LOTES — Annual Report 2023

Jun 18, 2024

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Stock Code: 3533

Lotes Co., LTD

2023

Annual Report

Notice to readers

This English version annual report is a translation of the Chinese version. If there is any inconsistency or discrepancy between the English version and Chinese version, the Chinese version shall prevail for all intents and purposes.

Published on May 17, 2024 Enquiry on the annual report: http://mops.twse.com.tw

1. Information on the Company's spokesperson and acting spokesperson.

	Name	Title	Telephone Number		E-mail Address	E-mail Address
Spokesperson	Liu, Hsing-Hsia	Financial manager	(02)24331110		samliu@lotestech.com
Acting Spokesperson	Tsai, Ming-Jui	Sales Vice President	(02)24331110			ray@lotestech.com

1. The name, address, and telephone number of the Company’s headquarters and factories

Name	Address	Telephone Number
Headquarter	No. 15, Wuxun St., Anle Dist., Keelung City	(02)24331110
Factory	No. 15, Wuxun St., Anle Dist., Keelung City	(02)24331110

1. The name, address, website, and telephone number of the agency handling shares transfer Name: SinoPac Securities Corporation Stock Registration Division Address: 3F., No. 17, Bo’ai Rd., Taipei City

Website: http://securities.sinopac.com/

Telephone Number: (02) 2381-6288

1. The name of the certified public accountant who duly audited the annual financial report for the most recent fiscal year, and the name, address and telephone:

2. Name of Accountants: Li, Fung-Hui, TSAI PEI-RU

Name of Accounting Firm: KPMG Taiwan

Address: 68F., No. 7, Sec. 5, Xinyi Rd., Taipei City

Website: http://www.kpmg.com.tw Telephone Number: (02) 8101-6666

1. the name of any exchanges where the company’s securities are traded offshore, and the method by which to access information on said offshore securities: N/A

2. Company website: http://www.lotes.com.tw

Table of Contents

I.	Letters to Shareholders	1
II.	Company Profile	3
III.	Corporate Governance Report	5
	1. Organization	5
	2. Information on Directors, Supervisors, President, Vice President, Associate President, Heads of departments and branches	7
	3. Remuneration of Presidents and Vice Presidents	15
	4. Corporate governance operations	19
	5. Accountants’ Information	45
	6. Transfer or pledge of shares by the company's directors,
	supervisors, managers and stockholders with more than 10% of the
	company's shares	45
	7. Relationship among the Top Ten Shareholders	48
IV.	Capital Overview	49
	1. Capital and shares	49
	2. Issuance of corporate bonds	53
	3. Issuance of preferred shares	55
	4. Issuance of global depository receipts	55
	5. Employee subscription warrants	55
	6. Restriction on issuing of new employee option	57
	7. Share issuance of merger company	57
	8. Share issuance of merger company	57
V.	Overview of Business Operations	62
	1. Description of the business	62
	2. Overview of market, production and sales	66
	3. Employee information	73
	4. Disbursements for environmental protection	73
	5. Labor relations	73
	6. IT security management	74
	7. Important contracts	75
VI.	Overview of Financial Status	76
	1. A condensed balance sheet and statement of comprehensive
	income for the last five years with the name of the accountant and	76

	his or her audit opinion
	2. Five-year financial analysis	79
	3. Audit Report of Supervisors for the Financial Statements	82
	4. Financial Statements and Independent Auditor’s Report	83
	5. Consolidated Financial Statement and Independent Auditor’s Report	177
VII.	Review Analysis of Financial Position and Operating Performance and Risk Issues	271
	1. Financial position	271
	2. Operating performance	272
	3. Cash flow	272
	4. The impact of major capital expenditures in the most recent year
	on financial operations	273
	5. The main reasons for the most recent annual reinvestment policy
	and profit or loss, improvement plans and investment plans for the	273
	coming year
	6. Analyze and assess the following risks for the most recent year and up to the date of publication of the annual report	274
	7. Other important matters	276
VIII.	Special Notes	277
	1. Related information of affiliates	277
	2. Private placements of marketable securities as of the date of
	publication of the most recent year and as of the date of the annual	286
	report
	3. Shareholdings or dispositions of the Company's shares by
	subsidiaries for the most recent year and as of the date of the	286
	annual report
	4. Other items of description which needs to be supplemented	286
	For the most recent year and as of the date of the annual report, if
IX.	any event occurred that had a significant impact on shareholders' equity or the price of securities as defined in Article 36, paragraph	286
	2, subparagraph 2 of the Securities and Exchange Act

I. Letters to Shareholders

1. 2023 Report on business operations

(1) Letters to Shareholders

The Company’s consolidated operating revenue for 2023 was NT$24,483 million, a decline of 9.66% compared to the revenue of NT$27,099 million for 2022. The consolidated net profit after tax was NT$5,593 million, a decrease of 10.57% compared to the net profit after tax of NT$6,254 million for 2022, resulting in an after-tax earnings per share of NT$50.65.

Reflecting on 2023, the global economy faced significant impact and recession due to the rapid rise of high inflation rates, directly affecting the operations of the consumer and server electronics industries to which the Company belongs. Additionally, downstream customers were generally affected by high inventory adjustments, leading to a significant decline in customer demand. However, due to the gradual increase in the conversion rate of new generation server and desktop CPU platforms, along with the Company's proactive investment in the development of new products and new customers, the revenue and profit performance for 2023 showed only a slight decline, with an after-tax earnings per share of NT$50.65 still reflecting a strong profit performance.

• (2) Operating plan implementation results and profitability analysis

• a. Operating plan implementation results

Unit: NT$ thousands

Item	2023	2022	Increased (decreased) amount	Increased (decreased) proportion
Operating revenues	24,483,463	27,099,134	(2,615,671)	(9.66%)
Operatingcosts	13,002,401	15,161,454	(2,159,053)	(14.25%)
Grossprofit	11,481,062	11,937,680	(456,618)	(3.83%)
Net income after tax for the period	5,593,032	6,254,264	(661,232)	(10.57%)

b. Financial income and expenditure and profitability analysis

	Item	Item	2023	2022
Profitability (%)	Return on total assets		15.85	19.34
	Return on total shareholders’ equity		22.11	31.53
	Percentage to the paid-in capital	Operating income	623.11	674.10
		Net income before tax	674.65	759.39
	Net profit margin		22.84	23.07
	Earnings per share after tax		50.66	58.70

c. Research and development status

In order to continue to provide customers with high quality products, the Company continues to improve the level of technology and energy in the areas of design, process, quality control and testing, and continues to achieve high growth goals, and has spared no effort in the development of

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new products to develop small pitch, high density connectors. Recently, in order to meet the future market trend of high-speed connectors, the Company has been actively engaged in high-current and high-frequency connector analysis and development capabilities to meet market demand. In addition, in order to expand our product line and market size, we have successfully developed connectors for high-frequency servers, automobiles, high-speed transmission devices and the latest transmission interface Type-C, etc.

1. 2023 Operating plan and outlook

2. (1) Management plan

3. a. Management policy

1) To strengthen market linkages between the three markets on both sides of the Strait and coordinate capacity allocation so as to fully grasp market changes and demand.

• 2) To strengthen the research and development team, continuously develop new products and improve the technical level to enhance the company's core technical capabilities in order to build a competitive advantage.

• 3) To integrate the Group's resources and improve production and management capabilities to reduce production costs and enhance operational efficiency.

• b. Important marketing and production policies

• 1) To strengthen customer relationship management to enhance competitive efficiency, and to actively maintain close relationships with major international manufacturers.

• 2) To provide customers with diversified products and services, the company adopts a customer-oriented approach and stays close to market leading manufacturers.

3) To improve the efficiency of factory management and the division of labor between domestic and overseas factories, and to strengthen the inventory management capability to effectively control production costs and enhance the production and sales mechanism.

• (2) Outlook for the future

Looking into the future, the Company will continue to face a highly competitive market and a dynamic economic environment. However, in addition to strengthening close cooperation with customers, the Company will continue to develop and improve its existing products and adopt a diversified strategy to enhance market sensitivity by maintaining good cooperation with international professional manufacturers, in order to fully grasp the development trend of new products and research and develop niche products. The Company aims to enhance its competitive edge in the industry and to achieve its operating objectives smoothly, thereby continuously creating maximum value for shareholders.

Best wishes,

Chairperson: Chu, Te-Hsiang President: Ho, Te-Yu Accounting Manager: Liu, Hsing-Hsia

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II. Company Profile

• I. Date of incorporation: August 23, 1986

I.	Date of incorporation: August 23, 1986	Date of incorporation: August 23, 1986
II.	Companyhistory
	1986	The Company was founded in Wugu Dist., New Taipei City; with total capital of 5 million New Taiwan Dollars; engaged in the manufacturing, processing and trading of various terminals and their finishedproducts.
	1989	Being aware of the electronics industry’s future, the Company began to manufacture/design electronic connectors and other related electronicproducts.
	1992	Moved to Dawulun Industrial Park,Keelungcity.
	1997	ISO9002 certified;Certified and taken effect of UL certification in the sameyear.
	1998	Capital increased by cash, total capital was twenty-five million New Taiwan Dollars (NT$25,000,000).
	2002	ISO9001:2000 certified.
	2003	Invested factoryin Guanghou-Lotes Guanghou Co.,Ltd。
	2004	Guanghou factory-Lotes Guanghou Co., Ltd was certified and taken effect of ISO 14001. LOTES connectors received ASUS “Environmental Management System “certification. CPU Socket 478 received Intel certification. Invested factory in Suzhou-Lotes Suzhou Co., Ltd。 Suzhou factory-Lotes Suzhou Co., Ltd was certified and taken effect of ISO 9000. The Company increased capital by cash, increasing total capital to four hundred ninety-five million New Taiwan Dollars(NT$495,000,000).
	2005	Lotes Suzhou Co., Ltd was certified and taken effect of ISO 9001:2000. The Company converted surplus into capital, increasing total capital to five hundred twenty-three million and two hundred thousand New Taiwan Dollars(NT$ 523,200,000)。
	2006	The Company converted surplus into capital and increased capital by cash, increasing total capital to five hundred ninety-one million and six hundred sixty thousand New Taiwan Dollars (NT$ 591, 660,000). Approved by Securities and Futures Bureau, Financial Supervision Commission of the Executive Yuan to pass public offering. Approved byTaipei Exchange to register as emergingstock.
	2007	The Company converted capital reserves and surplus into capital, increasing total capital to six hundred thirty-eight million and two hundred thousand New Taiwan Dollars (NT$ 638,200,000). Approved by Taiwan Stock Exchange to register as listed company. The Company increased capital by cash, increasing total capital to seven hundred eleven million and seven hundred fortythousand New Taiwan Dollars(NT$711,740,000).
	2008	The Company converted surplus into capital, increasing total capital to seven hundred sixty-two million three hundred twenty-seven thousand New Taiwan Dollars (NT$ 762, 327,000). Received Intel’s Preferred Quality Supplier (PQS) award
	2009	The Company converted employee stock option certificate to capital, increasing total capital to seven hundred seventy-one million and forty-one thousand New Taiwan Dollars (NT$ 771,041,000).
	2010	The Company increased capital by cash, increasing total capital to nine hundred thirty-one million and forty-one thousand New Taiwan Dollars(NT$ 931,041,000).
	2011	The Company converted employee stock option certificate to capital, increasing total capital to nine hundred thirty-four million and seven hundred seventy-nine thousand New Taiwan Dollars(NT$934,779,000).

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2012	The Company’s subsidiary, Lintes Technology, had successfully developed Thunderbolt high-speed active transmission cable series products. By passing Intel and Apple’s techconology qualification, Lintes echnology became the second professional manufacturer receiving the Intel Thunderbolt technology certification and manfacture Thunderbolt cables.
2013	CPU Socket—LGA 2011Pin R0 socket received Intel certification. CPU Socket—LGA 2011Pin R1 ILM & BP received Intel certification.
2014	Successfully developed HP Smart Socket ILM Joined USBIF to develop a new generation of high speed transmission device, USB Type C
2015	Developed Intel next generation server product, skt P PHLM Received Sanodenki ’s Quality Supplier award. Becamequalified supplier for SamsungMobile Communications business division.
2016	CPU Socket—LGA3674 PHLM for the next generation servers received Intel certification. Lotes Guanghou was certified AS9100C: Quality Management Standard for Aviation, Space,and Defense Industries.
2018	The Company’s subsidiary, Lintes Technology’s 40Gb Thunderbolt 3 passive 0.7M cable received Intel certification.
2019	The Company’s subsidiary, Lintes Technology was approved by Taipei Exchange to register as listed emerging stock company. The Company increased capital by cash, increasing total capital to one thousand thirty-one million and forty-one thousand New Taiwan Dollars(NT$1,031,041,000).
2020	The Company’s subsidiary, Lintes Technology was approved by Taiwan Stock Exchange to register as listed company. The Company implemented the Enterprise Resource Management (ERP) system, SAP ERP, and went live on 1/7. DDR5 certified by DETEC Association. USB4.0 & Thunderbolt Jan4 certified by USB-IF Association.
2021	CPU Socket-Whitley Socket for the next generation servers received Intel certification. The company carries out a cash capital increase and issues domestic convertible corporate bonds for the first time, increasing the total capital to NT$ 1.059 billion 77 million 9 thousand. Establish a subsidiary in Vietnam.
2022	The new generation server CPU Socket-Eagle Stream Socket has passed INTEL’s certification. The new generation server CPU Socket-AM5(Ginoa) Socket has passed AMD’s certification.
2023	The Company conducted a cash capital increase and issued the second domestic convertible bonds,raisingthe totalpaid-in capital to NT$1,113,209 thousand.

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III. Corporate Governance Report

1. Organization

(1) Organizational chart

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Board of
Directors
Auditor’s
Office
General
Manager
General Manager’s
Office
Management Dept. Administration Dept Finance Dept. Sales Dept. R&D Dept. Manufacturing Dept. QA Dept. IT Dept. Legal Affair Dept.
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(2) Businesses operated by each major department:

Department	Functions
General Manager	1. By the resolution of the Board of Directors, is responsible to all shareholders. 2. Overall planning for the Company and its developing direction. 3. Determine organizational structure. 4. Approve and sign off the Company’s major decisions and contracts. 5. Draw up quality policies/quality goals.
General Manager’s Office	1. Assist General Manager in the execution of the overall planning.
Auditing Office	1. Exam and evaluate the integrity, rationality and validity of the Company’s internal control system.
Financial & Administrative Department	1. Manage recruitment operations, and personnel information and attendance 2. Plan and execute employee training. 3. Manage miscellaneous affairs. 4. Manage office equipment maintenance and logistics affairs. 5.Human resourcesmanagementfor foreignaffiliated companies.
Finance Department	1. Provide relevant financial and management statements for external users and internal managers 2. Plan and execute annual budget. 3. Raise,operate,and allocate funds.
Finance Department	4. Prepare and analyze daily accounting, tax and financial statements. 5. Reimburse the Company’s various expenses 6. Evaluate the Company’s business performance and perform cost analysis. 7. Raise and allocate funds for foreign affiliated companies.
Sales Department	1. Expand markets. 2. External product quotations, correspondence and customer reception. 3. Operate order receiving, modifying and invoicing. 4. Collaborate with relevant departments to ensure delivery. Consult with clients if delivering on time is unachievable. 5. Customer information organization and customer service.

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Department	Functions
Research & Development Department	1. Responsible for the design and execution of newly developed products or tooling. 2. Manage and communication design changes. 3. Confirm toolingmade.
Manufacturing Department	1. Production of plastic products: Manufacture products’ plastic parts, design and modify plastic injection tooling and jigs, maintain on-site equipment, and manage material. 2. Production of stamping products: Responsible for the manufacture of terminals, the design and modification of stamping dies and jigs, the maintenance of on-site equipment, and material management. 3. Responsible for leading supplier management: Procure and manage material, equipment and daily consumables; Production planning and control. 4. Stock management of stock materials, semi-finished products and finished product: Manage and optimize production efficiency and process capability. 5. Procurement on behalf of foreign affiliated companies.
Quality Control Department	1. Product quality system control 2. Correction and preventive measures for defective products. 3. Handle customer complaint. 4. Inspect purchased products, self-produced products, finished products and raw material. 5. Counsel suppliers, inspect and monitor the process of incoming materials, manufacturing and shipping.
IT Department	1. Maintenance of network system 2. Maintenance of software/hardware equipments 3. Maintenance of system 4.Planning and executionof informationsystem.
Legal & Intellectual Property Office	1. Patent affairs 2. Legal affairs 3. Intellectual property affairs
Business Management Department	1. Responsible for oversea production quality control, delivery business expansion, customer services, customer/supplier relationship maintenance and improvement. 2. Operationplanningand analysis ofgroupaffiliated businesses.

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2. Information on Directors, Supervisors, President, Vice President, Associate President, Heads of departments and branches

(1). Information on Directors and Supervisors

																		April 15,	April 15,	2024
Title	Nationality/ Country of Origin	Name	Gender Age	Date elected	Term (year)	First Election Date	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Executives, Dir are spouses or w	ectors or Supervisors who ithin two degrees of kinship		Remarks
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relation
Chairperson	R.O.C.	Jiaming Investment Co., Ltd. Representative: Chu, Te-Hsiang	Male 61-70	July 16, 2021	3	93.10	10,040,037	9.70%	9,797,037	8.76%	0	0	0	0	Taishan Senior High School/ Mechanical Department; Lotes Co., Ltd./Chairperson	Lotes Co., Ltd./Chairperson Lotes Suzhou Co., Ltd./Chairperson Lintes Technology Co., Ltd./Chairperson Compertum Microsystems Inc./Chairperson LeRain Technology Co., Ltd./Chairperson Lotes Guangzhou Co., Ltd./Vice Chairperson t Co., Ltd./Chairperson	Associate President’s office	Chu Chen, Yi-Hui	Spouse
																	President	Ho,Te-Yu	Brother
Director	R.O.C.	Jiaming Investment Co., Ltd. Representative: Ho, Te-Yu	Male 51-60	July 16, 2021	3	October, 2004	10,040,037	9.70%	9,797,037	8.76%	0	0	0	0	Chung-Pu Junior High School Northern Occupational Training Council/Department of Die Molding Panyu Deyi Ltd./President	Lotes Co., Ltd./President Lotes Guangzhou Co., Lotes Hengnan Co., Ltd./Chairperson Lotes Suzhou Co., Ltd./Vice Chairperson Lintes Technology Co., Ltd./Director Compertum Microsystems Inc./Director Lotes ZhongshanCo.,Ltd./Director	Chairperson	Chu, Te-Hsiang	Brothers
Director	R.O.C.	Hsieh, Chia-Ying	Male 51-60	July 16, 2021	3	June, 2013	0	0	0	0	0	0	0	0	National Taiwan University/Master of Business Administration National Taiwan University/B.S. in Electrical Engineering Realtek Semiconductor Corp./Executive Assistant to the President Communicator Venture Management Inc./Vice President MIS Joint InternationalCo.,Ltd./Vice President	Leltek Inc./Director Total Fortune Capital Limited/Executive Director Sunplus Innovation Technology Inc./Independent Director Tyntek Corporation/Independent Director	None	None	None
Director	R.O.C.	Chu, Chien-Chung	Male 51-60	July 16, 2021	3	July 16, 2021	0	0	0	0	0	0	0	0	National Taiwan University/PhD in Electrical Engineering Mega Venture Capital Co., Ltd./Investment Review Committee Member Department of Electronic and Computer Engineering, National Taiwan University of Science and Technology/Adjunct Associate Professor TWSE/Listed Company Review Committee Member Department of Business Administration, NTU/Adjunt Practice Teacher Texas Instruments Taiwan Ltd./Senior Application Engineer NTU School of Professional Education and Continuing Studies/AdjunctChair Professor	Ansforce Inc./Founder and CEO Graduate Institute of Technology, Innovation & Intellectual Property Management, National Chengchi University/Adjunct Assistant Professor	None	None	None
Independent Director	R.O.C.	Wang, Jen-Chun	Female 51-60	July 16, 2021	3	July 16, 2021	0	0	0	0	0	0	0	0	University of Pennsylvania/PhD in Law Clerk Division for the Grand Justices at the Judicial Yuan/Assistant to the Grand Justices	Tsar and Tsai Law Firm/Partner	None	None	None

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Independent Director	R.O.C.	Chiang, I-Cheng	Male 61-70	July 16, 2021	3	July 16, 2021	0	0	0	0	0	0	0	0	University of Delaware/PhD in Mechanical Engineering Taiwan Aerospace Corp./Senior Engineer Taiwan High Speed Rail Corporation/Project Manager Department of Mechanical Engineering, Chinese Culture University/Assistant Professor, Associate Professor, Professor and Department Director Chinese Culture University/University Affairs DevelopmentCommittee Member	Department of Mechanical Engineering, Chinese Culture University/Professor	None	None	None
Independent Director	R.O.C.	Wu, Chang-Hsiu	Female 51-60	July 16, 2021	3	July 16, 2021	0	0	0	0	0	0	0	0	Drexel University/MBA Ding Shuo Certified Public Accountants Taipei Branch/Chief CPA Ding Shuo Certified Public Accountants/Partner CPA Department of International Business, National Taipei University of Business /Adjunct Lecturer Public Service Pension Fund Management Board/ Clerk of Department of Foreign Affairs National Taxation Bureau of the Southern Area Minxiong Office/Clerk of Tax Affairs Department of Accounting and Information Technology, National Chung Cheng University/Adjunct Lecturer Deloitte Taiwan/Deputy Group Leader KPMG Taiwan/Auditor	Deashine CPA Firm/CPA High-Tek Harness Enterprise Co., Ltd./Independent Director Innovation Incubation Center, National Taipei University of Technology/Counselor Academia-Industry Collaboration and Technology Licensing Center, National Taiwan Ocean University/Counselor

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Director and Supervisor are corporate shareholders’ representatives; the major shareholders of the corporate shareholders are:

April 15, 2024

	Name of Corporate Shareholder (Note 1)	Name of Corporate Shareholder (Note 1)	Major Shareholders of Corporate Sharholder (Note 2)	Major Shareholders of Corporate Sharholder (Note 2)	Major Shareholders of Corporate Sharholder (Note 2)
	Jiaming Investment Co., Ltd.		Chu, Te-Hsiang (24.44%), Chu-Chen, Yi-Hui (28.88%), Chu, Pei-Hsuan (15.56), Chu, Yen-Ni (15.56%), Chu, Ching-Fu (15.56%)
	Expertise and independence of the Director and Supervisor:
Term Name		Professional qualifications and experiences		Compliance with independence circumstances	Number of other public companies that the person also served as independent directors
Chairperson Chu, Te-Hsiang		With more than 30 years of experiences in the R&D and manufacturing of connectors, and business administration. No circumstances specified in Article 30 of the CompanyAct.			1
Director Ho, Te-Yu		With more than 30 years of experiences in the R&D and manufacturing of connectors, and business administration. No circumstances specified in Article 30 of the Company Act.			No
Director Hsieh, Chia-Ying		With the profession and experiences in engineering and business administration. Worked as an independent director of the Company. Currently serves as a director of Leltek Inc, the Executive Director Total Fortune Capital Limited, and an independent director of Sunplus Innovation Technology Inc. No circumstances specified in Article 30 of the CompanyAct.			2
Director Chu, Chien-Chung		With the profession and experiences in engineering and business administration. Currently serves as the Founder and CEO of Ansforce Inc., and the Adjunct Assistant Professor, Graduate Institute of Technology, Innovation & Intellectual Property Management, National Chengchi University. No circumstances specified in Article 30 of the CompanyAct.			No
Independent Director Wang, Jen-Chun		With the educational attainment and profession of law. A lawyer and patent attorney in R.O.C. and a lawyer in New York, U.S. Currently serves as a Partner at Tsar and Tsai Law Firm. No circumstances specified in Article 30 of the Company Act.		Being independent as an independent director. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, is not a director, supervisor or employee of the Company or any of its affiliates. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, does not hold any share of the Company and is not a director, supervisor or employee of company that has certain relationship with the Company. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, does not receive any remuneration for business, legal, financial and accounting services provided for the Company or its affiliates in the last two years.	No

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Independent Director Chiang, I-Cheng	With the educational attainment and profession of mechanical engineering. Currently serves as a professor at the Department of Mechanical Engineering, Chinese Culture University. Serves as the covenor of the Remuneration Committee of the Company. No circumstances specified in Article 30 of the Company Act.	Being independent as an independent director. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, is not a director, supervisor or employee of the Company or any of its affiliates. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, does not hold any share of the Company and is not a director, supervisor or employee of company that has certain relationship with the Company. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, does not receive any remuneration for business, legal, financial and accounting services provided for the Company or its affiliates in the last two years.	No
Wu, Chang-Hsiu	With the educational attainment and profession of accounting. A CPA in R.O.C., a CPA, agent ad litem for tax affairs, patent and trademark affairs, a corporate sustainability manager, Accredited in Business Valuation in Pennsylvania, U.S. Currently serves as a CPA at Deashine CPA Firm. Serves as the covenor of the Audit Committee of the Company. No circumstances specified in Article 30 of the Company Act.	Being independent as an independent director. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, is not a director, supervisor or employee of the Company or any of its affiliates. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, does not hold any share of the Company and is not a director, supervisor or employee of company that has certain relationship with the Company. The said person, including but not limited to the spouse and/or the second degree relatives of the said person, does not receive any remuneration for business, legal, financial and accounting services provided for the Company or its affiliates in the last two years.	1

Board Diversity and Independence:

1. Board Diversity:

In accordance with Rule 20 of the Company's Code of Corporate Governance Practices, the composition of the Board of Directors shall take into account diversity, except that the number of directors who are also managers of the Company shall not exceed one-third of the total number of directors, and that the Company shall develop an appropriate diversity approach with regard to its operation, business model and development needs, which shall include but not be limited to the following two major criteria.

• (1) Basic qualifications and values: gender, age, nationality and culture, etc.

• (2) Professional knowledge and skills: professional background (e.g. law, accounting, industry, finance, marketing or technology), professional skills and industry experience, etc.

Board members should generally possess the knowledge, skills and qualities necessary to carry out their duties. To achieve the desired objectives of corporate governance, the Board as a whole should possess the following competencies.

• (1) Ability to make operational judgments.

• (2) Ability to perform accounting and financial analysis.

• (3) Ability to conduct business administration.

• (4) Ability to conduct crisis management.

• (5) Knowledge of the industry.

• (6) International market perspective.

• (7) Ability to lead.

• (8) Ability to make policy decisions.

The composition of the Board of Directors should take into account the diversity of its membership and develop an appropriate diversity approach in relation to its operations, business model and development needs. The Company will re-elect its directors and independent directors and establish an audit committee at the 2021 Annual General Meeting. The current seven Board members, three of whom are independent, possess the knowledge, skills and qualities necessary to carry out their duties and have the necessary experience and expertise in accounting, legal, financial, commercial or corporate business respectively. The Company also places emphasis on gender parity in the composition of the Board, with a

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target of 25% or more female directors, and currently has 7 directors, including 2 female directors, representing 29%.

The diversity of the Board is shown in the table below: The Board conducts regular performance reviews annually and recognises the diversity and suitability of its members.

[Background of Diversification]

Item Name		BasicInformation	BasicInformation	BasicInformation		Background	Background			Experience	Experience
	Gender	Employee of the Company	Age		Accounting	Law	Finance	Technology	Profession al (Professor / lawyer/ CPA)	Business Administrat ion	R&D, Manufaturi ng	Investing
			41-50	51-60
Chairperson Chu, Te-Hsiang	M	◎		◎				◎		◎	◎
Director Ho, Te-Yu	M	◎		◎				◎		◎	◎
Director Hsieh, Chia-Ying	M		◎				◎	◎		◎		◎
Director Chu, Chien-Chung	M		◎					◎	◎	◎		◎
Independent Director Wang, Jen-Chun	F		◎			◎			◎	◎
Independent Director Chiang, I-Cheng	M			◎				◎	◎	◎	◎
Independent Director Wu, Chang-Hsiu	F		◎		◎				◎	◎

[Diversity Core Items]

Item Name				Diversity Core	Items
	Operational judgment	Accounting and financial analysis	Business administration	Crisis management	Knowledge of the industry	International market perspective	Ability to lead	Ability to make policy decisions
Chairperson Chu, Te-Hsiang	V		V	V	V	V	V	V
Director Ho, Te-Yu	V		V	V	V	V	V	V
Director Hsieh, Chia-Ying	V	V	V	V	V	V	V	V
Director Chu, Chien-Chung	V	V	V	V	V	V	V	V
Independent Director Wang, Jen-Chun	V		V	V	V	V	V	V
Independent Director Chiang, I-Cheng	V		V	V	V	V	V	V
Independent Director Wu, Chang-Hsiu	V	V	V	V	V	V	V	V

2.Independence of the Board.

• (1) The Company has 3 independent directors, accounting for 42.86% of the total 7 seats on the Board. The independent directors are independent in the following circumstances.

• a. None of them, including but not limited to himself/herself, his/her spouse, his/her second degree of kinship, etc., is a director, supervisor or employee of the Company or its affiliated companies.

• b. Neither the person, nor the spouse, nor a relative within the second degree of consanguinity, etc., holds shares in the Company (or uses the name of another person).

• c. None of them is a director, supervisor or employee of a company with a specific relationship with the Company (as stipulated in Article 3, Paragraph 1, Paragraphs 5 to 8 of the Regulations Governing the Establishment and Compliance of Independent

11

Directors of Public Companies).

• d. In the last two years, the Company or its affiliates have not provided business, legal, financial or accounting services for which the Company was paid.

• (2) There are no spousal relationships among the Directors; Chu, Te-Hsiang, Chairman, and Ho, Te-Yu, Director, are brothers in two degrees of consanguinity. In accordance with Article 26-3, Paragraph 3 of the Securities and Exchange Act, no more than half of the Board of Directors of the Company shall be spouses or second degree relatives of the Directors.

• (3) he Company's Board of Directors was re-elected in 2021 and the Audit Committee replaced the function of the Supervisors and there are no more Supervisors. Therefore, there shall be no relationship between the supervisors or between the supervisors and the directors as described in Article 26-3, Paragraph 4 of the Securities and Exchange Act, and at least one of them shall be a spouse or a relative within two degrees of consanguinity.

12

(2) Information on President, Vice President, Assistant Vice President, Heads of Departments and Branches

April 15 2024

													April 15 2024	April 15 2024	April 15 2024
Title	Natio nality / Coun try of Origi n	Name	Gender	Date elected	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other Position	Managers who are spouse or consanguineous within two degrees			Remark s
					Shares	%	Shares	%	Shares	%			Title	Name	Relation
President	R.O. C.	Ho, Te-Yu	Male	August 23, 1986	473,899	0.42%	0	0.00%	15,956,237	14.26%	Northern Occupational Training Council/Department of Die Molding; Lotes Co., Ltd./President Panyu Deyi Ltd./President	Jinling Investment Co., Ltd./Chairperson Dunlin Investment Co., Ltd./Chairperson LOTES INVESTMENT LTD./Director Lotes Guangzhou Co., Ltd./Chairperson Lotes Guangzhou Dezhi Co., Ltd/Chairperson Tsongkha Technology (Shenzhen ) Co., Ltd./Director Lotes Suzhou Co., Ltd./Vice Chairperson Lotes Hengnan Co., Ltd./Chairperson Lotes Hengnan Dezhi Co., Ltd./Chairperson Lintes Technology Co., Ltd./Director Jiayu Investment Co., Ltd./Director Lotes Zhongshan Co., Ltd./Director	Chairpe rson and R&D Director	Chu, Te-Hsian g	Brother
R&D Director	R.O. C.	Chu, Te-Hsiang	Male	November 8, 2017	27,920	0.03%	0	0.00%	12,748,425	11.40%	Taishan Senior High School/ Mechanical Department; Lotes Co., Ltd./Chairperson	Lotes Co., Ltd./Chairperson Jiaming Investment Co., Ltd./Chairperson Jinling Investment Co., Ltd./Supervisor LOTES INVESTMENT LTD./Chairperson Lotes Suzhou Co., Ltd./Chairperson Lotes Guangzhou Co., Ltd./Vice Chairperson Jiayu Investment Co., Ltd./Chairperson Ememe Robot Co., Ltd./Chairperson Lintes Technology Co., Ltd./Chairperson Dechuan Investment Co., Ltd./Chairperson	Associat e Presiden t's office	Chu-Che n, Yi-Hui	Spouse
													Presiden t	Ho, Te-Yu	Brother
President Office Assistant deputy manager	R.O. C.	Chu-Chen, Yi-Hui	Female	November 8, 2017	11,192	0.01%	0	0.00%	0	0.00%	Chinese Culture University/ Department of Political Science Lotes Co., Ltd./ Assistant deputy manager	Jiaming Investment Ltd./Supervisor	Chairpe rson and R&D Director	Chu, Te-Hsian g	Spouse
Department of Sales Senior deputy manager	R.O. C.	Tsai, Ming-Jui	Male	November 15, 2007	2,051	0.00%	0	0.00%	0	0.00%	Ming Chuan University/Graduate Institute of International Business Lotes Suzhou Co., Ltd. /Vice President	LOTES EU GmbH /Director	No	No	No
Department of Finance Manager	R.O. C.	Liu, Hsing-Hsia	Male	June 1, 2006	0	0.00%	0	0.00%	0	0.00%	Tamkang University/Department of Accounting TCK Technology Co., Ltd./ Financial Manager		No	No	No
Department of Finance Deputy Manager	R.O. C.	Liang, Shih-Yi	Female	June 1, 2006	0	0.00%	0	0.00%	0	0.00%	Tamkang University/Department of Accounting MAEDEN INTERNATIONAL LIMITED/Chief Accountant	None	No	No	No
Business Management Deputy Manager	R.O. C.	Kung, Yung-Sheng	Male	May 1, 2007	21,155	0.02%	0	0.00%	0	0.00%	National Taiwan University/Master of Mechanical Engineering Nan Juen International Co., Ltd./Engineering Manager	None	No	No	No
Business Management Vice President	R.O. C.	Lin, Ching-Hao	Male	July 11, 2008	1,009	0.00%	0	0.00%	0	0.00%	San-Chung Vocational High School/Department of Mechanical Engineering STARLINK ELECTRONICS CORP./Plant Manager	None	No	No	No
Business Management Assistant Manager	R.O. C.	Lin, Tsun-Te	Male	January 1, 2010	0	0.00%	0	0.00%	0	0.00%	Tamkang University/Master of Information Management FOUND FAIR PLASTIC INDUSTRIAL CO., LTD./Information Manager	None	No	No	No

13

Business Management Auditing Supervisor	R.O. C.	WENG, KUN-TANG	Male	May 12, 2022	0	0.00%	0	0.00%	0	0.00%	National Taiwan University/Master of Business Administration DaChan Food (Asia) Limited/Auditing Office Supervisor	None	No	No	No
Business Management Assistant Manager	R.O. C.	Lin, Yao-Ching	Male	January 21, 2016	100	0.00%	0	0.00%	0	0.00%	St. John's University/ Department of Electronic Engineering Foxconn Technology Group/Quality Controll Supervisor	None	No	No	No
Sales Deputy Manager	R.O. C.	Li, Cheng-Wen	Male	January 21, 2016	3,000	0.01%	0	0.00%	0	0.00%	Vanung University/Department of Electronic Engineering Lotes Co., Ltd./Sales B Manager	None	No	No	No
Business Management Assistant Manager	R.O. C.	Wu, Yi-Chen	Male	December 5, 2016	3,577	0.00%	203	0.00%	0	0.00%	Chinese Culture University/ Department of Political Science Lotes Co., Ltd./Sales A Manager	None	No	No	No
Business Management Sales Assistant Manager	R.O. C.	Lin, Ko-Lun	Male	December 5, 2016	0	0.00%	0	0.00%	0	0.00%	National Taipei University of Technology/Department of Industrial Engineering and Management EMBA LOTES Guangzhou Co., Ltd./Sales Manager	None	No	No	No
Management Department QR Associate Manager	R.O. C.	LIU, CHIN-HONG	Male	April 11, 2018	8,500	0.01%	0	0.00%	0	0.00%	National Taiwan University of Science and Technology/ FIT Vice Manager	None	No	No	No
Management Department Associate Manager	R.O. C.	HO, CHI-HSIANG	Male	April 1, 2020	4,750	0.00%	0	0.00%	0	0.00%	University of Michigan - Ann Arbor/MS FOXCONN/Engineer Touch Micro-system / Engineer	None	No	No	No
R&D Department Associate Manager, R&D Division II	R.O. C.	CHANG, WEN-CHA NG	Male	July, 2023	0	0.00%	0	0.00%	0	0.00%	Kuang Lung Vocational High School of Home Economics and Commerce Lotes Co., Ltd./ Manager, R&D Division II	None	No	No	No

14

3. Remuneration of Presidents and Vice Presidents:

1. Remuneration of Directors (including Independent Directors)

2023 ； Unit: NT$ thousands

Title	Name	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Directors' remuneration	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Sstaff receive relev	Sstaff receive relev	Sstaff receive relev	Sstaff receive relev	ant remuneration	ant remuneration	ant remuneration	ant remuneration	A, B, C, D, E, F and G as a percentage of net income after tax	A, B, C, D, E, F and G as a percentage of net income after tax	Remun eration from non-sub sidiary reinvest ments or parent compan ies
		Remuneration (A)		Severance Pay (B)		Bonuses and Allowances (C)		Profit Sharing- Employee Bonus (D)				Salaries, bonuses, special allowances, etc (E)		Retirement Pension (F)		Remuneration of employees (G)
		The Comp any	Cons olidat ed	The Comp any	Cons olidat ed	The Comp any	Cons olidat ed	The Comp any	Cons olidat ed	The Compan y	Consoli dated	The Compan y	Consoli dated	The Company	Consolidated	The Company		Consolidated		The Compan y	Consoli dated
																Cash	Share	Cash	Share
Chairpe rson	Jiaming Investment Ltd. Rept.: Chu, Te-Hsiang	0	0	0	0	3430	3430	36	36	0.06%	0.06%	4,393	4,393	78	78	27,921	0	27,921	0	0.64%	0.64%	0
Director	Jiaming Investment Ltd. Rept.: Ho, Te-Yu
Director	XIE, JIA-YING
Director	QU, JIEN-ZHO NG
Independ ent Director	WANG, REN-CHU N	450	450	0	0	1,050	1,050	141	141	0.03%	0.03%	0	0	0	0	0	0	0	0	0.03%	0.03%	0
Independ ent Director	JIANG, YI-CHEN
Independ ent Director	WU, CHANG- XIU
1.Please describe the policy, system, criteria and structure for the remuneration of independent directors, and the relevance of the amount of remuneration to the responsibilities, risks and Association, the remuneration of the Company's directors and independent directors shall not exceed 3% of the Company's profits and the Board of Directors is authorized to determine th of involvement in the Company's operations. 2.Except as disclosed in the table above, remuneration received by the directors of the Company for services rendered to all companies included in the financial statements (e.g., as consultan																time commitment involved: In accordance with Article 19 of the Company's Articles of e remuneration of the directors and independent directors in accordance with their level ts to non-employees) in the most recent year: None.

15

Remuneration Schedule

Range of Remuneration	Name	Name	of Directors
	Total of (A+B+C+D)		Total of (A+B+C+D+E+F+G)
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
Below 1,000,000	XIE, JIA-YING, QU, JIEN-ZHONG, WANG, REN-CHUN, JIANG, YI-CHEN, WU, CHANG-XIU	XIE, JIA-YING, QU, JIEN-ZHONG, WANG, REN-CHUN, JIANG, YI-CHEN,WU,CHANG-XIU	XIE, JIA-YING, QU, JIEN-ZHONG, WANG, REN-CHUN, JIANG, YI-CHEN, WU,CHANG-XIU	XIE, JIA-YING, QU, JIEN-ZHONG, WANG, REN-CHUN, JIANG, YI-CHEN,WU,CHANG-XIU
1,000,000～2,000,000	Chu, Te-Hsiang, Ho, Te-Yu	Chu, Te-Hsiang, Ho, Te-Yu
2,000,000～3,500,000
3,500,000～5,000,000
5,000,000～10,000,000
10,000,000～15,000,000
15,000,000～30,000,000			Chu, Te-Hsiang, Ho, Te-Yu	Chu, Te-Hsiang, Ho, Te-Yu
30,000,000～50,000,000
50,000,000～100,000,000
Over 100,000,000
Total	7	7	7	7

16

(2) Remuneration of Presidents and Vice Presidents: 2023 ； Unit: NT$ thousands

Title	Name	Remunera	tion (A)	Severanc	e Pay (B)	Bonuses and Al	lowances (C)	Profit Sharing- Employee Bonus	Profit Sharing- Employee Bonus	Profit Sharing- Employee Bonus	(D)	Ratio of total compensation (A+B+C+D) to net income (%)	Ratio of total compensation (A+B+C+D) to net income (%)	Remuneration from non-subsidiar y reinvestments or parent companies
		The Company	Consolidated	The Company	Consolidated	The Company	Consolidated	The Company		Conso	lidated	The Company	Consolidated
								Cash	Stock	Cash	Stock
President	Ho, Te-Yu	38,694	38,694	1,742	1,742	0	0	73,566	0	73,566	0	2.04%	2.04%	No
R&DChief	Chu,Te-Hsiang
Vice President	Kung, Yung-Sheng
Associate Manager	Chu-Chen, Yi-Hui
Vice President	Tsai, Ming-Jui
Vice President	Li, Cheng-Wen
Vice President	Lin, Ching-Hao
Associate Manager	Lin, Tsun-Te
Associate Manager	Lin, Yao-Ching
Associate Manager	Wu, Yi-Chen
Associate Manager	Lin, Ko-Lun
Associate Manager	HO, CHI-HSIANG
Associate Manager	LIU, CHI-HONG
Associate Manager	CHANG, WEN-CHANG

Remuneration Schedule

	Remuneration Schedule	Remuneration Schedule
Range of Remuneration	Name of Presidents and Vice Presidents
	The Company	Companies in the consolidated financial statements
Below 1,000,000
1,000,000～2,000,000
2,000,000～3,500,000	LIN, TSUN-DE, LIN, YAO-CHIN	LIN, TSUN-DE, LIN, YAO-CHIN
3,500,000～5,000,000	LIN, CHIN-HAO, LIU, CHI-HONG, CHANG, WEN-CHANG	LIN, CHIN-HAO, LIU, CHI-HONG, CHANG, WEN-CHANG
5,000,000～10,000,000	CHU CHEN,YI-HUI,LEE,ZHENG-WEN,WU,YI-CHEN,HO,CHI-HSIANG	CHU CHEN,YI-HUI,LEE,ZHENG-WEN,WU,YI-CHEN,HO,CHI-HSIANG
10,000,000～15,000,000	GONG, YONG-SHEN, TSAI, MING-REI, LIN, KE-LUN	GONG, YONG-SHEN, TSAI, MING-REI, LIN, KE-LUN
15,000,000～30,000,000	HE, TE-YU, CHU, TE-HSIANG	HE, TE-YU, CHU, TE-HSIANG
30,000,000～50,000,000
50,000,000～100,000,000
Over 100,000,000
Total	14	14

17

(3) Name of Managers and circumstances of distribution of employees' remuneration

2023 ； Unit: NT$ thousands

	Title	Name	Shares	Cash (Note 1)	Total	Ratio of Total Amount to Net Income (%)
Managerial officers	President	Ho, Te-Yu	0	76,808	76,808	1.37%
	R&D Chief	Chu, Te-Hsiang
	Management Department Vice President	Kung, Yung-Sheng
	Associate Manager	Chu-Chen, Yi-Hui
	Sales Div. VP	Tsai, Ming-Jui
	Management Department Associate Manager	Lin, Ching-Hao
	Management Department Associate Manager	Lin, Tsun-Te
	Management Department Associate Manager	Lin, Yao-Ching
	Management Department Associate Manager	Lin, Ko-Lun
	Management Department Associate Manager	HO, CHI-HSIANG
	Management Department Associate Manager	LIU, CHI-HONG
	Sales Div.1 Associate Manager	Wu, Yi-Chen
	Sales Div.2 VP	Li, Cheng-Wen
	R&D Division II Associate Manager	CHANG, WEN-CHANG
	Financing Dept. Manager	Liu, Hsing-Hsia
	Audit Director	WENG, KUN-TANG
	Financing Dept. ViceManager	Liang, Shih-Yi

Note 1: The 2023 employees remuneration is based on the proportion of 2022 employee remuneration.

18

• (4) Compare and contrast an analysis of the total remuneration paid to the Company's Directors, Supervisors, Presidents and Vice Presidents as a percentage of net income after tax for the most recent two years by the Company and all companies in the Consolidated Statements, respectively, and describe the policies, criteria and combinations of remuneration paid, the procedures used to establish remuneration, and the correlation with operating performance and future risks.

Unit: NT$ thousands

The Company	The Company	2022	2023
The Company	Total remuneration	92,511	123,502
	Proportion of netprofit after tax	1.49	2.21
Consolidated	Total remuneration	92,511	123.502
	Proportion of netprofit after tax	1.49	2.21

• (1) Directors' compensation is allocated in accordance with Article 19 of the Company's Articles of Incorporation, where no more than 3% of the annual profits are earmarked as compensation for directors, considering the Company’s operational results and the directors’ contribution to the Company's performance, to provide reasonable remuneration.

• (2) In accordance with Article 19 of the Articles of Incorporation, the Company allocates no less than 3% of the annual profits as employee compensation. The compensation for managers is determined based on the Company’s "Salary Management Measures" and the scope of duties and responsibilities of the position, as well as the contribution to the Company’s operational goals. The procedure for setting compensation is based on the Company's annual performance evaluation measures, taking into account the overall business performance of the Company and the participation and contribution of the managers to the Company’s operations. The rationality of the relevant remuneration is reviewed by the Salary and Compensation Committee and the Board of Directors.

• Corporate governance operations (1) Operations of the Board of Directors

The Board met 8 times in 2023, and the attendance of the Directors was as follows.

Title	Name	Attendance in Person B	By Proxy	Attendance Rate (%)(B/A)	Remarks
Chairperson	JIAMING CO. Rept.: CHU, TE-HSIANG	7	0	100%
Director	JIAMING CO. Rept.: HE, TE-YU	6	0	85.71%
Director	XIE, JIA-YING	6	0	85.71%	In the shareholder meeting on 2021.7.26, a new board of directors was elected.
Director	QU, JIEN-ZHONG	5	0	71.43%
Independent Director	WANG, REN-CHUN	6	0	87.50%	In the shareholder meeting on 2021.7.26, a new board of directors was elected.
Independent Director	JIANG, YI-CHEN	7	0	100%
Independent Director	WU, CHANG-XIU	7	0	100%
Other matters to be recorded. 1. The operation of the board of directors' meeting shall state the date, period, content of the motion, opinions of all independent directors and the Company's handling of the opinions of the independent directors if any of the following circumstances apply.

19

• (1)The matters listed in Article 14-3 of the Securities and Exchange Act.

• (2) Other than the matters listed above, any other matters resolved by the Board of Directors at a meeting of the Board of Directors at which the independent directors objected to or reserved their opinions and for which records or written statements are available.

• The recusal of a director from the implementation of an interest motion shall include the name of the director, the content of the motion, the reasons for the recusal and the circumstances of the participation in the vote.

• Listed companies should disclose information on the periodicity and duration of self- (or peer) evaluation by the board of directors, the scope, manner and content of the evaluation, and fill in Schedule 2(2) on the implementation of the board evaluation.

• An assessment of the current and most recent year's objectives for enhancing the functions of the board of directors (e.g. establishing an audit committee, enhancing information transparency, etc.) and their implementation.

(2) Information on the operation of the Audit Committee

Information on the operation of the Audit Committee

The Audit Committee met 5 times (A) in 2023 and the attendance of the independent directors was as follows

ollows
Title	Name	Attendance in Person B	By Proxy	Attendance Rate (%)(B/A)	Remarks
Independent a	Wang, Jen-Chun	4	0	80%	Elected on 2021.07.26
Independent b	Chiang, I-Cheng	5	0	100%	Elected on 2021.07.26
Independent c	Wu, Chang-Hsiu	5	0	100%	Elected on 2021.07.26
Other matters to be recorded. 1. The operation of the Audit Committee shall include the date and period of the Audit Committee meeting, the content of the resolution, the content of the objections, reservations or material recommendations of the independent directors, the results of the Audit Committee's resolution and the Company's handling of the Audit Committee's opinion if any of the following circumstances apply (1)The matters listed in Article 14-5 of the Securities and Exchange Act. (2)Matters other than those listed above which have not been approved by the Audit Committee and which have been approved by at least two-thirds of all directors. 2. The recusal of an independent director from the implementation of an interest motion shall include the name of the independent director, the content of the motion, the reasons for the recusal and the circumstances of the participation in the vote. 3.Communication between the independent directors and the internal Audit Director and the accountant (including the major issues,mannerandresults ofcommunication regarding the Company'sfinancialand business conditions).

20

(4) Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Y	N	Abstract Illustration
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	ˇ		The Code of Corporate Governance was approved by the Board of Directors and is posted on the Company's website and the Market Observation Post System.	None
2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4) Does the company establish internal rules against insiders trading with undisclosed information?	ˇ ˇ ˇ ˇ		(1) The Company has an internal spokesperson, acting spokesperson, exclusive personnel and email address to handle shareholder proposals or disputes in accordance with the procedures. (2) The company has access to a list of the company's major shareholders and their ultimate controllers, which is regularly disclosed in accordance with the law and regulations. For a list of the relevant major shareholders, see page 47 of this Annual Report. (3) The Company establishes appropriate risk control mechanisms and firewalls in accordance with internal regulations such as control operations of subsidiaries, endorsement and guarantee methods, lending of funds to others, and criteria for acquisition or disposal of assets. All business dealings with affiliates are treated as independent third parties and unconventional transactions are prohibited. (4) The Company has a "Ethical Corporate Management Best Practice Principles", "Procedures for Handling Material Inside Information", and a "Guidelines for the Adoption of Codes of Ethical Conduct" to prohibit insiders from using undisclosed market information to purchase and sell marketable securities for improper gain.	None
3.Composition and Responsibilities of the Board of Directors (1) Does the Board have a diversity policy, specific management objectives and implementation?	ˇ		(1) The Company has established the "Code of Corporate Governance Practices" in accordance with the law, and Article 20 stipulates that the composition of the Board of Directors shall take into account diversity. In addition to the fact that thenumberofdirectors who are alsomanagers of	The Company has no plans to establish a functional committee other than a remuneration committee. The Company has established the Board of Directors' performance evaluation method and will

21

Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Y	N	Abstract Illustration
(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Does the company establish a standard to measure theperformance of the Board,and implement it	ˇ	ˇ	the Company should not exceed one-third of the seats of the Board of Directors, the Company shall formulate an appropriate diversity policy with respect to its own operation, business model and development needs, which shall include but not be limited to the following two major criteria. a.Basic qualifications and values: gender, age, nationality, and culture, etc. b.Professional knowledge and skills: professional background (e.g., law, accounting, industry, finance, marketing or technology), professional skills and industry experience, etc. Board members should generally possess the knowledge, skills and qualities necessary to perform their duties. In order to achieve the desired goals of corporate governance, the Board of Directors as a whole should possess the following competencies: a. Operational judgment. b. Accounting and financial analysis ability. c. Management skills. d. Crisis management ability. e. Industry knowledge. f. International market perspective. g. Leadership skills. h. Decision-making ability. The Company re-elected its directors in 2021. The current term (10th) has seven directors, all of whom are R.O.C., five of whom are male and two are female, including three independent directors. The directors come from a variety of professional backgrounds or fields of work, including accountants, lawyers, university professors and engineering, finance and operations management. They have the knowledge, skills and qualities required to carry out their duties and responsibilities, which enable them to form the Board of Directors of the Company. (2) In addition to the Remuneration Committee, the Company re-elected the members of the Board of Directors and established an Audit Committee in 2021 to replace the Supervisory Committee. There are no plans to establish any other functional committees. (3) The Company has established a performance appraisal system for the Board of Directors and has been conducting	conduct annual performance evaluation on a regular basis starting in 2020 and will submit the results of the performance evaluation to the Board of Directors.

22

Evaluation Item	Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Y	N	Abstract Illustration
annually, and to report the result to the Board? (4) Does the company regularly evaluate the independence of CPAs?		ˇ		regular performance appraisals and reporting the results of these appraisals to the Board of Directors on an annual basis since 2020. (4) The Company periodically evaluates the independence of its certified public accountants by making reference to the evaluation criteria set forth in The Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China No. 10 "Integrity, Objectivity and Independence", and follows the regulations of the competent authorities to periodically adjust the length of a certifiedpublic accountant's license.
4. Are TWSE/GTSM Listed Companies staffed with suitable and appropriate number of corporate governance personneland designated corporate governance officers to be responsible for corporate governance related matters (including, but not limited to, providing directors, supervisors with information necessary for the execution of business,assisting directors, supervisors in complying with lawsand regulations, conducting board and shareholder meeting related matters in accordance with the law, preparing minutes of board and shareholder meetings,etc.)?		ˇ		The Company's Board of Directors appointed Liu Xingxia, Finance Manager, to also serve as Head of Corporate Governance on August 11, 2020, providing directors with information necessary for the execution of their business, handling matters related to the meetings of the Board of Directors and shareholders in accordance with the law, registering companies and registering changes, and preparing minutes of the meetings of the Board of Directors and shareholders, and other related matters.	None
5.	Does the company establish a communication channel and build a designated section on its website for stakeholders(including but not limited to shareholders, employees, customers,and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?	ˇ		The Company has appropriate communication channels with its customers, suppliers, correspondent banks, employees, investors and other relevant stakeholders. A special section of our stakeholders' website has been set up in FY2015 as a response to stakeholders' concerns on important CSR issues.	None
6.	Does the company appoint a professional shareholder service agency to deal with shareholder affairs?	ˇ		The Company currently appoints the Stock Agency Department of SinoPac Securities to handle the relevant shareholders'affairs.	None
7. (1) (2)	Information Disclosure Does the company have a corporate website to disclose both financial standings and the status of corporate governance? Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure,creatinga spokesman system,webcasting	ˇ ˇ		(1) The Company's website has disclosed information about the Company's profile, business and investor areas and corporate governance, and designated a person to be responsible for disclosing financial, business and corporate governance information about the Company on the MOPS. (2) The Company has a exclusive personnel responsible for the collection and disclosure of company information, and has a spokesperson and acting spokesperson in accordance with the regulations,and holds regular and irregular corporate	None

23

Evaluation Item	Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Y	N	Abstract Illustration
investor conferences)? (3) Does the Company announce and report its annual financial report within two months of the end of the fiscal year, and announce and report its first, second and third quarter financial reports and operations for each month well in advance of the required deadline?			ˇ	briefing sessions, and regularly publishes operational and financial information in both English and Chinese to enhance the transparency of company information. (3) The Company has not announced and reported its annual financial report within two months of the end of the fiscal year. However, all of them were announced well in advance of the required deadlines and reported the first, second and third quarterly financial reports and operations for each month.
8.	Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors )?	ˇ		1. Employee rights: The Company protects the legitimate rights and interests of its employees in accordance with the Labor Standards Law. 2. Investor relations: The Company's website has set up an investor section for investors to learn more about the Company's investor-related information, and a spokesperson, acting spokesperson and shareholder affairs units are set up to deal with issues such as shareholder proposals or disputes. 3. Rights of interested parties: The Company respects and protects the legal rights and interests of its interested parties. 4. Directors' and supervisors' continuing education: Company directors and supervisors attend continuing education courses in finance, business, etc., as required. 5. The implementation of the directors' recusal of interest motion: The directors of the Company adhere to the principle of a high degree of self-discipline and are not allowed to vote on board meetings when they have an interest in a matter. 6. The company insured US$3 million in liability insurance for directors, supervisors and managers in 2023. 7. Implementation status of customer policy: The Company has a Quality Assurance Department and a Customer Support Department to provide transparent and effective after-sales services and customercomplaintshandling.		None
9.	Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures. In order to continue to strengthen corporate governance, the Company will make the following improvements in accordance with the evaluation index: The Company's corporate governance rating for 2023, the improvement situation according to the rating index is as follows: Criteria Improvement Does the Companysimultaneously publish major information in English? Major information in 2023 was simultaneously published in English. Does the Company upload the changes in the shareholding of insiders from This is a new indicator for 2023. The Company uploads the changes in the shareholding
	Criteria				Improvement
	Does the Companysimultaneously publish major information in English?				Major information in 2023 was simultaneously published in English.
	Does the Company upload the changes in the shareholding of insiders from				This is a new indicator for 2023. The Company uploads the changes in the shareholding

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	Evaluation Item				ImplementationStatus	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Y	N		Abstract Illustration
	the previous month to the Market Observation Post System by the 10th of each month(inclusive)?				of insiders from the previous month to the Market Observation Post System by the 10th of each month.
	Does the Company establish workplace diversity or promote gender equality policies and disclose their implementation status?				This is a new indicator for 2023. The Company discloses the implementation status of workplace diversity and gender equality policies on the Company’s website under "Investor Relations / Corporate Governance / Related Information".
	Does the Company assess risks or opportunities for the community, take corresponding measures, and disclose the specific measures and their effectiveness on the Company’s website, annual report, or sustainability report?				This is a new indicator for 2023. The Company discloses community risk assessments and corresponding measures on the Company’s website under "Investor Relations / Corporate Governance / Related Information".
	Does the Companysimultaneously publish major information in English?				Major information in 2023 was simultaneously published in English.

• (5) Where the Company has a remuneration committee, it shall disclose its composition, duties and operations.

• 1.Composition of the Remuneration Committee

On July 26, 2021, the Company's Board of Directors approved the appointment of three members of the Compensation Committee, whose terms of office shall commence upon the appointment of the three members of the Compensation Committee by the Board of Directors and end on July 25, 2024, the same date as the term of office of the current Board of Directors, and shall operate in accordance with the "Compensation Committee Organization Regulations" established by the Company.

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April 18, 2023

The membership of the Compensation Committee is set out in the table below:

				April 18,2023
Qualification ID (Note 1) Name		Qualification (Note 2)	Independence (Note 3)	Number of members of remuneration committees of other public companies
Independent Director and Convener	Chiang, I-Cheng	Mechanical Engineering Professional Learning Experience Department of Mechanical Engineering, Chinese Culture UniversityProfessor。 Convener of Remuneration Committee No circumstances specified in Article 30 of the Company Act.	An independent director and meets the criteria for independence, including but not limited to not being a director, supervisor or employee of the Company or its affiliated companies, and not being a spouse, second degree relative, etc. not holding a number of shares in the Company; not being a director, supervisor or servant of a company with which the Company has a specified relationship.	None
Independent Director	Wang, Jen-Chun	Law Professional Experience R.O.C.Lawyer, Patent Attorney and United States Attorney for the State of New York Tsar and Tsai Law FirmPartner。 No circumstances specified in Article 30 of the Company Act.	An independent director and meets the criteria for independence, including but not limited to not being a director, supervisor or employee of the Company or its affiliated companies, and not being a spouse, second degree relative, etc. not holding a number of shares in the Company; not being a director, supervisor or servant of a company with which the Company has a specified relationship.	None
Independent Director	Wu, Chang-Hsiu	Background in Accounting Studies R.O.C.CPA Pennsylvania accountants, tax litigation agents, patent attorneys, corporate sustainability managers, corporate valuers Deashine CPA Firm/CPA。 Convener of Audit Committee No circumstances specified in Article 30 of the CompanyAct.	An independent director and meets the criteria for independence, including but not limited to not being a director, supervisor or employee of the Company or its affiliated companies, and not being a spouse, second degree relative, etc. not holding a number of shares in the Company; not being a director, supervisor or servant of a company with which the Company has a specified relationship.	1

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2.Responsibilities of the Remuneration Committee

The Committee shall, with the attention of the good manager, faithfully perform the following functions and submit the recommendations to the Board for discussion:

• (1) To establish and regularly review the policies, systems, standards and structures for performance evaluation and remuneration of directors, supervisors and managers.

• (2) To regularly evaluate and set remuneration for the directors, supervisors and managers.

3. Operation of the Remuneration Committee

• (1) The Company's Remuneration Committee consists of three members.

• (2) Current term of office: From Aug. 3, 2021 to Jul. 25, 2024, the 2023 Remuneration Committee met 3 times (A) and was attended by the following members:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%) (Ｂ/Ａ)(Note)	Remarks
Convener	Chiang,I-Cheng	4	0	100%	Term: 2021.8.3~2024.7.25
Committee Member	Wang, Jen-Chun	4	0	100%	Term: 2021.8.3~2024.7.25
Committee Member	Wu, Chang-Hsiu	4	0	100%	Term: 2021.8.3~2024.7.25
Other mentionable items: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified) 2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified

(3) The resolution of 2023 Remuneration Committee

Time	Content	Resolution and The Company’s Response
2023.3.1	(1)Formulate the 2023 cash capital increase employee	All memberspresent agreed that the

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	stock subscription plan and allocate new shares to managers and employees.	motion be approved as presented to the Board of Directors of the Company for resolution
2023.3.21	(1) Review the amendment of the Company's "Directors' Compensation Distribution Measures". (2) Review the total employee compensation and directors' compensation for 2022.	All members present agreed that the motion be approved as presented to the Board of Directors of the Company for resolution
2023.11.10	(1) Review the amendment of the Company's "Directors' Compensation Distribution Measures".	All members present agreed that the motion be approved as presented to the Board of Directors of the Company for resolution
2023.12.21	(1) Review the employee compensation distribution plan for managers for 2022. (2) Review the year-end bonus distribution plan for managers for 2023.	All members present agreed that the motion be approved as presented to the Board of Directors of the Company for resolution

(6)Implementation of sustainable development and how and why it differs from the Code of Practice on Sustainable Development.

Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
1. Has the company established a governance structure to promote sustainable development and set up a dedicated (part-time) unit to promote sustainable development, which is delegated by the Board of Directors to senior management and supervised by the Board of Directors?		ˇ	1. The Company has not yet established a governance structure authorized by the Board of Directors to be handled by senior management, nor has the Board of Directors supervised the promotion of sustainable development. 2. Our company established the "ESG Development Department", which is under the jurisdiction of the general manager's office. To ensure that the sustainable development direction covers aspects such as environment, society, and corporate governance, the ESG Development Department has set up specialized groups to collect stakeholders' concerns about environmental protection, job safety, supply chain management, labor human rights, operational performance, and corporate governance. Respectingthe rights and interests of stakeholders, a	1.Our company established the "ESG Development Department", which is under the jurisdiction of the general manager's office. To ensure that the sustainable development direction covers aspects such as environment, society, and corporate governance, the ESG Development Department has set up specialized groups to collect stakeholders' concerns about environmental protection,

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
			dedicated area for stakeholders is set up on the company website to appropriately respond to their key sustainable issues.	job safety, supply chain management, labor human rights, operational performance, and corporate governance. Respecting the rights and interests of stakeholders, a dedicated area for stakeholders is set up on the company website to appropriately respond to their key sustainable issues. 2.In the future, we will also plan to report the ESG implementation results to the board of directors every year to strengthen the board's involvement in the company's ESG results.
2. Does the Company conduct risk assessments on environmental, social and corporate governance issues related to the Company's operations and formulate relevant risk management policies or strategies in accordance with the materiality principle? (Note 3)	ˇ		1. The boundary of our company's risk assessment includes the Taiwan head office and the mainland factories (Guangzhou factory, Zhongshan factory, Suzhou factory). 2. Our company's "ESG Development Department" confirms significant issues through steps such as "identifying stakeholders", "collecting sustainable issues", "surveying stakeholders' concerns", "investigating impacts on the company and outside", "analyzingmajor topics".	None
3. Environmental issues (1) Does the company establish proper environmental management systems based on the characteristics of their industries?	ˇ		(1) 1. Our company is mainly engaged in the research and development, production and sales of electronic connectors. Under the premise of pursuing balanced development and sustainable operation,the safety,health and environmental	(1) None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?	ˇ		protection policy is formulated and signed by the general manager. Externally, we pledge our determination to protect the environment and maintain community safety, and internally, we require employees to enrich their professionalism, continue to create environmentally friendly products that benefit the public, and take safety, health and environmental protection as the basic considerations for the company's sustainable operation. 2.As of the printing of this annual report, our company's factories (Guangzhou, Suzhou, and Zhongshan) have continuously maintained the effective operation of the ISO 14001 Environmental Management System. They undergo regular audits by certification bodies and the Environmental Health and Safety Committee every year. Any deficiencies identified during these audits are marked for improvement and are addressed through continuous improvements under the PDCA cycle. This is done to ensure that the Environmental Health and Safety Management System complies with regulations and continues to improve. (2) The Company's plant in China has implemented measures such as controlling machine power, strengthening mold temperature pipelines, installing electric automatic control valves and inverters, and automatic control shutdown of suction motors to improve energy efficiency, reducing an estimated 6.98 million kWh. The Zhongshan and Suzhou factories in China have	(2) None.

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Evaluation Item			Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(3) Does the Company assess the current and future potential risks and opportunities of climate changes for the business and take measures to address climate related issues? (4) Has the Company compiled statistics on greenhouse gas emissions, water consumption, and total weight of waste in the past two years, and formulated policies on energy conservation, carbon reduction, greenhouse gas reduction, water use reduction, or other waste management?	ˇ	ˇ	installed solar power generation equipment, which generated a total of 2.46 million kWh in 2023. (3) In addition to identifying operational risks brought about by climate change, the Sustainable Development Committee members refer to the TCFD (Task Force on Climate-Related Financial Disclosures) recommendations issued by the Financial Stability Board (FSB) to implement climate risk and opportunity identification. These are incorporated into operational management according to the four core disclosures: "Governance", "Strategy", "Risk Management", and "Metrics and Targets", and disclosed in the sustainability report. This allows stakeholders to understand the impact of climate change-related risks and opportunities on the Company and the corresponding measures. (4)Our factories in Guangzhou, Suzhou, and Zhongshan actively promote energy conservation and carbon reduction measures, which has improved greenhouse gas emissions. Solar power facilities have been installed in our factories and dormitories to achieve noiseless and pollution-free power generation. This reduces the emission of smog, carbon dioxide, sulfur dioxide, carbon dust, and nitrogen oxides produced by coal-fired power plants and is beneficial for energy conservation and carbon reduction.					(3)The company has yet to assess the potential risks and opportunities climate change may pose to the business now and in the future. As per the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, the company will assess these risks and opportunities by the end of 2023, undertaking a comprehensive reassessment every three years, and conducting annual reviews and updates. (4)None.
				Water	Electricity	Greenhousegas	Waste

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Evaluation Item				Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status	Implementation Status		Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No			Abstract Explanation
				usage (tons)	usage (GJ)	emissions (tons CO2 equivalent/year)
						Scope 1	Scope 2	Scope 3	Hazardous	Non-hazardous
			2022	584,123	197,836.45		130,335		66	12,576
						3,434	39,435	87,466
			2023	516,340	299,626.34		156,394		299	17,529
						3,381	42,159	110,854
4. Social issues (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?	ˇ ˇ		(1)The Company recognises and adheres to international human rights conventions including the United Nations Universal Declaration of Human Rights, the International Labour Organisation Convention and supports the United Nations Framework for Protection, Respect and Remedy: Business and Human Rights and its Guiding Principles. We actively comply with human rights and labour rights legislation in all our locations, the Responsible Business Alliance Code of Conduct (RBA) and the requirements of our customers, and have established policies on management systems, working hours, wages, anti-discrimination and harassment, gender equality at work...etc. to ensure that our commitments are met. In addition to explaining the Company's policy and position to employees through announcements, events, literature, meetings, etc., the Company also educates employees on the importance of human rights protection and labour rights and related information through various channels, such as training for new employees and training for current employees.								None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(2) Does the Company establish and implement reasonable employee benefits (including compensation, vacation and other benefits) and appropriately reflect operating performance or results in employee compensation? Are reasonable employee benefits measures (including compensation, leave and other benefits, etc.) in place and appropriately reflected in employee compensation? (3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?	ˇ		(2) The Company has established relevant employee welfare measures and reflected its operating performance in the employee bonus in accordance with the Company's Articles of Association. 1.Employee bonus: The bonus will be distributed according to the company's operation and individual performance as an incentive. 2.Year-end bonuses, gifts (or presents) for the three festivals. 3.Labour insurance and health insurance. 4.Leave system in accordance with the Labour Standards Law. 5.Monthly pension in accordance with the law. 6.Nursing room available. 7.The Welfare Committee is authorized to provide birthday gifts, wedding gifts, childbirth gifts, funeral benefits, etc. to employees. 8.The Welfare Committee is authorized to provide birthday gifts, wedding gifts, childbirth gifts, funeral benefits, etc. to employees. (3)The Company attaches great importance to the safety and health of its employees in the workplace, and the relevant protective measures and their implementation are as follows. (1)The Company has established management measures for occupational safety and health, prevention and treatment of occupational hazards, and various environmental protection measures such as waste storage management, in order to protect the safety of employees and avoid environmental pollution. (2)All items that may have an impact on the environment and safety are prepared on a daily basis, and we are able to respond immediatelyin the event	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
			of a disaster. An emergency response team has been set up to establish the duties and procedures of the organisation and its staff. (3)In order to provide a safe working environment, prevent the occurrence of occupational disasters and protect the safety and health of workers, the Company has established a safety and health code of practice and management regulations in accordance with the Occupational Safety and Health Act and its implementing regulations and the management requirements of ISO45001. In order to ensure the safety and health of all employees and non-employees working in the Company's workplace, the Company shall comply with the Code of Practice and the Management Regulations. (4)To ensure the safety of our employees in the workplace, all entrances and exits of our company are equipped with access control devices and main entrances and exits are equipped with security surveillance devices to ensure the safety of our employees. Our electrical, mechanical, lift and fire-fighting equipment are regularly inspected and maintained in accordance with the regulations or equipment usage rules to ensure their safety at all times. (5)To hold disaster prevention drills every six months to enhance staff awareness of fire prevention, so that they can take precautionary measures and take the correct safety measures immediately in the event of an incident. (6)To conduct regular staff health checks, testing of drinking water quality, and workplace health promotion to maintain the health of staff in the

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
(4) Does the company provide its employees with career development and training sessions? (5) Does the Company comply with relevant regulations and international standards on customer health and safety, customer privacy, marketing and labeling of its products and services, and has it formulated relevant policies and complaint procedures to protect consumer rights? (6) Does the Company have a supplier management policy that requires suppliers to comply with relevant regulations on environmental protection, occupational safety and health, or human rights in the workplace, and how is it implemented?	ˇ ˇ ˇ		workplace. (7)In addition to health insurance for all employees, the Company also provides group accident insurance to protect the rights and interests of employees. (8)The Company had no fire incidents in 2023 and conducts annual fire drills to ensure effective evacuation and the safety of all employees in case of a fire. (4)The Company has established an annual training plan according to each function and level, and arranged internal and external training or OJT (On Job Training) to enable employees to maximize their performance in their respective positions, so that the Company and individuals can develop and grow together. (5)The Company has established a "Customer Complaint Handling Operation Procedure". The marketing and labelling of our products are in accordance with relevant laws and international standards. (6)The Company has established the "Supplier Selection Management System" and requires all suppliers to provide products that comply with international environmental regulations, and has established relevant regulations in the contract. We also require our suppliers to have a sound management structure in terms of personnel and environmental organizations. In addition, factory audits were conducted on suppliers. In 2023, 47 suppliers were audited and none were found to have significant actual or potential negative impacts on the environment,human rights,or laborpractices.
5. Does the company make reference to	ˇ		1. In 2022,our companycompiled a corporate sustainability	None

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Evaluation Item	Implementation Status	Implementation Status	Implementation Status	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Explanation
internationally accepted standards or guidelines for the preparation of reports, such as perpetual reports, which disclose non-financial information about the company? Has a third party assurance or assurance opinion been obtained on the previously disclosed report?			report based on the GRI Standards, which shows the company's sustainable development performance. The public and stakeholders can access and download this information from our website (https://www.lotes.cc/zh-tw/responsibility.php#governan ce). 2. Third-party verification body: Grer International Certification Co., Ltd. Applied standard: AA1000 Type 1 Moderate Assurance.
6. If the Company has its own CSR Best Practice Principles in accordance with the "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies", please explain the differences between them: Although the Company does not have a CSR Best Practice Principles at the moment, its implementation is consistent with its spirit and there are no significant differences. The Companywill implement them in the future accordingto the actual needs or regulations of the law.
7. Other important information to help understand the implementation of sustainable development: The Company's plants in Taiwan and China continue to focus on the needs of the local community  In Taiwan: Donations to low-income households in Keelung City (NT$ 160,000), sponsorship of elderly community meals by the Keelung City Zhonglun Volunteer Service Association (NT$ 20,000), and a contribution to a charity for Hope Primary School in India (NT$ 100,000).  In mainland China: Combining government resources to support disadvantaged groups over the long term, actively organizing employee participation in community activities, donating materials and funds to welfare institutions; donating a total of NT$90,000 to related activities of the Suzhou XiangchengDistrict CharityAssociation where theplant is located.

(7) Climate-related information for listed companies:

• (1) The Company’s paid-in capital is less than NT$5 billion. We will comply with regulations to complete the carbon inventory for the parent company by 2026 and the carbon inventory for subsidiaries included in the consolidated financial statements by 2027. The execution progress of greenhouse gas inventory and verification is reported to the Board of Directors quarterly to keep board members informed of the implementation status.

• (2) The impact of climate risks and opportunities on the Company's business, strategy, and finances (short-term, medium-term, long-term): Climate risks and opportunities are categorized into short-term, medium-term, and long-term, defined as within 3 years for short-term, 3-5 years for medium-term, and over 5 years for long-term. The Company has identified 11 risks and 10 opportunities. Key risks include "increased pricing of greenhouse gas emissions" (short and medium-term), "enhanced emission reporting obligations" (short-term), and "rising raw material costs" (short, medium, and long-term). Key opportunities include "use of low-carbon energy" (medium and long-term) and "more efficient production and distribution processes" (medium and long-term). After identifying these risks and opportunities, we implement corresponding strategies to reduce

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climate risks and enhance business and climate opportunities.

• (3) The impact of extreme climate events and transition actions on finances:

• Extreme climate events will affect production lines and supply chains. The Company’s transition actions include the regulation and reduction of greenhouse gas emissions, advancements in low-carbon product development and processes, acquisition of renewable energy, and carbon credits, all of which are related aspects that impact finances.

• (4) For more detailed climate-related information, please refer to the "Sustainable Environment - Climate Change Management" section in the "Sustainability Report".

1. Implementation status of climate-related information.

1. Implementation status of climate-related information.
Item	Implementation status
1. Describe how the Board of Directors and management supervise and govern climate-related risks and opportunities. 2. Explain how identified climate risks and opportunities affect the company's business, strategy, and finance (short-term, medium-term, long-term). 3. Describe the financial impact of extreme climate events and transition actions. 4. Explain how the identification, assessment, and management of climate risks are integrated into the overall risk management system. 5. If scenario analysis is used to assess resilience to climate change risks, explain the scenarios used, parameters, assumptions, analysis factors, and major financial impacts. 6. If there are plans to manage climate-related risks, explain the plan's content, and indicators and targets for identifying and managing physical risks and transition risks. 7. If internal carbon pricing is used as a planning tool, explain the basis for price setting. 8. If climate-related goals have been set, explain the activities covered, the scope of greenhouse gas emissions, the planning period, annual progress, etc. If carbon offset or Renewable Energy Certificates (RECs) are used to achieve related goals, explain the source and quantity of the offset carbon amount or the quantity of RECs. 9. Greenhouse gas inventory and assurance status, reduction targets, strategies, and specific action plans (to be filled in separately in 1-1 and 1-2):	1. The Company’s paid-in capital is less than NT$5 billion. We will comply with regulations to complete the carbon inventory for the parent company by 2026 and the carbon inventory for subsidiaries included in the consolidated financial statements by 2027. The execution progress of greenhouse gas inventory and verification is reported to the Board of Directors quarterly to keep board members informed of the implementation status. 2. The impact of climate risks and opportunities on the Company's business, strategy, and finances (short-term, medium-term, long-term): Climate risks and opportunities are categorized into short-term, medium-term, and long-term, defined as within 3 years for short-term, 3-5 years for medium-term, and over 5 years for long-term. The Company has identified 11 risks and 10 opportunities. Key risks include "increased pricing of greenhouse gas emissions" (short and medium-term), "enhanced emission reporting obligations" (short-term), and "rising raw material costs" (short, medium, and long-term). Key opportunities include "use of low-carbon energy" (medium and long-term) and "more efficient production and distribution processes" (medium and long-term). After identifying these risks and opportunities, we implement corresponding strategies to reduce climate risks and enhance business

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and climate opportunities.

1. The impact of extreme climate events and transition actions on finances: Extreme climate events will affect production lines and supply chains. The Company’s transition actions include the regulation and reduction of greenhouse gas emissions, advancements in low-carbon product development and processes, acquisition of renewable energy, and carbon credits, all of which are related aspects that impact finances.

2. For more detailed climate-related information, please refer to the "Sustainable Environment - Climate Change Management" section in the "Sustainability Report".

2. Greenhouse Gas Inventory and Confirmation Situation

Basic company information According to the sustainable development roadmap □ Companies with a capital of more than NTD 10 regulations for listed companies, at least the following should billion, steel industry, cement industry be disclosed: □ Companies with a capital of more than NTD 5 □ Parent company individual investigation billion but less than NTD 10 billion ■ Consolidated financial report subsidiary assurance ■ Parent company individual assurance □ Parent company individual investigation ■ Consolidated financial report subsidiary investigation

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S 1	Ttl ii t CO2	Intensity (tonnes CO2e/million	A bd	Diti f itti
cope	oa emssons (onnes e)	NTD) (Note 2)	ssurance oy	escrpon o assurance suaon
Parent Company	N/A	N/A	N/A	The mainland subsidiary has carried out its own carbon investigation because of its factory production line; two factory areas have obtained third-party assurance.
(Subsidiary) Panyu Deyi Precision Electronics IndustryCo.	1,228.72	0.05	SGS
(Subsidiary) Zhongshan Deyi Electronics Co.	809.85	0.03	SGS
(Subsidiary) Deyi Precision Electronics (Suzhou) Co.	1,298.67	0.05	N/A
(Subsidiary) Lotes Vietnam Co., Ltd.	43.9	0.00	N/A
Total	3337.24	0.14
Scope 2	Total emissions (tonnes CO2e)	Intensity (tonnes CO2e/million NTD Nt 2	Assurance body	Description of assurance situation
		) (oe )
Parent Company	N/A	N/A	N/A	The mainland subsidiary has carried out its own carbon investigation because of its factory production line; two factory areas have obtained third-party assurance.
(Subsidiary) Panyu Deyi Precision Electronics IndustryCo.	13,761.26	0.56	SGS
(Subsidiary) Zhongshan Deyi Electronics Co.	21,480.67	0.88	SGS
(Subsidiary) Deyi Precision Electronics (Suzhou) Co.	5,953.51	0.24	N/A
(Subsidiary) Lotes Vietnam Co., Ltd.	964.30	0.04	N/A
Total	42,159.74	1.72
Scope 3	Total emissions (tonnes CO2e)	Intensity (tonnes CO2e/million NTD Nt 2	Assurance body	Description of assurance situation
		) (oe )
Parent Company	N/A	N/A	N/A	The mainland subsidiary has carried out its own carbon investigation because of its factory production line; two factory areas have obtained third-party assurance.
(Subsidiary) Panyu Deyi Precision Electronics IndustryCo.	36,922.58	1.51	SGS
(Subsidiary) Zhongshan Deyi Electronics Co.	72,949.09	2.98	SGS
(Subsidiary) Deyi Precision Electronics (Suzhou) Co.	982.40	0.04	N/A
(Subsidiary) Lotes Vietnam Co., Ltd.	N/A	N/A	N/A
Total	110,854.07	4.53

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(8) The Company's performance and measures to ethical corporate management.

	Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	ImplementationStatus	(Note 1)	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
		Yes	No		Abstract Illustration
1. Establishment of ethical corporate management policies and programs (1) Does the Company have an ethical corporate management policy that has been approved by the Board of Directors and expresses its policies and practices on ethical corporate management in its regulations and external documents, as well as the commitment of the Board of Directors and senior management to actively implement the corporate management policy? (2) Has the Company established an assessment mechanism for the risk of unethical conduct, and regularly analyzed and evaluated the business activities in the scope of business with a higher risk of unethical conduct, and formulated a plan to prevent unethical conduct, covering at least the preventive measures under Article 7, paragraph 2 of "Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies"? (3) Does the Company have defined operating procedures, conduct guidelines, disciplinary and complaint systems for non-compliance, and periodically review and correct the foreclosure program in its unethical conduct prevention program?		ˇ ˇ ˇ		(1) The Company has established the "Ethical Corporate Management Best Practice Principles", which are based on the business philosophy of honesty, transparency and accountability, and has formulated policies based on ethical integrity, and established good corporate governance and risk control mechanisms to create a sustainable business environment, which are disclosed on the Company's website in 2020. (2) The Company has procedures and conduct guidelines for preventing unethical conduct, and will provide guidance to employees through internal mailings and conduct guidance sessions for directors and supervisors through external instructors. (3) The Company's dedicated unit shall hold an annual internal promotion and arrange for the chairman, president or senior management to convey the importance of integrity to directors, employees and appointees. The Company shall incorporate integrity management into employee performance appraisal and human resources policies, and establish a clear and effective system of rewards, penalties and grievances. The Company shall dismiss or terminate the employment of the Company's employees in accordance with relevant laws and regulations or in accordance with the Company's personnel policy in the event of a significant breach of integrity. The Company shall disclose on the Company's internal website the title, name, date of violation, content of the violation, and the circumstances under which the violation was handled.			Follow the Company's corporate management principles. Follow the Company's corporate management principles.
2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts?		ˇ		(1) The Company assesses the legality and integrity of the transactions between companies with which it has			(1) Follow the Company's corporate management

40

		Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	ImplementationStatus	(Note 1)	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” andReasons
			Yes	No		Abstract Illustration
(2) (3) (4) (5)	Has the company established a special (part-time) unit under the Board of Directors to promote corporate integrity management, and regularly (at least once a year) reports to the Board of Directors on its integrity management policies and plans to prevent dishonest practices and monitor their implementation? Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? Hasthe Company established an effective accounting system and internal control system for the implementation of ethical corporate management, and has the internal audit unitdrawn up an audit plan based on the assessment of the risk of unethical conduct, in order to audit compliance with the plan for preventing		ˇ ˇ ˇ	ˇ	business dealings before proceeding with subsequent transactions. A ethical conduct clause is also included in the signed commercial contract and is executed after inspection by the legal unit. (2) The Company has designated the Management Department as a dedicated unit to promote corporate integrity management. No material breaches of integrity were identified during 2023 and a report on the implementation of the Company's integrity policy was reported by the Board of Directors on March 12, 2024. (3) The Company establishes and publishes an internal independent whistleblower or statement mailbox hr@lotestech.com and a hotline on the Company's website and intranet site, or commissions other external independent organizations to provide a whistleblower mailbox or hotline for use by internal and external personnel of the Company. (4) The Company has established "Procedures and Conduct Guidelines for Integrity Management" as the basis for compliance with the Company's internal control system, but has not yet established an audit plan for this purpose. (5) The Company does not regularly conduct internal training on ethical corporate management, but from time to time, it participates in external explanatory meetings on ethical corporate management.			principles. (2) Follow the Company's corporate management principles. (3) Follow the Company's corporate management principles. (4) Follow the Company's corporate management principles. (5) The Company will evaluate whether to conduct internal education and training on ethical corporate management on a regularbasisinthefuture.。
	unethical conduct,or has it engaged an accountant to perform the audit? Does the company regularly hold internal and external educational trainings on operational integrity?
3. (1) (2) (3)	Operation of the integrity channel Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up? Does the Company have a standard operating procedure for the investigation of the matters to be investigated, follow-up measures to be taken after the completion of the investigation, and relevant confidentiality mechanisms? Does the company provide proper whistleblower protection?		ˇ ˇ	ˇ	The Company has not established a specific reporting and reward system, but encourages internal and external personnel to report dishonest conduct or misconduct. The Company has established and announced an internal independent whistleblower mailbox hr@lotestech.com and a dedicated hotline on the Company's website and intranet site for the use of internal personnel. The Company's personnel who handle reports shall declare in writing that the identity of the whistleblower and the content of the report shall be kept confidential,and undertake to			The Company currently conducts the promotion of the Ethical Corporate Management Best Practice Principles and concepts through its internal website. In the future, depending on the effectiveness of the promotion, the Company will evaluate whether it is necessary to establish a reporting channel and a disciplinaryand complaint system

41

	Evaluation Item	ImplementationStatus	ImplementationStatus	ImplementationStatus	ImplementationStatus	(Note 1)	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” andReasons
		Yes	No		Abstract Illustration
				protect the whistleblower from being improperly dealt with as a result of the report.			for violations of the Ethical Corporate Management Best PracticePrinciples.
4. Strengthening information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website andMOPS?		ˇ		The Company currently conducts the promotion of the Ethical Corporate Management Best Practice Principles and concepts through its internal website.			Follow the Company's corporate management principles.
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.: The Company currently operates in accordance with the spirit of the Ethical Corporate Management Best Practice Principles, except that the Company has not established a dedicated unit andhasnot established areporting channeland a disciplinary and complaint system for non-compliance with EthicalCorporateManagementBestPracticePrinciples.
6. Other importantinformationtofacilitate a betterunderstanding ofthe company’s ethicalcorporatemanagement policies (e.g.,review and amendits policies).: None

• (9) If the Company has set up corporate governance principles and relevant rules, the Company shall disclose methods for inquiry: None

• (10) Other important information to facilitate better understanding of the Company's corporate governance activities may be disclosed here: The Company’s website.

42

(10) Implementation status of internal control system

1.Statement of internal control system

Statement of internal control system

Date: March 12, 2024

The Company's internal control system for 2023, based on the results of self-assessment, hereby states as follows:

1. The Company knows that it is the responsibility of the board of directors and managers of the Company to establish, implement and maintain the internal control system.The Company has established such system to reasonably assure the effectiveness and efficiency of operations (including profits, performance and asset security), report reliability, timeliness, transparency and compliance with relevant regulations.

2. An internal control system has its inherent limitations. No matter how perfect the design is, an effective internal control system can only provide reasonable assurance for the achievement of the above three objectives. Moreover, the effectiveness of internal control system may vary with the change of the environment and situation. However, the Company's internal control system has a self-monitoring mechanism. Once the deficiencies are identified, the Company will take corrective action.

3. The Company shall judge whether the design and implementation of the internal control system are effective or not according to the assessment items for the effectiveness of the internal control system stipulated in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (the Regulations). According to the assessment items adopted therein, the internal control system is divided into five elements based on the the process of management control: (1) environment control, (2) risk assessment, (3) control operation, (4) information and communication, and (5) supervision operation. Each component element also includes several items. For the above items, please refer to the provisions of the Regulations.

4. The Company has adopted the above internal control system to assess the items and evaluate the effectiveness of the design and implementation of the internal control system.

5. Based on the outcome of the foregoing assessment, the Company considers that the design and implementation of its internal control system (including supervision and management of its subsidiaries) as of December 31, 2023, regarding ther understanding of the effectiveness of operations and the extent to which efficiency objectives have been achieved, report reliability, timeliness, transparency and compliance with relevant regulations, are effective and that the system can reasonably ensure the attainment of the above objectives.

6. This statement constitutes the main content of the annual report and the prospectus of the Company and is made public. If any of the contents disclosed above is found to be false, have concealment or other illegal matters, it will involve legal liabilities under Articles 20, 32, 171 and 174 of the Securities and Exchange Act.

7. This statement was approved by the board meeting of the Company on March 12, 2024. Among the 6 directors present, no one held opposing opinions, while the rest agree with the content of this statement.

Lotes Co., LTD

Chairperson: Chu, Te-Hsiang

President: Ho, Te-Yu

43

• 2.Where a certified public accountant is entrusted to examine the internal control system, the audit report shall be disclosed: N/A.

• (11) During the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, the Company and its internal personnel have been punished according to the law or the Company has imposed punishment on its internal personnel for violating the provisions of the internal control system, been found to have major deficiencies and made improvements: none.

• (12) During the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, important resolutions of the shareholders meeting and the Board of Directors meeting:

• 1. Contents of important resolutions of the Board of Directors and shareholders meeting

Shareholders / Board of Directors Meeting	Date	Important Resolutions
Board meeting	2023.03.01	Establishment of the Company’s 2023 cash capital increase employee stock subscription plan and allocation of new shares to be issued to managerial employees.
Board meeting	2023.03.21	1.The Company’s 2022 employee compensation and directors' compensation amounts and methods. 2.The Company’s 2022 business report, financial statements, and consolidated financial statements. 4.The Company’s 2022 earnings distribution plan. 5.Proposal to issue the Company’s “Internal Control System Statement”. 6.Proposal to amend certain provisions of the Company’s “Corporate Governance Best Practice Principles”. 7.Regular assessment of the independence and suitability of the Company’s certifying accountants. 8.The Company’s application to Taipei Fubon Commercial Bank Co., Ltd. for a comprehensive credit line of USD 25 million (renewal) and a derivative financial instrument trading limit of USD 5 million (renewal). 9.The Company’s domestic first unsecured convertible bonds capital increase and issuance of new shares. 10.The Company’s proposed investment in a subsidiary in Vietnam to enhance the Group’s capacity adjustment flexibility, reduce the risk of over-concentration of the Group’s capacity, and expand the Group’s business presence in the Southeast Asian market. 11.Conveningof the Company’s 2022 Annual General Meeting.
Board meeting	2023.05.12	1.The Company’s Q1 2023 financial report. 2.The Company’s application to E.SUN Bank for a comprehensive credit line of NT$300 million (renewal). 3.The Company’s application to SinoPac Commercial Bank Co., Ltd. (hereinafter referred to as SinoPac Bank)for a comprehensive credit line of NT$400 million and USD 6 million(renewal).
Board meeting	2023.06.21	1.Establishment of the Company’s 2022 cash dividend ex-dividend date. 2.The Company’s application to Oversea-Chinese Banking Corporation (OCBC Bank) and DBS Bank for the opening of Singapore OBU accounts. 3.The Company’s application to Hua Nan Bank for a comprehensive credit line of NT$1 billion for the 2022 dividendproject.
Shareholder meeting	2023.06.16	1.The Company’s 2022 business report and financial statements. 2.The Company’s 2022 earnings distribution plan.
Board meeting	2023.08.10	1.The Company’s Q2 2023 financial report. 2.The Company’s 100%-owned mainland China investment subsidiary, Panyu Deyi Precision Electronics Co., Ltd., application to Citibank for a credit line of USD 5 million, and the Company’s endorsement and guarantee for the mainland China investment subsidiary. 3.The Company’sproposed new investment in a subsidiaryin Vietnam.
Board meeting	2023.11.10	1.The Company’s Q3 2023 financial report. 2.Review of the Company’s amendment to the “Directors' Compensation Distribution Measures”.
Board meeting	2023.12.21	1.The Company’s proposed additional investment of NT$150 million in the 100%-owned investment subsidiary Jiayu Investment Co., Ltd. 2.The Company’s managerial employees' 2022 compensation and 2023 year-end bonus distribution plan. 3.The Company’s 2024 internal audit plan schedule. 4.The Company’sproposed investment in Links TechnologyInt'l Limited
Board meeting	2024.03.12	1.Proposal to approve the Company’s 2024 budget, pending further review and approval. 2.The Company’s 2023 employee compensation and directors' compensation amounts and methods. 3.The Company’s 2023 business report, parent company only financial reports, and consolidated financial statements. 4.The Company’s 2023 earnings distribution plan. 5.Proposal to issue the Company’s “Internal Control System Statement”. 6.Regular assessment of the independence and suitability of the Company’s certifying accountants. 7.The Company’s domestic second unsecured convertible bonds capital increase and issuance of new shares. 8.The Company’s application to Taipei Fubon Commercial Bank Co., Ltd. (hereinafter referred to as Taipei Fubon Bank) for a comprehensive credit line of USD 25 million (renewal) and a derivative financial instrument tradinglimit of USD 5 million(renewal).

44

Shareholders / Board of Directors Meeting	Date	Important Resolutions
		9.The Company’s application to Hua Nan Bank for a comprehensive credit line of NT$600 million (renewal). 10.Re-election of the Company’s directors. 11.Board of Directors nomination and review of the list of director (including independent director) candidates. 12.Amendment to the Company’s “Rules of Procedure for Board of Directors Meetings” and “Audit Committee Charter”. 13.Amendment to certain provisions of the Company’s “Articles of Incorporation”. 14.Conveningof the Company’s 2024 Annual General Meeting.

2.Review of the implementation of matters resolved at the 2022 annual general meeting of shareholders

Shareholders MeetingResolutions	Implementation Status
1. 2022 Annual Business Report and Final Account Book.	The company's 2022 operating income was NT$ 27,099,134 thousand, net profit for the term was NT$ 6,254,263 thousand, and earnings per ordinaryshare was NT$58.7.
2. 2022 Profit Distribution Plan.	According to the resolution, shareholders will receive a cash dividend of NT$26 per share, totaling NT$1,695,646 thousand. The Company completed the dividend distribution on August 31,2023.

• (13) During the most recent fiscal year and as of the date of publication of the annual report, the directors or supervisors disagreed with the Board of Directors on the adoption of a significant resolution and there is a record or written statement to the effect: none.

• (14) During the most recent year and as of the date of this annual report, the resignations and terminations of the Company's chairperson, president, accounting supervisor, finance supervisor, internal audit supervisor and research and development supervisor were summarized as follows: None.

• Accountants’ Information

• (1) Information on CPA professional fees:

			Unit: NT$ thousand Audit Fee Non-audit Fee Total Remarks 7,490 0 7,490 Audit fee ─ 450 450Transfer Pricing and Master File Reporting 200 200 Tax advisory	Unit: NT$ thousand Audit Fee Non-audit Fee Total Remarks 7,490 0 7,490 Audit fee ─ 450 450Transfer Pricing and Master File Reporting 200 200 Tax advisory	Unit: NT$ thousand Audit Fee Non-audit Fee Total Remarks 7,490 0 7,490 Audit fee ─ 450 450Transfer Pricing and Master File Reporting 200 200 Tax advisory	Unit: NT$ thousand Audit Fee Non-audit Fee Total Remarks 7,490 0 7,490 Audit fee ─ 450 450Transfer Pricing and Master File Reporting 200 200 Tax advisory
Accounting Firm	Name of CPA	Audit Period	Audit Fee	Non-audit Fee	Total	Remarks
KPMG Taiwan	Li, Fung-Hui	2023	7,490	0	7,490	Audit fee
	TSAI PEI-RU	2023
KPMG Taiwan	CHANG, ZHI	2023	─	450	450	Transfer Pricing and Master File Reporting
KPMG Taiwan	CHANG, ZHI	2023		200	200	Tax advisory

1. If the audit fee for the year of replacement of an accounting firm is less than the audit fee for the year before the replacement, the amount of the audit fee before and after the replacement and the reason shall be disclosed and the reason: N/A.

2. If the audit fee is reduced by more than 15% from the previous year, the amount, proportion and reason for the reduction shall be disclosed: N/A.

3. (2) Information on replacement of CPA:

The Company did not change its accountants for the fiscal year 2023.

• (3) The Company’s Chairperson, CEO, CFO, and Managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates during the latest fiscal year :None.

• Transfer or pledge of shares by the company's directors, supervisors, managers and stockholders with more than 10% of the company's shares: None

45

(1) Changes in shareholding transfers by directors, supervisors, managers and substantial shareholders

Unit: shares

				Unit: shares	Unit: shares
Title	Name	2023		As of April 15 of 2024
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	JIAMING INVESTMENT CO. Rept.: CHU, TE-HSIANG
		0	0	0	0
Chairman's Corporate Representative	CHU, TE-HSIANG
		11,994	0	0	0
Director	JIAMING INVESTMENT CO. Rept.: HE, TE-YU
		0	0	0	0
Chairman's Corporate Representative	HE, TE-YU
		19,791	0	0	0
Director	XIE,JIA-YING(Note 2)	0	0	0	0
Director	QU,JIEN-ZHONG(Note 2)	0	0	0	0
Independent Director	WANG, REN-CHUN (Note 4)
		0	0	0	0
Independent Director	JIANG, YI-CHEN (Note 4)	0	0	0	0
Independent Director	WU, CHANG-XIU (Note 4)
		0	0	0	0
Major Shareholder	JINLING INVESTMENTCO.	0	0	0	0
President	HE,TE-YU	19,791	0	0	0
Director of Research and Development Department	CHU, TE-HSIANG
		11,994	0	0	0
Assistant Manager of President's Office	CHU CHEN, YI-HUI
		6,131	0	0	0
Sales Department Senior Vice President	TSAI, MING-REI
		1,051	0	(1,000)	0
Business Management Department DeputyGeneral Manager	GONG, YONG-SHEN
		15,155	0	0	0
Business Management Department Assistant Manager	LIN, CHIN-HAO
		1,500	0	(1,000)	0
Business Management Department Assistant Manager	LIN, TSUN-DE
		4,500	0	(4,500)	0
Business Management Department Assistant Manager	LIN, KE-LUN
		3,000	0	0	0
Business Management Department Assistant Manager	LIN, YAO-CHIN
		100	0	0	0
Assistant Manager of Sales Division One Sales Department	WU, YI-CHEN
		577	0	0	0
Assistant Manager of Sales Division Two Sales Department	LEE, ZHENG-WEN
		3,000	0	0	0
Finance Department Manager	LIU, XIN-XIA
		0	0	0	0
Finance Department Deputy Manager	LIANG, SHI-YI
		0	0	0	0
Audit Supervisor	WENG, KUN-TANG
		0	0	0	0
Business Management Department Assistant Manager	LIU, CHI-HONG
		4,500	0	0	0

46

Title	Name	2023	2023	As of April 15 of 2024	As of April 15 of 2024
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Business Management Department Assistant Manager	HO, CHI-HSIANG
		4,750	0	0	0

• (2) Information on Relative Persons Related to the Transfer of Equity.

Name	Reasons for Equity Transfer	Date	Counterparties	Relationship of Counterparties to the Company, Directors, Supervisors, Managers and Shareholders Holding More than 10% of the Shares	Shares	Transactio n Price
None	None	None	None	None	None	None

• (3) Information on Relative Persons to the Equity Pledge: None

47

7. Relationship among the Top Ten Shareholders ：

April 15, 2024

Name	Current Shareholding	Current Shareholding	Spouse’s/Minor’s Shareholding	Spouse’s/Minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Remark s
	Shares	%	Shares	%	Shares	%	Name	Relationship
JINLING INVESTMENT CO.	10,956,237	9.79%	0	0.00%	0	0.00%	HE, TE-YU	JINLING INVESTMENT CO. Chairman
JIAMING INVESTMENT CO.	9,797,037	8.76%	0	0.00%	0	0.00%	CHU, TE-HSIANG	JIAMING INVESTMENT CO. Chairman
							CHU CHEN, YI-HUI	JIAMING INVESTMENT CO. Supervisor
Dunlin Investment Co.,Ltd.	5,000,000	4.47%	0	0.00%	473,899	0.42%	HE, TE-YU	JINLING INVESTMENT CO. Chairman
Cathay Life Insurance Co.,Ltd.	3,553,995	3.18%	0	0.00%	0	0.00%	None	None
New Labor Pension Fund System	3,386,102	3.03%	0	0.00%	0	0.00%	None	None
Custody by Citibank (Taiwan) Limited of the Norges Bank’s Investment Account	2,973,321	2.66%	0	0.00%	0	0.00%	None	None
Dechuan Investment Co.,Ltd.	2,951,388	2.64%	0	0.00%	27,920	0.02%	CHU, TE-HSIANG	JIAMING INVESTMENT CO. Chairman
Fubon Life Insurance Co.,Ltd.	2,281,376	2.04%	0	0.00%	0	0.00%	None	None
Deutsche Bank Custody of Swedbank Robb Technology Investment Account	2,000,000	1.79%	0	0.00%	0	0.00%	None	None
Standard Chartered Custody of Vontobel Fund - mtx Sustainable EmergingMarkets	1,939,000	1.73%	0	0.00%	0	0.00%	None	None

1. Information on the number of shares of the company invested by the company, any of the company’s directors and supervisors and executive officers or a company directly or indirectly controlled by the company and consolidated percentage of shareholding:

The Company's shareholdings in the investee companies are 100% owned by the Company and no joint shareholding with others or other companies has occurred.

48

IV. Capital Overview

1. Capital and shares

(1). Source of capital

Unit: thousand shares/ $ thousand

						Unit: thousand shares/$thousand	Unit: thousand shares/$thousand	Unit: thousand shares/$thousand
Date	Insuranc e Price (NT$)	Authorized Capital		Paid-in Capital		Remarks
		Shares	Amount	Shares	Amount	Sources of Capital (NT$)	Capital Increased by Assets Other than Cash	Other
1987.12	－		5,000		5,000	$5 million capital stock of establishment	－	Jian-San-Ding-Zi Letter No. 344438 dated December 1,1987
1998.09	10,000	2.5	25,000	2.5	25,000	Cash capital increase of $20 million	－	Jian-San-Ding-Zi Letter No. 230910 dated September 22,1998
2004.09	10	12,012	120,120	12,012	120,120	Cash capital increase of $95.12 million	－	Jing-Zhong-Zi Letter No. 09332670500 dated September 3,2004
2004.10	10	44,500	445,000	44,500	445,000	Cash capital increase of $324.88 million	－	Jing-Zhong-Zi Letter No. 09332928790 dated October 27,2004
2004.12	18	49,400	494,000	49,400	494,000	Cash capital increase of $49 million	－	Jing-Zhong-Zi Letter No. 09333306580 dated January6,2005
2005.10	10	61,000	610,000	52,320	523,200	Capitalization of retained earnings of $29.2 million	－	Jing-Zhong-Zi Letter No. 09401205920 dated October 17,2005
2006.08	10	61,000	610,000	55,686	556,860	Capitalization of retained earnings of $33.66 million	－	Jing-Shou-Shang-Zi Letter No. 09501181500 dated August 18,2006
2006.08	16.5	61,000	610,000	59,166	591,660	Cash capital increase of $34.8 million	－	Jing-Shou-Shang-Zi Letter No. 09501185810 dated August 23,2006
2007.03	10	61,000	610,000	60,349	603,493	Capitalization of capital reserves of $11.83 million	－	Jing-Shou-Shang-Zi Letter No. 09601038990 dated March 1,2007
2007.08	10	105,000	1,050,000	63,820	638,200	Capitalization of retained earnings of $34.71 million	－	Jing-Shou-Shang-Zi Letter No. 09601189090 dated August 6,2007
2008.01	41	105,000	1,050,000	71,174	711,740	Cash capital increase of $73.54 million	－	Jing-Shou-Shang-Zi Letter No. 09701004250 dated January14,2008
2008.08	10	105,000	1,050,000	76,232	762,327	Capitalization of retained earnings of $50.587 million	－	Jing-Shou-Shang-Zi Letter No. 09701196230 dated August 5,2008
2009.12	14.98	105,000	1,050,000	77,104	771,041	Capitalization of employee stock warrants of$8.714 million	－	Jing-Shou-Shang-Zi Letter No. 09801280550 dated December 7,2009
2010.02	116.5	105,000	1,050,000	83,104	831,041	Cash capital increase of $60 million	－	Jing-Shou-Shang-Zi Letter No. 09901038450 dated March 2,2010
2010.09	140	105,000	1,050,000	93.104	931.041	Cash capital increase of $100 million	－	Jing-Shou-Shang-Zi Letter No. 09901213910 dated September 23,2010
2011.01	10.98	105,000	1,050,000	93.313	933.139	Capitalization of employee stock warrants of$2.098 million	－	Jing-Shou-Shang-Zi Letter No. 10001008880 dated January17,2011
2011.08	10.98	105,000	1,050,000	93,477	934,779	Capitalization of employee stock warrants of$1.64 million	－	Jing-Shou-Shang-Zi Letter No. 10001184600 dated August 15,2011
2019.01	140	155,000	1,550,000	103,477	1,034,779	Cash capital increase of $100 million	－	Jing-Shou-Shang-Zi Letter No. 10801009430 dated January23,2019

49

2021.12	2021.12	432	155,000	155,000	1,550,000	105,977	1,059,779	1,059,779	Capital increase in cash NT$25 million	Capital increase in cash NT$25 million		Jing-Shou-Shang-Zi Letter No. 11001182950 dated Oct. 8,2021	Jing-Shou-Shang-Zi Letter No. 11001182950 dated Oct. 8,2021
2022.04		－	155,000		1,550,000	106,095	1,060,946		CB Conversion Shares			Jing-Shou-Shang-Zi Letter No. 11101057920 dated Apr. 19,2022
2022.06		－	155,000		1,550,000	106,181	1,061,806		CB Conversion Shares		－	Jing-Shou-Shang-Zi Letter No. 11101091040 dated 2022.6.2
2022.09		－	155,000		1,550,000	106.487	1,064,871		CB Conversion Shares		－	Jing-Shou-Shang-Zi Letter No. 11101168760 dated 2022.9.12
2022.12			155,000		1,550,000	106.876	1,068,762		CB Conversion Shares		－	Jing-Shou-Shang-Zi Letter No. 11101229790 dated 2022.9.12
2023.04		－	155,000		1,550,000	107,829	1,078,298		CB Conversion Shares		－	Jing-Shou-Shang-Zi Letter No. 11230061040 dated 2023.4.12
2023.04		660	155,000		1,550,000	111,329	1,113,298		Cash Capital Increase NT$ 35 million			Jing-Shou-Shang-Zi Letter No. 11230069610 dated 2023.4.25
2024.03		－	155,000		1,550,000	111,472	1,114,721		CB Conversion Shares		－	Change of registration not yet completed
	Share Type						Authorized Capital						Remarks
				Issued Shares				Un-issued Shares		Total Shares
	Registered Shares			111,472,118				43.527,882		155,000,000

Summary of information related to the reporting system: N/A.

(1). Shareholder structure

(1). Shareholder structure	(1). Shareholder structure
					Unit: shares April 15,2024
Shareholder structure Item	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	4	175	68	6,642	567	7,456
Shareholding (shares)	5,004,319	17,000,522	31,103,268	8,701,681	50,047,408	111,857,198
Percentage	4.47%	15.20%	27.81%	7.78%	44.74%	100%

(2) Diffusion of ownership

April 15, 2024

Class of Shareholding (Unit: shares)	Number of Shareholders	Shareholding (Shares)	Percentage
1- 999	5,150	457,947	0.41%
1,000-5,000	1,537	2,609,940	2.33%
5,001- 10,000	174	1,266,267	1.13%
10,001- 15,000	97	1,252,390	1.12%
15,001- 20,000	60	1,081,777	0.97%
20,001- 30,000	92	2,333,293	2.09%
30,001- 40,000	63	2,204,120	1.97%
40,001- 50,000	31	1,403,348	1.25%
50,001- 100,000	110	7,921,830	7.08%
100,001- 200,000	58	8,364,372	7.48%
200,001- 400,000	39	10,932,310	9.77%
400,001- 600,000	14	6,885,319	6.16%
600,001- 800,000	8	5,540,806	4.95%
800,001-,000,000	6	5,284,889	4.72%

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Over 1,000,001	17	54,318,590	48.56%
Total	7,456	111,857,198	100%

Diversification of shareholding in preference shares: N/A.

(4). List of major shareholders

The names, amounts and percentages of the top ten shareholders with or shareholders holding at least 5% of the shares.

east 5% of the shares.	east 5% of the shares.	east 5% of the shares.
Unit: shares April 15,2024
Shares Major Shareholders	Shares	Percentage
Jinling Investment Co., Ltd.	10,956,237	9.79%
Jiaming Investment Co., Ltd.	9,797,037	8.76%
Dunlin Investment Co., Ltd.	5,000,000	4.47%
Cathay Life Insurance Co., Ltd.	3,553,995	3.18%
New Labor Pension Fund System	3,386,102	3.03%
Custody by Citibank (Taiwan) Limited of the Norges Bank’s Investment Account	2,973,321	2.66%
Dechuan Investment Co., Ltd.	2,951,388	2.64%
Fubon Life Insurance Co., Ltd.	2,281,376	2.04%
Deutsche Bank Custody of Swedbank Robb Technology Investment Account	2,000,000	1.79%
Standard Chartered Custody of Vontobel Fund - mtx Sustainable EmergingMarkets	1,939,000	1.73%

• (5). Market Price per share,net worth per share,earnings per share,dividends per share,and

related information for the past 2 fiscal years

Unit: NT$

						Unit: NT$
Item	Year			2022	2023	As of March 31, 2024 for the year
Market Price per Share	Highest Mrket Price			924	1,150	1,435
	Lowest Market Price			556	693	921
	Average Mrket Price			745	864	1,097
Net Worth per Share	Before Distribution			211.55	249.15	－
	After Distribution			185.55	－	－
Earnings per Share	Weighted Average Shares (thousand shares)			106,539	110,416	－
	Earnings per Share		Before adjustment	58.70	50.65	－
			After adjustment	57.87	50.19	－
Dividends per Share	Cash Dividends			26	26	－
	Stock Divid	Dividends from Retained Earnings		－	－	－

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Item	Year	Year	2022	2023	As of March 31, 2024 for the year
	ends	Dividends from Capital Surplus	－	－	－
	Accumulated Undistributed Dividends		－	－	－
Return on Investment	Price / Earnings Ratio		12.69	17.05
	Price / Dividend Ratio		28.65	33.23	－
	Cash Dividend Yield Rate		3.48%	3.01%	－

• (6). Dividend Policy and Implementation Status

• The Company's Articles of Incorporation provide that the Company shall set aside not less than 3% of its annual profits for the remuneration of employees and not more than 3% for the remuneration of directors and supervisors. However, if the company has accumulated losses, it shall retain the amount of compensation in advance and allocate the remuneration of employees and directors and supervisors in proportion to the above. The above-mentioned employees' remuneration may be paid in stock or cash to employees of a subsidiary company who meet certain criteria.

If there is any surplus after the final settlement of each year, the Company shall first complete the tax contribution, make up the deficit of the previous year and set aside 10% of the surplus as legal reserve, except when the legal reserve has reached the total capital; if there is any surplus and the accumulated undistributed surplus, the Board of Directors shall prepare a proposal for the distribution of the surplus and submit it to the shareholders' meeting for resolution, and the shareholders' bonus to be distributed shall not be less than 20% of the net income after tax less the amount of legal reserve.

The Company will take into account the environment and growth stage of the Company and will expand its business in the future. 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. Proposed dividend distribution at the shareholders' meeting ：

To appropriate a cash dividend of NT$2,898,275,068 out of the 2023 surplus, to be allotted at NT$26 per share, and to authorize the Board of Directors to fix another dividend distribution base date upon the approval of the shareholders' meeting.

• (7). Effect upon Business Performance and Earnings per Share of any Stock Dividend Distribution Proposed or Adopted at the Most Recent Shareholders’ Meeting: None.

• (8). Employee Bonus and Directors' and Supervisors' Remuneration

• Ratio or scope of remuneration for employees, directors and supervisors as set forth in the Articles of Incorporation: please refer to the description in (6) above.

• The basis for estimating the amount of employee and directors’compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:

In accordance with the Ji-Mi-Zi Interpretation Letter No. 052 of the Accounting Research and Development Foundation (96), the Company estimates the amount of employee remuneration and directors' and supervisors' remuneration since January 1, 2008 and recognizes it as an appropriate accounting item under operating costs or operating expenses based on the nature of the employee remuneration and directors' and supervisors' remuneration. Any difference between the resolution

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of a subsequent shareholders' meeting and the estimates in the financial statements is treated as a change in estimates and recorded as profit or loss for the period.

1. Information on any approval by the board of directors of distribution of compensation:

2. (1) Amount of employee remuneration and directors' and supervisors' remuneration distributed in cash or shares.

Proposed employee cash bonus of NT$202,700,000.

Proposed remuneration for directors and supervisors is NT$4,480,000.

  - (2) The amount of any employee compensation distributed in stocks, and the size of that  amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: the Company did not pay any employee stock dividends during the period.

1. Actual distribution of remuneration to employees, directors and supervisors during the prior year: The Company's net income after tax for 2022 was $6,254,264 thousand, and the Board of Directors resolved to distribute employee remuneration of $221,300 thousand and director and supervisor remuneration of $4,480 thousand for 2023, which is the same as the actual distribution of employee, director and supervisor remuneration totaling $225,780 thousand for 2023 as resolved by the Board of Directors and reported at the 2023 Annual Meeting of Shareholders.

2. (9). Share repurchases: None

3. Issuance of corporate bonds:

(1)Corporate Bond

Issuance of corporate bonds: orporate Bond
Type of corporate bond (Note 2)	Second Unsecured Convertible Corporate Bond
Issue (Processing) Date	March 9, 2023
Nominal value	NT$ 100,000
Place of issue and transaction (Note 3)	─
Issue Price	Issued at 108.14% of par value
Total Amount	Total denomination of the issue is NT$1 billion
Interest Rate	Coupon rate 0% per annum
Term	Issued for a period of three years; from March 9, 2023, to March 9, 2026.
Guaranteed Institution	None
Trustee	Hua Nan Commercial Bank
Underwriter	Yuanta Securities Co.
Signatory Solicitors	Far East United Law Firm, CHIU, YA-WEN LAWYER
CPA	KPMG Li Fung Fai, CPA and TSAI, PEI-RU, CPA
Repayment Method	In addition to the holder of this convertible corporate bond converting it into ordinary shares of the company according to Article 10 of this method, or the company redeeming in advance according to Article 17 of this method or the company buying back from the securities dealer's business place to cancel, the company will within seven business days from the day after the maturity date of this convertible corporate bond repay in cash at once the bond held by the bondholder at the face value of the bond.
Unredeemed principal	NT$ 881,900,000
Terms of redemption or early settlement	If the closing price of the Company's common stock on the TWSE exceeds the then current conversion price of the Bonds by more than 30% (inclusive) for 30 consecutive business days from the day after the expiration of three months from the date of issuance (June 10,2023) until 40 days priorto the expirationofthe

53

		issuance period (January 28, 2026), the Company may, within 30 business days thereafter, send the Bonds by registered mail to (the holder of the Bonds (as stated in the Register of Bondholders on the fifth business day prior to the date of mailing, or by way of announcement for holders who subsequently acquire the Bonds through trading or otherwise) a "Notice of Call" for the expiry of the 30-day period (the aforesaid period shall be counted from the date of mailing by the Company and the expiry date of such period shall be the reference date for the call of the Bonds, and the aforesaid period shall not be the period of cessation of conversion under Article 9) The Company shall, upon the expiry of such period, send a letter to the Counterparty and request the Counterparty to announce and collect the Bonds from the Bondholders in cash at their face value within five business days after the Bond Collection Date. 2. From the day following three months after the bond issuance (June 10, 2023) until 40 days before the maturity date (January 28, 2026), if the outstanding amount of this convertible bond is less than 10% of the total issuance amount, the company may, at any time thereafter, send a registered letter to the bondholders (based on the register of bondholders five business days before the dispatch date, and for those who subsequently acquired the bonds due to purchase or other reasons, it will be done by announcement), a "Bond Recall Notice" that expires in thirty days (the aforementioned period starts from the date of dispatch by the company and ends on the bond recall benchmark date, this period must not be during the conversion suspension period stated in Article 9), and request the counter purchase center to announce it. The company will recall the bonds from the bondholders by cash according to the face value of the bond within five business days after the bond recall benchmark date. 3. If the bondholder does not reply in writing to the company's stock affairs agency before the bond recall benchmark date stated in the "Bond Recall Notice" (effective upon receipt, if sent by mail, the postmark date will be the proof), the company will redeem the bonds in cash according to the face value of the bond within five business days after the bond recall benchmark date. 4. If the company executes a recall request, the last date for the bondholder to request conversion is the second business day after the termination of the over-the-counter trading of this convertible corporate bond.
Restricted Terms		None
Name of credit rating agency, rating date, corporate bond rating result		NA
Other Rights	Amount of ordinary shares, overseas depositary receipts or other marketable securities converted (exchanged or warrants) as at the date of printing of the annual report	As of March 31, 2024, 1,181 bonds, each with a face value of NT$100,000, have been converted, totaling NT$118,100,000 in bond conversion amount. Cumulatively, 142,305 common shares have been converted.

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	Method of issue and conversion (exchange or share option)	Please refer to the domestic second unsecured convertible corporate bond issuance and conversion method of our company.
Te method of issue and conversion, exchange or subscription, the possible dilution of shareholdings by the terms of issue and the effect on the interests of existing shareholders		Based on the existing conversion price, if all remaining corporate bonds are fully converted into ordinary shares, the company needs to issue an additional 1,062,658 shares. The dilution rate of the share capital is 0.94%, and the impact on shareholder's equity is limited.
Name of the custodian for the exchange of the subject		NA

• (2) Converted Corporate Bonds Information

Type of corporate debt (Note 1)	Type of corporate debt (Note 1)	Second unsecured conversion of corporate bonds
Item	Year	Up to April 2, 2024
Convertible Corporate Bond Market Price	Highest	NT$175
	Lowest	NT$125
	Average	NT$140.58
Conversion Price		NT$829.9
Issue (processing) date and conversion price on issue		Issued on March 9, 2023, the conversion price at the time of issuance was NT$862.1.
Manner of fulfilling conversion obligations (Note 3)		Issue of New Shares

• (3)Reporting of corporate bonds issued: None.

• Issuance of preferred shares: None

• Issuance of global depository receipts: None

• Eemployee subscription warrants:

• (1) Eemployee subscription warrants

Eemployee subscription warrants: (1) Eemployee subscription warrants	Eemployee subscription warrants: (1) Eemployee subscription warrants
April 14, 2018
Types of Employee Stock Option Warrants	First (period) Types of Employee Stock Option Warrants
Date of effective registration and total units	2007.07.30/1,253,000 units
Issue date	2007.08.13
Number of units issued	1,253,000 units
	(1,253,000 common stocks)
Remaining Units Available for Issue	0
Ratio of subscribed shares issued to total number of shares issued (Note 1)	1.34%
Subscription Period
	Within five years from the actual issue date
Exercise Method	Issuance of new shares
Period and ratio in which subscription is restricted	70% after 2years;
	100% after 3 years

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Number of shares obtained	1,245,200
Amount of the shares subscribed	17,157,901
Number of shares that have not been subscribed	7,800
Subscription price per share of the unsubscribed shares	10.98
Ratio of the number of unsubscribed shares to the number of issued and outstanding shares	0.01%
Date of effective registration	This Stock Option Warrant shall be executed
	over five years after the expiration of two years
	from the Issue Date.
	As of December 31, 2012, the remunerative
	employee stock option plan has expired and the
	outstanding stock options as of the expiration
	date are deemed to be waived, therefore the
	unexecuted portion of the stock options no
	longer has any effect on shareholders'equity.

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(2) The names of the managers who acquired the employee stock options and the top ten employees who acquired the stock options, the acquisition and subscription status

	subscription status	subscription status	subscription status
									April 14,2018;Unit: shares;Unit: NT$
	Title	Name	Number of shares acquired	Ratio of the number of subscribed acquired shares to the number of issued and outstanding shares		Implemented (by2 years)			Implemented (by 3 years)				Not implemented
					Number of shares acquired	Price of shares acquired	Amount of shares acquired	Ratio of the number of subscribed shares to the number of issued and outstanding shares	Number of shares acquired	Price of shares acquired	Amount of shares acquired	Ratio of the number of subscribed shares to the number of issued and outstanding shares	Number of shares acquired	Price of shares acquired	Amount of shares acquired	Ratio of the number of subscribed shares to the number of issued and outstanding shares
Manager	Vice President, Sales Dept.	Tsai, Ming-Jui	371,000	0.40%	259,700	14.98	3,890,306	0.28%	111,300	10.98	1,222,074	0.12%	0	0	0	0
	Management DepartmentVice President	Lu, Chih-Cheng
	Management DepartmentVice President	Kung, Yung-Sheng
	Management Department Associate Manager	Lin, Ching-Hao
	Financing Dept. Manager	Liu, Hsing-Hsia
	Financing Dept. Vice Manager	Liang, Shih-Yi
Staff	--	--	--	--	--	--	--	--	--	--	--	--	--	--	--	--

1. Restriction on issuing of new employee option

2. Share issuance of merger company

3. Implementation of the capital utilization plan:

57

• 1, Analysis of previous cash capital increases, mergers and acquisitions or the issuance of new shares or corporate bonds in acquiring other companies' shares should be recorded:

The company has never handled mergers and acquisitions or issued new shares and private securities. The actual completion dates of the company's previous cash capital increases and corporate bond issuances have not exceeded three years from the date of declaration, which was handled in 2021 for the cash capital increase and the issuance of the first domestic

unsecured convertible corporate bond. The related plan contents, implementation situation, and benefits are described as follows:

• (1) Project Detail and Projected Benefits

• 1.Approval date and reference number of the competent authority: The letter No. 1100349428 and No. 11003494281 issued by the Financial Supervisory Commission on July 23, 2021.

• 2.The total amount of funds needed for this plan: NT$ 2,234,473 thousand.

• 3.Source of funds:

  • (1)A cash capital increase in Taiwan to issue 2,500 thousand new shares, each with a face value of NT$10 and an issue price of NT$ 432. The total amount of funds expected to be raised is NT$ 1,080,000 thousand.

  • (2)The company issued the first domestic unsecured convertible corporate bond, 10,000 in number, each with a face value of NT$ 100,000. The face interest rate is 0%, the issuance period is 3 years, and they were issued at 115.45% of the face value, raising an actual fund amount of NT$1,154,473 thousand.

4. Project Plan and Fund Usage Progress

Unit: NT$thousands

			Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Project	Scheduled Completion Date	Total Amount of Funds Needed	ScheduledProgress of Fund Utilization
			2021		2022				Total
			Q3	Q4	Q1	Q2	Q3	Q4
Replenishing OperatingFunds	2021 Q4	1,754,473	870,935	883,538	-	-		-	1,754,473
Building office buildings and storage	2022 Q4	480,000	-	48,000	96,000	120,000	120,000	96,000	480,000
Total		2,234,473	870,935	931,538	96,000	120,000	120,000	96,000	2,234,473

5.Expected Benefits

• (1)Replenishing Operating Capital

Of the funds raised this time, NT$1,754,473 thousand is planned to be used to replenish operating capital, to cater to the company's future development needs. Based on the interest rate of the company's bank loan, which is about 1%, it is estimated that it can save an interest expense of NT$17,545 thousand each year.

• (2) Construction of Office Building and Warehouse

The company plans to use NT$480,000 thousand for the construction of an office building and warehouse, to cater to the company's future operating needs and development, and to enhance overall operational management efficiency. The construction of the office building and warehouse is expected to be completed in the 4th quarter of 2022. Based on the rent price per ping in that area, it is estimated that

58

from 2023 and onwards it can save an annual rent expenditure of about NT$41,299 thousand, which should reasonably alleviate financial burden.

• 6.Changes to Project Content, Reasons for Change, and Expected Benefits Before and After the Change:

• (1) The Board of Directors resolved to change the plan on March 21, 2022: Change of plan content and reason

The original plan was to invest NT$480,000 thousand in the construction of an office building and warehouse. However, as it was unforeseen that the construction land is on a slope, and the Keelung City Government has strict regulations on the development of sloping land, especially in terms of soil and water conservation review, it is difficult to estimate when the Keelung City Government will issue the construction permit. To make effective use of the funds, therefore, it was decided at the Board of Directors' meeting on March 21, 2022, to change the plan for using the funds raised from the issuance of new shares and the first domestic unsecured convertible corporate bond in 2021, and it is planned to use the unused NT$480,000 thousand all for replenishing operating capital, to support the company's daily operating capital needs.

Unit: NT$thousands

			Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands	Unit: NT$thousands
Project	Scheduled Completion Date	Total Amount of Funds Needed	ScheduledProgress of Fund Utilization
			2021		2022				Total
			Q3	Q4	Q1	Q2	Q3	Q4
Replenishing OperatingFunds	2022 Q2	2,234,473	870,935	883,538	-	480,000	-	-	2,234,473
Total		2,234,473	870,935	883,538	-	480,000	-	-	2,234,473

• (2) Expected Benefits after the Change in the Plan

The funds raised this time, 2,234,473 thousand Yuan, are planned to be used entirely to replenish operating capital, to cater to the company's future development needs. Based on the interest rate of the company's bank loan, which is about 1%, it is estimated that it can save an interest expense of 22,345 thousand Yuan each year.

1. Dates of Submission to the Information Reporting Website Specified by the Securities and Futures Bureau: July 23, 2021, and March 21, 2022.

2. (2)Execution Status, Causes of Delay, and Improvement Plan

Unit: NT$thousands

				Unit: NT$thousands
Project	Performance a	s of the second quarter	of 2022	Reasons for advancement or lagging situation and improvementplan
Replenishing Operating Funds	Amount spent	Anticipated	2,234,473	The implementation has been completed in accordance with the revised plan.
		Actual	2,234,473
	Actual Progress	Anticipated	100.00%
		Actual	100.00%

(3)Expected Benefit Achievement

To keep pace with revenue growth, our company carried out a cash capital increase, issued new shares and issued the first unsecured convertible corporate bond domestically in 2021. The fundraising was completed in the third quarter of 2021, with a total fundraising amount of NT$ 2,234,473,000, all of which was used to bolster operational

59

capital. After the fundraising was completed, our company's own funds were further supplemented, enabling the company to promote operations without worry. This resulted in a total operating income of NT$ 8,330,867,000 in the first two quarters of 2022, a growth of 29.05% compared to the first two quarters of 2021, and an increase in earnings per share to NT$ 27.25.

Unit: NT$thousands

Item	Year	First two quarters of 2021 (before capital raising)	First two quarters of 2022 (before capital raising)
Basic Financial Information	Current Assets	6,153,269	8,617,929
	Current liabilities	4,433,123	4,612,806
	Total Liabilities	4,485,637	5,524,727
	OperatingIncome	6,455,618	8,330,867
	Net Income	795,800	1,434,893
	Interest expense - bank loans	743	2,921
	Earnings pershare (NT$)	14.91	27.25
Financial Structure	Debtratio (%)	24.91	22.87
	Long-term capital to property, plant and equipment(%)	23,304.14	6,515.91
Solvency	Current Ratio(%)	138.80	186.83
	Quick Ratio(%)	116.48	160.40

Note: These are self-calculated numbers by our company

After the fundraising was completed, regardless of the company's financial structure or debt repayment capability, both improved compared to before the fundraising. Furthermore, business income also saw significant growth, indicating the benefits of the cash capital increase, new share issuance, and issuance of the first unsecured convertible corporate bond domestically by the company in 2021 have already been realized.

• 2, The following matters should be recorded for this cash capital increase, corporate bond issuance, issuance of employee stock ownership certificates or restricted employee rights new shares plan:

• (1)Details of this fundraising and securities issuance plan

  • 1.Total amount of funds required for this plan: NT$ 3,391,377,000.

  • 2.Sources of funds:

    • (1)To carry out a domestic cash capital increase, issuing 350,000 new shares, each share with a face value of NT$ 10, each share issuance price is NT$ 660, and the total fundraising amount is NT$ 2,310,000,000.

    • (2)Issuing the second unsecured convertible corporate bonds domestically, with 10,000 bonds, each bond has a face value of NT$ 100,000, a coupon rate of 0%, a issuance period of 3 years, this convertible corporate bond adopts a competitive auction method for public offering, issued at 108.14% of the face amount, the total issuance amount is NT$ 1,081,377,000.

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3. Plan project and progress of utilization

Unit: NT$thousands

					Unit: NT$thousands
Project	Execution		Q3 2023	As of Q3 2023	Reasons for advancement or lagging situation and improvementplan
Replenishing Operating Funds	Amount spent	Anticipated	0	3,391,377	Primarily due to adjustments in the Company's cash management and the subsidiary's funding needs, which caused slight delays in progress.
		Actual	278,385	3,391,377
	Actual Progress (%)	Anticipated	0.00%	100.00%
		Actual	8.21%	100.00%

The Company's 2022 cash capital increase through new shares and the issue of the second domestic unsecured convertible bonds required a total of NT$3,391,377 thousand, with disbursements expected to begin in the second quarter of 2023.

The issue of the second domestic unsecured convertible bonds was completed on March 8, 2023, raising NT$1,081,377 thousand. Additionally, the funds raised from the 2022 cash capital increase through new shares were completed on April 7, 2023, raising NT$2,310,000 thousand. As of September 30, 2023, the amount used for operating capital was NT$3,391,377 thousand, fully executed according to the plan with no significant anomalies.

• (2) Assessment of Expected Benefits vs. Actual Achievements

1. Expected Benefits

The raised funds of NT$3,391,377 thousand will be entirely used to bolster operating capital to support the Company's future development. Based on the Company's bank loan interest rate of approximately 1.5%, it is estimated to save an annual interest expense of NT$50,871 thousand.

2. Actual Benefits

The funds raised by the Company for operating capital are expected to have no significant differences between the projected and actual benefits regarding the savings on interest expenses.

3. Involvement in Plan Changes

In accordance with Securities and Futures Institute Letter (87)-Tai-Cai-Zheng-(1)-Zi No.03693, "Precautions for Changes to Plans for Cash Capital Increases or Issuance of Corporate Bonds by Publicly Issued Companies," a plan change refers to the occurrence of any of the following circumstances, resulting in a decrease or increase in the total amount of funds required for the original individual items by more than twenty percent of the total funds raised:

The Company's cash capital increase by issuing new shares and issuing domestic unsecured convertible corporate bonds in 2022 has been entirely used as planned to enhance operational funds, and therefore, there are no circumstances involving plan changes.

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V. Overview of Business Operations

A. Description of the business

• (1). Scope of business

• Main business operation and sales ratio

  • (1) Main operation for businesses

    • A. Trading of various hardware parts and tool parts.

    • B. Trading, manufacturing and processing various terminals and their finished connectors.

    • C. Trading, manufacturing and processing electronic components.

    • D. Trading, manufacturing and processing precision tooling.

  • (2) Main products and their sales ratio

Unit: NT$thousands

	2023 Net Operating Sales
Major products		Sales Ratio (%)
	(Note)
Connectors (with cables)	23,917,441	97.69%
Other Electronic Components	566,022	2.31%
Total	24,483,463	100.00%

2. The Company’s current products and services

• The Company’s products are various connectors and components for computers,

• communications, Automotive and mobile phones, and consumer electronic.

• New products and services in planning

In order to continuously provide high quality products to clients, the Company continue to improve comprehensively on its process standard and energy in design, manufacturing process, quality control and testing, and to achieve the goals of high growth. Sparing no effort in developing new products, it keep developing towards fine pitch and high-density connectors. To match the future market trend of high speed connectors, it has recently been further developed into more actively engage in analyzing high-current, high-frequency connectors and developing capability to meet the market demand. In addition, to expand product lines and market scale, the Company had successfully developed the relevant connectors required for high-frequency server, automobiles, high-speed transmission devices and the latest transmission interface Type-C.

• (2). Overview of the industry:

• (1)Status and development trends of the industry

Electronic connectors (cables) refers to all the connecting elements and accessories used for electronic signals and power supplies, whose main function is to provide a separable interface between two subsystems within an electronic system to enable the smooth transmission of signals or power. As electronic connectors (wires) are considered to be the bridge for all signals and are used to connect components to each other, the quality of the product is clearly related to the reliability of the signal transmission, which in turn affects the operation of the entire electronic machine. The downstream market for electronic connector (wire) products is very broad. They are used in a wide range of applications, including chip and component connections, PCB (Printed Circuit Board) board-to-board connections, host and I/O (Input/Output) connections, external power supply and external signal connections, etc. Currently, they are mainly used in personal computer (PC) and peripheral, network communications, automotive electronics (AE), green energy, consumer electronics, etc. Peripherals, network communications, automotive electronics, green energy, consumer electronics, etc.

Additionally, the global trend towards net-zero carbon emissions continues to drive the development of applications in electric vehicles, automotive electronics, and green energy storage. This results in a clear demand momentum for high-voltage connectors used in vehicles. Coupled with infrastructure construction policies promoted by various European and American countries, we have also ventured into high-value-added application fields such as 5G infrastructure, industrial

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control (e.g., industrial automation, fiber optic transmission, semiconductor equipment), and healthcare.

Analyzing the main import and export countries of Taiwan's electronic connector (cable) manufacturing industry from January to October 2022 (see Table 3-1), first, in terms of imports, the top five importing countries for this industry are China, Japan, the United States, Germany, and Mexico. Among them, the largest importing country, China, saw an annual decrease rate of 7.83%, mainly due to the local government's strict pandemic control policies, resulting in lower production line utilization rates in our companies' factories, which led to a decline in demand for general 3C application connectors (cables) imported China. The second-largest importing country, Japan, saw the most significant annual decrease rate of 14.15%, due to the increasing production quality of Taiwanese automotive connector companies, which has led to successful import substitution since 2022. However, the United States saw the most significant annual increase rate of 7.98%, primarily because domestic information and communication technology giants continued to have a clear demand for mid-to-high-end connectors (cables) from the US.

In terms of exports, the top five exporting countries for this industry are the United States, China, Hong Kong, Germany, and Japan. Among them, the annual increase rates for Japan, the United States, and Germany were 28.17%, 24.96%, and 13.03%, respectively. This is due to clear demand from local customers for niche application connectors (cables) produced in Taiwan, such as those used in network communication, electric vehicles and automotive electronics, healthcare, green energy and storage, semiconductor equipment, and industrial control. However, export amounts to China and Hong Kong decreased by 14.35% and 13.68%, respectively, compared to the same period in 2021. This decline is mainly due to the Chinese government's ongoing strict pandemic control measures, which weakened the domestic sales in application markets such as industrial automation and 5G infrastructure, leading to insufficient demand from Chinese customers and Taiwanese EMS companies with factories in China for related domestic connectors.

In the international market, although connectors (cables) for general consumer electronic products will continue to undergo inventory de-stocking due to the global terminal demand momentum yet to recover significantly, and domestically produced mid-to-low-end products will face intense competition from Chinese companies. Furthermore, the expected rise in international copper prices, following China's reopening, will increase production costs for manufacturers, and some companies with high operational baselines may face challenges. However, the cost transfer benefits of some high-value-added products will emerge, and the increasing popularity of USB Type-C ports is expected to gradually drive the replacement cycle of electronic products. Additionally, the rising penetration rate of American 5G smartphones and the launch of new 3C products will increase demand for mid-to-high-end 3C application connectors (cables). Moreover, benefiting from the active construction of infrastructure and smart grids by European and American countries implementing energy-saving policies, and the continuous development of electric vehicles and automotive electronics driven by the global net-zero carbon emissions trend, green energy and storage products, as well as automotive high-voltage connectors and charging gun cable assemblies, are expected to become important sources of growth for some companies' operations.

With the saturation of these markets, many connector companies are now moving to other electronic product markets. In recent years, the connector companies have stepped up their operations in the fields of 8 electric vehicles, 5G infrastructure and high-current connectors for smart grid.

(a) High Frequency and High Speed Technology The future is the generation of 5G high-speed and high data capacity communication network, and the network world is everywhere. Compared with the previous generation of mobile networks, 5G communication will carry the technology of large data and high transmission efficiency, so in the era of 5G Internet, the connector technology also needs to enhance the "speed" function. The number of 5G users will multiply rapidly in the future, and 2020 is also a critical time for deployment.

(b) Higher accuracy and lower cost In the future smart era, connectors will require more accuracy, such as car safety in the car network. The automotive connector market is a very large market, and with the trend toward electric vehicles, connectors will be more accurate and the

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market will become more popular than ever.

(c) More compact design technology In the era of high speed transmission of big data, a fiber optic equipment device may have multiple very small connectors to achieve higher performance transmission connections.

(d) Automated production technology With the move toward automated industrial production, connectors will become an important force in the development of modern industry with the support of precision machining technology, advanced mold design, and advanced CAD.

(2)Connection between upstream, midstream and downstream industries

==> picture [426 x 577] intentionally omitted <==

----- Start of picture text -----

Metal Materials Plastic Materials Plating Materials
． ． ．
Phosphor Bronze LCP Gold Plating
． Brass ． PPS ． Tin Plating
． Beryllium Copper ． PBT ． Nickel Plating
． ．
Titanium Copper PCT
． ．
Low Impedance Copper NYLON
． ．
Stainless Steel PC
．
SPCC (Cold Rolled
Steel Plate)
Product Design + Mold Development
Metal Plated Metal Plastic
Stamping/Casting Injection Molding
Plating
Assembly + Testing
Finished Products
Industry Upstream Raw Material
Industry Midstream Connector
Applications
Others
Industry
Downstream End-User Peripherals Electronics Consumer Automotive Appliances Information
Computers and
Telecommunication
----- End of picture text -----

• (3) Various developing trends of products

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Connectors are widely used in automobile and computer peripherals application, communication data application, industrial, aerospace & defense, transportation, consumer electronics, medical, instruments, commercial equipm ent and more. However, with in-depth analysis, the strongest growths are application in automobile, communication equipment, and consumer electronics. Other applications such as computers or instruments are showing signs of saturation.

With the development of technology in the electronics industry, there are more and more diversities. In the trend of requiring high-speed, miniaturized and even energy saving electronic products, some connectors have different performance requirements than before, hence increasing the development difficulties, yet at the same time, it has become the key to whether manufacturers could survive in competitions within the industry. Meanwhile, in response to the trend of developing thinner consumer electronic devices, up to date, the thickness of connectors has been reduced to within one inch. In addition to manufacturers re-layout product designs, changing component types and implementing stronger new components, the connection between components has become significantly important. Thus the connectors in thin equipment do not only need to have the ability of high-speed data transmission, but only the structural design of high pin count and fine pitch to satisfy the dual requirements for thickness and performance of the new generation electronic devices.

(4)Competition of the products

Looking at the changes in layout of the connector industry for the past 20 years, the market share of large manufacturers continues to rise. The top ten manufacturers in global connector market are TE Connectivity, Amphenol, Molex, Delphi, Foxconn Technology Group, Yazaki Corporation, JST Mfg., JAE, Hirose Electric and Sumitomo Wiring Systems, Ltd.. The U.S. is the world's largest supplier of connectors, Japan ranks second. And Foxconn Technology Group is the only domestic connector manufacturer included in the top ten connector manufacturers in the world. Domestic connector manufacturers have benefited from the recent year’s transformation of applications in different fields such as electric vehicles, NetCom servers, new high-speed transmission mechanism of Type C and industrial wire harness. And the benefits have gradually shown in profitability. Although with the rise of China’s red supply chain, the status of four major monopolies, namely the U.S., Japan, South Korea and Taiwan have begun to loosen up, international giants are fighting it through expedite consolidation and adopt expansion and saving. However for smaller scaled domestic manufacturers, with technology and production capacity, only by taking advantage of Chinese manufacturers’ advantages in market and channels could they increase their competitiveness.

• (3). Overview of technologies and R&D:

• (1) Technical levels of business operations

There are various types of connectors with continuously innovative products. Its technical development could be summarizing into two major outlines, one is the development of fine pitch and low profile, the other one is the development of high frequency. Under the market demand of high transmission speed and fine, compact, thin structured connectors, high frequency problems such as crosstalk noise, signal attenuation, electromagnetic interference, etc., have become the Company's development focus.

(2) R&D Overview

In order to continuously provide high quality products to clients, the Company continue to improve comprehensively on its process standard and energy in design, manufacturing process, quality control and testing, and to achieve the goals of high growth. Sparing no efforts in developing new products, it keeps developing towards fine pitch and high-density connectors. Recently, to further satisfy the market’s demand and cooperate with high-speed connector Type-C, WLAN and automotive connectors, the Company is actively cultivating the ability to analysis and experiment high frequency connectors. In addition, to expand product lines and market scale, the Company had successfully developed the relevant connectors

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required for NB, servers, mobile communication industry and automotive application industry.

• (3) Research and development expenses for recent years and as of the publish date of prospectus

Unit: NT$thousands

		Unit: NT$thousands
	2023	2024Q1(Note)
R&D Costs	2,173,521	－
R&D Costs to Operating Revenues	8.88%	－

Note: As of the date of publication of the annual report, the Company has not yet issued financial statements for the first quarter of fiscal year 2024.

(4) 2023 R&D Achievements

A	Intel(7529)CPU Socket
B	AMD(SP6)4844 PIN CPU Socket
C	P5 CAMM2 1.0 Conneter
D	PCIE GEN 5 MCIO 8X High-Speed Transmission Cable

• (4). Long- and short-term business development plans:

  • A. Marketing Strategy: Develop products according to customers' individual needs.

  • B. Production Strategy: Reinforce the efficiency of production bases, reduce costs, improve instrument calibration capabilities, establish a measuring technology system and develop image measuring technology.

  • C. Development Strategy: Develop towards high-frequency and high-speed transmission connectors fields.

  • D. Financial Planning: Establish close cooperation with financial institutions, and fully make use of financing channels in capital market.

• Long-term business development plans

  • A. Marketing Strategy: Head towards globalization and strengthen the LOTES brand.

  • B. Production Strategy: Reinforce production process and expand automated production equipment.

  • C. Development Strategy: Expand the development of connectors and related modules for the related product markets in communication industry, consumer electronics, and the automotive industry.

  • D. Financial Planning: Finance through multiple channels and fully plan funds, creating a sounded financial structure

• B. Overview of market, production and sales:

• (1). Market analysis:

• Sales Region:

Unit: NT$thousands

Year Area	2022	2022	2023	2023
	Amount	%	Amount	%
Domestic	4,182,196	11.08	2,902,628	11.86
Export	22,916,938	88.92	21,580,835	88.14
Total	27,099,134	100,00	24,483,463	100,00

2. Market share

The global connector industry is on a steady rise. With the development of downstream industries and the progress of the connector industry itself, connectors have become a bridge for the stable circulation of energy and information in equipment, and the overall market size maintains a stable growth trend. According to Bishop's statistics, LOTES ranks fourth globally among computer and peripheral connector manufacturers, and nineteenth globally without considering specific industries. As the company and its subsidiaries continue to expand their business, the overall operation and market share should grow steadily.

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(1)Global market overview

Analysis of the global connector industry's output value trend, according to the Industrial Technology Research Institute (ITRI) IEK data (see Figure 1). In 2022, the global connector industry's output value was USD 90 billion, with an annual growth rate of 6.6%. Since the second half of 2020, opportunities in automotive electronics, home office, remote teaching, and home entertainment have started to strengthen. However, with stringent lockdown measures in China and Europe and the US, production bases of international leaders like TE Connectivity, Molex, and Amphenol were disrupted. Coupled with weak global market demand for some consumer products, the production and sales momentum for connectors used in smartphones and general automotive applications significantly weakened.

Entering 2022, despite the easing pandemic in Europe and the US, which led to significant demand for connectors used in data communication, green energy and storage, electric vehicles and automotive electronics, and semiconductor equipment, the production and sales momentum in the Japanese market also saw a rebound. However, the Chinese market, which holds the largest market share, faced strict lockdown measures in coastal cities where major connector production bases are located. This resulted in low operating rates for many factories and hindered domestic logistics, leading to lower-than-expected economic growth. Additionally, with continued weak demand for smartphones and LCD TVs, the noticeable decline in the stay-at-home economy effect and rising global inflation dampened the sales of 3C application connectors such as laptops and home appliances. Consequently, it is estimated that the global connector industry market size will reach USD 90 billion in 2022, with an annual growth rate of 6.6%, the lowest since 2018.

Figure 1: Global Connector Industry Market Size Trend

==> picture [372 x 230] intentionally omitted <==

Note: The output value of the global connector industry in 2022 is an estimate by us. Source: AskCI Consulting Co., Ltd., compiled by Taiwan Industry Economics Services (December 2022)

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• (2)Market supply and demand situation and growth in the future

In recent years, driven by continuous developments in communication, automotive, consumer electronics, industrial control, and rail transportation industries, the global connector market size has shown an overall expansion trend. According to the "2024-2029 Global and China Connector Industry Research and 14th Five-Year Plan Analysis Report" published by AskCI Consulting Co., Ltd., the global connector market size in 2023 was USD 96 billion, a year-on-year increase of 14.15%. Analysts from the China Commercial Industry Research Institute predict that the global connector market size will reach USD 105 billion in 2024.

==> picture [477 x 241] intentionally omitted <==

Data Source: Bishop & Associates, compiled by AskCI Consulting Co., Ltd. Global Connector Regional Market Structure

China, North America, and Europe are the main markets for global connectors, occupying the vast majority of market shares. In 2022, their market shares were 31.51%, 22.46%, and 20.61% respectively, totaling 74.58%.

==> picture [520 x 265] intentionally omitted <==

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The connector industry has successfully penetrated the supply chains of major international companies such as NVIDIA, Amazon and Tesla in smart manufacturing, smart grid, cloud and Internet of Things, smart car, fiber optic and smart wearable applications, and has gained a significant position. In response to the surge in artificial intelligence (AI), high-definition video and audio streaming and online live streaming, and high-speed data computing and transmission applications, major manufacturers are actively launching new products that will drive a wave of server replacements in enterprises and data centres. As IOT applications such as automotive, industrial and medical applications continue to grow, Taiwanese manufacturers are actively developing connectors for AI artificial intelligence, e-sports market, smart manufacturing, Internet of Things, optical fiber, smart wear, self-driving cars, drones and other device applications. The continued evolution of various high frequency transmission interface technologies, the new trend of connector/sensor integration and the move towards soft electronics in connectors are expected to provide new drivers for the connector industry and bring a new wave of market growth.

Although the US-China trade friction has a directly negative impact on domestic connector manufacturers with China’s automobile market as their main sales (automotive connectors are listed in both the U.S and China’s additional tariff lists), and the mid to low-end 3C application businesses facing fierce competition from their Chinese peers, the main domestic connector (wiring) manufacturers, however, had not only prepare production bases globally in advance to soften the impact of unstable international political and economic situation, but also had effectively optimized their products dedicating in increasing the sales proportion of high niche application connector (wiring). Meanwhile, through providing localized and customized solutions and value-added services to local customers to enhance competitiveness, thus making the industry having certain support from production and marketing.

4. Competitive niche

A. Technical capabilities for quick tooling development

Connectors are assemblies of injection molded plastics and terminals. The processing technique of the plastic materials related closely to whether a fine pitch, high density and high temperature resistance semi-finished product can be produced. For the processing of terminals, in addition to considering the contact resistance and high pullout resistance of the metal materials, it has to be bended to a suitable angle per customers’ requests. In order to have connectors meet its required design and specifications and quality stability, the technical capabilities come from the design and development of molds and fixtures. The Company has years of experience in tooling development, terminal stamping and plastic injection molding, which enables us to quickly develop and design various molds and fixtures to cooperate into production. Therefore, despite the rapid market change and the diverse but small in quantity customer needs, the capabilities of new product development allows the Company to make immediate responses to the market change and have better timing.

B. Possession of various and numerous patents

The development of new products and the technological advancement are very important to electronic connector manufacturer, especially in the acquisition of patents to protect the company’s intellectual property rights. The Company, focusing on product research and development, has an excellent research and development team. Including internal design and development and the products developed in cooperation with customers, the Company would apply for patents for these technologies to protect the Company’s products’ competitive advantages and to avoid plagiarism from other peers within the industry. The Company currently possess over one thousand patents across Taiwan, China, U.S and other areas, and the number of patents is steadily increasing by year.

C. Possessing a solid source of customers that is beneficial to other new product sales

The quality of the connector products has a decisive influence on the signal transmissions between electronic devices, thus the customers having a considerable level of quality requirements and standards for suppliers. The Company's customer base includes international manufacturers of electronic products for information and communications, making the

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Company’s products more international, which becomes one of the bases for establishing in the industry. Currently, the Company will not only continuing to cooperate with existing clients, but also expecting to establish a more diversified customer source from application product manufacturers in order to create a more substantial source of operating income, to set the product with more international and cross-industrial features, and to enhance strength for future market expansion.

D. Possession of a complete production line, vertically integrating plastic molding, stamping, die and mechanical components.

The Company is fully functional with R&D team designing products, stamping molds, plastic molds, and injection molding, stamping of terminals and other metal structures, electroplating processing, assembling jigs, and finished product processing, and have the Company’s precision laboratory equipment test to ensure the stability of product quality. In response to the developing trend of expediting product innovation and product differentiation, currently the Company’s research and development heads toward the developing of precision connectors with fine pitch, low height, low contact resistance, resistance to high insertion force, high insertion frequency, environmental resistance and high frequency stability. Therefore, in addition to grasping opportunities to meet market demand of having lighter, thinner, shorter and more compacted products, the Company could expand the its connector product application market providing downstream customers services with a complete product line.

E. The Company focuses on self-capacity expansion and development of new products

The Company has a strong R&D team, which can provide supports between the head office and subsidiaries according to project needs. Hence having the capabilities of rapid product development that allows product to be completed in three months from design to having a physical product; at the same time, possess the research and development abilities to design multiple new products at once. The Company also invest in precision experimental equipment to ensure the functional stability of the products. As for production capacities, the company is set up as a one-stop production; all steps can be completed within the Company, from design, development, manufacturing to shipment and other operations. Based on “Copy exactly”, the Company can also meet the customers’ needs of rapid production capacity expansion.

1. Positive and negative factors for future development

2. (1) Positive factors

3. A. In terms of industry development trend, connectors are critical components of computer and its peripheral, mobile phones, digital cameras, PDAs, and other electronic products. The recovery of global information and communication industries will prompt the growth for demand in electronic component market; therefore, the connector industry still has considerable room to grow in the future.

4. B. In terms of business strategy, in response to the pressure of cost competition, and considering the reduction of labor and material costs, the Company has adopted the model of dividing operations cooperating between Taiwan and China, thus maximized benefits by effectively using organization resources and reducing production costs.

5. C. In terms of product competitiveness, the Company has complete production lines. The current produced connector products are applicate in multiple electronic industries including information and communication, and the quality of products is recognized by major manufacturers of downstream application products.

6. (2) Negative factors

7. A. As the information industry blooms, the rapid change of related electronic product, in order to satisfy the customers’ need of diversified products; Products need to be constantly innovated, leading to the short life cycles of information products. If a company fails to launch new products in a timely manner, it will not be able to grasp market opportunities, which results in losing market competitiveness.

8. B. Global information and communication system manufacturers are becoming larger. The Company’s capital is relatively low comparing to major international manufacturers, making it difficult to carry out large-scaled new product development projects.

9. C. The wage cost of domestic labor remains high, increasing the Company's operating costs.

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     - D. There are many manufacturers in the country engage in connector manufacturing. The profit are getting thinner due to high product homogeneity and the fierce price cut competition from peers.

  - (3) Response to such factors

     - A. Continue to develop and improve existing products, maintain good partnership with major international manufacturer, enhance acuity to the market, fully grasp product trends, follow the growing trend of information and communication products, and to research and develop related niche products.

     - B. Strengthen strategic partnership with international manufacturers, in addition to developing new products, it is to enhance product quality and maintain customer satisfaction, and stabilize market competitiveness. Furthermore, by listing stocks, the Company may raise long-term funds in the capital market, reduce capital costs, and invest in production equipment to expand production capacity and increase research and development funds, expand the scale of operations, making the Company’s products being more competitive.

     - C. Through establishing production bases in China, the Company may engage in manufacturing connector-related products, thus to reduce production costs and reduce the impact of rising domestic wages.

     - D. In terms of design, it is focused on the particularity of products and to achieve competitive advantages in saving materials and labor.

• (2). Usage and manufacturing processes for the main products

• Main usage

   - Main products are electronic connectors, providing current and signal transmission for various electronic products.
  

2. Manufacturing process

==> picture [302 x 127] intentionally omitted <==

----- Start of picture text -----

Product design Plastic and stamping die Plastic injection, Electroplating Quality inspection Storage and
----- End of picture text -----

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3. The Supply Status of the Major Raw Materials

The company's main raw materials for production are copper, plastic pellets and steel. Therefore, the top suppliers with highest procurement amounts are all suppliers for copper, plastic pellets and steel. These suppliers are long-term partners for years with substantial sources. Considering the quality of raw materials, pricing and cooperation may affect the change in suppliers, there is no concentration risk for material outage due to purchasing from a small number of suppliers.

1. A list of any suppliers and clients accounting for 10 percent or more of the company's total procurement (sales) amount in either of the 2 most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each (1) Customers accounting for 10% or more of the Company's total sales in the last two years

Unit: NT$thousands

												Unit: NT$t
		2022				2023				2024Q1
Item	Company Name	Amount	Percentage of net sales for the year (%)	Relation With Issuer	Company Name	Amount	Percentage of net sales for the year (%)	Relation With Issuer	Company Name	Amount	Percentage of net sales for the year (%)	Relation With Issuer
1	Company A	2,679,643	9.89%	None	Company A	2,421,263	9.89%	None	－	－	－	－
2	Company B	2,360,149	8.71%	None	Company B	1,940,011	7.92%	None	－	－	－	－
3	Company C	1,754,896	6.48%	None	Company C	1,586,841	6.48%	None
	Others	16,314,540	74.92%		Others	18,535,348	75.71%		－	－	－	－
	Total	27,099,134	100%		Total	24,483,463	100%		－	－	－	－

Note: As of the date of publication of the annual report, the Company has not yet issued its financial statements for the first quarter of 2023. (2) Suppliers accounting for 10% of the Company's total shipments for the last two years

Unit: NT$thousands

		2022	2022			2023	2023	2023		2024Q1	2024Q1
Item	Company Name	Amount	Percentage of net purchases for the year (%)	Relation With Issuer	Company Name	Amount	Percentage of net purchases for the year (%)	Relation With Issuer	Company Name	Amount	Percentage of net purchases for the year (%)	Relation With Issuer
1	Company A	270,056	3.22%	None	Company A	196,615	3.49%	None	－	－	－	－
2	Company B	239,376	2.85%	None	Company B	194,264	3.45%	None	－	－	－	－
3	Company C	223,217	2.66%	None	Company C	174,029	3.09%	None
	Others	7,811,026	91.27%	﹣	Others	5,069,134	89.97%	﹣	－	－	－	－
	Total	8,396,303	100%	﹣	Total	5,634,042	100.00%	﹣	－	－	－	－

Note: As of the date of publication of the annual report, the Company has not yet issued its financial statements for the first quarter of 2023.

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5. Production value for the past two years

The Company mainly receive orders while the reinvestment companies at a third area in China, 。 Lotes Guanghou Co., Ltd and Lotes Suzhou Co., Ltd act mainly as production center

1. Sales value for the past two years

	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand	Unit: thousand units/ $ thousand
Year Sales Volume Major Products	2022 Domestic Sales Export Quantity Quality Quantity Quality				2023
			Export		Domestic Sales		Export
		Quality	Quantity	Quality	Quantity	Quality	Quantity	Quality
Connectors & Cables	128,260	3,898,416	3,559,003	22,515,587	65,282	2,689,502	3,326,576	21,227,939
Others	3,579	283,780	9,621	401,351	2,316	213,126	2,939	352,896
Total	131,839	4,182,196	3,568,624	22,916,938	131,839	2,902,628	3,568,624	21,580,835

C. Employee information

	March 31,2024	March 31,2024	March 31,2024	March 31,2024
	Year	2022	2023	As of March 31, 2024
Staff Number	Management	127	121	123
	General staff	4,681	3,608	4,139
	Operators	7,333	7,420	7,470
	Total	12,141	11,149	11,732
	Average Age	32.06	33.74	33.54
	Average Seniority	3.24	4.48	4.47
Education	PhD	0.08%	0.09%	0.10%
	Master	0.94%	1.22%	1.22%
	Bachelor	21.32%	26.25%	24.23%
	High School	15.39%	16.13%	16.10%
	Below	62.26%	56.31%	58.35%

D.Disbursements for environmental protection

In the most recent year and as of the date of publication of the annual report, the Company’s total amount of losses and punishments due to environmental pollution, and state counter measures for the future and possible expenses: None.

E. Labor relations

• (I)Various employee welfare measures, education, training, retirement system and implementation. And labor-management agreement and protection of employee rights.

• Employee welfare measures

(1) Establish an employee welfare committee in accordance with the law and implementing all employee welfare measures such as subsidy allowance for wedding, funeral, birth, injury and gifts for labor day, Dragon Boat Festival, Mid-Autumn Festival, etc.,.

• (2) Insured with labor insurance and national health insurance in accordance with the law to protect employees.

2. Education and training

In order to increase employee quality and working skills, reinforce the working efficiency

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and quality, the Company implements pre-employment guidance and training for new employees when they arrive, conduct irregular internal education and training for all employees, and select employees for external education and training programs according to their various expertise, with expectation to cultivate outstanding professionals, and then to further increase operational performances and effectively develop and utilize human resources.

1. Retirement system and implementation

The Company has established employee retirement measures in accordance with the “Labor Standards Act”. According to the retirement measures, the pension is calculated based on the employees’ years of service and the average salary of the six months before retirement. In accordance with regulations, the Company set aside a monthly labor retirement reserve and has it managed by the Supervisory Committee of Business Entities’ Labor Retirement Reserve, and deposits it into the Central Trust of China in the name of the committee. Since the implementation of "Labor Pension Act" on July 1st, 2005, the Company also set aside a 6% pension for employees applied to the Act.

4.Labor-management agreement and protection of employee rights

The company has always upheld the concept of labor-management harmony. All operations are conducted in accordance with the regulations of the “Labor Standards Act” with regular labor-management meetings held. Therefore, the internal communication channels are open and so far no labor disputes occurred.

(2)In the most recent year and as of the date of publication of the annual report, the Company’s losses due to labor disputes, and disclose of current and the possible future estimated amounts and measures: None.

• F. IT security management

(1)Describe the risk management framework for IT and communications security, IT and communications security policies, specific management plans and resources devoted to IT and communications security management.

1.Risk management framework for IT security

The IT security department of the Company has four IT supervisors and several professional IT personnel, who are responsible for formulating internal IT security policies, planning and implementing IT security operations and promoting and implementing IT security policies, and reporting regularly to the Board of Directors on the Company's IT security governance.

The Company has an auditor to oversee the supervision of IT security, who is responsible for auditing and supervising the implementation of internal IT security. If deficiencies are found, the audited unit is immediately requested to propose relevant improvement plans and specific actions, and the effectiveness of the improvements is regularly tracked to reduce internal IT security risks.

Organizational operation mode - PDCA (Plan-Do-Check-Act) cycle management is adopted to ensure the achievement of reliability targets and continuous improvement.

2.IT Security Policy

To enhance IT security management, the Company's IT Technology Department promotes internal control of IT security risks and is responsible for the management, supervision and verification of the Company's IT security operations...etc. The audit reports regularly to the Board of Directors on the status of IT security governance review. It covers the following four areas.

(1)IT Security Technology: Introduction of IT security management equipment and deepening of multi-level and in-depth defence.

(2)Systems and practices: To establish company IT security policies and IT security procedures, and to regulate the IT security behaviour of personnel.

(3)Employee Awareness: Conduct IT security education and drills to raise the awareness of all employees on IT security.

(4)Data backup management: Respect the 3-2-1 backup principle for data backup.

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• 3.Specific Management Solutions

  • (1)IT Security Technology: In order to prevent various external IT security threats, we have built various IT security systems to enhance the overall security of our IT environment. In addition, regular vulnerability scans are conducted on hosts and personnel IT security management measures are implemented.

  • (2)Systems: The company's IT security policy must be followed, and necessary system updates, anti-virus software installation, password non-sharing and regular updates must be carried out to effectively block computer viruses, Trojan horses and malicious programs to provide first-line security protection.

  • (3)Staff training: Regular and irregular training/drills on IT security, creation of rewards and punishments for internal control of risk behaviours, and periodic announcements according to current events to promote awareness of IT security among all staff.

  • (4)Data backup management: at least 3 copies of important data are backed up; 2 different backup methods are used, one of which is stored in an off-site server room.

• 4.Investing resources in IT security management

  • In order to implement the four major IT security policies, the following resources are invested.

  • (1)Network hardware equipment such as firewall, mail anti-virus, spam filtering, Internet behaviour analysis, network managed hubs, etc.

  • (2)Software systems such as endpoint protection system, backup management software, VPN authentication and encryption software, etc.

  • (3)Invest in Human resources such as: daily system status checks, weekly backups and off-site storage of backup media, at least two IT security education courses per year, annual system disaster recovery exercises, annual internal audits of IT cycles, audits by accountants, etc.

  • (4)Invest in IT security personnel: One IT security supervisor and two IT security personnel, responsible for IT security structure design, IT security maintenance and monitoring, IT security incident response and investigation, IT security policy review and revision, the IT security supervisor reports to the board of directors at least once a year.

• (2)To set out the losses suffered, the possible impact and the measures taken in response to major information and communications security incidents in the most recent year and up to the date of printing of the annual report, and to state the facts that cannot be reasonably estimated if they cannot be reasonably estimated.

• The Company has not suffered any loss as a result of an information and communications security incident up to the date of publication of the annual report.

G. Important contracts

Nature	Contracting Parties	Contract start/end date	Major Content	Restrictive Clauses
Borrowing Agreement	E.SUN Commercial Bank Ltd.	2023.06.27~2024.06.27	Credit line	None
Borrowing Agreement	Bank Sinopac Co., Ltd.	2023.06.12~2024.06.30	Credit line	None
Borrowing Agreement	CTBC Bank Co., Ltd.	2023.08.31~2024.08.31	Credit line	None
Borrowing Agreement	Hua Nan Commercial Bank Ltd.	2024.03.22~2025.03.22	Credit line	None
Borrowing Agreement	Hua Nan Commercial Bank Ltd.	2023.08.28~2024.08.28	Dividend Project	Dividend Project
Borrowing Agreement	Taipei Fubon Commercial Bank Co., Ltd.	2022.03.08~2023.03.08	Credit line	None

75

VI. Overview of Financial Status

A. A condensed balance sheet and statement of comprehensive income for the last five years with the name of the accountant and his or her audit opinion

(1) Condensed balance sheet

1. Adoption of International Financial Reporting Standards (IFRS) - Consolidated Statements

Year Item	Year Item	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial information as of March 31, 2024 (Note)
		2019	2020	2021	2022	2023
Current assets		11,400,712	13,054,559	16,959,937	22,090,479	26,074,754	－
Property, Plant and Equipment		3,514,714	4,495,974	6,882,186	8,871,880	9,129,914	－
Intangible assets		99,789	155,510	205,584	182,069	150,113	－
Other assets		388,701	661,820	822,486	775,192	373,212	－
Total assets		16,280,192	19,282,895	26,419,391	33,295,640	37,952,399	－
Current liabilities	Before distribution	3,630,746	4,580,880	7,004,306	8,097,597	6,854,344	－
	After distribution	4,717,264	5,957,136	8,699,952	10,901,172	Notyet allocated	－
Non-current liabilities		104,221	222,456	1,360,381	869,430	1,717,053	－
Total liabilities	Before distribution	3,734,967	4,803,336	8,364,687	8,787,027	8,571,397	－
	After distribution	4,821,485	6,179,592	10,060,333	11,590,602	Notyet allocated	－
Equity attributable to shareholders of the parent		13,499,198	13,499,198	16,682,481	22,807,309	27,773,059	－
Capital stock		1,034,779	1,034,779	1,059,779	1,068,762	1,114,762	－
Capital surplus		3,958,247	3,958,247	5,283,698	6,307,022	8,896,393	－
Retained earnings	Before distribution	7,471,519	9,101,144	11,200,170	15,761,019	18,552,928	－
	After distribution	6,385,001	7,724,888	9,504,524	12,957,444	Notyet allocated	－
Other equity interest		(594,972)	(594,972)	(682,333)	(339,030)	(790,983)	－
Treasury stock		0	0	0	0	0	－
Non-controlling interest		980,361	980,361	1,192,223	1,701,304	1,607,943	－
Total equity	Before distribution	12,545,225	14,479,559	18,054,704	24,508,613	29,381,002	－
	After distribution	11,458,707	13,103,303	16,359,058	21,705,038	Notyet allocated	－

Note: Quarterly report for the first quarter has not yet been issued as at the date of publication.

2.Adoption of International Financial Reporting Standards (IFRS) - Individual Statements

Year Item Current assets Property, Plant and Equipment Intangible assets Other assets Total assets Current liabilities Before distribution After distribution Non-current liabilities Total liabilities Before distribution After distribution Equity attributable to shareholders of the parent Capital stock Capital surplus	Year	Financial Information for the Last Five Years	Financial Information for the Last Five Years	Financial Information for the Last Five Years	Financial Information for the Last Five Years	Financial Information for the Last Five Years
		2019	2020	2021	2022	2023
		5,476,170	5,643,845	7,648,068	11,060,372	14,483,740
	Equipment	63,428	58,276	58,354	296,550	293,768
		50,937	97,583	82,534	59,895	38,347
		15,462	6,027	9,349	13,661	13,275
		14,830,921	16,395,041	20,802,281	28,706,679	35,424,262
	Before distribution	2,972,923	2,845,841	2,975,871	5,738,166	6,756,431
	After distribution	4,059,441	4,222,097	4,671,517	8,541,741	Notyet allocated
		42,672	50,002	963,929	161,222	894,772
	Before distribution	3,015,595	2,895,843	3,939,800	5,899,388	7,651,203
	After distribution	4,102,113	4,272,099	2,244,154	8,702,963	Notyet allocated
		11,815,326	13,499,198	16,862,481	22,807,309	27,773,059
		1,034,779	1,034,779	1,059,779	1,068,762	1,114,762
		3,959,560	3,958,247	5,283,698	6,307,022	8,896,393

76

Item	Year	Financial Information for the Last Five Years	Financial Information for the Last Five Years	Financial Information for the Last Five Years	Financial Information for the Last Five Years	Financial Information for the Last Five Years
		2019	2020	2021	2022	2023
Retained earnings	Before distribution	7,471,519	9,101,144	11,200,170	15,761,019	18,552,928
	After distribution	6,385,001	7,724,888	9,504,524	12,957,444	Notyet allocated
Other equity interest		(650,532)	(594,972)	(682,333)	(339,030)	(790,983)
Treasury stock		0	0	0	0	0
Non-controlling interest		0	0	0	0	0
Total equity	Before distribution	11,815,326	13,499,198	16,862,481	22,807,309	27,773,059
	After distribution	10,728,808	12,122,942	15,166,835	20,003,734	Notyet allocated

(2) Condensed statement of comprehensive income

1. Adoption of International Financial Reporting Standards (IFRS) - Consolidated Statements

Year Item	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Information as of March 31, 2024 (Note)
	2019	2020	2021	2022	2023
Operatingrevenue	15,088,872	17,291,332	21,391,917	27,099,134	24,483,463	－
Gross profit	5,467,910	6,930,195	8,557,306	15,161,454	11,481,062	－
Operating profit or loss	2,750,624	3,707,652	4,359,267	7.268.886	6,945,949	－
Non-operating income and expenses	81,137	(37,650)	180,931	919,681	574,544	－
Profit before income tax	2,831,761	3,670,002	4,540,158	8,188,567	7,520,493	－
Current net profit from continuingoperations	2,144,468	2,835,589	3,519,031	6,406,412	5,727,046	－
Loss from discontinued operations	0	0	0	0	0	－
Net profit (loss)	2,144,468	2,835,589	3,519,031	6,406,412	5,727,046	－
Other comprehensive income (loss) ( income after tax)	(337,918)	42,913	(84,179)	345,772	(316,952)	－
Total comprehensive income (loss)	1,806,550	2,878,502	3,434,852	6,752,184	5,410,094	－
Net profit attributable to owners of the company	2,076,043	2,732,361	3,472,201	6,254,263	5,593,032	－
Net profit attributable to non-controlling interests	68,425	103,228	46,830	153,149	134,014	－
Comprehensive income attributable to owners of the company	1,741,613	2,771,703	3,387,921	6,599,798	5,145,430	－
Comprehensive income attributable to non-controllinginterests	64,937	106,799	46,931	152,386	264,664	－
Earnings per share	20.11	26.41	33.32	58.70	50.65	－

Note: Quarterly report for the first quarter has not yet been issued as at the date of publication.

77

2.Adoption of International Financial Reporting Standards (IFRS) - Individual Statements

Unit: NT$ thousands

Year Item	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years	Financial Summary for The Last Five Years
	2019	2020	2021	2022	2023
Operatingrevenue	9,968,334	11,362,435	14,151,210	17,440,172	15,473,450
Grossprofit	1,805,548	2,544,800	2,739,782	4,294,516	4,219,741
Operating profit or loss	1,230,782	1,884,003	1,986,941	3,431,537	3,404,485
Non-operating income and expenses	1,126,841	1,255,369	1,953,510	3,703,836	3,130,322
Profit before income tax	2,357,623	3,139,372	3,940,451	7,135,373	6,534,807
Current net profit from continuingoperations	2,076,043	2,732,361	3,472,201	6,254,263	5,593,032
Loss from discontinued operations	－	－	－	－	－
Net profit (loss)	2,076,043	2,732,361	3,472,201	6,254,263	5,593,032
Other comprehensive income (loss) ( income after tax)	(334,430)	39,342	(84,280	345,535	(447,602)
Total comprehensive income (loss)	1,741,613	2,771,703	3,387,921	6,599,798	5,145,430
Earningsper share	20.11	26.41	33.32	58.70	50.65

(3) Name of the CPAs of the last five years and their audit opinion

Year	Accounting Firm	Names of CPAs	Audit Opinion
2019	KPMG Taiwan	Chen, Fu-Wei, Chung,Tan-Tan	Unqualified opinion
2020	KPMG Taiwan	Li Fung-Hui, Chung,Tan-Tan	Unqualified opinion
2021	KPMG Taiwan	Li Fung-Hui, Chung,Tan-Tan	Unqualified opinion
2022	KPMG Taiwan	Li Fung-Hui, TSAI,PEI-RU	Unqualified opinion
2023	KPMG Taiwan	Li Fung-Hui, TSAI,PEI-RU	Unqualified opinion

78

B. Five-year financial analysis

1. Adoption of International Financial Reporting Standards (IFRS) - Consolidated Statements

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years		Financial Analysis as of March 31, 2024 (Note)
		2019	2020	2021	2022	2023
Financial structure%	Debt ratio (%)	22.94	24.90	31,66	26.39	22.58
	Long-term capital to property, plant and equipment ratio(%)	359.89	327.00	282.10	284.02	340.61
Solvency%	Current ratio (%)	314.00	284.97	242.13	272.80	380.41
	Quick ratio (%)	255.79	227.75	181.67	225.61	340.14
	Interest protection multiples(times)	12,568.67	19,821.65	16,140.83	14,958.85	10,674.66
Operating Ability	Receivable turnover ratio(times)	2.67	2.68	2.72	2.77	2.40
	Average collection period	136	136	134	131	152
	Inventory turnover ratio(times)	4.06	4.06	3.50	3.50	3.66
	Payable turnover ratio (times)	5.21	4.70	4.99	6.07	6.20
	Average days in sales	90	90	104	101	100
	Property, plant and equipment turnover ratio(times)	4.39	4.31	3.76	3.44	2.72
	Total assets turnover ratio(times)	1.00	0.97	0.93	0.90	0.68
Profitability	Return on assets(%)	13.92	15.44	15.29	21.09	15.58
	Return on equity (%)	19.47	21.58	22.87	31.53	22.11
	Pre-tax income to paid-in capital ratio (%)	273.65	354.66	428.40	759.39	674.65
	(note 7)
	Netprofit ratio(%)	13.75	15.80	16.23	23.07	22.84
	Earnings per share (NT$)	20.11	26.41	33.32	58.70	50.65
Cash flow	Cash flow ratio (%)	31.30	38.90	92.53	75.72	133.24
	Cash flow adequacy ratio(%)	88.74	93.98	104.28	95.50	115.68
	Cash reinvestment ratio (%)	6.02	7.99	16.14	20.62	17.01
Leverage	Operating leverage	3.61	3.07	2.68	2.49	2.34
	Financial leverage	1.00	1.01	1.01	1.01	1.01
Please explain the reasons for the changes in the financial ratios in the last two years. (Analysis may be waived if the change is less than 20%) 1.Current ratio: The current ratio increased in 2023, primarily due to the cash capital increase and CB issuance, along with stable profit contributions, resulting in an increase in cash and cash equivalents, causing current assets to grow more than current liabilities. 2.Quick ratio: The quick ratio increased in 2023, primarily due to the cash capital increase and CB issuance, along with stable profit contributions, resulting in an increase in cash and cash equivalents, causing quick assets to grow more than current liabilities. 3.Interest protection multiples: The interest protection multiples decreased, mainly due to a decline in profits while interest expenses increased. 4.Property, plant and equipment turnover ratio (times): The turnover ratio for property, plant, and equipment decreased, mainly due to a decline in revenue for 2023, while property, plant, and equipment increased. 5.Total assets turnover ratio: The total assets turnover ratio decreased, mainly due to a decline in revenue for 2023, while the average total assets increased. 6.Return on assets: The return on assets declined, mainly due to a decrease in profits for 2023. 7.Return on equity: The return on equity declined, mainly due to a decrease in profits for 2023. 8.Cash flow ratio: The cash flow ratio increased in 2023, primarily due to an increase in cash flow from operating activities greater than the increase in current liabilities. 9.Cash flow adequacy ratio: The cash flow adequacy ratio increased in 2023, mainly due to an increase in cash flow from operating activities.

Note: Quarterly report for the first quarter has not yet been issued as at the date of publication.

79

2.Adoption of International Financial Reporting Standards (IFRS) - Individual Statements

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2019	2020	2021	2022	2023
Financial structure%	Debt ratio (%)	20.33	17.66	18.94	20.55	21.60
	Long-term capital to property, plant and equipment ratio (%)	18,695.21	23,250.05	30,548.74	7,745.25	9,758.66
Solvency%	Current ratio (%)	184.20	198.32	257.00	192.75	214.37
	Quick ratio (%)	164.20	173.19	223.45	175.31	205.38
	Interest protection multiples (times)	398,347	221,183	58,503	35,041	19.44
Operating Ability	Receivable turnover ratio (times)	2.68	2.76	2.78	2.74	2.43
	Average collectionperiod	136	132	131.29	133.21	150
	Inventoryturnover ratio(times)	14.18	12.90	12.56	12.20	12.37
	Payable turnover ratio(times)	3.80	4.06	6.37	6.96	3.75
	Average days in sales	26	28	29	30	30
	Property, plant and equipment turnover ratio(times)	173	186	242	98.28	52.42
	Total assets turnover ratio (times)	0.72	0.73	0.76	0.70	0.48
Profitability	Return on assets(%)	13.41	15.07	17.51	18.70	17.53
	Return on equity (%)	18.08	19.47	21.59	22.87	22.12
	Pre-tax income to paid-in capital ratio (%)	192.99	227.84	303.39	605.87	586.23
	Netprofit ratio(%)	18.42	20.83	24.05	24.54	36.15
	Earningsper share(NT$)	20.11	26.41	33.32	58.70	50.65
Cash flow	Cash flow ratio (%)	1.78	32.31	28.97	(21.20)	81.60
	Cash flow adequacy ratio (%)	60.28	53.40	46.51	24.69	96.08
	Cash reinvestment ratio (%)	(4.78)	0.51	(1.93)	(11.26)	9.49
Leverage	Operating leverage	1.21	1.16	1.18	1.13	4.55
	Financial leverage	1.00	1.00	1.00	1.01	1.01
Please explain the reasons for the changes in the financial ratios in the last two years. (Analysis may be waived if the change is less than 20%) 1.Long-term capital to property, plant, and equipment ratio: The ratio increased in 2023, mainly due to the issuance of convertible bonds, resulting in an increase in long-term capital, with the increase being greater than the increase in land acquisitions for property, plant, and equipment. 2.Interest protection multiples: The interest protection multiples decreased in 2023, mainly due to an increase in interest expenses while profits declined. 3.Payable turnover ratio: The payable turnover ratio significantly decreased in 2023, mainly due to a reduction in the cost of goods sold while accounts payable increased. 4.Property, plant, and equipment turnover ratio: The ratio decreased mainly due to a decline in revenue for 2023, resulting in a lower turnover of property, plant, and equipment. 5.Total assets turnover ratio: The ratio decreased mainly due to a decline in revenue for 2023, resulting in a lower turnover of total assets. 6.Net profit ratio: The net profit ratio increased in 2023 due to an increase in gross profit and a reduction in expenses. 7.Cash flow ratio: The cash flow ratio increased in 2023, primarily due to an increase in cash flow from operating activities while current liabilities significantly increased. 8.Cash flow adequacy ratio and cash reinvestment ratio: Both ratios increased in 2023, mainly due to an increase in cash flow from operatingactivities.

80

1. Financial Structure

2. (1) Debt ratio = total liabilities / total assets

3. (2) Long-term capital to property, plant and equipment ratio = (total equity + non-current liabilities)/net property, plant and equipment

4. Solvency

5. (1) Current ratio = current assets/current liabilities

6. (2) Quick ratio = (current assets – inventory – prepaid expense) / current liabilities

7. (3) Interest protection multiples = net income before income tax and interest expense / current interest expense

8. Operating Ability

9. (1) Receivables (including accounts receivable and notes receivable arising from business operations) turnover ratio = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period

10. (2) Average collection period = 365 / receivables turnover ratio

11. (3) Inventory turnover ratio = cost of goods sold / average inventory amount

12. (4) Payable (including accounts payable and business-related notes payable) turnover ratio = cost of goods sold / average payable balance of the period (including accounts payable and business-related notes payable)

13. (5) Average days in sale = 365 / inventory turnover rate

14. (6) Property, plant, and equipment (PP&E) turnover ratio = net sales/average PP&E

15. (7) Total asset turnover ratio = net sales / average total assets

16. Profitability

17. (1) Return on assets = (net income + interest expense x (1– tax rate)) / average total assets

18. (2) Return on equity = net income after tax/ average total equity

19. (3) Net profit ratio = net income / net sales

20. (4) Earnings (loss) per share = (income or loss attributable to owners of parent company – dividends on Preferred shares) / weighted average number of issued shares (Note 4)

21. Cash flow

22. (1) Cash flow ratio = net operating cash flow / current liabilities

23. (2) Net cash flow adequacy ratio = net operating cash flow in last 5 years / (capital expenditures + Inventory increase + cash dividend) in last 5 years

24. (3) Cash reinvestment ratio = (Net operating cash flow – cash dividend) / (gross property, plant and equipment + long-term investment + other non-current assets + working capital) (Note 5)

25. Leverage

26. (1) Operating leverage = (Net operating revenue - variable operating change cost and expense) / Operating income (Note 6)

81

• 3.2023 Audit Report of Supervisors for the Financial Statements

Lotes Co., Ltd. Audit Report of Supervisors

The Board of Directors had prepared and delivered the 2023 Business Report, Statement of Earnings Distribution and Financial Statements (including consolidated financial statements). The audit of the financial statements was completed by accountants LI, FUNG-HUI and TSAI, PEI-RU at KPMG Taiwan, and a auditor's report was issued. The audit of the aforementioned reports and statements delivered by the Board of Directors were conducted by the supervisors who found no inconsistency. The audit report was issued in accordance with Article 219 of the Company Act and Article 14-4 of Security Transaction Act.

Yours sincerely,

2024 Shareholders General Meeting of Lotes Co., Ltd.

Audit Committee Convenor: WU, CHANG-HSIU

March 12, 2024

82

4. 2023 Financial Statements and Independent Auditor’s Report

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.

~83~

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.

~84~

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

2. 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.

3. Evaluating the adequacy of the accounting policies used by the management level and the rationality of the accounting evaluation and relevant disclosure concluded.

4. 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

~85~

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.

1. 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.

2. 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.

~86~

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

Assets Current assets: 1100 Cash and cash equivalents (Note VI (1) and (25)) 1110 Financial assets measured at FVTPL - current (Note VI (2) and (25)) 1150 Net notes receivable (Note VI (3) and (25)) 1170 Net accounts receivable (Note VI (3) and (25)) 1181 Accounts receivable - related parties (Note VI (3), (25) and VII) 1200 Other receivables (Note VI (3) and (25)) 1210 Other accounts receivable - related parties (Note VI (3), (25) and VII) 1220 Income tax assets for the current period (Note VI (18)) 130X Net inventory (Note VI (4)) 1410 Advance payment 1470 Other current assets Non-current assets: 1510 Financial assets measured at FVTPL - non-current (Note VI (2), (12) and (25)) 1517 Financial assets measured at FVTOCI - non-current (Note VI (2) and (25)) 1550 Investments accounted for using the equity method (Note VI (5) and XIII) 1600 Property, plant and equipment(Note VI (6) and VIII) 1755 Right-of-use assets(Note VI (7)) 1760 Net investment property(Note VI (8) and (25)) 1780 Intangible assets(Note VI (9)) 1840 Deferred tax assets(Note VI (18)) 1900 Other non-current assets	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	(Restated) Jan. 1, 2022 Amount % 779,913 4 - - 1,911 - 5,812,399 28 32,627 - 22,484 - 160 - - - 995,854 5 2,720 - - - 7,648,068 37 3,370 - 9,500 - 12,627,056 61 58,354 - 59 - 300,256 2 82,534 - 66,302 - 9,349 - 13,156,780 63 Liabilities and equity Current liabilities: 2100 Short-term loans (Note VI (10), (25), (28), VIII and IX) 2130 Contract liabilities - current (Note VI (22)) 2150 Notes payable (Note VI (25)) 2170 Accounts payable (Note VI (25)) 2180 Accounts payable - related parties (Note VI (25) and VII) 2200 Other payables (Note VI (25)) 2220 Other payables - related parties (Note VI (25) and VII) 2230 Income tax liabilities for the period (Note VI (18)) 2280 Lease liabilities - current (Note VI (13), (25) and (28)) 2365 Refund liabilities - current (Note VI (14)) 2300 Other current liabilities 2322 Long-term loans maturing within one year or one operating cycle (Note VI (11), (25), (28), and VIII) Non-current liabilities: 2530 Bonds payable (Note VI (12), (25) and (28)) 2540 Long-term loans (Note VI (11), (25), (28), and VIII) 2550 Provisions - non-current (Note VI (15) and (17)) 2570 Deferred income tax liabilities (Note VI (18)) 2600 Other non-current liabilities Total of liabilities Equity attributable to owners of parent: Share capital: 3110 Capital – common stock (Note VI (19)) 3130 Certificates of bond-to-stock conversion (Note VI (19)) 3200 Capital reserves (Note VI (19)) 3300 Retained earnings (Note VI (19)) 3400 Other equity (Note VI (19)) Total of equity Total of liabilities and equity	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

4000 Operating revenue (Note VI (14), (22) and XIV) 5000 Operating cost (Note VI (4) and XII) Gross profit Operating expense (Note VI (13), (16), (17). (24), (25), VII and XII): 6100 Promotion expense 6200 Administration expense 6300 R&D expense 6450 Expected credit impairment profit/loss Total operating expense Net operating profit Non-operating revenue/expense (Note VI (12) and (23)): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Financial costs 7070 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method Total non-operating revenue/expense Net profit before tax from continuing operations 7950 Less: Income tax expense (Note VI (18)) Net profit for the period 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurement of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at FVTOCI 8330 Share of the other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method - items which were not reclassified into profit or loss 8349 Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation 8399 Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss Total components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income for the period (net) Total other comprehensive income for the period Basic earnings per share (Unit: NT$) (Note VI (21)) Diluted earnings per share (Unit: NT$) (Note VI (21))	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 ~89~

Lotes Co., Ltd.

Statement of Change in Equity

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

Balance on January 1, 2022 Effects of retrospective application of new standards Balance after restatement on January 1, 2022 Net profit for the period Other comprehensive income for the period Total other comprehensive income for the period Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of common stock Other changes in capital reserves: Changes in equity of subsidiaries, associates and joint ventures accounted for using equity method Redemption of convertible bonds Conversion of convertible bonds Balance after restatement on December 31, 2022 Net profit for the period Other comprehensive income for the period Total other comprehensive income for the period Appropriation and distribution of retained earnings: Legal reserve appropriated Reversal on special reserve Cash dividends of common stock Other changes in capital reserves: Issuance of stock options for convertible bonds Changes in equity of subsidiaries, associates and joint ventures accounted for using equity method Compensation expense for employee stock options Cash capital increase Conversion of convertible bonds Changes in ownership of subsidiaries Balance on December 31, 2023		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

~90~

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:

1. 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

~92~

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.

2. 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”

~93~

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

1. 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).

2. 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.

~94~

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.

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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:

1. Those that are expected to be realized during the normal operating period or intended to be sold or consumed.

2. Those held mainly for the purpose of transaction.

3. Those expected to be realized within 12 months after the reporting period.

4. 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:

1. Those expected to be paid off during the normal operating period.

2. Those held mainly for the purpose of transaction.

3. Those expected to be paid off within 12 months after the reporting period.

4. 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

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

treat all purchases and sales of financial assets classified in the same manner in accordance with the transaction date or the settlement date.

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.

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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.

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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

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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;

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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.

2. 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.

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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.

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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

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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.

The rental income of investment real estate is recognized as other income in the

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

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

1. 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.

3. 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.

4. 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.

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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.

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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.

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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.

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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.

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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.

Current taxes include expected payable income taxes or receivable tax rebates of the

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

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:

1. 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.

2. Those generated due to investment subsidiary company and joint equities and likely to not to be returned in the foreseeable future.

3. 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:

1. Having the legal execution right to make the current income tax assets and the current tax liabilities offset with each other: and

2. 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

3. (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.

~111~

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.

~112~

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

~113~

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. Inventory
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.

~114~

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.

~115~

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:

Cost or deemed cost: Balance on January 1, 2023 Addition Disposal Balance on December 31, 2023 Balance on January 1, 2022 Addition Investment property transferred in Disposal Balance on December 31, 2022 Losses on depreciation and impairment: Balance on January 1, 2023 Depreciation in the year Disposal Balance on December 31, 2023 Balance on January 1, 2022 Depreciation in the year Disposal Investment property transferred in Balance on December 31, 2022 Book value: December 31, 2023 December 31, 2022	Land $ 249,650 - -	Buildings 55,866 - -	Machinery equipment 10,691 923 (1,447)	Other 55,346 3,548 (645)		Total 371,553 4,471 (2,092)
	$ 249,650	55,866	10,167	58,249		373,932
	$ 28,250 - 221,400 -	32,438 - 23,428 -	11,920 - - (1,229)	51,455 4,654 - (763)		124,063 4,654 244,828 (1,992)
	$ 249,650	55,866	10,691	55,346		371,553
	$ - - -	23,358 1,384 -	10,513 174 (1,447)	41,132 5,695 (645)		75,003 7,253 (2,092)
	$ -	24,742	9,240	46,182		80,164
	$ - - - -	17,876 1,304 - 4,178	11,633 74 (1,194) -	36,200 5,656 (724) -		65,709 7,034 (1,918) 4,178
	$ -	23,358	10,513	41,132		75,003
	$ 249,650	31,124	927	12,067		293,768
	$ 249,650	32,508	178	14,214		296,550

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
	$ -

~116~

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:

Cost or deemed cost: Balance on January 1, 2023 Balance on December 31, 2023 Balance on January 1, 2022 Addition Reclassified to property, plant, and equipment Balance on December 31, 2022 Losses on depreciation and impairment: Balance on January 1, 2023 Depreciation Balance on December 31, 2023 Balance on January 1, 2022 Depreciation Reclassified to property, plant, and equipment Balance on December 31, 2022 Book value: December 31, 2023 December 31, 2022 Fair value: December 31, 2023 December 31, 2022	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:

Cost: Balance on January 1, 2023 Separate acquisition Balance on December 31, 2023 Balance on January 1, 2022 Balance on December 31, 2022 Losses on amortization and impairment: Balance on January 1, 2023 Amortization for the period Balance on December 31, 2023 Balance on January 1, 2022 Amortization for the period Balance on December 31, 2022 Book value: Balance on December 31, 2023 Balance on December 31, 2022	$	Computer software 111,084 514	Computer software 111,084 514		Other 600 -		Total 111,684 514 112,198 111,684 111,684 51,789 22,062 73,851 29,150 22,639 51,789 38,347 59,895
	$		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

~117~

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

1. The Company's first domestic unsecured convertible bonds

~118~

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

(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.

~119~

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

2. 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

~120~

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 efund 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.

~121~

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:
Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability	Dec. 31, 2023 $ 79,676 (36,142)	Dec. 31, 2022 78,993 (37,583)
	$ 43,534	41,410

Details of the employee benefit liabilities of the Company are as follows:	Details of the employee benefit liabilities of the Company are as follows:	Details of the employee benefit liabilities of the Company are as follows:	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

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.

~122~

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

~123~

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)	2022 (1,852) 2,790
	$ (1,354)	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

~124~

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

~125~

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	2023 $ 6,534,807	2022 7,137,041
	1,306,961 (509,269) (14,446) 158,529	1,427,408 (587,089) (26,456) 67,237
	$ 941,775	881,100

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	Dec. 31, 2023 $ 25,143 203 44 84,037 45,712 8,886	Dec. 31, 2022 19,656 237 44 76,809 890 8,428
	$ 164,025	106,064

(2) Recognized deferred income tax liabilities

) Recognized deferred income tax liabilities
Unrealized gains on financial assets Deferred income tax liabilities	Dec. 31, 2023	Dec. 31, 2022 1,955 1,955
	$ 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).

~126~

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

~127~

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.

2. 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.

~128~

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:

2022 2021 Payout ratio (NT$) Amount Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 25.18 2,803,575 15.92 1,695,646 On March 12, 2024, the Company’s board of directors proposed the following 2023 earnings distribution: 2023 Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 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)” Other equity Exchange differences on translation of foreign operations Unrealized gain (loss) on financial assets measured at FVTOCI Unearned compensation Total Balance on Jan. 1, 2023 $ (319,295) (19,758) - (339,053) Exchange differences arising from the translation of the net assets of foreign operations (449,712) - - (449,712) Unrealized losses from financial assets measured at FVTOCI - 3,944 - 3,944 Changes in ownership interests in subsidiaries - - (6,162) (6,162) Balance on Dec. 31, 2022 $ (769,007) (15,814) (6,162) (790,983) Balance on January 1, 2022 $ (669,055) (13,278) - (682,333) Effects of retrospective application of new standards (51) - - (51) Balances restated as of January 1, 2022 (669,106) (13,278) - (682,384) Exchange differences arising from the translation of the net assets of foreign operations 349,811 - - 349,811 Unrealized losses from financial assets measured at FVTOCI - (6,480) - (6,480) Balance on Dec. 31, 2022 $ (319,295) (19,758) - (339,053)	2022 2021 Payout ratio (NT$) Amount Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 25.18 2,803,575 15.92 1,695,646 On March 12, 2024, the Company’s board of directors proposed the following 2023 earnings distribution: 2023 Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 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)” Other equity Exchange differences on translation of foreign operations Unrealized gain (loss) on financial assets measured at FVTOCI Unearned compensation Total Balance on Jan. 1, 2023 $ (319,295) (19,758) - (339,053) Exchange differences arising from the translation of the net assets of foreign operations (449,712) - - (449,712) Unrealized losses from financial assets measured at FVTOCI - 3,944 - 3,944 Changes in ownership interests in subsidiaries - - (6,162) (6,162) Balance on Dec. 31, 2022 $ (769,007) (15,814) (6,162) (790,983) Balance on January 1, 2022 $ (669,055) (13,278) - (682,333) Effects of retrospective application of new standards (51) - - (51) Balances restated as of January 1, 2022 (669,106) (13,278) - (682,384) Exchange differences arising from the translation of the net assets of foreign operations 349,811 - - 349,811 Unrealized losses from financial assets measured at FVTOCI - (6,480) - (6,480) Balance on Dec. 31, 2022 $ (319,295) (19,758) - (339,053)	2022 2021 Payout ratio (NT$) Amount Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 25.18 2,803,575 15.92 1,695,646 On March 12, 2024, the Company’s board of directors proposed the following 2023 earnings distribution: 2023 Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 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)” Other equity Exchange differences on translation of foreign operations Unrealized gain (loss) on financial assets measured at FVTOCI Unearned compensation Total Balance on Jan. 1, 2023 $ (319,295) (19,758) - (339,053) Exchange differences arising from the translation of the net assets of foreign operations (449,712) - - (449,712) Unrealized losses from financial assets measured at FVTOCI - 3,944 - 3,944 Changes in ownership interests in subsidiaries - - (6,162) (6,162) Balance on Dec. 31, 2022 $ (769,007) (15,814) (6,162) (790,983) Balance on January 1, 2022 $ (669,055) (13,278) - (682,333) Effects of retrospective application of new standards (51) - - (51) Balances restated as of January 1, 2022 (669,106) (13,278) - (682,384) Exchange differences arising from the translation of the net assets of foreign operations 349,811 - - 349,811 Unrealized losses from financial assets measured at FVTOCI - (6,480) - (6,480) Balance on Dec. 31, 2022 $ (319,295) (19,758) - (339,053)	2022 2021 Payout ratio (NT$) Amount Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 25.18 2,803,575 15.92 1,695,646 On March 12, 2024, the Company’s board of directors proposed the following 2023 earnings distribution: 2023 Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 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)” Other equity Exchange differences on translation of foreign operations Unrealized gain (loss) on financial assets measured at FVTOCI Unearned compensation Total Balance on Jan. 1, 2023 $ (319,295) (19,758) - (339,053) Exchange differences arising from the translation of the net assets of foreign operations (449,712) - - (449,712) Unrealized losses from financial assets measured at FVTOCI - 3,944 - 3,944 Changes in ownership interests in subsidiaries - - (6,162) (6,162) Balance on Dec. 31, 2022 $ (769,007) (15,814) (6,162) (790,983) Balance on January 1, 2022 $ (669,055) (13,278) - (682,333) Effects of retrospective application of new standards (51) - - (51) Balances restated as of January 1, 2022 (669,106) (13,278) - (682,384) Exchange differences arising from the translation of the net assets of foreign operations 349,811 - - 349,811 Unrealized losses from financial assets measured at FVTOCI - (6,480) - (6,480) Balance on Dec. 31, 2022 $ (319,295) (19,758) - (339,053)	2022 2021 Payout ratio (NT$) Amount Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 25.18 2,803,575 15.92 1,695,646 On March 12, 2024, the Company’s board of directors proposed the following 2023 earnings distribution: 2023 Payout ratio (NT$) Amount Distributed to the holders of ordinary shares: Cash $ 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)” Other equity Exchange differences on translation of foreign operations Unrealized gain (loss) on financial assets measured at FVTOCI Unearned compensation Total Balance on Jan. 1, 2023 $ (319,295) (19,758) - (339,053) Exchange differences arising from the translation of the net assets of foreign operations (449,712) - - (449,712) Unrealized losses from financial assets measured at FVTOCI - 3,944 - 3,944 Changes in ownership interests in subsidiaries - - (6,162) (6,162) Balance on Dec. 31, 2022 $ (769,007) (15,814) (6,162) (790,983) Balance on January 1, 2022 $ (669,055) (13,278) - (682,333) Effects of retrospective application of new standards (51) - - (51) Balances restated as of January 1, 2022 (669,106) (13,278) - (682,384) Exchange differences arising from the translation of the net assets of foreign operations 349,811 - - 349,811 Unrealized losses from financial assets measured at FVTOCI - (6,480) - (6,480) Balance on Dec. 31, 2022 $ (319,295) (19,758) - (339,053)
	$ (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)

3. Other equity

~129~

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

~130~

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

(22) Revenue from contracts with customers

1. 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

ance 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

1. 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	2022 300 170,481 5,008 9,172 1,584 - 896 6,799

~131~

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

$ 175,636 194,240

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 Articles of Incorporation. These costs were reported as operating costs or expenses for the

~132~

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

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

1. 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:

Not past due 1-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due More than 271 days past due		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

~133~

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

Not past due 1-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due More than 271 days past due	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	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.

December 31, 2023 Non-derivative financial liabilities: Short-term loans Bonds payable Notes payable Accounts payable Accounts payable—related parties Other payables Other payables—related parties Lease liabilities December 31, 2022 Non-derivative financial liabilities: Short-term loans Long-term loans (including long-term loans due within one year or one operating cycle) Notes payable Accounts payable Accounts payable—related parties Other payables Other payables—related parties	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

The Company does not anticipate that the cash flows analyzed at maturity date will

~134~

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

alter significantly or that the actual amounts will vary significantly.

1. Market risk—exchange rate risk

2. (1) Exposure to exchange rate risk

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

	Financial assets Currency USD RMB HKD JPY EUR INR VND Long-term equity investment accounted for using the equity method USD EUR VND Financial liabilities Currency USD RMB EUR VND Financial assets Currency USD RMB HKD JPY EUR INR			Dec. 31, 2023	NTD 13,103,946 602,703 87 32 104,133 2 2 16,627,615 4,744 1,894,288 3,965,580 393 16,924 84 NTD 9,402,427 499,662 100 18 30,015 2
		$ $	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

~135~

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

	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

~136~

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

liabilities were $0 and $126,175 respectively. If interest rates had increased or decreased 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.

5. 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 Fair value $ 34,223 34,223 1,144 1,144 221,387 236,930 850,247 851,210	Dec. 31, 2022 Book value Fair value 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.

~137~

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).

December 31, 2023 Measured at fair value: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value: Investment property Bonds payable December 31, 2022 Measured at fair value: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value: Investment property	Level 1 $ - -	Level 2 7,307 -	Level 3 26,916 1,144 28,060		Total 34,223 1,144 35,367 236,930 851,210 16,531 4,595 21,126 233,945
	$ -	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

~138~

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

Name Financial assets measured at FVTPL Financial assets measured at FVTOCI Name Financial assets measured at FVTPL Financial assets measured at FVTOCI								2023						Closing balance 26,916 1,144
	$	Opening balance - 4,595		Total profit		or loss Recognized in other comprehensi ve income - 3,982		Increase in	th	e period Transfers into Level 3 - -		Decrease in the period Sale, disposal or settlement (295) (7,433)
				Recognized in profit or loss 1,011 -				Issuance or purchase 26,200 -
	$	4,595		1,011		3,982		26,200		-		(7,728)		28,060
								2022						Closing balance - 4,595
	$	Opening balance 3,370 9,500		Total profit		or loss		Increase in	th	e period Transfers into Level 3 - -		Decrease in the period Sale, disposal or settlement (2,794) (1,422)
				Recognized in profit or loss (576) -		Recognized in other comprehensi ve income - (3,483)		Issuance or purchase - -
	$	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:

Total gain or loss Recognized in profit (losses) (reported in “other gains and losses”) Recognized in other comprehensive income (reported in “unrealized valuation gains (losses) on financial assets at FVTOCI”) Total	2023 $ 857 (154) $ 703	2022 - (3,839)
		(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:

~139~

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

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

‧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

~140~

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

for the period is as follows:

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

1. 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

~141~

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

faced by the Company, to set appropriate risk limits and controls, and to monitor 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.

3. 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.

~142~

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.

~143~

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:

Price of securities on reporting date Up by 1% Down by1%
	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.

~144~

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:

1. For the conversion of corporate bonds into common shares, see Note VI (12).

2. 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

~145~

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. A subsidiary of the Company Zhongshan Jinmeida Metal Surface Treatment Co., A subsidiary of the Company Ltd. Guangzhou Leside Technology Co., Ltd. A subsidiary of the Company Chongqing Fuxinrui Electronic Technology Co., A subsidiary of the Company Ltd. 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

~146~

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

Key management personnel

Including the directors, supervisors, managers and their families and spouses

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

1. Operating revenue

The amounts of material sales from the Company to the related parties are as follows:

Other subsidiaries	2023 $ 61,291	2022 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.

2. 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.

3. 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

~147~

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. . Promotion expense Other subsidiaries Mainly the sample fees. . Administration expense Other subsidiaries Mainly the sample fees. . R&D expense Other subsidiaries Associates Mainly for research and development materials. . Non-operating income Other subsidiaries Associates	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 2022 4,639 -
	2023 $ 66,404
	2023 $ - 54
	$ 54
	2023 $ 3,239 416

6. Promotion expense

7. Administration expense

8. R&D expense

9. Non-operating income

~148~

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

$ 3,655 4,639

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:

~149~

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

Dec. 31, 2022 Dec. 31, 2023[Guaranteed notes ] $ 2,887,704 4,796,150

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	395,64 9 14,977 8,079 4,657 13,143 11,728 22,050	425,98 0 16,516 8,670 4,657 15,227 11,966 22,062	29,628 1,780 577 - 2,293 105 11	349,67 9 14,631 7,706 4,261 14,100 10,087 22,628	379,30 7 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:

Number of employees Number of directors who were not employees of the Company Average employee benefit expenses Average employee salary expenses Adjustment of average employee salary expenses Remuneration for supervisors	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.

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

~150~

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

1. The bonuses and dividends for managers and employees are based on the Company’s

operating conditions, personal duties and performance.

1. The salaries of the directors and supervisors are adjusted in a timely manner to meet

their responsibilities.

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. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:	1. Capital lending to others:
Unit: NT$/Foreigncurrency1,000
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

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.

~151~

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.

~152~

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

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

Unit: NT$ 1,000

**Holding company **	Category and name of security	Relationship with the issuer of the security	Accounting item	End of the period	End of the period	End of the period	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.

~153~

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

1. 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.

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

5. Acquisition of real property amounting to paid-in capital:	5. Acquisition of real property amounting to paid-in capital:	5. Acquisition of real property amounting to paid-in capital:	5. Acquisition of real property amounting to paid-in capital:	5. Acquisition of real property amounting to paid-in capital:	5. Acquisition of real property amounting to paid-in capital:	5. Acquisition of real property amounting to paid-in capital:	NT$300 million or 20% or more of the	NT$300 million or 20% or more of the	NT$300 million or 20% or more of the	NT$300 million or 20% or more of the	NT$300 million or 20% or more of the	NT$300 million or 20% or more of the	NT$300 million or 20% or more of the
							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				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.

~154~

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

1. Disposal of real property amounting to NT$300 million or 20% or more of paid-in capital: None.

2. 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%

~155~

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

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

paid-in capital:	paid-in capital:	paid-in capital:	paid-in capital:	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		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 -	- - - - - - - - - - - - - - - - - - -

1. Engagement in derivative transactions: None.

~156~

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

~157~

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.

~158~

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

(3) Investment in China:

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

										Unit: NT$1,000 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 1,699,523B 9,949,927 - 871,189B 4,351,473 - 23,890B 201,685 - 184,741B 1,686,900 - 37,809C 307,641 - 18,397B 168,785 - 979,691B 5,301,921 - 33,677B 300,699 - 485B 98,642 - (3,621)B 98,978 - (41)B 2,124 - (8,232)B 244,950 - 79,413B 190,634 - 4,517B 6,108 - (2,795)B 227 - (1,168)B 1,057 - 12B 1,037 -	Unit: NT$1,000 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 1,699,523B 9,949,927 - 871,189B 4,351,473 - 23,890B 201,685 - 184,741B 1,686,900 - 37,809C 307,641 - 18,397B 168,785 - 979,691B 5,301,921 - 33,677B 300,699 - 485B 98,642 - (3,621)B 98,978 - (41)B 2,124 - (8,232)B 244,950 - 79,413B 190,634 - 4,517B 6,108 - (2,795)B 227 - (1,168)B 1,057 - 12B 1,037 -	Unit: NT$1,000 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 1,699,523B 9,949,927 - 871,189B 4,351,473 - 23,890B 201,685 - 184,741B 1,686,900 - 37,809C 307,641 - 18,397B 168,785 - 979,691B 5,301,921 - 33,677B 300,699 - 485B 98,642 - (3,621)B 98,978 - (41)B 2,124 - (8,232)B 244,950 - 79,413B 190,634 - 4,517B 6,108 - (2,795)B 227 - (1,168)B 1,057 - 12B 1,037 -
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	- - - - - - - - - - - - - - - - -

~159~

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.

~160~

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

(4) Information on Major Shareholders:

mation on Major Shareholders:
Shares **Name of Major Shareholder **	Shares held	Shareholding %
Chin-Ling Investment Co., Ltd.	10,956,237	9.82%
Jiaming Investment 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.

~161~

Lotes Co., Ltd.

Statement of Cash and Cash Equivalents

Item Cash and cash equivalents: Petty cash Checks and demand deposits: Time deposit: Total	December 31, 2023 Summary	Unit: NT$ 1,000 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	Summary	Number of Shares or Bonds	Face Value	Total Amount	Interest Rate	Acquisition Cost 3,001	Fair	Value	Fair Value Change Attributable to Credit Risk Change	Remarks
							Unit Price	Total Amount 7,307
OTC Stocks VSO ELECTRONICS CO., LTD.		90,800	$ -	-	- %		80.47		-

~162~

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.

~163~

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.

~164~

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	Remark
	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

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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	Remark
	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.

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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 val	ue or net equity Provision of guarantees or pledges Totalprice 9,949,958 None 2,035,859 " 4,351,613 " 201,685 " 1,493,390 " 88,500 " 4,744 " 30,534 " 83,364 " 1,894,288 " 47,666 " 20,181,601	Remark
									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.

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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

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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.

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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.

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Lotes Co., Ltd.

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

Name	Trustee	Issuance period	Coupon rate 0%	Total issue amount	Unamortized discount	Converted amount (118,100)	Book value	Redemption method	Guarantee Note None
Second domestic unsecured convertible bond	Hua Nan Commercial Bank, Ltd.	2023.03.09~2026.03.09		$ 1,000,000	(31,653)		850,247	Lump-sum payment at maturity

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==> picture [495 x 545] intentionally omitted <==

----- Start of picture text -----

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
----- End of picture text -----

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Lotes Co., Ltd.

Statement of Operating Revenue

From January 1 to December 31, 2023

Unit: NT$ 1,000

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

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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

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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.

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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)

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5. 2023 Consolidated Financial Statement and Independent Auditor’s Report

Independent Auditor’s Report

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

Audit opinion

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

In our opinions, the compilation of the above consolidated financial statements present fairly, in all material respects, of the financial status of December 31, 2023 and 2022 in Lotes Group and the consolidated 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 and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations approved by the Financial Supervisory Commission and issued into effect.

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 consolidated 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 Group 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 Group’s consolidated financial statements of fiscal year 2023 based on the professional judgment of our accountants. The matters have been responded on the whole audited consolidated 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 consolidated financial statements for the accounting policy in terms of income recognition. Please refer to Note VI (16) to the consolidated financial statements for the refund liability. Please refer to Note VI (24) to the consolidated financial statements for details about income.

Description of the key audit matters:

The operating income is the most critical factor when determining the operational performance of Lotes Group. 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

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Group. 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 (8) for the accounting policy of inventory evaluation. Please refer to Note V in the consolidated financial statements for the accounting estimates and assumed uncertainties of the inventory evaluation. Please refer to Note VI (4) in the consolidated 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 Group. 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.

Emphasis of Matter

As disclosed in Note III (1) to the consolidated financial statements, effective January 1, 2023, Lotes Group 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 consolidated financial statements for the year ended December 31, 2022 retrospectively. We have not modified our audit opinion accordingly.

Other Matters

Lotes Co., Ltd. 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 consolidated financial statements

Management level’s responsibility is to prepare the consolidated financial statements present fairly according to Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations approved by the Financial Supervisory Commission and issued into effect and to maintain necessary internal control related to the preparation of the consolidated financial statements in order to ensure there is no major untrue expression on the financial statements due to fraud or error.

When preparing the consolidated financial statements, the responsibility of management level also includes evaluating Lotes Group’s capability of continuous operation, disclosure of relevant matters and the application of continuous operation accounting model unless the management level intends to

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liquidate Lotes Group 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 Group is responsible for supervising the process of financial reports.

Responsibility of accountants’ audit on the consolidated financial statements

The purpose of the consolidated financial statements audited by our accountants is to obtain reasonable assurance on whether the significant untrue expression exists on the whole consolidated 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 consolidated 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 consolidated 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 due to fraud will be higher than that due to error.

2. 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 Group.

3. Evaluating the adequacy of the accounting policies used by the management level and the rationality of the accounting evaluation and relevant disclosure concluded.

4. 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 Group’s capability in continuous operation are made. If we believe major uncertainty existed on the event or situation, we must remind the users of consolidated 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 Group not capable in continuous operation.

5. Evaluating the overall expression, structure and content of the consolidated financial statements (including relevant notes) as well as whether the consolidated financial statements present fairly, in all material respects, relevant transaction and events.

6. We obtained sufficient and appropriate audit evidence about the financial information of the constituent entities of the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and execution of the Group's audits and for forming an opinion on the Group's audits.

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 Group’s consolidated 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

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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.

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. And Subsidiaries

Unit: NT$ 1,000

Consolidated Balance Sheet

December 31, 2023 and 2022

Assets Current assets: 1100 Cash and cash equivalents (Note VI (1) and (27)) 1110 Financial assets measured at FVTPL - current (Note VI (2), (14) and (27)) 1120 Financial assets measured at FVTOCI - current (Note VI (2) and (27)) 1150 Net notes receivable (Note VI (3) and (27)) 1170 Net accounts receivable (Note VI (3) and (27)) 1200 Other receivables (Note VI (3) and (27)) 1220 Income tax assets for the period (Note VI (20)) 130X Net inventory (Note VI (4)) 1410 Advance payment 1479 Other current assets - other Non-current assets: 1510 Financial assets measured at FVTPL - non-current (Note VI (2), (14) and (27)) 1517 Financial assets measured at FVTOCI - non-current (Note VI (2) and (27)) 1550 Investments accounted for using the equity method(Note VI (5) 1600 Property, plant and equipment (Note VI (8) and 8) 1755 Right-of-use assets (Note VI (9)) 1760 Net investment property(Note VI (10) and (27)) 1780 Intangible assets (Note VI (11)) 1840 Deferred tax assets (Note VI (20)) 1900 Other non-current assets Total of assets	Dec. 31, 2023 Amount % $ 13,132,491 35 60,784 - - - 305,564 1 9,305,409 25 506,207 1 599 - 2,657,313 7 102,555 - 3,832 -	(Restated) Dec. 31, 2022 Amount % 7,090,304 21 79,007 - - - 203,501 1 10,507,021 31 384,111 1 739 - 3,561,132 11 260,014 1 4,650 -	(Restated) Jan. 1, 2022 Amount % 3,303,062 12 154,124 1 1,456 - 61,292 - 8,736,734 33 459,211 2 362 - 4,091,387 15 143,291 1 9,018 - 16,959,937 64 3,370 - 30,003 - - - 6,882,186 26 1,028,489 4 335,869 1 205,584 1 251,260 1 822,486 3 9,559,247 36 26,519,184 100 Liabilities and equity Current liabilities: 2100 Short-term loans (Note VI (12), (27), (30) VIII and IX) 2130 Contract liabilities - current (Note VI (24)) 2150 Notes payable (Note VI (27)) 2170 Accounts payable (Note VI (27)) 2200 Other payables (Note VI (27)) 2230 Income tax liabilities for the period - current (Note VI (20)) 2280 Lease liabilities - current (Note VI (15), (27), (30) and VII) 2365 Refund liabilities - current (Note VI (16)) 2300 Other current liabilities 2322 Long-term loans - current portion (Note VI (13), (27), (30), and VIII) Non-current liabilities: 2530 Bonds payable (Note VI (14), (27) and (30)) 2540 Long-term loans (Note VI (13), (27), (30) and VIII) 2550 Provisions – non-current (Note VI (17) and (19)) 2560 Income tax liabilities for the period - non-current (Note VI (20)) 2570 Deferred income tax liabilities (Note VI (20)) 2580 Lease liabilities - non-current (Note VI (15), (27), (30) and VII) 2600 Other non-current liabilities Total of liabilities Equity attributable to owners of parent: Share capital: 3110 Capital – common stock (Note VI (21)) 3130 Certificates of bond-to-stock conversion (Note VI (21)) 3200 Capital reserves (Note VI (21)) 3300 Retained earnings (Note VI (21)) 3400 Other equity (Note VI (21)) Total equity attributable to owners of parent 36XX Non-controlling interest (Note VI (7)) Total of equity Total of liabilities and equity	Dec. 31, 2023 Amount % $ 1,580,000 4 30,617 - 5,209 - 1,822,819 5 1,859,015 5 969,358 3 129,085 - 420,182 1 38,059 - - - 6,854,344 18	(Restated) Dec. 31, 2022 Amount % 1,906,775 6 54,427 - 8,504 - 2,351,503 7 1,937,095 6 1,296,939 4 110,281 - 384,044 1 32,168 - 15,861 - 8,097,597 24	(Restated) Jan. 1, 2022 Amount % 1,142,178 4 97,494 - 16,402 - 2,613,359 10 1,998,938 8 670,568 3 220,742 1 195,105 1 34,715 - 14,805 - 7,004,306 27
	26,074,754 69	22,090,479 66
	26,916 - 79,979 - 81,730 - 9,129,914 24 1,278,713 3 344,997 1 150,113 1 412,071 1 373,212 1	- - 83,520 - - - 8,871,880 27 982,871 3 97,817 - 182,069 1 297,115 1 775,192 2
				934,155 2 - - 43,534 - - - 226,640 1 487,452 1 25,272 -	132,449 - 149,769 1 41,410 - 6,928 - 154,433 1 260,380 1 25,101 -	911,927 4 29,600 - 45,220 - 31,342 - 131,132 - 285,847 1 22,539 -
				1,717,053 4	770,470 3	1,457,607 5
	11,877,645 31	11,290,464 34		8,571,397 22	8,868,067 27	8,461,913 32
				1,113,298 3 1,423 - 8,896,393 24 18,552,928 49 (790,983) (2)	1,068,762 3 9,536 - 6,307,022 19 15,765,305 47 (339,053) (1)	1,059,779 4 1,167 - 5,283,698 20 11,202,788 42 (682,384) (2)
	$ 37,952,399 100	33,380,943 100		27,773,059 74	22,811,572 68	16,865,048 64
				1,607,943 4	1,701,304 5	1,192,223 4
				29,381,002 78	24,512,876 73	18,057,271 68
				$ 37,952,399 100	33,380,943 100	26,519,184 100

(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. and Subsidiaries

Consolidated Statement of Comprehensive Income

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

4000 Operating revenue (Note VI (16), (24) and XIV) 5000 Operating cost (Note VI (4) and XII) Gross profit Operating expense (Note VI (15), (18), (19), (26), (27), VII and XII): 6100 Promotion expense 6200 Administration expense 6300 R&D expense 6450 Expected credit loss (gain) Total operating expense Net operating profit Non-operating revenue/expense(Note VI (5), (18) and (25)): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Financial costs 7070 Share in the gain or loss of subsidiaries, associate and joint ventures accounted for using the equity method Total non-operating revenue/expense Net profit before tax from continuing operations 7950 Less: Income tax expense(Note VI (20)) Net profit for the period 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Remeasurements of defined benefit plan 8316 Unrealized gains (losses) from investments in equity instruments measured at FVTOCI 8349 Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation 8399 Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss Total components of other comprehensive income that will not be reclassified to profit or loss 8300 Other comprehensive income for the period (net) Total other comprehensive income for the period Net profit for the period attributable to: 8610 Owners of parent 8620 Non-controlling interest Total comprehensive income attributable to: 8710 Owners of parent 8720 Non-controlling interest Basic earnings per share (Unit: NT$) (Note VI (23)) Diluted earnings per share (Unit: NT$) (Note VI (23))	2023	% 100 53	(Restated) 2022	% 100 56
	Amount $ 24,483,463 13,002,401		Amount 27,099,134 15,161,454
	11,481,062	47	11,937,680	44
	779,454 1,593,509 2,173,521 (11,371)	3 7 9 -	828,044 1,532,956 2,300,779 7,015	3 6 8 -
	4,535,113	19	4,668,794	17
	6,945,949	28	7,268,886	27
	325,532 412,287 (74,898) (71,118) (17,259)	1 2 - - -	46,801 367,702 560,287 (55,109) -	- 1 2 - -
	574,544	3	919,681	3
	7,520,493 1,793,447	31 8	8,188,567 1,780,487	30 7
	5,727,046	23	6,408,080	23
	(2,292) 3,892 (458)	- - -	2,790 (7,981) 558	- - -
	2,058	-	(5,749)	-
	(320,804) (1,794)	(1) -	352,379 830	1 -
	(319,010)	(1)	351,549	1
	(316,952)	(1)	345,800	1
	$ 5,410,094	22	6,753,880	24
	$ 5,593,032 134,014	22 1	6,255,931 152,149	22 1
	$ 5,727,046	23	6,408,080	23
	$ 5,145,430 264,664	21 1	6,601,494 152,386	23 1
	$ 5,410,094	22	6,753,880	24
	$	50.65		58.72
	$	50.19		57.88

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

Chairperson: CHU, TE-HSIANG

Accounting Manager: LIU, HSIN-HSIA

~182~

Unit: NT$ 1,000

Lotes Co., Ltd. and Subsidiaries

Consolidated Statement of Changes in Equity

From January 1 to December 31, 2023 and 2022

Balance on January 1, 2022 Effects of retrospective application of new standards Balance after restatement on January 1, 2022 Net profit for the period Other comprehensive income for the period Total other comprehensive income for the period Appropriation and distribution of retained earnings: Legal reserve appropriated Reversal on special reserve Cash dividends of common stock Other changes in capital reserves: Changes in equity of subsidiaries, associates and joint ventures accounted for using equity method Redemption of convertible bonds Conversion of convertible bonds Changes in non-controlling interests Cash dividends paid by subsidiaries to non-controlling interests Balance after restatement on December 31, 2022 Net profit for the period Other comprehensive income for the period Total other comprehensive income for the period Appropriation and distribution of retained earnings: Legal reserve appropriated Reversal on special reserve Cash dividends of common stock Other changes in capital reserves: Issuance of stock options for convertible bonds Changes in equity of subsidiaries, associates and joint ventures accounted for using equity method Compensation expense for employee stock options Cash capital increase Conversion of convertible bonds Changes in ownership of subsidiaries Changes in non-controlling interests Cash dividends paid by subsidiaries to non-controlling interests Balance on December 31, 2023						Equity attributable to own	Equity attributable to own	ers of parent						Non-controll ing interests	Total equity 18,054,704 2,567
		Share capital		Capital reserves		Retained	earnings			Other equity			Unrealized gains (losses) on financial assets measured at FVTOCI
									Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at FVTOCI	Unearned compensation to employees	Total
	Share capital for ordinary shares	Certificates of bond-to-stoc k conversion	Total		Legal reserve	Special reserve	Unappropri ated retained 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)	16,862,481 2,567	1,192,223 -
	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	1,192,223	18,057,271
	- -	- -	- -	- -	- -	- -	6,255,931 2,232	6,255,931 2,232	- 349,811	- (6,480)	- -	- 343,331	6,255,931 345,563	152,149 237	6,408,080 345,800
	-	-	-	-	-	-	6,258,163	6,258,163	349,811	(6,480)	-	343,331	6,601,494	152,386	6,753,880
	- - - - - 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 - -	- - - - - - 413,561 (56,866)	- - (1,695,646) 127,583 (90) 913,183 413,561 (56,866)
	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)	1,701,304 134,014 130,650	24,512,876 5,727,046 (316,952)
	-	-	-	-	-	-	5,591,198	5,591,198	(449,712)	3,944	-	(445,768)	5,145,430	264,664	5,410,094
	- - - - - - 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) - -	- - - - - - - - (6,258) (207,388) (144,379)	- - (2,803,575) 114,556 24,049 52,309 2,305,973 128,907 (12,420) (207,388) (144,379)
	$ 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	1,607,943	29,381,002

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

Chairperson: CHU, TE-HSIANG

Accounting Manager: LIU, HSIN-HSIA

~183~

Lotes Co., Ltd. and Subsidiaries

Consolidated Statement of Cash Flows

From January 1 to December 31, 2023 and 2022

Cash flows from (used in) operating activities: Net profit before tax Adjustments: Adjustments to reconcile profit (loss) Depreciation expense Amortization expense Expected credit loss (gain) Net loss (gain) on financial assets or liabilities at FVTPL Interest expense Interest income Dividend income Compensation expense for share-based payment Share in the gain or loss of subsidiaries, associate and joint ventures accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Impairment loss on non-financial instruments Inventory valuation and disposal loss Profit from the repurchase of corporate bonds Other adjustments Total adjustments to reconcile profit (loss): Changes in operating assets and liabilities: Changes in operating assets: Increase in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivables Decrease (increase) in inventory Decrease (increase) in advance payment Decrease in other current assets Total changes in operating assets Changes in operating liabilities: Decrease in contract liabilities Decrease in notes payable Decrease in accounts payable Decrease in other payables Decrease in provisions Increase (decrease) in other current liabilities Increase in refund liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities	Unit: NT$ 1,000 2023 (Restated) 2022 $ 7,520,493 8,188,567 2,333,633 2,212,956 57,955 55,711 (11,371) 7,015 (10,726) 14,301 71,118 55,109 (325,532) (46,801) (4,003) (5,535) 58,061 10,825 17,259 - 35,805 28,364 37,320 - 101,013 97,602 - (35) (607) 23,779	Unit: NT$ 1,000 2023 (Restated) 2022 $ 7,520,493 8,188,567 2,333,633 2,212,956 57,955 55,711 (11,371) 7,015 (10,726) 14,301 71,118 55,109 (325,532) (46,801) (4,003) (5,535) 58,061 10,825 17,259 - 35,805 28,364 37,320 - 101,013 97,602 - (35) (607) 23,779
	2,359,925	2,453,291
	(88,404) 1,348,895 (58,914) 876,958 155,894 1,467	(142,209) (1,777,302) 85,564 432,653 (116,723) 4,368
	2,235,896	(1,513,649)
	(27,506) (3,229) (942,001) (87,353) (168) 5,301 36,138	(43,067) (7,898) (261,856) (62,876) (1,020) (2,547) 188,939
	(1,018,818)	(190,325)
	1,217,078	(1,703,974)
	3,577,003	749,317
	11,097,496 275,214 4,003 (58,939) (2,184,951)	8,937,884 36,337 5,535 (45,171) (1,201,299)
	9,132,823	7,733,286

~184~

Lotes Co., Ltd. and Subsidiaries

Consolidated Statement of Cash Flows (Continued)

From January 1 to December 31, 2023 and 2022

Unit: NT$ 1,000

Cash flows from (used in) investing activities: Disposal of financial assets measured at FVTOCI Acquisition of financial assets measured at FVTOCI Acquisition of financial assets measured at FVTPL Disposal of financial assets measured at FVTPL Acquisition of Investments accounted for using the equity method Cash outflow from the losing the control of subsidiaries Acquisition of property, plant and equipment Disposal of property, plant and equipment Acquisition of intangible assets Net cash inflows from business combination Acquisition of investment property Decrease in other non-current assets Net cash flows from (used in) investing activities: Cash flows from (used in) financing activities: Increase (decrease) in short-term loans Borrowings of long-term loans Repayments of long-term loans Payments of lease liabilities Increase in other non-current liabilities Cash dividends paid Cash dividends paid to non-controlling interests Cash capital increase Issuance of restricted stock awards Repurchase of restricted stock awards Subsidiary issuing corporate bonds Issuance of corporate bonds Repurchase of corporate bonds Changes in non-controlling interests Changes in subsidiaries, associates and joint ventures accounted for using equity method Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2023 $ 7,433 - (25,000) 27,794 (94,000) (50,631) (2,658,787) 72,444 (37,453) (54,076) (256,488) 299,198	2022 1,422 (61,465) (8,000) 69,302 - - (3,677,619) 2,392 (30,457) - - 18,314
	(2,769,566)	(3,686,111)
	(317,432) - (165,630) (249,887) 171 (2,803,575) (144,379) 2,305,973 16,620 255 - 1,079,877 - (16,092) (1,508)	714,342 130,000 (8,775) (237,460) 2,562 (1,695,646) (56,866) - - - 346,268 - (2,800) 246,344 67,445
	(295,607)	(494,586)
	(25,463) 6,042,187 7,090,304	234,653 3,787,242 3,303,062
	$ 13,132,491	7,090,304

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

Chairperson: CHU, TE-HSIANG

Accounting Manager: LIU, HSIN-HSIA

~185~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Lotes Co., Ltd. and Subsidiaries Notes to the Consolidated 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 Act and was approved for registration with its registered office at No.15, Wuxun Street, Anle District, Keelung City. The Company and Subsidiaries (hereinafter referred to as the “Consolidated 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 Consolidated 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 Consolidated Company adopted the following newly revised IFRSs, the impact of which is described below:

1. 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$99,793 thousand, an increase of NT$97,226 thousand, an increase of NT$2,618 thousand and a decrease of NT$51 thousand in deferred income tax assets, deferred income tax liabilities, retained earnings and other equity, respectively, as of January 1, 2022, and an increase of NT$85,303 thousand, an increase of NT$81,040 thousand, an increase of NT$4,286 thousand, and a decrease of NT$23 thousand in deferred income tax assets, deferred income tax liabilities,

~186~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

retained earnings and other equity, respectively, as of December 31, 2022. The income tax expense decreased by 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 Consolidated Company had followed the previous accounting policy, the deferred income tax assets, deferred income tax liabilities, retained earnings and other equity as of December 31, 2023 would have been decreased by NT$148,902 thousand, decreased by NT$142,025 thousand, decreased by NT$7,023 thousand and increased by NT$146 thousand, respectively. For the year ended December 31, 2023, the income tax expense 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 $0.01, respectively, and there would have been no effect on net cash flows.

2. Others

The following revised standards are also effective January 1, 2023, but did not have a significant impact on the consolidated 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 Consolidated 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 Consolidated 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 consolidated financial statements. The Consolidated 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 Consolidated Company operates and will disclose the mandatory exemption and the new disclosure requirements in the 2023 consolidated financial statements. Please refer to Note VI (20) 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 Consolidated Company assessed that the application of the following newly revised IFRSs, effective January 1, 2024, would not have a material impact on the consolidated financial statements.

~187~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

‧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”

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

The Consolidated Company does not expect the following newly issued and amended standards, which have not yet been endorsed, to have a material impact on the consolidated 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 Consolidated Financial Statement.

(1) Compliance statement

The Consolidated Financial Statement was compiled in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations approved by the Financial Supervisory Commission.

(2) Compiling basis

1. Measurement foundation

Except the major items in the following balance sheet, the Consolidated 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).

~188~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

2. Functional currency and presentation currency

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

(3) Consolidation basis

The main entity for the preparation of consolidated financial statements consists of the Company and the entity controlled by the Company (i.e., the subsidiaries).

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control is obtained until the date that control is lost. Total consolidated income of subsidiaries is attributed to the Company's owners and non-controlling interests, respectively, even if the non-controlling interests become a deficit balance as a result.

Inter-company transactions, balances and any unrealized gains and losses are eliminated in the preparation of the consolidated financial statements. The financial statements of subsidiaries have been appropriately adjusted to conform to the accounting policies used by the Consolidated Company.

Changes in ownership interests in subsidiaries that do not result in a loss of control of subsidiaries are accounted for as equity transactions with owners.

1. Subsidiaries included in the consolidated financial statements

The subsidiaries included in the consolidated financial statements are:

Investing company Subsidiary **Location **

Shareholding % Dec. 31, 2023 Dec. 31, 2022 Note

The Company Lotes Investments Limited Samoa 〞 Good Hope Investments Limited 〞 〞 Guansi Development Co., Ltd. 〞 〞 Zhaxi Investment Co., Ltd. Anguilla 〞 Zhaxi Investment Co., Ltd. Taiwan 〞 Lotes USA, Inc America 〞 LOTES EU GmbH Germany 〞 Lerain Technology Co., Ltd. Taiwan 〞 Lomites Co., Ltd. 〞 〞 LOTES VIET NAM COMPANY LIMITED Vietnam Lotes Investments Limited Loteson International Investments Limited Hong Kong

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% (Note 3) 15.74% (Note 1) 99.04% 99.92% (Note 2) 100.00% 100.00% 100.00% 100.00%

~189~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Loteson	Lotes Guangzhou Co., Ltd.	China	100.00%	100.00%	100.00%
International
Investments
Limited
Lotes	Lotes Hengnan Co., Ltd.	〞	100.00%	100.00%
Guangzhou Co.,
Ltd.
〞	Shenzhen DeYi Automation	〞	100.00%	100.00%
	Equipment Co., Ltd.
〞	Lotes Zhongshan Co., Ltd.	〞	50.00%	50.00%
〞	Zhongshan Dezhi Metal Surface	〞	100.00%	100.00%
	Treatment Co., Ltd.
〞	Hengnan Deyi Property	〞	100.00%	100.00%
	Development Co., Ltd.
〞	Zhongshan Jinmeida Metal	〞	- %	-	% (Note 1)
	Surface Treatment Co., Ltd.
〞	Guangzhou Leside Technology	〞	100.00%	100.00%
	Co., Ltd.
〞	Zhongshan Huixing Electronics	〞	30.06%	-	% (Note 1)
	Co., Ltd.
〞	Guangzhou Dezhi Technology	〞	100.00%	-	%
	Co., Ltd.
Lotes	Zhongshan DeZhi Real Estate	〞	100.00%	100.00%
Zhongshan Co.,	Development Co., Ltd.
Ltd.
Guangzhou	Chongqing Fuxinrui Electronic	〞	51.00%	51.00%
Leside	Technology Co., Ltd.
Technology
Co., Ltd.
Zhongshan	Ningbo Huili Electronic	〞	51.00%	-	%
Huixing	Technology Co., Ltd.
Electronics Co.,
Ltd.
Good Hope	Xincheng Development Co.,	Samoa	100.00%	100.00%
Investments	Ltd.
Limited
〞	REKA Technology Co., Ltd.	Hong Kong	100.00%	100.00%
Guansi	Jae You Co., Ltd.	〞	100.00%	100.00%
Development
Co., Ltd.
Jae You Co.,	Lotes Suzhou Co., Ltd.	China	100.00%	100.00%
Ltd.
Lotes Suzhou	Lotes Zhongshan Co., Ltd.	〞	50.00%	50.00%
Co., Ltd.
Zhaxi	Wangden Investments Limited	Hong Kong	100.00%	100.00%
Investment Co.,
Ltd.
Wangden	Zongka Technology (Shenzhen)	China	100.00%	100.00%
Investments	Co., Ltd.
Limited
Zhaxi	Ememe Robot Co., Ltd.	Taiwan	94.37%	94.37%
Investment Co.,
Ltd.

~190~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

〞	Compertum Microsystems Inc.	〞	31.78%	31.78% (Note 1)
Zhaxi	Good News Medical Co., Ltd.	Taiwan	25.44%	25.44% (Note 1)
Investment
Co., Ltd.
〞	Lintes Technology Co., Ltd.	〞	49.61%	50.24% (Note 1)
Good News	FELICITY NEWS LIMITED	British Virgin Islands	100.00%	- %
Medical Co.,
Ltd.
FELICITY	Guangzhou Jiashimei Trading	China	100.00%	- %
NEWS	Co., Ltd.
LIMITED
Lintes	Genie Precision Machine Co.,	Taiwan	60.00%	60.00%
Technology	Ltd.
Co., Ltd.
〞	Compertum Microsystems Inc.	〞	10.59%	10.59% (Note 1)
〞	Lerain Technology Co., Ltd.	〞	(Note 3)	1.82% (Note 1)
〞	Jilong Co., Ltd.	Samoa	100.00%	100.00%
〞	LINTES TECHNOLOGY	Thailand	100.00%	100.00%
	(THAILAND) CO., LTD.
Jilong Co.,	Rihui Co., Ltd.	Samoa	100.00%	100.00%
Ltd.
Rihui Co.,	Lintes Technology (Suzhou)	Taiwan	100.00%	100.00%
Ltd.	Co., Ltd.

Note 1: Although the Consolidated Company does not hold more than half of the voting shares of this company, it is included as a subsidiary in the consolidated financial statements because the Consolidated Company has control over its major operating activities and other decisions.

• Note 2: MicroIdea Co., Ltd. changed its name into Lomites Co., Ltd. on May 18, 2022.

• Note 3: The Consolidated Company has lost control over Lerain Technology Co., Ltd. since June 1, 2023 based on the judgment that the Consolidated Company does not have the absolute power and the ability to dominate the relevant activities and changes in the remuneration of the operation of Lerain Technology Co., Ltd. Therefore, it has not been listed as a subsidiary in the Consolidated Financial Statements since June 2023.

2. Subsidiaries not included in the consolidated financial statements: None.

(4) 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.

~191~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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.

1. 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. Upon partial disposal of a subsidiary with foreign operations, the related accumulated exchange differences are reattributed to non-controlling interest on a pro rata basis. 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.

• (5) 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:

1. Those that are expected to be realized during the normal operating period or intended to be sold or consumed.

2. Those held mainly for the purpose of transaction.

3. Those expected to be realized within 12 months after the reporting period.

4. The asset is cash or cash equivalents, unless the asset is otherwise restricted from

~192~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

being exchanged or used to settle a liability for at least 12 months after the reporting period.

~193~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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:

1. Those expected to be paid off during the normal operating period.

2. Those held mainly for the purpose of transaction.

3. Those expected to be paid off within 12 months after the reporting period.

4. 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. (6) 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.

(7) 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 Consolidated 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 Consolidated 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.

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 Consolidated 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.

~194~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(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 Consolidated 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.

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.

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Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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 Consolidated 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.

• 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 Consolidated Company continues to recognize the asset.

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Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

• (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 Consolidated 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 Consolidated 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

• 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.

~197~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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 Consolidated 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 Consolidated Company can collect under the contract and the cash flows that the Consolidated Company expects to collect. The expected credit loss is discounted at the effective interest rate of the financial asset.

On each reporting date, the Consolidated 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;

• For economic or contractual reasons related to the borrower’s financial difficulties, the merged Consolidated 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.

~198~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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 Consolidated Company shall analyze the date and amount of the write-off on the basis of whether it is reasonable to expect recovery. The Consolidated 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 Consolidated 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 Consolidated 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.

2. Financial liabilities and equity instruments

(1) Classification of liabilities or equity

Debt and equity instruments issued by the Consolidated 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 Consolidated Company after deducting all of its liabilities. Equity instruments issued by the Consolidated Company are recognized at the amount of the consideration received less direct issue costs.

(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.

~199~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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.

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.

~200~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(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 Consolidated 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 Consolidated 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.

(8) 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.

(9) Investments in Associates

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

The Consolidated 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 consolidated financial reports include the Consolidated 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 Consolidated Company’s accounting policies. When an associate undergoes an equity transaction affecting comprehensive income and other comprehensive income that does not affect the Consolidated Company’s ownership percentage, the Consolidated Company recognizes any changes in equity proportionately as capital reserves.

~201~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Unrealized gains and losses arising from transactions between the Consolidated 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 Consolidated 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.

(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.

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

1. 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 Consolidated Company.

3. 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.

~202~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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

• (1) Buildings 20-40 years

• (2) Machinery 2-10 years

• (3) Other equipment 2-10 years

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

4. 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 Consolidated 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.

1. The lessee

The Consolidated 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 Consolidated 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 Consolidated 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

~203~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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.

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 Consolidated 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 Consolidated 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 Consolidated 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

~204~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

principal part of the underlying asset’s economic life.

~205~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

If the Consolidated 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

Goodwill arising from the acquisition of subsidiaries is measured at cost less accumulated impairment.

Computer software acquired by the Consolidated 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.

3. Amortization

Except for goodwill, 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 Consolidated 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 Consolidated 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. Goodwill is tested for impairment on a regular basis each year.

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.

~206~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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.

Goodwill impairment losses are not reversed. 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 Consolidated 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 Consolidated Company recognizes revenue from the transfer of control of goods or services to the customer in order to meet its performance obligations.

The Consolidated Company manufactures electronic components and sells them to manufacturers in the electronics industry. The Consolidated 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.

~207~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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 payments for the goods or services is expected to be no more than one year, so the Consolidated 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 Consolidated 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 Consolidated 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.

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 Consolidated 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.

~208~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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 Consolidated 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.

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

~209~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

is not recognized for the following temporary differences:

1. 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.

2. Those generated due to investment subsidiary company and joint equities and likely to not to be returned in the foreseeable future.

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

1. Having the legal execution right to make the current income tax assets and the current tax liabilities offset with each other: and

2. 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

3. (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.

(20) Business combination

Goodwill is measured at the fair value of the consideration transferred at the date of acquisition, including the amount of any non-controlling interest attributable to the acquiree, less the net amount of identifiable assets acquired and liabilities assumed (usually the fair value). If the resulting balance is negative, the Consolidated Company reassesses whether all assets acquired and liabilities assumed have been correctly identified before recognizing gain recognized in bargain purchase transaction in profit or loss.

Transaction costs associated with a business combination, except for those related to the issuance of debt or equity instruments, are recognized as expenses of the Consolidated Company immediately upon incurrence.

~210~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Non-controlling interest of the acquiree, which is a present ownership interest and the holder of which is entitled to a proportionate share of the net assets of the enterprise at the time of liquidation, is measured at fair value at the acquisition date or at the present ownership instrument's proportionate share of the recognized amount of the acquiree's identifiable net assets, at the option of the Consolidated Company, on a transaction by transaction basis. Other non-controlling interests are measured at their fair values on the acquisition date or on other bases as prescribed by IFRSs recognized by the FSC.

(21) Earnings per share

The Consolidated 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 Consolidated 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 Consolidated Company include convertible corporate bonds and stock options for employees.

• (22) Segmental Information

An operating segment is a component of the Consolidated Company that engages in operating activities that may earn revenues and incur expenses, including revenues and expenses related to transactions with other components of the Consolidated Company. The operating results of all operating segments are reviewed regularly by the Consolidated Company's chief operating decision maker to make decisions about the allocation of resources to the segment and to evaluate its performance. Separate financial information is available for each operating segment.

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

Management is required to make judgments, estimates and assumptions in preparing the Consolidated 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.

~211~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Consolidated 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.

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 of Cash Flows	Dec. 31, 2023 $ 3,585 4,035,836 9,093,070 $ 13,132,491		Dec. 31, 2022 6,331 3,662,736 3,421,237 7,090,304

Disclosures of interest rate risks and sensitivity analysis on financial assets and liabilities of the Consolidated Company are seen in Note VI (26).

(2) Financial assets and liabilities

1. Financial assets measured at FVTPL

nancial assets and liabilities Financial assets measured at FVTPL
Financial assets mandatorily measured at FVTPL: Current: Non-hedging derivative financial assets Embedded derivative instruments - redemption right Non-derivative financial assets Shares of listed ("OTC") companies Emerging stock Subtotal Non-current: Non-hedging derivatives Embedded derivatives—right of redemption Non-derivative financial assets Private equity funds Subtotal Total	Dec. 31, 2023 $ 187 53,290 7,307	Dec. 31, 2022 163 62,313 16,531
	60,784	79,007
	2,205 24,711	- -
	26,916	-
	$ 87,700	79,007

Please refer to Note VI (14) for the disclosure of embedded derivatives of the convertible bonds issued by the Consolidated Company.

~212~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Please refer to Note VI (27) for the amount recognized in profit or loss based on fair value remeasurement.

2. Financial assets measured at FVTOCI

Equity instruments measured at FVTOCI: Non-current: Domestic listed stock - Chailease Finance Co., Ltd. Domestic listed stock - Hotai Finance Co., Ltd. Domestic unlisted (or OTC) stock—SteadyBeat Technology Corporation Domestic unlisted (or OTC) stock—G-sau Co., Ltd Domestic unlisted (or OTC) stock－AICP Technology Corporation Total	Dec. 31, 2023 50,125 28,710 1,129 15 -	Dec. 31, 2022 50,125 28,800 4,426 169 -
	$ 79,979	83,520

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

The Consolidated Company recognized dividend income from equity instruments measured at fair value through other comprehensive income, amounting to NT$2,298 thousand in 2023 and NT$1,946 thousand in 2022.

On February 20, 2023, December 29, 2023, and September 30, 2022, the Consolidated 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(27)5.

As of December 31, 2023, and December 31, 2022, there were no financial assets of the Consolidated 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 $ 305,564 9,312,888 509,221 10,493 $ 10,117,180		Dec. 31, 2022 203,501 10,532,266 387,133 28,267 11,094,633

For the changes in the provisions for notes and accounts receivable for the years 2023 and 2022, please refer to Note VI (27) 1. (3) Statement of Impairment Losses.

~213~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(4) Inventory

Merchandises Finished goods Work in process Raw materials	Dec. 31, 2023 $ 602,757 829,978 770,644 453,934	Dec. 31, 2022 777,610 1,334,030 843,056 606,436
	$ 2,657,313	3,561,132

The Consolidated Company’s inventory as of December 31, 2023 and 2022 including allowance for inventory losses are NT$445,445 thousand and NT$438,7320 thousand respectively.

The Consolidated Company recognized inventory-related expenses (gain) as follows: 2023 2022 Cost of goods sold $ 12,901,388 15,063,852 Inventory valuation and disposal loss 101,013 97,602 Total $ 13,002,401 15,161,454	The Consolidated Company recognized inventory-related expenses (gain) as follows: 2023 2022 Cost of goods sold $ 12,901,388 15,063,852 Inventory valuation and disposal loss 101,013 97,602 Total $ 13,002,401 15,161,454	The Consolidated Company recognized inventory-related expenses (gain) as follows: 2023 2022 Cost of goods sold $ 12,901,388 15,063,852 Inventory valuation and disposal loss 101,013 97,602 Total $ 13,002,401 15,161,454
	$ 13,002,401	15,161,454

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

(5) Investments accounted for using the equity method

The Consolidated Company's investments accounted for using the equity method as of the reporting date are listed as follows:

Associates	Dec. 31, 2023 $ 81,730	Dec. 31, 2022 -

1. Associates

On July 24, 2023, the Consolidated Company acquired a 21.01% interest in I-See Vision Technology Inc. for NT$94,000 thousand in cash, thereby obtaining significant influence over the company.

The Consolidated Company's investments in associates that are individually not significant are accounted for using the equity method, and their aggregated financial information is as follows. This financial information is included in the

Consolidated Company's consolidated financial reports:

Year-end aggregated carrying amount of equity in individually not significant associates Attributable to the Consolidated Company: Total comprehensive income (i.e., net profit (loss) of continuing operations for the period)	Dec. 31, 2023 $ 81,730	Dec. 31, 2022 -
	2023 $ (17,259)	2022
		-

~214~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

2. Guarantees

There are no pledges as guarantees for the Consolidated Company's investments accounted for using the equity method.

(6) Changes in ownership interests in subsidiaries

1. Acquisition of subsidiaries

On October 27, 2023, the Consolidated Company acquired a 31.65% stake in ZhongShan HuiXing Electronics Co., Ltd. (HuiXing Electronics) for NT$10,175 thousand in cash. HuiXing Electronics is a manufacturer of electronic connectors, and the acquisition is expected to increase the Consolidated Company's market share in China.

From the acquisition date to December 31, 2023, HuiXing Electronics contributed revenues and a net loss of NT$203,265 thousand and NT$9,071 thousand, respectively. Had this acquisition occurred on January 1, 2023, management estimates that the Consolidated Company's revenues and net loss would have increased by NT$481,612 thousand and NT$25,055 thousand, respectively. In determining these amounts, management assumed that the acquisition took place on January 1, 2023, and that the provisional fair value adjustments arising on the acquisition date were the same.

The costs associated with this acquisition transaction have been recognized under "Other Expenses" in the consolidated statement of comprehensive income.

The main categories of consideration transferred, assets acquired, and liabilities assumed, and the amount of goodwill recognized on the acquisition date are as follows:

(1) Net cash outflow from acquisition of subsidiaries

Consideration paid in cash $ 10,175 Less: Cash and cash equivalents acquired 64,251 $ (54,076)

~215~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(2) Identifiable assets acquired and liabilities assumed

The fair values of the identifiable assets acquired and liabilities assumed at the date of acquisition were as follows:

Current Assets Cash and cash equivalents Notes receivable, accounts receivable, and other receivables Inventories Other current assets Non-current Assets Property, plant, and equipment Intangible assets Other non-current assets Current Liabilities Notes payable, accounts payable, and other payables Contract liabilities – Current Other non-current liabilities – Other Fair value of identifiable net assets

$ 64,251 185,511 92,408 649 95,464 23 7,639 (433,406) (3,696) (698) $ 8,145

The Consolidated Company will keep the above matters under review during the measurement period. If new information becomes available within one year of the acquisition date regarding facts and circumstances existing at the acquisition date that would identify adjustments to the provisional amounts described above or any additional provisions for liabilities existing at the acquisition date, the accounting for the acquisition will be modified.

(3) Goodwill

Goodwill recognized from acquisitions is as follows: Consideration transferred Plus: Non-controlling interests (measured at the proportionate share of the identifiable net assets) Less: Fair value of identifiable net assets Goodwill	$ 10,175 5,567 (8,145) $ 7,597

2. Acquisition of additional equity interests in subsidiaries

On November 7, 2022, the consolidated company increased its stake in Lomites Co.,

Ltd. by NT$600 thousand in cash, resulting in an increase in its stake in Lomites Co., Ltd. by 0.32%.

~216~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

The effect of the change in the Consolidated Company's ownership interest in the subsidiaries listed above on the equity attributable to the owners of parent is as follows:

Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests Capital reserves - the difference between the actual acquisition or disposal price and the carrying amount of the subsidiary	2023	2022
	$ - -	548 (600) (52)
	$ -

3. Disposal of partial subsidiary shares without loss of control

In November 2023, the Consolidated Company disposed of 0.88% of its equity interest in Lomites Co., Ltd. for NT$1,100 thousand.

In March 2023, the Consolidated Company disposed of 0.01% of its equity interest in Lintes Technology Co., Ltd. for NT$900 thousand.

The changes in the Consolidated Company's ownership interests in the above subsidiaries had the following impact on the equity attributable to the parent company's shareholders:

Carrying amount of the disposed subsidiary shares Consideration received from non-controlling interests Capital reserve – difference between the actual price of acquisition or disposal of subsidiary shares and the carrying value	2023 $ (1,059) 2,000 $ 941

1. The Consolidated Company did not subscribe to the subsidiary's cash capital increase in proportion to its shareholding, which did not result in a loss of control.

In November 2023, ZhongShan HuiXing Electronics Co., Ltd. issued 385 thousand new shares, raising a total of NT$1,667 thousand. The Consolidated Company’s ownership in ZhongShan HuiXing Electronics Co., Ltd. decreased by 1.59% due to not subscribing to the new shares.

On December 15, 2022, Compertum Microsystems Inc. issued 5,206 thousand new shares in a capital increase, raising a total of NT$52,060 thousand. The consolidated company subscribed to 2,265 thousand shares, with a subscription amount of NT$22,645 thousand. As a result, the consolidated company increased its stake in Compertum Microsystems Inc. by 0.61% because it did not subscribe in proportion to its shareholding.

On April 29, 2022, Lomites Co., Ltd. issued 10,000 thousand new shares in a capital increase, raising a total of NT$100,000 thousand. The consolidated company subscribed to 9,950 thousand shares, with a subscription amount of NT$99,500 thousand. As a result, the consolidated company's stake in Lomites Co., Ltd. decreased by 0.40% because it did not subscribe in proportion to its shareholding.

On April 15, 2022, Lerain Technology Co., Ltd. issued 1,215 thousand new shares in

~217~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

a capital increase, raising a total of NT$85,050 thousand. Because the consolidated company did not subscribe, its stake in Lerain Technology Co., Ltd. decreased by 0.70%.

On February 25, 2022, Lintes Technology Co., Ltd. issued 3,500 thousand new shares in a capital increase, raising a total of NT$332,500 thousand. The consolidated company subscribed to 1,368 thousand shares, with a subscription amount of NT$129,993 thousand. As a result, the consolidated company's stake in Lintes Technology Co., Ltd. decreased by 0.76% because it did not subscribe in proportion to its shareholding.

The effect of changes in the Consolidated Company's ownership interest in the subsidiaries listed above on the equity attributable to owners of parent was as follows:

Increase in equity after issuance of new shares by subsidiaries Amount not subscribed in proportion to shareholding Capital reserves - recognition of changes in ownership interests in subsidiaries	2023 $ 441 -	2022 325,061 (252,138) 72,923
	$ 441

1. The exercise of the conversion right of the unsecured convertible corporate bonds of the subsidiary did not result in a loss of control.

The subsidiary, Lintes Technology Co., Ltd., issued 1,644 thousand new shares in 2023 due to bondholders exercising their conversion rights, resulting in a 0.34% decrease in the Consolidated Company's equity in Lintes Technology Co., Ltd.

The subsidiary, Lintes Technology Co., Ltd., issued 1,367 thousand new shares in 2022 due to the bondholders exercising their conversion rights, resulting in a decrease of 1.13% in the consolidated company's stake in Lintes Technology Co., Ltd.

The changes in the Consolidated Company's ownership interests in the subsidiaries for 2023 and 2022 increased the equity attributable to the parent company's shareholders by NT$15,266 thousand and NT$54,712 thousand, respectively.

1. The subsidiary issued restricted employee stock options without resulting in loss of control.

The subsidiary, Lintes Technology Co., Ltd., issued 358 thousand restricted shares to employees on August 25, 2023, decreasing the Consolidated Company’s equity in Lintes Technology Co., Ltd. by 0.29%.

The change in the Consolidated Company’s ownership interests in the subsidiary for 2023 increased the equity attributable to the parent company's shareholders by NT$7,277 thousand.

~218~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

7. Subsidiary employee stock options expired

In 2023, 5.5 thousand restricted shares held by departing employees of the subsidiary

Lintes Technology Co., Ltd. expired, increasing the Consolidated Company’s equity in Lintes Technology Co., Ltd. by 0.01%.

The changes in the Consolidated Company’s ownership interests in the subsidiary for 2023 increased the equity attributable to the parent company's shareholders by NT$124 thousand.

(7) Subsidiaries with significant non-controlling interests

The non-controlling interests of subsidiaries that are material to the Consolidated Company are as follows:

Name of subsidiary Lintes Technology Co., Ltd.	Principal place of business/country of incorporation Taiwan	The percentage of ownership interests and voting interests in all non-controlling interests	The percentage of ownership interests and voting interests in all non-controlling interests
		Dec. 31, 2023	Dec. 31, 2022
		50.39%	49.76%

The aggregate financial information of the above subsidiaries is as follows. The financial information has been prepared in accordance with International Financial Reporting Standards (IFRSs) approved by the Financial Supervisory Commission (FSC), and the financial information represents amounts before the elimination of intercompany transactions:

1. Comprehensive financial information of Lintes Technology Co., Ltd.:

Current assets Non-current assets Current liabilities Non-current liabilities Less: Non-controlling interests Equity attributable to owners of Lintes Technology Co., Ltd. Closing balance of non-controlling interests attributable to the Consolidated Company	Dec. 31, 2023 $ 2,528,937 1,246,610 (584,325) (179,677) 119,813	Dec. 31, 2022 3,115,748 1,062,281 (1,060,878) (258,033) 145,853
	$ 2,891,732	2,713,265
	$ 1,457,195	1,350,148

~219~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Operating revenue Net profit for the period Attributable to owners of Lintes Technology Co., Ltd. Attributable to non-controlling interests of Lintes Technology Co., Ltd. Other comprehensive income Attributable to owners of Lintes Technology Co., Ltd. Total of comprehensive income Attributable to owners of Lintes Technology Co., Ltd. Attributable to non-controlling interests of Lintes Technology Co., Ltd. Net income of the Consolidated Company for the period attributable to non-controlling interests Comprehensive income of the Consolidated Company for the period attributable to non-controlling interests Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Effect of exchange rate changes Increase in cash and cash equivalents Dividends paid to non-controlling interests	2023 $ 2,454,917	2022 3,369,201 570,248 14,084 277 570,525 14,084 280,498 280,715 2022 500,397 (420,111) 296,556 (3,102) 373,740 52,954
	$ 396,730
	$ (21,150)
	$ (7,265)
	$ 389,465
	$ (21,150)
	$ 198,978
	$ 195,353
	2023 $ 880,699 (278,397) (404,383) (8,455)
	$ 189,464
	$ 139,489

~220~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(8) Property, plant and equipment

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

Cost or deemed cost: Balance on Jan. 1, 2023 Addition Prepayment for equipment transferred in Acquired through business combinations Completion of construction in progress and acceptance of equipment to be examined Disposal Reclassified to investment property Loss of control over a subsidiary Effect of change in exchange rate Balance on Dec. 31, 2023 Balance on Jan. 1, 2022 Addition Prepayment for equipment transferred in Completion of construction in progress and acceptance of equipment to be examined Investment properties transferred in Disposal Transferred to expenses Effect of change in exchange rate Balance on Dec. 31, 2022 Losses on depreciation and impairment: Balance on Jan. 1, 2023 Depreciation in the year Acquired through business combinations Disposal Loss of control over a subsidiary Reclassified to investment property Effect of change in exchange rate Balance on Dec. 31, 2023 Balance on Jan. 1, 2022 Depreciation in the year Disposal Investment properties transferred in Effect of change in exchange rate Balance on Dec. 31, 2022 Book value: December 31, 2023 December 31, 2022	Land $ 767,108 109,366 - - - - (1,276) (38,442) 154	Buildings 2,523,944 200,235 320 - 909,717 - (4,121) (15,770) (98,389)		Machinery equipment 4,086,610 760,270 66,730 11,795 116,285 (150,332) - (27,679) (115,143)		Other 6,264,473 191,175 14,632 74,162 896,741 (261,440) - (19,597) (115,904)	Outstanding work and equipment to be inspected 1,375,401 1,397,741 28,717 31,244 (1,922,743) - - - (25,970)		Total 15,017,536 2,658,787 110,399 117,201 - (411,772) (5,397) (101,488) (355,252) 17,030,014 11,554,527 3,677,619 28,980 - 241,868 (669,507) (23,925) 207,974 15,017,536 6,145,656 2,166,408 21,737 (303,523) (8,436) (593) (121,149) 7,900,100 4,672,341 2,035,905 (638,751) 4,352 71,809 6,145,656 9,129,914 8,871,880
	$ 836,910	3,515,936		4,748,536		7,044,242	884,390
	$ 241,919 131,296 - 173,500 218,230 - - 2,163	1,646,343 469,162 789 330,115 23,638 - - 53,897		3,721,293 425,575 17,095 167,558 - (316,536) - 71,625		4,811,867 613,038 11,096 1,123,013 - (352,971) - 58,430	1,133,105 2,038,548 - (1,794,186) - - (23,925) 21,859
	$ 767,108	2,523,944		4,086,610		6,264,473	1,375,401
	$ - - - - - - -	459,743 144,709 - - (387) (593) (10,586)		1,953,192 368,306 1,234 (92,587) (1,203) - (32,440)		3,732,721 1,653,393 20,503 (210,936) (6,846) - (78,123)	- - - - - - -
	$ -	592,886		2,196,502		5,110,712	-
	$ - - - - -	366,833 83,432 - 4,352 5,126		1,893,006 314,184 (295,539) - 41,541		2,412,502 1,638,289 (343,212) - 25,142	- - - - -
	$ -	459,743		1,953,192		3,732,721	-
	$ 836,910	2,923,050		2,552,034		1,933,530	884,390
	$ 767,108	2,064,201		2,133,418		2,531,752	1,375,401

~221~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

The subsidiary, LOTES VIET NAM COMPANY LIMITED (LOTES VIET NAM), acquired land use rights in 2021 for the construction of a new factory, with an acquisition cost of NT$299,921 thousand recorded as right-of-use assets. LOTES VN CO., LTD. has begun construction of a new factory building. As of December 31, 2023, and 2022, the cumulative expenditures for the construction were NT$578,057 thousand and NT$399,060 thousand, respectively.

The subsidiary, Lotes Zhongshan Co., Ltd, acquired the land use rights for the construction of the new plant in 2017, and the acquisition cost was NT$183,934 thousand to list right-of-use assets in the account. As of December 31, 2023, and 2022, the cumulative expenditures for the construction of the factory building (including tax), recorded under buildings and structures, amounted to NT$1,621,212 thousand and NT$1,614,359 thousand, respectively, with the property deed acquired in 2022.

The subsidiary, Lotes Hengnan Co., Ltd., acquired the land use rights for the construction of the new plant in 2016, and the acquisition cost was NT$9,878 thousand to list right-of-use assets in the account. As of December 31, 2023, and 2022, the cumulative expenditures for the construction of the factory building (including tax), recorded under buildings and structures, amounted to NT$342,401 thousand and NT$347,224 thousand, respectively, with the property deed acquired in 2023.

The subsidiary Lotes Zhongshan in April 2019 signed a contract for pre-purchase of building construction and a decoration contract with Zhongshan City Weili Real Estate Development Co., Ltd. and Tianjin Xinhongyuanchuang Architectural Decoration Engineering Co., Ltd. respectively. As of 2023, it has paid RMB 10,881 thousand and RMB 3,285 thousand respectively (recorded as buildings and constructions), and obtained the property certificate in 2022.

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.

(9) Right-of-use assets

The changes in the cost and depreciation of the right-of-use assets recognized by the consolidated company for leasing land, buildings, and other equipment are as follows:

Other

			Other
Cost of right-of-use assets: Balance on January 1, 2023 Addition Decrease Effect of change in exchange rate Balance on December 31, 2023 Balance on January 1, 2022 Addition Decrease Effect of change in exchange rate	Land $ 666,442 113,434 - (40,101)	Buildings 604,356 396,528 (146,166) (14,608)	equipment 12,816 3,994 (3,120) (124)	Total 1,283,614 513,956 (149,286) (54,833)
	$ 739,775	840,110	13,566	1,593,451
	$ 636,586 4,707 - 25,149	552,848 133,405 (83,774) 1,877	403 12,848 (411) (24)	1,189,837 150,960 (84,185) 27,002

~222~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Balance on December 31, 2022 Depreciation of right-of-use assets: Balance on January 1, 2023 Depreciation for the period Decrease Effect of change in exchange rate Balance on December 31, 2023 Balance on January 1, 2022 Depreciation for the period Decrease Effect of change in exchange rate Balance on December 31, 2022 Book value: December 31, 2023 December 31, 2022	$ 666,442 604,356 12,816 1,283,614
	$ 37,066 260,333 3,344 300,743 15,133 143,278 4,081 162,492 - (139,032) (3,120) (142,152) (1,900) (4,385) (60) (6,345)
	$ 50,299 260,194 4,245 314,738
	$ 21,033 140,064 251 161,348 17,711 154,929 3,363 176,003 - (32,786) (257) (33,043) (1,678) (1,874) (13) (3,565)
	$ 37,066 260,333 3,344 300,743
	$ 689,476 579,916 9,321 1,278,713
	$ 629,376 344,023 9,472 982,871

(10) Investment property

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

~223~ Self-owned assets Land Buildings Cost or deemed cost: Balance on January 1, 2023 $ 42,34 22,710 Additions - - Reclassified to property, plant, and equipment 1,27 4,121 Effect of change in exchange rate - - Balance on December 31, 2023 $ 43,62 26,831 Balance on January 1, 2022 $ 260,57 46,348 Reclassified to property, plant, and equipment (218,230 (23,638) Effect of change in exchange rate - - Balance on December 31, 2022 $ 42,34 22,710 Losses on depreciation and impairment: Balance on January 1, 2023 $ - 2,832 Depreciation - 847 Reclassified to property, plant, and equipment - 593 Impairment losses - - Effect of change in exchange rate - - Balance on December 31, 2023 $ - 4,272 Balance on January 1, 2022 $ - 6,668 Depreciation - 516 Reclassified to property, plant, and equipment - (4,352) Effect of change in exchange rate - - Balance on December 31, 2022$ - 2,832 Book value: December 31, 2023 $ 43,622 22,559 December 31, 2022 $ 42,346 19,878	~223~ Self-owned assets Land Buildings Cost or deemed cost: Balance on January 1, 2023 $ 42,34 22,710 Additions - - Reclassified to property, plant, and equipment 1,27 4,121 Effect of change in exchange rate - - Balance on December 31, 2023 $ 43,62 26,831 Balance on January 1, 2022 $ 260,57 46,348 Reclassified to property, plant, and equipment (218,230 (23,638) Effect of change in exchange rate - - Balance on December 31, 2022 $ 42,34 22,710 Losses on depreciation and impairment: Balance on January 1, 2023 $ - 2,832 Depreciation - 847 Reclassified to property, plant, and equipment - 593 Impairment losses - - Effect of change in exchange rate - - Balance on December 31, 2023 $ - 4,272 Balance on January 1, 2022 $ - 6,668 Depreciation - 516 Reclassified to property, plant, and equipment - (4,352) Effect of change in exchange rate - - Balance on December 31, 2022$ - 2,832 Book value: December 31, 2023 $ 43,622 22,559 December 31, 2022 $ 42,346 19,878	~223~ Self-owned assets Land Buildings Cost or deemed cost: Balance on January 1, 2023 $ 42,34 22,710 Additions - - Reclassified to property, plant, and equipment 1,27 4,121 Effect of change in exchange rate - - Balance on December 31, 2023 $ 43,62 26,831 Balance on January 1, 2022 $ 260,57 46,348 Reclassified to property, plant, and equipment (218,230 (23,638) Effect of change in exchange rate - - Balance on December 31, 2022 $ 42,34 22,710 Losses on depreciation and impairment: Balance on January 1, 2023 $ - 2,832 Depreciation - 847 Reclassified to property, plant, and equipment - 593 Impairment losses - - Effect of change in exchange rate - - Balance on December 31, 2023 $ - 4,272 Balance on January 1, 2022 $ - 6,668 Depreciation - 516 Reclassified to property, plant, and equipment - (4,352) Effect of change in exchange rate - - Balance on December 31, 2022$ - 2,832 Book value: December 31, 2023 $ 43,622 22,559 December 31, 2022 $ 42,346 19,878	Right-of-use assets Land 37,731 256,488 - (4,691)	Total 102,787 256,488 5,397 (4,691)
		$ 43,62 26,831	289,528	359,981
			37,198 - 533	344,122 (241,868) 533
		$ 42,34 22,710	37,731	102,787
			2,138 3,886 - 4,863 (175)	4,970 4,733 593 4,863 (175)
		$ - 4,272	10,712	14,984
		- 6,668 - 516 - (4,352) - -	1,585 532 - 21	8,253 1,048 (4,352) 21
	$	- 2,832	2,138	4,970
	$	43,622 22,559	278,816	344,997
	$	42,346 19,878	35,593	97,817
		~223~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Fair value: December 31, 2023 December 31, 2022	$ 410,733
	$ 162,684

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

(11) Intangible assets

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

Cost: Balance on January 1, 2023 Acquired separately Acquired through business combinations Derecognition Loss of control over a subsidiary Effect of change in exchange rate Balance on December 31, 2023 Balance on January 1, 2022 Acquired separately Derecognition Effect of change in exchange rate Balance on December 31, 2022 Losses on amortization and impairment: Balance on January 1, 2023 Amortization for the period Impairment Acquired through business combinations Derecognition Loss of control over a subsidiary Effect of change in exchange rate Balance on December 31, 2023 Balance on January 1, 2022 Amortization for the period Derecognition Effect of change in exchange rate Balance on December 31, 2022 Book value: Balance on December 31, 2023 Balance on December 31, 2022	$	Computer Software 322,973 29,856 - (16,663) (3,421) (3,471)		Other 600 - 7,622 - - -		Total 323,573 29,856 7,622 (16,663) (3,421) (3,471) 337,496 307,488 30,457 (17,005) 2,633 323,573 141,504 57,955 7,597 2 (16,663) (1,485) (1,527) 187,383 101,904 55,711 (17,005) 894 141,504 150,113 182,069
	$	329,274		8,222
	$	306,888 30,457 (17,005) 2,633		600 - - -
	$	322,973		600
	$	141,504 57,954 - - (16,663) (1,485) (1,527)		- 1 7,597 2 - - -
	$	179,783		7,600
	$	101,904 55,711 (17,005) 894		- - - -
	$	141,504		-
	$	149,491		622
	$	181,469		600

~224~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(12) Short-term loans

The details, conditions and terms of the short-term loans of the Consolidated Company are as follows:

Bank loans - credit loans Total Remaining credit Bank loans - credit loans Total Remaining credit		Dec. 31, 2023		Amount $ 1,580,000
	Currency NTD	Interest rate range	Maturity 2024
		1.80%~1.90% Dec. 31, 2022
				$ 1,580,000
				$ 3,403,056
				Amount $ 76,775 1,830,000
	Currency USD NTD	Interest rate range 5.55% 1.55%~1.80%	Maturity 2023 2023
				$ 1,906,775
				$ 3,634,405

For information on the Consolidated Company's exposure to interest rate and foreign currency risks, please refer to Note 6(27). Additionally, for details on the Consolidated Company's assets pledged as collateral for bank loans, refer to Note 8, and for the issuance of guarantee notes due to bank loans and financing limits, refer to Note 9.

(13) Long-term loans

The breakdown of the Consolidated Company's long-term loans is as follows:

Bank loans—credit loans (The expiry date is May 2025) Bank loans—guaranteed loans (The expiry date is May 2037) Subtotal Less: portion due within one year Total Remaining credit Interest rate range	Dec. 31, 2023 $ - -		Dec. 31, 2022 9,855 155,775
	- -		165,630 15,861
	$ -		149,769
	$ -		6,845
	-		1.75%~2.11%

For details of the guarantees provided by the Consolidated Company for bank loans using assets pledged as collateral, please refer to Note VIII.

~225~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(14) Bonds payable

Information on the issuance of unsecured convertible bonds by the Consolidated Company is as follows:

Total amount of convertible bonds issued Cumulative amount of redemptions Accumulated converted amount Unamortized balance of discount on bonds payable Bonds payable at the end of the period Embedded derivative - right of redemption(reported as financial assets measured at FVTPL) Equity components - conversion rights (reported in capital reserves - stock options) Equity component - Conversion rights (listed under the changes in the net value of the subsidiary's equity recognized using the equity method and non-controlling interests) Right of redemption valuation benefit (loss) (reported in other gains and losses) Interest expense	Dec. 31, 2023 $ 1,300,000 - (333,200) (32,645)	Dec. 31, 2022 1,300,000 (2,800) (1,161,600) (3,151) 132,449 163 - 25,680 2022 (323) 9,513
	$ 934,155
	$ 2,392
	$ 114,556
	$ 16,078
	2023 $ 1,468
	$ 14,086

1. The Company's first domestic unsecured convertible corporate 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. The closing price of the Company's common stock on the Taiwan Stock Exchange exceeds the conversion price of the bonds by 30% or more for 30 consecutive business days from the day after the third month of the issuance of the bonds to the 40th day prior to the expiration of the issuance period.

• B. If the closing price of the Company's common stock on the Taiwan Stock

~226~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Exchange exceeds the conversion price of the bonds by 30% or more for 30 consecutive business days from the day after the third month of the issuance of the bonds to the 40th day prior to 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 $915,969 thousand. The net change in capital surplus generated by the bond conversion during the current period is $895,831 thousand. Also, the share capital generated by the bond conversion is $17,352 thousand. Please refer to note VI (21) for details on the share conversion.

• (3) Repurchase details

The Company's first domestic three-year unsecured convertible bonds were redeemed and trading on the counter ceased on December 9, 2022.

1. The Company's second domestic unsecured convertible bonds

2. (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.

~227~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(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(21).

1. The first domestic unsecured convertible corporate bonds of the subsidiary, Lintes Technology Co., Ltd.

(1) Issuance details

The subsidiary, Lintes Technology Co., Ltd., issued 3,000 domestic first unsecured convertible corporate bonds with a coupon rate of 0% on January 19, 2022. These bonds are due for a one-time cash repayment at maturity according to the bond par value. The conversion price was set at NT$123.4 per share at issuance. When there are adjustments to the ordinary shares of the subsidiary, Lintes Technology Co., Ltd., that meet the terms of issuance, the conversion price is adjusted according to the formula specified in the terms. As of December 31, 2023, and 2022, the conversion prices were NT$116.4 and NT$120.3, respectively. This bond does not have a reset clause.

If any of the following conditions regarding the redemption rights are met, the subsidiary, Lintes Technology Co., Ltd., will recover the outstanding bonds in cash at face value:

• A. From the day after three months after the issuance of the bond until forty days before the end of the issuance period, if the closing price of the common shares of the subsidiary, Lintes Technology Co., Ltd., on the Taiwan Stock Exchange, exceeds the current conversion price of the bond by 30% (inclusive) or more for thirty consecutive business days.

• B. From the day after three months after the issuance of the bond until forty days before the end of the issuance period, if the outstanding balance of the bond is less than 10% of the original total issuance amount.

(2) Conversion details

In 2023 and 2022, holders of Lintes Technology Co., Ltd.'s first domestic three-year unsecured convertible bonds exercised their conversion rights, obtaining 422 thousand and 1,367 thousand ordinary shares of Lintes Technology Co., Ltd., respectively.

~228~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(15) Lease liabilities

ease liabilities	ease liabilities	ease liabilities
The book values of the lease liabilities of the Consolidated Company are			as follows:
		Dec. 31, 2023	Dec. 31, 2022
Current	$	129,085	110,281
Non-current	$	487,452	260,380

For the maturity analysis, please refer to Note VI (27). The amounts recognized in profit or loss are as follows:

For the maturity analysis, please refer to Note VI (27). The amounts recognized in profit or loss are as follows:	). s:
2023 Interest expense for lease liabilities $ 34,122 Changes in lease payments not included in the measurement of lease liabilities $ 12,421 Income from the sublease of right-of-use assets $ 30,898 Expenses for short-term leases $ 7,045 Cost of low-value leased assets (excluding low-value leases under short-term leases) $ 328 The amounts recognized in the Statement of Cash Flows are as follows: 2023 Total cash outflow from leases $ 303,803	2023 $ 34,122	2022 22,673 13,394 28,417 6,753 354 2022 280,625
	$ 12,421
	$ 30,898
	$ 7,045
	$ 328

1. Lease of land, premises and buildings

The Consolidated Company leases land, premises and buildings for plant, office space and staff quarters. The lease term of the plant and office space is usually one to ten years, and the lease term of the staff quarters is three to eight years. Part of the lease includes an option to extend the lease at the end of the lease term. In cases where it is not reasonably determined to exercise an optional extension of lease term, the relevant benefits for the period covered by the option are not included in the lease liabilities.

The Consolidated Company is a sublease of right-of-use assets by business lease.

2. Other leases

The leasing period of machines and other equipment leased by the Consolidated Company shall be two to six years. In addition, the lease term of some lease contracts of the Consolidated Company is one year, and these leases are short-term subject leases. The Consolidated Company chooses to apply the exemption of relevant right-of-use assets and lease liabilities.

(16) Refund liabilities - current

Dec. 31, 2023 Dec. 31, 2022 Refund liabilities - current $ 420,182 384,044

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

~229~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(17) 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 Consolidated Company’s defined benefit plan. Please refer to Note VI (19).

(18) Operating lease

The Consolidated 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 (10) for details of the investment real estate.

The maturity analysis of lease payments is presented in the following table for the total undiscounted lease payments to be received after the reporting date:

Not more than 1 year 1-2 years Total undiscounted lease payment	Dec. 31, 2023 $ 484 130	Dec. 31, 2022 130 -
	$ 614	130

In year 2023 and 2022, the income tax generated in the investment property from rentals were NT$555 thousand and NT$580 thousand, respectively, and the direct operating expenses (including maintenance) incurred in the investment property from rentals were NT$826 thousand and NT$408 thousand, respectively.

(19) Employee benefits

1. Defined benefit plans

A reconciliation of the present value of the Company's defined benefit obligation to the fair value of plan assets is as follows:

the fair value of plan assets is as follows:
Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability	Dec. 31, 2023 $ 79,676 (36,142)	Dec. 31, 2022 78,993 (37,583)
	$ 43,534	41,410

The Consolidated Company's employee benefit liabilities are as follows:

Paid leave liability	Dec. 31, 2023 $ 30,013	Dec. 31, 2022 27,802

The Company's defined benefit plan is contributed to the Bank of Taiwan's Labor Retirement Reserve Fund. Retirement payments to each employee under the Labor Standards Act are based on the basis of the number of years of service and the average salary for the six months prior to retirement.

~230~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(1) Composition of plan assets

The Company's pension fund under the Labor Standards Act is managed by the Bureau of Labor Funds, Ministry of Labor (hereinafter referred to as the Bureau of Labor Funds). According to the "Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund", the minimum annual earnings to be distributed to the fund shall not be less than the earnings calculated based on the two-year time deposit interest rate of the local bank.

As of the date of this report, the balance of the Bank of Taiwan's Labor Retirement Reserve Fund was $36,412 thousand. For information on the use of the Labor Pension Fund assets, including the fund yield and fund asset allocation, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

(2) Changes in the present value of the defined benefit obligation

The changes in the present value of the Company's defined benefit obligation for fiscal 2023 and 2022 are as follows:

2023 Defined benefit obligation at January 1 $ 78,993 Current service cost and interest 1,485 Remeasurement of net defined benefit liability (asset) 2,583 Benefits planned to be paid (3,385) Defined benefit obligation at December 31 $ 79,676	2023 Defined benefit obligation at January 1 $ 78,993 Current service cost and interest 1,485 Remeasurement of net defined benefit liability (asset) 2,583 Benefits planned to be paid (3,385) Defined benefit obligation at December 31 $ 79,676	2022 78,057 1,128 (192) -
	$ 79,676	78,993

(3) Changes in the fair value of plan assets

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

fiscal 2023 and 2022 are as follows:	fiscal 2023 and 2022 are as follows:
2023 Fair value of plan assets as of January 1 $ 37,583 Interest income 486 Remeasurement of net defined benefit liability (asset) 291 Amount contributed to the plan 1,167 Benefits paid under the plan (3,385) Fair value of plan assets at December 31 $ 36,142		2022 32,837 228 2,598 1,920 -
	$ 36,142	37,583

~231~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(4) Expenses recognized in profit or loss

The expenses recognized in profit or loss in fiscal 2023 and 2022 were as follows:

Current service cost Net interest on net defined benefit liability 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

• (5) Remeasurement of net defined benefit liability (asset) recognized as other

comprehensive income

The remeasurements of net defined benefit liability (asset) recognized as other comprehensive income in fiscal 2023 and 2022 are as follows:

Accumulated balance as of January 1 Recognized in the current period Accumulated balance as of December 31	2023 $ 938 (2,292)	2022 (1,852) 2,790
	$ (1,354)	938

(6) Actuarial assumptions

The significant actuarial assumptions used to determine the present value of the Company's defined benefit obligation at the end of the financial reporting period are as follows:

follows:
Discount rate Future salary increases	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.

~232~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(7) Sensitivity analysis

The effect of changes in key actuarial assumptions on the present value of the

defined benefit obligation as of December 31, 2023 and 2022 are as follows:

December 31, 2023 Discount rate Future salary increases December 31, 2022 Discount rate Future salary increases	Effect on the defined benefit obligation Increase of 0.25% Decrease of 0.25% $ (1,835) 1,899 1,879 (1,825) (1,918) 1,987 1,968 (1,909)
	Increase of 0.25% $ (1,835) 1,879 (1,918) 1,968

The sensitivity analysis above analyzes the effect of changes in a single assumption with other assumptions held constant. In practice, changes in many assumptions may be linked. The sensitivity analysis is consistent with the methodology used to calculate the net pension liability on the balance sheet.

The methodology and assumptions used in preparing the sensitivity analysis are the same as those used in the previous period.

2. Defined contribution plan

As to the defined contribution plan, the Consolidated 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 Consolidated Company will not assume the legal or constructive obligations of paying extra amount.

The pension expense under the defined contribution retirement funds of the Consolidated Company for year 2023 and 2022 were NT$17,427 thousand and NT$16,866 thousand respectively, which have been contributed to the Bureau of Labor Insurance.

In accordance with the pension insurance system established by the government of the People’s Republic of China, the subsidiaries in Mainland China make monthly contributions to employees’ pension insurance based on a certain percentage of their salaries and wages. The monthly pension plan is administered and arranged by the government, and the above-mentioned company has no further obligation other than to make monthly contributions. The related pension expense for 2023 and 2022 were NT$357,922 thousand and NT$351,027 thousand, respectively.

~233~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(19) Income tax

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

2023 2022 Income tax expense for the period Current income tax $ 1,682,633 1,860,954 Tax on unappropriated retained earnings 174,484 70,405 Prior period current income tax adjustment (6,561) (128,480) 1,850,556 1,802,879 Deferred income tax expense Other deferred income tax expense (benefit) (58,803) (21,707) Adjustments from prior years 1,694 (685) Income tax expense $ 1,793,447 1,780,487 A breakdown of the Consolidated Company's income tax expense (benefit) recognized under other comprehensive income is as follows: 2023 2022 Components of other comprehensive income that will not be reclassified to profit or loss: Remeasurements of defined benefit plan $ (458) 558 Components of other comprehensive income that will be reclassified to profit or loss: Exchange differences on translation $ (1,794) 830	2023 $ 1,682,633 174,484 (6,561)	2022 1,860,954 70,405 (128,480)
	1,850,556	1,802,879
	(58,803) 1,694	(21,707) (685)
	$ 1,793,447	1,780,487
	$ (1,794)	830

The relationship adjustment between the Consolidated Company’s income tax expense (benefit) and pre-tax net income for 2023 and 2022 is as follows:

Net profit before tax Income tax based on domestic tax rate Adjustments based on local tax laws Unrecognized deferred tax assets from current taxable losses Recognition of previously unrecognized tax losses Adjustments to current income taxes for prior periods Additional tax levied on unappropriated retained earnings Total	2023 $ 7,520,492	2022 8,188,567
	2,560,937 (921,533) - (15,574) (4,867) 174,484	2,853,679 (1,041,473) 27,041 - (129,165) 70,405
	$ 1,793,447	1,780,487

~234~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

2. Deferred tax assets and liabilities

(1) Unrecognized deferred tax assets

The items not recognized as deferred tax assets of the Consolidated Company are as follows:

Inventory devaluation losses Tax losses	Dec. 31, 2023 $ - 52,747	Dec. 31, 2022 2,886 47,457
	$ 52,747	50,343

In accordance with the Income Tax Act, losses for the previous ten years may be deducted from net income before income tax is assessed. These items are not recognized as deferred tax assets because it is not probable that the Consolidated Company will have sufficient taxable income in the future to utilize the temporary differences.

Domestic subsidiaries, according to the Income Tax Act and approved by the tax authorities, can deduct losses from the previous ten years from the current year's net income for tax assessment purposes. As of December 31, 2023, for taxable losses not yet recognized as deferred tax assets by the Consolidated Company, the deduction periods are as follows:

Ememe Robot Co., Ltd.:

Year of loss 2013 (Approved) 2014 (Approved) 2015 (Approved) 2016 (Approved) 2017 (Approved) 2018 (Approved) 2019 (Approved) 2020 (Approved) 2021 (Approved) 2022 (Declared) 2023 (Estimated)	Losses not yet deducted $ 14,550 6,246 8,951 10,166 6,828 3,237 2,609 629 158 78 15 $ 53,467	Last year to be deducted
		2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

Compertum Microsystems Inc.:

Compertum Microsystems Inc.:
Year of loss 2019 (Approved) 2020 (Approved) 2021 (Approved) 2022 (Declared) 2023 (Estimated)	Losses not yet deducted $ 519 29,317 39,512 45,162 35,411 $ 149,921	Last year to be deducted
		2029 2030 2031 2032 2033

~235~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

GOOD NEWS MEDICAL CO., LTD.:

Year of loss 2020 (Approved) 2021 (Approved) 2022 (Declared) 2023 (Estimated)	Losses not yet deducted $ 1,203 3,743 4,498 7,805 $ 17,249	Last year to be deducted
		2030 2031 2032 2033

Lomites Co., Ltd.:

Lomites Co., Ltd.:
Year of loss 2020 (Approved) 2021 (Approved) 2022 (Declared) 2023 (Estimated)	Losses not yet deducted $ 64 5,623 14,827 22,585 $ 43,099	Last year to be deducted
		2030 2031 2032 2033

(2) Deferred tax assets recognized

Inventory valuation and obsolescence losses Undistributed pension costs Loss on decline in value of fixed assets and idle assets Refund liabilities Unrealized exchange loss Estimated payables Remeasurement of defined benefit plans Taxable losses Exchange differences on translation Derivative valuation losses Lease liabilities Other Deferred tax assets ) Deferred income tax liabilities recognized Unrealized exchange gain Investment income recognized by the equity method Gain recognized in bargain purchase transaction Unrealized gains on financial assets Right-of-use assets Deferred income tax liabilities	Dec. 31, 2023 $ 66,024 203 44 84,037 49,316 45,562 8,886 - 2,736 - 148,902 6,361	Dec. 31, 2022 66,843 237 44 76,809 890 55,234 8,428 527 942 1,693 85,303 165
	$ 412,071	297,115
	Dec. 31, 2023 $ 83,145 522 948 - 142,025	Dec. 31, 2022 2,606 67,787 1,045 1,955 81,040
	$ 226,640	154,433

(3) Deferred income tax liabilities recognized

~236~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

3. Income tax assessment

The profit-seeking enterprise income tax filings of the Company and its domestic subsidiaries—Jiayu Investment Co., Ltd., Ememe Robot Co., Ltd., Compertum Microsystems Inc., GOOD NEWS MEDICAL CO., LTD., Lomites Co., Ltd., Lintes Technology Co., Ltd., and Genie Precision Machine Co., Ltd.—have been approved by the tax authorities up to the fiscal year 2021.

4. Global Minimum Tax

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

The Consolidated 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).

(21) Capital and other equity

As of December 31, 2023 and 2022, the total authorized capital stock of the Company were all NT$1,550,000 thousand with a par value of $10 per share, and the actual amount issued were NT$1,113,298 and NT$1,068,762 thousand respectively.

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 the 2022 fiscal year, the Company issued 1,735 thousand new shares due to the convertible bondholders exercising their conversion rights. Apart from a part of the issued shares that are still being processed due to the relevant legal registration procedures, listed as convertible bond certificates worth $9,536 thousand, the rest were completed in April, June, September, and December of 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.

~237~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

1. Capital reserves

. Capital reserves
The components of the Company’s capital reserve 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	are as follows: 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 Companies Act, capital reserves are required to cover losses first before new shares or cash can be issued in proportion to the shareholders’ original shares. Realized capital reserves referred to in the preceding paragraph include premiums from the issuance of shares in excess of par value and proceeds from gifts received. In accordance with the Regulations Governing the Issuer’s Offerings and Issuance of Marketable Securities, the aggregate amount of capital reserves that may be capitalized each year shall not exceed 10% of the paid-in capital.

2. 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.

~238~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(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.

(3) Earnings 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)”

~239~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

3. Other equity

Exchange differences on translation of foreign operations Balance on January 1, 2023 $ (319,295) Exchange differences arising from the translation of the net assets of foreign operations (449,712) Unrealized losses from financial assets measured at FVTOCI - Changes in ownership interests in subsidiaries - Balance on December 31, 2023 $ (769,007) Balance on January 1, 2022 $ (669,055) Effects of retrospective application of new standards (51) Balances restated as of January 1, 2022 (669,106) Exchange differences arising from the translation of the net assets of foreign operations 349,811 Unrealized losses from financial assets measured at FVTOCI - Balance on December 31, 2022 $ (319,295)	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)
		(13,278) - (6,480)	- - -	(682,384) 349,811 (6,480)
	$ (319,295)	(19,758)	-	(339,053)

(22) Share-based payment

The Consolidated Company has the following share-based payment transactions:

Date of grant Number of grants Granted to Vesting conditions Fair value at the date of grant	Cash capital increase reserved for employee stock options	Cash capital increase reserved for employee stock options	Restricted Stock for Employees
	The Company Lintes Technology	Lerain Technology
			Lintes Technology
	2023.03.08 2022.01.31 350 thousand shares 431 thousand shares Current employees of the Consolidated Company Current employees of the subsidiary Immediate vesting Immediate vesting $ 161.00 $ 25.02	2022.03.29 122 thousand shares Current employees of the subsidiary Immediate vesting $ 0.30	2023.08.25 358 thousand shares Eligible employees of subsidiaries From the grant date to 6, 18, and 30 months of continuous employment, and upon achieving individual performance metrics or corporate operational goals set by the company: $ 69.61

~240~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

1. Cash capital increase reserved for employee subscription

The Company’s cost of employee compensation based on the shares generated from the cash capital increase retained for employee stock options was $52,309 thousand recognized in fiscal 2023.

In 2022, the subsidiary, Lintes Technology Co., Ltd., recognized a cost of $10,789 thousand for share-based employee compensation arising from the cash capital increase reserved for employees to subscribe for shares.

The costs recognized by the subsidiary, Lerain Technology Co., Ltd., for share-based employee compensation arising from the cash capital increase reserved for employees to subscribe for shares in 2022 was $36 thousand.

2. Restricted stock for employees

On June 15, 2023, the shareholder meeting of Lintes Technology Co., Ltd. resolved to issue restricted stock for employees, with August 25, 2023, as the base date for the capital increase (grant date). A total of 358 thousand shares were issued. The rights to the shares allocated to employees before fulfilling the vesting conditions are restricted, including prohibitions against selling, pledging, transferring, gifting to others, creating any encumbrance, or disposing of in any other manner. Other rights include, but are not limited to, entitlement to dividends, bonuses, statutory reserves, and capital reserves rights, as well as rights to subscribe to new shares in a cash capital increase, identical to those of the company’s already issued ordinary shares.

(23) Earnings per share

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

Consolidated 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 bonuses 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

~241~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(24) Revenue from contracts with customers

1. Please refer to Note XIV (3) and (4) for the disclosure of disaggregation of revenue for the major products and major regional markets.

2. Balance of contract

ance of contract
Contract liabilities	Dec. 31, 2023	Dec. 31, 2022 54,427	Jan. 1, 2022 97,494
	$ 30,617

The beginning balances of contract liabilities as of January 1, 2023 and 2022 were recognized as income of NT$45,847 thousand dollars and NT$80,636 thousand dollars respectively.

(25) Non-operating revenue/expense

1. Interest income

The breakdown of interest income of the Consolidated Company is as follows:

Interest on bank deposits	2023 $ 325,532	2022 46,801

2. Other income

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

Dividend income Income from molding Income from compensation Income from rentals Income from subsidies Others	2023 $ 4,003 150,533 1,451 34,175 68,668 153,457 $ 412,287	2022 5,535 170,481 5,189 35,076 59,899 91,522
		367,702

3. Other gains and losses

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

Foreign exchange gain Net profit (loss) from financial assets (liabilities) measured at FVTPL: Derivatives: Forward foreign exchange contracts Embedded derivative Financial products Non-derivatives Stock	2023	2022
	$ 20,150 - 1,468 - 9,547	613,970 (8,390) (323) 1,296 (6,884)

~242~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Private equity funds		(289)	-
Net gain from bond buyback		-	35
Loss from the disposal of property, plant and equipment		(35,805)	(28,364)
Lease modification interest		607	146
Impairment losses on non-financial assets		(37,320)	-
Other		(33,256)	(11,199)
Total	$	(74,898)	560,287

4. Financial costs

The details of the financial costs of the Consolidated Company are as follows:

Bank loans Lease liabilities Conversion of corporate bonds	2023	2022 22,923 22,673 9,513
	$ 22,910 34,122 14,086
	$ 71,118	55,109

(26) 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 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 consolidated financial reports for 2023 and 2022.

~243~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(27) Information on financial instruments and fair value

1. 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 $23,246,086 thousand and $18,178,606 thousand as of December 31, 2023 and 2022 respectively.

(2) Credit risk concentration risk

In order to reduce the credit risk of accounts receivable, the Consolidated 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 Consolidated Company had 7 and 5 different customers, respectively with accounts receivable balances exceeding 5% of total accounts receivable for a single customer. The Consolidated 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 Consolidated 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 Consolidated Company’s notes and accounts receivable are analyzed as follows:

Not past due 1-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due More than 271 days past due		Dec. 31, 2023		Expected credit loss in the duration of provision 77 267 3,275 52 196 3,612
	Book value of notes and accounts receivable $ 9,310,187 279,125 24,870 236 392 3,642	Weighted average expected credit loss rate
		0.00% 0.10% 13.17% 22.03% 50.00% 99.18%
	$ 9,618,452			7,479

~244~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Not past due 1-60 days past due 61-120 days past due 121-180 days past due 181-270 days past due More than 271 days past due		Dec. 31, 2022		Expected credit loss in the duration of provision 369 1,119 6,380 6,222 466 10,689
	Book value of notes and accounts receivable	Weighted average expected credit loss rate 0.00% 0.38% 8.94% 38.21% 49.79% 98.72%
	$ 10,343,048 293,326 71,344 16,285 936 10,828
	$ 10,735,767			25,245

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

Opening balance Acquired through business combinations Recognition of impairment losses (reversal gains) Write-offs for the period Foreign currency translation (losses) gains Closing balance	2023
	$ 7,479 25,245

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.

December 31, 2023 Non-derivative financial liabilities Short-term loans Bonds payable Notes payable Accounts payable Other payables Lease liabilities December 31, 2022 Non-derivative financial liabilities Short-term loans Bonds payable Long-term loans(including long-term loans – current portion) Notes payable Accounts payable Other payables Lease liabilities	Book value $ 1,580,000 934,155 5,209 1,822,819 1,859,015 616,537	Cash flow from the contract 1,594,090 966,800 5,209 1,822,819 1,859,015 758,012	Within 6 months 591,019 - 5,209 1,822,819 1,859,015 82,043	6 12 months 1,003,071 - - - - 78,590	1-2years - 84,900 - - - 138,985	2-5years - 881,900 - - - 227,871	More than 5 years - - - - - 230,523
	$ 6,817,735	7,005,945	4,360,105	1,081,661	223,885	1,109,771	230,523
	$ 1,906,775 132,449 165,630 8,504 2,351,503 1,937,095 370,661	1,920,045 135,600 187,005 8,504 2,351,503 1,937,095 412,713	917,667 - 9,890 8,504 2,351,503 1,937,095 69,614	1,002,378 - 9,032 - - - 58,102	- - 17,011 - - - 103,420	- 135,600 37,288 - - - 181,577	- - 113,784 - - - -
	$ 6,872,617	6,952,465	5,294,273	1,069,512	120,431	354,465	113,784

~245~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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

1. Market risk—exchange rate risk

2. (1) Exposure to exchange rate risk

The Consolidated Company’s financial assets and liabilities exposed to significant foreign currency exchange rate risk are as follows:

	Financial assets Currency USD RMB HKD JPY EUR INR VND Financial liabilities Currency USD RMB JPY EUR Financial assets Currency USD RMB HKD JPY EUR INR Financial liabilities Currency USD RMB EUR MOP		Dec. 31, 2023
		$
		$
		$ $	Foreign currency (Note) 642,058 236,085 45 305,602 1,160 4 267,351 1,173 272 8

~246~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Note: The foreign currencies denominated in the non-functional currencies of the consolidated entities include items that have been eliminated in the consolidated financial statements for inter-group transactions.

Due to the variety of functional currencies of the Consolidated Company, information on exchange gains and losses on monetary items is presented on a consolidated basis. Foreign currency exchange gains and losses (including realized and unrealized) amounted to a gain of $20,150 thousand and $613,970 thousand in fiscal 2023 and 2022, respectively.

(2) Sensitivity analysis

The Consolidated Company's exchange rate risk arises mainly from cash and cash equivalents denominated in foreign currencies, financial assets at FVTPL, accounts receivable and other receivables, short-term loans, accounts payable and other payables, which generate foreign currency exchange gains or losses upon translation. As of December 31, 2023 and 2022, when NTD depreciates or appreciates by 1% against the foreign currencies held by the Consolidated Company, with all other factors held constant, net income after tax would increase or decrease by $92,191 thousand and $101,146 thousand for year 2023 and 2022, respectively. The same basis was used for the analysis of both periods.

4. Market risk—changes in interest rates

The interest rate risk of the Consolidated Company mainly comes from the bank deposit and loan of floating rate, so the interest rate change will cause the effective interest rate of bank deposit and loan to change accordingly, and the future cash flow will fluctuate.

The following sensitivity analysis is based on the risk of interest rate shocks reported by financial instruments on the date of coverage. For floating rate liabilities, the analysis is based on the assumption that the reported amount of daily outstanding liabilities is current throughout the year. The rate of change used by the Consolidated Company in reporting interest rates to the main management is 1% up or down, which represents the management’s assessment of the reasonable range of possible interest rate changes.

The Consolidated Company’ financial assets with variable interest rates as of December 31, 2023 and 2022 were NT$4,086,086 thousand and NT$3,744,810 thousand, respectively, and its financial liabilities were NT$0 thousand and NT$242,405 thousand, respectively. If interest rates had increased or decreased by 1%, the Consolidated Company’ net income would have increased or decreased by NT$32,689 thousand and NT$28,019 thousand for year 2023 and 2022, respectively, with all other variables held constant.

~247~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

5. Market risk—fair value

(1) Fair value and carrying amount

The management of the Consolidated Company believes that non-derivative short-term financial instruments should be estimated at their fair value based on their book value on the balance sheet, and that their book value should be a reasonable basis for the estimated fair value because of the near expiry date of such commodities. This method is applied to cash and equivalent cash, notes receivable and payable, accounts receivable and payable, other receivables and payables, deposit margin and borrowings.

In addition to the above financial instruments, the fair value and book value information of the remaining financial instruments, investment properties and corporate bonds payable of the Consolidated Company on the financial 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 Bonds payable	Dec. 31, 2023 Book value Fairvalue $ 87,700 87,700 79,979 79,979 Dec. 31, 2023 Book value Fair value $ 344,997 410,733 934,155 934,870	Dec. 31, 2022 Book value Fairvalue 79,007 79,007 83,520 83,520 Dec. 31, 2022 Book value Fair value 97,817 162,684 132,449 131,573
	Book value $ 344,997 934,155	Book value 97,817 132,449

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

• A. When financial assets are quoted publicly in an active market, this market price is the fair value. When market prices are not available, estimates are made by reference to quoted counterparties or using valuation techniques. The estimates and assumptions used are consistent with the information used by market participants as estimates and assumptions in pricing financial instruments.

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

~248~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(3) Fair value hierarchy

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

• A. Level 1: Publicly quoted prices (unadjusted) in an active market for identical assets or liabilities.

• B. Level 2: Input parameters for an asset or liability are observable either directly (i.e., prices) or indirectly (i.e., derived from prices), except for publicly quoted prices included in Level 1.

• C. Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable parameters).

December 31, 2023 Measured at fair value: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value: Investment property Bonds payable December 31, 2022 Measured at fair value: Financial assets measured at FVTPL Financial assets measured at FVTOCI Not measured at fair value: Investment property Bonds payable	Level 1 $ 53,290 78,835		Level 2 7,307 -		Level 3 27,103 1,144		Total 87,700 79,979 167,679 410,733 934,870 Total 79,007 83,520 162,527 162,684 131,573
	$ 132,125		7,307		28,247
	$ -		-		410,733
	$ -		-		934,870
	Level 1 $ 62,313 78,925		Level 2 16,531 -		Level 3 163 4,595
	$ 141,238		16,531		4,758
	$ -		-		162,684
	$ -		-		131,573

(4) Transfer between the Level 1 and the Level 2

The Consolidated Company does not have any transfers between 2023 and 2022.

~249~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(5) Statement of changes in financial assets (liabilities) classified as Level 3 at fair value

Name								2023						Unit: NT$1,000 Decrease Sales, disposal or settlement Closing balance (439) 27,103 (7,433) 1,144 (7,872) 28,247 Decrease Sales, disposal or settlement Closing balance (65,421) 163 (1,422) 4,595 (66,843) 4,758 and losses” and which relate to 2022 253 (5,295)	Unit: NT$1,000 Decrease Sales, disposal or settlement Closing balance (439) 27,103 (7,433) 1,144 (7,872) 28,247 Decrease Sales, disposal or settlement Closing balance (65,421) 163 (1,422) 4,595 (66,843) 4,758 and losses” and which relate to 2022 253 (5,295)
	$	Opening balance 163 4,595		Total profit		or loss Recognized in other comprehensi ve income - 3,982		Incr	ea	s	e ransferred to level 3 - -			Decrease Sales, disposal or settlement (439) (7,433)
				Recognized in profit or loss 1,179 -				Issuance or purchase 26,200 -		T
Financial assets measured at FVTPL Financial assets measured at FVTOCI Name
	$	4,758		1,179		3,982		26,200			-			(7,872)
								2022
	$	Opening balance 65,757 10,956		Total profit		or loss		Incr	ea	s	e ransferred to level 3 - -			Decrease Sales, disposal or settlement (65,421) (1,422)
				Recognized in profit or loss (323) -		Recognized in other comprehensi ve income - (4,939)		Issuance or purchase 150 -		T
	$	76,713		(323)		(4,939)		150			-			(66,843)

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

The Consolidated Company’s financial assets primarily classified at fair value through profit or loss as Level 3 include derivative financial instruments, equity securities investments, private equity fund investments, and financial assets at fair value through other comprehensive income—equity securities investments. Quantitative information on significant unobservable inputs is as follows:

~250~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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, and December 31, 2022, were 36.41%~41.78% and 41.43%, respectively ‧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:

~251~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 Embedded derivatives - right of redemption	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 - - - - 1 (2) 1 (2) - - - -
			Favorable changes	Unfavorab le changes	Favorable changes
	Volatility Stock price Net market value multiplier Lack of marketability discount Volatility Stock price	5% 10% 7% 7% 5% 10%	$ 385 1,664 - - 68 81	(1,013) (1,055) - - (68) (54)	- - 1 1 - -

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.

(28) Financial risk management

1. The Consolidated 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 Consolidated Company’s risk information for each of these risks and the Consolidated Company’s objectives, policies and procedures for measuring and managing risk. For further quantitative disclosures, please refer to the respective notes to the consolidated financial statements.

2. Risk management structure

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

~252~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

The Consolidated Company’s risk management policy is designed to identify and analyze the risks faced by the Consolidated Company, to set appropriate risk limits and controls, and to monitor compliance with the risks and risk limits. The Consolidated 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 Consolidated Company oversees how management monitors compliance with the Consolidated Company’s risk management policies and procedures and reviews the appropriateness of the Consolidated Company’s risk management framework in relation to the risks it is exposed to. Internal auditors assist the Consolidated 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.

3. Credit risk

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

(1) Accounts receivable and other receivables

The Consolidated Company’s credit risk exposures are primarily depended on each customer’s individual circumstances. However, management also considers statistical information about the Consolidated Company’s customer base, including the risk of default in the customer’s industry and country, as these factors may affect credit risk. Approximately 73% and 72% of the Consolidated 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 Consolidated Company has established a credit policy whereby the Consolidated 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 Consolidated 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 Consolidated Company maintains a Provisions account to reflect estimates of losses on accounts receivable and other receivables.

~253~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(2) Use of funds

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

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 Consolidated Company’s finance department. Since the Consolidated 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 Consolidated 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 Consolidated Company’s approach to manage liquidity risk is to ensure that the Consolidated 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 Consolidated Company’s reputation. In addition, the Consolidated Company has entered into unused borrowing lines totaling $3,403,056 thousands and $3,641,250 thousand, repectively as of December 31, 2023 and 2022 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 Consolidated Company’s revenue or the value of financial instruments held by the Consolidated 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 Consolidated 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 Consolidated 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 each Group Enterprise’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 Consolidated Company reduce, but still not completely eliminate, the impact of changes in foreign currency exchange rates.

~254~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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

(2) Interest rate risk

The Consolidated 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.

(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:

Price of securities on reporting date Up by 1% Down by 1%
	Other comprehensiv e income after tax $ 800						Other comprehensi ve income after tax 835
	$ (800)			(606)					(835)		(788)

(29) 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 Consolidated 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 Consolidated Company may adjust dividends paid to shareholders, reduce capital to refund shareholders, issue new shares or sell assets to settle liabilities.

The Consolidated 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:

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 $ 8,571,397 (13,132,491)			Dec. 31, 2022 8,868,067 (7,090,304) 1,777,763 24,512,876 6.76%
	$ (4,561,094)
	$ 29,381,002
		(18.38)%

~255~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Changes in the debt-to-capital ratio as of December 31, 2023, were mainly due to operational profits, increased cash levels, and decreased net debt.

(30) Investment and fund-raising activities for non-cash transactions

The information on non-cash investment and financing activities of the consolidated company for the 2023 and 2022 fiscal years is as follows:

1. For details on the conversion of convertible corporate bonds into common shares, please refer to Note VI (14).

2. For details on obtaining right-of-use assets through leasing, please refer to Note VI (9) and (15).

The adjustments of liabilities arising from financing activities of the consolidated company in 2023 and 2022 are as follows:

Short-term loans Bonds payable Long-term loans (including long-term loans – current portion) Lease liabilities Total liabilities from financing activities	Jan. 1, 2023 Cash flow $ 1,906,775 (317,432) 132,449 1,079,877 165,630 (165,630) 370,661 (284,009)	Non-cash changes Other Changes in exchange rate Changes in fair value Dec. 31, 2023 (10,000) 657 - 1,580,000 (278,171) - - 934,155 - - - - 540,337 (10,452) - 616,537
	$ 2,575,515 312,806	252,166 (9,795) - 3,130,692

Short-term loans Bonds payable Long-term loans (including long-term loans – current portion) Lease liabilities Total liabilities from financing activities	Jan. 1, 2022 Cash flow $ 1,142,178 714,342 911,927 343,468 44,405 121,225 506,589 (260,133)	Non-cash changes Other Changes in exchange rate Changes in fair value Dec. 31, 2022 - 50,255 - 1,906,775 (1,122,946) - - 132,449 - - - 165,630 118,081 6,124 - 370,661
	$ 2,605,099 918,902	(1,004,865) 56,379 - 2,575,515

VII. Related Party Transactions

• (1) Parent company and ultimate controller: The Company is the ultimate controller of the Consolidated Company and the Consolidated 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 consolidated financial statements are as follows:

Name of related parties Relationship with the Company LeRain Technology Co., Ltd. An associate of the Consolidated Company Key management personnel Including the directors, managers and their families and spouses

~256~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

Note: Transactions with related parties are disclosed only for the period with associates.

(3) Material transactions with the related parties

1. Amounts payable to related parties

The details of the Consolidated Company’s payables to related parties are as follows:

Accounting Item	Related Party Category	Dec. 31, 2023 $ 49	Dec. 31, 2022 -
Accounts payable	Associates

2. Purchases

The amount of purchases from related parties by the Consolidated Company is as follows:

Associate	2023 $ 91	2022 -

The purchase prices from related parties are not significantly different from those from general suppliers. The payment terms are three months, which are not significantly different from those of general suppliers.

3. Non-operating income

Associate	2023 $ 56	2022 -

Mainly rental income from parking spaces.

4. Leases

The Consolidated Company leases a warehouse from key management personnel and signed a one-year lease agreement based on the rental rates of nearby areas, with a total contract value of NT$60 thousand. Interest expenses recognized for 2023 and 2022 were NT$1 thousand each, with lease liabilities as of December 31, 2023, and 2022 amounting to NT$59 thousand and NT$0 thousand, respectively.

(4) Major management personnel transactions

Related compensation includes:

Short-term employee benefits Post-employment benefits Share-based payment	2023 $ 128,611 1,313 8,766	2022 211,794 1,328 430 213,552
	$ 138,690

For details on share-based payments, please refer to note 6 (22).

~257~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

VIII. Pledged Assets

The carrying value of the assets pledged as collateral by the Consolidated Company was as follows:

Name of asset Property, plant and equipment	Dec. 31, 2023 $ 204,260	Dec. 31, 2022 246,448

• IX. Significant Contingent Liabilities and Unrecognized Contractual Commitments

• (1) Significant unrecognised contract commitments:

The Consolidated Company's significant construction contracts signed but not yet paid for as of December 31, 2023, are as follows:

for as of December 31, 2023, are as follows:
	Unit: NT$1,000	in foreign currency
		Dec. 31, 2023
Significant construction contract amounts in:
RMB		$	41,408
VND			17,340,908
NTD			10,131

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

Guaranteed notes	Dec. 31, 2023 $ 2,887,704	Dec. 31, 2022 5,020,405

• X. Significant Disaster Loss: None.

• XI. Significant Post-Period Events:

• (1) On February 26, 2024, the board of directors of Lintes Technology Co., Ltd. resolved:

  1. To meet the operational needs of Lintes Thailand, a wholly-owned subsidiary, it is proposed to increase its capital by up to THB 155,000 thousand (approximately NT$141,000 thousand), with a par value of THB 10 per share. The funds will be transferred in installments according to the financial needs of Lintes Thailand.

  2. Some employees allocated restricted stock under the employee stock option plan did not meet the vesting conditions. As a result, Lintes Technology Co., Ltd. repurchased these restricted stocks at the issuance price. Besides the share capital of NT$55 thousand already recovered by December 31, 2023, an additional NT$11 thousand in share capital was recovered prior to this board meeting. The board resolved to cancel the aforementioned issued share capital of NT$66 thousand (i.e.,

~258~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

6,600 shares), reducing the total issued shares from 62,642,311 shares to 62,635,711 shares. The record date for the capital reduction is set for March 6, 2024.

~259~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

• (2) To raise funds for constructing the Longtan factory building, purchasing machinery for the Longtan factory, and making long-term equity investments in Lintes Thailand, Lintes Technology Co., Ltd., resolved on November 8, 2023, to issue the second series of domestic unsecured convertible corporate bonds. These were approved by the competent authority on December 20, 2023. The unsecured convertible bonds, totaling 3,000 units with a face value of NT$100 thousand each, have a coupon rate of 0% and a term of three years. The funds totaling NT$344,232 thousand were fully collected on January 17, 2024.

XII. Others

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

below:
Function Nature	2023			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	3,878,365 590,300 4,922 - 192,162 1,714,558 2,302	1,934,546 186,402 15,467 6,695 112,828 619,075 55,653	5,812,911 776,702 20,389 6,695 304,990 2,333,633 57,955	4,960,411 619,006 3,157 - 237,096 1,679,313 2,254	1,820,365 159,252 14,609 8,817 150,098 533,643 53,457	6,780,776 778,258 17,766 8,817 387,194 2,212,956 55,711

(2) Seasonality of operations:

The Company’s operations are subject to seasonal fluctuations due to the downstream computer industry.

~260~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 major transactions for year 2022:

1. Capital lending to others:

Unit: NT$1,000

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	Collateral	Lending limit for single party (Note 2)	Overall lending limit (Note 2)
													Name	Value
1	Lintes Technology Co.,Ltd.	Genie Precision Machine Co., Ltd.	Other receivables - related parties	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.

2. Endorsement:

Unit: NT$1,000/1,000 in foreign currency

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	The Company " 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	Y " N Y	N " " "	N Y N "

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.

~261~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(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.

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

Unit: NT$ 1,000

Holding company	Category and name of security	Relationship with the issuer of the security	Accounting item	End of the period	End of the period	End of the period	End of the period	Maximum shareholding or capitalization in theperiod	Remark
				Shares	Book value	Shareholding ratio	Fair value
Lotes Co., Ltd. " " " Zhaxi 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	0.49% - % 4.35% 12.10% 1.31% 2.91% 4.10% 17.33% 5.33% 0.34% 0.60%	Note Note

Note: All of them were recognized in losses.

1. 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$1,000/1,000 in foreign currency

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 the equity method "	Lotes Viet Nam Company Limited Lintes Technology (Thailand) Co., Ltd	Note2 Note2	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.

~262~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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

paid-in capital:	paid-in capital:	paid-in capital:	paid-in capital:	paid-in capital:	paid-in capital:	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	Relation	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.

1. Disposal of real property amounting to NT$300 million or 20% or more of paid-in

2. capital: None.

3. 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. " " " " " 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 " " " " " " " " " " Subsidiary The surrogate parent company are the same parent company " The surrogate parent company are the same parent company " " "	Net sales Net purchases Net sales Net purchases " Net sales Net purchases Net sales Net purchases Net sales Net purchases " " Net sales " Net sales " Net sales Net purchases Net sales "	1,316,107 1,386,087 9,413,378 6,196,311 1,015,488 137,972 6,317,936 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 %	月結90 天 " " " " " " " " " " " " " " 月結90 天 " " " "	- - - - - - - - - - - - - - - - - - - - -	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%

~263~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

1. Amounts due from related parties amounting to at least NT$100 million or 20% of

paid-in capital:

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

9. Engagement in derivative transactions: None.

~264~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

10. Business relationships and material transactions between parent and subsidiaries: Business relationships and significant intercompany transactions in 2023

Unit: NT$ 1,000

				Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
No.	Name	Transaction with	Relationship	Transaction in 2023
				Subject	Amount	Term	Operating revenue Accounting for total assets
0 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 2 2 3 3 3 3 3 3 3 3 3 3 4 4 5 5 5 5 5 6 6 6 6 7 8	The Company " " " Lotes Guangzhou Co., Ltd. " " " " " " " " " " " Lotes Suzhou Co., Ltd. " REKA Technology Co., Ltd. " " " " " " " " " Lintes Technology (Suzhou) Co., Ltd. " Lotes Zhongshan Co., Ltd. " " " " Guangzhou Leside Technology Co., Ltd. " " " Zongka Technology (Shenzhen) Co., Ltd. Lotes Hengnan Co., Ltd.	Xincheng Development Co., Ltd. " REKA Technology Co., Ltd. " REKA Technology Co., Ltd. " " " Lotes Zhongshan Co., Ltd. " " " " Lotes Hengnan Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd. Xincheng Development Co., Ltd. " Lotes Hengnan Co., Ltd. " " Lotes Zhongshan Co., Ltd. " " Guangzhou Leside Technology Co., Ltd. " Good Hope Investments Limited Zhongshan Huixing Electronics Co., Ltd. Lintes Technology Co., Ltd. " Lotes Hengnan Co., Ltd. " Guangzhou Leside Technology Co., Ltd. " Zhongshan Huixing Electronics Co., Ltd. Shenzhen DeYi Automation Equipment Co., Ltd. " Zongka Technology (Shenzhen) Co., Ltd. " REKA Technology Co., Ltd. Zongka Technology (Shenzhen) Co., Ltd.	1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3	Net purchases Accounts payable Net purchases Accounts payable Sales revenue Purchases for the period Accounts receivable Accounts payable Accounts payable Other receivables Sales of fixed asset Purchases for the period Sales revenue Purchases for the period Purchases for the period Sales revenue Sales revenue Accounts receivable Purchases for the period Sales revenue Accounts payable Purchases for the period Accounts payable Accounts receivable Sales revenue Accounts receivable Other payables Accounts receivable Sales revenue Accounts receivable Purchases for the period Accounts payable Sales revenue Accounts receivable Accounts receivable Sales revenue Accounts receivable Sales revenue Accounts receivable Sales revenue Sales revenue	1,316,107 211,845 9,413,378 3,499,107 6,196,331 766,171 2,235,650 273,713 307,353 673,231 155,016 612,492 146,863 238,052 333,391 138,369 1,386,087 236,004 1,015,488 137,972 162,900 6,317,936 1,602,945 484,934 1,521,821 736,376 949,431 159,096 1,359,338 521,489 363,754 104,324 441,350 236,064 145,838 877,230 411,039 707,026 285,299 200,420 132,314	Same as general transactions " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " "	5.38% 0.56% 38.45% 9.22% 25.31% 3.13% 5.89% 0.72% 0.81% 1.77% 0.41% 2.50% 0.60% 0.97% 1.36% 0.57% 5.66% 0.62% 4.15% 0.56% 0.43% 25.80% 4.22% 1.28% 6.22% 1.94% 2.50% 0.42% 5.55% 1.37% 1.49% 0.27% 1.80% 0.62% 0.38% 3.58% 1.08% 2.89% 0.75% 0.82% 0.54%

Note 1: The number should be filled in as follows:

1. 0 refer to parent company

2. Subsidiaries are numbered by company, starting with the Arabic numeral 1.

Note 2: The type of relationship with the counterparty is indicated below:

1. Parent company to subsidiaries

2. Subsidiaries to parent company

3. Subsidiaries to subsidiaries

~265~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(2) Information on Reinvestment Business:

Information on the Company’s investees in 2023was as follows (excluding investees in China):

Unit: NT$ 1,000

Name of the company investing	Name of investee company	Location	Main business	Initial investment amount (Note 1)	Initial investment amount (Note 1)	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Shares held at the end of the fiscal period	Maximum shareholding or capitalization in the period	Gain/loss of investee company in the fiscal period	Gain/loss in the investment recognized in the fiscal period	Remarks
				End of this period	End of the previous year	Shares	Percentage	Book value
The Company " " " " " " " " " " Lotes Investment Ltd. Good Hope Investments Limited " Guansi Development Co., Ltd. Zhaxi Investment Co., Ltd. Jiayu Investment Co., Ltd. " " " Good News Medical Co., Ltd. Lintes Technology Co., Ltd. Lintes Technology Co., Ltd. " " " Jilong 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 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.	Samoa " " Anguilla Taiwan America Germany Taiwan " " Vietnam Hong Kong Samoa Hong Kong " " Taiwan " " " British Virgin Islands " Taiwan " Samoa Thailand Samoa	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 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	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 69,600 60,866 6,360 616,859 1,013 164,833 20,279 5,471 151,990 348,318 151,990	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 69,600 60,866 6,360 616,919 - 164,833 20,279 5,471 152,015 57,709 152,015	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 6,960,000 4,331,380 636,000 31,075,140 33,000 14,671,000 1,443,135 547,059 4,950,000 38,600,000 4,950,000	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% 94.37% 31.78% 25.44% 49.61% 100.00% 60.00% 10.59% 1.82% 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 (8,184) 9,656 1,941 1,434,537 1,037 180,123 3,217 3,530 547,774 344,599 547,774	100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 15.74% 99.92% 21.01% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 94.37% 31.78% 25.44% 50.24% - % 60.00% 10.59% 1.82% 100.00% 100.00% 100.00%	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 (15) (35,411) (7,805) 396,730 12 (52,241) (35,411) 6,475 81,966 (3,216) 81,966	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 (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 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.

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Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(3) Investment in China:

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

other related information:	other related information:	other related information:	other related information:	other related information:
					Unit: NT$1,000
Name of investee company in Mainland China	Mainbusiness	Paid-in capital (Note 3)	Investment method (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the fiscal period (Note 3)	Amount remitted or recovered		Accumulated investment amount remitted from Taiwan at the end of the fiscal period (Note 3)	Gain/loss of investee company in the fiscal period	Shareholding 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	Amount remitted or recovered
					Remitted	Recovered
Lotes Guangzhou Co., Ltd. Lotes Suzhou Co., Ltd. Zongka Technolog y (Shenzhen) Co., Ltd. Lotes Hengnan Co., Ltd. Lintes Technolog y (Suzhou) Co., Ltd. Shenzhen DeYi Automatio n Equipment Co., Ltd. Lotes Zhongshan Co., Ltd. Zhongshan Dezhi Metal Surface Treatment Co., Ltd. Hengnan Deyi Property Developme nt Co., Ltd. Zhongshan Jinmeida Metal Surface Treatment Co., Ltd. Guangzhou Dezhi Technolog y Co., Ltd. Zhongshan DeZhi Real Estate Developme nt Co., Ltd. Guangzhou Leside Technolog y Co., Ltd. Chongqing Fuxinrui Electronic Technolog y Co., Ltd. ZhongShan HuiXing Electronics Co., Ltd. Ningbo Huili Electronic Technolog y Co., Ltd. Guangzhou Jiashimei 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%	100.00% 100.00% 100.00% 100.00% 50.24% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 51.00% 31.65% 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	- - - - - - - - - - - - - - - - -

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Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

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 thousand	$1,559,749 thousand	$16,663,835 thousand
Lintes Technology Co., Ltd.	$151,990 thousand	$151,990 thousand	$1,735,039 thousand
GOOD NEWS MEDICAL CO., LTD.	$1,013 thousand	Note 2	$4,579 thousand

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.

~268~

Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(4) Information on Major Shareholders:

mation on Major Shareholders:
Shares **Name of Major Shareholder **	Shares held	Shareholding %
Chin-Ling Investment Co., Ltd.	10,956,237	9.82%
Jiaming Investment 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

(1) General information

The Company’s main business is the trading of various hardware and tool parts, the manufacturing, processing and trading of various terminals and their finished connectors, the import and export trade of the preceding items, and the agency of the preceding items related to domestic and foreign manufacturers’ products in the tender quotation and distribution business.

• (2) Information on reportable segment profit or loss, assets, liabilities and their measurement basis and reconciliation

The Consolidated Company’s major decisions are based on the performance appraisal and resource allocation by the production regions. After analysis, the two regions meet the conditions of consolidation into a single operating segment, therefore the Consolidated Company as a whole is a single operating segment, and the information of segment profit or loss, segment assets and segment liabilities are consistent with the financial statements.

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Notes to the Consolidated Financial Statements of Lotes Co., Ltd. and Subsidiaries

(3) Product and labor provision information

The Consolidated Company’s revenue information from external customers is as

follows:

Product and labor	2023 $ 7,139,280 6,495,604 3,273,846 3,224,559 2,298,452 1,325,145 726,577	2022 7,211,569 8,145,108 3,565,682 3,487,379 2,961,513 931,868 796,015 27,099,134
DT Server NB Strategic Projects LINTES(High Speed Cable) Automotive Other Total
	$ 24,483,463

(4) Geographical information

The geographical information of the consolidated company is as follows, categorized based on the geographic location of the customers.

Area Revenue from external customers: Taiwan Mainland China Other Total Area Non-current assets Taiwan Mainland China Other	2023 $ 2,902,628 17,890,444 3,690,391	2022 4,182,196 19,633,031 3,283,907 27,099,134 Dec. 31, 2022 1,464,157 8,365,737 1,079,935 10,909,829
	$ 24,483,463
	Dec. 31, 2023 $ 1,295,998 7,945,559 2,035,392 $ 11,276,949

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VII. Review Analysis of Financial Position and Operating Performance and Risk Issues

1. Financial position

Unit: NT$ thousand

Year Item	2021	2023	Difference	Difference
			Amount	%
Current assets	22,090,479	26,074,754	3,984,275	18.04%
Property, plant and equipment	8,871,880	9,129,914	258,034	2.91%
Intangible assets	182,069	150,113	-31,956	-17.55% )
Other assets	775,192	373,212	-401,980	-51.86% )
Total assets	33,295,640	37,952,399	4,656,759	13.99%
Current liabilities	8,097,597	6,854,344	-1,243,253	-15.35%
Non-current liabilities	770,470	1,717,053	946,583	122.86%
Total liabilities	8,787,027	8,571,397	-215,630	-2.45%
Share capital	1,068,762	1,114,721	45,959	4.30%－
Capital reserves	6,307,022	8,896,393	2,589,371	41.06%
Retained earnings	15,761,019	18,552,928	2,791,909	17.71%
Other equity	-339,030	-790,983	-451,953	133.31%
Equityto theparent company	22,807,309	27,773,059	4,965,750	21.77%
Non-control equity	1,701,304	1,607,934	-93,370	-5.49%
Total of equity	24,508,613	29,381,002	4,872,389	19.88%
Main causes and effects of changes of more than 20% and amounting to NT$10 million: 1.Other assets: Other assets decreased, primarily due to a reduction in prepaid equipment and engineering payments. 2.Non-current liabilities: Mainly due to the issuance of the Company’s second convertible bonds in 2023. 3.Capital surplus: Primarily due to the premium on shares issued from the cash capital increase in 2023. 4.Other equity: Changes in foreign operating institutions' cumulative translation adjustments due to exchange rate fluctuations.

~271~

2. Operating performance

• (1) Comparative analysis table of operating performance

Unit: NT$ thousand

Year Item	2022	2023	Difference	Difference
			Amount	%
Net operating revenue	27,099,134	24,483,463	-2,615,671	-9.65%
Operating cost	15,161,454	13,002,401	-2,159,053	-14.24%
Gross profit	11,937,680	11,481,062	-456,618	-3.83%
Operating expense	4,668,794	4,535,113	-133,681	-2.86%
Operating profit	7,268,886	6,945,949	-322,937	-4.44%
Non-operating income/expenses	919,681	574,544	-345,137	-37.53%
Net income before tax for continuingoperations	8,188,567	7,520,493	-668,074	-8.16%
Income tax (expense) benefit	-1,782,155	-1,793,447	-11,292	0.63%
Net profit for the period	6,406,412	5,727,046	-679,366	-10.60%
Other comprehensive income	345,772	-316,952	-662,724	-191.67%
Total comprehensive income	6,752,184	5,410,094	-1,342,090	-19.88%
Net income attributed to owners of theparent company	6,254,263	5,593,032	-661,231	-10.57%
Net income attributed to non-controllinginterest	153,149	134,014	-19,135	-12.49%
EPS	58.7	50.65	-8	-13.71%
Main causes and effects of changes of more than 20% and amounting to NT$10 million: 1.Non-operating income and expenses: Primarily due to a significant decrease in exchange gains in 2023, leading to a notable increase in non-operating income and expenses. 2.Other comprehensive income for the period: The total comprehensive income for the period increased, mainly due to changes in foreign operating institutions' cumulative translation adjustments in 2023.

Main causes and effects of changes of more than 20% and amounting to NT$10 million:

• 1.Non-operating income and expenses: Primarily due to a significant decrease in exchange gains in 2023, leading to a notable increase in non-operating income and expenses.

2.Other comprehensive income for the period: The total comprehensive income for the period increased, mainly due to changes in foreign operating institutions' cumulative translation adjustments in 2023.

3. Cash flow

(1) Analysis of changes in cash flows for the most recent years

Year			Increase (decrease)
	2022	2023
Item			proportion %
Cash Flow Ratios
	95.50	133.24	39.52%
Cash flow fair value ratios
	95.45	115.68	21.19%
Cash reinvestment ratio
	20.62	17.01	-17.51%

• (1) Cash Flow Ratio (%): The cash flow ratio increased in 2023, primarily due to the increase in cash flow from operating activities being greater than the increase in current liabilities.

• (2) Cash Flow Adequacy Ratio (%): The cash flow adequacy ratio increased in 2023, mainly due to the increase in cash flow from operating activities over the past five years.

• (3) Cash Reinvestment Ratio (%): The cash reinvestment ratio decreased in 2023, primarily due

~272~

to a higher proportion of cash flow from operating activities in 2023 being invested in capital expenditures such as property and plant compared to 2022.

(2) Liquidity improvement plan:

The Company’s cash flow from operating activities in 2023 was a net inflow and higher than in 2022, hence there was no liquidity shortage affecting operating activities.

• (3) Analysis of changes in cash flows in the coming year.

  • The Company's operating scale and profitability have grown steadily and is expected to maintain a steady net cash inflow from operating activities in the coming year. The Company will adjust its production and sales operations in response to the global economic situation, and take into account the future trend of product development to replace old equipment with new equipment, and expects that capital expenditures and working capital requirements will be met by its own funds; if there is still a need for funds, the Company will take into account market conditions and the cost of raising funds to effectively cover the need by borrowing from existing banks and raising funds through equity issuance.

• The impact of major capital expenditures in the most recent year on financial operations: None.

• The main reasons for the most recent annual reinvestment policy and profit or loss, improvement plans and investment plans for the coming year:

Unit: NT$ thousands

Name of Investing Company	Investing amount as of 2023/12/31	Investing policy	Investment income recognized during the period	Main reasons for gain or loss	Improvement plans	Other investme nt plans for the future
Lotes Investment Ltd	799,865	Investment	1,699,504	Deepening and Expanding Markets by investing	-	-
JIA WANG Investment INC.	12,321	Investment	194,701	Deepening and Expanding Markets by investing	-	-
Guan Si Development INC.	614,604	Investment	871,190	Deepening and Expanding Markets by investing	-	-
JA XI Investment INC.	15,353	Investment	23,890	Deepening and Expanding Markets by investing	-	-
JIA YU Investment INC.	690,000	Investment	190,485	Deepening and Expanding Markets by investing	-	-
LOTES USA ,Inc	76,763	Business Maintenance and Development	5,925	Maintain customer relationships	-	-
LOTES EU Gmbh	3,398	Business Maintenance and Development	254	Maintain customer relationships	-	-

~273~

Lerain Technology Co., Ltd.	47,321	IC design, testing and sales	1,330	Still in its early stage of establishment, the operational benefits are not yet visible	-	-
Lomites Co., Ltd	123,800	Manufacture and sale of machinery and electronic components	(22,916)	The Company is still in the product development stage, and operational efficiency has yet to be realized.	-	-
LOTES Viet Nam Co,Ltd	2,291,483	Connector manufacturing for the information industry, communicatio ns industry and consumer electronics industry	(147,235)	Still in its early stage of establishment, the operational benefits are not yet visible	-	-
I-SEE VISION TECHNOLOGY INC.	94,000	Providing research, development, manufacturing , and sales services for contactlenses.	(21,474)	After undergoing capital reduction and restructuring, the Company is in the restart phase.	Actively developing marketable products.	-

1. Analyze and assess the following risks for the most recent year and up to the date of publication of the annual report:

2. (1) Effect of interest rates, exchange rate changes, inflation on the Company's profit or loss and future response measures:

3. 1) Effect of interest rate changes on the Company's profit or loss and future response measures

   • Changes in the Company's interest income and expenditure for the last two years

Unit: NT$ thousands

Item	2022	2022	2023	2023
	Amount	%	Amount	%
Operatingrevenue	27.099,134	100.00%	24,483,463	100.00%
Operating profit	7,268,886	26.82%	6,945,949	28.37%
Interest	(8,308)	(0.03%)	254,414	1.04%

The Company's interest income (expense) as a percentage of operating revenue and operating profit was insignificant and had no significant impact on profit or loss.

• Future response measures

• The Company has exclusive personnel to observe the fluctuation of the exchange rate from time to time, and intends to consider the effect of exchange rate changes when quoting prices; and to appropriately retain the foreign currency portion of sales revenue to meet the foreign currency purchase expenses in order to achieve the automatic hedging function.

• The Company will adopt hedging strategies for derivative financial instruments, such as pre-sale or pre-purchase of forward exchange, in order to hedge the related exchange rate risk in order to minimize the impact of exchange rate changes on the Company's profit or loss, depending on the changes in the currency exchange market and currency exchange funds requirements.

• (3)The effect of inflation on the Company's profit or loss for the most recent year and up to the

~274~

date of publication of the Company's prospectus and future response measure:

The Company is always aware of market price fluctuations to determine its purchasing policies and maintains good interaction with its suppliers and customers, therefore there are no events that have a significant impact on inflation.

(2) Policies, principal reasons for gains or losses from engaging in high-risk, leveraged investing, lending of funds to others, endorsement guarantees and derivative transactions and future response measures:

As of the end of 2023, the Company had loaned $0 thousand to others.

The Company recorded $153,525 thousand of guarantees for others at the end of 2023 which was to endorse bank loans for the working capital needs of its subsidiaries. The related loans and guarantees were performed in accordance with the "Control over Loans and Endorsements of Funds" established by the Company.

• (3) Future R&D plans and estimated R&D costs:

Our future product development and design direction: board-to-board connectors will be designed for high-frequency high speed, small pitch, low height, SMT design volume minimization; I/O connectors will be designed for interface connectors Fine Pitch, thin design and high-frequency high speed; memory card connectors will be designed for integration of multi-card all-in-one design, enhance battery connector volume minimization and custom design; wireless network connectors with wireless network product development and design, computer peripheral connectors for consumer electronics (HDMI DVI phones), automotive, server, medical and communication connectors will also be the development focus.

In the coming year, the Company will not only continue to increase the investment in R&D expenses, but will also continue to improve the production efficiency with the accumulated R&D results in the long term in order to gain a competitive advantage in the market; in 2024, the Group's R&D expenses are expected to be approximately NT$2,300,000 thousand, which is expected to account for 8% of the current year's operating revenue.

• (4) Effect of significant domestic and international policy and legal changes on the Company's financial operations and response measures:

The Company is always aware of important policy and legal changes in domestic and foreign countries, and takes the initiative to take appropriate measures in a timely manner. In recent years, the Company has not been subject to significant policy and legal changes both domestically and internationally that have materially affected its financial operations.

• (5) Effect of technological and industrial changes on the Company's financial operations and response measures:

The Company has always been committed to technology research and development to improve yield and continues to innovate high value-added connector products, therefore, technology changes have a positive effect on the Company's financial business and the Company will continue to maintain its leading position in R&D and technology.

• (6) Effect of corporate image changes on corporate risk management and response measures:

The Company adheres to the business philosophy of "teamwork, enthusiasm, efficiency, innovation" and has a good corporate image, and became a listed company in 2007 which is expected to attract more outstanding talents to enter the company's service, strengthen the strength of the operating team, and then return the operating results to the shareholders and fulfill the corporate social responsibility. So far, no incidents that damage the corporate image have occurred.

(7) Expected benefits and possible risks of mergers and acquisitions: None.

• (8) Expected benefits and possible risks of plant expansion: None.

• (9) Risk of concentration of imports or sales: None.

• (10) Effects or risks on the issue that large numbers of shares are transferred or replaced by directors, supervisors or major shareholders holding more than 10% of company shares: None.

• (11) The effects and risks of changes in management on the Company: None.

• (12) In the event of litigation or non-litigation, the Company and its Directors, Supervisors, Presidents, substantially responsible persons, majority shareholders holding more than 10% of the shares and affiliated companies shall disclose the material litigation, non-litigation or administrative dispute

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that has been adjudicated or is still pending, the outcome of which may have a material impact on shareholders' interests or the price of securities, the facts in dispute, the amount of the subject matter, the date of commencement of the litigation, the principal parties involved and the disposition of the matter as of the date of publication of this annual report: None. (13) Other significant risks: None.

7. Other important matters: None

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VIII. Special Notes

1. Related information of affiliates

(1) Affiliates' organizational chart

Lotes Co., Ltd. 2023.12.31

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LOTES INVESTMENTS LIMITED Guan Si Jiayu Investment Co., Ltd. LOTES USA, INC. Good Hope Zha Xi
Development Investments Investments
Co, Ltd. Limited Ltd.
Ememe Robot Co., Lintes Technology Co., Ltd.
LOTESON INTERNATIONAL INVENTMENTS Ltd. Lai Da LOTES EU GmbH
LTD. Jae You Co., Ltd. Technology
Xin Cheng Ltd.
Jia Yin Medical Co., Ltd. Jilong Co., Ltd. Genie Precision
Wangden
Equipment Co., Ltd. Machining Co., Ltd. Lomites Co., Ltd. Investments
Co., Ltd.
Lotes Guangzhou Co., Ltd. Lotes Suzhou
Co., Ltd. Sunmax
Technology Co., Lintes Technology
Lotes Hengnan Co., Ltd. FELICITY NEWS LIMITED Ltd (Thailand) Co., Ltd LOTES VIET NAM COMPANY Rui Jia Trading Co. Tsongkha
LIMITED
Technology
Lintes Technology
(Shen Zhen)
Lotes Zhongshan Co., (Suzhou) Co., Ltd. Co., Ltd.
Ltd.
Shenzhen Deyi Automation
Technology Co., Ltd. Jiasimei
(Guangzhou)
Trading Co., Ltd.
Zhongshan DeZhi Real
Hengnan De Yi Property Estate Development and
Development Co., Ltd. Management Co., Ltd.
Guangzhou LeRain Chongqing Fuxinrui Electronic
Technology Co., Ltd. Technology Co., Ltd.
Zhongshan Dezhi Metal
Surface Treatment Co.,
Ltd.
Zhongshan Jinmeida
Metal Surface Treatment
Co., Ltd.
Guangzhou Chief Tech
Electronic Technology
Co., Ltd.
Zhongshan Huixing Huili Electronic Technology
Electronics Co., Ltd. (Ningbo) Co., Ltd.
----- End of picture text -----

277

(2) Basic information of each affiliates:

Unit: NT$thousands

				Unit: NT$thousands
Name of Company	Incorporating date	Address	Paid-in Capital	Major operations or production items
LOTES INVESTMENTS LIMITED	2003/9/5	Offshore Chambers, P.O. Box217, Apia, Samoa	811,197	Engaged in holding and reinvestment activities
Good Hope Investments Limited	2003/3/21	Offshore Chambers, P.O. Box217, Apia, Samoa	12,496	Engaged in holding and reinvestment activities
Guan Si Development Co, Ltd.	2003/11/18	Offshore Chambers, P.O. Box217, Apia, Samoa	62,311	Engaged in holding and reinvestment activities
Zha Xi Investments Ltd.	2005/12/22	P.O.BOX850, Offshore Incorporation Centre, The Valley,Anguilla,British West Indies	15,579	Engaged in holding and reinvestment activities
Jiayu Investment Co., Ltd.	2008/7/4	4F., No. 15, Wuxun St., Anle Dist., Keelung City	690,000	Engaged in holding and reinvestment activities
LOTES USA,INC.	2012/4/1	888SW Fifty Avenus, Suite 800,Portland, OR 97204 U.S.A	77,850	Market development
LOTES EU,GmbH	2018/2/27	Hessenring119-121,61348 Bad Homburg	3,381	Market development
Lerain Technology Co., Ltd.	2020/1/2	13F-1, No.716, Zhongzheng Rd., Zhonghe Dist., New Taipei City	300,679	Chip design, testing and sales
Lomites Co., Ltd.	2020/12/21	9F No. 87-5, Kuangming 6th Rd., Zhubei City, Hsinchu County	125,000	Manufacture and sale of machinery and equipment, electronic parts and components, and optical instruments
LOTES VIETNAM COMPANY LIMITED	2021/4/23	LOT E1, LIEN HA THAI INDUSTRIAL PARK, THUY LIEN COMMUNE, THAI THUY DISTRICT, THAI BINH PROVINCE, VIETNAM Công ty TNHH Lotes Việt Nam	1,801,449	Manufacturing of connectors for the information industry, communications industry and consumer electronics industry
LOTES INVESTMENT Ltd.	2007/10/15	Unit 1405-1406, Dominion Centre, 43-59 Queen's Road East,Wanchai,H.K	811,197	Engaged in holding and reinvestment activities
Xin Cheng Ltd.	2003/10/16	Offshore Chambers, P.O. Box217, Apia, Samoa	3,114	Selling of connectors for the information industry, communications industry and consumer electronics industry
Rui Jia Trading Co.	2007/11/13	Unit 1405-1406, Dominion Centre, 43-59 Queen's Road East, Wanchai, H.K	3,154	Selling of connectors for the information industry, communications industry and consumer electronics industry
Jae You Co., Ltd.	2007/10/29	Unit 1405-1406, Dominion Centre, 43-59 Queen's Road East,Wanchai,H.K	623,322	Engaged in holding and reinvestment activities
Wangden Investments Co., Ltd.(HK)	2007/10/12	Unit 1405-1406, Dominion Centre, 43-59 Queen's Road East,Wanchai,H.K	15,570	Engaged in holding and reinvestment activities
Ememe Robot Co., Ltd.	2010/6/22	13F.-1, No. 716, Zhongzheng Rd., Zhonghe Dist., New Taipei City	69,600	Engaged in the manufacturing of electrical and audio-visual electronicproducts
Compertum Microsystems Inc.	2019/11/5	13F.-1, No. 716, Zhongzheng Rd., Zhonghe Dist.,New Taipei City	136,310	Engaged in the manufacturing of electronic components
Good News Medical Co., Ltd.	2020/4/22	4F No.15 Wuhsun St., Anle Dist., Keelung City	25,000	Manufacture and sale of machinery and equipment, electronic parts and components, and optical instruments
Lintes Technology Co., Ltd.	2011/8/22	2F.-1, No. 268, Liancheng Rd., Zhonghe Dist., New Taipei City	626,411	Engaged in the manufacturing of electronic components, other electrical and electronic mechanical equipment
Genie Precision Machining Co.,Ltd.	1986/10/3	No.4 Alley 704, Heping Rd., Bade Dist., Taoyuan City,Taiwan R.O.C.	244,500	Engagement in optical mold manufacturingand trading
Jilong Co., Ltd.	2011/6/16	Offshore Chambers,P.O.Box 217 ,Apia ,Samoa	154,143	Engaged in holding and reinvestment activities
Sunmax Technology Co., Ltd.	2011/11/8	Offshore Chambers,P.O.Box 217 ,Apia ,Samoa	154,143	Engaged in holding and reinvestment activities
LINTES Technology(Thailand)	2033/08/16	Thong Grow Industrial. No. 222/8, Moo2, Khlong Tamru Sub-district, Mueang Chonburi District,Chonburi Province 20000	256,708	Processing, manufacturing, and trading of wires, cables, and electronic components.
Lotes Hengnan Co., Ltd.	2010/5/17	Yunji Avenue, New County Industrial Park, Henan County, Hengyang City, Hunan Province	1,119,743	Manufacturing and selling of connectors for the information industry, communications industryand consumer electronics

278

Name of Company	Incorporating date	Address	Paid-in Capital	Major operations or production items
				industry
Shenzhen Deyi Automation Technology Co., Ltd.	2014/5/13	No. 522, Block C, Section D, Industrial Plant, Area 71, South Side of East Second Road, Xin'an Street,Bao'an District,Shenzhen City	107,050	Production of industrial robots, automation equipment and their components.
Lotes Zhongshan Co., Ltd.	2016/05/12	No.12, Jinhui Road, Triangle Town, Zhongshan City	2,569,200	R&D, production and management of electronic components and assemblies, calculator parts, molds, industrial robots, intelligent floor sweeping robots and components, intelligent industrial cameras; engaged in electronic, communication and automatic control technologyR&D
Lotes Suzhou Co., Ltd.	2003/7/10	No.26, Caohu Avenue, Xiangcheng Economic Development Zone, Suzhou, Jiangsu Province	622,464	Manufacturing of connectors for the information industry, communications industry and consumer electronics industry
Tsongkha Technology (Shen Zhen) Co., Ltd.	2006/5/15	No. 528, Block C, Section D, Industrial Plant, Area 71, South Side of East Second Road, Xinan Street Office, Baoan District, Shenzhen City	15,570	Engaged in R&D of electronic products, plastic raw materials and their products, import and export business
Lintes Technology (Suzhou) Co., Ltd.	2012/3/14	No.26, Caohu Avenue, Xiangcheng Economic Development Zone, Suzhou	154,143	Development and production of optical communication measuring instruments and optical transceivers with speeds of 10GB/S and above and technical services for the aboveproducts
Guangzhou Leside Technology Co.,Ltd.	2015/2/27	Room 603, No.5, Shuang Shan Avenue, Nansha District,Guangzhou	20,125	Research and experimental development
Chongqing Fuxinrui Techmology Co., Ltd.	2018/12/27	No. 6, Yingchun Road, Nanan District, Chongqing City	13.433	Development and sale of electronic components, automotive parts and components, calculators and components, mold development and import and export ofgoods and technologies
Hengnan Deyi Property Development Co., Ltd.	2018/5/18	No. 120, Yunji Avenue, Yunji Town, Henan County, Hengyang City, Hunan Province	98,486	Property development, home rental, landscaping and interior decoration
Zhongshan Dezhi Artificial Co.,Ltd.	2016/3/24	1F., No.8, Ruifeng Road, Triangle Town, Zhongshan	261,202	Surface treatment for all kinds of hardware andplasticproducts
Zhongshan Jinmeida Metal Surface Treatment Co.	2002/7/11	1, No. 2, Ruifeng Road, Zhongshan City, GuangdongProvince	44,019	Surface treatment for all kinds of hardware andplasticproducts
Zhongshan Dezhi Real Estate Development and Operation Co.,Ltd.	2021/09/16	No. 12, Jinhui Road, Sanjiao Town, Zhongshan City	250.497	Real estate development, house rental, landscape design, etc.

(3) Same shareholder information as those presumed to have a controlling and subordinate relationship:

None.

(4) Information on Directors, Supervisors and Presidents of affiliates

Unit: shares

				Unit: shares	Unit: shares
Nature	Name of Company	Title	Name or representative	Shareholding
				Shares	Shareholding %
Controlling	Lotes Co., Ltd.	Chairperson	Jiaming Investment Ltd. Legal Representative: Chu, Te-Hsiang	9,797,037	9.23
		Director	Jiaming Investment Ltd. Legal Representative: Ho, Te-Yu	9,797,037	9.23

279

Nature	Name of Company	Title	Name or representative	Shareholding	Shareholding
				Shares	Shareholding %
		Director	Hsieh, Chia-Ying	0	0
		Director	Chu, Chien-Chung	0	0
		Director	Wang, Jen-Chun	0	0
		Director	Chiang, I-Cheng	0	0
		Director	Wu, Chang-Hsiu	0	0
		President	Ho, Te-Yu	473,899	0.43
Subsidiary	LOTES INVESTMENTS LIMITED	Director	Lotes Co., Ltd. Legal Representative: Chu, Te-Hsiang, Ho, Te-Yu	26,050,000	100
	Good Hope Investments Limited	Director	Lotes Co., Ltd. Legal Representative: Chu, Te-Hsiang,Ho,Te-Yu	401,281	100
	Guan Si Development Co, Ltd.	Director	Lotes Co., Ltd. Legal Representative:Hsu, Li-Ping	20,016,426	100
	Zha Xi Investments Ltd.	Director	Lotes Co., Ltd. Legal Representative: Huang, Li-Yueh	500,000	100
	Jiayu Investment Co., Ltd.	Chairperson	Lotes Co., Ltd. Legal Representative: Chu, Te-Hsiang	69,000,000	100
		Director	Lotes Co., Ltd. Legal Representative: Ho, Te-Yu	69,000,000	100
		Director	Lotes Co., Ltd. Legal Representative: Ho, Kun-Shan	69,000,000	100
		Supervisor	Lotes Co., Ltd. Legal Representative: Ho, Jian-Sheng	69,000,000	100
	LOTES INVESTMENT Ltd.	Director	LOTES INVESTMENTS LIMITEDLegal Representative: Chu-Chen, Yi-Hui	26,050,000	100
	Lotes Guangzhou Co., Ltd.	Chairperson	LOTES INVESTMENT Ltd. Legal Representative: Ho, Te-Yu	26,700,000	100
		Director (Vice Chairperson)	LOTES INVESTMENT Ltd. Legal Representative: Chu, Te-Hsiang	26,700,000	100
		Director	LOTES INVESTMENT Ltd. Legal Representative: Chu-Chen, Yi-Hui	26,700,000	100
		Supervisor	LOTES INVESTMENT Ltd. Legal Representative: Ho, Kun-Shan	26,700,000	100
	Xin Cheng Ltd.	Director	Good Hope Investments Ltd. Legal Representative: Ho,Mei-Yu	100,000	100
	Rui Jia Trading Co.	Director	Good Hope Investments Ltd. Legal Representative: Bao,Yu-Yi	101,281	100
	Jae You Co., Ltd.	Director	Guan Si Development Co, Ltd. Legal Representative: Ho, Jian-Sheng	20,016,756	100
	Lotes Suzhou Co., Ltd.	Chairperson	Jae You Co., Ltd. Legal Representative: Chu, Te-Hsiang	19,989,221	100

280

	Nature	Name of Company	Title	Name or representative	Shareholding	Shareholding
					Shares	Shareholding %
			Director (Vice Chairperson)	Jae You Co., Ltd. Legal Representative: Ho, Te-Yu	19,989,221	100
			Director	Jae You Co., Ltd. Legal Representative: Kung, Yung-Sheng	19,989,221	100
			Supervisor	Jae You Co., Ltd. Legal Representative: Chen, Ya-Yuan	19,989,221	100
		Wangden Investments Co., Ltd.	Director	Zha Xi Investments Ltd. Legal Representative: Lin, Yi-Jun	500,000	100
		Tsongkha Technology (Shen Zhen) Co., Ltd.	Director	Wangden Investments Co., Ltd. Legal Representative: Wang, Ying-Ping, Ho, Te-Yu, Lin, Ko-Lun	500,000	100
		Lotes Hengnan Co., Ltd.	Director	Lotes Guangzhou Co., Ltd. Legal Representative: Ho, Te-Yu, Chen, Zhi-Yu, Lin, Ko-Lun	261,500,000	100
		Lotes Hengnan Co., Ltd.	Supervisor	Lotes Guangzhou Co., Ltd. Legal Representative: Lu, Chih-Cheng	261,500,000	100
		Shenzhen Deyi Automation Technology Co., Ltd.	Director	Lotes Guangzhou Co., Ltd. Legal Representative: Wang, Ying-Ping	25,000,000	100
		Shenzhen Deyi Automation Technology Co., Ltd.	Supervisor	Lotes Guangzhou Co., Ltd. Legal Representative: Wang, Hsi-Hung	25,000,000	100
		Ememe Robot Co., Ltd.	Chairperson	Jiayu Investment Co., Ltd. Legal Representative: Chu, Te-Hsiang	6,960,000	94.37
			Director	Jiayu Investment Co., Ltd. Legal Representative: Tsai, Hui-Wen	6,960,000	94.37
			Director	Jiayu Investment Co., Ltd. Legal Representative: Liu, Hsing-Hsia	6,960,000	94.37
			Supervisor	Hsu, Feng-Yu	0	0
		Lintes Technology Co., Ltd.	Chairperson	Jiayu Investment Co., Ltd. Legal Representative: Chu, Te-Hsiang	31,075,140	49.61
			Director	Jiayu Investment Co., Ltd. Legal Representative: Ho, Te-Yu	31,075,140	49.61
			Director	Jiayu Investment Co., Ltd. Legal Representative: Lo, Wei-Ren	31,075,140	49.61
			Director	Lai, Wei-Ru	0	0
			Director	Ye, Jing-Zhong	0	0
			Director	Ling, Ge	0	0
			Director	Yang, Zhi-Qing	0	0-
		LOTES USA, INC	Director	Lotes Co., Ltd. Legal Representative: Wang, Ying-Lin	2,500,000	100
			Director	Lotes Co., Ltd. Legal Representative: Huang, Rui-Jin	2,500,000	100

281

Nature	Name of Company	Title	Name or representative	Shareholding	Shareholding
				Shares	Shareholding %
		Director	Lotes Co., Ltd. Legal Representative: Lin, Yi-Jun	2,500,000	100
	LOTES EU,GmbH	Chairperson	Lotes Co., Ltd. Legal Representative: Chu, Te-Hsiang	100,000	100
		Director	Lotes Co., Ltd. Legal Representative: Tsai, Ming-Jui	100,000	100
		Director	Lotes Co., Ltd. Legal Representative: HSIEH, JIA-XIN	100,000	100
	Jilong Co., Ltd.	Director	Lintes Technology Legal Representative: Chen, Ya-Yuan	4,950,000	100
	Sunmax Technology Co., Ltd.	Director	Jilong Co., Ltd. Legal Representative: LIAO, HUI-YING	4,950,000	100
	Lintes Technology (Suzhou) Co., Ltd.	Chairperson	Sunmax Technology Co., Ltd. Legal Representative: Ho, Te-Yu	4,950,000	100
		Director and President	Sunmax Technology Co., Ltd. Legal Representative: Lo, Wei-Ren	4,950,000	100
		Director	Sunmax Technology Co., Ltd. Legal Representative: Chu, Te-Hsiang	4,950,000	100
		Supervisor	Sunmax Technology Co., Ltd. Legal Representative: Bao, Yu-Yi	4,950,000	100
	Lotes Zhongshan Co., Ltd.	Chairperson	Legal Representative: Ho, Te-Yu	600,000,000	100
		Director	Legal Representative: Chu-Chen, Yi-Hui	600,000,000	100
		Director	Legal Representative: Ho, Hung-YU	600,000,000	100
		Supervisor	Legal Representative: Lin, Ya-Chi	600,000,000	100
	Guangzhou Leside Technology Co., Ltd.	Chairperson	Lotes Guangzhou Co., Ltd. Legal Representative: Wang, Ying-Ju	4,700,000	100
		Supervisor	Lotes Guangzhou Co., Ltd. Legal Representative: Deng, Li-Ming	4,700,000	100
	Chongqing Fuxinrui Techmology Co., Ltd.	Chairperson	Guangzhou Leside Technology Co., Ltd. Legal Representative: He, Yong-Hong	1,600,000	51
		Director	Guangzhou Leside Technology Co., Ltd. Legal Representative: Deng, Li-Ming	1,600,000	51
		Supervisor	Guangzhou Leside Technology Co., Ltd. Legal Representative: WANG, HSUEH-LIANG	1,600,000	51
	Hengnan Deyi Property Development Co., Ltd.	Chairperson	Lotes Guangzhou Co., Ltd. Legal Representative: Ho, Te-Yu	23,000,000	100
		Supervisor	Lotes Guangzhou Co., Ltd. Legal Representative: Lu, Chih-Cheng	23,000,000	100
	Compertum Microsystems Inc.	Chairperson	Jiayu Investment Co., Ltd. Legal Representative: Chu, Te-Hsiang	4,331,380	31.78

282

Nature	Name of Company	Title	Name or representative	Shareholding	Shareholding
				Shares	Shareholding %
		Director	Ho, Te-Yu	600,000	4.40
		Director	Lo, Wei-Ren	987,095	7.24
		Director	LIU, JIEN-CHAN	1,210,500	8.88
		Director	Man Francis Piu	1,425,500	10.46
		Supervisor	Hsu, Feng-Yu	0	0 -
	Zhongshan Dezhi Artificial Co., Ltd.	Director	Lotes Guangzhou Co., Ltd. Legal Representative: Wang,Ying-Ping	6,100,000	100
	Zhongshan Jinmeida Metal Surface Treatment Co.	Director	Lotes Guangzhou Co., Ltd. Legal Representative: Wang, Ying-Ping	6,780,000	100
	Lerain Technology Co., Ltd.	Director	Lotes Co., Ltd. Legal Representative: Chu, Te-Hsiang	4,732,059	15.74
		Director	Kao, Miao-Bin	4,607,941	15.33
		Director	Lu, Xiao-Di	4,600,000	15.30
		Director	Yao, De-Zhang	1,682,128	0
		Director	Gao, Shu-Rong	0	0
		Director	Zhu, Wen-Yi	0	0
		Director	Ye, Jia-Xin	0	0
	Karlum Investment Co., Ltd.	Director	Lintes Technology Co., Ltd. Legal Representative: Chu, Te-Hsiang	0	0
		Director	Lintes Technology Co., Ltd. Legal Representative: Lo, Wei-Ren	0	0
	Genie Precision Machining Co., Ltd.	Chairperson	Lintes Technology Co., Ltd. Legal Representative: Lo, Wei-Ren	14,671,000	60
		Vice Chairperson	Lintes Technology Co., Ltd. Legal Representative: Chu, Te-Hsiang	14,671,000	60
		Director	Lintes Technology Co., Ltd. Legal Representative: Wang, Tzu-Wei	14,671,000	60
		Supervisor	Chu, Tzu-Chi	201,571	0.8
	Good News Medical Co., Ltd.	Chairperson	Chu, Te-Hsiang	0	0
		Supervisor	Ho, Te-Yu	0	0
	FELICITY NEWS LIMITED	Director	Xu, Feng-Yu	0	0
	Jiasimei (Guangzhou) Trading Co.,Ltd.	Director	Lin, Ke-Lun	0	0

283

Nature	Name of Company	Title	Name or representative	Shareholding	Shareholding
				Shares	Shareholding %
	Lomites Co., Ltd.	Chairperson	Lotes Co., Ltd. Legal Representative: Chu, Te-Hsiang	12,380,000	99.04
		Director	Lotes Co., Ltd. Legal Representative: Ho, Te-Yu	12,380,000	99.04
		Director	Lotes Co., Ltd. Legal Representative: Chen, Ya-Yuan	12,380,000	99.04
		Supervisor	Lotes Co., Ltd. Legal Representative: Hsu, Feng-Yu	12,380,000	99.04
	LOTES VIET NAM COMPANY LIMITED	Chairperson	Lotes Co., Ltd. Legal Representative: Kung, Yung-Sheng	74,629,000	100

(5) Operating overview of affiliates

Unit: NT$ thousands

No.						Operating	Operating	After tax
	Name of Company	Capital	Total Assets	Liabilities	Net Worth	Revenue	(Loss) Gain	(Loss) Gain	EPS
1	Lotes Guangzhou Co., Ltd.	819,824	12,157,173	2,207,246	9,949,927	7,362,174	1,004,713	1,600,810	59.96
2	Lotes Suzhou Co.,Ltd.	613,769	4,608,958	257,485	4,351,473	1,794,571	467,790	878,688	43.96
3	Good Hope Investments Limited	12,321	2,035,859	0	2,035,859	0	0	194,701	485.20
4	LOTES INVESTMENTS LIMITED	799,865	9,949,958	0	9,949,958	0	0	1,600,810	61.45
5	Xin ChengLtd.	3,071	237,923	236,567	1,356	1,396,322	(55)	(19)	(0.19)
6	Guan Si Development Co,Ltd.	614,604	4,351,613	0	4,351,613	0	0	878,688	43.90
7	Zha Xi Investments Ltd.	15,353	201,685	0	201,685	0	0	23,890	47.78
8	Tsongkha Technology (Shen Zhen)Co.,Ltd.	15,353	587,668	385,983	201,685	1,110,866	27,595	23,890	47.78
9	LOTES INVESTMENT Ltd.	799,865	10,306,155	0	10,306,155	0	0	1,600,810	61.45
10	Wangden Investments Co.,Ltd.	15,353	201,685	0	201,685	0	0	23,890	47.78
11	Jae You Co.,Ltd.	614,614	4,387,190	0	4,387,190	0	0	878,688	43.90
12	Rui Jia TradingCo.	3,110	6,683,900	5,598,854	1,085,047	13,975,857	180,042	194,719	1,922.56
13	Jiayu Investment Co., Ltd.	723,000	1,493,772	383	1,493,390	189,538	189,349	190,233	2.63
14	Ememe Robot Co., Ltd.	73,750	2,105	10,777	(8,672)	0	(23)	(15)	(0.00)
No.	Name of Company	Capital	Total Assets	Liabilities	Net Worth	Operating Revenue	Operating (Loss) Gain	After tax (Loss) Gain	EPS
15	Lotes Hengnan Co., Ltd.	1,131,511	2,008,453	321,553	1,686,900	1,938,211	210,295	203,962	0.78
16	Lintes Technology Co., Ltd.	626,411	3,739,645	847,913	2,891,732	2,237,348	450,369	396,730	6.38
17	JilongCo.,Ltd.	151,990	547,774	0	547,774	0	0	81,966	16.56
18	Sunmax Technology Co.,Ltd.	151,990	580,518	32,744	547,774	0	3,792	81,966	16.56
19	Lintes Technology (Suzhou)Co.,Ltd.	151,990	914,137	333,619	580,518	1,388,052	89,670	78,175	15.79

284

20	LOTES USA,INC.	76,763	93,515	5,015	88,500	0	(50,932)	5,925	2.37
21	Shenzhen Deyi Automation TechnologyCo.,Ltd.	108,175	727,804	559,019	168,785	1,182,764	26,631	18,397	0.74
22	Lotes Zhongshan Co., Ltd.	3,028,900	7,902,936	2,601,014	5,301,921	7,772,507	1,166,195	979,691	1.40
23	LOTES EU GmbH	3,398	6,011	1,267	4,744	0	(9,990)	254	2.54
24	Guangzhou LeRain TechnologyCo.,Ltd.	20,337	1,202,252	1,011,618	190,634	2,086,602	99,569	79,413	16.90
25	Chongqing Fuxinrui Electronic Technology Co., Ltd.	6,923	40,413	28,436	11,977	51,916	9,028	8,858	5.54
26	Hengnan De Yi Property Development Co., Ltd.	99,521	98,685	43	98,642	0	(207)	1,013	0.04
27	Lai Da Technology Co.,Ltd.	136,310	45,700	15,310	30,389	0	(47,925)	(35,411)	(2.60)
28	Zhongshan Dezhi Metal Surface Treatment Co., Ltd.	263,947	344,103	43,404	300,699	411,520	42,209	33,677	0.55
29	Genie Precision Machining Co., Ltd.	244,500	388,760	92,606	296,154	184,893	(66,903)	(52,241)	(2.14)
30	Jia Yin Medical Equipment Co., Ltd.	25,000	8,415	784	7,632	100	(8,012)	(7,805)	(3.12)
31	Lomites Co., Ltd.	125,000	94,839	10,847	83,992	0	(23,282)	(22,585)	(1.81)
32	LOTES VIET NAM COMPANY	2,291,483	2,085,476	191,188	1,894,288	52,181	(148,111)	(147,235)	(1.97)
33	Zhongshan Jinmeida Metal Surface Treatment Co.	44,482	99,831	854	98,978	0	(841)	(824)	(0.08)
34	Zhongshan DeZhi Real Estate Development and Management Co., Ltd.	253,130	244,971	20	244,950	0	(31)	(10)	(0.00)
No.	Name of Company	Capital	Total Assets	Liabilities	Net Worth	Operating Revenue	Operating (Loss) Gain	After tax (Loss) Gain	EPS
35	Lintes Technology (Thailand)Co.,Ltd.	348,318	355,851	11,252	344,599	0	(4,833)	(3,216)	(0.08)
36	Guangzhou Chief Tech Electronic Technology Co.,Ltd.	2,164	2,124	0	2,124	0	(42)	(41)	(0.08)
37	FELICITY CO.,LTD.	1,013	1,037	0	1,037	0	0	12	0.36
38	Jiasimei (Guangzhou) TradingCo.,Ltd.	1,013	1,037	1	1,037	0	(2)	12	0.36
39	Zhongshan Huixing Electronics Co.,Ltd.	33,318	445,170	444,416	754	684,877	(35,530)	(34,126)	(4.43)
40	Huili Electronic Technology (Ningbo) Co.,Ltd.	4,327	2,305	233	2,072	0	(2,298)	(2,291)	(2.29)

285

(6) Consolidated financial statements of affiliates:

Declaration

For the fiscal year 2023 (January 1, 2023 through December 31, 2023), the companies that should be included in the preparation of the consolidated financial statements of affiliated enterprises in accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" are the same companies that should be included in the preparation of the consolidated financial statements of their parent and subsidiaries in accordance with IAS 10 approved by the Financial Supervisory Commission, and the information that should be disclosed in the consolidated financial statements of affiliated enterprises has been disclosed in the consolidated financial statements of the parent and subsidiaries previously disclosed, the Company hereby does not prepare separate consolidated financial statements of affiliated enterprises.

Company Name: Lotes Co., Ltd.

Chairperson: Chu, Te-Hsiang Date: March 12, 2024

(7) Affiliates Report: None.

2. Private placements of marketable securities as of the date of publication of the most recent year and as of the date of the annual report: None.

3. Shareholdings or dispositions of the Company's shares by subsidiaries for the most recent year and as of the date of the annual report: None.

4. Other items of description which needs to be supplemented: None.

1. For the most recent year and as of the date of the annual report, if any event occurred that had a significant impact on shareholders' equity or the price of securities as defined in Article 36, paragraph 2, subparagraph 2 of the Securities and Exchange Act: None

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Lotes Co., Ltd.

Chairperson: Chu, Te-Hsiang

President: Ho, Te-Yu