TOSE released responses to questions following the announcement of its financial results, addressing concerns over the cancellation of a development project that significantly impacted its third-quarter performance. The company confirmed that there will be no compensation for the canceled project, as it was still in the planning stage.
The cancellation, driven by customer restructuring, led to a third-quarter deficit and prompted a downward revision of TOSE’s earnings forecast for the fiscal year ending August 2024. The company explained that compensation is generally available if a project has progressed beyond the planning stage, but this was not the case for the canceled project.
Game development has become increasingly complex and large-scale, necessitating frequent revisions midway through development due to rapidly changing trends and technologies. TOSE emphasizes close communication with clients and careful progression through smaller development stages, securing payment guarantees at each stage.
In most cases, TOSE’s contracts stipulate that payment is made up to the point of development completion if a project is canceled due to customer reasons. The company is currently reviewing its trading practices and strengthening management to avoid future project cancellations.
The canceled and postponed projects were with long-term major clients, who are restructuring and revising their policies for mid- to long-term business growth. These changes led to adjustments in game software development plans, causing cancellations or delays in planned projects with TOSE.
