Stock Code: 3450

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements for the Years Ended December 31, 2025 and 2024 and Independent Auditors’ Report

REPRESENTATION LETTER

The entities that are required to be included in the consolidated financial statements of Elite Advanced Laser Corporation as of and for the year ended December 31, 2025 (January 1 to December 31, 2025), under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the IFRS 10 Consolidated Financial Statements. In addition, the information required to be disclosed in the consolidated financial statements is included in the consolidated financial statements. Consequently, Elite Advanced Laser Corporation does not prepare a separate set of combined financial statements.

Very truly yours

Elite Advanced Laser Corporation

Chairman: Chu-Liang, Cheng

March 12, 2026

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders

Elite Advanced Laser Corporation:

Opinion

We have audited the accompanying consolidated financial statements of Elite Advanced Laser Corporation and its subsidiaries (the "Group"), which comprise the consolidated balances sheets as of December 31, 2025 and 2024, and the consolidated statements of comprehensive income, changes in equity and of cash flows for the years then ended, and the notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the "consolidated financial statements").

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended 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 Group’s consolidated financial statements for the year ended December 31, 2025 is as follows:

The veracity of the sales revenue of specific customers

The Group's operating revenue in 2025 was $8,584,594 thousand, with a consolidated operating revenue growth rate of approximately 13%. However, among customers with material annual sales amounts, the total operating revenue of those with revenue growth rates higher than the consolidated operating revenue growth rate accounted for approximately 39% of the consolidated operating revenue, which has a significant impact on the consolidated financial statements. Therefore, we have included the authenticity of the sales revenue from the aforementioned specific customers as a key audit matter for the 2025 consolidated financial statements. Please refer to Note 4 (15) of the Consolidated Financial Statements for the description of the income recognition policy.

Our audit procedures for this include:

By understanding the relevant internal control systems and operating procedures of the sales transaction cycle, we design the internal control auditing procedures according to the veracity of the sales revenue and confirm and evaluate the relevant internal control procedure during the sales transactions for whether the design and implementation are effective.
We obtain the list of the above-mentioned specific customers in 2025, and evaluate whether their relevant background, transaction amount, credit line and company size are reasonable.
We select samples from the above-mentioned specific customer sales details, examine the sales slips, customs declarations, bills of lading, sales invoices, payment collections, and major sales returns after the balance sheet date to confirm the veracity of the sales revenue.

Other Matter

We have also audited the parent company only financial statements of Elite Advanced Laser Corporation as of and for the years ended December 31, 2025 and 2024, on which we have issued an unqualified audit opinion.

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

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability 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 the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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.
Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ 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 the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities 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.
5 -

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that most significance in the audit of the 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.

The engagement partners on the reviews resulting in this independent auditors' review report are Keng-Hsi, Chang and Chiang-Hsun, Chen.

Deloitte & Touche
Taipei, Taiwan
Republic of China

March 12, 2026

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors' review report and the accompanying consolidated financial statements have been translated into English from original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors' review report and consolidated financial statements shall prevail.

(in Thousands of New Taiwan Dollars)

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

Code	ASSETS	December 31, 2025		December 31, 2024
		Amount	%	Amount	%
CURRENT ASSETS
1100	Cash and cash equivalents (Notes 4 and 6)	$ 2,733,695	21	$ 3,138,394	28
1136	Financial assets measured at amortized cost - Current (Notes 4, 5, 7 and 8)	890,108	7	213,949	2
1140	Current contract assets (Notes 4, 5 and 24)	250,047	2	213,039	2
1150	Notes receivable (Notes 4, 5, 9 and 31)	79,442	-	-	-
1170	Accounts receivable (Notes 4, 5, 9 and 24)	1,606,803	12	1,524,386	14
1180	Accounts receivable due from related parties (Notes 4, 5, 24 and 34)	8,066	-	8,903	-
1200	Other receivables (Notes 4, 5 and 9)	678,311	5	376,937	3
1210	Other receivables due from related parties (Notes 4, 5 and 34)	52	-	863	-
1220	Current tax asset (Notes 4 and 26)	1,273	-	165	-
130X	Inventories (Notes 4 and 10)	1,007,880	8	671,935	6
1410	Prepayments (Note 18)	303,216	2	245,570	2
11XX	Total current assets	7,558,893	57	6,394,141	57
NON-CURRENT ASSETS
1540	Financial assets measured at amortized cost - Non-current (Notes 4, 5, 7, 8 and 35)	776	-	763	-
1550	Investments accounted for using equity method (Notes 4 and 12)	129,284	1	125,814	1
1600	Property, plant and equipment (Notes 4, 13, 29 and 35)	4,766,871	36	4,108,811	37
1755	Right-of-use assets (Notes 4 and 14)	128,471	1	174,105	2
1760	Investment property (Notes 4 and 15)	34,995	-	43,522	-
1805	Goodwill (Notes 4 and 16)	-	-	-	-
1821	Intangible assets (Notes 4 and 17)	13,606	-	3,953	-
1840	Deferred tax assets (Notes 4 and 26)	122,865	1	130,482	1
1930	Long-term notes receivable (Notes 4, 5, 9 and 31)	27,022	-	-	-
1990	Other non-current assets (Notes 4, 9 and 18)	479,122	4	167,957	2
15XX	Total non-current assets	5,703,012	43	4,755,407	43
1XXX	TOTAL	$ 13,261,905	100	$ 11,149,548	100
Code	LIABILITIES AND EQUITY
CURRENT LIABILITIES
2100	Short-term borrowings (Notes 4 and 19)	$ 407,848	3	$ 50,000	-
2130	Current contract liabilities (Notes 4 and 24)	63,550	-	27,580	-
2170	Accounts payable	995,171	7	1,317,971	12
2200	Other payables (Notes 20 and 31)	1,674,842	13	1,169,493	11
2230	Current tax liabilities (Notes 4 and 26)	220,670	2	134,814	1
2250	Current provisions (Notes 4 and 21)	57,256	-	57,785	1
2280	Current lease liabilities (Notes 4 and 14)	44,481	-	44,848	-
2300	Other current liabilities (Notes 20, 31 and 34)	206,886	2	182,535	2
2320	Long-term borrowings due within 1 year (Notes 4, 19 and 35)	92,441	1	64,527	1
21XX	Total current liabilities	3,763,145	28	3,049,553	28
NON-CURRENT LIABILITIES
2540	Long-term borrowings (Notes 4, 19 and 35)	841,679	6	222,281	2
2570	Deferred tax liabilities (Notes 4 and 26)	379,398	3	352,738	3
2580	Non-current lease liabilities (Notes 4 and 14)	48,072	1	90,519	1
2640	Non-current net defined benefit liabilities (Notes 4 and 22)	34,628	-	29,107	-
2670	Others (Notes 20 and 34)	372,118	3	439,262	4
25XX	Total non-current liabilities	1,675,895	13	1,133,907	10
2XXX	Total liabilities	5,439,040	41	4,183,460	38
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 23)
Capital stock
3110	Common stock	1,456,814	11	1,456,814	13
3200	Capital surplus	456,222	3	456,473	4
Retained earnings
3310	Legal reserve	849,127	6	793,144	7
3320	Special reserve	23,078	-	86,025	-
3350	Unappropriated earnings	2,319,329	18	1,659,389	15
3300	Total retained earnings	3,191,534	24	2,538,558	22
3400	Other equity	( 41,079 )	-	( 23,078 )	-
31XX	Total equity attributable to owners of the Company	5,063,491	38	4,428,767	39
36XX	NON-CONTROLLING INTERESTS (Notes 4, 23, 28 and 30)	2,759,374	21	2,537,321	23
3XXX	Total equity	7,822,865	59	6,966,088	62
TOTAL		$ 13,261,905	100	$ 11,149,548	100

The accompanying notes are an integral part of the consolidated financial statements.

(Ln Thousands of New Taiwan Dollars, Except Earnings Per Share)

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Code		For the years ended December 31
		2025		2024
		Amount	%	Amount	%
	OPERATING REVENUE (Notes 4, 24 and 34)
4100	Sales revenue	$ 8,356,157	97	$ 7,342,156	97
4800	Other operating revenue	228,437	3	225,505	3
4000	Total revenue	8,584,594	100	7,567,661	100
	OPERATING COSTS (Notes 10, 22, 25 and 29)
5110	Cost of goods sold	( 5,950,912 )	( 70 )	( 5,476,940 )	( 72 )
5800	Other operating costs	( 78,101 )	( 1 )	( 29,605 )	( 1 )
5000	Total operating costs	( 6,029,013 )	( 71 )	( 5,506,545 )	( 73 )
5900	GROSS PROFIT	2,555,581	29	2,061,116	27
	OPERATING EXPENSES (Notes 4, 9, 22, 24, 25 and 28)
6100	Selling and distribution expense	( 119,661 )	( 1 )	( 154,465 )	( 2 )
6200	General and administrative expense	( 558,437 )	( 7 )	( 481,208 )	( 7 )
6300	Research and development expense	( 282,321 )	( 3 )	( 239,748 )	( 3 )
6450	Gain on reversal of expected credit loss (impairment loss)	7,084	-	( 6,796 )	-
6000	Total operating expenses	( 953,335 )	( 11 )	( 882,217 )	( 12 )
6500	OTHER GAINS AND LOSSES (Notes 4, 13 and 25)	-	-	( 8,534 )	-
6900	INCOME FROM OPERATIONS	1,602,246	18	1,170,365	15
	NON-OPERATING INCOME AND EXPENSES (Notes 4, 12, 16 and 25)
7100	Interest income	59,480	1	54,289	1
7010	Other income	14,886	-	17,497	-
7020	Other gains and losses	( 713 )	-	49,493	1
7050	Finance costs	( 21,553 )	-	( 6,296 )	-
7060	Share of profit of subsidiaries and joint ventures accounted for using equity method	9,892	-	9,624	-
7000	Total non-operating income and expenses	61,992	1	124,607	2

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Code		For the years ended December 31
		2025		2024
		Amount	%	Amount	%
7900	INCOME BEFORE INCOME TAX	$ 1,664,238	19	$ 1,294,972	17
7950	INCOME TAX EXPENSES
(Notes 4 and 26)	( 431,096 )	( 5 )	( 222,287 )	( 3 )
8200	NET INCOME	1,233,142	14	1,072,685	14
	OTHER COMPREHENSIVE INCOME
(LOSS) (Notes 4, 22, 23 and 26)
8310	Items that will not be reclassified
subsequently to profit or loss:
8311	Remeasurement of defined benefit
obligation	( 4,984 )	-	4,256	-
8349	Income tax related to components
of other comprehensive income
that will not be reclassified to
profit or loss	998	-	( 851 )	-
8360	Items that will not be reclassified
subsequently to profit or loss
8361	Foreign operations - foreign
currency translation differences	( 44,123 )	-	154,293	2
8399	Income tax profit (expense)
related to items that will be
reclassified subsequently	4,500	-	( 15,737 )	-
8300	Other comprehensive
income(loss) for the period, net
of income tax	( 43,609 )	-	141,961	2
8500	TOTAL COMPREHENSIVE INCOME
(LOSS)	$ 1,189,533	14	$ 1,214,646	16
	NET INCOME ATTRIBUTABLE TO:
8610	Owners of the Company	$ 729,803	8	$ 556,426	7
8620	Non-controlling interests	503,339	6	516,259	7
8600		$ 1,233,142	14	$ 1,072,685	14
	TOTAL COMPREHENSIVE INCOME
(LOSS) ATTRIBUTABLE TO
8710	Owners of the Company	$ 707,816	8	$ 622,778	8
8720	Non-controlling interests	481,717	6	591,868	8
8700		$ 1,189,533	14	$ 1,214,646	16
	EARNINGS PER SHARE (Note 27)
9710	Basic earnings per share	$ 5.01		$ 3.82
9810	Diluted earnings per share	$ 4.99		$ 3.81

The accompanying notes are an integral part of the consolidated financial statements.

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

Code		Equity attributable to owners of the Company						Others
		Capital stock		Retained earnings			Foreign operations - foreign currency translation differences	Total	Non-controlling interests	Total equity
		Common stock	Capital surplus	Legal reserve	Special reserve	Unappropriated earnings
A1	BALANCE AT JANUARY 1, 2024	$ 1,456,814	$ 455,236	$ 793,144	$ 67,718	$ 1,117,865	($ 86,025)	$ 3,804,752	$ 2,151,056	$ 5,955,808
B3	Distribution of 2023 earnings (Note 23)
	Special reserve				18,307	(18,307)
D1	Net income in 2024				18,307	(18,307)
D3	Other comprehensive income (loss) in 2024, net of income tax					556,426		556,426	516,259	1,072,685
D5	Total comprehensive income (loss) in 2024					3,405	62,947	66,352	75,609	141,961
D5	Charges in subsidiaries' ownership (Notes 11, 23 and 30)		861			559,831	62,947	622,778	591,868	1,214,646
M7	Renumeration costs of employee stock options by subsidiaries (Notes 23, 25, and 28)		376					861	(861)
N1	Cash dividends issued from subsidiaries (Note 23)
O1	Ordinary shares issued under subsidiary's employee stock option plan (Notes 23 and 30)
O1	Increase in non-controlling interests (Note 23)								10,000	10,000
Z1	BALANCE AT DECEMBER 31, 2024	1,456,814	456,473	793,144	86,025	1,659,389	(23,078)	4,428,767	2,537,321	6,966,088
B1	Distribution of 2024 earnings (Note 23)
	Legal reserve			55,983		(55,983)
B3	Special reserve				(62,947)	62,947
B5	Cash dividends to shareholders					(72,841)		(72,841)		(72,841)
				55,983	(62,947)	(65,877)		(72,841)		(72,841)
D1	Net income in 2025					729,803		729,803	503,339	1,233,142
D3	Other comprehensive income (loss) in 2025, net of income tax					(3,986)	(18,001)	(21,987)	(21,622)	(43,609)
D5	Total comprehensive income (loss) in 2025					725,817	(18,001)	707,816	481,717	1,189,533
M7	Changes in subsidiaries' ownership (Notes 11, 23 and 30)		(251)					(251)	251
O1	Cash dividends issued from subsidiaries (Note 23)								(265,599)	(265,599)
O1	Subsidiary's employee compensation used for recapitalization (Note 23)								5,684	5,684
Z1	BALANCE AT DECEMBER 31, 2025	$ 1,456,814	$ 456,222	$ 849,127	$ 23,078	$ 2,319,329	($ 41,079)	$ 5,063,491	$ 2,759,374	$ 7,822,865

The accompanying notes are an integral part of the consolidated financial statements.

(Lin Thousands of New Taiwan Dollars)

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Code		For the years ended December 31
		2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
A10000	Income before income tax	$ 1,664,238	$ 1,294,972
A20010	Adjustments for:
A20100	Depreciation expense	818,413	839,864
A20200	Amortization expense	2,630	2,877
A20300	Expected credit impairment losses (gain on reversal of expected credit impairment losses)	( 7,084 )	6,796
A20900	Finance costs	21,553	6,296
A21200	Interest income	( 59,480 )	( 54,289 )
A21900	Stock option compensation cost of subsidiary	-	667
A22300	Share of profit of subsidiaries and joint ventures accounted for using equity method	( 9,892 )	( 9,624 )
A22500	Gains on disposal of property, plant and equipment	( 87,449 )	( 2,077 )
A22600	Prepayments for equipment reclassified to expenses	323	-
A23500	Impairment loss on property, plant and equipment	-	8,534
A23700	Inventory loss (reversal of write-down of inventories)	118,772	140,957
A23700	Goodwill impairment loss	-	32,577
A24100	Loss (gain) on foreign exchange	84,785	( 116,277 )
A29900	(Reversal of) provision for liabilities	( 319 )	20,521
A29900	Gains from lease modification	( 54 )	( 142 )
A30000	Changes in operating assets and liabilities
A31125	Contract assets	( 35,940 )	( 51,516 )
A31150	Accounts receivable	( 177,034 )	( 538,427 )
A31160	Accounts receivable due from related parties	647	1,479
A31180	Other receivables	( 301,085 )	( 124,569 )
A31200	Inventories	( 456,918 )	( 424,523 )
A31230	Prepayments	( 58,178 )	6,452
A32125	Contract liabilities	35,970	( 19,896 )
A32150	Accounts payable	( 304,426 )	586,798
A32180	Other payables	543,668	316,585
A32200	Provisions	( 210 )	( 585 )
A32230	Other current liabilities	( 165 )	473
A32240	Non-current net defined benefit liabilities	537	518
A33000	Net cash generated by operating activities	1,793,302	1,924,441
A33100	Interest received	61,102	50,088
A33300	Interest paid	( 20,758 )	( 6,274 )
A33500	Income taxes paid	( 307,325 )	( 136,676 )
AAAA	Net cash flows from operating activities	1,526,321	1,831,579

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Code		For the years ended December 31
		2025	2024
CASH FLOWS FROM INVESTING ACTIVITIES
B00040	Acquisition of financial assets at amortized cost	($ 1,057,445)	($ 212,517)
B00060	Principal repayment upon maturity of financial assets measured at amortized cost	393,707	17,751
B02700	Acquisition of property, plant and equipment	( 1,398,776)	( 391,170)
B02800	Disposal of property, plant and equipment	7,194	14,416
B03700	Increase in refundable deposits	( 983)	( 875)
B03800	Decrease in refundable deposits	46	1,112
B04300	Increase in other receivables - from related parties	-	( 911)
B04400	Decrease in other receivables - from related parties	880	-
B04500	Acquisition of intangible assets	( 9,027)	( 978)
B07100	Increase in prepayments for equipment	( 417,978)	( 145,497)
B07300	Increase in other prepayments	( 7,021)	-
B07600	Dividends received	4,169	6,500
BBBB	Net cash used in investing activities	( 2,485,234)	( 712,169)
CASH FLOWS FROM FINANCING ACTIVITIES
C00100	Increase in short-term borrowings	757,848	50,000
C00200	Decrease in short-term borrowings	( 400,000)	-
C01600	Long-term borrowings	1,027,000	195,000
C01700	Repay long-term borrowings	( 379,688)	( 113,192)
C03000	Guarantee deposits received	51,215	-
C04020	Repayment of the principal portion of lease liabilities	( 44,185)	( 45,104)
C04500	Dividends to owners of the Company	( 72,841)	-
C04800	Employees stock options exercised by subsidiaries	-	6,300
C05800	Cash dividends to non-controlling interests	( 265,581)	( 221,318)
C05800	Changes in non-controlling interests	-	10,000
CCCC	Net cash generated by (used in) financing activities	673,768	( 118,314)
DDDD	EFFECT OF EXCHANGE RATE CHANGES ON CASH AND EQUIVALENTS	( 119,554)	169,311
EEEE	NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	( 404,699)	1,170,407
E00100	CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	3,138,394	1,967,987
E00200	CASH AND CASH EQUIVALENTS, END OF YEAR	$ 2,733,695	$ 3,138,394

The accompanying notes are an integral part of the consolidated financial statements.

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

GENERAL

a. Elite Advanced Laser Corporation (hereinafter referred to as “the Company”) was established in New Taipei City in September 2000 and started operation in September of the same year. The registered capital of establishment was $5,000 thousand. After years of capital increase and decrease, the current total capital is $1,456,814 thousand. The Company’s business affairs consists of 1. optical information and optical communication products; 2. power semiconductor packaging and testing; 3. silicon photonics products.

b. The Company’s stock has been listed on the Taiwan Stock Exchange since April 2006.

c. The Company has no ultimate parent company due to dispersed shareholding.

d. The consolidated financial statements are expressed in New Taiwan Dollars, the Company’s functional currency.

THE AUTHORIZATION OF FINANCIAL STATEMENTS

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 12, 2026.

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Amendments to IAS 21 - Lack of Exchangeability

The application of the amendment to IAS 21, "Lack of Exchangeability," is not expected to cause a significant change to the accounting policies of the Company and its subsidiaries (collectively as the "Group").

b. Applicable FSC - approved IFRS Accounting Standards in 2026

New, revised or amended standards and interpretations	Effective date issued by IASB
Amendments to IFRS 9 and IFRS 7 "Amendments to the Classification and Measurement of Financial Instruments"	January 1, 2026
Amendments to IFRS 9 and IFRS 7 “Contracts Referencing Nature-dependent Electricity”	January 1, 2026
Annual Improvements to IFRS Accounting Standards - Volume 11	January 1, 2026
IFRS 17 “Insurance Contracts” (Including the 2020 and 2021 Amendments)	January 1, 2023

As of the publication date of this consolidated financial statement, the Group has concluded that there is no material impact of amendments of above standards and interpretations on the consolidated financial position and consolidated financial performance.

c. New IFRSs Accounting Standards in issue by IASB but not yet endorsed and issued into effect by the FSC

New, revised or amended standards and interpretations	Effective date issued by IASB (Note 1)
Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	NA
IFRS 18 - Presentation and Disclosure in Financial Statements	January 1, 2027 (Note 2)
IFRS 19 “Disclosure Initiative - Subsidiaries without Public Accountability: Disclosures” (Including the 2025 Amendments)	January 1, 2027
Amendments to IAS 21 - Translation to a Hyperinflationary Presentation Currency	January 1, 2027

Note 1: Unless stated otherwise, the above new/revised/amended standards or interpretations are effective for annual reporting periods beginning on their respective effective dates.

Note 2: On September 25, 2025, the FSC announced that IFRS 18 will be mandatory for Taiwanese companies starting January 1, 2028, with an option for early adoption once the FSC has approved the standard.

IFRS 18 - Presentation and Disclosure in Financial Statements and related consequential amendments

IFRS 18 will replace IAS 1 “Presentation of Financial Statements”. The main changes in this standard include:

The Group shall assess whether it possesses specific main business activities, such as investing in specific types of assets and providing financing to customers. Based on this assessment, income and expense items in the statement of profit or loss shall be classified into operating, investing, financing, income tax, and discontinued operations categories.
An entity has to present totals and subtotals in the statement of profit or loss for operating profit or loss, pre-tax profit or loss before financing, and profit or loss.
Requirements for provision of guidance to enhance aggregation and disaggregation: The Group should identify assets, liabilities, equity, income, expenses, losses, and cash flows in each transaction or other events, and classify and aggregate them based on shared characteristics so that the main line items presented in the financial statements share at least one similar characteristic. Items should be disaggregated based on non-similar characteristics. The Group should label such items as "other" only if it cannot find a more informative title.
Increasing the disclosure of management-defined performance measures (MPMs): When the Group engages in public communications outside financial statements and communicate to management’s view of an aspect of the financial performance of the entity as a whole, the Group should disclose information
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about its MPMs in a single note to the financial statements, including a description of how the MPM is measured, how the MPM is calculated, and a reconciliation between the MPM and the total or subtotal required by IFRS Accounting Standards, including the income tax effect and the effect on non-controlling interests for each item disclosed in the reconciliation.

Furthermore, IAS 7 "Statement of Cash Flows" has undergone the following consequential amendments:

When the Group prepares cash flows from operating activities using the indirect method, "operating profit or loss" shall be used as the starting point for reconciliation.
Interest and dividends received by the Group shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. If the Group is assessed to have specific main business activities, it must consider the classification of dividend income, interest income, and interest expense presented in the statement of profit or loss to determine the classification of dividends received, interest received, and interest paid within the statement of cash flows; provided, however, that each such cash flow may only be classified within a single activity in the statement of cash flows.

In addition to the above impacts, as of the reporting date of this consolidated financial statement, the Group continues to assess other impacts of amendments to the standards and interpretations on the consolidated financial position and consolidated financial performance, and the relevant impact will be disclosed when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statement has been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed and issued by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis, except for the net defined benefit liability recognized at the present value of the defined benefit obligation less the fair value of the plan assets.

Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable and its significance:

1) Level 1 Inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.
2) Level 2 Inputs: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly (including market-corroborated data).
3) Level 3 Inputs: unobservable inputs and are used when relevant observable inputs are not available.

c. Criteria for classifying assets and liabilities into current and non-current.

Current assets:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the balance sheet date; and

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3) Cash and cash equivalents (unless the asset is to be used for an exchange or to settle a liability, or otherwise remains restricted, at more than 12 months after the balance sheet date).

Current liabilities:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities expected to be settled within 12 months of the balance sheet date, and
3) Liabilities for which there is no substantive right at the balance sheet date to defer settlement of the liability for at least 12 months after the balance sheet date.

Current assets or current liabilities other than those stated above are classified as non-current assets or liabilities.

d. Consolidation basis

This consolidated financial statement includes the financial statement of the Company and the entities (subsidiaries) controlled by the Company. Comprehensive income of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate. The financial statements of subsidiaries have been adjusted to ensure the accounting policies are line with those of the Group. Transactions between entities, account balances, profit and losses have been fully eliminated in preparing the consolidated financial statements. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. 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 and attributed to the owners of the Company.

For details of subsidiaries, shareholding ratio and business activities, please refer to Note 11 and Table 4 and Table 5 of Note 38.

e. Foreign currencies

When preparing the individual financial statements, transactions in currencies other than the parent company's functional currency (foreign currency) shall be converted into functional currency at the exchange rate on the transaction day.

Monetary items denominated in foreign currencies are translated at the closing rates at each balance sheet date. Exchange differences arising on the settlement of monetary items or on translating monetary items shall be recognized in profit or loss in the period in which they arise.

Non-monetary items that are measured in terms of historical cost in a foreign currency shall be translated using the exchange rate at the date of the transaction; and shall not be re-translated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the domestic and foreign entities (including subsidiaries, associates or branches in other countries that use currencies that are different from the currency of the Company) are translated into the New Taiwan Dollar at the exchange rate on

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each balance sheet date. Income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests as appropriate).

In relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the noncontrolling interests of the subsidiary and is not recognized in profit or loss.

f. Inventories

Inventories include raw materials, supplies, work in progress and finished goods. Inventories shall be measured at the lower of cost and net realizable value, and the comparison between cost and net realizable value is based on individual items except for inventories of the same category. Net realizable value is the estimated selling price under normal circumstances less the estimated cost to complete the project and the estimated cost to complete the sale. The Group’s inventory is recorded at standard cost during daily operation and adjusted to approximate weighted-average cost at the end of the reporting period.

g. Investments in associates

An associate is an entity over which the Group has significant influence, but are not subsidiaries or joint ventures of the Group.

The Group adopts the equity method when accounting for investments in associates. Under the equity method, on initial recognition the investment in an associate is recognized at cost, and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss of the associate after the date of acquisition. The Group’s share of the associate’s profit or loss is recognized in the Group’s profit or loss.

When assessing impairment, the Group regards the overall carrying amount of the investment as a single asset and compares the recoverable amount with the carrying amount for impairment testing. The recognized impairment loss is viewed as the carrying amount of the investment. Any reversal of the impairment loss is recognized to the extent of subsequent increases in the recoverable amount of the investment.

Gains and loss arising from upstream, downstream, and sidestream transactions between the Group and associates shall be recognized in the consolidated financial statement only to the extent that it is unrelated Group’s interest in the associate.

h. Property, plant and equipment

Property, plant and equipment shall be recognized at cost, and subsequent measurement shall be presented at costs subtracted by accumulated depreciation and accumulated impairment losses.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately portion with a straight-line method over their useful lives. The Group shall review the estimated useful life, residual value and depreciation method at least at each financial year-end, and the impact of changes in accounting estimates shall be applied prospectively.

Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

i. Investment property

Investment property is property (including right-of-use assets that meet the definition of investment property) held to earn rentals or for capital appreciation or both.

Investment property shall be initially measured at cost (including transaction costs), and subsequent measurement shall be presented at costs subtracted by accumulated depreciation and accumulated impairment losses.

Investment property shall be depreciated with a straight-line method.

Property, plant and equipment and right-of-use assets is transferred to investment property at the carrying amount at the end of owner-occupation.

Any gain or loss arising on the disposal or retirement of an item of investment property is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

j. Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating unit or groups of cash-generating units (referred to as cash-generating units) that are expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal.

k. Intangible assets

1) Additions

Intangible assets with a limited useful life acquired separately shall be initially measured at cost, and subsequent measurement shall be presented at costs subtracted by accumulated depreciation and accumulated impairment losses. Intangible assets shall be amortized with a straight-line method within the useful life where the Group shall review the estimated useful life, residual value and amortization method at least at each financial year-end, and the impact of changes in accounting estimates shall be applied prospectively. Intangible assets with indefinite useful lives are recognized at cost subtracted by accumulated impairment losses.

2) Derecognition

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Any gain or loss arising on the disposal or retirement of an item of intangible assets is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

Impairment of property, plant and equipment, right-of-use assets, investment property and intangible assets (other than goodwill)

The Group assess at the date of statement property, plant and equipment, right-of-use assets, investment property and intangible assets (other than goodwill) for whether there is any indication of impairment. If there is any indication that an asset may be impaired, the recoverable amount shall be estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the recoverable amount of the cash-generating unit to which the asset belongs. If groups of assets can be allocated to cash-generating units on a reasonable and consistent basis, they will be allocated to individual cash-generating units; otherwise, they will be allocated to the smallest group of cash-generating units that can be allocated on a reasonable and consistent basis.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs of disposal and its value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the revised estimate of its recoverable amount, but the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. (net of amortization or depreciation) A reversal of an impairment loss is recognized immediately in profit or loss.

m. Financial instruments

Financial assets and liabilities shall be recognized in the consolidated balance sheet when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially recognized at fair values. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

1) Financial assets

Regular way purchases or sales of financial assets are recognized and derecognized on a trade date.

(1) Category of financial assets and measurement

The types of financial assets held by the Group are financial assets measured at amortized cost.

Financial assets measured at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

(i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

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(ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, financial assets measured at amortized cost, accounts receivable (including related parties), other receivables (including related parties; excluding income tax refund receivables), overdue receivables and refundable deposit, are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

(i) Purchased or originated credit-impaired financial asset, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets.

(ii) Financial asset that is not credit impaired on purchase or origination but has subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when significant financial difficulty of the issuer or the borrower; breach of contract; it is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or the disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits and certificates of deposits investments with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

(2) Impairment of financial assets and contract assets

On each balance sheet date, the Group evaluates the impairment loss of financial assets (including notes receivable, accounts receivable, other receivables and deposits) and contract assets measured at amortized cost based on expected credit losses.

Accounts receivable and contract assets are recognized as allowance losses based on lifetime expected credit losses. Other financial assets are evaluated on whether the credit risk has increased significantly since the original recognition. If there is no significant increase, the loss provision shall be recognized as the 12-month expected credit loss, and if there has been a significant increase, the loss provision shall be recognized as the expected credit loss during the duration.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, lifetime ECLs represent the expected

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credit losses that will result from all possible default events over the expected life of a financial instrument.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

(i) Internal or external information show that the debtor is unlikely to pay its creditors.

(ii) When a financial asset is due longer than 180 days, unless the Group has reasonable and corroborative information to support a more lagged default criterion.

As for the impairment losses on all financial assets, the carrying amounts there are reduced directly or through an allowance account.

(3) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset to another entity.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Group are classified as financial liabilities or equity based on the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Group are recognized at acquisition price less direct issuance cost.

Repurchase of the Company's own equity instruments is recognized in and deducted directly from equity. Its carrying amount is calculated using the weighted-average method based on the type of stock. The purchase, sale, issue, or cancellation of the Company's own equity instruments is not recognized in profit or loss.

3) Financial liabilities

(1) Subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method, except where the recognition of interest on short-term payables is not material.

(2) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

n. Provisions

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. A provision is measured using the cash flows estimated to settle the present obligation.

Warranties

The warranty obligation to ensure that the product conforms to the agreed specifications is recognized when the relevant product is recognized as revenue

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based on the management's best estimate of the expense required to settle the obligations of the Group.

o. Revenue recognition

When a performance obligation is satisfied, the Group shall recognize as revenue the amount of the transaction price that is allocated to that performance obligation.

Operating revenue

1) Service revenue

Revenue from packaging and testing

The Group’s packaging service creates or enhances an asset that the customer controls as the asset is created or enhanced; the customer simultaneously receives and consumes the benefits from the testing services provided by the Group’s performance as the Group performs.

The relevant revenue will be transferred to the customer with the promised goods or services, and the sales revenue will be recognized when the performance obligations are met over time. The revenue received before meeting the above-mentioned performance obligations are recognized as contract liabilities.

2) Sales revenue

When merchandise sold is shipped out or delivered, a customer has the right to set a price, use the merchandise, and has the main responsibility for resale, while bearing the risk of obsolescence of the merchandise, at which the Group recognizes it in sales revenue and accounts receivable. The revenue received before meeting the above-mentioned performance obligations are recognized as contract liabilities.

3) Lease and other services

Other service revenue is recognized as revenue when the service contract conditions are met in accordance with the relevant contract when the economic benefits are likely to flow into the Group and the revenue can be measured reliably. The revenue received before meeting the above-mentioned performance obligations are recognized as contract liabilities.

p. Lease

The Group assesses whether the contract is a lease on the contract establishment date.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

When the Group subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) The Group as lessee

Except for leases of low-value assets to which the recognition exemption applies and lease payments for short-term leases, which are recognized as

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expenses on a straight-line basis over the lease term, other leases are recognized as right-of-use assets and lease liabilities on the lease commencement date.

The right-of-use asset is initially measured at cost (including the original measurement amount of the lease liability and the lease payment paid before the lease commencement date), and subsequently measured at the cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability. Right-of-use assets shall be recognized separately in the consolidated balance sheet.

The lessee shall depreciate the right-of-use asset on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

Lease liabilities are measured at the present value of the lease payments including fixed payments and variable lease payments which depend on an index or a rate. The lease payments shall be discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee shall use the lessee's incremental borrowing rate.

Subsequently, the lease liability is measured on an amortized cost basis using the effective interest method, and the interest expense is amortized over the lease term. After the commencement date, the Group shall remeasure the lease liability to reflect changes to the lease index or rate and shall recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero, the Group shall recognize any remaining amount of the remeasurement in profit or loss. For lease modifications not accounted for as a separate lease: For a decrease in lease scope, the remeasurement of the lease liability results in a reduction of the right-of-use asset, with any gain or loss recognized for the partial or full termination of the lease. For all other modifications, the remeasurement of the lease liability results in a corresponding adjustment to the right-of-use asset. Lease liabilities shall be recognized separately in the consolidated balance sheet.

q. Borrowing costs

Borrowing costs are recognized in profit or loss in the period in which they are incurred.

r. Governments subsidy

A government grant is not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to it, and that the grant will be received.

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate. Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as a deduction from the carrying amount of the related assets and recognized as a reduced depreciation or amortization charge in profit or loss over the contract period or useful lives of the related assets.

A government grant that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs shall be recognized in profit or loss of the period in which it becomes receivable.

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s. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for service rendered by employees.

2) Post-employment benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost, past service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Net defined benefit assets cannot exceed present value of the plan’s returned contributions or possible decrease in future contributions.

t. Share-based payment arrangements

Employee stock options

Employee stock options are based on the fair value of equity instruments on the grant date and the best estimated amount expected to be acquired. Expenses are recognized on a straight-line basis during the acquired period, and capital surplus - employee stock options is adjusted at the same time. If it is immediately acquired on the grant date, the full amount of the fee shall be recognized on the grant date. When the Group issues employee stock options at cash capital increase, the date of notification to the employees shall be the grant date.

The Group revises the estimated number of expected vested employee stock options on each balance sheet date. If there is a revision to the original estimated quantity, the influence number is recognized as profit and loss, so that the accumulated expenses reflect the revised estimate, and the capital surplus - employee stock options is relatively adjusted.

u. Income tax

Income tax expense is the sum of current income tax and deferred income tax.

1) Current income tax

The Group determines the current income (loss) in accordance with the laws and regulations formulated by each income tax reporting jurisdiction, and calculates the payable (recoverable) income tax accordingly.

According to the Income Tax Act, an additional tax on unappropriated earnings is provided for as income tax in the year the stockholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

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2) Deferred income tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and loss deductible that it is probable that taxable profits will be available against which those deductible temporary differences and loss deductible can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are recognized only to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and such temporary differences are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred tax

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

When the Group adopts accounting policies, the management must make relevant judgments, estimates and assumptions based on experience and other relevant factors for the information that is not easily obtained from other sources. Actual results may differ from estimates.

The Group will take the possible impacts of inflation and market interest rate fluctuations, foreign exchange market fluctuations, and U.S. reciprocal tariff measures into consideration when making major estimates, such as cash flow estimates, growth rates,

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discount rates, and profitability. The management will continue to review the estimates and the basic assumptions.

Main sources of uncertainty in estimates and assumptions

Estimated impairment of financial assets and contract assets

The estimated impairment of notes receivable, accounts receivable, other receivables, contract assets and debt instrument investments is based on the Group's assumptions about the loss given default and probability of default. The Group takes experience, current market conditions and forward-looking information into account to develop assumptions and inputs for impairment assessments. Please refer to Note 8, Note 9 and Note 24 for the key assumptions and inputs used. If the actual future cash flow is less than the Group's expectations, there may be significant impairment losses.

6. CASH AND CASH EQUIVALENTS

	December 31, 2025	December 31, 2024
Cash on hand and working fund	$ 389	$ 397
Demand deposit in banks	2,351,435	2,287,039
Cash equivalent (Investments with original maturities of less than 3 months)
Bank fixed deposit	381,871	850,958
	$ 2,733,695	$ 3,138,394

As of December 31, 2025 and 2024, the interest rate ranges for bank deposits were 0.03% to 3.88%, and 0.002% to 4.8%, respectively.

7. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

	December 31, 2025	December 31, 2024
Current
Term deposit with an initial maturity of more than three months (a)	$ 890,108	$ 213,949
Non-current
Restricted assets – time deposit (b)	$ 776	$ 763

a. As of December 31, 2025 and 2024, the rates of annual interest for bank time deposits with the initial duration exceeding three months were 1.10%-4.40%, and 1.69%-4.30%, respectively.
b. As of December 31, 2025 and 2024, the restricted time deposit interest rate was 1.69% per annum.
c. For credit risk management and impairment assessment related to financial assets measured at amortized cost, please refer to Note 8.
d. For pledge of financial assets measured at amortized cost, please refer to Note 35.

CREDIT RISK MANAGEMENT OF INVESTMENTS IN DEBT INSTRUMENTS

The debt instruments invested by the Group are financial assets measured at amortized cost (including current and non-current):

	December 31, 2025	December 31, 2024
At amortized cost
Total amount	$ 890,884	$ 214,712
Less: Loss allowances	-	-
Amortized cost	$ 890,884	$ 214,712

The Group adopts the policy to invest only in debt instruments issued by creditworthy entities. The Group continues to track changes in the credit risk of the invested debt instruments, and reviews other information such as significant information of the debtor to assess whether the credit risk of the debt instrument investment has increased significantly since the original recognition.

To mitigate credit risk, the management of the Group will collect relevant information to assess the default risk of debt instrument investment. The Group gives appropriate internal ratings with reference to publicly available financial information.

The Group considers the debtor's historical record, current market conditions and business outlook to measure the 12-month expected credit loss or lifetime expected credit loss of the debt investment paid. As of December 31, 2025 and 2024, the Group assessed that it was not necessary to report expected credit losses for debt investment paid.

NOTES RECEIVABLES, ACCOUNT RECEIVABLES, UNCOLLECTIBLE RECEIVABLES AND OTHER RECEIVABLES

	December 31, 2025	December 31, 2024
Notes receivable (Note 31)
At amortized cost
Total amount	$ 81,375	$ -
Less: Unrealized interest income	(1,933)	-
	$ 79,442	$ -
Non-operating	$ 81,375	$ -
Less: Unrealized interest income	(1,933)	-
	$ 79,442	$ -
Accounts receivable
At amortized cost
Total amount	$ 1,608,866	$ 1,529,643
Less: Loss allowances	(2,063)	(5,257)
	$ 1,606,803	$ 1,524,386
Uncollectible receivables
At amortized cost
Total amount	$ -	$ -

27 -

28 -

	December 31, 2025	December 31, 2024
Less: Loss allowances	-	-
	$ -	$ -
Other receivables
OEM collection and payment	$ 619,914	$ 329,699
Income tax refund receivable	40,379	36,118
Interest receivable	5,503	7,125
Receivables from disposal of equipment (Note 31)	3,236	-
Others	9,279	3,995
	$ 678,311	$ 376,937
Long-term notes receivable (Note 31)
At amortized cost
Total amount	$ 27,125	$ -
Less: Unrealized interest income	( 103 )	-
	$ 27,022	$ -
Non-operating	$ 27,125	$ -
Less: Unrealized interest income	( 103 )	-
	$ 27,022	$ -

a. Notes receivables

It refers to notes receivable arising from the sale of property, plant, and equipment. When determining the recoverability of notes receivable, the Group considers any changes in the quality of notes receivable from the original credit date to the balance sheet date. The Group continues to monitor and refer to the counterparty's past default records and analyze its current financial position to assess whether the credit risk of the notes receivables has increased significantly since the original recognition and to measure expected credit losses. As of December 31, 2025, the Group assessed that there was no need to recognize expected credit losses for notes receivables.

The aging analysis of notes receivable (including current and non-current) is as follows:

	December 31, 2025	December 31, 2024
	Not past due	Not past due
Total amount	$ 108,500	$ -
Less: Unrealized interest income	( 2,036 )	-
Amortized cost	$ 106,464	$ -

The above is an aging analysis based on days overdue.

b. Accounts receivable

The Group's average credit period for commodity sales ranges from prepayment to net 90 days end of the month, and the collection policy does not add interest to

overdue accounts receivable. When determining the recoverability of accounts receivable, the Group considers any changes in the quality of notes receivable from the original credit date to the balance sheet date. Experience shows that most accounts receivable are recovered well.

To mitigate credit risk, the management of the Group performs credit limit determination, credit approval and other monitoring procedures for each counterparty to ensure appropriate actions have been taken to recover overdue accounts receivable. In addition, the Group will review the recoverable amount of accounts receivable one by one on the balance sheet date to ensure the unrecoverable accounts receivable are recognized as impairment losses. Accordingly, the management of the Group believes that the credit risk of the Group has been significantly reduced.

The Group recognizes loss allowance for accounts receivable based on lifetime expected credit losses. Lifetime expected credit losses are calculated using a provision matrix, which considers experience, current market conditions and business outlook. As the Group's credit loss experience shows that there is no significant difference in the provision matrix of different customer groups, the provision matrix does not further differentiate customer groups, and only sets the expected credit loss rate based on the number of days overdue for accounts receivable.

If there is evidence that the counterparty is facing serious financial difficulties and the Group cannot reasonably expect the recoverable amount, the Group will write off the relevant accounts receivable and loss allowance, but will continue to pursue account recovery, and the amount recovered due to pursuit and recovery will be recognized in profit or loss.

The Group measures the loss allowance of accounts receivable according to the provision matrix as follows:

December 31, 2025

	Not past due	Past due within 60 days	Past due 61-90 days	Past due 91-120 days	Past due over 120 days	Total
Expected credit loss rate	0.05%~0.45%	0.06%~12.62%	7.93%~33.33%	20%~50%	100%
Total amount	$ 1,528,135	$ 80,720	$ -	$ 11	$ -	$ 1,608,866
Loss allowance (lifetime expected credit losses)	( 2,001 )	( 60 )	-	( 2 )	-	( 2,063 )
Amortized cost	$ 1,526,134	$ 80,660	$ -	$ 9	$ -	$ 1,606,803

December 31, 2024

	Not past due	Past due within 60 days	Past due 61-90 days	Past due 91-120 days	Past due over 120 days	Total
Expected credit loss rate	0.02%~0.84%	0.02%~12.52%	6.74%~25%	13.56%~100%	50%~100%
Total amount	$ 1,434,019	$ 95,269	$ 17	$ 337	$ 1	$ 1,529,643
Loss allowance (lifetime expected credit losses)	( 3,216 )	( 1,926 )	( 2 )	( 112 )	( 1 )	( 5,257 )
Amortized cost	$ 1,430,803	$ 93,343	$ 15	$ 225	$ -	$ 1,524,386

Movements of the loss allowance for accounts receivable

	For the years ended December 31
	2025	2024
Opening balance	$ 5,257	$ 1,175
Impairment losses for the current period	-	4,082
Reversal	( 3,194 )	-
Ending balance	$ 2,063	$ 5,257

Uncollectible receivables

The Group recognizes loss allowance for uncollectible receivable based on lifetime expected credit losses. Lifetime expected credit losses considers experience, current market conditions and business outlook. As of December 31, 2024, the expected credit loss ratio for overdue notes receivable was 100%.

Movements of the loss allowance for uncollectible receivable

	For the year ended December 31, 2024
Opening balance	$ 6,936
Write-offs	( 6,936 )
Ending balance	$ -

c. Other receivables

The Group accounts for other receivables, such as OEM collection and payment, income tax refund receivable, interest receivable, and receivables from the disposal of equipment. The Group's policy is to only conduct business with customers with good credit. The Group continues to track and refer to the past default records of the counterparty and analyze its current financial position to assess whether the credit risk of other receivables has increased significantly since the original recognition and to measure the expected credit loss. If there is evidence that the counterparty has signs of default or the recoverable amount cannot be reasonably expected due to termination of the contract, the Group will write off the relevant other receivables and loss allowance, but will continue to pursue recovery where the amount recovered will be recognized in profit or loss. As of December 31, 2025 and 2024, the Group assessed that there was no need to recognize expected credit losses for other receivables.

INVENTORIES

	December 31, 2025	December 31, 2024
Finished goods	$ 28,246	$ 12,855
Work in process	161,398	74,161
Raw materials	800,790	563,254
Inventory in transit	17,446	21,665
	$ 1,007,880	$ 671,935

The nature of cost of goods sold is as follows:

	For the years ended December 31
	2025	2024
Cost of inventories sold	$ 5,824,041	$ 5,295,410
Unapportioned manufacturing overhead	-	32,204
Lease cost	8,099	8,369
Inventory loss (reversal of write-down of inventories)	118,772	140,957
	$ 5,950,912	$ 5,476,940

SUBSIDIARY

a. Subsidiaries included in the consolidated financial statements

The subsidiaries included in the consolidated financial statements were as follows:

Investment company	Subsidiary	Main activities	% of ownership		Remark
			December 31, 2025	December 31, 2024
The Company	Centera Photonics Inc.	Manufacture and sales of electronic parts	54.23%	54.56%	Notes 3, 4 and 5
The Company	GEM Services, Inc.	Holding company business	51%	51%	Note 1
GEM Services, Inc.	GEM Electronics Company Limited	Holding company business	100%	100%	Note 1
GEM Services, Inc.	GEM Tech Ltd.	Manufacture and sales of electronic parts	100%	100%	Note 1
GEM Electronics Company Limited	GEM Electronics (Shanghai) Co., Ltd.	Manufacture and sales of electronic parts	100%	100%	Note 2
GEM Electronics (Shanghai) Co., Ltd.	GEM Electronics (Hefei) Co., Ltd.	Manufacture and sales of electronic parts, factory leasing	100%	100%	Note 2

Note 1: The main business risk is currency risk.

Note 2: The main business risks are political risks and currency risks faced by government decrees and the changes between Taiwan and Mainland China.

Note 3: In September 2024, the Company did not participate in the cash capital increase of the subsidiary Centera Photonics Inc. in proportion to its shareholding, causing the Company's shareholding in the subsidiary to fall from 56.41% to 55.26%. As the aforementioned transaction did not change the Company's control over this subsidiary, the change is treated as an equity transaction. During 2024, the Company recognized the relevant effects due to the aforementioned transaction, leading to an adjustment by increasing the capital surplus by $873 thousand. Please refer to Note 30 for equity transactions with non-controlling interests.

Note 4: Centera Photonics Inc. issued 630,000 new shares on October 23, 2024 due to the exercise of stock options by its employees, causing the Company's shareholding in the subsidiary to fall from 55.26% to 54.56%. As the aforementioned transaction did not change the Company's control over this subsidiary, the change is treated as an equity transaction. The effect recognized by the Company for 2024 due to the aforementioned transaction was for the adjustment of the capital surplus downward by $12 thousand. Please refer to Note 30 for details of equity transactions with non-controlling interests.

Note 5: On June 30, 2025, Centera Photonics Inc. issued 400 thousand new shares due to the capitalization of employees' compensation, causing the Company's shareholding in the subsidiary to fall from 54.56% to 54.23%. As the aforementioned transaction did not change the Company's control over this subsidiary, the change is treated as an equity transaction. The effect recognized by the Company for 2025, due to the aforementioned transaction was for the adjustment of the capital surplus downward by $251 thousand. Please refer to Note 30 for details of equity transactions with non-controlling interests.

b. Information on subsidiaries with material non-controlling interests

Subsidiary	% of non-controlling interests
	December 31, 2025	December 31, 2024
GEM Services, Inc.	49%	49%
Centera Photonics Inc.	45.77%	45.44%

Please refer to Table 4 for the country information of the principal business site and company registration.

Subsidiary	Net income (loss) distribution to non-controlling interests		Non-controlling interests
	2025	2024	December 31, 2025	December 31, 2024
GEM Services, Inc.	$ 371,763	$ 325,481	$ 2,300,533	$ 2,215,991
Centera Photonics Inc.	$ 131,576	$ 190,778	$ 458,841	$ 321,330

The consolidated financial information for the following subsidiaries has been prepared at balances before intercompany transactions are eliminated:

GEM Services, Inc.

	December 31, 2025	December 31, 2024
Current assets	$ 4,129,242	$ 3,734,968
Non-current assets	2,692,316	2,885,958
Current liabilities	( 1,691,538 )	( 1,566,854 )
Non-current liabilities	( 435,404 )	( 531,979 )
Equity	$ 4,694,616	$ 4,522,093
Equity attributable to:
Owners of the Company	$ 2,394,083	$ 2,306,102
Non-controlling interests	2,300,533	2,215,991
	$ 4,694,616	$ 4,522,093
	For the years ended December 31
---	---	---
	2025	2024
Operating revenue	$ 5,325,910	$ 4,670,539
Net income	$ 758,645	$ 664,197
Other comprehensive income	( 44,123 )	154,293
Total comprehensive income (loss)	$ 714,522	$ 818,490
Net income attributable to:
Owners of the Company	$ 386,882	$ 338,716
Non-controlling interests	371,763	325,481
	$ 758,645	$ 664,197
Total comprehensive income (loss) attributable to
Owners of the Company	$ 364,381	$ 417,400
Non-controlling interests	350,141	401,090
	$ 714,522	$ 818,490
Cash flow
From operating activities	$ 1,295,498	$ 1,299,084
From investing activities	( 1,089,874 )	( 422,903 )

33 -

From financing activities
( 522,549 ) ( 485,407 )
Effect of exchange rate
changes
( 90,323 ) 153,231
Net cash generated (used in)
($ 407,248 ) $ 544,005

Dividends to non-controlling
interests
GEM Services, Inc. $ 265,581 $ 221,318

Centera Photonics Inc.
December 31,
2025 December 31,
2024
Current assets $ 1,332,512 $ 1,291,547
Non-current assets 94,858 62,928
Current liabilities ( 421,467 ) ( 644,621 )
Non-current liabilities ( 3,482 ) ( 2,670 )
Equity $ 1,002,421 $ 707,184

Equity attributable to:
Owners of the Company $ 543,580 $ 385,854
Non-controlling interests 458,841 321,330
$ 1,002,421 $ 707,184

For the years ended December 31
2025 2024
Operating revenue $ 1,811,835 $ 2,023,000
Net income $ 289,553 $ 426,805
Other comprehensive income - -
Total comprehensive income
(loss) $ 289,553 $ 426,805

Net income attributable to:
Owners of the Company $ 157,977 $ 236,027
Non-controlling interests 131,576 190,778
$ 289,553 $ 426,805

Total comprehensive income
(loss) attributable to
Owners of the Company $ 157,977 $ 236,027
Non-controlling interests 131,576 190,778
$ 289,553 $ 426,805

Cash flow
From operating activities ($ 8,251 ) $ 467,297
From investing activities ( 42,785 ) ( 13,501 )
From financing activities ( 4,567 ) 12,321
Effect of exchange rate
changes ( 22,135 ) 10,818
Net cash generated (used in) ($ 77,738 ) $ 476,935

34 -

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates

	December 31, 2025	December 31, 2024
Associates that are not individually material
Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd.	$ 129,284	$ 125,814

Shareholding and voting rights of the Group in the associates at the balance sheet date are as follows:

Name of company	Main activities	Location	% of ownership
			December 31, 2025	December 31, 2024
Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd.	Production, design, packaging and testing of power management electronic accessories	Hefei City, Anhui Province, China	20%	20%

Aggregate information of associates that are not individually material

	For the years ended December 31
	2025	2024
Attributable to the Group
Net income	$ 9,892	$ 9,624
Other comprehensive income	-	-
Total comprehensive income (loss)	$ 9,892	$ 9,624

Share of profit of associates accounted for using equity method is recognized based on the financial statements of the associates that have been audited by CPA during the same period.

13. Property, plant and equipment - self-use

	Self-owned land	Buildings	Machinery and equipment	Transportation equipment	Office equipment	Leasehold improvements	Miscellaneous equipment	Property under construction and equipment to be inspected	Total
Cost
Balance at January 1, 2025	$ 743,384	$ 1,026,370	$ 7,436,311	$ 10,673	$ 78,399	$ 194,993	$ 130,158	$ 213,628	$ 9,833,916
Additions	-	19,861	1,096,024	2,913	23,079	9,583	40,102	174,349	1,365,911
Reclassification (Note)	-	-	382,247	-	1,638	-	107	(272,788)	111,204
Disposal	-	(5,081)	(294,445)	-	(9,975)	(97,134)	(11,985)	-	(418,620)
Effect of exchange rate changes	-	(10,719)	(52,979)	(77)	(1,320)	(1,710)	(1,657)	(3,120)	(71,582)
Balance at December 31, 2025	$ 743,384	$ 1,030,431	$ 8,567,158	$ 13,509	$ 91,821	$ 105,732	$ 156,725	$ 112,069	$ 10,820,829
Accumulated depreciation and impairment
Balance at January 1, 2025	$ -	$ 349,201	$ 5,031,946	$ 9,945	$ 67,920	$ 170,283	$ 95,810	$ -	$ 5,725,105
Depreciation expense	-	51,862	674,074	1,055	6,630	15,493	15,571	-	764,685
Disposal	-	(5,081)	(266,720)	-	(9,921)	(95,473)	(11,980)	-	(389,175)
Effect of exchange rate changes	-	(3,087)	(56,402)	(75)	(1,210)	(1,428)	(1,455)	-	(46,657)
Balance at December 31, 2025	$ -	$ 392,895	$ 5,399,898	$ 10,025	$ 63,419	$ 88,875	$ 97,996	$ -	$ 6,053,958
Carrying amount at December 31, 2025	$ 743,384	$ 637,536	$ 3,167,260	$ 2,584	$ 28,402	$ 16,857	$ 58,779	$ 112,069	$ 4,766,871
Cost
Balance at January 1, 2024	$ 743,384	$ 1,019,524	$ 7,239,402	$ 10,479	$ 73,864	$ 179,404	$ 117,641	$ 186,307	$ 9,570,005
Additions	-	9,533	168,500	-	2,239	11,974	19,151	172,777	384,174
Reclassification (Note)	-	1,029	164,545	-	1,363	-	-	(152,410)	14,527
Disposal	-	(30,784)	(287,535)	-	(2,142)	(643)	(11,306)	-	(332,410)
Effect of exchange rate changes	-	27,068	151,399	350	3,075	4,258	4,672	6,954	197,620
Balance at December 31, 2024	$ 743,384	$ 1,026,370	$ 7,436,311	$ 10,673	$ 78,399	$ 194,993	$ 130,158	$ 213,628	$ 9,833,916
Accumulated depreciation and impairment
Balance at January 1, 2024	$ -	$ 322,892	$ 4,515,191	$ 8,969	$ 61,718	$ 123,138	$ 87,433	$ -	$ 5,119,341
Depreciation expense	-	48,755	671,607	789	5,522	45,115	15,889	-	787,677
Impairment losses	-	-	8,534	-	-	-	-	-	8,534
Disposal	-	(30,784)	(275,199)	-	(2,142)	(643)	(11,303)	-	(320,071)
Effect of exchange rate changes	-	8,338	111,813	187	2,822	2,673	3,791	-	129,624
Balance at December 31, 2024	$ -	$ 349,201	$ 5,031,946	$ 9,945	$ 67,920	$ 170,283	$ 95,810	$ -	$ 5,725,105
Carrying amount at December 31, 2024	$ 743,384	$ 677,169	$ 2,404,365	$ 728	$ 10,479	$ 24,710	$ 34,348	$ 213,628	$ 4,108,811

Note: It was transferred from other non-current assets - prepaid equipment.

Due to the influence of the industry and market environment, the Group's sales failed to meet the expected target. It was assessed that future cash inflows would be reduced, resulting in its recoverable amount being less than the carrying amount. Therefore, impairment losses of $8,534 thousand was recognized for 2024. The impairment loss has been accounted for under other income and expenses and losses in the consolidated statement of comprehensive income. The Group adopts value in use as the recoverable amount of such machinery and equipment, and the discount rates used was 19%.

Depreciation expense is accrued on a straight-line basis for the following economic life:

Buildings
Factory main building	20 to 50 years
Building improvement	5 to 20 years
Machinery and equipment	3 to 15 years
Transportation equipment	5 years
Office equipment	3 to 7 years
Leasehold improvements	2 to 10 years
Miscellaneous equipment	2 to 10 years

Please refer to Note 35 for the amount of property, plant and equipment pledged as collateral.

14. LEASE ARRANGEMENTS

a. Right-of-use assets

	December 31, 2025	December 31, 2024
Carrying amount
Land (Note)	$ 37,540	$ 39,469
Buildings	88,327	131,062
Office equipment	2,604	3,574
	$ 128,471	$ 174,105
	For the years ended December 31
	2025	2024
Addition of right-of-use assets	$ 6,767	$ 100,600
Depreciation of right-of-use assets
Land	$ 1,130	$ 1,167
Buildings	44,159	42,309
Office equipment	948	970
	$ 46,237	$ 44,446

Note: For the land use right in mainland China, the Group has obtained the Land Use Certificates for State Owned Land, and the lease period is 50 years.

Part of the land leased by the Group in Hefei, Anhui Province, China has been sub-leased to Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd. under operational leasing from January 1, 2022, and the relevant right-of-use assets are presented as investment properties please refer to Note 15. The relevant amount of

the above right-of-use assets does not include the right-of-use assets that meet the definition of investment properties.

No impairment losses were recognized or reversed in 2025 and 2024.

b. Lease liabilities

	December 31, 2025	December 31, 2024
Carrying amounts
Current	$ 44,481	$ 44,848
Non-current	$ 48,072	$ 90,519
Ranges of discount rates for lease liabilities are as follows:
	December 31, 2025	December 31, 2024
Buildings	1.87%~4.35%	0.99%~4.35%
Office equipment	1.36%~4.35%	1.36%~4.35%

c. Important lease activities and terms

The lease period of the buildings and office equipment leased by the Group is about 1 to 10 years. Among them, the rent of the building is adjusted according to the fluctuation of the price indices and the terms are reviewed during the lease period. At the end of the lease period, the Group has no bargain purchase price option to purchase the leased buildings and office equipment.

Some of the Group's building leases contain options to extend the leases. Such terms allow the Group to have maximum operational flexibility. If the Group cannot be reasonably certain that the options will be exercised, such terms are not reflected in the measurement of the lease liabilities.

d. Other lease information

	For the years ended December 31
	2025	2024
Expense relating to short-term leases	$ 9,732	$ 7,325
Total cash outflow for leases	($ 57,233)	($ 53,942)

The Group has chosen to apply the recognition exemption to building and other equipment leases that qualify as short-term leases and will not recognize the related right-of-use assets and lease liabilities.

INVESTMENT PROPERTY

	Buildings	Right-of-use assets - land	Total
Cost
Balance at January 1, 2025	$ 220,726	$ 5,737	$ 226,463
Effect of exchange rate changes	( 4,318)	( 112)	( 4,430)
Balance at December 31, 2025	$ 216,408	$ 5,625	$ 222,033
Accumulated depreciation and impairment
Balance at January 1, 2025	$ 182,068	$ 873	$ 182,941
Depreciation expense	7,352	139	7,491

37 -

Effect of exchange rate changes	( 3,381 )	( 13 )	( 3,394 )
Balance at December 31, 2025	$ 186,039	$ 999	$ 187,038
Carrying amount at December 31, 2025	$ 30,369	$ 4,626	$ 34,995
Cost
Balance at January 1, 2024	$ 209,808	$ 5,453	$ 215,261
Effect of exchange rate changes	10,918	284	11,202
Balance at December 31, 2024	$ 220,726	$ 5,737	$ 226,463
Accumulated depreciation and impairment
Balance at January 1, 2024	$ 165,759	$ 691	$ 166,450
Depreciation expense	7,597	144	7,741
Effect of exchange rate changes	8,712	38	8,750
Balance at December 31, 2024	$ 182,068	$ 873	$ 182,941
Carrying amount at December 31, 2024	$ 38,658	$ 4,864	$ 43,522

The right-of-use assets in the investment property is the subleasing of the leased land located in Hefei City, Anhui Province, China to Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd. under operational leasing.

The lease term of the investment property (including buildings and right-of-use assets - land) is 5 years with an option to extend the lease term for 2 years. The lessees do not have purchase options to acquire the assets at the expiration of the lease periods.

The maturity analysis of operating lease payments receivable from the investment property is as follows:

	December 31, 2025	December 31, 2024
Year 1	$ 48,912	$ 49,888
Year 2	-	49,888
Year 3	-	-
Year 4	-	-
Year 5	-	-
	$ 48,912	$ 99,776

The Group implements a general risk management policy to reduce the residual risk of the leased buildings and right-of-use assets upon expiry of the lease term.

No impairment losses were recognized or reversed in 2025 and 2024.

Investment properties are depreciated on a straight-line basis over the following economic life:

Buildings
Factory main building 20 years
Right-of-use assets - land 50 years

The fair value of the investment properties is measured by the independent appraisal company Anhui Huateng Property Assessment Office as a Level 3 input on the balance sheet date. The evaluation is based on market evidence of similar property transaction prices and the cash flow method, and the important unobservable input used include discount rate. The fair value obtained from the evaluation is as follows:

	December 31, 2025	December 31, 2024
Fair value	$ 254,259	$ 262,385

16. GOODWILL

	For the year ended December 31, 2024
Cost
Opening balance	$ 32,577
Ending balance	$ 32,577
Accumulated impairment losses
Opening balance	$ -
Impairment losses recognized in the current period	32,577
Ending balance	$ 32,577
Balance, end of year	$ -

The cost of the Group acquiring the subsidiary, Centera Photonics Inc., higher than the net value of the identifiable assets and liabilities assumed on the date of acquisition is recognized in goodwill.

The Group conducted an impairment assessment of the recoverable amount of goodwill and adopted value in use as the basis for calculating the recoverable amount. In 2024, the Group assessed that the recoverable amount of Centera Photonics Inc. was less than its carrying amount, so it recognized a goodwill impairment loss of $32,577 thousand. The impairment loss has been included in the other gains and losses of the consolidated statement of comprehensive income, and the discount rate used is 11.40%.

17. INTANGIBLE ASSETS

	Computer software
Cost
Balance at January 1, 2025	$ 8,516
Additions	9,027
Reclassification (Note)	3,135
Disposal	( 3,570 )
Effect of exchange rate changes	133
Balance at December 31, 2025	$ 17,241
Accumulated amortization
Balance at January 1, 2025	$ 4,563
Amortization expense	2,630
Disposal	( 3,570 )

39 -

	Computer software
Effect of exchange rate changes	12
Balance at December 31, 2025	$ 3,635
Carrying amount at December 31, 2025	$ 13,606
Cost
Balance at January 1, 2024	$ 9,292
Additions	978
Disposal	( 2,011 )
Effect of exchange rate changes	257
Balance at December 31, 2024	$ 8,516
Accumulated amortization
Balance at January 1, 2024	$ 3,622
Amortization expense	2,877
Disposal	( 2,011 )
Effect of exchange rate changes	75
Balance at December 31, 2024	$ 4,563
Carrying amount at December 31, 2024	$ 3,953

Note: It was transferred from other non-current assets - other prepayments.
Amortization expenses are accrued on a straight-line basis over the economic life:
Computer software 2 to 5 years

OTHER ASSETS

	December 31, 2025	December 31, 2024
Current
Prepayments
Tax credit	$ 256,293	$ 206,455
Prepayments to suppliers	9,305	11,954
Others	37,618	27,161
	$ 303,216	$ 245,570
Non-current
Prepayments for equipment	$ 462,651	$ 156,220
Refundable deposits (Note)	12,489	11,737
Other prepayments	3,982	-
	$ 479,122	$ 167,957

Note: The Group considers the debtor's historical record, current market conditions and business outlook to measure the 12-month expected credit loss or lifetime expected credit loss of the refundable deposit. As of December 31, 2025 and 2024, the Group assessed that it was not necessary to report expected credit losses for refundable deposits.

40 -

19. BORROWINGS

a. Short-term borrowings

	December 31, 2025	December 31, 2024
Unsecured borrowings
Credit line borrowings	$ 407,848	$ 50,000

The interest rate of the bank revolving loans was 1.87%-1.98% and 1.92% as of December 31, 2025 and 2024, respectively.

b. Long-term borrowings

	December 31, 2025	December 31, 2024
Secured borrowings (Note 35)
Bank borrowings	$ 934,120	$ 286,808
Less: Current portion	( 92,441 )	( 64,527 )
Long-term borrowings	$ 841,679	$ 222,281

The borrowings of the Group include:

	Due date	Material terms	December 31, 2025		December 31, 2024
			Amount	Effective rate %	Amount	Effective rate %
Floating rate borrowing
Taiwan Cooperative Bank
Secured borrowings for land and buildings	October 13, 2032	The borrowings amount of $135,000 thousand is divided into 84 monthly installments starting November 2025 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting November 2026.	$ 135,000	1.87	$ -	-
Secured borrowings for land and buildings	May 20, 2032	The borrowings amount of $135,000 thousand is divided into 84 monthly installments starting June 2025 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting June 2026.	135,000	1.87	-	-
Secured borrowings for land and buildings	March 5, 2032	The borrowings amount of $135,000 thousand is divided into 84 monthly installments starting April 2025 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting April 2026.	135,000	1.87	-	-
Machinery and equipment secured borrowings	August 20, 2032	The borrowings amount of $219,000 thousand is divided into 72 monthly installments starting September 2025 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting September 2026.	219,000	2.15	-	-
Machinery and equipment secured borrowings	August 20, 2032	The borrowings amount of $133,000 thousand is divided into 70 monthly installments starting November 2025 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting November 2026.	133,000	2.15	-	-

41 -

	Due date	Material terms	December 31, 2025		December 31, 2024
			Amount	Effective rate %	Amount	Effective rate %
Machinery and equipment secured borrowings	October 20, 2026	The borrowing amount of $80,000 thousand is divided into 36 monthly installments starting November 2023 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting November 2024.	33,696	1.87	73,447	1.87
Machinery and equipment secured borrowings	October 20, 2026	The borrowing amount of $20,000 thousand is divided into 36 monthly installments starting November 2023 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting November 2024.	8,424	1.87	18,361	1.87
Secured borrowings for land and buildings	September 23, 2031	The borrowings amount of $60,000 thousand is divided into 84 monthly installments starting October 2024 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting October 2025. (Early repayment in March 2025).	-	-	60,000	1.87
Secured borrowings for land and buildings	May 29, 2031	The borrowings amount of $135,000 thousand is divided into 84 monthly installments starting June 2024 where the interest is paid monthly in the first year, and the principal and interest are amortized monthly starting June 2025. (Early repayment in May 2025).	-	-	135,000	1.87
E.SUN Bank Secured borrowings for land and buildings	December 10, 2028	The borrowings amount of $135,000 thousand is divided into 37 monthly installments starting from December 2025 where the interest is paid monthly in the first year, and the principal is repaid quarterly in equal installments starting from January 2027.	135,000	1.97	-	-
			934,120		286,808
			( 92,441 )		( 64,527 )
Less: Current portion
Balance of long-term bank borrowings			$ 841,679		$ 222,281

OTHER LIABILITIES

	December 31, 2025	December 31, 2024
Current
Other payables
OEM collection and payment	$ 681,871	$ 264,118
Salaries payable and bonus	552,616	484,873
Payable for equipment (Note 31)	135,057	167,922
Engineering service fee	64,927	9,786
Insurance premium	$ 56,660	$ 46,799
Commission expense	3,591	31,034
Compensation payable	24,125	25,165
Pension	22,751	21,115
Professional service fee	15,182	11,661
Repair and maintenance expense	12,779	8,394
Processing fee	4,130	6,463

42 -

	December 31, 2025	December 31, 2024
Import and export fee	5,356	5,575
Freight	1,076	3,647
Business tax	2,850	2,778
Interest	934	139
Cash dividends (Note 31)	164	146
Others	90,773	79,878
	$ 1,674,842	$ 1,169,493
Other current liabilities
Guarantee deposit - payments received to retain capacity (Note 31) (Note)	$ 200,474	$ 175,872
Advance receipts (Note 34)	4,017	4,097
Others	2,395	2,566
	$ 206,886	$ 182,535
Non-current
Guarantee deposits
Payments received to retain capacity (Note)	$ 346,684	$ 418,545
Others (Note 34)	25,434	20,717
	$ 372,118	$ 439,262

Note: To expand the production capacity in response to the increase in customer demand, the Group has signed a production capacity agreement with its customers and collected a production capacity deposit which the customers can offset the payment for shipments in phases during the production capacity guarantee period according to the conditions stipulated in the agreement.

21. PROVISIONS

	December 31, 2025	December 31, 2024
Current
Warranties	$ 57,256	$ 57,785
	For the years ended December 31
	2025	2024
Opening balance	$ 57,785	$ 37,849
Additions	-	20,521
Usage	( 210 )	( 585 )
Reversal of unused balance in the current year	( 319 )	-
Ending balance	$ 57,256	$ 57,785

The warranties provision for liabilities is the present value of the best estimate of the future economic outflows due to the warranties obligations by the management of the Group according to the contract for the sale of goods. This estimate is based on historical warranties and adjusted by taking into account new raw materials, changes in the process or other factors that affect product quality.

22. RETIREMENT BENEFIT PLANS

a. Determined contribution plans

The Company, Centera Photonics Inc., and GEM Tech Ltd., Taiwan Branch of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Group makes monthly contributions to employees' individual pension accounts at 6% of monthly salaries and wages.

The employees of the subsidiaries of the Group in Mainland China are enrolled in the pension system operated by the local location government. These subsidiaries are required to contribute a specified percentage of payroll to fund the pension system. The Group's obligation to this government-operated pension system is only to contribute the specified amount.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the "Labor Standards Act" is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the Supervisory Committee of Business Entities' Labor Retirement Reserve. Pension contributions are deposited in the Bank of Taiwan in the committee's name. Before the end of each year, if the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, Elite Advanced Laser Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor; the Company has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Company's defined benefit plans were as follows:

	December 31, 2025	December 31, 2024
Present value of defined benefit obligation	$ 52,444	$ 45,168
Fair value of plan assets	( 17,816 )	( 16,061 )
Deficit	34,628	29,107
Net defined benefit liabilities	$ 34,628	$ 29,107

Movements in net defined benefit liabilities (asset) were as follows:

	Present value of defined benefit obligation	Fair value of plan assets	Net defined benefit liabilities (asset)
January 1, 2025	$45,168	($16,061)	$29,107
Service cost
Current service cost	496	-	496
Interest expense (income)	677	(244)	433
Recognized in profit or loss	1,173	(244)	929
Remeasurement
Return on plan assets (excluding the amounts included in net interest)	-	(1,162)	(1,162)
Actuarial (profit) loss - changes in financial assumptions	335	-	335
Actuarial (profit) loss - experience adjustment	5,811	-	5,811
Recognized in other comprehensive income	6,146	(1,162)	4,984
Contributions from the employer	-	(392)	(392)
Benefits paid	(43)	43	-
December 31, 2025	$52,444	($17,816)	$34,628
January 1, 2024	$48,385	($15,540)	$32,845
Service cost
Current service cost	502	-	502
Interest expense (income)	605	(197)	408
Recognized in profit or loss	1,107	(197)	910
Remeasurement
Return on plan assets (excluding the amounts included in net interest)	-	(1,648)	(1,648)
Actuarial (profit) loss - changes in financial assumptions	(774)	-	(774)
Actuarial (profit) loss - experience adjustment	($1,834)	$-	($1,834)
Recognized in other comprehensive income	(2,608)	(1,648)	(4,256)
Contributions from the employer	-	(392)	(392)
Benefits paid	(1,716)	1,716	-
December 31, 2024	$45,168	($16,061)	$29,107

1) Investment risk: The investment is conducted at the discretion of the Bureau of Labor Funds, Ministry of Labor or under the mandated management which is invested in domestic and foreign equity and debt securities, bank deposits, etc. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

	December 31, 2025	December 31, 2024
Discount rate	1.38%	1.50%
Expected rates of salary increase	3.00%	3.00%

If possible reasonable changes in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

	December 31, 2025	December 31, 2024
Discount rate
Increase by 0.25%	($ 665)	($ 748)
Decrease by 0.25%	$ 688	$ 774
Expected rates of salary increase
Increase by 0.25%	$ 666	$ 752
Decrease by 0.25%	($ 648)	($ 731)

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

	December 31, 2025	December 31, 2024
Expected contributions to the plan for the next year	$ 404	$ 404
Average duration of the defined benefit obligation	5.1 years	6.6 years

46 -

23. EQUITY

a. Capital stock
Common stock

	December 31, 2025	December 31, 2024
Authorized shares (in thousands)	300,000	300,000
Authorized capital (NTD in thousand)	$3,000,000	$3,000,000
Issued and paid shares (in thousands)	145,681	145,681
Issued capital (NTD in thousand)	$1,456,814	$1,456,814

The authorized shares include 10,000 thousand shares allocated for the exercise of employee stock options.

A holder of issued common shares with par value of $10 per share is entitled to vote and to receive dividends.

b. Capital surplus

	December 31, 2025	December 31, 2024
May be used to offset a deficit, distributed as cash dividends or transferred to capital (Note 1)
Additional paid-in capital	$322,130	$322,130
Treasury stocks	6,420	6,420
	$328,550	$328,550
May only be used to offset a deficit
From share of changes in equities of subsidiaries (Note 2)	$127,672	$127,923

Note 1: Such capital surplus can be used to offset a deficit, in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends up to a certain percentage of the Company's paid-in capital.

Note 2: This capital surplus is the amount of equity transaction impact recognized due to changes in the Company's equity when the Company does not subscribe to the subsidiary's equity in proportion to its shareholding, or the adjusted amount recognized by the Company using the equity method to recognize the subsidiary's capital surplus.

c. Retained earnings and dividend policy

In accordance with the Company's earnings distribution policy in the Articles of Association, if there is a surplus after the annual financial report, the Company will pay taxes and make up for previous annual deficit and add items other than the after-tax net profit to the undistributed earnings for the current period. Also, 10% of legal reserve shall be set aside and if necessary. If the legal reserve has reached the

Company's paid-in capital, this allocation may cease. Furthermore, a special reserve shall be allocated or reversed in accordance with relevant laws and regulations. The accumulated undistributed earnings from the previous year shall be added to the distributable earnings. The Board of Directors shall then draft a proposal for earnings distribution to be submitted to the shareholders' meeting for a resolution. The distributable earnings mentioned above may be retained by the Board of Directors as needed for the Company's operations. When the net amount of other equity deductions accumulated in the previous period is set aside as a special reserve, if the undistributed earnings in the previous period is insufficient to be set aside, items other than after-tax net profit plus after-tax net profit for the current period are included in the undistributed earnings for the current period. The Company's dividend policy is based on an assessment of the Company's future capital needs for sustained investment, research and development, and operations, in order to maintain a sound financial structure for sustainable development. Earnings will be appropriately distributed in the form of stock dividends or cash dividends, depending on the Company's operation. The total amount of dividends shall be at least 5% of the earnings for the current year, of which cash dividends shall not be less than 20% of the total dividends.

Please refer to Note 25 (9) Employee Remuneration and Director Remuneration for the employees and directors remuneration policy stipulated in the Articles of Association of the Company.

According to Article 237 of the Company Act, when allocating surplus profits after having paid all taxes and dues, shall first set aside 10% of said profits as legal reserve. Where such legal reserve amounts to the total paid-in capital, this provision shall not apply. The legal reserve can be used to make up for losses. When the Company has no losses, the portion of the legal reserve exceeding 25% of the total paid-in capital can be allocated in cash in addition to being accounted as share capital.

The Company set aside the special reserve in accordance with the Official Letter Chin-Kuan-Cheng-Fa-Tzu No. 1090150022 and "Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs (IFRS Accounting Standards)". The Company held regular shareholders' meetings on May 28, 2025 and June 7, 2024, and the resolutions were passed respectively to approve the 2024 and 2023 annual earnings distribution proposals as shown below:

	For the years ended December 31
	2024	2023
Legal reserve	$ 55,983	$ -
Special reserve	( $ 62,947 )	$ 18,307
Cash dividends	$ 72,841	$ -
Cash dividend per share (NT$)	$ 0.5	$ -

On March 12, 2026, the Company's Board of Directors proposed the 2025 earnings distribution as follows:

	For the year ended December 31, 2025
Legal reserve	$ 72,582
Special reserve	$ 18,001
Cash dividends	$ 145,681
Cash dividend per share (NT$)	$ 1

The 2025 earnings distribution plan is yet to be resolved at the shareholders' meeting which is expected to be held on May 29, 2026.

d. Special reserve

	For the years ended December 31
	2025	2024
Opening balance	$ 86,025	$ 67,718
Appropriations in respect of debits to other equity items	-	18,307
(Reversal of) Reduction of other equity items	( 62,947 )	-
Balance, end of period	$ 23,078	$ 86,025

e. Others

Exchange differences on translation of foreign financial statements:

	For the years ended December 31
	2025	2024
Opening balance	($ 23,078)	($ 86,025)
Recognized in the current period
Foreign operations - foreign currency translation differences	(22,501)	78,684
Related tax	4,500	(15,737)
Other comprehensive income	(18,001)	62,947
Ending balance	($ 41,079)	($ 23,078)

f. Non-controlling interests

	For the years ended December 31
	2025	2024
Opening balance	$ 2,537,321	$ 2,151,056
Net income	503,339	516,259
Other comprehensive income
Foreign operations - foreign currency translation differences	(21,622)	75,609
Changes in subsidiaries' ownership (Notes 11 and 30)	251	(861)
Employee stock options recognized by subsidiaries (Note 28)	-	291
Cash dividend issued from subsidiaries	(265,599)	(221,333)
Cash capital increase by subsidiaries	-	10,000
Ordinary shares issued under subsidiary's employee stock option plans	-	6,300
Subsidiary's employee compensation used for recapitalization	5,684	-

49 -

	For the years ended December 31
	2025	2024
Ending balance	$ 2,759,374	$ 2,537,321

24. REVENUE

	For the years ended December 31
	2025	2024
Revenue from contracts with customers
Packaging and testing	$ 6,483,291	$ 5,231,906
Merchandise sales	1,780,574	2,022,003
Others (Note 34)	273,679	265,135
Other operating revenue
Lease revenue (Note 34)	47,050	48,617
	$ 8,584,594	$ 7,567,661

a. Detail of customer contracts

1) Packaging and testing

The customer contract signed by the Group includes two performance obligations of packaging and testing services. The customer pays the contract transaction price after obtaining the packaged or tested product. Since the time interval between the transfer of labor services and the customer's payment is less than a year, the significant financial component of the contract transaction price will not be adjusted. The stand-alone selling prices for packaging and testing services are determined using the expected cost plus a margin approach and are used to allocate the transaction price to each performance obligation.

2) Merchandise sales

It refers to the sale of products, such as high-speed optical interconnect modules and active optical cables. The transaction price refers to the market and is negotiated by both parties.

3) Lease and other services

Other service contracts signed by the Group were from electroplating processing services outsourced by customers, production equipment installation and testing services, and product research and development services. The prices of the services were determined in accordance with the contracts.

b. Contract balance

	December 31, 2025	December 31, 2024	January 1, 2024
Accounts receivable (Note 9)	$ 1,606,803	$ 1,524,386	$ 1,009,538
Accounts receivable due from related parties (Note 34)	8,066	8,903	9,885
	$ 1,614,869	$ 1,533,289	$ 1,019,423
Contract assets
Packaging and testing	$ 285,119	$ 252,003	$ 192,649
Less: Loss allowances	(35,072)	(38,964)	(36,216)
	$ 250,047	$ 213,039	$ 156,433

Contract liabilities

Packaging and testing	$ 63,550	$ 25,964	$ 31,293
Merchandise sales	-	1,616	16,181
	$ 63,550	$ 27,580	$ 47,474

Changes in contract assets and contract liabilities are due to the difference between the timing of meeting performance obligations and the timing of payment. Other major changes are as follows:

	For the years ended December 31
	2025	2024
Contract assets
Balance at beginning of the period transfers to accounts receivable	($ 234,298)	($ 161,579)

The Group recognizes loss allowance for contract assets based on lifetime expected credit losses. The average process duration of the packaging and testing service contracts signed by the Group is 20 to 60 days. When determining the possibility of obtaining an unconditional right of payment for contract assets in the future, the policy adopted by the Group refers to the historical experience of the counterparty's relevant contract assets, current market conditions and business outlook, considers the contracts that are still under obligations on the balance sheet date, examines each contract for stagnation, and recognizes the loss allowance for contract assets according to the expected credit losses during the duration. If there is evidence indicating that the performance obligations of the contract have been suspended for a period exceeding the normal manufacturing process and the Group cannot reasonably anticipate the contract resumption time, the Group will recognize the loss allowance at full amount, but will continue to pursuit the stagnation of the contract, and carry out the obligation when the stagnation has been eliminated. If there is evidence that the counterparty has signs of breach of contract or is facing serious debt difficulties where the recoverable amount cannot be reasonably estimated, the Group will directly write off the relevant contract assets and loss allowance, but will continue to pursue for recovery. The amount recovered by the pursuit will be recognized in profit or loss.

	December 31, 2025	December 31, 2024
Expected credit loss rate	12%	15%
Total amount	$ 285,119	$ 252,003
Loss allowance (lifetime expected credit losses)	( 35,072 )	( 38,964 )
	$ 250,047	$ 213,039

Movements of the loss allowance for contract assets

	For the years ended December 31
	2025	2024
Opening balance	$ 38,964	$ 36,216
Impairment losses for the current period	-	2,714
Reversal	( 3,890 )	-
Exchange differences on	( 2 )	34

translation of foreign
currency
Ending balance
$ 35,072
$ 38,964

The amount recognized as revenue in the current year from the contract liabilities at the beginning of the period and the performance obligations that have been satisfied in the previous period is as follows:

	For the years ended December 31
	2025	2024
Contract liabilities at the beginning of the period	$ 17,502	$ 44,087

c. Detail of customer contracts

Please refer to Note 39 for detailed revenue information.

NET PROFIT FROM CONTINUING OPERATION

a. Other income and (losses)

	For the years ended December 31
	2025	2024
Impairment loss on property, plant and equipment	$ -	($ 8,534)

b. Interest income

	For the years ended December 31
	2025	2024
Bank deposit	$ 58,925	$ 54,289
Notes receivables	555	-
	$ 59,480	$ 54,289

c. Other income

	For the years ended December 31
	2025	2024
Government subsidy	$ 7,168	$ 12,789
Others	7,718	4,708
	$ 14,886	$ 17,497

d. Other gains and losses

	For the years ended December 31
	2025	2024
Foreign exchange gains (losses)	($ 85,564)	$ 104,757
Gains on disposal of property, plant and equipment	87,449	2,077
Gains from lease modification	54	142
Compensation for losses	-	( 24,827 )
Goodwill impairment loss	-	( 32,577 )
Others	( 2,652 )	( 79 )
	($ 713 )	$ 49,493

e. Finance costs

52 -

	For the years ended December 31
	2025	2024
Bank borrowings interest	$ 18,237	$ 4,783
Interest expense on lease liability	3,316	1,513
	$ 21,553	$ 6,296
f.	Depreciation and amortization
	For the years ended December 31
	2025	2024
Depreciation expenses summarized by function
Cost of revenue	$ 751,364	$ 778,580
Operating expenses	67,049	61,284
	$ 818,413	$ 839,864
Amortization expenses summarized by function
General and administrative expense	$ 2,464	$ 2,824
Research and development expense	166	53
	$ 2,630	$ 2,877
g.	Direct operating expenses of investment property
	For the years ended December 31
	2025	2024
Lease revenue
Depreciation expense	$ 7,491	$ 7,741
Others	608	628
	$ 8,099	$ 8,369
h.	Employee benefits expenses
	For the years ended December 31
	2025	2024
Share-based payment
Equity-settled (Note 28)	$ -	$ 667
Post-employment benefits
Determined contribution plans	149,382	147,693
Defined benefit plans (Note 22)	929	910
	150,311	149,270
Others	2,000,595	1,812,205
Total employee benefits expenses	$ 2,150,906	$ 1,961,475
Summarized by function
Cost of revenue	$ 1,600,834	$ 1,453,402
Operating expenses	550,072	508,073
	$ 2,150,906	$ 1,961,475

i. Remuneration to the employees and directors

According to the Articles of Association, the Company allocates 8% to 15% of the employee’s remuneration and no more than 3% of the director’s remuneration according to the pre-tax profit before deducting the employee’s and director’s remuneration in the current year. In accordance with the amendments to the Securities and Exchange Act in August 2024, the Company’s 2025 shareholders’ meeting approved by resolution an amendment to its Articles of Incorporation. This amendment will stipulate that at least 1% of the current year’s employee remuneration allocated be distributed to entry-level employees. The estimated employee remuneration (including remuneration for entry-level employees) and director remuneration for 2025 and 2024 were approved by the Board of Directors on March 12, 2026, and March 11, 2025, respectively, as follows:

Estimated ratio

	For the years ended December 31
	2025	2024
Remuneration to employees	11.41%	12.32%
Remuneration to directors	2.71%	2.71%

Amount

	For the years ended December 31
	2025	2024
	Cash	Cash
Remuneration to employees	$ 118,000	$ 91,000
Remuneration to directors	$ 28,000	$ 20,000

If there is still a change in the amount after the annual consolidated financial statement is approved, it will be treated as a change in accounting estimates and adjusted and recorded in the following year.

There is no significant difference between the aforementioned approved amounts and the amounts charged against earnings of 2024 and 2023, respectively.

The information about the appropriations of the Company’s remuneration to employees and remuneration to directors is available at the Market Observation Post System website.

j. Foreign exchange gains and losses

	For the years ended December 31
	2025	2024
Foreign currency exchange gains	$ 408,170	$ 276,281
Foreign currency exchange losses	( 493,734 )	( 171,524 )
Net gains (losses)	( $ 85,564 )	$ 104,757

INCOME TAX

a. Income tax expense recognized in profit or loss

Income tax expense consisted of the following:

	For the years ended December 31
	2025	2024
Current income tax
Recognized in the current period	$ 376,374	$ 229,881
Levied undistributed surplus earnings	24,698	-
Income tax adjustments on prior years	( 8,999)	( 10,058)
	392,073	219,823
Deferred income tax
Recognized in the current period	39,363	2,464
Income tax adjustments on prior years	( 340)	-
	39,023	2,464
Income tax expense recognized in profit or loss	$ 431,096	$ 222,287

A reconciliation of accounting profit and income tax expenses is as follows:

	For the years ended December 31
	2025	2024
Income before income tax	$ 1,664,238	$ 1,294,972
Income tax expense calculated at the statutory rate (20%)	$ 332,848	$ 258,994
Nondeductible expenses in determining taxable income	5,845	14,655
Tax exempt income	( 31,731)	( 46,888)
Levied undistributed surplus earnings	24,698	-
Unrecognized deductible temporary differences/ loss deduction	( 43,940)	( 114,391)
Effect of different tax rates applicable to consolidated entities	149,708	132,107
Income tax effects of earnings of subsidiaries	12,342	-
Adjustments for prior years’ tax	( 8,999)	( 10,058)
Adjustments of deferred tax expenses from prior years in the current year	( 340)	-
Investment credits	( 9,335)	( 12,132)
Income tax expense recognized in profit or loss	$ 431,096	$ 222,287

54 -

b. Income tax recognized in other comprehensive income

	For the years ended December 31
	2025	2024
Deferred income tax
Recognized in the current period
- Remeasurement of defined benefit plans	($ 998)	$ 851
- Foreign operations – foreign currency translation differences	(4,500)	15,737
	($ 5,498)	$ 16,588

c. Current tax assets and liabilities

	December 31, 2025	December 31, 2024
Current tax asset
Income tax refund receivable	$ 1,273	$ 165
Current tax liabilities
Income tax payable	$ 220,670	$ 134,814

d. Deferred tax assets and liabilities

Changes in deferred tax assets and liabilities are as follows: 2025

	Opening balance	Recognized in profit or loss	Recognized in other comprehensive income	Exchange difference	Ending balance
Deferred tax assets
Temporary difference
Inventory loss (reversal of write-down of inventories)	$ 38,943	($ 20,043)	$ -	($ 135)	$ 18,765
Defined benefit retirement plan	3,833		998	-	4,831
Unrealized exchange loss	3,917	( 3,917)	-	-	-
Allowance for losses - accounts receivable	1,779	( 1,779)	-	-	-
Impairment loss on property, plant and equipment	5,855	( 1,776)	-	-	4,079
Unrealized pension expense	1,235	109	-	-	1,344
Difference between consideration and carrying amount of subsidiaries acquired or disposed	9,900	-	-	-	9,900
Exchange differences on translating the financial statements of foreign operations	5,769	-	4,500	-	10,269
Allowance for losses - contract assets	7,910	( 688)	-	( 2)	7,220
Employee remuneration payable	15,810	1,496	-	( 273)	17,033
Unrealized sales allowance	2,991	8,957	-	-	11,948
Lease liabilities	24,597	( 7,946)	-	( 676)	15,975
Provisions	7,943	3,508	-	-	11,451
	130,482	( 22,079)	5,498	( 1,086)	112,815
Loss deduction	-	10,050	-	-	10,050
	$ 130,482	($ 12,029)	$ 5,498	($ 1,086)	$ 122,865

Deferred tax liabilities

Temporary difference
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method	$ 288,328	$ 23,219	$ -	$ -	$ 311,547
Changes in subsidiaries' ownership	28,482	-	-	-	28,482
Income tax effects of earnings of subsidiaries	-	12,342	-	302	12,644
Revenue from contracts with customers	1,095	1,540	-	45	2,680
Right-of-use assets	24,613	( 8,160 )	-	( 681 )	15,772
Unrealized exchange profit	10,220	( 1,947 )	-	-	8,273
	$ 352,738	$ 26,994	$ -	($ 334 )	$ 379,398

2024

	Opening balance	Recognized in profit or loss	Recognized in other comprehensive income	Exchange difference	Ending balance
Deferred tax assets
Temporary difference
Inventory loss (reversal of write-down of inventories)	$ 13,905	$ 24,778	$ -	$ 260	$ 38,943
Defined benefit retirement plan	4,684	-	( 851 )	-	3,833
Unrealized exchange loss	5,473	( 1,556 )	-	-	3,917
Allowance for losses - accounts receivable	3,183	( 1,404 )	-	-	1,779
Impairment loss on property, plant and equipment	7,228	( 1,373 )	-	-	5,855
Unrealized pension expense	1,132	103	-	-	1,235
Difference between consideration and carrying amount of subsidiaries acquired or disposed	9,900	-	-	-	9,900
Exchange differences on translating the financial statements of foreign operations	21,506	-	( 15,737 )	-	5,769
Revenue from contracts with customers	999	( 1,039 )	-	40	-
Allowance for losses - contract assets	7,254	648	-	8	7,910
Employee remuneration payable	13,512	1,577	-	721	15,810
Unrealized sales allowance	3,197	( 206 )	-	-	2,991
Lease liabilities	9,079	14,879	-	639	24,597
Provisions	7,570	373	-	-	7,943
	$ 108,622	$ 36,780	($ 16,588 )	$ 1,668	$ 130,482
Deferred tax liabilities
Temporary difference
Share of profit of subsidiaries, associates and joint ventures accounted for using equity method	$ 267,178	$ 21,150	$ -	$ -	$ 288,328
Changes in subsidiaries' ownership	28,482	-	-	-	28,482
Revenue from contracts with customers	6,308	( 5,244 )	-	31	1,095
Right-of-use assets	8,589	15,402	-	622	24,613
Unrealized exchange profit	2,284	7,936	-	-	10,220
	$ 312,841	$ 39,244	$ -	$ 653	$ 352,738

e. Deductible temporary difference and unused loss deduction amount not recognized in the consolidated balance sheet

	December 31, 2025	December 31, 2024
Deductible temporary difference
Unrealized asset impairment loss	$ 101,771	$ 120,975
Provisions	-	18,071
	$ 101,771	$ 139,046
	December 31, 2025	December 31, 2024
Loss deduction
Expired in 2031	$ -	$ 28,744
Expired in 2032	-	64,782
Expired in 2033	-	111,571
	$ -	$ 205,097

f. Information on unused tax loss carryforwards

As of December 31, 2025, information regarding tax loss carryforwards is as follows:

Unused balance	Last valid year
$ 50,249	2033

g. Income tax examination

The filings of the Company's profit-seeking enterprise income tax up to 2023 were approved by the tax collection authority and there is no significant difference between the approved number and the filed number. The Group had no pending tax litigation as of December 31, 2025.

EARNINGS PER SHARE

	For the years ended December 31
	2025	2024
Basic EPS	$ 5.01	$ 3.82
Diluted EPS	$ 4.99	$ 3.81
EPS is computed as follows:
Net income	For the years ended December 31
	2025	2024
Net income attributable to owners of the Company	$ 729,803	$ 556,426
Net Income used to calculate basic earnings per share	$ 729,803	$ 556,426
Effects of all dilutive potential

common shares:

Subsidiaries’ stock option

Net profit used to calculate diluted earnings per share

$729,803

$556,426

Common shares

Unit: thousand shares

For the years ended December 31

	2025	2024
Weighted average number of common shares used to calculate basic EPS	145,681	145,681
Effects of all dilutive potential common shares:
Remuneration to employees	504	317
Weighted average number of common shares used to calculate diluted EPS	146,185	145,998

If the Group can choose to pay employee remuneration in shares or cash, when calculating diluted EPS, assumed that employee remuneration will be issued in shares, the weighted average number of outstanding shares shall be included in the potentially dilutive common shares to calculate the diluted EPS. When calculating the diluted EPS before deciding on the number of shares for employee remuneration in the following year, the potentially dilutive common shares will also be considered.

28. SHARE-BASED PAYMENT ARRANGEMENTS

a. Employee stock option plan by subsidiary, Centera Photonics Inc.

The subsidiary Centera Photonics Inc. has issued a share option plan in 2018

Centera Photonics Inc. was approved by the Board of Directors on May 17, 2018 to issue 2,000 thousand units of employee stock warrant, and each unit subscribed for 1 common share. The total number of common shares to be for this stock warrant was 2,000 thousand shares, and the grantees are limited to the employees of Centera Photonics Inc. According to the warrant exercise rules, warrant holders can exercise a certain proportion of warrants granted after half a year, one year and one and a half years after the issuance respectively. The duration of the warrants is 7 years, and each share and the subscription price is $10, with a total of 2,000 thousand units. The Board of Directors, on August 19, 2024, approved by resolution Centera Photonics Inc.’s amendment to the stock subscription regulations. According to the amended regulations, warrant holders can exercise the granted stock warrants after being granted. Authorized by the Board of Directors, the chairman decided to issue 300 thousand units, 599 thousand units, 713 thousand units, 289 thousand units and 99 thousand units on May 18, 2018, May 20, 2019, November 12, 2019, May 24, 2021, and May 11, 2023, respectively.

The subsidiary Centera Photonics Inc. has issued a share option plan in 2024

Centera Photonics Inc. was approved by the Board of Directors on August 19, 2024 to issue 500 thousand units of employee stock warrant, and each unit subscribed for 1 common share. The total number of common shares to be for this stock warrant was 500 thousand shares, and the grantees are limited to the employees of Centera Photonics Inc. According to the warrant exercise rules, warrant holders can exercise

58 -

the granted stock warrants after being granted. The duration of the warrants is 1 years, and each share and the subscription price is $10, with a total of 500 thousand units.

As of December 31, 2024, all warrants have been exercised.

Information relating to issued employee stock options is as follows:

Employee stock option	For the year ended December 31, 2024
	Unit (thousand)	Weighted average exercise price (NT$)
Circulation at the beginning of the period	156	$ 10
Granted during this year	500	10
Lost during this year	( 26 )	10
Exercised during this year	( 630 )	10
Circulation at the end of the period	-
Exercisable at the end of the period	-
Weighted average fair value of the stock options in the current period (NT$)	$ 0.9354

Centera Photonics Inc. granted its employees stock options on August 19, 2024, May 11, 2023, May 24, 2021, November 12, 2019, May 20, 2019, and May 18, 2018, respectively, using the Black-Scholes valuation model. The inputs used in the valuation model are as follows:

	August 19, 2024	May 11, 2023	May 24, 2021	November 12, 2019	May 20, 2019	May 18, 2018
Share price on grant day	NT$10.21	NT$8.12	NT$4.75	NT$4.98	NT$5.73	NT$4.61
Exercise price	NT$10	NT$10	NT$10	NT$10	NT$10	NT$10
Expected volatility	51.70%	45.40%	39.66%	32.18%	32.08%	37.02%
Duration	0.15 years	4.3 years	4.3 years	4.3 years	4.3 years	4.3 years
Expected dividend rate	0%	0%	0%	0%	0%	0%
Risk-free interest rate	1.3510%	1.0498%	0.1689%	0.5758%	0.5546%	0.8427%

The expected volatility is based on the historical stock price volatility of the same industry, and the annualized standard deviation is obtained based on the duration of the option.

b. Employee stock options retained by subsidiary, Centera Photonics Inc., from the cash capital increase

The Board of Directors, on August 19, 2024, approved by resolution Centera Photonics Inc.'s cash capital increase by issuing new shares and retention of 15% of the shares in accordance with Article 267 of the Company Act, with a total of 150 thousand shares to be subscribed for by employees. The aforementioned employee stock options have been fully vested on the grant date.

The grant date of the above employee stock options of the cash capital increase was August 19, 2024. Centera Photonics Inc. calculated the fair value of the stock options using the Black-Scholes option valuation model. The inputs used are as follows:

August 19, 2024

Share price on grant day	NT$10.21
Exercise price	NT$10
Expected volatility	51.70%
Duration	0.0384 years
Expected dividend rate	0%
Risk-free interest rate	1.3510%
Fair value of stock options granted (NT$/share)	$ 0.5246

c. Share-based payment compensation cost

The remuneration costs recognized for 2024 was $667 thousand.

29. GOVERNMENTS SUBSIDY

GEM Electronics (Hefei) Co., Ltd., a subsidiary of the Group, met the subsidy conditions of the local government and received a subsidy of $84,796 thousand after filing an application for the buildings built and the machinery and equipment purchased by the subsidiary.

This amount has been deducted from the relevant asset's carrying amount and carried forward to profit or loss over the asset's economic life by reducing the depreciation expense. In 2025 and 2024, the depreciation expenses were reduced by $7,924 thousand and $8,537 thousand, respectively.

30. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

a. Participation in the cash capital increase by subsidiary, Centera Photonics Inc.

In September 2024, the Company did not participate in the cash capital increase of the subsidiary Centera Photonics Inc., in proportion to its shareholding, causing the Company's shareholding in the subsidiary to fall from 56.41% to 55.26%.

b. Stock options exercised by employees at subsidiary, Centera Photonics Inc.

Centera Photonics Inc. issued 630 thousand new shares on October 23, 2024 due to employees' exercise of stock options, causing the Company's shareholding in the subsidiary to fall from 55.26% to 54.56%.

c. Capital increase from employee remuneration of the subsidiary, Centera Photonics Inc.

Centera Photonics Inc. issued 400 thousand new shares on June 30, 2025 due to the capitalization of employees' remuneration, causing the Company's shareholding in the subsidiary to fall from 54.56% to 54.23%.

Since the above transactions did not change the Company's control over these subsidiaries, they are treated as equity transactions.

| Centera Photonics Inc. | For the year ended
December 31, 2025
Capitalization of
employees' compensation |
| --- | --- |
| Cash consideration paid | $ - |
| The amount of non-controlling interests that
should be transferred in to the carrying amount
of the subsidiary's net assets was calculated
based on the change in relative equity | ( 251 ) |
| Equity transaction difference | ( $ 251 ) |

Equity transaction difference adjustments

Capital surplus - changes in ownership interests in subsidiaries recognized

($ 251 )

Centera Photonics Inc.	For the year ended December 31, 2024
	Exercise of stock options by subsidiary's employees	Cash capital increase not in proportion to shareholding	Total
Cash consideration paid	$ -	$ -	$ -
The amount of non-controlling interests that should be transferred out of (in to) the carrying amount of the subsidiary's net assets was calculated based on the change in relative equity	(12)	873	861
Equity transaction difference	($ 12)	$ 873	$ 861
Equity transaction difference adjustments
Capital surplus - changes in ownership interests in subsidiaries recognized	($ 12)	$ 873	$ 861

31. CASH FLOW INFORMATION

a. Non-cash transaction

The Group conducted the following non-cash investment and financing activities in 2025 and 2024:

1) As of December 31, 2025 and 2024, the purchase price of unpaid properties, plant and equipment acquired by the Group were $135,057 thousand and $167,922 thousand respectively, and were accounted as other payables.

2) As of December 31, 2025, the Group had an uncollected balance of $109,700 thousand from the sale of property, plant, and equipment, which is recorded under notes receivable, other receivables, and long-term notes receivable.

3) Subsidiary GEM Services, Inc. as of December 31, 2025 and 2024, had announced cash dividends $164 thousand and $146 thousand respectively that have not been distributed and are listed under other payables.

4) As of December 31, 2024, the subsidiary, Centera Photonics Inc., had $5,684 thousand in employee stock compensation payable that had not yet been paid out. On June 30, 2025 (the capital increase record date), this amount was reclassified from other payables to share capital of $4,000 thousand and capital surplus of $1,684 thousand. This transaction resulted in an increase of $5,684 thousand in non-controlling interests.

5) The Group signed a production capacity guarantee agreement with the customer and offset the security deposit by offsetting the payment according to the conditions stipulated in the contract. In 2025 and 2024, $92,410 thousand and $76,795 thousand, respectively, were used to offset the accounts receivable to offset the security deposits.

61 -

b. Reconciliation of liabilities arising from financing activities 2025

	January 1, 2025	Cash flow	Non-cash changes					Others	December 31, 2025
			Lease addition	Lease modification	Finance costs	Payment refund	Foreign exchange movement
Short-term borrowings	$ 50,000	$ 357,848	$ -	$ -	$ -	$ -	$ -	$ -	$ 407,848
Long-term borrowings	286,808	647,312	-	-	-	-	-	-	934,120
Guarantee deposits	615,134	51,215	-	-	-	( 92,410 )	( 1,347 )	-	572,592
Lease liabilities	135,367	( 44,185 )	6,767	( 2,693 )	3,316	-	( 2,703 )	( 3,316 )	92,553
	$1,087,309	$1,012,190	$ 6,767	($ 2,693 )	$ 3,316	($ 92,410 )	($ 4,050 )	($ 3,316 )	$2,007,113

2024

	January 1, 2024	Cash flow	Non-cash changes					Others	December 31, 2024
			Lease addition	Lease modification	Finance costs	Payment refund	Foreign exchange movement
Short-term borrowings	$ -	$ 50,000	$ -	$ -	$ -	$ -	$ -	$ -	$ 50,000
Long-term borrowings	205,000	81,808	-	-	-	-	-	-	286,808
Guarantee deposits	688,434	-	-	-	-	( 76,795 )	3,495	-	615,134
Lease liabilities	77,453	( 45,104 )	100,600	( 142 )	1,513	-	2,560	( 1,513 )	135,367
	$ 970,887	$ 86,704	$ 100,600	($ 142 )	$ 1,513	($ 76,795 )	$ 6,055	($ 1,513 )	$1,087,309

32. CAPITAL RISK MANAGEMENT

The Group conducts capital management to ensure that companies in the group can continue to operate, and maximize shareholder returns with the best mix of debt and equity.

The Group’s capital structure is formed by its net debt (i.e., borrowings, less cash and cash equivalents) and equity (i.e., share capital, capital surplus, retained earnings, and other equity items).

The Group is not subject to any externally imposed capital requirements.

33. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

The management of the Group considers that the carrying amounts of financial instruments in the consolidated financial statements that are not measured at fair value approximate their fair values.

b. Categories of financial instruments

	December 31, 2025	December 31, 2024
Financial assets
Financial assets measured at amortized cost (Note 1)	$ 5,996,385	$ 5,239,814
Financial liabilities
Amortized cost (Note 2)	3,402,374	2,289,278

Note 1: Including cash and cash equivalents, financial assets measured at amortized cost, note receivable, accounts receivable (including related parties), other receivables (including related parties; excluding income tax refund receivable), uncollectible receivables and refundable deposits and other financial assets.

Note 2: Including financial liabilities, such as short-term borrowings, accounts payable, other payables (excluding salaries payable and bonuses, insurance premium payable, pension payable, business tax payable, and cash dividend payable), long-term borrowings, and guarantee deposit.

c. Financial risk management objectives and policies

The Group's main financial instruments include cash and cash equivalents, investments in debt instruments, receivables, payables, lease liabilities, and borrowings. Among the financial instruments held by the Group, financial risks related to operations include market risk (including exchange rate risk and interest rate risk), credit risk and liquidity risk.

1) Market risk

The main financial risks borne by the Group's operating activities are the exchange rate risk (see 1) below) and the interest rate risk (see 2) below).

(1) Foreign currency risk

The Group is engaged in foreign currency-denominated sales and purchase transactions, thus causing the Group to be exposed to exchange rate risk. The Group regularly evaluates the net risk position of the sales amount and cost amount denominated in non-functional currency, and adjusts the cash holding position of the non-functional currency accordingly to achieve hedging.

For the carrying amounts of monetary assets and liabilities of the Group denominated in non-functional currencies on the balance sheet date (including those monetary items denominated in non-functional currencies that have been eliminated in the consolidated financial statements), please refer to Note 37.

Sensitivity analysis

The Group is mainly affected by fluctuations in the exchange rates of USD, JPY and NTD.

The table below details the sensitivity analysis of the Group when the exchange rate of each functional currency of each entity against each relevant foreign currency increases/decreases by 1%. 1% is the sensitivity rate used when reporting exchange rate risk within the Group to key management, and also represents management's assessment of the reasonably possible range of changes in foreign currency exchange rates. Sensitivity analysis only includes foreign currency monetary items in circulation which is translated at the end of the period with a 1% exchange rate adjustment.

When foreign currency monetary items are net assets, a positive number in the table below means that when the functional currency of each consolidated entity depreciates by 1% relative to each related currency (mainly USD, JPY and NTD), the pre-tax net profit or equity will increase by a number of the same amount; when the functional currency of each consolidated entity appreciates by 1% relative to each relevant currency, its impact on pre-tax net profit or equity will be a negative number of the same amount.

	The impact of USD		The impact of JPY		The impact of NTD
	For the years ended December 31		For the years ended December 31		For the years ended December 31
	2025	2024	2025	2024	2025	2024
Gains or (losses)	$ 28,192 (i)	$ 25,503 (i)	($ 311)(ii)	$ 2 (ii)	($ 1,519)(iii)	($ 1,256)(iii)

(i) Mainly from the Group's USD-denominated cash and cash equivalents, receivables, and payables that were in circulation on the balance sheet date without cash flow hedging.

The Group's sensitivity to the USD exchange rate increased in the current period, which was due to the decrease in payables denominated in USD.

(ii) Mainly from the Group's JPY-denominated cash and cash equivalents, receivables, and payables that were in circulation on the balance sheet date without cash flow hedging.

The Group's sensitivity to the JPY exchange rate increased in the current period, which was due to the increase in payables denominated in JPY.

(iii) Mainly from the Group's NTD-denominated payables that were still in circulation on the balance sheet date without cash flow hedging.

The Group's sensitivity to the NTD exchange rate increased in the current period, which was due to the increase in payables denominated in NTD.

(2) Interest rate risk

Interest rate risk exposure is incurred due to the bank deposits, notes receivable, lease liabilities and borrowings within the Group include fixed and floating interest rates.

The carrying amounts of financial assets and financial liabilities of the Group subject to interest rate risk exposure on the balance sheet date are as follows:

	December 31, 2025	December 31, 2024
Fair value interest rate risk
- Financial assets	$ 1,360,943	$ 1,047,668
- Financial liabilities	260,401	135,367
Cash flow interest rate risk
- Financial assets	2,369,711	2,305,041
- Financial liabilities	1,174,120	336,808

Sensitivity analysis

The sensitivity analysis below is based on the interest rate exposure of non-derivative instruments at the balance sheet date. The analysis for floating rate liabilities assumes that the amounts of the liabilities outstanding at the balance sheet date were all outstanding during the reporting period. The rate of change used in reporting interest rates within the Group to key management is a 1% increase or decrease in interest rates, which represents management's assessment of the reasonably possible range of changes in interest rates.

If interest rates increased/decreased by 1% when all other variables are held constant, the Group's net profit before tax in 2025 and 2024 will increase/decrease by $11,956 thousand and $19,682 thousand, respectively, mainly due to the risk of interest rate changes arising from the interest-bearing bank deposits and bank borrowings at floating rates.

The Group's sensitivity to interest rates decreased in the current period, which is due to the increase in bank borrowings at floating interest rates.

2) Credit risk

Credit risk refers to the risk that the counterparty defaults on its contractual obligations resulting in financial losses to the Group. As of the balance sheet date, the maximum credit risk exposure of the Group that may result in financial losses due to the counterparty's failure to perform its obligations is

from the carrying amount of financial assets recognized in the consolidated balance sheet.

The policy adopted by the Group is to transact with reputable counterparties and to obtain adequate guarantees to mitigate the risk of financial loss due to default when necessary. The Group rates major customers by creating complete customer profiles, using publicly available financial and non-financial information, and referring to past transaction records with the Group. The Group continuously monitors the credit exposure and the credit rating of the counterparty and controls the credit exposure through the counterparty's credit limit which is reviewed and approved annually by the responsible supervisor.

The Group continuously evaluates the financial status of customers with accounts receivable and contract assets and reviews the recoverable amounts of accounts receivable and contract assets to ensure that unrecoverable accounts receivable and contract assets have been properly set aside for impairment losses. When necessary, receipts in advance will be adopted as a transaction term to reduce credit risk. Thus, the credit risk on accounts receivable and contract assets is expected to be limited.

The credit risk of the Group is concentrated in the top five customers. As of December 31, 2025 and 2024, the ratio for the total amount of accounts receivable and total contract assets came from the top five customers were 51% and 53%, respectively.

3) Liquidity risk

The Group manages and maintains a sufficient position of cash and cash equivalents to support the operations and mitigate the impact of fluctuations in cash flow. The management of the Group supervises the use of the bank's financing amount and ensures compliance with the terms of the borrowing agreement.

Bank borrowings are an important source of liquidity for the Group. Please refer to the description of (2) Financing amount for the unused financing amount of the Group as of December 31, 2025 and 2024.

(1) Liquidity and Interest Rate Risk for Non-Derivative Financial Liabilities

The analysis of the remaining contractual maturity of non-derivative financial liabilities is based on the earliest date on which the Group may be required to repay, and is prepared based on the undiscounted cash flows of financial liabilities (including principal and estimated interest). The maturity analysis of other non-derivative financial liabilities is prepared according to the agreed repayment date.

For interest cash flows paid at floating rates, the undiscounted interest amount is derived based on the average borrowing rate on the balance sheet date.

December 31, 2025

	Less than 1 month	1 - 3 months	3 - 12 months	1 - 5 years	More than 5 years
Non-derivative financial liabilities
Non-interest bearing liabilities	$ 632,753	$ 837,441	$ 564,942	$ 25,434	$ -
Floating rate instrument	247,702	11,462	93,201	726,624	155,032
Fixed rate instrument	168,378	-	-	-	-
Lease liabilities	8,699	2,924	34,870	48,978	-
	$1,057,532	$ 851,827	$ 693,013	$ 801,036	$ 155,032

December 31, 2024

	Less than 1 month	1 - 3 months	3 - 12 months	1 - 5 years	More than 5 years
Non-derivative financial liabilities
Non-interest bearing liabilities	$ 561,503	$ 807,216	$ 563,180	$ 20,717	$ -
Floating rate instrument	4,631	9,264	105,904	181,445	52,861
Lease liabilities	8,944	3,124	36,174	91,788	1,586
	$ 575,078	$ 819,604	$ 705,258	$ 293,950	$ 54,447

(2) Financing amount

	December 31, 2025	December 31, 2024
Unsecured borrowings
- Utilized	$ 407,848	$ 50,000
- Unutilized	912,152	720,000
	$ 1,320,000	$ 770,000
Secured borrowings
- Utilized	$ 934,120	$ 286,808
- Unutilized	905,880	1,073,192
	$ 1,840,000	$ 1,360,000

34. RELATED PARTY TRANSACTIONS

Transactions, account balances, income and expenses between the Company and its subsidiaries (which are related parties of the Company) are all eliminated upon consolidation, thus not disclosed in this note. Unless disclosed in other notes, the transactions between the Group and other related parties are as follows.

a. Related party name and categories

Related party name	Related party categories
Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd.	Associate

b. Operating revenue

Item	Related party categories	For the years ended December 31
		2025	2024
Electroplating services	Associate	$ 92,292	$ 88,247
Lease revenue	Associate	$ 47,050	$ 48,617
Lease and other services	Associate	$ 7,032	$ 6,800

There is no other comparable transaction of the same sales price and conditions of the related parties. The income from electroplating services is determined by the cost-plus pricing, and the payment terms are monthly T/T 45 days. The lease income is based on the contract signed according to the general market conditions, and the rent is collected on a monthly basis; the other service income is collected on a monthly basis according to the contract content.

c. Receivables from related parties

Item	Related party categories	December 31, 2025	December 31, 2024
Accounts receivable due from related parties	Associate	$ 8,066	$ 8,903
Other receivables - related parties	Associate	$ 52	$ 863

The outstanding receivables from related parties are not overdue, and no guarantee has been received. The amount receivable from related parties in 2025 and 2024 has not been recognized as loss provision.

d. Lease agreement

Operation lease/ sublease

The Group leases the buildings and subleases the land use rights related to the buildings to its associate, Mitsubishi Electric GEM Power Semiconductor (Hefei) Co., Ltd., for a lease term of five years, with an option to extend the lease term for two years. The rent is signed according to the general market condition which is paid monthly. At the end of the lease period, the lessee will not have the purchase price option to acquire the real estate. As of December 31, 2025 and 2024, the total lease payments to be received in the future are as follows:

	December 31, 2025	December 31, 2024
Year 1	$ 48,912	$ 49,888
Year 2	-	49,888
Year 3	-	-
Year 4	-	-
Year 5	-	-
	$ 48,912	$ 99,776

The lease income recognized in 2025 and 2024 was $47,050 thousand and $48,617 thousand, respectively.

e. Other related party transactions

Item	Related party categories	December 31, 2025	December 31, 2024
Guarantee deposits	Associate	$ 1,732	$ 1,767
Advance receipts	Associate	$ 4,017	$ 4,097

f. Remuneration for key managerial officers

	For the years ended December 31
	2025	2024
Short-term employee benefits	$ 179,208	$ 142,033
Post-employment benefits	720	720
Share-based payment	-	100
	$ 179,928	$ 142,853

The remuneration of directors and other key managerial officers is determined by the Remuneration Committee in accordance with individual performance and market trends.

68 -

35. PLEDGED ASSETS

The following assets have been provided as collateral for financing borrowings and customs guarantees for imported raw materials:

	December 31, 2025	December 31, 2024
Pledged term deposits (financial assets measured at amortized cost - non-current)	$ 776	$ 763
Self-owned land	622,948	622,948
Net amount of property and building	164,593	168,619
Net amount of machinery and equipment	597,697	162,049
	$ 1,386,014	$ 954,379

36. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The unrecognized commitments of the Group are as follows:

	Unit: Foreign currency (In thousands)
	December 31, 2025	December 31, 2024
Acquisition of property, plant and equipment
JPY	$ 81,439	$ 1,049,634
NTD	$ 60,610	$ 145,384
RMB	$ 8,075	$ 2,127
USD	$ 2,780	$ 871

37. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

The following information was summarized according to the foreign currencies other than the functional currency of the Group. The exchange rates disclosed were used to translate the foreign currencies into the functional currency. The significant financial assets and liabilities denominated in foreign currencies were as follows:

December 31, 2025

	Foreign currencies (in thousands)	Exchange rate		Carrying amount
Foreign currency assets
Monetary items
USD	$ 102,177	31.4300	(USD: NTD)	$ 3,211,424
USD	52,669	7.0288	(USD: RMB)	1,655,399
JPY	263,134	0.2008	(JPY: NTD)	52,837
Foreign currency liabilities
Monetary items
USD	56,638	31.4300	(USD: NTD)	1,780,125
USD	8,511	7.0288	(USD: RMB)	267,508
JPY	418,111	0.2008	(JPY: NTD)	83,957

69 -

NTD	50,938	0.0318	(NTD: USD)	50,938
NTD	100,930	0.2236	(NTD: RMB)	100,930

December 31, 2024

	Foreign currencies (in thousands)	Exchange rate		Carrying amount
Foreign currency assets
Monetary items
USD	$ 101,684	32.7850	(USD: NTD)	$ 3,333,724
USD	48,235	7.1884	(USD: RMB)	1,581,389
JPY	250,863	0.2099	(JPY: NTD)	52,656
Foreign currency liabilities
Monetary items
USD	$ 61,877	32.7850	(USD: NTD)	$ 2,028,646
USD	10,254	7.1884	(USD: RMB)	336,163
JPY	249,737	0.2099	(JPY: NTD)	52,420
NTD	44,289	0.0305	(NTD: USD)	44,289
NTD	81,334	0.2193	(NTD: RMB)	81,334

The Group's foreign exchange gains and losses (realized and unrealized) in 2025 and 2024 were ($85,564) thousand and $104,757, respectively. Due to the wide variety of foreign currency transactions and functional currencies of the Company, it is not possible to disclose exchange gains and losses and significant impact for each currency.

38. ADDITIONAL DISCLOSURES

a. Following are the additional disclosures required by the Securities and Futures Bureau for the Company:

1) Financings provided: None
2) Endorsement/guarantee provided: None
3) Holding of significant securities at the end of the period (excluding investments in subsidiaries and associates): None
4) Total purchases from or sales to related parties of at least $100 million or 20% of the paid-in capital: See Table 1 attached
5) Receivables from related parties amounting to at least $100 million or 20% of the paid-in capital: See Table 2 attached
6) Others: The business relationship between the parent and the subsidiaries and significant transactions between them: See Table 3 attached

b. Information on investees (excluding information on investment in Mainland China): See Table 4 attached

c. Information on investment in mainland China:

1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 5 attached

2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gains or losses, and other related information which is helpful to understand the impact of investment in mainland China on financial reports:

(1) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: See Table 1 and Table 3 attached

(2) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: None

(3) The amount of property transactions and the amount of the resultant gains or losses: None

(4) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: None

(5) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None

(6) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Note 34

(7)

SEGMENTS INFORMATION

Information provided to the operation decision maker to allocate resources and measure segment performance, focusing on each type of product or service delivered or provided. The reportable segments of the Group are the optoelectronics segment, the semiconductor segment, and the silicon photonics segment.

The operation decision maker regards the subsidiaries in optoelectronics industry, semiconductor foundry and sales, or silicon photonics industry in each region as individual operating segments, but when preparing financial statements, the Group considers the following factors and aggregates these operating segments as a single segment:

Similar product properties and process;
Similar product pricing strategy and sales model.

a. Revenue and operation results from each department

The revenue and operating results of the Group's continuing operation are analyzed as follows according to the reportable segment:

	Revenue from each segment		Profit and loss from each segment
	For the years ended December 31		For the years ended December 31
	2025	2024	2025	2024
Optoelectronics industry	$ 1,903,838	$ 1,370,408	$ 284,350	$ 131,982
Semiconductor	5,325,910	4,670,539	1,044,800	684,008
Silicon photonics segment	1,811,835	2,023,000	340,667	413,464
Intercompany eliminations	( 456,989)	( 496,286)	3,230	1,805
Total of continuing operations	$ 8,584,594	$ 7,567,661	1,673,047	1,231,259
Headquarters management cost and compensation to			($ 70,801)	($ 52,360)

71 -

directors

Other gains and losses	-	(	8,534)
Interest income	59,480		54,289
Other income	14,886		17,497
Other gains and losses	(	713)	49,493
Finance costs	(	21,553)	(
Share of profit of subsidiaries and joint ventures accounted for using equity method	9,892		9,624
Income before income tax	$ 1,664,238		$ 1,294,972

The segment revenue reported above is generated from transactions with external customers.

Segment profit and loss refers to the profit earned by each segment, excluding the apportionable headquarters management costs and compensation to directors, other gains and losses, interest income, other income, other profits and losses, financial costs, share of profits and losses of affiliates and joint ventures accounted using the equity method, and income tax cost. This measured amount is provided to the decision maker for the purpose of allocating resources to segments and measuring their performance.

b. Segment total assets and liabilities

	December 31, 2025	December 31, 2024
Segment assets
Optoelectronics industry	$ 4,958,243	$ 3,127,664
Semiconductor	6,627,545	6,429,659
Silicon photonics segment	1,410,206	1,324,027
Uncollected assets	265,911	268,198
Consolidated total assets	$ 13,261,905	$ 11,149,548
Segment liabilities
Optoelectronics industry	$ 1,289,167	$ 1,198,138
Semiconductor	1,991,581	1,972,344
Silicon photonics segment	216,256	188,618
Uncollected liabilities	1,942,036	824,360
Consolidated total liabilities	$ 5,439,040	$ 4,183,460

For the purpose of monitoring segment performance and allocating resources between segments:

1) All assets were allocated to reportable segments other than investments using the equity method, refundable deposit and current and deferred income tax assets. Assets used jointly by reportable segments were allocated on the basis of the revenues earned by individual reportable segments; and
2) All liabilities were allocated to reportable segments other than borrowings and other financial liabilities. Liabilities for which reportable segments are jointly liable were allocated in proportion to segment assets.

c. Other segment information

Other information reviewed by the chief operating decision maker or are otherwise regularly provided to the chief operating decision maker:

	Depreciation and amortization		Increase in non-current assets in the current period (Note)
	For the years ended December 31		For the years ended December 31
	2025	2024	2025	2024
Optoelectronics industry	$ 216,908	$ 179,157	$ 1,123,081	$ 242,181
Semiconductor	584,577	645,949	309,458	235,089
Silicon photonics segment	19,558	17,635	63,505	23,009
	$ 821,043	$ 842,741	$ 1,496,044	$ 500,279

Note: Non-current assets include property, plant and equipment, right-of-use assets and other intangible assets.

d. Revenue from major products and services

The Group's revenues from continuing operations from its major products and services are shown below.

	For the years ended December 31
	2025	2024
Optical communication and optical information products	$ 1,447,729	$ 874,182
Semiconductor products	5,325,910	4,670,539
Silicon photonics products	1,810,955	2,022,940
	$ 8,584,594	$ 7,567,661

e. Region

The Group operates in two regions - Taiwan and China.

The Group's revenue from continuing operations from external customers by location of operations and non-current assets was detailed below:

	Revenue from external customers		Non-current assets
	For the years ended December 31		December 31, 2025	December 31, 2024
	2025	2024
Taiwan	$ 6,828,844	$ 6,176,654	$ 3,967,694	$ 2,989,771
China	1,755,750	1,391,007	1,470,680	1,497,603
	$ 8,584,594	$ 7,567,661	$ 5,438,374	$ 4,487,374

Non-current assets exclude investments using the equity method, refundable deposit and deferred income tax assets.

f. Information about major customers

Single customers contributing 10% or more to the Group's revenue were as follows:

Name	For the years ended December 31
	2025	2024
AAAA	$ 1,668,470	$ 1,987,771
AC	793,660	777,722
	$ 2,462,130	$ 2,765,493

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2025

(Amounts in Thousands of New Taiwan Dollars)

Table 1

Company Name	Related Party	Nature of Relationships	Transaction Details				Abnormal Transaction		Notes/ Accounts Payable or Receivable		Remark
			Purchases/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company	Centera Photonics Inc.	Parent company to subsidiary	Sales	($ 456,109)	( 24% )	Processing income and other service income: Payments are collected in net 30 to 60 days end of the month.	—	—	$ 187,554	17%	Notes 1, 3, 5 and 6
Centera Photonics Inc.	The Company	Subsidiary to parent company	Note 7	456,109	71%	Net 30~60 days from invoice date	—	—	( 205,211)	( 51% )	Notes 1, 3 and 5
GEM Electronics (Shanghai) Co., Ltd.	GEM Tech Ltd., Taiwan Branch	Subsidiary to subsidiary	Sales	( 1,580,566)	( 59% )	Net 90 days from invoice date	—	—	360,402	55%	Notes 1, 2 and 3
GEM Tech Ltd., Taiwan Branch	GEM Electronics (Shanghai) Co., Ltd.	"	Purchase	1,580,566	62%	"	—	—	( 360,402)	( 59% )	Notes 1, 2 and 3
	GEM Electronics (Hefei) Co., Ltd.	"	Purchase	957,924	37%	"	—	—	( 250,580)	( 41% )	Notes 1, 2 and 3
GEM Electronics (Hefei) Co., Ltd.	GEM Tech Ltd., Taiwan Branch	"	Sales	( 957,924)	( 60% )	"	—	—	250,580	75%	Notes 1, 2 and 3
	Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd.	Subsidiaries to affiliates	Sales	( 146,374)	( 9% )	Electroplating services: monthly T/T 45 days; Lease and other services: collected on a monthly basis.	—	—	8,066	2%	Notes 2 and 4

Note 1: The transaction price is determined by the cost-plus pricing.
Note 2: There is no unrealized profit or loss for this period.
Note 3: It has been consolidated and written off in the preparation of this consolidated financial statement.
Note 4: The income from electroplating services is determined by the cost-plus method; the lease income is based on the contract signed according to the general market conditions; the income from other services is based on the content of the contract.
Note 5: The Company's payment term for transactions with Centera Photonics Inc. was revised to net 30 days from invoice date in April 2025.
Note 6: The current period's transactions include unrealized gains of $911 thousand. The balance of receivables includes accounts receivable of $57,494 thousand and other receivables of $130,060 thousand.
Note 7: The Company recognized manufacturing expenses of $447,702 thousand, research and development expenses of $7,952 thousand, and acquisition of property, plant, and equipment of $455 thousand.

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2025

(Amounts in Thousands of New Taiwan Dollars)

Table 2
Table 2

Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover Rate	Overdue		Amounts Received in Subsequent Period (Note 1)	Allowance for Bad Debts
					Amount	Action Taken
The Company	Centera Photonics Inc.	Parent company to subsidiary	Receivables $ 205,211	1.38	$ -	—	$ 205,211	$ -
GEM Electronics (Shanghai) Co., Ltd.	GEM Tech Ltd., Taiwan Branch	Subsidiary to subsidiary	Accounts receivable 360,402	4.22	-	—	243,106	-
GEM Electronics (Hefei) Co., Ltd.	GEM Tech Ltd., Taiwan Branch	Subsidiary to subsidiary	Accounts receivable 250,580	4.06	-	—	168,545	-

Note 1: Amount recovered from January 1 to March 12, 2026.
Note 2: It has been consolidated and written off in the preparation of this consolidated financial statement.

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

The business relationship between the parent and the subsidiaries and significant transactions between them

FOR THE YEAR ENDED DECEMBER 31, 2025

(Amounts in Thousands of New Taiwan Dollars)

Table 3

No.	Company Name	Counterparty	Nature of Relationship	Transaction Details
				Financial Statements Item	Amount (Note 1)	Terms	% of Total (Note 2)
1	The Company	Centera Photonics Inc.	Note 3 (1)	Operating revenue	$ 456,109 (Note 5)	Net 30-60 days from invoice date (Note 6)	5%
				Contract assets - related parties	17,657	-	-
				Accounts receivable due from related parties	57,494	-	-
				Other receivables - related parties	130,060	Net 30~60 days from invoice date (Payments for materials purchased on behalf of others) (Note 6)	1%
2	GEM Services, Inc.	The Company	Note 3 (2)	Earnings Distribution	276,400	-	2%
3	GEM Electronics (Shanghai) Co., Ltd.	GEM Tech Ltd., Taiwan Branch	Note 3 (3)	Sales revenue	1,580,566 (Note 4)	Net 90 days from invoice date	18%
				Accounts receivable due from related parties	360,402	-	3%
				Contract assets - related parties	55,437	-	-
4	GEM Electronics (Hefei) Co., Ltd.	GEM Tech Ltd., Taiwan Branch	Note 3 (3)	Sales revenue	957,924 (Note 4)	Net 90 days from invoice date	11%
				Accounts receivable due from related parties	250,580	-	2%
				Contract assets - related parties	31,486	-	-
5	GEM Tech Ltd.	GEM Services, Inc.	Note 3 (3)	Remittance of earnings	631,267	-	5%

The business relationship between the parent and the subsidiaries:

The Company, Centera Photonics Inc., and GEM Electronics (Shanghai) Co., Ltd., GEM Tech Ltd., Taiwan Branch, and GEM Tech Ltd. are engaged in the manufacture and sale of electronic parts; GEM Electronics (Hefei) Co., Ltd. is engaged in the manufacture and sale of electronic parts and plant leasing;; GEM Services, Inc. and GEM Electronics Company Limited are holding companies.

Note 1: This table discloses information on one-way transactions only, which have been written off in the preparation of the consolidated financial statements.

Note 2: The calculation of the ratio of the transaction amount to the consolidated total revenue or total assets is calculated by the closing balance for the consolidated total assets if it is an asset-liability account or calculated by the accumulated amount for the consolidated total revenue if it is a profit and loss account

Note 3: Relationship to the counterparty:

(1) Parent company to subsidiary
(2) Subsidiary to parent company
(3) Subsidiary to subsidiary

Note 4: There is no unrealized profit or loss for this period.

Note 5: This transaction included unrealized profit of $911 thousand.

Note 6: The Company's payment term for transactions with Centera Photonics Inc. was revised to net 30 days from invoice date in April 2025.

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)

FOR THE YEAR ENDED DECEMBER 31, 2025

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Table 4

Investment Company	Investee	Location	Main Business	Original Investment Amount (Note 1)			Holding of Investment at the End of the Period Balance as of December 31, 2025		Net Income (Losses) of the Investee	Share of Profits/ Losses (Note 4)	Share Price/ Net Value Per Share (NT$)	Remark
				December 31, 2025	December 31, 2024	Common Shares	Percentage of Ownership (Note 3)	Carrying Amount (Note 3)
The Company	Centera Photonics Inc.	Taiwan	Manufacture and sales of electronic parts	$ 271,562	$ 271,562	35,303,082	54.23%	$ 542,669	$ 289,553	$ 157,977	$ 15.4	Notes 2, 6, 7, 8 and 10
	GEM Services, Inc.	Cayman Islands	Holding company business	568,965	568,965	65,809,451	51%	2,394,083	758,645	386,882	75.2	Notes 2, 6 and 9
GEM Services, Inc.	GEM Electronics Company Limited	British Virgin Islands	Holding company business	-	-	100	51%	1,744,539	367,782	187,555	34,209,100	Notes 2, 6 and 8
	GEM Tech Ltd.	Samoa	Manufacture and sales of electronic parts	18,202	18,202	606,091	51%	651,575	508,471	259,302	2,108	Notes 2, 6 and 8

Note 1: The original investment amount does not include the investment amount of the investee company before the date of acquisition.
Note 2: The relevant investment profit and loss recognition are based on the financial statements of the investee company audited by accountants during the same period.
Note 3: The carrying amount held at the end of the period is based on the shareholding ratio of the Company at the end of the period.
Note 4: The investment profit (loss) recognized in the current period is based on the weighted average shareholding ratio of the Company.
Note 5: Please refer to Table 5 for relevant information on investment in Mainland China.
Note 6: The highest capital investment does not change in this period, and there is no pledge.
Note 7: The carrying amount of the holding at the end of the period included $1,588 thousand in realized profit and $911 thousand in unrealized profit from intercompany transactions.
Note 8: Refers to the net value per share.
Note 9: Refers to the closing price.
Note 10: On June 30, 2025, Centera Photonics Inc. issued stock dividends, and the Company received 8,146,865 shares based on its shareholding in the subsidiary.

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2025

(Amounts in Thousands of New Taiwan Dollars/ Foreign Currency)

Table 5
1. Name of the investee company in Mainland China, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, current profit or loss, recognized investment gains or losses, carrying amount of the investment, and repatriated investment gains:

Investee Company in China	Main Business	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2025	Investment Flows		Accumulated Outflow of Investment from Taiwan as of December 31, 2025	Percentage of Ownership %	Net Income (Losses) of the Investee Company	Share of Profits/Losses	Carrying Amount as of December 31, 2025	Accumulated Inward Remittance of Earnings as of December 31, 2025
					Outflow	Inflow
GEM Electronics (Shanghai) Co., Ltd. (Note 4)	Manufacture and sales of electronic parts	$ 2,168,670 (USD 69,000) (Note 5)	Reinvested by GEM Electronics Company Limited (Note 1(2))	$ -	$ -	$ -	$ -	51%	$ 367,782	$ 187,555 (Note 2(2) 2.)	$ 1,744,539	$ -
GEM Electronics (Hefei) Co., Ltd. (Note 4)	Manufacture and sales of electronic parts, factory leasing	1,951,904 (RMB 436,511)	Reinvested by GEM Electronics (Shanghai) Co., Ltd. (Note 1(3))	-	-	-	-	51%	106,485	54,303 (Note 2(2) 2.)	723,484	-
Mitsubishi Electric GEM Power Device (Hefei) Co., Ltd.	Production, design, packaging and testing of power management electronic accessories	157,150 (USD 5,000)	Reinvested by GEM Electronics (Shanghai) Co., Ltd. (Note 1(3))	-	-	-	-	10.2%	49,460	5,045 (Note 2(2) 1.)	65,930	-

Note 1: There are three types of investment methods, and they indicated below:
(1) Directly conduct investment in China.
(2) Reinvestment in Mainland China through a third regional company (GEM Electronics Company Limited).
(3) Other methods. (reinvestment through GEM Electronics (Shanghai) Co., Ltd.).
Note 2: Share of Profits/Losses
(1) It shall be indicated If it is under preparation without investment profit or loss.
(2) The basis for recognition of investment gains and losses is divided into the following three types, which should be indicated.
1. Financial statements audited by an international accounting firm that has a cooperative relationship with an accounting firm of Republic of China.
2. Financial statements audited by the certified accounting firm by the parent company in Taiwan.
3. Based on the financial statements of the invested company that have not been audited by accountants during the same period.
Note 3: Relevant figures in this table should be denominated in New Taiwan Dollars.
Note 4: It has been written-off in the preparation of these consolidated financial statements.
Note 5: Part of it is reinvested with surplus funds from the third region.
Note 6: The highest capital investment of Elite Advanced Laser Corporation and subsidiaries in the above table does not change in this period, and there is no pledge.
2. Upper limit on investment in Mainland China:

Accumulated Investment in Mainland China as of December 31, 2025	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
$ - (USD -)	$ -	$ 4,693,719

Note 1: The Company originally applied for an investment case of indirectly investing USD 9,000 thousand in GEM Electronics (Shanghai) Co., Ltd. in Mainland China according to the Official Letter Ching-Shen-Erh-Tzu No. 10100160030 dated May 16, 2012, and later, on August 15, 2013, the investment purpose of the case was changed to an overseas investment, which was approved by Official Letter Ching-Shen-Erh-Tzu No. 10200310550.
Note 2: The Company originally applied for an indirect investment of USD 2,750 thousand in GEM Electronics (Hefei) Co., Ltd. in Mainland China according to the Official Letter Ching-Shen-Erh-Tzu No. 10100160040 dated May 16, 2012, and later, on August 15, 2013, the investment purpose of the case was changed to an overseas investment, which was approved by Official Letter Ching-Shen-Erh-Tzu No. 10200310550.

AI assistant

ELASER Audit Report / Information 2025

52329_rns_2026-04-10_6f1329dc-083d-440d-acf7-f5c0149c1197.pdf

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

Opinion

Basis for Opinion

Key Audit Matters

The veracity of the sales revenue of specific customers

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates

13. Property, plant and equipment - self-use

14. LEASE ARRANGEMENTS

16. GOODWILL

17. INTANGIBLE ASSETS

19. BORROWINGS

21. PROVISIONS

22. RETIREMENT BENEFIT PLANS

23. EQUITY

24. REVENUE

a. Detail of customer contracts

b. Contract balance

Common shares

28. SHARE-BASED PAYMENT ARRANGEMENTS

29. GOVERNMENTS SUBSIDY

30. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

31. CASH FLOW INFORMATION

32. CAPITAL RISK MANAGEMENT

33. FINANCIAL INSTRUMENTS

34. RELATED PARTY TRANSACTIONS

35. PLEDGED ASSETS

36. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

37. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

38. ADDITIONAL DISCLOSURES

AI assistant

ELASER — Audit Report / Information 2025

52329_rns_2026-04-10_6f1329dc-083d-440d-acf7-f5c0149c1197.pdf

ELITE ADVANCED LASER CORPORATION AND SUBSIDIARIES

Opinion

Basis for Opinion

Key Audit Matters

The veracity of the sales revenue of specific customers

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates

13. Property, plant and equipment - self-use

14. LEASE ARRANGEMENTS

16. GOODWILL

17. INTANGIBLE ASSETS

19. BORROWINGS

21. PROVISIONS

22. RETIREMENT BENEFIT PLANS

23. EQUITY

24. REVENUE

a. Detail of customer contracts

b. Contract balance

Common shares

28. SHARE-BASED PAYMENT ARRANGEMENTS

29. GOVERNMENTS SUBSIDY

30. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

31. CASH FLOW INFORMATION

32. CAPITAL RISK MANAGEMENT

33. FINANCIAL INSTRUMENTS

34. RELATED PARTY TRANSACTIONS

35. PLEDGED ASSETS

36. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

37. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND LIABILITIES

38. ADDITIONAL DISCLOSURES

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ELASER Audit Report / Information 2025