Adastria : Notice Concerning Share Exchange Agreement (Simplified Share Exchange) Concerning Making zetton, Inc. a Wholly Owned Subsidiary of Adastria Co., Ltd.

March 21, 2024

(Translation)

To Whom It May Concern,

Company name	Adastria Co., Ltd.
Representative	Osamu Kimura, Representative Director and President
	(Securities code: 2685 TSE Prime Market)
Inquiries	Itsuo Iwakoshi, Senior Executive Officer, General Manager of
	Administration Division
	(TEL: [phone])
Company name	zetton, Inc.
Representative	Shinsuke Suzuki, Representative Director and President
	(Securities code: 3057 NSE Next Market)
Inquiries	Mitsuru Mori, General Manager, Finance and Accounting Department
	(TEL: [phone])

Notice Concerning Share Exchange Agreement (Simplified Share Exchange) Concerning

Making zetton, Inc. a Wholly Owned Subsidiary of Adastria Co., Ltd.

At meetings held today, the board of directors of Adastria Co., Ltd. and zetton, Inc. (collectively, the "Companies") resolved to conduct a share exchange ("Share Exchange") through which Adastria will become the wholly owning parent company and zetton will become the wholly owned subsidiary. Further, the Companies concluded a share exchange agreement (the "Agreement") today.

The effective date of the Share Exchange is scheduled to be June 1, 2024, subject to the approval of the Agreement by a resolution of the zetton Ordinary General Meeting of Shareholders to be held on April 25, 2024. The Share Exchange will be conducted without obtaining approval of the Agreement at a meeting of the general shareholders of Adastria in accordance with the simplified share exchange procedure pursuant to Article 796-2 of the Companies Act. Shares of zetton will be delisted from the Next Market operated by the Nagoya Stock Exchange Inc. ("Nagoya Stock Exchange") prior to the effective date of the Share Exchange (scheduled for June 1, 2024, "Effective Date"). Shares are scheduled to be delisted on May 30, 2024 (last trading date to be May 29, 2024).

1. Objective of Share Exchange

Adastria consists of Adastria, 17 consolidated subsidiaries, and 1 equity method affiliate (collectively, the "Adastria Group"). Under the mission of Play fashion!, the Adastria Group endeavors to enrich minds and lifestyles through fashion. Adastria operates numerous brands, including casual fashion brands such as GLOBAL WORK, LOWRYS FARM, LEPSIM, JEANASIS, and RAGEBLUE; lifestyle brands such as nico and ... , studio CLIP, and BAYFLOW; e- commerce brands such as apres jour, and brands for sophisticated adults such as Chaos and Curensology.

Meanwhile, zetton consists of zetton and 1 consolidated subsidiary. Under the management philosophy of stores are the essence of both the individual and the community,the company operates businesses including domestic commercial town revitalization, overseas commercial town revitalization and park revitalization businesses. As one of its medium- to long-

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term management strategies, zetton aims to maximize its brand power to establish new business models. At the same time, zetton aims to achieve sustainable societies and increase its corporate value permanently by focusing on refining existing businesses to develop urban areas, based on sustainable strategies.

The three basic necessities of life include food, clothing, and shelter. Given that food is just as important as clothing in the lives of consumers, Adastria considers its food and beverage business an important factor in providing diverse lifestyles to customers in all aspects of their lives beyond the framework of apparel. To expand its food and beverage business, Adastria explored growth through alliances with other companies and M&A, rather than growth as an extension of the current business using existing management resources. Directors from Adastria and zetton have interacted through management discussions and other events since late October 2017, when Adastria launched its food and beverage business. As Adastria aims to introduce lifestyle brands, the company highly evaluated the zetton brand, products, services, and other content as having high-quality space design that pays special attention to interior detail. Based on this evaluation, Adastria determined zetton possessed the ability to appeal to its target consumers, who are conscious of high fashion and care about daily clothing. Adastria also determined that zetton creates a stylish atmosphere through meticulous interior design that is highly compatible with the Adastria brand. Meanwhile, zetton strives to engage in sustainable strategies to develop parks and redevelop public facilities, based on the Park-PFI system*. To engage in these projects, zetton recognized the need to leverage its expertise cultivated in the food and beverage industry while collaborating with other industries to cross over the bounds of the food and beverage industry.

• The Park-PFI system was established by the 2017 Urban Parks Act revision. The system is designed to select, through public solicitation, a party that will 1) establish park facilities subject to public application that improve the convenience of park users, such as restaurants, stores, etc., and 2) utilize revenue generated from such facilities to maintain and renovate specified park facilities for the use of general park users, such as parkways and plazas in the vicinity of said park facilities.

Zetton also recognizes the need for external alliances, including those with other companies in other industries, to achieve further business growth and increase corporate value, even in post-COVID-19 times. From early January 2021, zetton took initiative and began exploring various options, including capital alliances with other companies. On December 14, 2021, the Companies entered into a capital and business alliance agreement (the "Capital and Business Alliance Agreement"), and through third-party allotment and tender offer conducted between December 2021 and February 2022, Adastria acquired 3,289,400 shares of common stock from zetton (51.00% of the total number of voting rights in 6,449,766 shares issued and outstanding (excluding treasury shares) as of January 31, 2024), making zetton a consolidated subsidiary.

Based on the Capital and Business Alliance Agreement between the Companies, the Companies explored measures including ① mutual product, brand, and business development in overseas regions in which the Companies have strengths, ② mutual product, brand, and business development in the respective existing brand businesses of the Companies, ③ expansion of zetton products on the Adastria Group e-commerce platform, ④ the use of Adastria Group-owned media to promote zetton activities, ⑤ planning and manufacturing of zetton branded goods within the Adastria Group, ⑥ leveraging connections with commercial facilities that the Adastria Group established to date to develop joint stores and overseas areas in which zetton has yet to enter (i.e., China and other Asian countries) and exchange expertise regarding human resources exchange and operational efficiency in the administrative division (measures ① through ⑥ collectively referred to as the "Alliance Measures").

Zetton saw business opportunities for growth after the end of the global turmoil caused by COVID-19. These opportunities include (i) an increase in the number of properties introduced that were either not vacant before COVID-19 or that are unoccupied stores with completed interior design due to rent and other favorable conditions, (ii) an increase in money spent on a single meal following the customer reassessment of the value of eating out after COVID-19, and (iii) the emergence of M&A projects attracting inquiries not only from Japan but and from countries around the world, as well as collaborative projects within the Park-PFI system.

Zetton belongs to the food service industry, which continues to face rapid price hikes, chronic labor shortages, delayed IT utilization, and other challenges. These challenges present zetton with the urgent need to implement countermeasures. Financial institutions remain cautious in lending to the food service industry, making it difficult for zetton to secure

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flexible and sufficient funds to invest in business opportunities.

In light of these circumstances, Adastria concluded that active and urgent engagement in the Alliance Measures and above-mentioned business opportunities that contribute to the growth of zetton will contribute to the long-term enhancement of the corporate value of the Companies. However, these measures may harm the interests of the minority shareholders of zetton in the short term, due to lower business performance and management indicators as a result of increased capital investment and expenses. Zetton also faced difficulties making proactive and quick management decisions as a listed company managed independently from its parent company, Adastria, as transactions with Adastria required careful consideration to avoid conflicts of interest.

Adastria therefore concluded that making zetton its wholly owned subsidiary would solve these issues and enhance the corporate value of the Companies over the medium to long term. Adastria launched concrete discussions regarding the Share Exchange between Adastria and zetton in late November 2023. In response to the discussions with Adastria, the parent company and controlling shareholder of zetton, zetton explored specific details of an independent review system necessary to review the Share Exchange and ensure the fairness of the Share Exchange, as described below in 5. Measures to ensure fairness (Measures to avoid conflicts of interest). Upon establishing an appropriate review system, zetton launched a concrete review of the Share Exchange. To begin the concrete review, zetton established the Enlarged Special Committee consisting of independent members who have no interest in the controlling shareholder Adastria (the "Enlarged Special Committee," for more details refer to 5. Measures to ensure fairness (Measures to avoid conflicts of interest), below on December 14, 2023. The Enlarged Special Committee ensures the fairness, transparency, and objectivity of the decision-making process at the zetton board of directors in response to the proposal from Adastria and eliminates arbitrary decision-making. Zetton also established a system to engage outside experts, etc., in the concrete review.

Subsequently, Adastria submitted a letter of intent to zetton proposing to make zetton its wholly owned subsidiary through a share exchange on December 27, 2023.

After careful consideration of the proposal from Adastria under the above system, zetton concluded that becoming a wholly owned subsidiary of Adastria will enable zetton to work more closely with Adastria and provide zetton with opportunities to expand its business while accelerating further the implementation of policies under the Capital and Business Alliance Agreement. Utilizing the product development, marketing expertise, human resources, financial strength, domestic and overseas networks, and other management resources of the Adastria Group, the Share Exchange will enable the Companies Groups to achieve their management strategies from a medium- to long-term perspective in a flexible and timely manner, and enhance the corporate value of zetton. The Companies expect the following policies and synergies based on said policies to surface after entering the Share Exchange.

1. Strengthened organization, enhanced recruiting capabilities, expanded human resources, and further execution of digital transformation
   Zetton must strengthen head office functions to support its sales force and expand business further in its current favorable environment. Currently, zetton faces challenges in strengthening recruitment capabilities, and enhancing human resources and digital transformation in business management, store development, back-office operations. As a wholly owned subsidiary of Adastria, zetton can take advantage of the expertise, network, and brand power of the Adastria Group in recruitment. Human resource expansion and digital transformation at zetton will also benefit from personnel dispatch from the Adastria Group for business management, marketing, finance and accounting, etc., as well as from shared system infrastructure on digital expertise, etc.

Future overseas expansion and M&A outside of Hawaii will require zetton to conduct due diligence and post- merger integrations adapted to the customs, laws, and regulations of each country. Sharing the human resources and expertise of the Adastria Group, which has offices in the U.S. and Asian countries and a wealth of M&A experience, will enable highly-precise overseas expansions.

(ii) Improved flexibility and conditions of financing methods

Financial institutions remain cautious in lending to the food service industry, even in post-COVID-19 times. This

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caution prevented zetton from borrowing from financial institutions in a sufficient and timely manner. As a listed company with minority shareholders, zetton was required to make careful considerations to avoid conflicts of interest with respect to group financing from its parent company Adastria.

As a wholly owned subsidiary of Adastria, zetton can take advantage of more flexible and favorable terms in group financing from Adastria compared to in borrowings from financial institutions.

1. Improved added-value for new stores and improved bidding power in the Park-PFI system due to the increased flexibility of financing in (ii).
   Zetton requires substantial funds to acquire properties and invest in interior design for new stores, as well as to invest in bidding and execute projects under the Park-PFI systems. Procuring funds from conventional financial institutions and external sources presented issues in terms of flexibility and other factors, forcing zetton to use funds from business cash flow. As a wholly owned subsidiary of Adastria, and if flexibility in financing methods improves as described in (ii) above, zetton will gain the ability to acquire properties, increase the value of stores, participate in bid under the Park-PFI system, and expand business on a level previously not possible.
2. More proactive and flexible policies and under the Capital and Business Alliance Agreement

As independent listed companies, executing the Alliance Measures under the Capital and Business Alliance Agreement proved difficult for the Companies to make urgent decisions due to conflicts of interest, etc. Currently, zetton holds little flexibility with minority shareholders and the need to make careful judgments. However, as a wholly owned subsidiary of Adastria, zetton expects to see dramatic improvements in the flexibility of idea generation, discussion, and decision-making processes of the Alliance Measures through human resources exchanges and shared information and expertise between the Companies.

To make zetton a wholly owned subsidiary, the Companies will deliver common shares of Adastria ("Adastria Shares") to the minority shareholders of zetton as consideration for the Share Exchange. By holding Adastria shares, the Companies will provide the minority shareholders of zetton with opportunities to enjoy the synergies expected to arise through the implementation of various policies expected after the Share Exchange, the business development and earnings expansion of the Adastria Group as a result of said synergies, and the resulting price increase of Adastria shares. Adastria shares are highly liquid and can be cashed in at any time by trading them on the market. For these reasons, the Companies concluded that this Share Exchange method is the most desirable.

The Companies conducted a comprehensive review based on the above four points. As a result, Adastria and zetton both concurred that making zetton a wholly owned subsidiary of Adastria through the Share Exchange will contribute to the improved corporate value of both Adastria and zetton. Upon consideration and discussion of the allotment ratio and other terms and conditions of the Share Exchange, the Companies entered the Agreement. At meetings held today, the board of directors of the Companies resolved to conduct the Share Exchange, with the aim of making zetton a wholly owned subsidiary of Adastria.

2. Share Exchange
(1) Schedule of Share Exchange
Record date of the Ordinary General Meeting of Shareholders to approve the	January 31, 2024
Agreement (zetton)
Board of directors meeting to approve the Agreement (the Companies)	March 21, 2024
Date of execution of the Agreement (the Companies)	March 21, 2024
Date of resolution of the Ordinary General Meeting of Shareholders (zetton)	April 25, 2024 (scheduled)
Last trading date (zetton)	May 29, 2024 (scheduled)
Delisting date (zetton)	May 30, 2024 (scheduled)
Effective date of Share Exchange	June 1, 2024 (scheduled)

(Note 1) Pursuant to Article 796-2 of the Companies Act, Adastria is scheduled to conduct the Share Exchange through a simplified share exchange, which does not require approval at the general meeting of shareholders.

(Note 2) The effective date of the Share Exchange may be changed by agreement of the Companies. Any changes to

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the above schedule will be announced promptly.

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(2) Share Exchange Method

The Share Exchange is to be conducted with Adastria as the wholly owning parent company and zetton as the wholly owned subsidiary. The effective date of the Share Exchange is scheduled for June 1, 2024, after obtaining approval at the zetton Ordinary General Meeting of Shareholders to be held on April 25, 2024, and without obtaining approval at the Adastria general meeting of shareholders, pursuant to the simplified share exchange procedure under Article 796-2 of the Companies Act.

(3) Allotment of shares related to Share Exchange
	Adastria	zetton
	(Wholly owning parent company in Share Exchange)	(Wholly owned subsidiary in Share Exchange)
Share Exchange Ratio	1	0.36
No. of shares to be delivered	Adastria common stock: 1,137,731 shares (scheduled)
in Share Exchange

(Note 1) Allotment ratio for Share Exchange

Adastria will allot 0.36 shares of Adastria stock for each share of zetton stock.

However, no shares will be allotted through the Share Exchange for the 3,289,400 shares of zetton stock (as of January31, 2024) held by Adastria.

The above share exchange ratio ("Share Exchange Ratio") is subject to change upon consultation between the Companies in the event of major changes to the terms and conditions on which the ratio was calculated.

(Note 2) Number of Adastria shares to be delivered in Share Exchange

In the Share Exchange, Adastria plans to allot and deliver to the shareholders of zetton (excluding Adastria) the number of Adastria shares calculated by multiplying the total number of zetton shares held by said shareholders with the Share Exchange Ratio, as of the time immediately preceding the acquisition of all of the issued shares of zetton ("Base Time") by Adastria through the Share Exchange (excluding the zetton shares held by Adastria). Adastria plans to deliver Adastria treasury shares and does not plan to issue new shares after allotment in the Share Exchange. In addition, zetton plans to cancel all of its treasury shares (including treasury shares purchased from dissenting shareholders' share purchase requests exercised in connection with the Share Exchange) by the Base Time by resolution at the board of directors meeting to be held by the day prior to the effective date of the Share Exchange. The number of shares to be allotted and delivered through the Share Exchange may be revised at a later date due to cancellation of treasury shares by zetton or other such reasons.

(Note 3) Treatment of odd-lot shares

Shareholders holding odd-lot shares of Adastria stock as a result of the Share Exchange are entitled to use the following systems concerning Adastria shares. Shareholders may not sell odd-lot shares in the financial instruments exchange market.

• System to purchase additional odd-lot shares (purchase up to one unit (100 shares))

This system enables shareholders holding odd-lot shares of Adastria to purchase from Adastria an additional number of common shares that, together with the number of odd-lot shares held, will add up to one unit (100 shares), Pursuant to Article 194-1 of the Companies Act and Article 8 of the Adastria Articles of Incorporation.

• System to buy back odd-lot (sale of shares constituting less than one unit (100 shares))

This system enables shareholders holding odd-lot shares of Adastria to request Adastria to buy back said odd-lot shares, pursuant to Article 192-1 of the Companies Act.

(Note 4) Treatment of fractions of less than one share

Shareholders allotted fractions of less than one share of Adastria stock resulting from the Share Exchange will, in accordance with Article 234 of the Companies Act and other relevant laws and regulations, sell the number of Adastria shares equivalent to the total number of such fractions (fraction of less than one share in the total shall be rounded down). Shareholders will then receive the proceeds in proportion to the fractional shares.

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1. Treatment of stock acquisition rights and bonds with stock acquisition rights in the Share Exchange Not applicable

3. Basis of allotment of shares related to Share Exchange

(1) Basis and reason for allotment

As described in 1. Objective of Share Exchange, Adastria proposed to zetton in December 2023 to make zetton its wholly owned subsidiary through the Share Exchange. As a result of sincere discussions and negotiations between the Companies, Adastria and zetton concluded that the decision to make zetton a wholly owned subsidiary of Adastria is the best decision to enhance the corporate value of the Companies.

The Companies agreed to separately request third-party appraisers independent from both companies to ensure the fairness and appropriateness of the calculation of the Share Exchange Ratio to be used in the Share Exchange, as described in 2. (3) Allotment of shares related to Share Exchange above. Adastria and zetton appointed Plutus Consulting Co., Ltd. and Mita Securities Co., Ltd., respectively, as third-party calculation agents.

As described in 5. Measures to ensure fairness (Measures to avoid conflicts of interest) below, Adastria conducted careful discussions and deliberations based on the Share Exchange Ratio Calculation Report received on March 19, 2024, from its third-party calculation agent, Plutus Consulting, and advice from its legal advisor Sato&Partners. Based on these results, Adastria determined that it is appropriate to conduct the Share Exchange using the Share Exchange Ratio, as the Share Exchange is appropriate and in the best interest of all Adastria shareholders.

As described in 5. Measures to Ensure Fairness (Measures to Avoid Conflicts of Interest) below, zetton carefully negotiated and discussed the terms and conditions of the Share Exchange, including the Share Exchange Ratio, with Adastria on multiple occasions. zetton also took into consideration the Share Exchange Ratio Calculation Report received on March 19, 2024, from its third-party calculation agent, Mita Securities; advice from its legal advisor Iwaida Partners; and instructions, advice, and the written report dated March 21, 2024, from the Enlarged Special Committee, consisting solely of independent members with no vested interest in Adastria. Based on these results, zetton determined that it is appropriate to conduct the Share Exchange using the Share Exchange Ratio, as the Share Exchange is appropriate and in the best interest of all minority shareholders of zetton.

The Companies held negotiations and discussions based on the respective aforementioned considerations. As a result, the Companies determined that it is appropriate to conduct the Share Exchange using the Share Exchange Ratio, resolving to conduct the Share Exchange, as it is determined to be in the best interest of the respective shareholders. Based on the resolutions passed at the boards of directors meetings of both companies held today, the Companies entered into the Agreement.

The Share Exchange Ratio is subject to change upon consultation between the Companies in the event of major changes to the terms and conditions on which the ratio was calculated.

(2) Overview of calculation

• Calculation agents and relationship with the listed company and counterparty

Plutus Consulting, the third-party calculation agent for Adastria, is not a related party of Adastria or zetton and does not have any vested interest in Adastria or zetton.

Mita Securities, the third-party calculation agent for zetton, is not a related party of zetton or Adastria and does not have any vested interest in zetton or Adastria.

• Calculation summary

To ensure fairness in the calculation of the Share Exchange Ratio to be used in the Share Exchange, Adastria and zetton each appointed a third-party calculation agent. Adastria appointed Plutus Consulting and zetton appointed Mita Securities to calculate the Share Exchange Ratio to be used in the Share Exchange. Each company received a Share Exchange Ratio Calculation Report including the following information.

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Plutus Consulting used the market price method, as the Companies both have market share prices, in addition to the comparable multiple method, as both Adastria and zetton are comparable to similar listed companies, enabling shares to be calculated with the comparable multiple method. Further, Plutus Consulting also used the discounted cash flow method ("DCF method") to reflect the future business activities in its calculation.

The following table indicates the Share Exchange Ratio calculated through each method, assuming a value of 1 per share of Adastria stock.

Valuation methods	Calculated ranges of the Share
	Exchange Ratio
Market price method	0.30-0.37
Comparable multiple method	0.21-0.30
DCF method	0.15-0.39

Plutus Consulting set the base date for the calculation as March 19, 2024, the business day prior to the date of execution of the Agreement. Using the market price method, Plutus Consulting calculated the simple average closing prices of the common stock of Adastria and zetton on the Tokyo Stock Exchange and the Nagoya Stock Exchange on the base date, and during the one-month,three-month, and six-month periods prior to the base date for the calculation.

Using the DCF method, Plutus Consulting calculated the valuation of Adastria by discounting future cash flows to present value at a certain discount rate, based on financial forecasts prepared by Adastria from the fiscal year ending February 2024 to the fiscal year ending February 2026.

For zetton, Plutus Consulting calculated the valuation by discounting future cash flows to present value at a certain discount rate, based on financial forecasts prepared by zetton from the fiscal year ending January 2025 to the fiscal year ending January 2029.

Zetton financial forecasts, on which Plutus Consulting based calculations using the DCF method, include fiscal years in which zetton expects significant increases in profits. Specifically, in the fiscal years ending January 2026, zetton expects consolidated operating income to be 690 million yen, an increase of approximately 130% from the previous year.. This increase is expected due to higher spending per customer, improvements in gross profit margins resulting from higher added value, and lower SG&A expenses from a slower pace in new store openings.

Synergies expected to arise from the Share Exchange are not reflected in the financial forecasts on which DCF method calculations are based, due to difficulties in estimating specific impacts on earnings at this point in time.

Plutus Consulting used materials and information provided by Adastria and zetton in addition to publicly available information to calculate the Share Exchange Ratio. Plutus Consulting assumes, among other things, that all materials and information used in the analysis and review are accurate and complete, and that there are no matters undisclosed to Plutus Consulting that could have a significant impact on the calculation of the Share Exchange Ratio. Plutus Consulting has not conducted independent verification of the accuracy or completeness of such materials, nor determined any obligation to do so. Plutus Consulting has not independently evaluated, appraised, or assessed all assets or liabilities (including, but not limited to, derivatives, off-balance sheet assets and liabilities, and other contingent liabilities) of Adastria and zetton and their affiliates, including analysis and evaluation of individual assets and liabilities. Plutus Consulting has also not requested any third-party evaluation, appraisal, or assessment. Plutus Consulting assumes information on the Adastria and zetton financial forecasts provided was reasonably prepared based on the best currently available forecasts and judgments by the management of Adastria and zetton. With the consent of Adastria, Plutus Consulting has relied on this information without independent verification.

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Calculations made by Plutus Consulting reflect information and economic conditions made available to Plutus Consulting through March 19, 2024. The sole purpose of the Plutus Consulting calculations is to serve as a reference for the Adastria board of directors in its consideration of the Share Exchange Ratio.

Meanwhile, Mita Securities used the market price method to calculate the share prices of the Companies, as the Companies both have market share prices. Further, to reflect the future business activities in its calculation, Mita Securities also used the DCF method, a valuation method that calculates stock value by discounting future expected cash flows based on future earnings to present value at a certain discount rate. Mita Securities didn't adopt the comparable multiple method because the restaurant industry, to which zetton belongs, is in a transitional stage of its business environment in post-COVID-19 times, and zetton and its comparable companies are considered to be undergoing structural reforms according to their respective business circumstances, and it is difficult to appropriately calculate the stock value using the comparable multiple method based on the latest earnings forecast figures of each company.

The following table indicates the Share Exchange Ratio calculated through each method, assuming a value of 1 per share of Adastria stock.

Valuation methods	Calculated ranges of the Share
	Exchange Ratio
Market price method	0.30-0.37
DCF method	0.33-0.39

Mita Securities set the base date for the calculation as March 19, 2024, the business day prior to the date of execution of the Agreement. Using the market price method, Mita Securities calculated the simple average closing prices of the common stock of zetton and Adastria on the Nagoya Stock Exchange and the Tokyo Stock Exchange on the base date, and during the one-month,three-month, and six-month periods prior to the base date for the calculation.

Using the DCF method, Mita Securities calculated the valuation of Adastria by discounting future cash flows to present value at a certain discount rate, based on financial forecasts prepared by Adastria from the fiscal year ending February 2024 to the fiscal year ending February 2026. Mita Securities used a discount rate of 6.1% to 8.1% and applied the perpetual growth rate method to calculate the going concern value. Here, Mita Securities assumed a perpetual growth rate of 0% to calculate the per-share value of the target stock.

For zetton, Mita Securities calculated the valuation by discounting future cash flows to present value at a certain discount rate, based on financial forecasts prepared by zetton from the fiscal year ending January 2025 to the fiscal year ending January 2029. Mita Securities used a discount rate of 4.9% to 6.9% and applied the perpetual growth rate method to calculate the going concern value. Here, Mita Securities assumed a perpetual growth rate of 0% to calculate the per-share value of the target stock.

Zetton financial forecasts, on which Mita Securities based calculations using the DCF method, include fiscal years in which zetton expects significant increases in consolidated operating profits. Specifically, in the fiscal year ending January 2026, zetton expects consolidated operating income to be 310 million yen in the fiscal year ending January 31, 2025, a year-on-year increase of approximately 53%, and a consolidated operating income to be 1,050 million yen in the fiscal year ending January 31, 2026, a year-on-year increase of approximately 239%. This increase is expected due to higher spending per customer, improvements in gross profit margins resulting from higher added value, and lower SG&A expenses from a slower pace in new store openings.

Synergies expected to arise from the Share Exchange are not reflected in the financial forecasts on which DCF method calculations are based, due to difficulties in estimating specific impacts on earnings at this point in time.

Mita Securities used materials and information provided by zetton and Adastria in addition to publicly available

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information to calculate the Share Exchange Ratio. Mita Securities assumes, among other things, that all materials and information used in the analysis and review are accurate and complete, and that there are no matters undisclosed to Mita Securities that could have a significant impact on the calculation of the Share Exchange Ratio. Mita Securities has not conducted independent verification of the accuracy or completeness of such materials, nor determined any obligation to do so.

Mita Securities used materials and information provided by Adastria and zetton in addition to publicly available information to calculate the Share Exchange Ratio. Mita Securities assumes, among other things, that all materials and information used in the analysis and review are accurate and complete, and that there are no matters undisclosed to Mita Securities that could have a significant impact on the calculation of the Share Exchange Ratio. Mita Securities has not conducted independent verification of the accuracy or completeness of such materials, nor determined any obligation to do so. Mita Securities has not independently evaluated, appraised, or assessed all assets or liabilities (including, but not limited to, derivatives, off-balance sheet assets and liabilities, and other contingent liabilities) of Adastria and zetton and their affiliates, including analysis and evaluation of individual assets and liabilities. Mita Securities has also not requested any third-party evaluation, appraisal, or assessment. Mita Securities assumes information on the Adastria and zetton financial forecasts provided was reasonably prepared based on the best currently available forecasts and judgments by the management of Adastria and zetton. With the consent of zetton, Mita Securities has relied on this information without independent verification. Calculations made by Mita Securities reflect information and economic conditions made available to Mita Securities through March 19, 2024. The sole purpose of the Mita Securities calculations is to serve as a reference for the zetton board of directors in its consideration of the Share Exchange Ratio.

1. Prospect and reasons for delisting
   Zetton will become a wholly owned subsidiary of Adastria through the Share Exchange as of June 1, 2024 (scheduled), the effective date of the Share Exchange. Shares of zetton, which will become a wholly owned subsidiary of Adastria, will be delisted on May 30, 2024 (last trading date to be May 29, 2024) after completion of the designated procedures pursuant to the Nagoya Stock Exchange delisting regulations. After the delisting, zetton shares will no longer be available for trade on the Nagoya Stock Exchange. However, since the Adastria shares to be allocated to zetton shareholders on the Effective Date of the Share Exchange are listed on the Tokyo Stock Exchange Prime Market, certain shareholders may only receive odd-lot shares. Despite this allocation, shares of more than one unit will still be available for trade on the financial instruments exchange market, ensuring the liquidity of the shares.
   On the other hand, shareholders holding odd-lot shares of Adastria as a result of the Share Exchange will be unable to sell said odd-lot shares on the financial instruments exchange market. Instead, shareholders in question may request Adastria buy back the odd-lot shares held, as described in 2. (3) (Note 3) Treatment of odd-lot shares, above. For details on the treatment of fractions of less than one share resulting from the Share Exchange, please refer to 2.(3) (Note 4) Treatment of fractions of less than one share, above.
   Zetton shareholders may trade zetton shares per usual on the Nagoya Stock Exchange Next Market until the final trading date of May 29, 2024 (scheduled). Shareholders may also exercise their legal rights as stipulated in the Companies Act and other related laws and regulations until the Base Time.
2. Measures to ensure fairness (Measures to avoid conflicts of interest)
   The Companies determined that it is necessary to ensure the fairness of the Share Exchange, as Adastria holds 3,289,400 shares of common stock of zetton (51.00% of the total number of voting rights in 6,449,766 shares issued and outstanding (excluding treasury shares) as of January 31, 2024) and zetton is to become a consolidated subsidiary of Adastria. As such, the Companies conducted the following measures to ensure fairness.

(Measures to ensure fairness)

• Obtaining a Share Exchange Ratio Calculation Report from an independent third-party calculation agent

To ensure the fairness of the Share Exchange Ratio in the Share Exchange, Adastria appointed Plutus Consulting, a third-party calculation agent independent from the Companies, to calculate the Share Exchange Ratio, as described above in 3. Basis of allotment of shares related to Share Exchange (1) Basis and reason for allotment. Adastria

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