FY2026 Audited Financial Statements

Consolidated Financial Statements for the Year Ended March 31, 2026, and Independent Auditor's Report

Deloitte Touche Tohmatsu LLC Marunouchi Nijubashi Building 3-2-3 Marunouchi

Chiyoda-ku, Tokyo 100-8360 Japan

Tel: +81 (3) 6213 1000

Fax: +81 (3) 6213 1005

https://www.deloitte.com/jp/en

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors of Avex Inc.:

We have audited the consolidated financial statements of Avex Inc. and its consolidated subsidiaries (the "Group"), which comprise the consolidated balance sheet as of March 31, 2026, and the consolidated

statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, all expressed in Japanese yen.

In our opinion, the accompanying consolidated financial statements present fairly, in all material

respects, the consolidated financial position of the Group as of March 31, 2026, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Convenience Translation

Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 1 to the

consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in Japan. Our

responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, including the ethical requirements that are relevant to audits of the financial statements of public interest entities, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Member of

Other Information

Other information comprises the information included in the Group's disclosure documents accompanying the audited consolidated financial statements, but does not include the consolidated financial statements and our auditor's report thereon.

We determined that no such information existed and therefore, we did not perform any work thereon.

Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Audit and Supervisory Committee is responsible for overseeing the Directors' execution of duties relating to the design and operating effectiveness of the controls over the Group's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks. The procedures selected depend on the auditor's judgment. In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance with accounting principles generally accepted in Japan, as well as the overall

  presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit and Supervisory Committee regarding, among other matters, the

planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with it all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit and Supervisory Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Fees for audit and other services for the year ended March 31, 2026, which were charged by us and our network firms to Avex Inc. and its subsidiaries were ¥84 million and ¥20 million, respectively.

Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan

Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.

Deloitte Touche Tohmatsu LLC August 21, 2026

Consolidated Balance Sheet

March 31, 2026

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

Total investments and other assets 19,464 19,685 121,741

TOTAL ¥ 110,793 ¥ 105,960 $ 692,975

Consolidated Balance Sheet

March 31, 2026

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

(Notes 16 and 18)

EQUITY (Notes 10 and 11): Shareholders' equity:

Common stock—authorized, 184,631,000 shares;

Consolidated Statement of Income

Year Ended March 31, 2026

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

Operating income (loss) 4,085 (1,819) 25,550

OTHER INCOME (EXPENSES):

Consolidated Statement of Income

Year Ended March 31, 2026

See notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income

Year Ended March 31, 2026

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

See notes to consolidated financial statements.

Consolidated Statement of Changes in Equity

Year Ended March 31, 2026

Millions of Yen

Accumulated Other Comprehensive Income

Shareholders' Equity

Unrealized Gain on

Foreign Currency

Defined Retirement

Thousands of U.S. Dollars (Note 1)

Accumulated Other Comprehensive Income

Shareholders' Equity

Unrealized Gain on

Foreign Currency

Defined Retirement

- 12 -

Consolidated Statement of Cash Flows

Year Ended March 31, 2026

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

2026 2025 2026

OPERATING ACTIVITIES:

Net cash provided by (used in) operating activities—

(Forward) ¥ 2,076 ¥ (4,675) $ 12,984

Consolidated Statement of Cash Flows

Year Ended March 31, 2026

Millions of Yen

Thousands of

U.S. Dollars

(Note 1)

Notes to Consolidated Financial Statements

Year Ended March 31, 2026

1. BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS

   The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and in accordance with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different in certain respects as to the application and disclosure requirements of IFRS Accounting Standards.

   In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2025 consolidated financial statements to conform to the classifications used in 2026.

   The consolidated financial statements are stated in Japanese yen, the currency of the country in which Avex Inc. (the "Company") is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been made at the rate of ¥159.88 to $1, the approximate rate of exchange at March 31, 2026. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.

   Japanese yen figures less than a million yen are rounded down to the nearest million, except for per share data.

   U.S. dollar figures less than a thousand dollars are rounded down to the nearest thousand, except for per share data.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   1. Cons olidation—The consolidated financial statements as of March 31, 2026, include the accounts of the Company and its 28 significant (32 in 2025) subsidiaries (together, the "Avex Group").

      Consolidation of the remaining subsidiaries would not have a material effect on the accompanying consolidated financial statements.

      Under the control and influence concepts, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and those companies over which the Avex Group has the ability to exercise significant influence are accounted for by the equity method.

      (Consolidated Subsidiaries) Avex Entertainment Inc.

      Avex Live Creative Inc. Avex Music Creative Inc. Avex Creative Factory Inc.

      Avex Alliance & Partners Inc. Avex Music Publishing Inc.

      Avex Classics International Inc. Avex Management Inc.

      Avex Clan Inc. Avex Styles Inc.

      Avex Management Agency Inc. Avex Creator Agency Inc.

      Avex Pictures Inc.

      Avex Animation Labels Inc. FLAGSHIP LINE, Inc.

      Avex Film Labels Inc. AN Inc.*6

      The Anime Times Company AVEX AY FACTORY LLC.

      Avex Southeast Asia Pte. Ltd.*3 Avex China Inc.

      Avex Hong Kong Ltd. Avex Taiwan Inc.

      Avex USA Inc.

      Avex Music Group LLC Avex Catalog Fund 1 LLC*8 Avex Song Fund 1 LLC*8

      S10 Entertainment & Media LLC*2

      *1 Avex Technologies Inc. was excluded from the scope of consolidation from the year ended March 31, 2026, since it was merged into Avex Entertainment Inc. in absorption-type merger.

      *2 S10 Entertainment & Media LLC was included in the scope of consolidation from the year ended March 31, 2026, as it became a subsidiary under the substantial control criteria.

      *3 The company name of Avex Asia Pte. Ltd. was changed to Avex Southeast Asia Pte. Ltd. in the year ended March 31, 2026.

      *4 Virtual Avex Inc., fuzz, Inc. and LIVESTAR Inc. were excluded from the scope of consolidation in the year ended March 31, 2026, due to the sale of their shares.

      *5 Avex ASUNARO Company Inc. was excluded from the scope of consolidation from the year ended March 31, 2026, since it was merged into AVEX AY FACTORY LLC. in absorption-type merger.

      *6 For the year ended March 31, 2026, aNCHOR Inc. carried out an incorporation-type company demerger in which it was the demerging company, and changed its company name to AN Inc. effective January 7, 2026.

      *7 Avex Fan Marketing Inc. and Avex Saudi Arabia LLC were excluded from the scope of consolidation in the year ended March 31, 2026, due to their liquidation.

      *8 Avex Catalog Fund 1 LLC and Avex Song Fund 1 LLC were included in the scope of consolidation from the year ended March 31, 2026, due to their establishment.

      Investments in five (six in 2025) associated companies are accounted for by the equity method. (Associated Companies Accounted for by Equity Method)

      Memory-Tech Holdings Inc. AWA Co. Ltd.

      HI&max Inc.

      Fashion Freak Show International Ltd. Show-What Entertainment LLC*3

      *1 S10 Entertainment & Media LLC was excluded in the scope of equity method from the year ended March 31, 2026, as it became a consolidated subsidiary during the period under the substantial control criteria.

      *2 SANRIO SOUTH EAST ASIA Pte. Ltd. was excluded from the scope of equity method from the year ended March 31, 2026, due to the sale of its shares.

      *3 Show-What Entertainment LLC was included in the scope of consolidation from the year ended March 31, 2026, as its materiality has increased in terms of financial significance.

      Investments in the remaining associated companies are stated at cost. If the equity method of accounting had been applied to the investments in these companies, the impact on the accompanying consolidated financial statements would be immaterial.

      The excess of the cost of acquisition over the fair value of the net assets of an acquired subsidiary at the date of acquisition is amortized over 5 to 8 years.

      All significant intercompany balances and transactions have been eliminated in consolidation. All material unrealized profit included in assets resulting from transactions within the Avex Group is also eliminated.

      Accounts of subsidiaries whose year-ends differ from March 31 have been consolidated using pro forma financial information prepared as of March 31.

   2. Unification of Accounting Policies Applied to Foreign Subs idiaries for the Cons olidated Financial Statements —Under Accounting Standards Board of Japan ("ASBJ") Practical Issues Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements," the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar circumstances should in principle be unified for the preparation of the consolidated financial statements. However, financial statements prepared by foreign subsidiaries in accordance with either IFRS Accounting Standards or generally accepted accounting principles in the United States of America (Financial Accounting Standards Board Accounting Standards Codification) tentatively may be used for the consolidation process, except for the following items that should be adjusted in the consolidation process so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill;

      (b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costs of R&D;

      (d) cancellation of the fair value model of accounting for property, plant and equipment and

      investment properties and incorporation of the cost model of accounting; and (e) recording a gain or loss through profit or loss on the sale of an investment in an equity instrument for the difference between the acquisition cost and selling price, and recording impairment loss through profit or loss for other-than-temporary declines in the fair value of an investment in an equity instrument, where a foreign subsidiary elects to present in other comprehensive income

      subsequent changes in the fair value of an investment in an equity instrument.

   3. Unification of Accounting Policies Applied to Foreign As s ociated Companies for the Equity Method—ASBJ Statement No. 16, "Accounting Standard for Equity Method of Accounting for Investments," requires adjustments to be made to conform the associate's

      accounting policies for similar transactions and events under similar circumstances to those of the parent company when the associate's financial statements are used in applying the equity method, unless it is impracticable to determine such adjustments. In addition, financial

      statements prepared by foreign associated companies in accordance with either IFRS Accounting Standards or generally accepted accounting principles in the United States of America tentatively may be used in applying the equity method if the following items are adjusted so that net income is accounted for in accordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or loss of

      pensions that has been recorded in equity through other comprehensive income; (c) expensing capitalized development costs of R&D; (d) cancellation of the fair value model of accounting for property, plant and equipment and investment properties and incorporation of the cost model of accounting; and (e) recording a gain or loss through profit or loss on the sale of an investment in an equity instrument for the difference between the acquisition cost and selling price, and recording impairment loss through profit or loss for other-than-temporary declines in the fair value of an investment in an equity instrument, where a foreign subsidiary elects to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument.

   4. Bus ines s Combinations —Business combinations are accounted for using the purchase method. Acquisition-related costs, such as advisory fees or professional fees, are accounted for as expenses in the periods in which the costs are incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, an acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, which shall not exceed one year from the acquisition, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and that would have affected the

      measurement of the amounts recognized as of that date. Such adjustments shall be recognized as if the accounting for the business combination had been completed at the acquisition date. The acquirer recognizes any bargain purchase gain in profit or loss immediately on the acquisition date after reassessing and confirming that all of the assets acquired and all of the

      liabilities assumed have been identified after a review of the procedures used in the purchase price allocation. A parent's ownership interest in a subsidiary might change if the parent purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrolling interest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while

      the parent retains its controlling interest in its subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is

      adjusted is accounted for as capital surplus as long as the parent retains control over its subsidiary.

   5. Cas h Equivalents —Cash equivalents are short-term investments that are readily convertible into cash and exposed to insignificant risk of changes in value.

      Cash equivalents include time deposits, certificates of deposit, commercial paper and bond funds, all of which mature or become due within three months of the date of acquisition.

   6. Inventories —Merchandise, finished products and supplies are stated at the lower of cost, determined by the moving average cost method, or net selling value.

      Raw materials are stated at the lower of most recent purchase price, which approximates cost determined by the first-in, first-out method, or net selling value.

      Work in process (including the right to use audiovisual) is stated at the lower of cost, determined by the specific identification method, or net selling value.

      Valuation losses due to declines in profitability included in cost of sales for the years ended March 31, 2026 and 2025, were ¥1,767 million ($11,052 thousand) and ¥2,662 million,

      respectively.

   7. Marketable and Inves tment Securities —Marketable and investment securities classified as available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of equity.

      Nonmarketable available-for-sale equity securities are stated at cost determined by the moving-average method. For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by a charge to income.

      Investments in limited partnerships are accounted for by the equity method.

   8. Property, Plant and Equipment—Property, plant and equipment are stated at cost.

      Depreciation of property, plant and equipment of the Company and its consolidated domestic

      subsidiaries is computed by the declining-balance method based on the estimated useful lives of the assets, while the straight-line method is applied to buildings (excluding accompanying facilities) acquired after April 1, 1998, and building improvements and structures acquired after April 1, 2016.

      Depreciation of property, plant and equipment of consolidated foreign subsidiaries is computed by the straight-line method.

      The range of useful lives is principally from 3 to 43 years for buildings and structures and from 2 to 20 years for other.

      Accumulated depreciation of property, plant and equipment as of March 31, 2026 and 2025, was

      ¥7,877 million ($49,268 thousand) and ¥7,176 million, respectively.

   9. Long-Lived As s ets —The Avex Group reviews its long-lived assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
   10. Intangible As s ets —Intangible assets are amortized by the straight-line method over the estimated useful life (2–5 years).
   11. Leas es —The Avex Group leases certain tools, furniture and fixtures and vehicles as finance

       leases that do not transfer ownership of the leased property to the lessee. Finance leases that do not transfer ownership of the leased property to the lessee are depreciated by the straight-line method over the terms of the respective leases with no residual value.

   12. Allowance for Doubtful Accounts —The allowance for doubtful accounts is stated in amounts considered to be appropriate based on the Company's past credit loss experience and a valuation of potential losses in the receivables outstanding.
   13. Provis ion for Bonus es —Provision for bonuses is provided for the bonus payments to employees in estimated bonus amounts attributable to the current fiscal year.
   14. Retirement and Pens ion Plans —The Avex Group (excluding certain consolidated subsidiaries) has defined benefit pension plans.

       Additional retirement benefits are paid in certain circumstances.

       The Company accounts for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date. The projected benefit obligations are attributed to periods on a benefit formula basis. Actuarial gains and losses and past service costs that are yet to be recognized in profit or loss are recognized within equity (accumulated other comprehensive income), after adjusting for tax effects and are recognized in profit or loss over 1 year and 11 years, respectively, no longer than the expected average remaining service period of the employees. The discount rate is determined using a single weighted-average discount rate reflecting the estimated timing and amount of benefit payment.

   15. Net Sales —The Avex Group recognizes revenue in accordance with that core principle by applying the following steps:

       Step 1: Identify the contracts with a customer

       Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price

       Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

       The Avex Group provides a wide variety of goods and services, including through its music business, anime & visual content business and overseas business.

       In the sale of merchandise and products, the Avex Group determines that control of merchandise and products transfers to the customer at the time of shipment, and recognizes revenue at the time of shipment. However, for merchandise and products shipped before the release date, the Avex Group recognizes revenue at the time of sale according to accepted business practices

       since the time from shipment to delivery is very short.

       For merchandise and products sold where the Avex Group determines its role is that of an agent, it recognizes revenue as the net amount obtained by deducting the amount of payment to a third party from the total amount of the consideration.

       Regarding the holding of live events, the Avex Group determines that services promised transfer to customers and performance obligations are satisfied at the time the event is held. Thus, the Avex Group recognizes revenue at the time of the event.

       Various types of music and other distribution are classified as transactions that grant licenses to customers. With respect to sales or usage-based royalties received from customers, the Avex Group recognizes revenue from such distribution at the time the customer records revenue in connection with the license or the licensee uses the license.

   16. Income Taxes —The provision for income taxes is computed based on the pretax income included in the consolidated statement of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted income tax rates to the temporary differences.

       The Avex Group files a tax return under the group tax sharing system.

   17. Foreign Currency Trans actions —All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet date. The foreign exchange gains and losses from translation are recognized in the consolidated statement of income to the extent that they are not hedged by forward exchange contracts.
   18. Foreign Currency Financial Statements —The balance sheet accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date except for equity, which is translated at the historical rate. Differences arising from such translation are shown as "Foreign currency translation adjustments" under accumulated other comprehensive income in a separate component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated into yen at the average exchange rate.
   19. Derivatives and Hedging Activities —The Avex Group uses derivative financial instruments to manage its exposures to fluctuations in foreign exchange. Foreign exchange forward contracts are utilized by the Avex Group to reduce foreign currency exchange risks. The Avex Group does not enter into derivatives for trading or speculative purposes.

       Derivative financial instruments are classified and accounted for as follows: (1) all derivatives are recognized as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized in the consolidated statement of income; and (2) for derivatives used for hedging purposes, if such derivatives qualify for hedge accounting because of high correlation and effectiveness between the hedging instruments and the hedged items, gains or losses on derivatives are deferred until maturity of the hedged transactions.

       Foreign currency forward contracts applied for forecasted transactions are measured at fair value, but the unrealized gains/losses are deferred until the underlying transactions are completed.

   20. Per Share Information—Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding for the period, retroactively adjusted for stock splits.

       Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock. Diluted net income per share of common stock

       assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with an applicable adjustment for related interest expense, net of tax, and full exercise of outstanding warrants.

       Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective fiscal years, including dividends to be paid after the end of the year.

   21. Change in Pres entationCons olidated Balance Sheet—"Goodwill" of ¥22 million for the year ended March 31, 2025, which was included in "Intangible assets" in investments and other assets, has been presented separately to conform to the current year's presentation.Cons olidated Statement of Income—"Loss on investments in partnership" of ¥16 million for the year ended March 31, 2025, which was included in "Other—net" in other income (expenses), has been presented separately to conform to the current year's presentation.Cons olidated Statement of Cas h Flows —"Share based compensation expenses" of

       ¥155 million for the year ended March 31, 2025, which was presented separately in prior periods, has been reclassified into "Other—net" in operating activities to conform to the current year's presentation.

   22. New Accounting PronouncementsAccounting Standard for Leas es , Etc.—On September 13, 2024, the ASBJ revised ASBJ Statement No. 34, "Accounting Standard for Leases" and ASBJ Guidance No. 33, "Guidance on Accounting Standard for Leases," etc.

       1. Overview

          As part of its efforts to align Japanese GAAP with international standards, the ASBJ has developed a new accounting standard for leases under which lessees are required to recognize all leases as assets and liabilities. This standard is based on the single accounting model adopted in IFRS 16 "Leases." However, rather than incorporating all provisions of IFRS 16, the ASBJ has selectively adopted the main elements in order to achieve a

          simplified and practical approach. The aim is to make the new standard user-friendly while minimizing the need for adjustments when using IFRS 16 in preparing non-consolidated financial statements.

          Under the lessee accounting model, depreciation of the right-of-use assets and interest expense on the lease liabilities are recognized for all leases, regardless of whether they are classified as finance leases or operating leases, in accordance with the IFRS 16 model.

       2. Scheduled effective date

          The Company applies the new standards from the start of the year ending March 31, 2028.

       3. Effects of application of new standards

          The Company is currently in the process of determining the effects of the new standards on its consolidated financial statements.

          Accounting Standard for Subs equent Events , Etc.—On January 9, 2026, the ASBJ revised ASBJ Statement No. 41, "Accounting Standard for Subsequent Events" and ASBJ Guidance No. 35, "Guidance on Accounting Standard for Subsequent Events."

          1. Overview

             The Accounting Standard for Subsequent Events prioritizes the establishment of a comprehensive accounting standard addressing the definition, accounting treatment, and disclosure of subsequent events. As a fundamental policy, it will generally follow the accounting content outlined in the Japan Institute of Certified Public Accountants (JICPA) Audit and Assurance Standards Committee's Audit Standard Report No. 560, Practice Guide No. 1, "Audit Considerations Regarding Subsequent Events," and to organize the evaluation period for subsequent events, while also requiring new notes regarding the approval of financial statement disclosure.

          2. Scheduled effective date

          The Company applies the new standards from the start of the year ending March 31, 2028.

3. SIGNIFICANT ACCOUNTING ESTIMATES

   Deferred Tax As s ets

   (1) Carrying amounts
   	Millions of Yen	Thousands of U.S. Dollars
   	2026 2025	2026
   Deferred tax assets	¥ 5,307 ¥ 5,183	$ 33,193
   (2) Information on the s ignificant estimate

   As stated in Note 13, "Income Taxes," the Avex Group recorded deferred tax assets determined to be recoverable before being offset against deferred tax liabilities of ¥5,698 million

   ($35,639 thousand) (total deferred tax assets of ¥8,616 million ($53,890 thousand) and valuation allowance of ¥(2,917) million ($(18,244) thousand)). The amount of deferred tax assets is the amount expected to be recovered in light of future taxable income based on profitability and tax planning, and in light of the scheduling of the fiscal period in which deductible temporary differences are expected to be reversed. In calculating the amount expected to be recovered, future taxable income based on profitability is estimated on the basis of the Group's business

   plan, which includes key assumptions relating to future sales projections and market trends.

   The assumptions used in these estimates may be affected by changes in uncertain economic conditions, and should it become necessary to revise the amount of future taxable income, this could have a significant impact on the amount of deferred tax assets recognized in the

   consolidated financial statements for the following fiscal year.

   Valuation of Goodwill for Equity-Method Affiliates
   (1) Carrying amounts
   	Millions of Yen	Thousands of U.S. Dollars
   	2026 2025	2026
   Goodwill	¥ 2,535 ¥ 22	$ 15,855

   Note: "Goodwill" of S10 Entertainment & Media LLC as of the year ended March 31, 2025, was nil.

   (2) Information on the s ignificant estimate

   Goodwill associated with S10 Entertainment & Media LLC is recognized as the excess earning power expected from the acquired company's future business activities, representing the difference between the acquisition cost and the fair value of the acquired entity's identifiable

   assets and liabilities at the date of the business combination. It is systematically amortized using the straight-line method over the period of its expected benefit.

   Recoverability of the goodwill amounts is determined with reference to future cash flows, based on the business plan prepared by the acquired company. Major assumptions of the plans involve the number and amounts of future contracts and market trends.

   The assumptions used in these estimates are highly uncertain. If the recoverable amount falls below the book value due to changes in future economic conditions or other factors, it may be necessary to record an impairment loss, which could have a significant impact on the

   consolidated financial statements for the year ended March 31, 2026.

4. BUSINESS COMBINATION

   Bus ines s Combination through Additional Acquis ition

   1. Outline of business combination

      1. Name of acquired company and its business outline

         Name of the acquired company: S10 Entertainment & Media LLC Business outline: Artist management business

      2. Major reason for the business combination

         As S10 Entertainment & Media LLC ("S10") conducts a management business for prominent international artists and talent in the United States of America, the Avex Group deemed that the business combination would broaden opportunities for the Avex Group artists to expand overseas and support their activities in a wider range of markets, and that, through these efforts, it could expect to accelerate the global development of intellectual property originating in Japan and expand business growth in the global market.

      3. Date of business combination April 1, 2025

      4. Legal form of business combination

         The acquired company has become a subsidiary based on the substantial control criteria.

      5. Name of company after business combination No change

      6. Percentage of voting rights acquired

         Percentage of voting rights held

         immediately before the business combination: 40.0%

         Percentage of voting rights additionally

         acquired on the day of the business combination: —% Percentage of voting rights held after acquisition: 40.0%

      7. Major basis for determining the acquired company

         As the CEO of S10 assumed the position of CEO of Avex Music Group LLC, a consolidated subsidiary, S10 transitioned from an associated company accounted for by equity method of the Company to a consolidated subsidiary, based on the substantial control criteria.

   2. Period of the acquired company's results included in the consolidated financial statements

      April 1, 2025 to December 31, 2025

   3. Acquisition cost of the acquired company and related details of each class of consideration

      March 31, 2026 Millions of Yen

      Thousands of

      U.S. Dollars

      Consideration for acquisition:

      Fair value of the acquiree's interest at

      the date of the business combination ¥ 2,779 $ 17,381

      Acquisition cost ¥ 2,779 $ 17,381

   4. Major acquisition-related costs

      Not applicable

   5. Amount of goodwill incurred, reason for the goodwill incurred, and the method and period of amortization

      1. Amount of goodwill incurred

         ¥2,759 million ($17,256 thousand)

      2. Reason for the goodwill incurred

         Goodwill represents the excess earning power expected from future business activities.

      3. The method and period of amortization Straight-line method over eight years

   6. The assets acquired and the liabilities assumed at the acquisition date

   March 31, 2026	Millions of Yen	Thousands of U.S. Dollars
   Current assets	¥ 102	$ 637
   Total assets	¥ 102	$ 637
   Current liability	¥ 53	$ 331
   Total liabilities	¥ 53	$ 331

5. NOTES AND ACCOUNTS RECEIVABLE

   Receivables from contracts with customers, included in notes and receivables—trade, at March 31, 2026 and 2025, were as follows:

   Millions of Yen

   Thousands of

   U.S. Dollars

   2026 2025 2026

   Accounts receivables—trade ¥ 25,678 ¥ 22,952 $ 160,607

6. MARKETABLE AND INVESTMENT SECURITIES

   The costs and aggregate fair values of marketable and investment securities at March 31, 2026 and 2025, were as follows:

   Millions of Yen

   March 31, 2026 Cost

   Unrealized

   Gains

   Unrealized

   Losses

   Fair

   Value

   Securities classified as available-for-sale—

   equity securities ¥ 712 ¥ 1,555 ¥ 2,268

   March 31, 2025

   Securities classified as available-for-sale—

   equity securities ¥ 674 ¥ 1,553 ¥ 2,228

   Thousands of U.S. Dollars

   March 31, 2026 Cost

   Unrealized

   Gains

   Unrealized

   Losses

   Fair

   Value

   Securities classified as available-for-sale—

   equity securities $ 4,453 $ 9,726 $ 14,185

   Note: "Cost" for the years ended March 31, 2026 and 2025, represents the carrying amount after impairment.

   The information for available-for-sale securities which were sold during the year ended March 31, 2026, was as follows:

   Millions of Yen

   March 31, 2026 Proceeds

   Realized

   Gains

   Realized

   Losses

   Available-for-sale equity securities ¥ 99 ¥ 78

   Thousands of U.S. Dollars

   March 31, 2026 Proceeds

   Realized

   Gains

   Realized

   Losses

   Available-for-sale equity securities $ 619 $ 487

   The information for available-for-sale securities which were sold during the year ended March 31, 2025, is not disclosed since the Avex Group did not sell any available-for-sale securities.

   The impairment losses on available-for-sale securities for the year ended March 31, 2026, were

   ¥97 million ($606 thousand) (¥97 million ($606 thousand) for unlisted stocks).

   The impairment losses on available-for-sale securities for the year ended March 31, 2025, were

   ¥103 million (¥103 million for unlisted stocks).

   Investments in associated companies included in investment securities for the years ended March 31, 2026 and 2025, were as follows:

   	Millions of Yen	Thousands of U.S. Dollars
   	2026 2025	2026
   Equity securities	¥ 1,627 ¥ 4,613	$ 10,176

7. LONG-LIVED ASSETS

   The Avex Group performs asset groupings in units that facilitate the ongoing assessment of earnings based on reportable segment classifications for business assets, as a minimum unit that generates independent cash flow.

   For the year ended March 31, 2026, revising down the book value of asset groups to their recoverable value, the Company recorded an impairment loss of ¥372 million ($2,326 thousand) as other expense for the amount of this downward revision for business assets in the music business and the anime & visual content business since recovery could not be expected in line with the originally anticipated schedule.

   The Company measures recoverable amounts based on value in use, which has been assessed to be nil due to the likelihood of negative future cash flow.

   Details of the impairment losses for the year ended March 31, 2026, are as follows:

   Purpose of Use Location Type of Assets

   Millions

   of Yen

   Thousands of

   U.S. Dollars

   Business use

   (music business)

   Tokyo Facilities attached to buildings, etc.

   ¥ 84 $ 525

   Software in progress 183 1,144

   Business use Tokyo Software 103 644

   (anime & visual content business)

   For the year ended March 31, 2025, revising down the book value of asset groups to their recoverable value, the Company recorded an impairment loss of ¥496 million as other expense for the amount of this downward revision for business assets in the music business and the anime & visual content business since recovery could not be expected in line with the originally anticipated schedule.

   The Company measures recoverable amounts based on value in use, which has been assessed to be nil due to the likelihood of negative future cash flow.

   Details of the impairment losses for the year ended March 31, 2025, are as follows:

   Purpose of Use Location Type of Assets Millions of Yen

   Business use	Tokyo	Software	¥ 244
   (music business)		Goodwill	176

   Business use Tokyo Software 74

   (anime & visual content business)

8. LONG-TERM DEBT

   Long-term debt at March 31, 2026 and 2025, consisted of the following:

   Millions of Yen

   Thousands of

   U.S. Dollars

   2026 2025 2026

   Long-term loans:

   Current portion of lease obligations	¥ 66	71	$ 412
   Lease obligations excluding current portion	177	184	1,107
   Total	¥ 244	¥ 259	$ 1,526

   Current portion of long-term loans ¥ 3 Lease obligation:

   Annual maturities of long-term debt at March 31, 2026, were as follows:

   Year Ending

   March 31

   Millions of Yen Lease

   Obligation

   2027 ¥ 66

   2028 103

   2029 45

   2030 23

   2031 and thereafter 4

   Year Ending

   March 31

   Thousands of

   U.S. Dollars Lease

   Obligation

   2027 $ 412

   2028 644

   2029 281

   2030 143

   2031 and thereafter 25

   For the purpose of obtaining working funds effectively, for the years ended March 31, 2026 and 2025, the Avex Group has entered into commitment lines with four financial institutions.

   Information on loan commitment agreements was as follows:

   	Millions of Yen	Thousands of U.S. Dollars
   	2026 2025	2026
   Contract amounts Borrowings outstanding	¥ 11,000 ¥ 11,000	$ 68,801
   Unused balance	¥ 11,000 ¥ 11,000	$ 68,801

9. RETIREMENT AND PENSION PLANS

   The Avex Group (excluding certain consolidated subsidiaries) has defined benefit pension plans. Additional retirement benefits are paid in certain circumstances.

   1. The changes in defined benefit obligation for the years ended March 31, 2026 and 2025, were as follows:

      Millions of Yen

      Thousands of

      U.S. Dollars

      	2026	2025	2026
      Balance at beginning of year	¥ 5,148	¥ 5,631	$ 32,199
      Current service cost	408	435	2,551
      Interest cost	102	33	637
      Actuarial losses (gains)	59	(543)	369
      Benefits paid	(295)	(408)	(1,845)
      Balance at end of year	¥ 5,425	¥ 5,148	$ 33,931

   2. The changes in plan assets for the years ended March 31, 2026 and 2025, were as follows:

      Millions of Yen

      Thousands of

      U.S. Dollars

      	2026	2025	2026
      Balance at beginning of year	¥ 5,190	¥ 5,249	$ 32,461
      Expected return on plan assets	103	104	644
      Actuarial gains (losses)	253	(117)	1,582
      Contributions from the employer	365	362	2,282
      Benefits paid	(295)	(408)	(1,845)
      Balance at end of year	¥ 5,618	¥ 5,190	$ 35,138

   3. Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets was as follows:

      	Millions of Yen	Thousands of U.S. Dollars
      	2026 2025	2026
      Funded defined benefit obligation	¥ 5,425 ¥ 5,148	$ 33,931
      Plan assets	(5,618) (5,190)	(35,138)
      Net asset arising from defined benefit obligation	¥ (193) ¥ (42)	$ (1,207)
      	Millions of Yen	Thousands of U.S. Dollars
      	2026 2025	2026
      Asset for retirement benefits	¥ (193) ¥ (42)	$ (1,207)
      Net asset arising from defined benefit obligation	¥ (193) ¥ (42)	$ (1,207)

   4. The components of net periodic benefit costs for the years ended March 31, 2026 and 2025, were as follows:

      Millions of Yen

      Thousands of

      U.S. Dollars

      	2026	2025	2026
      Service cost	¥ 408	¥ 435	$ 2,551
      Interest cost	102	33	637
      Expected return on plan assets	(103)	(104)	(644)
      Recognized actuarial gains	(426)	(160)	(2,664)
      Amortization of prior service cost	28	31	175
      Net periodic benefit costs	¥ 10	¥ 235	$ 62

   5. Amounts recognized in other comprehensive income (before income tax effect) in respect of defined retirement benefit plans for the years ended March 31, 2026 and 2025, were as follows:

      	Millions of Yen	Thousands of U.S. Dollars
      	2026 2025	2026
      Prior service cost	¥ 28 ¥ 31	$ 175
      Actuarial (gains) losses	(232) 265	(1,451)
      Total	¥ (203) ¥ 296	$ (1,269)

   6. Amounts recognized in accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of March 31, 2026 and 2025, were as follows:

   Millions of Yen

   Thousands of

   U.S. Dollars

   		2026	2025	2026
   	Unrecognized prior service cost Unrecognized actuarial gains	¥ (193)	¥ 28 (426)	$ (1,207)
   	Total	¥ (193)	¥ (397)	$ (1,207)
   (7)	Plan assets
   	a. Components of plan assets
   	Plan assets consisted of the following:
   			2026	2025
   	General insurance account		31 %	33 %
   	Debt investments		30	26
   	Alternative investments		19	20
   	Equity investments		18	18
   	Others		2	3
   	Total		100 %	100 %

   Alternative investments are mainly investment funds.

   b. Method of determining the expected rate of return on plan assets

   The expected rate of return on plan assets is determined considering the long-term rates of return which are expected currently and in the future from the various components of the plan assets.

   (8) Assumptions used for the years ended March 31, 2026 and 2025, were set forth as follows:

   	2026	2025
   Discount rate	2.0%	2.0%
   Expected rate of return on plan assets	2.0	2.0

10. EQUITY

    Japanese companies are subject to the Companies Act of Japan (the "Companies Act"). The significant provisions in the Companies Act that affect financial and accounting matters are

    summarized below:

    1. Dividends

       Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at the shareholders' meeting. Additionally, for companies that meet certain criteria including (1) having a Board of Directors, (2) having independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service of the directors being prescribed as one year rather than the normal two-year term by its articles of incorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation.

       However, the Company does not meet all the above criteria.

       Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the shareholders, but the amount of net assets after dividends must be maintained at no less than ¥3 million.

    2. Increas es /Decreas es and Trans fer of Common Stock, Res erve and Surplus

       The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus), depending on the equity account charged upon the payment of such dividends, until the aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts within equity under certain conditions upon

       resolution of the shareholders.

    3. Treas ury Stock and Treas ury Stock Acquis ition Rights

       The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the shareholders which is determined by a specific formula. Under the Companies Act, stock acquisition rights are presented as a separate component of equity. The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or deducted directly from stock acquisition rights.

11. INFORMATION RELATED TO CONSOLIDATED CHANGES IN EQUITY

    Changes in the outstanding number of shares of common stock and treasury stock for the years ended March 31, 2026 and 2025, were as follows:

    Shares

    	2026	2025
    Issued—Common stock: Balance at beginning of year	45,792,500	45,663,400
    Increase	126,800	129,100
    Balance at end of year	45,919,300	45,792,500
    Treasury stock—Common stock: Balance at beginning of year	3,410,680	410,546
    Increase	148	3,000,134
    Balance at end of year	3,410,828	3,410,680

    Notes: 1. For the year ended March 31, 2026, the increase in common stock of 126,800 shares resulted from issuance of new stock as compensation through restricted stock.

    1. For the year ended March 31, 2026, the increase in treasury stock of 148 shares resulted from purchase of shares comprising less than one unit.

    2. For the year ended March 31, 2025, the increase in common stock of 129,100 shares resulted from issuance of new stock as compensation through restricted stock.

    3. For the year ended March 31, 2025, the major breakdown of changes in treasury stock was as follows:

    March 31, 2025 Shares

    Increase:

    Purchase of shares based on the resolution approved by

    the Board of Directors' meeting held on May 9, 2024 3,000,000 Purchase of shares comprising less than one unit 134

    Dividends paid to shareholders for the years ended March 31, 2026 and 2025, were as follows:

    Amount Millions

    Amount per Share

    March 31, 2026 Type of Shares of Yen Yen Record Date Effective Date

    Resolution approved by:

    The Board of Directors' meeting held on

    May 8, 2025 Common stock ¥ 1,059 ¥ 25.00 March 31, 2025 June 12, 2025 The Board of Directors' meeting held on

    November 13, 2025 Common stock 1,062 25.00 September 30, 2025 December 4, 2025

    March 31, 2025

    Resolution approved by:

    The Board of Directors' meeting held on

    May 9, 2024 Common stock ¥ 1,131 ¥ 25.00 March 31, 2024 June 7, 2024 The Board of Directors' meeting held on

    November 7, 2024 Common stock 1,076 25.00 September 30, 2024 December 5, 2024

    March 31, 2026 Type of Shares

    Amount Thousands of

    U.S. Dollars

    Amount per Share U.S.

    Dollars Record Date Effective Date

    Resolution approved by:

    The Board of Directors' meeting held on

    May 8, 2025 Common stock $ 6,623 $0.16 March 31, 2025 June 12, 2025 The Board of Directors' meeting held on

    November 13, 2025 Common stock 6,642 0.16 September 30, 2025 December 4, 2025 Dividends declared after the fiscal year ended March 31, 2026, were as follows:

    Amount Millions

    Amount per Share

    March 31, 2026 Type of Shares of Yen Yen Record Date Effective Date

    Resolution approved by—The Board of Directors' meeting

    held on May 14, 2026 Common stock ¥ 1,062 ¥ 25.00 March 31, 2026 June 11, 2026

    March 31, 2026 Type of Shares

    Amount Thousands of

    U.S. Dollars

    Amount per Share U.S.

    Dollars Record Date Effective Date

    Resolution approved by—The Board of Directors' meeting

    held on May 14, 2026 Common stock $ 6,642 $0.16 March 31, 2026 June 11, 2026

12. NET SALES

    1. Dis aggregation of Revenue

       Millions of Yen

       2026

       Reportable Segment Anime &

       	Music Business	Visual Content Business	Overseas Business	Other	Total
       Live	¥ 53,482				¥ 53,482
       Merchandising	8,238				8,238
       Management	12,102				12,102
       Music package	19,741				19,741
       Digital music distribution	15,644				15,644
       Music publication	3,262				3,262
       E-commerce	17,834				17,834
       Anime		¥ 17,138			17,138
       Live-action visual content		4,377			4,377
       Overseas			¥ 4,040		4,040
       Other	8,792	208		¥ 685	9,685
       Intercompany transaction adjustments	(17,659)	(600)	(88)	(628)	(18,976)
       Revenue from contracts with customers	121,438	21,123	3,952	57	146,571
       Sales to external customers	¥ 121,438	¥ 21,123	¥ 3,952	¥ 57	¥ 146,571

       Millions of Yen

       2025

       Reportable Segment Anime &

       Music

       Business

       Visual Content

       Business

       Overseas

       Business Other Total

       Live	¥	45,571			¥	45,571
       Merchandising		7,465				7,465
       Management		9,706				9,706
       Music package		21,445				21,445
       Digital music distribution		13,909				13,909
       Music publication		3,214				3,214
       E-commerce		16,535				16,535
       Fan clubs		1,585				1,585
       Anime			¥ 13,508			13,508
       Live-action visual content			4,724			4,724
       Overseas				¥ 3,447		3,447
       Other	8,172		260		¥ 662	9,095
       Intercompany transaction adjustments	(17,350)		(544)	(1)	(620)	(18,517)
       Revenue from contracts with customers	110,255		17,948	3,445	42	131,691
       Sales to external customers	¥ 110,255		¥ 17,948	¥ 3,445	¥ 42	¥ 131,691

       Thousands of Dollars

       2026

       Reportable Segment Anime &

       	Music Business	Visual Content Business	Overseas Business	Other	Total
       Live	$ 334,513				$ 334,513
       Merchandising	51,526				51,526
       Management	75,694				75,694
       Music package	123,473				123,473
       Digital music distribution	97,848				97,848
       Music publication	20,402				20,402
       E-commerce	111,546				111,546
       Anime		$ 107,192			107,192
       Live-action visual content		27,376			27,376
       Overseas			$ 25,268		25,268
       Other	54,991	1,300		$ 4,284	60,576
       Intercompany transaction adjustments	(110,451)	(3,752)	(550)	(3,927)	(118,689)
       Revenue from contracts with customers	759,557	132,117	24,718	356	916,756
       Sales to external customers	$ 759,557	$ 132,117	$ 24,718	$ 356	$ 916,756

    2. Bas ic Information to Unders tand Revenues from Contracts with Cus tomers

       Basic information to understand revenues from contracts with customers is described in Note 2, "Summary of Significant Accounting Policies," "o. Net Sales."

    3. Contract Balances

       Contract liabilities and advances received at the beginning and end of the year are as follows:

       Millions of Yen

       Thousands of

       U.S. Dollars

       2026 2025 2026

       Balance at beginning of year	¥	47	¥	45	$ 293
       Balance at end of year		45		47	281
       dvances received: Balance at beginning of year	4,097		2,014		25,625
       Balance at end of year	5,962		4,097		37,290

       Contract liabilities:

       A

       Notes: 1. Contract liabilities are mainly the balance of point card certificates granted by the Avex Group for which the performance obligation was not satisfied as of the end of the year. They are included in "Other" in current liabilities in the consolidated balance sheet.

       2. Advances received are mainly the balance of ticket prices for live events received by the Avex Group prior to the event as of the end of the year. Advances received are drawn down in line with revenue recognition, and the entire balance of advances received as of the beginning of the current year is recognized as revenue for that year.

    4. Trans action Prices Allocated to Remaining Performance Obligations

    Since the Avex Group has no significant transactions with an initial expected contract term exceeding one year, the Company does not include notes on remaining performance obligations for practical convenience. Also, there is no significant amount of consideration from contracts with customers that is not included in the transaction price.

13. INCOME TAXES

    The Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in the aggregate, resulted in a normal effective statutory tax rate of approximately 30.6% for the years ended March 31, 2026 and 2025.

    The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax assets and liabilities at March 31, 2026 and 2025, are as follows:

    Millions of Yen

    Thousands of

    U.S. Dollars

    	2026	2025	2026
    Deferred tax assets: Merchandise and finished products	¥ 1,486	¥ 1,281	$ 9,294
    Tax loss carryforwards	1,460	1,884	9,131
    Work in process	1,152	1,313	7,205
    Depreciation	847	771	5,297
    Advance payments—trade	411	329	2,570
    Refund liabilities	364	405	2,276
    Allowance for doubtful accounts	358	604	2,239
    Asset retirement obligations	329	247	2,057
    Advances received	243	142	1,519
    Provision for bonuses	234	80	1,463
    Other	1,728	2,059	10,808
    Total of tax loss carryforwards and temporary differences	8,616	9,120	53,890
    Less valuation allowance for tax loss carryforwards	(1,364)	(1,785)	(8,531)
    Less valuation allowance for temporary differences	(1,553)	(1,852)	(9,713)
    Total valuation allowance	(2,917)	(3,638)	(18,244)
    Deferred tax assets	5,698	5,481	35,639
    Deferred tax liabilities: Asset retirement obligations	(212)	(151)	(1,325)
    Unrealized gain on available-for-sale securities	(185)	(151)	(1,157)
    Liability for retirement benefits	(56)	(118)	(350)
    Gain on valuation of investment securities	(43)	(314)	(268)
    Deferred tax liabilities	(498)	(736)	(3,114)
    Net deferred tax assets	¥ 5,200	¥ 4,744	$ 32,524

    Valuation allowance decreased by ¥720 million ($4,503 thousand). The main component of the decrease was in accordance with a decrease in valuation allowance for tax loss carryforwards and allowance for doubtful accounts in the consolidated subsidiaries.

    The expiration of tax loss carryforwards, the related valuation allowances and the resulting net deferred tax assets as of March 31, 2026, were as follows:

    Millions of Yen

    March 31, 2026	1 Year or Less	After 1 Year through 2 Years	After 2 Years through 3 Years	After 3 Years through 4 Years	After 4 Years through 5 Years	After 5 Years	Total
    Deferred tax assets relating to tax loss
    carryforwards ¥4 Less valuation		¥ 233	¥ 77	¥ 20	¥ 258	¥ 865	¥ 1,460
    allowances for tax loss carryforwards (4)		(233)	(77)	(20)	(227)	(800)	(1,364)

    Net deferred tax assets relating to tax loss

    carryforwards 31 65 96

    Thousands of U.S. Dollars

    March 31, 2026	1 Year or Less	After 1 Year through 2 Years	After 2 Years through 3 Years	After 3 Years through 4 Years	After 4 Years through 5 Years	After 5 Years	Total
    Deferred tax assets relating to tax loss
    carryforwards $ 25 Less valuation		$ 1,457	$ 481	$ 125	$ 1,613	$ 5,410	$ 9,131
    allowances for tax loss carryforwards (25)		(1,457)	(481)	(125)	(1,419)	(5,003)	(8,531)

    Net deferred tax assets relating to tax loss

    carryforwards 193 406 600

    A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statement of income for the year ended March 31, 2026, with the corresponding figures for 2025, is as follows:

    	2026	2025
    Normal effective statutory tax rate	30.6 %	30.6 %
    Expenses not deductible for income tax purposes	7.4	6.6
    Enterprise taxes through external standards taxation	4.1	11.1
    Equity in earnings of associated companies	(3.1)	(2.5)
    Valuation allowance	(20.4)	22.5
    Equity in earnings or losses of associated companies		(16.0)
    Other—net	0.7	12.0
    Actual effective tax rate	19.3 %	64.3 %

    The Company and certain domestic subsidiaries applied the group tax sharing system. In addition, the Avex Group applied the "Practical Solution on the Accounting and Disclosure Under the Group Tax Sharing System" (PITF No. 42, August 12, 2021) for the accounting and disclosure of corporate tax, local corporate tax, and tax effect accounting.

14. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

    Selling, general and administrative expenses for the years ended March 31, 2026 and 2025, consisted of the following:

    Millions of Yen

    Thousands of

    U.S. Dollars

    2026 2025 2026

    Advertising expenses	¥	6,278	¥	5,966	$ 39,266
    Promotion expenses		2,375		1,946	14,854
    Provision of allowance for doubtful accounts		(60)		1,228	(375)
    Salaries and bonuses for employees		8,177		8,308	51,144
    Provision for bonuses		808		320	5,053
    Net periodic retirement benefit costs		29		213	181
    Depreciation		971		913	6,073
    Commission fee		7,846		6,897	49,074
    Other	11,266		11,863		70,465
    Total	¥ 37,694		¥ 37,658		$ 235,764

15. OTHER INCOME (EXPENSES)

    "Loss on liquidation of business" for the year ended March 31, 2026, represents additional retirement benefits and similar costs incurred in connection with the structural reform of a consolidated

    subsidiary.

16. LEASES

    Obligations and future minimum payments under non-cancellable operating leases for the years ended March 31, 2026 and 2025, were as follows:

    	Millions of Yen	Thousands of U.S. Dollars
    	2026 2025	2026
    Due within one year	¥ 427 ¥ 857	$ 2,670
    Due after one year	1 428	6
    Total	¥ 428 ¥ 1,286	$ 2,677

17. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

1. Avex Group Policy for Financial Ins truments

   The Avex Group uses financial instruments, mainly long-term debt including bank loans for working capital and equipment capital. Cash surpluses, if any, are invested in short-term time deposits, etc. Derivatives are not used for speculative purposes, but to manage exposure to financial risks as described in (2) below.

2. Nature and Extent of Ris ks Aris ing from Financial Ins truments and Ris k Management for Financial Ins truments

   Receivables, such as notes and accounts receivable—trade, and accounts receivable—other, are exposed to customer credit risk.

   The Avex Group manages its credit risk from receivables on the basis of internal guidelines, which include monitoring of payment terms and balances of customers.

   Investment securities mainly consist of investment in partnerships and others and equity instruments of customers and suppliers of the Avex Group.

   Investment in partnerships and others whose fair value is not readily determinable is managed by monitoring its financial condition on a regular basis.

   Equity instruments are exposed to the risk of market price fluctuations.

   The Avex Group monitors the value of equity instruments and the financial position of the issuer (business partners, etc.) on a regular basis.

   Payment terms of payables, such as notes and accounts payable—trade, accounts payable—other, accrued royalties and income taxes payable are less than one year.

   The Avex Group uses bank loans mainly for working capital.

   Derivative transactions are approved by the Executive Director in charge or the Board of Directors based on the internal guidelines which prescribe the authority and the limits for each transaction. Because the counterparties to these derivatives are limited to major financial institutions, the Avex Group does not anticipate any losses arising from credit risk.

   Payables and loans are subject to liquidity risk (the risk of being unable to make payments on the due date). The Avex Group, however, finances the borrowing needs of its domestic subsidiaries (excluding some subsidiaries) through a cash pooling system (CPS) in order to efficiently

   manage liquidity based on the cash management plans drawn up by each subsidiary every month.

3. Supplemental Explanation of Fair Values of Financial Ins truments

   Since the calculation of fair values of financial instruments incorporates factors that are subject to change, the Company adopts differing assumptions, which may alter fair value. Moreover, the contract amounts, etc. of derivative transactions in Note 18, "Derivatives" do not indicate the market risk of derivative transactions.

4. Fair Values of Financial Ins truments

   Fair values of financial instruments are as follows: Investments in equity instruments that do not have a quoted market price in an active market are not included in the following table.

   1. Fair value of financial instruments

      Millions of Yen

      March 31, 2026	Carrying Amount	Fair Value	Unrealized Gain/Loss
      Assets—Investment securities—available-for-sale	¥ 2,268	¥ 2,268
      Total	¥ 2,268	¥ 2,268
      Derivatives
      March 31, 2025 Assets—Investment securities—available-for-sale	¥ 2,228	¥ 2,228
      Total	¥ 2,228	¥ 2,228
      Liabilities—Long-term loans	¥ 3	¥ 3
      Total	¥ 3	¥ 3
      Derivatives	¥ 11	¥ 11

      Thousands of U.S. Dollars

      March 31, 2026	Carrying Amount	Fair Value	Unrealized Gain/Loss
      Assets—Investment securities—available-for-sale	$ 14,185	$ 14,185
      Total	$ 14,185	$ 14,185
      Derivatives

   2. Carrying amount of investments in equity instruments that do not have a quoted market price in an active market

      Millions of Yen

      Thousands of

      U.S. Dollars

      2026 2025 2026

      Unlisted equity instruments ¥ 4,012 ¥ 6,960 $ 25,093

      As of the years ended March 31, 2026 and 2025, information on investments in partnerships and other similar entities whose equity equivalent is recorded as a net amount on the

      consolidated balance sheet is omitted. The amounts recorded in the consolidated balance sheet for such investments as of the years ended March 31, 2026 and 2025, are

      ¥696 million ($4,353 thousand) and ¥650 million, respectively.

5. Maturity Analys is for Financial As s ets and Securities with Contractual Maturities

Millions of Yen