Disclaimer of conclusion in the interim review report on the quarterly consolidated financial statements for the third quarter of the fiscal year ending March 2026
Abalance株式会社 (the filing company and entity responsible for preparing the consolidated financial statements) and the Abalance Group, including its overseas subsidiaries
The wafer manufacturing process within the solar panel manufacturing processes of the overseas subsidiaries, including polysilicon raw materials and processed intermediate materials such as wafers
In addition to issues with the accounting treatment of past transactions involving customer-supplied materials, the improvement plan for the internal management system and other measures to prevent recurrence had not been fully implemented, and verification of the specific measures was still in progress. Internal controls over transactions involving customer-supplied materials had not been established across the group, and the company had been unable to obtain a comprehensive understanding of the transactions because of its complex capital structure and transaction structures involving multiple subsidiaries
Company response
A third-party committee comprising external experts was established on 2 September 2025, and its investigation report was received on 17 December 2025. A verification committee comprising external experts was established on 8 January 2026, and its verification report was received on 20 February 2026
Strengthening management oversight functions, rebuilding Group governance, strengthening the internal control system, raising compliance awareness, and improving the appropriateness of the financial reporting process
Third quarter of the fiscal year ending March 2026 (1 April 2025 to 31 December 2025)
Related procedures
Interim review (disclaimer of conclusion)
The company will continue to monitor progress under the improvement plan and work to improve its internal management system and prevent recurrence. It will continue discussions with the auditor to address the resolution of the matters identified, and will work to stabilize its financial foundation and enhance corporate value by executing its business and funding plans
The Company will promptly disclose any matters that should be disclosed in the future.
| Item | Details |
|---|---|
| Event name | Disclaimer of conclusion in the interim review report on the quarterly consolidated financial statements for the third quarter of the fiscal year ending March 2026 |
| Date of occurrence | 18 August 2026 (the date on which the company received the review report) |
| Date recognized / date notice received | 18 August 2026 (the date on which the company received the review report) |
| Subject Entity | Abalance株式会社 (the filing company and entity responsible for preparing the consolidated financial statements) and the Abalance Group, including its overseas subsidiaries |
| Target Locations / Products | The wafer manufacturing process within the solar panel manufacturing processes of the overseas subsidiaries, including polysilicon raw materials and processed intermediate materials such as wafers |
| Cause | In addition to issues with the accounting treatment of past transactions involving customer-supplied materials, the improvement plan for the internal management system and other measures to prevent recurrence had not been fully implemented, and verification of the specific measures was still in progress. Internal controls over transactions involving customer-supplied materials had not been established across the group, and the company had been unable to obtain a comprehensive understanding of the transactions because of its complex capital structure and transaction structures involving multiple subsidiaries |
| Accounting period in which recognized | Third quarter of the fiscal year ending March 2026 (1 April 2025 to 31 December 2025) |
| Type of litigation or proceeding | Interim review (disclaimer of conclusion) |
| Investigation structure | A third-party committee comprising external experts was established on 2 September 2025, and its investigation report was received on 17 December 2025. A verification committee comprising external experts was established on 8 January 2026, and its verification report was received on 20 February 2026 |
| Measures to prevent recurrence | Strengthening management oversight functions, rebuilding Group governance, strengthening the internal control system, raising compliance awareness, and improving the appropriateness of the financial reporting process |
| Outlook | The company will continue to monitor progress under the improvement plan and work to improve its internal management system and prevent recurrence. It will continue discussions with the auditor to address the resolution of the matters identified, and will work to stabilize its financial foundation and enhance corporate value by executing its business and funding plans |
| Planned follow-up disclosure | The Company will promptly disclose any matters that should be disclosed in the future. |
Items this document does not state (13)
These are items the company does not state in this document. We do not leave them blank, nor fill them in from other sources or by inference.
The reasons the company gives
The company's own explanation, not something inferred from the numbers.According to the audit firm's explanation cited by the company, the improvement plan for the internal management system and measures to prevent recurrence had not been fully implemented, and verification of the specific measures was still in progress. In addition, internal controls over transactions involving customer-supplied materials had not been established across the group, and the company had been unable to obtain a comprehensive understanding of the transactions because of its complex capital structure and transaction structures involving multiple subsidiaries. As a result, the audit firm was unable to obtain sufficient appropriate audit evidence regarding the accuracy and completeness of the correction entries.