Stock Code: 7769

(English Translation of Parent Company Only Financial Statements and a Report Originally Issued in Chinese)

Hon. Precision, Inc.

Parent Company Only 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

Independent Auditors' Report

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

Opinions

We have audited the accompanying parent company only balance sheet of Hon. Precision, Inc. (the “Company”) as of December 31, 2025 and 2024 and the relevant parent company only statement of comprehensive income, changes in equity and cash flows for the years then ended, and relevant notes to the parent company only financial statements, including a summary of significant accounting policies (collectively referred to as the parent company only financial statements)”.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as of December 31, 2025 and 2024, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Auditing Standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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 parent company only financial statements of for the year ended December 31, 2025. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters of the parent company only financial statements for the year ended December 31, 2025 are stated as follows:

Revenue recognition

The revenue from the semiconductor testing equipment of the Company 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.

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

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

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

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

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

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

As part of an audit in accordance with the 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 parent company only financial statements arising from fraud or error; design and implement appropriate responses to the assessed risks; and obtain sufficient and appropriate audit evidence to provide a basis for an audit 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 Company's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of 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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our 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 parent company only financial statements, including the disclosure, and whether the parent company only 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 entities within Hon. Precision, Inc. to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit, and we are responsible for forming an audit opinion for the Company.

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 parent company 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 parent company only financial statements are intended only to present the 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 parent company only financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying parent company only 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 parent company only financial statements shall prevail.

Hon. Precision, Inc.
PARENT COMPANY ONLY 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)	$ 53,259,857	73	$ 5,868,855	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 27)	630,600	1	1,870,745	9
1170	Notes and accounts receivable (Notes 10 and 20)	2,134,625	3	2,506,727	12
1180	Amounts due from related parties (Notes 10, 20, and 26)	1,375,778	2	562,720	3
130X	Inventories (Note 11)	12,012,481	16	8,234,815	38
1470	Other current assets (Note 13)	387,940	1	117,041	-
11XX	Total current assets	69,949,632	96	19,310,449	90
Non-current assets (Note 4)
1517	Financial assets measured at fair value through other comprehensive income (Note 8)	173,503	-	66,157	-
1550	Investments accounted for using the equity method (Note 12)	157,777	-	71,034	-
1600	Property, plant and equipment (Note 13)	1,878,730	3	1,754,254	8
1755	Right-of-use assets (Notes 14 and 26)	55,646	-	9,601	-
1760	Investment property (Note 15)	-	-	15,203	-
1840	Deferred income tax assets (Note 22)	346,451	-	318,569	2
1900	Other non-current assets (Notes 13 and 16)	387,496	1	26,979	-
15XX	Total non-current assets	2,999,603	4	2,261,797	10
1XXX	Total assets	$ 72,949,235	100	$ 21,572,246	100
Code	Liabilities and equity
Current liabilities (Note 4)
2130	Contract liabilities (Note 20)	$ 6,413,863	9	$ 2,280,676	11
2170	Accounts payable (Note 26)	3,365,757	5	3,146,780	15
2200	Other payables (Notes 13, 17 and 26)	2,257,394	3	1,327,166	6
2230	Current tax liabilities (Note 22)	2,436,470	3	852,946	4
2280	Lease liabilities (Notes 14 and 26)	13,406	-	3,073	-
2399	Other current liabilities	220,150	-	87,369	-
21XX	Total current liabilities	14,707,040	20	7,698,010	36
Non-current liabilities (Note 4)
2570	Deferred income tax liabilities (Note 22)	168,096	-	98,427	-
2580	Lease liabilities (Notes 14 and 26)	42,658	-	7,000	-
2670	Other non-current liabilities (Note 12)	373	-	36,999	-
25XX	Total non-current liabilities	211,127	-	142,426	-
2XXX	Total liabilities	14,918,167	20	7,840,436	36
Equity (Notes 4 and 19)
3100	Common stock capital	1,799,300	3	1,616,000	8
3200	Capital surplus	36,179,767	50	878,400	4
3300	Retained earnings	19,908,127	27	11,182,331	52
3400	Other equity	164,807	-	55,079	-
3500	Treasury stock	(20,933)	-	-	-
3XXX	Total equity	58,031,068	80	13,731,810	64
Total liabilities and equity		$ 72,949,235	100	$ 21,572,246	100

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

Hon. Precision, Inc.

PARENT COMPANY ONLY 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, 20, and 26)	$ 30,143,071	100	$ 13,784,367	100
5000	Operating costs (Notes 11, 21, and 26)	13,371,058	45	6,155,295	45
5900	Operating gross profit	16,772,013	55	7,629,072	55
5910	Unrealized gain on sales	( 6,502 )	-	( 269,005 )	( 2 )
5950	Realized gross profit	16,765,511	55	7,360,067	53
	Operating expenses (Notes 10 and 21)
6100	Selling and marketing expenses	407,980	1	204,688	1
6200	General and administrative expenses	606,860	2	247,851	2
6300	Research and development expenses	1,038,992	3	636,810	5
6450	Expected credit impairment (reversal gain) loss	( 149,346 )	-	209,474	1
6000	Total operating expenses	1,904,486	6	1,298,823	9
6900	Operating net profit	14,861,025	49	6,061,244	44
	Non-operating income and expenses (Note 4)
7100	Interest income (Note 26)	304,697	1	160,004	1
7190	Other income (Note 21)	11,250	-	8,988	-
7230	Net foreign exchange gain (Note 28)	224,181	1	231,984	2
7375	Share of profit of subsidiaries accounted for using the equity method (Note 12)	120,491	-	145,595	1
7590	Other expenses (Notes 21 and 26)	( 252 )	-	( 204 )	-

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Code		2025		2024
		Amount	%	Amount	%
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	659,172	2	543,691	4
7900	Income before income tax	15,520,197	51	6,604,935	48
7950	Income tax expense (Notes 4 and 22)	( 3,158,401 )	( 10 )	( 1,319,006 )	( 9 )
8200	Net income for the year	12,361,796	41	5,285,929	39
	Other comprehensive income (Note 4)
	Items not to be reclassified to profit or loss:
8316	Unrealized net profit from equity instrument investment measured at fair value through other comprehensive income	107,346	-	23,496	-
8310		107,346	-	23,496	-
	Items that may be reclassified subsequently to profit or loss:
8361	Exchange differences on translation of financial statements of foreign operations	5,293	-	3,475	-
8380	Share of other comprehensive income of subsidiaries accounted for using the equity method	( 2,911 )	-	9,095	-
8360		2,382	-	12,570	-
8300	Other comprehensive income (net tax)	109,728	-	36,066	-
8500	Total comprehensive income for the year	$ 12,471,524	41	$ 5,321,995	39
	Earnings per share (Note 23)
9710	Basic	$ 75.71		$ 32.95
9810	Diluted	$ 75.54		$ 32.73

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

Hon. Precision, Inc.

PARENT COMPANY ONLY 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
B1	Appropriation of 2023 earnings
	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
B1	Appropriation of 2024 earnings
	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	-	-	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 the parent company only financial statements.

Hon. Precision, Inc.

PARENT COMPANY ONLY 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	$ 15,520,197	$ 6,604,935
A20010	Income and expense items
A20100	Depreciation expenses	40,660	23,468
A20200	Amortization expenses	7,104	2,204
A20300	Expected credit impairment
(reversal gain) loss	( 149,346 )	209,474
A20400	Net loss on financial assets and liabilities measured at fair value through profit or loss	1,195	2,676
A20900	Interest expenses	227	61
A21200	Interest income	( 304,697 )	( 160,004 )
A21300	Dividend income	( 9,772 )	( 4,180 )
A21900	Remuneration cost of share-based payments	1,018,458	-
A22400	Share of profit of subsidiaries accounted for using the equity method	( 120,491 )	( 145,595 )
A22500	Gain (loss) on disposal of property, plant and equipment	( 304 )	35
A23700	Inventory write-downs and slow-moving losses (reversal of gains)	124,763	( 157,395 )
A23900	Unrealized gain on sales to subsidiaries	6,502	269,005
A24100	Unrealized foreign exchange gains	( 136,015 )	( 132,898 )
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	604,943	( 1,663,537 )
A31160	Accounts receivable - related parties	( 760,153 )	( 312,284 )
A31200	Inventories	( 3,902,429 )	( 4,172,198 )
A31240	Other current assets	( 82,036 )	( 72,185 )
A31990	Other non-current assets	( 192 )	-
A32125	Contract liabilities	4,133,187	( 207,786 )
A32150	Accounts payable	217,658	2,630,802
A32180	Other payables	915,622	395,110
A32230	Other current liabilities	132,781	44,463
A33000	Cash inflows generated from operations	17,257,862	3,028,563

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Code		2025	2024
A33100	Interest received	$ 258,834	$ 154,247
A33200	Dividends received	9,772	4,180
A33300	Interest paid	( 227 )	( 61 )
A33500	Income tax paid	( 1,533,090 )	( 848,346 )
AAAA	Net cash inflows from operating activities	15,993,151	2,338,583
	Cash flow from investing activities
B00010	Acquisition of financial assets at fair value through other comprehensive income	-	( 3,000 )
B00040	Acquisition of financial assets at amortized cost	( 1,444,750 )	( 2,177,260 )
B00050	Disposal of financial assets at amortized cost	2,684,895	984,025
B01800	Acquisition of investments under equity method	( 6,945 )	( 65,000 )
B02700	Acquisition of property, plant and equipment	( 276,068 )	( 109,483 )
B02800	Proceeds from disposal of property, plant and equipment	520	-
B04400	Decrease in amounts due from related parties	-	96,096
B06700	Increase in other non-current assets	( 363,538 )	( 11,768 )
BBBB	Net cash inflow (outflow) from investing activities	594,114	( 1,286,390 )
	Cash flow from financing activities
C03000	Increase (decrease) in guarantee deposits received	( 53 )	320
C04020	Repayment of lease principal	( 5,486 )	( 1,307 )
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	30,803,737	( 3,906,587 )
EEEE	Increase (decrease) in cash and cash equivalents	47,391,002	( 2,854,394 )
E00100	Balance of cash and cash equivalents at the beginning of the year	5,868,855	8,723,249
E00200	Balance of cash and cash equivalents at the end of the year	$ 53,259,857	$ 5,868,855

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

Hon. Precision, Inc.
Notes to Parent Company Only 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 parent company only financial statements are presented in the Company's functional currency, NTD.

II. Date and Procedures for Approval of the Financial Report

These parent company only 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 amendments to IAS 21, “Lack of Exchangeability,” will not result in a material change to the Company’s accounting policies.

(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 parent company only financial statements, the Company has assessed that the amendments to the above standards and interpretations will not have a significant impact on its financial position and financial performance.

(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 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.
Classify income and expenses into the categories of operating, investing and financing, the income taxes, and the discontinued operations.
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 the requirements of aggregation and segmentation: The Company must identify assets, liabilities, equity, revenues, expenses and cash flows from individual transactions or other events and classify and summarize each line item presented which shall have at least one similar characteristic. Items that are dissimilar from other items should be disaggregated. The Company only labels such items as "other" when no more informative label can be found.
Increase the disclosure of performance measures defined by management: When the Company engages in public communication outside of financial statements, and when communicating perspective on a specific aspect of the Company'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 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 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.

Apart from the abovementioned impacts, as of the date these parent company only financial statements were approved and released, the Company continued to assess the impact of other amended standards and interpretations on its financial status and financial performance. The relevant effects shall be disclosed once the assessment has been completed.

IV. Summary of Material Accounting Policies

(1) Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

Except for financial instruments measured at fair value, the parent company only 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.

14 -

The Company accounts for its subsidiaries using the equity method when preparing the parent company only financial statements. To ensure consistency between the amount of profit/loss, other comprehensive income, and equity presented in the parent company only financial statements and the amount of profit/loss, other comprehensive income, and equity attributable to the Company's owners shown in the consolidated financial statements, adjustments were made to differences in accounting treatment between the standalone basis and consolidated basis for "equity-accounted investments", "share of profit from equity-accounted subsidiaries", "share of other comprehensive income from equity-accounted subsidiaries", and related equity items.

(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) Foreign currency

When the Company prepares the parent company only financial statements, transactions in currencies other than the Company'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.

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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 parent company only 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.

If the Company disposes of all interests in a foreign operation, or disposes of a portion of the interests of a foreign operation's subsidiary but loses control, all the accumulated exchange differences 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 included in equity transactions on a pro rata basis 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.

(5) 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 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.

(6) Investment in subsidiaries

The Company accounts for its investment in subsidiaries under the equity method. A subsidiary is an entity controlled by the Company.

Under the equity method, investments are initially recognized at cost; after the acquisition date, the carrying amount may be increased or decreased by the Company's share of profits/losses and other comprehensive income in subsidiaries. Furthermore, changes in other equity items of subsidiaries are recognized proportionally according to the Company's shareholding ratio.

Changes in the Company's ownership interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The difference between the carrying amount of the investment and the fair value of the consideration paid or received is recognized directly in equity.

When the Company assesses the impairment, it considers the cash-generating unit as a whole and compares the recoverable amount with the carrying amount. If the recoverable amount of the asset increases subsequently, the reversal of the impairment loss will be recognized as gain. However, the carrying amount of the

16 -

asset after the reversal of the impairment loss shall not exceed the amount that would have been appropriated if the impairment loss had not been recognized less amortization before the impairment took place. The impairment loss attributable to goodwill shall not be reversed in the subsequent period.

When the Company loses control over a subsidiary, its remaining investment in the subsidiary is measured at the fair value on the date when control is lost. The fair value of the remaining investment and the difference between any disposal price and the carrying amount of the investment on the date of loss of control is recognized in profit or loss for the current period. 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 Company's direct disposal of relevant assets or liabilities.

Unrealized gains and losses on downstream transactions between the Company and its subsidiaries are written off in the parent company only financial statements. Gains/losses arising from upstream transactions and transactions among subsidiaries are recognized in the parent company only financial statements only when the Company exercises no control over the subsidiary.

(7) Property, plant and equipment

Property, plant and equipment are stated at cost and subsequently measured at cost less accumulated depreciation.

The property, plant and equipment under construction is recognized at the amount of cost less accumulated impairment loss, and the cost includes professional service fees. 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 the 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 over their useful lives. The Company 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 for the period.

(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 Company adopts a straight-line basis for depreciation.

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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 Company 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.

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

The Company 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 Company 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 parent company only balance sheet when the 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.

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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 Company 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

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 method of determining fair value, please see Note 25.

b. Financial assets at amortized cost

When the financial assets invested in by the Company 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, and receivables from related parties) 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.

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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 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 Company 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 Company's right to receive dividends is established unless such dividends clearly represent the recovery of a part of the investment cost.

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(B) Impairment of financial assets

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

Notes receivable, accounts receivable and related party receivables are recognized in loss allowance based on the 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.

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 Company 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 Company 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 Company are recognized at the proceeds received, net of the cost of direct issue.

The repurchase of the Company'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

21 -

cancellation of the Company'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.

(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 Company's obligation, and is recognized when relevant products are recognized in revenue.

(13) Revenue recognition

After the Company 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.

Merchandise sales revenue mainly comes from the sale of sorting machines and other equipment. Since the sorting machines and other equipment have been installed and accepted, the customer has the right to use them and the control of the ownership of the equipment has been transferred. The 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 Company assesses whether a contract belongs to (or contains) a lease on the date of establishment of the contract.

A. The Company 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.

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

B. The Company 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 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 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 Company 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.

(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

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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 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 Company 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 Company 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.

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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 realized. The tax rate is subject to the tax rate and tax laws legislated or substantively legislated on the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

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 Company'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 Company 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	$ 51	$ 47
Checks and demand deposits	5,716,706	4,852,473
Cash equivalents (investment with original maturity date of less than 3 months)
Time deposits with banks	47,543,100	1,016,335
	$ 53,259,857	$ 5,868,855

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	1.28~3.9%	4.55~4.66%

VII. Financial assets and financial liabilities 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 fair value through other comprehensive income

	December 31, 2025	December 31, 2024
Equity instrument investment - non-current
Unlisted stocks	$ 173,503	$ 66,157

The Company invests in unlisted (non-TPEx listed) shares for mid-term and long-term strategic purposes and expects to generate returns through long-term investments. The Company'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.

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IX. Financial assets at amortized cost

	December 31, 2025	December 31, 2024
Current
Time deposits with original maturity date of more than 3 months	$ 628,600	$ 1,868,745
Pledged time deposit	2,000	2,000
	$ 630,600	$ 1,870,745

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

Please refer to Note 27 for information on financial assets at amortized cost pledged.

X. Notes and accounts receivable (including related parties)

	December 31, 2025	December 31, 2024
Notes receivable	$ 6,939	$ 2,015
Accounts receivable	2,352,675	2,879,047
Receivables from related parties (Note 25)	1,375,778	562,720
	3,735,392	3,443,782
Less: Loss allowance	(224,989)	(374,335)
	$ 3,510,403	$ 3,069,447

On the balance sheet date, the Company 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 Company 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, as well as the GDP forecast and industry outlook. As the Company'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 Company cannot reasonably expect to recover the amount, the Company 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 Company 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 | 0-5% | 8% | 18% | 27% | 60% | 100% | |
| Gross carrying amount | $ 3,016,526 | $ 313,098 | $ 303,221 | $ 52,493 | $ 1,405 | $ 48,649 | $ 3,735,392 |
| Allowance for losses
(lifetime expected credit losses) | ( 81,696 ) | ( 25,048 ) | ( 54,580 ) | ( 14,173 ) | ( 843 ) | ( 48,649 ) | ( 224,989 ) |
| Amortized cost | $ 2,934,830 | $ 288,050 | $ 248,641 | $ 38,320 | $ 562 | $ - | $ 3,510,403 |

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 | 0-6% | 8% | 19% | 30% | 58% | 97-100% | |
| Gross carrying amount | $ 1,850,247 | $ 1,014,932 | $ 346,722 | $ 99,956 | $ 25,961 | $ 105,964 | $ 3,443,782 |
| Allowance for losses
(lifetime expected credit losses) | ( 77,131 ) | ( 81,195 ) | ( 65,877 ) | ( 29,987 ) | ( 15,058 ) | ( 105,087 ) | ( 374,335 ) |
| Amortized cost | $ 1,773,116 | $ 933,737 | $ 280,845 | $ 69,969 | $ 10,903 | $ 877 | $ 3,069,447 |

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	$ 374,335	$ 164,861
Impairment loss for the year	-	209,474
Reversal of impairment loss for the year	( 149,346 )	-
Closing balance	$ 224,989	$ 374,335

XI. Inventories

	December 31, 2025	December 31, 2024
Finished goods	$ 7,168,017	$ 4,788,374
Work-in-process and semi-finished products	3,046,411	1,830,136
Raw materials and supplies	1,798,053	1,616,305
	$ 12,012,481	$ 8,234,815

Cost of goods sold for 2025 and 2024 included inventory write-downs and losses (reversal of losses) due to obsolescence amounting to NT$124,763 thousand and (NT$157,395 thousand), respectively. The reversal of inventory net realizable value was mainly due to the clearance of inventories.

XII. Investment under equity method

	December 31, 2025	December 31, 2024
Investment in subsidiaries
Hon. Precision, USA INC.	$ 88,908	$ 71,034
Top Vintage International Ltd. (Note)	61,881	-
Hon. Precision, GERMANY GmbH.	6,988	-
	$ 157,777	$ 71,034

Note: As of December 31, 2024, the investment balance in Top Vintage International Ltd. showed a credit balance of NT$36,573 thousand and was therefore recognized under other non-current liabilities.

	Ratio of ownership interests and voting rights (%)
Subsidiary name	December 31, 2025	December 31, 2024
Top Vintage International Ltd.	100.00	100.00
Hon. Precision, USA INC.	100.00	100.00
Hon. Precision, GERMANY GmbH.	100.00	-

Note: To expand its European business, the 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.

The profit or loss of subsidiaries accounted for using the equity method and the Company's share of their profit or loss and other comprehensive income for 2025 and 2024 were recognized based on the annual financial statements of each subsidiary audited by CPAs.

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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	$513,621	$30,677	$73,198	$426	$1,822,818
Addition	68,232	7,083	6,723	33,175	29,504	144,717
Disposition	-	-	-	(770)	-	(770)
Reclassification	11,928	4,010	-	426	(426)	15,938
Balance on December 31, 2025	$1,285,056	$524,714	$37,400	$106,029	$29,504	$1,982,703
Accumulated depreciation
Balance on January 1, 2025	$-	$33,567	$13,835	$21,162	$-	$68,564
Depreciation expenses	134	15,977	6,309	12,788	-	35,208
Disposition	-	-	-	(554)	-	(554)
Reclassification	-	755	-	-	-	755
Balance on December 31, 2025	$134	$50,299	$20,144	$33,396	$-	$103,973
Net as of December 31, 2025	$1,284,922	$474,415	$17,256	$72,633	$29,504	$1,878,730
Cost
Balance on January 1, 2024	$1,168,602	$130,615	$20,893	$47,137	$341,051	$1,708,298
Addition	36,294	8,865	6,209	22,128	30,998	104,494
Disposition	-	-	-	(470)	-	(470)
Reclassification	-	374,141	3,575	4,403	(371,623)	10,496
Balance on December 31, 2024	$1,204,896	$513,621	$30,677	$73,198	$426	$1,822,818
Accumulated depreciation
Balance on January 1, 2024	$-	$25,743	$8,508	$13,136	$-	$47,387
Depreciation expenses	-	7,824	5,327	8,461	-	21,612
Disposition	-	-	-	(435)	-	(435)
Balance on December 31, 2024	$-	$33,567	$13,835	$21,162	$-	$68,564
Net as of December 31, 2024	$1,204,896	$480,054	$16,842	$52,036	$426	$1,754,254

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

Land and 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	$ 144,717	$ 104,494
Increase in prepaid land payments (recognized in other current assets)	143,000	-
Increase in prepayment for equipment (recognized in other non-current assets)	3,891	184
Payables for equipment (recognized as other payables) (increased) decreased	( 15,540 )	4,805
	$ 276,068	$ 109,483

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

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	54,326	9,557
	$ 55,646	$ 9,601
	Years Ended December 31
---	---	---
	2025	2024
Addition of right-of-use assets	$ 51,477	$ 10,811
Depreciation expense of right-of-use assets
Land	$ 624	$ 523
Buildings	4,808	1,254
	$ 5,432	$ 1,777

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

(2) Lease liabilities

	December 31, 2025	December 31, 2024
Carrying amount of lease liabilities
Current	$ 13,406	$ 3,073
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	1.14~1.45%	1.15%

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

Other lease information

	Years Ended December 31
	2025	2024
Short-term lease expense	$ 8,775	$ 432
Total cash outflow for leases	$ 14,488	$ 1,800

The Company 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.

32 -

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 operational use considerations, the Company reclassified investment property to property, plant and equipment in April 2025. 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 Company'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.

33 -

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

34 -

35 -

XVII. Other payables

	December 31, 2025	December 31, 2024
Salaries and bonuses payable	$ 945,440	$ 732,370
Remuneration payable to employees and remuneration to directors	930,000	361,300
Payable service charge	79,223	77,729
Payables for equipment	20,671	5,131
Others	282,060	150,636
	$ 2,257,394	$ 1,327,166

XVIII. Post-employment benefit plan

(1) Defined contribution plan

The Company's pension plan under the "Labor Pension Act" is a government-managed defined contribution plan, under which pension contributions are made monthly at 6% of employees' salaries to individual accounts with the Bureau of Labor Insurance.

(2) Defined benefit plan

The Company's pension plan under the "Labor Standards Act" 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 Company has no right to influence the investment management strategy.

XIX. 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.

(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 21.

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	$ 3,636,000	$ 4,800,000
Cash dividend per share (NTD)	$ 22.5	$ 30.00

Note: Since the Company's repurchased treasury shares have not yet been transferred to employees, this has affected the number of outstanding common shares. Accordingly, the cash dividend per common share has been adjusted to NTD 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 2025 earnings distribution proposal is pending resolution at the shareholders' meeting 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 thousand 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.

XX. Operating revenue

	Years Ended December 31
	2025	2024
Merchandise sales revenue	$30,054,879	$13,697,142
Other operating revenue	88,192	87,225
	$30,143,071	$13,784,367

Contract balance

	December 31, 2025	December 31, 2024	January 1, 2024
Notes and accounts receivable (Notes 10)	$2,134,625	$2,506,727	$921,331
Receivables from related parties (Notes 10 and 25)	$1,375,778	$562,720	$339,994
Contract liabilities	$6,413,863	$2,280,676	$2,488,462

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:

	Years Ended December 31
	2025	2024
Merchandise sales revenue	$2,168,675	$2,274,255

XXI. Net profit

(1) Other income

	Years Ended December 31
	2025	2024
Dividend income	$9,772	$4,180
Others	1,478	4,808
	$11,250	$8,988

(2) Depreciation and amortization

	2025	2024
Property, plant and equipment	$35,208	$21,612
Investment property	20	79
Right-of-use assets	5,432	1,777
Intangible assets	7,104	2,204
	$47,764	$25,672

(Continued on next page)

(Continued from previous page)

	Years Ended December 31
	2025	2024
Depreciation expenses by function
Operating cost	$ 32,499	$ 16,711
Operating expenses	8,141	6,678
Other expenses	20	79
	$ 40,660	$ 23,468
Amortization expenses by function
Operating cost	$ 1,443	$ 331
Operating expenses	5,661	1,873
	$ 7,104	$ 2,204
(3) Employee benefit expense
	2025	2024
Short-term employee benefits	$ 2,237,082	$ 1,391,334
Other employee benefits	110,484	74,439
Post-employment benefits
Defined contribution plan	21,370	16,298
Defined benefit plan	10	-
	2,368,946	1,482,071
Share-based payment
Equity settlement	1,018,458	-
Total employee benefit expenses	$ 3,387,404	$ 1,482,071
Summary by function
Operating cost	$ 1,661,658	$ 647,309
Operating expenses	1,725,746	834,762
	$ 3,387,404	$ 1,482,071

(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 parent company only 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".

XXII. 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 year	$ 3,060,547	$ 1,309,910
Income tax on unappropriated earnings	56,067	-
Adjustments from previous years	-	(1,680)
	3,116,614	1,308,230
Deferred income tax
Incurred in the current year	41,787	10,776
Income tax expense recognized in profit or loss	$ 3,158,401	$ 1,319,006

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

	Years Ended December 31
	2025	2024
Income before income tax	$ 15,520,197	$ 6,604,935
Income tax expense calculated at the statutory rate	$ 3,104,039	$ 1,320,987
Nondeductible expense in determining taxable income	10	-
Tax- exempt income	( 1,715 )	( 301 )
Income tax on unappropriated earnings	56,067	-
Income tax adjustments for prior years	-	( 1,680 )
Income tax expense recognized in profit or loss	$ 3,158,401	$ 1,319,006

(2) Current income tax liabilities

	December 31, 2025	December 31, 2024
Current income tax liabilities
Income tax payable	$ 2,436,470	$ 852,946

(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.

XXIII. 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

42 -

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 Company 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.

XXIV. 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	NT$2,148.68
Exercise price	NT$1,495
Expected volatility	49.66%
Expected life	4 days
Expected dividend yield	0%
Risk-free interest rate	1.19%

43 -

XXV. Financial instruments

(1) Fair value - financial instruments not at fair value
The Company'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	$ -	$ -	$ 173,503	$ 173,503
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

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
Recognized in the unrealized profit or loss of equity instrument investment measured at fair value through other comprehensive income	107,346
Closing balance	$ 173,503

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
Measured at amortized cost (Note 1)	57,867,079	10,881,140
Equity instrument investments measured at fair value through other comprehensive income	173,503	66,157
Financial liabilities
Financial liabilities measured at amortized cost (Note 2)	5,623,525	4,474,372

Note 1: The balance comprises financial assets measured at amortized cost, including cash and cash equivalents, time deposits with original maturities of more than three months, pledged time deposits, notes and accounts receivable, amounts due from related parties, other receivables (recognized in other current assets), and refundable deposits (recognized in other non-current assets).
Note 2: The balance includes financial liabilities measured at amortized cost, such as accounts payable, other payables, and guarantee deposits received (classified under Other Non-current Liabilities).

(4) Financial risk management objectives and policies

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

A. Market risk

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

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

(A) Exchange rate risk

The Company engages in sales and purchase transactions denominated in foreign currencies, which expose the Company to the risk of exchange rate fluctuations. The Company'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 information on significant monetary assets and monetary liabilities denominated in currencies other than the functional currency at the balance sheet date, please refer to Note 28.

Sensitivity analysis

The Company 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 Company's after-tax profit or loss is as follows; when NTD strengthens by 1% against the US dollar, the impact on the Company'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 Company 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	$ 5,716,706	$ 4,852,473
Fair value interest rate risk
- Financial assets	48,173,700	2,887,080
- Lease liabilities	56,064	10,073

48 -

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 Company 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 Company will fluctuate due to changes in market interest rates, which will cause fluctuations in their future cash flows.

If interest rates increase or decrease by 10 basis points, with all other variables held constant, the Company’s net profit after tax for 2025 and 2024 would change by NT$4,573 thousand and NT$3,882 thousand, respectively.

The Company 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 Company 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 8,675 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 Company. As of the balance sheet date, the maximum credit risk exposure of the Company 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 balance sheet.

The policy adopted by the Company is to conduct transactions only with counterparties with good credit ratings. The Company 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 Company's accounts receivable is mainly concentrated in the Company's large customers. As of December 31, 2025 and 2024, customers accounted for more than 10% of the total accounts receivable:

	December 31, 2025	December 31, 2024
Group C	$ 252,997	$ 389,365
Group A	229,499	192,778
Group B	170,969	693,287

C. Liquidity risk

The Company manages and maintains sufficient cash and cash equivalents to finance operations and mitigate the impact of fluctuations in cash flows. The remaining contractual maturity analysis of non-derivative financial liabilities was based on the earliest date at which the Company 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	$ 4,117,370	$ 1,505,781	$ -
Lease liabilities	3,493	10,480	43,517
	$ 4,120,863	$ 1,516,261	$ 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	$ 3,574,433	$ 899,513	$ -
Lease liabilities	825	2,344	7,091
	$ 3,575,258	$ 901,857	$ 7,091

XXVI. Related Party Transaction

(1) Names of related parties and relationships

Name of related party	Relationship with the Company
Top Vintage International Ltd.	Subsidiary
Hon. Precision (Suzhou), Inc	Subsidiary
Hon. Precision, USA INC.	Subsidiary
Te-Kuei Weng	Key management

(2) Operating revenue

Presentation item	Name of related party	2025	2024
Operating revenue	Hon. Precision (Suzhou)	$ 2,276,430	$ 1,133,739
Operating revenue	Others	2,140	$ 1,154
		$ 2,278,570	$ 1,134,893

The price and payment terms sold by the Company to the related parties are based on the agreed terms.

(3) Purchase of goods

Name of related party	Years Ended December 31
	2025	2024
Hon. Precision (Suzhou)	$ 22,677	$ 97,711

The purchase price and payment terms of the Company's purchases from related parties are based on the agreed terms.

(4) After-sales service (stated as operating cost)

Name of related party	Years Ended December 31
	2025	2024
Hon. USA	$ 44,675	$ 87,763

(5) Accounts receivable - related parties

Name of related party	December 31, 2025	December 31, 2024
Hon. Precision (Suzhou)	$ 1,375,192	$ 561,541
Others	586	1,179
	$ 1,375,778	$ 562,720

The outstanding related party receivables have not received collaterals, and after evaluation, no provision for loss allowance is required.

(6) Accounts payable

Name of related party	December 31, 2025	December 31, 2024
Hon. Precision (Suzhou)	$ 3,663	$ 302

(7) Other payables

Name of related party	December 31, 2025	December 31, 2024
Hon. USA	$ 315	$ 23,592

(8) Lease agreement

Category of related party	Years Ended December 31
	2025	2024
Acquisition of right-of-use assets
Key management	$ -	$ 4,084

51 -

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
---	---	---
	2025	2024
Interest expense (recorded as other expenses)
Key management	$ 33	$ 42

For the lease contract between the Company 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.

(9) Loans to related parties (recognized in receivables from related parties)

Name of related party	December 31, 2025	December 31, 2024
TOP Vintage	$ -	$ -

Interest income

Name of related party	Years Ended December 31
	2025	2024
TOP Vintage	$ -	$ 524

The Company's loans to subsidiaries are unsecured loans and the interest rate is close to the market interest rate. Such loans are expected to be recovered within one year, and there is no expected credit loss after assessment.

(10) Compensation of key management personnel

	Years Ended December 31
	2025	2024
Short-term employee benefits	$ 206,977	$ 139,258
Post-employment benefits	788	908
Other employee benefits	1,131	1,244
	$ 208,896	$ 141,410

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

XXVII. Pledged Assets

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

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

XXVIII. 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 Company. 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
Non-monetary items
USD	4,798	31.43 (USD:NTD)	150,789
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
Non-monetary items
USD	2,167	32.785 (USD:NTD)	71,034
Foreign currency liabilities
Monetary items
USD	10,322	32.785 (USD:NTD)	338,399
Non-monetary items
USD	1,116	32.785 (USD:NTD)	36,573

The Company's net foreign currency exchange gains (realized and unrealized) amounted to NTD 224,181 thousand and NTD 231,984 thousand for 2025 and 2024, respectively, mainly due to fluctuations in the US dollar exchange rate

XXIX. 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.

(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.
(C) Amount of property transactions and the amount of the resulting gain or loss: None.
(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.

XXX. Segment Information

The Company has disclosed the information of relevant operating segments in the consolidated financial statements in accordance with the requirements of IFRS 8.

Hon. Precision, Inc.
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
(In Thousands of New Taiwan Dollars)

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	Ratio of total notes and accounts receivable (payable) (Note)
Hon. Precision, Inc.	Hon. Precision (Suzhou), Inc	Subsidiary	Sales	$ 2,276,430	7.55	Terms and conditions	$ -	—	$ 1,375,192	99.96	—

Note: Represents the proportion of amounts due from (to) related parties.

54 -

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

Table 2
(In Thousands of New Taiwan Dollars)

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	$ -	—	$ -	$ -

55 -

Hon. Precision, Inc.
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 )	-

56 -

Hon. Precision, Inc.
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)	Shareholding percentage (%) of the Company's direct or indirect investment	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.

57 -

58 -

§THE CONTENTS OF STATEMENT OF MAJOR ACCOUNTING ITEMS

ITEMS	NUMBER/INDEX
STATEMENT OF ASSETS, LIABILITIES AND EQUITY
STATEMENT OF CASH AND CASH EQUIVALENTS	Table 1
STATEMENT OF ACCOUNTS RECEIVABLE	Table 2
STATEMENT OF INVENTORIES	Table 3
STATEMENT OF CHANGES IN INVESTMENTS
ACCOUNTED FOR USING EQUITY METHOD	Table 4
STATEMENT OF CHANGES IN PROPERTY, PLANT
AND EQUIPMENT	Note 13
STATEMENT OF CHANGES IN INVESTMENT
PROPERTY	Note 15
STATEMENT OF CONTRACT LIABILITIES	Table 5
STATEMENT OF ACCOUNTS PAYABLE	Table 6
STATEMENT OF PROFIT AND LOSS ITEMS
STATEMENT OF OPERATING REVENUE	Table 7
STATEMENT OF OPERATING COST	Table 8
STATEMENT OF OPERATING EXPENSES	Table 9
SUMMARY OF EMPLOYEE BENEFITS,
DEPRECIATION, AND AMORTIZATION
EXPENSES INCURRED IN THE CURRENT
PERIOD BY FUNCTION	Table 10

Hon. Precision, Inc.
STATEMENT OF CASH AND CASH EQUIVALENTS
December 31, 2025

Table 1
Unit: In thousands of NTD, unless otherwise stated.

Items	Term	Interest rate	Amount
Cash on hand and revolving funds			$ 51
Bank deposits
Bank check			-
Demand deposits		0.74~0.89%	4,392,043
Foreign currency demand deposit (Note 1)		0.01~3.3%	1,324,663
			5,716,706
Cash equivalents
NT$ time deposits	2025.10.13 ~ 2026.3.11	1.28~1.65%	42,200,000
Foreign currency time deposit (Note 2)	2025.12.17 ~ 2026.3.26	3.6~3.9%	5,343,100
			$53,259,857

Note 1: Mainly includes JPY 56,884 thousand, RMB 155,713 thousand, and USD 19,509 thousand, translated at exchange rates of JPY 1 = NT$0.2008, RMB 1 = NT$4.496, and USD 1 = NT$31.43.

Note 2: Includes USD 170,000 thousand, translated at an exchange rate of USD 1 = NT$31.43.

59 -

Hon. Precision, Inc.
STATEMENT OF ACCOUNTS RECEIVABLE
December 31, 2025

Table 2
(In Thousands of New Taiwan Dollars)

Name	Amount
Notes receivable	$ 6,939
Accounts receivable
Group C	252,997
Group A	229,499
Group B	170,969
Group K	119,231
Others (Note)	1,579,979
	2,352,675
Less: Loss allowance	( 224,989 )
	$ 2,134,625

Note: The balance of each account does not exceed 5% of the balance of this account.

60 -

Hon. Precision, Inc.
STATEMENT OF INVENTORIES
December 31, 2025

Table 3
(In Thousands of New Taiwan Dollars)

Items	Amount
	Cost	Net realizable value
Finished goods	$ 7,537,990	$ 19,478,825
Work-in-process and semi-finished products	3,235,131	4,110,997
Raw materials and supplies	2,006,623	2,795,622
	12,779,744	$ 26,385,444
Less: Allowance for devaluation and obsolescence losses (Note)	( 767,263 )
	$ 12,012,481

Note: Including finished goods of NT$369,973 thousand, work in progress and semi-finished goods of NT$188,721 thousand, and raw materials of NT$208,569 thousand.

61 -

Hon. Precision, Inc.
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
2025

Table 4
(In Thousands of New Taiwan Dollars)

Investee	Opening balance		Increase this year		Investment income accounted for using the equity method (Note 1)	Other adjustments (Note 2)	Closing balance			Net value of equity	Guarantee or pledge
	Number of Shares	Amount	Number of Shares	Amount			Number of Shares	Shareholding %	Amount
Investments accounted using the equity method (credit balance)
Unlisted company
Top Vintage International Ltd.	5,100,000	($ 36,573)	-	$ -	$102,224	($ 3,770)	5,100,000	100	$ 61,881	$561,789	—
Hon. Precision, USA INC.	1,000,000	71,034	-	-	18,640	( 766)	1,000,000	100	88,908	99,426	—
Hon. Precision, GERMANY GmbH.	-	-	200,000	6,945	( 373)	416	200,000	100	6,988	6,991	—
		$ 34,461		$ 6,945	$120,491	($ 4,120)			$157,777	$668,206

Note 1: Calculated based on the audited annual financial statements.
Note 2: Represents the net amount of exchange differences on translation of financial statements of foreign operations of NT$2,382 thousand, realized sales profit of NT$449,625 thousand for the current year, and unrealized sales profit of (NT$456,127 thousand).

62 -

Hon. Precision, Inc.
STATEMENT OF CONTRACT LIABILITIES
December 31, 2025

Table 5
(In Thousands of New Taiwan Dollars)

Customer name	Amount
Group K	$ 3,010,576
Group A	679,279
Group B	598,906
Group N	503,359
Others (Note)	1,621,743
	$ 6,413,863

Note: The balance of each individual account did not exceed 5% of the account balance.

63 -

Hon. Precision, Inc.
STATEMENT OF ACCOUNTS PAYABLE
December 31, 2025

Table 6
(In Thousands of New Taiwan Dollars)

Vendor Name	Amount
Accounts payable
Company C	$ 288,976
Others (Note)	3,073,118
	3,362,094
Payables to related parties	3,663
	$ 3,365,757

Note: The balance of each individual account did not exceed 5% of the account balance.

64 -

Hon. Precision, Inc.
STATEMENT OF OPERATING REVENUE
2025

Table 7
(In Thousands of New Taiwan Dollars)

Name	Quantity	Amount
Merchandise sales revenue
Semiconductor testing equipment	Approx. 5,121	$ 24,733,986
Jigs and various modules		4,767,471
Parts and others		553,422
Other operating revenue
Rental income		14,754
Service revenue		73,438
		$ 30,143,071

65 -

Hon. Precision, Inc.
STATEMENT OF OPERATING COST
2025

Table 8
(In Thousands of New Taiwan Dollars)

Items	Amount
Manufacturing cost
Cost of finished goods
Raw materials at the beginning of the year	$ 1,874,717
Add: Purchase of goods this year	11,871,342
Others	66,795
Less: Raw materials at the end of the year	2,006,623
Sales of raw materials	311,671
Inventory shortages and scrapped raw materials	15,167
Others	180,189
Direct labor	12,381
Indirect labor	1,593,791
Manufacturing overhead	3,707,551
Manufacturing cost	16,612,927
Add: Work-in-progress and semi-finished goods at the beginning of the year	1,897,182
Inventory gains of work in progress and semi-finished goods	2,793
Purchases this year	4,606
Others	124,940
Less: Work-in-progress and semi-finished goods at the end of the year	3,235,131
Sale of semi-finished goods	86,647
Others	70,394
	15,250,276
Add: Finished goods at the beginning of the year	5,105,416
Others	5,410
Less: Finished goods at the end of the year	7,537,990
Inventory shortages and scrapped finished goods	36,074
Others	32,596
	12,754,442
Add: Scrap of inventory	55,401
Gain on obsolescence of inventory and recovery of price decline	124,763
Others	436,452
	$ 13,371,058

66 -

Hon. Precision, Inc.
STATEMENT OF OPERATING EXPENSES
2025

Table 9
(In Thousands of New Taiwan Dollars)

Items	Selling and marketing expenses	Administrative expenses	Research and development expenses	Total
Employee benefit expense	$ 238,610	$ 548,561	$ 938,575	$ 1,725,746
Laboratory materials	-	-	69,817	69,817
Sales and service expense	75,916	-	-	75,916
Others (Note)	93,454	58,299	30,600	182,353
Subtotal	407,980	606,860	1,038,992	2,053,832
Reversal of expected credit loss	-	( 149,346 )	-	( 149,346 )
	$ 407,980	$ 457,514	$ 1,038,992	$ 1,904,486

Note: Each amount did not exceed 5% of the account amount.

67 -

Hon. Precision, Inc.

SUMMARY OF EMPLOYEE BENEFITS, DEPRECIATION, AND AMORTIZATION EXPENSES INCURRED IN THE CURRENT PERIOD BY FUNCTION

2025 and 2024

Table 10
Unit: NT$ thousands

	2025				2024
	Attributable to operating costs	Attributable to operating expenses	Attributable to non-operating income and expenses	Total	Attributable to operating costs	Attributable to operating expenses	Attributable to non-operating income and expenses	Total
Employee benefit expense
Salary expenses	$ 1,127,497	$ 1,021,750	$ -	$ 2,149,247	$ 607,586	$ 770,793	$ -	$ 1,378,379
Labor and national health insurance expenses	25,796	41,826	-	67,622	18,304	29,579	-	47,883
Pension expense
Defined contribution plan	12,171	9,199	-	21,370	9,221	7,077	-	16,298
Defined benefit plan	-	10	-	10	-	-	-	-
Remuneration to directors	-	87,835	-	87,835	-	12,955	-	12,955
Share-based payment	478,675	539,783	-	1,018,458	-	-	-	-
Other employee benefit expenses	17,519	25,343	-	42,862	12,198	14,358	-	26,556
	$ 1,661,658	$ 1,725,746	$ -	$ 3,387,404	$ 647,309	$ 834,762	$ -	$ 1,482,071
Depreciation expenses	$ 32,499	$ 8,141	$ 20	$ 40,660	$ 16,711	$ 6,678	$ 79	$ 23,468
Amortization expenses	$ 1,443	$ 5,661	$ -	$ 7,104	$ 331	$ 1,873	$ -	$ 2,204

Note 1: As of December 31, 2025 and 2024, the number of employees of the Company was 613 and 481, respectively, of which the number of directors who did not serve as employees concurrently was 6 and 5, respectively.
Note 2: (1) The average employee benefits expense for the current year was NT$5,436 thousand, compared with NT$3,086 thousand for the previous year.
(2) The average employee salary expense for the current year was NT$3,541 thousand, compared with NT$2,896 thousand for the previous year.
(3) Change in average employee salary expense: Increase of 22%.
Note 3: In 2025 and 2024, the Company did not have supervisors; therefore, there was no related remuneration for supervisors.
Note 4: The Company's remuneration policy
(1) The Company's remuneration policy for employees is committed to providing employees with remuneration and benefits above the average level of the industry. Employee remuneration includes monthly salaries, bonuses based on operating performance, and remuneration distributed by the Company based on annual profitability. Based on the Company's operating results and with reference to prevailing practices in the domestic industry, the Company determines the total amount of performance bonuses and remuneration, with the amount and allocation proposed by the Remuneration Committee and submitted to the Board of Directors for approval; the amount allocated to each employee is determined based on position, contribution, and performance.
(2) In addition, in accordance with the Company's Articles of Incorporation, if the Company has profits for the year, it shall allocate no less than 5% as employee remuneration and no more than 2.5% as director remuneration. The Remuneration Committee will regularly evaluate director remuneration based on the Company's operating performance and overall competitiveness in the remuneration market.

AI assistant

HON Audit Report / Information 2025

52696_rns_2026-05-28_c8f60740-9386-4188-bede-d2bd101e93ec.pdf

Hon. Precision, Inc.

Revenue recognition

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

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

Notice to Readers

IV. Summary of Material Accounting Policies

XIV. Lease agreement

XVII. Other payables

XVIII. Post-employment benefit plan

XIX. Equity

XX. Operating revenue

XXI. Net profit

XXIV. Share-based payment arrangement

Employee stock option plan for cash capital increase

(A) Exchange rate risk

Sensitivity analysis

(B) Interest rate risk

XXVII. Pledged Assets

XXVIII. Significant Assets and Liabilities Denominated in Foreign Currencies

XXIX. Additional Disclosures

XXX. Segment Information

§THE CONTENTS OF STATEMENT OF MAJOR ACCOUNTING ITEMS

AI assistant

HON — Audit Report / Information 2025

52696_rns_2026-05-28_c8f60740-9386-4188-bede-d2bd101e93ec.pdf

Hon. Precision, Inc.

Revenue recognition

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

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

Notice to Readers

IV. Summary of Material Accounting Policies

XIV. Lease agreement

XVII. Other payables

XVIII. Post-employment benefit plan

XIX. Equity

XX. Operating revenue

XXI. Net profit

XXIV. Share-based payment arrangement

Employee stock option plan for cash capital increase

(A) Exchange rate risk

Sensitivity analysis

(B) Interest rate risk

XXVII. Pledged Assets

XXVIII. Significant Assets and Liabilities Denominated in Foreign Currencies

XXIX. Additional Disclosures

XXX. Segment Information

§THE CONTENTS OF STATEMENT OF MAJOR ACCOUNTING ITEMS

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