[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

To All Shareholders
Securities Code: 8140
December 4, 2023
(Start of measures for electronic provision: November 27, 2023)
Ryosan Company, Limited
2-3-5 Higashi-Kanda, Chiyoda-ku, Tokyo
Kazuhiko Inaba
Representative Director, President
NOTICE OF CONVOCATION OF THE EXTRAORDINARY GENERAL MEETING OF
SHAREHOLDERS
We appreciate your continuous support as always.
Ryosan Company, Limited ("Ryosan" or the "Company") hereby notifies that the Company's
Extraordinary General Meeting of Shareholders will be held as set forth below.
In tandem with this convocation of the Extraordinary General Meeting of Shareholders, the Company
is taking measures to provide some items electronically. The details of these measures are posted on
the website listed below.

【Ryosan official website】
https://www.ryosan.co.jp/
To view the measures, please access the above website, then click "Investor Relations,""Information on Shareholders and Shares" and then "General Meetings of Shareholders."
The information is also posted on the following website:【Tokyo Stock Exchange website】
https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show
To view the information, please access the above website, enter and search "Ryosan" in the"Security Name (Company Name)" field, or "8140" in the "Code" field, then select "Basic
information", and then "Documents for Public inspection/PR Information."―1―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

If you are not going to attend the meeting, you may exercise your voting rights via the Internet or by
mail in accordance with the reference material for the Extraordinary General Meeting of Shareholders(pages 6 through 71) and exercise your voting rights by no later than 5:30 p.m. on Monday, December
18, 2023.
1. Date and Time Tuesday, December 19, 2023, 10:00 a.m.
(Doors are scheduled to open at 9:00 a.m.)Hall on the 8th floor of Ryosan's Head Office Building, 2-3-5 Higashi-Kanda,
2. Place
Chiyoda-ku, Tokyo(Please refer to the "Venue Map" attached at the end of this document.)
3. Meeting Agenda:
Matters to be Resolved: Proposal 1. Approval of the Share Transfer Plan
Proposal 2. Partial Amendment to Articles of Incorporation
•
•

•
•

When you attend the meeting, you are kindly asked to submit the enclosed Voting Rights
Exercise Form at the reception desk of the venue on the day of the meeting.
Pursuant to laws and ordinances, as well as Article 17, Paragraph 2 of the Articles ofIncorporation of Ryosan, documents provided in response to requests for documents do notinclude the following information:➢ Details of Financial Statements and Other Documents for the Most Recent Business Year of
Ryoyo Electro Corporation
Should any of the items in the measures for electronic provision require correction, suchcorrections will be listed on each website.
Please understand that the notice of resolutions in the Extraordinary General Meeting of
Shareholders will be posted on the Company's website (https://www.ryosan.co.jp/) in place ofsending written notifications to shareholders.

―2―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Information on Exercising Voting Rights
You may exercise your voting rights in the following three ways.
Document (Mail)
Please post the enclosed voting form without a stamp after expressing your approval or disapproval of the
proposal.
If you do not express your approval or disapproval, we will assume that you expressed your intent to approve
the proposal.
Exercise
Deadline
DateYour vote shall reach the Company no later than 5:30 p.m. on Monday,
December 18, 2023.

Internet
Please access the website designated by us for exercising voting rights (https://www.web54.net), and enter yourapproval or disapproval in accordance with the on-screen instructions.
(Please see page 5 for details.)
Exercise
Deadline
Date

You shall complete exercising your voting rights no later than 5:30 p.m.
on Monday, December 18, 2023.

(i) To prevent unauthorized access by non-shareholder impersonators and the manipulation of the voting content, we provide a new"voting code" and "password" each time meetings of shareholders are convened.
(ii) If you are voting via the Internet, please note that you will be asked to change the "password" provided in advance on the website
for exercising voting rights.
(iii) Shareholders should bear the costs of accessing the website for exercising voting rights (e.g. Internet access fees).

Attendance of Meeting of Shareholders
Please submit the enclosed Voting Rights Exercise Form at the reception desk of the venue.
Date and
Time

Place

Tuesday, December 19, 2023, 10:00 a.m.
(Doors are scheduled to open at 9:00 a.m.)Hall on the 8th floor of Ryosan's Head Office Building, 2-3-5 Higashi-Kanda, Chiyoda-ku, Tokyo(Please refer to the "Venue Map" attached at the end of this document.)

Methods for Exercising Voting Rights via the Internet, Etc.
If you are voting via the Internet, etc., please acknowledge the following matters in advance.

1. Website for Exercising Voting Rights
Exercise of your voting rights via the Internet is only available by accessing the following website for exercising voting rights.
Online voting(Address of Website for Exercising Voting Rights)
https://www.web54.net

2. Handing of Exercised Voting Rights(1) If you use a PC to exercise your voting rights, please access the address above and express approval or disapproval in accordance with
the instructions on the screen using the "voting code" and "password" provided in the enclosed voting form.
(2) If you use a smartphone to exercise your voting rights, by scanning the "smartphone use voting right exercise website login" provided in
the enclosed voting form, you can exercise your voting rights from the website for exercising voting rights via smartphone without
entering "voting code" and "password." If you make a correction to the content of your vote, you are required to scan the QR code again
and enter your "voting code" and "password" provided in the voting form.
(3) If you exercise your voting rights twice, once in writing and once via the Internet, the vote cast via the Internet will be considered a valid
exercise of your voting rights. If you exercised your voting rights more than once via the Internet, the final vote will be considered a valid―3―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

exercise of your voting rights.

3. Handling of "Password"(1) The "password" is important information for verifying the identity of voters as shareholders. Please handle it with the same care as you
would handle a seal, etc.
(2) If you enter incorrect passwords more than a certain number of times, you will no longer be able to use your password. If you wish tohave your "password" reissued, please follow the instructions on the screen.
(3) The "password" provided in the voting form is effective only for this meeting of shareholders.

4. Inquiries about the Operation of Devices such as PC(1) If you have questions about the use of your PC or other devices in connection with the exercise of voting rights on this Website, pleasecontact:
Sumitomo Mitsui Trust Bank, Limited, Securities Agent Web Support Hotline[TEL] 0120-652-031 (9:00 a.m. to 9:00 p.m.)(2) For inquiries other than (1) (address, number of shares, etc.), please contact either of the following as appropriate:
A．If you have an account with a securities company, please contact:Your securities company
B．If you do not have an account with a securities company (you hold a special account (Tokubetsu Koza)), please contact:
Sumitomo Mitsui Trust Bank, Limited, Stock Transfer Agency Business Planning Dept.
[TEL] 0120-782-031 (9:00 a.m. to 9:00 p.m. Mon.-Fri.)

5. Use of Electronic Voting Platform (To institutional investors)
If you have applied in advance for the use of the electronic voting platform for institutional investors operated by ICJ, Inc., you may use thisplatform to exercise your voting rights.

―4―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Reference Documents for the General Meeting of Shareholders
Proposal and Reference Matters
Proposal 1: Approval of the Share Transfer Plan with Ryoyo Electro Corporation
Ryosan and Ryoyo Electro Corporation (“Ryoyo Electro”; Ryosan and Ryoyo Electro are collectively referred to as the“Companies”) have been in discussions regarding the management integration of the Companies (the “Management Integration”), as
disclosed in the “Notice of Execution of a Memorandum of Understanding for Management Integration between Ryoyo Electro
Corporation and Ryosan Company, Limited”, dated May 15, 2023, and hereby announce that they have reached an agreement
concerning the establishment of Ryoyo Ryosan Holdings, Inc. (the “Joint Holding Company”), which will become the wholly-owningparent company of the Companies, on April 1, 2024 (scheduled) by way of a joint share transfer (kyoudou kabushiki iten) (the “Share
Transfer”), and the terms and conditions of the Management Integration, and in accordance with the resolutions of their respective
boards of directors held on October 16, 2023, they have entered into a management integration agreement in the spirit of equality (the“Management Integration Agreement”) and have jointly prepared a share transfer plan (the “Share Transfer Plan”).
The implementation of the Management Integration and the Share Transfer is subject to, among other things, the Companies
obtaining the approval of their general meetings of shareholders and the permission and authorization of the relevant authorities
required for the Management Integration and the Share Transfer.
Accordingly, Ryosan proposes that you approve the Share Transfer Plan. The reasons for the Share Transfer, a summary of thedetails of the Share Transfer Plan, and other matters relating to this proposal are as follows.
1. Reason for the Share Transfer(1) Background of the Management Integration
Ryosan is a trading company specializing in the sale of semiconductor and electronic components in its device business and IT
equipment in its solutions business. It sells products, such as electronic equipment, to manufacturers in Japan and overseas. Ryosanaims to become a “company that creates confidence and the best fit for society in the electronics domain.” It positioned the innovationof its business model, supplier networks and sales channels as pillars of growth. Ryosan is proceeding with the “promotion of thediversification of its portfolio” through extensive commercial rights acquisitions and channel reform, “deepening its local businesses
in the Greater China” through collaboration with local investees, “benefiting from advanced investment products and newinvestment,” “investing in business transformation”, such as entry into new businesses, including manufacturing based on customer
needs, “streamlining existing businesses” by utilizing various digital technologies and “developing business infrastructure”, such as
management information development, education, risk management and governance.
Ryoyo Electro is an electronics trading company selling “semiconductors and devices” and offering “ICT and solutions” in its
business domain. Ryoyo Electro sells products and provides associated services to electronic equipment manufacturers and users inJapan and overseas. It endeavors to realize its vision of becoming “a company that provides the best solutions for our customers’issues and problems in a faster and better manner than anyone else.” By leveraging its wide range of upstream and downstream
contacts in the supply chain and taking advantage of the market needs, as obtained from end users, Ryoyo Electro expands its
relationships with upstream electronics manufacturers; also, by creating unique solutions that combine product, technology andservices, it is developing a business model that circulates information and value throughout the supply chain.
As described above, the Companies operate as trading companies in the electronics domain. The environment surrounding theelectronics trading industry is undergoing significant changes due to rapid increase in the use of new technologies, with theacceleration of IoT and digital transformation (DX) across society. In line with these changes in the industry environment, thefunction and role of electronics trading companies is also changing. In addition, while competition among trading companies isintensifying due to the alliances of electronic component manufacturers, such as semiconductor and IT equipment manufacturers,
external factors, such as changes in the supply-demand balance in the semiconductor market, trends in the financial markets, risingresource and material prices, and geopolitical risks, are having a significant impact on the business environment and performance.
As such, electronics trading companies, while having low profitability, are vulnerable to changes in the external environment.

―5―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Based on this recognition, the Companies have aligned their understanding that, in order to achieve a sustainable increase incorporate value and further contribute to all stakeholders, it is necessary not only to establish a solid management base, but also to
break through the growth limit of each company and pursue value enhancement across the entire value chain by integrating theirrespective strengths. The Companies have therefore reached a final agreement regarding the Management Integration through theestablishment of the Joint Holding Company.
(2) Purpose of and initiatives for the Management Integration
Through the Share Transfer, the Companies, as a new core group of domestic electronics trading companies, will promote thefollowing initiatives that make maximum use of the management resources, such as good customer relationships and excellent
products and solutions, that each of the Companies has built up over the years, within a new framework, and strive to further enhancetheir corporate value.

(i) Expanding “quantity” by multiplying the management assets of the Companies
Given the limited overlap in customers and product lines, the Companies will rapidly expand their business base by offering new
products to their existing customers and by offering existing products to new customers. By expanding and enhancing new contact
points with customers through these initiatives, the Companies will gain an accurate and deep understanding of their customers’
needs. In addition, the Companies will further expand the scale of their business by leveraging the needs identified as a result of
these initiatives to offer new products and services.
(ii) Improving “quality” by creating new value
The Companies will further acquire know-how to provide solutions by making the most of their accumulated knowledge to meetthe diverse needs of customers identified through the initiatives described in (i) above. The Companies will not only sell products,
but also promote the provision of added value that no other company can provide, in order to solve problems and issues faced bycustomers and the market as a whole. By broadening the scope of the solution domain through these initiatives, the Companies willseek to develop diverse business models and create a new image of electronics trading companies unlike any before.
(iii) Creating an optimal structure and fostering a corporate culture to support the initiatives in (i) and (ii)―6―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

As an optimal structure to support the initiatives in (i) and (ii) above, the Companies will develop an infrastructure for the unified
management of the group and establish a system to realize the provision of new value to customers.
In addition, the Companies will further improve their organizational ability to meet customer needs by fostering a corporate culture
in which each and every employee can enhance their “individual” skills and experience both the joy of contributing to customers
and personal growth through the active exchange of knowledge and technology among employees of the Companies.
By combining the strengths of Ryosan, which has key semiconductor products and a solid customer base, with those of Ryoyo
Electro, which has extensive experience in ICT fields such as DX and AI, through the initiatives in (i) to (iii) above, the Companies
will aim to become a company that customers continue to choose, creating a virtuous cycle by pursuing “quantity” and “quality,”
helping solve not only the issues and problems of individual customers but also the common problems and issues of the market as awhole, and seeking to provide new value.
The Companies will promote the above initiatives to realize synergies from the Management Integration as early as possible andaim to achieve a sales volume of JPY 500 billion and an operating profit of JPY 30 billion as the group management’s targets forthe fiscal year ending March 31, 2029. In addition, the Companies will continue to consider measures with a view to realize further
growth opportunities beyond the scope of electronics trading companies in order to pursue value enhancement throughout the entire
value chain, with the ultimate goal of solving the problems of end-users who are “customers of the Companies’ customers.”―7―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

2. Outline of the details of the share transfer plan
The details of the Share Transfer Plan are as described in the “Share Transfer Plan (Copy)” below.
Share Transfer Plan (copy)
Having reached agreement on a share transfer through the joint transfer of shares, Ryoyo Electro Corporation (“Ryoyo Electro”) andRyosan Company, Limited (“Ryosan”) jointly formulated the following Share Transfer Plan (the “Plan”):
Article 1 (Share Transfer)
As set forth in the Plan, Ryoyo Electro and Ryosan will execute a joint share transfer to establish a new wholly-owning parent
company (the “New Company”), and on the Establishment Date (as defined in Article 7) will execute a share transfer in which the
New Company will acquire all issued and outstanding shares of Ryoyo Electro and Ryosan (the “Share Transfer”).
Article 2 (New Company’s Purpose, Trade Name, Location of Head Office, Total Number of Authorized Shares, and Other Matters to
be Set Forth in Articles of Incorporation)
1.

The purpose, trade name, location of head office and total number of authorized shares of the New Company shall be as follows:(1) Purpose
The purpose of the New Company shall be as described in Article 2 of the Articles of Incorporation in Exhibit 1.
(2) Trade Name
The trade name of the New Company shall be “ リ ョ ー サ ン菱 洋 ホ ール デ ィン グス 株 式会 社 ” (Ryosan Ryoyo
Horudingusu Kabushiki Kaisha) and shall be indicated in English as Ryoyo Ryosan Holdings, Inc.
(3) Location of Head Office
The New Company will be headquartered at 3-5, Higashi-Kanda 2-chome, Chiyoda-ku, Tokyo.
(4) Total Number of Authorized Shares
The total number of shares in the New Company will be 150,000,000 shares.

2.

In addition to the provisions of the preceding paragraph, matters stipulated in the Articles of Incorporation of the New Company
shall be as set forth in the Articles of Incorporation attached as Exhibit 1.

Article 3 (Names of Directors and Accounting Auditor at Time of Establishment of New Company)
1.

The names of the Directors at the time of establishment of the New Company (excluding Directors at the time of establishment
who are Audit and Supervisory Committee members at the time of establishment) shall be as follows:
Director: Moritaka Nakamura
Director: Kazuhiko Inaba
Director: Shunya Endo
Director: Atuyuki Ohashi
Director: Norihiko Takahashi
Outside Director: Shinya Takada
Outside Director: Haruyoshi Kawabe
Outside Director: Masumi Shiraishi

2.

The names of the Directors at the time of establishment of the New Company who are also Audit and Supervisory Committee
members at the time of establishment shall be as follows:
Director: Kiyoshi Waki

―8―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Outside Director: Mahito Ogawa
Outside Director: Motomi Ooi
Outside Director: Sachiko Fukuda
3.

The name of the Accounting Auditor at the time of establishment of the New Company shall be as follows.
Deloitte Touche Tohmatsu LLC

Article 4 (Shares to be Delivered at the Time of the Share Transfer; and Allotment Thereof)
1.

In conjunction with the Share Transfer, the New Company will deliver to the shareholders of Ryoyo Electro’s and Ryosan’scommon stock that they respectively hold in Ryoyo Electro and Ryosan common stock immediately prior to the acquisition of allof the issued and outstanding shares of Ryoyo Electro and Ryosan (the “Base Time”), in exchange for such common stock heldby the shareholders, the total number of shares in the New Company calculated as the aggregate of: (i) the total number of sharesof common stock issued at the Base Time by Ryoyo Electro multiplied by 1; and (ii) the total number of shares of common stock
issued at the Base Time by Ryosan multiplied by 1.32.

2.

The New Company will allocate the common stock of the New Company that is delivered pursuant to the preceding paragraph to
Ryoyo Electro’s and Ryosan’s common shareholders at the Base Time according to their individual ratio as indicated below:(1) To Ryoyo Electro’s shareholders, 1 share of common stock in the New Company per 1 share of common stock held in Ryoyo
Electro(2) To Ryosan’s shareholders, 1.32 shares of common stock in the New Company per 1 share of common stock held in Ryosan3.

Any fractions of less than one (1) share resulting from the calculations in the preceding two paragraphs will be treated inaccordance with Article 234 of the Companies Act (Law No. 86 of July 26, 2005, as amended), and the provisions of other relevantlaws and regulations.

Article 5 (Share Options to be Delivered at the Time of the Share Transfer; and Allotment Thereof)
1.

In conjunction with the Share Transfer, the New Company will deliver to the holders of the third series of share options in Ryoyo
Electro (the details of which are as described in Exhibit 2, “Third Series of Share Options (Ryoyo Electro)”) that they respectively
hold in Ryoyo Electro as at the Base Time, in exchange for such Third Series of Share Options (Ryoyo Electro) held by theholders, the same number of the first series of share options in the New Company (the details of which are as described in Exhibit
3, “First Series of Share Options (New Company)”) as the total number of share options as at the Base Time.

2.

The New Company will allocate the First Series of Share Options (New Company) that are delivered pursuant to the preceding
paragraph to the holders of the Third Series of Share Options (Ryoyo Electro) at the Base Time according to their individual ratio
as indicated below.
(1) One (1) unit of the First Series of Share Options (New Company) per one (1) unit of Third Series of Share Options (Ryoyo
Electro)Article 6 (New Company’s Capital and Reserves)
The amount of capital, reserves, etc. at the time of establishment of the New Company shall be as follows:(1) Amount of capital
15 billion yen(2) Amount of capital reserve―9―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

5 billion yen(3) Amount of retained earnings reserve
0 yen(4) Amount of capital surplus
Remainder after deduction of the total of (1) and (2) above from the change in shareholders’ equity set forth in Article 52.1of the Regulations on Company Accounting
Article 7 (Incorporation Date of New Company)
The date on which the establishment of the New Company is to be registered (referred to as “Establishment Date” in the Plan) is
April 1, 2024. However, this date can be changed by agreement after consultation between Ryoyo Electro and Ryosan whennecessitated by procedures for the Share Transfer or other reasons.
Article 8 (General Meeting of Shareholders to Approve the Plan)
Ryoyo Electro and Ryosan shall each hold an extraordinary General Meeting of Shareholders on the date set forth below to seek
approval of the Plan and matters necessary for the Share Transfer. However, when necessitated by the procedures for the Share Transfer
or other reasons, Ryoyo Electro and Ryosan may, by agreement after consultation, change the dates of the general meetings ofshareholders to seek approval of the Plan and resolutions on matters necessary for the Share Transfer.
Ryoyo Electro : December 19, 2023
Ryosan : December 19, 2023
Article 9 (Listing of Shares, Shareholder Registry Administrator)
1.

Ryoyo Electro and Ryosan will perform the procedures required for listing the common stock issued by the New Company on
the Prime Market of the Tokyo Stock Exchange, Inc. on the Establishment Date, in consultation with and through the mutual
cooperation of Ryoyo Electro and Ryosan.

2.

The administrator of the shareholder registry for the New Company at the time of establishment will be Mitsubishi UFJ Trustand Banking Corporation.

Article 10 (Distribution of Surplus)
1.

Ryoyo Electro may distribute surplus dividends in a maximum of 100 yen per share to Ryoyo Electro’s shareholders andregistered stock pledge holders noted or recorded in the final shareholder registry as of March 31, 2024.

2.

Ryosan may distribute surplus dividends respectively as follows: (1) a maximum of 60 yen per share to Ryosan’s shareholders
and registered stock pledge holders noted or recorded in the final shareholder registry as of September 30, 2023; and (2) amaximum of 90 yen per share to Ryosan’s shareholders and registered stock pledge holders noted or recorded in the final
shareholder registry as of March 31, 2024.

3.

Ryoyo Electro and Ryosan shall not resolve to distribute surplus dividends with a record date prior to the Establishment Date of
the New Company during the period after formulation of the Plan until the establishment of the New Company, except as set
forth in the preceding two paragraphs.

Article 11 (Management, etc. of Company Assets)
After formulation of the Plan and until the Establishment Date of the New Company, unless stipulated to the contrary in the Plan,
Ryoyo Electro and Ryosan shall individually execute their operations and manage and administer their assets with the due care of a―10―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

prudent manager, shall cause their subsidiaries to execute their operations and manage and administer their assets with the due care of
a prudent manager and, unless stipulated to the contrary in the Plan, shall only take actions with potential material impacts on theirassets, rights and duties, and cause such actions to be taken after advance consultation and agreement between Ryoyo Electro andRyosan.
Article 12 (Effect of the Plan)
The Plan shall cease to have effect in the event that: (i) the Plan fails to obtain approval from, or a resolution on matters necessary
for the Share Transfer fails to pass, a General Meeting of Shareholders or general meeting of class shareholders of either Ryoyo Electro
or Ryosan as set forth in Article 8; (ii) any of the Licenses and Permits etc. from the relevant authorities that are required for executionof the Share Transfer are not obtained by the Establishment Date of the New Company; or (iii) the Share Transfer is cancelled pursuant
to the following Article 13.
Article 13 (Amendment of Share Transfer Terms and Cancellation of Share Transfer)
After the formulation of the Plan and until the Establishment Date of the New Company, Ryoyo Electro and Ryosan may amend theterms of the Share Transfer and other content of the Plan and may cancel the Share Transfer by agreement after consultation in theevent of: (i) any material change in the assets or business circumstances of Ryoyo Electro or Ryosan; (ii) the identification of events
having a material impact on the assets or business circumstances of Ryoyo Electro or Ryosan; (iii) the occurrence or identification of
circumstances constituting material impediments to the execution of the Share Transfer; or (iv) other circumstances in which it would
be extremely difficult to achieve the purposes of the Plan.
Article 14 (Matters for Consultation)
Any matters not set forth in the Plan and any other matters necessary for the Share Transfer shall be determined upon separate
consultation and agreement between Ryoyo Electro and Ryosan in accordance with the intentions of the Plan.
(Blank below)―11―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

IN WITNESS of the formulation of the Plan, this Document has been prepared in duplicate, and signed and sealed by Ryoyo Electro
and Ryosan, with each party to retain one copy.
October 16, 2023

Ryoyo Electro: 12-22 Tsukiji 1-chome, Chuo-ku, Tokyo, Japan
Ryoyo Electro Corporation
Moritaka Nakamura, President and Chief Executive Officer [seal]

Ryosan: 3-5, Higashi-Kanda 2-chome, Chiyoda-ku, Tokyo, Japan
Ryosan Company, Limited
Kazuhiko Inaba, President and Chief Executive Officer [seal]―12―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

[Exhibit 1]

Articles of Incorporation

Chapter 1 - General Provisions

Article 1 (Business Name)
The name of the Company shall be “リョーサン菱洋ホールディングス株式会社”(Ryosan Ryoyo Horudingusu Kabushiki
Kaisha). The name in English shall be Ryoyo Ryosan Holdings, Inc.
Article 2 (Purpose)
The purposes of the Company shall be, by means of holding shares or interests, to manage and control companies (including foreigncompanies), partnerships (including those equivalent to partnerships in foreign countries), or other entities engaged in the following
businesses, and to conduct the following businesses:(1) Sales, leasing, manufacturing, processing and intermediary of semiconductor devices, integrated circuits, microcomputers andother electronic components, electronic application equipment, electrical machinery and appliances and other machinery andappliances, medical equipment and related materials, and components thereof;(2) Sales, leasing, production and construction of software and information systems, and intermediary services thereof;(3) Information processing services and information provision services;(4) Telecommunications construction business;(5) Telecommunications business based on the Telecommunications Business Law;
(6) Freight forwarding business;(7) Warehousing and warehouse management services;(8) Secondhand goods dealing under the Secondhand Goods Business Act;
(9) Non-life insurance agency and insurance brokerage business;(10) Installation and maintenance of equipment related to items (1) through (5) above;(11) Planning, investigation, research, development and design related to items (1) through (5) above;(12) Acquisition, management, licensing and transfer of patents, trademarks, design rights, copyrights, know-how and otherintellectual property rights related to items (1) through (5) above;(13) Import/export operations related to items (1) and (2) above;(14) Consultancy services related to each of the preceding items;(15) Temporary staffing business related to each of the preceding items;(16) Buying, selling, leasing, managing and brokering real estate; and(17) All businesses incidental to the preceding items
Article 3 (Location of Head Office)
The Company’s head office shall be located in Chiyoda-ku, Tokyo.

―13―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Article 4 (Company Organs)
The Company shall have the following bodies in addition to the General Meeting of Shareholders and the Directors:(1) Board of Directors;(2) Audit and Supervisory Committee; and(3) Financial Auditor
Article 5 (Method of Public Notice)
The Company’s method of making public notices shall be by electronic public notice; provided, however, that if the Company isunable to give an electronic public notice because of an accident or any other unavoidable reason, the Company’s public notices will
be published in the Nihon Keizai Shimbun.

Chapter 2 - Shares

Article 6 (Total Number of Authorized Shares)
The total number of shares authorized to be issued by the Company shall be 150,000,000 shares.

Article 7 (Share Units)
For all classes of shares in the Company, the number of shares per share unit of the Company shall be 100.
Article 8 (Rights of Shareholders Holding Shares of the Company Less Than One Unit)
Shareholders who hold shares of the Company that are less than one unit may not exercise rights other than those listed below withregard to those shares of less than one unit:(1) The rights listed in the subparagraphs to Article 189, Paragraph (2) of the Companies Act;
(2) The right to make a demand pursuant to the provisions of Article 166, Paragraph (1) of the Companies Act;
(3) The right to receive an allotment of offered shares and offered share acquisition rights in proportion to the number of shares heldby the shareholder; and(4) The right to make a demand as set forth in the following Article 9.
Article 9 (Additional Purchase of Shares Less than One Unit)
A shareholder of the Company who holds shares less than one unit may, as provided for in the Company’s Share Handling
Regulations, request the Company to sell to such shareholder a number of shares which will, when combined with the number of sharesalready held by such shareholder, constitute one share unit.
Article 10 (Shareholder Registry Administrator)
1. The Company shall have a shareholder registry administrator.
2. The shareholder registry administrator and the place at which it handles its business will be determined by a resolution of the Boardof Directors or by a Director delegated by a resolution of the Board of Directors and stated in a public notice.
3. The preparation and keeping of the Company’s shareholder registry and registry of share options and other administrative work
concerning the shareholder registry and registry of share options will be delegated to the shareholder registry administrator and will

―14―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

not be handled at the Company.
Article 11 (Record Date)
1. The record date for voting rights at the Company’s ordinary General Meeting of Shareholders is March 31 of each year.
2. Notwithstanding the preceding paragraph, when necessary, the Company may, by a resolution of the Board of Directors and theprovision of a prior public notice, deem the shareholders or registered pledgees of shares entered or recorded in the final shareholder
register as of a certain date as the shareholders or registered pledgees of shares eligible to exercise their rights.
Article 12 (Share Handling Regulations)
Recording or entering matters in the shareholder register and the register of share options, the acquisition or additional purchase ofshares of less than one full unit, any other handling and fees with respect to shares or share options, and procedures, etc. upon theexercise of shareholder rights, shall all be in accordance with the laws and regulations or these Articles of Incorporation, as well as theshare handling regulations established by the Board of Directors.

Chapter 3 - General Meeting of Shareholders

Article 13 (Convocation)
An ordinary General Meeting of Shareholders shall be convened in June of each year, and extraordinary general meetings ofshareholders shall be convened as necessary.
Article 14 (Convener and Chair)
1. Unless otherwise provided in the laws and regulations, general meetings of shareholders shall be convened by the Director previously
appointed by the Board of Directors. If such Director is not available, the General Meeting of Shareholders shall be convened byanother Director, in accordance with the order set forth in advance by the Board of Directors.
2. Unless otherwise provided in the laws and regulations, a Director previously appointed by the Board of Directors shall serve as chairat general meetings of shareholders. If such Director is not available, another Director shall serve as chair, in accordance with the orderset forth in advance by the Board of Directors.
Article 15 (Electronic Provision Measures)
1. When convening a General Meeting of Shareholders, the Company shall provide reference documents for the General Meeting of
Shareholders and other relevant information by electronic means.
2. The Company may elect not to include all or part of the matters subject to electronic provision stipulated by the Ministry of Justiceordinance in the documents delivered to shareholders requesting delivery of written documents by the voting rights record date.
Article 16 (Method of Resolution)
1. Except where otherwise provided by the laws and regulations or these Articles of Incorporation, a resolution of a General Meetingof Shareholders shall be made by a majority of the voting rights of the shareholders present at the meeting who are entitled to vote.
2. Resolutions set forth in Article 309, Paragraph (2) of the Companies Act shall be made by at least two-thirds of the voting rights ofthe shareholders present where shareholders holding at least one-third of the voting rights that may be exercised are present.

―15―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Article 17 (Exercising Voting Rights by Proxy)
A shareholder may act as proxy and exercise voting rights for one other shareholder who has voting rights in the Company. In suchcase, the shareholder or proxy shall submit to the Company a document certifying the proxy rights to the Company for each General
Meeting of Shareholders.

Chapter 4 - Directors, Board of Directors and Executive Officers

Article 18 (Number of Directors)
1. The number of Directors of the Company (excluding those who are Audit and Supervisory Committee members) shall be no morethan twelve (12).
2. The Company shall have no more than six (6) Directors who are Audit and Supervisory Committee members.
Article 19 (Election of Directors)
1. Directors of the Company shall be appointed at a General Meeting of Shareholders by distinguishing between Audit and Supervisory
Committee members and other Directors.
2. Resolutions on the election of a Director shall be made by a majority of the votes of the shareholders present at a meeting where
shareholders holding one-third of the voting rights of the shareholders entitled to exercise their votes at such meetings are present.
3. Resolutions for the election of Directors shall not be conducted by cumulative voting.
Article 20 (Directors’ Term of Office)
1. The term of office of a Director (excluding Audit and Supervisory Committee members) shall expire at the close of the ordinary
General Meeting of Shareholders held with respect to the final business year ending within one year of their appointment.
2. The term of office of a Director who is an Audit and Supervisory Committee member shall expire at the close of the ordinary General
Meeting of Shareholders held with respect to the final business year ending within two years of the Audit and Supervisory Committee
member’s appointment.
3. The term of office of a Director who is an Audit and Supervisory Committee member elected as a substitute for a Director who is
an Audit and Supervisory Committee member resigning before the expiration of their term of office shall be until the time of expirationof the term of office of the relevant resigned Director who is an Audit and Supervisory Committee member.
Article 21 (Representative Director)
The Board of Directors shall elect a Representative Director from among the Directors (excluding Audit and Supervisory Committee
members) by a resolution of the Board of Directors.
Article 22 (Convocation of Board of Directors Meetings)
Notice to convene a Board of Directors meeting will be sent to each Director no later than three days before the day of the meeting.
However, this period can be shortened when urgently necessary.
Article 23 (Omission of Resolution at Board of Directors Meeting)―16―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

The Company will deem a resolution of the Board of Directors to have been passed when the conditions set forth in Article 370 of
the Companies Act have been met.
Article 24 (Executive Officers)
The Board of Directors may resolve to appoint Executive Officers. Matters concerning Executive Officers shall be in accordancewith the Executive Officer Regulations established by the Board of Directors.
Article 25 (Board of Directors Regulations)
Matters concerning the Board of Directors shall be governed by the Board of Directors Regulations established by the Board of
Directors, in addition to applicable laws and regulations and these Articles of Incorporation.
Article 26 (Exemption of Directors From Liability)
1. The Company may, pursuant to Article 426, Paragraph (1) of the Companies Act, and to the extent permitted by laws and regulations,
exempt Directors (including former Directors) from liability for damages due to negligence of their duties by way of passing a
resolution of the Board of Directors.
2. Pursuant to the provisions of Article 427, Paragraph (1) of the Companies Act, the Company may enter into agreements with
Directors (excluding Executive Directors, etc.) to limit their liability to provide compensatory damages due to negligence of theirduties; provided, however, that the maximum amount of compensation liability pursuant to such agreements shall be the minimum
liability amount stipulated by the laws and regulations.
Article 27 (Delegation of Decisions on Important Execution of Operations)Pursuant to Article 399–13, Paragraph (6) of the Companies Act, the Company may delegate all or part of its important businessexecution decisions (excluding the matters listed in the subparagraphs to Article 399–13, Paragraph (5) of the Companies Act) to the
Directors by a resolution of the Board of Directors.
Article 28 (Director Remuneration)
Directors’ remuneration, bonuses, and other economic benefits received from the Company as consideration for the performance of
their duties shall be determined by a resolution of a General Meeting of Shareholders, distinguishing between Audit and Supervisory
Committee members and other Directors.

Chapter 5 - Audit and Supervisory Committee

Article 29 (Convocation of the Audit and Supervisory Committee)
Notice to convene the Audit and Supervisory Committee will be sent to each Auditor no later than three days before the day of themeeting. However, this period can be shortened when urgently necessary.
Article 30 (Regulations of the Audit and Supervisory Committee)
Matters concerning the Audit and Supervisory Committee shall be governed by the Regulations of the Audit and Supervisory
Committee established by the Audit and Supervisory Committee, in addition to applicable laws and regulations and these Articles of―17―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Incorporation.

Chapter 6 – Accounts

Article 31 (Fiscal Year)The fiscal year of the Company is from April 1 of each year until March 31 of the following year.
Article 32 (Decision-Making Body for Dividends from Surplus)
The Company may, except as otherwise provided by the laws and regulations, determine the matters set forth in each item of Article
459, Paragraph (1) of the Companies Act by a resolution of the Board of Directors.
Article 33 (Record Date for Dividends of Surplus)
1. The record date for the year-end dividends of the Company shall be March 31 of each year.
2. The record date for interim dividends of the Company shall be September 30 of each year.
3. In addition to the preceding two paragraphs, the Company may declare dividends of surplus by specifying a record date, by way of
a resolution of the Board of Directors.
Article 34 (Dividend Exclusion Period)
1. If the assets for distribution are monetary in nature (“Unpaid Dividends”), the Company is released from its obligation to makepayment of dividends that have not been received after the elapse of three (3) full years from the payment commencement date.
2. Unpaid Dividends do not attract interest.

Chapter 7 - Supplementary Provisions

Article 35 (Compensation of the Initial Directors)
Notwithstanding the provisions of Article 28, the amount of remuneration, etc. of the Company’s Directors for the period from thedate of incorporation of the Company to the conclusion of the first Ordinary General Meeting of Shareholders shall be as follows:(1) Monetary Compensation to Directors Who are Not Members of the Audit and Supervisory Committee
The total amount of the remuneration, etc. (excluding (3) Monetary Compensation Claims Paid for the Grant of Restricted Stock)shall be no more than 900 million yen per year (not including the portion of employee salary for Directors who concurrently serve
as employees, and no more than 100 million yen per year for the total amount of remuneration of Outside Directors).
(2) Compensation to Directors Who are Members of the Audit and Supervisory Committee
The total amount of remuneration, etc. shall not exceed 200 million yen per year.
(3) Monetary Compensation Claims to be Paid for the Grant of Restricted Stock(a) The total amount of monetary compensation claims to be paid to Directors who are not members of the Audit Committee(excluding Outside Directors, the “Subject Directors”) for the grant of shares with transfer restrictions shall be no more than 200
million yen per year.

―18―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(b) The Subject Directors shall, in accordance with a resolution of the Board of Directors, deliver to the Company all of the monetarycompensation claims to be paid as assets contributed in-kind, and shall be issued or disposed of with respect to the common
stock of the Company. The total number of shares of common stock to be issued or disposed of to the eligible Subject Directors
shall not exceed 200,000 shares per year (provided, however, that in the event of a stock split (including an allotment of theCompany’s common stock without compensation) or a reverse stock split of the Company’s common stock or other events
necessitating adjustment of the total number of shares of the Company’s common stock to be issued or disposed of as Restricted
Shares, such total number shall be adjusted to a reasonable extent).
(c) The amount to be paid-in per share of common stock of the Company shall be determined by the Board of Directors based on
the closing price of the Company’s common stock on the Tokyo Stock Exchange, Inc. on the business day immediately preceding
the date of resolution of each Board of Directors meeting to determine the subscription for such common stock (or, if no tradingis effected on such date, the closing price of the immediately preceding trading day) to the extent that is not particularly favorable
to the Subject Directors. The issuance or disposal of the Company’s common stock in this manner shall be subject to the executionof a Restricted Share Allotment Agreement (the “Allotment Agreement”) between the Company and each Subject Director,
which shall include, in summary, the following terms and conditions (the shares of common stock to be allotted pursuant to the
Allotment Agreement shall hereinafter be referred to as the “Allotted Shares”).
(i) The Subject Directors may not transfer, grant security interests in, or otherwise dispose of the Allotted Shares (the “Transfer
Restriction”) during the period from the date of delivery of the Allotted Shares to the date on which the relevant Subject Director
retires or resigns from his/her position as a Director of the Company or other position determined by the Company’s Board of
Directors (the “Transfer Restriction Period”).
(ii) If a Subject Director loses the status described in (i) above before the expiration of the period determined by the Company’s
Board of Directors (the “Service Period”), the Company shall automatically acquire all of the Allotted Shares without
consideration, unless there is a reason that the Board of Directors deems justifiable.
(iii) Notwithstanding the provision of (i) above, the Company shall cancel the Transfer Restriction for all of the Allotted Shares
upon the expiration of the Transfer Restriction Period; provided, however, that if the Subject Director loses the position
specified in (i) above before the expiration of the Service Period for reasons deemed justifiable by the Company’s Board of
Directors as specified in (ii) above, as of the time immediately following such loss, the Company shall cancel the Transfer
Restriction for all of the Allotted Shares held by the relevant Subject Director.
(iv) If, at the time the Transfer Restriction Period expires, there are any Allotted Shares for which the Transfer Restriction has notbeen lifted pursuant to (iii) above, the Company shall automatically acquire all of such Allotted Shares without consideration;
provided, however, that, in the event that, during the Transfer Restriction Period, a merger agreement under which the Company
shall become a defunct company, a share exchange agreement, a share transfer plan or any other matters relating toorganizational restructuring, etc. under which the Company shall become a wholly-owned subsidiary are approved at a General
Meeting of Shareholders of the Company (or by the Board of Directors of the Company if such approval is not required), if, insuch reorganization, etc., a corporation related to such reorganization, etc. other than the Company delivers shares of suchcorporation (limited to those that become shares with transfer restrictions) to the Subject Director, then the provisions set forthin (iv) above shall not apply.

―19―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(v) Notwithstanding the provision of (i) above, in the event that a merger agreement under which the Company shall become adefunct company, a share exchange agreement, a share exchange agreement or a share transfer plan or other matters relating toorganizational restructuring, etc., are approved by a General Meeting of Shareholders of the Company (or by the Board of
Directors of the Company if such approval is not required), the Company shall, by a resolution of the Board of Directors, cancel
the Transfer Restriction for a reasonably determined number of the Allotted Shares prior to the effective date of suchorganizational restructuring, etc. based on the period from the Allocation Date to the approval date of such organizational
restructuring, etc. In such case, the Company shall automatically acquire the Allotted Shares for which the Transfer Restriction
has not yet been lifted without compensation as of the time immediately after the cancellation of the Transfer Restriction;
provided, however, that, if, in such reorganization, etc., a corporation related to such reorganization, etc. other than the Company
delivers shares of such corporation (limited to those that become shares with transfer restrictions) to the Subject Director, thenthe provisions set forth in (v) above shall not apply.
(vi) Other matters relating to the Allotment Agreement shall be determined by the Board of Directors.
Article 36 (Succession to Restrictions on Transfer)
As of April 1, 2024, the Company shall succeed to the position, rights and obligations of Ryoyo Electro under each allotment
agreement relating to the restricted stock delivered under the restricted stock compensation plan approved at the 59th Annual General
Meeting of Shareholders of Ryoyo Electro held on April 25, 2019.
Article 37 (Deletion of Supplementary Provisions)
These Supplementary Provisions shall be deleted at the conclusion of the Company’s first Ordinary General Meeting of Shareholders.

―20―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

[Exhibit 2]
Details of the Third Series of Share Options (Ryoyo Electro)(1) Name of Share Options

Third Series of Share Options (Ryoyo Electro)(2) Class and number of shares to be issued upon exercise of Share Options
The type of shares to be issued upon exercise of the Share Options shall be common stock of the Company, and the number ofshares to be issued upon exercise of each stock acquisition right (the “Number of Granted Shares”) shall be 100 shares. In the eventthat the Company conducts a stock split (including a gratis allotment of shares of common stock of the Company; the same shallapply hereinafter to the description of a stock split) or reverse stock split of its common stock after the date of resolution (the“Resolution Date”) on the proposal for subscription for the Share Options, the Number of Granted Shares shall be adjusted inaccordance with the following formula.
Number of Granted Shares After Adjustment = Number of Granted Shares Before Adjustment × Ratio of Stock Split or Reverse
Stock Split
Any fraction of less than one (1) share resulting from the above adjustment shall be rounded down.
In addition to the above, in the event that the Company conducts a merger, corporate split or share exchange after the Resolution
Date, or in other cases where adjustment of the Number of Granted Shares is required pursuant to such cases, the Company may
adjust the Number of Granted Shares as deemed necessary by the Company’s Board of Directors.
123,000 shares of the Company's common stock shall be the maximum number of shares that can be delivered by exercising theShare Options to be issued within one (1) year from the date of the Company’s annual General Meeting of Shareholders for eachfiscal year, and if the Number of Granted Shares is adjusted, the maximum number shall be the Number of Granted Shares after
adjustment multiplied by the total number of Share Options below.
(3) Amount of assets to be contributed upon exercise of Share Options
The value of assets to be contributed upon the exercise of each stock acquisition right shall be the amount obtained by multiplying
the exercise price of one (1) yen per share that can be delivered by exercising each such stock acquisition right by the Number ofGranted Shares.
(4) Period during which Share Options may be exercised
The period shall be from February 1, 2019 to January 31, 2059.
(5) Conditions for exercise of Share Options①

Holders of Share Options may exercise their Share Options within ten (10) days from the day following the day on which
they lose their position as a Director of the Company (if the 10th day falls on a holiday, the next business day).

②

Notwithstanding ① above, in the event that a proposal for approval of a merger agreement in which the Company becomesa dissolving company, a proposal for approval of a split agreement or split plan in which the Company becomes a splitting
company, or a proposal for approval of a share exchange agreement or share transfer plan in which the Company becomes awholly-owned subsidiary is approved at a shareholder’s meetings (or resolved by the Board of Directors if no resolution isrequired at the shareholder’s meetings), the Share Options may be exercised within thirty (30) days from the day following―21―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

the date of such approval. However, this excludes the case where Share Options of the Reorganized Company are delivered
to the holders of Share Options in accordance with the matters concerning the delivery of Share Options in connection with
the Reorganization set forth in (9) below.
③

Other conditions shall be as set forth in the “Share Options Allotment Agreement” to be entered into between the Company
and the holders of Share Options.

(6) Matters concerning increase of capital stock and capital reserves in the event of the issuance of shares upon the exercise of Share
Options①

The amount of increase in capital stock in the event of the issuance of shares upon the exercise of the Share Options shall behalf of the maximum amount of increase in capital stock, etc., as calculated in accordance with Article 17, Paragraph 1 of the
Corporate Accounting Regulations, with any fraction less than one (1) yen resulting from the calculation being rounded up
to the nearest yen.

②

The amount of increase in the capital reserves in the event of the issuance of shares upon the exercise of the Share Options
shall be the amount obtained by subtracting the amount of the increase in capital as set forth in ① above from the maximum
amount of the increase in capital stock, etc. as set forth in ① above.

(7) Acquisition of Share Options
The Company may acquire Share Options without consideration on a date separately determined by the Company’s Board of
Directors in the event that the following proposals ①, ②, ③, ④ or ⑤ below are approved at the Company’s General Meetingof Shareholders (in the event that a resolution of a General Meeting of Shareholders is not required, when a decision by theCompany’s Board of Directors is made).
①

Proposal for approval of a merger agreement under which the Company will be the disappearing company;②

Proposal for approval of a split agreement or split plan under which the Company will become the splitting company;③

Proposal for approval of a share exchange agreement or share transfer plan under which the Company will become a wholly
owned subsidiary;④

Proposal for approval of an amendment to the Articles of Incorporation to provide that the acquisition of all shares issued by
the Company by way of transfer shall require the approval of the Company; or⑤

Proposal for approval of an amendment to the Articles of Incorporation to provide that the acquisition of the class of shares
to be issued upon exercise of the Share Options by transfer requires the approval of the Company or that the Company may
acquire all the shares of the class by a resolution of the General Meeting of Shareholders(8) Restriction on acquisition of Share Options by transfer
Acquisition of Share Options by transfer shall require approval by a resolution of the Company’s Board of Directors.
(9) Matters concerning issuance of subscription rights to shares in connection with reorganization―22―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

In the event of a merger (limited to cases where the Company is dissolved as a result of the merger), absorption-type company split
or incorporation-type company split (limited to cases in which the Company is the demerged company, respectively), shareexchange or share transfer (limited to cases where the Company becomes a wholly owned subsidiary of another company)(collectively, the “Reorganization”), the Share Options of a company as listed in Article 236, Paragraph 1, Item 8 (a) through (e)of the Companies Act (the “Reorganized Company”) shall be issued to the holders of Share Options remaining (the “Remaining
Share Options”) immediately prior to the effective date of the Reorganization (in the event of an absorption-type merger, the dateon which the absorption-type merger becomes effective; in the event of an incorporation-type merger, the date on which theincorporation-type merger corporation is established; in the event of an absorption-type split, the date on which the absorption-type
split becomes effective; in the event of an incorporation-type split, the date on which the incorporation-type split corporation isestablished; in the event of a share exchange, the date on which the share exchange becomes effective; and in the event of a sharetransfer, the date on which the wholly-owning parent company in the share transfer is established; the same shall apply hereinafter.).
However, the share subscription rights of the Reorganized Company shall be delivered in accordance with the following items, aslong as such delivery is provided for in the absorption-type merger agreement, incorporation-type merger agreement, absorptiontype company split agreement, incorporation-type company split plan, share exchange agreement or share transfer plan:①

Number of Share Options of the Reorganized Company to be granted
The same number of Share Options as the number of Remaining Share Options held by the holders of Share Options shallbe delivered to each such holder.

②

Class of shares of the Reorganized Company to be issued upon exercise of Share Options
The shares shall be common stock of the Reorganized Company.

③

Number of shares of the Reorganized Company to be issued upon exercise of Share Options
To be determined in accordance with (2) above, taking the conditions, etc. of the restructuring transaction into consideration.

④

Amount of assets to be contributed upon exercise of Share Options
The value of assets to be contributed upon the exercise of each stock acquisition right to be delivered shall be the amountobtained by multiplying the post-reorganization exercise price set forth below by the number of shares of the ReorganizedCompany to be issued for each such stock acquisition right determined in accordance with ③ above. The postreorganization exercise price shall be one (1) yen per share of the Reorganized Company to be delivered upon the exerciseof each stock acquisition right to be granted.

⑤

Period during which Share Options may be exercised
From the later of the commencement date of the period during which Share Options may be exercised as set forth in (4)above or the effective date of the Reorganization, until the expiration date of the period during which Share Options may be
exercised as set forth in (4) above.

⑥

Matters concerning increase of capital stock and capital reserves in the event of the issuance of shares upon the exercise of
Share Options
To be determined in accordance with (6) above.

⑦

Restriction on acquisition of Share Options by transfer―23―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Acquisition of Share Options by transfer shall require approval by a resolution of the Reorganized Company’s Board of
Directors.
⑧

Conditions for exercise of Share Options
To be determined in accordance with (5) above.

⑨

Acquisition of Share Options
To be determined in accordance with (7) above.

(10) Handling of fractions of less than one (1) share resulting from the exercise of Share Options
Any fraction of less than one (1) share in the number of shares to be issued to the holders of Share Options who exercised their
Share Options shall be rounded down.
(11) Date of allotment of Share Options
January 31, 2019(12) Method of requesting the exercise of Share Options and making payment①

When exercising Share Options, the shareholder shall fill in the necessary items in a “Share Options Exercise Request Form”
in the form prescribed by the Company, affix his/her name thereto and seal or sign the form, and submit it to the place forreceiving requests to exercise Share Options as set forth in (13) below.

②

Along with the submission of the “Share Options Exercise Request Form” mentioned in (i) above, the full amount calculated
by multiplying the value of the property to be contributed upon the exercise of each stock acquisition right by the number of
Share Options to be exercised shall be transferred in cash to the account designated by the Company at the payment handling
location set forth in (14) by the date and time specified by the Company in accordance with Article 281, Paragraph 1 of theCompanies Act.

(13) Place to receive requests to exercise Share Options
The General Affairs Department of the Company (or the department in charge of the relevant business from time to time)(14) Payment handling place for money to be contributed upon exercise of Share Options
The Bank of Tokyo-Mitsubishi UFJ, Marunouchi Branch(or the successor bank of such bank or the successor branch of such branch as may apply from time to time)(15) Handling of Share Options after exercise
Promptly after the completion of the exercise procedures, the Company shall take the necessary procedures to enter or record theshares to be acquired by the holder of the Share Options upon the exercise of the Share Options in an account in the name of theholder of the Share Options opened in advance with a financial instruments business operator, etc. designated by the Company.
(16) Handling of the revision of terms and conditions and other measures
If it becomes necessary to revise any provision of these terms and conditions or take any other measures, these terms and conditions―24―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

may be amended in a manner the Company deems appropriate to handle related matters in accordance with the provisions of theCompanies Act and the purpose of the Share Options, and such amendment shall become an integral part of these terms andconditions.
(17) Public notice of issuance requirements
The Company shall keep a certified copy of the terms and conditions for the issuance of the Share Options at its head office andmake it available for inspection by the holders of the Share Options during its business hours.
(18) Others
The Company's Chairman and Representative Director shall be entrusted with determining the details concerning the issuance andallotment of Share Options, the performance of various procedures necessary for the issuance of Share Options, and other affairs
necessary for the issuance of Share Options.

―25―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

[Exhibit 3]
Details of First Series of Share Options (New Company)(1) Name of Share OptionsFirst series of Share Options (Ryoyo Ryosan Holdings, Inc.)(2) Class and number of shares to be issued upon exercise of Share Options
The type of shares to be issued upon exercise of Share Options shall be common stock of the Company, and the number of shares
to be issued upon exercise of each stock acquisition right (the “Number of Granted Shares”) shall be 100 shares. In the event that
the Company conducts a stock split (including a gratis allotment of shares of common stock of the Company. The same shall apply
hereinafter to the description of a stock split) or reverse stock split of its common stock after the date of allotment of the Share
Options, the Number of Granted Shares shall be adjusted in accordance with the following formula:
Number of Granted Shares After Adjustment = Number of Granted Shares Before Adjustment × Ratio of Stock Split or Reverse
Stock Split
Any fraction of less than one (1) share resulting from the above adjustment shall be rounded down.
In addition to the above, in the event that the Company conducts a merger, corporate split or share exchange after the allotment, orin other cases where adjustment of the Number of Granted Shares is required pursuant to such cases, the Company may adjust the
Number of Granted Shares as deemed necessary by the Company’s Board of Directors.
(3) Amount of assets to be contributed upon the exercise of Share Options
The value of assets to be contributed upon the exercise of each stock acquisition right shall be the amount obtained by multiplying
the exercise price of one (1) yen per share that can be delivered by exercising each such stock acquisition right by the Number ofGranted Shares.
(4) Period during which Share Options may be exercised
The period shall be from April 1, 2024 to January 31, 2059.
(5) Conditions for exercise of Share Options①

Holders of Share Options may exercise their Share Options within ten (10) days from the day following the day on which
they lose their position as a Director of the Company (if the 10th day falls on a holiday, the next business day).

②

Notwithstanding ① above, in the event that a proposal for approval of a merger agreement in which the Company becomesa dissolving company, a proposal for approval of a split agreement or split plan in which the Company becomes a splitting
company, or a proposal for approval of a share exchange agreement or share transfer plan in which the Company becomes awholly-owned subsidiary is approved at a general meeting of shareholders (or resolved by the Board of Directors if noresolution is required at the general meeting of shareholders), the Share Options may be exercised within thirty (30) days
from the day following the date of such approval. However, this excludes the case where Share Options of the ReorganizedCompany are delivered to the holders of Share Options in accordance with the matters concerning the delivery of Share
Options in connection with the Reorganization set forth in (9) below.

③

Other conditions shall be as set forth in the “Share Options Allotment Agreement” to be entered into between the Company―26―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

and the holders of the Share Options.
(6) Matters concerning increase of capital stock and capital reserves in the event of the issuance of shares upon the exercise of the
Share Options①

The amount of the increase in capital stock in the event of the issuance of shares upon the exercise of the Share Options shallbe half of the maximum amount of the increase in capital stock, etc., as calculated in accordance with Article 17, Paragraph
1 of the Corporate Accounting Regulations, with any fraction less than one (1) yen resulting from the calculation being
rounded up to the nearest yen.

②

The amount of increase in the capital reserves in the event of the issuance of shares upon the exercise of the Share Options
shall be the amount obtained by subtracting the amount of the increase in capital as set forth in ① above from the maximum
amount of the increase in capital stock, etc. as set forth in ① above.

(7) Acquisition of Share Options
The Company may acquire Share Options without consideration on a date separately determined by the Company’s Board of
Directors in the event that the following proposals ①, ②, ③, ④ or ⑤below are approved at the Company’s General Meetingof Shareholders (in the event that a resolution of a General Meeting of Shareholders is not required, when a decision is made by theCompany’s Board of Directors of the Company):①

Proposal for approval of a merger agreement under which the Company will become a disappearing company;②

Proposal for approval of a split agreement or split plan under which the Company will become the splitting company;③

Proposal for approval of a share exchange agreement or share transfer plan under which the Company will become a whollyowned subsidiary;④

Proposal for approval of an amendment to the Articles of Incorporation to provide that the acquisition of all shares issued by
the Company by way of transfer shall require the approval of the Company; or⑤

Proposal for approval of an amendment to the Articles of Incorporation to provide that the acquisition of the class of shares
to be issued upon exercise of the Share Options by transfer requires the approval of the Company or that the Company may
acquire all the shares of the class by a resolution of the General Meeting of Shareholders(8) Restriction on acquisition of Share Options by transfer
Acquisition of Share Options by transfer shall require approval by a resolution of the Company’s Board of Directors.
(9) Matters concerning issuance of subscription rights to shares in connection with reorganization
In the event of a merger (limited to cases where the Company is dissolved as a result of a merger), absorption-type company split
or incorporation-type company split (limited to cases in which the Company is the demerged company, respectively), shareexchange or share transfer (limited to cases where the Company becomes a wholly owned subsidiary of another company)(collectively, the “Reorganization”), Share Options of a stock company listed in Article 236, Paragraph 1, Item 8 (a) through (e) of
the Companies Act (the “Reorganized Company”) shall be issued to the holders of Share Options remaining (the “Remaining Share
Options”) immediately prior to the effective date of the Reorganization (in the event of an absorption-type merger, the date on―27―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

which the absorption-type merger becomes effective; in the event of an incorporation-type merger, the date on which theincorporation-type merger corporation is established; in the event of an absorption-type split, the date on which the absorption-type
split becomes effective; in the event of an incorporation-type split, the date on which the incorporation-type split corporation isestablished; in the event of a share exchange, the date on which the share exchange becomes effective; and in the event of a sharetransfer, the date on which the wholly-owning parent company in the share transfer is established; and the same shall apply
hereinafter.). However, the share subscription rights of the Reorganized Company shall be delivered in accordance with thefollowing items, as long as such delivery is provided for in the absorption-type merger agreement, incorporation-type merger
agreement, absorption-type company split agreement, incorporation-type company split plan, share exchange agreement or sharetransfer plan.
①

Number of Share Options of the Reorganized Company to be granted

The same number of Share Options as the number of Remaining Share Options held by the holders of the Share Options shall bedelivered to each such holder.
②

Class of shares of the Reorganized Company to be issued upon exercise of Share Options

The shares shall be common stock of the Reorganized Company.
③

Number of shares of the Reorganized Company to be issued upon exercise of Share Options

To be determined in accordance with (2) above, taking the conditions, etc. of the restructuring transaction into consideration.
④

Amount of assets to be contributed upon exercise of Share Options

The value of assets to be contributed upon the exercise of each stock acquisition right to be delivered shall be the amount obtainedby multiplying the post-reorganization exercise price set forth below by the number of shares of the Reorganized Company to beissued for each such stock acquisition right determined in accordance with ③ above. The post-reorganization exercise price shallbe one (1) yen per share of the Reorganized Company to be delivered upon the exercise of each stock acquisition right to be
granted.
⑤

Period during which Share Options may be exercised

From the later of the commencement date of the period during which Share Options may be exercised as set forth in (4) above or
the effective date of the Reorganization, until the expiration date of the period during which the Share Options may be exercised
as set forth in (4) above.
⑥

Matters concerning increase of capital stock and capital reserves in the event of the issuance of shares upon the exercise of
the Share Options

To be determined in accordance with (6) above.
⑦

Restriction on acquisition of Share Options by transfer

Acquisition of Share Options by transfer shall require approval by a resolution of the Reorganized Company’s Board of Directors.
⑧

Conditions for exercise of Share Options

To be determined in accordance with (5) above.

―28―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

⑨

Acquisition of Share Options

To be determined in accordance with (7) above.
(10) Handling of fractions of less than one (1) share resulting from the exercise of Share Options
Any fraction of less than one (1) share in the number of shares to be issued to the holders of Share Options who exercised their
Share Options shall be rounded down.
(11) Date of allotment of Share Options
April 1, 2024
(12) Method for requesting the exercise of Share Options and making payment①

When exercising Share Options, the shareholder shall fill in the necessary items in a “Share Options Exercise Request Form”
in the form prescribed by the Company, affix his/her name thereto and seal or sign such form, and submit it to the placedesignated by the Company for receiving requests to exercise Share Options.

②

Along with the submission of the “Share Options Exercise Request Form” mentioned in ①above, the full amount calculated
by multiplying the value of the property to be contributed upon the exercise of each stock acquisition right by the number of
Share Options to be exercised shall be transferred in cash to the account designated by the Company by the date and time
specified by the Company in accordance with Article 281, Paragraph 1 of the Companies Act.

(13) Handling of Share Options after exercise
Promptly after completion of the exercise procedures, the Company shall take the necessary procedures to enter or record theshares to be acquired by the holder of the Share Options upon the exercise of the Share Options in an account in the name of theholder of the Share Options opened in advance with a financial instruments business operator, etc. designated by the Company.
(14) Handling of the revision of terms and conditions and other measures
If it becomes necessary to revise any provision of these terms and conditions or take any other measures, these terms and conditions
may be amended in a manner the Company deems appropriate in order to handle the related matters in accordance with theprovisions of the Companies Act and the purpose of the Share Options, and such amendment shall become an integral part ofthese terms and conditions.
(15) Public Notice of Issuance Requirements
The Company shall keep a certified copy of the terms and conditions for the issuance of Share Options at its head office and makeit available for inspection by the holders of Share Options during its business hours.
(16) Others
The Company's Representative Director shall be entrusted with determining the details concerning the issuance and allotment of
Share Options, the performance of various procedures necessary for the issuance of Share Options, and other affairs necessary forthe issuance of Share Options.

―29―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

3. Matters concerning the reasonableness of the provisions regarding the matters set forth in Article 773, Paragraph 1, Items 5 and 6 of
the Companies Act(1) Matters concerning the shares of the Joint Holding Company to be delivered by the Joint Holding Company to the shareholdersof the Companies upon the Share Transfer and the allotment of shares of the Joint Holding Company① Details of Allotment pertaining to the Share Transfer (Share Transfer Ratio)
Upon the establishment of the Joint Holding Company through the Share Transfer, the Companies have determined theallotment ratio of common stock of the Joint Holding Company to be allotted and delivered to the respective shareholders of theCompanies (the "Share Transfer Ratio") as follows.

Share transfer ratio

RyosanRyoyo Electro

1.32

1

(Note 1) Share allotment ratio
1.32 common shares of the Joint Holding Company will be allotted to one common share of Ryosan, and one common share of
the Joint Holding Company will be allotted to one common share of Ryoyo Electro. However, the above share transfer ratio
may be changed through consultation between the Companies in the event of any material change in the terms and conditions
which form the basis of the calculation. If there is a fraction of less than one share in the number of common shares of the Joint
Holding Company to be delivered to shareholders of the Companies as a result of the Share Transfer, the amount corresponding
to the fraction of less than one share will be paid to such shareholders in accordance with Article 234 of the Companies Act andother related laws and regulations.
(Note 2) Share unit (tangen kabushiki sū) of the Joint Holding Company and treatment of fractional shares (tangen miman
kabushiki)
The share unit of the Joint Holding Company is 100 shares.
Shareholders of the Companies who will receive an allotment of the Joint Holding Company’s shares of less than one shareunit (100 shares) as a result of the Share Transfer may not sell such shares on the Tokyo Stock Exchange and other financial
instruments exchanges (kin’yū shouhin torihikijo). However, shareholders who will hold such fractional shares may request the
Joint Holding Company to purchase their fractional shares pursuant to Article 192, Paragraph 1 of the Companies Act. In
addition, those shareholders may also request the Joint Holding Company to sell them the number of shares that, together with
the number of their fractional shares, will constitute one share unit pursuant to Article 194, Paragraph 1 of the Companies Act
and the articles of incorporation of the Joint Holding Company.
(Note 3) Number of new shares to be delivered by the Joint Holding Company upon the Share Transfer (planned)
59,800,000 common shares
The above number is calculated based on the total number of issued shares of Ryosan (25,000,000 shares as of the end of
September 2023) and the total number of issued shares of Ryoyo Electro (26,800,000 shares as of the end of July 2023).
② Grounds and reasons for Details of Allotment pertaining to the Share Transfer
In order to ensure the fairness of the determination of the share transfer ratio as described in 3.(1)①"Details of Allotment
pertaining to the Share Transfer (Share Transfer Ratio)" above, Ryosan has appointed Mitsubishi UFJ Morgan Stanley Securities
Co., Ltd. (“Mitsubishi UFJ Morgan Stanley Securities”) and Ryoyo Electro has appointed Daiwa Securities Co. Ltd. (“Daiwa
Securities”) respectively, as financial advisors and third-party calculation agents independent of the Companies, and theCompanies have received a report on the calculation of the share transfer ratio as of October 13, 2023.
By reference to the advice and results of the calculations by the financial advisors and third-party calculation agents, as well as
the legal advice from the legal advisors of the respective Companies as described in 3.(1)④b. and d. "Advice from an independent
law firm" below, based on the results of the due diligence conducted by each of the Companies on the other party, and after
comprehensive consideration of factors such as the financial conditions, status of assets, future prospects and stock price―30―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

fluctuations of the Companies, the Companies have, after a series of careful negotiations and deliberations between the Companies
in respect of the share transfer ratio, finally determined that the share transfer ratio stated in

3.(1)①"Details of Allotment

pertaining to the Share Transfer (Share Transfer Ratio)" above is reasonable, and the share transfer ratio for the Share Transfer
has been determined and agreed upon at the meetings of the boards of directors of both Companies held on October 16, 2023.
③ Matters relating to calculationa. Name of calculation agents and relationship with the Companies
Neither Mitsubishi UFJ Morgan Stanley Securities, the third-party calculation agent of Ryosan, nor Daiwa Securities, the thirdparty calculation agent of Ryoyo Electro, is a related party of the Companies, and neither of them has a material interest in the
Share Transfer that should be stated herein.
b. Outline of calculation
In respect of Ryosan and Ryoyo Electro, Mitsubishi UFJ Morgan Stanley Securities has adopted and made calculations using:(a) the market stock price analysis on the grounds that the shares of the Companies are listed on a financial instruments exchange
and their market stock prices are available; (b) the comparable peer company multiple analysis on the grounds that there exist
multiple comparable listed peer companies with respect to both Companies and that the stock price is available for comparable
peer company multiple analysis; and (c) the discounted cash flow analysis (“DCF Analysis”) in order to reflect the status of futurebusiness activities to the assessment.
For the market stock price analysis, the closing price of the share price on the calculation base date on the Tokyo Stock Exchange
and the simple average of the closing prices on the respective transaction dates for the respective periods of one (1) month prior
to the calculation base date, three (3) months prior to the calculation base date and six (6) months prior to the calculation basedate on the Tokyo Stock Exchange have been adopted with the calculation base date of October 13, 2023.
The calculation of prices using the DCF Analysis is based on various factors, such as the profits in the financial prospects andinvestment plans provided by the management of Ryosan and Ryoyo Electro, all of which have been acknowledged by bothCompanies to be used for the purpose of the calculation, results of the due diligence conducted on Ryosan and Ryoyo Electro andother information generally made available to the public. For the avoidance of doubt, the financial prospects of the Companies on
which the calculations are based do not include those for fiscal years in which significant increases or decreases in profits are
expected.
The results of the calculations under each of the above methods are as follows. The results of the calculations of the sharetransfer ratio below represent the results of the calculations of the number of common shares of the Joint Holding Company to be
allotted for one common share of Ryosan where one common share of the Joint Holding Company is allotted for one commonshare of Ryoyo Electro.
Adopted method

Calculation results of share transfer ratio

Market stock price analysis

1.27 to 1.40

Comparable peer company multiple

0.80 to 1.88

analysis
DCF Analysis

1.20 to 2.23

(Note) The analysis by Mitsubishi UFJ Morgan Stanley Securities and the analysis of the underlying share transfer ratio areprovided to the board of directors of Ryosan for its reference only. Such analysis does not constitute a financial opinion or
recommendation of Mitsubishi UFJ Morgan Stanley Securities or its affiliates, nor does it provide its approval of the Share
Transfer, or an opinion or recommendation to the shareholders of Ryosan or Ryoyo Electro regarding the transfer andacquisition of shares and the exercise of the shareholder rights, including the exercise of voting rights, or their consent to the
Share Transfer or any other related matters. Mitsubishi UFJ Morgan Stanley Securities relies on the information that is alreadypublicly available or any information provided by Ryosan or Ryoyo Electro or otherwise obtained for the analysis and―31―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

calculation of the share transfer ratio, assuming that such information is accurate and complete, and has not independently
verified the accuracy and completeness thereof. Also, Mitsubishi UFJ Morgan Stanley Securities assume that the financial
prospects reflect the best prospects and judgement currently available with respect to the future financial condition of Ryosan
and Ryoyo Electro and has been reasonably prepared and provided by the management of Ryosan and Ryoyo Electro.
Mitsubishi UFJ Morgan Stanley Securities has not made or obtained any independent assessment or appraisal of the assets andliabilities (including off-balance sheet assets and liabilities and other contingent liabilities) of Ryosan, Ryoyo Electro or theiraffiliates, nor has it requested any third-party institution to value or appraise them. Mitsubishi UFJ Morgan Stanley Securities’
analysis is based on economic, financial, market, and other conditions as of the calculation base date of the share transfer ratio
calculation report and on information available to Mitsubishi UFJ Morgan Stanley Securities as of such date. Although there isa possibility that an event occurring on or after the date may affect the basis on which the Mitsubishi UFJ Morgan Stanley
Securities’ analysis and the share transfer ratio calculation report have been prepared, Mitsubishi UFJ Morgan Stanley Securities
is not obligated to update, revise or reconfirm the share transfer ratio calculation report or its analysis. In addition, thepreparation of the share transfer ratio calculation report and the underlying analysis therefor was a complex process and is notnecessarily suitable for partial analysis or summary description. The valuation ranges based on the specific analysis describedherein may not be considered as Mitsubishi UFJ Morgan Stanley Securities’ assessment of the actual value of Ryosan or Ryoyo
Electro.
On the other hand, Daiwa Securities has adopted and made calculations using: (a) the market stock price method on the grounds
that the shares of the Companies are listed on a financial instruments exchange and their market stock prices are available; and(b) the discounted cash flow method (“DCF Method”) in order to reflect the status of future business activities to the assessment.
For the market stock price method, the closing price of the share price on the calculation base date on the Tokyo Stock Exchange
and the simple average of the closing prices for the respective periods of one (1) month prior to the calculation base date, three(3) months prior to the calculation base date and six (6) months prior to the calculation base date on the Tokyo Stock Exchange
have been adopted with the calculation base date of October 13, 2023.
Under the DCF Method, the corporate value is evaluated by discounting future cash flows, etc. based on financial prospects
prepared by the Companies to the present value using a certain discount rate. For the avoidance of doubt, the financial prospectsof the Companies on which the calculations are based do not include those for fiscal years in which significant increases ordecreases in profits are expected.
The results of the calculations under each of the above methods are as follows. The results of the calculations of the sharetransfer ratio below represent the results of the calculations of the number of common shares of the Joint Holding Company to be
allotted for one common share of Ryosan where one common share of the Joint Holding Company is allotted for one commonshare of Ryoyo Electro.
Adopted method

Calculation results of share transfer ratio

Market stock price method

1.27 to 1.40

DCF Method

0.99 to 1.43

④ Measures for securing fairness
Ryosan has taken the following measures to ensure the fairness of the Share Transfer.
a. Obtaining a share transfer ratio calculation report from an independent third-party calculation agent
As stated in 3.(1)②"Grounds and reasons for Details of Allotment pertaining to the Share Transfer" and ③"Matters relating
to calculation" above, in order to ensure the fairness and reasonableness of the Share Transfer, Ryosan has appointed Mitsubishi
UFJ Morgan Stanley Securities as an independent third-party calculation agent and obtained a share transfer ratio calculation
report as a basis for agreeing on the share transfer ratio for the Share Transfer. Ryosan has also negotiated and discussed with
Ryoyo Electro by reference to the analysis and advice of Mitsubishi UFJ Morgan Stanley Securities, its financial advisor and―32―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

third-party calculation agent, and resolved at a meeting of its board of directors held on October 16, 2023, to implement the Share
Transfer based on the share transfer ratio described in 3.(1)①"Details of Allotment pertaining to the Share Transfer (Share
Transfer Ratio)" above.
b. Advice from an independent law firm
In order to ensure the fairness and appropriateness of the decision-making by its board of directors, Ryosan has received legal
advice from Anderson Mori & Tomotsune, a legal advisor independent of the Companies, regarding the procedures for the Share
Transfer and the method and process of decision-making by Ryosan. Anderson Mori & Tomotsune is not a related party to theCompanies and does not have a material interest in the Management Integration that should be stated herein.
On the other hand, Ryoyo Electro has taken the following measures to ensure the fairness of the Share Transfer.
c. Obtaining a share transfer ratio calculation report from an independent third-party calculation agent
As stated in "3.(1)②Grounds and reasons for Details of Allotment pertaining to the Share Transfer" and ③"Matters relating
to calculation" above, in order to ensure the fairness and reasonableness of the Share Transfer, Ryoyo Electro has appointed Daiwa
Securities as an independent third-party calculation agent and obtained a share transfer ratio calculation report as a basis foragreeing on the share transfer ratio for the Share Transfer. Ryoyo Electro also negotiated and discussed with Ryosan by reference
to the analysis and advice of Daiwa Securities, its financial advisor and third-party calculation agent, and resolved at a meeting of
its board of directors held today, to implement the Share Transfer based on the share transfer ratio described in 3.(1)①"Details of
Allotment pertaining to the Share Transfer (Share Transfer Ratio)" above.
d. Advice from an independent law firm
In order to ensure the fairness and appropriateness of the decision-making by its board of directors, Ryoyo Electro has obtained
legal advice from TMI Associates, a legal advisor independent of the Companies, regarding the procedures for the Share Transfer
and the method and process of decision-making by Ryoyo Electro. TMI Associates is not a related party to the Companies anddoes not have a material interest in the Management Integration that should be stated herein.
⑤ Matters related to application for listing, etc. of the Joint Holding Company
The Companies plan to apply for an initial listing (technical listing) of the shares of the newly established Joint Holding
Company on the Prime Market of the Tokyo Stock Exchange. The listing date is expected to be April 1, 2024, the date ofregistration of the establishment of the Joint Holding Company. The Companies will be delisted from the Tokyo Stock Exchange
on March 28, 2024, prior to the listing of the Joint Holding Company, as the Companies will become wholly-owned subsidiariesof the Joint Holding Company through the Share Transfer.
The listing date of the shares of the Joint Holding Company and the delisting date of the Companies will be determined inaccordance with the respective rules of the Tokyo Stock Exchange.
⑥ Measures to avoid conflict of interest
No special measures have been taken because no particular conflict of interest arises between Ryosan and Ryoyo Electro withrespect to the Share Transfer.
(2) Matters concerning the amount of capital and reserves, etc. of the Joint Holding Company.
Upon the establishment of the Joint Holding Company through the Share Transfer, Ryosan and Ryoyo Electro have determined
the amounts of capital and reserves, etc. of the Joint Holding Company as follows:① Capital stock

15 billion yen② Capital reserve

5 billion yen③ Legal reserve

0 yen④ Capital surplus

The amount obtained by subtracting the amounts listed in ① and ②from the amount of changes―33―[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

in shareholders' equity (as defined in Article 52, Paragraph 1 of Regulation on Corporate Accounting).
These amounts of capital stock and reserve were determined within the scope of the provisions of Article 52 of Regulation on
Corporate Accounting upon consultation between Ryosan and Ryoyo Electro, taking into consideration and considering the size ofthe joint holding company and other various circumstances.
4. Matters concerning the reasonableness of the provisions of Article 773, Paragraph 1, Items 9 and 10 of the Companies Act
With respect to the Third Series of Share Options (Ryoyo Electro) already issued by Ryoyo Electro, the Joint Holding Company will
allot one (1) First Series of Share Options (New Company) for every one (1) such share option.
The above is provided so that the content of the Share Option issued by Ryoyo Electro and the content of the First Series of Share
Options (New Company) will be substantially the same in order to ensure that the holders of the Third Series of Share Options (Ryoyo
Electro) will maintain the same rights as before as much as possible after the Share Transfer, and Ryosan has determined that this isappropriate. The Companies have not issued any bonds with share options.
5. Matters relating to Ryoyo Electro(1) Details of financial statements for Most Recent Business Year (ended January 31, 2023) Ryoyo Electro's financial statements forthe fiscal year ended January 31, 2023 have been omitted in accordance with laws and regulations and Article 17, Paragraph 2
of Ryosan's Articles of Incorporation, and are available on Ryosan's website on the Internet (https://www.ryosan.co.jp/) and on
the website of the Tokyo Stock Exchange.
(2) Details of events occurring after the end of Most Recent Business Year that have a material impact on the status of Ryoyo
Electro's assets.
N/A.
6. Details of events that materially affect the financial position of Ryosan that occurred after the end of Most Recent Business Year of
Ryosan's business
N/A.

―34―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

7. Matters stipulated in Article 74 of the Ordinance for Enforcement of the Companies Act related to Persons who will become
directors of the Joint Holding Company (excluding persons who will become directors who are members of the Audit andSupervisory Committee)
The persons who will become directors of the Joint Holding Company (excluding persons who will become directors who aremembers of the Audit and Supervisory Committee) are as follows.
(1) Number of shares
of Ryosan held(2) Number of shares
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positionsof Ryoyo Electro
held(3) Number of sharesof the Joint Holding
Company

tobeallocated
Apr. 1984

Joined Isetan Co., Ltd.

(Currently Isetan

Mitsukoshi Ltd.)
Apr. 2011

Director, Executive Officer, General Manager, of
Corporate Planning Division, Isetan Mitsukoshi Ltd.

Apr. 2012

Executive Officer, General Manager, Personnel
Division, Isetan Mitsukoshi Holdings Ltd.

Apr. 2016

Managing Executive Officer, General Manager, IT& Group Marketing Strategy Headquarters, Isetan
Mitsukoshi Holdings Ltd.

Moritaka Nakamura

May 2017

Joined Ryoyo Electro as Special Advisor

Aug. 2017

Senior Managing Executive Officer in charge of(September 7, 1959)

Business Renovation
Dec. 2017

Senior Managing Executive Officer in charge of(1) 0 shares(2) 48,900 shares(3) 48,900 shares

Sales, Technology, Overseas Marketing andBusiness Renovation
Mar.2018

Senior Managing Executive Officer in charge ofSales, Technology and Overseas Marketing, General
Manager, Sales and Business Development Div., incharge of Business Renovation

Apr. 2018

Representative Director & President

Feb. 2021

Representative Director & Chief Executive Officer(present position)

Reasons for nominating the candidate for Director (excluding persons who will become directors who are members of
the Audit and Supervisory Committee).
Mr. Moritaka Nakamura has been engaged in corporate planning, marketing strategy, personnel, and information strategy throughout his career,and he has a wealth of experience, knowledge, and connections cultivated while participate in management as a director. After assuming theposition of Representative Director & President of Ryoyo Electro, he continues to utilize these experiences to lead management reform withstrong leadership. Therefore, election of Mr. Moritaka Nakamura as a director of the newly established Joint Holding Company is proposed as
he is deemed suitable to achieve enhancement of corporate value of the whole group.

―35―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positionsof Ryoyo Electro
held(3) Number of sharesof the Joint Holding
Company

tobeallocated
Apr. 1990

Joined RyosanJul . 2013

General Manager, 2nd Sales Department

Jun. 2017

Executive Officer, General Manager, Electronic
Components Business Headquarters

Jun. 2019

Director, Senior Executive Officer, General
Manager, Electronic Components Business

Kazuhiko Inaba(June 14, 1967)

Feb. 2020

Headquarters(1) 9,660 shares

Representative Director, President, General(2) 0 shares

Manager, Corporate Planning Headquarters, and(3) 12,751 shares

General Manager, Electronic Components Business
Headquarters
Jun. 2020

Representative Director, President, and General
Manager, Electronic Components Business
Headquarters

Jun. 2021

Representative Director, President (present position)

Reasons for nominating the candidate for Director (excluding persons who will become directors who are members of
the Audit and Supervisory Committee).
Mr. Kazuhiko Inaba has been served as a General Manager, 2nd Sales Department responsible for sales to large size corporations and as an
Executive Officer, General Manager, Electronic Components Business Headquarters since joining Ryosan, and currently as a Representative
Director, President, Executive Officer, he is demonstrating leadership and he possess a wealth of experience and extensive knowledge
cultivated through sales operations and development and promotion of business strategies. Therefore, election of Mr. Kazuhiko Inaba as adirector of the newly established Joint Holding Company is proposed as he is deemed suitable to achieve enhancement of corporate value ofthe whole group.

Mar. 1988

Joined RyosanMay 2007General Manager, 1st Nagoya Sales Branch

Nov.2013

Managing Director, Ryosan (Thailand) Co., Ltd.

Jun. 2016

Executive Officer, General Manager, Central
Japan/Tokai Marketing and Sales Headquarters

Shunya Endo

Jun. 2020(February 7, 1967)

Executive Officer, General Manager, 1st Domestic
Marketing and Sales Headquarters

Jun. 2021

Director, Executive Officer, General Manager, Sales
Planning and Control Headquarters, and General
Manager, 1st Domestic Marketing and Sales
Headquarters, and General Manager, Engineering
Headquarters (present position)―36―(1) 3,100 shares(2) 0 shares(3) 4,092 shares

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positionsof Ryoyo Electro
held(3) Number of sharesof the Joint Holding
Company

tobeallocated
Reasons for nominating the candidate for Director (excluding persons who will become directors who are members of
the Audit and Supervisory Committee).
Mr. Shunya Endo has been served as a General Manager, 1st Nagoya Sales Branch, Managing Director, Ryosan (Thailand) Co., Ltd.,
Executive Officer, General Manager, Central Japan/Tokai Marketing and Sales Headquarters and Executive Officer, General Manager, 1stDomestic Marketing and Sales Headquarters since joining Ryosan, and currently as a Director, Executive Officer, General Manager, Sales
Planning and Control Headquarters, and General Manager, 1st Domestic Marketing and Sales Headquarters, and General Manager,
Engineering Headquarters, he is demonstrating leadership and he possess a wealth of experience and extensive knowledge of Ryosan’sbusiness in general, including overseas business. Therefore, election of Mr. Shunya Endo as a director of the newly established Joint Holding
Company is proposed as he is deemed suitable to achieve enhancement of corporate value of the whole group.

Apr. 1985

Joined Ryoyo Electro

Feb. 2006

Assistant General Manager, Sales Dept. 1, Osaka
Branch OfficeAug.2007General Manager, Sales Dept. 1, Osaka Branch
Office, Western Region

Aug.2013

Deputy General Manager, Intelligent System Sales
Div.

Feb. 2015

General Manager, Intelligent System Sales Div.

Atuyuki Ohashi

Feb. 2018

Executive Officer, Western Region(September 27, 1962)

Feb. 2022

Managing Executive Officer in charge of Eastern
Region and Western Region

April.2022(1) 0 shares(2) 2,400 shares(3) 2,400 shares

Managing Executive Officer in charge of Solution
Div. and Eastern Region and Western Region

Feb. 2023

Managing Executive Officer in charge of
Semiconductor & Device Div. and Solution Div.

Apr. 2023

Director and Managing Executive Officer in chargeof Semiconductor & Device Div. and Solution Div.
(present position)

Reasons for nominating the candidate for Director (excluding persons who will become directors who are members of
the Audit and Supervisory Committee).
Mr. Atuyuki Ohashi has a wide range of experience in both business fields of Ryoyo Electro which are semiconductor and device, and ICT
solution. He also has various experiences in various positions at the head office and branches and is currently taking leadership by being incharge of both Divisions, which has given him extensive experience and a broad knowledge of Ryoyo Electro's business. Therefore, electionof Mr. Atuyuki Ohashi as a director of the newly established Joint Holding Company is proposed as he is deemed suitable to achieveenhancement of corporate value of the whole group.

―37―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positionsof Ryoyo Electro
held(3) Number of sharesof the Joint Holding
Company

tobeallocated
Apr. 1987

Joined Mitsubishi Bank, Limited (currently MUFG
Bank, Ltd.)

Oct. 2015

Seconded to Ryosan, General Manager, IR and
Public Relations OfficeJun. 2016

Appointed as the Head of the Business Strategy
Office at the same company.

Norihiko Takahashi（September 20, 1962）

Jul.2016

Joined Ryosan(1) 520 shares

Jun. 2020

Executive Officer, General Manager, Corporate(2) 0 shares

Planning Headquarters, General Manager, Corporate(3) 686 shares

Planning OfficeJun. 2021

Executive Officer, General Manager, Corporate
Planning Headquarters, General Manager, Corporate
Planning Office

Apr. 2023

Executive Officer, General Manager, Corporate
Planning Headquarters (present position)

Reasons for nominating the candidate for Director (excluding persons who will become directors who are members of
the Audit and Supervisory Committee).
Mr. Norihiko Takahashi has domestic and international experience and achievements during his career at financial institutions. In addition, healso experienced management in corporate planning and strategy department since he joined Ryosan, and he possess a high level of expertiseand broad knowledge in areas related to finance, accounting, and business strategy. Therefore, election of Mr. Norihiko Takahashi as adirector of the newly established Joint Holding Company is proposed as he is deemed suitable to achieve an enhancement of corporate valueof the whole group.

Apr. 1975

Joined Isetan Co., Ltd. (currently Isetan Mitsukoshi
Ltd.)

Feb. 1995

General Manager, Sales Policy Department, Sales
Division, Isetan Co., Ltd.

June 2002
OutsideShinya Takada(January 8, 1952)

Apr. 2008

Executive Officer, Manager, General Planning
Section, Management Planning Department, Isetan(1) 0 sharesCo., Ltd.

(2) 0 shares

Director, Senior Managing Executive Officer,(3) 0 shares

General Manager, Corporate Strategy Headquarters,
Isetan Mitsukoshi Holdings Ltd.
Jan. 2010

Representative Director, Senior Managing Executive
Officer, General Manager, Corporate Strategy
Headquarters, Isetan Mitsukoshi Holdings Ltd.

―38―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positionsof Ryoyo Electro
held(3) Number of sharesof the Joint Holding
Company

tobeallocated
Jun. 2012

Full-time Corporate Auditor, Isetan Mitsukoshi
Holdings Ltd.

Jun. 2017

Outside Director (Member of the Audit andSupervisory Committee), SHOWACORPORATION (currently Hitachi Astemo, Ltd.)

Apr. 2020

Outside Director, Ryoyo Electro

Apr. 2022

Outside Director & Chairman of the Board of
Directors, Ryoyo Electro (present position)〈Status of important concurrent occupations or positions at otherorganizations〉
N/A
Reasons for nominating the candidate for Outside Director (excluding persons who will become directors who aremembers of the Audit and Supervisory Committee) and outline of expected role
Mr. Shinya Takada has experience primarily in the field of corporate planning and strategy in his previous position while being involved inmanagement. After assuming the position of an outside director at Ryoyo Electro, he continues to leverage his experience to provide impartial
and objective advice. Therefore, election of Mr. Shinya Takada as an outside director of the newly established Joint Holding Company isproposed in expectation of his role in strengthening the corporate governance and enhancing corporate value of the whole group.

Oct. 1977

Joined Management Work Co., Ltd

Dec.1988

Joined TSD Co., Ltd

Apr. 1993

Senior Managing Director, Neutral Co., Ltd.

Apr. 1996

President and Representative Director, Neutral Co.,Ltd.

OutsideOct. 2010

Representative Director, Intermind Co., Ltd.

(1) 0 shares

Haruyoshi Kawabe

Oct. 2011

Director, CloudLand Co., Ltd.

(2) 0 shares(February 13, 1956)

Sep. 2015

Executive Officer, Cyberlinks Co., Ltd.

(3) 0 sharesJan. 2022

Advisor, Cyberlinks Co., Ltd. (present position)

Jun. 2022
Outside Director of Ryosan (present position)〈Status of important concurrent occupations or positions at otherorganizations〉
Advisor, Cyberlinks Co., Ltd.
Reasons for nominating the candidate for Outside Director (excluding persons who will become directors who aremembers of the Audit and Supervisory Committee) and outline of expected role
Mr. Haruyoshi Kawabe has been involved in management in IT services industry for many years. After assuming the position of an outside
director at Ryosan, he continues to utilize his extensive experience and broad knowledge as an entrepreneur and business leader to provide
effective advice for enhancing transparency and impartiality of management and supervision. Therefore, election of Mr. Haruyoshi Kawabe
as an outside director of the newly established Joint Holding Company is proposed in expectation of his role in strengthening the corporate―39―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positionsof Ryoyo Electro
held(3) Number of sharesof the Joint Holding
Company

tobeallocatedgovernance and enhancing corporate value of the whole group.

May 1989

Joined NLI Research InstituteApr. 2001

Senior Researcher, NLI Research InstituteApr. 2006

Professor, Department of Social Economic Systems,
Faculty of Economics, Toyo University

Apr. 2007

Professor, Faculty of Policy Studies, Kansai
University (present position)

Jun. 2013

Outside Director, Asahi Kasei Corp.

Jun. 2014

Outside Audit & Supervisory Board Member,Central Nippon Expressway Company Limited

Jun. 2015
OutsideNEW KANSAI INTERNATIONAL AIRPORT(1) 0 shares

COMPANY, LTD.

(2) 0 shares

Apr. 2019

Outside Director, Ryoyo Electro (present position)(3) 0 sharesFeb. 2021

Outside Audit and Supervisory Board Member, E-

Jun. 2022

Outside Director, MIKUNI CORPORATION

Masumi Shiraishi(November 6, 1958)

Outside Audit and Supervisory Board Member,

SUPPORTLINK, Ltd. (present position)(present position)〈Status of important concurrent occupations or positions at otherorganizations〉
Professor, Faculty of Policy Studies, Kansai University
Outside Audit and Supervisory Board Member, ESUPPORTLINK, Ltd.
Outside Director, MIKUNI CORPORATION
Reasons for nominating the candidate for Outside Director (excluding persons who will become directors who aremembers of the Audit and Supervisory Committee) and outline of expected role
Although Ms. Masumi Shiraishi has no experience of participating in corporate management other than being an outside officer, she has awide range of insight based on her extensive experience in private sector, teaching profession and official position, and she has also provided
advice from a multifaceted perspective based on her insight, etc. after she assumed office as an outside director of Ryoyo Electro. Therefore,
election of Ms. Masumi Shiraishi as an outside director of the newly established Joint Holding Company is proposed in expectation of herrole in strengthening the corporate governance and enhancing corporate value of the whole group.

(Note)―40―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

1.

The number of shares of Ryosan and Ryoyo Electro held by each candidate is based on ownership status as of October 31, 2023,
and the number of shares of the Joint Holding Company to be allocated is based on such ownership status, taking into accountthe share transfer ratio. The actual number of shares of the Joint Holding Company to be allocated may vary depending on thechange in number of shares held by each candidate until right before the date of incorporation of the Joint Holding Company.

2.

Neither candidate has any special interest in Ryosan or Ryoyo Electro, nor do they plan to have any special interest in the Joint
Holding Company.

3.

Mr. Shinya Takada, Mr. Haruyoshi Kawabe and Ms. Masumi Shiraishi are candidates for outside director.

4.

Mr. Shinya Takada, Mr. Haruyoshi Kawabe and Ms. Masumi Shiraishi meet the requirements for independent directors/auditors
as stipulated by the Tokyo Stock Exchange. If each of them is elected and assumes the office as an outside director, such personis planned to be reported to Tokyo Stock Exchange as an independent directors/auditors.

5.

If Mr. Shinya Takada, Mr. Haruyoshi Kawabe and Ms. Masumi Shiraishi are elected and assume the office as directors, theJoint Holding Company plans, in accordance with Article 427, Paragraph 1 of the Companies Act, to enter into an agreement tolimit his/her liability for damages; the maximum amount of liability for damages under such agreement will be the amountstipulated by laws and regulations.

6.

The Joint Holding Company plans to enter into a directors and officers liability insurance contract, as stipulated in Article 4303, paragraph 1 of the Companies Act, with insurance company. In the event that each candidate is elected and assumed his/her
position, such person is planned to become insured under this contract. An overview of the contents of the directors and officers
liability insurance contract is as follows:
・The insurance premium will be fully covered by the Joint Holding Company―41―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

8.

Matters stipulated in Article 74-3 of the Ordinance for Enforcement of the Companies Act related to Persons who will become
directors who are members of the Audit and Supervisory Committee of the Joint Holding Company
The persons who will be directors who are members of the Audit and Supervisory Committee of the Joint Holding Company are
as follows.
(1) Number of shares
of Ryosan held(2) Number of shares
of Ryoyo Electro
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positions

held(3) Number of sharesof the Joint
HoldingCompany to beallocated

Apr. 1983

Joined Mitsubishi Bank, Limited (currently MUFG
Bank, Ltd.)

Nov. 2011

Seconded to Ryoyo Electro as General Manager,
Corporate Strategy Div.

Feb. 2012

Executive Officer & General Manager, Corporate
Strategy Div. and Deputy General Manager, Overseas
Marketing Div.

Apr. 2012

Joined Ryoyo Electro

Nov.2012

Executive Officer & General Manager, Overseas
Marketing Div.

Feb. 2014

Senior Executive Officer & General Manager,
Overseas Marketing Div.

Kiyoshi Waki

Oct. 2014

Registered as a U.S. Certified Public Accountant,

Feb. 2015

Senior Executive Officer & General Manager,(1) 0 shares

Administration Div., Overseas Marketing Div., in(2) 22,700 sharescharge of CSR Dept.

(3) 22,700 shares(October 22, 1959)
Nov.2015

Senior Executive Officer & General Manager,
Administration Div., in charge of CSR Dept.

Apr. 2016

Director & Senior Executive Officer in charge ofCorporate Strategy Div., General Manager,
Administration Div., in charge of CSR Dept, andGeneral Manager, Accounting Dept

Feb. 2019

Director & Managing Executive Officer in charge ofCorporate Strategy Div., and Administration Div.

Jul.2019

Representative Director & Senior Managing
Executive Officer in charge of Corporate Strategy
Div., and Administration Div.

Feb. 2021

Representative Director & Senior Managing
Executive Officer in charge of Corporate Strategy―42―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
of Ryoyo Electro
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positions

held(3) Number of sharesof the Joint
HoldingCompany to beallocatedDiv., and Administration Div.
Feb. 2022

Director & Managing Executive Officer in charge ofInternal Auditing Dept., CSR Dept., and Special
Assignment.

Apr. 2023

Director & Managing Executive Officer in charge of
Administration Div., Internal Auditing Dept., CSR
Dept., and Special Assignment. (present position)

Reasons for nominating the candidate for Director who is a member of the Audit and Supervisory Committee
Mr. Kiyoshi Waki has domestic and international experience and achievements during his career at financial institutions. In addition, he also
experienced management in corporate planning and strategy department, overseas marketing division and administration division since hejoined Ryoyo Electro, and he possess a high level of expertise and broad knowledge in areas related to finance and accounting. Therefore,
election of Mr. Kiyoshi Waki as a director who is a member of the Audit and Supervisory Committee of the newly established Joint Holding
Company is proposed as he is deemed suitable to enhance transparency and impartiality of the whole group.

Sep. 1983

Joined Pete Marwick Mitchell Accountants Office(currently KPMG AZSA LLC)

Oct. 1996

Partner, Century Audit Corporation (currently KPMG

Oct. 2001

Joined Shin Nihon & Co. (currently Ernst & YoungAZSA LLC)
ShinNihon LLC)
Jul.2003

Transferred to KPMG FAS Co.

Jul.2005

Director (Partner), KPMG FAS Co.

Apr. 2008

Auditor, The Japan-England Society (present
position)

OutsideMahito Ogawa

Apr. 2008(1) 0 shares

Representative Director, ACE Consulting K.K.
(present position)(January 25, 1961)
Apr. 2011

Director, Japan Association of Certified Fraud
Examiners

Jan. 2013

Auditor, NPO Think Kids (present position)

Jan. 2013

Outside Director, K.K. CrossVision International

Jun. 2016

Outside Director (Member of the Audit andSupervisory Committee), Ryosan (present position)

Jun. 2017

Outside Auditor, ICHIKEN Co., Ltd.

〈Status of important concurrent occupations or positions at otherorganizations〉―43―(2) 0 shares(3) 0 shares

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
of Ryoyo Electro
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positions

held(3) Number of sharesof the Joint
HoldingCompany to beallocated

Auditor, The Japan-England Society
Representative Director, ACE Consulting K.K.
Auditor, NPO Think Kids
Reasons for nominating the candidate for Outside Director who is a member of the Audit and Supervisory Committee
and outline of expected role
Mr. Mahito Ogawa has advanced knowledge and broad experience in finance and accounting, which has been cultivated through his career asa certified public accountant over many years. Therefore, election of Mr. Mahito Ogawa as an outside director who is a member of the Audit
and Supervisory Committee of the newly established Joint Holding Company is proposed in expectation of his role to provide supervision toenhance transparency and impartiality of management and advice based on his professional expertise as a certified public accountant.

Apr. 1999

Joined Deloitte Touche Tohmatsu (currently Deloitte
Touche Tohmatsu LLC)

Jun. 2002

Registered as a Certified Public Accountant

May 2006

Established OI CPA OfficeOutsideJun. 2013

Outside Auditor, C'BON COSMETICS Co., Ltd.

(1)0 shares

Motomi Oi

Apr.2020

Outside Auditor, Ryoyo Electro(2)0 shares(July 27, 1977)

Oct. 2021

Supervisory Director, Japan Logistics Fund, Inc.

(3)0 shares(present position)〈Status of important concurrent occupations or positions at otherorganizations〉
Certified Public Accountant, OI CPA Office
Supervisory Director, Japan Logistics Fund, Inc.
Reasons for nominating the candidate for Outside Director who is a member of the Audit and Supervisory Committee
and outline of expected role
Although she has never been involved in the management of a company in any way other than by being an outside director or officer, Ms.
Motomi Oi has extensive expertise in finance, accounting and auditing as a certified public accountant and broad knowledge based on wealthof experience, and she has served as auditor at other companies. Therefore, election of Ms. Motomi Oi as an outside director who is amember of the Audit and Supervisory Committee of the newly established Joint Holding Company is proposed in expectation of her role toprovide supervision to enhance transparency and impartiality of management and advice based on her professional expertise as a certified
public accountant.

―44―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

(1) Number of shares
of Ryosan held(2) Number of shares
of Ryoyo Electro
Name

Biography, Positions, Responsibilities and Important Concurrent(Date of birth)

Positions

held(3) Number of sharesof the Joint
HoldingCompany to beallocated

Apr. 1987

Joined Pete Marwick Accountants Office (currently
KPMG AZSA LLC)

Mar. 1990

Registered as a Certified Public Accountant

Oct. 1992

Established Sachiko Takaya (Fukuda)

CertifiedPublic Accountant Office
Oct. 2001

Joined Chiba Citizens' Kyodo Law Office (present

Outsideposition)

Sachiko Fukuda(July 15, 1962)

Registered as a lawyer,

Apr. 2018(1)0 shares(2)0 shares

Representative Audit Committee Member of(3)0 shares

Narashino City (present position)〈Status of important concurrent occupations or positions at otherorganizations〉
Registered as a lawyer and certified public accountant, Chiba
Citizens' Kyodo Law Office

Representative Audit Committee Member of Narashino City
Reasons for nominating the candidate for Outside Director who is a member of the Audit and Supervisory Committee
and outline of expected role
Although she has never been involved in the management of a company in any way, Ms. Sachiko Fukuda has extensive expertise in finance,accounting and legal which are cultivated through her experience as a certified public accountant and an attorney. Therefore, election of Ms.
Sachiko Fukuda as an outside director who is a member of the Audit and Supervisory Committee of the newly established Joint Holding
Company is proposed in expectation of her role to provide supervision to enhance transparency and impartiality of management and advice
based on her professional expertise as a certified public accountant and an attorney.

(Note)
1.

The number of shares of Ryosan and Ryoyo Electro held by each candidate is based on ownership status as of October 31, 2023,
and the number of shares of the Joint Holding Company to be allocated is based on such ownership status, taking into accountthe share transfer ratio. The actual number of shares of the Joint Holding Company to be allocated may vary depending on thechange in number of shares held by each candidate until right before the date of incorporation of the Joint Holding Company.

2.

Neither candidate has any special interest in Ryosan or Ryoyo Electro, nor do they plan to have any special interest in the Joint
Holding Company.

3.

Mr. Mahito Ogawa, Ms. Motomi Ooi and Ms. Sachiko Fukuda are candidates for outside director.

4.

Mr. Mahito Ogawa, Ms. Motomi Oi and Ms. Sachiko Fukuda meet the requirements for independent directors/auditors as
stipulated by the Tokyo Stock Exchange. If each of them is elected and assumes the office as an outside director, such person isplanned to be reported to Tokyo Stock Exchange as an independent directors/auditors.

5.

If Mr. Mahito Ogawa, Ms. Motomi Oi and Ms. Sachiko Fukuda are elected and assume the office as directors, the Joint Holding―45―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Company plans, in accordance with Article 427, Paragraph 1 of the Companies Act, to enter into an agreement to limit his/her
liability for damages; the maximum amount of liability for damages under such agreement will be the amount stipulated by laws
and regulations.
6.

The Joint Holding Company plans to enter into a directors and officers liability insurance contract, as stipulated in Article 4303, paragraph 1 of the Companies Act, with insurance company. In the event that each candidate is elected and assumed his/her
position, such person is planned to become insured under this contract. An overview of the contents of the directors and officers
liability insurance contract is as follows:
・The insurance premium will be fully covered by the Joint Holding Company

7.

If this proposal is approved as proposed, Mr. Kiyoshi Waki will be elected as a director of the Joint Holding Company as amember of the Audit and Supervisory Committee of the Joint Holding Company. Accordingly, he plans to resign as a director
of Ryoyo Electro before the effective date of the Share Transfer (March 31, 2024) and assume the position of director who isthe member of the Audit and Supervisory Committee of the Joint Holding Company as of the effective date of the Share Transfer(April 1, 2024).

―46―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

9. Matters stipulated in Article 77 of the Regulation for Enforcement of the Companies Act regarding a person who will be a financial
auditor of the Joint Holding Company.
The profile of a person who will serve as a financial auditor of the Joint Holding Company is provided below.
(As of May 31, 2023)
Name

Deloitte Touche Tohmatsu LLC

Location of principal office

Marunouchi Nijubashi Building, 3-2-3 Marunouchi, Chiyoda-ku, Tokyo
May. 1968
May. 1975

Corporate history

OutlineEstablished Tohmatsu Aoki & Co.
Joined Touche Ross International (now Deloitte Touche Tohmatsu
Limited)Feb. 1990
Name changed to Deloitte Touche Tohmatsu
Jul. 2009
Name changed to Deloitte Touche Tohmatsu LLC due to transition
to a limited liability audit corporation.
Capital amount: 1,138 million yen
Number of members (certified public accountants): 486
Specified employees: 58
Staff Certified Public Accountants: 2,543
Persons who passed the Certified Public Accountant
Examination, etc. (including assistant accountants):
1,359
Other professionals: 3,309
Administrative staff: 90
Number of companies involved in audits: 3,162(Note)We have selected Deloitte Touche Tohmatsu LLC as our candidate for financial auditor because we believe that the said auditing
firm has the expertise, independence, and internal control systems required of a financial auditor of the Joint Holding Company andthat it is suitable for the position.

Proposal 2: Partial Amendment to the Articles of Incorporation
1.

Reasons for Proposal
To facilitate the administrative procedures related to the convocation of ordinary general meetings of shareholders, theCompany has provided the record date for ordinary general meetings of shareholders in Article 13 (Record Date of the Ordinary
General Meeting of Shareholders) of the current Articles of Incorporation, pursuant to Article 124, Paragraph 3 of the Companies
Act. If proposal 1 above for the approval of the share transfer plan related to the Share Transfer is approved at the Extraordinary
General Meeting of Shareholders, and the Share Transfer becomes effective on Monday, April 1, 2024, the Company will have
only one shareholder, the Joint Holding Company, making the provisions regarding the record date for the ordinary general
meeting of shareholders unnecessary. Therefore, in connection with the abolition of the record date system for the ordinary general
meetings of shareholders, the Company will delete Article 13 (Record Date of the Ordinary General Meeting of Shareholders) of
the current Articles of Incorporation in its entirety, and move up the numbering of Article 14 and the articles following thereafter
by one article (such partial amendment to the Articles of Incorporation is hereinafter referred to as the "Partial Amendment to the
Articles of Incorporation").
This Partial Amendment to the Articles of Incorporation will become effective on Sunday, March 31, 2024, provided that
Proposal 1 (Approval of the Share Transfer Plan) is approved in its original form in the Extraordinary General Meeting of
Shareholders, and that the Share Transfer Plan to be approved in Proposal 1 above has not lost its effect, or the Share Transfer―47―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

has not been cancelled by the day before Sunday, March 31, 2024.

―48―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

2.

Details of the Amendment
Details of the amendment are as follows.
(Underlines indicate changes.)
Current Articles of Incorporations

Article 1 through Article 12 (Omitted)

Proposed Amendment
Article 1 through to Article 12 (No amendment)(Record Date of the Ordinary General Meeting of(Deleted)

Shareholders)
Article 13

The record date of the voting rights at theordinary general meeting of shareholders of theCompany shall be March 31 of each year.

Article 14 through Article 35 (Omitted)

Article 13 through to Article 34 (Only numbering amended)(Reference)
The dividends from the surplus for the FY ending March 31, 2024 (from April 1, 2023 to March 31, 2024)(year-end dividends) will be paid by the Company to shareholders or to the registered share pledgees whosenames are listed or recorded in the final shareholders' register as of March 31, 2024, in accordance with Article
34, Paragraph 1 of the current Articles of Incorporation (Article 33, Paragraph 1 of the Articles of Incorporation
after the Partial Amendment to the Articles of Incorporation).

―49―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

Q&A regarding the Management Integration (establishment of a Joint Holding Company)
with Ryoyo Electro Corporation◇

Background and purpose of the Management Integration
Q.

Please explain the background and purpose of the Management Integration.
In line with the recent changes in the environment surrounding the electronics industry, the function and role ofelectronics trading companies are also changing, and the competition among trading companies is intensifying. BasedA.

on this recognition, in order to achieve a sustainable increase in corporate value and further contribute to all
stakeholders, the Companies recognized that it is necessary not only to establish a solid management base, but also
to break through the growth limit of each company by integrating their respective strengths and pursuing valueenhancement across the entire value chain. Therefore, we have decided to carry out the Management Integration.

Q.

What initiatives are taken through the Management Integration?
The Companies, as a new core group of domestic electronics trading companies, will make maximum use of the
management resources, such as good customer relationships and excellent products and solutions, that each of theCompanies has built up over the years, within a new framework, expanding "quantitatively" by multiplying themanagement assets of the Companies, and improving "qualitatively" by creating new value. By combining theA.

strengths of the Companies, the Companies will aim to achieve a sales volume of JPY 500 billion and an operating
profit of JPY 30 billion as the group management’s targets for the fiscal year ending March 31, 2029, creating avirtuous cycle by pursuing "quantity" and "quality," and by helping solve not only the issues and problems ofindividual customers, but also the common problems and issues of the market as a whole, as well as seeking to further
improve their corporate value.

―50―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

◇
Q.

Holding company
What is a joint share transfer (kyoudou kabushiki iten)?
A joint share transfer (kyoudou kabushiki iten) means an integration scheme in which a newly established joint holdingA.

company will become a wholly-owning parent company, and the existing companies (Ryosan and Ryoyo Electro in
the case of the Management Integration) will operate their businesses as wholly-owned subsidiaries with independent
legal personalities.

Q.

What is a joint holding company?
A joint holding company means a holding company established for the purpose of holding all the shares of two orA.

more existing companies that are wholly-owned subsidiaries (Ryosan and Ryoyo Electro in the case of theManagement Integration) and for managing, supervising and controlling such multiple companies as a wholly-owningparent company.

Q.

Why did you decide to carry out the Management Integration by way of a joint share transfer (kyouodu kabushikiiten)?
A joint share transfer (kyoudou kabushiki iten) is a structure that can exert collaborative effects while maintaining theA.

uniqueness of the Companies' businesses. Therefore, we determined that this was a desirable way to achieve thedesired results.

Q.

Why did you choose the form of "a company with an Audit and Supervisory Committee" as the organization structureof the Joint Holding Company?
We chose the form of "a company with an Audit and Supervisory Committee" to facilitate meaningful discussions

A.

within the Board of Directors by speeding up the decision-making process, to strengthen the supervisory functions of
the Board of Directors, and improve corporate governance. This can be achieved by including in the Board of
Directors the members of the Audit and Supervisory Committee, who play the role of auditing the Directors' duties.

―51―

[Translation]
The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japan that are different
from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordance with foreign accounting standards
that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and some or all of theirofficers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of the U.S. securities
laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should be aware that the issuer may purchase securities
otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, theoriginal shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect or any other forms of damages arisingfrom the translation.

◇
Q.

SharesWhat will happen to the Ryosan Shares that we currently hold?
The shares of the Company will be delisted on March 28, 2024 as a result of the establishment of the Joint HoldingA.

Company by way of the Share Transfer. We are planning to newly list shares on the Prime Market of Tokyo Stock
Exchange (technical listing), and shares of the Joint Holding Company will be newly delivered to the Company's
shareholders. 1.32 shares of the Joint Holding Company will be allocated per common share of the Company.

Q.
A.
Q.
A.

Should the shareholders take any measures?
The shareholders do not need to take any procedures. The shares of the Joint Holding Company will be automaticallyallocated to the account currently opened.
When can Ryosan shares and the shares of the Joint Holding Company be purchased and sold?
The final purchase and sale date of shares of the Company is scheduled to be March 27, 2024. The sale of shares of
the Joint Holding Company is scheduled to be permitted on April 1, 2024.

―52―

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Commencement date of measures for electronic provision: November 27, 2023

Extraordinary General Meeting of Shareholders
Other Matters subject to Measures for Electronic Provision(Matters omitted in delivery documents)

Contents of Financial Statements of Ryoyo Electro Corporation
for FY ended January 2023

Ryosan Company, Limited- 1 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Provided document

Business Report(From February 1, 2022 to January 31, 2023)

1.

Current Conditions of the Corporate Group(1) Business conditions in the fiscal year ended January 31, 2023
Progress and results of operations
The Japanese economy during the current fiscal year (from February 1, 2022 to January
31, 2023) saw moves toward the normalization of social and economic activities.
However, the year was marked by constant uncertainty about the outlook, fueled bysoaring energy and raw material costs stemming from heightened geopolitical risks,
mounting monetary tightening in various countries, and rising prices due to the yen’s
depreciation.
In the electronics industry, in which the Ryoyo Group operates, despite disruptions tothe supply chain due to shortages of semiconductors and other components, thesituation has gradually calmed down, improving supply/demand balance for somesegments and products. On the other hand, the ICT segment saw ongoing, brisk ITrelated investment by companies in digital transformation for the purpose of
automation and labor saving as well as investments aimed at transforming theirbusiness models.
Under these circumstances, in order to provide the best solutions for customers’ issues
and problems in faster and better manners than anyone else, the Ryoyo Group set out
three core strategies in its three-year business plan: “to expand and deepen customer
engagement,” “to pursue uniqueness,” and “to increase productivity.” While
implementing various measures, we expanded both businesses of semiconductors &devices and ICT & solutions from the previous fiscal year.
As a result, performance in the fiscal year under review was up year on year across theboard: Net sales were ¥129.912 billion (up 15.9%), operating profit was ¥4.693 billion(up 107.9%), ordinary profit was ¥4.477 billion (up 86.5%), and profit attributable toowners of parent was ¥3.056 billion (up 63.1%).

- 2 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

- 3 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Semiconductors & devices businessSupporting Monozukuri with our abundant product lineup of top brand products andunique devices and appropriate proposals

Net sales were ¥79,151 million, an increase of ¥15,357 million, or 24.1%, year on year.
This was mainly due to solid performance in a wide range of areas, particularly forindustrial applications and applications for office equipment.

- 4 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

ICT & solution business
Our specialists in various fields identify issues and needs that customers face, andsupport the process of solving them.

Net sales were ¥50,760 million, an increase of ¥2,455 million, or 5.1%, year on year.
This was mainly due to growth in sales of personal computers, network equipment, andother products and related services associated with the introduction of an online
eligibility verification system in Japan.

- 5 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(2) Challenges that the Company should address
The Ryoyo Group is an electronics trading company selling “semiconductors anddevices” and offering “ICT and solutions” in its business domain. It sells products andprovides associated services to electronic equipment manufacturers and users in Japanand overseas. It endeavors to realize its vision “To provide the best solutions for ourcustomers’ issues and problems in a faster and better manner than anyone else,” aiming
to enhance its corporate value.
However, the environment surrounding the electronics trading industry is undergoingsignificant changes due to rapid increase in the use of new technologies astechnological innovation, with the acceleration of IoT and digital transformation (DX)across society. In line with these changes, the functions and roles of electronics trading
companies are also changing. In addition, while competition among trading companies
is intensifying due to the alliances of electronic component manufacturers, such as
semiconductor and IT equipment manufacturers, external factors, such as the impact of
COVID-19, the supply shortage of semiconductors and other components, geopoliticalrisk, and trends in the financial markets, are having a significant impact on the businessenvironment and performance despite the low-profitability structure of the trading
companies.
In this context, the Ryoyo Group has set out three core strategies in its three-yearbusiness plan started from February 2022: “to expand and deepen customer
engagement,” “to pursue uniqueness,” and “to increase productivity.” Taking
advantages of our broad network of contacts both upstream and downstream in the
supply chain for electronics devices, and armed with insights into market needs gained
from end-users (downstream), we will seek to expand engagement with electronicequipment manufacturers (upstream), combining products, technologies, and services
to offer unique solutions and also seek to become a key player in creating a business(information and value) cycle across the entire supply chain. By doing so, we aim tobuild a strong business foundation that is resilient to changes in the environment.
In the ongoing three-year business plan, we have been engaged in investments and
M&A for the purpose of acquiring elemental technologies that lead to create uniqueadded value and complementing functionality. We have also been considering allianceswith other companies in view of building a strong business foundation and obtaining
growth opportunities.

- 6 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

As described in “Notice Concerning Acquisition of Ryosan Company Stock by Ryoyo
Electro” disclosed on February 7, 2023, we will accelerate consideration anddiscussions pursuing business synergies and the form for a broad alliance between thetwo parties, and aim to realize a new image of an electronics trading company thathelps resolve the issues and problems facing customers and the market as a whole.
(3) Status of capital investments
Not applicable(4) Status of fundraising
The Company issued the fourth share acquisition rights in the previous fiscal year andraised funds of ¥636 million during the current fiscal year.
(5) Status of business transfer, absorption-type split, and incorporation-type split
Not applicable(6) Status of transfer of business from other companies
Not applicable(7) Status of succession to rights and obligations in connection with business of anotherjuridical person by absorption-type merger or absorption-type split
Not applicable(8) Status of acquisition or disposition of shares, other equity, or share acquisition rights ofanother company
Not applicable- 7 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(9) The financial position and results of operations during the last three fiscal years(Millions of yen)
63rd(Current fiscal
year)(Fiscal year
ended January
31, 2023)

60th(Fiscal year
ended January
31, 2020)

61st(Fiscal year
ended January
31, 2021)

62nd(Fiscal year
ended January
31, 2022)

108,538

95,792

112,099

129,912

Ordinary profit

2,187

905

2,400

4,477

Profit attributable toowners of parent

1,303

806

1,873

3,056

Net income per share (yen)¥53.06¥35.19¥103.94¥151.45

Total assets

78,11759,33672,652

88,409Net assets

62,13537,99242,30944,725¥2,524.47¥2,188.90¥2,130.46¥2,213.65

Net sales

Net assets per share (yen)(Note)The Company has adopted the Accounting Standard for Revenue Recognition (ASBJ
Statement No. 29, March 31, 2020) from the beginning of the current fiscal year, and every
figure regarding the current fiscal year reflects adoption of the Accounting Standard.

- 8 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(10) Main businesses (as of January 31, 2023)
The main businesses of the Ryoyo Group are sales of semiconductors & devices and
ICT & solutions as well as provision of related services. The major handling productsin their respective businesses are as follows:Business

Main handling products(Semiconductors)

Semiconductors & devices(Devices)(ICT)
ICT & solutions(Solutions)

Microprocessors, microcontrollers, system LSI,
power devices, memories, LED elements, laser
diodes, various sensors, etc.
LCD panels, LCD modules, contact image sensors,
etc.
Servers, storage, workstations, personal
computers, tablets, software, display monitors,
printers, plotters, projectors, network systems,
maintenance services, etc.
Original solutions by business type, etc.

(11) Status of the parent company and important subsidiary companies(i)

Status of the parent company
Not applicable- 9 -The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(ii) Status of important subsidiary companies
Company name

CapitalVoting rights

Main businesses

Ryoyo Semicon
Corporation¥100 million

100%

Semiconductors & devices
ICT & solutions

StyleZ Corporation¥30 million

100%

ICT & solutions

S$8,000 thousand

100%

Semiconductors & devices
ICT & solutions

HK$30,300 thousand

100%

Semiconductors & devices
ICT & solutions

Ryoyo Electro(Shanghai) Co., Ltd.

RMB58,301 thousand

100%

Semiconductors & devices
ICT & solutions

RYOYO ELECTROINDIA PVT. LTD.

INR140,000 thousand*100%

Semiconductors & devices
ICT & solutions

RM1,000 thousand*100%

Semiconductors & devices
ICT & solutions

THB140,000 thousand*100%

Semiconductors & devices
ICT & solutions

NT$45,000 thousand

100%

Semiconductors & devices
ICT & solutions

RYOYO ELECTROSINGAPORE PTE.,LTD.
RYOYO ELECTROHONG KONG
LIMITEDRYOYO ELECTRO(MALAYSIA) SDN.
BHD.
RYOYO ELECTRO(THAILAND) CO.,LTD.
Ryoyo Electro Taiwan
Co., Ltd.

(Note) 1. The asterisk indicates the percentage including ownership by subsidiaries.
2. Ryoyo Electro Taiwan Co., Ltd., which was a non-consolidated subsidiary until the previous
consolidated fiscal year, has become a consolidated subsidiary from the beginning of thisconsolidated fiscal year because of increased materiality.

- 10 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(12) Principal business sites (as of January 31, 2023)
Head Office

1-12-22 Tsukiji, Chuo-ku, Tokyo

Branchoffices

Sendai, Matsumoto, Ohmiya, Hachioji,
Yokohama, Nagoya, and Osaka

Sales offices

Kyoto, Fukuoka

Ryoyo Semicon Corporation (Subsidiary)Head Office

1-12-22 Tsukiji, Chuo-ku, Tokyo

StyleZ Corporation (Subsidiary)Head Office

1-2 Kandaogawamachi, Chiyoda-ku,
Tokyo

Head Office

Republic of Singapore

Head Office

The People’s Republic of China

Head Office

The People’s Republic of China

Head Office

India

Head Office

Malaysia

Head Office

Kingdom of Thailand

Head Office

The Republic of China

Head Office

The Federal Republic of Germany

Ryoyo Electro Corporation(the Company)

RYOYO ELECTRO SINGAPORE PTE.,
LTD. (Subsidiary)
RYOYO ELECTRO HONG KONG
LIMITED (Subsidiary)
Ryoyo Electro (Shanghai) Co., Ltd.
(Subsidiary)
RYOYO ELECTRO INDIA PVT. LTD.
(Subsidiary)
RYOYO ELECTRO (MALAYSIA) SDN.
BHD. (Subsidiary)
RYOYO ELECTRO (THAILAND) CO.,LTD. (Subsidiary)
Ryoyo Electro Taiwan Co., Ltd.
(Subsidiary)
RYOYO ELECTRO EUROPE GMBH
(Subsidiary)(13) Status of employees (as of January 31, 2023)(i)(Note)

Status of employees of the Corporate Group
Number of employees

Increase/decrease from the end of the previous
consolidated fiscal year

714

Decreased by 1

The figure is the number of employees.

- 11 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(ii) Status of employees of the Company
Number of employees

Increase/decrease fromthe end of the previous
fiscal year

Average age

Average years of service

537

Increased by 4

44.6 years old

16.0 years(Note)

The figure is the number of employees.

(14) Borrowings from major banks (as of January 31, 2023)(Millions of yen)
Banks

Balance of borrowing

MUFG Bank, Ltd.

8,263

Sumitomo Mitsui Banking Corporation

5,995

Mizuho Bank, Ltd.

5,558

(15) Other significant matters on the current conditions of the Corporate GroupNot applicable- 12 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

2.

Current conditions of the Company(1) Status of shares (as of January 31, 2023)(i)

Total number of authorized shares

119,628,800 shares(ii) Total number of outstanding shares

26,800,000 shares(iii) Number of shareholders

23,750(iv) Top 10 shareholders
Number of shares
held (thousand
shares)Shareholding ratio(%)

SHC Corporation

2,118

10.49

The Master Trust Bank of Japan, Ltd. (Trust Account)

2,073

10.27

Mitsubishi Electric Corporation

1,576

7.81

Sheep Shokai Co.

523

2.59

Nippon Life Insurance Company

409

2.03

Ryoyo Electro Employee Stockholder Association

309

1.53

Yoshihisa Shimada

211

1.05

Yoichiro Ohashi

206

1.02

Ken System Co., Ltd.

200

0.99

Mars Group Holdings Corporation

200

0.99

Name of shareholders(Note) 1. The Company, which owns 6,608,536 treasury shares, is excluded from the above major
shareholders.
2. The shareholding ratios are calculated after deducting treasury shares.

- 13 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(v) Status of treasury shares granted to the Company’s officers as compensation for
the execution of duties during the fiscal year under review
Number of shares

Number of grantees

21,700 shares

4 personsOutside Directors––

Audit & Supervisory Committee Members––

Directors (excluding outside Directors)(Note)

The content of stock compensation of the Company is described in “2. Current conditions of
the Company (3) Status of the Company’s officers (iii) Compensations, etc. for Directors
and Audit & Supervisory Committee Members in the fiscal year under review.”(2) Status of share acquisition rights, etc.
Status of share acquisition rights granted to Directors of the Company as compensation
for the execution of duties and held by them as of the end of this fiscal year
Ryoyo Electro Corporation, Third shareacquisition rights

Name
Total number of share acquisition rights

300 rights(100 shares per share acquisition right)

Scope and number of grantees of share acquisitionrights2 Directors of the Company(including - outside Director)

Type and number of shares for share acquisition rights

Common shares of the Company:
30,000 shares

Paid-in amount of share acquisition rights(Issue price)¥95,400 per share acquisition right(¥954 per share) (Note 1)

The value of property to be contributed upon theexercise of share acquisition rights(Note 2)The period for exercising share acquisition rights

From February 1, 2019
to January 31, 2059

Terms and conditions for exercising share acquisitionrights(Note 3)(Note) 1. The amount of compensation right held by a person to the Company will be offset by thepaid-in amount of share acquisition rights.

- 14 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

2. The value of property to be contributed upon the exercise of share acquisition rights shall be
one yen, which is the amount to be paid per share upon the exercise of share acquisitionrights, multiplied by the number of granted shares.
3. (i) Holders of share acquisition rights can exercise their rights within 10 days from the next
day of expiration of position as Director (or the next business day of the 10th day if the10th day is a holiday).
(ii) Notwithstanding the above (i), in the event when a general meeting of shareholders of
the Company approves a merger agreement under which the Company will become anon-surviving company, a corporate split agreement or corporate split plan under which
the Company will be split, or a share exchange agreement or share transfer plan underwhich the Company will become a wholly-owned subsidiary of another company (ineither case, if no resolution at a general meeting of shareholders is needed, resolved by
the Board of Directors of the Company), share acquisition rights shall be exercised
within 30 days from the next day after such approval is made. However, this does not
apply when share acquisition rights of a reorganized company are granted to holders ofshare acquisition rights in accordance with matters regarding granting of shareacquisition rights in line with the reorganizational restructuring.
(iii) Other terms and conditions shall be subject to the share acquisition allocation agreement
signed between the Company and the holder of share acquisition rights.

(3) Status of the Company’s officers(i)Status of Directors and Audit & Supervisory Committee Members (as of January
31, 2023)

Current position at the Company
Representative Director,
President & Chief Executive
Officer
Director & Managing Executive
Officer
Director & Managing Executive
Officer

Name

Responsibilities and status of importantconcurrent occupations or positions at otherorganizations

Moritaka
Nakamura
Kiyoshi Waki

Osamu Sano

- 15 -In charge of Internal Auditing Dept., CSR
Dept., and Special Assignment
In charge of Strategic Technology
Development Div., General Manager,
Strategic Technology Development Div.,
Application Development Dept. 1 andApplication Development Dept. 2

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Current position at the Company

Name

Director & Managing Executive
Officer

Daisuke Aguro

Outside Director

Shinya Takada

Outside Director

Masumi Shiraishi

Outside Director

Masashi Oba

Outside Director

Michiko Aoki

Full-time Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member

Responsibilities and status of importantconcurrent occupations or positions at otherorganizations
In charge of Semiconductor & Device Div.,
General Manager, Semiconductor & Device
Div.
Chairperson of the Board of Directors
Professor, Faculty of Policy Studies, Kansai
University
Outside Audit & Supervisory Board Member,
NEW KANSAI INTERNATIONALAIRPORT COMPANY, LTD.
Outside Audit & Supervisory Board Member,
E-SUPPORTLINK, Ltd.
Member of the Board (outside), MIKUNICORPORATION
Outside Director, State Street Trust andBanking Co., Ltd.
Managing Director, COACH A Co., Ltd.

Hiroyuki Kanno
Ryoji Kimura
Kazumi Akiyama
Motomi Oi

Lawyer, Kimura / Kuroe Law OfficeOutside Director, SAMURAI SECURITIESCo., Ltd.
Certified Public Accountant, Oi CPA Office
Supervisory Director, Japan Logistics Fund,Inc.

Nomination and Compensation Committee: Shinya Takada, Masumi Shiraishi, Masashi Oba, MichikoAoki, Moritaka Nakamura, and Kiyoshi Waki
(Note) 1. Shinya Takada, Masumi Shiraishi, Masashi Oba, and Michiko Aoki are outside Directors.
2. Ryoji Kimura, Kazumi Akiyama, and Motomi Oi are outside Audit & Supervisory Board
Members.
3. Yasushi Okazaki and Seiju Yasuda retired upon expiration of their term of office at theconclusion of the 62nd annual general meeting of shareholders held on April 26, 2022.
4. Hiroyuki Kanno, full-time Audit & Supervisory Board Member, and Kazumi Akiyama andMotomi Oi, Audit & Supervisory Board Members, possess considerable expertise in financeand accounting.

- 16 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

・Hiroyuki Kanno, full-time Audit & Supervisory Board Member, has many years ofexperience in the overall administrative operations of the Company.
・Kazumi Akiyama, Audit & Supervisory Board Member, has many years of experience in
the Ministry of Finance.
・Motomi Oi, Audit & Supervisory Board Member, is licensed as a certified public
accountant.
5. Ryoji Kimura, Audit & Supervisory Board Member, is qualified as a lawyer and possesses
considerable expertise in corporate legal affairs.
6. The Company has designated Directors Shinya Takada, Masumi Shiraishi, Masashi Oba, andMichiko Aoki, and Audit & Supervisory Board Members Ryoji Kimura, Kazumi Akiyama,and Motomi Oi as independent directors and auditors in accordance with the regulations ofTokyo Stock Exchange to which its report has been submitted.

(ii) The outline of the liability insurance contract for Directors
The Company has entered into a liability insurance policy for Directors with aninsurance company as provided for in Article 430-3, Paragraph 1 of theCompanies Act. The policy covers economic losses incurred by an insured personfrom claims for damages arising from the performance of duties as an officer, etc.
of the Company. However, as measures to ensure that the proper performance of
duties of officers, etc. is not impaired, the policy does not cover damages resulting
from breach of faith or criminal acts or damages caused by the insured persons incases where they have intentionally committed illegal acts. Insured persons under
the policy are Directors, Audit & Supervisory Board Members, and Executive
Officers, etc. of the Company and its subsidiaries under the Companies Act.
All insurance premiums are borne by the Company. The policy is renewed on
March 1 every year and the Company plans to renew the policy with the sameterms.
(iii) Compensation, etc. for Directors and Audit & Supervisory Board Members for the
fiscal year under review
Compensation, etc. for Directors and Audit & Supervisory Board Membersa.

Policy for determining the content of compensation, etc. for Directors
The Company consults the Nomination and Compensation Committee
regarding the policy for determining the content of compensation, etc. for- 17 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

individual Directors, and the Board of Directors makes a resolution on thepolicy after receiving the report from the Committee.
With regard to the compensation, etc., for individual Directors for the fiscal
year under review, the Board of Directors has confirmed that the method ofdetermining the content of compensation, etc., and the content ofcompensation, etc., determined are consistent with the determination policy
resolved by the Board of Directors and that the report from the Nomination
and Compensation Committee has been given due weight. Accordingly, theBoard of Directors judges that the compensation, etc., for individual
Directors for the fiscal year under review are in accordance with thedetermination policy.
Outline of the policy for determining the content of compensation, etc. forindividual Directors is as follows.
・

Basic Policy
The Company’s Director compensation is based on a compensation systemappropriate for securing excellent human resources who can realize theCompany’s management philosophy and improve the Company’s
performance in accordance with the Company’s management policy, and for
motivating such human resources to play an active role in enhancing theCompany’s corporate value over the medium to long term. Compensation for
Directors who serve concurrently as executive officers includes basic
compensation, performance-based compensation (monetary), and stockcompensation (restricted stock). Compensation for Directors who do notserve concurrently as executive officers comprises only basic compensation.
Furthermore, individual compensation depends on each Director’s respective
job description and responsibilities based on the above-mentioned
compensation system.

・

Policy for determining the amount, award period, and terms of basic
compensation for individual Directors
Basic compensation is fixed monthly compensation paid in cash while the
Director is in office. For Directors who serve concurrently as executive
officers, the basic compensation amount is determined annually at a certain
period, based on the Compensation Table for each position, and reflecting theprevious year’s performance of the Company, the degree of contribution of- 18 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

each Director to the Company, and other factors. Compensation plans foroutside Directors not serving concurrently as executive officers are
determined annually at a certain period, taking into account a range offactors, including Company performance, compensation levels at othercompanies, and the current social context.
・Policy for determining the content of performance indicators, amount,calculation method, award period, and terms of performance-based
compensation (monetary)
Directors who serve concurrently as executive officers are paid performancebased compensation (monetary) in an amount determined based on the degreeof achievement of target values allocated and set according to duties for eachof the following indicators: consolidated operating profit, operating profit ofeach business division, and consolidated net profit for the applicable fiscal
year. The compensation is paid at a certain time each year after the end of theapplicable fiscal year.

・

Policy for determining the content, amount, calculation method, award
period, and terms of non-monetary compensation, etc. (stock compensation)
Directors who serve concurrently as executive officers are granted restricted
stock at a certain time each year while in office. Restricted stock is common
stock of the Company allocated to Directors who serve concurrently as
executive officers based on a restricted stock allocation agreement concluded
with them, in which transfer restrictions stipulated in the agreement are
applied for a period from the date of delivery of the stock until the date ofretirement or resignation of the Director as a Director of the Company orother position stipulated by the Board of Directors. The number of shares ofstock granted is determined based on the Compensation Table for eachposition.

・

Policy on the Compensation Table
The Nomination and Compensation Committee determines the Compensation
Table. Using compensation amounts of companies listed on the Japanesestock market taken from the objective compensation survey data of an outside
specialist organization as a reference, and comprehensively taking into
consideration the Company’s performance and corporate scale, social
context, and other factors, the Committee makes relative comparisons and- 19 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

revises the Compensation Table appropriately in accordance with the Basic
Policy.
・

Policy for determining the ratio of basic compensation, performance-based
compensation (monetary), and stock compensation (restricted stock) toindividual Director compensation
The ratio of each type of compensation for Directors who serve concurrently
as executive officers is set based on position, duties, trends among othercompanies, and so forth. As an approximate guide to the ratio ofcompensation by type, basic compensation comprises 70%, performancebased compensation (monetary) 10%, and stock compensation (restricted
stock) 20%.

・

Method of determining the content of individual Director compensation, etc.
All Director compensation plans are determined by a resolution of the Boardof Directors, reflecting deliberation and reporting from the Nomination andCompensation Committee, the majority of whose members are independent
outside Directors.

・

Policy for determining the amount and calculation method of compensation,etc. for Audit & Supervisory Board Members
Compensation for Audit & Supervisory Board Members (excluding outside
Audit & Supervisory Board Members) is fixed, and is determined throughdiscussions among the Audit & Supervisory Board Members based oncomprehensive consideration of the individual’s contribution to the Company
and the degree to which roles and responsibilities have been fulfilled.
Meanwhile, compensation for outside Audit & Supervisory Board Members
is fixed, and is determined through discussions among the Audit &Supervisory Board Members based on comprehensive consideration of theindividual’s social position, contribution to the Company, and thecircumstances of their appointment.

- 20 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

b.

Total compensation, etc. of Directors and Audit & Supervisory Board
Members
Compensation by type (millions of yen)

Office category

Directors(Of which, outside
Directors)
Audit &
Supervisory Board
Members(Of which, outside
Audit &
Supervisory Board
Members)

Total
compensation(millions of yen)

Performance- Non-monetary
based
compensation,
Basiccompensation,etc.
compensationetc.
(stock(monetary) compensation)

Number ofapplicable
individuals

230
(38)

161
(38)

33
(–)

35
(–)

10
(4)

36
(21)

36
(21)

–
(–)

–
(–)

4
(3)

266
(60)

197
(60)

33
(–)

35
(–)

14
(7)

Total
(Of which, outside
Directors andoutside Audit &Supervisory Board
Members)

Notes: 1. The amount of compensation, etc. of Directors does not include the portion for employees of
Directors who concurrently serve as employees.
2. Performance indicators for performance-based compensation, etc. are calculated based on
the degree of achievement of target values allocated and set according to duties for each of
the following indicators: consolidated operating profit, operating profit of each businessdivision, and consolidated net profit The reason for selecting these indicators is to encourage
profit-oriented management for Directors who concurrently serve as executive officers. The
results of performance indicators for the fiscal year under review are shown in “1. Current
Conditions of the Corporate Group, (1) Business conditions in the fiscal year ended January
31, 2023, Progress and results of operations.”
3. Non-monetary compensation, etc., consists of shares of the Company’s stock, and the termsof allotment, etc., are stated in “2. Current conditions of the Company, (3) Status of the- 21 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Company’s officers, (iii) Compensation, etc. for Directors and Audit & Supervisory Board
Members for the fiscal year under review, Compensation, etc. for Directors and Audit &Supervisory Board Members, a. Policy for determining the content of compensation, etc. for
Directors.” The status of stock delivery during the fiscal year under review is stated in “2.
Current conditions of the Company, (1) Status of shares, (v) Status of treasury shares granted
to the Company’s officers as compensation for the execution of duties during the fiscal year
under review.”
4. The maximum amount of compensation for Directors was resolved at the 48th Annual
Shareholders’ Meeting held on April 25, 2008 to be ¥280 million per year (not including the
portion for employees). As of the conclusion of the 48th Annual Shareholders’ Meeting, thenumber of Directors was 11.
5. The maximum amount of restricted stock compensation was resolved at the 59th Annual
Shareholders’ Meeting held on April 25, 2019 to be ¥100 million per year. As of theconclusion of the 59th Annual Shareholders’ Meeting, the number of Directors was nine (ofwhich, two were outside Directors).
6. The maximum amount of compensation for Audit & Supervisory Board Members was
resolved at the 57th Annual Shareholders’ Meeting held on April 27, 2017 to be ¥40 million
per year. As of the conclusion of the 57th Annual Shareholders’ Meeting, the number ofAudit & Supervisory Board Members was four.
7. The above includes two Directors who retired due to expiration of their terms of office at theconclusion of the 62nd Annual Shareholders’ Meeting held on April 26, 2022.

(iv) Matters related to outside Directors and outside Audit & Supervisory Board
Membersa.

Significant concurrent positions held at other companies and relationshipbetween the Company and such other companies
Outside Director Michiko Aoki is a Director and Executive Officer of
COACH A Co., Ltd. (“COACH A”). Although the Company has an
education-related business relationship with COACH A, there are no mattersaffecting the independence of outside Directors between the Company and
COACH A, and the Company believes that Ms. Aoki is qualified to serve as
an independent Director.
There are no special relationships between the Company and any othercompanies.
- 22 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

b.

Major activities in the fiscal year under review

Director
Shinya Takada

Summary of attendance, statements made, and duties performed with respect tothe role expected of an outside Director
Mr. Takada attended all 12 meetings of the Board of Directors during the
fiscal year under review. Of those, he attended 10 meetings held on or after
April 26, 2022, as chairman.
He played an appropriate role in ensuring the adequacy and appropriatenessof decision-making by the Board of Directors by expressing his opinions froma multifaceted perspective based on his extensive experience in management
while serving in the areas of corporate planning and strategy. In addition, as
chairman of the Nomination and Compensation Committee, he played an
important role in the nomination, compensation, etc. of Directors andexecutive officers.

Director
Masumi Shiraishi

Ms. Shiraishi attended all 12 meetings of the Board of Directors during the
fiscal year under review.
She played an appropriate role in ensuring the adequacy and appropriatenessof decision-making by the Board of Directors by expressing her opinionsfrom a multifaceted perspective based on her extensive experience in theprivate sector, teaching, and public service. In addition, as a member of theNomination and Compensation Committee, she played an important role in
the nomination, compensation, etc. of Directors and executive officers.

Director
Masashi Oba

Mr. Oba attended all 12 meetings of the Board of Directors during the fiscal
year under review.
He played an appropriate role in ensuring the adequacy and appropriatenessof decision-making by the Board of Directors by expressing his opinions froma multifaceted perspective based on his experience in management as a CFO
while working mainly in the administrative division in his previous positions.
In addition, as a member of the Nomination and Compensation Committee, heplayed an important role in the nomination, compensation, etc. of Directors
and executive officers.

Director
Michiko Aoki

Ms. Aoki attended all 10 meetings of the Board of Directors held after her
appointment.
She played an appropriate role in ensuring the adequacy and appropriatenessof decision-making by the Board of Directors by expressing her opinionsfrom a multifaceted perspective based on her experience in the productplanning department in her previous position and her extensive experience inhuman resource development at a human resource development company. In
addition, as a member of the Nomination and Compensation Committee, sheplayed an important role in the nomination, compensation, etc. of Directors
and executive officers.

Audit & Supervisory
Board Member
Ryoji Kimura

Mr. Kimura attended all 12 meetings of the Board of Directors and all 12
meetings of the Audit & Supervisory Board during the fiscal year underreview. He expressed his opinions from his professional perspective as an
attorney and other appropriate opinions to ensure the adequacy andappropriateness of decision-making by the Board of Directors and the Audit& Supervisory Board.

- 23 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Summary of attendance, statements made, and duties performed with respect tothe role expected of an outside Director
Mr. Akiyama attended all 12 meetings of the Board of Directors and all 12
Audit & Supervisory meetings of the Audit & Supervisory Board during the fiscal year underreview. He expressed his opinions based on the insights he had gained
Board Member
through his many years of service in the Ministry of Finance and other
Kazumi Akiyama
appropriate opinions to ensure the adequacy and appropriateness of decisionmaking by the Board of Directors and the Audit & Supervisory Board.
Audit & Supervisory
Board Member
Motomi Oi

Ms. Oi attended all 12 meetings of the Board of Directors and all 12 meetingsof the Audit & Supervisory Board during the fiscal year under review. She
expressed her opinions from her professional perspective as a certified public
accountant and other appropriate opinions to ensure the adequacy andappropriateness of decision-making by the Board of Directors and the Audit& Supervisory Board.

(v) Outline of the agreement limiting liability
The Company and outside Directors Shinya Takada, Masumi Shiraishi, Masashi
Oba, and Michiko Aoki, and outside Audit & Supervisory Board Members Ryoji
Kimura, Kazumi Akiyama, and Motomi Oi have entered into an agreement to limit
their liability for damages under Article 423, Paragraph 1 of the Companies Act
pursuant to Article 427, Paragraph 1 of said Act.
The maximum amount of liability for damages under said agreement is the higherof the amount stipulated by law or ¥8 million.

- 24 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(4) Status of Accounting Auditor(i)Name: Seiyo Audit Corporation
Note: The term of office of KPMG AZSA & Co., the Company’s former accounting auditor,
expired at the conclusion of the 62nd Annual Shareholders’ Meeting held on April 26,
2022, and the firm resigned.

(ii) Amount of audit fees, etc.
Amount of audit fees, etc.
(millions of yen)Amount of audit fees, etc. for the fiscal year under review

32

Total amount of money and other financial benefits payable by theCompany and its subsidiaries to the accounting auditor

32

Notes: 1. The audit agreement between the Company and the accounting auditor does not clearly
distinguish between the amounts of audit fees, etc. for audits pursuant to the Companies Act
and those for audits pursuant to the Financial Instruments and Exchange Act, and it is notpractically possible to distinguish them. Therefore, the total amount of these fees is provided
as the amount of audit fees, etc. for the fiscal year under review.
2. Of the Company’s important subsidiaries, the Company’s overseas subsidiaries are auditedby auditing firms (including those with qualifications equivalent to an auditing firm inforeign countries) other than the Company’s accounting auditor.
3. In addition to the above fees, the Company paid ¥1 million to the predecessor accounting
auditor, KPMG AZSA & Co., as fees for the services of handing over to the successor
accounting auditor.

(iii) Non-audit services
Not applicable.
(iv) Reasons why the Audit & Supervisory Board gave consent to the amount of audit
fees, etc. of the accounting auditor for the fiscal year under review
The Audit & Supervisory Board made a decision to consent to the amount of audit
fees, etc. paid to the accounting auditor after necessary verification of theappropriateness of the content of the accounting auditor’s audit plan, the status of
performance of accounting audit duties, the basis for calculation of the estimatedaudit fees, etc.
- 25 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(v) Policy on dismissal or non-reappointment of accounting auditor
The Audit & Supervisory Board decides the content of the proposal for dismissal
or non-reappointment of the accounting auditor to be submitted to the annual
shareholders’ meeting, when it determines that such action is necessary, such as
when there is a problem with the performance of duties by the accounting auditor.
In addition, if it is deemed that the accounting auditor falls under any of the itemsof Article 340, Paragraph 1 of the Companies Act, the Audit & Supervisory Board
dismisses the accounting auditor based on the unanimous consent of the Audit &Supervisory Board Members. In this case, the Audit & Supervisory Board Member
selected by the Audit & Supervisory Board reports the dismissal of the accounting
auditor and the reasons thereof at the first annual shareholders’ meeting convened
after the dismissal.
(vi) Outline of the agreement limiting liability
Not applicable.
(5) Systems for Ensuring the Appropriateness of Business Operations
The following is a summary of decisions made regarding systems for ensuring that theexecution of duties by Directors complies with laws, regulations, and the Articles ofIncorporation, and other systems for ensuring the appropriateness of the Company’sbusiness operations.
(i)

System for ensuring that the execution of duties by Directors and employees of
the Company and its subsidiaries (the “Group”) is in compliance with laws,
regulations, and the Articles of Incorporation
・ The Ryoyo Group Code of Conduct has been established as a code for
Directors and employees of the Group acting in compliance with laws,
regulations, the Articles of Incorporation, and social norms.
In order to ensure thorough implementation of the Code, the CSR
Department oversees the Group’s compliance efforts across the board.
・ Recognizing that the development of internal control systems is an importantmanagement issue, the Company has established the Rules of the Board of
Directors, Rules on Division of Duties, Rules on Administrative Authority,- 26 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

and “Rules on the Ringi System” to ensure appropriate organizational
management.
・ Directors monitor each other’s execution of duties through regularly held
meetings of the Board of Directors.
・ The Internal Auditing Department checks the appropriateness and efficiencyof each department’s operations in a timely manner, and also audits the statusof compliance in cooperation with the CSR Department. These activities are
regularly reported directly to the Representative Director and President, theBoard of Directors, and the Audit & Supervisory Board Members as
appropriate.
・ The Ryoyo Group Compliance Hotline has been established as a means for
employees to directly provide information on legally questionable conduct.
・ The Company takes a firm stand against antisocial forces, groups, etc. thatthreaten the order and safety of civil society, and works closely with thepolice and specialized attorneys to cut off all relationships with them.
(ii)

System for the storage and management of information related to the execution ofduties by Directors
・ Information related to the execution of duties by Directors is stored andmanaged in accordance with the Document Management Rules. Directors andAudit & Supervisory Board Members may have access to these documents
and other information at all times.

(iii) Rules and other systems for managing the risk of loss of the Group・ The risk management manager of each department establishes an appropriate
system for managing risks associated with compliance, environment, disaster,
information security, quality, foreign exchange, financial reporting, and so on.
In the unlikely event that a risk materializes, each department takes prompt
and appropriate action to minimize damage under the direction of the risk
management manager.
(iv) System for ensuring the efficient execution of duties by Directors of the Group・ The Board of Directors has enhanced its functions by setting the appropriate
number of Directors to enable accurate and prompt decision-making based on- 27 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

sufficient discussions on matters stipulated by laws, regulations, and the
Articles of Incorporation and on important management matters (including
important matters concerning subsidiaries).
・ The function of the Board of Directors as a management decision-making andsupervisory body is separated from the function to execute business based on
the Board of Directors’ decisions to enable flexible business execution by the
Representative Director and President and executive officers.
・ In order to enhance objectivity in nominating and compensating Directors
and executive officers, a Nomination and Compensation Committee, themajority of which is composed of independent outside Directors, has been
established and reports the results of its deliberations to the Board of
Directors.
(v)

System for ensuring the appropriateness of operations of the corporate groupconsisting of the Company and its subsidiaries, and system for reporting to theCompany on matters related to the execution of duties by Directors, etc. of
subsidiaries
・ Having Domestic Subsidiary Management Rules and Overseas Subsidiary
Management Rules in place, the Company requires subsidiaries to report
regularly to the Company on their financial conditions and other importantmatters. The Company also strives to ensure smooth cooperation and soundbusiness development among the Company’s corporate group.
・ In order to ensure the reliability of financial reporting in accordance with theprovisions of the Financial Instruments and Exchange Act, the Company has
established Internal Control Rules on Financial Reporting, has developed aninternal control system, and regularly assesses its effectiveness.
・ The CSR Department, in cooperation with the departments supervising theoperations of each company in the Group, monitors the status of internal
controls and provides guidance for improvement, etc., as necessary.
・ The Internal Auditing Department periodically conducts internal audits ofeach company in the Group to audit the status of compliance with laws,
regulations, and rules, and provides necessary guidance.

- 28 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(vi) Matters regarding employees who are assigned to assist duties of Audit &Supervisory Board Members, their independence from Directors, and ensuring
effectiveness of instructions given to said employees by Audit & Supervisory
Board Members
・ The Internal Auditing Department implements internal audits for mattersrequested by Audit & Supervisory Board Members based on the Job
Assignment Regulation, and reports its result to Audit & Supervisory Board
Members. The Department’s employees are not subject to instructions andorders from the Directors, in order to ensure the independence with respect totheir duties.
(vii) Reporting systems through which Directors and employees of the Company andDirectors, Audit & Supervisory Board Members, and employees of its
subsidiaries report to the Audit & Supervisory Board Members, other reporting
system to the Audit & Supervisory Board Members, and the system to ensure thatreporters will not suffer from any disadvantageous treatment due to submission of
those reports
・ Directors and employees of the Company and Directors, Audit & Supervisory
Board Members, and employees of its subsidiaries shall promptly report to
Audit & Supervisory Board Members on matters which are likely to cause
serious damage to the Group, important management matters, internal audit
status, notification state through compliance hotline, and their contents, inaddition to matters designated by law.
・ It shall be prohibited to give any disadvantageous treatment to Directors andemployees of the Company and Directors, Audit & Supervisory Board
Members, and employees of its subsidiaries, who have reported to thecorporate auditors, due to their reporting to the Audit & Supervisory Board
Members, and officers and employees of the Group shall be notified of theruling.

- 29 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(viii) Matters regarding prepayment or reimbursement procedures of expenses which
occur on the occasion of performance of duties of the Audit & Supervisory Board
Members and other policies for accounting for those expenses or related liabilities
・ When an Audit & Supervisory Board Member requests advance payment for
expenses for performance of their duties, the accounting treatment shall bedone according to the request for advance payment, etc. excluding items
which are recognized as unnecessary for the Audit & Supervisory Board
Member’s execution of duties.
(ix) Other system to ensure that audits by corporate auditors shall be implemented
effectively
・ Audit & Supervisory Board Members and the Representative Director,
President & Chief Executive Officer hold meetings regularly for mutual
exchange of opinions. In addition, Audit & Supervisory Board Members
obtain advice on audit work from expert lawyers and accounting auditors asneeded.
(6) Outline of implementation status of systems for ensuring the appropriateness ofbusiness operations(i)Efforts to ensure appropriateness and efficiency of duty execution by Directors

・ The Board of Directors makes decisions regarding matters stipulated by laws andregulations and the Articles of Incorporation, and important management matters
as well as monitor mutually execution status of operation by Directors. outside
Audit & Supervisory Board Members also attend the Board of Directors meetingand express their opinions at any time when needed.
(ii)

Efforts to ensure effective implementation of audits by Audit & Supervisory
Board Members
・ At the Audit & Supervisory Board, agenda items of the Board of Directors
meeting are deliberated, along with exchange of a wide range of opinions are
implemented regarding validity, efficiency, compliance, etc. of corporate
management. The discussion result is expressed appropriately at the Board of
Directors.

- 30 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

・ Efforts are made to improve the effectiveness of the audit through attending
important meetings including the Board of Directors, inspection of important
documents such as approval documents which have obtained all approvalrequired, and holding regular meetings to exchange opinions with the
Representative Director, President & Chief Executive Officer, accounting
auditors, and the Internal Auditing Department.
(iii) Efforts to ensure appropriateness of operation
・ The Internal Auditing Department implements internal audits based on theinternal audit plan formulated at the start of the business year and reports theaudit result to the Representative Director, President & Chief Executive
Officer, the Board of Directors, and Audit & Supervisory Board Members
after each audit engagement.
・ Contact points outside the Company (outside lawyers) which are independent
from corporate management are set up as contact points of “Ryoyo Group
Compliance Hotline” which is the means for the Group’s employees todirectly provide information with respect to an action that could be viewed asa breach of laws.
(7) Basic policy regarding decision making on dividends of surplus
While maintaining a stable management base and working to expand business in the
future, the Company returns profit to its shareholders, taking into account the financial
position, business environment, etc., and the Company’s basic policy is to pay stabledividends, targeting a dividend on equity ratio (DOE) of 5%.
The Company’s basic policy for dividends of surplus is to distribute profits twice ayear, interim dividend and year-end dividend. Although it is provided in the Articles ofIncorporation that both of interim dividend and year-end dividend can be resolved at
the board of directors meeting, the year-end dividend of the fiscal year under review isto be resolved at the general meeting of shareholders.
Note: The amounts mentioned in this business report show those whose fractions under the unit
stated are rounded down.

- 31 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Consolidated Financial Statements
Consolidated Balance Sheet (As of January 31, 2023)(Millions of yen)
Item

AmountItem(Assets)
Current assets

79,183

Cash and deposits

19,031

Notes and accounts
receivable-trade, andcontract assets
Electronically recordedmonetary claims-operating
Merchandise and finished
goodsWork in process
Other
Allowance for doubtful
accounts
Non-current assets
Property, plant, andequipment
Tools, furniture and fixtures,net
LandConstruction in progress
Other, net
Intangible assets
Goodwill
Other
Investments and other assets
Investment securities
Deferred tax assets
Retirement benefit asset
Other
Allowance for doubtful
accounts(Liabilities)
Current liabilities
Notes and accounts payabletrade

Amount42,657
13,36630,966

Short-term borrowings

25,817

3,886

Income taxes payable

1,423

23,623

Accrued consumption taxes

174
1,502

Provision for bonuses
Other

857
1,048

(1) Non-current liabilities

1,026

9,225

143

Deferred tax liabilities

603

226

Retirement benefit liability

316

73

Other

106

5
7
139
832
471
361
8,166

Total liabilities(Net assets)
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Accumulated other5,406
comprehensive income
Valuation difference on
110
available-for-sale securities
Deferred gains or losses on
1,589
hedgesForeign currency translation
1,642
adjustment
Remeasurements of defined(582)
benefit plans- 32 -

43,683
41,94013,672
13,33632,000(17,068)
2,756
1,805
0
1,124
(173)

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Item

AmountTotal assets

Item
Share acquisition rights

88,409Amount28

Total net assets

44,725

Total liabilities and net assets

88,409Note: The amounts mentioned show those whose fractions under the unit stated are rounded down.

Consolidated Statements of Income (From February 1, 2022 to January 31, 2023)(Millions of yen)
Item

AmountNet sales
Cost of sales

129,912116,328

Gross profit

13,583

Selling, general, and administrative expenses
Operating profit

8,889
4,693

Non-operating income
Interest income
Dividend income
Gain on investments in investment
partnerships
Other
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Other

185
43
113
6
21
401
185
151
54
9

Ordinary profit

4,477

Extraordinary losses

105

Loss on valuation of investment securities

105

Profit before income taxes

4,372

Income taxes-current
Income taxes-deferred

1,595
(279)

Profit3,056

Profit attributable to owners of parent

3,056

Note: The amounts mentioned show those whose fractions under the unit stated are rounded down.

- 33 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Consolidated Statements of Changes in Net Assets(From February 1, 2022 to January 31, 2023)(Millions of yen)
Shareholders’ equity
Share capital
Balance at the beginning ofcurrent period

13,672

CapitalsurplusRetainedearnings

13,336

31,164

Total
shareholders’equityTreasuryshares(17,978)

40,194

Changes during period
Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesExercise of shareacquisition rights
Restricted stock
payment
Changes in scope of
consolidation
Transfer from retained
earnings to capitalsurplus
Net changes in items
other than shareholders’equityTotal changes during
periodBalance at end of period(2,200)(2,200)

3,056

3,056
(1)

(1)

(0)

0

0

(210)

848

638

(13)

62

48

224

204

204

(224)

–
–

–

–

835

909

1,745

13,672

13,33632,000(17,068)

41,940- 34 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(Millions of yen)
Accumulated other comprehensive income

Balance at the
beginning ofcurrent period
Changes during
periodDividends ofsurplusProfitattributable toowners ofparentPurchase oftreasury shares
Disposal oftreasury shares
Exercise ofshareacquisitionrightsRestricted stock
payment
Changes inscope ofconsolidation
Transfer fromretainedearnings tocapital surplus
Net changes in
items other thanshareholders’equityValuationdifferenceonavailablefor-salesecurities

Deferred
gains orlosses onhedges1,794(0)Foreign Remeasurecurrency
ments ofdefinedtranslation
benefitadjustplans
ment
412

(122)

Share
acquisitionrightsTotal net
assets30

42,309(2,200)
3,056

(1)
0
638
48
204

–

10

0

712

(51)

(2)

670

Total changes
during period

10

0

712

(51)

(2)

2,416

Balance at end of
period

1,805

0

1,124

(173)

28

44,725

Note: The amounts mentioned show those whose fractions under the unit stated are rounded down.

- 35 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Notes to Consolidated Statements
1. Important matters providing basis for preparation of consolidated financial
statements(1) Matters regarding the scope of consolidation(i)

Number of consolidated subsidiaries: 9Name of consolidated subsidiaries
Ryoyo Semicon Corporation
StyleZ Corp.
RYOYO ELECTRO SINGAPORE PTE., LTD.
RYOYO ELECTRO HONG KONG LIMITED
Ryoyo Electro (Shanghai) Co., Ltd.
RYOYO ELECTRO INDIA PVT. LTD.
RYOYO ELECTRO (MALAYSIA) SDN. BHD.
RYOYO ELECTRO (THAILAND) CO., LTD.
Ryoyo Electro Taiwan Co., Ltd.

(ii) Changes in the scope of consolidation
Ryoyo Electro Taiwan Co., Ltd., which was a non-consolidated subsidiary until
the previous consolidated fiscal year, has become a consolidated subsidiary fromthe beginning of this consolidated fiscal year because of increased materiality.
(iii) Name of non-consolidated subsidiaries
RYOYO ELECTRO USA, INC.
RYOYO SERVICE (THAILAND) CO., LTD.
RYOYO ELECTRO EUROPE GMBH(iv) Reason for exclusion of non-consolidated subsidiaries from the scope of
consolidation
The non-consolidated subsidiaries are excluded from the scope of consolidation
because they have no significant influence on consolidated financial statementswith any respect to total assets, net sales, profit, retained earnings, etc.

- 36 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(2) Matters regarding application of the equity method
The non-consolidated subsidiaries are evaluated through the cost method instead of theequity method because they have minor impact on consolidated profit, retained
earnings, etc. and have no significance on the whole.
(3) Matters regarding business year of consolidated subsidiaries
Among consolidated subsidiaries, RYOYO ELECTRO INDIA PVT. LTD. and StyleZ
Corp. settle the accounts at the end of March. Therefore, their financial statements
prepared based on provisional settlement of accounts as of the end of December areused for the preparation of consolidated financial statements.
Other overseas subsidiaries settle the accounts at the end of December, and theirfinancial statements on said date are used for the preparation of consolidated financial
statements.
In addition, the adjustment required for the consolidation is provided to significant
transactions which occurred in relation to consolidated closing date.
(4) Matters regarding accounting policies(i)Valuation standards and methods for important assetsa.

Available-for-sale securities
Other securitiesa) Those other than securities, etc. without a market priceMarket value method (evaluation differences are included directly in net
assets, and costs of securities sold are calculated using the moving averagemethod).
b) Securities, etc. without a market price
Cost method using moving average method.
As for investments in investment limited partnership and similar investment
associations (as regarded as securities by Article 2, Paragraph 2 of Financial
Instruments and Exchange Act), the Company books the net value of equity
equivalents based on the latest available financial report of the associationaccording to the financial closing date set forth in the partnership contract.

b.

Inventoriesa) Merchandise and finished goods- 37 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Stated at cost method using moving average method (the balance sheet
amount is calculated by writing down the book value of assets which
decreased in profitability).
b) Work in process
Stated at cost method using the individual method (the balance sheet amountis calculated by writing down the book value of assets which decreased in
profitability).
c.

Derivatives
Stated at market value.

(ii) Depreciation methods for material depreciable assetsa.

Tangible fixed assets (excluding lease assets)
The Company and its domestic consolidated subsidiaries calculate
depreciation using the declining-balance method, and consolidated
subsidiaries outside of Japan calculate depreciation using the straight-line
method.
In this regard, however, the straight-line method is applied to building
fixtures obtained on and after April 1, 2016.
The main durable years are as follows:b.

Tools, furniture, and fixtures

3 - 15 years

Others

3 - 47 years

Intangible fixed assets (excluding lease assets)
The straight-line method is applied.
In this regard, however, the straight-line method is applied to software usedby the Company based on the inhouse usable period (five years).

c.

Lease assets
Regarding finance lease transactions that do not transfer ownership, thestraight-line method is applied, where the respective durable years are theirlease periods, setting the residual value to zero.

(iii) Accounting standards for material allowances and provisionsa.

Allowance for doubtful accounts
To prepare for bad debt losses on trade receivables the estimateduncollectible amount is recorded based on the actual bad debt rate for general- 38 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

receivables and the separate likelihood of collection for specific receivables
such as doubtful receivables.
b.

Provision for bonuses
To prepare for the payment of employee bonuses, an estimated amountcorresponding to the portion of the bonus payments in this fiscal year isaccounted for.

(iv) Methods of accounting procedures for retirement benefitsa.

Attribution method for projected retirement benefits
In the calculation of retirement benefit obligation, the method for allocating
the estimated retirement benefits to each fiscal year till the end of this fiscal
year is based on the benefit calculation method.

b.

Accounting method for actuarial differences and prior service cost
Prior service cost is amortized by the straight-line method over a period
within the average remaining service years for employees (10 years) at thetime of occurrence, and the amortized amount is expensed from the time ofoccurrence.
Actuarial differences are allocated by the straight-line method over a period
within the average remaining service years for employees (10 years) at thetime of occurrence, and they are expensed from the following year whenincurred in each fiscal year.

c.

Accounting method for unrecognized actuarial differences and unrecognizedprior service cost
With respect to accounting of actuarial differences and prior service costs thatare yet to be recognized in profit or loss, they are recorded as remeasurementsof defined benefit plans of accumulated other comprehensive income within
net assets, after adjusting for tax effects.
The Company has the defined-contribution pension plans in addition to thedefined-benefit pension plans.

(v) Accounting standards for revenues and expenses
The Group’s main businesses are the Semiconductors/device Business, which isengaged in sales of semiconductors and electronic parts both at home and abroad,and the ICT/solutions Business, which is engaged in ICT solutions. The respective- 39 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

businesses sell their merchandise and finished goods and provide the relevant
services.
Regarding the sales of merchandise and finished goods, we identify delivering
merchandise and finished goods that were purchased from suppliers to customers
as our performance obligation. Revenues are recognized when merchandise andfinished goods are delivered. In cases where the period from shipment to transfer
of control of the merchandise and finished goods to the customer is of normal
length, revenues are recognized at the time of shipment. As for providing
installment and other services, we identify providing functions that are demanded
by customers as our performance obligation. In principle, we judge our
performance obligation as satisfied when service provision is completed, andrecognize the revenue at the point of time.
Regarding transactions in which the Group serves as the agent for selling
merchandise and finished goods or providing services, the revenue is recognizedin the net amount of consideration to be received from customers, after deducting
the costs payable to suppliers.
The consideration of transactions is received largely within one year after the
performance obligation is satisfied, and no significant financing component isincluded.
(vi) Method of material hedge accountinga.

Method of hedge accounting
Deferral hedge processing is applied. In the meantime, the allocation
processing is applied to certain forward exchange contracts that meet therequirements for the allocation processing.

b.

Hedge means and hedge targets
Hedge means: Forward exchange transactions
Hedge targets: Foreign currency denominated monetary claims/liabilities andforeign currency denominated planned transactionsc.

Hedging policy
The potential exchange risk of foreign currency denominated transactions isin principle hedged by using derivatives such as a forward exchange contract
within the range of contract amount at the time of contract of the transactions- 40 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(including planned transactions), in accordance with the Inhouse Foreign
Currency Control Rules.
d.

Evaluation method for the effectiveness of hedging
The accumulated amount of the hedging target’s market changes during theperiod from the start of hedging to the evaluation of its effectiveness and theaccumulated amount of the hedging means’ market changes during the same
period are compared and evaluated.

(vii) Amortization method and amortization period for goodwill
Goodwill is evenly amortized over 10 years.
2.

Change in accounting policies

Application of accounting standards for revenue recognition
The Company has decided to apply the accounting standards including the ASBJ Statement
No. 29, March 31, 2020 (hereafter referred to as “the Accounting Standard for Revenue
Recognition”) from the beginning of this fiscal year, and to recognize revenue for transfer ofgoods or services promised to customers in an amount reflecting the expected considerationin return for those goods or services. Following this change, we have decided to recognize
revenue in the net amount of consideration to be received from customers, after deducting
the costs payable to suppliers in transactions in which the Company serves as the agent forproviding goods or services, instead of in the gross amount as in the past.
The adoption of the Accounting Standard for Revenue Recognition, etc. is in accordancewith the transitional treatment as stipulated in the proviso to Paragraph 84 of the AccountingStandard for Revenue Recognition. Accordingly, the cumulative impact from applying thisnew accounting policy to prior years before the beginning of this fiscal year has beenreflected in retained earnings brought forward at the beginning of this fiscal year, and the
new accounting policy has been adopted from the beginning of this fiscal year. In thisregard, however, the Company has adopted the method as stipulated in Paragraph 86 of the
Accounting Standard for Revenue Recognition, and thus the new accounting policy has notbeen applied to contracts in which most of revenues were recognized in accordance with theprevious treatment before the beginning of this fiscal year.
In addition, the Company decided to indicate “Notes and accounts receivable-trade,” whichwere presented in Current assets on the Balance Sheet of previous fiscal year, including- 41 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

them in “Notes and accounts receivable-trade, and contract assets” from the fiscal year
under review.
As a result, net sales and cost of sales for this fiscal year decreased by 4,140 million yen,respectively, and there is no impact on profit before income taxes for this fiscal year. In
addition, there is no impact on retained earnings brought forward at the beginning of thisfiscal year.
3.

Change of presenting method

Application of accounting standards for market value calculation
The Company has applied the Accounting Standards for Market Value Calculation(Corporate Accounting Standards No. 30 of July 4, 2019; the “Market Value Calculation
Accounting Standards”) and other standards since the beginning of this fiscal year. In
accordance with the interim handling specified in Clause 19 of the Market Value Calculation
Accounting Standards and Clause 44-2 of the Accounting Standards for Financial
Instruments (Corporate Accounting Standards No. 10 of July 4, 2019), the Company decided
to apply a new accounting policy as specified by the Market Value Calculation AccountingStandards, etc. over the future and to include notes on matters concerning a breakdown bylevel of the market values of financial instruments in the Notes on Financial Instruments.
Consolidated statements of income
Because Purchase discounts under Non-operating income that were independently stated in
the previous fiscal year have become lower in monetary importance, they have been
included in Other under Non-operating income in this fiscal year.
Because Charge expenses under Non-operating expenses that were independently stated in
the previous fiscal year have become lower in monetary importance, they have been
included in Other under Non-operating expenses in this fiscal year.

- 42 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

4.

Notes on accounting estimates

Valuation of merchandise and finished goods(1) Amounts recorded in the consolidated financial statements for this fiscal year
This fiscal year
(millions of yen)
(1) Merchandise and finished goods

23,623(2) Merchandise and finished goods for which one year or more
have passed since the purchase date

1,608(3) Devalued book value based on (2) and individual sales
potentials

413(2) Information about significant accounting estimates pertaining to identified items
The Ryoyo Group places orders according to orders and expected orders received andto be received from customers. Demand for goods related to Semiconductors &Devices and ICT & Solutions is influenced by rapid technological innovation andchanges in the business environment. So there is a risk that merchandise and finishedgoods will accumulate.
When the net realizable values of merchandise and finished goods are below their bookvalues, the Company devalues the year-end book values to those net realizable values.
It also regularly devalues the book values of merchandise and finished goods for which
one year or more have passed since the purchase date and for which no evidence exists
relating to order sheets from buyers or buyers’ accepting stock of them (the“Accumulating Stock”) according to the policy decided based on the past sales
performance or disposal performance and devalues the book values of merchandise andfinished goods whose book values have not been devalued based on individual sales
potentials.
The Company estimates sales potential taking into account the demand forecast, suchas market trends, the most recent performance of sales to customers and the trend inorders received, a production schedule in the future, and expected orders received.
That estimate involves uncertainty. So if demand from customers falls sharply inquantity or Accumulating Stock increases, because of future changes in the market
environment, there is a possibility that it will have a significant influence on the
consolidated financial statements for the following fiscal year.

- 43 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

5.

Notes on consolidated balance sheets
Accumulated depreciation of property, plant and equipment¥861 million

6.

Notes on consolidated statements of income
Year-end inventories show the book values devalued because of decreased profitability,
and the following loss from inventory revaluation is included in cost of sales.
¥286 million

7.

Notes on consolidated statements of changes in net assets(1) Matters concerning the total number of outstanding shares(Thousand shares)
Number of shares
Number of sharesClass of shares at beginning of this increased this fiscal
fiscal year
year
Common shares

26,800

Number of shares
decreased thisfiscal year

Number of sharesat end of this fiscal
year–

26,800

Number of shares
decreased thisfiscal year

Number of sharesat end of this fiscal
year

352

6,608

–

(2) Matters concerning the number of treasury shares(Thousand shares)
Number of shares
Number of sharesClass of shares at beginning of this increased this fiscal
fiscal year
year
Common shares

6,955

5

Notes: 1. The increase in the number of treasury shares is an increase from returns of payment basedon shares with restriction on transfer, and purchase of shares less than one unit.
2. The decrease in the number of treasury shares is a decrease from the exercise of stock
options, payment of payment based on shares with restriction on transfer, and requests for
additional purchase of shares less than one unit.

(3) Matters concerning dividends of surplus(i)Amount of dividends paida.

Matters concerning dividends according to a resolution at the 62nd annual
shareholders’ meeting held on April 26, 2022
・ The total amount of dividends: ¥1,190 million- 44 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

・ The amount of dividend per share: ¥60
・ Record date: January 31, 2022
・ Effective date: April 27, 2022b.

Matters concerning dividends according to a resolution at the board meeting
held on August 31, 2022
・ The total amount of dividends: ¥1,009 million
・ The amount of dividend per share: ¥50
・ Record date: July 31, 2022
・ Effective date: October 3, 2022(ii) Of dividends whose record date is included in this fiscal year, those whose
effective date is included in the following fiscal year
They will be discussed as follows at the 63rd annual shareholders’ meeting to beheld on April 26, 2023.
Moreover, the Company is to allot retained earnings to the dividend payment fund.
・ The total amount of dividends: ¥1,211 million
・ The amount of dividend per share: ¥60
・ Record date: January 31, 2023
・ Effective date: April 27, 2023
(4) Matters concerning stock options on the last day of this fiscal year
3rd stock options
Class of shares underlying

Common shares

Number of shares underlying

8.

30,000

Number of stock options

300

Balance of stock options¥28,620,000

Notes on financial instruments(1) Matters concerning the state of financial instruments(i)

Policy on working on financial instruments
The Ryoyo Group raises necessary funds mainly through bank borrowing
according to its fund operation and funding plan. Moreover, the Group basicallyoperates funds as highly safe financial assets. The Group makes it its principle tolimit derivatives to exchange forward contract transactions to avoid the risk of- 45 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

future foreign exchange fluctuations pertaining to foreign currency transactions
and not to carry out speculative transactions.
(ii) Details of financial instruments and their risks as well as risk management systems
Bill receivable, accounts receivable and contract assets which are trade receivables
as well as electronically recorded monetary claims are exposed to customers’
credit risk. Regarding the credit risk, in accordance with its internal rules, theGroup sets a credit limit for each business connection and manages dates andbalances as well as has established a system of regularly ascertaining the state ofcredit to early understand and reduce concerns about collection because ofdeteriorated financial situation. Moreover, foreign currency trade receivables are
exposed to the risk of foreign exchange fluctuations. The Group hedges againstthat risk using forward exchange contracts regarding a position netted mainly withforeign currency trade receivables.
Investments in securities mainly include bonds, investment trusts, and the sharesof companies with which it has business relations, which are exposed to the risk ofmarket price fluctuations. We report to the board of directors their market values,
which we assess regularly.
The due dates of bills payable and accounts payable, which are trade payables aswell as income taxes payable, will come within one year. Moreover, foreign
currency trade payables are exposed to the risk of foreign exchange fluctuations.
The Group hedges against that risk using forward exchange contracts regarding a
position netted mainly with foreign currency trade receivables.
Derivative transactions include forward exchange contract transactions for the
purpose of hedging transactions against the risk of foreign exchange fluctuations,which pertains to foreign currency trade receivables and trade payables. Moreover,the hedge accounting method, means of hedging and hedge targets, the hedging
policy, and the evaluating method for the effectiveness of hedging are stated inImportant Hedge Accounting Method under Matters concerning Accounting
Policies as mentioned above.
The Group uses borrowings mainly as working funds. Departments in charge
make and update a financing plan timely and manage liquidity risk by maintaining
liquidity on hand.

- 46 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Trade payables and income taxes payable are exposed to liquidity risk, and theGroup considers that they can be covered sufficiently by cash and deposits which
it holds.
(iii) Supplementary explanation for matters concerning the market values of financial
instruments
The market values of financial instruments include values calculated reasonably, if
there is no market value, in addition to values based on market values. Because
variable factors are included in calculating those values, the values may fluctuate
by adopting a different precondition, etc.
(2) Matters concerning the market values of financial instruments
The amounts and market values, as well as differences between them that are recordedin the consolidated balance sheets on January 31, 2023, are as follows.
Moreover, shares, etc. without a market price are not included in the following table(please see Note 1). In addition, a note on cash is omitted. Because Deposits, Notes,
accounts receivable - trade, and contract assets, Electronically recorded monetaryclaims - operating, Notes and accounts payable - trade, Income taxes payable, andShort-term borrowings are settled in a short period, their market values are close to
their book values. So notes on them are omitted.
Amount recorded inconsolidated balance
sheets(millions of yen)

Market value(millions of yen)

Difference(millions of yen)

4,947

4,947

–

347

347

–

(1) Investments in securities
Other securities(2) Derivative transactions (*1)(*1)

Net credits and debts created by derivative transactions are shown in net amounts, and a figure
for an item whose net debt is shown in total is put in parentheses.

- 47 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Note 1.

Shares, etc. without a market priceAmount recorded in consolidated balance sheets(millions of yen)

Category
Unlisted stocks

305

Investments in investment limited partnerships

152

Total

458

The above shares, etc. without a market price are not included in (1) (Investments in securities).
Note 2.

Expected amount of repayment of monetary claims and securities with a maturity after theclosing dateWithin 1 year
(millions of yen)Over 1 year andwithin 5 years(millions of yen)Over 5 years andwithin 10 years(millions of yen)Over 10 years(millions of yen)

Notes

259

–

–

–

Electronically recordedmonetary claims operating

3,886

–

–

–

Accounts receivable trade30,706

–

–

–

Total

34,852–––

Note 3.

Expected amount of repayment of borrowings after the closing dateWithin 1 year
(millions ofyen)Over 1 year
and within
2 years(millions ofyen)Over 2 years Over 3 years Over 4 years
and within
and within
and within Over 5 years
3 years
4 years
5 years(millions of(millions of (millions of (millions of
yen)
yen)
yen)
yen)

Short-termborrowings

25,817

–

–

–

–

–

Total

25,817

–

–

–

–

–

(3) Matters concerning the breakdown by level of the market values of financial
instruments
The Group classifies the market values of financial instruments into the following threelevels according to the observability and the importance of inputs pertaining to market
value calculation.
- 48 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Market value level 1: A market value calculated by using a market price of assets or
liabilities for which that market value is calculated and which isformed in an active market, of observable inputs pertaining tocalculation of the market valueMarket value level 2: A market value calculated by using an input pertaining to market
value calculation other than the input at the level 1, ofobservable inputs pertaining to calculation of the market valueMarket value level 3: A market value calculated by using an unobservable input
pertaining to market value calculation
When the Group uses several inputs which have a significant influence on market value
calculation, it classifies the market value in the lowest level of the order of priority incalculating market values, of levels in which those inputs are included respectively.
(i)

Financial instruments recorded in consolidated balance sheets at their market
valuesMarket value (millions of yen)
Category
Level 1

Level 2

Level 3

Total

Investment securities
Other securities
Shares

4,374

–

–

4,374

Currency relations

–

372

–

372

Total assets

4,374

372

–

4,746

Currency relations

–

24

–

24

Total liabilities

–

24

–

24

Derivative transactions

Derivative transactions

Note: The market values of investment trusts are not included in the above. The amount of investment
trusts that is recorded in the consolidated balance sheets is 573 million yen.

- 49 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(ii) Financial instruments other than those recorded in consolidated balance sheets attheir market values
Not applicable.
Note: Explanation of the technique for valuation that is used in calculating market values and inputs
pertaining to market value calculation
Investment securities
The Group values listed stocks using market prices. Because listed stocks are traded in active
markets, the Group classifies their market values in Market Value Level 1.
Derivative transactions
The Group calculates market values for derivative transactions based on prices, etc. presented by
its financial institutions and classifies the market values in Market Value Level 2.

9.

Notes on revenue recognition(1) Information about resolved revenues from agreements with customers(Millions of yen)
Reporting segment
Japan

Asia

Total

By item
Semiconductors &Devices

34,44544,705

79,151

ICT & Solutions

50,498262

50,76084,94444,967

129,912–––84,94444,967

129,912

Revenues from agreementswith customers
Other revenues
Net sales to outside
customers(2) Basic information to understand revenues from agreements with customers
The same content as that of basic information to understand revenues from agreementswith customers is mentioned in Section 1 (Important basic matters in drawing up
consolidated financial statements), (4) (Matters concerning accounting policies), (v)(Accounting standards for revenues and expenses). So notes on it are omitted.

- 50 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(3) Information to understand the amount of revenues in and after this fiscal year and thefollowing fiscal year(i)

Balances of contract assets and contract liabilities
Contract assets are unclaimed claims pertaining to the sale of goods whose
revenues the Group has recognized before inspection and acceptance by acustomer in selling the goods. Contract liabilities are advances received from
customers in the Semiconductor & Device Business and the ICT & Solution
Business.
The balances of claims as well as contract assets and contract liabilities fromagreements with customers in the Ryoyo Group at the beginning and the end of
this fiscal year are as follows. Moreover, in the consolidated balance sheets, claims
and contract assets are recorded in Notes and accounts receivable - trade, andcontract assets, and Electronically recorded monetary claims - operating andcontract liabilities in Other current liabilities.
This fiscal year
(millions of yen)
Balance at beginning of year

Claims from agreementswith customers

Balance at end of year

32,15834,852Contract assets––

Contract liabilities

183

210

(ii) Transaction prices allocated to remaining performance obligations
The Ryoyo Group has applied practical expedient means to notes on transaction
prices allocated to remaining performance obligations. So agreements whose term
is within one year as expected from the beginning are not included in the notes.
The total amount of transaction prices allocated to remaining performanceobligations and the period in which revenues are expected to be recognized are as
follows.

- 51 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

This fiscal year
(millions of yen)
Within 1 year

49

Over 1 year and within 2 years

34

Over 2 years

46
Total

131

10. Notes on information per share(1) Net assets per share(2) Net income per share(3) Diluted net income per share¥2,213.65¥151.45¥151.22

11. Notes on important events after reporting period
Acquisition of shares of Ryosan Company, Limited
The Company resolved to acquire some of the shares of Ryosan Company, Limited at theboard meeting held on February 7, 2023, entered into a share transfer agreement with
Silchester International Investors LLP, and acquired the shares on February 9, 2023 asfollows.
Number of shares acquired, acquisition price and state of shares held before and after
acquisition(1) Number of shares held before
acquisition0(Number of voting rights: 0)(Proportion of voting rights held: –)(Number of voting rights: 43,847)(2) Number of shares acquired(3) Acquisition price(4) Number of shares held after
acquisition*

4,384,700(Proportion of voting rights held:
18.71%)¥15,784 million (*)(Number of voting rights: 43,847)
4,384,700(Proportion of voting rights held:
18.71%)The Company fixed the acquisition price referring to the result of the share value calculation by anindependent third party calculating organization and considers it fair and appropriate.

- 52 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Borrowing of important funds
The Company borrowed funds as follows as part of funds for acquisition of the shares of
Ryosan Company, Limited according to a resolution at the board meeting held on February
7, 2023.
MUFG Bank, Ltd.

(1) Banks

Sumitomo Mitsui Banking Corporation(2) Amount of borrowings¥6,000 million(3) Borrowing dateFebruary 8, 2023

(4) Term of repayment

April 30, 2024

(5) Borrowing rate

TIBOR + 1.0%

(6) Security

No security- 53 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Financial Statements
Balance Sheets (as of January 31, 2023)(Millions of yen)Account title(Assets)
Current assets
Cash and deposits
Notes
Electronically recordedmonetary claims - operating
Accounts receivable - trade
Operating accounts
receivable
Merchandise and finishedgoods
Accounts receivable
Other
Non-current assets
Property, plant andequipment
Buildings
Machinery and equipment
Tools, furniture and fixtures,net
LandConstruction in progress
Intangible assets
Software
Software suspense account
Other
Investments and other assets
Investment securities
Shares of associatedcompanies
Long-term loans

AmountAccount title

64,337
15,219242(Liabilities)
Current liabilities
Accounts payable - trade
Short-term borrowings

3,886

Accounts payable

25,326

Income taxes payable

120

Amount35,808
11,50221,50066
1,267Consumption tax payable

121

18,385

Accrued expenses

487

364
792
12,003

Deposits received
Provision for bonuses
Other

72
705
84

178

Non-current liabilities

803

47
64

Deferred tax liabilities
Other

732
71

53

Total liabilities

36,612

5
7
389
326
50
12
11,435
5,308
3,464
228

Prepaid pension costs

1,667

Guarantee deposits

458(Net assets)
Shareholders’ equity
Share capital
Capital surplus
Legal capital surplus
Retained earnings
Legal retained earnings
Other retained earnings
Retained earnings
brought forward
Treasury shares
Valuation/translationdifference
Valuation difference on
available-for-sale securities- 54 -

37,895
13,672
13,336
13,336
27,955
1,290
26,665
26,665(17,068)
1,805
1,805

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Account title

AmountAccount title
Deferred gains or losses onhedgesOther

449

Allowance for doubtful
accounts(141) Stock options

Total assets

76,341

Amount028

Total net assets

39,729Total liabilities and net assets

76,341

Note: The amounts mentioned show those whose fractions under the unit stated are rounded down.

Statements of Income (From February 1, 2022 to January 31, 2023)(Millions of yen)Account title

AmountNet sales
Cost of sales

94,297
82,910Gross profit

11,387

Selling, general and administrative expenses
Operating profit

7,889
3,498

Non-operating income
Interest income
Dividend income
Gain on investments in investment
partnerships
Other
Non-operating expenses
Interest expenses
Foreign exchange losses
Cost of issuing stock options
Provision of allowance for doubtful accounts
Other

143
9
113
6
13
377
60
256
1
50
7

Ordinary profit

3,264

Extraordinary losses

105

Loss on valuation of investment securities

105

Profit before income taxes

3,159

Income taxes - current
Income taxes - deferred

1,276
(185)

Profit2,068

Note: The amounts mentioned show those whose fractions under the unit stated are rounded down.

- 55 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Statements of Changes in Net Assets (From February 1, 2022 to January 31, 2023)(Millions of yen)
Shareholders’ equity
Capital surplus

SharecapitalBalance on Feb. 1, 2022

Legalcapitalsurplus13,672Retained earnings

Other
capitalsurplus13,336

Otherretainedearnings

Legalretainedearnings–

Retainedearnings
brought
forward

1,290

27,021

Changes during fiscal year
Dividends of surplus(2,200)

Profit

2,068

Purchase of treasury
shares
Disposal of treasury
sharesExercise of stock
options
Restricted stock
payment
Transfer from retained
earnings to capitalsurplus
Net changes in items
other than shareholders’equityTotal changes during fiscal
year
Balance on Jan. 31, 2023

(0)
(210)
(13)
224

(224)

–

–

–

–

(356)

13,672

13,336–

1,290

26,665- 56 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(Millions of yen)
Shareholders’ equity

Balance on Feb. 1,
2022
Changes during
fiscal year
Dividends ofsurplusTreasurysharesTotalshareholders’equityValuationdifferenceonavailablefor-salesecurities(17,978)

37,341

1,794

Deferred Stock options
gains orlosses onhedges(0)30

Total net
assets39,166(2,200)(2,200)

2,068

2,068

(1)

(1)

(1)

0

0

0

848

638

638

62

48

48

–

–

ProfitPurchase oftreasury shares
Disposal oftreasury shares
Exercise ofstock options
Restricted stock
payment
Transfer fromretainedearnings tocapital surplus
Net changes in
items other thanshareholders’equityValuation/translationdifference

–

10

0

(2)

9

Total changes
during fiscal year

909

553

10

0

(2)

562

Balance on Jan.
31, 2023(17,068)

37,895

1,805

0

28

39,729Note: The amounts mentioned show those whose fractions under the unit stated are rounded down.

- 57 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Notes on unconsolidated financial statements
1. Important accounting policies(1) Evaluation standards and methods for securities(i)

Shares of subsidiaries and associates
Cost method using moving average method.

(ii) Other securitiesa.

Those other than securities, etc. without a market priceMarket value method (evaluation differences are included directly in net assets
and costs of securities sold are calculated using the moving average method).
b.

Securities, etc. without a market price

Cost method using moving average method.
As for investments in investment limited partnerships and similar investment
associations (regarded as securities by Article 2, Paragraph 2 of Financial
Instruments and Exchange Act), the Company books the net value of equity
equivalents based on the latest available financial report of the associationaccording to the financial closing date set forth in the partnership contract.
(2) Evaluation standards and methods for inventories
Cost method using moving average method of merchandise and finished goods (thebalance sheet amount is calculated by writing down the book value of assets which
decreased in profitability).
(3) Evaluation standards and methods for derivatives
Derivative market value method.
(4) Depreciation methods for fixed assets(i)

Tangible fixed assets (excluding lease assets)
Declining balance method.
In this regard, however, the straight-line method is applied to building fixtures
obtained on and after April 1, 2016.
The main durable years are as follows:
Buildings

3 - 47 years

Machinery and equipment

3 - 10 years- 58 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Tools, furniture and fixtures

4 - 15 years(ii) Intangible fixed assets (excluding lease assets)
Straight-line method.
In this regard, however, the straight-line method is applied to software used by theCompany based on the inhouse usable period (five years).
(iii) Lease assets
Regarding finance lease transactions that do not transfer ownership, the straightline method is applied, where the respective durable years are their lease periods,
setting the residual value to zero.
(5) Accounting standards for allowances and provisions(i)

Allowance for doubtful accounts
To prepare for bad debt losses on trade receivables, the estimated uncollectible
amount is recorded based on the actual bad debt rate for general receivables andthe separate likelihood of collection for specific receivables such as doubtfulreceivables.

(ii) Provision for bonuses
To prepare for the payment of employee bonuses, an estimated amountcorresponding to the portion of the bonus payments in this fiscal year is included.
(iii) Provision for retirement benefits
In the calculation of retirement benefit obligation, the method for allocating theestimated retirement benefits to each fiscal year till the end of this fiscal year isbased on the benefit calculation method. To prepare for the payment of employee
retirement benefits, the amount deemed to have arisen within this fiscal year wasrecorded on the basis of balance of retirement benefit obligation and pension
assets at the end of this fiscal year.
Prior service cost is amortized by the straight-line method over a period within the
average remaining service years for employees (10 years) at the time ofoccurrence, and the amortized amount is expensed from the time of occurrence.
Actuarial differences are allocated by the straight-line method over a period within
the average remaining service years for employees (10 years) at the time ofoccurrence, and they are expensed from the following year when incurred in eachfiscal year.

- 59 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

The accounting treatment of unrecognized actuarial differences related toretirement benefits and unrecognized prior service cost differs from that inconsolidated financial statements.
(6) Accounting standards for revenues and expenses
The Company’s main businesses are Semiconductors & Device Business, which isengaged in sales of semiconductors and electronic parts both at home and abroad, and
ICT & Solutions Business, which is engaged in ICT solutions. The respective
businesses sell their merchandise and finished goods and provide the relevant services.
Regarding the sales of merchandise and finished goods, we identify delivering
merchandise and finished goods that were purchased from suppliers to customers as our
performance obligation. Revenues are recognized when merchandise and finishedgoods are delivered. In cases where the period from shipment to transfer of control ofthe merchandise and finished goods to the customer is of normal length, revenues arerecognized at the time of shipment. As for providing installment and other services, we
identify providing functions that are demanded by customers as our performanceobligation. In principle, we judge our performance obligation as satisfied when service
provision is completed and recognize the revenue at the point of time.
Regarding transactions in which the Company serves as the agent for selling
merchandise and finished goods or providing services, the revenue is recognized in the
net amount of consideration to be received from customers, after deducting the costs
payable to suppliers.
The consideration of transactions is received largely within one year after the
performance obligation is satisfied, and no significant financing component is included.
(7) Method of hedge accounting(i)

Method of hedge accounting
Deferral hedge processing. In the meantime, the allocation processing is applied tocertain forward exchange contracts that meet the requirements for the allocation
processing.

(ii) Hedge means and hedge targets
Hedge means: Forward exchange transactions
Hedge targets: Foreign currency denominated monetary claims/liabilities andforeign currency denominated planned transactions- 60 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(iii) Hedging policy
The potential exchange risk of foreign currency denominated transactions is inprinciple hedged by using derivatives such as a forward exchange contract within
the range of contract amount at the time of contract of the transactions (including
planned transactions), in accordance with the Inhouse Foreign Currency Control
Rules.
(iv) Evaluation method for the effectiveness of hedging
The accumulated amount of the hedging target’s market changes during the period
from the start of hedging to the evaluation of its effectiveness and the accumulated
amount of the hedging means’ market changes during the same period arecompared and evaluated.
2.

Change in accounting policies

Application of accounting standards for revenue recognition
The Company has decided to apply the accounting standards including the ASBJ Statement
No. 29, March 31, 2020 (hereafter referred to as “the Accounting Standard for Revenue
Recognition”) from the beginning of this fiscal year, and to recognize revenue for transfer ofgoods or services promised to customers in an amount reflecting the expected considerationin return for those goods or services. Following this change, we have decided to recognize
revenue in the net amount of consideration to be received from customers, after deducting
the costs payable to suppliers in transactions in which the Company serves as the agent forproviding goods or services, instead of in the gross amount as in the past.
The adoption of the Accounting Standard for Revenue Recognition, etc. is in accordancewith the transitional treatment as stipulated in the proviso to Paragraph 84 of the AccountingStandard for Revenue Recognition. Accordingly, the cumulative impact from applying thisnew accounting policy to prior years before the beginning of this fiscal year has beenreflected in retained earnings brought forward at the beginning of this fiscal year, and then
the new accounting policy has been adopted from the beginning of this fiscal year. In thisregard, however, the Company has adopted the method as stipulated in Paragraph 86 of the
Accounting Standard for Revenue Recognition, and thus the new accounting policy has notbeen applied to contracts in which most revenues were recognized in accordance with theprevious treatment before the beginning of this fiscal year.
As a result, net sales and cost of sales for this fiscal year decreased by 4,140 million yen,respectively, and there is no impact on profit before income taxes for this fiscal year. In- 61 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

addition, there is no impact on retained earnings brought forward at the beginning of thisfiscal year.
3.

Change of presenting method

Consolidated statements of income
Because Interest on Securities under Non-operating Income which was independently statedin the previous financial year has become lower in monetary importance, they have been
included in Other under Non-operating Income in this fiscal year.
Because Purchase Discounts under Non-operating Income which was independently statedin the previous financial year has become lower in monetary importance, they have been
included in Other under Non-operating Income in this fiscal year.
4.

Notes on accounting estimates

Estimation of merchandise and finished goods(1) Amount reported in financial statements for this fiscal year
Year ended January 31, 2023
(Millions of Yen)
(1) Merchandise and finished goods

18,385(2) Merchandise and finished goods for which one year or more
have passed since the purchase date

1,461(3) Devalued book value based on (2) and individual sales potential

386(2) Information about significant accounting estimates pertaining to identified items
Information about significant accounting estimates pertaining to identified items is
included in 4. Notes on accounting estimates of Notes on Consolidated Financial
Statements. Accordingly, the note is omitted.
5.

Notes on balance sheet(1) Accumulated depreciation of property, plant and equipment¥614 million- 62 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

(2) Guarantee liabilities(i)

The Company has guaranteed the following subsidiary’s trade payables tosuppliers.
Guarantee

Amount

RYOYO ELECTRO HONG KONG LIMITED¥893 million(ii) The Company has guaranteed the following subsidiaries’ borrowings fromfinancial institutions.
Guarantee

Amount

RYOYO ELECTRO HONG KONG LIMITEDRYOYO ELECTRO INDIA PVT. LTD.

¥3,528 million¥17 million(3) Monetary claims/liabilities on/from associated companies
Short-term monetary claims

6.

¥4,019 million

Long-term monetary claims¥222 million

Short-term monetary liabilities¥1,490 million

Notes on statements of income(1) Transactions with associated companies
Net sales¥10,964 million

Purchases¥10,497 million

Selling, general and administrative expenses¥13 million
Transactions other than business deals ¥4 million(2) Year-end inventory shows the book value devalued because of profitability fallen, andthe following amount of losses from inventory valuation is included in cost of sales.
¥269 million- 63 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

7.

Notes on statements of changes in net assets

Matters concerning the number of own shares(Unit: Thousand shares)
No of shares at theClass of shares beginning of year
ended Jan. 31, 2023
Common shares

No. of increased
shares during theterm

No. of decreased
shares during theterm

No of shares at theend of year ended
Jan. 31, 2023

5

352

6,608

6,955

Notes: 1. The increase in the number of own shares is an increase from returns of payment based onshares with restriction on transfer, and purchase of shares less than one unit.
2. The decrease in the number of own shares is a decrease from the exercising of share options,payment of payment based on shares with restriction on transfer, and requests for additionalpurchase of shares less than one unit.

8.

Notes on tax effect accounting(1) Deferred tax assets and deferred tax liabilities by major cause(Millions of Yen)
Deferred tax assets
Provision for retirement benefits

231

Provision for bonuses

216

Shares of associated companies

141

Merchandise and finished goods

130

Business taxes payable

81

Investments in securities

78

Allowance for doubtful accounts

43

Accrued expenses

36

Share-based compensation expenses

36

Intangible fixed assets

29

Long-term other accounts payable

18

Others18

Deferred tax assets - Subtotal

1,061

Valuation allowance(273)

Deferred tax assets - Total

788

Deferred tax liabilities
Valuation difference on other securities(787)

Prepaid pension costs(504)- 64 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Gain on contribution of securities to retirement benefit
trust
Others(228)(0)

Deferred tax liabilities - Total(1,520)Net amount of deferred tax assets/(liabilities)(732)(2) Differences between the statutory effective tax rate and the actual effective tax rate bymajor cause item
Statutory effective tax rate

30.62%(Adjustments)
Items that are not permanently included in deductible
expenses, such as entertainment expenses

2.25%

Items that are not permanently included in taxable income,such as dividends received(0.24)%

Inhabitant and other taxes on per capita basis

0.51%

Valuation allowance

1.07%

Others0.31%

Actual effective tax rate after the adoption of tax effectaccounting

34.52%- 65 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

9.

Notes on transactions with related parties

Subsidiaries, etc.

Attribution

Name ofcompany,etc.

Capital ormoney
invested

Ownership
Details of relations(owned)Concurrent
Business details
rate ofofficerBusinessor occupation
votingrelations
positions,rights, etc.
etc.
(%)

RYOYO
ELECTRO(Subsidiary) HONG
KONG
LIMITED

Semiconductors
Direct
HK$30,300 & devices
ownership
thousandICT &100%
solutions

1 person

Ryoyo
Electro(Subsidiary) (Shanghai)Co., Ltd.
(Subsidiary)

RMB
58,301
thousand

Semiconductors
Direct& devices
ownership
ICT &
100%
solutions

1 person

Attribution

Details oftransactions
Sales of merchandise

Purchase ofmerchandise
Guarantee ofborrowings from
(Subsidiary) financial institutions(Note 3)Liabilities to the
suppliers’ trade
payablesGuarantee(Note 4)
(Subsidiary) Sales of merchandise(Notes)Amount oftransactions(Millions of Yen)
7,248
2,375

Account item
Accounts
receivable - trade
Accounts payable trade

Mutually
supplyingsome of theCompany’s
sellingmerchandise
Mutually
supplyingsome of theCompany’s
sellingmerchandise

Balanceat end of year
(Millions of Yen)
2,805
1,004

3,528

–

–

893

–

–

2,074

Accounts
receivable - trade

841

Transaction conditions and policies for determining the conditions, etc.

1. Amount of transactions does not include consumption taxes.

- 66 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

2. Sales prices are determined in light of prevailing market trends and after discussions with therelevant subsidiaries.
3. The Company has guaranteed the borrowings from financial institutions. It does not receive
guarantee fees and other fees associated with its guarantee of the liabilities.
4. The Company has guaranteed the suppliers’ trade payables. It does not receive guarantee feesand other fees associated with its guarantee of the liabilities.

10. Notes on revenue recognition
Basic information to understand revenue from contracts with customers is included in 9.
Notes on revenue recognition of Notes on Consolidated Financial Statements. Accordingly,
the note is omitted.
11. Notes on per share information(1) Net assets per share(2) Net income per share(3) Diluted net income per share¥1,966.22¥102.51¥102.36

12. Notes on important events after reporting period
Notes on important events after reporting period is included in 11. Notes on important
events after reporting period of Notes on Consolidated Financial Statements. Accordingly,
the note is omitted.

- 67 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Audit Report
Audit Report on the Consolidated Financial Statements (Translation)
Independent Auditor’s Report
March 7, 2023
To the Board of Directors of Ryoyo Electro Corporation
Seiyo Audit Corporation
Minato-ku, Tokyo
Toshiya Nakaichi
Certified Public Accountant
Designated Partner andEngagement Partner
Masatoshi Nakamura
Certified Public Accountant
Designated Partner andEngagement Partner
Naoto Nakayama
Certified Public Accountant
Designated Partner andEngagement Partner
Audit Opinion
Pursuant to Article 444, paragraph (4) of the Companies Act, we have audited theconsolidated financial statements of Ryoyo Electro Corporation, which comprise theconsolidated balance sheets, the consolidated statement of income, the consolidated
statement of changes in net assets and the notes to the consolidated financial statements
applicable to the fiscal year from February 1, 2022 through January 31, 2023.
In our opinion, the consolidated financial statements referred to above present fairly, in allmaterial respects, the financial position and results of operations of the corporate group,
which consisted of Ryoyo Electro Corporation and its consolidated subsidiaries, applicable- 68 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

to the fiscal year ended January 31, 2023 in accordance with accounting principles generally
accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan.
Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of our report.
We are independent of the Company and its consolidated subsidiaries in accordance with the
ethical requirements that are relevant to our audit of the consolidated financial statements inJapan, and we have fulfilled other ethical responsibilities as auditors. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Other Information
The other information comprises the business report and its supplementary schedules.
Management is responsible for the preparation and presentation of the other information.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ performance of their duties with regard to the design,
implementation, and maintenance of the reporting process for the other information.
Our opinion on the consolidated financial statements does not cover the other information,
and we do not express an opinion on the other information.
In connection with our audit of the consolidated financial statements, our responsibility is toread the other information and, in doing so, consider whether the other information ismaterially inconsistent with the consolidated financial statements or our knowledge obtainedin the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatementof this other information, we are required to report that fact.
There are no matters to report regarding the other information.
Responsibilities of Management, Audit & Supervisory Board Members and the Audit& Supervisory Board for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with accounting principles generally accepted in Japan.
This includes the maintenance and operation of internal control deemed necessary by- 69 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

management for the preparation and fair presentation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing
whether it is appropriate to prepare the consolidated financial statements with theassumption of a going concern, and in accordance with accounting principles generally
accepted in Japan, for disclosing, as necessary, matters related to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ performance of duties within the maintenance and operation of
the financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our responsibilities are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that expresses our opinion on the consolidated
financial statements based on our audit from an independent point of view. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the decisions of users of these consolidated
financial statements.
In accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit process to perform thefollowing:・ Identifying and assessing the risks of material misstatement, whether due to fraud or
error, and designing and performing audit procedures responsive to those risks.
Selecting audit procedures to be applied is at the discretion of the auditor. Obtaining
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ When auditing the consolidated financial statements, obtaining an understanding ofinternal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances in making risk assessments, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control.
・ Evaluating the appropriateness of accounting policies used by management and their
method of application, as well as the reasonableness of accounting estimates made bymanagement and related notes thereto.
・ Concluding on the appropriateness of preparing the consolidated financial statementswith the assumption of a going concern by management, and based on the audit- 70 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s ability to continue as a going
concern. If we conclude that a material uncertainty related to the assumption of a going
concern exists, we are required to draw attention in our auditor’s report to the notes tothe consolidated financial statements or, if the notes to the consolidated financial
statements on material uncertainty are inadequate, to express a qualified opinion withexceptions on the consolidated financial statements. Our conclusions are based on theaudit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Company to cease to continue as a going concern.
・ Evaluating whether the presentation of the consolidated financial statements and notes
to the consolidated financial statements are in accordance with accounting standards
generally accepted in Japan, as well as evaluate the presentation, structure, and content
of the consolidated financial statements, including the related notes thereto, andwhether the consolidated financial statements fairly present the underlying transactions
and accounting events.
・ Obtaining sufficient and appropriate audit evidence regarding the financial informationof the Company and its consolidated subsidiaries to express an opinion on the
consolidated financial statements.
We are responsible for the direction, supervision and performance of the audit of theconsolidated financial statements. We remain solely responsible for our audit opinion.
We report to the Audit & Supervisory Board Members and the Audit & Supervisory Board
regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify
during our audit process, and other matters required by auditing standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory
Board with a statement that we have complied with relevant ethical requirements in Japan
regarding independence, and will communicate with them all relationships and other mattersthat may reasonably be deemed to bear on our independence, and where applicable, related
safeguards in order to eliminate or reduce obstruction factors.
Conflicts of Interest
We or engagement partners have no interests in the Company and its consolidated
subsidiaries, which should be stated in compliance with the Certified Public Accountants
Act.
- 71 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Audit Report on the Non-consolidated Financial Statements (Translation)
Independent Auditor’s Report
March 7, 2023
To the Board of Directors of Ryoyo Electro Corporation
Seiyo Audit Corporation
Minato-ku, Tokyo
Toshiya Nakaichi
Certified Public Accountant
Designated Partner andEngagement Partner
Masatoshi Nakamura
Certified Public Accountant
Designated Partner andEngagement Partner
Naoto Nakayama
Certified Public Accountant
Designated Partner andEngagement Partner
Audit Opinion
Pursuant to Article 436, paragraph (2), item (1) of the Companies Act, we have audited thenon-consolidated financial statements of Ryoyo Electro Corporation, which comprise thenon-consolidated balance sheets, the non-consolidated statement of income, the nonconsolidated statement of changes in net assets, the notes to the non-consolidated financial
statements and the supplementary schedules (hereinafter referred to as the non-consolidated
financial statements, etc.) applicable to the 63rd term from February 1, 2022 throughJanuary 31, 2023.
In our opinion, the non-consolidated financial statements, etc. referred to above present
fairly, in all material respects, the financial position and results of operations of the Ryoyo- 72 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Electro Corporation applicable to the fiscal year ended January 31, 2023 in accordance withaccounting principles generally accepted in Japan.
Basis for Audit Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan.
Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Non-consolidated Financial Statements, etc. section of
our report. We are independent of the Company in accordance with the ethical requirementsthat are relevant to our audit of the non-consolidated financial statements, etc. in Japan, andwe have fulfilled our ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.
Other Information
The other information comprises the business report and its supplementary schedules.
Management is responsible for the preparation and presentation of the other information.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ performance of their duties with regard to the design,
implementation, and maintenance of the reporting process for the other information.
Our opinion on the non-consolidated financial statements, etc. does not cover the otherinformation and we do not express an opinion on the other information.
In connection with our audit of the non-consolidated financial statements, etc., our
responsibility is to read the other information and, in doing so, consider whether the otherinformation is materially inconsistent with the non-consolidated financial statements, etc. or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatementof this other information, we are required to report that fact.
There are no matters to report regarding the other information.
Responsibilities of Management, Audit & Supervisory Board Members and the Audit& Supervisory Board for the Non-Consolidated Financial Statements, etc.
Management is responsible for the preparation and fair presentation of the non-consolidated
financial statements, etc. in accordance with accounting principles generally accepted inJapan. This includes the maintenance and operation of internal control deemed necessary by- 73 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

management for the preparation and fair presentation of the non-consolidated financial
statements, etc. that are free from material misstatement, whether due to fraud or error.
In preparing the non-consolidated financial statements, etc., management is responsible forassessing whether it is appropriate to prepare the non-consolidated financial statements, etc.,with the assumption of a going concern, and in accordance with accounting principles
generally accepted in Japan, for disclosing, as necessary, matters related to going concern.
Audit & Supervisory Board Members and the Audit & Supervisory Board are responsible
for overseeing the Directors’ performance of duties within the maintenance and operation of
the financial reporting process.
Auditor’s Responsibilities for the Audit of the Non-Consolidated Financial Statements,
etc.
Our responsibilities are to obtain reasonable assurance about whether the non-consolidated
financial statements, etc. as a whole are free from material misstatement, whether due tofraud or error, and to issue an auditor’s report that expresses our opinion on the nonconsolidated financial statements, etc. based on our audit from an independent point of view.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the decisions of users of these
non-consolidated financial statements, etc.
In accordance with auditing standards generally accepted in Japan, we exercise professional
judgment and maintain professional skepticism throughout the audit process to perform thefollowing:・ Identifying and assessing the risks of material misstatement, whether due to fraud or
error, and designing and performing audit procedures responsive to those risks.
Selecting audit procedures to be applied is at the discretion of the auditor. Obtaining
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ When auditing the non-consolidated financial statements, etc., obtaining an
understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances in making risk assessments, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control.
・ Evaluating the appropriateness of accounting policies used by management and their
method of application, as well as the reasonableness of accounting estimates made bymanagement and related notes thereto.
- 74 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

・ Concluding on the appropriateness of preparing the non-consolidated financial
statements, etc. with the assumption of a going concern by management, and based on
the audit evidence obtained, whether a material uncertainty exists related to events orconditions that may cast significant doubt on the Company’s ability to continue as agoing concern. If we conclude that a material uncertainty related to the assumption of agoing concern exists, we are required to draw attention in our auditor’s report to thenotes to the non-consolidated financial statements, etc. or, if the notes to the nonconsolidated financial statements on material uncertainty are inadequate, to express aqualified opinion with exceptions on the non-consolidated financial statements, etc.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’sreport. However, future events or conditions may cause the Company to cease tocontinue as a going concern.
・ Evaluating whether the presentation of the non-consolidated financial statements, etc.
and notes to the non-consolidated financial statements, etc. are in accordance withaccounting standards generally accepted in Japan, as well as evaluate the presentation,
structure, and content of the non-consolidated financial statements, etc. including therelated notes thereto, and whether the non-consolidated financial statements, etc. fairly
present the underlying transactions and accounting events.
We report to the Audit & Supervisory Board Members and the Audit & Supervisory Board
regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify
during our audit process, and other matters required by auditing standards.
We also provide the Audit & Supervisory Board Members and the Audit & Supervisory
Board with a statement that we have complied with relevant ethical requirements in Japan
regarding independence, and will communicate with them all relationships and other mattersthat may reasonably be deemed to bear on our independence, and where applicable, related
safeguards in order to eliminate or reduce obstruction factors.
Conflicts of Interest
We or engagement partners have no interests in the Company, which should be stated incompliance with the Certified Public Accountants Act.

- 75 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

Audit Report of the Audit & Supervisory Board
Audit Report
With respect to the Directors’ performance of their duties during the 63rd term (fromFebruary 1, 2022 to January 31, 2023), the Audit & Supervisory Board has prepared thisaudit report, upon deliberations based on the audit reports prepared by each of the Audit &Supervisory Board Members, and hereby reports as follows.
1.

Method and Content of Audit by Audit & Supervisory Board Members and the
Audit & Supervisory Board(1) The Audit & Supervisory Board formulated audit policies, assignment of duties, etc.,
received reports from each of the Audit & Supervisory Board Members regarding the
progress and the results of their audit, received reports from the Directors, etc., and the
Accounting Auditor regarding the performance of their respective duties, and requested
further explanation as necessary.
(2) In conformity with the Standards of Audit by Audit & Supervisory Board Members
established by the Audit & Supervisory Board, and in accordance with the audit
policies and assignment of duties, etc., each of the Audit & Supervisory Board
Members communicated with the Directors, the Internal Auditing Department andother employees, etc., and endeavored to collect information and maintain and improve
the audit environment. Each of the Audit & Supervisory Board Members executed theiraudits using the methods described below:(i)

We attended the meetings of the Board of Directors and other important meetings,
received reports on the status of performance of duties from the Directors andemployees, etc. and requested explanations as necessary, inspected important
approval documents, and investigated the status of the corporate affairs and assets
at the head office and other principal business locations. With respect to thesubsidiaries, we communicated and exchanged information with the Directors andAudit & Supervisory Board Members, etc. of the subsidiaries and received fromthe subsidiaries reports on their respective operations as necessary.

(ii) We received reports on a regular basis from Directors and employees, etc.,
requested explanations as necessary, and provided opinions with respect to matters
mentioned in the business report. Such matters consist of the content of the Boardof Directors’ resolutions regarding the development and maintenance of the- 76 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

system to ensure that the Directors’ performance of their duties complied withapplicable laws and regulations and the Articles of Incorporation of the Company
and other systems that are set forth in Article 100, paragraphs (1) and (3) of theRegulations for Enforcement of the Companies Act as being necessary forensuring the appropriateness of the corporate affairs of a stock company and thecorporate group consisting of its subsidiaries, and the systems developed andmaintained based on such resolutions (internal control systems).
(iii) We further monitored and examined whether the Accounting Auditor maintained
their independence and conducted the audit in an appropriate manner, as well as
received reports concerning the performance of their duties and obtained
explanations as necessary from the Accounting Auditor. We also received noticefrom the Accounting Auditor that it had established “systems for ensuring that theperformance of the duties of financial auditor is being carried out correctly” (thematters set forth in the items of Article 131 of the Regulations on Corporate
Accounting) in accordance with the “Quality Control Standards for Auditing”(Business Accounting Council, October 28, 2005), and requested explanations asnecessary.
Based on the above methods, we examined the business report and the
supplementary schedules thereto, and the non-consolidated financial statements(the non-consolidated balance sheets, the non-consolidated statement of income,the non-consolidated statement of changes in net assets, and notes to the nonconsolidated financial statements) and the supplementary schedules thereto, as
well as the consolidated financial statements (the consolidated balance sheets, theconsolidated statement of income, the consolidated statement of changes in net
assets, and notes to the consolidated financial statements), for the fiscal year underconsideration.

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The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

2.

Results of Audit(1) Results of Audit of Business Report, etc.
(i)

We recognize that the business report and the supplementary schedules thereto
fairly present the status of the Company in conformity with the applicable laws
and regulations and the Articles of Incorporation of the Company.

(ii) We recognize that no misconduct or material fact constituting a violation of any
law or regulations or the Articles of Incorporation of the Company was found withrespect to the Directors’ performance of their duties.
(iii) We recognize that the Board of Directors’ resolutions with respect to the internal
control systems are appropriate. We did not find any matter to be mentioned withrespect to the content in the business report and Directors’ performance of theirduties concerning the internal control systems.
(2) Results of Audit of Non-consolidated Financial Statements and the Supplementary
Schedules
We recognize that the methods and results of audit performed by the Accounting
Auditor Seiyo Audit Corporation are appropriate.
(3) Results of Audit of Consolidated Financial Statements
We recognize that the methods and results of audit performed by the Accounting
Auditor Seiyo Audit Corporation are appropriate.
March 9, 2023
Audit & Supervisory Board of Ryoyo Electro Corporation
Full-time Audit & Supervisory Board Member
Hiroyuki Kanno
Outside Audit & Supervisory Board Member
Ryoji Kimura
Outside Audit & Supervisory Board Member
Kazumi Akiyama
Outside Audit & Supervisory Board Member
Motomi Oi- 78 -

The business combination described in this document involves securities of Japanese companies. The business combination is subject to disclosure requirements of Japanthat are different from those of the United States. Financial information included in this document, if any, was excerpted from financial statements prepared in accordancewith foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal securities laws, since the issuers are located in Japan and someor all of their officers and directors reside outside of the United States. You may not be able to sue a Japanese company or its officers or directors in a Japanese court forviolations of the U.S. securities laws. It may be difficult to compel a Japanese company and its affiliates to subject themselves to a U.S. court’s judgment. You should beaware that the issuer may purchase securities otherwise than under the business combination, such as in the open market or through privately negotiated purchases.
This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and theJapanese original, the original shall prevail. Ryoyo Electro Corporation and Ryosan Company, Limited assume no responsibility for this translation or for direct, indirect
or any other forms of damages arising from the translation.

<Reference>

Subsequent events regarding the Company and its corporate group after
receiving the audit report of the Audit & Supervisory Board

Conversion of Ryosan Company, Limited to an equity-method affiliate through theacquisition of additional shares
The Company resolved to additionally acquire some of the shares of Ryosan Company,
Limited, making it an equity-method affiliate, at the board meeting held on March 9, 2023,
and entered into a share transfer agreement with MUFG Bank, Ltd. and Sumitomo Mitsui
Banking Corporation. Based on the share transfer agreement, the Company acquired the
additional shares of the said company on March 10, 2023 as follows.
Number of shares acquired, acquisition price and state of shares held before and after
acquisition(1) Number of shares held before
acquisition(Number of voting rights: 43,847)
4,384,700(Proportion of voting rights held:
18.71%)*(Number of voting rights: 3,210)(2) Number of shares acquired(3) Acquisition price(4) Number of shares held after
acquisition*

321,000(Proportion of voting rights held:
1.37%)*¥1,000 million(Number of voting rights: 47,057)
4,705,700(Proportion of voting rights held:
20.08%)*

The figure shown for the proportion is as of March 10, 2023.

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