Investing cash flows in the first half were primarily driven by domestic and international amusement equipment procurement. Because our capital expenditure typically front-loads into the first half, cash outflows appear disproportionately large on a first half standalone basis.

Regarding full-year FCF for our existing businesses, our plan was formulated in line with the capital allocation policy revised in December 2025, and there are currently no changes to our initial full-year plan.

Additionally, please note that investing cash flows on the consolidated cash flow statement include expenditures associated with M&A, and thus differ from the FCF from existing businesses.

In July 2026, we completed the full rollout across the United States and Canada of a new system powered by “Kiddleton Force,” our field staff operation management app. Site visit frequency, which had temporarily dropped due to integration-related system issues, recovered to approximately 16,300 visits in July and 16,700 visits in August – marking the highest performance since the system disruption.

(Reference: page 13 of “FY2027/1 2Q Earnings Presentation” disclosed on September 11, 2026)

The recovery in site visit frequency allowed us to perform restocking and maintenance. Consequently, we achieved single-month profitability in July 2026. While turning a monthly profit represents a key milestone, we recognize that demonstrating sustainable earnings power is crucial, and we will continue to tackle this as our top strategic priority.

(Reference: page 12 of “FY2027/1 2Q Earnings Presentation” disclosed on September 11, 2026)

Previously, our primary focus was restoring visit frequency – prioritizing “volume” first. Having established a stable baseline for visit numbers, we are transitioning to the next phase: elevating visit “quality” by maximizing the operational impact on the sales floor during every single visit. This is not a new issue; rather, having recovered our volumes, we are now in a position to address it in earnest.

(Reference: page 16 of “FY2027/1 2Q Earnings Presentation” disclosed on September 11, 2026)

Specifically, the issue is that there remains a high percentage of booths where slow-selling prizes (“the Losers”) have been left in place for an extended period. Moving forward, headquarters will provide specific instructions via the app regarding “which prizes” to place “in which booths.” By taking measures such as moving slow-selling items to designated clearance booths and replacing them with new stock, we will create sales floors that feel fresh and inviting every time customers visit.

(Reference: page 19 of “FY2027/1 2Q Earnings Presentation” disclosed on September 11, 2026)

Out of approximately 13,000 locations in North America, we have so far replaced arcade machines and introduced Japanese IP prizes at around 5,000 sites. Expanding Japanese IP prizes to the remaining, untouched approximately 4,000 locations represents a key growth opportunity for us moving forward. Furthermore, as explained in Q2 above, there is still room to improve operations across the approximately 5,000 locations where rollouts have already begun, and we will continue driving these enhancements.

(Reference: page 21 of “FY2027/1 2Q Earnings Presentation” disclosed on September 11, 2026)

  Anime IP prizes from hit franchises like “Dragon Ball Z,” “NARUTO,” and “Demon Slayer: Kimetsu no Yaiba” have proven exceptionally popular. Starting in October, we will continue rolling out additional prize lineups featuring highly requested IPs.

(Reference: page 22 of “FY2027/1 2Q Earnings Presentation” disclosed on September 11, 2026)