2472

LELON ELECTRONICS CORP.
PARENT COMPANY ONLY FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024

Address: No. 147, Sec. 1, Guoguang Rd., Dali Dist., Taichung City 412023, Taiwan, R.O.C.
Telephone: (+886) 04-2418-1856

The reader is advised that parent company only financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

Independent Auditors' Report Translated from Chinese

To Lelon Electronics Corp.

Opinion

We have audited the accompanying parent company only balance sheets of Lelon Electronics Corp. (the "Company") as of 31 December 2025 and 2024, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2025 and 2024, and notes to the parent company only financial statements, including the summary of material accounting policies. (together "the parent company only financial statements").

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

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the 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 (the "Norm"), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits, 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 2025 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Impairment of accounts receivable

As of 31 December 2025, the gross accounts receivable and loss allowance by the Company amounted to NT$985,909 thousand and NT$16,658 thousand, respectively. The net accounts receivable accounted for 8% of total assets, which was considered material to the Company. The collection of accounts receivable is a key factor in the working capital management of the Company, the loss allowance of account receivables is measured by the expected credit loss for the duration of the account receivables, the measurement process includes grouping the receivables and determining the use of the related assumptions in the analysis, including appropriate account aging interval and consideration of the loss rate of each account aging interval. As the measurement of expected credit loss involves making judgment, analysis and estimates, and the result will affect the net account receivable, we therefore determined this a key audit matter.

Our audit procedures included, but not limited to, understanding and testing the effectiveness of the internal control system for the client risk assessment and collection of accounts receivable established by the management level, understanding and testing the use of provision matrix, including assessing the reasonableness of the determination of various account aging intervals and sampling and examining the accuracy of underlying information through original document inspection. The procedures also involve testing statistical information related to loss rates calculated based on rolling ratios over one year, sampling appropriate transactions to recalculate the accuracy of aging based on transaction conditions, evaluating the reasonableness of collection for individual customers with significant overdue amounts or longer overdue periods, performing group assessment for non-individually material customers, recalculating the reasonableness of the allowance for doubtful accounts amount based on the impairment loss policy, selecting samples to perform confirmations of accounts receivable and reviewing the collection status after the balance sheet date to assess their recoverability.

We also assessed the adequacy of disclosures related to accounts receivable in Notes 5 and 6 to the parent company only financial statements.

Valuation for inventories (Including inventories of the subsidiaries under the equity method)

The inventories of the Company and its subsidiaries accounted for using the equity method was significant to the financial statements. As the Company's inventories are distributed in multiple warehouses and has a wide range of items, the difficulty of managing the status of inventory usage has increased. The products have a wide range of applications and they are phased out at different rates, so the slowing-moving and obsolete inventory allowance for impairment involved significant management judgments. We therefore determined this a key audit matter.

Our audit procedures included, but were not limited to, understanding and testing the effectiveness of the internal controls established by management for inventory, assessing the appropriateness of accounting policies regarding obsolete and slow-moving inventory, understanding management's plan for inventory count, selecting material inventory locations for on-site observations during physical inventory counts, testing the accuracy of inventory aging, analyzing changes in inventory aging, testing management's estimated net realizable value for inventory, including price testing and conducting analytical procedures on gross profit margins for each product, verifying the calculation of inventory unit costs, considering the expected demand and market value of inventory, understanding management's analysis and evaluation of obsolete and slow-moving inventory, including the possibility of inventory realization and estimation of net realizable value.

We also assessed the adequacy of disclosures related to inventory in Notes 5 and 6 to the parent company only financial statements.

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

In preparing the parent company only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 financial reporting process of the Company.

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

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

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

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

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

Chin-Yuan Tu

Wen-Chen Lo

Ernst & Young, Taiwan

13 March 2026

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, results of operations 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 accepted and applied in the Republic of China.

Accordingly, the accompanying parent company only financial statements and report of independent auditors are not intended for use by those who are not informed about the accounting principles or Standards on Auditing of the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese
LELON ELECTRONICS CORP.
PARENT COMPANY ONLY BALANCE SHEETS
31 December 2025 and 2024
(Expressed in Thousand New Taiwan Dollars)

Assets	Notes	As of 31 December
		2025	2024
Current assets
Cash and cash equivalents	4, 6(1)	$584,204	$692,807
Financial assets at fair value through profit or loss, current	4, 6(2)	143,124	54,292
Notes receivable, net	4,6(13)	70	191
Accounts receivable, net	4, 5, 6(3), 6(13)	969,251	876,806
Other receivables	4, 6(13)	263	779
Other receivables-related parties	4, 6(13), 7	489,262	176,525
Inventories	4, 5, 6(4)	71,755	68,771
Prepayment	7	39,441	41,656
Other current assets		131	2
Total current assets		2,297,501	1,911,829
Non-current assets
Investments accounted for under the equity method	4, 6(5)	9,542,792	7,962,212
Property, plant and equipment	4, 6(6)	289,534	298,471
Investment property	4, 5, 12(8)	25,268	25,563
Intangible assets	4	4,294	3,573
Deferred tax assets	4, 5, 6(18)	17,766	18,613
Other non-current assets	4,6(13)	619	619
Total non-current assets		9,880,273	8,309,051
Total assets		$12,177,774	$10,220,880

(continued)

English Translation of Consolidated Financial Statements Originally Issued in Chinese

LELON ELECTRONICS CORP.

PARENT COMPANY ONLY BALANCE SHEETS

31 December 2025 and 2024

(Expressed in Thousand New Taiwan Dollars)

Liabilities and Equity	Notes	As of 31 December
		2025	2024
Current liabilities
Short-term loans	4, 6(7)	$1,016,588	$1,270,064
Contract liabilities, current	4, 6(12)	8,145	14,522
Notes payable		5,180	15,936
Notes payable-related parties	7	5,520	534
Accounts payable	4	11,058	8,353
Accounts payable-related parties	7	329,222	138,439
Other payables	6(8),7	1,076,290	604,991
Current tax liabilities	4, 6(18)	97,953	34,126
Other current liabilities		10,486	11,651
Total current liabilities		2,560,442	2,098,616
Non-current liabilities
Long-term borrowings	6(9)	282,000	-
Deferred tax liabilities	4, 5, 6(18)	223,825	53,986
Net defined benefit obligation, noncurrent	4, 5, 6(10)	18,115	20,492
Guarantee deposits received		460	460
Total non-current liabilities		524,400	74,938
Total liabilities		3,084,842	2,173,554
Equity attributable to the parent company
Capital	6(11)
Common stock		1,647,351	1,647,351
Additional Paid-in Capital		2,057,664	2,054,205
Retained earnings
Legal reserve		872,164	756,171
Special reserve		113,961	358,961
Unappropriated earnings		4,402,408	3,344,609
Subtotal		5,388,533	4,459,741
Other components of equity
Exchange differences on translation of foreign operations	4	27,558	(86,222)
Unrealized gains or losses measured at fair value through other comprehensive income		(28,174)	(27,749)
Total other components of equity		(616)	(113,971)
Total equity		9,092,932	8,047,326
Total liabilities and equity		$12,177,774	$10,220,880

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese

LELON ELECTRONICS CORP.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

For the years ended 31 December 2025 and 2024

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

	Notes	For the years ended 31 December
		2025	2024
Operating revenues	4, 6(12), 7	$3,249,997	$2,853,077
Operating costs	6(4), 7	(2,523,746)	(2,372,834)
Gross profit		726,251	480,243
Unrealized intercompany profit		-	(1,383)
Realized intercompany profit		11,328	8,646
Gross profit		737,579	487,506
Operating expenses	6(10), 6(15)
Sales and marketing expenses		(193,735)	(162,676)
General and administrative expenses		(185,812)	(171,659)
Research and development expenses		(50,815)	(54,945)
Expected credit gains	6(13)	3,299	6,042
Subtotal		(427,063)	(383,238)
Operating income		310,516	104,268
Non-operating income and expenses	4,5
Interest revenue		24,229	24,521
Other income	6(14), 6(16), 7	30,975	24,743
Other gain and losses	6(16)	(75,795)	92,190
Financial costs	6(16)	(38,541)	(24,279)
Share of profit or loss of subsidiaries, associates and joint ventures	6(5)	1,456,700	1,004,879
Subtotal		1,397,568	1,122,054
Income before income tax		1,708,084	1,226,322
Income tax expense	4,5, 6(18)	(270,367)	(70,836)
Net income		1,437,717	1,155,486
Other comprehensive income	4,6(17)
Items that may not be reclassified subsequently to profit or loss
Remeasurements of defined benefit plans		2,112	5,654
Unrealized gains(losses) on equity instruments measured at fair value through other comprehensive income		(425)	(415)
Income tax related to items that may not be reclassified subsequently		(358)	(1,211)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations	6(5)	113,780	245,405
Total other comprehensive income, net of tax		115,109	249,433
Total comprehensive income		$1,552,826	$1,404,919
Earnings per share (NTD)	4, 6(19)
Earnings per share-basic		$8.73	$7.01
Earnings per share-diluted		$8.70	$6.98

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

English Translation of Consolidated Financial Statements Originally Issued in Chinese
LELON ELECTRONICS CORP.
PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY
For the years ended 31 December 2025 and 2024
(Expressed in Thousands of New Taiwan Dollars)

		Retained earnings			Other components of equity
		Additional Paid-in Capital	Legal Reserve	Special Reserve	Unappropriated Earnings	Exchange Differences on Translation of Foreign Operations	Unrealized Gains (Losses) on Equity Instruments Measured at Fair Value Through Other Comprehensive Income
Balance as of 1 January 2024	$1,647,351	$2,013,165	$663,989	$232,480	$2,864,601	$(331,627)	$(27,334)
Appropriations of earnings, 2023:
Legal Reserve			92,182		(92,182)		-
Special reserve				126,481	(126,481)		-
Cash dividends					(461,258)		(461,258)
Net income in 2024					1,155,486		1,155,486
Other comprehensive income (loss), net of tax in 2024					4,443	245,405	(415)
Total comprehensive income (loss)	-	-	-	-	1,159,929	245,405	(415)
Changes in ownership interests in subsidiaries		41,040					41,040
Balance as of 31 December 2024	$1,647,351	$2,054,205	$756,171	$358,961	$3,344,609	$(86,222)	$(27,749)
Balance as of 1 January 2025	$1,647,351	$2,054,205	$756,171	$358,961	$3,344,609	$(86,222)	$(27,749)
Appropriations of earnings, 2024:
Legal Reserve			115,993		(115,993)		-
Cash dividends					(510,679)		(510,679)
Reversal of special reserve				(245,000)	245,000		-
Net income in 2025					1,437,717		1,437,717
Other comprehensive income (loss), net of tax in 2025					1,754	113,780	(425)
Total comprehensive income (loss)	-	-	-	-	1,439,471	113,780	(425)
Changes in ownership interests in subsidiaries		3,459					3,459
Balance as of 31 December 2025	$1,647,351	$2,057,664	$872,164	$113,961	$4,402,408	$27,558	$(28,174)

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

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

LELON ELECTRONICS CORP.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended 31 December 2025 and 2024

(Expressed in Thousand New Taiwan Dollars)

	For the years ended 31 December
	2025	2024
Cash flows from operating activities:
Net income before tax	$1,708,084	$1,226,322
Adjustments :
Income and expense adjustments:
Depreciation	9,336	12,343
Amortization	1,010	1,260
Expected credit gains	(3,299)	(6,042)
Loss (Gain) on financial assets/liabilities at fair value through loss or profit	4,445	(4,128)
Interest expense	38,541	24,279
Interest income	(24,229)	(24,521)
Dividend income	(1,614)	(1,346)
Share of profit of subsidiaries, associates and joint ventures	(1,456,700)	(1,004,879)
Gains on disposal and write-off of property, plant, and equipment	(1,905)	-
Gains on disposal of investments	(6,149)	-
Unrealized intercompany profit	-	1,383
Realized intercompany profit	(11,328)	(8,646)
Loss (Gain) on inventory write-down and reversal of obsolescence slow-moving of inventories	1,681	(255)
Changes in operating assets and liabilities:
Increase in financial assets at fair value through profit or loss	(114,151)	(22,413)
Decrease (increase) in notes receivable	121	(150)
Increase in accounts receivable	(92,445)	(104,944)
Increase in other receivables	(60,821)	(92,662)
(Increase) decrease in inventories	(4,665)	10,605
Decrease (increase) in prepayments	7,032	(8,275)
(Increase) decrease in other current assets	(129)	1,312
Decrease in other non-current assets	3,299	6,048
(Decrease) increase in contract liabilities	(6,377)	6,735
(Decrease) increase in notes payable	(5,770)	8,609
Increase in accounts payable	193,488	94,701
Increase in other payables	17,492	33,728
(Decrease) increase in other current liabilities	(1,165)	3,169
Decrease in net defined benefit liabilities non-current	(586)	(2,377)
Cash generated from operations	193,196	149,856
Interest received	24,229	24,521
Dividends received	1,614	1,346
Interest paid	(34,830)	(23,966)
Income tax paid	(36,212)	(89,194)
Net cash provided by operating activities	147,997	62,563

(Continued)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese

LELON ELECTRONICS CORP.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended 31 December 2025 and 2024

(Expressed in Thousand New Taiwan Dollars)

	For the years ended 31 December
	2025	2024
Cash flows from investing activities:
Acquisition of investment accounted for under equity method	(104,472)	(160,164)
Disposal of financial assets at fair value through profit or loss	27,023	-
Increase in prepayments for investments	(5,000)	-
Acquisition of property, plant and equipment	(264)	(1,084)
Disposal of property, plant and equipment	2,249	-
Increase in other receivables	(251,400)	-
Acquisition of intangible assets	(1,732)	(278)
Dividends received from subsidiaries	109,055	45,735
Net cash used in investing activities	(224,541)	(115,791)
Cash flows from financing activities:
Increase in short-term loans	3,082,391	5,986,186
Decrease in short-term loans	(3,335,867)	(5,891,101)
Increase in short-term notes and bills payable	850,723	-
Decrease in short-term notes and bills payable	(850,723)	-
Increase in long-term loans	282,000	-
Increase in other payables	450,096	449,504
Cash payments for the principal portion of the lease liability	-	(341)
Cash dividends	(510,679)	(461,258)
Net cash (used in) provided by financing activities	(32,059)	82,990
Net (decrease) increase in cash and cash equivalents	(108,603)	29,762
Cash and cash equivalents at the beginning of period	692,807	663,045
Cash and cash equivalents at the end of period	$584,204	$692,807

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

LELON ELECTRONICS CORP.
Notes to Financial Statements
For the Years Ended 31 December 2025 and 2024
(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

History and organization

LELON ELECTRONICS CORP. (The Company) was incorporated in February 1976. The main activities of the Company are manufacturing, assembling, selling electronic components&parts, and selling production machinery, and acting as an agent for the business operation investment and import and export trade of the preceding paragraph, etc. Place of operation and registration of the company is No. 147, Sec. 1, Guoguang Rd., Dali Dist., Taichung City 412023, Taiwan (R.O.C.)

In response to the diversified needs of future fundraising, and with the consent of the securities authority, the supplementary public offering procedures will be completed in July 1998.

The Company’s shares were approved for over-the-counter trading by the Securities and Futures Commission on March 3, 2000, and were officially listed for trading on the Taipei Exchange on May 16, 2000.

The Company received approval from the Securities and Futures Commission on September 6, 2001 to transfer its shares from OTC trading to a listed company, with trading commencing on the Taiwan Stock Exchange on September 17, 2001.

Date and procedures of authorization of financial statements for issue

The parent company only financial statements of the Company for the years ended 31 December 2025 and 2024 were authorized for issue by the Board of Directors’ on 13 March 2026.

Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2025. The adoption of these new standards and amendments had no material impact on the Company.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which have been endorsed by FSC, and not yet adopted by the Company as at the date when the company’s financial statements were authorized for issue, are listed below.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Items	New, Revised or Amended Standards and Interpretations	Effective Date issued by IASB
A	IFRS 17 “Insurance Contracts”	1 January 2023
B	Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7	1 January 2026
C	Annual Improvements to IFRS Accounting Standards – Volume 11	1 January 2026
D	Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7	1 January 2026

A. IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017 and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

B. Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The amendments include:

(a) Clarify that a financial liability is derecognised on the settlement date and describe the accounting treatment for settlement of financial liabilities using an electronic payment system before the settlement date.
(b) Clarify how to assess the contractual cash flow characteristics of financial assets that include environmental, social and governance (ESG)-linked features and other similar contingent features.
(c) Clarify the treatment of non-recourse assets and contractually linked instruments.
(d) Require additional disclosures in IFRS 7 for financial assets and liabilities with contractual terms that reference a contingent event (including those that are ESG-linked), and equity instruments classified at fair value through other comprehensive income.

C. Annual Improvements to IFRS Accounting Standards – Volume 11

(a) Amendments to IFRS 1
(b) Amendments to IFRS 7
(c) Amendments to Guidance on implementing IFRS 7
(d) Amendments to IFRS 9
(e) Amendments to IFRS 10
(f) Amendments to IAS 7

D. Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7

The amendments include:

(a) Clarify the application of the ‘own-use’ requirements.
(b) Permit hedge accounting if these contracts are used as hedging instruments.
(c) Add new disclosure requirements to enable investors to understand the effect of these contracts on a company’s financial performance and cash flows.

The abovementioned standards and amendments are applicable for annual periods beginning on or after 1 January 2026 and have no material impact on the Company.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(3) Standards or interpretations issued, revised or amended, by IASB which have not been endorsed by FSC, and not yet adopted by The Company as at the date when the company's financial statements were authorized for issue, are listed below.

Items	New Revised or Amended Standards and Interpretations	Effective Date issued by IASB
A	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
B	IFRS 18 “Presentation and Disclosure in Financial Statements”	1 January 2027 (Note)
C	Disclosure Initiative – Subsidiaries without Public Accountability: Disclosures (IFRS 19)	1 January 2027
D	Translation to a Hyperinflationary Presentation Currency (Amendments to IAS 21 and IAS 29)	1 January 2027

Note: On 25 September 2025, the FSC announced in a press release that Taiwan will adopt IFRS 18 in 2028.

A. IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

B. IFRS 18 “Presentation and Disclosure in Financial Statements”

IFRS 18 replaces IAS 1 Presentation of Financial Statements. The main changes are as below:

(a) Improved comparability in the statement of profit or loss (income statement)
IFRS 18 requires entities to classify all income and expenses within their statement of profit or loss into one of five categories: operating; investing; financing; income taxes; and discontinued operations. The first three categories are new, to improve the structure of the income statement, and requires all entities to provide new defined subtotals, including operating profit or loss. The improved structure and new subtotals will give investors a consistent starting point for analyzing entities’ performance and make it easier to compare entities.

(b) Enhanced transparency of management-defined performance measures
IFRS 18 requires entities to disclose explanations of those entity-specific measures that are related to the income statement, referred to as management-defined performance measures.

(c) Useful grouping of information in the financial statements
IFRS 18 sets out enhanced guidance on how to organize information and whether to provide it in the primary financial statements or in the notes. The changes are expected to provide more detailed and useful information. IFRS 18 also requires entities to provide more transparency about operating expenses, helping investors to find and understand the information they need.

C. Disclosure Initiative – Subsidiaries without Public Accountability: Disclosures (IFRS 19)

This new standard and its amendments permit subsidiaries without public accountability to provide reduced disclosures when applying IFRS Accounting Standards in their financial statements. IFRS 19 is optional for subsidiaries that are eligible and sets out the disclosure requirements for subsidiaries that elect to apply it.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

D. Translation to a Hyperinflationary Presentation Currency (Amendments to IAS 21 and IAS 29)

The amendments include:

(a) Clarify that when the entity’s functional currency is that of a non-hyperinflationary economy but its presentation currency is the currency of a hyperinflationary economy, the entity shall translate its results and financial position using the closing rate at the date of the most recent statement of financial position.

(b) In the above circumstances, when the presentation currency ceases to be hyperinflationary economy, the entity shall not retranslate amounts that arose before the beginning of the reporting period.

(c) When the entity’s functional currency and presentation currency are the currency of a hyperinflationary economy, the entity shall apply the relevant accounting treatment in accordance with paragraph 34 of IAS 29.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Group is still currently determining the potential impact of the new or amended standards and interpretations listed under B, it is not practicable to estimate their impact on the Group at this point in time. The remaining new or amended standards and interpretations have no material impact on the Group.

Summary of material accounting policies

(1) Statement of Compliance

The parent company only financial statements of the Company for the years ended 31 December 2025 and 2024 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee, which are endorsed by FSC.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(2) Basis of Preparation

The Company prepared the parent company only financial statements in accordance with Article 21 of the Regulations, which provided that the profit or loss and other comprehensive income for the period presented in the parent company only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent company only financial statements shall be the same as the equity attributable to the parent company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars ("NT$") unless otherwise stated.

(3) Foreign Currency Transactions

The Company's parent company only financial statements are presented in its functional currency, New Taiwan Dollars (NT$). Items included in the financial statements are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Company's entities at their respective functional currency rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currency are translated using the exchange rates as of the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

A. Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

B. Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.

C. Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(4) Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average exchange rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. Where control, significant influence, or joint control over a foreign operation is lost but a partial interest is retained, such transaction shall also be accounted for as a disposal.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(5) Current and Non-current Distinction

An asset is classified as current when:

A. The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
B. The Company holds the asset primarily for the purpose of trading
C. The Company expects to realize the asset within twelve months after the reporting period
D. The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as a current when:

A. The Company expects to settle the liability in normal operating cycle
B. The Company holds the liability primarily for the purpose of trading
C. The liability is due to be settled within twelve months after the reporting period
D. The Company does not have the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

(6) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(7) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

A. Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

(a) the Company’s business model for managing the financial assets
(b) the contractual cash flow characteristics of the financial asset

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, accounts receivable, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(a) purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition

(b) financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

(a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

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

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.

(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.

(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(i) Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

(ii) Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Besides, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

B. Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The Company measures expected credit loss of a financial instrument in a way that reflects:

(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes
(b) the time value of money
(c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions

The loss allowance is measured as follows:

(a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
(c) For accounts receivable or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
(d) For lease receivables arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

C. Derecognition of financial assets

A financial asset is derecognized when:

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(a) The rights to receive cash flows from the asset have expired.
(b) The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.
(c) The Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

D. Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if:

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(a) it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
(b) on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking;
(c) it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

(a) it eliminates or significantly reduces a measurement or recognition inconsistency; or
(b) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

E. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or
(b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Merchandise goods and raw materials
– Purchase cost under weighted average cost method.

Finished goods and work in progress
– Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(10) Investments accounted for under the equity method

According to Article 21 of the Regulation, the Company's investment in subsidiaries was presented as "Investments accounted for using equity method" and made necessary adjustments. The profit or loss during the period and other comprehensive income presented in the parent company only financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis, and the shareholders' equity presented in the parent company only financial statements shall be the same as the equity attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis.

The adjustment was considered the difference between investment in subsidiaries in consolidated financial statements according to IFRS 10 Consolidated financial statements and application of IFRS to different reporting entities, debit/credit "Investment accounted for using equity method", "Share of profit or loss of subsidiaries, associates and joint ventures" or "Share of other comprehensive profit or loss of subsidiaries, associates and joint ventures" etc.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The Company’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the Group’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.

When the associate issues new stock, and the Company’s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the 'share of profit or loss of an associate' in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Company estimates:

(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or

(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets.

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(11) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 "Property, plant and equipment". When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items	Useful Lives
Buildings	5~51 years
Machinery and equipment	2~ 9 years
Office equipment	3~15 years
Transportation equipment	5~ 6 years
Other equipment	3~20 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(12) Investment property

The Company's owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal Company that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Item	Useful lives
Buildings	2~45 years

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

The Company transfers properties to or from investment properties according to the actual use of the properties.

The Company transfers to or from investment properties when there is a change in use for these assets. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(13) Leases

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

A. the right to obtain substantially all of the economic benefits from use of the identified asset; and
B. the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximising the use of observable information.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

A. fixed payments (including in-substance fixed payments), less any lease incentives receivable;
B. variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
C. amounts expected to be payable by the lessee under residual value guarantees;
D. the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
E. payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortised cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

A. the amount of the initial measurement of the lease liability;
B. any lease payments made at or before the commencement date, less any lease incentives received;
C. any initial direct costs incurred by the lessee; and
D. an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 Impairment of Assets to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(14) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets which fail to meet the recognition criteria are not capitalized and the expenditures are reflected in profit or loss in the period incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and is treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Company's intangible assets is as follows:

	Software	Other intangible assets
Useful lives	3~5 years	5~15 years
Amortization method used	Amortized on a straight-line basis over the estimated useful life	Amortized on a straight-line basis over the estimated useful life
Internally generated or acquired	Acquired	Acquired

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(15) Impairment of Non-financial Assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(16) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(17) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of goods. The accounting policies are explained as follows:

Sale of goods

The Company manufactures and sells machinery. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main product of the Company are sewing machines and vacuum cleaners and spare parts and revenue is recognized based on the consideration stated in the contract.

The credit period of the Company’s sale of goods is from 30 to 150 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as accounts receivable. The Company usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Company has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component has arisen

Rendering of services

The rendering of services provided by the company are mainly based on the provision of management services, which is measured according to the estimated percentage of the cost incurred in each individual contract. When the outcome of the contract cannot be reasonably estimated, revenue is recognized only to the extent that the expenses incurred are expected to be recoverable.

Interest income

Financial assets measured at amortized cost (including loan and receivables and held-to-maturity financial assets) and available-for-sale financial assets, the interest income is estimated by using interest rate method, and recognized the interest income in profit and loss.

Dividend income

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The Group will recognize the dividend income when the Group has the rights to receive dividends.

(18) Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(19) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore fund assets are not included in the Company’s financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

A. the date of the plan amendment or curtailment, and
B. the date that the Company recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(20) Income Taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by shareholders' meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

A. The initial recognition of goodwill; or the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction affects neither accounting profit nor taxable income (loss), and does not give rise to equal taxable and deductible temporary differences.

B. Taxable temporary differences arising from investments in subsidiaries, associates, and interests in joint arrangements, where the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

A. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.

B. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities 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. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

According to the temporary exception in the International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12), information about deferred tax assets and liabilities related to Pillar Two income tax will neither be recognized nor be disclosed.

Significant accounting judgments, estimates and assumptions

The preparation of the parent company only financial statements require management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(1) Judgement

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognized in the financial statements:

A. Investment properties

The Company has some property are partly held to earn rentals or for capital increase and partly for own use. If each part can be sold separately, it shall be dealt with as investment property and property, plant and equipment respectively.

B. Operating lease commitment – Company as the lessor

The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.

C. De facto control without a majority of the voting rights in invested companies

The Company does not have majority of the voting rights in certain invested companies. However, after taking into consideration factors such as absolute size of the Company’s holding, relative size of the other shareholdings, how widely spread are the remaining shareholders, contractual arrangements between shareholders, potential voting rights, etc., the Company reached the conclusion that it has de facto control over these invested companies. Please refer to Note 4 for further details.

(2) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

A. Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flows model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

B. Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate and changes of the future salary etc. Please refer to Note 6 for more details.

C. Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile.

Deferred tax assets are recognized for all carryforward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

D. Accounts receivable estimation of impairment loss

The Group estimates the impairment loss of accounts receivable at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

E. Inventories

Estimates of net realizable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

Contents of significant accounts

(1) Cash and cash equivalents

	As of 31 December
	2025	2024
Cash on hand	$293	$330
Demand deposits	564,075	321,950
Time Deposits (within 3 months)	19,836	370,527
Total	$584,204	$692,807

Cash and cash equivalents were not pledged.

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

	As of 31 December
	2025	2024
Mandatorily at fair value through profit or loss:
Stock	$143,124	$54,292

The Company's financial assets measured at fair value through profit or loss are not pledged.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(3) Accounts receivable, net

	As of 31 December
	2025	2024
Accounts receivable - non related parties	$985,909	$893,464
Less: loss allowance	(16,658)	(16,658)
Accounts receivable, net	$969,251	$876,806

Accounts receivable are generally on 30-150 day terms. The total carrying amount are NT$985,909 thousand and NT$893,464 thousand as of 31 December 2025 and 2024. Please refer to Note 6(13) for more details on loss allowance of accounts receivable for the years ended 31 December 2025 and 2024. Please refer to Note 12 for more details on credit risk management.

Accounts receivable, net were not pledged.

(4) Inventories

	As of 31 December
	2025	2024
Work in progress	$-	$3,287
Merchandise goods	71,755	65,484
Total	$71,755	$68,771

The inventory cost recognized as operating costs for the years ended 31 December 2025 and 2024 were NT$2,523,746 thousand and NT$2,372,834 thousand, respectively. The price reduction of inventories related to cost of goods sold were NT$1,681 thousand and the gain from price recovery of inventories related to cost of goods sold were NT$255 thousand.

Gain from price recovery of inventories was because the net realizable value of inventories was not lower the cost anymore and the net realized value recovery for the year ended 31 December 2024.

No inventories were pledged.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(5) Investments accounted for under the equity method

The following table lists the investments accounted for using the equity method of the Company:

	As at 31 December
	2025		2024
	Carrying amount	Percentage of ownership	Carrying amount	Percentage of ownership
Investments in subsidiaries:
LIRO ELECTRONICS CO., LTD.	$7,852,811	89.47%	$6,451,470	89.47%
LITON TECHNOLOGY CORP.	1,192,366	29.13%	1,137,729	29.30%
LELON ELECTRONICS (Thailand) CO., LTD.	497,615	100.00%	373,013	100.00%
Total	$9,542,792		$7,962,212

The Company's investments accounted for using the equity method were not pledged.

A. The Company's investment in "LIRO ELECTRONICS CO., LTD" on 1 January 2024 was NT$818,824 thousand (US$ 26,465,137), with a shareholding ratio of 89.47%. As of 31 December 2025 and 2024, the investment amount was both NT$818,824 thousand (US$ 26,465,137), and the shareholding ratio was 89.47%, and the equity method was adopted for subsequent evaluations.

B. The Company's investment in "LITON TECHNOLOGY CORP." on 1 January 2024 was NT$468,471 thousand, holding 43,731,598 shares, and the shareholding ratio was 29.30%. LITON TECHNOLOGY CORP. purchased treasury shares and transferred to employees upon approval by the Board of Directors on 14 January 2025 and 11 November 2025 the shareholding ratio was changed to 29.13%.

C. As of January 1, 2024, the Company's investment in LELON ELECTRONICS (Thailand) CO., LTD. amounted to NT$195,091 thousand (equivalent to THB 215,509 thousand). During the years ended December 31, 2024 and 2025, the Company made additional investments of NT$160,164 thousand (THB 176,450 thousand) and NT$104,473 thousand (THB 110,166 thousand), respectively.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

As of December 31, 2024 and 2025, the carrying amounts of the investment were NT$355,255 thousand (THB 391,959 thousand) and NT$459,728 thousand (THB 502,125 thousand), respectively. The Company owned 100% of the equity interest in the investee as of both reporting dates, and the investment is accounted for using the equity method subsequent to initial recognition.

D. For the years ended 31 December 2025 and 2024, the Company recognized share of profit or loss of associates and joint ventures and exchange differences on translation of foreign operations with report of independent accountants, the details as follows:

	For the year ended 31 December
	2025		2024
	Share of profit or loss of subsidiaries, associates and joint ventures	Exchange differences on translation of foreign operations	Remeasurements of defined benefit plans	Share-based payment transactions
Investees
LIRO ELECTRONICS CO., LTD.	$1,340,030	$82,954	$865,663	$191,062
LITON TECHNOLOGY CORP.	117,000	10,367	141,000	33,077
LELON ELECTRONICS (Thailand) CO., LTD.	(330)	20,459	(1,784)	21,266
Total	$1,456,700	$113,780	$1,004,879	$245,405

(6) Property, plant and equipment

	As of 31 December
	2025	2024
Owner occupied property, plant and equipment	$289,534	$298,471

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

A. Owner occupied property, plant and equipment

	Land	Buildings	Machinery and equipment	Office equipment	Transportation equipment	Lease assets	Others	Total
Cost:
As of 1 January 2025	$142,128	$215,365	$25,855	$22,349	$3,172	$544	$30,809	$440,222
Additions	-	-	-	264	-	-	-	264
Disposals	-	(195)	(20,507)	(802)	-	(544)	(14,323)	(36,371)
As of 31 December 2025	$142,128	$215,170	$5,348	$21,811	$3,172	$-	$16,486	$404,115
Depreciation and impairment:
As of 1 January 2025	$-	$65,590	$23,621	$21,233	$2,127	$544	$28,636	$141,751
Depreciation	-	5,934	936	684	371	-	1,116	9,041
Disposals	-	(196)	(20,404)	(750)	-	(544)	(14,317)	(36,211)
As of 31 December 2025	$-	$71,328	$4,153	$21,167	$2,498	$-	$15,435	$114,581
Cost:
As of 1 January 2024	$142,128	$215,190	$25,855	$22,840	$2,372	$544	$30,929	$439,858
Additions	-	175	-	109	800	-	-	1,084
Disposals	-	-	-	(600)	-	-	(120)	(720)
As of 31 December 2024	$142,128	$215,365	$25,855	$22,349	$3,172	$544	$30,809	$440,222
Depreciation and impairment:
As of 1 January 2024	$-	$58,348	$22,435	$20,359	$1,807	$544	$27,321	$130,814
Depreciation	-	7,242	1,186	1,474	320	-	1,435	11,657
Disposals	-	-	-	(600)	-	-	(120)	(720)
As of 31 December 2024	$-	$65,590	$23,621	$21,233	$2,127	$544	$28,636	$141,751
Net carrying amount as of:
31 December 2025	$142,128	$143,842	$1,195	$644	$674	$-	$1,051	$289,534
31 December 2024	$142,128	$149,775	$2,234	$1,116	$1,045	$-	$2,173	$298,471

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

B. Property, plant and equipment was not pledged.

C. There was no capitalization of interest arising from the purchase of property, plant and equipment by the Company in 2025 and 2024.

D. Components of building that have different useful lives are main building structure, factory decoration, hydroelectric engineering and central air-condition wiring engineering, which are depreciated over 51 years, 21 years, 16 years and 9 years, respectively.

(7) Short-term borrowings

	As of 31 December
	2025	2024
Unsecured bank loans	$1,016,588	$1,270,064
	For the years ended 31 December
	2025	2024
Interest rates applied	0.81%~4.74%	0.73%~1.85%

The Company's unused short-term lines of credits amounted to $1,666,471 thousand and $1,634,814 thousand as of 31 December 2025 and 2024, respectively.

(8) Other payables

	For the years ended 31 December
	2025	2024
Other payables – related parties	$907,781	$452,527
Employee compensation and directors’ remuneration payable	78,684	70,868
Salaries and year-end bonuses payable	62,121	55,350
Other	27,704	26,246
Total	$1,076,290	$604,991

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(9) Long-term borrowings

The details of long-term borrowings as of December 31, 2025 and 2024 are as follows:

	For the years ended 31 December
	2025	2024
Long-term borrowings	$282,000	$-
Less: current portion of long-term borrowings	-	-
Total	$282,000	$-
Lender	Amount	Interest rate
---	---	---
Taishin International Bank – long-term borrowings	$182,000	1.88%
Taishin International Bank – long-term borrowings	100,000	1.88%
Subtotal	282,000
Less: current portion of long-term borrowings	-
Total	$282,000

As of December 31, 2024, there was no such matter.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(10) Post-employment benefits

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The company have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Pension expenses under the defined contribution plan for the years ended 31 December 2025 and 2024 were NT$4,884 thousand and NT$4,685 thousand, respectively.

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the company assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the company and its domestic subsidiaries will make up the difference in one appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure to risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute $902 thousand to its defined benefit plan during the 12 months as of 31 December 2025.

The weighted average durations of the Company's defined benefit plan obligation as of 31 December 2025 and 31 December 2024 were 7 years and 6 years, respectively.

Pension costs recognized in profit or loss for the years ended 31 December 2025 and 2024:

	For the years ended 31 December
	2025	2024
Current period service costs	$-	$35
Net interest on the net defined benefit liabilities	317	353
Total	$317	$388

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

	As of
	31 December 2025	31 December 2024	1 January 2024
Defined benefit obligation	$88,259	$84,722	$90,225
Plan assets at fair value	(70,144)	(64,230)	(61,303)
Other non-current liabilities - accrued pension liabilities recognized on the balance sheets	$18,115	$20,492	$28,922

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Reconciliation of liability (asset) of the defined benefit plan is as follows:

	Defined benefit obligation	Plan assets at fair value	Net defined benefit liability (asset)
As of 1 January 2024	$90,225	$(61,303)	$28,922
Current period service costs	35	-	35
Interest expense (income)	1,101	(748)	353
Subtotal	91,361	(62,051)	29,310
Remeasurements of the defined benefit liability /assets:
Actuarial gains and losses arising from changes in financial assumptions	(2,606)	-	(2,606)
Experience adjustments	2,062	-	2,062
Remeasurement on defined benefit assets	-	(5,509)	(5,509)
Subtotal	(544)	(5,509)	(6,053)
Contributions by employer	-	(2,765)	(2,765)
Payments from the plan	(6,095)	6,095	-
As of 31 December 2024	$84,722	$(64,230)	$20,492
Current period service costs	-	-	-
Interest expense (income)	1,313	(996)	317
Subtotal	86,035	(65,226)	20,809
Remeasurements of the defined benefit liability /assets:
Actuarial gains and losses arising from changes in financial assumptions	1,439	-	1,439
Experience adjustments	1,619	-	1,619
Remeasurement on defined benefit assets	-	(4,849)	(4,849)
Subtotal	3,058	(4,849)	(1,791)
Contributions by employer	-	(903)	(903)
Payments from the plan	(834)	834	-
As of 31 December 2025	$88,259	$(70,144)	$18,115

In all cases, the defined benefit plan is based on the following assumptions and conditions:

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The principal assumptions used in determining the Company’s defined benefit plan are shown below:

	As of 31 December
	2025	2024
Discount rate	1.35%	1.55%
Expected rate of salary increases	2.00%	2.00%

Sensitivity analysis for significant assumption is shown below:

	Effect on the defined benefit obligation
	2025		2024
	Increase	Decrease	Increase	Decrease
Discount rate increase by 0.5%	$-	$(2,115)	$-	$(1,034)
Discount rate decrease by 0.5%	3,784	-	3,997	-
Future salary increase by 0.5%	3,740	-	3,959	-
Future salary decrease by 0.5%	-	(2,115)	-	(1,034)

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(11) Equities

A. Common stock

The Company’s authorized capital was NT$3,600,000 thousand as of 31 December 31 2025 and 2024. The issued capital was NT$1,647,351 thousand in a total of 163,735 thousand shares. Each share has one voting right and a right to receive dividends.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

B. Capital surplus

	As of 31 December
	2025	2024
Additional paid - in capital	$1,793,730	$1,793,730
Increase through changes in ownership interests in subsidiaries	220,912	217,453
Treasury share transactions	20,704	20,704
Expired Share options	11,778	11,778
Difference between consideration received and carrying amount of interests in subsidiaries acquired	10,540	10,540
Total	$2,057,664	$2,054,205

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the Company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made either in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

C. Retained earnings and dividend policy

According to the Company's Articles of Incorporation, current year's earnings, if any, shall be distributed in the following order:

(a) Payment of all taxes and dues;
(b) Offset prior years' operation losses;
(c) Set aside 10% as legal reserve;
(d) Set aside or reverse special reserve in accordance with law and regulations;
(e) The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders' meeting.

The policy of dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the interest of the shareholders, share bonus equilibrium and long-term financial planning etc. The Board of Directors shall make the distribution proposal annually and present it at the shareholders' meeting. For the payment of dividend. The cash dividend ratio is not less than 10% of the total dividend. If the cash dividend per share is less than NT$0.5, the board of directors is authorized to draft a proposal, and the shareholders' meeting decides to pay cash dividends or stock dividends.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

When the Company distributing distributable earnings, it shall set aside to special reserve, an amount equal to "other net deductions from shareholders" equity for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements for the adoption of IFRS, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders' equity. For any subsequent reversal of other net deductions from shareholders' equity, the amount reversed may be distributed from the special reserve.

The FSC on 31 March 2021 issued Order No. Financial-Supervisory-Securities-Corporate-1090150022, which sets out the following provisions for compliance: On a public company's first-time adoption of the IFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders' equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside special reserve. For any subsequent use, disposal or reclassification of related assets, the Company can reverse the special reserve by the proportion of the special reserve first appropriated and distribute it.

The Company did not reverse any special reserve as a result of use, disposal or reclassification of related assets during the periods ended 31 December 2025 and 2024.

Details of the 2025 and 2024 earnings distribution and dividends per share as approved and resolved by the Board of Directors' meeting and shareholders' meeting on 13 March 2026 and 26 June 2025, respectively, are as follows:

	Appropriation of earnings		Dividend per share (in NT$)
	2025	2024	2025	2024
Legal reserve	$143,947	$115,993
Special reserve (reversal)/addition	(18,417)	(245,000)
Common stock—cash dividend	576,573	510,679	$3.50	$3.10

Please refer to Note 6(15) for details on employees' compensation and remuneration to directors and supervisors.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(12) Operating revenues

	For the years ended 31 December
	2025	2024
Revenue from customer contracts
Sale of goods	$3,166,719	$2,793,733
Other income	83,278	59,344
Total	$3,249,997	$2,853,077

All revenue derived from the Company’s customer contracts is recognized at a point in time.

Analysis of revenue from contracts with customers for the years ended 31 December 2025 and 2024 are as follows:

A. Contract balances

Contract liabilities – current

	As of
	31 December 2025	31 December 2024	1 January 2024
Sales of goods	$8,145	$14,522	$7,787

The significant changes in the balance of contract liabilities of the company during the years ended 31 December 2025 and 2024 are as follows:

	For the years ended 31 December
	2025	2024
The Opening balance transferred to revenue	$(7,094)	$(940)
Increase in receipts in advance during the period (excluding the amount incurred and transferred to revenue during the period)	717	7,675
Changes in this period	$(6,377)	$6,735

B. Transaction price allocated to unsatisfied performance obligations

None.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

C. Assets recognized from costs to fulfil a contract

None.

(13) Expected credit gains

	For the years ended 31 December
	2025	2024
Operating expenses – Expected credit gains
Long-terms receivables	$(3,299)	$(6,042)

Please refer to Note 12 for more details on credit risk.

The Company measures the loss allowance of accounts receivable (including note receivables, accounts receivable, other receivables and long-term receivables (which was recognized as other non-current assets)) at an amount equal to lifetime expected credit losses. The assessment of the Group's loss allowance as of 31 December 2025 and 2024 are as follows:

As of 31 December 2025

Group 1: Some counterparties were assessed individually. The amount of long-term receivables was NT$32,781 thousand recognized as other non-current assets, which was all overdue, and the loss allowance was NT$32,781 thousand. As of the financial reporting date, the contracted amount of long-term receivables that have been write-off and with recourse amounted to NT$32,781 thousand.

Group 2: The loss allowance is measured using expected credit losses as follows:

	Not yet due (Note)	Overdue					Total
		31-90 days	91-180 days	181-270 days	271-365 days	>=366 days
Gross carrying amount	$1,455,149	$2,783	$781	$324	$-	$18,775	$1,477,812
Loss ratio	-%	1-20%	20-30%	30-50%	80-100%	100%
Lifetime expected credit losses	-	(3)	(13)	(175)	-	(18,775)	(18,966)
Carrying amount of accounts receivable	$1,455,149	$2,780	$768	$149	$-	$-	$1,458,846

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

As of 31 December 2024

Group 1: Some counterparties were assessed individually. The amount of long-term receivables was NT$36,080 thousand recognized as other non-current assets, which was all overdue, and the loss allowance was NT$36,080 thousand. As of the financial reporting date, the contracted amount of long-term receivables that have been write-off and with recourse amounted to NT$36,080 thousand.

Group 2: The loss allowance is measured using expected credit losses as follows:

| | Not yet due
(Note) | Overdue | | | | | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | 31-90 days | 91-180 days | 181-270 days | 271-365 days | >=366 days | |
| Gross carrying amount | $1,047,424 | $6,611 | $620 | $49 | $- | $18,563 | $1,073,267 |
| Loss ratio | -% | 1-20% | 20-30% | 30-50% | 80-100% | 100% | |
| Lifetime expected credit losses | - | (266) | (103) | (34) | - | (18,563) | (18,966) |
| Carrying amount of accounts receivable | $1,047,424 | $6,345 | $517 | $15 | $- | $- | $1,054,301 |

Note: The Company’s note receivables are not overdue.

The movement in the provision for impairment of note receivables, accounts receivable, other receivables and long-term receivables during the 31 December 2025 and 2024 are as follows:

	Notes receivable	Accounts receivable	Other receivables	Long-terms receivables	Total
Bal. as of 1 January 2025	$-	$16,658	$2,308	$36,080	$55,046
Reversal for the current period	-	-	-	(3,299)	(3,299)
Bal. as of 31 December 2025	$-	$16,658	$2,308	$32,781	$51,747
Bal. as of 1 January 2024	$-	$16,658	$2,308	$42,122	$61,088
Reversal for the current period	-	-	-	(6,042)	(6,042)
Bal. as of 31 December 2024	$-	$16,658	$2,308	$36,080	$55,046

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(14) Lease

A. The Company as a lessor

Leases of owned investment properties are classified as operating leases as they do not transfer substantially all the risks and rewards incidental to ownership of underlying assets.

	For the years ended 31 December
	2025	2024
Lease income recognized under operating leases
Income relating to fixed lease payments	$2,750	$2,750

(15) Summary statement of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2025 and 2024:

| Function
Nature | For the years ended 31 December | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | 2025 | | | 2024 | | |
| | Operating costs | Operating expenses | Total | Operating costs | Operating expenses | Total |
| Employee benefits | | | | | | |
| Salaries & wages | $- | $199,301 | $199,301 | $- | $186,476 | $186,476 |
| Labor and health insurance | - | 12,613 | 12,613 | - | 11,088 | 11,088 |
| Pension | - | 5,201 | 5,201 | - | 5,073 | 5,073 |
| Directors’ remuneration | - | 25,661 | 25,661 | - | 23,573 | 23,573 |
| Other | - | 8,670 | 8,670 | - | 8,357 | 8,357 |
| Depreciation | - | 9,336 | 9,336 | - | 12,343 | 12,343 |
| Amortization | - | 1,010 | 1,010 | - | 1,260 | 1,260 |

For the years ended 31 December 2025 and 2024, the number of employees of the Company were 116 and 118, respectively; the number of directors who were not concurrently employees were both 8.

For the years ended 31 December 2025 and 2024, the average of employees benefits expense of the company were NT$2,091 thousand and NT$1,918 thousand, respectively.

For the years ended 31 December 2025 and 2024, the average of employees salaries of the company were NT$1,845 thousand and NT$1,695 thousand, respectively. The average employee salary expense for the two years increased by 9%, mainly due to the Company's favorable profitability in 2025, which resulted in a higher accrual of employee compensation.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The Company’s policy for compensation of directors, managers and employees is as follows:

The Company set the policy for directors and employees’ compensation in the company’s Articles of Incorporation and established the Remuneration Committee to evaluate and monitor the company’s remuneration system for its directors and executive officers. The Company shall assess the performance of directors and executive officers according to the Rules for Performance Assessment of the Board of Directors and the Performance Appraisal for employees of the company, in order to determine their compensation. An adequate compensation scheme will be calculated by referencing the company’s operation results, future risks, corporate strategies, industry trends and also individual contribution.

The Company developed a comprehensive employee welfare system in accordance with laws, government regulations and regional needs to provide employees with competitive salary and welfare conditions. Employees’ compensation includes monthly salary, bonus based on operation performance, and the compensation based on the company’s earnings performance as provided in the Articles of Incorporation. The Company conducts a performance evaluation of all employees every year to understand their job performance and uses such information as a reference for promotions, training and compensation distribution.

According to the Company’s Articles of Incorporation, if the Company records a profit for the year, it shall allocate not less than 2% of such profit as employee compensation (of which not less than 50% shall be distributed to Junior employees) and not more than 4% as directors’ remuneration. However, if the Company has accumulated losses, an amount shall first be reserved to cover such losses. The aforementioned employee compensation may be distributed in the form of shares or cash, and shall be resolved by the Board of Directors with the approval of at least two-thirds of the directors in attendance and a majority vote of the attending directors, and reported to the shareholders’ meeting. Information regarding employee compensation and directors’ remuneration approved by the Board of Directors can be obtained from the Market Observation Post System (MOPS) of the Taiwan Stock Exchange.

Based on the profit for the year ended 31 December 2025, the Company estimated the amounts of the employees’ compensation and remuneration to directors and supervisors for the year ended 31 December 2025 to be 3.00% and 1.40% of profit, respectively. The employees’ compensation and remuneration to directors and supervisors for the year ended 31 December 2025 amount to NT$53,648 thousand and NT$25,036 thousand respectively, recognized as employee benefits expense. Based on the profit for the year ended 31 December 2024, the Company estimated the amounts of the employees’ compensation and remuneration to directors and supervisors for the year ended 31 December 2024 to be 3.66% and 1.80% of profit, respectively. The employees’ compensation and remuneration to directors and supervisors for the year ended 31 December 2024 amount to NT$47,505 thousand and NT$23,363 thousand respectively, recognized as employee benefits expense.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

A resolution was passed at the Board of Directors meeting held on 13 March 2025 to distribute NT$53,603 thousand and NT$24,300 thousand in cash as employee compensation and directors’ remuneration, respectively. The difference between the estimated and actual amounts approved by the Board of Directors was NT$(45) thousand and NT$(736) thousand, respectively, are recognized in profit or loss of the subsequent year in 2025.

A resolution was passed at the Board of Directors meeting held on 14 March 2025 to distribute NT$49,293 thousand and NT$23,349 thousand in cash as employees’ compensation and remuneration to directors and supervisors of 2025, respectively.

(16) Non-operating income and expenses

A. Other income

	For the years ended 31 December
	2025	2024
Rental revenue	$2,750	$2,750
Dividend income	1,614	1,346
Others	26,611	20,647
Total	$30,975	$24,743

B. Other gains and losses

	For the years ended 31 December
	2025	2024
Gain on disposal of investments	$6,149	$-
Gain on disposal of property, plant and equipment	1,905	-
(Losses) Gains on financial assets at fair value through loss or profit	(4,445)	4,128
Foreign exchange (losses) gains, net	(79,391)	88,070
Others	(13)	(8)
Total	$(75,795)	$92,190

C. Financial costs

	For the years ended 31 December
	2025	2024
Interest on borrowings from bank	$(38,541)	$(24,279)

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(17) Components of other comprehensive income

A. For the year ended 31 December 2025

	Arising during the period	Reclassification during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
Not to be reclassified to profit or loss in subsequent periods:
Remeasurements of defined benefit plans	$2,112	$-	$2,112	$(358)	$1,754
Unrealized gains(losses) on equity instruments measured at fair value through other comprehensive income	(425)	-	(425)	-	(425)
To be reclassified to profit or loss in subsequent periods:
Exchange differences resulting from translating the financial statements of a foreign operation	113,780	-	113,780	-	113,780
Total of other comprehensive income	$115,467	$-	$115,467	$(358)	$115,109

B. For the year ended 31 December 2024

	Arising during the period	Reclassification during the period	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income, net of tax
Not to be reclassified to profit or loss in subsequent periods:
Remeasurements of defined benefit plans	$5,654	$-	$5,654	$(1,211)	$4,443
Unrealized gains(losses) on equity instruments measured at fair value through other comprehensive income	(415)	-	(415)	-	(415)
To be reclassified to profit or loss in subsequent periods:
Exchange differences resulting from translating the financial statements of a foreign operation	245,405	-	245,405	-	245,405
Total of other comprehensive income	$250,644	$-	$250,644	$(1,211)	$249,433

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(18) Income tax

The major components of income tax expenses for the years ended 31 December 2025 and 2024 are as follows:

A. Income tax expense recorded in profit or loss

	For the years ended 31 December
	2025	2024
Current income tax expense:
Current income tax charge	$100,040	$40,154
Adjustments in respect of current income tax of prior periods	(1)	17,000
Deferred tax expense:
Deferred tax expense related to origination and reversal of temporary differences	170,328	13,682
Total income tax expense	$270,367	$70,836

B. Income tax relating to components of other comprehensive income

	For the years ended 31 December
	2025	2024
Deferred tax expense:
Remeasurements of defined benefit plans	$(358)	$(1,211)

C. A reconciliation between tax expense and the product of accounting profit multiplied by the applicable tax rate is as follows:

	For the years ended 31 December
	2025	2024
Accounting income before tax from continuing operations	$1,708,084	$1,226,322
Tax effect of different tax rates for entities in other tax regions	$341,616	$245,264
Corporate income surtax on undistributed retained earnings	38,913	12,095
Income tax effect of tax-exempt income	(1,553)	(1,095)
Income tax effect of non-deductible expenses for tax purpose	899	-
Income tax effect of deferred tax assets / liabilities	175,255	1,453
Adjustments in respect of current income tax of prior periods	(1)	17,000
Tax effect of expenses not deductible for tax purposes	(284,752)	(203,881)
Total income tax expense recognized in profit or loss	$270,367	$70,836

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

D. Significant components of deferred income tax assets and liabilities are as follows:

(a) For the year ended 31 December 2025

	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Temporary differences
Unrealized foreign currency exchange gain or loss	$(4,072)	$3,266	$-	$(806)
Loss from price reduction of inventories	319	336	-	655
Loss allowance	13,549	(825)	-	12,724
Investments accounted for using the equity method	(27,147)	(172,988)	-	(200,135)
Difference between consideration received and carrying amount of interests in subsidiaries disposed of	(2,230)	-	-	(2,230)
Defined benefit Liability	(347)	(117)	-	(464)
Remeasurements of defined benefit plans	4,745	-	(358)	4,387
Reserve for land appreciation tax	(11,470)	-	-	(11,470)
Exchange differences resulting from translating the financial statements of a foreign operation	(8,720)	-	-	(8,720)
Deferred tax benefit		$(170,328)	$(358)
Net deferred tax liabilities	$(35,373)			$(206,059)
Reflected in balance sheet as follows:
Deferred tax assets	$18,613			$17,766
Deferred tax liabilities	$(53,986)			$(223,825)

(b) For the year ended 31 December 2024

	Balance as of 1 January	Recognized in profit or loss	Recognized in other comprehensive income	Balance as of 31 December
Temporary differences
Unrealized foreign currency exchange gain or loss	$7,760	$(11,832)	$-	$(4,072)
Loss from price reduction of inventories	370	(51)	-	319
Loss allowance	14,872	(1,323)	-	13,549
Investments accounted for using the equity method	(27,147)	-	-	(27,147)
Difference between consideration received and carrying amount of interests in subsidiaries disposed of	(2,230)	-	-	(2,230)
Defined benefit Liability	129	(476)	-	(347)
Remeasurements of defined benefit plans	5,956	-	(1,211)	4,745
Reserve for land appreciation tax	(11,470)	-	-	(11,470)
Exchange differences resulting from translating the financial statements of a foreign operation	(8,720)	-	-	(8,720)
Deferred tax benefit		$(13,682)	$(1,211)
Net deferred tax liabilities	$(20,480)			$(35,373)
Reflected in balance sheet as follows:
Deferred tax assets	$29,087			$18,613
Deferred tax liabilities	$(49,567)			$(53,986)

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

E. Unrecognized deferred tax assets

As of 31 December 2025 and 2024, the Company is not probable to has taxable income in the future so did not recognized deferred tax assets amounted to NT$0 thousand and NT$17,811 thousand, respectively.

F. Unrecognized deferred tax liabilities relating to the investment in subsidiaries

The Company did not recognize the relevant deferred income tax liabilities for the income tax payable that may arise when the undistributed surplus of a foreign subsidiary is remitted back. The Group has decided not to distribute the undistributed earnings of its subsidiaries in the foreseeable future. As of 31 December 2025 and 2024, the amount not recognized as deferred income tax liabilities were NT$829,721 thousand and NT$733,284 thousand, respectively.

G. The assessment of income tax returns: The tax authorities have assessed income tax returns of the Company through 2022.

(19) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

A. Basic earnings per share

	For the years ended 31 December
	2025	2024
Profit attributable to ordinary equity holders of the Company (in thousand NT$)	$1,437,717	$1,155,486
Weighted average number of ordinary shares outstanding for basic earnings per share (in thousand shares)	164,735	164,735
Basic earnings per share (in NT$)	$8.73	$7.01

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

B. Diluted earnings per share

	For the years ended 31 December
	2025	2024
Profit attributable to ordinary equity holders of the Company (in thousand NT$)	$1,437,717	$1,155,486
Profit attributable to ordinary equity holders of the Company after dilution	$1,437,717	$1,155,486
Weighted average number of ordinary shares outstanding for basic earnings per share (in thousand shares)	164,735	164,735
Effect of dilution:
Employee bonus—stock (in thousand shares)	605	899
Weighted average number of ordinary shares outstanding after dilution (in thousand shares)	165,340	165,634
Diluted earnings per share (NT$)	$8.70	$6.98

There were no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of the financial statements.

Related party transactions

Information of the related parties that had transactions with the Group during the financial reporting period is as follows

(1) Name and nature of relationship of the related parties

Name of the related parties	Nature of relationship of the related parties
LIRO ELECTRONICS CO., LTD.	Subsidiary
Lelon Electronics (HUIZHOU) Corp.	Sub-Subsidiary
Lelon Electronics (SUZHOU) Corp.	Sub-Subsidiary
Lelon Electronics Technology (SUZHOU) Corp.	Sub-Subsidiary
Lelon International Industrial Limited	Sub-Subsidiary
Lelon Electronics (Thailand) Co., Ltd	Subsidiary
Lifu Machinery Industrial Co., Ltd	The chairman of the Company is the same individual as the chairman of the Company.
Jimmy Wu and 11 others	Directors and Deputy General Manager of the Company

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(2) Significant transactions with related parties

A. Sales

	For the years ended 31 December
	2025	2024
Lelon Electronics Technology (SUZHOU) Corp.	$23,300	$19,526
Lelon Electronics (HUIZHOU) Corp.	18,357	9,323
Total	$41,657	$28,849

The sales price to the above related parties was determined through mutual agreement based on the market rates. The collection period to related parties was next month-end 90~180 days. The outstanding balance at 31 December 2025 and 2024 was unsecured, non-interest bearing and must be settled in cash. The receivables from the related parties were not guaranteed.

B. Purchase

	For the years ended 31 December
	2025	2024
Lelon International Industrial Limited	$2,484,434	$2,340,882
Lifu Machinery Industrial Co., Ltd	10,440	-
Lelon Electronics (HUIZHOU) Corp.	-	28
Total	$2,494,874	$2,340,910
	Transaction
---	---
Lelon International Industrial Limited	Prepayment of one month's payment for goods or mutual offset of creditor's rights and debts
Lelon Electronics (HUIZHOU) Corp.	Prepayment of one month's payment for goods or mutual offset of creditor's rights and debts

C. Other receivables

Name of Related Parties	For the years ended 31 December
	2025	2024
Lelon Electronics (Thailand) Co., Ltd	$260,840	$-
Lelon Electronics Technology (SUZHOU) Corp.	185,204	131,659
Lelon Electronics (HUIZHOU) Corp.	43,218	43,113
Total	$489,262	$174,772

Note: The Company's other accounts receivable refer to the creditor's right arising from the procurement for the subsidiary.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

D. Prepayments

	As of 31 December
	2025	2024
Lifu Machinery Industrial Co., Ltd	$9,072	$12,096
Lelon International Industrial Limited	1,110	1,014
LIRO ELECTRONICS CO., LTD.	166	217
Total	$10,348	$13,327

E. Note payable-related parties

	As of 31 December
	2025	2024
Lifu Machinery Industrial Co., Ltd	$5,520	$534

F. Account payable-related parties

	As of 31 December
	2025	2024
Lelon International Industrial Limited	$329,104	$138,385
Lifu Machinery Industrial Co., Ltd	118	26
Lelon Electronics (HUIZHOU) Corp.	-	28
Total	$329,222	$138,439

G. Other payable-related parties

	As of 31 December
	2025	2024
Lelon Electronics (HUIZHOU) Corp.	$907,781	$452,527

A portion of the other receivables mentioned above relates to financing arrangements (loans to others). Please refer to Note 13, Section 2(2) 1., "Loans to Others," for further details.

H. Interest income

	For the years ended 31 December
	2025	2024
Lelon Electronics (Thailand) Co., Ltd	$3,091	$-

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

I. Other income

	For the years ended 31 December
	2025	2024
Lelon Electronics (HUIZHOU) Corp.	$12,438	$12,048
Lelon Electronics Technology (SUZHOU) Corp.	7,786	5,704
Lelon Electronics (SUZHOU) Corp.	2	7
Total	$20,226	$17,759

J. Royalty income

	For the years ended 31 December
	2025	2024
Lelon Electronics Technology (SUZHOU) Corp.	$83,278	$59,344

K. Finance costs

	For the years ended 31 December
	2025	2024
Lelon Electronics (HUIZHOU) Corp.	$14,120	$4,904

L. Key management personnel compensation

	For the years ended 31 December
	2025	2024
Short-term employee benefit	$45,346	$41,330
Post-employment benefit	91	87
Total	$45,437	$41,417

The key management personnel of the company are including directors and deputy general managers.

About the payment of key management above, please refer Contents of the annual report of the shareholders meeting.

Assets pledged as security

None.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Significant contingencies and unrecognized contractual commitments

Amounts available under unused letters of credit as of 31 December 2025 are US$510 thousand and JPY$255,675 thousand.

Losses due to major disasters

None.

Significant subsequent events

None.

Others

(1) Categories of financial instruments

Financial assets

	As of 31 December
	2025	2024
Financial assets at fair value through profit or loss:
Mandatorily measured at fair value through profit or loss	$143,124	$54,292
Financial assets measured at amortized cost
Cash and cash equivalents (excluded cash on hand)	583,911	692,477
Notes and accounts receivable	969,321	876,997
Other receivables (excluded sales tax refund receivables)	489,262	176,525

Financial liabilities

	As of 31 December
	2025	2024
Financial liabilities at amortized cost:
Short-term loans	$1,016,588	$1,270,064
Notes and accounts payable	350,980	163,262
Lease liabilities	282,000	-

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies, measures, and manages the aforementioned risks based on its policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rare that a single risk variable will change independently from other risk variable, i.e. there are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company’s foreign currency receivables and payables are partially denominated in the same currencies. To the extent that these positions are matched, a natural hedging effect is achieved. For the remaining foreign currency exposures, the Company enters forward foreign exchange contracts to manage exchange rate risk. However, as natural hedging and the use of forward foreign exchange contracts do not meet the criteria for hedge accounting, hedge accounting is not applied. In addition, net investments in foreign operations are considered strategic investments; accordingly, no hedging arrangements are undertaken for these positions.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign currency risk is mainly related to the volatility in the exchange rates for USD, CNY, JPY and EUR. The information of the sensitivity analysis is as follows:

A. When NTD strengthens/weakens against USD by 1%, the profit for the years ended 31 December 2025 and 2024 is decreased/increased by $8,644 and $13,021 respectively; and no impact on the equity.

B. When NTD strengthens/weakens against CNY by 1%, the profit for the years ended 31 December 2025 and 2024 is decreased/increased by $201 and decreased by $2 respectively; and no impact on the equity.

C. When NTD strengthens/weakens against JPY by 1%, the profit for the years ended 31 December 2025 and 2024 is decreased/increased by $(1,160) and decreased by $(687) respectively; and no impact on the equity.

D. When NTD strengthens/weakens against EUR by 1%, the profit for the years ended 31 December 2025 and 2024 is decreased/increased by $487 and $579 respectively; and no impact on the equity.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s loans and receivables at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit for years ended 31 December 2025 and 2024 to decrease/increase by NT$1,299 thousand and NT$1,270 thousand, respectively.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Equity price risk

The fair value of the Company’s listed and unlisted equity securities and conversion rights of the Euro-convertible bonds issued are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s listed and unlisted equity securities are classified under financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income, while conversion rights of the Euro-convertible bonds issued are classified as financial liabilities at fair value through profit or loss as it does not satisfy the definition of an equity component. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, a change of 10% in the price measured at fair value through profit or loss could increase/decrease The Company’s profit for the years ended 31 December 2025 and 2024 by NT$14,312 thousand and NT$5,429 thousand, respectively.

Please refer to Note 12(8) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivable and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

As of 31 December 2025 and 2024, amounts receivables from top ten customers represented 31.89% and 31.52% of the total accounts receivable of the Company. The credit concentration risk of other accounts receivable is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company's treasury in accordance with the Company's policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Company's financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

	Less than 1 year	2 to 3 years	4 to 5 years	> 5 years	Total
As of 31 Dec. 2025
Short-term loans	$1,017,865	$-	$-	$-	$1,017,865
Notes and accounts payable	350,980	-	-	-	350,980
Long-term borrowings	-	93,753	117,746	85,528	297,027
As of 31 Dec. 2024
Short-term loans	$1,271,097	$-	$-	$-	$1,271,097
Notes and accounts payable	163,262	-	-	-	163,262

Derivative financial liabilities

None.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(6) Reconciliation of liabilities from financing activities

Reconciliation of liabilities for the year ended 31 December 2025:

	Short-term loans	Long-term loans	Total liabilities from financing activities
As at 1 January 2025	$1,270,064	$-	$1,270,064
Cash flows	(253,476)	282,000	28,524
Non-cash changes	-	-	-
As at 31 December 2025	$1,016,588	$282,000	$1,298,588

Reconciliation of liabilities for the year ended 31 December 2024:

	Short-term loans	Lease liabilities	Total liabilities from financing activities
As at 1 January 2024	$1,174,979	$341	$1,175,320
Cash flows	95,085	(341)	94,744
Non-cash changes	-	-	-
As at 31 December 2024	$1,270,064	$-	$1,270,064

(7) Fair value of financial instruments

A. The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

(a) The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate their fair value due to their short maturities.

(b) For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities, beneficiary certificates etc.) at the reporting date.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(c) Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).

(d) Fair value of debt instruments without market quotations, bank loans, bonds payable and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the GreTai Securities Market, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.).

(e) The fair value of derivatives which are not options and without market quotations, is determined based on the counterparty prices or discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using on the counterparty prices or appropriate option pricing model (for example, Black-Scholes model) or other valuation method (for example, Monte Carlo Simulation).

B. Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial assets and liabilities measured at amortized cost approximate their fair value.

C. Fair value measurement hierarchy for financial instruments

Please refer to Note 12(8) for fair value measurement hierarchy for financial instruments of the Company.

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(8) Fair value measurement hierarchy

A. Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

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

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

B. Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of December 31 2025

	Level 1	Level 2	Level 3	Total
Financial assets:
Financial assets at fair value through profit or loss
Stock	$143,124	$-	$-	$143,124
As of 31 December 2024	Level 1	Level 2	Level 3	Total
Financial assets:
Financial assets at fair value through profit or loss
Stock	$54,292	$-	$-	$54,292

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Transfers between Level 1 and Level 2 during the period

During the years ended 31 December 2025 and 2024, there were no transfers between Level 1 and Level 2 fair value measurements.

C. Fair value measurement hierarchy of the Company’s assets and liabilities not measured at fair value but for which the fair value is disclosed

As of 31 December 2025

	Level 1	Level 2	Level 3	Total
Financial assets not measured at fair value but for which the fair value is disclosed:
Investment properties	$-	$-	$150,119	$150,119
As of 31 December 2024	Level 1	Level 2	Level 3	Total
Financial assets not measured at fair value but for which the fair value is disclosed:
Investment properties	$-	$-	$148,775	$148,775

(9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

	As at 31 December 2025			As at 31 December 2024
	Foreign currencies	Foreign exchange rate	NTD	Foreign currencies	Foreign exchange rate	NTD
Financial assets
Monetary items:
USD	$41,380	31.4250	$1,300,367	$43,932	32.7900	$1,440,530
HKD	4,466	4.4980	20,088	54	4.4760	242
JPY	17,384	0.2008	3,491	8,693	0.2099	1,825
EUR	1,321	36.8900	48,732	1,697	34.1300	57,919
Financial liabilities
Monetary items:
USD	$13,873	31.4250	$435,959	$4,221	32.7900	$138,407
JPY	595,127	0.2008	119,502	336,084	0.2099	70,544

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

The Company has a number of different functional currencies; therefore, we are unable to disclose the exchange loss and gain of monetary financial assets and financial liabilities under each foreign currency that has significant impact. The Company recognized NT$(79,391) thousand and NT$88,070 thousand foreign exchange (losses) gains for the years ended 31 December 2025 and 2024, respectively.

(10) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payments to shareholders, return capital to shareholders or issue new shares.

Other disclosure

(1) Information on significant transactions

A. Financing provided to others for the year ended 31 December 2025:

No.	Financing Company (Note1)	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (the amount approved by the board of directors)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note4)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company	Financing Company's Total Financing Amount Limits
													Item	Value
0	Lelon Electronics Corp.	Lelon Electronics (THAILAND) Corp.	Other receivables	Yes	$471,375	$471,375	$251,400	2.0%	2	$ -	Operating and fund capital	$ -	-	$ -	$3,637,172 (Note1)	$3,637,172 (Note2)

Note1: The limit on short-term financing provided to any individual counterparty shall not exceed 40% of Lelon Electronics Corp.’s net worth.
Note2: The total amount available for lending purposes shall not exceed 40% of Lelon Electronics Corp.’s net worth as stated in its latest financial statement.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

B. Endorsement/Guarantee provided to others for the year ended 31 December 2025: None.

C. Material securities held at the end of the period (excluding investment subsidiaries, affiliates and joint-venture controlling interests):

Held Company Name	Marketable Securities Type and Name	Relationship with the Company (Note1)	Financial Statement Account	31-Dec-25
				Shares/Units	Carrying Value	Percentage of Ownership	Fair Value
LELON ELECTRONICS Corp.	Shares
Taiwan Semiconductor Manufacturing Co.,Ltd.	-	Financial asset measured at fair value through profit or loss-current	10,000	$15,500	-	$15,500
	Yageo Ltd.	-	Financial asset measured at fair value through profit or loss-current	80,000	18,480	-	18,480
	Delta Electronics Co.,Ltd.	-	Financial asset measured at fair value through profit or loss-current	12,000	11,556	-	11,556
	Nvidia Corporation	-	Financial asset measured at fair value through profit or loss-current	8,500	49,817	-	49,817
	InnoScience (Suzhou) Technology Holding Co., Ltd.	-	Financial asset measured at fair value through profit or loss-current	60,000	18,985	-	18,985
	BenQ Medical Group Co., Ltd.	-	Financial asset measured at fair value through profit or loss-current	750,000	12,441	-	12,441

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

D. Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock as of 31 December 2025:

Company Name	Counter-party	Nature of Relationship	Transactions				Details of non-arm's length transaction		Notes and accounts receivable (payable)		Note
			Purchases (Sales)	Amount	% to Total	Term	Unit price	Term	Balance	% to Total
LELON ELECTRONICS CORP.	Lelon International Industrial Limited	sub-subsidiary	Purchases	$2,484,434	98.33%	Write-off of debts	Regular	Regular	$(329,104)	93.77%

E. Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of the capital stock as of 31 December 2025:

Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover Ratio	Overdue		Amounts Received in Subsequent Period	Allowance For Bad Debts
					Amount	Action Taken
Lelon International Industrial Limited	Lelon Electronics (Thailand) Co., Ltd	Sub-subsidiary of the ownership	Other Receivables $260,840	-	$ -	-	Collection upon maturity	$ -
Lelon International Industrial Limited	Lelon Electronics (SUZHOU) Technology Corp.	Sub-subsidiary of the ownership	Other Receivables $185,204	-	-	-	Collection upon maturity	-

(2) Information on investees

A. Names, locations, main businesses and products, original investment amount, investment as of 31 December 2025 net income (loss) of investee company and investment income (loss) recognized for the year ended 31 December 2025: (Excluding investment in Mainland China):

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Investor Company	Investee companies	Address	Main Business and Product	Initial Investment		Balance as of 31 December 2025			Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares	Percentage of Ownership (%)	Carrying Value
LELON ELECTRONICS CORP.	LITON TECHNOLOGY CORP.	No. 9, Zhonglong 2nd Rd., Tongluo Township, Miaoli County 36643, Taiwan (R.O.C.)	Processing and trading of etched aluminum foils, manufacture and trading of aluminum formed foils	$468,471	$468,471	43,731,598	29.13%	$1,192,366	$400,535	$117,000	Subsidiaries (Note2,3)
LELON ELECTRONICS CORP.	LIRO ELECTRONICS CO., LTD.	P.O. BOX 3340, Dawson BLdg, ROAD TOWN, TORTOLA, BRITISH VIRGIN ISLANDS	Equity investment	818,824	818,824	26,005,137	89.47%	7,852,811	1,550,047	1,340,030	Subsidiaries (Note2,3)
LELON ELECTRONICS CORP.	SURGE-LELON LLC	1056 Grand Boulevard Deer Park, NY 11729	Trade business	2,121 (USD 67,500)	2,121 (USD 67,500)	-	45.00%	- (Note1)	-	-	Investee under the equity method
LELON ELECTRONICS CORP.	Lelon Electronics(Thailand) Co.,Ltd.	52 Moo.5,Nong Kakha Subdistrict, Phan Thong District, Chonburi Province20160	Manufacture and sales of capacitors	500,016 (THB 502,125 thousand)	390,313 (THB 391,959 thousand)	-	100.00%	497,615	(330)	(330)	Subsidiaries
LIRO ELECTRONICS CO., LTD	Lelon International Industrial Limited	140-142 Shichun Road, Tsim Sha Tsui, Kowloon, Hong Kong	Equity Investment and Trade	12,163 (USD 387,059)	12,163 (USD 387,059)	-	100.00%	29,644	627	It has been processed by a subsidiary company	Sub-subsidiary
LITON TECHNOLOGY CORP.	LITON(BVI) CO., LTD.	P.O. BOX 3340, Road Town, Tortola, British Virgin Islands	Equity investment	132,268 (USD 4,209 thousand)	132,268 (USD 4,209 thousand)	4,208,862	100.00%	1,022,048	132,250	It has been processed by a subsidiary company
LITON TECHNOLOGY CORP.	V-TECH CO., LTD.	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa	Sales of aluminum foil materials, aluminum electrolytic capacitors and related materials for the above products and equity investment	1,371,607 (USD 43,647 thousand)	1,371,607 (USD 43,647 thousand)	43,647,362	100.00%	1,784,697	161,501	It has been processed by a subsidiary company
LITON TECHNOLOGY CORP.	EVERTECH CAPA CO., LTD.	Jipfa Building,3rd Floor, Road Town, Tortola, British Virgin Islands.	Trade business	314 (USD 10 thousand)	314 (USD 10 thousand)	10,000	100.00%	-	-	It has been processed by a subsidiary company
V-TECH CO., LTD.	FOREVER CO., LTD.	Vistra Corporate Services Centre, Ground Floor NPF Building, Beach Road, Apia, Samoa	Equity investment	1,205,243 (USD 38,353 thousand)	1,205,243 (USD 38,353 thousand)	38,353,012	100.00%	1,872,779	166,181	It has been processed by V-TECH CO.,LTD

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Note1: The recognition of the investment loss of the investee company based on the shareholding ratio has exceeded the actual investment amount, and the recognition of investment losses is limited to reducing the book balance of the company's investment and advances to zero in accordance with regulations.

Note2: Current investment income from investees recognized by the Company included investment gain/loss recognized by their reinvested companies.

Note3: Current investment income from investees recognized by the Company included investment gain/loss recognized by these investees from upstream/downstream transactions

B. Information about major transactions of investee companies with controlling power:

(a) Financing provided to others for the year ended 31 December 2025:

No.	Lender	Counterparty	Financial statement account	Related party	Maximum balance for the period	Ending balance	Amount actually provided	Interest Rate	Nature for financing (Note1)	Amount of sales to counter-party	Reason for financing	Al-Low-ance for bad debt	Collateral		Limit of financing a mount for individual counter-party (Note4)	Limit of total financing amount (Note4)
													Item	Value
1	Lelon Electronics (HUIZHOU) Corp.	Lelon Electronics Corp.	Other receivables	Yes	$449,800	$449,800	$449,800	2.5%	2	$-	working capital turnover	$-	None	$-	$4,124,451	$4,124,451
2	Lelon Electronics (HUIZHOU) Corp.	Lelon Electronics Corp.	Other receivables	Yes	449,800	449,800	$449,800	2%	2	$-	working capital turnover	$-	None	$-	4,124,451	4,124,451
3	Lelon Electronics (SUZHOU) Corp.	Lelon Electronics Technology (SUZHOU) Corp.	Other receivables	Yes	449,800	449,800	$179,920	1.1%	2	-	working capital turnover	$-	None	$-	2,150,358	2,150,358

Note1: "1" is for business dealing, "2" is for the short-term financing.

Note 2: Loans of funds between foreign companies in which the Company directly or indirectly holds 100% of the voting shares are not subject to the above-mentioned limits; however, such loans shall not exceed 100% of the Company's net worth.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(b) Endorsement/Guarantee provided to others as of 31 December 2025: None.

(c) Material securities held at the end of the period (excluding investment subsidiaries, affiliates and joint-venture controlling interests):

Investee Company	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	Balance as of 31 December 2025
				Shares	Carrying Value	Percentage of Ownership	Fair Value
Lelon Electronics (SUZHOU) Corp.	Industrial Bank – Corporate RMB Structured Deposit Products	-	Financial asset measured at fair value through profit or loss–current	-	$179,920	-	$179,920
Lelon Electronics (SUZHOU) Corp.	CTBC RMB Yield Enhancement.	-	"	-	89,960	-	89,960
Lelon Electronics (SUZHOU) Corp.	CTBC RMB Yield Enhancement.	-	"	-	67,470	-	67,470
Lelon Electronics (HUIZHOU) Corp.	China Guangfa Bank wu hua tian bao"W" 2025 No. 229 RMB Structured Deposit.	-	"	-	76,691	-	76,691
Lelon Electronics (HUIZHOU) Corp.	China Guangfa Bank wu hua tian bao"W" 2025 No. 220 RMB Structured Deposit.	-	"	-	67,470	-	67,470
Lelon Electronics (HUIZHOU) Corp.	China Guangfa Bank wu hua tian bao"W" 2025 No. 216 RMB Structured Deposit.	-	"	-	44,980	-	44,980
Lelon Electronics (HUIZHOU) Corp.	Lijing Real Estate Development (Huizhou) Co., Ltd.	-	Financial assets at fair value through other comprehensive income-Non-current	4,719,710	$21,477	16.27%	$21,477

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(d) Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock as of 31 December 2025:

Company Name	Counterparty Item	Nature of Relationship	Transactions				Details of non-arm's length transaction		Notes and accounts receivable (payable)
			Purchases (Sales)	Amount	% to Total	Term	Unit price	Term	Balance	Percentage of total consolidated receivables (payable)
Lelon International Industrial Limited	Lelon Electronics Corp.	The Company's sub-subsidiary	Sales	$(2,484,434)	(99.67)%	Write-off of debts	Regular	Regular	$329,104	99.95%
Lelon International Industrial Limited	Lelon Electronics (HUIZHOU) Corp.	The Company's sub-subsidiary	Purchases	1,753,604	70.35%	Write-off of debts	Regular	Regular	(321,715)	(65.46)%
Lelon International Industrial Limited	Lelon Electronics (SUZHOU) Corp.	The Company's sub-subsidiary	Purchases	360,960	14.48%	Write-off of debts	Regular	Regular	-	-%
Lelon International Industrial Limited	Lelon Electronics Technology (SUZHOU) Corp.	The Company's sub-subsidiary	Purchases	381,920	15.32%	Write-off of debts	Regular	Regular	(166,798)	(33.94)%
Lelon Electronics Technology (SUZHOU) Corp.	Lelon Electronics (SUZHOU) Corp.	The Company's sub-subsidiary	Sales	(446,859)	(14.48)%	Write-off of debts	Regular	Regular	95,621	8.47%
Lelon Electronics (HUIZHOU) Corp.	Lelon Electronics Technology (SUZHOU) Corp.	The Company's sub-subsidiary	Sales	(110,552)	(2.77)%	Write-off of debts	Regular	Regular	25,397	2.17%
Lelon Electronics (HUIZHOU) Corp..	Lelon Electronics Technology (SUZHOU) Corp.	The Company's sub-subsidiary	Purchases	138,317	7.73%	Write-off of debts	Regular	Regular	(49,728)	(10.79)%

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Company Name	Counterparty Item	Nature of Relationship	Transactions				Details of non-arm's length transaction		Notes and accounts receivable (payable)
			Purchases (Sales)	Amount	% to Total	Term	Unit price	Term	Balance	Percentage of total consolidated receivables (payable)
LITON TECHNOLOGY CORP.	V-TECH CO., LTD	Liton Technology Corp.'s subsidiary	Purchases	881,321	65.03%	Write-off of debts	Regular	Mutual offset of creditor's rights and debts	-	-%
LITON TECHNOLOGY CORP.	V-TECH CO., LTD	Liton Technology Corp.'s subsidiary	Sales	(154,483)	(13.24)%	Write-off of debts	Regular	Mutual offset of creditor's rights and debts	20,039	7.06%
LITON TECHNOLOGY CORP.	Liton Electronics Technology (Abazhou) Co., Ltd.	Liton Technology Corp.'s subsidiary	Sales	(182,737)	(15.67)%	Write-off of debts	Regular	Mutual offset of creditor's rights and debts	28,407	10.01%
V-TECH CO., LTD	Liton Electronics Technology (HUIZHOU) Co., Ltd.	Associate of V-Tech Co., LTD	Sales	(131,530)	(12.70)%	Write-off of debts	Regular	Mutual offset of creditor's rights and debts	65,595	100%
V-TECH CO., LTD	Liton Electronics Technology (HUIZHOU) Co., Ltd.	Associate of V-Tech Co., LTD	Purchases	384,590	37.13%	Write-off of debts	Regular	Mutual offset of creditor's rights and debts	-	-%
V-TECH CO., LTD	Liton Electronics Technology (Abazhou) Co., Ltd.	V-TECH CO., LTD's subsidiary	Purchases	405,525	39.15%	Write-off of debts	Regular	Mutual offset of creditor's rights and debts	(46,226)	(30.58)%
Liton Electronics Technology (Abazhou) Co., Ltd.	Ruyuan Liding Electronic Technology Co., Ltd.	Associate of Liton Electronics Technology (Abazhou) Co., Ltd.	Purchases	610,125	58.94%	Net 30 days from the end of the month of when invoice is issued	Regular	Regular	(61,605)	(54.56)%

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Company Name	Counterparty Item	Nature of Relationship	Transactions				Details of non-arm's length transaction		Notes and accounts receivable (payable)
			Purchases (Sales)	Amount	% to Total	Term	Unit price	Term	Balance	Percentage of total consolidated receivables (payable)
Liton Electronics Technology (Abazhou) Co., Ltd.	Lelon Electronics Technology (SUZHOU) Corp.	Associate of Liton Electronics Technology (Abazhou) Co., Ltd.	Sales	(165,576)	(10.39)%	Net 135 days from the end of next month of when invoice is issued	Regular	Regular	68,749	12.23%
Liton Electronics Technology (Abazhou) Co., Ltd.	Lelon Electronics (HUIZHOU) Corp.	Associate of Liton Electronics Technology (Abazhou) Co., Ltd.	Sales	(114,941)	(7.21)%	Net 135 days from the end of next month of when invoice is issued	Regular	Regular	62,926	11.19%
Liton Electronics Technology (Hui Zhou) Co., Ltd.	Ruyuan Liding Electronic Technology Co., Ltd.	Associate of Liton Electronics Technology (Hui Zhou) Co., Ltd.	Purchases	309,749	66.65%	Net 30 days from the end of the month of when invoice is issued	Regular	Regular	(47,198)	(39.61)%
Ruyuan Liding Electronic Technology Co., Ltd.	Dongyang, Ruyuan Yao Autonomous County Actinic Foil Co., Ltd	Lidon Technology Corp.'s substantial related party	Sales	(565,558)	(22.55)%	Net 30 days from the end of the month of when invoice is issued	Regular	Regular	56,299	11.78%
Ruyuan Liding Electronic Technology Co., Ltd.	Youai Xi Jiedong Sunshine (Shaoguan) Aluminum Sales Co., Ltd	Lidon Technology Corp.'s substantial related party	Purchases	966,338	65.03%	Mutual offset of creditor's rights and debts	Regular	Mutual offset of creditor's rights and debts	(65,483)	(63.20)%

Note: The Company complies with the provisions of Letter No. 00747 of the Securities and Futures Commission dated 18 March 1998 (87) Taiwan Financial Securities (6)., When outsourced processing, if the parties have agreed to be shipped back for processing or sold on behalf of the party, title and risk of processed products have not passed, when the material is outsourced, it will be treated according to the accounting of outsourcing processing, it will not be treated as sales.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

(e) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of year ended 31 December 2025: please refer to Note 13(1) for details regarding financing provided to others.

Company Name	Related Party	Nature of Relationship	Ending Balance	Turnover Rate	Overdue receivables		Amounts Received in Subsequent Period	Loss allowance
					Amount	Actions taken
Lelon International Industrial Limited	Lelon Electronics Corp.	The Company’s sub-subsidiary	Accounts receivable $329,104	-	$-	$-	Write-off of debts	$-
Liton Electronics Technology (Hui Zhou) Co., Ltd.	Lelon International Industrial Limited	The Company’s sub-subsidiary	Accounts receivable $321,715	-	-	-	Write-off of debts	-
Lelon Electronics Technology (SUZHOU) Corp.	Lelon International Industrial Limited	The Company’s sub-subsidiary	Accounts receivable $166,798	-	-	-	Write-off of debts	-

3. Information on investment in Mainland China

A. The name of the investee in Mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, equity in the net gain or net loss, ending balance, amount received as dividends from the investee, and the limitation on investee:

Investee Company	Main Business and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1Jan. 2025	Investment Flows		Accumulated Outflow of Investment from Taiwan as of 31 Dec. 2025	Net income(loss) of investee company	Percentage of Ownership	Equity in Earnings (Losses) Note 1	Carrying Value as of 31 December 2025 (Note1)	Accumulated Inward Remittance of Earnings as of 31 December 2025
					Outflow	Inflow
Lelon Electronics (HUIZHOU) Corp.	Manufacture and sales of capacitors	$380,655 (RMB 84,627,532)	Indirect investments in Mainland China through companies registered in a third region	$241,564 (USD 7,687 thousand)	$-	$-	$241,564 (USD 7,687 thousand)	$755,208	89.47%	$675,685	$3,690,147	$-

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Investee Company	Main Business and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1Jan. 2025	Investment Flows		Accumulated Outflow of Investment from Taiwan as of 31 Dec. 2025	Net income(loss) of investee company	Percentage of Ownership	Equity in Earnings (Losses) Note 1	Carrying Value as of 31 December 2025 (Note1)	Accumulated Inward Remittance of Earnings as of 31 December 2025
					Outflow	Inflow
Lelon Electronics (SUZHOU) Corp.	Manufacture and sales of capacitors	355,472 (RMB 79,028,807)	Indirect investments in Mainland China through companies registered in a third region	186,382 (USD 5,931 thousand)	-	-	186,382 (USD 5,931 thousand)	435,668	89.47%	389,792	1,923,925	32,197 (RMB 7,158 Thousand)
Lelon Electronics (SUZHOU) Corp.	Manufacture and sales of capacitors	2,007,196 (RMB 446,241,785)	Indirect investments in Mainland China through companies registered in a third region	314,250 (USD 10,000 thousand)	-	-	314,250 (USD 10,000 thousand)	308,542	89.47%	276,053	2,279,642	-
Dongguan Lehong Trading Co., Ltd.	Trading of Electronic Components	11,888 (RMB 2,643,003)	Indirect investments in Mainland China through companies registered in a third region	12,161 (USD 387 thousand)	-	-	12,161 (USD 387 thousand)	622	89.47%	557	26,404	-
Suzhou Liding Automotive Technology Co., Ltd.	Research and development, design, manufacturing, and sale of automotive electronic components	44,980 (RMB 10,000,000)	Other	-	-	-	-	3,631	89.47%	3,249	30,959	-

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

Investee Company	Main Business and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1Jan. 2025	Investment Flows		Accumulated Outflow of Investment from Taiwan as of 31 Dec. 2025	Net income(loss) of investee company	Percentage of Ownership	Equity in Earnings (Losses) Note 1	Carrying Value as of 31 December 2025 (Note1)	Accumulated Inward Remittance of Earnings as of 31 December 2025
					Outflow	Inflow
Liton Electronics Technology (Hui Zhou) Co., Ltd.	Manufacture and sale of aluminum foil materials, aluminum electrolytic capacitors and related materials for the above products	392,813 (USD 12,500 thousand)	Indirect investments in Mainland China through companies registered in a third region	274,340 (USD 8,730 thousand)	-	-	274,340 (USD 8,730 thousand)	129,561	100.00%	129,561	1,018,744	85,967 (USD 1,230 thousand) (RMB 10,459 thousand)
Liton Electronics Technology (Abazhou) Co., Ltd.	Manufacture of aluminum foil materials, aluminum electrolytic capacitors and related materials for the above products	1,338,705 (USD 42,600 thousand)	Indirect investments in Mainland China through companies registered in a third region	1,181,580 (USD 37,600 thousand)	-	-	1,181,580 (USD 37,600 thousand)	166,181	100.00%	166,181	1,872,779	-
Ruyuan Liding Electronic Technology Co., Ltd.	Manufacture and trade of electroeroded foil and chemically formed aluminum foil	719,680 (RMB 160,000 thousand)	Direct investment in the Mainland China	287,872 (RMB 64,000 thousand)	-	-	287,872(RMB 64,000 thousand)	339,772	60.00%	203,034	1,405,966	43,181 (RMB 9,600 thousand)
Li-Han Technology (Huizhou) Co., Ltd.	Comprehensive Utilization of Waste Resources Industry	22,490 (RMB 5,000 thousand)	Other	-	-	-	-	(116)	60.00%	(70)	26,916	-

LELON ELECTRONICS CORP.
Notes to Financial Statements (Continued)
(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

	Accumulated investment in Mainland China as of 31 December 2025	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
The Company	$914,625
(USD 29,105 thousand)	$1,106,484
(USD 34,825 thousand)
(HKD 3,000 thousand)	$5,455,759
Liton Technology Corp.	$1,743,792
(USD 46,330 thousand)
(RMB 64,000 thousand)	$2,058,042
(USD 56,330 thousand)
(RMB 64,000 thousand)	Not applicable (Note 3)

Note 1: Amount was recognized based on the audited financial statements.

Note 2: The investment income of the investee company recognized in this period has included the investment gains and losses of these companies due to downstream and upstream transactions.

Note 3: According to Letter No.11451028780 issued by Ministry of Economic Affairs, R.O.C., because of LITON TECHNOLOGY Corp. has already get the operation headquarters certification documents issued by Industrial Development Bureau. Therefore, the amount to invest in Mainland China will not be limited to 60 percent of net or consolidated net worth by Investment Commission.

Note 4: The figures in this table should be presented in New Taiwan Dollars. Where foreign currencies are involved, they should be converted into New Taiwan Dollars using the exchange rates at the balance sheet date.

Note 5: The investment information of Mainland China is excluding investment information of disposed Mainland subsidiaries.

B. Directly or indirectly significant transactions through third regions with the investees in Mainland China, including price, payment terms, and other related information: The Company had no significant asset transactions or other transactions that had a material impact on the current period's profit or financial position. Please refer to Note 13(2).

LELON ELECTRONICS CORP.
THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS
FOR THE YEAR ENDED 31 DECEMBER 2025

Items	STATEMENT INDEX
STATEMENT OF CASH AND CASH EQUIVALENTS	1
STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS – CURRENT	Note 13 ~ 1(3)
STATEMENT OF ACCOUNTS RECEIVABLE – NON-RELATED PARTIE	2
STATEMENT OF OTHER RECEIVABLES	Note 7
STATEMENT OF INVENTORIES	3
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD	4
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	Note 6 (6)
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT	Note 6 (6)
STATEMENT OF CHANGES IN NET SHORT-TERM LOANS	5
STATEMENT OF OTHER PAYABLES	Note 6 (8)
STATEMENT OF NET OPERATING REVENUES	6
STATEMENT OF OPERATING COSTS	7
STATEMENT OF OPERATING EXPENSES	8
SUMMARY STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION	Note 6 (15)
STATEMENT OF NON-OPERATING INCOME AND EXPENSES	Note 6 (16)

LELON ELECTRONICS CORP.

1. STATEMENT OF CASH AND CASH EQUIVALENTS

31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Item	Description	Amount	Note
Petty cash		$60
Cash		233
Bank savings	Demand deposits-	411,711	USD 12,650 thousand
	foreign currency		HKD 494 thousand
			JPY 17,344 thousand
			EUR 235 thousand
			CNY 10 thousand
	Demand deposits-	152,188
	NTD
	Checking deposits-	176
	NTD
	Time deposits-		CNY 4,410 thousand
	foreign currency	19,836
Total		$584,204

LELON ELECTRONICS CORP.

2. STATEMENT OF RECEIVABLES FROM RELATED PARTIES

31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Client Name	Description	Amount	Note
Client A		$70,005
Others (Note)		915,904
Total		985,909
Less: Loss allowance		(16,658)
Subtotal		$969,251

Note: The amount of individual client in others does not exceed 5% of the account balance.

LELON ELECTRONICS CORP.

STATEMENT OF INVENTORIES

31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Item	Cost	Net realizable value
Merchandise	$74,521	$75,408
Less: Allowance for inventory valuation and obsolescence losses	(2,766)
Total	$71,755

LELON ELECTRONICS CORP.

STATEMENT OF CHANGES IN LONG-TERM EQUITY INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
FOR THE YEAR ENDED 31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Investees	Balance, 1 January 2025		Additions		Decrease		Receive cash dividends (Note1)	Increase (Decrease) in Using the Equity Method Amount	Exchange differences from the translation of financial statements	Obtain the difference between the equity price and book value of subsidiaries	Others (Note2)	Balance, 31 December 2025			Market value or equity net worth	Collateral	Note
	Shares	Amount	Shares	Amount	Shares	Amount						Shares	%	Amount
LIRO ELECTRONICS CO., LTD.	26,005,137	$6,451,470	-	$-	-	$-	$(32,525)	$1,340,030	$82,954	$-	$10,882	26,005,137	89.47%	$7,852,811	$7,899,768	Nil	OTC stocks
Liton Technology Corp.	43,731,598	1,137,729	-	-	-	-	(76,531)	117,000	10,367	3,459	342	43,731,598	29.13%	1,192,366	1,177,678	Nil
LELON ELECTRONICS (Thailand) CO., LTD.	-	373,013	-	104,473	-	-	-	(330)	20,459	-	-	-	100.00%	497,615	497,615	Nil
Total		$7,962,212		$104,473		$-	$(109,056)	$1,456,700	$113,780	$3,459	$11,224			$9,542,792

Note 1 : The main subsidiary Liton Technology Corp announced the distribution of cash dividends in this period, the Company recognized $76,531 according to the shareholding percentage, as well as profit remittances of NT$32,525 from the sub-subsidiary, Lelon Electronics (Suzhou) Co., Ltd.
Note 2 : Other components are as follows :

(1)
FVTOCI-Non-current
Defined benefit plan actuarial gains and losses
Total

$21
321
$342

(2)
Realized gross margin
Financial assets measured at fair value through other comprehensive income- noncurrent
Total

$11,328
(446)
$10,882

LELON ELECTRONICS CORP.
5. STATEMENT OF SHORT-TERM BORROWINGS
31 DECEMBER 2025
In Thousands of New Taiwan Dollars

Loan Type	Description	Ending balance	Contract Period	Interest Rates (%)	Amount	Collateral
First Bank - Taichung Branch	Short-term Revolving Funds	$275,847	2025/12/10~2026/03/23	0.81~4.74%	$600,000	-
YUANTA Commercial Bank	Short-term Revolving Funds	200,000	2025/11/07~2026/02/25		$200,000	-
Citibank - Chungkang Branch	Short-term Revolving Funds	180,000	2025/07/24~2026/01/23		$400,000	-
Taiwan Cooperative Bank- North Taichung Branch	Short-term Revolving Funds	154,925	2025/12/08~2026/03/31		$300,000	-
HSBC Bank (Taiwan) Limited - Taichung Branch	Short-term Revolving Funds	110,000	2025/06/25~2026/06/25		$200,000	-
Taishin International Bank	Short-term Revolving Funds	55,331	2025/08/26~2026/05/25		$350,000	-
KGI Commercial Bank	Usance L/C Borrowing	25,564	2025/07/14~2026/06/19		$250,000	-
Taiwan Cooperative Bank- North Taichung Branch	Usance L/C Borrowing	15,549	2025/09/17~2026/04/28		Note (1)	-

Subtotal
1,017,216
Less: Allowance for
exchange benefit
(628)
Total
$1,016,588

Note 1 : The shared credit limit for short-term borrowings with Taiwan Cooperative Bank amounts to 300,000 thousand.

LELON ELECTRONICS CORP.

STATEMENT OF NET REVENUE

FOR THE YEAR ENDED 31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Item	Description	Amount
Capacitor	1,601,089 KPCS	$3,141,959
Sale of machinery and equipment		41,741
Royalty income	Trademark royalty expense	83,278
Total net revenue		3,266,978
Less: Sales return		(2,613)
Sales discounts and allowance		(14,368)
Net revenues		$3,249,997

LELON ELECTRONICS CORP.

STATEMENT OF COST OF REVENUE

FOR THE YEAR ENDED 31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Item	Amount
A. Cost of goods sold of manufacturing products
Work in process, beginning of year	$3,287
Less: Transfer to goods	(3,287)
Cost of finished goods	-
B. Sales of goods sold
Inventories, beginning of year	66,569
Add: Net purchases in this period	2,526,730
Work in process transfer in	3,287
Less: Inventories, end of year	(74,521)
Inventory shortage	(1)
Cost of sales of goods purchased	2,522,064
C. Other costs
Reversal of inventory write-downs and obsolescence	1,681
Inventory shortage	1
Other cost	1,682
Total	$2,523,746

LELON ELECTRONICS CORP.

STATEMENT OF OPERATING EXPENSES

FOR THE YEAR ENDED 31 DECEMBER 2025

In Thousands of New Taiwan Dollars

Item	Selling Expenses	General and Administrative Expenses	Research and Development Expenses	Impairment gain for expected credit	Total	Note
Payroll expense	$46,228	$153,845	$29,830	$-	$229,903
Rental expense	276	-	4,096	-	4,372
Commission expense	54,994	-	-	-	54,994
Import and export expense	36,563	-	-	-	36,563
Insurance expense	3,664	6,445	3,310	-	13,419
Depreciation expense	90	3,373	5,873	-	9,336
Expected credit gains	-	-	-	(3,299)	(3,299)
Others	51,920	22,149	7,706	-	81,775	(Note)
Total	$193,735	$185,812	$50,815	$(3,299)	$427,063

Note: The amount of each item in others does not exceed 5% of the account balance.

100

AI assistant

LELON — Audit Report / Information 2025

52108_rns_2026-06-05_b6ec0bf0-04d8-4ea5-bd77-3d62f2a9aa83.pdf

Impairment of accounts receivable

Valuation for inventories (Including inventories of the subsidiaries under the equity method)

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

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Financial asset measured at fair value through profit or loss

B. Impairment of financial assets

Financial liabilities at amortized cost

Derecognition of financial liabilities

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(12) Investment property

Company as a lessee

LELON ELECTRONICS CORP.

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

(16) Non-operating income and expenses

A. Other income

B. Other gains and losses

C. Financial costs

Interest rate risk

Equity price risk

(4) Credit risk management

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

3. Information on investment in Mainland China

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

Notes to Financial Statements (Continued)

LELON ELECTRONICS CORP.

1. STATEMENT OF CASH AND CASH EQUIVALENTS

LELON ELECTRONICS CORP.

2. STATEMENT OF RECEIVABLES FROM RELATED PARTIES

More from LELON

LELON Audit Report / Information 2025