Sanshin Electronics : Other Matters Subject to Electronic Provision Measures in Connection with the Notice of the 72nd Ordinary General Meeting of Shareholders

This document has been translated from the original document in Japanese. In the event of any discrepancy between this English translation and the original document in Japanese, the original document in Japanese shall prevail.

Other Matters Subject to Electronic Provision Measures in Connection with the Notice of the 72nd Ordinary General Meeting of Shareholders

Notes to Consolidated Financial Statements

Notes to Non-consolidated Financial Statements

(From April 1, 2022 to March 31, 2023)

Sanshin Electronics Co., Ltd.

The items above are omitted from the document provided to shareholders who requested documented delivery in accordance with the applicable laws and regulations, and the provision of Article 15 of the Company's Articles of Incorporation.

In addition, regardless of whether shareholders requested document delivery, the same document listing matters subject to electronic provision measures with the items above omitted will be provided to all shareholders at the general meeting of shareholders.

Notes to Consolidated Financial Statements

(Notes on the Basic Important Points for Preparing the Consolidated Financial Statements of This Term) 1. Scope of consolidation

Number of consolidated subsidiaries: 9 Names of companies:

SANSHIN ELECTRONICS (HONG KONG) CO., LTD.

SANSHIN ELECTRONICS SINGAPORE (PTE) LTD. TAIWAN SANSHIN ELECTRONICS CO., LTD. SANSHIN ELECTRONICS CORPORATION SANSHIN ELECTRONICS KOREA CO., LTD. SANSHIN ELECTRONICS (THAILAND) CO., LTD. SANSHIN ELECTRONICS (SHANGHAI) CO., LTD. TAKUMI CORPORATION

SANSHIN NETWORK SERVICE CO., LTD. Number of non-consolidated subsidiaries: 5

Names of companies:

SANSHIN MEDIA SOLUTIONS CO., LTD.

AXIS DEVICE TECHNOLOGY CO., LTD. SANSHIN SYSTEM DESIGN CO., LTD.

SANSHIN ELECTRONICS (SHENZHEN) CO., LTD.

SAN SHIN ELECTRONICS (MALAYSIA) SDN. BHD. Rationale for exclusion of non-consolidated subsidiaries from the scope of consolidation:

The size of each of the non-consolidated subsidiaries is small, and each company's total assets, net sales and net profit or loss (amount corresponding to equity) and retained earnings (amount corresponding to equity) are small in size and neither does significantly affect the consolidated financial statements.

The standards for judging whether or not the subsidiary has materiality are based on the past five-year average net profit or loss on the part of both the Company and the subsidiaries.

2. Application of equity method

Non-consolidated subsidiaries and affiliated companies to which the equity method is not applied Names of companies:

SANSHIN MEDIA SOLUTIONS CO., LTD.

AXIS DEVICE TECHNOLOGY CO., LTD. SANSHIN SYSTEM DESIGN CO., LTD.

SANSHIN ELECTRONICS (SHENZHEN) CO., LTD.

SAN SHIN ELECTRONICS (MALAYSIA) SDN. BHD. SHINEI COMMUNICATION SYSTEMS CO., LTD.

Rationale for non-application of the equity method:

Based on each company's net profit or loss (amount corresponding to equity) and retained earnings (amount corresponding to equity) etc., neither does significantly affect the Company's consolidated financial statements, nor have importance as a whole, even if excluded from the subject of equity method.

The standards for judging whether or not the company has materiality are based on the past five-year average net profit or loss on the part of the Company, its subsidiaries and affiliated companies.

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3. Matters concerning accounting principles

A. Valuation standards and methods for major assets

1. Securities Other securities

Securities other than stocks, etc., without fair market values:

At market value, using the fair market value at the end of this consolidated fiscal year. (Appraisal differences are dealt with by means of the direct capital influx method, with cost of securities sold calculated by means of the moving average method.) Furthermore, among the other securities with market value, those, for which the difference between the "acquisition cost" and the "debenture amount" is judged to be the result of interest rate adjustments, are calculated by amortized cost method.

Stocks, etc., without fair market values:

At cost, using the moving average method.

b. Derivatives

At market value.

c. Inventories

Merchandise: Primarily at cost, using the moving average method. (Figures stated on balance sheets are calculated by means of the write-down method based on a decline in profitability.)

Partly-finished work: At cost, using the specific identification method. (Figures stated on balance sheets are calculated by means of the write-down method based on a decline in

	profitability.)
B. Depreciation method for major depreciable assets
a. Property and equipment:	Primarily the declining-balance method
(Excluding leased	However, buildings (excluding equipment and installations), and the equipment
assets)	and installations of buildings and structures acquired on or after April 1, 2016
	are depreciated by the straight-line method.
	The useful life of buildings and structures is 15 to 45 years; for other property
	and equipment, it is 3 to 20 years.
b. Intangible assets:	Straight-line method
(Excluding leased	The estimated useful life of software for internal use is 3 to 5 years.
assets)
c. Leased assets:	Straight-line method using the lease period as the useful life and zero residual
	value.

C. Accounting standards for major allowances a. Allowance for doubtful accounts:

Provided at an amount sufficient to cover probable losses on collection. It consists of the estimated uncollectible amount with respect to certain identified doubtful receivables and an amount calculated using the rate of actual collection losses with respect to the remaining receivables.

b. Allowance for bonuses to employees:

Allowance for employees' bonuses is provided at an amount applicable to this consolidated fiscal year based on the estimated amount to be paid in the next year.

c. Allowance for bonuses to Directors and Audit & Supervisory Board members:

Allowance for Directors' bonuses is provided at an amount applicable to this consolidated fiscal year based on the estimated amount to be paid in the next year.

d. Allowance for stock compensation:

Allowance for stock compensation is an allowance established to provide shares of the Company to the Directors (excluding the External Directors) based on the Performance-Based Stock Compensation Plan for Directors. The allowance is calculated based on the estimated amount of payment of Sanshin Shares to be delivered to the Directors according to the points granted to each of them in accordance with the Sanshin Share delivery rules.

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D. Accounting standards for revenue and expenses

The Group applies the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29; March 31, 2020), etc. We recognize revenue in the amount expected to be received in exchange for a good or service when a promised good or service is transferred to the customer.

The Group operates two businesses: the device business, which mainly sells semiconductors and electronic components in Japan and overseas, and the solution business, which mainly develops ICT solutions.

In the device business, we mainly identify the delivery to customers of products purchased from suppliers as obligation of performance. In principle, we judge the obligation of performance as satisfied when control of the products is transferred to the customer, and we recognize revenue at that time. For domestic sales, if the period from the time of shipment to the time of delivery is the normal period, we recognize revenue at the time of shipment. For export sales, we recognize revenue when the burden of risk is transferred to the customer based on trade conditions stipulated by Incoterms (international commercial terms), etc.

In the solution business, we mainly combine network equipment, security products, and Line-of-Business systems, etc., to provide the optimum ICT infrastructure for each customer. For these products, providing the functions required by the customer is recognized as the obligation of performance. In principle, we judge the obligation of performance as satisfied when the customer accepts the product, and we recognize revenue at that time. For construction work performed per a contract agreement, etc., and for made-to-order software, we judge obligation of performance to be satisfied over a certain period of time, and we recognize revenue based on the extent of progress in satisfying obligation of performance. For contracts that provide services such as maintenance services during the contract period, we judge obligation of performance to be satisfied over a certain period of time in conjunction with the passage of the period of time, and we recognize revenue uniformly during the contract period.

For the sale of merchandise and services, if the Group is trading as the principal party, we display revenue as the total amount of compensation. If the transaction is being conducted as an agent, we display revenue as the net amount after deducting the purchasing cost from the total amount of compensation. When determining the status as principal party or agent, we make a comprehensive judgment based on the following three indicators.

・Does the Group possess the main responsibility for executing the promise of providing the specified merchandise or services?

・Does the Group possess the inventory risk before transferring the specified merchandise or services to the customer, or after transferring control to the customer?

・Does the Group have discretion in setting the price of the specified merchandise or services? Furthermore, in accordance with the separately specified terms of payment, compensation for transactions is received within approximately 6 months after obligation of performance has been satisfied, and does not include important financial elements.

E. Major foreign currency transactions

Receivables and payables denominated in foreign currencies are translated into Japanese yen at the consolidated-fiscal-year-end spot market exchange rates; any foreign exchange gains and losses from transactions are specified in the profit and loss statement. Assets and liabilities of overseas subsidiaries are translated into yen at the exchange rates in effect as of the fiscal year end, and revenues and expenses are translated into yen at the average exchange rates for the fiscal year. The resulting translation adjustments are included in the foreign currency translation adjustment in net assets.

F. Significant hedge accounting a. Hedge accounting methods:

Primarily the deferred hedge accounting method

Hedge accounting is adopted for foreign currency receivables and payables, etc. on exchange forward contracts.

b. Hedging instruments and hedged items:

Hedging instrument:	Foreign currency forward contracts
Hedged items:	Both payables and receivables, and forecasted transactions denominated in
	foreign currencies

c. Hedge policy:

The Company uses foreign currency derivatives as a means of hedging exposure to foreign currency risk. Such transactions are all carried out with the finance department of the Company as the lead department, according to Company regulations. The Company does not enter into derivatives for trading

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or speculative purposes not stated in its regulations. d. Hedge effectiveness assessment:

Hedge effectiveness is evaluated at least every six months by evaluating whether the cash flow changes in the hedged item and cash flow changes in the hedge instrument cancel each other out at a high level.

G. Accounting standards for net defined benefit liability

Net defined benefit liability is provided in the amount equal to the benefit obligations minus the pension assets based on the projected amount at the end of this consolidated fiscal year, in order to prepare for the allowance for employees' severance and retirement benefits. The retirement benefit obligations are calculated using a payment calculation standard which is a method of attributing projected retirement benefits for the service period up to the current consolidated fiscal year.

The prior service expenses are amortized by the straight-line method for a given number of years (10 years) within employees' average remaining years of service, at the time of occurrence. The actuarial gains and losses are amortized in the year subsequent to their occurrence, by the straight-line method or a given number of years (10 years) within employees'average remaining period of service.

Unrecognized actuarial gains and losses and unrecognized past service expenses are reflected in remeasurements of defined benefit plans in the accumulated other comprehensive income of net assets, after adjusting for tax effects.

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