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FORMOSA LABORATORIES, INC.

PARENT COMPANY ONLY FINANCIAL
STATEMENTS AND INDEPENDENT AUDITORS'
REPORT
DECEMBER 31, 2025 AND 2024

For the convenience of readers and for information purpose only, the auditors' report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors' report and financial statements shall prevail.

INDEPENDENT AUDITORS' REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Formosa Laboratories, Inc.

Opinion

We have audited the accompanying parent company only balance sheets of Formosa Laboratories, Inc. (the “Company”) as at December 31, 2025 and 2024, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of material accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2025 and 2024, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission.

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 parent company only financial statements section of our report. We are independent of the Company 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.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company’s 2025 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s 2025 parent company only financial statements are stated as follows:

Key audit matter - inventory valuation

Description

Refer to Note 4(11) for accounting policy on inventory valuation, Note 6(5) for details of inventory, and Note 5(1) for uncertainty of accounting estimates and assumptions in relation to inventory valuation.

The Company is primarily engaged in the manufacturing and sales of active pharmaceutical ingredients. Due to the intensely competitive market and the restriction of expiry date of active pharmaceutical ingredients, there is a higher risk in loss on decline in market value of expired or obsolete inventories. As the determination of impairment of inventories involves subjective judgement and estimation uncertainty and considering that the amount of inventories is significant to the financial statements, we identified the inventory valuation as a key audit matter.

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How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

A. Obtained an understanding of the Company’s operations and industry, assessed the reasonableness of the accounting policy in recognising the allowance for inventory valuation losses, and ascertained whether the accounting policy was applied consistently for both periods.

B. Obtained the net realisable value report of inventories, reviewed the calculation logic used and tested related parameters, including sales and purchase data files and other resource data.

C. Obtained the expiry information date of each inventory item, checked against related supporting documents, and assessed the reasonableness of the provision of allowance for loss on inventory decline in market value.

D. Verified the related documents we gathered during the physical inventory count and performed an inquiry with management and related personnel to verify whether the following have been addressed in the inventory list: a. Slow-moving inventory. b. Inventory that is over certain age. c. Significant amount of damaged inventory.

Key audit matter - Impairment assessment of investments accounted for using equity method

Description

As of December 31, 2025, the amount of the Company’s reinvestment was significant and the reinvestment generated goodwill. Refer to Notes 4(12) and (16) for details of related accounting policies, and Notes 5(2) and 6(6) for uncertainty of accounting estimates and assumptions in relation to impairment assessment of investments accounted for using equity method.

The Company measures the recoverable amount of cash generating unit by discounting estimated future cash flows of related research and development projects as basis for impairment assessment. As the amount of investments accounted for using equity method was significant, the valuation model used in the impairment assessment involves significant accounting estimates, and the recoverable amount was determined based on projected future

cash flows, we considered the impairment assessment of investments accounted for using equity method as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in relation to the above key audit matter:

A. Obtained an understanding of the estimation process of projected cash flows to ascertain whether it was in agreement with the budget of the investee.

B. Obtained the appraisal report of appraisers who were appointed by the management and performed the following audit procedures:

(1) Assessed whether the valuation model was reasonably matched with its industry, environment and assets to be valued.

(2) Compared the expected growth rate and net operating interest rate used in the estimation of future cash flows with historical result, economic documents and other external data.

(3) Assessed the discount rate used and compared with capital cost assumption of cash-generating units and return rates of similar assets.

C. Confirmed and measured the recoverable amount of cash-generating units by discounting estimated future cash flows to determine whether the recoverable amount exceeds the book value.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including supervisors, are responsible for overseeing the Company's financial reporting process.

Auditors' responsibilities for the audit of the parent company only financial statements

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

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expressing an opinion on the effectiveness of the Company's internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the 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.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Teng, Sheng-Wei
Yen, Yu-Fang
For and on Behalf of PricewaterhouseCoopers, Taiwan
March 12, 2026

The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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FORMOSA LABORATORIES, INC.
PARENT COMPANY ONLY BALANCE SHEETS
DECEMBER 31, 2025 AND 2024
(Expressed in thousands of New Taiwan dollars)

Assets	Notes	December 31, 2025		December 31, 2024
		AMOUNT	%	AMOUNT	%
Current assets
1100	Cash and cash equivalents	6(1)	$ 880,626	7	$ 913,750	7
1110	Current financial assets at fair value through profit or loss	6(2) and 8	150,076	1	117,534	1
1170	Accounts receivable, net	6(4)	1,045,956	8	1,178,535	10
1180	Accounts receivable - related parties	7	48,668	-	19,823	-
1200	Other receivables		64,623	1	21,996	-
1210	Other receivables - related parties	7	68,761	1	21,162	-
130X	Inventory	6(5)	1,713,193	14	1,709,472	14
1410	Prepayments		120,868	1	152,755	1
1470	Other current assets		1,479	-	2,030	-
11XX	Total current assets		4,094,250	33	4,137,057	33
Non-current assets
1510	Financial assets at fair value through profit or loss - non-current	6(2) and 8	1,168,890	9	1,363,846	11
1517	Non-current financial assets at fair value through other comprehensive income	6(3)	90,642	1	95,382	1
1550	Investments accounted for under equity method	6(6)	664,113	5	708,294	6
1600	Property, plant and equipment	6(7) and 8	6,090,481	48	6,092,507	48
1755	Right-of-use assets		68,865	1	68,028	-
1780	Intangible assets		21,358	-	20,839	-
1840	Deferred income tax assets	6(25)	116,584	1	93,037	1
1900	Other non-current assets	6(7)(8) and 8	256,015	2	26,699	-
15XX	Total non-current assets		8,476,948	67	8,468,632	67
1XXX	Total assets		$ 12,571,198	100	$ 12,605,689	100

(Continued)

FORMOSA LABORATORIES, INC.
PARENT COMPANY ONLY BALANCE SHEETS
DECEMBER 31, 2025 AND 2024
(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	Notes	December 31, 2025		December 31, 2024
		AMOUNT	%	AMOUNT	%
Current liabilities
2100	Short-term borrowings	6(9) and 8	$ 1,113,000	9	$ 683,000	5
2110	Short-term notes and bills payable	6(10)	-	-	49,982	-
2130	Current contract liabilities	6(18) and 7	115,701	1	57,681	1
2150	Notes payable		-	-	910	-
2170	Accounts payable		274,356	2	218,026	2
2200	Other payables	6(11)	716,600	6	642,034	5
2220	Other payables to related parties	7	136	-	231	-
2230	Current income tax liabilities		30,941	-	69,448	1
2280	Current lease liabilities		18,556	-	20,864	-
2320	Long-term liabilities, current portion	6(12) and 8	440,337	4	388,145	3
2399	Other current liabilities		34,197	-	26,251	-
21XX	Total current liabilities		2,743,824	22	2,156,572	17
Non-current liabilities
2527	Non-current contract liabilities	6(18) and 7	9,317	-	5,462	-
2540	Long-term borrowings	6(12) and 8	1,949,414	16	2,669,752	21
2570	Deferred income tax liabilities	6(25)	9,732	-	16,677	-
2580	Non-current lease liabilities		51,025	-	47,501	1
2600	Other non-current liabilities		50,703	-	25,650	-
25XX	Total non-current liabilities		2,070,191	16	2,765,042	22
2XXX	Total liabilities		4,814,015	38	4,921,614	39
	Share capital	1 and 6(14)
3110	Common stock		1,202,560	10	1,202,560	10
	Capital surplus	6(15)
3200	Capital surplus		3,570,381	28	3,773,468	29
	Retained earnings	6(16)
3310	Legal reserve		513,729	4	498,069	4
3320	Special reserve		18,218	-	19	-
3350	Unappropriated retained earnings		2,478,635	20	2,228,157	18
	Other equity interest	6(17)
3400	Other equity interest		( 26,340)	-	( 18,198)	-
3XXX	Total equity		7,757,183	62	7,684,075	61
	Significant Contingent Liabilities and Unrecognised Contract Commitments	9
	Significant Events after the Balance Sheet Date	11
3X2X	Total liabilities and equity		$ 12,571,198	100	$ 12,605,689	100

The accompanying notes are an integral part of these parent company only financial statements.

FORMOSA LABORATORIES, INC.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2023 AND 2024
(Expressed in thousands of New Taiwan dollars, except for earnings per share amount)

	Items	Notes	Year ended December 31
			2025		2024
			AMOUNT	%	AMOUNT	%
4000	Operating revenue	6(18) and 7	$ 4,841,746	100	$ 4,605,182	100
5000	Operating costs	6(5)(23)(24)	( 2,810,873)	( 58)	( 2,671,976)	( 58)
5900	Gross profit		2,030,873	42	1,933,206	42
5910	Unrealized profit from sales		( 1,886)	-	( 794)	-
5920	Realized profit from sales		3,816	-	3,103	-
5950	Net operating margin		2,032,803	42	1,935,515	42
	Operating expenses	6(23)(24)
6100	Selling expenses		( 216,339)	( 5)	( 208,184)	( 4)
6200	General and administrative expenses		( 243,813)	( 5)	( 230,368)	( 5)
6300	Research and development expenses		( 589,042)	( 12)	( 581,503)	( 13)
6450	Impairment gain (loss) determined in accordance with IFRS 9	12(2)
			9,062	-	( 16,320)	-
6000	Total operating expenses		( 1,040,132)	( 22)	( 1,036,375)	( 22)
6900	Operating income		992,671	20	899,140	20
	Non-operating income and expenses
7100	Interest income	6(19)	6,868	-	10,989	-
7010	Other income	6(20) and 7	10,666	-	11,855	-
7020	Other gains and losses	6(2)(21)	( 365,887)	( 7)	( 516,853)	( 11)
7050	Finance costs	6(22)	( 30,446)	( 1)	( 37,740)	( 1)
7070	Share of loss of associates and joint ventures accounted for using equity method, net	6(6)
			( 66,536)	( 1)	( 97,363)	( 2)
7000	Total non-operating income and expenses		( 445,335)	( 9)	( 629,112)	( 14)
7900	Profit before income tax		547,336	11	270,028	6
7950	Income tax expense	6(25)	( 106,229)	( 2)	( 112,760)	( 3)
8200	Profit for the year		$ 441,107	9	$ 157,268	3
	Other comprehensive income
	Components of other comprehensive income that will not be reclassified to profit or loss
8311	Losses on remeasurements of defined benefit plan	6(13)	$ 958	-	($ 832)	-
8316	Unrealised loss from investments in equity instruments measured at fair value through other comprehensive income	6(3)
8349	Income tax related to components of other comprehensive income that will not be reclassified to profit or loss	6(25)	( 6,207)	-	( 22,708)	-
8310	Other comprehensive loss that will not be reclassified to profit or loss		192)	-	166	-
	Components of other comprehensive income that will be reclassified to profit or loss		( 5,441)	-	( 23,374)	-
8361	Financial statements translation differences of foreign operations		( 2,419)	-	( 2,071)	-
8399	Income tax relating to the components of other comprehensive loss	6(25)	484	-	414	-
8360	Other comprehensive loss that will be reclassified to profit or loss		( 1,935)	-	( 1,657)	-
8300	Total other comprehensive loss for the year		($ 7,376)	-	($ 25,031)	-
8500	Total comprehensive income for the year		$ 433,731	9	$ 132,237	3
	Earnings per share (in dollars)
9750	Basic earnings per share	6(26)	$ 3.67	$ 1.31
9850	Diluted earnings per share	6(26)	$ 3.64	$ 1.30

The accompanying notes are an integral part of these parent company only financial statements.

FORMOSA LABORATORIES, INC.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY
YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in thousands of New Taiwan dollars)

	Notes	Share capital - common stock	Capital Reserves			Retained Earnings			Other Equity Interest		Total equity
			Capital surplus, additional paid-in capital	Capital surplus, difference between consideration and carrying amount of subsidiaries acquired or disposed	Capital Surplus, changes in ownership interests in subsidiaries	Legal reserve	Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreign operations	Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income
2024
Balance at January 1, 2024		$ 1,202,560	$ 3,083,576	$ -	$ 468,494	$ 485,958	$ 54,984	$ 2,269,213	( $ 13,685)	$ 19,852	$ 7,570,952
Profit for the year		-	-	-	-	-	-	157,268	-	-	157,268
Other comprehensive loss		-	-	-	-	-	-	( 666)	( 1,657)	( 22,708)	( 25,031)
Total comprehensive income (loss)		-	-	-	-	-	-	156,602	( 1,657)	( 22,708)	132,237
Appropriations and distribution of retained earnings:	6(16)
Legal reserve		-	-	-	-	12,111	-	( 12,111)	-	-	-
Special reserve		-	-	-	-	-	( 54,965)	54,965	-	-	-
Cash dividends		-	-	-	-	-	-	( 240,512)	-	-	( 240,512)
From differences between equity purchase price and carrying amount arising from actual disposal of subsidiaries		-	-	1,586	-	-	-	-	-	-	1,586
Changes in ownership interests in subsidiaries		-	-	-	219,812	-	-	-	-	-	219,812
Balance at December 31, 2024		$ 1,202,560	$ 3,083,576	$ 1,586	$ 688,306	$ 498,069	$ 19	$ 2,228,157	( $ 15,342)	( $ 2,856)	$ 7,684,075
2025
Balance at January 1, 2025		$ 1,202,560	$ 3,083,576	$ 1,586	$ 688,306	$ 498,069	$ 19	$ 2,228,157	( $ 15,342)	$ 2,856	$ 7,684,075
Profit for the year		-	-	-	-	-	-	441,107	-	-	441,107
Other comprehensive income (loss)		-	-	-	-	-	-	766	( 1,935)	( 6,207)	( 7,376)
Total comprehensive income (loss)		-	-	-	-	-	-	441,873	( 1,935)	( 6,207)	433,731
Appropriations and distribution of retained earnings:	6(16)
Legal reserve		-	-	-	-	15,660	-	( 15,660)	-	-	-
Special reserve		-	-	-	-	-	18,199	( 18,199)	-	-	-
Cash dividends		-	-	-	-	-	-	( 157,535)	-	-	( 157,535)
Cash payment from capital surplus		-	( 203,232)	-	-	-	-	-	-	-	( 203,232)
Compensation cost of employee stock options		-	-	-	145	-	-	-	-	-	145
Disposal of investments in equity instruments designated at fair value through other comprehensive income by subsidiaries		-	-	-	-	-	-	( 1)	-	-	( 1)
Balance at December 31, 2025		$ 1,202,560	$ 2,880,344	$ 1,586	$ 688,451	$ 513,729	$ 18,218	$ 2,478,635	( $ 17,277)	$ 9,063	$ 7,757,183

The accompanying notes are an integral part of these parent company only financial statements.

FORMOSA LABORATORIES, INC.
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in thousands of New Taiwan dollars)

	Notes	Year ended December 31
		2025	2024
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		$ 547,336	$ 270,028
Adjustments
Adjustments to reconcile profit (loss)
Depreciation	6(23)	508,012	475,706
Amortisation	6(23)	7,525	7,940
Expected credit impairment (gain) loss	12(2)	( 9,062 )	16,320
Net losses on financial assets at fair value through profit or loss	6(2)(21)
Interest expense	6(22)	181,863	523,071
Interest income	6(19)	( 6,868 )	( 10,989 )
Share of loss of subsidiaries, associates and joint ventures accounted for using equity method	6(6)
Realised gain on inter-affiliate accounts		( 1,930 )	( 2,309 )
Proceeds from disposal of property, plant and equipment	6(21)
Gain from lease modification	6(21)	( 5 )	( 59 )
Expenses transferred from prepayments for equipment (shown as other non-current assets)		18,902	1,133
Changes in operating assets and liabilities
Changes in operating assets
Accounts receivable		141,659	( 246,678 )
Accounts receivable - related parties		( 28,863 )	( 4,564 )
Other receivables		( 43,336 )	9,191
Other receivables - related parties		( 47,599 )	( 20,165 )
Inventory		( 3,721 )	( 112,005 )
Prepayments		31,887	( 71,425 )
Other current assets		551	( 431 )
Changes in operating liabilities
Current contract liabilities		58,020	( 57,429 )
Non-current contract liabilities		3,855	( 11,103 )
Notes payable		( 910 )	( 107 )
Accounts payable		56,330	15,917
Other payables		50,610	84,390
Other payables to related parties		( 95 )	168
Other current liabilities		7,946	( 6,398 )
Cash inflow generated from operations		1,569,001	1,016,912
Interest received		6,868	10,989
Interest paid		( 30,483 )	( 38,619 )
Income taxes paid		( 174,226 )	( 152,499 )
Net cash flows from operating activities		1,371,160	836,783

(Continued)

FORMOSA LABORATORIES, INC.
PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in thousands of New Taiwan dollars)

	Notes	Year ended December 31
		2025	2024
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through profit or loss		($ 35,687)	$ -
Proceeds from disposal of financial assets at fair value through profit or loss		16,238	8,106
Acquisition of investments accounted for using equity method		-	(28,898)
Proceeds from disposal of investments accounted for using equity method	6(27)	-	3,589
Received cash dividends from investments accounted for using equity method		67	60
Acquisition of property, plant and equipment (including capitalised interests)	6(28)	( 504,298)	( 545,078)
Proceeds from disposal of property, plant and equipment	6(21)	910	47,437
Acquisition of intangible assets		( 5,324)	( 944)
(Increase) decrease in guarantee deposits paid		( 1,821)	656
Increase in margin deposits		168	475
Increase in prepayments for business facilities (shown as other non-current assets)	6(7)	( 201,830)	( 33,228)
Net cash flows used in investing activities		( 731,557)	( 547,825)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans	6(29)	430,000	( 751,000)
Decrease in short-term notes and bills payable	6(29)	( 49,982)	( 49,977)
Proceeds from long-term debt	6(29)	4,880,000	6,540,000
Repayments of long-term debt (including current portion)	6(29)	( 5,548,146)	( 5,968,784)
Payments of lease liabilities	6(29)	( 23,812)	( 24,802)
Cash dividends paid	6(16)	( 360,767)	( 240,512)
Net cash flows from financing activities		( 672,707)	( 495,075)
Net decrease in cash and cash equivalents		( 33,124)	( 206,117)
Cash and cash equivalents at beginning of year		913,750	1,119,867
Cash and cash equivalents at end of year		$ 880,626	$ 913,750

The accompanying notes are an integral part of these parent company only financial statements.

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FORMOSA LABORATORIES, INC.

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2025 AND 2024
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

Formosa Laboratories, Inc. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.) in December 1995 and started its operations in the same year. The Company is primarily engaged in the wholesale and manufacturing of active pharmaceutical ingredients.

On June 6, 2008, in order to strengthen operational efficiency, enlarge operation scale and minimize management costs, the Company’s shareholders resolved to merge with L. C. United Chemical Corporation, effective July 1, 2008, with the Company as the surviving company L. C. United Chemical Corporation was incorporated in Luzhu Dist., Taoyuan County in July 1984 and is primarily engaged in the manufacturing and sales of ultraviolet absorbers.

After the merger, the Company is primarily engaged in the manufacturing and sales of active pharmaceutical ingredients, including medical active pharmaceutical ingredients and ultraviolet absorbers. The Company’s shares were listed in the Taiwan Stock Exchange starting from March 1, 2011. As of December 31, 2025, the Company’s authorised capital and paid-in capital were $1,600,000 and $1,202,560, respectively, with a par value of $10 (in dollars) per share.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These financial statements were authorised for issuance by the Board of Directors on March 12, 2026.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS®”) Accounting Standards that came into effect as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC and became effective from 2025 are as follows:

New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 21, ‘Lack of exchangeability’	January 1, 2025

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

(2) Effect of new issuances of or amendments to IFRS Accounting Standards as endorsed by the FSC but not yet adopted by the Company

New standards, interpretations and amendments endorsed by the FSC effective from 2026 are as follows:

New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9 and IFRS 7, ‘Amendments to the classification and measurement of financial instruments’	January 1, 2026
Amendments to IFRS 9 and IFRS 7, ‘Contracts referencing nature-dependent electricity’	January 1, 2026
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 – comparative information’	January 1, 2023
Annual Improvements to IFRS Accounting Standards—Volume 11	January 1, 2026

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

(3) IFRS Accounting Standards issued by IASB but not yet endorsed by the FSC

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

New Standards, Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’	To be determined by International Accounting Standards Board
IFRS 18, ‘Presentation and disclosure in financial statements’	January 1, 2027 (Note)
IFRS 19, ‘Subsidiaries without public accountability: disclosures’	January 1, 2027
Amendments to IAS 21, ‘Translation to a Hyperinflationary Presentation Currency’	January 1, 2027

Note: The FSC has announced in a press release on September 25, 2025 that public companies will apply IFRS 18 starting from the fiscal year 2028. Additionally, entities can choose to adopt IFRS 18 earlier based on their requirements after the FSC endorses IFRS 18.

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

IFRS 18, 'Presentation and disclosure in financial statements'

IFRS 18, 'Presentation and disclosure in financial statements' replaces IAS 1. The standard introduces a defined structure of the statement of profit or loss, disclosure requirements related to management-defined performance measures, and enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes.

4. SUMMARY OF MATERIAL ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC® Interpretations, and SIC® Interpretations that came into effect as endorsed by the Financial Supervisory Commission.

(2) Basis of preparation

A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:

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

(b) Financial assets at fair value through other comprehensive income financial assets measured at fair value.

(c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC® Interpretations, and SIC® Interpretations that came into effect endorsed by the FSC (collectively referred herein as the "IFRSs") requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

(3) Foreign currency translation

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"). The parent company only financial statements are presented in New Taiwan dollars, which is the Company's functional and presentation currency.

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A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

(c) The translation differences of non-monetary assets and liabilities denominated in foreign currencies were parts of gains or losses on fair value. For those non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

B. Translation of foreign operations

The operating results and financial position of all the group entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

(b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

(4) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

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(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(5) Cash equivalents

Cash equivalents refer to 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 that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(6) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income. Financial assets at amortised cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.
C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(7) Financial assets at fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Company has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

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C. At initial recognition, the Company measures the financial assets at fair value plus transaction costs. The Company subsequently measures the financial assets at fair value. The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(8) Accounts and notes receivable

A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) Impairment of financial assets

For financial assets at amortised cost, at each reporting date, the Company recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognises the impairment provision for lifetime ECLs.

(10) Derecognition of financial assets

The Company derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(11) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.

(12) Investments accounted for using equity method / subsidiaries and associates

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

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B. Inter-company transactions, balances and significant unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries were in consistent with the policies adopted by the Company.

C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses in proportion to its ownership.

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

E. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

F. The Company’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses. If the company provided endorsement/guarantee and loans to associates or intends to continuously support the investee, the Company shall continue to recognise losses in proportion to its ownership.

G. In accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, the profit or loss and other comprehensive income or loss presented on the parent company only financial statements are consistent with those presented on the consolidated financial statements. In addition, owner’s equity presented on the parent company only financial statements is consistent with equity attributable to owners of parent presented on the consolidated financial statements.

H. At the balance sheet date, the Group performs an impairment test for an investment in an associate when there is an indication that the investment may be impaired. The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset, by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

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(13) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures	2 to 50 years
Machinery and equipment	2 to 15 years
Utilities equipment	7 to 20 years
Testing equipment	2 to 13 years
Pollution-prevention equipment	5 to 15 years
Office equipment	2 to 10 years
Leasehold improvements	5 to 15 years
Other equipment	2 to 20 years

(14) Leasing arrangements (lessee) — right-of-use assets/lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of fixed payments, less any lease incentives receivable and variable lease payments that depend on an index or a rate. The Company subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an

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adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

(a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date; and
(c) Any initial direct costs incurred by the lessee;

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(15) Intangible assets

Computer software is stated at cost and amortized using the straight-line method over the estimated useful life of 3-10 years.

(16) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognising impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(17) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(18) Accounts and notes payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(19) Derecognition of financial liabilities

A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

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(20) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(21) Employee benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans

i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

C. Employees' compensation and directors' and supervisors' remuneration

Employees' compensation and directors' and supervisors' remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(22) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

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B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities.

(23) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

(24) Dividends

Dividends are recorded in the Company's financial statements in the period in which they are resolved by the Company's shareholders. Cash dividends are recorded as liabilities.

(25) Revenue recognition

A. Sales of goods

(a) The Company manufactures and sells active pharmaceutical ingredients and ultraviolet absorber. Sales are recognised 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 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, or the Company has objective evidence that all criteria for acceptance have been satisfied.

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(b) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

B. Research and development revenue

The Group provides research and development of medicine and related services. Revenue from providing services is recognised in the accounting period in which the services are rendered. The revenue from fixed price contract is recognised based on the percentage of the actual services provided as of the balance sheet date to the total services to be provided under the contract. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The Company had no significant accounting judgement in relation to the adoption of accounting policies. In addition, the details of significant accounting estimates and assumption uncertainty are as follows:

Critical accounting estimates and assumptions

(1) Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. Because of the intensely competitive market and the restriction of expiry date of active pharmaceutical ingredients, the Company assesses the amounts of inventories with normal consumption, obsolescence or without market value as of the balance sheet date, and writes off the inventory cost to net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2025, the carrying amount of inventories was $1,713,193.

(2) Impairment assessment of investments accounted for using equity method

The assessment procedure of goodwill impairment which was generated from premiums on investment relies on the Company’s subjective judgement which is based on the discounted value of expected future cash flows of investees to estimate the recoverable amount and the reasonableness of related assumptions.

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(3) Revenue recognition

The Company recognises revenue from providing services based on the transaction price and the stage of completion, which is measured based on the actual services provided as of the end of the reporting period in proportion to the total services to be provided. The estimated total commissioned service cost will be affected by the estimated total time incurred, compliance costs, etc. The Company reassesses the reasonableness of estimates periodically.

For the year ended December 31, 2025, the amount of commissioned service revenue recognised was $189,948.

DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

	December 31, 2025	December 31, 2024
Petty cash and cash on hand	$ 426	$ 305
Demand deposits	880,200	913,445
	$ 880,626	$ 913,750

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Company has no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss

	December 31, 2025	December 31, 2024
Current items:
Financial assets mandatorily measured at fair value through profit or loss
Listed stocks
EirGenix, Inc.	$ 28,285	$ 28,285
TOT Biopharm International Company Limited	43,801	51,166
Emerging stocks
TaiRx, Inc.	9,490	9,490
HCmed Innovations Co., Ltd.	13,031	-
Convertible bonds	15,745	-
	110,352	88,941
Valuation adjustment	39,724	28,593
	$ 150,076	$ 117,534

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Non-current items:
Financial assets mandatorily measured at fair value through profit or loss
Listed stocks
EirGenix, Inc. $ 588,756 $ 588,756
Emerging stocks
HCmed Innovations Co., Ltd. - 17,716
Unlisted stocks
Forward BioT Venture Capital 60,000 42,000
AmMax Bio, Inc. 31,285 31,285
AG Global Inc. 35,340 35,340
715,381 715,097
Valuation adjustment 453,509 648,749
$ 1,168,890 $ 1,363,846

A. The Company recognised net loss amounting to ($181,863) and ($523,071) on financial assets at fair value through profit or loss for the years ended December 31, 2025 and 2024, respectively.

B. Details of the Company’s financial assets at fair value through profit or loss pledged to others as collateral are provided in Note 8.

(3) Financial assets at fair value through other comprehensive income

Items	December 31, 2025	December 31, 2024
Non-current items:
Equity instruments
Unlisted stocks
Oncomatryx Biopharma, S.L.	$ 57,135	$ 57,135
PHARMASTAR INC.	14,895	14,895
Valuation adjustment	18,612	23,352
	$ 90,642	$ 95,382

A. The Company has elected to classify equity investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $90,642 and $95,382 as at December 31, 2025 and 2024, respectively.

B. Amounts recognised in comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

	Year ended December 31,
	2025	2024
Equity instruments at fair value through other comprehensive income
Fair value change recognised in other comprehensive income	($ 6,207)	($ 22,708)

C. As at December 31, 2025 and 2024, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at fair value through other comprehensive income held by the Company was $90,642 and $95,382, respectively.

D. The Company had no financial assets at fair value through other comprehensive income pledged to others as collateral.

(4) Notes and accounts receivable, net

	December 31, 2025	December 31, 2024
Accounts receivable	$ 1,060,506	$ 1,202,165
Less: Allowance for uncollectible accounts	( 14,550)	( 23,630)
	$ 1,045,956	$ 1,178,535

A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

	December 31, 2025		December 31, 2024
	Accounts receivable	Notes receivable	Accounts receivable	Notes receivable
Not past due	$ 791,666	$ -	$ 998,024	$ -
Up to 30 days past due	215,657	-	152,892	-
31~90 days past due	38,003	-	43,705	-
91~180 days past due	9,038	-	174	-
181 days past due	6,142	-	7,370	-
	$ 1,060,506	$ -	$ 1,202,165	$ -

The above ageing analysis was based on past due date.

B. As of December 31, 2025 and 2024, accounts receivable and notes receivable were all from contracts with customers. As of January 1, 2024, the balance of receivables from contracts with customers amounted to $948,175.

C. The Company did not hold any collateral for the security of notes and accounts receivable.

D. As at December 31, 2025 and 2024, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company's notes and accounts receivable was $1,045,956 and $1,178,535, respectively.

E. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(5) Inventories

	December 31, 2025
	Cost	Allowance for valuation losses and loss on obsolete and slow-moving inventories	Carrying amount
Goods	$ 2,079	($ 2,078)	$ 1
Raw materials	565,332	( 73,132)	492,200
Work in progress	592,665	( 150,231)	442,434
Finished goods	1,053,712	( 275,154)	778,558
	$ 2,213,788	($ 500,595)	$ 1,713,193
	December 31, 2024
	Cost	Allowance for valuation losses and loss on obsolete and slow-moving inventories	Carrying amount
Goods	$ 2,074	($ 627)	$ 1,447
Raw materials	665,187	( 81,468)	583,719
Work in progress	455,729	( 101,596)	354,133
Finished goods	965,684	( 195,511)	770,173
	$ 2,088,674	($ 379,202)	$ 1,709,472

Current expenses related to inventories are as follows:

	Year ended December 31,
	2025	2024
Cost of goods sold	$ 2,525,436	$ 2,458,410
Loss on valuation decline and scrapped inventory	156,045	140,729
Cost of services	130,765	74,474
Others	( 1,373)	( 1,637)
	$ 2,810,873	$ 2,671,976

For the year ended December 31, 2024, the Group reversed a previous inventory write-down which was accounted for as reduction of cost of goods sold as certain inventories which were previously provided with allowance were subsequently sold.

(6) Investments accounted for using equity method

Accounted as assets (shown as “investments accounted for using equity method”)	December 31, 2025	December 31, 2024
Formosa Pharmaceuticals, Inc.	$ 623,219	$ 658,443
Epione Investment Cayman Limited	3,506	6,359
A. R. Z Taiwan Limited	-	11
Epione Pharmaceuticals, Inc.	12,860	12,981
Formosa Laboratories Japan, Inc.	24,528	17,034
SynChem-Formosa, Inc.	-	13,466
	$ 664,113	$ 708,294

Accounted as liabilities (shown as “investments accounted for using equity method”)

SynChem-Formosa, Inc. ($ 24,234) $ -

A. Please refer to Note 4(3) in the consolidated financial statements for the year ended December 31, 2025 for the information regarding the Company's subsidiaries.

B. Because the proportion of A. R. Z Taiwan Limited's and Formosa Laboratories Japan's assets, liabilities, income and profit or loss presented in the Company was minimal, and the two companies were not significant associates, the related accounts are not disclosed separately.

(7) Property, plant and equipment

	Land	Buildings and structures (Note 3)	Machinery and equipment	Utilities equipment	Testing equipment	Pollution-prevention equipment	Office equipment	Leasehold improvements	Other equipment	Unfinished construction and equipment acceptance	Total	Prepayments for business facilities (Note 1)
At January 1, 2025
Cost	$ 655,950	$ 2,452,275	$ 3,507,917	$ 97,668	$ 483,216	$ 237,285	$ 147,945	$ 15,244	$ 387,131	$ 1,993,871	$ 9,978,502	$ 22,246
Accumulated depreciation	-	( 673,845)	( 2,302,793)	( 84,183)	( 300,367)	( 161,071)	( 100,996)	( 12,568)	( 250,172)	-	( 3,885,995)	-
	$ 655,950	$ 1,778,430	$ 1,205,124	$ 13,485	$ 182,849	$ 76,214	$ 46,949	$ 2,676	$ 136,959	$ 1,993,871	$ 6,092,507	$ 22,246
Opening net book amount as at January 1	$ 655,950	$ 1,778,430	$ 1,205,124	$ 13,485	$ 182,849	$ 76,214	$ 46,949	$ 2,676	$ 136,959	$ 1,993,871	$ 6,092,507	$ 22,246
Additions (Note 2)	-	27,496	65,878	-	16,914	3,090	6,628	-	26,772	383,120	529,898	249,254
Disposals	-	-	( 822)	-	-	-	-	-	-	-	( 822)	-
Transfers (Note 4)	-	61,261	90,134	-	23,387	2,911	14,264	-	36,914	( 276,159)	( 47,288)	( 21,321)
Reclassifications	-	-	7,228	-	( 7,228)	-	-	-	-	-	-	-
Depreciation charge	-	( 96,832)	( 269,558)	( 1,998)	( 46,878)	( 13,817)	( 14,671)	( 642)	( 39,418)	-	( 483,814)	-
Closing net book amount as at December 31	$ 655,950	$ 1,770,355	$ 1,097,984	$ 11,487	$ 169,044	$ 68,398	$ 53,170	$ 2,034	$ 161,227	$ 2,100,832	$ 6,090,481	$ 250,179
At December 31, 2025
Cost	$ 655,950	$ 2,541,033	$ 3,657,982	$ 97,668	$ 502,496	$ 243,287	$ 168,310	$ 14,954	$ 448,447	$ 2,100,832	$ 10,430,959	$ 250,179
Accumulated depreciation	-	( 770,678)	( 2,559,998)	( 86,181)	( 333,452)	( 174,889)	( 115,140)	( 12,920)	( 287,220)	-	( 4,340,478)	-
	$ 655,950	$ 1,770,355	$ 1,097,984	$ 11,487	$ 169,044	$ 68,398	$ 53,170	$ 2,034	$ 161,227	$ 2,100,832	$ 6,090,481	$ 250,179

~32~

	Land	Buildings and structures (Note 3)	Machinery and equipment	Utilities equipment	Testing equipment	Pollution-prevention equipment	Office equipment	Leasehold improvements	Other equipment	Unfinished construction and equipment acceptance	Total	Prepayments for business facilities (Note 1)
At January 1, 2024
Cost	$ 655,950	$ 2,377,114	$ 3,244,885	$ 97,668	$ 446,659	$ 225,567	$ 118,906	$ 15,244	$ 337,484	$ 1,956,823	$ 9,476,300	$ 26,870
Accumulated depreciation	-	( 583,992)	( 2,056,978)	( 82,179)	( 260,992)	( 145,105)	( 90,827)	( 11,915)	( 223,926)	-	( 3,455,914)	-
	$ 655,950	$ 1,793,122	$ 1,187,907	$ 15,489	$ 185,667	$ 80,462	$ 28,079	$ 3,329	$ 113,558	$ 1,956,823	$ 6,020,386	$ 26,870
Opening net book amount as at January 1	$ 655,950	$ 1,793,122	$ 1,187,907	$ 15,489	$ 185,667	$ 80,462	$ 28,079	$ 3,329	$ 113,558	$ 1,956,823	$ 6,020,386	$ 26,870
Additions (Note 2)	-	11,571	98,768	-	26,500	11,428	17,439	-	24,686	366,425	556,817	33,228
Disposals	-	-	( 1,247)	-	-	-	-	-	( 30)	( 67,767)	( 69,044)	-
Transfers (Note 4)	-	63,787	177,062	-	12,374	291	13,843	-	29,285	( 261,610)	35,032	( 37,852)
Reclassifications	-	-	177	-	( 177)	-	-	-	-	-	-	-
Depreciation charge	-	( 90,050)	( 257,543)	( 2,004)	( 41,515)	( 15,967)	( 12,412)	( 653)	( 30,540)	-	( 450,684)	-
Closing net book amount as at December 31	$ 655,950	$ 1,778,430	$ 1,205,124	$ 13,485	$ 182,849	$ 76,214	$ 46,949	$ 2,676	$ 136,959	$ 1,993,871	$ 6,092,507	$ 22,246
At December 31, 2024
Cost	$ 655,950	$ 2,452,275	$ 3,507,917	$ 97,668	$ 483,216	$ 237,285	$ 147,945	$ 15,244	$ 387,131	$ 1,993,871	$ 9,978,502	$ 22,246
Accumulated depreciation	-	( 673,845)	( 2,302,793)	( 84,183)	( 300,367)	( 161,071)	( 100,996)	( 12,568)	( 250,172)	-	( 3,885,995)	-
	$ 655,950	$ 1,778,430	$ 1,205,124	$ 13,485	$ 182,849	$ 76,214	$ 46,949	$ 2,676	$ 136,959	$ 1,993,871	$ 6,092,507	$ 22,246

Note 1: Prepayments for equipment were shown as "other non-current assets".
Note 2: Including capitalised interests.
Note 3: The significant components of buildings include main plants and ancillary works and improvements, which is/are depreciated over 15-50 and 2-15 years, respectively.
Note 4: The difference of transfer during the year arose from prepayments for equipment transferred to intangible assets and operating expenses.

A. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:

	Year ended December 31,
	2025	2024
Amount capitalised	$ 42,532	$ 39,496
Range of the interest rates for capitalisation	1.9725%~2.0975%	1.8775%~1.9700%

B. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

(8) Other non-current assets

	December 31, 2025	December 31, 2024
Prepayments for business facilities	$ 250,179	$ 22,246
Guarantee deposits paid (Note)	5,295	3,474
Others	541	979
	$ 256,015	$ 26,699

Note: Refer to Note 8 for the performance guarantees provided.

(9) Short-term borrowings

	December 31, 2025	Interest rate range	Collateral
Bank borrowings
Secured borrowings	$ 63,000	1.82%	Refer to Note 8
Unsecured borrowings	1,050,000	1.82%~1.85%	None
	$ 1,113,000
	December 31, 2024	Interest rate range	Collateral
Bank borrowings
Secured borrowings	$ 63,000	1.82%	Refer to Note 8
Unsecured borrowings	620,000	1.82%~1.85%	None
	$ 683,000

Interest expense recognised in profit or loss amounted to $20,733 and $21,438 for the years ended December 31, 2025 and 2024, respectively.

(10) Short-term notes and bills payable

	December 31, 2025	December 31, 2024
Commercial paper payable	$ -	$ 50,000
Less: Unamortized commercial paper payable	-	( 18)
	$ -	$ 49,982
Range of the interest rates	-	1.97%

~35~

(11) Other payables

	December 31, 2025	December 31, 2024
Salaries and bonus payable	$ 257,616	$ 241,205
Payable on machinery and equipment	115,785	90,185
Accrued commission	59,664	51,009
Employees' compensation and directors' and supervisors' remuneration payable	57,600	52,650
Consumables payable	52,655	42,247
Repairs and maintenance expense payable	43,017	35,297
Utilities expense payable	23,413	24,534
Pension payable	11,772	10,908
Rent payable	8,021	-
Import and export charges payable	6,745	8,924
Service expenses payable	5,306	5,864
Insurance expense payable	4,608	-
Others	70,398	79,211
	$ 716,600	$ 642,034

(12) Long-term borrowings

Type of borrowings	Borrowing period and repayment term	Interest rate	Collateral	December 31, 2025
Mid-term and long-term bank borrowings
Mega International Commercial Bank (Note 1)	2025.2.25 ~ 2028.5.31 The principal will be repaid upon maturity.	2.15%	Note 2	$ 400,000
	2021.5.3 ~ 2026.5.3 Quarterly and average repayment starting from August 2022.
		2.33%	"	6,883
THE SHANGHAI COMMERCIAL & SAVINGS BANK, LTD.	2023.8.4 ~ 2026.8.4 Quarterly and average repayment starting from May 2024.	2.38%	None	30,000
O-Bank Co., Ltd. (Note 1)	2025.5.23 ~ 2027.5.22 The principal will be repaid upon maturity.	2.27%	"	100,000
E.SUN COMMERCIAL BANK, LTD. (Note 1)	2024.2.6 ~ 2027.2.6 The principal will be repaid upon maturity.	2.07%	"	200,000
	2025.2.25 ~ 2028.2.25 The principal will be repaid upon maturity.	2.12%	"	100,000
CTBC Bank Co., Ltd. Tao-Yuan Branch. (Note 1)	2025.2.28 ~ 2027.2.28 The principal will be repaid upon maturity.	2.22%	"	120,000
Taishin International Bank. (Note 1)	2025.7.31 ~ 2027.7.31 The principal will be repaid upon maturity.	2.33%	"	200,000
EnTie Commercial Bank Co., Ltd. (Note 1)	2025.4.30 ~ 2027.4.30 The principal will be repaid upon maturity.	2.18%	"	200,000
TAICHUNG COMMERCIAL BANK Co., Ltd. (Note 1)	2023.11.30 ~ 2026.11.30 Quarterly and average repayment starting from February 2024.	2.33%	"	33,334
CHANG HWA COMMERCIAL BANK, LTD.	2024.11.8 ~ 2027.11.8 Quarterly and average repayment starting from February 2026.	2.19%	"	300,000
SUNNY BANK	2022.5.24 ~ 2027.5.24 Quarterly and average repayment starting from May 2024.	2.20%	Note 2	230,769
	2022.5.24 ~ 2027.5.24 Quarterly and average repayment starting from May 2023.	2.20%	None	100,966
	2025.3.31 ~ 2028.3.31 (Note 1) The principal will be repaid upon maturity.	2.20%	"	367,800
				2,389,752
Less: Current portion (shown as other current liabilities)				440,338
				$ 1,949,414

~36~

Type of borrowings	Borrowing period and repayment term	Interest rate	Collateral	December 31, 2024
Mid-term and long-term bank borrowings
Mega International Commercial Bank (Note 1)	2023.2.25 ~ 2026.2.24 The principal will be repaid upon maturity.	2.15%	Note 2	$ 400,000
	2021.5.3 ~ 2026.5.3 Quarterly and average repayment starting from August 2022.
		2.33%	"	20,649
THE SHANGHAI COMMERCIAL & SAVINGS BANK, LTD.	2021.3.30 ~ 2025.3.30 Quarterly and average repayment starting from June 2021.	2.38%	Note 2	6,125
	2022.7.28 ~ 2025.7.28 Quarterly and average repayment starting from April 2023.	2.38%	"	12,300
	2023.8.4 ~ 2026.8.4 Quarterly and average repayment starting from May 2024.	2.38%	None	70,000
O-Bank Co., Ltd. (Note 1)	2024.6.15 ~ 2026.6.14 The principal will be repaid upon maturity.	2.32%	"	200,000
E.SUN COMMERCIAL BANK, LTD. (Note 1)	2024.2.6 ~ 2027.2.6 The principal will be repaid upon maturity.	2.12%	"	200,000
EnTie Commercial Bank Co., Ltd. (Note 1)	2024.4.30 ~ 2026.4.30 The principal will be repaid upon maturity.	2.21%	"	200,000
Bank SinoPac Co., Ltd. (Note 1)	2024.2.6 ~ 2027.4.20 The principal will be repaid upon maturity.	2.10%	"	100,000
DBS (Note 1)	2024.6.30 ~ 2026.6.30 The principal will be repaid upon maturity.	1.97%	"	120,000
Taishin International Bank. (Note 1)	2023.7.31 ~ 2025.7.31 The principal will be repaid upon maturity.	2.40%	"	300,000
CTBC Bank Co., Ltd. Tao-Yuan Branch. (Note 1)	2024.2.28 ~ 2026.2.28 The principal will be repaid upon maturity.	2.30%	"	150,000
TAICHUNG COMMERCIAL BANK Co., Ltd. (Note 1)	2023.11.30 ~ 2026.11.30 Quarterly and average repayment starting from February 2024.	2.33%	"	66,667
CHANG HWA COMMERCIAL BANK, LTD.	2021.7.9 ~ 2024.7.9 Quarterly and average repayment starting from June 2023.	2.16%	"	12,500
	2024.11.8 ~ 2027.11.8 Quarterly and average repayment starting from February 2026.	2.19%	"	300,000
SUNNY BANK	2022.5.24 ~ 2027.5.24 Quarterly and average repayment starting from May 2024.	2.20%	Note 2	384,615
	2022.5.24 ~ 2027.5.24 Quarterly and average repayment starting from May 2023.	2.20%	None	167,241
	2023.3.10 ~ 2026.3.10 (Note 1) The principal will be repaid upon maturity.	2.20%	"	297,800
BANK OF PANHSIN	2023.9.1 ~ 2025.9.1 Starting from December 2023, $10 million will be repaid every quarter. The remaining balance shall be paid off in lump sum	2.36%	"	50,000
				3,057,897
Less: Current portion (shown as other current liabilities)				( 388,145)
				$ 2,669,752

Note 1: Such borrowings can be redrawn during the contract period.
Note 2: Information on guarantees is provided in Note 8.

A. Under the loan agreements, the Company is required to compute and maintain certain financial covenants based on the annual and semi-annual consolidated financial statements. As of December 31, 2025 and 2024, the Company has met all the required covenants.

B. As at December 31, 2025 and 2024, the Company had total undrawn borrowing facilities of $2,211,210 and $2,293,710, respectively.

(13) Pensions

A. Defined benefit plans

(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees' service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees' monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

(b) The amounts recognised in the balance sheet are as follows:

	December 31, 2025	December 31, 2024
Present value of defined benefit obligations	$ 49,004	$ 51,573
Fair value of plan assets	( 23,179)	( 26,398)
Net defined benefit liability (shown as “other non-current liabilities”)	$ 25,825	$ 25,175

	2025
	Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liability
At January 1	$ 51,573	($ 26,398)	$ 25,175
Current service cost	2,190	-	2,190
Interest expense (income)	771	( 402)	369
	54,534	( 26,800)	27,734
Remeasurements:
Change in financial assumptions	2,898	-	2,898
Experience adjustments	( 2,054)	( 1,802)	( 3,856)
	844	( 1,802)	( 958)
Pension fund contribution	-	( 951)	( 951)
Benefits paid	( 6,374)	6,374	-
At December 31	$ 49,004	($ 23,179)	$ 25,825
	2024
	Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liability
At January 1	$ 46,778	($ 23,407)	$ 23,371
Current service cost	1,636	-	1,636
Interest expense (income)	559	( 285)	274
	48,973	( 23,692)	25,281
Remeasurements:
Change in financial assumptions	( 1,115)	-	( 1,115)
Experience adjustments	4,063	( 2,116)	1,947
	2,948	( 2,116)	832
Pension fund contribution	-	( 938)	( 938)
Benefits paid	( 348)	348	-
At December 31	$ 51,573	($ 26,398)	$ 25,175

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company's defined benefit pension plan in accordance with the Fund's annual investment and utilisation plan and the "Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund" (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its 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 the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2025 and 2024 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

(e) The principal actuarial assumptions used were as follows:

	Year ended December 31,
	2025	2024
Discount rate	1.359%	1.496%
Future salary increases	3.00%	2.50%

Assumptions regarding future mortality experience are set based on the Taiwan Standard Ordinary Experience Mortality Table for the years ended December 31, 2025 and 2024. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

	Discount rate		Future salary increases
	Increase 0.25%	Decrease 0.25%	Increase 0.25%	Decrease 0.25%
December 31, 2025
Effect on present value of defined benefit obligation	($ 936)	$ 970	$ 938	($ 910)
	Discount rate		Future salary increases
	Increase 0.25%	Decrease 0.25%	Increase 0.25%	Decrease 0.25%
December 31, 2024
Effect on present value of defined benefit obligation	($ 949)	$ 978	$ 951	($ 928)

(f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2026 amount to $980.
(g) As of December 31, 2025, the weighted average duration of the retirement plan is 8 years.

B. Defined contribution plan

(a) The Company has established a defined contribution pension plan (the "New Plan") under the Labor Pension Act (the "Act"), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees' monthly salaries and wages to the employees' individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

~40~

(b) The pension costs under the defined contribution pension plan of the Company for the years ended December 31, 2025 and 2024 were $40,610 and $38,165, respectively.

(14) Share capital

As of December 31, 2025, the Company’s authorised capital was $1,600,000, consisting of 160,000 thousand shares of ordinary stock (including 8,000 thousand shares reserved for employee stock options issued by the Company), and the paid-in capital was $1,202,560, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

(15) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(16) Retained earnings

A. Under the Company’s Articles of Incorporation, current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ deficit and then 10% of the remaining amount shall be set aside as legal reserve (until the legal reserve equals the paid-in capital), and the Company shall appropriate or reverse special reserve in accordance with laws or regulations of the authority. The remainder, if any, along with prior years’ accumulated undistributed earnings shall be distributed as shareholders’ bonus or retained for operating requirements which shall be proposed by the Board of Directors and resolved by the shareholders.

B. The Company’s dividend distribution policy was based on the Company’s financial structure, operation status and capital budget, etc., along with the consideration of shareholders’ interest and balancing dividends. The distribution of earnings shall be in the form of stock or cash or both, and the cash dividends shall account for at least 10% of total dividends distributed.

C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

~41~

(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Order No. Financial-Supervisory-Securities-Corporate-1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

E. On June 20, 2025 and June 25, 2024, the Company’s shareholders resolved the appropriations of earnings for the years ended December 31, 2024 and 2023, as follows:

	Year ended December 31,
	2024		2023
	Amount	Dividends per share (in dollars)	Amount	Dividends per share (in dollars)
Legal reserve	$ 15,660		$ 12,111
Special reserve	18,198		( 54,964)
Cash dividends	360,768	$ 3.0	240,512	$ 2.0
	$ 394,626		$ 197,659

F. On March 12, 2026, the Company’s Board of Directors proposed the appropriations of earnings for the year ended December 31, 2025 as follows:

	Year ended December 31, 2025
	Amount	Dividends per share (in dollars)
Legal reserve	$ 44,187
Special reserve	8,142
Cash dividends	360,768	$ 3.0
	$ 413,097

As of March 12, 2026, the aforementioned appropriations of 2025 earnings have not yet been resolved by the shareholders.

(17) Other equity items

	Year ended December 31, 2025
	Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income	Currency translation differences	Total
At January 1	($ 2,856)	($ 15,342)	($ 18,198)
Valuation adjustment	( 6,207)	-	( 6,207)
Currency translation differences:
-Subsidiaries and associates	-	( 2,419)	( 2,419)
-Tax on subsidiaries and associates	-	484	484
At December 31	($ 9,063)	($ 17,277)	($ 26,340)
	Year ended December 31, 2024
	Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income	Currency translation differences	Total
At January 1	$ 19,852	($ 13,685)	$ 6,167
Valuation adjustment	( 22,708)	-	( 22,708)
Currency translation differences:
-Subsidiaries and associates	-	( 2,071)	( 2,071)
-Tax on subsidiaries and associates	-	414	414
At December 31	($ 2,856)	($ 15,342)	($ 18,198)

(18) Operating revenue

	Year ended December 31,
	2025	2024
Revenue from contracts with customers
Sales revenue	$ 4,651,798	$ 4,506,230
Service revenue	189,948	98,952
	$ 4,841,746	$ 4,605,182

~44~

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services over time and at a point in time in the following geographical regions:

	Year ended December 31, 2025
	At a point in time	Over time	Total
United States	$ 839,835	$ 23,030	$ 862,865
India	755,050	-	755,050
Netherlands	601,883	8,835	610,718
China	437,907	-	437,907
Taiwan	249,521	130,408	379,929
Japan	277,517	2,879	280,396
Germany	262,726	-	262,726
Others	1,227,359	24,796	1,252,155
	$ 4,651,798	$ 189,948	$ 4,841,746
	Year ended December 31, 2024
	At a point in time	Over time	Total
India	$ 1,056,918	$ -	$ 1,056,918
Netherlands	588,641	-	588,641
United States	455,779	29,947	485,726
Taiwan	283,189	82,118	365,307
Japan	253,936	8,754	262,690
Germany	250,629	-	250,629
China	210,789	-	210,789
Switzerland	231,249	(34,194)	197,055
Others	1,175,100	12,327	1,187,427
	$ 4,506,230	$ 98,952	$ 4,605,182

B. Contract assets and liabilities

The Company has recognised the following revenue-related contract assets and liabilities:

	December 31, 2025	December 31, 2024	January 1, 2024
Contract liabilities	$ 125,018	$ 63,143	$ 131,675

The Company recognised the revenue-related contract assets arising from research and development of medicine and related services and contract liabilities arising from advance sales receipts.

Revenue recognised that was included in the contract liability balance at the beginning of the year:

	Year ended December 31,
	2025	2024
Revenue recognised that was included in the contract liability balance at the beginning of the year	$ 36,560	$ 95,915

(19) Interest income

	Year ended December 31,
	2025	2024
Interest income from bank deposits	$ 6,868	$ 10,989

(20) Other income

	Year ended December 31,
	2025	2024
Indemnities	$ -	$ 77
Grant revenues	396	125
Income from managerial services	1,496	3,951
Rental income	3,734	3,488
Others	5,040	4,214
	$ 10,666	$ 11,855

(21) Other gains and losses

	Year ended December 31,
	2025	2024
Net currency exchange (losses) gains	($ 166,587)	$ 28,436
Net losses on financial assets at fair value through profit or loss	( 181,863)	( 523,071)
Gain (losses) on disposal of property, plant and equipment	88	( 21,607)
Gains arising from lease modifications	5	59
Miscellaneous disbursements	( 17,530)	( 670)
	($ 365,887)	($ 516,853)

(22) Finance costs

	Year ended December 31,
	2025	2024
Interest expense:
Bank borrowings	$ 71,571	$ 76,188
Others	1,407	1,048
	72,978	77,236
Less: Capitalisation of qualifying assets	( 42,532)	( 39,496)
Finance costs	$ 30,446	$ 37,740

(23) Expenses by nature

	Year ended December 31,
	2025	2024
Employee benefit expense	$ 1,177,213	$ 1,122,988
Depreciation charges on right-of-use assets, property, plant and equipment	$ 508,012	$ 475,706

	Year ended December 31,
	2025	2024
Amortisation charges on intangible assets and other non-current assets	$ 7,525	$ 7,940
(24) Employee benefit expense
	Year ended December 31,
	2025	2024
Wages and salaries	$ 1,009,402	$ 968,205
Labour and health insurance fees	86,864	79,396
Pension costs	43,169	40,075
Directors’ remuneration	10,960	9,710
Other personnel expenses	26,818	25,602
	$ 1,177,213	$ 1,122,988

A. In accordance with the Articles of Incorporation, if the Company has a profit for the year, at least 5% of the distributable profit shall be appropriated as employees' compensation, and no more than 2% shall be appropriated as directors' remuneration. However, if the Company has accumulated losses, an amount sufficient to offset such losses shall be reserved in advance and reported to the shareholders' meeting.

Of the employees' compensation mentioned above, no less than 20% shall be allocated to rank-and-file employees for remuneration distribution or salary adjustments. The recipients of employees' compensation may include employees of certain controlled or subsidiary companies who meet specified criteria, and the method of distribution shall be determined by the Board of Directors.

B. For the years ended December 31, 2025 and 2024, employees' compensation was accrued at $50,400 and $46,200, respectively; while directors' remuneration was accrued at $7,200 and $6,450, respectively. The aforementioned amounts were recognised in salary expenses. For the year ended December 31, 2025, the Company has accrued the compensation and remuneration according to the profit of current year and the percentage range as regulated in the Company's Articles of Incorporation.

On March 12, 2026, the employees' compensation and directors' remuneration resolved by the Board of Directors were $50,400 and $7,200, respectively, and the employees' compensation will be paid in cash.

C. On March 12, 2025, the employees' compensation and directors' remuneration resolved by the Board of Directors were $46,200 and $6,450, respectively and the employees' compensation will be distributed in the form of cash.

D. Information about employees' compensation and directors' remuneration of the Company as resolved by the Board of Directors will be posted in the "Market Observation Post System" at the website of the Taiwan Stock Exchange.

(25) Income tax

A. Income tax expense

(a) Components of income tax:

	Year ended December 31
	2025	2024
Current tax:
Current tax on profits for the year	$ 184,247	$ 180,804
Prior year income tax under (over) estimation	10,138	( 24,681)
Total current tax	194,385	156,123
Deferred tax:
Origination and reversal of temporary differences	( 30,200)	( 10,484)
Tax impact of investment tax credit	( 57,956)	( 32,879)
Income tax expense	$ 106,229	$ 145,639

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

	Year ended December 31,
	2025	2024
Currency translation differences	($ 484)	($ 414)
Remeasurement of defined benefit obligations	192	( 166)
	($ 292)	($ 580)

B. Reconciliation between income tax expense and accounting profit

	Year ended December 31,
	2025	2024
Tax calculated based on profit before tax and statutory tax rate	$ 109,467	$ 54,336
Expenses disallowed by tax regulation	45,225	117,142
Tax exempt income by tax regulation	( 638)	( 1,152)
Prior year income tax under (over) estimation	10,138	( 24,681)
Foreign withholding tax on dividends	( 7)	( 6)
Tax impact of investment tax credit	( 57,956)	( 32,879)
Income tax expense	$ 106,229	$ 112,760

C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

	2025
	January 1	Recognised in profit or loss	Recognised in other comprehensive income	December 31
Temporary differences:
- Deferred tax assets:
Unrealised inventory valuation loss	$ 75,840	$ 24,279	$ -	$ 100,119
Amount of allowance for bad debts that exceed the limit for tax purpose	2,283	( 1,587)	-	696
Pensions	5,118	-	( 192)	4,926
Unrealised expenses	5,961	563	-	6,524
Cumulative translation adjustments	3,835	-	484	4,319
	93,037	23,255	292	116,584
- Deferred tax liabilities:
Land revaluation increment	( 17,529)	-	-	( 17,529)
Unrealised exchange gains	( 4,406)	394	-	( 4,012)
Foreign investment income	5,258	6,551	-	11,809
	( 16,677)	6,945	-	( 9,732)
	$ 76,360	$ 30,200	$ 292	$ 106,852
	2024
	January 1	Recognised in profit or loss	Recognised in other comprehensive income	December 31
Temporary differences:
- Deferred tax assets:
Unrealised inventory valuation loss	$ 62,772	$ 13,068	$ -	$ 75,840
Unrealised exchange loss	8,709	( 8,709)	-	-
Amount of allowance for bad debts that exceed the limit for tax purpose	-	2,283	-	2,283
Pensions	4,972	( 20)	166	5,118
Unrealised expenses	5,280	681	-	5,961
Cumulative translation adjustments	3,421	-	414	3,835
	85,154	7,303	580	93,037
- Deferred tax liabilities:
Land revaluation increment	( 17,529)	-	-	( 17,529)
Unrealised exchange gains	-	( 4,406)	-	( 4,406)
Foreign investment income	( 2,329)	7,587	-	5,258
	( 19,858)	3,181	-	( 16,677)
	$ 65,296	$ 10,484	$ 580	$ 76,360

D. Details of the amount the Company is entitled as investment tax credit and recognised deferred tax assets are as follows:

December 31, 2025
Qualifying items	Year incurred	Unused tax credits	Unrecognised deferred tax assets	Expiry year
Research and development	2025	$ -	$ 57,405	2027~2029 year
Statute for Industrial Innovation	2025	$ -	$ 551	2027 year
		$ -	$ 57,956
December 31, 2024
Qualifying items	Year incurred	Unused tax credits	Unrecognised deferred tax assets	Expiry year
Research and development	2024	$ -	$ 31,349	2026~2028 year
Statute for Industrial Innovation	2024	$ -	$ 1,530	2026 year
		$ -	$ 32,879

E. The Company’s income tax returns through 2023 have been assessed and approved by the Tax Authority.

(26) Earnings per share

	Year ended December 31, 2025
	Amount after tax	Weighted average number of ordinary shares outstanding (shares in thousands)	Earnings per share (in dollars)
Basic earnings per share
Profit attributable to ordinary shareholders of the parent	$ 441,107	120,256	$ 3.67
Diluted earnings per share
Profit attributable to ordinary shareholders of the parent	$ 441,107	120,256
Assumed conversion of all dilutive potential ordinary shares
Employees’ compensation	-	1,025
Profit attributable to ordinary shareholders of the parent	$ 441,107	121,281	$ 3.64

	Year ended December 31, 2024
	Amount after tax	Weighted average number of ordinary shares outstanding (shares in thousands)	Earnings per share (in dollars)
Basic earnings per share
Profit attributable to ordinary shareholders of the parent	$ 157,268	120,256	$ 1.31
Diluted earnings per share
Profit attributable to ordinary shareholders of the parent	$ 157,268	120,256
Assumed conversion of all dilutive potential ordinary shares
Employees’ compensation	-	734
Profit attributable to ordinary shareholders of the parent	$ 157,268	120,990	$ 1.30

(27) Transactions with non-controlling interest

A. On June 20, 2024, the Board of Directors of the subsidiary, Formosa Pharmaceuticals, Inc., approved cash capital increase by issuing 16,800 thousand new shares. As the Group did not subscribe to the capital increase in proportion to its ownership percentage and the employees continuously exercised their stock options, the Group's shareholding ratio in this subsidiary decreased from 45.84% to 40.73%. These transactions increased non-controlling interest by $436,212, and increased the equity attributable to the owners of the parent by $194,237. For the year ended December 31, 2024, the effects from changes in the owner's equity of Formosa Pharmaceuticals, Inc. on the owner's equity attributable to the parent company were as follows:

	Year ended December 31, 2024
Cash	$ 630,449
Increase in the carrying amount of non-controlling interest	( 436,212)
Capital surplus
- recognition of changes in ownership interest in subsidiaries	$ 194,237

B. Disposal of equity interest in a subsidiary (that did not result in a loss of control)

On August 9, 2024, the Group disposed of 0.07% of shares of its subsidiary - Formosa Pharmaceuticals. Inc. for a total cash consideration of $3,589. The carrying amount of non-controlling interest in Formosa Pharmaceuticals. Inc. was $596 at the disposal date. This transaction resulted in an increase in the non-controlling interest by $2,003 and an increase in the equity attributable to owners of the parent by $1,586. The effect of changes in interests in Formosa Pharmaceuticals. Inc. on the equity attributable to owners of the parent for the year ended December 31, 2024 is shown below:

Carrying amount of non-controlling interest disposed
( $ 2,003 )
Consideration received from non-controlling interest
3,589
Capital surplus
- recognition of changes in ownership
$ 1,586

(28) Supplemental cash flow information
Investing activities with partial cash payments

Year ended December 31, 2024

Purchase of property, plant and equipment
$ 529,898 $ 556,817
Add: Opening balance of payable on equipment
90,185 78,446
Less: Ending balance of payable on equipment
( 115,785 ) ( 90,185 )
Cash paid during the year
$ 504,298 $ 545,078

(29) Changes in liabilities from financing activities

	2025
	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings (including current portion)	Lease liability	Liabilities from financing activities-gross
At January 1	$ 683,000	$ 49,982	$ 3,057,897	$ 68,365	$ 3,859,244
Changes in cash flow from financing activities	430,000	( 49,982 )	( 668,146 )	( 23,812 )	( 311,940 )
Changes in other non-cash items	-	-	-	25,028	25,028
At December 31	$ 1,113,000	$ -	$ 2,389,751	$ 69,581	$ 3,572,332
	2024
	Short-term borrowings	Short-term notes and bills payable	Long-term borrowings (including current portion)	Lease liability	Liabilities from financing activities-gross
At January 1	$ 1,434,000	$ 99,959	$ 2,486,681	$ 37,836	$ 4,058,476
Changes in cash flow from financing activities	( 751,000 )	( 49,977 )	571,216	( 24,802 )	( 254,563 )
Changes in other non-cash items	-	-	-	55,331	55,331
At December 31	$ 683,000	$ 49,982	$ 3,057,897	$ 68,365	$ 3,859,244

RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

As the Company's shares were widely held by the public, the Company had no ultimate parent company and ultimate controlling party.

(2) Names of related parties and the relationship with the Company

Names of related parties	Relationship with the Company
Formosa Pharmaceuticals. Inc.	Subsidiary
Activus Pharma Co., Ltd.	Subsidiary
Epione Pharmaceuticals, Inc.	Subsidiary
SynChem-Formosa, Inc.	Subsidiary
Epione Investment Cayman Limited	Subsidiary
Epione Investment HK Limited	Subsidiary
Shanghai Epione Enterprise Co., Ltd.	Subsidiary
A. R. Z Taiwan Limited	Associate
Formosa Laboratories Japan, Inc	Associate
EirGenix Inc.	Other related party
TaiRx, Inc.	Other related party (Note)
Eros Biopharma Inc.	Other related party
Caravel Oculus Inc.	Other related party

Note: The corporate director representative of this entity is the spouse of the Company's Chairman and General Manager. The corporate director representative resigned on June 12, 2025; therefore, from June 12, 2025 onwards, this individual is no longer considered a related party of the Group.

(3) Significant related party transactions

A. Operating revenue

	Year ended December 31,
	2025	2024
Sales of goods:
Subsidiaries	$ 3,552	$ 18,693
Associates	190,724	59,168
Other related parties	19,565	29,457
	$ 213,841	$ 107,318

Goods are sold based on the price lists in force and terms that would be available to third parties.

	Year ended December 31,
	2025	2024
Sales of services:
Subsidiaries	$ 3,684	$ 8,808
Other related parties	20,455	14,294
	$ 24,139	$ 23,102

The Company was appointed to develop the manufacturing process and research method of active pharmaceutical ingredients. As there were no similar transactions for reference, the price cannot be compared with general customers and was based on mutual agreement. The payment term was not significantly different from regular transactions.

~52~

B. Purchases

	Year ended December 31,
	2025	2024
Purchases of goods:
Other related parties	$ -	$ 2,135

Goods and services are purchased from associates and an entity controlled by key management personnel on normal commercial terms and conditions.

C. Accounts receivable

	December 31, 2025	December 31, 2024
Subsidiaries	$ 3,155	$ 2,399
Associates	38,585	10,714
Other related parties	6,951	6,715
Loss allowance	( 23)	( 5)
	$ 48,668	$ 19,823

Receivables from related parties arose from sales of goods and service transactions, except for some service revenue which were recognised based on the percentage-of-completion method. The credit terms were 30-90 days from the date of sale. The receivables are unsecured in nature and bear no interest.

D. Contract liabilities

	December 31, 2025	December 31, 2024
Current contract liabilities
Formosa Pharmaceuticals. Inc.	$ 11,079	$ -

E. Other income and other receivables

	December 31, 2025	December 31, 2024
Other receivables (Note)
Subsidiaries	$ 785	$ 21,127
Associates	360	26
Other related parties	41	9
	$ 1,186	$ 21,153

Note: Other receivables arose from providing administrative resource management service provided, and the collection terms were based on the mutual agreement and collected according to the contract period. For the years ended December 31, 2025 and 2024, the Company recognised other income from subsidiaries and associates in the amounts of $1,048, $138 and $1,366, $122, respectively.

F. Other payables

	December 31, 2025	December 31, 2024
Other related parties	$ 137	$ 231

G. Loans to /from related parties

Loans to related parties

Outstanding balance

	December 31, 2025	December 31, 2024
Subsidiaries	$ 67,575	$ 19,671

(4) Key management compensation

	Year ended December 31,
	2025	2024
Salaries and other short-term employee benefits	$ 61,147	$ 65,089
Post-employment benefits	1,057	1,005
	$ 62,204	$ 66,094

8. PLEDGED ASSETS

The Company's assets pledged as collateral are as follows:

Pledged asset	Book value		Purpose
	December 31, 2025	December 31, 2024
Financial assets at fair value through profit or loss	$ 586,150	$ 684,000	Guarantee for short-term borrowings
Land	655,950	655,950	Guarantee for short-term borrowings and mid-term and long-term borrowing facility
Buildings and structures	1,585,020	1,577,323	"
Machinery and equipment	-	128,570	Guarantee for mid-term and long-term borrowing facility
Pollution-prevention equipment	-	3,790	"
Unfinished construction and equipment under acceptance	115,489	440,931	"
Guarantee deposits paid (shown as “other non-current assets”)	1,855	962	Performance guarantee
	$ 2,944,464	$ 3,491,526

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

	December 31, 2025	December 31, 2024
Property, plant and equipment	$ 816,492	$ 282,971

~55~

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Information about the appropriations of 2025 earnings of the Group is provided in Note 6(16)F.

12. OTHERS

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain the optimal capital structure, the Company may adjust the amount of dividends paid to shareholders, issue new shares or convertible bonds. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net liabilities is calculated as total borrowings (including short-term borrowings, short-term notes and bills payable, corporate bonds payable and long-term borrowings (including current portion)) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the parent company only balance sheet plus net debt.

During the year ended December 31, 2025, the Company’s strategy, which was unchanged from 2024, was to maintain the gearing ratio within a certain range. The gearing ratios at December 31, 2025 and 2024 were as follows:

	December 31, 2025	December 31, 2024
Total borrowings	$ 3,502,752	$ 3,790,879
Less: Cash and cash equivalents	( 880,626)	( 913,750)
Net debt	2,622,126	2,877,129
Total equity	7,757,183	7,684,075
Total capital	$ 10,379,309	$ 10,561,204
Gearing ratio	25.37%	27.24%

(2) Financial instruments

A. Financial instruments by category

	December 31, 2025	December 31, 2024
Financial assets
Financial assets at fair value through profit or loss
Financial assets mandatorily measured at fair value through profit or loss	$ 1,318,966	$ 1,481,380
Financial assets at fair value through other comprehensive income
Designation of equity instrument	$ 90,642	$ 95,382

	December 31, 2025	December 31, 2024
Financial assets at amortised cost
Cash and cash equivalents	$ 880,626	$ 913,750
Notes and accounts receivable (including related parties)	1,094,624	1,198,358
Other receivables due from related parties	133,384	43,158
Guarantee deposits paid (shown as “other non-current assets”)	5,295	3,474
	$ 2,113,929	$ 2,158,740
Financial liabilities
Financial liabilities at amortised cost
Short-term borrowings	$ 1,113,000	$ 683,000
Short-term notes and bills payable	-	49,982
Notes and accounts payable	274,356	218,936
Other payables	716,736	642,265
Long-term borrowings (including current portion)	2,389,752	3,057,897
	$ 4,493,844	$ 4,652,080
Lease liability (including current portion)	$ 69,581	$ 68,365

B. Financial risk management policies

The Company's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company's entire risk management policies focus on unpredictable matters in financial market and reducing the potential negative effects on the Company's financial status and financial performance.

C. Significant financial risks and degrees of financial risks

(a) Market risk

Exchange rate risk

i. The Company operates internationally and is exposed to exchange rate risk arising from the transactions of the Company used in various functional currency, primarily with respect to the USD and EUR. Foreign exchange rate risk arises from future commercial transactions and recognised assets and liabilities.
ii. Management has set up a policy to require each entity of the Company to manage their foreign exchange risk against their functional currency. Each entity of the Company is required to hedge their entire foreign exchange risk exposure with the Company treasury. Exchange rate risk is measured through a forecast of highly probable USD and EUR expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting cost of forecast inventory purchases.
iii. The Company's businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~57~

	December 31, 2025
	Foreign currency amount (in thousands)	Exchange rate	Carrying amount (NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD	$ 41,976	31.43	$ 1,312,759
Non-monetary items
JPY:NTD	122,154	0.20	24,528
USD:NTD	1,378	31.43	43,308
EUR:NTD	2,314	36.90	85,375
HKD:NTD	10,966	4.04	44,281
Financial liabilities
Monetary items
USD:NTD	4,342	31.43	135,276
	December 31, 2024
	Foreign currency amount (in thousands)	Exchange rate	Carrying amount (NTD)
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD	$ 47,031	32.785	$ 1,143,103
Non-monetary items
JPY:NTD	81,154	0.2099	17,034
USD:NTD	1,484	32.785	48,643
EUR:NTD	2,314	34.14	78,989
HKD:NTD	9,158	4.222	38,667
Financial liabilities
Monetary items

iv. The exchange gain (loss) arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2025 and 2024, amounted to ($166,587) and $28,436, respectively.

v. Analysis of foreign currency market risk arising from significant foreign exchange variation:

	Year ended December 31, 2025
Sensitivity analysis
Degree of variation	Effect on profit or loss
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD	1%
Financial liabilities
Monetary items
USD:NTD	1%
	Year ended December 31, 2024
Sensitivity analysis
Degree of variation	Effect on profit or loss
(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD	1%
Financial liabilities
Monetary items
USD:NTD	1%

Price risk

i. The Company’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

ii. The Company’s investments in equity securities comprise equity instruments issued by domestic and foreign companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2025 and 2024 would have increased/decreased by $13,190 and $14,814, respectively, as a result of gains/losses on equity securities classified as at

~58~

fair value through profit or loss. Other components of equity would have increased by $906 and $954, respectively, as a result of other comprehensive income on equity investment classified as at fair value through other comprehensive income.

Cash flow and fair value interest rate risk

i. The Company’s interest rate risk arose from short-term notes and bills payable, short-term and long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk which was partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. During 2025 and 2024, the Company’s borrowings at variable rate were mainly denominated in New Taiwan dollars and US Dollars.

ii. For the years ended December 31, 2025 and 2024, if the borrowing interest rate increased by 0.1% (such as 1% increased to 1.1%) with all other variables held constant, the profit, net of tax for the years ended December 31, 2025 and 2024 would have decreased by $1,912 and $2,446, respectively. The main factor is that increases in interest expense result from floating rate borrowings.

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and financial assets stated at amortised cost.

ii. According to the Company’s credit policy, the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

iii. The Company adopts the assumption under IFRS 9, that is, the default occurs when the contract payments are past due over 90 days.

iv. The Company adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

v. The Company classifies customer’s accounts receivable in accordance with credit rating of customer. The Company applies the modified approach using a provision roll rate matrix based on the loss rate methodology to estimate the expected credit loss.

~59~

vi. The Company wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Company will continue executing the recourse procedures to secure their rights.

vii. The Company used the forecastability of Taiwan Institute of Economic Research boom observation report to adjust historical and timely information to assess the default possibility of accounts receivable. The Company distinguished customers into optimal customers and non-optimal customers based on the customers' rating. Related information is as follows:

(i) The loss allowance for optimal customers' accounts was estimated to be 0.03% by using expected loss rate method. As of December 31, 2025 and 2024, the balances of loss allowance were $334 and $219, respectively.

(ii) The loss allowance for non-optimal customers' accounts was estimated by using provision roll rate matrix. As of December 31, 2025 and 2024, related information is as follows:

	Expected loss rate	Total book value	Loss allowance
December 31, 2025
Not past due	0.96%	$ 283,070	$ 2,731
Up to 30 days past due	4.92%	130,101	6,404
31~90 days past due	13.47%~28.96%	24,575	3,859
91~180 days past due	69.10%~100%	-	-
181 days past due	100.00%	1,245	1,245
Total		$ 438,991	$ 14,239
	Expected loss rate	Total book value	Loss allowance
December 31, 2024
Not past due	1.68%	$ 399,783	$ 6,722
Up to 30 days past due	12.03%	73,299	8,821
31~90 days past due	18.65%~47.35%	14,248	6,506
91~180 days past due	78.08%~100%	69	69
181 days past due	100.00%	1,298	1,298
Total		$ 488,697	$ 23,416

viii. Movements in relation to the Company applying the modified approach to provide loss allowance for accounts receivable are as follows:

	Year ended December 31, 2025
	Non-related parties	Related parties	Total
Balance at January 1	$ 23,630	$ 5	$ 23,635
Reversal of impairment loss	( 9,080)	18	( 9,062)
Balance at December 31	$ 14,550	$ 23	$ 14,573

~61~

Year ended December 31, 2024

	Non-related parties	Related parties	Total
Balance at January 1	$ 7,312	$ 3	$ 7,315
Reversal of impairment loss	16,318	2	16,320
Balance at December 31	$ 23,630	$ 5	$ 23,635

For provisioned loss on December 31, 2025 and 2024, the impairment losses (reversal) arising from customers' contracts are ($9,062) and $16,320, respectively.

i. Company treasury monitors rolling forecasts of the Company's liquidity requirements to ensure it has sufficient cash to meet operational requirements.
ii. The table below analyses the Company's non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December 31, 2025	Within 1 year	Between 1 and 2 years	Between 2 and 3 years	Over 3 years
Short-term borrowings	$ 1,115,589	$ -	$ -	$ -
Short-term notes and bills payable	-	-	-	-
Notes payable	-	-	-	-
Accounts payable	274,356	-	-	-
Other payables (related parties)	716,736	-	-	-
Lease liability (including current portion)	19,864	15,345	9,343	29,682
Long-term borrowings (including current portion)	465,246	1,120,622	881,070	-
	$ 2,591,791	$ 1,135,967	$ 890,413	$ 29,682

Non-derivative financial liabilities:

December 31, 2024	Within 1 year	Between 1 and 2 years	Between 2 and 3 years	Over 3 years
Short-term borrowings	$ 683,966	$ -	$ -	$ -
Short-term notes and bills payable	49,982	-	-	-
Notes payable	910	-	-	-
Accounts payable	218,026	-	-	-
Other payables (related parties)	642,265	-	-	-
Lease liability (including current portion)	22,051	14,301	10,357	25,807
Long-term borrowings (including current portion)	451,428	1,842,409	864,839	-
	$ 2,068,628	$ 1,856,710	$ 875,196	$ 25,807

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

B. The carrying amounts of the Company's financial instruments not measured at fair value comprise cash and cash equivalents, contract assets, notes receivable, accounts receivable (including related parties), other receivables (including related parties), short-term borrowings, short-term bills payable, notes payable, accounts payable, other payables, corporate bonds payable and long-term borrowings (including current portion) are approximate to their fair values.

C. The related information on financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2025 and 2024 are as follows:

(a) The related information on the nature of the assets and liabilities is as follows:

December 31, 2025	Level 1	Level 2	Level 3	Total
Assets
Recurring fair value measurements
Financial assets at fair value through profit or loss
Equity securities	$ 1,219,165	$ -	$ 24,086	$ 1,243,251
Venture Fund	-	-	60,000	60,000
Convertible bonds	-	-	15,715	15,715
Financial assets at fair value through other comprehensive income - equity securities	-	-	90,642	90,642
Total	$ 1,219,165	$ -	$ 190,443	$ 1,409,608
December 31, 2024	Level 1	Level 2	Level 3	Total
Assets
Recurring fair value measurements
Financial assets at fair value through profit or loss
Equity securities	$ 1,413,490	$ -	$ 25,890	$ 1,439,380
Venture Fund	-	-	42,000	42,000
Financial assets at fair value through other comprehensive income - equity securities	-	-	95,382	95,382
Total	$ 1,413,490	$ -	$ 163,272	$ 1,576,762

(b) The methods and assumptions the Company used to measure fair value are as follows:

i. For the instruments the Company used market quoted prices as their fair values (that is, Level 1), the Company uses the closing price of market quoted price to measure the listed and emerging shares.

ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques. Some of the listed stocks which were invested by the Company were restricted by lock-up period. Their fair values were determined based on the quoted prices of the same and unrestricted instruments in the active market, adjusted by the restricted effects, and calculated by inputting available market information in the model at the balance sheet date.

~63~

D. For the years ended December 31, 2025 and 2024, there was no transfer between Level 1 and Level 2.
E. The following chart is the movement of Level 3 for the years ended December 31, 2025 and 2024:

	Equity securities and derivative instruments
	2025	2024
At January 1	$ 163,272	$ 135,793
Recognised in profit or loss	( 1,834)	4,140
Gains and losses recognised in other comprehensive income	( 4,740)	1,372
Transfers out from level 3	-	( 30,058)
Acquired during the year	33,745	52,025
At December 31	$ 190,443	$ 163,272

F. Treasury segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions and periodically reviewed.
G. The following is the qualitative information of significant unobservable inputs to valuation model used in Level 3 fair value measurement:

	Fair value at December 31, 2025	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Non-derivative equity instrument:
Unlisted shares	$ 114,728	Marketcomparable companies	Equity to net worth ratio	1.51–9.56 (4.09)	The higher the multiple, the higher the fair value
Venture Fund	$ 60,000	Net asset value	Not applicable	-	Not applicable
Non-derivative debt instrument:
Corporate bond	$ 15,715	Latest transaction prices in inactive market	Not applicable	-	Not applicable
	Fair value at December 31, 2024	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
Non-derivative equity instrument:
Unlisted shares	$ 121,272	Latest transaction prices in inactive market	Not applicable	-	Not applicable
Venture Fund	$ 42,000	Net asset value	Not applicable	-	Not applicable

~65~

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Refer to table 2.
D. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: None.
E. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Refer to table 3.
F. Significant inter-company transactions during the reporting periods: Refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Refer to table 5.

(3) Information on investments in Mainland China

A. Basic information: Refer to table 6.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

14. SEGMENT INFORMATION

In accordance with the Article 22 of Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Company is not required to prepare segment information within the scope of IFRS 8 in its parent company only financial statements.

FORMOSA LABORATORIES, INC.

Loans to others

Year ended December 31, 2025

Table 1

Expressed in thousands of NTD

(Except as otherwise indicated)

No.	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during the year ended December 31, 2025	Balance at December 31, 2025	Actual amount drawn down	Interest rate	Nature of loan (Note 1)	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral		Limit on loans granted to a single party	Ceiling on total loans granted	Footnote
													Item	Value
0	Formosa Laboratories, Inc.	SynChem-Formosa Inc.	Other receivables due from related parties	Y	$ 157,150	$ 125,720	$ 67,575	-	2	$ -	Revolving funds	$ -	None	$ -	$ 775,718	$ 1,551,437	Note 2
1	Formosa Pharmaceuticals, Inc.	Activus Pharma Co., Ltd.	Other receivables-related parties	Y	8,000	-	-	3.244%	2	-	Revolving funds	-	None	-	436,986	509,817	Note 3

Note 1: The column of 'Nature of loan' shall fill in 1: 'Business transaction or 2: 'Short-term financing'.
Note 2: The Company loans to others:
(1) Ceiling of loans to individual (short-term financing) is $10\%$ of the creditor's net asset of latest financial statements.
(2) Total ceiling of loans to individual (short-term financing) is $20\%$ of the creditor's net asset of latest financial statements.
Note 3: Formosa Laboratories Japan loans to others:
(1) Ceiling of loans to individual (short-term financing) is $30\%$ of the creditor's net asset of latest financial statements.
(2) Total ceiling of loans to individual (short-term financing) is $35\%$ of the creditor's net asset of latest financial statements.

FORMOSA LABORATORIES, INC.

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

December 31, 2025

Table 2
Expressed in thousands of NTD
(Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account	As of December 31, 2025
				Number of shares	Carrying amount	Ownership (%)	Fair value
Formosa Laboratories, Inc.	EirGenix, Inc. common stocks	Other related party	Current/non-current financial assets at fair value through profit or loss	18,552,818	$ 1,144,709	6.06	$ 1,144,709
Formosa Laboratories, Inc.	TOT Biopharm International Company Limited common stocks	None	Financial assets at fair value through profit or loss - current	4,384,300	44,281	0.57	44,281
Formosa Laboratories, Inc.	TaiRx, Inc. common stocks	None	Financial assets at fair value through profit or loss - current	346,000	7,422	0.31	7,422
Formosa Laboratories, Inc.	AG Global Inc Unlisted stocks	None	Financial assets at fair value through profit or loss - noncurrent	1,041,666	-	1.33	-
Formosa Laboratories, Inc.	Oncomatryx Biopharma, S.L.common stocks	None	Non-current financial assets at fair value through other comprehensive income	303,713	74,927	3.12	74,927
Formosa Laboratories, Inc.	PHARMASTAR INC.common stocks	None	Non-current financial assets at fair value through other comprehensive income	500,000	15,715	20.00	15,715
Formosa Laboratories, Inc.	Hcmed Innovations Co., Ltd. common stocks	None	Financial assets at fair value through profit or loss - noncurrent	257,623	22,753	0.79	22,753
Formosa Laboratories, Inc.	Forward BioT Venture Capital	None	Financial assets at fair value through profit or loss - noncurrent	-	60,000	6.72	60,000
Formosa Laboratories, Inc.	AmMAX Bio, Inc. stocks	None	Financial assets at fair value through profit or loss - noncurrent	934,578	24,087	1.41	24,087
Formosa Laboratories, Inc.	APRINOHA Therapeutics Inc. convertible bonds	None	Financial assets at fair value through profit or loss - current	-	15,715	-	15,715
Epione Pharmaceuticals, Inc.	AcBel Polytech Inc. II unsecured convertible bonds	None	Financial assets at fair value through profit or loss - current	3,000	341	-	341

FORMOSA LABORATORIES, INC.

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

December 31, 2025

Table 3
Expressed in thousands of NTD
(Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2025 (Note)	Turnover rate	Overdue receivables		Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Activus Pharma. Co., Ltd.	Formosa Pharmaceuticals Inc.	Same ultimate parent company	$ 101,229	0.00	$ -	-	$ -	$ -

Note: The turnover rate is listed as 0.00 because the long-term receivables are listed in the table, so the turnover rate is not applicable.

Table 3, Page 1

FORMOSA LABORATORIES, INC.

Significant inter-company transactions during the reporting period

Year ended December 31, 2025

Table 4

Number (Note 1)	Company name	Counterparty	Relationship (Note 2)	Transaction
				General ledger account	Amount (Note 4)	Transaction terms	Percentage of consolidated total operating revenues or total
0	Formosa Laboratories, Inc.	Formosa Pharmaceuticals Inc.	1	Operating revenue	$ 7,236	Note 5	1%
1	Activus Pharma. Co., Ltd.	Formosa Pharmaceuticals Inc.	3	Other receivables	101,229	Note 6	1%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:
(1) Parent company is '0'.
(2) The subsidiaries are numbered in order starting from '1'.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):
(1) Parent company to subsidiary.
(2) Subsidiary to parent company.
(3) Subsidiary to subsidiary.
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.
Note 4: The aforementioned threshold of disclosure was NT$10 million above. Aforementioned related party transactions were written-off when preparing the consolidated financial statements.
Note 5: The transaction price and terms were based on mutual agreement.
Note 6: Represents receivables from authorised transaction in 2018 and was based on terms from mutual agreement, and the transaction price was $196,928. Because it was a business transfer in the Group, the profit or loss was not recognised.

FORMOSA LABORATORIES, INC.
Information on investees
Year ended December 31, 2025
Expressed in thousands of NTD
(Except as otherwise indicated)

Table 5

Investor	Investee	Location	Main business activities	Initial investment amount		Shares held as at December 31, 2025			Net income of investee for the year ended December 31, 2025	Investment income (loss) recognised by the Company for the year ended December 31, 2025
				Balance as at December 31, 2025	Balance as at December 31, 2024	Number of shares	Ownership (%)	Book value
Formosa Laboratories, Inc.	Formosa Pharmaceuticals Inc.	Taiwan	Research and development of new biotechnology medicine	$ 1,229,635	$ 1,229,635	61,387,653	40.66%	$ 623,219	($ 83,565)	($ 33,985)
Formosa Laboratories, Inc.	Epione Pharmaceuticals, Inc.	Taiwan	Research and development of new biotechnology medicine	40,000	40,000	4,000,000	100.00%	12,860	(121)	(121)
Formosa Laboratories, Inc.	A.R.Z Taiwan Limited	Taiwan	Agency sales of raw materials and intermediates	2,716	2,716	271,620	45.00%	-	( 1,764)	( 11)
Formosa Laboratories, Inc.	Formosa Labarotories Japan, Inc.	Japan	Agency sales of medicine and intermediates	1,105	1,105	400	40.00%	24,528	21,803	8,721
Formosa Laboratories, Inc.	SynChem-Formosa, Inc.	United States	Research of organic synthesis, process development and medicinal chemistry contracts	28,898	28,898	311,996		-	( 30,594)	( 38,358)
Formosa Laboratories, Inc.	Epione Investment Cayman Limited	Cayman Islands	Medicine, chemical trade and investment business	18,482	18,482	619,000	100.00%	3,506	( 2,782)	( 2,782)
Epione Investment Cayman Limited	Epione Investment HK Limited	Hong Kong	Medicine, chemical trade and investment business	16,287	16,287	544,500	100.00%	3,140	( 2,542)	( 2,542)
Formosa Pharmaceuticals Inc.	Activus Pharma. Co., Ltd.	Japan	Research and development of new biotechnology medicine	274,633	274,633	1,942	99.23%	103,364	(945)	(1,017)

Table 5, Page 1

FORMOSA LABORATORIES, INC.

Information on investments in Mainland China

Year ended December 31, 2025

Table 6

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2025	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31, 2025		Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2025	Net income of investee for the year ended December 31, 2025	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2025	Book value of investments in Mainland China as of December 31, 2025	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2025	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Shanghai Epione Enterprise Co., Ltd.	Wholesale and import and export of chemical raw materials and products and commission agency	$ 15,715	Note 1	$ 15,715	$ -	$ -	$ 15,715	($ 2,419)	100%	($ 2,419)	$ 2,864	$ -	Note 2

Note 1: Through investing in an existing company in the third area, which then invested in the investee in Mainland China.
Note 2: The investment loss for the year ended December 31, 2025 is calculated based on the Company's financial statements which were audited by independent accountants.

Company name	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2025 (Note 5)	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA) (Note 3)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA (Note 4)
Formosa Laboratories, Inc.	$ 57,620	$ 159,740	$ 4,654,310

Note 3: The total investment amount approved by the Investment Commission, MOEA, was USD 5,082 thousand at the exchange rate of 31.43 and translated into $159,740.
Note 4: Ceiling on investments in Mainland China was calculated by the higher of the Company's net assets and 60% of consolidated net assets.
Note 5: The Company's accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2025 was $41,905, including investment in TOT Biopharm International Company Limited.

FORMOSA LABORATORIES, INC.
STATEMENT OF CASH
DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Description	Amount
Petty cash and cash on hand		$ 426
Demand deposits - NTD		501,746
Foreign currency demand deposits - USD 1,335,882 (Note), conversion rate: 31.43;		356,287
JPY 249,394 (Note), conversion rate: 0.200803;		50
RMB 85,711 (Note), conversion rate: 4.49;		385
HKD 2,231,305 (Note), conversion rate: 4.038;		9,010
EUR 344,759 (Note), conversion rate: 36.9;		12,722
		$ 880,626

Note: The amounts of foreign currency were shown in units of dollars.

-66-

FORMOSA LABORATORIES, INC.
STATEMENT OF ACCOUNTS RECEIVABLE
DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Client Name	Amount	Note
Customer A	$ 170,605
Customer B	167,602
Customer C	69,790
Others	652,509	Balance of each client has not exceeded 5% of total account balance.
	1,060,506
Less: Allowance for bad debts	( 14,550)
	$ 1,045,956

Note: Because the Company had contracted that names of customers should not be disclosed, the Company named them with code names.

-67-

FORMOSA LABORATORIES, INC.
STATEMENT OF INVENTORIES
DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Amount		Note
	Cost	Market price
Goods	$ 2,079	$ 2,797	Net Realizable Value
Finished goods	1,053,712	1,916,103	〃
Work in progress	592,665	1,001,115	〃
Raw materials	565,332	609,346	Replacement cost
	2,213,788
Less: Allowance for valuation losses and loss for obsolete and slow-moving inventories	( 500,595)
	$ 1,713,193

-68-

-69-

FORMOSA LABORATORIES, INC.

STATEMENT OF FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

FOR THE YEAR ENDED DECEMBER 31, 2025

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Name of Financial Instrument	Description	Shares	Cost	Fair Value
				Unit Price (Note)	Total Amount
Listed stocks
EirGenix Inc.	Common share	18,552,818	$ 617,040	$ 61.70	$ 1,144,709
TOT Biopharm International Company Limited	Common share	4,384,300	43,801	10.10	44,281
Emerging stocks
TaiRx, Inc.	Common share	346,000	9,490	21.45	7,422
Hcmed Innovations Co., Ltd.	Common share	257,623	19,658	88.32	22,753
Unlisted stocks
AG Global Inc.	Preferred share	1,041,666	35,340	-	-
AmMax Bio, Inc.	Preferred share	934,578	31,285	-	24,087
Forward BioT Venture Capital		-	60,000	-	60,000
Unlisted bonds
APPINOIA Therapeutics Inc.	Convertible bonds	-	15,745	-	15,715
			$ 816,614		$ 1,318,967

Note: In New Taiwan dollars.

FORMOSA LABORATORIES, INC.
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Name	Beginning Balance		Addition		Decrease		Ending Balance			Market Value or Net Assets Value
	Shares (Note 1)	Amount	Shares (Note 1)	Amount (Note 2)	Shares	Amount (Note 3)	Shares (Note 1)	Percentage of Ownership (%)	Amount	Unit Price (Note 4)	Total Amount	Collateral	Note
Formosa Pharmaceuticals Inc.	61,487	$ 658,443	-	$ -	( 100)	($ 35,224)	61,387	-	$ 623,219	10.15	$ 623,219	None
Epione Pharmaceuticals, Inc.	4,000	12,981	-	-	-	( 121)	4,000	-	12,860	3.22	12,860	"
A.R.Z Taiwan Limited	272	11	-	-	-	( 11)	272	-	-	-	-	"
Epione Investment	619	6,359	-	-	-	( 2,853)	619	-	3,506	5.66	3,506	"
Cayman Limited
SynChem-Formosa, Inc.	312	13,466	-	-	-	( 37,700)	312	-	( 24,234)	( 77.67)	( 24,234)	"
Formosa Laboratories Japan Inc.	-	17,034	-	7,494	-	-	-	-	24,528	-	24,528	"
		708,294		$ 7,494		($ 75,909)			639,879
Add: Classified as other liabilities (shown as ‘other non-current liabilities’)									24,234
		$ 708,294							$ 664,113

Note 1: In thousands of shares.
Note 2: Additions were new investments for the year, gains on investments accounted for using equity method and accumulated translation adjustment accounted for using equity method.
Note 3: Decreases were losses on investments accounted for using equity method, recognition of changes in ownership interests in subsidiaries, accumulated translation adjustment accounted for using equity method, receipt of cash dividends and realised (unrealised) profit or loss of down-stream transactions.
Note 4: New Taiwan Dollars.

-71-

FORMOSA LABORATORIES, INC.
STATEMENT OF CHANGES IN COST, ACCUMULATED DEPRECIATION AND IMPAIRMENT OF
PROPERTY, PLANT AND EQUIPMENT
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Refer to Note 6(7) for details.

FORMOSA LABORATORIES, INC.
STATEMENT OF SHORT-TERM BORROWINGS
DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Nature	Description	Ending Balance	Contract Period	Range of Interest Rate	Credit Line	Collateral
Shin Kong Bank Taoyuan Branch	Unsecured borrowings	$ 100,000	2025.10.23~2026.01.23	1.85%	$ 100,000	None
Far Eastern International Bank	"	150,000	2025.12.02~2026.03.02	1.85%	150,000	"
Yuanta Commercial Bank Co., Ltd. Taosin Branch	"	100,000	2025.12.02~2026.03.02	1.83%	200,000	"
E.SUN Bank Taoyuan Corporate Banking Center	"	100,000	2025.12.17~2026.01.16	1.84%	150,000	"
Hua Nan Commercial Bank, Ltd. Nan Kan Branch	"	200,000	2025.12.19~2026.03.19	1.85%	300,000	"
"	"	100,000	2025.12.23~2026.03.23	1.85%
First Commercial Bank Nankan Branch	Secured borrowings	63,000	2025.12.26~2026.01.23	1.82%	63,000	Yes
"	Unsecured borrowings	300,000	2025.12.26~206.01.23	1.82%	300,000	None
		$ 1,113,000

-72-

-73-

FORMOSA LABORATORIES, INC.
STATEMENT OF LONG-TERM BORROWINGS
DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Refer to Note 6(12) for details.

FORMOSA LABORATORIES, INC.
STATEMENT OF OPERATING REVENUE
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Amount	Note
Sales revenue
Cholesterol and Phosphate Binders	$ 1,630,367
Vit. D Derivatives	779,863
Steroids	536,679
Respiratory Agents	474,547
Contract Development and Manufacturing Organization (CDMO)	414,945
Anti-Cancer Drugs	329,194
Other	504,387
Service revenue	190,862	Balance of each item has not exceeded 5% of total account balance.
Total	4,860,844
Less: Sales returns and discounts	( 18,184)
Service discounts	( 914)
	$ 4,841,746

-74-

FORMOSA LABORATORIES, INC.
STATEMENT OF OPERATING COSTS
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Items	Amount
Beginning inventory	$ 2,074
Add: Purchases for the year	16,848
Less: Ending inventory	( 2,079)
Transferred to manufacturing expenses	( 14)
Scrapping goods	-
Cost of purchasing and selling	16,829
Beginning raw materials	665,187
Add: Raw materials purchased for the year	1,051,980
Transferred from other department	33,427
Add: Ending raw materials	( 565,332)
Raw materials sold	( 13,178)
Transferred to manufacturing expenses	( 41,119)
Transferred to operating expenses	( 15,871)
Scrapping raw materials	( 10,024)
Raw materials used during the year	1,105,070
Direct labor	306,133
Manufacturing expense	1,364,029
Manufacturing cost	2,775,232
Beginning work in progress	455,729
Add: Transferred from R&D / Manufacturing department	33,237
Less: Ending work in progress	( 592,665)
Transferred to manufacturing expenses	( 1,345)
Transferred to operating expenses	( 15,181)
Scrapping work in progress	( 15,226)
Cost of finished goods	2,639,781
Beginning finished goods	965,684
Add: Transferred from R&D	14
Less: Ending finished goods	( 1,053,712)
Transferred to manufacturing expenses	( 16,306)
Transferred to operating expenses	( 30,630)
Scrapping finished goods	( 9,401)
Manufacturing and selling costs	2,495,430
Disposal of raw materials and current work in progress	13,178
Cost of goods sold	$ 2,525,437
Loss on valuation decline and scrapping inventory	156,045
Revenue from sales of scraps	( 1,373)
Cost of services	130,764
Operating costs	$ 2,810,873

-75-

FORMOSA LABORATORIES, INC.
STATEMENT OF MANUFACTURING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Amount	Note
Depreciation	$ 391,243
Wages and salaries	313,168
Utilities expense	258,854
Consumables	151,544
Repairs and maintenance expense	101,192
Others		Balance of individual accounts has not exceeded 5% of total account balance
	148,028
	$ 1,364,029

-76-

FORMOSA LABORATORIES, INC.
STATEMENT OF SELLING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Amount	Note
Commissions expense	$ 102,001
Wages and salaries	33,837
Export expense	31,086
Others	49,415	Balance of individual accounts has not exceeded 5% of total account balance
	$ 216,339

-77-

FORMOSA LABORATORIES, INC.
STATEMENT OF ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Amount	Note
Wages and salaries	$ 128,847
Miscellaneous expenses	20,809
Insurance expense	17,385
Repairs and maintenance expense	16,517
Depreciation	14,413
Others		Balance of individual accounts has not exceeded 5% of total account balance
	45,842
	$ 243,813

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FORMOSA LABORATORIES, INC.
STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2025
(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Item	Amount	Note
Wages and salaries	$ 204,737
Consumables	112,940
Depreciation	75,957
Repairs and maintenance expense	70,578
Others	124,830	Balance of individual accounts has not exceeded 5% of total account balance
	$ 589,042

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FORMOSA LABORATORIES, INC.

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION

FOR THE YEAR ENDED DECEMBER 31, 2025 AND 2024

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Nature	Function	Year ended December 31, 2025			Year ended December 31, 2024
		Classified as Operating Costs	Classified as Operating Expenses	Total	Classified as Operating Costs	Classified as Operating Expenses	Total
Employee benefit expense
Wages and salaries	$	641,981	$ 367,721	$ 1,009,702	$ 606,284	$ 361,921	$ 968,205
Labour and health insurance fees		53,881	32,983	86,864	49,617	29,779	79,396
Pension costs		28,008	15,161	43,169	25,087	14,988	40,075
Directors' remuneration		-	10,660	10,660	-	9,710	9,710
Other personnel expenses		18,388	8,430	26,818	15,575	10,027	25,602
	$	742,258	$ 434,955	$ 1,177,213	$ 696,563	$ 426,425	$ 1,122,988
Depreciation	$	416,138	$ 91,874	$ 508,012	$ 369,231	$ 106,474	$ 475,705
Amortisation	$	5,593	$ 1,932	$ 7,525	$ 4,901	$ 3,039	$ 7,940

Note:
A. As at December 31, 2025 and 2024, the Company has an average of 939 and 910 employees, respectively, including 8 non-employee directors for both years.
B. (1) Average employee benefit expense in current year was $1,216 thousand ((Total employee benefit expense in current year - Total directors' compensation in current year) / (Number of employees in current year - Number of non-employee directors in current year)).
Average employee benefit expense in previous year was $1,235 thousand ((Total employee benefit expense in previous year - Total directors' compensation in previous year) / (Number of employees in previous year - Number of non-employee directors in previous year)).
(2) Average employee salaries in current year was $1,085 thousand (Total employee salaries in current year / (Number of employees in current year - Number of non-employee directors in current year)).
Average employee salaries in previous year was $1,073 thousand (Total employee salaries in previous year / (Number of employees in previous year - Number of non-employee directors in previous year)).
(3) Adjustment of average employee salaries was 4% ((Average employee salaries in current year - Average employee salaries in previous year) / Average employee salaries in previous year).
(4) The Company's Compensation Policy is as follows:
i. Compensation that the Company paid to the employees includes basic salary, performance rewards, year-end bonus and salary increase. The salary standard was referred to internal salary and external market of salary, job classification, education background, professional knowledge and skill, professional working experience to approve competitive salary. The distribution of performance rewards took into consideration the operating performance of the Company and employees' performance. The salary raising would be based on the Company's operation profit of current year, performance assessment and other results and encourage employees' long-term development and with reference to the comprehensive consideration of the salary market standard and overall salary raising status to process annual salary raising.
ii. The Company's remuneration policies for managers were based on the Company's operation strategies, profit, performance and contributions in work, etc., and referred to salary standard in market, and be executed after being proposed by remuneration committee and approved by the Board of Directors.
iii. Additionally, under the Company's Articles of Incorporation, if the Company had profit for the year, the Board of Directors should resolve that the profit of the current year shall be distributed by not lower than 5% as employees' compensation and distributed no higher than 2% as directors' remuneration. However, if the Company has accumulated losses, an amount sufficient to offset such losses shall be reserved in advance and reported to the shareholders' meeting. Of the employees' compensation mentioned above, no less than 20% shall be allocated to rank-and-file employees for remuneration distribution or salary adjustments. The recipients of employees' compensation may include employees of certain controlled or subsidiary companies who meet specified criteria, and the method of distribution shall be determined by the Board of Directors.

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FRMSL — Audit Report / Information 2025

52425_rns_2026-05-20_623995d7-0305-46dc-8dab-a05137bd0a9e.pdf

FORMOSA LABORATORIES, INC.

Opinion

Basis for opinion

Key audit matters

Key audit matter - inventory valuation

Description

How our audit addressed the matter

Key audit matter - Impairment assessment of investments accounted for using equity method

Description

How our audit addressed the matter

Responsibilities of management and those charged with governance for the parent company only financial statements

Auditors' responsibilities for the audit of the parent company only financial statements

FORMOSA LABORATORIES, INC.

FORMOSA LABORATORIES, INC.

FORMOSA LABORATORIES, INC.

1. HISTORY AND ORGANIZATION

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

4. SUMMARY OF MATERIAL ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Foreign currency translation

(11) Other payables

(13) Pensions

A. Defined benefit plans

A. Disaggregation of revenue from contracts with customers

B. Contract assets and liabilities

(27) Transactions with non-controlling interest

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

10. SIGNIFICANT DISASTER LOSS

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

12. OTHERS

(1) Capital management

(2) Financial instruments

A. Financial instruments by category

B. Financial risk management policies

C. Significant financial risks and degrees of financial risks

(a) Market risk

Exchange rate risk

Price risk

Cash flow and fair value interest rate risk

(b) Credit risk

13. SUPPLEMENTARY DISCLOSURES

14. SEGMENT INFORMATION

FORMOSA LABORATORIES, INC.

FORMOSA LABORATORIES, INC.

FORMOSA LABORATORIES, INC.

Significant inter-company transactions during the reporting period

FORMOSA LABORATORIES, INC.

Information on investments in Mainland China

FORMOSA LABORATORIES, INC.

STATEMENT OF FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

FOR THE YEAR ENDED DECEMBER 31, 2025

FORMOSA LABORATORIES, INC.

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION

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