CEO Message

Toward a new stage of growth

　In Q1 FY2026, our Domestic debugging services continued to perform strongly, driven by the sustained acquisition of a high volume of new title projects for Nintendo Switch 2 since last year. Furthermore, the contribution from HUWIZ SOLUTIONS INC., which became our subsidiary in November 2025, supported the DH Group Business in delivering double-digit growth in both sales and profit. Meanwhile, in the AGEST Group business, we continued our efforts to build a business model less dependent on headcount through expanded sales of our proprietary AI testing tool “TFACT” and our proprietary security management tool “SBOM Archi,” which identifies and visualizes vulnerabilities. Nevertheless, the completion of a large ERP implementation support project and a sharp contraction in system development projects amid broader AI adoption weighed on performance, resulting in year-on-year declines in both sales and profit.
　As a result, consolidated net sales for Q1 FY2026 were 9,847 million yen (+5.0% YoY), and consolidated operating income was 624 million yen (-11.7% YoY).

　In addition, on 6 August 2026, Sandbox K.K. (the offeror), represented by Mr. Miyazawa, founder and current Representative Director and Chairman of DIGITAL HEARTS HOLDINGS Co., Ltd. (the Company), issued a release stating that it commences a tender offer (TOB) for the Company’s common shares as part of an MBO. After establishing a Special Committee independent of the offeror and the Company and conducting deliberations, the Company resolved to express the opinion in support of the tender offer and to recommend that the shareholders tender their shares. (For details, please refer to “Notice of Implementation of MBO and Recommendation for Tendering Shares”.)
　In recent years, advances in AI have been rapidly transforming the business environment surrounding the Company. In March this year, we made a management decision to withdraw the initiative regarding the share-distribution-type spin-off and listing of AGEST, Inc., which we had been preparing for around three years, and decided to concentrate management resources on our most important current issue: “rebuilding a competitive business foundation in the AI era.” This is because, in an era of rapid change, we believe that flexible management, unbound by conventional thinking or existing policies, and the ability to promptly reassess decisions as needed, are essential to sustainable growth.

　Under these circumstances, after receiving the proposal for this MBO and holding various discussions, we concluded that, to drive future growth, it is necessary to pursue fundamental transformation of our business model, step up AI investment, and develop and strengthen services required in the AI era; and that, in order to execute these initiatives swiftly, we believe that going private and implementing fundamental reforms is more effective than pursuing these measures as a listed company.

　This management decision was by no means an easy one. However, such fundamental reforms inevitably involve risks, and in today’s environment—where the impact of rapid advances in AI is uncertain—we felt it would not be appropriate to cause our shareholders any further concern.
　We understand that many shareholders may have been surprised by today’s announcement. While we recommend tendering in this MBO, we ask that, when considering whether to tender, shareholders review the materials released today and make their own individual decisions.
　As changes in the business environment accelerate, steering management will become even more difficult; however, precisely because we are in the AI era, the Company will take on the challenge of contributing to the AI-driven digital society by leveraging the diverse talent that is our strength and serving as a Global Quality Partner needed by clients around the world.

August 6, 2026
President & CEO
Toshiya Tsukushi