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Convano Inc.'s Strategic Deficit Compensation Plan

In a recent decision made by Convano Inc., based in Shibuya, Tokyo, the company has outlined plans to address a significant deficit of approximately 4.31 billion yen. This initiative is set to be proposed for approval at the extraordinary general meeting scheduled for September 30, 2026. With a firm commitment to enhancing shareholder value, Convano aims to establish a solid financial foundation for future returns to its shareholders.

Details of the Compensation Measure

The impending resolution hinges on receiving approval at the upcoming extraordinary general meeting. Convano plans to adjust its balance sheet significantly by reducing its capital surplus by 4,311,189,000 yen, with this amount redirected to offset losses in retained earnings. Specifically, the measure is designed to increase retained earnings by the same amount, thereby compensating for the deficit recorded in the company's financial statements as of March 31, 2026.

This adjustment reflects Convano's ongoing efforts to stabilize its financial health, ensuring that it is well-equipped to implement flexible capital policies and shareholder return strategies in the future.

Enhancing Financial Stability and Shareholder Returns

In conjunction with the recent decision taken during the 13th Annual General Meeting held on June 27, 2026, Convano plans to decrease its capital stock and capital reserves, effective September 4, 2026. The entire reduction will be allocated to the capital surplus, facilitating the resolution of the retained earnings deficit through this surplus.

As part of this restructuring, Convano seeks to fortify its financial stability while ensuring that it maintains the flexibility needed for future capital strategies and shareholder return plans. The primary objective remains clear: to lay the groundwork for future returns to shareholders.

Impact on Shareholder Equity

It's essential to note that this compensation process involves an internal transfer within shareholder equity, leading to no net change in the total shareholder equity or net assets post-compensation. Specifically, capital stock, capital reserves, and treasury stock figures remain unchanged, while the capital surplus will see a reduction from 10,452,594,000 yen to 6,141,405,000 yen, successfully eliminating the retained earnings deficit.

This comprehensive plan ensures that both the total shareholder equity and net assets remain unchanged, emphasizing that there will be no impact on the distribution amounts available to shareholders.

No Negative Impact on Future Performance

Importantly, this deficit compensation strategy does not influence the company’s performance metrics. The transfer of funds is purely an internal adjustment, ensuring that the total net worth remains stable. Consequently, there's no anticipated effect on the consolidated performance for the fiscal year ending March 31, 2027, which further reinforces the company’s robust financial planning.

Upcoming Timeline

Looking ahead, Convano has outlined a clear timeline—on August 24, 2026, the board of directors will finalize the resolution regarding surplus funds, which will then be presented for approval during the extraordinary general meeting on September 30, 2026. If approved, the deficit compensation will take effect on the same day, September 30, 2026.

About Convano Inc.

Founded with a mission encapsulated by the phrase "Creation Of New Value And New Opportunities," Convano Inc. supports companies in their growth and business transformation endeavors, focusing primarily on AI, digital transformation (DX), and consulting services. The firm actively integrates its extensive operational insights and data-utilization expertise to provide AI system development, DX promotion, and management and marketing consulting. Furthermore, Convano is exploring new business domains, especially in healthcare, while leveraging its knowledge gained from operating the nail service chain "FASTNAIL" to implement practical solutions aimed at enhancing corporate value sustainably.

For more information about Convano Inc., visit their official corporate website at convano.com.