Air Water : Notice Concerning the Formulation of Recurrence Prevention Measures (Outline)

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

To All Concerned Parties

Company Name

Air Water Inc.

February 13, 2026

Representative President and

Representative Director

Ryosuke

Matsubayashi

（Code Number 4088 Tokyo Stock Exchange Prime Market, Sapporo Stock Exchange Market）

Contact General Manager of Corporate Communications Office

Keisuke Fukushima

（TEL 06-6252-3966）

As announced in our press release dated February 12, 2026, entitled "Notice Concerning the Receipt of the Investigation Report of the Special Investigating Committee (as of February 9, 2026)," the investigation conducted by the Special Investigating Committee revealed that, in addition to the fact that inappropriate accounting treatments had been carried out within our Group, the involvement of top management and members of the management team was recognized in part.

Taking seriously the analysis of causes and the proposed recommendations for recurrence prevention measures pointed out in the said investigation report, we resolved at a meeting of the Board of Directors held today to adopt the outline of recurrence prevention measures, and hereby announce the same as set forth below.

We position these recurrence prevention measures as the highest management priority, and will

promote reform of corporate culture, governance reform, rebuilding of the management infrastructure and internal control systems, and a review of our Company-wide strategy (including a review of the business portfolio), in order to enhance transparency and soundness in management and to make every effort to restore social trust.

1. Analysis of Causes

   In response to this matter, in order to ensure that the recurrence prevention measures are truly effective, we conducted an analysis of the causes through repeated internal discussions and reviews centered on the Management Reform Committee, in addition to the findings of the investigation conducted by the Special Investigating Committee. As a result, we recognized that the inappropriate accounting in this case was not attributable to specific individuals, but rather was caused by an environment that had been formed over many years in which misconduct was likely to be overlooked.

   1. A Corporate Culture that Prioritized the Achievement of Performance Targets and Top-Down Organizational Management

      ・Beginning in fiscal year 2010, we set forth a long-term growth vision, the "¥1 Trillion Company Vision," aiming to achieve net sales of ¥1 trillion by fiscal year 2020, and promoted business diversification and overseas expansion. Over time, however, the achievement of performance targets itself tended to become an objective, and high targets were set without sufficient consideration of the external environment, which became a cause of excessive performance pressure being placed on frontline operations.

      ・Our organizational management was operated through a strong top-down command structure, which generated a sense of unity and execution capability, but also involved management practices that could be perceived as harassment. In addition, as top management possessed strong personnel authority, decision-making processes tended to be prioritized in line with the intentions of top management, which became one of the factors leading to inappropriate accounting treatments.

      ・Under these circumstances, even when problems or inappropriate matters arose, they were tacitly accepted, which weakened ethical awareness throughout the organization and resulted in the formation of an unhealthy corporate culture.

   2. Insufficient Development of Accounting and Management Functions and Lack of Effectiveness in the Internal Control System

      ・While we expanded our business scale through aggressive M&A activities, post-acquisition integration and the management of subsidiaries failed to keep pace with the speed of expansion, resulting in distortions in our overall growth strategy. Sufficient measures were not implemented

      to improve subsidiary management functions, such as the development of internal regulations, thorough dissemination of rules, or the allocation of authority and monitoring commensurate with the management capabilities of subsidiaries, leaving business processes that enabled inappropriate accounting treatments. In addition, within our administrative departments, insufficient personnel reinforcement and inadequate strengthening of checks and balances resulted in a lack of effective controls.

      ・Although the internal audit department should serve as the "last line of defense" to safeguard organizational soundness, it was revealed that the head of the internal audit department was involved in inappropriate practices, and that the department failed to exercise sufficient deterrent functions across the Group. Furthermore, adequate identification of risks, execution of audits, and issuance of improvement recommendations did not function properly.

      • Although governance-related discussions were conducted at meetings of the Board of Directors mainly by outside directors, it is questionable whether sufficient monitoring and oversight over top management were ultimately exercised. Audits conducted by the Audit & Supervisory Board Members lacked a proactive stance in independently identifying issues, and their activities with respect to internal control issues and fraud risks remained limited.

        ・Over many years, we were supported by strong past success experiences and a strong orientation toward growth. However, particularly in the areas of management and control, as the level required of us increased, we were unable to adequately respond to such changes, and a significant gap gradually emerged. Although we conducted self-reflective reviews and made partial adjustments from time to time, we did not reach fundamental corrections aligned with changes in our business structure and organizational structure, and circumstances in which inappropriate conduct could occur were left unaddressed.

   3. Low Accounting Literacy and a Lack of Ethical Awareness Required of a Listed Company Group

   ・Because accounting literacy was insufficient across the Group, we did not develop a strong sense of awareness regarding the inappropriateness of the accounting treatments.

   ・In addition, as conduct that prioritized the achievement of performance targets became entrenched, judgments based on the rules that must be observed, even under strong pressure, were not thoroughly enforced.

   ・Although internal control mechanisms such as internal audits, the Audit & Supervisory Board, and the internal reporting system existed, we were unable, through our own actions, to cause the internal controls that should have prevented or corrected specific incidents to function sufficiently. The investigation report of the Special Investigating Committee identified serious issues, stating that the internal audit function was "in a state where it could be nullified by the words and actions of top management," and that the internal reporting system was "not

   sufficiently publicized or properly operated."

2. Overview of Recurrence Prevention Measures

   Based on the deep reflection and analysis described above, we have established four initiatives as recurrence prevention measures in order to undertake fundamental reforms.

   (1) Reform of Corporate Culture	・A fundamental reform of the corporate culture that places the highest priority on compliance and aims to foster a sound, open, and integrity-driven environment that encourages appropriate conduct. ・The appropriate setting of performance targets and the elimination of excessive performance pressure ・A fundamental strengthening of education and training, including ethics and accounting literacy ・The strengthening of the internal reporting system and
   (2) Governance Reform	・Strengthening of the supervisory function of the Board of Directors ・Strengthening of the audit function of the Audit & Supervisory Board ・Strengthening the role of the Nomination and Remuneration Committee
   (3) Rebuilding of the Management Infrastructure and Internal Control Systems	・The establishment of executive officers responsible for management and finance ・The strengthening of the functions of the management departments, centered on the accounting department ・The rebuilding of internal control systems from a Group-wide perspective ・The strengthening of the internal audit function
   (4) Review of the Company-wide Strategy (Review of the Business Portfolio)	・The redefinition of core competencies ・The selection and concentration of businesses ・The optimization and restructuring of Group companies

   1. Reform of Corporate Culture

      ① Fundamental reform toward a corporate culture that places the highest priority on compliance and is "sound, open, and encourages proper conduct"

      1. Expression and dissemination of the determination of top management (the Representative Director) toward company reform

         ・Reaffirmation of the management philosophy and purpose, and dissemination thereof throughout the Group through direct dialogue with employees

      2. Clarification of organizational roles and areas of responsibility

         • Clarification of organizational roles, areas of responsibility, and the responsibilities associated therewith, and rebuilding of reporting processes

      3. Establishment of a management structure that places the highest priority on compliance

         ・Enhancement and strengthening of compliance awareness among top management and the management team

         ・Continuous communication to the entire Group by top management and the management team emphasizing that compliance is the highest priority, sharing of intent through direct dialogue with employees of Group companies, and enhancement of employees' compliance awareness

      4. Improvement of communication

・Development of an organizational environment in which psychological safety is ensured, and fostering of a culture in which everyone respects one another and can freely and openly express opinions

② Appropriate Setting of Performance Targets and Elimination of Excessive Performance Pressure

・Verification and improvement of the process for setting performance targets, including

appropriate consideration of bottom-up perspectives and the external environment, and revision of operations so as not to impose excessive performance targets(with an emphasis on KPIs from a medium- to long-term perspective and from the standpoint of enhancing corporate value)

・The review of evaluation methods for employees who bear responsibility for performance

③ Fundamental Strengthening of Education and Training (Ethics and Accounting Literacy)

・Institutionalization of corporate ethics management training for top management and the management team

・Implementation of continuous education and training on professional ethics and accounting literacy for all Group employees

④ Strengthening of the Internal Reporting System

・Strengthening of the operational framework of the internal reporting system (establishment