Notice Regarding Material Weaknesses in Internal Control over Financial Reporting and Disclaimer of Opinion on Internal Control Report

Overview of the Matter

The Company identified material weaknesses in internal control over financial reporting and confirmed that enterprise-wide internal controls were not functioning effectively. The third-party committee's investigation revealed widespread accounting irregularities, highlighting operational failures of NIAP and weaknesses in the supervisory functions of the Board of Directors and the Audit and Supervisory Committee. In addition, an external expert investigation into trade transactions by FIR Co. found errors in country-of-origin declarations related to exports to the United States. The Company has presented corrective actions and measures to prevent recurrence for these deficiencies.

Measures to Prevent Recurrence and Future Response

The recurrence prevention measures comprehensively list initiatives including corporate culture transformation, enhanced compliance training, clarification of responsibilities, strengthening business planning and budget vs. actual management, ensuring independence of accounting functions, reinforcing the internal audit framework, clarifying accounting policies and ensuring proper application, enhancing the effectiveness of the Board of Directors and the Audit and Supervisory Committee, establishing systems for sharing critical risk information, and recurrence prevention measures related to FIR Co. Progress includes establishing a Culture Transformation Lab, conducting internal training, expanding support for outside directors, reviewing and thoroughly communicating NIAP, and introducing compliance declarations.