Risk of delays in launching new businesses and of unprofitability

「Profit declined due to additional costs associated with the development of cell culture processing technology to meet the needs of major customers, in addition to upfront costs related to the start of operations at the cell culture processing facility.」

「Meanwhile, プライムロード株式会社, which operates a regenerative medicine support business, increased revenue following the launch of its contract cell-culture processing business, but profit declined due to upfront costs associated with commencing operations at the cell-culture processing facility. As a result, revenue was ¥51 million, up 24.0% year on year, and the segment loss was ¥14 million, compared with profit of ¥1 million in the same period of the previous year.」

「The segment as a whole reported lower revenue and profit, but remained profitable for the second consecutive period.」

「The AR/VR business is seeing steady growth in projects from customers with clearly defined objectives that emphasize cost effectiveness. During the interim consolidated accounting period, projects were concentrated in the feasibility-validation phase ahead of full-scale implementation, temporarily lowering project unit prices, but they are expected to develop into higher-priced recurring projects in the future.」

「As the AR/VR business steadily expanded, it also turned profitable for the first time since its launch. As a result, revenue from the AR/VR business was ¥230 million, up 82.7% year on year, and segment profit was ¥42 million, compared with a ¥22 million loss in the same period of the previous year.」

「During the first quarter, orders were secured for industrial AR/VR application development, development of AI-based business automation systems, metaverse-space development and 360° VR tours for educational institutions. As a result, AR/VR revenue was ¥82 million, up 106.2% year on year, and the segment loss was ¥5 million, compared with a loss of ¥26 million in the same period of the previous year. Meanwhile, プライムロード株式会社, which operates a regenerative medicine implementation support business, saw orders for regenerative medicine consulting services decline.」

「There were no impairment losses or other such losses recognized in the same period of the previous year under extraordinary gains and losses.」

「During the first six months, orders were secured for application development, metaverse services for educational institutions, metaverse services for companies such as exhibitions and corporate information sessions, and 360° VR tours. Revenue increased year on year and the loss narrowed. As a result, AR/VR revenue was ¥126 million, up 82.5% year on year, and the segment loss was ¥22 million, compared with a loss of ¥83 million in the same period of the previous year.」

「During the first quarter, orders were secured for application development, VR content for educational institutions, 360° VR tours and event content in virtual spaces. Revenue increased year on year and the loss narrowed. As a result, AR/VR revenue was ¥39 million, up 77.9% year on year, and the segment loss was ¥26 million, compared with a loss of ¥47 million in the same period of the previous year. As a result, total revenue was ¥20 million, up 72.0% year on year, and the segment loss was ¥3 million, compared with a loss of ¥2 million in the same period of the previous year.」

「In addition, at 株式会社クロスリアリティ, a consolidated subsidiary of the company, the carrying amount of business-use assets was reduced to their recoverable amount after reasonably estimating future earnings prospects and carefully reviewing recoverability in light of the current business environment, with the decrease recognized as an impairment loss under extraordinary losses. The recoverable amount was valued at zero.」

「At 株式会社クロスリアリティ, a consolidated subsidiary of the company, the carrying amount of business-use assets was reduced to their recoverable amount after reasonably estimating future earnings prospects and carefully reviewing recoverability in light of the current business environment, with the decrease recognized as an impairment loss under extraordinary losses. The recoverable amount was measured based on value in use, but was valued at zero because no future cash flows were expected.」

「Because an impairment loss of ¥203.444 million was recognized as an extraordinary loss on fixed assets held by 株式会社クロスリアリティ, a consolidated subsidiary of the company, the section “(9) Impairment Risk” included in the annual securities report for the previous fiscal year was removed.」

「As a result, AR/VR revenue was ¥22.394 million, up 350.2% year on year, and the segment loss was ¥47.075 million, compared with a loss of ¥70.633 million in the same period of the previous year. As a result, total revenue was ¥11.839 million, down 16.0% year on year, and the segment loss was ¥2.918 million, compared with segment profit of ¥3.786 million in the same period of the previous year.」

「The AR/VR business is aimed at training AR/VR creators and selling and developing AR/VR content and platforms sought by companies and educational institutions, as part of efforts to address the Fourth Industrial Revolution represented by AR (augmented reality) and VR (virtual reality). The business secured orders, primarily for VR video production. In addition, VRIA Kyoto (VR Innovation Academy Kyoto) opened in October 2020 at 株式会社クロスリアリティ, a consolidated subsidiary. Meanwhile, personnel and capital investment costs were incurred to secure orders for AR/VR content. As a result, AR/VR revenue was ¥36.450 million, compared with no results in the same period of the previous year, and the segment loss was ¥172.382 million, compared with a loss of ¥27.769 million in the same period of the previous year.」

「The AR/VR business is aimed at training AR/VR creators and selling and developing AR/VR content and platforms sought by companies and educational institutions, as part of efforts to address the Fourth Industrial Revolution represented by AR (augmented reality) and VR (virtual reality). The business secured orders, primarily for VR video production. As a result, AR/VR revenue was ¥22.677 million, compared with no results in the same period of the previous year, and the segment loss was ¥118.705 million, compared with a loss of ¥13.467 million in the same period of the previous year. As a result, total revenue was ¥61.293 million, up 99.5% year on year, and segment profit was ¥660 thousand, compared with a segment loss of ¥33.274 million in the same period of the previous year.」

「The AI matching solution SUZAKU saw revenue increase year on year as the number of orders remained firm. Revenue from 株式会社ストーンフリー, a special subsidiary under the Act on Employment Promotion, etc. of Persons with Disabilities, increased year on year, mainly because the number of users of its employment transition support business increased. As a result, revenue was ¥24.074 million, up 50.0% year on year, and the segment loss was ¥4.099 million, compared with a loss of ¥16.306 million in the same period of the previous year.」

「However, these business investments may not necessarily contribute to the performance of the Group as expected, and may take time to contribute to performance. If they underperform the anticipated results, impairment losses may arise from applying impairment accounting to the fixed assets related to the businesses, potentially affecting the Group’s performance. The carrying amount related to these business investments was ¥341.429 million as of the end of the fiscal year.」

「As a result, revenue was ¥46.223 million, down 24.8% year on year, and the segment loss was ¥82.142 million, compared with a loss of ¥25.476 million in the same period of the previous year.」

「As a result, revenue was ¥30.720 million, down 34.3% year on year, and the segment loss was ¥46.742 million, compared with a loss of ¥8.359 million in the same period of the previous year.」

「Revenue from the採用 matching solution “SUZAKU” and business consulting services increased year on year. On the other hand, revenue in the first quarter of the previous fiscal year was higher because of a specially commissioned software development project for a government agency and other factors, including a decline in users of the employment-transition support business at 株式会社ストーンフリー, a special subsidiary under the Act on Employment Promotion etc. of Persons with Disabilities. As a result, revenue was ¥16.055 million, down 31.7% year on year, and the segment loss was ¥21.107 million, compared with a loss of ¥4.809 million in the same period of the previous year.」

「During the fiscal year, the carrying amount of asset groups whose profit or loss from operating activities remained negative was reduced to the recoverable amount, with the decrease recognized as an impairment loss under extraordinary losses.」

「Sales of the recruitment matching solution SUZAKU began in July 2018, and orders were secured. However, following the failure to meet sales targets, the Company recognises that further strengthening and improvement are needed in terms of its sales structure and product functionality.」

「Full-scale sales of the recruitment matching solution SUZAKU began in July 2018. The Company also established its organisational structure and secured orders. However, in light of the failure to meet its sales targets, it recognises that further strengthening of its sales activities is necessary.」

「Full-scale sales of the recruitment matching solution SUZAKU began in July 2018. The Company also strengthened its organisational structure and secured orders.」

「The採用 matching solution “SUZAKU” performed poorly because time was spent validating data to improve accuracy, and additional development was undertaken to expand functionality in response to diversifying customer needs, delaying its release.」

「Among the group companies mainly comprising Other, 株式会社ストーンフリー, a special subsidiary under the Act on the Promotion of Employment for Disabled Persons, was beginning to establish its new employment transition support services business, but revenue remained sluggish.」

「Among the group companies mainly comprising Other, 株式会社ストーンフリー, a special subsidiary under the Act on the Promotion of Employment for Disabled Persons, was beginning to establish its new employment transition support services business, but revenue was sluggish.」

「Among the group companies mainly comprising Other, 株式会社ストーンフリー, a special subsidiary under the Act on the Promotion of Employment for Disabled Persons, was beginning to establish its new employment transition support services business, but revenue was sluggish.」

「However, if a new business does not progress as planned and fails to generate the initially expected revenue, or after taking business profitability and other factors into consideration, management may decide to withdraw from the new business or reduce its scale.」