Note: This document is a translation from the original in the Japanese language and is for reference purposes only. In the event of any discrepancy between
this translated document and the Japanese original, the original shall prevail. The Company assumes no liability for the following:This translation or for direct, indirect or any other forms of damages arising from the translation

Quarterly Consolidated Financial Results for First Three Months ofFiscal Year Ending March 31, 2024 (Japanese Accounting Standards)
July 31, 2023
Name of listed company

Securities code:

Digital Arts Inc.

Listed on:

Tokyo Stock ExchangePrime Market2326

URL https://www.daj.jp/
Representative Director,Representative: (Title)(Name) Toshio Dogu
President and CEO
General Manager of theContact:(Title)(Name) Isao Konishi
TEL: 03-5220-6045
Administration Department
Scheduled date for submission
Scheduled date to start dividends
August 4, 2023
―of quarterly report:
distribution:
Preparation of supplementary explanatory Yes
documents for quarterly results:
No
Holding of quarterly results briefing:(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the first three months of the fiscal year ending March 31, 2024 (April1, 2023 – June 30, 2023)(Percentage figures represent changes from same periodof previous year.)
Profit attributable toOperating profit
Ordinary profit
owners of parent(1) Consolidated operating results (cumulative totals)
Net sales
Million yen％％

Million yen

Million yen％

Million yen

First three months of year
2,541
6.5
872
(13.5)
885(13.2)
614
ending March 31, 2024
First three months of year
2,386
24.3
1,009
38.0
1,019
39.1
702
ended March 31, 2023(Note) Comprehensive First three months of 617million(12.7％) First three months of year 706million
income:year ending Marchyen
ended March 31, 2023
yen
31, 2024
Profit per share (basic)
First three months of year
ending March 31, 2024
First three months of year
ended March 31, 2023％

(12.4)
38.5(39.4％)

Profit per share (diluted)

Yen

Yen

43.87

43.08

50.00

48.99

(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per share

Million yen
Million yen%
As of June 30, 2023
20,446
13,90967.9
As of March 31, 2023
21,14914,173
66.9(Reference) Equity capital: As of June 30,2023
13,877million yen
As of March 31, 2023

Yen

992.45
1,007.27
14,141million yen

2. Dividends
Annual dividends
1Q-end2Q-endYen

3Q-endYen

Year ended March35.00－31, 2023
Year ending March－31, 2024
Year ending March 31, 2024
40.00
(forecast)(Note) Revisions to most recently announced dividend forecast―1―Year-end

Annual

Yen

Yen

Yen

－40.0075.00－40.0080.00： No3. Forecast of consolidated financial results for the year ending March 31, 2024 (April 1, 2023 – March31, 2024)(Percentage figures represent changes from same period of previous year.)
Profit attributable toNet sales
Operating profit
Ordinary profit
Profit per shareowners of parent
MillionMillionMillionMillion%
%%
%
Yen
yen
yenyenyen
Full year
11,500
10.2
5,150
16.7
5,150
16.3
3,550
15.9
252.86(Note) Revisions to most recently announced results forecasts: ：No* Notes(1) Changes in important subsidiaries during the first three months of fiscal
Noneyear ending March 31, 2024:(Changes in specified subsidiaries resulting in changes in scope of consolidation)
New―(Company name) , Excluding―(Company name)(2) Application of special accounting methods to the preparation of quarterlyYes
consolidated financial statements:(Note) For details, please refer to “2. Quarterly Consolidated Financial Statements and Primary Notes (3) Notes toquarterly consolidated financial statements (Application of special accounting methods to the preparation of quarterly
consolidated financial statements)" on page 10 of the attached materials(3) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting
Nonestandards, etc.:
2) Changes in accounting policies due to reasons other than those
Nonestated in 1):
3) Changes in accounting estimates:

None4) Restatement:

None(4) Number of shares outstanding (common stock)1) Number of shares issued and outstanding
As of June 30, 2023
(including treasury shares)
2) Number of treasury shares

As of June 30, 2023
First three months of3) Average number of shares issued andyear ending Marchoutstanding in each period (cumulative total)
31, 2024

14,133,000
150,133

As of March 31,2023
As of March 31,2023

14,133,000
93,833First three months
14,018,845 ofyear

ended

14,039,243

March 31, 2023

* Quarterly financial statements are not subject to quarterly audits by certified public accountants or audit corporations.
* Explanation concerning the appropriate use of financial result forecasts and other special notes(Forward looking statements)
Business forecasts and other forward-looking statements in this material contain predictions based on futureassumptions, outlooks and plans as of the date of publication of this material. The Company does not warrant theaccomplishment of the forecasts. Actual results may different significantly from the forecasts due to risks anduncertain factors associated with the world economy, the state of competition, and fluctuations in foreign exchange
rates and interest rates.
For matters concerning results forecasts, please refer to “1. Qualitative Information on Financial Results for the First
Three Months of Fiscal Year Ending March 31, 2024 (3) Explanation about information on future forecasts such as
consolidated results forecasts” on page 4 of the attached materials.
(How to obtain supplementary materials for quarterly results)
The material is available at Digital Arts Inc. corporate website.

―2―○Table of Contents for the Attached Document
1. Qualitative Information on Financial Results for the First Three Months of Fiscal Year Ending
March 31, 2024 ..................................................................................................................4(1) Explanation about business results ......................................................................................4(2) Explanation about financial position ...................................................................................6(3) Explanation about information on future forecasts such as consolidated results forecasts ..6
2. Quarterly Consolidated Financial Statements and Primary Notes .......................................7(1) Quarterly consolidated balance sheet ..................................................................................7(2) Quarterly consolidated statement of income and comprehensive income ...........................8
Quarterly consolidated statement of income
Consolidated first three months .....................................................................8
Quarterly consolidated statement of comprehensive income
Consolidated first three months .....................................................................9(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern) .......................................................... ………10(Notes on significant changes in the amount of shareholders' equity) ............................ 10(Application of special accounting methods to the preparation of quarterly consolidated financialstatements) ........................................................................................................................ 10―3―

1. Qualitative Information on Financial Results for the First Three Months of Fiscal Year Ending March 31,
2024(1) Explanation about business results
During the first three months of the consolidated fiscal year under review (April 1 through June 30, 2023), Japan
experienced the normalization of its social and economic activities and a recovery in its consumption behavior
following the downgrade of the legal classification of COVID-19 to Class 5. However, the outlook of the economy
remained uncertain, reflecting rising prices due to the prolonged war in Ukraine and the sharp weakening of the yen
against the dollar in the foreign exchange market.
In the security industry, in which the Digital Arts Group (the “Group”) operates, cyber attacks diversified andintensified, including ransomware, Emotet and Agent Tesla, which is remote control malware that steals confidential
information from keyboard operations. That expanded demand for security products. Not only among large companies
but also at small and medium enterprises that lag behind in security measures, demand for newly introducing security
products is expanding.
In this situation, the Company enhanced the linkage and features of its mainstay products of i-FILTER, m-FILTER
and FinalCode and added a broad array of security solutions to them in response to mounting needs forcomprehensive security. It also worked hard to promote its original next-generation Secure Web Gateway (SWG).
In addition, as a service for realizing the vision of creating new value and increasing demand stated in the mediumterm business plan, the Company released a new communications tool product called Desk ahead of the schedule set
out in the initial plan.
On the other hand, the Company saw increases in server expenses and personnel expenses, the former reflecting
a rise in the number of licenses for cloud service products and the impact of foreign exchange rates and the latter due
to a rise in the number of staff in Digital Arts Consulting Inc., its subsidiary. In addition, with the unprecedented
number of new functions and new products expected to be released, the Company actively invested to promote sales
events for agents and facilitate internal strategic meetings. This resulted in year-on-year increases in the cost of sales
and selling, general and administrative expenses.
As a result, net sales for the first three months of the consolidated fiscal year under review stood at 2,541 million
yen, up 6.5% year on year, operating profit at 872 million yen, down 13.5% year on year, ordinary profit at 885 million
yen, down 13.2% year on year, and profit attributable to owners of parent at 614 million yen, down 12.4% year on year.

Overview of Consolidated Business Results(Million yen)First threemonths of year
ended March 31,2023

First threemonths of year
ending March 31,2024

Net sales

2,386

2,541

＋155

＋6.5

Operating profit

1,009

872(136)(13.5)

Ordinary profit

1,019885(134)(13.2)

702

614(87)(12.4)

Profit attributableowners of parent

to―4―

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise section market, the Group continued to promote new optional functions it released to meet risingdemand for comprehensive security against the backdrop of the occurrence of extensive damage from diversifying
cyberattacks, and by doing so, made steady progress in the efforts to win new projects. Sales of cloud service products
increased following the acquisition of an order for a new m-FILTER project as a result of high marks given to the use of
the PPAP method (sending a password-protected Zip file by e-mail and sending the password by separate e-mail) anda function to deal with targeted attacks, including attacks using Emotet. In addition, Digital Arts Consulting Inc., one of
the Company's subsidiaries that offers security consulting services, increased the number of consulting staff andboosted sales by winning an ISMAP acquisition-related project and a new project in which it provides comprehensive
support, including security assessment and support for the implementation of security measures.
As a consequence, net sales in this market reached 1.418 million yen, up 12.3% year on year.
Public Sector Market
In the public sector market, the Group won new projects for schools that had not adopted filtering, a necessaryfunction in the GIGA School Concept, while also receiving orders for new projects by focusing on proposing solutions
to support local governments' efforts to strengthen security measures.
As a consequence, net sales in this market stood at 1,016 million yen, down 0.1% year on year.

―5―Consumer Sector Market
In the consumer sector market, the Group focused on collaborating with mobile network carriers and MVNOs andon sales of i-FILTER for Multiple Devices, which can be used on multiple operating systems using a single serial ID.
As a consequence, net sales in this market amounted to 106 million yen, up 0.6% year on year.

(2) Explanation about financial position(Assets)
Total assets at the end of the first three months of the consolidated fiscal year under review decreased 702 million
yen from the end of the previous consolidated fiscal year to 20,446 million yen.
This was due mainly to decreases of 630 million yen in cash and deposits and 220 million yen in notes andaccounts receivable - trade.
(Liabilities)
Total liabilities at the end of the first three months of the consolidated fiscal year under review declined 438 million
yen from the end of the previous consolidated fiscal year to 6,537 million yen.
This was due mainly to a decrease of 542 million yen in income taxes payable.
(Net assets)
Net assets at the end of the first three months of the consolidated fiscal year under review decreased 264 million
yen from the end of the previous consolidated fiscal year to 13,909 million yen.
This was mainly due to dividends paid that outweighed an increase in retained earnings due to the recording of
profit attributable to owners of parent.

(3) Explanation about information on future forecasts such as consolidated results forecasts
Operating results for the first three months of the consolidated fiscal year under review remained steady, and there
was therefore no change in the forecast of consolidated financial results for the year ending March 31, 2024
announced on May 9, 2023.
The Company has determined the results forecasts based on information available on the day of these financial
results for the first three months of the year ending March 31, 2024. Actual results may be different from the forecasts
due to a variety of factors. If there are any significant changes, the Company will disclose them appropriately.

―6―2. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly consolidated balance sheet(Million yen)First quarter of fiscal 2024
(As of June 30, 2023)

Fiscal 2023
(As of March 31, 2023)
AssetsCurrent assets
Cash and deposits

17,01816,387

1,574
19

1,354
53309

2
439

18,92518,189

209

231

1,264

1,251

243

275

Total intangible assets

1,508

1,526

Investments and other assets

506

498

Notes and accounts receivable - tradeFinished goods
Supplies
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Software
Other

Total non-current assets

2,223

2,256

21,14920,446

238
839

119
297

156
5,187

74
5,317

502

677

6,924

6,486

Asset retirement obligations
Other

48
148
1

Total non-current liabilities

50

50

6,975

6,537

Shareholders' equity
Share capital

713

713

Capital surplus
Retained earnings

953
12,768953
12,821

Treasury shares

(308)

(628)

14,127

13,860

14

1614

16

1111

Total assets
Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
OtherTotal current liabilities
Non-current liabilities

Total liabilities
Net assets

Total shareholders' equity
Accumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets―7―2020

14,173

13,90921,14920,446

(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first three months
First three months of fiscal2023(from April 1, 2022
to June 30, 2022)
2,386(Million yen)First three months of fiscal2024(from April 1, 2023
to June 30, 2023)
2,541

Cost of sales

766

1,019

Gross profit

1,619

1,521

Net sales

Selling, general and administrative expenses

609

648

1,009

872

00

Gain on forfeiture of unclaimed dividends
Foreign exchange gains

0809

Miscellaneous income02

Total non-operating income

1012－0－01,0198850

Operating profit
Non-operating income
Interest income

Non-operating expenses
Miscellaneous loss
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on reversal of share acquisition rights
Gain on sales of non-current assets－04

Total extraordinary income

0500

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

001,019890

Income taxes

316

275

Profit703

614

Profit attributable to non-controlling interests
Profit attributable to owners of parent―8―1(0)

702

614

Quarterly consolidated statement of comprehensive income
Consolidated first three months
First three months of fiscal2023(from April 1, 2022
to June 30, 2022)
703(Million yen)First three months of fiscal2024(from April 1, 2023
to June 30, 2023)
614

Foreign currency translation adjustment

32

Total other comprehensive income

32

Comprehensive income

706

617

Comprehensive income attributable toComprehensive income attributable to owners ofparent
Comprehensive income attributable to noncontrolling interests

705

617

1(0)

ProfitOther comprehensive income―9―

(3) Notes to consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
(Notes on significant changes in the amount of shareholders’ equity)
There are no applicable matters.
(Application of special accounting methods to the preparation of quarterly consolidated financial statements)
Calculation of tax expenses
With respect to the calculation of tax expenses, reasonable estimations are performed on an effective tax rateestablished after applying tax accounting to profit before income taxes for the consolidated fiscal year, which
includes the first quarter of the consolidated fiscal year under review, and such tax expenses are calculated bymultiplying this estimated effective tax rate by profit before income taxes.

―10―