Temporary Earnings Deterioration Due to Short Operating Histories and Growth Investment

「The main components of cash inflows were interim net income before income taxes and other adjustments of ¥752.378 million, impairment losses of ¥128.029 million and a decrease in the provision for bonuses of ¥121.936 million, partly offset by income taxes paid of ¥232.689 million.」

「Because the profitability of the fixed assets held by Coleman Research Group, Inc. had declined, their recoverable amount was set at zero and the full carrying amount was recognized as an impairment loss. The impairment loss recognized during the current interim consolidated accounting period was ¥128.029 million.」

「Because the profitability of the fixed assets held by Coleman Research Group, Inc. had declined, the recoverable amount was deemed to be zero and the full carrying amount was recorded as an impairment loss. The impairment loss recorded for the first quarter of the consolidated fiscal year was ¥66.612 million.」

「For the property, plant and equipment and intangible assets recorded by the consolidated subsidiary Coleman Research Group, Inc., the Company reduced their carrying amounts to their recoverable amounts based on future cash flows and other factors, taking into account the negative profit or loss generated by operating activities and other considerations, and recorded an impairment loss of ¥254.135 million as an extraordinary loss.」

「In that process, the Company recorded net losses for periods through the sixth fiscal year (fiscal year ended February 2018), mainly because the business was still in its start-up phase. It also recorded a net loss in the tenth fiscal year (fiscal year ended February 2022) due to acquisition-related expenses and other costs incurred in connection with the acquisition of Coleman Research Group, Inc., and in the twelfth fiscal year (fiscal year ended February 2024) due to impairment of goodwill and other intangible assets related to that company.」

「The operating loss and other losses resulted from costs required for the acquisition of Coleman Research Group, Inc., approved by our Board of Directors on 18 August 2021. These costs comprised ¥658 million in professional fees and other expenses included in operating expenses and ¥261 million in non-operating expenses, for a total of ¥920 million, in the quarterly consolidated statement of income for the third quarter under review.」

「We recognize that our company is currently in a growth phase and will need to continue investing in growth, which may temporarily worsen earnings.」

「Our company was established in March 2012 and has a short corporate history. We recorded a net loss attributable to the period through the sixth fiscal year because the business was still in its launch phase, among other reasons.」