Interim report
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Translation Notice : This document has been translated from the Japanese original for reference purposes . In the event of any discrepancy between this translated document and the Japanese original , the latter shall prevail . Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31 , 2027 [ Japanese GAAP ] FASF August 7 , 2026 Company name : Securities code : ispace , inc . Listing : Tokyo Stock Exchange 9348 URL : https://ispace-inc.com/ Representative : Inquiries : Scheduled date for filing quarterly securities report : Takeshi Hakamada , Representative Director & CEO Jumpei Nozaki , Executive Business Director & CFO August 7 , 2026 Telephone : + 81-3-6277-6451 Scheduled date for commencing dividend payments : Preparation of supplementary materials on quarterly financial results : Yes Holding of quarterly financial results briefing session : Yes ( for institutional investors and analysts ) ( Amounts are rounded down to the nearest million yen , unless otherwise stated ) 1. Consolidated Financial Results for the First Quarter of the Fiscal Year Ending March 31 , 2027 ( from April 1 , 2026 to June 30 , 2026 ) ( 1 ) Consolidated Operating Results ( Cumulative ) Project Revenue Net sales Operating income ( loss ) Ordinary income ( loss ) Millions of Millions of Millions of % % do % yen First quarter 168 ( 85.5 ) yen 168 ( 85.5 ) yen ( 6,397 ) Millions of yen ( 6,335 ) ( Percentage figures represent year - on - year changes ) Net income ( loss ) attributable to owners of parent Millions of % % yen ( 6,336 ) ended June 30 , 2026 First quarter 1,165 ( 83.4 ) 1,165 ( 83.4 ) ( 2,243 ) ( 2,878 ) I ( 2,879 ) ended June 30 , 2025 ( Note ) Comprehensive income ( loss ) First quarter ended June 30 , 2026 : First quarter ended June 30 , 2025 : First quarter ended June 30 , 2026 First quarter ended June 30 , 2025 -6,525Millions of yen ( - % ) -3,251Millions of yen ( - % ) Basic net income ( loss ) per share Diluted net income ( loss ) per share Yen Yen ( 43.32 ) ( 27.22 ) ( Note ) 1. Diluted net income ( loss ) per share for the first quarter of the fiscal year ended March 31 , 2026 and the fiscal year ending March 31 , 2027 are omitted for the reason that although there were dilutive shares , the Company posted basic net loss per share . 2. Project revenue is calculated by adding subsidy income from the government , etc. ( Non - operating income ) to Net sales . ( 2 ) Consolidated Financial Position First quarter ended June 30 , 2026 Fiscal year ended March 31 , 2026 Total assets Net assets Equity - to - asset ratio Millions of yen Millions of yen % 40,901 47,704 8,663 15,173 20.9 31.6 ( Reference ) Equity First quarter ended June 30 , 2026 : Fiscal year ended March 31 , 2026 : 8,553 Millions of yen 15,064 Millions of yen
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2. Cash Dividends Annual dividends per share End of 1st quarter End of 2nd quarter End of 3rd quarter Fiscal year-end Total Yen Yen Yen Yen Yen Fiscal year ended March 31, 2026 － 0.00 － 0.00 0.00 Fiscal year ending March 31, 2027 － Fiscal year ending March 31, 2027 (forecast) 0.00 － 0.00 0.00 (Note) Revisions to the most recently announced dividend forecast: None 3. Forecast of Consolidated Financial Results for the Fiscal Year Ending March 31, 2027 (from April 1, 2026 to March 31, 2027) (Percentage figures represent year-on-year changes) Project revenue Net sales Operating income (loss) Ordinary income (loss) Net income (loss) attributable to owners of parent Basic net income per share Millions of yen % Millions of yen % Millions of yen % Millions of yen % Millions of yen % Yen Full year 9,000 50.8 3,300 (0.2) (17,700) - (13,000) - (13,000) - (105.18) (Note) Revisions to the most recently announced earnings forecast: None *Explanatory notes (1) Changes in significant subsidiaries during the quarter (changes in specified subsidiaries resulting in change in scope of consolidation): None (2) Application of accounting treatments specific to the preparation of quarterly consolidated financial statements: None (3) Changes in accounting policies, changes in accounting estimates, and restatement of prior period financial statements i. Changes in accounting policies due to revisions to accounting standards, etc.: None ii. Changes in accounting policies other than those in above: None iii. Changes in accounting estimates: None iv. Restatement of prior period financial statements: None (4) Number of shares issued and outstanding (common shares) 1) Total number of issued shares at the end of the period (including treasury shares) As of June 30, 2026 146,311,623 shares As of March 31, 2026 146,209,683 shares 2) Number of treasury shares at the end of the period As of June 30, 2026 152 shares As of March 31, 2026 55 shares 3) Average number of shares during the period (cumulative from the beginning of the fiscal year) As of June 30, 2026 146,266,953 shares As of June 30, 2025 105,796,042 shares * This summary of financial results is not subject to quarterly review procedures by a public accountant or an audit corporation. * Explanation regarding appropriate use of earnings forecasts, and other notes (Notes on forward-looking statements) The earnings outlook and other forward-looking statements contained in this document are based on information currently available to the Company and certain assumptions that are thought to be reasonable. Accordingly, such statements should not be construe d as a guarantee of achieving the results by the Company. Actual financial results and the like may differ materially due to va rious factors. For matters concerning earnings forecast, refer to “1. Qualitative Information on the Financial Results for the Period under Review, (3) Explanations on Consolidated Earnings Forecast and Other Forecast Information” on page 3 of the Appendix. (How to obtain the supplementary materials on quarterly financial results and the content of the quarterly financial results briefing session) The Company will hold a quarterly financial result briefing session for institutional investors and securities analysts on August 7, 2026 (Friday) and the material to be used in the briefing session will be disclosed on the Company website.
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- 1 - Contents of Attachment 1. Qualitative Information on the Financial Results for the Period under Review .................................................................................... 2 (1) Explanation of Operating Results ..................................................................................................................................................... 2 (2) Financial Position ............................................................................................................................................................................. 4 (3) Explanations on Consolidated Earnings Forecast and Other Forecast Information .......................................................................... 4 2. Quarterly Consolidated Financial Statements and Significant Notes .................................................................................................... 6 (1) Quarterly Consolidated Balance Sheet ............................................................................................................................................. 6 (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income (Loss) .............. 8 (Quarterly Consolidated Statement of Income (Loss)) ..................................................................................................................... 8 (Quarterly Consolidated Statement of Comprehensive Income (Loss)) ........................................................................................... 9 (3) Notes to Quarterly Consolidated Financial Statements ................................................................................................................. 10 (Notes on Going Concern Assumption) .......................................................................................................................................... 10 (Notes in Case of Significant Changes in the Amounts of Shareholder’s Equity) ............................................................................ 10 (Notes to Quarterly Consolidated Balance Sheets)......................................................................................................................... 10 (Notes to Quarterly Consolidated Statements of Cash Flows)........................................................................................................ 11 (Segment Information, etc.) ........................................................................................................................................................... 12 (Significant Subsequent Events) ..................................................................................................................................................... 12
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- 2 - 1. Qualitative Information on the Financial Results for the Period under Review (1) Explanation of Operating Results Our group is a next-generation private space company working to commercialize lunar development, with the vision of "Expand our planet. Expand our future." in order to expand humanity's living sphere into space and realize a sustainable world. During the first quarter of the consolidated fiscal year, the global economy experienced heightened geopolitical risks, including the progress of various policies under the second administration of U.S. President Donald Trump, the intensification of tensions in the Middle East surrounding Iran, and developments in the international order centered on the two major powers, the United States and China. In addition, these factors have led to continued uncertainty in the outlook, with unstable capital markets and fluctuations in foreign exchange rates. Currently, in the field of lunar development to which our group belongs, significant changes are underway, led primarily by NASA (National Aeronautics and Space Administration) with 2026 serving as a turning point. First, the Moon is transitioning from being the subject of scientific exploration to a phase focused on building infrastructure to support sustained activities. Second, as a result of this transition, the importance of ensuring security in “Cislunar Space” the region of space extending from Earth to the Moon is increasing. The “IGNITION” event held by NASA in March 2026 served as a symbol of these developments. With the goal of establishing “THE MOON BASE” by 2030, a plan has been unveiled to significantly accelerate lunar landing missions—21 missions over the three-year period from 2026 to 2028 and a cumulative total of 73 missions by 2036. As a concrete measure toward achieving this goal, “CLPS 2.0”—an expanded version of the “CLPS” (Note 1) program, which commissions private companies to provide payload transportation services to the Moon—is also set to be launched. In Japan as well, aerospace was selected as one of the 17 strategic fields for priority investment in the Japan Growth Strategy announced in November 2025. The public-private investment roadmap for the “Japan Growth Strategy,” which was formally approved by the Cabinet in July 2026, specifies 5.6 trillion yen in public and private investment in lunar exploration and low-Earth orbit technologies through fiscal year 2040 (Note 2).Specifically this includes the development and manufacturing of lunar transport vehicles, landers, and rovers. As such, the Moon is transitioning into a phase of infrastructure development, and we anticipate that this will lead to expanded business opportunities for our company. Against this backdrop, during the first quarter of the current fiscal year, we continued to advance the development and sales activities for the ULTRA Lander in preparation for our Mission 3, scheduled for launch in 2028, and Mission 4, scheduled for launch in 2029. Regarding the development of Mission 3, vibration and acoustic tests using the structural model (Note 3) were successfully completed. Following the PDR (Note 4) and CDR (Note 5), we plan to begin manufacturing the flight model (Note 6) this winter, and development is progressing smoothly, largely in line with our schedule. In terms of business activities, we entered into a new payload service agreement with JALUX Inc. during the first quarter of this fiscal year. Going forward, Japan Airlines, Ltd. (JAL) and JALUX Inc. plan to collaborate with regions and companies nationwide to solicit items that reflect modern culture—such as regional specialties and products representative of local businesses—as lunar payloads. In addition, on July 29, 2026, we signed a launch contract with Mitsubishi Heavy Industries, Ltd. for the domestically produced H-3 rocket in preparation for Mission 3. We aim to establish Japan’s independent lunar transport system using the domestically produced ULTRA lander and the domestically produced H-3 rocket. Regarding sales activities for Mission 4, in July 2026, we finalized a contract worth approximately 12 billion yen with the European Space Agency (ESA) as part of the MAGPIE Project Phase 2. Furthermore, in August 7 2026, we received a notification of a grant decision for up to 20 billion yen under the second phase of the Space Strategy Fund for “High-Precision Landing Technology in the Lunar Polar Region.” We plan to continue promoting technological development for high-precision landings near lunar polar regions and support for payload operations in polar regions using communication relay satellites. Note that in the same period of the previous fiscal year, revenue from payloads—which accounts for the majority of our sales—included revenue associated with the development progress of Missions 2 and 5; however, in the first quarter of the current fiscal year, payload revenue consisted solely of revenue associated with the development progress of Mission 3, resulting in a year-over-year decrease in revenue. Additionally, regarding NASA’s CLPS Task Order “CP-12”—which was scheduled to serve as the payload for U.S. Mission 5, slated for launch in 2030—the contract between NASA and Draper Laboratory has been terminated by mutual agreement. Our U.S. subsidiary had been proceeding with the development of a lander for “CP-12” under a subcontract with Draper Laboratory; however, following the termination of the contract between NASA and Draper Laboratory, our subcontract with Draper Laboratory is also expected to be terminated. Furthermore, in light of the strong demand in both Japan and the U.S. mentioned above, we are continuing to consider conducting a lunar landing mission using the ULTRA lander in 2029. At our U.S. subsidiary, Bretton Alexander, who has held key positions at government agencies and private space companies, has
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- 3 - been appointed Executive Vice President of U.S. Business Development. He will drive efforts to secure demand in the U.S., including from NASA, while in Japan, we are continuing active dialogue between our management team and key cabinet ministers to promote public-private partnerships within the country. Furthermore, during the first quarter of this fiscal year, we made a new decision to launch a lunar transportation service utilizing the payload capacity of the Starship, developed by SpaceX in the United States. The introduction of the Starship, capable of transporting large-capacity payloads to the Moon, is expected to lower the barriers to entry into the lunar infrastructure business and rapidly expand demand for small payloads. By adding both high-value-added, customized services via the ULTRA Lander and high-capacity, relatively low-cost services via Starship to our business portfolio, we believe we will be able to broadly capture the demand for lunar payloads, which is expected to grow worldwide. In addition, while the space business sector to which our group belongs and national security are closely related fields, as mentioned above, with the full-scale launch of lunar development triggered by IGNITION, attention is increasingly focusing on the importance of security in the cislunar space extending from Earth to the Moon. The U.S. government has already defined cislunar space as a security concern, and Space Situational Awareness (SSA) utilizing satellites and other assets, as well as transportation capabilities to deliver satellites and other assets to cislunar space, are becoming urgent issues. Under these circumstances, we plan to launch one of our own lunar-orbiting satellites into lunar orbit as Mission 2.5 as early as 2027 (Note 7), using Argo Space’s transportation infrastructure. Furthermore, with a view to providing not only communication and positioning services but also observation and SSA (Space Situational Awareness) services, we aim to deploy at least five (Note 7) of our own satellites into lunar orbit by 2030. As a result, the Group posted net sales of 168,692 thousand yen ( down 85.5% year-on-year), operating loss of 6,397,630 thousand yen (operating loss of 2,243,460 thousand yen in the same period of the previous fiscal year) , ordinary loss of 6,335,217 thousand yen (ordinary loss of 2,878,585 thousand yen in the same period of the previous fiscal year) and net loss attributable to owners of parent of 6,336,167 thousand yen (net loss attributable to owners of parent of 2,879,535 thousand yen in the same period of the previous fiscal year) for First Quarter of consolidated fiscal year ending March 2027. Furthermore, operating results by segment are omitted as the Group operates a single segment focused on lunar surface development business. (Note 1) CLPS: Commercial Lunar Payload Services (Note 2) Source: https://www.cas.go.jp/jp/seisaku/nipponseichosenryaku/kaigi/dai5/shiryou3.pdf (Note 3) A model used to finalize the structural design of the lander (Note 4) Preliminary Design Review. A review meeting to verify the feasibility of design results against specifications and the design verification plan. (Note 5) Critical Design Review. A review meeting to confirm the appropriateness of the detailed design and verification plan for manufacturing and testing, utilizing evaluations conducted to date, such as prototype evaluations, thermal structural characteristic evaluations, and electromechanical design evaluations (Note 6) The flight model to be launched. (Note 7) This represents the mission and schedule as envisioned as of August 7, 2026, and is subject to change in the future
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- 4 - (2) Financial Position (Current assets) The balance of current assets at the end of the first consolidated quarter under review was 28,262,213 thousand yen, a decrease of 6,122,400 thousand yen from the end of the previous consolidated fiscal year. This was mainly attributable to a decrease of 3,987,469 thousand yen in cash and deposits and 2,209,575 thousand yen in advances payments - trade. (Non-current assets) The balance of non- current assets at the end of the f irst consolidated quarter under review was 12,639,174 thousand yen, a decrease of 681,167 thousand yen from the end of the previous consolidated fiscal year. This was mainly attributable to an increase of 284,920 thousand yen in construction in progress, while long-term advances decreased by 927,669 thousand yen. (Current liabilities) The balance of current liabilities at the end of the first consolidated quarter under review was 7,256,975 thousand yen, an increase of 1,560,031 thousand yen from the end of the previous consolidated fiscal year. This was mainly attributable to an increase of 2,176,249 thousand yen in short-term borrowings (Non-current liabilities) The balance of non-current liabilities at the end of the first consolidated quarter under review was 24,981,344 thousand yen, a decrease of 1,853,181 thousand yen from the end of the previous consolidated fiscal year. This was mainly attributable to long- term borrowings decreasing by 1,860,756 thousand yen. (Net assets) The balance of net assets at the end of the first consolidated quarter under review was 8,663,067 thousand yen, a decrease of 6,510,417 thousand yen from the end of the previous consolidated fiscal year. This was mainly due to a decrease in retained earnings of 6,336,167 thousand yen. (3) Explanations on Consolidated Earnings Forecast and Other Forecast Information Regarding consolidated earnings forecast, no change has been made to the consolidated earnings forecast for the full consolidated fiscal year announced in the “(Corrections) Notice Regarding Partial Corrections to the “Consolidated Financial Results for the Fiscal Year Ended March 31, 2026” and the Presentation for the Fiscal Year Ended March 31, 2026” on May 28, 2026. (4) Significant Events, etc. Going Concern Assumption The space related business in which the Group is engaged is expected to expand globally at a rapidly accelerating rate, requiring the urgent establishment of necessary technologies to keep up with the trajectory of the industry. As the Group is engaged in developments of space related equipment that require a large amount of upfront research and development investment and a long-term development period, the Company is not generating revenue to compensate for all such development investments, and has recorded continuous operating losses and negative operating cash flow. Therefore, as of the end of the first quarter, there are events or circumstances that could raise significant doubt regarding the ability of the Group to operate as a going concern. The Group is working on the following significant issues until such events or circumstances are resolved and stable business earnings are generated. However, as the Group is implementing measures to resolve such significant events or circumstances, the Group has determined that there is no significant uncertainty regarding its ability to operate as a going concern. (1) Promotion of Research and Development In order to carry out Mission 3 utilizing a new commercialized model developed by the Japanese entity, and Mission 4 which we decided to begin development upon selection for the Space Strategy Fund, the Group will steadily advance the development of lunar landers and rovers by strictly managing development schedule and development costs as well as development quality, while securing launching opportunities by launch service providers. (2) Customer Development The landers and rovers required for the Company to achieve business earnings are under development. The global market in which the Company anticipates business earnings is in its pioneer days. The Company has currently confirmed potential orders from customers for Mission 2.5 through Mission 4 and will continue to cultivate a sustainable customer market over the medium to long term to stabilize business earnings. (3) Securing Human Resources The Company is continuously hiring human resources with advanced expertise and capabilities in various development fields
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- 5 - in Japan and overseas to pursue research and development of landers and rovers. Additionally, the Company will continue to engage in preparing an environment that enables each human resource to demonstrate their full abilities in the organization in which the number of employees is rapidly expanding. (4) Establishing and Appropriately Managing Internal Control Responding to Growth The Company will continue to establish and appropriately manage internal controls responding to its growth, such as organizing necessary operational processes, financial and accounting structure, labor management, subsidiary management, and security management for the Group to continuously expand business in the future. (5) Securing Funds for Achieving Growth over Medium to Long Term Continuing to achieve missions in the future is essential for the Company to aspire to stable business earnings. It is also important to consistently secure the necessary funds to do so. The Company has so far raised funds by methods including unsecured convertible bond, third-party allotment of shares, borrowings from financial institutions, crowdfunding and public offering, and will consider the possibilities of flexible fundraisings to promote the missions in the future. In addition, the Company entered into an insurance contract with Mitsui Sumitomo Insurance Company, Limited for Mission 1,and since Success 9 and 10 out of the 10 success milestones set for Mission 1 were not achieved, the Company received an insurance payment. Since Mission 2 fell outside the scope of the insurance coverage, the company didn’t receive insurance payment for the mission. The Company recognizes insurance as one measures of reducing risk and ensuring financial stability, and is considering utilizing insurance for Mission 3 and beyond. With respect to borrowings from financial institutions, the Company entered into loan agreements totaling 19.3 billion yen (including refinancing) during the fiscal year ended March 31, 2025, and also entered into loan agreements totaling 15.5 billion yen (including refinancing) during the fiscal year ended March 31, 2026. In addition, during the first quarter of the current consolidated fiscal year, we entered into a loan agreement of 1 billion yen with Asahi Shinkin Bank in April 2026, and have secured sufficient short-term liquidity with cash on hand and deposits of 25.7 billion yen (as of the end of June 2026). Regarding capital raising, in October 2024, we entered into an Equity Program Agreement with CVI Investments, Inc. and issued new shares and stock acquisition rights through a third-party allotment. Furthermore, from October 2025 to November 2025, we conducted a public offering and third-party allotments of new shares totaling 18.2 billion yen, along with a secondary offering of our shares through an over-allotment. As of the date of this document, payment has been completed.
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- 6 - 2. Quarterly Consolidated Financial Statements and Significant Notes (1) Quarterly Consolidated Balance Sheet (Unit: Thousands of yen) Previous consolidated fiscal year (As of March 31, 2026) First quarter of current consolidated fiscal year (As of June 30, 2026) Assets Current assets Cash and deposits 29,690,611 25,703,142 Accounts receivable - trade 28,333 40,642 Advance payments - trade 3,991,994 1,782,419 Work in process 28,902 28,758 Other 644,771 707,251 Total current assets 34,384,613 28,262,213 Non-current assets Property, plant and equipment Facilities attached to buildings 925,563 928,369 Tools, furniture and fixtures 1,217,455 1,270,309 Right-of-use assets 196,128 176,551 Construction in progress 5,407,758 5,692,678 Other 6,899 6,899 Accumulated depreciation (535,462) (625,685) Total property, plant and equipment 7,218,344 7,449,124 Intangible assets Software 54,270 44,792 Other 930 937 Total Intangible 55,200 45,729 Investments and other assets Long-term advance payments - trade 5,515,551 4,587,882 Other 531,245 556,438 Total investments and other assets 6,046,797 5,144,320 Total non-current assets 13,320,342 12,639,174 Total assets 47,704,955 40,901,388
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- 7 - (Unit: Thousands of yen) Previous consolidated fiscal year (As of March 31, 2026) Current first-quarter consolidated accounting period (As of June 30, 2026) Liabilities Current liabilities Short-term borrowings 3,089,806 5,266,056 Contract liabilities 754,204 760,624 Provision for share-based compensation 22,737 31,482 Other 1,830,195 1,198,811 Total current liabilities 5,696,943 7,256,975 Non-current liabilities Long-term borrowings 26,353,510 24,492,753 Provision for share-based compensation 62,272 88,935 Other 418,743 399,655 Total non-current liabilities 26,834,526 24,981,344 Total liabilities 32,531,470 32,238,320 Net assets Shareholders' equity Common stock 20,720,194 20,728,777 Deposits for subscriptions of shares 3,239 1,028 Capital surplus 20,627,172 20,635,755 Retained earnings (25,079,815) (31,415,982) Treasury stock (65) (112) Total shareholders' equity 16,270,727 9,949,466 Accumulated other comprehensive income Foreign currency translation adjustment (1,206,460) (1,395,597) Total accumulated other comprehensive income (1,206,460) (1,395,597) Stock acquisition rights 109,218 109,199 Total net assets 15,173,485 8,663,067 Total liabilities and net assets 47,704,955 40,901,388
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- 8 - (2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income (Loss) (Quarterly Consolidated Statement of Income (Loss)) (Unit: Thousands of yen) First quarter of the previous consolidated fiscal year (April 1, 2025 - June 30, 2025) First quarter of the current consolidated fiscal year(April 1, 2026 - June 30, 2026) Net sales 1,165,754 168,692 Cost of sales 933,794 4,795,861 Gross profit (loss) 231,960 (4,627,169) Selling, general and administrative expenses Research and development expenses 1,236,082 434,047 Salaries and allowances 518,234 459,921 Other 721,103 876,491 Total selling, general and administrative expenses 2,475,420 1,770,461 Operating income (loss) (2,243,460) (6,397,630) Non-operating income Interest income 30,367 16,297 Foreign exchange gains - 530,754 Other 20 972 Total non-operating income 30,388 548,024 Non-operating expenses Interest expense 356,996 484,347 Foreign exchange losses 304,411 - Other 4,105 1,264 Total non-operating expenses 665,513 485,611 Ordinary loss (2,878,585) (6,335,217) Extraordinary losses Loss on retirement of non-current assets 0 - Total extraordinary losses 0 - Income (loss) before income taxes (2,878,585) (6,335,217) Income taxes - current 950 950 Total income taxes 950 950 Net income (loss) (2,879,535) (6,336,167) Net income (loss) attributable to owners of parent (2,879,535) (6,336,167)
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- 9 - (Quarterly Consolidated Statement of Comprehensive Income (Loss)) (Unit: Thousands of yen) First quarter of the previous consolidated fiscal year (April 1, 2025 - June 30, 2025) First quarter of the current consolidated fiscal year (April 1, 2026- June 30, 2026) Net income (loss) (2,879,535) (6,336,167) Other comprehensive income (loss) Foreign currency translation adjustment (372,398) (189,137) Total other comprehensive income (loss) (372,398) (189,137) Comprehensive income (loss) (3,251,933) (6,525,305) (Breakdown) Comprehensive income attributable to owners of parent (3,251,933) (6,525,305)
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- 10 - (3) Notes to Quarterly Consolidated Financial Statements (Notes on Going Concern Assumption) Not applicable. (Notes in Case of Significant Changes in the Amounts of Shareholder’s Equity) Not applicable. (Notes to Quarterly Consolidated Balance Sheets) Financial Covenants Previous consolidated fiscal year (March 31, 2026) (1) Of the borrowings as of the end of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on November 10, 2023 (balance as of the end of the current consolidated fiscal year: 1,189,806 thousand yen) 1) The total amount of net assets in the consolidated balance sheets as of the end of each quarterly consolidated fiscal period shall be maintained at a positive value. 2) To maintain the total amount of cash and deposits shown in the consolidated balance sheets as of the end of each quarter ly consolidated fiscal period at 3 billion yen or more. (2) Of the borrowings as of the end of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on April 25, 2024 (balance as of the end of the current consolidated fiscal year: 1,851,269 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposit s indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (3) Of the borrowings as of the end of the current consolidated fiscal year , syndicated loan agreement between the Company and several financial institutions contain the following financial covenants. Contract on July 26, 2024 (balance as of the end of the current consolidated fiscal year: 8,206,240 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposit s indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (4) Of the borrowings as of the end of the current consolidated fiscal year, the loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on March 31, 2025 (balance as of the end of the current consolidated fiscal year: 1,400,000 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (5) Of the borrowings as of the end of the current consolidated fiscal year, the loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on May 14, 2025 (balance as of the end of the current consolidated fiscal year: 4,896,000 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (6) Of the borrowings as of the end of the current consolidated fiscal year, the loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on May 23, 2025 (balance as of the end of the current consolidated fiscal year: 10,000,000 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fiscal year
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- 11 - should be maintained at 3 billion yen or more. First Quarter of the Consolidated Fiscal Year Ending March 31, 2027 (June 30, 2026) (1) Of the borrowings as of the end of the first quarter of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on November 10, 2023 (balance as of the end of the first quarter of the current consolidated fiscal year: 1,189,806 thousand yen) 1) The total amount of net assets in the consolidated balance sheets as of the end of each quarterly consolidated fiscal period should be maintained at a positive value. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each quarterly consolidated fiscal period should be maintained at 3 billion yen or more. (2) Of the borrowings as of the end of the first quarter of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on April 25, 2024 (balance as of the end of the first quarter of the current consolidated fiscal year: 1,851,269 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (3) Of the borrowings as of the end of the first quarter of the current consolidated fiscal year, syndicated loan agreement between the Company and several financial institutions contain the following financial covenants. Contract on July 26, 2024 (balance as of the end of the first quarter of the current consolidated fiscal year: 8,206,240 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (4) Of the borrowings as of the end of the first quarter of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on March 31, 2025 (balance as of the end of the first quarter of the current consolidated fiscal year: 1,224,980 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained at 3 billion yen or more. (5) Of the borrowings as of the end of the first quarter of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on May 14, 2025 (balance as of the end of the first quarter of the current consolidated fiscal year: 4,886,512 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fisca l year should be maintained at 3 billion yen or more. (6) Of the borrowings as of the end of the first quarter of the current consolidated fiscal year, loan agreement between the Company and a correspondent bank contains the following financial covenants. Contract on May 23, 2025 (balance as of the end of the first quarter of the current consolidated fiscal year: 10,000,000 thousand yen) 1) The total amount of net assets indicated in the consolidated balance sheet as of the end of each consolidated fiscal year should be maintained positive. 2) The total amount of cash and deposits indicated in the consolidated balance sheet as of the end of each consolidated fisca l year should be maintained at 3 billion yen or more. (Notes to Quarterly Consolidated Statements of Cash Flows) Quarterly consolidated statements of cash flows for the first quarter of the current cons olidated fiscal year have not been
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- 12 - prepared. Depreciation and amortization (including amortization related to intangible assets) for the first quarter of the current consolidated fiscal year is as follows. First quarter of the previous consolidated fiscal year (from April 1, 2025 to June 30, 2025) First quarter of the current consolidated fiscal year (from April 1, 2026 to June 30, 2026) Depreciation and amortization 47,397 thousand yen 93,965 thousand yen (Segment Information, etc.) ⅠFirst quarter of the previous consolidated fiscal year (from April 1, 2025 to June 30, 2025) Segment information is omitted as the Group operates a single segment focused on the lunar surface development business. Ⅱ First quarter of the current consolidated fiscal year (from April 1, 2026 to June 30, 2026) Segment information is omitted as the Group operates a single segment focused on the lunar surface development business. (Significant Subsequent Events) (Space Strategy Fund) Following the end of the first fiscal quarter, on August 7, 2026, we received official notification of the grant award from the Japan Aerospace Exploration Agency (hereinafter “JAXA”) regarding the Space Strategy Fund (Phase 2) project, for which JAXA had issued a public call for proposals. The details are as follows. (1) Details of the Grant Award (i) Soliciting organization: JAXA (ii) Technology development theme: High-Precision Landing Technology in Lunar Polar Regions (iii)Technical Development Project Title: High-Precision Landing Near the South Pole and Support for Payload Operations in Polar Regions Using Communication Relay Satellites (iv) Maximum amount of support: Up to 20.0 billion yen (v) Implementation Period: Up to approximately 5 years (through June 2030) (vi) Grant amount awarded for the initial grant project period (*) : 11.6 billion yen (**) (vii) Initial grant project period (*) : From April 13, 2026 to March 31, 2028 (*) The initial grant project period refers to the period from the grant award date through March 31 of the fiscal year in which the first stage-gate review is completed. The amounts applicable from April 2028 onward are expected to be disclosed upon each subsequent grant award decision. (**)The maximum amount of funding remains unchanged at 20.0 billion yen. As the amount may fluctuate depending on future stage-gate reviews and other factors, receipt of the full amount is not guaranteed at this time. (2) Future Outlook The impact of this matter has already been incorporated into ispace’s consolidated financial forecast for the fiscal year ending March 31, 2027, and ispace therefore expects the impact on its financial forecast for the current fiscal year to be immaterial. the Company will promptly disclose any matters that arise in the future requiring disclosure due to a material impact on its financial results. Furthermore, following this selection, the Company will advance the development of high-precision landing technology near the South Pole, long-term operation technology (14 days or more) utilizing the white nights unique to the Antarctic region, and communication relay satellites, with the aim of demonstrating these technologies through Mission 4, scheduled for launch in 2029. (Expected termination of material contracts) Our consolidated subsidiary, ispace technologies U.S., inc. (hereinafter, ispace-U.S.), confirmed that the contract concerning Task Order CP-12 under the CLPS program, which had been concluded among NASA and Draper laboratory, a nonprofit engineering innovation company based in Massachusetts, U.S., has been terminated on July 9, 2026 (U.S. Mountain Time). Accordingly, the subcontract agreement between ispace-U.S. and Draper laboratory regarding the development and operation of the lander for the provision of lunar transportation services is also expected to be terminated. Following the announcement made on March 27, 2026, "Notice regarding New “ULTRA” Lunar Lander and Schedule Shift of U.S.
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- 13 - Mission" will have no impact on ispace’s consolidated earnings forecast for the fiscal year ending March 31, 2027. In addition, following the change in the schedule of the U.S. mission, the Company recognized an impairment loss on the related advance payments in the first quarter of the current consolidated fiscal year. This impairment loss has already been disclosed as a material subsequent event in the annual report for the fiscal year ended March 31, 2026. Accordingly, this matter is not expected to have a material impact on the earnings forecast for the current fiscal year. (Establishment of a subsidiary) The Company had been proceeding with the establishment of its consolidated subsidiary "ispace S A" in the Kingdom of Saudi Arabia, but after the end of the first quarter of the current consolidated accounting period, on July 30, 2026, it completed the formal procedures and the capital contribution, and as of the same date, the Company has made the entity a consolidated subsidiary. (1) Purpose of Establishment of Subsidiary As the fourth global base following Tokyo, Luxembourg, and Denver, we will strengthen partnerships with commercial entities, government agencies, and research institutions in the Kingdom of Saudi Arabia, and contribute to the country's investments in the space technology sector and initiatives for lunar exploration by leveraging the knowledge and experience we have gained through our past lunar missions. In addition, we will promote human resource development and infrastructure building locally, as well as cooperation in the field of in-situ resource utilization (ISRU). (2) Overview of the subsidiary to be established (i) Name: ispace S A (ii) Location: Kingdom of Saudi Arabia (iii) Description of business: Lunar development business (iv) Common stock: ¥113 million* (v) Fiscal year-end: December (vi) Investment ratio: ispace, inc. 100% *Converted into yen using the TTM rate as of the end of June 2026.