2, February 2024
Company Name: HEROZ, Inc.
Names of Representatives:
Takahiro Hayashi,
Chief Executive Officer
Stock Code: 4382
Contact: Hiroya Mori,
Chief Financial Officer(Telephone: +81-3-6435-2495)

Notice: This document is an excerpt translation of the original Japanese document and is only for reference
purposes. In the event of any discrepancy between this translated document and the original Japanese
document, the latter shall prevail.

Announcement of Extraordinary Loss (Lump-sum Amortization of Goodwill, etc.) in the Financial
Results for the Third Quarter of the Fiscal Year Ending April 30, 2024 (Based on Japanese GAAP)HEROZ, Inc. (the “Company”) hereby announces that, in its non-consolidated financial results, theCompany will record an impairment loss on the shares of its consolidated subsidiary, Vario Secure,Inc.(the “Vario Secure”). Accordingly, the Company announces that it will record an extraordinary
loss due to a lump-sum amortization of a portion of goodwill ("the Amortization") in its consolidated
financial results for the third quarter of the fiscal year ending April 30, 2024.

1.

Description of losses recorded for Vario SecureThe Company entered a capital and business alliance with Vario Secure in September 2021, andthe two companies have continued discussions with the aim of establishing a system forcontinuous creation of new services unique to a group of technical experts by combining "domain
knowledge of rare security personnel held by Vario Secure" with "AI personnel held by theCompany". Subsequently, in September 2022, the Company subscribed to a third-party allotmentof new shares, making Vario Secure a consolidated subsidiary. The Company currently owns
42.8% of Vario Secure's common stock.
As the market price of Vario Secure's shares as of January 31, 2024, has fallen by more than
50% compared to the acquisition cost, the Company will record an impairment loss on theseshares in its non-consolidated financial statements. As a result, the Company has decided toperform this amortization in the consolidated financial statements in accordance with theprovisions of the "Practical Guidelines for Capital Consolidation Procedures in Consolidated
Financial Statements".
This amortization is a lump-sum amortization of goodwill resulting due to the decline in themarket price of Vario Secure's shares in the consolidated financial statements, and does not meanthat the goodwill recorded in Vario Secure's non-consolidated financial statements will beamortized.

2.

Impact on business results and operations
In the third quarter of the fiscal year ending April 30, 2024, an extraordinary loss of 891,209
thousand yen due to amortization of goodwill of Vario Secure is expected in the consolidatedaccounts. In the Company's non-consolidated accounts, a loss on valuation of stocks ofsubsidiaries and affiliates of 1,506,362 thousand yen is expected to be recorded. Losses on
valuation of stocks of subsidiaries and affiliates in the non-consolidated financial statements areeliminated in the consolidated financial statements, so there is no impact on consolidated
financial results.
The Company is in final discussions with its auditing firm regarding the above amounts, andwill make a further announcement if there is any change in the situation.
The full-year forecast for the fiscal year ending April 2024 is currently under scrutiny, together
with the impact of the acquisition of shares in AI Square Inc. in November 2023 (making it asubsidiary), and is scheduled to be announced at the announcement of financial results for thethird quarter of the fiscal year ending April 2024 (scheduled for March 8, 2024).
Goodwill amortization of Vario Secure may be reversed in the fiscal year ending April 30, 2024
if Vario Secure's stock price at the end of April 30, 2024 recovers, but if the stock price does notrecover and is amortized in a lump sum in the fiscal year ending April 30, 2024, no reversal will
occur thereafter.. This amortization is a one-time expense resulting from the write-down of sharesin the non-consolidated financial statements of the Company, and does not represent a revaluationof goodwill in the non-consolidated financial statements of Vario Secure itself.
In Vario Secure, their third-quarter financial results (IFRS) announced on January 11, 2024,show that they have already recorded a quarterly profit of 288 million yen for the first ninemonths of the fiscal year ending February 29, 2024, against a forecasted net income of 308
million yen for the fiscal year ending February 29, 2024, and the business is progressing steadily
at 93.6% against the earnings forecast. The business is progressing steadily.
Furthermore, the Company's consolidated operating income for the first half of the fiscal yearwas 252 million yen, 63% of the 400 million yen forecast for consolidated operating income inthe second quarter disclosed on December 8, 2023.
We will continue to improve corporate value by creating synergies throughout the group.