Stock Code:2393

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report
For the Years Ended December 31, 2025 and 2024

Address: No. 6-8, Zhonghua Road, Shulin Dist., New Taipei City
Telephone: (02)2685-6688

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

Contents	Page
1. Cover Page	1
2. Table of Contents	2
3. Representation Letter	3
4. Independent Auditors’ Report	4
5. Consolidated Balance Sheets	5
6. Consolidated Statements of Comprehensive Income	6
7. Consolidated Statements of Changes in Equity	7
8. Consolidated Statements of Cash Flows	8
9. Notes to the Consolidated Financial Statements
(1) Company history	9
(2) Approval date and procedures of the consolidated financial statements	9
(3) New standards, amendments and interpretations adopted	9~11
(4) Summary of material accounting policies	11~32
(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty	32~33
(6) Explanation of significant accounts	33~73
(7) Related-party transactions	73~75
(8) Pledged assets	75
(9) Commitments and contingencies	75~80
(10) Losses Due to Major Disasters	80
(11) Subsequent Events	80
(12) Other	80
(13) Other disclosures
(a) Information on significant transactions	81
(b) Information on investees	81
(c) Information on investment in mainland China	81
(14) Segment information	81~83

Representation Letter

The entities that are required to be included in the consolidated financial statements of Everlight Electronics Co., Ltd. as of and for the year ended 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 International Financial Reporting Standards No. 10, "Consolidated Financial Statements." endorsed by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the consolidated financial statements is included in the consolidated financial statements. Consequently, Everlight Electronics Co., Ltd. and Subsidiaries do not prepare a separate set of consolidated financial statements.

Company name: Everlight Electronics Co., Ltd.
Chairman: Robert Yeh
Date: March 11, 2026.

KPMG

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KPMG

台北市110615信義路5段7號68樓(台北101大樓)

68F., TAIPEI 101 TOWER, No. 7, Sec. 5,

Xinyi Road, Taipei City 110615, Taiwan (R.O.C.)

電話 Tel +886 2 8101 6666

傳真 Fax +886 2 8101 6667

網址 Web kpmg.com/tw

Independent Auditors' Report

To the Board of Directors of Everlight Electronics Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Everlight Electronics Co., Ltd. and its subsidiaries (“the Group”), which comprise the consolidated balance sheet as of December 31, 2025 and 2024, the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 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 with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), Interpretations developed by the International Financial Reporting Interpretations Committee ("IFRIC") or the former Standing Interpretations Committee ("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 Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the 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 of 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 of the current period. 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. The key audit matters we judged shall be presented in the financial report as follows:

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

KPMG
4-1

Inventory valuation

Please refer to note 4(h) for accounting policy related to valuation of inventory; note 5 for uncertainty of inventory valuation; and note 6(f) for information regarding inventory and related expenses.

Description of key audit matters:

Due to the impact of product life cycle and industrial competition in electronic industry, the price variability on the inventory of the Group is expected. Therefore, the test of inventory valuation is one of the significant assessment items in our audit procedures.

Audit procedures:

Our principal audit procedures included: assessing the allowance for inventory valuation and obsolescence losses to determine whether the policies of the Group and the accounting policies are applied accordingly, and challenging the adequacy of the Group’s provisions against inventories which we corroborated on a sample basis by testing the appropriateness of ageing listing, understanding the basis for valuation of net realized value used by the management of the Group and selecting appropriate samples to verify the reasonableness of the inventory valuation.

Revenue recognition

Please refer to note 4(q) for the accounting policy of revenue; and note 6(v) for information regarding revenue recognition.

Description of key audit matters:

The main activities of the Group include manufacturing and selling of products on light-emitting and sensing components. The sales revenue is a key matter in the consolidated financial statements, and the amounts and changes of sales revenue may affect the users' understanding of the entire financial statements. Therefore, testing over revenue recognition is one of the significant assessment items in our audit procedures.

Audit Procedures:

Our principal audit procedures included: testing the related controls surrounding the aforementioned sales and collection cycle; testing to verify with relevant documents; as well as selectively conducting external confirmations in order to evaluate the accuracy of the timing of the operating revenue recognition and determine whether related accounting policies are applied appropriately by the Group.

Other Matter

Everlight Electronics Co., Ltd. has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2025 and 2024, on which we have issued an unmodified opinion.

KPMG

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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, 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 the Audit Committee) are responsible for overseeing the Group's financial reporting process.

Auditor's 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 auditor's 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 the Standards on Auditing of the Republic of China, we exercise professional judgment and 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 in order 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.

KPMG
4-3

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 the 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 auditor's 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 auditor's 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.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant 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 were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's 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 audit resulting in this independent auditors' report are Hsin, Yu-Ting and Kuo, Kuan-Ying.

KPMG

Taipei, Taiwan (Republic of China)

March 11, 2026

Notes to Readers

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

The independent auditors' audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' audit report and consolidated financial statements, the Chinese version shall prevail.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

Assets	December 31, 2025		December 31, 2024		Liabilities and Equity	December 31, 2025		December 31, 2024
		Amount	%	Amount			%	Amount	%	Amount	%
Current assets:		Current liabilities:		Current liabilities:		Current liabilities		Current liabilities		Current liabilities
1100	Cash and cash equivalents (note 6(a))	$ 3,945,108	13	5,820,316	20	2100	Short-term borrowings (note 6(m))	$ 764,049	3	750,000	3
1110	Current financial assets at fair value through profit or loss (note 6(b))	751,248	3	572,365	2	2130	Current contract liabilities (note 6(v))	32,437	-	80,745	-
1170	Notes and accounts receivable, net (note 6(d))	5,234,953	18	5,462,892	18	2170	Notes and accounts payable	3,883,202	13	3,995,993	13
1180	Accounts receivable due from related parties, net (notes 6(d) and 7)	636,862	2	531,386	2	2180	Accounts payable to related parties (note 7)	389,231	1	225,533	1
1310	Inventories (note 6(f))	1,278,923	4	1,049,050	4	2213	Payables on machinery and equipment	139,891	1	211,850	1
1470	Other current assets	275,204	1	417,847	1	2230	Current tax liabilities	689,723	2	555,668	2
1476	Other current financial assets (notes 6(a), 6(e) and 7)	7,518,466	25	6,250,606	21	2250	Current provisions (note 6(e))	159,162	1	214,117	1
		19,640,764	66	20,104,462	68	2280	Current lease liabilities (note 6(q))	61,066	-	41,309	-
Non-current assets:						2300	Other current liabilities (notes 6(b) and 6(o))	2,046,313	7	2,153,878	7
1510	Non-current financial assets at fair value through profit or loss (note 6(b))	210,129	1	74,854	-	2322	Long-term borrowings, current portion (note 6(p))	1,242	-	1,290	-
1517	Non-current financial assets at fair value through other comprehensive income (note 6(c))	1,818,660	6	1,165,412	4	Non-Current liabilities:		8,166,316	28	8,230,383	28
1550	Investments accounted for using the equity method, net (note 6(g))	428,608	1	392,388	1	2527	Non-current contract liabilities (note 6(v))	44	-	45	-
1560	Non-current contract assets (note 6(v))	116,708	-	107,511	-	2540	Long-term borrowings (note 6(p))	4,398	-	5,760	-
1600	Property, plant and equipment (note 6(k))	5,293,847	18	5,775,316	19	2550	Non-current provisions (note 6(e))	200,151	1	154,342	-
1755	Right-of-use assets (note 6(l))	470,254	2	414,282	2	2560	Non-current tax liabilities	46,091	-	-	-
1780	Intangible assets	28,849	-	23,010	-	2570	Deferred tax liabilities (note 6(s))	121,660	-	184,566	1
1840	Deferred tax assets (note 6(s))	591,131	2	674,359	2	2580	Non-current lease liabilities (note 6(q))	354,315	1	315,510	1
1900	Other non-current assets (note 6(r))	46,256	-	46,003	1	2640	Non-current provisions for employee benefit (note 6(r))	46,233	-	37,632	-
1980	Non-current other financial assets (notes 6(a), 6(d) and 8)	954,028	4	1,002,183	3	2600	Other non-current liabilities	70,110	1	74,859	-
		9,958,470	34	9,675,318	32			923,002	3	772,714	2
						Total liabilities		9,089,318	31	9,003,097	30
						Equity:
						Equity attributable to owners of parent (note 6(i)):
						3110	Ordinary shares	4,433,931	15	4,433,931	15
						3200	Capital surplus (note 6(g))	8,818,972	30	8,818,763	30
						Retained earnings:
						3310	Legal reserve	3,503,833	12	3,208,061	11
						3320	Special reserve	655,408	2	842,843	2
						3350	Unappropriated earnings	3,187,443	10	3,618,616	12
						3400	Other equity interests	7,346,684	24	7,669,520	25
						3610	Non-controlling interests	(628,505)	(2)	(655,408)	(2)
								19,971,082	67	20,266,806	68
								538,834	2	509,877	2
								20,509,916	69	20,776,683	70
								$ 29,599,234	100	29,779,780	100
Total assets		$ 29,599,234	100	29,779,780	100

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars Except for Earnings Per Share, which is expressed in New Taiwan Dollars)

	2025		2024
		Amount	%	Amount	%
4000	Operating revenue (notes 6(v) and 7)	$ 19,639,955	100	20,972,903	100
5110	Cost of sales (notes 6(f), 6(r), 7 and 12)	13,535,270	69	14,619,727	70
5900	Gross profit	6,104,685	31	6,353,176	30
	Operating expenses (notes 6(r), 7 and 12):
6100	Selling expenses	1,034,007	5	1,076,276	5
6200	Administrative expenses	1,668,298	9	1,919,381	9
6300	Research and development expenses	849,135	4	857,600	4
6450	Expected credit loss (note 6(d))	90,299	-	39,772	-
		3,641,739	18	3,893,029	18
6900	Net operating income	2,462,946	13	2,460,147	12
	Non-operating income and expenses:
7100	Interest income (note 6(x))	277,682	1	259,256	1
7190	Other income (notes 6(g) and 7)	100,113	1	358,001	2
7210	Net gains on disposals of property, plant and equipment (notes 6(g) and 7)	10,104	-	15,697	-
7225	Gains on disposals of investments, net (notes 6(g) and 6(j))	-	-	771,902	4
7235	(Losses) gains on financial assets (liabilities) at fair value through profit or loss, net	(15,539)	-	(51,685)	-
7050	Finance costs (notes 6(q) and 6(x))	(31,897)	-	(17,305)	-
7590	Other expenses and losses (note 9(a))	(73,152)	-	(105,859)	(1)
7630	Foreign exchange gains (losses), net (note 6(y))	(106,781)	(1)	303,008	1
7770	Share of profit (loss) of associates and joint ventures accounted for using the equity method (note 6(g))	35,123	-	(1,171)	-
		195,653	1	1,531,844	7
7900	Profit before tax	2,658,599	14	3,991,991	19
7950	Less: Income tax expenses (note 6(s))	595,464	3	869,195	4
	Profit	2,063,135	11	3,122,796	15
8300	Other comprehensive income:
8310	Items that will not be reclassified to profit or loss
8311	Gains (losses) on remeasurements of defined benefit plans	(8,015)	-	17,584	-
8316	Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income (note 6(y))	1,089	-	(3,503)	-
8349	Less: income tax related to items that will not be reclassified to profit or loss (note 6(s))	(1,603)	-	3,517	-
		(5,323)	-	10,564	-
8360	Items that will be reclassified to profit or loss
8361	Exchange differences on translation of foreign financial statements	45,091	-	214,056	1
8367	Unrealized gains (losses) from investments in debt instruments measured at fair value through other comprehensive income	(945)	-	(39,511)	-
8370	Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss (note 6(g))	1,097	-	6,911	-
8399	Less: income tax related to items that will be reclassified to profit or loss (note 6(s))	(7,673)	-	(473)	-
		52,916	-	181,929	1
8300	Other comprehensive income	47,593	-	192,493	1
	Total comprehensive income	$ 2,110,728	11	3,315,289	16
	Profit, attributable to:
8610	Owners of parent	$ 2,038,257	11	2,944,495	14
8620	Non-controlling interests	24,878	-	178,301	1
		$ 2,063,135	11	3,122,796	15
	Total comprehensive income attributable to:
8710	Owners of parent	$ 2,058,484	11	3,145,497	15
8720	Non-controlling interests	52,244	-	169,792	1
		$ 2,110,728	11	3,315,289	16
	Earnings per share (note 6(u))
9750	Basic earnings per share	$ 4.60		6.64
9850	Diluted earnings per share	$ 4.53		6.55

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

	Equity attributable to owners of parent
	Ordinary shares	Capital surplus	Retained earnings			Exchange differences on translation of foreign financial statements	Other equity interest		Total	Total equity attributable to owners of parent	Non-controlling interests
			Legal reserve	Special reserve	Unappropriated earnings		Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total
Balance at January 1, 2024	$ 4,433,931	9,095,266	3,061,434	677,359	2,125,833	(858,886)	16,043	(842,843)	18,550,980	354,852	18,905,832
Appropriation and distribution of retained earnings:
Legal reserve	-	-	146,627	-	(146,627)	-	-	-	-	-	-
Special reserve	-	-	-	165,484	(165,484)	-	-	-	-	-	-
Cash dividends of ordinary share	-	-	-	-	(1,152,822)	-	-	-	(1,152,822)	-	(1,152,822)
Cash dividends from capital surplus distributed	-	(266,036)	-	-	-	-	-	-	(266,036)	-	(266,036)
	-	(266,036)	146,627	165,484	(1,464,933)	-	-	-	(1,418,858)	-	(1,418,858)
Profit for the period	-	-	-	-	2,944,495	-	-	-	2,944,495	178,301	3,122,796
Other comprehensive income for the period	-	-	-	-	13,567	230,449	(43,014)	187,435	201,002	(8,509)	192,493
Total comprehensive income for the period	-	-	-	-	2,958,062	230,449	(43,014)	187,435	3,145,497	169,792	3,315,289
Changes in equity of associates and joint ventures accounted for using the equity method	-	(10,935)	-	-	(346)	-	-	-	(11,281)	-	(11,281)
Changes in non-controlling interests	-	-	-	-	-	-	-	-	-	(14,767)	(14,767)
Others	-	468	-	-	-	-	-	-	468	-	468
Balance at December 31, 2024	4,433,931	8,818,763	3,208,061	842,843	3,618,616	(628,437)	(26,971)	(655,408)	20,266,806	509,877	20,776,683
Appropriation and distribution of retained earnings:
Legal reserve	-	-	295,772	-	(295,772)	-	-	-	-	-	-
Special reserve	-	-	-	(187,435)	187,435	-	-	-	-	-	-
Cash dividends of ordinary share	-	-	-	-	(2,354,417)	-	-	-	(2,354,417)	-	(2,354,417)
	-	-	295,772	(187,435)	(2,462,754)	-	-	-	(2,354,417)	-	(2,354,417)
Profit for the period	-	-	-	-	2,038,257	-	-	-	2,038,257	24,878	2,063,135
Other comprehensive income for the period	-	-	-	-	(6,676)	27,087	(184)	26,903	20,227	27,366	47,593
Total comprehensive income for the period	-	-	-	-	2,031,581	27,087	(184)	26,903	2,058,484	52,244	2,110,728
Changes in non-controlling interests	-	-	-	-	-	-	-	-	-	(23,287)	(23,287)
Others	-	209	-	-	-	-	-	-	209	-	209
Balance at December 31, 2025	$ 4,433,931	8,818,972	3,503,833	655,408	3,187,443	(601,350)	(27,155)	(628,505)	19,971,082	538,834	20,509,916

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

	2025	2024
Cash flows from (used in) operating activities:
Profit before tax	$ 2,658,599	3,991,991
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation and amortization expense	918,106	968,852
Expected credit loss	90,299	39,772
Net (gain) loss on financial assets or liabilities at fair value through profit or loss	(13,395)	19,205
Interest expense	31,897	17,305
Interest income	(277,682)	(259,256)
Share of (profit) loss of associates and joint ventures accounted for using the equity method	(35,123)	1,171
Net gain on disposal of property, plant and equipment	(10,104)	(15,697)
Gain on disposal of intangible assets	-	(171,815)
Gain on disposal of investments	-	(771,902)
Others	(3,926)	(318)
Total adjustments to reconcile profit	700,072	(172,683)
Changes in operating assets and liabilities:
(Increase) decrease in financial assets at fair value through profit or loss, mandatorily measured at fair value	(303,970)	217,443
(Increase) decrease in contract assets	(9,197)	30,987
Decrease (increase) in notes and accounts receivable (including related parties)	64,714	(1,184,920)
Increase in inventories	(229,873)	(131,095)
Decrease (increase) in other receivable and other current assets	149,422	(133,651)
Increase in notes and accounts payable (including related parties)	50,907	805,898
Increase in provisions	76,889	13,674
(Decrease) increase in other current liabilities	(103,138)	339,932
Increase (decrease) in net defined benefit liabilities	1,365	(5,446)
(Decrease) increase in current contract liabilities	(48,309)	26,104
Others	6,662	(2,246)
Total changes in operating assets and liabilities	(344,528)	(23,320)
Cash inflow generated from operations	3,014,143	3,795,988
Interest received	260,841	239,097
Interest paid	(32,623)	(16,039)
Income taxes paid	(395,238)	(909,725)
Net cash flows from operating activities	2,847,123	3,109,321
Cash flows from (used in) investing activities:
Acquisition of financial assets at fair value through other comprehensive income	(652,665)	(500,000)
Proceeds from disposal of financial assets at fair value through other comprehensive income	-	125,995
Proceeds from disposal of investments accounted for using the equity method	-	136,237
Proceeds from disposal of subsidiaries	-	701,057
Acquisition of property, plant and equipment	(447,100)	(541,568)
Proceeds from disposal of property, plant and equipment	56,879	67,686
Decrease (Increase) in refundable deposits	4,621	(10,609)
Acquisition of intangible assets	(42,216)	(36,303)
Increase in other financial assets	(1,284,249)	(1,416,509)
Decrease in restricted deposits	11,229	14,689
Others	29,311	-
Net cash flows used in investing activities	(2,324,190)	(1,459,325)
Cash flows from (used in) financing activities:
Increase in short-term borrowings	14,049	500,000
Repayments of long-term borrowings	(1,192)	(1,191)
(Decrease) increase in guarantee deposits received	(11,128)	32,590
Payment of lease liabilities	(63,411)	(40,565)
Cash dividends paid	(2,354,417)	(1,418,858)
Change in non-controlling interests	(23,287)	(14,767)
Other financing activities	209	468
Net cash flows used in financing activities	(2,439,177)	(942,323)
Effect of exchange rate changes on cash and cash equivalents	41,036	182,903
Net (decrease) increase in cash and cash equivalents	(1,875,208)	890,576
Cash and cash equivalents at beginning of period	5,820,316	4,929,740
Cash and cash equivalents at end of period	$ 3,945,108	5,820,316

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars unless otherwise specified)

(1) Company history

Everlight Electronics Co., Ltd. (the "Company") was incorporated in May 1983 as a company limited by shares under the Company Act of the Republic of China (ROC). The major business activities of the Company are the manufacture and sale of LEDs. The Company's common shares were listed on the Taiwan Stock Exchange (TWSE) in November 1999.

The consolidated financial statements are comprised of the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities"). Please refer to note 4(c) for related information of the Group entities main business activities.

(2) Approval date and procedures of the consolidated financial statements

These consolidated financial statements were authorized for issuance by the Board of Directors on March 11, 2026.

(3) New standards, amendments and interpretations adopted:

(a) The impact of the IFRS Accounting Standards endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2025:

Amendments to IAS21 "Lack of Exchangeability"

(b) The impact of IFRS Accounting Standards endorsed by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2026, would not have a significant impact on its consolidated financial statements:

IFRS 17 "Insurance Contracts" and amendments to IFRS 17 "Insurance Contracts"
Amendments to IFRS 9 and IFRS 7 "Amendments to the Classification and Measurement of Financial Instruments" regarding the application guidance requirements for Sections 3.1 and 3.3 of IFRS 9 and the related disclosure requirements of IFRS 7
Annual Improvements to IFRS Accounting Standards—Volume 11
Amendments to IFRS 9 and IFRS 7 "Contracts Referencing Nature-dependent Electricity"

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations	Content of amendment	Effective date per IASB
IFRS 18 “Presentation and Disclosure in Financial Statements”	The new standard introduces three categories of income and expenses, two income statement subtotals and one single note on management performance measures. The three amendments, combined with enhanced guidance on how to disaggregate information, set the stage for better and more consistent information for users, and will affect all the entities.

• A more structured income statement: under current standards, companies use different formats to present their results, making it difficult for investors to compare financial performance across companies. The new standard promotes a more structured income statement, introducing a newly defined ‘operating profit’ subtotal and a requirement for all income and expenses to be allocated between three new distinct categories based on a company’s main business activities.

• Management performance measures (MPMs): the new standard introduces a definition for management performance measures, and requires companies to explain in a single note to the financial statements why the measure provides useful information, how it is calculated and reconcile it to an amount determined under IFRS Accounting Standards.

• Greater disaggregation of information: the new standard includes enhanced guidance on how companies group information in the financial statements. This includes guidance on whether information is included in the primary financial statements or is further disaggregated in the notes. | January 1, 2027
note: On September 25, 2025, the FSC issued a press release announcing that Taiwan will adopt IFRS 18 beginning in 2028. Entities that need to adopt the new standard earlier may do with the endorsement of the FSC. |

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group is evaluating the impact on its consolidated financial position and consolidated financial performance upon the initial adoption of the abovementioned standards or interpretations. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the following other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture”
IFRS 19 “Subsidiaries without Public Accountability: Disclosures” and amendments to IFRS 19 “Subsidiaries without Public Accountability: Disclosures”
Amendments to IAS 21 “Translation to a Hyperinflationary Presentation Currency”

(4) Summary of material accounting policies

The material accounting policies presented in the consolidated financial statements are summarized below. Except for those specifically indicated, the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports of Securities Issuers (hereinafter referred to as “the Regulations”) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C. (altogether referred to “IFRS Accounting Standards” endorsed by the “FSC”).

(b) Basis of preparation

(i) Basis of measurement

Except for the following significant accounts, the consolidated financial statements have been prepared on the historical cost basis:

1) Financial instruments at fair value through profit or loss are measured at fair value;
2) Financial assets at fair value through other comprehensive income are measured at fair value; and
3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Functional and presentation currency

The functional currency of each Group entities is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan dollar (NTD), which is the Company's functional currency. All financial information presented in NTD has been rounded to the nearest thousand.

(i) Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries.

The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Intra-group balances and transactions, and any unrealized income and expenses arising from Intra-group transactions are eliminated in preparing the consolidated financial statements. Changes in the Group's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(ii) List of subsidiaries in the consolidated financial statements

The list of subsidiaries in the consolidated financial statements are as follows:

Investor	Name of subsidiary	Nature of business	Percentage of ownership		Description
			December 31, 2025	December 31, 2024
The Company	Pai-yee Investment Co., Ltd. (Pai-yee)	Investment	100 %	100 %
The Company and Pai-yee	Everlight (BVI) Co., Ltd. (Everlight BVI)	Investment	100 %	100 %
The Company	Everlight Electronics (Europe) GmbH (Everlight Europe)	Sale of LEDs	75 %	75 %
The Company	Everlight Americas, Inc. (ELA)	Sale of LEDs	99 %	99 %
The Company	Everlight Optoelectronics Korea Co., Ltd. (ELK)	Sale of LEDs	100 %	100 %
The Company	Forever Investment Co., Ltd. (Forever)	Investment	100 %	100 %
The Company	Everlight Intelligence Technology Co., Ltd. (ELIT)	Sale of LED lighting products	100 %	100 %
The Company	WOFI Leuchten GmbH (WOFI Holding)	Sale of lighting products, pendants and accessories	100 %	100 %	Note 2
The Company and Pai-yee	Everlight Electronic India Private Limited (ELI)	Sale of LEDs	100 %	100 %
The Company	Evlite Electronics Co., Ltd. (Evlite)	Sale of LEDs	100 %	100 %
The Company	Everlight Electronics Singapore Pte. Ltd. (ELS)	Sale of LEDs	100 %	100 %
The Company	Everlight Japan Corporation (ELJ)	Sale of LEDs	100 %	100 %
The Company	Everlight Electronics (Thailand) Co., Ltd. (ELTH)	Manufacture and sale of LEDs	98 %	- %	Note 7

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Investor	Name of subsidiary	Nature of business	Percentage of ownership		Description
			December 31, 2025	December 31, 2024
The Company - Pai-yee and Forever	Everson Electronics Co., Ltd. (Everson TW)	Manufacture and sale of liquid crystal displays and LED processing	67.97 %	67.97 %
Pai-yee	Everlight Optoelectronics (M) SDN. BHD. (Everlight Malaysia)	Business development and customer services	100 %	100 %
Pai-yee	Shan Yi Investment Co., Ltd. (Shan Yi)	Investment	- %	- %	Note 4
ELIT	Everlight Intelligence Technology KZ LLP (ELIT KZ)	Sale of LED lighting products	100 %	100 %
Everlight BVI	Everlight Electronics (China) Co., Ltd. and its subsidiary (Everlight China)	Manufacture of LEDs	100 %	100 %
Everlight BVI and Everlight China	Everlight Lighting (China) Co., Ltd. (Everlight Lighting China)	Sale of LEDs	100 %	100 %
Everlight BVI and Everlight China	Everlight Electronic (Guangzhou) Co., Ltd. (Everlight Electronic (Guangzhou))	Business development and customer services	100 %	100 %
Everlight BVI	Everlight Electronics (Zhongshan) Co., Ltd. (Everlight Zhongshan)	Manufacture of LED-related components	100 %	100 %
Everlight Lighting China	Zhongshan Everlight Lighting Co., Ltd. (Zhongshan Everlight Lighting)	Research and sale of LED lighting products	- %	- %	Note 5
WOFI Holding	WOFI Leuchten Wortmann & Filz GmbH (WOFI W&F GmbH)	Sale of lighting products, pendants and accessories	- %	- %	Note 1
WOFI Holding	Euro Technics Trade GmbH (ETT)	Sale of lighting products, pendants and accessories	- %	- %	Note 3
WOFI Holding	WOFI Technics Trade Limited (WTT)	Sale of lighting products, pendants and accessories	- %	100 %	Note 8
WOFI Holding	Action GmbH (Action)	Sale of lighting products, pendants and accessories	- %	- %	Note 3
WOFI Holding	WOFI Verkaufsgesellschaft mbH (WOFI VG)	Sale of lighting products, pendants and accessories	- %	- %	Note 3
WOFI Holding	Lamp For Less GmbH (LFL)	Sale of lighting products, pendants and accessories	- %	- %	Note 3
Eversion TW	Eversion Electronics (B.V.I.) Limited (Eversion BVI)	Investment	- %	100 %	Note 9
Eversion TW	VBest GmbH (VBest)	Sale of LCDs	75 %	75 %
Eversion BVI	VBest Electronics (Kunshan) Ltd. (VBest Kunshan)	Manufacture of LCDs	- %	- %	Note 6
Eversion BVI	Eversion Electronics (H.K.) Limited (Eversion HK)	Sale of LCDs	- %	100 %	Note 8

Note 1: The proceeding of that company’s bankruptcy that was formally adjudged by the court in Germany in April 2023 was still in progress, the Group lost control of that company.
Note 2: This company resolved to liquidate in August 2022.
Note 3: The proceeding of that company’s bankruptcy that was formally adjudged by the court in Germany in May 2023 was still in progress, the Group lost control of that company.
Note 4: This company was incorporated in January 2024 and was disposed in March 2024.
Note 5: This company completed its liquidation procedure in May 2024.
Note 6: This company was sold to a third party in December 2024.
Note 7: This company was incorporated in January 2025.
Note 8: This company completed its liquidation procedure in May 2025.
Note 9: This company completed its liquidation procedure in July 2025.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(d) Foreign currencies

(i) Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of the Group entities at exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date.

Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Non-monetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction. Exchange differences are generally recognized in profit or loss, except for those differences relating to an investment in equity securities designated as at fair value through other comprehensive income, which is recognized in other comprehensive income.

(ii) Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the Group's presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the Group's presentation currency at average rate. Exchange differences are recognized in other comprehensive income.

When a foreign operation is disposed to such that control, significant influence, or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of its investment in an associate of joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences arising from such a monetary item that are considered to form part of a net investment in the foreign operation are recognized in other comprehensive income.

(e) Classification of current and non-current assets and liabilities

The Group classifies the asset as current under one of the following criteria, and all other assets are classified as non current.

(i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is expected to be realized within twelve months after the reporting period; or

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iv) The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

The Group classifies the liability as current under one of the following criteria, and all other liabilities are classified as non current.

(i) It is expected to be settled in the normal operating cycle;
(ii) It is held primarily for the purpose of trading;
(iii) It is due to be settled within twelve months after the reporting period; or
(iv) The Group does not have the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.

(f) Cash and cash equivalents

Cash comprise cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits and bonds purchased under resale agreements which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are reclassified as cash equivalents.

(g) Financial instruments

Accounts receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is an accounts receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. An accounts receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

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

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

The Group shall reclassify all affected financial assets only when it changes its business model for managing its financial assets.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Fair value through other comprehensive income (FVOCI)

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

Dividend income is recognized in profit or loss on the date on which the Group's right to receive payment is established.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. Accounts receivables that the Group intends to sell immediately or in near term are measured at FVTPL; however, they are included in accounts receivable line item. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

4) Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, 'principal' is defined as the fair value of the financial assets on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs, as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

contingent events that would change the amount or timing of cash flows;
terms that may adjust the contractual coupon rate, including variable rate features;
prepayment and extension features; and
terms that limit the Group's claim to cash flows from specified assets (e.g. non-recourse features)

5) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, other receivable, leases receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Group measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

debt securities that are determined to have low credit risk at the reporting date; and

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for accounts receivable, other receivable and contract assets are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment as well as forward-looking information.

The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of 'investment grade which is considered to be BBB- or higher per Standard & Poor's, Baa3 or higher per Moody's or twA or higher per Taiwan Ratings'.

The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The Group considers a financial asset to be in default when the financial asset is more than 365 days past due or the borrower is unlikely to pay its credit obligations to the Group in full.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data:

significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than 365 days past due;

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
it is probable that the borrower will enter bankruptcy or other financial reorganization; or
the disappearance of an active market for a security because of financial difficulties.

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charge to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

6) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its statement of balance sheet but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

(ii) Financial liabilities and equity instruments

1) Classification of debt or equity

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

2) Equity instrument

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

3) Compound financial instrument

Compound financial instruments issued by the Group comprise convertible bonds denominated in NTD that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognized at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognized at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured.

Interest related to the financial liability is recognized in profit or loss. On conversion at maturity, the financial liability is reclassified to equity and no gain or loss is recognized.

4) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

5) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligation is discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

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

6) Offsetting of financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount presented in the statement of balance sheet when, and only when the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii) Derivative financial instruments and hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met. Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognized in profit or loss.

(h) Inventories

Inventories are measured at the lower of cost and net realizable value. Raw materials are stated at actual purchase costs, while the calculation of costs of work in process and finished goods uses the standard cost method and include expenditure incurred in acquiring the inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less, the estimated costs of completion and selling expenses. The differences between standard and actual costing are fully classified as operating costs.

(i) Investment in associates

Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.

Investment in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Group's share of the profit or loss and other comprehensive income of those associates, after adjustments to align the accounting policies with those of the Group, from the date on which significant influence commences until the date on which significant influence ceases.

The Group recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual proportionate share.

Gains and losses profits resulting from the transactions between the Group and an associate are recognized only to the extent of unrelated Group's interest in the associate.

When the Group’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group discontinues the use of the equity method and measures the retained interest at fair value from the date when its investment ceases to be an associate. The difference between the fair value of retained interest and proceeds from disposing, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Group accounts for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss ( or retained earnings) on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss as a reclassification adjustment ( or retained earnings) when the equity method is discontinued. If the Group’s ownership interest in an associate is reduced while it continues to apply the equity method, the Group reclassifies the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss.

(j) Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. The IFRS classifies joint arrangements into two types – joint operations and joint ventures, which have the following characteristics: (a) the parties are bound by a contractual arrangement; and (b) the contractual arrangement gives two or more of those parties joint control of the arrangement. IFRS 11 “Joint Arrangements” defines joint control as the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities (i.e. activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control.

A joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group accounts for the assets, liabilities, revenues and expense in relation to its interest in a joint operation in accordance with the IFRS Accounting Standards applicable to the particular assets, liabilities, revenues and expenses. When assessing whether a joint arrangement is a joint operation or a joint venture, the Group considers the structure and legal form of the arrangement, the terms agreed by the parties in the contractual arrangement and, when relevant, other facts and circumstances.

(k) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment.

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

When the use of a property changes such that it is reclassified as property, plant and equipment, the carrying amount at the date of reclassification becomes its cost for subsequent accounting.

(1) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(iii) Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

(iv) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows:

1) Buildings: 20~60 years
2) Building improvements: 2~35 years
3) Machinery and equipment: 1~10 years
4) Modeling equipment: 1~6 years
5) Office and other equipment: 1~11 years

Buildings and equipment constitutes mainly building, mechanical and electrical power equipment and its related facilities, etc. Each such part depreciates based on its useful life.

Depreciation methods, useful lives, and residual values are reviewed at each annual reporting date and adjusted if appropriate.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(m) Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method 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. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise of the following:

fixed payments, including in substance fixed payment;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
there are any lease modifications

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of offices and machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

For sale-and-leaseback transactions, the Group applies the requirements for determining when a performance obligation is satisfied in IFRS 15 to determine whether the transfer of an asset is accounted for as a sale of the asset. If the transfer of an asset satisfies the requirement of IFRS 15 to be accounted for as a sale of the asset, the Group measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Group recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. If the transfer of an asset does not satisfy the requirement of IFRS 15 to be accounted for as a sale of the asset, the Group will continue to recognize the transferred asset and shall recognize the financial liability equal to the transfer proceeds.

(ii) As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS 15 to allocate the consideration in the contract.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘rental income’.

(n) Intangible assets

(i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent Expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

1) Patents: the shorter of contract period and estimated useful lives
2) ERP software system: 1~10 years

Amortization method, useful lives and residual values are reviewed at each annual reporting date and adjusted if appropriate.

(o) Impairment of non financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and assets arising from employee benefits) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units (CGUs). Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(p) Provisions

A provision is recognized if, as a result of a past event, the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and those risks specific to the liability. The increase in the provision due to the passage of time is recognized as an interest expense.

A provision for warranties is recognized when the underlying products or services are sold, based on historical warranty data and the weighting of all possible outcomes against their associated probabilities.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognizes any impairment loss on the assets associated with that contract.

(q) Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group's main types of revenue are explained below.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(i) Sale of goods–electronic components

The Group manufactures and sells of LEDs, LCDs and pendants. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer's acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

The Group often offers volume discounts to its customers based on aggregate sales of goods. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate the discounts, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. A contract liability is recognized for expected volume discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales of goods are made with a credit term, which is consistent with the market practice.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(ii) Construction contracts

The Group enters into contracts to illuminating construction. Because its customer controls the asset as it is constructed, the Group recognizes revenue over time on the basis of completion of a physical proportion of the contract work. The consideration promised in the contract includes fixed and variable amounts. The customer pays the fixed amount based on a payment schedule. For some variable considerations (for example, a penalty payment calculated based on delay days), accumulated experience is used to estimate the amount of variable consideration, using the expected value method. For other variable considerations (for example, completion bonus if a construction is completed by a specified date), the Group estimates the amount of variable consideration using the most likely amount. The Group recognizes revenue only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. If the Group has recognized revenue, but not issued a bill, then the entitlement to consideration is recognized as a contract asset. The contract asset is transferred to receivables when the entitlement to payment becomes unconditional.

If the Group cannot reasonably measure its progress towards complete satisfaction of the performance obligation of a construction contract, the Group shall recognize revenue only to the extent of the costs expected to be recovered.

A provision for onerous contracts is recognized when the Group expects the unavoidable costs of performing the obligations under a construction contract exceed the economic benefits expected to be received under the contract.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

For illuminating construction, the Group offers a standard warranty to provide assurance that it complies with agreed-upon specifications, and has recognized warranty provisions for this obligation.

(iii) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(iv) Contract costs

1) Costs to fulfil a contract

If the costs incurred in fulfilling a contract with a customer are not within the scope of another Standard (for example, IAS 2 Inventories, IAS 16 Property, Plant and Equipment or IAS 38 Intangible Assets), the Group recognizes an asset from the costs incurred to fulfil a contract only if those costs meet all of the following criteria:

a) the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify;

b) the costs generate or enhance resources of the Group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future; and

c) the costs are expected to be recovered.

General and administrative costs, costs of wasted materials, labor or other resources to fulfil the contract that were not reflected in the price of the contract, costs that relate to satisfied performance obligations (or partially satisfied performance obligations), and costs for which the Group cannot distinguish whether the costs relate to unsatisfied performance obligations or to satisfied performance obligations (or partially satisfied performance obligations), the Group recognizes these costs as expenses when incurred.

(r) Government grants and government assistance

The Group recognizes an unconditional government grant related to manufacture and research in profit or loss as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant; they are then recognized in profit or loss as reduction of depreciation expenses on a systematic basis over the useful life of the asset.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(s) Employee benefits

(i) Defined contribution plans

Obligations for contributions to the defined contribution pension plans are expensed as the related service is provided.

(ii) Defined benefit plans

The net obligation of the Company and Evervision TW, in respect of the defined benefit pension plans, is calculated separately for each plan by estimating the amount of future benefit that the employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential assets for the Company and Evervision TW, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in the future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income and accumulated in retained earnings within equity. The Company and Evervision TW determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company and Evervision TW recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

The Group's subsidiaries located in China provided their employees the social insurance and housing fund by using the minimum wage as the base calculation which is in accordance with the request of the bureau of labor and social security.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(t) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

The Group has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

The Group has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation – is an income tax in the scope of IAS 12. The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

(i) temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and at the time of the transaction (i) affects neither accounting nor taxable profits (losses) and (ii) does not give rise to equal taxable and deductible temporary differences;

(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Deferred tax assets and liabilities are offset if the following criteria are met:

(i) The Group has a legally enforceable right to set off current tax assets against current tax liabilities; and

(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

1) the same taxable entity; or

2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

The surtax on unappropriated earnings of the Company and the consolidated subsidiaries in the ROC will be recognized as current tax expense in the following year after the resolution of appropriate retained earnings is approved in the shareholders' meeting.

(u) Earnings per share

The Group discloses the Company's basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding. Diluted earnings per share is calculated as the profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as convertible bonds, employee stock options, remuneration to employees not yet approved by the shareholders, and restricted employee shares.

(v) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone financial information.

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty

In preparing these consolidated financial statements, management has made judgments and estimates about the future, including climate-related risks and opportunities, that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis and are consistent with the Group's risk management and climate-related commitments where appropriate. Revisions to estimates are recognized prospectively in the period of the change and future periods.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

There are no critical judgments in applying the accounting policies that have significant effects on the amounts recognized in the consolidated financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial period is as follows:

(a) Valuation of inventory

As inventories are stated at the lower of cost or net realizable value, the Group writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future sales price. Due to the transformation in industry and market, there may be changes in the net realizable value of inventories. Please refer to note 6(f) for further description on the valuation of inventories.

(6) Explanation of significant accounts

(a) Cash and cash equivalents

	December 31, 2025	December 31, 2024
Cash, checking accounts, and demand deposits	$ 2,402,012	3,497,947
Time deposits	1,543,096	2,322,369
	$ 3,945,108	5,820,316

(i) The time deposits with maturities within three months or less from the acquisition date that are readily convertible to a known amount of cash are subject to an insignificant risk of changes in their fair value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Therefore, the time deposits are classified as cash and cash equivalents. The time deposits with maturities over three months from the acquisition date are recorded as other current financial assets amounting to $7,389,706 and $6,105,702 as of December 31, 2025 and 2024, respectively. The non-current portion of the time deposits with maturities over three months from the acquisition date as recorded as other non-current financial assets amounting to $391,484 and $402,468 as of December 31, 2025 and 2024, respectively.

(ii) Please refer to note 6(y) for the fair value sensitivity analysis of the financial assets and liabilities of the Group.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b) Financial assets and liabilities at fair value through profit or loss

	December 31, 2025	December 31, 2024
Mandatorily measured at fair value through profit or loss:
Derivative instruments not used for hedging
Derivative instruments not used for hedging	$ 2,670	2,492
Listed convertible bonds	29,475	76,192
Structured deposits and financial products	336,454	164,405
Beneficiary certificate-funds	374,805	240,105
Stocks listed on domestic markets	132,686	89,171
Unlisted stocks	85,287	74,854
	$ 961,377	647,219
Current	$ 751,248	572,365
Non-current	210,129	74,854
	$ 961,377	647,219
	December 31, 2025	December 31, 2024
Current financial liabilities held-for-trading (recorded as other current liabilities):
Derivative instruments not used for hedging	$ 6,930	10,137

(i) Listed convertible bonds are hybrid instruments. Even though it is required to record the host contract and embedded derivative separately, they are recognized as financial assets designated as at fair value through profit or loss because those investments can not be reliably measured at fair value as of the acquisition date.

(ii) If there is an increase (decrease) in equity price by 5% on the reporting date, the increase (decrease) in net income pre-tax for the years ended December 31, 2025 and 2024 will be $29,639 and $20,207, respectively. These analyses are performed on the same basis for both years and assume that all other variables remain the same.

(iii) Capital guarantee financial products (Structured deposits) held by the Group, which were recognized as financial assets mandatorily measured at fair value through profit or loss, because the interest was not based on the time value on principal amount outstanding.

(iv) The Group uses derivative financial instruments to hedge certain foreign exchange and interest risks the Group is exposed to, arising from its operating and financing activities. The following derivative instruments, without the application of hedge accounting, were classified as mandatorily measured at fair value through profit or loss and held-for-trading financial liabilities:

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

1) Forward exchange contracts

	December 31, 2025
	Contract amount (in thousands)	Currency	Maturity date
Financial assets:
Forward exchange sold USD	4,000	USD to NTD	2026.02.05~2026.02.10
Forward exchange sold USD	10,000	USD to RMB	2026.01.13~2026.02.10
Forward exchange sold EUR	1,500	EUR to USD	2026.01.29~2026.02.12
Financial liabilities:
Forward exchange sold USD	27,000	USD to NTD	2026.01.08~2026.02.12
Forward exchange sold EUR	2,000	EUR to USD	2026.01.08~2026.01.27
	December 31, 2024
---	---	---	---
	Contract amount (in thousands)	Currency	Maturity date
Financial assets:
Forward exchange sold EUR	3,250	EUR to USD	2025.01.07~2025.02.11
Financial liabilities:
Forward exchange sold USD	30,000	EUR to NTD	2025.01.07~2025.02.06
Forward exchange sold USD	11,000	USD to RMB	2026.01.09~2026.02.18

2) Other derivative financial instrument contracts

December 31, 2025
Contract amount (in thousands)		Rate	Maturity period
Financial assets:
RMB	47,000	1.60%~1.65%	2026.02.25~2026.03.27
USD	4,000	4.6% ~5.15%	2030.09.16~2030.10.15
December 31, 2024
---	---	---	---
Contract amount (in thousands)		Rate	Maturity period
Financial assets:
RMB	36,000	1.70%~2.84%	2024.04.23-2025.05.09

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(v) The Group discloses the related market risk of financial instruments, please refer to note 6(y).

(vi) The aforementioned assets had not been pledged as collateral.

	December 31, 2025	December 31, 2024
Debt instruments at fair value through other comprehensive income:
Domestic and foreign corporate bonds	$ 1,807,571	1,165,412
Subtotal	1,807,571	1,165,412
Equity instruments at fair value through other comprehensive income:
Domestic and foreign unlisted stocks	11,089	-
Subtotal	11,089	-
Total	$ 1,818,660	1,165,412

(i) Debt instruments measured at fair value through other comprehensive income

The Group has assessed that the securities are held within a business model whose objective is achieved by both collecting the contractual cash flows and selling financial assets; therefore, they have been classified as financial assets at fair value through other comprehensive income.

(ii) Equity instruments at fair value through other comprehensive income

The Group designated the investments shown above as equity securities at fair value through other comprehensive income because these equity securities are held by the Group for long-term strategic investments and are not held for trading purposes.

There were no disposals of strategic investments and transfers of any cumulative gain or loss within equity relating to these investments for the years ended December 31, 2025 and 2024.

For credit risk (including the impairment of debt instrument investments) and market risk, please refer to note 6(y).

(iii) The aforementioned assets had not been pledged as collateral.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(d) Notes and accounts receivable (including related parties)

	December 31, 2025	December 31, 2024
Notes receivable from operating activities	$ 4,970	5,944
Accounts receivable-measured as amortized cost	6,110,592	6,187,372
Installment receivables	617,804	645,886
Less: Unrealized interest income on installment receivables	(44,814)	(47,653)
	6,688,552	6,791,549
Less: Allowance for uncollectible accounts	(340,750)	(288,734)
	$ 6,347,802	6,502,815
Notes and accounts receivable, net	$ 5,234,953	5,462,892
Accounts receivable due from related parties, net	636,862	531,386
Long-term receivables (recorded as other non-current financial assets)	475,987	508,537
	$ 6,347,802	6,502,815

(i) Impairment loss on notes and accounts receivables

The Group applies the simplified approach to provide for its expected credit losses, i.e., the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, notes and accounts receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including the reasonable prediction of historical credit loss experience and the future economic situation.

The expected credit loss for notes and accounts receivable in Taiwan region was determined as follows:

	December 31, 2025
	Gross carrying amount	Weighted-average loss rate	Loss allowance
Not overdue	$ 5,018,625	0.030%	1,485
Overdue 0-90 days	5,158	6.456%	333
Overdue 91-180 days	4,401	32.379%	1,425
Overdue 181-270 days	2,312	50.995%	1,178
Overdue 271-365 days	8,523	99.542%	8,484
Overdue over one year	250,905	100%	250,905
	$ 5,289,924		263,810

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	December 31, 2024
	Gross carrying amount	Weighted-average loss rate	Loss allowance
Not overdue	$ 5,398,557	0.056%	2,998
Overdue 0-90 days	8,518	7.666%	653
Overdue 91-180 days	10,746	31.342%	3,368
Overdue 181-270 days	1,949	52.181%	1,017
Overdue 271-365 days	48	89.583%	43
Overdue over one year	275,665	100%	275,665
	$ 5,695,483		283,744

The expected credit loss for notes and accounts receivable in non-Taiwan region was determined as follows:

Credit rating	December 31, 2025
	Gross carrying amount	Weighted-average loss rate	Loss allowance
Rating A	$ 1,396,811	5.462%	76,298
Rating B	1,817	35.333%	642
	$ 1,398,628		76,940
	Gross carrying amount
Not overdue	$ 1,235,438
Overdue 0-90 days	96,499
Overdue 91-180 days	45,033
Overdue 181-270 days	19,841
Overdue 271-365 days	550
Overdue over one year	1,267
	$ 1,398,628
	December 31, 2024
Credit rating	Gross carrying amount	Weighted-average loss rate	Loss allowance
Rating A	$ 1,092,796	0.229%	2,502
Rating B	3,270	76.086%	2,488
	$ 1,096,066		4,990

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Gross carrying amount
Not overdue	$ 1,034,797
Overdue 0-90 days	51,021
Overdue 91-180 days	6,621
Overdue 181-270 days	357
Overdue 271-365 days	-
Overdue over one year	3,270
	$ 1,096,066

(ii) The movements in the allowance for impairment loss with respect to notes and accounts receivable were as follows:

	2025	2024
Balance on January 1	$ 288,734	297,385
Impairment loss recognized	90,299	39,772
Amounts written off	(40,895)	(48,385)
Effects of foreign exchange	2,612	(38)
Balance on December 31	$ 340,750	288,734

(iii) As of December 31, 2025 and 2024, the Group did not provide any notes and accounts receivable as collateral for its loans.

(e) Other current financial assets

	December 31, 2025	December 31, 2024
Time deposits with maturities over three months	$ 7,389,706	6,105,702
Other accounts receivable	128,760	144,904
	$ 7,518,466	6,250,606
	December 31, 2025	December 31, 2024
Other accounts receivable	$ 128,760	144,904
Less: Loss allowance	-	-
	$ 128,760	144,904

For the year ended December 31, 2025 and 2024, no expected credit losses on other receivables classified as financial assets were recognized by the Group.

As of December 31, 2025 and 2024, the Group did not provide any other receivables as collateral for its loans.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(f) Inventories

	December 31, 2025	December 31, 2024
Raw materials	$ 224,187	179,966
Work in progress	420,439	327,109
Finished goods	634,297	541,975
	$ 1,278,923	1,049,050

The Group recognized the details of the operating costs for 2025 and 2024 are as follows:

	2025	2024
Inventory has been sold	$ 13,360,456	14,573,114
Inventory obsolescence and write-downs (reversal gains)	(12,873)	(52,601)
Sales of scraps	(25,214)	(30,025)
Construction costs	212,901	129,239
	$ 13,535,270	14,619,727

Due to the disposal or scrapping of obsolete inventories, the factors causing the net realizable value of inventories to fall below cost no longer exist, resulting in a reversal of the allowance for valuation losses.

As of December 31, 2025 and 2024, the Group did not provide any inventories as collateral for its loans.

(g) Investments accounted for using the equity method

(i) A summary of the Group's financial information for equity-accounted investees at the reporting date was as follows:

	December 31, 2025	December 31, 2024
Associates	$ 428,608	392,388

(ii) The Group's financial information on investments accounted for using the equity method that are individually insignificant was as follows:

	December 31, 2025	December 31, 2024
The carrying amount of equity of the associates	$ 428,608	392,388
	2025	2024
Attributable to the Group:
Profit (loss) from continuing operations	$ 35,123	(1,171)
Other comprehensive income	1,097	6,911
	$ 36,220	5,740

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iii) The conversion right of convertible corporate bonds of Associates - Tekcore Co., Ltd. (Tekcore) was exercised in March 2024, and the Group recognized an increase in capital surplus of $6,082 in accordance with the equity method. The Group planned to adjust organizational structure in February 2024. The subsidiary Pai yee disposed of all the shares of Tekcore through block trade system, and Shan Yi, a subsidiary of Pai yee, purchased all the shares from the public market for $142,042, with the gain on disposal of $70,595, recorded as deferred credits. Moreover, Pai yee indirectly disposed shares of Tekcore in March 2024 through the disposal of all the shares of Shan Yi. The disposal gain amounting to $70,595 was reclassified from deferred credits to gain on disposal of investments, net. Then the Group disposed all the remaining shares of Tekcore with an amount of $136,237 through the block trade system in April 2024. The gain on disposal amounting to $89,387 was recorded as gain on disposal of investments, net.

(iv) The Group acquired 13.99% ownership in Anhui Hongming Technology Co., Ltd. (Anhui Hongming) in March 2024 by participating in a cash capital injection of Anhui Hongming through the fair value of fixed assets, inventories and intangible assets based on an appraisal report. In accordance with IFRS, such transaction was treated as assets exchange with a consideration of $271,703. The above transaction resulted in an increase of the Group's ownership in Anhui Hongming from 20% to 33.99%, which was accounted for using the equity method. As of December 31, 2024, the ownership, property, plant and equipment, inventories and intangible assets of Anhui Hongming have been settled and transferred, and a gain on disposal of intangible assets of $171,815 was recognized based on the fair value, which was recorded as other income. The gain on disposal of property, plant and equipment of $19,284 was recognized based on the fair value, which was recorded as net gains on disposal of property, plant and equipment.

(v) Pledges

As of December 31, 2025 and 2024, the Group did not provide any investment accounted for using the equity method as collaterals for its loans.

(h) Joint operation

The Group cooperated with the A3 Commerce LLP and Altocom Asia LLP in the joint operation of the government's streetlight project in the Republic of Kazakhstan. The joint operation ratio between the Group and the joint operators is 53.6%, 36.4% and 10%.

The Group cooperated with Altocom Asia LLP in the joint operation of the government's streetlight project in the Republic of Kazakhstan. The joint operation ratio between the Group and the joint operators is 53.6% and 46.4%.

In the joint operation described above, the joint contractors bear the costs incurred on a pro rata basis, share the income from the final settlement of the project, and bear the jointly incurred expenses. The Group recognizes its direct rights (and its share) to the joint operation's assets, liabilities, income and expenses, which are included in the consolidated financial statements.

Disputes over the aforementioned joint operation projects had occurred, please refer to note 9(b) for details. As of December 31, 2025 and 2024, the Group accumulatively recognized both losses of $419,657.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(i) Acquisition of subsidiaries

The Group had injected capital and incorporated Shan Yi for investment holding purpose through an investment $150,000 in Pai-yee on January 22, 2024. Shan Yi was a 100% owned subsidiary of Pai-yee.

On January 31, 2025, the Group had established 98%-owned subsidiary, Everlight Electronics (Thailand) Co., Ltd. (ELTH), whose primary business activities are the manufacturing and sale of LEDs. In June and October 2025, the Group had further injected the capital of $35,293 (THB 37,500 thousand) into ELTH. The above transactions, together with their relevant registration procedures, have been completed as of the reporting date.

(j) Loss control of subsidiaries

(i) The Group disposed all of the ownership of Shan Yi to third parties in March 2024, in order to indirectly dispose of its shares of Tekcore for a consideration of $164,505. Therefore, the Group lost the control of Shan Yi and Shan Yi was no longer to be included in the consolidated financial statements.

The Group derecognized the assets, liabilities and the related equity components of the aforementioned subsidiary less estimated liquidation cost, and recognized a gain on disposal of investment amounting to $19,526, which was recorded as net gain on disposal of investment.

The carrying amounts of assets and liabilities of subsidiary on disposal were as follows:

Cash and cash equivalents	$ 2,064
Other current assets	4
Investments accounted for using the equity method	142,911
Previous book value of subsidiary's net assets	$ 144,979

(ii) Zhongshan Everlight Lighting Co., Ltd. (Zhongshan Everlight Lighting), completed its liquidation process in May 2024. Zhongshan Everlight Lighting was no longer included in the consolidated financial statements from the date of liquidation.

(iii) The Group disposal all of its ownership in VBest Kunshan to third parties in December 2024 for a consideration of $1,177,249, resulting in the Group to lose Control over VBest Kunshan, who was no longer included in the consolidated financial statements.

The Group derecognized the assets, liabilities and the related equity components of the aforementioned subsidiary, less the estimated liquidation cost, and recognized a gain on disposal of investment accounting to $592,394, which was recorded as net gain on disposal of investment.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The carrying amounts of the assets and liabilities of subsidiary on disposal were as follows :

Cash and cash equivalents $ 638,633
Right-of-use assets 9,898
Other current assets (286)
Effect of movement in exchange rates (63,390)
Previous book value of subsidiary's net assets $ 584,855

(iv) WOFI Technics Trade Limited (WTT) and Evervision Electronics (H.K.) Limited (Evervision HK) completed their liquidation process in May 2025, resulting in both companies to be excluded in the consolidated financial statements thereafter.

(v) Evervision Electronics (B.V.I.) Limited (Evervision BVI), completed its liquidation process in July 2025, resulting in the company to be excluded in the consolidated financial statements thereafter.

(k) Property, plant and equipment

The movements in the property, plant and equipment of the Group were as follows:

	Land	Buildings and construction	Machinery and equipment	Modeling equipment	Office and other equipment	Constructions in progress and testing equip	Total
Cost or deemed cost:
Balance on January 1, 2025	$ 599,610	8,020,390	12,532,411	1,880,388	1,292,211	104,375	24,429,385
Add: additions	-	25,238	188,067	72,488	25,443	63,905	375,141
Add: reclassification	-	16,376	38,708	-	47,962	(103,046)	-
Less: sales	-	-	(408,854)	(22,780)	(3,826)	-	(435,460)
Less: retirement	-	(14,748)	(102,636)	(36,833)	(19,496)	-	(173,713)
Effect of movements in exchange rate	-	4,178	8,725	1,757	1,256	85	16,001
Balance on December 31, 2025	$ 599,610	8,051,434	12,256,421	1,895,020	1,343,550	65,319	24,211,354
Balance on January 1, 2024	$ 599,610	8,113,658	13,366,654	1,853,626	1,271,100	35,190	25,239,838
Add: additions	-	35,995	245,165	114,653	53,986	132,876	582,675
Add: reclassification	-	7,896	44,906	2,598	1,051	(64,198)	(7,747)
Less: sales	-	(217,974)	(1,238,186)	(76,643)	(32,146)	(99)	(1,565,048)
Less: retirement	-	(35,399)	(124,532)	(40,930)	(27,651)	-	(228,512)
Effect of movements in exchange rate	-	116,214	238,404	27,084	25,871	606	408,179
Balance on December 31, 2024	$ 599,610	8,020,390	12,532,411	1,880,388	1,292,211	104,375	24,429,385

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Land	Buildings and construction	Machinery and equipment	Modeling equipment	Office and other equipment	Constructions in progress and testing equip	Total
Depreciation and impairments loss:
Balance on January 1, 2025	$ -	4,838,197	11,301,783	1,585,542	928,547	-	18,654,069
Add: depreciation for the period	-	225,128	408,132	111,437	67,123	-	811,820
Less: sales	-	-	(380,086)	(11,957)	(3,450)	-	(395,493)
Less: retirement	-	(14,740)	(102,541)	(36,796)	(19,240)	-	(173,317)
Effect of movements in exchange rate	-	6,152	11,045	2,332	899	-	20,428
Balance on December 31, 2025	$ -	5,054,737	11,238,333	1,650,558	973,879	-	18,917,507
Balance on January 1, 2024	$ -	4,749,462	11,939,059	1,534,576	912,065	-	19,135,162
Add: depreciation for the period	-	234,052	468,102	124,453	57,213	-	883,820
Add: reclassification	-	-	(272)	-	272	-	-
Less: sales	-	(217,974)	(1,179,562)	(53,827)	(28,449)	-	(1,479,812)
Less: retirement	-	(16,098)	(123,589)	(40,511)	(27,080)	-	(207,278)
Effect of movements in exchange rate	-	88,755	198,045	20,851	14,526	-	322,177
Balance on December 31, 2024	$ -	4,838,197	11,301,783	1,585,542	928,547	-	18,654,069
Carrying amounts:
Balance on December 31, 2025	$ 599,610	2,996,697	1,018,088	244,462	369,671	65,319	5,293,847
Balance on January 1, 2024	$ 599,610	3,364,196	1,427,595	319,050	359,035	35,190	6,104,676
Balance on December 31, 2024	$ 599,610	3,182,193	1,230,628	294,846	363,664	104,375	5,775,316

(i) As of December 31, 2025 and 2024, the aforesaid property, plant and equipment were not pledged as collateral.

(l) Right-of-use assets

The movements in cost, depreciation and impairment loss of land, buildings, vehicles, and office equipment about leases for which the Group as a lessee were as below:

	Land	Buildings and construction	Office transportation and other equipment	Total
Cost:
Balance on January 1, 2025	$ 413,922	115,087	26,500	555,509
Additions	-	126,082	3,444	129,526
Disposal and cancellation	-	(45,480)	(13,358)	(58,838)
Effect of changes in foreign exchange rates	97	4,951	306	5,354
Balance on December 31, 2025	$ 414,019	200,640	16,892	631,551
Balance on January 1, 2024	$ 367,403	113,391	28,833	509,627
Additions	61,049	5,100	4,058	70,207
Disposal of subsidiaries and transfer out	(12,085)	-	-	(12,085)
Disposal and cancellation	(6,152)	(7,589)	(6,047)	(19,788)
Effect of changes in foreign exchange rates	3,707	4,185	(344)	7,548
Balance on December 31, 2024	$ 413,922	115,087	26,500	555,509

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Land	Buildings and construction	Office transportation and other equipment	Total
Accumulated depreciation and impairment losses:
Balance on January 1, 2025	$ 53,131	72,740	15,356	141,227
Depreciation for the period	11,561	49,391	6,000	66,952
Disposal and cancellation	-	(36,020)	(12,168)	(48,188)
Effect of changes in foreign exchange rates	107	1,024	175	1,306
Balance on December 31, 2025	$ 64,799	87,135	9,363	161,297
Balance on January 1, 2024	$ 48,887	52,606	13,127	114,620
Depreciation for the period	12,019	25,946	8,476	46,441
Disposal of subsidiaries and transfer out	(2,187)	-	-	(2,187)
Disposal and cancellation	(6,152)	(7,589)	(6,047)	(19,788)
Effect of changes in foreign exchange rates	564	1,777	(200)	2,141
Balance on December 31, 2024	$ 53,131	72,740	15,356	141,227
Carrying amount:
Balance on December 31, 2025	$ 349,220	113,505	7,529	470,254
Balance on January 1, 2024	$ 318,516	60,785	15,706	395,007
Balance on December 31, 2024	$ 360,791	42,347	11,144	414,282

The Group’s increase in right-of-use assets was mainly due to the leasing of a factory in Thailand for the year ended December 31, 2025.

(m) Short-term borrowings

The details of short-term borrowings were as follows:

	December 31, 2025	December 31, 2024
Unsecured bank loans	$ 764,049	750,000
Unused short-term credit lines	$ 14,191,231	13,759,130
Annual interest rates	1.24%~1.725%	1.64%~1.80%

(i) For information on the Group's foreign currency risk, please refer to note 6(y) for details.
(ii) The Group did not provide any assets as collateral for its loans.

(n) Provisions

(i) The carrying amounts of the provisions of the Group were as follows:

	December 31, 2025	December 31, 2024
Provisions - current	$ 159,162	214,117
Provisions - non-current	280,151	154,342
	$ 439,313	368,459

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) The movements in provisions of the Group for the years ended December 31, 2025 and 2024 were as follows:

	Onerous Contracts Provision	Warranty	Lawsuit and Others	Total
Balance on January 1, 2025	$ 98,533	7,037	262,889	368,459
Provisions made during the year	-	67,013	128,774	195,787
Provisions reversed during the year	(1,293)	-	(58,440)	(59,733)
Provision written off during the year	-	(3,650)	(55,515)	(59,165)
Effect of changes in foreign exchange rates	-	-	(6,035)	(6,035)
Balance on December 31, 2025	$ 97,240	70,400	271,673	439,313
Balance on January 1, 2024	$ 105,311	8,709	174,112	288,132
Provisions made during the year	-	6,806	79,583	86,389
Provisions reversed during the year	(6,778)	(601)	-	(7,379)
Provisions written off during the year	-	(7,877)	-	(7,877)
Effect of changes in foreign exchange rates	-	-	9,194	9,194
Balance on December 31, 2024	$ 98,533	7,037	262,889	368,459

(iii) The provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. As of December 31, 2025 and 2024, the mentioned above provisions for the onerous contract, including the amount of provisions estimated by Kazakhstan Joint Operation Project, were $89,777 for each reporting date.

(o) Other current liabilities

	December 31, 2025	December 31, 2024
Derivative instruments not used for hedging	$ 6,930	10,137
Wages and salaries payable	316,713	557,710
Guarantee deposits received	272,313	272,807
Payable to remuneration of employee and directors	752,464	481,754
Others	697,893	831,470
	$ 2,046,313	2,153,878

Refund liabilities mainly represent amounts expected to be paid to customers due to volume discounts under the sales contracts and return requests resulting from customer complaints.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(p) Long-term borrowings

The details were as follows:

	December 31, 2025
	Currency	Rate	Maturity year	Amount
Unsecured bank loans	JPY	0.00%~0.90%	2030.10	$ 5,640
Less: current portion				(1,242)
Total				$ 4,398
Unsecured long-term credit lines				$ -
	December 31, 2024
---	---	---	---	---
	Currency	Rate	Maturity year	Amount
Unsecured bank loans	JPY	0.00%~0.90%	2030.10	$ 7,050
Less: current portion				(1,290)
Total				$ 5,760
Unsecured long-term credit lines				$ -

(i) For information on the Group's interest risk and liquidity risk, please refer to note 6(y) for details.

(ii) The Group did not provide any assets as collateral for its loans as of December 31, 2025 and 2024.

(q) Lease liabilities

The carrying amounts of lease liabilities were as follows:

	December 31, 2025	December 31, 2024
Current	$ 61,066	41,309
Non-current	$ 354,315	315,510

For the maturity analysis, please refer to note 6(y).

The amounts recognized in profit or loss were as follows:

	2025	2024
Interest on lease liabilities	$ 8,492	7,240
Variable lease payments not included in the measurement of lease liabilities	$ 6,653	8,497
Expenses relating to short-term leases	$ 20,792	19,839
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	$ 540	654

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The amounts recognized in the consolidated statements of cash flows for the Group were as follows:

	2025	2024
Total cash outflow for leases	$ 99,888	76,795

(i) Real estate leases

The Group leases land and buildings for its office space and factory. The leases of land typically run for a period for 3 years to 50 years, of office space for 1 to 5 years, and of factory for 3 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases of equipment contain extension or cancellation options. The extension options held are exercisable only by the Group and not by the lessors. In which lessee is not reasonably certain to use an optional extended lease term, payments associated with the optional period are not included within lease liabilities.

(ii) Other leases

The Group leases vehicles and other equipment, with lease terms of 2 to 10 years. In some cases, the Group has options to purchase the assets at the end of the contract term.

The Group also leases office, vehicles, and IT equipment with contract terms of 1 to 5 years. These leases are short-term and leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(r) Employee benefits

(i) Defined benefit plans

The present value of the defined benefit obligations and the fair value of the plan assets of the Company and Evervision TW were as follows:

	December 31, 2025	December 31, 2024
Present value of defined benefit obligations	$ (138,975)	(130,938)
Fair value of plan assets	110,201	109,412
Net defined benefit obligations liabilities	$ (28,774)	(21,526)
Defined benefit assets (recorded as other non-current asset)	$ 17,459	16,106
Defined benefit liabilities	(46,233)	(37,632)
	$ (28,774)	(21,526)

The Company and Evervision TW make defined benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on the years of service and average salary for the six months prior to retirement.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Composition of plan assets

The Company and Evervision TW allocate pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks.

The labor pension reserve account balance of the Company and Evervision TW with Bank of Taiwan amounted to $110,201 at the end of the reporting period. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Labor Pension Fund Supervisory Committee.

(iii) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Company and Evervision TW were as follows:

	2025	2024
Defined benefit obligation at January 1	$ (130,938)	(143,086)
Benefits paid by the plan	12,494	4,380
Current service costs and interest	(5,313)	(4,913)
Remeasurement in net defined benefit assets (liabilities)	(15,218)	8,893
Curtailment loss (gain)	-	3,788
Defined benefit obligation at December 31	$ (138,975)	(130,938)

(iv) Movements of defined benefit plan assets

The movements in the fair value of the defined benefit plan assets for the Company and Evervision TW were as follows:

	2025	2024
Fair value of plan assets at January 1	$ 109,412	97,518
Contributions made	3,883	8,994
Benefits paid from the plan assets	(12,494)	(4,380)
Expected return on plan assets	2,197	1,578
Actuarial gain (loss)	7,203	8,691
Curtailment or Settlement	-	(2,989)
Fair value of plan assets at December 31	$ 110,201	109,412
Actual return on plan assets	$ 9,400	10,269

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(v) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company and Evervision TW were as follows:

	2025	2024
Current service cost	$ 2,729	2,620
Prior service cost	-	(799)
Interest cost	2,584	2,293
Expected return on plan assets	(2,197)	(1,578)
	$ 3,116	2,536

(vi) Actuarial assumptions

The following are the principal actuarial assumptions of present value of defined obligations on the financial reporting date of the Company and Evervision TW:

	December 31, 2025	December 31, 2024
Discount rate	1.625%~1.750%	2%
Future salary increasing rate	1.000%~3.500%	1.000%~3.500%

The expected allocation payment made by the Company and Evervision TW to the defined benefit plans for the one year period after the reporting date was $3,747 and $0, respectively.

The weighted-average duration of the defined benefit obligation of the Company and Evervision TW are 13.55 years and 9.93 years, respectively.

(vii) Sensitivity analysis

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation on December 31, 2025 and 2024, shall be as follows:

	Influences of defined benefit liabilities
The Company	Increased 0.25%	Decreased 0.25%
December 31, 2025
Discount rate	$ (4,180)	4,349
Future salary increasing rate	4,200	(4,050)
December 31, 2024
Discount rate	(3,877)	4,036
Future salary increasing rate	3,901	(3,775)

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Influences of defined benefit assets
Evervision TW	Increased 0.25%	Decreased 0.25%
December 31, 2025
Discount rate	$ (46)	47
Future salary increasing rate	46	(45)
December 31, 2024
Discount rate	(53)	55
Future salary increasing rate	54	(53)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for both periods.

(viii) Defined contribution plans

The Company and the Group entities in the ROC allocate 6% of each employee's monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. They also make payments for life insurance based on the Company policy. Under this defined contribution plan, the Company and the Group entities in the ROC allocate a fixed rate of salaries to the Bureau of the Labor Insurance and insurance company without additional legal or constructive obligations.

The pension costs under the defined contribution method of the Company and the consolidated subsidiaries in the ROC for 2025 and 2024 have been allocated to the Bureau of the Labor Insurance and provision of life insurance account. The subsidiaries other than the aforementioned entities recognized their pension expense, endowment insurance expense and social security expense. The total pension expenses recognized under the defined contribution plans for the years ended December 31, 2025 and 2024 were $114,930 and $125,358, respectively.

(s) Income taxes

(i) Income tax expenses

1) The amount of income tax for the years ended December 31, 2025 and 2024 was as follows:

	2025	2024
Current tax expense
Recognized during the period	$ 529,280	849,113
Adjustment for prior periods	(5,156)	(10,823)
Surtax on unappropriated earnings	41,742	6
	565,866	838,296

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	2025	2024
Deferred tax expense
Recognition and reversal of temporary differences	29,598	30,899
	29,598	30,899
Income tax expense	$ 595,464	869,195

2) The amount of income tax recognized in other comprehensive income for the years ended December 31, 2025 and 2024 was as follows:

	2025	2024
Exchange differences on translating foreign operations	$ (7,673)	(473)
Actuarial gains (losses) on defined benefit plans	(1,603)	3,517
	$ (9,276)	3,044

3) Reconciliations of income tax and profit before tax for 2025 and 2024 were as follows:

	2025	2024
Profit before income tax	$ 2,658,599	3,991,991
Income tax using the Company's domestic tax rate	$ 531,720	798,398
Effect of tax rates in foreign jurisdiction	139,058	350,904
Non-deductible expenses	(256)	(115)
Tax exemption of investment disposal income	(2,397)	(37,031)
Investment tax credits	(38,903)	(40,478)
Realized investment loss	-	(37,051)
Net gains or losses on domestic investments	(17,613)	(143,006)
Changes in unrecognized deferred tax assets and liabilities	(23,343)	(32,445)
Changes in unrecognized deferred tax assets arising from tax loss	7,837	(76,896)
Basic income tax	-	7,721
Surtax on unappropriated earnings	41,742	6
Adjustment for prior periods and others	(42,381)	79,188
	$ 595,464	869,195

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Deferred tax assets and liabilities

1) Unrecognized deferred tax assets and liabilities

Details of unrecognized deferred tax assets were as follow:

	December 31, 2025	December 31, 2024
Deductible temporary differences	$ 193,900	83,728
Tax losses	25,479	17,642
	$ 219,379	101,370

Details of unrecognized deferred tax liabilities were as follow:

	December 31, 2025	December 31, 2024
Temporary differences related to investments in subsidiaries	$ 723,999	590,484

The Group is able to control the timing of the reversal of the part of temporary differences associated with investments in subsidiaries as at December 31, 2025 and 2024. Also, the management of the Group considered it probable that the temporary differences will not be reversed in the foreseeable future. Hence, such temporary differences were not recognized under deferred tax liabilities.

Deferred tax assets are not recognized when the Group has considered that the future taxable profit will not be available against which the unused tax credits and deductible temporary differences can be utilized. Furthermore, each Group entity is subject to its income tax act, and these income tax acts allow net losses, as assessed by their tax authorities, to offset taxable income for local tax reporting purposes. The above deferred tax assets were not recognized because it is not probable that the Group will have any sufficient taxable profit in the future periods to benefit from the reduction in tax payments.

As of December 31, 2025, the Group had not recognized the prior years' loss carryforwards as deferred tax assets, and their expiry years thereof were as follows:

	Year of occurrence	Deductible amount	Tax credit amount	Expiry year
Subsidiaries in the ROC	2016	$ 6,608	1,322	2026
Subsidiaries in the PRC	2024~2025	96,628	24,157	2034~2035
		$ 103,236	25,479

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2025 and 2024 were as follows:

	Defined benefit Plans	Investment loss accounted for using equity method	Loss for market price decline and obsolete inventories	Others	Total
Deferred tax assets:
Balance on January 1, 2025	$ 7,588	386,820	28,636	251,315	674,359
Recognized in profit or loss	(89)	(110,788)	1,262	15,843	(93,772)
Recognized in other comprehensive income	1,809	-	-	8,735	10,544
Balance on December 31, 2025	$ 9,308	276,032	29,898	275,893	591,131
Balance on January 1, 2024	$ 11,804	414,121	28,946	176,325	631,196
Recognized in profit or loss	(1,090)	(27,301)	(310)	75,160	46,459
Recognized in other comprehensive income	(3,126)	-	-	(170)	(3,296)
Balance on December 31, 2024	$ 7,588	386,820	28,636	251,315	674,359
	Defined benefit Plans	Investment gain accounted for using equity method	Others	Total
Deferred tax liabilities:
Balance on January 1, 2025	$ 3,175	106,741	74,650	184,566
Recognized in profit or loss	65	(60,798)	(3,441)	(64,174)
Recognized in other comprehensive income	206	-	1,062	1,268
Balance on December 31, 2025	$ 3,446	45,943	72,271	121,660
Balance on January 1, 2024	$ 2,581	35,433	69,446	107,460
Recognized in profit or loss	203	71,308	5,847	77,358
Recognized in other comprehensive income	391	-	(643)	(252)
Balance on December 31, 2024	$ 3,175	106,741	74,650	184,566

3) Assessment of tax

The tax authorities have examined the Company's income tax returns through 2023. The income tax returns of the Group and other consolidated entities in the ROC have been examined by the tax authorities through 2023.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(t) Capital and other equities

As of December 31, 2025 and 2024, the authorized common stocks amounted to $10,000,000 (of which $400,000 were reserved for the exercising of employee share options); face value of each share is NTD $10, which means there were 1,000,000 thousand ordinary shares, in total of which 443,393 thousand shares were issued. All issued shares were paid up upon issuance.

(i) Capital surplus

The balances of capital surplus of the Company were as follows:

	December 31, 2025	December 31, 2024
Additional paid-in capital	$ 7,551,109	7,551,109
Difference between consideration and carrying amount of subsidiaries disposed	74,117	74,117
Treasury stock resulting from the redemption of convertible bonds	1,071,632	1,071,632
Share-based payment – employee stock options	119,974	119,974
Others	2,140	1,931
	$ 8,818,972	8,818,763

In accordance with the ROC Company Act, realized capital surplus can only be capitalized and distributed as share capital or distributed as cash dividends after offsetting losses. The aforementioned capital surplus include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital surplus to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

The Company’s annual shareholder’s meeting resolved to distribute cash dividends of $266,036 (0.6 New Taiwan dollars per share), by using capital surplus on June 12, 2024. The related information can be accessed through the Market Observation Post System Website.

The Company's Board of Directors resolved to distribute cash of $159,622 (respectively 0.36 New Taiwan dollars per share), by using capital surplus on March 11, 2026. The related information can be accessed through the Market Observation Post System Website.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Retained earnings

In accordance with the Company's articles, net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes, of the remaining balance, 10% is to be appropriated as legal reserve, and the Company should appropriate the same amount as special reserve from retained earnings in accordance with legal authorities and legislations. The remainder, accumulated with the unappropriated earnings of prior years, is distributed as additional dividends to shareholders, which cannot be lower than 50% of the total accumulated unappropriated earnings. The distribution rate is based on the proposal of the Company's board of directors and should be approved in the shareholders' meeting.

Cash dividends cannot be lower than 10% of the total cash and stock dividends. However, stock dividends instead of cash dividends are declared if the cash dividends per share are less than NT$0.2 (dollars).

1) Legal reserve

When a company incurs no loss, it may, pursuant to a resolution by a shareholders' meeting, distribute its legal reserve by issuing new shares or by distributing cash, and only the portion of legal reserve which exceeds 25% of capital may be distributed.

2) Special reserve

By choosing to apply the exemptions granted under IFRS 1 "First-time Adoption of International Financial Reporting Standards" during the Company's first-time adoption of the International Financial Reporting Standards approved by the Financial Supervisory Commission (IFRSs), the unrealized land revaluation increment and foreign currency translation adjustments under shareholders' equity shall be reclassified as retained earnings at the adoption date. According to the regulations, the retained earnings increased by $283,890 on the adoption date. In accordance with the requirements issued by the FSC, an increase in retained earnings due to the first-time adoption of the IFRSs shall be reclassified as a special reserve, and when the relevant assets were used, disposed of, or reclassified, this special reserve shall be reserved as distributable earnings proportionately. As of December 31, 2025 and 2024, the carrying amount of special reserve amounted to $259,694 and $283,890, respectively.

In accordance with the ruling issued by the FSC, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of the carrying amount of other shareholders' equity and the special earnings reserve. The amount to be reclassified to special reserve shall be a portion of current-period earnings plus other line items in the retained earnings movements and undistributed prior-period earnings. A portion of the undistributed prior-period earnings shall be reclassified as special reserve (which does not qualify for earnings distribution) to account for the cumulative changes to other shareholders' equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

3) Earnings distribution

Based on a resolution of annual shareholder's meeting held on June 11, 2025 and June 12, 2024, the appropriations of dividends from the earnings distribution for 2024 and 2023 were as follows:

	2024		2023
	Amount per share (dollars)	Total amount	Amount per share (dollars)	Total amount
Dividends distributed to common shareholders:
Cash	$ 5.31	2,354,417	2.60	1,152,822

On March 11, 2026, the Company's Board of Directors resolved to appropriate the 2025 earnings. These earnings were appropriated as follows:

	2025
	Amount per share (dollars)	Total amount
Cash	$ 4.14	1,835,647

The related information of the abovementioned earnings distribution can be accessed from the Market Observation Post System website.

(iii) Other equity (net of tax)

	Foreign exchange differences arising from foreign operation	Unrealized gain (loss) from financial assets measured at fair value through other comprehensive income	Total
Balance of January 1, 2025	$ (628,437)	(26,971)	(655,408)
Exchange differences on foreign operations	(39,763)	-	(39,763)
Disposal of other equity in foreign operations reclassified to profit or loss	65,753	-	65,753
Exchange differences on investments accounted for using equity method	1,097	-	1,097
Unrealized gains or losses on financial assets measured at fair value through other comprehensive income		(184)	(184)
Balance on December 31, 2025	$ (601,350)	(27,155)	(628,505)

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Foreign exchange differences arising from foreign operation	Unrealized gain (loss) from financial assets at fair value through other comprehensive income	Total
Balance of January 1, 2024	$ (858,886)	16,043	(842,843)
Exchange differences on foreign operations	223,538	-	223,538
Exchange differences on investments accounted for using equity method	6,911	-	6,911
Unrealized gains or losses from financial assets measured at fair value through other comprehensive income	-	(40,882)	(40,882)
Cumulative gains (losses) reclassified to profit or loss on disposal of investments in debt instrument at fair value through other comprehensive income		(2,132)	(2,132)
Balance on December 31, 2024	$ (628,437)	(26,971)	(655,408)

(u) Earnings per share

For the years ended December 31, 2025 and 2024, the Group's basic and diluted earnings per share were calculated as follows:

	2025	2024
Basic earnings per share:
Profit attributable to ordinary shareholders of the Company	$ 2,038,257	2,944,495
Weighted-average number of outstanding ordinary shares (thousands)	443,393	443,393
Basic earnings per share (dollars)	$ 4.60	6.64
Diluted earnings per share:
Profit attributable to ordinary shareholders of the Company (basic) (equal to profit attributable to ordinary shareholders of the Company (diluted))	$ 2,038,257	2,944,495
Weighted-average number of outstanding ordinary shares (thousands) (basic)	443,393	443,393
Dilutive effect of potential ordinary shares
Employee stock bonus	6,311	5,893
Weighted-average number of outstanding ordinary shares (thousands) (diluted)	449,704	449,286
Diluted earnings per share (dollars)	$ 4.53	6.55

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(v) Revenue from contracts with customers

(i) Disaggregation of revenue

	2025
	LED	LCD	Illumination	Others	Total
Primary geographical markets:
Asia	$ 16,392,778	-	1,051,865	94,769	17,539,412
Europe	1,379,878	-	-	377	1,380,255
Others	720,288	-	-	-	720,288
	$ 18,492,944	-	1,051,865	95,146	19,639,955
Major products
Construction revenue	$ -	-	243,464	-	243,464
Sales revenue	18,492,944	-	808,401	95,146	19,396,491
	$ 18,492,944	-	1,051,865	95,146	19,639,955
	2024
	LED	LCD	Illumination	Others	Total
Primary geographical markets:
Asia	$ 17,726,546	90,714	761,007	83,013	18,661,280
Europe	1,289,733	175,978	-	-	1,465,711
Others	672,963	172,949	-	-	845,912
	$ 19,689,242	439,641	761,007	83,013	20,972,903
Major products
Construction revenue	$ -	-	251,187	-	251,187
Sales revenue	19,689,242	439,641	509,820	83,013	20,721,716
	$ 19,689,242	439,641	761,007	83,013	20,972,903

(ii) Contract balance

	December 31, 2025	December 31, 2024	January 1, 2024
Notes receivable	$ 4,970	5,944	4,201
Accounts receivable (including long-term receivables)	6,683,582	6,785,605	5,650,851
Less: allowance for impairment	(340,750)	(288,734)	(297,385)
	$ 6,347,802	6,502,815	5,357,667
Contract assets-illumination	$ 123,618	114,421	145,408
Less: allowance for impairment	(6,910)	(6,910)	(6,910)
	$ 116,708	107,511	138,498
Non-current contract liabilities-illumination	$ 44	45	48
Current contract liabilities-illumination	$ 28,210	57,996	37,268
Current contract liabilities-advance receipt	$ 4,227	22,749	17,370

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For details on accounts receivable and allowance for impairment, please refer to note 6(d).

The amount of revenue recognized for the years ended December 31, 2025 and 2024 that was included in the contract liability balance at the beginning of the period were $6,893 and $12,436, respectively.

The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(w) Remuneration of employees and directors

On June 11, 2025, the Company resolved at the shareholders’ meeting to amend its Articles of Incorporation. According to the amended Articles, if the Company has profit in a given fiscal year, the Company shall allocate 6% to 12% as remuneration to employees and remuneration to directors not exceeding 1%. The recipients of the employee remuneration, whether in the form of shares or cash, may include employees of subsidiaries who met certain specific requirements, which were formulated by the Board of Directors. The amount of employees’ compensation mentioned above includes an allocation of no less than 20%, as required by the Securities and Exchange Act, designated for distribution to grassroots employees.

Prior to the amendment, the Articles of Incorporation stipulated that, if the Company has profit in a given fiscal year, the Company shall allocate 6% to 12% as remuneration to employees and remuneration to directors not exceeding 1%. However, if the Company has accumulated deficits, the after-tax earnings shall first be used to offset such deficits. The recipients of the employee remuneration, whether in the form of shares or cash, may include employees of subsidiaries who met certain specific requirements, which were formulated by the Board of Directors.

However, if the Company has accumulated deficits, the after-tax earnings shall first be used to offset such deficits before allocating employee and director remuneration in accordance with the aforementioned percentages.

The remuneration to employees amounted to $284,560 (including base-level employee remuneration) and $435,952, and the remuneration to directors amounted to $28,078 and $39,864, in 2025 and 2024, respectively. These amounts are calculated using the Company's profit before tax without the remuneration to employees and directors for the period, and are determined using the earnings allocation method which was stated under the Company's article. These remunerations are expensed under operating expenses for the period. The related information can be accessed from the Market Observation Post System website. If the board of directors decides to pay the employees compensation in stock, the basis for calculating the number of shares will be the closing price one day before the shareholders' meeting. The amounts, as stated in the consolidated financial statements are identical to those of the actual distributions for 2025 and 2024.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(x) Non-operating income and expenses

The interest income and finance costs in 2025 and 2024 were as follows:

(i) Interest income

	2025	2024
Cash in banks	$ 215,828	197,681
Corporate bonds	53,853	52,889
Other	8,001	8,686
	$ 277,682	259,256

(ii) Finance costs – interest expenses

	2025	2024
Loans	$ 23,405	10,063
Lease liabilities	8,492	7,240
Other	-	2
	$ 31,897	17,305

(y) Financial Instruments

(i) Credit risk

1) Exposure to credit risk

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk.

2) Credit risk of receivables and debt securities

For credit risk and credit impairment of note and accounts receivable, please refer to note 6(d).

For credit impairment of other receivables, please refer to note 6(e).

Investment in debt instruments measured at fair value through other comprehensive income are listed debt securities.

All of these financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12-month expected credit losses.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Liquidity Risk

The following are the contractual maturities of financial liabilities, including estimated interest payments.

	Carrying Amount	Contractual cash flows	Within 1 year	1 ~ 2 years	Over 2 years
December 31, 2025
Non-derivative financial liabilities:
Short-term borrowings	$ 764,049	(765,643)	(765,643)	-	-
Notes and accounts payable (including related parties)	4,272,433	(4,272,433)	(4,272,433)	-	-
Payables on construction and equipment	139,891	(139,891)	(139,891)	-	-
Other payables (recorded as other current liabilities)	1,740,523	(1,740,523)	(1,740,523)	-	-
Lease liabilities (including current and non-current)	415,381	(517,526)	(68,364)	(60,090)	(389,072)
Long-term borrowings (including current portion)	5,640	(6,120)	(1,225)	(1,214)	(3,681)
Guarantee deposits received (recorded as other current and non-current liabilities)	273,493	(273,493)	(272,313)	-	(1,180)
Derivative financial liabilities:
Forward exchange contracts not used for hedging:	6,930
Outflow	-	(922,649)	(922,649)	-	-
Inflow	-	916,369	916,369	-	-
	$ 7,618,340	(7,721,909)	(7,266,672)	(61,304)	(393,933)
December 31, 2024
Non-derivative financial liabilities:
Short-term borrowings	$ 750,000	(753,367)	(753,367)	-	-
Notes and accounts payable (including related parties)	4,221,526	(4,221,526)	(4,221,526)	-	-
Payables on construction and equipment	211,850	(211,850)	(211,850)	-	-
Other payables (recorded as other current liabilities)	1,846,843	(1,846,843)	(1,846,843)	-	-
Lease liabilities (including current and non-current)	356,819	(459,517)	(47,621)	(29,185)	(382,711)
Long-term borrowings (including current portion)	7,050	(7,234)	(1,352)	(1,236)	(4,646)
Guarantee deposits received (recorded as other current and non-current liabilities)	284,621	(284,621)	(272,807)	-	(11,814)
Derivative financial liabilities:
Forward exchange contracts not used for hedging:	10,137
Outflow	-	(1,344,021)	(1,344,021)	-	-
Inflow	-	1,333,917	1,333,917	-	-
	$ 7,688,846	(7,795,062)	(7,365,470)	(30,421)	(399,171)

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Exposure to foreign currency risk

The Group's significant financial assets and liabilities exposure to foreign currency risk was as follows:

	December 31, 2025			December 31, 2024
	Foreign currency (in thousands)	Exchange rate	TWD	Foreign currency (in thousands)	Exchange rate	TWD
Financial assets
Monetary items
USD	$ 194,860	USD/TWD =31.4380	6,126,009	157,413	USD/TWD =32.7810	5,160,156
RMB	403,776	RMB/TWD =4.4959	1,815,337	354,686	RMB/TWD =4.4910	1,592,895
HKD	371,584	HKD/TWD =4.0397	1,501,088	402,393	HKD/TWD =4.2201	1,698,139
Financial liabilities
Monetary items
USD	21,110	USD/TWD =31.4380	663,656	18,069	USD/TWD =32.7810	592,320
USD	17,454	USD/RMB =6.9926	548,719	19,058	USD/RMB =7.2993	624,740
RMB	1,005,591	RMB/TWD =4.4959	4,521,037	914,821	RMB/TWD =4.4910	4,108,461
USD	6,447	USD/HKD =7.7823	203,624	8,221	USD/HKD =7.7679	269,493

2) Sensitivity analysis

The Group's exposure to foreign currency risk of monetary items arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, notes and accounts receivable, other receivables, financial assets at fair value through other comprehensive income, loans and borrowings, financial assets at fair value through profit or loss, accounts payables and other payables that are denominated in foreign currency. A 5% of appreciation (depreciation) of each major foreign currency against the Group's functional currency as of December 31, 2025 and 2024 would have increased (decreased) the profit before tax by $230,910 for the year ended December 31, 2025, and increased (decreased) the profit before tax by $205,627 for the year ended December 31, 2024. The analysis is performed on the same basis for both periods.

3) Exchange gains and losses of monetary items

As the Group deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2025 and 2024, the net foreign exchange (losses) gains, including both realized and unrealized, amounted to $(106,781) and $303,008, respectively.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(iv) Interest rate analysis

The details of financial assets and liabilities exposed to interest rate risk were as follows:

	Carrying amount
	December 31, 2025	December 31, 2024
Variable rate instruments:
Financial assets	$ 2,617,651	3,698,151
Financial liabilities	-	-
	$ 2,617,651	3,698,151

The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the assets and liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of assets and liabilities outstanding at the reporting date was outstanding throughout the year. The rate of change is expressed as the interest rate increases or decreases by 0.25% when reporting to management internally, which also represents management of the Group's assessment on the reasonably possible interval of interest rate change.

If the interest rate had increased or decreased by 0.25%, the effects of the net profit before tax for the years ended December 31, 2025 and 2024, were as follows, which would have mainly resulted from cash in banks with variable interest rates.

	2025	2024
Increase by 0.25%	$ 6,544	9,245
Decrease by 0.25%	(6,544)	(9,245)

(v) Fair value

1) The kinds of financial instruments and fair value

The fair value of the Group's financial assets and liabilities at fair value through profit or loss, and financial assets at fair value through other comprehensive income are measured on a recurring basis. The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. They shall not include fair value information of the financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value, and lease liabilities, disclosure of fair value information is not required.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	December 31, 2025
	Book value	Fair value
		Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss:
Derivative financial assets	$ 2,670	-	2,670	-	2,670
Non-derivative financial assets mandatorily measured at fair value through profit or loss	958,707	536,966	381,811	39,930	958,707
	961,377
Financial assets at fair value through other comprehensive income:
Foreign and domestic unlisted stocks	11,089	-	-	11,089	11,089
Foreign and domestic corporate bonds	1,807,571	1,807,571	-	-	1,807,571
	1,818,660
Financial assets measured at amortized cost:
Cash and cash equivalents	3,945,108	-	-	-	-
Notes and accounts receivable (including related parties)	5,871,815	-	-	-	-
Other current financial assets	7,518,466	-	-	-	-
Other non-current financial assets	954,028	-	-	-	-
	18,289,417
	$ 21,069,454
Financial liabilities at fair value through profit or loss:
Derivative financial liabilities (recorded as other current liabilities)	$ 6,930	-	6,930	-	6,930
Financial liabilities measured at amortized cost:
Short-term borrowings	764,049	-	-	-	-
Notes and accounts payable (including related parties)	4,272,433	-	-	-	-
Payables on construction and equipment	139,891	-	-	-	-
Lease liabilities	415,381	-	-	-	-
Other current payables (recorded as other current liabilities)	1,740,523	-	-	-	-
Long-term borrowings (including current portion)	5,640	-	-	-	-
Guarantee deposits received (recorded as other current and non-current liabilities)	273,493	-	-	-	-
	7,611,410
	$ 7,618,340

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	December 31, 2024
	Book value	Fair value
		Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss:
Derivative financial assets	$ 2,492	-	2,492	-	2,492
Non-derivative financial assets mandatorily measured at fair value through profit or loss	644,727	405,468	209,267	29,992	644,727
	647,219
Financial assets at fair value through other comprehensive income:
Foreign and domestic corporate bonds	1,165,412	1,165,412	-	-	1,165,412
	1,165,412
Financial assets measured at amortized cost:
Cash and cash equivalents	5,820,316	-	-	-	-
Notes and accounts receivable (including related parties)	5,994,278	-	-	-	-
Other current financial assets	6,250,606	-	-	-	-
Other non-current financial assets	1,002,183	-	-	-	-
	19,067,383
	$ 20,880,014
Financial liabilities at fair value through profit or loss:
Derivative financial liabilities (recorded as other current liabilities)	$ 10,137	-	10,137	-	10,137
Financial liabilities measured at amortized cost:
Short-term borrowings	750,000	-	-	-	-
Notes and accounts payable (including related parties)	4,221,526	-	-	-	-
Payables on construction and equipment	211,850	-	-	-	-
Lease liabilities	356,819	-	-	-	-
Other current payables (recorded as other current liabilities)	1,846,843	-	-	-	-
Long-term borrowings (including current portion)	7,050	-	-	-	-
Guarantee deposits received (recorded as other current and non-current liabilities)	284,621	-	-	-	-
	7,678,709
	$ 7,688,846

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

2) Fair value valuation technique of financial instruments not measured at fair value

The Group estimates instruments that are not measured at fair value, by method and presumption as follows:

a) The book value of financial assets and liabilities at amortized cost are similar to their fair value.

3) Fair value valuation technique of financial instruments measured at fair value

a) The fair value of financial assets and liabilities traded in active markets, including listed stocks, fund beneficiary certificates, emerging stocks and listed convertible bonds, etc., is based on quoted market prices.

b) The fair value of unlisted shares without an active market is assessed by using the net asset value per share approach, P/E ratio approach, and P/B ratio approach.

c) The fair value of derivative instruments is based on quoted prices. When quoted prices are unavailable, the fair value is estimated by adapting a valuation technique using the estimates and hypothesis referred from those used by financial instruments, or the binomial options pricing model which is generally accepted by the market participants.

d) For all other financial assets and financial liabilities, the fair value is determined using a discounted cash flow analysis based on expected future cash flows.

4) There were no transfers from one level to another of the Group for the years ended December 31, 2025 and 2024.

5) The following table shows the reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy of the Group for the years ended December 31, 2025 and 2024:

	Financial assets at fair value through profit or loss – non-derivative mandatorily measured at fair value through profit or loss	Financial assets at fair value through other comprehensive income – unquoted equity instruments
Balance on January 1, 2025	$ 29,992	-
In profit (loss)	9,938	-
In other comprehensive income	-	1,089
Purchased	-	10,000
Balance on December 31, 2025	$ 39,930	11,089

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

	Financial assets at fair value through profit or loss – non-derivative mandatorily measured at fair value through profit or loss	Financial assets at fair value through other comprehensive income – unquoted equity instruments
Balance on January 1, 2024	$ -	3,503
In profit (loss)	(8)	-
In other comprehensive income	-	(3,503)
Purchased	30,000	-
Balance on December 31, 2024	$ 29,992	-

For the nine months ended December 31, 2025 and 2024, the total gains and losses that were included in other gains and losses and unrealized gains (losses) on financial assets at fair value through other comprehensive income were as follows:

	2025	2024
Total gains and losses recognized:
In profit or loss (recorded as other gains and losses)	$ 9,938	-
In other comprehensive income (recorded as unrealized gains (losses) from financial assets at fair value through other comprehensive income)	$ 1,089	(3,503)

6) The quantified information for significant unobservable inputs (Level 3) used in fair value measurement

The Group's financial instruments that use level 3 inputs to measure the fair values include financial assets measured at fair value through profit or loss – equity securities, financial assets measured at fair value through other comprehensive income – equity securities, and derivative financial instruments.

Most of fair value measurements of the Group which are categorized as equity investment instruments into level 3 have several significant unobservable inputs. Significant unobservable inputs of equity instruments without quoted prices are independent of each other.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The quantitative information about significant unobservable inputs was as follows:

Item	Valuation technique	Significant unobservable inputs	Inter-relationships between significant unobservable inputs and fair value
Financial assets at fair value through other comprehensive income - equity investments without an active market	Guideline Company method - Price-Book Method	·Price-to-Book ratio (P/B Ratio) (8.04 on December 31, 2025)	·The higher the P/B ratio, the higher the fair value.
		·Lack of marketability discount rate (75% on December 31, 2025)	·The higher the lack of marketability discount, the lower the fair value.
Financial assets at fair value through profit or loss	Net Asset Value Method	·Net Asset Value	·Not applicable.

7) Fair value measurements in Level 3 - sensitivity analysis of reasonably possible alternative assumptions

The Group's fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using level 3 inputs, if the valuation parameters changed, the impacts on profit or loss or other comprehensive income were as follows:

	Input	Variation	Impacts of fair value changes on other comprehensive income
			Advantageous change	Disadvantageous change
December 31, 2025
Financial assets at fair value through other comprehensive income	P/B ratio	5%	$ 548	(552)
Financial assets at fair value through other comprehensive income	Lack of marketability discount	5%	$ 1,661	(1,689)
December 31, 2024
Financial assets at fair value through other comprehensive income	P/B ratio	5%	$ -	-
Financial assets at fair value through other comprehensive income	Lack of marketability discount	5%	$ -	-

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The table above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(z) Financial risk management

(i) Briefings

The Group is exposed to the following risks arising from financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

In this note expressed the information on risk exposure and objectives, policies and process of risk measurement and management. For detailed information, please refer to the related notes of each risk.

(ii) Structure of risk management

The Group's finance department provides business services for the overall internal department. It sets the objectives, policies and processes for managing the risk and the methods used to measure the risk arising from both the domestic and international financial market operations.

The Group minimizes the risk exposure through derivative financial instruments. The Board of Directors regulated the use of derivative and non-derivative financial instruments in accordance with the Group's policy about risks arising from financial instruments such as currency risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investments of excess liquidity. The internal auditors of the Group continually review the amount of the risk exposure and the compliance with the Group's policies. The Group has no transactions in financial instruments (including derivative financial instruments) for the purpose of speculation.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities.

1) Accounting receivable and other receivables

The Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Group's review includes external ratings, when available, and bank references in some cases. Credit limits that are established for each customer are reviewed periodically. Customers that fail to meet the Group's benchmark creditworthiness may transact with the Group only on a prepayment basis.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group's customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk. The Group's customers are from many different industries. The Group does not concentrate on a specific customer, thus, there should be no concern on the significant concentrations of accounts receivable credit risk. In order to mitigate account receivable credit risk, the Group constantly assesses the financial status of the customers.

The Group set the allowance for bad debt account to reflect the estimated losses for accounts receivables, other receivables, and investments. The allowance for bad debt account consists of specific losses relating to individually significant exposure and the unrecognized losses arising from similar assets groups. The allowance for bad debt account is recognized based on historical collection records of similar financial assets.

2) Investment

The credit risk exposure in the bank deposits, fixed income investments and other financial instruments are measured and monitored by the Group's finance department. Since the Group's transaction counterparties and contractually obligated counterparties are banks, investment grade above financial institutions, and corporate organizations with good credit standing, there are no compliance issues, and therefore, there is no significant credit risk.

3) Guarantees

The Group's policy to provide financial guarantees is only permissible to subsidiaries. As of December 31, 2025 and 2024, the Group did not provide any endorsements or guarantees.

(iv) Liquidity risk

The Group manages sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group's management supervises the banking facilities to ensure they are in compliance with the terms of the loan agreements.

The borrowings from the bank form an important source of liquidity for the Group. Please refer to notes 6(m) and 6(p) for the unused credit lines of short-term and long-term borrowings as of December 31, 2025 and 2024.

(v) Market risk

Market risk is the risk that will affect the Group's income or the value of its financial instruments arising from the changes in market prices, such as foreign exchange rates, interest rates and equity prices. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risks.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

1) Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Group's entities, primarily TWD, EUR, USD, HKD, and RMB, etc. The currencies used in these transactions are denominated in TWD, HKD, EUR, USD, and RMB.

The Group hedges accounts receivable denominated in a foreign currency. The Group uses forward exchange contracts to hedge its currency risk, with a maturity of less than one year from the reporting date.

2) Interest rate risk

The Group borrows funds on fixed and floating interest rate; and the Group bears the cash flow risks related to floating rate loans.

3) Other market value risk

The Group is exposed to equity price risk arising from listed stock investments. This is a strategic investment and is not held for trading. The Group does not actively trade in these investments. The material investments of investment portfolio are managed individually and their purchase decision must be approved by the finance department.

(aa) Capital management

The Group maintains the capital based on the current operating characteristics of the industry, future development, and changes in external environment, to assure there are financial resources and operating plans to support working capital, capital expenditures, research and development expenses, debt redemptions and dividend payments, and so on. The management decides the optimized capital by using appropriate debt-to-equity ratio, interest-bearing liabilities-to-equity ratio or other financial ratios. To maintain a strong capital base, the Group enhances the return on equity by optimizing debt-to-equity ratio. The Group's debt-to-equity ratio at the end of the reporting date was as follows:

	December 31, 2025	December 31, 2024
Total liabilities	$ 9,089,318	9,003,097
Total equity	20,509,916	20,776,683
Interest-bearing liabilities	769,689	757,050
Debt-to-equity ratio	44 %	43 %
Interest-bearing liabilities to equity ratio	4 %	4 %

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ab) Investing and financial activities not affecting current cash flow

The Group's investing and financing activities which did not affect the current cash flow in the year ended December 31, 2025 and 2024, were acquisition of right-of-use assets by lease; please refer to note 6(l). Reconciliations of liabilities arising from financing activities were as follows:

	January 1, 2025	Cash flow	Non-cash changes		December 31, 2025
			Increase (decrease)	Foreign exchange movement
Short-term borrowings	$ 750,000	14,049	-	-	764,049
Long-term borrowings	7,050	(1,192)	-	(218)	5,640
Lease liabilities	356,819	(63,411)	118,051	3,922	415,381
Guarantee deposits received (including current and non-current)	284,621	(11,128)	-	-	273,493
Total liabilities from financing activities	$ 1,398,490	(61,682)	118,051	3,704	1,458,563
			Non-cash changes
	January 1, 2024	Cash flows	Increase	Foreign exchange movement	December 31, 2024
Short-term borrowings	$ 250,000	500,000	-	-	750,000
Long-term borrowings	8,628	(1,191)	-	(387)	7,050
Lease liabilities	324,690	(40,565)	70,207	2,487	356,819
Guarantee deposits received (including current and non-current)	252,031	32,590	-	-	284,621
Total liabilities from financing activities	$ 835,349	490,834	70,207	2,100	1,398,490

(7) Related-party transactions

(a) Names and relationship with related parties

The following are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

Name of related party	Relationship with the Group
Tekcore Co., Ltd. (Tekcore)	The Group's associate (Note 1)
Anhui Hongming Technology Co., Ltd. and its subsidiaries (Anhui Hongming)	The Group's associate
LeadTech Electronics Inc. (LeadTech)	The Group's associate

Note 1: The Group disposed of all the shares of Tekcore since Tekcore re-elected the directors in shareholders' meeting on June 19, 2024. Therefore, Tekcore is no longer a related-party of the Group, and the amount listed above was from January 1 to June 19, 2024.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b) Significant related party transactions

(i) Sales

The amounts of significant sales by the Group to related parties were as follows:

	2025	2024
Associates	$ 1,207,243	1,061,173

There were no significant differences in the collection periods and sales prices between the related parties and other customers, and the collection term was 60 to 165 days. There were no significant differences in the payment term between the related parties and other customers.

(ii) Purchase

The amounts of significant purchases by the Group from related parties were as follows:

	2025	2024
Associates	$ 398,030	621,703

The payment term was 90 to 150 days for the related parties and third-party suppliers.

The finished goods partially sold to Anhui Hongming by the Group were repurchased after being processed and manufactured by Anhui Hongming, at the purchase amount of $284,219 and $198,386, which had been eliminated in the financial statements, and was not regarded as sales and purchase transactions, in 2025 and 2024, respectively.

(iii) Accounts receivable due from related parties

The accounts receivable due from related parties were as follows:

		December 31, 2025	December 31, 2024
Accounts receivable	Associates	$ 636,862	531,386
Other receivable	Associates	-	1,027
		$ 636,862	532,413

(iv) Property transactions

The Group acquired 13.99% ownership in Anhui Hongming Technology Co., Ltd. (Anhui Hongming) in March 2024 by participating in a cash capital injection of Anhui Hongming through the fair value of fixed assets, inventories and intangible assets based on an appraisal report. Such transaction was treated as assets exchange with a consideration of $271,703. As of December 31, 2024, the ownership, property, plant and equipment, inventories and intangible assets of Anhui Hongming have been settled and transferred, and a gain on disposal of intangible assets of $171,815 was recognized based on the fair value, which was recorded as other income. The gain on disposal of property, plant and equipment of $19,284 was recognized based on the fair value, which was recorded as net gains on disposal of property, plant and equipment.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(v) Accounts payable to related parties

The accounts payable to related parties were as follows:

	December 31, 2025	December 31, 2024
Associates	$ 389,231	225,533

Key management personnel compensation comprised:

	2025	2024
Short-term employee benefits	$ 65,837	73,908
Others	412	296
	$ 66,249	74,204

There are no termination benefits and other long-term benefits.

(8) Pledged assets

The carrying amounts of the pledged assets were as follows:

Assets	Objectives	December 31, 2025	December 31, 2024
Time deposits (recorded as other non-current financial assets)	Guarantee for contract grant and guarantee for construction contracts	$ 166,689	177,918

(9) Commitments and contingencies

(a) Litigation with Nichia Corporation (Nichia)

(i) Patent Case No. DE69702929

On April 18, 2012, Nichia filed a lawsuit against the Company and its subsidiary, Everlight Europe, at the Dusseldorf District Court of Germany for infringement of Nichia's German patent DE69702929, concerning the white light LEDs using specific phosphors, wherein the district court ruled in favor of Nichia on September 3, 2013. Dissatisfied with the decision, the Group appealed to the Dusseldorf Higher Regional Court of Germany on October 2, 2013, in which it lost the case on December 22, 2016. In response to this, Group filed an appeal to the German Federal Supreme Court on January 18, 2017. However, since the patent DE69702929 expired on July 29, 2017, and thus, had no impact on the existing products of the Group. In addition, the lawsuit only targeted a few old products of the Company and its subsidiary, Everlight Europe. The Group had assessed that there was no significant impact on the current operation and product sales, and to avoid the waste of judicial resources caused by frivolous lawsuits, the Group had withdrawn the lawsuit from the German Federal Supreme Court.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

On March 12, 2025, Nichia filed a lawsuit against the Company and its subsidiary, Everlight Europe, to the Dusseldorf District Court of Germany for the damage of infringement of Nichia's European patent EP0936682 (German patent number DE69702929), requesting for the compensation of EUR2,500 thousand. The damage dispute is an extension of said patent lawsuit between the Group and Nichia in Germany from 2012 to 2017. On March 31, 2025, the Group received a lawsuit notice from the German regional court, wherein it appointed a lawyer to handle the case, which was still in progress as of the reporting date. After evaluating the final judgment and the amount of the possible claims, the Group estimated a liability provision of EUR1,900 thousand (approximately $68,190), which will not have a significant impact on the operations of the Group.

In addition, Nichia Corporation filed a damage compensation lawsuit with the Dusseldorf District Court in Germany on July 15, 2021, against WOFI, alleging infringement of patent EP0936682 (DE69702929). On October 31, 2022, the Dusseldorf District Court rendered a first-instance judgment requiring WOFI to pay Nichia Corporation damages in the amount of EUR 3,225 thousand. WOFI subsequently filed an appeal with the Higher Regional Court Dusseldorf on November 30, 2022.

(ii) Patent Case No. EP2276080

In September 2015, Nichia filed a lawsuit against the Company’s sub-subsidiary, WOFI, for infringement of patent EP2276080 with the District Court of Dusseldorf, Germany. On December 15, 2016, the District Court of Dusseldorf, Germany, ruled against WOFI in the first instance. On January 12, 2017, WOFI filed an appeal with the High Court of Justice in Dusseldorf, Germany. In October 2017, a ruling notice had been received from the European Patent Office, which found that the original scope of patent EP2276080 was invalid and that the revised scope of the patent was valid. However, in April 2022, patent EP2276080 was judged valid by the European Patent Office and the infringement lawsuit was reopened. On December 16, 2022, the High Court of Justice in Dusseldorf, Germany ruled against WOFI in the second trial. Thereafter, the case proceeded to the execution of the litigation order.

The Company’s subsidiary, WOFI, assessed the outcome of the final judgment and the potential amount of claims that may be required to be paid, and accordingly recognized a provision for liabilities of EUR 4,500 thousand ($141,316). As the subsidiary, WOFI, has entered into bankruptcy liquidation process, the final conclusion of this case will only be completed after the bankruptcy administrator has finalized the liquidation process and the distribution of assets. Based on the current assessment, the outcome of the final judgment is not expected to have a material impact on the Company’s operations.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b) Kazakhstan Joint Contracting Project

(i) Pavlodar Regional Government Project

In 2017, the Company, together with A3 Commerce LLP and Altocom Asia LLP (hereinafter referred to as “Alliance A”), was jointly contracted for a smart street light installation and maintenance project for the Pavlodar State Government in Pavlodar of the Republic of Kazakhstan for a period of six years, with a total contract cost of approximately USD8,967 thousand. The installation of the light fixtures was completed and accepted by the Pavlodar State Government on January 4, 2019. However, the Pavlodar State Government later found that some equipment for the smart control systems that should have been installed by A3 Commerce LLP, a member of Alliance A, was shortage, thus suspended the payment for the second quarter of 2020 as well as the subsequent project payment. On October 26, 2020, the Pavlodar State Government requested in writing to Alliance A to complete the installation of the shortage smart control systems as soon as possible and in accordance with the contract.

The Company believed that A3 Commerce LLP failed to fulfill its obligation to install the smart control systems and that Altocom Asia LLP failed to fulfill its maintenance management responsibilities. These two companies were deemed to be incompetent. In order to protect the Company’s interests, the Company sent a letter to the Pavlodar State Government in December 2020, demanding the removal of A3 Commerce LLP and Altocom Asia LLP from Alliance A. In January 2021, the Pavlodar State Government sent a further request in writing that the Company should correct the equipment shortage issue as described above. On February 9, 2021, the Pavlodar State Government filed a lawsuit in the Kazakhstan Court, demanding the termination of the contract with Alliance A with compensation of KZT268,883 thousand (approximately $18,203). The Company has appointed Baker McKenzie, an international business law firm and its local member firm in Kazakhstan, in the hope of negotiating a contract revision with the Pavlodar State Government to allow the Company to finish the uncompleted project independently. The local Court dismissed the lawsuit and appeal on the grounds of procedural irregularities on March 10 and April 22, 2021, as the State Government failed to follow the terms of the contract regarding negotiation but instead went straight to litigation. After the dismissal of its lawsuit, the Pavlodar State Government immediately started negotiations with Alliance A.

According to the opinion report issued by the appointed attorney on March 22, 2021, as both parties were still in the process of understanding each other’s requests and the attribution of responsibilities, a solution should be negotiated to resolve the dispute. However, it was difficult to predict the outcome, and the maximum exposure for termination of the contract was approximately $141,599. As of December 31, 2020, based on a reasonably conceivable judgment, the Company estimated a loss of $58,754 and reserved the right to legal recourse against the alliance members, A3 Commerce LLP and Altocom Asia LLP, for their incomplete work that damaged the rights and interests of the Company.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

In addition, on June 21, 2021, the Ministry of Energy of the Pavlodar State Government filed a lawsuit against the Transportation Department of Pavlodar, all members of Alliance A, and all contractors, requesting confirmation that the project acceptance that took place in January 2019 was invalid. The Company’s appointed attorney argued with the Court that the subject matter of the lawsuit is the same as the previous lawsuit filed by the Pavlodar State Government in December 2020. The lawsuit was dismissed by the Court due to having no legal basis. On the grounds of non bis in idem, the failure of the Ministry of Energy of the Pavlodar State Government to fulfill its pre-litigation negotiation obligations, and the lack of legal right of the Pavlodar State Government to petition for the invalidation of the acceptance of the project, the Company’s appointed attorney believes that the lawsuit should be dismissed in accordance with the law, and requested the Court to grant a transfer to a Court of competent jurisdiction. On July 21, 2021, the Court of First Instance granted the transfer of jurisdiction. The Ministry of Energy of the Pavlodar State Government filed a protest. On August 5, 2021, the Court of Second Instance revoked the decision of transfer of jurisdiction and remanded the case to the First Instance. On September 13, 2021, the Court of First Instance ruled against the Company on the grounds of non bis in idem, the failure of the Ministry of Energy of the State Government of Pavlodar to fulfill its pre-litigation negotiation obligations, and that the Pavlodar State Government had no legal right to apply for confirmation of the invalidation of the acceptance and ruled that the acceptance of the project in January 2019 was invalid. As the Company found that the decision in this case was clearly unlawful, the Company filed a protest against the decision of dismissal on October 1, 2021. The Company then filed an appeal against the decision of invalidation of the acceptance of the project as described above on October 19, 2021. On December 28, 2021, the judge of the second trial dismissed the Company’s protest and appeal and the ruling was finalized. The Company filed an appeal for the third trial against the ruling and judgment of the second trial, and this appeal was dismissed on April 4, 2022. The lawsuit only pleaded to confirm the invalidation of the acceptance of the project in January 2019, and the Pavlodar State Government did not file a claim for compensation.

As no satisfactory outcome was achieved by either party, on February 10, 2022, the Pavlodar Statement Government filed another lawsuit against Alliance A, demanding to terminate the contract with Alliance A and compensation of KZT1,345,882 thousand (approximately $85,733). The Company has appointed an attorney to defend the best legal interests of the Company. Pursuing ongoing negotiations with the Pavlodar State Government to find a mutually beneficial solution should suffice considering termination of the contract would be in the best interests of neither party. On April 27, 2022, the Court of First Instance granted the entire request of the State Government of Pavlodar. The Company filed an appeal against the ruling as it was considered unlawful on June 2, 2022. On July 19, 2022, the Second Trial Court denied the Company’s appeal, with a final judgment entered.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Taraz Regional Government Project

In 2019, the Company, together with Altocom Asia LLP (hereinafter referred to as “Alliance B”), was jointly contracted for a smart street light installation and maintenance project for the Taraz State Government, for a period of six years, with a total contract cost of approximately USD 14,196 thousand. Alliance B carried out light fixture installation according to the contract. On March 18, 2021, the Taraz State Government filed a lawsuit to terminate the contract claiming that Alliance B carried out the project without fully preparing the relevant design documents and did not complete the contracted work by December 30, 2020. However, the Company believed that Alliance B completed the project without any delay or deficiency. According to the opinion issued by the appointed attorney on March 22, 2021, as both parties were still in the process of understanding each other’s requests and the attribution of responsibilities, it was difficult to predict the outcome. However, the Taraz State Government failed to follow the terms of contract to first negotiate with Alliance B, instead filing a lawsuit for the termination of the contract. The appointed attorney argued that the relevant procedures were unlawful to defend against the Taraz State Government's claim and requested the Court to grant a transfer to a Court of competent jurisdiction in order to negotiate with the State Government to resolve the dispute. On April 22, 2021, the local court granted the transfer of jurisdiction to the Commercial Court for trial. On July 21, 2021, the Commercial Court of Taraz ruled against the Company. On August 19, 2021, the Company filed an appeal, which was dismissed by the Court of Second Instance on September 23, 2021, and the ruling was finalized. As the Company believed that Alliance B had no deficiencies, the Company filed an appeal for the third trial against the ruling and judgment of the second trial. The third appeal was dismissed by the Court of Third Instance on April 18, 2022. The case was only to decide on the termination of the contract, and the Taraz State Government did not request compensation. As a result, the Company will continue to assess whether to request the return of the equipment or the associated cost from the Taraz State Government.

As of the financial reporting date, with the assistance of the attorney, the Company believed that its litigation in Kazakhstan has exhausted the judicial procedures and reached the Supreme Court of Kazakhstan. Although there are special relief procedures similar to retrials in Taiwan, the Company is of the opinion that its special relief procedures will not achieve a favorable outcome for the Company, considering the local political environment and judicial peculiarities.

(iii) Overall impact

Base on the above assessments, the Group has recognized an allowance for uncollectible accounts receivable of $121,697 for the two cases mentioned above, recognized an inventory write-down of $65,672, and set aside a provision of $232,288 for other reasonably foreseeable obligations and compensation losses. In addition, the Group reserves the right to pursue legal action against alliance members, A3 Commerce LLP and Altocom Asia LLP, regarding damages resulting from engineering defects and the protection of the Group's interests.

As of December 31, 2025 and 2024, the accumulated loss from the aforementioned two cases amounted to $419,657.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(c) The Group's subsidiary, WOFI Verkaufsgesellschaft mbH, was officially declared bankrupt by the local court in Germany in May 2023 and had therefore been placed under the administration of a court-appointed insolvency administrator. On December 30, 2024, the insolvency administrator filed a lawsuit with the local German court against WOFI Holding, seeking compensation for losses incurred by this subsidiary in the amount of approximately EUR1,392 thousand. The Company received the court notice of the lawsuit on January 16, 2025, and appointed a local German attorney to represent the Company in the proceedings on January 27, 2025. The Company assessed that the final ruling of this case will not have any material effects on its operations.

The Company's subsidiary, Action GmbH, was officially declared bankrupt by the local court in Germany in May 2023 and had therefore been placed under the administration of a court-appointed insolvency administrator. On December 30, 2024, the insolvency administrator filed a lawsuit with the local German court against WOFI Holding, seeking compensation for losses incurred by this subsidiary in the amount of approximately EUR763 thousand. The Company received the court notice of the lawsuit on January 16, 2025, and appointed a local German attorney to represent the Company in the proceedings on January 27, 2025. The Company assessed that the final ruling of this case will not have any material effects on its operations.

(d) Significant commitments unrecognized:

(i) As of December 31, 2025 and 2024, the Company's signed significant commitments to purchase machinery, equipment and commitments for construction contracts not yet due amounted to $164,691 and $127,709, respectively.

(ii) As of December 31, 2025 and 2024, the unused balance of the Company's outstanding standby letters of credit amounted to $0 and $111,826, respectively.

(10) Losses Due to Major Disasters: none

(11) Subsequent Events: none

(12) Other

The following are the summary statement of current period employee benefits, depreciation and amortization expenses by function:

| By function
By item | 2025 | | | 2024 | | |
| --- | --- | --- | --- | --- | --- | --- |
| | Cost of sales | Operating expenses | Total | Cost of sales | Operating expenses | Total |
| Employee benefits | | | | | | |
| Salary | 1,070,250 | 1,496,273 | 2,566,523 | 1,243,376 | 1,832,186 | 3,075,562 |
| Labor and health insurance | 69,552 | 110,286 | 179,838 | 78,779 | 118,538 | 197,317 |
| Pension | 67,279 | 50,767 | 118,046 | 72,742 | 55,152 | 127,894 |
| Others | 88,718 | 76,976 | 165,694 | 103,236 | 80,826 | 184,062 |
| Depreciation | 439,953 | 438,819 | 878,772 | 518,195 | 412,066 | 930,261 |
| Amortization | 18,744 | 20,590 | 39,334 | 19,914 | 18,677 | 38,591 |

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(13) Other disclosures

(a) Information on significant transactions

The following is the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Group for the year ended December 31, 2025:

(i) Loans to other parties: Please refer to table 1.
(ii) Guarantees and endorsements for other parties: None.
(iii) Information regarding material securities held at the reporting date (subsidiaries, associates and joint ventures not included): Please refer to table 2.
(iv) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to table 3.
(v) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to table 4.
(vi) Business relationships and significant intercompany transactions: Please refer to table 5.

(b) Information on investees: Please refer to table 6.

(c) Information on investment in Mainland China: Please refer to table 7.

(14) Segment information:

(a) General Information

The segmentation of the Group is based on different products and services. The Group’s reportable segments are the LED segment, LCD segment and illumination segment. The LED segment engages in the manufacture and sale of LEDs. The LCD segment engages in the manufacture and sale of LCDs and LCD modules. The illumination segment engages in the manufacture and sale of lighting products.

Other operating segments mainly engage in the sale of raw materials for electronic products, masks, and electrophoretic displays. The above operating segments did not meet the quantitative thresholds for the years ended December 31, 2025 and 2024.

The Group does not allocate tax expense or non-operating gains and losses to reportable segments. The amounts in the operating segment information are the same as those in the reports used by the chief operating decision maker.

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(b) Information about reported segment profit or loss, segment assets, and the basis of segment measurement for reportable segments

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies as stated in note 4 of the 2024 annual consolidated financial statements. The Group evaluates performance on the basis of net operating income or loss. There were no intersegment revenues.

	2025
	LED segment	LCD segment	Illumination segment	Others	Adjustments & eliminations	Total
Revenues
Revenues from external customers	$18,492,944	-	1,051,865	95,146	-	19,639,955
Intersegment revenues	-	-	-	-	-	-
Total revenues	$18,492,944	-	1,051,865	95,146	-	19,639,955
Reportable segment profit (loss)	$ 2,451,740	-	(33,573)	44,779	-	2,462,946
Reportable segment assets						$29,599,234
	2024
---	---	---	---	---	---	---
	LED segment	LCD segment	Illumination segment	Others	Adjustments & eliminations	Total
Revenues
Revenues from external customers	$19,689,242	439,641	761,007	83,013	-	20,972,903
Intersegment revenues	-	-	-	-	-	-
Total revenues	$19,689,242	439,641	761,007	83,013	-	20,972,903
Reportable segment profit (loss)	$ 2,421,927	82,278	(59,438)	15,380	-	2,460,147
Reportable segment assets						$29,779,780

The following was the Group's geographical information. Revenues were attributed to countries on the basis of the customers' location. Non-current assets were attributed to countries on the basis of the assets' location.

(i) Revenues from external customers:

Please refer to note 6(v).

(Continued)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(ii) Non-current assets:

Geographical information	December 31, 2025	December 31, 2024
Asia	$ 5,885,506	6,312,806
Europe	39,140	37,600
Others	13,809	205
Total	$ 5,938,455	6,350,611

Non-current assets include property, plant and equipment, right-of-use, investment property, intangible assets, and other assets, excluding financial instruments, deferred tax assets, and post-employment benefit assets.

(d) Information about major customers

There were no individual customers whose purchases were over 10% of consolidated net sales in 2025 and 2024.

Table 1 Loans to other parties
December 31, 2025
Unit: In Thousands of New Taiwan Dollar

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

No	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short term financing	Allowance for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing	Note
													Item	Value
0	The Company	WOF1 Leuchten GmbH	Other receivables	Yes	583,200	583,200	573,193	1.0%	Short term financing	-	Financing Services	Note 6		-	$ 1,997,108	$ 7,988,432	Note 5
						$ 583,200	573,193
1	Everlight China	Everlight Lighting China	Other receivables	Yes	899,180	449,590	449,590	1.5%	Short term financing	-	Financing Services	-		-	2,413,515	2,413,515	Note 5
2	Forever	Pai-yee Investment	Other receivables	Yes	60,000	-	-	1.7%	Short term financing	-	Financing Services	-		-	191,864	191,864	p
						$ 449,590	449,590

Note 1: According to the Company's "Procedures for Lending Funds to Other Parties and Guarantees and Endorsements", the total amount of loans to others cannot exceed 40% of the net worth of the Company; and to borrowers having business relationship with the Company, the total amount for lending the borrower cannot exceed the transaction amount of business dealings between the two parties in the last fiscal year. For those companies with short term financing needs, the amount of each fund financing cannot exceed 10% of the Company's net worth.
Note 2: According to Everlight China's "Procedures for Lending Funds to Other Parties and Guarantees and Endorsements", the total amount of loans to others cannot exceed 40% of the net worth of Everlight China; and to borrowers having business relationship with Everlight China, the total amount for lending the borrower cannot exceed the transaction amount of business dealings between the two parties in the last fiscal year. For those companies with short term financing needs, the amount of each fund financing cannot exceed 40% of Everlight China's net worth.
Note 3: According to Forever's "Procedures for Lending Funds to Other Parties and Guarantees and Endorsements", the total amount of loans to others cannot exceed 40% of the net worth of Forever; and to borrowers having business relationship with Forever, the total amount for lending the borrower cannot exceed the transaction amount of business dealings between the two parties in the last fiscal year. For those companies with short term financing needs, the amount of each fund financing cannot exceed 40% of Forever's net worth.
Note 4: The amounts were translated into New Taiwan dollars at the exchange rates at the ending date of the reporting period.
Note 5: The aforementioned transactions had been eliminated in the consolidated financial statements.
Note 6: The aforementioned transactions had all been recognized as investment loss.

~84~

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 2. Information regarding material securities held at the reporting date (subsidiaries, associates and joint ventures not included)

December 31, 2025

Unit: In Thousands of New Taiwan Dollar, thousand shares

Name of holder	Category and name of security	Relationship with security issuer	Account name	Ending balance				Highest balance during the year
				Shares/Units (thousands)	Carrying value (Note 1)	Percentage of ownership (%)	Fair value	Shares/Units (thousands)	Percentage of ownership (%)
The Company	SinaPac TWH Money Market Fund	None	Current financial assets at fair value through profit or loss	5,869	$ 86,427	-%	$ 86,427	5,869	-%
The Company	WT Microelectronics Co., Ltd. Preferred Stock A	None	Current financial assets at fair value through profit or loss	600	30,040	-%	30,040	600	-%
The Company	Other	None	Current financial assets at fair value through profit or loss	-	91,190	-%	91,190	-	-%
The Company	Principle-Pretested Wealth Management Product	None	Non-current financial assets at fair value through profit or loss	-	124,042	-%	124,042	-	-%
The Company	Bank of America Corp.Bond	None	Non-current financial assets at fair value through other comprehensive income	20	63,779	-%	63,779	20	-%
The Company	Sunstone-Mitsui Financial Group Inc. Bond	None	Non-current financial assets at fair value through other comprehensive income	20	62,092	-%	62,092	20	-%
The Company	ST&T Inc.Bond	None	Non-current financial assets at fair value through other comprehensive income	20	60,208	-%	60,208	20	-%
The Company	HSBC holdings Plc Bond	None	Non-current financial assets at fair value through other comprehensive income	20	61,612	-%	61,612	20	-%
The Company	Wells Fargo & CO.Bond	None	Non-current financial assets at fair value through other comprehensive income	19	60,043	-%	60,043	19	-%
The Company	Cathay Life Insurance 2023 first unsecured accumulated secondary ordinary corporate bond	None	Non-current financial assets at fair value through other comprehensive income	2,500	252,499	-%	252,499	2,500	-%
The Company	Falcon Life Insurance 2023 first unsecured accumulated secondary ordinary corporate bond	None	Non-current financial assets at fair value through other comprehensive income	2,500	250,622	-%	250,622	2,500	-%
The Company	Cathay Life Insurance 2024 first unsecured accumulated secondary ordinary corporate bond	None	Non-current financial assets at fair value through other comprehensive income	3,000	301,441	-%	301,441	3,000	-%
The Company	Falcon Life Insurance 2024 first unsecured accumulated secondary ordinary corporate bond	None	Non-current financial assets at fair value through other comprehensive income	2,000	200,396	-%	200,396	2,000	-%
The Company	other	None	Non-current financial assets at fair value through other comprehensive income	-	93,343	-%	93,343	-	-%
				$ 1,700,954
Forever	CTBC USD Corporate 10+ Year High Grade Capped Bond ETF	None	Current financial assets at fair value through profit or loss	840	28,787	-%	28,787	840	-%
Forever	other	None	Current financial assets at fair value through profit or loss	-	95,369	-%	95,369	-	-%
Forever	other	None	Non-current financial assets at fair value through other comprehensive income	200	-	-%	-	200	-%
				$ 324,156
Pai yes	InnoFund I Co., Ltd.	Pai yes is the corporate director of this company	Non-current financial assets at fair value through profit or loss	3,000	45,357	-%	45,357	3,000	-%
Pai yes	InnoFund VI Co., Ltd.	Pai yes is the corporate director of this company	Non-current financial assets at fair value through profit or loss	3,000	39,930	-%	39,930	3,000	-%
Pai yes	Other	None	Current financial assets at fair value through profit or loss	1,648	23,688	-%	23,688	1,648	-%
				$ 100,975
Everlight China	Structured deposits	None	Current financial assets at fair value through profit or loss	-	$ 211,612	-%	211,612	-	-%
Evevision TW	CAPITAL ICE ENG 20+ Year BBB Corporate ETF	None	Current financial assets at fair value through profit or loss	2,970	44,788	-%	44,788	2,970	-%
Evevision TW	Cathay BBB Corporate bond ex China Coupon 4.5% 10%+ 20% Sector Capped ETF	None	Current financial assets at fair value through profit or loss	1,250	44,663	-%	44,663	1,250	-%
Evevision TW	Other	None	Current financial assets at fair value through profit or loss	-	91,214	-%	91,214	-	-%
Evevision TW	The Second Issue of 2025 for unsecured Cumulative Subordinated Corporate Bonds of Nan Shan Life Insurance Co., Ltd. Series A	None	Non-current financial assets at fair value through other comprehensive income	2,000	199,966	-%	199,966	2,000	-%
Evevision TW	Falcon Life Insurance Co., Ltd. 2nd issue of Unsecured Cumulative Subordinated Corporate Bonds A in 2025	None	Non-current financial assets at fair value through other comprehensive income	2,000	199,970	-%	199,970	2,000	-%
Evevision TW	Other	None	Non-current financial assets at fair value through other comprehensive income	5,000	11,089	-%	11,089	5,000	-%
				$ 411,025

Note 1. The amounts were translated into New Taiwan dollars at the exchange rates at the ending date of the reporting period.

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 3 Related party transactions for purchases and sales with amounts exceeding the lower of NTS100 million or 20% of the capital stock
December 31, 2025
Unit: hr Thousands of New Taiwan Dollars

Name of Company	Name of Counter party	Relationship	Transaction Details				Abnormal Transaction		Notes: Account (Payable) or Receivable		Note
			Purchases (Sale)	Amount (Note 1)	Percentage of total purchases/sales	Payment Terms	Unit Price	Payment Terms	Ending Balance (Note 3)	Percentage of total nonconsumers receivable (payable)
The Company	Evitie	100% owned subsidiary	(Sales)	$(662,882)	(5%)	OA 120	No significant difference to the general customers	General export receivables in 50-120 days	Accounts Receivable 141,796	3%	Note 2
The Company	Everlight Europe	75% owned subsidiary	(Sales)	(1,071,644)	(8%)	OA 120	No significant difference to the general customers	General export receivables in 30-120 days	Accounts Receivable 226,258	4%	Note 2
The Company	ELA	99% owned subsidiary	(Sales)	(363,739)	(3%)	OA 140	No significant difference to the general customers	General export receivables in 30-120 days	Accounts Receivable 62,199	1%	Note 2
The Company	Anhui Hongming	Equity accounted investor by the Everlight China	(Sales)	(1,194,007)	(9%)	OA 120-150	No significant difference to the general customers	General export receivables in 30-120 days	Accounts Receivable 624,076	12%
The Company	Everlight China	100% owned sub-subsidiary	Purchases	8,820,973	98%	OA 120 payments	Terms net comparable to other general trading price	General purchase payments in 90-120 days	Accounts Payable (3,736,515)	(69%)	Note 2
The Company	Everlight Zhongshan	100% owned sub-subsidiary	Purchases	520,922	6%	OA 120 payments	Terms net comparable to other general trading price	General purchase payments in 90-120 days	Accounts Payable (220,044)	(4%)	Note 2
The Company	Everlight Lighting China	100% owned sub-subsidiary	Purchases	214,058	2%	OA 120 payments	Terms net comparable to other general trading price	General purchase payments in 90-120 days	Accounts Payable (88,368)	(2%)	Note 2
The Company	Anhui Hongming	Equity accounted investor by the Everlight China	Purchases	180,263	2%	OA 120-150 payments	Terms net comparable to other general trading price	General purchase payments in 120 days	Accounts Payable (274,201)	(5%)
Everlight Zhongshan	The Company	Ultimate holding company	(Sales)	(552,279)	(100%)	OA 120 receivables	Not applicable	Not applicable	Accounts Receivable 220,048	100%	Note 2
Everlight China	The Company	Ultimate holding company	(Sales)	(9,196,418)	(100%)	OA 120 receivables	Not applicable	Not applicable	Accounts Receivable 3,736,515	100%	Note 2
Everlight Lighting China	The Company	Ultimate holding company	(Sales)	(214,451)	(19%)	OA 120 payments	Terms net comparable to other general trading price	General export receivables in 90-120 days	Accounts Receivable 93,368	27%	Note 2
Everlight Lighting China	Anhui Hongming	Equity accounted investor by the Everlight China	Purchases	217,768	20%	OA 120-150 payments	Terms net comparable to other general trading price	General purchase payments in 90-120 days	Accounts Payable (114,914)	(5%)
ELA	The Company	Parent company	Purchases	366,157	100%	OA 140	Not applicable	Not applicable	Accounts Payable (70,104)	(100%)	Note 2
Everlight Europe	The Company	Parent company	Purchases	1,090,326	100%	OA 120	Not applicable	Not applicable	Accounts Payable (217,387)	(99%)	Note 2
Evitie	The Company	Parent company	Purchases	661,640	100%	OA 120	Not applicable	Not applicable	Accounts Payable (141,019)	(100%)	Note 2

Note 1: The amounts were translated into New Taiwan dollars at the average exchange rates for the year ended December 31, 2025.
Note 2: The transaction amounts of the subsidiaries are inconsistent with the Company since the financial statements of the subsidiaries did not consider the adjustments made by the Company for processing trade and in transit inventory.
Note 3: The accounts were translated into New Taiwan dollars at the exchange rate at the end of date of the reporting period.

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 4 Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock

December 31, 2025

Unit: In Thousands of New Taiwan Dollar

Name of company	Counterparty	Nature of relationship	Ending balance	Turnover rate	Overdue		Amounts received in subsequent period (Note 1)	Allowance for bad debts	Note
					Amount	Action taken
The Company	Evlite	100% owned subsidiary	$ 141,796	2.51	-		64,311	-	Note 4
The Company	Everlight Europe	75% owned subsidiary	226,258	5.06	-		190,499	-	"
The Company	WOFI Leuchten GmbH	100% owned subsidiary	573,193
(Note 3)	-	-		-	-
The Company	Anhui Hongming	Equity accounted investee by the Everlight China	634,976	2.07			239,353
Everlight China	Everlight Lighting China	Same parent company	449,590
(Note 3)	-	-		-	-	Note 4
Everlight China	The Company	Ultimate holding company	3,736,515	2.58	-		1,544,805	-	"
Everlight Zhongshan	The Company	Ultimate holding company	220,848	2.45	-		90,335	-	"

Note 1: Information as of March 4, 2026.
Note 2: The amounts were translated into New Taiwan dollars at the exchange rates at the reporting date.
Note 3: Lending funds (including interest).
Note 4: The aforementioned transactions had been eliminated in the consolidated financial statements.

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 5 Business relationships and significant intercompany transactions
December 31, 2025
Unit: In Thousands of New Taiwan Dollar

No. (Note 1)	Name of company	Counter-party	Relationship (Note 2)	Intercompany transactions
				Financial statements accounts	Amount	Terms	Percentage of consolidated net revenue or total assets
0	The Company	Everlight Europe	1	Sales revenue	$ 1,071,644	There is no significant difference on the price offered to general customers; and the credit period is OA 120 days.	5%
			1	Accounts receivable	226,258	There is no significant difference on the price offered to general customers; and the credit period is OA 120 days.	1%
0	The Company	Evlite	1	Sales revenue	662,882	There is no significant difference on the price offered to general customers; and the credit period is OA 120 days.	3%
			1	Accounts receivable	141,796	There is no significant difference on the price offered to general customers; and the credit period is OA 120 days.	- %
0	The Company	ELA	1	Sales revenue	363,739	There is no significant difference on the price offered to general customers; and the credit period is OA 140 days.	2%
			1	Accounts receivable	62,199	There is no significant difference on the price offered to general customers; and the credit period is OA 140 days.	0%
0	The Company	WOFI Leuchten GmbH	1	Other receivable due from related parties (Note 3)	573,193	Rate 1%	2%
1	Everlight China	The Company	2	Sales revenue	9,196,418	There is no general price for comparison; and the credit period is OA 120 days.	47%
			2	Accounts receivable	3,736,515	There is no general price for comparison; and the credit period is OA 120 days.	13%
1	Everlight China	Everlight Lighting China	3	Other receivable due from related parties (Note 3)	449,590	Rate 1.5%	2%
2	Everlight Zhongshan	The Company	2	Sales revenue	552,279	There is no general price for comparison; and the credit period is OA 120 days.	3%
			2	Accounts receivable	220,848	There is no general price for comparison; and the credit period is OA 120 days.	1%
3	Everlight Lighting China	The Company	2	Sales revenue	214,451	There is no general price for comparison; and the credit period is OA 120 days.	1%
			2	Accounts receivable	93,368	There is no general price for comparison; and the credit period is OA 120 days.	0%

Note 1: The numbers filled in as follows:
1. 0 represents the parent company.
2. Subsidiaries are sorted in a numerical order starting from 1.
Note 2: Relationship with the transactions labeled as follows:
1. Represents the transactions from the parent company to the subsidiaries.
2. Represents the transactions from the subsidiaries to the parent company.
3. Represents the transactions between the subsidiaries.
Note 3: Lending funds (including interest).

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 6 Information on investees

December 31, 2025

Unit: In Thousands of Non Taiwan Dollar

Investor company	Investor company	Location	Main businesses and products	Original investment amount		Ending balance			The highest holdings in the period		Net income (Losses) of the investee	Share of profits/losses of investee	Note
				December 31, 2025	December 31, 2024	Shares (In thousands)	Percentage of ownership	Carrying value	Shares (In thousands)	Percentage
The Company	Everlight BV1	Registered in British Virgin Islands	Investment	$ 4,762,934	$ 4,762,934	1,540	98%	$ 7,861,246	1,540	98%	321,191	314,786	Subsidiaries (Note3)
The Company	Pai yee	New Taipei City	Investment	580,253	580,253	23,940	100%	526,468	23,940	100%	23,232	23,232	Subsidiaries (Note3)
The Company	ELA and its subsidiaries	Registered in the USA	Sale of LEDs	373,396	373,396	11,375	98.91%	3,900	11,375	98.91%	(8,099)	(8,011)	Subsidiaries (Note3)
The Company	Evavision TW and its subsidiaries	New Taipei City	Manufacture and sales of LEDs and LED processing	35,455	35,455	4,477	24.27%	371,058	4,477	24.27%	(6,673)	(1,618)	Subsidiaries (Note3)
The Company	Everlight Europe	Registered in Germany	Sale of LEDs	2,203	2,203	75	75%	214,743	75	75%	110,792	83,094	Subsidiaries (Note3)
The Company	ELK	Korea	Sale of LEDs	6,485	6,485	38	100%	74,922	38	100%	27,192	27,192	Subsidiaries (Note3)
The Company	Forever	New Taipei City	Investment	400,000	400,000	42,488	100%	479,622	42,488	100%	(6,754)	(6,754)	Subsidiaries (Note3)
The Company	ELIT	New Taipei City	Sale of LED lighting products	500,000	500,000	20,000	100%	290,112	20,000	100%	75,804	76,117	Subsidiaries (Note3)
The Company	Evlite	Kwan Tong, Kowloon, Hong Kong	Sale of LEDs	71,324	71,324	7,000	100%	181,963	7,000	100%	3,503	3,503	Subsidiaries (Note3)
The Company	ELI	Registered in India	Sale of LEDs	1,984	1,984	353	80%	26,364	353	80%	5,619	4,495	Subsidiaries (Note3)
The Company	ELS	Singapore	Sale of LEDs	5,989	5,989	200	100%	18,031	200	100%	4,380	4,380	Subsidiaries (Note3)
The Company	WOFH Holding and its subsidiaries	Germany	Sale of lighting products, pendants and accessories	1,333,883	1,333,883	5,775	100%	(624,391)	5,775	100%	(22)	(22)	Subsidiaries (Note 1 and 3)
The Company	ELJ	Japan	Sale of LEDs	14,911	14,911	5	100%	3	5	100%	(10,401)	(10,401)	Subsidiaries (Note3)
The Company	ELTH	Tailand	Manufacturing and sale of LEDs	35,293	-	375	98%	11,074	375	98%	(25,733)	(25,218)	Subsidiaries (Note3)
Pai yee	Everlight BV1	Registered in British Virgin Islands	Investment	120,740	120,740	37	2%	160,434	37	2%	321,191	6,425	Subsidiaries (Note3)
Pai yee	Evavision TW and its subsidiaries	New Taipei City	Manufacture and sales of LEDs and LED processing	61,121	61,121	2,940	15.94%	222,693	2,940	15.94%	(6,673)	(1,065)	Subsidiaries (Note3)
Pai yee	Everlight Malaysia	Registered in Malaysia	Business development and customer services	2,240	2,240	254	100%	5,436	254	100%	1,875	1,875	Sub-subsidiaries (Note3)
Pai yee	ELI	India	Sale of LEDs	493	493	88	20%	6,590	88	20%	5,619	1,124	Subsidiaries (Note3)
ELIT	ELIT KZ	Kazakhstan	Sale of LED lighting products	73	73	-	100%	-	-	100%			Sub-subsidiaries (Note3)
Forever	Evavision TW and its subsidiaries	New Taipei City	Manufacture and sales of LEDs and LED processing	30,978	30,978	5,120	27.76%	355,841	5,120	27.76%	(6,673)	(1,851)	Subsidiaries (Note3)
Forever	ElefAcon Inc.	New Taipei City	Manufacture and sales of electronic components and communication equipment	45,000	45,000	4,500	32.14%	-	4,500	32.14%	-	-	-
Evavision	LeadTech	Heinebu County	Wafer testing service	30,000	30,000	2,500	43.48%	30,891	2,500	43.48%	3,053	1,327	-
Evavision	Evavision (B.V.I.) Ltd.	Registered in British Virgin Islands	Investment	-	696,251	-	-	0	20,567	100.00%	590	590	Sub-subsidiaries (Note3)
Evavision	Vibest GmbH	Germany	Trade Company	790	790	-	75.00%	24,264	-	75.00%	(110)	(83)	Sub-subsidiaries (Note3)
Evavision Electronics (B.V.I.)	Evavision (B.K.) Ltd.	Hong Kong	Trade Company		1,179		0.00%		300	100.00%			Sub-subsidiaries (Note3)

Note 1: The Company invented in WOFH through a cash injection of EUR 11,000 thousand and EUR 16,000 thousand in July 2020 and August 2022, respectively, wherein the registration procedures have not yet to be completed.
Note 2: The amounts were translated into New Taiwan dollars at the yearly average exchange rates in 2025.
Note 3: The aforementioned transactions had been eliminated in the consolidated financial statements.

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 7 Information on investment in Mainland China

December 31, 2025

(i) The names of investees in Mainland China, the main businesses and products, and other information:

Unit: In Thousands of New Taiwan Dollar + Foreign currency

Name of investee	Main businesses and products	Total amount of paid in capital (Note 6)	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	Highest balance during the year		Net income (losses) of the investee	Percentage of ownership owned directly or indirectly by the company	Investment Income (losses) (Note 4)	Carrying amount as of December 31, 2025 (Note 6)	Accumulated remittance of earnings as of December 31, 2025
					Outflow	Inflow		Shares/Units (thousands)	Percentage of ownership
The Company and the year: Everlight China	Manufacture of LEDs	3,861,026 (US$113,500 + RMB65,129) (Note 7 and 8)	(Note 1)	3,469,498 (US$110,360)	-	-	3,469,498 (US$110,360)	-	100%	349,161	100%	349,161	6,033,788	665,834
Everlight Lighting	Sale of LEDs	314,380 (US$10,000) (Note 10)	(Note 1)	163,478 (US$5,200)	-	-	163,478 (US$5,200)	-	100%	(30,202)	100%	(30,202) (Note 11)	435,541 (Note 11)	-
Everlight Electronic Guangzhou	Business development and customer services	206,340 (US$128 + RMB45,000) (Note 13)	(Note 1)	4,024 (US$128)	-	-	4,024 (US$128)	-	100%	1,506	100%	1,506 (Note 14)	8,283 (Note 14)	-
Everlight Zhongshan	Manufacture of LED related components	943,140 (US$30,000)	(Note 1)	943,140 (US$30,000)	-	-	943,140 (US$30,000)	-	100%	(1,639)	100%	(1,639)	933,839	14,437
Everlight China and Everlight Zhongshan: Anhui Hongming	Research and Manufacture of Mini LED lighting products	969,856 (RMB215,720)	(Note 3)	-	-	-	-	-	33.99%	99,427	33.99%	33,796	397,717	-
Everlight China: Everlight New Electronics (Suzhou) Co., Ltd. (Note 16)	Manufacture of LEDs	22,480 (RMB5,000)	(Note 3)	-	-	-	-	-	49.00%	(97)	49.00%	(47)	10,966	-

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Table 7 Information on investment in Mainland China
December 31, 2025

(ii) Limitation on investment in Mainland China:
Unit: In Thousands of New Taiwan Dollar + Foreign currency

Company Name	Accumulated Investment in Mainland China as of December 31, 2025 (Note 6)	Investment Amounts Authorized by Investment Commission of Ministry of Economic Affairs (Note 6)	Limitation on investment in Mainland China by Investment Commission of Ministry of Economic Affairs
The Company and Pai yee (Note 5)	5,571,098
(USD168,787 thousand + RMB58,892 thousand)
(Notes 9)	5,706,101
(USD170,682 thousand + RMB75,669 thousand)	11,982,649
ELIT	148,067
(USD2,723 thousand + RMB13,893 thousand)
(Notes 9)	148,067
(USD2,723 thousand + RMB13,893 thousand)	181,485
Eversion TW	98,590
(Notes 2 + 12 and 15)
(USD3,136 thousand)	98,590
(USD3,136 thousand)	838,245

Note 1: Indirect investment in Mainland China through companies registered in a third region.
Note 2: Evervision BVI disposed all of its ownership in VBest Electronics (Kunshan) Ltd. (VBest Kunshan) to a third party in December 2024. The aforementioned investment amounts included the investment amounts of USD 18,000 thousand that has yet to be applied for elimination.
Note 3: Indirect investment in Mainland China through an existing company in Mainland China.
Note 4: Except for Everlight China and Everlight Lighting, which recognized their gains and losses on investment in accordance with the investees' self-reported financial statements, the gains and losses on investment of the remaining companies were recognized according to the investees' financial statements audited by the certified public accountants of Taiwan parent company and other accountants, wherein the amounts were translated into New Taiwan Dollars at the yearly average exchange rate in 2025.
Note 5: Including the investment amount of USD 3,790 thousand approved by Pai yee.
Note 6: The amounts were translated into New Taiwan dollars at the exchange rates at the end of the reporting period.
Note 7: The difference from the Company's outflow of investment was due to the retained earnings transferred to the capital of Everlight China amounting to USD 3,140 thousand and RMB 65,129 thousand in 2007 and 2015, respectively.
Note 8: Including the remittance amounting to USD 10,140 thousand from Guangzhou Everlight to Everlight BVI to be invested in Everlight China by Everlight BVI in 2007.
Note 9: The liquidation of Yi Yao, Everlight Electronics (Guangzhou), Everlight Yi Guang Technology (Shanghai), Everlight Lighting Management Consulting (Shanghai), Shanghai Yaming Lighting, and Everlight Fujian, were completed. The aforesaid investments amounting to USD23,099 thousand and RMB58,892 thousand were included in the Company's accumulated outflow of investment from Taiwan; as well as the investments of USD2,723 thousand and RMB13,893 thousand were included in the ELIT's accumulated outflow of investment from Taiwan.
Note 10: The difference from the Company's outflow of investment was due to the amount of USD 4,800 thousand invested in Everlight Lighting China from Everlight China's owned fund.
Note 11: Including the gains or losses on investment and ending balance of the carrying value of investment in Everlight Lighting China by Everlight China.
Note 12: Including the investment amount of the factory in Mainland China written off in 2012 amounting to USD 2,750 thousand.
Note 13: The difference from the Company's outflow of investment was due to the amount of RMB 45,000 thousand invested in Everlight Electronic (Guangzhou) from Everlight China's owned fund.
Note 14: Including the gains or losses on investment and ending balance of the carrying value of investment in Everlight Electronic (Guangzhou) by Everlight
Note 15: The liquidation of Debao was completed in June 2017; and the aforesaid investment amounting to USD 386 thousand was included in the Evervision company's accumulated outflow of investment from Taiwan.
Note 16: Everlight China invested in a company in mainland China, using its owned fund in 2025.

(iii) Significant transactions:

Please refer to "Information on significant transactions" and "Business relationships and significant intercompany transactions" for the information on significant direct or indirect transactions between the Company and the investee companies in Mainland China for the year ended December 31,2025.

AI assistant

EVERLIGHT — Audit Report / Information 2025

52052_rns_2026-05-21_d0899230-e1a3-424b-8c3a-c37079c135ba.pdf

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Table of contents

Representation Letter

Independent Auditors' Report

Opinion

Basis for Opinion

Key Audit Matters

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

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

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2025 and 2024

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars)

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(4) Summary of material accounting policies

(a) Statement of compliance

(b) Basis of preparation

(i) Basis of measurement

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(p) Provisions

(q) Revenue from contracts with customers

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

EVERLIGHT ELECTRONICS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts

EVERLIGHT Audit Report / Information 2025