Consolidated Financial Results for the Fiscal Year Ended March
31, 2022 [Japan GAAP]May 10, 2022
Tokyo Stock
Exchange Prim
MarketName of listed company:

Digital Arts Inc.

Securities code:

URL https://www.daj.jp
Representative Director,(Name) Toshio Dogu
President and CEO
General Manager of the(Name) Isao Konishi
TEL: 03-5220-6045
Administration Department

2326

Representative:(Title)Contact:(Title)Listed on:

Scheduled date to hold theordinary general meeting of June 21, 2022
shareholders:
Scheduled date for filing
June 22, 2022
annual financial report:
Preparation of supplementary explanatory：Yes
documents for quarterly results
Holding of quarterly results briefing：Yes

Scheduled date to start
dividends distribution:

June 22, 2022

(for institutional investors and financial analysts)(Figures shown are rounded down to the nearest million yen.)

1. Consolidated financial results for the year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(1) Consolidated operating results(Percentage figures represent changes from previous year.)Net sales

Operating profit

Profit attributable toowners of parent

Ordinary profit

Million yen%

Million yen%

Million yen%

Million yen

%

9,051

32.6

4,126

38.6

4,135

38.2

2,900

40.8

6,825

21.0

2,977

27.9

2,991

28.6

2,059

29.5

Year ended
March 31,2022

2,910millionyen(41.1％)

Year ended
March 31,
2021

Profit per share(basic)Profit per share(diluted)

Year ended March
31, 2022
Year ended March
31, 2021(Note) Comprehensive
income:Year ended March
31, 2022
Year ended March
31, 2021(Reference) Equity-method
investment profit(loss):

2,063millionyen(29.9％)

Ordinary profit to Operating profit to
net sales
total assets

Return on equity

Yen

Yen

％

％

％

206.71202.03

26.2

24.2

45.6

146.90143.45

22.0

23.3

43.6

Year ended March 31,
2022－million yen

Year ended March 31,
2021－million yen(2) Consolidated financial position
Total assets

Net assets

Million yen
As of March 31,
19,341
2022
As of March 31,
14,8562021(Reference) Equity capital: As of March 31, 2022

Equity ratio

Net assets per share

Million yen％

Yen

12,15962.7

863.96

10,06267.6

715.7912,129million yen

As of March 31, 2021

10,041million yen(3) Consolidated cash flows

Million yen

Million yen

Million yen

Cash and cash
equivalents at end of
periodMillion yen

Year ended March
31, 2022

6,169

(978)

(810)

15,773

Year ended March
31, 2021

5,221

(671)

11,382

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities(830)

2. Dividends
Annual dividends
1Q-endYear ended
March 31, 2021
Year ended
March 31, 2022
Year ending March 31,
2023 (forecast)

2Q-endYear-end

3Q-endAnnual

Total
Dividends to
Payout ratio
dividends
net assets(consolidate
paid(consolidated)(annual)
d)

Yen

Yen

Yen

Yen

Yen

million yen

％

％

－

25.00

－

30.00

55.00

771

37.4

8.3

－

30.00

－

40.00

70.00

982

33.9

8.9

－

35.00

－

40.00

75.00

32.4

3. Forecast of consolidated financial results for the year ending March 31, 2023 (April 1, 2022 – March 31, 2023)

Full year(Percentage figures represent changes from same period of previous year.)
Profit attributable to
Net sales
Operating profit
Ordinary profit
Profit per shareowners of parent
Million yen% Million yen% Million yen% Million yen%
Yen
10,500 16.0
4,700 13.9
4,700
13.7
3,250
12.0
231.49

* Notes(1) Changes in subsidiaries during the fiscal year (Changes in specified subsidiaries： Noneresulting in changes in scope of consolidation)
New‐(Company name),

Excluding - (Company name)(2) Changes in accounting policies, changes of accounting estimates and restatement
1) Changes in accounting policies due to revisions of accounting standards, etc. : Yes
2) Changes in accounting policies due to reasons other than those stated in 1): None3) Changes in accounting estimates: None4) Restatement“ None(3) Number of shares outstanding (common stock)
As of March
1) Number of shares issued and31, 2022
outstanding (including treasury shares)

As of March
31, 2021
As of March
93,731shares
31, 2021
Year ended
14,034,190shares March 31,
2021
14,133,000shares

As of March
31, 2022
Year ended
March 31,2022

2) Number of treasury shares
3) Average number of shares issued andoutstanding in each period

14,133,000shares
104,462shares

14,022,503shares(Reference) Overview of the non-consolidated business results
1. Non-consolidated financial results for the year ended March 31, 2022 (April 1, 2021 – March 31, 2022)(Percentage figures represent changes from previous year.)(1) Non-consolidated operating results
Net sales
Million yen

8,003
6,074

Year ended March
31, 2022
Year ended March
31, 2021

Operating profit％

Million yen

31.8

4,040

13.8

2,947

Profit per share
Year ended March
31, 2022
Year ended March
31, 2021

Ordinary profit％

Million yen

37.1

4,052

25.0

2,964

Profit％Million yen

％

36.7

2,832

38.5

25.6

2,044

26.7

Diluted profit per share
Yen

Yen

201.83197.26145.81142.38(2) Non-consolidated financial position
Total assets
As of March 31,2022
As of March 31,
2021(Reference) Equity capital:

Net assets

Equity ratio

Net assets per share

Million yen

Million yen％

Yen

19,13812,09763.1

860.82

14,751

10,07868.3

717.78

As of March 31, 2022:

12,085 million yen As of March 31, 2021:

10,069 million yen

2. Forecast of non-consolidated financial results for the year ending March 31, 2023 (April 1, 2022 – March
31, 2023)(Percentage figures represent changes from previous year for full year figures.)
Net sales
Full year※※

Ordinary profit

ProfitProfit per share

Million yen％

Million yen％

Million yen

％

Yen

9,000

12.4

4,600

13.5

3,200

13.0

227.93

Summaries of financial results are not subject to audit.
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 futureassumptions, outlooks and plans as of the date of publication of this material. The Company does not warrant theaccomplishment of the forecasts. Actual results may differ 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 relevant to business forecasts, refer to (4) Outlook in 1. Overview of Business Results, Etc. on page 5of the Attached Document.
(Obtaining the Supplementary Material for the Financial Results)
The material is available at Digital Arts Inc. corporate website.

Table of Contents for the Attached Document
1. Overview of Business Results, Etc. ································································································ 2(1) Overview of business results in the fiscal year under review ··························································· 2(2) Overview of financial position for the fiscal year under review·························································· 4(3) Overview of cash flows in the fiscal year under review ································································· 4(4) Outlook ································································································································ 5
2. Basic Approach to Selection of Accounting Standards········································································ 6
3. Consolidated Financial Statements and Primary Notes ······································································ 7(1) Consolidated balance sheet ····································································································· 7(2) Consolidated statement of income and consolidated statement of comprehensive income ···················· 9Consolidated statement of income ························································································ 9Consolidated statement of comprehensive income ··································································· 10(3) Consolidated statement of changes in equity ··············································································· 11(4) Consolidated statement of cash flows ························································································ 12(5) Notes to consolidated financial statements ·················································································· 13(Notes on the premise of a going concern)···················································································· 13(Significant matters that serve as the basis for the preparation of consolidated financial statements) ········ 13(Changes in accounting policy)··································································································· 14(Changes in presentation policy)································································································· 15(Consolidated statement of income) ···························································································· 16(Consolidated statement of comprehensive income) ······································································· 16(Consolidated statement of changes in equity)··············································································· 17(Consolidated statement of cash flows) ························································································ 19(Financial instruments) ············································································································· 19(Securities) ···························································································································· 22(Retirement benefits)················································································································ 23(Stock options)························································································································ 23(Asset retirement obligations)····································································································· 27(Matters concerning revenue recognition) ····················································································· 28(Segment information, etc.) ······································································································· 29(Related party information) ········································································································ 30(Per share information) ············································································································· 30(Significant subsequent events) ·································································································· 30

1. Overview of Business Results, Etc.
(1) Overview of business results in the fiscal year under review
During the consolidated fiscal year under review (April 1, 2021 through March 31, 2022), the Japanese economy
continued to recover, although weakness was still evident in certain industries. The economic recovery was driven byincreasing exports primarily to the United States and China, reflecting a recovery in the world economy due towidespread COVID-19 vaccinations and economic stimulous packages in many countries. However, the economic
outlook remain uncertain, chiefly reflecting continued adverse effects of the spread of COVID-19 on the domestic
economy and rising raw materials prices due to the worsening situation in Ukraine.
In the security industry, in which the Digital Arts Group (the “Group”) operates, the scope of the Internet continued to
expand as social lifestyles were going digital with the use of cloud services and teleworking. The importance of security
solutions grew in response to the risk of information leaks and increasingly sophisticated and diverse cyber attacks,
including targeted attacks against specific enterprises, government agencies and other organizations. Further, in theenterprise sector market, demand for software products to prepare for working in the home and performing businessprocesses securely and efficiently increased under the prolonged effects of the pandemic. Meanwhile, progress was
also made in the public sector market, with the strengthening of security measures by local governments, in addition to
the GIGA School Concept, which envisions the development of an environment with one learning terminal for eachschool-aged child to make at-home learning possible.
Under these conditions, in the enterprise sector market, the Group took advantage of the fact that more and more
people are working from home and web services and e-mail environments are shifting to the cloud and expanded salesof its i-FILTER@Cloud and m-FILTER@Cloud cloud service products, creating a world in which the Internet and emails
can be used without hesitation in the cloud environment. In the public sector market, the Company provided a special
version of i-FILTER that caters to needs arising from the GIGA School Concept. At the same time, it continued to
run campaigns, including the provision of free services that conform to the Guidelines on Education Information Security
Policy, in its ongoing efforts to expand sales from schools. In addition, the Company focused on proposing solutions to
support local government efforts to strengthen security measures, which will be ramped up from the next fiscal year.
Demand in the enterprise and public sector markets has soared for cloud service products due to the effects of the
COVID-19 pandemic. A large part of the amount of the contract for traditional mainstay license sales products isrecorded as sales in a lump at the time of shipment. For cloud service products, recorded sales are apportioned on amonthly basis throughout the service provision period. For that reason, the Company continued to receive strong orders
for cloud service products as in the previous fiscal year. Net sales deferred to the next and subsequent fiscal years
increased from the end of the previous fiscal year.
As a result of the above, consolidated net sales for the fiscal year under review stood at 9,051 million yen, up 32.6%
year on year, operating profit increased 38.6% year on year, to 4,126 million yen, ordinary profit grew 38.2% year on
year, to 4,135 million yen, and profit attributable to owners of parent increased 40.8% year on year, to 2,900 million yen.
Overview of Consolidated Business Results(Million yen)
Year ended
March 31, 2021

Year ended
March 31, 2022

Net sales

6,825

9,051

＋2,226＋32.6

Operating profit

2,977

4,126

＋1,148＋38.6

Ordinary profit

2,991

4,135

＋1,143＋38.2

Profit attributable toowners of parent

2,059

2,900

＋841

＋40.8

-2-

Change% Change

The following describes business performance in separate markets.
Enterprise Sector Market
In the enterprise sector market, orders increased for i-FILTER and m-FILTER cloud service products, which are used
to reduce costs and operations management burdens at companies. Sales of m-FILTER increased steadily as a resultof the use of the PPAP method (sending the Zip file protected by a password by e-mail and sending the password by aseparate e-mail) and the addition of functionality 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 progressachieved in new customer acquisition in line with greater corporate demand for cybersecurity and digital transformation(DX) consulting.
Net sales in this market reached 4,559 million yen, up 14.5% year on year.
Public Sector Market
In the public sector market, the Group has traditionally enjoyed excellent recognition and a large market share as aprovider of Japan-made security solutions. In addition, under the GIGA School Concept, the Group's i-FILTER cloudservice products were adopted by many schools during the previous fiscal year in recognition of its reliability andfunctionality in supporting a safe learning environment at home. That led to a sales hike. Sales of the i-FILTER and mFILTER series grew as brisk orders were won from public agencies and local governments.
As a consequence, net sales in this market stood at 4,046 million yen, up 68.0% 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. As aresult, it attained an increase of users.
Net sales in this market amounted to 444 million yen, up 2.8% year on year.

(2) Overview of financial position for the fiscal year under review(Assets)
Total assets in the consolidated fiscal year under review increased 4,485 million yen from the end of the previous
consolidated fiscal year, to 19,341 million yen. This was due mainly to an increase of 4,391 million yen in cash anddeposits.
(Liabilities)
Total liabilities in the consolidated fiscal year under review rose 2,387 million yen from the end of the previous
consolidated fiscal year, to 7,181 million yen. This was due mainly to an increase of 2,313 million yen in advances
received, attributable to an increase in the amount of contracts for which orders were received.
(Net assets)
Net assets in the consolidated fiscal year under review climbed 2,097 million yen from the end of the previous
consolidated fiscal year, to 12,159 million yen. This was mainly due to an increase in retained earnings due to therecording of profit attributable to owners of parent, which outweighed a decrease in dividends paid.

(3) Overview of cash flows in the fiscal year under review
In the consolidated fiscal year under review, cash and cash equivalents increased 4,391 million yen from the end of
the previous consolidated fiscal year to 15,773 million yen. Cash flows in each category are as follows:(Cash flows from operating activities)
Net cash provided by operating activities stood at 6,169 million yen (net cash provided of 5,221 million yen in theprevious consolidated fiscal year), chiefly reflecting profit before income taxes of 4,136 million yen, depreciation of
890 million yen, and a decrease in trade receivables of 2,364 million yen.
(Cash flows from investing activities)
Net cash used in investing activities came to 978 million yen (830 million yen in the previous fiscal year), mainly due
to the purchase of intangible assets.

-4-

(Cash flows from financing activities)
Net cash used in financing activities was 810 million yen (671 million yen in the previous fiscal year), primarily due
to dividends paid, although there were proceeds from disposal of treasury shares.
The table below shows trends of cash flow indicators.
As of March 31, As of March 31, As of March 31, As of March 31,
2019
2020
2021
2022
Equity ratio (%)
Equity ratio based on market value (%)

78.7

79.7

67.6

62.7

1,276.0

603.2

915.0

538.6

1. The methods to calculate the indicators are as follows:a) Equity ratio: Equity capital / Total assetsb) Equity ratio based on market value: Market capitalization / Total assets(Market capitalization is calculated by multiplying the closing stock price at the end of the fiscal year by the
number of issued shares (excluding treasury shares).)
2. Each indicator is calculated based on consolidated financial numbers.

(4) Outlook
The outlook for the next fiscal year (April 1, 2022 to March 31, 2023) is as follows:
In the security industry, in which the Digital Arts Group (the “Group”) operates, demand for security products expanded
following the intensification of damaging incidents caused by diversifying cyberattacks, including ransomware and Emotet.
Apart from demand from large-sized organizations, new demand for security measures is growing from medium andsmall-sized enterprises, which were comparatively lagging in these measures. In addition, IoT, AI and other technologies
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, and the demand for
total security is expected to continue growing. Expected to continue accelerating are the outsourcing of security
operations and the utilization of cloud services to reduce the burden of security operations. Responding to the situation,
the Company will continue to expand its product lineup, focusing on its main products, and strengthen links between its
products and other companies' products to increase share in high-growth areas.
In this environment, the Group has developed a medium-term business plan for the period ending March 31, 2025.
The Company will continue striving to achieve deeper penetration of its "White Operation" in a world where security
threats are expanding, while pursuing overwhelming quality. In the medium term, the Company aims to grow to become
a comprehensive security provider that will provide comprehensive services that deal with more diverse problems.
Specifically, the Company has set three priorities—steady organic growth, expansion of security products and services,and drawing attention to high expertise at Digital Arts Consulting Inc. —to grow to become a comprehensive security
provider and establish a foothold to create new value.
(For details of the plan, please refer to the "Notice of Creation of Medium-Term Business Plan," which was publishedon May 10, 2022.)
As the Group pursues those initiatives, it expects to post net sales of 10,500 million yen, an ordinary profit of 4,700
million yen, and a profit attributable to owners of parent of 3,250 million yen in the next consolidated fiscal year.
The Company has determined the results forecasts based on information available on the day of publication of thesefinancial results for the fiscal year ended March 31, 2022. Actual results may differ from the forecasts due to a variety offactors. If there are any significant changes, the Company will disclose them appropriately.

-5-Results forecasts for the next fiscal year (consolidated)
Net sales

Profit attributable to ownersof parent

Ordinary profit

Million yen

Million yen

Million yen

10,500

4,700

3,250

9,051

4,135

2,900

Year ending March 31, 2023
(forecast)Year ended March 31, 2022
(results)

Results forecasts for the next fiscal year (non-consolidated)
Net salesYear ending March 31, 2023
(forecast)Year ended March 31, 2022
(results)

Ordinary profit

ProfitMillion yen

Million yen

Million yen

9,000

4,600

3,200

8,003

4,052

2,832

(Figures shown are rounded down to the nearest million yen.)
Note: The forecasts above are based on information available on the day of publication of these financial results for the
fiscal year ended March 31, 2022. Actual results may be different from the forecasts due to a variety of factors.

2. Basic Approach to Selection of Accounting Standards
The Group will prepare consolidated financial statements based on the Japan GAAP for some time to come, considering
a comparison with consolidated financial statements for the previous fiscal year and with financial statements of othercompanies.
The Group will make an appropriate decision about the application of the International Financial Reporting Standards(IFRS), considering circumstances in Japan and overseas.

-6-

3. Consolidated Financial Statements and Primary Notes(1) Consolidated balance sheet(Million yen)
Fiscal 2021
(As of March 31, 2021)

Fiscal 2022
(As of March 31, 2022)

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade

11,382
1,268
－
－
0
3

Notes receivable - trade
Accounts receivable - tradeFinished goods
Supplies
Other
Total current assets

15,773
－
74
1,142
0
3

70

111

12,725

17,105

220
(127)

220
(132)

92

88

18
(4)

18
(9)

Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
VehiclesAccumulated depreciation
Vehicles, net

14

8

469
(369)

493
(409)

99

83

Land

26

26

Construction in progress

0

－

233

206

Software
Other

1,274
128

1,317
209

Total intangible assets

1,403

1,526

Investments and other assets
Investment securities

102

101

Deferred tax assets
Other

123
268

96
304

Total investments and other assets

493

503

Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net

Total property, plant and equipment
Intangible assets

Total non-current assets
Total assets

-7-

2,130

2,236

14,856

19,341

(Million yen)
Fiscal 2021
(As of March 31, 2021)

Fiscal 2022
(As of March 31, 2022)

Liabilities
Current liabilities
Accounts payable - trade
Income taxes payable
Provision for bonuses
Advances received
Other

32
688

44
760

194
3,370

95
5,684

456

546

Total current liabilities

4,743

7,130

Non-current liabilities
Asset retirement obligations

48

48

1

1

Other
Total non-current liabilities

50

50

4,793

7,181

713
963

713
953

Retained earnings
Treasury shares

8,699
(342)

10,758(307)

Total shareholders' equity

10,034

12,118

7

11

7

11

8
12

12
17

10,062

12,15914,856

19,341

Total liabilities
Net assets
Shareholders' equity
Share capital
Capital surplus

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-8-(2) Consolidated statement of income and consolidated statement of comprehensive income
Consolidated statement of income

Net sales
Cost of sales

Fiscal 2021
(from April 1, 2020
to March 31, 2021)
6,825
1,946

(Million yen)
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
9,051
2,676

Gross profit

4,878

6,374

Selling, general and administrative expenses

1,900

2,248

Operating profit

2,977

4,126

0

0

7
1

6
1

Miscellaneous income

40

Total non-operating income

14

8

0

－

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

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

0

－

2,991

4,135

9

1

Gain on sales of non-current assets

30

Total extraordinary income

121

Extraordinary losses
Loss on retirement of non-current assets
Loss on liquidation of subsidiaries
Total extraordinary losses

0

0

2

－

2

0

Profit before income taxes

3,001

4,136

Income taxes – current
Income taxes – deferred

977
(37)

1,203
26

939

1,229

2,062

2,906

Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

-9-

2

5

2,059

2,900

Consolidated statement of comprehensive income
Fiscal 2021
(from April 1, 2020
to March 31, 2021)
2,062(Million yen)
Fiscal 2022
(from April 1, 2021
to March 31, 2022)
2,906

Foreign currency translation adjustment

1

3

Total other comprehensive income

13

Comprehensive income

2,063

2,910

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

2,061

2,904

2

5

ProfitOther comprehensive income- 10 -

(3) Consolidated statement of changes in equity
Fiscal 2021 (from April 1, 2020 to March 31, 2021)(Million yen)SharecapitalBalance at beginning of
period713

Accumulated other
Shareholders' equity
comprehensive
incomeShare
NonTotal
Total net
Foreign accumulat acquisition controlling
assetsTotal
rightsinterests
currency ed other
Capital Retained Treasury
shareholde
surplus earnings
sharestranslation comprehers' equity
adjustment nsive
income
972

7,340

(380)

8,646

6

6

18

9

8,680

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Disposal of treasury
sharesPurchase of treasury
sharesNet changes in items
other thanshareholders' equity
Total changes during
periodBalance at end of
period

(700)

(700)

(700)

2,059

2,059

2,059

37

29

29

(0)

(0)

(0)

(8)

1

1

(9)

2

(5)

－

(8)

1,358

37

1,387

1

1

(9)

2

1,382

713

963

8,699

(342)

10,034

7

7

8

12

10,062

Fiscal 2022 (from April 1, 2021 to March 31, 2022)(Million yen)
Accumulated othercomprehensive
incomeShare
NonTotal
Total net
Foreign accumulat acquisition controlling
assetsTotal
rightsinterests
currency ed other
Treasuryshareholdesharestranslation comprehers' equity
adjustment nsive
incomeShareholders' equity

Balance at beginning of
periodSharecapitalCapitalsurplusRetainedearnings

713

963

8,699

(342)

10,034

7

7

8

12

10,062

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Disposal of treasury
sharesPurchase of treasury
sharesNet changes in items
other thanshareholders' equity
Total changes during
periodBalance at end of
period

(841)

(841)

(841)

2,900

2,900

2,900

35

25

25

(0)

(0)

(0)

(9)

3

3

3

5

13

－

(9)

2,059

34

2,084

3

3

3

5

2,097

713

953

10,758(307)

12,118

11

11

12

17

12,159- 11 -

(4) Consolidated statement of cash flows(Million yen)
Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Fiscal 2021
(from April 1, 2020
to March 31, 2021)
Cash flows from operating activities
Profit before income taxes

3,001

4,136

Depreciation
Increase (decrease) in provision for bonuses

859
74

890
(98)

Interest income
Foreign exchange losses (gains)

(0)
(9)

(0)
(6)

Gain on reversal of share acquisition rights
Loss on retirement of non-current assets

(9)
0

(1)
0

Loss (gain) on sales of non-current assets
Loss (gain) on liquidation of subsidiaries

(3)
2

(0)

Decrease (increase) in trade receivables
Decrease (increase) in inventories

1,867
(2)

－
2,364
0

Increase (decrease) in trade payables
Increase (decrease) in accounts payable - other

0
15

10
43

Decrease (increase) in other current assets
Increase (decrease) in other current liabilities

9
165

(40)
38

6

(27)

Subtotal

5,977

7,309

Interest and dividends received
Income taxes paid

0
(757)

0
(1,140)Net cash provided by (used in) operating activities

5,221

6,169

(48)

(17)

6

0

(787)

(961)

Other

Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant andequipment
Purchase of intangible assets
Liquidation of subsidiaries
Net cash provided by (used in) investing activities

(1)

－

(830)

(978)

28
(0)

25
(0)

－

5

(699)

(840)

(671)

(810)

10

10

Cash flows from financing activities
Proceeds from disposal of treasury shares
Purchase of treasury shares
Proceeds from issuance of share acquisitionrightsDividends paid
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

3,730

4,391

Cash and cash equivalents at beginning of period

7,651

11,382

Cash and cash equivalents at end of period

11,382

15,773- 12 -

(5) Notes to consolidated financial statements(Notes on the premise of a going concern)
There are no applicable matters.
(Significant matters that serve as the basis for the preparation of consolidated financial statements)
1. Matters related to the scope of consolidation(1) Number of consolidated subsidiaries: 4Names of consolidated subsidiaries
Digital Arts Consulting Inc.
Digital Arts America, Inc.
Digital Arts Asia Pacific Pte. Ltd.
Digital Arts Europe Limited(2) Names, etc. of non-consolidated subsidiaries
There are no applicable matters.
2. Matters related to the application of the equity method(1) Number of non-consolidated subsidiaries to which the equity method is applied: ―(2) Names, etc. of non-consolidated subsidiaries to which the equity method is not applied
There are no applicable matters.
3. Fiscal years of consolidated subsidiaries
The fiscal year end of all consolidated subsidiaries is the same as the end of the consolidated fiscal year.
4. Matters related to accounting policies(1) Valuation standards and valuation methods for significant assets
A. Securities(a) Bonds held for maturity
The amortized cost method (interest method) is applied.
B. Inventories(a) Finished goods
The gross average cost method is applied. (The balance sheet amount is calculated by the book value writedown method based on reduction in profitability.)(2) Depreciation/amortization method for significant depreciable/amortizable assets
A. Property, plant and equipment
The declining balance method is applied.
The useful life and the residual value are calculated based on the same standards as those set out in the
Corporation Tax Act. The straight-line method is applied for facilities attached to buildings acquired on April 1, 2016or later.
B. Intangible assets
The straight-line method is applied.
The straight-line method based on the availability period in the company (five years) is used for software in thecompany. For software for sale in the market, a method based on estimated sales quantities (or revenue) or theremaining lifetime (three years) is used.
C. Long-term prepaid expenses
The straight-line method is applied.
The amortization period is calculated based on the same standards as those set out in the Corporation Tax Act.

- 13 -

(3) Standards for recognition of significant allowances
A. Provision for bonuses
For the payment of employees’ bonuses, of the estimated payment amount, the amount to be paid in the
consolidated fiscal year under review is posted.
(4) Accounting standards for significant income and expenses
The Company has begun applying the Accounting Standard for Revenue Recognition (ASBJ Statement No.29
issued on March 31, 2020) and the Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ
Guidance No. 30 issued on March 31, 2020). Accordingly, the Company recognizes revenue in the amount expected tobe received in exchange for promised goods or services at the point where control over such goods or services moves
to customers.
Major performance obligations in major businesses and the normal time to recognize revenue are as described in(Matters concerning revenue recognition).
(5) Standards for translating significant assets or liabilities that are in foreign currency into yen
Monetary claims and obligations in foreign currency are translated into yen using the spot exchange rate on the
consolidated settling day, and translation adjustments are treated as a profit or loss. Assets and liabilities at overseas
subsidiaries, etc. are translated into yen using the spot exchange rate on the consolidated settling day. Revenue andexpense are translated into yen using the average rate during the period, and translation adjustments are included in
the foreign currency translation adjustment in net assets.
(6) Scope of funds in the consolidated statement of cash flows
Funds in the consolidated statement of cash flows (cash and cash equivalents) consist of cash on hand, deposits
that can be withdrawn as needed, and short-term investments that can be realized easily and only have insignificant
value fluctuation risk and whose redemption date arrives within three months of the acquisition date.
(Change in accounting policy)（Application of Accounting Standard for Revenue Recognition, etc.)
The Company began applying the Accounting Standard for Revenue Recognition (ASBJ Statement No.29 issued on
March 31, 2020; hereinafter, “Accounting Standard for Revenue Recognition”) and the like from the beginning of thecurrent fiscal year. Accordingly, the Company recognizes revenue in the amount expected to be received in exchange
for promised goods or services at the point where control over such goods or services moves to customers.
As a result, sales rebates, which were previously recorded as selling, general and administrative expenses, are now
deducted from sales. The application of the Accounting Standard for Revenue Recognition, etc. is subject to thetransitional treatment provided for in the proviso of Paragraph 84 of the Accounting Standard for Revenue Recognition.
The cumulative effect of the retrospective application, assuming the new accounting policy had been applied to periods
prior to the beginning of the consolidated fiscal year under review was added to or subtracted from the beginningbalance of retained earnings of the consolidated fiscal year under review. However, this did not have any impact onsuch beginning balance.
From the fiscal year under review, current assets included in notes and accounts receivable - trade in the consolidatedbalance sheet in the previous fiscal year are included in notes receivable - trade and accounts receivable - trade.
As a result, net sales and selling, general and administrative expenses for the consolidated fiscal year under review
decreased, respectively, causing gross profit to fall. However, their declines produced insignificant effects, leaving
operating profit, ordinary profit and profit before income taxes unaffected.
According to the transitional measures prescribed in paragraph 89-3 of the Accounting Standard for Revenue
Recognition, there are no notes on "Matters concerning revenue recognition" pertaining to the results of the previous
consolidated fiscal year.

- 14 -

(Changes in presentation methods)(Application of the Accounting Standard for Fair Value Measurement)
The Company is applying the Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30, July 4,
2019; "Fair Value Measurement Accounting Standard") from the beginning of the current fiscal year and has decided toapply new accounting policies under the Fair Value Measurement Accounting Standard, etc., following the transitional
procedures set forth in Paragraph 19 of the Fair Value Measurement Accounting Standard and Paragraph 44-2 of the
Accounting Standard for Financial Instruments (ASBJ Statement No. 10, July 4, 2019). The Company has decided also
to add a note on a breakdown of financial instruments in different market price levels in (Financial instruments). In thenote on a breakdown of financial instruments, a breakdown of financial instruments in the previous fiscal year is notincluded in accordance with the transitional procedures set out in Paragraph 7-4 of the Implementation Guidance on
Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19, July 4, 2019).

- 15 -

(Consolidated statement of income)"Subsidy income" (0 million yen in the fiscal year under review), which was presented separately in the previous fiscal
year, is included in "Other" in non-operating income in the fiscal year under review because of a decrease in significancein financial terms.
(Consolidated statement of income)*1. The major items of selling, general and administrative expenses and the amounts are as follows.
Fiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Advertising expenses

168million yen

239million yen

Salaries and allowances

631

708

Provision for bonuses

110

54

*2. Total amount of research and development expenses included in general and administrative expenses are as follows.
Fiscal 2021
(from April 1, 2020
to March 31, 2021)
1million yen

Fiscal 2022
(from April 1, 2021
to March 31, 2022)
1million yen*3. The details of loss on retirement of non-current assets are as follows.
Fiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Tools, furniture and fixtures
Software0million yen－－million yen
0

Total

0

0

*4. Details of the loss on liquidation of subsidiaries are as follows.
Fiscal 2021 (from April 1, 2020 to March 31, 2021)
The loss on liquidation of subsidiaries resulted from the completion of the liquidation of Digital Arts Investment, Inc.
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
There are no applicable matters.
(Consolidated statement of comprehensive income)*1. Reclassification adjustment and tax effect related to other comprehensive income
Fiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Foreigncurrencytranslation
adjustment:
Amount that occurred in the fiscal
year under review
Reclassification adjustment

1million yen

3million yen－－

Before tax effect adjustment

1

3

Tax effectForeign currency translation
adjustment
Total other comprehensive income

-

-

1

3

1

3

- 16 -

(Consolidated statement of changes in equity)
Fiscal 2021 (from April 1, 2020 to March 31, 2021)
1. Class and number of issued shares and class and number of treasury shares
Number of shares at
beginning of
consolidated fiscal
year under review

Increase in number of Decrease in number of Number of shares atshares during
shares during
end of consolidated
consolidated fiscal
consolidated fiscal
fiscal year underyear under review
year under review
review

Issued shares
Common shares

14,133,000－－

14,133,000

Total

14,133,000－－

14,133,000

116,04220

11,600104,462

116,04220

11,600104,462

Treasury shares
Common(Note)

shares

Total(Note) An increase in the number of common shares in treasury shares, 20, is due to the purchase of treasury shares. A
decrease in the number of treasury shares, 11,600, is due to the exercise of stock options.
2. Matters related to share acquisition rights and treasury share acquisition rights

Classification

Reportingcompany(parent
company)

Breakdown of shareacquisition rights

Class of
Number of shares to be acquired upon exercise ofsharesshare acquisition rights
Amount atend of fiscal
underlying
Beginning of Increase
Decreaseshare
End of fiscal year underfiscal year during fiscal during fiscal
reviewacquisition
year under
underyear under year under(million yen)rightsreview
review
review
review

Share acquisitionrights as stock
options

―

―

―

―

―

8

Total

―

―

―

―

―

8

3. Matters related to dividends(1) Dividends paid

Resolution
Annualshareholders’meeting on June
19, 2020
Board of Directors
meeting on
October 29, 2020

Total amount of
Dividend per share
Class of shares dividends (million
(yen)
yen)

Record date

Effective date

March 31, 2020

June 22, 2020

Common shares

350

25

Common shares

350

25 September 30, 2020 December 2, 2020

(2) Of dividends whose record date is in the consolidated fiscal year under review, those whose effective date in the next
consolidated fiscal year

Resolution

Class ofsharesTotal amountof dividends(million yen)

Financialsource ofdividends

Dividend pershare (yen)Annualshareholders’meeting on June22, 2021

Commonshares420

Retainedearnings

30

Fiscal 2022 (from April 1, 2021 to March 31, 2022)- 17 -

Record date

Effective date

March 31, 2021

June 23, 2021

1. Class and number of issued shares and class and number of treasury shares
Number of shares at
beginning of
consolidated fiscal
year under review

Increase in number of Decrease in number of Number of shares atshares during
shares during
end of consolidated
consolidated fiscal
consolidated fiscal
fiscal year underyear under review
year under review
review

Issued shares
Common shares

14,133,000－－

14,133,000

Total

14,133,000－－

14,133,000

Common shares(Note)

104,46269

10,80093,731

Total

104,46269

10,80093,731

Treasury shares(Note) An increase in the number of common shares in treasury shares, 69, is due to the purchase of treasury shares. A
decrease in the number of treasury shares, 10,800, is due to the exercise of stock options.
2. Matters related to share acquisition rights and treasury share acquisition rights

Classification

Reportingcompany(parent
company)

Breakdown of shareacquisition rights

Class of
Number of shares to be acquired upon exercise ofsharesshare acquisition rights
Amount atend of fiscal
underlying
Beginning of Increase
Decreaseshare
End of fiscal year underfiscal year during fiscal during fiscal
reviewacquisition
year under
underyear under year under(million yen)rightsreview
review
review
review

Share acquisitionrights as stock
options

―

―

―

―

―

12

Total

―

―

―

―

―

12

3. Matters related to dividends(1) Dividends paid

Resolution
Annualshareholders’meeting on June22, 2021
Board of Directors
meeting on
October 28, 2021

Total amount of
Dividend per share
Class of shares dividends (million
(yen)
yen)

Record date

Effective dateCommon shares

420

30

March 31, 2021

June 23, 2021

Common shares

421

30

September 30,
2021

December 2, 2021

(2) Of dividends whose record date is in the consolidated fiscal year under review, those whose effective date in the next
consolidated fiscal year

Resolution

Class ofsharesTotal amountof dividends(million yen)

Financialsource ofdividends

Dividend pershare (yen)Annualshareholders’meeting on June21, 2022

Commonshares561

Retainedearnings

40- 18 -

Record date

Effective date

March 31, 2022

June 22, 2022

(Consolidated statement of cash flows)*1. Cash and cash equivalents at the end of the fiscal year and their relationships with items in the consolidated balance
sheetsFiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Cash and deposit account

11,382million yen

15,773million yen

Cash and cash equivalents

11,382

15,773(Financial instruments)
1. Matters related to the status of financial instruments(1) Policy on financial instruments
The Group’s fund management is centered on short-term deposits. The Group also invests in government bonds,
which are very safe and highly rated corporate and other bonds.
(2) Description of financial instruments and their risks
Notes and accounts receivable-trade, operating receivables, are exposed to customers’ credit risk.
Investment securities are public and corporate bonds and are exposed to risks of fluctuations in market price.
(3) Risk management system related to financial instruments(i) Credit risk (risk related to business connections’ contract non-performance) management
The sales management section and administrative department of the Company regularly monitor the status ofoperating receivables at the main trading partners under the Company’s credit management regulations and control
the due dates and balances for individual partners. In this way, the Company strives to identify concerns overcollections caused by deterioration in partners’ financial situation early and mitigate them. The Company conducts
similar credit management at consolidated subsidiaries under its credit management regulations.
As for short-term fund management, the Company only uses bank deposits and investments in highly rated funds
to avoid as much credit risk as possible.
(ii) Market risk (interest-rate fluctuation risk, etc.) management
The Company determines its fund management portfolio while expecting its financing needs, and avoids market
risk as much as possible.
(iii) Management of liquidity risk in financing (risk of failure to pay on due dates)
The Company manages liquidity risk chiefly by having the administrative department create financial plans in atimely manner.
(4) Additional information on matters related to the market prices of financial instruments, etc.
The market prices of financial instruments are based on market prices and rationally calculated prices if no market
prices are available. The calculated prices include variable factors, which may change if different assumptions are used.
2. Matters related to the market prices of financial instruments, etc.
Consolidated balance sheet amounts, market prices and differences between them are as follows: Cash is omitted.
Deposits are also omitted because deposits are settled in a short period of time and their market prices are similar to theirbook values.

- 19 -

Fiscal 2021 (As of March 31, 2021)
Consolidated balance
sheet amount(million yen)

Market price (million yen)

Difference (million yen)

1,268

1,268

－

102

102

(0)

1,370

1,370

(0)

688

688

－

688

688

－

Consolidated balance
sheet amount(million yen)

Market price (million yen)

Difference (million yen)

74

74

－

1,142

1,142

－

101

101

(0)

1,318

1,317

(0)

760

760

－

760

760

－

(1) Notes and accounts receivable trade(2) Investment securities
Bonds held to maturity
Total assets(1) Income taxes payable
Total liabilities
Fiscal 2022 (As of March 31, 2022)(1) Notes receivable - trade(2) Accounts receivable(3) Investment securities
Bonds held to maturity
Total assets(1) Income taxes payable
Total liabilities(Note) Monetary claims and securities with maturity periods to be redeemed after the consolidated closing dateFiscal 2021 (As of March 31, 2021)
More thanMore than afive years, More than 10
Within a year year, within
years
within 10(million yen) five years(million yen)
years
(million yen)(million yen)
Cash and deposits

11,382－－－

Notes and accounts receivable - trade

1,268

－

－

－

(1) Government bonds, local government bonds

－

－

－

－

(2) Corporate bonds

－

100

－

－

12,650100－－

Investment securities
Bonds held to maturity

Total- 20 -

Fiscal 2022 (As of March 31, 2022)
More thanMore than afive years, More than 10
Within a year year, within
years
within 10(million yen) five years(million yen)
years
(million yen)(million yen)
15,773

－

－

－

74

－

－

－

1,142

－

－

－

(1) Government bonds, local government bonds

－

－

－

－

(2) Corporate bonds

－

100

－

－

16,989100－－

Cash and deposits
Notes receivable - trade
Accounts receivable - trade
Investment securities
Bonds held to maturity

Total- 21 -

3. Breakdown of financial instruments in different appropriate classifications
The fair values of financial instruments are classified into the following three levels according to the observability andimportance of inputs used in the calculation of fair values.
Level 1 fair value: fair value calculated using market prices, on an active market, of assets or liabilities whose fair value
is calculated of the observable inputs related to the calculation of fair value
Level 2 fair value: fair value calculated using inputs other than the inputs used for Level 1 of the observable inputs
related to the calculation of fair value
Level 3 fair value: fair value calculated using inputs that are not observable related to the calculation of fair value
If more than one input that has a significant effect on the calculation of fair value is used, the fair value is classified to
the level of inputs whose priority is lowest in the calculation of fair value.
Financial assets and financial liabilities whose consolidated balance sheet amounts are not market prices.
Fiscal 2022 (As of March 31, 2022)(Million yen)
Market priceClassification
Level 1

Level 2

Level 3

Total

Notes receivable - trade

－

74

－

74

Accounts receivable – trade

－

1,142

－

1,142

Bonds payable

－

101

－

101

Total assets

－

1,317

－

1,317

Income taxes payable

－

760

－

760

Total liabilities

－

760

－

760

Investment securities
Bonds held to maturity(Securities)
Bonds held to maturity
Fiscal 2021 (As of March 31, 2021)

Classification

Market price exceeds
consolidated balance
sheet amountMarket price does notexceed consolidatedbalance sheet amount

Consolidated
Market price (million Difference (million
balance sheet
yen)
yen)
amount (million yen)

(1) Government bonds,
local government
bonds, etc.

－

－

－

(2) Corporate bonds

－

－

－

(3) Other－－－

Subtotal－－－(1) Government bonds,
local government
bonds, etc.

－

－

－

(2) Corporate bonds

102

102

(0)

(3) Other

－

－

－

102

102

(0)

102

102

(0)

Subtotal
Total- 22 -

Fiscal 2022 (As of March 31, 2022)

Classification

Market price exceeds
consolidated balance
sheet amountMarket price does notexceed consolidatedbalance sheet amount

Consolidatedbalance sheet
amount (million yen)

Market price(million yen)

Difference(million yen)

(1) Government bonds,
local government
bonds, etc.

－

－

－

(2) Corporate bonds

－

－

－

(3) Other－－－

Subtotal－－－(1) Government bonds,
local government
bonds, etc.

－

－

－

(2) Corporate bonds

101

101

(0)

(3) Other

－

－

－

101

101

(0)

101

101

(0)

Subtotal
Total(Retirement benefits)
1. Outline of the retirement benefits system
The Company and its consolidated subsidiaries have a defined contribution pension plan.
2. Retirement benefit expenses
Fiscal 2021 (from April 1, 2020 to March 31, 2021)
The amount that was required for contribution to the defined contribution pension plan was 27 million yen.
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
The amount that was required for contribution to the defined contribution pension plan was 38 million yen.
(Stock options)
1. Expenses related to stock options and their account titles
Fiscal 2021
(from April 1, 2020
to March 31, 2021)‒ million yen

Selling, general and administrative expenses

Fiscal 2022
(from April 1, 2021
to March 31, 2022)
0 million yen

2. Amount posted as profit due to the forfeiture of unexercised stock options
Fiscal 2021
(from April 1, 2020
to March 31, 2021)
Gain on reversal of share acquisition rights

9 million yen- 23 -

Fiscal 2022
(from April 1, 2021
to March 31, 2022)
1 million yen

3. Description of stock options, their scale and changes(1) Description of stock options

Company
Category and number of persons subject
to grants
Stock options by class of shares
Grant date

Vesting conditions

Requisite service period

Exercise period

8th Stock options

9th Stock options

Reporting company

Same as on the left

Four directors
151 employees

Three directors
96 employees

Common shares 350,100 shares

Common shares 848,000 shares

November 27, 2015

December 13, 2016

Being a director or an employee ofthe reporting company and not
being subject to salary reduction or
stricter disciplinary action provided
for in the rules of employment of
the reporting company from the
grant date (November 27, 2015) tothe vesting date (July 1, 2017)
Share acquisition rights can be
exercised up to the percentage ofthe allocated share acquisitionrights specified in each item below
by each holder of share acquisitionrights only if operating profit
reaches the level specified in each
item below in the fiscal year ended
March 31, 2017, the fiscal year
ended March 31, 2018, or the fiscal
year ended March 31, 2019.
(i) If operating profit exceeds 1.5
billion yen, 20% of shareacquisition rights can be
exercised(ii) If operating profit exceeds 2.0
billion yen, 50% of shareacquisition rights can be
exercised(iii) If operating profit exceeds 2.5
billion yen, 100% of shareacquisition rights can be
exercised
In the items above, the operating
profit stated in the consolidated
statement of income in the
Company’s annual securities report(or the statements of income if noconsolidated statements of income
are prepared) shall be referenced.
If the concept of items to bereferenced changes significantly
due to the application of theInternational Financial ReportingStandards, etc. indicators to bereferenced shall be determined by
the Board of Directors.
No requisite service periods are
determined.

Being a director or an employee ofthe reporting company and not
being subject to salary reduction or
stricter disciplinary action provided
for in the rules of employment of
the reporting company from the
grant date (December 13, 2016) tothe vesting date (July 1, 2018).
Share acquisition rights can be
exercised up to the percentage ofthe allocated share acquisitionrights specified in each item below
by each holder of share acquisitionrights only if operating profit
reaches the level specified in each
item below in the fiscal year ended
March 31, 2018, the fiscal year
ended March 31, 2019, or the fiscal
year ended March 31, 2020.
(i) If operating profit exceeds 2.0
billion yen, 20% of shareacquisition rights can be
exercised(ii) If operating profit exceeds 2.5
billion yen, 50% of shareacquisition rights can be
exercised(iii) If operating profit exceeds 2.8
billion yen, 100% of shareacquisition rights can be
exercised
In the items above, the operating
profit stated in the consolidated
statement of income in the
Company’s annual securities report(or the statements of income if noconsolidated statement of income
are prepared) shall be referenced.
If the concept of items to bereferenced changes significantly
due to the application of theInternational Financial ReportingStandards, etc. indicators to bereferenced shall be determined by
the Board of Directors.
No requisite service periods are
determined.

From the vesting date to May 31,
2027.
The person must continue to be adirector or an employee of theCompany to exercise shareacquisition rights.

From the vesting date to May 31,
2028.
The person must continue to be adirector or an employee of theCompany to exercise shareacquisition rights.

- 24 -

Company
Category and number of persons subject
to grants
Stock options by class of shares
Grant date

10th Stock options

11th Stock options

Reporting company

Same as on the leftThree directors
151 employees

16 employees

Common shares 1,413,300 shares

Common shares 69,000 shares

March 5, 2018

September 24, 2021

Vesting conditions

Being a director or an employee ofthe reporting company and not
being subject to salary reduction
or stricter disciplinary action
provided for in the rules of
employment of the reporting
company from the grant date(March 5, 2018) to the vestingdate (July 1, 2021).
Each holder of share acquisitionrights can exercise the shareacquisition rights allocated to them
only if operating profit exceeds 4.0
billion yen in the fiscal year ended
March 31, 2021.
In the items above, the operating
profit stated in the consolidated
statement of income in the
Company’s annual securities
report (or the statements ofincome if no consolidated
statement of income are prepared)
shall be referenced. If the concept
of items to be referenced changes
significantly due to the applicationof the International Financial
Reporting Standards, etc.
indicators to be referenced shallbe determined by the Board of
Directors.

Requisite service period

No requisite service periods are
determined.

Exercise period

From the vesting date to May 31,
2028.
The person must continue to be adirector or an employee of theCompany to exercise shareacquisition rights.

- 25 -

Being a director, an auditor, or an
employee of the reporting
company or its subsidiaries andnot being subject to salary
reduction or stricter disciplinary
action provided for in the rules of
employment of the reporting
company or its subsidiaries fromthe grant date (September 24,2021) to the vesting date (June 30,
2036)
The share acquisition rights canbe exercised only over the period
from July 1, 2036 to June 30,
2038, if operating profit exceeds
14,736 million yen in any fiscal
year from the fiscal year ended
March 31, 2022 to the fiscal year
ending March 31, 2036.
Whether the operating profit above
is exceeded or not shall be
determined in reference to theoperating profit stated in the nonconsolidated statement of incomein the Company's Annual
Securities Report, and in the eventof a material change in theconcept of the item to be referred
to due to the application ofInternational Financial ReportingStandards, etc., the Board of
Directors shall separately
determine the index to be referred
to.
No requisite service periods are
determined.
From July 1, 2036 to June 30,
2038.
The person must continue to be adirector, an auditor, or an
employee of the Company or its
subsidiaries to exercise shareacquisition rights.

12th Stock options
Company
Category and number of persons subject
to grants
Stock options by class of shares
Grant date

Vesting conditions

Requisite service period

Exercise period

Reporting company
55 employees
Common shares 137,500 shares
September 24, 2021
Being a director, an auditor, or an
employee of the reporting
company or its subsidiaries andnot being subject to salary
reduction or stricter disciplinary
action provided for in the rules of
employment of the reporting
company or its subsidiaries fromthe grant date (September 24,2021) to the vesting date (June 30,
2041)
The share acquisition rights canbe exercised only over the period
from July 1, 2041 to June 30,
2043, if operating profit exceeds
20,630 million yen in any fiscal
year from the fiscal year ended
March 31, 2022 to the fiscal year
ending March 31, 2041.
Whether the operating profit above
is exceeded or not shall be
determined in reference to theoperating profit stated in the nonconsolidated statement of incomein the Company's Annual
Securities Report, and in the eventof a material change in theconcept of the item to be referred
to due to the application ofInternational Financial ReportingStandards, etc., the Board of
Directors shall separately
determine the index to be referred
to.
No requisite service periods are
determined.
From July 1, 2041 to June 30,2043.
The person must continue to be adirector, an auditor, or an
employee of the Company or its
subsidiaries to exercise shareacquisition rights.

- 26 -

(2) Scale of stock options and related changes
The stock options below are those that existed in the fiscal year under review (fiscal year ended March 31, 2022).
The number of stock options has been converted to the number of shares.
(i) Number of stock options

8th Stock options 9th Stock options

10th Stock
options

11th Stock
options

12th Stock
options

Before vesting (shares)
As of March 31, 2021－－

1,130,900－－

Granted－－－69,000137,500

Forfeited－－

1,130,900

－

7,500

Vested

－

－

－

－

－

Yet to be vested

－

－

－

69,000130,000

156,800

306,900

－

－

－

－

－

－

－

－

Exercised

4,800

6,000

－

－

－

Forfeited

－

－

－

－

－

152,000

300,900－－－

After vesting (shares)
As of March 31, 2021
VestedYet to be exercised(ii) Unit price information
8th Stock
options
Exercise price (yen)Average stock price when
exercised (yen)Fair unit value (grantdate) (yen)9th Stock
options

10th Stock
options

11th Stock
options

12th Stock
options

2,034

2,639

3,400

8,310

8,310

7,515

7,952

－

－

－

2 yen

24 yen

1 yen

20 yen27 yen4. Method for estimating the number of stock options vested
It is basically difficult to reasonably estimate the number of stock options to be forfeited, and only the actual number ofstock options forfeited is reflected.
(Asset retirement obligations)
Asset retirement obligations posted in the consolidated balance sheets(1) Outline of the asset retirement obligations
Obligations of restoration related to lease agreements at the head office and other offices(2) Method for calculation of the asset retirement obligations
The period of use is estimated to be one to 15 years from the acquisition. The discount rate is 0.15% to 1.73%. The
amount of asset retirement obligations is calculated based on those assumptions.

- 27 -

(3) Increase/decrease in the asset retirement obligations
Fiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Balance at beginning of fiscal year
Increase due to purchase ofproperty, plant and equipment
Adjustment due to passage of time

45million yen

48million yen

2

－

0

0

Balance at end of fiscal year

48

48

(Matters concerning revenue recognition)
1. Information on the breakdown of revenue from contracts with customers
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
Below is a breakdown of revenue from contracts with customers.
(Million yen)Enterprise
Sector Market

Public Sector
MarketConsumer
Sector Market

Revenue from contracts with
4,559
4,046
customers(Note) Internal transactions between Group companies are deducted.

Total

444

9,051

2. Basic information for understanding revenue from contracts with customers
The Digital Arts Group is principally engaged in internet security, email security, the planning, development, sale, etc.
of file encryption and tracking solutions, and information security consulting.
In sales of security software, software is classified into two types: license products and associated maintenanceservices, and cloud service products.
Revenue from a license product is recognized when the software product is provided to the customer, at which time
the performance obligation is deemed fulfilled. The performance obligation for maintenance services is fulfilled over acertain period, and revenue is recognized over the term of the contract as the performance obligation is being satisfied.
As for the cloud service product, the service performance obligation is satisfied over time, and the transaction priceunder the contract with the customer is distributed evenly throughout the term of the contract and recognized as revenue.
Revenue is recorded mostly in accordance with the contract with the customer. If the Company pays a rebate
according to a transaction amount for a certain period, among other factors, the rebate is deducted from the revenue.
The promised consideration does not include any significant financing component.
3. Information to understand revenue in the fiscal year under review and the next fiscal year and thereafter
Below is the opening and ending balance of contract liabilities arising from contracts with customers.
(Million yen)Contract liabilities

Fiscal 2022

Balance at beginning of fiscal year

3,370

Balance at end of fiscal year

5,684

Advances received in the consolidated balance sheet are all contract liabilities arising from contracts with customers,
and advance payments are posted if the related performance obligations are not fulfilled at the end of the fiscal year.
The amount of revenue recognized in the fiscal year under review included in the balance of contract liabilities at the
beginning of the fiscal year is 1,316 million yen.

- 28 -

(Segment information, etc.)
Segment information
Previous consolidated fiscal year (from April 1, 2020 to March 31, 2021) and consolidated fiscal year under review(from April 1, 2021 to March 31, 2022)
The Group has only one segment, which is the security business, and segment information is omitted.
Related information
Fiscal 2021 (from April 1, 2020 to March 31, 2021)
1. Information by product/service
The Group has only one product and service category, and information by product/service is omitted.
2. Information by region(1) Net sales
Sales to external customers in Japan are more than 90% of net sales in the consolidated statement of income, andinformation by region is omitted.
(2) Property, plant and equipment
The amount of property, plant and equipment in Japan is more than 90% of the amount of property, plant andequipment in the consolidated balance sheets, and information on property, plant and equipment is omitted.
3. Information by major customer
The Group engages in only one segment, the security business.
(Million yen)
Customer name

Net sales

Daiwabo Information System Co., Ltd.

1,409

SB C&S Corp.

1,287

Fiscal 2022 (from April 1, 2021 to March 31, 2022)
1. Information by product/service
The Group has only one product and service category, and information by product/service is omitted.
2. Information by region(1) Net sales
Sales to external customers in Japan are more than 90% of net sales in the consolidated statement of income, andinformation by region is omitted.
(2) Property, plant and equipment
The amount of property, plant and equipment in Japan is more than 90% of the amount of property, plant andequipment in the consolidated balance sheets, and information on property, plant and equipment is omitted.
3. Information by major customer
The Group engages in only one segment, the security business.
(Million yen)
Customer name

Net sales

Daiwabo Information System Co., Ltd.

2,045

SB C&S Corp.

1,541- 29 -

Transactions with related parties
Transactions between the company submitting consolidated financial statements and related parties
Officers and major individual shareholders of the company submitting consolidated financial statements
Fiscal 2021 (from April 1, 2020 to March 31, 2021)
There are no applicable matters.
Fiscal 2022 (from April 1, 2021 to March 31, 2022)
There are no applicable matters.
(Per share information)
Fiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Net assets per share

715.79 yen

863.96 yen

Profit per share

146.90 yen

206.71 yen

Diluted profit per share
Profit143.45 yen

202.03 yen(Note) Base for calculating profit per share and diluted profit per share
Item

Fiscal 2021
(from April 1, 2020
to March 31, 2021)

Fiscal 2022
(from April 1, 2021
to March 31, 2022)

Profit per share
Profit attributable to owners of parent (million yen)

2,059

2,900

Amount not attributable to common shareholders(million yen)
Profit attributable to owners of parent related tocommon shares (million yen)

－

－

2,059

2,900

14,022,503

14,034,190－－

Increase in the number of common shares

337,562

325,272(Of the increase, the number of share acquisitionrights) (shares)

337,562

325,272

Share acquisition rights
Resolution on February 16,
2018
Number of potential shares:
1,130,900

Share acquisition rights
Resolution on August 30,
2021
Number of potential shares:
199,000

Average number of common shares during the term
Diluted profit per share
Adjustment of profit attributable to owners of parent(million yen)

Outline of potential shares that are not included in thecalculation of the diluted profit per share because they
do not have any diluting effects(Significant subsequent events)
There are no applicable matters.

- 30 -