Stock Code: 3533

Lotes Co., Ltd.

Parent Company Only Financial Statement and Independent Auditor’s Report

2023 & 2022

Notice to Readers

For the convenience of readers, the Parent Company Only Financial Statement and Independent Auditor’s Report have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

Address: No. 15, Wuxun St., Anle Dist., Keelung City 204 Telephone: (02) 2433 1110

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Item I. Cover Page II. Table of Contents III. Independent Auditor’s Report IV. Balance Sheet V. Statement of Comprehensive Income VI. Statement of Change in Equity VII. Statement of Cash Flows VIII. Notes to the Parent Company Only Financial Statements (I) Company History (II) Date and Procedures of Approval of Financial Statement (III) Application of New and Revised Standards and Interpretations (IV) Summary of Major Accounting Policies (V) Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties (VI) Descriptions for Important Accounting Items (VII) Related Party Transactions (VIII) Pledged Assets (IX) Significant Contingent Liabilities and Unrecognized Contractual Commitments (X) Significant Disaster Loss (XI) Significant Post-Period Events (XII) Others (XIII) Disclosing Information (1) Major Transaction Details (2) Information on Reinvestment Business (3) Investment in China (4) Information on Major Shareholders (XIV) Segmental Information IX. Tables of Significant Accounting Items	Page
	1 2 3 8 9 10 11 12 12 12~14 14~32 32 33~65 66~69 69 69 70 70 70 71~76 77~78 79~80 81 81 82~96

Item
I.
Cover Page
II.
Table of Contents
III.
Independent Auditor’s Report
IV.
Balance Sheet
V.
Statement of Comprehensive Income
VI.
Statement of Change in Equity
VII.
Statement of Cash Flows
VIII. Notes to the Parent Company Only Financial Statements
(I)
Company History
(II)
Date and Procedures of Approval of Financial Statement
(III) Application of New and Revised Standards and Interpretations
(IV) Summary of Major Accounting Policies
(V)
Primary Sources of Major Accounting Judgment, Estimate and
Assumption Uncertainties
(VI) Descriptions for Important Accounting Items
(VII) Related Party Transactions
(VIII) Pledged Assets
(IX) Significant Contingent Liabilities and Unrecognized Contractual
Commitments
(X)
Significant Disaster Loss
(XI) Significant Post-Period Events
(XII) Others
(XIII) Disclosing Information
(1)
Major Transaction Details
(2)
Information on Reinvestment Business
(3)
Investment in China
(4)
Information on Major Shareholders
(XIV) Segmental Information
IX.
Tables of Significant Accounting Items

Page

1
2
3
8
9
10
11
12
12
12~14
14~32
32
33~65
66~69
69
69
70
70
70
71~76
77~78
79~80
81
81
82~96

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Independent Auditor’s Report

To the Board of Directors of Lotes Co., Ltd.:

Audit opinion

We have audited the Balance Sheet of Lotes Co., Ltd. (hereinafter referred to as Lotes) as of December 31, 2023 and 2022, the Statement of Comprehensive Income as of January 1 to December 31, 2023 and 2022 as well as the Statement of Changes in Equity, Statement of Cash Flows and the Notes to Parent Company Only Financial Statement (including important accounting policies summary).

In our opinions, the compilation of the above parent company only financial statements present fairly, in all material respects, of the financial status of December 31, 2023 and 2022 in Lotes and the financial performance and consolidated cash flow of January 1 to December 31, 2023 and 2022 prepared according to Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis of the audit opinions

The audit was conducted by us in accordance with the Rules Governing Auditing and Certification of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards (GAAS). Our responsibilities under these standards will be further explained in the responsibility paragraph of the accountant’s audit on the parent company only financial statements. The personnel regulated by independence at the accounting firm that our accountants work with have been managed according to the code of professional ethics to maintain independence from Lotes as well as perform other responsibilities addressed on the regulation. Based on the audit results of us, we believe we have obtained sufficient and appropriate auditing evidence as the basis to express our audit opinions.

Key audit matters

Key audit matters refer to the most important matters on the audits to Lotes’s parent company only financial statements of fiscal year 2023 based on the professional judgment of our accountants. The matters have been responded on the whole audited parent company only financial statements and during the process of the expression of the audit opinions. There, our accountants will not express opinions separately towards the matters. Based on the judgment of the accountants, the following key audit matters that should be communicated on the audit report are as follows: I. Recognition of income

Please refer to Note IV (16) to the parent company only financial statements for the accounting policy in terms of income recognition. Please refer to Note VI (14) to the parent company only financial statements for the refund liability. Please refer to Note VI (22) to the parent company only financial statements for details about income.

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Description of the key audit matters:

The operating income is the most critical factor when determining the operational performance of Lotes Co., Ltd. Users of the statements are cautiously concerned about the performance of the operating income. In response to the market conditions and business needs, discounts were provided for parts of the sales of goods agreed with the customers. Based on the agreements with the customers, the management would estimate the refund liability and include it as a deduction of operating income. Thus, the income recognition evaluation is one of the fundamental evaluation items for accountants in the execution of financial report audit for Lotes Co., Ltd.

Corresponding audit procedures:

The primary audit procedure conducted by the accountants for the aforementioned key audit matters included the understanding and evaluation of the relevant control procedures and the effectiveness of the design and execution of the control procedure. Regarding the sampling testing for sales close to the balance sheet date, external certification documents were reviewed to assess the adequacy of the income recognition timings. The management’s method to estimate and list refund liabilities were also obtained to assess whether the evaluation is based on the agreed conditions with customers. The adequacy of the refund liability estimate was analyzed with the actual situation afterward.

II. Evaluation of inventory

Please refer to Note IV (7) for the accounting policy of inventory evaluation. Please refer to Note V in the parent company only financial statements for the accounting estimates and assumed uncertainties of the inventory evaluation. Please refer to Note VI (4) in the parent company only financial statements for the information on the losses from the falling price of inventory. Description of the key audit matters:

Due to the impacts of rapid changes in the market demand and the development of production technology, the existing products are at risk to become outdated inventory or non-compliant with market demand. Parts of the inventory may become obsolete or have the market prices dropped. Thus, the inventory evaluation is one of the fundamental evaluation items for the accountants in the execution of financial report audit for Lotes Co., Ltd. Corresponding audit procedure:

The primary audit procedure conducted by the accountants for the aforementioned key audit matters included the understanding and evaluation of the basis and methods used by the management to assess the net realizable value of inventory. Review and audit were conducted in terms of the data used by the management as the basis and to estimate the net realizable value, and an evaluation was conducted on the estimated sales price to the latest sales record by sampling. To evaluate the adequacy of the drop in prices, the adequacy of the inventory aging report was checked, and the changes in the inventory aging of each period were analyzed.

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Emphasis of Matter

As disclosed in Note III (1) to the parent company only financial statements, effective January 1, 2023, Lotes adopted the amendments to IAS 12, which was recognized and issued by the Financial Supervisory Commission, for the preparation of its financial statements, and restated its parent company only financial statements for the year ended December 31, 2022 retrospectively. We have not modified our audit opinion accordingly.

Other Matters

Lotes has prepared its parent company only financial statements for fiscal years 2023 and 2022, and we have issued an unqualified audit report thereon for your information.

Responsibility from management level and governing unit towards the parent company only financial statements

Management level’s responsibility is to prepare the parent company only financial statements present fairly according to Regulations Governing the Preparation of Financial Reports by Securities Issuers and to maintain necessary internal control related to the preparation of the parent company only financial statements in order to ensure there is no major untrue expression on the financial statements due to fraud or error.

When preparing the parent company only financial statements, the responsibility of management level also includes evaluating Lotes’s capability of continuous operation, disclosure of relevant matters and the application of continuous operation accounting model unless the management level intends to liquidate Lotes or suspend its business operation or there is no alternative practical and feasible solution other than liquidation or business suspension.

The governing unit (including the audit committee) at Lotes is responsible for supervising the process of financial reports.

Responsibility of accountants’ audit on the parent company only financial statements

The purpose of the parent company only financial statements audited by our accountants is to obtain reasonable assurance on whether the significant untrue expression exists on the whole parent company only financial statements due to fraud or error as well as issue the audit report. The reasonable assurance is the high certainty; however, it will not be able to guarantee that the significant untrue expression will definitely be able to be detected by generally accepted auditing standards, and the untrue expression might be caused from fraud or error. It is regarded as with significance if the individual amount or the aggregation number of the untrue expression can reasonably predict that it will affect the economic decisions made by the users of the parent company only financial statements.

When we conduct the audit according to generally accepted auditing standards, we use professional judgment and maintain our professional suspicion. We also executed the following tasks: 1. Identifying and evaluating the risk of major untrue expression on the parent company only financial statements due to fraud or error; designing and implementing proper responding strategies towards the risk evaluated; and obtaining sufficient and appropriate audit evidence as the basis of audit opinions. Due to fraud might be involving with collusion, counterfeiting, malicious omission untrue declaration, or going out of the internal control, the risk of not detecting the major untrue expression

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due to fraud will be higher than that due to error.

Obtaining necessary understanding of internal control related to audit in order to design proper audit procedure under the situation of the case. However, its purpose is not to express opinion toward the effectiveness of the internal control in Lotes.
Evaluating the adequacy of the accounting policies used by the management level and the rationality of the accounting evaluation and relevant disclosure concluded.
Based on the audit evidence obtained, conclusion towards the appropriateness of continuous operation accounting basis that the management level adopts and the existence of major uncertainty on events or situations with major concerns affecting Lotes’s capability in continuous operation are made. If we believe major uncertainty existed on the event or situation, we must remind the users of parent company only financial statements on the audit report to pay attention on the relevant disclosure or modify audit opinion when the disclosure is not appropriate. The conclusion that we made is based on the audit evidence obtained up to the audit report day, but future events or situations might cause Lotes not capable in continuous operation.
Evaluating the overall expression, structure and content of the parent company only financial statements (including relevant notes) as well as whether the parent company only financial statements present fairly, in all material respects, relevant transaction and events.
Obtaining sufficient and appropriated audit evidence of the financial information from the investee companies accounted for using equity method as well as express opinions towards the parent company only financial statements. We are in charge of the directing, supervision and execution on the audit cases as well as concluding audit opinions towards the parent company only financial statements of Lotes.

The communication between us and the governing unit includes the audit scope and time planned and major audit findings (including the significant defects on the internal control identified during the auditing process).

We have also provided information to the governing unit that the personnel of the firm—under which our CPAs are working—who are subject to independence requirements have complied with the statement of independence in the CPA code of professional ethics and communicated to the governing unit all relationships and other matters (including relevant safeguards) that may be considered to affect the independence of CPAs.

We determined the key audit matters that we would like to execute on Lotes’s parent company only financial statements for fiscal year 2023 from the communication with the governing unit. We clearly stated the related matters on the audit report unless it is the specific matter that is not allowed to be disclosed to the public according to laws, or under a very rare situation that we decided not to communicate specific matters on the audit report because we can reasonably anticipate the negative influence generated by the communication will be greater than the public interests increased.

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KPMG Taiwan

CPAs:

Competent CHIN-KUAN-CHENG-SHENAuthority of : TZU No. 1000011652 Securities CHIN-KUAN-CHENG-SHENApproval TZU No. 1110333933 Certificate No.[March 12, 2024 ]

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Lotes Co., Ltd.

Unit: NT$ 1,000

Balance Sheet

December 31, 2023, December 31, 2022 and January 1, 2022

Dec. 31, 2023 Amount % $ 7,936,834 22 7,307 - 1,383 - 5,839,889 17 35,703 - 54,891 - 3 - 135 - 600,365 2 7,215 - 15 -	(Restated) Dec. 31, 2022	Dec. 31, 2023 Amount % $ 1,580,000 4 3,605 - 5,191 - 2,000 - 3,742,662 11 386,979 1 4,356 - 593,337 2 59 - 420,182 1 18,060 - - -	(Restated) Dec. 31, 2022 Amount % 1,830,000 6 29,321 - 8,390 - 18,359 - 2,218,939 8 428,315 1 6,377 - 795,052 3 - - 384,044 2 11,008 - 8,361 -	(Restated) Jan. 1, 2022 Amount % 552,240 3 41,541 - 13,402 - 8,391 - 1,512,055 7 293,440 1 2,166 - 350,031 2 59 - 195,105 1 7,441 - - -
	Amount % 3,127,767 11 16,531 - 1,394 - 6,852,416 24 22,514 - 38,176 - 420 - 135 - 995,827 4 5,192 - - -
		6,756,431 19	5,738,166 20	2,975,871 14
14,483,740 41	11,060,372 39	850,247 3 - - 43,534 - 948 - 43 -	- - 117,814 - 41,410 - 1,955 - 43 -	911,927 5 - - 45,220 - 6,038 - 744 -
26,916 - 1,144 - 20,181,601 57 293,768 1 59 - 221,387 1 38,347 - 164,025 - 13,275 -	- - 4,595 - 16,943,782 59 296,550 1 - - 226,041 1 59,895 - 106,064 - 13,661 -
		894,772 3	161,222 -	963,929 5
		7,651,203 22	5,899,388 20	3,939,800 19
		1,113,298 3 1,423 - 8,896,393 25 18,552,928 52 (790,983) (2)	1,068,762 4 9,536 - 6,307,022 22 15,765,305 55 (339,053) (1)	1,059,779 5 1,167 - 5,283,698 25 11,202,788 54 (682,384) (3)
20,940,522 59	17,650,588 61
		27,773,059 78	22,811,572 80	16,865,048 81
		$ 35,424,262 100	28,710,960 100	20,804,848 100

Total of assets

$ 35,424,262 100 28,710,960 100 20,804,848 100

(Please read the Notes to the Parent Company Only Financial Statements) Manager: HO, TE-YU

Chairperson: CHU, TE-HSIANG

Accounting Manager: LIU, HSIN-HSIA

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Lotes Co., Ltd.

Statement of Comprehensive Income

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

2023	% 100 73	(Restated) 2022	% 100 75
Amount $ 15,473,450 11,253,709		Amount 17,440,172 13,145,656
4,219,741	27	4,294,516	25
306,238 450,781 59,862 (1,625)	2 3 - -	420,304 378,064 62,879 1,732	2 2 - -
815,256	5	862,979	4
3,404,485	22	3,431,537	21
264,179 175,636 (71,334) (33,786) 2,795,627	2 1 - - 18	25,756 194,240 507,645 (20,421) 2,998,284	- 1 3 - 17
3,130,322	21	3,705,504	21
6,534,807 941,775	43 6	7,137,041 881,110	42 5
5,593,032	37	6,255,931	37
(2,292) 3,982 (38) (458)	- - - -	2,790 (3,483) (2,997) 558	- - - -
2,110	-	(4,248)	-
(449,712) -	(3) -	349,811 -	2 -
(449,712)	(3)	349,811	2
(447,602)	(3)	345,563	2
$ 5,145,430	34	6,601,494	39
$	50.65		58.72
$	50.19		57.88

(Please read the Notes to the Parent Company Only Financial Statements) Chairperson: CHU, TE-HSIANG Manager: HO, TE-YU Accounting Manager: LIU, HSIN-HSIA

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Lotes Co., Ltd.

Statement of Change in Equity

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

	Share capital		Capital reserves		Retained	earnings			Other equity items	Other equity items		Total equity 16,862,481 2,567
								Exchange difference between foreign operating office’s statement	Unrealized gain or loss on financial assets measured at FVTOCI	Unearned compensation to employees	Total
Share capital for ordinary shares	Certificates of bond-to-stock conversion	Total		Legal reserve	Special reserve	Undistributed earnings	Total
$ 1,059,779 -	1,167 -	1,060,946 -	5,283,698 -	1,571,158 -	594,972 -	9,034,040 2,618	11,200,170 2,618	(669,055) (51)	(13,278) -	- -	(682,333) (51)
1,059,779	1,167	1,060,946	5,283,698	1,571,158	594,972	9,036,658	11,202,788	(669,106)	(13,278)	-	(682,384)	16,865,048
- -	- -	- -	- -	- -	- -	6,255,931 2,232	6,255,931 2,232	- 349,811	- (6,480)	- -	- 343,331	6,255,931 345,563
-	-	-	-	-	-	6,258,163	6,258,163	349,811	(6,480)	-	343,331	6,601,494
- - - - - 8,983	- - - - - 8,369	- - - - - 17,352	- - - 127,583 (90) 895,831	347,528 - - - - -	- 87,361 - - - -	(347,528) (87,361) (1,695,646) - - -	- - (1,695,646) - - -	- - - - - -	- - - - - -	- - - - - -	- - - - - -	- - (1,695,646) 127,583 (90) 913,183
1,068,762 - -	9,536 - -	1,078,298 - -	6,307,022 - -	1,918,686 - -	682,333 - -	13,164,286 5,593,032 (1,834)	15,765,305 5,593,032 (1,834)	(319,295) - (449,712)	(19,758) - 3,944	- - -	(339,053) - (445,768)	22,811,572 5,593,032 (447,602)
-	-	-	-	-	-	5,591,198	5,591,198	(449,712)	3,944	-	(445,768)	5,145,430
- - - - - - 35,000 9,536 -	- - - - - - - (8,113) -	- - - - - - 35,000 1,423 -	- - - 114,556 24,049 52,309 2,270,973 127,484 -	625,649 - - - - - - - -	- (343,303) - - - - - - -	(625,649) 343,303 (2,803,575) - - - - - -	- - (2,803,575) - - - - - -	- - - - - - - - -	- - - - - - - - -	- - - - - - - - (6,162)	- - - - - - - - (6,162)	- - (2,803,575) 114,556 24,049 52,309 2,305,973 128,907 (6,162)
$ 1,113,298	1,423	1,114,721	8,896,393	2,544,335	339,030	15,669,563	18,552,928	(769,007)	(15,814)	(6,162)	(790,983)	27,773,059

(Please read the Notes to the Consolidated Financial Statements) Manager: HO, TE-YU

Chairperson: CHU, TE-HSIANG

Accounting Manager: LIU, HSIN-HSIA

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Lotes Co., Ltd.

Statement of Cash Flows

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

Cash flows from (used in) operating activities: Net profit before tax Items of adjustment: Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Expected credit loss (gain) Interest expense Interest income Dividend income Share of the profit from subsidiaries, associates and joint ventures accounted for using equity method Net loss on financial assets measured at FVTPL Investment impairment loss accounted for using equity method Profit from repurchase of corporate bonds Inventory valuation and disposal loss Loss (profit) from the disposal and scaping of property, plant and equipment Compensation expense for employee stock options Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Decrease in notes receivable Decrease (increase) in accounts receivable Increase in other receivables Decrease (increase) in inventory Increase in advance payment Increase in other current assets Total net change in the assets related to operating activities Net change in the liabilities related to operating activities: Decrease in contract liabilities Decrease in notes payable Increase in accounts payable Increase (decrease) in other payables Decrease in provision for liabilities Increase in other current liabilities Increase in refund liabilities Decrease in other non-current liabilities Total net change in the liabilities related to operating activities Total net change in the assets and liabilities related to operating activities Total of the adjustment items Cash inflow generated from operating activities Interest received Dividends received Interest paid Income taxes paid Cash flows used in operating activities Cash flows in investing activities: Disposal of financial assets measured at FVTOCI Acquisition of financial assets measured at FVTPL Disposal of financial assets measured at FVTPL Acquisition of investment accounted for using equity method Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Acquisition of investment property Decrease (increase) in other non-current assets Net cash outflow from investment activities Cash flows in financing activities: Increase in short-term loans Issuance of corporate bonds Raising long-term loans Repayment of long-term loans Repayment of lease principal Issuance of cash dividends Cash capital increase Repurchase of corporate bonds Cash flows from (used in) financing activities Increase in cash and cash equivalents Beginning balance of cash and cash equivalents Ending balance of cash and cash equivalents	2023 $ 6,534,807 11,966 22,062 (1,625) 33,786 (264,179) (441) (2,795,627) (2,736) 24,860 - 40,413 (29) 52,309	2022 7,137,041 10,192 22,639 1,732 20,421 (25,756) (300) (2,998,284) (12,990) - (35) 36,076 34 -
	(2,879,241)	(2,946,271)
	11 1,000,963 (25,644) 355,049 (2,023) (15)	517 (1,031,636) (6,651) (36,049) (2,472) -
	1,328,341	(1,076,291)
	(25,716) (3,199) 1,507,363 (42,780) (168) 7,052 36,138 -	(12,220) (5,012) 716,852 138,661 (1,020) 3,567 188,939 (701)
	1,478,690	1,029,066
	2,807,031	(47,225)
	(72,210)	(2,993,496)
	6,462,597 273,525 441 (21,435) (1,202,000)	4,143,545 16,455 300 (13,201) (480,627)
	5,513,128	3,666,472
	7,433 (25,000) 10,949 (898,915) (4,471) 29 (514) - 386	1,422 (8,000) 5,035 (844,045) (4,654) 40 - (169,534) (4,312)
	(910,103)	(1,024,048)
	(250,000) 1,079,878 - (126,175) (59) (2,803,575) 2,305,973 -	1,277,760 - 130,000 (3,825) (59) (1,695,646) - (2,800)
	206,042	(294,570)
	4,809,067 3,127,767	2,347,854 779,913
	$ 7,936,834	3,127,767

(Please read the Notes to the Parent Company Only Financial Statements) Chairperson: CHU, TE-HSIANG Manager: HO, TE-YU

Accounting Manager: LIU, HSIN-HSIA

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Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Lotes Co., Ltd. Notes to the Parent Company Only Financial Statements 2023 & 2022

(All amounts are in NT$ thousands unless otherwise stated)

I. Company History

Lotes Co., Ltd. (hereinafter referred to as the “Company”) was incorporated on August 23, 1986 in accordance with the provisions of the Company Law and was approved for registration with its registered office at No.15, Wuxun Street, Anle District, Keelung City. The Company (hereinafter referred to as the “Company”) are principally engaged in the sale and purchase of various hardware parts and components, the manufacturing and processing of various terminals and their connectors, the import and export business in connection with the preceding item and the agency of the preceding item in connection with the tender quotation and distribution of products of domestic and foreign manufacturers. Please refer to Note XIV for further details.

II. Date and Procedures of Approval of Financial Statement

The Parent Company Only Financial Statement was approved and released by the Board of Directors on March 12, 2024.

III. Application of New and Revised Standards and Interpretations

(1) Influence of the Adoption of New and Revised Standards and Integrations Approved by the Financial Supervisory Commission

Effective January 1, 2023, the Company adopted the following newly revised IFRSs, the impact of which is described below:

Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

The amendments restrict the scope of the recognition exemption. When the original recognition of a transaction results in an equal amount of taxable and deductible temporary differences, the recognition exemption no longer applies, and an equal amount of deferred income tax assets and deferred income tax liabilities should be recognized. This accounting change resulted in an increase of NT$2,567 thousand, an increase of NT$2,618 thousand and a decrease of NT$51 thousand in investments accounted for using equity method, retained earnings and other equity, respectively, as of January 1, 2022, and an increase of NT$4,263 thousand, an increase of NT$4,286 thousand and a decrease of NT$23 thousand in investments accounted for using the equity method, retained earnings and other equity, respectively, as of December 31, 2022. The share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method decreased by

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Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

NT$1,668 thousand, while basic earnings per share and diluted earnings per share increased by NT$0.02 and NT$0.01, respectively, and had no impact on net cash flows for the year ended December 31, 2022.

If the Company had followed the previous accounting policy, the investments accounted for using equity method, retained earnings and other equity as of December 31, 2023 would have been increased by NT$6,877 thousand, decreased by NT$7,023 thousand and increased by NT$146 thousand, respectively. For the year ended December 31, 2023, the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method would have been increased by NT$2,737 thousand, basic earnings per share and diluted earnings per share would have been decreased by $0.02 and $0.03, respectively, and there would have been no effect on net cash flows.

Others

The following revised standards are also effective January 1, 2023, but did not have a significant impact on the parent company only financial statements:

Amendments to IAS 1 – “Disclosure of Accounting Policies”
Amendments to IAS 8 – “Definition of Accounting Estimates”

In addition, effective May 23, 2023, the Company adopted the amendments to IAS 12, "International Tax Reform - Pillar Two Model Rules", which provide a temporary mandatory exemption and applies retrospectively to the accounting for deferred income taxes related to supplemental taxes and newly disclose Pillar II income tax risk information from the annual reporting period which began from January 1, 2023. However, as of December 31, 2022, no country where the Company operates has enacted or substantively enacted legislation related to supplemental tax, and no related deferred income tax has been recognized; therefore, the retroactive application of the amendment had no impact on the parent company only financial statements. The Company is closely monitoring the progress of the legislation on the introduction of the global minimum tax in each of the jurisdictions in which the Company operates and will disclose the mandatory exemption and the new disclosure requirements in the 2023 parent company only financial statements. Please refer to Note VI (18) Income Tax for more details.

(2) Effects of new and revised standards and interpretation has been approved by FSC but not yet being adopted

The Company assessed that the application of the following newly revised IFRSs, effective January 1, 2024, would not have a material impact on the parent company only financial statements.

‧Amendments to IAS 1, “Classification of Liabilities as Current or Non-current”

‧Amendments to IAS 1, “Non-current Liabilities with Covenants”

‧Amendments to IAS 7 and IFRS 7, “Supplier Finance Arrangements”

‧Amendments to IFRS 16, “Lease Liability in a Sale and Leaseback”

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Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) New and revised standards and interpretations not yet recognized by the FSC

The Company does not expect the following newly issued and amended standards, which have not yet been endorsed, to have a material impact on the parent company only financial statements.

‧Amendments to IFRS 10 and IAS 28, “Disposal of or Contribution to Assets between an Investor and its Affiliate or Joint Venture”.

‧Amendments to IFRS 17, “Insurance Contracts” and IFRS 17

‧Amendments to IFRS 17, "First-time Application of IFRS 17 and IFRS 9 Comparative Information"

‧Amendments to IAS 21, “Lack of Exchangeability”

IV. Summary of Major Accounting Policies

The major accounting policies adopted in this Financial Statement are summarized as follows. Unless otherwise noted, the following accounting policies have been applicable for all presentation period of the Parent Company Only Financial Statement.

(1) Compliance statement

The Parent Company Only Financial Statement was compiled in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers.

(2) Compiling Basis

Measurement foundation

Except the major items in the following balance sheet, the Parent Company Only Financial Statement was compiled based on the historical costs:

(1) Financial assets at fair value through profit or loss measured with fair value.

(2) Financial assets measured at fair value through other comprehensive income.
(3) Liabilities for cash-settled share-based benefit agreements that are measured at fair value.
(4) Net defined benefit liability (or asset) is measured according to the fair value of the retirement fund assets deducting present value of the defined benefit obligation and the ceiling influence value listed in Footnotes IV (17).
Functional Currency and Presentation Currency

Each party of the Company takes the currency of major economic environment where its operation is located as its functional currency. The Parent Company Only Financial Statement is presented in the functional currency of the Company, TWD. All of the financial information expressed herein in TWD is of one thousand per unit.

~14~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) Foreign currency

1. Foreign currency trading

Foreign currency is converted into functional currency according to exchange rate on the date of transaction. At the end of each subsequent reporting period (the “Reporting Date”), foreign currency monetary items are translated into functional currency at the exchange rate prevailing on that date. Non-monetary items measured at fair value in foreign currencies are translated into functional currencies using the exchange rates prevailing at the date of fair value measurement, while non-monetary items measured at historical cost in foreign currencies are translated at the exchange rates prevailing at the dates of the transactions.

The foreign currency exchange difference resulting from the conversion is recognized to be other comprehensive Income excepting for the following situations, otherwise, recognized to be gains and losses:

(1) Equity instruments designated as measured at fair value through other comprehensive income.

(2) Financial liabilities designated as a net investment hedge for a foreign operating entity are within the effective range of the hedge; or

(3) Eligible cash flow hedges are within the effective range of the hedge.

2. Foreign Operating Organizations

The assets and liabilities of foreign operating organizations, including the business reputation and fair value adjustment during the acquisition, are converted to be NTD according to exchange rate on the report day; gains and losses are converted into NTD according to exchange rate in the current period, and the resultant conversion difference is recognized to be other comprehensive Income.

In case of the loss of control, joint control or material influences arising from the punishment on foreign operating organizations, the accumulated conversion differences related to the foreign operating organizations shall be fully reclassified as gains and losses. In case of affiliated company or joint ventures of foreign operating organizations involved in some of the punishment, related accumulated conversion differences shall be fully reclassified as gains and losses in proportion.

As to the receivable and payable monetary items of foreign operating organizations, if without the repayment plan or the possibility of repayment in foreseeable future, the resultant gains and losses from foreign currency conversion shall be regarded as a part of net investments to the foreign operating organizations as recognized as other comprehensive income.

~15~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(4) Standards for classifying current and non-current assets and liabilities

Assets meeting one of the following conditions are recognized to be current assets, and

other assets not belonging to current assets are recognized to be non-current assets:

Those that are expected to be realized during the normal operating period or intended to be sold or consumed.
Those held mainly for the purpose of transaction.
Those expected to be realized within 12 months after the reporting period.
The asset is cash or cash equivalents, unless the asset is otherwise restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

The liabilities meeting any one of the following conditions are current liabilities, and other liabilities not belonging to current liabilities are recognized to be non-current liabilities:

Those expected to be paid off during the normal operating period.
Those held mainly for the purpose of transaction.
Those expected to be paid off within 12 months after the reporting period.
Liabilities that do not have an unconditional right to extend the maturity period to at least 12 months after the reporting period. The terms of the liability may, at the option of the counterparty, not affect its classification if the issuance of equity instruments results in its settlement.

(5) Cash and cash equivalents

Cash includes cash on hand and demand deposits. Cash equivalents are the investments which are allowed to be converted into normed cash with few value change risks and short-term high flowability. Certificate of deposit which satisfy the foregoing definition and with the holding purpose of meeting the short-term cash pledges rather than investment or others shall be recognized as cash equivalents.

(6) Financial instrument

Accounts receivable and the original debt securities issued are recognized when they are incurred. All other financial assets and financial liabilities were originally recognized when the company became a party to the terms of the financial instrument agreement. Financial assets that are not measured at fair value through profit or loss (except accounts receivable, which do not contain a significant financial component) or financial liabilities are measured at fair value plus the transaction cost directly attributable to the acquisition or issue. Accounts receivable, which do not contain significant financial components, are originally measured at transaction prices.

1. Financial assets

The purchase or sale of financial assets by a conventional trader, the company shall treat all purchases and sales of financial assets classified in the same manner in accordance with the transaction date or the settlement date.

~16~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

At the time of the original recognition, financial assets were classified as: financial assets measured at amortized cost, debt instrument investments measured at fair value through other comprehensive income, equity instrument investments measured at fair value through other comprehensive income, or financial assets measured at fair value through gains and losses.

The company will only change its business model for managing financial assets from the first day of the next reporting period to classify all affected financial assets.

(1) Financial assets measured at amortized cost

Financial assets are measured at post-amortized cost when they simultaneously meet the following conditions and are not specified to be measured at fair value through profit or loss:

‧The financial asset is held under a business model for the purpose of collecting contractual cash flow.

‧The cash flow generated by the terms of the contract on the financial asset at the specified date is solely for the payment of the principal and the interest on the outstanding principal amount.

The cumulative amortization of such assets is subsequently calculated by the effective interest method plus or minus the original amount recognized, and the amortized cost of any loss allowance is adjusted. Interest income, foreign exchange gains and losses and impairment losses are recognized as gains and losses. When derecognized, the profit or loss shall be included in the profit or loss.

(2)Financial assets measured at FVTOCI

When the debt instrument investment simultaneously meets the following conditions and is not specified to be measured at fair value through profit and loss, it is measured at fair value through other consolidated profit and loss:

‧The financial asset is held under a business model for the purpose of collecting contractual cash flow and selling.

‧The cash flow generated by the terms of the contract on the financial asset at the specified date is solely for the payment of the principal and the interest on the outstanding principal amount.

The company may, at the time of its original recognition, irrevocably choose to report the subsequent changes in the fair value of its non-tradable equity instrument investments to other consolidated profits and losses. The foregoing selection is made on an item-by-item tool basis.

~17~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Debt instrument investors are measured by fair value afterwards. Interest income, foreign exchange gains and losses and impairment losses calculated by the effective interest method are recognized as gains and losses, while the remaining net gains or losses are recognized as other comprehensive income. When discounting, the accumulated amount of other comprehensive income shall be reclassified into comprehensive income.

Equity instrument investors are measured by fair value afterwards. Dividend income (unless it clearly represents the recovery of a portion of the investment cost) is recognized as a profit or loss. The remaining net benefits or losses are recognized as other comprehensive income and are not reclassified into gains and losses.

Dividend income from equity investments is recognized on the date (usually ex-dividend date) when the consolidated company becomes entitled to receive dividends.

(3) Financial assets measured at FVTPL

Financial assets not measured at amortized cost or through other comprehensive income at fair value (e.g., financial assets held for trading and managed on a fair value basis for performance evaluation) are measured at fair value through profit or loss, including derivative financial assets. The company may, at the time of its original recognition, irrevocably designate financial assets that meet the criteria of measuring at fair value according to the amortized cost or through other comprehensive income as financial assets measured at fair value through gains and losses in order to eliminate or substantially reduce improper accounting matching.

Such assets are subsequently measured at fair value and their net gains or losses (including any dividends and interest income) are recognized as gains or losses.

(4) Business model evaluation

The purpose of the company is to assess the business model of holding financial assets at a portfolio level, which best reflects the way of operation and management and the way of providing information to management. The following information is considered:

The portfolio policies and objectives described and the operation of such policies. Including whether the management’s strategy is to focus on earning contractual cash flow, maintaining a certain portfolio of interest rates, matching the duration of financial assets with the duration of the relevant liabilities or anticipated cash outflows, or achieving cash flow through the sale of financial assets.
Performance of the business model and how the financial assets held under the business model are evaluated and reported to the principal managers of the business.

~18~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Risks that affect the performance of the business model (and the financial assets held under the business model) and the manner in which such risks are managed.
The frequency, amount and timeliness of previous sales of financial assets, the reasons for such sales and the expectation of future sales.

The transfer of a financial asset to a third party for the above business purposes that does not meet the exclusion criteria is not a sale as described above, consistent with the purpose for which the merged company continues to recognize the asset.

(5) Evaluate whether the cash flow of the contract is fully the interest on the payment of the principal and the amount of outstanding principal

For evaluation purposes, the principal is the fair value of the financial asset at the time of its original recognition, and the interest is made up of the following considerations: the time value of money, the credit risk associated with the amount of outstanding principal in circulation during a particular period, and other basic lending risks and costs and profit margins.

To evaluate whether the contract cash flow is fully interest on the principal and the outstanding principal amount, the company considers the terms of the financial instrument contract, including whether the financial asset contains a contract term that can change the point or amount of the cash flow of the contract, causing it to fail to meet this condition. In the evaluation, the consolidated company considers:

Any contingencies that change the timeliness or amount of the cash flow of the contract;
The terms of the coupon rate may be adjusted, including the nature of the variable rate;
The nature of prepayment and extension; and
Claims of the consolidated company are limited to cash flow terms derived from specific assets (e.g. non-recourse nature).
(6) Impairment of financial assets

For the financial assets measured at the amortized cost after (including cash and about when cash, notes receivable, accounts receivable, other receivables, refundable deposit, and other financial assets, etc.), through the other comprehensive income measured at fair value, the debt instruments of investment assets and contract of expected loss, the company recognizes the allowance for credit losses.

The following financial assets are measured against losses according to the expected credit loss amount of 12 months, and the rest are measured according to the expected credit loss amount of the existing period:

Determine that the credit risk of the debt securities at the reporting date is low; and

~19~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The credit risk of other debt securities and bank deposits (i.e. the risk of default during the expected life of financial instruments) has not increased significantly since the original recognition.

The loss allowance for accounts receivable and contract assets is measured in terms of the expected credit loss during the period of existence.

In determining whether credit risk has increased significantly since the initial recognition, the consolidated company considers reasonable and verifiable information (available at no excessive cost or investment), including qualitative and quantitative information, as well as analysis based on the Company’s historical experiences, credit assessment and forward-looking information.

The consolidated company shall be deemed to be in default of the financial asset if the debtor of the contract payment is unlikely to meet his credit obligations to make the full payment to the consolidated company.

Expected credit loss during the life of a financial instrument refers to the expected credit loss arising from all possible defaults during the life of the financial instrument.

Twelve-month expected credit loss refers to the expected credit loss arising from the possible default of the financial instrument within twelve months after the date of the report (or a shorter period, if the expected duration of the financial instrument is shorter than twelve months).

The longest contract period during which the expected credit loss is measured is the longest contract period during which the company is exposed to credit risk.

The expected credit loss is the probabilistic weighted estimate of the credit loss during the expected life of the financial instrument. Credit losses are measured in terms of the present value of all cash shortfalls, the difference between the cash flows that the company can collect under the contract and the cash flows that the company expects to collect. The expected credit loss is discounted at the effective interest rate of the financial asset.

On each reporting date, the company evaluates whether there is a credit impairment in the debt securities on which financial assets are measured at after-amortized cost and on which fair value is measured through other comprehensive income. When one or more events have occurred that adversely affect the estimated future cash flow of a financial asset, the financial asset has suffered a credit impairment. Evidence of credit impairment of financial assets includes observable information relating to:

Major financial difficulties of the borrower or issuer;
Default, such as delay or delay beyond a specified period;

~20~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

For economic or contractual reasons related to the borrower’s financial difficulties, the merged company gives the borrower concessions that the borrower would not have considered;
The borrower is likely to file for bankruptcy or other financial restructuring; or
The active market for the financial asset disappears due to financial difficulties.
The loss allowance for a financial asset measured at its amortized cost is deducted
from the carrying amount of the asset. The allowance for losses on debt instrument investments is measured at fair value through other comprehensive income. It is adjusted and recognized as other comprehensive income (without reducing the carrying amount of the assets).

When the company cannot reasonably expect to recover the financial assets as a whole or in part, it will directly reduce the total book amount of its financial assets. For the company, the company shall analyze the date and amount of the write-off on the basis of whether it is reasonable to expect recovery. The company does not expect a significant reversal of the write-off. However, financial assets that have been written off may still be enforced to comply with the procedures of the consolidated company for recovering overdue amounts.

(7) Financial assets derecognition

When the Company terminates the contractual rights from the cash flow of such assets or has transferred the financial assets and almost all risks and returns of the asset ownership have been transferred to other enterprises, the financial assets shall be derecognized.

Transactions in which the Company enters into transfers of financial assets that retain all or substantially all of the risks and rewards of ownership of the transferred assets continue to be recognized on the balance sheet.

Financial liabilities and equity instruments
(1) Classification of liabilities or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity based on the substance of the contractual agreements and the definitions of financial liabilities and equity instruments.

(2) Equity transactions

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the amount of the consideration received less direct issue costs.

~21~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) Compound financial instruments

The number of shares issued does not vary with the change in fair value of the compound financial instruments, which are convertible bonds (denominated in New Taiwan dollars) that the holders have the option to convert to equity.

The original recognition amount of the liability component of a compound financial instrument is measured at the fair value of a similar liability excluding the equity conversion rights. The original recognition amount of the equity component is measured as the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to the carrying amounts of the original liability and equity.

After initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not remeasured after initial recognition.

Interest related to financial liabilities is recognized as profit or loss. Financial liabilities are reclassified to equity upon conversion, and no gain or loss is recognized upon conversion.

(4) Financial liabilities

Financial liabilities are classified as amortized costs or measured at fair value through profit or loss. Financial liabilities which are held for trading, derivatives or specified at the time of their original recognition are classified as being measured at fair value through profit or loss. Financial liabilities, measured at fair value through profit and loss, are measured at fair value, and the associated net benefits and losses, including any interest expense, are recognized as profit and loss.

The effective subsequent interest method for other financial liabilities is measured at the amortized cost. Interest expenses and exchange gains and losses are recognized as gains and losses. Any benefit or loss at the time of discounting is also considered as profit or loss.

(5) Derecognition of financial liabilities

The Company derecognizes financial liabilities when contractual obligations have been fulfilled, cancelled or matured. When the terms of a financial liability are modified and the cash flows of the modified liability differ materially, the original financial liability is derecognized and a new financial liability is recognized at fair value based on the modified terms.

~22~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

When derecognizing financial liabilities, the difference between carrying amount and the sum of paid or payable considerations (including any transferred non-cash capital or assumed liabilities) shall be recognized as gains and losses.

(6) Offset between financial assets and liabilities

Financial assets and financial liabilities can be offset with each other and represented on the balance sheet with net value only when the Company has legal rights to offset and has the intention to deliver with net value as well as realize capital and liquidate the liabilities.

3. Derivative financial instruments

The Company holds derivative financial instruments to avoid foreign currency and interest rate risks. Embedded derivatives are separated from the main contract when specific conditions are met and the main contract is not a financial asset.

Derivative instruments are initially recognized at fair value and subsequently measured at fair value, and the resulting gain or loss is recognized directly in profit or loss.

(7) Inventory

Inventory shall be measured with the lower of the costs and net realizable value. The costs include the acquisition, production and processing costs enabling them to arrive at the available places and status and other costs, which are calculated according to the standard cost method, and priced at cost transferring according to weighted mean method. The costs of the inventory of finished products and products in process include the manufacturing costs amortized based on normal production capacity according to proper percentage.

Net realizable value refers to the estimated prices under normal operation deducting estimated costs to be needed for estimated completion and estimated costs to be needed for completing selling.

(8) Investments in Associates

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

The Company accounts for its interests in associates using the equity method. Under the equity method, the investment is initially recognized at cost, including the cost of the transaction. The carrying amount of the investment in associates includes goodwill identified at the time of the initial investment, less any accumulated impairment losses.

The parent company only financial reports include the Company's share of the profits or losses and other comprehensive income of the associates, from the date of significant influence until the date when significant influence is lost, after adjustments consistent with the Company’s accounting policies. When an associate undergoes an equity transaction affecting comprehensive income and other comprehensive income that does not affect the Company’s ownership percentage, the Company recognizes any changes in equity

~23~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

proportionately as capital reserves.

Unrealized gains and losses arising from transactions between the Company and its associates are recognized in the financial statements only to the extent unrelated to the investor's interest in the associates. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, recognition of further losses is stopped unless there is a legal or constructive obligation or payments have been made on behalf of the investee.

When an associate issues new shares and the Company does not subscribe proportionately, causing a change in its ownership percentage and thus changing the net equity value of the investment, such changes are adjusted against capital reserves for equity method investments. If this adjustment reduces the capital reserves and the remaining balance of capital reserves from equity method investments is insufficient, the difference is charged against retained earnings. However, if the Company’s ownership interest in the associate decreases without subscribing proportionately, previously recognized amounts related to the associate in other comprehensive income are reclassified proportionally, based on the same basis as if the associate had directly disposed of related assets or liabilities.

(9) Investing subsidiary

In preparing parent company only financial statements, the Company applies the equity method to investees over which it has control. Under the equity method, the share of current profit or loss and other comprehensive income of the parent company only financial report is the same as the share of current profit or loss and other comprehensive income attributable to the owners of the parent in the financial statements prepared on a consolidated basis, and the interest of the owners of the parent company only financial report is the same as the interest attributable to the owners of the parent in the financial statements prepared on a consolidated basis.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are treated as equity transactions with owners.

(10) Investment property

Investment real estate means real property held for the purpose of earning rent or asset appreciation, or both, rather than for the purpose of production, provision of goods or services, or for administrative purposes. Investment real estate is originally measured by cost, and later measured by cost minus accumulated depreciation and accumulated impairment. The depreciation method, durable life and residual value shall be treated in accordance with the provisions of real estate, plant and equipment.

The disposal interest or loss of the investment real estate (calculated at the difference between the net disposal price and the account amount of the project) shall be recognized as the profit or loss.

~24~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The rental income of investment real estate is recognized as other income in the straight-line method during the lease term. The incentive to lease is recognized as part of the rental income during the lease term.

(11) Property, plant and equipment
Recognition and measurement

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

Significant components of property, plant and equipment are treated as separate items (major components) when they have different life cycles.

Gain or loss on disposal of property, plant and equipment is recognized in profit or loss.

2. Subsequent costs

Subsequent expenses are capitalized only when it is probable that future economic benefits will flow into the Company.

Depreciation

Depreciation is calculated based on the cost of the asset less its residual value and is recognized in profit or loss using the straight-line method over the estimated useful life of each component.

The land is not subject to depreciation.

The estimated useful lives for the current and comparative periods are as follows:

(1) Buildings 20-40 years
(2) Machinery 3-10 years
(3) Other equipment 2-10 years

The Company reviews the method of depreciation, durability and residual value at each reporting date and makes appropriate adjustment as necessary.

Reclassification to investment real estate

When real property for own use is reclassified to investment property, the real property is reclassified to investment property based on its carrying amount at the time of change of use.

(12) Leasing

The company shall assess whether the contract is a lease or includes a lease on the date of formation of the contract. If the contract transfers control over the use of the identified assets for a period of time in exchange for consideration, the contract shall be a lease or includes a lease.

~25~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

1. The lessee

The company recognize the right-of-use assets and lease liabilities on the beginning date of the lease. Right-of-use assets are originally measured in terms of cost, which includes the original measured amount of lease liabilities, adjusts the lease beginning date or before payment of any rent payment, and the initial direct costs, and applied to removing the asset and restoring its location or the estimated cost of the underlying assets. It minuses the charge of any lease incentives at the same time.

Depreciation of right-of-use assets following the commencement of the lease shall be carried out by the straight-line method at the end of the useful life of right-of-use assets or earlier at the end of the lease term. In addition, the company will periodically evaluate whether there is any loss of right-of-use assets and deal with any loss that has occurred, and adjust the right-of-use assets in the case of lease liabilities.

Lease liabilities are defined as the present value of lease benefits not yet paid at lease commencement date. If the implied lease rate is easy to determine, the discount rate will be that rate, and if not, the incremental borrowing rate of the Company will be used. Generally speaking, the consolidated company adopts its incremental borrowing rate as the discount rate.

Lease benefits measured in Lease liabilities include:

(1) fixed payments, including substantive fixed payments;
(2) depending on the variation of a certain index or rate of rent payment, the index or rate on the commencement date of the lease shall be used as the original measurement;
(3) the guaranteed amount of salvage value expected to be paid; and
(4) the price at which the option to exercise the option to purchase or terminate the lease will be reasonably determined or the penalty to be paid.

Lease liabilities is then calculated using effective interest method, and the amount was measured when:

(1) changes in the index or rate used to determine lease payments result in changes in future lease payments;
(2) the guaranteed amount of the residual value expected to be paid has changed;
(3) the evaluation of the underlying asset purchase option has changed;
(4) the estimate of whether to exercise the option of extension or termination has changed, which leads to the change of the assessment of the lease period;
(5) modification of the subject matter, scope or other terms of the lease.

~26~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Lease liabilities are remeasured due to the aforementioned changes in the index or rate used to determine lease payments, changes in the residual value guarantee amount, and changes in the evaluation of purchases, extensions or termination options, the book value of right-of-use assets should be adjusted accordingly. When the book value of right-of-use assets is reduced to zero, the remaining re-measured amount is recognized in profit or loss.

For the tease modifications about the reduced coverage, the book amount of right-of-use assets will be reduced to reflect partial or total termination of Lease, and the difference between Lease assets and Lease assets will be included in the profit and loss.

The company will express the right-of-use assets and lease liabilities that do not conform to the definition of investment real estate in the form of single line items in the balance sheet.

In relation to short-term leases and leases of low-value assets, the Company has chosen not to recognize right-of-use assets and lease liabilities, but rather to recognize lease payments on a straight-line basis as an expense during the lease term. 2. The lessor

The transaction in which the company is a lessor shall be classified as a financial lease or an operating lease on the date of establishment of the lease, depending on whether or not the lease contract is transferred to almost all the risks and rewards attached to the ownership of the underlying asset. In the evaluation, the consolidated company shall consider certain indicators, including whether the lease term covers the principal part of the underlying asset’s economic life.

If the company is a sublease lessor, it will handle the master lease and the sublease transaction respectively and evaluate the sublease transaction classification based on the right-of-use assets generated from the master lease. If the principal lease is a short-term lease and a recognition waiver is applicable, the sublease transaction shall be classified as an operating lease.

(13) Intangible assets

1. Recognition and measurement

Computer software acquired by the Company is measured at cost less accumulated amortization and accumulated impairment.

2. Subsequent expenditure

The subsequent expenditure can be capitalized only when they can increase the future economic benefits of relevant specific assets, and all of other expenditures are recognized as gains and losses when they occur, including the expenses for developing reputation and brand establishing.

~27~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

3. Amortization

Amortization is calculated based on the cost of the asset less its estimated residual value and is recognized in profit or loss using the straight-line method over the estimated useful lives of the Intangible assets, from one to five years from the time the assets reach a ready-for-use condition.

The Company reviews the amortization method, useful life and residual value of Intangible assets at each reporting date and makes appropriate adjustments as necessary. (14) Non-financial asset impairment

At each reporting date, the Company assesses whether there is any indication that the carrying amount of non-financial assets (other than inventories, deferred income tax assets) may be impaired. If any indication exists, the recoverable amount of the asset is estimated.

For the purpose of impairment testing, cash inflows that are largely independent of other individual assets or groups of assets are treated as the smallest identifiable group of assets.

The recoverable amount is the higher of the fair value less costs to dispose of the individual asset or cash-generating unit or its value in use. If the recoverable amount of an individual asset or cash-generating unit is less than its carrying amount, an impairment loss is recognized. An impairment loss is recognized immediately in profit or loss and is reduced first by the carrying amount of goodwill amortized on the cash-generating unit and then by the carrying amount of each other asset in the unit in proportion to its carrying amount.

Non-financial assets other than goodwill are reversed only to the extent that they do not exceed the carrying amount (net of depreciation or amortization) that would have been determined had no impairment loss been recognized for the asset in prior years. (15) Provision for liabilities

Provisions are recognized as present obligations due to past events that make it probable that the Company will need to expend economically efficient resources in the future to settle the obligation and the amount of the obligation can be reliably estimated.

The amount recognized in Provisions takes into account the risks and uncertainties of the obligation and is the best estimate of the payments required to settle the obligation at the end of the reporting period. If Provisions is measured at the estimated cash flows to settle this realistic obligation, the carrying amount is the present value of those cash flows.

(16) Income recognition

Revenue from customer contracts

Income is measured in consideration for the expected entitlement to transfer goods or services. The company recognizes revenue from the transfer of control of goods or services to the customer in order to meet its performance obligations.

~28~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The company manufactures electronic components and sells them to manufacturers in the electronics industry. The company recognizes revenue at the time of the transfer of control over the products. Control transfer of the product means that the product has been delivered to the customer and the customer can fully determine the sales channel and price of the product, and there is no failure to fulfill obligations that would affect the customer’s acceptance of the product. Delivery occurs when the product is shipped to a specific location, the risk of obsolescence and loss has been transferred to the customer, the customer has accepted the product in accordance with the sales contract, the acceptance terms have expired, or the consolidated company has objective evidence that all acceptance conditions have been met.

The consolidated company recognizes revenue on the basis of the net amount of the estimated discount deducted from the contract price, the amount of which is estimated based on past experiences, and only to the extent that there is a high probability that no significant turnaround will occur. As of the date of the report, the sales will expect to pay the customer for the discount, which is refunded as refund liabilities. The average credit period of sales is one hundred twenty days to one hundred fifty days, which is consistent with the practice of the same trade, so no financing elements are included.

The company shall recognize accounts receivable at the time of delivery of the goods, as the consolidated company shall have the right to receive unconditional consideration at that time.

The time between the transfer of goods or services from all customer contracts to the customer and the time between the customer’s payment for the goods or services is expected to be no more than one year, so the company does not adjust the time currency value of the transaction price.

(17) Employee benefits

1. Defined contribution plan

The obligation for contributions under the defined contribution plan is recognized as an expense during the period in which the employees provide services.

2. Defined benefit plan

The Company’s net obligation to a defined benefit plan is measured by discounting the present value of future benefits earned by the employee’s current or prior period of service, less the fair value of the plan assets.

The defined benefit obligation is actuated annually by a qualified actuary using the projected unit benefit method. When the results of the calculation are probable to be favorable to the Company, an asset is recognized to the extent of the present value of any economic benefits that may be obtained by returning a contribution from the plan or reducing future contributions to the plan. Any minimum funding requirement is taken into account in calculating the present value of economic benefits.

~29~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The remeasurement of the net defined benefit obligation, including actuarial gains and losses, compensation for plan assets (excluding interest), and any change in the impact of asset limits (excluding interest) is recognized immediately in other comprehensive income and accumulated in retained earnings. The Company determines net interest expense (income) for net defined benefit liabilities (assets) using the net defined benefit liabilities (assets) and discount rate determined at the beginning of the annual reporting period. Net interest expense and other costs for defined benefit plans are recognized in profit or loss.

When a plan is revised or curtailed, changes in benefits related to prior period service costs or curtailment gains or losses are recognized immediately in profit or loss. The Company recognizes gain or loss on the settlement of defined benefit plans when settlement occurs.

3. Short-term employee benefits

Short-term employee benefit obligations are recognized as an expense when services are provided. If the Company has a present legal or constructive obligation to pay for services rendered by employees in the past and the obligation can be estimated reliably, the amount is recognized as a liability.

(18) Share-based payment transactions

Equity-settled share-based payment agreements recognize an expense and increase relative equity over the vesting period of the award at the grant date fair value. The expense recognized is adjusted for the number of awards that are expected to qualify for the service condition and the non-market vesting condition, and the final amount recognized is measured based on the number of awards that qualify for the service condition and the non-market vesting condition on the vesting date.

The non-vested conditions regarding share-based payment awards are reflected in the measurement of the fair value of the share-based payment awards at the date of grant and no adjustment is required to be made to verify the difference between the expected and actual results.

The fair value amount of the share appreciation rights payable to employees for cash settlement is recognized as an expense and an increase in the relative liability in the period in which the employees reach the point where they can receive unconditional compensation. The liability is remeasured at the fair value of the share appreciation rights at each reporting date and settlement date, and any change is recognized in profit or loss.

(19) Income tax

Income taxes include current and deferred income tax asset. Except those related to enterprise consolidation and items directly recognized as equities or other comprehensive income, Current tax and deferred income tax asset shall be recognized as gains and losses.

~30~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Current taxes include expected payable income taxes or receivable tax rebates of the annual taxation (losses) calculated according to the legal tax rate or substantial legal tax rate on the report day, and any unappropriated retained earnings plus 10% income tax recognized as tax expense in the shareholders meeting resolution year calculated according to the adjustments to the payable income taxes in the previous year and the provisions of income tax laws.

Deferred income tax is recognized for temporary differences between the carrying amounts of assets and liabilities at the reporting date and their tax bases. Deferred income tax is not recognized for the following temporary differences:

Temporary differences arising from the initial recognition of assets or liabilities in transactions that are not business combinations and, at the time of the transaction, (i) do not affect either accounting profit or taxable income (loss) and (ii) do not result in taxable and deductible temporary differences in equal amounts.
Those generated due to investment subsidiary company and joint equities and likely to not to be returned in the foreseeable future.
Original recognition of business reputation

Deferred income tax assets are recognized for unused tax losses and unused income tax credits in subsequent periods to the extent that it is probable that future taxable income will be available against which the temporary differences can be deducted. Deferred income tax assets are reassessed at each reporting date and reduced to the extent that it is not probable that the related income tax benefit will be realized, or to the extent that it becomes probable that sufficient taxable income will be available to allow the reversal of the original reduction.

Deferred income tax assets are measured according to the tax rate in the current period when the expected capital is realized or liabilities are liquidated and based on the legal tax rate or substantial legal tax rate on the report day.

Only when the Company shall meet the following conditions at the same time, can the deferred income tax assets and deferred tax liabilities offset with each other:

Having the legal execution right to make the current income tax assets and the current tax liabilities offset with each other: and
Deferred income tax assets and deferred tax liabilities are related to one of the subjects of tax payment from which the same tax authority levies income tax;
(1) Same subject of tax payment; or
(2) Different subjects of tax payment, but all subjects intend to liquidate the current tax liabilities and assets based on net amount or at the same time realize assets and liquidate liabilities in each of the future periods when deferred income tax assets of major amounts are expected to be recovered and deferred tax liabilities expected to be liquidated.

~31~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(20) Earnings per share

The Company lists the basic and diluted earnings per share of holders of common stock equity of the Company. The basic earnings per share of the Company shall be calculated with the gains and losses of the holders of common stock equity of the Company divided by the weighted mean of current outstanding common shares. Diluted earnings per share shall be calculated after adjusting the influence of all potential diluted common shares of the gains and losses of the holders of common stock equity of the Company and the weighted mean of current outstanding common shares. The potential diluted common shares of the Company include convertible corporate bonds and stock options for employees.

(21) Segmental information

The Company has disclosed segment information in the Consolidated Financial Statements and therefore parent company only financial statements do not disclose segment information.

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

Management is required to make judgments, estimates and assumptions in preparing this entity’s financial statements that will affect the adoption of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from estimates. The management authority continuously inspects the estimate and basic assumption, and accounting changes are recognized during the period of changes and the period of future to be influenced.

The following assumptions and estimates are subject to significant risks of material adjustments to the carrying amounts of assets and liabilities in the next financial year, and the related information is as follows:

Inventory evaluation

Since inventory must be measured at the lower of cost or net realizable value, the company estimates the reported amount of inventory due to normal wear and tear, obsolescence, or no market sale value daily and reduces the cost of inventory to net realizable value. The net realizable value of inventories may change significantly due to rapid changes in the industry and the introduction of new products. Please refer to Note VI (4) for the inventory assessment.

~32~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

VI. Descriptions for Important Accounting Items

(1) Cash and cash equivalents

Petty cash Checks and demand deposits Time deposits Cash and cash equivalents listed on the Statement	Dec. 31, 2023 $ 155 461,239 7,475,440 $ 7,936,834		Dec. 31, 2022 59 698,497 2,429,211 3,127,767

Disclosures of interest rate risks and sensitivity analysis on financial assets and liabilities of the Company are seen in Note VI (25).

(2) Financial assets

1. Financial assets measured at FVTPL

Financial assets mandatorily measured at FVTPL: Current: Non-derivative financial assets Over-the-counter company stocks Non-current Non-hedging derivatives Embedded derivatives—right of redemption Non-derivative financial assets Private equity funds Total	Dec. 31, 2023 $ 7,307 2,205 24,711	Dec. 31, 2022 16,531 - -
	$ 34,223	16,531

Please refer to Note VI (12) for the disclosure of embedded derivatives of the convertible bonds issued by the Company.

Please refer to Note VI (25) for the amount recognized in profit or loss based on fair value remeasurement.

2. Financial assets measured at FVTOCI

Equity instruments measured at fair value through other comprehensive income: Non-current: Domestic unlisted (or OTC) stocks—SteadyBeat Technology Corporation Domestic unlisted (or OTC) stocks—G-sau Co., Ltd Total	Dec. 31, 2023 $ 1,129 15	Dec. 31, 2022 4,426 169
	$ 1,144	4,595

~33~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The Company’s investments in these equity instruments are not held for trading purposes and have been designated as measured at FVTOCI.

The Company has no dividend income from equity instruments measured at FVTOCI as listed above for the year 2023 and 2022.

On February 20, 2023, December 29, 2023, and September 30, 2022, the Company adjusted its investment portfolio for asset allocation considerations to diversify risk, selling specified investments in SteadyBeat Technology Corporation measured at fair value through other comprehensive income. The fair values at the time of disposal were NT$4,889 thousand, NT$2,544 thousand, and NT$1,422 thousand, respectively, with accumulated gains or losses on disposal of NT$0 thousand.

For information on market risks, refer to note 6(25)5.

As of December 31, 2023, and December 31, 2022, there were no financial assets of the Company provided as collateral for pledges.

(3) Notes receivable, accounts receivable and other receivables

Notes receivable Accounts receivable Other receivables Less: provisions	Dec. 31, 2023 $ 1,383 5,877,903 57,445 4,862		Dec. 31, 2022 1,394 6,878,866 41,147 6,487 6,914,920
	$ 5,931,869

For changes in the allowance for doubtful accounts and notes receivable of the Company as of December 31, 2023, and December 31, 2022, please refer to note 6(25)1.(3) for a description of impairment losses.

(4) Inventory

for a description of impairment losses. nventory
Merchandises Finished goods Work in process Raw materials	Dec. 31, 2023 $ 598,399 1,946 3 17		Dec. 31, 2022 992,396 3,430 - 1 995,827
	$ 600,365

The Company’s inventory as of December 31, 2023 and 2022 including allowance for inventory losses are NT$125,716 thousand dollars and NT$98,280 thousand dollars respectively.

~34~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The Company recognized inventory-related expenses (gain) as follows:

Cost of goods sold Inventory valuation and disposal loss Total	2023 $ 11,213,296 40,413 $ 11,253,709	2022 13,109,580 36,076 13,145,656

As of December 31, 2023 and 2022, the Company’s inventories were not pledged as security.

(5) Investment accounted for using the equity method

The investments of the Company accounted for using the equity method are as follows:

Subsidiaries Associates	Dec. 31, 2023 $ 20,103,401 78,200	Dec. 31, 2022 16,943,782 -
	$ 20,181,601	16,943,782

1. Subsidiaries

Please refer to the consolidated financial statements for year 2023.

2. Associates

The Company uses the equity method for associates that individually are not significant. The aggregated financial information for these associates, which is included in the parent company only financial reports, is as follows:

Total book value of the Company’s interest in individually insignificant associates at the end of the period: Share attributable to the Company: Total comprehensive income (i.e., net profit (loss) from continuing operations for the period)	Dec. 31, 2023 $ 78,200	Dec. 31, 2022 -
	2023 $ (17,695)	2022 -

3. Guarantee

As of December 31, 2023 and 2022, the Company’s investments accounted for using the equity method did not provide security for the pledge.

~35~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(6) Property, plant and equipment

The changes in the cost, depreciation and impairment losses of the property, plant and equipment of the Company are as follows:

Land $ 249,650 - -	Buildings 55,866 - -	Machinery equipment 10,691 923 (1,447)	Other 55,346 3,548 (645)
$ 249,650	55,866	10,167	58,249
$ 28,250 - 221,400 -	32,438 - 23,428 -	11,920 - - (1,229)	51,455 4,654 - (763)
$ 249,650	55,866	10,691	55,346
$ - - -	23,358 1,384 -	10,513 174 (1,447)	41,132 5,695 (645)
$ -	24,742	9,240	46,182
$ - - - -	17,876 1,304 - 4,178	11,633 74 (1,194) -	36,200 5,656 (724) -
$ -	23,358	10,513	41,132
$ 249,650	31,124	927	12,067
$ 249,650	32,508	178	14,214

As of December 31, 2023, and December 31, 2022, property, plant and equipment were

used as collateral for loans and financing lines. Please refer to Note VIII for details.

(7) Right-of-use assets

The costs and depreciation of the leased buildings of the Company are as follows:

Cost of right-of-use assets: Balance on January 1, 2023 Addition Balance on December 31, 2023 Balance on January 1, 2022 Derecognition upon maturity Balance on December 31, 2022 Depreciation of right-of-use assets: Balance on January 1, 2023 Depreciation for the period Balance on December 31, 2023 Balance on January 1, 2022 Depreciation for the period Derecognition upon maturity Balance on December 31, 2022 Book value: December 31, 2023 December 31, 2022	Buildings $ - 118
	$ 118
	$ 118 (118)
	$ -
	$ - 59
	$ 59
	$ 59 59 (118)
	$ -
	$ 59
	$ -

~36~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(8) Investment property

The changes in the investment property of the Company are as follows:

Land $ 129,386	Buildings 102,244	Buildings 102,244	Total 231,630
$ 129,386	102,244		231,630
$ 260,576 90,210 (221,400)	46,348 79,324 (23,428)		306,924 169,534 (244,828)
$ 129,386	102,244		231,630
$ - -	5,589 4,654		5,589 4,654
$ -	10,243		10,243
$ - - -	6,668 3,099 (4,178)		6,668 3,099 (4,178)
$ -	5,589		5,589
$ 129,386	92,001		221,387
$ 129,386	96,655		226,041
		$ 236,930
		$ 233,945

As of December 31, 2023, and 2022, for details of investment properties serving as collateral for borrowings and financing, please refer to note VIII.

(9) Intangible assets

The changes in the cost and amortization of the intangible assets of the Company are as follows:

$	Computer software 111,084 514	Other 600 -

$	111,598	600
$	111,084	600
$	111,084	600
$	51,789 22,062	- -
$	73,851	-
$	29,150 22,639	- -
$	51,789	-
$	37,747	600
$	59,295	600

~37~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(10) Short-term loans

The details of the Company’s short-term loans are as follows:

Unsecured bank loan Unused line of credit Interest rate range	Dec. 31, 2023 $ 1,580,000	Dec. 31, 2023 $ 1,580,000	Dec. 31, 2022 1,830,000 1,922,010 1.55%~1.80%
	$ 2,167,625
		1.80%~1.90%

For information on the Company’s interest rate and foreign currency risk, please refer to Note VI (25). In addition, please refer to Note VIII for the Company’s pledge of assets for short-term loans and Note IX for the Company’s guarantee notes for bank loans and financing lines.

(11) Long-term loans

The details of the Company's long-term loans are as follows:

Bank loan—Secured loan (due in May 2037) Less: Portion due within a year Total Unused limit Interest rate range	Dec. 31, 2023 $ - - $ - $ - -	Dec. 31, 2022 126,175 8,361 117,814 - 1.75%

Please refer to Note VIII for details of the Company's collateralization of assets for bank loans.

(12) Bonds payable

Information on the Company’s issuance of unsecured convertible bonds is as follows:

Total amount of convertible bonds issued Cumulative amount redeemed Cumulative amount converted Unamortized balance of discount on bonds payable Balance of bonds payable at the end of the period Embedded derivatives—right of redemption (reported as financial assets measured at FVTPL) Equity component - conversion rights (reported as capital reserves - stock options) Embedded derivatives—Redemption benefits (losses) (reported as other gains and losses) Interest expense	Dec. 31, 2023 $ 1,000,000 - (118,100) (31,653) $ 850,247 $ 2,205 $ 114,556 2023 $ 1,300 $ 12,928	Dec. 31, 2022 1,000,000 (2,800) (997,200) - - - - 2022 (576) 6,795

~38~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The Company's first domestic unsecured convertible bonds
(1) Issuance details

On August 19, 2021, the Company issued 10,000 domestic first three-year unsecured convertible bonds with a coupon rate of 0%, which are repayable in cash at par on maturity.

The conversion price was set at $563.2 per share at the time of issuance, and the conversion price will be adjusted according to the formula specified in the terms of the issuance if the conversion price of the Company’s common shares is adjusted in accordance with the terms of the issuance. The conversion price on December 31, 2022 was $535. There is no reset clause for the bonds.

The Company redeems the outstanding bonds at par value in cash if one of the following conditions is met:

A. If the closing price of the Company’s common stock on the Taiwan Stock Exchange exceeds the conversion price of the Bonds by more than 30% for 30 consecutive business days from the day after the third month of the issuance of the Bonds to the 40th day before the expiration of the issuance period.
B. The outstanding balance of the bonds is less than 10% of the original issue amount from the day after the third month of issuance to the 40th day before the expiration of the issuance period.
(2) Conversion details

In 2022, bondholders have requested the conversion of 9,333 of the Company's first three-year unsecured convertible corporate bonds, respectively. The book amount at the time of conversion totals NT$915,969,000. The net change in capital surplus generated by the bond conversion during the current period is NT$895,831,000. Also, the share capital generated by the bond conversion is NT$17,352,000. Please refer to note VI (19) for details on the share conversion.

(3) Repurchase details

The Company repurchased 28 of its first convertible corporate bonds in 2022 for a total of NT$2,800,000. The book value of the bonds at the time of repurchase was NT$2,753,000. The net gain from the bond repurchase recognized in 2022 was NT$35,000, which is included in other gains and losses. The original capital surplus recognized from the initial issue of share options was transferred to the capital surplus of treasury shares transaction, amounting to NT$423,000. Furthermore, the Company exercised its redemption right and terminated over-the-counter trading on December 9, 2022.

~39~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The Company's second domestic unsecured convertible bonds
(1) Issuance Details

On March 9, 2023, the Company issued 10,000 zero percent coupon, three-year unsecured convertible bonds, which will be repaid at maturity in cash based on the face value of the bonds.

The conversion price was initially set at NT$862.1 per share at issuance. If any adjustments to the conversion price occur according to the terms provided in the issuance related to the Company’s common shares, the conversion price is adjusted accordingly. As of December 31, 2023, the conversion price was NT$829.9. These bonds do not have reset clauses.

The right to redeem the bonds for cash at face value applies if one of the following conditions is met:

A. From the day after three months following the issuance until forty days before the end of the issuance period, if the closing price of the Company's common stock on the Taiwan Stock Exchange exceeds the conversion price of the bonds by at least 30% for thirty consecutive trading days.
B. From the day after three months following the issuance until forty days before the end of the issuance period, if the outstanding balance of the bonds is less than 10% of the original total amount issued.
(2) Conversion Details

During the year 2023, bondholders requested the conversion of 1,181 of the Company's second three-year unsecured convertible bonds. The total book value at the time of conversion was NT$113,861 thousand. The net change in capital reserves resulting from these conversions was NT$112,143 thousand, and an additional NT$1,423 thousand was generated in paid-in capital due to these conversions. For details on the conversion of share capital, please refer to note 6(19).

(13) Lease liabilities

The carrying amounts of the Company’s lease liabilities are as follows:

Current	Dec. 31, 2023 $ 59	Dec. 31, 2022 -

Please refer to Note VI (25) for the maturity analysis.

The amounts recognized in the profit and loss are as follows:

Interest expense for lease liabilities Short-term lease expense	2023 $ 1	2022 1
	$ -	47

~40~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The amounts recognized in the Statement of Cash Flows are as follows:

Total cash outflow for leases fund liabilities - current Refund liabilities - current	2023 $ 60 Dec. 31, 2023 $ 420,182	2022 107
		Dec. 31, 2022 384,044

(14) Refund liabilities - current

The refund liabilities are mainly the prepayments to customers for the sales discount and defects of electronic components.

(15) Provision for liabilities

Provision for liabilities - non-current Employee benefits	Dec. 31, 2023 $ 43,534	Dec. 31, 2022 41,410

Employee benefits are estimated under the Company’s defined benefit plan, please refer to Note VI (17) for details.

(16) Operating leasing

The company leases its investment real estate, which is classified as an operating lease because almost all risks and rewards belonging to the ownership of the underlying asset have not been transferred. Please refer to Note VI (8) for details of the investment real estate.

Due date analysis of lease benefits to report the total amount of undiscounted lease benefits received in the future is shown in the following table:

Less than 1 year 1 to 2 years 2 to 3 years 3 to 4 years Total undiscounted lease payments	Dec. 31, 2023 $ 1,660 256 89 -	Dec. 31, 2022 2,816 1,176 126 88 4,206
	$ 2,005

Rental income generated from investment properties was NT$2,868,000 dollars and NT$1,464,000 dollars for 2023 and 2022 respectively. The direct operating expenses (including maintenance) incurred by the investment properties that generated rental income during the period were NT$4,823,000 dollars and NT$3,332,000 dollars respectively.

~41~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(17) Employee benefits

1. Defined benefit plans

The reconciliation between the present value of defined benefit obligations and the fair value of plan assets of the Company is as follows:

fair value of plan assets of the Company is as follows:
Dec. 31, 2023 Dec. 31, 2022 Present value of defined benefit obligations $ 79,676 78,993 Fair value of plan assets (36,142) (37,583) Net defined benefit liability $ 43,534 41,410 Details of the employee benefit liabilities of the Company are as follows: Dec. 31, 2023 Dec. 31, 2022 Liabilities from paid leaves $ 3,975 5,354	Dec. 31, 2023 $ 79,676 (36,142)	Dec. 31, 2022 78,993 (37,583)
	$ 43,534	41,410

The defined benefit plan of the Company is contributed to special account of contribution for retirement of Bank of Taiwan. The retirement payment of each employee applicable to Labor Standards Law is calculated in accordance with the base obtained based on the length of service and the average salaries within six months before retirement.

(1) Composition of plan assets

The retirement fund contributed by the Consolidated under the Labor Standards Law shall be controlled by the Labor Funds Operation Bureau of the Ministry of Labor (hereinafter referred to as the Labor Funds Bureau), and under the provisions of Measures on the Management and Application of Labor Retirement Funds, the annual minimum return settled and distributed from the funds operation shall not be lower than the incomes calculated in accordance with the 2-year time certificate of deposit rate of the local banks.

As of the reporting date, the balance of the Company in the special account of contribution for retirement of Bank of Taiwan amounts to NT$ 36,142,000 dollars. The data of the application of the labor retirement funds include funds yield and funds asset allocation, with details to be seen in the information released on the website of the Labor Funds Bureau.

~42~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(2) Changes in the present values of defined benefit obligations

Changes in the present values of defined obligations of the Company in 2023 and

in 2022 are as follows:

Defined benefit obligation on January 1 Service cost and interest in the year Remeasurement of net defined benefit liabilities (assets) Benefit paid by the plan Defined benefit obligation on December 31	2023 $ 78,993 1,485 2,583 (3,385)	2022 78,057 1,128 (192) -
	$ 79,676	78,993

(3) Changes in fair value of plan assets

The changes in the fair value of defined benefit plan assets of the Company in 2023 and in 2022 are as follows:

Fair value of plan assets on January 1 Interest income Remeasurement of net defined benefit liabilities (assets) Amount contributed to the plan Benefit paid by the plan Fair value of plan assets on December 31	2023 $ 37,583 486 291 1,167 (3,385)	2022 32,837 228 2,598 1,920 -
	$ 36,142	37,583

(4) Expenses recognized in profit or loss

The expenses of the Company recognized in profit or loss in 2023 and in 2022 are as follows:

Service cost for the period Net interest of net defined benefit liabilities Operating cost Promotion expense Administration expense R&D expense	2023 $ 468 531	2022 587 313
	$ 999	900
	$ 102 424 318 155	106 362 295 137
	$ 999	900

~43~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(5) Remeasurement of the net defined benefit liabilities (assets) recognized in other comprehensive income

Remeasurement of the accumulated net defined benefit liabilities (assets) of the

Company recognized in other comprehensive income in 2023 and 2022 are as follows:

Accumulated balance on January 1 Amount recognized in the year Accumulated balance on December 31	2023 $ 938 (2,292) $ (1,354)	2022 (1,852) 2,790
		938

(6) Actuarial assumptions

The material actuarial assumptions used by the Company to determine the present value if defined benefit obligations at the end of the reporting period are as follows:

Discount rate Increase in future salary	Dec. 31, 2023 1.20% 2.00%	Dec. 31, 2022
		1.30% 2.00%

The Company anticipates making contributions to defined benefit plans amounting to NT$1,185 thousand and NT$1,149 thousand within one year following the reporting dates of 2023 and 2022, respectively.

The weighted average duration of the defined benefit plan for 2023 is 9 years.

(7) Sensitivity analysis

The effects of changes in the main actuarial assumptions adopted on December 31,

2023 and 2022 on the present value of defined benefit obligations are as follows:

December 31, 2023 Discount rate Increase in future salary December 31, 2022 Discount rate Increase in future salary	Effects on defined benefit obligations Increased by 0.25% Decreased by 0.25% $ (1,835) 1,899 1,879 (1,825) Effects on defined benefit obligations Increased by 0.25% Decreased by 0.25% (1,918) 1,987 1,968 (1,909)
	Increased by 0.25% (1,918) 1,968

~44~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The above sensitivity analysis refers to the analysis on the influence of single assumption change based on the situation that other assumptions keep unchanged. In practice, many changes to the assumptions may be linked. The calculation method of sensitivity analysis shall be consistent with that of net defined benefit liabilities of the balance sheet.

The method and assumption applied in current sensitivity analysis is consistent with those adopted in early stage.

2. Defined contribution plan

As to the defined contribution plan, the Company shall contribute the retirement funds of employees to the individual accounts for labor retirement funds of the Bureau of Labor Insurance according to 6% of the monthly salaries of labors under the provisions of Labor Pension Act. Under this plan, after contributing fixed amount to the Bureau of Labor Insurance, the Company will not assume the legal or constructive obligations of paying extra amount.

The pension expense under the defined contribution retirement funds of the Company in the year of 2023 and 2022 are NT$7,671,000 and NT$7,383,000 respectively, which have been contributed to the Bureau of Labor Insurance.

(18) Income tax

1. The details of the income tax expenses of the Company are as follows:

Income tax expense for the period Income tax generated in the current period Surtax on undistributed retained earnings Adjustment of the income tax in the previous year Deferred income tax expense Occurrence and reversal of temporary difference Income tax expense	2023 $ 856,202 158,529 (14,446)	2022 884,732 67,237 (26,456)
	1,000,285	925,513
	(58,510)	(44,403)
	$ 941,775	881,110

The income tax expenses (profit) of the Company recognized in other comprehensive income in 2023 and in 2022 are as follows:

Components of other comprehensive income that will not be reclassified to profit or loss: Remeasurement of defined benefit plan	2023 $ (458)	2022 558

~45~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The reconciliation of the relationship between the income tax expense (profit) and the net profit before tax of the Company in 2023 and in 2022 is as follows:

Net profit before tax Income tax calculated based on the tax rate of the place where the Company located Adjustments in accordance with local tax laws Adjustment of current income tax for the prior period Surtax on undistributed retained earnings Total 2. Deferred tax assets and liabilities (1) Recognized deferred tax assets Losses from inventory price drop and obsolescence Unappropriated pension expenses Losses from the price drop of fixed assets and idle assets Refund liabilities and accounts payable Unrealized foreign exchange losses Remeasurement of defined benefit plan Deferred tax assets (2) Recognized deferred income tax liabilities Unrealized gains on financial assets Deferred income tax liabilities	2023 $ 6,534,807	2022 7,137,041 1,427,408 (587,089) (26,456) 67,237 881,100 Dec. 31, 2022 19,656 237 44 76,809 890 8,428 106,064 Dec. 31, 2022 1,955 1,955
	1,306,961 (509,269) (14,446) 158,529
	$ 941,775
	Dec. 31, 2023 $ 25,143 203 44 84,037 45,712 8,886
	$ 164,025
	Dec. 31, 2023
	$ 948 $ 948

3. Income tax approval

The approval on the filing of final income tax return of the Company has lasted till the year 2021 as required by the taxing authority.

4. Global Minimum Tax

The Company's subsidiaries operating in Vietnam have obtained additional tax incentives, resulting in an effective tax rate below 15%.

The Company recognizes supplementary taxes as current income tax when incurred, and temporary exemptions are applied to the related deferred income tax accounting for supplementary taxes, as detailed in Note (4).

~46~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(19) Capital and other equity

As of December 31, 2023 and 2022, the total authorized share capital of the Company was $1,550,000,000 dollars with a par value of $10 per share, and the actual amount issued was $1,113,298,000 and $1,068,762,000 dollars, separately.

In 2023, due to convertible bondholders exercising their conversion rights, the Company issued 142 thousand new shares. The issuance is pending legal registration and thus is recorded under bond conversion entitlement certificates at NT$1,423 thousand.

On November 10 and December 15, 2022, the board of directors resolved to issue 3,500 thousand new shares via a cash capital increase at NT$10 per share and an issue price of NT$660 per share, with April 7, 2023, set as the base date for the capital increase. This capital increase was approved by the Financial Supervisory Commission and legally registered on April 25, 2023.

In 2022, the Company issued 1,735 thousand new shares due to convertible bondholders exercising their conversion rights. Some of these shares are still being processed due to legal registration procedures and hence are listed under convertible bond certificates amounting to NT$9,536,000. The remaining procedures were completed in April, June, September, and December 2022.

In 2021, due to convertible bondholders exercising their conversion rights, the Company issued 117 thousand new shares. Since the legal registration process was not yet completed, it is recorded under bond conversion entitlement certificates at NT$1,167 thousand, and the registration was completed in April 2022.

1. Capital reserves

The components of the Company’s capital reserve are as follows:

. Capital reserves The components of the Company’s capital reserve	are as follows:
Premium of issued shares Convertible bond conversion premium Treasury stock transactions Change in the net value of the stock of subsidiaries and associates accounted for using the equity method Employee stock options Convertible bond stock options Expired subscription rights	Dec. 31, 2023 $ 6,951,216 1,266,891 423 522,172 40,330 114,556 805		Dec. 31, 2022 4,628,739 1,139,407 423 498,123 40,330 - - 6,307,022
	$ 8,896,393

In accordance with the Company Act, capital surplus is required to cover losses first before new shares or cash can be issued in proportion to the shareholders’ original shares. Realized capital surplus referred to in the preceding paragraph includes premiums from the issuance of shares in excess of par value and proceeds from gifts received. In

~47~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

accordance with the Regulations Governing the Issuer’s Offerings and Issuance of Marketable Securities, the aggregate amount of capital surplus that may be capitalized each year shall not exceed 10% of the paid-in capital.

Retained earnings

In accordance with the Company's Articles of Incorporation, after the final settlement of each year’s earnings, the Company shall first complete tax contributions, make up for prior years’ deficits, and set aside 10% as a legal reserve, except when the legal reserve has reached the total capital level. Subsequently, according to the laws, the special reserve may be set aside or reversed; if there are any profits remaining, along with accumulated undistributed profits, the board of directors will prepare a profit distribution proposal for resolution at the shareholder's meeting. The distribution of shareholder dividends must not be less than 20% of the net amount of the year's after-tax profits after legally mandated profit reserves have been deducted.

The Company will take into account the environment and growth of the Company and the distribution of earnings should take into account the Company’s future capital expenditure budget and capital requirements and pay cash dividends of not less than 10% of the dividends distributed in the current year.

(1) Legal reserve

If the Company has no deficit, it may, by resolution of the shareholders in general meeting, issue new shares or cash out of the legal reserve to the extent that such reserve exceeds 25% of the paid-in capital.

(2) Special reserve

When the Company distributes the distributable profit, the net decrease in other equity items occurring in the year is added to the undistributed profit of the current period along with other items beyond the net profit after tax. A special reserve is set aside from the undistributed profit of the previous period. For accumulated decrease in other equity items of previous periods, an equal amount of special reserve shall be set aside from the undistributed profit of previous periods and cannot be distributed. When there is a reversal of other decreases in equity, profits can be distributed for the reversed part.

~48~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) Profit distribution

The Company resolved the profit distribution for the fiscal years 2022 and 2021 at

the annual general shareholders' meetings held on June 16, 2023, and June 17, 2022, respectively. The amounts distributed as dividends to shareholders are as follows:

Distributed to the holders of ordinary shares: Cash	2022 Payout ratio (NT$) Amount $ 25.18 2,803,575	2022 Payout ratio (NT$) Amount $ 25.18 2,803,575		2021 Payout ratio (NT$) Amount 15.92 1,695,646	2021 Payout ratio (NT$) Amount 15.92 1,695,646
	Payout ratio (NT$) $ 25.18			Payout ratio (NT$) 15.92

On March 12, 2024, the Company’s board of directors proposed the following 2023 earnings distribution:

Distributed to the holders of ordinary shares: Cash	2023 Payout ratio (NT$) Amount $ 26.00 2,898,275

Information on the distribution of earnings as proposed by the Board of Directors

and resolved by the Shareholders’ Meeting is available on the “Market Observation Post System (MOPS)”

3. Other equity

Exchange differences on translation of foreign operations $ (319,295) (449,712) - -	Unrealized gain (loss) on financial assets measured at FVTOCI (19,758) - 3,944 -	Unearned compensation - - - (6,162)	Total (339,053) (449,712) 3,944 (6,162)
$ (769,007)	(15,814)	(6,162)	(790,983)
$ (669,055) (51)	(13,278) -	- -	(682,333) (51)
(669,106) 349,811 -	(13,278) - (6,480)	- - -	(682,384) 349,811 (6,480)
$ (319,295)	(19,758)	-	(339,053)

~49~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(20) Share-based payment

The Company has the following share-based benefit transactions:

Date of grant Number of grants Granted to Vesting conditions Fair value at the grant date	Cash capital increase reserved for employee subscription
	The Company
	2023.03.08 350 thousand shares Current employees of the Company and subsidiaries Immediate vesting $161

The Company recognized a share-based employee compensation cost of NT$52,309 thousand from cash capital increase for employee stock options in 2023.

(21) Earnings per share

The calculation of basic earnings per share and diluted earnings per share of the Company is as follows:

Basic earnings per share: Net profit attributable to the Company in the year Weighted average shares outstanding (1,000 shares) Basic earnings per share Diluted earnings per share: Net profit attributable to the Company in the year Dilutive potential ordinary shares: Convertible bond Net income attributable to equity holders of the Company’s common stock (adjusted for the effect of dilutive potential common stock) Weighted average shares outstanding (1,000 shares) Dilutive potential ordinary shares: Employee compensation Convertible bond Weighted average common shares outstanding (adjusted for the effect of dilutive potential common stock) Diluted earnings per share	2023 $ 5,593,032	2022 6,255,931
	110,416	106,539
	$ 50.65	58.72
	$ 5,593,032 9,302	6,255,931 5,897
	$ 5,602,334	6,261,828
	110,416 244 964	106,539 309 1,337
	111,624	108,185
	$ 50.19	57.88

~50~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(22) Revenue from contracts with customers
Segmentation of main regional markets and main product revenue:

Major regional markets Taiwan Mainland China Other countries Main products/line of service: DT Server NB Strategic Projects Automotive Other	2023 $ 2,088,934 11,001,186 2,383,330	2022 2,872,643 12,104,361 2,463,168
	$ 15,473,450	17,440,172
	$ 5,673,620 4,567,884 2,704,619 2,215,796 276,686 34,845	5,591,228 5,913,259 2,938,068 2,481,727 148,379 367,511
	$ 15,473,450	17,440,172

2. Balance of contract

Contract liabilities	Dec. 31, 2023	Dec. 31, 2022 29,321	Jan. 1, 2022 41,541
	$ 3,605

The beginning balances of contract liabilities as of January 1, 2023 and 2022 were

recognized as income of NT$27,732,000 dollars and NT$24,750,000 dollars respectively.

(23) Non-operating revenue/expense

Interest income

The details of interest income of the Company are as follows:

Bank deposit interest	2023 $ 264,179	2022 25,756

2. Other income

The details of other income of the Company are as follows:

Income from dividend Income from molding Income from compensation Income from samples Income from rentals Royalty income Income from subsidies Other	2023 $ 441 150,533 1,078 10,055 2,868 1,593 1,135 7,933 $ 175,636	2022 300 170,481 5,008 9,172 1,584 - 896 6,799 194,240

~51~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

3. Other gains and losses

The details of other gains and losses of the Company are as follows:

Foreign exchange gain (loss) Net profit (loss) from financial assets (liabilities) measured at FVTPL: Derivatives: Embedded derivatives Non-derivative products Stock Private equity funds Net profit from bond repurchases Profit (loss) from the disposal of property, plant and equipment Impairment losses on investments accounted for using the equity method Other Total	2023	2022 495,993 (576) - 13,566 - 35 (34) - (1,339)
	$ (26,440) 1,300 - 1,725 (289) - 29 (24,860) (22,799)
	$ (71,334)	507,645

4. Financial costs

The details of the financial cost of the Company are as follows:

Bank loans Lease liabilities Conversion of corporate bonds	2023	2022 13,625 1 6,795
	$ 20,857 1 12,928
	$ 33,786	20,421

(24) Compensation to employees and directors

In accordance with the Company’s Articles of Incorporation, no less than 3% of the Company’s annual profits shall be appropriated to the Compensation of Employees and no more than 3% to the Compensation of Directors; however, if the Company has accumulated losses, it shall retain the amount of compensation in advance and appropriate the Compensation of Employees and Directors in proportion to the aforementioned. The former Compensation of employees to whom stock or cash is issued may include employees of a subordinate company who meet certain criteria.

For the fiscal years 2023 and 2022, the estimated compensation amounts for employees were NT$202,700 thousand and NT$221,300 thousand, respectively, and for directors, both were NT$4,480 thousand. These estimations were based on pre-tax profits before employee and director compensation, multiplied by the distribution ratios set out in the Company’s

~52~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Articles of Incorporation. These costs were reported as operating costs or expenses for the respective periods and were paid entirely in cash. Detailed information can be found on the Market Observation Post System. The amounts distributed as employee and director compensation as resolved by the board of directors match the estimated amounts in the parent company only financial reports for 2023 and 2022.

(25) Information on financial instruments and fair value
Credit risk
(1) Credit risk exposure

The carrying amount of a financial asset represents the maximum amount of credit risk. The maximum amount of credit risk exposure was $13,868,548,000 dollars and $10,042,628,000 dollars as of December 31, 2023 and 2022 respectively.

(2) Credit risk concentration risk

In order to reduce the credit risk of accounts receivable, the Company continually evaluates the financial position of its customers and adjusts the terms of transactions between them if necessary. As of December 31, 2023 and 2022, the Company had 7 and 6 different customers with accounts receivable balances exceeding 5% of total accounts receivable for a single customer respectively. The Company periodically evaluates the probability of recovery of accounts receivable and presents Provisions, and the total loss is always within management’s expectations.

(3) Impairment loss

The Company uses a simplified method of estimating expected credit losses for all of its notes and accounts receivable, which is to measure expected credit losses over the life of the notes and accounts receivable, and for this purpose, the notes and accounts receivable are grouped by common credit risk characteristics that represent the ability of customers to pay all amounts due under contractual terms and are included in forward-looking information. The expected credit losses on the Company’s notes and accounts receivable are analyzed as follows:

	Dec. 31, 2023	Expected credit loss in the duration of provision 77 267 196 - - 1,771
Book value of notes and accounts receivable $ 5,838,231 36,121 3,163 - - 1,771	Weighted average expected credit loss rate
	0.00% 0.74% 15.10% 26.37% 73.66% 100.00%
$ 5,879,286		2,311

~53~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Dec. 31, 2022 Book value of notes and accounts receivable $ 6,808,724 Weighted average expected credit loss rate Expected credit loss in the duration of provision 63,705 0.00% 91 4,407 0.93% 595 604 5.60% 247 - 30.30% 183 2,820 75.16% - $ 6,880,260 100.00% 2,820 3,936	Dec. 31, 2022 Book value of notes and accounts receivable $ 6,808,724 Weighted average expected credit loss rate Expected credit loss in the duration of provision 63,705 0.00% 91 4,407 0.93% 595 604 5.60% 247 - 30.30% 183 2,820 75.16% - $ 6,880,260 100.00% 2,820 3,936	Dec. 31, 2022 Book value of notes and accounts receivable $ 6,808,724 Weighted average expected credit loss rate Expected credit loss in the duration of provision 63,705 0.00% 91 4,407 0.93% 595 604 5.60% 247 - 30.30% 183 2,820 75.16% - $ 6,880,260 100.00% 2,820 3,936
$ 6,808,724 63,705 4,407 604 - 2,820	Weighted average expected credit loss rate
	0.00% 0.93% 5.60% 30.30% 75.16% 100.00%
$ 6,880,260
		3,936

The changes in the provisions for the notes and accounts receivable of the Company are as follows:

Opening balance Impairment loss (reversal of impairment loss) recognized Closing balance	2023
	$ 2,311 3,936

2. Liquidity risk

The contracts of financial liabilities are sorted by their maturity dates as follows. The

estimated interests are included, but the effect of net value agreement is excluded.

Book value $ 1,580,000 850,247 5,191 2,000 3,742,662 386,979 4,356 59	Cash flow from the contract 1,594,090 881,900 5,191 2,000 3,742,662 386,979 4,356 60	Within 6 months 591,019 - 5,191 2,000 3,742,662 386,979 4,356 30	6 12 months 1,003,071 - - - - - - 30	1-2years - - - - - - - -	2-5years - 881,900 - - - - - -	More than 5 years - - - - - - - -
$ 6,571,494	6,617,238	4,732,237	1,003,101	-	881,900	-
$ 1,830,000 126,175 8,390 18,359 2,218,939 428,315 6,377	1,842,205 142,952 8,390 18,359 2,218,939 428,315 6,377	839,827 5,751 8,390 18,359 2,218,939 428,315 6,377	1,002,378 4,929 - - - - -	- 9,859 - - - - -	- 29,576 - - - - -	- 92,837 - - - - -
$ 4,636,555	4,665,537	3,525,958	1,007,307	9,859	29,576	92,837

~54~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The Company does not anticipate that the cash flows analyzed at maturity date will alter significantly or that the actual amounts will vary significantly.

Market risk—exchange rate risk
(1) Exposure to exchange rate risk

The Company's financial assets and liabilities exposed to significant foreign exchange risks are as follows:

		Dec. 31, 2023
$ $	Foreign currency 426,769 139,289 22 149 3,065 4 1,630 541,528 140 1,578,573,492 129,151 91 498 70,314	Exchange rate 30.7050 4.3270 3.9290 0.2172 33.9800 0.4791 0.0012 30.7050 33.9800 0.0012 30.7050 4.3270 33.9800 0.0012 Dec. 31, 2022
$	Foreign currency 306,170 113,317 25 77 917 4	Exchange rate 30.7100 4.4094 3.9380 0.2324 32.7200 0.4791

~55~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

- Long term equity investment

	Long-term equity investment
	accounted for using the equity method USD 459,551 30.7100 14,112,804 EUR 127 32.7200 4,162 VND 925,143,585 0.0013 1,202,687 Financial liabilities Currency USD $ 78,810 30.7100 2,420,259 RMB 37 4.4094 164 EUR 79 32.7200 2,578 MOP 8 3.9380 32

Because the Company has a wide range of functional currencies, it has adopted a consolidated approach to disclose exchange gain or loss on monetary items, with foreign currency exchange profit and loss (realized and unrealized) of loss of $26,440,000 dollars and profit of $495,993,000 for the years ended 2023 and 2022 respectively.

(2) Sensitivity analysis

The Company’s exchange rate risk primarily comes from foreign currency-denominated cash and cash equivalents, financial assets measured at FVTPL, accounts receivable and other receivables, loans, accounts payable and other payables, resulting into gains and losses of conversion of foreign currency when exchanging. As of December 31, 2023 and 2022, if NTD had depreciated or appreciated by 1% relative to foreign currencies held by the Company and all other factors remained constant, net income would have increased or decreased by $78,623,000 dollars and $60,074,000 dollars respectively for 2023 and 2022. The same basis is used for both phases of analysis.

4. Market risk—changes in interest rates

The Company’s interest rate risk arises primarily from variable rate bank deposits and loans, and changes in interest rates will cause future cash flows to fluctuate as the effective interest rates on bank deposits and loans.

The following Sensitivity analysis was determined based on the interest rate risk of the financial instruments on the reporting date. For floating-rate liabilities, the analysis is based on the assumption that the amount of the liability outstanding at the reporting date is outstanding for the entire year. The rate of change used in the Company’s internal reporting of interest rates to key management is a 1% increase or decrease in interest rates, which also represents management’s assessment of the range of reasonably possible changes in interest rates.

The Company’s financial assets with variable interest rates as of December 31, 2023 and 2022 were $460,334,000 dollars and $698,195,000 dollars respectively, and financial liabilities were $0 and $126,175 respectively. If interest rates had increased or decreased

~56~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

by 1%, the Company’s net income would have increased or decreased by $3,683,000 dollars and decreased or increased by $4,576,000 dollars for 2023 and 2022, respectively, with all other variables held constant.

Market risk - fair value
(1) Fair value and carrying amount

The Company’s management believes that the fair value of non-derivative short-term financial instruments shall be estimated using their book value on the balance sheet because of the near maturity of such instruments and their book value should be a reasonable basis for estimating fair value. This method is applied to cash and cash equivalents, notes receivable, accounts payable, other receivables and other payables, deposit margin and loans.

In addition to the aforementioned financial instruments, the fair value and book value of the remaining financial instruments, investment property, and payable corporate bonds of the Company as of the reporting date are as follows:

Measured at fair value: Financial assets: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value: Non-financial assets: Investment property Financial liabilities Corporate bonds payable	Dec. 31, 2023 Book value Fairvalue $ 34,223 34,223 1,144 1,144 221,387 236,930 850,247 851,210	Dec. 31, 2022 Book value Fairvalue 16,531 16,531 4,595 4,595 226,041 233,945 - -
	Book value $ 34,223 1,144 221,387 850,247	Book value 16,531 4,595 226,041 -

(2) The evaluation techniques used to determine fair value are as follows:

A. If there is an active market for a financial asset, the fair value is based on the market price. If market prices are not available, quoted prices from counterparties or estimates using valuation techniques are used. The estimates and assumptions used are consistent with those used by market participants in pricing financial instruments.

B. The fair value of investment properties is based on independent evaluators with recognized professional qualifications and recent experience in the area and type of investment properties evaluated.

~57~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) Fair value hierarchy:

The following table analyzes the fair value levels of financial instruments, investment properties, and payable corporate bonds by valuation method. Each fair value level is defined as follows:

A. Level 1: Publicly quoted prices (unadjusted) in an active market for identical assets or liabilities.
B. Level 2: Besides the public quotations included in Level 1, the input parameters for assets or liabilities are directly (i.e., price) or indirectly (i.e., derived from price) observable.
C. Level 3: Input parameters for an asset or liability are not based on observable market information (non-observable parameters).

Level 1 $ - -	Level 2 7,307 -	Level 3 26,916 1,144 28,060
$ -	7,307
$ -	-	236,930
$ -	-	851,210
$ - -	16,531 -	- 4,595
$ -	16,531	4,595
$ -	-	233,945

(4) Transfers between Level 1 and Level 2

There were no transfers between Level 1 and Level 2 in the fiscal years 2023 and

~58~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(5) Table of changes in financial assets classified as Level 3 at FVTPL

Unit: NT$ 1,000

						2023	2023
										Decrease in
				Total profit or loss		Increase in the period				the period
					Recognized
				Recognized	in other
		Opening		in profit or	comprehensi	Issuance or		Transfers		Sale, disposal	Closing
Name		balance		loss	ve income	purchase		into Level 3		or settlement	balance
Financial assets measured at FVTPL	$	-		1,011	-		26,200	-		(295)			26,916
Financial assets measured at FVTOCI			4,595	-	3,982	-		-		(7,433)			1,144
	$		4,595	1,011	3,982		26,200	-		(7,728)			28,060
						2022
										Decrease in
				Total profit or loss		Increase in the period				the period
					Recognized
				Recognized	in other
		Opening		in profit or	comprehensi	Issuance or		Transfers		Sale, disposal	Closing
Name		balance		loss	ve income	purchase		into Level 3		or settlement	balance
Financial assets measured at FVTPL	$		3,370	(576)	-	-		-		(2,794)		-
Financial assets measured at FVTOCI			9,500	-	(3,483)	-		-		(1,422)			4,595
	$		12,870	(576)	(3,483)	-		-		(4,216)			4,595
The above included		gains		and losses	are reported		in “other gains			and losses”			and
“unrealized valuation	gains		(losses) on financial assets at FVTOCI”, which								relate to
assets still held as of December				31, 2023 and 2022 as follows:
							2023			2022
Total gain or loss
Recognized in profit (losses) (reported in “other						$			857		-
gains and losses”)
Recognized in other	comprehensive income							(154)			(3,839)
(reported in “unrealized valuation gains (losses) on
financial assets at FVTOCI”)
Total						$			703		(3,839)

(6) Quantitative information on fair value measurements of significant unobservable inputs (Level 3)

The Company’s financial assets primarily categorized as Level 3 include equity securities investments and private equity fund investments measured at fair value

through profit or loss, and equity securities investments measured at fair value through other comprehensive income. The list of quantitative information about significant unobservable inputs is as follows:

~59~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Item Financial assets measured at FVTPL - Embedded derivatives - right of redemption Financial assets measured at FVTPL - investment in private equity fund Financial assets measured at FVTOCI - investment in equity instruments with no active market Financial assets measured at FVTOCI - investment in equity instruments with no active market	Valuation techniques Binary tree method for pricing convertible bond Net asset value approach Comparable Company Analysis Net asset value approach	Significant unobservable inputs ‧Volatility as of December 31, 2023, was 36.41% ‧Net asset value ‧Price-to-NAV (Net Asset Value) ratio as of December 31, 2023, and December 31, 2022, were 1.630 and 1.475, respectively ‧Lack of market liquidity discount as of December 31, 2023, and December 31, 2022, were 15.70% and 15.80%, respectively ‧Net asset value	Relationship between significant unobservable inputs and fair value
			‧The higher the volatility, the higher the fair value ‧Higher net asset value leads to higher fair value ‧The higher the multiplier, the higher the fair value ‧The higher the discount for lack of marketability, the lower the fair value ‧The fair value is positively correlated

(7) Valuation process for fair value classified in Level 3

The Company uses unobservable inputs for its fair value measurements and classifies its fair value in Level 3. The source of the input value for this level is the price provided by reference to counterparty quotations or market comparable companies’ net market value multipliers, etc., and the relevant quotations and valuation information are appropriately maintained. The results are subsequently reviewed to ensure consistency with the valuation sources and the reasonableness of the valuation results.

(8) Sensitivity analysis of fair value to reasonably possible alternative assumptions for Level 3 fair value measurements

The Company’s fair value measurements of financial instruments are reasonable, but the use of different valuation models or valuation parameters may result in different valuation results. For financial instruments classified in Level 3, if the valuation parameters are changed, the impact on the profit or loss or other comprehensive income for the period is as follows:

~60~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

December 31, 2023 Financial assets measured at FVTPL Embedded derivatives - right of redemption Financial assets measured at FVTOCI Investments in equity instruments with no active market December 31, 2022 Financial assets measured at FVTPL Financial assets measured at FVTOCI Investments in equity instruments with no active market	Input value	Upward or downward changes	Fair value changes reflected in profit or loss for the period	Fair value changes reflected in profit or loss for the period	Fair value changes reflected in other comprehensive income Favorable changes Unfavorab le changes
			Favorable changes	Unfavorab le changes
	Volatility Stock price Net market value multiplier Lack of marketability discount Net market value multiplier Lack of marketability discount	5% 10% 7% 7% 4% 4%	$ 265 1,587 $ - - - -	(970) (970) - - - -	- - - - 1 (2) 1 (2) 12 (12) 12 (12)

Favorable and unfavorable changes in fair value represent fluctuations in fair value, which are calculated using valuation techniques based on various degrees of unobservable input parameters. If the fair value of a financial instrument is affected by more than one input, the above table reflects only the effect of changes in a single input and does not take into account the correlation and variability among the inputs.

(26) Financial risk management

The Company is exposed to the following risks from the engagement of financial instruments:
(1) Credit risk

(2) Liquidity risk

(3) Market risk

This note presents the Company’s risk information for each of these risks and the Company’s objectives, policies and procedures for measuring and managing risk. For further quantitative disclosures, please refer to the respective notes to the parent company only financial statements.

2. Risk management structure

The Chairman has the sole responsibility for establishing and overseeing the Company’s risk management structure and reports regularly to the Board on its operations.

The Company’s risk management policy is designed to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor

~61~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

compliance with the risks and risk limits. The Company develops a disciplined and constructive control environment through training, management guidelines and operating procedures to enable all employees to understand their roles and responsibilities.

The Audit Committee of the Company oversees how management monitors compliance with the Company’s risk management policies and procedures and reviews the appropriateness of the Company’s risk management framework in relation to the risks it is exposed to. Internal auditors assist the Company’s Audit Committee in its oversight role. These personnel conduct regular and exceptional reviews of risk management controls and procedures and report the results of these reviews to the Audit Committee.

Credit risk

Credit risk is the risk of financial loss arising from the failure of the Company’s customers or counterparties to fulfill their contractual obligations, mainly from the Company’s accounts receivable from customers and investments in securities. (1)Accounts receivable and other receivables

The Company’s credit risk exposures are primarily depended on each customer’s individual circumstances. However, management also considers statistical information about the Company’s customer base, including the risk of default in the customer’s industry and country, as these factors may affect credit risk. Approximately 71% and 69% of the Company’s revenue for 2023 and 2022, respectively, were derived from sales to customers in Mainland China, which resulted in a significant concentration of regional credit risk.

The Company has established a credit policy whereby the Company is required to analyze the credit rating of each new customer individually before granting standard payment and delivery terms. Credit sales limits are established on an individual customer basis and are reviewed periodically; customers who do not meet the Group’s benchmark credit rating may only transact business with the Company on a pre-collection basis.

In monitoring customers’ credit risk, customers are grouped according to their credit characteristics, including whether they are individuals or legal entities, age of accounts, maturity dates and pre-existing financial difficulties. The Company maintains a Provisions account to reflect estimates of losses on accounts receivable and other receivables.

(2) Use of funds

The Company’s investments in equity securities are placed through a centralized trading market and therefore have no significant credit transaction risk.

~62~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The credit risk of bank deposits, fixed income investments and other financial instruments is measured and reported to the Chairman of the Board of Directors by the Company’s finance department. Since the Company’s counterparties are creditworthy banks and financial institutions with investment grade or above, there are no significant performance concerns and therefore no significant credit risk.

4. Liquidity risk

Liquidity risk is the risk that the Company will not be able to deliver cash or other financial assets to settle its financial liabilities and will not be able to meet its related obligations. The Company’s approach to manage liquidity risk is to ensure that the Company has sufficient liquidity to meet its liabilities as they fall due under normal and stressful circumstances and that there is no risk of unacceptable loss or damage to the Company’s reputation. In addition, the Company has entered into unused borrowing lines totaling $2,167,625,000 as of December 31, 2023 to cover unanticipated payments.

5. Market risk

Market risk is the risk that changes in market prices, such as changes in exchange rates, interest rates, and prices of equity instruments, will affect the Company’s revenue or the value of financial instruments held by the Company. The objective of market risk management is to manage the exposure to market risk to an acceptable level and to optimize investment returns.

The Company engages in derivative transactions in order to manage market risk. All transactions are executed in accordance with the guidelines of the Board of Directors. (1) Exchange rate risk

The Company uses derivative transactions to hedge exchange rate risk due to its exposure to exchange rate risk arising from sales and purchase transactions that are not denominated in the Company’s functional currency. Gains or losses on foreign currency assets and liabilities arising from changes in exchange rates are largely offset against natural hedges. Derivative transactions can help the Company reduce, but still not completely eliminate, the impact of changes in foreign currency exchange rates.

The Company periodically reviews individual foreign currency assets and liabilities for exposures and hedges against such exposures.

(2) Interest rate risk

The Company’s interest rate risk arises primarily from variable rate bank deposits and short-term loans, and changes in interest rates will cause future cash flows to fluctuate as the effective interest rates on bank deposits and short-term loans change.

~63~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) Equity instrument price risk

If the price of equity securities changes at the reporting date (the same basis is used for both periods of analysis and other changes are assumed to be constant), the effect on the consolidated profit and loss items would be as follows:


Other comprehensiv e income after tax $ 11		Other comprehensi ve income after tax 46


$ (11)	(73)		(46)	(165)

(27) Capital management

It is the Board’s policy to maintain a sound capital base to maintain the confidence of investors, creditors and the market and to support the development of future operations. Capital consists of the Company’s share capital, capital surplus and retained earnings. The Board of Directors controls the rate of return on capital and also controls the level of dividends on ordinary shares.

In order to maintain or adjust its capital structure, the Company may adjust dividends paid to shareholders, reduce capital to refund shareholders, issue new shares or sell assets to settle liabilities.

The Company controls its capital on a debt-to-capital ratio basis. The ratio is calculated by dividing net debt by total capital. Net debt is total liabilities less cash and cash equivalents as shown on the balance sheet. Total capital represents all components of equity (i.e., equity, capital surplus, retained earnings and other equity) plus net debt. The debt-to-capital ratio at the reporting date is as follows:

Total liabilities Less: Cash and cash equivalents Net liabilities Total equity Debt-to-capital ratio	Dec. 31, 2023 $ 7,651,203 (7,936,834)	Dec. 31, 2023 $ 7,651,203 (7,936,834)		Dec. 31, 2022 5,899,388 (3,127,767) 2,771,621 22,811,572 10.83%
	$ (285,631)
	$ 27,773,059
		(1.04)%

As of December 31, 2023, the change in the debt-to-capital ratio was primarily due to operational profits, an increase in cash levels, and a reduction in net debt.

~64~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(28) Non-cash investment and financing activities

The information on non-cash investment and financing activities of the Company in 2023 and 2022 is as follows:

For the conversion of corporate bonds into common shares, see Note VI (12).
For obtaining right-of-use assets through leasing, see Note VI (7) and (13).

The Company's adjustments to liabilities from financing activities in 2023 and 2022 are as shown in the following table:

Short-term loans Bonds payable Long-term loans (including long-term loans due within one year or one operating cycle) Lease liabilities Total liabilities from financing activities Short-term loans Bonds payable Long-term loans (including long-term loans due within one year or one operating cycle) Lease liabilities Total liabilities from financing activities	Jan. 1, 2023 Cash flow $ 1,830,000 (250,000) - 1,079,878 126,175 (126,175) - (60)	Non-cash changes Other Changes in exchange rate Changes in fair value Dec. 31, 2023 - - - 1,580,000 (229,631) - - 850,247 - - - - 119 - - 59
	$ 1,956,175 703,643	(229,512) - - 2,430,306
	Jan. 1, 2022 Cash flow $ 552,240 1,239,209 911,927 (2,800) - 126,175 59 (60)	Non-cash changes Other Changes in exchange rate Changes in fair value Dec. 31, 2022 - 38,551 - 1,830,000 (909,127) - - - - - - 126,175 1 - - -
	$ 1,464,226 1,362,524	(909,126) 38,551 - 1,956,175

~65~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

VII. Related Party Transactions

(1) Parent company and ultimate controller: The Company is the ultimate controller of the Company and the Company’s subsidiaries.
(2) Names and relationships of related parties

The related parties that had transactions with the Company during the period covered by

these parent company only financial statements are as follows:

Name of related parties Relationship with the Company Lotes Investments Limited A subsidiary of the Company Good Hope Investments Limited A subsidiary of the Company Guansi Development Co., Ltd. A subsidiary of the Company Zhaxi Investment Co., Ltd. A subsidiary of the Company Jiayu Investment Co., Ltd. A subsidiary of the Company Lotes USA, Inc A subsidiary of the Company LOTES EU GmbH A subsidiary of the Company Lerain Technology Co., Ltd. An associate of the Company (Note 2) Lomites Co., Ltd (Note 1) A subsidiary of the Company LOTES VIET NAM COMPANY LIMITED A subsidiary of the Company Loteson International Investments Limited A subsidiary of the Company Lotes Guangzhou Co., Ltd. A subsidiary of the Company Lotes Hengnan Co., Ltd. A subsidiary of the Company Shenzhen DeYi Automation Equipment Co., Ltd. A subsidiary of the Company Lotes Zhongshan Co., Ltd. A subsidiary of the Company Zhongshan DeZhi Real Estate Development Co., A subsidiary of the Company Ltd.

Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Zhongshan Jinmeida Metal Surface Treatment Co., Ltd.

Guangzhou Leside Technology Co., Ltd. Chongqing Fuxinrui Electronic Technology Co., Ltd.

A subsidiary of the Company A subsidiary of the Company

Hengnan Deyi Property Development Co., Ltd. A subsidiary of the Company Guangzhou Dezhi Technology Co., Ltd. A subsidiary of the Company ZhongShan HuiXing Electronics Co., Ltd. A subsidiary of the Company HuiLi Electronics Technology (Ningbo) Co., Ltd. A subsidiary of the Company Xincheng Development Co., Ltd. A subsidiary of the Company REKA Technology Co., Ltd. A subsidiary of the Company Jae You Co., Ltd. A subsidiary of the Company Lotes Suzhou Co., Ltd. A subsidiary of the Company Wangden Investments Limited A subsidiary of the Company Zongka Technology (Shenzhen) Co., Ltd. A subsidiary of the Company Ememe Robot Co., Ltd. A subsidiary of the Company Compertum Microsystems Inc. A subsidiary of the Company Good News Medical Co., Ltd. A subsidiary of the Company FELCITY NEWS LIMITED A subsidiary of the Company Jia Shi Mei (Guangzhou) Trading Co., Ltd. A subsidiary of the Company Lintes Technology Co., Ltd. A subsidiary of the Company Jilong Co., Ltd. A subsidiary of the Company Rihui Co., Ltd. A subsidiary of the Company Lintes Technology (Suzhou) Co., Ltd. A subsidiary of the Company Genie Precision Machine Co., Ltd. A subsidiary of the Company LINTES TECHNOLOGY (THAILAND) CO.,LTD A subsidiary of the Company I-See Vision Technology Inc. An associate of the Company Key management personnel Including the directors, supervisors, managers and their families and spouses

~66~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Note 1: Mikronpoint Co., Ltd. changed its name to Lomites Co., Ltd. on May 18, 2022. Note 2: As of June 2023, the Company lost control over Lerain Technology Co., Ltd.

(3) Material transactions with the related parties
Operating revenue

ote 1: Mikronpoint Co., Ltd. changed its name to Lomites Co., Ltd. on May 18, 2022. ote 2: As of June 2023, the Company lost control over Lerain Technology Co., Ltd. terial transactions with the related parties . Operating revenue	ote 1: Mikronpoint Co., Ltd. changed its name to Lomites Co., Ltd. on May 18, 2022. ote 2: As of June 2023, the Company lost control over Lerain Technology Co., Ltd. terial transactions with the related parties . Operating revenue	ote 1: Mikronpoint Co., Ltd. changed its name to Lomites Co., Ltd. on May 18, 2022. ote 2: As of June 2023, the Company lost control over Lerain Technology Co., Ltd. terial transactions with the related parties . Operating revenue	ote 1: Mikronpoint Co., Ltd. changed its name to Lomites Co., Ltd. on May 18, 2022. ote 2: As of June 2023, the Company lost control over Lerain Technology Co., Ltd. terial transactions with the related parties . Operating revenue
The amounts of material sales from the Company to the related parties are as follows:
		2023	2022
Other subsidiaries	$	61,291	90,271

The terms of sale of the Company to a subsidiary of the Company are not significantly different from the normal sales price. Their collection periods are all three to four months. Receivables from related parties are not covered by collateral.

Purchase

The amounts of goods purchased by the Company from the related parties are as follows:

Xincheng Development Co., Ltd. REKA Technology Co., Ltd. Other subsidiaries Associates	2023 $ 1,316,107 9,413,378 61,377 69	2022 1,397,497 11,627,683 73,949 - 13,099,129
	$ 10,790,931

The Company’s purchase price to the above company is not significantly different from the Company’s purchase price to general suppliers. The payment terms are three months, which are not significantly different from those of general suppliers.

Accounts receivable from related parties

The details of the accounts receivable from related parties are as follows:

Accounting item	Type of related party	Dec. 31, 2023 $ 35,535 168 2,272 3 (2,272)	Dec. 31, 2022 21,364 1,150 2,272 420 (2,272) 22,934
Accounts receivable Accounts receivable Other receivables Other receivables Allowance for losses	REKA Technology Co., Ltd. Other subsidiaries Ememe Robot Co., Ltd. Other subsidiaries Ememe Robot Co., Ltd.
		$ 35,706

~67~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

4. Accounts payable from related parties

The details of the accounts payable from related parties are as follows:

Accounting item	Type of related party	Dec. 31, 2023 $ 211,845 3,499,107 31,661 49 4,347 9	Dec. 31, 2022 314,136 1,887,801 17,002 - 4,399 1,978 2,225,316
Accounts payable Accounts payable Accounts payable Accounts payable Other payables Other payables	Xincheng Development Co., Ltd. REKA Technology Co., Ltd. Other subsidiaries Associates Other subsidiaries Associates
		$ 3,747,018

5. Endorsement

The balance and details of the endorsement and guarantee provided by the Company to the related parties are as follows:

Lotes Guangzhou Co., Ltd. REKA Technology Co., Ltd. 6. Promotion expense Other subsidiaries Mainly the sample fees. 7. Administration expense Other subsidiaries Mainly the sample fees. 8. R&D expense Other subsidiaries Associates Mainly for research and development materials.	Dec. 31, 2023 $ 153,525 - $ 153,525 2023 $ 3,682		Dec. 31, 2022 614,200 541,715 1,155,915 2022 2,304 2022 51,311 2022 47 - 47



	2023 $ 66,404

	2023 $ - 54

	$ 54

9. Non-operating income Other subsidiaries Associates	2023 $ 3,239 416	2022 4,639 - 4,639
	$ 3,655

~68~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Mainly comprises rental income from offices and parking spaces, and income from samples.

10. Lease

The Company leases warehouses from major management personnel and enters into one-year lease contracts with a total value of $60,000,000 with reference to the neighboring warehouse rental quotes. The interest expenses of $1,000 and $1,000 were respectively recognized in 2023 and 2022, and the balance of Lease liabilities as of December 31, 2023 and 2022 were respectively $59,000 and $0.

(4) Major management personnel transactions

Related compensation includes:

Short-term employee benefits Post-employment benefits Share-based payment	2023 $ 79,012 880 7,970	2022 50,606 896 -
	$ 87,862	51,502

Please refer to Note 6(20) for details on share-based compensation.

VIII. Pledged Assets

The details of the book value of the assets provided as collateral by the Company are as follows:

Asset name Property, plant, and equipment (Note) Investment property	Collateral subject	Dec. 31, 2023 $ 41,006 163,254		Dec. 31, 2022 41,909 167,220 209,129
	Bank loan Bank loan
		$ 204,260

Note: Some loan contracts have expired and are no longer renewed. The Company has obtained bank repayment certificates but has not yet cancelled the collateral registration procedures.

IX. Significant Contingent Liabilities and Unrecognized Contractual Commitments

(1) Significant unrecognized contractual commitments

As of December 31, 2023, the Company has signed but not yet paid for significant construction contracts as follows:

Dec. 31, 2023 Amounts contracted for significant factory construction $ 10,131

(2) The issuance of guarantee notes for bank loans, financing lines and derivative financial commodity transactions:

Dec. 31, 2022 Dec. 31, 2023 $ 2,887,704 4,796,150

Guaranteed notes

~69~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

X. Significant Disaster Loss: None.

XI. Significant Post-Period Events: None.

XII. Others

(1) Employee benefits, depreciation, depletion, and amortization functions are summarized below:

Function Nature	2023	2023	2023	2022	2022	2022
	Operation cost	Operation expense	Total	Operation cost	Operation expense	Total
Employee benefit expense Salary expenses Labor insurance and health insurance expenses Pension expenses Compensation of directors Other employee benefit expenses Depreciation expense Amortization expense	30,331 1,539 591 - 2,084 238 12	395,649 14,977 8,079 4,657 13,143 11,728 22,050	425,980 16,516 8,670 4,657 15,227 11,966 22,062	29,628 1,780 577 - 2,293 105 11	349,679 14,631 7,706 4,261 14,100 10,087 22,628	379,307 16,411 8,283 4,261 16,393 10,192 22,639

Additional information on the number of employees and employee benefit costs for 2023 and 2022 is as follows:

2023 158	2023 158	2022 153
5		5
$ 3,048		2,841
$ 2,784		2,563
	8.62%	-
	-

Information on the Company’s remuneration policy (including the policy for the remuneration of directors, managers and employees) is as follows.

Remuneration for directors is paid in accordance with the Company’s remuneration

policy for directors.

The bonuses and dividends for managers and employees are based on the Company’s operating conditions, personal duties and performance.
The salaries of the directors and supervisors are adjusted in a timely manner to meet their responsibilities.

~70~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

XIII. Disclosing Information

(1) Major transaction details

In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023:

1. Capital lending to others:

(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:	(1) Major transaction details In accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the Company should disclose the following information about significant transactions in 2023: 1. Capital lending to others:
Unit: NT$/Foreign currency1,000 No. Lender Borrower Item Related party Max amount for the period Closing balance Actual amount Interest rate Nature of the lending (Note 1) Transaction amount Purpose for lending Allowance for bad debt Collateral Lending limit for single party (Note 2) Overall lending limit (Note 2) Name Value 1 Lintes Technology Co.,Ltd. Genie Precision Machining Co., Ltd. Other receivables - relatedparties Yes 30,000 30,000 29,000 1.72 2 - To repay loan - None - 289,173 1,156,693
No.	Lender	Borrower	Item	Related party	Max amount for the period	Closing balance	Actual amount	Interest rate	Nature of the lending (Note 1)	Transaction amount	Purpose for lending	Allowance for bad debt	Collateral		Lending limit for single party (Note 2)	Overall lending limit (Note 2)
													Name	Value
1	Lintes Technology Co.,Ltd.	Genie Precision Machining Co., Ltd.	Other receivables - relatedparties	Yes	30,000	30,000	29,000	1.72	2	-	To repay loan	-	None	-	289,173	1,156,693

Note 1: The following are the descriptions of the funds lending.
(1) Those who have business dealings.
(2) When there is a need for short-term financing.
Note 2: (1) The amount of the Company’s financing to a single party shall not exceed 20% of the Company’s net worth.
The total amount of funds lent by the Company to others shall not exceed 40% of the Company’s net worth.
(2) Lintes Technology Co., Ltd. must not lend more than 10% of its net value to a single entity.
Lintes Technology Co., Ltd.'s total amount of funds lent to others must not exceed 50% of its net
value.
a. For those with business transactions, the total amount of funds lent must not exceed 10% of
the company's net value.
b. For those needing short-term funding, the total amount of funds lent must not exceed 40% of
the company's net value.

~71~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

2. Endorsement:

Unit: NT$/Foreign currency 1,000

No.	Endorseme nt provider	Endorsee	Endorsee	Ceiling on amount of endorsement for an enterprise (Note 2)	Balance of the ceiling endorsement fee in the period	Ending balance of the endorsement fee	Amount actually used	Amount of endorsemen t backed by assets	Percentage of the accumulated amount of endorsement in the net value of current financial statement (%)	Ceiling on amount of endorsement (Note 2)	Endorsement made by parent company to subsidiary	Endorsement made by subsidiary to parent company	Endorseme nt made to any party in Mainland China
		Company Name	Relatio nship (Note 1)
0 0 1 2	`本公司` " Lotes Guangzhou Co., Ltd. Lintes Technology Co., Ltd.	REKA Technology Co., Ltd. Lotes Guangzhou Co., Ltd. REKA Technology Co., Ltd. Genie Precision Machine Co., Ltd.	2 2 1 2	5,554,612 5,554,612 2,061,227 1,445,866	537,920 628,400 (USD20,000) 97,275 (USD3,000) 146,600	- 153,525 (USD5,000) 92,115 (USD3,000) 130,000	- - - -	- - - -	0.00% 0.55% 0.89% 4.50%	13,886,529 13,886,529 5,153,069 2,891,732	Yes " No Yes	No " " "	No Yes No "

Note 1: There are seven types of relationship between the Endorser and Endorsee, which can be marked:

(1) Companies with business dealings.

(2) Companies in which the company directly and indirectly holds more than 50% of the voting rights.

(3) Companies that hold more than 50% of the voting rights in the company, both directly and indirectly.

(4) The Company owns, directly and indirectly, more than 90 percent of the voting shares.

(5) Company that is mutually insured under a contract between its peers or co-manufacturers based on the need to perform the work.

(6) Company in which all of the contributory shareholders have given their endorsement in proportion to their shareholding in the joint venture.

(7) Intercompany performance guarantees and guarantees for pre-sale contracts in accordance with the Consumer Protection Act.

Note 2: (1) The amount of the Company’s guarantee for a single corporate endorsement shall not exceed 20%

of the net worth of the Company 。

The aggregate amount of the Company’s guarantees under external endorsement shall not exceed 50% of the net worth of the Company.

(2) The amount of Lotes Guanghou Co., Ltd’s guarantee for a single corporate endorsement is limited to not more than 20% of the net worth of the company.

The aggregate amount of Lotes Guanghou Co., Ltd’s external endorsement guarantees is limited to an amount not exceeding 50% of the Company’s net worth.

(3) The amount of Lintes Technology Co., Ltd.’s guarantee for a single corporate endorsement is limited to not more than 50% of the net worth of the company.

The aggregate amount of Lintes Technology Co., Ltd.’s external endorsement guarantees is limited to an amount not exceeding 100% of the Company’s net worth.

~72~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Securities held at the end of fiscal period (excluding the equity of controlled by subsidiaries, affiliated companies, or joint company):

Unit: NT$ 1,000

				Unit: NT$	Unit: NT$	Unit: NT$	Unit: NT$	1,000
Holding company	Category and name of security	Relationship with the issuer of the security	Accounting item	End of the period				Remark
				Shares	Book value	Shareholding ratio	Fair value
Lotes Co., Ltd. " " " Jiayu Investment Co., Ltd. " " " " Lintes Technology Co., Ltd. "	VSO ELECTRONICS CO., LTD. NEXUS CVC Partners Fund LP - private equity fund SteadyBeat Technology Corporation G-sau Co., Ltd Grand-Tek Technology Co., Ltd. LIAN HONG ART CO., LTD. OTO PHOTONICS, INC. LUCEMITEK CO., LTD. AICP Technology Corporation Chailease Holding Company Limited Class A Preferred Shares Hotai Finance Co., Ltd. Class A Preferred Shares	None " " " " " " " " " "	Financial assets measured at FVTPL - current Financial assets measured at FVTPL – non-current Financial assets measured at FVTOCI - non-current " Financial assets measured at FVTPL - current " " " Financial assets measured at FVTOCI - current Financial assets measured at FVTOCI - non-current "	90,800 - 212,020 300,000 392,815 1,088,719 1,368,800 1,169,977 400,000 512,000 300,000	7,307 24,711 1,129 15 18,364 34,926 - - - 50,125 28,710	0.24 % - % 2.17 % 10.38 % 1.31 % 2.87 % 4.10 % 17.33 % 5.33 % 0.34 % 0.60 %	7,307 24,711 1,129 15 18,364 34,926 - - - 50,125 28,710	Note Note

Note: All of them were recognized in losses.

~73~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The company which purchases (sells) products	Name of transaction counterparty	Relationship		Transacti	on status		Situation and reason for the conditions of transaction to be different from the ordinary ones	Situation and reason for the conditions of transaction to be different from the ordinary ones	Notes and receivable	accounts (payable)	Remark
			Purchases (sales)	Amount	Percentage in total goods purchased (sold)	Credit period	Unit price	Credit period	Balance	Percentage in the notes and accounts receivable (payable)

The cumulative purchase or sale of the same securities amounted to at least NT$300 million or 20% of the paid-in capital:

Unit: NT$ 1,000/ Foreign currency 1,000

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counterparty	Nature of Relationship	Beginning Balance(Note 1)	Beginning Balance(Note 1)	Acquisition(Note 1)	Acquisition(Note 1)	Disposal(Note 1)	Disposal(Note 1)	Disposal(Note 1)	Disposal(Note 1)	Ending Balance(Note 1)	Ending Balance(Note 1)
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Value	Gain/Loss on Disposal	Shares	Amount
Lotes Co., Ltd. Lintes Technology Co., Ltd.	Lotes Viet Nam Company Limited Lintes Technology (Thailand) Co., Ltd	Investments accounted for using equity method " (	Lotes Viet Nam Company Limited Lintes Technology Thailand) Co., Ltd	Note 2 Note 2	42,200,000 6,400,000	1,295,751 (USD42,200) 57,709 (THB64,000)	32,429,000 32,200,000	995,732 (USD32,429) 290,609 (THB258,000) (USD1,888)	- -	- -	- -	- -	74,629,000 38,600,000	2,291,483 (USD74,629) 348,318 (THB322,000) (USD1,888)

Note 1: Conversion into New Taiwan Dollars is based on the exchange rate on the balance sheet date.

Note 2: The subsidiary's issued securities were acquired through cash capital increase.

Acquisition of real property amounting to NT$300 million or 20% or more of the paid-in capital:

Unit: NT$ 1,000

The company which acquired the property	Name of asset	Date of occurrence	Amount of transaction (Note 2)	Payment condition (Note 2)	Counterparty of transaction	Relationship	If the counterparty is a related party, the information of its previous transfer shall be provided	If the counterparty is a related party, the information of its previous transfer shall be provided	If the counterparty is a related party, the information of its previous transfer shall be provided	If the counterparty is a related party, the information of its previous transfer shall be provided	Reference for pricing	Purpose of the acquisition and the condition of use	Other agreed matters
							Owner	Relationship with the issuer	Date of transfer	Amount
Lotes Zhongshan Co., Ltd. Lotes Hengnan Co., Ltd. LOTES VIET NAM COMPANY LIMITED Zhongshan Dezhi Real Estate Development and Operation Co., Ltd.	Plant (Note 1) " Plant (Note 1) Land use rights	2017.10 ~ 2023.02.28 2019.10 ~ 2023.12 2022.03~ 2023.12 2023.02.10	1,793,895 348,891 598,866 249,876	1,621,212 342,401 578,057 249,876	Chongqing Chuangyou Construction Group, etc. " VITECCONS CONSTRUCTION INVESTMENT JOINT STOCK COMPANY Zhongshan Municipal Natural Resources Bureau	None " " "	- - - -	- - - -	- - - -	- - - -	Tendering " Tendering Transaction prices for governmental construction land use rights	Construction of self-use plant " Construction of self-use plant Business development	None " " "

Note 1: Build the factory by own contracting committee.

Note 2: The conversions were made at the exchange rates prevailing on the balance sheet date.

~74~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

The company which purchases (sells) products	Name of transaction counterparty	Relationship		Transacti	on status		Situation and reason for the conditions of transaction to be different from the ordinary ones	Situation and reason for the conditions of transaction to be different from the ordinary ones	Notes and receivable	accounts (payable)	Remark
			Purchases (sales)	Amount	Percentage in total goods purchased (sold)	Credit period	Unit price	Credit period	Balance	Percentage in the notes and accounts receivable (payable)

Disposal of real property amounting to NT$300 million or 20% or more of paid-in capital: None.
The amount of sales to or from related parties is at least $100 million or 20% of the paid-in capital:

Unit: NT$ 1,000

The company which purchases (sells) products	Name of transaction counterparty	Relationship	Transaction status	Transaction status	Transaction status	Transaction status	Situation and reason for the conditions of transaction to be different from the ordinary ones	Situation and reason for the conditions of transaction to be different from the ordinary ones	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Remark
			Purchases (sales)	Amount	Percentage in total goods purchased(sold)	Credit period	Unit price	Credit period	Balance	Percentage in the notes and accounts receivable(payable)
Xincheng Development Co., Ltd. " REKA Technology Co., Ltd. " REKA Technology Co., Ltd. " " " Lotes Guangzhou Co., Ltd. " " " " " Lintes Technology (Suzhou) Co., Ltd. Lotes Hengnan Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. Guangzhou Leside Technology Co., Ltd. " "	The Company Lotes Suzhou Co., Ltd. The Company Lotes Guangzhou Co., Ltd. Lotes Hengnan Co., Ltd. " Lotes Zhongshan Co., Ltd. Guangzhou Leside Technology Co., Ltd. Lotes Zhongshan Co., Ltd. " REKA Technology Co., Ltd. Lotes Hengnan Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Lintes Technology Co., Ltd. Lotes Zhongshan Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. REKA Technology Co., Ltd. Lotes Zhongshan Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd.	Subsidiary The surrogate parent company are the same parent company Subsidiary The surrogate parent company are the same parent company The surrogate parent company are the same parent company " The surrogate parent company are the same parent company " " " " " " " Subsidiary The surrogate parent company are the same parent company " " " " "	Net sales Net purchases Net sales Net purchases Net purchases Net sales Net purchases Net sales Net purchases Net sales Net purchases " " Net sales " " " " Net purchases Net sales "	1,316,107 1,386,087 9,413,378 6,196,311 1,015,488 137,972 6,137,936 1,521,821 612,492 146,863 766,171 238,052 333,391 138,369 1,359,338 363,754 132,314 200,420 441,350 707,026 877,230	94.26 % 99.27 % 67.35 % 44.98 % 7.37 % 0.99 % 45.86 % 10.89 % 13.30 % 2.09 % 16.64 % 5.17 % 7.24 % 1.97 % 97.93 % 26.86 % 9.77 % 18.04 % 22.21 % 33.88 % 42.04 %	EOM 90 days " " " EOM 90 days " " " " " " " " " " " " " " " "	- - - - - - - - - - - - - - - - - - - - -	No significant difference " " " No significant difference " " " " " " " " " " " " " " " "	211,845 (236,004) 3,499,107 (2,235,650) (162,900) 46,373 (1,602,945) 736,376 (307,353) 50,325 (273,713) (88,375) (48,422) 9,266 521,489 104,324 61,828 8,954 (236,064) 285,299 411,039	89.64% (99.76)% 56.60% (48.90)% (3.56)% 0.75% (35.06)% 11.91% (30.66)% 1.77% (27.31)% (8.82)% (4.83)% 0.33% 97.00% 19.61% 11.62% 2.36% (23.56)% 26.96% 38.84%

~75~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Amounts due from related parties amounting to at least NT$100 million or 20% of paid-in capital:

Unit: NT$ 1,000

Related party with accounts receivable by the Company	Name of transaction counterparty	Relationship	Balance of receivables from the relatedparty	Turnover ratio	Past due receivables from the related party	Past due receivables from the related party	Amounts due from related parties recovered after theperiod	Allowance for losses
					Amount	Handling
Lotes Guangzhou Co., Ltd. " Lotes Zhongshan Co., Ltd. " " " Lotes Hengnan Co., Ltd. " Guangzhou Leside Technology Co., Ltd. " Lintes Technology (Suzhou) Co., Ltd. Xincheng Development Co., Ltd. REKA Technology Co., Ltd. " " " " Lotes Suzhou Co., Ltd. Good Hope Investments Limited	REKA Technology Co., Ltd. Lotes Zhongshan Co., Ltd. REKA Technology Co., Ltd. Lotes Guangzhou Co., Ltd. Guangzhou Leside Technology Co., Ltd. ZhongShan HuiXing Electronics Co., Ltd. REKA Technology Co., Ltd. Lotes Zhongshan Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Lintes Technology Co., Ltd. The Company " Lotes Guangzhou Co., Ltd. Lotes Zhongshan Co., Ltd. Guangzhou Leside Technology Co., Ltd. ZhongShan HuiXing Electronics Co., Ltd. Xincheng Development Co., Ltd. REKA Technology Co., Ltd.	The surrogate parent company are the same parent company " " " " " The ultimate parent entity is the same company " " " Subsidiary Subsidiary " The surrogate parent company are the same parent company " " " " Parent company	2,235,650 673,231 1,602,945 307,353 236,064 145,838 162,900 104,324 285,299 411,039 521,489 211,845 3,499,107 273,713 484,934 736,376 159,096 236,004 949,431	4.18 - 4.37 1.90 1.95 1.55 6.35 4.59 3.45 2.49 2.42 5.00 3.49 3.14 - 2.60 1.30 4.78 -	- - - - - - - - - - - - - - - - - - -		1,155,908 57,217 982,560 165,056 114,741 17,429 61,891 70,312 148,347 203,652 203,495 210,728 1,655,927 124,363 139,518 286,103 45,796 215,585 -	- - - - - - - - - - - - - - - - - - -

Engagement in derivative transactions: None.

~76~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(2) Information on reinvestment business:

The Company’s investments in 2023, excluding those in Mainland China, include the

following:

Unit: NT$ 1,000

Name of the company investing	Name of investee company	Location	Main business	Original investment amount (Note 1)	Original investment amount (Note 1)	Shares held at the	end of the period	end of the period	Gain/loss of investee company in the fiscal period	Gain/loss in the investment recognized in the fiscal period	Remark
				End of the period	End of the previous year	Shares	Ratio	Book value
The Company " " " " " " " " " " Lotes Investment Ltd. Good Hope Investments Limited " Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd.	Lotes Investment Ltd. Good Hope Investments Limited Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. Lotes USA, Inc. LOTES EU GmbH Lerain Technology Co., Ltd. Lomites Co., Ltd I-See Vision Technology Inc. LOTES VIET NAM COMPANY LIMITED Loteson International Investments Limited Xincheng Development Co., Ltd. REKA Technology Co., Ltd. Jae You Co., Ltd. Wangden Investments Limited	Samoa " " Anguilla Taiwan America Germany Taiwan " " Vietnam Hong Kong Samoa Hong Kong " "	Holding and investment " " " General investment Market development Market development Design, test and sale of chips Manufacturing and trading of mechanical equipment and electronic parts Design, research and development, and manufacturing services for contact lenses Manufacturing of connectors for the information industry, communications industry, and consumer electronics industry Holding and investment Sales of connectors for the information industry, communications industry, and consumer electronics industry Sales of connectors for the information industry, communications industry, and consumer electronics industry Holding and investment Holding and reinvestment	799,865 12,321 614,604 15,353 690,000 76,763 3,398 47,321 123,800 94,000 2,291,483 799,865 3,071 3,110 614,614 15,353	799,996 12,323 614,704 15,355 690,000 76,775 3,272 47,321 124,900 - 1,295,962 799,996 3,071 3,110 614,715 15,355	26,050,000 401,281 20,016,426 500,000 72,300,000 2,500,000 100,000 4,732,059 12,380,000 9,400,000 74,629,000 26,050,000 100,000 101,281 20,016,756 500,000	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 15.74% 99.04% 21.01% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%	9,949,958 2,035,859 4,351,613 201,685 1,493,390 88,500 4,744 30,534 83,364 47,666 1,894,288 10,306,155 1,356 1,085,047 4,387,190 201,685	1,600,810 194,701 878,688 23,890 190,233 5,925 254 6,476 (22,585) (183,101) (147,235) 1,600,810 (19) 194,719 878,688 23,890	1,699,504 194,701 871,190 23,890 190,458 5,925 254 1,330 (22,916) (21,474) (147,235) 1,600,810 (19) 194,719 878,688 23,890	Note 2 Note 2 Note 2

~77~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Name of the company investing	Name of investee company	Location	Main business	Original investment amount (Note 1)	Original investment amount (Note 1)	Shares held a	t the end of	the period	Gain/loss of investee company in the fiscal period	Gain/loss in the investment recognized in the fiscal period	Remark
				End of the period	End of the previous year	Shares	Ratio	Book value
Jiayu Investment Co., Ltd. " " " Good News Medical Co., Ltd. Lintes Technology Co., Ltd. Manufacturing and sales of optical molds " " " Jilong Co., Ltd.	Ememe Robot Co., Ltd. Compertum Microsystems Inc. Good News Medical Co., Ltd. Lintes Technology Co., Ltd. FELICITY NEWS LIMITED Genie Precision Machine Co., Ltd. Compertum Microsystems Inc. Lerain Technology Co., Ltd. Jilong Co., Ltd. LINTES TECHNOLOGY (THAILAND) CO., LTD. Rihui Co., Ltd.	Taiwan " " " BVI Taiwan " " Samoa Thailand Samoa	Manufacturing of electrical and audio-visual electronic products Manufacturing of electronic components Manufacturing and sales of machinery and equipment, electronic components, and optical instruments Manufacturing of electronic parts and components, other electrical and electronic machinery and equipment Holding and reinvestment Manufacturing and sales of optical molds Manufacturing of electronic components Design, test and sale of chips Holding and reinvestment Manufacturing, processing, and trading of wires, cables, and electronic components Holding and reinvestment	69,600 60,866 6,360 616,859 1,013 164,833 20,279 5,471 151,990 348,318 151,990	69,600 60,866 6,360 616,919 - 164,833 20,279 5,471 152,015 57,709 152,015	6,960,000 4,331,380 636,000 31,075,140 33,000 14,671,000 1,433,135 547,059 4,950,000 38,600,000 4,950,000	94.37% 31.78% 25.44% 49.61% 100.00% 60.00% 10.59% 1.82% 100.00% 100.00% 100.00%	(8,184) 9,656 1,941 1,434,537 1,037 180,123 3,217 3,530 547,774 344,599 547,774	(15) (35,411) (7,805) 396,730 12 (52,241) (35,411) 6,475 81,966 (3,216) 81,966	(14) (11,252) (1,986) 197,752 12 (31,800) (3,749) 118 80,006 (3,216) 80,006	Note 2 Note 2 Note 2

Note 1: The original investment amount was converted into New Taiwan dollars using the exchange rate at the balance sheet date. Note 2: The investment income or loss recognized in the current period includes adjustments for unrealized gains or losses from intercompany transactions.

~78~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(3) Investment in China:

Names of investee companies in Mainland China, major business activities, and other related information:

Unit: NT$ 1,000

Name of investee company in Mainland China	Mainbusiness	Paid-in capital (Note 3)	Investme nt method (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the fiscal period (Note 3)	Amount r recov	emitted or ered	Accumulated investment amount remitted from Taiwan at the end of the fiscal period (Note 3)	Gain/loss of investee company in the fiscal period	Shareholdin g ratio	Gain/loss in investment recognized in the fiscal period (Note 2)	Carrying amount of investment at the end of the fiscal period	Investment income remitted back to Taiwan by the end of the fiscal period
					Remitted	Recovered
Lotes Guangzhou Co., Ltd. Lotes Suzhou Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Lotes Hengnan Co., Ltd. Lintes Technology (Suzhou) Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. Lotes Zhongshan Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Hengnan Deyi Property Development Co., Ltd. Zhongshan Jinmeida Metal Surface Treatment Co., Ltd. Guangzhou Dezhi Technology Co., Ltd. Zhongshan DeZhi Real Estate Development Co., Ltd. Guangzhou Leside Technology Co., Ltd. Chongqing Fuxinrui Electronic Technology Co., Ltd. ZhongShan HuiXing Electronics Co., Ltd. HuiLi Electronics Technology (Ningbo) Co., Ltd. Jia Shi Mei (Guangzhou) Trading Co., Ltd.	Manufacturing of connectors for the information industry, communications industry, and consumer electronics industry Manufacturing of connectors for the information industry, communications industry, and consumer electronics industry R&D of electronics, import and export of raw materials of plastic products and plastic products Manufacturing of connectors for the information industry, communications industry, and consumer electronics industry Development and production of the measurement instruments for optical communication, optical transceivers of 10GB/s or above and relevant technical support Manufacturing of robotic arms, automation equipment and relevant components Manufacturing connectors for telecommunication industry and for consumer electronics industry, and manufacturing of robotic arms, automation equipment and relevant components Surface treatment of metal products and plastic products Development of real estate, lease of premises, landscape design and interior decorating Surface treatment of metal products and plastic products Manufacturing of computers, communication, and other electronic equipment Real estate development, house rental, landscape design, and interior decoration Research, testing and development R&D and sales of electronic components, automobile components and accessories, computers and accessories, development of molds and the import and export of goods and technologies Manufacturing of connectors for the information technology, communication industries, and consumer electronics Manufacturing of connectors for the information technology, communication industries, and consumer electronics Engaging in the manufacture and sale of audio equipment, Class II medical devices, mechanical equipment, electronic components, and optical instruments	819,824 613,769 15,353 1,131,511 151,990 108,175 3,028,900 263,947 99,521 44,482 2,164 253,130 20,337 6,923 33,318 4,327 1,013	(2) (2) (2) (3) (2) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (3) (2)	782,978 613,769 15,355 - 151,990 - - - - - - - - - - - -	- - - - - - - - - - - - - - - - 1,013	- - - - - - - - - - - - - - - - -	782,978 613,769 15,353 - 151,990 - - - - - - - - - - - 1,013	1,600,810 878,688 23,890 203,962 78,175 18,397 979,691 33,677 1,013 (824) (41) (10) 79,413 8,858 (34,126) (2,291) 12	100.00% 100.00% 100.00% 100.00% 49.61% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00% 30.06% 51.00% 100.00%	1,699,523B 871,189B 23,890B 184,741B 37,809C 18,397B 979,691B 33,677B 485B (3,621)B (41)B (8,232)B 79,413B 4,517B (2,795)B (1,168)B 12B	9,949,927 4,351,473 201,685 1,686,900 307,641 168,785 5,301,921 300,699 98,642 98,978 2,124 244,950 190,634 6,108 227 1,057 1,037	- - - - - - - - - - - - - - - - -

~79~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

Note 1: There are six types of investments:

(1) Investment in Chinese Corporation via Third Region Remittance.
(2) Establishment of a company to reinvest in a continental company through a third regional investment.
(3) Reinvest in Chinese companies by re-investing in existing companies in third regions.
(4) Direct Investment
(5) Others.
(6) N/A.

Note 2: (1)The investment gain or loss recognized in the current period has been reconciled with the unrealized gain or loss from intercompany transactions.

(2) Basis of recognition of investment income and loss is divided into the following four categories, which should be noted:
A. Financial statements audited by an international accounting firm with a cooperative relationship with the CPA firms in Taiwan
B. Financial statements audited by the parent company’s certified accountant in Taiwan
C. Financial statements audited by the subsidiary's certified accountant in Taiwan D. Other

Note 3: The balance sheet date exchange rates are used to translate the paid-in capital and remittance of cumulative investment amounts into New Taiwan dollars.

2. Investment ceiling in Mainland China:

Company name	Accumulated amount remitted from Taiwan at the end of the fiscal period for investment in Mainland China (Note 1)	Investment amount approved by Investment Commission, MoEA (Note 1)	Investment ceiling in Mainland China according to the regulations made by Investment Commission, MoEA
Lotes Co.,Ltd.	$1,412,100,000	$1,559,749,000	$16,663,835,000
Lintes Technology Co.,Ltd.	$151,990,000	$151,990,000	$1,735,039 ,000
GOOD NEWS MEDICAL CO., LTD.	$1,013,000	Note 2	$4,579 ,000

Note 1: The conversions to NTD were made at the exchange rates prevailing on the balance sheet date.

Note 2: As the relevant statutory filing procedures have not yet been completed, the approved investment amount is not yet available.

3. Significant transactions with the investee companies in China:

Please refer to the “Information on Significant Transactions” and “Business Relationships and Significant Transactions between Subsidiaries and Parents” for details of significant direct or indirect transactions between the Company and its investees in Mainland China in fiscal 2023, which have been eliminated in the preparation of the consolidated financial statements.

~80~

Notes to the Parent Company Only Financial Statements of Lotes Co., Ltd.

(4) Information on Major Shareholders:

ation on Major Shareholders:
Shares Name of Major Shareholder	Shares held	Shareholding %
Chin-LingInvestment Co.,Ltd.	10,956,237	9.82%
JiamingInvestment Co.,Ltd.	9,797,037	8.78%

Note:

(1) The information on major shareholders in this table is based on the last business day of each quarter and is calculated based on the total number of common shares and preferred shares held by shareholders who have completed the delivery of unregistered shares (including treasury shares) of the Company of at least 5%. The number of shares recorded in the Company’s financial statements and the actual number of shares delivered without physical registration may differ depending on the basis of computation.
(2) The above information is revealed by the trustee’s opening of a trust account with individual subaccounts of the principal if the shareholder has delivered his or her shares to the trust. As for any shareholder holding more than 10% of the shares of the Company in accordance with the Securities and Exchange Act, the shareholdings include its own shares plus the shares it has delivered to the trust and has the right to decide on the use of the trust property, etc. Please refer to the Market Observation Post System for information on insider shareholdings.

XIV. Segmental Information

Please refer to the consolidated financial statements for 2023.

~81~

Lotes Co., Ltd.

Statement of Cash and Cash Equivalents

December 31, 2023

Unit: NT$ 1,000

Item Cash and cash equivalents: Petty cash Checks and demand deposits: Time deposit: Total	Summary	Amount $ 155 36,389 424,850 461,239 50 7,475,390 7,475,440 $ 7,936,834
	NTD Foreign currency (USD13,567,389.85, HKD20,871.68, JPY148,785.00, EUR217,680.55, RMB173,801.74 and THB1.67) NTD Due date: 2024.02.19 Interest rate range: 1.45% Foreign currency (USD239,290,000, RMB17,800,000 and EUR1,500,000) Due date: 2024.01.04~2024.06.12 Interest rate range: 2.30%~5.54%

Statement of Financial Assets Measured at FVTPL - Current

Financial Instrument	Number of Shares or Bonds	Face Value	Total Amount	Interest Rate	Fair	Value	Fair Value Change Attributable to Credit Risk Change
					Unit Price	Total Amount 7,307
OTC Stocks VSO ELECTRONICS CO., LTD.	90,800	$ -	-	- %	80.47		-

~82~

Lotes Co., Ltd.

Statement of Notes Receivable

December 31, 2023

Unit: NT$ 1,000

Item	Summary	Amount $ 735 284 81 283 $ 1,383
Non-related parties: A company B company C company Other (Note)

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

Statement of Accounts Receivable

Item	Summary	Amount $ 35,703 $ 639,371 613,044 532,964 504,044 401,295 383,527 354,730 2,413,225 5,842,200 (2,311) $ 5,839,889
Accounts receivable - related parties Non-related parties: D company E company F company G company H company I company J company Other (Note) Less: allowance for losses

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

~83~

Lotes Co., Ltd.

Statement of Other Receivables

December 31, 2023

Unit: NT$ 1,000

Item	Summary Primarily receivables from mold opening income	Amount $ 2,275 (2,272)
Related-parties Less: allowance for losses Non-related parties: Business tax credit and tax refund Other receivables - interest Other Subtotal Less: allowance for losses
		$ 3
		$ 13,846 41,040 284
		55,170 (279)
		$ 54,891

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

Statement of Inventories

Item Merchandises Finished goods Work in process Raw materials Subtotal Less: Allowance for decline in value of inventories and doubtful losses	Amount $ 723,215 2,834 3 29	Market price 899,545 1,945 3 17 901,510
	726,081 (125,716)
	$ 600,365

Note: Allowance for decline in value of inventories and allowance for doubtful accounts is based on the lower of cost or net realizable value and the ageing of inventories, respectively.

~84~

Lotes Co., Ltd.

Statement of Prepayments

December 31, 2023

Unit: NT$ 1,000

Item	Summary Mainly prepayment of annual association fee Mainly prepayment of product certification fee Mainly prepayment of insurance Primarily prepaid business tax Mainly prepayment of miscellaneous expenses, etc.	Amount $ 1,461 1,250 912 2,480 1,112 $ 7,215
Prepayment of membership fee Prepayment Prepayment of insurance Prepaid import business tax Other (Note) Total

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

Statement of Changes in Financial Assets Measured at FVTPL - Non-Current From January 1 to December 31, 2023

Name of financial instruments	Beginning of theperiod	Beginning of theperiod	Increa	se in theperiod	Decrea	se in theperiod	Ending	of theperiod	Provision of guarantees orpledges
	Shares	Fair value	Shares	Amount 2,500 25,000	Shares	Amount (295) (289)	Shares	Fair value 2,205 24,711
Redemption rights of convertible bonds Private equity funds	- -	$ - -	- -		- -		- -		None
		$ -		27,500		(584)		26,916

~85~

Lotes Co., Ltd.

Statement of Changes in Financial Assets Measured at FVTOCI - Non-Current

From January 1 to December 31, 2023

Unit: 1,000 Shares/NT$ 1,000

Name	Beginning of theperiod	Beginning of theperiod	Increase	in theperiod	Decrease in the period (Note)	Decrease in the period (Note)	Ending	of theperiod	Accumulated impairment	Provision of guarantees orpledges
	Shares Fair value		Shares	Amount - -	Shares	Amount (3,297) (154)	Shares	Fair value 1,129 15
SteadyBeat Technology Corporation G-sau Co., Ltd	831 $ 4,426 300 169 $ 4,595		- -		619 -		212 300		- -	None None
		$ 4,595		-		(3,451)		1,144	-

Note: This amount includes a disposal of NT$7,433 thousand in this period and unrealized gains of NT$3,982 thousand on financial assets measured at fair value through other comprehensive income.

~86~

Lotes Co., Ltd.

Statement of Changes in Investment Accounted for Using the Equity Method

From January 1 to December 31, 2023

Unit: NT$ 1,000

Name	Opening balance (Note 1)	Opening balance (Note 1)	Increase in the period (Note 2)	Increase in the period (Note 2)	Decrease in the period (Note 2)	Decrease in the period (Note 2)	Closing balance		Market valu
									Unitprice
	Shares Amount		Shares Amount - 1,508,827 - 188,414 - 790,463 - 20,126 3,300,000 9,801 - 2,718 - 582 - 1,329 - - 32,429,000 691,601 9,400,000 47,666 3,261,527		Shares Amount - - - - - - - - - - - - - - - - 110,000 23,708 - - - - 23,708		Shares Shareholding % 26,050,000 100.00% 401,281 100.00% 20,016,426 100.00% 500,000 100.00% 72,300,000 100.00% 2,500,000 100.00% 100,000 100.00% 4,732,059 15.74% 12,380,000 99.92% 74,629,000 100.00% 9,400,000 21.01%	Amount 9,949,958 2,035,859 4,351,613 201,685 1,493,390 88,500 4,744 30,534 83,364 1,894,288 47,666

Lotes Investment Limited Good Hope Investments Limited Guansi Development Co., Ltd. Zaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. Lotes USA. Inc. LOTES EU Gmbh Lerain Technology Co., Ltd. Lomites Co., Ltd LOTES VIET NAM COMPANY LIMITED I-See Vision Technology Inc.	26,050,000 $ 8,441,131 401,281 1,847,445 20,016,426 3,561,150 500,000 181,559 69,000,000 1,483,589 2,500,000 85,782 100,000 4,162 4,732,059 29,205 12,490,000 107,072 42,200,000 1,202,687 - - $ 16,943,782								- - - - - - - - - - -
		$ 16,943,782		3,261,527		23,708		20,181,601

Note 1: This amount includes the impact of retrospectively applying new standards amounting to NT$4,263 thousand. Note 2: This amount includes an increase in investment funds of NT$898,915 thousand, recognition of investment income of NT$2,795,627 thousand, recognition of a decrease in cumulative translation adjustments of NT$449,712 thousand, recognition of an increase in invested companies' capital reserves of NT$24,049 thousand under the equity method, recognition of unrealized losses on financial assets of NT$38 thousand under the equity method, recognition of unearned compensation of NT$6,162 thousand, and impairment losses of NT$24,860 thousand under the equity method.

~87~

Lotes Co., Ltd.

Statement of Deferred Tax Assets

December 31, 2023

Unit: NT$ 1,000

Item Deferred tax assets	Summary	Amount $ 164,025

Statement of Other Non-Current Assets

Item Refundable deposits Prepayment for construction work	Summary	Amount $ 6,027 7,248
		$ 13,275

~88~

Lotes Co., Ltd.

Statement of Short-Term Borrowings

December 31, 2023

Unit: NT$ 1,000

Type Credit loan Credit loan Credit loan Credit loan Credit loan Dividend loan	Description	$ $	Closing balance Period - 2023.06.27~ 2024.06.27 - 2023.08.07~ 2024.08.31 580,000 2023.06.12~ 2024.06.30 - 2023.03.31~ 2024.03.31 - 2023.04.30~ 2024.04.30 1,000,000 2023.08.28~ 2024.08.28 1,580,000	Interest rate 0% 0% 1.80% 0% 0% 1.90%		Financing line Collateral or guarantee 300,000Guaranteed notes of 300,000,000 500,000 Guaranteed notes of 500,000,000 580,000 Guaranteed notes of 580,000,000 (Note1) 600,000 Guaranteed notes of 600,000,000 767,625 Guaranteed notes of 767,625,000 (Note 2) 1,000,000 None 3,747,625	Remark
	E.SUN Bank CTBC Bank Bank SinoPac Hua Nan Bank Fubon Bank Hua Nan Bank

Note 1: The financing amount is NT$400,000 thousand and US$6,000 thousand. Note 2: The financing amount is US$25,000 thousand.

Statement of Notes Payable

Item	Summary	Amount $ 2,603 395 313 283 1,597 $ 5,191
Non-related parties: K company L company M company Ncompany Other (Note)

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

~89~

Lotes Co., Ltd.

Statement of Accounts Payable

December 31, 2023

Unit: NT$ 1,000

Item	Summary	Amount $ 3,499,107 211,845 31,710 $ 3,742,662 $ 882 743 276 99 $ 2,000
Related parties: REKA Technology Co., Ltd. Xincheng Development Co., Ltd. Other (Note) Non-related parties: O company P company Q company Other (Note)

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

Statement of Other Payables

Item Other payables - related parties Non-related parties: Salary payable Royalties payable Compensation payable to employees and directors and supervisors Promotion expenses payable Other Total Income tax liabilities for the period	Summary	Amount $ 4,356
	Mainly salary and year-end bonuses payable Mainly royalties payable Mainly compensation for employees and directors in 2023 Mainly promotion expenses payable
		$ 44,178 31,028 207,180 70,715 33,878
		$ 386,979
		$ 593,337

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

~90~

Lotes Co., Ltd. Statement of Refund Liabilities - Current December 31, 2023 Item Summary	Unit: NT$ 1,000 Amount $ 420,182
Refund liabilities - current Amount expected to be paid to customers as a result of discounts Statement of Other Current Liabilities Item Summary
	Amount $ 18,060
Other current liabilities Collection on behalf of others Statement of Bonds Payable

Name	Trustee	Issuanceperiod	Coupon rate 0%	Total issue amount	Unamortize d discount	Converted amount	Book value	Redemptio n method	Guarante e Note None
Second domestic unsecured convertibl e bond	Hua Nan Commercia l Bank, Ltd.	2023.03.09~2026.03.0 9		$ 1,000,000	(31,653)	(118,100)	850,247	Lump-sum payment at maturity

~91~

Lotes Co., Ltd. Statement of Deferred Income Tax Liabilities December 31, 2023 Unit: NT$ 1,000 Item Summary Amount Deferred income tax liabilities $ 948 Statement of Provision for Liabilities - Non-Current Item Summary Amount Provision for liabilities - Provision for employee benefit liabilities $ 43,534 non-current Statement of Other Non-Current Liabilities Item Summary Amount Deposits received $ 43

~92~

Lotes Co., Ltd.

Statement of Operating Revenue

From January 1 to December 31, 2023

Unit: NT$ 1,000

Item Quantity Amount Sales revenue: General 779,671KPCS $ 8,932,344 Triangular trade 1,258,539KPCS 6,763,228 Less: Return of sales (46,902) Discount on sales (175,220) Net operating revenue $ 15,473,450

~93~

Unit: NT$ 1,000

Lotes Co., Ltd.

Statement of Operating Cost

From January 1 to December 31, 2023

Item
Direct raw materials
Opening inventory
Add: Incoming materials for the period
Less: Raw materials at the end of the period
Transfer to merchandise inventory sales
Raw material consumption
Manufacturing Costs
Processing Costs
Transfer of finished goods and merchandise
Less Work in process at the end of the period
Total manufacturing costs
Add: Opening finished goods
Less: Transfer to work-in-progress
Finished goods at the end of the period
Other
Cost of finished goods
Add: Opening goods
Current period imports
Transfer of raw materials to sales
Other
Less: Ending goods
Other
Cost of goods sold
Loss on decline in value of inventories, slump and obsolescence
Operating cost

Amount
$ 18
848
(29)
(11)
826
3,851
1,487
5,105
(3)
11,266
4,220
(5,105)
(2,834)
(796)
6,751
1,089,869
10,821,429
11
31,427
(723,215)
(12,976)
11,206,545
40,413
$
11,253,709

~94~

Lotes Co., Ltd.

Statement of Promotion Expense

From January 1 to December 31, 2023

Unit: NT$ 1,000

Item	Summary	Amount $ 67,044 38,356 74,527 126,311
Import and export expenses Royalties Payroll Other (Note) Total
		$ 306,238

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

Statement of Administration Expense

Item	Summary	Amount $ 278,106 25,567 147,108
Salary expenses Labor expenses Other (Note) Total
		$ 450,781

Note: The balance of each account does not exceed 5% of the amount in this accounting item and is not shown separately.

~95~

Lotes Co., Ltd.

December 31, 2023

Please refer to the following notes for the remaining information on the schedule of significant accounting items:

(1) Statement of property, plant and equipment and changes in accumulated depreciation, Note VI (6).

(2) Statement of right-of-use assets and changes in accumulated depreciation, Note VI (7).

(3) Statement of investment property and accumulated depreciation, Note VI (8).

(4) Statement of changes in intangible assets, Note VI (9).

(5) Statement of the net amount of other revenues and gains and expenses and losses, Note VI (23)

~96~

AI assistant

LOTES — Annual Report 2023

52339_rns_2023-11-14_d51f1a6b-8632-49dc-bb0b-15b6f0a2dc01.pdf

Lotes Co., Ltd.

Parent Company Only Financial Statement and Independent Auditor’s Report

2023 & 2022

Notice to Readers

Table of Contents

Independent Auditor’s Report

Audit opinion

Basis of the audit opinions

Key audit matters

Description of the key audit matters:

Corresponding audit procedures:

Emphasis of Matter

Other Matters

Responsibility from management level and governing unit towards the parent company only financial statements

Responsibility of accountants’ audit on the parent company only financial statements

Balance Sheet

December 31, 2023, December 31, 2022 and January 1, 2022

Lotes Co., Ltd.

Statement of Comprehensive Income

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

Lotes Co., Ltd.

Statement of Change in Equity

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

Lotes Co., Ltd.

Statement of Cash Flows

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

Lotes Co., Ltd. Notes to the Parent Company Only Financial Statements 2023 & 2022

(All amounts are in NT$ thousands unless otherwise stated)

I. Company History

II. Date and Procedures of Approval of Financial Statement

III. Application of New and Revised Standards and Interpretations

IV. Summary of Major Accounting Policies

(3) Foreign currency

1. Foreign currency trading

2. Foreign Operating Organizations

(5) Cash and cash equivalents

1. Financial assets

(3) Compound financial instruments

(4) Financial liabilities

(5) Derecognition of financial liabilities

3. Derivative financial instruments

(7) Inventory

(9) Investing subsidiary

(10) Investment property

2. Subsequent costs

(12) Leasing

1. The lessee

(13) Intangible assets

1. Recognition and measurement

2. Subsequent expenditure

3. Amortization

1. Defined contribution plan

2. Defined benefit plan

3. Short-term employee benefits

(19) Income tax

(20) Earnings per share

(21) Segmental information

V. Primary Sources of Major Accounting Judgment, Estimate and Assumption Uncertainties

VI. Descriptions for Important Accounting Items

1. Financial assets measured at FVTPL

2. Financial assets measured at FVTOCI

(5) Investment accounted for using the equity method

1. Subsidiaries

2. Associates

3. Guarantee

(6) Property, plant and equipment

(7) Right-of-use assets

(8) Investment property

(9) Intangible assets

(10) Short-term loans

(11) Long-term loans

(12) Bonds payable

(3) Repurchase details

(13) Lease liabilities

LOTES Annual Report 2023