Interim report
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DISCLAIMER : This English translation has been prepared using machine translation and is provided for reference purposes only . It may contain inaccuracies or misinterpretations . For official and accurate information , please refer to the original Japanese document . Reliance on this translation is at your own discretion . Consolidated Financial Results for the Six Months Ended June 30 , 2026 ( Under Japanese GAAP ) Company name : Listing : SOLITON SYSTEMS K.K. Tokyo Stock Exchange Securities code : 3040 URL : Representative : https://www.soliton.co.jp Osamu Kamata , President Inquiries : Telephone : Takao Misu , Senior Vice President Scheduled date to file semi - annual securities report : + 81-3-5360-3801 Scheduled date to commence dividend payments : Preparation of supplementary material on financial results : August 12 , 2026 August 20 , 2026 Yes August 12 , 2026 Holding of financial results briefing : None ( Yen amounts are rounded down to millions , unless otherwise noted . ) 1 . Net sales Operating profit Consolidated Financial Results for the Six Months Ended June 30 , 2026 ( from January 1 , 2026 to June 30 , 2026 ) ( 1 ) Consolidated Operating Results ( cumulative ) ( Percentage reflects the change compared to the same period of the preceding year . ) Profit attributable to owners of parent Ordinary profit Six months ended Millions of yen % Millions of yen % Millions of yen % Millions of yen % June 30 , 2026 10,022 15.1 1,777 124.0 1,882 140.8 1,447 150.8 June 30 , 2025 8,710 2.0 793 22.5 781 ( 6.2 ) 577 ( 1.5 ) Note : Comprehensive income For the six months ended June 30 , 2026 : For the six months ended June 30 , 2025 : Basic earnings per share Diluted earnings per share ¥ 1,439 million ¥ 525 million [ 173.8 % ] [ 12.2 % ] Six months ended June 30 , 2026 June 30 , 2025 ( 2 ) Consolidated Financial Position As of June 30 , 2026 December 31 , 2025 Reference : Equity As of June 30 , 2026 : Yen 78.06 31.13 Yen Total assets Net assets Equity - to - asset ratio Millions of yen Millions of yen % 26,910 14,196 52.7 26,228 13,256 50.5 ¥ 14,188 million As of December 31 , 2025 : ¥ 13,247 million 2. Cash Dividends First quarter - end Second quarter - end Annual dividends per share Third quarter - end Fiscal year - end Total Yen Yen Yen Yen Yen 28.00 54.00 26.00 Fiscal year ended December 31 , 2025 Fiscal year ending December 31 , 2026 Fiscal year ending December 31 , 2026 ( Forecast ) Note : Revisions to the forecast of cash dividends most recently announced : Yes 30.00 42.00 72.00 3. Forecast of Consolidated Financial results for the Fiscal Year Ending December 31 , 2026 ( from January 1 , 2026 to December 31 , 2026 ) ( Percentage reflects the change compared to the same period of the preceding year . ) Fiscal year ending December 31 , 2026 Net sales Operating profit Ordinary profit Profit attributable to owners of parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % 22,300 12.8 3,900 37.1 3,950 32.7 2,670 16.2 Note : Revisions to the earnings forecasts most recently announced : Yes Basic earnings per share Yen 144.01
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* Notes (1) Significant changes in the scope of consolidation during the period: Yes Excluded: 1 company (Sound-FinTech Inc.) (2) Adoption of accounting treatment specific to the preparation of semi-annual consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement (i) Changes in accounting policies due to revisions to accounting standards and other regulations: None (ii) Changes in accounting policies due to other reasons: None (iii) Changes in accounting estimates: None (iv) Restatement: None (4) Number of issued shares (common shares) (i) Total number of issued shares at the end of the period (including treasury shares) As of June 30, 2026 19,738,888 shares As of December 31, 2025 19,738,888 shares (ii) Number of treasury shares at the end of the period As of June 30, 2026 1,187,598 shares As of December 31, 2025 1,197,498 shares (iii) Average number of shares outstanding during the period (cumulative from the beginning of the fiscal year) Six months ended June 30, 2026 18,542,101 shares Six months ended June 30, 2025 18,537,435 shares * Review of the Japanese-language originals of the attached semi-annual consolidated financial statements by certified public accountants or an audit firm: None * Proper use of earnings forecasts, and other special matters (Cautions on forward-looking statements, etc.) The forward-looking statements, including forecasts of financial results contained in these materials, are based on information currently available to the Company and on certain assumptions deemed to be reasonable. However, the Company makes no guarantee that these forecasts will be achieved. Actual financial results, etc. may differ substantially due to various factors.
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Semi-Annual Consolidated Balance Sheet (Millions of yen) As of December 31, 2025 As of June 30, 2026 Assets Current assets Cash and deposits 10,858 10,136 Electronically recorded monetary claims - operating 1,349 901 Accounts receivable - trade 2,695 2,228 Securities 6,000 8,000 Investments in leases 97 81 Merchandise and finished goods 1,050 1,124 Work in process 66 83 Raw materials and supplies 48 44 Prepaid expenses 1,677 1,869 Other 125 234 Allowance for doubtful accounts (14) (14) Total current assets 23,954 24,690 Non-current assets Property, plant and equipment 731 732 Intangible assets Software 210 232 Software in progress 60 3 Other 14 14 Total intangible assets 285 250 Investments and other assets Investment securities 12 12 Guarantee deposits 378 374 Deferred tax assets 393 359 Other 472 489 Allowance for doubtful accounts (0) (0) Total investments and other assets 1,257 1,236 Total non-current assets 2,274 2,219 Total assets 26,228 26,910
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(Millions of yen) As of December 31, 2025 As of June 30, 2026 Liabilities Current liabilities Notes and accounts payable - trade 1,420 1,180 Lease liabilities 32 32 Accounts payable - other 564 545 Income taxes payable 655 514 Contract liabilities 8,931 9,573 Provision for bonuses 752 501 Provision for bonuses for directors (and other officers) 57 - Other 482 306 Total current liabilities 12,896 12,654 Non-current liabilities Lease liabilities 65 48 Other 10 10 Total non-current liabilities 75 59 Total liabilities 12,971 12,713 Net assets Shareholders' equity Share capital 1,326 1,326 Capital surplus 1,406 1,415 Retained earnings 12,163 13,091 Treasury shares (1,310) (1,299) Total shareholders' equity 13,585 14,534 Accumulated other comprehensive income Valuation difference on available-for-sale securities 0 0 Foreign currency translation adjustment (338) (345) Total accumulated other comprehensive income (338) (345) Non-controlling interests 9 8 Total net assets 13,256 14,196 Total liabilities and net assets 26,228 26,910
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Semi-Annual Consolidated Statement of Income (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Net sales 8,710 10,022 Cost of sales 4,846 5,004 Gross profit 3,863 5,018 Selling, general and administrative expenses 3,070 3,240 Operating profit 793 1,777 Non-operating income Interest income 9 52 Dividend income 20 26 Foreign exchange gains - 31 Recoveries of written off receivables 2 - Other 4 6 Total non-operating income 37 116 Non-operating expenses Interest expenses 0 - Foreign exchange losses 36 - Loss on retirement of non-current assets 0 - Provision of allowance for doubtful accounts 0 0 Loss on investments in investment partnerships 11 11 Other 0 0 Total non-operating expenses 49 11 Ordinary profit 781 1,882 Extraordinary income Gain on sale of shares of subsidiaries - 63 Total extraordinary income - 63 Extraordinary losses Loss on valuation of investment securities 16 - Loss on sale of investment in affiliates 105 - Total extraordinary losses 122 - Profit before income taxes 659 1,945 Income taxes - current 102 465 Income taxes - deferred (17) 34 Total income taxes 85 500 Profit 574 1,445 Loss attributable to non-controlling interests (2) (1) Profit attributable to owners of parent 577 1,447
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Semi-Annual Consolidated Statement of Comprehensive Income (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Profit 574 1,445 Other comprehensive income Valuation difference on available-for-sale securities (0) (0) Foreign currency translation adjustment (48) (6) Total other comprehensive income (48) (6) Comprehensive income 525 1,439 Comprehensive income attributable to Comprehensive income attributable to owners of parent 529 1,440 Comprehensive income attributable to non-controlling interests (3) (1)
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Semi-Annual Consolidated Statement of Cash Flows (Millions of yen) Six months ended June 30, 2025 Six months ended June 30, 2026 Cash flows from operating activities Profit before income taxes 659 1,945 Depreciation 146 143 Increase (decrease) in allowance for doubtful accounts (10) (0) Increase (decrease) in provision for bonuses 3 (250) Increase (decrease) in provision for bonuses for directors (and other officers) (13) (57) Interest and dividend income (30) (79) Interest expenses 0 - Foreign exchange losses (gains) 38 (27) Loss (gain) on valuation of investment securities 16 - Loss (gain) on investments in investment partnerships 11 11 Loss(gain) on sale of investment in affiliates 105 - Loss (gain) on sale of shares of subsidiaries - (63) Decrease (increase) in accounts receivable - trade, and contract assets 875 907 Decrease (increase) in inventories (316) (88) Decrease (increase) in prepaid expenses (190) (191) Increase (decrease) in trade payables (14) (237) Increase (decrease) in accounts payable - other 39 (15) Increase (decrease) in contract liabilities 156 640 Other, net 26 (245) Subtotal 1,503 2,390 Interest and dividends received 25 72 Interest paid (0) (0) Income taxes refund (paid) 112 (600) Net cash provided by (used in) operating activities 1,641 1,863 Cash flows from investing activities Payments into time deposits (3,000) (2,000) Proceeds from withdrawal of time deposits 3,000 6,000 Purchase of property, plant and equipment (101) (61) Purchase of intangible assets (21) (42) Proceeds from sales of investments in capital of subsidiaries and associates resulting in change in scope of consolidation (107) - Proceeds from sale of shares of subsidiaries resulting in change in scope of consolidation - 35 Payments of guarantee deposits (0) (0) Purchase of securities (4,000) (16,000) Proceeds from redemption of securities - 14,000 Other, net 0 1 Net cash provided by (used in) investing activities (4,229) 1,932 Cash flows from financing activities Net increase (decrease) in short-term borrowings (3) - Dividends paid (722) (519) Net cash provided by (used in) financing activities (726) (519) Effect of exchange rate change on cash and cash equivalents (2) 1 Net increase (decrease) in cash and cash equivalents (3,317) 3,278 Cash and cash equivalents at beginning of period 14,692 6,858 Cash and cash equivalents at end of period 11,375 10,136
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(Notes on Segment Information) Segment Information I. Changes to Reporting Segments From the first quarter of the current fiscal year, the expenses of the video transmission basic technology development team, which were previously included in the "company-wide expenses," were changed to include in the "Mobile Video Communication BU." In accordance with this segment change, the segment information for the three months of the previous fiscal year is based on the segment classification after the change. II. The Six Months of The Previous Fiscal Year (January 1, 2025 to June 30, 2025) 1. Information on Sales, Profits or Losses, Assets, Liabilities and Other Amounts by Reporting Segment, and Breakdown of Earnings (Millions of yen) Reporting segments Total IT security BU Mobile Video Communication BU Eco Innovative BU Sales Products & Products 2,741 155 59 2,955 Maintenance 2,711 29 - 2,741 Cloud Services 1,282 48 - 1,330 Services and other revenues 1,452 193 36 1,682 Revenue generated from customer contracts 8,187 426 95 8,710 Revenues from external customers 8,187 426 95 8,710 Transactions with other segments 3 4 11 18 Total 8,190 431 106 8,728 Segment profit (loss) 1,257 (113) (77) 1,066 2. The Differences between the Total Amount of Profit or Loss of the Reporting Segments and the Amount Recorded in the Semi-Annual Consolidated Statements of Income and the Key Details of the Differences (Matters related to Adjustment of Differences) (Millions of yen) Profit Amount Total amount of reporting segments 1,066 Company-wide expenses (Note) (272) Operating income in the interim consolidated statement of income 793 Note: Company-wide expenses are the difference in the allocation of related departmental expenses, which are mainly borne by the reporting segment. 3. Information on Impairment Losses or Goodwill on Fixed Assets by Reporting Segment: Not applicable. III. The Six Months of the Current Fiscal Year (January 1, 2026 to June 30, 2026) 1. Information on Sales, Profits or Losses, Assets, Liabilities and Other Amounts by Reporting Segment, and Breakdown of Earnings (Millions of yen) Reporting segments Total IT security BU Mobile Video Communication BU Eco Innovative BU Sales Products & Products 3,531 231 81 3,844 Maintenance 2,757 31 - 2,789 Cloud Services 1,474 54 - 1,529 Services and other revenues 1,673 177 8 1,859 Revenue generated from customer contracts 9,437 495 89 10,022 Revenues from external customers 9,437 495 89 10,022 Transactions with other segments 14 8 - 22 Total 9,451 503 89 10,044 Segment profit (loss) 2,335 (131) (113) 2,091 2. The Differences between the Total Amount of Profit or Loss of the Reporting Segments and the Amount Recorded in the Semi-Annual Consolidated Statements of Income and the Key Details of the Differences (Matters related to Adjustment of Differences) (Millions of yen) Profit Amount Total Reporting Segments 2,091 Company-wide expenses (Note) (313) Operating income in the interim consolidated statement of income 1,777 Note: Company-wide expenses are the difference in the allocation of related departmental expenses, which are mainly borne by the reporting segment. 3. Information on Sales, Profits or Losses, Assets, Liabilities and Other Amounts by Reporting Segment, and Breakdown of Earnings: Not applicable.