Advanced Optoelectronic Technology Inc. and Subsidiaries
Consolidated Financial Statements and Independent Auditors' Report 2025 and 2024 (Stock code: 3437)

Company address: No. 13, Gongye 5th Rd., Hukou Township, Hsinchu County
TEL: (03)597-6988

Notice to readers

For the convenience of readers and for information purpose only, the auditors' report and company financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders' meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

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Advanced Optoelectronic Technology Inc.
Declaration of Consolidated Financial Statements of Affiliated Enterprises

From January 1 to December 31, 2025, if, pursuant to the Regulations Governing Preparation of Consolidated Business Reports Covering Affiliated Enterprises, Consolidated Financial Statements Covering Affiliated Enterprises, and Reports on Affiliations, the entities that must be included in preparing the consolidated financial statements covering affiliated enterprises are entirely the same as those that IFRS 10 requires to be included in preparing the consolidated financial report comprising the parent and its subsidiaries, and if the required disclosures to be made in the consolidated financial statements covering affiliated enterprises are already made in the consolidated financial report comprising the parent and its subsidiaries, then the consolidated financial statements covering affiliated enterprises will not be prepared.

We hereby declare

Advanced Optoelectronic Technology Inc.
Person in Charge: Fang, Jung-Hsi
March 12, 2026

Independent Auditors' Report

(2026) Cai-Shen-Bao-Zi No. 25004638

To: Advanced Optoelectronic Technology Inc.

Audit opinion

We have audited the accompanying consolidated balance sheet of Advanced Optoelectronic Technology Inc. and its Subsidiaries ("Advanced Optoelectronic Technology Group") as of December 31, 2025 and 2024, and the consolidated statements of comprehensive income, consolidated changes in equity and cash flow for the years then ended, and the notes to the consolidated financial statements, (including a summary of significant accounting policies).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Advanced Optoelectronic Technology Group as of December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee (collectively, "IFRSs") as endorsed by the Financial Supervisory Commission (FSC).

Basis for audit opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are Independent of the Advanced Optoelectronic Technology Group in accordance with The Norm of Professional Ethics for Certified Public Accountants of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that sufficient and appropriate audit evidence has been obtained in order to be served as a basis for presenting our audit opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the Advanced Optoelectronic Technology Group for the year ending December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of the 2025 consolidated financial statements of Advanced Optoelectronic Technology Group are as below:

Inventory valuation

Description of matters

For descriptions of the accounting policies, accounting estimates, and the uncertainties of accounting estimates for inventory valuation and assumptions, and accounting items, please see Notes IV (XIII), V (II) and VI (VI) to the consolidated financial statements.

The principal business of the Advanced Optoelectronic Technology Group is the manufacture and sale of light-emitting diodes. Due to a large number of competitors from China manufacturers, the commodity prices may be vulnerable to fluctuations or the product sale may not be as expected, which may affect the estimation result of the net realizable value of inventory valuation.

The Advanced Optoelectronic Technology Group adjusts its inventory requirements in response to the sales market and development strategies. Since LEDs are the main sales commodity, the related inventory amount is significant. The management evaluates the inventory according to the lower cost and net realizable value. Because the above process involves subjective judgments, we believe that the accounting estimate has a significant impact on the assessment of inventory value, so it is listed as one of the most important matters during the audit.

Corresponding audit procedures

The audit procedures we have executed for the key audit matters are as follows:

We have evaluated the policy adopted for the allowance for inventory write-down based on our understanding of the nature of the Advanced Optoelectronic Technology Group's operations and industry.
We have tested the basis for the net realizable value to see whether it complies with the policy of the Advanced Optoelectronic Technology Group. Calculation is performed by taking the sales and net realizable value of the individual inventory number from random sampling.
Obtain obsolete inventory details identified by the management, review related documents, and reconcile the records contained in the accounts.

Other Matters - Parent Company Only Financial Statements

Advanced Optoelectronic Technology Inc. has prepared the parent company only financial statements for 2025 and 2024. We have issued an independent Auditors' Report with an unmodified opinion for reference.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulation Governing the Preparation of Financial Reports by Securities Issuers, and the IFRS, IAS, IFRIC, and SIC as endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the management is responsible for assessing Advanced Optoelectronic Technology Group's capability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Advanced Optoelectronic Technology Group, or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing Advanced Optoelectronic Technology Group's financial reporting process.

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Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance on whether the consolidated financial statements as a whole are free from material misstatement arising from fraud or error, and to issue an independent auditor's report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Auditing Standards of the Republic of China will always detect a material misstatement when it exists. Misstatement may result from fraud or error. Misstatements are considered material, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

We exercised professional judgment and skepticism during the audit in accordance with the Auditing Standards of the Republic of China. We also perform the following tasks:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Understand the internal control related to the audit in order to design appropriate audit procedures under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Assess the appropriateness of the accounting policies adopted by the management, and the reasonableness of the accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of the management's use of the going concern basis of accounting based on the audit evidence obtained, and whether a material uncertainty exists for events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inappropriate, to modify our opinion. Our conclusion is based on the audit evidence acquired as of the date of the audit report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure, and content of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements adequately present the relevant transactions and events.
Obtain sufficient and appropriate audit evidence concerning the financial information of entities within the Group, to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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The matters communicated between us and the governing body include the planned scope and time of the audit and significant audit findings (including any significant deficiencies in internal control identified during the audit).

We also provided the governing body with a declaration that we have complied with relevant ethical requirements regarding independence, and we communicated with them all relationships that may be thought to undermine our independence and other matters (including related protective measures).

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the Group's consolidated financial statements for the year ended December 31, 2025, and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

PricewaterhouseCoopers Taiwan

Po-Chuan Lin

Accountant

Shu-Chiung Chang

Financial Supervisory Commission

Approval No.: Jin-Guan-Zheng-Shen-Zi No. 1100350706

Former Financial Supervisory Commission, Executive Yuan

Approval No.: Jin-Guan-Zheng-Shen-Zi No. 0990042602

March 12, 2026

Advanced Optoelectronic Technology Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 2025 and 2024
Unit: NT$ Thousand

	Assets	Notes	December 31, 2025		December 31, 2024
			Amount	%	Amount	%
Current assets
1100	Cash and cash equivalents	VI (I)	$ 1,078,038	39	$ 1,225,968	37
1110	Financial assets at fair value through profit or loss (FVTPL) - Current	VI (II)	20	-	770	-
1136	Financial assets at amortized cost - current	VI (III)	-	-	130,000	4
1150	Notes receivable, net	VI (IV)	763	-	14,760	-
1170	Accounts receivable, net	VI (IV)	405,731	15	461,291	14
1200	Other receivables	VI (V)	19,853	1	112,697	3
1220	Current income tax assets		2,738	-	2,815	-
130X	Inventory	VI (VI)	191,226	7	183,214	6
1410	Prepayments		13,327	-	16,125	1
1479	Other current assets - others		1,620	-	1,546	-
11XX	Total of current assets		1,713,316	62	2,149,186	65
Non-current assets
1517	Financial assets at FVTOCI - non-current	VI (VII)	307,285	11	382,689	12
1600	Property, plant, and equipment	VI (IX) and VII	601,129	22	631,985	19
1755	Right-of-use assets	VI (X)	27,474	1	979	-
1780	Intangible assets	VI (XI)	43,842	1	75,633	2
1840	Deferred tax assets	VI (XXIV)	86,613	3	75,292	2
1990	Other non-current assets - others	VIII	926	-	2,360	-
15XX	Total non-current assets		1,067,269	38	1,168,938	35
1XXX	Total assets		$ 2,780,585	100	$ 3,318,124	100

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Advanced Optoelectronic Technology Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 2025 and 2024
Unit: NT$ Thousand

	Liabilities and equity	Notes	December 31, 2025		December 31, 2024
			Amount	%	Amount	%
Current liabilities
2120	Financial liabilities at fair value through profit or loss - Current	VI (II)	$ 3,049	-	$ 4,709	-
2130	Contract liabilities - current	VI (XIX)	2,006	-	9,389	-
2170	Accounts payable		315,700	11	320,227	10
2180	Accounts payable - related parties	VII	7,520	-	3,983	-
2200	Other payables	VI (XIII)	292,840	11	362,177	11
2220	Other payables - related parties	VII	-	-	31	-
2230	Current income tax liabilities		165	-	-	-
2280	Lease liabilities - current		13,414	1	627	-
2399	Other current liabilities - others		13,161	-	21,408	1
21XX	Total of current liabilities		647,855	23	722,551	22
Non-current liabilities
2570	Deferred income tax liabilities	VI (XXIV)	6,137	-	5,956	-
2580	Lease liabilities - non-current		14,469	1	370	-
2610	Long-term notes and payables	VI (XIV)	-	-	13,114	-
25XX	Total of non-current liabilities		20,606	1	19,440	-
2XXX	Total liabilities		668,461	24	741,991	22
Equity
	Share capital	VI (XVI)
3110	Common stock share capital		1,445,480	52	1,445,480	44
	Capital Surplus	VI (XVII)
3200	Capital Surplus		890,972	32	956,721	28
	Retained earnings	VI (XVIII)
3310	Legal reserves		-	-	69,665	2
3350	Losses to be compensated		( 383,404)	( 14)	( 135,414)	( 4)
	Other equity
3400	Other equity		98,960	4	174,284	6
31XX	Total equity attributable to parent company shareholders		2,052,008	74	2,510,736	76
36XX	Non-controlling equity		60,116	2	65,397	2
3XXX	Total equity		2,112,124	76	2,576,133	78
	Significant Contingent Liabilities and IX Unrecognized Commitments
3X2X	Total liabilities and equity		$ 2,780,585	100	$ 3,318,124	100

The attached notes to the consolidated financial reports are part of this consolidated financial report; please refer to them, too.

Chairman: Fang, Jung Hsi
Manager: Fang, Jung-Hsi
Accounting Officer: Chang, Hui-Ling

Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Comprehensive Income

January 1 to December 31, 2025 and 2024

Unit: NT$ Thousand

(except for loss per share in NT$)

	Items	Notes	2025		2024
			Amount	%	Amount	%
4000	Operating revenue	VI (XIX) and VII	$ 1,602,662	100	$ 2,035,208	100
5000	Operating cost	VI(VI)(XXIII) and VII	( 1,541,025)	( 96)	( 1,672,989)	( 82)
5900	Gross profit		61,637	4	362,219	18
	Operating expenses	VI (XXIII)
6100	Sales and marketing expenses		( 149,510)	( 9)	( 193,421)	( 9)
6200	Administrative expenses		( 223,843)	( 14)	( 256,649)	( 13)
6300	R&D expenses		( 103,206)	( 6)	( 163,909)	( 8)
6450	Expected credit impairment gain (loss)		( 40,533)	( 3)	3,412	-
6000	Total operating expenses		( 517,092)	( 32)	( 610,567)	( 30)
6900	Operating loss		( 455,455)	( 28)	( 248,348)	( 12)
	Non-operating income and expense
7100	Interest income		15,359	1	19,624	1
7010	Other income	VI (XX) and VII	43,290	2	41,882	2
7020	Other gains and losses	VI (XXI) and VII	( 1,288)	-	13,116	1
7050	Financial cost	VI (XXII)	( 1,879)	-	( 4,570)	-
7060	Share of the profit or loss of the affiliated companies and joint ventures under the equity method	VI (VIII)
7000	Total non-operating income and expenses		55,482	3	71,298	4
7900	Net loss before tax		( 399,973)	( 25)	( 177,050)	( 8)
7950	Income tax benefit (expense)	VI (XXIV)	10,679	1	( 205)	-
8200	Current net loss		($ 389,294)	( 24)	($ 177,255)	( 8)
	Other comprehensive income (net)
	Items not reclassified to profit or loss
8316	Unrealized gains (losses) on investments in equity instruments at FVTOCI	VI (VII)	($ 75,404)	( 5)	$ 163,684	8
8310	Total of items not reclassified to profit or loss		( 75,404)	( 5)	163,684	8
	Items that may be reclassified subsequently to profit or loss
8361	Exchange difference in the translation of the financial statement of foreign operations		689	-	3,774	-
8370	Share of other comprehensive income of affiliates and joint ventures accounted for under the equity method - items that may be reclassified as income	VI (VIII)
8360	Total of items that may be reclassified subsequently to profit or loss		689	-	3,896	-
8300	Other comprehensive income (loss) - net amount after tax		($ 74,715)	( 5)	$ 167,580	8
8500	Total comprehensive loss for current period		($ 464,009)	( 29)	($ 9,675)	-
	Net profit or loss attributable to:
8610	Owner of the parent company		($ 383,404)	( 24)	($ 135,414)	( 6)
8620	Non-controlling equity		( 5,890)	-	( 41,841)	( 2)
			($ 389,294)	( 24)	($ 177,255)	( 8)
	Total comprehensive income attributable to:
8710	Owner of the parent company		($ 458,728)	( 29)	$ 31,222	2
8720	Non-controlling equity		( 5,281)	-	( 40,897)	( 2)
			($ 464,009)	( 29)	($ 9,675)	-
	Loss per share	VI (XXV)
9750	Basic loss per share		($	2.65)	($	0.94)

The attached notes to the consolidated financial reports are part of this consolidated financial report; please refer to them, too.

Chairman: Fang, Jung Hsi

Manager: Fang, Jung-Hsi

Accounting Officer: Jane Chang

Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Changes in Equity

January 1 to December 31, 2025 and 2024

Unit: NTS Thousand

	Capital Surplus					Retained earnings		Other equity			Total	Non-controlling equity	Total equity
	Common stock share capital	Shares premium from issuance	Recognition of changes in equity of subsidiaries	Donated assets	Changes in the net equity value of affiliates and joint ventures recognized under the equity method	Expired stock options	Legal reserves	Losses to be compensated	Exchange difference in the translation of the financial statement of foreign operations	Financial assets at FVTOCl - Unrealized gains or losses
2024
Balance on January 1, 2024	$ 1,445,480	$ 936,594	$ 3,386	$ 5,900	$ 10,681	$ 48	$ 168,696	($ 99,031)	($ 6,651)	$ 14,390	$ -	$ 2,479,493	$ 106,294
Current net loss	-	-	-	-	-	-	-	( 135,414 )	-	-	-	( 135,414 )	( 41,841 )
Other comprehensive income VI (VII) (loss)	-	-	-	-	-	-	-	-	2,952	163,684	-	166,636	944
Total comprehensive income (loss)	-	-	-	-	-	-	-	( 135,414 )	2,952	163,684	-	31,222	( 40,897 )
Appropriation and distribution of VI (XVIII) 2023 earnings:
Legal reserve used to make up losses	-	-	-	-	-	-	( 99,031 )	99,031	-	-	-	-	-
Dividends unclaimed by shareholders beyond the statute of limitations	-	-	-	112	-	-	-	-	-	-	-	112	-
Transfer to rights directly related to VI (XII) non-current assets held for sale	-	-	-	-	-	-	-	-	( 91 )	-	91	-	-
Disposal of non-current assets held for sale	-	-	-	-	-	-	-	-	-	-	( 91 )	( 91 )	-
Balance on December 31, 2024	$ 1,445,480	$ 936,594	$ 3,386	$ 6,012	$ 10,681	$ 48	$ 69,665	($ 135,414 )	($ 3,790 )	$ 178,074	$ -	$ 2,510,736	$ 65,397
2025
Balance on January 1, 2025	$ 1,445,480	$ 936,594	$ 3,386	$ 6,012	$ 10,681	$ 48	$ 69,665	($ 135,414 )	($ 3,790 )	$ 178,074	$ -	$ 2,510,736	$ 65,397
Current net loss	-	-	-	-	-	-	-	( 383,404 )	-	-	-	( 383,404 )	( 5,890 )
Other comprehensive income VI (VII) (loss)	-	-	-	-	-	-	-	-	80	( 75,404 )	-	( 75,324 )	609
Total comprehensive income (loss)	-	-	-	-	-	-	-	( 383,404 )	80	( 75,404 )	-	( 458,728 )	( 5,281 )
Appropriation and distribution of VI (XVIII) 2024 earnings:
Legal reserve used to make up losses	-	-	-	-	-	-	( 69,665 )	69,665	-	-	-	-	-
Capital reserve to cover losses VI (XVIII)	-	( 45,622 )	( 3,386 )	( 6,012 )	( 10,681 )	( 48 )	-	65,749	-	-	-	-	-
Balance on December 31, 2025	$ 1,445,480	$ 890,972	$ -	$ -	$ -	$ -	$ -	($ 383,404 )	($ 3,710 )	$ 102,670	$ -	$ 2,052,008	$ 60,116

The attached notes to the consolidated financial reports are part of this consolidated financial report; please refer to them, too.

Chairman: Fang, Jung Hsi

Manager: Fang, Jung-Hsi

Accounting Officer: Jane Chang

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Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Cash Flows

January 1 to December 31, 2025 and 2024

Unit: NT$ Thousand

	Notes	January 1 to December 31, 2025	January 1 to December 31, 2024
Cash flow from operating activities
Net loss before tax for current period		($ 399,973)	($ 177,050)
Adjustment items
Income/expenses that do not affect cash flow
Depreciation expenses	VI (XXIII)	143,068	154,987
Amortized expenses	VI (XI) (XXIII)	38,451	39,160
Expected credit impairment loss (gain)		40,533	( 3,412 )
Losses on financial assets and liabilities at FVTPL	VI (II) (XXI)	4,211	18,146
Interest expense	VI (XXII)	1,879	4,570
Interest income		( 15,359 )	( 19,624 )
Dividend income	VI (XX)	( 2,440 )	( 1,219 )
Share of profit on affiliates accounted for using the equity method:	VI (VIII)	-	( 1,246 )
Gains from the disposal of property, plant, and equipment	VI (XXI)	( 1,023 )	( 4,929 )
Gains on disposal of investment accounted for using equity method	VI (XXI)	-	( 91 )
Impairment Loss on Non-Current Assets	VI (XXI)
Held for Sale		-	2,342
Gains on lease modification	VI(X)(XXI)	( 9 )	( 1,946 )
Changes in operating activities related assets/liabilities
Net changes in assets related to operating activities
Financial assets at fair value through profit or loss (FVTPL) - Current		750	4,900
Notes receivable		13,997	( 5,141 )
Accounts receivable		14,639	( 19,775 )
Accounts receivable - related parties		-	134,595
Other receivables		92,592	( 87,922 )
Inventory		( 8,012 )	( 4,425 )
Prepayments		2,798	4,803
Other current assets - others		( 74 )	( 364 )
Net changes in liabilities related to operating activities
Financial liabilities at fair value through profit or loss - Current		( 5,871 )	( 14,598 )
Contract liabilities - current		( 7,383 )	9,389
Accounts payable		( 4,527 )	( 39,566 )
Accounts payable - related parties		3,537	( 256 )
Other payables		( 33,600 )	61,297
Other payables - related parties		( 31 )	( 2,834 )
Other current liabilities - others		( 8,247 )	5,818
Cash inflow (outflow) from operations		( 130,094 )	55,609
Interest received		15,611	19,506
Dividends received		2,440	5,408
Interest paid		( 1,839 )	( 4,925 )
Income tax paid		( 224 )	( 1,100 )
Net cash inflow (outflow) from operating activities		( 114,106 )	74,498

(continued on next page)

Advanced Optoelectronic Technology Inc. and Subsidiaries
Consolidated Statement of Cash Flows
January 1 to December 31, 2025 and 2024

Unit: NT$ Thousand

	Notes	January 1 to December 31, 2025	January 1 to December 31, 2024
Cash flows from investing activities
Acquisition of financial assets at fair value through other comprehensive income - non-current		$ -	($ 13,051)
Financial assets at amortized cost		-	( 130,000 )
Disposal of financial assets at amortized cost		130,000	-
Disposal of non-current assets held for sale		-	1,086
Acquisition of property, plant, and equipment	VI (XXVI)	( 119,251 )	( 81,339 )
Disposal of property, plant, and equipment		8,227	29,025
Acquisition of intangible assets	VI (XXVI)	( 43,266 )	( 30,655 )
Decrease in refundable deposits		1,434	3,112
Decrease in other non-current assets - others		360	549
Net cash outflow from investing activities		( 22,496 )	( 221,273 )
Cash flow from financing activities
Repayment of lease principal	VI (XXVII)	( 12,289 )	( 19,271 )
Dividends unclaimed by shareholders beyond the statute of limitations		-	112
Net cash outflow from financing activities		( 12,289 )	( 19,159 )
Effect of exchange rate changes on cash and cash equivalents		961	3,470
Decrease in cash and cash equivalents for current period		( 147,930 )	( 162,464 )
Opening balance of cash and cash equivalents		1,225,968	1,388,432
Closing balance of cash and cash equivalents		$ 1,078,038	$ 1,225,968

The attached notes to the consolidated financial reports are part of this consolidated financial report; please refer to them, too.

Chairman: Fang, Jung Hsi
Manager: Fang, Jung-Hsi
Accounting Officer: Jane Chang

Advanced Optoelectronic Technology Inc. and Subsidiaries
Notes to Consolidated Financial Statements
2025 and 2024
Unit: NT$ Thousand
(unless otherwise stated)

I. Company history

Advanced Optoelectronic Technology Inc. (hereinafter referred to as the "Company") was incorporated in the Republic of China on October 2, 1999. The original name in Mandarin was changed (from "先進開發光電股份有限公司" to "榮創能源科技股份有限公司"), while the English name of the Company remains the same. The renaming was approved by the competent authority on July 14, 2000. The Company and its subsidiaries (collectively referred to as "the Group" hereinafter) primarily engage in the R&D, testing, manufacturing and sale of LEDs, as well as the import/export and trading of raw materials and semi-finished products. The Company's shares have been listed for trading on the Taiwan Stock Exchange since July 9, 2014.

II. Adoption of the date and procedures of the Financial Statements

The consolidated financial report was approved by the Board of Directors on March 12, 2026.

III. Applicable new and amended standards and interpretations

(I) Effect upon adoption of the new and amended IFRSs and accounting standards that came into effect and approved by the Financial Supervisory Commission ("FSC").

The following table sets forth the standards and interpretations newly released, amended, and revised of the IFRSs and accounting standards applicable in 2025 that came into effect and endorsed by the FSC:

New/revised/amended standards and interpretations	IASB
Amendments to IAS 21 "Lack of Convertibility"	January 1, 2025

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

(II) Effect of new issuances of or amendments to IFRSs and accounting standards as endorsed by the FSC but not yet adopted by the Group

The following table sets forth the standards and interpretations newly released, amended, and revised of the IFRSs and accounting standards applicable in 2026 endorsed by the FSC:

New/revised/amended standards and interpretations	Effective date announced by IASB
Amendments to IFRS 9 and IFRS 7: "Amendments to Classification and Measurement of Financial Instruments"	January 1, 2026
Amendments to IFRS 9 and IFRS 7 "Contracts Referencing Nature-dependent Electricity"	January 1, 2026
IFRS 17, 'Insurance contracts'	January 1, 2023
Amendments to IFRS 17, 'Insurance contracts'	January 1, 2023
Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 – comparative information'	January 1, 2023
Annual Improvements to IFRS Accounting Standards - Volume 11	January 1, 2026

The above standards and interpretations have no significant impact to the Group's financial condition and financial performance based on the Group's assessment.

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(III) IFRSs and accounting standards issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs and accounting standards as endorsed by the FSC are as follows:

New/revised/amended standards and interpretations	Effective date announced by IASB
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’	To be determined by International Accounting Standards January 1, 2027 (Note 1)
IFRS 18 "Presentation and Disclosure of Financial Statements"	January 1, 2027
IFRS 19 "Subsidiaries without Public Accountability: Disclosures"	January 1, 2027
Amendments to IAS 21 "Translation to a Hyperinflationary Presentation Currency"

Note: In a press release dated September 25, 2025, the FSC announced that International Financial Reporting Standard No. 18 (hereinafter referred to as "IFRS 18") will be applicable to publicly listed companies starting in 2028. Additionally, companies may elect to apply IFRS 18 early, provided they must obtain approval by the FSC.

Except as described below, the Group has assessed that the above standards and interpretations do not have a significant impact on the Group's financial position and financial performance:

IFRS 18 "Presentation and Disclosure of Financial Statements"

IFRS 18 "Presentation and Disclosure of Financial Statements" replaces IAS 1 and updates the structure of the statement of comprehensive income, adds disclosure of management performance measures, and strengthens the principles of aggregation and disaggregation applied to the primary financial statements and notes.

IV. Summary of significant accounting policies

The major accounting policies adopted in the preparation of this consolidated financial report are described below. Unless otherwise stated, these policies apply consistently throughout the reporting period.

(I) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers," International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the "IFRSs").

(II) Basis of preparation

Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

(1) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

(2) Financial assets at fair value through other comprehensive income.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

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(III) Basis of consolidation

Basis for preparation of consolidated financial statements:

(1) All subsidiaries of the Group are included in the consolidated financial statement. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

(2) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

(3) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

(4) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.

(5) When the Group loses control over a subsidiary, the remaining investment in the subsidiary is re-measured at fair value and treated as the fair value of the initially recognized financial assets or the cost on initial recognition of the investment in associates or joint ventures. The difference from the book value is recognized in the current profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

Subsidiaries included in the consolidated financial statements:

Name of investment company	Name of subsidiary	Main business activities	Ownership (%)
			December 31, 2025	December 31, 2024
Advanced Optoelectronic Technology Inc.	Advanced Optoelectronic Technology Holding Ltd. (Advanced)	Investments in various businesses	100%	100%
Advanced Optoelectronic Technology Inc.	Asphetek Solution Inc. (Asphetek)	Manufacture, R&D and sale of electronic components	47.33%	47.33%
Advanced	AOT Holding Ltd.	Investments in various businesses	100%	100%
AOT Holding Ltd.	ZHAN JING Technology (Shen ZHEN) Co., Ltd. (Zhan Jing)	Technology development, wholesale, import/export and related ancillary services of new electronic components and electronic products	100%	100%
Asphetek Solution	Asphetek Solution (Chengdu) Inc. (Asphetek Chengdu)	Manufacture and sale of electronic components	100%	100%

Subsidiaries not included in the consolidated financial statements: None.

Different adjustment and treatment methods of subsidiaries in the accounting period: This situation did not apply.
Significant restrictions: None.
Subsidiaries with material non-controlling equity of the Group: None.

(IV) Conversion of foreign currencies

Items included in the financial report of each entity within the Group are measured by the currency of the primary economic environment in which the entity operates (i.e. the functional currency). The consolidated financial statements are presented in the Company's functional currency, which is "New Taiwan Dollar".

Transactions and balances in foreign currencies

(1) Transactions in foreign currencies are converted into the functional currency at the spot exchange rate on the transaction or measurement date, and the difference from such conversion is recognized as the profits or losses for the current term.
(2) The balance of foreign currency assets and liabilities is adjusted according to the evaluation of the spot exchange rate on the balance sheet date, and the difference from such adjustment is recognized as the profits or losses for the current term.
(3) The balance of foreign currency non-monetary assets and liabilities measured at fair value through profit and loss is adjusted according to the spot exchange rate on the balance sheet date, and the exchange difference generated as a result of the adjustment is recognized as the current profit and loss; the value measured through other for the comprehensive profit or loss that is measured at fair value, it shall be adjusted according to the evaluation of the spot exchange rate on the balance sheet date, and the exchange difference arising from the adjustment shall be stated as the other comprehensive income. Those not measured using fair value shall be measured using historical rates on the initial trading day.
(4) All exchange gains and losses are reported in the "other gains and losses" of the comprehensive income statement.

Conversion of foreign operations

(1) For all group entities and affiliated enterprises whose functional currency is different from the presentation currency, the operating results and financial status are converted into the presentation currency in the following ways:

A. Assets and liabilities expressed in each balance sheet are converted at the closing exchange rate on the balance sheet date;
B. The income, expense, and loss expressed in each comprehensive income statement shall be converted at the average exchange rate in the current period; and
C. All exchange differences arising from conversion are recognized in other comprehensive income.

(2) When the foreign operations disposed or sold are affiliated companies, the exchange differences will be re-categorized under other comprehensive income proportionally to the current profits or losses as part of the sales profits or losses. However, if the Group still retains part of its equity in the former affiliate, but has lost its significant influence on the affiliated enterprise of foreign operations, it shall be treated as a disposal of all interests in the foreign operations.
(3) When the foreign operation that is partially disposed of or sold is a subsidiary, the accumulated exchange difference recognized in other comprehensive income is re-attributed to the non-controlling interests of the foreign operation on a pro-rata basis. However, if the Group still retains part of its equity in the former subsidiary but has lost control of the subsidiary of the foreign operation, it shall be treated as a disposal of all the equity of the foreign operation.

(V) Classification criteria for current and non-current assets and liabilities

Assets that meet one of the following conditions are classified as current assets:

(1) The asset is expected to be realized, sold or consumed in the normal business cycle.
(2) Mainly for trading purpose.
(3) Expected to be realized within 12 months after the balance sheet date.
(4) Cash or cash equivalents, except for those to be exchanged or used to settle liabilities in at least 12 months after the reporting period.

The Group classifies all assets not meeting the above conditions as non-current.

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Liabilities that meet one of the following conditions are classified as current liabilities:

(1) Expected to be settled in the normal business cycle.
(2) Mainly for trading purpose.
(3) Expected to be settled within 12 months after the reporting period.
(4) Those that do not have the right to defer settlement of the liability for at least twelve months after the reporting period.

The Group classifies all liabilities that do not meet the above conditions as non-current.

(VI) Cash equivalents

Cash equivalents refer to short-term and highly liquid investments that can be converted into a fixed amount of cash at any time with little risk of changes in value. Time deposits that meet the definition above and mature within three months from the date of acquisition and are held to meet short-term cash commitments in operations are classified as cash equivalents.

(VII) Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are not measured at amortized cost or at fair value through other comprehensive income.
The Group adopts trade date accounting for financial assets measured at fair value through profit or loss that meet the requirements for regular way transactions.
The Group measures their fair values at the time of initial recognition, and the relevant transaction costs are recognized in profit or loss; subsequently, they are measured at fair value, and the profits or losses are recognized in profit or loss.

(VIII) Financial assets at FVTOCI

Refers to an irrevocable choice made at the time of original recognition to recognize the changes in the fair value of the equity instrument investment held not for trading in other comprehensive profit or loss.
The Group adopts trade date accounting for financial assets measured at fair value through other comprehensive income that meet the requirements for regular way transactions.
The group measures their fair value plus transaction costs at the time of original recognition, and is subsequently measured at fair value:

Changes in the fair value of equity instruments are recognized in other comprehensive income. At the time of derecognition, the cumulative gain or loss previously recognized in other comprehensive income shall not be reclassified to profit or loss but transferred to retained earnings. When the right to receive dividends is established, the economic benefits related to the dividends are very likely to inflow, and the dividend amount can be measured reliably, the Group recognizes dividend income in profit or loss.

(IX) Financial assets at amortized cost

These refer to assets that simultaneously meet the following conditions:

(1) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows.
(2) The contractual terms of the financial assets generate the cash flow on a specific date, which are solely for the payment of the principal and interest on the outstanding principal amount.

The Group adopts trade date accounting for financial assets measured at amortized cost that meet the requirements for regular way transactions.
The Group initially recognizes these assets at fair value plus transaction costs, and subsequently measures them using the effective interest method to amortize and recognize interest income over the circulation period, recognize impairment losses, and recognize gains or losses in profit or loss upon derecognition.
Due to the short holding period, the fixed deposits held by the Group that do not conform to cash equivalents have a little discount effect and are therefore measured by the investment amount.

(X) Accounts and notes receivable

Refer to the accounts and notes for which the contract provides for the unconditional right to receive the amount of consideration obtained from the transfer of goods or services.

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For short-term accounts and notes receivable without interest payment, due to the insignificant discount effect, the Group measured the value based on the original invoice amount.
The business model of the accounts receivable that the Group expects to sell is for the purpose.

(XI) Impairment of financial assets

On each balance sheet date, the Group, with respect to financial assets measured at amortized cost and accounts receivable containing major financial components, considers all reasonable and supporting information (including forward-looking ones). Where the credit risk has not increased significantly since the original recognition, the loss allowance shall be measured at the 12-month expected credit loss amount; where the credit risk has increased significantly since the original recognition, the loss allowance shall be measured at the expected credit loss amount throughout the duration. For the accounts receivable that do not contain significant financial components, the allowance for loss is measured at the expected credit losses throughout the duration.

(XII) Derecognition of financial assets

The Group will de-recognize financial assets when one of the following conditions is met:

Invalidation of the contractual right to receive cash flows from financial assets.
The contractual rights over the cash flows of financial assets are transferred, and almost all risks and rewards of ownership of the financial assets have been transferred.
The Company has transferred the contractual rights over the cash flows of financial assets, but has not retained control over the financial assets.

(XIII) Inventory

Inventories are measured at the lower of cost or net realizable value, and the cost is determined in accordance with the weighted average method. The cost of finished goods and work-in-progress includes raw materials, direct labor, other direct costs, and production-related manufacturing expenses (allocated according to normal production capacity), but does not include borrowing costs. Where the lower cost and net realizable value, the itemized comparison method is adopted. Net realizable value is the balance from the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs required to complete the sale.

(XIV) Investment under equity method - Affiliated companies

Affiliated companies are entities over which the Group has significant influence but no control. Generally, the Group holds more than 20% of their shares with voting rights directly or indirectly. The Group's investment in an affiliated company is accounted for under the equity method and is recognized at time of acquisition at cost.
The Group recognizes the share of profit or loss of the affiliated company as the current profit and loss, and recognizes the share of other comprehensive income after the acquisition as other comprehensive income. If the Group's share of losses on any affiliated company equals or exceeds its equity in the said affiliated company (including any other unsecured receivables), the Group will not recognize further losses, unless the Group incurs statutory obligations, constructive obligations, or payments made on behalf of them.
When there is an equity change in the non-profit and loss and other comprehensive income in the affiliated company with no impact on the shareholding ratio of the affiliated company, the group will recognize all the equity changes as "capital reserve" according to the shareholding ratio.
The unrealized profits or losses arising from transactions between the Group and an affiliate have been written off proportionally to the equity the Group holds in the said affiliate. Unless evidence shows that assets transferred through the said transaction are impaired, unrealized losses are written off, too. Accounting policies of affiliated companies have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
If the Group fails to subscribe or acquire new shares in proportion to the issuance of new shares, resulting in a change in the investment proportion but still a significant influence on the affiliate, the increase or decrease in the change in the net value of equity shall be the adjustment of the "Capital Surplus" and "Equity-Method Investment." If the proportion of investment decreased as a result, except for the above adjustment, related to the decrease in ownership interest and has been recognized in the profit or loss of other comprehensive income before, and the profit or loss must be reclassified to profit and loss during the disposal of related assets or liabilities, if any, is reclassified to profit or loss proportionally.

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When the Group disposes of an associate, if it loses its material influence on the associate, for all amounts recognized in other comprehensive income related to the associate, its accounting treatment will be the same as if the group directly disposes of the relevant assets or liabilities. On the same basis, i.e. if the gain or loss previously recognized as other comprehensive income will be reclassified as profit or loss when the related assets or liabilities are disposed, losing material influence on the affiliates, the profit or loss is reclassified from equity to profit or loss. If it still has significant influence on the affiliated company, only the amount recognized previously in other comprehensive income shall be transferred out proportionally.
The Group conducts impairment tests on associates with signs of impairment at the balance sheet date by treating the overall carrying amount of the investment (including goodwill) as a single asset and comparing its recoverable amount (the higher of value in use or fair value less costs to sell) with the book value. The recognized impairment loss will be included in the carrying amount of the investment. Impairment losses are reversed to the extent of any subsequent increase in the investment's recoverable amount.

(XV) Property, plant, and equipment

Property, plant, and equipment are recorded at the acquisition cost.
Subsequent costs are included in the book value of assets or recognized as a separate asset only when the future economic benefits related to the project are likely to flow into the Group and the cost of the project can be measured reliably. The book value of replacements shall be de-recognized. All other maintenance expenses are recognized as income at the time of occurrence.
Property, plant, and equipment are subsequently measured at cost. Except for land, no depreciation is made, whereas depreciation is calculated using the straight-line method over the estimated useful years. If the components of property, plant and equipment are significant, they are separately depreciated.
The Company examines the residual value, useful lives and depreciation methods of each asset at the end of each fiscal year. If the residual value and useful lives are different from the estimates, or if there is a material change in the expected consumption pattern of future economic benefits of the asset, the effect shall be treated in accordance with the provisions of IAS 8 "Accounting Policies, Changes and Errors in Accounting Estimates" from the date of the occurrence of the changes.

The durability of each asset is as follows:

Houses and buildings	3 - 26 years
Machinery and equipment	1 - 6 years
Office equipment	6 years
Other equipment	1 - 6 years

(XVI) Lease transactions with lessees - right-of-use assets/lease liabilities

Lease assets are recognized as right-of-use assets and lease liabilities on the date they are available for use by the Group. When the lease contract is a short-term lease or lease of a low-value target asset, the lease payment shall be recognized as expenses during the lease period using the straight-line method.
Lease liabilities are recognized at the present value of the lease payments that have not been paid at the beginning of the lease at the discounted current value of the Group's incremental borrowing rate. Lease payments include fixed payments, less any lease incentives receivable.

Subsequently, the interest method is adopted and measured by the after-amortization cost, and interest expenses are provided during the lease period. When the lease period or lease payment changes other than contract modification, the lease liabilities will be reassessed and the right-of-use assets will be re-measured.

The right-of-use assets are recognized at cost on the lease start date, and the cost includes the initially measured amount of the lease liabilities.

The subsequent measurement is based on the cost model, and the depreciation expense is recognized when the service life of the right-of-use assets expires or the lease term expires, whichever is earlier. When the lease liabilities are reassessed, the right-of-use assets will adjust any re-measurement of the lease liabilities.

For the lease modification that reduces the scope of the lease, the lessee will reduce the book value of the right-of-use assets to reflect the partial or full termination of the lease, and recognize the difference between the re-measured amount of the leasehold and the lease liabilities in profit or loss. For all other lease modifications, the book value of the right-of-use asset shall be adjusted to correspond with the remeasured lease liability.

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(XVII) Intangible assets

The royalty is recognized at the acquisition cost and amortized over the effective years of the contract.
Computer software is recognized at the cost of acquisition and amortized using the straight-line method over 1 to 10 years of estimated durability.

(XVIII) Non-current Assets Held for Sale

When the carrying amount of a non-current asset will be recovered principally through a sale transaction rather than through continuing use, and the sale is highly probable, it is classified as held for sale and measured at the lower of its carrying amount and fair value less costs to sell.

(XIX) Borrowings

Refers to short-term borrowings from banks. The group measures their fair value less transaction costs at the time of initial recognition, and subsequently, for any difference between the price after deducting transaction costs and the redemption value, the effective interest method is used to recognize interest expenses during the outstanding period according to the amortization procedure in profit or loss.

(XX) Financial liabilities measured at fair value through profit or loss

Financial liabilities held for trading with the main purpose of repurchasing in the near future and derivatives other than those designated as hedging instruments according to hedge accounting.
The Group measures their fair values at the time of initial recognition, and the relevant transaction costs are recognized in profit or loss; subsequently, they are measured at fair value, and the profits or losses are recognized in profit or loss.

(XXI) Accounts payable

Refers to liabilities arising from the purchase of raw materials, commodities, or labor services on credit and accounts payable arising from business and non-business reasons.
For short-term accounts payable with unpaid interest, the impact of discounting is small, and the Group measures them at the original invoice amount.

(XXII) Derecognition of financial liabilities

The Group will derecognize financial liabilities when the contractual obligation is fulfilled, canceled or expired.

(XXIII) Non-hedging derivative instruments

Non-hedging derivatives are measured at the fair value on the contract signing date at the time of original recognition, and recognized as financial assets or liabilities measured at fair value through income; subsequently, they are measured at fair value, and the profit or loss is recognized in profit or loss.

(XXIV) Employee benefit

Short-term employee benefits

Short-term employee benefits are measured by the non-discounted amount expected to be paid, and stated as expenses when the related services are provided.

Pension fund

(1) Determined contribution plan

For the defined contribution plan, the amount to be allocated to the pension fund is recognized as the pension cost in the current period on an accrual basis. Prepaid contribution is recognized as assets to the extent of refundable in cash or reduced in future payments.

(2) Defined benefit plan

A. The net obligation under the defined benefit plan is calculated by discounting the future benefit amount earned by the employee in the current period or in the past, and the fair value of the plan asset is deducted from the present value of the defined benefit obligation on the balance sheet date. An actuary using the Projected Unit Credit Method estimates defined benefit obligations each year. The discount rate is the market yield rate of the government bonds (at the balance sheet date) with the same currency and duration as the defined benefit plan on the balance sheet date.

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B. The re-measurement generated from the defined benefit plan shall be stated as other comprehensive income in the current period and presented in the retained earnings.

Termination benefits

Termination benefits are the benefits provided upon termination of employment before a normal retirement date or provided by employees upon acceptance of an offer of benefits in exchange for the termination of employment. The Group will not state the benefits as expenses until the offer of benefits cannot be withdrawn or the related reorganization cost is stated, whichever earlier. It is not expected that benefits in full 12 months after balance sheet date will be discounted.

Remuneration to employees and directors

The remuneration of employees and directors is recognized as expenses and liabilities when they have legal or constructive obligations and the value can be reasonably estimated. Subsequently, if the actual distributed amount resolved is different from the estimate, the difference shall be treated as a change in accounting estimate.

(XXV) Income tax

Income tax expenses include current and deferred income tax. Income tax is recognized in profit or loss, except for the income tax related to the items recognized in other comprehensive profit or loss or recognized directly in equity and recognized in other comprehensive profit or loss or directly recognized in equity, respectively.
The current income tax is calculated according to the tax rate that has been enacted or substantially enacted in the countries where the Group is operating and generating taxable income on the balance sheet date. The management regularly evaluates the status of income tax filings for applicable income tax laws and regulations, and estimates income tax liabilities based on the taxes expected to be paid to the tax authorities, if applicable. The income tax for undistributed earnings that is levied in accordance with the Income Tax Act is to be recognized in undistributed earnings income tax expenses in accordance with the actual distribution of earnings in the year following the year in which the earnings are generated, after the proposal for distribution of earnings is passed at the shareholders' meeting.
The balance sheet method is adopted for deferred income tax, and the temporary difference generated between the tax bases of assets and liabilities and the book value in the consolidated balance sheet is recognized. If the deferred income tax arises from the initial recognition of assets or liabilities in a transaction (excluding business merger), and the accounting profit or taxable income (taxable loss) is not affected by the transaction, and does not generate equivalent taxable amount and deductible temporary differences, the deferred income tax shall not be recognized. Taxable temporary difference generated from investment in subsidiaries and affiliates, of which the time of reverse is controllable by the Group and which is not likely to be reversed in the foreseeable future, shall not be recognized. Deferred income tax is subject to the tax rate (and tax law) that has been enacted or substantively enacted on the balance sheet date and is expected to apply when the relevant deferred income tax assets are realized or the deferred income tax liabilities are settled.
Deferred income tax assets shall be recognized, insofar as temporary difference is very likely to offset against future taxable income, and the unrecognized and recognized deferred income tax assets shall be re-evaluated on each balance sheet date.
Current income tax assets and liabilities are offset against each other when the Company has the legally enforceable right to offset the recognized amounts and the Company intends to settle on a net basis or realize assets and settle liabilities simultaneously. When there is a legally enforceable right to offset current income tax assets against current income tax liabilities, and the deferred income tax assets and liabilities are levied by the same tax authority for the same tax subject, or different tax subjects resulted, but each tax subject intends for the deferred income tax assets and liabilities to offset against each other when they are settled on a net basis or the assets and liabilities are realized at the same time.

(XXVI) Share capital

Common shares are classified as equity. The incremental cost directly attributable to the issuance of new shares or stock warrants, net of income tax, is stated as a deduction in equity.

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(XXVII) Distribution of dividends

Dividends distributed to the Company's shareholders are recognized in the financial statements when the Company's shareholders' meeting decides to distribute such dividends. Cash dividends are recognized as liabilities, and stock dividends are recognized as stock dividends to be distributed and recognized as common stock on the base date of issuance of new shares.

(XXVIII) Recognition of income

Sales of goods

The Group manufactures and sells LED and other related products. The sales revenue is recognized when the control of the product is transferred to the customer, that is, when the product is delivered to the customer and the Group has no outstanding performance obligation that may affect the customer in accepting the product. When the product is delivered to the designated location, the risk of obsolescence and loss has been transferred to the customer, and the customer accepts the product according to the sales contract, or there is objective evidence to prove that all acceptance criteria have been met.
Accounts receivable are recognized when the goods are delivered to the customer. Since then, the group has unconditional rights to the contract price, and the consideration can be collected from the customer after a certain period of time.

(XXIX) Government grants

Government grants are recognized at fair value when it is reasonably certain that the enterprise will comply with the conditions attached to the government grant and will receive the grant. If the government subsidies, in nature, are intended to compensate the expenses incurred by the Group, the government subsidies shall be recognized as current profit or loss on a systematic basis during the period when the relevant expenses are incurred.

(XXX) Operational department

The information of the Group's operating segments is reported consistently with the internal management reports provided to major operational decision-makers. The chief operational decision-makers are responsible for allocating resources to operating departments and evaluating their performance.

V. Major sources of significant accounting judgments, estimates, and assumptions uncertainty

When the Group prepared this consolidated financial report, the management has used its judgment to determine the adopted accounting policies, and made accounting estimates and assumptions based on the reasonable expectation of future events based on the situation on the balance sheet date. The significant accounting estimates and assumptions made may differ from the actual results. Historical experience and other factors will be considered for continuous evaluation and adjustment. These estimates and assumptions contain risks that may result in significant adjustments to the book values of assets and liabilities in the next fiscal year. Please see below for a detailed description of the uncertainty of significant accounting judgments, estimates, and assumptions:

(I) Important judgments adopted for accounting policies

None.

(II) Important accounting estimates and assumptions

Valuation of inventories

Because inventories must be priced at the lower of the cost and net realizable value, the Group must use judgment and estimation to determine the net realizable value of inventories on the balance sheet date. Due to the large number of competitors in mainland China, commodity prices are susceptible to fluctuations or product sales are not as good as expected. The Group assesses the amount of inventory on the balance sheet date due to normal wear and tear, obsolescence, or no market sales value, and writes off the cost of the inventories against it to net realizable value. This inventory evaluation is mainly based on the estimated product demand in a specific period in the future, so significant changes may occur.

On December 31, 2025, the book value of the Group's inventories amounted to NT$191,226.

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VI. Description of important accounting items

(I) Cash and cash equivalents

	December 31, 2025	December 31, 2024
Cash in stock and petty cash	$ 29	$ 29
Checking and demand deposits	256,008	477,989
Time deposit	822,001	747,950
	$ 1,078,038	$ 1,225,968

The financial institutions that the Group does business with have good credit quality, and the Group does business with multiple financial institutions to diversify credit risk, and the possibility of expected default is very low.
The Group does not put cash and cash equivalents up for pledge.

(II) Financial assets and liabilities at FVTPL

Assets	December 31, 2025	December 31, 2024
Current items:
Financial assets mandatorily measured at fair value through profit or loss
Derivatives
-Forward Exchange Contract	$ 20	$ 770
Non-current items:
Financial assets mandatorily measured at fair value through profit or loss
Non-listed, OTC, or emerging stocks	$ 40,619	$ 40,619
Adjustment of evaluation	( 40,619)	( 40,619)
	$ -	$ -
Liabilities items	December 31, 2025	December 31, 2024
Current items:
Financial liabilities held for trading
Derivatives
-Forward Exchange Contract	($ 3,049)	($ 4,709)

The details of financial assets and liabilities measured at fair value through profit and loss recognized in profit and loss are as follows:

	2025	2024
Financial assets mandatorily measured at fair value through profit or loss and available-for-sale financial liabilities
Derivatives	($ 4,211)	($ 18,146)

The transaction and contract information of derivative financial assets and liabilities not subject to hedging accounting are explained as follows:

	December 31, 2025
Derivative financial assets (liabilities)	Contract amount (nominal principal)	(NTD thousand)	Duration of the contract
Current items:
Forward Exchange Contract
Sell USD and buy NTD	US Dollars	2,000	2025/10/17~2026/02/25
Sell USD and buy JPY	Japanese Yen	139,170	2025/10/07~2026/03/06
Sell CNY to buy NTD	CNY	4,500	2025/09/24~2026/03/25
Sell CNY and buy USD	CNY	6,200	2025/10/16~2026/03/13
	December 31, 2024
Derivative financial assets (liabilities)	Contract amount (nominal principal)	(NTD thousand)	Duration of the contract
Current items:
Forward Exchange Contract
Sell USD and buy NTD	US Dollars	6,000	2024/10/07~2025/03/21
Sell USD and buy JPY	Japanese Yen	78,700	2024/10/14~2025/03/07
Sell CNY to buy NTD	CNY	8,200	2024/09/20~2025/04/25
Sell CNY and buy USD	CNY	7,600	2024/09/04~2025/03/14

The foreign exchange forward transactions entered into by the Group are pre-sale forward transactions to avoid the exchange rate risk of export proceeds; the foreign exchange swaps contract is for currency exchange at a fixed exchange rate, and hedge accounting is not applied to meet the need for capital dispatch.

For information on the credit risk of financial assets and liabilities at fair value through profit and loss, please refer to Note XII (II).

(III) Financial assets at amortized cost

Items	December 31, 2025	December 31, 2024
Current items:
Time deposits with original maturity date of more than three months	$ -	$ 130,000

Details of financial assets measured at amortized cost recognized in profit or loss are as follows:

Interest income	2025	2024
	$ -	$ 103

Without considering collateral held or other credit enhancements, the maximum exposure to credit risk for financial assets measured at amortized cost as of December 31, 2025 and 2024 was $0 and $130,000 respectively, representing the carrying amount of the financial assets held by the Group.
The Company has not pledged any financial assets measured at amortized cost as collateral.
For related credit risk information on financial assets measured at amortized cost, please refer to Note XII(II). The Company's counterparties for time deposit investments are financial institutions with good credit quality, and the probability of default is very low.

-25-

(IV) Notes and accounts receivable

	December 31, 2025	December 31, 2024
Notes receivable	$ 763	$ 14,760
Accounts receivable	$ 451,010	$ 465,649
Less: Allowance for losses	( 45,279)	( 4,358)
	$ 405,731	$ 461,291

Aging analysis of accounts and notes receivable are as follows:

	December 31, 2025		December 31, 2024
	Accounts receivable	Notes receivable	Accounts receivable	Notes receivable
Not overdue	$ 405,624	$ 763	$ 463,744	$ 14,760
Within 30 days of overdue	2,262	-	1,182	-
Past due 31-60 days	667	-	723	-
Past due 61-90 days	340	-	-	-
Overdue by more than 91 days	42,117	-	-	-
	$ 451,010	$ 763	$ 465,649	$ 14,760

The above is an aging analysis based on the number of overdue days.

The balances of notes and accounts receivable as of December 31, 2025 and 2024 were all generated from contracts with customers. Additionally, as of January 1, 2024, the balance of receivables from contracts with customers and the allowance for losses were NT$590,088 and NT$7,186, respectively.
Without considering the collateral or other credit-enhancing collaterals held, the measure that best represents the exposure to the Group's notes and accounts receivable with the highest credit risk, the risk exposure amounted to NT$406,494 and NT$476,051 on December 31, 2025 and December 31, 2024, respectively.
As of December 31, 2025 and 2024, the Group's accounts receivable transferred to collection accounts (presented under other non-current assets) amounted to $482,227 and $482,587, respectively, for which allowance for losses has been fully provided. For the years 2025 and 2024, the reversal of allowance for losses on collection accounts was NT$360 and NT$549, respectively, and the amount written off due to uncollectibility was $0 and (NT$442), respectively.
In order to increase the credit limit of some customers, the Group obtained guarantee letters of credit and guarantee deposits from some customers.
For credit risk information of notes and accounts receivable, please see Note XII(II).

(V) Transfer of financial assets

The Company signed an accounts receivable transfer contract with Taipei Fubon Bank on November 3, 2020. According to the contract, the Company does not have to bear the risk of uncollectible accounts receivable, but only needs to bear the losses resulting from commercial disputes. The Company has not had any continuing involvement in the transferred accounts receivable. Therefore, the Company de-recognized the selling accounts receivable and the relevant information not due yet is as follows:

Unit: NTD thousand

December 31, 2025
Target for sale	Amount of selling accounts receivables	Derecognition amount	Amount paid in advance	Permissible advance payment	The interest rate range of the prepaid amount
Taipei Fubon Bank	USD 1,767	USD 1,767	USD 1,453	USD -	4.55%
December 31, 2024
Target for sale	Amount of selling accounts receivables	Derecognition amount	Amount paid in advance	Permissible advance payment	The interest rate range of the prepaid amount
Taipei Fubon Bank	USD 3,071	USD 3,071	USD -	USD -	0.00%

As of December 31, 2025 and 2024, the selling accounts receivable assigned by the Company included retentions of NT$9,859 and NT$100,690, respectively, which had been transferred to other receivables.

(VI) Inventory

	December 31, 2025
	Cost	Allowance for devaluation losses	Book value
Raw materials	$ 92,348	($ 20,671)	$ 71,677
Work-in-progress	65,969	( 20,297)	45,672
Finished goods	93,026	( 19,819)	73,207
Merchandise inventory	670	-	670
	$ 252,013	($ 60,787)	$ 191,226
	December 31, 2024
	Cost	Allowance for devaluation losses	Book value
Raw materials	$ 62,854	($ 19,522)	$ 43,332
Work-in-progress	91,261	( 20,522)	70,739
Finished goods	82,099	( 12,956)	69,143
Merchandise inventory	42	( 42)	-
	$ 236,256	($ 53,042)	$ 183,214

Inventory cost recognized as expenses and losses by the Group in the current period:

	2025	2024
Cost of sold inventory	$ 1,493,029	$ 1,649,225
Loss of idle capacity	45,409	38,121
Inventory Loss on devaluation (gain on recovery) (Note)	11,530	( 2,740)
Income from sale of scraps	( 8,943)	( 11,617)
	$ 1,541,025	$ 1,672,989

Note: The recovery of gains in 2024 was mainly due to the fact that the Group actively disposed of idle inventories.

(VII) Financial assets at FVTOCI

	December 31, 2025	December 31, 2024
Non-current items:
Equity instruments
Listed company stock	$ 184,583	$ 184,583
Emerging stocks	20,032	20,032
	204,615	204,615
Adjustment of evaluation	102,670	178,074
	$ 307,285	$ 382,689

The Group has elected to classify equity investments that are considered strategic as financial assets measured at fair value through other comprehensive income. The fair values of these investments as of December 31, 2025 and 2024 were NT$307,285 and NT$382,689, respectively.
The details of financial assets measured at fair value through other comprehensive income recognized in profit or loss and comprehensive income are as follows:

	2025	2024
Equity instruments at FVTOCI
Changes in fair value recognized in other comprehensive income	($ 75,404)	$ 163,684
Dividend income recognized in profit or loss held at the end of the period	$ 2,440	$ 1,219

For information on the credit risk of financial assets at fair value through other comprehensive income, please refer to Note XII (II).

(VIII) Investment under equity method - Affiliated enterprise

Statement of changes and details are as follows:

	2025	2024
January 1	$ -	$ 6,222
Share of investment income accounted for using equity method	-	1,246
Investment earnings distribution under equity method	- (	4,189)
Other changes in equity	-	122
Reclassification to non-current assets held for sale	- (	3,401)
December 31	$ -	$ -
	December 31, 2025	December 31, 2024
---	---	---
ELUX, Inc. (ELUX)	$ 24,953	$ 24,953
Accumulated impairment	( 24,953)	( 24,953)
	$ -	$ -

(1) Due to the poor operation of ELUX, Inc., the value of investment had indeed been impaired, so the Company recognized impairment loss of $24,953 in 2019.
(2) In July 2024, the Group sold its entire 20% equity interest in Guangdong Kaichuang Display Technology Co., Ltd.

Share of profit or loss on affiliates accounted for using the equity method:

Guangdong Kai Chuang	$ 2025	-	$ 2024	1,246

The book value and operating result share of the Group's individual non-material affiliates are summarized as follows:

As of December 31, 2025 and 2024, the book values of the Group's individually immaterial associates were NT$0 for both years.

	2025	2024
Net income for the period	$ -	$ 1,246
Other comprehensive income (net amount after tax)	-	122
Total comprehensive income (loss)	$ -	$ 1,368

~28~

(IX) Property, plant, and equipment

	2025
	Land	Houses and buildings	Machinery and equipment	Office equipment	Other equipment	Unfinished construction and equipment pending inspection	Total
January 1
Cost	$ 160,357	$ 802,217	$ 1,729,087	$ 74,451	$ 269,490	$ 37,281	$ 3,072,883
Accumulated depreciation and impairment	-	( 519,629)	( 1,591,777)	( 69,571)	( 259,921)	-	( 2,440,898)
	$ 160,357	$ 282,588	$ 137,310	$ 4,880	$ 9,569	$ 37,281	$ 631,985
January 1	$ 160,357	$ 282,588	$ 137,310	$ 4,880	$ 9,569	$ 37,281	$ 631,985
Increase	-	-	-	-	-	106,966	106,966
Disposal	-	-	( 7,204)	-	-	-	( 7,204)
Reclassification	-	6,537	79,541	10,594	21,340	( 118,012)	-
Depreciation expenses	-	( 51,056)	( 60,192)	( 2,838)	( 16,307)	-	( 130,393)
Net exchange difference	-	-	( 246)	( 4)	25	-	( 225)
December 31	$ 160,357	$ 238,069	$ 149,209	$ 12,632	$ 14,627	$ 26,235	$ 601,129
December 31
Cost	$ 160,357	$ 808,754	$ 1,741,549	$ 82,896	$ 250,844	$ 26,235	$ 3,070,635
Accumulated depreciation and impairment	-	( 570,685)	( 1,592,340)	( 70,264)	( 236,217)	-	( 2,469,506)
	$ 160,357	$ 238,069	$ 149,209	$ 12,632	$ 14,627	$ 26,235	$ 601,129

	2024
	Land	Houses and buildings	Machinery and equipment	Office equipment	Other equipment	Unfinished construction and equipment pending inspection	Total
January 1
Cost	$160,357	$798,633	$1,916,605	$74,766	$310,742	$18,856	$3,279,959
Accumulated depreciation and impairment	-	(470,106)	(1,740,647)	(65,500)	(301,777)	-	(2,578,030)
	$160,357	$328,527	$175,958	$9,266	$8,965	$18,856	$701,929
January 1	$160,357	$328,527	$175,958	$9,266	$8,965	$18,856	$701,929
Increase	-	-	-	-	-	92,591	92,591
Disposal	-	-	(24,004)	(92)	-	-	(24,096)
Reclassification	-	5,007	53,402	331	15,639	(74,379)	-
Depreciation expenses	-	(50,946)	(68,089)	(4,647)	(15,065)	-	(138,747)
Net exchange difference	-	-	43	22	30	213	308
December 31	$160,357	$282,588	$137,310	$4,880	$9,569	$37,281	$631,985
December 31
Cost	$160,357	$802,217	$1,729,087	$74,451	$269,490	$37,281	$3,072,883
Accumulated depreciation and impairment	-	(519,629)	(1,591,777)	(69,571)	(259,921)	-	(2,440,898)
	$160,357	$282,588	$137,310	$4,880	$9,569	$37,281	$631,985

(X) Lease transaction - Lessee

The Group's leased assets include land, buildings, and machinery. The lease terms typically range from 1 to 3 years. Lease contracts are individually negotiated and contain various different terms and conditions. Other than restrictions that the leased assets may not be used as loan collateral, no other restrictions are imposed.
The machinery and equipment leased by the Group with the lease period not exceeding 12 months and the target assets leased of low value are machinery and equipment and are not included in the right-of-use assets.
Information on the carrying amount and recognized depreciation expense of right-of-use assets is as follows:

	December 31, 2025
	Cost	Accumulated depreciation	Book value
House	$ 10,267	($ 3,501)	$ 6,766
Machinery and equipment	29,820	( 9,112)	20,708
	$ 40,087	($ 12,613)	$ 27,474
	December 31, 2024
	Cost	Accumulated depreciation	Book value
Land	$ 3,160	($ 2,809)	$ 351
House	2,565	( 1,937)	628
	$ 5,725	($ 4,746)	$ 979
	2025	2024
	Depreciation expenses	Depreciation expenses
Land	$ 351	$ 1,054
House	3,542	2,646
Machinery and equipment	8,782	12,540
	$ 12,675	$ 16,240

The Group's additions to right-of-use assets in 2025 and 2024 were NT$38,638 and NT$11,735, respectively.
The information on profit and loss items related to lease contracts is as follows:

	2025	2024
Items affecting current profit and loss
Interest expense of lease liabilities	$ 1,012	$ 1,144
Expenses of short-term lease contracts	1,119	1,972
Expenses of low-value asset lease	380	386
Gains on lease modification	9	1,946

The Group's total cash outflow for leases in 2025 and 2024 was NT$14,800 and NT$22,773, respectively.

(XI) Intangible assets

	2025
	Royalties	Computer software	Total
January 1
Cost	$ 147,672	$ 71,157	$ 218,829
Accumulated amortization	( 73,836)	( 69,360)	( 143,196)
	$ 73,836	$ 1,797	$ 75,633
January 1	$ 73,836	$ 1,797	$ 75,633
Increase	-	6,660	6,660
Amortized expenses	( 36,918)	( 1,533)	( 38,451)
December 31	$ 36,918	$ 6,924	$ 43,842
December 31
Cost	$ 147,672	$ 77,817	$ 225,489
Accumulated amortization	( 110,754)	( 70,893)	( 181,647)
	$ 36,918	$ 6,924	$ 43,842
	2024
	Royalties	Computer software	Total
January 1
Cost	$ 147,672	$ 71,157	$ 218,829
Accumulated amortization	( 36,918)	( 67,118)	( 104,036)
	$ 110,754	$ 4,039	$ 114,793
January 1	$ 110,754	$ 4,039	$ 114,793
Amortized expenses	( 36,918)	( 2,242)	( 39,160)
December 31	$ 73,836	$ 1,797	$ 75,633
December 31
Cost	$ 147,672	$ 71,157	$ 218,829
Accumulated amortization	( 73,836)	( 69,360)	( 143,196)
	$ 73,836	$ 1,797	$ 75,633

The details of amortization of intangible assets are as follows:

	2025	2024
Operating cost	$ 398	$ 495
Sales and marketing expenses	36,918	36,918
Administrative expenses	1,135	1,609
R&D expenses	-	138
	$ 38,451	$ 39,160

(XII) Non-current Assets Held for Sale

In May 2024, the Group approved the sale of its entire 20% equity interest in its equity-method investment - Guangdong Kaichuang Display Technology Co., Ltd., and therefore reclassified the related assets and equity as a disposal group held for sale. As of June 30, 2024, the assets and equity of this disposal group held for sale amounted to $1,067 and $91, respectively. The Group completed the disposal process in July 2024.
The disposal group held for sale was remeasured at the lower of its carrying amount and fair value less costs to sell, using the expected disposal price as the basis for fair value assessment, resulting in an impairment loss of $2,342, which was recorded under other gains and losses.

(XIII) Other payables

	December 31, 2025	December 31, 2024
Salary and bonus payable	$ 111,210	$ 122,630
Payable outsourcing fees	55,806	51,111
Premiums payable	21,438	49,088

Payables for equipment	17,064	29,349
Labor and health insurance and pension payable	14,742	17,147
Payable commission	8,583	16,342
Others	63,997	76,510
	$ 292,840	$ 362,177

(XIV) Long-term notes and payables

	December 31, 2025		December 31, 2024
Premiums payable	$	12,572	$	49,178
Less: Current portion (presented under other payables)	(	12,572)	(	36,064)
	$	-	$	13,114

(XV) Pension fund

1.(1) The Company and its domestic subsidiaries has established the retirement policy with defined welfare in accordance with the "Labor Standards Act", which is applicable to the years of service of all regular employees before the "Labor Pension Act" went into effect on July 1, 2005; and the years of service of employees who elect to continue applying the Labor Standards Act after the implementation of the "Labor Pension Act." If an employee is eligible for retirement, the pension payment is based on the service years and the average salary of 6 months prior to retirement. Two base figures are given for each full year of service within 15 years, and one base figure will be granted after completing one year, but the cumulative maximum shall be limited to 45 base figures. The Company appropriates $2\%$ of the total salary on a monthly basis to the pension fund, which is deposited with the Bank of Taiwan in the name of the Labor Pension Fund Supervisory Committee. In addition, the Company estimates the balance of the aforementioned special accounts for labor pension before the end of each year. If the balance is not sufficient to pay the amount of pension benefits to employees eligible for retirement in the following year, the Company will make a lump-sum appropriation for the difference by the end of March of the following year.

(1) Since July 1, 2005, the Company has established the regulation for defined contribution plan in accordance with the "Labor Pension Act", which is applicable to employees of Taiwan nationality. For employees choosing the labor pension system under the "Labor Pension Act", the Company contributes $6\%$ of the monthly salary to the personal accounts of the employees with the Labor Insurance Bureau. The pension is paid according to the individual pensions of the employees. The amount of accumulated income and accumulated income is withdrawn as monthly pension or lump sum.

(2) For the subsidiaries in Mainland China, according to the endowment insurance system stipulated by the People's Republic of China, the Company contributes a certain percentage of the total salary of the local employees to the endowment insurance on a monthly basis. The pension fund of each employee is managed and arranged by the local government, and the subsidiaries have no further obligation other than the monthly contribution.

(3) In 2025 and 2024, the Group recognized pension cost amounting to $24,967 and NT$ 28,462, respectively, in accordance with the above regulations governing the recognition of pension fund.

~34~

(XVI) Share capital

As of December 31, 2025, the Company's rated capital was NT$2,400,000 and the paid-in capital was NT$1,445,480 with a par value of NT$10 per share. All issues paid for the Company's shares have been received.
The outstanding common stock (in thousands) at the beginning and end of the term is adjusted as follows:

January 1 (i.e. December 31)	2025	144,548	2024	144,548

(XVII) Capital Surplus

Pursuant to the Company Act, the premium from the issuance of shares above par value and the additional paid-in capital from the receipt of gifts may be used to make up for the losses. When the Company has no accumulated losses, new shares or cash are issued to shareholders in proportion to their existing shares. In addition, the Securities and Exchange Act requires that the amount of capital surplus to be capitalized mentioned above shall not exceed 10% of the paid-in capital each year. The company shall not use the capital reserve to make good its capital loss, unless the surplus reserve is insufficient to make good such loss.

(XVIII) Retained earnings

According to the Company's Articles of Incorporation, if the Company has earnings concluded each year, after paying taxes, the losses from previous years shall first be offset and then 10% of the remaining earnings shall be appropriated as legal reserves. The Company also makes provision or reversal of special reserve, if any, along with the accumulated undistributed earnings of the previous year in accordance with Article 41 of the Securities and Exchange Act.
The Company determines its future development and growth stage; establishes a sound financial structure; and protects the rights and interests of shareholders. The dividend distribution policy adopts cash and share method. The share dividend accounts for not more than half of all dividends in principle. The above ratio is adjusted according to the circumstances.
The legal reserve cannot be used for purposes other than to cover the accumulated losses of the company and for issuance of new shares or cash to shareholders in proportion of their original shareholding percentage, provided that the balance of the reserve exceeds 25% of the Company's paid-in capital.
When the Company distributes earnings, it is required by laws and regulations to set aside a special reserve for the debit balance of other equity items on the balance sheet date of the current year before distribution. When the debit balance of other equity items is subsequently reversed, the amount of reversal may be included in the earnings available for distribution.
The Company passed the motion for offsetting deficits in 2023 at the shareholders' meeting on June 27, 2024. NT$99,031 was made up for the losses with legal reserve.
On June 19, 2025, the Company's shareholders' meeting resolved to offset the loss for 2024. NT$69,665 from the statutory retained earnings reserve and $65,749 from the capital reserve were used to offset the loss.

(XIX) Operating revenue

	2025	2024
Revenue from customer contracts	$ 1,602,662	$ 2,035,208

Breakdown of revenue from contracts with customers

The income of the Group comes from the transfer of goods at a certain point in time. The income can be subdivided into the following geographical regions:

	2025	2024
Revenue from contracts with external customers
China	$ 1,310,262	$ 1,547,508
Taiwan	101,391	73,601
Vietnam	64,292	149,269
Hong Kong	62,354	97,293
South Korea	36,259	9,081
Turkey	19,382	64,040
USA	4,612	63,276
Others	4,110	31,140
	$ 1,602,662	$ 2,035,208

Contract liabilities

(1) The contractual liabilities related to the contractual income recognized by the Group are as follows:

	December 31, 2025	December 31, 2024	January 1, 2024
Contract liabilities:
Sales contract	$ 2,006	$ 9,389	$ -

(2) Contract liabilities at the beginning of the period recognized as revenue during the period

	2025	2024
Balance contract liabilities at the beginning of the period recognized as revenue during the period
Sales contract	$ 9,369	$ -

(XX) Other income

	2025	2024
Rent income	$ 688	$ 1,525
Dividend income	2,440	1,219
Income from government subsidies	3,542	-
Other income	36,620	39,138
	$ 43,290	$ 41,882

(XXI) Other gains and losses

	2025	2024
Gain on foreign currency exchange	$ 2,054	$ 26,638
Gains from the disposal of property, plant, and equipment	1,023	4,929
Impairment Loss on Non-Current Assets Held for Sale	-	( 2,342)
Losses on financial assets and liabilities at FVTPL	( 4,211)	( 18,146)
Gains on disposal of investment accounted for using equity method	-	91
Gains on lease modification	9	1,946
Miscellaneous expenses	( 163)	-
	($ 1,288)	$ 13,116

(XXII) Financial cost

	2025	2024
Interest expense:
Borrowings from banks	$ 129	$ 66
Lease liabilities	1,012	1,144
Other financial expenses	738	3,360
	$ 1,879	$ 4,570

(XXIII) Employee benefits, depreciation and amortization expenses

	2025
	Attributable to operating cost	Attributable to operating expenses	Total
Employee benefit expenses
Salary expenses	$ 289,523	$ 192,728	$ 482,251
Labor and national health insurance expenses	34,788	16,816	51,604
Pension expense	13,164	11,108	24,272
Other employee expenses	30,800	12,280	43,080
Depreciation expenses	103,075	39,993	143,068
Amortized expenses	398	38,053	38,451
	2024
	Attributable to operating cost	Attributable to operating expenses	Total
Employee benefit expenses
Salary expenses	$ 316,261	$ 260,638	$ 576,899
Labor and national health insurance expenses	34,404	20,363	54,767
Pension expense	14,519	13,793	28,312
Other employee expenses	30,682	13,849	44,531
Depreciation expenses	97,519	54,366	151,885
Amortized expenses	495	38,665	39,160

Note: For 2025 and 2024, certain employee benefits are included under non-operating income and expense.
1. According to the Company's Articles of Incorporation, if the Company makes a profit at the end of the year, no less than 5% of the profit shall be allocated as the remuneration to employees. No less than 25% among this amount shall be allocated as the remuneration to entry-level employees and no more than 0.1% as the

remuneration to directors. When the Company has accumulated losses, it shall set aside an amount to cover the losses first.

The Company incurred a net loss after tax for 2025 and 2024, therefore, no provision was made for employee and director compensation.
The Company's saw a net loss after tax for 2024, so the Board of Directors resolved not to distribute employees' and directors' remuneration, which is consistent with the amount recognized in the 2024 financial statements.

Information on the employees' and directors' remuneration approved by the Company's Board of Directors is available on the Market Observation Post System.

(XXIV) Income tax

Income tax benefit (expense)

Components of income tax (benefit) expense:

	2025	2024
Income tax for the current period:
Income tax arising from current income	$ 445	$ -
Underestimated (over) estimated amount of income tax in previous years	16	(21)
Total income tax for the current period	461	(21)
Deferred income tax:
Original occurrence and reversal of temporary difference	(11,140)	226
Income tax benefit (expense)	($ 10,679)	$ 205

Relationship between income tax expenses and accounting profit:

	2025		2024
Income tax calculated at statutory rate for net loss (Note)	($	80,699)	($ 42,931)
Income tax effect of items adjusted in accordance with the tax law		18,005	15,003
Changes in realizable assessment of deferred income tax assets		49,762	12,265
Underestimated (over) estimated amount of income tax in previous years		16	(21)
Taxable loss not recognized as deferred income tax assets		2,237	15,889
Income tax benefit (expense)	($	10,679)	$ 205

Note: The applicable tax rate is based on the tax rate applicable to the income in the relevant country.

The amounts of deferred income tax assets or liabilities arising from the temporary difference and taxation loss are as follows:

	2025
	January 1	Recognized in profit or loss	Recognized in other comprehensive income	December 31
- Deferred income tax assets:
Temporary difference:
Unrealized gains on sales	$ 1	($ 1)	$ -	$ -
Inventory devaluation losses	10,345	1,618	-	11,963
Allowance for loss beyond threshold	2,683	7,359	-	10,042
Cost of goods sold to be replaced	45	8	-	53
Valuation loss on unrealized financial assets and liabilities	788	( 182)	-	606
Impairment of investments accounted for using the equity method	4,990	-	-	4,990
Impairment of non-financial assets	10,322	( 269)	-	10,053
Bonus payable for unused leave of absence	4,563	( 262)	-	4,301
Tax losses	41,555	3,050	-	44,605
	75,292	11,321	-	86,613
- Deferred income tax liabilities:
Unrealized exchange losses	-	( 78)	-	( 78)
Unrealized exchange gain	( 418)	( 718)	-	( 1,136)
Premiums payable	( 5,538)	615	-	( 4,923)
	( 5,956)	( 181)	-	( 6,137)
	$ 69,336	$ 11,140	$ -	$ 80,476
	2024
	January 1	Recognized in profit or loss	Recognized in other comprehensive income	December 31
- Deferred income tax assets:
Temporary difference:
Unrealized gains on sales	$ 240	($ 239)	$ -	$ 1
Inventory devaluation losses	10,410	( 65)	-	10,345
Allowance for loss beyond threshold	2,356	327	-	2,683
Cost of goods sold to be replaced	26	19	-	45
Unrealized exchange losses	1,264	( 1,264)	-	-
Valuation loss on unrealized financial assets and liabilities	-	788	-	788
Income from government subsidies	235	( 235)	-	-
Impairment of investments accounted for using the equity method	4,990	-	-	4,990
Impairment of non-financial assets	12,229	( 1,907)	-	10,322
Bonus payable for unused leave of absence	3,587	976	-	4,563
Tax losses	41,280	275	-	41,555
	76,617	( 1,325)	-	75,292
- Deferred income tax liabilities:
Unrealized exchange gain	-	( 418)	-	( 418)
Unrealized gains on valuation of financial assets and liabilities	( 902)	902	-	-
Premiums payable	( 6,153)	615	-	( 5,538)
	( 7,055)	1,099	-	( 5,956)
	$ 69,562	($ 226)	$ -	$ 69,336

The effective term of the Group's unused taxation losses and the relevant amount of unrecognized deferred income tax assets are as follows:

December 31, 2025
Year of occurrence	Amount declared/authorized	Amount yet to be offset	Unrecognized amount of deferred income tax assets	Last year of credit
2018	$ 337,523	$ 222,996	$ 222,996	2028
2019	205,350	205,350	205,350	2029
2020	161,644	161,644	161,644	2030
2022	154,329	154,329	154,329	2032
2023	159,994	159,994	159,994	2033
2024	177,408	177,408	177,408	2034
2025	355,154	355,154	132,132	2035
	$ 1,551,402	$ 1,436,875	$ 1,213,853
December 31, 2024
---	---	---	---	---
Year of occurrence	Amount declared/authorized	Amount yet to be offset	Unrecognized amount of deferred income tax assets	Last year of credit
2018	$ 337,523	$ 222,996	$ 222,996	2028
2019	205,350	205,350	205,350	2029
2020	161,644	161,644	161,644	2030
2022	154,329	154,329	110,722	2032
2023	159,994	159,994	76,377	2033
2024	175,455	175,455	94,906	2034
	$ 1,194,295	$ 1,079,768	$ 871,995

Deductible temporary differences of unrecognized deferred income tax assets:

	December 31, 2025	December 31, 2024
Deductible temporary difference	$ 391,686	$ 371,328

The Company and its subsidiary, Asphetek Solution Inc., have had their business income taxes approved by the tax collection authority up to the year 2023.

(XXV) Loss per share

	2025
	Amount after tax	Weighted average outstanding shares (thousand shares)	Loss per share (NT$)
Basic loss per share
Net loss for the period attributable to the parent company's common stock shareholders	($ 383,404)	144,548	($ 2.65)
	2024
	Amount after tax	Weighted average outstanding shares (thousand shares)	Loss per share (NT$)
Basic loss per share
Net loss for the period attributable to the parent company's common stock shareholders	($ 135,414)	144,548	($ 0.94)

(XXVI) Supplementary information on cash flow

Investment activities with partial cash payment:

	2025	2024
Acquisition of property, plant and equipment	$ 106,966	$ 92,591
Add: Payables for equipment, beginning	29,349	18,097
Less: Payables for equipment, ending	( 17,064)	( 29,349)
Cash paid in current period	$ 119,251	$ 81,339
	2025	2024
Acquisition of intangible assets	$ 6,660	$ -
Add: Premium payable, beginning	36,064	33,776
Long-term notes and accounts payable, beginning	13,114	46,057
Less: royalty payable, ending	( 12,572)	( 36,064)
Long-term notes and accounts payable, ending	-	( 13,114)
Cash paid in current period	$ 43,266	$ 30,655

(XXVII) Changes in liabilities from financing activities

	2025 Lease liabilities	2024 Lease liabilities
January 1	$ 997	$ 46,243
Repayment of lease principal	( 12,289)	( 19,271)
Other non-cash changes	39,175	( 25,975)
December 31	$ 27,883	$ 997

~41~

VII. Related party transactions

(I) Related party's name and relationship

Name of Related Party	Relationship with the Group
Epileds Technologies, Inc. (Epileds Technologies)	Other related party
OBE Integrated Tech Co., Ltd. (OBE)	"
ELUX, Inc.	Affiliated companies

(II) Significant transactions with related parties

1. Operating revenue

	2025	2024
Sales of goods:
Other related party	$ -	$ 5

The price of the Group's sale to the above-mentioned related parties is similar to that of general customers, except when there is no similar transaction to follow, and the terms of the transaction are to be determined by both parties; the payment term to the related parties is 90~120 days; for general customers, 30~120 days after settlement of the current month.

2. Purchase stock

	2025	2024
Purchase of goods:
Other related party	$ 11,903	$ 9,405

Except for the fact that there is no similar transaction to follow, the terms of the transaction are determined by both parties through negotiation. For the rest, the Group bills the purchase to the related party at the prevailing price; the terms of payment to the related party, except for some materials, is payment at sight, and the rest are purchased within 90 to 120 days after settlement of the current month, or within 30 to 120 days after settlement of the current month for suppliers.

3. Payables to related parties

	December 31, 2025	December 31, 2024
Accounts payable:
Other related party	$ 7,520	$ 3,983
	December 31, 2025	December 31, 2024
Other payable:
Other related party	$ -	$ 31

4. Rental income (stated as other income)

	2025	2024
Affiliated companies	$ -	$ 499
Other related party	$ 70	$ 350
	$ 70	$ 849

The Group rents some offices, machinery and equipment for use by affiliates and other related parties. The rent is negotiated and collected on a monthly basis as agreed by both parties.

~42~

Property transactions

Disposal of property, plant, and equipment

	2024
	Disposal of proceeds	Gain on disposal
Other related party	$ 1,380	$ 113

(III) Remuneration to the management

	2025	2024
Salary and other short-term employee benefits	$ 10,631	$ 11,361
Benefits after retirement	108	108
	$ 10,739	$ 11,469

VIII. Pledged assets

	Book value		Purpose of guarantee
Assets	December 31, 2025	December 31, 2024
Refundable deposits (listed in other non-current assets - others)	$ 926	$ 2,360	Performance bond

IX. Significant Contingent Liabilities and Unrecognized Commitments

(I) Contingencies

None.

(II) Commitments

Capital expenditure contracted but not incurred

Property, plant, and equipment	December 31, 2025	December 31, 2024
	$ 25,364	$ 9,853

To adapt to future business and market changes, the Company signed an LED patent licensing agreement with Cree Inc. in December 2019. The Company pays royalties based on a certain percentage of sales revenue as per the agreement. In December 2024, the Company signed a renewal contract with Cree Inc., with a contract period of 2 years.
The Company signed a phosphor powder licensing contract with a foreign manufacturer in December 2022. According to the agreement, the Company shall pay a certain percentage of the sales amount each year during the contract period as royalty and the royalty when the sales quantity reaches the target.

X. Significant losses from disasters

None.

XI. Materiality after the period

None.

XII. Others

(I) Capital management

The Group's capital management objective is to ensure the Group's sustainable operation, maintain the optimal capital structure, reduce the cost of capital, and provide returns to shareholders.

~43~

(II) Financial instruments

1. Types of financial instruments

	December 31, 2025	December 31, 2024
Financial assets
Financial assets at fair value through profit or loss (FVTPL)
Financial assets mandatorily measured at fair value through profit or loss	$ 20	$ 770
Financial assets at FVTOCI
Investment in selected equity instruments	$ 307,285	$ 382,689
Financial assets at amortized cost
Cash and cash equivalents	$ 1,078,038	$ 1,225,968
Financial assets at amortized cost	-	130,000
Notes receivable	763	14,760
Accounts receivable	405,731	461,291
Other receivables	19,853	112,697
Refundable deposits (listed in other non-current assets - others)	926	2,360
	$ 1,505,311	$ 1,947,076
Financial liabilities
Financial liabilities measured at fair value through profit or loss
Financial liabilities held for trading	$ 3,049	$ 4,709
Financial liabilities measured at amortized cost
Accounts payable	$ 315,700	$ 320,227
Accounts payable - related parties	7,520	3,983
Other payables	292,840	362,177
Other payables - related parties	-	31
Long-term notes and payables	-	13,114
	$ 616,060	$ 699,532
Lease liabilities	$ 27,883	$ 997

2. Risk management policies

(1) The daily operations of the Group are affected by multiple financial risks, including market risk (including exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk. In order to reduce the adverse effect on the Group's financial performance resulting from uncertainty, the Group enters into forward exchange contracts and foreign exchange swaps contracts to avoid exchange rate risks.

(2) For risk management, the Group's finance unit works closely with various operating units within the Group to be responsible for identifying, evaluating and hedging financial risks.

(3) For information on derivative instruments to avoid financial risks, please see Note VI(II).

3. Nature and extent of significant financial risk

(1) Market risk

Exchange rate risk

A. The Group operates as a multinational company. Therefore, it is subject to the exchange rate risk arising from transactions that are functionally different from the Company and its subsidiaries, which are mainly USD, Japanese Yen, and RMB. The relevant exchange rate risk comes from future business transactions and recognized assets and liabilities.

B. The group hedges the overall exchange rate risk through the Group Finance Department. Foreign exchange risk is measured with the use of forward exchange contracts and exchange rate swap contracts to minimize the effect of fluctuating exchange rates on the anticipated transactions of USD, Japanese Yen, and CNY which are highly probable.

C. The Group uses forward exchange rates to hedge against exchange rate risks, but does not apply the hedge accounting to financial assets or liabilities measured at fair value through profit and loss. Please refer to Note 6 (2).

D. The Group's business involves several non-functional currencies (the functional currency of the Company and some subsidiaries is NTD, and the functional currency of some subsidiaries is RMB). Therefore, it is affected by exchange rate fluctuations, and there are significant exchange rate fluctuations. The information about assets and liabilities denominated in foreign currencies affected is as follows:

	December 31, 2025
	Foreign currency ($ in Thousand)	Exchange rate	Book value NT$ Thousands
(Foreign currency: Functional currency)
Financial assets
Monetary items
USD: NTD	$ 11,453	31.4300	$ 359,968
Financial liabilities
Monetary items
USD: NTD	$ 6,267	31.4300	$ 196,972
Japanese Yen: NTD	149,130	0.2008	29,945
	December 31, 2024
	Foreign currency ($ in Thousand)	Exchange rate	Book value NT$ Thousands
(Foreign currency: Functional currency)
Financial assets
Monetary items
USD: NTD	$ 17,686	32.7850	$ 579,836
Financial liabilities
Monetary items
USD: NTD	$ 9,376	32.7850	$ 307,392
Japanese Yen: NTD	84,977	0.2099	17,837

E. All exchange gains and losses (including realized and unrealized) on the Group's monetary items due to exchange rate fluctuations were aggregated for NT$2,054 and NT$26,638 in 2025 and 2024, respectively.

F. The risk analysis of the Group's foreign currency market due to the impact of significant exchange rate fluctuations is as follows:

	2025
	Sensitivity analysis
	Range of change	Impact on profit and loss	Impact on other comprehensive income
(Foreign currency: Functional currency)
Financial assets
Monetary items
USD: NTD	1%	$ 3,600	$ -
Financial liabilities
Monetary items
USD: NTD	1%	$ 1,970	$ -
Japanese Yen: NTD	1%	299	-
	2024
	Sensitivity analysis
	Range of change	Impact on profit and loss	Impact on other comprehensive income
(Foreign currency: Functional currency)
Financial assets
Monetary items
USD: NTD	1%	$ 5,798	$ -
Financial liabilities
Monetary items
USD: NTD	1%	$ 3,074	$ -
Japanese Yen: NTD	1%	178	-

Price risk

A. The Group's equity instruments exposed to price risk are financial assets measured at fair value through profits or losses and financial assets measured at fair value through other comprehensive income. In order to manage the price risk of equity instrument investment, the group diversifies its investment portfolio according to the limit set by the group.
B. The Group mainly invests in equity instruments issued by domestic companies. The prices of these equity instruments will be affected by the uncertainty of the future values of the investment objects. If the prices of these equity instruments rose or fell by $1\%$ , with all other factors remaining unchanged, other comprehensive income in 2025 and 2024 would be classified as gains of equity investment measured at fair value through other comprehensive income. The contingent loss would increase or decrease by NT$3,073 and NT$3,827, respectively.

Cash flow and fair value interest rate risk

The Group has no debt instruments that are significantly exposed to interest rate risk.

(2) Credit risk

A. The credit risk of the Group is the risk of financial loss due to the failure of customers or counterparties of financial instrument transactions to fulfill contractual obligations, which mainly comes from the inability of counterparties to pay off accounts receivable according to the collection terms.
B. The Group establishes credit risk management from the group perspective. According to the internal credit policy, each operating entity within the Group and each new customer shall determine the payment and delivery terms and conditions before establishing the terms and conditions for payment and delivery and credit risk analysis. Internal risk control is to evaluate the credit quality of customers by considering their financial position, past experience and other factors. The limit of individual risk is set by the Board of Directors according to the internal or external rating. The usage of the credit limit is monitored regularly.
C. The Group adopts IFRS 9 to provide the hypotheses. When the contract payment is overdue for more than 90 days according to the agreed payment terms, it is deemed that a default has occurred.

D. The Group applies IFRS 9 and makes the following assumptions: When the contract payment is overdue for more than 30 days according to the agreed payment terms, it is deemed that the credit risk of the financial asset has increased significantly since the original recognition.

E. The Group classifies notes receivable and accounts receivable of customers according to the characteristics of trade credit risk, and estimates the expected credit loss based on the provision matrix and loss rate method.

F. After the recourse procedure, the Group will write off the amount of the financial assets for which the recovery cannot be reasonably expected. However, the Group will continue the recourse procedure to preserve the rights of the claims. As of December 31, 2025 and 2024, the Group did not have any creditor's rights that were written off but were still subject to recourse.

G. The expected loss rate of customers with good credit standing was 0.2%. The total book value of accounts receivable as of December 31, 2025 and 2024 were NT$21,239 and $24,310, respectively, and the loss allowance was NT$42 and NT$49, respectively.

H. The Group incorporates economic countermeasures from the National Development Commission into its forward-looking considerations, and adjusts the loss rate based on historical and current information in a specific period to estimate the value of the allowance for loss of the notes and accounts receivable of general credit customers. The preparation matrix as of December 31, 2025 and 2024, is as follows:

December 31, 2025	Expected loss rate	Total book value	Allowance for losses
Not overdue	0.20%~0.80%	$ 383,886	$ 1,704
Within 30 days of overdue	25.23%~25.92%	2,223	571
Past due by 31 to 60 days	50%	667	334
Past due by 61 to 90 days	50%	124	62
Overdue by more than 90 days	100%	1,546	1,546
		$ 388,446	$ 4,217
December 31, 2024	Expected loss rate	Total book value	Allowance for losses
Not overdue	0.72%~0.94%	$ 439,847	$ 4,147
Within 30 days of overdue	26.06%~28.18%	117	33
Past due by 31 to 60 days	50%	27	13
		$ 439,991	$ 4,193

I. Based on historical experience, the Group applies individual assessment to calculate expected credit losses for customers with higher credit risk. As of December 31, 2025 and 2024, the total carrying amount of notes and accounts receivable was NT$42,088 and NT$16,108, respectively, with allowances for losses of NT$41,020 and NT$116, respectively.

J. The changes in the allowance for losses on notes and accounts receivable using the simplified approach are as follows:

	2025	2024
January 1	$ 4,358	$ 7,186
Provision (reversal) of impairment loss	40,893	(2,863)
Foreign exchange rate effect	28	35
December 31	$ 45,279	$ 4,358

For the years 2025 and 2024, the impairment losses (reversals) recognized for receivables arising from customer contracts were NT$40,893 and (NT$2,863), respectively.

(3) Liquidity risk

A. The cash flow forecast is carried out by each operating entity within the Group and summarized by the Group's financial unit. The Group's financial unit monitors the forecast of the Group's liquidity requirements to ensure that it has sufficient funds to meet operating needs.

B. The following table shows the Group's non-derivative financial liabilities and derivative financial liabilities settled on a net or gross basis, which are classified according to the relevant maturity dates. Non-derivative financial liabilities are based on the residual period from the balance sheet date to the contract maturity date. Derivative financial liabilities are analyzed based on the residual

period from the balance sheet date to the expected maturity date. The contractual cash flows disclosed in the table below are the undiscounted amounts.

December 31, 2025	Less than 1 year	1 to 2 years	2 to 5 years	Total
Non-derivative financial liabilities:
Accounts payable
(including related parties)	$ 323,220	$ -	$ -	$ 323,220
Other payable accounts
(including related party)	292,840	-	-	292,840
Lease liabilities	14,111	13,865	870	28,846
Derivative financial liabilities:
Forward Exchange Contract	$ 3,049	$ -	$ -	$ 3,049
December 31, 2024	Less than 1 year	1 to 2 years	2 to 5 years	Total
Non-derivative financial liabilities:
Accounts payable
(including related parties)	$ 324,210	$ -	$ -	324,210
Other payable accounts
(including related party)	362,208	-	-	362,208
Long-term notes and payables	-	13,114	-	13,114
Lease liabilities	644	240	141	1,025
Derivative financial liabilities:
Forward Exchange Contract	$ 4,709	$ -	$ -	$ 4,709

(III) Information on fair value

The levels of the evaluation techniques used to measure the fair value of financial and non-financial instruments are defined as follows:

Level 1: The quoted price (unadjusted) is available to the enterprise in an active market for the same assets or liabilities on the measurement date. An active market refers to a market in which assets or liabilities are traded in sufficient frequency and quantity to provide pricing information on an ongoing basis. The fair value of the listed and OTC stocks invested by the Group belongs to this.

Level 2: Direct or indirect observable inputs for assets or liabilities, except for quoted prices included in Class I. The fair value of the Group's investments in derivative instruments and emerging market stock investments belong to this category.

Level 3: The unobservable input value of assets or liabilities includes the equity instrument investment that the Group invests in and for which there is no active market.

Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, financial assets measured at amortized cost, notes receivable, accounts receivable (including related parties), other receivables (including related parties), accounts payable (including related parties), other payables (including related parties), lease liabilities, and long-term notes and accounts payable are reasonable approximations of their fair values.

The financial and non-financial instruments measured at fair value are classified according to the nature, characteristics, risk, and fair value level of the assets and liabilities. Relevant information is as follows:

(1) The information is classified according to the nature of the Group's assets and liabilities. The relevant information is as follows:

December 31, 2025	Level 1	Level 2	Level 3	Total
Assets
Repeated fair value
Financial assets at fair value through profit or loss (FVTPL)
Forward Exchange Contract	$ -	$ 20	$ -	$ 20
Financial assets at FVTOCI
Equity securities	194,467	112,818	-	307,285
	$ 194,467	$ 112,838	$ -	$ 307,305
Liabilities
Repeated fair value
Financial liabilities measured at fair value through profit or loss
Forward Exchange Contract	$ -	$ 3,049	$ -	$ 3,049
December 31, 2024	Level 1	Level 2	Level 3	Total
Assets
Repeated fair value
Financial assets at fair value through profit or loss (FVTPL)
Forward Exchange Contract	$ -	$ 770	$ -	$ 770
Financial assets at FVTOCI
Equity securities	306,797	75,892	-	382,689
	$ 306,797	$ 76,662	$ -	$ 383,459
Liabilities
Repeated fair value
Financial liabilities measured at fair value through profit or loss
Forward Exchange Contract	$ -	$ 4,709	$ -	$ 4,709

(2) The methods and hypotheses used by the Group to measure fair value are as follows:

A. If the Group adopts market quotation as the input value of fair value (i.e. Level 1), the characteristics of the instruments are as follows:

| Market quotation | Listed company stock
Closing price |
| --- | --- |

B. Except for the financial instruments in the active market, the fair value of other financial instruments is based on the evaluation technology or with reference to the quotation of the counterparty.
C. When evaluating non-standardized and less complicated financial instruments, the Group adopts the evaluation techniques widely used by market participants. The parameters used in the evaluation model of this kind of financial instrument are usually the information that is observable in the market.
D. The derivative financial instruments were evaluated according to the evaluation models widely accepted by the market users, such as the discount method. Foreign exchange forward contracts are usually evaluated based on the current forward exchange rate.
E. The output of the evaluation model is the estimated value, and the evaluation technique may not reflect all the factors related to the financial and non-financial instruments held by the Group. Therefore, the estimated value of the evaluation model will be adjusted according to additional parameters, such as model risk or liquidity risk. According to the Group's fair value evaluation model management policies and related control procedures, the management believes that the evaluation adjustment is appropriate and necessary to properly express the fair value of the financial and non-financial instruments in the consolidated balance sheet. The price information

and parameters used in the evaluation process have been carefully evaluated and adjusted according to the current market conditions.

There were no transfers between Level 1 and Level 2 in 2025 and 2024.
There was no transfer in or out from Level 3 in 2025 and 2024.
In the evaluation process for the Group's fair value classified to Level 3, the Finance Department is responsible for verifying the independent fair value of the financial instrument. The data from independent sources are used to approximate the evaluation results to the market status, and to confirm that the data sources are independent, reliable, and resources and any necessary fair value adjustment to ensure that the evaluation result is reasonable.

In addition, the finance department determines the fair value evaluation policies, evaluation procedures, and confirmation of financial instruments in accordance with relevant International Financial Reporting Standards.

The Group carefully selects the evaluation model and evaluation parameters; however, different evaluation models or parameters may result in different evaluation results.

XIII. Disclosures in notes

(I) Information about significant transactions

Loaning of funds to others: None.
Making endorsements/guarantees for others: None.
Significant marketable securities held at the end of the period (excluding investment in subsidiaries, associates, and joint ventures): Please refer to Table 1.
The total purchase from and sale to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please refer to Table 2.
Accounts receivable from related parties amounting to at least NT$100 million, or 20% of the paid-in capital: Please refer to Table 3.
Business relationships and significant transactions between the parent company and its subsidiaries: Please refer to Table4.

(II) Information on reinvested businesses

The name and location of the investee company and other relevant information (excluding mainland China investee companies): Please refer to Table 5.

(III) Investment in Mainland China

Basic information: Please refer to Table 6.
Significant transactions with investee companies in mainland China directly or indirectly through enterprises in a third region: Please refer to Table 4.

XIV. Departmental Information

(I) General information

The Group only operates in a single industry, and the major operating decision-makers have identified the Group as the single reportable department based on the overall evaluation and the resource allocation of the Group.

(II) Assessment of departmental information

The Group acts as a single reporting unit and reports the group net income before tax to the major operating decision-makers. The measurement method is consistent with the income and expenses in the comprehensive income statement, and the performance of operating departments is evaluated according to the net profit before tax. The Group does not provide the total assets and total liabilities for the main operating decision-maker for operating decision-making.

~49~

(III) Information about departmental profit and loss

Information on the reportable departments as provided to major operational decision-makers is as follows:

	2025	2024
Departmental revenue	$ 1,602,662	$ 2,035,208
Departmental profit or loss	($ 399,973)	($ 177,050)
Departmental income includes:
Interest income	$ 15,359	$ 19,624
Interest expense	$ 1,879	$ 4,570
Depreciation and amortization expenses	$ 181,519	$ 194,147
Income tax benefit (expense)	($ 10,679)	$ 205

(IV) Reconciliation of departmental profit and loss

There is no difference between the statements that provide the chief operating decision maker for department operating decisions and the department income statements, so no adjustment is required.

(V) Information on product type and service type

The revenue of external customers mainly comes from the R&D, testing, manufacturing and sales of LED. The balance of revenue is as follows:

	2025	2024
LED - Self-made	$ 1,555,819	$ 1,912,501
LED - commodity	30,083	105,444
Others	16,760	17,263
	$ 1,602,662	$ 2,035,208

(VI) Information by geographical location

The information by territory of the Group in 2025 and 2024 is as follows:

	2025		2024
	Income	Non-current assets	Income	Non-current assets
Taiwan	$ 101,391	$ 642,945	$ 73,601	$ 698,754
China	1,310,262	29,500	1,547,508	9,843
Hong Kong	62,354	-	97,293	-
Vietnam	64,292	-	149,269	-
USA	4,612	-	63,276	-
South Korea	36,259	-	9,081	-
Turkey	19,382	-	64,040	-
Others	4,110	-	31,140	-
	$ 1,602,662	$ 672,445	$ 2,035,208	$ 708,597

Non-current assets refer to non-current items excluding financial instruments, deferred income tax assets, and refundable deposits (stated as other non-current assets).

~51~

(VII) Important Customer Information

Important customers accounted for more than 10% of the Group's consolidated revenue in 2025 and 2024:

	2025		2024
	Income	Percentage	Income	Percentage
Customer A	$ 703,426	44	$ 877,469	43
Customer B	237,462	15	207,464	10
	$ 940,888	59	$ 1,084,933	53

Advanced Optoelectronic Technology Inc. and Subsidiaries
Significant marketable securities held at the end of the period (excluding investment in subsidiaries, associates, and joint ventures)
December 31, 2025

Attached table 1

Unit: NTS Thousand
(unless otherwise stated)

Companies held	Type and name of securities (Note 1)	Relationship with issuer of securities	Account titles in book	End of period
				Shares (Thousand Shares)	Book value (Note 2)	Shareholding ratio (%)	Fair value	Remarks
Advanced Optoelectronic Technology Inc.	Northern Lights Semiconductor Corporation stock	None	Financial assets mandatorily measured at fair value through profit or loss - non-current	2,033	$-	10.27%	$-	None
Advanced Optoelectronic Technology Inc.	Shares of Excellence Optoelectronics Holding Co., Ltd.	None	Financial assets at fair value through other comprehensive income - non-current	312	5,219	0.15%	5,219	None
Advanced Optoelectronic Technology Inc.	Shares of Epileds Technologies, Inc.	The chairman of the Company is a director of the company	Financial assets at fair value through other comprehensive income - non-current	8,130	175,608	8.10%	175,608	None
Advanced Optoelectronic Technology Inc.	Shares of Hua Yang Precision Machinery Co., Ltd.	None	Financial assets at fair value through other comprehensive income - non-current	773	112,818	4.86%	112,818	None
Advanced Optoelectronic Technology Inc.	Shares of Innolux Corporation	None	Financial assets at fair value through other comprehensive income - non-current	800	13,640	0.01%	13,640	None

Note 1: Marketable securities in this table refer to stocks, bonds, beneficiary certificates and marketable securities derived from the aforementioned items within the scope of IFRS 9 "Financial Instruments."
Note 2: If the measurement is based on fair value, please fill in the book balance after adjustment for fair value evaluation. For the book value not measured at fair value, please fill in the book value of the original acquisition cost or cost after amortization deducting the accumulated impairment in the book value column.
Note 3: Based on the principle of materiality, this table lists the securities that the Company has determined should be disclosed.

Attached Table 1 page 1

Advanced Optoelectronic Technology Inc. and Subsidiaries
The total purchase from and sale to related parties amounting to at least NT$100 million or 20% of the paid-in capital
January 1 to December 31, 2025

Table 2

	Status of transactions	Trading terms different from general trade and reasons	Notes and accounts receivable (payable)
Purchase (sales) company	Name of counterparty	Relationship	Purchase (sales)
Advanced Optoelectronic Technology Inc.	ZHAN JING Technology (Shen ZHEN) Co., Ltd.	Sales volume	14

Note 1: The price of the Company's sale to the above-mentioned related parties is similar to that of general customers, except when there is no similar transaction to follow, and the terms of the transaction are to be determined by both parties.

Attached Table 2 page 1

Advanced Optoelectronic Technology Inc. and Subsidiaries
Accounts receivable from related parties amounting to more than NT$100 million or 20% of the paid-in capital
December 31, 2025

Table 3

| The company that accounts for the accounts receivable
Advanced Optoelectronic Technology Inc. | Name of counterparty
ZHAN JING Technology (Shen ZHEN) Co., Ltd. | Relationship
Subsidiary of the Company | Receivables from related parties
$119,347 | Turnover
2.25 | Overdue accounts receivable - related parties | | Subsequent recovery of receivables from related parties
$60,181 | Provision for loss allowance
$- |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | Amount
$20,860 | Treatment method
Enhancement of collection service | | |

Unit: NT$ Thousand (unless otherwise stated)

Attached Table 3 on page 1

Advanced Optoelectronic Technology Inc. and Subsidiaries
Business relationships and significant transactions between the parent company and its subsidiaries
January 1 to December 31, 2025

Table 4

Serial number (Note 1)	Name of Transaction Party	Counterparty of transactions	Relationship with the counterparty (Note 2)	Accounts	Amount	Status of transactions		Unit: NTS Thousand (unless otherwise stated) Percentage to consolidated total revenue or total assets (%) (Note 3)
						Trading terms and conditions	Note 4
0	Advanced Optoelectronic Technology Inc.	ZHAN JING Technology (Shen ZHEN) Co., Ltd.	1	Sales volume	$196,018			12.23
0	Advanced Optoelectronic Technology Inc.	ZHAN JING Technology (Shen ZHEN) Co., Ltd.	1	Accounts receivable	119,347			4.29

Note 1: Information on business transactions between the parent company and its subsidiaries shall be specified in the numbered column. The number is to be entered as follows:
(1) "0" for the parent company.
(2) Subsidiaries are numbered sequentially from 1 onwards.
Note 2: There are three types of relationship with transaction parties, and it is sufficient to indicate the relationship:
(1) Between the parent company and its subsidiaries.
(2) Subsidiary to parent company.
(3) Subsidiaries to subsidiaries.
Note 3: In employing the ratio of transaction amount to consolidated revenue or assets, if it belongs as an asset and liability item, the ratio is calculated by taking the ending balance to the consolidated total assets. If it belongs as a profit and loss item, the ratio is calculated by taking the interim accumulated amount to the consolidated total revenue.
Note 4: The payment deadline for sales to related parties is 120 days after the shipment. The payment term for purchases with related parties, except for some materials, which is sight payment, is 120 days after purchase.
Note 5: List the ratios of transaction amount to total consolidated revenue or total assets that reach 1%.

Attached Table 4 on page 1

Advanced Optoelectronic Technology Inc. and Subsidiaries

The name and location of the investee company and other relevant information (excluding mainland China investee companies)

January 1 to December 31, 2025

Table 5

				Initial investment amount		Held at end of period			Unit: NTS Thousand (unless otherwise stated)
Name of investment company	Name of investee company (Note 1, 2)	Location of the Company	Main Business	End of current period	End of last year	Shares (Thousand Shares)	Percentage (%)	Book value	Profit or loss of the investee	Investment income recognized in the current period
Advanced Optoelectronic Technology Inc.	Advanced Optoelectronic Technology Holding Ltd.	Samoa	Investments in various businesses	$99,811	$99,811	3,250	100	$28,591	($17,386)	($17,386)
Advanced Optoelectronic Technology Inc.	Asphetek Solution Inc.	Taiwan	Manufacture and sale of electronic components	142,000	142,000	14,200	47.33	54,646	(11,184)	(5,294)
Advanced Optoelectronic Technology Inc.	ELUX, Inc.	USA	Development of micro LED displays	91,188	91,188	283	25.94	-	70,587	-
Advanced Optoelectronic Technology Holding Ltd.	AOT Holding Ltd.	Samoa	Investments in various businesses	67,632	67,632	2,250	100	28,730	(17,383)	-

Note 1: If the public company that has a foreign holding company and complies with local laws and regulations, mainly rely on the consolidated financial statements in its financial statements, the relevant information about the foreign invested company may be disclosed only to the relevant information of the holding company.
Note 2: Please fill in the information as follows for situations other than those described in Note 1:
(1) The columns of "Name of investee company," "Location," "Main business," "Original investment amount" and "Ownership at end of the period" must be filled out based on the (public) Company's investment status and the re-investment situation of each investee directly or indirectly controlled in order, and the relationship between each investee and the (public) Company (e.g., a subsidiary or a sub-subsidiary) must be indicated in the remarks column.
(2) Fill in the amount of current profit or loss of the investee in the column of "Profit or loss of investee for the current period."
(3) The column, Gains and losses on investment recognized for the current period, must be filled out with the (public) Company's recognized subsidiaries through direct investments and the gain or loss amount for each of the equity-method investee company, and the rest is not required. When filling in the "Recognized amount of current profit or loss on each subsidiary directly invested," it must be confirmed that the amount of the current profit or loss on each subsidiary includes investment gains and losses that must be recognized in accordance with the regulations for its investment.

Attached Table 5 on page 1

Advanced Optoelectronic Technology Inc. and Subsidiaries

Investment in Mainland China - Basic Information

January 1 to December 31, 2025

Table 6
Unit: NT$ Thousand
(unless otherwise stated)

Name of investees in Mainland China	Main Business	Paid-in capital $63,698	Method of investment (Note 1) (2)	Accumulated Investment Amount from Taiwan at Beginning of Period $63,698	Export $-	Recovered $-	Accumulated investment amount from Taiwan at end of period $63,698	Profit or loss of the investee ($17,358)	The Company's direct or indirect shareholding (%) 100%	Investment income recognized in the current period (Note 2) ($17,358) ((2)B)	Book value of investment at ending period $28,061	Investment income received in the current period $-
ZHAN JING Technology (Shen ZHEN) Co., Ltd.	Technology development, wholesale, import/export and related ancillary services of new electronic components and electronic products
Asphetek Solution (Chengdu) Inc.	Manufacture and sale of electronic components	79,725	(1)	73,659	6,066	-	79,725	12,885	47.33%	6,098 ((2)B)	95,761	-
Company name	Accumulated investment from Taiwan to Mainland China at end of period	Investment Amount Approved by Investment Commission, MOEA	Upper limit of investment to Mainland China approved by the Investment Commission, MOEA
---	---	---	---
Advanced Optoelectronic Technology Inc.	$66,946 (USD: 2,130 thousand)		$1,267,274
Asphetek Solution Inc.	79,725	141,435 (USD: 4,500 thousand)	68,486

Note 1: Investment methods are divided into the following three types. It is sufficient to indicate the types of investments:
(1) Direct investment in mainland China.
(2) Reinvestment in Mainland China through a third country company (please specify the investment company in the third country): Reinvest in China through AOT Holding Ltd.
(3) The Company was directly invested by ZHAN JING Technology (Shen ZHEN) Co., Ltd.

Note 2: Recognized in the investment income column for the current period:
(1) It shall be specified if the investment is in preparation without any investment income.
(2) The recognition bases of investment income are classified into the following three categories, which shall be specified:
A. Financial statements audited and verified by the international accounting firm associated with the accounting firm of the Republic of China.
B. The financial statements audited and verified by the CPAs of the parent company in Taiwan.
C. Others: Investment gains/losses recognized based on self-prepared financial statements for the same period that have not been audited by CPAs.

Note 3: Figures in this table shall be stated in NTD.

Attached Table 6 on page 1

AI assistant

AOT Audit Report / Information 2025

52326_rns_2026-06-05_3f5a2ce6-0407-45ae-a1a5-ab567b1bd121.pdf

Audit opinion

Basis for audit opinion

Key audit matters

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Comprehensive Income

January 1 to December 31, 2025 and 2024

Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Cash Flows

VII. Related party transactions

(I) Related party's name and relationship

(II) Significant transactions with related parties

1. Operating revenue

2. Purchase stock

3. Payables to related parties

4. Rental income (stated as other income)

(II) Financial instruments

1. Types of financial instruments

2. Risk management policies

3. Nature and extent of significant financial risk

(1) Market risk

Exchange rate risk

Price risk

Cash flow and fair value interest rate risk

(2) Credit risk

(VII) Important Customer Information

AI assistant

AOT — Audit Report / Information 2025

52326_rns_2026-06-05_3f5a2ce6-0407-45ae-a1a5-ab567b1bd121.pdf

Audit opinion

Basis for audit opinion

Key audit matters

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Comprehensive Income

January 1 to December 31, 2025 and 2024

Advanced Optoelectronic Technology Inc. and Subsidiaries

Consolidated Statement of Cash Flows

VII. Related party transactions

(I) Related party's name and relationship

(II) Significant transactions with related parties

1. Operating revenue

2. Purchase stock

3. Payables to related parties

4. Rental income (stated as other income)

(II) Financial instruments

1. Types of financial instruments

2. Risk management policies

3. Nature and extent of significant financial risk

(1) Market risk

Exchange rate risk

Price risk

Cash flow and fair value interest rate risk

(2) Credit risk

(VII) Important Customer Information

More from AOT

AOT Audit Report / Information 2025