Quarterly Consolidated Financial Results for First Three Months of Fiscal
Year Ending March 31, 2023 (Japanese Accounting Standards)
July 29, 2022
Name of listed company:Digital Arts Inc.

Securities code:

Listed on:

Tokyo Stock Exchange
Prime 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 5, 2022
―of quarterly report:
distribution:
Preparation of supplementary explanatory Yes
documents for quarterly results:
NoHolding 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, 2023 (April
1, 2022 – June 30, 2022)(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
2,386
24.3
1,009
38.0
1,019
39.1
702
38.5
ending March 31, 2023
First three months of year
1,919
35.7
731
50.8
732
49.8
506
51.6
ended March 31, 2022
(Note) Comprehensive First three months of 706million (39.4％) First three months of year 507million (53.2％)
income:year ending Marchyen
ended March 31, 2022
yen
31, 2023
Profit per share (basic)
First three months of year
ending March 31, 2023
First three months of year
ended March 31, 2022

Profit per share (diluted)

YenYen

50.00

48.99

36.1335.29(2) Consolidated financial position
Total assets

Net assets

Equity ratio

Net assets per shareYen
Million yen
Million yen%
As of June 30, 2022
19,204
12,30463.9
874.20
As of March 31, 2022
19,341
12,15962.7
863.96(Reference) Equity capital: As of June 30,2022
12,273million yen
As of March 31, 2022 12,129Million yen

2. Dividends
Annual dividends
1Q-end2Q-endYen

3Q-endYen

Year-end
Yen

Year ended March30.00－－31, 2022
Year ending March－31, 2023
Year ending March 31,35.00－2023 (forecast)(Note) Revisions to most recently announced dividend forecast: NoAnnual

Yen

Yen

40.00

70.00

40.00

75.00

3. Forecast of consolidated financial results for the year ending March 31, 2023 (April 1, 2022 – March31, 2023)(Percentage figures represent changes from same period of previous year.)
Profit attributable toNet sales
Operating profit
Ordinary profit
Profit per shareowners of parent
MillionMillionMillionMillion%%%%YenyenyenyenyenFull year
10,500
16.0
4,700
13.9
4,700
13.7
3,250
12.0
231.49(Note) Revisions to most recently announced results forecasts: No* Notes(1) Changes in important subsidiaries during the first three months of fiscal
year ending March 31, 2023:

None(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 quarterly
consolidated financial statements:

Yes(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 8 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 thoseNonestated 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, 2022
(including treasury shares)
As of June 30, 2022
2) Number of treasury sharesFirst three months of14,133,000 As of March 31, 2022

14,133,000

93,769 As of March 31, 2022

93,7313) Average number of shares issued andyear ending March 31, 14,039,243
outstanding in each period (cumulative total)
2023

First three months ofyear ended March

14,031,398

31, 2022* 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 and uncertain
factors associated with the world economy, the state of competition, and fluctuations in foreign exchange rates andinterest 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, 2023 (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.

○Table of Contents for the Attached Document
1. Qualitative Information on Financial Results for the First Three Months of Fiscal Year EndingMarch 31, 2023 ..................................................................................................................2(1) Explanation about business results ......................................................................................2(2) Explanation about financial position ...................................................................................4(3) Explanation about information on future forecasts such as consolidated results forecasts ..42. Quarterly Consolidated Financial Statements and Primary Notes .......................................5(1) Quarterly consolidated balance sheet ..................................................................................5(2) Quarterly consolidated statement of income and comprehensive income ...........................6
Quarterly consolidated statement of income
Consolidated first three months ................................................................................6
Quarterly consolidated statement of comprehensive incomeConsolidated first three months ................................................................................7(3) Notes to quarterly consolidated financial statements(Notes on the premise of a going concern) .......................................................................8(Notes on significant changes in the amount of shareholders' equity) ..............................8(Application of special accounting methods to the preparation of quarterly consolidated financialstatements) ..........................................................................................................................81

1. Qualitative Information on Financial Results for the First Three Months of Fiscal Year Ending March 31,
2023(1) Explanation about business results
During the first three months of the consolidated fiscal year under review (April 1 through June 30, 2022), COVID-19
vaccinations were widespread in Japan, but economies worldwide continued to be affected by COVID-19. In addition
to the impact of COVID-19, rising raw materials prices due to the prolonged war in Ukraine and the sharp weakening of
the yen against the dollar caused uncertainty in the outlook for the Japanese economy.
In the security industry, in which the Digital Arts Group (the “Group”) operates, demand for security products expandedfollowing the intensification of damaging incidents caused by diversifying cyberattacks, including ransomware andEmotet. Apart from demand from large-sized organizations, new demand for security measures is growing from medium
and small-sized enterprises, which were comparatively lagging in these measures. In addition, IoT, AI and othertechnologies were increasingly used and the practice of working from home spread quickly to stop the proliferation of
the COVID-19 coronavirus, security personnel must now manage increasingly diversifying and advancing threats, andthe demand for total security is expected to continue growing. Expected to continue accelerating are the outsourcing ofsecurity operations and the utilization of cloud services to reduce the burden of security operations.
Under these conditions, in the enterprise sector market, the Group expanded sales chiefly by adding new functions,particularly those of mainstay products, i-FILTER and m-FILTER, to meet demand for total security and won deals byimplementing a strategy to expand sales to specific targets. In the public sector market, the Group focused on proposing
solutions to support local government efforts to strengthen security measures, which are ramped up from the fiscal year
under review.
As a result, net sales for the first three months of the consolidated fiscal year under review stood at 2,386 million yen,
up 24.3% year on year, operating profit at 1,009 million yen, up 38.0% year on year, ordinary profit at 1,019 million yen,up 39.1% year on year, and profit attributable to owners of parent at 702 million yen, up 38.5% year on year.

Overview of Consolidated Business Results(Million yen)First threemonths of year
ended March 31,2022

First threemonths of year
ending March 31,2023

1,919

2,386＋466＋24.3

Operating profit

731

1,009＋278＋38.0

Ordinary profit732

1,019＋286＋39.1

506

702＋195＋38.5

Net sales

Profit attributableowners of parent

to2

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise sector market, the Group created new projects by adding new functions, including antivirus functions
and sandbox functions, to i-FILTER and m-FILTER to meet demand for total security and strengthened cooperation withagencies to win deals by implementing a strategy to expand sales to specific targets. Sales of m-FILTER increased
steadily as a result of high marks given to the use of the PPAP method (sending the Zip file protected by a password bye-mail and sending the password by a separate e-mail) and a function to deal with targeted attacks, including attacks
using Emotet. In addition, net sales for Digital Arts Consulting Inc., a subsidiary offering security consulting services,increased with a progress achieved in new customer acquisition in line with greater corporate demand for cybersecurity
and digital transformation (DX) consulting.
Net sales in this market reached 1,262 million yen, up 18.3% year on year.
Public Sector Market
In the public sector market, the Group focused on proposing solutions to support local government efforts tostrengthen security measures, which are ramped up from the fiscal year under review, and as a result, sales of the iFILTER and m-FILTER series grew as brisk orders were won from public agencies and local governments.
As a consequence, net sales in this market stood at 1,017 million yen, up 37.8% year on year.

3Consumer Sector Market
In the consumer sector market, the Group focused on collaborating with mobile network carriers and MVNOs and onsales of i-FILTER for Multiple Devices, which can be used on multiple operating systems using a single serial ID, but
the Group saw sluggish growth in the number of users.
Net sales in this market amounted to 105 million yen, down 6.9% 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 137 million
yen from the end of the previous consolidated fiscal year to 19,204 million yen. This was due mainly to a decrease of
197 million yen in cash and deposits.
(Liabilities)
Total liabilities at the end of the first three months of the consolidated fiscal year under review declined 282 million
yen from the end of the previous consolidated fiscal year to 6,899 million yen. This was due mainly to a decrease of
423 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 increased 144 million yen
from the end of the previous consolidated fiscal year to 12,304 million yen. This was mainly due to an increase inretained earnings due to the recording of profit attributable to owners of parent, which outweighed a decrease individends paid.

(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 overall, andthere was therefore no change in the forecast of consolidated financial results for the year ending March 31, 2023
announced on May 10, 2022.
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, 2023. 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.

42. Quarterly Consolidated Financial Statements and Primary Notes(1) Quarterly consolidated balance sheet(Million yen)
Fiscal 2022
(As of March 31, 2022)

First quarter of fiscal 2023
(As of June 30, 2022)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - tradeFinished goods
Supplies
Other

15,773
1,216

15,575
1,290

0
30
3

111

121

17,105

16,990206

197

Software
Other

1,317
209

1,380
136

Total intangible assets

1,526

1,516

Investments and other assets

503

499

Total current assets
Non-current assets
Property, plant and equipment
Intangible assets

Total non-current assets
Total assets

2,236

2,213

19,341

19,204

44760

55
337

95
5,684

655,777

Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other
Total current liabilities
Non-current liabilities
Asset retirement obligations

546

612

7,130

6,848

48

48

Other

1

1

Total non-current liabilities

50

50

7,181

6,899

713
953

713
953

Retained earnings
Treasury shares

10,758(307)

10,899(307)

Total shareholders' equity

12,11812,258

11

14

11

14

12
17

12
19

12,15912,304

19,341

19,204

Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplusAccumulated other comprehensive income
Foreign currency translation adjustment
Total accumulated other comprehensive
incomeShare acquisition rights
Non-controlling interests
Total net assets
Total liabilities and net assets5(2) Quarterly consolidated statement of income and comprehensive income
Quarterly consolidated statement of income
Consolidated first three months

Net sales
Cost of sales

First three months of fiscal2022(from April 1, 2021
to June 30, 2021)
1,919

Gross profit(Million yen)First three months of fiscal2023(from April 1, 2022
to June 30, 2022)
2,386613766

1,305

1,619

Selling, general and administrative expenses

574609Operating profit

731

1,009

00000800

Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Foreign exchange gains
Miscellaneous income
Total non-operating income

110732

1,019

Gain on reversal of share acquisition rights

10

Total extraordinary income

10－0

Ordinary profit
Extraordinary income

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

－0734

1,019

Income taxes

226316

Profit507

703

01506702

Profit attributable to non-controlling interests
Profit attributable to owners of parent

6Quarterly consolidated statement of comprehensive income
Consolidated first three months
First three months of fiscal2022(from April 1, 2021
to June 30, 2021)
507(Million yen)First three months of fiscal2023(from April 1, 2022
to June 30, 2022)
703

Other comprehensive income
Foreign currency translation adjustment(0)3

Total other comprehensive income(0)3507706

506

705

01

ProfitComprehensive income
Comprehensive income attributable toComprehensive income attributable to owners ofparent
Comprehensive income attributable to noncontrolling interests7(3) Notes to quarterly 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.

8