Doubt about the going concern assumption arising from continued operating cash flow deficits

「In addition, agreements have been reached with all of the company's lending financial institutions to relax repayment terms through the end of the fiscal year ending March 2023, and the company believes that it will continue to receive support from those institutions thereafter. As stated in “Part 4. Accounting Information, 1. Quarterly Consolidated Financial Statements, Notes (Significant Subsequent Events),” the company resolved at a meeting of its Board of Directors held on 23 December 2022 to enter into a capital and business alliance agreement with 株式会社チェンジ (hereinafter, “チェンジ”) (the “Capital and Business Alliance Agreement,” and the alliance based on that agreement, the “Capital and Business Alliance”), and to issue new shares to チェンジ through a third-party allotment under that agreement (the “Third-Party Allotment Capital Increase”), and entered into the Capital and Business Alliance Agreement on the same date. The company has determined that no material uncertainty regarding the going-concern assumption exists because the Third-Party Allotment Capital Increase, with 10 January 2023 as the payment date, will secure working capital.」

「However, ホープエナジー, the Company that operated the energy business, which had a significant impact on business performance, filed a petition for commencement of bankruptcy proceedings effective 25 March 2022, and an order commencing the proceedings was issued on the same date. The Company has therefore withdrawn from that business. As the Company, 株式会社ジチタイアド and 株式会社ジチタイワークス have not assumed any obligations, such as guarantees, in respect of liabilities incurred by ホープエナジー, no provision has been recognised. In addition, no contingent liabilities arising from the bankruptcy have currently arisen at the Company, 株式会社ジチタイアド or 株式会社ジチタイワークス, and the Company has determined that they are unlikely to arise in the future.」

「Because negative net worth of ¥5,602.419 million continued as of the end of the consolidated accounting period, the Company recognised that events or conditions existed that raised substantial doubt about the going-concern assumption.」

「In addition, because debt payments in the energy business increased substantially more than expected, the Company fell behind on part of the repayment of bank borrowings scheduled for the end of January 2022, although it is working to resolve the delay by the end of February 2022 at the latest. In light of these circumstances, the Company continues to recognise that events or conditions exist that raise substantial doubt about the going-concern assumption.」

「The Company will pursue the measures described above to stabilise business earnings and cash management. However, because these measures are still being implemented and the Company remains exposed to the risk of fluctuations in electricity trading prices, material uncertainty regarding the going-concern assumption exists at present.」

「The Company will pursue the measures described above to stabilise business earnings and cash management. However, because these measures are still being implemented and the Company remains exposed to the risk of fluctuations in electricity trading prices, material uncertainty regarding the going-concern assumption exists at present.」

「The Group has events or conditions that raise substantial doubt about the going-concern assumption because operating cash flow was negative for consecutive years. In addition, due to the surge in electricity trading prices on the Japan Electric Power Exchange since mid-December 2020, the Group expects to record a substantial operating loss in the third quarter.」

「However, because the Company recorded operating income during the first quarter and has received sufficient support from financial institutions, it determined that no material uncertainty exists regarding the going-concern assumption.」

「Negative operating cash flow also occurred during the fiscal year, and the Company recognised that events or conditions that continued to raise substantial doubt about the going-concern assumption still existed. However, because it recorded net income of ¥665.005 million for the fiscal year and had received support from financial institutions, it determined that no material uncertainty exists regarding the going-concern assumption.」

「Negative operating cash flow continued during the first 3 quarters, and the Company recognised that events or conditions that raised substantial doubt about the going-concern assumption still existed. However, because it recorded operating income during the first 3 quarters and had received support from financial institutions, it determined that no material uncertainty exists regarding the going-concern assumption.」

「The Company had events or conditions that raised substantial doubt about the going-concern assumption because operating cash flow remained negative following payments of security deposits in the energy business during the previous fiscal year and had been negative for consecutive years. However, because it recorded operating income during the first 2 quarters and expects to receive support from financial institutions, it determined that no material uncertainty exists regarding the going-concern assumption.」

「However, the Company recorded operating income during the first quarter, and because support from financial institutions is expected to be available, it determined that no material uncertainty exists regarding the going-concern assumption.」

「Although the Company recorded net income of ¥75.576 million for the fiscal year, operating cash flow remained negative due to the payment of a security deposit in the energy business. Accordingly, events or conditions continue to exist that raise substantial doubt about the going-concern assumption.」