# EDGAR Filing Document

**Accession Number:** 0002107588
**File Stem:** 0001193125-26-024853
**Filing Date:** 2026-1
**Character Count:** 146939
**Document Hash:** 8535d8bf26b1bbe6ce5613e2525e6755
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-024853.hdr.sgml**: 20260127

**ACCESSION NUMBER**: 0001193125-26-024853

**CONFORMED SUBMISSION TYPE**: CB

**PUBLIC DOCUMENT COUNT**: 5

**FILED AS OF DATE**: 20260127

**DATE AS OF CHANGE**: 20260127

**SUBJECT COMPANY**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BBD Initiative Inc.
- **CENTRAL INDEX KEY:** 0002107602

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 0930

**FILING VALUES:**
- **FORM TYPE:** CB
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 005-95435
- **FILM NUMBER:** 26566735

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** ATAGO GREEN HILLS MORI TOWER 38F
- **STREET 2:** 2-5-1 ATAGO
- **CITY:** MINATO-KU
- **NON US STATE TERRITORY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **ZIP:** 105-6238
- **BUSINESS PHONE:** 81 03-5405-8120

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** ATAGO GREEN HILLS MORI TOWER 38F
- **STREET 2:** 2-5-1 ATAGO
- **CITY:** MINATO-KU
- **NON US STATE TERRITORY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **ZIP:** 105-6238
**FILED BY**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Headwaters Co., Ltd.
- **CENTRAL INDEX KEY:** 0002107588

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** M0
- **FISCAL YEAR END:** 1231

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

**BUSINESS ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 6-5-1 NISHI-SHINJUKU, 4F
- **CITY:** SHINJUKU-KU
- **NON US STATE TERRITORY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **ZIP:** 163-1390
- **BUSINESS PHONE:** 81 03-6258-0525

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 6-5-1 NISHI-SHINJUKU, 4F
- **CITY:** SHINJUKU-KU
- **NON US STATE TERRITORY:** TOKYO
- **PROVINCE COUNTRY:** M0
- **ZIP:** 163-1390

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**FORM CB** 

**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) | ☐ |

---

## BBD Initiative Kabushiki Kaisha
**(Name of Subject Company)** 

**BBD Initiative Inc.** 

**(Translation of Subject Company's Name into English (if applicable)** 

**Japan** 

**(Jurisdiction of Subject Company's Incorporation or Organization)** 

**Headwaters Co., Ltd.** 

**(Name of Person(s) Furnishing Form)** 

**Common Stock** 

**(Title of Class of Subject Securities)** 

**Not Applicable** 

**(CUSIP Number of Class of Securities (if applicable))** 

**Headwaters Co., Ltd.** 

**Attn: Yosuke Shinoda** 

**4F, Shinjuku Island Tower** 

**6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-1304 Japan** 

**Telephone: +81-3-6258-0525** 

***Copies to:***

**Kentaro Tanaka** 

**TMI Associates** 

**23rd Floor, Roppongi Hills Mori Tower** 

**6-10-1 Roppongi, Minato-ku, Tokyo 106-6123 Japan** 

**Telephone: +81-3-6438-5511** 

**Nobuki Takeuchi** 

**TMI Associates Silicon Valley LLP** 

**1700 S El Camino Real, STE300** 

**San Mateo, CA 94402 USA** 

**Telephone: +1-650-477-2277** 

**(Name, Address (including zip code) and Telephone Number (including area code)** 

**of Person(s) Authorized to Receive Notices and Communications on Behalf of Subject Company)** 

**Not Applicable** 

**(Date Tender Offer/Rights Offering Commenced)** 

------

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

**Item 1. Home Jurisdiction Documents** 

(a) The following documents are published in Japan and attached as exhibits to this Form:

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| | |
|:---|:---|
| Exhibit No. | Description |
| A | English translation of Notice Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc. |
| B | English translation of Extraordinary Report to Kanto Local Finance Bureau dated January 26, 2026 under the Financial Instruments and Exchange Act of Japan Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc. |
| C | English translation of Notice Concerning Change to Subsidiary Companies as a Result of Merger with BBD Initiative Inc. |
| D | English translation of Extraordinary Report to Kanto Local Finance Bureau dated January 26, 2026 under the Financial Instruments and Exchange Act of Japan Concerning Change to Specified Subsidiary Companies as a Result of Merger with BBD Initiative Inc. |

---

(b) Not applicable.

**Item 2. Informational Legends** 

A legend compliant with Rule 802(b) under the Securities Act of 1933, as amended, is included on each document filed as an exhibit to this form.

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

(1) Not applicable.

(2) Not applicable.

(3) Not applicable.

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

Headwaters Co., Ltd. is filing with the Securities and Exchange Commission a written irrevocable consent and power of attorney on Form F-X concurrently with the furnishing of this Form.

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**PART IV – 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.

---

| | |
|:---|:---|
|  Headwaters Co., Ltd. | Headwaters Co., Ltd. |
|  By: | /s/ Yosuke Shinoda |
|  | Name: Yosuke Shinoda |
|  | Title: Chief Executive Officer |

---

Date: January 27, 2026

## Ex-99.A

**Exhibit A** 

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| | | |
|:---|:---|:---|
|  |  | January 26, 2026 |
| &nbsp;&nbsp; To Whom It May Concern: |  |  |
|  | Company Name: | Headwaters Co., Ltd. |
|  | Name and Title of Representative: | Yosuke Shinoda, Representative Director |
|  | (Code: 4011, TSE Growth Market) |  |
|  | Contact: | Kazutaka Harashima, Executive Officer, Administrative Management Department Manager |
|  |  | (TEL: +81-3-6258-0525) |
|  | Company Name: | BBD Initiative Inc. |
|  | Name and Title of Representative: | Yuichi Inaba, Representative Director and President, Group CEO |
|  | (Code: 5259, TSE Growth Market) |  |
|  | Contact: | Yukie Sato, Director, Group CFO |
|  |  | (TEL: +81-3-5405-8120) |

---

**Notice Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc.** 

This exchange offer or business combination is made for the securities of a Japanese company. The offer is subject to disclosure requirements of Japan that are different from those of the United States. Financial statements included in the document, if any, have been prepared in accordance with Japanese 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 U.S. federal securities laws, since the issuer is located in Japan, and some or all of its officers and directors may be residents of Japan. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of 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 exchange offer, such as in open market or privately negotiated purchases.

Headwaters Co., Ltd. ("**Headwaters**") and BBD Initiative Inc. ("**BBD Initiative**") (Headwaters and BBD Initiative may also hereinafter be collectively referred to as the "**Companies**") hereby announce as follows, as Headwaters and BBD Initiative have each resolved, at their respective boards of directors meetings held on January 26, 2026, to enter into a merger agreement (the "**Merger Agreement**") pertaining to an absorption-type merger in which Headwaters will be the surviving company and BBD Initiative will be the disappearing company (the "**Merger**"), with an effective date designated on May 1, 2026 (scheduled), in order to integrate their management based on the spirit of equality (the "**Business Integration**"), and have entered into the Merger Agreement.

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The Merger is subject to the approval of the shareholders meetings of the Companies.

In addition, prior to the effective date of the Merger (May 1, 2026 (scheduled)), the common shares of BBD Initiative are scheduled to be delisted from Tokyo Stock Exchange, Inc. (the "**TSE**") on April 28, 2026 (with the final trading day being April 27, 2026).

**1.** **Purpose of Business Integration** 

**(1)** **Background of Business Integration** 

Headwaters has supported corporate digital transformation by developing AI-powered solutions. In particular, Headwaters' core competencies are rooted in advanced technological capabilities cultivated across a wide range of areas, including the development of AI engines, the construction of cloud platforms, and the implementation of systems aimed at enhancing operational efficiency. In recent years, while the AI/DX market has grown significantly due to the rapid advancement of cutting-edge technologies such as generative AI and the expansion of the market, the competitive environment has become increasingly sophisticated. In order to respond to these changes and achieve sustainable growth, Headwaters recognizes the importance of consolidating management resources and maximizing the strengths of the Companies toward further advancement.

On the other hand, BBD Initiative listed its shares on the TSE Mothers market in December 2017. Since its establishment in April 2023 as a pure holding company, i.e., the wholly owning parent company of Knowledge Suite Co., Ltd., through a sole share transfer, BBD Initiative has adopted the management philosophy of "Creating 'Thank You' from X-Tech (Cross-Tech)," and has supported the automation and autonomization of business operations, with a focus on the automation of sales activities, through SaaS and AI in order to supplement corporate labor shortages by means of digital transformation (DX). Currently, the BBD Initiative Group consists of BBD Initiative and five (5) consolidated subsidiary companies, and is composed of two (2) business segments: i.e., the "Digital Transformation (DX) Business" and the "Business Process Outsourcing (BPO) Business." In addition, as specified in the "Notice on Capital and Business Alliance with Headwaters Co., Ltd., and Changes to Largest Shareholder (Major Shareholder) and Other Related Companies" dated August 14, 2025, released by BBD Initiative, the commencement of the capital and business alliance with Headwaters in August 2025 led BBD Initiative to firmly believe in the significant potential of AI and to decide to substantially shift its business focus from "DX," under which it has supported mid-sized and small-to-medium enterprises, to "AX (AI Transformation)." Concurrently, BBD Initiative has initiated the transformation of its traditional SaaS-centered business model to providing "AI as a Service." BBD Initiative has reaffirmed its firm belief that Headwaters is an indispensable partner for accelerating the pace of transformation and creating high added value in the process of considering and promoting this business shift. BBD Initiative has also come to firmly believe that, by combining the respective knowledge and strengths of the Companies, they will be able to develop AI products and services that generate greater synergies and establish a structure that allows them to promote their businesses in a complementary manner. Based on such firm beliefs, the Companies have determined that a deeper cooperative system becomes necessary to enable the further acceleration of the business shift, and, in order to accelerate not only the business shift but also efforts toward new business initiatives, the Companies have engaged in multiple rounds of consultations and decided to proceed with the Business Integration. The strategic significance of

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the Business Integration is to combine Headwaters' advanced technological capabilities cultivated in the AI domain with the Companies' market development capabilities to thereby establish a leading position in the domestic and global AI/DX markets. The Companies possess a high level of expertise across different fields, and by combining these strengths, the Companies believe that it will be possible to provide the market with high value-added services that could not have been achieved by either company alone, thereby further accelerating the digital transformation of client companies.

Furthermore, the synergy effects expected from the Business Integration include the creation of new services through the integration of AI implementation know-how and operational efficiency solutions, the promotion of cross-selling and up-selling by leveraging customer networks, and the creation of next-generation products by strengthening research and development capabilities. The Companies firmly believe that the collaboration of their AI engineering personnel will enable the acceleration of the development of innovative services, such as generative AI and advanced predictive analytics solutions.

In carrying out the Business Integration, the Companies determined, after holding multiple rounds of consultations, that they would be able to create the maximum possible synergies by fully integrating the Companies' management resources and unifying their technological capabilities, human resources and business foundations, and the Companies therefore selected an absorption-type merger as the scheme. Looking ahead to the promotion of business after the Business Integration, the Companies believe that securing cash on hand will broaden the scope for selecting a more flexible and diverse range of strategic options, and will enable the Companies to reliably capture future growth opportunities. In addition, achieving centralized management would be difficult and certain constraints may arise in realizing the effects of the Business Integration under a structure in which BBD Initiative's legal personality were to remain in existence, such as a share exchange. Given the foregoing, the Companies believe that implementing integrated operations through an absorption-type merger is the optimal approach. The Companies believe that this approach will expand opportunities for shareholders to directly benefit from the growth and synergies after the Business Integration and that enhancing the Companies' corporate appeal will also contribute to building a relationship in which shareholders will support the Companies in the long term.

As previously announced by Headwaters in its August 14, 2025 notice titled "Notice Concerning Acquisition of Shares in BBD Initiative Inc. (Conversion into an Equity Method Affiliate) and Execution of Capital and Business Alliance Agreement," the Companies executed a Capital and Business Alliance Agreement in August 2025. Subsequently, the Companies commenced initiatives relating to the utilization of generative AI in specific SaaS products and have steadily promoted collaboration at the practical working level. Through these initiatives, the Companies have come to strongly recognize the compatibility of their businesses and the potential for collaboration, and after engaging in repeated good-faith discussions, the Companies have entered into the Merger Agreement in order to implement the Business Integration.

The Business Integration will unify the Companies as one team to achieve sustainable growth that makes "1+1 into 3 or even 4," and thereby deliver greater value than ever before to all stakeholders, including the Companies' shareholders, employees, and business partners. The Companies firmly believe that the Business Integration will serve as an opportunity for significant advancement for the Companies, and are committed to working together to create a new future.

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**(2)** **Purpose of Business Integration** 

As detailed below, the Companies will proceed with the Business Integration to realize the benefits of integration, focusing on: (a) "creating new value through the integration of technology and products"; (b) "expanding the business through the integration of human resources"; and (c) "strengthening the financial foundation."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Creating New Value through the Integration of Technology and Products

The Companies aim to develop next-generation services incorporating AI functionality by integrating Headwaters' advanced expertise in AI implementation, which it has cultivated over time, with the portfolio of SaaS products offered by BBD Initiative. This will not only enhance the added value of existing products, but also establish a framework to bring new solutions to the market that support customers' operational efficiency and the promotion of digital transformation, thereby strengthening the Companies' competitive advantage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Expanding the Business through the Integration of Human Resources

The Companies aim to enhance their competitiveness in recruitment and to strengthen their AI personnel development system by integrating their engineering resources. This will enable the Companies to achieve both development speed and quality, and put in place a structure that is capable of handling a greater volume of projects. In addition, the Companies aim to create cross-selling and up-selling opportunities and to gain access to a broader range of markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Strengthening the Financial Foundation

The Business Integration is expected to expand the Companies' scale and enhance their creditworthiness. This will enable the Companies to further strengthen their financial foundation and establish a system capable of flexibly responding to large-scale industry restructuring and new investments. A robust financial foundation will support proactive investments in research and development and strategic initiatives such as M&A, and the Companies aim for this to serve as an important foundation to enable sustainable growth for the Companies over the medium to long term.

**2.** **Outline of Business Integration** 

**(1)** **Schedule of Business Integration** 

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| | |
|:---|:---|
| Day of resolution by the board of directors (the Companies) | January 26, 2026 |
| Day of execution of the Merger Agreement (the Companies) | January 26, 2026 |
| Day of resolution of the annual shareholders meeting (Headwaters) | March 27, 2026 (scheduled) |
| Day of public notice of the record date for the extraordinary shareholders meeting (BBD Initiative) | January 26, 2026 (scheduled) |

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| | |
|:---|:---|
| Record date for the extraordinary shareholders meeting (BBD Initiative) | February 10, 2026 (scheduled) |
| Day of resolution by the extraordinary shareholders meeting (BBD Initiative) | March 27, 2026 (scheduled) |
| Final trading day (BBD Initiative) | April 27, 2026 (scheduled) |
| Day of delisting (BBD Initiative) | April 28, 2026 (scheduled) |
| Effective date of the Merger | May 1, 2026 (scheduled) |

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**(2)** **Method of Business Integration** 

The Business Integration will be implemented through an absorption-type merger, with Headwaters as the surviving company and BBD Initiative as the disappearing company.

**(3)** **Contents of Allotment Pertaining to Merger** 

<u> Headwaters (Company surviving absorption- type merger)</u> <u> BBD Initiative (Company disappearing in absorption-type merger)</u> <br> Allotment Ratio Pertaining to the Merger 1 0.50

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| | |
|:---|:---|
| (Note 1) | Allotment Ratio Pertaining to the Merger (the "**Merger Ratio**")  |

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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;0.50 shares of Headwaters shall be allotted and delivered for each share of BBD Initiative; provided, however, that no shares will be allotted or delivered in the Merger in respect of the 1,599,100 shares of BBD Initiative held by Headwaters (as of September 30, 2025) or the 296 treasury shares held by BBD Initiative (as of September 30, 2025).

(Note 2) Number of Shares of Headwaters to be Delivered in the Merger (scheduled): Common shares: 2,260,412 shares

The number of shares to be delivered may be modified if there is any change in the number of treasury shares of BBD Initiative due to shareholders of BBD Initiative exercising their right to request the purchase of shares up to immediately before the effective time of the Merger.

Furthermore, Headwaters assumes that it will cover the entire number of shares to be delivered in the Merger by issuing new common shares.

(Note 3) Handling of Shares Less Than One Unit

The shareholders of BBD Initiative who will hold shares of Headwaters constituting less than one unit (100 shares) ("**Shares Less Than One Unit**") may use the following system available in relation to shares in Headwaters, and it is also possible to purchase and sell Shares Less Than One Unit that are available at certain securities firms. However, it is not possible to sell any Shares Less Than One Unit on a financial instruments exchange market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• System for purchase of Shares Less Than One Unit (sale of shares constituting less than one unit (100 shares))

The system under which shareholders holding Shares Less Than One Unit of Headwaters may demand that Headwaters purchase such Shares Less Than One Unit that they hold pursuant to Article 192, Paragraph (1) of the Companies Act.

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(Note 4) Treatment of Fractional Shares

If shareholders of BBD Initiative receive an allotment that results in fractional shares of Headwaters of less than one (1) share in connection with the Merger, an amount corresponding to such fractional shares shall be paid in cash to such shareholders in accordance with Article 234 of the Companies Act and other applicable laws and regulations.

**(4)** **Handling of Share Options and Corporate Bond Certificates with Share Options in Connection with Merger** 

BBD Initiative has not issued any share options or corporate bond certificates with share options.

**3.** **Grounds for Valuation of the Contents of the Allotment Pertaining to Merger** 

**(1)** **Grounds and Reasons for the Contents of Allotment** 

To ensure the fairness and appropriateness of the Merger Ratio to be used in the Merger, the Companies each requested an independent third-party appraiser to calculate the Merger Ratio, and each obtained a valuation report on the Merger Ratio. Headwaters appointed Plutus Consulting Co., Ltd. ("**Plutus Consulting**") as its third-party appraiser, and BBD Initiative appointed Akasaka International Accounting Co., Ltd. ("**Akasaka International Accounting**") as its third-party appraiser.

With respect to Headwaters, Headwaters determined that the Merger Ratio is appropriate, based on, among other things, legal advice from TMI Associates, as its legal advisor, as well as the results of legal due diligence on BBD Initiative conducted by TMI Associates and the results of financial and tax due diligence conducted by Univis Consulting Co., Ltd., and as a result of holding multiple rounds of careful consultations with BBD Initiative taking into account the ranges of the valuation results determined by its third-party appraiser, Plutus Consulting, using the market price method, comparable listed company method and the discounted cash flow method (the "**DCF method**").

With respect to BBD Initiative, as specified in "(4) Measures to Ensure Fairness (Including Measures to Avoid Conflicts of Interest)" below, BBD Initiative carefully considered various conditions of the Merger while holding multiple rounds of consultations with Headwaters, taking into account, among other things, the results of the financial and tax due diligence on Headwaters obtained from Akasaka International Accounting, the valuation report on the Merger Ratio, financial advice from AGS FAS Co., Ltd. ("**AGS FAS**"), as BBD Initiative's financial advisor, from a financial perspective, legal advice from Anderson Mori & Tomotsune Law Office ("**Anderson Mori & Tomotsune**"), as BBD Initiative's legal advisor, and the results of legal due diligence on Headwaters, and while giving the maximum possible respect to the contents of the written response submitted by the special committee established by BBD Initiative (the "**Special Committee**").

As a result, BBD Initiative determined that the Merger Ratio is appropriate and does not impair the interests of BBD Initiative's general shareholders, because, as specified in "b. Outline of Valuation" of "(2) Matters Concerning Valuation" below, among the valuation results determined by BBD Initiative's third-party appraiser, Akasaka International Accounting, the Merger Ratio is at the upper end of the valuation range under the average market price method, and it also falls within the valuation ranges under the comparable listed company method and the DCF method.

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As specified above, the Companies each comprehensively considered factors including the respective financial conditions, asset status, future outlook, and other factors, with reference to the valuation results provided by their respective third-party appraisers and advice from their respective legal advisors, and based on the results of due diligence conducted by each Company on the other party, etc., and the Companies engaged in multiple rounds of careful negotiations and consultations concerning the Merger Ratio (and, with respect to BBD Initiative, also took into account the contents of the written response submitted by the Special Committee). As a result, the Companies ultimately determined that the Merger Ratio is appropriate, and agreed thereto.

The Merger Ratio may be changed upon consultation between the Companies if any material change arises in the conditions forming the basis of the valuation.

**(2)** **Matters Concerning Valuation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Names of Appraisers and Their Relationship with the Listed Company and the Counterparty

Plutus Consulting, as Headwaters' third-party appraiser, does not fall under a "related party" of the Companies and does not have any material interest in the Companies. The fees to be paid to Plutus Consulting pertaining to the Merger are fixed fees to be paid irrespective of whether the Merger is successful or unsuccessful.

In addition, Akasaka International Accounting, as BBD Initiative's third-party appraiser, does not fall under a "related party" of the Companies and does not have any material interest in the Companies. The fees to be paid to Akasaka International Accounting pertaining to the Merger are fixed fees to be paid irrespective of whether the Merger is successful or unsuccessful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Outline of Valuation

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Valuation by Plutus Consulting

Plutus Consulting conducted the valuation by employing the market price method, as market prices of the Companies' shares are available. In addition, Plutus Consulting employed the comparable listed company method, as there are several comparable listed companies and it is possible to infer the share value through comparison with such comparable listed companies. Furthermore, Plutus Consulting employed the DCF method, which is a valuation method that calculates the share value by discounting to present value the free cash flows expected to be generated in the future using a certain discount rate based on the future earnings of the Companies, in order to reflect the status of the Companies' future business activities in the valuation.

The following shows the valuation results for the Merger Ratio under each method when the value per share of Headwaters is one (1).

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| | | |
|:---|:---|:---|
| Methods Employed | Methods Employed | Valuation Range of the Merger |
| Headwaters | BBD Initiative | Ratio |
| Market Price Method | Market Price Method | 0.45 ~ 0.50 |
| Comparable Listed Company Method | Comparable Listed Company Method | 0.23 ~ 1.03 |
| DCF Method | DCF Method | 0.35 ~ 0.64 |

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Under the market price method, Plutus Consulting conducted the valuation by setting the valuation reference date as January 23, 2026, which is the business day immediately preceding the date of execution of the Merger Agreement, and using the closing prices of the common shares of the Companies on the TSE as of the valuation reference date and the simple average of the closing prices for the one-month, three-month and six-month periods ending on the valuation reference date (Headwaters: valuation reference date: 3,500 yen; one-month period: 3,105 yen; three-month period: 3,062 yen; six-month period: 3,433 yen; and BBD Initiative: valuation reference date: 1,591 yen; one-month period: 1,500 yen; three-month period: 1,531 yen; and six-month period: 1,571 yen).

Under the comparable listed company method, the valuation was conducted by comparing market share prices of listed companies engaged in business relatively similar to that of the Companies and their financial indicators representing profitability and other factors.

Under the DCF method, Plutus Consulting evaluated Headwaters' corporate value by discounting future cash flows based on the financial forecasts prepared by Headwaters to present value using a certain discount rate. The financial forecasts that constituted the assumptions for such valuation include fiscal years during which a substantial increase in profits and a substantial increase in free cash flows are anticipated. Specifically, for the fiscal years ending December 2026, December 2027 and December 2028, operating profit is expected to substantially increase (i.e., increases of 57%, 165%, and 116% from each of the previous years), due to: (i) an increase in net sales mainly as a result of higher project unit prices for AI integration services and digital transformation (DX) services achieved through hands-on development support led by business engineers well-versed in cutting-edge technologies; and (ii) efficiency improvements in the development process through the use of generative AI and AI-driven development. In addition, for the fiscal years ending December 2027 and December 2028, free cash flow is expected to substantially increase due to an increase in operating profit (i.e., increases of 177% and 131% from each of the previous years). In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of Headwaters' standalone plan that does not incorporate such synergies. On the other hand, Plutus Consulting evaluated BBD Initiative's corporate value by discounting future cash flows based on the financial forecasts for the fiscal years ending September 2026 through September 2030 prepared by BBD Initiative to present value using a certain discount rate. The financial forecasts for the fiscal years ending September 2026 through September 2030 that served as the assumptions for such valuation include fiscal years during which a substantial increase in profits is anticipated. Specifically, for the fiscal years ending September 2028, September 2029 and September 2030, operating profit is expected to substantially increase (i.e., increases of 93%, 90%, and 38% from each of the previous years), due to an increase in the number of high value-added and high-performance AI product development projects and an increase in unit prices accompanying the

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business transformation from a conventional SaaS-centered business model to "AI as a Service". In addition, for the fiscal years ending September 2027, September 2028, September 2029 and September 2030, free cash flow is expected to substantially increase due to an increase in operating profit (i.e., increases of 49%, 77%, 73%, and 41% from each of the previous years). In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of BBD Initiative's standalone plan that does not incorporate such synergies.

In calculating the Merger Ratio, Plutus Consulting basically used the materials and information provided by Headwaters and BBD Initiative and information available to the general public as is, and relied on the assumptions that all such materials and information were accurate and complete and that there were no undisclosed facts that could have a material impact on the calculation of the Merger Ratio that had not been disclosed to Plutus Consulting. Plutus Consulting did not conduct its own verification on the accuracy or completeness of such materials and information, nor is it obligated to do so.

Plutus Consulting did not conduct its own valuation, appraisal or assessment on any of the assets or liabilities of Headwaters and BBD Initiative and their respective associated companies (including, without limitation, financial derivative products, off-balance sheet assets and liabilities, and other contingent liabilities), including any analysis and valuation of individual assets and liabilities, nor did it request a third party to conduct any valuation, appraisal or assessment. Plutus Consulting assumes that the financial forecast information provided by Headwaters and BBD Initiative has been reasonably prepared based on the best possible forecasts and judgments available to their respective management teams as of the date hereof. Plutus Consulting relies on this information without conducting its own verification, upon obtaining Headwaters' consent thereto. Plutus Consulting's valuations are based on financial, economic, market, and other conditions as of January 23, 2026 for the market price method, and as of January 16, 2026 for all other methods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Valuation by Akasaka International Accounting

On the other hand, Akasaka International Accounting conducted the valuation by employing the average market price method, as market prices of the Companies' shares are available. In addition, Akasaka International Accounting employed the comparable listed company method, as there are multiple comparable listed companies for each of the Companies and it is possible to infer the share value by comparison with such comparable companies. Furthermore, Akasaka International Accounting employed the DCF method, which is a valuation method that calculates the share value by discounting the free cash flows expected to be generated in the future to present value by using a certain discount rate based on the future earnings of the Companies, in order to reflect the Companies' future business plans in such valuation.

The following shows the valuation results for the Merger Ratio under each method when the value per share of Headwaters is one (1).

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| | | |
|:---|:---|:---|
| Methods Employed | Methods Employed | Valuation Range of the Merger |
| Headwaters | BBD Initiative | Ratio |
| Average Market Price Method | Average Market Price Method | 0.45 ~ 0.50 |
| Comparable Listed Company Method | Comparable Listed Company Method | 0.18 ~ 1.42 |
| DCF Method | DCF Method | 0.37 -~ 0.90 |

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Under the average market price method, Akasaka International Accounting conducted the valuation by setting the valuation reference date as January 23, 2026, which is the business day immediately preceding the date of execution of the Merger Agreement, and using the closing prices of the common shares of the Companies on the TSE as of the valuation reference date and the simple average of the closing prices for the one-month, three-month and six-month periods ending on the valuation reference date (Headwaters: valuation reference date: 3,500 yen; one-month period: 3,105 yen; three-month period: 3,062 yen; six-month period: 3,433 yen; and BBD Initiative: valuation reference date: 1,591 yen; one-month period: 1,500 yen; three-month period: 1,531 yen; and six-month period: 1,571 yen).

Under the comparable listed company method, the valuation was conducted by comparing market share prices of listed companies engaged in business relatively similar to that of the Companies and their financial indicators representing profitability and other factors.

Under the DCF method, Akasaka International Accounting evaluated Headwaters' corporate value by discounting the future cash flows based on Headwaters' financial forecasts for the fiscal years ending December 2026 through December 2028 prepared by Headwaters to present value using a certain discount rate. The financial forecasts underlying such valuation anticipate a substantial increase in profits. Specifically, operating profit is expected to increase by 57% from the previous year for the fiscal year ending December 2026, by 165% from the previous year for the fiscal year ending December 2027, and by 116% from the previous year for the fiscal year ending December 2028, due to an increase in net sales mainly as a result of higher project unit prices for AI integration services and DX services achieved through hands-on development support led by business engineers well-versed in cutting-edge technologies, and efficiency improvements in the development process through the use of generative AI and AI-driven development. Free cash flow is expected to increase by 843% from the previous year for the fiscal year ending December 2026, by 191% from the previous year for the fiscal year ending December 2027, and by 127% from the previous year for the fiscal year ending December 2028, due to an increase in operating profit. In addition, it is difficult as of the date

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hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of Headwaters' standalone plan that does not incorporate such synergies. On the other hand, Akasaka International Accounting evaluated BBD Initiative's corporate value by discounting the future cash flows based on BBD Initiative's financial forecasts for the fiscal years ending September 2026 through September 2030 prepared by BBD Initiative to present value using a certain discount rate. The financial forecasts underlying such valuation include fiscal years during which a substantial increase in profits is anticipated. Specifically, operating profit is expected to increase by 93% from the previous year for the fiscal year ending September 2028, by 90% from the previous year for the fiscal year ending September 2029, and by 38% from the previous year for the fiscal year ending September 2030, due to an increase in the number of high value-added and high-performance AI product development projects and an increase in unit prices accompanying the business transformation from a conventional SaaS-centered business model to "AI as a Service." Free cash flow is expected to increase by 94% from the previous year for the fiscal year ending September 2028, by 83.48% from the previous year for the fiscal year ending September 2029, and by 37.7% from the previous year for the fiscal year ending September 2030, due to an increase in operating profit. In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of BBD Initiative's standalone plan that does not incorporate such synergies.

In calculating the Merger Ratio, Akasaka International Accounting basically used the materials and information provided by Headwaters and BBD Initiative and information available to the general public as is, and relied on the assumptions that all such materials and information were accurate and complete and that there were no undisclosed facts that could have a material impact on the calculation of the Merger Ratio that had not been disclosed to Akasaka International Accounting. Akasaka International Accounting did not conduct its own verification on the accuracy or completeness of such materials and information, nor is it obligated to do so.

Akasaka International Accounting did not conduct its own valuation, appraisal or assessment on any of the assets or liabilities of Headwaters and BBD Initiative and their respective associated companies (including, without limitation, financial derivative products, off-balance sheet assets and liabilities, and other contingent liabilities), including any analysis and valuation of individual assets and liabilities, nor did it request a third party to conduct any valuation, appraisal or assessment. Akasaka International Accounting assumes that the financial forecast information provided by Headwaters and BBD Initiative has been reasonably prepared based on the best possible forecasts and judgments available to their respective management teams as of the date hereof. Akasaka International Accounting has relied on this information without conducting its own verification, upon obtaining BBD Initiative's consent thereto. Akasaka International Accounting's valuations are based on financial, economic, market, and other conditions as of January 23, 2026.

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**(3)** **Prospects of and Reasons for Delisting** 

In association with the Merger, the common shares of BBD Initiative are scheduled to be delisted from the TSE on April 28, 2026, pursuant to the delisting criteria of the TSE. After the delisting, the common shares of BBD Initiative will no longer be tradable on the TSE. However, since the common shares of Headwaters to be allotted to the shareholders of BBD Initiative on the effective date of the Merger are listed on the TSE, although some shareholders may receive only an allotment of shares constituting less than one unit depending on the number of shares they hold, shares constituting one unit or more will remain tradable on the TSE, and thus the Companies believe that the liquidity of the shares can be secured. In addition, even after the effective date of the Merger, the common shares of Headwaters will continue to be listed on the TSE Growth Market, which is Headwaters' current listing market.

The shareholders of BBD Initiative who will come to hold shares of Headwaters constituting less than one unit as a result of the Merger will not be able to sell the shares constituting less than one unit on the TSE; however, they may demand that Headwaters purchase such shares constituting less than one unit. For details of such handling, please refer to Note 3 under "(3) Contents of Allotment Pertaining to Merger" of "2. Outline of the Business Integration" above. In addition, for details of the treatment of fractional shares in the event that fractional shares of less than one (1) share arise, please refer to Note 4 under "(3) Contents of Allotment Pertaining to Merger" of "2. Outline of the Business Integration" above.

The shareholders of BBD Initiative will be able to trade their common shares of BBD Initiative on the TSE in the same manner as before up to the final trading day, April 27, 2026 (scheduled), and will also be able to exercise their lawful rights as prescribed in the Companies Act and other applicable laws and regulations.

**(4)** **Measures to Ensure Fairness (Including Measures to Avoid Conflicts of Interest)** 

The Merger does not constitute a material transaction with controlling shareholders, etc. for the Companies. On the other hand, given that Headwaters is the largest shareholder (major shareholder) and also falls under the category of being an "other associated company," and holds 1,599,100 shares, equivalent to 26.13% of BBD Initiative's total number of issued shares (6,120,221 shares), and in light of the Companies' capital relationship, the Companies have implemented the following measures to ensure fairness (including measures to avoid conflicts of interest) in order to exercise caution in the Companies' decision-making, and from the perspective of ensuring the fairness of the Merger and avoiding any doubt as to conflicts of interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Obtaining valuation reports on the Merger Ratio from independent third-party appraisers for the Companies

From the perspective of ensuring the fairness of the Merger Ratio in the Merger, as specified in "(1) Grounds and Reasons for the Contents of Allotment" above, the Companies each requested a third-party appraiser independent from the Companies to calculate the Merger Ratio, and, with reference to such valuation results, the Companies engaged in good-faith negotiations and consultations, and each resolved at the respective board of directors meetings of the Companies held on January 26, 2026, to conduct the Merger at the Merger Ratio.

The Companies have not obtained any fairness opinion concerning the fairness of the Merger Ratio from their respective third-party appraisers.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Receiving advice from an independent law firm for Headwaters

Headwaters has appointed TMI Associates as its legal advisor in connection with the Merger, and has received legal advice concerning the procedures for the Merger, the method and process of decision-making, and other relevant matters. TMI Associates is independent from Headwaters and BBD Initiative, and does not have any material interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Receiving advice from an independent law firm for BBD Initiative

BBD Initiative has appointed Anderson Mori & Tomotsune as its legal advisor in connection with the Merger, and has received legal advice concerning the procedures for the Merger, the method and process of decision-making, and other relevant matters. Anderson Mori & Tomotsune is independent from Headwaters and BBD Initiative, and does not have any material interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Receiving Advice from an independent financial advisor for BBD Initiative

BBD Initiative has appointed AGS FAS as its financial advisor in connection with the Merger, and has received advice on the promotion of the Merger transaction from a financial perspective. AGS FAS is independent from Headwaters and BBD Initiative, and does not have any material interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Establishment of an independent special committee for BBD Initiative and obtaining a written response therefrom

In proceeding with its consideration of the Merger with Headwaters, BBD Initiative established the Special Committee, pursuant to a resolution of the board of directors adopted at its board of directors meeting held on September 19, 2025, which is comprised of BBD Initiative's three (3) independent officers (Mr. Teruhiro Ikaga, Mr. Nobuo Wada, and Mr. Kengo Miura, all of whom are outside directors serving as audit and supervisory committee members of BBD Initiative), who are independent from BBD Initiative, Headwaters, and the success or failure of the Merger, in order to exercise caution in its decision-making and to eliminate any risk of arbitrariness in, and any potential conflicts of interest in, the decision-making process of the board of directors, and thereby ensure fairness, transparency and objectivity.

BBD Initiative has appointed the foregoing three (3) persons as members of the Special Committee since its establishment, and there has been no change in its members. In addition, Mr. Teruhiro Ikaga has assumed the position of chairperson of the Special Committee by election from among the members of the Special Committee. The compensation of the members of the Special Committee consists of fixed fees only which are to be paid irrespective of whether the Business Integration is successful or unsuccessful, and does not include any contingency fees conditional upon the announcement, decision, implementation, etc. of the Merger.

Based on the above-mentioned resolution of its board of directors, BBD Initiative has submitted the following four (4) items to the Special Committee for consultation (the "**Matters for Consultation**"), and has commissioned the Special Committee to submit a written response concerning such items to BBD Initiative's board of directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Whether the purpose of the Merger is found to be reasonable (including whether the Merger contributes to
enhancing BBD Initiative's corporate value);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Whether the fairness and appropriateness of the transaction terms pertaining to the Merger (including the
Merger Ratio in the Merger) are ensured;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Whether the fairness of the procedures pertaining to the Merger is ensured; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Based on (i) through (iii) above, whether the decision and implementation of the Merger are fair to BBD
Initiative's general shareholders.

In addition, at the above-mentioned resolution of its board of directors, BBD Initiative resolved that it will respect the contents of the Special Committee's written response concerning the Matters for Consultation to the maximum extent possible, and that, if the Special Committee determines that the transaction terms are not appropriate, BBD Initiative will decide not to implement the Merger. In addition, BBD Initiative's board of directors has granted the Special Committee the following five (5) authorities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Authority to designate or approve (including subsequent approval of) experts such as BBD Initiative's
financial advisor and legal advisor (collectively, "**Advisors** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Authority to appoint its own Advisors in the case where the Special Committee finds it necessary upon
consideration of the Matters for Consultation (provided, however, that, if the Special Committee determines that it may rely on BBD Initiative's Advisors and seek their professional advice, as BBD Initiative's Advisors have a high level
of expertise and there is no issue with their independence, the Special Committee may seek professional advice from BBD Initiative's Advisors; and furthermore, reasonable expenses pertaining to the professional advice from the Special
Committee's Advisors shall be borne by BBD Initiative);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Authority to acquire information necessary for the consideration and determination concerning the Merger from
BBD Initiative's officers and employees, and other persons whom the Special Committee deems necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Authority to be substantially involved in the process of negotiations concerning the transaction terms
pertaining to the Merger by conducting advance confirmation of the negotiation policy concerning the transaction terms pertaining to the Merger, receiving timely reports on the status thereof, stating opinions at important stages, and issuing
instructions or requests, etc., as well as the authority to directly conduct negotiations on its own, as necessary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Authority concerning other matters that the Special Committee deems necessary in examining and determining the
Merger.

At the first meeting of the Special Committee held on October 2, 2025, the Special Committee confirmed that there was no issue with the independence and qualification of Akasaka International Accounting, which is a third-party appraiser, AGS FAS, which is a financial advisor, and Anderson Mori & Tomotsune, which is a legal advisor, each appointed by BBD Initiative, and approved their appointment.

The Special Committee held a total of ten (10) meetings during the period from October 2, 2025 through January 26, 2026 (i.e., the date of submission of the written response). In addition to such meetings, the Special Committee exchanged opinions among its members and with the third-party appraisers and Advisors, conducted information gathering such as collecting information concerning the contents of the discussions and negotiations pertaining to the Merger between the Companies, and gave consideration to the Matters for Consultation. The Special Committee received advice, as necessary, concerning the role of the Special Committee, the matters to be considered at the Special Committee meetings, and the operation of the Special Committee from Anderson Mori & Tomotsune, which is BBD Initiative's legal advisor,

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received explanations of the results of the legal due diligence on Headwaters conducted by Anderson Mori & Tomotsune, received explanations regarding the financial and tax due diligence on Headwaters conducted by Akasaka International Accounting, which is a third-party appraiser, and also received advice from AGS FAS, as BBD Initiative's financial advisor, concerning the promotion of the Merger transaction from a financial perspective, and proceeded with its considerations on the Matters for Consultation while taking all of these circumstances into account.

In addition, upon such consideration, the Special Committee received explanations from BBD Initiative concerning BBD Initiative's business contents, business environment, and major management issues, the advantages and disadvantages expected for BBD Initiative's business as a result of the Business Integration, and the contents and procedures to formulate BBD Initiative's business plan that serves as the premise of the Merger Ratio, and held Q&A sessions. The Special Committee also received explanations from Headwaters concerning, among other matters, Headwaters' business contents, business environment, the process of consideration that led Headwaters to propose the Business Integration, the measures expected to be implemented after the Business Integration, the synergies and other impacts expected from the Business Integration, the policy for the management structure after the Business Integration, and the contents and procedures to formulate Headwaters' business plan that serves as the premise of the Merger Ratio, and held Q&A sessions.

The Special Committee also received explanations concerning the methods and results of the valuation of the Merger Ratio in the Merger from Akasaka International Accounting, which is BBD Initiative's third-party appraiser, held Q&A sessions, and gave consideration to the reasonableness thereof.

In addition, the Special Committee received reports in a timely manner concerning the background and contents of the discussions and negotiations pertaining to the Merger between BBD Initiative and Headwaters, and thereafter substantially involved itself in the negotiation process with Headwaters by engaging in multiple rounds of consultations on the policy for negotiations, expressing its opinions to BBD Initiative, and the like.

Following the foregoing process, the Special Committee engaged in multiple rounds of careful discussions and considerations concerning the Matters for Consultation, and, as a result, the Special Committee submitted a written response to BBD Initiative's board of directors dated January 26, 2026, which states that: (i) the purpose of the Merger is found to be reasonable because, among other things, the Merger is expected to generate synergies such as: (a) creation of new value through the integration of technologies and products; (b) business expansion through the integration of human resources; and (c) strengthening of the financial base, it would be difficult to realize these synergies to the same extent through the existing capital and business alliance, and it is not recognized that any adverse effects would result from the Merger that would clearly outweigh these synergies; (ii) the fairness and appropriateness of the transaction terms pertaining to the Merger, including the Merger Ratio, have been ensured, because the selection of the scheme is found to be reasonable given that, among other things, the Merger Ratio is at the upper end of the valuation range under the average market price method, and it also falls within the valuation ranges under the comparable listed company method and the DCF method, and the above synergies cannot be maximized under schemes

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such as a tender offer or a share exchange; (iii) appropriate measures to ensure fairness have been implemented in the Merger, including the establishment of the Special Committee at BBD Initiative, the obtaining of valuation reports on the Merger Ratio from a third-party appraiser, and the obtaining of advice from the financial advisor and the legal advisor, and it can be evaluated that a situation comparable to an arm's-length transaction has been secured in the process of forming the transaction terms, and the fairness of the negotiation process and the procedures leading to decision-making pertaining to the Merger have been ensured; and (iv) based on (i) through (iii) above, after careful consideration, the decision and implementation of the Merger are found to be fair to BBD Initiative's general shareholders. In such written response, BBD Initiative's Special Committee expressed its opinion that, although it is anticipated that a certain number of BBD Initiative's shareholders would become shareholders of Shares Less Than One Unit after the Merger given the Merger Ratio scheduled to be applied in the Merger, if we take the following factors into comprehensive account, the Merger Ratio cannot be deemed unfair immediately due to such restrictions arising: (i) the Merger Ratio itself can be evaluated as reasonable in light of the valuation results for the Merger Ratio determined by Akasaka International Accounting, as BBD Initiative's third-party appraiser; (ii) such shareholders may demand that Headwaters purchase their Shares Less Than One Unit in accordance with the provisions of the Companies Act, thereby making it possible to ensure liquidity; (iii) such shareholders may enjoy economic benefits due to the enhancement of corporate value through the Merger, such as through dividends of surplus; and (iv) the fairness of the negotiation process and the procedures leading to decision-making pertaining to the Merger are recognized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Approval by all directors of Headwaters, excluding directors having interests in the Merger

At the board of directors meeting of Headwaters held on January 26, 2026, upon deliberation by six (6) directors and three (3) directors who are audit and supervisory committee members (three (3) of whom are outside directors), none of whom has any interest in the Merger, the execution of the Merger Agreement was approved and adopted unanimously thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Approval by all directors of BBD Initiative, excluding directors with conflicts of interest

At the board of directors meeting of BBD Initiative held on January 26, 2026, upon deliberation by three (3) directors and three (3) directors who are audit and supervisory committee members (three (3) of whom are outside directors), none of whom has any interest in the Merger, the execution of the Merger Agreement was approved and adopted unanimously thereby.

**4.** **Outline of the Companies** 

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| | | | |
|:---|:---|:---|:---|
|  |  | Company Surviving Absorption-Type Merger | Company Disappearing in Absorption-Type Merger |
| (1) | Company Name | Headwaters Co., Ltd. | BBD Initiative Inc. |
| (2) | Location | 6-5-1, Nishi-Shinjuku, Shinjuku-ku, Tokyo | 2-5-1, Atago, Minato-ku, Tokyo |
| (3) | Name and Title of Representative | Yosuke Shinoda, Representative Director | Yuichi Inaba, Representative Director and President, Group CEO |
| (4) | Business Contents | AI Solutions Business | Digital Transformation Business, BPO Business |

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| | | | |
|:---|:---|:---|:---|
| (5) | Stated Capital | 389,887 thousand yen | 1,176,526 thousand yen |
| (6) | Date of Incorporation | November 2005 | April 2023 |
| (7) | Number of Issued Shares | 3,844,144 shares | 6,120,221 shares |
| (8) | Fiscal Year-End | December 31 | September 30 |
| (9) | Number of Employees | (Consolidated) 391 employees | (Consolidated) 215 employees |
| (10) | Major Business Partners | Not applicable | Not applicable |
| (11) | Major Financing Banks | Mizuho Bank, Ltd.; and<br> MUFG Bank, Ltd. | MUFG Bank, Ltd.; and<br> Sumitomo Mitsui Banking Corporation |
| (12) | Major Shareholders and Shareholding Ratio | Yosuke Shinoda: 46.42%<br> Ryozai Mizutani: 3.12%<br> Rakuten Securities, Inc.: 2.93%<br> Masato Hikita: 1.31%<br> Tetsuyasu Yamazaki: 1.01%<br> BC Holdings Co., Ltd.: 0.85%<br> Hidenobu Kon: 0.84%<br> Nomura Securities Co., Ltd.: 0.83%<br> ROBOT PAYMENT INC.: 0.83%<br> Shoji Hatakeyama: 0.70% | Headwaters Co., Ltd.: 26.13%<br> Yuichi Inaba: 22.48%<br> Infinity Asset Management KK: 4.91%<br> Takashi Yanagisawa: 3.50%<br> Koki Iioka: 2.98%<br> Tatsuya Inuma: 2.11%<br> WOW WORLD Inc.: 1.68%<br> Kimiko Inaba: 1.14%<br> Yukio Yoneda: 0.50%<br> Akiteru Miyaji: 0.33% |
| (13) | Relationship Between the Companies | Relationship Between the Companies | Relationship Between the Companies |
|  | Capital Relationship | Headwaters owns 1,599,100 shares of BBD Initiative, representing 26.13% of the total number of issued shares of BBD Initiative (6,120,221 shares), and accordingly constitutes BBD Initiative's largest shareholder (a major shareholder) and also falls under the category of being an "other associated company." | Headwaters owns 1,599,100 shares of BBD Initiative, representing 26.13% of the total number of issued shares of BBD Initiative (6,120,221 shares), and accordingly constitutes BBD Initiative's largest shareholder (a major shareholder) and also falls under the category of being an "other associated company." |
|  | Personnel Relationship | Not applicable | Not applicable |
|  | Business Relationship | Headwaters and BBD Initiative entered into a Capital and Business Alliance Agreement dated August 14, 2025, and have commenced initiatives relating to "X-Tech AI Enhancement." | Headwaters and BBD Initiative entered into a Capital and Business Alliance Agreement dated August 14, 2025, and have commenced initiatives relating to "X-Tech AI Enhancement." |
|  | Applicability as Related Party | BBD Initiative is an affiliate of Headwaters and constitutes a related party. | BBD Initiative is an affiliate of Headwaters and constitutes a related party. |
| (14) | Operating Results and Financial Position for the Last Three Years<br>(Unit: million yen, unless otherwise indicated) | Operating Results and Financial Position for the Last Three Years<br>(Unit: million yen, unless otherwise indicated) | Operating Results and Financial Position for the Last Three Years<br>(Unit: million yen, unless otherwise indicated) |

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Fiscal Year-End | Headwaters<br>(Consolidated) | Headwaters<br>(Consolidated) | Headwaters<br>(Consolidated) | BBD Initiative<br>(Consolidated) | BBD Initiative<br>(Consolidated) | BBD Initiative<br>(Consolidated) |
| Fiscal Year-End | Fiscal Year<br>Ending<br>December 2022 | Fiscal Year<br>Ending<br>December 2023 | Fiscal Year<br>Ending<br>December 2024 | Fiscal Year<br>Ending<br>September 2023 | Fiscal Year<br>Ending<br>September 2024 | Fiscal Year<br>Ending<br>September 2025 |
| Net Assets | 875442 | 961659 | 1272595 | 1091309 | 1280360 | 1758216 |
| Total Assets | 1169242 | 1294238 | 1800388 | 3746996 | 4133240 | 3989128 |
| Net Assets Per Share (yen) | 233.78 | 254.73 | 333.73 | 206.84 | 242.26 | 287.29 |
| Net Sales | 1574596 | 2315088 | 2905981 | 3570969 | 4127625 | 4399466 |
| Operating Profit (Loss) | 110019 | 94861 | 307954 | 22577 | 285497 | (351803) |
| Ordinary Profit | 106916 | 98300 | 362432 |  |  |  |
| Net Profit (Loss) Attributable to Owners of Parent | 75143 | 70683 | 272787 | 29999 | 164727 | (377478) |
| Net Income (Loss) Per Share (yen) | 20.07 | 18.85 | 72.01 | 5.75 | 31.22 | (63.60) |
| Dividend Per Share (yen) |  |  |  |  | 7.00 |  |

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(Unit: Thousand yen, unless otherwise stated.)

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| | |
|:---|:---|
| (Note 1) | Headwaters implemented a stock split at a ratio of two (2) shares per one (1) common share effective July 1, 2023, and another stock split at a ratio of two (2) shares per one (1) common share effective January 1, 2025. Net assets per share and net income per share have been calculated on the assumption that such stock splits were implemented at the beginning of the fiscal year ending December 2022.  |

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(Note 2) The consolidated financial statements of BBD Initiative for the fiscal year ending September 2023 have been prepared by succeeding the consolidated financial statements of Knowledge Suite Co., Ltd., which became a wholly-owned subsidiary of BBD Initiative through a sole share transfer.

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| | |
|:---|:---|
| (Note 3) | BBD Initiative has adopted the International Financial Reporting Standards ("**IFRS**"), the figures presented as "net assets" represent the figures for "equity attributable to owners of parent"; the figures presented as "net assets per share" represent the figures for "equity attributable to owners of parent per share"; the figures presented as "net sales" represent the figures for "revenue"; the figures presented as "net income attributable to shareholders of the parent" represent the figures for "profit attributable to owners of parent"; and the figures presented as "net income per share" represent the figures for "basic earnings per share." As there is no item corresponding to "ordinary profit," the figures for such item are omitted.  |

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| | |
|:---|:---|
| (Note 4) | BBD Initiative has applied International Accounting Standard 12 "Income Taxes" (revised in May 2021) from the first quarter of the fiscal year ending September 2024. Accordingly, with respect to the fiscal year ending September 2023, the indicators, etc. reflect the figures after their retrospective applications.  |

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**5.** **Circumstances After Business Integration** 

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| | | |
|:---|:---|:---|
| | | Company Surviving Absorption-type Merger |
| (1) | Name | Headwaters Co., Ltd. |
| (2) | Location | 6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo |
| (3) | Name and Title of Representative | Yosuke Shinoda, Representative Director |
| (4) | Business Contents | AI solutions business, digital transformation business, BPO business |
| (5) | Stated Capital | Not yet determined as of the date hereof. |
| (6) | Fiscal Year-End | December 31 |
| (7) | Net Assets | Not yet determined as of the date hereof. |
| (8) | Total Assets | Not yet determined as of the date hereof. |

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**6.** **Outline of Accounting Methods** 

The "Accounting Standards for Business Combinations" (ASBJ Statement No. 21) and the "Guidance on Accounting Standards for Business Combinations and Accounting Standards for Business Divestitures" (ASBJ Guidance No. 10) will be applied to the accounting for the Merger, and the purchase method of accounting will be used wherein Headwaters is designated as the acquiring company. The amount of goodwill arising from the Merger has not yet been determined as of the date hereof; an announcement will be made once such amount is determined.

**7.** **Future Outlook** 

The outlook for business performance after the Business Integration will be announced once it becomes available.

**8.** **BBD Initiative's Shareholder Benefit Program** 

For details regarding the abolition of BBD Initiative's shareholder benefit program, please refer to "Notice Concerning Abolition of the Shareholder Benefit Program" released by BBD Initiative on January 26, 2026.

- End -

## Ex-99.B

**Exhibit B** 

**[Cover Page]** 

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| | |
|:---|:---|
| [Document Filed] | Extraordinary Report |
| [Filed With] | Director-General of the Kanto Local Finance Bureau |
| [Filing Date] | January 27, 2026 |
| [Company Name] | Kabushiki Kaisha Headwaters |
| [English Name] | Headwaters Co., Ltd. |
| [Title and Name of Representative] | Yosuke Shinoda, Representative Director |
| [Location of Head Office] | 6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo |
| [Telephone Number] | +81-3-6258-0525 |
| [Name of Administrative Contact Person] | Kazutaka Harashima, Executive Officer, Administrative Management Department Manager |
| [Closest Contact Location] | 6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo |
| [Telephone Number] | +81-3-6258-0525 |
| [Name of Administrative Contact Person] | Kazutaka Harashima, Executive Officer, Administrative Management Department Manager |
| [Place Where Document is Made Available for Public Inspection] | Tokyo Stock Exchange, Inc. |

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This exchange offer or business combination is made for the securities of a Japanese company. The offer is subject to disclosure requirements of Japan that are different from those of the United States. Financial statements included in the document, if any, have been prepared in accordance with Japanese 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 U.S. federal securities laws, since the issuer is located in Japan, and some or all of its officers and directors may be residents of Japan. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of 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 exchange offer, such as in open market or privately negotiated purchases.

**1.** **Reason for Filing** 

Headwaters Co., Ltd. ("**Headwaters**"), at its board of directors meeting held on January 26, 2026, resolved to integrate its management with BBD Initiative Inc. ("**BBD Initiative**") (Headwaters and BBD Initiative may also hereinafter be collectively referred to as the "**Companies**") based on the spirit of equality between the Companies, with an effective date designated on May 1, 2026 (scheduled) (the "**Business Integration**"), and entered into a merger agreement (the "**Merger Agreement**") pertaining to an absorption-type merger in which Headwaters will be the surviving company and BBD Initiative will be the disappearing company (the "**Merger**"). Accordingly, Headwaters hereby files this Extraordinary Report pursuant to Article 24-5, Paragraph (4) of the Financial Instruments and Exchange Act and Article 19, Paragraph (2), Item (vii)-3 of the Cabinet Office Order on Disclosure of Corporate Affairs.

**2.** **Contents of Report** 

**(1)** **Matters Concerning the Counterparty to Merger** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)** **Trade Name, Location of Head Office, Name of Representative, Amount of Stated Capital or Contributions, Amount of Net Assets, Amount of Total Assets and Business Contents** 

(As of September 30, 2025)

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| | |
|:---|:---|
| Trade Name | BBD Initiative Inc. |
| Location of Head Office | 2-5-1 Atago, Minato-ku, Tokyo |
| Name of Representative | Yuichi Inaba, Representative Director and President, Group CEO |
| Amount of Stated Capital (thousand yen) | 1176526 |
| Amount of Net Assets (thousand yen) | (Consolidated) 1,758,216<br> (Non-consolidated) 1,610,006 |
| Total Assets<br> (thousand yen) | (Consolidated) 3,989,128<br> (Non-consolidated) 2,221,860 |
| Business Contents | DX Business; BPO Business |

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| | |
|:---|:---|
| Note: | BBD Initiative has adopted the International Financial Reporting Standards ("**IFRS**") as its accounting standards. The figures presented as "net assets" (consolidated) for BBD Initiative, which adopts the IFRS, represent the figures for "equity attributable to owners of parent."  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)** **Net Sales, Operating Profit, Ordinary Profit and Net Profit for Each Fiscal Year Closed During the Latest Three-Year Period** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Consolidated)

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| | | | |
|:---|:---|:---|:---|
| Fiscal Year | Fiscal Year<br>Ending<br>September<br>2023 | Fiscal Year<br>Ending<br>September<br>2024 | Fiscal Year<br>Ending<br>September<br>2025 |
|  Revenue (thousand yen) | 3570969 | 4127625 | 4399466 |
|  Operating Profit (loss) (thousand yen) | 22577 | 285497 | (351803) |
|  Profit (loss) Before Income Tax (thousand yen) | 10318 | 266583 | (370955) |
|  Profit (loss) Attributable to Owners of Parent (thousand yen) | 29999 | 164727 | (377478) |

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Note: The figures presented as "net sales" represent the figures for "revenue," the figures presented as "ordinary profit" represent the figures for "profit before income tax," and the figures presented as "net profit" represent the figures for "profit attributable to owners of parent," respectively.

(Non-consolidated)

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| | | | |
|:---|:---|:---|:---|
| Fiscal Year-End | Fiscal Year<br>Ending<br>September<br>2023 | Fiscal Year<br>Ending<br>September<br>2024 | Fiscal Year<br>Ending<br>September<br>2025 |
|  Operating Revenue<br> (thousand yen) | 191400 | 318800 | 322848 |
|  Operating Profit (loss)<br> (thousand yen) | 49826 | 4397 | (109568) |
|  Ordinary Profit (loss)<br> (thousand yen) | 44686 | (87) | (112352) |
|  Net Profit (loss)<br> (thousand yen) | 29511 | (66289) | (382347) |

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Note: The figures presented as "net sales" represent the figure for "operating revenue."

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)** **Names of Largest Shareholders and Proportion of Number of Shares Held by Largest Shareholders to Total Number of Issued Shares** 

(As of September 30, 2025)

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| | |
|:---|:---|
| Name of Largest Shareholder | Proportion of<br>Number of Shares<br>Held by Largest<br>Shareholders to Total<br>Number of Issued<br>Shares (%) |
|  Headwaters Co., Ltd. | 26.13% |
|  Yuichi Inaba | 22.48% |
|  Infinity Asset Management KK | 4.91% |
|  Takashi Yanagisawa | 3.50% |
|  Koki Iioka | 2.98% |
|  Tatsuya Inuma | 2.11% |
|  WOW WORLD Inc. | 1.68% |
|  Kimiko Inaba | 1.14% |
|  Yukio Yoneda | 0.50% |
|  Akiteru Miyaji | 0.33% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)** **Capital Relationship, Personnel Relationship, Business Relationship, and Applicability as a Related Party to the Reporting Company** 

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| | |
|:---|:---|
| Capital Relationship | Headwaters owns 1,599,100 shares of BBD Initiative, representing 26.13% of the total number of issued shares of BBD Initiative (6,120,221 shares), and accordingly constitutes BBD Initiative's largest shareholder (major shareholder) and also falls under the category of being an "other associated company." |
| Personnel Relationship | Not applicable |
| Business Relationship | Headwaters and BBD Initiative entered into a Capital and Business Alliance Agreement dated August 14, 2025, and have commenced initiatives relating to "X-Tech AI Enhancement." |
| Applicability as Related Party | BBD Initiative is an affiliate of Headwaters and constitutes a related party thereof. |

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**(2)** **Purpose of Merger** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)** **Background of Business Integration** 

Headwaters has supported corporate digital transformation by developing AI-powered solutions. In particular, Headwaters' core competencies are rooted in advanced technological capabilities cultivated across a wide range of areas, including the development of AI engines, the construction of cloud platforms, and the implementation of systems aimed at enhancing operational efficiency. In recent years, while the AI/DX market has grown significantly due to the rapid advancement of cutting-edge technologies such as generative AI and the expansion of the market, the competitive environment has become increasingly sophisticated. In order to respond to these changes and achieve sustainable growth, Headwaters recognizes the importance of consolidating management resources and maximizing the strengths of the Companies toward further advancement.

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On the other hand, BBD Initiative listed its shares on the Tokyo Stock Exchange Mothers market in December 2017. Since its establishment in April 2023 as a pure holding company, i.e., the wholly owning parent company of Knowledge Suite Co., Ltd., through a sole share transfer, BBD Initiative has adopted the management philosophy of "Creating 'Thank You' from X-Tech (Cross-Tech)," and has supported the automation and autonomization of business operations, with a focus on the automation of sales activities, through SaaS and AI in order to supplement corporate labor shortages by means of digital transformation (DX). Currently, the BBD Initiative Group consists of BBD Initiative and five (5) consolidated subsidiary companies, and is composed of two (2) business segments: i.e., the "Digital Transformation (DX) Business" and the "Business Process Outsourcing (BPO) Business." In addition, as specified in the "Notice on Capital and Business Alliance with Headwaters Co., Ltd., and Changes to Largest Shareholder (Major Shareholder) and Other Related Companies" dated August 14, 2025, released by BBD Initiative, the commencement of the capital and business alliance with Headwaters in August 2025 led BBD Initiative to firmly believe in the significant potential of AI and to decide to substantially shift its business focus from "DX," under which it has supported mid-sized and small-to-medium enterprises, to "AX (AI Transformation)."Concurrently, BBD Initiative has initiated the transformation of its traditional SaaS-centered business model to providing "AI as a Service." BBD Initiative has reaffirmed its firm belief that Headwaters is an indispensable partner for accelerating the pace of transformation and creating high added value in the process of considering and promoting this business shift. BBD Initiative has also come to firmly believe that, by combining the respective knowledge and strengths of the Companies, they will be able to develop AI products and services that generate greater synergies and establish a structure that allows them to promote their businesses in a complementary manner. Based on such firm beliefs, the Companies have determined that a deeper cooperative system becomes necessary to enable the further acceleration of the business shift, and, in order to accelerate not only the business shift but also efforts toward new business initiatives, the Companies have engaged in multiple rounds of consultations and decided to proceed with the Business Integration. The strategic significance of the Business Integration is to combine Headwaters' advanced technological capabilities cultivated in the AI domain with the Companies' market development capabilities to thereby establish a leading position in the domestic and global AI/DX markets. The Companies possess a high level of expertise across different fields, and by combining these strengths, the Companies believe that it will be possible to provide the market with high value-added services that could not have been achieved by either company alone, thereby further accelerating the digital transformation of client companies.

Furthermore, the synergy effects expected from the Business Integration include the creation of new services through the integration of AI implementation know-how and operational efficiency solutions, the promotion of cross-selling and up-selling by leveraging customer networks, and the creation of next-generation products by strengthening research and development capabilities. The Companies firmly believe that the collaboration of their AI engineering personnel will enable the acceleration of the development of innovative services, such as generative AI and advanced predictive analytics solutions.

In carrying out the Business Integration, the Companies determined, after holding multiple rounds of consultations, that they would be able to create the maximum possible synergies by fully integrating the Companies' management resources and unifying their technological capabilities, human resources and business foundations, and the Companies therefore selected an absorption-type merger as the scheme. Looking ahead to the promotion of business after the Business Integration, the Companies believe that securing cash on hand will broaden the scope for selecting a more flexible and diverse range of strategic

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options, and will enable the Companies to reliably capture future growth opportunities. In addition, achieving centralized management would be difficult and certain constraints may arise in realizing the effects of the Business Integration under a structure in which BBD Initiative's legal personality were to remain in existence, such as a share exchange. Given the foregoing, the Companies believe that implementing integrated operations through an absorption-type merger is the optimal approach. The Companies believe that this approach will expand opportunities for shareholders to directly benefit from the growth and synergies after the Business Integration and that enhancing the Companies' corporate appeal will also contribute to building a relationship in which shareholders will support the Companies in the long term.

As previously announced by Headwaters in its August 14, 2025 notice titled "Notice Concerning Acquisition of Shares in BBD Initiative Inc. (Conversion into an Equity Method Affiliate) and Execution of Capital and Business Alliance Agreement," the Companies executed a Capital and Business Alliance Agreement in August 2025. Subsequently, the Companies commenced initiatives relating to the utilization of generative AI in specific SaaS products and have steadily promoted collaboration at the practical working level. Through these initiatives, the Companies have come to strongly recognize the compatibility of their businesses and the potential for collaboration, and after engaging in repeated good-faith discussions, the Companies have entered into the Merger Agreement in order to implement the Business Integration. The Business Integration will unify the Companies as one team to achieve sustainable growth that makes "1+1 into 3 or even 4," and thereby deliver greater value than ever before to all stakeholders, including the Companies' shareholders, employees, and business partners. The Companies firmly believe that the Business Integration will serve as an opportunity for significant advancement for the Companies, and are committed to working together to create a new future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)** **Purpose of Business Integration** 

As detailed below, the Companies will proceed with the Business Integration to realize the benefits of integration, focusing on: (a) "creating new value through the integration of technology and products"; (b) "expanding the business through the integration of human resources"; and (c) "strengthening the financial foundation."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Creating New Value through the Integration of Technology and Products

The Companies aim to develop next-generation services incorporating AI functionality by integrating Headwaters' advanced expertise in AI implementation, which it has cultivated over time, with the portfolio of SaaS products offered by BBD Initiative. This will not only enhance the added value of existing products, but also establish a framework to bring new solutions to the market that support customers' operational efficiency and the promotion of digital transformation, thereby strengthening the Companies' competitive advantage.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Expanding the Business through the Integration of Human Resources

The Companies aim to enhance their competitiveness in recruitment and to strengthen their AI personnel development system by integrating their engineering resources. This will enable the Companies to achieve both development speed and quality, and put in place a structure that is capable of handling a greater volume of projects. In addition, the Companies aim to create cross-selling and up-selling opportunities and to gain access to a broader range of markets.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Strengthening the Financial Foundation

The Business Integration is expected to expand the Companies' scale and enhance their creditworthiness. This will enable the Companies to further strengthen their financial foundation and establish a system capable of flexibly responding to large-scale industry restructuring and new investments. A robust financial foundation will support proactive investments in research and development and strategic initiatives such as M&A, and the Companies aim for this to serve as an important foundation to enable sustainable growth for the Companies over the medium to long term.

**(3)** **Method of Merger, Contents of Allotment Pertaining to Merger and Other Contents of Merger Agreement** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)** **Method of Merger** 

The Business Integration will be implemented through an absorption-type merger, with Headwaters as the surviving company and BBD Initiative as the disappearing company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)** **Contents of Allotment Pertaining to Merger** 

<u>Headwaters<br>(Company surviving<br>absorption-type<br>merger)</u> <u>BBD Initiative<br>(Company<br>disappearing in<br>absorption-type<br>merger)</u> <br> Allotment Ratio Pertaining to the Merger 1 0.50

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| | |
|:---|:---|
| (Note 1) | Allotment Ratio Pertaining to the Merger (the "**Merger Ratio**")  |

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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;0.5 shares of Headwaters shall be allotted and delivered for each share of BBD Initiative; provided, however, that no shares will be allotted or delivered in the Merger in respect of the 1,599,100 shares of BBD Initiative held by Headwaters (as of September 30, 2025) or the 296 treasury shares held by BBD Initiative (as of September 30, 2025).

(Note 2) Number of Shares of Headwaters to be Delivered in the Merger (scheduled): Common shares: 2,260,412 shares

The number of shares to be delivered may be modified if there is any change in the number of treasury shares of BBD Initiative due to shareholders of BBD Initiative exercising their right to request the purchase of shares up to immediately before the effective time of the Merger.

Furthermore, Headwaters assumes that it will cover the entire number of shares to be delivered in the Merger by issuing new common shares.

(Note 3) Handling of Shares Less Than One Unit

The shareholders of BBD Initiative who will hold shares of Headwaters constituting less than one unit (100 shares) ("**Shares Less Than One Unit**") may use the following system available in relation to shares in Headwaters, and it is also possible to purchase and sell Shares Less Than One Unit that are available at certain securities firms. However, it is not possible to sell any Shares Less Than One Unit on a financial instruments exchange market.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• System for purchase of Shares Less Than One Unit (sale of shares constituting less than one unit (100 shares))

The system under which shareholders holding Shares Less Than One Unit of Headwaters may demand that Headwaters purchase such Shares Less Than One Unit that they hold pursuant to Article 192, Paragraph (1) of the Companies Act.

(Note 4) Treatment of Fractional Shares

If shareholders of BBD Initiative receive an allotment that results in fractional shares of Headwaters of less than one (1) share in connection with the Merger, an amount corresponding to such fractional shares shall be paid in cash to such shareholders in accordance with Article 234 of the Companies Act and other applicable laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)** **Handling of Share Options and Corporate Bond Certificates with Share Options in Connection with Merger** 

BBD Initiative has not issued any share options or corporate bond certificates with share options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)** **Other Contents of Merger Agreement** 

The contents of the Merger Agreement are as specified in "Merger Agreement" below.

**(4)** **Grounds for Valuation of the Contents of the Allotment Pertaining to Merger** 

**(i)** **Grounds and Reasons for the Contents of Allotment** 

To ensure the fairness and appropriateness of the Merger Ratio to be used in the Merger, the Companies each requested an independent third-party appraiser to calculate the Merger Ratio, and each obtained a valuation report on the Merger Ratio. Headwaters appointed Plutus Consulting Co., Ltd. ("**Plutus Consulting**") as its third-party appraiser, and BBD Initiative appointed Akasaka International Accounting Co., Ltd. ("**Akasaka International Accounting**") as its third-party appraiser.

With respect to Headwaters, Headwaters determined that the Merger Ratio is appropriate, based on, among other things, legal advice from TMI Associates, as its legal advisor, as well as the results of legal due diligence on BBD Initiative conducted by TMI Associates and the results of financial and tax due diligence conducted by Univis Consulting Co., Ltd., and as a result of holding multiple rounds of careful consultations with BBD Initiative taking into account the ranges of the valuation results determined by its third-party appraiser, Plutus Consulting, using the market price method, comparable listed company method and the discounted cash flow method (the "**DCF method**").

With respect to BBD Initiative, as specified in "(iv) Measures to Ensure Fairness (Including Measures to Avoid Conflicts of Interest)" below, BBD Initiative carefully considered various conditions of the Merger while holding multiple rounds of consultations with Headwaters, taking into account, among other things, the results of the financial and tax due diligence on Headwaters obtained from Akasaka International Accounting, the valuation report on the Merger Ratio, financial advice from AGS FAS Co., Ltd. ("**AGS FAS**"), as BBD Initiative's financial advisor, from a financial perspective, legal advice from Anderson Mori & Tomotsune Law Office ("**Anderson Mori & Tomotsune**"), as BBD Initiative's legal advisor, and the results of legal due diligence on Headwaters, and while giving the maximum possible respect to the contents of the written response submitted by the special committee established by BBD Initiative (the "**Special Committee**").

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As a result, BBD Initiative determined that the Merger Ratio is appropriate and does not impair the interests of BBD Initiative's general shareholders, because, as specified in "b. Outline of Valuation" of "(ii) Matters Concerning Valuation" below, among the valuation results determined by BBD Initiative's third-party appraiser, Akasaka International Accounting, the Merger Ratio is at the upper end of the valuation range under the average market price method, and it also falls within the valuation ranges under the comparable listed company method and the DCF method.

As specified above, the Companies each comprehensively considered factors including the respective financial conditions, asset status, future outlook, and other factors, with reference to the valuation results provided by their respective third-party appraisers and advice from their respective legal advisors, and based on the results of due diligence conducted by each Company on the other party, etc., and the Companies engaged in multiple rounds of careful negotiations and consultations concerning the Merger Ratio (and, with respect to BBD Initiative, also took into account the contents of the written response submitted by the Special Committee). As a result, the Companies ultimately determined that the Merger Ratio is appropriate, and agreed thereto.

The Merger Ratio may be changed upon consultation between the Companies if any material change arises in the conditions forming the basis of the valuation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)** **Matters Concerning Valuation** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Names of Appraisers and Their Relationship with the Relevant Companies

Plutus Consulting, as Headwaters' third-party appraiser, does not fall under a "related party" of the Companies and does not have any material interest in the Companies. The fees to be paid to Plutus Consulting pertaining to the Merger are fixed fees to be paid irrespective of whether the Merger is successful or unsuccessful.

In addition, Akasaka International Accounting, as BBD Initiative's third-party appraiser, does not fall under a "related party" of the Companies and does not have any material interest in the Companies. The fees to be paid to Akasaka International Accounting pertaining to the Merger are fixed fees to be paid irrespective of whether the Merger is successful or unsuccessful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Outline of Valuation

Plutus Consulting conducted the valuation by employing the market price method, as market prices of the Companies' shares are available. In addition, Plutus Consulting employed the comparable listed company method, as there are several comparable listed companies and it is possible to infer the share value through comparison with such comparable listed companies. Furthermore, Plutus Consulting employed the DCF method, which is a valuation method that calculates the share value by discounting to present value the free cash flows expected to be generated in the future using a certain discount rate based on the future earnings of the Companies, in order to reflect the status of the Companies' future business activities in the valuation.

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The following shows the valuation results for the Merger Ratio under each method when the value per share of Headwaters is one (1).

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| | | |
|:---|:---|:---|
| Methods Employed | Methods Employed | Valuation Range of the Merger Ratio |
| Headwaters | BBD Initiative | Valuation Range of the Merger Ratio |
| Market Price Method | Market Price Method | 0.45 ~ 0.50 |
| Comparable Listed Company Method | Comparable Listed Company Method | 0.23 ~ 1.03 |
| DCF Method | DCF Method | 0.35 ~ 0.64 |

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Under the market price method, Plutus Consulting conducted the valuation by setting the valuation reference date as January 23, 2026, which is the business day immediately preceding the date of execution of the Merger Agreement, and using the closing prices of the common shares of the Companies on the TSE as of the valuation reference date and the simple average of the closing prices for the one-month, three-month and six-month periods ending on the valuation reference date (Headwaters: valuation reference date: 3,500 yen; one-month period: 3,105 yen; three-month period: 3,062 yen; six-month period: 3,433 yen; and BBD Initiative: valuation reference date: 1,591 yen; one-month period: 1,500 yen; three-month period: 1,531 yen; and six-month period: 1,571 yen).

Under the comparable listed company method, the valuation was conducted by comparing market share prices of listed companies engaged in business relatively similar to that of the Companies and their financial indicators representing profitability and other factors.

Under the DCF method, Plutus Consulting evaluated Headwaters' corporate value by discounting future cash flows based on the financial forecasts prepared by Headwaters to present value using a certain discount rate. The financial forecasts that constituted the assumptions for such valuation include fiscal years during which a substantial increase in profits and a substantial increase in free cash flows are anticipated. Specifically, for the fiscal years ending December 2026, December 2027 and December 2028, operating profit is expected to substantially increase (i.e., increases of 57%, 165%, and 116% from each of the previous years, due to: (i) an increase in net sales mainly as a result of higher project unit prices for AI integration services and digital transformation (DX) services achieved through hands-on development support led by business engineers well-versed in cutting-edge technologies; and (ii) efficiency improvements in the development process through the use of generative AI and AI-driven development. In addition, for the fiscal years ending December 2027 and December 2028, free cash flow is expected to substantially increase due to an increase in operating profit (i.e., increases of 177% and 131% from each of the previous years). In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of Headwaters' standalone plan that does not incorporate such synergies. On the other hand,

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Plutus Consulting evaluated BBD Initiative's corporate value by discounting future cash flows based on the financial forecasts for the fiscal years ending September 2026 through September 2030 prepared by BBD Initiative to present value using a certain discount rate. The financial forecasts for the fiscal years ending September 2026 through September 2030 that served as the assumptions for such valuation include fiscal years during which a substantial increase in profits is anticipated. Specifically, for the fiscal years ending September 2028, September 2029 and September 2030, operating profit is expected to substantially increase (i.e., increases of 93%, 90%, and 38% from each of the previous years), due to an increase in the number of high value-added and high-performance AI product development projects and an increase in unit price accompanying the business transformation from a conventional SaaS-centered business model to "AI as a Service." In addition, for the fiscal years ending September 2027, September 2028, September 2029 and September 2030, free cash flow is expected to substantially increase due to an increase in operating profit (i.e., increases of 49%, 77%, 73%, and 41% from each of the previous years). In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of BBD Initiative's standalone plan that does not incorporate such synergies.

In calculating the Merger Ratio, Plutus Consulting basically used the materials and information provided by Headwaters and BBD Initiative and information available to the general public as is, and relied on the assumptions that all such materials and information were accurate and complete and that there were no undisclosed facts that could have a material impact on the calculation of the Merger Ratio that had not been disclosed to Plutus Consulting. Plutus Consulting did not conduct its own verification on the accuracy or completeness of such materials and information, nor is it obligated to do so.

Plutus Consulting did not conduct its own valuation, appraisal or assessment on any of the assets or liabilities of Headwaters and BBD Initiative and their respective associated companies (including, without limitation, financial derivative products, off-balance sheet assets and liabilities, and other contingent liabilities), including any analysis and valuation of individual assets and liabilities, nor did it request a third party to conduct any valuation, appraisal or assessment.

Plutus Consulting assumes that the financial forecast information provided by Headwaters and BBD Initiative has been reasonably prepared based on the best possible forecasts and judgments available to their respective management teams as of the date hereof. Plutus Consulting relies on this information without conducting its own verification, upon obtaining Headwaters' consent thereto. Plutus Consulting's valuations are based on financial, economic, market, and other conditions as of January 23, 2026 for the market price method, and as of January 16, 2026 for all other methods.

On the other hand, Akasaka International Accounting conducted the valuation by employing the average market price method, as market prices of the Companies' shares are available. In addition, Akasaka International Accounting employed the comparable listed company method, as there are multiple comparable listed companies for each of the Companies and it is possible to infer the share value by comparison with such comparable companies. Furthermore, Akasaka International Accounting employed the DCF method, which is a valuation method that calculates the share value by discounting the free cash flows expected to be generated in the future to present value by using a certain discount rate based on the future earnings of the Companies, in order to reflect the Companies' future business plans in such valuation.

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The following shows the valuation results for the Merger Ratio under each method when the value per share of Headwaters is one (1).

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| | | |
|:---|:---|:---|
| Methods Employed | Methods Employed | Valuation Range of the Merger Ratio |
| Headwaters | BBD Initiative | Valuation Range of the Merger Ratio |
| Average Market Price Method | Average Market Price Method | 0.45 ~ 0.50 |
| Comparable Listed Company Method | Comparable Listed Company Method | 0.18 ~ 1.42 |
| DCF Method | DCF Method | 0.37 -~ 0.90 |

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Under the average market price method, Akasaka International Accounting conducted the valuation by setting the valuation reference date as January 23, 2026, which is the business day immediately preceding the date of execution of the Merger Agreement, and using the closing prices of the common shares of the Companies on the TSE as of the valuation reference date and the simple average of the closing prices for the one-month, three-month and six-month periods ending on the valuation reference date (Headwaters: valuation reference date: 3,500 yen; one-month period: 3,105 yen; three-month period: 3,062 yen; six-month period: 3,433 yen; and BBD Initiative: valuation reference date: 1,591 yen; one-month period: 1,500 yen; three-month period: 1,531 yen; and six-month period: 1,571 yen).

Under the comparable listed company method, the valuation was conducted by comparing market share prices of listed companies engaged in business relatively similar to that of the Companies and their financial indicators representing profitability and other factors.

Under the DCF method, Akasaka International Accounting evaluated Headwaters' corporate value by discounting the future cash flows based on Headwaters' financial forecasts for the fiscal years ending December 2026 through December 2028 prepared by Headwaters to present value using a certain discount rate. The financial forecasts underlying such valuation anticipate a substantial increase in profits. Specifically, operating profit is expected to increase by 57% from the previous year for the fiscal year ending December 2026, by 165% from the previous year for the fiscal year ending December 2027, and by 116% from the previous year for the fiscal year ending December 2028, due to an increase in net sales mainly as a result of higher project unit prices for AI integration services and DX services achieved through hands-on development support led by business engineers well-versed in cutting-edge

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technologies, and efficiency improvements in the development process through the use of generative AI and AI-driven development. Free cash flow is expected to increase by 843% from the previous year for the fiscal year ending December 2026, by 191% from the previous year for the fiscal year ending December 2027, and by 127% from the previous year for the fiscal year ending December 2028, due to an increase in operating profit. In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of Headwaters' standalone plan that does not incorporate such synergies.

On the other hand, Akasaka International Accounting evaluated BBD Initiative's corporate value by discounting the future cash flows based on BBD Initiative's financial forecasts for the fiscal years ending September 2026 through September 2030 prepared by BBD Initiative to present value using a certain discount rate. The financial forecasts underlying such valuation include fiscal years during which a substantial increase in profits is anticipated. Specifically, operating profit is expected to increase by 93% from the previous year for the fiscal year ending September 2028, by 90.02% from the previous year for the fiscal year ending September 2029, and by 38% from the previous year for the fiscal year ending September 2030, due to an increase in the number of high value-added and high-performance AI product development projects and an increase in unit prices accompanying the business transformation from a conventional SaaS-centered business model to "AI as a Service.". Free cash flow is expected to increase by 94% from the previous year for the fiscal year ending September 2028, by 83.48% from the previous year for the fiscal year ending September 2029, and by 37% from the previous year for the fiscal year ending September 2030, due to an increase in operating profit. In addition, it is difficult as of the date hereof to specifically estimate the synergies expected to be realized by the Merger, and therefore, such financial forecasts were prepared on the basis of BBD Initiative's standalone plan that does not incorporate such synergies.

In calculating the Merger Ratio, Akasaka International Accounting basically used the materials and information provided by Headwaters and BBD Initiative and information available to the general public as is, and relied on the assumptions that all such materials and information were accurate and complete and that there were no undisclosed facts that could have a material impact on the calculation of the Merger Ratio that had not been disclosed to Akasaka International Accounting. Akasaka International Accounting did not conduct its own verification on the accuracy or completeness of such materials and information, nor is it obligated to do so.

Akasaka International Accounting did not conduct its own valuation, appraisal or assessment on any of the assets or liabilities of Headwaters and BBD Initiative and their respective associated companies (including, without limitation, financial derivative products, off-balance sheet assets and liabilities, and other contingent liabilities), including any analysis and valuation of individual assets and liabilities, nor did it request a third party to conduct any valuation, appraisal or assessment.

Akasaka International Accounting assumes that the financial forecast information provided by Headwaters and BBD Initiative has been reasonably prepared based on the best possible forecasts and judgments available to their respective management teams as of the date hereof. Akasaka International

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Accounting has relied on this information without conducting its own verification, upon obtaining BBD Initiative 's consent thereto.

Akasaka International Accounting's valuations are based on financial, economic, market, and other conditions as of January 23, 2026.

**(iii)** **Prospects of and Reasons for Delisting** 

In association with the Merger, the common shares of BBD Initiative are scheduled to be delisted from the TSE on April 28, 2026, pursuant to the delisting criteria of the TSE. After the delisting, the common shares of BBD Initiative will no longer be tradable on the TSE. However, since the common shares of Headwaters to be allotted to the shareholders of BBD Initiative on the effective date of the Merger are listed on the TSE, although some shareholders may receive only an allotment of shares constituting less than one unit depending on the number of shares they hold, shares constituting one unit or more will remain tradable on the TSE, and thus the Companies believe that the liquidity of the shares can be secured. In addition, even after the effective date of the Merger, the common shares of Headwaters will continue to be listed on the TSE Growth Market, which is Headwaters' current listing market.

The shareholders of BBD Initiative who will come to hold shares of Headwaters constituting less than one unit as a result of the Merger will not be able to sell the shares constituting less than one unit on the TSE; however, they may demand that Headwaters purchase such shares constituting less than one unit. For details of such handling, please refer to Note 3 under "(3) Method of Merger, Contents of Allotment Pertaining to Merger and Other Contents of Merger Agreement" of "(ii) Contents of Allotment Pertaining to Merger" above. In addition, for the details of the treatment of fractional shares in the event that fractional shares of less than one (1) share arise, please refer to Note 4 under "(3) Method of Merger, Contents of Allotment Pertaining to Merger and Other Contents of Merger Agreement" of "(ii) Contents of Allotment Pertaining to Merger" above.

The shareholders of BBD Initiative will be able to trade their common shares of BBD Initiative on the TSE in the same manner as before up to the final trading day, April 27, 2026 (scheduled), and will also be able to exercise their lawful rights as prescribed in the Companies Act and other applicable laws and regulations.

**(iv)** **Measures to Ensure Fairness (Including Measures to Avoid Conflicts of Interest)** 

The Merger does not constitute a material transaction with controlling shareholders, etc. for the Companies. On the other hand, given that Headwaters is the largest shareholder (major shareholder) and also falls under the category of being an "other associated company," and holds 1,599,100 shares, equivalent to 26.13% of BBD Initiative's total number of issued shares (6,120,221 shares), and in light of the Companies' capital relationship, the Companies have implemented the following measures to ensure fairness (including measures to avoid conflicts of interest) in order to exercise caution in the Companies' decision-making, and from the perspective of ensuring the fairness of the Merger and avoiding any doubt as to conflicts of interest.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Obtaining valuation reports on the Merger Ratio from independent third-party appraisers for the Companies

From the perspective of ensuring the fairness of the Merger Ratio in the Merger, as specified in "(1) Grounds and Reasons for the Contents of Allotment" above, the Companies each requested a third-party appraiser independent from the Companies to calculate the Merger Ratio, and, with reference to such valuation results, the Companies engaged in good-faith negotiations and consultations, and each resolved at the respective board of directors meetings of the Companies held on January 26, 2026, to conduct the Merger at the Merger Ratio.

The Companies have not obtained any fairness opinion concerning the fairness of the Merger Ratio from their respective third-party appraisers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Receiving advice from an independent law firm for Headwaters

Headwaters has appointed TMI Associates as its legal advisor in connection with the Merger, and has received legal advice concerning the procedures for the Merger, the method and process of decision-making, and other relevant matters. TMI Associates is independent from Headwaters and BBD Initiative, and does not have any material interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Receiving advice from an independent law firm for BBD Initiative

BBD Initiative has appointed Anderson Mori & Tomotsune as its legal advisor in connection with the Merger, and has received legal advice concerning the procedures for the Merger, the method and process of decision-making, and other relevant matters. Anderson Mori & Tomotsune is independent from Headwaters and BBD Initiative, and does not have any material interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Receiving Advice from an independent financial advisor for BBD Initiative

BBD Initiative has appointed AGS FAS as its financial advisor in connection with the Merger, and has received advice on the promotion of the Merger transaction from a financial perspective. AGS FAS is independent from Headwaters and BBD Initiative, and does not have any material interest therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Establishment of an independent special committee for BBD Initiative and obtaining a written response therefrom

In proceeding with its consideration of the Merger with Headwaters, BBD Initiative established the Special Committee, pursuant to a resolution of the board of directors adopted at its board of directors meeting held on September 19, 2025, which is comprised of BBD Initiative's three (3) independent officers (Mr. Teruhiro Ikaga, Mr. Nobuo Wada, and Mr. Kengo Miura, all of whom are outside directors serving as audit and supervisory committee members of BBD Initiative), who are independent from BBD Initiative, Headwaters, and the success or failure of the Merger, in order to exercise caution in its decision-making and to eliminate any risk of arbitrariness in, and any potential conflicts of interest in, the decision-making process of the board of directors, and thereby ensure fairness, transparency and objectivity.

------

BBD Initiative has appointed the foregoing three (3) persons as members of the Special Committee since its establishment, and there has been no change in its members. In addition, Mr. Teruhiro Ikaga has assumed the position of chairperson of the Special Committee by election from among the members of the Special Committee. The compensation of the members of the Special Committee consists of fixed fees only which are to be paid irrespective of whether the Business Integration is successful or unsuccessful, and does not include any contingency fees conditional upon the announcement, decision, implementation, etc. of the Merger.

Based on the above-mentioned resolution of its board of directors, BBD Initiative has submitted the following four (4) items to the Special Committee for consultation (the "**Matters for Consultation**"), and has commissioned the Special Committee to submit a written response concerning such items to BBD Initiative's board of directors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Whether the purpose of the Merger is found to be reasonable (including whether the Merger contributes to
enhancing BBD Initiative's corporate value);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Whether the fairness and appropriateness of the transaction terms pertaining to the Merger (including the
Merger Ratio in the Merger) are ensured;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Whether the fairness of the procedures pertaining to the Merger is ensured; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Based on (a) through (c) above, whether the decision and implementation of the Merger are fair to BBD
Initiative's general shareholders.

In addition, at the above-mentioned resolution of its board of directors, BBD Initiative resolved that it will respect the contents of the Special Committee's written response concerning the Matters for Consultation to the maximum extent possible, and that, if the Special Committee determines that the transaction terms are not appropriate, BBD Initiative will decide not to implement the Merger. In addition, BBD Initiative's board of directors has granted the Special Committee the following five (5) authorities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Authority to designate or approve (including subsequent approval of) experts such as BBD Initiative's
financial advisor and legal advisor (collectively, "**Advisors** ");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Authority to appoint its own Advisors in the case where the Special Committee finds it necessary upon
consideration of the Matters for Consultation (provided, however, that, if the Special Committee determines that it may rely on BBD Initiative's Advisors and seek their professional advice, as BBD Initiative's Advisors have a high level
of expertise and there is no issue with their independence, the Special Committee may seek professional advice from BBD Initiative's Advisors; and furthermore, reasonable expenses pertaining to the professional advice from the Special
Committee's Advisors shall be borne by BBD Initiative);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Authority to acquire information necessary for the consideration and determination concerning the Merger from
BBD Initiative's officers and employees, and other persons whom the Special Committee deems necessary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Authority to be substantially involved in the process of negotiations concerning the transaction terms
pertaining to the Merger by conducting advance confirmation of the negotiation policy concerning the transaction terms pertaining to the Merger, receiving timely reports on the status thereof, stating opinions at important stages, and issuing
instructions or requests, etc., as well as the authority to directly conduct negotiations on its own, as necessary; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Authority concerning other matters that the Special Committee deems necessary in examining and determining the
Merger.

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At the first meeting of the Special Committee held on October 2, 2025, the Special Committee confirmed that there was no issue with the independence and qualification of Akasaka International Accounting, which is a third-party appraiser, AGS FAS, which is a financial advisor, and Anderson Mori & Tomotsune, which is a legal advisor, each appointed by BBD Initiative, and approved their appointment.

The Special Committee held a total of ten (10) meetings during the period from October 2, 2025 through January 26, 2026 (i.e., the date of submission of the written response). In addition to such meetings, the Special Committee exchanged opinions among its members and with the third-party appraisers and Advisors, conducted information gathering such as collecting information concerning the contents of the discussions and negotiations pertaining to the Merger between the Companies, and gave consideration to the Matters for Consultation. The Special Committee received advice, as necessary, concerning the role of the Special Committee, the matters to be considered at the Special Committee meetings, and the operation of the Special Committee from Anderson Mori & Tomotsune, which is BBD Initiative's legal advisor, received explanations of the results of the legal due diligence on Headwaters conducted by Anderson Mori & Tomotsune, received explanations regarding the financial and tax due diligence on Headwaters conducted by Akasaka International Accounting, which is a third-party appraiser, and also received advice from AGS FAS, as BBD Initiative's financial advisor, concerning the promotion of the Merger transaction from a financial perspective, and proceeded with its considerations on the Matters for Consultation while taking all of these circumstances into account.

In addition, upon such consideration, the Special Committee received explanations from BBD Initiative concerning BBD Initiative's business contents, business environment, and major management issues, the advantages and disadvantages expected for BBD Initiative's business as a result of the Business Integration, and the contents and procedures to formulate BBD Initiative's business plan that serves as the premise of the Merger Ratio, and held Q&A sessions. The Special Committee also received explanations from Headwaters concerning, among other matters, Headwaters' business contents, business environment, the process of consideration that led Headwaters to propose the Business Integration, the measures expected to be implemented after the Business Integration, the synergies and other impacts expected from the Business Integration, the policy for the management structure after the Business Integration, and the contents and procedures to formulate Headwaters' business plan that serves as the premise of the Merger Ratio, and held Q&A sessions.

The Special Committee also received explanations concerning the methods and results of the valuation of the Merger Ratio in the Merger from Akasaka International Accounting, which is BBD Initiative's third-party appraiser, held Q&A sessions, and gave consideration to the reasonableness thereof.

In addition, the Special Committee received reports in a timely manner concerning the background and contents of the discussions and negotiations pertaining to the Merger between BBD Initiative and Headwaters, and thereafter substantially involved itself in the negotiation process with Headwaters by engaging in multiple rounds of consultations on the policy for negotiations, expressing its opinions to BBD Initiative, and the like.

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Following the foregoing process, the Special Committee engaged in multiple rounds of careful discussions and considerations concerning the Matters for Consultation, and, as a result, the Special Committee submitted a written response to BBD Initiative's board of directors dated January 26, 2026, which states that: (i) the purpose of the Merger is found to be reasonable because, among other things, the Merger is expected to generate synergies such as: (a) creation of new value through the integration of technologies and products; (b) business expansion through the integration of human resources; and (c) strengthening of the financial base, it would be difficult to realize these synergies to the same extent through the existing capital and business alliance, and it is not recognized that any adverse effects would result from the Merger that would clearly outweigh these synergies; (ii) the fairness and appropriateness of the transaction terms pertaining to the Merger, including the Merger Ratio, have been ensured, because the selection of the scheme is found to be reasonable given that, among other things, the Merger Ratio is at the upper end of the valuation range under the average market price method, and it also falls within the valuation ranges under the comparable listed company method and the DCF method, and the above synergies cannot be maximized under schemes such as a tender offer or a share exchange; (iii) appropriate measures to ensure fairness have been implemented in the Merger, including the establishment of the Special Committee at BBD Initiative, the obtaining of valuation reports on the Merger Ratio from a third-party appraiser, and the obtaining of advice from the financial advisor and the legal advisor, and it can be evaluated that a situation comparable to an arm's-length transaction has been secured in the process of forming the transaction terms, and the fairness of the negotiation process and the procedures leading to decision-making pertaining to the Merger have been ensured; and (iv) based on (i) through (iii) above, after careful consideration, the decision and implementation of the Merger are found to be fair to BBD Initiative's general shareholders. In such written response, BBD Initiative's Special Committee expressed its opinion that, although it is anticipated that a certain number of BBD Initiative's shareholders would become shareholders of Shares Less Than One Unit after the Merger given the Merger Ratio scheduled to be applied in the Merger, if we take the following factors into comprehensive account, the Merger Ratio cannot be deemed unfair immediately due to such restrictions arising: (i) the Merger Ratio itself can be evaluated as reasonable in light of the valuation results for the Merger Ratio determined by Akasaka International Accounting, as BBD Initiative's third-party appraiser; (ii) such shareholders may demand that Headwaters purchase their Shares Less Than One Unit in accordance with the provisions of the Companies Act, thereby making it possible to ensure liquidity; (iii) such shareholders may enjoy economic benefits due to the enhancement of corporate value through the Merger, such as through dividends of surplus; and (iv) the fairness of the negotiation process and the procedures leading to decision-making pertaining to the Merger are recognized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Approval by all directors of Headwaters, excluding directors having interests in the Merger

At the board of directors meeting of Headwaters held on January 26, 2026, upon deliberation by six (6) directors and three (3) directors who are audit and supervisory committee members (three (3) of whom are outside directors), none of whom has any interest in the Merger, the execution of the Merger Agreement was approved and adopted unanimously thereby.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Approval by all directors of BBD Initiative, excluding directors with conflicts of interest

At the board of directors meeting of BBD Initiative held on January 26, 2026, upon deliberation by three (3) directors and three (3) directors who are audit and supervisory committee members (three (3) of whom are outside directors), none of whom has any interest in the Merger, the execution of the Merger Agreement was approved and adopted unanimously thereby.

**(5)** **Trade Name, Location of Head Office, Name of Representative, Amount of Stated Capital, Amount of Net Assets, Amount of Total Assets and Business Contents of the Surviving Company after the Merger** 

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| | | |
|:---|:---|:---|
| (1) | Trade Name | Headwaters Co., Ltd. |
| (2) | Location of Head Office | 6-5-1, Nishi-Shinjuku, Shinjuku-ku, Tokyo |
| (3) | Name of Representative | Yosuke Shinoda, Representative Director |
| (4) | Amount of Stated Capital | Not yet determined as of the date hereof. |
| (5) | Amount of Net Assets | Not yet determined as of the date hereof. |
| (6) | Amount of Total Assets | Not yet determined as of the date hereof. |
| (7) | Business Contents | AI solutions business, digital transformation business, BPO business |

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- End -

## Ex-99.C

**Exhibit C** 

January 26, 2026

To Whom It May Concern:

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| |
|:---|
| Company Name: Headwaters Co., Ltd. |
| Name and Title of Representative: Yosuke Shinoda, Representative Director |
| (Code: 4011; TSE Growth Market) |
| Contact: Kazutaka Harashima, Executive Officer, Administrative Management Department Manager |
| (TEL: +81-3-6258-0525) |

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**Notice Concerning Change in Subsidiary Companies as a Result of** 

**Merger with BBD Initiative Inc.** 

This exchange offer or business combination is made for the securities of a Japanese company. The offer is subject to disclosure requirements of Japan that are different from those of the United States. Financial statements included in the document, if any, have been prepared in accordance with Japanese 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 U.S. federal securities laws, since the issuer is located in Japan, and some or all of its officers and directors may be residents of Japan. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of 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 exchange offer, such as in open market or privately negotiated purchases.

As announced in the "Notice Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc." dated January 26, 2026 , Headwaters Co., Ltd. ("**Headwaters**") resolved to execute a merger agreement (the "**Merger Agreement**") pertaining to an absorption-type merger in which Headwaters will be the surviving company and BBD Initiative Inc. ("**BBD Initiative**") will be the disappearing company (the "**Merger**"), and entered into the Merger Agreement today. As a result of the Merger, a change in subsidiary companies is expected to occur at Headwaters, and accordingly, Headwaters hereby announces as follows:

**1.** **Reason for and Method of the Change** 

As announced in the "Notice Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc." dated January 26, 2026, Headwaters and BBD Initiative, in order to integrate the management of both companies under the principle of equality between the two companies, each resolved, at its respective board of directors meeting today, to execute the Merger Agreement with an effective date of May 1, 2026 (scheduled), and executed the Merger Agreement.

The Merger is subject to approval by special resolutions at Headwaters' annual shareholders meeting scheduled to be held on March 27, 2026, and BBD Initiative's extraordinary shareholders meeting scheduled to be held on the same day. If the Merger is approved at the respective shareholders meetings, BlueTec Inc., ArchitectCore Inc., Net Business Support Ltd., BoostMarketing Inc., and RocketStarter Inc. are expected to become subsidiary companies of Headwaters as of the effective date of the Merger, i.e., May 1, 2026 (scheduled), as a result of the Merger.

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**2.** **Outline of Subsidiary Companies Subject to Change** 

(i) BlueTec Inc.

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| | | |
|:---|:---|:---|
| (1) Company Name | BlueTec Inc. | BlueTec Inc. |
| (2) Location | 3-18-19 Toranomon, Minato-ku, Tokyo | 3-18-19 Toranomon, Minato-ku, Tokyo |
| (3) Name and Title of Representative | Koki Iioka, Representative Director | Koki Iioka, Representative Director |
| (4) Business Contents | DX Business | DX Business |
| (5) Stated Capital | 100,000,000 yen | 100,000,000 yen |
| (6) Date of Establishment | October 23, 2006 | October 23, 2006 |
| (7) Major Shareholder and Shareholding Ratio | BBD Initiative: 100% | BBD Initiative: 100% |
| (8) Relationship Between the Listed Company and the Company | Capital Relationship | Not applicable |
|  | Personnel Relationship | Not applicable |
|  | Business Relationship | Not applicable |
| (9) Operating Results and Financial Position for the Last Three Years |  |  |

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| | | | |
|:---|:---|:---|:---|
| Fiscal Year-End | Fiscal Year Ending<br>September 2023 | Fiscal Year Ending<br>September 2024 | Fiscal Year Ending<br>September 2025 |
|  Net Assets (thousand yen) | 159835 | 318462 | 542522 |
|  Total Assets (thousand yen) | 2178815 | 2226186 | 1878842 |
|  Net Assets Per Share (yen) | 30.70 | 61.16 | 103.51 |
|  Net Sales (thousand yen) | 1494724 | 1804215 | 1735043 |
|  Operating Profit (thousand yen) | 6136 | 250165 | 195831 |
|  Ordinary Profit (thousand yen) | 25490 | 236943 | 181428 |
|  Net Profit Attributable to Owners of Parent (thousand yen) | 153726 | 158629 | 117939 |
|  Net Income Per Share (yen) | 29.65 | 30.46 | 22.54 |
|  Dividend Per Share (yen) |  |  | 1.52 |

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(ii) ArchitectCore Inc.

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| | | |
|:---|:---|:---|
| (1) Company Name | ArchitectCore Inc. | ArchitectCore Inc. |
| (2) Location | 3-18-19 Toranomon, Minato-ku, Tokyo | 3-18-19 Toranomon, Minato-ku, Tokyo |
| (3) Name and Title of Representative | Tetsuo Nakagawa, Representative Director | Tetsuo Nakagawa, Representative Director |
| (4) Business Contents | BPO Business | BPO Business |
| (5) Stated Capital | 10,000,000 yen | 10,000,000 yen |
| (6) Date of Establishment | August 1, 1989 | August 1, 1989 |
| (7) Major Shareholder and Shareholding Ratio | BBD Initiative: 100% | BBD Initiative: 100% |
| (8) Relationship Between the Listed Company and the Company | Capital Relationship | Not applicable |
|  | Personnel Relationship | Not applicable |
|  | Business Relationship | Not applicable |

---

------

(9) Operating Results and Financial Position for the Last Three Years

---

| | | | |
|:---|:---|:---|:---|
| Fiscal Year-End | Fiscal Year Ending<br>September 2023 | Fiscal Year Ending<br>September 2024 | Fiscal Year Ending<br>September 2025 |
|  Net Assets (thousand yen) | 410047 | 426865 | 532662 |
|  Total Assets (thousand yen) | 675018 | 932814 | 875521 |
|  Net Assets Per Share (yen) | 6834132.56 | 7114424.66 | 8877701.86 |
|  Net Sales (thousand yen) | 1684388 | 1878017 | 2169069 |
|  Operating Profit (thousand yen) | 32957 | 25438 | 64226 |
|  Ordinary Profit (thousand yen) | 38062 | 26315 | 64538 |
|  Net Profit Attributable to Owners of Parent (thousand yen) | (159246) | 16817 | 105796 |
|  Net Income Per Share (yen) | (2654114.23) | 280292.10 | 1763277.20 |
|  Dividend Per Share (yen) |  |  |  |

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(iii) Net Business Support Ltd.

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| | | |
|:---|:---|:---|
| (1) Company Name | Net Business Support Ltd. | Net Business Support Ltd. |
| (2) Location | 3-18-19 Toranomon, Minato-ku, Tokyo | 3-18-19 Toranomon, Minato-ku, Tokyo |
| (3) Name and Title of Representative | Masao Ikegami, Representative Director | Masao Ikegami, Representative Director |
| (4) Business Contents | DX Business | DX Business |
| (5) Stated Capital | 3,000,000 yen | 3,000,000 yen |
| (6) Date of Establishment | February 26, 2014 | February 26, 2014 |
| (7) Major Shareholder and Shareholding Ratio | BBD Initiative: 100% | BBD Initiative: 100% |
| (8) Relationship Between the Listed Company and the Company | Capital Relationship | Not applicable |
|  | Personnel Relationship | Not applicable |
|  | Business Relationship | Not applicable |
| (9) Operating Results and Financial Position for the Last Three Years |  |  |

---

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| | | | |
|:---|:---|:---|:---|
| Fiscal Year-End | Fiscal Year Ending<br>September 2023 | Fiscal Year Ending<br>September 2024 | Fiscal Year Ending<br>September 2025 |
|  Net Assets (thousand yen) | 68183 | 90487 | 115612 |
|  Total Assets (thousand yen) | 105329 | 132799 | 168498 |
|  Net Assets Per Share (yen) | 227277.51 | 301623.78 | 385375.75 |
|  Net Sales (thousand yen) | 198049 | 233414 | 274347 |
|  Operating Profit (thousand yen) | 20959 | 31414 | 49056 |
|  Ordinary Profit (thousand yen) | 20969 | 32447 | 49508 |
|  Net Profit Attributable to Owners of Parent (thousand yen) | 14540 | 22303 | 33125 |
|  Net Income Per Share (yen) | 48468.37 | 74346.27 | 110418.63 |
|  Dividend Per Share (yen) |  |  | 26666.66 |

---

------

(iv) BoostMarketing Inc.

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| | | |
|:---|:---|:---|
| (1) Company Name | BoostMarketing Inc. | BoostMarketing Inc. |
| (2) Location | 2-5-1 Atago, Minato-ku, Tokyo | 2-5-1 Atago, Minato-ku, Tokyo |
| (3) Name and Title of Representative | Norihiro Fujita, Representative Director | Norihiro Fujita, Representative Director |
| (4) Business Contents | DX Business | DX Business |
| (5) Stated Capital | 59,000,000 yen | 59,000,000 yen |
| (6) Date of Establishment | October 24, 2022 | October 24, 2022 |
| (7) Major Shareholder and Shareholding Ratio | BBD Initiative: 100% | BBD Initiative: 100% |
| (8) Relationship Between the Listed Company and the Company | Capital Relationship | Not applicable. |
|  | Personnel Relationship | Not applicable. |
|  | Business Relationship | Not applicable. |
| (9) Operating Results and Financial Position for the Last Three Years |  |  |

---

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| | | | |
|:---|:---|:---|:---|
| Fiscal Year-End | Fiscal Year Ending<br>September 2023 | Fiscal Year Ending<br>September 2024 | Fiscal Year Ending<br>September 2025 |
|  Net Assets (thousand yen) | 77833 | 59160 | 23032 |
|  Total Assets (thousand yen) | 129649 | 82186 | 39130 |
|  Net Assets Per Share (yen) | 7140.67 | 5427.56 | 2113.06 |
|  Net Sales (thousand yen) | 71860 | 99483 | 101797 |
|  Operating Profit (thousand yen) | (30801) | (17904) | (14656) |
|  Ordinary Profit (thousand yen) | (30900) | (18382) | (14559) |
|  Net Profit Attributable to Owners of Parent (thousand yen) | (31166) | (18672) | (36128) |
|  Net Income Per Share (yen) | (2859.32) | (1713.11) | (3314.49) |
|  Dividend Per Share (yen) |  |  |  |

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(v) RocketStarter Inc.

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| | | |
|:---|:---|:---|
| (1) Company Name | RocketStarter Inc. | RocketStarter Inc. |
| (2) Location | 3-18-19 Toranomon, Minato-ku, Tokyo | 3-18-19 Toranomon, Minato-ku, Tokyo |
| (3) Name and Title of Representative | Takashi Yanagisawa, Representative Director | Takashi Yanagisawa, Representative Director |
| (4) Business Contents | DX Business | DX Business |
| (5) Stated Capital | 10,000,000 yen | 10,000,000 yen |
| (6) Date of Establishment | January 24, 2020 | January 24, 2020 |
| (7) Major Shareholder and Shareholding Ratio | BBD Initiative: 100% | BBD Initiative: 100% |
| (8) Relationship Between the Listed Company and the Company | Capital Relationship | Not applicable |
|  | Personnel Relationship | Not applicable |
|  | Business Relationship | Not applicable |
| (9) Operating Results and Financial Position for the Last Three Years |  |  |

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| | | | |
|:---|:---|:---|:---|
| Fiscal Year-End | Fiscal Year Ending<br>December 2023 \* | Fiscal Year Ending<br>September 2024 | Fiscal Year Ending<br>September 2025 |
|  Net Assets (thousand yen) | 32327 | 37758 | 55464 |
|  Total Assets (thousand yen) | 53012 | 64901 | 107181 |
|  Net Assets Per Share (yen) | 323271.78 | 377585.03 | 55464.99 |
|  Net Sales (thousand yen) | 150052 | 105122 | 216566 |
|  Operating Profit (thousand yen) | 29982 | 6518 | 15423 |
|  Ordinary Profit (thousand yen) | 31816 | 6316 | 15543 |
|  Net Profit Attributable to Owners of Parent (thousand yen) | 21616 | 5431 | 9868 |
|  Net Income Per Share (yen) | 216167.16 | 54313.25 | 9868.75 |
|  Dividend Per Share (yen) |  |  | 8000.00 |

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(Note) RocketStarter Inc. changed its fiscal year-end from December to September in February 2024. The operating results and financial position above are for the period from January 2023 through December 2023, prior to the change of its fiscal year-end.

**3.** **Schedule of the Change** 

Please refer to "1. Reason for and Method of the Change" above and "(1) Schedule of the Business Integration" under "2. Outline of the Business Integration" in the "Notice Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc." dated January 26, 2026.

**4.** **Future Outlook** 

Please refer to "7. Future Outlook" in the "Notice Concerning Execution of Merger Agreement Between Headwaters Co., Ltd. and BBD Initiative Inc." dated January 26, 2026.

- End -

## Ex-99.D

**Exhibit D** 

**[Cover Page]** 

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| | |
|:---|:---|
| [Document Filed] | Extraordinary Report |
| [Filed With] | Director-General of the Kanto Local Finance Bureau |
| [Filing Date] | January 27, 2026 |
| [Company Name] | Kabushiki Kaisha Headwaters |
| [English Name] | Headwaters Co., Ltd. |
| [Title and Name of Representative] | Yosuke Shinoda, Representative Director |
| [Location of Head Office] | 6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo |
| [Telephone Number] | +81-3-6258-0525 |
| [Name of Administrative Contact Person] | Kazutaka Harashima, Executive Officer, Administrative Management Department Manager |
| [Closest Contact Location] | 6-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo |
| [Telephone Number] | +81-3-6258-0525 |
| [Name of Administrative Contact Person] | Kazutaka Harashima, Executive Officer, Administrative Management Department Manager |
| [Place Where Document is Made Available for Public Inspection] | Tokyo Stock Exchange, Inc. |

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This exchange offer or business combination is made for the securities of a Japanese company. The offer is subject to disclosure requirements of Japan that are different from those of the United States. Financial statements included in the document, if any, have been prepared in accordance with Japanese 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 U.S. federal securities laws, since the issuer is located in Japan, and some or all of its officers and directors may be residents of Japan. You may not be able to sue a Japanese company or its officers or directors in a Japanese court for violations of 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 exchange offer, such as in open market or privately negotiated purchases.

**I** **Reason for Filing** 

Headwaters Co., Ltd. ("**Headwaters**") resolved, at its board of directors meeting held, to integrate its management with BBD Initiative Inc. ("**BBD Initiative**") based on the spirit of equality between the two companies, with an effective date designated on May 1, 2026 (scheduled) (the "**Business Integration**"), and entered into a merger agreement (the "**Merger Agreement**") pertaining to an absorption-type merger in which Headwaters will be the surviving company and BBD Initiative will be the disappearing company (the "**Merger**"). As changes to specified subsidiary companies of Headwaters are expected to arise as a result of the Merger, Headwaters hereby files this Extraordinary Report pursuant to Article 24-5, Paragraph (4) of the Financial Instruments and Exchange Act and Article 19, Paragraph (2), Item (vii)-3 of the Cabinet Office Order on Disclosure of Corporate Affairs.

**II** **Contents of Report** 

1. Company Names, Addresses, Names of Representatives, Amounts of Stated Capital or Contributions, and Business
Contents of the Specified Subsidiary Companies Subject to Change

(i) BlueTec Inc.

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| | |
|:---|:---|
| Company Name | BlueTec Inc. |
| Address | 3-18-19 Toranomon, Minato-ku, Tokyo |
| Name of Representative | Koki Iioka, Representative Director |
| Stated Capital | 100,000,000 yen |
| Business Contents | DX Business |

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(ii) ArchitectCore Inc.

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| | |
|:---|:---|
| Company Name | ArchitectCore Inc. |
| Address | 3-18-19 Toranomon, Minato-ku, Tokyo |
| Name of Representative | Tetsuo Nakagawa, Representative Director |
| Stated Capital | 10,000,000 yen |
| Business Contents | BPO Business |

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(iii) BoostMarketing Inc.

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| | |
|:---|:---|
| Company Name | BoostMarketing Inc. |
| Address | 2-5-1 Atago, Minato-ku, Tokyo |
| Name of Representative | Norihiro Fujita, Representative Director |
| Stated Capital | 59,000,000 yen |
| Business Contents | DX Business |

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2. Numbers of Voting Rights in the Specified Subsidiary Companies Held by Headwaters, and Ratios of Voting Rights
in the Specified Subsidiary Companies Held by Headwaters to Those Held by All Shareholders, etc. of the Specified Subsidiary Companies, Before and After Change

(i) BlueTec Inc.

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| | | |
|:---|:---|:---|
|  | Number of Voting Rights in the<br>Specified Subsidiary Company<br>Held by Headwaters | Ratio of Voting Rights in the<br>Specified Subsidiary Company<br>Held by Headwaters to Those Held<br>by All Shareholders, etc. of the<br>Specified Subsidiary Company |
|  Before the Change |  |  |
|  After the Change | 5241221 | 100% |

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(ii) ArchitectCore Inc.

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| | | |
|:---|:---|:---|
|  | Number of Voting Rights in the<br>Specified Subsidiary Company<br>Held by Headwaters | Ratio of Voting Rights in the<br>Specified Subsidiary Company<br>Held by Headwaters to Those Held<br>by All Shareholders, etc. of the<br>Specified Subsidiary Company |
|  Before the Change |  |  |
|  After the Change | 60 | 100% |

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(iii) BoostMarketing Inc.

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| | | |
|:---|:---|:---|
|  | Number of Voting Rights in the<br>Specified Subsidiary Company<br>Held by Headwaters | Ratio of Voting Rights in the<br>Specified Subsidiary Company<br>Held by Headwaters to Those Held<br>by All Shareholders, etc. of the<br>Specified Subsidiary Company |
|  Before the Change |  |  |
|  After the Change | 10900 | 100% |

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3. Reason for and Date of Change

(1) Reason for Change

Headwaters resolved, at its board of directors meeting held, to implement the Merger. If the Merger takes effect (i) the amounts of the net assets of BlueTec Inc. and ArchitectCore Inc. will be equivalent to 30% or more of the amount of the net assets of Headwaters, and (ii) the amount of the stated capital of BoostMarketing Inc. will be equivalent to 10% or more of the amount of the stated capital of Headwaters, both as of the last day of the most recent business year of Headwaters, whereby each of such companies will fall under the category of a specified subsidiary company.

(2) Date of Change: May 1, 2026 (scheduled)

- End -