Material Doubt as to the Going Concern Assumption and Potential Breach of Financial Covenants
First written in FY2022-Q3. 6 of 20 entries say "Mitigated", first in 2026-05-15. Latest entry: 2026-08-14.
Kasai Kogyo moved to the "Worse" side of this theme in 2022, 2 years after the typical company in this theme (2020).
The whole theme swung hardest in 2022: 4 of 13 companies on the "Worse" side.
14 other companies' latest entry also says "Mitigated".
- 2026-08-14MitigatedEarningsSuggests it is closing out
「As described above, we achieved a return to operating profitability during the cumulative first-quarter consolidated period, and believe that the likelihood of achieving the plan for the current consolidated fiscal year is steadily increasing. Accordingly, although events exist that raise significant doubt about the going-concern assumption, we determine that material uncertainty regarding the going-concern assumption does not exist.」
The Company reports a return to operating profitability and an increasing likelihood of achieving the plan, and continues to determine that material uncertainty does not exist even though events raising significant doubt remain. - FY2026MitigatedAnnual report
「Accordingly, although events exist that raise significant doubt about the going-concern assumption, we determined that material uncertainty regarding the going-concern assumption no longer exists, and eliminated the disclosure under "Notes on Going Concern" for the current consolidated fiscal year.」
Following the return to operating profitability and resolution of the breaches of the financial institution agreements, the company determined that no material uncertainty exists regarding the going concern assumption and removed the note. However, it stated that events that may raise material doubt still exist. - FY2026-H1RestatedAnnual report
「Although the group secured operating profitability during the interim consolidated fiscal period, it recognizes that events or conditions still exist that may raise material doubt about the going concern assumption because: ① its equity remains at a low level and it is required to improve profitability, improve and strengthen its financial position, establish a stable operating base, and secure stable cash flows; ② although losses in the North American business have steadily narrowed through ongoing restructuring efforts, the business remains in the process of improvement; ③ the results for the current consolidated fiscal year include support from its customer OEMs; and ④ it is in breach of the undertaking clauses and financial covenants in the intercreditor agreements executed with its relationship financial institutions, as described below.」
Although the company secured operating profitability in the interim period, it continues to recognize material doubt regarding the going concern assumption due to its low level of equity, the North American business remaining in the process of improvement, OEM support, and the financial covenants, among other factors. - FY2025WorsenedAnnual report
「As it has not been finalized that the financial institutions will waive their rights, including the right to demand the loss of the benefit of time, material uncertainty regarding the going concern assumption exists at present.」
In addition to the material doubt recognized through the previous fiscal year, the company explicitly discloses material uncertainty due to the operating loss in FY2025, breaches of the financial covenants and the undertaking clauses resulting from the delayed filing, and the fact that waivers by the financial institutions have not been finalized. - FY2025-H1RestatedAnnual report
「Although the group achieved a return to operating profitability in the previous consolidated fiscal year for the first time in 4 fiscal years, it recognizes that events or conditions still exist that may raise material doubt about the going concern assumption because: ① it reported an operating loss in the interim period of the current consolidated fiscal year; ② it remained in breach of the financial covenants as of the end of the interim period and had obtained a deferral from the financial institutions of the exercise of rights, including demands for the loss of the benefit of time; ③ its equity remained at a low level as of the end of the interim period, and it was required to improve profitability, improve and strengthen its financial position, establish a stable operating base, and secure stable cash flows; ④ although losses in the North American business have steadily narrowed through ongoing restructuring efforts, the business remains in the process of improvement; and ⑤ the return to profitability in the previous consolidated fiscal year included support from its customer OEMs.」
Although the company disclosed a return to operating profitability in the previous consolidated fiscal year and narrower losses in the North American business, it continues to recognize material doubt regarding the going concern assumption due to the operating loss in the interim period, the breach of financial covenants, the low level of equity, and the return to profitability including OEM support. - FY2024-Q3RestatedAnnual report
「Although the group reported operating profit for the nine months ended Q3, it reported operating losses for 3 consecutive fiscal years in the previous consolidated fiscal year and was in breach of the financial covenants, as described below under Additional Information (Financial Covenants). Accordingly, it recognizes that events or conditions still exist that may raise material doubt about the going concern assumption.」
Although the company reported operating profit for the nine months ended Q3, it continues to recognize material doubt regarding the going concern assumption due to operating losses for 3 consecutive fiscal years in prior years and the breach of financial covenants. - FY2024-Q2RestatedAnnual report
「The group recognizes that, at present, events or conditions still exist that may raise material doubt about the going concern assumption, because it reported operating losses for 3 consecutive fiscal years in the previous consolidated fiscal year and was in breach of the financial covenants, as described below under Additional Information (Financial Covenants).」
The company continues to recognize material doubt regarding the going concern assumption due to operating losses for 3 consecutive fiscal years and the breach of financial covenants. Continued support from financial institutions and financing terms remain unfinalized, and material uncertainty also continues. - FY2024-Q1WorsenedAnnual report
「Although the company has obtained the consent of each relationship financial institution to defer the exercise of rights, including the right to demand the loss of the benefit of time, on the grounds of the breach of financial covenants, it is currently discussing continued support with those institutions. As the method, amount, terms, and timing of financing have not been finalized, material uncertainty regarding the going concern assumption exists at present.」
Although the financial institutions have deferred exercising their rights in response to the breach of financial covenants, continued support and the method, amount, terms, and timing of financing have not been finalized, and the company explicitly discloses material uncertainty regarding the going concern assumption. - FY2023WorsenedAnnual report
「Although performance in Japan and Europe improved during the current consolidated fiscal year, the company reported an operating loss of ¥14,790 million due to deteriorating performance in North America caused by higher raw material and labor costs. In addition, because it was in breach of the financial covenants, it recognizes that events or conditions exist that may raise material doubt about the going concern assumption, as in the previous consolidated fiscal year.」
The company reported an operating loss of ¥14,790 million due to higher raw material and labor costs in North America and continued to disclose, for the full year, the breach of financial covenants and material uncertainty regarding the going concern assumption. - FY2023-Q3WorsenedAnnual report
「Due to the spread of COVID-19 and semiconductor supply shortages, the company reported operating losses for 2 consecutive fiscal years in the previous consolidated fiscal year and continued to report an operating loss of ¥10,104 million for the nine months ended Q3. Accordingly, it recognizes that events or conditions exist that may raise material doubt about the going concern assumption, as in the previous consolidated fiscal year. Depending on the future business environment, the company may breach the covenants as of the end of the current consolidated fiscal year, but it continues to maintain close coordination with its relationship financial institutions through regular discussions and other means and expects to receive continued support.」
The operating loss widened from ¥9,776 million in the same period of the previous year to ¥10,104 million, and the company continued to disclose material doubt regarding the going concern assumption and the possibility of breaching its financial covenants at fiscal year-end. However, it stated that it was not in breach of the covenants as of the end of Q3 and was continuing discussions with the financial institutions. - FY2023-Q2WorsenedAnnual report
「Due to the spread of COVID-19 and semiconductor supply shortages, the company reported operating losses for 2 consecutive fiscal years in the previous consolidated fiscal year and continued to report an operating loss of ¥8,154 million for the six months ended Q2. Accordingly, it recognizes that events or conditions exist that may raise material doubt about the going concern assumption, as in the previous consolidated fiscal year.」
While material doubt regarding the going concern assumption continues, the company reported an operating loss of ¥8,154 million for the six months ended Q2 and also disclosed the possibility of breaching its financial covenants at fiscal year-end depending on the business environment. - FY2023-Q1RestatedAnnual report
「Due to the spread of COVID-19 and semiconductor supply shortages, the company reported operating losses for 2 consecutive fiscal years in the previous consolidated fiscal year and became in breach of the financial covenants attached to its borrowing agreements with financial institutions as of the end of that fiscal year.」
The company continues to recognize that events exist that may raise material doubt about the going concern assumption due to operating losses for 2 consecutive fiscal years and the breach of financial covenants as of the end of the previous consolidated fiscal year. At the same time, it determined that no material uncertainty exists as a result of restructuring, optimizing its production structure, and reaching an agreement with the financial institutions. - FY2022MaterialisedAnnual report
「Due to the continuing spread of COVID-19 and semiconductor supply shortages since the previous consolidated fiscal year, the company reported operating losses for 2 consecutive fiscal years and was in breach of the financial covenants attached to its borrowing agreements with financial institutions as of the end of the current consolidated fiscal year.」
The potential breach indicated in the previous quarter was explicitly reported as an actual breach of the financial covenants, alongside operating losses for 2 consecutive fiscal years. At the same time, the company determined that no material uncertainty exists as a result of consolidating and closing locations, optimizing its production structure, and holding discussions with financial institutions. - FY2022-Q3First statedAnnual report
「Due to the continuing spread of COVID-19 and semiconductor supply shortages since the previous consolidated fiscal year, the company expects to report operating loss, ordinary loss, and net loss for 2 consecutive fiscal years, following the previous consolidated fiscal year, and may be in breach of the financial covenants attached to its borrowing agreements with financial institutions as of the end of the current consolidated fiscal year. Accordingly, the company recognizes that events or conditions exist that may raise material doubt about the going concern assumption.」
Against the backdrop of COVID-19 and semiconductor supply shortages, the company indicates that it expects to report losses for 2 consecutive fiscal years and may breach its financial covenants, explicitly disclosing for the first time that events or conditions exist that may raise material doubt about the going concern assumption. At the same time, it has determined that no material uncertainty exists regarding the going concern assumption as a result of consolidating and closing locations, optimizing its production structure, and holding discussions with financial institutions.