# EDGAR Filing Document

**Accession Number:** 0002060797
**File Stem:** 0000947871-25-000579
**Filing Date:** 2025-6
**Character Count:** 338680
**Document Hash:** 15c013b070b376af17e34e99b2a1873e
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000947871-25-000579.hdr.sgml**: 20250602

**ACCESSION NUMBER**: 0000947871-25-000579

**CONFORMED SUBMISSION TYPE**: CB

**PUBLIC DOCUMENT COUNT**: 12

**FILED AS OF DATE**: 20250602

**DATE AS OF CHANGE**: 20250602

**SUBJECT COMPANY**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** DAIDO KOGYO CO., LTD.
- **CENTRAL INDEX KEY:** 0002060797

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** CB
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 005-95017
- **FILM NUMBER:** 251013067

**BUSINESS ADDRESS:**
- **STREET 1:** I-197, KUMASAKA-MACHI
- **STREET 2:** KAGA-SHI
- **CITY:** ISHIKAWA
- **STATE:** M0
- **ZIP:** 922-8686
- **BUSINESS PHONE:** 81-761-72-1234

**MAIL ADDRESS:**
- **STREET 1:** I-197, KUMASAKA-MACHI
- **STREET 2:** KAGA-SHI
- **CITY:** ISHIKAWA
- **STATE:** M0
- **ZIP:** 922-8686
**FILED BY**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Tsubakimoto Chain Co.
- **CENTRAL INDEX KEY:** 0002059713

**ORGANIZATION NAME:**
- **EIN:** 366632760
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** CB

**BUSINESS ADDRESS:**
- **STREET 1:** NAKANOSHIMA MITSUI BUILDING, 6F
- **STREET 2:** 3-3-3 NAKANOSHIMA, KITA-KU
- **CITY:** OSAKA
- **STATE:** M0
- **ZIP:** 530-0005
- **BUSINESS PHONE:** 81-6-6441-0011

**MAIL ADDRESS:**
- **STREET 1:** NAKANOSHIMA MITSUI BUILDING, 6F
- **STREET 2:** 3-3-3 NAKANOSHIMA, KITA-KU
- **CITY:** OSAKA
- **STATE:** M0
- **ZIP:** 530-0005

**UNITED STATES<br> SECURITIES AND EXCHANGE COMMISSION<br> Washington, D.C. 20549** 

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FORM CB<br> TENDER OFFER/RIGHTS OFFERING NOTIFICATION FORM

Please place an X in the box(es) to designate the appropriate rule provision(s) relied upon to file this Form:

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| | |
|:---|:---|
| Securities Act Rule 801 (Rights Offering) | □ |
| Securities Act Rule 802 (Exchange Offer) | ⌧ |
| Exchange Act Rule 13e-4(h)(8) (Issuer Tender Offer) | □ |
| Exchange Act Rule 14d-1(c) (Third Party Tender Offer) | □ |
| Exchange Act Rule 14e-2(d) (Subject Company Response) | □ |
| Filed or submitted in paper if permitted by Regulation S-T Rule 101(b)(8) | □ |

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| |
|:---|
| <br> **DAIDO KOGYO KABUSHIKI KAISHA**<br>|
| (Name of Subject Company)<br>|
| **DAIDO KOGYO CO., LTD.** |
| (Translation of Subject Company's Name into English (if applicable)) |
| **Japan** |
| (Jurisdiction of Subject Company's Incorporation or Organization) |
| **Tsubakimoto Chain Co.** |
| (Name of Person(s) Furnishing Form) |
| **Common Stock** |
| (Title of Class of Subject Securities) |
| **N/A** |
| (CUSIP Number of Class of Securities (if applicable)) |
| **DAIDO KOGYO CO., LTD.**<br> **I-197, Kumasaka-machi,** <br> **Kaga-shi, Ishikawa, 922-8686**<br> **Japan**<br> **+81-761-72-1234**<br> **Attn: Mr. Kenshin Noguchi**<br>|
| (Name, Address (including zip code) and Telephone Number (including area code)<br> of Person(s) Authorized to Receive Notices and Communications on Behalf of Subject Company) |
| **N/A** |
| (Date Tender Offer/Rights Offering Commenced) |

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**PART I – INFORMATION SENT TO SECURITY HOLDERS**

**Item 1. Home Jurisdiction Documents** 

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| | |
|:---|:---|
| &nbsp;&nbsp;**Exhibit**<br> **<u>Number</u>** |  |
| &nbsp;&nbsp;99.1 | &nbsp;&nbsp;[Notice of Convocation of the 132nd Ordinary General Meeting of Shareholders (English translation)](ss4885108_ex9901.htm) |
| &nbsp;&nbsp;99.2 | &nbsp;&nbsp;[Reference Documents for the 132nd Ordinary General Meeting of Shareholders (English translation)](ss4885108_ex9902.htm) |

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**Item 2. Informational Legends**

The required legend is prominently included in the document(s) referred to in Item 1.

**PART II – INFORMATION NOT REQUIRED TO BE SENT TO SECURITY HOLDERS** 

N/A

**PART III – CONSENT TO SERVICE OF PROCESS**

Tsubakimoto Chain Co. submitted to the Securities and Exchange Commission a written irrevocable consent and power of attorney on Form F-X dated May 14, 2025.

**SIGNATURES** 

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

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| | |
|:---|:---|
|  | Tsubakimoto Chain Co.<br>/s/ Yasuhiro Akesaka |
|  | Name: Yasuhiro Akesaka |
|  | Title: Senior Executive Officer |
| Date: June 2, 2025 |  |

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## Exhibit 99.1

The business combination described in this document involve securities of a Japanese company. 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 issuer is located in Japan and some or 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 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.

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| | | | |
|:---|:---|:---|:---|
|  | <br> Security code 6373 | <br> Security code 6373 | <br> Security code 6373 |
|  | June 6, 2025 | June 6, 2025 | June 6, 2025 |
| To Shareholders | | | |
| | | I-197 Kumasaka-machi, Kaga City, Ishikawa | I-197 Kumasaka-machi, Kaga City, Ishikawa |
| | | Daido Kogyo Co., Ltd. | Daido Kogyo Co., Ltd. |
| | | President | Hirofumi Araya |

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Notice of Convocation of the 132nd Ordinary General Meeting of Shareholders

We would like to express our sincere gratitude for your continued support.

You are cordially invited to attend the 132nd Annual General Meeting of Shareholders of DAIDO KOGYO CO., LTD. (the "Company"). The meeting will be held as described below.

If you are unable to attend the Meeting, you can exercise your voting rights in writing (by mail) or via the Internet, etc. Please read the attached Reference Documents for the General Meeting of Shareholders and exercise your voting rights by 5:00 p.m., Monday, June 23, 2025 in reference to the "Information on the Exercise of Voting Rights" below.

In convening this General Meeting of Shareholders, we have taken the measure of providing electronic information for the contents of the reference documents for the General Meeting of Shareholders, etc. (items to be provided electronically), and posted the relevant information on our website on the Internet. Please access the following website for the information.

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;Our website: https://www.did-daido.co.jp/ | ![](image_001.jpg) |

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(Please access the website above and select "Investor Relations" and then "General Meeting of Shareholders Information" from the menu.)

In addition to our website, the items to be provided electronically are also posted on the website of the Tokyo Stock Exchange (TSE), which can be found at the following link.

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|:---|:---|
| &nbsp;&nbsp;&nbsp; Tokyo Stock Exchange Website (TSE Company Announcements Service)<br> https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show | ![](image_002.jpg) |

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(Access the TSE website above, enter "Daido Kogyo" in the "Issue name (Company name)" field or our securities code "6373" in the "Code" field, and search for "Daido Kogyo" or "6373" in the "Code" field. Then, select "Basic Information" and then "Documents for Public Inspection/PR Information" and confirm the "Notice of Convocation of the General Meeting of Shareholders/Materials for General Meeting of Shareholders" under "Documents for Public Inspection.")

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| | | |
|:---|:---|:---|
| 1. | Date and Time | &nbsp;&nbsp;&nbsp;&nbsp;Tuesday, June 24, 2025, at 10:00 a.m. (Start of reception: 9:00 a.m.) |
| 2. | Place | &nbsp;&nbsp;&nbsp; Main Hall, 1st floor of CHIENKAN<br> I-197 Kumasaka-machi, Kaga City, Ishikawa<br> (<u>Please refer to the hall map at the end of this document.</u>) |
| 3. | Agenda of the Meeting |  |
|  | Matter to be reported | &nbsp;&nbsp;&nbsp;&nbsp;1. Business Report, Consolidated Financial Statements, and the results of the audits of the Consolidated Financial Statements by the Accounting Auditor and the Board of Company Auditors for the 132nd Fiscal Term (from April 1, 2024 to March 31, 2025) |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;2. Non-Consolidated Financial Statements for the 132nd Fiscal Term (from April 1, 2024 to March 31, 2025) |
|  | Proposals to be resolved |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Proposal No. 1 | &nbsp;&nbsp;&nbsp;&nbsp;Appropriation of surplus |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Proposal No. 2 | &nbsp;&nbsp;&nbsp;&nbsp;Election of three Directors (except Directors serving as the Audit and Supervisory Committee Members) |
|  | &nbsp;&nbsp;&nbsp;&nbsp;Proposal No. 3 | &nbsp;&nbsp;&nbsp; Approval of Share Exchange Agreement Between the Company and Tsubakimoto Chain<br>|

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4. Decisions in convening the General Meeting (Information on the Exercise of Voting Rights)

&nbsp;&nbsp;&nbsp;&nbsp;(1) If you exercise your voting rights in writing (by mail) and do not indicate
your approval or disapproval of a proposal, we will treat it as if you indicated your approval.

&nbsp;&nbsp;&nbsp;&nbsp;(2) If you exercise your voting rights multiple times via the Internet, etc.,
we will treat the last vote as a valid exercise of voting rights.

&nbsp;&nbsp;&nbsp;&nbsp;(3) If you exercise your voting rights both in writing (by mail) and via the Internet,
etc., we will treat the exercise of voting rights via the Internet, etc. as valid, regardless of the arrival date and time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ◎ If you attend the Meeting in person, please submit the enclosed Voting Rights Exercise Form at the reception.<br> ◎ In accordance with the revision of the Companies Act, the Company has decided that, in principle, shareholders should access the aforementioned Internet websites to confirm the items to be provided electronically, and that a document describing such items will be delivered to only shareholders who have made a request for document delivery by the record date. However, at this General Meeting of Shareholders, regardless of whether or not a request for document delivery is made, a written document describing the items to be provided electronically will be sent uniformly.<br> ◎Of the items to be provided electronically, the following are excluded from the documents to be delivered pursuant to the provision of the applicable laws and regulations and the Articles of Association of the Company. Therefore, the business report, consolidated financial statements, and financial statements described in the document to be delivered are part of the business report, consolidated financial statements, and financial statements audited by the accounting auditors or the Audit and Supervisory Committee when they prepared the Accounting Audit Report or Audit Report.<br> - "Status of accounting auditor," "Systems for ensuring the appropriateness of business and the status of operation of such systems," "Basic policy on corporate control," and "Policy on deciding dividends of surplus" in the Business Report<br> - "Statement of Changes in Shareholders' Equity" and "Notes to Consolidated Financial Statements" in the consolidated financial statements<br> - "Balance Sheet," "Statement of Income," "Statement of Changes in Net Assets," and "Notes to Non-Consolidated Financial Statements" in the financial statements.<br> - Report of Accounting Auditor on Consolidated Financial Statements<br> - Report of Accounting Auditor on Financial Statements<br> - Audit report of the Audit and Supervisory Committee<br> ◎ In the event of any modification to the items provided electronically, a notice of such modification, as well as the items before and after such modification, will be posted on the aforementioned Internet websites.<br> ◎ Please be advised that the results of resolutions in this General Meeting of Shareholders will be announced by posting them on the Company's website, instead of sending a written notice of resolution.<br> ◎ The "Year-End Report" (Shareholder Newsletter), which had been mailed with the notice of resolution, is also no longer issued to save paper resources, as its main information is disclosed on the Company's website and part of its contents is included in this document.<br>

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|:---|:---|
| ![](image_003.jpg) | Information on the Exercise of Voting Rights<br>The right to vote at general meetings of shareholders is an important right of shareholders.<br> Please exercise your voting rights after reviewing the Reference Documents for the General Meeting of Shareholders.<br> The following three methods are available for exercising voting rights. |

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|:---|:---|:---|
| ![](image_004.jpg) | ![](image_005.jpg) | ![](image_006.jpg) |
| If you attend the General Meeting of Shareholders | If you exercise voting rights by mail (postal delivery) | If you exercise voting rights through the Internet, etc. |
| Please present the Voting Rights Exercise Form at the reception desk. | Please indicate your approval or disapproval of the proposals on the Voting Rights Exercise Form in accordance with the following instructions and return it to us. | Please follow the instructions on the next page to enter your approval or disapproval of the proposals. |
| Date and Time | Exercise period | Exercise period |
| 10:00 a.m.<br> (Reception starts at 9:00 a.m.)<br> Tuesday, June 24, 2025 | Arrival by Monday, June 23, 2025, <br> 5:00 p.m. | By Monday, June 23, 2025, <br> 5:00 p.m. |

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Information on how to fill out the Voting Rights Exercise Form

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|:---|:---|
| ![](image_007.jpg) | &nbsp;&nbsp; Please enter your approval or disapproval for the proposals here.<br>Proposal No.1 and No.3<br> • When you approve:<br> >> Put the mark "○" in the "Approval" column.<br> • When you disapprove: <br> >> Put the mark "○" in the "Disapproval" column.<br>Proposal No.2<br> • When you approve all candidates:<br> >> Put the mark "○" in the "Approval" column.<br> • When you disapprove all candidates:<br> >> Put the mark "○" in the "Disapproval" column.<br> • When you disapprove some candidates:<br> >> Put the mark "○" in the "Approval" column and enter the numbers of candidates you disapprove. |

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\*The Voting Rights Exercise Form is a sample image.<br>

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| | |
|:---|:---|
| Guide to voting right exercise over the Internet, etc. | Guide to voting right exercise over the Internet, etc. |
| How to read QR Code<br> "Smart Exercise" | How to enter the voting code and password |
| You can log in to the website for exercising voting rights without entering your voting code and password. | Website for exercising voting rights https://www.web54.net |
| ![](image_008.jpg) Scan the QR code on the bottom right corner of the Voting Rights Exercise Form. \*"QR Code" is a registered trademark of DENSO WAVE INC. Follow the instructions on the screen to enter your approval or disapproval. | ![](image_009.jpg) Access the website for exercising voting rights. Click "Continue." Enter the "Voting Code" indicated on the Voting Rights Exercise Form. Enter "Voting Code." Click "Login." Enter the "password" indicated on the Voting Rights Exercise Form Enter "Password." Please set a new password to be used for voting. Click "Register." Follow the instructions on the screen to enter your approval or disapproval. \* The operation screen is a sample image. |

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Sumitomo Mitsui Trust Bank Transfer Agency Web Support Dial-in Number 0120 - 652 - 031 (Toll-free) (Inquiries accepted: 9:00 a.m. - 9:00 p.m.)

Institutional investors can use the platform for electronic exercise of voting rights for institutional investors, which is operated by ICJ, Inc.

Reference Documents for the General Meeting of Shareholders

**Proposal No.1: Appropriation of surplus**

The Company considers return of profits to shareholders as an important management policy and takes a policy on dividends to distribute dividends considering comprehensively full-year performance, management environment, and medium- to long-term reinforcement of financial standing with focus on maintenance of stable dividends.

Based on the above-mentioned policy, the appropriation of surplus shall be as follows.

&nbsp;&nbsp;&nbsp;&nbsp;1. Matters regarding year-end dividend

We would like to propose the year-end dividend for the 132<sup>nd</sup> Fiscal Term considering the current term's business performance and the necessity for internal reserves to prepare for future growth as follows.

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|:---|:---|
| &nbsp;&nbsp;[1] Type of dividend property: | &nbsp;&nbsp;Cash |
| &nbsp;&nbsp;[2] Matters regarding allocation of dividend property and the amount thereof: | &nbsp;&nbsp; **¥25** per common share<br> Total amount: ¥253,724,900 |
| &nbsp;&nbsp;[3] Effective date of surplus dividend: | June 25, 2025 |

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&nbsp;&nbsp;&nbsp;&nbsp;2. Matters regarding appropriation of other surplus

We would like to propose the appropriation of other surplus as follows to effectively use the surplus for capital investment for future business expansion as well as research and development activities addressing technological innovation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) Item and amount of decreased surplus

Earned surplus carried forward ¥500,000,000

ii) Item and amount of increased surplus

Special reserve fund ¥500,000,000

**Proposal No. 2: Election of three Directors (except Directors serving the Audit and Supervisory Committee)**

The term of office of all four (4) Directors (excluding Directors who are Audit and Supervisory Committee members; hereinafter the same shall apply in this proposal) will expire at the conclusion of this General Meeting of Shareholders.

In this regard, in order to enable the Board of Directors to make decisions strategically and flexibly, the Company proposes to reduce the number of Directors by one and elect three Directors.

Regarding this proposal, there was no particular opinion from the Audit and Supervisory Committee, who judged this proposal was appropriate. In addition, the Company made a resolution regarding this proposal at the Board of Directors meeting after discussions and replies at the voluntary nomination and compensation committee, with external directors, reported as independent director to the Tokyo Stock Exchange, taking more than half of its members and the role of its chairman.

The candidates for Directors are as follows.

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp; Candidate<br> No. | Name | Name | &nbsp;&nbsp;(References) | &nbsp;&nbsp;(References) |
| &nbsp;&nbsp; Candidate<br> No. | Name | Name | &nbsp;&nbsp;Responsibilities at the Company | &nbsp;&nbsp;Attendance to Board of Director's Meetings |
| 1 | &nbsp;&nbsp;Hirofumi Araya | &nbsp;&nbsp;&nbsp;&nbsp;Re-appointment | &nbsp;&nbsp;&nbsp; Representative Director<br> President Executive Officer CEO | &nbsp;&nbsp; 15/15<br> (100%) |
| 2 | &nbsp;&nbsp;Masanori Sanada | &nbsp;&nbsp;&nbsp;&nbsp;Re-appointment | &nbsp;&nbsp;&nbsp; Managing Director<br> Executive Officer Administration Div. Manager | &nbsp;&nbsp; 15/15<br> (100%) |
| 3 | &nbsp;&nbsp;Toshio Ishimura | &nbsp;&nbsp;&nbsp;&nbsp;Re-appointment | &nbsp;&nbsp;&nbsp; Director<br> Executive Officer<br> Industrial Products Div. Manager | &nbsp;&nbsp; 15/15<br> (100%) |

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp; Candidate<br> No. | Name<br> (Date of birth)<br> Sex | Career summary | Number of shares of the Company held |
| &nbsp;&nbsp;1 | Hirofumi Araya<br> (August 20, 1971) <br>Male <br>Re-appointment  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; April 2002 Joined Daido Kogyo Co., Ltd.<br> Sep. 2004 Sales Dept. Manager, Sales Div. of Daido Kogyo Co., Ltd.<br> June 2005 Automotive Technology and Sales Dept., Automotive Div.<br> June 2007 Executive Officer of Daido Kogyo Co., Ltd.<br> April 2008 Representative Director & President of Daido Sittipol Co., Ltd.<br> April 2010 Representative Director & President of D.I.D Asia Co., Ltd.<br> Sep. 2010 Representative Director & President of Daido India pvt. Ltd.<br> June 2011 Director and Technical Development Div.<br> Manager of Daido Kogyo Co., Ltd.<br> June 2013 Managing Director<br> In charge of Motorcycle / Automotive Div.<br> Director & Vice Chairman of Daido Sittipol Co., Ltd<br> June 2015 Representative Director & Vice President of Daido Kogyo Co., Ltd.<br> In charge of Research & Development Div. of Daido Kogyo Co., Ltd.<br> Director & Chairman of Daido Sittipol Co., Ltd. (to date)<br> June 2017 In charge of Business Strategy Div. and, Research & Development Div. of Daido Kogyo Co., Ltd.<br> June 2019 Representative Director & President of Daido Kogyo Co., Ltd. (to date)<br> In charge of Internal Control Audit Office<br> June 2021 Marketing Strategy Office Manager of Daido Kogyo Co., Ltd<br> June 2024 Executive Director of Daido Kogyo Co., Ltd. (to date)<br> CEO of Daido Kogyo Co., Ltd. (to date) | &nbsp;&nbsp; 17,304<br> shares |
| &nbsp;&nbsp;1 | Hirofumi Araya<br> (August 20, 1971) <br>Male <br>Re-appointment  | &nbsp;&nbsp; (Important concurrent position)<br> Director & Chairman of Daido Sittipol Co. Ltd | &nbsp;&nbsp; 17,304<br> shares |
| &nbsp;&nbsp;1 | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Hirofumi Araya has assumed various important posts including President and Representative Director of the Company's overseas subsidiaries in Asia, which is an important area for the Group. He has been engaging in the planning of business strategies in the Business Strategy Division, as well as actively leading the Development Division, toward development of growth markets/ growth areas and expansion of business areas/ technology areas of the Company. Thus, he has a great deal of work experience in the Company and the Group and knowledge on global business operations, etc., so we determined that he is continuously appropriate as a candidate for a director. | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Hirofumi Araya has assumed various important posts including President and Representative Director of the Company's overseas subsidiaries in Asia, which is an important area for the Group. He has been engaging in the planning of business strategies in the Business Strategy Division, as well as actively leading the Development Division, toward development of growth markets/ growth areas and expansion of business areas/ technology areas of the Company. Thus, he has a great deal of work experience in the Company and the Group and knowledge on global business operations, etc., so we determined that he is continuously appropriate as a candidate for a director. | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Hirofumi Araya has assumed various important posts including President and Representative Director of the Company's overseas subsidiaries in Asia, which is an important area for the Group. He has been engaging in the planning of business strategies in the Business Strategy Division, as well as actively leading the Development Division, toward development of growth markets/ growth areas and expansion of business areas/ technology areas of the Company. Thus, he has a great deal of work experience in the Company and the Group and knowledge on global business operations, etc., so we determined that he is continuously appropriate as a candidate for a director. |

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|:---|:---|:---|:---|
| &nbsp;&nbsp; Candidate<br> No. | Name<br> (Date of birth)<br> Sex | &nbsp;&nbsp;Career summary | &nbsp;&nbsp;Number of shares of the Company held |
| &nbsp;&nbsp;2 | Masanori Sanada<br> (January 7, 1962) <br>Male <br>Re-appointment  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; April 1984 Joined Daido Kogyo Co., Ltd.<br> June 2005 Administration Dept. Manager, Administration Div. of Daido Kogyo Co., Ltd.<br> June 2007 Corporate Planning Office Manager of Daido Kogyo Co., Ltd.<br> June 2013 Executive Officer of Daido Kogyo Co., Ltd.<br> Administration Div. Manager of Daido Kogyo Co., Ltd.<br> June 2015 Representative Director & President of Daido Sittipol Co., Ltd.<br> June 2019 Senior Executive Officer of Daido Kogyo Co., Ltd.<br> Administration Div. Manager of Daido Kogyo Co., Ltd.<br> June 2020 Director, Daido Kogyo Co., Ltd. (to date)<br> June 2021 Business Administration Div. Manager of Daido Kogyo Co., Ltd.<br> June 2022 Administration Division Manager (to date)<br> June 2024 Managing Director of Daido Kogyo Co., Ltd. (to date)<br> Executive Director of Daido Kogyo Co., Ltd. (to date) | &nbsp;&nbsp; 6,973<br> shares |
| &nbsp;&nbsp;2 | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Sanada has profound knowledge on finance and accounting based on his long-term experience of leading the administration and management planning departments. He also served the representative director of overseas subsidiaries and has extensive experiences and achieved results in management of the Company's Group. He currently serves, as Director, the Administration Division Manager, and we have determined that his experiences and results will be useful for management of the Company and decided that he is continuously appropriate as a candidate for director. | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Sanada has profound knowledge on finance and accounting based on his long-term experience of leading the administration and management planning departments. He also served the representative director of overseas subsidiaries and has extensive experiences and achieved results in management of the Company's Group. He currently serves, as Director, the Administration Division Manager, and we have determined that his experiences and results will be useful for management of the Company and decided that he is continuously appropriate as a candidate for director. | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Sanada has profound knowledge on finance and accounting based on his long-term experience of leading the administration and management planning departments. He also served the representative director of overseas subsidiaries and has extensive experiences and achieved results in management of the Company's Group. He currently serves, as Director, the Administration Division Manager, and we have determined that his experiences and results will be useful for management of the Company and decided that he is continuously appropriate as a candidate for director. |
| &nbsp;&nbsp;3 | Toshio Ishimura<br> (October 15, 1961) <br>Male <br>Re-appointment  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; April 1984 Joined Daido Kogyo Co., Ltd.<br> Dec. 2004 AS Business Dept. Manager of Daido Kogyo Co., Ltd.<br> June 2005 Manager, Corporate Planning Office of Daido Kogyo Co., Ltd.<br> Manager, Industrial Machinery Sales Dept. of D.I.D<br> June 2009 Industrial Machinery Sales Dept. Manager of D.I.D Co., Ltd.<br> June 2011 Director of D.I.D Co., Ltd.<br> June 2017 Executive Officer of Daido Kogyo Co., Ltd.<br> Industrial Products Div. Manager of Daido Kogyo Co., Ltd.<br> June 2019 Senior Executive Officer of Daido Kogyo Co., Ltd.<br> June 2020 Director, Daido Kogyo Co., Ltd. (to date)<br> June 2022 M&S Division Manager of Daido Kogyo Co., Ltd. (to date)<br> June 2024 Executive Director of Daido Kogyo Co., Ltd. (to date)<br> Industrial Products Div. Manager of Daido Kogyo Co., Ltd. (to date) | 4,649<br> shares |
| &nbsp;&nbsp;3 | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Ishimura has a great deal of business experience and knowledge based on his long term experience of leading the industrial machinery business as well as excellent capability and knowledge on corporate management through the experience of serving as a director of a domestic subsidiary, etc. He currently serves, as Director, Industrial Products Div. Manager, and we have determined that his experiences and results will be useful for management of the Company and decided that he is continuously appropriate as a candidate for director. | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Ishimura has a great deal of business experience and knowledge based on his long term experience of leading the industrial machinery business as well as excellent capability and knowledge on corporate management through the experience of serving as a director of a domestic subsidiary, etc. He currently serves, as Director, Industrial Products Div. Manager, and we have determined that his experiences and results will be useful for management of the Company and decided that he is continuously appropriate as a candidate for director. | &nbsp;&nbsp;&nbsp; The reasons why the Company elects him as a candidate for Director:<br> Mr. Ishimura has a great deal of business experience and knowledge based on his long term experience of leading the industrial machinery business as well as excellent capability and knowledge on corporate management through the experience of serving as a director of a domestic subsidiary, etc. He currently serves, as Director, Industrial Products Div. Manager, and we have determined that his experiences and results will be useful for management of the Company and decided that he is continuously appropriate as a candidate for director. |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Notes) 1. A director candidate Mr. Hirofumi Araya serves concurrently as Chairman and Director of Daido Sittipol
Co., Ltd., which engages in the business falling under the same category as the Company's and has business (chains and other products)
with the Company. Additionally, the Company provides a guarantee for its loan of the funds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. There are no special interests between the other director candidates and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. D.I.D Co., Ltd. was a consolidated subsidiary of the Company but merged into the Company as of April 1,
2018. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The Company has entered into a liability insurance contract with an insurance company as stipulated in
Paragraph 1, Article 430-3, of the Companies Act. The summary of the contents of this insurance contract is described in "2.(3) Status
of Company Officers" of the Business Report. When the election of the candidates for director is approved, they will continue to
be covered as an insured person under the relevant insurance contract.

[Reference] Skill matrix of the Board of Directors after the General Meeting of Shareholders

(Note) The skill matrix of the Board of Directors will be as follows if the candidates listed in this Notice of Convocation are elected as proposed.

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name | Corporate management<br> Business strategy | Marketing and sales | Technology, IT, R&D | Finance | Legal affairs and risk management | Personnel and labor affairs and human-resource development | Global experience | ESG, sustainability |
| &nbsp;&nbsp;&nbsp;Director | &nbsp;&nbsp;Hirofumi Araya | | ● | ● | ● | ● | ● | | ● | ● |
| &nbsp;&nbsp;&nbsp;Director | &nbsp;&nbsp;Masanori Sanada | | ● | | | ● | ● | ● | ● | ● |
| &nbsp;&nbsp;&nbsp;Director | &nbsp;&nbsp;Toshio Ishimura | | | ● | ● | | | | | |
| &nbsp;&nbsp;&nbsp;Audit and Supervisory Committee Member | &nbsp;&nbsp;Kiyohiro Kajiya | | | | ● | | ● | | | ● |
| &nbsp;&nbsp;&nbsp;Audit and Supervisory Committee Member | &nbsp;&nbsp;Seiji Sakashita | Outside<br> (Independent) | | | | ● | ● | | | ● |
| &nbsp;&nbsp;&nbsp;Audit and Supervisory Committee Member | &nbsp;&nbsp;Shoji Takechi | Outside<br> (Independent) | | | ● | | | | | |
| &nbsp;&nbsp;&nbsp;Audit and Supervisory Committee Member | &nbsp;&nbsp;Miho Yamamoto | Outside<br> (Independent) | ● | | | | | ● | ● | ● |
| &nbsp;&nbsp;&nbsp;Audit and Supervisory Committee Member | &nbsp;&nbsp;Jun Akimoto | Outside<br> (Independent) | ● | | | ● | ● | ● | ● | |

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**Proposal No. 3: Approval of Share Exchange Agreement Between the Company and Tsubakimoto Chain**

The Company and Tsubakimoto Chain Co. ("Tsubakimoto Chain"; together with the Company, the "Companies") resolved at their respective Board of Directors' meetings on May 14, 2025 to integrate business between the Companies and to conduct a share exchange (the "Share Exchange") through which Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange and the Company will become a wholly-owned subsidiary company resulting from the share exchange, and have executed a business integration agreement (the "Business Integration Agreement") and a share exchange agreement (the "Share Exchange Agreement") between the Companies on May 14, 2025.

Accordingly, in this proposal, the Company requests the approval of the Share Exchange Agreement.

Subject to approvals by the relevant authorities under applicable competition laws in Japan and Thailand, the Share Exchange will be conducted, in the case of Tsubakimoto Chain, by way of a simplified share exchange that does not require approval by a resolution of its general shareholders' meeting, as prescribed in Article 796, Paragraph 2 of the Companies Act, and in the case of the Company, with the Share Exchange being approved by a resolution at this general shareholders' meeting. The effective date of the Share Exchange is scheduled to be January 1, 2026.

Prior to the effective date of the Share Exchange, the Company plans to delist its shares of common stock (the "Company Shares") from the Standard Market of the Tokyo Stock Exchange, Inc. ("TSE") on December 29, 2025 (with a final trading date of December 26, 2025).

The reasons for conducting the Share Exchange and the outline and other details of the Share Exchange are as follows.

&nbsp;&nbsp;&nbsp;&nbsp;1. Reasons for Conducting the Share Exchange

The Tsubaki Group (meaning the corporate group consisting of Tsubakimoto Chain, and 78 subsidiaries and eight affiliates of Tsubakimoto Chain (as of March 31, 2025); the same applies hereafter) is developing its business with a focus on four main businesses, namely Chain Operations, which is its original business, along with Motion Control Operations, Mobility Operations, and Materials Handling Operations, and has been actively pursuing alliances with other companies. Tsubakimoto Chain has acquired and consolidated as its subsidiaries the following companies: in 2006, Yamakyu Chain Co., which manufactures and sells plastic chains; in 2010, KABELSCHLEPP GmbH, which manufactures and sells cable and hose support and guiding devices; in 2012, the Mayfran Holdings Group, which manufactures and sells metal chip conveying and coolant treatment devices; and in 2018, Central Conveyor Company, LLC, which manufactures and sells material handling systems. Tsubakimoto Chain has achieved its business growth both by expanding its own business and by leveraging synergies through integration with such other companies.

Meanwhile, the Company Group (meaning the corporate group consisting of the Company, and 20 subsidiaries and six affiliates of the Company (as of March 31, 2025); the same applies hereinafter) originated from Araya Shokai founded in 1903, and was established as Kokueki Chain Co., Ltd. in 1933 and later renamed to its current name, Daido Kogyo Co., Ltd., in 1938. Currently, the Company is primarily engaged in the motorcycle parts business, as well as the automotive parts business, the industrial machinery business, and the manufacture and sale of products such as assistive devices, as well as the provision of related services. In addition, the Company Group has established itself as the leading manufacturer and seller of chains for motorcycles in Japan by continuing, up to the present, to provide valuable products that meet the ever-changing needs of society.

In recent years, the domestic chain industry has been undergoing restructuring in response to changes in the market environment, such as an increase in foreign capital inflows. In addition, chain manufacturers from China and South Korea are aggressively entering the Japanese market, mainly through promotions at major domestic exhibitions, and there are some cases where customers of the Companies are considering entering into transactions with such chain manufacturers from China and South Korea as suppliers. Furthermore, restructuring and mergers among chain manufacturers in the United States and Europe are progressing actively, and the Companies anticipate that global competition will intensify only further. Moreover, the Companies are expected to respond to market demands for achieving a decarbonized society, such as reducing greenhouse gas emissions; thus, the business environment is also undergoing major changes.

Under these circumstances, Tsubakimoto Chain repeatedly conducted internal examinations with the belief that aiming to combine the comprehensive strengths of the Companies and strengthen their competitiveness in the global market by a business integration with the Company will lead to protecting Japanese industry, ultimately contributing to the development of global industry. As a result of Tsubakimoto Chain's examinations, it was concluded that executing a share exchange, with Tsubakimoto Chain becoming a wholly-owning parent company resulting from the share exchange and the Company becoming a wholly-owned subsidiary company resulting from the share exchange, would enable the Companies to integrate their management resources, create an efficient operating structure, improve the profitability of the entire group, and strengthen management. Tsubakimoto Chain has determined that the Companies share many commonalities in their medium-to-long-term management visions, and that the integration of their management resources will enhance the feasibility of achieving their goals in the areas of reducing environmental impact and developing innovative products aimed at achieving carbon neutrality. In addition, after comprehensively considering the structure of the business integration with the Company from multiple perspectives, including the impact on the interests of shareholders of Tsubakimoto Chain and shareholders of the Company, Tsubakimoto Chain concluded that the best course of action for enhancing the corporate value of the Companies is for Tsubakimoto Chain to make the Company a wholly-owned subsidiary company of Tsubakimoto Chain through a share exchange, thereby achieving an optimal organizational structure, expanding business opportunities through information consolidation, streamlining duplicate operations across locations, and implementing optimal financial strategies. Accordingly, on December 13, 2024, Tsubakimoto Chain made a proposal to the Company for a business integration plan based on the Share Exchange.

Upon receiving the above proposal from Tsubakimoto Chain, the Company began concrete discussions regarding the Share Exchange. In commencing these concrete discussions of the Share Exchange, on December 20, 2024, the Company established a special committee (the "Special Committee") composed of independent members who have no interests in Tsubakimoto Chain, and put in place a system for having concrete discussions including the appointment of external experts, for the purpose of eliminating any arbitrariness or possible conflicts of interest in the decision-making process of the Company's Board of Directors regarding the Share Exchange and thereby ensuring its fairness by considering the Share Exchange from a viewpoint independent from those of the Company and Tsubakimoto Chain, and also for the purpose of obtaining opinions on whether the decision of the Company's Board of Directors to proceed with the Share Exchange would be disadvantageous to minority shareholders. Under this system, careful consideration of the proposal from Tsubakimoto Chain led the Company to recognize that the Share Exchange would contribute to the enhancement of its corporate value, based on the belief that the Share Exchange would lead to the creation of new business opportunities by enabling the Companies' groups to leverage each other's management resources, including human resources, assets, technologies, and know-how, and to achieve optimal financial strategies for the Companies' groups as a whole, thereby making it possible for the Companies to flexibly implement their management strategies from a medium- to long-term perspective.

It is expected that the following synergies and advantages will be produced from business integration via the Share Exchange for the Companies:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Expansion of overseas business

While Tsubakimoto Chain manufactures general industrial chains in North America, Europe, China, and Taiwan, it is proceeding with full-scale entry into the Global South market, represented by India, South America, and Africa, where future market expansion is expected. As the Company already has manufacturing bases in the Global South market, Tsubakimoto Chain believes that it will be able to further expand its business with the Company in this market. In addition, by utilizing Tsubakimoto Chain's strong business base in North America and Europe, the Company will also be able to leverage the Companies' strengths to expand its overseas operations, including the expansion of sales channels for its products. Furthermore, the Companies believe that joint expansion by the Companies in regions such as Africa and the Middle East, where market development and expansion are expected in the future, will enable further global expansion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Cross-selling in existing businesses

It is believed that cross-selling that leverages the strengths of the Companies will be possible, which would entail: the utilization of the Tsubaki Group's distribution channels to expand sales of developed products, including the Company's motorcycle products and general-purpose seal chains; the sale of Tsubakimoto Chain's general industrial products, such as top chains and motion control products, through the Company's sales channels; and collaborations involving Tsubakimoto Chain's conveyor system technology for the food and beverage industry and the Company's vacuum conveyor technology.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) New businesses and joint development

Tsubakimoto Chain certifies products that contribute to the solution of social issues as "sustainable products," and is actively enhancing the development and sale of such products. Specifically, such products include "eco-products" that contribute to the environment, such as wood chips and fuel conveyors for biomass power generation, V2X-compatible charging and discharging devices, and electric-assist three-wheeled bicycles, as well as "social products" that contribute to society, such as automatic sorting devices, unmanned transport vehicles, and arc chain actuators. the Company also focuses on the development of "sustainability contribution products" such as electric motorcycles and micro hydroelectric power generators. The Company also aims to further expand its existing assistive device-related business. The Company will be able to achieve the joint development of these sustainable products in cooperation with Tsubakimoto Chain through the Share Exchange.

In terms of technology, the Companies anticipate that combining their chain-related products, production, and manufacturing technologies will make it possible to create new products and further enhance their position in the global chain market. The Companies also believe that they will be able to work together to address issues such as reducing carbon dioxide emissions and utilizing waste heat in the manufacturing stage.

In addition to the business synergies that the Share Exchange will produce, it is anticipated that following the Share Exchange, the minority shareholders of the Company will be able to benefit economically from the increased corporate value resulting from the synergies between the Company Group and the Tsubaki Group, as shareholders of Tsubakimoto Chain which includes the Company group companies. Moreover, given the increasing burdens of supporting and bearing the costs of the development of the necessary organizational structure for a listed company, it is expected that this will also lead to a reduction in the workload and costs associated with maintaining the Company's listing.

Although the Company will be delisted as a result of the Share Exchange and lose the benefits generally obtained from being listed, such as the diversification of financing options through equity financing, the improvement of creditworthiness and the positive effects on recruiting activities, and the improvement of financial reliability through accounting audits, as a member of Tsubaki Group, the Company will be able to raise funds by utilizing the Tsubaki Group's group financing, and therefore, there will be virtually no disadvantages to fundraising resulting from the loss of equity financing options. In addition, since Tsubakimoto Chain, which is listed on the TSE Prime Market, will become the wholly-owning parent company of the Company, the risk of a decline in social credibility due to the delisting of the Company is considered to be low, and the negative impact on recruitment and other areas is also expected to be minimal. Moreover, even after becoming a wholly-owned subsidiary company of Tsubakimoto Chain, the Company will remain subject to consolidated financial audits for Tsubaki Group, thereby making it possible to maintain financial reliability. Therefore, the disadvantages associated with delisting are highly limited, and the benefits associated with the Share Exchange are believed to far outweigh the disadvantages. Furthermore, Tsubakimoto Chain intends to retain, in principle, the employment of employees of the Company and its subsidiaries, and make efforts to ensure that the terms of employment of such employees are not substantially less advantageous than the existing employment terms as a member of the Tsubaki Group, after the Share Exchange, and believes that the motivation of the employees of the Company and its subsidiaries will be further increased because they will be able to engage in business as members of the Tsubaki Group, which is listed on the TSE Prime Market, and will also be able to engage in a wider range of business activities than before.

After careful discussion between the Companies based on the above points, the Companies agreed that the Company's becoming a wholly-owned subsidiary company of Tsubakimoto Chain through the Share Exchange would contribute to the enhancement of the corporate value of the Companies, and after consideration and discussion of various terms and conditions, including the Share Exchange Ratio (as defined in "(Note 1) Share allotment ratio" in "(I) Allotments in connection with the Share Exchange" in "(1) Matters concerning the appropriateness of the total number of exchange consideration" in Section 3. "Matters Concerning the Appropriateness of Exchange Consideration" below), the Companies reached an agreement. Then on May 14, 2025, the Boards of Directors of the Companies resolved to implement the Share Exchange for the purpose of making the Company a wholly-owned subsidiary company of Tsubakimoto Chain, and executed the Business Integration Agreement and the Share Exchange Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;2. Outline of the Terms of the Share Exchange Agreement

The terms of the Share Exchange Agreement executed as of May 14, 2025 between the Company and Tsubakimoto Chain are as follows.

Share Exchange Agreement

Tsubakimoto Chain Co. ("Tsubakimoto Chain") and Daido Kogyo Co., Ltd. ("Daido Kogyo") hereby enter into this Share Exchange Agreement (this "Agreement") as of May 14, 2025 as follows.

Article 1 (Share Exchange)

In accordance with the provisions of this Agreement, Tsubakimoto Chain and Daido Kogyo shall execute a share exchange (the "Share Exchange") through which Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange and Daido Kogyo will become a wholly-owned subsidiary company resulting from the share exchange, and Tsubakimoto Chain shall acquire all the issued shares of Daido Kogyo (excluding the shares of Daido Kogyo held by Tsubakimoto Chain; the same applies hereinafter) via the Share Exchange.

Article 2 (Trade Name and Address)

The trade names and addresses of Tsubakimoto Chain and Daido Kogyo are as follows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Tsubakimoto Chain (a wholly-owning parent company resulting from the share exchange)

Trade name: Tsubakimoto Chain Co.

Address: 3-3 Nakanoshima 3-chome, Kita-ku, Osaka-shi, Osaka

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Daido Kogyo (a wholly-owned subsidiary company resulting from the share exchange)

Trade name: Daido Kogyo Co., Ltd.

Address: i-197 Kumasakamachi, Kaga-shi, Ishikawa

Article 3 (Shares to be Delivered upon the Share Exchange and Allotment Thereof)

&nbsp;&nbsp;&nbsp;&nbsp;1. Upon the Share Exchange, Tsubakimoto Chain shall deliver to shareholders of Daido Kogyo (excluding Tsubakimoto
Chain; the "Shareholders Subject to Allotment") at the time immediately prior to Tsubakimoto Chain's acquisition via
the Share Exchange of all the issued shares of Daido Kogyo (the "Record Time") the number of shares of common stock of Tsubakimoto
Chain calculated by multiplying the total number of the shares of Daido Kogyo held by the shareholders by 0.65, in exchange for the shares
of Daido Kogyo held by them.

&nbsp;&nbsp;&nbsp;&nbsp;2. Upon the Share Exchange, Tsubakimoto Chain shall allot to the Shareholders Subject to Allotment 0.65 shares
of common stock of Tsubakimoto Chain per share of Daido Kogyo held by them.

&nbsp;&nbsp;&nbsp;&nbsp;3. If the number of shares of common stock of Tsubakimoto Chain to be allotted to the Shareholders Subject
to Allotment in accordance with the provisions of the preceding two paragraphs includes a fraction of less than one share, Tsubakimoto
Chain shall handle such fraction in accordance with the provisions of Article 234 of the Companies Act and other relevant laws and regulations.

Article 4 (Matters Concerning Capital and Reserves of Tsubakimoto Chain)

The amount of capital, capital reserves and retained earnings reserves of Tsubakimoto Chain to be increased by the Share Exchange shall be the amount separately determined by Tsubakimoto Chain in accordance with the provisions of Article 39 of the Regulations on Corporate Accounting.

Article 5 (Effective Date of Share Exchange)

The effective date of the Share Exchange (the "Effective Date") shall be January 1, 2026; provided, however, that the Effective Date may be changed by mutual consultation and agreement between Tsubakimoto Chain and Daido Kogyo if necessary due to the progress of the procedures for the Share Exchange or for other reasons.

Article 6 (Approval of this Agreement)

&nbsp;&nbsp;&nbsp;&nbsp;1. Pursuant to the provisions of the main text of Article 796, Paragraph 2 of the Companies Act, Tsubakimoto
Chain shall execute the Share Exchange without obtaining approval of this Agreement by a resolution of the general shareholders'
meeting as prescribed in Article 795, Paragraph 1 of the Companies Act; provided, however, that if approval of this Agreement by a resolution
of the general shareholders' meeting becomes necessary under Article 796, Paragraph 3 of the Companies Act, Tsubakimoto Chain shall
seek approval of this Agreement by a resolution of the general shareholders' meeting by the day immediately prior to the Effective
Date.

&nbsp;&nbsp;&nbsp;&nbsp;2. Daido Kogyo shall seek approval of this Agreement by a resolution of the general shareholders' meeting
as prescribed in Article 783, Paragraph 1 of the Companies Act by the day immediately prior to the Effective Date.

Article 7 (Dividends of Surplus Profits, Etc.)

&nbsp;&nbsp;&nbsp;&nbsp;1. Tsubakimoto Chain may pay a dividend of surplus profits of up to 50 yen per share of Tsubakimoto Chain
to the shareholders or registered pledgees of shares listed or recorded in the shareholder register as of the close of business on March
31, 2025, and a dividend of surplus profits of up to 50 yen per share of Tsubakimoto Chain to the shareholders or registered pledgees
of shares listed or recorded in the shareholder register as of the close of business on September 30, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;2. Daido Kogyo may pay a dividend of surplus profits of up to 25 yen per share of Daido Kogyo to the shareholders
or registered pledgees of shares listed or recorded in the shareholder register as of the close of business on March 31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;3. Except as set forth in the preceding two paragraphs, Tsubakimoto Chain and Daido Kogyo shall not, without
the prior written consent of the other party, pay any dividend of surplus profits for which the record date falls within the period from
the execution date of this Agreement to the Effective Date, and shall not acquire any treasury shares for which the acquisition date falls
within the period from the execution date of this Agreement to the Effective Date (excluding the acquisition of treasury shares described
in the press release entitled "Notice Regarding Decision on Matters Relating to the Acquisition of Treasury Shares (Acquisition
of Treasury Shares under the Articles of Incorporation pursuant to Article 165, Paragraph 2 of the Companies Act)" disclosed by
Tsubakimoto Chain on May 14, 2025 and cases where acquisition of treasury shares is required in response to the exercise of shareholder
rights under applicable laws and regulations).

Article 8 (Cancellation of Treasury Shares)

Daido Kogyo shall cancel, immediately prior to the Record Time, all of the treasury shares in its possession as of the point in time immediately prior to the Record Time (including own shares acquired by Daido Kogyo in response to a share purchase demand by a dissenting shareholder as prescribed in Article 785, Paragraph 1 of the Companies Act that may be made in relation to the Share Exchange), by a resolution at the meeting of its Board of Directors held before the day immediately prior to the Effective Date.

Article 9 (Business Operation and Property Management)

From the execution date of this Agreement until the Effective Date, each of Tsubakimoto Chain and Daido Kogyo shall, within the scope of its ordinary business, conduct its business and manage and operate its properties with the care of a good manager, so as to enhance its corporate value, and shall cause itself and each of its subsidiaries to conduct its business and manage and operate its properties with the care of a good manager, so as to enhance its corporate value, and shall not take any action or cause its subsidiaries and affiliates to take any action that damages the corporate value of itself and its subsidiaries and affiliates (except for those actions contemplated in this Agreement).

Article 10 (Amendment and Termination of this Agreement)

If, during the period between the execution date of this Agreement and the Effective Date, any material change occurs or becomes apparent in the financial conditions or business conditions of Tsubakimoto Chain or Daido Kogyo, or any event that would materially hinder the implementation of the Share Exchange occurs or becomes apparent, or it becomes difficult to achieve the purpose of this Agreement due to any other reasons, Tsubakimoto Chain and Daido Kogyo may amend or terminate this Agreement upon mutual consultation and agreement.

Article 11 (Effect of this Agreement)

This Agreement shall cease to be effective if any of the following events occurs by the date immediately prior to the Effective Date: (i) this Agreement is not approved at the general shareholders' meeting of Tsubakimoto Chain (provided that this Agreement requires approval by the general shareholders' meeting of Tsubakimoto Chain pursuant to the provisions of Article 796, Paragraph 3 of the Companies Act), (ii) this Agreement is not approved at the general shareholders' meeting of Daido Kogyo; (iii) any approval by the relevant government agencies or other authorities that is required for the implementation of the Share Exchange under Japanese or foreign laws and regulations is not obtained (including the cases where the waiting period for the notification submitted by Tsubakimoto Chain or Daido Kogyo with respect to the Share Exchange pursuant to the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947) has not expired by the day immediately prior to the Effective Date or where measures or procedures to prevent the Share Exchange, such as cease and desist order by the Japan Fair Trade Commission, are taken); or (iv) this Agreement is terminated pursuant to the preceding Article.

Article 12 (Governing Law and Jurisdiction)

&nbsp;&nbsp;&nbsp;&nbsp;1. This Agreement shall be governed by and construed in accordance with the laws of Japan.

&nbsp;&nbsp;&nbsp;&nbsp;2. The Osaka District Court shall have the exclusive jurisdiction in the first instance over any dispute
between Tsubakimoto Chain and Daido Kogyo in connection with this Agreement.

Article 13 (Consultation)

If any matter is not provided for in this Agreement, or if any doubt arises regarding its terms, Tsubakimoto Chain and Daido Kogyo shall consult in good faith to resolve such matter or doubt.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by placing their signatures and seals thereon, and each party shall retain one copy thereof.

May 14, 2025

Tsubakimoto Chain： 3-3 Nakanoshima 3-chome, Kita-ku, Osaka-shi, Osaka

Tsubakimoto Chain Co.

Takatoshi Kimura, President and Representative Director

Daido Kogyo： i-197 Kumasakamachi, Kaga-shi, Ishikawa

Daido Kogyo Co., Ltd.

Hirofumi Araya, President and Representative Director

&nbsp;&nbsp;&nbsp;&nbsp;3. Matters Concerning the Appropriateness of Exchange Consideration

&nbsp;&nbsp;&nbsp;&nbsp;(1) Matters concerning the appropriateness of the total number of exchange consideration

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I) Allotments in connection with the Share Exchange

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| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; Tsubakimoto Chain<br> (a wholly-owning parent company resulting from the share exchange) | &nbsp;&nbsp;&nbsp;&nbsp;The Company<br> (a wholly-owned subsidiary company resulting from the share exchange) |
| &nbsp;&nbsp;&nbsp;&nbsp;Allotment Ratio in Connection with the Share Exchange | &nbsp;&nbsp;&nbsp;&nbsp;1 | &nbsp;&nbsp;&nbsp;&nbsp;0.65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Number of Shares to be Delivered in the Share Exchange | &nbsp;&nbsp;&nbsp;&nbsp;6,558,107 shares of common stock of Tsubakimoto Chain (scheduled) | &nbsp;&nbsp;&nbsp;&nbsp;6,558,107 shares of common stock of Tsubakimoto Chain (scheduled) |

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(Note 1) Share allotment ratio

Tsubakimoto Chain will allot and deliver 0.65 shares of common stock of Tsubakimoto Chain (the "Tsubakimoto Chain Shares") per Company Share. However, no Company Shares held by Tsubakimoto Chain at the Record Time (as defined below) will be allocated. The allotment ratio for the Share Exchange written above (the "Share Exchange Ratio") may be changed upon discussions and agreement between the Company if there are significant changes to the terms and conditions on which the calculation is based.

(Note 2) Number of the Tsubakimoto Chain Shares to be delivered in the Share Exchange

Upon the Share Exchange, Tsubakimoto Chain will deliver, to the shareholders of the Company (meaning shareholders after the cancellation of treasury shares as described below, and excluding Tsubakimoto Chain) at the time immediately prior to its acquisition via the Share Exchange of all the issued shares of the Company (excluding the shares of the Company held by Tsubakimoto Chain) (the "Record Time"), the number of the Tsubakimoto Chain Shares calculated by multiplying the total number of the Company Shares held by the shareholders by 0.65, in exchange for the Company Shares held by them.

All of the shares to be delivered by Tsubakimoto Chain will be allocated from the treasury shares held by Tsubakimoto Chain as of May 14, 2025 and a portion of the own shares that Tsubakimoto Chain will acquire on or after May 14, 2025. For more information on the new acquisition of own shares by Tsubakimoto Chain on or after May 14, 2025, please refer to the "Notice Regarding Decision on Matters Relating to the Acquisition of Treasury Shares (Acquisition of Treasury Shares under the Articles of Incorporation pursuant to Article 165, Paragraph 2 of the Companies Act)" disclosed on May 14, 2025.

The Company plans to cancel, immediately prior to the Record Time, all of the treasury shares in its possession as of the point in time immediately prior to the Record Time (including own shares acquired by the Company in response to a share purchase demand by a dissenting shareholder as prescribed in Article 785, Paragraph 1 of the Companies Act that may be made in relation to the Share Exchange), by a resolution at the meeting of its Board of Directors held before the day immediately prior to the effective date of the Share Exchange.

(Note 3) Handling of shares less than one unit

Shareholders of the Company who hold shares less than one unit (shares less than 100 shares) of Tsubakimoto Chain as a result of the Share Exchange may participate in either of the following programs with respect to the Tsubakimoto Chain Shares as prescribed in the Articles of Incorporation and the Regulations for Handling of Shares of Tsubakimoto Chain, on or after the effective date of the Share Exchange. Shares less than one unit may not be sold in a financial instruments exchange market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I) Top-up purchase program for shares less than one unit (top-up purchase of
less than one unit (100 shares))

Under this program, any holder of shares less than one unit of Tsubakimoto Chain can, in accordance with the provisions of Article 194, Paragraph 1 of the Companies Act and the Articles of Incorporation, and the Regulations for Handling of Shares of Tsubakimoto Chain, demand that Tsubakimoto Chain sell the number of shares of Tsubakimoto Chain that will constitute one unit when combined with the shares less than one unit held by that shareholder, and then purchase those shares from Tsubakimoto Chain.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II) Buyback program for shares less than one unit (sale of shares less than
one unit (100 shares))

Under this program, any holder of shares less than one unit of Tsubakimoto Chain can demand that Tsubakimoto Chain purchase the shares less than one unit held by that shareholder, in accordance with the provisions of Article 192, Paragraph 1 of the Companies Act.

(Note 4) Treatment of fractions of less than a single share

If Tsubakimoto Chain delivers fractional shares less than a single Tsubakimoto Chain Share to shareholders of the Company as a result of the Share Exchange, in accordance with the provisions of Article 234 of the Companies Act and other relevant laws and regulations, Tsubakimoto Chain will sell the number of Tsubakimoto Chain Shares equivalent to the total sum of the fractional shares (if the total sum includes a fraction less than one, it is to be rounded off) and deliver the sales proceeds to the relevant shareholders in proportion to the fractional shares attributed to them.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II) Basis for allotments in connection with the Share Exchange

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Basis and reason for allotments

In order to ensure fairness and appropriateness in determining the Share Exchange Ratio, the Company and Tsubakimoto Chain individually selected their respective independent third-party valuation agents and various professional advisors. Tsubakimoto Chain appointed Nomura Securities Co., Ltd. ("Nomura Securities") as its financial advisor and third-party valuation agent and Nishimura & Asahi ("N&A") as its legal advisor, and the Company appointed SMBC Nikko Securities Inc. ("SMBC Nikko Securities") as its financial advisor and third-party valuation agent and Anderson Mori & Tomotsune ("AMT") as its legal advisor, after which they began seriously considering the Share Exchange.

As stated in "(I) Measures to ensure fairness (including measures to avoid conflicts of interest)" in "(3) Considerations to ensure that the interests of shareholders of the wholly-owned subsidiary company resulting from the share exchange are not harmed" below, Tsubakimoto Chain carefully discussed and examined the Share Exchange using the Share Exchange Ratio based on the share exchange ratio valuation report received on May 13, 2025 from its financial advisor and third party valuation agent, Nomura Securities, advice from its legal advisor, N&A, the results of the due diligence conducted by Tsubakimoto Chain on the Company from the middle of February 2025 to late April 2025, and other factors. As a result of such careful discussion and examination, Tsubakimoto Chain has concluded that the Share Exchange Ratio is appropriate and that it serves the interests of its shareholders, and therefore has determined that it is appropriate to proceed with the Share Exchange using the Share Exchange Ratio.

At the same time, as stated in "(I) Measures to ensure fairness (including measures to avoid conflicts of interest)" in "(3) Considerations to ensure that the interests of shareholders of the wholly-owned subsidiary company resulting from the share exchange are not harmed" below, the Company carefully discussed and examined the Share Exchange using the Share Exchange Ratio based on the share exchange ratio valuation report received on May 13, 2025 from its financial advisor and third party valuation agent, SMBC Nikko Securities, advice from its legal advisor, AMT, the results of the due diligence conducted by the Company on Tsubakimoto Chain from the middle of February 2025 to late April 2025, the instructions, advice and the report received on May 13, 2025 from the Special Committee composed solely of independent members having no conflicts of interest with Tsubakimoto Chain (for details, please refer to "(I) Measures to ensure fairness (including measures to avoid conflicts of interest)" below in "(3) Considerations to ensure that the interests of shareholders of the wholly-owned subsidiary company resulting from the share exchange are not harmed"), and other factors. As a result of such careful discussion and examination, the Company has concluded that the Share Exchange Ratio is appropriate and that it serves the interests of its shareholders, and therefore has determined that it is appropriate to proceed with the Share Exchange using the Share Exchange Ratio.

As stated above, the Company and Tsubakimoto Chain carefully examined the Share Exchange Ratio based on the results of due diligence conducted by the Company and Tsubakimoto Chain on each other while referring to the calculation results of the share exchange ratio obtained from their financial advisors and third-party valuation agents, and were engaged in extensive negotiations and discussions upon comprehensive consideration of factors such as the financial condition, status of assets, and future outlooks of the Companies. As a result of these repeated negotiations and discussions, the Company and Tsubakimoto Chain have concluded that the Share Exchange Ratio is appropriate and serves the interests of their respective shareholders. Based on this conclusion, the Companies have determined that the implementation of the Share Exchange using the Share Exchange Ratio is appropriate.

The Share Exchange Ratio may be changed upon consultation and agreement between the Companies if there are significant changes to the terms and conditions on which the calculation is based, in accordance with the Share Exchange Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Matters relating to the calculation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Names of the valuation agents and relationships with Tsubakimoto Chain and
the Company

Nomura Securities, which is the third-party valuation agent of Tsubakimoto Chain, and SMBC Nikko Securities, which is the third-party valuation agent of the Company, are both independent calculation agents, and neither of them is a related party of the Company or Tsubakimoto Chain nor has a material interest that must be stated in relation to the Share Exchange.

In addition, SMBC Nikko Securities is a member of the Sumitomo Mitsui Financial Group, Inc. along with Sumitomo Mitsui Banking Corporation ("Sumitomo Mitsui Bank"). Sumitomo Mitsui Bank engages in lending and other transactions as part of normal banking transactions with the Companies. However, Sumitomo Mitsui Bank does not have any material conflicts of interest with either of the Companies as regards the Share Exchange. According to SMBC Nikko Securities, it has taken appropriate measures to prevent adverse effects, such as information barriers between the departments responsible for financial advisory services and the valuation of the shares of the Companies and other departments within SMBC Nikko Securities. In addition, it has established an appropriate conflict of interest management system, including information barriers between SMBC Nikko Securities and Sumitomo Mitsui Bank. Therefore, since there are no conceivable issues from the perspective of fairness regarding the Company's request to SMBC Nikko Securities for the valuation of the shares of the Companies, the Company has selected SMBC Nikko Securities as its third-party valuation agent that is independent from the Companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Outline of calculation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Calculation by Nomura Securities

Nomura Securities used (a) the market price analysis because Tsubakimoto Chain is listed on the TSE Prime Market and its shares are quoted, (b) the comparable company analysis because there are comparable listed companies and it is possible to infer share value by comparing similar companies, and (c) the discounted cash flow ("DCF") analysis in order to reflect the status of future business activities in the valuation.

Under the market price analysis, Nomura Securities adopted, with May 13, 2025 as the calculation base date, the simple average of the closing prices on the calculation base date and the closing prices for the most recent five business days, one month, three months, and six months prior to the calculation base date, as quoted on the TSE.

Under the DCF analysis, Nomura Securities calculated the future cash flows based on the financial forecasts prepared by Tsubakimoto Chain for the fiscal years ending March 31, 2025 through March 31, 2030, by discounting such cash flows to their present value at a certain discount rate. In the financial forecasts of Tsubakimoto Chain serving as the basis for calculations using the DCF analysis by Nomura Securities, there are no fiscal years in which significant increases or decreases in profits are anticipated. In addition, these financial forecasts are not based on the assumption that the Share Exchange will be conducted.

Nomura Securities used (a) the market price analysis because the Company is listed on the TSE Standard Market and its shares are quoted, (b) the comparable company analysis because there are comparable listed companies and it is possible to infer the share value by comparing similar companies, and (c) the DCF analysis in order to reflect the status of future business activities in the valuation.

Under the market price analysis, Nomura Securities adopted, with May 13, 2025 as the calculation base date, the simple average of the closing prices on the calculation base date and the closing prices for the most recent five business days, one month, three months, and six months prior to the calculation base date, as quoted on the TSE.

Under the DCF analysis, Nomura Securities calculated the future cash flows based on the financial forecasts that were provided to Nomura Securities after being received from the Company and being confirmed by Tsubakimoto Chain for the fiscal years ending March 31, 2025 through March 31, 2029, by discounting such cash flows to their present value at a certain discount rate. In the financial forecasts of the Company serving as the basis for calculations using the DCF analysis by Nomura Securities, there are fiscal years in which significant increases or decreases in profits are anticipated. Specifically, regarding operating profits for the fiscal years ending March 31, 2025 through March 31, 2029, a significant increase in profits compared to the previous fiscal year is expected due to improvement of contribution margin ratios as a result of stronger sales of high-value-added products in the motorcycle and industrial machinery businesses. These financial forecasts are not made based on the assumption that the Share Exchange will be conducted.

The valuation ranges of the Company using each of the above valuation methods where the share value per share of Tsubakimoto Chain is one are as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;Method Used | &nbsp;&nbsp;Calculation Range for the Share Exchange Ratio |
| &nbsp;&nbsp;Market price analysis | &nbsp;&nbsp;0.42 - 0.47 |
| &nbsp;&nbsp;Comparable company analysis | &nbsp;&nbsp;0.09 - 1.15 |
| &nbsp;&nbsp;DCF analysis | &nbsp;&nbsp;0.24 - 0.88 |

---

Nomura Securities calculated the share exchange ratio assuming that all publicly available information and all information provided to it were accurate and complete, and did not independently verify the accuracy or completeness of such information. In addition, Nomura Securities has not independently valued, appraised, or assessed, nor has it requested a third-party institution to appraise or assess, any relevant assets or liabilities (including derivative financial instruments, off-balance sheet assets and liabilities, and other contingent liabilities) of the Companies and their affiliates, including as pertains to analyses or assessments of any individual assets or liabilities. Moreover, Nomura Securities assumed that the financial forecasts and other forward-looking information for Tsubakimoto Chain have been reasonably examined and prepared based on the best forecasts and judgments obtained from Tsubakimoto Chain's management at the time. The calculation of the share exchange ratio by Nomura Securities reflects information obtained by Nomura Securities and economic conditions as of May 13, 2025. Calculation by Nomura Securities is intended solely as a reference for the Board of Directors of Tsubakimoto Chain in considering the Share Exchange Ratio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Calculation by SMBC Nikko Securities

In making its calculation, SMBC Nikko Securities used (a) the market price analysis because the Company and Tsubakimoto Chain are listed on the TSE Prime Market and on the TSE Standard Market, respectively, and their shares are quoted (taking May 13, 2025 as the calculation base date, SMBC Nikko Securities based its analysis on the simple average of closing prices on the TSE Prime Market and the TSE Standard Market for the most recent one-month period from April 14, 2025 to the calculation base date, for the most recent three-month period from February 14, 2025 to the calculation base date, and for the most recent six-month period from November 14, 2024 to the calculation base date), (b) the comparable listed company analysis because there are listed companies comparable to both the Company and Tsubakimoto Chain and it is possible to infer the share values of the Company and Tsubakimoto Chain using the comparable listed company analysis, and (c) the DCF analysis in order to reflect the status of future business activities of the Companies in the valuation.

The valuation ranges for Company Shares per Tsubakimoto Chain Share calculated using each of the above valuation methods are as follows:

---

| | |
|:---|:---|
| &nbsp;&nbsp;Method Used | &nbsp;&nbsp;Calculation Range for the Share Exchange Ratio |
| &nbsp;&nbsp;Market price analysis | &nbsp;&nbsp;0.42 - 0.47 |
| &nbsp;&nbsp;Comparable listed company analysis | &nbsp;&nbsp;0.14 - 0.72 |
| &nbsp;&nbsp;DCF analysis | &nbsp;&nbsp;0.57 - 1.37 |

---

SMBC Nikko Securities calculated the share exchange ratio assuming that all publicly available information and all information provided to it were accurate and complete, and did not independently verify the accuracy or completeness of such information. In addition, SMBC Nikko Securities has relied on information, judgments or forecasts provided or disclosed by the Companies and has not independently valued, appraised, or assessed, nor has it requested a third-party institution to appraise or assess, any relevant assets or liabilities (including derivative transactions, off-balance sheet assets and liabilities, and other contingent liabilities) of the Companies and their affiliates, including as pertains to analyses or assessments of any individual assets or liabilities. Moreover, SMBC Nikko Securities assumed that the financial forecasts (including profit plans and other information) for the Companies have been reasonably examined and prepared based on the best forecasts and judgments obtained from the managements of both of the Companies at the time. Furthermore, the financial forecasts for Tsubakimoto Chain used by SMBC Nikko Securities as the basis for its DCF analysis do not include fiscal years in which significant increases or decreases in profits are expected. The financial forecasts for the Company include fiscal years in which significant increases or decreases in profits are expected. Specifically, regarding operating profits for the fiscal years ending March 31, 2025 through March 31, 2028, a significant increase in profits compared to the previous fiscal year is expected due to improvement of contribution margin ratios as a result of stronger sales of high-value-added products in the motorcycle and industrial machinery businesses. These financial forecasts are not based on the assumption that the Share Exchange will be conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Reasons for selecting Tsubakimoto Chain Shares as exchange consideration

The Company and Tsubakimoto Chain selected Tsubakimoto Chain Shares, shares of the wholly-owning parent company resulting from the share exchange, as consideration for the Share Exchange. Since Tsubakimoto Chain is listed on the TSE Prime Market, trading opportunities will be available on such market even after the effective date of the Share Exchange, and the Company's shareholders are expected to benefit from the synergies resulting from the Share Exchange. For these reasons, the Company believes that this selection is appropriate.

In this regard, as a result of the Share Exchange, the Company will become a wholly-owned subsidiary company of Tsubakimoto Chain on the effective date of the Share Exchange (January 1, 2026 (scheduled)) and the Company Shares will be delisted on December 29, 2025 (with December 26, 2025 as the final trading date). Following the delisting, it will no longer be possible to trade Company Shares on the TSE Standard Market.

Even after the Company Shares have been delisted, the Tsubakimoto Chain Shares that will be allotted to shareholders of the Company as a result of the Share Exchange will remain listed on the TSE Prime Market, and it will be possible to trade the Tsubakimoto Chain Shares on a financial instruments exchange on and after the effective date of the Share Exchange. Accordingly, Tsubakimoto Chain believes that it can continue to provide liquidity of shares to shareholders of the Company who hold 154 or more Company Shares as of the Record Time and who will receive an allocation of one unit (100 shares) or more of the Tsubakimoto Chain Shares as a result of the Share Exchange.

At the same time, the shareholders of the Company who hold less than 154 Company Shares as of the Record Time will be allotted less than one unit (100 shares) of the Tsubakimoto Chain Shares. Such shares less than one unit cannot be sold on a financial instruments exchange, but those shareholders may demand that Tsubakimoto Chain purchase the shares less than one unit that they hold. Alternatively, a shareholder holding shares less than one unit may demand that Tsubakimoto Chain sell the number of shares of Tsubakimoto Chain that will constitute one unit when combined with the shares less than one unit held by that shareholder, and then purchase those shares from Tsubakimoto Chain. For details, please refer to "(Note 3) Handling of shares less than one unit" in "(I) Allotments in Connection with the Share Exchange" in "(1) Matters concerning the appropriateness of the total number of exchange consideration" above. For details on the handling of fractions of less than a single share resulting from the Share Exchange, please refer to "(Note 4) Handling of fractions of less than a single share" in "(I) Allotments in Connection with the Share Exchange" in "(1) Matters concerning the appropriateness of the total number of exchange consideration" above.

Please note that shareholders of Company Shares may trade their Company Shares on the TSE Standard Market as usual until the final trading date, December 26, 2025 (scheduled), and may exercise any legal rights under the Companies Act and other applicable laws and regulations up to the Record Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Considerations to ensure that the interests of shareholders of the wholly-owned
subsidiary company resulting from the share exchange are not harmed

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I) Measures to ensure fairness (including measures to avoid conflicts of interest)

Upon the Share Exchange, the Company, a listed company, will become a wholly-owned subsidiary company resulting from the share exchange, and therefore the Company and Tsubakimoto Chain have taken the following measures to ensure the fairness of the Share Exchange:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Obtaining a valuation report from an independent third-party valuation agent

To ensure fairness in calculating the share exchange ratio for the Share Exchange, Tsubakimoto Chain appointed Nomura Securities as its third-party valuation agent independent from both the Company and Tsubakimoto Chain and obtained a share exchange ratio valuation report from Nomura Securities on May 13, 2025, whereas the Company appointed SMBC Nikko Securities as its third-party valuation agent independent from both the Company and Tsubakimoto Chain and obtained a share exchange ratio valuation report from SMBC Nikko Securities on May 13, 2025. For the outlines of those valuation reports, please refer to "(B) Matters relating to the calculation" in "(II) Basis for allotments in connection with the Share Exchange" in "(1) Matters concerning the appropriateness of the total number of exchange consideration" above. Neither of the Companies has obtained from either of those third-party valuation agents a written opinion stating that the Share Exchange Ratio is appropriate for shareholders of Tsubakimoto Chain or the Company from a financial perspective (a so-called fairness opinion).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Advice from independent law firms

Tsubakimoto Chain appointed N&A as its legal advisor for the Share Exchange in October 2024, and obtained from N&A legal advice concerning various procedures for the Share Exchange and the method and processes of decision-making by its Board of Directors. N&A has no material interests in the Company or in Tsubakimoto Chain.

The Company appointed AMT as its legal advisor for the Share Exchange in December 2024, and obtained from AMT legal advice concerning various procedures for the Share Exchange and the method and processes of decision-making by its Board of Directors. AMT has no material interests in the Company or in Tsubakimoto Chain.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Establishment of the special committee, which has no interest in the Company
and obtaining a written opinion from the special committee

Upon receiving a proposal from Tsubakimoto Chain regarding the Share Exchange on December 13, 2024, the Company began concrete discussions regarding the Share Exchange, and prior to having its Board of Directors deliberate and decide on whether to approve the Share Exchange, on December 20, 2024, it established the Special Committee consisting of four members—Mr. Seiji Sakashita, Mr. Shoji Takechi, Ms. Miho Yamamoto, and Mr. Jun Akimoto, who are outside directors of the Company, have no interest in Tsubakimoto Chain, and have been registered as independent directors with TSE—for the purpose of ensuring that the decision-making process of the Company's Board of Directors regarding the Share Exchange is conducted with due care, eliminating any arbitrariness or possible conflicts of interest in the decision-making process of the Company's Board of Directors regarding the Share Exchange to ensure its fairness, and obtaining opinions on whether the decision of the Company's board of directors to proceed with the Share Exchange would be disadvantageous to minority shareholders, and then the Company sought an opinion from the Special Committee on (i) whether the purpose of the procedures to delist the Company Shares through the Share Exchange or other methods by Tsubakimoto Chain (the "Transaction") is reasonable (including whether the Transaction contributes to the enhancement of the Company's corporate value), (ii) whether the fairness and appropriateness of the terms and conditions of the Transaction (including the share exchange ratio for the Share Exchange) are ensured, (iii) whether the fairness of the procedures for the Transaction is ensured, and (iv) whether, taking into account (i) to (iii) above, the Transaction is not deemed to be disadvantageous to the minority shareholders of the Company (the "Consultation Matters"). Further, the Company's Board of Directors has resolved that, in its inquiries regarding the Consultation Matters, it shall make its decision regarding the Transaction after appropriately understanding and identifying the findings of the Special Committee and with utmost respect for such findings, and that if the Special Committee determines that the implementation or the terms and conditions of the Transaction are inappropriate, the Company's Board of Directors shall not approve the Transaction under such terms and conditions. The Company's Board of Directors has also granted the Special Committee the authority to: (a) appoint or approve (including retroactive approval) professionals for the Company such as financial advisors and legal advisors, etc. (collectively, "Advisors, etc."), (b) appoint Advisors, etc. to the Special Committee when deemed necessary by the Special Committee (with the reasonable costs associated with the professional advice of the Advisors, etc. to the Special Committee to be borne by the Company), (c) receive information necessary for the examination and decision-making regarding the Transaction from the officer and employees of the Company or other persons deemed necessary by the Special Committee, and (d) substantively participate in the negotiation process regarding the terms and conditions of the Transaction by confirming the policy on those negotiations in advance, receiving timely reports on the status of the negotiations, and providing opinions, instructions, or requests at critical junctures.

The Special Committee carefully examined the Consultation Matters at a total of 15 committee meetings held between December 20, 2024 and May 13, 2025, as well as outside of committee meetings by expressing opinions and collecting information via e-mail or other means and holding discussions from time to time as necessary. Specifically, the Special Committee first confirmed that there were no issues regarding the independence and expertise of SMBC Nikko Securities, the financial advisor and third-party valuation agent appointed by the Company, or those of AMT, the legal advisor appointed by the Company, and then it approved their appointments. In addition, the Special Committee has confirmed that it will seek professional advice from the Company's Advisors, etc. as necessary and will not appoint its own advisors.

Following the above procedures, the Special Committee sent a questionnaire to the Companies regarding the purpose of the Share Exchange, and received explanations from the Companies regarding the purpose of the Share Exchange, the background and circumstances leading to the Share Exchange, the reasons for selecting a share exchange, and their views on management policies and the treatment of employees after the Share Exchange, etc., after which it conducted a question-and-answer session. In addition, the Special Committee received advice from AMT, the legal advisor to the Company, regarding the method of decision-making of the Company's Board of Directors with respect to the Share Exchange, measures to ensure the fairness of procedures related to the Share Exchange, including the operation of the Special Committee, and measures to avoid conflicts of interest. Moreover, the Special Committee received an explanation from SMBC Nikko Securities, the financial advisor and third-party valuation agent of the Company, regarding the method for and results of the calculation of consideration for the Share Exchange (including the Share Exchange Ratio), conducted a question-and-answer session, and verified the reasonableness thereof. Furthermore, with the advice of SMBC Nikko Securities and AMT, the Special Committee established a negotiation policy for the consideration for the Share Exchange (including the Share Exchange Ratio) and substantively participated in the negotiations with Tsubakimoto Chain by receiving reports on the negotiation content from time to time and providing instructions as necessary.

On May 13, 2025, the Special Committee submitted to the Company's Board of Directors a written opinion to the effect that, after careful discussion and examination of the Consultation Matters under the aforementioned circumstances, (i) the purpose of the Transaction is found to be reasonable (including whether the Transaction contributes to the enhancement of the Company's corporate value), (ii) the terms and conditions of the Transaction (including the share exchange ratio for the Share Exchange) are found to be fair and appropriate, (iii) the procedures for the Transaction are found to be fair, and (iv) taking into account (i) to (iii) above, the Transaction is not deemed to be disadvantageous to the minority shareholders of the Company. The summary of the Special Committee's opinion is as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Reasonableness of the purpose of the Transaction (including whether the
Transaction contributes to the enhancement of the corporate value of the Company)

The business synergies through the Transaction expected by the Company and Tsubakimoto Chain through the Transaction include expansion of overseas businesses, cross-selling in existing businesses, and new businesses and joint developments, and in particular, with respect to the expansion of the Company's overseas business, utilizing Tsubakimoto Chain's base and utilizing the Tsubaki Group's distribution channels to expand sales of developed products, including the Company's motorcycle products and general-purpose seal chains, and the possibility is high that they will lead to an increase in the Company's profitability, and the Company and Tsubakimoto Chain are aware of such fact. Further, the Company also recognizes that through the Transaction, the degree of certainty of the realization of the DID MUGENDAI SMILE VISION 2035 and the 13<sup>th</sup> Medium-Term Business Plan announced on May 14, 2024 will be raised, and that the workload and costs associated with maintaining the Company's listing can be reduced.

The Company believes that realization of the above synergies will lead to resolution of the business issues and management issues that it recognizes, and therefore, will contribute to the enhancement of the Company's medium- and long-term corporate value.

Furthermore, at present, no alternative capital policy that could realistically enhance the Company's corporate value to a comparable extent as this transaction has been identified. Given that Tsubakimoto Chain is considered a suitable partner for realizing the above-mentioned business synergies, this transaction is deemed to be superior—when compared with other potential capital policy options—from the perspective of enhancing the Company's corporate value.

On the other hand, in conjunction with the delisting of the Company through the Transaction, the reduction of the degree of the Company's freedom in its management, impact on the Company's business partners, impact on financing options going forward, weakening of its compliance system, impact on recruitment going forward, and impact on the morale of existing employees and the like can be envisioned, but in light of the fact that the Company will become one of the Tsubakimoto Chain group companies listed on the TSE Prime Market through the Transaction, it is believed that all such impacts will be limited.

Taking the foregoing into consideration comprehensively, it has been determined that the Transaction will contribute to the corporate value of the Company, and the purpose of the Transaction is reasonable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Fairness and appropriateness of the terms and conditions of the Transaction
(including the share exchange ratio for the Share Exchange)

As set forth in (iii) below, negotiations relating to the Share Exchange Ratio are being conducted after taking measures to ensure fairness and while receiving the opinions and instructions of the Special Committee regarding such important aspects of proposals and decisions on the Share Exchange Ratio. For that reason, it has been determined that in the negotiation process regarding the terms and conditions of the Share Exchange, a state where reasonable efforts are aimed at conducting the Share Exchange so that it will enhance corporate value under terms and conditions that are most advantageous to general shareholders pursuant to fair procedures, has been ensured.

Further, it has been determined that, among the calculation results of the share exchange ratio by SMBC Nikko Securities, the Share Exchange Ratio exceeds the upper limit of the calculation range of the market price analysis, is within the calculation range of the comparable company analysis and exceeds its median value, and is within the calculation range of the DCF analysis, and in light of the calculation results of the share exchange ratio by SMBC Nikko Securities, is at a reasonable level. Moreover, the Share Exchange Ratio not only significantly exceeds that of comparable cases involving full acquisitions through share exchanges, but can also be considered reasonable when viewed in light of premium levels observed in similar cases of full acquisitions conducted via tender offers. Moreover, if the premium of the Share Exchange Ratio is calculated based on the Company's closing price as of the base date, it will be found to be at a level that exceeds the highest closing price of the Company's shares over the past three years and nine months.

In addition to the foregoing, using a share exchange as the method for the scheme of the Transaction has been determined to be reasonable in light of the fact that in comparison to other conceivable methods, a share exchange is a method that offers opportunities to general shareholders of the Company to enjoy economic benefits from enhancement of corporate value resulting from synergies through the Transaction.

Taking the foregoing into consideration comprehensively, it has been determined that the fairness and appropriateness of the terms and conditions of the Transaction (including the share exchange ratio of the Share Exchange) have been ensured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Fairness of the procedures of the Transaction

It has been confirmed that the Company, in its consideration of the Transaction, took the measures below to ensure the fairness of the procedures in the negotiation process regarding the Share Exchange.

In the period before entering into concrete negotiations regarding the terms and conditions of the Share Exchange, including the Share Exchange Ratio, the Company established the Special Committee composed of special committee members whose independence from Tsubakimoto Chain and independence from the Transaction were ensured. It has been confirmed that the Special Committee received professional advice from SMBC Nikko Securities and AMT, as necessary, appropriately obtained information regarding the Transaction, and substantively participated in the negotiation process regarding the Share Exchange Ratio.

The Company obtained professional advice etc. from external experts independent from the Companies such as SMBC Nikko Securities and AMT, and went through a process of careful consideration and decision making regarding the fairness of the procedures and appropriateness of the terms and conditions of the Transaction. Further, in the Company's decision-making process, no points of suspicion regarding fairness were found.

Disclosure in accordance with laws and regulations and timely disclosure rules of the TSE is planned to be made through timely disclosure of documents regarding the Share Exchange, and it can be said that shareholders of the Company are provided with information necessary to make decisions from the perspective of the appropriateness of the terms and conditions of the Transaction etc. and whether, through the Transaction, the value of the corporate group after the acquisition (value of consideration shares) will improve over the medium- to long-term. Further, shareholders of the Company who express dissent against the Share Exchange or the Share Exchange Ratio have appraisal rights (and the right to file a petition to determine the price based on such right) under the Companies Act; accordingly, it has been determined that measures to eliminate coercion have been taken.

In the Transaction, an "active" market check has not been implemented, but an indirect market check is in operation; accordingly, no points that raise suspicions regarding fairness from the perspective of market checks were found.

Taking the foregoing into consideration comprehensively, it can be said that the Company has taken reasonable measures necessary to ensure the fairness of the Share Exchange and it has been determined that the fairness of the procedures for the Transaction has been ensured.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Whether, taking into account (i) to (iii) above, the Transaction is not
deemed to be disadvantageous to the minority shareholders of the Company

Taking (i) to (iii) above into consideration comprehensively, it has been determined that the Transaction is not deemed to be disadvantageous to the minority shareholders of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) Approval by all directors (including Audit and Supervisory Committee members)
who have no interest in the Company

At the meeting of the Company's Board of Directors held on May 14 2025, all members of the Board of Directors deliberated and unanimously resolved to implement the Share Exchange. There are no directors of the Company who have interests in Tsubakimoto Chain.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Matters concerning the appropriateness of the amount of capital and reserves
of Tsubakimoto Chain, the wholly-owning parent company resulting from the share exchange

The amount of capital and reserves of Tsubakimoto Chain to be increased by the Share Exchange will be determined by Tsubakimoto Chain as appropriate in accordance with the provisions of Article 39 of the Regulations on Corporate Accounting. The Company considered that this treatment is appropriate because the determination will be made within the scope of relevant laws and regulations, comprehensively considering and taking into account the financial conditions, capital policies, and other circumstances of Tsubakimoto Chain.

&nbsp;&nbsp;&nbsp;&nbsp;4. Matters to be Referenced Regarding Exchange Consideration

&nbsp;&nbsp;&nbsp;&nbsp;(1) Provisions of the Articles of Incorporation of Tsubakimoto Chain, the wholly-owning
parent company resulting from the share exchange

The Articles of Incorporation of Tsubakimoto Chain are posted on the Company's website (https://www.did-daido.co.jp/) and the TSE website (https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show) in accordance with laws and regulations and Article 15 of the Company's Articles of Incorporation.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Matters concerning the method of conversion into cash of exchange consideration

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I) Market where exchange consideration is traded

Tsubakimoto Chain Shares are traded on the TSE Prime Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II) Brokers, intermediaries or agencies for trading of exchange consideration

Tsubakimoto Chain Shares are traded through brokerage and other intermediation services by financial instruments business operators (i.e., securities companies) across Japan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(III) Restriction on transfer or other disposal of exchange consideration

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Matters concerning the market price of exchange consideration

As of the business day (May 13, 2025) immediately prior to the date of announcement of the execution of the Share Exchange Agreement (May 14, 2025), the average closing price of Tsubakimoto Chain Shares on the TSE Prime Market for the one-month, three-month, and six-month periods ending on that date was 1,721 yen, 1,819 yen, and 1,851 yen, respectively.

The market price and other information on Tsubakimoto Chain Shares can be viewed on the TSE website (https://www.jpx.co.jp/) and other sources.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Balance sheets of Tsubakimoto Chain, the wholly-owning parent company resulting
from the share exchange, for each of the fiscal years ending in the past five years

Since Tsubakimoto Chain has filed an annual securities report for each of the relevant fiscal years in accordance with the provisions of Article 24, Paragraph 1 of the Financial Instruments and Exchange Act, statement is omitted.

&nbsp;&nbsp;&nbsp;&nbsp;5. Matters Concerning the Appropriateness of the Provisions Regarding Stock
Acquisition Rights Pertaining to Share Exchange

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;6. Matters Concerning Financial Statements

&nbsp;&nbsp;&nbsp;&nbsp;(1) Financial statements, etc. of Tsubakimoto Chain for the most recent fiscal
year

The contents of financial statements and other documents of Tsubakimoto Chain for the most recent fiscal year (the fiscal year ended March 31, 2025) are posted on the Company's website (https://www.did-daido.co.jp/) and the TSE website (https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show) in accordance with laws and regulations and Article 15 of the Company's Articles of Incorporation.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Disposal of material property, etc. that have occurred after the last day
of the most recent fiscal year

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I) The Company

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Execution of the Business Integration Agreement and the Share Exchange Agreement

The Company resolved at the meeting of its Board of Directors on May 14, 2025 to integrate business between the Company and Tsubakimoto Chain and to conduct a share exchange through which Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange and the Company will become a wholly-owned subsidiary company resulting from the share exchange, and have executed the Business Integration Agreement and the Share Exchange Agreement between the Companies on the same date. The outline of the Share Exchange Agreement is as described in Section 2. "Outline of the Terms of the Share Exchange Agreement" above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Cancellation of treasury shares

The Company plans to cancel, immediately prior to the Record Time, all of the treasury shares in its possession as of the point in time immediately prior to the Record Time (including own shares acquired by the Company in response to a share purchase demand by a dissenting shareholder as prescribed in Article 785, Paragraph 1 of the Companies Act that may be made in relation to the Share Exchange), by a resolution at the meeting of its Board of Directors held before the day immediately prior to the effective date of the Share Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(II) Tsubakimoto Chain

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) Execution of the Business Integration Agreement and the Share Exchange Agreement

Tsubakimoto Chain resolved at the meeting of its Board of Directors on May 14, 2025 to integrate business between the Company and Tsubakimoto Chain and to conduct a share exchange through which Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange and the Company will become a wholly-owned subsidiary company resulting from the share exchange, and have executed the Business Integration Agreement and the Share Exchange Agreement between the Companies on the same date. The outline of the Share Exchange Agreement is as described in Section 2. "Outline of the Terms of the Share Exchange Agreement" above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Acquisition of treasury shares

At the meeting of its Board of Directors on May 14, 2025, Tsubakimoto Chain adopted a resolution regarding matters relating to the acquisition of treasury shares. Tsubakimoto Chain plans to acquire up to 6,500,000 Tsubakimoto Chain Shares at a total purchase price of up to 10 billion yen during the period from June 2, 2025 to December 30, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Recognition of extraordinary income

At the meeting of its Board of Directors on May 14, 2025, Tsubakimoto Chain resolved to sell a portion of the investment securities it holds. The gain on the sale of such investment securities, estimated at approximately 4.7 billion yen, is expected to be recognized as extraordinary income in the fiscal year ending March 31, 2026.

Business Performance Report

（ From April 1, 2024 to March 31, 2025 ）

1. Our group's current business performance

&nbsp;&nbsp;&nbsp;&nbsp;(1) Business performance in the current consolidated fiscal year

① Business overview and its results

Japan's economy in the current fiscal year has showed a slow recovery, as the employment and the income environment improved. However, as there simultaneously exist such issues as unstable international situation, the US trade policy status, high inflation rate and high energy price, we still have an uncertain situation for future.

Under such circumstances, our group tried to improve profitability by passing on the increased costs for energy prices and personnel costs to the sales prices. In addition, we made substantial structural reforms for the future including such continuous approaches as restructuring and expansion projects for HQs' manufacturing sites and renewal of the core IT system and promoted activities to expand our business domain and to generate new businesses.

As a result, the sales were 57,515 million yen (+2.6% YoY). The profit improved substantially, and the consolidated operating profit was 1,382 million yen (+508.3% YoY) and the consolidated ordinary profit was 1,434 million yen (+84.2% YoY) thanks to the passing-on of such cost increases as energy prices and personnel costs to the sales prices. Though we accounted for an impairment loss in this fiscal year, the net income attributable to owners of the parent was 1,192 million yen (+247.8% YoY) thanks to the gain on the sales of investment securities.

The overviews by segment are as follows.

[Japan]

The sales to external customers were 26,269 million yen (-0.3% YoY), the operating loss was 3 million yen (the operating loss for the previous FY was 602 million yen). The main reasons for the decrease in sales include the decrease in orders of wheels for agricultural machinery due to the decrease in sales of tractors for overseas markets and the disappointing orders of aluminum rims for motorcycles affected by stock adjustment of domestic finished-vehicle manufacturers. On the other hand, the profit substantially improved YoY thanks to cost improvement as a result of the passing-on to the sales prices, however, we continuously ended up with an operating loss, as we accounted for the allowance for replacement expenses due to product failure.

[Asia]

The sales to external customers were 18,146 million yen (+6.8% YoY), the operating profit was 806 million yen (+103.7% YoY). The sales increased due to strong orders of motorcycle chains for finished-vehicle manufacturers in India, China and Indonesia in addition to the impact of a weak yen. In addition, the profit improvement effect by the passing-on to the sales prices also contributed to the increase in the operating profit.

[North America]

The sales to external customers were 3,140 million yen (+7.2% YoY), the operating profit was 87 million yen (+92.3% YoY). Though the orders of chains for industrial machinery decreased due to the US financial policy and the uncertainty with the political situation, the weak yen impact and the strong orders of motorcycle chains for repair markets contributed to the business improvement.

[South America]

The sales to external customers were 5,207 million yen (+4.2% YoY), the operating loss was 9 million yen (the operating profit for the previous FY was 99 million yen). The orders of motorcycle chains showed steady progress both for finished-vehicle manufacturers and for repair markets and the sales increased YoY. On the other hand, we recorded an operating loss, as our profit margin was narrowed due to increased price competition in chains for industrial machinery due to the growth of local competing manufacturers in addition to the increase in logistics expenses affected by the drought.

[Europe]

The sales to external customers were 4,753 million yen (-0.6% YoY), the operating profit was 465 million yen (+10.8% YoY), Though the sales improved thanks to the ongoing weak yen and the restructuring of distribution channels within the group for chains for industrial machinery, the sales finally ended up with the same level as the previous FY, as the orders of motorcycle chains continued to remain low affected by a decrease in production at finished-vehicle manufacturers, etc. The profit increased thanks to the profit improvement effect as a result of the passing-on to the sales prices.

② Capital investment situation

The total capital investment amount of our group in this FY was 3,921 million yen, mainly consisting of the construction of warehouse for steel materials at our HQs' factory and the replacement and reinforcement of facilities at our company and overseas subsidiaries.

③ Financing situation

Our group's required funds are financed by our own funds and borrowings.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Trend for assets and profit / loss

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item | &nbsp;&nbsp; The 129<sup>th</sup><br> From April 1, 2021 to March 31, 2022 | &nbsp;&nbsp; The 130<sup>th</sup><br> From April 1, 2022 to March 31, 2023 | &nbsp;&nbsp; The 131<sup>st</sup><br> From April 1, 2023 to March 31, 2024 | &nbsp;&nbsp; The 132<sup>nd</sup><br> (the current consolidated fiscal year)<br> From April 1, 2024 to March 31, 2025 |
| &nbsp;&nbsp;Sales | (million yen) | 49847 | 55054 | 56041 | 57515 |
| &nbsp;&nbsp;Operating profit | (million yen) | 2707 | 1379 | 227 | 1382 |
| &nbsp;&nbsp;Ordinary profit | (million yen) | 3119 | 1652 | 778 | 1434 |
| &nbsp;&nbsp;Net income attributable to owners of the parent or net loss (minus) | (million yen) | 2347 | △257 | 342 | 1192 |
| &nbsp;&nbsp;Net income per share or net loss (minus) | (yen) | 215.11 | △23.88 | 32.55 | 116.65 |
| &nbsp;&nbsp;Total assets | (million yen) | 71490 | 73029 | 79121 | 77803 |

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(Note) We have applied "Accounting Standard for Current Income Taxes" (ASBJ Statement No. 27, October 28, 2022) from the beginning of the 132<sup>nd</sup> fiscal term and the figures, etc. for the 132<sup>nd</sup> fiscal term are those after having applied this Accounting Standard, etc.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Material issues on the parent company and subsidiaries

① Issues on the parent company

There is no applicable issue.

② Material issues on subsidiaries (as of March 31, 2025)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;Segment | &nbsp;&nbsp;&nbsp;&nbsp;Company name | &nbsp;&nbsp;Capital | &nbsp;&nbsp;Capital | Our company's ratio of voting rights | &nbsp;&nbsp;Main business details |
| &nbsp;&nbsp;Japan | &nbsp;&nbsp;DAIDO GENERAL SERVICE CO., LTD. | 30 | million yen | 100.00％ | &nbsp;&nbsp;Land transportation, sales of petroleum products, chemical agents and packing materials, non-life insurance agent, maintenance and sales of automobiles |
| &nbsp;&nbsp;Japan | &nbsp;&nbsp;SHINSEI KOGYO CO., LTD. | 370 | million yen | 77.27 | &nbsp;&nbsp;Heat treatment of steel wires, manufacturing, sales and contract processing of drawn wires |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DAIDO CHAIN (CHANGSHU) CO., LTD. | 4100 | thousand US$ | 100.00 | &nbsp;&nbsp;Manufacturing and sales of conveyors and chains |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;D.I.D PHILIPPINES INC. | 120 | million pesos | 100.00 | &nbsp;&nbsp;Manufacturing and sales of chains, etc. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;P.T. DAIDO INDONESIA MANUFACTURING | 13444 | thousand US$ | 100.00 | &nbsp;&nbsp;Manufacturing and sales of rims, wheels and chains |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;D.I.D VIETNAM CO., LTD. | 2788 | thousand US$ | 100.00 | &nbsp;&nbsp;Manufacturing and sales of chains, etc. |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;Segment | &nbsp;&nbsp;&nbsp;&nbsp;Company name | &nbsp;&nbsp;Capital | &nbsp;&nbsp;Capital | Our company's ratio of voting rights | &nbsp;&nbsp;Main business details |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DID MALAYSIA SDN. BHD. | 1 | million ringgits | 100.00％<br> (100.00) | &nbsp;&nbsp;Sales of chains, etc. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DAIDO SITTIPOL CO., LTD. | 325 | million baht | 51.00 | &nbsp;&nbsp;Manufacturing and sales of chains, etc. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;D.I.D ASIA CO., LTD. | 10 | million baht | 100.00 | &nbsp;&nbsp;Sales of chains, etc. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;INTERFACE SOLUTIONS CO., LTD. | 100 | million baht | 59.09 | &nbsp;&nbsp;Logistics system, transportation of various goods, manufacturing and sales of equipment, etc. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;INTERFACE SYSTECH CO., LTD. | 21 | million baht | &nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;50.23<br> (50.23) | &nbsp;&nbsp;Manufacturing and sales of transport equipment for precision machinery, etc. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DAIDO INDIA PVT.LTD. | 918 | million rupees | &nbsp;&nbsp; 100.00<br> (1.09) | &nbsp;&nbsp;Manufacturing and sales of chains, etc. |
| &nbsp;&nbsp;North America | &nbsp;&nbsp;DAIDO CORPORATION OF AMERICA | 6400 | thousand US$ | 100.00 | &nbsp;&nbsp;Manufacturing and sales of chains, etc., sales of rims and wheels, etc. |
| &nbsp;&nbsp;South America | &nbsp;&nbsp;DAIDO INDUSTRIAL E COMERCIAL LTDA. | 31 | million reals | 100.00 | &nbsp;&nbsp;Manufacturing and sales of chains and conveyors |
| &nbsp;&nbsp;South America | &nbsp;&nbsp;DAIDO INDUSTRIA DE CORRENTES DA AMAZONIA LTDA. | 31 | million reals | 100.00 | &nbsp;&nbsp;Manufacturing and sales of chains, etc. |
| &nbsp;&nbsp;Europe | &nbsp;&nbsp;DID EUROPE S.R.L. | 510 | thousand euros | 100.00 | &nbsp;&nbsp;Sales of chains and rims, etc. |

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(Notes) 1. The figure in the parentheses for the ratio of voting rights is the ratio of our company's indirect ownership and inside of the total ratio.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. As D.I.D VIETNAM CO., LTD. made capital increase of 453 thousand US$ in May 2024, this company's capital increased to 2,788 thousand US$. As our company paid for this company's capital increase, our company's voting rights ratio did not change (100.00%).

&nbsp;&nbsp;&nbsp;&nbsp;(4) Issues to be addressed

Our company announced the long-term vision "DID MUGENDAI SMILE VISION 2035" in 2024 under the company direction "we will globally deliver smiling faces in Daido way with an effort to promote [conveying] and [delivering]". In parallel, we made the 13<sup>th</sup> mid-range management plan and FY 2025 falls on its 2<sup>nd</sup> year.

In this mid-range management plan, we focus on strengthening "power to earn", namely, how to ensure the structure to generate the profit within 3 years of this plan. We will ensure that we solve business issues within 3 years of this plan, ensure a growth base toward our company's 100<sup>th</sup> anniversary and contribute to the development of a sustainable society.

■Current business domain

We will pursue further sales expansion and profit improvement by taking advantage of technologies developed in such domains as automobiles, motorcycles and industrial areas. We will provide products responding to our customers' expectations by reinforcing such strength as advanced plastic processing and surface finishing.

■New business domain

We study to challenge such new business domains as logistics and agriculture based on technologies developed through the current businesses. We will judge the possibility of commercialization and pursue business expansion.

■Return policy to shareholders

We position the profit return to our shareholders as one of the most important management policies and will ensure a flexible approach, taking the business performance, the management environment and the strengthening of long and mid-term financial structure into account, keeping the maintenance of stable dividend as base. We would appreciate it if our shareholders could continuously support and guide us.

&nbsp;&nbsp;&nbsp;&nbsp;(5) Main business details (as of March 31, 2025)

We manufacture and sell the following products.

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Business category | &nbsp;&nbsp;&nbsp;&nbsp;Main business details | &nbsp;&nbsp;&nbsp;&nbsp;Segment |
| &nbsp;&nbsp;Chain-related business | &nbsp;&nbsp;For motorcycle, automobile, industrial machinery (multistory parking system, office machines, agricultural machinery, water treatment devices, engineering machinery, construction machinery and conveyor) | &nbsp;&nbsp;Japan, Asia, North America, South America and Europe |
| &nbsp;&nbsp;Conveyor-related business | &nbsp;&nbsp;For environment-related devices, steelmaking, cement, automobile transportation equipment, port equipment, mining, chemical industry, precision machinery and rationalization of other industrial equipment | &nbsp;&nbsp;Japan, Asia, South America |
| &nbsp;&nbsp;Rim wheel-related business | &nbsp;&nbsp;Rim for motorcycles, wheel for agricultural machinery, wheel for buggy, spokes and bolts for motorcycles | &nbsp;&nbsp;Japan, Asia, Nort America, Europe |
| &nbsp;&nbsp;Other business | &nbsp;&nbsp;Specified machinery, tools, etc., staircase lifting device, parts and materials for products | &nbsp;&nbsp;Japan |

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&nbsp;&nbsp;&nbsp;&nbsp;(6) Main sales offices and factories (as of March 31, 2025)

① Our company

---

| | | |
|:---|:---|:---|
| HQs | &nbsp;&nbsp;I-197, Kumasaka machi, Kaga city, Ishikawa Pref. | &nbsp;&nbsp;I-197, Kumasaka machi, Kaga city, Ishikawa Pref. |
| Branch office | &nbsp;&nbsp;Tokyo branch office | &nbsp;&nbsp;(Chuo ku, Tokyo) |
| Sales office | &nbsp;&nbsp;Sapporo sales office <br> Tochigi sales office <br> Hamamatsu sales office <br> Nagoya sales office <br> Osaka sales office <br> West Japan sales office <br> Kumamoto sales office  | &nbsp;&nbsp;(Higashi ku, Sapporo city, Hokkaido)<br> (Utsunomiya city, Tochigi Pref.)<br> (Kita ku, Hamamatsu city, Shizuoka Pref.)<br> (Nakamura ku, Nagoya city, Aichi Pref.)<br> (Chuo ku, Osaka city, Osaka)<br> (Hakata ku, Fukuoka city, Fukuoka Pref.)<br> (Kikuchi city, Kumamoto Pref.) |
| Factory | &nbsp;&nbsp;HQs factory <br> Fukuda factory <br> Iburihashi factory  | &nbsp;&nbsp;(Kaga city, Ishikawa Pref.)<br> (Kaga city, Ishikawa Pref.)<br> (Kaga city, Ishikawa Pref.) |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Note) Tochigi sales office and Hamamatsu sales office were closed on April 16, 2025.

The business operations of Tochigi sales office have been transferred to Tokyo branch office and the business operations of Hamamatsu sales office have been transferred to Nagoya sales office.

② Main subsidiaries

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;Segment | &nbsp;&nbsp;&nbsp;&nbsp;Company name | &nbsp;&nbsp;&nbsp;&nbsp;Location |
| &nbsp;&nbsp;Japan | &nbsp;&nbsp;Daido General Service | &nbsp;&nbsp;Kaga city, Ishikawa Pref. |
| &nbsp;&nbsp;Japan | &nbsp;&nbsp;Shinsei Kogyo Co., Ltd. | &nbsp;&nbsp;Nakagawa ku, Nagoya city, Aichi Pref. |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;Daido Chain (Changshu) Co., Ltd. | &nbsp;&nbsp;China |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;D.I.D PHILIPPINES INC. | &nbsp;&nbsp;The Philippines |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;P.T. DAIDO INDONESIA MANUFACTURING | &nbsp;&nbsp;Indonesia |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;D.I.D VIETNAM CO., LTD. | &nbsp;&nbsp;Vietnam |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DID MALAYSIA SDN. BHD. | &nbsp;&nbsp;Malaysia |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DAIDO SITTIPOL CO., LTD. | &nbsp;&nbsp;Thailand |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;D.I.D ASIA CO., LTD. | &nbsp;&nbsp;Thailand |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;INTERFACE SOLUTIONS CO., LTD. | &nbsp;&nbsp;Thailand |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;INTERFACE SYSTECH CO., LTD. | &nbsp;&nbsp;Thailand |
| &nbsp;&nbsp;Asia | &nbsp;&nbsp;DAIDO INDIA PVT.LTD. | &nbsp;&nbsp;India |
| &nbsp;&nbsp;North America | &nbsp;&nbsp;DAIDO CORPORATION OF AMERICA | &nbsp;&nbsp;The US |
| &nbsp;&nbsp;South America | &nbsp;&nbsp;DAIDO INDUSTRIAL E COMERCIAL LTDA. | &nbsp;&nbsp;Brazil |
| &nbsp;&nbsp;South America | &nbsp;&nbsp;DAIDO INDUSTRIA DE CORRENTES DA AMAZONIA LTDA. | &nbsp;&nbsp;Brazil |
| &nbsp;&nbsp;Europe | &nbsp;&nbsp;DID EUROPE S.R.L. | &nbsp;&nbsp;Italy |

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&nbsp;&nbsp;&nbsp;&nbsp;(7) Employees' situation (as of March 31, 2025)

① Our group's employees' situation

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Segment | &nbsp;&nbsp;&nbsp;&nbsp;Number of employees | &nbsp;&nbsp;&nbsp;&nbsp;Number of employees | &nbsp;&nbsp;&nbsp;&nbsp;Change from the figure at the end of the previous consolidated FY |
| &nbsp;&nbsp;&nbsp;&nbsp;Japan | 950 | (156) | Increase of 6 employees |
| &nbsp;&nbsp;&nbsp;&nbsp;Asia | 1093 | (419) | Decrease of 40 employees |
| &nbsp;&nbsp;&nbsp;&nbsp;North America | 46 | (2) | Decrease of 1 employee |
| &nbsp;&nbsp;&nbsp;&nbsp;South America | 352 | (46) | Increase of 12 employees |
| &nbsp;&nbsp;&nbsp;&nbsp;Europe | 13 | (5) | Decrease of 3 employees |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 2454 | (628) | Decrease of 26 employees |

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(Note) The number of employees is for that of full-time employees. The number of temporary employees (retired employees, dispatched employees, etc.) is shown in the parentheses in addition to the number of full-time employees.

② Our company's employees' situation

Number of employees <u>Change from the figure at the end of the previous consolidated FY</u> <u>Average age</u> <u>Average years of service</u> <br> <u>833(129)</u> <u>Increase of 15 employees</u> <u>37.4 years old</u> <u>13.6 years</u>

(Note) The number of employees is for that of full-time employees. The number of temporary employees (retired employees, dispatched employees, etc.) is shown as an annual average in the parentheses in addition to the number of full-time employees.

&nbsp;&nbsp;&nbsp;&nbsp;(8) Main banks (as of March 31, 2025)

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Bank | &nbsp;&nbsp;&nbsp;&nbsp;Borrowing balance |
| &nbsp;&nbsp;&nbsp;The Hokkoku Bank | 7,448 million yen |
| &nbsp;&nbsp;&nbsp;MUFG Bank, Ltd. | 3,817 |
| &nbsp;&nbsp;&nbsp;Mizuho Bank, Ltd. | 2,623 |

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&nbsp;&nbsp;&nbsp;&nbsp;(9) Other Important Particulars Regarding Current Status of Business Group

At the meeting of its Board of Directors on May 14, 2025, the Company resolved to integrate business between the Company and Tsubakimoto Chain Co. ("Tsubakimoto Chain"; together with the Company, the "Companies") and to conduct a share exchange (the "Share Exchange") through which Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange and the Company will become a wholly-owned subsidiary company resulting from the share exchange, and have executed the Business Integration Agreement and the Share Exchange Agreement between the Companies on the same date.

Subject to approvals by the relevant authorities under applicable competition laws in Japan and Thailand, the Share Exchange will be conducted with the approval by a resolution at this general shareholders' meeting. The effective date of the Share Exchange is scheduled to be January 1, 2026.

As a result of these transactions, Tsubakimoto Chain will become the Company's wholly-owning parent company, and the Company, as its wholly-owned subsidiary company, will be delisted from the Standard Market of the Tokyo Stock Exchange, Inc. on December 29, 2025 (with December 26, 2025 as the final trading date).

2. Company's situation

&nbsp;&nbsp;&nbsp;&nbsp;(1) Share information (as of March 31, 2025)

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| | | |
|:---|:---|:---|
| ① Total number of authorized shares | 32,000,000 shares |  |
| ② Total number of outstanding shares | 10,924,201 shares | (including 775,205 treasury shares) |
| ③ Number of shareholders | 4939 |  |

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④ Major shareholder (top 10 shareholders)

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Name of shareholders | &nbsp;&nbsp;&nbsp;Number of shares held | &nbsp;&nbsp;&nbsp;Shareholding ratio |
| &nbsp;&nbsp;&nbsp;Iida Co., Ltd. | 709 thousand shares | 6.99％ |
| &nbsp;&nbsp;&nbsp;The Hokkoku Bank | 503 | 4.96 |
| &nbsp;&nbsp;&nbsp;Nippon Life Insurance Company | 275 | 2.71 |
| &nbsp;&nbsp;&nbsp;Kaga Shoko Ltd. | 262 | 2.59 |
| &nbsp;&nbsp;&nbsp;Mizuho Bank, Ltd. | 258 | 2.55 |
| &nbsp;&nbsp;&nbsp;MUFG Bank, Ltd. | 258 | 2.55 |
| &nbsp;&nbsp;&nbsp;Mariko Araya | 257 | 2.54 |
| &nbsp;&nbsp;&nbsp;LGT Bank, Ltd. | 247 | 2.44 |
| &nbsp;&nbsp;&nbsp;PBG Clients SG | 242 | 2.39 |
| &nbsp;&nbsp;&nbsp;Custody Bank of Japan, Ltd. (trust account) | 227 | 2.24 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Notes) 1. Our company holds 775,205 treasury shares, however, our company is not excluded from the above-mentioned major shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The shareholding ratio is calculated after excluding the treasury shares.

⑤Situation of shares given to our company's officers in exchange for their services during this fiscal

year

Position <u>Number of shares given</u> <u>Number of officers to whom shares were given</u> <br> <u>Director (except Directors serving as the Audit and Supervisory Committee Members)</u> <u>Common share 14,243 shares</u> <u>Four officers</u>

⑥ Other important matters regarding our company's shares

We purchased the treasury shares as stated below in this fiscal year based on the resolution made at the Board of Directors meeting held on July 31, 2024.

---

| | |
|:---|:---|
| Type and number of shares purchased: | Common share 228,100 shares |
| Total amount for purchased shares: | 209,852,000 yen |
| Date of purchase: | August 1, 2024 |
| Purchasing method: | Purchase through the Off-Auction Own Share Repurchase<br> Trading System (ToSTNeT-3) at the Tokyo Stock<br> Exchange |

---

&nbsp;&nbsp;&nbsp;&nbsp;(2) Situation on share option, etc.

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Company officers' situation

① Situation on directors (as of March 31, 2025)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;Position in the company | &nbsp;&nbsp;&nbsp;&nbsp;Name | &nbsp;&nbsp;&nbsp;&nbsp;Area of responsibilities and significant concurrent positions |
| &nbsp;&nbsp;&nbsp;Representative Director, Chairman | &nbsp;&nbsp;&nbsp;Kozo Araya |  |
| &nbsp;&nbsp;&nbsp;Representative Director, President | &nbsp;&nbsp;&nbsp;Hirofumi Araya | &nbsp;&nbsp;&nbsp;Executive Officer, CEO<br> Representative Director, Chairman of DAIDO SITTIPOL CO., LTD. |
| &nbsp;&nbsp;&nbsp;Managing Director | &nbsp;&nbsp;&nbsp;Masanori Sanada | &nbsp;&nbsp;&nbsp;Executive Officer Administration Div. Manager |
| &nbsp;&nbsp;&nbsp;Director | &nbsp;&nbsp;&nbsp;Toshio Ishimura | &nbsp;&nbsp;&nbsp;Executive Officer Industrial Products Div. Manager |
| &nbsp;&nbsp;&nbsp;Director (Audit and Supervisory Committee Member, full-time) | &nbsp;&nbsp;&nbsp;Kiyohiro Kajiya |  |
| &nbsp;&nbsp;&nbsp;Director (Audit and Supervisory Committee Member) | &nbsp;&nbsp;&nbsp;Seiji Sakashita | &nbsp;&nbsp;&nbsp;Representative Partner, Hokuriku Auditing Office<br> Outside auditor, Komatsu Matere Co., Ltd. |
| &nbsp;&nbsp;&nbsp;Director (Audit and Supervisory Committee Member) | &nbsp;&nbsp;&nbsp;Shoji Takechi | &nbsp;&nbsp;&nbsp;Professor, Department of Management Systems, Faculty of Information Frontier, Kanazawa Institute of Technology |
| &nbsp;&nbsp;&nbsp;Director (Audit and Supervisory Committee Member) | &nbsp;&nbsp;&nbsp;Miho Yamamoto | &nbsp;&nbsp;&nbsp;Representative Director, COCOROE Inc |
| &nbsp;&nbsp;&nbsp;Director (Audit and Supervisory Committee Member) | &nbsp;&nbsp;&nbsp;Jun Akimoto | &nbsp;&nbsp;&nbsp;General Manager, Planning & Administration Department, Aerospace & Defense Business Domain, IHI |

---

&nbsp;&nbsp;&nbsp;&nbsp;(Notes) 1. The Directors (Audit and Supervisory Committee Members), Mr. Seiji Sakashita, Mr. Shoji Takechi, Ms. Miho Yamamoto and Mr. Jun Akimoto, are external directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Our company designates Mr. Seiji Sakashita, Mr. Shoji Takechi, Ms. Miho Yamamoto and Mr. Jun Akimoto,
who are external directors, as independent directors based on the provisions of the Tokyo Stock Exchange and reports to the Tokyo Stock
Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Mr. Kiyohiro Kajiya has various work experiences in our company's technology, manufacturing and
product quality divisions and achievements taking charge of "Monozukuri" and therefore, we have selected him as full-time
Audit and Supervisory Committee Member so that he can strengthen the audit and oversight function using these rich experiences and knowledge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Mr. Seiji Sakashita, Director (Audit and Supervisory Committee Member), has specialized knowledge of financing
and accounting which he has developed for many years as a certified public accountant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. Mr. Seiji Sakashita, Director (Audit and Supervisory Committee Member), will resign as the outside auditor
of Komatsu Matere Co., Ltd. as of June 20, 2025, and, at the same time, resume as the external director (Audit and Supervisory Committee
Member) of Komatsu Matere Co., Ltd., as Komatsu Matere Co., Ltd. is scheduled to move to Company with Audit and Supervisory Committee
on the above-mentioned day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. Mr. Jun Akimoto, Director (Audit and Supervisory Committee Member), resumed as Executive Officer, Deputy
Business Domain Head, Aerospace & Defense Business Domain, IHI as of April 1, 2025.

② Overview of agreement limiting liability

Our company and each Audit and Supervisory Committee Member have concluded an agreement limiting liability for damages stipulated in Article 423, Clause 1 of the Companies Act, based on the provision of Article 427, Clause 1 of the Companies Act and the liability amount based on this agreement is set at such an amount defined by the law.

③ Overview, etc. of compensation agreement

Not applicable.

④ Overview, etc. of liability insurance agreement for officers, etc.

Our company has concluded a liability insurance agreement for officers, etc., stipulated in Article 430, Clause 3.1 of the Companies Act with an insurance company and the insurance premium is entirely borne by the company.

As for the overview of this liability insurance, it stipulates that the insurance company shall compensate for damages, under this liability insurance agreement, likely to occur to officers, who are insured, when they are held responsible relating to execution of their responsibilities or when they are subject to claims relating to such responsibilities and this agreement shall be annually renewed.

In addition, in this insurance agreement, there are certain disclaimers including a provision that no compensation shall be made for such acts as acts to illegally obtain personal benefits, criminal acts and acts done knowing that those acts violate the law, and we ensure such measures not to affect subject officers' appropriateness to execute their responsibilities by setting a maximum amount for compensation.

⑤ Director's compensation, etc.

1) Total amount of compensation, etc. in this fiscal year

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Position | Total amount of compensation, etc. (million yen) | Total amount of compensation, etc. by type (million yen) | Total amount of compensation, etc. by type (million yen) | Total amount of compensation, etc. by type (million yen) | Number of officers subject to compensation (XX officers) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Position | Total amount of compensation, etc. (million yen) | Basic compensation | Performance-based compensation | Non-monetary compensation, etc. | Number of officers subject to compensation (XX officers) |
| &nbsp;&nbsp;Directors (except Audit and Supervisory Committee Members)<br> (external directors within the above) | 171<br> (－) | 147<br> (－) | 13<br> (－) | 10<br> （－） | 6<br> (－) |
| &nbsp;&nbsp;Directors (Audit and Supervisory Committee Members)<br> (external directors within the above) | 36<br> (19) | 36<br> (19) | － | － | 6<br> (5) |
| &nbsp;&nbsp;Total<br> (external officers within the above) | 207<br> (19) | 183<br> (19) | 13<br> (－) | 10<br> （－） | 12<br> (5) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Notes) 1. The above-mentioned table includes three directors (including one external director) who resigned at the closing of the 131<sup>st</sup> Ordinary General Meeting of Shareholders held on June 25, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The amount of director's compensation, etc. does not include the employee's salary for a director who also holds an employee post.

2) Matters regarding the resolution of the General Meeting of Shareholders on Director's compensation, etc.

The maximum compensation amount for directors (except Directors serving as the Audit and Supervisory Committee Members) has been resolved as within 300 million yen per annum (not including the employee's salary) at the 127th Ordinary General Meeting of Shareholders held on June 26, 2020, and the number of directors (except Directors serving as the Audit and Supervisory Committee Members) at the closing of this general Meeting of Shareholders was 7. The maximum compensation amount for directors serving as the Audit and Supervisory Committee Members has been resolved as within 100 million yen per annum at the 127th Ordinary General Meeting of Shareholders held on June 26, 2020, and the number of directors serving as the Audit and Supervisory Committee Members) at the closing of this general Meeting of Shareholders was 4.

In addition, apart from the monetary compensation, it was resolved at the 131st Ordinary General Meeting of Shareholders held on June 25, 2024 that the share-based payment amount for directors (except Directors serving as the Audit and Supervisory Committee Members) was 60 million yen per annum or less and that the maximum number of shares for them was 50,000 shares or less per annum and the number of directors subject to this compensation at the closing of this General Meeting of Shareholders was 4.

3) Matters regarding performance-based compensation

Our company's criteria for performance-based compensation has been set as the consolidated ordinary profit amount for the previous fiscal year to encourage efforts to improve business performance at each fiscal year and to appropriately reflect the results and we calculate the total amount to be paid by multiplying the consolidated ordinary profit amount for the previous fiscal year with a certain ratio decided at the Board of Directors meeting. The actual consolidated ordinary profit, used as criteria for this fiscal year, is 778 million yen.

4) Matters regarding non-monetary compensation, etc.

The non-monetary compensation, etc. shall mean our company's shares and the conditions, etc. for the allocation shall be stated in 6) d. Policies on the details and the amount or the quantity of non-monetary compensation or the decision for its calculation method (including policies on the timing to pay such compensation, etc.). In addition, the actual payment situation for this fiscal year is stated in [2. (1) ⑤ The situation of shares paid to our company's officers as compensation for their business responsibilities during this fiscal year].

5) Matters regarding restricted stock unit system

The non-monetary compensation for our company's directors (except Directors serving as the Audit and Supervisory Committee Members) shall be a share-based payment using the restricted stock unit, aiming to ensure further value sharing with our shareholders and to give an incentive to aim for sustainable improvement in our company's corporate value. The number of restricted stock units paid shall be decided depending on the position and the responsibilities of each director subject to this compensation and the payment shall be made at a certain period each year during their service. In addition, the compensation for directors serving as the Audit and Supervisory Committee Members shall be fixed compensation only.

6) Policies to determine individual compensation, etc. for directors (except Directors serving as the Audit and Supervisory Committee Members. Hereinafter referred to as [director] in ⑤)

Our company resolves policies to determine individual compensation, etc. for directors at the Board of Directors meeting.

In addition, our company's Board of Directors has reviewed the policies, etc. to determine the compensation amount for the representative Director & President relating to individual fixed compensation, performance-based compensation and non-monetary compensation for directors for this fiscal year, and the Borad has confirmed that such policies are in line with the policies to determine individual compensation, etc. for directors, decided by our company.

The overview of the policies to determine individual compensation, etc. for directors is as follows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Basic policy

The individual compensation, etc. for our company's directors consists of monetary compensation and non-monetary compensation as fixed compensation and performance-based compensation, etc. within the total compensation amount resolved at the General Meeting of Shareholders. The performance-based compensation and the non-monetary compensation shall be paid to directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Policies to determine
 the amount of individual compensation, etc. for directors and the calculation method on basic
 compensation (including policies on the timing to pay such compensation, etc.).

The basic compensation for our company's directors shall be monthly fixed compensation and the amount shall be determined in accordance with each director's position, responsibilities and years of service, etc., comprehensively considering other companies' compensation level, our company's performance and the level of our employees' salaries, etc. and shall be paid periodically during their service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Policies to determine the details of performance criteria for performance-based compensation, etc. and the
calculation method (including policies on the timing to pay such compensation, etc.).

The performance-based compensation, etc. for our company's directors has been set by using the consolidated ordinary profit amount for the previous fiscal year as criteria to encourage efforts to improve business performance at each fiscal year and to appropriately reflect the results and the total compensation amount shall be calculated by multiplying the consolidated ordinary profit amount for the previous fiscal year with a certain ratio decided by the Board of Directors meeting. In addition, for each director's individual performance-based compensation, etc., after the total compensation amount has been allocated, the individual amount shall be decided depending on each director's position, responsibilities and years of service, etc. and the payment shall be made at a certain period each year during their service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Policies to determine the details of non-monetary compensation, its amount or quantity and the calculation
method (including policies on the timing to pay such compensation, etc.).

The non-monetary compensation for our company's directors shall be a share-based payment using the restricted stock unit, aiming to ensure further value sharing with our shareholders and to give an incentive to aim for sustainable improvement in our company's corporate value. The number of restricted stock units paid shall be decided depending on the position and the responsibilities of each director subject to this compensation and the payment shall be made at a certain period each year during their service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Policies to determine the proportion of fixed compensation, performance-based compensation and non-monetary
compensation against individual compensation, etc. for directors

The proportion of fixed compensation, performance-based compensation and non-monetary compensation against individual compensation, etc. for directors shall be decided to make it an appropriate incentive for performance improvement, benchmarking other companies' examples.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Matters regarding delegation of decisions for the details of individual compensation, etc.

The decision for the individual fixed compensation amount, the individual performance-based compensation allocated based on the total payment for the performance-based compensation, etc. calculated based on the above-mentioned c. and the non-monetary compensation calculated based on the above-mentioned d. shall be delegated to Representative Director and President based on the resolution by the Board of Directors meeting. The Representative Director and President shall decide the individual fixed compensation depending on each director's position, responsibilities and years of service, etc. and comprehensively considering other companies' compensation level, our company's performance and the level of our employees' salaries, etc. and shall have the authority to decide the individual performance-based compensation and the non-monetary compensation depending on each director's position, responsibilities and years of service, etc.

7) Matters regarding delegation of individual compensation, etc. for directors

The Board of Directors delegates the decision of fixed compensation, performance-based compensation, etc. and non-monetary compensation for each director to Hirofumi Araya, Representative Director, Executive Officer and CEO. The reason for the delegation is that the Board has acknowledged that Representative Director and President is in the best position to appraise each director considering the entire company's performance, etc.

⑥ Matters regarding external officers

1) Significant concurrent positions at other companies, etc. and the relationship between our company and such other companies, etc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Mr. Seiji Sakashita, Director (Audit and Supervisory Committee member), is Representative Partner of Hokuriku
Auditing Office and Outside auditor of Komatsu Matere Co., Ltd. There is no particular conflict of interest between our company and each
of the concurrent positions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Mr. Shoji Takechi, Director (Audit and Supervisory Committee member), is Professor, Department of Management
Systems, Faculty of Information Frontier, Kanazawa Institute of Technology. There is no particular conflict of interest between our company
and the concurrent position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Ms. Miho Yamamoto, Director (Audit and Supervisory Committee member), is Representative Director of COCOROE
Inc. There is no particular conflict of interest between our company and the concurrent position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Mr. Jun Akimoto, Director (Audit and Supervisory Committee member), is Deputy Business Domain Head, Aerospace
& Defense Business Domain and General Manager, Planning & Administration Department, Aerospace & Defense Business Domain,
IHI. There is no particular conflict of interest between our company and the concurrent position.

2) Kinship with personnel in charge, etc. of our company or of our company's specific business partners

Not applicable

3) Main activities in this fiscal year

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Position<br> Name | Board of Directors meeting | Audit and Supervisory Committee | Main activities and overview of responsibilities executed in line with the expected role for external directors |
| &nbsp;&nbsp; Director (Audit and Supervisory Committee Member)<br> Seiji Sakashita | 15/15 times<br> (100%) | 11/11 times<br> (100%) | He attended all the Board of Directors Meetings and Audit and Supervisory Committees held during this fiscal year.<br> Mr. Seiji Sakashita fully performs roles and responsibilities as external director, including practical oversight and advice on our company's management based on rich knowledge and experience in financing and accounting as a certified public accountant. |
| &nbsp;&nbsp; Director (Audit and Supervisory Committee Member)<br> Shoji Takechi | 15/15 times<br> (100%) | 11/11 times<br> (100%) | He attended all the Board of Directors Meetings and Audit and Supervisory Committees held during this fiscal year.<br> Mr. Shoji Takechi fully performs roles and responsibilities as external director, including appropriate advice and oversight on our company's management based on rich knowledge and experience covering our company's business areas, resuming as Professor at Faculty of Engineering, Institute of Technology. |
| &nbsp;&nbsp; Director (Audit and Supervisory Committee Member)<br> Miho Yamamoto | 11/11 times<br> (100%) | 8/8 times<br> (100%) | She attended all the Board of Directors Meetings and Audit and Supervisory Committees held during this fiscal year since her appointment as director (Audit and Supervisory Committee Member) on June 25, 2024.<br> Ms. Miho Yamamoto fully performs roles and responsibilities as external director, including appropriate advice and oversight of our company's management based on rich knowledge and experience covering our company's business areas as an expert having a global viewpoint, known as a pioneer in the social design field, having studied social contribution and sustainability at graduate school in UK. |
| &nbsp;&nbsp; Director (Audit and Supervisory Committee Member)<br> Jun Akimoto | 11/11 times<br> (100%) | 8/8 times<br> (100%) | He attended all the Board of Directors Meetings and Audit and Supervisory Committees held during this fiscal year since his appointment as director (Audit and Supervisory Committee Member) on June 25, 2024.<br> Mr. Jun Akimoto fully performs roles and responsibilities as external director, including appropriate advice and oversight of our company's management based on his experience and knowledge with his rich global business management experience. |

---

(Note) The amount and the number of shares stated in this business report are indicated by omitting figures less than stated units.

<u>Consolidated Balance Sheet</u>

(as of March 31, 2025) <br> (Unit: million yen)

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;Assets | &nbsp;&nbsp;Assets | &nbsp;&nbsp;Liabilities | &nbsp;&nbsp;Liabilities |
| &nbsp;&nbsp;<u>Current assets</u> | &nbsp;&nbsp;37725 | &nbsp;&nbsp;<u>Current liabilities</u> | &nbsp;&nbsp;17650 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | &nbsp;&nbsp;8711 | &nbsp;&nbsp;&nbsp;&nbsp;Notes payable and accounts payable | &nbsp;&nbsp;7687 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes receivable | &nbsp;&nbsp;3230 | &nbsp;&nbsp;&nbsp;Short-term debt | &nbsp;&nbsp;5451 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | &nbsp;&nbsp;8927 | &nbsp;&nbsp;&nbsp;Lease liabilities | &nbsp;&nbsp;151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract asset | &nbsp;&nbsp;125 | &nbsp;&nbsp;&nbsp;Income taxes payable | &nbsp;&nbsp;250 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merchandise and finished products | &nbsp;&nbsp;5979 | &nbsp;&nbsp;&nbsp;Contract liability | &nbsp;&nbsp;172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Work in process | &nbsp;&nbsp;4600 | &nbsp;&nbsp;&nbsp;Reserve for bonuses | &nbsp;&nbsp;524 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Raw materials and supplies | &nbsp;&nbsp;4150 | &nbsp;&nbsp;&nbsp;&nbsp;Reserve for directors' bonuses | &nbsp;&nbsp;10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;2112 | &nbsp;&nbsp;&nbsp;&nbsp;Provision for product warranties | &nbsp;&nbsp;133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | &nbsp;&nbsp;△112 | &nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on order received | &nbsp;&nbsp;37 |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on disaster | &nbsp;&nbsp;140 |
|  |  | &nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;3092 |
| &nbsp;&nbsp;<u>Fixed assets</u> | &nbsp;&nbsp;40039 | &nbsp;&nbsp;<u>Fixed liabilities</u> | &nbsp;&nbsp;23365 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tangible fixed assets | &nbsp;&nbsp;22295 | &nbsp;&nbsp;&nbsp;Bonds payable | &nbsp;&nbsp;5700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buildings and structures | &nbsp;&nbsp;6938 | &nbsp;&nbsp;&nbsp;Long-term debt | &nbsp;&nbsp;12182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Machinery, equipment and delivery equipment | &nbsp;&nbsp;8526 | &nbsp;&nbsp;&nbsp;Lease liabilities | &nbsp;&nbsp;1102 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land | &nbsp;&nbsp;4028 | &nbsp;&nbsp;&nbsp;Deferred tax liabilities | &nbsp;&nbsp;1499 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease assets | &nbsp;&nbsp;478 | &nbsp;&nbsp;&nbsp;&nbsp;Provision for retirement benefits | &nbsp;&nbsp;2641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Construction in progress | &nbsp;&nbsp;1307 | &nbsp;&nbsp;&nbsp;&nbsp;Long-term accounts payable | &nbsp;&nbsp;177 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;1016 | &nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;62 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangible fixed assets | &nbsp;&nbsp;222 | &nbsp;&nbsp;Total liabilities | &nbsp;&nbsp;41016 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Software | &nbsp;&nbsp;209 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net assets | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;13 | &nbsp;&nbsp;<u>Shareholder's equity</u> | &nbsp;&nbsp;21292 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments and other assets | &nbsp;&nbsp;17521 | &nbsp;&nbsp;&nbsp;Capital stock | &nbsp;&nbsp;3536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment securities | &nbsp;&nbsp;16715 | &nbsp;&nbsp;&nbsp;Capital surplus | &nbsp;&nbsp;3273 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax assets | &nbsp;&nbsp;324 | &nbsp;&nbsp;&nbsp;Retained earnings | &nbsp;&nbsp;15105 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;830 | &nbsp;&nbsp;&nbsp;Treasury shares | &nbsp;&nbsp;△622 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | &nbsp;&nbsp;△349 | &nbsp;&nbsp;&nbsp;<u>Accumulated other comprehensive income</u> | &nbsp;&nbsp;9430 |
| &nbsp;&nbsp;<u>Deferred assets</u> | &nbsp;&nbsp;38 | &nbsp;&nbsp;&nbsp;&nbsp;Other difference in Securities valuation | &nbsp;&nbsp;5825 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bond issuance cost | &nbsp;&nbsp;38 | &nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation reserve | &nbsp;&nbsp;3157 |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;Remeasurements of defined benefit plans | &nbsp;&nbsp;447 |
|  |  | &nbsp;&nbsp;Non-controlling interests | &nbsp;&nbsp;6064 |
|  |  | &nbsp;&nbsp;Total net assets | &nbsp;&nbsp;36787 |
| &nbsp;&nbsp;Total assets | &nbsp;&nbsp;77803 | &nbsp;&nbsp;Total liabilities and equity | &nbsp;&nbsp;77803 |

---

<u>Consolidated Profit and Loss Statement</u>

（ From April 1, 2024 to March 31, 2025) ）

(Unit: million yen)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Account | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amount | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amount |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales |  | 57515 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of goods sold |  | 46379 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit |  | 11136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses費 |  | 9753 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating profit |  | 1382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-operating income |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 74 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend income | 546 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment gain on equity method | 197 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | 162 | 981 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-operating expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Interest expense<br> Foreign exchange loss | 392<br> 384 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | 151 | 929 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ordinary profit |  | 1434 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extraordinary gain |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of non-current assets | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities<br> Gain on reversal of provision for loss on disaster | 637<br> 65 | <br> 712 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extraordinary loss |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on retirement of property | 50 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment loss | 305 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disaster | 17 | 373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes and others |  | 1774 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate tax Inhabitant and enterprise taxes | 650 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes-deferred | Δ108 | 542 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current net income |  | 1231 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to non-controlling interests |  | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to owners of the parent |  | 1192 |

---

## Exhibit 99.2

The business combination described in this document involve securities of a Japanese company. 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 issuer is located in Japan and some or 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 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.

Reference Documents for the 132<sup>nd</sup> Ordinary General Meeting of Shareholders

（ Items not described in the reference documents provided to shareholders who have requested document provision based on the laws and the articles of incorporation among items provided by electronic means ）

Business report

Situation regarding accounting auditors

Structure to ensure appropriateness of business operations and operational situation such structure

Basic policy regarding company control

Policy to determine dividend of surplus, etc.

Consolidated financial statements

Consolidated statement of changes in net assets

Notes to consolidated financial statements

Financial statements

Balance sheet

Profit and loss statement

Statement of changes in net assets

Notes to non-consolidated financial statements

Accounting audit report on consolidated financial statements

Accounting audit report on financial statements

Audit report of Audit and Supervisory Committee

(From April 1, 2024 to March 31, 2025)

Daido Kogyo Co., Ltd.

&nbsp;&nbsp; We do not state the above-mentioned items in the documents provided to the shareholders who have requested a document provision based on the laws and the provisions of our company's articles of incorporation.<br> As for this General Meeting of Shareholders, we will uniformly send documents describing items provided by electronic means excluding the above-mentioned items to all the shareholders regardless of having requested a document provision or not.<br>

Situation regarding accounting auditor

[1] Name KPMG AZSA LLC

[2] Amount of compensation, etc.

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| | |
|:---|:---|
| | Amount of compensation, etc.<br> (million yen) |
| &nbsp;&nbsp;Amount of compensation, etc. for accounting auditor regarding this fiscal year | 51 |
| &nbsp;&nbsp;Total of monetary and other financial benefits payable to accounting auditor by our company and our subsidiaries | 51 |

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(notes) 1. As the classification between the amount of audit fee, etc. for the audit based on the Companies Act and that for the audit based on the Financial Instruments and Exchange Act is not clearly made in the audit agreement between our company and the accounting auditor and it can not be practically classified either, we state the amount of compensation, etc. for accounting auditor regarding this fiscal year as total amount for these two audits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Audit and Supervisory Committee agreed on the amount of compensation, etc. for the accounting auditor
after having made the necessary verification on whether the details of the audit plan made by the accounting auditor, the execution process
of accounting audit and the calculation basis, etc. for proposal of compensation amount are appropriate or not.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Among our company's important subsidiaries, Daido Chain (Changshu) Co., Ltd., D.I.D PHILIPPINES
INC., P.T. DAIDO INDONESIA MANUFACTURING, D.I.D VIETNAM CO.,LTD., DID MALAYSIA SDN. BHD., DAIDO SITTIPOL CO.,LTD., D.I.D ASIA CO.,LTD.,
INTERFACE SOLUTIONS CO.,LTD., INTERFACE SYSTECH CO.,LTD., DAIDO INDIA PVT.LTD., DAIDO CORPORATION OF AMERICA, DAIDO INDUSTRIAL E COMERCIAL
LTDA., DAIDO INDUSTRIA DE CORRENTES DA AMAZONIA LTDA., DID EUROPE S.R.L. are subject to audits by certified public accounts other than
our company's accounting auditor or auditing firms (including those who hold qualifications equivalent to these qualifications overseas).

[3] Policy to determine dismissal or non-reelection of accounting auditor

The Audit and Supervisory Committee shall decide the details of the proposal regarding dismissal or non-reelection of accounting auditor made to the General Meeting of Shareholders in case the Committee acknowledges it necessary such as there occurs certain difficulty for the accounting auditor executes the responsibilities.

In addition, in case the accounting auditor is assumed to fall on one of the provisions defined in each of Article 340, Clause 1 of the Companies Act, the Committee shall dismiss the accounting auditor based on the consent of all Audit and Supervisory Committee members. In this case, it shall report such a decision to dismiss the accounting auditor and the reason for the dismissal.

[4] Overview of the details of limited liability contract

Not applicable.

Structure to ensure operational appropriateness and operational situation of this structure

[1] Overview of decision details regarding structure to ensure operational appropriateness

The overview of decision details regarding the structure to ensure that directors' execution of their responsibilities conforms to the laws and the articles of incorporation and other structures to ensure the operational appropriateness for the company's operations and for the operations of the company group consisting of our company and the subsidiaries is as follows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Structure to ensure that directors' and employees' execution of responsibilities conforms
to the laws and the articles of incorporation

Our company shall systemize rules and standards required for compliance with laws execution of management and operations, define its treatment and operations and implement a structure to ensure that directors' and employees' execution of responsibilities is made appropriately and efficiently.

Regarding safety and disaster prevention, etc., we shall have various committees to comply with the laws through their activities and regarding the product quality and the environment, we shall ensure the corporate social responsibility through the operation of ISO management system.

We shall have sustainability committee chaired by President to manage and promote activities regarding sustainability management including group companies.

In addition, we shall have an inter control and audit office directly reporting to President, independent from each business operation division, to assess the establishment and operation of internal control in the company group and to ensure the compliance with laws and ethics in business activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Structure to store and manage information regarding directors' execution of responsibilities

We shall record, store and manage information regarding directors' execution of responsibilities in documents or electronic and magnetic media (hereinafter referred to as documents, etc.) following "the document management rules". Directors and the Audit and Supervisory Committee may obtain information in these documents, etc. in a timely manner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Rules regarding management of risk of loss and other structures

We shall ensure preventive measures for hazardous situations through the establishment and management of rules regarding safety and disaster prevention and activities of various committees and in case of hazardous situations, each division in charge shall have various committees as necessary and take organization measures to minimize the risk of loss.

We shall further identify potential risks in the company group to ensure the establishment of required rules and structures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Structure to ensure that directors' execution of responsibilities is efficiently made

We shall pursue the efficiency of directors' execution of responsibilities in the company group using the following enterprise management systems.

1) To clearly document authorities and decision-making rules in the internal regulations

2) To set management meetings, etc. consisting of directors

3) To make the mid-term management plan, the annual plan based on the mid-term management plan and performance indicators by division and budget by the Board of Directors

4) To implement monthly performance management and budget management using IT systems

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Structure to ensure operational appropriateness regarding the following structures and other company consisting
of our company and the subsidiaries

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Structure regarding the reporting to our company of matters relating to directors' and employees'
execution of responsibilities in the subsidiaries

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Structure including rules regarding the management of risk of loss in the subsidiaries

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Structure to ensure that the execution of responsibilities by directors, etc. in the subsidiaries is efficiently
made

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Structure to ensure that the execution of responsibilities by directors, etc. and employees in the subsidiaries
conforms to the laws and the articles of incorporation

Our company asks each of the group companies to submit monthly reports and prior reporting of material issues based on "the group company management rules". In addition, at the management strategy meeting, we shall receive the report on management performance and management plans, etc. and approve them. Through these measures, we shall ensure the company group's prompt decision-making and execution of responsibilities.

In addition, for the above b., c. and d., we shall make efforts to establish the company group's rules and structures as per the above (1), (3) and (4).

As for ensuring the reliability of the financial report based on the Financial Instruments and Exchange Act, the internal control and audit office shall review and assess the establishment and operational situation of the company group's internal control and propose improvement measures to the management and the Board of Directors as necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Matters regarding an employee in case the Audit and Supervisory Committee asks to have such an employee
to support the Committee's responsibilities

Our company shall have the Audit and Supervisory Committee and appoint designated staff to support its responsibilities. Such staff shall be those who have competence and knowledge to verify company operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Matters regarding independence of the employee stated in the previous clause from directors (except directors
serving as Audit and Supervisory Committee Members)

As for appointment, transfer, appraisal and disciplinary action for such an employee, we shall discuss such issues with the Audit and Supervisory Committee in advance and make decisions upon its approval to ensure independence from directors (except directors serving as the Audit and Supervisory Committee Members).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Matters regarding assurance of effectiveness for the Audit and Supervisory Committee's instructions
to an employee who should support the Audit and Supervisory Committee responsibilities

Such an employee shall exclusively abide by the Audit and Supervisory Committee's instructions and orders and execute the responsibilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Structure stated below and structure regarding the other report to the Audit and Supervisory Committee

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Structure for directors (except directors serving as the Audit and Supervisory Committee Members) and
employees to report to the Audit and Supervisory Committee

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Structure for directors, auditors, employees or those who are reported from them to report to the Audit
and Supervisory Committee of our company

Our company shall report to the Audit and Supervisory Committee at the Board of Directors meetings, the management meetings and other important meetings the matters defined in the laws and the articles of incorporation and other important matters including management plan, business management, financing and human resources management.

Notwithstanding the previous sentence, the Audit and Supervisory Committee may, as necessary, ask directors and employees of our company and each of the group companies to make a report. In addition, the Committee may access such records as information in meeting minutes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Structure to ensure that those who have made the report stated in the previous clause are not exposed
to unfavorable treatment due to the reason that they made such reports

Our company and each of the group companies prohibit imposing any unfavorable treatment on those who have made the report stated in the previous clause to the Audit and Supervisory Committee due to the reason that they made such reports.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) Matters regarding the policy on procedures for advance payment or reimbursement of expenses incurred due
to the Audit and Supervisory Committee Members' execution of the responsibilities (limited to those relating to the execution of
the responsibilities by the Audit and Supervisory Committee) and the treatment of other expenses or liabilities incurred due to the Audit
and Supervisory Committee Members' execution of the responsibilities

In case the Audit and Supervisory Committee Members claim the advance payment or reimbursement of expenses incurred due to the execution of the responsibilities, we shall promptly settle such expenses or liabilities, except for such cases that they are deemed to be unnecessary for the execution of the responsibilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Structure to ensure that other audits by the Audit and Supervisory Committee are effectively made

The management, including the Representative Director, shall periodically exchange opinions and information with the Audit and Supervisory Committee, provide necessary information in a timely manner and aim for mutual understanding with the Audit and Supervisory Committee. In addition, in case the Audit and Supervisory Committee deems necessary for the execution of the Audit and Supervisory Committee's responsibilities, we shall ensure an environment for the Committee to cooperate with external experts such as lawyers and certified public accountants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) Structure to eliminate antisocial forces

Our company shall ensure denying all the relations with antisocial forces giving a threat to the orders of the civil society and the companies' heathy activities, and for any unlawful claims, the division in charge shall cooperate with external authorities such as the police and lawyers and take decisive actions organizationally.

[2] Overview of operational situation of structure to ensure operational appropriateness

The overview of operational situation of the structure to ensure that the directors' execution of the responsibilities conforms to the laws and the articles of incorporation and other structures to ensure the company's operational appropriateness is as follows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Overall internal control system

Our company ensures that the internal control and audit office, independent and directly reporting to President, audits the establishment and operational situation of operational audits and internal control system of our company group based on the basic policy on internal control resolved at the Board of Directors. In addition, we ensure the necessary correction and improvement to enable the internal control to function effectively and continuously by having periodical monitoring. As for important issues regarding the establishment, operation and improvement of the internal control system, we determine the countermeasures after discussing them at the Sustainability Committee held based on the plan made at the beginning of the fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Compliance

We ensure the development of compliance awareness in the entire company group through the operation of the Sustainability Committee. In addition, we ensure notifying the helpline system (contact window for whistleblowing) through the establishment and operation of whistleblowing rules. As for reported matters, we ensure appropriate handling in cooperation with each internal division and external experts, etc. and timely reporting at the Sustainability Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Management structure for the group companies

We have a management strategy meeting based on the group company management rules applied to our group companies to ensure appropriate and efficient management of operations in our company group. At this meeting, we report and approve business performance and management plans, etc. of the group companies, ensure the group management policies and make coordination, etc. among the group companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Internal control over financial reports

We ensure tests on operational situation for internal control by the internal audit and the accounting auditor and evaluate the internal control over our company group's financial reports to ensure the reliability of financial reports based on the basic policy and plan for internal control. In addition, we ensure the establishment, evaluation and improvement of internal rules, operational processes in parallel, and these evaluation results are reported to directors and the Audit and Supervisory Committee through the Sustainability Committee and separately reported to the accounting auditor.

Basic policy regarding control of the company

Our company defines a basic policy regarding those who control the decision on financial and business policies and the details, etc. are as follows.

I Overview of the details of the basic policy

Our company's Board of Directors believes that the decision to sell our company's shares, responding to a large-scale purchasing action by a specific party, should be designated to the judgment of our shareholders who finally own our company shares as long as we accept the sale and purchase of our company shares freely as a listed company.

However, we believe that it is indispensable to take measures standing on mid and long-term viewpoints ensuring (1) technology to fulfill customers' needs, (2) global supply structure, (3) strong relationship of trust with business partners, (4) Global brand power of "D.I.D.", (5) contribution to regional economy and society, (6) ensuring the mutually complementary relationship among businesses, which are sources of our corporate value to improve the corporate value and eventually shareholders' common benefits by thoroughly pursuing technologies to fulfill customers' needs and by delivering high-function, high-quality products. If measures based on such mid and long-term viewpoints are not taken by those who control the decision on the financial and business policies of our company, there is a possibility that our company group's corporate value, eventually the shareholders' mutual benefits and benefits of all the stakeholders relating to our company group may be damaged.

Though our company promotes IR activities so that our shareholders can understand the appropriate value of our company share, in case a sudden and large-scale purchasing act occurs, for our shareholders to appropriately judge whether such large-scale purchasing act by the purchaser is appropriate or not including whether the purchase price for our company shares proposed by the purchaser is appropriate or not in a short period of time, it is indispensable for them to receive appropriate and sufficient information both from the purchaser and the Board of Directors of our company. In addition, for shareholders who plan to continuously hold our company shares, we believe such information as the impact of such purchasing act to our company group, the management policy which the purchaser considers when participating in our company's management, the details of the business plan and the opinion of our company's Board of Directors over such purchasing act should be important judgment criteria to study the continuous possession of our company shares.

Considering the above, we believe it necessary for a purchaser who would make a large-scale purchasing act to provide our company with necessary and sufficient information on the purchasing act in advance for shareholders' judgement following a certain rule (please refer to III for the details. Hereinafter referred to as "rules for large-scale purchasing act") prepared and disclosed by our company in advance, and to start such purchasing act after a certain evaluation period by our company's Board of Directors would pass and a resolution either by our company's Board of Directors or the General Meeting of Shareholders would be made regarding whether allotment of share without contribution for share option be made or not.

In addition, we cannot guarantee that some large-scale purchasing acts might substantially damage the corporate value and eventually shareholders' common benefits. Our company believes that it is necessary to take measures that our company's Board of Directors consider appropriate against such a large-scale purchasing act following the response policy described later to protect the corporate value and eventually shareholders' common benefits.

II Overview of special approaches contributing to materialization of the basic policy on effective use of our company's assets, formulation of appropriate company group and other controls of company

Our company renewed the Management Philosophy in February 2024 and adopted the long-term management vision "DID MUGENDAI SMILE VISION 2035" and the mid-term management plan "Make Smile From Heart" in May 2024 and aims for the maintenance of resources and further reinforcement of our company's corporate value based on human capital management, using two pillars such as global expansion strategy and sustainability business creation.

In addition, our company prioritizes achieving fair management to increase management efficiency and transparency and makes the effective functioning of corporate governance as a basic policy. More concretely, at the Ordinary General Meeting of Shareholders held on June 26, 2020, our company moved to a company with an Audit and Supervisory Committee, the Audit and Supervisory Committee Members taking charge of audit, etc. over directors' execution of responsibilities became members of the Board of Directors, and we make efforts to further enhance corporate governance through the reinforcement of oversight function by the Board of Directors and the further reinforcement of monitoring system. In addition, we try to ensure more prompt decision-making by the Board of Directors and reinforcement and enhancement of audit structure by reducing one internal director at the Ordinary General Meeting of Shareholders held on June 24, 2021, and by reducing two directors and adding one external director at the Ordinary General Meeting of Shareholders held on June 25, 2024. Currently, we have 9 directors in total, out of which 4 directors are external directors (four of them are independent external directors).

In addition, we established the internal control and audit office since April 2008 to ensure compliance, and it oversights and promotes important activities for continuous enhancement of the internal control system and fulfillment of corporate social responsibilities. In addition, since May 2024, we have established the Sustainability Committee chaired by the Representative Director by unifying it with the CSR Committee. This Committee consists of all the directors including the Audit and Supervisory Committee Members, executive officers and Presidents of subsidiaries and discusses issues regarding promotion of activities to take opportunities while mitigating overall risk of our company group and the sustainability management.

III Overview of approaches to prevent inappropriate parties in the light of the basic policy regarding the control of the company from controlling the decision of our company's financial and business policies

Our company approved a resolution to continue "the response policy for large-scale purchasing act of our company's shares, etc.", introduced based on the resolution at the Board of Directors meeting held on May 21, 2020 and the resolution at the 127<sup>th</sup> Ordinary General Meeting of Shareholders held on June 26, 2020, after making a partial revision, in the light of the basic policy regarding the control of the company stated in I at the our company's Board of Directors meeting held on May 12, 2023 (the response policy after the revision shall be referred to as "this response policy" hereinafter).

This response policy asks a large-scale purchaser to comply with the large-scale purchasing rule such as (1) the large-scale purchaser shall provide necessary and sufficient information regarding such large-scale purchasing act to our company's Board of Directors in advance, (2) a certain evaluation period for our company's Board of Directors passes and (3) the purchaser shall start the large-scale purchasing act after our company's Board of Directors or the General Meeting of Shareholders makes a resolution on whether allotment of share without contribution for share option be made or not in case of (i) a purchasing act of our company's shares, etc. aiming that the voting rights ratio of specific shareholders' group would be 20% or more,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a purchasing act of our company's shares, etc. as a result of which the voting rights ratio of specific shareholders' group would 20% or more (regardless of actual purchasing method including market trading and tender offer, excluding the purchasing act our company's Board of Directors consents in advance) or (iii) a consent, etc. with our company's other shareholders as a result of which the voting rights ratio of specific shareholders' group would be 20% or more (such purchasing act or such consent, etc. shall be referred to as "large-scale purchasing act" and such parties who execute such purchasing act or such consent, etc. shall be referred to as "large-scale purchaser" hereinafter) and it defers the large-scale purchasing act substantially damaging our company's corporate value and eventually shareholders' common benefits by using allotment of share without contribution for share option and aims for improvement of our company's corporate value and eventually shareholders' common benefits.

In case there is a large-scale purchasing act of our company's shares, etc., firstly, we ask the large-scale purchaser to submit a letter of intent to our company's Representative Director describing the overview of the large-scale purchaser and the large-scale purchasing act as well as the intention to comply with the large-scale purchasing rule.

In addition, we ask the large-scale purchaser to provide necessary information for shareholders' judgement and for opinion formulation by our company's Board of Directors and the independent committee based on the list of necessary information issued within 10 working days after our company's Board of Directors' receipt of such a letter of intent.

Then, we shall set 60 days (in case of purchasing of our company's total shares through tender offer using cash (yen) only for purchase) or 90 days (in case of other large-scale purchasing act) as a period for our company's Board of Directors to evaluate, study, negotiate, formulate opinions and make alternative plans after the large-scale purchaser completes providing the afore-mentioned information to our company's Board of Directors, depending on the degree of difficulty for evaluation, etc. of large-scale purchasing act and our company's Board of Directors shall publish opinions of our company's Board of Directors, within such periods, receiving advice from external experts, etc., comprehensively evaluating and studying information provided by the large-scale purchaser and respecting recommendations of the independent committee stated later at the maximum. In addition, our company's Board of Directors shall, as necessary, negotiate the improvement of conditions regarding the large-scale purchasing act with such a large-scale purchaser and may propose an alternative plan as our company's Board of Directors. Our company's Board of Directors may extend the evaluation period for the Board of Directors by 30 days at the maximum within the required scope, based on recommendations of the independent committee.

Our company's Board of Directors shall establish an independent committee consisting of members selected from our company's external directors and external experts independent from the management executing our company's responsibilities as advisory body to appropriately manage this response policy and prevent arbitrary judgment by our company's Board of Directors and for such critical judgement on this response policy as whether executing allotment of share without contribution for share option or not, as the large-scale purchaser would not comply with the large-scale purchasing rule or whether executing allotment of share without contribution for share option or not, as such large-scale purchasing act would be likely to substantially damage our company's corporate value and eventually shareholders' common benefits, we shall seek for advice from the independent committee. The independent committee shall make recommendations on whether executing allotment of share without contribution for share option or not or letting the General meeting of Shareholders discuss whether executing allotment of share without contribution for share option or not to our company's Board of Directors.

Our company's Board of Directors shall respect the recommendations of the afore-mentioned independent committee at the maximum and make a resolution on whether executing allotment of share without contribution for share option or not, a resolution for convocation of the General Meeting of Shareholders and other required resolutions. In case we need to let the shareholders discuss whether executing allotment of share without contribution for share option or not at the General Meeting of Shareholders, we shall hold our company's General Meeting of Shareholders within 60 days, at the maximum, from the resolution date of convocation of the General Meeting of Shareholders. In case we execute allotment of share without contribution for share option, share option holders execute share option by paying the amount of one yen or more and obtain our company's common share, and we may impose on such share option holders such execution conditions that the right execution by large-scale purchasers would not be allowed or such purchasing conditions that our company may obtain the share option in exchange for our company's shares from those other than large-scale purchasers. In addition, our company's Board of Directors may suspend or change the execution of allotment of share without contribution for share option when judging that the execution of allotment of share without contribution for share option is not appropriate even after our company's Board of Directors or the General Meeting of Shareholders has resolved the execution of allotment of share without contribution for share option, respecting the independent committee's recommendations at the maximum. In case our company's Board of Directors makes the afore-mentioned resolution, it shall disclose such information appropriately and in a timely manner.

As the continuation of this response policy was approved at the Ordinary General Meeting of Shareholders held on June 23, 2023, its validity is from the date of such Ordinary General Meeting of Shareholders to the closing date of the Ordinary General Meeting of Shareholders which is in the last fiscal year among fiscal years finishing within 3 years from June 23, 2023 and for the renewal of this response policy thereafter (including renewal with partial revision as well), it shall be approved by our company's General Meeting of Shareholders. In addition, even within the valid period of this response policy, we may revise this response policy from the viewpoint of improvement of corporate value and eventually shareholders' common benefits by reviewing as necessary considering the alignment with related laws and the alignment with the listing system defined by the financial instruments exchange. As for the details of this response policy, please refer to the press release dated May 12, 2023 published on our company's website (address: <u>https://www.did-daido.co.jp/</u>) on the internet.

IV Our company's Board of Directors' judgment for practical approaches and its reason

The special approaches contributing to materialization of the basic policy on effective use of our company's assets, formulation of appropriate company group and other controls of company described in II are, as described in II, practical measures to improve our company's corporate value and eventually shareholders' common benefits and in line with our company's basic policy, not aiming to maintain the positions of our company officers. This response policy described in III has continued to improve the corporate value and eventually shareholders' common benefits, as described in III, and in line with our company's basic policy, not aiming to maintain the positions of our company officers. In particular, this response policy contributes to the corporate value and eventually shareholders' common benefits, not aiming to maintain the positions of our company officers, judging from the fact that we have such measures to ensure the fairness and the objectivity in its details including such points that we establish an independent committee as organization independent from our company's Board of Directors and it is always required for the Board of Directors to always discuss with the independent committee when judging whether executing allotment of share without contribution for share option or not, and that the execution of allotment of share without contribution for share option may be proposed at the General Meeting of Shareholders as necessary, and that the validity of this response policy is 3 years and its further continuation needs to be approved by our shareholders.

Policy regarding decision dividend of surplus

Our company positions the profit return to our shareholders as one of the most important management policies and will ensure a dividend, comprehensively taking the annual business performance, the management environment and the strengthening of long and mid-term financial structure into account, keeping the maintenance of stable dividend as base. In addition, our approach for the profit return in the 13<sup>th</sup> mid-term management plan (FY2024 to FY2026) is to aim for continuous enhancement including the annual dividend of 15 yen per share as minimum and the target for the total return ratio of 25% or more in the final fiscal year.

As for the annual dividend for this fiscal year, we would like to make it 25 yen per share based on the above-mentioned policy and approach.

<u>Consolidated statements of changes in net assets</u>

（ From April 1, 2024 to <br> March 31, 2025 ）

((Unit: million yen)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity |
| | Capital stock | Capital surplus | Retained earnings | Treasury shares | Total shareholder's equity |
| April 1, 2024<br> Balance at beginning of current period | 3536 | 3270 | 14068 | Δ423 | 20451 |
| Changes of items during period |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividend of surplus |  |  | Δ155 |  | Δ155 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of shares of consolidated subsidiaries |  | Δ0 |  |  | Δ0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to owners of the parent |  |  | 1192 |  | 1192 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury shares |  |  |  | Δ209 | Δ209 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposal of treasury shares |  | 3 |  | 10 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net changes of items other than shareholder's equity |  |  |  |  |  |
| Total changes of items during period | ― | 3 | 1036 | Δ199 | 840 |
| &nbsp;&nbsp;&nbsp;&nbsp; March 31, 2025<br> Balance at end of current period | 3536 | 3273 | 15105 | Δ622 | 21292 |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | Non-controlling interests | Total net assets |
| | Other difference in Securities valuation | Foreign currency translation reserve | Remeasurements of defined benefit plans | Accumulated other comprehensive income total | Non-controlling interests | Total net assets |
| April 1, 2024<br> Balance at beginning of current period | 8216 | 2277 | 212 | 10706 | 5527 | 36685 |
| Changes of items during period |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividend of surplus |  |  |  |  |  | Δ155 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of shares of consolidated subsidiaries |  |  |  |  |  | Δ0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income attributable to owners of the parent |  |  |  |  |  | 1192 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury shares |  |  |  |  |  | Δ209 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposal of treasury shares |  |  |  |  |  | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net changes of items other than shareholder's equity | Δ2,391 | 880 | 235 | Δ1,275 | 536 | Δ738 |
| Total changes of items during period | Δ2,391 | 880 | 235 | Δ1,275 | 536 | 101 |
| March 31, 2025<br> Balance at end of current period | 5825 | 3157 | 447 | 9430 | 6064 | 36787 |

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Notes to consolidated financial statements

1. Notes, etc. regarding important matters as basis for preparing consolidated financial statements

[1] Matters regarding the scope of consolidation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Number of consolidated subsidiaries 17 subsidiaries

Names of consolidated subsidiaries Daido General Service

Shinsei Kogyo Co., Ltd.

Daido Chain (Changshu) Co., Ltd.

D.I.D PHILIPPINES INC.

P.T. DAIDO INDONESIA MANUFACTURING

D.I.D VIETNAM CO.,LTD.

DID MALAYSIA SDN. BHD.

DAIDO SITTIPOL CO.,LTD.

D.I.D ASIA CO.,LTD.

INTERFACE SOLUTIONS CO.,LTD.

INTERFACE SYSTECH CO.,LTD.

DAIDO INDIA PVT.LTD.

DAIDO CORPORATION OF AMERICA

DAIDO INDUSTRIAL E COMERCIAL LTDA.

DAIDO INDUSTRIA DE CORRENTES DA AMAZONIA LTDA.

DID EUROPE S.R.L.

Other one subsidiary

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Names of non-consolidated subsidiaries Daido Techno Co., Ltd.

Daido Kensetsu Co., Ltd.

Shoken Kogyo Co., Ltd.

(Reason for exclusion from the scope of consolidation)

The impact of the total assets, the sales, the net income and the retained earnings of non-consolidated subsidiaries to the consolidated financial statements is minor and they are not material as a whole, so we categorize them as non-consolidated subsidiaries.

[2] Matters regarding the application of the equity method

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Number of non-consolidated subsidiaries accounted for using the equity method

One company Daido Techno Co., Ltd.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Number of affiliated companies accounted for using the equity method

Two companies Tsukiboshi Manufacturing Co., Ltd.<br> IWIS-DAIDO LLC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) As for two non-consolidated subsidiaries (Daido Kensetsu Co., Ltd., Shoken Kogyo Co., Ltd.) and four affiliated companies (Izumi Shoko Co., Ltd., Sugimura Seiko Co., Ltd., F2 Techno Co., Ltd., ATLAS DID (PRIVATE) LTD.), considering the net income and the retained earnings for each company, their impact on the consolidated financial statements is minor and they are not material as a whole even if being excluded from companies accounted for using the equity method, therefore, we exclude them from the companies accounted for using the equity method.

[3] Matters regarding the fiscal year, etc. of consolidated subsidiaries

Out of 17 consolidated subsidiaries, the settling day for the following 14 subsidiaries is December 31<sup>st</sup>.

Daido Chain (Changshu) Co., Ltd.

D.I.D PHILIPPINES INC.

P.T. DAIDO INDONESIA MANUFACTURING

D.I.D VIETNAM CO.,LTD.

DID MALAYSIA SDN. BHD.

DAIDO SITTIPOL CO.,LTD.

D.I.D ASIA CO.,LTD.

INTERFACE SOLUTIONS CO.,LTD.

INTERFACE SYSTECH CO.,LTD.

DAIDO CORPORATION OF AMERICA

DAIDO INDUSTRIAL E COMERCIAL LTDA.

DAIDO INDUSTRIA DE CORRENTES DA AMAZONIA LTDA.

DID EUROPE S.R.L.

And one other subsidiary

For preparation of the consolidated financial statements, we use the subsidiaries' financial statements as of their settling day and adjust required for consolidation on material transactions realized between their settling day and the settling day of the consolidated financial statements.

Out of 17 consolidated subsidiaries, the settling day of the following 3 subsidiaries is the same as the settling day of the consolidated financial statements.

Daido General Service

Shinsei Kogyo Co., Ltd.

DAIDO INDIA PVT. LTD.

[4] Matters regarding accounting policy

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Valuation criteria and valuation method for important assets

1) Securities

Other securities

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than shares without a market price | The market value method (the valuation difference is reported as a component of shareholders' equity and the cost of goods sold is calculated by the moving average method.) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares, etc. without a market price | The cost method using the moving average method |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2) Derivatives | The market value method |

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3) Inventory

Finished products : Mainly, the cost method using the weighted-average method

Work in process : Mainly, the cost method using the weighted-average method <br> Raw materials and supplies : Mainly, the cost method using the moving average method

(The values in the balance sheet are calculated using the method of reducing book value based on the decrease in profitability.)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Depreciation method for important depreciable assets

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1) Tangible fixed assets<br> (excluding lease assets) | : | Our company and the consolidated subsidiaries in Japan use the declining balance method. |
|  |  | However, as for the buildings (excluding accessory equipment) obtained after April 1, 1998, and the accessory equipment and structures obtained after April 1, 2016, we use the straight-line method. In addition, the overseas consolidated subsidiaries use the straight-line method. The main service life is as follows.<br> Buildings and structures: 2 to 60 years<br> Machinery, equipment and delivery equipment: 2 to 20 years |

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2) Intangible fixed assets

(excluding lease assets)

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Software | : | As for software (for internal use), we use the straight-line method based on the internal usable period (5 years). |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3) Lease assets | : | As for lease assets under the finance lease exempt from passage of title, we set the lease period as service life and the difference between the total lease fee and the equivalent to the acquisition cost is deemed as interest equivalents and we apply a method to distribute such amount to each term using the interest method. |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Accounting method for important deferred assets

Bond issuance cost : The bond issuance cost is written off by the straight-line method throughout the bond redemption period for each applicable bond.

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Criteria for recording of important reserve | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Criteria for recording of important reserve | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Criteria for recording of important reserve |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1) Allowance for doubtful accounts | : | We record the estimated uncollectible amount, using the loan loss ratio for general receivables, and by considering the collectability for each receivable for such specific receivables as doubtful accounts receivable to prepare for bad debt loss for accounts receivable and loan receivable, etc. |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2) Reserve for bonuses | We record it based on the estimated amount borne in this consolidated fiscal year to cover the payment of bonuses payable to employees. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3) Reserve for directors' bonuses | We record it based on the estimated amount borne in this consolidated fiscal year to prepare for the payment of bonuses payable to directors. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4) Provision for product warranties | We record the estimated amount to be incurred in future based on the past actual result and the estimated amount based on individual consideration to prepare for the expense for product warranties. |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5) Provision for loss on order received | : | We record the estimated loss amount for such orders with which a loss is likely to occur and with which such loss can be reasonably estimated among all the orders in this consolidated fiscal year to prepare for future loss relating to order contracts. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6) Provision for loss on disaster | : | We record the estimated amount to be incurred in future to prepare for the expenses required for restoring, etc. of assets damaged by the disaster. |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Accounting method regarding retirement benefits

1) In calculating retirement benefits liabilities, we use the benefit calculation criteria as a method to cut-off the estimated retirement benefits to the period of the end of this consolidated fiscal year.

2) Cost accounting method for actuarial differences

We account for the actuarial differences by mainly processing the amount distributed by the straight-line method based on fixed years (10 years) within the average residual years of service for employees when such differences occur in each consolidated fiscal year, starting from the next consolidated fiscal year after they occur.

3) Accounting method for unrecognized actuarial differences

We account for the unrecognized actuarial differences in the remeasurements of defined benefit plans, other accumulated comprehensive income of net assets after adjusting the tax effects.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Criteria for recording important revenues and expenses

The details of the main obligations in our main businesses relating to profits generated from the contracts with customers of our company and the consolidated subsidiaries and the usual timing to fulfill such obligations (the usual timing to recognize revenues) are as follows.

Our company group mainly engages in the motorcycle parts business (motorcycle chains, rims, spokes, wheels), the automobile parts business (automobile engine chains, sprocket, tensioner), the industrial machinery business (chains for industrial machinery, conveyor) and sales of others (welfare equipment, petroleum products, steel materials) and provision of related services.

For sales of products, we recognize revenues when the control of products is transferred to customers based on the contract with them and for services, etc. in the industrial machinery business, we recognize revenues when our company fulfills the obligation based on the contract with customers.

For certain sales of products, we have an obligation to deliver merchandise or products based on the sales contract with customers. Under this obligation, as customers obtain control of such items when we complete the delivery of merchandise or products, we conclude that our obligation is fulfilled. By applying the substitute treatment in Article 98 of "The Guidance on the Accounting Standard for Revenue Recognition", we recognize revenues when delivering such items.

In addition, for the transaction with supply for a fee where we purchase parts, etc. from customers and then sell finished products after processing to such customers, we recognize revenues by applying net value after deducting the purchase costs of such parts, etc.

For variable amounts such as price reduction and rebates, we include only the amount with high probability of not having substantial revenue decrease recorded till the time when the uncertainty with such variable amount is finally eliminated in the transaction price.

For certain product sales in the industrial machinery business, we have an obligation to deliver products and services responding to customers' specifications and the obligation for such products shall be fulfilled according to the progress of manufacturing and the control of assets or services is to be transferred during a certain period of time, therefore, we conclude that our obligation is fulfilled throughout a certain period of time.

We recognize such revenue in accordance with the degree of progress only when we can estimate such degree of progress with reliability, except for works involving small amount and short period. We calculate the degree of progress using a proportion of accumulated actual incurred cost against the direct estimated cost, as we judge that the incurred cost appropriately indicates the degree of progress.

Moreover, by applying the substitute treatment in Article 95 of "The Guidance on the Accounting Standard for Revenue Recognition", we recognize revenues when we completely fulfill the obligation, not recognizing revenues throughout a certain period of time, in case the period from the starting date of the transaction based on the contract to the timing when we estimate to completely fulfill the obligation is substantially short.

In addition, the amount for transactions in main businesses is received mostly within 6 months after fulfilling the obligation, therefore, there is no critical financing factor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Criteria to convert important foreign currency-based assets or liabilities into Japanese yen

The foreign currency-based accounts receivable or liabilities are converted into Japanese yen using the spot exchange rate of the settling day and we account for the exchange differences either as gain or loss. In addition, the assets and liabilities of overseas subsidiaries, etc. are converted into Japanese yen using the spot exchange rate of the settling day of each overseas subsidiaries and the revenues and expenses are converted into Japanese yen using the average exchange rate during the fiscal term, and the exchange differences are included in the foreign currency translation adjustment and the non-controlling interest of net assets.

&nbsp;&nbsp;&nbsp;&nbsp;2. Notes regarding changes in accounting policy

[1] Application of "The Accounting Standard for Income Taxes", etc.

We apply the"The Accounting Standard for Income Taxes", etc. (ASBJ Statement No. 27, October 28, 2022. Hereinafter referred to as "2022 Revised Accounting Standard") from the beginning of this consolidated fiscal year.

As for the revision in the account for corporate taxes, etc. (taxes on other comprehensive income), we follow the transitional treatment defined in the proviso, Article 20-3 of 2022 Revised Accounting Standard and the transitional treatment defined in the proviso, Article 65-2 [2] of "The Guidance on The Accounting Standard regarding Tax Effect Accounting" (ASBJ Statement No. 28, October 28, 2022. Hereinafter referred to as "2022 Revised Guidance").

In addition, the change in this accounting policy does not have any impact on the consolidated financial statements.

Moreover, as for the revision relating to review of treatment in consolidated financial statements when we defer the sales gain or loss generated following the sale of subsidiaries' shares, etc. among consolidated companies for tax purposes, we apply 2022 Revised Guidance from the beginning of this consolidated fiscal year.

The change in this accounting policy does not have any impact on the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;3. Notes regarding revenue recognition

[1] Disaggregation of revenue

Our group's sales are revenues recognized based on contracts with customers and the disaggregated details into revenues by business type and by timing of revenue recognition are as follows.

(Unit: million yen)

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Reporting segment | Reporting segment | Reporting segment | Reporting segment | Reporting segment | |
| | Japan | Asia | North America | South America | Europe | <br>Total |
| &nbsp;&nbsp;By business |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Motorcycle parts business | 7914 | 13451 | 1174 | 3486 | 4530 | 30558 |
| &nbsp;&nbsp;&nbsp;Automobile parts business | 3233 | 2331 | 3 | － | － | 5568 |
| &nbsp;&nbsp;&nbsp;Industrial machinery business | 7217 | 2226 | 1960 | 1660 | 220 | 13286 |
| &nbsp;&nbsp;&nbsp;Others | 7903 | 135 | 0 | 59 | 1 | 8101 |
| &nbsp;&nbsp;Total | 26269 | 18146 | 3140 | 5207 | 4753 | 57515 |
| &nbsp;&nbsp;Timing of revenue recognition |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Assets transferred at a point | 25825 | 16402 | 3140 | 5207 | 4753 | 55328 |
| &nbsp;&nbsp;&nbsp;Assets transferred during a certain period | 443 | 1743 | － | － | － | 2187 |
| &nbsp;&nbsp;Total | 26269 | 18146 | 3140 | 5207 | 4753 | 57515 |

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(Note) The main products and services included in each business are as follows.

Motorcycle parts business --- motorcycle chains, rims, spokes, wheels

Automobile parts business --- chains for automobile engines, sprocket, tensioner

Industrial machinery business --- chains for industrial machinery, conveyor

Others --- welfare equipment, petroleum products, steel materials

[2] Information used as a base to understand revenues

It is described in "Matters regarding accounting policy" and "Criteria for recording important revenues and expenses".

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| | |
|:---|:---|
| [3] | Information to understand the revenue amount for this consolidated fiscal year and periods after the next consolidated fiscal year. |

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The contract asset is a company's right for the amount to receive in exchange for assets or services transferred to customers and the contract liability is mainly an advance payment from customers relating to construction contracts.

Our company group does not describe information on residual obligations, applying practical approaches, as we do not have any important transaction of which an individual estimated contract period exceeds one year. In addition, there is no important amount not included in the transaction price in the amounts generated from contracts with customers.

&nbsp;&nbsp;&nbsp;&nbsp;4. Notes regarding accounting estimates

As for the accounting estimates, we calculate reasonable amounts based on available information when preparing the consolidated financial statements. Among the accounting estimates recorded in the financial statements for this consolidated fiscal year, the accounting items which may have an important impact on the financial statements for the next fiscal year are as follows.

[1] Recognition and measurement of impairment loss for fixed assets regarding our company's aluminum rim business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The amount recorded in the financial statements of this consolidated fiscal year

Tangible fixed assets <u>817 million yen</u> <br> <u>Impairment loss</u> <u>289 million yen</u>

In the aluminum rim business, we continuously recorded an operational loss, as the motorcycle demand under the COVID-19 pandemic calmed down and there was a production adjustment at motorcycle manufacturers, and in particular, the sales of high-value added tubeless rims for overseas markets were under the budget and due to the increase of raw material cost and energy cost. As a result, there is an indication for impairment, so we have judged whether we should recognize the impairment loss or not in this consolidated fiscal year.

As a result of our review, we wrote down the book value of the applicable asset group to the collectible amount, as the total amount of undiscounted future cashflow decreased below the book value of the tangible fixed assets and we recorded such decreased amount of 289 million yen as impairment loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Other information contributing to the understanding by users of the consolidated financial statements
on the details of accounting estimates

Our company regularly amortizes fixed assets and in case there is an indication of potential impairment for fixed assets, by comparing the total amount of undiscounted future cashflow obtained from the asset group with the book value, we need to judge whether we should recognize the impairment loss or not. As a result of the judgment, if it is necessary to recognize the impairment loss, we reduce the book value to the collectible amount and the decrease in book value is recognized as the impairment loss. The collectible amount is measured as either net realizable value

The estimation of future cash flow used to measure such judgment and the impairment loss is based on the business plan of the aluminum rim business and uses the sales increase due to sales expansion of high value-added tubeless rim on which our company has been focusing as its precondition, adding the future market development. In addition, the net realizable value is based on the appraised value calculated by the external expert.

In case we need to review the business plan due to the uncertain future economic situation or the change in management environment or in case the net realizable value decreases due to the trend of the future real estate market, etc., it is possible to have an important impact on the consolidated financial statements of the next consolidated fiscal year.

[2] Whether we need to recognize the impairment loss for fixed assets of our company's industrial machinery business

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The amount recorded in the consolidated financial statements of this consolidated fiscal year

Tangible fixed assets <u>1,845 million yen</u>

In the industrial machinery business, we continuously recorded an operating loss due to the fact that the sales decreased, as we could not achieve the planned production volume along with the aging equipment and due to the increase, etc. of raw material cost and energy cost. As a result, as there is an indication of impairment, we have judged whether we need to recognize the impairment loss in this consolidated fiscal year.

After the review, we do not record the impairment loss, as we judge the undiscounted future cashflow exceeds the book value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Other information contributing to the understanding by users of the consolidated financial statements on the details of accounting estimates

Our company regularly amortizes fixed assets and in case there is an indication of potential impairment for fixed assets, by comparing the total amount of undiscounted future cashflow obtained from the asset group with the book value, we need to judge whether we should recognize the impairment loss or not. As a result of the judgment, if it is necessary to recognize the impairment loss, we reduce the book value to the collectible amount and the decrease in book value is recognized as the impairment loss. The collectible amount is measured as either net realizable value or use value, whichever is higher.

The estimation of future cashflow used to measure such judgment is based on the mid-term business plan of the industrial machinery business and such business plan uses the sales expansion due to global deployment, the increase of sales due to in-take of maintenance demand for conveyor chains and the cost improvement due to capital investment aiming for productivity improvement as its preconditions. As for the judgment whether we need to recognize the impairment loss or not, we use the plan reflecting a certain uncertainty in such a business plan and these judgments may have an important impact.

5. Notes to the consolidated balance sheet

[1] Assets giving as security and liabilities related to security

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assets giving as security

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| | | |
|:---|:---|:---|
| Buildings and structures | 133 | million yen |
| Machinery, equipment and delivery equipment | 0 | million yen |
| Land | 448 | million yen |
| Investment securities | 6836 | million yen |
| Total | 7419 | million yen |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Liabilities related to security

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| | | |
|:---|:---|:---|
| Short-term debt | 2194 | million yen |
| Long-term debt | 10172 | million yen |
| Total | 12367 | million yen |

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[2] Accumulated depreciation of tangible fixed assets 59,053 million yen

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| | | |
|:---|:---|:---|
| [3] Transfer amount of endorsed bills receivable<br>| &nbsp;&nbsp; 38<br>| million yen |

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6. Notes to the consolidated statements of changes in net assets

[1] Type of issued shares and number of shares at the settling day of this consolidated fiscal year

Common shares 10,924,201 shares

[2] Type of treasury shares and number of shares at the settling day of this consolidated fiscal year

Common shares 785,649 shares

[3] Matters regarding dividend of surplus

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Paid dividend amount, etc.

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matters regarding dividend by the resolution at the 131<sup>st</sup> Ordinary General Meeting of Shareholders held on June 25, 2024 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Matters regarding dividend by the resolution at the 131<sup>st</sup> Ordinary General Meeting of Shareholders held on June 25, 2024 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Total dividend | 155 million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Dividend per share | 15 yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Record date | 2March 31, 2024 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Effective date | June 26, 2024 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Dividend whose effective date falls in the next consolidated fiscal year among the dividend whose record date falls in this consolidated fiscal year

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We shall propose as follows at the 132<sup>nd</sup> Ordinary General Meeting of Shareholders held on June 24, 2025. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We shall propose as follows at the 132<sup>nd</sup> Ordinary General Meeting of Shareholders held on June 24, 2025. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Total dividend | 253 million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Dividend per share | 25 yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Record date | March 31, 2025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Effective date | June 25, 2025 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;・ Dividend resource | Retained earnings |

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7. Notes regarding financial instruments

[1] Matters regarding the situation of financial instruments

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Policy for approach to financial instruments

Our company group finances the required funds (mainly bank borrowing and the issuance of corporate bonds) based on the business plan and the investment plan. We manage temporary surplus funds with financial instruments having high safety and finance short-term working capital by bank borrowing. As for derivatives, we use them to mitigate risks as described later and we do not have any speculative transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The details of financial instruments and risks regarding such financial instruments

The notes receivable and the accounts receivable, which are trade receivables, are exposed to customers' credit risk. In addition, the foreign currency-based trade receivables generated when doing overseas business are exposed to exchange fluctuation risk, so we have a risk hedge using forward exchange contracts within the range of such transaction amount.

The investment securities are mainly shares of companies with which we have business relations and are exposed to market price fluctuation risk.

The notes payable and the accounts payable, which are trade payable, mostly have the due date of 6 months or less. Some of them are foreign currency-based trade payable and they are exposed to exchange risk.

The debt, the corporate bonds and lease liabilities relating to lease transactions are for financing relating to capital investment and maturity dates are 8 years after the settling day at the maximum. Some of them are exposed to interest rate risk.

The derivative transactions are forward exchange contract transactions aiming to hedge exchange fluctuation risk relating to trade receivables and trade payable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Risk management system regarding financial instruments

1) Credit risk management (risks relating to non-fulfillment of contracts by business partners)

Our company ensures that each division in charge periodically monitors our business partners' status relating to trade receivables according to the business management regulations and the accounting regulations to monitor the due date and the balance for each business partner and to promptly identify and mitigate the collectivity risk due to the worsening financial status, etc. At our consolidated subsidiaries as well, we have similar controls to those of our company. As for derivative transactions, we have financial institutions with high reliability as partners to mitigate credit risk due to non-fulfillment of liabilities by our business partners.

2) Market risk management (fluctuation risk of foreign exchange and interest rate, etc.)

Our company hedges the exchange fluctuation risk relating to foreign currency-based trade receivables and trade payable by using forward exchange contracts. We have the forward exchange contracts within the range supported by actual needs.

As for investment securities, we periodically review their market prices and the financial status of issuing companies and continuously review our possession situation considering the relation with our business partners, etc.

At our company, the Finance and Accounting Department is in charge of execution and management of derivative transactions and the General Manager of the Finance and Accounting Department reports the operation status to the Board of Directors.

Our consolidated subsidiaries make financial reports including derivative transactions to our company's Board of Directors on a quarterly basis.

3) Liquidity risk management relating to financing (risk of not executing payment on due date)

Our company ensures that business administration departments prepare and renew financing plans in a timely manner based on reports, etc. from each section and manage liquidity risk through maintenance of liquidity on hand, etc.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Supplementary explanation on matters regarding the market price, etc. of financial instruments

As we reflect variation factors in calculating the market price of financial instruments, such a market price may change, applying different preconditions, etc.

[2] Matters regarding the market price, etc. of financial instruments

The accounted amount in the consolidated balance sheet as of March 31, 2025, the market price and the differences are as follows. The shares, etc. without market prices are not included in the following table. (Refer to "notes)

In addition, we omit a note for cash and cash equivalents and we also omit notes for deposits, notes receivable, accounts receivable, contract assets, notes payable and accounts payable, short-term debt, lease liabilities (current liabilities), income taxes payable and contract liability, as they are settled in a short period and the market prices are mostly close to the book value.

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| | | | | |
|:---|:---|:---|:---|:---|
| | | Accounted amount in the consolidated balance sheet<br> (million yen) | Market price<br> (million yen) | Difference<br> (million yen) |
| &nbsp;&nbsp;[1] | Investment securities |  |  |  |
|  | Other securities | 11220 | 11220 | － |
| &nbsp;&nbsp;Total assets | &nbsp;&nbsp;Total assets | 11220 | 11220 | － |
| &nbsp;&nbsp;[1] | Corporate bonds | 5700 | 5384 | Δ315 |
| &nbsp;&nbsp;[2] | Long-term debt | 12182 | 11699 | Δ482 |
| &nbsp;&nbsp;[3] | Lease liabilities (fixed liabilities) | 1102 | 1035 | Δ66 |
| &nbsp;&nbsp;[4] | Long-term accounts payable | 177 | 169 | Δ7 |
| &nbsp;&nbsp;Total liabilities | &nbsp;&nbsp;Total liabilities | 19162 | 18288 | Δ873 |
| &nbsp;&nbsp;Derivative transactions \* | &nbsp;&nbsp;Derivative transactions \* |  |  |  |
| &nbsp;&nbsp;(1) Those not subject to hedge accounting | &nbsp;&nbsp;(1) Those not subject to hedge accounting | (1) | (1) | － |
| &nbsp;&nbsp;(2) Those subject to hedge accounting | &nbsp;&nbsp;(2) Those subject to hedge accounting | － | － | － |
| &nbsp;&nbsp;Derivative transactions | &nbsp;&nbsp;Derivative transactions | (1) | (1) | － |

---

\* The net receivables and liabilities generated by derivative transactions are indicated in net value and if there is an item that becomes a net liability as a total, we indicate it in ().

&nbsp;&nbsp;&nbsp;&nbsp;(Note) Shares, etc. without market prices

---

| | |
|:---|:---|
|  | Accounted amount in the consolidated balance sheet<br> (million yen) |
| &nbsp;&nbsp;&nbsp;Non-listed shares | 189 |
| &nbsp;&nbsp;&nbsp;Shares for non-consolidated subsidiaries and affiliated companies | 5,305 |

---

[3] Matters regarding the details, etc. by market price level for financial instruments

We classify the market price for financial instruments into the following 3 levels, depending on the observability and the importance of inputs used in calculating the market price.

Level 1 market price: The market price calculated by the market price for assets and liabilities subject to calculation of such a market price formulated by active market among observable inputs in calculating the market price

Level 2 market price: The market price calculated by other inputs in calculating the market price than the inputs used in Level 1 among observable inputs in calculating the market price

Level 3 market price: The market price calculated by unobservable inputs in calculating the market price

In case we use various inputs having an impact on calculation of the market price, we classify such a market price into the level having the lowest priority in calculating the market price among the levels to which each input belongs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Financial assets and financial liabilities having the market price as the accounted amount in the consolidated balance sheet

(Unit: million yen)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;Market price | &nbsp;&nbsp;Market price | &nbsp;&nbsp;Market price | &nbsp;&nbsp;Market price |
| &nbsp;&nbsp;Category | &nbsp;&nbsp;Level 1 | &nbsp;&nbsp;Level 2 | &nbsp;&nbsp;Level 3 | &nbsp;&nbsp;Total |
| &nbsp;&nbsp;Investment securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Other securities |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares | 11211 | － | － | 11211 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Local bonds | － | 9 | － | 9 |
| &nbsp;&nbsp;&nbsp;Derivative transactions (\*1) | － | [1] | － | [1] |
| &nbsp;&nbsp;&nbsp;Total assets | 11211 | 8 | － | 11219 |

---

\*1 The net receivables and liabilities generated by derivative transactions are indicated in net value and if there is an item that becomes a net liability as a total, we indicate it in ().

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Financial assets and financial liabilities not having the market price as the accounted amount in the consolidated balance sheet

(Unit: million yen)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;Market price | &nbsp;&nbsp;Market price | &nbsp;&nbsp;Market price | &nbsp;&nbsp;Market price |
| &nbsp;&nbsp;Category | &nbsp;&nbsp;Level 1 | &nbsp;&nbsp;Level 2 | &nbsp;&nbsp;Level 3 | &nbsp;&nbsp;Total |
| &nbsp;&nbsp;Corporate bonds | － | 5384 | － | 5384 |
| &nbsp;&nbsp;Long-term debt | － | 11699 | － | 11699 |
| &nbsp;&nbsp;Lease liabilities (fixed liabilities) | － | 1035 | － | 1035 |
| &nbsp;&nbsp;Long-term accounts payable | － | 169 | － | 169 |
| &nbsp;&nbsp;&nbsp;Total liabilities | － | 18288 | － | 18288 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(Note) Explanation on valuation method and inputs in calculating the market price

Investment securities

We evaluate listed shares using the market price. As the listed shares are in transaction in the active market, such a market price is classified

as that for Level 1. Receivables, namely, receivables with standard prices or receivables calculated by the present value after discounting the future cashflow generated from such receivables, are classified in the market price of Level 2.

Derivative transactions

The market price for exchange contracts is calculated by the discounted present valuation methos using such observable inputs as exchange rates and classified in the market price of Level 2.

Corporate bonds

The market price of corporate bonds issued by our company is calculated by the discounted present valuation method based on the total amount of principal and interest and the rate considering the residual period and the credit risk of such corporate bonds and is classified in the market price of Level 2.

Long-term debt and lease liabilities

These market prices are calculated by the discounted present valuation method based on the total amount of principal and interest and the rate considering the residual period and the credit risk of such liabilities and is classified in the market price of Level 2.

Long-term accounts payable

The market price is calculated by the present value after discounting the future cashflow by the rate considering the residual period and classified in the market price of Level 2.

8. Notes regarding information per share

[1] Net assets value per share 3,030. 34 yen <br> [2] Net income per share 116. 65 yen

9. Explanatory Notes on Important Subsequent Events

(Execution of the Business Integration Agreement and the Share Exchange Agreement)

At the meeting of its Board of Directors on May 14, 2025, the Company resolved to integrate business between the Company and Tsubakimoto Chain Co. ("Tsubakimoto Chain"; together with the Company, the "Companies") and to conduct a share exchange (the "Share Exchange") through which the Company will become a wholly-owned subsidiary company resulting from the share exchange and Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange, and have executed the Business Integration Agreement and the Share Exchange Agreement between the Companies on the same date.

Subject to approvals by the relevant authorities under applicable competition laws in Japan and Thailand, the Share Exchange will be conducted with the approval by a resolution at this general shareholders' meeting. The effective date of the Share Exchange is scheduled to be January 1, 2026.

As a result of these transactions, Tsubakimoto Chain will become the Company's wholly-owning parent company, and the Company, as its wholly-owned subsidiary company, will be delisted from the Standard Market of the Tokyo Stock Exchange, Inc. on December 29, 2025 (with December 26, 2025 as the final trading date).

&nbsp;&nbsp;&nbsp;&nbsp;1. Purposes of Business Integration through the Share Exchange

The domestic chain industry, to which the Company and Tsubakimoto Chain belong, has been undergoing restructuring in response to changes in the market environment, such as an increase in foreign capital inflows. In addition, chain manufacturers from China and South Korea are aggressively entering the Japanese market, mainly through promotions at major domestic exhibitions, and there are some cases where customers of the Companies are considering entering into transactions with such chain manufacturers from China and South Korea as suppliers. Furthermore, restructuring and mergers among chain manufacturers in the United States and Europe are progressing actively, and the Companies anticipate that global competition will intensify only further. Moreover, the Companies are expected to respond to market demands for achieving a decarbonized society, such as reducing greenhouse gas emissions; thus, the business environment is also undergoing major changes.

Under these circumstances, the Company came to recognize that the Share Exchange would contribute to the enhancement of its corporate value, based on the belief that the Share Exchange would lead to the creation of new business opportunities by enabling the Companies to leverage the management resources, including human resources, assets, technologies, and know-how, of the Company Group (meaning the corporate group consisting of the Company, and 20 subsidiaries and six affiliates of the Company (as of March 31, 2025)) and the Tsubaki Group (meaning the corporate group consisting of Tsubakimoto Chain, and 78 subsidiaries and eight affiliates of Tsubakimoto Chain (as of March 31, 2025)) and to achieve optimal financial strategies for the Companies' groups as a whole, thereby making it possible for the Companies to flexibly implement their management strategies from a medium- to long-term perspective.

&nbsp;&nbsp;&nbsp;&nbsp;2. Outline of the Share Exchange

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Name and description of business of the wholly-owning parent company resulting from the share exchange

Name <u>Tsubakimoto Chain Co.</u> <br> <u>Description of business</u> <u>Manufacture and sale of drive chains and conveyor chains, speed reducers, linear operating machines, timing chain systems for engines, and transport, sorting, storage systems, etc.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Schedule of the Share Exchange

---

| | |
|:---|:---|
| Record date for annual general meeting of shareholders (the Company) | &nbsp;&nbsp;Monday, March 31, 2025 |
| Resolution date of the meeting of the Board of Directors for executing the Business Integration Agreement and the Share Exchange Agreement (the Companies) | &nbsp;&nbsp;Wednesday, May 14, 2025 |
| Execution date of the Business Integration Agreement and the Share Exchange Agreement (the Companies) | &nbsp;&nbsp;Wednesday, May 14, 2025 |
| Resolution date of annual general meeting of shareholders for approval of the Share Exchange Agreement (the Company) | &nbsp;&nbsp;Tuesday, June 24, 2025 (scheduled) |
| Final trading date (the Company) | &nbsp;&nbsp;Friday, December 26, 2025 (scheduled) |
| Date of delisting (the Company) | &nbsp;&nbsp;Monday, December 29, 2025(scheduled) |
| Scheduled implementation date of the Share Exchange (effective date) | &nbsp;&nbsp;Thursday, January 1, 2026(scheduled) |

---

(Note 1) Tsubakimoto Chain plans to implement the Share Exchange by way of a simplified share exchange that does not require approval by resolution of its general shareholders' meeting, as prescribed in Article 796, Paragraph 2 of the Companies Act.

(Note 2) The above schedule can be changed upon agreement by the Companies if necessary for the performance of procedures for the Share Exchange or for other reasons (including the status of obtaining approvals required for the implementation of the Share Exchange from relevant authorities in Japan and Thailand pursuant to applicable competition laws). Notifications will be made promptly should there arise any changes to the above schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Method of the Share Exchange

The Share Exchange is a share exchange through which Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange and the Company will become a wholly-owned subsidiary company resulting from the share exchange. The Share Exchange will be conducted, in the case of Tsubakimoto Chain, by way of a simplified share exchange that does not require approval by a resolution of its general shareholders' meeting, as prescribed in Article 796, Paragraph 2 of the Companies Act, and in the case of the Company, with the Share Exchange Agreement being approved by a resolution at its annual general shareholders' meeting to be held on June 24, 2025. The effective date of the Share Exchange is scheduled to be January 1, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;3. Share Exchange Ratio and Calculation Method for Shares, and Number of Shares to be Delivered

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Class of and share exchange ratio for shares, and number of shares to be delivered

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp; Tsubakimoto Chain<br> (a wholly-owning parent company resulting from the share exchange) | &nbsp;&nbsp;&nbsp;&nbsp; The Company<br> (a wholly-owned subsidiary company resulting from the share exchange) |
| &nbsp;&nbsp;&nbsp;&nbsp;Allotment Ratio in Connection with the Share Exchange | &nbsp;&nbsp;&nbsp;&nbsp;1 | &nbsp;&nbsp;&nbsp;&nbsp;0.65 |
| &nbsp;&nbsp;&nbsp;&nbsp;Number of Shares to be Delivered in the Share Exchange | &nbsp;&nbsp;&nbsp;&nbsp;6,558,107 shares of common stock of Tsubakimoto Chain (scheduled) | &nbsp;&nbsp;&nbsp;&nbsp;6,558,107 shares of common stock of Tsubakimoto Chain (scheduled) |

---

(Note 1) Share allotment ratio

Tsubakimoto Chain will allot and deliver 0.65 shares of common stock of Tsubakimoto Chain (the "Tsubakimoto Chain Shares") per the Company's share of common stock (the "Company Shares"). However, no Company Shares held by Tsubakimoto Chain at the Record Time (as defined below) will be allocated. The allotment ratio for the Share Exchange written above (the "Share Exchange Ratio") may be changed upon discussions and agreement between the Company if there are significant changes to the terms and conditions on which the calculation is based.

(Note 2) Number of the Tsubakimoto Chain Shares to be delivered in the Share Exchange

Upon the Share Exchange, Tsubakimoto Chain will deliver, to the shareholders of the Company (meaning shareholders after the cancellation of treasury shares as described below, and excluding Tsubakimoto Chain) at the time immediately prior to its acquisition via the Share Exchange of all the issued shares of the Company (excluding the shares of the Company held by Tsubakimoto Chain) (the "Record Time"), the number of the Tsubakimoto Chain Shares calculated by multiplying the total number of the Company Shares held by the shareholders by 0.65, in exchange for the Company Shares held by them.

All of the shares to be delivered by Tsubakimoto Chain will be allocated from the treasury shares held by Tsubakimoto Chain as of May 14, 2025 and a portion of the own shares that Tsubakimoto Chain will acquire on or after May 14, 2025. For more information on the new acquisition of own shares by Tsubakimoto Chain on or after May 14, 2025, please refer to the "Notice Regarding Decision on Matters Relating to the Acquisition of Treasury Shares (Acquisition of Treasury Shares under the Articles of Incorporation pursuant to Article 165, Paragraph 2 of the Companies Act)" disclosed on May 14, 2025.

The Company plans to cancel, immediately prior to the Record Time, all of the treasury shares in its possession as of the point in time immediately prior to the Record Time (including own shares acquired by the Company in response to a share purchase demand by a dissenting shareholder as prescribed in Article 785, Paragraph 1 of the Companies Act that may be made in relation to the Share Exchange), by a resolution at the meeting of its Board of Directors held before the day immediately prior to the effective date of the Share Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Basis and reason for allotments in connection with the Share Exchange

The Company and Tsubakimoto Chain carefully examined the Share Exchange Ratio based on the results of due diligence conducted by the Company and Tsubakimoto Chain on each other while referring to the calculation results of the share exchange ratio obtained from their financial advisors and third-party valuation agents, and were engaged in extensive negotiations and discussions upon comprehensive consideration of factors such as the financial condition, status of assets, and future outlooks of the Companies. As a result of these repeated negotiations and discussions, the Company and Tsubakimoto Chain have concluded that the Share Exchange Ratio is appropriate and serves the interests of their respective shareholders. Based on this conclusion, the Companies have determined that the implementation of the Share Exchange using the Share Exchange Ratio is appropriate.

10. Other notes

[1] Notes regarding impairment loss

Our company recorded impairment loss for the following asset groups.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;Location | &nbsp;&nbsp;Usage | &nbsp;&nbsp;Type | &nbsp;&nbsp; Impairment loss<br> (million yen) |
| &nbsp;&nbsp;Kaga city,<br> Ishikawa Pref. | &nbsp;&nbsp;Aluminum rim<br> production equipment | &nbsp;&nbsp;Buildings and structures, Machinery,<br> equipment and delivery equipment, lease assets, others | &nbsp;&nbsp;289 |
| &nbsp;&nbsp;Kaga city,<br> Ishikawa Pref. | &nbsp;&nbsp;Plastic processing & production equipment | &nbsp;&nbsp;Machinery, equipment and delivery<br> equipment, others | &nbsp;&nbsp;15 |

---

Our company applies assets groupings per minimum unit generating mostly independent cashflow, mainly based on classification in management accounting (by product, by division).

As for our company's business assets, we continuously recorded a loss from the business activities and the short-term business recovery is not likely, therefore, we reduced the fixed assets' book value to the collectible value and recorded such decreased amount in extraordinary loss as impairment loss (305 million yen). The details are 140 million yen for buildings and structures, 110 million yen for machinery, equipment and delivery equipment, 47 million yen for lease assets and 6 million yen for others.

In addition, we measured the collectible amount for this assets group by net realizable value and such net realizable value

is based on the appraisal by experts.

<u>Balance Sheet</u>

(as of March 31, 2025) <br> (Unit: million yen)

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;Assets | &nbsp;&nbsp;Assets | &nbsp;&nbsp;Liabilities | &nbsp;&nbsp;Liabilities |
| &nbsp;&nbsp;<u>Current assets</u> | &nbsp;&nbsp;16354 | &nbsp;&nbsp;<u>Current liabilities</u> | &nbsp;&nbsp;9110 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | &nbsp;&nbsp;1307 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | &nbsp;&nbsp;3850 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes receivable | &nbsp;&nbsp;2297 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term debt | &nbsp;&nbsp;1539 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | &nbsp;&nbsp;5276 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt (due date within one year) | &nbsp;&nbsp;955 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract asset | &nbsp;&nbsp;4 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | &nbsp;&nbsp;122 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merchandise and finished products | &nbsp;&nbsp;1888 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes payable | &nbsp;&nbsp;60 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Work in progress | &nbsp;&nbsp;1953 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract liability | &nbsp;&nbsp;47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Raw materials and supplies | &nbsp;&nbsp;1388 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve for bonuses | &nbsp;&nbsp;382 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;2237 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for product warranties | &nbsp;&nbsp;133 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | &nbsp;&nbsp;Δ0 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on order received | &nbsp;&nbsp;37 |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on disaster | &nbsp;&nbsp;140 |
|  |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;1840 |
| &nbsp;&nbsp;<u>Fixed assets</u> | &nbsp;&nbsp;29172 | &nbsp;&nbsp;<u>Fixed liabilities</u> | &nbsp;&nbsp;21982 |
| &nbsp;&nbsp;&nbsp;Tangible fixed assets | &nbsp;&nbsp;11631 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate bonds | &nbsp;&nbsp;5700 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Buildings | &nbsp;&nbsp;3891 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | &nbsp;&nbsp;11622 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Structures | &nbsp;&nbsp;407 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities | &nbsp;&nbsp;1007 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Machinery, equipment | &nbsp;&nbsp;3729 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liabilities | &nbsp;&nbsp;1220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delivery equipment | &nbsp;&nbsp;22 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for retirement benefits | &nbsp;&nbsp;2312 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land | &nbsp;&nbsp;2168 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term accounts payable | &nbsp;&nbsp;118 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease assets | &nbsp;&nbsp;315 | &nbsp;&nbsp;Total liabilities | &nbsp;&nbsp;31092 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Construction in progress | &nbsp;&nbsp;832 | &nbsp;&nbsp;Net assets | &nbsp;&nbsp;Net assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;262 | &nbsp;&nbsp;<u>Shareholder's equity</u> | &nbsp;&nbsp;8837 |
| &nbsp;&nbsp;&nbsp;Intangible fixed assets | &nbsp;&nbsp;129 | &nbsp;&nbsp;&nbsp;Capital stock | &nbsp;&nbsp;3536 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Software | &nbsp;&nbsp;120 | &nbsp;&nbsp;&nbsp;Capital surplus | &nbsp;&nbsp;2864 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;9 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital reserve | &nbsp;&nbsp;2861 |
| &nbsp;&nbsp;&nbsp;Investments and other assets | &nbsp;&nbsp;17411 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other capital surplus | &nbsp;&nbsp;3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment securities | &nbsp;&nbsp;11196 | &nbsp;&nbsp;&nbsp;Retained earnings | &nbsp;&nbsp;3052 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Affiliated companies' shares | &nbsp;&nbsp;3600 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Profit reserve | &nbsp;&nbsp;556 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments to affiliated companies | &nbsp;&nbsp;1334 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings others | &nbsp;&nbsp;2496 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term loans to affiliated companies | &nbsp;&nbsp;1906 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision of reserve for advanced depreciation of non-current assets | &nbsp;&nbsp;184 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | &nbsp;&nbsp;132 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special reserve fund | &nbsp;&nbsp;1172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | &nbsp;&nbsp;Δ758 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings brought forward | &nbsp;&nbsp;1139 |
| &nbsp;&nbsp;<u>Deferred assets</u> | &nbsp;&nbsp;38 | &nbsp;&nbsp;&nbsp;Treasury shares | &nbsp;&nbsp;Δ616 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bond issuance cost | &nbsp;&nbsp;38 | &nbsp;&nbsp;<u>Valuation and translation adjustments</u> | &nbsp;&nbsp;5635 |
|  |  | &nbsp;&nbsp;&nbsp;Valuation difference on available-for-sale securities | &nbsp;&nbsp;5635 |
|  |  | &nbsp;&nbsp;Total net assets | &nbsp;&nbsp;14472 |
| &nbsp;&nbsp;Total assets | &nbsp;&nbsp;45565 | &nbsp;&nbsp;Total liabilities and equity | &nbsp;&nbsp;45565 |

---

<u>Profit and Loss Statement</u>

（ From April 1, 2024 to <br> March 31, 2025 ）

(Unit: million yen)

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Account | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amount | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amount |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales |  | 27773 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of goods sold |  | 23782 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit |  | 3990 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses |  | 4414 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loss |  | 423 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-operating income |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 53 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend income | 1099 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange gain | 1 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reversal of allowance for doubtful accounts at affiliated companies | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | 69 | 1234 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-operating expenses |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 87 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bond interest | 43 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of bond issuance cost | 8 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision of allowance for doubtful accounts | 30 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Others | 93 | 263 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ordinary profit |  | 547 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extraordinary gain |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Gain on sale of investment securities<br> Gain on reversal of provision for loss on disaster | 637<br> 65 | <br> 702 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Extraordinary loss |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on retirement of property | 33 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment loss | 305 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disaster | 17 | 356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes and others |  | 893 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate tax, inhabitant and enterprise taxes | 149 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes - deferred | Δ58 | 90 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current net income |  | 802 |

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<u>Statement of changes in net assets</u>

（ From April 1, 2024 to <br> March 31, 2025 ）

(Unit: million yen)

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's Equity |
| | Capital stock | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital surplus | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital surplus | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital surplus | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings |
| | Capital stock | Capital surplus | Other capital surplus | Total capital surplus | Profit reserve | Retained earnings others | Retained earnings others | Retained earnings others | Total retained earnings |
| | Capital stock | Capital surplus | Other capital surplus | Total capital surplus | Profit reserve | Provision of reserve for advanced depreciation of non-current assets | Special reserve fund | Retained earnings brought forward | Total retained earnings |
| April 1, 2024<br> Balance at beginning of current period | 3536 | 2861 | － | 2861 | 556 | 184 | 1872 | Δ207 | 2406 |
| Changes of items during period |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividend of surplus |  |  |  | － |  |  |  | Δ155 | Δ155 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current net income |  |  |  | － |  |  |  | 802 | 802 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reversal of reserve for advanced depreciation of non-current assets |  |  |  | － |  | Δ0 |  | 0 | － |
| &nbsp;&nbsp;&nbsp;&nbsp;Reversal of special reserve fund |  |  |  | － |  |  | Δ700 | 700 | － |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury shares |  |  |  | － |  |  |  |  | － |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposal of treasury shares |  |  | 3 | 3 |  |  |  |  | － |
| &nbsp;&nbsp;&nbsp;&nbsp;Net changes of items other than shareholder's equity |  |  |  | － |  |  |  |  | － |
| Total changes of items during period | － | － | 3 | 3 | － | Δ0 | Δ700 | 1346 | 646 |
| March 31, 2025<br> Balance at end of current period | 3536 | 2861 | 3 | 2864 | 556 | 184 | 1172 | 1139 | 3052 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's equity | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shareholder's equity | &nbsp;&nbsp;&nbsp;Valuation and translation adjustments | &nbsp;&nbsp;&nbsp;Valuation and translation adjustments | &nbsp;&nbsp;&nbsp;Total net assets |
| | &nbsp;&nbsp;&nbsp;Treasury shares | &nbsp;&nbsp;&nbsp;Total shareholder's equity | &nbsp;&nbsp;&nbsp;Valuation difference on available-for-sale securities | Total valuation and translation adjustments | &nbsp;&nbsp;&nbsp;Total net assets |
| April 1, 2024<br> Balance at beginning of current period | Δ417 | 8387 | 8043 | 8043 | 16430 |
| &nbsp;&nbsp;Changes of items during period |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividend of surplus |  | Δ155 |  |  | Δ155 |
| &nbsp;&nbsp;&nbsp;&nbsp;Current net income |  | 802 |  |  | 802 |
| &nbsp;&nbsp;&nbsp;&nbsp;Reversal of reserve for advanced depreciation of non-current assets |  | － |  |  | － |
| &nbsp;&nbsp;&nbsp;&nbsp;Reversal of special reserve fund |  | － |  |  | － |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury shares | Δ209 | Δ209 |  |  | Δ209 |
| &nbsp;&nbsp;&nbsp;&nbsp;Disposal of treasury shares | 10 | 13 |  |  | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net changes of items other than shareholder's equity |  | － | Δ2,407 | Δ2,407 | Δ2,407 |
| &nbsp;&nbsp;Total changes of items during period | Δ199 | 450 | Δ2,407 | Δ2,407 | Δ1,957 |
| March 31, 2025<br> Balance at end of current period | Δ616 | 8837 | 5635 | 5635 | 14472 |

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Notes to non-consolidated financial statements

1. Matters regarding important accounting policy

[1] Valuation criteria and valuation method for securities

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares for subsidiaries and for affiliated companies | : | The cost method using the moving average method |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other securities<br> Other than shares without a market price | : | The market value method (the valuation difference is reported as a component of shareholders' equity and the cost of goods sold is calculated by the moving average method.) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares, etc. without a market price | : | The cost method using the moving average method |

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[2] Valuation criteria and valuation method for inventory

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finished products | : | The cost method using the weighted-average method<br> (however, the cost method using the specific identification method for conveyors) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Work in process | : | The cost method using the weighted-average method<br> (however, the cost method using the specific identification method for conveyors) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Raw materials and supplies | : | The cost method using the moving average method |

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(The values in the balance sheet are calculated using the method of reducing book value based on the decrease in profitability.)

[3] Depreciation method for fixed assets

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Tangible fixed assets<br> (excluding lease assets) | : | By the declining balance method<br> However, as for the buildings (excluding accessory equipment) obtained after April 1, 1998, and the accessory equipment and structures obtained after April 1, 2016, we use the straight-line method.<br> Buildings and structures: 3 ~ 47 years<br> Machinery, equipment and delivery equipment: 2 ~ 9 years |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible fixed assets | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible fixed assets | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible fixed assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Software | : | As for software (for internal use), we use the straight-line method based on the internal usable period (5 years). |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease assets | : | As for lease assets under the finance lease exempt from passage of title, we set the lease period as service life and the difference between the total lease fee and the equivalent to the acquisition cost is deemed as interest equivalents and we apply a method to distribute such amount to each term using the interest method. |
| &nbsp;&nbsp;&nbsp;[4] Accounting method for important deferred assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bond issuance cost | : | The bond issuance cost is written off by the straight-line method throughout the bond redemption period for each applicable bond. |
| &nbsp;&nbsp;&nbsp;[5] Criteria for recording reserves | &nbsp;&nbsp;&nbsp;[5] Criteria for recording reserves | &nbsp;&nbsp;&nbsp;[5] Criteria for recording reserves |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | : | We record the estimated uncollectible amount, using the loan loss ratio for general receivables, and by considering the collectability for each receivable for such specific receivables as doubtful accounts receivable to prepare for bad debt loss for accounts receivable and loan receivable, etc. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve for bonuses | : | We record it based on the estimated amount borne in this consolidated fiscal year to cover the payment of bonuses payable to employees. |

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for product warranties | We record the estimated amount to be incurred in future based on the past actual result and the estimated amount based on individual consideration to prepare for the expense for product warranties. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on order received | We record the estimated loss amount for such orders with which a loss is likely to occur and with which such loss can be reasonably estimated among all the orders in this consolidated fiscal year to prepare for future loss relating to order contracts. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for retirement benefits | It is to prepare for retirement benefits for employees, and we record the amount which is likely to have been incurred at the end of this fiscal year based on the estimated retirement benefits and the estimated pension assets at the end of this fiscal year.<br> We account for the actuarial differences by mainly processing the amount distributed by the straight-line method based on fixed years (10 years) within the average residual years of service for employees when such differences occur in each consolidated fiscal year, starting from the next consolidated fiscal year after they occur. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on disaster | We record the estimated amount to be incurred in future to prepare for the expenses required for restoring, etc. of assets damaged by the disaster. |

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[6] Hedge accounting method

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Hedge accounting method | We apply deferral hedge accounting for foreign currency-based monetary assets with forward exchange contracts. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Hedge method and scope of hedge | Hedge method: forward exchange contracts<br> Scope of hedge: foreign currency-based monetary assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Hedge policy | We make forward exchange contracts as derivative transactions for risk hedge method covering foreign currency-based transactions. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Method to evaluate hedge effectiveness | We do not evaluate the effectiveness on the settling day, as the correlation by subsequent fluctuation of the exchange rate is completely covered due to the fact that we apply deferral hedge accounting for each asset by making forward exchange contract for the same foreign currency-based amount on the same day following the risk management policy when concluding forward exchange contracts. |

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[7] Criteria for recording important revenues and expenses

The details of the main obligations in our main businesses relating to profits generated from the contracts with customers of our company and the usual timing to fulfill such obligations (the usual timing to recognize revenues) are as follows.

Our company mainly engages in the motorcycle parts business (motorcycle chains, rims, spokes, wheels), the automobile parts business (automobile engine chains, sprocket, tensioner), the industrial machinery business (chains for industrial machinery, conveyor) and sales of others (welfare equipment) and provision of related services.

For sales of products, we recognize revenues when the control of products is transferred to customers based on the contract with them and for services, etc. in the industrial machinery business, we recognize revenues when our company fulfills the obligation based on the contract with customers.

For certain sales of products, we have an obligation to deliver merchandise or products based on the sales contract with customers. Under this obligation, as customers obtain control of such items when we complete the delivery of merchandise or products, we conclude that our obligation is fulfilled.

In addition, for the transaction with supply for a fee where we purchase parts, etc. from customers and then sell finished products after processing to such customers, we recognize revenues by applying net value after deducting the purchase costs of such parts, etc.

Therefore, for the domestic sales, we apply the substitute treatment in Article 98 of "The Guidance on the Accounting Standard for Revenue Recognition" and recognize revenues when delivering such items.

For certain product sales in the industrial machinery business, we have an obligation to deliver products and services responding to customers' specifications and the obligation for such products shall be fulfilled according to the progress of manufacturing and the control of assets or services is to be transferred during a certain period of time, therefore, we conclude that our obligation is fulfilled throughout a certain period of time. We recognize such revenue in accordance with the degree of progress only when we can estimate such degree of progress with reliability, except for works involving small amount and short period. We calculate the degree of progress using a proportion of accumulated actual incurred cost against the direct estimated cost, as we judge that the incurred cost appropriately indicates the degree of progress.

Moreover, by applying the substitute treatment in Article 95 of "The Guidance on the Accounting Standard for Revenue Recognition", we recognize revenues when we completely fulfill the obligation, not recognizing revenues throughout a certain period of time, in case the period from the starting date of the transaction based on the contract to the timing when we estimate to completely fulfill the obligation is substantially short.

[8] Accounting method regarding retirement benefits

The accounting method for unrecognized actuarial differences relating to retirement benefits is different from the corresponding accounting method applied for the consolidated financial statements.

2. Notes regarding changes in accounting policy

[1] Application of "The Accounting Standard for Current Income Taxes"

We apply the "The Accounting Standard for Current Income Taxes", etc. (ASBJ Statement No. 27, October 28, 2022. Hereinafter referred to as "2022 Revised Accounting Standard") from the beginning of this consolidated fiscal year.

As for the revision in the account for corporate taxes, etc. (taxes on other comprehensive income), we follow the transitional treatment defined in the proviso, Article 20-3 of 2022 Revised Accounting Standard.

The change in this accounting policy does not have any impact on the financial statements.

3. Notes regarding accounting estimates

As for the accounting estimates, we calculate reasonable amounts based on available information when preparing the financial statements. Among the accounting estimates recorded in the financial statements for this consolidated fiscal year, the accounting items which may have an important impact on the financial statements for the next fiscal year are the same items as described in the Notes to consolidated financial statements "4. Notes regarding accounting estimates: [1] Recognition and measurement of impairment loss for fixed assets regarding our company's aluminum rim business and [2] whether we need to recognize the impairment loss for fixed assets of our company's industrial machinery business.

4. Notes to the balance sheet

[1] Assets giving as security and liabilities related to security

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Assets giving as security

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| | | |
|:---|:---|:---|
| Buildings | 133 | million yen |
| Machinery, equipment | 0 | million yen |
| Land | 448 | million yen |
| Investment securities | 6836 | million yen |
| Total | 7419 | million yen |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Liabilities related to security

---

| | | |
|:---|:---|:---|
| Shoer-term debt | 1239 | million yen |
| Long-term debt (due date within one year) | 955 | million yen |
| Long-term debt | 10172 | million yen |
| Total | 12367 | million yen |

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[2] Accumulated depreciation of tangible fixed assets 30,971 million yen

[3] Guaranteed liabilities

Our company gives a financial guarantee for the following related companies' debt from financial institutions.

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.I.D PHILIPPINES INC. | 36 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;P.T. DAIDO INDONESIA MANUFACTURING | 880 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAIDO INDIA PVT.LTD. | 210 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAIDO CORPORATION OF AMERICA | 538 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAIDO INDUSTRIAL E COMERCIAL LTDA. | 155 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAIDO INDUSTRIA DE CORRENTES DA AMAZONIA LTDA. | 315 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DID EUROPE S.R.L. | 148 | million yen |

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The above guaranteed liabilities are converted into Japanese yen using the exchange rate of the settling day.

[4] Monetary assets and monetary liabilities with related companies (excluding the companies classified)

(1) Short-term monetary assets 4,676 million yen <br> (2) Short-term monetary liabilities 1,326 million yen

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;[5] Transfer amount of endorsed bills receivable | 38 | million yen |

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5. Notes to the profit and loss statement

[1] Transaction amount with related companies

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales | 10472 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase amount | 5287 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transaction amount other than business transactions | 1111 | million yen |

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[2] Provision of allowance for doubtful accounts for related companies

The provision of allowance for doubtful accounts for related companies has been accounted for considering the financial status, etc. of our consolidated subsidiary (D.I.D PHILIPPINES INC.).

6. Notes to the statement of changes in net assets

Type and number of the treasury shares at the end of this fiscal year

Common shares 775,205 shares

7. Notes regarding tax effect accounting

The details of deferred tax assets and deferred tax liabilities by main reason for occurrence

Deferred tax assets

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Reserve for bonuses | 116 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for retirement benefits | 724 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Impairment loss | 528 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss from inventory revaluation | 202 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Allowance for doubtful accounts | 344 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Provision for loss on disaster | 44 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on valuation of shares of subsidiaries and associates | 1219 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on valuation of investments in capital of subsidiaries and affiliates | 536 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax loss carried forward | 18 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Others | 190 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Sub-total for deferred tax assets | 3926 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Valuation allowance for total of future deductible temporary differences, etc. | Δ2,484 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deferred tax assets | 1441 | million yen |

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Deferred tax liabilities

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;Provision of reserve for advanced depreciation of non-current assets | Δ 83 | million yen |
| &nbsp;&nbsp;&nbsp;&nbsp;valuation difference on available-for-sale securities | Δ 2,579 | million yen |
| Total deferred tax liabilities | Δ 2,662 | million yen |
| Net deferred tax liabilities | Δ 1,220 | million yen |

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8. Notes regarding transactions with related parties

[1] The parent company and major corporate shareholders, etc.

Not applicable

[2] Officers and main individual shareholders, etc.

Not applicable

[3] Subsidiaries and affiliated companies

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;type | &nbsp;&nbsp;&nbsp;Name of company, etc. | &nbsp;&nbsp;Holding (held) ratio of voting rights (%) | &nbsp;&nbsp;Relationship with related party | Details of transaction | &nbsp;&nbsp;Transaction amount (million yen) | &nbsp;&nbsp;&nbsp;Account | Ending balance<br> (million yen) |
| Subsidiary | &nbsp;&nbsp;D.I.D PHILIPPINES INC. | &nbsp;&nbsp;Direct holding<br> 100.00 | &nbsp;&nbsp;Lending funds | &nbsp;&nbsp;Lending and collecting funds (-)<br> (Note 1) | &nbsp;&nbsp;571<br> (-472) | &nbsp;&nbsp;Long-term loans payable to subsidiaries and affiliates | &nbsp;&nbsp;571 |
| Subsidiary | &nbsp;&nbsp;P.T.DAIDO INDONESIA MANUFACTURING | &nbsp;&nbsp;Direct holding<br> 100.00 | &nbsp;&nbsp;Debt guarantee<br> Interlocking directorates | &nbsp;&nbsp;Debt guarantee<br> (Note 2) | 880 | &nbsp;&nbsp;－ | － |
| Subsidiary | &nbsp;&nbsp;DAIDO INDIA PVT.LTD. | &nbsp;&nbsp;Holding<br> Direct 98.91<br> Indirect 1.09 | &nbsp;&nbsp;Lending funds<br> Interlocking directorates | &nbsp;&nbsp;Lending and collecting funds (-)<br> (Note 1) | 210<br> (-30) | &nbsp;&nbsp;Short-term loans payable to subsidiaries and affiliates (Other current assets)<br> Long-term loans payable to subsidiaries and affiliates | 307<br>995 |
| Subsidiary | &nbsp;&nbsp;DAIDO CORPORATION OF AMERICA | &nbsp;&nbsp;Direct holding<br> 100.00 | &nbsp;&nbsp;Our company sells products, equipment, etc.<br> Debt guarantee<br> Interlocking directorates | &nbsp;&nbsp;Sales of chain parts and equipment, etc.<br> (Note 3) | 1407 | &nbsp;&nbsp;Accounts receivable | 588 |
| Subsidiary | &nbsp;&nbsp;DAIDO CORPORATION OF AMERICA | &nbsp;&nbsp;Direct holding<br> 100.00 | &nbsp;&nbsp;Our company sells products, equipment, etc.<br> Debt guarantee<br> Interlocking directorates | &nbsp;&nbsp;Debt guarantee<br> (Note 2) | 538 | &nbsp;&nbsp;－ | － |
| Subsidiary | &nbsp;&nbsp;DAIDO INDUSTRIAL E COMERCIAL LTDA. | &nbsp;&nbsp;Direct holding<br> 100.00 | &nbsp;&nbsp;Lending funds | &nbsp;&nbsp;Lending and collecting funds (-)<br> (Note 1) | 650<br> (-650) | &nbsp;&nbsp;Short-term loans payable to subsidiaries and affiliates (Other current assets) | 650 |
| Subsidiary | &nbsp;&nbsp;DID EUROPE S.R.L. | &nbsp;&nbsp;Direct holding<br> 100.00 | &nbsp;&nbsp;Our company sells products | &nbsp;&nbsp;Sales of chains, etc.<br> (Note 3) | 3541 | &nbsp;&nbsp;Accounts receivable | 746 |
| Affiliated companies accounted for using the equity method | Tsukiboshi Manufacturing Co., Ltd. | &nbsp;&nbsp;Direct holding<br> 29.00 | &nbsp;&nbsp;Delivery of spokes and bolts to our company<br> Interlocking directorates | &nbsp;&nbsp;Purchase of spokes and bolts, etc.<br> (Note 3)<br>| 1582 | &nbsp;&nbsp;Accounts payable | 536 |

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Transaction conditions and decision policy for transaction conditions, etc.

(Notes) 1. As for lending funds, we determine the interest rate reasonably referring to the market actuals. We do not ask for any collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The debt guarantee is that our company gives a financial guarantee for our subsidiaries' debt from financial institutions. We do not ask for any collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The price and other transaction conditions are determined based on the price negotiation referring to the market actuals.

[4] Sister companies, etc.

Not applicable.

9. Notes regarding revenue recognition

The information used as a base to understand the revenue generated from the contracts with customers is described in "Matters regarding important accounting policy" and "Criteria for recording important revenues and expenses".

10. Notes regarding information per share

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;[1] Net assets amount per share | 1,426.03 yen |
| &nbsp;&nbsp;&nbsp;[2] Current net income per share | 78.40 yen |

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11. Explanatory Notes on Important Subsequent Events

(Execution of the Business Integration Agreement and the Share Exchange Agreement)

At the meeting of its Board of Directors on May 14, 2025, the Company resolved to integrate business between the Company and Tsubakimoto Chain Co. ("Tsubakimoto Chain"; together with the Company, the "Companies") and to conduct a share exchange through which the Company will become a wholly-owned subsidiary company resulting from the share exchange and Tsubakimoto Chain will become a wholly-owning parent company resulting from the share exchange, and have executed the Business Integration Agreement and the Share Exchange Agreement between the Companies on the same date.

The details are described in "9. Explanatory Notes on Important Subsequent Events" of the Notes to consolidated financial statements.

12. Other notes

[1] Notes regarding impairment loss

Our company recorded impairment loss for the following asset groups.

Location <u>Usage</u> <u>Type</u> <u> Impairment loss (million yen)</u> <br> <u>Kaga city, Ishikawa Pref.</u> <u>Aluminum rim production equipment</u> <u>Buildings and structures, Machinery, equipment and delivery equipment, lease assets, others</u> <u>289</u> <br> <u>Kaga city, Ishikawa Pref.</u> <u>Plastic processing & production equipment</u> <u>Machinery, equipment, others</u> <u>15</u>

Our company applies assets groupings per minimum unit generating mostly independent cashflow, mainly based on classification in management accounting (by product, by division).

As for our company's business assets, we continuously recorded a loss from the business activities and the short-term business recovery is not likely, therefore, we reduced the fixed assets' book value to the collectible value and recorded such decreased amount in extraordinary loss as impairment loss (305 million yen). The details are 130 million yen for buildings, 9 million yen for structures, 108 million yen for machinery and equipment, 2 million yen for delivery equipment, 47 million yen for lease assets and 6 million yen for others.

In addition, we measured the collectible amount for this assets group by net realizable value and such net realizable value is based on the appraisal by experts.

Accounting audit report regarding the consolidated financial statements

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent auditor's report</u><br> May 19, 2025<br> To the Board of Directors, Daido Kogyo Co., Ltd.<br> KPMG AZSA LLC | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent auditor's report</u><br> May 19, 2025<br> To the Board of Directors, Daido Kogyo Co., Ltd.<br> KPMG AZSA LLC | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent auditor's report</u><br> May 19, 2025<br> To the Board of Directors, Daido Kogyo Co., Ltd.<br> KPMG AZSA LLC |
| Hokuriku office |  |  |
| Designated limited liability partner<br> Executive member | Certified public accountant | Katsunori Hanaoka |
| Designated limited liability partner<br> Executive member | Certified public accountant | Toshiyuki Makino |
| <br>Audit opinion<br> We have audited the consolidated financial statements, which are the consolidated balance sheet, the consolidated profit and loss statement, the consolidated statement of changes in net assets and the notes to consolidated financial statements, for the consolidated fiscal period from April 1, 2024 to March 31, 2025, of Daido Kogyo Co., Ltd. (the Company) in accordance with the provisions of Article 444, Clause 4 of the Companies Act.<br> In our opinion, the above-mentioned consolidated financial statements present fairly, in all material respect, the status of the assets and the profit or loss of the company group consisting of the Company. and its consolidated subsidiaries for the period regarding these consolidated financial statements, in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br> Basis of opinion<br> We conducted the audit in accordance with the generally accepted audit standards in Japan. KPMG AZSALLC's responsibility in the audit standards is described in "Auditor's responsibility for audit of the consolidated financial statements". We are, in accordance with The Code of Ethics for Professional Accountants in Japan, independent from the Company and its subsidiaries and fulfill other ethical responsibilities as auditor. We believe that we have obtained sufficient and appropriate audit evidence as a base of our opinion.<br> Emphasis<br> As described in the notes regarding important subsequent events (conclusion of business integration agreement and share exchange agreement) within the notes to consolidated financial statements, the Company decided to execute a business integration with Tsubakimoto Chain and to execute a share exchange through which the Company will become a wholly-owned subsidiary company and Tsubakimoto Chain will become a wholly-owning parent company by the resolution made at the Board of Directors meeting held on May 14, 2025, and on the same day, the Company concluded a business integration agreement and a share exchange agreement. The share exchange will be executed after obtaining approval by resolution made at the Ordinary General Meeting of Shareholders held on June 24, 2025, with a condition to obtain approvals, etc. for competition laws applicable, etc. from concerned authorities in Japan and Thailand, having an effective date of January 1, 2026.<br> The Company's shares will be delisted as of December 29, 2025 through appropriate procedures.<br> This matter shall not have any impact on our opinion.<br> Other details described<br> Other details described are the business report and its annexed detailed statements. The management's responsibility is to prepare and disclose other details described. The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the reporting process of other details described.<br> Othe details described are not included in the scope of our audit opinion regarding the consolidated financial statements and we do not express any opinion on other details described.<br> Our responsibility regarding the audit of the consolidated financial statements is to peruse the other details described, to review whether there is any material difference between the other details described and the consolidated financial statements or the knowledge we have obtained during the audit, when perusing the other details described, and in addition, to pay attention whether there is any sign of material error in the other details described other than such material difference. | <br>Audit opinion<br> We have audited the consolidated financial statements, which are the consolidated balance sheet, the consolidated profit and loss statement, the consolidated statement of changes in net assets and the notes to consolidated financial statements, for the consolidated fiscal period from April 1, 2024 to March 31, 2025, of Daido Kogyo Co., Ltd. (the Company) in accordance with the provisions of Article 444, Clause 4 of the Companies Act.<br> In our opinion, the above-mentioned consolidated financial statements present fairly, in all material respect, the status of the assets and the profit or loss of the company group consisting of the Company. and its consolidated subsidiaries for the period regarding these consolidated financial statements, in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br> Basis of opinion<br> We conducted the audit in accordance with the generally accepted audit standards in Japan. KPMG AZSALLC's responsibility in the audit standards is described in "Auditor's responsibility for audit of the consolidated financial statements". We are, in accordance with The Code of Ethics for Professional Accountants in Japan, independent from the Company and its subsidiaries and fulfill other ethical responsibilities as auditor. We believe that we have obtained sufficient and appropriate audit evidence as a base of our opinion.<br> Emphasis<br> As described in the notes regarding important subsequent events (conclusion of business integration agreement and share exchange agreement) within the notes to consolidated financial statements, the Company decided to execute a business integration with Tsubakimoto Chain and to execute a share exchange through which the Company will become a wholly-owned subsidiary company and Tsubakimoto Chain will become a wholly-owning parent company by the resolution made at the Board of Directors meeting held on May 14, 2025, and on the same day, the Company concluded a business integration agreement and a share exchange agreement. The share exchange will be executed after obtaining approval by resolution made at the Ordinary General Meeting of Shareholders held on June 24, 2025, with a condition to obtain approvals, etc. for competition laws applicable, etc. from concerned authorities in Japan and Thailand, having an effective date of January 1, 2026.<br> The Company's shares will be delisted as of December 29, 2025 through appropriate procedures.<br> This matter shall not have any impact on our opinion.<br> Other details described<br> Other details described are the business report and its annexed detailed statements. The management's responsibility is to prepare and disclose other details described. The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the reporting process of other details described.<br> Othe details described are not included in the scope of our audit opinion regarding the consolidated financial statements and we do not express any opinion on other details described.<br> Our responsibility regarding the audit of the consolidated financial statements is to peruse the other details described, to review whether there is any material difference between the other details described and the consolidated financial statements or the knowledge we have obtained during the audit, when perusing the other details described, and in addition, to pay attention whether there is any sign of material error in the other details described other than such material difference. | <br>Audit opinion<br> We have audited the consolidated financial statements, which are the consolidated balance sheet, the consolidated profit and loss statement, the consolidated statement of changes in net assets and the notes to consolidated financial statements, for the consolidated fiscal period from April 1, 2024 to March 31, 2025, of Daido Kogyo Co., Ltd. (the Company) in accordance with the provisions of Article 444, Clause 4 of the Companies Act.<br> In our opinion, the above-mentioned consolidated financial statements present fairly, in all material respect, the status of the assets and the profit or loss of the company group consisting of the Company. and its consolidated subsidiaries for the period regarding these consolidated financial statements, in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br> Basis of opinion<br> We conducted the audit in accordance with the generally accepted audit standards in Japan. KPMG AZSALLC's responsibility in the audit standards is described in "Auditor's responsibility for audit of the consolidated financial statements". We are, in accordance with The Code of Ethics for Professional Accountants in Japan, independent from the Company and its subsidiaries and fulfill other ethical responsibilities as auditor. We believe that we have obtained sufficient and appropriate audit evidence as a base of our opinion.<br> Emphasis<br> As described in the notes regarding important subsequent events (conclusion of business integration agreement and share exchange agreement) within the notes to consolidated financial statements, the Company decided to execute a business integration with Tsubakimoto Chain and to execute a share exchange through which the Company will become a wholly-owned subsidiary company and Tsubakimoto Chain will become a wholly-owning parent company by the resolution made at the Board of Directors meeting held on May 14, 2025, and on the same day, the Company concluded a business integration agreement and a share exchange agreement. The share exchange will be executed after obtaining approval by resolution made at the Ordinary General Meeting of Shareholders held on June 24, 2025, with a condition to obtain approvals, etc. for competition laws applicable, etc. from concerned authorities in Japan and Thailand, having an effective date of January 1, 2026.<br> The Company's shares will be delisted as of December 29, 2025 through appropriate procedures.<br> This matter shall not have any impact on our opinion.<br> Other details described<br> Other details described are the business report and its annexed detailed statements. The management's responsibility is to prepare and disclose other details described. The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the reporting process of other details described.<br> Othe details described are not included in the scope of our audit opinion regarding the consolidated financial statements and we do not express any opinion on other details described.<br> Our responsibility regarding the audit of the consolidated financial statements is to peruse the other details described, to review whether there is any material difference between the other details described and the consolidated financial statements or the knowledge we have obtained during the audit, when perusing the other details described, and in addition, to pay attention whether there is any sign of material error in the other details described other than such material difference. |

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&nbsp;&nbsp;&nbsp; In case we acknowledge that there is material error in the other details described based on our review work conducted, we are required to report such fact.<br> There is no item we are required to report regarding the other details described.<br> Responsibilities of the management and the Audit and Supervisory Committee for the consolidated financial statements<br> The management's responsibility is to prepare and appropriately express the consolidated financial statements in accordance with the corporate accounting standards generally accepted as fair and valid in Japan. It includes the management's responsibility to establish and manage the internal control system that the management believes necessary to prepare and appropriately express the consolidated financial statements without material misstatement due to fraud or error.<br> In preparing the consolidated financial statements, the management has a responsibility to assess whether it is appropriate to prepare the consolidated financial statements based on the going concern assumption and to disclose matters regarding going concern if it is required to disclose such matters in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br> The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the financial reporting process.<br> Auditor's responsibility for audit of the consolidated financial statements<br> The auditor's responsibility is to express the opinion on the consolidated financial statements in the audit report from an independent standpoint based on the audit conducted by the auditor, obtaining a reasonable guarantee on whether there is any material misstatement due to fraud or error in the consolidated financial statements as a whole. A misstatement is likely to occur due to fraud or error and is acknowledged as material if it is reasonably assumed to affect the decision-making of the users of the consolidated financial statements, individually or collectively.<br> The auditor conducts the followings, making judgements as professional experts and holding professional skepticism through the audit process in accordance with the generally accepted audit standards in Japan.<br> ・ We identify and assess the risk of material misstatement due to fraud or error. In addition, we plan and execute an audit procedure responding to the risk of material misstatement. The selection and application of audit procedures shall be subject to the auditor's judgement. In addition, we obtain sufficient and appropriate audit evidence as a base to express our opinion.<br> ・ The purpose for the audit of the consolidated financial statements is not to express the opinion on the effectiveness of the internal control system, however, the auditor reviews the internal control system relating to the audit to plan an appropriate audit procedure responding to circumstances when making a risk assessment. <br> ・ We evaluate the accounting policy the management has adopted, the appropriateness of its application method, the rationality of accounting estimates made by the management and the adequacy of related notes. <br> ・ We make a conclusion on whether it is appropriate for the management to prepare the consolidated financial statements based on the going concern assumption and whether any material uncertainty is assumed relating to events or circumstances likely to raise material doubt on the going concern assumption based on the obtained audit evidence. If there is material uncertainty with the going concern assumption, we are required to call for attention to the notes to the consolidated financial statements in the audit report, or if the notes regarding material uncertainty in the consolidated financial statements are not appropriate, we are required to express the opinion with exceptions. The auditor's conclusion is based on the audit evidence obtained by the date of the audit report and there is a possibility that a company may not continue as going concern due to future events or circumstances. <br> ・ We evaluate whether the presentation and the notes to the consolidated financial statements are in accordance with the corporate accounting standards generally accepted as fair and valid in Japan and whether the presentation, the structure and the details of the consolidated financial statements including related notes as well as the consolidated financial statements appropriately present transactions and accounting events which are the base of the statements. <br> ・ We plan and conduct the audit of the consolidated financial statements to obtain sufficient and appropriate audit evidence regarding the financial information of the Company and its consolidated subsidiaries, being a base of the opinion on the consolidated financial statements. The auditor has a responsibility to direct, oversight and peruse regarding the audit of the consolidated financial statements. The auditor is responsible for the audit opinion independently.<br> The auditor reports to the Audit and Supervisory Committee on the scope and the execution period of planned audit, material audit findings identified in the execution process of the audit including material weakness in the internal control system and other matters required in the audit standards.<br> The auditor reports to the Audit and Supervisory Committee that the auditor has complied with the rule regarding professional ethics in Japan on independence, the matters which may reasonably affect the auditor's independence and, if the auditor takes a measure to eliminate hindrance or applies a safeguard to mitigate such hindrance to acceptable level, such details.<br> Conflict of interest<br> There is no conflict of interest to be described based on the provisions of the Certified Public Accountant Act between the Company and its subsidiaries and KPMG AZSA LLC or its Executive members.<br> Concluded<br>

Accounting audit report regarding financial statements

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| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent auditor's report</u><br> May 19, 2025<br> To the Board of Directors, Daido Kogyo Co., Ltd.<br> KPMG AZSA LLC | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent auditor's report</u><br> May 19, 2025<br> To the Board of Directors, Daido Kogyo Co., Ltd.<br> KPMG AZSA LLC | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent auditor's report</u><br> May 19, 2025<br> To the Board of Directors, Daido Kogyo Co., Ltd.<br> KPMG AZSA LLC |
| Hokuriku office |  |  |
| Designated limited liability partner<br> Executive member | Certified public accountant | Katsunori Hanaoka |
| Designated limited liability partner<br> Executive member | Certified public accountant | Toshiyuki Makino |
| <br>Audit opinion<br> We have audited the financial statements, which are the balance sheet, the profit and loss statement, the statement of changes in net assets and the notes to non-consolidated financial statements and its annexed detailed statements (hereinafter referred to as "financial statements, etc."), for the 132<sup>nd</sup> fiscal period from April 1, 2024 to March 31, 2025, of Daido Kogyo Co., Ltd. (the Company) in accordance with the provisions of Article 436, Clause 2-1 of the Companies Act.<br> In our opinion, the above-mentioned financial statements, etc. present fairly, in all material respect, the status of the assets and the profit or loss for the period regarding these financial statements, etc. in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br>Basis of opinion<br> We conducted the audit in accordance with the generally accepted audit standards in Japan. KPMG AZSALLC's responsibility in the audit standards is described in "Auditor's responsibility for audit of the financial statements, etc.". We are, in accordance with<br> The Code of Ethics for Professional Accountants in Japan, independent from the Company and fulfill other ethical responsibilities as auditor. We believe that we have obtained sufficient and appropriate audit evidence as a base of our opinion.<br> Emphasis<br> As described in the notes regarding important subsequent events (conclusion of business integration agreement and share exchange agreement) within the notes to consolidated financial statements, the Company decided to execute a business integration with Tsubakimoto Chain and to execute a share exchange through which the Company will become a wholly-owned subsidiary company and Tsubakimoto Chain will become a wholly-owning parent company by the resolution made at the Board of Directors meeting held on May 14, 2025, and on the same day, the Company concluded a business integration agreement and a share exchange agreement. The share exchange will be executed after obtaining approval by resolution made at the Ordinary General Meeting of Shareholders held on June 24, 2025, with a condition to obtain approvals, etc. for competition laws applicable, etc. from concerned authorities in Japan and Thailand, having an effective date of January 1, 2026.<br> The Company's shares will be delisted as of December 29, 2025 through appropriate procedures.<br> This matter shall not have any impact on our opinion.<br> Other details described<br> Other details described are the business report and its annexed detailed statements. The management's responsibility is to prepare and disclose other details described. The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the reporting process of other details described.<br> Other details described are not included in the scope of our audit opinion regarding the consolidated financial statements and we do not express any opinion on other details described.<br> Our responsibility regarding the audit of the financial statements, etc. is to peruse the other details described, to review whether there is any material difference between the other details described and the financial statements, etc. or the knowledge we have obtained during the audit, when perusing the other details described, and in addition, to pay attention whether there is any sign of material error in the other details described other than such material difference. | <br>Audit opinion<br> We have audited the financial statements, which are the balance sheet, the profit and loss statement, the statement of changes in net assets and the notes to non-consolidated financial statements and its annexed detailed statements (hereinafter referred to as "financial statements, etc."), for the 132<sup>nd</sup> fiscal period from April 1, 2024 to March 31, 2025, of Daido Kogyo Co., Ltd. (the Company) in accordance with the provisions of Article 436, Clause 2-1 of the Companies Act.<br> In our opinion, the above-mentioned financial statements, etc. present fairly, in all material respect, the status of the assets and the profit or loss for the period regarding these financial statements, etc. in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br>Basis of opinion<br> We conducted the audit in accordance with the generally accepted audit standards in Japan. KPMG AZSALLC's responsibility in the audit standards is described in "Auditor's responsibility for audit of the financial statements, etc.". We are, in accordance with<br> The Code of Ethics for Professional Accountants in Japan, independent from the Company and fulfill other ethical responsibilities as auditor. We believe that we have obtained sufficient and appropriate audit evidence as a base of our opinion.<br> Emphasis<br> As described in the notes regarding important subsequent events (conclusion of business integration agreement and share exchange agreement) within the notes to consolidated financial statements, the Company decided to execute a business integration with Tsubakimoto Chain and to execute a share exchange through which the Company will become a wholly-owned subsidiary company and Tsubakimoto Chain will become a wholly-owning parent company by the resolution made at the Board of Directors meeting held on May 14, 2025, and on the same day, the Company concluded a business integration agreement and a share exchange agreement. The share exchange will be executed after obtaining approval by resolution made at the Ordinary General Meeting of Shareholders held on June 24, 2025, with a condition to obtain approvals, etc. for competition laws applicable, etc. from concerned authorities in Japan and Thailand, having an effective date of January 1, 2026.<br> The Company's shares will be delisted as of December 29, 2025 through appropriate procedures.<br> This matter shall not have any impact on our opinion.<br> Other details described<br> Other details described are the business report and its annexed detailed statements. The management's responsibility is to prepare and disclose other details described. The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the reporting process of other details described.<br> Other details described are not included in the scope of our audit opinion regarding the consolidated financial statements and we do not express any opinion on other details described.<br> Our responsibility regarding the audit of the financial statements, etc. is to peruse the other details described, to review whether there is any material difference between the other details described and the financial statements, etc. or the knowledge we have obtained during the audit, when perusing the other details described, and in addition, to pay attention whether there is any sign of material error in the other details described other than such material difference. | <br>Audit opinion<br> We have audited the financial statements, which are the balance sheet, the profit and loss statement, the statement of changes in net assets and the notes to non-consolidated financial statements and its annexed detailed statements (hereinafter referred to as "financial statements, etc."), for the 132<sup>nd</sup> fiscal period from April 1, 2024 to March 31, 2025, of Daido Kogyo Co., Ltd. (the Company) in accordance with the provisions of Article 436, Clause 2-1 of the Companies Act.<br> In our opinion, the above-mentioned financial statements, etc. present fairly, in all material respect, the status of the assets and the profit or loss for the period regarding these financial statements, etc. in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br>Basis of opinion<br> We conducted the audit in accordance with the generally accepted audit standards in Japan. KPMG AZSALLC's responsibility in the audit standards is described in "Auditor's responsibility for audit of the financial statements, etc.". We are, in accordance with<br> The Code of Ethics for Professional Accountants in Japan, independent from the Company and fulfill other ethical responsibilities as auditor. We believe that we have obtained sufficient and appropriate audit evidence as a base of our opinion.<br> Emphasis<br> As described in the notes regarding important subsequent events (conclusion of business integration agreement and share exchange agreement) within the notes to consolidated financial statements, the Company decided to execute a business integration with Tsubakimoto Chain and to execute a share exchange through which the Company will become a wholly-owned subsidiary company and Tsubakimoto Chain will become a wholly-owning parent company by the resolution made at the Board of Directors meeting held on May 14, 2025, and on the same day, the Company concluded a business integration agreement and a share exchange agreement. The share exchange will be executed after obtaining approval by resolution made at the Ordinary General Meeting of Shareholders held on June 24, 2025, with a condition to obtain approvals, etc. for competition laws applicable, etc. from concerned authorities in Japan and Thailand, having an effective date of January 1, 2026.<br> The Company's shares will be delisted as of December 29, 2025 through appropriate procedures.<br> This matter shall not have any impact on our opinion.<br> Other details described<br> Other details described are the business report and its annexed detailed statements. The management's responsibility is to prepare and disclose other details described. The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the reporting process of other details described.<br> Other details described are not included in the scope of our audit opinion regarding the consolidated financial statements and we do not express any opinion on other details described.<br> Our responsibility regarding the audit of the financial statements, etc. is to peruse the other details described, to review whether there is any material difference between the other details described and the financial statements, etc. or the knowledge we have obtained during the audit, when perusing the other details described, and in addition, to pay attention whether there is any sign of material error in the other details described other than such material difference. |

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In case we acknowledge that there is material error in the other details described based on our review work conducted, we are required to report such fact.<br> There is no item we are required to report regarding the other details described.<br>Responsibilities of the management and the Audit and Supervisory Committee for the financial statements, etc.<br> The management's responsibility is to prepare and appropriately express the financial statements, etc. in accordance with the corporate accounting standards generally accepted as fair and valid in Japan. It includes the management's responsibility to establish and manage the internal control system that the management believes necessary to prepare and appropriately express the financial statements, etc. without material misstatement due to fraud or error.<br> In preparing the financial statements, etc., the management has a responsibility to assess whether it is appropriate to prepare the financial statements, etc. based on the going concern assumption and to disclose matters regarding going concern if it is required to disclose such matters in accordance with the corporate accounting standards generally accepted as fair and valid in Japan.<br> The Audit and Supervisory Committee's responsibility is to oversight the company directors' execution of responsibilities in establishing and managing the financial reporting process.<br>Auditor's responsibility for audit of the financial statements, etc.<br> The auditor's responsibility is to express the opinion on the financial statements, etc. in the audit report from an independent standpoint based on the audit conducted by the auditor, obtaining a reasonable guarantee on whether there is any material misstatement due to fraud or error in the financial statements, etc. as a whole. A misstatement is likely to occur due to fraud or error and is acknowledged as material if it is reasonably assumed to affect the decision-making of the users of the financial statements, etc., individually or collectively.<br> The auditor conducts the followings, making judgements as professional experts and holding professional skepticism through the audit process in accordance with the generally accepted audit standards in Japan.<br> ・ We identify and assess the risk of material misstatement due to fraud or error. In addition, we plan and execute an audit procedure responding to the risk of material misstatement. The selection and application of audit procedures shall be subject to the auditor's judgement. In addition, we obtain sufficient and appropriate audit evidence as a base to express our opinion.<br> ・ The purpose for the audit of the financial statements, etc. is not to express the opinion on the effectiveness of the internal control system, however, the auditor reviews the internal control system relating to the audit to plan an appropriate audit procedure responding to circumstances when making a risk assessment. <br> ・ We evaluate the accounting policy the management has adopted, the appropriateness of its application method, the rationality of accounting estimates made by the management and the adequacy of related notes.<br> ・ We make a conclusion on whether it is appropriate for the management to prepare the financial statements, etc. based on the going concern assumption and whether any material uncertainty is assumed relating to events or circumstances likely to raise material doubt on the going concern assumption based on the obtained audit evidence. If there is material uncertainty with the going concern assumption, we are required to call for attention to the notes to the financial statements, etc. in the audit report, or if the notes regarding material uncertainty in the financial statements, etc. are not appropriate, we are required to express the opinion with exceptions. The auditor's conclusion is based on the audit evidence obtained by the date of the audit report and there is a possibility that a company may not continue as going concern due to future events or circumstances.<br> ・ We evaluate whether the presentation and the notes to the financial statements, etc. are in accordance with the corporate accounting standards generally accepted as fair and valid in Japan and whether the presentation, the structure and the details of the financial statements, etc. including related notes as well as the financial statements, etc. appropriately present transactions and accounting events which are the base of the statements.<br>The auditor reports to the Audit and Supervisory Committee on the scope and the execution period of planned audit, material audit findings identified in the execution process of the audit including material weakness in the internal control system and other matters required in the audit standards.<br> The auditor reports to the Audit and Supervisory Committee that the auditor has complied with the rule regarding professional ethics in Japan on independence, the matters which may reasonably affect the auditor's independence and, if the auditor takes a measure to eliminate hindrance or applies a safeguard to mitigate such hindrance to acceptable level, such details.<br> Concluded<br>

Audit and Supervisory Committee's audit report

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| Audit report |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; We have audited the company directors' execution of responsibilities in the 132<sup>nd</sup> fiscal year from April 1, 2024 to March 31, 2025. We report the method, and the results as follows.<br>1. Audit method and its details<br> Regarding the details of the Board of Directors' resolutions relating to the matters stipulated in Article 399, Clause 13-1-1 b and c of the Companies Act, and the system established based on such resolutions (internal control system), we periodically receive reports on the situation of such establishment and management from the directors and employees, ask for explanations as necessary, express our opinion and conducted the audit as per the following methods.<br>&nbsp;&nbsp;&nbsp;&nbsp;(1) In accordance with the Audit and Supervisory Committee rules and the Audit and Supervisory Committee standards for audit, etc. determined by the Audit and Supervisory Committee and following the current period's audit policy, the audit plan and the segregation of duties, etc., we, in cooperation with the internal control department, attended important meetings, received reports from the directors and employees, etc. on the matters regarding the execution of their responsibilities, asked for explanations as necessary, reviewed important approval documents and inspected business operations and the assets positions at the HQs and main offices. In addition, as for the subsidiaries, we communicated with directors and auditors of the subsidiaries, shared information and were reported of the business performances from the subsidiaries as necessary.<br> &nbsp;&nbsp;&nbsp;&nbsp;(2) As for the basic policies in Article 118, Clause 3 a of the Ordinance for Enforcement of the Companies Act and each approach stated in Clause 3 b described in the business performance report, we added our review on the details considering the progress of discussions at the Board of Directors and other meetings.<br> &nbsp;&nbsp;&nbsp;&nbsp;(3) We supervised and reviewed whether the accounting auditor kept the independence stance, received reports from the accounting auditor on the execution of the responsibilities and asked for explanations as necessary. In addition, we were notified from the accounting auditor that the auditor established "the structure to ensure that the execution of responsibilities would be appropriately made" (the matter described in each clause of Article 133 of the Regulation on Corporate Accounting) in accordance with "the quality management standard for audit", etc. (Business Accounting Council) and asked for explanations as necessary.<br>Based on the above-mentioned methods, we reviewed the business performance report and the annexed detailed statements, financial statements (the balance sheet, the profit and loss statement, the statement of changes in net assets and the notes to non-consolidated financial statements and the annexed detailed statements, and the consolidated financial statements (the consolidated balance sheet, the consolidated profit and loss statement, the consolidated statement of changes in net assets and the notes to consolidated financial statements). |

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| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2. Audit results<br> [1] Audit results for the business performance reports, etc.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) We acknowledge that the business performance report and its annexed detailed statements correctly represent the company's situation in accordance with the laws and the articles of incorporation.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) We have not recognized any fraudulent acts regarding the directors' execution of the responsibilities or any material facts violating the laws or the articles of incorporation.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) We acknowledge that the details of the Board of Directors' resolutions regarding the internal control system are appropriate. In addition, we have no points to note regarding the details described in the business performance report and the directors' execution of the responsibilities regarding such an internal control system.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) We acknowledge that the basic policy regarding the approach by the personnel to control the decision<br> on the company's financial and business policies described in the business performance report is appropriate. We acknowledge that each approach described in Article 118 Clause 3 b of the Ordinance for Enforcement of the Companies Act is in line with such a basic policy, does not compromise our company's shareholders' common benefits and does not have any purpose of maintaining the position of our company's officers.<br>[2] Audit results for the financial statements and the annexed detailed statements<br> We acknowledge that the audit method and the audit results made by the accounting auditor, KPMG AZSA LLC, are appropriate.<br>[3] Audit results for the consolidated financial statements<br> We acknowledge that the audit method and the audit results made by the accounting auditor, KPMG AZSA LLC, are appropriate. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2. Audit results<br> [1] Audit results for the business performance reports, etc.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) We acknowledge that the business performance report and its annexed detailed statements correctly represent the company's situation in accordance with the laws and the articles of incorporation.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) We have not recognized any fraudulent acts regarding the directors' execution of the responsibilities or any material facts violating the laws or the articles of incorporation.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) We acknowledge that the details of the Board of Directors' resolutions regarding the internal control system are appropriate. In addition, we have no points to note regarding the details described in the business performance report and the directors' execution of the responsibilities regarding such an internal control system.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) We acknowledge that the basic policy regarding the approach by the personnel to control the decision<br> on the company's financial and business policies described in the business performance report is appropriate. We acknowledge that each approach described in Article 118 Clause 3 b of the Ordinance for Enforcement of the Companies Act is in line with such a basic policy, does not compromise our company's shareholders' common benefits and does not have any purpose of maintaining the position of our company's officers.<br>[2] Audit results for the financial statements and the annexed detailed statements<br> We acknowledge that the audit method and the audit results made by the accounting auditor, KPMG AZSA LLC, are appropriate.<br>[3] Audit results for the consolidated financial statements<br> We acknowledge that the audit method and the audit results made by the accounting auditor, KPMG AZSA LLC, are appropriate. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2. Audit results<br> [1] Audit results for the business performance reports, etc.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) We acknowledge that the business performance report and its annexed detailed statements correctly represent the company's situation in accordance with the laws and the articles of incorporation.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) We have not recognized any fraudulent acts regarding the directors' execution of the responsibilities or any material facts violating the laws or the articles of incorporation.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) We acknowledge that the details of the Board of Directors' resolutions regarding the internal control system are appropriate. In addition, we have no points to note regarding the details described in the business performance report and the directors' execution of the responsibilities regarding such an internal control system.<br> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) We acknowledge that the basic policy regarding the approach by the personnel to control the decision<br> on the company's financial and business policies described in the business performance report is appropriate. We acknowledge that each approach described in Article 118 Clause 3 b of the Ordinance for Enforcement of the Companies Act is in line with such a basic policy, does not compromise our company's shareholders' common benefits and does not have any purpose of maintaining the position of our company's officers.<br>[2] Audit results for the financial statements and the annexed detailed statements<br> We acknowledge that the audit method and the audit results made by the accounting auditor, KPMG AZSA LLC, are appropriate.<br>[3] Audit results for the consolidated financial statements<br> We acknowledge that the audit method and the audit results made by the accounting auditor, KPMG AZSA LLC, are appropriate. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May 19, 2025 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May 19, 2025 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May 19, 2025 |
| Audit and Supervisory Committee, Daido Kogyo Co., Ltd. | Audit and Supervisory Committee, Daido Kogyo Co., Ltd. | Audit and Supervisory Committee, Daido Kogyo Co., Ltd. |
| Audit and Supervisory Committee Member | Kiyohiro Kajiya | [seal] |
| Audit and Supervisory Committee Member | Seiji Sakashita | [seal] |
| Audit and Supervisory Committee Member | Shoji Takechi | [seal] |
| Audit and Supervisory Committee Member | Miho Yamamoto | [seal] |
| Audit and Supervisory Committee Member | Jun Akimoto | [seal] |
| (Note) The Audit and Supervisory Committee Members, Seiji Sakashita, Shoji Takechi, Miho Yamamoto and Jun Akimoto are external directors defined in Article 2 Clause 15 and Article 331 Clause 6 of the Companies Act. | (Note) The Audit and Supervisory Committee Members, Seiji Sakashita, Shoji Takechi, Miho Yamamoto and Jun Akimoto are external directors defined in Article 2 Clause 15 and Article 331 Clause 6 of the Companies Act. | (Note) The Audit and Supervisory Committee Members, Seiji Sakashita, Shoji Takechi, Miho Yamamoto and Jun Akimoto are external directors defined in Article 2 Clause 15 and Article 331 Clause 6 of the Companies Act. |

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