) Explanation of Forecast of Consolidated Performance and Other Forward-looking Information ............... 7
2. Quarterly Consolidated Financial Statements and Primary Notes ................................................................... 8(1) Quarterly Consolidated Balance Sheets ....................................................................................................... 8(2) Quarterly Consolidated Statements of Income and Comprehensive Income ............................................ 10(Quarterly Consolidated Statements of Income) .................................................................................... 10(Quarterly Consolidated Statements of Comprehensive Income) .......................................................... 11(3) Quarterly Consolidated Statements of Cash Flows ................................................................................... 12(4) Notes to Quarterly Consolidated Financial Statements ............................................................................. 14(Notes on Going Concern Assumption) ................................................................................................. 14(Notes in Case of Significant Changes in Shareholders’ Equity) ........................................................... 14(Segment Information) ........................................................................................................................... 14(Additional Information) ........................................................................................................................ 15(Quarterly Consolidated Statements of Income) .................................................................................... 15

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DAIICHIKOSHO

CO.,

LTD.

1. Qualitative Information on Quarterly Performance(1) Explanation of Operating Results
In the six months ended September 30, 2022 (the “six months under review”), due to the gradual mitigation of impact of
the COVID-19 pandemic on economic activities, Japan’s economy saw signs of consumer spending and other matters backto normal. The economic outlook, however, remains unclear as it is still not certain when the pandemic will end and due tothe rapid depreciation of the yen and surging prices of energy resources and raw materials.
In the karaoke industry, where DAIICHIKOSHO CO., LTD. (the “Company,” together with its subsidiaries, the“Group”) operates, amid the lifting of quasi-emergency measures and related requests in the previous fiscal year, many
karaoke cabins and restaurants both in the night business and the karaoke cabin markets resumed normal operation.
Although there were still impacts of the pandemic on business locations, attracting customers late at night and some otheraffairs, the markets were in a recovery trend as a whole, partly due to the fact that no administrative restrictions were
imposed on operation, despite the resurgence of infections seen in July.
As a result of taking a series of measures in our businesses amid such a situation, in the six months under review, net
sales amounted to 60,671 million yen (up 53.5% year on year), operating profit was recorded of 5,469 million yen (a loss of
1,945 million yen in the previous corresponding period), ordinary profit was 5,773 million yen (a loss of 1,176 million yen
in the previous corresponding period), and profit attributable to owners of parent amounted to 5,990 million yen (a loss of
1,429 million yen in the previous corresponding period).
The Group posted 2,868 million yen of subsidies income covering the previous fiscal year (5,660 million yen in theprevious corresponding period) in extraordinary income from various subsidies, such as employment adjustment subsidies
and subsidies for shorter business hours.
(Millions of yen)

Net sales
Operating profit
Ordinary profit
Profit attributable to owners ofparentSix months ended
September 30, 2021
39,529(1,945)(1,176)Six months ended
September 30, 2022
60,671
5,469
5,773(1,429)5,990

Year-on-year change% change

21,141
7,414
6,950

53.5%
―
―

7,419

―

Operating results by segment are as follows.
(Commercial karaoke business)
In the commercial karaoke business, due to the lifting of various requests followed by the resumption of operation of
our customers’ facilities and an increase in new store openings, the business environment was in the recovery trend
primarily in stores operating at night, such as snack bars, which are our main market.
In such an environment, in order to recover the number of DAM units in operation, which is the key challenge in thecurrent fiscal year, we opened a website to help with the introduction of karaoke equipment “Karaoke no Madoguchi(Consultation desk for karaoke)” in the previous fiscal year and a website providing property information “Yorumise Navi
(Search navigation for properties for night entertainment)” in April. In addition to face-to-face sales that is our strength, we
also strived to build a sales system online by holding online events at nursing facilities in the seniors’ market and taking
other steps.
In addition, we strived to improve our Karaoke DAM products by further expanding our visual contents such as live
videos, animated videos and music videos including “Liview!,” which was released in the previous fiscal year and withwhich users can enjoy the atmosphere of live performances in karaoke cabins.
We released in October “FREE DAM LIFE,” our latest dedicated model for DK elder system, newly equipped with aremote session function and others that would help reduce the workload of staff working at nursing facilities. Goingforward, we aim to replace the old models and acquire new customers in the seniors’ market.
As a result, net sales and operating profit increased by 14.0% and 29.0%, respectively, year on year.

5

DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Net sales
Operating profit

Six months ended
September 30, 2021
25,1835,792

Six months ended
September 30, 2022
28,716
7,472

Year-on-year change% change

3,533
1,679

14.0%
29.0%

(Karaoke cabin and restaurant business)
In the karaoke cabin and restaurant business, we opened six karaoke cabins and six restaurants, including those in new
business types (Amatsu and Ginten), and closed three karaoke cabins and six restaurants, and we operate 506 karaokecabins and 175 restaurants as of the end of the six months under review.
Thanks to the lifting in the previous fiscal year of various requests made due to the pandemic, we have seen the return ofcustomer flow since the beginning of the six months under review. However, the sales of existing karaoke cabins andrestaurants in the six months under review were at the level of approximately 30% lower than those before the COVID-19
pandemic (80% lower in the previous corresponding period), as there were still impacts of the pandemic on businesslocations and attracting customers late at night, among other impacts, and due also to a temporary slowdown in the recovery
trend given the spread of COVID-19 from mid-July onward.
Under such circumstances, in BIG ECHO karaoke cabins, we strengthened our equipment by establishing 42 karaokecabins, of which “LIVE DAM Ai,” our most premium karaoke model, is installed in all rooms and worked to improvecustomer satisfaction. We also started to promote the joy of karaoke by using social media (Twitter and TikTok) andfocused on attracting more young customers by advertising “Saikyo Gakuwari (Best student discount),” launched in all
karaoke cabins in June.
As a result, net sales increased by 258.6% year on year, and operating loss was recorded at 1,671 million yen.
(Millions of yen)

Net sales
Operating profit

Six months ended
September 30, 2021
6,331
(6,981)

Six months ended
September 30, 2022
22,702(1,671)Year-on-year change
16,371
5,309% change258.6%―(Music software business)
In the music software business, the product sales of CDs and DVDs saw a recovery trend while the music industry has
been booming again as events and concerts have gradually started to resume. In addition, the TV program production
business also made steady progress.
As a result, net sales and operating profit increased by 18.6% and 299.2%, respectively, year on year.
(Millions of yen)

Net sales
Operating profit

Six months ended
September 30, 2021
2,717
24

Six months ended
September 30, 2022
3,221
98

Year-on-year change504
74% change
18.6%
299.2%(Other businesses)
In the other businesses, the parking business operating “The Park” brand as its new pillar of revenue made steadyprogress, and the business scale expanded to 1,900 parking facilities and 23,000 parking spots as of the end of the six
months under review.
As a result, net sales increased by 13.8% year on year thanks to the increase in revenue from the parking business, andoperating profit increased by 110.5% year on year.
(Millions of yen)

Net sales
Operating profit

Six months ended
September 30, 2021
5,297
374

Six months ended
September 30, 2022
6,030
788

6

Year-on-year change732
413% change
13.8%
110.5%DAIICHIKOSHO

CO.,

LTD.

(2) Explanation of Financial Position
Total assets at the end of the six months under review increased by 4,090 million yen from the end of the previous fiscal
year to 184,480 million yen.
Major changes from the previous fiscal year were increases in cash and deposits, notes and accounts receivable – trade,inventories and prepaid expenses included in “other” by 1,998 million yen, 579 million yen, 491 million yen and 1,053
million yen, respectively, in current assets.
Liabilities increased by 964 million yen from the end of the previous fiscal year to 76,193 million yen.
The increase is primarily attributable to increases in notes and accounts payable – trade and provision for bonuses by
339 million yen and 489 million yen, respectively, in current liabilities.
Net assets increased by 3,126 million yen from the end of the previous fiscal year to 108,286 million yen.
The increase is primarily attributable to an increase in retained earnings of 5,990 million yen due to profit attributable toowners of parent and a decrease in retained earnings of 3,111 million yen due to the dividends of surplus.

(3) Explanation of Cash Flows
Cash and cash equivalents (hereinafter referred to as “funds”) at the end of the six months under review increased by
1,998 million yen from the end of the previous fiscal year to 70,124 million yen.
The following is the explanation of cash flows in the six months under review and their contributing factors.
(Cash Flows from Operating Activities)
Funds provided by operating activities were 11,367 million yen (1,606 million yen used in the previous
corresponding period), mainly due to profit before income taxes of 8,712 million yen, depreciation of 5,079 million yen
and income taxes paid of 1,827 million yen.
(Cash Flows from Investing Activities)
Funds used in investing activities increased by 852 million yen year on year to 5,901 million yen, mainly due topurchase of property, plant and equipment of 3,527 million yen and purchase of intangible assets of 1,615 million yen.
(Cash Flows from Financing Activities)
Funds used in financing activities increased by 185 million yen year on year to 3,500 million yen, mainly due todividends paid of 3,111 million yen.

(4) Explanation of Forecast of Consolidated Performance and Other Forward-looking Information
There is no change to the full-year performance forecast announced on August 8, 2022.
The forecast was prepared based on information available on the date this report was released, and actual results mayvary from forecast values due to various factors in the future.

7

DAIICHIKOSHO

CO.,

LTD.

Quarterly Consolidated Financial Statements and Primary
Notes(1) Quarterly Consolidated Balance Sheets(Millions of yen)

FY2021
Current Second quarter(As of March 31, 2022) (As of September 30, 2022)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Inventories
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Karaoke equipment for rental, net
Karaoke cabin and restaurant facilities, net
Land
Other, net
Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets
Investments and other assets
Investment securities
Leasehold and guarantee deposits
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

8

68,214
4,127
7,596
4,796
(457)
84,27770,212
4,706
8,088
5,600
(377)
88,2306,294
10,38040,341
5,970
62,987

6,525
10,54540,3406,303
63,714

996
5,861
6,858

938
5,964
6,902

4,507
13,4498,375(64)26,267
96,112
180,389

4,713
13,622
7,435(138)
25,632
96,249184,480

DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

FY2021
Current Second quarter(As of March 31, 2022) (As of September 30, 2022)
Liabilities
Current liabilities
Notes and accounts payable – trade
Short-term borrowings
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term borrowings
Provision for retirement benefits for directors (and otherofficers)
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Revaluation reserve for land
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Share acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets

9

2,614
6,098
1,985
1,141
9,817
21,6582,954
16,016
2,034
1,630
9,979
32,61541,70531,406

993

1,026

7,846
3,024
53,57075,2298,079
3,064
43,57876,193

12,3504,114
87,733(570)
103,628

12,3504,114
90,612(571)
106,506

606
(733)
69
(26)
(84)
219
1,397
105,160
180,389

742
(733)
114
(8)
114
255
1,409
108,286
184,480

DAIICHIKOSHO

CO.,

LTD.

(2) Quarterly Consolidated Statements of Income and Comprehensive Income(Quarterly Consolidated Statements of Income)(Millions of yen)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit (loss)
Non-operating income
Interest income
Insurance claim income
Cooperative monetary aid received
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Cancellation penalty
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Gain on sale of non-current assets
Gain on bargain purchase
Subsidies income
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Impairment losses
Loss on sale of investment securities
Loss on valuation of investment securities
Loss on COVID-19
Total extraordinary losses
Profit (loss) before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Profit (loss)
Profit attributable to non-controlling interests
Profit (loss) attributable to owners of parent

10

Six months ended
September 30, 2021
(From April 1, 2021, toSeptember 30, 2021)

Six months ended
September 30, 2022
(From April 1, 2022, toSeptember 30, 2022)

39,52927,48812,041
13,987(1,945)60,671
39,771
20,89915,430
5,469

10
319
144
533
1,007

9
94
93
350
548

109
23
49
55
238
(1,176)

87
40
35
80
243
5,773

11
－
5,660
5,672

3
112
2,868
2,983

30
60
0
108
6,299
6,499
(2,004)684(1,275)(590)(1,413)15(1,429)

26
18
－
－
－
44
8,712
1,807
895
2,703
6,009
19
5,990

DAIICHIKOSHO

CO.,

LTD.

(Quarterly Consolidated Statements of Comprehensive Income)(Millions of yen)

Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests

11

Six months ended
September 30, 2021
(From April 1, 2021, toSeptember 30, 2021)

Six months ended
September 30, 2022
(From April 1, 2022, toSeptember 30, 2022)(1,413)

6,009

106
8
21
136
(1,277)

136
45
17
198
6,208

(1,292)

6,189

15

19

DAIICHIKOSHO

CO.,

LTD.

(3) Quarterly Consolidated Statements of Cash Flows(Millions of yen)

Cash flows from operating activities
Profit (loss) before income taxes
Depreciation
Amortization of goodwill
Impairment losses
Increase (decrease) in provision for retirement benefits for
directors (and other officers)
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on disposal of non-current assets
Subsidy income
Gain on bargain purchase
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Transfer of cost of sales on karaoke equipment for rental
Decrease (increase) in advance payments to suppliers
Increase (decrease) in trade payables
Increase (decrease) in accounts payable – other
Other, net
SubtotalInterest and dividends received
Interest paid
Subsidies received
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangible assets
Payments for acquisition of video licenses
Proceeds from sale of investment securities
Purchase of investment securities
Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation
Payments for acquisition of businesses
Loan advances
Proceeds from collection of loans receivable
Payments of leasehold and guarantee deposits
Proceeds from refund of leasehold and guarantee deposits
Other, net
Net cash provided by (used in) investing activities

12

Six months ended
September 30, 2021
(From April 1, 2021, toSeptember 30, 2021)

Six months ended
September 30, 2022
(From April 1, 2022, toSeptember 30, 2022)(2,004)
6,002
53
60

8,712
5,079
54
18

6

33

(147)
109
(6)
0
108
19
(5,660)
－
1,083
(94)
80
(42)
(455)
(3,958)(1,537)(6,384)
147
(110)
5,501
(761)
(1,606)

(78)
87
(33)
－
－
23
(2,868)
(112)
(566)
(491)
27
(242)
326
548
(352)
10,168
78
(88)
3,036
(1,827)
11,367(363)
107(2,824)76(1,428)
(557)
0
(50)

(10)
10
(3,527)
7(1,615)
(536)
－
－

－

143

(1,014)
(32)
207
(68)
445
453
(5,049)

(16)
(106)
106
(472)
206
(89)
(5,901)DAIICHIKOSHO

CO.,

LTD.

(Millions of yen)

Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Dividends paid
Purchase of treasury shares
Other, net
Net cash provided by (used in) 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 period
Cash and cash equivalents at end of period

13

Six months ended
September 30, 2021
(From April 1, 2021, toSeptember 30, 2021)

Six months ended
September 30, 2022
(From April 1, 2022, toSeptember 30, 2022)(299)
11,250(11,146)(3,105)(0)(12)(3,314)
6(9,964)
67,68057,715

25
130
(537)
(3,111)(0)(7)(3,500)33
1,998
68,12570,124DAIICHIKOSHO

CO.,

LTD.

(4) Notes to Quarterly Consolidated Financial Statements(Notes on Going Concern Assumption)
Not applicable.

(Notes in Case of Significant Changes in Shareholders’ Equity)
Not applicable.

(Segment Information)[Segment information]
Six months ended September 30, 2021 (From April 1, 2021, to September 30, 2021)
1. Information on the amounts of net sales and profit or loss by reportable segment(Millions of yen)
Reportable segments

Net sales
Segment profit orSegment loss
(Operating profit orOperating loss)

Notes:

Adjusted
amount(Note 2)

Postedamount to theconsolidated
quarterlystatements ofincomeCommercial
karaokeKaraokecabin and
restaurantMusic
softwareSubtotal

Other(Note 1)

Total

25,183

6,331

2,717

34,231

5,297

39,529−39,5295,792(6,981)24(1,163)

374

(789)

(1,156)(1,945)

1. The category “Other” comprises a business segment not attributable to reportable segments, including
parking, real estate leasing and BGM broadcasting businesses.
2. The (1,156) million yen adjustment posted to segment profit or segment loss is primarily composed ofgeneral and administrative expenses incurred by the administrative department at the head office that are
not attributable to any particular reportable segment.

2. Information on impairment loss of non-current assets or goodwill, etc. by reportable segment
The statements are omitted due to little significance.
Six months ended September 30, 2022 (From April 1, 2022, to September 30, 2022)
1. Information on the amounts of net sales and profit or loss by reportable segment(Millions of yen)
Reportable segments

Net sales
Segment profit orSegment loss
(Operating profit orOperating loss)

Notes:

Adjusted
amount(Note 2)

Postedamount to theconsolidated
quarterlystatements ofincomeCommercial
karaokeKaraokecabin and
restaurantMusic
softwareSubtotal

Other(Note 1)

28,71622,702

3,221

54,6406,030

60,671－60,671

7,472(1,671)

98

5,899

788

6,688

(1,219)

5,469

Total

1. The category “Other” comprises a business segment not attributable to reportable segments, including
parking, real estate leasing and BGM broadcasting businesses.
2. The (1,219) million yen adjustment posted to segment profit or segment loss is primarily composed ofgeneral and administrative expenses incurred by the administrative department at the head office that are
not attributable to any particular reportable segment.

2. Information on impairment loss of non-current assets or goodwill, etc. by reportable segment
The statements are omitted due to little significance.

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DAIICHIKOSHO

CO.,

LTD.

(Additional Information)
Concerning the impairment of non-current assets, tax effect accounting, etc., the Company estimated future cash flows,
recoverability of deferred tax assets, etc. on the assumption that the impact of COVID-19 will gradually improvethroughout the fiscal year ending March 31, 2023, and that the performance of the Company will recover to the level before
the COVID-19 pandemic in the medium term.
No significant changes have been made to the assumptions made at the end of the previous fiscal year.

(Quarterly Consolidated Statements of Income)Subsidies income
Following the issuance of the declaration of state of emergency due to the spread of COVID-19, employment
adjustment subsidies, which are subsidies that are provided to cover salaries, etc. for the period during which employees are
furloughed, as well as subsidies, etc. that are received from the national government, local municipalities, etc., have beenposted in subsidies income.
Loss on COVID-19
Following the issuance of the declaration of state of emergency due to the spread of COVID-19, we implemented ameasure to furlough (special leave of absence) employees in predetermined areas. In addition, karaoke cabins andrestaurants operated by the Company as well as those operated by our clients closed temporarily or opened for shorter hours,
following the requests from the national government and local municipalities.
In light of these events, fixed costs of karaoke cabins and restaurants operated by the Company during the period ofclosure and fixed costs in relation to leasing of commercial karaoke equipment, including salaries for the period during
which employees were furloughed, have been posted in loss on COVID-19.

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