*President Hironori Aoki and Vice President Takanori Aoki made JPY 8.82 billion at the expense of all other Kusuri No Aoki shareholders by exercising the stock options that Oasis has raised concerns

*Oasis is continuing its lawsuit against the Aoki Brothers, the Company’s directors, and others responsible for the Stock Options that caused JPY 7.2 billion in damages to Kusuri No Aoki

*Based on the recent materials disclosed by the Aoki Brothers during the court process to justify the low option price, it has become apparent that it is likely that Kusuri No Aoki assume incorrectly that there is “absolutely no correlation between a company’s business performance and share price”

*Kusuri No Aoki (and all other listed companies) disclose earnings and other financial data to facilitate fair pricing in the stock market, and the assumption that there is absolutely no correlation between business performance and share price is unreasonable

*Oasis urges shareholders to vote AGAINST the re-election of the Aoki Brothers, the President and Vice President, and to vote FOR Oasis’s shareholder proposal to dismiss them at the upcoming Kusuri No Aoki AGM

More information available at www.KusuriNoAokiCorpGov.com

Oasis Management Company Ltd. (“Oasis”) is the manager to funds that beneficially own approximately 9.1 % of drugstore operator KUSURI NO AOKI HOLDINGS CO., LTD. (3549 JT) (“Kusuri No Aoki” or “Aoki” or the “Company”). Oasis has adopted the Japan FSA’s “Principles of Responsible Institutional Investors” (a/k/a the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with its investee companies.

Oasis, a long-term shareholder of Aoki, urges its fellow shareholders to hold President Hironori Aoki and Vice President Takanori Aoki (the “Aoki Brothers”), who are leading Aoki, accountable at the upcoming Annual General Meeting of Shareholders to be held in August 2025 for their history of neglecting minority shareholder interests.

Since Aoki’s 2023 AGM, Oasis has asked its fellow shareholders to demonstrate its dissatisfaction in Aoki’s governance structure, led by the Aoki Brothers, and particularly, the stock options issued to the Aoki Brothers, by voting AGAINST the re-election of the Aoki Brothers and voting FOR Oasis’s shareholder proposals. In Oasis’s public campaign, we have highlighted serious governance failures at Aoki, including:

• Stock options (“Stock Options”), which would cause an 11.1% dilution when exercised, were issued to the Aoki Brothers for only approximately JPY 52.5 million, representing a discount of more than 99% from the “Fair Unit Price” disclosed by the Company itself.

• The Stock Options were issued shortly after the Company made unusual downward revisions to forecasts, which subsequently depressed the stock price significantly.

• Despite Oasis questioning the legitimacy of the process and the pricing of the Stock Options and asking the Aoki Brothers not to exercise the Stock Options until a judicial judgement was reached, the Aoki Brothers exercised the Stock Options three business days after they became exercisable, diluting all existing shareholders by 11.1%, and profiting JPY 8.82 billion.

• Oasis has requested in the 2024 AGM campaign that, if, as Aoki claims, there are truly no issues with the decision-making process or the valuation methodology behind the Stock Options, Aoki should provide shareholders with a fair opportunity to assess the facts for themselves by disclosing appropriate materials, instead of making abstract claims that “there are no problems”. Oasis’s request has been ignored, thereby depriving shareholders of their opportunity to make these assessments by themselves to date.

Oasis, as the largest minority shareholder of the Company, has been leading a shareholder derivative lawsuit since July 2024 on behalf of Kusuri No Aoki and its shareholders to recoup the damages the Stock Options have done to the Company. During this legal procedure:

• the Aoki Brothers have continued to refuse to disclose the full details of the valuation by the third-party valuation agent (Plutus Consulting, “Plutus”), which is the basis of the pricing of the Stock Options;

• the Company has continued to intervene in support on the side of the defendants, i.e., the Aoki Brothers; and

• based on the limited disclosures made by the Company and the Aoki Brothers, it has been discovered that it is likely that valuation of the Stock Options uses extremely unreasonable assumptions, including assuming incorrectly that there is no correlation between business performance and share price. It has become apparent that it is extremely likely that these errors have caused the “fair value” of the Stock Options calculated by the Company to be much lower than the intrinsic value of the Stock Options.

In particular, the use of the assumption that there is “absolutely no correlation” between the Company’s business performance and share price (or corporate value) is extremely shocking. Such assumption goes against the most fundamental principles of corporate finance. For example, even Plutus, the valuation agent of the Stock Options, points out in its own published accounting book that company-specific factors and macro factors affect the profit of each company, which determines the share price of a company. There are also internal board meeting minutes where Aoki directors discuss how future profit growth will lead to increased corporate value. Thus, said “assumption” that there is “absolutely no correlation” between share price, an indicator of corporate value, and business performance, directly contradicts the principles of corporate value valuation that even Aoki and Plutus acknowledge.

We believe that the additionally discovered facts about the valuation of the Stock Options, especially the assumptions used, are further evidence that the Aoki Brothers have significantly abused their powers as directors of the Company at the expense of minority shareholders.

Further, we believe that the Aoki Brothers’ lack of cooperation in Oasis’s genuine attempt to protect the interests of minority shareholders -- especially their exercising of the Stock Options three business days after they became exercisable, which yielded them JPY 8.82 billion in profits, despite Oasis’s clear request not to exercise them, as well as their continued refusal to disclose the details of the valuation methodology of the Stock Options -- is proof of the continued abuse of their powers as directors of the Company.

As such, we believe that the dismissal of the Aoki Brothers is necessary to protect the interests of minority shareholders and to enhance Aoki’s corporate value. To this end, Oasis urges shareholders to vote AGAINST the re-election of Aoki Brothers, and to vote FOR Oasis’s shareholder proposal to dismiss them.

For more information, please visit www.KusuriNoAokiCorpGov.com. We welcome all stakeholders to contact Oasis at info@KusuriNoAokiCorpGov.com to help improve Kusuri No Aoki’s corporate governance.

***

Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at https://oasiscm.com. Oasis has adopted the Japan FSA’s ��Principles for Responsible Institutional Investors” (a.k.a. the Japan Stewardship Code) and, in line with those principles, Oasis monitors and engages with our investee companies.

The information and opinions contained in this press release (referred to as the "Document") are provided by Oasis Management Company (“Oasis”) for informational or reference purposes only. The Document is not intended to solicit or seek shareholders to, jointly with Oasis, acquire or transfer, or exercise any voting rights or other shareholder’s rights with respect to any shares or other securities of a specific company which are subject to the disclosure requirements under the large shareholding disclosure rules under the Financial Instrument and Exchange Act. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate shareholding with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Except in the event that Oasis expressly enters into the agreement as a joint holder requiring such disclosure, Oasis does not intend to take any action triggering reporting obligations as a Joint Holder. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.

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