Stock Code: 7769

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

Hon. Precision, Inc. and Subsidiaries

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

Address: No. 11, Lane 758, Section 3, Zhongqing Road, Daya District, Taichung City

Tel: (04)25608752

REPRESENTATION LETTER

The companies required to be included in the consolidated financial statements of affiliates in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" for the year ended December 31, 2025 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10 "Consolidated Financial Statements". Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, Hon. Precision, Inc. and Subsidiaries do not prepare a separate set of consolidated financial statements of affiliates.

In witness thereof, the Declaration is hereby presented.

Company name: Hon. Precision, Inc.
Chairman: Wen-Ta Hsieh
Date: March 10, 2026

Independent Auditors' Report

To the Board of Directors and Shareholders of
Hon. Precision, Inc.:

Opinions

We have audited the accompanying consolidated balance sheet of Hon. Precision, Inc. (the "Company") and its subsidiaries (collectively, the "Group") as of December 31, 2025 and 2024 and the relevant consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and relevant notes to the consolidated financial statements, including material accounting policy information (collectively referred to as the consolidated financial statements).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2025 and 2024, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis of Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

Key audit matter for the consolidated financial statements for the year ended December 31, 2025 is stated as follows:

Revenue recognition

The revenue from the semiconductor testing equipment of the Group is material to the overall financial statements. The revenue is recognized when the performance obligation is fulfilled. Since the Company may recognize the sales revenue when the conditions of the sale revenue recognition are not yet met, it is listed as a key audit matter.

The principal audit procedures for the aforementioned matter are as follows:

Understand and test the effectiveness of the design and implementation of the internal control system related to the revenue recognition of the semi-conductor testing equipment.
Take samples from the sales details of these revenues and check the confirmation order of the installation and the payment information as of the date of the audit report to assess whether the revenue was recognized appropriately.

Other Matters

We have also audited the parent company only financial statements of Hon. Precision, Inc. as of and for the years ended December 31, 2025 and 2024 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with the auditing standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

We communicated 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 identified during our audit.

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

The engagement partners on the audits resulting in this independent auditors' report are Hui-Min Huang and Chih-Ming Shao.

Deloitte & Touche
Taipei, Taiwan
Republic of China

March 10, 2026

Notice to Readers

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

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

Hon. Precision Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
December 31, 2025 and 2024
(In Thousands of New Taiwan Dollars)

Code	Assets	December 31, 2025		December 31, 2024
		Amount	%	Amount	%
Current assets (Note 4)
1100	Cash and cash equivalents (Note 6)	$ 53,426,985	73	$ 6,024,608	27
1110	Financial assets at fair value through profit or loss (Note 7)	148,351	-	149,546	1
1136	Financial assets measured at amortized cost (Notes 9 and 28)	652,961	1	1,870,745	8
1170	Notes and accounts receivable (Notes 10 and 21)	2,934,528	4	2,912,847	13
130X	Inventories (Note 11)	12,641,141	17	8,444,154	39
1470	Other current assets (Note 13)	391,363	1	134,910	1
11XX	Total current assets	70,195,329	96	19,536,810	89
Non-current assets (Note 4)
1517	Financial assets measured at fair value through other comprehensive income (Note 8)	173,599	-	66,157	-
1600	Property, plant and equipment (Note 13)	2,105,755	3	1,887,622	9
1755	Right-of-use assets (Notes 14 and 27)	56,941	-	10,659	-
1760	Investment property (Note 15)	-	-	15,203	-
1840	Deferred income tax assets (Note 23)	346,451	-	318,569	2
1990	Other non-current assets (Notes 13 and 16)	391,993	1	30,833	-
15XX	Total non-current assets	3,074,739	4	2,329,043	11
1XXX	Total assets	$ 73,270,068	100	$ 21,865,853	100
Code	Liabilities and equity
Current liabilities (Note 4)
2100	Short-term borrowings (Note 17)	$ -	-	$ 156,745	1
2130	Contract liabilities (Note 21)	6,590,997	9	2,398,284	11
2170	Accounts payable	3,401,606	5	3,180,809	15
2200	Other payables (Notes 13 and 18)	2,323,060	3	1,315,725	6
2230	Current income tax liabilities (Note 23)	2,477,348	4	885,110	4
2280	Lease liabilities (Notes 14 and 27)	14,712	-	4,148	-
2399	Other current liabilities	220,150	-	87,369	-
21XX	Total current liabilities	15,027,873	21	8,028,190	37
Non-current liabilities (Note 4)
2570	Deferred income tax liabilities (Note 23)	168,096	-	98,427	-
2580	Lease liabilities (Notes 14 and 27)	42,658	-	7,000	-
2600	Other non-current liabilities	373	-	426	-
25XX	Total non-current liabilities	211,127	-	105,853	-
2XXX	Total liabilities	15,239,000	21	8,134,043	37
Equity attributable to owners of the Company (Notes 4 and 20)
3100	Common stock capital	1,799,300	3	1,616,000	8
3200	Capital surplus	36,179,767	49	878,400	4
3300	Retained earnings	19,908,127	27	11,182,331	51
3400	Other equity	164,807	-	55,079	-
3500	Treasury stock	( 20,933 )	-	-	-
3XXX	Total equity	58,031,068	79	13,731,810	63
Total liabilities and equity		$ 73,270,068	100	$ 21,865,853	100

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

Hon. Precision Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the years ended December 31, 2025 and 2024
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Code		2025		2024
		Amount	%	Amount	%
4000	Operating revenue (Notes 4 and 21)	$ 30,270,625	100	$ 13,992,344	100
5000	Operating costs (Notes 11 and 22)	13,156,989	43	6,292,694	45
5900	Operating gross profit	17,113,636	57	7,699,650	55
	Operating expenses (Notes 10 and 22)
6100	Selling and marketing expenses	450,275	2	235,836	2
6200	General and administrative expenses	626,976	2	269,004	2
6300	Research and development expenses	1,039,476	3	636,810	4
6450	Expected credit impairment (reversal gain) loss	( 48,794 )	-	273,395	2
6000	Total operating expenses	2,067,933	7	1,415,045	10
6900	Operating net profit	15,045,703	50	6,284,605	45
	Non-operating income and expenses (Note 4)
7100	Interest income	307,109	1	160,137	1
7190	Other income (Note 22)	11,368	-	8,991	-
7230	Net foreign exchange gains (Note 29)	222,254	1	231,890	2
7590	Miscellaneous expenses (Notes 22 and 27)	( 1,039 )	-	( 93 )	-
7635	Net loss on financial assets and liabilities at fair value through profit or loss	( 1,195 )	-	( 2,676 )	-
7000	Total non-operating income and expenses	538,497	2	398,249	3
7900	Income before income tax	15,584,200	52	6,682,854	48
7950	Income tax expense (Notes 4 and 23)	( 3,222,404 )	( 11 )	( 1,396,925 )	( 10 )
8200	Net income for the year	12,361,796	41	5,285,929	38

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Code		2025		2024
		Amount	%	Amount	%
8316	Other comprehensive income (Note 4)
	Items not to be reclassified to profit or loss:
	Unrealized net profit from equity instrument investment measured at fair value through other comprehensive income	$ 107,346	-	$ 23,496	-
8310		107,346	-	23,496	-
8361	Items that may be reclassified subsequently to profit or loss:
	Exchange differences on translation of financial statements of foreign operations	2,382	-	12,570	-
		2,382	-	12,570	-
8360		109,728	-	36,066	-
8300	Other comprehensive income (net of tax)
8500	Total comprehensive income for the year	$ 12,471,524	41	$ 5,321,995	38
8610	Net income attributable to:
	Owners of the Company	12,361,796	41	$ 5,285,929	38
	Non-controlling interests	-	-	-	-
8600		$ 12,361,796	41	$ 5,285,929	38
8710	Total comprehensive income attributable to:
	Owners of the Company	12,471,524	41	$ 5,321,995	38
	Non-controlling interests	-	-	-	-
8700		$ 12,471,524	41	$ 5,321,995	38
9710	Earnings per share (Note 24)
	Basic	$ 75.71		$ 32.95
9810	Diluted	$ 75.54		$ 32.73

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

Hon. Precision Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the years ended December 31, 2025 and 2024
(In Thousands of New Taiwan Dollars)

Code		Common stock capital		Capital surplus	Retained earnings		Other equity		Treasury stock	Total equity
		Number of shares (in thousands)	Amount		Legal reserve	Unappropriated earnings	Exchange differences on translation of financial statements of foreign operations	Unrealized gains or losses on financial assets at fair value through other comprehensive income
A1	Balance on January 1, 2024	160,000	$ 1,600,000	$	$ 1,233,359	$ 9,463,043	($ 4,575)	$ 23,588	$ -	$ 12,315,415
	Appropriation of 2023 earnings
B1	Legal reserve	-	-	-	306,781	( 306,781 )	-	-	-	-
B5	Cash dividends	-	-	-	-	( 4,800,000 )	-	-	-	( 4,800,000 )
E1	Capital increase in cash	1,600	16,000	878,400	-	-	-	-	-	894,400
D1	Net income in 2024	-	-	-	-	5,285,929	-	-	-	5,285,929
D3	Other comprehensive income after tax for 2024	-	-	-	-	-	12,570	23,496	-	36,066
D5	Total comprehensive income (loss) in 2024	-	-	-	-	5,285,929	12,570	23,496	-	5,321,995
Z1	Balance on December 31, 2024	161,600	1,616,000	878,400	1,540,140	9,642,191	7,995	47,084	-	13,731,810
	Appropriation of 2024 earnings
B1	Legal reserve	-	-	-	528,593	( 528,593 )	-	-	-	-
B5	Cash dividends	-	-	-	-	( 3,636,000 )	-	-	-	( 3,636,000 )
E1	Capital increase in cash	18,330	183,300	34,282,909	-	-	-	-	-	34,466,209
N1	Share-based payment transactions	-	-	1,018,458	-	-	-	-	-	1,018,458
D1	Net income in 2025	-	-	-	-	12,361,796	-	-	-	12,361,796
D3	Other comprehensive income (loss), net of income tax in 2025	-	-	-	-	-	2,382	107,346	-	109,728
D5	Total comprehensive income (loss) in 2025	-	-	-	-	12,361,796	2,382	107,346	-	12,471,524
L1	Repurchase of treasury stock	-	-	-	-	-	-	-	( 20,933 )	( 20,933 )
Z1	Balance on December 31, 2025	179,930	$ 1,799,300	$ 36,179,767	$ 2,068,733	$ 17,839,394	$ 10,377	$ 154,430	($ 20,933 )	$ 58,031,068

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

Hon. Precision Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended December 31, 2025 and 2024
(In Thousands of New Taiwan Dollars)

Code		2025	2024
	Cash flow from operating activities
A10000	Income before income tax	$ 15,584,200	$ 6,682,854
A20010	Income and expense items
A20100	Depreciation expenses	61,524	43,551
A20200	Amortization expenses	7,104	2,204
A20300	Expected credit impairment (reversal gain) loss	( 48,794 )	273,395
A20400	Net loss on financial assets and liabilities measured at fair value through profit or loss	1,195	2,676
A20900	Interest expenses	758	416
A21900	Remuneration cost of share-based payments	1,018,458	-
A21200	Interest income	( 307,109 )	( 160,137 )
A21300	Dividend income	( 9,772 )	( 4,180 )
A22500	Gains on disposal of property, plant, and equipment	( 304 )	( 2,500 )
A23700	Inventory write-downs and slow-moving losses (reversal of gains)	126,126	( 125,007 )
A24100	Unrealized foreign exchange gains	( 83,146 )	( 124,942 )
A30000	Net changes in operating assets and liabilities
A31115	Financial assets mandatorily measured at fair value through profit or loss	-	( 125,608 )
A31150	Notes and accounts receivable	103,952	( 1,942,143 )
A31200	Inventories	( 4,423,975 )	( 4,242,649 )
A31240	Other current assets	( 67,341 )	( 91,992 )
A31990	Other non-current assets	( 192 )	-
A32125	Contract liabilities	4,193,783	( 199,682 )
A32150	Accounts payable	219,646	2,640,231
A32180	Other payables	995,227	380,010
A32230	Other current liabilities	132,781	44,464
A33000	Cash inflows generated from operations	17,504,121	3,050,961
A33100	Interest received	261,217	160,049
A33200	Dividends received	9,772	4,180
A33300	Interest paid	( 893 )	( 278 )
A33500	Income tax paid	( 1,588,467 )	( 907,104 )
AAAA	Net cash inflows from operating activities	16,185,750	2,307,808

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Code		2025	2024
	Cash flow from investing activities
B00010	Acquisition of financial assets at fair value through other comprehensive income	($ 96)	($ 3,000)
B00040	Acquisition of financial assets at amortized cost	( 1,466,933)	( 2,177,260)
B00050	Disposal of financial assets at amortized cost	2,684,895	984,025
B02700	Acquisition of property, plant and equipment	( 285,666)	( 132,659)
B02800	Proceeds from disposal of property, plant and equipment	520	18,217
B06700	Increase in other non-current assets	( 364,082)	( 11,461)
BBBB	Net cash inflow (outflow) from investing activities	568,638	( 1,322,138)
	Cash flow from financing activities
C00100	Increase (decrease) in short-term borrowings	( 151,691)	155,888
C03000	Increase (decrease) in guarantee deposits received	( 53)	320
C04020	Repayment of lease principal	( 7,631)	( 9,389)
C04500	Payment of cash dividends	( 3,636,000)	( 4,800,000)
C04600	Capital increase in cash	34,466,209	894,400
C04900	Repurchase of treasury stock	( 20,933)	-
CCCC	Net cash inflows (outflows) from financing activities	30,649,901	( 3,758,781)
DDDD	Effect of exchange rate changes on cash and cash equivalents	( 1,912)	3,878
EEEE	Increase (decrease) in cash and cash equivalents	47,402,377	( 2,769,233)
E00100	Balance of cash and cash equivalents at the beginning of the year	6,024,608	8,793,841
E00200	Balance of cash and cash equivalents at the end of the year	$ 53,426,985	$ 6,024,608

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

Hon. Precision Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2025 and 2024
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise.)

I. Organization and Operations

Hon. Precision, Inc. (the Company) was established in April 2015 and is mainly engaged in the manufacturing and sales of mechanical equipment and related parts and components, as well as the engineering and mechanical installation of automatic control equipment.

The Company’s shares have been listed and traded on the Taiwan Stock Exchange since November 27, 2025.

The consolidated financial statements are presented in the Company's functional currency, NTD.

II. Date and Procedures for Approval of the Financial Report

These consolidated financial statements were approved by the Board of Directors on March 10, 2026.

III. Application of Newly Issued and Amended Standards and Interpretations

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

Amendments to IAS 21 “Lack of Exchangeability”

The amendment to IAS 21, "Lack of Exchangeability," will not result in significant changes to the accounting policies of the consolidated company.

(2) The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2026

New/Revised/Amended Standards and Interpretations	Effective Date Announced by IASB
Amendments to IFRS 9 and IFRS 7, "Amendments to the Classification and Measurement of Financial Instruments"	January 01, 2026
Amendments to IFRS 9 and IFRS 7, “Contracts Referencing Nature-Dependent Electricity”	January 01, 2026
“Annual Improvements to IFRS Accounting Standards — Volume 11”	January 01, 2026
IFRS 17 “Insurance Contracts” (including the 2020 and 2021 amendments)	January 01, 2023

As of the date of approval of the consolidated financial statements, the Group has assessed that the amendments to the above standards and interpretations will not have a significant impact on its financial position and financial performance.

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(3) IFRS accounting standards issued by the IASB but not yet endorsed and issued into effect by the FSC

New/Revised/Amended Standards and Interpretations	Effective date issued by the IASB (Note 1)
Amendments to IFRS 10 and IAS 28, “Sale or Contribution of Assets between an Investor and their Associate or Joint Venture”	Undetermined
IFRS 18 “Presentation and Disclosure in Financial Statements”	January 01, 2027 (Notes 2)
IFRS 19 “Subsidiaries without Public Accountability: Disclosures” (including the 2025 amendments)	January 01, 2027
Amendments to IAS 21, “Translation into a Hyperinflationary Presentation Currency”	January 01, 2027

Note 1: Unless otherwise specified, the aforementioned newly issued, amended, or revised standards or interpretations shall take effect for annual reporting periods beginning on or after their respective effective dates.

Note 2: On September 25, 2025, the FSC announced that enterprises in Taiwan shall apply IFRS 18 starting from January 1, 2028, and may also elect early adoption after IFRS 18 is endorsed by the FSC.

IFRS 18 “Presentation and Disclosure in Financial Statements” and related consequential amendments

IFRS 18 will replace IAS 1 “Expression of Financial Statements”. The main changes include:

The consolidated company shall assess whether it engages in investing in specified types of assets and providing financing to customers as specific main operating activities, and based on such assessment, classify income and expense items in the statement of profit or loss into operating, investing, financing, income tax, and discontinued operations categories.
The income statement shall be reported as operating income, pre-tax income before financing, and the sum and total of profit and loss.
Provide guidance to strengthen aggregation and segmentation: The Group must identify the assets, liabilities, equity, income, expenses and cash flows generated from individual transactions or other matters, and group and aggregate them based on common characteristics, so that each line item presented in the financial statements has at least one similar characteristic. Items that are dissimilar from other items should be disaggregated. The Group only labels such items as "other" when no it is unable to find a more informative label.
Increase the disclosure of performance measures defined by management: When the Group engages in public communication outside of financial statements, and when communicating perspective on a specific aspect of the Group's overall financial performance to users of the financial statements, it should disclose information about performance measures defined by management in a single note to the financial statements. This includes a

description of the measure, how it is calculated, a reconciliation with subtotals or totals specified by IFRS accounting standards, and the impact of related reconciliation items on income tax and non-controlling interests.

In addition, IAS 7 “Statement of Cash Flows” has been amended as follows:

When the consolidated company prepares cash flows from operating activities using the indirect method, operating profit or loss shall be used as the starting point for reconciliation.
Interest and dividends received by the consolidated company shall be classified as investing activities, while interest and dividends paid shall be classified as financing activities. If the consolidated company, upon assessment, has specific main operating activities, it shall consider the classification of dividend income, interest income, and interest expense presented in the statement of profit or loss to determine the classification of dividends received, interest received, and interest paid in the statement of cash flows; however, each of the aforementioned cash flows may only be classified within a single activity in the statement of cash flows.

Except for the aforementioned impacts, as of the approval date of these consolidated financial statements, the consolidated company is still assessing the effects of the above amendments to standards and interpretations on its financial position and financial performance, and the related impacts will be disclosed upon completion of the assessment.

IV. Summary of Material Accounting Policies

(1) Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs as endorsed and issued into effect by the FSC.

(2) Basis of preparation

Except for financial instruments measured at fair value, the consolidated financial statements have been prepared on the historical cost basis.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

A. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
B. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
C. Level 3 inputs are unobservable inputs for an asset or liability.

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

Current assets include:

A. Assets held primarily for the purpose of trading;

B. Assets expected to be realized within 12 months after the reporting period; and
C. Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:
A. Liabilities held primarily for the purpose of trading;
B. Liabilities due to be settled within 12 months after the reporting period; and
C. Liabilities that do not have substantial rights to defer the settlement period to at least 12 months after the balance sheet date

Assets and liabilities that do not satisfy the above criteria are classified into non-current assets or non-current liabilities.

(4) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities (subsidiaries) controlled by the Company. Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of comprehensive income from the effective dates of acquisition up to the effective dates of disposal. The financial statements of subsidiaries have been adjusted to ensure consistency between their accounting policies and the Group's. All intra-group transactions, balances, income, and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests have been adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

When the Group loses control of a subsidiary, the disposal gain or loss is the difference between (1) the sum of the fair value of the consideration received and the fair value of the remaining investment in the former subsidiary on the day it lost control; and (2) The assets (including goodwill), liabilities and non-controlling interests of the former subsidiary shall be added up according to the book value on the date when the control is lost. In addition, the accounting treatment of all amounts recognized in other comprehensive income related to the subsidiary is the same as that required for the Group's direct disposal of relevant assets or liabilities.

The remaining investment in the former subsidiary is the amount of financial assets initially recognized at fair value through other comprehensive income based on the fair value on the date of loss of control.

16 -

For details of subsidiaries, shareholding ratio and business items, please refer to Note 12 and Tables 3 and 4.

(5) Foreign currency

In preparing the financial statements of each individual entity in the Group, transactions in currencies other than the entity's functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing on the transaction dates.

At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing on that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. The resulting exchange difference is recognized in profit or loss. For items whose changes in fair value are recognized in other comprehensive income, the resulting exchange difference is recognized in other comprehensive income.

Non-monetary items measured at historical cost that are denominated in foreign currencies are translated at the rates of exchange prevailing on the transaction dates and are not retranslated.

When the consolidated financial statements are prepared, the assets and liabilities of the Company's foreign operations (including subsidiaries or associates that operate in countries or adopt the functional currencies different from the Company) are translated into New Taiwan dollar at the rates of exchange prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. The resulting currency exchange differences are recognized in other comprehensive income and attributed to the owners of the Company and non-controlling interests.

Where the Group disposes of all the equity of a foreign operation, or disposes of part of the equity of the foreign operation's subsidiary and loses control over it, or the retained interests after disposal of the foreign operation's joint arrangements or associates are a financial asset and treated based on the accounting policies applicable to financial instruments, all accumulated exchange differences attributable to the owners of the Company and related to the foreign operation will be reclassified to profit or loss.

Where the partial disposal of a subsidiary of a foreign operation does not result in the loss of control, the accumulated exchange differences are re-attributed to the subsidiary's non-controlling interests in proportion, and are not recognized in profit or loss. In the case of any other partial disposal of a foreign operation, the accumulated exchange differences will be reclassified to profit or loss in proportion to the disposal.

(6) Inventories

Inventories include raw materials, finished goods, work-in-process, and semi-finished goods. The value of inventories is determined based on the cost or

17 -

net realizable value, whichever is lower. The comparison of the cost and net realizable value is based on individual items except for inventories of the same category. The net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. The cost of inventories is calculated using the weighted average method.

(7) Property, plant and equipment

Property, plant and equipment are initially recognized at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment under construction are recognized at cost less accumulated impairment loss. The cost shall include professional service expenses and the borrowing costs eligible for capitalization. Such assets are classified into appropriate property, plant and equipment categories upon completion and reaching the status of intended use, and the depreciation will begin.

Except for self-owned land, which is not depreciated, each significant component of the remaining property, plant and equipment is depreciated separately on a straight-line basis within their useful lives. The Group conducts at least one annual review at the end of each year to assess the estimated useful life, residual value, and depreciation methods, and applies the effect of changes in applicable accounting estimates prospectively.

When derecognizing an item of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount of the asset shall be recognized in loss or profit.

(8) Investment property

Investment properties refers to properties held for the purpose of earning rents or capital appreciation or both. Investment properties also include land held for a currently undetermined future use.

Self-owned investment properties are initially measured at cost (including transaction cost), and subsequently measured at cost less accumulated depreciation and accumulated impairment losses. The Group adopts a straight-line basis for depreciation.

When investment properties are derecognized, the difference between the net disposal price and the carrying amount of the asset is recognized in profit or loss.

(9) Intangible assets

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization. Intangible assets are amortized using straight-line method over the useful lives. The Group conducts at least one annual review at the end of each year to assess the estimated useful life, residual value, and amortization methods, while applying the effects of changes in accounting estimates prospectively.

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

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(10) Impairment of property, plant and equipment, right-of-use assets, investment property and intangible assets

The Group assesses all property, plant and equipment, right-of-use assets, and intangible assets for signs of impairment at the end of each reporting period. If there is any sign of impairment, an estimate is made of its recoverable amount. If it is not possible to determine the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest cash-generating units on a reasonable and consistent basis.

Intangible assets with indefinite useful lives and not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

The recoverable amount is the fair value less cost of sales or its value in use, whichever is higher. If the recoverable amount of an individual asset or a cash-generating unit is lower than its carrying amount, the carrying amount is reduced to the recoverable amount, and the impairment loss is recognized in profit or loss.

When the impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised recoverable amount, provided that the increased carrying amount shall not exceed the carrying amount (less amortization or depreciation) of the asset, cash-generating unit, or the asset related to contract cost which was not recognized in impairment loss in prior years. The reversal of the impairment loss is recognized in profit or loss.

(11) Financial instruments

Financial assets and financial liabilities are recognized in the consolidated balance sheet when the consolidated company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities not at fair value through profit or loss are measured at fair value plus transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities. Transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

A. Financial assets

Regular trading of financial assets shall be recognized and derecognized in accordance with trade date accounting.

(A) Measurement type

Financial assets held by the Group are divided into the following categories: financial assets at fair value through profit or loss, financial assets at amortized cost, and equity instrument investments measured at fair value through other comprehensive income.

a. Financial assets at fair value through profit or loss

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Financial assets at fair value through profit or loss are those mandatorily measured at fair value through profit or loss. Financial assets mandatorily measured at fair value through profit or loss include investments in equity instrument that the Group has not designated to measure at fair value through other comprehensive income, and debt instruments that are not eligible to be classified as measured at amortized cost or at fair value through other comprehensive income.

Financial assets at fair value through profit or loss are measured at fair value, and their dividends, interest, and remeasurement gains or losses are recognized in other gains and losses. For the determination of fair value, please refer to Note 26.

b. Financial assets at amortized cost

When the financial assets invested in by the Group satisfy the following two criteria at the same time, they are classified as amortized cost financial assets:

(a) The financial assets held under a certain business model, of which the objective is to collect contractual cash flows by holding the financial assets; and

(b) The cash flows on specific dates specified in the contractual terms are solely payments of the principal and interest on the principal amount outstanding.

Financial assets at amortized cost (including cash and cash equivalents, notes and accounts receivable measured at amortized cost) were determined using the effective interest method after initial recognition and are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Except for the following two cases, interest revenue is calculated by multiplying the effective interest rate by the total carrying amount of financial assets:

(a) For purchased or originated credit-impaired financial asset, interest revenue is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial asset.

(b) For financial asset that is not purchased or originated credit-impaired but subsequently becomes credit impaired, interest revenue is calculated by multiplying the effective interest rate from the next reporting period

20 -

after the credit impairment by the amortized cost of the financial asset.

Financial assets are considered credit-impaired if the issuer or debtor exhibits major financial distress, default, likely bankruptcy, financial restructuring, or any financial difficulty that may render the financial asset no longer available on the active market.

Cash equivalents include time deposits with less than 3 months until maturity that are highly liquid, readily convertible into defined amounts of cash, and less prone to the risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments.

c. Equity instrument investments measured at fair value through other comprehensive income

For equity instrument investments that are neither held for trading nor recognized/received as a consideration for business acquisition, the Group is entitled to an irrevocable option to account them at fair value through other comprehensive income at initial recognition.

Investments in an equity instrument measured at fair value through other comprehensive income are measured at fair value, and any subsequent fair value changes are recognized in other comprehensive income and accumulated in other equity. Upon disposal of investments, cumulative gain or loss is directly transferred to retained earnings and are not reclassified to profit or loss.

Dividends of investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the Group's right to receive dividends is established unless such dividends clearly represent the recovery of a part of the investment cost.

(B) Impairment of financial assets

The Group assesses the impairment loss of financial assets at amortized cost (including notes and accounts receivable) based on the expected credit loss at each balance sheet date.

For notes and accounts receivable, loss allowance is recognized based on lifetime expected credit losses. Other financial assets are first assessed based on whether the credit risk has increased significantly since the initial recognition. If there is no significant increase in the risk, a loss allowance is recognized at an amount equal to 12-month ECLs.

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If the risks have increased significantly, a loss allowance is recognized at an amount equal to lifetime ECLs. 12-month expected credit losses represent the expected credit losses on financial instruments from any potential default within 12 months after the reporting date. Lifetime-expected credit losses represent the expected credit losses on financial instruments from any potential default during the expected lifetime.

For the purpose of internal credit risk management, the Group determines that a financial asset has defaulted when internal or external information shows that it is impossible for the debtor to pay off the debt without considering the collateral held.

The impairment loss of all financial assets is reduced by the book value of the allowance account.

The Group derecognizes a financial asset when the contractual rights to the cash inflow from the financial asset expire or when it transfers the financial assets and substantially all the risks and rewards of ownership of the asset to another party.

For derecognition of the entire financial assets at amortized cost, the differences between the book value and the received consideration are recognized as profit or loss. Upon derecognition of the entire investments in equity instruments measured at fair value through other comprehensive income, the cumulative gain or loss is directly transferred to retained earnings and not reclassified as profit or loss.

B. Equity instrument

Equity instruments issued by the Group are recognized at the proceeds received, net of the cost of direct issue.

The repurchase of the Group's own equity instruments is recognized in and deducted under equity, and the carrying amount is calculated according to the weighted average of the types of shares, and is calculated separately according to the reasons for the retrieval. The purchase, sale, issuance, or cancellation of the Group's own equity instruments is not recognized in profit or loss.

C. Financial liabilities

(A) Subsequent measurement

All financial liabilities are measured at amortized cost in the effective interest method.

(B) Derecognition of financial liabilities

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

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(12) Provision for liabilities

The amount recognized in provisions is the best estimate of the expenditure required to settle the obligation at the end of the reporting period based on the consideration for the risks and uncertainties of the obligation. The provisions are measured at the discounted value of the cash flow estimated to settle the obligation.

The warranty obligation to ensure that products conform to the agreed specifications is based on the management's best estimate of the expenditure required to settle the Group’s obligation, and is recognized when relevant products are recognized in revenue.

(13) Revenue recognition

After the Group identifies its performance obligations in contracts with customers, it allocates the transaction price to each performance obligation in the contracts and recognizes revenue when performance obligations are satisfied.

For the contract in which transfer of commodities or services and collection of considerations are conducted at an interval within 1 year, the transaction price is not adjusted for significant financing components.

Revenue from the sale of goods is mainly derived from the sale of sorting machines and other equipment. As customers obtain the right to use the sorting machines and other equipment and control of ownership has been transferred upon completion of installation and acceptance, the consolidated company recognizes revenue and accounts receivable at that point in time. The advance payment received before the equipment installation inspection completed is recognized as contract liabilities.

(14) Leases

The Group assesses whether an agreement is (or contained) a lease on the date of entering into the agreement.

A. The Group as lessor

A lease is classified as finance leases when almost all the risks and returns attached to the ownership of assets are transferred to the lessee according to the terms and conditions. All the other leases are classified as operating leases.

Under operating leases, lease payments are recognized as income on a straight-line basis over the lease terms.

B. The Group as lessee

The lease payment from the leases of low-value underlying assets to which the exemption of recognition is applied and short-term lease is recognized as expenses on the straight-line basis over the lease term, while right-of-use assets and lease liabilities with respect to other leases are recognized on the lease commencement date.

The right-of-use assets are initially measured based on the cost (including the initial recognized amount of lease liabilities, the lease payment paid before the lease commencement date less the lease incentives

23 -

received, the initial direct cost and the cost estimated to restore the underlying asset) and subsequently measured based on the cost net of accumulated depreciation and accumulated impairment losses, and then the remeasurement of the lease liabilities is adjusted. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated on a straight-line basis from the lease commencement date to the expiration of the useful life or the expiration of the lease term, whichever is earlier.

Lease liabilities are initially measured at the present value of the lease payments. If the interest rate implicit in a lease can be easily determined, the lease payment is discounted at such an interest rate. If the interest rate cannot be easily determined, the lessee's incremental borrowing rate applies.

Subsequently, lease liabilities are measured at the amortized cost using the effective interest rate method, and interest expense is amortized over the lease term. If a change in the lease term results in a change in future lease payments, the Group remeasures the lease liability and adjusts the right-of-use asset accordingly. However, if the carrying amount of the right-of-use asset is reduced to zero, the remaining remeasurement amount is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

(15) Employee benefits

A. Short-term employee benefits

Liabilities related to employee benefits are measured at non-discounted amount expected to be paid against the services to be provided by the employees.

B. Post-employment benefits

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

The defined benefit cost of defined benefit plans, including service cost, net interest, and remeasurements, is determined using the projected unit credit method. Service cost (including current service cost and net interest on the net defined benefit asset) is recognized as employee benefits expense when incurred. Remeasurements (including actuarial gains and losses, changes in the effect of the asset ceiling, and the return on plan assets excluding interest) are recognized in other comprehensive income when incurred and included in retained earnings, and are not reclassified to profit or loss in subsequent periods.

The net defined benefit asset represents the surplus of contributions in the defined benefit retirement plan.

(16) Share-based payment arrangement

Employee stock options are recognized as an expense on a straight-line basis over the vesting period based on the fair value of the equity instruments at the grant

24 -

date and the best estimate of the number expected to vest, with a corresponding adjustment to capital surplus - employee stock options. If they vest immediately on the grant date, the full expense is recognized on the grant date. For capital increases by cash with shares reserved for employee subscription, the Company designates the date on which the number of shares subscribed by employees is determined as the grant date.

(17) Income tax

The income tax expenses are the total of current and deferred income taxes.

A. Current income tax

The Group determines the current revenue (loss) in accordance with the laws and regulations of the jurisdiction where the income tax returns are filed and, with this as a basis, calculates the income tax payable (receivable).

The additional income tax on undistributed earnings calculated according to the Income Tax Act of the Republic of China is recognized in the year when the related resolution is made at the shareholders' meeting.

The adjustments to the income tax payable in the previous year are recognized in the current income tax.

B. Deferred income tax

The deferred income taxes are calculated based on the temporary difference between the book value of assets and liabilities in the book and the tax base for calculation of taxable income.

Deferred income tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized when it is probable that taxable income will be available to deduct the temporary differences.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences related to such investment are recognized, to the extent that they are expected to be reversed in the foreseeable future, as deferred income tax assets only when we are likely to have taxable income adequate to realize the temporary differences.

The book value of deferred income tax assets is reviewed at each balance sheet date. When any of the deferred income tax assets is not likely to have taxable income adequate to return all or part of the assets anymore, the book value thereof is reduced. Those that are not originally recognized as deferred income tax assets are reviewed at each balance sheet date. When any of those is likely to generate taxable income adequate to return all or part of the assets in the future, the book value thereof is increased.

The deferred income tax assets and liabilities are measured at the tax rate of the period in which the liabilities or assets are expected to be settled or

25 -

realized. The tax rate is subject to the tax rate and tax laws legislated or substantively legislated on the balance sheet date. The deferred income tax liabilities and assets are measured to reflect the tax on the balance sheet date arising from the method that the Group excepts to use to recover or settle the book value of the liabilities and assets.

C. Current and deferred income taxes

Current and deferred income tax is recognized in profit or loss, except for the current and deferred income tax that is related to other comprehensive income.

V. Critical Accounting Judgements and Key Sources of Estimation Uncertainty

In the adoption of the Group's accounting policies, management is required to make judgments, estimations, and assumptions about the relevant information that is not readily accessible from other sources based on historical experience and other relevant factors. The actual results may differ from those estimates.

The accounting policies, estimates and basic assumptions adopted by the Group have been evaluated by its management and are not subject to significant accounting judgments, estimates and assumptions.

VI. Cash and cash equivalents

	December 31, 2025	December 31, 2024
Cash on hand and revolving funds	$ 116	$ 94
Checks and demand deposits	5,883,769	5,008,179
Cash equivalents (investment with original maturity date of less than 3 months)
Time deposits with banks	47,543,100	1,016,335
	$ 53,426,985	$ 6,024,608

The interest rate ranges of bank deposits at the balance sheet date are as follows:

	December 31, 2025	December 31, 2024
Time deposits with banks	1.28~3.90%	4.55~4.66%

VII. Financial instruments at fair value through profit or loss

	December 31, 2025	December 31, 2024
Financial assets – current
Mandatorily measured at fair value through profit or loss
Non-derivative financial assets
Foreign ordinary corporate bonds	$104,225	$105,758
Foreign government bonds	27,815	27,327
Foreign subordinate financial bonds	16,311	16,461
	$148,351	$149,546

VIII. Financial assets measured at FVOCI

	December 31, 2025	December 31, 2024
Equity instrument investment - non-current
Unlisted stocks	$173,599	$ 66,157

The Group invests in the above-mentioned unlisted stocks for medium- to long-term strategic purposes, and expects to make profits through long-term investments. The Group's management believes that recognizing the short-term fluctuations in the fair value of such investments in profit or loss is not consistent with the aforementioned long-term investment plan. Therefore, the management elected to designate these investments in equity instruments as at fair value through other comprehensive income.

IX. Financial assets at amortized cost

	December 31, 2025	December 31, 2024
Current
Time deposits with original maturity date of more than 3 months	$ 650,961	$ 1,868,745
Pledged time deposit	2,000	2,000
	$ 652,961	$ 1,870,745

As of December 31, 2025 and 2024, the interest rates of the Group's time deposits with original maturities more than 3 months were 3.50~3.70% and 4.36~5.10%, respectively. As of December 31, 2025 and 2024, the interest rate on the consolidated company's pledged time deposits was 1.69% for both years.

For information on the pledge of financial assets measured at amortized cost, please refer to Note 28.

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X. Notes and accounts receivable

	December 31, 2025	December 31, 2024
Notes receivable	$ 6,939	$ 2,015
Accounts receivable	3,350,774	3,378,769
	3,357,713	3,380,784
Less: Loss allowance	( 423,185 )	( 467,937 )
	$ 2,934,528	$ 2,912,847

On the balance sheet date, the Group estimates the irrecoverable amount of notes and accounts receivable based on the expected credit loss provision policy to ensure that an appropriate allowance for losses has been accrued for the irrecoverable notes and accounts receivable.

The Group recognizes the loss allowance for notes and accounts receivable based on the lifetime expected credit losses. The lifetime expected credit losses take into account customers' past default records, current financial position, and industry economic conditions, and industry outlook, as well as the GDP forecast and industry outlook. As the Group's credit loss history shows that there is no significant difference in the loss patterns of different customer groups, the allowance matrix does not further divide the customer groups, and only sets the expected credit loss rate based on the notes receivable and the days of accounts receivable.

If there is evidence that a counterparty is facing serious financial difficulties and the Group cannot reasonably expect to recover the amount, the Group will directly write off the relevant trade receivables, but will continue to collect the receivable. The recovered amount is recognized in profit or loss.

The Group measures the loss allowance for notes and accounts receivable based on the provision matrix as follows:

December 31, 2025

	Account opening 0 - 90 days	Account opening 91 - 180 days	Account opening 181 - 270 days	Account opening 271 - 360 days	Account opening 361 - 450 days	Account opening More than 451 days	Total
Expected credit loss rate	0-12%	8-21%	18-50%	12-89%	60-100%	100%
Gross carrying amount	$2,322,146	$518,890	$368,896	$69,760	$29,372	$48,649	$3,357,713
Allowance for losses (lifetime expected credit losses)	(163,464)	(68,264)	(87,409)	(26,589)	(28,810)	(48,649)	(423,185)
Amortized cost	$2,158,682	$450,626	$281,487	$43,171	$562	$-	$2,934,528

December 31, 2024

	Account opening 0 - 90 days	Account opening 91 - 180 days	Account opening 181 - 270 days	Account opening 271 - 360 days	Account opening 361 - 450 days	Account opening More than 451 days	Total
Expected credit loss rate	0-10%	0-15%	0-30%	12-50%	58-100%	97-100%
Gross carrying amount	$1,653,244	$1,073,167	$384,759	$101,310	$62,340	$105,964	$3,380,784
Allowance for losses (lifetime expected credit losses)	(113,569)	(89,929)	(77,252)	(30,664)	(51,436)	(105,087)	(467,937)
Amortized cost	$1,539,675	$983,238	$307,507	$70,646	$10,904	$877	$2,912,847

Information on the changes in the allowance for losses on notes and accounts receivable is as follows:

	Years Ended December 31
	2025	2024
Opening balance	$467,937	$193,192
Impairment loss for the year	-	273,395
Reversal of impairment loss for the year	(48,794)	-
Exchange difference, net	4,042	1,350
Closing balance	$423,185	$467,937

XI. Inventories

	December 31, 2025	December 31, 2024
Finished goods	$ 7,477,553	$ 4,955,924
Work-in-process and semi-finished products	3,069,673	1,839,378
Raw materials and supplies	2,093,915	1,648,852
	$ 12,641,141	$ 8,444,154

Operating costs for 2025 and 2024 included inventory write-downs and losses (reversal of losses) due to obsolescence amounting to NT$126,126 thousand and (NT$125,007 thousand), respectively. The reversal of inventory net realizable value was mainly due to the clearance of inventories.

XII. Subsidiary

The main entities included in the consolidated financial statements are as follows:

Investor company	Subsidiary name	Nature of business	Ownership ratio (%)
			December 31, 2025	December 31, 2024
the Company	Top Vintage International Ltd.	General investment	100.00	100.00
	Hon. Precision, USA INC.	Sale and after-sales service of mechanical, equipment and electronic products	100.00	100.00
		Sale and after-sales service of mechanical, equipment and electronic products	100.00	-
	Hon. Precision, GERMANY GmbH.	Sale and after-sales service of mechanical, equipment and electronic products	100.00	100.00
Top Vintage International Ltd.	Hon. Precision (Suzhou), Inc	Sale and after-sales service of mechanical, equipment and electronic products	100.00	100.00

Note 1: To expand its European business, the consolidated company resolved at a Board of Directors meeting in March 2025 to establish a German subsidiary, Hon. Precision, GERMANY GmbH, and completed the capital injection in September 2025.

Note 2: There were no significant subsidiaries in 2025 and 2024.

The subsidiaries included in the consolidated financial statements have been audited by the CPAs.

XIII. Property, plant and equipment

	Land and land improvements	Buildings	Machinery and Equipment	Other Equipment	Construction in Progress	Total
Cost
Balance on January 1, 2025	$1,204,896	$619,467	$72,377	$84,961	$426	$1,982,127
Addition	68,232	7,083	14,417	33,459	29,504	152,695
Disposition	-	-	-	(885)	-	(885)
Reclassification	11,928	4,010	101,205	426	(426)	117,143
Exchange difference, net	-	(351)	4,183	(100)	-	3,732
Balance on December 31, 2025	$1,285,056	$630,209	$192,182	$117,861	$29,504	$2,254,812
Accumulated depreciation
Balance on January 1, 2025	-	$37,302	$28,726	$28,477	$-	$94,505
Depreciation expenses	134	21,861	17,618	14,320	-	53,933
Disposition	-	-	-	(669)	-	(669)
Reclassification	-	755	-	-	-	755
Exchange difference, net	-	50	473	10	-	533
Balance on December 31, 2025	$134	$59,968	$46,817	$42,138	$-	$149,057
Net as of December 31, 2025	$1,284,922	$570,241	$145,365	$75,723	$29,504	$2,105,755
Cost
Balance on January 1, 2024	$1,168,602	$145,874	$50,754	$63,486	$416,102	$1,844,818
Addition	36,294	8,865	12,522	23,787	48,441	129,909
Disposition	-	-	(22,160)	(7,343)	-	(29,503)
Reclassification	-	463,207	30,151	4,384	(466,331)	31,411
Exchange difference, net	-	1,521	1,110	647	2,214	5,492
Balance on December 31, 2024	$1,204,896	$619,467	$72,377	$84,961	$426	$1,982,127
Accumulated depreciation
Balance on January 1, 2024	$-	$27,015	$21,234	$25,307	$-	$73,556
Depreciation expenses	-	10,162	13,559	10,010	-	33,731
Disposition	-	-	(6,523)	(7,263)	-	(13,786)
Exchange difference, net	-	125	456	423	-	1,004
Balance on December 31, 2024	$-	$37,302	$28,726	$28,477	$-	$94,505
Net as of December 31, 2024	$1,204,896	$582,165	$43,651	$56,484	$426	$1,887,622

Depreciation expenses are accrued on a straight-line basis over the following useful lives:

Land improvements 7 years

Buildings

Plant main building 17 to 50 years

Others 5 to 15 years

Machinery and Equipment 3 to 10 years

Other Equipment 3 to 15 years

The price for acquisition of property, plant and equipment includes non-cash items, and the relevant reconciliation are as follows:

	Years Ended December 31
	2025	2024
Increase in property, plant and equipment	$ 152,695	$ 129,909
Increase in prepaid land payments (recognized in other current assets)	143,000	-
Increase (decrease) in prepayments for equipment (recognized in other non-current assets)	3,891	( 434 )
Payables for equipment (recognized as other payables) (increased) decreased	( 13,920 )	3,184
	$ 285,666	$ 132,659

All the property, plant and equipment of the Company are owned by the Group.

XIV. Lease agreement

(1) Right-of-use assets

	December 31, 2025	December 31, 2024
Carrying amount of right-of-use assets
Land	$ 1,320	$ 44
Buildings	55,621	10,615
	$ 56,941	$ 10,659
	2025	2024
Addition of right-of-use assets	$ 53,895	$ 13,252
Depreciation expense of right-of-use assets
Land	$ 624	$ 523
Buildings	6,947	9,218
	$ 7,571	$ 9,741

Except for the above additions and depreciation expenses recognized, there was no significant sublease or impairment of the Group's right-of-use assets in 2025 and 2024.

(2) Lease liabilities

	December 31, 2025	December 31, 2024
Carrying amount of lease liabilities
Current	$ 14,712	$ 4,148
Non-current	$ 42,658	$ 7,000

Range of discount rate for lease liabilities:

	December 31, 2025	December 31, 2024
Land	1.48%	1.00%
Buildings	1.14~4.11%	0.98~5.17%

The Group leases land and buildings for operational use and the lease term is 2 to 5 years.

(3) Other lease information

	Years Ended December 31
	2025	2024
Short-term lease expense	$ 8,775	$ 6,934
Total cash outflow for leases	$ 16,675	$ 16,488

The Group has elected to apply the recognition exemption for leases of property, plant and equipment that qualify as short-term leases, and did not recognize such leases in right-of-use assets and lease liabilities.

XV. Investment property

	Land	Buildings and structures	Total
Cost
Balance on January 1, 2025	$ 11,928	$ 4,010	$ 15,938
Reclassification	( 11,928)	( 4,010)	( 15,938)
Balance on December 31, 2025	$ -	$ -	$ -
Accumulated depreciation
Balance on January 1, 2025		$ 735	$ 735
Depreciation expenses		20	20
Reclassification		( 755)	( 755)
Balance on December 31, 2025		$ -	$ -
Net as of December 31, 2025	$ -	$ -	$ -
Cost
Balance at January 1 and December 31, 2024	$ 11,928	$ 4,010	$ 15,938
Accumulated depreciation
Balance on January 1, 2024		$ 656	$ 656
Depreciation expenses		79	79
Balance on December 31, 2024		$ 735	$ 735
Net as of December 31, 2024	$ 11,928	$ 3,275	$ 15,203

For business use considerations, in April 2025 the consolidated company transferred investment properties to property, plant, and equipment. The fair value of the investment property as of December 31, 2024 was NT$22,996 thousand, which was estimated by management with reference to market prices of similar properties in nearby areas.

The Group's depreciable investment property is depreciated on a straight-line basis over a useful life of 50 years.

All of the Group's investment property are self-owned equity.

XVI. Intangible assets (recognized in other non-current assets)

	Computer software	Other intangible assets	Total
Cost
Balance on January 1, 2025	$ 19,283	$ 10,652	$ 29,935
Addition	21,491	1,911	23,402
Balance on December 31, 2025	$ 40,774	$ 12,563	$ 53,337
Accumulated amortization
Balance on January 1, 2025	$ 11,513	$ 191	$ 11,704
Amortization expenses	6,874	230	7,104
Balance on December 31, 2025	$ 18,387	$ 421	$ 18,808
Net as of December 31, 2025	$ 22,387	$ 12,142	$ 34,529
Cost
Balance on January 1, 2024	$ 11,452	$ 8,747	$ 20,199
Addition	7,831	1,905	9,736
Balance on December 31, 2024	$ 19,283	$ 10,652	$ 29,935
Accumulated amortization
Balance on January 1, 2024	$ 9,435	$ 65	$ 9,500
Amortization expenses	2,078	126	2,204
Balance on December 31, 2024	$ 11,513	$ 191	$ 11,704
Net as of December 31, 2024	$ 7,770	$ 10,461	$ 18,231

Amortization expenses are accrued on a straight-line basis over the following useful lives:

Computer software

Other intangible assets

1 to 3 years

10 to 20 years

35 -

XVII. Borrowings

Short-term borrowings

	December 31, 2025	December 31, 2024
Unsecured borrowings
Credit loans	$ -	$ 156,745
The interest rate as of December 31, 2024 was 2.9%.

XVIII. Other payables

	December 31, 2025	December 31, 2024
Salaries and bonuses payable	$ 1,033,262	$ 757,879
Remuneration payable to employees and remuneration to directors	930,000	361,300
Payable service charge	78,908	54,136
Payables for equipment	20,671	6,752
Others	260,219	135,658
	$ 2,323,060	$ 1,315,725

XIX. Post-employment benefit plan

(1) Defined contribution plan

The Company's pension system under the "Labor Pension Act" is a state-managed defined contribution plan. Under the Labor Pension Act, the Company makes monthly contributions to employees' individual pension accounts at 6% of their monthly salaries and wages.

The employees of the Group's subsidiaries in Mainland China are members of the retirement benefit plan managed by the local government. These subsidiaries are required to contribute a specific percentage of the salary cost to the pension benefit plan to provide funds for the plan. The obligation of the Group for this government-operated pension plan is only to contribute a specific amount.

(2) Defined benefit plan

The Company within the consolidated company has a pension plan under the "Labor Standards Act," which is a government-managed defined benefit plan. Pension benefits for employees are calculated based on years of service and the average salary of the six months preceding the approved retirement date. Such companies make monthly pension contributions based on the total monthly salaries of employees, which are deposited in a special account with the Bank of Taiwan in the name of the Supervisory Committee of Business Entities' Labor Pension Reserve. Before the end of each year, if the estimated balance in the account is insufficient to cover the pensions of employees expected to meet retirement conditions in the following year, the shortfall shall be fully contributed

in a lump sum before the end of March of the following year. The account is entrusted to the Bureau of Labor Funds, Ministry of Labor for management, and the consolidated company has no right to influence the investment management strategy.

XX. Equity

(1) Common stock capital

	December 31, 2025	December 31, 2024
Authorized thousands of shares	200,000	200,000
Authorized share capital	$ 2,000,000	$ 2,000,000
Thousands of shares issued and fully collected	179,930	161,600
Issued share capital	$ 1,799,300	$ 1,616,000

The ordinary shares issued have a par value of NTD 10 per share, and each share is entitled to one voting right and the right to receive dividends.

On July 15, 2024, the Company's Board of Directors resolved to increase capital by NTD 16,000 thousand in cash by issuing 1,600 thousand new shares with par value of NTD 10 per share at a premium of NTD 559 per share. The above-mentioned cash capital increase became effective by Letter Zheng-Kuei-Xin-Zi No. 1130006784 TPEx on August 6, 2024. The Board of Directors resolved to set September 1, 2024 as the base date for the capital increase. On October 11, 2024, the change of registration was completed. After the capital increase, the paid-in capital was NTD 1,616,000 thousand.

The Company resolved at a Board of Directors meeting on September 19, 2025 to conduct a cash capital increase of NT$183,300 thousand, issuing 18,330 thousand new shares with a par value of NT$10 per share, tentatively at a premium issue price of NT$1,350 per share. The aforementioned cash capital increase was declared effective by the Taiwan Stock Exchange Corporation under Letter No. Tai-Zheng-Shang-Yi-Zi-1140018439 dated October 8, 2025, with November 25, 2025 as the capital increase record date, and the change of registration was completed on December 23, 2025. After the capital increase, the paid-in capital amounted to NT$1,799,300 thousand.

The new shares issued in the aforementioned cash capital increase included both competitive auction and public subscription. The competitive auction was issued at a premium based on a weighted average winning bid price of NT$2,030.37 per share, while the public subscription was issued at a premium of NT$1,495 per share.

36 -

(2) Capital surplus

	December 31, 2025	December 31, 2024
May be used to offset losses, distribute cash or capitalize on share capital (Note)
Premium from stock issuance	$36,179,767	$878,400

Note: Such capital surplus may be used to offset accumulated deficits. In the absence of such deficits, they may also be distributed as cash dividends or capitalized into share capital, provided that any such capitalization is subject to an annual limit based on a specified ratio of paid-in capital.

(3) Retained earnings and dividend policy

According to the earnings distribution policy set forth in the Company's Articles of Incorporation, if there is a profit in the annual final accounting, the Company shall first pay tax and make up for the accumulated losses, and then appropriate 10% of the profit as the legal reserve, unless the legal reserve reaches the paid-in capital. The remaining profit may be set aside or reversed as a special reserve in accordance with the laws and regulations. If there is surplus, the unappropriated earnings at the beginning of the same period are accumulated as distributable earnings. The Board of Directors shall prepare an earnings distribution proposal to be submitted to the shareholders' meeting for resolution of the distribution. The Company's dividend policy takes into consideration factors such as profitability, financial structure, and future operational needs. Each year, not less than 20% of the distributable earnings for the year shall be allocated as dividends to shareholders. However, if the distributable earnings for the year are less than 2% of the paid-in capital, the Company may resolve to transfer the entire amount to retained earnings and not distribute it. When distributing dividends to shareholders, it may be done in cash or stock. However, the cash dividend shall not be less than 50% of the total dividend amount. The Company's policy on the distribution of employee and director remuneration, as stipulated in its Articles of Incorporation, is detailed in Note 22.

Legal reserves may be used to offset losses. If the Company has no losses, legal reserve over 25% of the paid-in capital may be transferred to capital and distributed in cash.

On June 25, 2025, and May 27, 2024, the Company held its annual general shareholders' meetings, at which the following earnings distribution plans for 2024 and 2023, respectively, were resolved:

	Years Ended December 31
	2024	2023
Legal reserve	$ 528,593	$ 306,781
Cash dividends	$ 3,360,000	$ 4,800,000
Cash dividend per share (NTD)	$ 22.5	$ 30.00

Note: Since the treasury shares repurchased by the Company have not yet been transferred to employees, affecting the number of outstanding ordinary

shares, the cash dividend per ordinary share has therefore been adjusted to NT$22.50375991.

The Company’s Board of Directors proposed the 2025 earnings distribution plan on March 10, 2026 as follows:

	2025
Legal reserve	$1,236,180
Cash dividends	$9,894,665
Cash dividend per share (NTD)	$55

The Company’s Board of Directors proposed on March 10, 2026 to distribute cash from capital surplus amounting to NT$1,799,030 thousand, at NT$10 per share. The earnings distribution proposal for 2025 remains subject to resolution at the annual general shareholders’ meeting expected to be held in June 2026.

(4) Treasury stock

Reasons for recovery	Transfer of shares to employees
January 1, 2025 thousand shares	-
Increase this year	27
December 31, 2025, thousands of shares	27

On April 21, 2025, the Company’s Board of Directors resolved to repurchase 3,500 thousand treasury shares for the purpose of transferring them to employees. As of the expiration date of the treasury share repurchase period, the Company had repurchased 27 thousand treasury shares, with a total repurchase amount of NTD 20,933 thousand.

XXI. Operating Revenue

	Years Ended December 31
	2025	2024
Merchandise sales revenue	$30,162,221	$13,896,430
Other operating revenue	108,404	95,914
	$30,270,625	$13,992,344

Contract balance

	December 31, 2025	December 31, 2024	January 1, 2024
Notes and accounts receivable (Notes 10)	$2,934,528	$2,912,847	$1,110,877
Contract liabilities	$6,590,997	$2,398,284	$2,596,973

The changes in contract liabilities were mainly due to the difference between the point of meeting the performance obligation and the time of payment by the customer. The amount of contract liabilities recognized as revenue at the beginning of the year as follows:

(Continued on next page)

	Years Ended December 31
	2025	2024
Merchandise sales revenue	$ 2,229,084	$ 2,362,263
XXII. Net profit
(1) Other income
	Years Ended December 31
	2025	2024
Dividend income	$ 9,772	$ 4,180
Others	1,596	4,811
	$ 11,368	$ 8,991
(2) Depreciation and amortization
	Years Ended December 31
	2025	2024
Property, plant and equipment	$ 53,933	$ 33,731
Investment property	20	79
Right-of-use assets	7,571	9,741
Intangible assets	7,104	2,204
	$ 68,628	$ 45,755
Depreciation expenses by function
Operating cost	$ 51,166	$ 29,166
Operating expenses	10,338	14,306
Other expenses	20	79
	$ 61,524	$ 43,551
Amortization expenses by function
Operating cost	$ 1,443	$ 331
Operating expenses	5,661	1,873
	$ 7,104	$ 2,204
(3) Employee benefit expense
	Years Ended December 31
	2025	2024
Short-term employee benefits	$ 2,346,824	$ 1,451,331
Other employee benefits	152,873	92,294
Post-employment benefits
Defined contribution plan	24,537	18,889
Defined benefit plan	10	-
	2,524,244	1,562,514
Share-based payment
Equity settlement	1,018,458	-
Total employee benefit expenses	$ 3,542,702	$ 1,562,514

39 -

(Continued from previous page)

	Years Ended December 31
	2025	2024
Summary by function
Operating cost	$ 1,776,103	$ 702,706
Operating expenses	1,766,599	859,808
	$ 3,542,702	$ 1,562,514

(4) Remuneration to employees and remuneration to directors

According to the Articles of Incorporation, the Company shall allocate no less than 5% of profit before tax (before deducting employees' and directors' remuneration) as employees' remuneration and no more than 2.5% as directors' remuneration. According to the amendment of the Securities and Exchange Act in August 2024, the Company approved the amendment to the Articles of Incorporation at the annual general shareholders' meeting in June 2025, stipulating that no less than 40% of the employees' remuneration allocated for the year shall be distributed to entry-level employees. The estimated remuneration for employees (including entry-level employees) and remuneration for directors for 2025 and 2024 were resolved by the Board of Directors on March 10, 2026 and March 17, 2025, respectively, as follows:

Estimated percentage

	Years Ended December 31
	2025	2024
Remuneration to employees	5%	5%
Remuneration to directors	0.5%	0.2%
Amount
	Years Ended December 31
	2025	2024
	Cash	Cash
Remuneration to employees	$ 850,000	$ 350,000
Remuneration to directors	80,000	11,300

If there is still a change in the amount of the annual consolidated financial statements after the publication date, it will be treated as a change in the accounting estimate and adjusted and accounted for in the following year.

The actual amounts of employee remuneration and director remuneration for 2024 and 2023 did not differ from the amounts recognized in the 2024 and 2023 financial statements.

Information regarding the employees' and directors' remuneration resolved by the Company's Board of Directors can be found on the Taiwan Stock Exchange "MOPS".

XXIII. Income tax

(1) Income tax recognized in profit or loss

The main components of income tax expense are as follows:

Years Ended December 31
	2025	2024
Current income tax
Incurred in the current period	$ 3,140,708	$ 1,398,052
Income tax on unappropriated earnings	56,067	-
Adjustments from previous years	( 16,158 )	( 11,903 )
	3,180,617	1,386,149
Deferred income tax
Incurred in the current year	41,787	10,776
Income tax expense recognized in profit or loss	$ 3,222,404	$ 1,396,925

The reconciliation of accounting income and income tax expense is as follows:

Years Ended December 31
	2025	2024
Income before income tax	$ 15,584,200	$ 6,682,854
Income tax expense calculated at the statutory rate	$ 3,116,840	$ 1,336,571
Nondeductible expense in determining taxable income	10	-
Taxable income	35,209	34,535
Tax- exempt income	( 1,715 )	( 301 )
Income tax on unappropriated earnings	56,067	-
Effect of different tax rates applicable to consolidated entities	8,253	9,037
Adjustments from previous years	( 16,158 )	( 11,903 )
Others	23,898	28,986
Income tax expense recognized in profit or loss	$ 3,222,404	$ 1,396,925

(2) Current income tax liabilities

	December 31, 2025	December 31, 2024
Current income tax liabilities
Income tax payable	$ 2,477,348	$ 885,110

41 -

(3) Deferred income tax assets and liabilities

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

2025

	Opening balance	Recognized in profit or loss	Closing balance
Deferred income tax assets
Inventory write-downs and slow-moving losses	$ 128,500	$ 24,953	$ 153,453
Expected credit impairment loss	67,980	( 30,453 )	37,527
Unrealized gross profit from sales	100,739	1,300	102,039
Others	21,350	32,082	53,432
	$ 318,569	$ 27,882	$ 346,451
Deferred income tax liabilities
Investment gains under equity method	$ 64,694	$ 24,098	$ 88,792
Others	33,733	45,571	79,304
	$ 98,427	$ 69,669	$ 168,096
2024
	Opening balance	Recognized in profit or loss	Closing balance
Deferred income tax assets
Inventory write-downs and slow-moving losses	$ 159,979	($ 31,479 )	$ 128,500
Expected credit impairment loss	30,305	37,675	67,980
Unrealized gross profit from sales	46,938	53,801	100,739
Unrealized net exchange loss	16,822	( 16,822 )	-
Others	12,449	8,901	21,350
	$ 266,493	$ 52,076	$ 318,569
Deferred income tax liabilities
Investment gains under equity method	$ 35,575	$ 29,119	$ 64,694
Others	-	33,733	33,733
	$ 35,575	$ 62,852	$ 98,427

(4) Authorization of income tax

The Company's income tax returns filed before 2023 have been approved by the tax collection agency.

43 -

XXIV. Earnings per share

	Years Ended December 31
	2025	2024
Basic earnings per share (NTD)	$ 75.71	$ 32.95
Diluted earnings per share (NTD)	$ 75.54	$ 32.73

The earnings and weighted average number of thousands of common shares used to calculate earnings per share are as follows:

Net income

	Years Ended December 31
	2025	2024
Net income attributable to owners of the Company	$12,361,796	$5,285,929
Number of Shares
	Years Ended December 31
	2025	2024
Weighted average number of thousands of common shares used to calculate basic earnings per share.	163,289	160,446
Effect of dilutive potential ordinary shares:
Remuneration to employees	366	1,062
Weighted average number of thousands of common shares used to calculate diluted earnings per share.	163,655	161,508

If the Group may choose to pay employees' remuneration in stock or cash, when calculating the diluted earnings per share, it is assumed that the employees' remuneration will be paid in stock. When the potential common shares have dilutive effect, they will be included in the weighted average number of outstanding shares to calculate diluted earnings per share. Such a dilutive effect of the potential shares is included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

XXV. Share-based payment arrangement

Employee stock option plan for cash capital increase

The Company resolved at a Board of Directors meeting on September 19, 2025 to issue 183,300 thousand new shares through a cash capital increase, with 1,833 thousand shares reserved for employee subscription in accordance with the Company Act. The remuneration cost recognized in 2025 amounted to NT$1,018,458 thousand.

The employee stock options granted by the Company in connection with the cash capital increase in 2025 were valued using the Black-Scholes-Merton pricing model. The inputs used in the valuation model are as follows:

November 2025

Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividend yield
Risk-free interest rate

NT$2,148.68
NT$1,495
49.66%
4 days
0%
1.19%

XXVI. Financial instruments

(1) Fair value - financial instruments not at fair value

The Group's management believes that the carrying amount of financial assets and financial liabilities not measured at fair value approximates their fair value.

(2) Fair value - financial instruments at fair value on a recurring basis

A. Fair value hierarchy

December 31, 2025

	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss
Non-derivative financial assets
Foreign ordinary corporate bonds	$ -	$ 104,225	$ -	$ 104,225
Foreign government bonds	-	27,815	-	27,815
Foreign subordinate financial bonds	-	16,311	-	16,311
	$ -	$ 148,351	$ -	$ 148,351
Financial assets measured at FVOCI
Investment in equity instruments
Unlisted stocks	$ -	$ -	$ 173,599	$ 173,599
December 31, 2024	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss
Non-derivative financial assets
Foreign ordinary corporate bonds	$ -	$ 105,758	$ -	$ 105,758
Foreign government bonds	-	27,327	-	27,327
Foreign subordinate financial bonds	-	16,461	-	16,461
	$ -	$ 149,546	$ -	$ 149,546
Financial assets measured at FVOCI
Investment in equity instruments
Unlisted stocks	$ -	$ -	$ 66,157	$ 66,157

44 -

There were no transfers between Level 1 and Level 2 fair value measurements in 2025 and 2024.

B. Reconciliation of Level 3 fair value measurements of financial instruments 2025

Financial assets	Financial assets measured at FVOCI
	Equity instrument
Opening balance	$ 66,157
Acquired this year	96
Recognized in the unrealized profit or loss of equity instrument investment measured at fair value through other comprehensive income	107,346
Closing balance	$ 173,599

2024

Financial assets	Financial assets measured at FVOCI
	Equity instrument
Opening balance	$ 39,661
Acquired this year	3,000
Recognized in the unrealized profit or loss of equity instrument investment measured at fair value through other comprehensive income	23,496
Closing balance	$ 66,157

C. Valuation techniques and inputs applied for Level 2 fair value measurement Foreign ordinary corporate bonds, foreign government bonds, and foreign subordinate financial bonds - The measurement is based on the open market quotation provided by a third-party institution.

D. Valuation techniques and inputs applied for Level 3 fair value measurement The fair value of investments in unlisted (non-TPEx listed) equity instruments is assessed with reference to market transaction prices of similar assets and prevailing market conditions. The unobservable input used is the liquidity discount to determine the value of the subject matter of evaluation.

	December 31, 2025	December 31, 2024
Liquidity discount	29.24~29.51%	27.67~28.87%

If the following input values are changed in order to reflect reasonable and possible alternative hypotheses, and all other inputs remain unchanged, the fair value of the equity investment will be increased (decreased) by the following amounts:

	December 31, 2025	December 31, 2024
Liquidity discount
Increase by 1%	($ 2,461)	($ 929)
Decrease by 1%	$ 2,461	$ 929
(3) Type of financial instruments
	December 31, 2025	December 31, 2024
Financial assets
Mandatory measurement at fair value through profit or loss	$ 148,351	$ 149,546
Financial assets at amortized cost (Notes 1)	57,481,395	10,897,692
Equity instrument investments measured at fair value through other comprehensive income	173,599	66,157
Financial liabilities
Financial liabilities measured at amortized cost (Note 2)	5,725,039	4,653,705

Note 1: The balance includes financial assets at amortized cost, such as cash and cash equivalents, time deposits with original maturities of more than three months, pledged time deposits, notes and accounts receivable, other receivables (classified under other current assets), and refundable deposits (classified under other non-current assets).

Note 2: The balance includes financial liabilities measured at amortized cost, such as short-term borrowings, accounts payable, other payables, and guarantee deposits received (classified under Other Non-current Liabilities).

(4) Financial risk management objectives and policies

The Group's main financial instruments include investments in equity instruments, accounts receivable, accounts payable, borrowings, and lease liabilities. The Group's financial management department analyzes exposures based on the level and scope of risks to manage financial risks related to the Group's operations. Such risks include market risk, credit risk and liquidity risk.

A. Market risk

The main financial risks of the Group's operating activities are the risk of changes in foreign currency exchange rates, interest rates and other price risks.

The Group's exposure to market risks of financial instruments and management and measurement of such exposures have not changed.

(A) Exchange rate risk

The Group engages in sales and purchase transactions denominated in foreign currencies, which expose the Group to the risk of

exchange rate fluctuations. The Group's exchange rate risk exposure is managed with natural hedging, and the emphasis is on the allocation of various currencies and the offsetting of the amounts of assets and liabilities in various currencies to avoid the impact of exchange rate fluctuations on the valuation gains and losses of foreign currency monetary assets and liabilities.

For the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the functional currency at the balance sheet date, please refer to Note 29.

Sensitivity analysis

The Group is mainly affected by fluctuations in the exchange rate of the US dollar. The sensitivity analysis on foreign currency exchange rate risk is calculated for monetary items denominated in foreign currencies at the end of the financial reporting period. When NTD depreciates by 1% against the USD, the impact on the Group's after-tax profit or loss is as follows; when NTD strengthens by 1% against the US dollar, the impact on the Group's after-tax profit or loss is negative by the same amount.

	The impact of NTD against USD
	2025	2024
Profit and loss	$ 61,460	$ 36,659

(B) Interest rate risk

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

	December 31, 2025	December 31, 2024
Cash flow interest rate risk
- Financial assets	$ 5,883,769	$ 5,008,179
Fair value interest rate risk
- Financial assets	48,196,061	2,887,080
- Lease liabilities	57,370	11,148

Sensitivity analysis

The sensitivity analysis below is determined based on the exposure to the interest rate risk of non-derivative instruments at the end of the year. The rate of change used by the Group to report interest rates to key management is 10 basis points for an increase or decrease in interest rates, which also represents management's assessment of the reasonably possible range of changes in interest rates. The effective interest rate of the floating interest rate financial assets and financial liabilities held by the Group will fluctuate due to changes in market

47 -

interest rates, which will cause fluctuations in their future cash flows.

If the interest rate had increased/decreased by 10 basis points, with all other variables remaining unchanged, the Group's net income after tax for 2025 and 2024 would have changed by NTD 4,707 thousand and NTD 4,007 thousand, respectively.

The Group has equity price risk due to investment in equity securities. The equity investment is not held for trading but is a strategic investment, and the Group does not actively trade such investment.

Sensitivity analysis

The following sensitivity analysis is based on the equity price exposure at the balance sheet date.

If the equity price had increased/decreased by 5%, the other comprehensive income before tax for 2025 and 2024 would have increased/decreased by NTD 8,680 thousand and NTD 3,308 thousand, respectively, due to the increase/decrease in the fair value of financial assets measured at fair value through other comprehensive income.

B. Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. As of the balance sheet date, the maximum credit risk exposure of the Group that may cause financial losses due to the counterparty's failure to perform its obligations is mainly derived from the carrying amount of financial assets recognized in the consolidated balance sheet.

The policy adopted by the Group is to conduct transactions only with counterparties with good credit ratings. The Group assesses the credit quality of the potential customers through the internal credit rating mechanism and sets the credit limit of the customers, in order to control the credit status of the counterparties and effectively control the credit exposure of the counterparties. insurance.

The credit risk of the Group's accounts receivable is mainly concentrated in the Group's large customers. As of December 31, 2025 and 2024, single customers accounted for more than 10% of the total accounts receivable:

	December 31, 2025	December 31, 2024
Group C	$482,931	$494,341
Group O	398,900	-
Group A	280,983	237,101
Group B	230,241	740,607

C. Liquidity risk

The Group manages and maintains sufficient cash and cash equivalents to finance operations and mitigate the impact of fluctuations in cash flows. The management of the Group monitors the use of the bank financing facilities and ensures compliance with the terms of the borrowing terms.

Bank borrowings are an important source of liquidity to the Group. For the Group's unused financing facilities, please refer to the description of (2) financing facilities below.

(A) Liquidity and interest rate risk table of non-derivative financial liabilities

The remaining contractual maturity analysis of non-derivative financial liabilities was based on the earliest date at which the Group might be required to repay and was compiled based on the undiscounted cash flows of financial liabilities (including principal and estimated interest). However, probability that the financial institution will immediately enforce the right is not taken into account.

December 31, 2025

	1 to 3 months	3 months to 1 year	More than a year
Non-derivative financial liabilities
Non-interest-bearing liabilities	$ 4,218,885	$ 1,505,781	$ -
Lease liabilities	4,114	11,178	43,517
	$ 4,222,999	$ 1,516,959	$ 43,517

December 31, 2024

	1 to 3 months	3 months to 1 year	More than a year
Non-derivative financial liabilities
Non-interest-bearing liabilities	$ 3,597,021	$ 899,513	$ -
Lease liabilities	1,406	2,849	7,091
Fixed interest rate instruments	1,137	160,154	-
	$ 3,599,564	$ 1,062,516	$ 7,091

(B) Financing limit

	December 31, 2025	December 31, 2024
Unsecured bank facilities
- Amount drawn	$ -	$ 156,745
- Undrawn amount	-	67,177
	$ -	$ 223,922

50 -

XXVII. Related Party Transaction

Inter-company transactions, account balances, income, and expenses have been eliminated on consolidation and are not disclosed in this note. The transactions between the Group and other related parties are as follows:

(1) Names of related parties and relationships

Name of related party	Relationship with the Group
Te-Kuei Weng	Key management

(2) Lease agreement

Category of related party		Years Ended December 31
Acquisition of right-of-use assets		2025	2024
Key management		$ -	$ 4,084
Presentation item	Category of related party	December 31, 2025	December 31, 2024
Lease liabilities	Key management	$ 2,478	$ 3,286
Category of related party		Years Ended December 31
---	---	---	---
Interest expense (recorded as other expenses)		2025	2024
Key management		$ 33	$ 42

For the lease contract between the Group and the related party, the rent is determined through negotiation with reference to the market price, and is subject to the general terms of collection and payment.

(3) Compensation of key management personnel

Years Ended December 31
	2025	2024
Short-term employee benefits	$ 223,295	$ 157,619
Post-employment benefits	970	1,057
Other employee benefits	1,485	1,540
	$ 225,750	$ 160,216

Remuneration of directors and key management personnel is determined based on individual performance and market trends.

XXVIII. Pledged Assets

The following assets have been provided as collateral for the Group's purchase payment:

	December 31, 2025	December 31, 2024
Pledged time deposits (recorded as financial assets at amortized cost)	$ 2,000	$ 2,000

51 -

XXIX. Significant Assets and Liabilities Denominated in Foreign Currencies

The information below is aggregated and presented in foreign currencies other than the functional currencies of the entities under the Group. The exchange rates disclosed refer to the rates at which these foreign currencies are converted to the functional currency. Significant assets and liabilities denominated in foreign currencies are as follows:

December 31, 2025

	Foreign currency	Exchange rate	Carrying amount
Assets denominated in foreign currencies
Monetary items
USD	$ 253,369	31.43 (USD:NTD)	$ 7,963,400
CNY	467,189	4.496 (CNY:NTD)	2,100,483
Foreign currency liabilities
Monetary items
USD	8,938	31.43 (USD:NTD)	280,936
December 31, 2024
	Foreign currency	Exchange rate	Carrying amount
Assets denominated in foreign currencies
Monetary items
USD	$ 150,092	32.785 (USD:NTD)	$ 4,920,756
CNY	313,016	4.478 (CNY:NTD)	1,401,686
Foreign currency liabilities
Monetary items
USD	10,322	32.785 (USD:NTD)	338,399

The Group's net foreign currency exchange gains (realized and unrealized) amounted to NTD 222,254 thousand and NTD 231,890 thousand for 2025 and 2024, respectively, mainly due to fluctuations in the US dollar exchange rate.

XXX. Additional Disclosures

(1) Significant transactions:

A. Loaning of funds to others: None.
B. Endorsements/Guarantees provided: None.
C. Major marketable securities held at the end of the period: None.
D. Total purchases from or sales to related parties amounting to at least NTD 100 million or 20% of the paid-in capital: Table 1.

E. Receivables from related parties amounting to at least NTD 100 million or 20% of the paid-in capital: Table 2.

F. Others: Business relationships and significant intercompany transactions and balances among the parent company and subsidiaries, and among subsidiaries: see Table 5.

(2) Information on investees: Table 3.

(3) Information on Investments in Mainland China:

A. Name of investee companies in China, principal business activities, paid-in capital, investment method, status of capital remittance, shareholding percentage, current year profit or loss and recognized investment income or loss, carrying amount of investment at year-end, repatriated investment income or loss, and investment limits in China: see Table 4.

B. Any of the following significant transactions with investees in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

(A) Amount and percentage of purchases and related payables at the end of the year: None.

(B) Sales amount and percentage, and the year-end balance and percentage of related receivables: see Table 1.

(D) Year-end balance of negotiable instruments endorsed or provided as collateral and the purpose thereof: None.

(E) Maximum balance, ending balance, interest rate range, and total interest of the year for capital financing: None.

(F) Other transactions that have a significant impact on the profit or loss or financial position for the year, such as the rendering or receipt of services: None.

XXXI. Segment Information

The Group's operating decisions are based on product information for allocating resources and evaluating department performance. Each product has similar economic characteristics and is sold in a centralized manner. Therefore, the Group is aggregated into a single segment. In addition, the segment information provided by the consolidated company to the chief operating decision maker for review is measured on the same basis as the financial statements. Accordingly, the reportable segment revenue and operating results for 2025 and 2024 may be referenced from the consolidated statements of comprehensive income for 2025 and 2024; and the reportable segment assets as of December 31, 2025 and 2024 may be referenced from the consolidated balance sheets as of December 31, 2025 and 2024.

52 -

(1) Information by product

By product	Years Ended December 31
	2025	2024
Merchandise sales revenue	$ 30,162,221	$ 13,896,430
Other operating revenue	108,404	95,914
	$ 30,270,625	$ 13,992,344

(2) Information by region

The Group mainly operates in Taiwan, Asia and North America.

The Group's non-current assets are classified as follows:

	December 31, 2025	December 31, 2024
Taiwan	$ 2,322,332	$ 1,790,832
Asia	218,230	121,738
North America	14,127	16,544
	$ 2,554,689	$ 1,929,114

Non-current assets refer to property, plant and equipment, right-of-use assets and other non-current assets.

(3) Information on major customers

Single customers contributing 10% or more of the Group's total revenue are as follows:

Customer name	2025		2024
	Amount	As a percentage of operating revenue (%)	Amount	As a percentage of operating revenue (%)
Group K	$ 9,448,973	31	$ 1,919,201	14
Group B	4,768,822	16	2,909,683	21
Group C	3,921,179	13	1,339,284	10
	$ 18,138,974		$ 6,168,168

Hon. Precision Inc. and Subsidiaries
Total purchases from or sales to related parties amounting to at least NTD 100 million or 20% of the paid-in capital
2025

Table 1
Unit: NT$ thousands

Buyer/Seller	Name of counterparty	Relationship	Transaction details				Differences in transaction terms compared to general transactions, and the reasons thereof.		Note/trade receivables (payable)		Note
			Buyer/Seller	Amount	Percentage to total purchase (sales)	Credit Period	Unit price	Credit Period	Balance	Percentage of total notes and accounts receivable (payable) (Note 1)
Hon. Precision, Inc.	Hon. Precision (Suzhou), Inc	Subsidiary	Sales	$ 2,276,430	7.52	Terms and conditions	$ -	—	$ 1,375,192	99.96	Note 2

Note 1: Refers to the proportion of amounts due from (to) related parties.
Note 2: Written off when the consolidated financial statements were prepared.

54 -

Hon. Precision, Inc. and Subsidiaries
Receivables from related parties amounting to at least NTD 100 million or 20% of the paid-in capital
December 31, 2025

Table 2
Unit: NT$ thousands

Company Name	Name of counterparty	Relationship	Balance of receivables from related parties	Turnover rate	Overdue receivables from related parties		Subsequent amount received from related parties	Allowance for Impairment Loss
					Amount	Actions taken
Hon. Precision, Inc.	Hon. Precision (Suzhou), Inc	Subsidiary	$ 1,375,192	2.35	$ -	—	$ -	$ -

Note: Written off when the consolidated financial statements were prepared.

55 -

Hon. Precision, Inc. and Subsidiaries

Information on investees, location, etc.

For The Year Ended in December 31, 2025

Table 3
Unit: In thousands of NTD, unless otherwise stated.

Investor company	Name of investee	Location	Main business and products	Original investment amount		Held at the end of the year			Current year (loss) profit of investee companies	Investment (loss) profit recognized for the current year	Note
				December 31, 2025	December 31, 2024	Number of Shares	Percentage (%)	Carrying amount
Hon. Precision, Inc.	Top Vintage International Ltd.	Seychelles	General investment	$ 159,168	$ 159,168	5,100,000	100	$ 61,881	$ 100,851	$ 102,224	-
	Hon. Precision, USA INC.	USA	Sale and after-sales service of mechanical, equipment and electronic products	30,116	30,116	1,000,000	100	88,908	18,640	18,640	-
	Hon. Precision, GERMANY GmbH.	Germany	Sale and after-sales service of mechanical, equipment and electronic products	6,945	-	200,000	100	6,988	( 373 )	( 373 )	-

Note: Written off when the consolidated financial statements were prepared.

Hon. Precision, Inc. and Subsidiaries

Information on Investments in Mainland China

For The Year Ended in December 31, 2025

Table 4
Unit: In thousands of NTD, unless otherwise stated.

Name of investee in Mainland China	Main business and products	Paid-in capital (Note 1)	Investment method	Cumulative investment amount remitted from Taiwan at the beginning of the year (Note 1)	Remittance of funds		Cumulative investment amount remitted from Taiwan at the end of the year (Note 1)	Current year profit of investee companies (Note 2)	The Company's shareholding ratio directly or indirectly invested (%)	Investment income recognized for the current year (Note 2)	Carrying amount of investment at the end of the year (Note 1)	Accumulated repatriation of investment income as of the end of the year
					Outward	Inward
Hon. Precision (Suzhou), Inc	Sale and after-sales service of mechanical, equipment and electronic products	$ 157,913 (CNY 35,123 thousand)	Reinvestment in Mainland China through third regions	$ 157,150 (USD 5,000 thousand)	$ -	$ -	$ 157,150 (USD 5,000 thousand)	$ 100,992 (USD 3,239 thousand)	100	$ 100,992 (USD 3,239 thousand)	$ 560,240 (USD 17,825 thousand)	$ -
Cumulative investment amount remitted from Taiwan to China at the end of the year (Note 1)	Approved investment amount by the Department of Investment Review, Ministry of Economic Affairs (Note 1)	Upper limit on the amount of investments stipulated by the investment commission of MOEA
---	---	---
$157,150 (USD 5,000 thousand)	$157,150 (USD 5,000 thousand)	$ 34,818,640

Note 1: Translated at the exchange rates of RMB¥1 = NT$4.496 and US$1 = NT$31.43 as of December 31, 2025.
Note 2: Translated at the average exchange rates for 2025: RMB¥1 = NT$4.333 and US$1 = NT$31.18.
Note 3: Calculated based on the financial statements audited by the independent auditors for the same period.
Note 4: Written off when the consolidated financial statements were prepared.

Hon. Precision, Inc. and Subsidiaries
Business relationships and significant transactions between the parent company and subsidiaries and among subsidiaries
For The Year Ended in December 31, 2025

Table 5
Unit: NT$ thousands

No.	Company name	Counterparty	Relationship with the counterparty (Note 1)	Transaction details
				Account	Amount	Transaction Terms	Percentage of consolidated total revenue or total assets (%)
0	Hon. Precision, Inc.	Hon. Precision (Suzhou), Inc	(1)	Operating revenue
Accounts receivable	$ 2,276,430
1,375,192	Terms and conditions
Terms and conditions	7.52
1.88

Note 1: The above transactions have been eliminated in the preparation of the consolidated financial statements. The relationship with the counterparty is indicated by the codes below.

(1) Parent company to subsidiary.

Note 2: This table discloses transactions with an amount of NT$100 million or more.

58 -

AI assistant

HON Audit Report / Information 2025

52696_rns_2026-05-28_89c9b37c-4107-458d-b428-ecbf78396ae4.pdf

Hon. Precision, Inc. and Subsidiaries

REPRESENTATION LETTER

Key Audit Matters

Revenue recognition

Other Matters

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

Auditors’ responsibilities for the audit of the consolidated financial statements

Notice to Readers

IV. Summary of Material Accounting Policies

X. Notes and accounts receivable

XII. Subsidiary

XIV. Lease agreement

(1) Right-of-use assets

(2) Lease liabilities

XVII. Borrowings

XVIII. Other payables

XIX. Post-employment benefit plan

XX. Equity

XXIV. Earnings per share

XXV. Share-based payment arrangement

XXVI. Financial instruments

Sensitivity analysis

(B) Interest rate risk

Sensitivity analysis

XXVII. Related Party Transaction

XXVIII. Pledged Assets

XXIX. Significant Assets and Liabilities Denominated in Foreign Currencies

XXX. Additional Disclosures

AI assistant

HON — Audit Report / Information 2025

52696_rns_2026-05-28_89c9b37c-4107-458d-b428-ecbf78396ae4.pdf

Hon. Precision, Inc. and Subsidiaries

REPRESENTATION LETTER

Key Audit Matters

Revenue recognition

Other Matters

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

Auditors’ responsibilities for the audit of the consolidated financial statements

Notice to Readers

IV. Summary of Material Accounting Policies

X. Notes and accounts receivable

XII. Subsidiary

XIV. Lease agreement

(1) Right-of-use assets

(2) Lease liabilities

XVII. Borrowings

XVIII. Other payables

XIX. Post-employment benefit plan

XX. Equity

XXIV. Earnings per share

XXV. Share-based payment arrangement

XXVI. Financial instruments

Sensitivity analysis

(B) Interest rate risk

Sensitivity analysis

XXVII. Related Party Transaction

XXVIII. Pledged Assets

XXIX. Significant Assets and Liabilities Denominated in Foreign Currencies

XXX. Additional Disclosures

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HON Audit Report / Information 2025